Burbo v. Dept. of Social Welfare

                                ENTRY ORDER

                      SUPREME COURT DOCKET NO. 90-569

                              JUNE TERM, 1991


Christine Burbo                   }          APPEALED FROM:
                                  }
                                  }
     v.                           }          Human Services Board
                                  }
                                  }
Department of Social Welfare      }
                                  }          DOCKET NO. 9544


             In the above entitled cause the Clerk will enter:

     Plaintiff is a recipient of public assistance from the Department of
Social Welfare (DSW) under the Aid to Needy Families with Children (ANFC)
program.  She appeals a decision of the Human Resources Board affirming a
DSW decision to recoup certain overpayments at the rate of 10% of her grant
amount, without considering a reduced rate of recoupment because of her
particular circumstances.  We reverse and remand.

     In 1989, plaintiff received an overpayment of $1,258, resulting from
her failure to report the earnings of a member of her household.  Under both
federal and state regulations, when DSW overpays certain benefits, it can
recoup the overpayment by deducting a percentage of each future benefit
amount until the total overpayment has been recovered.  Under the appli-
cable federal regulation, 45 C.F.R. { 233.20(a)(13)(A)(2):

          If recovery is made from the grant, such recovery shall
          result in the assistance unit retaining, for any payment
          month, from the combined aid, income and liquid
          resources . . . not less than 90 percent of the amount
          payable under the State plan to a family of the same
          composition with no other income.  Where a State chooses
          to recover at a rate less than the maximum, it must
          recover promptly.

(Emphasis added.)

     Under Vermont's implementing regulation, Welfare Assistance Manual
(WAM) { 2234.2, where the overpayment is not the result of DSW error,
recoupment may be made from ANFC payments "so long as the assistance unit
retains from its combined income no less than 90% of the amount payable to
an assistance unit of the same composition with no income."  The retention
percentage where overpayment results from DSW error is 95% rather than 90%.

     DSW notified plaintiff that beginning in December 1989 her ANFC
benefits would be reduced by 10% per month until the full amount of the
overpayment had been recouped.  At the levels then in effect, this recoup-
ment schedule would have reduced her monthly grant from $551 to $496.

     She appealed the decision to the Human Services Board, requesting that
the monthly recoupment amount be reduced because she could not provide
necessities for herself and her child at that level of assistance.  DSW
argued that its 10% recoupment level, though a maximum and not a fixed per-
centage under both federal and state regulations, was applied as a matter of
uniform policy and that the facts in individual cases played no role in that
policy.  The Board in a 2-1 decision affirmed the DSW decision. The present
appeal followed.

     Plaintiff contends that because both federal and state regulations
allow the exercise of DSW discretion in setting the recoupment level up to
10% of the assistance amount, it was an abuse of discretion for DSW to fail
to consider the particular circumstances of her case.  DSW responds that the
Board was correct in concluding that it was allowed, but not compelled, to
exercise discretion on a case-by-case basis in applying a recoupment per-
centage.  Since it could and did apply a flat 10% recoupment deduction to
plaintiff as a matter of set policy, there was no discretion to abuse and
hence no error in its decision.

     The Board decision is clear that the plain meaning of the Vermont, as
well as the federal, regulation allows consideration of the individual cir-
cumstances of recipients.  Both regulations thus confer discretion on DSW
in setting an appropriate recoupment rate in individual cases.  We agree
that DSW's refusal to exercise the discretion that its own regulation allows
is an abuse of discretion.  As the United States Supreme Court stated in
United States ex rel. Accardi v. Shaughnessy, 347 U.S. 260, 266-67 (1954),
"[I]f the word 'discretion' means anything in a statutory or administrative
grant of power, it means that the recipient must exercise his authority
according to his own understanding and conscience."  See Berger, Do
Regulations Really Bind Regulators?, 62 Nw. U.L. Rev. 137, 149 (1967).

     Trust in government depends in large measure on whether citizens can
come to rely on ordinary readings and interpretations of the laws and
regulations that affect their everyday lives.  As we said in In re Peel
Gallery, 149 Vt. 348, 351, 543 A.2d 695, 697 (1988), "An administrative
agency must abide by its regulations as written until it rescinds or amends
them."

     The Board decision adopts DSW's argument that establishing an
individualized hardship-based recoupment system would be "an administrative
nightmare and would be virtually impossible to adjudicate on a consistent
and equitable basis."  The "administrative nightmare" scenario is a familiar
one, and tells us more about resistance to change than about genuine threats
to administrative efficiency.  Plaintiff points out that the states of New
Jersey and Washington both consider individual hardship in some recoupment
cases, and the Board's attempt to distinguish their analogous regulations is
puzzling.

     Further, the Board's worry that considering hardship cases will lead
to inequity is without merit.  Any regulatory scheme that depends on admin-
istrative discretion runs the risk of inconsistency.  The solution is not to
abolish the discretionary function but to improve it by developing and
applying rules consistently and by creating an administrative environment in
which the facts of each case can be developed clearly and expeditiously.  We
believe that DSW is equal to this task.

     Reversed and remanded.






                                   BY THE COURT:



                                   Frederic W. Allen, Chief Justice


                                   Ernest W. Gibson III, Associate Justice


[ ]  Publish                       Denise R. Johnson, Associate Justice

[ ]  Do Not Publish