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Burlington County Welfare Board v. Stanley

Decided: January 20, 1987.

BURLINGTON COUNTY WELFARE BOARD, PLAINTIFF-APPELLANT,
v.
MILDRED STANLEY, DEFENDANT/THIRD-PARTY PLAINTIFF-RESPONDENT, V. AUDREY HARRIS, DIRECTOR, DIVISION OF PUBLIC WELFARE, THIRD-PARTY DEFENDANT/APPELLANT



On appeal from the Superior Court, Law Division, Burlington County.

Furman, Dreier and Shebell. The opinion of the court was delivered by Shebell, J.A.D.

Shebell

Plaintiff-appellant, Burlington County Welfare Board, sometimes referred to as "CWA," and third-party plaintiff-appellant, Audrey Harris, Director of the New Jersey Division of Public Welfare, have filed separate appeals from an order for summary judgment in favor of defendant-respondent, Mildred Stanley, dismissing the action of the County Welfare Board for reimbursement of public assistance in the sum of $7,159 received during the pendency of Stanley's lawsuit for personal injuries sustained in an automobile accident. We now consolidate the two appeals. The trial court in a written opinion concluded that neither the reimbursement agreement signed by the defendant nor the procedures used in connection with its execution satisfied constitutional demands and thus the County Welfare Board was not entitled to reimbursement. We reverse.

Mildred Stanley, having only a seventh grade education, began receiving public assistance benefits in January 1969. Stanley was injured in an automobile accident on April 3, 1980 for which she filed suit for damages, but did not inform the Welfare Board of this claim.

For the next twenty-one months, she continued to collect public assistance benefits totaling $7,159, while signing Welfare Board recertifications on three different occasions even though these certifications asked, "Do you or anyone making application have any pending claims, such as lawsuits, sale of property, or does anyone owe you money?" On July 7, 1980 Stanley answered "no," on February 5, 1981 "none," and on July 27, 1981 Stanley left it blank, each time signing the form.

Subsequent to the third recertification, the Welfare Board learned of Stanley's lawsuit through its investigator and requested on October 5, 1981 that she sign an agreement to repay. Stanley had previously signed a similar agreement regarding disability benefits during unemployment following an earlier accident. The text of the agreement pertinent to this case reads as follows:

I, We, (Mildred Stanley) of (2210 Walnut St.) (Mt. Holly, N.J.) for the purpose of receiving assistance for myself (ourselves) and my (our) children, in accordance with New Jersey Statutes Annotated, Title 44, Chapter 10, Assistance for Dependent Children, do hereby promise, in consideration of the granting of such assistance, to repay the County Welfare Board for that portion of any assistance so granted which may be paid during the period pending my (our) receipt of certain funds which are anticipated by the virtue of a claim or other action against (blank) arising out of (accident that took place in April 1980 in Willingboro). I hereby agree, and also authorize and direct by [ sic ] attorney, if any, to furnish full and complete information to the (Burlington) County Welfare Board, as to the above claim or other action. I agree to keep the Welfare Board informed of any proposed disposition of the claim or other action, and I agree not to dispose of any monies realized from such claim or other action without the prior consent and approval of the Welfare Board. Witness (Maureen A. McGlashon) Signature (Mildred Stanley) (L.S.) Witness (blank) Signature (blank)

Date: (10-5-81)

[(parenthetical information as it appears on form)]

Defendant's caseworker said that according to standard procedure she did explain to Stanley what the form meant, telling her that "[Stanley] would have to repay any assistance that was granted [during the pendency of the claim]. . . ." Stanley then asked the caseworker

what would happen if she didn't. Everybody always asks me, what would happen if I didn't sign it . . .

and was told

it would hold up your checks. And I told her that this would be signed because of the lawsuit and it would be referred to the legal department.

The caseworker admitted that she did not specifically inform Stanley that failure to repay would eventually result in termination of benefits. Stanley also inquired

like most people do, how much do I have to repay, and I told her that I didn't -- I didn't know; that wasn't my department; it would be referred to someone else and they would let her know.

Stanley however denies that she understood any of these forms, including the recertifications and the agreement to repay. After Stanley completed the forms, Welfare Department personnel would check the forms. However, Stanley claims that she did not sign the agreement to repay. She also states that no one explained that she "would have to pay money back if you had any claim such as an automobile accident . . ." nor that the Welfare Department has "a duty to try to get the money back . . ." nor that she "had some duty to report to the Welfare Department whenever you had a claim for an accident. . . ." With specific reference to the recertifications, Stanley said she did not know what "pending" meant and did not know that claims included insurance company proceeds.

A form letter was sent to Stanley's counsel on the tort claim on October 23, 1981 "to advise the attorney of the Welfare Board's interest in Mrs. Stanley's law suit." According to the caseworker it included

a copy of the agreement to repay, and I also attach a blank information form asking the attorney to advise us of certain circumstances, the date of the accident, where it occurred, who was injured in the accident, the insurance company, and certain other items. If I don't get an answer from the attorney a short period of time after that, I write to the client asking them to please contact their attorney and ask them to give us the information we need.

Receiving no response, the Board wrote to Stanley on November 25, 1981 "asking her to get in touch with her attorney." On December 17, 1981, the Board sent Stanley official notice of suspension of AFDC benefits for "refusal to comply . . ."

effective January 1, 1982, which included notice of Stanley's right to appeal at a fair hearing. The Board again wrote defendant's counsel on July 28, 1982 seeking "the current status of the law suit . . ." and explaining that "under the statute [ N.J.S.A. 44:10-4(a)] no monies could be disbursed without the written permission of the Welfare Board." Thereafter, her counsel requested "[a] copy of any document which gives you a right or lien against any recovery we may get in Mrs. Stanley's personal injury case as well as a copy of the statute authorizing the same. . . ." In reply, the Welfare Board sent Stanley's counsel another copy of the agreement to repay, together with a letter indicating the citation of the relevant statute and reminding counsel that a copy of the agreement had previously been forwarded to him in October 1981. Stanley has not reapplied for public assistance since January 1982 and returned to work in January 1984.

In 1984 Stanley's accident claim was settled for $40,000. On April 13, 1984, the Board sought the advice of the New Jersey Department of Human Services, Division of Public Welfare as to whether the Board could accept "a lesser amount than is due under the Agreement to Repay . . . due to Mrs. Stanley's physical and mental condition" and received the reply that

we are unable to find in the material presented any showing of a critical connection of the release to Mrs. Stanley of additional funds from the settlement to her ability to remain self-supporting indefinitely. The establishment of such a relationship would produce a basis for the release.

In the event that the Welfare Board acts favorably on this compromise proposal, we will be pleased to review it again for purposes of the required approval.

Stanley's counsel requested an appearance before the State Welfare Board. Following an appearance before the Burlington County Welfare Board counsel was advised that the County Board "declined to settle for a lesser amount . . ." and requested payment in full within ten days. This action was then filed.

The trial court in its written opinion stated that although Stanley's intelligence was "not so demonstrably limited as to prevent [her] understanding [of the agreement], especially in [214 NJSuper Page 621] view of the oral explanation provided when the agreement was tendered . . .," the agreement was not effective for several reasons. First, the agreement constituted a contract of adhesion because it was drafted without Stanley's participation; had the unilateral effect of binding only Stanley; and the parties were in unequal bargaining positions without Stanley being notified of the effects of, or available alternatives to, not signing. Second, the agreement "presents difficulties with respect to grammar, language and interpretation . . .," contravening case law and the Plain Language Act, N.J.S.A. 56:12-2. Third, Stanley would have been better off not signing because under the applicable regulations "[s]he would have become ineligible for assistance but would have lost welfare payments for only the three or four months between October 5, 1981, when she signed the agreement and January 1982 when she last received assistance." Lastly, the agreement and its procedures violate basic principles of due process articulated by the United States Supreme Court in Goldberg v. Kelly, 397 U.S. 254, 90 S. Ct. 1011, 25 L. Ed. 2d 287 (1970) and Mathews v. Eldridge, 424 U.S. 319, 96 S. Ct. 893, 47 L. Ed. 2d 18 (1976), because "Stanley's execution of the agreement, without a full explanation of its consequences [, i.e., that her refusal to sign would have terminated future benefits at once], denied her the opportunity to make a choice as to whether she preferred termination of benefits or some other alternative . . ." such as her right to compromise and to a retention of monies for anticipated medical expenses or monies constituting the damage award. Defendant filed a third-party complaint against the Deputy ...


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