Gorrie v. Heckler, Civ. No. 4-84-1203.

• Court: United States District Courts. 8th Circuit. United States District Court of Minnesota
• Writing for the Court: MILES W. LORD, Senior
• Citation: 624 F. Supp. 85
• Parties: Barbara Anne GORRIE, Karen Comnick, Linda Schneider, Robert Schneider, on behalf of themselves and their minor children, and other persons similarly situated, Plaintiffs, JoAnne Heille, Rosa Williams, Jean Sonnenberg, and Linda Garza, on behalf of themselves and their minor children, and other persons similarly situated, Intevenor-Plaintiffs, v. Margaret M. HECKLER, Secretary, United States Department of Health and Human Services, and Leonard W. Levine, Commissioner, Minnesota Department of Human Services, Defendants.
• Decision Date: 10 September 1985
• Docket Number: Civ. No. 4-84-1203.

624 F. Supp. 85

Barbara Anne GORRIE, Karen Comnick, Linda Schneider, Robert Schneider, on behalf of themselves and their minor children, and other persons similarly situated, Plaintiffs,
JoAnne Heille, Rosa Williams, Jean Sonnenberg, and Linda Garza, on behalf of themselves and their minor children, and other persons similarly situated, Intevenor-Plaintiffs,
v.
Margaret M. HECKLER, Secretary, United States Department of Health and Human Services, and Leonard W. Levine, Commissioner, Minnesota Department of Human Services, Defendants.

Civ. No. 4-84-1203.

United States District Court, D. Minnesota, Fourth Division.

July 22, 1985.

Permanent Injunction Order September 10, 1985.

624 F. Supp. 86

Southern Minnesota Regional Legal Service by Martha A. Eaves, Thomas G. Squire, and Michael Hagedorn, St. Paul, Minn., for plaintiffs.

Law Office of the Legal Aid Society of Minneapolis, Inc. by Richard A. Pavel, Minneapolis, Minn., for intervenor-plaintiffs.

Carol B. Swanson, Asst. U.S. Atty., Minneapolis, Minn., for defendant Margaret M. Heckler, Secretary of the U.S. Dept. of Health and Human Services.

Hubert H. Humphrey III, Minn. State Atty. Gen. by Vicki Sleeper, Sp. Asst. Atty. Gen., St. Paul, Minn., for defendant Leonard Levine, Com'r of the Minnesota Dept. of Human Services.

ORDER FOR PRELIMINARY INJUNCTION

MILES W. LORD, Senior District Judge.

This matter came before the Court on July 16, 1985 on the motion of intervenor-plaintiffs for a preliminary injunction pursuant to Federal Rule of Civil Procedure 65(a). Intervenor-plaintiffs were represented by Richard A. Pavel; plaintiffs were represented by Martha A. Eaves; defendant Commissioner was represented by Vicki Sleeper and defendant Secretary was represented by Anne L. Weismann. Based upon the entire record before the Court and after consideration of argument by counsel, the Court makes the following findings of fact and conclusions of law.

FINDINGS OF FACT

1. The original plaintiff class consists of families who are receiving or applying for Aid to Families with Dependent Children (hereinafter "AFDC") who have residing with them both dependent children and other children (either blood-related or adoptive) who receive independent child support payments from non-custodial parents.

2. The intervenor-plaintiff class consists of persons who are receiving or applying for AFDC who have residing with them both dependent children and other children (either blood-related or adoptive) who receive Social Security Child's Insurance Benefits pursuant to 42 U.S.C. § 402(d).

3. At issue in this case is the validity of the Secretary of Health and Human Services' (hereinafter "Secretary") interim final rule, 45 C.F.R. § 206.10(a)(1)(vii) (hereinafter "New Rule"), interpreting section 2640(a) of the Deficit Reduction Act of 1984, (hereinafter "DEFRA") Pub.L. No.

624 F. Supp. 87

98-369, 98 Stat. 494, 1145 (effective October 1, 1984) (codified at 42 U.S.C. § 602(a)(38) and hereinafter referred to as "Paragraph 38"). Paragraph (38) provides that

In making the determination under paragraph (7) with respect to a dependent child and applying paragraph (8), the State agency shall (except as otherwise provided in this part) include —

(A) any parent of such child, and

(B) any brother or sister of such child, if such brother or sister meets the conditions described in clauses (1) and (2) of section 606(a) of this title 42 U.S.C. § 606(a) , if such parent, brother, or sister is living in the same home as the dependent child, and any income of or available for such parent, brother, or sister shall be included in making such determination and applying such paragraph with respect to the family (notwithstanding section 405(j) of this title 42 U.S.C. § 405(j) , in the case of benefits provided under subchapter II of this chapter); 42 U.S.C. § 602(a)(38).

In its conditional language Paragraph 38 incorporates unchanged 42 U.S.C. § 606(a)(1) and (2) which defines the term "dependent child" as "a needy child (1) who has been deprived of parental support or care by reason of the death, continued absence from the home ... or physical or mental incapacity of a parent" and who is under a specified age (either 18 or 19). 42 U.S.C. § 606(a).

4. The Secretary's New Rule provides that:

For AFDC only, in order for the family to be eligible, an application with respect to a dependent child must also include, if living in the same household and otherwise eligible for assistance:

(A) Any natural or adoptive parent, or stepparent (in the case of States with laws of general applicability); and

(B) Any blood-related or adoptive brother or sister.

49 Fed.Reg. 35599 (Sept. 10, 1984), to be codified at 45 C.F.R. § 206.10(a)(1)(vii).

5. On September 24, 1984, Defendant Commissioner issued an Instructional Bulletin No. 84-76, Attachment 9 which instructed all county welfare agencies in Minnesota that:

Parent, minor siblings and minor half-siblings must all be included as part of the AFDC assistance unit when they reside in the same home. An application must be submitted for all members of the assistance unit. If application is not made for currently excluded parents, minor siblings or minor half-siblings by November 1, 1984, the AFDC case shall be terminated.

6. On April 1, 1985 this Court issued a Preliminary Injunction upon the motion of the original plaintiff class herein; that Order concluded that the Secretary's New Rule facially violated the purpose of the AFDC program, the intent of Paragraph 38, and the due process rights of the original plaintiff class. Said injunction established a pre-deprivation hearing requirement to ensure compliance with due process safeguards.

7. Defendant Commissioner issued an Instructional Bulletin No. 84-76d on April 15, 1985, which was intended to implement the Court's April 1st injunction and which stated in part: "NOTE: children receiving RSDI Social Security Child's Insurance Benefits or other forms of income are not affected by this preliminary injunction."

8. The defendants have made no factual determination as to whether the intervenor children who receive Social Security meet the condition of Paragraph 38 that these children must in fact be "dependent children" who are "needy" before they come within the scope of Paragraph 38. Instead, the defendant Secretary has focused solely upon whether these children have one parent who is absent, deceased or incapacitated and the New Rule creates an irrebuttable presumption that the status of that parent is conclusive evidence that the Social Security recipient child is a "needy" dependent child who must actually file an

624 F. Supp. 88

application for AFDC benefits without regard to whether such children either need or desire welfare assistance

9. The Secretary's New Rule conclusively presumes that the Social Security benefits of plaintiff children are fully available to the AFDC recipient/applicant half-brothers and/or half-sisters without any regard to whether that income is in fact legally available or actually available to those AFDC recipient/applicant children.

10. The Social Security Child's Insurance benefits of the class members vary in amount because they are based upon the earnings history of their deceased, incapacitated or retired wage-earner parents. 42 U.S.C. § 402(d). Even in cases where a plaintiff child receives more than $500 per month in Social Security benefits, the Secretary's new rule still conclusively presumes that such a child is "needy" and "dependent" and therefore that child is required to apply for AFDC benefits or their half-siblings will be terminated from AFDC. (See, Affidavits of class members West and Brown).

11. The representative payees who receive the Social Security benefit checks for intervenor-plaintiff children are prohibited by law from using those funds for any purpose whatsoever except "for the use and benefit of" the intended child beneficiary; violation of this prohibition would subject a representative payee to federal criminal sanctions. 42 U.S.C. § 408(e). The Secretary's own regulations also require that these Social Security benefits be used only for the intended child beneficiary. 20 C.F.R. §§ 404.2040, 404.2045.

12. The transfer or assignment of Social Security benefits, including Child's Insurance benefits, is strictly prohibited by statute.

The right of any person to any future payment under this subchapter shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this subchapter shall be subject to execution levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law.

42 U.S.C. § 407(a).

13. In 1983 Congress added a provision to 42 U.S.C. § 407 which strictly prohibits any modification of 42 U.S.C. § 407 by any method whatsoever except when adopted "by express reference to this section." 42 U.S.C. § 407(b). Paragraph 38 contains no express reference to 42 U.S.C. § 407.

14. The intervenor-plaintiff class members are at the economic margin of existence and would suffer severe economic hardship if an injunction is not issued. All of the AFDC recipients in the intervenor class face either substantial reductions or total termination of their AFDC grants if the Secretary's New Rule is enforced as to this class of plaintiffs.

Mary West's AFDC grant of $431 was terminated on July 1, 1985 because of the Secretary's New Rule. The West family now must rely entirely upon the Social Security benefits of one child for their support. In July, 1985 they spent 88% of their total income just to pay for rent.

The application of the New Rule in the case of Virginia Brown creates a loss of $447 per month in AFDC benefits. The one child in the household who receives Social Security benefits has special medical and behavioral problems. However, that child has almost $3000 in past-due medical bills which cannot be paid because under the...