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Stone v. Hamilton

October 18, 2002

SCOTT STONE AND MARIAN REDELL, ON THEIR OWN BEHALF AND ON BEHALF OF THOSE SIMILARLY SITUATED, PLAINTIFFS-APPELLANTS,
v.
JOHN M. HAMILTON, IN HIS OFFICIAL CAPACITY AS SECRETARY OF THE INDIANA FAMILY AND SOCIAL SERVICES ADMINISTRATION, DEFENDANT-APPELLEE.



Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 01 C 564--Larry J. McKinney, Chief Judge.

Before Bauer, Rovner, and Evans, Circuit Judges.

The opinion of the court was delivered by: Rovner, Circuit Judge.

ARGUED SEPTEMBER 4, 2002

Prior to 1996, the federal Food Stamp Act prohibited a state from collecting a food stamp overissuance that was due to its own administrative error ("agency error overissuance") by involuntarily reducing a food stamp recipient's food stamp allotment. States were permitted, but not required, to recoup overissuances by other means. In 1996, Congress amended the statute to require states to collect agency error overissuances by involuntary means, including by involuntarily reducing a food stamp recipient's food stamp allotment. A class of food stamp recipients ("recipients") sued the Secretary of the Indiana Family and Social Services Agency ("State"), challenging the State's ability to involuntarily reduce a recipient's food stamp allotment to collect for overissuances made prior to the 1996 amendment to the Food Stamp Act. The district court denied the plaintiffs' motion for summary judgment and granted summary judgment in favor of the defendant. We reverse and remand for further proceedings.

I.

In order to alleviate hunger and malnutrition among the economically disadvantaged, the federal government funds a program to provide food stamps to low-income individuals. 7 U.S.C. § 2011. Although funded by the federal government, each state must administer the program in compliance with the Federal Food Stamp Act and the accompanying regulations. 7 U.S.C. § 2020, 7 C.F.R. § 273.18(a)(2)-(3). The state's agencies in charge of doling out food stamps occasionally err and issue more food stamps than a recipient is entitled to receive. The state has always been entitled to collect from recipients who, due to agency error, received an overissuance of food stamps (7 U.S.C. § 2022(a)), but prior to 1996, the state could not do so by involuntarily reducing a recipient's current food stamp allotment. 7 U.S.C. § 2022(b)(2) (1995). The overissuances could only be collected by "other means." 7 U.S.C. § 2022(b)(2)(B) (1995). *fn1 The problem for the states, of course, was that the recipients from whom they might collect were impoverished and thus had few, if any assets from which to collect "by other means." All of that changed, however, when Congress amended the Food Stamp Act by enacting the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, Pub. L. No. 104-193, § 844, 110 Stat. 2105 (Aug. 22, 1996). Where before the states were prohibited from using food stamp allotment reduction as a method for collecting agency error over issuances, the new Act required the state to use involuntary means, including food stamp allotment reduction, to collect from recipients in these cases. 7 U.S.C. § 2022(b) (2002). The regulations implementing the amendment require states to recoup overissuances by involuntarily reducing a recipient's food stamp allotment. 7 C.F.R. § 273.18(g)(1) (2002). Suddenly the states were not only required to collect for their errors, but they also had an effective means of doing so. *fn2

After enactment of the amendment, the State began sending out notices that it would be reducing food stamp allotments to collect for agency error overissuances. Some of these notices went to persons who had received the overissuances long before Congress enacted the new amendment. For instance, in a Notice of Action mailed on September 1, 2000, the State informed Marian Redell that it was now going to collect--by reducing her monthly food stamp allotment--for an overissuance of food stamps that she received in 1988.

In 1988, the State wrote to Ms. Redell asking for voluntary repayment of the overissuance but stated in bold capitalized letters, "BECAUSE THE ERROR WAS MADE BY OUR AGENCY YOU ARE NOT REQUIRED TO AGREE TO REPAY THE OVERISSUED BENEFITS." (R. Doc. 30).

It warned Ms. Redell, however, that it was reserving the right to pursue other collection methods permitted by federal law. Despite the warning, for approximately twelve years, the State took no action to collect from Ms. Redell.

Similarly, in January 1986, the State informed Scott Stone that, due to its error, in August 1984 and in February through December 1985, he had received $233 in food stamps that he was not entitled to receive. The notification asked Stone to voluntarily pay back the amount of the overissuance. Mr. Stone paid back $98 over the course of two years from 1986 to 1988, but then paid nothing further. As with Ms. Redell, from December 1988, when Mr. Stone stopped making payments, through September 2000, the State did nothing further to collect for the overpayments. On September 1, 2000, the State sent Mr. Stone a notice informing him that it was going to begin recouping the balance due on the overpayment by reducing his food stamp allotment.

Mr. Stone and Ms. Redell sued the State in district court, challenging its ability to reduce current food stamp allotments to collect for overissuances which occurred prior to the effective date of the amendment. The district court certified the case as a class action in which Mr. Stone and Ms. Redell represent a class of "all individuals in the State of Indiana who received an overissuance of food stamps due to an agency error at any time prior to August 22, 1996." The plaintiffs filed a motion for summary judgment asking the district court to grant a permanent injunction prohibiting the State from retroactively applying the amendments to the Food Stamp Act. Shortly thereafter, the defendant filed its motion for summary judgment. The district court granted summary judgment in favor of the defendant, the Secretary of the Indiana Family and Social Services Administration. The food stamp recipients appeal.

II.

We review the district court's ruling on summary judgment de novo, construing the record in the light most favorable to the non-movant. Oconomowoc Residential Programs Inc. v. City of Milwaukee, 300 F.3d 775, 777 (7th Cir. 2002). Summary judgment is appropriate where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).

The sole issue presented by the parties is whether the application of the Food Stamp Act amendments to pre-1996 overissuances constitutes an impermissible retroactive application of the law. We begin with the recognition that the law disfavors a retroactive application of a statute. Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208 (1988). "Thus, congressional enactments and administrative rules will not be construed to have retroactive effect unless their language requires this result." Id. The first step in determining whether a law applies to conduct occurring prior to the passage of an act is to ascertain whether Congress has expressly prescribed the statute's reach. Landgraf v. USI Film Prod., 511 U.S. 244, 280 (1994). In this case it is apparent from the face of the amended statute, and both parties agree, that Congress has not expressly stated whether the new provisions of the Act apply ...


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