Stowell v. Sullivan, Civ. No. 92-125-P-C.

• Decision Date: 29 January 1993
• Docket Number: Civ. No. 92-125-P-C.
• Citation: 812 F. Supp. 264
• Parties: Christine STOWELL, et al., Plaintiffs, v. Louis SULLIVAN, M.D., Secretary, United States Department of Health & Human Services, Defendant.
• Court: U.S. District Court — District of Maine

812 F. Supp. 264

Christine STOWELL, et al., Plaintiffs, v. Louis SULLIVAN, M.D., Secretary, United States Department of Health & Human Services, Defendant.

Civ. No. 92-125-P-C.

United States District Court, D. Maine.

January 29, 1993.

Jack Comart, Pine Tree Legal Assistance, Augusta, ME, for plaintiffs.

David Collins, Asst. U.S. Atty., Portland, ME, for defendant.

ORDER AFFIRMING THE RECOMMENDED DECISION OF THE MAGISTRATE JUDGE

GENE CARTER, Chief Judge.

The United States Magistrate Judge having filed with the Court on December 17, 1992, with copies to counsel, his Recommended Decision on Merits Based on a Stipulated Record (Docket No. 36), a copy of which is attached hereto and made a part hereof as "Exhibit A"; and Plaintiffs having filed their objection thereto on January 11, 1993 (Docket No. 39), to which objection the Maine Department of Human Services, as amicus curiae, and Defendant filed their objections on January 19, 1993 (Docket Nos. 40 and 41, respectively); and this Court having reviewed and considered the Magistrate Judge's Recommended Decision, together with the entire record; and this Court having made a de novo determination of all matters adjudicated by the Magistrate Judge's Recommended Decision, and concurring with the recommendations of the United States Magistrate Judge for the reasons set forth in his Recommended Decision, and having determined that no further proceeding is necessary; it is ORDERED^* as follows:

(1) The Recommended Decision of the Magistrate Judge is hereby AFFIRMED;

(2) Judgment is hereby ENTERED for the Defendant.

EXHIBIT A

UNITED STATES DISTRICT COURT

DISTRICT OF MAINE

Christine Stowell, et al., Plaintiffs

v.

Louis Sullivan, M.D., Secretary, United States Department of Health & Human Services, Defendant

Civil No. 92-125-P-C

RECOMMENDED DECISION ON MERITS BASED ON A STIPULATED RECORD¹

DAVID M. COHEN, United States Magistrate Judge.

This class action raises the question whether the Secretary of the federal Department of Health and Human Services ("Secretary") has failed to fulfill a statutory duty to enforce 42 U.S.C. § 1396a(c)(1) which requires that he not approve any state Medicaid plan if the state has in effect an Aid-to-Families-with-Dependent-Children ("AFDC") plan with payment levels less than those in effect on May 1, 1988.² The plaintiff class³ specifically contends that Maine's decision to lower its AFDC "standard of need"⁴ by 3.5% effective March 1, 1992,⁵ resulting in a smaller gross cash payment to class members each month, effectuated a reduction in "payment levels" below those in effect on May 1, 1988. Proceeding under section 702⁶ of the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 701-706, the class seeks a declaratory judgment that the AFDC payment levels reflected in the modified Maine regulations are less than those in effect on May 1, 1988 and an order requiring the Secretary to take all steps available to him, including the withholding of federal Medicaid funds, to enforce the provisions of 42 U.S.C. § 1396a(c)(1) so long as AFDC payment levels in Maine are less than the May 1, 1988 levels and to pay, retroactive to April 1, 1992, the federal portion of the AFDC payments in issue. The parties have submitted the case for judgment on a stipulated record. Any factual disputes may therefore be resolved by the court. See Boston Five Cents Sav. Bank v. Secretary of Dep't of Hous. & Urban Dev., 768 F.2d 5, 11-12 (1st Cir.1985).

I. BACKGROUND

This court has recently had occasion to describe the operation of the AFDC program generally and in Maine specifically as follows:

AFDC is a cooperative federal-state program administered by states. It was established to "encourage the care of dependent children ... to help maintain and strengthen family life ... and to help such parents or relatives to attain or retain capability for the maximum self support and personal independence...." 42 U.S.C. § 601. These goals are accomplished "by enabling each state to furnish financial assistance and rehabilitation and other services." Id.

States determine the amount of a family's AFDC benefits by subtracting the family's countable income from a state established "standard of need," the amount of money a state determines is necessary for the subsistence of a family of a given size. Most states provide funds equal to the difference between the established standard of need and the family's countable income so that every family has enough funds to meet the standard of need. Quarles v. St. Clair, 711 F.2d 691, 694 (5th Cir.1983). The Maine Department of Human Services, however, has established a maximum payment standard that limits the amount of AFDC funds available for any particular family, thus leaving some families with a gap between the AFDC funds available and the amount of money necessary to elevate the family to the standard of need.

Doucette v. Ives, 744 F.Supp. 23, 24 (D.Me. 1990) (Carter, C.J.), aff'd in part and rev'd in part, 947 F.2d 21 (1st Cir.1991).

Prior to 1975 child support payments to which recipient families were entitled were available to help fill the gap between the funds available to a family and the standard of need. Since 1975, however, federal law mandates that families who receive AFDC funds assign the right to receive such child support payments to the state; the state may retain payments in excess of the child support obligations due in the current month. Doucette, 744 F.Supp. at 24. Because of the possibility that state retention of child support payments would cause some families living in so called "gap" states like Maine to loose income necessary for them to meet the standard of need, "Congress provided that any money retained by the state shall be added to the families' AFDC payments, provided that the monies would not raise a family's income beyond the standard of need. 42 U.S.C. § 602(a)(28)."⁷ 744 F.Supp. at 25.

Stowell v. Ives, 788 F.Supp. 40, 41 (D.Me.) (Carter, C.J.), aff'd, 976 F.2d 65 (1st Cir. 1992).

In addressing the state's recent budget crisis, the Maine legislature authorized the Maine Department of Human Services to reduce the AFDC standard of need by an amount not to exceed 3.5%. See P.L.1991, Ch. 622, § M-18 (effective Dec. 23, 1991) (to be codified at 22 M.R.S.A. § 3760-E(1)). As noted earlier, a full 3.5% reduction was implemented on April 1, 1992. Me. Dep't of Human Servs., D.H.S. Public Assistance Payment Manual Ch. II, § D, 3-4; see supra n. 5. This decrease has led to a compression of the "gap" between the standard of need and the maximum payment standard ("basic AFDC") resulting in a smaller total payment package to members of the plaintiff class. See Stipulations of Fact ¶ 11.

The named plaintiff, Christine Stowell, is a single parent with two minor children. Id. ¶ 9. In 1988 she had no income except basic AFDC, section 602(a)(28) "gap" payments and section 657(b)(1) "pass through" payments.⁸ Id. ¶ 11. Stowell continues to remain eligible to receive basic AFDC, "gap" and "pass through" payments. Id. ¶ 12. In May 1988, with her current assistance unit composition, Stowell would have received $416 in basic AFDC, $157 in "gap" payments and a $50 "pass through" payment for a total assistance package of $623. Id. ¶ 11. Under Maine's current AFDC plan, she receives $453 in basic AFDC, $100 in "gap" payments and a $50 "pass through" payment for a total assistance package of $603, or $20 less than she would have received in 1988. Id.

II. LEGAL ANALYSIS

A.

42 U.S.C. § 1396a(c)(1) provides, in relevant part, that

the Secretary shall not approve any State plan for medical assistance if —

(1) the State has in effect, under its AFDC plan ... payment levels that are less than the payment levels in effect under such plan on May 1, 1988....

In arguing that the Secretary has neglected a duty to enforce 42 U.S.C. § 1396a(c)(1), the plaintiff class relies on section 1396c which reads, in significant part, as follows:

If the Secretary, after reasonable notice and opportunity for hearing to the State agency administering or supervising the administration of the State plan approved under this subchapter, finds —

(1) that the plan has been so changed that it no longer complies with the provisions of section 1396a of this title; ...

the Secretary shall notify such State agency that further payments will not be made to the State (or, in his discretion, that payments will be limited to categories under or parts of the State plan not affected by such failure), until the Secretary is satisfied that there will no longer be any such failure to comply. Until he is so satisfied he shall make no further payments to such State (or shall limit payments to categories under or parts of the State plan not affected by such failure).

42 U.S.C. § 1396c.

The Secretary's principal defense, on the merits, is that in the absence of a clear congressional intent his interpretation of the term "payment levels" as referring to the maximum amount of assistance available to a family with no other countable income, i.e., basic AFDC, is reasonable, should be accorded deference and yields the conclusion that Maine has not reduced its AFDC payment levels below those obtaining on May 1, 1988 since its basic AFDC has actually increased since then. See Memorandum in Support of Defendant's Motion to Dismiss, or in the Alternative, for Summary Judgment, and Opposition to Plaintiff's sic Motion for Preliminary Injunction ("Defendant's Memorandum") at 4-20 (Docket Item 19); Defendant's Reply Memorandum in Support of Motion for Judgment Based Upon a Stipulated Record ("Defendant's Reply Memorandum") at 2-10 (Docket Item 31). The Secretary further asserts that, even if the court disagrees with his interpretation argument, he is nevertheless entitled to prevail in this action because: (i) section 1396a(c)(1) applies only to newly submitted state Medicaid plans, not to existing plans or amendments to existing plans; (ii) section 1396c is concerned...