# Amicus Curiae Brief — Lukhard v. Reed > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0074%3A14 ## Record - **Collection:** Supreme Court brief - **Document type:** Amicus Curiae Brief - **Published:** January 1, 1987 - **Citation:** 481 U.S. 368 ## Text Supreme Court. U.S. iL ED IN THE SEP 30 1986 Supreme Court of the United States ~~ JOSEPH F. SPAR OCTOBER TERM, 1986 _——_-... WILLIAM L. LUKHARD, COMMISSIONER, VIRGINIA DEPARTMENT OF SOCIAL SERVICES, . Petitioner, ONA MAE REED, SALLIE LONG, RUTH WILCHER, OPAL MAE Cook, STELLA KING, AND ALL OTHERS SIMILARLY SITUATED, Respondents. On Writ of Certiorari to the United States Court of Appeals for the Fourth Circuit BRIEF AMICUS CURIAE OF LEGAL SERVICES OF NORTH CAROLINA ON BEHALF OF ITS CLIENTS IN SUPPORT OF RESPONDENTS ONA MAE REED ET AL. Of Counsel Davin H. HARRIS, JR. RICHARD M. TAYLOR, JR. SUSAN M. PERRY * Executive Director — Carolina Legal Legal Services of North Carolina ervices 112 S. Blount Street a eye Raleigh, N.C. 27611 ilson, N.C. 27893 C.D (919) 291-6851 WILLIE C. DAWSON ; ; ; Att Executive Director orneys for Amicus Curiae, Legal Services of Pamlico Sound Legal Services — . . P.O. Box 1167 North Carolina New Bern, N.C. 28560 * Counsel of Record Peccy S. LEVIN Eastern Carolina Legal Services P.O. Box 2688 Wilson, N.C. 27893 CAMILLA McCLAIN Pamlico Sound Legal Services P.O. Box 7283 Greenville, N.C. 27834 EE WILSON - Eres Printine Co., Inc. - 789-0096 - WASHINGTON, D.C. 20001 CONTENTS Page po) 8 ER BS, eae ii STATEMENT OF INTEREST ........ Fee eR Oe 1 INTRODUCTION AND SUMMARY OF ARGU- ntsc deell 6 DN, EE 7 I. CONGRESS INTENDED THE EXCLUSION OF PERSONAL INJURY AWARDS FROM THE DEFINITION OF INCOME IN THE I sc hicnrticinnnsitesitictnistinted bepisaamiosatibemunies 7 Il. THE SECRETARY’S INTERPRETATION OF THE OBRA LUMP SUM AMENDMENT IS NOT ENTITLED TO DEFERENCE ................ 11 GRAIG ccnncestcnnnnnntieienniinsin sain senelllalictisaibsianaamiiibits 15 ii TABLE OF AUTHORITIES CASES Page American Shipbuilding Co. v. NLRB, 380 U.S. 4 IRARIENI ISSR ear A eee ee 12 Batterton v. Francis, 432 U.S. 416 (1977) ............. 12 Bowen v. Fidelity Banks, 209 N.C. 140, 183 S.E. BR I aki lachlan ilciaiitalideacain 8 Bureau of Alcohol, Tobacco and Fire Arms v. Fed- eral Labor Relations Authority, 104 S.Ct. 439 RRL a TA ee es Ne 12 Carolina Power and Light Company v. Paul, 261 N.C. 710, 136 S.E.2d 108 (1964) ......................... ~ Eisner v. Macomber, 252 U.S. 189 (1919) —............ 8 Finch v. Kirk, No. 86-90-CIV-5 (E.D.N.C. Jan. 21, Eee ae eee eee Le 2 NLRB v. Amax Coal Co., 453 U.S. 322 (1981) ....... ds) Heckler v. Turner, 105 §.Ct. 1138 (1986) .............. 9 Reed v. Lukhard, 774 F.2d 1270 (4th Cir. 1985), aff’g 591 F. Supp. 1247 (W.D. Va. 1984) _.......... 2, 8,9 Richards v. United States, 369 U.S. 1 (1962) _...... 8 Securities Industry Association v. Board of Gov- ernors, 104 S.Ct. 2979 (1984) ...........00000000 14 Shea v. Vialpando, 416 U.S. 251 (1974) —............... 10 Skidmore v. Swift & Co., 323 U.S. 134 (1944) ......... 13 St. Martin Evangelical Lutheran Church v. South I GI i UU CUED cccccccceccenceecesecssccccooes 13 Southeastern Community College v. Davis, 442 U.S. EES A SR A a 12 Teamsters v. Daniel, 439 U.S. 551 (1979) ............... 12 United States v. Locke, 105 S.Ct. 1785 (1985) ......... 8 Watkins v. Blinzinger, 789 F.2d 474 (7th Cir. 1986), aff’g 610 F. Supp. 1443 (S.D. Ind. 1985) .. 6 Yuckert v. Heckler, 774 F.2d 1365 (9th Cir. 1986) .. 14 STATUTES: Omnibus Budget Reconciliation Act of 1981, Pub. L. 97-35, 95 Stat. 358, et seg. (1981) —.......0000..... 7 RS 14 REST As a 9 42 U.S.C. § 601 et seq. (Social Security Act) ............. 14 iii ’ TABLE OF AUTHORITIES—Continued Page a 7,9 eS eee 7,9,12 45 CFR § 233.20 (a) (3) (ii) (F) ......-.-.....-.-......... 5, 11, 13, 15 rr ee, nsssbeonnsontseucvanes 13 LEGISLATIVE HISTORY: Page S. Rep. No. 139, 97th Cong., Ist Sess. 505 (1981), reprinted in 1981 U.S. Code Cong. & Ad. News, EIS ITC TA A 7 OTHER AUTHORITIES: Blacks Law Dictionary, 352, 687 (5th Ed. 1979)... 8,9 Davis, Administrative Law § 503 (3rd Ed. 1972). 13 Dobbs, Remedies § 3.1 (1978) .....................-...--------- ~ 25 C.J.S. Damages § 17 (1966) ...... PE ae Ee 8,9 42 C.J.S. Income § 531 (1944) ..........................-....... 8 IN THE Siywreme Court of the United States OCTOBER TERM, 1986 No. 85-1358 WILLIAM L. LUKHARD, COMMISSIONER, VIRGINIA DEPARTMENT OF SOCIAL SERVICES, a Petitioner, ONA MAE REED, SALLIE LONG, RUTH WILCHER, OPAL MAE CooK, STELLA KING, AND ALL OTHERS SIMILARLY SITUATED, Respondents. On Writ of Certiorari to the United States Court of Appeals for the Fourth Circuit BRIEF AMICUS CURIAE OF LEGAL SERVICES OF NORTH CAROLINA ON BEHALF OF ITS CLIENTS IN SUPPORT OF RESPONDENTS ONA MAE REED ET AL. STATEMENT OF INTEREST Amicus, Legal Services of North Carolina (LSNC) in- cluding two of its affiliate programs, is deeply and inti- mately concerned about the outcome of this case. LSNC files this brief on behalf of its clients. Two affiliate pro- grams of LSNC currently represent AFDC recipients in an action filed against the North Carolina Department of Human Resources and the United States Department of 2 Health and Human Services, Finch v. Kirk, No. 86-90- CIV-5 (E.D.N.C. Jan 21, 1986), challenging state and federal regulations that treat personal injury awards as “income” rather than as “resources” in determining AFDC eligibility. Class certification is pending in that action. LSNC is a statewide program responsible for civil representation of low income persons in eighty-three of North Carolina’s one hundred counties. Overall, 1.3 mil- lion persons in North Carolina are governmentally de- fined as eligible for legal services. Generally, to be eli- gible, a family’s annual gross income must be less than 125% of the federal poverty line. Legal Services pro- grams in North Carolina receive more than 35,000 re- quests for assistance from eligible, low income persons each year and provide service to approximately 25,000 of these persons. In North Carolina, 180,000 people receive AFDC benefits. Many of these AFDC recipients rely upon LSNC to protect their interest in continued finan- cial assistance when eligibility criteria are met. AFDC regulations provide that, when a member. of an AFDC household receives non-recurring “lump sum”’ in- come, a period of ineligibility is imposed during which AFDC benefits are denied to the entire family. The set period of ineligibility continues even though the lump sum may be exhausted, leaving the family in desperate need of AFDC benefits to meet the basic costs of survival. Although the United States Court of Appeals for the Fourth Circuit held in Reed v. Lukhard, 774 F.2d 1270 (4th Cir. 1985), aff'g 591 F. Supp. 1247 (W.D. Va. 1984) that “the lump sum rule may not be applied to personal injury awards to render AFDC recipients in- eligible for benefits,” the State of North Carolina con- tinues to deny, reduce, or terminate AFDC benefits on this basis, thereby depriving many low income families of resources desperately needed for survival. 3 In the Finch action filed by LSNC, plaintiff Finch alleged that she and her minor child were receiving AFDC benefits of $176 per month in June, 1985. She received her monthly AFDC check on June 1, 1985 and spent the check for monthly expenses. On June 4, 1985, Ms. Finch received a $1,200 lump sum insurance settle ment for bodily injury sustained in an automobile acci- dent on September 15, 1984. Ms. Finch used part of the money to repay outstanding loans and bills. She also spent her award for transportation expenses, clothing and a few inexpensive toys for her child, and non-Food Stamp items such as cleaning supplies. Ms. Finch promptly reported the personal injury award to Social Services. Social Services then determined she would be ineligible for June, July and August, 1985 AFDC benefits. It found she would be eligible for partial benefits in September, 1985. However, before termina- tion of her benefits, she had expended her award. Dur- ing the time that Ms. Finch’s AFDC benefits were ter- minated, she had to pawn part of her furniture in order to meet her living and medical expenses for July and August, 1985. Upon appeal, the State Department of Human Re- sources affirmed the termination of her AFDC benefits. It concluded as a matter of law that personal injury awards are income rather than resource and thus are subject to the lump-sum rule. Plaintiff Hardy and her two minor children were re- ceiving AFDC benefits of $246 per month in November, 1985. The AFDC benefits constituted the family’s only source of income aside from $50 per month in support payments from the children’s father. Ms. Hardy received her monthly AFDC check on November 1, 1985 and spent the check for monthly expenses. On November 25, 1985, she received a $1,783 lump sum insurance settlement for bodily injury sustained in an automobile accident on d May 22, 1985. She had received medical treatment for her injuries from May through October, 1985. Ms. Hardy received notice in January 1986, that pur- suant to North Carolina’s lump-sum policies, her AFDC grant would be reduced from $246 to $184, representing partial benefits for March, 1986. Additionally, a period of recoupment, at a minimum of 10% of the monthly grant, or $24 per month, for approximately the next 40 months, would follow until the AFDC benefits provided to Ms. Hardy for November and December, 1985, and January and February, 1986 were fully reimbursed. The County determined she was ineligible during these months. Prior to receiving this notice of ineligibility and the 40 month recoupment, Ms. Hardy had completely expended the personal injury award. In November, 1985, Ms. Hardy’s mother, who is disabled, received an eviction notice from her landlord. Ms. Hardy spent substantial portions of her personal injury award on moving expenses for her mother and her family. Ms. Hardy later moved into her mother’s apartment with her children to reduce family expenses. Approximately $300 of the money was spent on the purchase of groceries during November and December, 1985 for the combined households. Part of the money was also spent on the repayment of an outstand- ing loan to her grandmother. Another portion of the funds was spent on the purchase of necessary items and basic living expenses such as winter clothing for herself and her children. By December, 1985, the entire insur- ance settlement had been exhausted, leaving no money to pay the winter’s heating and utility bills or non-food items such as soap, detergent and toilet articles. Plaintiff Little and her minor child were receiving AFDC benefits of $214 per month in 1985. She re- ceived her monthly AFDC checks in December, 1985 and January, 1986, and spent the checks for monthly ex- 5 penses. On December 4, 1985, she received a $749 lump sum settlement for bodily injury sustained in a slip and fall accident at a grocery store on August 15, 1984. After reporting her personal injury award to Social Services, she was informed by written notice dated De- cember 17, 1985, that she was ineligible to receive the December, 1985 and January, 1986 AFDC checks. She appealed this decision and the original decision of in- eligibility was upheld whereby the AFDC benefits for those two months were ordered recouped. Ms. Little is dependent on the continued receipt of her AFDC pay- ments in order to meet her needs and those of her minor child. In each of the above situations, the imposition of the lump sum rule resulted in harsh inequities to the families involved. An adverse decision in this case would leave these families and many other families who receive per- sonal injury awards without the means to obtain food, clothing and shelter. A principle interest of Amicus is the protection and preservation of the court decision be- low to ensure that needy children and their families can receive financial assistance. The Secretary of the United States Department of Health and Human Services has issued a new regulation which purports to treat all lump sum payments, includ- ing “windfalls” (which would include personal injury awards), as “income” to be counted under the lump sum rule. 52 Fed. Reg. 9191, 96 (March 18, 1986) (to be codified at 45 C.F.R. § 233.20(a) (3) (ii) (F)). The Sec- retary has filed a Brief as Respondent Supporting Pe- titioner in which he argues that the March 18, 1986 final regulation is dispositive of the entire issue and re- quires reversal of the decision below. The State of North Carolina has joined in an amicus brief with seven other states in support of petitioner’s position. Therefore, LSNC’s interest in this case is considerable and justified. 6 INTRODUCTION AND SUMMARY OF ARGUMENT Amicus, Legal Services of North Carolina on behalf of its clients, urges affirmance of the judgment of the United States Court of Appeals for the Fourth Circuit. Petitioner argues that the opinion of the United States Court of Appeals for the Seventh Circuit in Watkins v. Blinzinger, 789 F.2d 474 (7th Cir. 1986), aff'g 610 F. Supp. 1443 (S.D.Ind. 1985), best construes the AFDC statute and furthers legislative intent. Respondents and Amicus, however, strongly urge the Court to hold that the purpose of the AFDC statute and Congressional in- tent support the exclusion of personal injury awards from the definition of “income.” Amicus argues (Point I) that, given the legislaiive history and clearly established rules of statutory con- struction, Congressional intent dictates the exclusion of personal injury awards from the term “income” under the lump sum rule. Since Congress did not indicate that it intended to use a definition of “income” that is broader than the traditional legal definition, it is clear that Con- gress did not intend to include personal injury awards as “income” under the AFDC statute. Amicus further ar- gues (Point II) that the Court should not give deference to the Secretary’s interpretation of the lump sum rule, becausc it is inconsistent with Congressional intent and his own prior pronouncements, and defeats the very pur- pose of the AFDC Act. Therefore, the judgment below should be affirmed. 7 ARGUMENT I. CONGRESS INTENDED THE EXCLUSION OF PER- SONAL INJURY AWARDS FROM THE DEFINI- TION OF INCOME IN THE AFDC STATUTE. The Court of Appeals for the Fourth Circuit correctly determined that personal injury awards must be ex- cluded from the definition of “income” in the AFDC statute. The Fourth Circuit carefully analyzed the “lump sum” rule of the Omnibus Budget Reconciliation Act of 1981 (OBRA) in making its determination. Congress passed the lump sum rule to encourage AFDC recipients to budget large payments of income to meet ongoing needs of their households. Before 1981, 42 U.S.C. § 602(a)(7) stated that “... the State agency shall in determining need take into con- sideration any other income and resources. .. .” When Congress implemented OBRA, it did not alter its lan- guage. Rather, Congress changed the method by which income would be counted. Under pre-1981 law, “[any] payments that [met] the definition of income... [were] counted as income in the month of receipt and any of the payment that [was] not spent in that month [was] usually considered as a resource in the months there- after.” In the 1981 Act, “income received in a month [would] be considered available as income in the month it is received and also in future months.” S. Rep. No. 139, 97th Cong., 1st Sess. 505, reprinted in 1981 USS. Code & Ad. News, 396, 702, 771. See also 42 U.S.C. § 602(a) (17) (before and after OBRA). The court helow correctly reasoned that the 1981 amendment changed the treatment of income, but did not change the definition of income. In fact, it found that OBRA did not even define “income.” In the absence of a definition of income, the court concluded that Con- gress intended to include as income only those large pay- ments of money that would ordinarily be considered in- 8 come. Reed, 774 F.2d at 1274-75. This Court set forth that principle when it stated that “deference to the supremacy of the legislature, as well as recognition that congressmen typically vote on the language of a bill, generally require[s] us to assume that ‘the legislative purpose is expressed by the ordinary meaning of the words used.’” United States v. Locke, 105 S.Ct. 1785, 1793 (1985) (quoting Richards v. United States, 369 US. 1, 9 (1962) ). Based on the ordinary meaning of the term “income,” personal injury awards should not be included as income ‘under the lump sum rule. As this Court determined, “where Congress uses terms that have accumulated settled meaning under either equity or the common law, a court must infer, unless the statute otherwise dictates, that Congress means to incorporate the established mean- ing of these terms.” NLRB v. Amax Coal Co., 453 U.S. 322, 329 (1981) (emphasis added). The term “income” has accumulated settled meaning. “Income” represents a “gain or profit,” 42 C.J.S. Income § 531 (1944), and is ordinarily understood to be a return on the investment of labor or capital, thereby increasing the wealth of the recipient. See Blacks Law Dictionary 687 (5th ed. 1979). See also Eisner v. Macomber, 252 U.S. 189, 207 (1919). On the other hand, “{pljersonal injury awards serve to make one whole, in effect, restoring one to the status quo before the injury was suffered.” See Bowen v. Fi- delity Banks, 209 N.C. 140, 183 S.E. 266 (1936); Caro- lina Power and Light Company v. Paul, 261 N.C. 710, 136 S.E. 2d 103 (1964) ; 25 C.J.S. Damages § 17 (1966). “The damages award is substitutionary relief, that is, it gives the plaintiff money mainly by way of compensation, to make up for some loss that was not, originally, a money loss, but one that ordinarily may be measured in money.” D. Dobbs, Remedies § 3.1 (1973). See also 25 9 C.J.S. Damages § 17; Black’s Law Dictionary 352 (5th ed. 1979). Hence, personal injury awards do not represent a return on investment of labor or capital. See also The Internal Revenue Code, 26 U.S.C. § 104 which states that gross income does not include “the amount of any dam- ages received ... on account of personal injuries or sick- ness.” Rather, as the Fourth Circuit found, personal in- jury awards replace losses due to pain and suffering. See Reed, 774 F.2d at 1275. Congress was well aware of the common meaning of “income” when it redrafted 42 U.S.C. § 602(a)(7) and (17). If Congress had intended to radically change the definition of “income” to include damages in such a way as to be repugnant to 200 years of American law, it would have clearly so stated. In total contradiction to these established principles, the Secretary argues that the term “income” refers to the gross receipts an AFDC family has available to meet its monthly needs. The Secretary relies upon Heckler v. Turner, 105 S.Ct. 1188 (1985) to support his theory that the gross receipts available to an AFDC family for support are income. Significantly, Heckler v. Turner did not address personal injury awards. Rather, the opinion centers on mandatory tax withholdings from wages or salary. Unlike personal injury awards, mandatory tax withholdings represent wages and fall within the ordi- nary meaning of “income.” The Secretary’s reading of Heckler v. Turner is overly broad. The case cannot be cited for the proposition that personal injury awards come within the purview of term “income.” With his misplaced reliance on Heckler v. Turner, the Secretary, in effect, seeks to overturn a whole body of tort law. When he implemented his expansive definition of ‘“‘in- come,” the Secretary substantially rewrote the statute in disregard of Congressional intent. These actions are clearly arbitrary, capricious and repugnant to a whole body of American jurisprudence. 10 Not only does the Secretary’s contrived definition of income contradict Congressional intent, but it also frus- trates the very policy that Congress sought to implement. The situation the Secretary envisions is far removed from the financial realities confronting many AFDC families. The Secretary blinks at reality and blatantly ignores the fact that often personal injury victims sustain injuries that result in physical and mental impairments extend- ing beyond the receipt of the personal injury award. Although the Secretary discounts prior medical expenses in determining a disqualification period, he fails to recog- nize the frequent existence of future expenses relating to the injury. Contrary to the Secretary’s assumption, the personal injury award may not be available to meet the ongoing needs of the AFDC family. When additional expenses arise, the disqualified AFDC household is often forced to use its personal injury award to seek proper medical care, leaving no money for food, shelter and other survival needs of the family. The Secretary correctly points out that Congress in- tended for AFDC benefits to be provided only to needy families. See Shea v. Vialpando, 416 U.S. 251 (1974). He then argues that the most sensible reconcilation of the concepts of “income” and “resources” is “. . . one that best encourages a family to budget its income and re- sources to take care of itself. ... [T]he Secretary’s treat- ment of personal injury . . . awards gives the statutory language its congressionally intended effect.” See Brief for the Secretary of Health and Human Services as Re- spondent Supporting Petitioner at 13. However, his new regulation utterly fails to achieve this Congressional pur- pose. Not only does the Secretary refuse to recognize the ordinary meaning of “income,” but he denies AFDC recipients the opportunity to budget their personal injury awards for future expenses. For example, in the class action pending in North Carolina, one plaintiff alleged she was forced during her — 11 period of disqualification to pawn part of her furniture, and to sleep on the floor with her minor child, in order to purchase food for her child and to obtain medical care for herself. See p. 3, supra. Hence, circumstances be- yond her control dictated that she could not budget her personal injury award as “income” in the manner the Secretary contemplates. In this case and many similar cases, in addition to thwarting the Congressional purpose of encouraging budgeting by the AFDC recipient, the application of state and federal regulations purporting to interpret the lump sum rule utterly defeats the purpose of the AFDC statute which is to assist needy families. Both the Secretary’s regulation and his interpretation of the statute ignore the ordinary meaning of the term “income,” thereby imposing harsh inequities upon needy parents and their children. Congress intended that per- sonal injury awards be excluded from the definition of income in the AFDC statute. In order to fulfill the Con- gressional intent to encourage budgeting and to assist the needy, Health and Human Services’ new regulation must be declared invalid. Only by affirming the decision in Reed will these families be afforded the means to meet their basic needs of survival as Congress intended. II. THE SECRETARY’S INTERPRETATION OF THE OBRA LUMP SUM AMENDMENT IS NOT EN- TITLED TO DEFERENCE. The Secretary of Health and Human Services, by en- acting 45 C.F.R. § 223.20(a) (3) (ii) (F), has impermissi- bly rewritten the OBRA lump sum statute. He now asks the Court to legitimate his nonconformance with Congres- sional intent by holding that his interpretation of the OBRA lump sum rule is “reasonable” and, as such, is entitled to deference. The Secretary’s interpretation of OBRA as expressed in his new regulation and in his brief is not entitled to deference since his interpretation is in- consistent with Congressional intent and his own prior 12 pronouncements, and defeats the very purpose of the AFDC Act. Although it is true that the Secretary’s interpretation of the Social Security Act would be entitled to deference, this deference does not abrogate the Court’s duty to in- terpret the Act in a manner consistent with Congres- sional intent. Federal courts, not administrative agen- cies are the final arbiters of statutory construction. This Court has held that “ ‘deference owed to [agency inter- pretation of statutes they are empowered to administer ] cannot be allowed to slip into judicial inertia which result in the unauthorized assumption by an agency of major policy decisions properly made by Congress.’ ” Bureau of Alcohol, Tobacco and Fire Arms v. Federal Labor Relations Authority, 104 S.Ct. 439, 444 (1983) (quoting American Shipbuilding Co. v. NLRB, 380 U.S. 300, 318 (1965)). This Court further mandates that courts must not rubber-stamp administrative decisions; rather, they must insure that these decisions are con- sistent with the statutory mandate and do not frustrate Congressional policy underlying the statute. 104 S.Ct. at 444. Ordinarily, administrative interpretations of statutory terms are given important—but not controlling—sig- nificance. Batterton v. Francis, 482 U.S. 416 (1977). However, deference that the Secretary seeks is con- strained by this Court’s “obligation to honor the clear meaning of a statute, as revealed by its language, pur- pose, and history.” Southeastern Community College v. Davis, 442 U.S. 397, 411 (1979) (quoting Teamsters v. Daniel, 439 U.S. 551, 566 (1979) ). The obvious inconsistency of the new lump sum regula- tion with Congressional intent can readily be seen from the legislative history of OBRA. When it revised 42 U.S.C. § 602(a) (17), Congress did not expahd, constrict or otherwise alter the definition of “income.” See p. 7, supra. The language of the lump sum rule and the history surrounding it in no way suggest that Congress 13 intended to change anything other than the treatment of lump sum “income.” The weight afforded to agency interpretative regula- tions “depend[s] upon the thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade, if lacking power to control.” Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944) (emphasis added). See also St. Martin Evan- gelical Lutheran Church v. South Dakota, 451 U.S. 772, 783, n. 18 (1981); K. Davis, Administrative Law, § 5.03 (3rd Ed. 1972). In this case, there has been a gross lack of consistency by the Secretary interpretating the OBRA lump sum rule. Previously, but long after enactment of OBRA, the Secretary had propounded the policy of treat- ing as “resource,” not “income,” damage to a “resource” such as a car. (J.A. 46-47) Now, with the enactment of the final regulation 45 C.F.R. § 223.20(a) (3) (ii) (F), the Secretary requires states to treat resource damage awards as “income” and to be counted under the lump sum rule. Brief for the Secretary of Health and Human Services as Respondent Supporting Petitioner at 19. Furthermore, the Secretary previously permitted the states to treat personal injury awards as either “income” or “resource.”’ (J.A. 62) Then, while cases on this issue were pending throughout the country, the Secretary is- sued proposed new regulations which would require all states to treat all “windfalls” as “income” under the lump sum rule. 49 Fed. Reg. 45558 (November 14, 1984). No mention of personal injury awards was made in his definition of “windfall.’”’ However, when the final regulation was issued—after a Third Circuit decision unfavorable to the Secretary’s position and while this case was pending before this Court on petition for a writ of certiorari—the Secretary specifically included personal injury awards in the definition of “income.” 50 Fed. Reg. 9205 (March 18, 1986) (to be codified at 45 C.F.R. § 233.20(a) (3) (ii) (F). | 14 Not only has the Secretary vacillated in his rulings, but he has conveniently contrived new versions of the lump sum rule to meet the objections raised in the various court cases. This type of blatant manipulation of agency regulation by the Secretary is not entitled to deference. Under the Secretary’s interpretation of OBRA, Con- gressional intent is badly frustrated. The AFDC pro- gram was created to encourage “the care of dependent children in their own homes... . by enabling each State to furnish financial assistance .. . to needy depending children . . . to help maintain and strengthen family, life and ... maximum self support... .” 42 U.S.C. § 601. Yet, by improper operation of the lump sum rules, this purpose is thwarted, leaving AFDC families destitute. See, p. 11, supra. Therefore, the Secretary’s regulation contradicts the provisions of the statute and frustrates congressional intent. Further, the regulation exceeds the Secre- tary’s statutory authority and is arbitrary and capri- cious. Therefore, the regulation is not entitled to any deference whatsoever. Securities Industry Association v. Board of Governors, 104 S.Ct. 2979 (1984); 5 U.S.C. § 706; see also Yuckert v. Heckler 774 F.2d 1365 (9th Cir. 1986). Where, as in this case, the regulation is in- valid, it is the intention of Congress as interpreted by the Court that must prevail. Id. The Secretary attempts to set a dangerous precedent. He seeks to insure that the Court will adopt his position by issuing a regulation at the eleventh hour of this litigation by arguing that this regulation is “[a] reason- able interpretation of {the AFDC] statute... .” Brief for the Secretary of Health and Human Services as Re- spondent Supporting Petitioner at 10. This backdoor ap- proach to law making is repugnant to the judiciary’s role in statutory interpretation. As this Court accurately noted in Securities Industry Association v. Board of Governors: 15 [D]eference is not a device that emasculates the significance of judicial review. Judicial deference to an agency interpretation of a statute “only sets the significance of judicial analysis; it does not dispell it.” A reviewing court “must reject administrative construction of [a] statute, rather reached by ad- judication or by rulemaking that [is] inconsistent with the statutory mandate or that frustrates the policy that congress sought to implement.” 104 S.Ct. at 2983 (1984) (citations omitted). The Secretary’s self-serving interpretation of OBRA is unreasonable and clearly disregards congressional in- tent as well as judicial power. Therefore, the Court should not accord any deference to the Secretary’s inter- pretation of the OBRA lump sum amendment as ex- pressed in 45 C.F.R. § 233.20(a) (3) (ii) (F). CONCLUSION For the reasons stated above, the Court should affirm the decision of the United States Court of Appeals for the Fourth Circuit. Respectfully submitted, Of Counsel DAVID H. HARRIS, JR. RICHARD M. TAYLOR, JR. SUSAN M. PERRY * Executive Director Eastern Carolina Legal Legal Services of North Carolina Services 112 S. Blount Street P.O. Box 2688 Raleigh, N.C. 27611 Wilson, N.C. 27893 (919) 291-6851 bale nt atl Attorneys for Amicus Curiae, Legal Services of Pamlico Sound Legal Services : P.O. Box 1167 North Carolina New Bern, N.C. 28560 * Counsel of Record Peccy S. LEVIN Eastern Carolina Legal Services P.O. Box 2688 Wilson, N.C. 27893 CAMILLA MCCLAIN Pamlico Sound Legal Services P.O. Box 7283 Greenville, N.C. 27884 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0074%3A14. Public record. Not legal advice.