Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
AFDC QUALITY CONTROL REVIEW PANEL
SUBJECT: North Dakota Department of Human Services
Docket No. A-96-127
Decision No. QC102
DATE: September 9, 1996
DECISION
The North Dakota Department of Human Services (North Dakota) appealed a quality control (QC) determination of the Regional Administrator of the Administration for Children and Families (ACF) that the sample case (State Review No. 20901; Federal Review No. 238) was ineligible for Aid to Families with Dependent Children (AFDC) for the review month of August 1995. The federal QC review found that the assistance unit (AU) had vehicles valued above the applicable resource limit.
Legal Authority
Section 402(a)(7) of the Social Security Act (Act) requires that the income and resources of AU members be considered in determining need for AFDC. The Act permits an AU to retain real and personal property with an equity value of up to $1,000. Section 402(a)(7)(B). The regulations provide, however, that the equity value of one motor vehicle up to a limit set by the state within the federal maximum limit of $1,500 is to be excluded from the calculation of the AU's resources. 45 C.F.R. § 233.20(a)(3)(i)(B). Any excess equity value beyond the $1,500 limit is to be applied towards the general resource limit. Id.; see generally Kansas Dept. of Social and Rehabilitation Services, DAB QC61 (1994).
The QC Manual provides that procedures established by the state to determine the value of motor vehicles owned by an AU should be followed as the permissible state practice (PSP) against which the QC review is conducted. (If a state has no such procedure, the QC Manual requires establishing a fair market value by contacts with two collateral sources.) QC Manual § 3547. North Dakota's manual established the following procedures for determining the value of motor vehicles:
A used car pricing list that eligibility staff may find useful is published monthly by the National Automobile Dealers Association (NADA). . . . The "Average Trade-In" value without regard to add-on features shall be accepted as the value of the vehicle unless the applicant/recipient contests its accuracy. In this case, the matter shall be resolved by averaging the fair market value estimates obtained by the family from two licensed car dealers.
North Dakota Dept. of Human Services Manual, Service 400, Ch. 10; ACF Ex. 4.
Background
North Dakota QC reviewers determined from state and tribal motor vehicle records that the AU held clear title to two motor vehicles: a 1983 GMC pick-up truck and a 1979 Pontiac TransAm. There was no indication in the case file that the AU had ever reported either of these vehicles to the local agency; hence, no determination of their value had been made by the case worker. North Dakota QC reviewers made no determination of the value of these vehicles. In its appeal, North Dakota acknowledged that "State QC failed to follow-up with assistance unit on ownership and condition of the two unreported vehicles." Appeal letter at 1 (May 22, 1996). North Dakota QC reviewers found a correct payment to the AU.
The federal QC review determined the value of the two vehicles based on the above-cited provision of the North Dakota Manual, using the NADA average trade-in value. The trade-in value, based on the NADA Older Used Car Guide, was $2,850 for the 1983 GMC pick-up truck and $1,025 for the 1979 TransAm. ACF Exs. 8 and 9. After subtracting the $1,500 motor vehicle exemption amount, the remaining $2,375 exceeded the resource limit of $1,000 by $1,375. Federal QC reviewers classified the review month payment as payment to an ineligible.
In its reconsideration request before the Regional Administrator, North Dakota contended that unless additional information could be obtained about the vehicles from the AU, the case should be dropped from the sample because eligibility could not be determined. ACF Ex. 7. The reconsideration request was denied on the grounds that the information in the record was sufficient to find ineligibility based on average trade-in values of the vehicles. Thereafter, North Dakota again contacted the AU and obtained additional information about the vehicles.
On appeal before the Panel, North Dakota did not argue that the case should be dropped but rather that the payment was correct because the value of the vehicles attributable to the AU did not exceed the resource limit. North Dakota contended that the federal QC reviewers had failed to establish the condition of the 1983 GMC, and that its value was below the $1,500 motor vehicle exclusion. In addition, North Dakota argued that the federal QC reviewers had not proven ownership of the 1979 Pontiac TransAm, which it claimed was transferred before the review month. With its appeal, North Dakota produced a signed statement from a niece who was not part of the AU asserting that she bought the 1979 TransAm for $300. The note has the date December 1994, although it is not clear if that was intended as a reference to the approximate date of the claimed transfer. In addition, North Dakota reported that the AU stated that the 1983 GMC pick-up was in bad condition and produced two notes from car dealers estimating its value, in one case, at $1,000-$1,600 and, in the other, at $1,500. On this basis, North Dakota argued that the 1979 TransAm should not be considered a resource of the AU and that the 1983 GMC pick-up was valued at $1,400, below the $1,500 exclusion. Therefore, North Dakota argued that the payment for August 1995 was correct.
Analysis
We uphold federal QC's determination that this AU had excess resources. As explained below, the evidence submitted by North Dakota as to the value of the GMC pick-up was not relevant to the question of the pick-up's value during the review month. Therefore, in the absence of evidence to the contrary, federal QC properly relied on the NADA trade-in value for the vehicle. Based on that value, the AU was ineligible.
The entire report of the North Dakota QC reviewers' contact with the AU about the value of the vehicles is as follows:
On May 7, 1996 [nine months after the review month], State QC contacted [AU] 1/ regarding the two unreported vehicles. [AU] stated the 1979 TransAm was not in running order, needed a new engine and paint job. The vehicle was sold to his niece . . . [who] provided State QC a signed statement stating her purchase of the TransAm for $300 in December 1994. Tribal Motor Vehicle records reflects license expired 3/17/95. [AU] stated the 1983 GMC pick-up engine needs work and the body is rusting, estimated it is worth $300 maximum. Applying PSP, at time of client contesting the NADA average trade-in value of a vehicle, the matter shall be resolved by averaging the fair market value estimates obtained by the family from two licensed car dealers. [AU] provided State QC two estimates as follows: Thiel Motors, Bottineau - estimate between $1,000 & $1,600 and Thiel Motors, Rolla - estimate of $1,500. Applying PSP, 1983 GMC pick-up fair market value is $1,400.
It thus appears that the AU did assert that ownership of the TransAm had changed prior to the review month. However, this report does not indicate that the client contested the accuracy of the average trade-in value of 1983 GMC pick-up as of the review month, but rather responded to questions from the State QC regarding the current condition of the car (as of May 1996) and obtained estimates of its value at that time from the dealers. The State QC review apparently treated the description of the current condition of pick-up as contesting the trade-in value but there is no indication in this report of an assertion by the client that the AU contested the trade-in value of the vehicle as of the relevant time (i.e., August 1995), nor any indication that the condition of the car at that time was even discussed with the client. In support of this interpretation, we note that North Dakota did not submit any statement from the AU concerning the asserted value of the vehicles as of the review month. Further, the unsigned handwritten notes from the dealers submitted by North Dakota contain no reference to any time period other than May 1996.
Obviously, the condition and value of a car may well change quite dramatically in the course of nine months. Even assuming that the information received from the AU was completely accurate about the condition and value of the car as of May 1996, no inferences could be drawn from that information about what its condition or value was as of August 1995. Further, the fact that the client asserted in May 1996 that the vehicle was not in good condition and was not worth the NADA value does not imply that the client contested the accuracy of the NADA trade- in value as of August 1995.
ACF took the position before us that the client could not contest the trade-in value during the QC process because any such contest "had to have already happened via the agency." Determination letter at 2 (April 25, 1996). North Dakota responded that the AU had not had the opportunity to contest the trade-in values earlier. North Dakota's argument was somewhat circular in that the reason the client did not have an earlier opportunity to contest the values was that the AU failed to report the vehicles and the agency did not discover their existence until the QC review and even then did not ascertain their value. However, it is not necessary for us to decide whether the AU had to contest the trade-in value before the federal QC review, because in this case there is no evidence that the AU has at any point contested the value of the vehicles as of the review month.
We conclude that the AU did not present any evidence concerning the value of the 1983 GMC pick-up as of the review month, so PSP requires that its equity be valued at the average trade-in value. North Dakota did not dispute ACF's evidence that the amount of the average trade-in value was $2,850 based on NADA sources. Therefore, the 1983 GMC pick-up truck was worth $2,850 of which $1,500 would be excluded, leaving $1,350 to be counted against the general resource limit.
Since the GMC vehicle alone caused the AU to be ineligible during the review month, we need not decide the question of the ownership and value of the 1979 TransAm. We note, however, that the statement by the niece was somewhat ambiguous and possibly self-serving. In addition, ACF offered evidence that tribal vehicle records still showed the AU as the registered owner as of September 1995, nine months after the purported transfer of ownership. ACF Ex. 6; ACF Br. 4.
Conclusion
For the reasons explained above, we conclude that ACF correctly determined that this AU was ineligible for AFDC benefits during the review month due to excess resources.
_______________________________
Sara Anderson
_______________________________
Thomas D. Horvath
_______________________________
Leslie A. Sussan
* * * Footnotes * * *
1. Names of AU members have been omitted for reasons of privacy.
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