Kramarevcky v. State, Dept. of Social and Health Services
| Decision Date | 27 January 1992 |
| Docket Number | No. 28337-5-I,28337-5-I |
| Citation | 64 Wn.App. 14,822 P.2d 1227 |
| Parties | Mikhail KRAMAREVCKY, Appellant, v. The DEPARTMENT OF SOCIAL AND HEALTH SERVICES, Respondent. Olivia S. JINNEMAN, Appellant, v. The DEPARTMENT OF SOCIAL AND HEALTH SERVICES, Respondent. |
| Court | Washington Court of Appeals |
Elizabeth Schott, Seattle, Yvette Hall War Bonnet, Everett, William Rutzick, Seattle, Barbara Baker, Puget Sound Legal Assistance Foundation, Olympia, for appellants.
Robert L. Schroeter, Olympia, for respondent.
Petitioners Mikhail Kramarevcky and Olivia S. Jinneman, both former recipients of public assistance benefits, challenge the reversal by a Department of Social & Health Services (DSHS) review judge of the initial decisions made by the administrative law judges (ALJ) in each of their cases. The ALJs found that equitable estoppel applied to prevent DSHS from seeking recoupment of public assistance overpayments made by DSHS to each of the petitioners. We agree with the ALJs and reverse the decision of the review judge.
Petitioner Mikhail Kramarevcky and his wife are refugees from the Soviet Union who arrived in the United States on April 26, 1989, with their minor son, Andre. Between September 1989 and October 1990, the Kramarevckys received both income and food assistance benefits through the Family Independence Program administered by DSHS. Kramarevcky obtained employment in December 1989 and provided DSHS with a copy of his first pay stub. DSHS failed to send Kramarevcky monthly income reporting forms as required by established procedure. Kramarevcky therefore did not understand that he had any further obligation to report his wages. As a result, his earned income was not considered in DSHS' calculation of benefits awarded to his family for the 4-month period of February through May 1990. DSHS subsequently determined that Kramarevcky had received an overpayment of $1,375 in financial assistance and $262 in food assistance during that 4-month period and issued an overpayment letter to that effect.
After the administrative hearing at which Kramarevcky contested the assessed overpayments, the ALJ found that Kramarevcky had followed all proper procedures and had no reason to believe his eligibility had ceased, that he could have been eligible for job training reimbursement had he not received the overpaid benefits, and that both he and his wife are now partially disabled and have no income or resources with which to repay DSHS. The ALJ therefore concluded that each of the elements of the defense of equitable estoppel had been met, and DSHS was estopped from recouping the overpaid amounts.
Olivia Jinneman was the recipient of categorically needy medical assistance under the Aid to Families with Dependent Children (AFDC) Program, also administered by DSHS. Jinneman had provided DSHS with accurate information concerning the date of birth of her son, whose 18th birthday occurred on April 29, 1988. Because her son was not attending school at the time of his 18th birthday, the family unit became ineligible for the AFDC program. As a result, Jinneman was no longer eligible for the medical coupons she continued to receive from May 1, 1988 through June 30, 1989. Upon discovering its error, DSHS terminated Jinneman's medical assistance and assessed a $1,759.94 overpayment against her for medical assistance received during that period.
At her hearing to contest the overpayment assessment, a different ALJ found that the overpayment stemmed solely from DSHS' error, and that Jinneman would have obtained medical care through alternative sources such as women's clinics and the fire department if she had been correctly advised of her ineligibility for medical assistance. The ALJ also found that Jinneman's average disposable income for the 11 months preceding the hearing was $527 a month, an amount barely adequate to meet her current needs. The judge concluded that the elements of equitable estoppel had been met, and DSHS was therefore estopped from recouping the assessed overpayment from Jinneman.
DSHS appealed each of the initial decisions made by the ALJs to a DSHS review judge. The review judge adopted all the findings of fact made by the ALJs in each case, but reversed on the basis that all of the elements required to assert equitable estoppel against the government were not met. Each of the recipients subsequently filed a petition for review in Snohomish County Superior Court pursuant to RCW 34.05.510, et seq., and RCW 74.08.080. The petitions were consolidated through an agreed order, and certified to this court, which accepted review by order of May 23, 1991.
An agency's determination that the elements of equitable estoppel have not been met presents a mixed question of law and fact. Coble v. Hollister, 57 Wash.App. 304, 308-309, 788 P.2d 3 (1990). In reviewing administrative decisions, we apply a clearly erroneous standard to factual findings and review legal conclusions de novo. Franklin Cy. Sheriff's Office v. Sellers, 97 Wash.2d 317, 324-325, 646 P.2d 113 (1982), cert. denied, 459 U.S. 1106, 103 S.Ct. 730, 74 L.Ed.2d 954 (1983). When conclusions of law are not supported by or are inconsistent with the findings, the findings control. Mell v. Winslow, 49 Wash.2d 738, 747, 306 P.2d 751 (1957); Riley v. Sturdevant, 12 Wash.App. 808, 812, 532 P.2d 640 (1975). In both of these cases, the review judge adopted all of the findings of fact made by the ALJs, which findings are not contested. The issues raised on certification concern the application of law to those facts and are thus conclusions of law subject to de novo review.
The elements of equitable estoppel are:
(1) an admission, statement, or act, inconsistent with the claim afterwards asserted; (2) [an] action by the other party on the faith of such admission, statement, or act; and (3) [an] injury to such other party arising from permitting the first party to contradict or repudiate such admission, statement, or act.
Shafer v. State, 83 Wash.2d 618, 623, 521 P.2d 736 (1974). When a party seeks to assert equitable estoppel against the State, that party must also show (1) that equitable estoppel is necessary to prevent a manifest injustice and (2) that the exercise of governmental powers will not thereby be impaired. Finch v. Matthews, 74 Wash.2d 161, 175, 443 P.2d 833 (1968). Because equitable estoppel against the government is disfavored, each of the elements must be established by clear, cogent and convincing evidence. Chemical Bank v. WPPSS, 102 Wash.2d 874, 901 n. 7, 691 P.2d 524 (1984), cert. denied, 471 U.S. 1065, 1075, 105 S.Ct. 2140, 2154, 85 L.Ed.2d 497, 510 (1985); Mercer v. State, 48 Wash.App. 496, 500, 739 P.2d 703, review denied, 108 Wash.2d 1037 (1987). The burden of proving each of the elements is on the party seeking to invoke the doctrine of equitable estoppel. Pioneer Nat'l Title Ins. Co. v. State, 39 Wash.App. 758, 760-761, 695 P.2d 996 (1985); Mercer, 48 Wash.App. at 500, 739 P.2d 703.
Where public revenues are involved, a general rule has been articulated that, at least in tax cases, courts should be "most reluctant" to find the State equitably estopped. Harbor Air Serv. v. Board of Tax Appeals, 88 Wash.2d 359, 367, 560 P.2d 1145 (1977) (); Wasem's, Inc. v. State, 63 Wash.2d 67, 70, 385 P.2d 530 (1963) (). Further, current federal and state legislation both impose on DSHS the duty to take all possible steps to recoup overpaid amounts. 42 U.S.C.A. § 602(a)(22), at 568; RCW 43.20B.630; WAC 388-44-140. However, neither federal nor state legislation and case law prohibit the application of equitable estoppel in appropriate cases. E.g., Harbor Air, 88 Wash.2d at 359, 560 P.2d 1145; Lentz v. McMahon, 49 Cal.3d 393, 777 P.2d 83, 261 Cal.Rptr. 310 (1989).
The parties agree that the first two elements of equitable estoppel were met in each of these cases. At issue here is the determination by the review judge that the remaining elements--"injury," "manifest injustice," and "non-impairment of government powers"--were not met in either case.
The review judge concluded that, in order to establish an injury, a recipient must demonstrate either that he or she was substantively eligible for the assistance paid, or that the recipient was eligible for some other form of benefits that he or she would have received but for the overpaid assistance. 1 In characterizing the injury requirement in this manner, the review judge declined to consider as binding or instructive two Washington cases concerning the application of equitable estoppel, West v. DSHS, 21 Wash.App. 577, 586 P.2d 516 (1978), review denied, 92 Wash.2d 1032 (1979), and Wilson v. Westinghouse Elec. Corp., 85 Wash.2d 78, 530 P.2d 298 (1975), relying instead on two out-of-state cases, Lentz, 777 P.2d 83, and Thrift v. Adult & Family Servs. Div., 58 Or.App. 13, 646 P.2d 1358 (1982). The review judge's reliance on these out-of-state cases is misplaced.
In Lentz, the court held that a recipient may assert equitable estoppel as a defense when a government agent causes a claimant to fail to comply with a procedural precondition to eligibility. The court did not reach the question presented here; i.e., can the nature of the official misconduct and the resulting hardship on an ineligible recipient outweigh the damage to the government caused by prohibiting the repayment assessment, thus supporting a claim of estoppel. 777 P.2d at 87-88. Lentz simply does not provide support for the conclusion that an ineligible recipient of overpaid benefits is precluded from asserting the defense of equitable estoppel.
Thrift is not persuasive for a different reason. In Thrift, the Oregon court declined to...
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Kramarevcky v. Department of Social and Health Services
...determinations that DSHS was estopped from recouping the overpayments it made to the respondents. Kramarevcky v. Department of Social & Health Servs., 64 Wash.App. 14, 822 P.2d 1227 (1992). DSHS sought review of the Court of Appeals decision, and this court granted The issue in these two co......
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...court allows the first party to contradict or repudiate the prior act, statement, or admission. Kramarevcky v. Department of Soc. & Health Servs., 64 Wash.App. 14, 18-19, 822 P.2d 1227 (1992), aff'd, 122 Wash.2d 738, 863 P.2d 535 (1993). When we review the facts in the light most favorable ......
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