This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2014).

STATE OF MINNESOTA

IN COURT OF APPEALS

A15-1908

Lucas Sanchez,

Appellant,

vs.

St. Louis County Public Health and Human Services Department,

Respondent,

Minnesota Department of Human Services,

Respondent.

Filed May 23, 2016

Reversed and remanded

Kirk, Judge

St. Louis County District Court

File No. 69DU-CV-15-548

Gwen Updegraff, Legal Aid Service of Northeastern Minnesota, Duluth, Minnesota (for 

appellant)

Mark S. Rubin, St. Louis County Attorney, Benjamin M. Stromberg, Assistant County 

Attorney, Duluth, Minnesota (for respondent St. Louis County Public Health and Human 

Services Department)

Lori Swanson, Attorney General, Patricia A. Sonnenberg, Assistant Attorney General, St. 

Paul, Minnesota (for respondent Minnesota Department of Human Services) 

Considered and decided by Connolly, Presiding Judge; Stauber, Judge; and Kirk, 

Judge. 
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U N P U B L I S H E D O P I N I O N

KIRK, Judge

Appellant Lucas Sanchez challenges a decision by the Minnesota Commissioner of 

Human Services (commissioner) that he was overpaid benefits under the Supplemental 

Nutrition Assistance Program (SNAP) and Medical Assistance (MA). Because the 

commissioner concedes that its decision was based on an error of law, we reverse and 

remand for further proceedings consistent with this opinion. 

FACTS

Sanchez applied for and received SNAP benefits between December 2010 and May 

2013 and MA benefits between December 2010 and November 2013. On all applications 

and certifications, Sanchez indicated that his household had no income. In April 2013, 

anticipating an inheritance, Sanchez decided not to reapply for benefits. Respondent St. 

Louis County Public Health and Human Services (the county) notified Sanchez that,

because required forms had not been provided, his SNAP and MA benefits would stop on 

June 1, 2013, and May 31, 2013, respectively, and that his two children’s MA benefits 

would stop on November 30, 2013.

In June, the county received an anonymous tip that Sanchez and his wife were 

selling items on craigslist.org. The county initiated an investigation and located a number 

of craigslist ads; motor-vehicle-registration records reflecting eight vehicles and one trailer 

registered to Sanchez; and an eBay account registered to Sanchez with selling activity. The 

county sent a verification-request form to Sanchez, requesting him to verify any income 
3

from self-employment between December 2012 and June 2013. Sanchez did not respond 

to the request. 

The county next sent a letter to Sanchez advising him that the county had 

determined that overpayments had occurred in his SNAP and MA benefits, but did not 

specify the amounts of any overpayments. The Minnesota Department of Human Services 

(department) noticed a hearing before a human-services judge (HSJ) to “decide whether 

you have committed an intentional violation of the rules” for SNAP. Sanchez did not 

respond or participate in the hearing, and the commissioner issued an order disqualifying 

Sanchez from receiving SNAP benefits for a period of one year, and Sanchez did not 

appeal.

The county then sent to Sanchez notices of overpayments of SNAP benefits, in the 

amount of $14,524, and MA benefits, in the amount of $17,769.35. Sanchez appealed, and 

a hearing was scheduled before an HSJ. 

Following the hearing, the HSJ issued recommended findings of fact, including that:

[] Appellant describes himself as a tinkerer. 

Appellant and his family live on 7 acres of land. Appellant 

obtains items from other people for free or low cost and uses 

many of the items as parts to repair his house or vehicles. 

Appellant also fixes up cars and the cars he cannot fix are 

junked. When Appellant junks the car he turns over the title to 

the junkyard and relies on them to transfer the title with the 

state. Appellant has acquired several items on his property, 

such as old propane tanks, old tires, old water heaters, a broken 

backhoe, salvaged steel or plywood. Appellant uses these 

items to make things and occasionally he lists for sale on either 

craigslist or ebay. Appellant also allowed his friends to store 

items, such as vehicles, on his property. 
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[] Appellant started [an] account on ebay on 

February 12, 2012. In the beginning, Appellant bought school 

items on ebay and sold some household items such as baking 

ware. In January and February 2013, Appellant sold guitars, 

amps, and music gear totaling $4,985.00. In April and May 

2013, Appellant sold items for his mother’s estate. Appellant 

put the proceeds of these sales in the estate account. Appellant 

opened an ebay store account around May 2013. 

[] Appellant contends that he was selling 

household items occasionally. Appellant and his family used 

their student loans and tax returns to live during the year. The 

household did not have any ongoing source of income. . . . 

Appellant did not actually sell the items referenced by the 

[county] on craigslist and the majority of the items are still on 

the property. 

The HSJ recommended a conclusion that the county could not assess overpayments for the 

period between December 2010 and December 2012 because it had not requested income 

verification for that time period. But the HSJ recommended that the overpayment 

assessments be affirmed for all SNAP benefits paid for the period from December 2012 

through May 2013 ($2,202) and for all MA benefits paid for the period from December 

2012 through September 2013 ($11,160.48) because “the [county] requested verification[]

[and] Appellant did not respond.” 

The commissioner adopted the HSJ’s recommended findings, conclusions, and 

order and denied Sanchez’s request for reconsideration. Sanchez appealed to the district 

court, which affirmed the commissioner’s decision. 

Sanchez now appeals to this court.
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D E C I S I O N

In reviewing the commissioner’s decision, we apply the standard of review set forth

in the Minnesota Administrative Procedures Act. See Minn. Stat. § 14.69 (2014); Brunner 

v. State, Dep’t of Pub. Welfare, 285 N.W.2d 74, 75 (Minn. 1979); Zahler v. Minn. Dep’t of 

Human Servs., 624 N.W.2d 297, 301 (Minn. App. 2001), review denied (Minn. June 19, 

2001). Under that standard, we may

affirm the decision of the agency or remand the case for further 

proceedings; or it may reverse or modify the decision if the 

substantial rights of the petitioners may have been prejudiced 

because the administrative finding, inferences, conclusion, or 

decisions are:

(a) in violation of constitutional provisions; or

(b) in excess of the statutory authority or jurisdiction of the 

agency; or

(c) made upon unlawful procedure; or

(d) affected by other error of law; or 

(e) unsupported by substantial evidence in view of the 

entire record as submitted; or

(f) arbitrary or capricious.

Minn. Stat. § 14.69 (2014). We “review[] the commissioner’s order independently, giving 

no deference to the district court’s review.” Zahler, 624 N.W.2d at 301. 

Sanchez asserts that the commissioner erred by assessing the entire amount of

SNAP and MA benefits paid to Sanchez as overpayments based solely on his failure to 

provide the county with requested information regarding his income. We agree.

Under federal regulations governing SNAP, households applying for benefits are 

required to provide certain information to state agencies administering the program as well 

as participate in interviews, and the state agency must verify the required information. 
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7 C.F.R. § 273.2(d) (2015). “If the household refuses to cooperate with the State agency 

in completing the process, the application shall be denied at the time of the refusal.” Id. 

“The household shall also be determined ineligible if it refuses to cooperate in any 

subsequent review of its eligibility, including reviews generated by reported changes and 

applications for recertification.” Id. 

With respect to continuing participation, the federal regulations provide that, 

“[d]uring the certification period, the [s]tate agency may obtain information about changes 

in the household’s circumstances from which the [s]tate agency cannot readily determine 

the effect of the change on the household’s benefit amount.” Id. § 273.12(c)(3) (2015). 

Under such circumstances, the agency “must pursue clarification and verification of 

household circumstances” beginning with a written request for contact. Id.

§ 273.12(c)(3)(i). If the household fails to respond, “the [s]tate must issue a notice of 

adverse action . . . which terminates the case, explains the reasons for the action, and 

advises the household of the need to submit a new application if it wishes to continue 

participating in the program.” Id. § 273.12(c)(3)(ii).

The federal regulations also provide for the recovery of overpaid benefits. Id.

§ 273.18(a)(3) (2015). Federal regulations provide a formula for determining the amount 

of benefits that have been overpaid, which generally requires the state agency to subtract 

from the correct amount of benefits received from the benefits to which a household is 

actually entitled. Id. § 273.18(c) (2015).
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However, as the commissioner now concedes,1the federal regulations authorize the 

collection of overpayments as determined under the formula provided, but do not authorize 

the assessment of an overpayment for the entire amount of benefits paid based on the failure 

to provide information. Accordingly, the order affirming the overpayments assessed with 

respect to SNAP benefits is based on a mistake of law. 

To qualify for MA, a household of two or more persons must meet certain income 

requirements and its total net assets must not exceed $20,000. See Minn. Stat. § 256B.056, 

subd. 3c(a) (2014). Household goods are not included in determining whether a household 

has exceeded the total net asset limit. Id., subd. 3c(a)(1). Moreover, under department 

policy, the sale of an excluded asset does not count as income. Counties are required to 

recover wrongfully obtained MA benefits, but they are limited to recovering the amount 

wrongfully obtained, which is the amount in excess of the amount to which a recipient was 

entitled. Minn. R. 9505.0015, subp. 49, 9505.0131, subp. 4 (2015). As with SNAP 

benefits, there is no authority for the county to recover the full amount of benefits paid 

based on the mere failure to provide information. Accordingly, the commissioner’s 

decision with respect to MA benefits is based on an error of law. 

 

1 At oral argument, the county expressed frustration at the commissioner’s seeming change 

of stance on this issue, arguing that the department has previously advised counties to cite 

an overpayment for all SNAP benefits paid when a client refuses to provide information to 

establish the amount of the overpayment. We understand this frustration, and we find no 

fault in the county’s compliance with guidance from the department. Instead, we conclude 

that any such guidance was legally erroneous, and that the commissioner erred by affirming 

the overpayment determinations on that basis. 
8

Appellant requests that this court reverse the commissioner’s decision with respect 

to the assessment of overpayment of SNAP benefits and modify the MA overpayment to 

$1,577.13, reflecting amounts paid on behalf of his children after he received a lifeinsurance payment in July 2013. But appellant has not provided a sufficient evidentiary 

basis to substantiate this amount. The commissioner requests that the matter be remanded 

for further consideration. Because there is a factual issue regarding appellant’s entitlement 

to MA benefits for his children after he received the life-insurance payment, we conclude 

that a remand is appropriate. 

Reversed and remanded.