Illinois Department of Public Aid, DAB No. 1320 (1992)

Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Appellate Division

SUBJECT:  Illinois Department of   Public Aid

DATE:  April 1, 1992
Docket Nos. 91-127 91-150 A-92-47 A-92-90
Decision No.   1320

DECISION

The Illinois Department of Public Aid (Illinois) appealed disallowances
by the Administration for Children and Families (ACF or Agency) of
$12,591,000 in federal financial participation (FFP) claimed under Title
IV-A (Aid to Families with Dependent Children or AFDC) of the Social
Security Act (Act).  The disallowed claims were one-time $1000 payments
made by Illinois to certain AFDC applicants and recipients to implement
Doston v. Duffy, 732 F.Supp. 857 (N.D.Ill. 1988) (Doston).  The payments
covered periods for which Illinois had failed to pay proper levels of
assistance on a current basis.  ACF disallowed the federal share of
these retroactive payments which Illinois made to eligible members of
the plaintiff class.  ACF determined that the payments had not been
individually determined for each recipient, and therefore were not
"payments of assistance" within the scope of the AFDC program.  As all
of the appeals involve the same parties, issues, and facts, they have
been consolidated at the request of Illinois. 1/

Based on our review of the evidence and arguments in the record and the
relevant provisions of the Social Security Act and implementing
regulations, we find that the court ordered payments were payments of
assistance made within the scope of a Federally aided public assistance
program.  However, we also find that the record does not sufficiently
demonstrate that the $1000 payment is a valid approximation of the
amount of assistance lost to the Doston class.  Since this issue is not
fully developed here, we remand this case for the sole purpose of
permitting ACF to determine what amount, up to the $1000 actually paid,
qualifies for FFP.  ACF is not precluded from accepting the $1000 amount
mandated by the court order, but may require further substantiation from
Illinois as to what amount best approximates the actual amount of
assistance lost to the Doston class.  We emphasize that it is Illinois'
burden to provide information adequate to validate the amount of the
payment.  If ACF determines to reinstate a portion of the disallowance,
Illinois may appeal to the Board within 30 days of receiving ACF's
determination.

BACKGROUND

The primary purpose of AFDC, a cooperative federal and state program, is
to encourage "the care of dependent children in their own homes or in
the homes of relatives by enabling each State to furnish financial
assistance . . . to needy dependent children . . . ." Section 401 of the
Act; 42 U.S.C. .601.  This financial assistance is achieved through AFDC
payments which are determined and paid for by reference to federal and
state statutes, regulations, and policy issuances.  To qualify for FFP,
claims must be made pursuant to a federally approved AFDC state plan
which fulfills these statutory and regulatory requirements.  Section
402(a)(7) of the Act (42 U.S.C. .602(a)(7)) and its implementing
regulations define the methodology by which states develop and implement
state plans for aid and services to needy families with children.  For
example, 45 C.F.R. .233.20(a)(1) requires state plans to provide
determinations of need and amount of assistance "on an objective and
equitable basis," while (a)(2)(i) requires the states to "[s]pecify a
statewide standard, expressed in money amounts, to be used in
determining (a) the need of the applicants and recipients and (b) the
amount of the assistance payment."  State plan provisions on need, the
amount of assistance, and eligibility then determine the limits on FFP.
See 45 C.F.R. .233.10(b).

The Illinois State Plan, 2/ provides AFDC benefits to enrolled caretaker
parents by using set methodologies for calculating need and the amount
of assistance required.  For example, factors such as geographic
location, number of children, employment of parents, income, and other
resources are used to measure the individual applicant's need for
assistance.  These are then applied to the Tables of Monthly Allowances
and Standards of Need in the Illinois State Plan to determine the amount
of assistance each applicant receives.  Pursuant to the Illinois Child
Support Enforcement Program under Title IV-D of the Act, 3/ caretaker
parents in, or attempting to enroll in, the AFDC program are required to
cooperate with Illinois in determining or locating an absent or alleged
parent.  This cooperation could include providing Illinois with known
personal information about the absent or alleged parent such as name,
address, social security number, or place of work, and attending court
hearings to establish parentage. 4/  The failure of a client to
cooperate by providing information or attending appointments or court
dates could result in sanctions, and Illinois would reduce a recipient's
pre-determined payments by set amounts. 5/  The affected portion of any
assistance payment would not be restored or the recipient enrolled in
the program until he or she cooperated by providing the information
and/or attending the next meeting or court appearance.

In 1985, a class action was filed against Illinois by applicants and
recipients of AFDC challenging Illinois' practice of denying or
terminating plaintiffs' benefits in the AFDC program if it determined
that they had failed to cooperate.  Plaintiffs alleged violations of
their rights under the Act, its regulations, and the Fourteenth
Amendment because of Illinois' practice of finding noncooperation
regarding information concerning an absent parent or alleged parent even
when information was unknown, or there were valid reasons for missing an
appointment or court date.  Plaintiffs sought injunctive relief,
attorneys' fees, and costs.  The federal district court issued a
temporary restraining order restoring benefits on April 9, 1985, and a
preliminary injunction in favor of the plaintiffs on August 1, 1985.
The class members were certified on June 2, 1986, to include:

     All applicants for and recipients of Aid to Families with Dependent
     Children ("AFDC") benefits from the Illinois Department of Public
Aid whose benefits, on or after March 22, 1980, have been, are being, or
will be denied or terminated by IDPA [Illinois] on the ground that they
allegedly failed to cooperate with Illinois in establishing paternity or
obtaining child support under the State's child support enforcement
program.

On November 23, 1988, the District Court ruled in Doston that Illinois
had wrongfully denied or terminated AFDC benefits to plaintiffs and that
class members were entitled to reimbursement for their losses.  Doston
at 870-73.

Illinois and the plaintiffs entered into a consent order on January 17,
1989 (Consent Order), which obligated Illinois to cease enforcing
policies which the court found violated statutory, regulatory, and
constitutional standards.  Consent Order at 2-6. Illinois agreed to
reinstate and/or commence AFDC and Medicaid benefits prospectively,
effective November 23, 1988, to all class members whose benefits had
been terminated or denied due to their alleged non-cooperation.

The Consent Order also required Illinois to provide relief notice to all
Doston class members who were sanctioned during the period March 22,
1980, through December 31, 1989.  Illinois was required to pay a one
time corrective payment of $1000 to each responding member unless the
identified class member was determined not to have been sanctioned for
non-cooperation with the child support enforcement program, but instead
was incorrectly coded RNP (Illinois computer code that identified AFDC
cases in which the caretaker had been denied benefits for failure to
cooperate).  Illinois sent 56,770 notices, and from the 36,726 class
members that responded to the notice, 25,168 were determined to have
been sanctioned and were issued the one-time check for atotal outlay by
Illinois of $25,168,000. 6/  ACF was not a party to any of this
litigation.

Illinois reported its outlays in its quarterly expenditure reports.  The
Chicago Regional Administrator for the Family Support Administration
(ACF's predecessor agency) approved the request for FFP in the amounts
of $175,000 in awarded attorneys' fees and $1,058,241 in prospective
AFDC payments to class members restored to AFDC eligibility.  However,
the Administrator denied requests totaling $12,584,000 in FFP for the
$1000 payments on the grounds the payments were arbitrary, and that FFP
is not available for court-imposed retroactive payments when a Federally
approved State plan was improperly implemented by the state and the
Department of Health and Human Services was not a party to the court
order. 7/

Illinois requested reconsideration of the Administrator's decisions in
Docket Nos. 91-127 and 91-50, and on July 15 and August 2, 1991, the
Assistant Secretary for Children and Families upheld the disallowances.
The Assistant Secretary found that the $1000 payments were not
individually determined from identifiable standards of need and payment
as required by the Illinois State Plan and federal regulations.  Thus,
she found that FFP was not available under 45 C.F.R. .205.10(b)(3)
because the payments did not meet the requirements of 45 C.F.R.
.233.20(a)(2)(i) and were, therefore, not payments of assistance within
the scope of a federally aided public assistance program or corrective
payments under .233.10(b)(3).  ACF Brief, Exhibits (Exs.) 9 and 10.
Illinois has appealed ACF's determinations to this Board. 8/

ANALYSIS

It is uncontroverted that in accordance with the Doston court order,
Illinois made retroactive one-time payments of $1000 representing the
caretaker portion of assistance payments which Illinois had wrongfully
failed to pay on a current basis.  These payments were made in
approximately 26,000 cases.  At issue here is whether FFP is available
for these retroactive payments under 45 C.F.R. .205.10(b)(3).  That
regulation provides that FFP is available for:

     Payments of assistance within the scope of Federally aided public
     assistance programs made in accordance with a court order.

ACF's primary argument was that payments of assistance within the scope
of the federal program must be individually determined from identifiable
standards of need and payment.  ACF asserted that while a state is not
required to participate in the AFDC program, if it does, it must comply
with all of the statutory and regulatory requirements. ACF further
argued that even payments made in response to a court order must be
individually determined in accordance with program requirements.  If
not, ACF maintained, FFP is unavailable because ACF may not issue funds
in violation of federal law.  ACF's position, therefore, was that FFP
was not available under section 205.10(b)(3) because the $1000 court
ordered payments were not individually determined.

Illinois, on the other hand, argued that these were payments of
assistance which were determined by reference to the Illinois AFDC
payment level in effect for the time period covered by the payments and
which corresponded to the actual lost payment amount for the average
member of the Doston class.  Illinois also asserted that ACF could not
disallow its FFP claims since it had agreed to participate in other
similar court ordered payments. 9/

As explained more fully below, we reject ACF's arguments.  We conclude
that as court ordered payments representing assistance which Illinois
improperly had failed to pay to eligible recipients, these payments fell
squarely within the ambit of section 205.10(b)(3). The fact that the
payment amount was not individually determined, as Illinois would have
done had it made these payments contemporaneously, does not take the
payments outside the scope of the program.  Any limitation created by
the requirements for individualized payments relied on by the Agency was
overcome by the court order which took into account all the relevant
factors.  In the context of section 205.10(b)(3), this record
demonstrates that the remedy fashioned by the Doston court was a
reasonable substitute which required Illinois to by-pass an
individualized determination process.  We conclude, therefore, that FFP
is available in these payments to the extent that the amount of the
payment reasonably approximated the lost assistance payment to the
Doston class members.  Since we find that the issue of the amount of
lost assistance is not fully developed on this record, and it is not
clear whether ACF would accept the $1000 amount as reasonable, we remand
for the sole purpose of permitting ACF to determine what amount, up to
the $1000 actually paid, qualifies for FFP.  Illinois must present
information adequate to justify a proper payment.  We also conclude that
ACF was not precluded here from applying any applicable federal
requirements because it had not questioned the availability of FFP in
certain other court ordered payments.

Below, we first review the history of section 205.10(b)(3) and how it
has been applied in other cases.  We will then consider whether
retroactive Doston payments were payments of assistance within the scope
of the federal program as required by the regulation.  In this section,
we examine the authorities relied on by ACF for the proposition that
court ordered payments must be individually determined to qualify for
FFP.  We then assess the question of whether the $1000 payments
reasonably approximated, for the purposes of receiving FFP, the amount
of the lost assistance payments.  Finally, we address Illinois'
assertion that ACF was improperly imposing new restrictions on its
receipt of FFP in court ordered payments since FFP had been paid in
similar cases.

A.  The Intent and Purpose of 45 C.F.R. .205.10(b)(3)

The parties agreed that the key issue here is whether section
205.10(b)(3) applied to these payments.  There was minimal discussion of
this regulation either when proposed, 35 Fed. Reg. 8448 (May 29, 1970),
or when finally adopted, 36 Fed. Reg. 3034 (February 18, 1971).  It has
remained unchanged since its origins.  This regulation has received
limited discussion by the courts.  Often, it has been the source of a
brief footnote in which a court noted that even if a state is required
by a court to make a payment, FFP is available.  See, e.g., Edelman v.
Jordan, 415 U.S. 651, 679 n.17 (1974); Jordan v.  Weaver, 472 F.2d 985,
995 n.15 (1973).  However, in Owens v. Roberts, 377 F.Supp. 45, 57
(1974), a district court in discussing section 205.10(b) stated that:

     [C]ourt-ordered retroactive welfare payments were clearly
     contemplated by Congress in enacting this federal-state welfare
legislation . . . whenever participating states misapplied or ignored
existing statutory or constitutional law so as to wrongfully withhold
public assistance to deserving welfare claimants. 10/

In Georgia v. Heckler, 768 F.2d 1293, 1298 (1985) (Georgia), the court
noted that "a parallel regulation . . . with nearly identical wording"
was promulgated in 1980 specifically for the Medicaid program.  42
C.F.R. .431.250, 45 Fed. Reg. 24878 (April 11, 1980).  The court quoted
the explanation in the preamble to the Medicaid regulation that:

     [E]ven when there is a court order against a State to provide
     services beyond the limits of the program, FFP is not available
when there are other regulatory provisions which impose limitations
[such as separate time limits or limitations on types of services] upon
the receipt of Federal funds.  45 Fed. Reg. 24878 (April 11, 1980).

The court, in analyzing the regulation's history, stated that the
Medicaid regulations clearly intended to provide FFP where a court had
ordered a state to provide benefits, and federal funds would have been
available had the state, in implementing its program, provided the funds
on its own initiative.  The Georgia court continued, however, that in
the case at hand, a federal appropriations statute specifically
prohibited the payment of FFP.  Therefore, the statutory limitation
removed the court ordered payments from the scope of the program and
they could not be considered "payments of assistance."  Id. at 1297-8.
11/

This Board has also considered both the AFDC and Medicaid regulations
regarding FFP for court ordered payments.  In Louisiana Dept. of Health
and Human Resources, DAB No. 188, at 8 (1981), we stated:

     Underlying .205.10(b)(3) is a recognition that FFP should be made
     available in the situation where a State, through no fault of its
own, is forced to pay for costs which would not normally meet program
requirements. . . . A court order, however, acts to overcome the program
limitations and to make FFP available, so long as payments are otherwise
within the scope of the program.

Similarly, we have interpreted these two regulations as providing
limited exceptions to program limitations to the extent the exceptions
are the subject of the court order, while retaining other program
limitations. 12/ California Dept. of Health Services, DAB No.  1139
(1990), is particularly instructive on this point.  There, we determined
that FFP was available in payments made to individuals improperly found
ineligible under Title XIX of the Act (Medicaid) to reimburse those
individuals for payments for medical services made by them which would
have been covered by Medicaid.  The court order had directed California
"to provide reimbursement for those of plaintiff's bills which have been
paid and to pay the providers for those bills which remain unpaid . . .
."  Id. at 4. We found that "the [court] order necessarily requires that
individuals be reimbursed to the full extent of any payments made by
them for such services."  We concluded, therefore, that FFP was
available in the payments to individuals so long as the payments were
for covered services by participating providers, "regardless of whether
those payments exceeded the applicable upper limits" on the amount of
payments for such services under Medicaid.  Id. at 9.  We also concluded
that payments to providers under the court order were subject to the
applicable upper limits since there was no reasonable basis for a
Medicaid provider to expect a higher payment than permitted by the upper
limits.  Id. at 9-10.  This case is significant here because under the
terms of the court order, FFP was determined to be available in payments
to individual recipients (who do not ordinarily directly receive
payments in the Medicaid program) in amounts higher than would
ordinarily be paid under the program.

To summarize, this regulation applies to make FFP available for court
ordered payments which substitute or replace a payment of assistance
erroneously not made, so long as the court order overcomes any program
limitations which would otherwise take a payment outside the scope of
the program, and there are no other limiting statutes or regulations.

B.   The Doston Payments Were Payments of Assistance Within the Scope of
a Federally Aided Public Assistance Program Made in Accordance with a
Court Order

ACF argued that the Doston payments were not based upon the scheme set
forth by Congress and the Secretary for AFDC.  We disagree.  The primary
purpose of AFDC is to provide support to needy children.  See sections
401 and 402 of the Act.  Illinois failed to make payments that it was
legally required to make to caretaker parents for needy children due to
its erroneous and unconstitutional application of federal requirements.
The Consent Order  required Illinois to make up payments which it had
failed to make on a contemporaneous basis.  Contrary to ACF's
allegations, we conclude that the Doston court took AFDC program
requirements into consideration in fashioning the remedy since the
retroactive payments were made only to eligible individuals for whom
Illinois had either improperly denied or terminated assistance.

ACF does not dispute the eligibility of the Doston class members for
AFDC, or their right to receive assistance payments as caretakers.  The
Doston class members were defined pursuant to the Consent Order as AFDC
eligible recipients. 13/  First, the Consent Order required Illinois to
accept or reinstate the class members for Medicaid and AFDC.  The 1950
eligible Doston class members who were wrongfully removed from the
program from November 23, 1988, forward received prospective assistance
payments (which were paid retroactively) based on individual
calculations.  Illinois was then ordered to pay each of the over 25,000
other eligible Doston class members a payment of $1000 for the
retroactive relief.  It is clear that the court and the parties intended
the $1000 retroactive payment to substitute for the lost AFDC payments
which would have been made pursuant to Illinois' State Plan for the time
the recipients and applicants were improperly sanctioned.

In determining the amount of the $1000 payment, the court also
considered the length of the improper sanctions and the amount of
caretaker benefits lost.  The payments were calculated by reference to
the Illinois AFDC payment level in effect at the time.  The parties to
the Consent Order used, as the basis for determining the liquidated
figure, the average amount of monthly AFDC assistance that the AFDC
caretaker relatives lost when removed from the grant for child support
enforcement noncooperation.  The Court made this determination based on
the average length of the sanction being five to six months and the loss
of benefits averaging $150 to $155 per month.  See discussion infra at
Part 3 of the Analysis.

As Illinois noted, it is uncontested that had it made "individualized"
payments after the Doston decision, FFP would have been available.  As a
practical matter, the $1000 payments were intended by the Consent Order
to compensate for and approximate the originally wrongfully denied
payments to the eligible AFDC applicants and recipients.  In another
case, this Board has dealt with a contrasting situation.  In Georgia
Dept. of Human Resources, DAB No. 995, 12-14 (1988), we concluded that
section 205.10(b)(3) did not apply to make FFP available because the
court-order payments were substantively unsound from the standpoint of
federal law.  Thus, the court order could not override certain
substantive requirements.  Here, however, the court ordered payments
represented assistance payments which would have been made by Illinois
had it properly implemented its program.

As discussed previously, ACF has argued that to qualify for FFP, a
state's claims must be made in accordance with an approved AFDC state
plan which fulfills certain statutory and regulatory requirements.  ACF
asserted that several sections of the Act and the implementing
regulations require individualized determinations of need, and that this
requirement cannot be overcome by a court order.  ACF cited in
particular:  (1) section 402(a)(7) of the Act which details the
methodology by which the standard of need should be calculated; (2) 45
C.F.R. .233.20(a)(1), which requires that a state's manner of
calculating need and the amount of assistance must be made in an
objective and equitable manner; and (3) 45 C.F.R. .233.10(b), which
dictates that the above state plan provisions on need, the amount of
assistance, and eligibility then determine the limits on FFP.

While the regulations cited by ACF, like the state plan, provide for
case-by-case determinations, these are general requirements governing
usual program operations. Section 205.10(b)(3) governs the availability
of FFP for court ordered payments which might not otherwise be in accord
with the requirements of the state plan and regulations. Here, we find
that the Doston court did specifically consider the issue of whether or
not to require individualized determinations.  As noted, there were two
distinct original Doston classes -- the smaller class of 7292 members
who were entitled to receive prospective individualized payments upon
being determined eligible, and the larger class of 56,770 notice relief
members potentially entitled to the $1000 payment.  Because of their
different treatments, it is apparent that the court found it necessary
to differentiate between the two classes because of their size.  The
fact that the Consent Order by-passed a process of determining the
actual benefit amount per class member in the larger class was
reasonable since this avoided substantial hardship and provided some
assurance that the wrongfully denied payments would be made in a
feasible manner.

The Doston court's rationale for this approach is bolstered, and perhaps
was driven by, the practicalities inherent in a class action of this
size.  The Court was faced here with more that 56,000 identified members
with a potential right to claim and receive retroactive payments for
several months each during a ten year time span.  Illinois asserted, and
ACF did not deny, that to have provided individual hearings and
determinations to each of the class members who responded to the notice
relief and were determined eligible within a reasonable amount of time
would have been administratively impossible. 14/

In addition, as noted by Illinois, the delays caused by the extra
workload occasioned by individualized determinations for these thousands
of Doston class members would have had an adverse effect not only on the
members but other recipients of AFDC.  For example, Illinois noted that
to have required individual determinations in each of the over 25,000
eligible cases would have resulted in hardships caused by lengthy delays
in receipt of payments already wrongfully delayed.  Also, it is possible
that many of the Doston class members would not have subjected
themselves to the hearing procedures, nor been able to accurately
reconstruct evidence to meaningfully participate in the hearings.
Further, there appears no reason to question Illinois' assertion that
this disruption would have seriously impaired Illinois' ability to serve
its other AFDC clients.  15/  The Doston court's rationale, which
emphasizes regard for the recipients and applicants, is not a new
concern of either the courts or this Board.  For example, in Missouri
Dept. of Social Services, DAB No. 193 (1980), we found that section
205.10(b)(3) applied to make FFP available for court ordered retroactive
payments to cover the costs of medical services for individuals that
Missouri had initially found ineligible for Medicaid.  Missouri conceded
that it was obliged to document individual determinations of
eligibility, and that the payments were for covered services.  Although
the state had originally required the individuals to seek reimbursement
for the costs of medical services from the providers, the court issued a
contempt order directing the state to pay the claimants directly.  We
concluded that FFP was available in payments which covered time periods
where the state plan did not provide for the eligibility of these
claimants, but could have under federal policy.  We also concluded that
the payments were not outside the scope of the Medicaid program simply
because the court had ordered Missouri to pay individual claimants
directly.  We noted that the court had taken this step, in part, to
by-pass "a time consuming and burdensome procedure for the recipients."
Id. at 7.

The record here shows that the Doston court reasonably fashioned a
realistic remedy for restoring the lost payments of assistance on an
expeditious basis.  We conclude that the Doston court specifically
considered the program requirements for individualized determinations in
its decision to order the one time $1000 payments.  Thus, while the
Doston court may not have specifically considered each regulation cited
by ACF, the program and the regulations were considered and taken into
account in the Consent Order.  Therefore, to the extent individualized
determinations may have been required, the program limitations were
overcome by the terms of the court order and section 205.10(b)(3).

As support for the proposition that even court ordered payments must be
individually determined, ACF relied on the previously discussed Georgia
v. Heckler, 768 F.2d 1293 (1985) (Georgia) and the preamble to the
Medicaid regulation, 45 C.F.R. .431.250, 45 Fed. Reg. 24878 (April 11,
1989) (Medicaid Preamble), providing FFP for court ordered payments.  As
discussed supra, in Georgia, the court held that an appropriations
statute specifically prevented the application of the regulation, and
thus FFP was not available.  ACF asserted that other language in
Georgia, which discussed section 205.10(b)(3), required individualized
determinations.  The language cited reads as follows:

     45 C.F.R. .205.10, read as a whole, is intended to sanction the
     payment of federal funds where a state has made payments "within
the scope of Federally aided public assistance programs" upon court
order after judicial review of agency decisions made after hearings.
See id.  . 205.10(a).  In 1970, when the current version of section
205.10 was proposed, a stated purpose of the regulation was that it
provide "[an] opportunity for fair hearing, with continuation of
assistance in cases involving issues of fact or judgment regarding
termination or reduction of assistance."

Id. at 1298 citing 35 Fed. Reg. 8448 (May 29, 1970).

We see nothing in this language to support ACF's assertion.  The court
merely quoted the preamble language which described the impact of the
regulation on an individual claimant.  The quoted discussion occurred in
the context of the court's conclusion, referenced earlier, that FFP was
clearly available in circumstances such as those here -- where a state
was obliged to make payments that it properly could have made on its
own.  The issues before the Georgia court did not involve requirements
for individualized payment determinations.  That court was in no way
concerned with the mechanics of assuring payment to a large class.  To
that extent, we have adequately discussed above the implications
regarding the use of individualized payments and their effects on the
application of section 205.10(b)(3) on the instant case.

Likewise, we dismiss ACF's argument regarding the Medicaid Preamble
which stated that FFP was not available where program limitations
applied that were not overcome by the court order.  See 45 Fed. Reg.
24878 (April 11, 1980).  As noted previously, ACF's objections go to the
lack of individualized determinations, which it alleged were required by
certain regulations.  We have already determined that the court ordered
payments were made within the framework of AFDC requirements, and the
issue of individualized determinations was specifically covered by the
Consent Order.  ACF did not assert that there were other applicable
limitations, and we do not find any other specific regulatory
limitations left uncovered by the Consent Order (such as the separate
time limits or limitations on types of service mentioned in the Medicaid
Preamble which would otherwise prevent FFP).

ACF relied on Illinois v. U.S. Dept. of Health and Human Services, 772
F.2d 329 (1985), as support for its contention that FFP here would
violate federal law since such payments were required to be individually
determined.  We see no parallels, however, between the Doston case and
the abortion/Hyde Amendment cases like Illinois.  There, the courts
applied a specific statutory prohibition in concluding that this
regulation did not apply to make FFP available.  Those cases provide no
support for ACF's contentions here.

As we noted earlier, we conclude that the Doston payments fall squarely
within the ambit of section 205.10(b)(3) since those payments represent
assistance payments erroneously not paid by Illinois on a current basis.

C.   We are Unable to Determine From the Record Whether the $1000
Payments Reasonably Approximated the Amount of the Lost Assistance
Payments

The issue remains, however, whether Illinois has shown that its method
of determining the $1000 payment amount was accurate.  As discussed
below, we determine that ACF reasonably questioned its obligation to pay
FFP in an amount that represents a "best judgment" as to the proper
payment amount.  We have concluded, therefore, that FFP is available in
whatever amount (up to the $1000 actually paid) reasonably approximates
the amount of the lost assistance payment to the Doston class.  We have
remanded this case to ACF to make this determination.

As ACF asserted, a state is required to document its claims.  It is well
settled that the burden to document that expenditures are allowable
ultimately rests with the state.  See, e.g., Ohio Dept. of Human
Services, DAB No. 858, at 8 (1987); New Jersey Dept. of Human Services,
DAB No. 416, at 7 (1983).  While the amount actually expended by
Illinois has not been challenged, we believe that the amount of the
payment eligible for FFP has not been fully developed on this record and
that Illinois bears the burden to justify a proper payment amount.

Illinois stated that the $1000 payments were based on the average
monthly payments lost to a caretaker relative being $150-$155 and that
the average amount of time the payments were discontinued or suspended
was 6-7 months.  However, no documentation other than Illinois'
statements has been submitted to support the use of these averages. The
Joint Status Report Explaining Proposed Consent Order and Fairness
Hearing, which Illinois and the plaintiffs submitted in response to the
court's request for information regarding the settlements, merely states
"The $1,000 figure represents the actual damages for roughly a six-month
sanction."  Id. at 7.  Illinois' Brief, at 13-14, expanded on this by
stating that:

     Simply put, counsel for the Department and for the Doston
     plaintiffs used the amount of monthly AFDC benefits an AFDC
caretaker relative lost when removed from her grant for child support
enforcement non-cooperation as the basis for determining the liquidated
figure.

     The amount of injury in any individual case is a function of the
     monthly reduction of AFDC benefits for the case and the number of
months the case is sanctioned.  When a caretaker relative is sanctioned
for failure to cooperate with child support, the caretaker relative's
needs are taken out of the household's AFDC grant.  This results in a
reduction in the AFDC payment level.  Due to the manner in which this is
calculated, the Department knew that the average reduction in the AFDC
payment level was about $150-155 per month per case and the only varying
factor in each case was the length of the sanction 16/ (citation
omitted).

     Thus the $1,000.00 amount corresponds to the actual lost benefits a
     class member would have had if her sanction had lasted between six
and seven months (citation omitted).  This figure was the parties' best
judgment of the average sanction; based upon substantial experience with
the sanctioning process, the parties believed that most sanctions were
slightly less than seven months, but a substantial number of sanctions
were much longer than seven months. 17/  The parties agreed that the
$1,000.00 figure on balance would be a fair result for the majority of
class members.

Illinois also pointed out that the average amount paid to Doston class
members who received the prospective payments was $1085.  These Doston
class members were also required to respond to relief notice and be
determined eligible.  They were then awarded retroactive corrective AFDC
payments from November 23, 1988, after individual determinations.
Consent Order at 7.  Illinois states that as of March 1990, it had
issued $2,116,481 in retroactive (prospective) AFDC payments to the 1950
eligible Doston class members. 18/  Illinois Brief at 5.

We find that ACF reasonably declined to participate in payments based
only on "a best judgment" even when the payments were made pursuant to
court order.  While it appears that there may be a sound basis for the
use of the $1000 figure, it is not fully developed in the record.

ACF has also faulted Illinois for not consulting with it to determine a
method whereby Illinois could achieve the objectives required by the
court yet still obtain federal funding. While the state would have been
prudent to seek to involve the agency in this matter, or at least to
coordinate with it when it engaged in the process of developing the
manner whereby it would comply with the court's order, this is not fatal
to the state's claim. ACF pointed to no requirement that the state
involve it in any way in this matter or even indicated that it would
have been willing to participate.  There is no dispute that FFP would
have been available in the caretaker portion of the assistance payments
to these class members had these payments been made contemporaneously.
However, there is a separate question presented by these appeals
concerning whether the payment amount selected by the state was
reasonable.  Accordingly, it is not clear whether ACF would accept the
$1000 payment amount as a reasonable approximation of the lost
assistance payments.  A "best judgment" is not an adequate basis upon
which to claim FFP.  Therefore, FFP is only available in whatever
amount, up to the $1000 actually paid, that Illinois can document as a
valid approximation of the amount of the assistance erroneously not paid
to this class.

We make no finding that the $1000 amount cannot be adequately justified.
We note that the parties may wish to evaluate the prospective payment
process whereby retroactive payments were individually determined for
the 1950 recipients.  If the circumstances there were sufficiently
analogous to those that existed for the Doston class members who
received the $1000 payments, the process followed by Illinois for the
payment of the prospective relief may provide information adequate to
support the payments at issue here.  It is also possible that
statistical sampling techniques could be employed to verify the amount
of lost assistance payments to the Doston class members receiving the
$1000 payments. 19/  Finally, ACF and Illinois could also agree on
another method of verifying an appropriate payment amount as well. 20/
Therefore, we remand this case for the sole purpose of permitting ACF to
determine what amount, up to the $1000 actually paid, qualifies for FFP.
The Agency is not precluded from accepting the $1000 amount mandated by
the court, but may require further substantiation from Illinois.  To the
extent any of the disallowed amount is reinstated, Illinois may appeal
to the Board within 30 days of receiving the Agency's determination.

D.   Illinois Must Validate the Amount of the Assistance Payment
Notwithstanding Its Assertion that ACF Was Obliged to Participate in the
$1000 Payment Since ACF Had Participated in Other Court Ordered Payments
in Similar Circumstances

Illinois has argued that the disallowances ignore prior practice and
cites three cases in which it claims FFP was received for liquidated
payments arising from court orders and/or settlements.  Of the three
cases cited, only Machado v. Miller, 83 C 5795 (1983), appears on point.
21/  In Machado, the consent order required Illinois to change a policy
which allowed the state to retain child support amounts above the amount
of the AFDC grant.  Retroactive notice relief was granted to four
different groups within the member class and liquidated payments were
made available to qualifying recipients in each group.

ACF argues that in Machado, as opposed to Doston, there was an attempt
to individualize circumstances, such as whether there was eligibility
for SSI, eligibility of different children within the household,
stepchildren, and amount and frequency of child support payments.  This
is not enough to differentiate the two cases; the results were the same,
whether four groups or one, liquidated payments based on averages rather
than case-by-case documentation were made.

However, while we are sympathetic to Illinois' reliance on Machado and
similar cases, they cannot be the basis for overruling the
disallowances.  Even if all three of Illinois' cited cases involved FFP
for liquidated payments, ACF would not be foreclosed from disallowing
future payments in appropriate cases.  Illinois was basically making an
estoppel argument here, and, if permitted, would prevent ACF from
enforcing a requirement because it allegedly failed to enforce it on
some prior occasion.  See Michigan Dept. of Social Services, DAB No.
1211, at 6 (1990).  Estoppel requires misrepresentation of fact,
reasonable reliance, and detriment to the opposing party.  Heckler v.
Community Health Services of Crawford County, Inc., 467 U.S. 51, 59
(1984); Nisqually Indian Tribe, DAB No. 1210, at 7-8 (1990).  The U.S.
Supreme Court has never decided what type of misrepresentation or
misconduct by a federal employee would rise to the level of affirmative
misconduct so as to estop the government from enforcing valid
regulations regarding welfare benefits.  See Schweiker v. Hanson, 450
U.S. 785, 788-89 (1981).  In any event, there is no allegation here of
any affirmative misconduct by ACF.  Further, a recent Supreme Court case
has indicated that it is unclear whether an estoppel claim could ever
succeed against the Government. See Office of Personnel Management v.
Richmond, ___ U.S.___,___, 110 S.Ct. 2456, 2470-71 (1990).

ACF has also argued that it is not bound by the Doston Consent Order
because it was not a party to the case or the order, the order and
injunction were directed solely at the state, and Illinois neither asked
ACF to participate nor consulted it prior to agreeing to the order.
Illinois, in response, notes that it relied on the Agency's payment of
FFP in Machado and related cases.  A court order made without the
consent and/or participation of the Agency does not, on its own, require
the Agency to pay FFP.  See Georgia, 768 F.2d at 1297.  As discussed
supra, for a state to receive FFP for court ordered payments, the
payments must qualify under section 205.10(b)(3) and the state must be
prepared to support the rationale and methodology used to determine the
amount of the payments.

CONCLUSION

For the foregoing reasons, we conclude that the court ordered payments
to eligible members of the Doston class were payments of assistance
within the scope of the AFDC program.  However, we also conclude that
ACF cannot be required to pay FFP in an amount that represents only a
"best judgment" as to the proper retroactive payment amount.
Accordingly, FFP is available in whatever amount, up to the $1000
actually paid, ACF determines reasonably approximates the assistance
payment amount Illinois erroneously failed to pay the Doston class
members.  Illinois bears the burden of presenting information adequate
to validate such a payment.  This proceeding is remanded for the sole
purpose of permitting ACF to determine what amount, up to the $1000
actually paid, qualifies for FFP.  If ACF determines that an amount less
than $1000 is properly used as a basis for paying FFP, and thereby
reinstitutes a portion of this disallowance, Illinois may appeal that
determination within 30 days of receipt of that disallowance.

     Donald F. Garrett

     Norval D. (John) Settle

     Cecilia Sparks Ford Presiding Board Member

1.  Docket No. 91-127 involves claims for $12,577,500 FFP reported by
Illinois in its quarterly expenditure reports filed on October 31, 1989,
January 31, April 30, July 31, and October 30, 1990, January 31 and
April 30, 1991.  Docket No. 91-150 involves a claim for $6500 FFP for
expenditures incurred during the quarter ended July 31, 1991. Docket No.
A-92-47 involves a claim for $6500 FFP for expenditures incurred during
the quarter ended September 30, 1991.  Docket No. A-92-90 involves a
claim of $500 for the quarter ending December 31, 1991.

2.  Illinois State Plan for Title IV-A of the Social Security Act:
Financial Aid to Families with Dependent Children.  Illinois Brief,
Exhibit 4.

3.  42 U.S.C. .651 et seq.; section 451 et seq. of the Act.

4.  45 C.F.R. .232.12(b)(1-4).

5.  45 C.F.R. .233.10(a)(l)(ii)(B).

6.  The numbers and amounts used here are based on those claimed in
Docket Nos.  91-127 and 91-150 as set forth in Illinois' Brief, dated
October 7, 1991, and do not include Docket Nos. A-92-47 and A-92-90.

7.  See Note 6, supra.

8.  The disallowances in Docket Nos. A-92-47 and A-92-90 were appealed
directly to the Board with requests for consolidation.

9.  Illinois argued that another applicable regulation is 45 C.F.R.
.205.10(b)(2), which provides for FFP for payments of assistance made to
extend the benefits of a court order "to others in the same situation as
those directly affected by the decision or order. . . ." Id.  However,
we agree with ACF that this regulation, by its very terms, is
inapplicable here where it is clear that the eligible Doston class
members were directly affected by, and included in, the Consent Order.
This regulation is meant to permit the extension of court ordered
payments of assistance to qualified individuals not included in a court
order.

10.  Subsection (2) of section 205.10(b), which specifically referred to
retroactive payments for indirectly affected recipients, has since been
amended.  See also discussion at Note 9, supra.

11.  In Georgia and Illinois v. U.S. Dept. of Health and Human Services,
772 F.2d 329 (1985), the states brought actions seeking to overturn
disallowances of FFP for monies spent by the states in providing certain
medically necessary procedures pursuant to federal court orders.  Both
courts held that the Hyde Amendment, which directed that no federal
funds be appropriated to pay the federal share of Medicaid programs were
to be used to finance these procedures, barred the Department of Health
and Human Services from paying the claims.  The court in Georgia
specifically held that the effect of the Hyde amendment was to make the
payments not "payments of assistance within the scope of federally aided
public assistance programs."  Id. at 1298.  See Joint
Consideration--Abortion Funding, DAB No. 260, at 13-14 (1982) (no
interpretation of an agency regulation or policy can overcome a specific
statutory funding prohibition).

12.  Missouri Dept. of Social Services, DAB No. 193, at 7-8 (1981) (FFP
not available for payments to nonparticipating providers who were not
specifically included in court order); Ohio Dept. of Public Welfare, DAB
No. 173, at 11-12 (1981) (FFP available to reimburse a state for court
ordered payments during provider appeals for up to 12 months from
termination or nonrenewal of a provider agreement).

13.  The $1000 payments were ordered made to "all class members who
would currently be in 'RPN' status, except that their removal from their
AFDC cases resulted in the ineligibility of their cases for AFDC for a
reason other than alleged noncooperation with the child support
enforcement program."  Consent Order at 6-7.

14.  The Consent Order gave Illinois 60 days to identify all defined
class members and 30 days thereafter to send a notice to each identified
class member on the list.  Within 45 days of a returned claim form,
Illinois was required to determine the member's eligibility and, if
eligible, send the member the $1000 payment.  Consent Order at 12-13,
Para. 10.

15.  For example, Illinois stated that it took its staff over a year to
review the 7,292 prospective cases and reinstate 1950 caretaker
relatives to their AFDC grants. Case-by-case determinations in the
retroactive payments, Illinois argued, would have involved notices for
the hearings, calculations of actual lost benefits, processing
inquiries, and paperwork.  Disputed hearing results would have involved
state court actions to review, the handling of Illinois Court of Claims
proceedings brought by claimants to collect on favorable hearing
decisions, and the processing of all of the appeals from the procedures.

16.  For example, a stipulated fact in the Doston case was that in Cook
County, a sanctioned client's grant since January 1987 dropped between
$145 and $158 per month depending on the number of children in the
household.  Prior to January 1987, the grants were lower.  Illinois
Brief, Ex. 1, 85 C 2356 at 13.  The stipulated findings of fact are
omitted in the published version.  732 F. Supp. at 863.

17.  Illinois stated that the six to seven month figure was based on the
average amount of time it took a sanctioned class member to be
reinstated.  Recipients, for example, who missed a court date, could not
be reinstated until they appeared at their rescheduled court date which
was usually six to seven months later.

18.  As of April 1990, Illinois has claimed and received FFP in these
payments.  Illinois Brief at 5.

19.  Evidence produced by statistical sampling is a well-established and
accepted method. See Rosado v. Wyman, 322 F.Supp. 1173, 1180-1 (1977).
We have considered whether statistical sampling may be used in lieu of
case-by-case determinations in a number of cases.  For example, in Ohio
Dept. of Human Services, DAB No. 900, at 10 (1987), we concluded that
the Office of Human Development Services had "unreasonably rejected in
principle the concept of the use of a sampling methodology to establish
a reasonable disallowance amount."  Id. at 12.  Ohio sought to use a
random moment study to distinguish allowable foster care maintenance
costs (Title IV-E) from social services costs (Tile XX).  The Agency had
argued that statistical methodology could not be used because it would
be based on an estimate rather than actual expenditures in violation of
section 474(a)(1) of the Act and its implementing regulations which it
alleged mandated FFP only for the state's adequately documented actual
expenditures.  We noted there that the Act contains no such specific
preclusion against the use of statistical sampling. See also New York
State Dept. of Social Services, DAB No. 1216 (1991); New York State Dept
of Social Services, DAB No. 1134 (1990).

20.  See DAB No. 1139, supra, at 11, where we permitted the state to
more fully document its FFP claims based on our conclusions regarding
the court ordered payments in that decision.

21.  In Simpson v. Miller, 81 C 2985 (1982), the case was settled and
Illinois was ordered to provide notice relief to the eligible class
members.  Although, Illinois states that it made retroactive liquidated
payments, that consent order, as opposed to Doston, does not appear to
require that any particular amount be paid.  Only notice relief was
ordered.  The third case, Berberena v. Miller, 81 C 5776 (1982), was not
provided by