Kelly v. Wyman

• Decision Date: 21 April 1969
• Docket Number: 864.,No. 68 Civ. 394,68 Civ. 394
• Citation: 294 F. Supp. 893
• Parties: John KELLY et al., Plaintiffs, Ruby Sheafe et al., Plaintiffs, and Teresa Negron et al., Intervenor-Plaintiffs, v. George K. WYMAN et al., Defendants.
• Court: U.S. District Court — Southern District of New York

294 F. Supp. 893

John KELLY et al., Plaintiffs, Ruby Sheafe et al., Plaintiffs and Teresa Negron et al., Intervenor-Plaintiffs, v. George K. WYMAN et al., Defendants.

Nos. 68 Civ. 394, 864.

United States District Court S. D. New York.

November 26, 1968.

Probable Jurisdiction Noted April 21, 1969.

COPYRIGHT MATERIAL OMITTED

Lee A. Albert, Henry A. Freedman, Brian Glick, Harold J. Rothwax, David Gilman, David Diamond, Stephen Wizner, Marianne J. Rosenfield, Peter H. Darrow, Robert Sugarman, and Martin Garbus, New York City, for plaintiffs and intervenor-plaintiffs.

Mary B. Tarcher, Mort Cohen, and Louise Gruner Gans, New York City, for plaintiff Frye.

Carl Rachlin and Stephen Nagler, New York City, for plaintiffs Sheafe, and others, and intervenor-plaintiffs.

Shyleur Barrack and Richard Kwasnik, New York City, for plaintiff Lett.

Louis J. Lefkowitz, Atty. Gen., State of New York, for defendant Wyman; Joel H. Sachs, New York City, of counsel.

J. Lee Rankin, Corp. Counsel, City of New York, for defendant Goldberg; John J. Loflin, Jr., Merrill Charlton, Milton L. Platt, and Samuel Felder, of counsel.

Edwin L. Weisl, Jr., Asst. Atty. Gen., Civil Division, Dept. of Justice, Robert M. Morgenthau, U. S. Atty. for the Southern District of New York, Laurence Vogel, Asst. U. S. Atty., of counsel.

Amicus curiae brief for the United States.

Before FEINBERG, Circuit Judge, BRYAN and McLEAN, District Judges.

Probable Jurisdiction Noted April 21, 1969. See 89 S.Ct. 1469.

FEINBERG, Circuit Judge:

These consolidated actions present another in the increasing number of attacks on prevailing state welfare practices.¹ Plaintiffs claim that the procedures in New York State for termination of welfare benefits deny due process and violate both the Social Security Act and regulations of the United States Department of Health, Education, and Welfare (HEW). The eight plaintiffs (six in one action, two in the other) are New York City welfare recipients; their complaints sought the convening of a three-judge court and declaratory and injunctive relief under the Civil Rights Act, 42 U.S.C. § 1983, and the Social Security Act, 42 U.S.C. §§ 301 et seq. Defendants are the Commissioner of the New York State Department of Social Services, the State Board of Social Welfare and the Commissioner of the New York City Department of Social Services. In May 1968, over the objections of defendants, Judge Bryan convened a three-judge court pursuant to 28 U. S.C. §§ 2281, 284. 294 F.Supp. 887 (S.D.N.Y.1968). Thereafter, a briefing schedule was fixed and hearings were held in June and July on a number of motions. Because of the interest of the United States in the monies expended under New York State and City welfare programs and in the procedures set up to administer them, the court invited the United States to submit an amicus brief, which it did in early October 1968. For reasons hereafter indicated, we grant plaintiffs' motion for a preliminary injunction in part and deny it in part, and deny defendants' motion for summary judgment; the disposition of other motions is set forth in detail below.

I

Welfare programs in the United States generally fall into two groups: general assistance and categorical assistance.² The former is financed only by state and local governments; the latter refers to programs supported by grants from the federal government under the Social Security Act to give aid to particular categories of individuals, e. g., aid to families with dependent children (AFDC). Four of the original plaintiffs in this action³ were recipients of general assistance, home relief under the New York Social Welfare Law. The other four⁴ were recipients of AFDC, which New York State administers in accordance with the Social Security Act, 42 U.S.C. §§ 601-609. Funds of the United States are involved only in the latter program.

It is instructive on the state of administration of public welfare to review how both federal and New York State and City regulations have changed just since the institution of this consolidated action. At the time the complaints were filed, state regulations dealing with both home relief and AFDC programs apparently required no prior notice at all of suspension of benefits and no hearing prior to that action. However, a state hearing procedure, which is designated as a "fair hearing," had been instituted to provide an administrative remedy after suspension or termination of benefits; in the case of home relief, the procedure went into effect barely two weeks before the first complaint was filed in this case. After the action began, the State Department of Social Services amended its regulations, effective March 1, 1968, to provide notice and an "administrative hearing" before termination of public assistance. Thereafter, apparently because the New York City Department of Social Services felt that it could not feasibly comply with that regulation, it was repealed, and a new regulation was adopted. Under it, welfare departments may choose one of two options described below, both of which continue to provide notice and a type of hearing before cessation of benefits. Subsequent to the State amendments, HEW adopted a new criterion for the administration of state plans, effective July 1, 1968, which requires that the agency:

Gives advance notice of questions it has about an individual's eligibility so that a recipient has an opportunity to discuss his situation before receiving formal written notice of reduction in payment or termination of assistance.

Handbook of Public Assistance Administration, Part IV, § 2300(d) (5) (1968) ("Handbook").

The remedies for a welfare recipient who has been wrongfully suspended or terminated have also been changed in another significant respect. At the time the suit was commenced, New York granted a reinstated recipient retroactive benefits for only two months and then only to the extent of debts for necessities which had been incurred.⁵ Since the delay between wrongful termination of benefits and subsequent reinstatement often exceeded two months, the limit on retroactivity worked hardship. However, effective July 1, 1968, pursuant to a change in regulations issued by HEW, payments are now made fully retroactive and are not confined to reimbursement for debts incurred.⁶

As a result of these changes, welfare recipients in New York State now have a two-step procedure to protect them against allegedly wrongful termination or suspension of benefits. The first, or pre-termination procedure, depends upon which of two options the local welfare agency has adopted. We are advised that in New York State, option (a) is in effect everywhere but in New York City, which has chosen to follow option (b). Both options are set forth in the margin.⁷ Under option (a), the local agency must give seven days written notice, specifying the reasons for suspension, before aid is stopped. The recipient is entitled to appear before an official, who is superior to the one who approved the suspension, and can present oral and written evidence with the aid of an attorney or other representative. Option (b), adopted by New York City, offers less procedural protection; e. g., although the notice provision is the same, the welfare recipient is entitled to submit a statement in writing to demonstrate why aid should continue. Under either option, if the recipient is unsuccessful, benefits cease. Thereafter, the terminated recipient is entitled to the second step, the so-called state "fair hearing,"⁸ which spells out significant procedural rights and is a trial-type proceeding. Thus, that hearing is before an independent state hearing officer; the complaining recipient has the right of confrontation and cross-examination of the witnesses against him; and a verbatim record is made of the hearing. The state regulations provide that the state fair hearing is to be held within ten working days of receipt of a request for the hearing, and a decision is to be rendered as soon as feasible, and, in any event, not later than twelve working days from the close of the hearing.⁹

II

Plaintiffs allege that even with the improved procedures, they are threatened with termination of assistance in a manner that is both unconstitutional and improper under the governing statute and regulations. Their constitutional argument is that under the due process clause of the fourteenth amendment they are entitled to a constitutionally adequate hearing before termination of benefits and that the procedures provided by the state and city do not meet this standard. Defendants do not deny plaintiffs' general propositions that the terminations here under attack amount to "state action" and that the protections of the due process clause apply. Nor do defendants attempt to argue that welfare benefits are a "privilege," rather than a right, and that therefore they may fix the procedures of termination as they see fit.¹⁰ However, defendants do claim that the combined hearing procedures now provided to welfare recipients meet constitutional and statutory requirements.

We agree with defendants that the state fair hearing procedure after termination of benefits seems constitutionally sufficient.¹¹ Defendants argue that combining the post-termination procedure with an informal pre-termination "hearing" disposes of all due process claims, citing principally Wheeler v. Montgomery, 296 F.Supp. 138 (N.D.Cal. 1968) (three-judge court), appeal docketed, 37 U.S.L.W. 3152 (U.S. Oct. 22, 1968) (No. 634). In that case, as in this, state hearing procedures for termination of welfare changed during the litigation. There, the state provided an "informal conference" before termination and a full hearing procedure within a few months thereafter. The court determined the constitutionality of the former "in light of" the latter and held that the combined procedure complied with due process.¹²

While post-termination review is relevant, there is one overpowering fact...