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CITY OF PHILADELPHIA v. PENNSYLVANIA

February 9, 1981

CITY OF PHILADELPHIA
v.
COMMONWEALTH OF PENNSYLVANIA et al.



The opinion of the court was delivered by: GREEN

MEMORANDUM

This litigation is the result of a dispute concerning the alleged failure of the Commonwealth of Pennsylvania to reimburse the City of Philadelphia for expenses incurred by the latter in providing child welfare services. Seeking declaratory and injunctive relief as well as damages, plaintiff City has sued the Commonwealth defendants *fn1" and the federal defendant, Patricia Roberts Harris, Secretary of Health and Human Services for purported violations of Title IV-B (42 U.S.C. §§ 620-626) and Title XX (42 U.S.C. §§ 1397-1397f) of the Social Security Act and the Commonwealth defendants alone for alleged breach of contract. Stating that the action arises under the constitution and laws of the United States and the amount in controversy exceeds $ 10,000, plaintiff alleges jurisdiction under 28 U.S.C. §§ 1331, 1361 and 2201. Although the plaintiff fails to mention it in its statement of jurisdiction, it is clear that the complaint also requests the Court to exercise pendent jurisdiction over the contract claim.

 The matter is now before the Court on motions to dismiss, filed pursuant to Fed.R.Civ.P. 12(b) by all the defendants. *fn2" For reasons set forth in the following discussion, I will grant these motions and dismiss the complaint.

 The Pennsylvania Department of Public Welfare (DPW) entered into a Child Welfare Service Agreement with the City of Philadelphia. *fn3" (Exhibit "A" to the complaint) Pursuant to this contract, the City agreed to provide protective and foster care services to children found eligible by the county board of assistance while DPW agreed to provide technical consultation and assistance to the City, review periodically the City's delivery of these services and reimburse it for seventy-five percent of the money spent in carrying out the program. The agreement specifically states that the City is to submit a monthly bill to DPW for the preceding month's expenditures. *fn4"

 According to the complaint, Title IV-B of the Social Security Act was the ultimate source of funds for this program. Thus, the money used by DPW to reimburse the City came from monies given the Commonwealth by the federal government. Plaintiff contends that this Child Welfare Agreement continued in effect until October 1, 1975 when the newly enacted Title XX of the Social Security Act became effective. Title XX, according to the complaint, placed a ceiling on the amount of federal money available to the States to pay for such programs as child welfare services. *fn5" Plaintiff alleges that in order to ease the transition to the new program, Title XX requires that each State receiving federal funds under Title XX must establish and publish a plan, known as a comprehensive annual services program plan, showing how it intends to use the money.

 At issue in this lawsuit is money supposedly owed the City by DPW for child welfare services provided by the City pursuant to the 1972 Agreement and to the Title IV-B program. The complaint states that on October 17, 1975, the City submitted an invoice prepared in September of 1975 (hereinafter the September, 1975 invoice) requesting reimbursement in the amount of $ 4,404,174.42 for expenditures made by the City in providing child welfare services before September, 1975 and under Title IV-B. Some of these expenditures were for services provided as early as September, 1973. Plaintiff alleges that DPW told the City that it would not reimburse the City for most of the expenses covered by the September, 1975 invoice because the Department had reached its funding limit under Title XX for the fiscal year, 1975-76. *fn6"

 The complaint alleges that Pennsylvania DPW violated Title IV, Title XX and applicable Health and Human Services regulations by including the request for reimbursements made in the September, 1975 invoice as part of the expenditures for the fiscal year 1975-76, governed by the restricted funding of Title XX, since those disbursements were made by the City in earlier years when child welfare services were provided under Title IV-B. Plaintiff further contends that DPW's treatment of the September, 1975 invoice as part of the 1975-76 fiscal year Title XX expenditures violated the terms of the Child Welfare Service Agreement and the parties' prior course of dealing whereby DPW would reimburse the City for expenses already incurred. The complaint also charges defendant DPW with failure to give the City adequate notice of the new policy of applying Title XX funding limitations to expenditures made by City before the effective date of Title XX, with failure to prepare an adequate comprehensive annual services program plan as required by Title XX and for failure to distribute its Title IV-B and Title XX funds to geographical regions on an equitable basis.

 By way of relief, plaintiff requests, inter alia, the Court to order the Commonwealth to pay to the City the $ 3.7 million allegedly owing on the September, 1975 invoice, *fn7" and to order the Secretary of Health and Human Services to withhold Title XX funds from Pennsylvania until the Commonwealth begins to administer its Child Welfare Services Program properly and in accordance with the federal statute and regulations.

 In its opinion in Cort v. Ash, the Supreme Court identified four factors which should be considered in determining if a cause of action may be implied from a federal statute:

 
First, is the plaintiff "one of the class for whose especial benefit the statute was created' ... that is, does the statute create a federal right in favor of the plaintiff? Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or to deny one? Third, is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for plaintiff? And finally, is the cause of action one traditionally relegated to state law, in an area basically the concern of the States, so that it would be inappropriate to infer a cause of action based solely on federal law? 422 U.S. 66, 78, 95 S. Ct. 2080, 2088, 45 L. Ed. 2d 26 (1975) (citations omitted).

 The Court has referred repeatedly to this four point standard in opinions written since the Cort v. Ash decision. *fn9"

 An analysis of the instant case reveals that no part of the Cort v. Ash test has been satisfied. First, plaintiff City is not a member of the "especial" class for whose benefit Titles IV and XX of the Social Security Act were enacted. Looking to the language of the statutes themselves, as the Supreme Court directs in Cannon v. University of Chicago, 441 U.S. 677, 99 S. Ct. 1946, 1953, 60 L. Ed. 2d 560 (1979), it is clear that Congress viewed people in need of various welfare services as the primary "beneficiaries" of Titles IV and XX. *fn10" The only other parties who might be described as intended beneficiaries, given the terms of the statutes, are the States, the recipients of the federal funds allocated by Titles IV and XX for the purpose of helping the States finance certain welfare services. Plaintiff has failed to point to any language found in Titles IV and XX or to any part of the legislative history of the statutes which would support the view that Congress intended to benefit parties such as the City which, pursuant to contract with a State, provide those welfare services.

 I turn now to consideration of the second factor, legislative intent to create or to deny such a cause of action. Language found in two of the most recent Supreme Court decisions discussing the issue of implication of a private cause of action suggests that this factor is the most important one. *fn11" Determining legislative intent regarding the creation of a right of action is a matter of ...


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