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                              Missouri Department of Social Services, DAB No. 2994 (2020)
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Missouri Department of Social Services, DAB No. 2994 (2020)








  
  
    

  
      
Department of Health and Human Services 
    DEPARTMENTAL APPEALS BOARD
          Appellate Division





Missouri Department of Social Services
Docket No. A-18-95Decision No. 2994April 15, 2020

        
              
    

      DECISION

The Missouri Department of Social Services (Missouri) appeals a disallowance of $1,336,156 by the Administration for Children and Families (ACF). The disallowed amount represents the federal financial participation (FFP), or federal share, of $2,068,033 claimed as title IV-E foster care professional parenting maintenance payments for two quarters that ended on December 31, 2017 and on March 31, 2018. ACF determined that the payments were improperly claimed as foster care maintenance payments, reimbursable to Missouri at the rate of approximately 62 percent. We uphold the disallowance in full for the reasons set out below.

Authorities

Title IV-E of the Social Security Act (Act), codified at 42 U.S.C. § 670 et seq., authorizes FFP to states that operate foster care and adoption assistance programs. A state is eligible for FFP once it submits a state plan to the Secretary of Health and Human Services and that plan is approved. 42 U.S.C. § 671. FFP may be paid under the title IV-E program for, among other things, foster care maintenance, adoption assistance, and the proper and efficient administration of a state plan. *Id.* § 674(a).

The statute defines "foster care maintenance payments" as –

payments to cover the cost of (and the cost of providing) food, clothing, shelter, daily supervision, school supplies, a child's personal incidentals, liability insurance with respect to a child, reasonable travel to the child's home for visitation, and reasonable travel for the child to remain in the school in which the child is enrolled at the time of placement. In the case of institutional care, such term shall include the reasonable costs of administration and operation of such institution as are necessarily required to provide the items described in the preceding sentence.

*Id.* § 675(4)(A); *see also* 45 C.F.R. § 1355.20(a) (defining "foster care maintenance payments").

**Page 2**

The regulations which implement title IV-E state that –

"Daily supervision" for which foster care maintenance payments may be made includes:

(1)     *Foster family care* – licensed child care, when work responsibilities preclude foster parents from being at home when the child for whom they have care and responsibility in foster care is not in school, licensed child care when the foster parent is required to participate, without the child, in activities associated with parenting a child in foster care that are beyond the scope of ordinary parental duties, such as attendance at administrative or judicial reviews, case conferences, or foster parent training. Payments to cover these costs may be: included in the basic foster care maintenance payment; a separate payment to the foster parent, or a separate payment to the child care provider; and

(2)     *Child care institutions* – routine day-to-day direction and arrangements to ensure the well-being and safety of the child.

45 C.F.R. § 1355.20(a). Foster care maintenance payments are reimbursable at the rate of the state's federal medical assistance percentage (FMAP, as defined in 42 U.S.C. § 1396d(b)). 45 C.F.R. § 1356.60(a)(2). (The parties state that Missouri is reimbursed for foster care maintenance payments at the rate of approximately 62 percent. Mo. Br. at 1; ACF Response Br. at 1).

Allowable costs necessary for the "proper and efficient administration" of the title IV-E program and for which FFP may be paid include the expenses for recruiting and licensing foster care homes and institutions, service referrals, child placement, case plan development and case reviews, case management and supervision, and a proportionate share of related state agency overhead, to the extent those expenses benefit the IV-E program. 45 C.F.R. § 1356.60(c), (c)(2); *Ohio Dep't of Job & Family Servs.*, DAB No. 2643, at 3 (2015). In general, the federal government reimburses title-IV-E administrative costs at the rate of 50 percent. 42 U.S.C. § 674(a)(3)(C); 45 C.F.R. § 1356.60(c). The approved IV-E state plan must include all administrative activities and costs funded under title IV-E. 45 C.F.R. § 1356.60(c).

Title IV-E's role in funding administrative activities associated with child welfare is "limited." *Mo. Dep't of Soc. Servs.*, DAB No. 2681, at 1 (2016) (quoting *Mo. Dep't of Soc. Servs*., DAB No. 1783, at 3 (2001)). Even categories of administrative activities that may be permissible to charge to the title IV-E foster care program may only be claimed when they are "directly related" to administering the title IV-E program and are not claimable under any other federal program. *Id*.; *see also Ohio*, DAB No. 2643, at 3.

**Page 3**

The basic cost principles effective December 26, 2014 and applicable to this case – "Uniform Administrative Requirements, Cost Principles, and Audit Requirements for HHS Awards" – are set out in 45 C.F.R. Part 75. *See* 79 Fed. Reg. 75,872, 75,875-76 (Dec. 19, 2014). Under those cost principles, a cost is allowable (i.e., eligible for funding) under a federal assistance program only if it is "necessary and reasonable for the performance of the Federal award"; "[c]onform[s] to any limitations or exclusions set forth in [the cost] principles or in the Federal award as to types or amount of cost items"; and is "adequately documented." 45 C.F.R. § 75.403(a), (b), (g). "[T]he state's . . . financial management systems, including records documenting compliance with Federal statutes, regulations, and the terms and conditions of the Federal award, must be sufficient to permit . . . the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to the Federal statutes, regulations, and the terms and conditions of the Federal award." *Id.* § 75.302(a).

Background

In October 2017, ACF reviewed Missouri's title IV-E foster care program to determine whether Missouri was complying with federal eligibility requirements. ACF Ex. 1, at 1 and 5; 42 U.S.C. § 672. That review entailed an analysis of a "computerized statistical sample of 80 cases" for the period October 1, 2016 through March 31, 2017. ACF Ex. 1, at 1 (citing 45 C.F.R. § 1356.71 (setting out, among other things, the purpose of, and the sampling methodology to be used in, primary review of a state's IV-E foster care program; requirements subject to review; compliance standards)), 5. ACF found, among other things, that 59 of the 80 sampled cases included "ineligible payments" to foster care parents "incorrectly claimed" as "maintenance payments" "based on the state's code for Professional Parenting Payments" (code PPMN) rather than as "administrative costs." *Id.* at 8-12. Those ineligible payments, ACF determined, accounted for FFP of $59,717. *Id.* at 12. Based on the review findings, ACF issued a determination, dated January 19, 2018, disallowing FFP of $74,849, which included FFP of $59,717 that ACF determined was for "incorrectly claimed" professional parenting maintenance payments.1
*Id.* at 1-4.

**Page 4**

Missouri appealed the January 2018 disallowance, disputing, among other things, the review finding that Missouri improperly claimed FFP for professional parenting maintenance payments. The Board docketed the appeal under number A-18-41. On May 30, 2018, Missouri withdrew its appeal. The Board closed appeal A-18-41 that day.2

The next day, ACF issued another determination disallowing FFP of $1,336,156.18, related to Missouri's PPMN claims but for a later period (last quarter of 2017 and first quarter of 2018).3
 Referring to its October 2017 eligibility review findings, ACF stated:

[T]he [Children's Bureau of ACF] . . . ma[de] clear that the Professional Parenting Payments were not allowable as title IV-E maintenance payment costs. We urged the state to identify the systemic factors underlying these improper payments and develop strategies to correct them. We also noted that the costs could potentially be claimed as title IV-E administrative costs, if properly allocated in accordance with an approved cost allocation plan. Alternatively, we noted that the state could review and make changes to its rate structure for maintenance payments.

We have determined that Missouri has continued to claim Professional Parenting Payments as title IV-E maintenance payment costs under the payment service code of "PPMN" for periods after those reviewed in the cited title IV-E eligibility review. Therefore, we are disallowing the $2,068,033 ($1,336,156 federal share) of PPMN title IV-E foster care maintenance payment claims submitted by Missouri on its title IV-E foster care financial reports for the quarters ended (QE) 12-31-17 and 3-31-18.

May 2018 determination at 1.4

**Page 5**

Missouri timely appealed. *See* 45 C.F.R. § 1356.71(j)(4) ("Title IV-E agencies may appeal any disallowance actions taken by ACF to the HHS Departmental Appeals Board in accordance with regulations at 45 CFR part 16."); 45 C.F.R. § 16.3(b) (appeal to the Board must be filed within 30 days after receipt of final written decision).

Analysis

As set out above, ACF disallowed FFP for costs claimed by Missouri as professional parenting maintenance payments. Missouri reports on appeal that it no longer makes PPMN payments separately from the base foster care maintenance payments. It reportedly combined the professional parenting maintenance payments (coded as PPMN) with base foster care maintenance payments in response to ACF's review findings. Later, Missouri says, it made that change retroactive to cover the two quarters at issue. Missouri maintains that, by making such an adjustment, it has "eliminated" "the basis for the disallowance." Notice of appeal at 1. Missouri also points to ACF's purported acceptance of its discontinued claiming practices (claiming separate PPMN and base maintenance payments) following earlier eligibility reviews, thus raising an issue about whether ACF may be estopped from taking the disallowance on appeal.

Missouri also argues that the PPMN payments were made for foster care maintenance costs in the form of "daily supervision" costs, reimbursable at the rate of 62 percent. Mo. Br. at 8. Missouri disputes ACF's position that the payments were for incentive costs to recruit, retain and license foster parents, which are not reimbursable as maintenance costs. Mo. Reply Br. at 1-3. However, Missouri asserts, alternatively, that, if the payments could be reimbursed as incentive costs at the administrative cost rate of 50 percent, the disallowance amount is overstated by over $1 million. *Id*. at 4.

We uphold the disallowance. First and foremost, Missouri has not borne its burden to prove that the PPMN payments were reimbursable as foster care maintenance costs, as claimed. Second, Missouri's combining the PPMN payments with the base maintenance payments and making that adjustment retroactive would not overcome its failure to prove that the PPMN payments were for maintenance costs as claimed. Third, we reject Missouri's estoppel theory as wholly meritless. Finally, we address Missouri's argument that the disallowance should be reduced to reflect the difference between the FFP claimed at the 62 percent rate as maintenance costs and the FFP that would be claimable at the 50 percent rate for administrative costs. Missouri contends that ACF has already indicated that the PPMN payments would be proper administrative costs. However, Missouri has not submitted claims for these expenditures as administrative costs. Our decision does not preclude ACF from re-reviewing the disallowed PPMN payments to determine if it has sufficient documentation to reimburse them as administrative costs, or Missouri from submitting claims for such reimbursement if timely.

**Page 6**

**I.         Missouri has not carried its burden to prove that the PPMN payments were allowable foster care maintenance payments.**

In an appeal of a disallowance, the federal agency (here, ACF) has the burden to articulate clearly the basis of the disallowance and to provide enough detail for the appellant to understand the issues and the federal agency's position. *See, e.g., Targazyme, Inc.*, DAB No. 2939, at 4 (2019). Once the federal agency does so, the appellant must carry the burden to prove that federal funds were claimed only in accordance with applicable authorities. *See Ohio*, DAB No. 2643, at 31 (citing *Mass. Exec. Office of Health & Human Servs.*, DAB No. 2218, at 11 (2018), *aff'd*, *Mass. v. Sebelius*, 701 F. Supp. 2d 182 (D. Mass. 2010); *Md. Dep't of Health & Mental Hygiene*, DAB No. 2090, at 4 (2007); and *N.Y. State Dep't of Soc. Servs.*, DAB No. 433, at 9 (1983)).

Here, ACF explained in its disallowance determination, quoted above, that its final report of the October 2017 eligibility review notified Missouri why the PPMN claims were not allowable as foster care maintenance payments. May 2018 determination at 1; ACF Ex. 1, at 8-12, 14-15 ("The title IV-E payment history for the sample cases included payments incorrectly claimed as maintenance payments based on the state's payment code of Professional Parenting Payments (PPMN)."). ACF also had notified Missouri that the costs potentially could be claimed through changes to its rate structure for maintenance payments, but that any claimed payments must meet the following requirement:

**Title IV-E Requirement:** Consistent with 45 CFR 1356.60(a)(i), title IV-E foster care maintenance assistance payments may be claimed only for the cost of providing certain expenditures covered within the federal definition of foster care maintenance at §475(4) of the Act [42 U.S.C. § 675]. *The state must document that foster care maintenance payments claimed for title IV-E reimbursement are for allowable expenditures* in accordance with the statutory definition, are in amounts conforming to the state established rates of payment for the type and level of care provided, and reflect non-duplicable cost of daily maintenance.

ACF Ex. 1, at 15 (italics added).

ACF has thus sufficiently explained why it was disallowing FFP for the claimed PPMN payments. Accordingly, Missouri bears the burden to show that it properly claimed the PPMN payments as foster care maintenance payments. We explain below our reasons for concluding that Missouri has not borne its burden of proof.

**Page 7**

On appeal, Missouri asserts that its PPMN payments were for "daily supervision" costs for which foster care maintenance payments may be made. Mo. Br. at 5. Missouri offers the declaration of Sheila Tannehill, who has served as Designated Principal Assistant of the Children's Division, Missouri Department of Social Services, since June 2017. Mo. Ex. 2 (Tannehill Decl.), at ¶ 1. Relying on the declaration, Missouri represents that it has been making PPMN payments, and reporting and claiming them as foster care maintenance payments, for over 20 years since it "introduced" the payments in 1996 as part of an overhaul of the state's foster care system. That overhaul included increased duration of pre-service training and requirement of more in-service training in subsequent years, for all new foster parents who would be paid an additional $100 per month per child in their care. Mo. Br. at 2 (citing Tannehill Decl. ¶ 3). Missouri also reportedly made the additional payments available during the early years for already-licensed foster parents who opted to undergo additional training to encourage them to become qualified as "professional parents." *Id.* (citing Tannehill Decl. ¶ 4). Over time, all resource parents – new parents entering the foster care program and licensed parents renewing their licenses – underwent additional training and were paid an additional $100 per month, meaning that they received two monthly payments (base and PPMN) per child under their care, prorated by the number of nights a child spent in the home. *Id.* (citing Tannehill Decl. ¶ 6). Missouri thus argues that the PPMN payments were for training activity "beyond the scope of ordinary parental duties" to the child and accordingly qualify for reimbursement as "daily supervision" maintenance costs. Mo. Br. at 5-6 (quoting 45 C.F.R. § 1355.20(a)).

"Daily supervision" costs (in the foster family care setting5
) are payments made for "licensed child care, when work responsibilities preclude foster parents from being at home when the child for whom they have care and responsibility in foster care is not in school, [and] licensed child care when the foster parent is required to participate, without the child, in activities associated with parenting a child in foster care that are beyond the scope of ordinary parental duties, such as attendance at administrative or judicial reviews, case conferences, or foster parent training." 45 C.F.R. § 1355.20(a). Thus, undergoing foster parent training is an activity that could be considered "beyond the scope of ordinary parental duties," but is not itself equivalent to providing a foster child "daily supervision" that the foster parent ordinarily would provide.

**Page 8**

Missouri offers no proof that the claimed PPMN payments were intended for licensed child care that was necessary because foster parents to whom the payments were made would not be able to provide daily supervision for reasons recognized by the regulation. That Missouri has long made additional payments available to resource parents to undergo training does not prove that the payments were in fact for necessary licensed child care. We note, moreover, that despite its representation that "all resource parents [were] required to participate in the training which the payment (back in the 1990s) was intended to promote" (Mo. Br. at 5), Missouri does not offer any evidence that it documented or assessed costs of child care for attendance at required training.6
 Missouri admits that it "did not require a separate accounting for the PPMN payment" (*id.* at 6) and offers no other documentation to support the retroactive re-characterization of these payments as intended to cover those specific costs, whether incurred by already-licensed or new resource parents. *See also* Tannehill Decl. ¶ 5 (stating that Missouri "did not require a separate accounting for these payments").

Ms. Tannehill also states that the Missouri Resource Parent Handbook, given to resource parents, described the payments as "intended to assist licensed foster parents with costs associated with attending court hearings, family support and permanency planning review team meetings, additional training, transportation, and family visits." Tannehill Decl. ¶ 5; Mo. Br. at 5 (quoting Tannehill Decl. ¶ 5). In response to ACF's statement that "it would be reasonable to expect" to see language in Missouri's state plan, or state-issued guidelines or policy letters, supporting Missouri's claim that it had communicated the purpose of the PPMN payments to resource parents (ACF Response Br. at 6), Missouri states, "ACF does not explain why the Handbook provided to Resource Parents does not qualify as such a guideline or policy" that ACF suggested could be acceptable. Mo. Reply Br. at 2. But ACF stated only that Missouri has not produced state-issued guidelines or policy letters that could help support its claim about the payments being earmarked to support child care training. ACF did not state that the Handbook cannot be considered as a form of guidance or policy document. In any case, regardless of whether the Handbook could be considered guidance or a policy document, Missouri has not produced the Handbook – which it authored and thus should be able to readily produce – for our examination. Thus we are not able to determine for ourselves whether its language supports Missouri's claim, after the fact, that the PPMN payments were intended to support daily supervision activities, namely child care training, as claimed.

**Page 9**

Missouri's main argument is that the PPMN payments were made for daily supervision costs related to foster parent training – an argument we have rejected as unsubstantiated. However, Missouri also suggests that the payments were used for other types of recognized maintenance costs. Mo. Br. at 6 ("[I]t is likely that the funds were spent for other maintenance purposes on behalf of Title IV-E eligible children, including food, clothing, shelter, and travel."). The implication is that it is reasonable to think that foster parents probably would use any additional funds to meet more immediate or basic needs such as food. Whatever appeal there might be to a presumption that limited resources are likely to be used first to meet more basic needs, Missouri's statement appears to be at odds with its main argument that the payments were made for costs to attend training. The shifting suggestions about how the payments may have been used only makes Missouri's claim that they were based on any clear purpose other than the original explanation (i.e., incentivizing training) less plausible.7

Missouri bears the burden to prove entitlement to federal reimbursement for the disallowed expenditures as claimed – that is, as foster care maintenance payments reimbursable at the rate of approximately 62 percent. We conclude that Missouri has not borne its burden. It has not produced documentation to permit "the tracing of funds to a level of expenditures adequate to establish that such funds have been used according to" the applicable authorities. 45 C.F.R. § 75.302(a). Without any clear documentation of how the payments were calculated to serve the limited purposes of foster care maintenance under title IV-E, we cannot find the payments allowable as claimed.

**II.         Missouri cannot overcome its failure to prove that the PPMN payments as claimed were for maintenance costs by simply combining those payments and base maintenance payments and making that adjustment retroactive to the two quarters at issue.**

Following its October 2017 review, ACF made the following recommendation relating to Missouri's PPMN payments:

**Recommended Corrective Action:** The Children's Bureau urges the state to identify the systemic factors underlying these improper payments and develop strategies to correct them. There appear to be several options. The state could review the costs to reclaim them as administrative costs in accordance with an approved cost allocation plan. The state could also review their maintenance payments rate structure and make changes. The

**Page 10**

state is further urged to review sections 8.1 and 8.3B of the Children's Bureau Child Welfare Policy Manual for guidance to determine which costs qualify as allowable maintenance payments and administrative costs under the title IV-E program. In addition, it is recommended that Missouri look at their current policy defining Professional Parenting Payments and provide clarification as to what these payments should be utilized for and how they should be claimed.

ACF Ex. 1, at 15; *see also* May 2018 determination at 1 (referring to its earlier findings and suggestions).

Missouri reportedly responded to ACF's suggestions in the final report (which Missouri received in February 2018) by combining the professional parenting payments (coded PPMN) with the base maintenance payments (coded MAIN) into a single maintenance payment, effective July 1, 2018.8
 Mo. Br. at 3-4, 6; Tannehill Decl. ¶¶ 11-13. It states that it "decided to make this change the day before it received the disallowance" determination on appeal.9
 Mo. Br. at 6. Later, it made the change retroactive to July 1, 2016 "[b]ecause the combination of payments did not involve any actual change in payment amounts or intended purpose." *Id.* at 4; Mo. Ex. 1 (Declaration of Kristen Pattrin (Pattrin Decl.)10
) ¶ 4.

Missouri made the change by creating an internal adjustment with a retroactive effective date in its Family & Children Electronic System (FACES), which is Missouri's Statewide Automated Child Welfare Information System (SACWIS) used for title IV-E reporting. Mo. Br. at 4; Mo. Reply Br. at 3. It "made a series of negative adjustments to remove the two separate payments (base and PPMN) and a series of positive adjustments to reflect a single combined payment" through FACES. Mo. Br. at 4. "Because the two separate payments were equal to the combined payment," says Missouri, the result was "a net zero

**Page 11**

effect, and there were not any additional payments to, or recoupments from, foster parents." *Id.*; Pattrin Decl. ¶ 4. Missouri did not report the change to ACF through Form CB-496 because the "positive and negative adjustments netted each other out" with no corresponding effect on the federal share. Mo. Br. at 5; Pattrin Decl. ¶ 5. Missouri states that ACF has not identified any authority that precludes the retroactive adjustment, and that there is no regulation requiring changes to foster care maintenance payments to be made only prospectively. Mo. Br. at 7.

ACF does not take issue with Missouri's prospective adjustment of its payment structure effective July 1, 2018. ACF Response Br. at 10. ACF does not question Missouri's implementing a "policy change" through the issuance of Memorandum CD 18-39 (Mo. Ex. 7), which included revisions to Missouri's Child Welfare Manual to specify its Standard Payment Rate for Foster Family Alternative Care and to include certain types of expenditures as "maintenance" costs, effective July 1, 2018. *Id.*; Mo. Reply Br. at 3 and Tannehill Decl. ¶ 14 (describing Manual updates). However, ACF does take issue with the attempted **retroactive** adjustment. Thus, ACF states, "[p]ayments for periods prior to [July 1, 2018] must be treated in accordance with the 'Standard Payment Rate' table that was in effect in Missouri for the involved period." ACF Response Br. at 10-11. It asserts that

Missouri should not represent this automated system accounting change as an official re-characterization of the nature of the PPMN payment. The proper method to increase the MAIN rate, retroactively, would be an amendment or change to the state's Child Welfare Manual with a differing effective date. Evidence of such change is absent . . . .

*Id.* at 11.

Missouri asserts that it appropriately revised outdated Child Welfare Manual language referring to PPMN payments serving as an incentive to complete additional training to bring the language into alignment with longstanding practice to make PPMN payments available to all licensed parents, and that ACF erred in simply disallowing the PPMN payments based on an "outdated description" of the payment in the manual. Mo. Br. at 7; Mo. Reply Br. at 3 (citing Mo. Br. at 7); Tannehill Decl. ¶ 14. It says, "Just as the State is not permitted to rely on outdated policy language to justify a practice, ACF should not be able to rely on the language in the [Child Welfare] manual to turn the payments into something they are not." Mo. Br. at 7 (also quoting *N.Y. Dep't of Soc. Servs.*, DAB No. 1405, at 19 (1993) ("The version [of the State Medicaid Manual] on which the State relied was simply outdated, and could not provide an alternative option for structuring the State's [third-party liability] subsystem."), *aff'd, New York v. Shalala*, No. 93 CIV. 1330 (JFK), 1996 WL 87240 (S.D.N.Y. Feb. 29, 1996)). ACF, however, maintains that "[t]he 'outdated' nature of the description of PPMN payments" in the manual was not the only problem. ACF Response Br. at 11. ACF further pointed out that "the PPMN payment

**Page 12**

was separate from the MAIN payment which identifies the items contained within the title IV-E statutory definition of the term 'foster care maintenance payments'" and that the state continued to characterize the payment as a "'professional parent incentive payment' as part of the Foster Family Homes Licensing Rules" until July 1, 2018. *Id.*; *see also* ACF Ex. 3 (Missouri's Child Welfare Manual), at 5. Missouri does not respond to this ACF statement, and simply states it is willing to amend its manual with a July 1, 2016 effective date. Mo. Reply Br. at 4.

We agree with ACF that the nature and purpose11
 of payments already made to foster parents and for which FFP has already been claimed cannot be altered merely by changing the accounting records after the fact, providing no notice of that change to ACF and no documentation that the prior payments were indeed calculated to serve the newly characterized role. Missouri had in effect a state plan which should contain its methodology for foster care maintenance; as ACF notes, even if no state plan amendment is needed to restructure the methodology to subsume the PPMN payments into the foster care maintenance payments, Missouri would certainly have to use formal policy procedures to adopt the change. ACF Response Br. at 6. Apparently, Missouri clearly understood how to do so, since it used that approach for the prospective change in methodology. An attempt to re-characterize past payments, being a less routine process, makes it all the more important to follow such procedures. Missouri did not do so here.

We recognize that ACF has suggested that it might accept an amendment to Missouri's Child Welfare Manual language to formally adopt a policy change with a retroactive date. ACF Response Br. at 11. In response, Missouri expresses a willingness to amend its Manual with a July 1, 2016 effective date. Mo. Reply Br. at 4. At this point, however, the payment system in effect during the disallowance period has not been effectively changed, and we have already found that the PPMN payments have not been shown to be foster care maintenance payments under that system. We decide this case based on the existing facts, but our decision does not preclude Missouri and ACF from further discussing whether any Manual revisions would be acceptable to resolve the disallowance or permit reclaiming the costs.

**Page 13**

**III.         Estoppel does not lie against ACF to the extent ACF did not previously question Missouri's claiming practices concerning the PPMN payments.**

Missouri maintains that it has claimed the PPMN payments as "supplemental" maintenance payments "[f]rom the beginning of the program" but that ACF "never questioned that characterization," including during the eligibility reviews conducted every three years between 2002 and 2014, "all of which included cases where PPMN payments were part of the detailed expenditures provided for review." Mo. Br. at 3 (citing Tannehill Decl. ¶ 7). Following those prior reviews ACF reportedly disallowed both the base payment and the PPMN payment when it identified incorrectly claimed maintenance payments. *Id.* (citing Tannehill Decl. ¶ 8). Beginning with the quarter that ended in March 2014, Missouri also reports it "provided ACF every quarter with child specific documentation of all maintenance payments," which identified PPMN payments and base maintenance payments. *Id.* (citing Tannehill Decl. ¶ 9).

Missouri asserts that "ACF never raised any objection to the split payment until the 2017 review." *Id*. (citing Tannehill Decl. ¶ 9). The implication is that ACF should be estopped from disallowing FFP claimed for the last quarter of 2017 and the first quarter of 2018 based on similar claiming practices. *Id.* at 6 (citing Tannehill Decl. ¶ 7). Thus, Missouri contends that "[a]pparently, ACF previously believed that the payments were appropriately claimed as maintenance payments, as it has never previously questioned them despite years of Eligibility Reviews in which the payments were identified and included." *Id.*

In addressing claims of estoppel, the Board has stated:

It is well-established that "the government cannot be estopped absent, at a minimum, a showing that the traditional requirements for estoppel are present (i.e., a factual misrepresentation by the government, reasonable reliance on the misrepresentation by the party seeking estoppel, and harm or detriment to that party as a result of the reliance) and that the government's employees or agents engaged in 'affirmative misconduct.'" *Oaks of Mid City Nursing & Rehab. Ctr.*, DAB No. 2375, at 31 (2011), citing *Office of Pers. Mgmt. v. Richmond*, 496 U.S. 414, 421 (1990), and *Pacific Islander Council of Leaders*, DAB No. 2091, at 12 (2007) ("equitable estoppel does not lie against the federal government, if indeed it is available at all, absent at least a showing of affirmative misconduct.").

*Bright Beginnings for Kittitas Cnty.*, DAB No. 2623, at 8 (2015). "Even if estoppel would lie against the federal government . . . , there can be no estoppel absent the traditional requirements of a misrepresentation of fact, reasonable reliance, and detriment to the opposing party." *Mo. Dep't of Soc. Servs.*, DAB No. 1229, at 5-6 (1991) (citing *Heckler v. Cmty. Health Servs. of Crawford Cnty., Inc.*, 467 U.S. 51, 59 (1984)).

**Page 14**

Missouri's only argument for estoppel is that ACF did not previously question Missouri's "split payment" claiming practices. Missouri does not even claim that ACF took any actions Missouri reasonably understood to mean ACF had made an actual determination that Missouri's earlier claiming practices would be acceptable going forward on which Missouri reasonably relied to continue such practices. Certainly, Missouri points to nothing that could be considered affirmative misconduct of any kind. The argument fails.

**IV.         Our decision does not preclude Missouri from submitting a claim that the PPMN payments are for administrative costs reimbursable at the 50 percent rate, if such claim is timely and permissible under its cost allocation plan, and/or ACF from re-reviewing the payments to determine if it has sufficient documentation to reimburse them as administrative costs.**

ACF's final report of its October 2017 review findings stated in part:

Agency records indicated title IV-E maintenance payments were improperly claimed for the payments the state makes to foster parents that would be considered incentives for completing and maintaining training requirements. **These payments could be claimed under title IV-E as "recruitment and licensing of foster homes and institutions", which is an allowable title IV-E administrative cost.** In many states, there are not enough foster family homes to meet the needs of the children in foster care. Therefore, increasing the number of foster family homes through the allowable use of title IV-E administrative funds is appropriate. Any such costs must be allocated through an approved cost allocation plan by either identifying actual cost amounts for title IV-E eligible children or by applying an appropriate allocation methodology to the pool of all such costs. The portion of costs so allocated to title IV-E foster care should be claimed as "In-Placement Administrative Costs – Provider Management". Since these payments were incorrectly claimed under the state's Alternative Care IV-E code, we must disallow all Professional Parenting Payments as maintenance payments. [However], the state may be able to submit title IV-E administrative cost claims for some of these disallowed costs.

ACF Ex. 1, at 14-15 (emphasis added); *see also* May 2018 determination (similar discussion). On appeal, ACF continues to take a similar position, stating that the payments were incentive payments for "recruitment/licensing-related" costs, which could "be easily seen to fit the administrative cost category." ACF Response Br. at 6, 8-9 (citing 45 C.F.R. § 1356.60(c)(2)(vii) ("Recruitment and licensing of foster homes and institutions" is an example of allowable administrative costs necessary for the administration of a foster care program.)).

**Page 15**

Missouri states that if its PPMN payments had served as an incentive for foster parents to take additional training, that has not been the case for some time. Mo. Br. at 2-3; *id.* at 5 (stating that the additional PPMN payments it had long paid to foster parents "has not served as an 'incentive' to obtain additional training for at least ten years, and probably longer" because "all resource parents are required to participate in the training which the payment (back in the 1990s) was intended to promote"); *id.* at 6 ("[T]he reality was that the PPMN payment had not served as an incentive payment for many years, but instead was paid to all licensed in-state foster parents."). In October 2018, Missouri released updates to its Child Welfare Manual, effective July 1, 2018, to bring "outdated" language concerning PPMN payments serving as an incentive to take additional training into alignment with Missouri's longstanding practice to make PPMN payments available to all licensed parents. Mo. Br. at 4, 6; Tannehill Decl. ¶ 14; Mo. Ex. 7, at 1.

ACF's position, which appears to have remained consistent over time since the 2017 eligibility review, is that the payments for the two quarters in question might be reimbursable as administrative costs for the recruiting and licensing of foster homes. ACF Response Br. at 9 (citing 45 C.F.R. § 1356.60(c)(2)(vii)). Missouri states that, assuming the PPMN payments at issue are incentive payments and its combining of the base maintenance and PPMN payments cannot be applied retroactively, the disallowed amount is overstated by over $1 million (that is, the disallowed amount should be reduced by the difference between FFP for maintenance costs paid at approximately 62 percent and FFP for administrative costs paid at 50 percent). Mo. Reply Br. at 4-5.

The question presented in this appeal is whether ACF properly disallowed FFP for PPMN payments Missouri claimed as foster care maintenance payments. As we have explained earlier, Missouri has not borne its burden to prove that the PPMN payments were for maintenance costs, as claimed. Whether those same payments nevertheless could be reimbursed at a lower rate as administrative costs is not presently before us. Missouri has not submitted claims for these expenditures as administrative costs, nor has ACF denied any such claims, so the question is not ripe for appeal.

Our decision does not, however, preclude ACF from re-reviewing the payments based on the existing claims and determining that they were incurred for administrative costs reimbursable at the administrative cost rate. *See Mo. Dep't of Soc. Servs.*, DAB No. 2681, at 10 ("Recruitment of foster homes is . . . an allowable title IV-E activity but is reimbursable only at the normal administrative FFP rate of 50 per cent."). Nor does it preclude Missouri from submitting new claims for these expenditures as administrative costs under the normal claiming procedures.

**Page 16**

Conclusion

We uphold the disallowance of $1,336,156.


          /s/
        Leslie A. Sussan

                      Board Member
          /s/
        Constance B. Tobias

                      Board Member
          /s/
        Susan S. Yim

                      Presiding Board Member
      1. The January 2018 determination is of record as ACF exhibit 1, pages 1-4. The final report of the October 2017 eligibility review is of record as ACF exhibit 1, pages 5-17. These two documents discuss additional review findings that we need not address because they are not at issue in this appeal. back to note 1
                      2. The Board extended the due date for Missouri's opening brief to May 30, 2018. Appeal A-18-41 was withdrawn and closed on May 30, 2018, with no briefs or exhibits filed. back to note 2
                      3. ACF set out the following table, breaking out the federal share disallowed by quarter:
    PPMN Claims by Qtr Total computable Federal share   12/31/2017 $999,577.04 $645,826.73   3/31/2018 $1,068,456.05 $690,329.45   Total $2,068,033.09 $1,336,156.18     May 2018 determination at 1. back to note 3
                      4. ACF also noted that FFP of $1,268.50 for claimed PPMN payments was not included in the disallowed amount of $1,336,156.18 because the payments were included in the amount disallowed in the January 2018 determination. May 2018 determination at 1. back to note 4
                      5. Missouri does not claim that the PPMN payments were made for "daily supervision" costs associated with foster care provided in an institutional setting. back to note 5
                      6. ACF's Child Welfare Policy Manual, which is available online at ACF's website (https://www.acf.hhs.gov/cwpm/public_html/programs/cb/laws_policies/laws/cwpm/index.jsp) and the relevant portions of which Missouri has submitted, explains that "foster parent training required by the title IV-E agency is an activity beyond the scope of ordinary parental duties" and, "[t]herefore, the cost of child care to provide for the foster parent's attendance at mandatory foster parent training is an allowable expenditure under title IV-E foster care maintenance." See Child Welfare Policy Manual, Section 8.3B.1 (Mo. Ex. 6), Question and Answer no. 3. back to note 6
                      7. Accepting that the PPMN payments were made to foster parents to undergo required training, that itself would not prove that the payments were no longer serving as an incentive to recruit and retain foster parents who, without the additional payments, might be less willing to sign up and continue to serve given the training requirement. back to note 7
                      8. Missouri represents that "[o]nce [it] confirmed with ACF that it could combine the two payments and claim them as a single maintenance payment, it withdrew its appeal from the disallowance included as part of the Eligibility Review (which was for less than $60,000)." Mo. Br. at 4 (citing "DAB Docket No. A-18-41"). But neither the record in this appeal, nor that in appeal A-18-41, includes any evidence of communication between Missouri and ACF that would support "confirmation" by ACF that Missouri may combine the two payments, whether for the time period addressed in the January 2018 disallowance that was the subject of appeal A-18-41, or for any other time period. back to note 8
                      9. Missouri also writes: "In that the disallowance relates to PPMN payments after July 1, 2016," it "believes that its post-disallowance actions have removed the basis of the disallowance." Mo. Br. at 5. We understand Missouri to be asserting that, while it decided to combine the payments shortly after the release of the October 2017 review findings, it made the retroactive adjustment after ACF issued the disallowance determination on appeal. back to note 9
                      10. Ms. Pattrin is the Assistant Chief Financial Officer, Division of Finance and Administrative Services, Missouri Department of Social Services. Pattrin Decl. ¶ 1. back to note 10
                      11. We also reject Missouri's suggestion that it is sufficient to justify treating the claims as proper because the PPMN payments "functioned as part of the overall maintenance payment, albeit paid separately." Mo. Reply Br. at 2-3 (citing N.Y. State Dep't of Soc. Servs., DAB No. 1428 (1993) (analyzing the "function and purpose" of a State's disputed activities to determine allowability of their costs), aff'd, New York v. Shalala, No. 96 CIV 8464 (JFK), 1998 WL 150955 (S.D.N.Y. Apr. 1, 1998)). The cited case held that New York could not claim title IV-E funding for administrative activities that were neither listed as allowable in the regulation nor shown to be "closely related" to the listed activities. DAB No. 1428, at 10 (citing 45 C.F.R. § 1356.60(c)). The Board found that the activities for which New York claimed funding "differ in both function and purpose from the activities listed in section 1356.60(c)(2)." Id. at 11. The decision provides no support for the idea that Missouri may simply re-characterize prior expenditures based on an assertion that the funds were used for different purposes than those indicated in its program documents. back to note 11 Back to top
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