Opinion ID: 4561573
Heading Depth: 3
Heading Rank: 1

Heading: The Language of Part 5.609(c)(16) Precludes

Text: the Majority’s Interpretation We review questions of statutory interpretation de novo. (Christensen v. Lightbourne (2019) 7 Cal.5th 761, 771.) Under “our familiar principles of statutory construction,” “ ‘[w]e start with the statute’s words, which are the most reliable indicator of legislative intent.’ [Citation.] ‘ “We interpret relevant terms in light of their ordinary meaning, 10 REILLY v. MARIN HOUSING AUTHORITY Cantil-Sakauye, C. J., dissenting while also taking account of any related provisions and the overall structure of the statutory scheme to determine what interpretation best advances the Legislature’s underlying purpose.” ’ [Citations.] ‘If we find the statutory language ambiguous or subject to more than one interpretation, we may look to extrinsic aids, including legislative history or purpose to inform our views.’ ” (In re A.N. (2020) 9 Cal.5th 343, 351–352 (A.N.).) We take the same approach when interpreting administrative regulations. (Centinela Freeman Emergency Medical Associates v. Health Net of California, Inc. (2016) 1 Cal.5th 994, 1011.) Based on the ordinary meaning of its language, we should conclude that the part 5.609(c)(16) exclusion is limited to state payments that compensate a family’s actual expenditures for services and equipment to keep a developmentally disabled family member in their home. As noted above, part 5.609(c)(16), excludes from a Section 8 family’s annual income “[a]mounts paid by a State agency to a family . . . to offset the cost of services and equipment needed to keep the developmentally disabled family member at home.” According to Merriam-Webster, the verb “offset” means “to serve as a counterbalance for : COMPENSATE.” (Merriam-Webster Dict. Online (2020) [as of Aug. 28, 2020]; see, e.g., Steinmeyer v. Warner Cons. Corp. (1974) 42 Cal.App.3d 515, 518 [“An ‘offset’ may be defined as 11 REILLY v. MARIN HOUSING AUTHORITY Cantil-Sakauye, C. J., dissenting a claim that serves to counterbalance or to compensate for another claim”].) Part 5.609(c)(16) therefore excludes payments by the state to a family that are made to “counterbalance” the cost of services and equipment needed to keep the developmentally disabled family member at home. Necessarily, this language anticipates that an equivalent cost has been or will be paid by the family for those services or equipment, since there would be nothing to counterbalance in the absence of such an expenditure. If HUD, the agency that drafted part 5.609(c)(16), had intended the regulation to bear the broader meaning imposed by the majority, it could have used a more inclusive phrase, such as amounts paid by the state “for services and equipment,” instead of requiring the excluded payments to “offset the cost” of services and equipment. This is the approach taken by HUD in drafting the only part 5.609(c) exclusion that undoubtedly bears the breadth bestowed on subpart (c)(16) by the majority. Part 5.609(c)(2) excludes “[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),” leaving no uncertainty about its meaning.7 (Italics added.) By imposing 7 The parenthetical presumably explains the reason for the breadth of the exclusion: To provide a benefit to lowincome families that care for unrelated persons who are in 12 REILLY v. MARIN HOUSING AUTHORITY Cantil-Sakauye, C. J., dissenting a similar breadth on part 5.609(c)(16), the majority’s reading renders pointless the use of the term “offset” because its reading is not restricted to the exclusion of payments that “offset the cost” of services and equipment. It is an elementary principle of statutory interpretation that “ ‘[a]n interpretation that renders statutory language a nullity is obviously to be avoided.’ ” (Tuolumne Jobs & Small Business Alliance v. Superior Court (2014) 59 Cal.4th 1029, 1039.) The majority’s expansive approach also defies the general interpretive principle that exceptions to a statute are to be construed narrowly. (Mathews v. Becerra (2019) 8 Cal.5th 756, 771; Simpson Strong-Tie Co. v. Gore (2010) 49 Cal.4th 12, 22.) HUD has confirmed this understanding in an amicus curiae brief, arguing that it intended the regulation to reach only state payments that reimburse a family’s expenditures. As HUD reasons, this narrower reading “accords with the distressed circumstances. The majority contends that interpreting subpart (c)(2) differently from subpart (c)(16) “would be unreasonable” because both families are providing “the same care.” (Maj. opn., ante, at p. 28.) The different approaches, however, are readily explained. HUD could reasonably have concluded that the familial connection required by part 5.609(c)(16) makes it unnecessary to bestow this type of benefit on families covered by that exclusion. In any event, the distinctly different language in the two exclusions suggests that they should be interpreted differently. 13 REILLY v. MARIN HOUSING AUTHORITY Cantil-Sakauye, C. J., dissenting basic policy objectives of the regulation. [Citation.] As HUD has explained, in promulgating [part] 5.609(c)(16), the exclusion exists because ‘families that strive to avoid institutionalization should be encouraged, and not punished.’ [Citation.] The regulation pursues this goal in part by ensuring that families that choose different means of keeping the developmentally disabled family member at home are treated evenhandedly.”8 Plaintiff argues that the term “cost” could cover more than a monetary expenditure. In ordinary parlance, “cost,” admittedly, can refer not simply to the price paid for something, but more broadly to “the outlay or expenditure (as of effort or sacrifice) made to achieve an object” or the “loss or penalty incurred especially in gaining something.” (Merriam-Webster Dict. Online (2020) [as of Aug. 28, 2020].) In this connection, plaintiff invokes the economic concept of an “opportunity cost,” that is, the opportunities foregone when a person makes a particular 8 Leaving aside debate about the precise degree of deference to be accorded HUD’s interpretation under Yamaha Corp. of America v. State Bd. of Equalization (1998) 19 Cal.4th 1, 7–8, the administrative agency’s interpretation undoubtedly deserves serious consideration. Although the majority does address HUD’s views, its explanation for rejecting them amounts to little more than a disagreement with HUD over which interpretation best serves HUD’s goals. (Maj. opn., ante, at pp. 28–30.) 14 REILLY v. MARIN HOUSING AUTHORITY Cantil-Sakauye, C. J., dissenting economic choice. Here, the argument goes, “cost” refers to the employment opportunities that plaintiff has foregone in order to provide care under IHSS. The payments therefore “offset” the cost to plaintiff of not having other employment. This is hardly the “ordinary meaning” of the language HUD chose to use. (A.N., supra, 9 Cal.5th at p. 351.) We typically refer to a payment for services as “compensation” or, more simply, “payment” for the work performed. We do not refer to compensation for providing a service as “offsetting the cost” of the service provider’s own effort, much less the service provider’s decision to take this job, rather than a different hypothetical job. The majority takes a different tack in justifying its interpretation, suggesting that because much of the IHSS compensation paid to plaintiff will ultimately be spent on costs associated with supporting K.R. in the family home, that compensation is paid to “offset the cost of services and equipment needed to keep [K.R.] at home.” (§ 5.609(c)(16); see Maj. opn., ante, at p. 10 [“Whether a family uses homecare payments to support itself so that it may care for a developmentally disabled member at home, or instead uses the funds to pay a third party to provide care for some of the time, these payments do no more than ‘offset’ the ‘cost’ of services and equipment needed to avoid institutionalization”].) This rationale fails for two independent reasons. First, while it finds a role for the term 15 REILLY v. MARIN HOUSING AUTHORITY Cantil-Sakauye, C. J., dissenting “offset,” it disregards other aspects of the regulatory language. Part 5.609(c)(16) excludes only state payments that offset expenditures for “services and equipment.” As rationalized above, the majority’s reading necessarily stretches the exclusion to cover any cost related to K.R.’s presence in the home, including food, clothing, and rent. These are not normally viewed as “services and equipment.”9 By restricting the exclusion to the costs of “services and equipment,” HUD signaled its intent to exclude only costs related to the family member’s disability, rather than the ordinary, if necessary, expenses of daily life. Second, the regulation excludes “[a]mounts paid by a state agency . . . to offset the costs of services and equipment.” (§ 5.609(c)(16).) As discussed above, the IHSS compensation is paid by the state to compensate plaintiff for her labor in caring for her daughter. While it may be used by plaintiff to cover the costs of supporting her daughter, it is not paid by the state to offset those costs. The restrictive view of part 5.609(c)(16) has been adopted by all other appellate courts that have considered the issue. The plaintiff in Anthony v. Poteet Housing Authority 9 Indeed, because the majority reads the regulation to exclude the entirety of plaintiff’s IHSS compensation on this basis, it construes “the costs of services and equipment” to cover the cost of anything plaintiff chooses to spend her compensation on. 16 REILLY v. MARIN HOUSING AUTHORITY Cantil-Sakauye, C. J., dissenting (5th Cir. 2009) 306 Fed. Appx. 98, the first decision to address this issue, lived with her developmentally disabled adult child. Under a state-funded program in Texas, she was employed by a private entity to care for the child and, like plaintiff, contended that the income she earned in this role should be excluded from her Section 8 income under part 5.609(c)(16). The court was willing to accept that her payments, despite being provided by a private employer, constituted payments by the state. It rejected her argument that the payments should be excluded from the calculation of her Section 8 income under part 5.609(c)(16), however, upon concluding that the exclusion applies only to reimbursements for costs paid for care by third-party providers. As the court explained, “One must incur costs before they can be offset.” (Anthony, at p. 101.) The Court of Appeal below reached a similar conclusion after a more extensive analysis. It declined to equate “offset” with “reimburse,” but the distinction it found between the two terms was quite narrow and is inconsequential in these circumstances. As the court explained, part 5.609(c)(16) “appears to reach money paid to a family so that the family can go out and hire services or purchase equipment necessary for the developmentally disabled family member. Such payments ‘offset the cost of services and equipment’ that would otherwise fall on the family. But they are not reimbursement for out-of-pocket expenses if the family 17 REILLY v. MARIN HOUSING AUTHORITY Cantil-Sakauye, C. J., dissenting receives payment before, rather than after, incurring the expense.”10 (Reilly, supra, 23 Cal.App.4th at p. 434.) The appellate court below also rejected plaintiff’s argument that the IHSS payments should be excluded because “the services she provides are necessary for her daughter to live at home, and the IHSS payments offset the costs of those services.” (Id. at p. 432.) The court rightly accepted plaintiff’s contention that her services were necessary to keep K.R. at home, but it found the language of the regulation inconsistent with plaintiff’s argument that it excludes any payment for necessary services. As the court explained, part 5.609(c)(16) refers to payments “ ‘to a family . . . to offset the cost of services . . . .’ ” (Reilly, at p. 434.) “If a payment is to ‘offset the cost of services,’ the payment must go to the same entity that incurs the cost of those services. Otherwise the payment does not counterbalance or compensate for the cost of services. . . . This means that the costs these payments offset must be costs that the family itself incurs.” (Ibid.) Most recently, the Minnesota Supreme Court reached the same conclusion in In re Ali (Minn. 2020) 938 N.W.2d 835 (Ali). In that case the plaintiff lived at home with her developmentally disabled son. Under a Minnesota state 10 The majority contends that “ ‘offset’ as used here does not necessarily reflect th[e] same meaning” as “reimburse” (maj. opn., ante, at p. 10), but it does not clearly articulate what the difference might be. 18 REILLY v. MARIN HOUSING AUTHORITY Cantil-Sakauye, C. J., dissenting program, she was provided with a budget for the services and equipment needed to keep him in the home, some of which she allocated to herself as compensation for her services as a caregiver. (Id. at p. 837.) In concluding that the sums allocated to plaintiff were not excluded from her Section 8 income under part 5.609(c)(16), the court held that the word “cost” should be interpreted as “price.” (Ali, at p. 839.) It rejected the argument that the word should be given a broader definition for three independent reasons. First, referring to the entirety of the phrase “to offset the cost of services and equipment,” the court reasoned that “[t]he ‘and’ between the words services and equipment suggests that the same measurement is used for each. Typically, the cost of equipment is calculated in monetary terms — such as the cost to buy or lease.” (Ibid.) Second, like the appellate court below, Ali cited the use of the word “cost” elsewhere in part 5.609, where it clearly refers to “a monetary expense.” (Ali, at p. 839.) Finally, the court noted that “when the regulators wanted to exclude amounts paid to family members for their own services, they knew how to do so — and did so unambiguously.” (Ibid.) Ali cited in support two other subparts of part 5.609(c), in both of which the regulatory language, unlike part 5.609(c)(16), unambiguously excludes 19 REILLY v. MARIN HOUSING AUTHORITY Cantil-Sakauye, C. J., dissenting state payments made to the Section 8 family.11 (Ali, at p. 839.)