New York State Department of Social Services, DAB No. 1510 (1995)

Department of Health and Human Services

DEPARTMENTAL APPEALS BOARD

Appellate Division

SUBJECT: New York State Department of Social Services

DATE: March 10, 1995
Docket No. A-95-59
Decision No. 1510

DECISION

The New York State Department of Social Services (New York) appealed a
determination by the Administration for Children and Families (ACF)
disallowing $6,329,712 in federal financial participation (FFP) claimed
for the quarter ended June 30, 1994 under title IV-E of the Social
Security Act (Act) for foster care maintenance payments. 1/ The
payments were made on behalf of children living in foster care
placements with a relative. ACF found that the children had been living
with a relative for more than six months prior to the initiation of the
court proceedings that determined that the child should be removed from
a prior home because the child's continuance in that home would be
contrary to the child's welfare. ACF concluded that the children were
ineligible for IV-E funding because they were not removed from the
contrary-to-the-welfare home as the result of a judicial determination,
as required by section 472(a)(1) of the Act. This conclusion was based
on ACF's interpretation of section 472(a)(1) as requiring the child's
physical removal from the contrary-to-the welfare home within six months
prior to the initiation of court proceedings.

New York stated in its notice of appeal that the issues in the instant
case were the same as those presented in Dockets No. A-93-219, A-94-26,
A-94-64, A-94-137, A-94-159 (See New York State Dept. of Social
Services, DAB No. 1485 (1994)), and Docket No. A-94-174 (See New York
State Dept. of Social Services, DAB No. 1492 (1994)). New York
requested that the Board issue a summary decision consistent with the
holdings in DAB Nos. 1485 and 1492, and consolidate the appeal of
issues concerning calculation of the disallowance with Docket Nos.
A-94-188 and A-94-205, and A-95-63. Counsel for ACF did not object.

The Board concluded in the two prior decisions that ACF's interpretation
of section 472(a)(1) was a reasonable interpretation (and perhaps the
only reasonable interpretation) of the language of the statute as a
whole. In addition, the Board found that ACF's interpretation was
supported by the legislative history of the title IV-E program and
furthers the goals of the program. The Board also rejected New York's
argument that ACF's interpretation constituted a legislative rule which
was invalid because it was not issued pursuant to notice and comment
rulemaking under the Administrative Procedure Act, finding that it was
instead an interpretative rule of which New York had timely, actual
notice. Finally, the Board rejected New York's argument that it was
improper for ACF to disallow a portion of the claims without first
deferring or auditing them. However, the Board upheld the disallowances
in principle only, and pursuant to the parties' agreement, the Board
deferred consideration of arguments raised by New York concerning how
ACF calculated the disallowances. New York subsequently re-appealed
calculation issues from both appeals. The Board docketed the new
appeals as Dockets Nos. A-94-188 and A-94-205, and consolidated them for
briefing purposes.

New York subsequently appealed the disallowance of FFP claimed for
foster care maintenance payments for the quarter ended March 31, 1994,
in Board Docket No. A-95- 24. Pursuant to New York's request in that
appeal, the Board issued a summary decision consistent with the holdings
in DAB Nos. 1485 and 1492. See New York State Dept. of Social Services,
DAB No. 1505 (1995). The appeal of issues concerning calculation of the
disallowance in Docket No. A-95-24 was then assigned Docket No. A-95-63,
and consolidated with Docket Nos. A-94-188 and A-94-205.

Conclusion

Accordingly, based on the analysis in DAB Nos. 1485, 1492, and 1505, we
conclude that ACF properly found ineligible for IV-E funding children
who were not physically removed from home within six months prior to the
initiation of court proceedings resulting in a judicial determination
that continuation in the home was contrary to the child's welfare. We
therefore uphold the disallowance in principle. Since New York has
requested the Board to consider New York's arguments concerning the
calculation of the disallowance, the Board will schedule further
proceedings for this purpose under Board Docket No. A-95-80, in
consolidation with New York's appeals in Board Docket Nos. A-94-188,
A-94-205, and A-95-63.

Judith A. Ballard

Cecilia Sparks Ford

Donald F. Garrett Presiding Board Member


1. The disallowance at issue here was part of a disallowance
totalling $8,481,595 in title IV-E funds which also included $2,151,883
claimed as preventive services administration costs. This decision
concerns only the disallowance of claims for maintenance payments; the
other portion of the disallowance has been assigned Docket No. A-95-60
and will be considered