DEPARTMENTAL GRANT APPEALS BOARD
Department of Health and Human Services
SUBJECT: Maryland Department of Human Resources
Docket No. 87-26
DATE: July 28, 1987
RULING ON REQUEST FOR RECONSIDERATION OF DECISION NO. 706
The Maryland Department of Human Resources has appealed from
a
determination by the Administration for Children, Youth, and
Families
(ACYF) regarding the State's eligibility for fiscal year 1982
funds
under section 427 of the Social Security Act. This determination
was
made pursuant to a remand by the Board in Maryland Department of
Human
Resources, Decision No. 706, November 21, 1985. In its appeal
brief
(dated July 14, 1987) in the remand proceeding, the State
identifies
four bases on which it challenges the ACYF determination.
One of those
issues relates to the ACYF review on remand and is properly
raised in
the remand proceeding. Three of those issues were raised in
the
previous proceeding and decided against the State. Thus, we
have
determined that the State's attempt to raise those issues
here
constitutes a request that the Board reconsider its holdings in
Decision
No. 706 on those issues.
Under the Board's regulations at 45 CFR 16.13, the Board may
reconsider
its own decision where a party "promptly alleges a clear error of
fact
or law." For the reasons stated below, we conclude that the State
has
not met that standard. Accordingly, the State's request is denied
and
no further briefing or argument on these issues will be accepted in
this
proceeding.
We first note that the State was informed in the letter
transmitting
Decision No. 706 that that decision was the final administrative
action
on the matters addressed in the decision. The decision
clearly
addressed and rejected arguments made by the State concerning
the
validity of the compliance review process used by ACYF. Yet, the
State
did not challenge the Board's analysis of those arguments until
its
brief in the current proceedings, filed more than a year and a
half
later.
Although there was a possibility that the remand would result in
a
decision favorable to the State, the State has been aware of
the
preliminary adverse findings since May 1986 and the final ACY
decision
since January 1987. Thus, we do not consider the State to have
met the
"promptness" standard in the regulation. This is a sufficient
basis for
denying reconsideration. We further find that the State has
not alleged
a "clear error of fact or law" requiring us to modify Decision
No. 706.
The three specific issues which the State now seeks to relitigate are:
o Whether the decision that Maryland is ineligible for section
427
funds is based on a substantive rule not promulgated in
accordance
with the Administrative Procedure Act (APA).
o Whether the Maryland foster care system should be deemed to
be
operating to the satisfaction of the Secretary pursuant to
section
427(a)(2).
o Whether the Agency disavowed the compliance review process and
this
precludes a finding that Maryland was ineligible for
section 427
funds.
The State for the most part simply incorporates by reference arguments
it
made on these issues in the prior Board proceedings. The State
raises a
few additional points, which it implies are based on "new
evidence or legal
precedent." State's appeal brief, p. 3, n. 2. To the
extent that what
the State has presented can be considered "new"
evidence or legal precedent,
it is insufficient to show a clear error of
fact or law in the Board's
previous analysis.
The APA argument
The State had argued that the program instruction on the compliance
review
process (PI 82-06) was a substantive rule which was without the
force and
effect of law because it was not promulgated in accordance
with notice and
comment rulemaking requirements under the APA. The
Board rejected this
argument for a number of reasons, set out in
Decision No. 706 at pages
7-11. The State here argues that the Board's
determination that PI
82-06 was not a substantive rule was "primarily
because the federal Agency
retained the discretion to determine that
Maryland's performance was
satisfactory no matter what the result of the
case record review" (conducted
according to PI 82-06). State's appeal
brief, pp. 8-9. The State argues
that ACYF has rejected that
interpretation, as shown by the final decision
issued by the
Commissioner after the remand proceedings. The State
emphasizes
language in that decision stating that Maryland has been
determined
ineligible "based upon the results of the case record survey," and
that,
since Maryland has been found ineligible, "ACYF must recover
funds"
awarded to the State for FY 1982. According to the State, this
means
that ACYF has determined that the result of the case record
survey
conducted pursuant to PI 82-06 is the "sole ground for measuring
a
State's compliance" and "failure to comply with the process [in
PI
82-06] means the loss of funds." State's appeal brief, pp.
9-10.
According to the State, since the loss of section 427 funds will have
a
"substantive effect" on the State's foster care program, this means
that
PI 82-06 affects substantive individual rights and obligations
and,
therefore, is a substantive rule (under certain court cases the
State
cites) and may be promulgated only following notice and comment
rule-
making (under other cited cases). See State's appeal brief, p.
10, and
cases cited there.
The State misreads the Commissioner's letter. The statements
are
consistent with the statute and our analysis in Decision No. 706.
The
Commissioner did not, as the State implies, state that she had
no
discretion to consider matters other than the case record survey
in
determining whether the State was or was not eligible. Being
compelled
to recover funds once she has found the State to be ineligible
is
different from being compelled to adopt the findings recommended by
the
regional office based on the case record survey.
Decision No. 706 merely indicated, as one of many reasons why PI 82-06
was
not a substantive rule subject to notice and comment rulemaking,
that the
Commissioner had the discretion, under the program instruction,
to find a
state's foster care case review system satisfactory under
section 427 even if
a state failed the regional office compliance
review. Nothing in
Decision No. 706 suggested that the Commissioner was
compelled under section
427 to consider other information in determining
whether a state had
satisfactorily implemented and was operating a
foster care review system, as
required by section 427.
The cases the State cites in its appeal brief in support of its
position
that PI 82-06 is a substantive rule subject to notice and
comment
rulemaking are not new legal precedent; each of the cases was
decided
prior to 1980. Most of these cases were cited in the State's brief
in
the proceedings leading to Decision No. 706 and distinguished from
the
instant case in that decision. Decision No. 706, pp. 10-11.
The State
did not state how our analysis of these cases was incorrect.
The
remaining cases cited merely stand for the proposition that
a
substantive rule is subject to notice and comment rulemaking.
Nothing
in Decision No. 706 is contrary to that proposition; the basis for
our
decision was that PI 82-06 does not constitute such a substantive
rule.
The State's program operation
The State argues that its foster care system should be deemed to
be
operating to the satisfaction of the Secretary even though the
State
failed the case record survey because the State met the "intent"
of
section 427, notwithstanding the results of the case record review.
The
State cites to arguments and evidence already considered by the
Board
and rejected. Decision No. 706, pp. 5-7. The State does not
give any
reason why the Board's analysis of this evidence and argument is
wrong.
As we explained in Decision No. 706, a state's failure to pass the
case
record survey (which required only 80% compliance with
applicable
requirements) is a sufficient reason to find that the state was
not
satisfactorily operating a case review system, and was
therefore
ineligible for section 427 funds. Thus, we held that the
Secretary was
not required to consider other evidence regarding program
operation.
The State's arguments on this point are not new.
We noted alternatively that, even if the Secretary were required
to
consider other evidence on program operation, the evidence submitted
by
the State would be insufficient to show satisfactory operation.
The
"new" documentary evidence is likewise insufficient since it does
not
relate to the fiscal year in question.
The State did note that it was requesting a hearing for the purpose
of
submitting testimony as to why the State's system should be deemed to
be
operating satisfactorily. The State did not, however, specify what
this
testimony would be, nor assert that it was unable to provide
this
testimony during the prior hearing, nor explain how this testimony
or
other evidence would show that the Board's decision contained a
clear
error of fact or law. Indeed, this evidence is proffered to
establish
facts which we have already determined do not need to be
considered.
Agency policy on the review process
Maryland also "urges the Board to reconsider its ruling" that a
December
13, 1983 letter from the Assistant Secretary for Human
Development
Services to a representative of the National Council of State
Public
Welfare Administrators, American Public Welfare Association, does
not
bar the finding that the State was ineligible for section 427
funds.
The State alleges that the Board "ignores the well-established
doctrine
in the D.C. Circuit that the term 'rule' is 'broad enough' to
include
every statement an agency may make. . . ." State's appeal brief, p.
15,
citing Chaney v. Heckler, 718 F. 2d 1174, 1186, reversed on
other
grounds, ____ U.S. ____, 105 S.Ct. 1649 (1985); Center for Auto
Safety
v. NHTSA, 710 F. 2d 842, 846 (D.C. Cir. 1983); Batterton
v. Marshall,
648 F. 2d 694, 700 (D.C. Cir. 1980); and 5 U.S.C. 551(4)
(definition of
"rule"). The State argues that the Assistant Secretary's
letter
described a departmental policy of general applicability designed
to
implement the section 427 process: the development of a notice
of
proposed rulemaking to include the criteria, percentage levels,
and
standards with which a state must comply. The State says this is
an
"explicit disavowal of the compliance review process." State's
appeal
brief, p. 16.
The cases cited by the State were not discussed in Decision No.
706
because the basis for the Board's analysis was not that such an
agency
letter could never be a "rule" (although we question whether the
letter
was "designed to implement . . . law or policy" within the definition
of
"rule" at 5 U.S.C. 552(4)). Rather, the Board found that a
plain
reading of the letter indicated that it was not a "disavowal of
the
compliance review process" as the State had alleged.
Here, the State does point to language in the letter which the State
did
not emphasize in its earlier argument. But the State's
conclusory
assertion that an intent to issue a notice of proposed
rulemaking
constitutes a disavowal of the existing review process is
insufficient
to cause us to reconsider our decision. 1/
Moreover, part of the Board's analysis was that, even if the December
13,
1983 letter could be read as establishing a policy to "disavow the
compliance
review process," the Agency had clearly changed that policy.
We saw no reason
why the Agency would be bound by the supposed 1983
policy since the State
could not have relied on it in FY 1982 in
claiming eligibility for section
427 funds or in operating its program.
The State faults us for citing no
authority for this reasoning, but does
not allege that the reasoning is
erroneous. Indeed, the State has never
cited any authority for its
proposition that reading the letter as a
"disavowal of the compliance review
process" would necessarily mean that
the Agency is barred from acting on the
results of that process even for
periods prior to the "disavowal." The
general legal principle that an
agency is bound by its own policy simply does
not answer questions
regarding what the scope of that policy is; what kind of
retroactive
effect, if any, does the policy have; or which of two
conflicting
policies applies.
Other matters
Maryland is apparently seeking to relitigate issues already decided
in
Decision No. 706 because of a concern generated by a question raised
by
ACYF's counsel, in the teleconference held on April 2, 1987.
He
questioned whether Decision No. 706 would be appealable if the Board
did
not ultimately rule in Maryland's favor on the FY 1982 funds.
Maryland
states in a footnote in its brief that "Maryland requests that the
Board
direct the federal Agency to clarify its position regarding
the
appealability of Decision No. 706 . . . and, should the federal
Agency
assert that Decision No. 706 is not appealable, reserves the right
to
relitigate before the Board all issues raised in that appeal."
State's
appeal brief, p. 3, n. 2.
For the reasons stated here, we do not think that the State has any
"right
to relitigate" issues which have already been decided, following
proceedings
which the State has not alleged were inadequate. 2/
Moreover, the
State's concerns may be unwarranted. Agency counsel
suggested in the
April 3, 1987 call that the State's concern could be
addressed by simply
incorporating Decision No. 706 by reference into any
subsequent decision on
FY 1982 eligibility. He tentatively agreed to
such incorporation and
was to notify the Board if his client objected to
his agreement. The
Board's letter of May 12, 1987 noted that he had not
done so and that,
therefore, the Board would incorporate Decision No.
706 into any further
decision. In any event, it is outside the scope of
the Board's
authority to direct the Agency to clarify its position on
what its litigation
posture would be if this matter is ultimately before
a court.
Accordingly, for the reasons stated above, we have determined not
to
reconsider the issues addressed in Decision No. 706 and
identified
above.
________________________________ Donald
F.
Garrett
________________________________ Norval
D.
(John) Settle
________________________________ Judith
A.
Ballard Presiding Board Member
1. Nothing in the letter indicates that the
Agency will not make any
further findings of ineligibility based on the
existing compliance
review process. The problems noted in the letter
had to do with
interpreting the requirements being reviewed, not with the
process
itself. The State has been given the benefit of being judged
according
to its own reasonable interpretations of the requirements. We
also note
that, if every agency statement that it intends to revise a process
were
read as a disavowal of the existing process, agencies would
have
difficulty operating.
2. The State describes discovery in the prior
proceedings as
"limited" but did not allege that fairness required unlimited
discovery
nor state why any limits on discovery were