GAB Decision 478
Docket No. 83-59
November 18, 1983
Illinois Department of Public Aid;
Ford, Cecilia; Settle, Norval Garrett, Donald
The Illinois Department of Public Aid appealed a determination by the
Social Security Administration (SSA) disallowing $620,873 in federal
financial participation claimed by the State under Title IV-A of the
Social Security Act. The claims were submitted under section 408 of the
Act, which authorized federal funding for Aid to Families with Dependent
Children - Foster Care (AFDC-FC) payments made on behalf of children
removed from their homes and placed in foster care. One of the
conditions for federal funding for children placed in foster family
homes in the State was that the homes had to be licensed by the State,
or approved by the State as meeting the standards established by the
State for licensing such homes. Section 408 of the Act (definition of
"foster family home").
The payments in question here were made during the period July 1,
1977 through June 30, 1979 on behalf of foster children placed in the
homes of relatives. These "relative boarding homes" were approved
by
the State, and the State said that its policy was to approve only homes
meeting the standards in the State's regulation governing the licensing
of foster family homes. SSA contended that, in practice, the State was
applying lesser standards to relative boarding homes than to licensed
homes.
The key issues to be decided are 1) what does section 408 of the Act
require concerning the standards and procedures for approving relative
boarding homes; 2) was the State's approval process as a whole
deficient in a way which would justify a conclusion that the standards
applied could not have been the same as those applied in the licensing
process; 3) was SSA correct in determining that certain provisions in
the State's licensing regulation were standards, even though the State
said they were not; and 4) does the evidence show in other ways that
the State was generally failing to apply the licensing standards to
relative boarding homes or to document that it had done so. We address
these issues below and conclude that --
* The Act and regulations gave the State discretion to determine what
the standards for foster family homes would (2) be and to use a less
formal process for approval of relative boarding homes than for
licensing other homes, so long as the same standards were applied.
* The approval process was not deficient.
* The State's interpretation of what provisions in its own regulation
were standards is reasonable and should be accorded deference;
* SSA's evaluation of the evidence was tainted by SSA's erroneous
view of what the standards were, what procedural differences were
permissable, and how the State should document approval and, therefore,
does not provide a basis for disallowing the State's entire claim for
relative boarding home payments.
Accordingly, we reverse the disallowance.
I. Background
This dispute arises because the State used a different process for
approving relative boarding homes than for licensing homes as foster
family homes. Here, we briefly describe the two processes and what the
parties say in general about the differences.
A. The two processes
The State's procedures for approval and licensing are the same in the
following respects: (1) both require on-site investigations of the
home; (2) both require two-year renewals and immediate renewal if the
family relocates; (3) both require that the caretakers be contacted on
a monthly basis; and (4) both prohibit placement of a child in the home
until the home is approved or licensed.
The procedures differ primarily in the forms used and in who performs
the on-site investigation of the home. An applicant for a foster family
home license in Illinois must complete an application form, submit a
medical report, and consent to a crimial record check. A "Licensing
Module" form, which is one page and contains the applicant's name, is
then forwarded to State licensing staff. A licensing staff member then
prepares an outline from the licensing regulation and conducts an
on-site investigation of the home which is written up as a licensing
study. The licensing study must state complete reasons in support of
any conclusions drawn. The Licensing Module is then completed and
serves as verification that the licensing study was performed and the
results recorded.
(3) In the relative boarding home situation, a casseworker with the
Division of Children and Family Services (DCFS) determines a placement
need and then identifies a relative as a possible placement resource.
The relative is not automatically required to submit the forms a license
applicant must submit. Instead, the caseworker visits the relative's
home and completes an approval "checklist." This checklist is a one-page
form which summarizes some, but not all, of the provisions in the
State's licensing regulation. The caseworker may include in the child's
case file a narrative which addresses the licensing standards, but this
is not a requirement.
It should be emphasized that the foregoing are procedural
differences, not differences in standards. Of course, procedural
differences might provide some evidence that different standards were
applied; but, as we discuss below, the record as a whole does not
support this conclusion.
B. The parties' positions
SSA originally questioned whether the State was applying licensing
standards to relative boarding homes based on a comparison of the
one-page approval checklist with the eleven-page licensing regulation,
concluding that the difference in length meant that the State could not
possibly be applying the licensing standards to these homes. Similar
reasoning had been used by the Office of Human Development Services
(OHDS) in disallowing a related claim. /1/ This Board reversed the OHDS
disallowance, finding that the checklist was derived from the licensing
regulation and that the record did not support the conclusion that the
State was in policy or in practice applying different standards to
relative boarding homes than to licensed homes. Illinois Department of
Public Aid, Decision No. 378, January 31, 1982.
In the OHDS case, the primary focus was on whether the licensing
standards were applicable at all to relative boarding homes. Questions
about the State's practice were raised only after the State submitted
some caseworkers' statements which OHDS thought implied that these
caseworkers were not applying the licensing standards to relative
boarding homes. Here, SSA presented a more complete analysis of the
differences between the approval checklist and the licensing regulation,
and between the approval and licensing (4) processes, and also relied on
a summary of the results of an SSA review of 79 relative boarding home
case files. SSA based its position that in actual practice the State
was applying to relative boarding homes lesser, more subjective
standards than those in the licensing regulation on its view that --
* Certain parts of the licensing regulation which the State did not
apply to relative boarding homes were standards, not procedural or
technical requirements as the State contended.
* The approval checklist was deficient because it did not contain the
particulars of the licensing regulation.
* DCFS caseworkers using the checklist could not have been applying
the specifics of the licensing standards if trained licensing staff had
to prepare an outline and do a detailed written licensing study to
ensure that they were applying the standards.
SSA contended that the case file review supported its conclusions, as
did the caseworkers' statements (which the Board allegedly had misread).
The State defended the differences in its two processes on the ground
that they reflect a statutory preference for placing a child with a
relative, whenever possible. The State alleged that it can require that
an applicant for a license to care for a foster child fill in detailed
forms to show that standards are met because the applicant is actively
seeking to become a foster parent. On the other hand, the State said,
where a caseworker is soliciting a relative to care for a foster child,
the relative might hesitate to accept the child if that entailed
complying with complicated administrative procedures. The State
disagreed with SSA about what the standards in the licensing regulation
were and whether the approval checklist adequately reflected them. The
State also contested SSA's evaluation of the sufficiency of the State's
approval process.
We address the parties' arguments below. As indicated above,
however, we have organized the decision according to what we see as the
key issues underlying the parties' arguments.
II. What does section 408 of the Act require?
A. The same standards must be applied for approval and licensing
The last sentence of section 408 of the Act defines "foster family
home" as a "foster family home which is licensed by the State in which
it is situated or has been approved, by (5) the agency of such State
responsible for licensing homes of this type as meeting the standards
established for such licensing; . . . ." (emphasis added).
SSA contended that the plain language of this definition controlled
here because it required that the same standards be applied for
licensing and approval. The State never disputed this interpretation,
however, but insisted that the same standards were applied, even though
the procedures differed. /2/ The real question is whether the State's
position on what provisions in the licensing regulation constitute
standards, and what procedural differences are permissable, somehow
conflicts with the statutory requirements.
B. Standards are rules set by the State for measuring quality
The Act does not define the terms "standards" as used in section
408,
and we could find no discussion of the term in the legislative history
of the section. SSA has not clarified the term, either in the foster
care regulations or in any policy guidance documents. Implicit in SSA's
analysis presented here, however, is a view that any requirement of the
State's licensing regulation is a standard to be applied.
The State's position was that the parts of its licensing regulation
which had to be applied were those related to the quality of the home as
a safe and healthy environment or to the quality of the care and
supervision the child would receive in the home. This view is
consistent with the plain (6) meaning of the term "standards" /3/
and is
also supported by the following:
* In a decision regarding whether relative boarding homes could be
eligible for AFDC-FC payments, the Supreme Court referred to the
requirement that the homes meet "minimum standards of qualify." Miller
v. Youakim, 440 U.S. 125, 140 (1979).
* If Congress had intended that all licensing "requirements" apply
to
relative boarding homes, it could have so specified. Instead, it
specified only that the same "standards" be applied.
* Reading the term "standards" as the State did does not conflict
with Congress' obvious concern for the children's welfare since it
assures that the State applies the rules established for evaluating the
quality of the home.
We also think it significant that Congress did not specify what the
standards for licensing and approval had to be. Nor did Congress
specifically give the Secretary authority to prescribe standards for
covered institutions although it has done so in other programs under the
Act. /4/ Instead, Congress referred, in section 408, to the state
function of licensing, and to the "standards established for licensing,"
implying that the standards would be established by the states. Even if
section 408 were read to permit the Secretary to prescribe standards for
state licensing of foster family homes, however, the Secretary has not
done so. /5/ Thus, under the Act and the regulations, standard-setting
is left up to the states.
(7) This conclusion is buttressed by the following statement made by
the Commissioner of Social Security:
The Act clearly delegates to the States the authority to determine
the requirements for licensing and to license or approve the homes as
meeting the requirements for licensing. It does not authorize the
Department of Health and Human Services or its predecessor agency to
second-guess the State in determining what such requirements should be
or the form or manner in which license or approval should be expressed.
/6/
When this statement was called to the Agency's attention, the Agency
stated that it did reflect Agency policy. /7/ The Agency asserted,
however, that it was not inconsistent with the disallowance here since
nothing in it implies that the standards for approval and licensing can
be different. This is a correct assertion, but ignores the fact that
SSA here is substituting its own judgment for that of the State in
determining what parts of the State regulation are "standards" and
in
determining the form and manner in which approval should be expressed.
To that extent, the disallowance here is not supported by the Act, and
is inconsistent with the Agency's own policy statement.
C. Some differences in procedures are permissable
The State justified the differences between its approval and
licensing procedures by pointing to statutory language which indicates a
preperence for placing dependent children with relatives as opposed to
other possible placements. See section 408(f) of the Act. The Supreme
Court in the Youakim case found that, consistent with this preference,
relatives could receive AFDC-FC payments and this explained why Congress
permitted use of an approval process rather than (8) requiring that all
foster family homes be licensed. 440 U.S. at 140-142.
We agree with the State that the Act gives the State discretion to
use a different process for approval than for licensing and that that
process can be less formal than licensing. Indeed, SSA acknowledged
that some differences were appropriate. The crux of SSA's position on
the State's procedures, however, was that the State's approval process
was so deficient as compared to the licensing process that the State
could not possibly be applying the same standards in the two processes.
Since the Act does require that the same standards be applied, there is
some validity to the proposition that the State's discretion to use
different procedures is limited.
Thus, we conclude that the State had discretion to determine what the
standards for foster family homes would be and to use a less formal
process for approval of relative boarding homes than for licensing other
homes, so long as the same standards were applied.
III. Was the State's approval process deficient?
In this section, we analyze whether the State's approval process was
so deficient that it necessarily resulted in application of "lesser,
more subjective" standards than those used for licensing. The context
for our analysis is that the State has some discretion to use different
procedures, consistent with the statutory preference for placing
children with relatives, and that SSA policy generally is not to
interfere with the form and manner in which a state expresses approval.
SSA's attack on the approval process was first directed at the
adequacy of the approval checklist, as compared to the detailed
provisions of the licensing regulation. Later, SSA pointed to manual
provisions requiring licensing staff to prepare an outline and complete
a licensing study, arguing that if licensing experts needed to do this
to properly apply the standards, how could untrained, less experienced
caseworkers properly assess a relative boarding home using only the
checklist. Below, we first discuss the adequacy of the checklist and
then address the other differences in how the workers prepare for,
conduct, and document the home studies.
A. The checklist is adequate
The regulation contains more particulars about home conditions than
the approval checklist, and SSA inferred from this that the State was
not applying the detailed standards of the regulation but was applying
instead more generalized, subjective standards. The State asserted that
the checklist (9) was merely meant as verification that the home met the
more detailed health and safety standards, of which the caseworkers were
aware.
The State's position is supported by the wording of the checklist,
which prefaces a summary list of conditions the home must meet with the
following statement: "The home meets minimal health and safety
standards such as: . . ." Appeal File, Tab 3. This makes it clear that
the checklist itself is not the source of the standards. The list that
follows summarizes provisions from the regulation. While the list does
not mention all of the details of the regulation, nor use precisely the
same wording, we think it is sufficient to remind the caseworkers that
the standards should be applied. For example, some of the provisions of
the regulation specify certain conditions under which children of
various ages and sex can share the same bedroom or bed. The checklist
refers to "Safe place for child to sleep considering the child's age and
sex." By its very design, the form is a "checklist" to certify
that
health and safety standards were met and, therefore, we would not expect
it to contain all of the details of the standards.
The State admitted that some of the licensing regulation's provisions
were not reflected on the checklist. All but one of these are
provisions which the State said were not standards, however. For the
reasons discussed in section IV below, we addept the State's
interpretation regarding these provisions. The one other provision,
which the State did consider a standard, concerns food products from
home-raised animals and inoculation of pets. The checklist arguably
covers this standard very generally by mentioning the child's "health
needs." Even if this provision is not reflected on the checklist,
however, we do not think this necessarily suggests that it was not
applied in practice. This provision applies only if the family raises
animals or has pets, and the State has said that, if that contingency
existed, its caseworkers would observe that and obtain information
concerning whether the standard were met. We do not think the checklist
has to specifically identify such a standard, which applies only in
limited circumstances anyway. /8/
(10) The purpose of the checklist form is clearly not to substitute
for the regulation's standards but merely to certify that they were
applies. A factor in why we consider the checklist adequate for that
purpose is that there is nothing in the record or applicable regulations
to indicate that SSA ever established any specific format for how
approval should be documented. /9/ In the absence of any specific
cocumentation requirment, and given SSA's own policy not to second-guess
the form and manner in which approval is expressed, we think that the
checklist is adequate to document that the regulation's standards were
applied and were met.
Moreover, to the extent the checklist is an integral part of the
process of applying the standards, we do not agree with SSA that it is
clearly inadequate as compared to the outline which a licensing staff
member is supposed to prepare. The outline is to follow "the topical
headings and sub-headings of the standards applicable to the facility to
be studied." SSA Exhibit 9, section 5.3. An examination of these
headings and sub-headings in the regulation for licensing foster family
homes indicates that they are, on the whole, even more general in nature
than the items on the approval checklist. This, use of these headings
in an outline provides no more assurance that the details of the
regulation are actually applied in licensing than the checklist provides
for approval.
B. SSA's view of the other differences is not supported
Much of SSA's argument concerning the relative merits of the two
processes was based on speculation concerning the qualifications of the
two types of workers and what this meant. The State, on the other hand,
provided evidence that the caseworkers approving the relative boarding
homes were qualified social workers with master's degrees or the
equivalent. The record also shows that some of the caseworkers had
licensing experience or received training in the licensing standards.
In addition, SSA did not dispute the State's contention that the reason
the licensing staff members had to prepare an outline was that they
performed studies on various types of institutions, such as child care
institutions and day care centers, each of which had its own detailed
set of standards; the caseworkers, on the other (11) hand, are
responsible for knowing only the foster family home standards. The
State also explained, without contradiction, that the caseworker usually
has gathered a significant amount of information on the appropriateness
of the relative placement prior to even visiting the home. Thus, the
home study is not as critical in the approval process, as in licensing.
While the completion of a detailed licensing study is not required
for approval as for licensing, we do not agree with SSA that this
implies that the standards cannot be applied without such a study. An
examination of the licensing requirements indicates to us that the
differences are as easily attributable to due process considerations --
the need to document reasons why a license is denied -- as to a concern
that such steps are necessary to ensure application of the standards.
We think that the State is correct that SSA originally based its
disallowance on a superficial comparison of the checklist and regulation
without any real analysis of the content and purposes of the two
documents; much of SSA's later comparison of the two procedures failed
to consider the underlying purposes.
Thus, we conclude that the State's approval process was an adequate
means for applying the licensing standards to relative boarding homes.
IV. What are the State's standards for licensing?
As noted above, the parties disagreed about whether certain parts of
the licensing regulation were in fact standards to be applied. In
resolving this issue, we start with the fact that it is the State's
regulation. Previous Board decisions have recognized that some
deference should be accorded to a state's interpretation of its own law
and regulations, so long as that interpretation is reasonable and does
not conflict with federal program purposes. Florida Department of
Health and Rehabilitative Services, Decision No. 414, April 29, 1982.
/10/ Further, according such deference may be particularly appropriate
where, as here, a state has broad discretion to determine the content of
its regulation and does not have to fashion that regulation to respond
to any specific federal requirements.
In this section, we first describe the State's licensing regulation
generally and then set out the reasons why we (12) think the State's
interpretation that certain parts of its licensing regulation are not
standards is resonable, and should be accorded deference.
A. General description of the regulation
The State's licensing regulation (DCFS Regulation 5.12, Appeal File,
Tab 2) is entitled "Minimum Standards for Licensed Foster Family Homes,"
yet none of the provisions is clearly labeled as a "standard." The
first
few pages of the regulation are devoted to matters such as the statutory
authority for licensing and the form and manner of application for a
license. The last few pages apply to adoptive homes only.
The sections in between contain some requirements the foster home
must meet to be licensed (for example, the home "shall be safe, clean,
well-ventilated, properly lighted and heated," p. 3), some duties which
are placed on the foster parents after a child is placed with them (for
example, keeping the supervising agency informed of any health problems,
p. 8), and some requirements which are placed on the caseworker
responsible for the foster child (for example, promptly investigating
reports of mistreatment of the child, p. 9).
The State did not dispute SSA's position that the particular,
detailed desriptions in the regulation about what the conditions of the
physical environment should be like were standards to be applied, merely
asserting that its checklist reflected these standards and verified that
they were met. We have addressed this assertion above. The specific
provisions which SSA said were standards and the State said were not are
the following: a requirement that license applicants submit medical
reports on foster family members; provisions relating to the maximum
number of children in a foster family home; a provision regarding
confidentiality of information about the foster child; and a
requirement for a physical examination of the child. SSA also thought
that a requirement that a license applicant consent to a criminal record
check was a standard, even though this requirement does not appear in
the regulation, because it appears in a State manual and is referred to
on the State's Licensing Module form.
B. The State's interpretation is reasonable
The provision concerning medical reports appears under the heading
"Health of Foster Family." The text of the provision does not specify
any particular degree of health that the foster family must have, nor
state that any particular health defect would be a basis for denying a
license. Instead, the provision requires that, prior to licensing, the
prospective (13) foster parents must furnish medical reports containing
certain information on each member of the household. The State
contended that the medical report requirement is simply one means of
determining whether the family meets the general standard of being
healthy. A caseworker evaluating a relative boarding home would obtain
information on the health of the family, the State asserted, and if a
problem were noted, would require medical examinations. Reply Brief, p.
17. SSA's position is that, if the State is not requiring a medical
report in every instance, it is not applying the same standard as for
licensing but a more subjective one.
We do not think that the State's reading of the medical report
requirement is unreasonable. While SSA is probably correct that
caseworker observation might be less satisfactory that a medical report
in determining whether a health defect actually exists, netither the
caseworker nor the licensor has any real guidance from the regulation
about what kind of a defect is disqualifying. The provision relies on
the judgment of the licensors to evaluate the results of the medical
report. Thus, the State was not unreasonable in also relying on the
caseworkers to observe if there is a need for a medical examination and
then to judge whether to approve the relatives as sufficiently healthy.
There is no evidence in the record to show that this resulted in
approval of homes which would not have been licensed, and the State has
given considerable programmatic reasons why it does not wish to impose
unnecessary administrative burdens on relative boarding homes.
Requiring medical reports in every instance might have a chilling effect
on the relative's willingness to take the foster child and, therefore,
frustrate the State's efforts to place the child in a setting Congress
has said is the preferred one.
We also find reasonable the State's position on the other
requirements that SSA thought were standards. The reasons are indicated
below.
* Maximum number of children. The State said that provisins about the
maximum number of children in a foster family home and related
requirements (e.g., when child care assistants are required) simply did
not apply outside of the licensing context. This view is supported by
an analysis of the regulation. The provisions regarding numer of
children are derived from a State statutory requirement that facilities
are licensed as foster family homes only if they receive "no more than
8
children unrelated to them, unless all the children are of common
parentage." (Presumably, a license as a child care institution would be
required if more children were to be served.) This statutory requirement
provides a basis for determining how many unrelated children a foster
family (14) home can be licensed to receive, and the State is reasonable
in determining the provisions pertinent to this requirement would not
apply as a standard to a home which is by definition that of a relative.
/11/
* Confidentiality. The regulation states that information about the
child "shall be regarded and handled as confidential by all persons
involved in his care." Prior to licensing, the State would apparently
obtain from the prospective caretaker an assurance to maintain
confidentiality about the child and his family and background. SSA took
the position that the State should therefore do the same thing in the
approval process. The State said that there was no need to obtain the
same kind of assurance from a relative as from a caretaker who was
unrelated to the child. We think that the State's position is
reasonable. The same concerns about confidentialty would not apply
where the caretaker is a relative as where the caretaker is a
non-relative to whom the State is giving information to which that
person would not otherwise have access. In any event, the regulatory
provision involved here is one which refers to a duty a caretaker would
have only after a child is actually placed in a home and, therefore, is
distinguishable from the types of conditions a home must meet before it
can be licensed or approved.
* Physical examination of the child. SSA thought it was significant
that the checklist did not mention physical examination of the child
although the regulation requires that one be performed. The wording of
the regulatory provision, however, indicates that it is not a
requirement placed on the prospective foster home as a condition for
licensing but a duty of the caseworker to meet prior to placing the
child, or within a short time after placement.
* Criminal record checks. SSA thought that the State needed to obtain
consent for criminal record checks on relatives merely because it did
this with license applicants. The form for authorizing criminal record
checks states, however, that the background check "is not intended to
substitute for the judgment of the licensing representative." SSA
Exhibit 15. As with the medical reports, we think that, without
imposing this procedural requirement, the State's caseworkers can make a
judgment concerning whether the relative is of proper character.
(15) In summary, we conclude that the State's interpretation of its
regulation is reasonable. It is not inconsistent with the plain wording
of the regulation, and in most instances is supported by that wording.
Further, it is consistent with the notion that standards are measures of
quality, as distinct from procedures, and with the statutory requirement
that the same standards be applied for approval and licensing.
Therefore, we think that the State's interpretation should be accorded
deference.
V. Does other evidence support the disallowance?
Above, we concluded that SSA incorrectly determined that the State's
approval process was deficient and that certain parts of the licensing
regulation were standards which had to be applied. There still might be
a question about the allowability of the State's claim for payments to
relative boarding homes if other evidence showed that in practice the
State was not applying those parts of the licensing regulation which the
State acknowledged were standards, or that the State was generally
failing to document that it had done so. Thus, in this section, we
examine the case file review and caseworkers' statements relied on by
SSA. /12/
(16) A. The case file review
SSA conducted a review of 79 case files for relative boarding homes
to ascertain whether the approval checklist was used during the
disallowance period and whether case file narratives addressed areas
which were on the licensing form but not on the approval checklist.
Agency Exhibit 6. The SSA findings used as support for the disallowance
were that 1) only two of the files contained medical report forms; 2)
only 33 percent of the files contained any narrative, and these varied
from in-depth discussions of home conditions to mere statements that the
homes were adequate and/or met minimum health and safety standards; and
3) 22 percent of the files did not contain the approval checklist.
In its letter requesting that the State make some files available for
review, SSA has stated that "cases should be randomly selected but need
not be statistically valid as we do not intend to extrapolate the
results of the review to the universe of relative boarding home cases."
Agency Exhibit 7. The State alleged that this was exactly what SSA was
attempting to do in this disallowance. /13/
SSA did disallow the State's entire claim for the time period in
question, but we do not think that SSA's action here is tantamount to
extrapolation from a sample. In some cases, a non-statistical review
can be sufficient to show a general failure to meet applicable
requirements, raising a presumption that all costs of a certain type are
unallowable unless shown to be allowable. See, e.g., New Jersey
Department of Human Services, Decision No. 416, April 29, 1983. The
circumstances here, however, indicate to us that the case file review is
not reliable as a basis for questioning the State's entire claim.
(17) The major reasons why we find the review deficient are as
follows:
* The form used by the reviewers to evaluate the case files shows
that the reviewers were measuring them against the SSA view of what the
standards were. As explained above, we do not think that the fact that
the files did not all contain medical reports, criminal record checks,
and evidence that other licensing procedures were followed means that
the State was failing to apply the licensing standards.
* SSA had also prejudged what type of narrative had to be in the
files, comparing the narratives to licensing studies. We have already
determined that this kind of written documentation was not required.
* The State representatives examined most of the case files and found
higher percentages which had narratives and in which the approval
checklist was present. Although the State's response to the review was
very general, so were SSA's findings, which were presented in summary
form without any detailed report or documentation of specifics.
* In most cases where the approval checklist was absent, the State
could explain it. According to the State, where the checklist was
absent either: 1) the child was an out-of-State placement; 2) the home
was a licensed home and the licensing form was present; 3) the form was
in a sibling's file; or 4) the child was placed with the relative prior
to the time the State began using the checklist.
This is not to say that the review does not raised some questions
concerning allowability of some of the State's payments. For two of the
cases the State reviewed, the State had no explanation for absence of
the form from the file other than that the form might have been lost.
We have no idea, however, what amount of AFDC-FC payments are related to
these cases and decline to uphold part of the disallowance on this
basis. However, SSA is not precluded by our decision from reexamining
the State's files to determine whether a checklist or some other
adequate documentation of approval exists for these cases. Where the
explanation is that the child was placed out of State, SSA may examine
whether there is documentation that approval standards of the state in
which the home is situated were met. See 45 CFR 233.110.
While the case file review might be sufficient to raise some question
concerning whether the form was present in every file, however, it does
not support the position that the State's entire claim for FFP for
relative boarding homes should be disallowed. Given our conclusions
above, upholding the State's view of what its standards were, the case
file (18) review simply does not show that the State was applying lesser
standards to relative boarding homes than to licensed homes, or
generally failing to document that it had done so.
B. The caseworkers' statements
In the case leading to Decision No. 378, OHDS relied on certain
caseworkers' statements submitted by the State. OHDS argued primarily
that, because the caseworkers did not state specifically that the
standards for licensing and approval were the same, but used words such
as "similar," this meant that the State in practice did not apply
the
licensing standards to relative boarding homes. The Board found that
the caseworkers' statements, while not entirely clear, on the whole
supported the opposite conclusion. The Board noted that the use of the
term "similar" was not significat since the statements "generally
concern the differences in the procedures followed for licensing and
approval." Decision No. 378, p. 5. Here, SSA challenged the Board's
findings, presenting a more complete analysis of what in the
caseworkers' statements SSA thought supported a conclusion that the
State's practice was to apply lesser, more subjective standards to
relative boarding homes.
As with SSA's review of the case files, we think that SSA's
evaluation of the caseworkers' statements is tainted by its own view of
what the standards were and what procedural diffeences were permissable.
We think that the reason the caseworkers did not explicitly state that
the same standards applied to relative boarding homes as to licensed
homes is that they were not directly asked this question. The
caseworkers were told: "Explain how reviews for placement in RBH
(relative family homes) and FFH (foster family homes) are similar and
different." Moreover, the State asked this question in response to the
first disallowance letter contrasting the length of the checklist with
the licensing regulation, and this letter stated: "If the State's
approval standards were comparable to the licensing standards, FFP would
be allowable." SSA Exhibit 3 (emphasis added). In this context, it is
not surprising that the caseworkers' statements are somewhat ambiguous
on the point of whether the standards were the same. To clarify the
ambiguities, the State has in this proceeding submitted an affidavit by
the person who procured the caseworkers' statements. Reply brief, Tab
E. This person attested that the caseworkers he interviewed exhibited a
clear understanding of the licensing standards and used them as
guidelines when completing the checklist. SSA has presented no reason
why we should disbelieve this.
Even without the affidavit, however, we would not agree with SSA's
analysis of what the caseworkers' statements imply. For example, one
caseworker stated: "Hitting those relatives (19) with exhaustive forms
and procedures in order to accept the children would most likely
discourage or prevent many relatives from taking children." Statement
#4, SSA Exhibit 13. SSA concludes that this implies that "applying the
licensing standards particulars to relative boarding homes in the same
detail" would be "too cumbersome." SSA brief, p. 22. To the contrary,
we think this statement reinforces the view that it was the forms and
procedures which differed, not the standards.
One caseworker did state that he was opposed to being trained in the
licensing standards and used the licensing standards "as a framework"
when considering placement of a child with a relative. However, we
think that SSA makes too much of this. These comments do not
necessarily mean that the worker did not apply the standards, and the
record shows that the other caseworkers were trained and some had
licensing experience. In any event, the record does not show which, if
any, of the relative boarding homes involved here were aproved by this
caseworker.
Thus, we conclude that the caseworkers' statements do not support
this disallowance.
Conclusion
For the reasons stated above, we conclude that this disallowance
should be reversed. Our decision does not preclude SSA from further
audit or review of the State's files to see whether the approval was
properly documented, consistent with our opinion. /1/ OHDS took over
administration of the AFDC-FC program when it was transferred to
a new Title IV-E of the Act, Pub. L. 96-272, June 17, 1980. SSA and
OHDS divided responsibility for disallowance of claims made under the
previous section 408 program. /2/ SSA apparently made its plain
language argument because it thought that the Board in Decision No. 378
failed to recognize that the same standards had to be applied. Decision
No. 378 states that certain parts of the regulation not directly
mentioned on the State's approval checklist concerned areas which could
have been applied during the caseworkers' home visits. The Board's
point, however, was merely that absence of specific mention of a
standard on the checklist was not determinative on the issue of whether
it was actually applied. Decision No. 378, pp. 5-6. This was not meant
to imply that different standards could be applied, and, indeed, the
Board noted that the statute appeared to require that the standards be
the same for licensing and approval. p.
"something established by authority as a rule for the measure of
quantity, weight, extent, value, or quality." Webster's New Collegiate
Dictionary, 1977 Edition (emphasis added). /4/ See, e.g.,
section 1905(a)(16) of the Act. /5/ The foster care regulations
at 45 CFR 233.110 (1976-1980) merely required generally that, for FFP to
be available, payments must be made on behalf of eligible children
"placed in a foster family home . . . licensed or approved by the agency
which is responsible for licensing or approval of such facilities in the
State where it is situated." /6/ This statement was made in a
disallowance letter dated August 23, 1983, issued to the Illinois
Department of Public Aid. When the State appealed that disallowance to
the Board, the Board offered the parties an opportunity to comment on
its relevance to the case decided here, and included the letter in the
record. See 45 CFR 16.21(a). /7/ The Agency nonetheless tried to
detract from the significance of the policy statement by pointing out
that the letter in which it appeared was drafted by an outside
contractor. The Agency admitted, however, that the letter was reviewed
and approved by the Office of the General Counsel and by the
Commissioner, who signed it. Conference Call held October 13, 1983.
/8/ Indeed, SSA did not assert that the checklist should have included
reference to another provision which applies only in limited
circumstances: a requirement that a foster home applicant running a
business enterprise at home must show that this does not interfere with
family life. Both the provision about animals and the provision about
businesses concern matters which would likely be obvious to the
caseworker investigating the home, who could then ask the requisite
questions. /9/ The State also provided an affidavit by a state
employee who had participated in developing the approval checklist,
stating that a federal representative (whose name he could not remember)
had also participated. SSA provided a counteraffidavit, stating that no
employees currently with OHDS could remember such participation.
/10/ SSA has also stated that it generally defers to a State's
interpretation of its own statutes. Associate Commissioner's
disallowance letter, Appeal File, Tab 1, p. 2. /11/ In any event, to
the extent number of children bears on the caretaker's ability
to adequately care for a foster child, it would be taken into account
under standards that the State's checklist indicates the State was
applying to relative boarding homes. /12/ In Decision No. 378, the
Board noted that OHDS had simply relied on its reading of the
caseworkers' statements submitted by the State, providing no affirmative
evidence that the State was failing to apply the licensing standards in
practice. SSA allged that the Board had improperly placed a burden of
proof on OHDS which was inconsistent with previous Board decisions. SSA
Brief, p. 27 The decisions cited by SSA, however, stand for the
proposition that grantees are generally required to maintain
documentation of the allowability of costs charged to federal funds and,
therefore, have the burden of providing such documentation in Board
proceedings. In Decision No. 378, OHDS was not challenging whether the
State could document that the homes were approved but was essentially
looking behind the State's approval to question what the State's
practice was, solely on the basis of implications drawn from the
caseworkers' remarks. The Board simply disagreed with OHDS' evaluation
of what the statements meant. This was consistent with the decisions
cited and, indeed, required by other Board decisions which have held
that the Board will not uphold a disallowance where it is not supported
by the record. See, e.g., California Department of Benefit Payments,
Decision No. 159, March 31, 1981. 13 The State also attacked the review
on the grounds that the reviewers did not have sufficient experience in
the State's program, performed the review without sufficient time to
adequately check the voluminous files, and failed to seek assistance
from State representatives although they were present in the room during
the review. SSA responded with some evidence that the reviewers were
qualified, and asserted that the 15 minutes or so for each file was
adequate. We do not reach the issue here of whether the reviewers were
qualified and devoted sufficient time to their task since we find the
review was deficient in other ways. However, we note that SSA did not
deny that it did not seek assistance from the State representatives, nor
that the review was performed under time constraints (although SSA
blamed this on the State).
NOVEMBER 14, 1984