Quarles v. St. Clair

Decision Date12 August 1983
Docket NumberNos. 78-2112,81-4190,s. 78-2112
PartiesRosie QUARLES, et al., Plaintiffs-Appellees, v. Fred ST. CLAIR, individually and as Commissioner of the Mississippi State Department of Public Welfare, et al., Defendants-Appellants.
CourtU.S. Court of Appeals — Fifth Circuit

Maudine G. Eckford, Lexington, Miss., David F. Baughn, Vicksburg, Miss., Dennis L. Horn, Hazelhurst, Miss., for plaintiffs-appellees.

Darold L. Rutland, Child Support Div., State Dept. of Public Welfare, Jackson, Miss., for State defendants-appellants.

Appeals from the United States District Court for the Northern District of Mississippi.

Before WILLIAMS and JOLLY, Circuit Judges, and WILL *, District Judge.

JERRE S. WILLIAMS, Circuit Judge.

This consolidated appeal involves two challenges to Mississippi's administration of two, interrelated, Social Security Act programs which benefit certain needy children: the Aid to Families with Dependent Children (AFDC) program, 42 U.S.C. §§ 601-610; and the Child Support and Establishment of Paternity (CSE) program, 42 U.S.C. §§ 651-662. Because of codification in Part D of title IV of the Social Security Act, the CSE program has become known as the "IV-D" program. 1 These challenges are class actions which focus upon the intended effect of the 1975 amendments to the Social Security Act upon the states with regard to: 1) the extent to which child support payments collected on behalf of AFDC recipients from the absent parent may be retained by the state as reimbursement to the state and federal governments for past AFDC payments made, pursuant to 42 U.S.C. § 602(a)(28); and 2) the obligations placed upon the states to "provide for entering into cooperative arrangements with appropriate courts and law enforcement officials," pursuant to 42 U.S.C. § 654(7). Plaintiffs are Mississippi AFDC recipients subject to the challenged regulations. Defendants are the state of Mississippi and the federal agency, the Department of Health and Human Services (HHS), charged with administering the Social Security Act programs at issue.

The District Court for the Northern District of Mississippi held that Mississippi's practices as to both issues stated above were in contravention of congressional intention and that the Department of Health and Human Services was wrong in interpreting the 1975 amendments to authorize the Mississippi practices.

We agree with the district court that Congress, by its 1975 amendments, did not authorize states to retain the magnitude of child support payments which Mississippi

                does even though the state was in compliance with the HHS interpretation.   We disagree, however, with the court's conclusion that Congress required states in all cases to effect "cooperative arrangements with appropriate courts and law enforcement officials."   Instead, we conclude that Section 654(7) does not require agreement, but does require that the states must pave the way for such agreements by the enactment of enabling legislation and the removal of statutory impediments.   Further, the states must make reasonable, good faith attempts to reach agreement with their appropriate courts and law enforcement officials.   We thus affirm in part and reverse in part
                
I. Child Support Payments: To Have and to Hold?
A. Overview

The Aid to Families with Dependent Children (AFDC) program is a federal-state cooperative effort administered by the states. It was established to "encourag[e] the care of dependent children..., to help maintain and strengthen family life and to help such parents and relatives to attain or retain capability for the maximum self-support and personal independence consistent with the maintenance of continuing parental care and protection...." 42 U.S.C. § 601. The program provides assistance to families deprived of child support by one or both parents, through death, disability or absence, when "countable income" 2 falls below a specified "standard of need," 3 resulting in a "budget deficit." 4 Most states provide aid payments to make up the full budget deficit. Mississippi, eleven other states, and Puerto Rico did not provide full "budget deficit" payments at the time critical to this case. 5 In Mississippi, an AFDC recipient would get the lesser of: 1) 40% of the "budget deficit;" or 2) the prescribed family maximum grant, which varied in accordance with family size. 6

Before 1975, monthly "countable income" included child support payments the AFDC parent received each month from the divorced or otherwise absent parent. 7 Child support was counted as income for the month in which it was received, regardless of whether the amount received reflected that month's child support obligations alone or included additional sums paid for past or future obligations, or merely reflected an excess payment. If this "countable income"--earnings plus child support--exceeded the "standard of need," the AFDC parent would be ineligible for assistance in that month.

In 1975, the law was amended to provide that child support payments would no longer be included in countable income. Instead, the state could require individuals to assign to the state their rights to child support payments as a condition of AFDC eligibility, 42 U.S.C. § 602(a)(26). The state was authorized to retain these child support payments collected "as reimbursement for any past assistance payments made to the family for which the State has not been reimbursed...." 42 U.S.C. § 657(b). Mississippi requires child support assignment pursuant to this 1975 amendment.

                Section 657(b) was enacted as part of the IV-D program as an incentive to the states themselves to get them to aid in enforcing and collecting delinquent child support obligations.   That section 8 distinguishes between state retention of those sums currently owed and those sums in excess of the month's obligations;  it permits the states to retain all "excess" payments to the extent reimbursement is owed the state.  42 U.S.C. § 657(b)(3)
                

The 1975 amendments included an additional provision, however, intended to ameliorate the harsh effect of these child support assignment and government AFDC-reimbursement provisions in the "gap" states, such as Mississippi, which do not provide a dollar-for-dollar payment of the "budget deficit." Specifically, Section 602(a)(28) was enacted when Congress realized that AFDC families in the gap states would lose disposable income under these assignment and reimbursement provisions. The AFDC families because of the amendments could no longer fill the gap between their less than full AFDC benefits and their standard of need level with their child support entitlements since the state had obtained the right to collect and retain those payments as a condition to AFDC eligibility. Thus, Section 602(a)(28) provided that "any portion of the amounts collected in any particular month as child support ... which [prior to the 1975 amendments] would not have caused a reduction in the amount of aid paid to the family if such amounts had been paid directly to the family, shall be added to the amount of aid otherwise payable to such family...," 42 U.S.C. § 602(a)(28). 9

The parties agree that this section was intended to require the gap states to take into account the "amounts collected in any particular month as child support" and to return to the AFDC recipient that portion of those amounts which would fill the gap up to the point of ineligibility, i.e. one dollar less than the standard of need. The parties disagree, however, on whether the child support collections which the state must return pursuant to Section 602(a)(28) are limited to the current month's entitlement or whether the state must consider those amounts received which are in excess of the monthly obligation--arrearages for past months or mere overpayments. 10

B. Question on Appeal

All parties agree that under Section 602(a)(28) a state must return to the AFDC recipient all child support payments for current obligations received to the extent that such obligations would not affect eligibility for the AFDC program. Thus, as long as a child support collection reflects the current month's entitlement and does not eliminate the budget deficit, when added to monthly income, the AFDC family receives the entire sum from the state by operation of the 1975 amendments as it previously had received the benefits directly from the absent parent. 11

The point of disagreement lies with what treatment is to be accorded any excess support obligations received in any given month as a result of arrearage collection or mere overpayment. Mississippi's practice, on appeal here, has been to retain all child support collected in a given month in excess of the monthly obligation. The government-appellants urge the propriety of that practice, while the appellee-class of AFDC recipients contends that Mississippi's practice is contrary to the statutory intent.

A hypothetical case provides the clearest explanation of the parties' divergent positions, as well as the operation of the statutory provisions at issue. Assume a Mississippi family with a $250 standard of need, a maximum statutory benefit of $60, no monthly income, but a monthly child support entitlement of $100. Assume, further that a lump sum child support payment of $600 is collected, covering the current month as well as the prior five months' arrearages. Prior to the 1975 amendments, the AFDC recipient would receive the arrearages directly and would have been able to fill the "gap" between the $60 AFDC payment and the $250 standard of need with child support from arrearage as well as current payments, thus meeting the standard of need. 12 After the 1975 amendments, without consideration of Section By contrast, when the construction adopted by the district court and argued by appellees is applied, the same AFDC recipient would receive $249--the...

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