Owens v. Roberts, No. 73-423-Civ-J-S.

• Court: United States District Courts. 11th Circuit. United States District Court of Middle District of Florida
• Writing for the Court: SIMPSON, Circuit , and YOUNG and SCOTT
• Citation: 377 F. Supp. 45
• Parties: Rosa OWENS and Willie Belle Worth, Individually, and on behalf of all others similarly situated, Plaintiffs, v. Emmett S. ROBERTS, Secretary, Department of Health and Rehabilitative Services, State of Florida, Defendant.
• Docket Number: No. 73-423-Civ-J-S.
• Decision Date: 17 July 1974

377 F. Supp. 45

Rosa OWENS and Willie Belle Worth, Individually, and on behalf of all others similarly situated, Plaintiffs,
v.
Emmett S. ROBERTS, Secretary, Department of Health and Rehabilitative Services, State of Florida, Defendant.

No. 73-423-Civ-J-S.

United States District Court, M. D. Florida, Jacksonville Division.

February 28, 1974.

On Motion to Amend Judgment July 17, 1974.

377 F. Supp. 46

COPYRIGHT MATERIAL OMITTED

377 F. Supp. 47

COPYRIGHT MATERIAL OMITTED

377 F. Supp. 48

Paul C. Doyle, Steven M. Goldstein, David A. Hertz, Carolyn S. Zisser, Duval County Legal Aid Assn., Jacksonville, Fla., for plaintiffs

Chester G. Senf, Robert J. Horne, Duane N. Ivester, Jacksonville, Fla., for defendant Secretary.

Glen Smith, Asst. Atty. Gen., Tallahassee, Fla., for defendant State.

Before SIMPSON, Circuit Judge, and YOUNG and SCOTT, District Judges.

OPINION

CHARLES R. SCOTT, District Judge:

The named plaintiffs, welfare recipients, seek, on behalf of themselves and all those similarly situated, declaratory and injunctive relief against the Secretary, Florida Department of Health and Rehabilitative Services,¹ the principal welfare officer for the State of Florida, on the grounds that Fla.Stat. § 409.185(1)(b)², F.S.A. and Florida Division of Family Services Regulation, Ch. V, § II³, relating to the transfer of assets as an exclusion from eligibility, violate the Due Process and Equal Protection Clauses of the Fourteenth Amendment. In addition, they contend that the aforesaid statute and administrative regulation are inconsistent with the Social Security Act, 42 U.S.C. § 301 et seq., and are, therefore, invalid under the Supremacy Clause.

377 F. Supp. 49

A temporary restraining order was issued by a single district judge pursuant to 28 U.S.C. § 2284(3), in order to render the named plaintiffs eligible for welfare assistance pendente lite.⁴

I. THREE-JUDGE COURT JURISDICTION

This is a suit seeking declaratory relief pursuant to 28 U.S.C. § 2201 and injunctive relief pursuant to 28 U. S.C. § 2202 and 42 U.S.C. § 1983. Jurisdiction is conferred pursuant to 28 U.S. C. § 1343(3) and (4). A three-judge court was convened pursuant to 28 U.S. C. §§ 2281 and 2284 on the basis that plaintiffs sought an injunction to restrain a state officer from enforcing a state statute and regulation of statewide application because said statute and regulation violated equal protection and due process. In addition, "since the statutory claim and the constitutional claims `derive from a common nucleus of operative fact', . . . this Court considers it appropriate, once having assumed jurisdiction as a three-judge court on the constitutional claims, to maintain jurisdiction over the statutory claim." Story v. Roberts, 352 F.Supp. 473, 475 (M.D.Fla.1972) (Simpson, McRae and Scott, JJ.).⁵

II. EXHAUSTION OF STATE REMEDIES

At the outset, this Court is met with the argument that the plaintiffs should have exhausted their state judicial remedies prior to initiating this suit. This contention has been uniformly rejected by the Fifth Circuit in Section 1983 Civil Rights Act cases. Hobbs v. Thompson, 448 F.2d 456 (5th Cir. 1971); Moreno v. Henckel, 431 F.2d 1299 (5th Cir. 1970); Hall v. Garson, 430 F.2d 430 (5th Cir. 1970). In addition, as counsel for the Secretary conceded at oral argument, the time for judicial review under the state Administrative Procedure Act, Fla.Stat. § 120.31, F.S.A., has long since expired. Therefore, there are no presently existing state judicial remedies to be exhausted. Therefore, this action is properly before this Court. Cf. Fay v. Noia, 372 U.S. 391, 83 S.Ct. 822, 9 L.Ed.2d 837 (1963).

III. THE CONTESTED STATUTE AND REGULATION

The net effect of the statute is that whenever a transfer of property is effected by a welfare claimant for any reason whatsoever within two years prior to or during receipt of assistance, the burden automatically shifts to the claimant to explain that the transfer was not made for the purpose of voluntarily rendering him eligible for assistance. Lack of an adequate explanation thereby results in automatic exclusion from eligibility. Fraud is thus presumed regardless of the circumstances under which the transfer was made, the consideration for the property so transferred, the good faith of the claimant or the intellectual and physical capability of the claimant to adequately rebut the presumption. The fact proved is the mere transfer of property. The fact presumed is the intent to defraud the Division of Family Services by voluntarily and purposefully rendering oneself eligible for welfare.

The regulation, however, accomplishes a fait accompli and converts this rebuttable presumption into a conclusive, irrebuttable one. The net effect of the regulation is to automatically render any

377 F. Supp. 50

transfer of property worth more than $600.00⁶ for less than its fair market value as a failure of the second condition precedent to eligibility in the regulation. On the basis of the regulation, then, once the applicant or recipient indicates to the Division of Family Services on the initial application form or otherwise that such a transfer was made, that person is irrevocably and absolutely foreclosed from public assistance for two years regardless of the circumstances under which the transfer was made or the good faith of the welfare claimant

IV. THE NAMED PLAINTIFFS

Plaintiff Rosa Owens is an 85 year old black resident of Jacksonville, Florida. She lives with her son and daughter-in-law, is unemployed and has no source of income whatever. On or about April 12, 1972, Mrs. Owens sold her home for $1,050.00. At the time of the sale, she was receiving Old Age Assistance (OAA) from the Florida Division of Family Services (DFS). The assessed value of the property was $2,885.00. Just prior to the sale, Mrs. Owens' husband had passed away and funds were needed for his burial expenses. Of the $1,050.00 purchase price, $394.55 was paid directly to the funeral home for the burial, $330.45 was paid directly to her by the purchaser, James Sawyer, and the contract balance is apparently still outstanding and unpaid.

In August 1972 Mrs. Owens was advised by DFS that her OAA grant was to be terminated solely because she had transferred an asset worth more than $600.00 for less than its assessed value in contravention of the challenged statute and regulation, although she had no funds currently available from the sale. An administrative "fair hearing"⁷ was held on September 7, 1972, pursuant to Mrs. Owens' request for an appeal. By letter dated October 26, 1972, Mrs. Owens was informed that her OAA grant and medical assistance would be cancelled effective December 1972, and that she could reapply for OAA two years from the date on which the deed to the transferred property was recorded. The state did not dispute the fact that the sole reason that Mrs. Owens transferred the property for less than its fair market value was that she needed the funds immediately to defray her husband's burial expenses and that the transfer was not effected for the purpose of keeping herself eligible for welfare assistance.

The other named plaintiff, Mrs. Willie Belle Worth, is a 54 year old black resident of Jacksonville, Florida. She is divorced, has no children and her sole source of income is a Social Security disability grant⁸ (which was $84.30 per month as of July 13, 1973, the date of the first portion of the hearing on the application for a preliminary injunction) and food stamps valued at $38.00. On November 13, 1972, Mrs. Worth applied for assistance under the Aid to the Permanently and Totally Disabled Program. At that time, she informed the Division of Family Services that she sold certain business equipment in September 1972 for $200.00. The assessed value of the property, as of September 1972, was $660.00. The sole reason why she sold the business equipment was that her doctor had directed her to liquidate the business because of her health.⁹

377 F. Supp. 51

On December 11, 1972, Mrs. Worth's application was rejected for the sole reason that she had transferred an asset worth more than $600.00 for less than its assessed value. Mrs. Worth's appeal was rejected on the same basis. The Secretary did not dispute the fact that the transfer was not effected for the purpose of rendering herself eligible for welfare. Instead, the uncontradicted evidence discloses that Mrs. Worth could not secure more than $200.00 for her used furniture simply because there was no market for used furniture.

V. THE CONSTITUTIONAL CLAIMS

Plaintiffs' constitutional claim must be bifurcated into two separate contentions: (1) that the statute is unconstitutional as applied through the regulation, in that the automatic ascription of the status of ineligibility, by virtue of the conclusive, irrebuttable presumption embodied in the regulation, without affording the claimant the prior opportunity to rebut that conclusive presumption is violative of due process and equal protection; and (2) that the statute itself is unconstitutional on its face, in that there is no rational relationship between the fact proved (the transfer of property within two years immediately prior to or during the receipt of assistance) and the fact presumed (the intent to defraud the welfare authorities by purposefully attempting to render one-self eligible for welfare). We conclude that these constitutional claims have merit and that both the statute and regulation must fall.

(A)—The Regulation is Unconstitutional

It is axiomatic that whenever a governmental body such as a welfare agency acts so as to injure an individual, the Constitution requires that the act be consonant with due process of law. It is also well settled that a governmental body, once it confers a privilege, cannot withdraw it or dispense it arbitrarily and irrationally. Bell v. Burson, 402 U. S. 535, 91 S.Ct. 1586, 29 L.Ed.2d 90 (1971); Shapiro v. Thompson, 394 U.S. 618, 89 S.Ct....