Pennsylvania Department of Public Welfare, DAB No. 371 (1982)

GAB Decision 371

December 30, 1982 Pennsylvania Department of Public Welfare; Docket No.
82-12-PA-SS Ford, Cecilia, Teitz, Alexander Garrett, Donald


The Pennsylvania Department of Public Welfare (State) appealed the
following determinations, concerning claims for federal financial
participation (FFP) under Title IV-A (Aid to Families with Dependent
Children) of the Social Security act, made by component agencies of the
Department of Health and Human Services (Department): /1/

the disallowance, under Administrative Costs, of FFP of $416,932 for
Annuitant's Medical Benefits Costs for the period July 1, 1971 to June
30, 1978;

the disallowance of FFP of $15,229 for the alleged double-billing of
equipment costs for the period July 1, 1972 to June 30, 1979;

the nonpayment of FFP of $1,338,715 for Administrative Costs,
incurred prior to October 1, 1978, because of the restrictive wording of
the continuing resolutions in Pub. L. 97-92; and

the deferral of $2,651,542 in FFP for claimed AFDC-Foster Care
Maintenance Assistance Costs.

In the course of Board proceedings, the State withdrew its appeal of
the disallowance of the $15,229 in equipment costs. Also during the
course of the appeal, as discussed below, the majority of the deferred
AFDC-Foster Care Maintenance Assistance Costs were found to be
allowable, depending upon the availability of funds. Furthermore, as to
the Department's nonpayment of the otherwise allowable Administrative
Costs, the parties agreed, at a large stage of the proceedings before
the Board, that this issue should be withdrawn from this appeal, without
prejudice to refile, pending the resolution of judicial action on this
issue. While we do not, therefore, believe that we are required to
address the substantive merits of this issue, we have nevertheless
included in the decision the procedural background of the nonpayment
issue.


(2) Therefore the only substantive issue we reach in this appeal is
the allowability of the Annuitant's Medical Benefits Costs. For reasons
discussed below, we sustain, on the basis of a prior Board decision, the
disallowance of the Annuitant's Medical Benefits Costs.

There are no material issues of fact in dispute. We have determined,
therefore, to proceed to decision based on the parties' submissions.
These include the parties' responses to a Board jurisdictional inquiry
and to an invitation to brief. The State also submitted an appeal file
and brief, and the Department submitted a brief. /2/


The Maintenance Assistance Costs

The State asserted that the Department's deferral of $2,651,542 in
Maintenance Assistance Costs violated 45 CFR 201.15(c)(6), which
requires the Department to make a determination on the allowability of a
deferred claim within 90 days after all documentation is available in
readily reviewable form, and, if such a review cannot be completed
within that time period, to pay the claim subject to a later
determination of its allowability. In response, the Department disputed
the Board's jurisdiction to review this issue, arguing that a deferral
was not a final determination as required by 45 CFR 16.3(b). The
Department further contended that the time provisions of 45 CFR
201.15(c)(6) did not apply here because the State had failed to submit,
in readily reviewable form, all of the documentation and information
needed to complete the Department's assessment of the State's claim.

By letter dated August 10, 1982 the Department notified the Board
that the Department, in a June 29, 1982 letter, had taken final
administrative action with respect to its prior deferral of $2,651,542,
allowing $2,263,250 of the claim. The June 29, 1982 letter noted that
the State had finally provided all the documentation for its claims on
April 1, 1982. The Department stated that it believed, therefore, that
"the State's claim for these funds is no longer properly in dispute in
the instant appeal." By letter dated August 13, 1982, the State replied
that it still believed that the Department's deferral constituted "a de
facto disallowance of a cash flow right guaranteed to the State by the
Department's own regulations" and that it continued to request the Board
to render a decision in this matter.

The amount deferred but not allowed ($388,292) was included in a
disallowance issued by the Department on June 29, 1982. The State's
appeal of that disallowance is now before the Board in Docket No.
82-132-PA-HD. Inasmuch as the Department has now formally acted on the
deferred claim for AFDC-FC Maintenance Assistance Costs, the Board
believes that the remaining $338,292 in AFDC-FC Maintenance Assistance
(3) Costs in dispute would be more properly considered in Docket No.
82-132.We believe, however, that the Department did not violate the time
requirements of 45 CFR 201.15(c)(6). The State did not deny that it had
not submitted the required documentation until April 1, 1982 and the
Department's subsequent decision on the deferred funds was issued within
90 days on June 29, 1982.

The Annuitant's Medical Benefits Costs

Both parties have agreed that the circumstances pertaining to the
issue of the Annuitant's Medical Benefits Costs are identical to the
facts of another appeal, Docket No. 81-180-PA-HC, brought by the State.
In Pennsylvania Department of Public Welfare, Decision No. 293, April
30, 1982, the Board decided that case, sustaining the disallowance of
costs, including Annuitant's Medical Benefits Costs, because
Pennsylvania had failed to include those costs in its approval cost
allocation plans. Here the State did not argue any different basis for
relief than it had argued in the previous case, preserving its position
that the Department's failure to pay the amount claimed pending the
disallowance was contrary to 45 CFR 201.15(c)(6).

As the State has not presented any new arguments as to why Decision
No. 293 was erroneous, we sustain the disallowance of the $416,932 for
Annuitant's Medical Benefits Costs on the grounds stated in Decision No.
293.

The Administrative Costs

The Department conceded that the Administrative Costs for the
AFDC-Foster Care Program claimed by the State were allowable, but argued
that the Department was prohibited from paying the $1,338,715 in claimed
costs because of the restrictive wording of the continuing resolutions
in Pub. L. 97-92.

When Congress passed the continuing resolutions for fiscal year (FY)
82 on December 15, 1981 (Pub. L. 97-92) and March 31, 1982 (Pub. L.
97-161), the following section of the Department's appropriations act
for FY 82 was incorporated:

... no payment shall be made from this or any other appropriation to
reimburse State or local expenditures made prior to October 1, 1978,...
unless a request for reimbursement had been officially transmitted to
the Federal Government by the State within one year after the fiscal
year in which the expenditure occurred.

H.R. 4560, 97th Cong., 1st Sess. 38 (1981) (House passed version);
H.R. 4560, 97th Cong., 1st Sess. 45-46 (1981) (version deemed to pass
Senate)

(4) In arguing that the Board's jurisdiction under Title IV-A did not
cover the determination here since that jurisdiction is limited only to
disallowances, the Department contended, "The fact that the (Department)
is prohibited by Congress from paying certain State claims, regardless
of whether they are allowable under program requirements, is clearly
beyond the purview of the Board." (Department's February 25, 1982
Submission, p. 4) The Department further argued that the State was aware
that this statutory prohibition on the payment of certain claims can be
addressed and remedied only by Congress, not the Department, citing
State of Connecticut, et al. v. Schweiker, et al., Civil Action No.
81-2237 (D.D.C. September 30, 1981).

In requesting that the Board assume jurisdiction over this issue, the
State declared that "the purpose of the appeal is to preserve the claim
by exhausting all available remedies, as required by the decision
(Connecticut v. Schweiker)$O cited by the (Department)." (State's March
4, 1982 Submission, p. 3)

While the administrative appeal was before the Board, the United
States Court of Appeals for the District of Columbia, in State of
Connecticut, et al. v. Schweiker, et al., No. 81-2090 (D.C. Cir., July
27, 1982), reversed the District Court opinion cited by the Department
and declared that the 1981 appropriations laws do not prohibit the use
of fiscal year 1981 funds to pay the prior-period claims..." (slip op.
at 3) The Court of Appeals remanded the case to the District Court to
determine the amount of funds available to pay the claims involved. The
Court of Appeals later rejected the Deparment's petition for rehearing
en banc wherein the Department asserted that the prohibition in Pub. L.
97-92 of paying claims "from this or any other appropriation" applied to
the claims in Connecticut v. Schweiker.

Based on the Court of Appeals' decision, the State requested that the
Board should order the amount of $1,338,715 to be paid by setoff or
otherwise.

The Department indicated to the Board that it has sought certiorari
from the Supreme Court, and thus there has been no final result in
Connecticut v. Schweiker. The Department also informed the Board that
Congress has taken further action, affecting the Department's
authorization to pay prior year claims, in section 136 of Pub. L.
97-276:

Notwithstanding the decision of the United States Court of Appeals
for the District of Columbia Circuit in Connecticut v. Schweiker (No.
81-2090, July 27, 1982), section 306 of Public Law 96-272, or section
1132 of the Social Security Act, no payment shall be made in or with
respect to any fiscal year prior to fiscal year 1984, under this or any
other Act, and no court shall award or enforce any payment (whether or
not pursuant to such decision) from amounts appropriated by this or any
other Act, to reimburse State or (5) local expenditures made prior to
October 1, 1978, under title I, IV, X, XIV, XVI, XIX, or XX of the
Social Security Act, unless a request for reimbursement had been
officially transmitted to the Federal Government by the State within one
year after the fiscal year in which the expenditure occurred. After
fiscal year 1983, any payment made to reimburse such State or local
expenditures required to be reimbursed by a court decision in any case
filed prior to September 30, 1982 shall be made in accordance with a
schedule, to be established under the Social Security Act, over fiscal
years 1984 through 1986.

On November 19, 1982 the Court of Appeals issued an order, denying
the Department's request to extend the stay of the court's decision and
directing the District Court to begin proceedings to process the states'
claims, such proceedings to be in compliance with Congress's direction
that any payments not begin until FY 84. On December 9, 1982 the
District Court issued an order setting forth a schedule of proceedings.

On December 23, 1982 the Board held a telephone conference with the
parties concerning the effect of these court orders on the Board's
consideration of this aspect of the State's appeal. During the
conference the State proposed that it withdraw the issue of the
nonpayment of the administrative costs from this appeal, without
prejudice to reopen, pending ultimate judicial resolution of this issue.
The Department did not object to this proposal. Accordingly, we are not
considering in this decision the substantive merits of the issue of the
nonpayment of the AFDC-FC administrative costs.The State may reopen the
case, solely on this issue, if the court proceedings do not resolve the
issue.

Conclusion

For the reasons stated above, we sustain the disallowance of the
Annuitant's Medical Benefits Costs. Further, we will consider the issue
of the remaining AFDC-FC maintenance Assistance Costs in dispute in
Board Docket No. 82-132. /1/ The notification of disallowance was
signed by a Regional Administrator of the Social Security
Administration (SSA). Administrative responsibility for the AFDC-Foster
Care Program was transferred from SSA to the Office of Human Development
Services (OHDS) on June 5, 1981 including responsibility for past as
well as future actions. /2/ Under Board regulations, 45 CFR
16.8(c), the State was entitled to submit a reply brief. The State,
however, decided not to submit such additional briefing.

SEPTEMBER 22, 1983