Amicus Curiae Brief — Goldberg v. Kelly

Nos. 62 and 14

Us

FILED

» Mates °°

JOHN F. DAVIS, CLERK

OcToBER TERM, 1969

oe

Jack R. Gotpserc, Commissioner of Social Services of the

City of New York,

Appellants,

Vi

JOHN KELLY, et al.,

Appellees.

Pp

Mar WHEELER, e¢¢ al.,

Appellants,

—v.—

Joun Monteomery, Director of the State Department of Social

Welfare, and Ronaup Born, General Manager of the San

Francisco City and County Department of Social Services,

Appellees.

ON APPEALS FROM THE UNITED STATES DISTRICT COURTS FOR THE

SOUTHERN DISTRICT OF NEW YORK AND THE

NORTHERN DISTRICT OF CALIFORNIA

wa renner

wt

BRIEF IN REPLY TO THE UNITED STATES AS

AMICUS CURIAE

Perer E. SrrKIn LEE A. ALBERT

Sreven J. ANTLER STEVEN J. CoE

Spney M. WoLINSKY Nancy Durr Levy

CuaRLEs STEPHEN RALSTON Lucy V. Karz

1095 Market Street Center on Social Welfare

San Francisco, Calif. 94103 Policy and Law

: 401 West 117th Street

—s for Appellants in New York, New York 10027

0.

Attorneys for Appellees in

Epwarp V. SPARER No. 62

Micuagn §. Zoua

Winton D. Woops, Jr.

Of Counsel

(Counsel continued on inside cover)

i

Martin —

Roger Baldwin Foundgt

of the American Civ

Liberties Union

156 Fifth Avenue

New York, New York 10019

Haroip J. Rorawax

Davm Diamonp

Davip Gruman

MARIANNE RosENrFiELp

Perer H. Darrow

STEVE WIzNER

MFY Legal Services, Ine.

320 East Third Street

New York, New York 10009

Attorneys for Appellees in

No. 62

Table of Authorities

TABLE OF CONTENTS

PAGE

ARGUMENT:

I.

Il.

il.

ConcLUSION

The Constitutionality of Neither the Social

Security Act Nor the H.E.W. Regulations

Thereunder Is in Question in This Case ............

The Official Expressions of Federal Policies in

the H.E.W. Regulations Accommodate and En-

dorse the Due Process Requirements Invoked

Here

The “Advance Notice of Questions” Require-

ment Is Not an Innovative Experiment Requir-

ing Modifications of Prior Practice or Time for

Assessment

The Government’s Invocation of the “Right-

Privilege” Doctrine and the OASDI Program

Provides No Intelligible Standard for Deter-

mining the Requirements of Due Process ............

A Hearing Before Termination Does Not Im-

pose Unusual or Undue Fiscal or Administra-

tive Burdens

APPENDIX:

District Court Brief of the United States as

Amicus Curiae in Goldberg v. Kelly

13

17

la

~ AN ge ERNE

i

TABLE OF AUTHORITIES

PAGE

Cases:

Bailey v. Engleman, Civ. No. 654-69 (D.N.J. Sept. 22,

1969) sonnsnnnnanitinnsnnaninnioniniiieebaembiebissstics 18

Blumenthal v. F.C.C., 318 F. 2d 276 (D.C. Cir. 1963) .. 17

Coleman v. Ott, Civ. No. 68-1169-C (D. Mass. Jan.

1969) ... . 18

Engineers Public Service Co. v. S.E.C., 138 F. 2d 936

(D.C. Cir. 1943), judgment vacated and case re-

manded as moot, 332 U.S. 788 (1947) -..... 5

Garfield v. Goldsby, 211 U.S. 249 (1908) 20. 16-17

Gonzales v. Freeman, 334 F. 2d 570 (D.C. Cir. 1964) ..6,17

Greene v. McElroy, 360 U.S. 474 (1959) 0... 6

Hannah v. Larche, 363 U.S. 420 (1960) 2.02. 14

King v. Smith, 392 U.S. 309 (1968) 4,17

Machado v. Hackney, 299 F. Supp. 644 (W.D. Tex.

1969) 18

Muller v. Zoeller, Civ. No. 69-C-2 (W.D. Wise. Jan. 20,

1969) 18

Ng Fung Ho v. White, 259 U.S. 276 (1922) oeececccon i7

Oestereich v. Selective Service Local Bd. No. 11, 393

U.S. 233 (1968) 9

Panitz v. District of Columbia, 112 F. 2d 39 (D.C. Cir.

1940) ........ 5

PAGE

Phillips v. Commissioner, 283 U.S. 589 17

Robertson v. Born, Civ. No. 654-69 (N.D. Calif. June

12, 1969) 18

Shapiro v. Thompson, 394 U.S. 618 (1969) .................. 5,17

Shaughnessy V. United States, 345 U.S. 206 (1953) ... 6

Sims v. Juras, Civ. No. 69-238 (D. Ore. Aug. 21, 1969) 18

Snaidach v. Family Finance Corp., 395 U.S. 337 (1969) 16

Willner v. Committee on Character and Fitness, 373

US. 96 (1963) . 17

Statutes :

Ggsc. eres) ....................... 3

RII Gihiith Sania ci nsscctnnansodioninns +

$402 ... TL oT 15

SN. Siicccriniunsiciprotas 15

a 15

SCRE ESR 15

§$602(a)(4) ee. 3

§602(a)(5) ....... 4

$606(e)(1) -...... 6

§1202(a) (4) 3

§1202(a) (5) ™ 4

§1352(a) (4) ..... 3

PIII” ccsescccitisssnsittichiiacty 3

§1382(a)(5) .... 4

iv

PAGE

Regulations:

H.E.W. Handbook, Pt. IV

cepa, he OTS 10

PI sscnieveiceosnisuecimsiianmonsninciniiinacsagict

§2220(5)(a) (March 18, 1966) [now §2200(e) (1)]

11, 12

§2220(5)(b) (March 18, 1966) [now §2200(e)(2)] 1

§2230(5) (March 18, 1966) [now §$2300(e)(1)] .. 49

§2230(5)(a) (March 18, 1966) [now §2300(e)(5)] 12

§2230(5)(¢) (March 18, 1966 [now §2300(e) (2) (3)]

11,12

tity ot dee A ROA NIA I 12

§2230(5)(e) (March 18, 1966) [now §2300(e)(2)] 19

§2300(d) (5) 9, 11, 12, 13

§5514(2) “aS

$6100 ; =

§$6200-6400 . —

PE silat naptiaacipinniaiendennibcuniiicenighicauiaeemen a 6

§6200(b) ..... meee 4

§$6200(k) 8

§6500(a) ‘

§6500(b) . ial 3, 14,17

20 C.F.R. §404.910 15

§404.968 (a) 15

45 C.F.R. 202.3 me 5

203.1 5

205.10 4, 5, 8, 14

205.20 5

ME sti cite cencitunsen eatin 5

PAGE

Calif. Social Services Manual, Section 44-325.43 _.......... 10

Mississippi, Manual See. F, pp. 6101-6103 —.............. 21

18 N.Y.C.R.R. §82.1 13

$351.22 13

§351.23(a), (b) 13

New York City Dept. of Soc. Serv., Procedure No. 69-7

(Jan. 15, 1969) 1(4) (a) 21

Washington, D.C., Handbook of Public Assistance

Policies and Procedures (HPA-IT) BR 1.1, III,

See. 17 21

Miscellaneous Materials:

P. Dodyk, Cases and Materials on Law and Poverty... 4

113 Cong. Rec. 23055, 90th Cong. Ist Sess. ..................-.-- 7

Graham, Public Assistance: The Right to Receive;

The Obligation to Repay, 43 N.Y.U.L. Rev. 451

(1968) 21

Jones, “The Rule of Law in the Welfare State,” 58

Colum. L. Rev. 143 (1958) 22

Mississippi Dept. of Welfare, Division of Statistics ... 20

New York City Dept. of Soc. Serv., Review Section

Reports for Quarter Ending Mar. 31, 1969, and

Months Ending Apr. 30, 1969 and May 31, 1969 ........ 19

PAGE

New York City Dept. of Soc. Serv. Monthly Statistica]

TR I Te Silesctiteniictinensecpntiniasietitenainitisieen ed 19

New York State, Letter of Commissioner, Dept. of

Soc. Serv. to Local Commissioners

Social Security Programs in the United States, US,

Dept. of Health, Education and Welfare, Soc. See.

Admin., March 1968

Welfare in Mississippi, A Report of the Mississippi

State Advisory Committee to the United States

Commission on Civil Rights (February 1969) _. mI

' ,

) i

eae

In THE

Supreme Court of the United States

Ocroser Term, 1969

Nos. 62 and 14

——

Jack R. GotpBerc, Commissioner of Social Services

of the City of New York,

Appellants,

Ve

Joun Ke ty, et al.,

Appellees.

—_$—~>

Mae WHEELER, ef? dl.,

Appellants,

—V.—

Jonx Montcomery, Director of the State Department of

Social Welfare, and Ronatp Born, General Manager

of the San Francisco City and County Department of

Social Services,

Appellees.

ON APPEALS FROM THE UNITED STATES DISTRICT COURTS

FOR THE SOUTHERN DISTRICT OF NEW YORK AND THE

NORTHERN DISTRICT OF CALIFORNIA

a

BRIEF IN REPLY TO THE UNITED STATES AS

AMICUS CURIAE

2

Appellees in No. 62 and Appellants in No, 14 jointly

submit this brief in reply to the Brief for the United

States as Amicus Curiae, in which the Government now

argues that the currently applicable H.E.W. Policies, saiq

to represent the “expert judgment of the Secretary” op

“cogent policy considerations,” Gov. Br. 23, 24, should con.

trol the constitutional standards for termination of wel.

fare payments. This position stands in sharp contrast With,

at times in opposition to, the exposition of the United

States as amicus curiae below in Goldberg v. Kelly of the

very same federal regulatory policies invoked here and

of their relevance to constitutional Standards. We have

therefore reprinted in full the Government’s earlier ey.

position in the Appendix to this Reply.

I.

Let us first put aside the Government’s intimation that

this constitutional attack on state administrative prac.

tices draws into question, in some undefined manner, the

“fair hearing” provision of the Social Security Act or

the currently applicable H.E.W. regulatory policy. The

constitutional validity of neither is under review in this

Court. The challenged terminations of public assistance

benefits were effected by state and local administrators

under state law and administrative policies. No federal

statute or regulation requires (or, as we shall establish,

encourages) such terminations without a hearing. It is

*The brief amicus curiae of the United States in Goldberg v.

Kelly was submitted to the three-judge district court in October,

1968, in response to that court’s request to the Attorney General

for the views of the United States.

| ——

3

state administration of these programs generally which

entails the eligibility problems and abuses necessitating con-

stitutional accountability. As the United States said and

reiterated in its amicus brief below:

“As for the AFDC program, whether the plaintiff-

clients or the defendant-State and local agency should

prevail in this case, it appears, as will be discussed

below, that there will be no violation of Federal re-

quirements.” Reply App. 2a.

Our attack on state regulations does not question the

constitutionality of the “fair hearing” provisions of the

Social Security Act, 42 U.S.C. §§302(a) (4), 602(a) (4),

1202(a) (4), 1352(a) (4), 1382(a)(4).2 Although Congress,

as is its wont in such procedural matters, did not attempt

to define what was “fair” over the entire spectrum of dis-

putes between an applicant or recipient and the agency,

no inference may be drawn therefrom.” All that can fairly

be said from the statutory command of a “fair hearing”

is that Congress intended the customary requirements of

fairness embodied in procedural due process to govern wel-

fare hearings. H.E.W. has so interpreted the term in spec-

ifying at length the manner in which the states must con-

duct the hearing. H.E.W. Handbook, Pt. IV, §§6200-6400.

H.E.W.’s regulation providing continued federal partici-

pation where the state maintains assistance pending the

hearing decision, H.E.W. Handbook, Pt. IV, §6500(b), ob-

2These provisions are applicable to state programs for Old Age

Assistance, Aid to Families with Dependent Children, Aid to the

Blind, Aid to the Permanently and Totally Disabled and Aid to

the Aged, Blind and Disabled, respectively.

aIn the one instance in which Congress enacted requirements

dealing solely with recipients, the Work Incentive Program, it

required a hearing prior to withdrawal of aid for refusal to ac-

cept employment. 42 U.S.C. §633(g).

4

viously is premised on an interpretation of co i

intent not inconsistent with a prior “fair hearing”:

Moreover, the failure of the currently applicable federal

regulations to require a prior hearing as a prerequisite to

approval of a state plan cannot be construed as a consti.

tutional judgment of the Secretary or a constitutional de.

ficiency in the federal regulations. The H.E.W. procedural

regulations at any point in time represent the minimal

federal requirements for continued funding of a state wel.

fare program. Reply App. 2a. Because of the exceedingly

difficult problems of administrative enforcement of federal

requirements, cutoff of federal funds to the states being

the only sanction, H.E.W. has not taken an expansive view

of its statutory powers generally, see King v. Smith, 399

U.S. 309, 337-38 (1968), or specifically of its vague author.

ity to require “proper and efficient” methods of administra.

tion. 42 U.S.C. $§302(a)(5), 602(a)(5), 1202(a)(5), 1359

(a)(5), 1382(a)(5).* As a result, federal regulatory pol-

*The Government alludes to, but does not quite rest upon, a

literal reading of “a fair hearing . . . to any individual whose

claim for aid . . . is denied” to obliterate any distinction between

applicants and recipients of aid. Such a literal reading would

contradict H.E.W.’s own settled construction of the statute re

quiring a “fair hearing” for any agency action adversely affecting

an individual’s situation, monetary and non-monetary, H.E.W.

Handbook, Pt. IV, §6200(b), and also contradict H.E. W.’s inter-

pretation evinced in its prior hearing regulation, which does, after

all, implement the statutory “fair hearing” provision. 45 C.F.R.

§205.10. This reading would also seemingly require persons ter-

minated to reapply or aid as a prerequisite for the hearing, a

practice that H.E.W. has found offensive to the federal act. See

In the Matter of The Conformity of the Lowisiana Plan for Aid to

Dependent Children Under Title IV of the Social Security Act,

in P. Dopyx, Cases aND MaTeriats on Law AnpD Poverty 131-136.

* H.E.W.’s skittishness under this provision may be seen not only

in the postponement of the effective date of the prior hearing

regulation, but also in a similar postponement of the regulation re-

5

iey often does not reflect vigorous pursuit of the central

purpose of the federal programs—protection of the eco-

nomic security of individuals in need. Nonetheless, the

states are at the very minimum obliged to obey the dic-

tates of constitutional standards. Shapiro v. Thompson,

904 U.S. 618, 633 (1969). This is so whether or not these

dictates are embodied in the applicable federal regulations.

While H.E.W. may not, of course, continue to fund a state

program found to be administered in an unconstitutional

manner, Shapiro v. Thompson, supra, like other adminis-

trative agencies it does not possess, nor has it assumed,

the power to resolve disputed constitutional questions that

have not been authoritatively settled in the courts, En-

gineers Public Service Co. v. S.E.C., 188 F. 2d 936 (D.C.

Cir. 1943), judgment vacated and case remanded as moot,

939 U.S. 788 (1947); Panitz v. District of Columbia, 112

F. 2d 39 (D.C. Cir. 1940), though it quickly moves to

implement such decisions by regulations, e.g., 45 C.F.R.

4203.1 (Aug. 8, 1968) ; 45 C.F.R. §202.3 (May 29, 1969).

HLEW. has not purported to exercise such a power here.

As the Government succinctly explained below, “it does

not appear that the validity of the Federal policies under

either the Federal statute or the Constitution is in issue

here.” Reply App. 3a. The identical federal policies pre-

vail today.

The standards which were left by Congress for judicial

determination in accordance with general principles of pro-

cedural due process can mean no less in welfare hearings

quiring provision of attorneys at fair hearings, 45 C.F.R. §§205.10,

990.25(a) (as amended Aug. 19, 1969), and in the repeal, in effect,

of the regulation requiring use of the declaration method to estab-

lish eligibility, 45 C.F.R. §205.20 (Jan. 17, 1969).

6

than in customary administrative decision making. gq

Goldberg, Br. for Appellees 43-45. Among these stand.

ards is a well-founded and established distinction between

initial denial and revocation of statutory rights, entitle.

ments or privileges, Gonzales v. Freeman, 334 F. 2d 570,

575 (D.C. Cir. 1964); Shaughnessy v. United States, 345

U.S. 206 (1953); Greene v. McElroy, 360 U.S. 474 (1959),

which is as valid and recognized in the welfare context

as in all others.*

Il.

The Government’s repeated assertion that the Secretary

has confronted and acted upon “cogent policy considera.

tions” in opposition to prior hearings cannot be reconciled

with the Secretary’s official expression of federal policy in

5 By hypothesis the recipient of aid is far more dependent and

vulnerable than the applicant. The recipient has been found fully

eligible, which means without resources or income, employment or

opportunity for employment. Such persons must yield whatever

resources they come by to the welfare department. They therefore

await and expect the bi-weekly check to cover the most immediate

of needs—shelter, food and clothing. They are also more exposed

to arbitrary treatment stemming from their ongoing personal rela-

tionship with a caseworker who administers their subsistence

grant.

Federal and state welfare regulations well recognize the dif.

ference. H.E.W. makes clear that aid may not be revoked with-

out an administrative finding, supported by clear evidence, of

ineligibility, H.E.W. Handbook, Pt. IV, §§6100, 6200; aid, how.

ever, may be denied unless the applicant establishes eligibility,

H.E.W. Handbook, Pt. IV, §§2000-2999. The statute also provides

that the applicant for aid may receive temporary assistance during

the 30-day period allowed for investigation of eligibility, 42 U.S.C.

§606(e)(1). The terminated recipient deemed ineligible most often

may not reapply or receive emergency assistance, but rather must

wait the far longer and more uncertain period for the fair hearing

to re-establish eligibility. The situations are not, as the Govern-

ment implies, comparable.

7

the H.E.W. regulations. These regulations, at the time of

the Government’s brief below and now, both accommodate

and in large part endorse the due process standards relied

on here. Upon exposure of the due process claim in these

cases, but before any decision, H.E.W. added to the fair

hearing provisions authorization for states to continue aid

pending the “fair hearing,” without loss of federal match-

ing funds. Those funds are now available for all attendant

expenditures, including benefits paid during the interim pe-

riod. H.E.W. Handbook, Pt. IV, §6500(b). As the Govern-

ment explained below, Reply App. 3a, federal matching

provisions often go beyond coercive federal conditions, in

order to encourage, hardly discourage, a specified method

of administration.° This currently applicable federal policy

embodied in the matching provision hardly bespeaks a con-

sidered administrative judgment that prior hearings im-

e an unwarranted fiscal burden on federal revenues or

create a likelihood that “large numbers of ineligible persons

[will or might] enforce a right to receive benefits for sub-

stantial periods of time.” Gov. Br. 26.7 At the same time,

HLE.W. also expanded from 30 to 90 days the federal match-

ing periods in which the local agency investigates ineligi-

bility and conducts its own termination proceedings.

HLE.W. Handbook, Pt. IV, §5514(2). Being at least equal

to the 60 days theoretically allowed for the state “fair

hearing,” the enlarged period certainly accommodates &

‘Statutory matching provisions are often designed to accom-

plish the same purpose. New services provided by Congress for

AFDC recipients in January 1968 were attended by liberal match-

ing provisions to encourage the states to make use of these meas-

ures. 113 Cong. Ree. at 23055, 90th Cong. Ist Sess. (Rep. Mills).

*The regulation was promulgated with full appreciation of the

tardiness of the state-administered “fair hearing.”

hearing procedure before the local agency.* To diminish

a part of the fiscal incentive for termination followed by

dilatory hearing process, H.E.W. departed from the gen.

eral rule that aid may be afforded for current needs only,

by requiring the states to make retroactive payments where

termination is later reversed in the “fair hearing.” H.E.W.

Handbook, Pt. IV, §§6200(k), 6500(a).

Finally, on January 23, 1969, the Secretary promulgated

the prior hearing regulation requiring continuation of aid

in, it now appears, all termination cases except challenges

to constitutional or statutory validity.’ Although recently

* Candor requires the observation that all of these time periods

have been and remain largely theoretical, save perhaps for the

required periodic reinvestigation every three or six months in

AFDC, since that entails an entry at that time in the individual

ease record. The 30-day federal matching rule for acting upon

information indicating possible ineligibility was and remains in

the judgment of the case unit to decide when such information

warrants investigation. That decision is in most cases made at

the time of the follow-up and then reflected in the case record,

There is no direct federal or state supervision of the line workers

and state procedures are usually not designed to interfere with

the flow of federal matching funds.

As we have seen, the federal 60-day period for “fair hearings”

was and remains exhortatory; there is no federal action, short of

defunding the state program, for dilatory “fair hearings.” Gold-

berg, Br. of Appellees 59-61.

® The regulation appears at Goldberg, Br. of Appellees 62. While

not an example of clarity to be easily applied by welfare officials,

see Goldberg, Brief of National Institute for Education in Law

and Poverty as Amicus Curiae 54 (hereinafter Br. of Institute),

and Goldberg, Br. of Appellees 56, “issue of fact, or of judgment”

has been interpreted by the Government to include all termination

disputes except those involving questions of statutory or consti-

tutional validity. The Government would seek to preclude hear-

ings prior to termination “where the claimant challenges only the

provisions of law or settled agency policy.” Gov. Br. 33. The

recipients terminated in these cases do not make such challenges

and would be fully satisfied if prior hearings were afforded in all

other cases of termination. We agree that questions of statutory

—

ned to July 1970, and practically unmentioned in the

Government’s brief, the regulation was not repealed and

currently represents a federal policy which the states must

to implement. It was not an intent to observe the

riment said to be contained in the “substantial modi-

feations” effective July 1968, and certainly not to allow the

states time to digest these earlier “modifications,” see,

infra, PP- 10-13, that accounts for the postponement. The

delay, as California candidly admits, Wheeler, Br. for Ap-

pellees 18-19, was a response to the vigorous political

opposition of many states to this and other recently pro-

mulgated procedural regulations.” This political concession

to the states cannot properly be considered a part of the

administrative expertise of the Secretary ; nor is it evidence

of any cogent policy considerations considered by him and

thus entitled to some deference by this Court. The federal

regulatory structure simply does not lend credence to the

speculative fears set forth in the Government’s brief.

9

Il.

We have dealt with the constitutional deficiencies of the

new federal “advance notice” requirement, H.E.W. Hand-

book, Pt. IV, §2300(d)(5), in our discussions of the Cali-

fornia and New York City pre-termination procedures.

construction or constitutional validity are not appropriate for

agency determination and are best settled by resort to the judicial

process. Cf. Oestereich v. Selective Service Local Bd. No. 11, 393

US. 233, 239 (1968) (Harlan, J. coneurring). The issue raised by

Mrs. Guzman in Goldberg was to the applicability of agency policy

in her case, Goldberg, Br. of Appellees 68, n. 81, and the “in-

advertence” noted by the Government was its own, and not the

district court’s.

See note 4 supra, p. 4.

10

Wheeler, Br. for Appellants 14-23; Goldberg, Br. for Appel.

lees 48-50. Several points, however, require clarification,

Since both the California and New York City procedures

fully comply with this Handbook provision, it is clear that

“advance notice of questions” is satisfied by California's

and New York’s written forms, and the recipient’s “oppor.

tunity to discuss his situation” before termination is satis.

fied by New York City’s letter of protest procedure. Se.

Reply App. 7a." “Advance notice of questions” and the

required discussion, an addition to H.E.W.’s detailed pre.

existing code governing caseworker investigation of eligi.

bility, H.E.W. Handbook, Pt. IV, $2000, et seq., may occur

at any point during the investigation process, not neces.

sarily after investigation, and the procedure does not re-

quire a review by a relatively uninvolved official of the case-

worker’s reasons for termination. As the Government

states,

“It is merely a method of providing notice and screening

out those cases which can be resolved by informal pro.

cedures.” Gov. Br. 13.”

Nonetheless, the Government urges that this procedure is

a “substantial modification” of prior practice since, the

Government continues, formerly local agencies

11 Notice need be no more advance than California’s three days,

though one function of the federal requirement is said to be to

eliminate the “element of surprise.” Gov. Br. 12.

12The California procedure makes clear that it contemplates a

discussion between line worker and recipient of eligibility ques-

tions and not a review of the reasons for termination. “The op-

portunity to meet” under the California procedure is “to dis-

cuss the entire matter informally for purposes of clarification and,

where possible, resolution.” Calif. Social Services Manual, Section

44-325.43 [emphasis added]. The New York City procedure goes

somewhat beyond this, but the review it offers is predicated on the

ease record and a possible letter of protest from the recipient.

——

11

“were not required to inform recipients that an investi-

gation or evaluation was underway or to permit them

to participate in the process leading to this initial deci-

sion.” Gov. Br. 10.

This description of prior practice is irreconcilable with a

plethora of H.E.W. regulations antedating Section 2300

(d)(5) which mandate in great detail the eligibility infor-

mation to be provided recipients and their participation in

all redeterminations of eligibility (including the special in-

vestigations upon report as well as the periodic recertifica-

tions).

“At least one” personal interview with the recipient has

long been required for all such eligibility investigations and

redeterminations. H.E.W. Handbook, Pt. IV, §§2220(5) (b),

9930(5)(c) (March 18, 1966) [now Sections 2200(e) (2),

9300(e) (3) ]."* The Handbook also required that:

“Applicants and recipients will be relied upon as the

primary source of information about their eligibility.”

Section 2220(5)(a) (March 18, 1966) [now Section

2200(e) (1) J.**

HEW. interpreted this to require the local agency to ex-

plain to the recipient what questions remained to be solved,

18 We are without access to the regulations of the Department of

Health, Education and Welfare prior to March 1966. The substance

of the regulations requiring recipient involvement in eligibility

determinations certainly predates 1966, however.

4 The Handbook explains that determinations of eligibility (in-

cluding, of course, redeterminations) “are based on recognition

of the rights and obligations of applicants and recipients to be

responsible participants in the process.” H.E.W. Handbook, Pt.

IV, §2230(5) (March 18, 1966) [now Section 2300(e) (1)].

12

how he can resolve them, and the necessity for resolution,"

H.E.W. Handbook, Pt. IV, §2230(5) (a) (March 18, 1966)

[now Section 2300(e) (5)]. Obviously it has always been

understood that client assistance will be sought to dissipate

questions of possible ineligibility. Indeed, the agency wag

obligated “to help [recipients] provide needed informa.

tion.” H.E.W. Handbook, Pt. IV, §2220(5)(a) (March 18,

1966) [now Section 2200(e)(2)]. The role of the recipient

was underlined by the requirement that he agree to all steps

taken by the agency in its investigation of continued eligi-

bility, including contact with third parties who might be in

possession of relevant information. H.E.W. Handbook, Pt,

IV, §2230(5)(e) (March 18, 1966) [now Section 2300(e)

(2)].** Where, on the basis of all available information, the

agency determined that the requirements for continued

eligibility were not satisfied, it was under a duty to notify

the recipient of such a determination in writing, and include

therein “the reason why he has been determined to be in-

eligible”; the express purpose of notice was to enable the

aggrieved recipient “to express dissatisfaction with the

agency action.” H.E.W. Handbook, Pt. IV, §2230(5) (d)

(March 18, 1966) [now Section 2300(f) ].

These requirements certainly are not evidence of the

secret process without notice which the Government would

have us believe Section 2300(d)(5) was intended to elimi-

** “Tf the individual is reluctant or unwilling to help resolve the

question . . . the agency is responsible for considering carefully

with him his reasons.” H.E.W. Handbook, Pt. IV, §2230(5) (a)

(March 18, 1966).

** Recipients were to be afforded a “clear interpretation of what

information is desired, why it is needed, and how it will be used”

before consent is sought to secure information from collateral

sources. H.E.W. Handbook, Pt. IV, §2230(5) (ce) (March 18, 1966)

[now Section 2300(e) (2) }.

<<

nate. Except, therefore, as additional exhortation in this

rolix code, it is difficult to discern what mandatory change

is worked by Section 2300(d)(5). Whatever its purpose,

the Section does not represent an experiment requiring

substantial modification of prior state practice or neces-

sitating time to adequately assess its effectiveness. See

Gov. Br. 16. Pervasive personal contacts between case-

worker and client in eligibility redetermination, and an

opportunity to discuss eligibility questions with the case-

er have been the rule, not the exception, in welfare

13

work

administration.”

IV.

The Government does not dispute that due process guar-

antees “against governmental capriciousness and arbitrari-

ness” apply to the distribution of public assistance

benefits. Gov. Br. 19-20. But it would justify summary pro-

cedure for revocation of such benefits on the legal principle

that they are not “property (in the classic sense),” Gov. Br.

29, that they are less “tangible” than OASDI (Social Se-

curity) benefits, Gov. Br. 22, and that the interests of eli-

gible recipients in retention of them is “more tentative”

than one’s interest in “property,” Gov. Br. 27. These

opaque legalisms will be recognized as variations on the

T At least since 1963 New York State has mandated that “in

eases where there is indication of changes in need or resources”

personal contacts with the recipient “as needed in excess of the

minimum ... shall be made.” 18 N.Y.C.R.R. §351.22. The mini-

mum referred to in the case of Home Relief and AFDC clients is

once every three months. 18 N.Y.C.R.R. §82.1. The State regula-

tions contemplate the possibility of additional personal contacts

even in the case of periodic redeterminations (which in the case of

Home Relief and AFDC recipients must be made every six months).

18 N.Y.C.R.R. §351.23(a), (b). Also, see, Goldberg, Br. for Appel-

lees 33-37, 49-50.

14

theme of rights and privileges and invocation of the doc.

trine that the latter are not entitled to traditional consti.

tutional safeguards against revocation. The inappropriate.

ness of this dichotomy, particularly in a benefit program

which sought “to introduce ... a government of laws,”

Gov. Br. 21, is argued in the principal briefs, Goldberg,

Br. of Appellees 12-13; Goldberg, Br. of Institute 10-17,

But the factors relied on by the Government to classify

interests as worthy or unworthy of procedural protection

under this dichotomy well reveal its irrelevancy in deter.

mining the procedural requirements of due process, The

comparison with OASDI is illustrative. Under the right-

privilege approach, the controlling difference is found in

the financing of OASDI through a trust fund and public

assistance through annual congressional appropriations,

How the mechanics of financing bears upon the impact and

character of the administrative decision, the nature of the

individual and governmental interests, the decision-making

process or “the type of proceeding involved,” Hannah y,

Larche, 363 U.S. 420, 440 (1960), is not explained. There

are critical differences between OASDI and public assist.

ance which bear directly upon the procedures that are due,

as H.K.W. has itself recognized,” but the right-privilege

dichotomy simply forecloses inquiry into them.”

** The Government’s assertion that it would be inconsistent to

require prior hearings in the case of AFDC terminations when

they are not available in the case of OASDI is curious in view of

the contrary position taken by H.E.W., the agency charged with

administering both programs. Federal financial participation is

now available to those states which choose to provide hearings

prior to termination of assistance, H.E.W. Handbook, Pt. IV,

§6500(b), and, effective July 1, 1970, all states will be required

to do so. 45 C.F.R. §205.10.

%* As the Government said below, “{t]he OASDI program is not

involved in this litigation.” Reply App. 2a. Accordingly, the

_

15

We do not assert a due process right to a prior hearing

in all circumstances of governmental action. Where the

question is essentially who is to hold property or benefits

nding adjudication, the requirements of due process may

vary. But that is not the question we face in welfare pro-

grams, the last line of public defense against severe pri-

vation. Where welfare aid is erroneously and arbitrarily

withdrawn before an opportunity to contest the decision,

what is at stake is the brute fact of survival and indeed

administration of that program, its actual procedures, and the

impact of suspension or termination have not been explored in

these cases. Some observations about the differences can be made,

wever.

nligibility for OASDI is not based on need and beneficiaries can

and usually do have resources and other sources of income. Social

Security Programs in the United States, 20-21, U.S. Dept. of

Health, Education and Welfare, Social Security Administration,

March 1968. Eligibility is based on objectively verifiable criteria

(age, death, family relationship and disability), 42 U.S.C. §§402,

432(c), and once established, is not subject to continuous re-

determination. There are no caseworkers in OASDI. Far fewer

events affect payment in OASDI than AFDC or OAA, and most

all of them are objectively ascertainable and verifiable (¢.g., in-

come subject to withholding, 42 U.S.C. §403(b)). The vast ma-

jority of terminations or suspensions are based on changes reported

by the beneficiary himself. In some circumstances, payments may

continue for a specified time beyond the date eligibility is found

to cease, Public assistance under the federal programs is available

to most OASDI beneficiaries.

Social Security benefits may in some circumstances be suspended

upon an administrative finding that there is a danger of over-

payment, after notice and a conference between an agency official

and a beneficiary. Upon suspension, the beneficiary may request

expedited payment or reinstatement upon alleging reasons wh

he is entitled to the payment. 42 U.S.C. §405(g) and 20 ORR.

§404.968(a). He may also request reconsideration of the suspen-

sion, 20 C.F.R. §404.910. The beneficiary is also entitled to a

prompt hearing before a Social Security hearing officer and an

appeal to the Social Security administrative appeals counsel. He

is then entitled to further review in the United States District

Court. The hearing process in OASDI, with judicial review, is

not unused. See generally Reply App. 1la-l5a.

te

16

any effective opportunity to contest the determination, As

we have seen in the instant cases, the interim hardships

are incalculable and a subsequent hearing largely illusory,

Indeed the Government observes that “[w]hile a substan.

tial proportion of ‘fair hearings’ have in the past led to

reversal or modification of adverse agency determinations,

only a small proportion of terminations result in requests

for hearings.” Gov. Br. 30, n. 12. In light of the interim

harms and the subsidized dilatoriness of the very subse.

quent “fair hearing,” this is not a case of flexibility of tim.

ing. The issue really is the availability and effectiveness

of any opportunity to be heard. See Goldberg, Br. of Ap-

pellees 58-61.

When the due process question is measured in these

terms, the necessity of maintaining assistance until a

hearing is apparent. We believe this Court recognized in

Snaidach v. Family Finance Corp., 395 U.S. 337 (1969),

the relevancy of the significance of the “property” to the

individual about to be deprived of its enjoyment, The

invalidation of ancient garnishment procedures was based

on the impact of summary process as applied to wages, “a

specialized type of property presenting distinct problems,”

395 U.S. at 430. The Court noted that summary process

“might well drive a wage-earning family to the wall.” 395

U.S. at 341-42. This decision, we believe, reflected a line of

cases in this Court requiring a high degree of procedural

fairness where an adjudicatory determination threatens a

shattering impact on an individual.”® Garfield v. Goldsby,

7° The Government’s distinction between benefits without cost to

the Government, such as broadcasting licenses, and Government

revenues is equally unhelpful in determining whether there is an

“extraordinary situation” warranting summary process. The Gov-

ernment’s interest in the proper use and allocation of such publicly

—

17

911 U.S. 249 (1908); Ng Fung Ho v. White, 259 U.S. 276

(1922) ; Willner v. Comm. on Character and Fitness, 373

U.S. 96 (1963).

V.

There is also no merit in the argument that summary

revocation can be justified as a means of accurately allo-

cating and limiting discretionary expenditures in the in-

terest of all welfare recipients. While no stranger to de-

fenses of welfare practices, King v. Smith, supra; Shapiro

vy. Thompson, 394 U.S. 618 (1969), this justification is par-

ticularly indefensible here in light of the very allocating

function of a fair hearing and the total lack of evidence

or argument to support the spectre of abuse.

We first must observe that the existing welfare system

cannot claim accuracy in allocating aid as one of its virtues ;

the inaccuracies weigh heavily on the side of underpay-

ment and arbitrary revocation. Goldberg, Br. of Appellees

38.39, 57; Gov. Br. 30-31. The arbitrary, indeed cavalier,

revocations of aid documented in the instant cases are

owned resources as the limited number of broadcasting channels

or air traffic routes is certainly no less than its interest in public

revenues, And these resources are certainly not property in any

classic sense. See, Blumenthal v. F.C.C., 318 F. 2d 276 (D.C. Cir.

1963), But that seg | tells us when, if ever, the Government

may summarily seize a broadcasting license or an air traffic route.

The constitutional question would not be changed if the Govern-

ment issued licenses to the highest bidder, thereby involving “pub-

lie revenues” as well as public resources. Cf. Gonzalez v. Freeman,

$34 F. 2d 570 (D.C. Cir. 1964). The “extraordinary situation”

represented by Phillips v. Commissioner, 283 U.S. 589, does not

support summary process in any situation affecting “public rev-

enues.” Largely based on history, this extraordinary situation

refers to the prompt collection of a tax, where payment is in

jeopardy and not revocation of statutory benefits. See generally,

Reich, The New Property, 73 Yale L. J. 733 (1964).

i8

not speculative; the denial of an effective hearing is not

calculated to diminish this pattern of administrative gy.

bitrariness. Speculative focus on the so-called “ineligible

individual” must not obscure the documented and

embedded characteristics of the present system. Nor should

the welter of statistics obscure the individuals and families

in the instant cases, and the many others Similarly sity.

ated, victims of the welfare system’s long emphasis op

saving money. They do not see the relaxation of consti.

tutional safeguards as somehow in the interests of all

or any welfare recipients.

Against the reality of these “thousands of personal trag.

edies behind the statistics of public assistance,” as the City

of New York puts it, Goldberg, Br. of Appellants 11, we

have a speculative cost argument that finds no support

in the regulatory view of H.E.W. or the view of New York

State, which does not join the City in this appeal.” Nor,

upon examination, is the speculation well founded.

The additional expenditures of a prior hearing are not

delineated by the number of persons receiving public as-

sistance, though all have a stake in the outcome of this

case. Nor is it relevant that some welfare recipients, about

2% in all, have joined together to deal with grievances

** Other courts, familiar with the factors of locai welfare admin-

istration, have reached a similar conclusion to that of the three

judge district court in Goldberg v. Kelly. Machado v. Hackney,

299 F. Supp. 644 (W.D. Texas 1969) (three-judge court) ; Sims

v. Juras, Civ. No. 69-238 (D. Ore. August 21, 1969) (three-judge

court) ; Robertson v. Born, Civ. No. 51364 (N.D. Calif. June 12,

1969) ; Bailey v. Engleman, Civ. No. 654-69 (D.N.J. Sept. 22,

1969) ; Miller v. Zoeller, Civ. No. 69-C-2 (W.D. Wise. Jan. 20,

1969) (temporary restraining order); Coleman v. Ott, Civ. No.

68-1169-C (D. Mass. Jan. 1969) (stipulation of dismissal on con-

dition that state adopt prior hearing procedure as outlined by the

district court in Goldberg v. Kelly).

—

19

collectively. They do not petition for a joint or mass ter-

mination hearing, and denial of a specific grant or indeed

adjustment of assistance is not comparable to withdrawal

of 8 bi-weekly subsistence grant. It is also incorrect to

infer the burdens from the gross number of cases ter-

minated. By hypothesis, we deal here with contested initial

decisions to withdraw aid, where the recipient, previously

found eligible, sufficiently believes that circumstances have

not changed to contest the caseworker’s assessment in &

hearing.

Experience in states affording a prior hearing before

cutoff leaves no doubt that the number of persons who do

pursue the hearing is limited, indeed disturbingly so in

light of recognized rates of erroneous terminations. New

York City is assuredly illustrative, with the largest number

of AFDC recipients in the country, a recipient population

relatively more aware of their legal rights, and with

greater access to legal assistance, an excess of adminis-

trative problems and errors, and a high rate of termina-

tions monthly. The overall figures indicate that from

January 20, 1969 to May 30, 1969, 1014** persons out of over

60,000" terminations requested a prior hearing, and that

approximately 51 percent of these persons prevailed in that

hearing. Indeed this reversal rate would pass muster even

under the Government’s test of whether more “eligible”

than “ineligible” persons request a hearing. The experi-

ence in California, Washington, -D.C., and Massachusetts

is not to the contrary.

2 New York City Department of Social Services, Review Section

Reports for Quarter Ending March 31, 1969, and Months Ending

April 30, 1969 and May 31, 1969.

*New York City Department of Social Services Monthly Sta-

tistical Report, May 1969, p. 10.

20

Nor is Mississippi, the Government’s chosen state, ap

exception to this experience. The so-called “200 per cant”

increase in requests for termination hearings in 1968-1949

arises against the virtual non-use of the delayed hearing

after termination (97 out of 22,776 terminations in 1967.

68).** And the reference to the “77 per cent” “ineligibie”

persons requesting pre-termination hearings in Mississipp}

ignores the 46 requests (out of the 288 prior hearings

in one year) “withdrawn” prior to the hearing, which

almost always occurs upon reinstatement by the local

agency. It also ignores the recent findings of the United

States Commission on Civil Rights on welfare administra.

tion in that state:

“When a hearing is finally granted, there is no as.

surance it will be fair. ... The local decision is often

assumed correct.” *

The report concludes that

“Despite the Social Security Act principle that eligible

persons have a ‘right to aid’ and to a ‘rule of law,’ the

Mississippi welfare system ignores this in practice.”™

The argument then comes down to assertion, and indeed

an assertion that we are to accept for many years, until

the refuting experience is certain. Gov. Br. 27. It will

readily be appreciated that the assertion is ultimately

founded on the premise of distrust too long characteristic

™ Mississippi Department of Welfare, Division of Statistics.

28 Welfare in Mississippi, A Report of the Mississippi State Ad

bog Committee to the United States Commission on Civil Rights

66 (February 1969).

26 Td. at 81-82.

21

of welfare administration. As the Government openly puts

it, “if payments are continued pending ‘fair hearing’ there

will be more requests for such hearings, and more pay-

ments will be made to ineligible individuals.” Gov. Br.

96-27. We have already argued that this premise is both

unfounded and impermissible where, as here, it results in

the denial of any effective opportunity to be heard. Gold-

berg, Br. of Appellees 56-61.

We stress here only that welfare agencies, rather more

than most, possess ample authority and flexibility both to

deal with abuses and to minimize the costs and incon-

veniences of fair process. Civil remedies in the form of

recovery provisions for overpayments frequently are in-

yoked” (and valid terminations are usually based on re-

sources or income). Criminal sanctions exist and are used

for misrepresentation of eligibility and knowing improper

retention of benefits. The nature of eligibility disputes,

being limited to a single issue or two, and a highly localized

system of administration allows unusual expedition in the

scheduling and holding of a welfare hearing. The pattern

of 3-6 month delays, sometimes longer, in the post-termina-

tion “fair hearing” process cannot be explained by the

practicalities of administration, as can be seen in the re-

vised two week pattern in those states now continuing aid

pending a hearing.” Although the welfare system is not

See Graham, Public Assistance: The Right to Receive; The

Obligation to Repay, 43 N.Y.U.L. Rev. 451 (1968).

* Mississippi, Manual Sec. F’., pp. 6101-6103 (fair hearing, 20

days) ; Washington, D.C., Handbook of Public Assistance Policies

and Procedures (HPA-II) BR 1.1, III, Sec. 17 (fair hearing, 15

days); New York State, Letter of Commissioner, Department of

Social Services, to Local Commissioners, Goldberg, Br. of Appellees

92 at 95 (local agency hearing, two weeks); New York Cit

Department of Social Services, Procedure No. 69-7 (January 19,

1969) 1(4) (a) (14 days).

known for the exercise of flexibility, the flexibility as.

suredly is there, and the minimal guarantees of due process

do not impose “fixed molds” precluding its exercise, Th

application of accepted norms of due process to welfar

terminations does not impose costs or burdens in excess

of those inherent in any system of Government that has

sufficient regard for the rights of individuals to provide

an opportunity to be heard in making adjudicatory deg.

sions affecting their vital interests.

In the final analysis, the Government’s brief puts before

this Court the questions posed by Professor Harry Jones

over a decade ago in “The Rule of Law in the Welfare

State,” 58 Colum. L. Rev. 143, 156 (1958) :

“Tn an era when rights are mass produced, can the

quality of their protection against arbitrary official

action be as high as the quality of the protection af.

forded in the past to traditional legal rights less nu.

merous and less widely dispersed among the members

of society? . . . Is it beyond hope that this vast new

company of officials can, in time, develop a tradition of

decision worthy of being called, in Pound’s fine phrase,

an ‘ethos of adjudication?’ ”

We submit the Government’s answer to these questions

is both untimely and incorrect.

—

23

CONCLUSION

The judgment of the District Court in No. 62, Goldberg

y, Kelly, should be affirmed.” The judgment of the District

Court in No. 14, Wheeler v. Montgomery, should be re-

versed.

Respectfully submitted,

Lee A. ALBERT

Steven J. Coie

Nancy Durr LEvy

Lucy V. Karz

Center on Social Welfare Policy

and Law

401 West 117th Street

New York, New York 10027

Attorneys for Appellees in No. 62

Martin GaRBUS

Roger Baldwin Foundation of

the American Civil

Liberties Union

156 Fifth Avenue

New York, New York 10010

Attorney for Appellees in No. 62

®The Government’s request that the judgment in No. 62 be

affirmed with modification of the conditions appears to be inad-

vertent error. The Government provides no legal grounds in its

brief to continue the preliminary injunction against the use of

option (b), the New York City procedure, in either the AFDC

or Home Relief Programs.

24

Harotp J. Rorawax

Daviy DiaMonD

Davi GiLMAN

MarIANNE ROSENFIELD

Peter H. Darrow

Sreve WIzNER

MFY Legal Services, Ine.

320 East Third Street

New York, New York 10009

Attorneys for Appellees in No. 63

Peter E. Srrxkin

Steven J. ANTLER

Siwney M. Wo.insky

CxHarLes STEPHEN Ratston

1095 Market Street

San Francisco, Calif. 94103

Attorneys for Appellants in No. 14

Epwarp V. SPaRER

Micwaet S. Zoia

Winton D. Woops, Jr.

Of Counsel

APPENDIX

- gy ee

REPLY APPENDIX

In THE

UNITED STATES DISTRICT COURT

For THE SouTHERN District or New York

68 Civ. 394

68 Civ. 864

>

Joun KE LLy, e¢ al.,

Plaintiffs,

_—V.—

Greorcz K. Wyman, et al.,

Defendants.

len

Brier OF THE UniTep States Amicus CURIAE

Introduction

This brief is filed by the United States in response to

the court’s request. It describes certain Federal policies

and procedures applicable to the Federal-State program of

Aid to Families with Dependent Children (AFDC), Title

IV, part A of the Social Security Act, 42 USC 601-609, and

those followed in the Federally-administered program of

Qld-Age, Survivors, and Disability Insurance (OASDI),

Title II of the Social Security Act, 42 USC 401 et seq.

No attempt is made to argue or discuss on the merits

the constitutional or other issues which are raised by this

case. Rather, this brief sets forth certain relevant Federal

policies and how they operate, together with an explanation

of some of the factors which the Federal agency must take

2a

into account in the development and application of these

policies.

In responding to the court’s request, we have placed em.

phasis on furnishing information and clarification, We

have not undertaken to discuss in any detail the authority

or legal rationale for the various Federal policies, The

OASDI program is not involved in this litigation. As for

the AFDC program, whether the plaintiff-clients or the

defendant-State and local agencies should prevail in this

case, it appears, as will be discussed below, that there will

be no violation of Federal requirements.

I. Title IV, part A, of the Social Security Act (AFDC)

Title IV, part A, of the Social Security Act contains the

statutory authorization for the Federally-assisted AFDC

program, which is administered by the States and localities,

Under this title, as is the case in the other public assistance

programs, the Secretary is responsible for determining

whether State plans submitted conform to the requirements

of the Social Security Act and the Federal policies adopted

pursuant to the statute to carry out those requirements,

These implementing policies, which are presently found

in the Federally-issued Handbook of Public Assistance Ad-

ministration (hereinafter cited as HB), reflect the Federal

agency’s interpretation of the specific provisions, construed

in light of the broad purposes, of Title IV, part A, of the

Social Security Act. The Federal policies pertaining to

State agency procedures such as the prior notice and fair

hearing requirements involved in the present litigation, set

forth the minimum standards necessary for an approvable

State plan. States are free, insofar as their relationship

with the Department of Health, Education, and Welfare is

concerned, to adopt additional or more elaborate proce-

dures than the Federal basic requirements.

—

3a

In addition, Federal matching policies are often broader

than Federal requirements. Thus, under Handbook Trans-

mittal No. 140, States are not required to continue assist-

ance pending & fair hearing decision, but if a State does

continue assistance, Federal matching would be available

for all the attendant expenditures by the State agency in

accordance with the usual rates described below.

In general, no question would be raised by the Federal

administrative agency should a State do more than the

minimum Federal requirements, and Federal matching

could be claimed for the additional related expenditures.

Therefore, because there would likely be no conflict with

Federal plan requirements and no loss of Federal funds

regardless of what decision this court might reach on the

merits of the litigation, we have not deemed it either ap-

propriate or necessary to include legal argument on those

issues. For the reasons stated above, it does not appear

that the validity of the Federal policies under either the

Federal statute or the constitution is in issue here.

The Statute

Section 602 of 42 USC contains three provisions in par-

ticular which are relevant to the claims of those plaintiffs

in the above-captioned litigation who have been receiving

AFDC. In order to be approved by the Secretary, and hence

be eligible for Federal matching, the State plan must

“provide, effective July 1, 1951, that all individuals

wishing to make application for aid to families with

dependent children shall have opportunity to do so,

and that aid to families with dependent children shall

be furnished with reasonable promptness to all eligible

individuals ;” § 602(a) (10),

Oe REG

—

“provide for granting an opportunity for a fair hear

before the State agency to any individual whose claim

for aid to families with dependent children is denied

or is not acted upon with reasonable promptness.”

§ 602(a) (4), and

“provide . . . such methods of administration , . . a8

are found by the Secretary to be necessary for the

proper and efficient operation of the plan...” 42 USC

§ 602(a)(5)(A).

4a

The Federal Policy

(a) Application, Determination of Eligibility and

Furnishing Assistance

Under the policies applicable to a Federally-assisted

AFDC program, once the State welfare agency has found

an individual (or, as is more common in AFDC, the family

unit) eligible for a cash assistance payment, these payments

must continue until there has been an agency determination

that the individual is no longer eligible for assistance or,

although not totally ineligible, should receive a lesser

amount of assistance. The agency may not cease or reduce

payment while investigating a family’s current situation or

evaluating information it may have received which appears

to raise a question about continuing eligibility. HB, Part

IV, § 2200(b) (4). Thus, until the agency has completed any

redetermination it may make, has considered all the

relevant available information, and has made a definite

determination of ineligibility, or change in amount of

assistance needed, payments must continue as before.

Effective July 1, 1968, as part of the required procedure,

should any question arise concerning change in the family’s

circumstances, the State agency

id Tn mg Ae ee OE. ay

—

“gives advance notice of questions it has about an in-

dividual’s eligibility so that a recipient has an oppor-

tunity to discuss his situation before receiving formal

written notice of reduction in payment or termination

of assistance.” HB, Part IV, § 2300(d) (5).

5a

orem nce saa tia

———eeere

This procedure is designed to serve several purposes. First,

it is intended to give the individual a chance to bring new

or additional facts to the agency’s attention; thus, he may

be able to show, prior to any more formal action, that his

situation has not actually changed as believed by the

agency. Where this can be accomplished, termination (or

reduction) of assistance is avoided, with benefit to both the

individual who does not have his usual payments inter-

rupted, and to the agency which will be spared the expense

and staff time involved in an unnecessary hearing.

Even in cases which would not be contested by the in-

dividual, the advance notice provides him with time to pre-

pare for the change which the reduction or termination of

assistance will have on his financial situation. This policy

seeks to avoid a situation in which a person is caught com-

pletely by surprise with a notice that he will no longer

receive any assistance or will receive a lesser amount than

formerly.

It should be made clear at this point that the prior notice

procedure described above, as required by the Federal

policies, is not intended to constitute the “fair hearing” re-

quired by the Federal statute, and which will be dis-

cussed separately below. The formalities of the fair hearing

process are not required at this stage, although a State

would certainly be free to add safeguards to this adjust-

ment procedure which go beyond the minimum Federal

requirement. This informal process gives notice, and per-

6a

mits an exchange of information before the actual deter.

mination is made by the State agency, and as stated above,

since this takes place before the agency has made the de.

termination to reduce or terminate assistance, payments

must continue without interruption or reduction through.

out this time period.

This procedure also operates to “sort out” those cases

which will proceed to the fair hearing. Clearly, every re.

cipient has a right to a fair hearing if he is not satisfied

with the determination made by the agency in his case;

however, it is hoped that this preliminary process will re.

solve many of the disputes and thus satisfy the recipient.

This procedure is also intended to be expeditious. There.

fore, the Federal agency expects that the time from which

notice is given to the recipient of questions about his eligi-

bility, through agency consideration of any information

which is brought to its attention, until the time the agency

notifies the individual of its final decision, will not exceed

30 days. The policies on Federal financial participation set

an outer limit of 30 days on the time period for which

Federal matching may be claimed in assistance payments

continued during the notice and adjustment process.

Federal financial participation may be claimed for all the

expenditures which the State agency incurs in connection

with the prior notice and adjustment procedure described

above. The Federal agency will pay 50% of the administra.

tive costs and also participate in the assistance payments

made to the individual throughout this 30-day period in

accordance with the usual formula (which, for assistance

payments under the New York program, is also 50%).

(HB, Part IV, §5514(2)(c) (as revised)).

The procedure which New York has adopted in response

to the Handbook policy on prior notice and which is in issue

7a

in the present litigation satisfies the basic objectives of

that Federal requirement. While New York has allowed

for variations in procedures under its two options, they

hoth meet the purposes for which this requirement was

designed, namely the giving of advance notice to the re-

cipient before action is taken by the agency, and the avail-

ability of @ mechanism whereby information may be pre-

sented, and adjustment is possible.

Plaintiffs, in their Brief in Opposition to Defendants’

\otion for Summary Judgment, question whether the New

York procedure meets the Federal requirement that the

State plan “be in effect in all political subdivisions of the

State, and, if administered by them, be mandatory upon

them.” 42 USC 602(a)(1). While it is certainly true

that this provision means that there must be a uniform

program in effect throughout the State, the Department of

Health, Education, and Welfare does not interpret this

section of the statute to require absolutely identical proce-

dures in every political subdivision. Rather, this subsec-

tion is satisfied if the procedures everywhere in the State

meet the fundamental purposes to which the Federal policy

is directed. In some instances, the Department of Health,

Education, and Welfare may determine that there is only

one possible procedure, or that certain components are es-

sential (or, even, unacceptable), in order to carry out its

purposes. However, in the present case, both options which

the New York State agency allows provide prior notice and

an adjustment procedure, and thus, the possible differences

in other details do not raise a question of the uniformity of

the program.

The Department of Health, Education, and Welfare has

approved the New York regulation, but is nevertheless seek-

ing clarification on one point. The Federal policy on prior

notice and adjustment is mandatory with respect to both

8a

contemplated terminations and reductions of assistance

The New York regulation only expressly refers to the

former situation. Therefore, it is necessary to seek con.

firmation from the New York agency to assure that its pro.

cedures on prior notice and adjustment are equally appli.

cable to proposed reductions in the assistance payment.

(b) The Fair Hearing

As stated above, the Federal statute requires the State

agency to provide an opportunity for a fair hearing to any.

one whose claim for assistance is denied, or is not acted

upon with reasonable promptness. This has been inter.

preted by the Department of Health, Education, and Wel.

fare to require the same fair hearing in connection with

termination of assistance or reduction in the amount of as.

sistance and, indeed, such a hearing may also be required

in connection with various other decisions which the agency

makes affecting the AFDC family. See, generally, HB

Part IV, § 6200 et seq.

The Federal policies contemplate, in any termination or

reduction of assistance, that the welfare agency will give

formal written notification of the action to the client (after

use of the prior notice and adjustment procedure discussed

above). At this point, the client has a right to a fair hear.

ing. In New York, as in other jurisdictions where there is

local administration, the distinction between these two pro-

cedures is clearcut. The locality (New York City) gives the

recipient advance notice and an opportunity to provide ad-

ditional information. After considering the information,

if any, that may be presented, the locality makes its formal

determination and informs the recipient in writing. The

recipient may then request a fair hearing before the State

agencv.

’

—

9a

Under the current policies in the Handbook, continuation

of assistance pending the fair hearing decision is not re-

quired.’ However, should the State welfare agency choose

to continue such payments, with no recovery or adjustment

should the hearing decision be in favor of the agency, or

should this court rule that continuation is required, such

a practice would be completely consistent with Federal

rules, and Federal financial participation may be claimed

for the assistance payments made during this period. HB,

Part IV, §6500(b). Matching will be available in accord-

ance with the usual 50% rate (for New York) for assist-

ance payments.

In February, 1968, the Department of Health, Education,

and Welfare notified all States that, effective July 1, 1968,

payments of assistance retroactive to the date of the in-

correct agency action must be made in those cases where

the decision of the State agency following the fair hearing

is favorable to the claimant (HB, Part IV, § 6200 (k)),

and Federal financial participation may be claimed for

such retroactive assistance payments. HB, Part IV, § 6500

(a). This requirement applies to hearing decisions after

June 30, 1968 and means that retroactive payments must

be made back to the date of the incorrect agency action

or July 1, 1968, whichever is later. If the incorrect action

was earlier than July 1, 1968 and the State chooses to make

retroactive payments for the full period, Federal financial

participation is available for the payments back to the date

of the incorrect action.

1 The Department .7 Health, Education and Welfare has decided

to adopt a policy requiring states to continue assistance in certain

classes of cases until a decision is rendered in the fair hearing

proceeding. Although no formal statement of this contemplated

policy has been issued, distinction between classes of cases along

the lines suggested at pages 8-10 of Judge Bryan’s Memorandum

convening a three-judge court in this matter is being considered.

10a

In addition, the States were notified at the same time of

several other new policies, some pertaining to the increased

availability of Federal matching and others Setting forth

new plan requirements in the area of fair hearings. The

new Federal requirements became effective July 1, 19%

and New York submitted implementing plan material,

However, the State was notified that its plan amendment

was not acceptable in several areas. In particular, the plan

amendment was deficient with respect to its Provision for

(1) detailing of the circumstances under which an indi.

vidnal could obtain a fair hearing, (2) informing the local

agencies of fair hearing decisions and assuring that such

decisions will be treated as precedents by the State and

local agencies and will be made available to claimants and

their representatives and the general public for their prece.

dential value, (3) providing an impartial medical aSsiss.

ment at agency expense when medical issues are involved

in the hearing, (4) making retroactive payments where the

fair hearing decision of the State agency is favorable to the

claimant, and (5) specifically providing that the hearing

officer’s decision must be based only upon evidence which is

a part of the record.

Because of the pendency of these questions, no action on

the plan amendment has been taken by the Federal admin.

istrative agency. It is their understanding that New York

is in the process of preparing revised material to fully

comply with the Federal requirements and will then submit

the revision for formal Federal approval. While the New

York plan, as currently approved, does not at this moment

fully meet the Federal requirements regarding fair hear-

ings, no question of continuation of Federal funds has been

raised, in view of the continuing negotiations between the

Federal and State agencies. Federal funds of course, are

ee ae

lla

not withdrawn unless there has been formal disapproval

of a State plan and the State has been given notice and

opportunity for hearing.

As this court is aware, the question of whether a State

welfare agency is required under the due process clause

of the Fourteenth Amendment or any other generally ap-

plicable principle of law, to continue assistance pending

the fair hearing decision, is one which is currently the sub-

ject of litigation in various other jurisdictions.’

IL. Title II of the Social Security Act (OASDI)

Termination and Suspension of OASDI Benefits

1. The entitlement of an individual to an OASDI benefit

depends on meeting stated statutory conditions. Once es-

tablished, the individual’s entitlement to the benefit con-

tinues until the occurrence of specified termination events.

Upon the occurrence of such an event, the benefits are termi-

nated as of the close of the month preceding the month in

which the event occurred. In disability benefit cases, how-

ever, the benefits are terminated as of the close of the sec-

ond month following the month in which the disability

ceased; or, in cases in which benefits are terminated because

the individual returned to work, the termination is effec-

tive as of the close of his “trial work period” which can be

as late as the eleventh month following the month he re-

turns to work.

2In addition to the cases cited on page 10 of Judge Bryan’s

memorandum opinion in this matter, we understand that these suits

have been filed in Federal district courts: Machado v. Hackney,

C.A. No. 68-108-SA (W.D. Tex.) ; Sprayberry v. Dulaney, C.A.

No. (M.D. Ga.) ; Van Blaricum v. Department of Public Wel-

fare, C.A. No. 68-78 (S.D. Ohio).

—

2. Between the date as of which entitlement to the bene.

fits is established and the occurrence of an event calling

for the termination of the benefit, other Statutorily pre.

seribed events may occur that require the Suspension op

nonpayment of the benefit (as distinguished from terminat.

ing entitlement to the benefit) for one or more months,

These events are principally :

12a

a. Earnings by a beneficiary over and above an amount

prescribed by the statute;

b. Work outside the United States by a beneficiary for

a period of time specified by the law;

c. Residence by an alien beneficiary outside the United

States ;

d. Court-ordered suspension upon conviction for subver.

Sive activities ;

e. Refusal of vocational rehabilitation Services by a

disability insurance beneficiary ;

f. No entitied child in a mother’s care;

g- Deportation of the beneficiary ;

h. Receipt by a disability insurance beneficiary of pe.

riodic workmen’s compensation payments; and

i. The performance of substantial gainful activity by an

occupationally blind disability insurance beneficiary.

3. The determination of the Social Security Administra.

tion to terminate a benefit because of the occurrence of a

specified terminating event or to suspend the payment of

a benefit for one or more months because of the occurrence

of a suspension event, is based in the vast majority of

cases on a report of the occurrence of the event by the bene-

13a

‘anv. The determination to terminate a benefit or to sus-

dits payment for one or more months may be made also

é information obtained by the Administration from other

sources. Before this is done, however, the beneficiary is

ysually contacted by the Social Security Administration

and asked to submit a report relative thereto which often

furnishes also necessary data on which to base a termina-

tion oF suspension and on which the termination or suspen-

sion determination is then made. The greatest number of

these suspensions by far are based on reports of current

wages from employment or of self-employment income de-

rived by beneficiaries in amounts in excess of those they

may earn OF derive under the statute and still receive their

benefits.

In every case in which a benefit is terminated or sus-

pended, whether the action is taken pursuant to the report

from the beneficiary or on information obtained from other

sources, the individual affected is notified in writing of

the determination and is advised of his rights to further

administrative and court review of the determination.

Under the regulations of the Social Security Adminis-

tration adopted pursuant to section 205(b) of the Social

Security Act, the determination of the Administration to

terminate or suspend a benefit is a “final decision” if the

beneficiary fails to seek its reconsideration by the Admin-

istration, 20 CFR 404.908, and each successive administra-

tive decision likewise is, in turn, a “final decision” unless

further administrative review is sought, as provided by the

regulations, 20 CFR 404.916, 404.940, 404.951, or if after all

such administrative review has been had, the beneficiary

does not seek court review as provided by section 205(g)

of the Act.

Benefits are not certified by the Administration for pay-

ment to a beneficiary from and after the effective date of

l4a

the initial determination terminating or Suspending pay.

ment of a benefit unless it is reversed on further adminis.

trative review or by a court on court review. Upon re.

versal, the benefit is certified for payment retroactively to

the date as of which it was terminated or suspended.

4. The certification of benefits for payment may be with.

held also while the Administration, on the basis of informs.

tion it has received, is conducting an investigation to deter.

mine whether or not it should terminate the benefit or sus.

pend its payment for one or more months. This, as the

Social Security Administration Claims Manual States, may

be done, however, “only where it appears probable that

payments will eventually have to be suspended or termi.

nated,” and may continue, it is further stated in the Manual,

merely “as long as necessary to offset the probable over.

payment.” Claims Manual section 5036, paragraph 1. §o.

cial Security district offices and reviewing offices ave en-

joined, too, to give high priority to such investigations, to

complete them promptly and to determine as quickly as

possible whether or not benefits should be terminated or

suspended. Claims Manual section 5036, paragraph 2.

There are some instances also in which payment may be

withheld for administrative reasons not related to the right

to payment but to what might be termed the “technique of

payment.” This occurs where the Administration is noti-

fied by the Post Office Department or by others that the

beneficiary has moved and left no forwarding address or

where the appointment of a representative payee may be

required. In these instances all past dre benefits are, of

course, certified for payments as soon as new proper ad-

dress is obtained or a payee is appointed.

5. Section 203(h) of the Social Security Act expressly

authorizes the Administration to withhold certifications of

—

15a

payment pending investigation as to whether work deduc-

tions should be imposed. Sections 205 (b) and (i) of the

Act appear to authorize the Administration to withhold

certifications of payment pending determination of whether

or not to terminate or suspend certification for payment

in other than work deduction instances.

Payments may be withheid pending development of the

facts essential to a determination as is recognized by sec-

tion 205(g) of the Act, authorizing the Administration, un-

jer stated conditions, to adopt “expedited benefit payment”

procedures ; by section 204 of the Act, specifying to whom

unpaid benefits due @ deceased beneficiary shall be paid;

and by section 206 of the Act which provides for setting

of attorneys’ fees in Title II cases.’

fll. AFDC and OASDI Compared

For purposes of drawing an analogy between the pro-

cedures followed by the Social Security Administration in

operating its program of OASDI, and the Federal require-

ments pertaining to AFDC programs, it may be helpful to

note some differences in the overall situations:

1. The kinds of situations or events which might give rise

to termination or reduction of benefits are far fewer in

QASDI than in public assistance, particularly AFDC. Also,

most of the events affecting payment of OASDI tend to be

more readily susceptible to objective ascertainment and

hence less open to dispute than is often the case in the

public assistance programs.

* Hopkins v. Cohen, 390 US. 530 (1968) held that accrued

benefits due a beneficiary and his family, to which they became

entitled as the result of judicial review, provide the base for

determining the attorney’s fee.

16a

2. In OASDI, the events which result in Suspension or

termination are often changes in circumstances Which the

beneficiary himself reports to the Social Security Admin.

istration; thus, the resultant action is generally expected

and understood by the individual.

3. There is a much greater likelihood of change in the

amount of a recipient’s payment under AFDC, than there

is in OASDI, or even in the other public assistance cate.

gories of the Social Security Act (Titles I, X, XIV, and

XVI). If the recipient obtains temporary employment for

a month, he will be eligible only for a reduced payment,

or perhaps no payment at all; when the income ceases, the

family will probably be eligible for the full amount previ.

ously paid. Support payments may be made by an absent

father for a few months and then cease. The problem,

therefore, of the proper procedures to be followed in AFDC

is more difficult for both the recipient and for the State

agency, than is the comparable situation in OASDI.

Epwin L. West, Jr.,

Assistant Attorney General

Civil Division

Department of Justice

Rosert M. Morcenruav,

United States Attorney for the

Southern District of New York,

For the United States of America.

LavRENCE VOGEL,

Assistant United States Attorney,

Of Counsel.