Owens v. Heckler

• Decision Date: 30 January 1985
• Docket Number: No. 84-1104,84-1104
• Citation: Owens v. Heckler, 753 F.2d 675 (8th Cir. 1985)
• Parties: Shelly OWENS, on behalf of herself and all other persons similarly situated, Appellees, v. Margaret M. HECKLER, in her official capacity as Secretary of Health and Human Services, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 675

753 F.2d 675

Shelly OWENS, on behalf of herself and all other persons similarly situated, Appellees, v.Margaret M. HECKLER, in her official capacity as Secretary of Health and Human Services, Appellant.

No. 84-1104.

United States Court of Appeals Eighth Circuit.

Submitted Oct. 8, 1984.

Decided Jan. 30, 1985.

Frances Reddis(argued), Kansas City, Mo., Christopher D. Hagen, Asst. U.S. Atty., Des Moines, Iowa, for appellant.

Diane Brazen(argued), Univ. of Iowa School of Law and Susan B. Keith, Waterloo, Iowa, for appellees.

Before LAY, Chief Judge, and ROSS and McMILLIAN, Circuit Judges.

LAY, Chief Judge.

The Secretary of the Department of Health and Human Services(HHS) appeals from the district court's ¹ judgment ruling that the Secretary's policy of reducing a family's Aid to Families with Dependent Children (AFDC) grant, 42 U.S.C. Secs. 601 et seq.(1982), by the amount of Old Age, Survivors, and Disability Insurance (OASDI) extended student benefits, ²42 U.S.C. Secs. 401 et seq.(1982), received by Shelly Owens(the caretaker relative and student), without regard to whether the student benefits were actually needed for educational expenses, violates federal law and regulations.The district court's decision does not require the Secretary to exclude all OASDI extended student benefits from available income for purposes of calculating AFDC benefits.Rather, the district court found the Secretary's policy violative of federal law only to the extent that it reduces an AFDC grant by the amount of OASDI student benefits actually needed for educational expenses.³We affirm.

The facts are not in dispute.Shelly Owens was an eighteen-year-old secondary student and a recipient of OASDI extended student benefits under 42 U.S.C. Sec. 402(d)(1982) at the commencement of this action.Owens also received AFDC benefits on behalf of her minor child.Until October 1, 1982, Owens received $242 per month in OASDI extended student benefits in addition to $292 per month in AFDC benefits for the support and care of her daughter.On or about September 20, 1982, however, Owens received a written notice from the Iowa Department of Social Services stating that her AFDC grant would be reduced to $50 per month because OASDI extended student benefits were no longer exempt as income or resources under the AFDC program.Owens became ineligible for OASDI extended student benefits in February 1983, because she turned nineteen on November 19, 1982.See42 U.S.C. Sec. 402(d)(7)(D).

The reduction in Owens' AFDC grant resulted from a change in the Secretary's stated policy regarding whether OASDI extended student benefits are disregarded as income for purposes of calculating AFDC payments.Prior to enactment of the OBRAamendments, the then Department of Health, Education, and Welfare instructed state agencies administering AFDC programs to exclude all OASDI extended student benefits from "income" as that term is defined by the AFDC regulations.SeeAction TransmittalNo. SSA-AT-77-44(APA)(April 21, 1977)(Joint Stipulation, Exhibit E).After the OBRAamendments were enacted, however, HHS changed its policy and announced that OASDI student benefits were to be treated as available income under the AFDC program.SeeAction TransmittalNo. SSA-AT-81-35(November 5, 1981)(Joint Stipulation, Exhibit F);Action TransmittalNo. SSA-AT-81-37(November 16, 1981)(Joint Stipulation, Exhibit G).

On October 26, 1982, Owens filed an action in federal district court seeking declaratory and injunctive relief on behalf of herself and all applicants and recipients of benefits under the AFDC program in the state of Iowa, who are caretaker relatives and who also are beneficiaries of OASDI extended student benefits under the Social Security Act.The district court denied Owens' request for a preliminary injunction on April 7, 1983.In an order filed September 28, 1983, the district court concluded that a class action should be certified and made the certification retroactive to February 23, 1983, under the relation-back doctrine of Sosna v. Iowa, 419 U.S. 393, 401-02, 95 S.Ct. 553, 558-59, 42 L.Ed.2d 532(1975).The class action could therefore proceed even though Owens' individual claim had become moot.

On November 17, 1983, the district court entered its judgment on the merits in this action.The district court concluded that the Secretary's practice and policy of reducing or terminating AFDC payments based on receipt by the caretaker relative of OASDI extended student benefits, without excluding the amount of those benefits needed for the caretaker relative's actual and reasonable educational expenses ⁴ from consideration as income available to the AFDC grant group, was in conflict with federal statutes and regulations.The district court stated that the Secretary's policy frustrates the purposes of the AFDC program of promoting the attainment of the capability for maximum self-support, and of the OASDI extended student benefits program of ensuring that students aged 18-22 would not be forced to quit school for financial reasons.In the language of the AFDC regulations, the district court concluded that OASDI extended student benefits which are needed for educational expenses are not "actually available" to the caretaker relative within the meaning of 45 C.F.R. Sec. 233.20(a)(3)(ii)(D)(1983), and thus, are not available for the support and maintenance of the child for purposes of subsection (a)(3)(vi) of 45 C.F.R. Sec. 233.20.

Before considering the Secretary's arguments, it is necessary to review the relevant statutory and regulatory provisions.The AFDC program, 42 U.S.C. Sec. 601 et seq., provides categorical federal grants to states for aid and services for needy families with children.To be eligible for federal funding, a state must submit to the Secretary a plan that defines eligibility criteria for recipients.If the plan meets the requirements contained in 42 U.S.C. Sec. 602(a)(1982) and its implementing regulations, the Secretary must approve the plan.Because eligibility for benefits is based on financial need, 42 U.S.C. Sec. 602(a)(7)(A) provides that a state must consider the "income and resources of [the] child or relative."⁵45 C.F.R. Sec. 233.20(a)(1)(i) further requires that the state plan: "Provide that the determination of need and amount of assistance for all applicants and recipients will be made on an objective and equitable basis and all types of income will be taken into consideration in the same way except where otherwise specifically authorized by Federal statute * * *."45 C.F.R. Sec. 233.20(a)(3)(ii)(D) defines available income in the following manner:

Net income, except as provided in paragraph (a)(3)(xiii) of this section, and resources available for current use shall be considered; income and resources are considered available both when actually available and when the applicant or recipient has a legal interest in a liquidated sum and has the legal ability to make such sum available for support and maintenance.

In addition, federal regulations provide that in family groups living together, income of a parent is considered or deemed available for minor children.⁶

Against this statutory and regulatory background, the Secretary argues that the OASDI extended student benefits received by Owens are income available to the caretaker relative and thus, are income available to the minor child pursuant to 45 C.F.R. Sec. 233.20(a)(3)(vi).Pursuant to this "deeming" provision, the Secretary contends that OASDI benefits need not actually be spent on the dependent child to be considered available income under the AFDC regulations.The district court found, however, that the Secretary's interpretation frustrated the purpose of the OASDI extended student benefits program, which is also a part of the Social Security Act.From a construction of the statute itself ⁷ and the expressed intent of Congress in the legislative history, ⁸ it is plain that OASDI benefits under Sec. 402(d)(1)(B)(i) were intended to be used for education by the recipient.The district court so found.OASDI benefits to eligible children normally terminate when the recipient attains the age of eighteen.However, the benefits for a child under OASDI, as originally enacted, continued between the ages of eighteen and twenty-two if the child was a full-time student.(Hence, "OASDI extended student benefits.")If the child over eighteen ceased to be a full-time student, the OASDI benefits under Sec. 402(d) terminated.The 1981 OBRA amendments⁹ did not alter Congress' intended purpose with respect to full-time elementary or high school students between the ages of eighteen and nineteen years and three months.As the district court mentioned, Congress retained extended student benefits for those students most likely because it recognized the crucial importance of a high school diploma and wished to ensure that those students would not be forced to quit high school for financial reasons.¹⁰

Recognizing the distinct purposes of the two programs (the OASDI program: to aid a recipient in obtaining an education; and the AFDC program: to assist in the care of dependent children in their own homes or the home of a relative), the court must attempt to enforce both applicable statutes without compromising the overriding purpose of either statute.A reconciliation of the two statutes is appropriate even if the wording in the laws and regulations allows a contrary interpretation.SeeMarkham v. Cabell, 326 U.S. 404, 411, 66 S.Ct. 193, 196, 90 L.Ed. 165(1945).Broadly interpreting the statutes at issue to achieve their intended purposes, Elam v. Hanson, 384 F.Supp. 549, 553(N.D.Ohio1974), the district court properly concluded that the amount of OASDI extended student benefits that are actually needed for educational expenses should be excluded from the income and resources of the family for the purposes of determining eligibility and level of...