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ROSADO v. BOWEN

December 22, 1987

MARIA ROSADO, PRISCILLA GOLDEN, ANGELICA SALDANA, SHARON THOMAS, NORMA TAYLOR, NYDIA CRUZ, each individually and on behalf of their respective plaintiff minor children and on behalf of all other persons in New Jersey similarly situated, Plaintiffs
v.
OTIS R. BOWEN, SECRETARY OF HEALTH AND HUMAN SERVICES, AND GEOFFREY S. PERSELAY, ACTING COMMISSIONER OF THE NEW JERSEY DEPARTMENT OF HUMAN SERVICES, Defendants



The opinion of the court was delivered by: LECHNER

 This is a class action *fn1" in which the plaintiffs seek injunctive and declaratory relief from federal and state regulations promulgated under § 402(a)(38) of the Deficit Reduction Act of 1984("DEFRA"), *fn2" 42 U.S.C. § 602(a)(38).

  Specifically, plaintiffs alleged seven causes of action and complain that: (1) the federal regulation implementing the DEFRA provision, 45 C.F.R. § 206.10(a)(1)(vii)(B) and New Jersey practice which include plaintiffs in AFDC assistance units, violate the DEFRA amendment, 42 U.S.C. § 602 (a)(38), as well as 42 U.S.C. § 606(a)(1) (Complaint, First Cause of Action, para. 62); (2) considering child support payments and Social Security benefits for determining AFDC eligibility violates 42 U.S.C. 601 et seq. and the implementing regulation, 45 C.F.R. § 206.10(a)(1)(vii)(B) (Complaint, Second Cause of Action, para. 66); (3) defendants' actions violate the federal statute prohibiting the assignment of benefits 42 U.S.C. § 407 (Complaint, Third Cause of Action, para. 68); (4) assuming plaintiffs' benefits to be available to other family members violates plaintiffs' Fourteenth Amendment Due Process Rights (Complaint, Fourth Cause of Action, para. 72); (5) including child support in the income of the AFDC unit infringes on state family law, and violates the Fifth, Ninth and Tenth Amendments (Complaint, Fifth Cause of Action, para. 76); (6) terminating Medicaid benefits as a result of the inclusion of income pursuant to the DEFRA amendment violates the Medicaid statute, 42 U.S.C. § 1396a(a)(17)(D), and its implementing regulations, 42 C.F.R. § 435.602(a)(1) and 435.113 (Complaint, Sixth Cause of Action, para. 82); and (7) forcing plaintiffs to use Title II benefits for other than their intended use violates plaintiffs' Due Process and Equal Protection rights under the Fifth and Fourteenth Amendments (Complaint, Seventh Cause of Action, para. 88). Plaintiffs also seek a preliminary and permanent injunction, enjoining defendants from the above practices.

 In this motion plaintiffs seek summary judgment or in the alternative an injunction on all causes of action alleged in the complaint. Defendants have cross-moved for summary judgment on all causes of action. I reserved judgment on this motion pending the Supreme Court's decision in Bowen v. Gilliard, 483 U.S. 587, 97 L. Ed. 2d 485, 107 S. Ct. 3008 (1987). In light of this decision and for the reasons discussed below, plaintiffs' motion for summary judgment is granted in part and denied in part. Defendants' cross-motion for summary judgment is granted in part and denied in part.

 I. Facts

 The facts of this case are undisputed and have been stipulated to by the parties. Defendant Otis R. Bowen is the Secretary of the Department of Health and Human Services. He is responsible for adopting regulations implementing the Social Security Act and for ensuring that states which participate in the AFDC and Medicaid programs comply with the Social Security Act.

 At the time of commencement of this action, defendant Geoffrey S. Perselay was the Acting Commissioner of the Department of Human Services of the State of New Jersey; *fn3" the Commissioner of this department is generally responsible for administration of the AFDC program, N.J.S.A. 30:4B-1, et seq. and the Medicaid program, N.J.S.A. 30:4D-1, et seq.4

 Prior to the passage of DEFRA, a child who was independently supported was not required to apply for AFDC or to be included in the AFDC unit. *fn5" With the promulgation of the DEFRA regulations, however, a child who is independently supported must apply for AFDC and be included in the AFDC unit. When the independently supported child does apply for AFDC, the amount of that support, be it child support or Social Security, is counted in the family's AFDC eligibility determination and in calculating the AFDC grant amount. The inclusion of this support generally results in a family unit receiving a smaller grant amount or in some cases being denied or ineligible for AFDC. When AFDC benefits are denied or terminated due to DEFRA requirements the State of New Jersey automatically denied or terminates a claimant's eligibility for Medicaid.

 Plaintiffs, as class representatives, *fn6" appear for those New Jersey residents who have been or will be adversely affected by defendants' interpretation of the DEFRA amendment, § 602(a)(38).

 Plaintiff Priscilla Golden is the natural mother and custodial parent of three children who do not share the same father. Prior to November, 1985, she received monthly AFDC benefits of $ 404.00 along with Medicaid for herself and two older children. Her youngest child received $ 200 per month in child support until April, 1984, when he began receiving $ 280 per month in Social Security on his retired father's account. In October, 1985, Golden was required by the Essex County Welfare Department ("ECWD") to add her youngest child to the AFDC grant and include his Social Security benefits in the family's income. As of January 1, 1986, as a result of the increased total income, Golden's benefits under AFDC were reduced to $ 176 per month. Presently, the payment is subject to recoupment due to previous overpayments, reducing the amount to $ 139 per month.

 Plaintiff Angelica Saldana is also the natural mother and custodial parent of children who do not share the same father. Saldana reapplied for AFDC in February, 1986 and was required to include her daughter, who receives $ 233 per month in Social Security, in the family unit. The family was classified as a five person household entitled to $ 526 per month. The Social Security payment was subtracted from the family's AFDC grant. Before DEFRA, Saldana would have received a four person grant of $ 465, and Saldana's daughter would have received the $ 233 Social Security payment.

 Plaintiff Sharon Thomas lives with her seven minor children. Prior to DEFRA, she was receiving AFDC of $ 556 per month ($ 617 grant minus $ 61 recoupment), Medicaid for herself and six children, and her oldest daughter received $ 533 in Social Security per month. Effective January, 1986, Thomas receives Medicaid, an AFDC grant of $ 139 per month (reduced to $ 69 because of recoupment), and her oldest daughter's Social Security ($ 533 per month).

 Prior to February, 1986, plaintiff Norma Taylor and her daughter received $ 307 per month in AFDC. In November, 1985, Taylor obtained custody of her son when his father died. In February, 1986, Taylor began receiving $ 448 per month in Social Security as representative payee for her son. Taylor was required to report the Social Security income to the Warren County Welfare Board. As a result, Taylor's AFDC and Medicaid payments were terminated. Taylor now receives $ 140 per month in child support for her daughter and $ 448 in Social Security for her son.

 Plaintiff Nydia Cruz lives with her three minor children who do not share a common father. Prior to DEFRA, Cruz received $ 307 in AFDC benefits per month and Medicaid for herself and her oldest child. She also received $ 280 per month in child support and medical insurance and expenses for her two younger children pursuant to a divorce decree. In October, 1985, Cruz was required to include her two younger children in the AFDC grant and to assign their child support payments to ECWD which received them directly from the Probation Department of Essex County. Since DEFRA, Cruz and her three children receive $ 465 AFDC per month (which is currently reduced to $ 409 because of recoupment for unreduced benefits during her administrative appeal).

 Class member David Vine lives with his wife, his child and his wife's child from a previous marriage, Robbie Carroll. Mrs. Vine is totally disabled and receives $ 367 per month in Social Security Income ("SSI"). Prior to October, 1986, David Vine received $ 404 in AFDC and Medicaid for himself and the two children. When Robbie Carroll's father died in January, 1986, Robbie was awarded $ 549 per month in Social Security. In September, 1986, as a result of the increased family income due to Robbie's Social Security benefits, the Warren County Welfare Board notified David Vine that the family's AFDC and Medicaid would be terminated.

 II. Discussion

 A. Standard for Summary Judgment

 To prevail on a motion for summary judgment, the moving party must establish "there is no genuine issue as to any material fact and that [it] is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). The district court's task is to determine whether disputed issues of fact exist, but the court cannot resolve factual disputes on a motion for summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S. Ct. 2505, 2511, 91 L. Ed. 2d 202 (1986). All evidence submitted must be viewed in a light most favorable to the party opposing the motion. See Matsushita Elec. Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S. Ct. 1348, 1356-57, 89 L. Ed. 2d 538 (1986).

 As has been previously stated, there are no factual disputes in this case. The resolution of issues depends wholly upon the interpretation of specific statutory language as well as the applicable law. ...


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