Vailes v. D'Elia

• Decision Date: 06 October 1980
• Parties: In the Matter of Diane VAILES, on behalf of herself and her three minor children, Petitioner, v. Joseph D'ELIA, as Commissioner of the Nassau County Department of Social Services, et al., Respondents.
• Court: New York Supreme Court — Appellate Division

Page 204

432 N.Y.S.2d 204

77 A.D.2d 45

In the Matter of Diane VAILES, on behalf of herself and her

three minor children, Petitioner, v. Joseph D'ELIA, as Commissioner of the Nassau County

Department of Social Services, et al., Respondents.

Supreme Court, Appellate Division, Second Department.

Oct. 6, 1980.

Leonard S. Clark, Nassau/Suffolk Law Services Committee, Inc., Hempstead (Ira S. Schneider, Hempstead, of counsel), for petitioner.

Robert Abrams, Atty. Gen., New York City (Joy Meyers and Maryellen Weinberg, Asst. Attys. Gen., New York City, of counsel), for respondent State Commissioner.

Before TITONE, J. P., and MANGANO, RABIN and GULOTTA, JJ.

MANGANO, Justice.

This article 78 proceeding raises two issues for review: (1) whether respondents properly computed petitioner's public assistance grant by reducing by 50% her previous allowance for a family of four, having determined that two of petitioner's children were no longer eligible for public assistance; and (2) whether, for the purpose of determining eligibility for medical assistance, respondents correctly calculated the income exemption level of petitioner's two children who are nonrecipients of public assistance.

Petitioner resides in the same household with her three minor children. Prior to June, 1978, she and her children were recipients of a public assistance grant in the Aid to Dependent Children category (ADC) from the Nassau County Department of Social Services (the agency). That grant was for $451 per month, which was computed by adding $258 (the basic needs allowance for a family of four) to $193 (petitioner's actual rent). On June 2, 1978 the agency notified petitioner that her ADC grant would be reduced, since it had been determined that two of her children were receiving Social Security benefits under the Federal Old Age, Survivors, and Disability Insurance (OASDI) program. These two children were removed from petitioner's ADC budget because their OASDI benefits exceeded their pro rata share of petitioner's then current ADC grant, i. e., their combined OASDI monthly income was more than one-half of the monthly ADC grant for a family of four. Consequently, the ADC grant for petitioner and one child was reduced to an amount equal to one-half of the ADC allowance for a family of four.

Petitioner was also advised in the agency's notice of June 2, 1978, and in a subsequent notice dated June 19, 1978, that her two children receiving OASDI benefits were no longer eligible for Medicaid. This determination was based on the fact that the OASDI income of these two children exceeded their pro rata share, i. e., one half, of the monthly net income exemption for a family of four.

Petitioner thereafter requested a fair hearing by the New York State Department of Social Services. The hearing was conducted on August 16, 1978, and a decision after fair hearing was rendered on September 6, 1978. In that decision, now under review, the State Commissioner held as proper: (1) the agency's method of prorating, i. e., reducing by 50%, the ADC budget for a family of four when computing the budget for two ADC recipients in a household of four, where the other two household members are not ADC recipients; and (2) the agency's method of prorating, i. e., reducing by 50%, the monthly income exemption for a family of four in determining Medicaid eligibility for two nonrecipients of ADC funds in a household of four, where the other two household members are recipients of ADC funds.

I

With regard to the reduction of petitioner's ADC grant, this court, in a scholarly opinion by Mr. Justice GULOTTA, has recently considered the proration method employed herein. (Matter of Leone v. Blum, 73 A.D.2d 252, 425 N.Y.S.2d 836.) In that opinion (p. 258, 425 N.Y.S.2d p. 840), the proration method was described as follows: "(a) counting each person residing in the household (whether or not eligible for assistance) to determine household size, (b) referring to the schedules to find the appropriate allowance for that size household, and them (c) 'prorating' that allowance to assure that only the eligible members of the household are assisted" (e. g., in the instant matter, where the household consists of two ineligibles and two eligibles, one-half of a four person grant would be, and was, awarded). Leone held that this proration method violated State and Federal law, as well as the State Commissioner's own regulations. Specifically, it concluded (pp. 262-263, 425 N.Y.S.2d 836) that where an OASDI beneficiary was not legally responsible to support other members of his household or the State Commissioner was not authorized to compel any application of OASDI benefits towards such support, the OASDI beneficiary could not be automatically counted as a household member for public assistance budgeting purposes. Furthermore, it found impermissible the assumption that the OASDI beneficiary would be contributing his pro rata share to the household expenses, so as to warrant a prorated public assistance grant.

In the case at bar, the two minor children receiving OASDI benefits were clearly not responsible for the support of their mother or sibling. (See Domestic Relations Law, § 32; Family Ct. Act, §§ 412, 413, 414, 415; Social Services Law, § 101.) Moreover, the State Commissioner was not authorized to compel petitioner, as representative payee of the OASDI funds for her two beneficiary children, to apply those funds towards the support of herself or her nonbeneficiary child (20 CFR 404.1603-404.1605). Accordingly, under the holding of Leone (supra), the agency's use of the proration method to reduce petitioner's ADC grant was improper and the State Commissioner's decision affirming the agency's action was erroneous.

It should be noted that respondent Blum has always maintained that in the instant matter she is not contesting the validity of petitioner's challenge to that aspect of the fair hearing decision concerning the prorating of petitioner's ADC grant. Nonetheless, she never admits error, but simply advises this court that on constraint of Swift v. Toia, S.D.N.Y., 450 F.Supp. 983, affd. sub nom. Swift v. Blum, 2d Cir., 598 F.2d 312, cert. den. --- U.S. ----, 100 S.Ct. 687, 62 L.Ed.2d 658), which accords with Leone (supra), new regulations, consistent with the result we reach today, were promulgated on March 30, 1979, and March 31, 1980. The State Commissioner thus implies that these new regulations render the instant challenge on the issue of the grant reduction moot. However, Leone (supra) found that under the relevant statutes and case law, as well as the pertinent regulations existing prior to the 1979 and 1980 revisions, the proration method was unauthorized. Therefore, since petitioner seeks not only prospective relief, but, also retroactive relief to the date of the agency's reduction of her ADC grant, the State Commissioner's qualified concession to petitioner's challenge concerning the grant reduction would not moot the issue as it relates to the time prior to March 30, 1979. Moreover, even though a stay of the fair hearing decision was granted by Special Term on January 3, 1979, there still existed a four-month period prior thereto during which the fair hearing decision was in effect. For that period, the State Commissioner denies liability for retroactive payments. This denial is in keeping with her untenable position that the prospective effect of the 1979 and 1980 revisions in the regulations of the State Department of Social Services cure, retroactively, the unlawful withholding of rightful benefits. (See Matter of Leone v. Blum, 73 A.D.2d 252, 425 N.Y.S.2d 836, supra.) We reject this position of the State Commissioner. Accordingly, this matter must be remanded for a recalculation of petitioner's ADC benefits consistent with this opinion, and to the date of the agency's reduction of such aid.

II

With regard to prorating the income exemption for Medicaid eligibility, an analysis of the relevant statutes and regulations, both Federal and State, is required. ¹

Under subchapter XIX of chapter 7 of the Federal Social Security Act (U.S.Code, tit. 42, §§ 1396-1396i), Federal medical assistance to eligible persons whose income and resources are insufficient to meet necessary medical costs is to be administered by the States in accordance with federally approved plans (U.S.Code, tit. 42, §§ 1396-1396c). In New York, the State Department of Social Services is the designated State agency responsible for the implementation and administration of this medical assistance program.

Pursuant to Federal regulation, there are two classifications of eligible recipients of Medicaid, viz., the categorically needy (42 CFR 448.1(a)(1)(i)) ² and the medically needy (42 CFR 448.1(a)(2)(i)). Under both Federal regulation and State law, ADC recipients are classified categorically needy (42 CFR 448.1(b)(1)(i); Social Services Law, § 366, subd. 1, par. (a)). Included in the medically needy category are nonrecipients of ADC who, according to State standards, have insufficient income to meet their medical care expenses, and, except for income and resources, would be otherwise eligible for ADC (42 CFR 448.1(a)(2)(i), (d); Social Services Law, § 366, subd. 1, par. (a), cl. (5)).

In determining eligibility for, and the amount of, medical assistance under each classification, Federal regulations require:

1. that categorically needy ADC recipients be eligible for full Medicaid assistance by reason of their ADC eligibility alone (42 CFR 448.3(a)(1)(i)); and,

2. that the medically needy be eligible for Medicaid on a spend-down basis, calculated as follows:

a. determine the ADC maintenance payment level of the medically needy applicant as if he were an ADC recipient (42 CFR 448.3(c)(1));

b. apply the foregoing maintenance level to the medically needy applicant's income "for maintenance so that any income in an amount at or below the established level will be protected for maintenance" (42 CFR...