Department of Health and Human Services
Departmental Appeals Board
QUALITY CONTROL REVIEW PANEL
SUBJECT: New York State Department
of Social Services
Docket No. A-95-164
Decision No. QC90
DATE: October 27, 1995
DECISION
The New York State Department of Social Services (New York)
appealed
the June 8, 1995 quality control (QC) determination of
the Regional
Administrator of the Administration for Children and
Families in state QC
number 609584 (federal QC number 264-0876).
The Regional Administrator
concluded that the assistance unit
(AU) in the sample case was ineligible
for the Aid to Families
with Dependent Children (AFDC) payment received
during the review
month because there was no dependent child in the
AU. For the
reasons discussed below, we sustain the Regional
Administrator's
determination.
Background
This case involves an adult woman (the client) who received a
one-person
AFDC grant of $352 for herself in June 1994, the
review month. Prior
to the review month, the client had received
a one-person grant of $352 plus
a pregnancy allowance of $50. On
March 17, 1994, she gave birth to a
child. The pregnancy
allowance was not removed until May 1994, and the
child's needs
were not added to the grant until July 6, 1994 when two
supplemental payments of $116 were authorized and paid for the
periods
May 11, 1994 to June 10, 1994 and June 11, 1994 to July
10, 1994. The
case was selected in the QC sample selection on
June 4, 1994.
Applicable Authority
Title IV-A of the Social Security Act (Act) establishes the AFDC
program
to provide assistance to certain needy children and their
caretakers.
Under section 408(a) of the Act, the Secretary of
the Department of Health
and Human Services must establish a
quality control system to determine the
amount of erroneous AFDC
payments made by each state. Pursuant to this
statutory mandate,
the Secretary has issued regulations for the operation of
the
federal and state AFDC QC systems. 45 C.F.R. §§ 205.40 through
205.43. Those regulations provide that a state agency must
operate
its QC system in accordance with the applicable
regulations and the policies
and procedures prescribed in the
Quality Control Manual (QCM) issued by the
Department. 45 C.F.R.
§ 205.40(d)(1).
The QCM sets forth uniform standards for QC sample selection and
for the
QC review process. Uniform standards are critical to
assuring that
payments made by many different states are
evaluated similarly and that the
results of such evaluations are
statistically valid. To this end, the
QCM defines the scope of
QC review and the category of payments which will
be evaluated in
the QC review process. The QCM provides:
The QC review independently establishes and verifies the
facts
about each element of eligibility for each case
drawn from the total State
universe of cases paid for a
particular month, called the "review month"
(RM). An
active paid case for the RM is one for which either a
full or partial payment was authorized or issued for the
RM. This
includes all AFDC cases which were authorized
and received a payment in the
RM . . . .
The scope of QC review encompasses all payments which
are
authorized prior to sample selection and issued for
the RM.
QCM § 3020 at 2 (emphasis added).
In AFDC, the eligibility of an adult (mother, father, etc.) is
ordinarily
contingent upon his or her living with a dependent
child. Section
406(b) of the Act. The exceptions pursuant to
which an adult-only AU
can receive AFDC benefits are AUs composed
of a pregnant woman, or cases in
which the adult is living with a
child who is receiving SSI (AT-77-45, date
April 22, 1977) or
Title IV-E benefits (AT-94-5, date February 28,
1994).
The Act provides that certain QC payment discrepancies that would
otherwise be considered erroneous payments are not included in a
state's error rate. At issue here is the effect of section
408(c)(2)(B)(ii) of the Act which provides that payments made
pursuant
to court orders will not be considered erroneous even if
they are contrary
to federal law or regulations. Section
408(c)(2)(B)(ii) creates an
exception to section 408(c)(2)(A)
which provides that, where a state plan
provision is inconsistent
with federal law and the state has been notified
of the
inconsistency, federal law controls in a QC review and determines
whether a payment is erroneous. Under the section
408(c)(2)(B)(ii)
exception, federal law does not control if the
payment under review was made
"in compliance with a court order."
The purpose of this provision is
to protect states against QC
errors when a state agency is making payments
pursuant to the
authority of a court.
As to section 408(c)(2)(B)(ii) the QCM states:
Section 408(c)(2)(B)(ii) of the Act provides that, for
error
determination purposes, the QC review will be
conducted against provisions
of court orders. We
interpret this provision to apply to all Federal,
State
and local court orders that affect the eligibility and
payment
status of QC sample cases. Therefore, a sampled
case would be
considered correctly paid if the AU was
paid in compliance with a court
order issued by a
Federal, State, or local court, and all other
eligibility and payment conditions not affected by the
court order are
correct.
QCM § 3135 at I-11.
In this case, it is undisputed that the supplemental payments
made in
July for the child's June needs were made pursuant to a
state court order in
Vega v. Perales (Stipulation of Settlement,
New York Ex. 4). Vega held
that an AFDC recipient who gives
birth has the right to have the child added
to the grant
retroactive to the date of birth. Prior to Vega, the
needs of
the child would have been added as of the date of the
verification of birth. However, in order to be eligible for a
retroactive payment, "appropriate verification" of the birth must
be
provided within 6 months of the child's birth or by the next
recertification, whichever is later. Id. at 2. The
administrative directive which implemented the Vega mandate
describes
the "program implications" of Vega as ensuring that
"the needs of the
newborn are met regardless of the date the
parent submits
verification." New York Ex. 5 at 2.
Analysis
For the following reasons, we conclude that New York made a $352
payment
to an ineligible AU during the review month of June 1994.
It is undisputed that the assistance payment made by New York on
June 1,
1994 was for an AU consisting solely of the client and
that such an AU was
not eligible for AFDC. While the client was
apparently living with a
child who could have satisfied the
statutory criteria for a dependent child,
as of the review month
no assistance had been requested for that child, no
verification
of that child's birth had been provided, and New York had no
information that the child met AFDC eligibility factors.
Therefore, the child was not a member of the AU.
New York argued that the child should have been a member of the
AU in the
review month. It based its argument on section
408(c)(2)(B)(ii) of the
Act and the fact that, as of July 1994,
this AU became eligible for a
retroactive payment under Vega.
New York asserted that section
408(c)(2)(B)(ii) requires this QC
review to be conducted pursuant to the
requirements of Vega.
Since, under the Vega standard, a child must be
retroactively
added to an AU upon verification of birth and since this
child's
birth was verified in July, New York concluded that the QC
reviewers must find that, as of June 1994, the AU consisted of
the
client and her child. New York requested the Panel to
conclude that
the case was underpaid because the June grant did
not reflect the child's
needs. 1/
We reject New York's argument and conclude that section
408(c)(2)(B)(ii)
does not require the QC reviewer to include a
dependent child in this AU in
June simply because New York
retroactively modified the configuration of the
AU in July
pursuant to Vega. Section 408(c)(2) defines the legal
standards
which apply to QC review of payments selected in a sample.
It
has nothing to do with the standards which define the scope of QC
review. Therefore, section 408(c)(2)(B)(ii) only provides that,
when a payment is within the scope of QC review and that payment
is
subject to a court order, the correctness of the payment shall
be judged by
the court order rather than by federal law.
The payment and the circumstances under review in this case are
the June
payment and the June circumstances. The verification of
this child's
birth was not provided to the local agency until
July. As of June, the
action by the client which was necessary
to make Vega applicable to this
case (verification of the birth
within six months of the birth or by the
next recertification)
had not been taken. Consequently, in June, the
Vega legal
standard did not apply to the June payment: there was no
payment
which was made pursuant to the Vega standard and there was no
payment which should have been made pursuant to Vega. 2/
The fact that, after the review month, New York adjusted the
configuration of the AU and issued a retroactive supplemental
payment is
irrelevant for the purposes of this review process.
The QC process
measures the correctness of a payment in a
discrete review month. The
QCM clearly limits the scope of QC
review to payments "which are authorized
prior to sample
selection and issued for the RM." QCM § 3020 at
2. Events in
subsequent months and supplemental payments which reflect
those
events are beyond the scope of the QC review. The QCM also
expressly addresses the question of subsequent payment
adjustments to
the initial assistance payment. It provides:
The QC scope of review only encompasses the correctness
of
eligibility and payment for the RM. If an adjustment
is made in the
payment for the RM, the reviewer verifies
the adjustment amount, so long as
the adjustment was
made by the end of the RM and authorized before the
sample was selected.
QCM § 3310 at III-12.
Consequently, New York's adjustment of the composition of this AU
in July
is beyond the scope of QC review.
Moreover, since the Vega mandate is not applicable to this case,
the QCM
provisions concerning the addition of newborns to AUs are
relevant.
The QCM specifically addresses the problem potentially
posed by the birth a
child to a woman who had been receiving AFDC
as a pregnant woman. It
provides that a payment to an ineligible
should be cited under the following
circumstances:
The assistance payment under review is
to a pregnant
woman with no other children and . . . the payment for
the
pregnant woman was never terminated even though the
child is born, there is
no casefile documentation as of
the review date confirming that the mother
had requested
assistance for the newborn once the child was born, and
that the child met all eligibility factors.
QCM § 3578 at V-177; see also the example on V-178.
The QCM goes on to explain the circumstances under which an
underpayment
would be cited in a case in which a child had been
born and the mother was
still receiving a one-person grant based
on her status as a pregnant
woman. "If there was an application
for the newborn as of the review
date and the child met all
eligibility factors, then an underpayment would
be cited." QCM §
3578 at V-177.
As an alternative argument, New York asserted that, by virtue of
its
payment of Medicaid costs for the birth of this child, New
York had
knowledge of his birth before the review month. (New
York attached a
printout of medical costs paid in May 1994 for
the birth of the child.
New York Ex. 8). New York argued that
the local district should have
acted upon this knowledge by
adding the child to the AU in June and its failure to do so
resulted in
an underpayment to the AU.
We reject New York's argument that, through its payment in May of
Medicaid costs for the birth of this child, New York had
knowledge of
his birth before the review month and therefore the
local district should
have added the child to the AU. The Vega
mandate, which makes benefits
contingent on the action of the
parent or caretaker relative, does not
require such action by the
local district. New York presented no other
authority for the
proposition that the payment of Medicaid costs requires a
local
district to sua sponte include the child in the AFDC grant and no
explanation for how a local district would know that such a child
met
other AFDC eligibility requirements.
Conclusion
For the preceding reasons, we sustain ACF's determination that
New
York made a $352 payment to an ineligible during the review
month of June
1994.
__________________________
Carmen
Cafasso
___________________________
Peggy
McFadden-Elmore
___________________________
Sara
Anderson
* * * Footnotes * * *
1. New York did not argue
that the retroactive payments
it made in July for the child's needs in June
affect the June
error computation. Rather, New York computed the needs
of a two-
person AU ($443.50 in this case) and subtracted the grant paid
($352). New York therefore concluded that it underpaid the AU by
$91. New York Ex. 2 at 2.
2. We note that, had the action which required New York
to
include the child in the AU (i.e., the mother's verification of
birth)
occurred in June, then the case would present a different
issue under
section 408(c)(2)(B)(ii).