Atkinson v. Minn. Dep't of Human Servs.
| Decision Date | 05 June 2017 |
| Docket Number | A16-1688 |
| Parties | Robert Atkinson, Appellant, v. Minnesota Department of Human Services, Respondent, and Scott County Social/Human Services Agency, Respondent. |
| Court | Minnesota Court of Appeals |
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2016).
Affirmed
Scott County District Court
Jennifer M. Moore, Moore Family Law, Plymouth, Minnesota (for appellant)
Lori Swanson, Attorney General, Patricia Sonnenberg, Ali Patrick Afsharjavan, Assistant Attorneys General, St. Paul, Minnesota (for respondent)
Considered and decided by Johnson, Presiding Judge; Larkin, Judge; and Reilly, Judge.
UNPUBLISHED OPINION
Robert Atkinson's daughter, who has a developmental disability, received services through a state program that assesses a fee on parents based on their taxable income, using progressive rates. Atkinson experienced a spike in income in a single year because he received money from a lump-sum settlement of an employment-discrimination lawsuit. As a result, Atkinson paid fees on the lump-sum settlement at a higher rate than he would have paid if he had received that income over multiple years. He challenges the constitutionality of the statutory scheme by which the fee was calculated, arguing that the use of progressive rates in his particular circumstances violates his constitutional rights to substantive due process and equal protection. We conclude that the state's application of the governing statute does not violate Atkinson's constitutional rights. Therefore, we affirm.
Atkinson and his wife have three children, including a daughter who was born in 1997 with Down syndrome. She requires constant supervision and assistance with all aspects of daily life. When she was of eligible age, some of her "significant and expensive ongoing medical care" was provided by the state's Medical Assistance (MA) program. The cost of the MA-provided services that were not covered by insurance was approximately $75,000 per year.
Under state law, children with developmental disabilities are entitled to receive services through the MA program regardless of family income. See Minn. Stat. § 252.27, subd. 1 (2016). But the department of human services (DHS) is required to recoup a portion of the costs of the program from parents of children receiving services. See Minn. Stat. § 252.27, subd. 2 (2016). A family's "ability to pay" is determined by reference to "the adjusted gross income of the natural or adoptive parents determined according to the previous year's federal tax form." Id., subd. 2a(d) (2016). Using a parent's adjusted gross income (AGI), DHS calculates the parent's fee by applying a rate determined by statute, which is progressive in that parents with higher incomes are assessed fees at higher rates. Id., subd. 2a(b). For example, a parent with income at the poverty level would pay a nominal fee of $4 per month, a parent with income of five times the poverty level would pay a fee equal to 7.5% of AGI, and a parent with income of ten times the poverty level would pay a fee equal to 12.5% of AGI. See Minn. Stat. § 252.27, subd. 2a(b)(1)-(4) (2012). During the relevant period, the federal poverty guidelines provided that a family of five would be in poverty below an AGI of $27,010. Annual Update of the HHS Poverty Guidelines, 77 Fed. Reg. 4034 (Jan. 26, 2012); see also 42 U.S.C. § 9902(2) (2012).
Parents of children receiving services through the program may reduce their income for purposes of the parental-fee calculation in three specified circumstances. First, a parent's AGI is adjusted downward by $2,400 if the disabled child lives in the parent's home. Minn. Stat. § 252.27, subd. 2a(b). Second, a parent may apply for a "[v]ariance for tax status" if the parent can show that "there is a gross disparity between the amount of income . . . allocated to the parents and the amount of cash distributions made to the parents." Minn. R. 9550.6230, subp. 2 (2013). And third, a parent may receive a "[v]ariance for undue hardship" if certain expenditures were made to accommodate a disabled child and were not reimbursed. Id., subp. 1a.
In some years in the late 1990s and early 2000s, when the Atkinsons' AGI was approximately $50,000, they were assessed parental fees of only $25 per month (or $300 per year). In fiscal years 2007 through 2010, the Atkinsons were assessed parental fees of approximately $950 per month (or $11,400 per year) based on AGI numbers of approximately $150,000. In fiscal year 2011, the Atkinsons were assessed a parental fee of $1,638 per month (or $19,656 per year) based on an AGI of approximately $194,000.
In November 2010, a class-action employment-discrimination lawsuit was commenced against Atkinson's former employer. The complaint alleged claims under the federal Age Discrimination in Employment Act (ADEA) and the Minnesota Human Rights Act (MHRA). The lawsuit was resolved by a settlement in 2012. Because he was a member of the class, Atkinson received a lump-sum settlement payment of $195,149, which increased the family's 2012 AGI to $355,774.
In January 2015, DHS gave notice to the Atkinsons that their parental fee for fiscal year 2014 (which ran from July 1, 2013, to June 30, 2014) would be $3,681 per month (or $44,172 per year) based on the family's 2012 AGI. Atkinson pursued an administrative appeal. A DHS judge conducted four hearings over a period of approximately four months. Atkinson provided amended tax returns, which resulted in a recalculation of the parental fee, reducing it somewhat to $3,367 per month (or $40,400 per year). Atkinson argued, in part, to the DHS judge that the settlement proceeds were "a one-time anomaly" that should not be attributed to his income. DHS argued in response that the governing statute required the agency to include the settlement proceeds in Atkinson's income. In August 2015, the DHS judge issued an order that states, "There is no legal authority to exclude the settlement income." Accordingly, the DHS judge recommended that Atkinson's parental fee be upheld. The commissioner of DHS adopted the DHS judge's recommendation. Atkinson requested reconsideration, which was denied.
In October 2015, Atkinson commenced an action in the district court to seek judicial review of the commissioner's order. See Minn. Stat. § 256.045, subd. 7 (2016). Atkinson argued to the district court that the commissioner's decision was arbitrary and capricious and that including the settlement proceeds in his income violated his constitutional rights to substantive due process and equal protection. He requested a recalculation of his parental fee for fiscal year 2014 based on his 2012 AGI without the settlement proceeds. The district court reasoned that "[t]he settlement proceeds clearly qualify as income under the statutory definition" and that "DHS did not act arbitrarily or capriciously by following this clear statutory definition." The district court also rejected Atkinson's argument that DHS's inclusion of the settlement proceeds in his income violated his constitutional rights. Accordingly, the district court affirmed the commissioner's decision. Atkinson appeals.
Our review in a case of this type is authorized by the Minnesota Administrative Procedure Act. See Minn. Stat. § 14.63 (2016); Mammenga v. State Dep't of Human Servs., 442 N.W.2d 786, 789 (Minn. 1989); Kaplan v. Washington Cty. Cmty. Soc. Servs., 494 N.W.2d 487, 489 (Minn. App. 1993). When we review a district court's decision to affirm or reverse an agency determination, we independently examine the agency's decision. Reserve Mining Co. v. Herbst, 256 N.W.2d 808, 824 (Minn. 1977). We may reverse or modify the agency decision if the agency exceeded its authority in making the decision or based the decision on unlawful procedure, if the decision was affected by an error of law or was not supported by substantial evidence, or if the decision was arbitrary, capricious, or in violation of the constitution. Minn. Stat. § 14.69 (2016); Estate of Atkinson v. Minnesota Dep't of Human Servs., 564 N.W.2d 209, 213 (Minn. 1997).
Atkinson argues that DHS's method of calculating his income for purposes of his 2014 parental fee violates his constitutional rights to due process and equal protection. His arguments are focused on the progressive nature of the rates that are used to determine the parental fee in light of his irregular income. More specifically, he contends that he paid an unduly large parental fee in fiscal year 2014 because his income in 2012 was increased by his receipt of a lump-sum settlement, which was intended to compensate him for lost income in multiple prior years, thereby causing more of his income to be subject to a higher rate than if he had received a more consistent income stream during the relevant time period. Atkinson does not attempt to quantify the specific amount by which he was disadvantaged, but the district court did not dispute his assertion that he was disadvantaged, and there is no such dispute on appeal. We note that "Minnesota statutes are presumed constitutional." State v. Fitch, 884 N.W.2d 367, 373 (Minn. 2016). We apply a de novo standard of review to a district court's ruling on the constitutionality of a statute. Gluba ex rel. Gluba v. Bitzan & Ohren Masonry, 735 N.W.2d 713, 719 (Minn. 2007).
Atkinson first argues that DHS's method of calculating his income for purposes of his 2014 parental fee violates his constitutional right to due process. He contends that the progressive rate structure of the statute is "unfair" because it amplifies the effect of the age discrimination that he asserts was remedied by the lump-sum settlement. He does not base his argument on the procedures used by DHS when determining his 2014 parental fee. Accordingly, we construe his argument to be an assertion of his right to substantive due process, as he argued below, not his right...
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