Hodges v. Shalala
| Decision Date | 24 October 2000 |
| Docket Number | No. 3:00-2048-17.,3:00-2048-17. |
| Parties | Jim HODGES, et al., Plaintiffs, v. Donna SHALALA, et al., Defendants. |
| Court | U.S. District Court — District of South Carolina |
Marcus Manos, Wilburn Brewer, Jr., Susan Batten Lipscomb, of Nexsen, Pruet, Jacobs & Pollard, LLP, Columbia, SC, for plaintiffs.
Deborah B. Barbier, Robert F. Daley, Jr., U.S. Attorney's Office, Columbia, SC, Robert E. Keith, U.S. Dept. of Health and Human Services, Washington, DC, for defendants.
The State of South Carolina ("State"),1 as well as other persons, filed this lawsuit in an attempt to prevent the United States from penalizing it for failing to meet certain conditions that were tied to its receipt of federal money. Specifically, the State accepted funds from the United States under the Temporary Assistance to Needy Families Program ("TANF") upon the conditions that it would (1) implement and maintain a centralized computer system, with which to track those persons who are responsible for paying child support, and (2) create a central child-support disbursement unit. Although substantial efforts were made by the State to comply with its obligations under TANF, its attempts have not yet met with success.
The State has asked the Defendant, Donna Shalala, in her official capacity as the Secretary of the United States Department of Health and Human Services ("Department"), to exercise her discretion and grant it an opportunity to comply with the TANF requirements at a later time without incurring any substantial penalty. According to the pleadings, there are indications that Shalala will not grant the State's request because, in her opinion, she does not possess any discretionary authority to do so. Thus, the purpose of this litigation is to determine the limits, if any, of the Secretary's discretion and, in the meantime, to forestall the issuance of an administrative decision that might terminate the State's ability to elect a lesser alternative penalty.
The parties have deemed this case to be one of substantial importance to them since hundreds of millions of dollars, as well as the balance of power between the federal and state governments, are at stake. Unfortunately, because of the nature of these grants, many of the poorest residents of South Carolina are caught in the middle of this dispute.
On August 11, 2000, Secretary Shalala filed a motion to dismiss the lawsuit.2 On the same day, the State filed a motion for a second preliminary injunction. For the reasons that are set forth below, Shalala's motion is granted and the State's motion is denied.3
The history surrounding this case is generally undisputed. The nonpayment of child support has been a continuing problem in the United States for several decades. See generally Deborah L. Rhode, Feminism and the State, 107 Harv. L.Rev. 1181, 1200 (1994) ( ). Although once considered an issue of local family law, the problem has taken on national dimensions. See, e.g., 132 Cong. Rec. S5303-04 (1986) (statement of Sen. Bradley) ( ).
Given the particularly harsh effects of nonpayment on poor families, the federal and state governments, including that of South Carolina, have long cooperated in an attempt to assure that those children and parents, who live in poverty and are entitled to receive child support, get the necessary private and public assistance. In 1975, Congress initiated a series of aggressive steps to remedy such nonpayment when it passed the Child Support Enforcement Act, Title IV, Part D of the Social Security Act, 42 U.S.C. §§ 651-669 (1975) [hereinafter Title IV-D]. Therein, it created an enforcement program that would be (1) prescribed and administered by the federal government as a prerequisite to the receipt of any enhanced federal funding, and (2) operated by the states.
Following the enactment of this Act, South Carolina acted quickly to come into compliance with these initial requirements. By 1976, the State had devised and implemented a uniform family court system to address the situation. The program was to be administered by each of the forty-six county clerks of the State's courts. In reliance upon local knowledge and relationships, the system was able to satisfy most claims for payment within a period of twenty-four hours.
However, as time passed, Congress developed a different view as to the effectiveness of the state-run systems—especially with regard to interstate enforcement efforts. See, e.g., 132 Cong. Rec. S5303-04 (1986) (statement of Sen. Bradley) ( ). Hence, Congress enacted the Family Support Act in 1988, in which it amended Title IV-D to require all of the participating states to create and maintain automated computer systems that would facilitate enforcement. The federal government provided matching funds at a rate of ninety (90) percent during the development phase of the project, and the State contracted with the Unisys Corporation ("Unisys") to build the system.
In or around 1996, two events dramatically changed the relationship between the State and the Secretary. First, the State alleges that it learned for the first time that Unisys had failed to fulfill its contractual obligations to build a system that would meet federal standards. In the opinion of the State, the failure by Unisys was an act of "actual fraud." (Pls.' Mem. Opp'n Mot. Dismiss at 3.) As a result of these ostensible misdeeds, the State was falling out of compliance with federal regulations. At about the same time, Congress enacted the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, which further amended the conditions under Title IV-D by requiring the states' enforcement systems to be centralized and statewide in nature.
The 1996 amendment was part of a broad reaching attempt by Congress to overhaul the federal government's public assistance program and supplant it with the TANF Program. Under the TANF Program, the participating states would receive federal block grants to design their own public assistance programs in exchange for their agreement to (1) work toward federal program goals, and (2) satisfy a series of effort and performance requirements. These federal monies were to be distributed to the poorest families within each participating state so that its recipients could obtain the basic necessities of life. The parties agree that in order for a state to receive this funding, it must have a Title IV-D plan that has been approved by the federal government.4 See 42 U.S.C. §§ 602(a)(2), 655(a)(1) (2000).
In 1998, the relationship between the State and the federal government became more complicated. On January 27 of that year and despite the State's allegations of fraud by Unisys, the Secretary sent a notice of her intent to disapprove its child-support enforcement systems. Additionally, Congress enacted the Child Support Performance and Incentive Act of 1998. Therein, it created a graduated financial penalty system, which could be adopted by a participating state in lieu of a disapproval of its plan by the Secretary (i.e., for its failure to have an automated data processing or disbursement system in place on the prescribed date). The State has only requested the alternative penalty with respect to a condition that it have a centralized payment-disbursement system. However, it did not accept the alternative penalty with respect to its statewide data and information system, even though such system is admittedly noncompliant with the statute.
Thereafter, the Secretary designated a presiding officer to make recommended findings and a proposed decision that would address the State's data system plan. On May 18, 2000, the presiding officer issued, among other things, the following recommended findings: "that having an automated system in effect is a requirement for approval of a state IV-D plan, and that [the Administration for Children and Families] has not been shown to have the authority to excuse South Carolina's conceded failure to comply with the automated system requirement by fashioning some sanction short of disapproval in its state IV-D plan." (Defs.' Mem. Supp. Mot. to Dismiss Ex. A at 2; Pls.' Opp'n Mot. Dismiss Ex. J at 3.) On the basis of these recommended findings, the presiding officer proposed the disapproval of the State's Title IV-D plan. (Defs.' Mem. Supp. Mot. to Dismiss Ex. A at 17; Pls.' Opp'n Mot. Dismiss Ex. J at 18.) This lawsuit followed.5 After an Assistant Secretary issued a brief statement on August 9, 2000, in which the Secretary was advised to reach the same conclusion, (Defs.' Mem....
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