Turner v. McMahon

830 F.2d 1003, 56 U.S.L.W. 2248
CourtCourt of Appeals for the Ninth Circuit
DecidedOctober 16, 1987
DocketNos. 86-2321, 86-2490 and 87-1519
StatusPublished
Cited by43 cases

This text of 830 F.2d 1003 (Turner v. McMahon) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Turner v. McMahon, 830 F.2d 1003, 56 U.S.L.W. 2248 (9th Cir. 1987).

Opinion

ALARCON, Circuit Judge:

The dispositive issue on appeal is whether section 402(a) of the Social Security Act, 42 U.S.C. § 602(a)(22) (Supp. Ill 1985) permits a state to recoup overpayment of money paid to Families with Dependent Chil[1005]*1005dren (hereinafter AFDC) recipients under compulsion of an erroneous court order subsequently reversed by the Supreme Court. We hold that a state is authorized to do so under the plain language of the statute, and reverse the judgment of the district court.

Defendants-appellants Linda McMahon, Director of the Department of Social Services of the State of California (hereinafter State) and third party defendant-appellant Otis R. Bowen, Secretary of Health and Human Services (hereinafter Secretary or collectively referred to as appellants) appeal from the district court’s orders granting plaintiffs-appellees Sandra Turner and other certified class members (hereinafter appellees) injunctive relief, summary judgment, and attorney’s fees. In this consolidated appeal, appellees are past, present and future AFDC recipients who have been or will be affected by appellants’ policy of considering mandatory payroll deductions as income in calculating grants and determining eligibility.

FACTS

A. Background

In 1981, a class of AFDC recipients in California brought suit in federal court asserting that the State had improperly calculated the amount of benefits due AFDC recipients who work in implementing directions issued by the Secretary. The primary issue raised was whether the State should, when calculating AFDC eligibility and benefits, base its calculations on the gross or net income of a working recipient after mandatory payroll deductions.

In 1982, the district court issued a permanent injunction which enjoined it from implementing its new regulations and ordered the State not to treat funds withheld for mandatory payroll deductions as income to AFDC recipients. Turner v. Woods, 559 F.Supp. 603 (N.D.Cal.1982). We affirmed the district court’s order. Turner v. Prod, 707 F.2d 1109 (9th Cir.1983).

The injunction was stayed by Justice Rehnquist, acting as Circuit Justice for the Ninth Circuit. Heckler v. Turner, 468 U.S. 1305, 105 S.Ct. 2, 82 L.Ed.2d 891 (1984) (in chambers). The Supreme Court, in a unanimous decision, reversed this court's judgment. Heckler v. Turner, 470 U.S. 184, 105 S.Ct. 1138, 84 L.Ed.2d 138 (1985).

The Secretary thereafter issued Action Transmittal No. SSA-AT-85-10 on April 30, 1985. The Action Transmittal ordered states participating in the AFDC program, including California, to recover over-payments made to AFDC recipients where mandatory payroll deductions had been disregarded in calculating benefits and eligibility. The appellees had their AFDC benefits calculated without treating mandatory payroll deductions as income during the period between July 29, 1982, when the permanent injunction was implemented, and August 10, 1984, when the stay was issued by Justice Rehnquist.

The State then initiated measures for recoupment of the AFDC monies paid during this period under 42 U.S.C. § 602(a)(22). Section 602(a)(22) provides in pertinent part:

A State plan for aid and services to needy families with children must—
(22) provide that the State agency will promptly take all necessary steps to correct any overpayment or underpayment of aid under the State plan, and, in the case of—
(A) an overpayment to an individual who is a current recipient of such aid (including a current recipient whose overpayment occurred during a prior period of eligibility), recovery will be made by repayment by the individual or by reducing the amount of any future aid payable to the family of which he is a member, except that such recovery shall not result in the reduction of aid payable for any month, such that the aid, when added to such family's liquid resources and to its income (without application of paragraph (8)), is less than 90 percent of the amount payable under the State plan to a family of the same composition with no other income (and, in the case of an [1006]*1006individual to whom no payment is made for a month solely by reason of recovery of an overpayment, such individual shall be deemed to be a recipient of aid for such month);
(B) an overpayment to any individual who is no longer receiving aid under the plan, recovery shall be made by appropriate action under State law against the income or resources of the individual or the family; ____

B. Nos. 86-2321, 86-U90

Appellees thereafter filed a supplemental complaint in federal court to prohibit any recoupment by the State of AFDC benefits as “overpayments” paid pursuant to the court’s injunction. Appellees argued that monies paid to AFDC recipients pursuant to a court order were not “overpayments” within the meaning of section 602(a)(22). The State asserted that under section 602(a)(22) and the common law, over-payments made under a subsequently overturned court order could be recovered. The State filed a third party complaint against the Secretary claiming that if the State was enjoined from recovering over-payments, the Secretary should be prohibited from imposing sanctions for failure to comply with the recoupment provisions of section 602(a)(22).

The parties filed cross-motions for summary judgment. On June 18, 1986, the district court granted the appellees’ motion for summary judgment and request for an injunction. The State was enjoined from recouping funds that were paid to AFDC recipients in California from July 29, 1982, the date the district court issued its permanent injunction, until August 10, 1984, the date Justice Rehnquist granted the Secretary’s request for a stay of the district court’s injunction.

The district court examined the legislative history of section 602(a)(22) and concluded that recoupment of overpayments was designed solely to correct over-payments resulting “from recipient or agency error.” The court reasoned that “[njothing in this legislative history suggests Congress intended to require states to recover funds paid pursuant to a court-ordered injunction.” Thus, “[i]n the absence of any error or lack of diligence by either plaintiffs or the state, the OBRA amendments do not require — or empower— the state to recover the funds paid under the injunction.” The court also rejected the State's argument that it had a common law right to recoupment.

The district court enjoined the State from recouping AFDC overpayments and the Secretary from taking any action declaring the State to be in violation of federal law.

C. No. 87-1519

No. 87-1519 is a related appeal challenging the award of attorney’s fees to appellees under 42 U.S.C. § 1988 as prevailing parties on the recoupment issue.

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Bluebook (online)
830 F.2d 1003, 56 U.S.L.W. 2248, Counsel Stack Legal Research, https://law.counselstack.com/opinion/turner-v-mcmahon-ca9-1987.