On Appeal from the United States District Court for the Eastern District of Pennsylvania.
Gibbons, Chief Judge, Seitz, Circuit Judge, and Farnan, District Judge*fn*
The plaintiffs, Mary Bennett and Michaeline Forsythe, are class representatives in a class action which challenges the manner in which Pennsylvania officials administer the child support enforcement program established by Subchapter IV-D of the Social Security Act, 42 U.S.C. §§ 651-667, and its implementing regulations. The class consists of all present or former recipients of public assistance, residing in Philadelphia, who assigned their own and their childrens' rights to child support to the Pennsylvania Department of Public Welfare (DPW), and whose support money is actually being collected by DPW. The class representatives obtained a summary judgment in favor of the class, but appeal from the limited relief ordered by the district court. The defendants are John F. White, Jr., Secretary of DPW, James R. Adams,*fn1 Director of the Office of Program Accountability of DPW, Clyde Black, Director of the Claims Settlement Area Office for the Southeastern Region of DPW, and Robert J. Henry, Support Director of the same Settlement Area Office. These defendants cross-appeal, contending that their cross-motion for summary judgment should have been granted. We hold that summary judgment in favor of the class was required, but that the limited relief ordered was, considering the nature of the violations found, legal error or an abuse of discretion. Thus we will affirm the liability judgment in favor of the class, but remand for consideration of further relief.
Pennsylvania has elected to participate in the federal spending program authorized by Subchapter IV-A of the Social Security Act, 42 U.S.C. §§ 601-615. That title authorizes expenditures for aid to families with dependent children in states which have submitted and have had approved by the Social Security Administration a plan for aid and services to needy families with children (AFDC recipients). This federal spending clause program is a matching funds program intended to encourage state aid and service to AFDC recipients. The level of federal support varies from year to year and from state to state, but it is always equal to at least 50 percent of the state's expenditures for AFDC purposes. 42 U.S.C. § 1301(a)(8), 1396d(b). A state plan for such aid and service must, among other features, ". . . provide that, as a condition of eligibility for aid, each applicant or recipient will be required -
(A) to assign to the State any rights to support from any other person such applicant may have (i) in his own behalf or in behalf of any other family member for whom the applicant is applying for or receiving aid, and (ii) which have accrued at the time the assignment is executed."
42 U.S.C. § 602(a)(26)(A). The assigned third party payments are collected by the state agency, which may from the collected payments reimburse the state and the federal government in proportion to their respective participation in assistance to the AFDC recipient. 42 U.S.C. § 657(b)(4). Federal reimbursement is accomplished by deducting from federal grants the net amounts of assigned support payments recovered by the state in the prior quarter. 42 U.S.C. § 603(b)(2)(B),(C); 45 C.F.R. § 302.51. The state plan must provide that "[w]hen a family ceases receiving assistance under the State's Subchapter IV-A plan, the assignment of support rights under § 232.11 of this title terminates except with respect to the amount of any unpaid support obligation that has accrued under such assignment." 45 C.F.R. § 302.51(f). Furthermore, "[i]f the amount collected is in excess of the amounts required to be distributed [to reimburse the state or the federal government], such excess shall be paid to the family." 45 C.F.R. § 302.51(b)(5).
When periodic third party support payments for a child exceed the amount of AFDC assistance for the child for a period, the state plan must provide for a determination whether if treated as income the support payments render the child ineligible for assistance. Such redeterminations must occur within two months after the support is collected. 45 C.F.R. § 232.20(b)(1). The plan must provide that the recipient be notified of the termination of eligibility, and entire third-party support payments must be paid the recipient in the month for which ineligibility was determined. Id. The plan must also provide that if public assistance stops, the state may only continue to collect current third-party support payments for a maximum of three months, unless the recipient authorizes an extension. 45 C.F.R. § 302.51(e). All support payments collected after termination of assistance, however, are for the benefit of the recipient. "The state may not charge fees from support collections and must pay all amounts collected which represent monthly support payments to the family." Id. Thus, as is typical of federal spending clause programs, Pennsylvania has entered into a contractual undertaking with the United States that in exchange for federal benefits it will operate a state program in accordance with federal requirements. See, e.g., Delaware Dept. of Health v. U.S. Dept. of Educ., 772 F.2d 1123 (3d Cir. 1985).
The class representatives' complaint, filed on May 1, 1979, alleges the AFDC arrangements for collection of third-party support payments outlined above, and the responsibility of the named defendants for compliance with those arrangements. It alleges that DPW arranged with the Philadelphia Family Court and other courts for third-party support payments to be made to it, during the continuance of AFDC assistance in amounts in excess of the amount the state was entitled to, and to continue such payments after assistance was terminated. The complaint alleges that the defendants wilfully and maliciously refused to account for such excess collections. In the absence of an account, it is alleged, AFDC recipients cannot determine whether the state is retaining support payments which belong to the recipients. This conduct, the complaint alleges, violates Subchapter IV-D of the Social Security Act, the implementing regulations thereunder, and the Due Process Clause of the Fourteenth Amendment. The prayer for relief requests that the court:
59. Declare this action a class action pursuant to Rule 23(a) and (b)(2) of the Federal Rules of Civil Procedure;
60. Declare defendants' actions and procedures invalid and unconstitutional under the Social Security Act, 42 U.S.C. §§ 601 et seq. and 651 et seq.; 42 U.S.C. § 1983; and the Due Process Clause of the Fourteenth Amendment.
61. Preliminarily and permanently enjoin defendants' future retention of monthly support collections in excess of public assistance rendered;
62. Preliminarily and permanently enjoin defendants from retaining monthly support collections after ...