GAB Decision 647
May 9, 1985
Louisiana Department of Health and Human Services;
Ballard, Judith A.; Teitz, Alexander G. Ford, Cecilia Sparks
Docket No. 84-200
The Louisiana Department of Health and Human Services (State)
appealed a determination by the Administration for Children, Youth, and
Families, Office of Human Development Services (Agency), disallowing
federal financial participation (FFP) totalling $3,619,701 claimed under
titles IV-A and IV-E of the Social Security Act (Act). The claim was
for maintenance payments for 931 children in foster care. The payments
were made during the period October 1, 1981 through September 30, 1983
and appeared as an increasing adjustment on the State's revised
quarterly statement of expenditures for the quarter ended September 30,
1983. The claim followed a review by the State to identify children who
had been eligible for title IV-A or IV-E funds in fiscal years 1982 and
1983 but for whom no federal funds had been claimed under these titles.
The Agency disallowed the claim on the ground that the payments lacked
"prior or simultaneous authorization of award;" i.e., there was no
determination at the time of payment that the children on whose behalf
the payments were made were eligible for assistance under title IV-A or
IV-E. The Agency took the position that prior or simultaneous
authorization was required by Section 5214 of Part IV of the Handbook of
Public Assistance Administration (HB-IV-5214). The State argued on
appeal that HB-IV-5214 was not applicable to the foster care program.
As discussed below, we agree with the State that HB-IV-5214 is not
applicable here and reverse the disallowance on that basis. Statutory
Framework The first federal foster care grant program was enacted in
1961 to supplement the already existing Aid to Families with Dependent
Children program (AFDC). Congress added to title IV-A of the Act a
provision making FFP available for payments on behalf of children who
would have been eligible for AFDC had they remained in their own homes,
but who had been removed from home as a result of a judicial
determination and placed in foster care. (Title IV-A, Section 408) This
provision was modified by Congress in 1967 to broaden eligibility to
include children whose placement had been judicially confirmed within
six months of removal from the original home. Under this amendment,
children who required immediate removal from the home, before a court
determination could be made on placement in foster care, were eligible
for assistance if they had been living at home within six months of the
initiation of judicial proceedings and had qualified for AFDC at that
time. The Adoption Assistance and Child Welfare Act of 1980, Pub. L. No.
96-272, transferred the title IV-A foster care program to a new title
IV-E of the Social Security Act. The criteria for eligibility for
foster care payments remained essentially the same. States were
permitted to shift their foster care programs from IV-A to IV-E as of
October 1, 1980 and were required to have made the transition by October
1, 1982. The State implemented its title IV-E state plan in October
1982. Of the amount in dispute, $1,361,545 was claimed under title IV-A
for expenditures in fiscal year 1982 and $2,258,156 was claimed under
title IV-E for expenditures in fiscal year 1983. HB-IV-5214 The
provision relied on by the Agency as a basis for the disallowance
appears in Part IV of the Handbook of Public Assistance Administration,
which is captioned "Eligibility, Assistance, and Services." Sections
5000 - 5999 are captioned "Payments to Individuals," and section 5000,
in defining the scope of those sections, refers to "(g)rants to States
under titles I, IV, X, and XIV. . . ." Section 5214 provides as follows:
All disbursements of assistance payments must be supported by a prior
(or simultaneous) authorization of award signed by the official or
officials charged with this responsibility. Such authorization of
award, which shall be dated, shall be an affirmative statement
indicating that the eligibility of each applicant has been established
and that a decision has been made, effective on a specific date, to
grant assistance of a specified amount as OAA, AB, AFDC, APTD or AABD.
This provision was published in its current form on August 5, 1963. /1/
In New York Department of Social Services, Decision No. 585, November
16, 1984, the Board upheld the Agency's position that HB-IV-5214 was a
"binding federal policy" with respect to claims under title IV-A of
the
Act for FFP in AFDC payments made from 1971 through 1981, although the
Board did not fully adopt the interpretation of this requirement
advanced by the Agency in that case. (Decision, p. 2) /2/
Applicability of HB-IV-5214 to the Foster Care Program Parties'
Arguments HB-IV-5214 does not mention the foster care program
specifically. The Agency took the position, however, that HB-IV-5214
was nevertheless applicable to the foster care program under title IV-A
because the foster care program was "an integral part" of the title
IV-A
AFDC program. Furthermore, the Agency argued that the title IV-A foster
care program was transferred "intact" to title IV-E, thus preserving
any
requirements previously applicable to the program. (Agency's brief,
dated March 4, 1985, pp. 2, 5) Regarding the applicability of HB-IV-5214
to the title IV-E foster care program, the Agency noted more
particularly that --
(w)here Congress, having full knowledge of a longstanding
administrative construction of a statute, revisits the statute and
leaves it untouched, the adminstrative construction is entitled to great
weight. (Id., p. 5, quoting from Robbins vs. Schweiker, 708 F. 2d 340
(8th Cir. 1983)) The State argued that HB-IV-5214 was clearly
inapplicable to its claim under title IV-E since the foster care program
under that title is separately authorized from the AFDC program which
remains in title IV-A. (State's brief dated January 14, 1985, p. 15)
The State further argued that there was no basis for finding that the
term "AFDC" as used in HB-IV-5214 implicitly included foster care,
thus
making HB-IV-5214 applicable to the State's claim under title IV-A. The
State noted that an entirely separate section of the Handbook,
HB-IV-3454.1, was devoted to a requirement for authorization of foster
care payments, and that that section did not contain any particular time
requirement for authorization. (Id., pp. 15-16) The State also asserted
that HB-IV-5214(1) and (2), which discuss in further detail the
application of the AFDC authorization requirement, as well as
HB-IV-5212, which discusses the authorization requirement generally,
refer only to situations where a needy child is living at home, and thus
are a further indication that HB-IV-5214 was not intended to cover
foster care. (State's reply brief dated March 20, 1985, p. 2) The State
also argued that HB-IV-5214 was not properly applied to the foster care
program because eligibility determinations in that program were more
complex than determinations of basic AFDC eligibility. The State noted
that, in addition to determining whether the child was or would have
been eligible for AFDC had the child remained at home, the State was
required to determine whether the child had been removed from the home
pursuant to a judicial determination or voluntary agreement, whether the
State was responsible for the child's placement and care, and whether
the child was placed in a state-licensed or approved facility meeting
federal statutory requirements. The State contended that due to the
complexity of these determinations, eligibility for foster care
"typically" cannot be established until after payments have commenced.
(State's brief dated January 14, 1985, pp. 16-17) Finally, the State
argued that HB-IV-5214 was inconsistent with the eligibility scheme
established for foster care by the Act. The State contended that, under
the 1967 amendments to the Act, there was "a six-month period during
which a child's eligibility for FFP could remain in limbo, only to be
settled when a judicial determination was reached and when the child was
placed in an approved facility." The State argued that a prior or
simultaneous authorization requirement has no place "where a child meets
the conditions for federal funding over a period of time and where
eligibility determinations consequently involve reconstructing the
child's past. . . ." (State's brief dated January 14, 1985, p. 21)
Discussion We conclude that HB-IV-5214 is not properly applied to the
foster care program under either title IV-A or title IV-E of the Act.
Although the term "AFDC" might in other contexts be properly read
to
include the foster care program as well as the basic AFDC program, that
reading is in this case inconsistent with other language in the
Handbook. Moreover, since a requirement for prior or simultaneous
authorization has the practical effect of limiting FFP in foster care
payments in cases where Congress clearly intended it to be available,
any ambiguity with respect to the meaning of the term "AFDC" here
should
be resolved against extending it to cover the foster care program. Our
conclusions are discussed more fully below. We find it persuasive that
HB-IV-5214 refers to circumstances which are unique to the basic AFDC
program. Paragraph 5214(1) requires in pertinent part that --
(a)n authorization of award for AFDC must indicate the name of the
grantee-relative, or emergency payee, the name of the needy relative or
relatives (grantee or other) included in the group to whom the Federal
matching formula is to be applied, the number and dates of birth of the
eligible children and the amount of the aggregate award. Paragraph
5214(2) states:
Authorizations of award which cover more than one recipient in any
category or combination of categories, must show the name of each
recipient and the amount of the award attributable to each in each
category, except that for AFDC only the aggregate amount of the award
for the family need be shown. These provisions clearly pertain only to
the basic AFDC program, in which payments are made to meet the needs not
only of the dependent child but also of eligible relatives with whom the
dependent child is living. (See 45 CFR 233.10(b) (2) (ii)) It has no
relevance to the foster care program, in which payments are related to
the cost of the child's care in a foster family home or child-care
institution and are not based on the needs of the foster parents or
other party responsible for the child. (See 45 CFR 233.110( b)) Further
evidence that HB-IV-5214 was not intended to cover the foster care
program is found in HB-IV-5212, which discusses the purpose of an
authorization of award and further states:
In AFDC, any one of the needy relatives, specified in the Social
Security Act, with whom a dependent child "is living," may be specified
on the authorization of award as the eligible relative for recipient
count purposes. This statement assumes that the child on whose behalf
the payments are made is living with a relative, which is obviously not
the case for every child in foster care. Thus, the term "AFDC" in
this
section as well as related section 5214 must have been intended to refer
only to the basic AFDC program. The State also argued that the existence
of a separate Handbook section dealing specifically with foster care
authorizations showed that HB-IV-5214 was not intended to apply to the
foster care program. The State cited HB-IV-3454.1 as the pertinent
provision. /3/ However, this section was omitted from the Handbook as of
February 27, 1971. The Handbook instead refers the reader to the foster
care regulations at 45 CFR 233.110, published on the same date. These
regulations do not contain any provision dealing with authorizations.
Nevertheless, we think that there is some support here for the State's
position. The existence at one time of HB-IV-3454.1 strongly suggested
that HB-IV-5214 was not intended to cover the foster care program since
a separate section on foster care authorizations would presumably not be
necessary if HB-IV-5214 covered foster care. The subsequent deletion of
this section from the Handbook would not then enlarge the scope of
HB-IV-5214, since that section remained unchanged. Moreover, we cannot
infer from the absence in the foster care regulations of a requirement
for authorizations that HB-IV-5214 became applicable to foster care when
HB-IV-3454.1 was deleted. The preamble to the foster care regulations
indicated that the Agency intended to incorporate therein requirements
which had up to that time been contained in the Handbook. (See 36 Fed.
Reg. 3860) This could reasonably be taken to mean that any Handbook
requirements pertaining to foster care which were not transferred to the
Code of Federal Regulations were no longer binding.
We also agree with the State that a requirement for prior or
simultaneous authorization is inconsistent with certain eligibility
criteria unique to the foster care program, in particular, the
requirement that the child have been eligible for basic AFDC grants had
the child remained at home. As the State pointed out, the relevant
period of time for purposes of this requirement could under the terms of
the statute be as much as six months after the child's removal from the
home and placement in foster care. The State could not begin to
determine whether this requirement was satisfied until the initiation of
judicial proceedings to determine whether continuation in the home of a
relative was contrary to the child's welfare, however, since the statute
in effect requires that the six-month period be measured from the time
of the initiation of such proceedings backwards. If a requirement for
prior or simultaneous authorization were applied, FFP would not be
available in foster care payments made even after judicial confirmation
of a foster care placement meeting all federal requirements, pending
establishment of AFDC eligibility. This result seems contrary to the
intent of Congress to broaden eligibility for foster care payments to
include children who are removed from the home prior to judicial
proceedings. /4/
The considerations noted above apply to the foster care program both
during the time that it was a part of title IV-A of the Act and after
its transfer to title IV-E. We note nevertheless that there is no basis
whatsoever for the Agency's argument that HB-IV-5214 applied to the
title IV-E foster care program. The foster care program was severed
from the AFDC program upon the transfer of the former program from title
IV-A to title IV-E. Each title contains its own authorization of funds
to be used for entirely different purposes. The only remaining link
between the programs, although not an insignificant one, is that
eligibility for the foster care program is conditional in part on the
eligibility of the child for AFDC. We see no merit in the argument that
Congress sanctioned the application of HB-IV-5214 to the foster care
program merely because it transferred that program virtually intact to
title IV-E, since there is no evidence that Congress was even aware of
HB-IV-5214. Accordingly, our conclusion that the term "AFDC" in
HB-IV-5214 does not apply to the roster care program applies a fortiori
as of the time that that program was transferred to title IV-E. In view
of our conclusion, we need not address the State's argument that it
complied with HB-IV-5214 as that requirement was interpreted by the
Board in Decision No. 585. (State's brief dated January 14, 1985, pp.
22-24; State's reply brief dated March 20, 1985, p. 4) The State also
stated that --
(t)he State does not agree with the Board's conclusion in Decision
No. 585 that HB-IV-5214 states a valid and binding policy. Rather, it
believes that New York was correct in its assertions that HB-IV-5214 was
effectively revoked and was regarded by DHHS as obsolete. The State
indicated, however, that it would not reargue these questions in light
of the recency of Decision No. 585. (State's brief dated January 14,
1985, p. 14, n. 10) In view of our conclusion that HB-IV-5214 does not
apply to the foster care program, we would not address this matter even
if the State chose to reargue it. We note in any event that Decision
No. 585 decided only that HB-IV-5214 "remained in effect during the
period covered by the State's claim," (Decision, p. 9), and did not
preclude the possibility that HB-IV-5214 was no longer a viable policy
during the later time period in question in the instant case.
Conclusion For the foregoing reasons, we find that the requirement in
HB-IV-5214 for prior or simultaneous authorization of award was not
applicable to the foster care program and reverse the disallowance. Our
conclusion here does not preclude the Agency from disallowing the
State's claim on other grounds after a review of the cases involved in
the claim. /5/
/1/ In proceedings on another appeal, the Agency asserted,
without providing supporting documentation, that HB-IV-5214 was
originally published in 1947 and was preceded in 1941 by a provision
with similar effect in the Social Security Board's Guide to Public
Assistance Administration. (New York Department of Social Services,
Decision No. 585, November 16, 1984, p. 3, n. 3) If this was the case,
then this requirement would have pre-dated the establishment of the
federal foster care program. /2/ In the instant case, the
Agency's disallowance letter cited as authority for the requirement for
prior or simultaneous authorization of award language in titles IV-A and
IV-E authorizing FFP in amounts expended "as aid to families with
dependent children" (section 403(a) of the Act) and "as foster care
maintenance payments" (section 474(a) of the Act). (Letter from
Livingston to Robinson dated August 14, 1984, p. 4) However, the Agency
in its brief relied instead on HB-IV-5214, citing the Board's conclusion
in Decision No. 585 (at p. 12) that there was no such requirement in the
statute or regulations. (Agency's brief dated March 4, 1985, p. 4)
/3/ HB-IV-3454.1 provided: The payment for foster care on behalf of an
eligible child may be authorized by (1) revising the AFDC authorization
or (2) by preparing a separate document for such authorization. In
either case, the authorization of payment for assistance is a formal
agency record signed by the appropriate official of the agency showing
the name of each eligible child; the amount to be paid for foster care;
the name of the payee foster home parent, children's institution, or the
cooperating agency providing the use of its foster care facilities; and
the name of the vendor of medical care and the effective date of
payment. The Agency did not dispute the State's assertion that this
section did not require the prior or simultaneous authorization of
payments as foster care nor do we see anything in the language of this
provision which could reasonably be understood to impose such a
requirement. /4/ The Agency indicated in another case argued
before the Board that FFP was available in foster care payments
beginning at the time of a child's removal from the home provided that
the other eligibility criteria were satisfied within six months.
Michigan Department of Social Services, Decision No. 589, October 31,
1984, p. 8, n. 9. This position would substantially undercut a
requirement for prior or simultaneous authorization. However, since
neither of the parties developed this point in the instant case, we do
not rely on it to support our conclusion that HB-IV-5214 was not
applicable to the foster care program. /5/ The Agency initially
stated that, should the State prevail on the "retroactive certification"
question, its claim would be reduced to $3,048,598 FFP. The Agency had
projected $571,103 FFP in unallowable costs based on a random sample of
200 of the 931 cases claimed. (State's appeal brief, Exhibit B) The
State argued that the Agency could not use extrapolation from a
statistical sample to determine that a portion of the claim involved
payments for ineligible children. The State cited in support of its
position Louisiana Department of Health and Human Resources, Decision
No. 580, October 22, 1984. (State's brief dated January 14, 1985, p.
30) Whether the Agency may use extrapolation from a statistical sample
to estimate the unallowable costs claimed is an issue not ripe for
decision in the instant case, however, since the Agency did not actually
rely on its extrapolation as support for the disallowance. (Agency's
brief dated March 4, 1985, p. 8) We note, however, that it is not clear
that the factors considered dispositive in Decision No. 580 are present
here -- where there is a retroactive claim and the objective of sampling
would not be to identify errors in the State's original determinations
of eligibility for foster care payments but rather to determine for what
portion of the retroactively claimed cases the State's review correctly
determined an error had been made. Moreover, the State and the Agency
could certainly agree that it is more acceptable to both parties to
conduct a sample rather than review the entire 931 cases.
JULY 18, 1985