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New Jersey v. Department of Health and Human Services

decided: December 23, 1981.

STATE OF NEW JERSEY, PETITIONER
v.
DEPARTMENT OF HEALTH AND HUMAN SERVICES, RESPONDENT



ON PETITION FOR REVIEW OF DECISIONS OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES

Before Adams, Van Dusen and Sloviter, Circuit Judges.

Author: Adams

Opinion OF THE COURT

New Jersey petitions for review of a series of decisions by the Grant Appeals Board of the Department of Health and Human Services disallowing certain expenditures submitted for reimbursement by the State in connection with the Child Support Enforcement Act, 42 U.S.C. §§ 651-662. After initially determining that we have jurisdiction to entertain New Jersey's appeal pursuant to 42 U.S.C. § 1316(a), we conclude, both as a matter of statutory construction and as a matter of administrative law, that the Department had sufficient authority to impose the challenged disallowances. Accordingly, we affirm the orders entered by the Board.

I

On January 4, 1975, President Ford signed into law the Child Support Enforcement Act, Pub.L. No. 93-647. The Act made available to the states federal financial assistance "(f)or the purpose of enforcing the support obligations owed by absent parents to their children, locating absent parents, establishing paternity, and obtaining child support." 42 U.S.C. § 651. The authors of the legislation-which was codified as Part D of Title IV of the Social Security Act, 42 U.S.C. §§ 651-662, and hence became known as the "IV-D" program-left basic responsibility for child support plans with the states, but envisioned "a far more active role on the part of the Federal Government in monitoring and evaluating State programs ... (and) in undertaking to give direct assistance to the States in locating absent parents and obtaining support payments from them." S.Rep. No. 93-1356, 93d Cong., 2d Sess., reprinted in (1974) U.S.Code Cong. & Ad.News 8133, 8134.

The primary justification for this increased federal role can be discerned from the relevant legislative history. Congress was concerned about the "rapid and uncontrolled growth" of expenditures under the Aid to Families with Dependent Children (AFDC) program. In large measure, such growth could be attributed to the failure of the states to ensure that individuals legally obligated to provide child support actually did so. Greater efforts in this regard by both the federal and state governments, it was believed, would reduce overall welfare costs. Id. at 8148-50. Moreover, according to one of the Senate sponsors of the IV-D program, "once an effective support collection system is established, fathers will be deterred from deserting their families to welfare and children will be spared many of the effects of family breakup." 120 Cong.Rec. 40,323 (1974) (remarks of Sen. Long).

To achieve these ends, Congress required each state to establish a IV-D program, designed to provide all AFDC recipients with certain child support and paternity services. 42 U.S.C. § 602(a)(27).*fn1 The legislation specifies that, to qualify for federal financial participation, a state must draw its IV-D plan in accord with certain statutory requirements, set forth at 42 U.S.C. § 654. Among other things, a state IV-D agency must "enter( ) into cooperative arrangements with appropriate courts and law enforcement officials" in order to ensure that its child support program is administered in the most effective fashion. Id. at § 654(7).

Intent on "creat(ing) a mechanism to require compliance with the law," (1974) U.S.Code Cong. & Ad.News, supra, at 8149-50, Congress mandated that a "separate organizational unit" be established within the Department of Health and Human Services (HHS)*fn2 to administer the IV-D program. 42 U.S.C. § 652(a). That unit, known as the Office of Child Support Enforcement (OCSE), is charged by statute with the responsibility, inter alia, for reviewing and approving state IV-D proposals, evaluating their implementation, and ensuring that states comply with federal IV-D standards. Pursuant to congressional directive, OCSE also compiles and submits "full and complete report(s)" detailing all activities, expenses, and problems associated with federal and state child support programs. Id. Finally, under 42 U.S.C. § 654(13), states are required to "comply with such other requirements and standards as the Secretary (of HHS) determines to be necessary to the establishment of an effective (IV-D) program."

Congress did not limit the availability of IV-D services to those individuals who received AFDC monies, however. The legislators recognized that "the problem of nonsupport is broader than the AFDC rolls" and that "many families might be able to avoid the necessity of applying for welfare in the first place if they had adequate assistance in obtaining the support due from absent parents." (1974) U.S.Code Cong. & Ad.News, supra, at 8158. Consequently coverage under the Child Support Enforcement Act was extended to include non-AFDC recipients as well. Specifically, Congress provided that:

the child support collection or paternity determination services established under (a state's IV-D) plan shall be made available to any individual not otherwise eligible for such services upon application filed by such individual with the State....

42 U.S.C. § 654(6)(A). The statute authorizes a state to impose a "reasonable" application fee on non-AFDC recipients seeking IV-D services, id. at § 654(6)(B), and permits a state to deduct its additional administrative expenses from any recovery ultimately obtained from a delinquent parent, id. at § 654(6)(C). OCSE was instructed to pay particular attention to the non-AFDC aspects of the IV-D effort. As part of its periodic reporting obligation, OCSE was to identify:

(i) the total amount of child support payments collected as a result of services furnished ... to individuals under (42 U.S.C. § 654(6)), (ii) the cost to the States and to the Federal Government of furnishing such services to those individuals, and (iii) the extent to which the furnishing of such services was successful in providing sufficient support to those individuals to assure that they did not require assistance under the State (AFDC plan).

42 U.S.C. § 652(a).

In mid-1975, pursuant to its statutory authority, HHS promulgated a series of administrative regulations covering the IV-D program. See 45 C.F.R. §§ 301.0-306.40 (1980). One such regulation restates the requirement that states make child support services available to non-AFDC individuals, as well as to AFDC recipients:

The State plan shall provide that the child support collection or paternity determination services established under the plan shall be made available to any individual not otherwise eligible for such services upon application filed by such individual with the IV-D agency.

Id. at § 302.33(a). As is apparent, the regulation tracks the language of section 654(6)(A) of the Act, save for its final clause: while the statute requires only that applications by non-AFDC individuals be filed "with (a) State," the regulation specifies that such applications be filed "with (a) IV-D agency."

Neither the statute nor the regulation elaborate upon the application requirement; that is, neither the statute nor the regulation addresses the format or the timeliness of the application itself. On June 9, 1976, however, OCSE issued a "program instruction" setting forth certain procedures to be followed by states seeking reimbursement of costs for services provided to non-AFDC persons. OCSE noted that both the statute and the regulation make reimbursement contingent "upon application filed by (a non-AFDC) individual." Therefore, states were informed that "(in) order to comply with the statutory requirements, ... (an) application must be in writing ... (and) must be signed by the individual applying for child support services" before federal funds could be received. App. at 59a. Additionally, OCSE observed that, while a number of states made non-welfare recipients eligible for child support services prior to the enactment of the Child Support Enforcement Act, none of those previously existing state plans was "grandfathered" into the IV-D program adopted by Congress. Thus, states were instructed that "(applications) filed prior to the effective date of title IV-D ... do not make a case eligible for Federal financial participation under title IV-D." Id. at 60a-61a.

In a subsequent communication, OCSE established August 1, 1976, as the effective date of the June 9 program instruction. Appropriate state officials were urged to "proceed immediately" to obtain "new applications" for child support services from non-AFDC individuals, "so that you do not suffer any loss of Federal funds." Letter from J. Steigman, Deputy Regional Director, OCSE (Sept. 20, 1976), App. at 66a-67a.

II

On July 1, 1975, New Jersey commenced participation in the national IV-D program. Retroactive to that date, New Jersey's Division of Public Welfare entered into a cooperative agreement, as required under 42 U.S.C. § 654(7), with the State's Administrative Office of the Courts (AOC). That agreement obligated the AOC to furnish those services required of the State under the IV-D Act; in exchange, the Division of Public Welfare was to forward to the AOC whatever amounts it received as reimbursement for its IV-D expenditures from HHS. Brief for Petitioner at 1.

Prior to the enactment of the Child Support Enforcement Act, New Jersey, not unlike other states, provided child support collection and paternity locater services through its state courts and county probation departments. See 2A N.J.Stat.Ann. § 168-11(b) (West); N.J.Ct.R. 4:79-9(a) & (b). These services were made available, pursuant to court order, to any eligible person, regardless of whether that person was a welfare recipient. Thus, at the time New Jersey entered the IV-D program, thousands of child support cases-many of them involving non-AFDC individuals-already were pending with local probation offices, and the authorities proceeded to process them in connection with applicable IV-D rules and regulations.

New Jersey received a copy of the OCSE program instruction concerning the non-AFDC application requirement on July 19, 1976. Shortly thereafter, an official in New Jersey's Division of Public Welfare recommended that the AOC undertake "immediate action ... in order to assure that New Jersey will remain eligible for Federal reimbursement in non-public assistance cases." Specifically, the AOC was urged to secure new, signed applications from "all persons seeking child support enforcement services." Letter from P. Timlen, Coordinator, Child Support and Paternity Unit (Aug. 19, 1976), App. at 64a-65a. In response to this directive, the AOC, acting through county probation offices, attempted to obtain signed requests for IV-D services from all non-AFDC recipients, "including those who had initially petitioned the courts for assistance in obtaining child support payments many years before New Jersey's entry into the IV-D Program." Affidavit of F. Fant, Assistant Director for Probation, AOC (Mar. 15, 1978), App. at 68a-69a.

For a variety of reasons, however, the AOC was unable to acquire new IV-D applications from all non-AFDC individuals to whom the State provided child support services.*fn3 By March 31, 1977, for example, signed applications had been secured from only 60-65% of the non-AFDC population.*fn4 While that percentage increased in the months that followed, as late as June 30, 1980, New Jersey was continuing to report less-than-complete compliance with the new application requirement. App. at 54a.

As a result, in a series of determinations covering the period from August 1, 1976, through June 30, 1980, OCSE regional officials disallowed $1,772,920 of IV-D expenditures for which New Jersey sought reimbursement. These various disallowances represented the amount of child support services provided by the State to non-AFDC individuals from whom as yet no application had been obtained. App. at 43a-57a. New Jersey challenged the disallowances through appropriate HHS administrative proceedings.*fn5 In the main, the State argued that, instead of requiring new applications for members of the non-AFDC population, OCSE should have accepted court orders, complaints, or other "objective indicia" of a need by such individuals for child support services.

The HHS Departmental Grant Appeals Board rejected this, as well as other arguments proffered by New Jersey.*fn6 The Board held that OCSE could insist that a state obtain signed, post-1975 applications from non-AFDC recipients in order to be eligible for federal reimbursement. The Board acknowledged that neither the IV-D statute nor its legislative history explicitly directed that such new applications be secured. Nonetheless, it reasoned that, "in the absence of an express reference in Title IV-D to services provided prior to the effective date of that title, it (cannot) clearly be inferred that new applications are not required." Faced with this ambiguity, the Board concluded that the proper result was to defer to the agency's interpretation of its own statute. It maintained that it could logically be assumed that Congress would not want to provide child support services to individuals who failed to submit IV-D applications, since the failure to submit IV-D applications "might arguably reflect the absence of any serious desire for continued services." There was no reason to believe, moreover, that the "minimal" burden placed on states by the new application requirement served to frustrate, to any significant degree, the overall objectives of the IV-D program. In addition, the Board determined ...


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