Department of Health and Human Services
DEPARTMENTAL APPEALS BOARD
Appellate Division
SUBJECT: Pennsylvania Department
DATE: September 4, 1990
of Public Welfare Docket No. 90-44
Decision No. 1190
DECISION
The Pennsylvania Department of Public Welfare (Pennsylvania or State)
appealed a decision by the Family Support Administration (FSA or Agency)
to disallow $430,746 in medical assistance expenditures which
Pennsylvania claimed under its Refugee Resettlement Program. FSA
disallowed the claims because they were not filed within one year as
required by 45 C.F.R. 400.210(a).
For the reasons set forth below, we uphold the disallowance.
Background
On September 28, 1989, the State submitted a financial status report (SF
269) to FSA in connection with Grant No. G-88-AA-PA-3100, for the
State's Refugee Resettlement Program, which had been awarded for the
period from October 1, 1987 to September 30, 1988. The report listed no
expenditures for medical assistance, but listed unliquidated obligations
of $398,572. On December 13, 1989, the State submitted another
financial report enclosing a letter advising the Agency that the report
included medical assistance costs which had not been previously claimed,
but had been reported as obligations. This report listed expenditures
of $98,521 and $332,225 for refugee medical assistance, for a total of
$430,746. Under the Refugee Act of 1980, 1/ states can receive
reimbursement for expenditures on behalf of eligible refugees, including
expenditures for medical assistance. There is no dispute that the
expenditures at issue were for medical assistance to refugees or that
the State submitted a financial report, on which these expenditures were
listed as an unliquidated obligation, prior to the end of the federal
fiscal year in which the grant was awarded. The issue is whether the
State, by listing these expenditures as an unliquidated obligation,
"claimed" them for purposes of receiving federal funding.
FSA argued that the State did not claim these expenditures within the
time period required by 45 C.F.R. 400.210(a). It asserted that the
regulation codified a May 11, 1984 Agency policy which, like the
regulation, required states to file a financial status report reflecting
the liquidation of obligations within one year after the close of the
relevant fiscal year or to forego claims for expenditures made pursuant
to such obligations.
The State argued that the Agency's policy is contrary to regulations and
has no basis in principles of grant accounting. State Br., p. 2. The
State also asserted that "a report of an unliquidated obligation is a
claim" (State Br., p. 1) and argued that it therefore claimed these
expenditures by reporting them as an unliquidated obligation on its
September 28, 1989 financial status report. 2/
Analysis
I. The State's claim was untimely.
The federal regulations pertaining to the Refugee Resettlement Program
are contained in 45 C.F.R. Part 400 (1987). Section 400.210 provides
the time limit for filing of state claims:
Federal funding is available for a State's expenditures for
assistance and services to eligible refugees for which a claim is
filed no later than (a) one year after the end of the Federal
fiscal year in which the grant was awarded in the case of a grant
for cash assistance, medical assistance, and related administrative
costs, . . . .
There is no dispute that the grant involved in this case was for items
covered by this provision of the regulation. The published regulation
was binding on the State, and this Board is also bound by its
provisions. 45 C.F.R. 16.14. Therefore, the only issue in this appeal
is whether the State filed a claim for federal funding within the
one-year period after the end of the appropriate fiscal year.
The grant was for the period from October 1, 1987 to September 30, 1988,
or fiscal year (FY) 88. Therefore, to be timely any claim for federal
funding had to be filed within one year after the end of FY 88, or no
later than September 30, 1989. 3/ The issue before us is whether the
State filed a claim on or before that date.
There were two financial status reports (SF-269) filed by the State for
FY 88. The second, dated December 13, 1989, was more than one year
after the end of FY 88, and therefore untimely. The only remaining
question is whether the first report, filed on September 28, 1989 (and
therefore within the one-year time limit), was a "claim" for the
expenditures at issue.
This September 28, 1989 financial report (Agency Ex. 1) reported no
expenditures for medical assistance, but reported unliquidated
obligations totalling $398,572. The State argued that reporting these
"unliquidated obligations" on the report constituted a claim for federal
funds.
The State's position is clearly an afterthought. When it filed the
report which was too late (Agency Ex. 2), the forwarding letter gave the
following explanation:
This report includes medical assistance costs that were not
previously claimed, but reported as obligations . . . .
(Emphasis added.)
Thus, the State itself recognized that an obligation was not the same as
a claim.
The State relied on the Board's leading decision on timely claims, New
York State Dept. of Social Services, DAB No. 521 (1984), and cited also
to 45 C.F.R. 95.13(b). The short answer to the State's arguments is that
Part 95 (implementing section 1132 of the Act) provides generally for a
two-year time limit for filing claims under certain specified public
assistance programs, of which the Refugee Resettlement Program is not
one. Neither these regulations nor our decisions pertaining to these
regulations (including New York) have anything to do with this case,
which is governed by specific regulations.
If the State was referring to the timely claims provisions of Part 95 by
analogy, its argument was still wholly without merit. So far as we can
determine, 4/ the State appeared to be arguing that we said in New York
that a claim was a request for federal financial participation; the
report of an obligation was a request for federal funding and therefore
a claim.
The fallacy in this argument is that the timely filing requirements of
45 C.F.R. Part 95 (as well as the requirement in section 45 C.F.R.
400.210) refer to claims for expenditures, not for obligations. The
particular regulation cited by the State, 45 C.F.R. 95.13(b), states
that an expenditure for services under Title XIX of the Social Security
Act is considered as made in the quarter in which a state agency made a
payment to the service provider.
An "unliquidated obligation" is by definition, as well as in common
parlance, an obligation to pay, not an actual payment or expenditure, at
least for a grantee on a cash basis. The definition regulation at 45
C.F.R. 74.71, applicable to grants under the Refugee Resettlement
Program, states that "unliquidated obligations" --
for reports prepared on a cash basis, are the amount of obligations
incurred by the grantee that has not been paid . . . .
(Emphasis added.)
The State here was on a cash basis, as shown on its financial reports.
Agency Exs. 1 and 2. By definition, its unliquidated obligations had
not been paid, and therefore could not be "expenditures". 5/
Since the only report listing actual expenditures, rather than
unliquidated obligations, was not filed within the one-year time limit
of the regulation, the disallowance was correct.
II. The Agency's policy is not contrary to grant principles.
The Agency's policy with respect to unliquidated obligations was
transmitted to the states in a memorandum entitled "Consolidated ORR
Policy and Procedure with respect to ORR Grantee Unliquidated
Obligations" in May 1984. States were advised that they had one year
from the close of the federal fiscal year to revise their financial
status reports and that at the end of the year, remaining unliquidated
obligations would be treated as unobligated balances and lapsed. Agency
Exs. 3 and 4.
Contrary to the State's arguments, the Agency's policy is in keeping
with the basic principles of grant administration to insure fiscal
responsibility and grantee accountability. This type of limitation,
with respect to unliquidated obligations, enables the federal
administrator of a grant to insure that funds are being expended on the
program and to compute future grant awards. Furthermore, this same
provision was included in the Standard Terms and Conditions applicable
to ORR grants. Agency Ex. 6, par. 5.
III. The Board is not required to remand this case.
The State indicated that we should remand this case for consideration of
a waiver. The State cited Arizona Dept. of Economic Security, DAB No.
386 (1983), in support of its argument that "a disallowance must be
remanded where the Agency has the power to grant waivers." State Br.,
p. 3.
The State misinterpreted the Arizona decision. That case did not hold
that the Board was required to remand a case for consideration of a
waiver. In Arizona, the Agency had refused to consider a waiver because
the matter was before the Board. Since the Board in its discretion
determined that, in any event, the record was insufficient with respect
to certain other issues, it remanded the case to allow the State to seek
a waiver pursuant to 45 C.F.R. 95.19, prior to the Board's determining
the other issues in the case.
As we pointed out above, 45 C.F.R. Part 95 is not applicable here.
Moreover, the record is sufficient to determine that the disallowance
should be upheld, therefore, no remand is dictated by our decisions.
The regulations concerning waivers with respect to the Refugee
Resettlement Program are found at 45 C.F.R. 400.300 and state:
If a State agency administering a plan approved under this part
demonstrates, to the satisfaction of the Director, that it cannot
reasonably comply with a requirement of this part, the Director may
waive such requirement with respect to such State, unless required
by statute, if the Director determines that such waiver will
advance the purposes of this part. It is clear from the language
of the regulation that the granting of a waiver is within the discretion
of the Director of ORR and it is that person to whom a request for
waiver must be directed. There has been nothing to prevent the State
from seeking a waiver during the pendency of this case, nor is it
precluded by this decision from requesting a waiver.
Conclusion
Accordingly, we uphold the disallowance in the amount of $430,746.
___________________________ Judith A.
Ballard
___________________________ Norval D. (John)
Settle
___________________________ Alexander G.
Teitz Presiding Board Member
1. On March 17, 1980, the Immigration and Nationality Act was amended
by the Refugee Act of 1980 (Public Law 96-212 codified at 8 U.S.C.
1522), to revise procedures for the admission of refugees and to
establish a uniform base for the provision of assistance to refugees.
Section 311 of Pub. L. 96-212 added a chapter to title IV of the Act to
establish the Office of Refugee Resettlement in the Department of Health
and Human Services (HHS). Under section 412(a)(9) of the Act the
Secretary of HHS is authorized to issue regulations to carry out the
program.
2. We note that even if the State were correct, it listed obligations
of only $398,572 on its September 28, 1989 financial report and listed
$430,746 on its December 13, 1989 financial report, a difference of
$32,174.
3. The regulation actually fixes the time limit as one year after
the end of the fiscal year in which the grant was awarded, rather than
one year after the end of the fiscal year of the grant, as construed by
the Agency. However, this interpretation can not possibly prejudice the
State for the grant would have to be awarded at a date before the grant
period ended.
4. The State's opening brief covers less than three pages; the State
elected not to file a reply brief.
5. Even if the State were on an accrual basis of accounting, its
unliquidated obligations probably could not be considered expenditures
under Part 95. The definition of unliquidated obligations in section
74.71 for reports prepared on an accrued expenditure basis is that they
are "the amount of obligations incurred by the grantee for which an
outlay has not been recorded." An obligation which has neither been
paid nor had an outlay recorded for it can hardly be termed an