Clark v. Harder

• Decision Date: 27 June 1983
• Docket Number: No. 83-4173.,83-4173.
• Citation: 577 F. Supp. 1085
• Parties: Judy CLARK, Plaintiff, v. Robert C. HARDER, Individually and in his Capacity as Secretary of the Kansas Department of Social and Rehabilitation Services, and Margaret Heckler, as Secretary of the Department of Health and Human Services, Defendants.
• Court: U.S. District Court — District of Kansas

577 F. Supp. 1085

Judy CLARK, Plaintiff, v. Robert C. HARDER, Individually and in his Capacity as Secretary of the Kansas Department of Social and Rehabilitation Services, and Margaret Heckler, as Secretary of the Department of Health and Human Services, Defendants.

No. 83-4173.

United States District Court, D. Kansas.

June 23, 1983.

Supplement June 27, 1983.

Joyce Lancaster of Kansas Legal Services of Olathe, Kan., for plaintiff.

Alleen Castellani, Asst. U.S. Atty., Topeka, Kan., for defendant Heckler.

Bruce Roby, Topeka, Kan., for defendant Harder.

MEMORANDUM AND ORDER

ROGERS, District Judge.

This case is now before the court upon the motion of plaintiff, Judy Clark, for a preliminary injunction enjoining defendants and their agents from applying the "lump sum" rule as found in section 3414 p. 3-29 of the Kansas Public Assistance Manual and 45 C.F.R. 233.20(a)(3)(ii)(D) in determining her pending claim for Aid to Families with Dependent Children benefits. On June 13, 1983, this court entered a temporary restraining order against the application of the above-mentioned regulations by defendants against plaintiff. This order shall expire today.

The facts in this case are uncontested at this juncture. For the purposes of this order, the court shall incorporate the factual findings in our order granting the temporary restraining order as well as the "statement of material facts" contained in defendant Heckler's response in opposition to plaintiff's motion for a preliminary injunction. For the purposes of providing some background for the discussion which follows, we will proceed with a short factual summary.

Plaintiff, a former AFDC recipient, is without income or financial resources. Her AFDC benefits were terminated at the end of April 1983 because she received a lump sum payment (as part of a worker's compensation award) which exceeded the monthly needs standard of eligibility for AFDC in Kansas. This cutoff was the result of a lump sum rule promulgated by defendants in response to amendments to the AFDC program passed by Congress in the Omnibus Budget Reconciliation Act of 1981. The regulations require that persons who receive lump sum payments exceeding the monthly needs standard for an AFDC family unit become ineligible for further AFDC assistance for the number of months calculated by dividing the monthly needs standard into the lump sum received. The lump sum rule was proposed and supported by the Department of Health and Human Services. Plaintiff claims, however, that the regulations implementing the rule against her are contrary to the statutory language passed by Congress. Defendants claim their application of the rule is not contrary to the statute. Plaintiff now has reapplied for AFDC benefits. There has been no argument or evidence that plaintiff qualifies for any exception to the lump sum rule. Thus, the legal issue of whether the lump sum rule passed by Congress applies to plaintiff is the only issue in dispute.

Plaintiff must show that she will suffer immediate and irreparable harm without injunctive relief before the court may order injunctive relief. There is no dispute that this showing has been made. Plaintiff is destitute. She needs public assistance.

Plaintiff must also show that the harm she will incur without injunctive relief exceeds the harm to defendants if injunctive relief is granted. At the hearing upon plaintiff's application for a temporary restraining order, the court found that plaintiff satisfied this requisite. Plaintiff further argues that should the court eventually find against plaintiff, defendants can retrieve any benefits paid by reason of injunction orders, but plaintiff has no financial resources to live on should the court refuse preliminary injunctive relief and later hold in plaintiff's favor at a trial on the merits. This argument obviously illustrates an aspect of the balance of harm equation in this case. It does not address plaintiff's probability of success on the merits. Nor does plaintiff explicitly argue that the balance of harm justifies delaying an interpretation of the lump sum rule contrary to plaintiff if the court is firmly convinced that such an interpretation is justified.

In order to justify injunctive relief, plaintiff must also demonstrate that such relief is in the public interest. We reaffirm our previous holding that the public interest is served by injunctive relief in this instance. In the written opposition presented on behalf of defendant Heckler, it is argued that it is not in the public interest to allow public assistance to go to persons benefiting from lump sums while those without lump sums (the "truly needy", dare we say) are not served. This is not the choice before the court, however. If the court grants injunctive relief in this case, benefits will not be taken away from some other person. Nor will preliminary injunctive relief set a precedent endangering the funds for persons without lump sums. In other words, we are not playing a zero-sum game in which some needy person will lose if plaintiff wins. We reaffirm our finding that the public interest is not an obstacle to injunctive relief in this case.

Plaintiff must still establish a probability or likelihood of success on the merits to justify injunctive relief. When the other three requisites for injunctive relief are satisfied, a likelihood of success on the merits is demonstrated if plaintiff "raises questions going to the merits so serious, substantial, difficult and doubtful as to make them a fair ground for litigation and thus for more deliberate investigation ..." Kenai Oil and Gas, Inc. v. Department of Interior, 671 F.2d 383, 385 (10th Cir.1982) quoting Lundgrin v. Claytor, 619 F.2d 61, 63 (10th Cir.1980). As mentioned in our earlier order, three other courts have granted motions for preliminary injunctive relief and agreed with plaintiff's interpretation of the lump-sum rule. Faught v. Heckler, 577 F.Supp. 1180 (S.D.Iowa 1983): Sweeney v. Affleck, 560 F.Supp. 1118 (D.R.I.1983); Vermeulin v. Kheder, No. K82-135-CA4 (W.D.Mich., June 3, 1982). After a careful reading of these opinions, the statute in question, and the pertinent legislative history, I conclude that plaintiff has failed to raise questions going to the merits which are serious, substantial, difficult and doubtful. I conclude that defendants have clearly established that the lump sum rule is legally applicable to plaintiff.

Each side argues that the statutory language is clear and supports its interpretation. Plaintiff argues that the lump-sum rule only applies when "a person specified in paragraph (8)(A)(i) or (ii)" receives a lump sum payment and that those persons must have earned income. See 42 U.S.C. § 602(a)(8) and (17). Defendant claims that all persons applying for assistance are covered by paragraph (8)(A)(i) or (ii) by virtue of the reference to paragraph (7) in paragraph (8)(A), and, therefore, all persons applying for AFDC are persons "specified in paragraph (8)(A)(i) or (ii)." Plaintiff claims that if all persons were intended to be covered by the lump sum rule, Congress could have clearly stated as much or made reference to paragraph (7), as it did in paragraph (31) covering stepparent's income disregards. It could also be argued that if Congress intended only persons with earned income to be covered by the lump sum rule, Congress could have clearly stated as much.

It appears to this court that the all-important paragraphs (8)(A)(i) and (ii) do not specify "persons" as much as they specify types and amounts of earned income which are not considered for the purpose of determining need for all persons applying for AFDC. Since all persons applying for assistance have their need determined in accordance with paragraph (8)(A)(i) and (ii), it is possible that all applicants are the persons "specified" for coverage by the lump sum rule. Still, one can legitimately inquire why Congress would "specify" persons for application of the lump sum rule, if it intended to apply the rule to all AFDC applicants. In common parlance, the word "specify" contains some connotation of restriction. If Congress intended to restrict the population to which the lump sum rule applied, perhaps only AFDC recipients with earned income comprise the restricted population. The conclusion we draw from these points and questions is that the statute is ambiguous and that the meaning of the statute should be decided after examining the legislative history of the lump sum rule. Cf., Tidewater Oil Co. v. United States, 409 U.S. 151, 157, 93 S.Ct. 408, 412, 34 L.Ed.2d 375 (1972) ("it is essential that ... words of a statute be placed in their proper context by resort to legislative history."); Hunt v. Nuclear Regulatory Commission, 611 F.2d 332, 336 (10th Cir. 1979) cert. denied, 445 U.S. 906, 100 S.Ct. 1084, 63 L.Ed.2d 322 (1980) (reference to legislative history appropriate "however clear" the statute's language).

In the court's opinion, the legislative history of the lump sum rule clearly supports defendant's interpretation. The lump sum rule was proposed by the Department of Health and Human Services as a cost-cutting measure and included in a mammoth budget-cutting bill. The testimony of former Secretary Schweiker does not mention any intended dichotomy between applicants with earned income and applicants without earned income. The purpose of the measure as described in the Budget Committee Report was to eliminate the incentive to spend lump sums quickly in order to requalify for AFDC. 1981 U.S.CODE CONG. & ADMIN.NEWS at 396, 771. AFDC beneficiaries were to be forced to budget the lump sum payments because AFDC benefits would be cutoff for a future period calculated by dividing the monthly needs standard into the amount of the lump sum. The legislative history does not intimate any reason for maintaining the incentive for AFDC recipients without earned income to quickly spend lump sum payments, while cracking...