GAB Decision 576
October 5, 1984
Joint Consideration-Timely Filing of Claims Ballard,
Judith; Ford, Cecilia Garrett, Donald
This decision resolves an issue common to the appeals of 12 States
from decisions by various operating components (Agencies) of the
Department of Health and Human Services to disallow claims for federal
financial participation under the public assistance titles of the Social
Security Act. The issue is whether Public Laws 97-92 and 97-276 amended
the filing limits established by section 306 of Public Law 96-272 so as
to permanently bar reimbursement of any claims for pre-fiscal year 1979
expenditures which were not claimed within one year after the fiscal
year in which the expenditure occurred. The parties agreed to joint
consideration of their arguments on this issue, and the Board held a
conference to permit the parties to present oral arguments on the issue.
For the reasons stated in this decision, we conclude that the
provisions in question here have no effect other than to bar payments of
the States' claims out of specific appropriations. /1/ Below, we first
provide a brief summary of our decision. We then trace the history of
the timely claims provisions. Next, we analyze in detail the Agencies'
arguments concerning the wording and the legislative history of the two
key appropriations laws, Public Laws 97-92 and 97-276. Finally, we
address the parties' arguments based on recent legislation and on
general constitutional and equitable considerations.
(2) SUMMARY OF DECISION
Historically, states have been entitled to payment of their allowable
expenditures under the public assistance programs, regardless of when
the claims were filled. To foster better budget planning, Congress
enacted in 1980 a two-year time limit for current claims. But Congress
expressly made this limit prospective in effect, by establishing a
future deadline for claiming past expenditures. At issue here are two
subsequently-enacted appropriations laws which the Agencies argued
amended the filing limits which Congress enacted in 1980, to permanently
bar payment of any prefiscal year 1979 expenditures not meeting a
one-year filing deadline. Since that deadline expired years before
these laws were passed, the Agencies' interpretation renders the States
powerless to take any action to protect claims that would have been paid
under the laws in effect when the States made the expenditures.
In this decision, we examine the language of the appropriations laws
in question and conclude that they have no effect other than to prohibit
payment out of specific appropriations. The fundamental problem with
the Agencies' position is that their interpretation is simply
unsupported by the plain meaning of the provisions at issue. Moreover,
nowhere in the legislative history of the provisions is there any clear
statement of congressional intent to amend the 1980 provisions or to
permanently bar payment of the States' claims. Rather, the relevant
congressional actions, viewed as a whole, support the conclusion that
Congress did not intend to extinguish the claims.
This decision produces no windfall for the States. The costs claimed
are of the kind which otherwise would have been reimbursed, under the
several programs involved, if not for the Agencies' collateral objection
that the claims were retroactively time-barred. The Agencies either
have already found that the claims meet program requirements or have
raised additional issues of allowability which will be addressed
elsewhere.
We appreciate the Agencies' concern that the states file their claims
in a timely manner. But the retroactive application of a one-year time
limit several years after the time limit had expired would do nothing to
further that goal. We also recognize that there might have been some
disruption to the programs if all the claims had been paid at the time
they were submitted. But we do not agree that Congress' response to
this problem was to bar payment altogether. Congress has delayed
payment sufficiently to give the Agencies time to plan how to pay them
and has established a schedule for court-ordered payments, which
constitute the bulk of the claims. Finally, the Agencies' attempt to
characterize these claims as "stale" and unworthy simply does (3)
not
hold up when nature of the claims are examined. It is also inconsistent
with basic notions of fairness.
GENERAL HISTORY OF TIME LIMITS ON CLAIMS
How the programs operate
For many years, the states have administered public assistance
programs under the Social Security Act, in cooperation with the Federal
Government. Under the Act, the states are entitled to federal financial
participation, generally at a specified percentage, in expenditures
incurred in operating the programs in accordance with an approved state
plan. The Social Security Act authorizes the Secretary of the
Department of Health and Human Services (HHS, formerly HEW) to make
grants to the states based on estimated expenditures for each quarter.
The states submit reports for each quarter showing their actual program
expenditures. States cannot always claim expenditures on a current
basis, due to factors such as the complex nature of the programs, the
methods used to reimburse service providers, and the frequent changes in
program policy. Thus, the states may include in these reports
previously unreported expenditures, incurred in earlier quarters, called
prior-period adjustments or retroactive claims.
Prior to fiscal year 1980, there were no statutory time limits for
filing retroactive claims.
H.R. 4389
During the late 1970's, Congress became increasingly concerned with
managing the budget process. The timing and amount of retroactive
claims were unpredictable; this made it difficult for HHS to plan and
administer the budget for the programs. The drafters of the fiscal year
1980 Labor-HEW appropriations bill--H.R. 4389--included a provision
restricting payment "from this appropriation to reimburse State or local
expenditures made prior to September 30, 1978." H.R. 4389 passed the
House but was never enacted. Instead, a set of continuing resolutions
appropriated funds for fiscal year 1980 in accordance with the
provisions of H.R. 4389 as it had passed the House. Pub. L. 96-86;
Pub. L. 96-123. Based on the conference report on H.R. 4389, HHS
interpreted the above-quoted provision to prohibit reimbursement of
pre-fiscal year 1979 claims with fiscal year 1980 funds, unless the
claim had been submitted within one year of the date of expenditure.
Agencies' brief, p. 6, citing H.R. REP. No. 400, 96th Cong., 1st Sess 18
(1979).
Section 306 of Public Law 96-272
Meanwhile, several members of Congress began to advocate developing
substantive legislation to improve the process for filing (4) claims.
125 Cong. Rec. 29,518 (Oct. 25, 1979). Congress ultimately enacted such
time limits as section 306 of the Adoption Assistance and Child Welfare
Act of 1980, Public Law 96-272, which the President signed on June 17,
1980.
Section 306(a) (codified as section 1132 of the Social Security Act)
established a general time limit for the filing of claims of two years
from the end of the calendar quarter in which the expenditure was made,
but permitted exceptions for certain types of claims and also gave the
Secretary authority to waive the time limit for good cause shown. /2/
Section 306(b) was added on the floor of the Senate to provide a
transition period, making it clear that the two-year time limit should
not be applied retroactively. /3/ Section 306(b)(1) made the two-year
limit applicable only to claims for expenditures incurred on or after
October 1, 1979. Section 306(b)(2) provided that there would be no
limit for payment of pre-October 1, 1979 expenditures if a claim had
been filed by the date of enactment of section 306, June 17, 1980. For
expenditures for which no claim had been filed by that date, section
306(b)(3) required that the claim be filed prior to January 1, 1981.
The Secretary later extended this deadline by regulation to May 15,
1981, finding that "States will need additional time to comply . . . ."
46 Fed. Reg. 3527, 3528 (January 15, 1981).
Some of the claims in question here were filed by the May 15, 1981
deadline. With respect to the remaining claims, the States contend
either that one of the exceptions applies or that the expenditure was
incurred on or after October 1, 1979. /4/
(5) Finally, we note that section 306(c) provided:
Notwithstanding any other provision of law, there shall be no time
limit for the filing or payment of such claims except as provided in
this section, unless such other provision of law, in imposing such a
time limitation, specifically exempts such filing or payment from the
provisions of this section.
The effect of this provision was considered in the litigation we
describe below.
The Agencies argued that section 306(b) was amended by
subsequently-enacted appropriations laws. The States said that section
306(b) was controlling on the validity of their claims.
1981 continuing appropriations resolutions
Congress again resorted to continuing resolutions for fiscal year
1981 since it was unable to agree on an appropriations act. Pub. L.
96-369, October 1, 1980; Pub. L. 96-536, December 16, 1980. These
continuing resolutions continued funding for the Department under the
authority and conditions provided in the applicable appropriations acts
for fiscal year 1980, including the time-limit provision of H.R. 4389
quoted above. The Department determined that this time limit controlled
over the time limits in section 306, even though the provision did not
specifically refer to section 306. This determination was based on the
Department's interpretation of section 306(c) as not applying to the
circumstances of the 1981 appropriations.
Thus, the Department's regulations for the filling of claims, at 45
CFR Part 95, were amended to state at section 95.11 that the Department
would pay otherwise allowable claims, subject to the availiability of
funds and "subject to conditions or restrictions applicable to payments
out of such funds, including provisions of the first and second
continuing resolutions for FY 1981 . . . that make funds under those
Acts available to pay for a State agency expenditure made before
September 30, 1978, only if the State had filed a claim for that
expenditure within one year . . . ." 46 Fed. Reg. 46, 134 (Sept. 17,
1981). A number of states (6) disagreed with this interpretation and
brought suit in federal district court. /5/
The litigating states took the position that the continuing
resolutions for fiscal year 1981 did not bar payment of pre-fiscal year
1979 claims filed within section 306 deadlines because the resolutions
did not contain the express exemption required by section 306(c). In
Connecticut v. Schweiker, No. 81-2237 (D.D.C. Sept. 30, 1981), the
District Court upheld the Department's interpretation. The ten states
involved in that litigation (with $382 million at stake) appealed to the
Court of Appeals for the District of Columbia Circuit. On July 27,
1982, the Court of Appeals reversed the lower court decision.
Connecticut v. Schweiker, 684 F.2d 979 (D.C. Cir. 1982). /6/
The Court of Appeals found that the section 306 limits controlled,
based on the plain language of section 306(c) and on the legislative
history of this provision. Accord, Missouri v. Heckler, No. 82-0085
(W.D.Mo. Feb. 8, 1984). Subsequently, the Department requested a
rehearing en banc from the Court of Appeals and this request was denied
on September 22, 1982. The Department then petitioned the United States
Supreme Court for a writ of certiorari. This petition was denied on
February 22, 1983.
Public Law 97-92
While the Connecticut v. Schweiker litigation was still pending in
District Court, Congress was considering H.R. 4560, the relevant
appropriations bill for fiscal year 1982. That bill contained (at
section 208 of the House version and section 207 of the Senate version)
the following provision:
(7) Notwithstanding section 306 of Public Law 96-272 . . . no payment
shall be made from this or any other appropriation to reimburse State or
local expenditures made prior to October 1, 1978, . . . unless a request
for reimbursement had been officially transmitted to the Federal
Government within one year . . . .
H.R. 4560 was never enacted, but Congress did enact another
continuing resolution, Public Law 97-92, appropriating funds for fiscal
year 1982. The parties here disagreed about whether Public Law 97-92
"incorporated" H.R. 4560 by reference or merely "referred to"
H.R.
4560. The Agencies argued that Public Law 97-92 "enacted" the
above-quoted provision from H.R. 4560 as permanent legislation, amending
section 306 to permanently bar payment of pre-fiscal year 1979 claims
not filed within the one-year limit. The States said that Public Law
97-92 merely "referred to" H.R. 4560 to define the terms and conditions
for the availability of fiscal year 1982 funds. In our discussion
below, we analyze in detail the wording and legislative history of
Public Law 97-92. The effect of this provision is the first major issue
in dispute.
Section 136 of Public Law 97-276
As noted above, the Court of Appeals denied the Department's request
for rehearing of the Connecticut v. Schweiker decision on September 22,
1982. On that same day, the House passed a continuing resolution for
fiscal year 1983 that made no reference to time limits for Social
Security Act claims. H.J. Res. 599, 128 Cong. Rec. H7395 - 97 (daily
ed. Sept. 22, 1982). The following day, however, the Senate
Appropriations Committee reported a bill containing an amendment which
the accompanying committee report said would "permanently extinguish"
claims for pre-fiscal year 1979 expenditures not filed within a one-year
limit. S. REP. No. 581, 97th Cong., 2d Sess. 14 (1982). We discuss in
detail below the reaction on the Senate floor to this committee
amendment, and the legislative history and wording of the compromise
provision which was substituted for it. The substitute provision became
section 136 of Public Law 97-276.
Under section 136, any payment made to reimburse a claim involved in
the Connecticut v. Schweiker litigation (or other suit filed by
September 30, 1982) was to be made according to a schedule, to be
established, over fiscal years 1984 through 1986. The second major
issue in dispute here, and addressed in our discussion section below, is
whether section 136 also permanently bars payment of claims not involved
in that litigation, or has effect only for fiscal years prior to fiscal
year 1984.
(8) The Deficit Reduction Act of 1984
After the Supreme Court denied certiorari in the Connecticut v.
Schweiker case, and after many of the appeals before us had been filed,
Congress was considering the various bills which were eventually enacted
as the Deficit Reduction Act of 1984. Section 2637 of this Act provided
the schedule for court-ordered payments referred to in section 136 of
Public Law 97-276. The Senate version of this provision had contained a
rider which would have prohibited payment of pre-fiscal year 1979 claims
not filed by May 15, 1981, and which was struck by the conference
committee. H.R. REP. No. 861, 98th Cong., 2d Sess. 1405 (1984).
The States viewed this as a further rejection of an attempt to
extinguish their claims. The Agencies said that, in light of HHS'
"well-known, clear, and consistent position that stale claims are
time-barred by existing legislation, Congress' rejection of this
proposal can be read as an indication of its continuing intent to
extinguish such claims." Agencies' supplemental reply brief, p. 3. We
discuss below what bearing we think Congress' action in 1984 has on the
issues here, after we analyze the two major provisions on which the
Agencies relied.
ANALYSIS
I. WHETHER PUBLIC LAW 97-92 BARS PAYMENT OF THE STATES' CLAIMS
The plain language of Public Law 97-92
Public Law 97-92 was the continuing appropriations resolution for the
period December 15, 1981 through March 31, 1982. /7/ Continuing
resolutions are generally stop-gap measures intended to keep existing
federal programs temporarily functioning after the expiration of
previous budget authority, where Congress cannot agree on a regular
appropriations bill. See, e.g., 58 Comp. Gen. 530 (1979); S.REP. No.
581, 97th Cong., 2d. Sess. 1 (1982).The primary purpose of a continuing
resolution is to establish what amounts the government can spend during
the period the continuing resolution is in effect. Id. Thus, Public Law
97-92 provides, in pertient part:
Resolved . . . That the following sums are appropriated, for the
several departments, . . . and other organizational units of the
Government for the fiscal year 1982, and for other purposes, namely:
(9) SEC. 101(a)(1) Such amounts as may be necessary for projects or
activities (not otherwise specifically provided for in this joint
resolution) for which appropriations, funds, or other authority would be
available in the following appropriations Acts:
* * *
Departments of Labor, Health and Human Services, and Education and
Related Agencies Appropriation Act, 1982 (H.R. 4560);
* * *
(2) Appropriations made by this section shall be available to the
extent and in the manner which would be provided by the pertinent
Appropriation Act.
(emphasis added)
To identify which appropriation act provisions controlled, subsection
101(a)(3) provided basically that, it the Houses had passed different
versions of an Act, as of December 15, 1981, the lesser amount or more
restrictive authority would control, and that an Act reported to a House
would be deemed to have passed that House.
Versions of the fiscal year 1982 HHS appropriations bill, H.R. 4560,
had both passed the House of Representatives and been reported to the
Senate floor by December 15, 1981, although the reported bill had not
passed the Senate. Both versions of H.R. 4560 contained the following
provision:
Notwithstanding section 306 of Public Law 96-272 or section 1132 of
the Social Security Act, no payment shall be made from this or any other
appropriation to reimburse State or local expenditures made prior to
October 1, 1978, under titles I, IV, X, XIV, XVI, XIX, or XX of the
Social Security Act unless a request for reimbursement had been
officially transmitted to the Federal Government by the State within one
year after the fiscal year in which the expenditure occurred.
(emphasis added)
The Agencies contended that Public Law 97-92 enacted this provision
as permanent law. In support of this position, the Agencies relied
primarily on the "plain language" of the provision and the general
proposition that Congress can amend substantive legislation by including
suitable language in appropriations bills.
(10) The States did not dispute the limit's continuing applicability
to 1982 funds. Nor did the States dispute the general proposition that
Congress can enact permanent legislation in an appropriations act, and,
indeed, this proposition is well-settled. See, e.g., United States v.
Dickerson, 310 U.S. 554, 555 (1940), United States v. Will, 449 U.S.
200 (1981); City of Los Angeles v. Adams, 556 F.2d 40, 48-49 (D.C.
Cir. 1977). /8/
That Congress can accomplish a certain result, however, does not mean
that Congress has done so in any particular instance. Comptroller
General decisions indicate that the general rule is that a provision
contained in an annual appropriations act is not to be construed to be
permanent legislation unless the language used or the nature of the
provision renders it clear that such was the intention of Congress.See,
e.g., 32 Comp. Gen. 11 (1952); 36 Comp. Gen. 434 (1956).
For their position that Congress unambiguously intended to amend the
substantive limitations on pre-1979 claims in section 306, the Agencies
primarily relied on the wording of the above-quoted provision of H.R.
4560 that "no payment shall be made from this or any other
appropriation." The States' response was basically that, regardless of
what effect this provision would have had if H.R. 4560 had been enacted,
Public Law 97-92 cannot be read as creating a permanent bar to the
States' claims because it refers to H.R. 4560 solely as a source to
define the manner and extent to which funds are available in fiscal year
1982.
Based on our analysis of the language of Public Law 97-92, we
conclude that the Agencies' interpretation is unsupportable, since it
totally ignores the language of section 101(a)(1). Indeed, the primary
argument the Agency advanced in support of its position was based on
language from external sources (such as a statement made by the Court of
Appeals in the Connecticut v. Schweiker case) to the effect that Public
Law 97-92 had incorporated H.R. 4560 by reference. Thus, the Agencies
argued, we should find that Public Law 97-92 did not merely "refer to"
H.R. 4560, as the States argued, but actually "enacted" its terms
into
law. We see nothing in the wording of Public Law 97-92 which supports
this view. But, in any event, whether Public Law 97-92 incorporated
H.R. 4560 by reference or merely referred to it, the point is that the
purpose for doing (11) so was to determine what HHS projects or
activities would be funded and to what extent and in what manner
"appropriations made by" section 101 would be available. Clearly,
the
only appropriations "made by" section 101 were appropriations "for
the
fiscal year 1982." Thus, we see no basis in the language of Public Law
97-92 for giving effect to the provisions of H. R. 4560, except with
respect to fiscal year 1982 funds.
What effect should be given to wording in H.R. 4560
The Agencies also argued that we should adopt their interpretation of
Public Law 97-92 because a contrary interpretation would render
meaningless the words "any other appropriation" and "(notwithstanding)
section 306 of Public Law 96-272" in H.R. 4560. This argument again
treats the provision from H.R. 4560 as though it had been directly
enacted into law. Public Law 97-92 provides merely that the
appropriations acts provisions will be used to establish the
availability of fiscal year 1982 funds. To the extent that
appropriations acts provisions are not needed for this purpose, they are
irrelevant. While generally a statute should be construed to give
effect to every word, we know of no principle of law which requires that
every provision of an unenacted bill be given effect when that bill is
merely used as a source for terms and conditions to govern an interim
appropriation. /9/
Moreover, even if H.R. 4560 had been directly enacted, it is not
clear that the words the Agencies relied on should be interpreted as
amending section 306 by establishing a permanent bar to the States'
claims. The words "any other appropriation" could refer simply to
any
other appropriation for fiscal year 1982. /10/ Moreover, the words
"(notwithstanding) section 306 of Public Law 96-272" are just as
necessary to insure the validity of a provision limiting payment from
one year's appropriations as for a more (12) permanent limit. Section
306(b)(3); See Connecticut v. Schweiker. Indeed, the use of the words
"(notwithstanding) section 306" is more consistent with the States'
position that Congress intended all of section 306 to remain in full
force and effect, than with the Agencies' position that Congress
intended to permanently amend the filing limits in section 306(b)(3).
/11/
What the legislative history shows
As noted above, the Agencies' interpretation is in conflict with the
actual language of section 101(a). In the absence of any ambiguity in
the language, courts will not generally refer to extrinsic aids to
determine congressional intent. See, e.g., Maine v. Thiboutot, 448 U.
S. 1 (1980). For the sake of completeness, however, we discuss here the
legislative statements the (13) Agencies cited in support of their
position. In general, we found these statements to be ambiguous, taken
out of context, and of very little weight as evidence of congressional
intent.
We first note that the Agencies cited nothing in the events or
statements directly surrounding the enactment of Public Law 97-92 to
support their position. The Agencies first cited a statement from the
report of the House Appropriations Committee on H.R. 4560 that that
measure "might, under some circumstances be construed as changing
existing law." Agencies' brief, p. 23, citing H.R. REP. No. 251, 97th
Cong., 1st Sess. 126-27 (1981). This statement is both too ambiguous
and too general to be useful as evidence of intent here. It does not
specify how the provision would be read as changing existing law, nor
whether any change should be considered permanent. It does not even
state that the provision should be construed as changing existing law.
Moreover, it at most suggests that, if H.R. 4560 had been directly
enacted, it might have had some effect beyond fiscal year 1982. Since
that event did not occur, the statement would not be definitive even if
it were less ambiguous than it is.
The other legislative statements on which the Agencies relied were
made subsequent to the enactment of Public Law 97-92 and, therefore,
carry little weight in determining the intent of that law. The
conference report on section 136 of Public Law 97-276 (which we discuss
in detail below) referred to the Connecticut v. Schweiker case, noting
that the government's appeal rights had not yet expired, and stated:
The language agreed to is not intended to prejudice the outcome of
this court case either on behalf of the government or for the States.
The position of the Congress on this issue has already been amply
expressed through its action on the fiscal year 1980, 1981 and 1982
appropriations bills and related continuing resolutions.
The Agencies focused on the second of these sentences and argued:
"Past appropriations measures would of course have no continuing
relevance had they not created permanent law on the issue." Agencies'
post-hearing memorandum, p. 4. We do not think that this is a necessary
conclusion since such measures do have continuing effect on the
appropriations to which they refer. But the major difficulty with the
Agencies' reliance on this sentence is that it ignores the preceding
sentence. The better reading of the report is that the conference
committee wanted to ensure that its actions would not affect the pending
litigation and that the effect of the previous measures would be
determined without reference to subsequent actions of Congress. In
other words, the Committee (14) wanted to preclude the parties to the
litigation from doing what the Agencies would have us do here, i.e., use
congressional action in 1982 to interpret its earlier actions.
Moreover, even viewing the statement regarding the previous actions in
isolation would not lead to any particular result. Some of the referred
to bills or acts clearly had no permanent effect and the various bills
were not even consistent in what time limit would apply.
The Agencies also referred to language about Public Law 97-92 in a
1982 Senate Appropriations Committee report. Here, again, the
statements referred to were post-enactment statements taken out of
context. The Agencies described what the report did as follows:
The Senate Appropriations Committee commented that the Court of
Appeals in Connecticut v. Schweiker "gave inadequate weight" to the
filing limitations in P.L. 97-92. In the Committee's view, P.L. 97-92
required that any claim for a pre-October 1, 1978 expenditure not filed
within a one-year period "be permanently extinguished."
Agencies' brief, p. 26, citing S.REP. No. 581, 97th Cong., 2d Sess.
14 (1982).
The committee report actually states: "The Committee is advised that
the court in its ruling gave inadequate weight to effect on these claims
of language that appears in identical form in the House and Senate
versions of . . . H.R. 4560" (emphasis added). The report then quotes
the H.R. 4560 provision and states:
The Committee recommends this section of the bill (i.e., section 133
of H.J. Res. 599) to clarify the congressional intent . . . that the
claims in question are to be paid only if they had been formally filed
with HHS within 1 year. . . . If a claim does not meet this criterion,
it is to be permanently extinguished.
If the Committee recommendation had been followed, this statement
might provide some evidence (although of little weight) about what
Congress intended in Public Law 97-92. But, as we discuss below,
section 133 was rejected by the Senate (and not included in the House
version of the bill). In view of this, the report language cannot be
considered reliable as evidence of what Congress intended in Public Law
97-92.
Thus, even if the language of Public Law 97-92 were ambiguous, which
it is not, we would not find any clear intent on the part of Congress to
bar payment of the States' claims.
(15) Continuing resolutions and permanent legislation
In their arguments on the effect of Public Law 97-92, the States
pointed out that this was a continuing resolution and that such measures
are usually hastily enacted, stop-gap measures. The States also said
that, while Congress could enact permanent legislation in an
appropriations act, the States knew of no instance where a court found
that Congress had done so where the provision involved was not a
provision of the appropriations law which had been enacted but was a
provision in an unenacted bill which contained terms and conditions to
be followed in spending money for a particular year. Tr., p. 127;
States' reply brief, p. 10.
The Agencies apparently misunderstood this argument to be that
Congress could not enact permanent legislation in a continuing
resolution (which we agree would be an incorrect position). In a
post-conference submission, the Agencies pointed to a Comptroller
General decision (62 Comp. Gen. 54 (1982)) in support of the proposition
that Congress can make substantive amendments through enactment of a
continuing resolution, and had done so in section 140 of the continuing
resolution here--Public Law 97-92. The Agencies also said:
"Significantly, the operative language of futurity in section 140
closely parallels the time-bar provisions of H.R. 4560 which were also
incorporated in Public Law 97-92." Agencies' post-hearing memorandum, p.
2.
The Agencies' reliance on this Comptroller General decision is
misplaced. Indeed, examination of the decision points up the weaknesses
in the Agencies' position here. Unlike the provision in H. R. 4560,
section 140 (which precluded use of funds to increase federal judges'
salaries) was directly enacted as a section of Public Law 97-92.
Section 140 was not merely referred to, or incorporated by reference, as
a source of terms and conditions for fiscal year 1982 funds.
Moreover, the Comptroller General found a number of factors
supporting the interpretation of section 140 as permanent legislation
which are not present here. While some of the wording of section 140,
referring to "funds appropriated by this joint resolution or by any
other Act," somewhat parallel the wording of H.R. 4560, section 140 also
contained other language indicating futurity. /12/ Other factors (16)
present to aid in interpreting section 140 included that the provision
would have had no legal effect at all if it were not interpreted as
permanent legislation and that the one statement in the legislative
history explaining section 140 clearly indicated that it was intended to
have future effect. These factors are simply not present here.
Thus, this Comptroller General decision does not support the
Agencies' position and, in fact, emphasizes how weak that position is.
In summary, the Agencies' position on the effect of Public Law 97-92
conflicts with the plain language of that law and is unsupported by any
persuasive evidence of congressional intent. Having concluding this, we
next examine the other appropriations law relied on by the Agencies.
II. WHETHER SECTION 136 OF PUBLIC LAW 97-276 BARS PAYMENT OF THE
STATES' CLAIMS
The proposed committee amendment
As noted above, the Court of Appeals issued its decision in the
Connecticut v. Schweiker case on July 27, 1982. During the closing days
of September 1982, Congress was considering a continuing appropriations
resolution for fiscal year 1983. On September 22, the same day that the
Court of Appeals refused to rehear the Connecticut v. Schweiker case en
banc, the House adopted a continuing resolution that did not refer to
any time limits for Social Security Act claims. 128 Cong. Rec. H7395
(daily ed. Sept. 22, 1982). The version of the continuing resolution
reported by the Senate Appropriations Committee the following day,
however, did contain the following committee amendment (at section 133):
Notwithstanding section 306 of Public Law 96-272 or section 1132 of
the Social Security Act, no payment shall be made, in or with respect to
any fiscal year, under this or any other Act, and no court shall award
or enforce any payment from amounts appropriated by this or any other
Act, to reimburse State or local expenditures made prior to October 1,
1978, under title I, IV, X, XIV, XVI, XIX, or XX of the Social Security
Act, unless a request for reimbursement had been officially transmitted
to the Federal Government by the State within one year after the fiscal
year in which the expenditure occurred.
H.J. Res. 599, 97th Cong., 2d Sess 31 (Sept. 23, 1982).
(17) The accompanying report of the Senate Appropriations Committee
explained that the purpose of section 133 was to clarify that, if a
claim had not been filed within the time limit, "it is to be permanently
extinguished." S. REP. No. 581, 97th Cong., 2d Sess 14 (1982). /13/
The Senate reaction to the committee amendment
On the floor of the Senate, a number of Senators spoke in opposition
to the committee amendment, proposing that it be struck from the bill.
Senator Heinz noted that he intended to raise a point of order against
the committee amendment because it was legislation on an appropriations
bill, but also objected to extinguishing "the right of States to be paid
money that they are owed by the Federal Government." 128 Cong. Rec.
S12487 (daily ed. Sept. 29, 1982). His strongly worded remarks included
statements that the committee amendment "repudiates the basic
Federal-State agreement at the heart of social security matching
programs" and that this was "outrageously unfair." Id. at S12488.
During his remarks, he referred to the $382 million at stake in the
Connecticut v. Schweiker litigation, indicating that the committee
amendment was an attempt to avoid the will of the court, but he also
submitted a schedule of "States with retroactive social security
claims," which included other States in addition to those involved in
court suit. Id. Senator Moynihan contrasted the Congress' "carefully
considered action in adopting section 306 in 1980" with the committee's
action of adding section 133 without any notice to any of the affected
interests. He referred to the pending litigation and to the committee
amendment as one which would "wipe out vested legal rights without any
process"; he also mentioned moneys owed to "20 States, much of it
to 10
States only." Id. at 12489. Senator Bradley likewise mentioned the
inappropriateness of amending the Social Security Act through a
continuing resolution and said that the matter should be brought up
before the Committee on Finance "particularly when what is involved are
(18) the legitimate claims of 10 States to date, and potentially 20
States in the next year." Id.; see also Remarks of Senators Danforth,
D'Amato and Brady in support of deleting the committee amendment, Id.
at S12498-99; 128 Cong. Rec. S12912 (daily ed. Sept. 30, 1982).
Senator Schmitt, the only Senator who rose on the floor in support of
the committee amendment, noted that there was an argument about whether
the claims were valid and stated:
However, what is important is that we make clear to the courts that
Congress has already expressed its will on this issue. I think it is
important . . . to recognize that these claims . . . could go as high as
$561 million . . . . The Members of this body should understand that
there is clearly a choice in the present budgetary climate between
paying these dubious back claims and funding the vital and unfortunately
vulnerable health and education program in this bill . . . .
The reason for this is that there is a choice of paying that cost
that would count against the labor, health, human services, and
educational discretionary ceiling for fiscal year 1983, and we are
already at that ceiling.
He expressed concern for the effect this would have on discretionary
programs. He then described some of the history of the relevant
provisions, and stated: "The committee amendment will make clear the
intent of Congress that the Treasury not pay claims for services
rendered before October 1, 1978." Id.
The compromise amendment
In response to Senator Schmitt's concern that the money to pay the
claims would have to come out of the discretionary funds for 1983,
Senator Heinz proposed that Congress adopt a repayment schedule. Id.
Senator Schmitt did not agree to this immediately, but the Senate set
the matter aside while an effort was made to compromise the issue. The
resulting compromise was a substitute for the committee amendment. The
substitute amendment, which ultimately became section 136 of Public Law
97-276, contained the same words as the committee amendment, but with
the four additions noted in underlining in the following quotation of
the provision:
Notwithstanding the decision of the United States Court of Appeals
for the District of Columbia Circuit in Connecticut against Schweiker
(No. 81-2090, July 27, 1982), section 306 of Public Law 96-272, or
section 1132 of the Social Security Act, no payment shall be (19) made,
in or with respect to any fiscal year prior to fiscal year 1984, under
this or any other Act, and no court shall award or enforce any payment
(whether or not pursuant to such decision) from amounts appropriated by
this or any other Act, to reimburse State or local expenditures made
prior to October 1, 1978, under title I, IV, X, XIV, XVI, XIX, or XX of
the Social Security Act, unless a request for reimbursement had been
officially transmitted to the Federal Government by the State within one
year after the fiscal year in which the expenditure occurred. After
fiscal year 1983, any payment made to reimburse such State or local
expenditures required to be reimbursed by a court decision in any case
filed prior to September 30, 1982 shall be made in accordance with a
schedule to be established under the Social Security Act, over fiscal
years 1984 through 1986.
Senator Schmitt, who submitted the substitute, explained it as
follows:
(This) amendment merely makes it possible for the ongoing litigation
involving back claims to proceed without prejudice to any current or
future decision. It will, however, preclude the payment for those
claims until a decision has been met through the courts, and then
further authorizes that if the decisions are adverse to the Government
there will be a schedule of payments beginning in fiscal year 1984
through fiscal year 1986.
128 Cong. Rec. S12498 (daily ed. Sept. 29, 1982).
In response to a question from Senator Bradley about whether the
amendment would prejudice the Connecticut v. Schweiker decision "or any
other court decision," Senator Schmitt clarified that it would not. Id.
Senator Heinz agreed that the compromise amendment would not prejudice
any court cases and added "nor is this amendment intended in any way to
raise a question about the validity of any of the pre-1978 claims filed
by the States." Id.
The compromise amendment was agreed to by the Senate. Id. In
conference, the substitute amendment was agreed to and the accompanying
report explained the provision by referring to the Connecticut v.
Schweiker litigation and stating:
As of the date of this conference, the appeal rights of the
government in the case have not yet expired, and there remains the
possibility of Supreme Court review or other (20) action affecting the
eventual payment by the government of these sums. The language agreed
to is not intended to prejudice the outcome of this court case either on
behalf of the government or for the States. The position of the
Congress on this issue has already been amply expressed through its
action on the fiscal year 1980, 1981, and 1982 appropriations bills and
related continuing resolutions. The amendment is, however, intended to
prohibit payment of any of these claims during fiscal year 1983. If the
courts determine that payments must be made, the language agreed to
provides a procedure for orderly payment of claims over a 3 year period
beginning in fiscal year 1984.
CONF. REP. H. REP. 914, 97th Cong., 2d Sess (1982), 128 Cong. Rec. H
8245, 8252 (daily ed. Sept. 30, 1982).
On the floor of the House, Represenative Conte explained what the
conference did, commenting:
Probably the amendment that has caused the most interest concerns the
matter of prior year State social security claims. This is a
complicated matter with a long history, but I want to make it clear that
this amendment keeps the door open for the States that have obtained a
court decision in their favor.
No money would be provided in fiscal year 1983 while the battle
continues in the courts, but provided they obtain a favorable judgment,
the States would be eligible for payments over a 3-year period starting
in 1984.
128 Cong. Rec. H8362 (daily ed. Oct. 1, 1982).
In response to a statement by Representative Rostenkowski, seeking
clarification of the purpose of the amendment, Representative Natcher
identified the claims that were involved and said:
Language prohibiting payment of these claims was included in the
1980, 1981, and 1982 appropriations bills. As you know the validity of
these appropriations limitations is at the heart of the case currently
before the courts. This language does not prejudice the outcome of this
case nor does it affect payment of any claims for State expenditures
after fiscal year 1978. It merely provides that if a final judgment is
rendered against (21) the Government that payment of the judgment will
be spaced out over a 3-year period of time beginning in fiscal year
1984.
Id. at H8368. /14/
On October 1, 1982, the conference version of the continuing
resolution was passed by both Houses, and signed by the president as
Public Law 97-276.
The parties' arguments about the wording of section 136
For their position that section 136 contained no bar to payment of
their claims, the States pointed to the words "prior to fiscal year
1984." The States said that these words clearly indicated that the
payment prohibition in section 136 had no relevance for appropriations
made for periods after fiscal year 1983. In their initial submissions
on the issue, the Agencies did not specifically address the effect of
these words but relied instead on the legislative history of section
136. At the conference, however, the Agencies argued that their view
that section 136 did contain a permanent bar was supported by a
comparison of the wording of section 136 with the committee version it
replaced and by the "grammar" of section 136.
As mentioned above, the amendment which ultimately became section 136
differed from the proposed committee amendment by the four additions of
language shown by the following underlining:
Notwithstanding the decision of the United States Court of Appeals
for the District of Columbia Circuit in Connecticut against Schweiker
(No. 81-2090, July 27, 1982), section 306 of Public Law 96-272, or
section 1132 of the Social Security Act, no payment shall be made, in or
with respect to any fiscal year prior to fiscal year 1984, under this or
any other Act, and no court shall award or enforce any payment (whether
or not pursuant to such decision) from amounts appropriated by this or
any other Act, to reimburse State or local expenditures made prior to
October 1, 1978, under title (22) I, IV, X, XIV, XVI, XIX, or XX of the
Social Security Act, unless a request for reimbursement had been
officially transmitted to the Federal Government by the State within one
year after the fiscal year in which the expenditure occurred. After
fiscal year 1983, any payment made to reimburse such State or local
expenditures required to be reimbursed by a court decision in any case
filed prior to September 30, 1982 shall be made in accordance with a
schedule to be established under the Social Security Act, over fiscal
years 1984 through 1986.
In their post-conference submission, the Agencies explained their
argument on the wording of section 136 as follows:
While the states have focused on the words "prior to fiscal year
1984" in an effort to argue that Congress merely sought to avoid payment
in fiscal year 1983, that reading ignores the fact that these words
modify only the first independent clause of the first sentence -- i.e.,
"no payment shall be made . . . prior to fiscal year 1984 . . . ."
The
words "prior to fiscal year 1984" do not modify and indeed have nothing
to do, grammatically or otherwise, with the second independent clause of
the first sentence, which provides that " no court shall award or
enforce any payment . . . from amounts appropriated by this or any other
Act, to reimburse state or local expenditures made prior to October 1,
1978 . . ., unless a request for reimbursement has been officially
transmitted to the Federal Government by the State within one year after
the fiscal year in which the expenditure occurred." The statutory
injunction against enforcement of payment by any court serves
effectively to extinguish the claims of the states -- just as surely in
the final version of the provisions as in its original form since the
four additions to the original language in no way affect that aspect of
the statute.
pp. 7-8.
At the conference, the Agencies explained the last sentence of
section 136 as follows:
. . . the Senators were principally concerned that no pending
litigation would be interfered with.They felt it necessary to add the
provision that, after fiscal year 1983, any payment made to reimburse
such State and local expenditures required to be reimbursed by (23) a
Court decision in any case filed prior to (September) 30, 1982, shall be
made in accordance with a schedule . . . .
So that that last sentence . . . which gets the Department out from
underneath the onerous one-time judgment of $382 million, plus the $7
million or so involved in the Missouri case, . . . makes it clear that
those two pieces of litigation, plus any others that either the
Department or the Congress might not have known about at the time, could
proceed to their conclusion.
. . . If it was not pending at the time, then, forget it.
Tr., pp. 71-72.
Our analysis of the wording of section 136
The Agencies' proposed reading of section 136 is one which would not
be readily apparent either to Congress in considering the provision or
to someone trying to apply it. As the States noted, the Agencies
themselves did not suggest this reading until the conference, after much
of the briefing had been submitted. We see nothing in the wording of
section 136 which indicates that, by prohibiting the courts from
providing judicial relief "from amounts appropriated by this or any
other act," Congress intended to permanently bar payment by the
Department of the States' claims.
Moreover, we know of no precedent for concluding that a provision
restricting judicial remedies is tantamount to a provision barring
payment altogether. /15/ When questioned at the conference about
whether the second clause applied to the Department as well as the
courts, counsel for the Agencies responded:
(24) Well, I have not researched the question of -- and I don't know
whether there is any case law on the question of the meaning which would
be ascribed to a phrase such as this: "No court shall award or enforce
any payment."
My horseback view of it is that, what it means is that there is no
entitlement to such a payment. And I believe that, in other contexts,
it would be interpreted that way.
Tr., p. 102.
No further analysis of this proposition was presented in the
Agencies' post-hearing memorandum, which merely stated conclusorily:
"Even if Public Law 97-92 were ineffective in barring the claims, the
elimination of any judicial remedy achieves the same result." p. 8.
Even assuming that the Agencies' view might have some validity if the
second clause of the first sentence of section 136 stood alone, giving
that effect to the clause as it appears in section 136 does not make
sense. As the States pointed out, the Agencies' reading presumes that,
having just said that payments could not be made "prior to fiscal year
1984," Congress would in the immediately following text effectively bar
payments forever. Moreover, this reading is in conflict with the
workding of the last sentence of section 136. If the clause concerning
judicial remedies barred payment by the Department of all claims not
meeting the time-limit, the last sentence would have logically been
worded as an exception to that bar. Instead, the last sentence begins
with the following words: "After fiscal year 1983, any payment made . .
. ." In view of this language, we think the States' view that both
clauses of the first sentence have no effect beyond payments made in
fiscal years prior to fiscal year 1984 is correct.
We also think that the Agencies ascribed unwarranted significance to
the fact that in drafting the compromise version of section 136 the
Senators did not delete any language in the previous provision, but
merely added to it. The question is what effect did the additions have.
We think that the addition of the words "prior to fiscal year 1984"
clearly transformed the payment prohibition in the first clause from one
which could be read as having permanent effect to one which had only a
limited effect. The Agencies' position is based solely on implication
from the failure of the drafters to add the same phrase to the second
clause, or to alter the punctuation of the provision. We see nothing in
the language of section 136 which makes this implication a resonable
one, much less a necessary one. Moreover, the Agencies' reading is
based on (25) its view of what the drafters intended to accomplish
through the added language. As we discuss next, this view is
unsupported by the legislative history.
Finally, we do not agree with the Agencies that the fact that the
last sentence of section 136 establishes a payment schedule only for
claims covered by a court case filed by September 30, 1982, means that
all other pre-1979 claims not filed within the one-year period are
extinguished. While section 136 does not explicitly provide for payment
of these claims, neither does it specifically prohibit payment of them
after fiscal year 1983. As mentioned above, the general rule is that
language in an appropriations act will not be construed as permanent
legislation, absent a clear intent. Since there are other possible
reasons why Congress would not mention non-court claims (such as the
fact that the bulk of the claims were covered by court cases), the
omission of any mention of a schedule for paying non-court claims cannot
be considered as evidence of a clear intent to extinguish such claims.
Thus, we conclude that there is no basis in the language of the
statute for the reading advanced by the Agencies.
The legislative history of section 136
The States pointed to the strong reaction in the Senate, opposing the
committee amendment, in support of their position that section 136
contained no permanent bar. In response, the Agencies' raised several
arguments based on the legislative history of section 136, which may be
summarized as follows:
* That Congress was principally concerned with not interfering with
the pending litigation and distinguished between the claims of States
involved in the litigation (since their rights had "vested") and other
States which had claims but had not filed in court by September 30,
1982.
* That Congress understood that it was enacting permanent legislation
in section 136.
* That Congress intended to clarify its intent in previous
legislation to bar payment of the State's claim.
Whether Congress intended to distinguish court and non-court claims
The Agencies' first argument is not so much inaccurate as it is
incomplete. Although avoiding interference with the court cases (26)
may have been the "principal" intent behind the compromise, this does
not mean that it was the only intent. The conference report on the
compromise provision does state that the language agreed to is not
intended to prejudice the outcome of the pending litigation, and the
remarks on the House floor when the conference report was being
considered also focus on a concern that the action not interfere with
the litigation. But in stating what the intent of the provision is, the
conference report says that "the amendment is, however, intended to
prohibit payment of any of these claims during fiscal year 1983." This
statement is more consistent with the States' view that there was no
payment prohibition in section 136 which had effect after fiscal year
1983. Moreover, even if this statement is read as pertaining only to
claims already being litigated, nothing in it indicates that Congress
intended to pay only these claims after fiscal year 1983. At most,
these statements indicate a silence on the non-court claims; there is
certainly no statement which clearly shows an intent to extinguish these
claims.
On the other hand, the actions and statements in the Senate strongly
indicate that this was not the intent of the compromise. In discussing
the compromise amendment which became section 136, Senator Heinz (who
was one of the Senators involved in developing the compromise language)
commented that the amendment not only would not prejudice the court
cases but was not intended "in any way to raise a question about the
validity of any of the pre-1978 claims filed by the States." Id.
Senator Heinz had submitted a schedule clearly showing claims other
than those involved in the Connecticut v. Schweiker litigation, so he
was aware that other claims existed. Moreover, since other Senators
specifically referred, in their remarks on the Senate floor, to more
claims than those involved in court suits, we think that the Agencies
unjustifiably relied on a statement by Senator Danforth (which was
limited to the Connecticut v. Schweiker claims) to support the view that
the full Senate was concerned only with the pending litigation.
Moreover, we see no basis in the Senators' remarks for drawing a
distinction between court and non-court claims with respect to whether
the Senators considered the rejected committee amendment as unfair.
Even if all the Senators did not consider the States' rights to payment
to have "vested" if no suit had been filed, it is clear that some
of the
Senators thought that the States were entitled to payment for any
allowable costs they had incurred under the public assistance programs
and claimed within the section 306 time limits. The only evident
distinction is section 136 between court and non-court claims is with
respect to whether payment had to adhere to the specified schedule.
(27) The Agencies' view that Congress would distinguish for purposes
of entitlement to payment between claims where suit had been filed and
those where it had not attributes an arbitrariness to Congress which we
would not. Some of the States involved here, such as Massachusetts, had
clearly filed some claims within the section 306 time limits and the
only reason they had not gone to court was that the Agencies delayed in
making their disallowance decisions. It is unlikely that Congress would
base entitlement to payment on actions beyond a state's control.
Moreover, there is another reasonable explanation for why Congress would
specifically provide a schedule only for payment of claims where suit
had been filed prior to September 30, 1982. For those States, arguably
a court could, under its equitable jurisdiction, award payment from
prior appropriations, as the Court of Appeals did in Connecticut v.
Schweiker. Payment out of past, rather than current appropriations,
would arguably be more disruptive to the federal Treasury. Also, the
bulk of the claims were covered by the court litigation so they would
cause the greatest budgetary concern.
There are some ambiguities in the legislative history; read as a
whole, however, we think it shows that the compromise was reached in
part to avoid the result the Agencies advocate here--permanently
extinguishing claims for which the States were otherwise entitled to be
paid. The other expressed purpose of the compromise--to avoid the
problem raised by Senator Schmitt of exceeding the applicable budget
authority for fiscal year 1983--is perfectly consistent with the States'
reading of section 136. Indeed, the proposed resolution of the
conflict, expressed by Senator Heinz, was to establish a payment
schedule, and nowhere is there any mention that part of the compromise
ws to extinguish those claims not included in the pending litigation.
Indeed, since Representative Natcher described the compromise amendment
as "merely" providing a payment schedule for payment of any court
judgment, the implication is that it did not extinguish other claims.
Whether Congress intended section 136 to be substantive legislation
Nor do we think that the legislative history of section 136 supports
the Agencies' view that Congress intended that section to be substantive
legislation. The Agencies pointed to remarks by Senator Bradley, on the
Senate floor (objecting to the inclusion of permanent legislation in an
appropriations bill), in support of the proposition that Congress
understood it was amending substantive law. But Senator Bradley's
comments pertained to the proposed section 133, not to the compromise
section 136 language. Indeed, given the strongly worded opposition by
Senator Bradley and others to including substantive legislation in a
continuing resolution, it is more reasonable to assume that they thought
the compromise wording eliminated this problem.
(28) Whether Congress intended in section 136 to clarify that previous
legislation barred payment
The Agencies also argued that the legislative history of section 136
showed that Congress thought it had previously enacted a bar to payment
the States' claims and wanted to clarify this by enacting section 136.
For this argument, the Agencies relied primarily on the statement in the
conference report that the intent of Congress had already been amply
expressed in prior appropriations bills. We have already discussed
above why this statement cannot be read as implying that the intent
expressed in those bills was to permanently extinguish claims; in
context, this statement means no more than that Congress did not intend
its actions in enacting section 136 to be considered as having any
bearing on how the prior provisions were interpreted.
There are some stateent in the Senate Appropriations Committee report
on the committee amendment to the effect that that committee thought its
amendment would "clarify" an intent to permanently extinguish the
claims. But these statmenets cannot be considered as having any
substantial weight in interpreting the compromise amendment, which was
adopted in part because of strong objections to the committee amendment.
This is not a case where a committee's statements should be accorded
grater weight than an individual congressman's remark. Not only was the
committee's position effectively rejected, but, also, the record shows
that the committee's action was not a thoughtful one but rather was a
hasty one, based on last minute advice. Finally, as noted above, with
respect to interpreting congressional intent in the previous
legislation, the committee report is a post-enactment statement.
Thus, we conclude that section 136 of Public Law 97-276 does not
permanently bar payment of the States' claims. We next address the
parties' arguments raised in connection with the Deficit Reduction Act
of 1984.
WHETHER CONGRESS HAS RATIFIED A LONGSTANDING INTERPRETATION THAT THESE
CLAIMS ARE BARRED
The States argued that their position here was supported by the
action of the Conference Committee on the bill that became the Deficit
Reduction Act of 1984. The relevant House bill (H.R. 5394) contained a
provision establishing a schedule for court-ordered reimbursement of
claims. A tax measure pending in the Senate (H.R. 2163) contined the
identical provision (section 998), but with a rider. The rider was
described in the conference report on the Deficit Reduction Act
(redesignated as H.R. 4170) as follows:
(29) Also prohibits reimbursement for pre-fiscal year 1979 claims,
whether asserted as an adjutment to prior years costs or otherwise, if
not filed by May 15, 1981 (unless they are identified in the . . .
specified court decrees).
H.R. REP. No. 861, 98th Cong., 2d Sess. 1405 (1984). /16/
The conference report noted "disagreement as to whetehr the 1983
continuing resolution (Public Law 97-276) had the effect of permanently
overriding the provision in P.L. 96-272 (section 306) that requires
reimbursement for any adjustments to prior years costs (and other
specified payments), regardless of when they are filed, thereby
extinguishing all claims for pre-fiscal year 1979 expenditures unless
they were filed within one year . . . ." Id. at 1404. The conference
report does not say specifically how its action resolves this
disagreement. The action taken by the conference committee was to
follow the House bill, which did not contain the rider provisions but
merely provided a schedule for court-ordered reimbursement.
The Agencies said that Congress' failure to take action by including
the language from the Senate bill can have no significance whatever,
under well-established rules of statutory construction. Agencies'
supplemental brief, p. 1. The Agencies went on, nonetheless, to argue
that Congress was aware of the "long-held, well-established and
unwaivering administrative interpretation by HHS to the effect that
pre-1979 claims are barred from payment" and that, under these
circumstances, the failure to revise or repeal that interpretation
indicates congressional agreement with it. Id., p. 2.
We agree that no definitive conclusion can be drawn from the
Conference Committee's action. The conference report noted the
disagreement about whether the 1983 continuing resolution (Public Law
97-276) had the effect of permanently overriding the provision in Public
Law 96-272 (section 306) that requires reimbursement for any adjustments
to prior year's costs, regardless of when they are filed. But,
unfortunately, the conference report does not specify how its action of
adopting the House provision resolves that disagreement. The action
itself is somewhat ambiguous since it is possible that the Conference
Committee thought that it did not need to adopt language specifying that
these claims could (30) not be reimbursed because it thought that this
had already been accomplished in Public Law 97-276. On the whole,
however, we think that it is more reasonable to read the committee's
actions as a further rejection of a provision which would have more
clearly extinguished the States' claims.
Adopting the Senate language would not have been a complete rejection
of the States' position. Since the Senate provision would have
specified that pre-1979 claims could be paid if they were filed by May
15, 1981, it represented a "compromise" rather than a complete victory
for either side of this dispute. Yet, the Agencies did not deny that
they had advocated aodption of the provision and the States had opposed
it, so we think it somewhat disingenuous of the Agenies to now argue
that rejection of the provision is meaningless.
Further, we do not think that Congress' failure to take some action
to specify that the States' claims should be paid somehow shows that
Congress agreed with a longstanding agency interpretation and,
therefore, is evidence that that interpretation is correct. The
Agencies acknowledged that their position was based on different
statutory or regulatory provisions at different times. Agencies'
supplemental brief, p. 2. Indeed, their position was unclear and
inconsistent even in their initial briefs to the Board, and, as we
mentioned above, the Agencies' specific interpretation of the wording of
section 136 was not advanced until the Board's conference, held after
the Deficit Reduction Act had been passed. Moreover, the only time that
a Departmental interpretation of any of the appropriations acts
provisions was formally issued was the interpretation of the 1981
appropriations in section 95.11, which was struck down in Connecticut v.
Schweiker. The effect of Public Law 97-92 was also at issue in that
litigation and Congress specifically chose not to take sides in that
dispute. With respect to the dispute over section 136 of Public Law
97-276, we do not think that Congress' failure to somehow specially
"revise or repeal" the Agencies' interpretation that that section
barred
payment of the States' claims can be read as ratifying that
interpretation, under the circumstances.
CONSTITUTIONAL AND EQUITABLE CONSIDERATIONS
Since the plain language and legislative history of the relevant
statutes support the States' poition, we do not need to address at
length the States' other arguments of statutory construction based on
questions of constitutionality and fundamental fairness. Clearly,
however, several aspects of the States' arguments reinforce the position
we have already taken based on the language and history. It is
undisputed that the States traditionally have not been bound by any
filing restrictions in the programs at issues. Prior to 1980 (31) the
statute and regulations permitted the States to receive reimbursement
for any allowable expenditures regardless of how much time had elapsed
between the date of expenditure and the date of filing. The Agencies
suggested that regardless of what reimbursement procedures were
previously in effect under the statute and regulations, those procedures
were changed by Public Laws 97-92 and 97-276. Even though such changes
would be retroactive in effect, the Agencies argued that such changes
were constitutionally permissible because states have no due process
rights (citing South Carolina v. Katzenbach, 383 U.S. 301, 323-24
(1966)) and since a state's right to payment would "vest," if at all,
only at the time the state obtained a final, unappealable judgment. The
Agencies also argued that the claims at issue were "stale" since the
States had not made a claim within one year after the year in which the
expenditures occurred and since an undisclosed percentage of the
expenditures occurred many years ago, in some cases a decade or more
ago.
The States asserted that a retroactive change would raise serious
constitutional problems and that the Board should avoid any such
approach if the disputed statutes are susceptible of another
construction. The states emphasized that the Agencies' filing deadlines
for pre-fiscal year 1979 expenditures would go into effect years after
the filing deadline had expired for even the most recent of the
pre-fiscal year 1979 expenditures.
We agree with the Agencies that there is no clearly established
constitutional right on the part of the States to due process generally.
But we also think that it is significant here that the States operate
the public assistance programs not in their sovereign governmental
capacities but as grantees. The Supreme Court has recognized that
Congress' authority to place conditions on federal grant funds as part
of its spending power is not totally unrestrained and that Congress must
clearly state what it intends.Pennhurst State School v. Halderman, 451
U.S. 1 (1981). The Court there stated: "Though Congress' power to
legislate under the spending power is broad, it does not include
surprising participating States with post-acceptance or 'retroactive'
conditions." Id. at 25. /17/
(32) Regardless of whether there is any constitutional right per se
involved here, we think that Congress at the very least demonstrated an
intent in enacting section 306 that filing deadlines not have
retroactive effect. The Department itself extended the deadline in that
statute to give the states additional time to comply.
Moreover, the fact that Congress rejected the only two provisions
which were expressly described as having the effect of permanently
extinguishing the states' claims is some evidence that at least some
members thought that the States had some right to payment which was
worth protecting.
(33) Finally, we disagree with the Agencies that the States lacked a
reasonable expectation of receiving payment for these expenditures or
that they should be characterized as stale. Traditional reimbursement
arrangements placed no premium on filing of claims within any particular
time frame, and indeed, aside from budgetary planning considerations
(which would favor predictability of filing, not necessarily early
filing), it would appear to be to the Federal Government's financial
advantage (as well as the Agencies' in particular) if the States delayed
making claims for their allowable expenditures. Certainly no state coul
have guessed in 1976 or 1977, for example, that in spite of the
procedures existing at that time, it would have to forfeit reimbursement
for expenditures occurring in that year if those expenditures were not
claimed in the subsequent year. Moreover, even if the States could
somehow have guessed what the future filing rules might turn out to be,
the States still would have had no control over the filing of a
substantial portion of their claims, such as those for retrospective
rate increases, court-ordered payments, and audit exceptions. Finally,
many of the claims here were not paid from fiscal year 1981 funds
because of the Agencies' interpretation of the appropriations law for
that year that was subsequently found to be erroneous in the Connecticut
v. Schweiker decision. Indeed, it appears that some of the claims here
might have been included in the Connecticut v. Schweiker litigation but
for the Agencies' delay in issuing final administrative determnations.
Because of these circumstances, the impact of the Agencies'
interpretation obviously can vary dramatically from state to state, with
no program reason justifying why one state's loss of reimbursement would
be proportionally greater than another's.
In stating this, we note that we are not unsympathetic with the
Agencies' difficulties encountered when, as a result of the deadlines
set in section 306, a number of the states submitted large, retroactive
claims within a relatively short period of time, threatening to disrupt
the program budgets. But we see nothing in the provisions or legisative
history relied on here to support a view that Congress' response to this
problem was to extinguish the claims altogether. Rathr, Congress
enacted a series of provisions prohibiting payment out of specific
appropriations, in effect delaying payment of the claims, and then
established a schedule for paying the bulk of the claims-- those
involved in the litigation. Absent any additional action on the part of
Congress, we see no basis for further delaying payment of these claims.
In summary, basic notions of fairness and equity weigh against the
Agencies' interpretation here.
(34) Conclusion
For the reasons stated above we conclude that neither Public Law
97-92 nor section 136 of Public Law 97-276 permanently barred payment of
the States' claims. Any additional issues of allowability or timeliness
of the claims will be addressed elsewhere. /1/ The States are Louisiana
(Docket Nos. 83-213, 84-18, 84-57, and 84-102), Colorado (Docket
No. 83-217), Massachusetts (Docket Nos. 83-244, -245, -246, and -248),
New York (Docket No. 83-249), Washington (Docket No. 83-256), Virginia
(Docket Nos. 83-260 and -263), Pennsylvania (Docket No. 83-261), Oregon
(Docket No. 83-262), Illinois (Docket No. 83-192), Ohio (Docket No.
83-191), New Mexico (Docket No. 84-36), and Maryland (Docket No.
84-144). Each of the undersigned Board members is Presiding Board
Member in one or more of the appeals and together they constitute the
panels for all of the appeals. /2/ The exceptions were for
court-ordered retroactive payments, audit exceptions, and adjustments to
prior years costs. HHS regulations at 45 CFR 95.4 define these
exceptions. The exceptions also apply to the time limits for pre-fiscal
year 1980 expenditures set out in section 306(b). /3/ For a
discussion of the legislative history of this provision, see Connecticut
v. Schweiker, 684 F.2d 979, 990-994 (D.C. Cir. 1982). /4/ This
decision resolves only whether section 306 is the applicable authority
with respect to the timeliness of the claims at issue; it does not
address whether in fact all of the claims met the time limits or
exceptions of that section. The latter questions will be treated, to
the extent necessary, when the Board disposes of the individual appeals
before it. /5/ The parties disagreed about whether section 95.11
has any continuing validity, after the litigation we discuss below, for
periods after fiscal year 1981. While initially citing section 95.11 as
a basis for some of the disallowances here, the Agencies stated at the
conference that they were no longer relying on that provision "to any
significant degree." Tr., p. 103. We think it sufficient to note that
any continuing validity of section 95.11 would depend on what conditions
or restrictions are applicable to any funds, based on the relevant
appropriations laws. We do not think that section 95.11 can reasonably
be read as itself establishing any time limit. /6/ When we refer
to the Connecticut v. Schweiker decision below, we mean this Court of
Appeals decision, unless otherwise indicated. /7/ It was later
extended to the end of fiscal year 1982. Pub. L. 97-161. /8/ The
question arises initially because there are congressional rules
against including general legislation in appropriations acts. Senate
Rule XVI; House Rule XXI. However, these rules merely subject the
prohibited provision to a point of order and have no effect or
application once the appropriation is enacted. 57 Comp. Gen. 34 (1977);
34 Comp. Gen. 278 (1954). /9/ The Agencies said that we should
give effect to the provision of H.R. 4560 in question here because it
had been agreed to by both Houses and one purpose of a continuing
resolution is to preserve agreements reached in the appropriations
process. The Agencies did not cite any authoritative support for this
proposition, and it conflicts with the language of Public Law 97-92
concerning what effect that continuing resolution gives to the bill
provisions in question. /10/ There is some authority in
Comptroller General decisions for considering these words inconclusive
on the question of whether Congress intended a provision in an
appropriations act to be permanent legislation. See, e.g., Comp. Gen.
decision A-88073, Aug. 19, 1937. /11/ In this regard, the
Agencies relied mistakenly on a statement made by the Court of Appeals
in Connecticut v. Schweiker that if the H.R. 4560 provision had appeared
in the 1981 appropriations act, "there would be no question about the
validity of the limit." 684 F.2d 995. In context, it is evident the
Court was simply referring to the fact that H.R. 4560 contained the
express exemption required by section 306(c). Nothing in the Court's
opinion suggests it would have given the H.R. 4560 provision the effect
the Agencies advocate here. The Court of Appeals addressed the effect of
Public Law 97-92 only briefly. The Court of Appeals held that Congress'
action in the 1982 appropriations law did not preclude injunctive relief
concerning the 1981 appropriations. 684 F.2d at 999. While we agree
with the Agencies that this holding is not dispositive here, we do not
agree with the Agencies that that holding is irrelevant here because
"the most likely basis for the Court's conclusion was that 1981 funds
had come under the court's protective equitable jurisdiction by virtue
of the states' filing their complaint for equitable relief and were
consequently beyond the reach of subsequent legislation." Agencies'
post-hearing memorandum, p. 4, n. 4. The Court noted specifically: "We
also reject the Government's argument that the words 'any other
appropriation' . . . have the effect of barring payment from 1981 as
well as 1982 appropriations." 684 F.2d at 999, n. 36 (emphasis added).
We think this statement is consistent with the view that the Court's
reasoning, while not explicitly stated, was based in part on a narrower
interpretation of the quoted words than the Agencies would ascribe to
them. We also note that the Department fully briefed the question of
the effect of Public Law 97-92 on the Connecticut v. Schweiker claims in
support of the petitions for rehearing en banc and for a writ of
certiorari. These petitions were denied. /12/ In a letter to
the Chairman of the House Committee on Appropriations about the effect
of section 140, the Comptroller General said: Standing alone, the
language of section 140 "by any other act * * * after the date of
enactment of this resolution" is not persuasive as to permanency.
However, the additional phrase "except as may be specifically authorized
by Act of Congress hereafter enacted" does lead in that direction.
/13/ The report quoted the provision from H.R. 4560 discussed above and
said that the Committee recommended section 133 to clarify the
congressional intent, as expressed in the quoted language. We have
discussed above why we do not think this statement shows that Congress
intended to extinguish the States' claims when it enacted Public Law
97-92. We also note that the drafters of section 133 "clarified" the
intent of the H.R. 4560 provision in part by adding a reference to
payment "in or with respect to any fiscal year, under this or any other
Act" (which did not appear in H.R. 4560), as well as wording precluding
certain court actions. /14/ Subsequently, when the House was
considering the regular appropriations bill for fiscal year
1983, Representative Natcher referred to section 136, stating it
"reached a compromise which allows the courts t determine the validity
of these old claims based on existing authorizing and appropriation
laws." 128 Cong. Rec. H8684 (daily ed. Dec. 1, 1982). Representative
Green commented on the parallel provision added to the appropriations
bill as an "amendment to repay the States for old claims." Id.
/15/ Indeed, it is not clear how broad an effect should be given to the
prohibition on judicial remedies.The words "from amounts appropriated by
this or any other act" in that clause do not conclusively apply to
future appropriations (see discussion above). The Agencies implied that
this language must clearly create a permanent bar because the States
acknowledged that the committee version would have extinguished the
States' claims and no language was deleted from that version. but the
most definitive language in the committee version was "in or with
respect to any fiscal year, under this or any other act." That the
committee version, read as a whole, would have extinguished claims does
not mean that the clause concerning judicial remedies, which is more
ambiguous, would have had this effect by itself. /16/ We note
that the language referred to stated that no claim shall be reimbursed
"now or hereafter," thus indicating more clearly than the provisions
we
discussed previously an intent to enact permanent legisation. /17/ The
Agencies also cited two cases for the principle that retroactive
"adjustments" in government reimbursement programs raise no
constitutional issues "unless they disturb final unappealable
judgments." Post-hearing memorandum, p. 9. We disagree that the cases
cited are broad enough in effect to cover the Agencies' interpretation
here. In Memorial Hospital v. Heckler, 706 F.2d 1130 (11th Cir. 1983),
cert. denied, 104 S.Ct. 1275 (1954), the court upheld the application of
a statute which was intended to clarify that costs had never been and
were not presently reimbursable under Medicare. The questioned costs
had already been the subject to litigation and had not been universally
accepted as allowable under the statute. In the instant case, the
statute and regulations unquestionably authorized reimbursement at the
time the expenses were incurred and did not set any time limits on
filing claims. Moreover, the interpretation at issue here would have
required an action from the States, as a prerequisite of reimbursement,
which had to occur several years before the States were even aware of
the requirement. We think the circumstances and effect of this
interpretation, therefore, are clearly distinguishable from the Memorial
Hospital case. Furtehr, Daylo v. Administrator, 501 F.2d 811 (D.C. Cir.
1974) merely precludes the application of statutory changes in instances
where a judgment has become final and unappealable. It clearly may not
be cited for the principle that all retroactive changes are
constitutional as long as they do not upset final judgment. Finally, we
note that the Agencies' reliance on certain reductions in Medicaid
funding pursuant to the Omnibus Reconciliation Act of 1981 as showing
that the States had no reasonable expectation of funding is misplaced.
Those reductions were prospective in effect, not retroactive.
MARCH 19, 1985