Department of Health and Human Services
Departmental Appeals Board
AFDC QUALITY CONTROL REVIEW PANEL
SUBJECT: Nebraska Department of Human Resources
Docket No. 92-200
DATE: September 25, 1992
DECISION
The Nebraska Department of Human Services (State) appealed the June 17, 1992 quality control (QC) review determination of the Regional Administrator of the Administration for Children and Families (ACF). ACF disagreed with the State's finding of an overpayment of $267 in an Aid to Families with Dependent Children (AFDC) grant to A.S., finding instead that A.S. was ineligible for any AFDC assistance due to the receipt of two non- recurring lump sum payments. 1/
For the reasons discussed below, we sustain ACF's determination.
Factual Background
The assistance unit (AU) for the AFDC grant is comprised of A.S. and her two children. A.S.'s husband was approved for an AABD (Aid to the Aged, Blind and Disabled) grant October 1, 1991 and was removed from the AFDC grant as of that date.
In October 1991, the AU received two lump sum payments from the Social Security Administration totaling $4,640, because of the husband's disability. Initially, the State QC review found an overpayment of $267 because the AFDC grant was not reduced by the excess income allocated to the AFDC unit from the husband's AABD grant. The State QC review, however, did not address the lump sum payments.
The Federal QC review indicated that the State QC review failed to account for the two lump sum payments. The Federal QC review determined how much of the lump sum payments must be considered available to the AU using provisions of the State Plan. The Federal QC review determined that $725 for medical expenses was unavailable to the AU. The Federal QC reviewers deducted this amount from the total lump sum payment and divided this amount by the $364 standard of need for a family of three. The result was a finding that the AU was ineligible for 10 months, October 1991 through July 1992.
In response to the Federal finding that the lump sum payments were not considered, the State argued that out of the lump sum payments, $4,057.38 of that amount was unavailable to the family for reasons beyond the family's control and should be deducted from the lump sum Social Security payments. The State reasoned that if the amount designated by the State QC review is deducted from the lump sum benefits, it leaves $582.62 as available income to the AU. The standard of need for a family of three is $364. The State argued that when that figure is divided into the standard of need, it makes the AU ineligible for the month of October, 1992 with the remaining income of $218.62 added to November's income. The State argued that as a result, the AU is eligible in December, 1991, the review month, with zero income to be applied to the December, 1991 budget.
The expenses which the State QC review found were incurred for reasons beyond the family's control are as follows:
$550.00 Vocational Rehabilitation Payment (allowed by Federal QC)
$175.00 Medical bills paid (allowed By Federal QC)
$550.00 Rent for October and November, 1991
$141.57 Gas and electric heating bills for October and November 1991
$350.00 New transmission for car
$848.00 Payoff on car loan (in collection)
$ 50.00 Phone
$ 65.00 Beds
$350.00 Clothing
$300.00 Washer and dryer
$150.00 Vacuum cleaner
$527.81 Food
$4057.38 Total
Relevant Legal Authority
Section 402 (a)(17) of the Social Security Act (Act) provides that a family that receives earned or unearned income in excess of the State's standard of need shall be ineligible for AFDC for the number of months that equals the total of the income received in that month divided by the standard of need applicable to the family. However, a state may recalculate the period of ineligibility due to the receipt of such income if "the income received has become unavailable to the members of the family for reasons that were beyond the control of such members, or the family pays medical expenses allowed by the state during the month of ineligibility." Section 402(a)(17).
The regulations further provide that if the State chooses to recalculate the period of ineligibility (i.e. to shorten the period of ineligibility), the State Plan shall identify which of the situations specified in the Act are included in the State's program. In the case of situations involving the unavailability of the lump sum income, the Plan shall include a definition of unavailability and specify what reasons will be considered beyond the control of the family. In the case of payment of medical expenses, the Plan shall specify the types of medical expenses the State will allow to be offset against the lump sum income. 45 C.F.R. § 233.20 (a)(3)(ii)(F)(3) and (4).
Each state is required to operate its quality control system in accordance with policies and procedures prescribed in a Quality Control Manual (QCM) issued by the Department of Health and Human Services. 45 C.F.R. §205.40(b)(1). The QCM addresses the lump sum payment provision and the calculation of the period of ineligibility in section 3551. That section provides that States may elect to shorten the period of ineligibility if:
The lump sum or a portion of it becomes unavailable to the family for a reason beyond its control. Examples: loss or theft of income; or a life- threatening circumstance.
Section 3551, QCM.
The Nebraska State Plan addresses lump sum income and the circumstances under which Nebraska will shorten the period of ineligibility. The State Plan provides that the State will shorten the period of ineligibility when a lump sum becomes unavailable to the family for a reason beyond the family's control. "Unavailability" is defined by the State Plan as meaning the lump sum or portion thereof is no longer accessible to the family. Nebraska State Plan, Attachment 2.3-G, p. 2. The Plan specifies the reasons considered beyond the control of the family as follows:
Expenditures made which are necessary for the well being of the family such as necessary repairs to a home; severe heating or cooling bills; payments to prevent eviction; costs associated with fire, flood or natural disaster, etc; theft or loss; the person controlling the lump sum no longer resides with the family; funeral and burial expenses; payments made on medical services for the former eligible group or their dependents even though incurred before the period of ineligibility, etc.
Nebraska State Plan, Attachment 2.3-G.
Analysis
The State argued that the provisions of its State Plan support its determination that certain expenditures (listed above) were incurred for reasons beyond the family's control and therefore, $4,057.38 of the lump sum payments were unavailable to the family. As a result, the family was eligible for the December 1991 review month.
The State contended that the use of the words "such as," followed by a listing of the type of expenditures which would be reasons considered beyond a family's control indicates that the examples given in the State Plan are not meant to be exhaustive. It allows discretion by State QC to determine if the expenditures were beyond the control of the family but necessary for the well being of the family. 2/ The State provided its reasons why it believed each of these expenditures met the State Plan's definition of "unavailability" and "beyond the control of the family." Nebraska State Plan, Attachment 2.3-G.
The State essentially contended that nearly every expense incurred by the AU was for a reason beyond the control of the family and therefore was deductible from the lump sum payment. We disagree. In characterizing every expense in this way, the State has nullified the purpose of the statutory provision. Under the State's construction, no AU would be ineligible for AFDC benefits even though they may have received a sizeable lump sum payment in a given month. The purpose of the lump sum provision of the Act was to make sure that if a family received income in excess of the State's standard of need, the family would become ineligible for aid for a period of time as determined by statute. This period of ineligibility may only be shortened under very limited circumstances. The Act and regulations address situations where it would be unfair to continue to count an AU as ineligible where the lump sum payment is not available for the family's use because of reasons beyond its control. The circumstances contemplated here were the kind of circumstances which are considered extraordinary such as theft or loss of the money, or unexpected losses from a natural disaster.
The State Plan provides for these kinds of extraordinary circumstances, but the State's application of its State Plan goes beyond the situations which the provision was intended to address.
o The State claimed that $550 for two months rent should be considered an expenditure which is necessary for the well being of the family but beyond the control of the family. While the State argued that the Plan provides for deductions from lump sum payments to prevent evictions, there is no indication in the record that the rent payments were made to prevent eviction. There is no indication of an eviction notice or a notice of past due rent. In the absence of this documentation, there is no reason to believe that the payments were for anything other than the family's normal monthly rent payments.
o The State claimed that utilities of $141.57 should be deducted from the lump sum to shorten the period of ineligibility because of unusually severe weather experienced in Omaha during October and November 1991. There is no documentation in the record to substantiate that there was severe weather in Omaha during these months. Moreover, there was no documentation to show how this weather had an impact on the family's heating and cooling bills for the months in question when compared to average bills for other months when the weather was not so severe. In the absence of this proof, we cannot conclude this expenditure was beyond the control of the family.
o The State claimed $350 for a new transmission for the car. Nebraska's State Plan does not list all the reasons which could be considered beyond the control of the family. However, the State Plan provision must be read together with section 402(a)(17) of the Act, the implementing regulations, and the QCM to determine the scope of the provision. As we previously explained, these provisions were meant to allow for a very limited exception to the period of ineligibility to prevent unfairness because of the occurrence of extraordinary and uncontemplated circumstances. The State here has failed to show how a new transmission could be considered an extraordinary circumstance within the meaning of these provisions.
o The State argued that $848 for the payoff of a car loan was an expense beyond the control of the family and therefore should be deducted from the lump sum payment in order to shorten the AU's period of ineligibility. The State argued that collection proceedings had been instituted against the family. However, the record has no documentation to support this allegation. Rather, the record indicates that the loan had been paid off in December 1990. There is a handwritten note from the husband's mother indicating that the loan is paid off to the commercial lender but that the parents are owed money from A.S. and her husband and that they are holding the truck until repayment can be made. There is no indication that the loan is in collection or that the vehicle was repossessed. The State Plan provision simply does not contemplate payoff of a car loan as an extraordinary circumstance for which a lump sum payment is unavailable to a family.
o The State claimed a new phone for $50. There is no indication whether the old phone was broken, whether the new phone was to replace the only existing phone in the household or was purchased as an additional phone. The purchase of a new phone does not meet the provisions of the State Plan and the Act as an expenditure beyond the control of the family.
o The State claimed a washer and dryer for $300 and a vacuum for $150 as expenditures made which are beyond the control of the family. Clearly, the purchase of a washer and dryer and vacuum are not items which are directly necessary for the well being of the family. These are discretionary expenditures well within the control of the family. Consequently, these expenditures should not be used to shorten the period of ineligibility for AFDC for this AU.
o The State claimed $527.81 for food, $350 for clothing, and $65 for beds. These expenditures, as well as the expenditures for rent and utilities, are exactly the kind of expenditures that Nebraska considers in its consolidated need standard as basic needs which are already considered in determining AFDC eligibility. Consequently, while the family may have chosen to use its lump sum payment to purchase these additional items, that does not mean that these expenditures were beyond the family's control.
We conclude, therefore, that the State has failed to show that these expenditures were other than discretionary expenditures made by the family. Consequently, these expenditures were not deductible from the lump sum payment.
Conclusion
For the foregoing reasons, we conclude that the expenditures made by the AU were not deductible from the lump sum payment so as to shorten the AU's period of ineligibility. Therefore, we sustain ACF's finding that the AU was ineligible for ten months, from October 1991 through July 1992.
_____________________________
Joseph T. Gatewood
_____________________________
Maxine Winerman
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Andrea M. Selzer
* * * Footnotes * * *
1. We identify the recipient by her initials in order to protect her privacy. The State quality review number is 39576 (N-050).
2. The Nebraska Department of Social Services Manual repeats the provisions of the State Plan but also provides that "expenditures for such things as household goods, vehicles, secured or unsecured debts are acceptable reasons to recalculate [the period of ineligibility]." Nebraska Department of Social Services Manual, section 2-009.05F. The Regional Administrator indicated that this Manual provision is not in conformity with the State Plan. The State does not appear to rely on this Manual provision in its appeal to the Panel; it is relying on the provisions of its State Plan. Therefore, we need not address the issue of whether this Manual provision conforms to the State Plan.