Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Gonzalez v. State

Supreme Court of Delaware

March 12, 2019

CINDY GONZALEZ, Defendant Below, Appellant,
v.
THE STATE OF DELAWARE, Plaintiff Below, Appellee.

          Submitted: February 20, 2019

          Court Below: Superior Court of the State of Delaware, C.A. No. N18C-01-144-RRC

          John S. Whitelaw, Esquire (Argued), Katherine E. Sell, Esquire, COMMUNITY LEGAL AID SOCIETY, INC., Wilmington and Dover, Delaware; Travis W. England, Esquire, NATIONAL CENTER FOR LAW AND ECONOMIC JUSTICE, New York, New York, for Appellant, Cindy Gonzalez.

          Oliver J. Cleary, Esquire (Argued), Department of Justice, Wilmington, Delaware, for Appellee, the State of Delaware.

          Joanna J. Cline, Esquire, PEPPER HAMILTON LLP, Wilmington, Delaware, for Amicus Curiae David. A. Super, Georgetown University Law Center, in Support of Appellant.

          Before STRINE, Chief Justice; VALIHURA, VAUGHN, SEITZ, and TRAYNOR, Justices.

          STRINE, CHIEF JUSTICE:

         The Supplemental Nutrition Assistance Program ("SNAP") is a public benefits program funded by the federal government and governed by federal regulations but administered on a day-to-day basis in substantial part by the states. Designed to "alleviate . . . hunger and malnutrition, "[1] SNAP provides low-income households with electronic payment cards-formerly called "food stamps"-which they can use to buy food. Like many federal benefits programs, a household's eligibility for SNAP is subject to limitations under federal law.

         In this case, a SNAP recipient, Cindy Gonzalez, was found to have defrauded the federal government of $6, 159 worth of SNAP benefits by representing that she lived alone and did not receive any income, when in fact she was not living alone and was receiving income. After discovering this wrongdoing, the Delaware Department of Health and Social Services ("DHSS") brought an administrative proceeding against Gonzalez to disqualify her from continued participation in SNAP and claw back the benefits she received through her misrepresentations. The hearing officer found that DHSS had established intentional program violations and disqualified Gonzalez from continued participation in SNAP for one year, and DHSS's audit and recovery arm assessed an overpayment of $6, 159, which the federal government has started to collect by offsetting the other federal benefits she receives against her SNAP obligations.

         About five months after the DHSS final decision, the State of Delaware brought a civil action in the Superior Court against Gonzalez under Delaware common law and the Delaware False Claims and Reporting Act based on the same circumstances underlying the DHSS administrative proceeding. This time, however, the State sought between approximately $200, 000 and $375, 000 in restitution, damages, and penalties; attorneys' fees and costs; and an order enjoining Gonzalez from participating in SNAP until she pays the judgment. Gonzalez in turn filed an answer asserting an affirmative defense that federal law preempts the State's Delaware law claims, and the State moved for judgment on the pleadings. The Superior Court granted the State's motion, holding that federal law did not preempt the State's claims. Gonzalez brings an interlocutory appeal from that determination.

         We reverse because federal law prohibits the State from bringing consecutive administrative and civil actions against a SNAP recipient based on the same fraud. Under our system of government, federal law is "the supreme Law of the Land."[2] In this case, the United States Congress passed a law that gives its state partners in SNAP a choice of different enforcement options, but requires states to pick one or the other: "Each State agency shall proceed against an individual alleged to have engaged in [food benefits fraud] either by way of administrative hearings . . . or by referring such matters to appropriate authorities for civil or criminal action in a court of law."[3] The relevant statutory history and administrative interpretations of that provision confirm the most facially reasonable reading of the statute, which is that Congress intended to use the word "or" in an exclusive sense. That is, a state can proceed through "either" an administrative hearing "or" an action in court, but not both. Here, DHSS already obtained a final decision against Gonzalez in an administrative setting, which bars the State from proceeding against her again in court, notwithstanding any state law to the contrary.

         I.

         A.

         Unless otherwise noted, the facts of this case are drawn from the pleadings in the Superior Court and are not in material dispute. Around June 2013, Gonzalez submitted an electronic application for SNAP benefits to DHSS, [4] which is the state agency that administers Delaware's implementation of the program. On her application, Gonzalez indicated that she lived alone and received $536.50 in monthly assistance from her mother. In later application renewals and periodic reports, Gonzalez indicated that she continued to live alone and had no income, except Social Security benefits that she started receiving in 2016. Gonzalez kept telling DHSS that she was living alone until at least October 2016.

         But a DHSS investigation uncovered evidence that Gonzalez had not lived alone and had received additional household income. On October 29, 2014, Gonzalez got married, and according to DHSS, Gonzalez's landlord told agency investigators that Gonzalez had been living with her spouse since 2011 and with her mother since 2014. According to DHSS, further investigation produced more evidence that Gonzalez and her spouse lived together.

         Following its investigation, DHSS brought an administrative proceeding against Gonzalez seeking to disqualify her from receiving future SNAP benefits. In that proceeding, DHSS alleged fraud and intentional program violations due to Gonzalez's falsification of her SNAP submissions by claiming she lived alone and received no income, when in fact she lived with other people and did receive income. On August 18, 2017, after holding a hearing during which Gonzalez was not represented by counsel, [5] the hearing officer issued a final decision finding that DHSS had established fraud through clear and convincing evidence and disqualifying Gonzalez from receiving SNAP benefits for one year. Gonzalez did not file an appeal from that decision. DHSS then assessed a $6, 159 overpayment, which was the total value of the SNAP benefits Gonzalez received as a result of her misrepresentations. According to Gonzalez, the federal government has started collecting that money by withholding her other federal benefits.[6]

         B.

         After knowing that Gonzalez had not appealed and that DHSS's decision against her had become final, [7] the State of Delaware brought a civil action in the Superior Court against Gonzalez seeking monetary damages and civil penalties under Delaware common law and the Delaware False Claims and Reporting Act. The State's complaint was based on the same factual allegations as the prior DHSS action, but this time, the State was asking for a lot more money: $6, 159 in restitution, $18, 477 in statutory treble damages, and between $5, 500 and $11, 000 in statutory civil penalties for each of the 32 false statements and fraudulent claims described in the complaint. In total, that adds up to between about $200, 000 and $375, 000. Additionally, the State sought attorneys' fees and costs and to enjoin Gonzalez from applying for or receiving SNAP benefits until she pays the judgment that the court imposes. In fact, the State sought to collaterally use the administrative hearing officer's factual findings against Gonzalez, asserting in its complaint that "[l]iability and intent in this matter are established by the [administrative disqualification hearing] decision pursuant to 6 Del. C. § 1204(f)."[8]

         In response, Gonzalez filed an answer asserting an affirmative defense that the federal statute that created SNAP, the Food and Nutrition Act of 2008, [9] preempts the State's claims.[10]

         The State then moved for judgment on the pleadings, which Gonzalez opposed on preemption grounds.[11] In essence, Gonzalez argued that there was either a specific conflict between the Food and Nutrition Act and the State's action against her or a more general conflict based on the notion that the State's action stands as an obstacle to the execution of Congress's intent.[12] The State denied that there was any preemption.

         The Superior Court granted the State's motion, holding that federal law did not preempt the State's claims, and referred the case to a Superior Court Commissioner for a hearing to determine the amount of fees and costs due under the Delaware False Claims and Reporting Act.[13]

         In ruling for the State, the Superior Court relied primarily on a federal regulatory provision promulgated under the Food and Nutrition Act by the federal agency responsible for implementing that statute, the Food and Nutrition Service, to govern court referrals by state agencies that are exempt from establishing an administrative disqualification system.[14] In particular, the court emphasized a provision in that regulation that requires exempt state agencies to "encourage State and local prosecutors to recommend to the courts that a disqualification penalty as provided in [the Food and Nutrition Act] be imposed in addition to any other civil or criminal penalties for such violations."[15] The trial court viewed that provision as "contemplat[ing] additional remedies the state can seek in addition to an administrative disqualification hearing."[16]

         The Superior Court also cited a U.S. District Court decision, United States v. Byrd, [17] which involved a merchant who allegedly violated the federal False Claims Act by illegally redeeming food stamp coupons, to support its position. Although Byrd did not consider the preemption issue and involved a merchant who redeemed food stamps (as opposed to a food stamp recipient), [18] the Superior Court agreed with the State that "it is difficult to understand why the government could not bring a state False Claims Act claim against the Defendant but could bring a federal False Claims Act against the Defendant."[19]

         After the Superior Court's decision, Gonzalez sought interlocutory review of the court's decision granting judgment on the pleadings to the State, which the Superior Court certified and this Court granted.

         II.

         This Court reviews the Superior Court's decision granting judgment on the pleadings de novo "to determine whether the court committed legal error in formulating or applying legal precepts."[20]

         III.

         On appeal, Gonzalez's main argument is that the Food and Nutrition Act preempts the State's claims against her because the Act prohibits states from bringing consecutive administrative and civil actions based on the same intentional program violations.[21] Specifically, she points to § 6(b)(2) of the Act, which requires each state agency to "proceed against an individual alleged to have engaged in [an intentional program violation] either by way of administrative hearings, after notice and an opportunity for a hearing at the State level, or by referring such matters to appropriate authorities for civil or criminal action in a court of law."[22] Gonzalez interprets that language to mean that Congress intended to allow states to proceed either administratively or in court, but not both. Here, she argues, the State was precluded from proceeding against her in court because DHSS had already successfully proceeded against her in an administrative setting.

         In response, the State's briefing seems to suggest that the "either/or" language in § 6(b)(2) should be read inclusively, giving the government the discretion to proceed administratively using the Food and Nutrition Act's disqualification and recoupment provisions, in court under state law, or through both means.[23]Additionally, the State claims that "two state agencies are involved in this matter"- DHSS and the Delaware Department of Justice ("DDOJ")-and that the DDOJ "is not bound by whatever requirements of the [Food and Nutrition Act]" there may be that bind DHSS.[24] Clarifying this position at oral argument, the State asserted that § 6(b)(2) applies to only "one state agency"-defined by the Act to be "the administering agency administering the SNAP program"-which shows that "Congress intended to preclude actions by the administering agency but not by other agencies."[25] In other words, the State views § 6(b)(2) as binding only the state agency charged with overseeing SNAP-DHSS-and leaving the rest of the state government free to proceed as it wishes.[26]

         Under the Supremacy Clause of the United States Constitution, "federal law preempts contrary state law."[27] In general, the types of preemption recognized by federal courts can divided into three categories: express preemption, field preemption, and conflict preemption.[28] Express preemption occurs when Congress preempts state law "in express terms."[29] Field and conflict preemption, by contrast, take a more contextual approach. Field preemption exists "when it is clear, despite the absence of explicit preemptive language, that Congress has intended, by legislating comprehensively, to occupy an entire field of regulation and has thereby 'left no room for the States to supplement' federal law."[30] As for conflict preemption, "even if Congress has not occupied the field, state law is naturally preempted to the extent of any conflict with a federal statute."[31] Thus, conflict preemption exists "when compliance with both state and federal law is impossible, or when state law stands as an obstacle to the accomplishment and execution of the full purposes and objective of Congress."[32] But these "categories of preemption are not rigidly distinct, "[33] and "the ultimate touchstone" in every preemption case involving a federal statute is "the purpose of Congress."[34] Courts should not "rely on a talismanic pre-emption vocabulary."[35]

         Because the text, statutory history, and relevant regulatory interpretations of the Food and Nutrition Act demonstrate that Congress intended to require states to choose between an administrative hearing and court when proceeding against an individual for fraud in obtaining SNAP benefits, we hold that federal law preempts the State's claims in this case.

         A.

         Starting with the statutory text, the provision that Gonzalez relies on is tied to the Food and Nutrition Act's disqualification penalties for fraud, misrepresentation, and other intentional program violations, including violations of state statutes, that are committed "for the purpose of using, presenting, transferring, acquiring, receiving, or possessing program benefits."[36] The Act provides that any person found by a state or federal court or administrative agency to have committed one of these intentional programs violations will be disqualified from further participation in SNAP, with the length of the disqualification depending on whether the person is a repeat offender and on the type of violation.[37] The provision that Gonzalez relies on, § 6(b)(2), goes on to provide:

Each State agency shall proceed against an individual alleged to have engaged in [activity constituting an intentional program violation] either by way of administrative hearings, after notice and an opportunity for a hearing at the State level, or by referring such matters to appropriate authorities for civil or criminal action in a court of law.[38]

         Thus, when a SNAP participant commits an intentional program violation-broadly defined to include both outright fraud and other intentional violations related to SNAP-the state agency must proceed against that participant either by way of an administrative hearing or by referring the case to appropriate authorities for a civil or criminal action in court. The Act and its implementing regulations also require state agencies to collect the overissued benefits on behalf of the federal government, [39] with the state retaining 35% of the amount collected.[40]

         Absent the use of the word "either," § 6(b)(2) could conceivably be read in one of two ways: (1) a state agency can proceed either administratively or in court, but not both (the exclusive use of "or"); or (2) a state agency can proceed administratively, in court, or through both means (the inclusive use of "or"). As scholars and other courts have recognized, drafters of legal text, like ordinary humans, can use the word "or" in either sense.[41] For example, if a waiter says that the breakfast special comes with either coffee or tea, he is probably using "or" exclusively-the meal doesn't come with both. But if that same waiter tells his manager that he will quit his job unless he receives a raise or more vacation time, he is probably using "or" inclusively-he would be happy to receive a raise, more vacation time, or both. Given these varying uses of "or," "[t]he intended meaning must be interpreted from context."[42]

         But in this instance, Congress used the word "either" in concert with "or." The statute's use of the "either/or" construct suggests that Congress intended to use "or" in the exclusive sense (i.e., "P or Q, but not both"). In ordinary English, the phrase "P or Q" on its own often suggests the inclusive sense of "or," but the addition of the word "either" before "P or Q" weighs toward the exclusive use.[43] This understanding of the "either/or" construct finds support in the U.S. District Court for the District of Columbia's decision in Delfani v. U.S. Capitol Guide Board, [44] where the court considered whether it had subject matter jurisdiction over employment discrimination claims brought by a former employee of the federal government. The plaintiff in that case was bringing her claims under the Congressional Accountability Act, which "permits an employee to 'either (1) file a complaint with the Office [of Compliance] . . . or (2) file a civil action.'"[45] Before filing suit in the district court, the plaintiff had filed an administrative complaint with the Office of Compliance.[46]Reasoning that "the statute plainly requires an employee to make a choice between alternatives, and therefore forecloses the possibility of parallel proceedings in both administrative and adjudicative fora," the district court dismissed the plaintiff's claims for lack of subject matter jurisdiction.[47] The D.C. Circuit affirmed the district court's decision on appeal, reasoning that "[t]he district court lacked subject matter jurisdiction because the plaintiff had an administrative complaint pending when she filed this civil action."[48]

         To the extent that the current statutory text can conceivably be viewed as ambiguous, the history of the statutory text of § 6(b)[49] dispositively shows that Congress intended to make state agencies choose between one forum or the other. Before 1981, the relevant language in § 6(b) provided:

Each State agency shall proceed against such alleged fraudulent activity either by way of administrative fraud hearings in accordance with clause (1) of this subsection or by referring such matters to appropriate legal authorities for civil or criminal action in accordance with clause (2) of this subsection, or both.[50]

         The use of the "or both" language in that version of § 6(b) makes clear that, before 1981, Congress intended to use "or" in the inclusive sense. That is, Congress wanted to allow states to proceed against an individual in a single forum "or both." But in 1981, things changed when, in the Omnibus Budget Reconciliation Act of 1981, Congress amended § 6(b) to strike the "or both" language, with the provision now reading:

Each State agency shall proceed against an individual alleged to have engaged in [activity constituting an intentional program violation] either by way of administrative hearings, after notice and an opportunity for a hearing at the State level, or by referring such matters to appropriate authorities for civil or criminal action in a court of law.[51]

         That language is the same, word for word, as the statute's current language.

         If we are to give any effect to Congress's removal of the "or both" language- as fundamental principles of statutory interpretation suggest we must[52]-the amended statute has to be read as requiring states to "either" choose one forum "or" the other, but not "both."

         B.

         Although the statutory text and history alone are clear enough to resolve this question, we note that our interpretation-that Congress intended to limit states to a single forum for any given case of SNAP fraud-is also supported by the Food and Nutrition Service's explanation of the food stamp rulemaking it finalized in 1983, less than two years after the 1981 omnibus legislation that amended § 6(b). Explaining the final rule's provisions regarding administrative responsibility for seeking disqualification penalties for intentional program violations, the Service noted that its previous regulation had "clarifi[ed] that administrative fraud hearings can be conducted regardless of whether other legal action is planned against the household member."[53] But the Service deleted that provision "to reflect a change in the language of the statutory requirement governing State agency action in pursuit of cases of alleged Program abuse."[54] Specifically, the Service explained:

[W]hereas the [predecessor statute to the Food and Nutrition Act][55] previously mandated State agency proceedings against individuals alleged to have committed fraud either by way of administrative hearings or by referring such matters to appropriate legal authorities, or both . . ., the language was amended by the Omnibus Budget Reconciliation Act of 1981 . . . to simply require that the proceedings be either by way of administrative hearings or referrals to appropriate legal authorities. . . . We continue to believe that Congress intended to prevent the State agency from pursuing the same case of alleged Program abuse by way of both an administrative hearing and referral for prosecution when the language of the statute was changed.[56]

         As the italicized language makes clear, the Food and Nutrition Service viewed Congress's decision to delete the "or both" language from § 6(b) as an attempt to prevent states from bringing one case in an administrative hearing and another one in court when the two cases are based on the same fraud. Even if we were to find the text of § 6(b)(2) ambiguous, the Food and Nutrition Service-the federal agency charged with administering the Food and Nutrition Act-reads the statute in exactly the same manner we have concluded is the most facially reasonable interpretation of the statute.[57]

         The text and structure of the Service's regulation governing disqualification for intentional program violations highlight this. Consistent with the statutory language, the regulation makes each state agency "responsible for investigating any case of alleged intentional Program violation, and ensuring that appropriate cases are acted upon either through administrative disqualification hearings or referral to a court of appropriate jurisdiction in accordance with the procedures outlined in [the regulation]."[58] Then, in detailing the specific circumstances under which agencies should bring administrative disqualification hearings versus legal actions in court, the regulation indicates that states should choose between one or the other:

The State agency should conduct administrative disqualification hearings in cases in which the State agency believes the facts of the individual case do not warrant civil or criminal prosecution through the appropriate court system, in cases previously referred for prosecution that were declined by the appropriate legal authority, and in previously referred cases where no action was taken within a reasonable period of time and the referral was formally withdrawn by the State agency. The State agency shall not initiate an administrative disqualification hearing against an accused individual whose case is currently being referred for prosecution or subsequent to any action taken against the accused individual by the prosecutor or court of appropriate jurisdiction, if the factual issues of the case arise out of the same, or related, circumstances.[59]

         That language contemplates administrative actions being brought in addition to lawsuits in court only under limited circumstances: (1) "in cases previously referred for prosecution that were declined by the appropriate legal authority"; and (2) "in previously referred cases where no action was taken within a reasonable period of time and the referral was formally withdrawn by the State agency."[60] Critically, each of those circumstances involves a situation where the court action is not completed. Indeed, the regulation provides that "[t]he State agency shall not initiate an administrative disqualification hearing against an accused individual" at the same time as or after a case against that person in court "if the factual issues of the case arise out of the same, or related, circumstances."[61] Here, the State is essentially trying to do the reverse: obtain relief in an administrative action first ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.