Betson v. Cohen, Civ. A. No. 83-3543.
| Decision Date | 29 December 1983 |
| Docket Number | Civ. A. No. 83-3543. |
| Parties | Nancy BETSON, Annabelle Woodard and Cynthia Williams on behalf of themselves and all others similarly situated v. Walter COHEN, Secretary of the Pennsylvania Department of Public Welfare; and Don Jose Stovall, Executive Director of the Philadelphia County Board of Assistance; and Margaret M. Heckler, Secretary of the United States Department of Health and Human Services. |
| Court | U.S. District Court — Eastern District of Louisiana |
Deborah Harris, Community Legal Services, Philadelphia, Pa., for plaintiff.
John D.J. Shellenberger, Philadelphia, Pa., for State defendants.
Charlotte Hardnett, Philadelphia, Pa., for federal defendants.
This action was initially brought in July 1983 by Roseann Barnes on behalf of herself and a putative class challenging federal regulations and state implementation of a section added to the Social Security Act in 1981 regarding the treatment of lump sum income received by Aid to Families with Dependent Children (AFDC) assistance units. Her complaint was dismissed with prejudice as to her and without prejudice as to the putative class, by agreement of the parties. Thereafter, Nancy Betson, Annabelle Woodard, Cynthia Williams and a woman filing anonymously as Juana del Pueblo filed a motion to intervene and reinstate the complaint together with an intervenor's complaint, a second amended complaint and a motion for a temporary restraining order and/or preliminary injunction.1 They have also filed a motion for class certification.
State defendants Walter Cohen, Secretary of the Pennsylvania Department of Public Welfare ("DPW") and Don Jose Stovall, Executive Director of the Philadelphia County Board of Assistance together with federal defendant Margaret M. Heckler, Secretary of the United States Department of Health and Human Services ("HHS") have entered into a stipulation, which the court has approved, to permit the intervention of Betson, Woodard and Williams and allow the amended complaint be filed of record. Both the state and federal defendants oppose the intervention of Juana del Pueblo and the certification of a class. Because of the disposition of the other intervening plaintiffs' motion, the court will deny intervention by Juana del Pueblo.
Plaintiff Betson began receiving AFDC benefits in 1977. She has two children, ages four and six. She receives monthly child support of $60.002 for her oldest child. Until her AFDC grant of $335.00 per month ceased, she paid $63.00 per month for rent in public housing, which was reduced to $6.00 per month once her grant ceased. Her utility bills occasionally reach $125.00 per month. She has a student loan, which is spent toward her schooling.
In April 1982 plaintiff Betson was involved in an automobile accident resulting in injuries to her leg and jaw. In December 1982, in settlement of her claim for pain and suffering, she received $18,175.00.3 No longer than two weeks after receipt of that money, DPW mailed a notice to her advising her that, in accordance with the lump sum rule, her and her children's AFDC grant would be terminated until July 1985. By June 1983 plaintiff Betson had exhausted the $18,175.00. She reapplied for AFDC and was told she would not be eligible for assistance until twenty-nine months had expired, in accordance with the lump sum rule. Her appeal resulted in a finding that she had exhausted her lump sum amount but that she remained ineligible for an AFDC grant due to the lump sum rule. She receives food stamps and medical assistance and, by agreement of the parties pending the outcome of this case, has been receiving an AFDC grant. Otherwise, she has no source of income.
Plaintiff Woodard has been receiving an AFDC grant for herself and her son since 1974. In March 1983, as a result of injuries she sustained in an automobile accident, Woodard received $6600.00 of a $10,000.00 settlement for pain and suffering. She reported the settlement to DPW and was advised that she owed the department $1700.00 for assistance received while her accident claim was pending and would then be ineligible for an AFDC grant for fifteen months4 based on the lump sum rule.
Plaintiff Woodard has been receiving food stamps and medical assistance since July 1983. She has been receiving AFDC assistance pending a request for reconsideration of Cohen's decision. If her benefits are terminated she will have no other source of income.
Plaintiff Williams has three children. She was a recipient of AFDC benefits until October 1983 and has had no earned income since the summer of 1982. At the time her grant ceased she was receiving $401.00 per month in AFDC assistance. In early August 1983 she received retirement benefits, for which she was required to apply as a condition of receiving AFDC benefits and for which she signed a confession of judgment in favor of DPW, totalling $4780.98. The $4780.98 was exhausted by the end of August. Her AFDC grant was terminated in September 1983 and by notice dated October 26, 1983 DPW advised her that she was ineligible for assistance for a period of time based on the lump sum rule. Her income consists of $39.03 per month in retirement benefits and $107.00 per month in child support which is restricted to the use of her six-year old child.
As stated earlier, the plaintiffs challenge the validity of federal and state regulations implementing 42 U.S.C. § 602(a)(17) which was enacted as Section 2304 of the Omnibus Budget Reconciliation Act of 1981, P.L. 97-35, 95 Stat. 357, 845 (1981) ("OBRA"). This new section changed the treatment of lump sum payments received by AFDC applicants or recipients. Prior to the enactment, if an assistance unit received a nonrecurring lump sum of money, it was counted as income in the month of receipt. If the funds were expended and other eligibility conditions were met, the assistance unit would be eligible for AFDC in the next month.
The new section provides:
42 U.S.C. § 602(a)(17).
The section incorporated in section 602(a)(17) states:
42 U.S.C. § 602(a)(8)(A)(i) and (ii). It is the incorporation and interpretation of this section that is initially at issue.
The federal and state regulations apply § 602(a)(17) when any recipient of AFDC receives a lump sum. The state regulations have been applied to personal injury awards. It is the plaintiffs' argument that the Social Security Act limits the application of the lump sum disqualification rule to AFDC recipients who have earned income. They also argue that compensation for pain and suffering is not "income" and therefore not subject to the rule. Finally, it is plaintiffs' argument that DPW's practice is violative of its regulations which they argue limits income subject to the lump sum disqualification to "windfalls" or "accumulated or retroactive benefits."
The federal regulation setting out the lump sum rule provides:
When the AFDC assistance unit's income, after applying applicable disregards, exceeds the State need standard for the family because of receipt of nonrecurring lump sum income, the family will be ineligible for aid for the full number of months derived by dividing the sum of the lump sum income and other income by the monthly need standard for a family of that size. Any income remaining from this calculation is income in the first month following the period of ineligibility.
45 C.F.R. § 233.20(a)(3)(ii)(D) (1982). It is plaintiffs' argument that this regulation is inconsistent with the authorizing statute because the Congress intended for the lump sum rule to apply only to recipients with earned income.
The Social Security Act section is ambiguous. Both the plaintiffs' reading that, by referring to sections 602(a)(8)(i) and (ii), ...
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