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S.L. v. Whitburn

October 6, 1995

S.L., P.W., B.S., INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, ET AL.,

PLAINTIFFS-APPELLEES, CROSS-APPELLANTS,

v.

GERALD WHITBURN, IN HIS OFFICIAL CAPACITY AS SECRETARY OF THE DEPARTMENT OF HEALTH AND SOCIAL SERVICES OF THE STATE OF WISCONSIN, J. JEAN ROGERS, IN HER OFFICIAL CAPACITY AS ADMINISTRATOR OF THE DIVISION OF ECONOMIC SUPPORT OF THE DEPARTMENT OF HEALTH AND SOCIAL SERVICES OF THE STATE OF WISCONSIN, AND THOMAS BROPHY, INDIVIDUALLY AND IN HIS OFFICIAL CAPACITY AS DIRECTOR OF THE MILWAUKEE COUNTY DEPARTMENT OF HUMAN SERVICES,

DEFENDANTS-APPELLANTS, CROSS-APPELLEES.



Appeals from the United States District Court for the Eastern District of Wisconsin. No. 91 C 576 -- John W. Reynolds, Judge.

Before BAUER, CUDAHY, and MANION, Circuit Judges.

MANION, Circuit Judge.

ARGUED APRIL 21, 1995

DECIDED OCTOBER 6, 1995

The plaintiffs in this class action receive benefits through the Food Stamp and Aid to Families with Dependent Children programs. They brought suit alleging that the procedures used by the defendants to verify eligibility for these public assistance programs violated certain federal regulations as well as the Fourth and Fourteenth Amendments. The district court certified the class and later it granted, in large part, the plaintiffs' motion for summary judgment. In its decision, the court found that several of the verification procedures used by the defendants violated applicable federal regulations, as well as the Fourth and Fourteenth Amendments. As a result, the court enjoined the defendants from using those verification procedures. On this interlocutory appeal both parties challenge the injunction issued by the district court. For the reasons stated herein we affirm in part, and reverse in part, the district court's decision, and remand the case so the district court can enter an injunction consistent with this opinion.

I. Background

The plaintiffs in this class action applied for or receive public assistance under the Food Stamp Act, 7 U.S.C. sec. 2201 et seq., ("FSA"), and the Aid to Families with Dependent Children section of the Social Security Act, 42 U.S.C. sec. 601 et seq. ("AFDC"). In Wisconsin, the administration and oversight of these programs is the responsibility of the Wisconsin Department of Health and Social Services ("DHSS"). But the Department of Social Services-Milwaukee Branch (the "County"), administers the programs in Milwaukee County. *fn1 In Wisconsin, a single application process covers both programs. *fn2 Pursuant to that process, an applicant submits a combined Food Stamp and AFDC application which contains detailed information concerning his or her household circumstances. A caseworker reviews the completed application and then interviews the applicant. The application is then subject to verification to ensure that the information provided is accurate and that the applicant is eligible for public assistance. Federal, state, and county regulations govern this verification process.

Under the County's current policy, if the information provided to a case worker is insufficient to verify eligibility, or if a caseworker believes that an applicant may not be eligible for benefits, then the case is designated for verification. Currently, caseworkers use written criteria to help them determine whether an application needs to be verified. That criteria is taken from the DHSS's Model Fraud Plan and is a non-exhaustive list of factors associated with "error-prone" applications for public assistance. Based on the criteria that is part of this "error-prone profile" a caseworker can authorize a home visit if he believes the information provided is questionable. (The examples given include cases where the information provided by the applicant is inconsistent or contradictory and cannot be resolved by the caseworker.) The caseworker thus has great discretion in determining whether an application needs further verification, although he is required to identify the basis for his decision.

If the caseworker believes that an applicant may not be eligible, the case is referred to an investigative service that has been hired by the County to verify eligibility. Verification could include a home visit. Plaintiffs challenge the use of a home visit on statutory and constitutional grounds. The County does not obtain a search warrant for the purpose of conducting the home visit. At present, the County notifies the applicant that a field representative will be visiting his home some time in the next ten days. The current County regulations state that home visits must be conducted between 8:00 a.m and 8:00 p.m., and recommend that home visits take place during normal business hours unless there are special circumstances (the examples given are cases where an applicant's work hours require late visits or where a field representative has made two unsuccessful attempts to contact an applicant). The County does not contact the applicant to schedule the exact date or approximate time of the visit.

Under the County's current policy, when the field representative makes contact with the applicant, he identifies himself as a field representative for the County and asks to be admitted to the home. The representative is not permitted to enter the home without consent. The representative is allowed to tell the applicant that refusal may delay the provision of public assistance, but he may not tell the applicant that assistance will be automatically denied if permission to enter is refused. The representative is required to tell the applicant that he or she can retract consent at any time. Once inside, the representatives are instructed that anything that is in plain view and pertinent to eligibility can be noted. Otherwise, however, field representatives are told to limit their investigation to the criteria of eligibility that the caseworker has designated as in need of verification. Field representatives may ask to see areas of the residence, and they can ask for permission to inspect closets, cabinets, attics, basements, garages, etc., but they are forbidden to inspect these areas without the resident's consent.

The plaintiffs also challenge the County's practice of verifying eligibility through so-called "collateral contacts," i.e., third parties that can be reasonably expected to furnish reliable information. Currently, the County does not allow applicants to designate collateral contacts, but simply relies on investigators to select and contact suitable third parties. Frequently, the field representatives contact landlords, employers, school officials, neighbors, and utility services. Investigators are permitted to identify themselves as County representatives, if asked, and are allowed to explain that they are verifying information provided by the applicant. They are also free to explain that they are not pursuing a criminal investigation, and that the applicant has not been involved in any wrongdoing. Under the current policy, collateral contacts can only be used to verify information that is questionable or unknown; collateral contacts cannot be used merely to confirm information that has already been satisfactorily verified.

Basically, the plaintiffs assert that the federal regulations governing the Food Stamp program and the Fourth and Fourteenth Amendments require the County to (1) use home visits as a method of verification only if documentary evidence is insufficient to verify eligibility for public assistance, (2) tell applicants that they can avoid home visits by providing documentary evidence that is sufficient to confirm eligibility, and (3) schedule home visits with the household by designating a mutually agreeable date and "window of time" within which the County's agent will visit the home. The plaintiffs also argue that the Food Stamp regulations and Fourth and Fourteenth Amendments require the County to let applicants designate collateral contacts in the first instance. According to the plaintiffs, under the Food Stamp regulations and the Constitution the County can select collateral contacts on its own initiative only if those chosen by the applicant cannot reasonably be expected to provide accurate information.

The district court granted summary judgment for the plaintiffs with respect to almost every challenge they raised to the County's home visit and collateral contact procedures. More specifically, the court found that the federal regulations promulgated under the Food Stamp program required the County to inform applicants at the outset that home visits would not take place unless the County could not verify eligibility solely on the basis of documentary evidence. The court also prevented the County from making home visits unless documentary evidence was insufficient to confirm eligibility, and required the County to give applicants advance notice concerning the date of the home visit. Likewise, the Court found that the Food Stamp regulations required the County to let applicants designate collateral contacts in the first instance, and required the County to tell the applicant that collateral contacts would be consulted only if documentary evidence was insufficient to confirm eligibility. The court noted that in the case of joint applications for Food Stamps and AFDC, the Food Stamp regulations govern only the verification of facts unique to eligibility for food stamps ("food stamp only facts"). The court, however, also concluded that in the case of joint applications the Fourth and Fourteenth Amendment required the County to give advance notice as to the date of any warrantless home visit, to use home visits only with respect to matters that could not be effectively verified by other means, and to give applicants an opportunity to designate collateral contacts in the first instance. The court entered an injunction consistent with its opinion; both parties filed this interlocutory appeal.

II. Analysis

Both parties challenge the district court's injunction. For the most part, the plaintiffs argue that the district court correctly interpreted the federal regulations governing the County's verification procedures. However, they argue that the Food Stamp regulations as well as the Fourth and Fourteenth Amendments require the County to set a "window of time" within which a home visit will take place. Also, on appeal they renew their alternative argument that the Fourth and Fourteenth Amendments impose the notice and scheduling requirements found in the district court's injunction. The gravamen of the County's appeal is the distinction drawn in the Food Stamp regulations between applications limited to the Food Stamp program (food stamp only applications) and joint applications for AFDC and Food Stamps (joint applications). As the County points out, in the case of joint applications the Food Stamp regulations only govern the verification of factors unique to the determination of eligibility for food stamps. The district court recognized this, but then went on to hold that the Fourth and Fourteenth Amendments imposed restrictions almost identical to those created by the Food Stamp regulations on the County's efforts to verify the eligibility of persons filing joint applications. The County contests this holding.

A. Claims for Violation of Federal Regulations

In this section, we consider those aspects of the plaintiffs' claims that rest upon the federal regulations governing the Food Stamp and AFDC programs. First, we consider the district court's interpretation of the Food Stamp regulations and the restrictions they impose on the County's verification procedures for food stamp only applications. Then we consider the operation of the Food Stamp regulations in the case of joint applications for AFDC and Food Stamps.

1. Applications for food stamps only.

As the plaintiffs have indicated, the class includes applicants for or recipients of food stamps only, and at least one representative plaintiff (H.B.) received only food stamps. Therefore, we need to consider the operation of the Food Stamp regulations with respect to food stamp only applications. More specifically for the purposes of this interlocutory appeal, we need to consider the restrictions that those regulations impose on the County's home visit and collateral contact practices.

As a preliminary matter, we consider the County's argument that the procedures at issue are exempt from the Food Stamp regulations because the investigations are performed under the state's Front End Verification Program ("FEV"). FEV is a program established pursuant to 7 U.S.C. sec. 2020(e)(23)'s dictate that states establish a unit for detection of fraud in the food stamp program. Basically, the County appears to argue that the Food Stamp regulations do not apply to its FEV program because the FEV program is designed to reduce erroneous benefits determinations and fraud. We agree with the County that the Food Stamp regulations concerning the verification of applications do not apply to fraud detection or quality control programs undertaken pursuant to 7 U.S.C. sec. 2020(e)(2), 7 C.F.R. sec. 272.5(h), 275.10-14. See 7 C.F.R. Part 275 & Subpart C, secs. 275.10-14 (distinguishing between verification and quality "control programs," which entail full investigations of a statistical sampling of program participants). But here the defendants have admitted that the primary function of their FEV program is to ensure accurate verification. They also acknowledge that the FEV program, by its terms, concerns the application and recertification process, and the evidence of record indicates that the practices at issue are undertaken in connection with the verification of eligibility or recertification. Also, in several portions of their brief dealing with the plaintiffs' constitutional challenges, the defendants insist that their FEV program is not a criminal investigation. In short, the County has not, and apparently cannot, establish that its FEV program is merely a quality control or fraud detection ...


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