Noble v. Shalala
| Decision Date | 30 November 1994 |
| Docket Number | Civ. A. No. 92 N 2495. |
| Parties | Greg NOBLE, Elizabeth Clark, Ronda Duran, and all others similarly situated, Plaintiffs, v. Donna E. SHALALA, Secretary of the Department of Health and Human Services, Defendant. |
| Court | U.S. District Court — District of Colorado |
Linda J. Olson, Judith Caron Stein, Legal Aid Soc. of Metropolitan Denver, Denver, CO, Barbara L. Hughes, Pikes Peak Legal Services, Colorado Springs, CO, Melody K. Fuller, Boulder County Legal Services, Boulder, CO, for plaintiffs.
Chalk S. Mitchell, Asst. U.S. Atty., Denver, CO, for defendant.
This action challenges the validity of federal and state regulations which set a $1500 limit on the equity value of an automobile owned by a recipient of either Aid to Families with Dependent Children ("AFDC") or Medicaid. See 45 C.F.R. § 233.20(a)(3)(i)(B)(2) (1993); 9 Colo.Code Regs. 2503-1, § 3.661.13(c) (1991). All of the named plaintiffs own or have owned vehicles which exceed this limitation and, as a result, have been denied AFDC and/or Medicaid benefits. Plaintiffs claim that Defendant Donna E. Shalala, Secretary of the Department of Health and Human Services ("HHS") hereinafter the "Secretary", or her predecessors, lacked a sufficient factual basis for the $1500 limit when the AFDC regulation was adopted in 1982. According to plaintiffs, the $1500 limit is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law" and violates both 5 U.S.C.A. § 706(2)(A) (West 1977), and the Due Process Clause of the Fourteenth Amendment to the United States Constitution. Plaintiffs seek declaratory and injunctive relief. Jurisdiction is based on 28 U.S.C.A. § 1331 (West 1993).
The matter is now before the court on cross-motions for summary judgment. The central issue raised by the parties' motions is the extent to which the federal government may circumscribe a means-tested program, such as AFDC or Medicaid, in order to save funds and still maintain a rational relation to the purpose of the program. See Hazard v. Sullivan, 827 F.Supp. 1348, 1350 (M.D.Tenn. 1993). Because I conclude that the $1500 limit maintains this rational relationship, I deny plaintiffs' motion for summary judgment and grant defendant's motion for summary judgment. My decision concerning the summary judgment motions renders plaintiffs' motion for class certification moot.
Plaintiff Greg Noble, his wife, and their three children applied for public assistance when he was unable to secure full-time employment. ( .) On November 19, 1992, Mr. Noble applied for Medicaid benefits for his children. (Id. ¶ 2 Noble Aff. ¶ 4.) On December 30, 1992, he applied for financial assistance under the Aid to Families With Dependent Children-Unemployed Parent ("AFDC-UP") program, which is available to needy two-parent families. Eligibility for AFDC-UP includes Medicaid eligibility for the whole family. Mr. Noble was notified that the value of his resources made him ineligible for any assistance. (Id. ¶ 4 Noble Aff. ¶ 6.) Specifically, in a letter dated February 16, 1993, the El Paso County, Colorado, Social Services Department stated that, according to the "Gold Book," a 1988 Firebird V6 in fair condition, such as the one owned by Mr. Noble, was worth $3520. (Id. ¶ 5 Noble Aff. ¶ 9.) The value of this vehicle exceeded the $1500 limit established by the Secretary.
Because Mr. Noble needed reliable transportation in order to look for a job and to go to medical appointments, (id. ¶ 6 Noble Aff. ¶ 6), he kept the vehicle despite the resulting denial of benefits. In mid-January, Mr. Noble finally secured full-time employment; however, he remains unable to pay his medical bills and other bills incurred during the period when he applied for and was denied financial and medical benefits. (Id. ¶ 7 Noble Aff. ¶¶ 8-9.) According to Mr. Noble, but for the application of the $1500 limit, he would have received AFDC benefits and/or Medicaid benefits for the period of November 1992 through March 1993. (Id. ¶ 8 Noble Aff. ¶ 10.)
In January 1993, Plaintiff Elizabeth Clark applied for Medicaid assistance through the "Baby Care/Kids Care" program for her fourteen-month-old son, Steven. Ms. Clark's application was denied based on her ownership of a 1987 Toyota Pickup. Ms. Clark had obtained two estimates from dealerships which valued the vehicle at $2500 and $2600. The Colorado Department of Social Services hereinafter "CDSS" averaged those two estimates to $2550, and found Ms. Clark ineligible because she exceeded by $50 the $1500 vehicle resource limit plus the $1000 liquid resource limit. .) Although CDSS later agreed to accept the lower estimate, it nevertheless denied Ms. Clark eligibility based on the value of her boyfriend's used car, a 1969 Ford Pickup truck. .) Ms. Clark has no medical insurance and needs Medicaid benefits in order for her son to receive the medical care he requires.
In April 1992, Plaintiff Ronda Duran and her four children were denied Medicaid and AFDC benefits based on her ownership interest in a 1989 Ford Aerostar van which her mother had purchased for Ms. Duran's use. The vehicle's value was estimated at $4400. .) After her benefits were denied, Ms. Duran gave the vehicle back to her mother and the title was changed to her mother's name. On January 25, 1993, Ms. Duran again applied for assistance. This time she was denied assistance because she had transferred a resource without adequate consideration. Ms. Duran requires financial and medical assistance in order to meet the needs of her children. .)
At least two of the three named plaintiffs were denied AFDC and/or Medicaid benefits based on the $1500 motor vehicle equity limit, see 45 C.F.R. § 233.20(a)(3)(i)(B)(2), and its Colorado counterpart, see 9 Colo.Code Regs. 2503-1, § 3.661.13(c). Pursuant to rule 23(c)(1) of the Federal Rules of Civil Procedure, plaintiffs request that I certify a class comprised of the named plaintiffs and the following similarly situated persons:
All Coloradans who own a motor vehicle and who, within the three years immediately preceding the date this action was commenced or at any time thereafter, were denied or terminated from AFDC and/or Medicaid, solely because the equity value in their respective motor vehicles exceeds the $1,500 automobile resource limitation as set forth in 9 CCR 2503-1, § 3.661.13(c).
A federal court has the power to declare unlawful and set aside agency regulations which are arbitrary, capricious, an abuse of discretion, or not in accordance with the law. See Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 37, 103 S.Ct. 2856, 2865, 77 L.Ed.2d 443 (1983); Sullivan v. Zebley, 493 U.S. 521, 527-29, 110 S.Ct. 885, 890, 107 L.Ed.2d 967 (1990). Under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), a court undertakes a two-part analysis when reviewing an agency's regulation. First, a court looks to the "plain meaning" of the statute to determine if the regulation responds to it. Where there is an express delegation of rule-making authority, the first prong of the analysis is unnecessary. See Sullivan, 493 U.S. at 527-29, 110 S.Ct. at 890. Second, if the statute is silent or ambiguous, a court must determine whether a given regulation is a permissible construction. Chevron, 467 U.S. at 842-43, 104 S.Ct. at 2781-82. A court must defer to an agency's construction of a statute if it is reasonable and consistent with the underlying congressional purpose. Id. Where the congressional delegation explicitly leaves a "gap" for the agency to fill, the deference accorded to the agency's construction is especially great, so long as the agency has considered the matter in a detailed and reasoned manner. Id. at 843-44, 104 S.Ct. at 2781-82. See generally Falin v. Sullivan, 776 F.Supp. 1097, 1100 (E.D.Va.1991), aff'd, 6 F.3d 207 (4th Cir.1993), cert. denied, ___ U.S. ____, 114 S.Ct. 1551, 128 L.Ed.2d 200 (1994).
The AFDC program was established by title IV of the Social Security Act of 1935, Pub.L. No. 74-271, 49 Stat. 627 (1935) (current version at 42 U.S.C.A. §§ 601-627 West 1991 & Supp.1994). AFDC is a cooperative federal-state program which was established to provide "financial assistance to needy dependent children and the parents or relatives who live with them." See Champion v. Shalala, 33 F.3d 963, 965 (8th Cir.1994) (quoting Shea v. Vialpando, 416 U.S. 251, 253, 94 S.Ct. 1746, 1750, 40 L.Ed.2d 120 (1974)). A principal goal of the program is "to help such parents or relatives to attain or retain capability for the maximum self-support and personal independence consistent with the maintenance of continuing parental care and protection." Id. at 253, 94 S.Ct. at 1749 (citing 42 U.S.C.A. § 601 West 1991). Originally, AFDC included an exemption for one automobile, a family home, personal effects, and income producing property. In 1973, the Secretary of the Department of Health and Human Education and Welfare (the predecessor to HHS) gave notice of a revision. That final revision allowed excess income of $2250.
The United States Court of Appeals for the District of Columbia Circuit struck down the $2250 limit in National Welfare Rights Organization v....
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