Daniels v. McMahon

• Citation: 5 Cal.Rptr.2d 404,4 Cal.App.4th 48
• Decision Date: 02 March 1992
• Docket Number: No. A052355,A052355
• Court: California Court of Appeals Court of Appeals
• Parties: Winfred H. DANIELS, Plaintiff and Appellant, v. Linda S. McMAHON, as Director, etc., et al., Defendants and Respondents.

Page 404

5 Cal.Rptr.2d 404

4 Cal.App.4th 48

Winfred H. DANIELS, Plaintiff and Appellant, v. Linda S. McMAHON, as Director, etc., et al., Defendants and Respondents.

No. A052355.

Court of Appeal, First District, Division 2, California.

March 2, 1992.

[4 Cal.App.4th 51] Edward Barnes, Berkeley, for plaintiff and appellant.

Daniel E. Lungren, Atty. Gen., John J. Klee, Jr., Deputy Atty. Gen., Oakland, for defendants and respondents.

KLINE, Presiding Justice.

This appeal challenges a policy utilized by the Alameda County Department of Social Services in determining eligibility for benefits under a state funded program providing supplemental benefits in certain circumstances to recipients of the federal-state Aid to Families with Dependent Children program. Winfred Daniels appeals the superior court decision dismissing the action by which he sought to invalidate the policy.

STATEMENT OF THE CASE AND FACTS

The Aid to Families with Dependent Children (AFDC) program is a federal-state program which provides cash grants to needy children and their families. (42 U.S.C. §§ 601 et seq.) The costs of the program are divided between the federal government and state. (42 U.S.C. § 603.) To be eligible for federal funding, states must formulate plans which fulfill the requirements of section 602, subdivision (a), of title 42 of the United States Code. (Darces v. Woods (1984) 35 Cal.3d 871, 880, 201 Cal.Rptr. 807, 679 P.2d 458.) Although states' participation in the AFDC program is voluntary, once a state elects to participate, it must maintain a welfare system which complies with the mandates of federal law. (Id., at p. 880, 201 Cal.Rptr. 807, 679 P.2d 458; Edwards v. McMahon (9th Cir.1988) 834 F.2d 796, 798; Vaessen v. Woods (1984) 35 Cal.3d 749, 754, 200 Cal.Rptr. 893, 677 P.2d 1183, cert. den. 470 U.S. 1049, 105 S.Ct. 1746, 84 L.Ed.2d 811; 42 U.S.C. §§ 601, 604, subd. (a)(2).) Monthly AFDC grants to families are based on a state determination of the amount necessary to "maintain a hypothetical family at a subsistence level" (Shea v. Vialpando (1974) 416 U.S. 251, 253, 94 S.Ct. 1746, 1750, 40 L.Ed.2d 120); states are not required to provide any specified level of income. (Rosado v. Wyman (1970) 397 U.S. 397, 408, 90 S.Ct. 1207, 1215, 25 L.Ed.2d 442; Darces v. Woods, supra, 35 Cal.3d at p. 881, fn. 8, 201 Cal.Rptr. 807, 679 P.2d 458; Vaessen v. Woods, supra, 35 Cal.3d at p. 755, 200 Cal.Rptr. 893, 677 P.2d 1183.)

In California, the amount of cash to which a family is entitled each month, the "maximum aid payment" or "MAP," is specified in Welfare and Institutions Code section 11450. ¹ The amount of aid a family receives from the AFDC program is determined by subtracting the family's income from the MAP. (§ 11450.) For example, if a family of five is entitled to a MAP of $899 and has no income, it receives the full $899 from AFDC. If the family has income of $300 from another source, it receives $599 from AFDC.

Federal law requires states to determine the amount of aid to which a family is entitled in a given month by reference to a prior month's income. (42 U.S.C. § 602, subd. (a)(13); 45 C.F.R. § 233.35.) In California Before an AFDC grant can be reduced or terminated, the family must be given advance notice of the proposed action and a right to request a hearing before the reduction or termination takes place. (Goldberg v. Kelly (1970) 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287; 45 C.F.R. § 205.10.) If the family requests a hearing, aid continues uninterrupted until after the hearing is held. (MPP § 22-022.5.) This aid during the hearing process is referred to as "aid paid pending." If it is determined that the reduction or termination of benefits is correct, the aid paid pending results in an overpayment. (MPP 44-350.4.) Federal law mandates that states correct overpayments and underpayments under the state plan (42 U.S.C. § 602, subd. (a)(22).) The federal regulations implementing this rule require specification of statewide policies for recovery of overpayments of AFDC, including "overpayments resulting from assistance paid pending hearing decisions." (45 C.F.R. § 233.20, subd. (a)(13).) When overpayments are recovered by reducing future grants, however, the reduction cannot leave the family less than 90 percent of the MAP in any month. (42 U.S.C. § 602, subd. (a)(22).)

the month upon which the determination is based, the "budget month," is two months prior to the month in which benefits are paid, the "payment month." (Vaessen v. Woods, supra, 35 Cal.3d at p. 755, 200 Cal.Rptr. 893, 677 P.2d 1183; Department of Social Services Manual of Policy and Procedures (MPP) § 44-313.2) Thus, if a family receives income other than AFDC in January, its AFDC grant for March will be reduced by the amount its income in January exceeded the MAP.

California provides a program under which AFDC families are entitled to receive supplemental payments "when, because of a change in reported financial circumstances occurring between the 'budget month' and the 'payment month,' a family's net available income for the payment month is less than 80 percent of the amount set forth in subdivisions (a) and (b) of Section 11450 [MAP]...." (§ 11450.2, subd. (a).) The amount of the supplemental payment is that necessary to raise the family's net available income in the payment month to 80 percent of the MAP and may not be considered income when calculating the amount of future grants. (§ 11450.2, subd. (a)(2), (a)(3).) Requests for supplemental payments must be made in the month for which the payment is requested and the Department must act on the request within seven working days. (§ 11450.2, subd. (a)(4).)

Federal law allows state supplemental payment programs such as California's but there is no federal financial participation in them. (42 U.S.C. § 603, subd. (a) [last p].) A supplemental payment is not treated as income for AFDC purposes as long as the supplemental payment, AFDC grant and other income for the payment month does not exceed the MAP. (45 C.F.R. § 233.20, subd. (a)(4)(iv).) No supplemental payment may be made to a family if the payment would be counted as income under the federal AFDC program. (§ 11450.2, subd. (a)(5).)

In the present case, appellant, his wife and three minor children had been receiving the full MAP of $899 each month. In May 1989, the family received disability benefits totalling $951.43. In June, appellant was notified that the family's grant for July would be reduced to zero because of the $951.43 payment in May. On June 23, appellant requested a hearing and consequently received $899 aid pending for the month of July. According to appellant's testimony before an administrative law judge, he asked for aid pending rather than requesting a supplemental payment because his family would have been "out on the streets" if he had not received the July check on the first of the month. On July 5, appellant requested a supplemental payment for July. This request was denied because appellant had received aid paid pending in the full amount of the MAP. Appellant appealed this decision. On August 4, appellant was notified that the $899 he received in July was an overpayment.

At a hearing on August 29, appellant conceded the proper AFDC grant for July

should have been zero, due to the income in May. He argued, however, that the amount of the overpayment (the $899 aid paid pending) should have been reduced by the amount of the supplemental payment to which he would have been entitled if he had not requested a hearing and received aid paid pending. The administrative law judge agreed. This decision was reversed by the Director. On December 5, appellant filed a complaint for injunctive and declaratory relief and petition for writ of mandate challenging the Director's action. The petition was denied on April 16, 1990, and respondents' motion for judgment on the pleadings as to the other causes of action was granted on September 28. Judgment denying relief and dismissing the action was entered on November 7. A timely notice of appeal was filed on January 4, 1990.

DISCUSSION

Appellant contends the Department's policy of counting aid paid pending which turns out to be an overpayment in determining eligibility for supplemental payments under section 11450.2 violates the statute as well as constitutional guarantees of due process and equal protection. Appellant does not contend he should have received both the aid paid pending and a supplemental payment under section 11450.2, but that once it was determined his aid paid pending was an overpayment, he should have had to repay only the difference between the supplemental payment he would have received if he had not requested a hearing and the full payment he in fact received as aid paid pending.

I.

Appellant's initial contention is that aid paid pending is not one of the types of income section 11450.2 specifies for consideration in determining eligibility for supplemental payments. Under section 11450.2, a family is eligible for a supplemental payment if its "net available income" for the payment month is less than 80 percent of its MAP. (§ 11450.2, subd. (a).) "Net available income" is defined as the sum of (1) "[t]otal net nonexempt income in the payment month," (2) "[a]ny child or spousal support received by the family," and (3) "[t]he grant for the payment month before overpayment adjustments." (§ 11450.2, subd. (b)(2).)

Respondent maintains that aid paid pending is a "grant for the payment month" within the meaning of the statute. According to respondent, since the very concept of Goldberg v. Kelly, supra, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287, is that an AFDC grant may not be terminated while a fair hearing is pending, the aid paid pending the hearing is necessarily an AFDC grant. The fact aid paid pending may have to be repaid (if determined to be an overpayment), according to respondent, does not distinguish it from other AFDC payments, which are...