Doucette v. Ives

• Decision Date: 06 May 1991
• Docket Number: 91-1017 and 91-1212,Nos. 90-2229,s. 90-2229
• Parties: Eva DOUCETTE, et al., Plaintiffs, Appellees, v. H. Rollin IVES, Commissioner of the Maine Department of Human Services, Defendant, Appellee, Louis W. Sullivan, M.D., Secretary of Health and Human Services, Defendant, Appellant. Eva DOUCETTE, et al., Plaintiffs, Appellants, v. H. Rollin IVES, Commissioner of the Maine Department of Human Services, et al., Defendants, Appellees. Eva DOUCETTE, et al., Plaintiffs, Appellees, v. H. Rollin IVES, Commissioner of the Maine Department of Human Services, Defendant, Appellant. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 21

947 F.2d 21

Eva DOUCETTE, et al., Plaintiffs, Appellees, v. H. Rollin IVES, Commissioner of the Maine Department of

Human Services, Defendant, Appellee,

Louis W. Sullivan, M.D., Secretary of Health and Human

Services, Defendant, Appellant.

Eva DOUCETTE, et al., Plaintiffs, Appellants, v. H. Rollin IVES, Commissioner of the Maine Department of

Human Services, et al., Defendants, Appellees.

Eva DOUCETTE, et al., Plaintiffs, Appellees, v. H. Rollin IVES, Commissioner of the Maine Department of

Human Services, Defendant, Appellant.

Nos. 90-2229, 91-1017 and 91-1212.

United States Court of Appeals, First Circuit.

Heard May 6, 1991.

Decided Oct. 21, 1991.

Deborah Ruth Kant, Appellate Staff, Civ. Div., Dept. of Justice, with whom Stuart M. Gerson, Asst. Atty. Gen., Washington, D.C., Richard S. Cohen, U.S. Atty., Portland, Me., and Barbara Biddle, Appellate Staff, Civ. Div. Dept. of Justice, Washington, D.C., were on briefs for Louis W. Sullivan.

James R. Crotteau, Pine Tree Legal Assistance, Inc., Machias, Me., for Eva Doucette, et al.

Christopher C. Leighton, Deputy Atty. Gen., with whom Michael E. Carpenter, Atty. Gen., and Thomas D. Warren, Deputy Atty. Gen., Augusta, Me., were on briefs for H. Rollin Ives.

Before CAMPBELL, Circuit Judge, BOWNES, Senior Circuit Judge, and TORRES, ^* District Judge.

LEVIN H. CAMPBELL, Circuit Judge.

This consolidated appeal involves two interrelated Social Security Act programs designed to benefit certain poor families: the Aid to Families with Dependent Children (AFDC) program, 42 U.S.C. §§ 601-610; and the Child Support Enforcement (CSE or "IV-D") program, 42 U.S.C. §§ 651-666. The plaintiff class challenges a Health and Human Services regulation governing the extent to which child support payments collected on behalf of AFDC recipients from the absent parent via the interception of state and federal tax refunds may be retained by the state as reimbursement to the state and federal governments for past AFDC payments. As defined by the district court, the class consists of Maine AFDC recipients affected by the regulation as of the date the motion for class certification was filed, September 6, 1988. Defendants-appellants are H. Rollin Ives, the Commissioner of the Maine Department of Human Services (DHS) and Dr. Louis Sullivan, Secretary of Health and Human Services (HHS), the federal agency charged with administering the programs.

I.

The AFDC program is a cooperative federal-state program administered by the states. The program was established to "encourag[e] the care of dependent children ..., to help maintain and strengthen family life and to help such parents and relatives to attain or retain capability for the maximum self-support and personal independence consistent with the maintenance of continuing parental care and protection...." 42 U.S.C. § 601. The AFDC program provides assistance to families deprived of the support of one parent through death, illness, mental incapacity or, in some states, unemployment. 42 U.S.C. §§ 606, 607. Families are eligible for AFDC assistance if their "countable income" ¹ falls below the "standard of need" ² established by the state. Although in most states the AFDC payment is sufficient to cover the full amount by which a family's income falls below the established standard of need, some states provide less than the full amount, leaving a gap between the family's resources and the standard of need. These states are called the "gap states." See 42 U.S.C. § 602(a)(28). Maine is one such state.

Before 1975, child support payments received by a family in a given month were included in "countable income" for that month for the purposes of determining the family's eligibility for AFDC. If the family's earnings, plus any child support received, exceeded the "standard of need," the AFDC parent would be ineligible for assistance that month. In 1975, the law was amended to provide that child support payments would no longer be included in countable income. Rather, the state could require individuals to assign to the state their rights to child support as a condition of AFDC eligibility, 42 U.S.C. § 602(a)(26).

The collection and distribution by the state of child support payments so assigned is governed by the Child Support Enforcement Act, 42 U.S.C. §§ 651-666, Title IV-D of the Social Security Act. The CSE program is designed both to assist parents in collecting child support from absent parents and to reduce state and federal government AFDC expenditures, which are often necessitated by the failure of noncustodial parents to meet their support obligations. All states participating in the AFDC program are required to have child support collection programs, 42 U.S.C. § 602(a)(27), through which they assist families in establishing paternity, locating parents, and collecting support through wage withholding, liens on property, and withholding from unemployment compensation and tax refunds. 42 U.S.C. §§ 654, 664, 666.

Child support collected by the state under a IV-D program is distributed according to the following scheme: first, fifty dollars goes directly to the AFDC family in addition to any AFDC grant, 42 U.S.C. § 657(b)(1); second, any amount in excess of the fifty dollars goes to the state and federal government as reimbursement for that month's AFDC payment, 42 U.S.C. § 657(b)(2); third, after the AFDC payment for that month is reimbursed, the balance of the support payment for that month goes to the AFDC family. In other words, the family will receive either the amount of the current support payment or the AFDC payment, whichever is larger. Finally, if the amount collected represents past due child support (arrearage), the excess support goes to the state and federal government for past unreimbursed AFDC payments, 42 U.S.C. § 657(b)(4)(A). If there are no unreimbursed past AFDC payments outstanding, the balance goes to the family under § 657(b)(4)(B).

In states in which the AFDC payment was sufficient to make up the full difference between the family's countable income and the standard of need, the 1975 amendment providing for the assignment of support payments to the state did not make a difference in the family's resources. In such states, support payments received directly by the family would have reduced dollar-for-dollar the amount of the AFDC payment. In gap states, however, support payments received directly by the family prior to 1975 could be used to fill the gap between the family's resources (including AFDC) and the standard of need, without reducing the AFDC payment. In those states, assignment of support payments to the state under the IV-D scheme would mean that the funds would be used to reimburse the AFDC payments made by the state, whether or not the family reached the state's minimum standard of need.

Realizing that AFDC families in "gap states" could be worse off under the CSE program, Congress enacted 42 U.S.C. § 602(a)(28), providing that child support collected by the state should be used as supplemental AFDC payments to fill the gap between the standard of need and the state's actual monthly AFDC payment standard. The section requires that state AFDC plans:

(28) provide that, in determining the amount of aid to which an eligible family is entitled, any portion of the amounts collected in any particular month as child support pursuant to a plan approved under part D of this subchapter, and retained by the State under section 657 of this title, which ... would not have caused a reduction in the amount of aid paid to the family if such amounts had been paid directly to the family, shall be added to the amount of aid otherwise payable to such family under the State plan approved under this part.

42 U.S.C. § 602(a)(28). In other words, in a gap state, collected child support must first be used to fill the gap before such funds may be used to reimburse the state and federal governments for AFDC payments. After the establishment of the CSE program in 1975, Congress established a number of specific tools to be used by states in collecting child support payments. One such tool is the federal tax refund intercept statute. 26 U.S.C. § 6402(c), 42 U.S.C. § 664(a)(1). Section 664 permits the federal government through the Secretary of the Treasury to intercept any federal tax refunds, offset any past-due child support under Title IV-D, and remit the child support to the state. ³ The tax refund intercept program applies to past due support payments and provides that the amounts collected be distributed according to § 657(b)(4). Subsection (b)(4) provides that the support collected be remitted to the state and federal government for unreimbursed past AFDC payments, 42 U.S.C. § 657(b)(4)(A), or, if there are no outstanding unreimbursed AFDC payments, to the AFDC family, 42 U.S.C. § 657(b)(4)(B).

In 1986, Congress added section 666, which created a number of additional methods for state collection of support payments, including a state tax refund intercept, 42 U.S.C. § 666(a)(3)(A), liens against personal and real property, 42 U.S.C. § 666(a)(4), and wage withholding, 42 U.S.C. § 666(a)(8), among others. Like the federal tax refund intercept, the state tax refund intercept provides that any amount collected be distributed in accordance with section 657(b)(4).

The regulation at issue in this appeal, 45 C.F.R. § 232.21(a), concerns the relationship between the federal and state tax refund intercepts and section 602(a)(28), the gap payment provision. ⁴ The Secretary's regulation effectively excludes from the scope of the gap provision any past-due child support obtained from federal or state tax refund intercepts. On September 6, 1988, plaintiffs filed suit in United States District Court for the District of Maine, seeking invalidation of the regulation and a declaration that Maine's IV-D program was not in compliance with 42 U.S.C. § 602(a)(28). Plaintiffs argue that, under 42 U.S.C. § 602(a)(28), any child...