Sturgell v. Creasy, 78-3548

• Citation: 640 F.2d 843
• Decision Date: 11 February 1981
• Docket Number: No. 78-3548,78-3548
• Parties: Paul and Joyce STURGELL, Plaintiffs-Appellants, v. Kenneth B. CREASY, Director, Ohio Department of Public Welfare; Ohio Department of Public Welfare; Joseph A. Califano, Jr., Secretary of Health, Education and Welfare; and Department of Health, Education and Welfare, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 843

640 F.2d 843

Paul and Joyce STURGELL, Plaintiffs-Appellants, v. Kenneth B. CREASY, Director, Ohio Department of Public Welfare; Ohio Department of Public Welfare; Joseph A Califano, Jr., Secretary of Health, Education and Welfare and Department of Health, Education and Welfare, Defendants-Appellees.

No. 78-3548.

United States Court of Appeals Sixth Circuit.

Argued Sept. 17, 1980.

Decided Feb. 11, 1981.

Bruce E. Friedman, Concord, N. H., Clement W. Pyles, Ohio State Legal Services Association, Columbus, Ohio, for plaintiffs-appellants.

William J. Brown, Atty. Gen. of Ohio, James C. Cissell, U. S. Atty., Richard Ross, Columbus, Ohio, Gwenda D. Jones, Baltimore, Md., for defendants-appellees.

Before ENGEL and MERRITT, Circuit Judges, and GUY, District Judge. ^*

GUY, District Judge.

Appellants, Paul and Joyce Sturgell, appeal from the district court's judgment holding that reduction of the family's AFDC grant due to Paul Sturgell's receipt of a veteran's non-service connected pension is consistent with federal law and regulations, and does not violate the Due Process and Equal Protection Clauses of the Fifth and Fourteenth Amendments. Finding that neither applicable statutes and regulations nor the Constitution prohibit this reduction of benefits, we affirm.

The facts presented to the court below are not in dispute. Appellant Paul Sturgell served in the military for seven years. He was found to be totally and permanently disabled for reasons unrelated to his military service by the Ohio Department of Public Welfare in 1970, the Social Security Administration in 1974, and the Veteran's Administration (VA) in 1977. Because he was without funds and disabled, he applied for Supplemental Security Income benefits (SSI) under 42 U.S.C. § 1381 et seq. In 1977, he received a full SSI grant of $177.80 per month. At the same time, Sturgell's wife, Joyce, and their two children received the full monthly grant of $215.00 for a family of three under the Aid for Families with Dependent Children program (AFDC), 42 U.S.C. § 601 et seq. and O.R.C. § 5101. Consequently, their total monthly income in 1977 was $392.80. In computing the family's income for purposes of determining the amount of AFDC benefits, Paul Sturgell was not considered to be a member of the family and his SSI benefits were not counted as income or resources available to the AFDC unit. ¹ As a result, the family's AFDC grant was greater than if the SSI benefits Paul Sturgell received had been considered as income to the family and they had been counted as a family of four rather than a family of three.

In late 1976, the Franklin County Welfare Department notified Paul Sturgell that federal and state law required him to apply for VA benefits. ² On December 31, 1976, Paul Sturgell was awarded a non-service connected disability pension under 38 U.S.C. § 351 in the amount of $209.00 per month. After the change in source of income was reported to the Social Security Administration and the Welfare Department, the Welfare Department notified the Sturgells that Paul Sturgell's SSI benefits were terminated and that his VA pension would be included in determining the family's income for purposes of awarding AFDC benefits. ³ As a result, the amount of the AFDC grant was reduced to $58.00, so that the total combined income of the Sturgell family became $267.00 per month, the amount to which a family of four was entitled under the AFDC program at that time.

On January 3, 1978, after the Sturgells had filed an action in federal district court complaining of the reduction in benefits, Judge Robert M. Duncan issued an order enjoining the state defendants and their agents from reducing Joyce Sturgell's monthly AFDC grant by more than $25.00, pending decision of the legal issues involved in reducing the benefits. The order also enjoined the federal defendants from refusing federal monies to the state defendants for actions taken as a result of the court's order. On August 4, 1978, after the case had been presented to the court on cross motions for summary judgment, the court ruled that inclusion of the amount of Paul Sturgell's VA pension in the family's income for purposes of fixing the amount of their AFDC benefits was proper as a matter of statutory construction and could not be assailed on equal protection grounds.

After notice of appeal was filed with this court on August 10, 1978, appellants filed a motion to remand the case to the district court for vacation of the lower court's decision or a declaration that the case is moot based on the Veterans and Survivors Pension Improvement Act of 1978, Pub.L. 95-588, which raised the rates for VA pensions paid for non-service related disabilities. This court denied the motion on January 12, 1979.

I. STATUTORY AND REGULATORY PROVISIONS

Before considering the arguments appellants make in support of their contentions, it is necessary to review the relevant applicable statutory and regulatory provisions.

The AFDC program, 42 U.S.C. § 601 et seq., provides categorical federal grants to states for aid and services for needy families with children. In order to be eligible for federal funding, a state must submit a plan to the Secretary of Health and Human (a) A State plan for aid and services to needy families with children must ... (7) except as may be otherwise provided in clause (8), provide that the State agency shall, in determining need, take into consideration any other income and resources of any child or relative claiming aid to families with dependent children, or of any other individual (living in the same home as such child and relative) whose needs the State determines should be considered in determining the need of the child or relative claiming such aid, as well as any expenses reasonably attributable to the earning of any such income;

Services that defines, inter alia, eligibility criteria for recipients. If the plan meets the requirements set forth in 42 U.S.C. § 602(a) and the implementing regulations found at 45 C.F.R. § 233.10 et seq., the Secretary must approve the plan. Since eligibility for benefits is based on financial need, 42 U.S.C. § 602(a)(7) provides:

45 C.F.R. § 233.20(a)(1)(i) further requires that the state plan must:

Provide that the determination of need and amount of assistance for all applicants and recipients will be made on an objective and equitable basis and all types of income will be taken into consideration in the same way except where otherwise specifically authorized by Federal statute.

It is presumed that income of a natural parent living with his family is available to them by virtue of 45 C.F.R. § 233.90(a) which provides in part:

In establishing financial eligibility and the amount of the assistance payment, only such net income as is actually available for current use on a regular basis will be considered, and the income only of the parent described in the first sentence of this paragraph (natural or adoptive parent) will be considered available for children in the household in the absence of proof of actual contributions;

An exception to the general rule that all income attributable to the natural parent who lives in the home is available to the family and should be considered available is found in 42 U.S.C. § 602(a)(24) and complementing regulations at 45 C.F.R. §§ 233.20(a)(1)(ii) and 233.20(a)(3)(vi), (b) which provide that an individual who receives SSI benefits will not be considered a member of the family unit and such benefits will not be considered available to the family for purposes of determining the amount of its AFDC grant.

Against this statutory and regulatory background then, the four arguments raised by the appellants must be considered.

First, appellants argue that the State's inclusion of $197.00 of Paul Sturgell's $222.00 VA pension in the computation of his family's income violates 45 C.F.R. § 233.20(a)(1)(i) because 38 U.S.C. § 521 which creates his pension is a federal statute that "specifically authorizes" exclusion of that amount.

Amendments to 38 U.S.C. § 521 indicate that the monthly rate of a non-service connected VA pension shall be $197.00 if the recipient has no dependents, $212.00 if he has one, $217.00 if there are two, and $222.00 where three persons are dependent on the veteran. Appellants contend that these figures indicate that $197.00 is "earmarked" for the veteran alone, $15.00 is "earmarked" for his wife, and $5.00 is "earmarked" for each of his children. This "earmarking," they argue, is tantamount to a specific authorization by Congress that the amount allowed for the veteran is to be excluded in computing the amount of income available to the family.

The court finds, however, that 38 U.S.C. § 521 does not "earmark" or apportion the VA pension for the exclusive use of individual family members so as to compel the conclusion that less than the entire amount of the pension is not available to the family unit. Unlike 38 U.S.C. § 3107, which specifically authorizes apportionment of a VA pension if the veteran is hospitalized, institutionalized, or under domiciliary care of the United States if he is not living with his wife or if his children are not in his custody, the tables upon which appellants rely do not apportion the pension but simply increase the amount available to the family Similarly, the court finds that the cases relied upon by the appellants in support of their position that the amount of the VA pension "earmarked" for him is not "available" to his wife and children so that it can be considered to come within the meaning of 42 U.S.C. § 602(a)(7) and 45 C.F.R. § 233.20(a) (1) are inapposite. In Elam v. Hanson, 384 F.Supp. 549 (N.D.Ohio 1974), and Brown v. Bates, 363 F.Supp. 897 (N.D.Ohio 1973), Judge Young found that OASDI student benefits and work study benefits should not be considered as income available to the family for purposes of computing the amount of family income for determining the need...