Bourgeois v. Stevens

• Decision Date: 02 April 1976
• Docket Number: No. 75-1473,75-1473
• Citation: 532 F.2d 799
• Parties: Rita BOURGEOIS et al., Plaintiffs-Appellants, v. Jerald L. STEVENS et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — First Circuit

Page 799

532 F.2d 799

Rita BOURGEOIS et al., Plaintiffs-Appellants, v. Jerald L. STEVENS et al., Defendants-Appellees.

No. 75-1473.

United States Court of Appeals, First Circuit.

Argued Jan. 8, 1976.

Decided April 2, 1976.

R. Peter Anderson, Boston, Mass., with whom Charles R. Capace, Daniel S. Manning and Hollis Young, Boston, Mass., were on brief, for plaintiffs-appellants.

Donald K. Stern, Asst. Atty. Gen., Boston, Mass., with whom Francis X. Bellotti, Atty. Gen., Boston, Mass., was on brief, for defendants-appellees.

Before COFFIN, Chief Judge, McENTEE and CAMPBELL, Circuit Judges.

COFFIN, Chief Judge.

This appeal raises the important question whether the Massachusetts Department of Welfare's plan to eliminate grants for certain nonrecurring needs from its Aid to Families with Dependent Children ("AFDC") program violates § 402(a) (23) of the Social Security Act, 42 U.S.C. § 602(a)(23). ¹ The district court found that Massachusetts had granted benefits for nonrecurring needs to individuals who were otherwise eligible for AFDC assistance, but that it had not included nonrecurring needs in its formula for determining AFDC eligibility on the critical date, January 2, 1968. Since the district court interpreted § 402(a)(23) as permitting a state to discontinue a benefit program if that program satisfied needs that were not factors in the state's January 2, 1968 standard of AFDC eligibility, it concluded that Massachusetts could eliminate its system of grants consistent with the provisions of the Social Security Act.

Plaintiffs, who represent all the AFDC recipients and applicants in the Commonwealth of Massachusetts, instituted this action to enjoin the Commissioner of the Massachusetts Department of Welfare from terminating two programs that provided grants for household and emergency needs of AFDC recipients. ² Although these programs were modified in 1970, they originated as part of a special needs program called "Non-Recurring Needs" which had been in effect since before January 2, 1968. ³ Although a major issue in this case is whether the Massachusetts practice was consistent with the governing state regulations, the uncontradicted competent evidence before the district court showed that, on January 2, 1968, the uniform statewide practice was for the Commonwealth to pay out money for nonrecurring needs only to individuals who were independently eligible for AFDC assistance and that Massachusetts had not considered the presence of nonrecurring needs in determining an individual's AFDC eligibility. This practice was contrary to the federal regulations requiring equality of treatment of AFDC applicants and recipients. ⁴ See 45 C.F.R. §§ 233.20(a)(1)(i) & (v). ⁵ Under this doctrine, a state must consider the same factors for purposes of paying out AFDC benefits as for determining AFDC eligibility. ⁶ By paying out benefits to recipients who had unsatisfied nonrecurring needs but failing to consider the presence of such needs in making eligibility determinations, Massachusetts violated the equality of treatment doctrine.

To place the complex issues presented by this case into perspective, it will be helpful briefly to describe the structure of the AFDC program and the place § 402(a)(23) occupies in it. The AFDC program is based upon a scheme of "cooperative federalism." See New York Dept. of Social Services v. Dublino, 413 U.S. 405, 413, 93 S.Ct. 2507, 2512, 37 L.Ed.2d 688, 694 (1973); Dandrige v. Williams, 397 U.S. 471, 478, 90 S.Ct. 1153, 1158, 25 L.Ed.2d 491, 498 (1970); King v. Smith, 392 U.S. 309, 316, 88 S.Ct. 2128, 2132, 20 L.Ed.2d 1118, 1126 (1967). It is administered by the states but is largely funded by the federal government on a matching funds basis. Although participation in the program is voluntary on the part of the states, those which participate must, under the Supremacy Clause, comply with the terms of the applicable federal legislation and regulations. See King v. Smith, supra at 333 n. 34, 88 S.Ct. at 2141, 20 L.Ed.2d at 1134. Under the terms of the federal law, the states have had broad discretion in determining the level of benefits they pay eligible recipients. See Rosado v. Wyman, 397 U.S. 397, 408-09, 90 S.Ct. 1207, 1215-16, 25 L.Ed.2d 442, 453-54 (1970).

There are two basic considerations in determining the benefits a state will pay. The first of these, "the standard of need", is the criterion of eligibility for welfare benefits. It is the level of personal income the state believes is necessary to maintain a hypothetical family at a subsistence level. See Shea v. Vialpando, 416 U.S. 251, 253, 94 S.Ct. 1746, 40 L.Ed.2d 120 (1974). The standard of need can vary from applicant to applicant depending upon factors such as family size, living arrangements, and individual circumstances. A principal issue in this case is whether the factor of nonrecurring needs was a component of Massachusetts' 1968 standard of need. Historically, the determination of the elements and amount of a state's standard of need has been a matter of state prerogative. See Smith v. King, supra, 392 U.S. at 318-19 & n. 14, 88 S.Ct. at 2133-34, 20 L.Ed.2d at 1126, 1127; National Welfare Rights Organization v. Mathews, --- F.2d ----, ---- - ---- (D.C.Cir.1976). The second is the level of benefits that will be paid. For a particular individual, the level of benefits will be based on that individual's "actual need": that is, the difference between the standard of need and the amount of income available to the individual. A state need not provide benefits that are equal to actual need. It may choose to satisfy only a percentage of it or a percentage subject to a dollar maximum. See Rosado v. Wyman, supra, 397 U.S. at 408-09, 90 S.Ct. at 1215-16, 25 L.Ed.2d at 453-54.

Section 402(a)(23), which Congress enacted in 1968, effected a modest encroachment on the states' traditional discretion to determine the needs of AFDC applicants and recipients. It provided:

"(The states shall) provide that by July 1, 1969, the amounts used to determine the needs of individuals will have been adjusted to reflect fully changes in living costs since such amounts were established, and any maximums that the State imposes on the amount of aid paid to families will have been proportionately adjusted."

In Rosado v. Wyman, supra, the Supreme Court construed the first clause in § 402(a)(23) as requiring all participating states, by July 1, 1969, to make a one time only cost of living adjustment in its standard of need and as prohibiting the states from diminishing the content of its standard of need below that which was in effect on January 2, 1968, the date the statute was passed. ⁷ Under the Court's interpretation, the states remained free to reduce the level of AFDC benefits they paid so long as they did so without reducing the content of their adjusted standard of need. Although the Court recognized that this statute provided no protection against reduced benefits, it noted that the provision accomplished the "modest" objective of "prodding" the states in the "preferred direction" of increasing the level of benefits and making them closer to actual need. The prohibition of any diminution in the standard of need has the effect of requiring the states to continue to accept the responsibility for those individuals whose income falls below the adjusted standard and of forcing those states that cut back their benefits "to accept the political consequence of such a cutback and (bring) to light the true extent to which actual assistance falls short of the minimum acceptable." Id. at 413, 90 S.Ct. at 1218, 25 L.Ed.2d at 456.

Plaintiffs make essentially two arguments in support of their position that the district court erred in concluding that Massachusetts is not prohibited from eliminating its nonrecurring needs program. First, they contend that nonrecurring needs were, in fact, a component of the January 2, 1968 Massachusetts standard of need for purposes of § 402(a)(23). To support this proposition, plaintiffs rely principally upon the plain meaning of the Massachusetts Public Assistance Policy Manual ("MPAPM") the regulations the Commonwealth submitted to HEW to obtain federal approval of its program for purposes of qualifying for federal funds in effect on January 2, 1968. Plaintiffs argue that the only plausible interpretation of these regulations is that nonrecurring needs were an element of the eligibility standard. Noting that HEW shared this interpretation, they maintain that the district court's reliance on the actual Massachusetts practice is improper and, in any event, that its determination that nonrecurring needs were not part of the standard of need was erroneous.

Plaintiffs' second argument proceeds from the fact that Massachusetts' actual practice was contrary to the equality of treatment requirement of the federal regulations. They submit, in essence, that § 402(a)(23) requires that federal courts remedy this violation of HEW policy by conclusively presuming that nonrecurring needs were a component of the January 2, 1968 Massachusetts standard of need. We reject both arguments and we affirm.

I. The Determination of the 1968 Standard of Need.

Although numerous cases have been decided under this statute, the case at bar, to our knowledge, is the first in which there has been a serious dispute over the content of a state's January 2, 1968 standard of need. Here the parties disagree not only over the legal principles a court should apply in determining the components of that standard, but also over the application of those principles to the facts of this case. In making its determination, the district court began by considering the "plain meaning" of MPAPM in light of the interpretations of the regulations by state and federal officials. ⁸ It found them ambiguous. Next, it considered the evidence of the actual Massachusetts practice, which was consistent with one interpretation of the regulations, and, in effect,...