Oliver v. Ledbetter, 86-8037

• Decision Date: 30 June 1987
• Docket Number: No. 86-8037,86-8037
• Citation: 821 F.2d 1507
• Parties: Ruby OLIVER, et al., Plaintiffs-Appellants, v. James G. LEDBETTER, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1507

821 F.2d 1507

Ruby OLIVER, et al., Plaintiffs-Appellants, v. James G. LEDBETTER, et al., Defendants-Appellees.

No. 86-8037.

United States Court of Appeals Eleventh Circuit.

June 30, 1987.

Gary Leshaw, Decatur, Ga., for plaintiffs-appellants.

Phyllis J. Holmen, Atlanta, Ga., for Gunter.

Lisa J. Krisher, Georgia Legal Services, Augusta, Ga.

Amy S. Gellins, Atlanta Legal Aid, Marietta, Ga., for Roberts.

Mary F. Russell, Asst. Atty. Gen., Atlanta, Ga., for Ledbetter.

Robert T. Ross. Asst. U.S. Atty., Edgar M. Swindell, Asst. Regional Counsel, HHS, Atlanta, Ga., for Bowen.

Appeal from the United States District Court for the Northern District of Georgia.

Before KRAVITCH, CLARK and EDMONDSON, Circuit Judges.

CLARK, Circuit Judge:

This appeal presents the question of whether Old Age, Survivors, and Disability Insurance ("OASDI") benefits received by children pursuant to Title II of the Social Security Act, 42 U.S.C. Sec. 401 et seq. (1982 & Supp. III 1985), must be included in calculating their co-resident siblings' eligibility for assistance under the Aid to Families with Dependent Children ("AFDC") program established by Title IV-A of the Social Security Act, 42 U.S.C. Sec. 601 et seq. (1982 & Supp. III 1985). Appellants and the class they represent are families in Georgia whose AFDC funds have been reduced or terminated because of the inclusion of such OASDI benefits in determining AFDC eligibility and assistance levels. On statutory and constitutional grounds, appellants challenge regulations promulgated by appellee Secretary of the Department of Health & Human Services ("HHS") and implemented in Georgia by appellee Department of Human Resources. These regulations affect computation of a family unit's income for the AFDC program. Prior to October 1, 1984, a recipient of AFDC benefits who had a child receiving OASDI benefits could choose whether to include that child in the AFDC grant group. By excluding a child who resided in the household and who received OASDI income, the family could maximize its benefits because the income of the excluded child was not included in the family's income for purposes of determining the amount of the AFDC grant. Such maximization could occur only if the amount of the OASDI benefit payable for the child exceeded the per capita amount of the AFDC benefit allocable if the child were included in the AFDC family unit.

Congress changed this policy when it enacted Sec. 2640(a) of the Deficit Reduction Act of 1984 ("DRA"), Pub.L. No. 98-369, 98 Stat. 494, 1145 (codified at 42 U.S.C. Sec. 602(a)(38) (Supp. III 1985)). ¹ Pursuant to 42 U.S.C. Sec. 602(a)(38), the Secretary of HHS (the "Secretary") promulgated 45 C.F.R. Sec. 206.10(a)(1)(vii) (1986), ² which requires that all parents and siblings living in the same household with an eligible AFDC recipient be included, along with their available income, in the AFDC grant group. The district court granted summary judgment in favor of the federal and state appellees. 624 F.Supp. 325 (N.D.Ga.1985). We affirm.

FACTS

Appellants brought this class action for injunctive and declaratory relief from federal and state implementation of the AFDC filing provision, 42 U.S.C. Sec. 602(a)(38), on grounds that 45 C.F.R. Sec. 206.10(a)(1)(vii) and County Letter 84-44 ³ conflict with provisions governing the use of OASDI benefits, and deprive them of due process and equal protection of the law.

On August 12, 1985, appellants filed a motion for conditional certification of a state-wide class, to which the Secretary objected. On September 20, 1985, appellants filed a motion for a preliminary injunction. A consent order entered on September 26, 1985 converted these motions into a motion for class certification and a motion for summary judgment, respectively. Thereafter, the Secretary and the Commissioner filed cross-motions for summary judgment. The district court issued an opinion and order on December 16, 1985, and entered judgment on December 31, 1985, granting appellants' motion for class certification, denying appellants' motion for summary judgment, granting appellees' cross-motions for summary judgment, and dismissing the action on the merits.

The AFDC program was established by Title IV-A of the Social Security Act and represents a joint effort by the federal and state governments to provide financial assistance to certain needy children and the parents or relatives with whom they reside. See Heckler v. Turner, 470 U.S. 184, 189, 105 S.Ct. 1138, 1141-42, 84 L.Ed.2d 138 (1985). Section 2640 of the Deficit Reduction Act ("DRA") redefined the basic AFDC filing unit to include siblings of dependent children who reside in the same household, and to require consideration of the siblings' income in determining the amount of AFDC assistance. Prior to enactment of the DRA, the custodial parent had the option of excluding children with independent sources of income from the filing unit. ⁴ Subsequent to passage of the DRA, the Secretary promulgated a regulation to implement Sec. 602(a)(38), which provides that in order for a family to be eligible for AFDC, the dependent child's application must also include any blood-related or adoptive brothers and sisters. 45 C.F.R. Sec. 206.10(a)(1)(vii)(B). Thus, state agencies must consider all income, including OASDI benefits, received by half-siblings in determining the family's eligibility for AFDC assistance. In accordance with the Secretary's regulations, the Commissioner of the Georgia Department of Human Resources issued a County Letter which instructed all county departments of Family and Children's Services to consider the needs and incomes of all parents and minor siblings in making the AFDC eligibility determination and the benefit calculation. ⁵

Appellants contend that the Secretary's interpretation of 42 U.S.C. Sec. 602(a)(38) conflicts with provisions governing the payment of OASDI benefits under Title II of the Social Security Act, 42 U.S.C. Sec. 401, et seq. Recipients of OASDI benefits include minor children of insured individuals who are retired, disabled, or deceased. Pursuant to 42 U.S.C. Sec. 405(j), the income may be paid directly to the child, or indirectly to a representative payee for that child's use and benefit. Because a representative payee who uses a payment for any purpose other than the use and benefit of an entitled recipient is subject to criminal prosecution and civil penalties under 42 U.S.C. Sec. 408(e) ⁶ and the implementing regulations, ⁷ ] appellants argue that the income to which Sec. 602(a)(38) refers cannot be interpreted to encompass OASDI benefits.

The district court held that OASDI benefits must be included in calculating AFDC assistance. The court first accorded substantial deference to the Secretary's interpretation of the statute because it found it to be reasonable and consistent with the plain meaning and legislative history of 42 U.S.C. Sec. 602(a)(38). The court then found that the OASDI benefits are legally available to dependent siblings because of the clear congressional intent to include parents and siblings receiving OASDI benefits in the AFDC family filing unit, and the explicit cross-reference in Sec. 602(a)(38) to Sec. 405(j). 42 U.S.C. Sec. 405(j) provides that the Secretary can direct the OASDI payment to a relative or some other person, but solely for the use and benefit of the child, ⁸ and Sec. 602(a)(38) is intended to operate notwithstanding Sec. 405(j). Finally, the district court rejected appellants' claims that the Secretary's interpretation violates their constitutional right to due process and equal protection because it found the regulation reasonable after analysis under the minimal scrutiny standard.

Research has revealed few decisions by courts of appeals on this issue. ⁹ In both Gorrie v. Bowen, 809 F.2d 508 (8th Cir.1987), and White Horse v. Bowen, 809 F.2d 529 (8th Cir.1987), the same panel of the Eighth Circuit was confronted with the question of whether the Secretary could require the inclusion of co-resident siblings and their child support or OASDI income in determining the family's eligibility for AFDC benefits. In Gorrie, the court held that the Secretary's implementation regulation was consistent with Sec. 602(a)(38), the federal laws governing OASDI benefits, the state's traditional role in child support matters, and the Constitution. Gorrie, 809 F.2d at 524. On the basis of Gorrie, the district court decision in White Horse was reversed and remanded. 809 F.2d at 530. We agree with that portion of Gorrie that deals with the inclusion of OASDI benefits. We need not address whether child support payments must also be included because this issue was not raised by appellants below or on appeal. In any event, this question has been resolved by the Supreme Court. In Bowen v. Gilliard, --- U.S. ----, 107 S.Ct. 3008, 97 L.Ed.2d 485 (1987), the Court held that requiring an AFDC family to include within its unit a child who receives child support payments from the noncustodial parent does not violate due process or equal protection or constitute a taking within the meaning of the Fifth Amendment.

DISCUSSION

I. Statutory Analysis

The first issue we address is whether 42 U.S.C. Sec. 602(a)(38) requires that the receipt of OASDI benefits by a sibling be considered in determining the co-resident dependent children's eligibility for AFDC benefits. ¹⁰ Specifically, we consider whether the statute applies to OASDI benefits, and whether the statute applies to all siblings who receive these funds.

Appellants advance the argument that the statute merely requires the inclusion of "legally available" income, and that OASDI benefits do not qualify because they are not actually available for use by a child other than the intended recipient. Appellants interpret the language "(not withstanding section 405(j) of this title, in the case of benefits provided under subchapter II of this chapter)" found in Sec. 602(a)(38) to...