Opinion ID: 4561573
Heading Depth: 2
Heading Rank: 4

Heading: MHA’s policy arguments

Text: Notwithstanding this reading of the HUD regulation, MHA asserts that including a parent’s IHSS compensation as income is necessary to achieve a measure of parity between families in similar circumstances. An expansive reading of the exclusion (24 C.F.R. § 5.609(c)(16) (2020)), MHA argues, would unfairly advantage families who provide in-home care to a 18 REILLY v. MARIN HOUSING AUTHORITY Opinion of the Court by Chin, J. developmentally disabled member because their compensation is not counted as income for purposes of calculating their rent subsidy, whereas no comparable income exclusion is available for a family with a medically disabled member or for a family who hires a third party provider. In advancing this argument, MHA asserts the state pays Reilly “wages” under the IHSS program. Describing an employment relationship between Reilly and the State of California, MHA relies in part on the Court of Appeal’s reasoning that “IHSS payments substitute in the family’s budget for the money the parent would have earned outside the home.” Such wages, MHA continues, should be considered part of her annual income just like the outside income of a parent who instead hires an in-home provider. We address these points in turn.
disabilities First, we reject MHA’s and the dissent’s assertion that excluding Reilly’s IHSS payments from annual income under 24 Code of Federal Regulations part 5.609(c)(16) (2020) would create an unfair disparity by extending the exclusion to families with a developmentally disabled member but not to families with a medically disabled member. To the extent there is any disparity, it is inherent in the federal regulation itself, which specifically limits the exclusion to payments made to families caring for a “developmentally disabled family member.” (24 C.F.R. § 5.609(c)(16) (2020).) Put another way, even assuming MHA’s position is correct that the exclusion is limited to payments made to third party providers, it would still treat developmental disabilities more favorably than physical disabilities because whatever its scope, the exclusion by its 19 REILLY v. MARIN HOUSING AUTHORITY Opinion of the Court by Chin, J. terms applies only to “[a]mounts paid by a State agency to a family with a member who has a developmental disability.” (Ibid., italics added.) The regulation, moreover, does not require that an individual meet a particular definition of “developmentally disabled” for the income exclusion to apply. As previously discussed (see ante, at p. 15), HUD has not defined “developmental disability” in the regulation, but instead left it up to states to determine its meaning. Specifically, if a state program authorizes a family to receive in-home care for a family member, in HUD’s view that family member “meets the criteria of the definition” of developmentally disabled, and the PHA “should consider the family eligible for the exclusion.” (61 Fed.Reg. 54492, 54497 (Oct. 18, 1996), italics added.) This expansive view in favor of applying the exclusion is consistent with HUD’s expressed concern that families of developmentally disabled members in particular would receive unfair treatment if this income exclusion were not made available to them. HUD added the relevant exclusion for families with a developmentally disabled member “[s]ince families that strive to avoid institutionalization should be encouraged, and not punished.” (60 Fed.Reg. 17388, 17389 (Apr. 5, 1995), italics added.) The dissent, however, asserts that precluding Reilly from utilizing this income exclusion would not amount to punishment because no other group, besides foster parents, enjoys the benefit of the income exclusion. (See dis. opn., post, at p. 34, fn. 18.) This critically misapprehends the nature of the penalty involved. The punishment here is not merely withholding a benefit to a family that is not otherwise given to similarly situated families; in other words, the dilemma a family faces is not choosing between enjoying or forgoing a “preferential 20 REILLY v. MARIN HOUSING AUTHORITY Opinion of the Court by Chin, J. benefit,” as the dissent seems to suggest. (Dis. opn., post, at p. 23.) Rather, if a family cannot utilize the income exclusion to exclude compensation for a parent’s in-home care, this may cause the family to lose its Section 8 housing altogether because it is unable to pay an increased portion of rent. Without such housing, a family may face having to institutionalize a developmentally disabled member, a result the exclusion seeks to prevent in the first place. Further, despite no expressed preference for family providers per se, “[r]ecipients needing 24-hour protective supervision — and other services — are more likely to receive better continuous care from relatives living with them whose care is more than contractual.” (Miller v. Woods, supra, 148 Cal.App.3d at p. 870.) This continuity of care is particularly salient here because of the nature of need-based tasks under the IHSS program. Because an IHSS recipient may only receive specific services based on an assessed need — i.e., where “[p]erformance of the service by the recipient would constitute such a threat to his/her health/safety that he/she would be unable to remain in his/her own home” (MPP, § 30.761.14) — not all time that a provider spends with a recipient would be compensable. (See § 12300, subd. (a); MPP, § 30.761.12.) Many tasks are discrete and not clustered together throughout the day (such as feeding, dressing, bowel and bladder care), and a provider may not be compensated for time spent waiting in between those tasks. It would no doubt prove challenging to find many providers — other than family members — willing to work that intermittently during the day. Family members may also make particularly good providers because IHSS services “involve a most intimate and personal aspect of an individual’s life” and family providers 21 REILLY v. MARIN HOUSING AUTHORITY Opinion of the Court by Chin, J. often “insure the least intrusion upon the recipient’s privacy.” (Miller v. Woods, supra, 148 Cal.App.3d at p. 878; see § 12304.1 [“preference shall be given to any qualified individual provider who is chosen by any recipient”].) Also recognizing that familyprovided care is often the best type of care for individuals with disabilities, Congress has included it as one of the “goals of the Nation” to provide families of children with disabilities the services necessary to “enable families of children with disabilities to nurture and enjoy their children at home”; and “support family caregivers of adults with disabilities.” (42 U.S.C. § 15091(a)(6)(B), (D) [congressional findings of Families of Children with Disabilities Support Act of 2000]; id., § 15091(a)(1) [“It is in the best interest of our Nation to preserve, strengthen, and maintain the family”].) Congress further emphasized the important cost savings when family members are themselves providers for their disabled children: “Families of children with disabilities provide support, care, and training to their children that can save States millions of dollars. Without the efforts of family caregivers, many persons with disabilities would receive care through State-supported out-ofhome placements.” (Id., § 15091(a)(2); see 60 Fed.Reg. 17388, 17389 (Apr. 5, 1995).) These expressed goals fully align with HUD’s objective to have developmentally disabled individuals avoid institutionalization and instead live with their families at home.3 3 Contrary to the dissent’s suggestion, nothing in our opinion should be construed as implying that third party caregivers as a whole will provide “substandard” care compared to family members. (Dis. opn., post, at p. 31.) We merely confirm what Congress has expressly recognized about the benefits of having family caregivers. 22 REILLY v. MARIN HOUSING AUTHORITY Opinion of the Court by Chin, J. This leads us to the inescapable conclusion that parents who keep their disabled child at home instead of in an institution — while also providing care as their child’s IHSS provider — are different from other caregivers. That difference, however, cuts in favor of allowing a parent’s IHSS compensation under the exclusion. Unlike third party caregivers whose job it is to take care of someone on an hourly basis, for these parent providers, caring for their child “is not a day job; it is their life.” (In re Hite (Bankr. W.D.Va. 2016) 557 B.R. 451, 458 [holding parents’ in-home care payments excluded from monthly income and consequently not deemed disposable income subject to creditors].) If in-home care payments are not excluded from her income, the benefits Reilly receives — the in-home care for her disabled daughter K.R. and the Section 8 housing assistance — would be at cross-purposes. A family should not be forced to make an impossible choice between these two critical benefits. We perceive no plausible reason why Reilly should not realize the full benefit of what each program has to offer her family.4
Next, we reject MHA’s underlying assumption that a parent provider’s compensation under the IHSS program seeks to replicate the wages and hours of a parent who is employed outside the home. A parent’s employment is relevant only to the extent it relates to the parent’s suitability or availability to provide IHSS services to a child. (MPP, § 30-763.451; Dept. AllCounty Letter No. 19-02 (January 9, 2019) (All-County Letter 4 This conclusion focuses on Reilly’s general entitlement to benefits under the Section 8 voucher and IHSS programs, and does not consider any other basis for terminating these benefits such as the failure to comply with any program requirements. 23 REILLY v. MARIN HOUSING AUTHORITY Opinion of the Court by Chin, J. 19-02).) As section 12300, subdivision (e) explains, the predicate for a paid parent provider is that “no other suitable provider is available.” (§ 12300, subd. (e); see MPP, § 30-763.451.) In providing the necessary in-home care to a disabled child, a parent forgoes any outside employment — not to displace otherwise competent professional caregivers — but to prevent a third party caregiver’s “inappropriate placement or inadequate care” for their child. (§ 12300, subd. (e).) For instance, in its 2019 All-County Letter 19-02, the Department clarified the paid parent provider requirements: “The paid parent IHSS provider requirements, set forth in MPP Section 30-763.451, do not require or imply that a parent must have marketable job skills or a work history to be their child’s paid IHSS provider, as long as it is the recipient child’s needs which prevent the parent from maintaining or obtaining fulltime employment.” (All-County Letter 19-02, supra, at p. 4, italics added.) Likewise, parents who retire or are laid off may also serve as their child’s provider only if their retirement or layoff is due to the child’s need for IHSS services. (Id. at p. 6.) In short, “if a parent is not employed full-time for a reason other than the recipient child’s IHSS needs . . . that parent would not qualify as a paid parent IHSS provider.” (Id. at p. 4.) Second, even assuming Reilly’s IHSS compensation represents her wages, this does not mean that providing inhome care to her child is “an employment for all purposes.” (Basden v. Wagner, supra, 181 Cal.App.4th at p. 940.) In Basden v. Wagner, the Court of Appeal recognized certain duties — such as the state being responsible for the provider’s unemployment compensation, workers’ compensation, federal and state income tax and the like — that would suggest providing IHSS full-time could be considered an employment. The court, however, 24 REILLY v. MARIN HOUSING AUTHORITY Opinion of the Court by Chin, J. pointed out that “the Legislature defined IHSS providers as employees for limited circumstances, but undisputedly not for all circumstances. More significantly, nothing in the statutes even remotely suggests the Legislature defined the provision of in-home, full-time, IHSS funded care by a parent to a child as full-time employment . . . .” (Ibid., italics omitted.) The question here is whether a parent’s compensation for providing in-home care is “specifically excluded” from the definition of annual income for purposes of the HUD regulation. (24 C.F.R. § 5.609(a)(3), (c)(16) (2020).) As explained above, we conclude that IHSS compensation to a parent provider is excluded from income. (See ante, at pp. 14–15.) Nevertheless, the dissent maintains that “[u]nlike funds that reimburse a family’s expenditures, funds provided by the state to compensate for the family’s caregiving activities are available to meet the family’s daily needs. That is their purpose.” (Dis. opn., post, at p. 25, italics added.) This characterization gravely misconstrues the nature and scope of IHSS services. Under the IHSS program, the main focus is on assessing the disabled individual’s “service needs and authorizing service hours to meet those needs.” (§ 12301.2, subd. (a)(1).) A caregiver will be compensated only for those authorized service hours and nothing more. As previously explained (see ante, at p. 21), because many tasks are discrete and completed throughout the day, a provider might not be compensated for time spent waiting in between those tasks. Contrary to the dissent’s suggestion, excluding a parent’s IHSS compensation from income would not artificially reduce a family’s income and thereby increase any resulting rent subsidy. At best, a parent’s IHSS compensation will offset a portion of the costs of keeping 25 REILLY v. MARIN HOUSING AUTHORITY Opinion of the Court by Chin, J. a developmentally disabled family member at home, and would not go far in meeting the family’s daily needs. The dissent’s related assertion — i.e., family providers “are effectively selling their labor to the state, and the resulting income is indistinguishable, in its impact on the family’s standard of living, from money earned working outside the home” (dis. opn., post, at p. 25) — is likewise long on conclusion but short on facts. (See ibid. [“to receive funds from IHSS a parent must accept their disabled child’s care as, in effect, their job”].) In the case of Reilly’s daughter, K.R., for example, she required protective supervision that is “only available” if “a need exists for twenty-four-hours-a-day of supervision in order for the recipient to remain at home safely.” (MPP, § 30-757.173(a).) A person needing 24-hour supervision would require a provider’s services for 720 hours in a 30-day month. However, an IHSS provider is limited to a statutory cap of 283 hours of compensation. (§§ 12303.4, 14132.95, subd. (g).) The discrepancy between a parent provider’s actual hours of service and compensation belies any assertion that IHSS payments, at least with respect to protective supervision, are intended to represent wages the parent would have earned outside the home, where compensation would be based on every hour worked. Finally, we find it significant that the IRS also treats inhome care payments — whether the provider is related or unrelated to the disabled individual — as excludable from a provider’s income under Internal Revenue Code section 131. (26 U.S.C. § 131; see Rev. Proc. 2014-7, 2014-4 I.R.B. 445.) In 2014, the IRS explained that Medicaid waiver payments to states, which are used to fund IHSS payments through the state MediCal program (see ante, at pp. 5–6 & fn. 2), should be excluded 26 REILLY v. MARIN HOUSING AUTHORITY Opinion of the Court by Chin, J. from a provider’s gross income. (Rev. Proc. 2014-7, 2014-4 I.R.B. 445.) It equated these payments to foster care payments, which are considered “difficulty of care” payments excludable from a provider’s income under Internal Revenue Code section 131. (26 U.S.C. § 131(a) [“Gross income shall not include amounts received by a foster care provider . . . as qualified foster care payments”].) “The programs share the objective of enabling individuals who otherwise would be institutionalized to live in a family home setting rather than in an institution, and both difficulty of care payments and Medicaid waiver payments compensate for the additional care required.” (Rev. Proc. 2014- 7, 2014-4 I.R.B. 445 [these foster parents “ ‘are saving the taxpayers’ money by preventing institutionalization of these children’ ”].) As relevant here, the IRS makes no distinction between care provided by a parent or by a third party — the exclusion for Medicaid waiver payments “will apply whether the care provider is related or unrelated to the eligible individual.” (Ibid., italics added.) Seeking to downplay any impact an IRS interpretation has on a HUD regulation, MHA notes that HUD has indicated that the “tax rules are different from the HUD program rules.” (HUD, HUD Handbook 4350.3: Occupancy Requirements of Subsidized Multifamily Housing Programs (Nov. 2013) ¶ 5-1.) Be that as it may, we do not conclude that the IRS’s interpretation is dispositive or compels the outcome in this case. We do, however, acknowledge that it provides persuasive insight, one that is consistent with the rulemaking record of the HUD regulation (24 C.F.R. § 5.609(c)(16) (2020)). (See ante, at pp. 11–13) For example, though payments to foster parents and inhome care payments are both considered “difficulty of care” 27 REILLY v. MARIN HOUSING AUTHORITY Opinion of the Court by Chin, J. payments excludable from a provider’s taxable income, these payments would receive unequal treatment under MHA’s interpretation of the regulation. Under 24 Code of Federal Regulations part 5.609(c)(2) (2020), “[p]ayments received for the care of foster children or foster adults (usually persons with disabilities, unrelated to the tenant family, who are unable to live alone)” are excluded from income for purposes of Section 8 housing. If a family takes into their home an unrelated disabled adult who is unable to live alone, and receives payment from the State for providing care to that adult, such payments are excluded from the family’s income. However, if that same family receives payment for providing the same care but to a developmentally disabled family member, those payments would not be excluded from income. To ascribe this interpretation to HUD, which would impose a financial penalty on a family simply because the care is given to a disabled family member rather than a disabled stranger, would not only be inconsistent with the IRS’s treatment of both payments, there is no evidence in the regulation’s rulemaking record that HUD intended different treatment.