Opinion ID: 352728
Heading Depth: 1
Heading Rank: 1

Heading: The AFDC Recoupment Regulation

Text: 2 Title IV A of the Social Security Act, 42 U.S.C.A. § 601 et seq., is designed to provide aid in the form of cash assistance and social services to needy, dependent children and their caretaker relatives. 42 U.S.C.A. § 601. The program is based on a scheme of cooperative federalism. It is financed in large part by federal funds on a matching basis, but its administration is entrusted to the states. See generally King v. Smith, 392 U.S. 309, 316-17, 88 S.Ct. 2128, 2133, 20 L.Ed.2d 1118 (1968). 3 A state desiring to participate in the program must submit for HEW approval a plan conforming to the Act and the implementing regulations. As a yardstick for measuring eligibility for assistance and the amount of assistance, each state plan must specify a statewide standard of need, which is the amount deemed necessary by the State to maintain a hypothetical family at a subsistence level. Shea v. Vialpando, 416 U.S. 251, 253, 94 S.Ct. 1746, 1750, 40 L.Ed.2d 120 (1974). State plans must also contain a determination of the level of assistance their plans will meet. Rosado v. Wyman, 397 U.S. 397, 408, 90 S.Ct. 1207, 1216, 25 L.Ed.2d 442 (1970). This level of benefits is the percentage of a covered family's standard of need which the state chooses to pay. See National Welfare Rights Organization v. Mathews, 174 U.S.App.D.C. 410, 414-15, 533 F.2d 637, 641-42 (1976). At the time of this suit the Louisiana plan was designed to assure that an eligible household would receive 60% Of its specified standard of need. If the income and resources of the family provided less than 60% Of the standard of need, the family was entitled to an assistance grant in the amount necessary to bring them up to the 60% Level. A similar system of computing the level of benefits to be given the welfare recipient was approved in Jefferson v. Hackney, 406 U.S. 535, 92 S.Ct. 1724, 32 L.Ed.2d 285 (1972). 4 HEW, the agency charged with administering the AFDC program, has the authority to promulgate rules and regulations, not inconsistent with the Act, as may be necessary to the efficient administration of the program. 42 U.S.C.A. § 1302. Pursuant to this authority, HEW promulgated the recoupment regulation in issue here: 5 The State may not recoup any overpayment previously made to a recipient: 6 (1) Unless the recipient has income or resources exclusive of the current assistance payment currently available in the amount by which the agency proposes to reduce payments: except that, 7 (2) Where such overpayments were occasioned or caused by the recipient's willful withholding of information concerning his income, resources or other circumstances which may affect the amount of payment, the State may recoup prior overpayments from current assistance grants irrespective of current income or resources. 8 45 C.F.R. § 233.20(a)(12)(i)(A) (1976). The regulations also contain this limitation on a state's power to recoup from current assistance grants: 9 If recoupments are made from current assistance payments, the State shall, on a case-by-case basis, limit the proportion of such payments that may be deducted in each case, so as not to cause undue hardship on recipients. 10 45 C.F.R. § 233.20(a)(12)(i)(f ) (1976). Louisiana's recoupment policy complies with the regulations. The lawfulness of the policy depends upon the validity of this regulatory scheme. 11 The standard of review to be applied in evaluating the regulations is lenient due to the deference accorded to an administrator's interpretation of the statutory scheme he carries out. The regulations are within the scope of the broad grant of power given to the Secretary of HEW by 42 U.S.C.A. § 1302 if they are reasonably related to the purposes of the enabling legislation and if they are not inconsistent with the Act. Johnson's Professional Nursing Home v. Weinberger, 490 F.2d 841, 844 (5th Cir. 1974). 12 In arguing that the recoupment regulation is contrary to the purposes of the Act, plaintiffs focus our attention on the effect of recoupment on the needy, dependent children, the protection of whom is the paramount goal of AFDC. King v. Smith, 392 U.S. 309, 325, 88 S.Ct. 2128, 2137, 20 L.Ed.2d 1118 (1968). The reality of public welfare is the necessity of current payments for current needs, and depriving these children of their current needs because of the fraud of their caretaker relatives violates the policy underlying the AFDC program. 13 Plaintiffs err in asserting that recoupment violates the purposes of AFDC. As the statute itself states, the purpose of AFDC is to provide assistance to needy and dependent children as far as practicable under the conditions in (each) state. 42 U.S.C.A. § 601. This proviso indicates that Congress realized state resources are not unlimited. Dandridge v. Williams, 397 U.S. 471, 478, 90 S.Ct. 1153, 1158, 25 L.Ed.2d 491 (1970). If some welfare recipients obtain more than their rightful share of these finite resources through fraud, it is mathematically certain that other needy, dependent children whose families accurately report their income and resources must be affected either by across-the-board reductions of the level of assistance or by the state's inability to provide an increased level of benefits. The recoupment regulations, an administrative tool designed to assure a fair distribution of the state's limited funds, are reasonably related to the goal of evenly assisting needy children to the state-determined level. Families from whom recoupment is made may suffer some hardships as a result of the reduction of their current grants, especially in a state like Louisiana where the AFDC program cannot provide the recipients' full standard of need. However, the fraud which enabled them to gain a share of the benefits to which others were entitled may properly cause this share to be returned. The regulation which limits recoupment to an amount that will not cause undue hardship, 45 C.F.R. § 233.20(a)(12)(i)(f ), reasonably assures that needy children will not be left entirely unprotected from the effects of their caretakers' wrongdoing. 14 Recoupment also serves another purpose of the Act: the desire of Congress to keep dependent children within a family unit. See Dandridge v. Williams, 397 U.S. 471, 90 S.Ct. 1153, 25 L.Ed.2d 491 (1970). The alternative remedy of criminal prosecutions for welfare fraud, suggested by plaintiffs, could result in the jailing of a needy child's proper caretaker relative. However, our initial decision is not rested upon such a policy choice. See Jefferson v. Hackney, 406 U.S. 535, 92 S.Ct. 1724, 1729, 32 L.Ed.2d 285 (1972). Rather, it is based on the determination that the regulations have a reasonable relationship to the purposes of the enabling legislation. 15 Plaintiffs also urge that the regulations are inconsistent with specific provisions of the Act. We begin our analysis of this issue by noting that no provision of Title IV A of the Social Security Act either expressly authorizes or forbids recoupment of prior overpayments from current assistance payments. See Swasey v. Whalen, 562 F.2d 831, 833 (1st Cir. 1977). Plaintiffs argue that congressional silence should be read as prohibiting recoupment in the AFDC program since Congress explicitly provided for recovery of overpayments by grant reductions in other welfare programs. See 42 U.S.C.A. § 404(a) (allowing recoupment by grant reductions in the Old Age, Survivors, and Disability Insurance program); Bradford v. Juras, 331 F.Supp. 167 (D.Or.1971). Defendants argue that congressional silence with respect to recoupment under the circumstances of this case, when HEW policy or regulations have allowed such recoupment at least since 1968 and arguably since 1951, indicates Congress' approval of the regulations. See Jackson v. Weinberger, 407 F.Supp. 792 (W.D.N.Y.1976). Given the inconclusive nature of the legislative history of recoupment, we decline to infer that Congress' silence indicates approval or disapproval. 16 No express statutory authorization is required to permit the government to recoup monies wrongfully paid. As we have held, the government has a common law right of recoupment. Mt. Sinai Hospital v. Weinberger, 517 F.2d 329 (5th Cir. 1975). In addition, the recoupment regulations function in at least two ways to further the efficient administration of the program, thus bringing them within the scope of HEW's broad statutory authority. First, the regulation deters fraud by eliminating any incentive to inaccurate reporting of income and resources. Second, the regulation enables the state to recover overpayments in order to maintain the fiscal integrity of its program. Since HEW's statutory authority extends only to regulations necessary to the efficient administration of the program that are not inconsistent with the Act, the issue narrows to whether the method of recoupment employed here recoupment by reduction of current benefits without regard to current income and resources when the recipient has received an overpayment by willfully withholding pertinent information is inconsistent with or prohibited by the Act. 17 Plaintiffs argue that the recoupment regulation is inconsistent with 42 U.S.C.A. § 602(a)(7). That section requires the state agency, in determining need, to take into consideration any other income and resources of any child or relative claiming aid to families with dependent children. Thus an individual family's need is determined by subtracting from its standard of need the available income and resources of that family. See Swasey v. Whalen, 562 F.2d 831, 835 (1st Cir. 1977). The income and resources to be taken into consideration in determining need and the amount of the assistance payment are net income available for current use and currently available resources. 45 C.F.R. § 233.20(a)(3)(ii)(D) (1976). 18 In a series of cases involving the presence in the welfare household of an able-bodied male who had no legal obligation to support the child, the Supreme Court has made clear that a state cannot assume the availability of that male's income in determining the family's eligibility for and amount of AFDC assistance, without proof that the income was actually being contributed for the child's support. Van Lare v. Hurley, 421 U.S. 338, 95 S.Ct. 1741, 44 L.Ed.2d 208 (1975); Lewis v. Martin, 397 U.S. 552, 90 S.Ct. 1282, 25 L.Ed.2d 561 (1970); King v. Smith, 392 U.S. 309, 319 n. 16, 88 S.Ct. 2128, 2134, 20 L.Ed.2d 1118 (1968). Plaintiffs argue that the reduction of current grants pursuant to the recoupment regulation likewise is based on an unlawful assumption that the past overpayment is currently available to meet current needs. This assumption is said to be precluded by the currently available income and resources rule of § 602(a)(7). 19 This argument persuaded the court in National Welfare Rights Organization v. Weinberger, 377 F.Supp. 861 (D.D.C.1974), to invalidate the predecessor of the recoupment regulation in issue here insofar as it permitted recoupment from current benefits of overpayments not occasioned by the recipient's willful withholding of information concerning his income or resources. The court's reasoning that such recoupment requires the states to presume conclusively that the overpayment is currently available even though it may have been spent long ago would appear to apply to a willful withholding of information case. Cf. Cooper v. Laupheimer, 316 F.Supp. 264 (E.D.Penn.1970). 20 We reject the reasoning of National Welfare Rights Organization v. Weinberger which would apply the assumption of income rule to the recoupment situation, and adopt the position of those courts which have held the recoupment regulation not to violate 42 U.S.C.A. § 602(a)(7). See Gardenia v. Norton, 425 F.Supp. 922 (D.Conn.1976); Jackson v. Weinberger, 407 F.Supp. 792 (W.D.N.Y.1976). This case is not controlled by Van Lare v. Hurley, Lewis v. Martin, or King v. Smith, for Louisiana's recoupment procedure does not assume that past overpayments are still available to the welfare child when it reduces current benefits under its recoupment policy. The reduction in current payments below the amount which the recipient would otherwise be entitled is made because the recipient has wrongfully acquired an overpayment in the past. The state does not alter its practice of considering only income and resources available on a regular basis in determining need and the level of benefits to which the recipient is rightfully entitled. The recoupment policy is unrelated to need, except to the extent its limitation proviso would prevent undue hardship. Rather, it is designed to assure that the welfare recipient is unable to acquire fraudulently more than his entitlement at the expense of other families benefitting from the AFDC program. 21 The second specific section of the Act that the plaintiffs contend the recoupment regulation violates is 42 U.S.C.A. § 602(a)(10). That section provides that AFDC shall be furnished with reasonable promptness to all eligible individuals. Plaintiffs' premise is that a state may not add an eligibility standard that results in the exclusion of persons eligible for benefits under federal standards. See Townsend v. Swank, 404 U.S. 282, 92 S.Ct. 502, 30 L.Ed.2d 448 (1971). Plaintiffs argue that since they meet both the permissible tests for determining eligibility the dependency standard of the federal statute and the need standards of the state plan denial of their full AFDC benefits must be the result of an impermissible eligibility standard. They urge that the policy imposes as a condition of eligibility that a child must be supervised by a relative who has not engaged in willful withholding of pertinent information from the welfare authorities. 22 The recoupment regulation does not impose a condition of eligibility. It does not affect eligibility for aid, only the amount an otherwise eligible recipient is entitled to receive. As the court stated in Gardenia v. Norton, 425 F.Supp. 922 (D.Conn.1976):Children whose supervising relative has been convicted of welfare fraud remain eligible for AFDC benefits. The reduction in actual assistance payments is an entirely different process from the determination of a child's threshold eligibility for the AFDC program. The defendant is free to make adjustments in the level of assistance payments without transgressing the requirement that eligibility determinations are to be made under federal standards. 23 425 F.Supp. at 927. The recoupment regulation does not add an eligibility requirement. To the contrary, it operates to insure that eligible persons receive the exact amount of their eligibility entitlement. 24 Plaintiffs have not been denied their full AFDC benefits. In fact, at any point of time after the overpayment but prior to the completion of the recoupment process, a family in plaintiffs' class would have received from the program more than its entitlement. At the completion of the recoupment process, the total amount of the assistance grants given that family would be equal to the total amount for which the family was eligible. 25 Over the long run, plaintiffs received the exact amount of assistance under the program their circumstances of need made them eligible to receive. The recoupment regulation allows Louisiana to administer its AFDC program in a manner that assures a fair dispensation of limited funds to all eligible families according to their need. The regulations are consistent with the purposes of the Act, they do not conflict with any provision of the Act, and they are a valid exercise of HEW's broad authority to provide for the efficient administration of the program. 26