481 U.S. 368 (1987), 85-1358, Lukhard v. Reed
|Docket Nº:||No. 85-1358|
|Citation:||481 U.S. 368, 107 S.Ct. 1807, 95 L.Ed.2d 328, 55 U.S.L.W. 4561|
|Party Name:||Lukhard v. Reed|
|Case Date:||April 22, 1987|
|Court:||United States Supreme Court|
Argued January 14, 1987
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE FOURTH CIRCUIT
The federal statute governing the Aid to Families With Dependent Children (AFDC) program requires participating States to consider a family's "income and resources" in determining whether it is needy, and prohibits the payment of benefits in any month in which either income or resources exceed state-prescribed limits. Because income and resources are separately computed and generally subject to different state limits, whether and for how long a family that acquires a sum of money is rendered ineligible for AFDC benefits may depend on whether the sum is classified as income or as a resource. Prior to 1981, the Department of Health and Human Services (HHS) required that States treat any income acquired in a given month as a resource in following months. However, because of HHS' concern that recipients that acquired a large amount of income had an incentive to spend it as quickly as possible in order to reduce their resources to a level beneath the state limit, Congress amended the AFDC statute to provide that recipients who receive income exceeding the State's standard of need are ineligible for benefits for as many months as that income would last if the recipients spent an amount equal to the State's standard each month. In response to this amendment, the Virginia Department of Social Services (VDSS) revised its AFDC regulations to treat various lump-sum payments, including personal injury awards, as income rather than resources, although the regulations continued to treat property damage awards as resources. Respondents, personal injury award recipients who were thereby rendered ineligible for AFDC benefits under Virginia's revised regulations, filed a class action in Federal District Court against the Secretary of HHS and petitioner Commissioner of VDSS. The District Court granted summary judgment to the class, holding that the common meaning of "income" precluded application of the term to personal injury awards, and that it was irrational to treat personal injury awards as income while treating property damage awards as resources. The Court of Appeals affirmed.
Held: The judgment is reversed.
774 F.2d 1270, reversed.
JUSTICE SCALIA, joined by THE CHIEF JUSTICE, JUSTICE WHITE, and JUSTICE [107 S.Ct. 1809] STEVENS, concluded that respondents have not demonstrated
that Virginia's policy of treating personal injury awards as income is inconsistent with the AFDC statute or HHS' regulations. Pp. 374-383.
(a) Virginia's revised regulations are consistent with the meaning of "income" as used in the AFDC statute. Respondents' premise that the common usage of "income" as involving gain excludes personal injury awards because of their purely compensatory nature is false, since such awards often compensate for the loss of gain in the form of lost wages, and, to that extent at least, must be considered income. More importantly, the AFDC statute itself contradicts respondents' contention, as is demonstrated by Heckler v. Turner, 470 U.S. 184, in which it was held that, under a provision not involved here, the part of an employee's salary that is allocated to work-related expenses -- clearly not a "gain" in the sense that respondents use that term -- is properly treated as "income" under the statute. Pp. 374-376.
(b) The fact that personal injury awards are expressly excluded from income under the Internal Revenue Code, the Food Stamp Program, and the HHS poverty guidelines does not mean that such awards are automatically excluded from "income" but, in fact, supports the opposite proposition that they are included when, as in the AFDC statute, Congress is silent on the subject. Moreover, no presumption of a common definition of "income" can be inferred from the fact that the AFDC statute, the Food Stamp Program, and the HHS poverty guidelines all attempt to define who is needy, since the explicit differences in the three programs' treatment of "income" are too great. Pp. 376-377.
(c) Virginia's treatment of personal injury awards is consistent with the administrative and legislative history of the AFDC statute. Contrary to respondents' contention, the evidence indicates that HHS has for many years interpreted the statute at least to permit the inclusion of such awards in "income," which interpretation is entitled to deference. Pp. 377-380.
(d) There is no merit to the contention that personal injury awards must be treated as resources because healthy bodies are resources and personal injury awards merely compensate for healthy bodies. The AFDC statute and regulations count only real and personal property as "resources." Pp. 380-381.
(e) Treating property damage awards as resources does not violate an HHS regulation requiring that eligibility conditions not result in arbitrary exclusions or inequitable treatment, since property damage awards can be distinguished from personal injury awards on the ground that they merely restore resources to previous levels. Moreover, HHS' conclusion that Virginia's regulations are consistent with HHS' regulations is entitled to substantial deference. Pp. 381-383.
JUSTICE BLACKMUN concluded that the Virginia regulations should not be upheld on an endorsement of the Virginia interpretation but,
flatly, on the deference owed the Secretary of HHS in his interpretation of the complex governing statutes. Pp. 383-384.
SCALIA, J., announced the judgment of the Court and delivered an opinion in which REHNQUIST, C.J., and WHITE and STEVENS, JJ., joined. BLACKMUN, J., filed an opinion concurring in the judgment, post, p. 383. POWELL, J., filed a dissenting opinion, in which BRENNAN, MARSHALL, and O'CONNOR, JJ., joined, post, p. 384.
SCALIA, J., lead opinion
[107 S.Ct. 1810] JUSTICE SCALIA announced the judgment of the Court and delivered an opinion, in which THE CHIEF JUSTICE, JUSTICE WHITE, and JUSTICE STEVENS join.
In this case, the United States Court of Appeals for the Fourth Circuit held that a state social services agency could not lawfully treat personal injury awards as income when determining the eligibility of families seeking Aid to Families with Dependent Children (AFDC) benefits. Reed v. Health & Human Services, 774 F.2d 1270 (1985). The United States Court of Appeals for the Seventh Circuit has reached the opposite conclusion. Watkins v. Blinzinger, 789 F.2d 474 (1986). We granted certiorari to resolve the conflict. 477 U.S. 903 (1986).
Under the AFDC program, participating States that provide financial assistance to families with needy, dependent children are partially reimbursed by the Federal Government. 49 Stat. 627, as amended, 42 U.S.C. §§ 601-615 (1982 ed. and Supp. III). Although the States are largely free to determine the appropriate standard of need and the level of assistance, they must administer their assistance plans in conformity with applicable federal statutes and with regulations promulgated by the United States Department of Health and Human Services (HHS). Those statutes require States to consider a family's "income and resources" when determining whether or not it is needy, 53 Stat. 1379, as amended, 42 U.S.C. § 602(a)(7)(A) (1982 ed., Supp. III), and prohibit them from providing AFDC benefits for any month in which either income or resources exceed state-prescribed limits (subject to a federal ceiling), 95 Stat. 844, as amended, 42 U.S.C. §§ 602(a)(7)(B), 602(a)(17), 602(a)(18) (1982 ed., Supp. III).
Because income eligibility and resource eligibility are separately computed (and also because state limits for the two generally differ), whether and for how long a family that acquires a sum of money is rendered ineligible for AFDC benefits
may depend on whether the sum is classified as income or as a resource. Prior to 1981, however, the importance of the classification was minimized by an HHS requirement that States treat any income received in a given month as a resource in following months. Thus, a family that received an amount of income that exceeded the State's income limit would be automatically ineligible for one month; whether or not it remained ineligible in subsequent months would depend on whether the amount of that income that had not yet been spent, combined with the value of the family's other resources, exceeded the State's resource limit. The Secretary of HHS became concerned that AFDC recipients who acquired a large amount of income had an incentive to spend it as rapidly as possible, in order to regain eligibility by reducing their resources to a level beneath the State's resource limit. To solve this problem, the Secretary proposed and Congress passed an amendment to the AFDC statute. Under that amendment, AFDC recipients who receive an amount of income that exceeds the State's standard of need are rendered ineligible for as many months as that income would last if the recipients spent an amount equal to the State's standard of need each month. Section 2304 of the Omnibus Budget Reconciliation Act of 1981 (OBRA), 95 Stat. 845, as amended, 42 U.S.C. § 602(a)(17) (1982 ed., Supp. III).
Because the OBRA amendment applies by its terms only to income, the distinction between income and resources took on new importance. If a given sum of money were treated as a resource, the family that received the sum would be ineligible only until it spent enough of the sum to bring its resources down to the State's resource limit; but if the sum were treated as income, no matter how much was spent, the family would remain ineligible for the statutory period. In response to the OBRA amendment, the Virginia Department of Social Services (the agency responsible for [107 S.Ct. 1811] administering...
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