Opinion ID: 476366
Heading Depth: 1
Heading Rank: 4

Heading: enjoining dpw recoupment

Text: 41 The final issue before us is whether Kathryn Jenkins is entitled to an injunction against the defendant's efforts to recoup AFDC payments made to Jenkins during her period of ineligibility under the lump-sum rule. In October 1983, Jenkins's family received and spent a lump sum without having received adequate notice of the lump-sum rule. See supra n. 11; 598 F.Supp. at 1050; 605 F.Supp. at 1246-47. In November 1983, Jenkins was notified that because of the lump-sum rule, her October and November benefits would be considered overpayments, and her family would be ineligible for further AFDC benefits until May 1984. Jenkins filed a timely state administrative appeal of this decision, and her benefits were continued pending the appeal. Because the final administrative decision was issued after Jenkins's ineligibility period expired, her family's AFDC benefits were not interrupted. Instead, the Jenkins family has been charged with an overpayment of $5,464.00 for the ineligibility period. The defendant seeks to recoup this sum by withholding one per cent. of Jenkins's benefits each month until the full amount has been recovered. See 45 C.F.R. Sec. 233.20(a)(13); Minn. Stat. Sec. 256.73, subd. 6. 42 The District Court, though it found that the defendant's failure to provide adequate notice rendered application of the lump-sum rule to her improper, concluded that it would violate the Eleventh Amendment to enjoin the defendant's efforts to recover the alleged overpayment to Jenkins. The defendant argues that, in addition to this state-sovereign-immunity obstacle, the relief Jenkins desires is also unavailable because federal regulations indicate that inadequate notice does not warrant the remedy of permitting a recipient to keep an overpayment. We conclude that an injunction against recoupment is fully consistent with the Eleventh Amendment and is a proper remedy for the defendant's violation of the federal notice regulation. 43 Prospective, equitable relief is a long-recognized exception to Eleventh Amendment immunity. See Ex Parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908). However, the District Court reasoned that to enjoin the defendant's recoupment efforts would be inconsistent with the Eleventh Amendment as interpreted in Edelman v. Jordan, supra, because it would reduce the public fisc of the State of Minnesota ... in the amount of one percent of plaintiff's monthly benefit. 621 F.Supp. at 514. Yet, as Edelman makes clear, a remedy against a state ordered by a federal court does not violate the Eleventh Amendment simply because it will have fiscal consequences for the state treasury. 415 U.S. at 667-68, 94 S.Ct. at 1358. Instead, the point of Edelman is that the key to whether a remedy violates the Eleventh Amendment is whether [i]t requires payment of state funds, not as a necessary consequence of compliance in the future with a substantive federal-question determination, but as a form of compensation for the state's past breach of a legal duty. Id. at 668, 94 S.Ct. at 1358. The Eleventh Amendment bars retroactive award[s] of money relief that, whether they are labeled equitable relief or damage awards, are in practical effect indistinguishable ... from an award of damages against the State. Id. 44 An injunction against the defendant's recoupment efforts would not run afoul of these strictures, because DPW has already paid Jenkins the money at issue, the benefit payments it characterizes as overpayments. The remedy would not be a retroactive award of damages against the State, since it would not require the State to make compensatory payments to Jenkins. Instead, the defendant would simply be ordered to cease efforts to take back funds that it previously paid Jenkins at its own instance, rather than that of a federal court. In contrast, the Eleventh Amendment would bar ordering the defendant to repay any portion of Jenkins's benefits that it has already recovered; further, had Jenkins not continued to receive benefits during her administrative appeal, the Eleventh Amendment would prohibit ordering the defendant to make corrective payments for months in which Jenkins received no benefits. In both of these examples, ordering the defendant to make payments would constitute ordering the state to pay damages--to make compensatory payments for the State's past legal wrongs. Here, the defendant would not be ordered to make compensation, but to refrain from recovering compensation already made. 45 Our analysis is not altered by the fact that the mechanism that the defendant has elected to use to effect this recovery is that of withholding a portion of Jenkins's AFDC benefits each month. It is true that the injunction under consideration would force the defendant to make larger payments to Jenkins each month than he would make if allowed to reduce her benefits in order to recoup his prior payments to her. Nonetheless, such payments are not damages; they do not compensate Jenkins for the State's past legal deficiencies. Rather, they are a necessary consequence of compliance in the future with the determination that the defendant provided inadequate notice of the lump-sum rule. The defendant cannot make an end run around a federal court's ability to order that the State not take money away from Jenkins by accomplishing recovery through paying her less AFDC benefits than she normally would receive. 19 46 Having disposed of the Eleventh Amendment objection to enjoining defendant Levine's recoupment efforts, we take up the defendant's assertion that permitting Jenkins to retain benefits paid her during her ineligibility period is barred by federal regulations. The defendant first argues that the payments to Jenkins were overpayments, as defined in 45 C.F.R. Sec. 233.20(a)(13)(i), because Jenkins has accurately been determined ineligible for the benefits under the lump-sum rule. He continues that 45 C.F.R. Sec. 233.20(a)(13) directs states to recover overpayments, and does not permit states to forego recovery even where the overpayment is the result of agency error rather than recipient misconduct. Therefore, the defendant concludes, while Jenkins bears no fault in causing her overpayment, the defendant is nonetheless entitled to recover it. 47 The fundamental flaw in this argument occurs in its first step: the payments to Jenkins cannot be considered an overpayment, because the defendant, having failed to provide adequate notice to Jenkins of the lump-sum rule, cannot properly invoke it against her. By failing to comply with the notice regulation, DPW failed to institute a legal change in its eligibility rules. See Kimble v. Solomon, 599 F.2d 599, 604 (4th Cir.), cert. denied, 444 U.S. 950, 100 S.Ct. 422, 62 L.Ed.2d 320 (1979). Jenkins's case must be governed by the prior policy towards lump sums, and under that policy she was eligible for most or all of the benefits the defendant wishes to recoup. 20 48 The defendant also asserts that corrective payments are an improper remedy for inadequate notice because the payments would be a windfall to recipients and would continue benefits at a level greater than that desired by Congress, citing Foggs v. Block, 722 F.2d 933, 941 (1st Cir.1983), rev'd on other grounds sub nom. Atkins v. Parker, 472 U.S. 115, 105 S.Ct. 2520, 86 L.Ed.2d 81 (1985). 49 We find Foggs distinguishable from the present case. Foggs involved a due-process challenge to a state's failure to notify each food-stamp recipient individually of the reduction in that recipient's benefits that would result from a statutory change in benefit-calculation methods. The Court found it an adequate remedy to order the State to review its files to ensure that each recipient's benefits had been accurately recalculated. 722 F.2d at 941. At issue here is not individualized notice of the effect of the new rule upon each recipient, but advance notice of a rule change and the new rule's general operation. Our concern is not that such advance notice was necessary to prevent erroneous application of the lump-sum rule, but that without adequate advance notice recipients could not be expected to budget their lump sum as Congress intended, and would be left without funds to pay for necessities. Permitting retention of ineligibility-period payments by lump-sum recipients who, like Jenkins, spent their lump sums in the belief that the old rule was still in force is hardly granting them a windfall. Other circuit courts have found it proper where the state has provided inadequate notice of changed standards to recipients to order the restoration of benefits under the previously governing standard, see Buckhanon v. Percy, 708 F.2d 1209, 1216 (7th Cir.1983), cert. denied, 465 U.S. 1025, 104 S.Ct. 1281, 79 L.Ed.2d 684 (1984), Kimble v. Solomon, 599 F.2d 599 (4th Cir.1979), cert. denied, 444 U.S. 950, 100 S.Ct. 422, 62 L.Ed.2d 320 (1979), and we agree. 50 We conclude that an injunction barring the defendant from recouping the payments made to Jenkins during her ineligibility period would be consistent with the Eleventh Amendment, and would, moreover, be an appropriate remedy in this case.