Bradley v. Austin

• Citation: 841 F.2d 1288
• Decision Date: 21 March 1988
• Docket Number: No. 87-5248,87-5248
• Parties: Patsy BRADLEY, On Behalf of Herself and Her Minor Children, and All Others Similarly Situated, Plaintiff-Appellant, v. E. Allen AUSTIN, Official Capacity, Secretary Cabinet for Human Resources; and Otis Bowen, Secretary Health and Human Services, Individually and in His Official Capacity, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 1288

841 F.2d 1288

21 Soc.Sec.Rep.Ser. 58

Patsy BRADLEY, On Behalf of Herself and Her Minor Children, and All Others Similarly Situated, Plaintiff-Appellant, v. E. Allen AUSTIN, Official Capacity, Secretary Cabinet for

Human Resources; and Otis Bowen, Secretary Health

and Human Services, Individually and in

His Official Capacity,

Defendants-Appellees.

No. 87-5248.

United States Court of Appeals, Sixth Circuit.

Argued Jan. 28, 1988.

Decided March 21, 1988.

Glenda Harrison, Carl Melcher (argued), Northern Kentucky Legal Aid, Covington, Ky., for plaintiff-appellant.

W. Kimble Moore, Office of the Counsel Cabinet for Human Resources, Frankfort, Ky., Edgar M. Swindell (argued), Asst. Regional Counsel, Office of General Counsel, HHS Atlanta, Ga., for defendants-appellees.

Before MILBURN and GUY, Circuit Judges, and CONTIE, Senior Circuit Judge.

MILBURN, Circuit Judge.

Plaintiff-appellant appeals from the summary judgment granted by the district court for defendants in this action challenging the Aid to Families with Dependent Children ("AFDC") program regulations enacted by the Secretary of Health and Human Services ("Secretary") and the State of Kentucky implementing the Deficit Reduction Act of 1984 ("DEFRA"). For the reasons that follow, we affirm.

I.

Plaintiff initiated this action on August 15, 1986, seeking class-wide injunctive and declaratory relief with respect to state and federal implementation of the AFDC filing unit provision of DEFRA, 42 U.S.C. Sec. 602(a)(38) (Supp.1987). The complaint asserted that 45 C.F.R. Sec. 206.10(a)(1)(vii)(B) (1986) and the corresponding Kentucky state regulations ¹ contravene the Social Security Act and violate the Federal Constitutional rights of the proposed plaintiff class. Plaintiff also moved for a preliminary injunction. On September 16, 1986, the Secretary filed its opposition to the motion for preliminary injunction and moved to dismiss or, in the alternative, for summary judgment. The State of Kentucky filed similar motions on September 22, 1986.

A preliminary injunction hearing was held on September 19, 1986, following which the district court concluded that the case was amenable for summary disposition and therefore combined consideration of the preliminary injunction with a review on the merits. The certification of a class was taken under advisement. Thereafter, plaintiff filed a cross-motion for summary judgment on November 13, 1986.

On January 5, 1987, the district court granted summary judgment for the state and federal defendants, adopting as its opinion the reasons stated in the defendants' memorandum. Plaintiff filed a timely notice of appeal on March 2, 1987.

Proceedings in this court were stayed pending the disposition by the United States Supreme Court of Bowen v. Gilliard, No. 86-509, and Flaherty v. Gilliard, No. 86-564. The Supreme Court consolidated these cases and rendered a decision upholding DEFRA's AFDC filing unit rule on June 25, 1987. Bowen v. Gilliard, 483 U.S. ----, 107 S.Ct 3008, 97 L.Ed.2d 485 (1987).

At the pertinent time period, the Bradley household, comprised of plaintiff Mrs. Bradley and her four daughters, received $750.00 per month in governmental benefits. Mrs. Bradley received $336.00 per month in Supplemental Security Income ("SSI"), and three of her four daughters received a combined $414.00 per month in Old Age, Survivors, and Disability Insurance ("OASDI") benefits as minor children of a disabled wage earner. Mrs. Bradley sought an additional $140.00 per month in AFDC benefits for her remaining daughter, a half-sibling of her other children.

Plaintiff Mrs. Bradley's request for benefits was denied because the Secretary's AFDC regulations implementing the family filing unit provision of DEFRA require the state agency to include in the application all children in the household. Since Mrs. Bradley was an SSI recipient, she was explicitly excluded from the unit and her income disregarded. See 42 U.S.C. Sec. 602(a)(24) (Supp.1987). However, the OASDI benefits of three of her children rendered their half-sister ineligible because the accountable family income was in excess of the standard of need for a unit of four persons as determined by the State of Kentucky.

On appeal, plaintiff argues that (1) the federal and state AFDC regulations are in irreconcilable conflict with Title II of the Social Security Act; (2) the federal regulations violate the equal protection and due process rights of the Title II children; and (3) the federal regulations violate the equal protection and due process rights of the Title II representative payees.

II.

A. Statutory Construction

The AFDC program, authorized under Title IV-A of the Social Security Act, 42 U.S.C. Secs. 601-15 (1983 and Supp.1987), is a cooperative federal-state effort established by Congress in 1935 under which grants are made to states to enable them, as far as practicable under the circumstances of each state, to furnish financial assistance and services to needy, dependent children of the parents or relatives with whom they are living. 42 U.S.C. Sec. 602 (1983 and Supp.1987); see Heckler v. Turner, 470 U.S. 184, 105 S.Ct. 1138, 84 L.Ed.2d 138 (1985); King v. Smith, 392 U.S. 309, 88 S.Ct. 2128, 20 L.Ed.2d 1118 (1968). Under the program, the federal government provides financial participation to match the contribution of a participating state, which administers the program and is required to submit for federal approval a "state plan" in conformity with the federal statute and implementing regulations. 42 U.S.C. Sec. 603 (1983 and Supp.1987); see 45 C.F.R. Sec. 201 (1986).

States "are given broad discretion in determining both the standard of need and the level of benefits[,]" exercising their responsibility given all the circumstances of a particular state. Shea v. Vialpando, 416 U.S. 251, 253, 94 S.Ct. 1746, 1750, 40 L.Ed.2d 120 (1974); see also Rosado v. Wyman, 397 U.S. 397, 408-09, 90 S.Ct. 1207, 1216, 25 L.Ed.2d 442 (1970). Each state AFDC plan specifies a "statewide standard of need, which is the amount deemed necessary by the State to maintain a hypothetical family at a subsistence level." Shea, 416 U.S. at 253, 94 S.Ct. at 1750. "Both eligibility for AFDC assistance and the amount of benefits to be granted an individual applicant are based on a comparison of the State's standard of need with the income and resources available to that applicant." Id.

Prior to 1984, there was no requirement that all coresident family members be included in the family filing unit for determining AFDC eligibility. Gilliard, 107 S.Ct. at 3011. Indeed, in anticipation of the receipt of income such as social security benefits, a family member could be selectively removed from the AFDC filing unit, which resulted in larger benefits for the family as a whole. Id. States were precluded from considering income or resources of excluded individuals in determining eligibility and benefits for the unit, except certain kinds of income from enumerated parental, spousal, and step-parent sources.

Title II of the Social Security Act creates several programs under which an individual may receive benefits from a social security trust fund. All of the programs are based upon the earnings record of either the individual or a related wage earner. 42 U.S.C. Secs. 401-33 (1983 and Supp.1987). A child is generally entitled to receive OASDI benefits if he or she (1) is the child of an "insured" person within the meaning of the Act; (2) is or was dependent on the insured; (3) applies; (4) is unmarried; and (5) unless disabled, is under eighteen years of age or older than eighteen years of age but still a full-time elementary or secondary student. 42 U.S.C. Sec. 402(d) (Supp.1987); see Childress v. Secretary of Health & Human Services, 679 F.2d 623, 624 (6th Cir.1982).

Pursuant to 42 U.S.C. Sec. 405(j)(1) (Supp.1987), Title II payments may be paid directly to the beneficiary or may be paid to persons (sometimes referred to as "representative payees") other than the Title II recipient. Section 405(j)(1) provides:

When it appears to the Secretary that the interest of an applicant entitled to a payment would be served thereby, certification of payment may be made, regardless of the legal competency or incompetency of the individual entitled thereto, either for direct payment to such applicant, or for his use and benefit to a relative or some other person.

Once payment to a representative payee is elected, the representative payee must use the OASDI benefits for the sole benefit of the beneficiary. See 20 C.F.R. Secs. 404.2035-404.2045 (1987). Otherwise, the representative payee is subject to both criminal and civil liability. 42 U.S.C. Sec. 408(e) (1983 and Supp.1987); see also 20 C.F.R. Sec. 404.2041 (1987).

DEFRA made several changes in the AFDC program, including one involving the composition of a filing unit for AFDC assistance. ² This amendment was initially proposed by Health and Human Services Secretary Heckler, and the language of the provision that ultimately passed is virtually identical to the Secretary's proposed amendment. Gilliard, 107 S.Ct. at 3012. The Secretary's proposed amendment initially became part of the draft of the Omnibus Reconciliation Act of 1983. Subsequently, the proposal was incorporated into the Senate version of DEFRA. Id. at 3012-13.

In 1984, the Senate Committee on Finance provided the following explanation of the amendment:

Present Law

There is no requirement in present law that parents and all siblings be included in the AFDC filing unit. Families applying for assistance may exclude from the filing unit certain family members who have income which might reduce the family benefit. For example, a family might choose to exclude a child who is receiving social security or child support payments, if the payments would reduce the family's benefits by an amount greater than the amount payable on behalf of the child....

Explanation of Provision

The...