Sweeney v. Murray

• Decision Date: 27 April 1984
• Docket Number: 83-1739,Nos. 83-1738,s. 83-1738
• Citation: 732 F.2d 1022
• Parties: Donna SWEENEY, et al., Plaintiffs, Appellees, v. Joseph J. MURRAY, Defendant, Appellee. Margaret Heckler, etc., Defendant, Appellant. Donna SWEENEY, et al., Plaintiffs, Appellees, v. Joseph J. MURRAY, Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

Page 1022

732 F.2d 1022

Donna SWEENEY, et al., Plaintiffs, Appellees, v. Joseph J. MURRAY, Defendant, Appellee.

Margaret Heckler, etc., Defendant, Appellant.

Donna SWEENEY, et al., Plaintiffs, Appellees, v. Joseph J. MURRAY, Defendant, Appellant.

Nos. 83-1738, 83-1739.

United States Court of Appeals First Circuit.

Argued March 7, 1984.

Decided April 27, 1984.

Jenny A. Sternbach, Atty., Washington, D.C., with whom Richard K. Willard, Acting Asst. Atty. Gen., Washington, D.C., Lincoln C. Almond, U.S. Atty., Providence, R.I., and Robert S. Greenspan, Atty., Appellate Staff, Civ. Div., Dept. of Justice, Washington, D.C., were on brief, for Margaret Heckler.

William M. Walsh, Sp. Asst. Atty. Gen., Providence, R.I., on brief for state appellants.

Barry Best, Providence, R.I., with whom Cynthia Mann, Brooklyn, N.Y., was on brief, for Donna Sweeney, et al.

Before CAMPBELL, Chief Judge, COFFIN and BREYER, Circuit Judges.

COFFIN, Circuit Judge.

This case requires us to determine whether the treatment of nonrecurring lump-sum income in the Aid to Families with Dependent Children (AFDC) program applies to all AFDC families or only to those AFDC families with earned income in the month of receipt of a lump-sum payment. Appellants, the Secretary of Health and Human Services (HHS) and the Director of the Rhode Island Department of Social and Rehabilitative Services, appeal from the district court's award of summary judgment to plaintiff class, which consists of former AFDC recipients whose benefits were terminated for a specified period of time following receipt of lump-sum income in a month in which they had no earned income.

Congress enacted the new lump-sum rule as part of the Omnibus Budget Reconciliation Act of 1981 (OBRA), Pub.L. 97-35, which amended section 402(a)(17) of the Social Security Act, 42 U.S.C. Sec. 602(a)(17). The amended rule provides that when an AFDC family receives a payment of nonrecurring lump-sum income (such as an inheritance, a personal injury judgment or settlement, or a workers' compensation award), the family becomes ineligible for AFDC for a prescribed period of time. State officials determine the period of ineligibility by dividing the lump sum ¹ by the family's monthly need standard. The rule in effect treats nonrecurring lump-sum income as a substitute for future AFDC payments. The lump-sum income must be pro-rated over the specified period of months to meet the family's needs.

Plaintiffs challenged the federal and state regulations that apply the lump-sum rule to all AFDC recipients. See 45 C.F.R. Sec. 233.20(a)(3)(ii)(D); Rhode Island Social and Rehabilitative Services Manual Sec. 207, pp. 23-26. Plaintiffs contended, and the district court agreed, that the governing statute, 42 U.S.C. Sec. 602(a)(17), applies only to AFDC families with earned income at the time of receipt of the lump-sum payment. The district court initially issued a preliminary injunction, finding that the statutory language, the legislative history, and the purpose of the AFDC program supported plaintiffs' restrictive reading of the scope of the lump-sum rule. Sweeney v. Affleck, 560 F.Supp. 1118 (D.R.I.1983). The district court subsequently granted plaintiffs' motion for summary judgment, incorporating by reference the court's reported preliminary injunction opinion, and enjoined defendants from applying the federal and state lump-sum income regulations to members of the plaintiff class.

While the district court wrote in February 1983 on an apparently clean slate in answering this question of statutory construction, in the past year many other district courts have answered the same question. ² No other reported district court decision subscribes to the Sweeney court's interpretation of 42 U.S.C. Sec. 602(a)(17), although in several reported decisions, district courts have granted relief to plaintiffs on other grounds. ³ See Betson v. Cohen, 578 F.Supp. 154 (E.D.Pa.1983) (judgment for defendants); Walker v. Adams, 578 F.Supp. 50 (W.D.Ky.1983) (denying motion for preliminary injunction), injunction pending appeal granted, No. 83-5527 (6th Cir. Sept. 2, 1983) (argued March 26, 1984); Reed v. Lukhard, 578 F.Supp. 40 (W.D.Va.1983) (finding plaintiffs' statutory argument "nothing but wishful thinking", but granting preliminary injunction because other cases, "especially Sweeney, demonstrate that plaintiffs have a colorable chance of prevailing on the merits"); Faught v. Heckler, 577 F.Supp. 1180 (S.D.Iowa 1983) (explicitly rejecting Sweeney in granting defendants' motion for summary judgment); Clark v. Harder, 577 F.Supp. 1085 (D.Kan.1983) (explicitly rejecting Sweeney in denying motion for preliminary injunction); Douthit v. Heckler, 577 F.Supp. 88 (D.Neb.1983) (explicitly rejecting Sweeney's reasoning, but ordering a hearing on plaintiff's eligibility for benefits under the lump-sum rule's exception for life-threatening situations).

I. Statutory Language

We start with the language of the statute. See Consumer Product Safety Commission v. GTE Sylvania, Inc., 447 U.S. 102, 108, 100 S.Ct. 2051, 2056, 64 L.Ed.2d 766 (1980). But we cannot end with it, for our dissection of the statute under the microscopes of both parties leaves us with the conclusion that neither side convincingly accounts for all of the internal references to other subsections of the statute, for the now obvious reason that 42 U.S.C. Sec. 602(a)(17), while both highly technical and complex, is anything but elegantly drafted.

Subsection (a)(17) does three things: in the opening paragraph, it specifies the persons whose receipt of lump-sum income could subject them to ineligibility periods; it instructs in (a)(17)(A) how to compute the period of ineligibility; it instructs in (a)(17)(B) what to do with amounts left over after such period expires. Since the precise wording and statutory cross-references are important, the entire subsection is reproduced in the margin. ⁴ This subsection refers to other subsections of the same statute, (a)(8)(A)(i) and (ii), which require that in computing income and resources of any AFDC recipient (as required by still another subsection, (a)(7)), a state agency must disregard all or part of the earned income of certain persons. These subsections are also reproduced verbatim in the margin. ⁵

Plaintiffs argue that the reference in subsection (a)(17) to "a person specified in" subsection (a)(8)(A)(i) or (ii) indicates that Congress intended to confine the impact of the lump-sum rule to those AFDC families that had earned income at the time they received a lump-sum payment. Plaintiffs maintain that subsection (a)(8) has relevance for only those AFDC families with earned income; if Congress had intended universal application of the lump-sum rule, Congress would have used subsection (a)(7), ⁶ rather than (a)(8)(A)(i) and (ii), as the definitional cross-reference in subsection (a)(17).

The district court cited subsection (a)(31)--the "stepparent deeming" provision that was adopted contemporaneously with subsection (a)(17)--as an example of congressional reference to subsection (a)(7) to signal application of the rule to all AFDC families. Subsection (a)(31) requires an AFDC state plan to "provide that, in making the determination for any month under [subsection (a)(7) ], the State agency shall take into consideration" certain income of a stepparent living with a dependent child. The district court reasoned that "[s]imilar language could have been used in Sec. 602(a)(17) if Congress had intended the 'lump sum' rule to apply to all families". 560 F.Supp. at 1124.

Plaintiffs further contend that the multiple references to subsection (a)(8) show that the first reference must mean something different from merely calling attention to the need to disregard certain income in calculating a family's need. Two other later references in subsection (a)(17) explicitly remind the states to use the earned income disregards in making lump-sum ineligibility calculations. ⁷ Plaintiffs thus argue that the first reference is not merely redundant, but rather restricts application of the lump-sum rule to those AFDC families with earned income in the month in which they receive a lump-sum payment.

Defendants read the statute quite differently. They argue that the reference in section 602(a)(17) to subsections (a)(8)(A)(i) and (ii) serves two purposes: it defines the "universe" of persons subject to the rule and alerts state agencies to take into account earned income disregards. Thus, rather than limiting the application of the lump-sum rule to AFDC recipients with earned income, the reference to (a)(8)(A)(i) and (ii) tells state plans how to treat the earned income, if any, of lump-sum recipients.

Defendants note that subsection (a)(8)(A)(ii), in language virtually identical to that used in subsection (a)(7), "specifies" the entire universe of AFDC recipients and essential persons. ⁸ In Drysdale v. Spirito, 689 F.2d 252, 259 (1st Cir.1982), we noted the similarity of the persons referred to in subsections (a)(7) and (a)(8)(A)(ii):

"The language of subsection (a)(8)(A)(ii) [referring to persons], by and large, tracks the language of subsection (a)(7); indeed the subsections refer to one another. There is no indication in the language of the statute or in the legislative history suggesting more than an intent to echo subsection (a)(7), applying the [earned income disregards] to the income of any of the persons specified in that subsection."

Thus, Congress may have used subsection (a)(8) as the most convenient shorthand reference for persons subject to the lump-sum rule, in that subsection (a)(8), and not (a)(7), is referred to throughout subsection (a)(17). Granted that the lump-sum rule contains redundant references to subsection (a)(8), such redundancy persists even under plaintiffs' construction. The only difference is that under plaintiffs' construction, there is one redundant use and under defendants' two. ⁹

None of these...