Edwards v. McMahon
| Decision Date | 16 December 1987 |
| Docket Number | 85-2705 and 86-2398,Nos. 85-2703,85-2704,s. 85-2703 |
| Parties | Helene EDWARDS; Christine Streicher Diamond, Plaintiffs/Appellees, and Helen Edwards; Christine Streicher Diamond; California Coalition of Welfare Rights Organizations; Sharon Lilly; Judith A. Tillings; Plaintiffs-Intervenors/Appellees, v. Linda S. McMAHON, Director of the State Department of Social Services; Department of Social Services, an agency of the State of California; Michael Franchetti, Director of the Department of Finance of the State of California; Dept. of Finance, an Agency of the State of California; Defendants/Counter-Claimants, Third-Party Plaintiffs, v. Otis R. BOWEN, Secretary of Health and Human Services, Defendant-Third-Party Defendant/Appellant. |
| Court | U.S. Court of Appeals — Ninth Circuit |
William Kanter and Al J. Daniel, Jr., Dept. of Justice, Washington, D.C., for defendant-third-party defendant/appellant.
Elizabeth Arnold, Contra Costa Legal Aid, Richmond, Cal., Wendy Sones, Coalition of California Welfare Rights Organizations, Sacramento, Cal., and Edward Barnes and Juliet Gee, Legal Aid Society of Alameda County, Oakland, Cal., for plaintiffs/appellees.
John K. Van de Kamp, Atty. Gen., Asher Rubin, Deputy Atty. Gen., for state appellees.
Appeal from the United States District Court for the Northern District of California.
Before ANDERSON, SKOPIL and CANBY, Circuit Judges.
The issue in this case is whether the Secretary of Health and Human Services
must make corrective payments to former recipients of benefits under the Aid to Families with Dependent Children program (AFDC), 42 U.S.C. Secs. 601-615 (1985). The State of California and former AFDC recipients sought to compel such payments. The district court granted summary judgment in their favor and awarded attorney fees under the Equal Access to Justice Act (EAJA), 28 U.S.C. Sec. 2412 (1985). We affirm the grant of summary judgment but reverse the attorney fees award.
AFDC provides cash grants to needy children and their families. AFDC is based on a scheme of cooperative federalism; the federal government and the state jointly finance it. A state has the option of participating, but once it chooses to participate, its program must meet all federal requirements. 42 U.S.C. Sec. 602; see generally Heckler v. Turner, 470 U.S. 184, 189, 105 S.Ct. 1138, 1142, 84 L.Ed.2d 138 (1985).
In 1981 Congress enacted the Omnibus Budget Reconciliation Act (OBRA), Pub. L. No. 97-35, 95 Stat. 357. OBRA amended 42 U.S.C. Sec. 602 by adding subsection (a)(22). The interpretation of that subsection lies at the heart of this case. State agencies must
(22) ... promptly take all necessary steps to correct any overpayment or underpayment of aid under the State plan, and, in the case of--
(A) an overpayment to an individual who is a current recipient of such aid [including a current recipient whose overpayment occurred during a prior period of eligibility], recovery will be made ...;
(B) an overpayment to any individual who is no longer receiving aid under the plan, recovery shall be made ...; and
(C) an underpayment, the corrective payment shall be disregarded in determining the income of the family, and shall be disregarded in determining its resources in the month the corrective payment is made and in the following month....
42 U.S.C. Sec. 602(a)(22) (emphasis added). The subsection appears to require the correction of underpayments to both current and former recipients. Nevertheless, the Secretary issued a regulation restricting corrective payments to current recipients. 1 45 C.F.R. Sec. 233.20(a)(13)(ii) (1986).
The Secretary's regulation had a harsh effect on individuals who were underpaid erroneously when they were AFDC recipients. Edwards and Diamond, the original plaintiffs in this case, are former AFDC recipients in California ("State") who were underpaid because of State errors. To buy clothing for her sons, Edwards was forced to charge items at department stores and paid finance charges on the outstanding balances. Among other things, her family did without haircuts. Diamond fell behind on her utility payments. The utility company threatened to shut off the gas and electricity. She had to walk two miles to work because she could not afford to repair her car. She also delayed getting married. The State agency ruled plaintiffs ineligible to receive corrective payments for the conceded underpayments because they were no longer current recipients.
Edwards and Diamond then sued the State in state court for recovery of AFDC benefits. They challenged state regulations based on the Secretary's regulation. The State filed a third party cross-complaint for declaratory and injunctive relief against the Secretary. The Secretary, as third party defendant, removed the action to federal district court pursuant to 28 U.S.C. Sec. 1442(a)(1) (1982).
The Secretary argues that he can limit corrective payments to current recipients. He contends the district court failed to accord sufficient deference to his interpretation of the statute. The district court held the regulation inconsistent with the statute's language, legislative history, and purpose. Our review is de novo. Native Village of Stevens v. Smith, 770 F.2d 1486, 1487 (9th Cir.1985), cert. denied, 475 U.S. 1121, 106 S.Ct. 1640, 90 L.Ed.2d 185 (1986).
An agency's statutory construction is subject to a two-step review. "If the intent of Congress is clear, that is the end of the matter." Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842, 104 S.Ct. 2778, 2781, 81 L.Ed.2d 694 (1984). The "unambiguously expressed intent of Congress" controls. Id. at 843, 104 S.Ct. at 2781. "[I]nquiry into congressional intent encompasses both statutory language and legislative history." Washington Hosp. Center v. Bowen, 795 F.2d 139, 143 (D.C. Cir.1986). If the intent of Congress is unclear, the court must defer to a reasonable agency interpretation. Chevron U.S.A., 467 U.S. at 843-44, 104 S.Ct. at 2782.
We conclude that the intent of Congress is clear. "[W]e look first, as always, to the language of the statute." Turner, 470 U.S. at 193, 105 S.Ct. at 1144. Section 602(a)(22) requires state agencies to "promptly take all necessary steps to correct any overpayment or underpayment of aid...." (Emphasis added). "All" means every. "Any" means without restriction or limitation. The plain meaning of the statute could not be broader. Congress intended all underpayments to be corrected.
The legislative history of the statute buttresses that conclusion. Prior to the enactment of section 602(a)(22), no express statutory provision dealt with incorrect payments. Under a regulation first issued in 1973 and reissued with no changes until 1981, states had the option of recovering overpayments. If they decided to recover overpayments, they had to correct underpayments. 45 C.F.R. Sec. 233.20(a)(12)(ii) (1973). Corrective payments, however, were subject to four limitations. They only had to be made (1) to current recipients; (2) when the underpayment resulted from administrative error; (3) if the amount of payment exceeded administrative cost; and (4) for the twelve-month period preceding the month in which the underpayment was discovered. Id. Corrective payments were to be disregarded in determining continued eligibility. 45 C.F.R. Sec. 233.20(a)(12)(ii)(b). They were not considered a resource for the two-month period following payment and were never counted as income. 3 Id. In enacting section 602(a)(22), Congress unambiguously adopted only this last provision. See 42 U.S.C. Sec. 602(a)(22)(C). Congress otherwise rejected the Secretary's four limitations.
Congressional and executive reports make clear that rejection. The Senate Budget Committee noted that "[t]he Committee amendment would require States to correct overpayments and underpayments in all instances". S.Rep. No. 139, 97th Cong., 1st Sess. 441 (1981), reprinted in 1981 U.S.Code Cong. & Admin.News 396, 707. The Senate Finance Committee made the same statement. Staff of Senate Comm. on Finance, 97th Cong., 1st Sess., Proposals for Reductions in Spending Programs Under the Jurisdiction of the Senate Finance Comm. 41 (Comm. Print 1981). The House Conference Report explained that "[s]tates would be required to take prompt action to correct both overpayments and underpayments." H.R. Conf.Rep. No. 208, 97th Cong., 1st Sess. 983 (1981), reprinted in 1981 U.S.Code Cong. & Admin.News 396, 1345.
The House Ways and Means Committee issued a press release stating that "[t]he Committee approved a provision under which states would be required to promptly take all necessary steps to correct any overpayments or underpayments." Staff of House Comm. on Ways and Means, 97th Cong., 1st Sess., Comm. on Ways and Means Acts on Various Spending Reduction Measures 3 (Press Release 1981). The Office of Management and Budget stated that "[a]ny overpayment or underpayment of assistance would have to be corrected as a basic policy of efficient and equitable program administration." Office of Management and Budget, Fiscal Year 1982 Budget Revisions: Additional Details on Budget Savings 141 (1981). Richard Schweiker, then Secretary of HHS, testified before Congress ...
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