Arizona St. Dept. of Pub. W. v. DEPARTMENT OF HEALTH, E. & W.

Decision Date17 November 1971
Docket NumberNo. 71-1177,71-1250.,71-1177
Citation449 F.2d 456
CourtU.S. Court of Appeals — Ninth Circuit



Gary K. Nelson, Ariz. Atty. Gen., James B. Feeley, Michael S. Flam, Peter Sownie, Asst. Attys. Gen., Phoenix, Ariz., for petitioner.

Leonard Schaitman (argued), Morton Hollander, Dept. of Justice, L. Patrick Gary, III, Asst. Atty. Gen., Washington, D. C., Stephanie W. Naidoff, Asst. Regional Atty., James L. Browning, Jr., U. S. Atty., San Francisco, Cal., for respondent.

Jerry Levine (argued), Tempe, Ariz., Mark B. Raven, (argued), Tucson, Ariz. Michael Serwatka (argued), DNA, Inc., Chinle, Ariz., John D Twiname, Administrator, Dept. of HEW, Washington, D. C., for intervenors.

No. 71-1250:

Jerry Levine, (argued), Tempe, Ariz., Mark B. Raven, Tucson, Ariz., Michael Serwatka, DNA, Inc., Chinle, Ariz., for intervenor-petitioner.

Leonard Schiatman (argued), Morton Hollander, Dept. of Justice, L. Patrick Gary, III, Asst. Atty. Gen., Washingon, D. C., Stephanie W. Naidoff, Ass't Regional Atty., San Francisco, Cal., Gary K. Nelson, Arizona Atty. Gen., Phoenix, Ariz., John D. Twiname, Administrator, Dept. of HEW, Washington, D. C., for respondents.

Before KOELSCH, BROWNING and DUNIWAY, Circuit Judges.

Rehearing and Rehearing In Banc Denied November 17, 1971.

DUNIWAY, Circuit Judge:

Following a hearing, the Secretary of Health, Education and Welfare (the Secretary), acting through the Administrator of Social and Rehabilitation Service (the Administrator), determined that certain public-assistance plans of the State of Arizona failed to conform to requirements imposed by federal law and regulations. The Secretary ordered that federal financial support for the affected Arizona public-assistance programs be discontinued for the duration of the nonconformities. In No. 71-1177, Arizona petitions this court for review of the Secretary's final decision, under 42 U.S.C. § 1316(a). Several organizations representing welfare recipients had participated in the hearing as intervenors. Those organizations seek to intervene as respondents in No. 71-1177. In addition, in No. 71-1250 intervenors1 petition this court for review of a procedural ruling made during the conformity hearing and affirmed by the Secretary. We affirm the Secretary's determinations in No. 71-1177; we dismiss No. 71-1250 for want of jurisdiction.

A. The Statutory Scheme.

Pursuant to the Social Security Act (the Act), the federal government provides grants-in-aid to states that administer programs for supplying assistance to specified categories of needy individuals and families. Four such programs are involved here: (1) Old-Age Assistance (OAA) under Title I of the Act, 42 U.S.C. §§ 301-306; (2) Aid to Families with Dependent Children (AFDC) and Child Welfare Services (CWS) under Title IV, 42 U.S.C. §§ 601-610, 620-626; (3) Aid to the Blind (AB) under Title X, 42 U.S.C. §§ 1201-1206; and (4) Aid to the Permanently and Totally Disabled (APTD) under Title XIV, 42 U.S.C. §§ 1351-1355.

States choosing to receive these grants-in-aid are required to formulate plans for administering the assistance programs. The states have free rein in designing many aspects of the plans, such as establishing criteria for need and setting the level of benefits to be paid. The Act, however, prescribes certain requirements with which all state plans must comply. See 42 U.S.C. §§ 302(a), 602(a), 1202(a), 1352(a). State plans must be approved by the Secretary before they can be implemented. The Secretary cannot approve any plan unless it meets the specified requirements and, in addition, does not impose as a condition of eligibility for assistance under the plan certain proscribed types of residence or citizenship requirements. 42 U.S.C. §§ 302(b), 602(b), 1202(b), 1352 (b).2 If a plan fulfills the specified requirements and is free from the proscribed conditions, the Secretary must approve it.

Once approved, a state's plan is subject to continuing scrutiny by the Secretary to ensure its continuing conformity to the federally imposed requirements and its continuing freedom from the federally proscribed conditions, both on the face of the plan and in its administration. 42 U.S.C. §§ 304, 604(a), 1204, 1354. Should the Secretary call into question the continuing conformity of the plan or of its administration to federal requirements, he must provide reasonable notice and opportunity for hearing to the state agency administering the plan. If, following a conformity hearing, the Secretary determines that the plan or its administration no longer meets federal requirements, he must terminate further federal payments to the state program until the non-compliance is cured.

Finally, if a state is dissatisfied with the Secretary's final decision, it may file a petition for review of the decision in the appropriate court of appeals. 42 U.S.C. § 1316(a).

B. The Background of This Case.
1. Administrative proceedings.

On July 8, 1970, the Secretary of Health, Education and Welfare, acting through the Administrator, notified the Commissioner of the Arizona State Department of Public Welfare that a hearing would be held on August 18, 1970, to determine whether four of Arizona's public assistance plans (OAA; AFDC and CWS; AB; and APTD) were in conformity with federal requirements and, if not, whether federal grants-in-aid to those programs should be terminated. The Administrator's notice specified four issues to be considered at the hearing, and noted that HEW and Arizona officials had been unable to reach agreement on those issues after extensive negotiations.

The conformity hearing was governed by HEW regulations promulgated on July 29, 1970. 45 C.F.R. Part 213 (originally promulgated in 35 Fed.Reg. 12180).3 The Administrator delegated the conduct of the hearing to a hearing examiner. 45 C.F.R. § 213.21(a). Pursuant to 45 C.F.R. § 213.15, the hearing examiner granted the petitions of the intervenors to participate in the conformity hearing. In their petitions, the intervenors listed 11 issues, in addition to the four specified in the Administrator's notice, which they sought to have considered at the conformity hearing. The conformity hearing was held on August 18 and 19, 1970. On August 18, the hearing examiner denied intervenors' request to expand the scope of the hearing to include the 11 additional issues, basing his denial on 45 C.F.R. § 213.14 (d). In his Recommended Findings and Proposed Decision, submitted November 27, 1970, the hearing examiner concluded that the Arizona plans were out of conformity in three of the four disputed respects, but that as to the fourth, HEW had not "sustained its burden of proof." Following additional briefing and oral argument, the Administrator determined, on January 26, 1971, that the Arizona plans did not conform with federal requirements with respect to all four issues. He therefore ordered discontinuance, effective April 1, 1971, of federal grants-in-aid to those four programs for the duration of the nonconformities. The Administrator also approved the hearing examiner's denial of intervenors' motion to introduce additional issues. The Administrator's decision automatically became the final decision of the Secretary. 45 C.F.R. § 213.32(d).

2. Proceedings before this court.

On February 8, 1971, Arizona filed with this court its petition in No. 71-1177 to review the Secretary's final decision, and also a motion to stay enforcement and execution of the Secretary's termination order pending this court's decision. On February 18, HEW filed a motion agreeing with Arizona's request for a stay, provided that this court would order expedited briefing and argument. On February 22, we granted the stay and ordered the case expedited. On March 5, intervenors moved for leave to intervene in No. 71-1177, and this court granted that motion on March 22, "without prejudice to the right of the Department of Health, Education and Welfare to seek to limit intervenors to the issues presented by the review of the Arizona State Department of Public Welfare."

The petition for review in No. 71-1250 was filed by intervenors on February 22, 1971. It requested (1) review of that part of the Secretary's final decision denying them permission to raise additional issues at the conformity hearing and (2) permission to be heard as respondents on those issues raised by Arizona's petition for review in No. 71-1177. Arizona moved to dismiss intervenors' petition, and on March 10 this court ordered that the ruling on Arizona's motion to dismiss be reserved for the panel hearing the case on the merits. Point (2), however, has already been effectively disposed of by this court's order of March 22 in No. 71-1177, permitting intervenors to respond in that case. Accordingly, the only question left open under Arizona's motion to dismiss relates to point (1) of intervenors' petition.

The waters were subsequently and unfortunately muddied when, on April 9, Arizona filed a second motion to dismiss intervenors' petition in No. 71-1250.4 On April 26, this court ordered that that motion to dismiss be denied as to point (1) of intervenors' petition, and granted as to point (2). HEW then moved to vacate the April 26 order, requesting us to reserve our ruling on Arizona's second motion to dismiss until after oral argument. Oral argument has since been held, and we have not yet ruled on HEW's motion to vacate.

The flurry of motions in these expedited cases has produced an unfortunate amount of confusion and an apparent contradiction between our March 22 order in No. 71-1177 and our April 26...

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