Faircloth v. Family Independence Agency

• Decision Date: 30 October 1998
• Docket Number: Docket No. 198222
• Citation: 591 N.W.2d 314,232 Mich.App. 391
• Parties: Mary FAIRCLOTH, Vernon Faircloth, Cheryl Saxon, Mary Roe, Patty Rapaich, Joe Bell, Robin S., Lorine Lagrone, Victoria Goad, Sharon D., Thomas Jenkins, Marci Devitt, Bettie C., Stephen W., Annie Bolden, Barbara Skoken, and Mary Gardner, Plaintiffs-Appellees, v. FAMILY INDEPENDENCE AGENCY f/k/a Department of Social Services and its Director, Medical Services Administration of the Michigan Department of Community Health, Defendants-Appellants.
• Court: Court of Appeal of Michigan — District of US

Page 314

591 N.W.2d 314

232 Mich.App. 391

Mary FAIRCLOTH, Vernon Faircloth, Cheryl Saxon, Mary Roe Patty Rapaich, Joe Bell, Robin S., Lorine Lagrone, Victoria Goad, Sharon D., Thomas Jenkins, Marci Devitt, Bettie C. Stephen W., Annie Bolden, Barbara Skoken, and Mary Gardner Plaintiffs-Appellees, v. FAMILY INDEPENDENCE AGENCY f/k/a Department of Social Services and its Director, Medical Services Administration of the Michigan Department of Community Health, Defendants-Appellants.

Docket No. 198222.

Court of Appeals of Michigan.

Submitted June 11, 1998, at Detroit.

Decided Oct. 30, 1998, at 9:10 a.m.

Released for Publication Feb. 3, 1999.

Michigan Legal Services by Susan McParland and Marilyn Mullane, Detroit, for the plaintiffs.

Frank J. Kelley, Attorney General, Thomas L. Casey, Solicitor General, and Susan A. Harris and Stephen H. Garrard, Assistant Attorneys General, for the defendants.

Before CORRIGAN, C.J., and MARK J. CAVANAGH and BANDSTRA, JJ.

CORRIGAN, C.J.

In this action challenging the standard for considering applications for state disability assistance program (SDA) benefits during fiscal years 1991-92 and 1992-93, defendants appeal by right the order granting plaintiffs supplemental relief. The trial court found defendants' policy regarding SDA eligibility invalid because it constituted a rule that should have been promulgated under the Administrative Procedures Act (APA), M.C.L. § 24.201 et seq.; MSA 3.560(101) et seq. It also determined that defendants' policy violated the plain meaning of the appropriations acts for fiscal years 1991-92 and 1992-93, 1991 PA 111 and 1992 PA 168. We hold that the policy regarding SDA eligibility was an interpretive statement that need not have been promulgated as a rule under the APA and that defendants correctly construed the language of the appropriations acts. We therefore reverse and remand for entry of judgment for defendants.

I. Underlying Facts and Procedural History

The state provided welfare benefits under a general assistance program (GA) administered by the Department of Social Services ¹ (DSS) from 1979 until fiscal year 1991-92. The program was not a permanent statutory enactment, but rather was contingent on the Legislature appropriating funds for the program in a line item of the DSS budget. MCL 400.14; MSA 16.414, M.C.L. § 400.18; MSA 16.418. The Legislature thus eliminated GA in 1991 by not appropriating funds for the program in the DSS budget for fiscal year 1991-92. In its place, the Legislature established the SDA program to provide assistance to some former GA recipients. 1991 P.A. 111, § 805.

1991 P.A. 111, § 805 provided in pertinent part as follows:

(1) The department of social services shall operate a state disability assistance program. Persons eligible for this program shall include needy persons 18 years of age or older, or emancipated minors, who meet 1 or more of the following requirements:

(a) A recipient of supplemental security income, social security, or medical assistance due to disability.

(b) A person who is medically diagnosed as incapacitated and unavailable for work for at least 90 days.

(c) A resident of adult foster care, home for the aged, county infirmary or substance abuse treatment center.

(d) A person receiving 30-day postresidential substance abuse treatment.

(e) A person diagnosed as having acquired immune-deficiency syndrome or acquired immune-deficiency syndrome related complex.

(f) A person receiving special education services through the local intermediate school district.

(g) A pregnant woman.

(h) A caretaker of a disabled person as defined in subsections (a), (b), (e), or (f) above.

Contemporaneous with the legislative action, defendants developed a policy for determining eligibility under subsection 805(1)(b). The policy provided as follows under the heading "Standard for Determining Disability":

Clients are medically eligible for State Disability Assistance if they are medically eligible for MA [medical assistance] based on disability or blindness or if they have a physical and/or mental impairment or combination of impairments which prevents the performance of any remunerative work for 90 days or more.

The policy further defined the term "work" as "[a]ny work or work activity usually done for remuneration." Defendants continued the policy during fiscal year 1992-93 because the Legislature included identical language in subsection 805(1)(b) of that year's appropriations act. 1992 PA 168, subsection 805(1)(b). The Legislature, however, modified the language of subsection 805(1)(b) for fiscal year 1993-94 to provide benefits for "[a] person with a physical or mental impairment other than substance abuse which meets federal SSI disability standards, except that the minimum duration of the disability shall be 90 days." 1993 PA 186, subsection 805(1)(b). Accordingly, defendants discontinued the policy for determining disability under subsection 805(1)(b).

In February 1992, in response to defendants' implementation of the policy, plaintiffs, former recipients of assistance under the GA program, commenced this action seeking certification of a class action and declaratory and injunctive relief. Plaintiffs alleged that defendants' policy was invalid because the internal criteria for determining eligibility under subsection 805(1)(b) was not promulgated as a rule under the APA and the policy excluded applicants who fell within the scope of subsection 805(1)(b). The trial court subsequently denied, without prejudice, plaintiffs' motion to certify a class.

Defendants and plaintiffs filed cross-motions for summary disposition of plaintiffs' claims under MCR 2.116(C)(10) in March 1993. The trial court granted partial summary disposition for plaintiffs on June 8, 1994, declaring defendants' policy invalid and violative of the APA and the SDA appropriations acts. The court reasoned as follows:

The policy for determining eligibility for SDA benefits--and this is a finding of the Court--is a rule, and should have been promulgated as a rule under the Michigan Administrative Procedures Act.

The interpretive statement exception has been narrowly construed by the courts, and requires that a statement be merely be [sic] explanatory.

This policy goes beyond explanatory. It essentially eliminated the medically diagnosed requirement altogether and went on to offer a restricted definition of incapacitated, as an impairment which prevents the performance of any remunerative work for 90 days or more. The plain meaning of incapacitated would certainly encompass more than this.

The policy in question had the full force and effect of law, and was used to determine whether a person was eligible for SDA benefits.

The preferred method of policy making is through the process of promulgation of rules. This policy clearly affected the status quo, and those affected by it should have been given an opportunity to be heard.

The Court also finds that the argument that this is somehow an exception to the Administrative Procedures Act because it falls underneath the--a broad boilerplate language of the Social Services Act, is also not adopted by the Court.

Therefore, the Court grants summary disposition to the Plaintiffs on Counts 12, 17, 18, and 21, finding that the definition as applied was violative of the Michigan Administrative Procedures Act and also in violation of the authorizing statute.

The court took under advisement the issue whether to grant further relief, but certified its declaratory rulings as "final" for purposes of appeal.

In April 1995, plaintiffs moved for postjudgment supplemental relief under MCR 2.605(F), arguing that because defendants had improperly denied benefits to seventy-five percent of applicants, defendants must notify previously rejected applicants and determine their eligibility under an appropriate standard. Plaintiffs urged the court to use its general power to fashion relief to grant them the additional relief necessary to give effect to the declaratory judgment because defendants had not sought to implement the court's decision. Plaintiffs further argued that the court should direct that defendants determine eligibility by means of the disability standard used for purposes of the supplemental security income (SSI) provisions of the Social Security Act, 42 USC 1382 et seq.

The trial court took the motion under advisement after a hearing in July 1995. Nine months later, the court ruled that it would use its general power to fashion a specific remedy to enforce its declaratory judgment. Noting that defendants had not developed an alternate standard for determining disability, the court directed that they use the SSI standard because it was the only "coherent" standard, it reasonably effectuated the Legislature's intent, and defendants had expertise in using it. Next, the court recognized that personal notice to all rejected applicants was impractical, but concluded that defendants could provide reasonable notice through the mass media and the inclusion of written materials in food stamp mailings. Therefore, the court ordered that defendants (1) include written notices and application forms in food stamp mailings during August 1996, (2) air public service announcements in the top seven television markets not less than five times in prime time during the first two weeks of August 1996, (3) air the announcements in the top ten radio markets not less than five times during working hours in the first two weeks of August 1996, and (4) use the SSI standard to review applications. The court then dismissed plaintiffs' remaining claims as moot.

Defendants moved for reconsideration, requesting that the court amend its order to allow them to send a preapplication to all food stamp recipients in a separate mailing, which applicants could then present to the Family Independence Agency (FIA) for a full application. Defendants further requested that the court reconsider the...