DEPARTMENTAL APPEALS BOARD
Department of Health and Human Services
SUBJECT: Georgia Department of Human Resources
Docket No. 88-40
Decision No. 995
DATE: November 4, 1988
DECISION
The Family Support Administration (FSA or Respondent) disallowed
$1,008
which the Georgia Department of Human Resources (Georgia or
Appellant)
claimed under Title IV-A of the Social Security Act (Aid to
Families
with Dependent Children (AFDC)). The disallowed amount
represented
corrective payments ordered by Georgia courts for two
AFDC
beneficiaries, based on the position that a part of the
beneficiaries'
Social Security disability and veterans' benefits should not
have been
considered in computing the AFDC payments. FSA took the
position that
these benefits did not qualify to be disregarded in computing
AFDC
benefits. Although the amount in dispute is small, the
issue
potentially has substantial consequences and has been the subject
of
litigation in other states. The Georgia Legal Services Program
(Amicus)
submitted a brief in support of Appellant's position here.
Based on our review of the evidence and argument in the record, and
the
relevant provisions of the Social Security Act, we have determined
that
FSA's interpretation of the Act is reasonable, and we uphold
the
disallowance. As we explain below, the central focus of this
dispute
concerns whether the term "child support payments," part of which may
be
disregarded when calculating AFDC, is broad enough to include the
Social
Security and veterans' benefits involved here. We conclude that
while
these benefits might be viewed generally as child support,
FSA
reasonably determined that they did not fall within the narrower
concept
in the Act.
Introduction Under section 402(a)(8)(A)(vi) of Title IV-A (42
U.S.C.
602(a)(8)(A)(vi)), a state AFDC agency, in determining AFDC
eligibility
--
. . . shall disregard the first $50 of any child
support payments
received in such month with respect
to the dependent child or
children in any family
applying for or receiving [AFDC] (including
support
payments collected and paid to the family under
section
457(b)) . . . . (emphasis added)
This provision is commonly called the AFDC "disregard," and has the
effect
of increasing a beneficiary's income by up to $50 a month.
Section 457(b) (42
U.S.C. 657(b)), cited in the provision quoted above,
is part of a separate
title in the Act (IV-D, Child Support and
Establishment of Paternity).
This provision (called "pass-through" by
FSA to distinguish it from the
"disregard" provision) provides that the
first $50 of periodic child support
collections shall be paid to the
family without affecting eligibility for
other assistance. Both
provisions of law were added to the Social
Security Act by section 2640
of the Deficit Reduction Act of 1984 (Pub.L. No.
98-369) (DEFRA).
The dispute here primarily concerns what the term "child support
payments"
-- the first emphasized phrase in the quote above -- means
for purposes
of the disregard provision. Essentially, FSA's position is
that it
covers only direct support payments owed by an absent parent
(an
interpretation which, indeed, was pressed in litigation by
Appellant
until Georgia's courts determined otherwise). Under this
reading, the
disregard is an incentive for AFDC recipients to assist
support
enforcement under Title IV-D. Now, Georgia would read the
phrase more
broadly to cover the Social Security and veterans' payments
involved
here. In part, Georgia relies on the second, parenthetical,
phrase
emphasized above, arguing that this parenthetical phrase also, and
more
specifically, covers the kind of payments FSA speaks of, so that
the
first phrase must cover something broader.
Background facts
The basic facts are undisputed. An AFDC participant challenged
the
refusal of a county welfare agency (a division of Appellant) to
apply
the disregard provision to disability insurance benefits under Title
II
of the Social Security Act. In September, 1985, the Superior Court
of
Fulton County, applying State law, found that these payments should
have
been considered child support subject to the disregard provision,
and
ordered recalculation of plaintiff's AFDC benefits. Later, the
same
court issued a similar order for an AFDC participant who sought to
apply
the disregard provision to veterans' dependents' benefits.
Meanwhile,
Georgia had appealed the first decision to the Georgia Court of
Appeals,
which affirmed the Superior Court's ruling. The Georgia
Supreme Court
declined to hear the case. FSA was not a party to any of
this
litigation. In April, 1987, Appellant claimed federal
financial
participation in the corrective payments. Appellant's Brief,
pp. 2-4;
Respondent's Brief, pp. 2-6. Respondent disallowed the claim
on the
bases that the Title II and veterans' benefits were not child
support
within the narrow meaning of the AFDC and Title IV-D programs;
the
payments were not otherwise within the scope of the programs;
and
Respondent had not been enjoined by the courts involved.
Related litigation
A federal district court, and the Eighth Circuit Court of
Appeals,
considered a case quite similar to the ones before us and
essentially
upheld the FSA position. Todd v. Reagen, CA No. 85-300-A
(S.D. Iowa,
December 18, 1986), aff'd sub nom. Todd v. Norman, 840 F.2d
608 (8th
Cir., 1988), rehearing and rehearing en banc denied, May 20,
1988. In
this class action, AFDC beneficiaries sought to have Social
Security
children's insurance benefits, payable because of the disability of
the
children's fathers, declared child support payments for purpose of
the
disregard provision. The district court found FSA's interpretation
of
the provision -- essentially the same interpretation presented here
--
permissible and a "harmonious construction of the Act." Todd v.
Reagen,
supra at p. 3 (see Respondent's Supplement to Appeal File, item
4). On
appeal, the 8th Circuit affirmed, rejecting an argument that the
Social
Security benefits were attributable to the work effort of
the
non-custodial parent and used for that person's child, becoming for
all
practical purposes child support. The court said:
. . . it would expand the meaning of "child support
payments" far
beyond its contemporary denotation as
a non-custodial parent's
legal obligation to
contribute to the support and maintenance of
the
children. For example, proceeds from virtually any
insurance
or annuity program that are attributable
in part to the work effort
of the parent could be
considered "child support," once payment to
the
dependent children begins. Indeed, under appellants'
criteria,
part of every parent's income could be
deemed "child support," a
result that would
transform a carefully crafted legislative concept
into a generality. Todd v. Norman, 840 F.2d 608, 610.
The court noted that the insurance benefits in question were
payable
regardless of any legal obligation to pay child support and were paid
by
the federal government, not the parent; these factors were
inconsistent
with the court's view of the ordinary meaning of "child
support
payments." Id., pp. 611-12. The court also analyzed the
AFDC program
and concluded that Social Security benefits and child support
were
intended as separate and distinct sources of income. Id., p.
611. In
the absence of evidence of Congress's intent concerning the
disregard
provision, the court referred to an earlier, almost identical
provision
of the Social Security Act (discussed below) which had
expired; the
court found "little doubt" that the provision was meant as
an incentive
for AFDC recipients to help establish paternity and assist
in
collections. Id., pp. 611-12. The court also acknowledged the
HHS
Secretary's "broad authority" to interpret the complex provisions of
the
Social Security Act, and found the interpretation "credible
and
coherent." Id., pp. 612, 613. While the Eighth Circuit's
majority
opinion is reasonable and persuasive, we have nevertheless reviewed
the
record and arguments here to respond afresh to Georgia's arguments,
some
of which appear not to have been presented to the court.
Applicable regulations
HHS published regulations on September 10, 1984 implementing the
DEFRA
provisions (which were effective October 1, 1984). The precise
term
"child support payments" is not defined in the regulations.
However, 45
C.F.R. 232.20(a) (1984), which has not been changed, stated:
Definition. For purposes of this section,
notwithstanding any
other regulations in this
chapter, support collections, monthly
collections
and support amounts for a month mean the assigned
amount that the support enforcement agency collects from an
absent
parent or spouse on a monthly support
obligation, less the
disregarded sum under section
[302.51(b)(l)]. (emphasis added)
Section 302.51(b)(1) is the implementation in the Title IV-D
regulations
of the pass-through provision. The preamble to the quoted
definition
specifically tied this regulation to the disregard, indicating
that the
disregard was viewed as a pass-through of support collected by the
IV-D
agency. 49 Fed.Reg. 35589-90 (September 10, 1984) (discussed
below).
FSA's position was that the disregard and the pass-through are two
sides
of the same coin: FSA also argued, without specific rebuttal from
the
State, that the kind of federal benefits involved in this case
cannot
legally be "assigned" under Title IV-A and are never collected
under
Title IV-D, and thus cannot fall within the language of the
regulation.
FSA's Brief, pp. 5, 12. The court in Todd v. Norman took
this position
also. 840 F.2d 608, 612. Georgia's response, which
is part of a larger
argument (discussed below) concerning other provisions of
the Act and
Congressional intent, is that the regulation should be read
as
implementing the second (parenthetical) phrase in the
statutory
disregard provision, and as silent on the allegedly broader
first
phrase. We discuss the regulation further in responding to
Georgia's
arguments below.
Georgia's arguments and our analysis
The meaning of "child support payments"
A primary issue in this case is whether FSA reasonably gave the
term
"child support payments" a narrow meaning, or whether Georgia's
broader
reading should prevail. Georgia argued that its reading
accorded with
statutory intent, that FSA's interpretation was not entitled
to
deference, and that FSA (as well as the court in Todd) erred in
focusing
on the "underlying obligation" of the payments rather the "character
of
the payments" themselves. Georgia's Brief, pp. 5-10; Reply Brief,
pp.
1-7. All parties acknowledged the lack of specific legislative
history.
Georgia's Brief, p. l4; Amicus Brief, p. 5; FSA's Brief,
p. 19.
We deal first with the issue of deference to FSA. Georgia's
point
basically was that deference should not be given (and should not
have
been given by the Court in Todd) to FSA's interpretation,
particularly
in the absense of an explicit regulatory definition, because in
the
State's view Congress's intention is clear and compels a
different
result. Georgia's Brief, pp. 6-8, 16; Reply Brief, pp.
5-7. However,
what is clear from the record here (including the history
of Appellant's
position and the different approaches taken by several levels
of state
and federal courts) is that Congress's intent is not so easily
discerned
from the face of the statute nor from the legislative history of
DEFRA.
In section 1102 of the Social Security Act (42 U.S.C. 1302),
Congress
gave FSA (through delegation from the Secretary) broad authority
to
resolve ambiguities in this remarkably complex statute. This Board
has
repeatedly determined that we will not substitute our judgement for,
nor
overturn, a reasonable interpretation of the agency charged
with
administering this intricate statute merely because there may be
an
alternative interpretation which arguably also is a
permissible
construction. See, e.g., Missouri Dept. of Social Services,
DGAB No.
468 (1983).
Thus, our focus here is on the reasonableness of the FSA position in
the
face of the challenge in Georgia's arguments.
As one line of reasoning in support of its position that the statute
is
clear, Georgia argued that the veterans' and Social Security
benefits
involved in this case undeniably were intended to benefit children,
and
that Congress generally sought to help parents support their
families
through AFDC. Georgia's Brief, pp. 9-10. Against that
background,
Georgia termed "irrational" the distinction between allowing
the
disregard for support produced directly by a working father, and
denying
the disregard for support produced indirectly from benefits to which
a
disabled father under Social Security and veterans' programs had
become
entitled. Id., p. 11.
We must reject this argument. It simply does not respond
persuasively
to FSA's position that the disregard is, in context, a
specific
incentive to reward and promote cooperation in child support
collection
efforts as part of an extensive and well-defined interaction
between
Titles IV-A and IV-D. Rewarding cooperation in seeking "child
support
payments" fits concretely into this scheme, while Georgia's
alternative
would create from mere ambiguity a very substantial and
open-ended
exception. Whether such an exception might be desirable
policy is not
the issue; the point is that in the absence of some clear
indication
that Congress has chosen such a policy, it is inherently less
reasonable
to stretch the term "child support payments" to cover all
imaginable
benefits to children, than it is to read the term to fit, as it
easily
does, into an existing specific structure.
There are other factors which favor FSA's interpretation and
disfavor
Georgia's:
- As is apparent from its very name, DEFRA primarily was meant
to
accomplish deficit reduction. Georgia acknowledged
this. Georgia's
Brief in opposition to FSA's reply to Amicus,
pp. 3-4. Georgia's
substantial expansion of the scope of "child
support payments" could
make the disregard provision an open-ended and
very costly bonus --
not something to be lightly implied as Congress's
intent in this
particular legislation.
- There is legislative history related to an earlier enactment
which
supports FSA's view. Title IV-D was added to the Act by
amendments in
1974 which also added a one-year disregard provision
providing that
$20 of support collected would be paid to the family
without affecting
AFDC eligibility. Except for the increase in
amount, the current
disregard provision and the old provision were
virtually identical,
and there is legislative history that the Senate
Finance Committee
specifically designed the earlier provision as a
demonstration of a
financial incentive to cooperate in obtaining
support benefits.
Details, undisputed here, are set forth in FSA's
Brief at pp. 10-14,
19-22. The court in Todd v. Norman was
persuaded by this history, and
specifically found that resort to it
was appropriate. 840 F.28 608,
611. In implementing the
DEFRA version, FSA treated the effort as
reinstatement of an old
concept with a new and slightly larger dollar
value. 49 Fed.Reg.
35605 (September 10, 1984). Georgia, however,
argued that the
incentive element was of little importance in view of
strengthened
support enforcement, and that it was inappropriate to
infer one
Congress's intent from actions of another. Georgia's Brief,
pp.
17-18; Reply Brief, pp. 7-9. FSA responded to the first point
(accurately, we believe) by noting that requirements for cooperation
are not always heeded, and that "a small carrot may frequently be more
persuasive than any form of a stick." FSA's Brief, p. 21. As
to
Georgia's second point, common sense and case law indicate that
we
need not ignore the earlier, nearly identical enactment in the
absence
of any legislative history of the current law. U.S. v.
Plesha, 352
U.S. 202. (1957); Todd v. Norman, supra. Georgia
also argued that the
new provision was different in intention from the
old because of an
alleged interrelationship of the new with the
"single family unit"
(SFU) provision also enacted in DEFRA, but since
we reject Georgia's
SFU argument on its own merits (see discussion
below), we also reject
the effect that position would have here.
- The veterans' benefits and Social Security benefits in
question are
paid as a matter of statutory right regardless of any
child support
obligation and even in the absence of such an
obligation. This is
inconsistent with the common understanding
of what child support is
generally (and particularly in the Title IV-D
program), and strongly
suggests that Congress would have been more
explicit had it intended
Georgia's interpretation.
- Georgia's interpretation could not be limited in its
application to
the two types of benefits coincidentally involved
here; assuming
Georgia was right, there appears to be nothing to
distinguish a wide
range of other benefits, including non-governmental
benefits such as
insurance, trust funds, and annuities. Again,
such an expansion in
the scope of the Act is unreasonable in the
absence of more explicit
legislative direction.
- If the benefits in question are treated as child support,
then
problems arise concerning how the benefits would be treated
under
other provisions of the Social Security Act. Under section
402(a)(26)
of the Act (42 U.S.C. 602(a)(26)), an AFDC beneficiary must
assign
rights to support to the state, but section 207(a) (42 U.S.C.
407(a))
prohibits the assignment of the benefits in question
here. The
veterans' benefits are subject to a similar
prohibition (31 U.S.C.
3101(a)). Under section 458(b) of the Act
(42 U.S.C. 658(b)), a state
is entitled to an incentive payment of a
portion of support
collections, but it is questionable whether
Congress contemplated that
states would take part of a person's
entitlements under the other
federal programs. These and other
such problems of statutory
construction are discussed at some length
in FSA's brief (pp. 15-34).
Georgia offered no direct and substantial
rebuttal. We do not here
decide whether or not each of these
problems is an insurmountable
obstacle to Georgia's interpretation;
again, the point is that these
factors cumulatively make it appear
unlikely that Congress meant the
disregard to be a general bonus for
recipients.
With the general argument discussed above, Georgia presented two
specific
arguments on statutory interpretation. One concerned the two
phrases in
the language of the disregard provision itself, and the other
concerned the
relationship of the disregard provision to the "standard
filing unit."
We discuss these next.
The disregard and the pass-through
As noted, section 402(a)(8)(A)(vi) says that the state agency, in
making
the AFDC eligibility determination, shall disregard a part of "any
child
support payments received . . . (including support payments
collected
and paid to the family under section 457(b)) . . . ."
Georgia argued
that the second, parenthetical, phrase fully covered the kind
of child
support payments that FSA said were the only payments covered by
the
disregard, so that the first phrase must cover some broader category
of
payments -- arguably, Social Security and other benefits. The court
in
Todd specifically rejected this argument, saying that:
A more plausible explanation of the parenthetical
language exists;
one that gives the Social Security
Act its most comprehensive and
coherent meaning in
light of the entire legislative scheme . . .
Despite
the imperative that all child support payments be
assigned
to the state, instances arise where child
support payments are made
directly to families
despite assignment, or where child support
payments
are made before the assignment becomes effective . .
.
regulations establish alternative procedures by
which the state can
collect child support paid
directly to the AFDC family [citations
omitted] . .
. the state can collect child support payments
outside
of 42 U.S.C. 657(b), and thus provide a
ready explanation for the
parenthetical language in
the amendment. 840 F.2d 608, 612-13.
FSA reiterated this position here. See, e.g., FSA's Brief, p. 18.
It
was also mentioned in the preamble to the 1984 regulations.
Georgia's
response was that while the Todd analysis is "plausible at first
blush"
it simply is insufficient to support FSA's interpretation.
Georgia's
Brief, p. 16. We disagree, for not only is FSA's
interpretation
reasonable on its face, but Georgia's alternative suffers by
comparison
because of its open-ended consequences lacking in evidence
of
Congressional approval. Viewing the two interpretations in the
context
discussed previously makes FSA's interpretation all the more
reasonable.
The "Standard Filing Unit"
A major Georgia argument was that there was a reason why Congress
would
have expanded the disregard: the enactment at the same time as
the
disregard, in section 2640(a)(3) of DEFRA, of another deficit
reduction
measure called the "Standard Filing Unit" (SFU), codified at
section
402(a)(38) of the Act (42 U.S.C. 602(a)(38)). This section
limited the
practice whereby families might increase AFDC benefits by
excluding from
the AFDC family unit family members with income who were
living with the
dependent child and presumably sharing expenses and
resources. The
provision requires the inclusion of resident parents,
brothers and
sisters with income -- including, apparently, the kinds of
benefits in
dispute here -- in the filing unit for purposes of determining
the need
of the dependent child. The practical effect was to reduce
AFDC for
children in homes where the support benefits of others were
available in
the household.
On the face of the Act, there is no explicit linkage between the
disregard
and the purpose of the SFU, nor have we been shown any
legislative history of
either provision to support Georgia's position.
However, Georgia argued that
it was reasonable to assume that Congress
enacted the disregard as a way of
mitigating the impact of the SFU.
Georgia's Brief, p. 12; Reply Brief, pp.
2-5. Georgia based this
speculative linkage in part on dicta in a U.S.
Supreme case in which the
SFU was the subject of an unsuccessful
constitutional challenge. In
Bowen v. Gilliard, 483 U.S. __, 107 S.Ct.
3008, 97 L.Ed 2d 485 (1987),
in discussing the impact of the SFU on the
family, the Court said,
"[t]he burden of the change was mitigated somewhat by
a separate
amendment providing that the first $50 of child support collected
by the
State must be remitted to the family . . . ." 107 S.Ct. 3008,
3013. We
agree with FSA that this is not dispositive of the question of
any
controlling linkage, much less Congressional intent. The Court
was
merely observing a fact: there is a disregard. The statement
merely
begs the question we have here, which is the scope of benefits
subject
to the disregard (a matter not at issue in Gilliard). Indeed,
if one
insists on divining from the Court's statement some meaning
relevant
here, one may note that the court's statement mentioned only
child
support "collected by the state," which would favor
FSA's
interpretation, not Georgia's (since the Social Security and
veterans'
benefits are not collected by the state as is Title IV-D child
support).
FSA also argued that the Court's mitigation quote merely reflected
an
alternative Constitutional argument made before the Court (by the
U.S.)
that the SFU, if it was a taking of property, was part of a
statutory
scheme that provided compensation. FSA's Brief, p. 26.
This, too, did
not deal with the scope of the "compensation" -- i.e.,
the benefits
covered by the disregard provision (and FSA also maintained that
the
diminution of governmental benefits by Congress is not subject to
the
Takings Clause. Id.). For all the foregoing reasons, we
conclude that
Georgia has not shown a linkage with the SFU provision which
is
sufficient to disturb FSA's otherwise reasonable interpretation of
the
scope of the disregard provision.
Other arguments
Georgia argued that the disallowance was invalid because it was based
on
an interpretation which was not published as a regulation or
otherwise
disseminated as proper notice. Georgia's Brief, pp.
19-23. An FSA
Regional Administrator, in a September 18, 1985 memo to
the State, had
specifically advised Georgia of FSA's interpretation,
effectively
confirming Georgia's own stance in pending litigation.
FSA's Appeal
File, Item 1. Georgia admitted that the State made the
corrective
payments (in early 1987) underlying the disallowed claim after FSA
had
specifically warned the State of FSA's interpretation (Id., pp.
21-22),
but argued that the first trial court decision, issued on September
10,
1985 in the Foster case, (albeit not the later Tidwell
decision)
preceded such notice. Aside from the fact that Georgia had
already
adopted the FSA interpretation for the specific benefits involved
here
before the State's courts rejected it, we note that the
regulations
implementing DEFRA, published on September 10, 1984 (prior to
the
October 1 effective date of the law), gave notice of
FSA's
interpretation (or, at least, were sufficient to give Georgia
an
obligation of further inquiry). The preamble stated that the
terms
"support collection," "monthly collections" and "support amounts for
a
month" all referred to ". . . the assigned amount that the
support
enforcement agency collects on behalf of an AFDC family as payment
on
the required support obligation . . . [this] merely represents
a
pass-through of support collected by the IV-D agency." 49 Fed.
Reg.
35589-90 (September 10, 1984). There is nothing in the preamble
to
indicate that FSA contemplated any other (and certainly no
significantly
broader) meaning for the concept of child support.
Whether or not one
might agree with the policy (and we note again that
Georgia itself had
urged the interpretation on its own courts, and has
legislatively
negated the courts' interpretation), there seems little
question that
FSA had articulated the policy from the beginning, and had not
merely
developed the policy in response to litigation. To the extent
there is
an issue under the Administrative Procedure Act (5 U.S.C. 552,
553),
FSA's determination was an interpretation of which Georgia clearly
had
notice (including notice of the application of the interpretation to
the
specific benefits involved here -- a level of detail which, in
any
event, does not appear to be required to be published).
Georgia and the Amicus also argued that FSA could not disallow
a
court-ordered payment which was within the "scope" of the
program.
Georgia's Reply Brief, pp. 11, 22; Amicus Brief, pp. 7-8.
Georgia
referred to 45 CFR 205.10(b), which provides in part that
federal
financial participation is available for:
(2) Payments of assistance made to carry out hearing
decisions . .
. [and]
(3) Payments of assistance within the scope of
Federally aided
public assistance programs made in
accordance with a court order.
The first quoted provision (section 205.10(b)(2)), strictly speaking,
is
not applicable here, since the disallowed corrective payments were
those
made in 1987 pursuant to court orders. Furthermore, although the
record
does not show whether administrative hearings were held (and the
State
sometimes described the trial court actions as administrative
hearings),
the State obviously made some kind of administrative
determinations
adverse to the individuals involved, which were then overruled
in court
(in actions in which FSA was not a party). Georgia's Brief,
pp. 2-3;
Reply Brief, p. 12. On the other hand, the second quoted
provision
(section 205.10(b)(3)) requires not only a court order, but a
payment of
assistance within the "scope" of the program; Since we are
upholding
the FSA position that the court-ordered payments were inconsistent
with
FSA's long-standing and reasonable interpretation of the Act, and
FSA
was not subject to the court orders , it follows that the payments
were
not within the scope of the AFDC program. We do not believe
that
section 205.10(b)(3) established a wholesale right to federal funds
in
every instance where a state court disagrees with a substantive
federal
funding determination, particularly in the absence of the federal
party
as a participant in the case. The Board's previous applications
of
section 205.10(b)(3) generally have dealt with cases where a court
has
ordered continued Medicaid payments on behalf of recipients in
a
particular provider pending resolution of an appeal by the provider
of
its right to participate in the Medicaid program. There was no
dispute
in these cases that payments to the recipients were
substantively
correct and authorized by the Medicaid statute aside from the
issue of
the status of the provider agreements that were under appeal.
See,
e.g., Ohio Department of Public Welfare, DGAB No. 173 (1981).
Moreover,
in a case involving abortion funding, we concluded that
section
205.10(b)(3) could not be applied where a federal
appropriation
restriction specifically prohibited the expenditures by the
federal
agency. Joint Consideration -- Abortion Funding, DGAB No. 260
(1982).
Finally, in the context of the fair hearings provided under
section
205.10, the regulations specifically distinguish between
appeals
involving the meaning and effect of Federal Law or policy and
appeals
that merely apply the law to the specific facts of a particular
case.
Only in the latter instance would assistance payments be
continued
pending a hearing decision. (45 C.F.R. 205.10(a)(6))
Accordingly, we
conclude that the Agency reasonably interprets section
205.10(b)(3) not
to apply here to overcome a Departmental determination of
the
substantive requirements of federal law.
Georgia and the Amicus also argued that family matters, including
the
determination of what constitutes child support, should be left to
state
law, that such deference is particularly appropriate here because of
the
absence of a specific definition of child support, and that
Georgia
courts had determined that Social Security benefits could be treated
as
child support. Georgia's Brief, pp. 9-10; Reply Brief, pp. 9-10;
Amicus
Brief, pp. 2-4, 6-7. We do not disagree with the general
principle of
deference to state policy in family law matters, nor that
Georgia
generally may define and control what is child support in that
state.
But it does not follow that Georgia has control over questions
of
whether federal funds fall within the ambit of a term used in a
federal
program. The issue here is the allowability under federal law
of a
particular cost item, not the handling of child support funding
and
family matters within the State. Since we are persuaded that there
is a
reasonable federal interpretation of the law, there is no breach for
the
State to fill with its own interpretation. Certain state court
cases
described by Georgia (see Reply Brief, pp. 9-10) do not define
child
support for federal purposes or purposes of allowability under
the
disregard provision: As the court in Todd v. Norman observed,
the
cases dealt with the propriety of substitution of Social
Security
disability payments for a father's or husband's support
obligations
under court order. 840 F.28 608, 611. Merely because
funds derived
from Social Security or other benefits may be used to meet a
person's
support obligation in Georgia does not answer the question of
whether
the disregard provision is applicable to such benefits. There
simply is
no basis in law for holding that Georgia may establish as
controlling
its own interpretation of federal law in the face of a clear
and
reasonable interpretation by the administering agency.
The Amicus argued that this disallowance was improper because
federal
payments to a state can only be reduced through the "quality
control"
(QC) system. Amicus Brief, pp. 8-10. The QC system
basically is a
management device for reducing costs by reducing errors in
high-volume
AFDC transactions, and involves rewarding (or punishing)
states'
performance in relation to a national target error rate. See 45
CFR
205.40 - 205.44. The Amicus alleged that the mechanisms in the
QC
system, which were not used in this case, were the exclusive means
for
effecting a disallowance, and that a double penalty is implied.
Georgia
itself did not raise this argument in its main or reply brief, but
did
join the Amicus in the State's reply to FSA's response to the
Amicus
brief (pp. 7-9). FSA's response, which we conclude is
correct (and
which Georgia did not specifically rebut), was that the payments
here
simply were not within the scope of potential payment errors covered
by
the QC system, as described in 45 CFR 205.40(a). The payments
were
corrective payments in closed cases, and thus would never be included
in
the universe of allegedly erroneous assistance payments under the
QC
system; thus, there is no possibility of a double penalty.
Where the
QC system is not applicable, there is no reasonable basis to hold
that
FSA is deprived of authority to exercise the general
disallowance
authority under section 1116(d) (42 U.S.C. 1316(d)) for specific
cases.
Cf. Florida Dept. of Health and Rehabilitative Services, DGAB No.
955
(1988).
Conclusion
For the foregoing reasons, we conclude that FSA's position on the
meaning
and implementation of the disregard provision was reasonable,
and we uphold
the disallowance.
____________________________ Cecilia
Sparks
Ford
____________________________ Donald
F.
Garrett
____________________________ Norval
D.
(John) Settle Presiding
Board