Opinion ID: 670690
Heading Depth: 2
Heading Rank: 3

Heading: Asserted Inconsistency of the Policy with Applicable Federal Regulations.

Text: 42 As discussed earlier, the district court ruled that the Policy conflicts with Secs. 233.20(a)(2)(viii) and 233.90(a)(1), see supra note 6, by presuming that a caretaker will share her resources with minor household members for whom the caretaker is not legally responsible, see Bray I at 8; and with Secs. 233.10(a)(1) and 233.20(a)(2)(iii) by denying such caretakers uniform treatment. See Bray I at 8; supra notes 7 and 9. We now address these rulings in turn.
43 The Agency Defendants contend that neither Sec. 233.20(a)(2)(viii) nor Sec. 233.90(a)(1) is applicable to the Policy's presumption that a relative caretaker will pool AFDC funds with dependent children in her household whom she is not legally obligated to support. Instead, they argue, the regulations apply only to bar any state presumption that outside income from non-legally responsible individuals in a household will be available to meet the needs of dependent minors therein. We agree. 44 Sections 233.20(a)(2)(viii) and 233.90(a)(1) were established to address specific concerns regarding the imputation of income from non-AFDC sources. HEW initially promulgated both regulations to implement the Supreme Court's decisions in King v. Smith, 392 U.S. 309, 88 S.Ct. 2128, 20 L.Ed.2d 1118 (1968), and Van Lare v. Hurley, 421 U.S. 338, 95 S.Ct. 1741, 44 L.Ed.2d 208 (1975). See Van Lare, 421 U.S. at 345, 95 S.Ct. at 1747 ([HEW] codified the holding of King v. Smith in 45 CFR Sec. 233.90(a)); Swift v. Blum, 598 F.2d 312, 312-13 (2d Cir.1979) (per curiam) (referring to 45 C.F.R. Secs. 233.20(a)(2)(viii) and 233.90(a) as implementing regulations for Van Lare ), cert. denied, 444 U.S. 1025, 100 S.Ct. 687, 62 L.Ed.2d 658 (1980); 42 Fed.Reg. 6583, 6584 (1977) (stating that Secs. 233.20(a)(2)(viii) and 233.90(a) were promulgated to implement Van Lare ). Both King and Van Lare invalidated state regulations which presumed that non-AFDC recipients would contribute financially to AFDC recipients with whom they shared a household on the basis that absent some legal duty, such support might not be forthcoming. 45 King disapproved Alabama's substitute father regulation, under which the State denied AFDC payments to minor children whose mother cohabited with a man who was not the children's father. See 392 U.S. at 311, 88 S.Ct. at 2130. Van Lare addressed a New York State lodger regulation that reduced pro rata the shelter allowance provided an AFDC unit that shared a household with nonpaying lodgers. See 421 U.S. at 339-40, 95 S.Ct. at 1743-44; see also Lewis v. Martin, 397 U.S. 552, 559-60, 90 S.Ct. 1282, 1285-86, 25 L.Ed.2d 561 (1970) (invalidating California regulation that presumed contribution of non-AFDC resources by non-legally obligated nonadoptive stepfather or common law husband of AFDC beneficiary's mother). 46 In all these cases, the needy AFDC beneficiaries had no recourse if the substitute father or lodger failed to contribute to the AFDC unit, because no duty existed under state law for these outsiders to apply their income for the support of the beneficiaries. The uncertainty of support that animated these cases and the federal regulations is absent here. 47 Federal law can be read to mandate that the caretaker use all of the [AFDC] grant for the benefit of everyone in the assistance unit. MacInnes v. Commissioner of Public Welfare, 412 Mass. 790, 593 N.E.2d 222, 226 (1992) (construing 42 U.S.C. Sec. 605 (1988), see 593 N.E.2d at 225); see also Jackson v. O'Bannon, 633 F.2d 329, 336 (3d Cir.1980) (The entire AFDC program relies on the integrity of the parent or custodian who is expected to disburse the child's grant in accordance with the statutory purpose.). In any event, federal law authorizes states to take steps to ensure that AFDC funds are spent in the best interests of the child, including the provision of protective payments to third parties, seeking the appointment of a guardian or legal representative for an AFDC beneficiary, or the imposition of criminal or civil penalties under state law. See Sec. 605. 48 New York law accordingly provides for both protective payments and the imposition of criminal sanctions for the wilful use of an AFDC allowance other than for the support of its intended beneficiary. See N.Y.Soc.Serv.Law Sec. 350-a (McKinney 1992); see also Morales v. State Dep't of Social Servs., 89 Misc.2d 360, 364-65, 391 N.Y.S.2d 268, 270-71 (Sup.Ct.1976). Most explicitly, Sec. 350-a(3) provides that: Any relative or other person who is granted an allowance of aid to dependent children for the benefit of a child or children and who wilfully uses all or any part of such allowance other than for the benefit of such child or children, shall be guilty of a misdemeanor. 49 This legal obligation to spend the grant on behalf of the children in the AFDC unit distinguishes this case from those involving presumption of support from outside income. See Jackson, 633 F.2d at 336 (rule of King, Lewis and Van Lare inapplicable in case involving presumption of support with AFDC funds because the presumption involved is one of application of government benefits, not independent income or resources as was true in [King, Lewis, and Van Lare ]). The state law obligation to spend the AFDC funds in the children's best interests makes it reliably certain that [t]his income is actually available for the support of the children in the household. Lewis, 397 U.S. at 558, 90 S.Ct. at 1285. We therefore conclude that the Policy, under which all children living with an adult caretaker relative are considered part of one AFDC assistance unit even if the household contains children for whom the caretaker is not legally responsible, does not contravene Secs. 233.20(a)(2)(viii) and 233.90(a)(1). See MacInnes, 593 N.E.2d at 226 (holding that comparable Massachusetts regulation does not assume contribution from non-legally responsible person because caretaker is responsible for spending AFDC grant for benefit of all children in the AFDC unit). 50 The Caretaker Plaintiffs cite a number of federal and state cases which, they contend, call for the invalidation of the Policy as violative of Secs. 233.20(a)(2)(viii) and 233.90(a)(1). See Edwards v. Healy, 12 F.3d 154 (9th Cir.1993); Beaton v. Thompson, supra; Swift v. Blum, supra; Wilkes v. Steffen, 831 F.Supp. 723 (D.Minn.1993); Gurley v. Wohlgemuth, 421 F.Supp. 1337, 1342-43 (E.D.Pa.1976); Morrell v. Flaherty, 109 N.C.App. 628, 428 S.E.2d 492, 496, stay granted, 333 N.C. 792, 430 S.E.2d 424 review allowed, 334 N.C. 165, 432 S.E.2d 364 (1993). However, these cases are either inapposite or unpersuasive. 51 Swift involved a New York regulation that prorated AFDC benefits when the child of an AFDC recipient whose needs were met by non-AFDC sources (and who was thus not eligible for benefits) resided with the assistance unit. See 598 F.2d at 312. That case, however, involved the state's assumption that outside income, rather than AFDC monies, would be made available to the AFDC unit, and is therefore inapposite for the reasons previously stated. Further, as the Caretaker Plaintiffs conceded at oral argument, Swift' § holding was overruled by Congress with the enactment of DEFRA. 52 Gurley involved the application of a Pennsylvania regulation, which treated all AFDC recipients living in a dwelling unit (except for boarders and their dependents) as a single assistance unit, to a situation where two sisters resided in a single household with minor children entitled to AFDC assistance for whom the sisters were separately responsible. See 421 F.Supp. at 1338 & n. 2. The Gurley court held that the Pennsylvania regulation contravened Sec. 233.90(a) because each sister only ha[d] an obligation to spend the [AFDC] funds to benefit the children for whom ... she is the specified relative, not to benefit some other AFDC child. 421 F.Supp. at 1346; see also 45 C.F.R. Sec. 237.50(b)(4) (1993) (in two-caretaker situation, there may be two AFDC families (assistance units)). In this case, by contrast, the Caretaker Plaintiffs are legally obligated to spend the AFDC funds for the benefit of all the minor children in their households. 53 The other cases cited by the Caretaker Plaintiffs involve regulations that are substantially similar to the Policy. However, we do not find these cases persuasive. Beaton is the leading case. It relies upon Gurley and a prior Ninth Circuit case, McCoog v. Hegstrom, 690 F.2d 1280 (9th Cir.1982). McCoog involved Oregon regulations that reduced the shelter component of the AFDC grant when children receiving benefits lived with non-legally responsible relatives who were not receiving benefits. Beaton, 913 F.2d at 703-04. As previously discussed, Gurley addressed the situation of a two-caretaker household. In relying upon McCoog and Gurley, Beaton did not recognize or discuss the distinction between a single caretaker who is obligated to expend AFDC funds for the benefit of all the minor children in her household and a non-legally responsible individual who has no corresponding obligation. Because we regard the distinction as dispositive, we decline to follow Beaton. 54 Edwards simply followed Beaton. In addition, both Wilkes and Morrell were strongly influenced by the Beaton ruling. See Wilkes, 831 F.Supp. at 728-29; Morrell, 428 S.E.2d at 496-97. But see MacInnes, 593 N.E.2d at 226 (rejecting Beaton ). Additionally, in our view, Wilkes accords inadequate deference to the expressed HEW/HHS views regarding the discretion afforded to states regarding the definition of AFDC assistance units, see 831 F.Supp. at 730-31, and Morrell misconstrues the impact of the enactment of DEFRA upon that discretion. See 428 S.E.2d at 495. 55
56 The district court also concluded that the Policy violates federal regulations that require uniform treatment of AFDC recipients. See Bray I at  8; supra note 9. As previously noted, Sec. 233.20(a)(2)(iii) mandates that the standard of assistance must be uniformly applied throughout the State. See supra note 7. 12 57 New York has chosen to premise uniformity upon identical treatment of similarly sized households receiving AFDC assistance in which one caretaker relative is required to expend the AFDC funds in the best interests of all members of such households. The uniformity that the Caretaker Plaintiffs advocate would ensure that dependent children such as the nieces in this case will receive the same AFDC benefit if they are taken into a household that already constitutes an AFDC assistance unit as they would receive if they were taken into a non-AFDC household. The Caretaker Plaintiffs do not persuade us that the federal requirement of a uniform statewide standard for AFDC assistance that is expressed in Sec. 232.20(a)(2)(iii) should be read to invalidate the New York choice, and mandate the substitution of the alternative for which the Caretaker Plaintiffs contend. Cf. Dandridge, 397 U.S. at 487, 90 S.Ct. at 1163 (intractable economic, social, and even philosophical problems presented by public welfare assistance programs more appropriately decided by state officials than federal courts).