Buckner v. Maher, Civ. No. H-75-411

Citation424 F. Supp. 366
Decision Date10 December 1976
Docket NumberH-76-190 and 15068.,Civ. No. H-75-411
CourtUnited States District Courts. 2nd Circuit. United States District Court (Connecticut)
PartiesMary BUCKNER, on her own behalf, on behalf of her household and on behalf of all others similarly situated v. Edward MAHER, Individually and in his capacity as Commissioner of Social Services of the State of Connecticut. Edith M. HUCKLE, a/k/a Carrie Murphy, on her own behalf, on behalf of her household and on behalf of all others similarly situated v. Edward MAHER, Individually and in his capacity as Commissioner of Social Services of the State of Connecticut. Luigi PORTA, on behalf of himself and all others similarly situated v. Edward MAHER, Individually and in his capacity as Commissioner of Social Services of the State of Connecticut.

Howard B. Schiller, Willimantic, Conn., Tolland Windham Legal Assistance Program, Inc., for plaintiffs in No. H-75-411.

Edmund C. Walsh, Paul M. Shapiro, Asst. Attys. Gen., Carl R. Ajello, Atty. Gen., State of Connecticut, Hartford, Conn., for defendant in Nos. H-75-411, H-76-190 and 15068.

David L. Snyder, Litchfield Hills Legal Services, Torrington, Conn., Dennis J. O'Brien, Tolland-Windham Legal Assistance Program, Willimantic, Conn., for plaintiff in No. H-76-190.

Raymond Richard Norko, Legal Aid Society of Hartford, Hartford, Conn., Whitney M. Lewendon, Fairfield County Legal Services, Danbury, Conn., for plaintiffs in No. 15068.

Paige J. Everin, Hartford, Conn., for defendant in No. 15068.

Before SMITH, Circuit Judge, and CLARIE and BLUMENFELD, District Judges.

MEMORANDUM OF DECISION

CLARIE, Chief Judge:

The plaintiffs in these consolidated actions1 have sued on behalf of themselves and others similarly situated, to invalidate two Connecticut statutes (Conn.Gen.Stat. §§ 17-85 & 17-109(e)), which have rendered them ineligible for welfare benefits under two federally sponsored programs, Medicaid and Aid to Families with Dependent Children (AFDC). They have been unable to satisfy the state statutory requirement that applicants who have transferred assets within seven years prior to applying for benefits must be able to prove that the transfer was in fact made for "reasonable consideration" — that is, for no less than fair market value minus encumbrances. The plaintiffs maintain that these statutory provisions are inconsistent with the federal Social Security Act (SSA), and thus violate the Supremacy Clause of Article VI of the Federal Constitution. They also contend that these state statutes violate their constitutional right to due process and equal protection. The plaintiffs seek declaratory and injunctive relief under 42 U.S.C. § 1983 and a three-judge court has been convened pursuant to 28 U.S.C. §§ 2281 et seq., to consider their challenge to the foregoing state statutes.

The defendant, Commissioner of Social Services for the State of Connecticut, requests the court to dismiss the three pending actions, on the grounds that the constitutional arguments raised by the plaintiff are frivolous and that there is no basis on which the court might properly consider the pendent statutory claims.2 The Commissioner argues that, even if the constitutional claims raised in these actions were deemed to be substantial, it is appropriate that a single judge decide all such statutory questions, not a three-judge constitutional court.

Said defendant maintains that there is no inconsistency between Connecticut's statutory limitation on welfare eligibility and the federal Social Security Act. He argues that, with respect to the cases of the plaintiffs Huckle and Buckner, favorable action was denied, not because there was a finding of insufficient consideration per se, but rather because the applicants had failed to supply sufficient information upon which the Commissioner could base an eligibility decision.

The court is not unmindful of the legitimate state need for strong legislative controls to curb fraudulent transfers undertaken for the very purpose of qualifying the property transferor for immediate welfare assistance. However, the court finds that the Connecticut "transfer-of-assets" statutes are inconsistent with the minimal qualifying requirements of the federal Social Security Act, that those laws are in violation of the Supremacy Clause and that the plaintiffs' constitutional claims are not frivolous. The plaintiffs' motions for class certification are granted.

FACTS

There is no dispute as to the material facts of these cases, a stipulation having been mutually agreed to and filed by counsel. Medicaid (42 U.S.C. §§ 1396 et seq.) and AFDC (42 U.S.C. §§ 601 et seq.) are federally sponsored welfare programs. In states which choose to participate in one or both, a particular state agency (typically the state welfare department) is designated to administer the program. Some parameters of that agency's operations are prescribed in advance by the Social Security Act. For instance, the Act establishes eligibility criteria from which the states are not free to deviate. For Medicaid the sole criterion for eligibility set up in the SSA is need;3 and for AFDC the criteria are need and dependency.4

Other parameters of the state agency's operations are left expressly to state choice under the SSA. Thus a state is free to select the level of payments which will be authorized for recipients in particular disadvantaged categories. In matters for which a locus of decision is not prescribed by the SSA or its regulations, the states may adopt reasonable rules and regulations. For example, 42 U.S.C. § 1396a(a)(10)(C) (Medicaid) and 42 U.S.C. § 602(a)(7) (AFDC) provide that the state agency must take into account the "income and resources" available to an applicant in determining need. Subject to certain statutory restrictions,5 the states are given reasonable latitude in carrying out this determination.

The two Connecticut statutes here in question purport to fall within this final category. Conn.Gen.Stat. § 17-85 reads, in relevant part:

"Any relative having a dependent child or dependent children, who is unable to furnish suitable support therefor in his own home, shall be eligible to apply for and receive the aid authorized by this part . . . if such applicant has not made, within seven years prior to the date of such application for aid, an assignment or transfer or other disposition of property without reasonable consideration or for the purpose of qualifying for an award . . . provided ineligibility because of such disposition shall continue only for that period of time from the date of disposition over which the fair value of such property, together with all other income and resources, would furnish support on a reasonable standard of health and decency." (Emphasis added.)

Conn.Gen.Stat. § 17-109 reads in relevant part:

"Any person shall be eligible for an old age assistance award who . . . (e) has not made, within seven years prior to the date of application for such aid, an assignment or transfer or other disposition of property without reasonable consideration or for the purpose of qualifying for an award. . . ."

The statute then proceeds to incorporate the language of § 17-85 with respect to the disqualification period. As used in these statutes, "reasonable consideration" has been interpreted to mean "fair value," which in turn is defined as "appraised or market value of the property in question, minus recorded encumbrances."6

The practical operation of Connecticut's "transfer-of-assets" rule is demonstrated by the experience of four of the named plaintiffs in these actions. The plaintiff Peter Galonek, aged 80, has been disabled since 1943. He lives in a convalescent home in Hartford and receives $174 per month in Social Security disability benefits. Until recently, he was cared for at home by a member of his family. In 1965, when he was still living at home, Galonek's wife became ill and was no longer able to look after him. Galonek then contacted his daughter, who at that time lived in Florida. He purportedly offered to eventually transfer his interest in the home to her, if she would return to Connecticut, care for him, and see to the maintenance and upkeep of the premises. The daughter did return to Connecticut, where for a period of approximately ten years she remained, paying property taxes, making repairs, seeing to Galonek's health, and generally fulfilling their agreement.

In October of 1974, Galonek transferred his one-half interest in the family residence to his daughter for the consideration of $5,000. His subsequent application for Title XIX (Medicaid) benefits was denied by the Connecticut Department of Social Services (DSS), on the grounds that the true value of his interest in the home was $11,843, not $5,000, and that the transfer was for less than "reasonable consideration."7 It would require several years for Galonek to "work off" this deficiency under the Department's standard cost-of-living formula,8 and during this period of time he would remain ineligible for benefits.

Another plaintiff, Richard Bennett, age 86, receives $189 monthly in Social Security old age insurance benefits, which he applies toward $350 of monthly medical expenses.9 In June of 1972, Bennett sold his family home, receiving proceeds of $34,000. Over the next three years Bennett's assets were frittered away in numerous small transactions, under circumstances which suggest that he was the victim of individuals who took advantage of his gullibility and reduced mental capacity to divest him of his holdings. It is uncontroverted that Bennett is presently without funds and no longer controls any of the assets in question. There is no allegation that he wilfully transferred assets in order to qualify for welfare. Yet, using a $405 monthly "cost-of-living" allowance, Bennett will remain ineligible for Medicaid for a period in excess of eight years.

Another plaintiff, Edith Huckle, lives with her four minor children in Torrington, Connecticut, having...

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