Indiana Dept. of Public Welfare v. DeVoux

• Citation: 161 Ind.App. 40,314 N.E.2d 79
• Decision Date: 25 July 1974
• Docket Number: No. 2--573A123,2--573A123
• Parties: INDIANA DEPARTMENT OF PUBLIC WELFARE and William R. Sterrett, Director of the Indiana Department of Public Welfare 1 , Defendants-Appellants, v. Kermit Vann DeVOUX, Plaintiff-Appellee.
• Court: Indiana Appellate Court

Page 79

314 N.E.2d 79

161 Ind.App. 40

INDIANA DEPARTMENT OF PUBLIC WELFARE and William R.

Sterrett, Director of the Indiana Department of

Public Welfare ¹, Defendants-Appellants, v. Kermit Vann DeVOUX, Plaintiff-Appellee.

No. 2--573A123.

Court of Appeals of Indiana, Second District.

July 25, 1974.

Rehearing Denied Sept. 6, 1974.

Theodore L. Sendak, Atty. Gen. of Indiana, A. Frank Gleaves, III, Deputy Atty. Gen., Indianapolis, for defendants-appellants.

John T. Manning, Manning & Reuben, Indianapolis, David S. Walker, Legal Services Organization of Indianapolis, Inc., Indianapolis, for plaintiff-appellee.

SULLIVAN, Presiding Judge.

This appeal is from a judgment of Marion County Superior Court, Room 6, reversing appellant's (State Department) decision which denied disability benefits to appellee (DeVoux). ²

Accepting the factual background most favorable to appellee, we note that DeVoux, age twenty-five, suffers from paralytic poliomyelitis which struck him at age two. DeVoux, for the most part, is confined to a wheelchair during his waking hours.

In December 1969, appellee applied to the Marion County Welfare Department (County Department) for Aid to the Totally and Permanently Disabled. Pursuant to State regulations, appellee was examined on January 13, 1970 by a physician selected by the County Department. The physician found that appellee:

'does have a physical or mental impairment, disease or loss which appears reasonably certain to continue throughout the lifetime of the individual without significant improvement and which substantially impairs his ability to perform labor or services or to engage in a useful occupation.'

Thereafter, the County Department denied appellee's application stating he was 'not permanently and totally disabled'.

In April 1970, DeVoux, by counsel, requested an administrative appeal hearing ('fair hearing') ³ by the State Department. At the hearing, which took place on February 23, 1971, the State Department hearing officer took testimony from DeVoux's counsel and a job placement expert, Mr. Rowe, appearing on behalf of DeVoux. Only these three persons were present at the State Department hearing. Mr. Rowe testified at length regarding appellee's difficulty in finding and maintaining employment or training. According to Rowe, appellee's physical condition and lack of mobility militated against placement in a suitable employment position. During the 'fair hearing', counsel for DeVoux requested that he be furnished with all information or evidence upon which the final determination of the appeal was to be based. The hearing officer iterated as agency policy that hearing examiners did not view the entire agency record prior to the hearing, but, rather, are apprised only of the case name and number and the basis of the appeal. However, the hearing examiner did assure counsel that the agency decision would be based upon the testimony presented at the hearing and application of the State and Federal rules and regulations. Thereafter, the hearing officer discontinued the hearing, and, at a later date, privately interviewed DeVoux.

The State Department, in April of 1971, issued its Finding of Fact and Decision stating that appellee was:

'. . . not permanently and totally disabled because it is the opinion that he can be rehabilitated if he is willing to cooperate with any of the numerous agencies available to assist him.'

It is readily apparent that the Department's decision was primarily based upon two reports prepared by the County Department caseworker which were not in evidence at the hearing nor made available to DeVoux prior to the agency decision. One of these reports was a departmental social information form setting forth myriad social and economic facts as garnered from the applicant and as deduced or discovered by the County Department caseworker. The information form stated, in relevant portion, that appellee could walk with crutches occasionally, and had held a job for one month in 1961. A subsequent report from the department caseworker came at the request of the State Medical Review Team which sought additional information as to DeVoux. The caseworker's report consisted of vague bits of information regarding DeVoux's attitude, and the subjective view of the caseworker that the appellee, for various reasons, had failed to take advantage of employment and training opportunities proffered by various agencies. The caseworker also stated that appellee was fired from his 1961 job and released from a later training program due to attitudinal problems. The caseworker did not testify at the hearing, and the caseworker's reports were not made available to DeVoux's counsel.

DeVoux contested the State Department decision, and requested a review thereof by the State Board of Public Welfare. The State Board, in May of 1971, sustained the State Department's action.

Thereafter, DeVoux filed a complaint in the Marion County Superior Court, Room 6, seeking judicial review of the decision. At the hearing conducted by the court, which was in reality an oral argument rather than a testimonial proceeding, the State Department over DeVoux's objection introduced the entire department file. By the parties' stipulation, however, the court accepted the entire record in order to facilitate judicial review. DeVoux, nevertheless, steadfastly maintained his objection to the court's consideration of evidence not presented or adduced at the 'fair hearing'.

The court entered finding of facts and conclusions of law and its judgment reversing the State Department decision. In sum, the court, in considering the evidence adduced at the fair hearing, held that DeVoux had proved entitlement to disability benefits. Therefore, the court concluded that the State Department action was arbitrary, capricious, and contrary to its own regulations. Further, the court ordered that the State Department 'pay Aid to the Permanently and Totally Disabled to Kermit Vann DeVoux commencing December 1, 1969, continuously until he shall cease to be eligible for reasons other than those (set forth in the Department's 'Finding of Fact and Decision,', i.e., unwillingness to cooperate in his own rehabilitation)'.

The State Department's motion to correct error was overruled, and this appeal was perfected.

The State Department broadly questions the propriety of the trial court's action. Essentially, the Department argues that the trial court exceeded the permissible bounds of judicial review by re-weighing the evidence and substituting its judgment for that of the agency. DeVoux argues that the agency, in making its finding, is confined to the evidence properly adduced at the hearing. Further, DeVoux contends that the substantial evidence adduced at the 'fair hearing', and therefore properly before the hearing examiner, clearly establishes the appellee's entitlement to disability benefits, and that the court's decision was therefore proper.

I AGENCY DETERMINATION BASED UPON EVIDENCE NOT ADDUCED AT HEARING OR NOT OTHERWISE MADE AVAILABLE TO BENEFIT CLAIMANT IS CONTRARY TO LAW

The State Department places great reliance upon the standard of judicial review found in the Administrative Adjudication and Court Review Act. IC 1971, 4--22--1--14, Ind.Ann.Stat. § 63--3014 (Burns 1961). Such reliance, and the Department's further contention that sufficient and substantial evidence exists to support the agency's decision misconceives the decisive factor which must control on appeal. As DeVoux properly points out, we are confronted with an agency decision based essentially upon evidence which was not adduced at the administrative hearing and subject to examination or rebuttal by DeVoux.

As heretofore noted, the administrative 'fair hearing' is a creature of statutory origin, being established in the Federal Social Security Act and adopted by the State of Indiana. ⁴

The State of Indiana receives federal monies for the administration of a categorical assistance program; one such category being Aid to the Permanently and Totally Disabled. Under this scheme of cooperative federalism, the federal government finances, on a matching fund basis, a large portion of the overall program, and the State, as a condition to receipt of the monies, agrees to conduct the program in conformity with the Social Security Act and Department of Health, Education and Welfare (H.E.W.) rules and regulations. See IC 1971, 12--1--2--12, Ind.Ann.Stat. § 52--1113 (Burns 1964) and IC 1971, 12--1--2--13, Ind.Ann.Stat. § 52--1113a (Burns 1973 Supp.); see also Green v. Stanton (N.D.Ind.1973), 364 F.Supp. 123.

A plethora of decisional law establishes the proposition that a State may not vary eligibility or procedural requirements mandated by the Social Security Act or by valid H.E.W. rules and regulations. Carleson v. Remillard (1972), 406 U.S. 598, 92 S.Ct. 1932, 32 L.Ed.2d 352; Townsend v. Swank (1971), 404 U.S. 282, 92 S.Ct. 502, 30 L.Ed.2d 448; King v. Smith (1968), 392 U.S. 309, 88 S.Ct. 2128, 20 L.Ed.2d 1118; Green v. Stanton, supra; Silvey v. Roberts (M.D.Fla.1973), 363 F.Supp. 1006; Jeffries v. Swank (N.D.Ill.1971), 337 F.Supp. 1062; Zunino v. Carleson (1973), 33 Cal.App.3d 36, 108 Cal.Rptr. 796; Cisco v. Lavine (Sup.Ct.1973), 72 Misc.2d 1009, 340 N.Y.S.2d 275, modified, 72 Misc.2d 1087, 341 N.Y.S.2d 719.

In considering a variance between the state and federal eligibility requirements, the United State Supreme Court, in Townsend v. Swank, supra, stated:

'King v. Smith establishes that, at least in the absence of congressional authorization . . . a state eligibility standard that excludes persons eligible for assistance under federal AFDC standards violates the Social Security Act and is therefore invalid under the Supremacy Clause.' 404 U.S. at 286, 92 S.Ct. at 505.

Similarly, in Silvey v. Roberts, supra, the court addressed a Florida Department of Health and Rehabilitative Services policy permitting termination or reduction of some Medicaid...