On appeal from a Final Administrative Decision of the Director, Division of Economic Assistance.
J.h. Coleman, Dreier and Landau. The opinion of the court was delivered by Landau, J.A.D.
Appellants, O.J., J.R., H.S., S.O., L.C., M.S., S.D. and M.B., are recipients of Aid to Families with Dependent Children (AFDC recipients). Each appeals from a final decision of the Director of the Division of Economic Assistance (DEA) which affirmed the termination of some or all AFDC benefits because of the refusal of the AFDC recipients to petition the Essex County Surrogate for withdrawal of individual trust funds established for minor beneficiaries after tort judgments*fn1 to be used for the minor's current or future support.*fn2
Each of the AFDC recipients have minor children who have received a personal injury award stemming from either a motor vehicle accident*fn3 or lead poisoning.*fn4 Pursuant to N.J.S.A.
3B:15-16, 17, the net awards were deposited into trust funds with the Surrogate of Essex County. As required by N.J.A.C. 10:81-3.39, the Essex County Division of Welfare (ECDW) requested each AFDC recipient to assist that Agency in the presentation of a Surrogate's Court petition for release of these trust funds for the current and future support*fn5 of the minors for whose benefit the funds were held. All recipients were advised that failure to cooperate would result in termination of AFDC benefits for such minors.
Except for H.S., the remaining AFDC recipients ultimately agreed to cooperate with the ECDW provided they did not relinquish their rights to challenge the validity of N.J.A.C. 10:81-3.39 and with the understanding that should they prevail, all monies previously withdrawn from the trust fund by ECDW would be restored.
One Administrative Law Judge, sitting in review of the M.B. case, recommended reversal of the decision of the ECDW to terminate benefits, holding that N.J.A.C. 10:81-3.39 conflicted with N.J.S.A. 44:10-4(a) and was therefore nugatory. Although the Director agreed that the ECDW is precluded, pursuant to N.J.S.A. 44:10-4(a), from considering a minor's personal injury award for reimbursement of past payments, she disagreed with the finding that N.J.S.A. 44:10-4 and its introductory statement expressly barred the Agency from petitioning the court for release of personal injury award trust funds for current and future support.
A second Administrative Law Judge issued an initial decision in the J.R., et al. and O.J. matters on September 11, 1989 and September 18, 1989, respectively, finding that (1) N.J.A.C. 10:81-3.39(a) was not in conflict with N.J.S.A. 44:10-4(a); (2) the trust funds would not necessarily be depleted depending on the size of the trust, the length of time the recipient seeks AFDC benefits, and the willingness of the Surrogate's Court to
allow the release of funds; and (3) application for withdrawal affecting eligibility to receive current and future AFDC benefits were not covered by the April 9, 1985 amendment to N.J.S.A. 44:10-4(a) under the court's holding in Hart v. Fox, 204 N.J. Super. 564, 499 A.2d 553 (Law Div.1985). The Director adopted this initial decision and affirmed termination of the AFDC benefits. We note that the Director's decisions permit the Board to require application for withdrawal.
On appeal, the AFDC recipients argue that ECDW cannot lawfully condition receipt of AFDC benefits upon petitioning the Surrogate's Court to release their children's personal injury based trust funds, whether for past, current or future support of such trust-benefitted children.
AFDC is a joint federal-state welfare program established pursuant to 42 U.S.C. § 601, et seq., to provide assistance to certain "needy" dependent children and the parents and relatives who live with and care for them so they may attain self-sufficiency. 42 U.S.C. § 601. Although states have wide latitude in determining the appropriate standard of need and level of assistance they wish to provide under the AFDC program, the states must administer their programs in compliance with applicable federal statutes and with regulations promulgated by the United States Department of Health and Human Services (HHS). Since AFDC is financed largely by the federal ...