Morrell v. Flaherty

• Decision Date: 03 November 1994
• Docket Number: No. 203PA93,203PA93
• Citation: 449 S.E.2d 175,338 N.C. 230
• Parties: Loretta MORRELL, As Guardian Ad Litem for Jonathan Long and Joshua Long, individually and on behalf of all others similarly situated v. David T. FLAHERTY, in his official capacity as Secretary of the North Carolina Department of Human Resources and Mary Deyampert, in her official capacity as Secretary of the North Carolina Division of Social Services.
• Court: North Carolina Supreme Court

Page 175

449 S.E.2d 175

338 N.C. 230

Loretta MORRELL, As Guardian Ad Litem for Jonathan Long and Joshua Long, individually and on behalf of all others similarly situated v. David T. FLAHERTY, in his official capacity as Secretary of the North Carolina Department of Human Resources and Mary Deyampert, in her official capacity as Secretary of the North Carolina Division of Social Services.

No. 203PA93.

Supreme Court of North Carolina.

Nov. 3, 1994.

Legal Services of Southern Piedmont, Inc. by Douglas S. Sea and Theodore O. Fillette, Charlotte, NC, for plaintiff.

Michael F. Easley, Atty. Gen. by Marilyn A. Bair, Asst. Atty. Gen., and Elizabeth L. Oxley, Associate Atty. Gen., for defendants.

WHICHARD, Justice.

Plaintiff Loretta Morrell brought this class action as guardian ad litem for two plaintiffs, minor children Jonathan and Joshua Long, to challenge the validity of a policy promulgated by the North Carolina Division of Social Services (hereinafter "DSS") under the Aid to Families with Dependent Children program (hereinafter "AFDC"). The trial court held that the policy--which requires that a needy caretaker relative and all needy children, siblings and non-siblings, when living in the same household, be included in the same AFDC assistance unit--violated federal AFDC availability regulations. The court issued a permanent injunction and a declaratory judgment in favor of plaintiff. The Court of Appeals affirmed the judgment but modified the definition of the certified class. Morrell v. Flaherty, 109 N.C.App. 628, 630-31, 428 S.E.2d 492, 494 (1993). The dispositive question is whether defendant agency's policy contravenes federal availability regulations, as well as federal regulations that mandate equitable treatment for AFDC recipients. We hold that the policy does not contravene any federal regulation. Accordingly, we reverse.

I.

AFDC is a public assistance program funded and administered jointly by the federal and state governments under Title IV, Part A of the Social Security Act (hereinafter the "Act"). 42 U.S.C. §§ 601-17 (1988 & Supp. IV 1993). States are not required to participate, but those states that do must administer their AFDC programs pursuant to a state plan that complies with federal statutes and regulations. Heckler v. Turner, 470 U.S. 184, 189, 105 S.Ct. 1138, 1141, 84 L.Ed.2d 138, 143 (1985).

AFDC assistance is available to children who have been deprived of parental support because of the death, absence or incapacity of a parent; who live with certain specified relatives; and who satisfy age requirements and state-determined financial need standards. 42 U.S.C. §§ 602(a), 606(a). If the caretaker relative is also needy, he or she may also receive AFDC benefits in addition to those received by eligible dependent children. 42 U.S.C. § 602(a).

Before assistance can be granted, states must determine the composition of the assistance unit and then establish eligibility for need of that assistance unit, which includes determining the income and resources available to members of the unit. Pursuant to section 402(a)(38) of the Act, 42 U.S.C. § 602(a)(38), and section 206.10(a)(1)(vii) of the regulations promulgated pursuant thereto, 45 C.F.R. § 206.10(a)(1)(vii) (1993), an application on behalf of a dependent child must also include in a single assistance unit, as applicants, if living in the same household as the dependent child, his or her natural or adoptive parent or stepparent (where the state has a law of general applicability holding a stepparent legally responsible for support of the child) and blood-related or adoptive siblings who are themselves dependent children.

Section 402(a)(7)(A) of the Act provides:

[T]he State agency ... shall, in determining need, take into consideration any other income and resources of any child or relative claiming [AFDC], or of any other individual (living in the same home as such child and relative) whose needs the State determines should be considered in determining the need of the child or relative claiming such aid ....

42 U.S.C. § 602(a)(7)(A) (emphasis added). Section 206.10(b)(5) of the regulations states that the assistance unit is "the group of individuals whose income, resources and needs are considered as a unit for purposes of determining eligibility and the amount of payment." 45 C.F.R. § 206.10(b)(5) (1993).

North Carolina's state plan requires that a needy caretaker relative and all needy children, siblings and non-siblings, when living in the same household, be included in the same assistance unit. AFDC Manual § 2100 II (N.C. Department of Human Resources, Division of Social Services, Public Assistance Section, 1991) ("A specified relative cannot be payee for more than one AFDC check. Include all children who are under his day-to-day care and supervision in the same assistance unit."). The State awards AFDC assistance according to the size of the assistance unit without regard to the actual cost of food, shelter, clothing and other expenses. This is called a "flat grant" system. Recognizing the economies generated by families sharing living expenses, the amount of assistance for each person added to an assistance unit is less than the amount awarded to a one-person unit. For example, an assistance unit consisting of one person receives $181; two persons, $236; three persons, $272; four persons, $297; five persons, $324; etc. Because of this feature of the plan, an assistance unit of five persons, for example, receives an AFDC grant which is smaller than the total grant received by two separate assistance units made up of two and three persons respectively.

Jonathan and Joshua Long are the minor children of Latrice Long Alexander and the grandchildren of plaintiff. Prior to May 1991 they resided with their mother in their plaintiff grandmother's household and received AFDC benefits in the amount of $224 per month from the Mecklenburg County Department of Social Services (hereinafter "Mecklenburg DSS"). In May 1991 Alexander notified Mecklenburg DSS that the children would be left in plaintiff's care, and asked that plaintiff be designated the payee for the children's AFDC payments. At approximately the same time, plaintiff applied for a separate AFDC grant for herself, her husband, and their nine minor dependent children. Mecklenburg DSS determined that all thirteen persons were eligible for AFDC benefits but, pursuant to policy 2100 II, provided plaintiff with a single thirteen-person AFDC grant of $483 per month instead of an eleven-person grant for herself, her husband and her children, and a separate two-person grant for the grandchildren.

On 24 June 1991 plaintiff commenced this action on behalf of herself and all others similarly situated. She contends that because she was not legally responsible under state law for the support of her grandchildren, they should be treated as a separate assistance unit. Plaintiff estimates that had her grandchildren been so treated, the household would have received grants totaling $671 per month instead of the $483 provided under the policy. Plaintiff sought declaratory and injunctive relief invalidating the policy on the basis that it contravened certain federal statutes and regulations prohibiting the State from assuming the availability of income to an AFDC claimant without determining that it has actually been contributed to him or her, if it is assumed to have come from a person who is not legally responsible for supporting the child, 45 C.F.R. §§ 233.20(a)(2)(viii), 233.20(a)(3)(ii)(D), 233.90(a)(1) (1993), ¹ and also on the basis that it contravened the regulations requiring equitable treatment of AFDC recipients. 45 C.F.R. § 233.10(a)(1) (1993). ² Plaintiff also sought costs and attorney's fees pursuant to 42 U.S.C. § 1988 (Supp. IV 1993).

On 30 September 1991 the trial court certified the class. It defined the class to include: All dependent children not living with a parent or other legally financially responsible relative for whom AFDC benefits are, have been, or will be denied, terminated, or reduced by a North Carolina County Department of Social Services based on the requirement that the children be included in a single AFDC assistance unit with other dependent children who are not their siblings. On 25 November 1991 it entered summary judgment in favor of plaintiff, finding that the policy on its face and as applied violates federal regulations 45 C.F.R. §§ 233.90(a)(1), 233.20(a)(2)(viii), and 233.20(a)(3)(ii)(D). Based on this finding, the court invalidated the policy and permanently enjoined defendants from continuing to enforce it; ordered defendants to ensure that all class members would be provided AFDC benefits as separate units from other children living in the same home who were not their siblings; and precluded defendants from considering in computing AFDC benefits any of the income, except for actual contributions made by them, of non-legally responsible relatives.

Defendants appealed to the Court of Appeals. As noted, the Court of Appeals affirmed that judgment. ³ Morrell, 109 N.C.App. at 635, 428 S.E.2d at 497. Relying upon Beaton v. Thompson, 913 F.2d 701 (9th Cir.1990), in which the Court of Appeals for the Ninth Circuit invalidated a substantially similar Washington state regulation, the court concluded that

[b]y making those children a part of an already existing [AFDC assistance] unit, the household receives only an incremental increase in benefits based on the concept of economies of scale. Thus, the policy discourages needy people from taking in dependent relatives, frustrating the very purpose of the AFDC program, a program designed to keep dependent children with their families.

Morrell, 109 N.C.App. at 634-35, 428 S.E.2d at 496. The court held that "the DSS policy at issue violates the federal regulations against imputing income from a non-legally responsible relative adult [caretaker] to a dependent child." Id. at 635, 428 S.E.2d at...