Gould v. Department of Health and Social Services for State of Wis.

• Decision Date: 29 January 1998
• Docket Number: No. 97-2602-FT,97-2602-FT
• Citation: Gould v. Department of Health and Social Services for State of Wis., 576 N.W.2d 292, 216 Wis.2d 356 (Wis. App. 1998)
• Parties: Victoria L. GOULD, Petitioner-Appellant, v. DEPARTMENT OF HEALTH AND SOCIAL SERVICES FOR the STATE OF WISCONSIN, Respondent-Respondent.
• Court: Wisconsin Court of Appeals

Page 292

576 N.W.2d 292

216 Wis.2d 356

Victoria L. GOULD, Petitioner-Appellant, v. DEPARTMENT OF HEALTH AND SOCIAL SERVICES FOR the STATE OF WISCONSIN, Respondent-Respondent.

No. 97-2602-FT.

Court of Appeals of Wisconsin.

Submitted on Briefs Dec. 1, 1997.

Opinion Released Jan. 29, 1998.

Opinion Filed Jan. 29, 1998.

[216 Wis.2d 358] On behalf of the petitioner-appellant, the cause was submitted on the briefs of Karen S. Roehl of Oshkosh.

On behalf of the respondent-respondent, the cause was submitted on the brief of James E. Doyle, Attorney General, and Maryann Sumi, Assistant Attorney General.

Before EICH, C.J., and VERGERONT and ROGGENSACK, JJ.

VERGERONT, Judge.

Victoria Gould received a lump sum payment for retroactive Social Security Disability Income (SSDI) benefits, while she was receiving Aid to Families with Dependent Children (AFDC) benefits for herself and her son. ¹ A Department of Health and Social Services (DHSS) hearing officer decided that Gould was overpaid AFDC benefits as a result of that lump sum payment and was properly terminated from AFDC; and that her subsequent application for AFDC benefits for her son was properly denied. Gould appeals the trial court's order affirming that decision. She contends that DHSS erroneously interpreted federal law governing the AFDC program and, alternatively, that issue preclusion prevents DHSS from litigating this issue because two prior circuit court decisions decided the issue adversely to DHSS. We conclude that issue preclusion does not apply, DHSS's interpretation of the federal statute is a reasonable one that comports with the purpose of the pertinent statutes, and Gould's interpretation is not more reasonable. We therefore affirm.

BACKGROUND

Gould applied for SSDI and Supplemental Security Income (SSI) benefits on January 12, 1990, due to various health problems. ² In a decision dated January 30, 1995, she was determined disabled effective January 12, 1990. Meanwhile, since March 1994, Gould had been receiving monthly AFDC benefits from Green County in the amount of $440 for herself and her minor child. In June 1995, Gould received an SSDI payment of $14,000, which included payments retroactive to January 12, 1990. She reported the payment to her county economic support worker, but no action was taken on her AFDC case as a result. In July 1995, Gould moved to Waushara County and began receiving AFDC benefits there in August. ³ In December 1995, Gould received her retroactive SSI payment that covered the "determination period," the time from the date of application to the date of receipt of benefits. ⁴ The amount of the retroactive SSI payment reflected a deduction for the AFDC benefits and the SSDI benefits she received during the period as is required by federal law. See 42 U.S.C. §§ 1382(b), 1382a(a)(2) and (b) (Supp.1997).

When Gould reported the SSI retroactive payment of December 1995 to the Waushara County agency, it became apparent to the agency that Gould received the SSDI retroactive payment in June 1995. The agency determined that, based on the receipt of that sum in June 1995, Gould should have been terminated from AFDC effective August 1, 1995. The agency also decided that under its "lump sum policy," Gould would remain ineligible for twenty-six months. The "lump sum policy" is required by federal statute and is codified in our state statute and regulation. See 42 U.S.C. § 602(a)(17) (Supp.1997); 45 C.F.R. § 233.20(a)(3)(ii)(F) (1997); 45 C.F.R. § 49.19(4)(k) (1997); WIS. ADM.CODE § DWD 11.28(8). Under the "lump sum policy" certain payments received by AFDC recipients, including retroactive SSDI benefits, are considered "lump sums" and result in AFDC ineligibility for a time. This AFDC ineligible period is computed by dividing the lump sum by the appropriate assistance standard. On December 19, 1995, the agency notified Gould of its determination and warned that her AFDC benefits would cease effective December 31, 1995. It also notified her that the AFDC payments she received from August 1995 through December 1995 were overpayments and would have to be repaid. On February 2, 1996, Gould applied for AFDC benefits for her son only, and the agency denied her application on the ground that she was ineligible under the "lump sum policy."

Gould appealed both the agency's decision to deny her son's application and the agency's determination of an overpayment. She contended at the hearing before DHSS, as she did before the trial court and does on this appeal, that the "lump sum policy" was inapplicable to her because in June 1995, when she received the SSDI retroactive payment, she was an SSI recipient not an AFDC recipient, and her income and assets could not be considered in determining her son's AFDC eligibility. The statute she relies on, 42 U.S.C. § 602(a)(24), provides: ⁵

[A state AFDC plan must] provide that if an individual is receiving benefits under [SSI] then, for the period for which the benefits are received, such individual shall not be regarded as a member of a family for purposes of determining the amount of the benefits of the family under this [subchapter] and his income and resources shall not be counted as income and resources of a family under this [subchapter].

Gould's position is that, since she was determined eligible for SSI benefits retroactive to a date prior to the date on which she received the SSDI retroactive payment, the date of receipt of that lump sum was within "the period for which such [SSI] benefits are received," and she was an SSI recipient, not an AFDC recipient, on that date. She concludes that she was therefore not overpaid AFDC, and that her income and resources could not be counted in determining her son's AFDC eligibility.

The DHSS hearing examiner decided that Gould was not an SSI recipient in June 1995 because she had not yet received any SSI check, whether for retroactive or current monthly benefits. The examiner relied on the DHSS AFDC HANDBOOK, Appendix 18.1.0 (10-1-92), which interprets the federal statute and the corresponding state regulation ⁶ to mean that an SSI recipient is someone who is "actually receiving SSI checks" such that "someone who has been determined eligible for SSI [but] who hasn't yet received benefits is not yet an SSI recipient." Since Gould was not an SSI recipient when she received the SSDI retroactive payment, the examiner decided the "lump sum policy" was properly applied to Gould and to the retroactive SSDI payment. The examiner acknowledged that DHSS arrived at the same conclusion in a case concerning another individual, and that the circuit court in Schilling v. Department of Health and Social Services, 95-CV-1584 (Dane County Cir. Ct., Jan. 12, 1996), reversed that decision. However, the examiner stated, that decision was never appealed to the court of appeals and was not binding on DHSS in cases involving other individuals. The examiner explained in detail why he did not agree with the legal analysis of that circuit court decision.

Gould appealed the hearing examiner's decision pursuant to § 227.52, STATS., and the circuit court affirmed. The court rejected Gould's argument that issue preclusion barred DHSS from litigating this issue because it had been decided against the agency in Schilling. The court concluded that the statutory language was ambiguous, that DHSS's interpretation of the statute was entitled to deference, but that even without according DHSS deference, its interpretation was the more "solid."

DISCUSSION

Issue Preclusion

We consider first Gould's argument that issue preclusion ⁷ applies based on the January 12, 1996 Schilling decision (Schilling I ) and a later related decision in Schilling v. Department of Health and Social Services, Case No. 96-CV-121 (Dane County Cir. Ct., July 24, 1996) (Schilling II ). In Schilling I, Sandra Schilling appealed a decision by a DHSS hearing examiner that the retroactive SSDI benefit check she received was properly considered by the county agency in determining her children's AFDC eligibility and benefit level. Schilling made the same argument that Gould makes concerning 42 U.S.C. § 602(a)(24), and the circuit court accepted that argument, reversing DHSS's decision. DHSS did not appeal the circuit court's decision.

Schilling II dealt with an overpayment issue that resulted from the application of the lump sum rule to Schilling's receipt of the SSDI retroactive payment. That issue, unlike in this case and for reasons not pertinent here, proceeded separately from the issue of other family members' eligibility. The circuit court in Schilling II concluded that the Schilling I court decided the effect of retroactive SSI eligibility on AFDC benefit calculations under 42 U.S.C. § 602(a)(24) and that issue preclusion barred DHSS from relitigating this issue. In the alternative, the Schilling II court adopted the reasoning and analysis of the Schilling I court concerning the application and interpretation of the statute.

Gould recognizes that she was not a party in the Schilling cases, but she contends that issue preclusion is nevertheless appropriate under Michelle T. v. Crozier, 173 Wis.2d 681, 688-89, 495 N.W.2d 327, 330-31 (1993). Crozier held that trial courts may apply issue preclusion when invoked by a plaintiff (offensive use) who was not a party in the prior litigation (non-mutual use) against a defendant who was, if application of the doctrine is fundamentally fair to the defendant. The court listed several factors to be considered in the fundamental fairness analysis. Crozier, 173 Wis.2d at 689, 495 N.W.2d at 330. ⁸ Gould argues that under the Crozier factors, it is fundamentally fair to apply issue preclusion against DHSS. DHSS responds that the defendant in Crozier was a private party, not a governmental agency; there is no authority in Wisconsin for using offensive non-mutual issue preclusion against governmental agencies; and there is persuasive authority from other...