Faught v. Heckler

• Decision Date: 11 October 1983
• Docket Number: Civ. No. 83-66-A,83-132-A.
• Citation: 577 F. Supp. 1180
• Parties: Linda FAUGHT, on behalf of herself and all other persons similarly situated, Plaintiff, and Yvonne Bradford, Intervenor, v. Margaret HECKLER, et al., Defendants. Peggy McCLURG, Plaintiff, v. Michael REAGEN, et al., Defendants and Third-party Plaintiffs, v. Margaret HECKLER, Third-party Defendant.
• Court: U.S. District Court — Southern District of Iowa

577 F. Supp. 1180

Linda FAUGHT, on behalf of herself and all other persons similarly situated, Plaintiff, and Yvonne Bradford, Intervenor, v. Margaret HECKLER, et al., Defendants.

Peggy McCLURG, Plaintiff, v. Michael REAGEN, et al., Defendants and Third-party Plaintiffs, v. Margaret HECKLER, Third-party Defendant.

Civ. Nos. 83-66-A, 83-132-A.

United States District Court, S.D. Iowa, C.D.

October 11, 1983.

COPYRIGHT MATERIAL OMITTED

Carroll L. Lucht, Steven Nelson, Jacqueline Miller, Civil Litigation Project, College of Law, University of Iowa, Iowa City, Iowa, for Faught.

Kay Delafield, Legal Services Corp. of Iowa, Ottumwa, Iowa, for McClurg.

David H. Correll, Price, Correll & Sheerer, Cedar Falls, Iowa, for Bradford.

Thomas J. Miller, Atty. Gen. of Iowa, Candy Morgan, Asst. Atty. Gen., Des Moines, Iowa, Richard C. Turner, U.S. Atty., Robert C. Dopf, Asst., Des Moines, Iowa, for defendants.

RULING AND ORDER

STUART, Chief Judge.

Pursuant to state and federal policies presently in effect in the State of Iowa, when a member of an Aid to Families with Dependent Children (AFDC) grant group receives a nonrecurring lump sum payment (such as inheritance), the lump sum is treated as income to be automatically prorated over a period of months. This represents a change from the former practice of treating the lump sum as income in the month of receipt and as a resource thereafter if not totally expended during the month of receipt. The present policy, which results in cancellation of AFDC benefits for a set period of time regardless of subsequent changes in circumstances (including depletion of the lump sum proceeds), is challenged in the above-captioned consolidated actions as being violative of the Social Security Act when applied to AFDC grant groups without earned income, as well as violative of the Due Process Clauses of the Fifth and Fourteenth Amendments.

The primary matters before the Court at this time are the parties' cross-motions for summary judgment. Plaintiffs have moved for summary judgment on their statutory claims against both the state and federal defendants, and the federal defendant seeks summary judgment on the statutory and due process claims asserted against her. In addition, the federal defendant moved for summary judgment on an equal protection claim which has since been abandoned by plaintiffs in their amended and substituted complaint, and the state defendants moved for summary judgment on a pendent state law claim concerning plaintiff Linda Faught only, which has similarly been dropped from the amended complaint. Because the motions pertaining to the equal protection claim and pendent state law claim have been rendered moot by the filing of the amended complaint, no ruling on them is required.

On August 12, 1983, the federal defendant moved for leave to file a reply brief. Although the reply brief has already been filed, the Court will grant defendant's motion for the record and will consider the reply brief in ruling on the cross-motions for summary judgment. The federal defendant's request for oral argument, filed August 18, 1983, will be denied.

Before proceeding to the summary judgment issues, the Court observes that plaintiffs seek certification of a plaintiff class under Fed.R.Civ.P. 23(b)(2), consisting of all persons in the state of Iowa whose AFDC grants were or will be canceled as a result of the proration of lump-sum payments received by a member of the AFDC grant group at a time when the grant group was receiving only unearned income. Defendants have not resisted certification of such a class, and the Court finds that this case meets all the requirements of Fed.R.Civ.P. 23(a) and 23(b)(2). Accordingly, the Court will certify the proposed plaintiff class.

There are no disputed facts in this case, but only questions of law. The case is therefore ripe for summary adjudication pursuant to Fed.R.Civ.P. 56. The Court will first address plaintiff's statutory claims in accordance with the Court's duty to avoid reaching constitutional issues when a nonconstitutional ground for relief may suffice. See, e.g., Wolston v. Readers Digest Association, Inc., 443 U.S. 157, 160-61 n. 2, 99 S.Ct. 2701, 2703-04 n. 2, 61 L.Ed.2d 450 (1979).

I. Statutory claim.

This case results from changes in the AFDC program required by the Omnibus Budget and Reconciliation Act of 1981 (OBRA). First, OBRA amended 42 U.S.C. § 602(a)(7)(A) to provide that state AFDC plans must:

(7) except as may be otherwise provided in paragraph (8) or (31) and section 615 of this title, provide that the State agency —

(A) shall, in determining need, take into consideration any other income and resources of any child or relative claiming aid to families with dependent children, or of any other individual (living in the same home as such child and relative) whose needs the State determines should be considered in determining the need of the child or relative claiming such aid;

In addition, 42 U.S.C. § 602(a)(17) was amended to require state plans to:

(17) provide that if a person specified in paragraph (8)(A)(i) or (ii) receives in any month an amount of income which, together with all other income for that month not excluded under paragraph (8), exceeds the State's standard of need applicable to the family of which he is a member —

(A) such amount of income shall be considered income to such individual in the month received, and the family of which such person is a member shall be ineligible for aid under the plan for the whole number of months that equals (i) the sum of such amount and all other income received in such month, not excluded under paragraph (8), divided by (ii) the standard of need applicable to such family, and

(B) any income remaining (which amount is less than the applicable monthly standard) shall be treated as income received in the first month following the period of ineligibility specified in subparagraph (A);

(Emphasis added.)

Paragraphs (8)(A)(i) and (ii) of 42 U.S.C. § 602(a), referred to in § 602(a)(17), require a state AFDC plan to:

(8)(A) provide that, with respect to any month, in making the determination under paragraph (7), the State agency —

(i) shall disregard all of the earned income of each dependent child receiving aid to families with dependent children who is (as determined by the State in accordance with standards prescribed by the Secretary) a full-time student or a part-time student who is not a full-time employee attending a school, college, or university, or a course of vocational or technical training designed to fit him for gainful employment;

(ii) shall disregard from the earned income of any child or relative applying for or receiving aid to families with dependent children, or of any other individual (living in the same home as such relative and child) whose needs are taken into account in making such determination, the first $75 of the total of such earned income for such month (or such lesser amount as the Secretary may prescribe in the case of an individual not engaged in full-time employment or not employed throughout the month);

(Emphasis added.)

Plaintiffs claim that the lump sum rule set forth in § 602(a)(17) applies by its terms only to persons with earned income, and that defendants' application of the rule to members of the plaintiff class (who have no earned income) is therefore contrary to the statute and illegal. Plaintiffs argue that the "persons specified in paragraph (8)(A)(i) or (ii)" are only persons with earned income.

In ruling on plaintiff Faught's motion for a preliminary injunction on April 5, 1983, this Court found that she was likely to prevail on the merits of the claim just discussed. That finding was based largely on the opinion filed in conjunction with a grant of preliminary injunctive relief in Sweeney v. Affleck, 560 F.Supp. 1118 (D.R. I.1983), a case which addresses the same statutory question presented here.¹ Subsequent to this Court's April 5 ruling, at least four other district courts have considered the same statutory question and have expressed either outright disagreement with or strong doubts about the statutory interpretation in Sweeney.

For example, in Reed v. Lukhard, 578 F.Supp. 40, (W.D.Va.1983), Chief Judge James C. Turk stated:

Plaintiffs' position that § 602(a)(8)(i) and (ii), as incorporated by § 602(a)(17), clearly contemplates that the lump sum rule applies only to AFDC recipients having earned income, is nothing but wishful thinking. If anything is to be decided from reading those two provisions in isolation, it would have to be in favor of the defendants' contentions: § 602(a)(8)(i) and (ii), without question, set forth certain categories of recipients, and then provide that certain portions of the "earned income" of those recipients be disregarded in making eligibility and need determinations under § 602(a)(7). It does not necessarily follow that the category of recipients set forth in § 602(a)(8)(i) and (ii), as incorporated by § 602(a)(17), includes only those having earned income; to argue that it does suggests an uncritical reading of the provisions.

Id. at 43-44.

Likewise, in Walker v. Adams, 578 F.Supp. 50 (W.D.Ky.1983), Judge Thomas A. Ballantine, Jr., wrote:

Plaintiff asserts that the language quoted in Section 602(a)(17), when read in conjunction with Section 602(a)(8)(i) and (ii) supports her interpretation that the lump sum rule applies only to those recipients who have earned income and lump sum income.

We disagree.

Section 602(a)(8)(i) and (ii) provide only that in determining whether an AFDC unit is ineligible, certain earned income of the persons named shall not be considered.

. . . .

... The Court reads the statute as applying equally to all AFDC recipients without regard to whether they have earned income or not ....

Id. at 52 (footnote omitted).

Also, in Douthit v. Heckler, 577 F.Supp. 88 (D.Neb.1983), Judge C. Arlen Beam opined that the Sweeney interpretation previously relied upon...