Court Opinion

ID: 8996998
Source: CourtListenerOpinion
Date Created: 2022-11-27 12:49:47.311596+00
Date Added: 2024-06-11T17:11:06.224521
License: Public Domain

HOLLOWAY, Circuit Judge,
dissenting:
I must respectfully dissent. I find nothing in the language of the Social Security Act or its legislative history which shows that Congress wanted AFDC assistance completely cut off for a failure to file a report on income that would otherwise be disregarded, or the harsh retroactive penalty depriving Ms. Marturello of all her AFDC assistance for seven months. I would affirm the district court because the Act is silent or ambiguous as to a remedial mechanism when inconsequential amounts of income are not reported and because the Secretary’s interpretation of the statutory scheme is grossly unreasonable.
I.
To place this case in perspective, I believe the following facts deserve our attention: Plaintiff Amy Marturello initiated this declaratory judgment action against two state AFDC officials, claiming that the *735state agency’s implementation of a policy promulgated by the Secretary was contrary to the AFDC provision of the Social Security Act. Under this policy,- expressed in FSA Regional Memorandum 87-1, the Secretary declared that AFDC recipients who fail to file monthly reports of any amounts of earned income are “ineligible for assistance beginning with the month that the monthly report normally would have been used to compute assistance[.]” App. at 218 (emphasis added). Utah DHS began implementing this policy in March of 1987.1
As implemented by the Utah DHS, a report is considered timely filed on or before the fifth day of the month due. Any report filed thereafter is considered “late.” After fifteen days, the recipient is to be notified that benefits may be terminated. A recipient filing a late report may show “good cause” for being late, in which case the report is considered timely filed. The failure to show good cause for a late report results in a denial of all EID’s for that month. See Utah DSS-APA, Yol. II, § 334.3 through § 334.9. Significantly here, after the Secretary’s new policy was implemented, Utah DHS no longer accepted reports after the last working day of the month it was due, regardless of the reason for untimeliness.
In November 1987,. a Utah DHS caseworker discovered that Ms. Marturello had earned almost $50 per month delivering newspapers from March through September of 1987. Without contacting Ms. Mar-turello or otherwise attempting to discover why no reports were filed, Utah DHS declared her ineligible to receive her $439/ month AFDC benefits for May through November of 1987.2 Because Utah DHS had already paid Ms.. Marturello these monthly benefits, the agency sent her a letter demanding recoupment of the overpayment of $3,073 — the total of all her benefits during this period.3
In the proceedings below, Amy Marturel-lo filed an affidavit in support of her position on the cross motions for summary judgment, and it was not contradicted by any opposing affidavit. From the materials before him, the district judge found that Mrs. Marturello misunderstood the filing requirements and believed that income reports need not be filed unless the income was sufficient to affect her grant. See App. at 231. The court also found that Ms. Marturello did not learn of the Secretary’s policy to declare noiireporting recipients totally ineligible for assistance until November 1987. See id. The court also ascertained that: '
If Marturello had been untimely but nevertheless had reported her income from the paper delivery job ... her AFDC grant of $439 would have been unaffected except as to the earned in- • come disregards. If the small amounts had been timely filed and reported, plaintiffs [sic] AFDC grant apparently would not have been affected at all.
Id. n. 9, •
H.
The majority opinion correctly identifies the two-step analysis required for the review of an agency’s construction of a statute which it administers; however, I believe the opinion reads too much into § 602(a)(14)(A) when applying that analysis-. The Supreme Court instructs that:
*736First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.... [I]f the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.
Chevron U.S.A. v. NRDC, 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984) (emphasis added).
I cannot find the required specificity in the language of subparagraph (14)(A) which demonstrates to me a clear intention that Congress sought to penalize nonfiling recipients who have earned only disregard-able income with total forfeiture of their benefits and a retroactive penalty to recover them. Subparagraph (14)(A) provides that the state agency shall require recipients “to report, as a condition to the continued receipt of such aid ... the income received[.]” This provision says nothing at all about a penalty — here an extended retroactive one — and most reasonably is construed as giving the state agency the power to temporarily withhold benefits until a report is received. This interpretation affords both respect and enforcement to the reporting condition. Congress, did not declare that those who fail to comply are categorically “ineligible” as it clearly did in other parts of this very statute. Cf § 6Q2(a)(18) (declaring that “no family shall be eligible” if their income exceeds a specified amount); Id. at (a)(19) (declaring that “every individual, as a condition of eligibility for aid ... shall register” for work programs).
Thus, we cannot presume that when Congress intentionally chose the phrase “continued receipt” that it meant “eligibility” in the • categorical sense that the majority opinion insists. Rather, it is merely the Secretary who has declared that AFDC recipients who fail to file monthly reports of any amounts of earned income are “ineligible for assistance[.]” See FSA Regional Memorandum 87-1. It is this administrative fiat, and not the statute, which declares Ms. Marturello irreversibly “ineligible for assistance[.]”4 Because Congress was silent as to a particular enforcement mechanism when reports were not filed, the Secretary acted by promulgating the policy at issue here.5
Having found that the statute does not address the question presented to this court of the proper remedy for nonfiling, I conclude that the district court correctly analyzed the Secretary’s interpretation under the second step of the Chevron analysis, finding his interpretation to be unreasonable. . In a succinct statement of his reasoning, with which I completely agree, the district judge stated?
The interpretation by the Secretary which retroactively causes recipients to lose total eligibility without notice, an opportunity to file late reports, or an opportunity to show good cause for failure to file constitutes an, unreasonable result. In such situations, the Secretary’s interpretation so severely restricts the amount to which an otherwise *737eligible recipient would be entitled that it is contrary to the purpose of the statute. As applied to the facts of this case, defendants’ policy interpretation is particularly harsh and unreasonable. In this regard, plaintiff points out that if she had filed a late report, the most severe sanction that could have been imposed under any interpretation would have been loss of earned income disregards. This would have reduced plaintiffs monthly grant by the amount of earned income received, a total of less than $350 over the period in question, rather than being sanctioned for over $3,700 [sic] for failure to report a few dollars a month which if reported would not have affected her eligibility or the amount of her grant at all. Since plaintiff was unaware of the federal interpretation that failure to file a report would result in ineligibility to receive benefits, and since plaintiff relied upon past interpretation of the state that the maximum sanction to be imposed for failure to file a report would be loss of earned income disregards, it does appear that it would be unfair and manifestly unjust to apply defendants’ interpretation of the law and regulation to her. The outcome in Marturello’s case is particularly inequitable in light of the state defendants’ pre-March 1987 policy of imposing only loss of earned income disregards as opposed to declaring a household totally ineligible for failure to file a monthly report. It is thus apparent that the result reached is unreasonable as applied to plaintiff and the court so holds.
App. at 240-41 (emphasis changed). See also Vierra v. Rubin, 915 F.2d 1372, 1378-79 (9th Cir.1990) (“Federal regulations stress that eligibility conditions must be applied on a consistent and equitable basis”) (emphasis in original) (quotation omitted).
I would add one important point. On review of the Secretary’s policy as formulated in FSA Regional Memorandum 87-1, I am convinced that at the time of its promulgation even the Secretary did not determine that nonfilers are categorically “ineligible” for assistance. Although the policy statement initially says that “[t]he assistance unit is ineligible[,]” the statement further explains that a state agency must begin recoupment efforts against a nonfiler because “the [assistance] unit, though not ineligible for failing to file a monthly report, would more likely be overpaid or ineligible because the determination of eligibility ... must be recomputed without benefit of the earnings disregard[.]” Id.; cf. Vierra, 915 F.2d at 1379 n. 6 (observing that the Secretary there argued that income report filing requirements “are factors independent of the general AFDC eligibility ... determinations’’). Thus, the Secretary’s adoption of a hardline, total ineligibility policy is a shift in the administrative interpretation and is unreasonable in light of his earlier position.
The Secretary says that “[although the result is severe,” it is necessary as a deterrent. Brief for Appellant at 15. Conditions, however, do not necessarily demand the exaction of the most severe penalty imaginable. In enacting this humane and remedial statute, I am convinced Congress did not intend such a harsh penalty. See Vierra, supra at 1378 (Congress did not intend to punish “innocent late filers” with total benefit loss as a penalty). Accordingly, I must dissent.

.The AFDC assistance level is determined on a monthly basis, taking into account any other income earned by the potential recipient. Notably, some outside income is "disregarded” each month when calculating need. Such income is commonly referred to as an "earned income disregard” ("ÉID”). To be eligible for an EID, recipients are required to file monthly income reports for each month in which they work. Under § 602(a)(8)(A)(ii), Utah DHS is required to apply an EID to "the first $90 of the total of such earned income for such month[.]”

. Utah uses a retrospective budgeting system for determining the benefits level of AFDC assistance. Thus, Ms. Marturello’s income in March ■ would first be reflected in the computation for May’s benefits.

. Starting in November 1987, Ms. Marturello filed monthly income reports which showed ■ that her income was less than the amounts disregarded by law. Accordingly, her grant was unaffected thereafter. App. at 231 n. 8.

. Alternatively, since the statute empowers Utah DHS to temporarily withhold benefits pending receipt of a report, it is Utah DHS’ interpretation of the Act whereby it refuses to accept reports after the month in which they are due which operates to permanently deprive Ms. Marturello of benefits for the past months when reports were not filed. In either instance, we must proceed beyond the first step of the Chevron analysis, which the majority opinion fails to do.

. Even if Congress were viewed as speaking to an enforcement remedy in (14)(A), I believe its language is ambiguous. Subparagraph (8), which provides for EIDs, contains an explicit cross reference to subparagraph (14), and therefore the two provisions are to be read together, creating confusion about the appropriate remedy for nonfiling. Moreover, this court has explained that "[a] statute may be ambiguous if its application leads to an irrational or absurd result.” Ewing v. Rodgers, 826 F.2d 967, 970 n. 3 (10th Cir.1987). Construing subparagraph (14)(A) to require the total retroactive forfeiture of $3,073 in benefits — penalizing Amy Marturel-lo and her children for her not reporting that she Went to work and earned less than $350 in seven months — is irrational and absurd in light of the statute's purpose of aiding indigent families with young children. See also United States v. Public Util. Comm’r of California, 345 U.S. 295, 315, 73 S.Ct. 706, 717, 97 L.Ed. 1020 (1953) (courts must look beyond statutory language where "literal words would bring about an end completely at variance with the purpose of the statute").