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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Allen v. State, Dept. of Health & Social Services, Division of Public Assistance (03/27/2009) sp-6347
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| CARLA ALLEN, | ) |
| ) Supreme Court No. S- 12700 | |
| Appellant, | ) |
| ) Superior Court No. 3AN-06-09151 CI | |
| v. | ) |
| ) O P I N I O N | |
| STATE OF ALASKA, | ) |
| DEPARTMENT OF HEALTH & | ) No. 6347 March 27, 2009 |
| SOCIAL SERVICES, DIVISION | ) |
| OF PUBLIC ASSISTANCE, | ) |
| ) | |
| Appellee. | ) |
| ) | |
)
IAN WALLIS, )
) Supreme Court No. S-12864
Appellant, )
) Superior Court No. 3AN-05-
11989 CI
v. )
)
STATE OF ALASKA, )
DEPARTMENT OF HEALTH & )
SOCIAL SERVICES, DIVISION )
OF PUBLIC ASSISTANCE, )
)
Appellee. )
)
Appeal in File No. S-12700 from the Superior
Court of the State of Alaska, Third Judicial
District, Anchorage, Charles T. Huguelet,
Judge. Appeal in File No. S-12864 from the
Superior Court of the State of Alaska, Third
Judicial District, Anchorage, Craig F.
Stowers, Judge.
Appearances: Nikole Nelson, Alaska Legal
Services Corporation, Anchorage, for
Appellants. Rebecca C. Polizzotto, Assistant
Attorney General, Juneau, Laura C. Bottger
and John W. Erickson, Jr., Assistant
Attorneys General, Anchorage, and Talis J.
Colberg, Attorney General, Juneau, for
Appellee.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, Carpeneti, and Winfree, Justices.
FABE, Chief Justice.
I. INTRODUCTION
Carla Allen and Ian Wallis are food stamp recipients
who each received an excess of food stamp benefits due to errors
made by the State of Alaska Department of Health and Social
Services, Division of Public Assistance (hereinafter the Agency).
The Agency seeks to recoup these overpaid benefits from Allen and
Wallis by reducing their future monthly food stamp allotments.
Allen and Wallis assert that Alaskas doctrine of equitable
estoppel should prevent the Agency from reducing their future
allotments because the overpayments were caused by the Agencys
own errors. Because applying equitable estoppel to prevent
recoupment of overpaid food stamps would create a conflict with
federal food stamp law, which intends for such overpayments to be
recouped, we hold that in this context equitable estoppel is
preempted by federal law. Allen also asserts that the Agencys
notice to her regarding its recoupment action did not comply with
federal regulation requirements and due process. Because the
notice did not sufficiently inform Allen, as required by federal
regulations, of how the claim against her was calculated and of
her right to copy Agency records, we conclude that the notice was
inadequate.
II. FACTS AND PROCEEDINGS
A. Facts
The facts of these consolidated cases are undisputed.
Appellants Carla Allen and Ian Wallis were both recipients of
food stamps funded under the federal Food Stamp Act1 and
administered by the Agency pursuant to 7 Alaska Administrative
Code (AAC) 46.010 et seq. Due to errors made by the Agency, both
Allen and Wallis received an excess of food stamps each month for
several months. When the Agency discovered its errors, it gave
written notice to Allen and Wallis that it intended to reduce
their future monthly food stamp allotments in order to make up
for the past overpayments. Both Allen and Wallis objected,
giving rise to these actions.
Carla Allen was a food stamp recipient in 2005. In
August 2005 she reported to the Agency that her daughter would be
leaving her household for approximately six months. This should
have triggered a downward adjustment of Allens monthly food stamp
allotment, but the Agency failed to act. In November Allen again
contacted the Agency regarding her daughters absence. At that
point the Agency recalculated Allens food stamp allotment based
on the reduction in her household size, as it should have done
two months earlier. The Agency then mailed a notice to Allen
informing her that she had received a total of $304 in excess
food stamps during the months of October and November due to the
agencys failure to code her daughter out of the household.
Ian Wallis applied for food stamps in May 2004. At his
intake interview, Wallis accurately reported that his landlord
paid for his heating costs. However, the Agency incorrectly
credited him for paying his own heating costs, resulting in a
higher food stamp allotment. In October 2004 the Agency
discovered its error. The Agency then mailed a notice to Wallis
informing him that he had received a total of $448 in excess food
stamps during the months of June through October due to the
incorrect utility credit.
The Agencys notices to both Allen and Wallis further
stated, [b]eginning next month, we must reduce your food stamp
benefit by 10% or $10, whichever is more, until this debt is
repaid. The agency can adjust the claim if full payment is not
possible. The notices listed several options for faster repayment
of the debt, ending with the instructions, [i]f you cannot make
the payments you have agreed to make, or you disagree with this
action and want to review our records of the claim, please
contact [your caseworker]. The notices also provided charts
showing, for each of the months of overpayment, the amount the
recipient received, the amount the recipient had been entitled
to, and the corresponding amount of overpayment for that month.2
B. Proceedings
1. Carla Allens appeal
After receiving the Agencys notice, Allen requested an
administrative hearing. At the hearing, Allen argued that
equitable estoppel should prevent the Agency from recouping the
overpaid food stamps, and that the Agencys notice to her did not
comply with federal regulations. The hearing officer rejected
both of these arguments, holding that equitable estoppel is not
available as a defense in food stamp overpayment cases and that
the notice to Allen met federal regulation requirements. Allen
appealed the hearing officers decision to the Director of Public
Assistance, who upheld it.
Allen then appealed to the superior court. In a
written memorandum decision and order, Superior Court Judge
Charles T. Huguelet affirmed the agency decision on both the
equitable estoppel and the notice questions. The superior court
looked to language in the Federal Register3 and determined that
Congress intended to preclude the defense of equitable estoppel
under the Food Stamp Act. The superior court also decided that
the Agency had provided sufficient notice to Allen under 7 C.F.R.
273.18(e)(3)(iv). Allen then filed this appeal on both the
equitable estoppel and the notice questions.
2. Ian Walliss appeal
After receiving the Agencys notice regarding recoupment
of $448 in excess food stamps, Wallis requested an administrative
hearing. At the hearing, Wallis, like Allen, unsuccessfully
argued that equitable estoppel should prevent the Agency from
recouping the overpaid food stamps and that the Agencys notice
violated the federal regulations. Wallis appealed the hearing
authoritys decision to the Director of Public Assistance, who
upheld it.
Wallis then appealed to the superior court. Superior
Court Judge Craig F. Stowers upheld the Agency decision regarding
the unavailability of the equitable estoppel defense but agreed
with Wallis that the Agencys notice did not meet the federal
regulation requirements. Language from the Federal Register,4
along with Judge Huguelets decision in Allens case, persuaded the
superior court that Congress intended to preempt state equitable
estoppel defenses in the context of food stamp overpayments. The
superior court also decided that the Agencys notice to Wallis did
not meet the 7 C.F.R. 273.18(e)(3)(iv)(E) requirement that it
show [h]ow the claim was calculated, because it did not explain
how the Agency arrived at the basic amount of Walliss correct
food stamp allotment, from which its calculation of the amount of
overpayment flowed. Additionally, the superior court held that
the notice was not sufficiently clear regarding [t]he opportunity
to inspect and copy records related to the claim as required by 7
C.F.R. 273.18(e)(3)(iv)(H). The superior court also suggested
that in order to avoid notice challenges the Agency should use
notices that simply copy the language in 7 C.F.R.
273.18(e)(3)(iv)(M), stating [t]hat the State agency may reduce
any part of the claim if the agency believes that the household
is not able to repay the claim.
Wallis then filed this appeal on the sole issue of
whether federal law precludes the defense of equitable estoppel
in food stamp overpayment cases. The Agency questions whether
the superior courts decision affirming the Agency determination
in part and reversing it in part constitutes an appealable final
order but supports the Courts accepting of the improper appeal as
a petition for review.
III. STANDARD OF REVIEW
In an appeal from a judgment of a superior court acting
as an intermediate court of appeal, we independently review the
agency decision, giving no deference to the superior court
decision.5 The two issues before us are whether equitable
estoppel is available as a defense to recoupment in a food stamp
overpayment case and whether the Agencys notice to Carla Allen
satisfied federal regulation and due process requirements. On
questions of law that do not involve agency expertise, such as
these, we substitute our judgment for that of the administrative
agency, reviewing the legal issues de novo.6 In substituting our
judgment for that of the agency, we have a duty to adopt the rule
of law that is most persuasive in light of precedent, reason, and
policy.7
IV. DISCUSSION
A. Federal Law Preempts the State Doctrine of Equitable
Estoppel in the Context of Food Stamp Overpayments.
Allen and Wallis argue that the doctrine of equitable
estoppel should prevent the Agency from recouping the food stamp
overpayments they received because they spent the overpaid
benefits in reasonable reliance on the Agencys mistaken
assertions that they were entitled to those benefits. In both
the Wallis and Allen cases, the hearing officer, the Agencys
director, and the superior court declined to consider the
potential applicability of this defense, holding that equitable
estoppel is simply not available in food stamp overpayment cases.
The Agency argues that this was the correct result because
federal law preempts the state law doctrine of equitable estoppel
in this context.
There is a presumption against federal preemption of
state law,8 and preemption doctrine enjoin[s] seeking out
conflicts between state and federal regulation where none clearly
exists.9 Additionally, [w]here co-ordinate state and federal
efforts exist within a complementary administrative framework,
and in the pursuit of common purposes, as is the case with the
food stamp program, the case for federal pre-emption becomes a
less persuasive one.10 But where state law comes into conflict
with federal law, the Supremacy Clause of the United States
Constitution11 dictates that state law must always yield.12
There are three major types of federal preemption of
state law: express, field, and conflict preemption.13 Express
preemption occurs when Congress explicitly declares an intent to
preempt state law in a particular area.14 Congress did not
include any explicit statements regarding preemption of state law
in the text of the Food Stamp Act, none are present in the text
of the federal regulations, and the Agency does not argue that
this is a case of express preemption.
Field preemption is the term used when the federal law
governing a particular area is so comprehensive and so complete
that Congress is said to have completely occupied a field,
leaving no room for state law.15 We will not infer an intent to
occupy the field where Congress has left some room for state
involvement.16 The Food Stamp Act and related regulations
delegate broad authority to participating states in administering
the food stamp program,17 including authority with regard to
overpayment collection.18 The food stamp program is thus a
cooperative federalstate venture, which anticipates significant
involvement of both the state and the federal governments.19
Accordingly, field preemption is not applicable here.20 There is
a role for state law in the administration of the food stamp
program, as long as it does not conflict with federal law.
Conflict preemption occurs when a state law and a
federal law are in conflict, either because compliance with both
state and federal law is impossible or because the state law
stands as an obstacle to accomplishment and execution of the full
purposes and objectives of Congress.21 The Agency argues that
equitable estoppel is preempted in this context because its
application would create a conflict with federal law. Because the
federal food stamp statutes and regulations intend that food
stamp overpayments caused by state agency error be recouped from
innocent food stamp recipient households, we agree.
1. The federal food stamp statutes and regulations
intend that food stamp overpayments due to state
agency error be recouped from innocent recipient
households.
The Food Stamp Act states that [e]ach adult member of a
household shall be jointly and severally liable for the value of
any overissuance of coupons.22 In addition to declaring that
households are liable for overpayments, the Food Stamp Act
specifically requires state agencies to recoup overpayments from
households, stating that a State agency shall collect any
overissuance of coupons issued to a household by one of several
listed recoupment methods, such as reduction of a households
future monthly allotment, or by any other means.23 It further
states that [a] State agency shall collect an overissuance of
coupons issued to a household . . . in accordance with the
requirements established by the State agency for providing
notice, electing a means of payment, and establishing a time
schedule for payment.24 The only exception to the Food Stamp Acts
recoupment mandate applies where a state agency can demonstrate
that recoupment would not be cost effective.25
The Food Stamp Act recognizes that sometimes
overpayments are made to innocent households but nonetheless
provides for recoupment in such situations, imposing a cap of ten
dollars or ten percent, whichever is greater, on monthly
household allotment reduction for recoupment of overpayments not
involving recipient fraud.26 The existence of this cap for
recoupment from innocent households demonstrates that Congress
has recognized that recoupment may cause hardship to recipients.
Congress has apparently determined that a cap on monthly
allotment reduction of ten dollars or ten percent, whichever is
greater, is sufficient to minimize the potential hardship to
blameless food stamp recipients.
Before the passage of the Personal Responsibility and
Work Opportunity Reconciliation Act of 1996 (PRWORA), involuntary
reduction of a households future monthly food stamp allotment was
not an option for recoupment of overpayments caused by agency
error.27 As one court has recognized, the amendments to the
statute allowing involuntary allotment reduction as a collection
strategy have increased the likelihood of success in recouping
overpayments caused by agency error.28 While households were
technically liable for such overpayments prior to PRWORA,
recoupment was rarely possible because households were judgment-
proof and allotment reduction was prohibited.29 When it enacted
PRWORA, Congress provided state agencies with a more effective
method for collecting food stamp overpayments caused by agency
error.30 By making it much easier for state agencies to recoup
overpayments from even totally innocent households, Congress
reinforced its intent that state agencies be able to recoup such
overpayments.
The federal regulations implementing the Food Stamp Act
also make clear that recoupment of overpayments to innocent
households is required. The regulations state that an
overpayment claim against a recipient household is a Federal debt
subject to this and other regulations governing Federal debts,
that [t]he State agency must establish and collect any claim by
following the[] regulations,31 and that a state agency must
develop a plan for establishing and collecting claims that
provides orderly claims processing and results in claims
collections similar to recent national rates of collection.32 The
regulations reiterate the Food Stamp Acts assertion that [e]ach
person who was an adult member of the household when the
overpayment occurred is responsible for repaying it.33 They also
recognize, however, the Food Stamp Acts limited exception under
which recoupment is not required where it would not be cost
effective.34
The federal regulations recognize and address three
different types of food stamp overpayment: Intentional Program
violation (IPV), Inadvertent household error (IHE), and Agency
error (AE).35 The regulations treat each type of overpayment
slightly differently,36 but nonetheless provide for all three
types of overpayment to be recouped from households. The
regulations incorporate PRWORAs determination that involuntary
monthly allotment reduction, capped at ten dollars or ten
percent, is a permissible recoupment method for overpayments
caused by agency error.37 In fact, the regulations make allotment
reduction the preferred method of recoupment for all
overpayments, stating that a state agency must use allotment
reduction unless the claim is being collected at regular
intervals at a higher amount or another household is already
having its allotment reduced for the same claim.38
Thus, the federal statutes and regulations implementing
the food stamp program intend for state agencies to recoup food
stamp overpayments from recipient households, whether the
overpayments were caused by recipient fraud or entirely by agency
error. While federal law grants state agencies some limited
flexibility with regard to how this is accomplished, the
application of a state law or procedure that would completely bar
recoupment of a large class of overpayments would clearly pose an
obstacle to this federal mandate.
2. Applying equitable estoppel to prohibit the
recoupment of food stamp overpayments due to
agency error would create an inescapable conflict
with federal law.
As described above, federal food stamp law requires
state agencies to recoup food stamp overpayments from recipient
households, regulates the manner in which they must do so, and
makes allowances for the fact that some overpayments will be
recouped from totally innocent households.
Alaskas doctrine of equitable estoppel, if applied,
would completely bar recoupment in many, if not most, cases of
overpayment caused by agency error. Equitable estoppel applies
against the government in favor of a private party if four
elements are present in a case: (1) the governmental body
asserts a position by conduct or words; (2) the private party
acts in reasonable reliance thereon; (3) the private party
suffers resulting prejudice; and (4) the estoppel serves the
interest of justice so as to limit public injury.39 Most food
stamp recipients receive and spend their food stamps in
reasonable reliance on the eligibility determinations of the
Agency. While we cannot presume that each of the elements of
equitable estoppel would necessarily be present in every case in
which a food stamp overpayment is caused by agency error, it is
safe to say that they would be satisfied in many of these cases.
Application of equitable estoppel would thus bar
recoupment of many overpayments that federal law intends for
state agencies to recoup. As evidenced by the structure of the
food stamp statutes and regulations described above, one
congressional objective with regard to the Food Stamp Act and
PRWORA is that food stamp overpayments, even those due entirely
to agency error, will be efficiently recouped from recipients.
The application of equitable estoppel would pose an obstacle to
the accomplishment of this objective. Accordingly, Alaskas
doctrine of equitable estoppel is in conflict with federal food
stamp law, and is therefore preempted.
Allen and Wallis urge that this conflict can be
avoided. They point to the catch-all provision wherein the Food
Stamp Act, after listing several recoupment options such as
allotment reduction, notes that state agencies may also recoup
food stamp overpayments by any other means.40 Allen and Wallis
insist that any other means encompasses the possibility that a
state agency itself could repay the federal government for
overpayments caused by agency error, rather than recouping such
overpayments from recipient households. To decide that a state
agency could obey the mandate that it collect any overissuance of
coupons issued to a household41 by collecting money from itself
would require an improbable stretch of the statutory language.
Though we are mindful that we must avoid manufacturing a conflict
between federal and state law where none clearly exists,42 the
presumption against preemption does not require us to warp
Congresss words to create harmony between federal and state law
where they clearly conflict.
We are sympathetic to the argument that it is unfair to
require indigent food stamp recipients to repay benefits that
were overissued to them through no fault of their own, but
Congress has already made the policy decision that a ten dollar
or ten percent cap on monthly allotment reduction,43 coupled with
allowing state agencies some flexibility to compromise claims,44
is sufficient to mitigate this unfairness. Alaskas doctrine of
equitable estoppel cannot be used to effectively override this
policy decision.
3. Our holding is consistent with the position of the
Federal Food and Nutrition Service.
In the 1998 preamble to proposed changes to the federal
food stamp regulations that were intended to incorporate
statutory changes made by PRWORA,45 the Food and Nutrition Service
(FNS) responded to comments, stating that households are
responsible for all overpayments with no exception for equitable
estoppel.46 In the 2000 preamble to the final rule implementing
PRWORAs statutory changes, FNS again responded to comments,
reiterating its position that equitable estoppel cannot bar
recoupment.47
The Allen superior court erroneously referred to two of
these FNS statements as [a] 1996 amendment to the [Food Stamp]
[A]ct and [a] 2000 amendment to the regulations governing the
Food Stamp Act, and thereby found that the Agency had properly
relied on the language of the Food Stamp Act and the federal
regulations in making its decision to reject the equitable
estoppel defense. The Allen superior court thus mistakenly
accorded more weight to the FNS statements than they are due.
Because the FNS has not chosen to encode its position
regarding equitable estoppel in a binding regulation,48 this court
need only defer to that position to the extent that it is
persuasive (so-called Skidmore deference).49 In reaching our
decision we rely primarily on our own assessment of the law as
discussed above, but we note that our holding is consistent with
the position of the FNS, which we believe to be correct.
4. Our holding avoids conflict with the federal
principle that equitable estoppel cannot be
applied against the government where it results in
the payment of benefits not authorized by
Congress.
In Office of Personnel Management v. Richmond, the
United States Supreme Court held, based on the Appropriations
Clause,50 that where payments out of the public treasury are
involved, equitable estoppel cannot be applied to require the
federal government to pay benefits not otherwise authorized by
law.51 While the instant case differs from Richmond in that it
involves a cooperative federalstate program in which the state
agency is given substantial authority and flexibility, the
federal government does provide the funding behind food stamp
benefits. Just as estopping the Agency from recouping food stamp
overpayments from innocent households would create a conflict
with federal food stamp law as described above, it could also
create a conflict with federal law regarding equitable estoppel
and the use of public funds. Our holding avoids this potential
conflict.
B. The Agencys Notice to Carla Allen Was Inadequate.
The Allen superior court concluded that the Agencys
notice to Allen informing her of its recoupment action was
sufficiently compliant with the requirements of the federal
regulations and due process, and Allen appeals that
determination. This issue arises in the Allen appeal and not the
Wallis appeal because the Wallis superior court found that the
Agencys notice to Wallis was insufficient, and the Agency has not
appealed that decision. We conclude that the Agencys notice to
Allen did not adequately comply with 7 C.F.R. 273.18(e)(3)(iv).
Under 7 C.F.R. 273.18(e)(3) a state agency seeking to
collect an overpayment claim against a food stamp recipient must
first give written notification to the affected household.52
Subsection (iv) of the regulation lists fifteen pieces of
information that every such notice must provide,53 and Allen
argues that the Agencys notice to her fails to provide three of
them: (E) How the claim was calculated, (H) The opportunity to
inspect and copy records related to the claim, and (M) That the
State agency may reduce any part of the claim if the agency
believes that the household is not able to repay the claim.
Allen argues that in failing to provide these pieces of
information, the Agencys notice violated both the federal
regulations and her right to due process. The Agency argues that
its notice was adequate, and that even if it were inadequate, it
would not matter because Allen did in fact receive notice and
assert her rights.
Where the regulations are unclear as to precisely what
information a notice must contain, due process requirements may
be used to fill in the gaps.54 Food stamps, like various other
forms of government benefits, are property interests protected by
due process.55 Due process requires that benefit recipients be
given timely and adequate notice detailing the reasons for a
proposed termination, and an effective opportunity to defend
before their benefits are reduced or terminated, in order to
afford them protection from agency error and arbitrariness.56 The
Mathews v. Eldridge57 due process balancing test instructs courts
to consider what burden can reasonably be placed on an agency to
eliminate the risk of erroneously depriving an individual of a
benefit in light of the value of that benefit to the individual.58
Where the recipient has a brutal need for the benefit at issue,
as is the case with food stamps, courts have traditionally
required that agencies go to greater lengths incurring higher
costs and accepting inconveniences to reduce the risk of error.59
Further, [i]n the context of notice, such effort might amount to
erring on the side of providing too much detail respecting the
basis for the agencys decision rather than too little.60
1. The Agencys notice did not comply with the
requirement that it include language stating . . .
(E) How the claim was calculated.
The Agencys notice to Allen contained some information
about how the $304 overpayment claim against her was calculated.
A chart at the bottom of the notice showed, for each of the two
months of overpayment, (1) the amount Allen actually received,
(2) the amount she had been entitled to, and (3) the overpayment
amount for that month, which was the difference between the first
two figures. If added together, the overpayment amounts for the
two months totaled $304, the overpayment figure provided at the
beginning of the notice. The Agency argues that this information
was sufficient to inform Allen of how the claim was calculated,
as required by 7 C.F.R. 273.18(e)(3)(iv)(E). Allen argues that
the notice should have included information showing how the
amount of her basic food stamp entitlement (i.e., the $119
figure) was calculated, not simply how that amount differed from
the amount she received. Without that additional information,
Allen argues, she would have no way of determining whether the
calculations were accurate.
Allen relies on several cases, and though none
addresses food stamp recoupment notices specifically, each holds
a notice of benefit denial, termination, or reduction inadequate
because due process required a more detailed explanation of
agency calculations.61 Due-process-compliant notices are designed
to protect recipients from erroneous deprivation of benefits by
allowing them to assess whether or not the agencys calculations
are accurate.62 As evidenced by this case, agencies make
mistakes. If a major purpose served by benefit change or denial
notices is protecting recipients from agency mistakes, then it
stands to reason that such notices should provide sufficient
information to allow recipients to detect and challenge mistakes.
While the calculations shown in the Agencys notice to Allen would
allow her to detect a simple mistake such as the top-level
arithmetic error in calculating the amount of overpayment that
was made in the notice to Wallis,63 they would not allow her to
detect the type of mistake that caused her overpayment problem in
the first place, that is, an error in determining the amount of
her true entitlement. Food stamp recipients should be given
detailed information throughout their involvement with the food
stamp program so that they can help prevent errors from occurring
in the first place. But detailed information must be supplied at
the post-error stage when the agency is attempting to recoup an
overpayment; otherwise, the affected recipient is being told to
accept an allotment reduction in blind reliance on the
calculations of an agency that has admittedly already made a
calculation error to that recipients detriment. It would be
unfair for the Agency to hold Allen liable for the Agencys own
calculation errors, without in turn supplying her with enough
information to enable her to double-check its calculations.
The risk of erroneous deprivation of benefits is
substantial, the importance of those benefits to Allen is clear,
and the Agency does not argue here, as agencies have argued in
other similar cases, that providing more detailed information
regarding its calculations would be such an unreasonable
administrative burden that the Mathews due process balancing test
would favor not requiring it. Courts in similar cases have found
that the administrative burden involved in providing more
detailed calculations was not unreasonable as compared to the
risk of erroneous deprivation of much needed benefits.64
Accordingly, we hold that the Agencys notice did not comply with
7 C.F.R. 273.18(e)(3)(iv)(E).
2. The Agencys notice did not comply with the
requirement that it include language stating . . .
(H) The opportunity to inspect and copy records
related to the claim.
The Agencys notice stated If you . . . disagree with
this action and want to review our records of the claim, please
contact [your caseworker]. The Agency asserts that this language
is sufficient to provide an opportunity to inspect and copy
records related to the claim so as to satisfy 7 C.F.R.
273.18(e)(3)(iv)(H), while Allen argues that it was insufficient
because it did not inform Allen that she had the right to copy
documents.
The language of 7 C.F.R. 273.18(e)(3)(iv)(H) is quite
clear in requiring that a recoupment notice must state that the
recipient will have the opportunity to inspect and copy records
related to the claim (emphasis added). The Agencys notice did
not mention the right to copy records. Therefore, the Agencys
notice did not comply with the regulation. The administrative
hearing officer in Wallis found that [t]he ability to copy is
implicit in the right to review, but this is simply incorrect.
And specific awareness of a right to copy records may make a
difference to a food stamp recipient who is trying to assess
whether it is worth it to appeal a potentially mistaken
recoupment action. For instance, having that awareness, he could
choose to make copies of the records and then consult with
somebody who could help him review them.
3. The Agencys notice may have complied with the
requirement that it include language stating . . .
(M) That the State agency may reduce any part of
the claim if the agency believes that the
household is not able to repay the claim.
The Agencys notice to Allen contained the language
[t]he agency can adjust the claim if full payment is not
possible. The Agency asserts that this language was sufficient
to inform Allen [t]hat the State agency may reduce any part of
the claim if the agency believes that the household is not able
to repay the claim, as required by 7 C.F.R. 273.18(e)(3)(iv)(M).
This notice requirement was added to the regulations in 2000 in
response to the 1997 Bliek v. Palmer decision, in which the
Eighth Circuit held that a food stamp recoupment notice violated
due process because it did not inform the recipient of the
agencys ability to compromise claims.65 Because the language
used by the Agency conveys the basic information required by the
regulation, we cannot say that the language used by the Agency is
insufficient to satisfy 7 C.F.R. 273.18(e)(3)(iv)(M). But, as
the Wallis court noted, the Agency would be on safer ground if it
wanted to avoid future arguments like the one that was made in
this case and in other cases if it simply used notices containing
the specific language provided in the regulations, thus avoiding
needless semantic debate over whether the words adjust and reduce
convey the same information.
4. The notice defects were not cured.
The Agency argues that Allen was not deprived of due
process because she availed herself of the right to challenge the
[Agencys] demand, making any notice deficiencies irrelevant. The
Agency also asserts that language in two later notices it sent to
Allen after she requested an administrative hearing apprised her
of her right to copy documents, thereby curing that potential
defect in the original notice.
Though Allen is certainly aware at this point of the
fact that she may inspect and copy Agency records and of the fact
that the Agency may reduce the claim against her, the Agency has
not shown that Allen has received actual notice of [h]ow the
claim [against her] was calculated.66 More importantly, giving
notice that complies with the regulations is a prerequisite to
bringing a recoupment action.67 The Agency provides no authority
for its assertion that failure to comply with an explicit federal
regulation notice requirement can be cured if a recipient,
through her own initiative, challenges an Agency action and
eventually obtains the information that the federal regulation
specifically requires the Agencys initial notice to contain.68
Accordingly, if the Agency wishes to pursue its
recoupment claims against Allen and Wallis, it must issue them
notices that comply with the federal regulation requirements.
The Agency should then consider exercising its discretion to
compromise its claims against Allen and Wallis if reduction of
their monthly food stamp allotments would pose a hardship to
them.69
V. CONCLUSION
For the foregoing reasons, we AFFIRM the superior court
decisions to uphold the administrative determination that Alaskas
equitable estoppel doctrine is not an available defense to
recoupment of food stamp overpayments. We REVERSE the superior
courts decision to uphold the administrative determination that
the Agencys notice to Carla Allen complied with federal
regulation requirements.
_______________________________
1 7 U.S.C. 2011 et seq. (2006); 7 C.F.R. 271.1 et seq.
(2008). On October 1, 2008, the Food Stamp Act was renamed the
Food and Nutrition Act of 2008, the food stamp program was
renamed the supplemental nutrition assistance program, and
instances of the word coupons were replaced with the word
benefits in the statutes. Pub. L. No. 110-234, 122 Stat 923,
1092 (May 22, 2008). This opinion uses the pre-2008 names and
terminology.
2 The chart on the notice received by Wallis contained a
small subtraction error for the month of September 2004,
recording the amount of overpayment as $89 rather than $72,
meaning that his total overpayment should have been $431 rather
than $448.
3 63 Fed. Reg. 29304, 29307 (May 28, 1998); 65 Fed. Reg.
41752, 41765 (July 6, 2000).
4 63 Fed. Reg. at 29307.
5 Cook Inlet Pipe Line Co. v. Alaska Pub. Utils. Commn,
836 P.2d 343, 348 (Alaska 1992).
6 See Lopez v. Admr, Pub. Employees Ret. Sys., 20 P.3d
568, 570 (Alaska 2001); see also State, Pub. Employees Ret. Bd.
v. Morton, 123 P.3d 986, 988 (Alaska 2005).
7 Cook Inlet, 836 P.2d at 348 (citing Guin v. Ha, 591
P.2d 1281, 1284 n.6 (Alaska 1979)).
8 See State v. Arnariak, 941 P.2d 154, 158 (Alaska 1997)
(recognizing presumption against finding federal preemption in
areas traditionally regulated by the states); see also New York
State Dept of Soc. Servs. v. Dublino, 413 U.S. 405, 413 (1973)
(It will not be presumed that a federal statute was intended to
supersede the exercise of the power of the state unless there is
a clear manifestation of intention to do so. The exercise of
federal supremacy is not lightly to be presumed. (internal
citation omitted)); Florida Lime & Avocado Growers, Inc. v. Paul,
373 U.S. 132, 142 (1963) (stating that, with respect to commerce,
preemption is not appropriate in the absence of persuasive
reasons either that the nature of the regulated subject matter
permits no other conclusion, or that the Congress has
unmistakably so ordained).
9 Exxon Corp. v. Governor of Maryland, 437 U.S. 117, 130
(1978) (quoting Huron Cement Co. v. Detroit, 362 U.S. 440, 446
(1960)).
10 Dublino, 413 U.S. at 421.
11 U.S. Const. art. VI, cl. 2.
12 See State v. Dupier, 118 P.3d 1039, 1049 (Alaska 2005)
(Under the Supremacy Clause of the federal constitution, state
laws that interfere with federal laws are invalid.).
13 See id.
14 For example, 29 U.S.C. 1144 (2006), the ERISA statute,
states in its first section that the provisions of this
subchapter and subchapter III of this chapter shall supersede any
and all State laws insofar as they may now or hereafter relate to
any employee benefit plan described in section 1003(a) of this
title and not exempt under section 1003(b) of this title.
15 For example, the Home Owners Loan Act (12 U.S.C. 1461
(2006)) gave the Federal Home Loan Bank Board such broad
regulatory authority as to wholly preempt any state regulation
over federal savings and loan associations. See Conference of
Federal Sav. & Loan Assocs. v. Stein, 604 F.2d 1256, 1260 (9th
Cir. 1979), affd, 445 U.S. 921 (1980) (In our judgment the
regulatory control of the Bank Board over federal savings and
loan associations is so pervasive as to leave no room for state
regulatory control.).
16 Dupier, 118 P.3d at 1050.
17 See, e.g., 7 U.S.C. 2020 (2006); 7 C.F.R. 271.4
(2008).
18 See 7 C.F.R. 271.4(b) (2008) (FNS delegates to the
State agency, subject to the standards in 273.18, the authority
to determine the amount of, and settle, adjust, compromise or
deny all or part of any claim which results from fraudulent or
nonfraudulent overissuances to participating households.).
19 See, e.g., 7 U.S.C. 2020 et seq.; 7 C.F.R. 271.4; see
also Reynolds v. Giuliani, 506 F.3d 183, 187 (2d. Cir. 2007) (The
Food Stamp Act, 7 U.S.C. 2011 (2006) et seq., and the Medicaid
Act, 42 U.S.C. 1396 (2006) et seq., created cooperative
federalstate programs aiming, respectively, to raise nutritional
levels and furnish medical care to needy individuals.).
20 See Pharm. Research & Mfrs. of Am. v. Meadows, 304 F.3d
1197, 1206 (11th Cir. 2002) ([The] federal government cannot
occupy the field [of Medicaid] when no Medicaid relief is
available unless a state designs and implements its own Medicaid
program.).
21 Roberts v. State, Dept of Revenue, 162 P.3d 1214, 1223
(Alaska 2007) (internal citation omitted); see also Catalina
Yachts v. Pierce, 105 P.3d 125, 128-29 (Alaska 2005).
22 7 U.S.C. 2022(a)(4).
23 7 U.S.C. 2022(b)(1) (emphasis added).
24 7 U.S.C. 2022(b)(4) (emphasis added).
25 7 U.S.C. 2022(b)(2).
26 7 U.S.C. 2022(b)(3) (distinguishing between
overpayments involving recipient fraud and those made to innocent
households by providing a cap on possible allotment reduction for
overpayments not involving recipient fraud).
27 Pub. L. No. 104-193 844, 110 Stat. 2105, 2332 (Aug.
22, 1996).
28 See Stone v. Hamilton, 308 F.3d 751, 756 (7th Cir.
2002) ([P]rior to the amendments, for all intents and purposes,
there were no legal consequences to the overissuance because the
indigent recipients were judgment proof or had no state tax
refunds to intercept. . . . Since the enactment, collection is
almost guaranteed. . . . By changing the remedies for collecting
for overpayments from ineffective and discretionary to highly
effective and mandatory, the amendment has increased the
recipients liability . . . .).
29 See 7 U.S.C. 2022(b)(2) (1995); Stone, 308 F.3d at 752-
53.
30 See Stone, 308 F.3d at 753 (Suddenly the states were
not only required to collect for their errors, but they also had
an effective means of doing so.).
31 7 C.F.R. 273.18(a)(2) (2008) (emphasis added).
32 7 C.F.R. 273.18(a)(3).
33 7 C.F.R. 273.18(a)(4)(i).
34 7 C.F.R. 273.18(e)(2), (e)(8)(ii)(D).
35 7 C.F.R. 273.18(b).
36 See, e.g., 7 C.F.R. 273.18(c)(1)(ii)(B),
(g)(1)(ii)(iii), (k)(1).
37 7 C.F.R. 273.18(f)(1), (g)(1).
38 7 C.F.R. 273.18(g)(1)(i).
39 Crum v. Stalnaker, 936 P.2d 1254, 1256 (Alaska 1997);
Municipality of Anchorage v. Schneider, 685 P.2d 94, 97 (Alaska
1984); see also Nelson v. State of Alaska, Commercial Fisheries
Entry Commn, 186 P.3d 582, 585 (2008).
40 7 U.S.C. 2022(b)(1) (2006) states:
[A] State agency shall collect any
overissuance of coupons issued to a household
by
(A) reducing the allotment of the household;
(B) withholding amounts from unemployment
compensation from a member of the household
under subsection (c) of this section;
(C) recovering from Federal pay or a Federal
income tax refund under subsection (d) of
this section; or
(D) any other means.
41 7 U.S.C. 2022(b)(1).
42 See Exxon Corp. v. Governor of Maryland, 437 U.S. 117,
130 (1978).
43 7 U.S.C. 2022(b)(3).
44 See 7 U.S.C. 2022(a)(1).
45 Pub. L. No. 104-193 844, 110 Stat. 2105 (Aug. 22,
1996).
46 63 Fed. Reg. 29,307 (May 28, 1998) (Some groups
maintain that, since the reason for the overissuance resulting in
the [Agency Error] claim was an error by the State agency, the
household should not be responsible for the overissuance under
laws in a number of States under the legal concept of equitable
estoppel. The Department disagrees with this position. . . .
Federal law permits no exception for equitable estoppel in the
case of an overissuance caused by State agency error.).
47 65 Fed. Reg. 41,765 (July 6, 2000) (Two recipient
interest groups disagreed with our position on [Agency Error]
claims and equitable estoppel. They believe that the [Food Stamp
Act] does not specifically prohibit equitable estoppel,
especially since this activity is delegated to State agencies.
We disagree. Section 13(a)(2) of the [Food Stamp Act] clearly
states that a household . . . shall be . . . liable for the value
of any overissuance of coupons. This language establishes that a
household must be held accountable for any claim, including those
caused by agency errors. . . . One State agency commented that we
need to strengthen the fact that equitable estoppel does not
apply to food stamp [Agency Error] claims. The commenter
suggested that we add specific language to the regulations
indicating this position. We do not believe that this is
necessary. The discussion above and in the preamble of the
proposed rule should suffice and no change is needed in the final
rule.).
48 See Christensen v. Harris County, 529 U.S. 576, 587
(2000) (Interpretations such as those in opinion letters like
interpretations contained in policy statements, agency manuals,
and enforcement guidelines, all of which lack the force of law
do not warrant Chevron-style deference.).
49 See Vigil v. Leavitt, 381 F.3d 826, 835 (9th Cir. 2004)
(stating that EPA interpretations contained in regulation
preamble and addendum were entitled to so-called Skidmore
deference insofar as they constitute a body of experience and
informed judgment to which courts and litigants may properly
resort for guidance. (quoting Skidmore v. Swift & Co., 323 U.S.
134, 140 (1944))).
50 U.S. Const. art. I, 9, cl. 7.
51 496 U.S. 414, 427 (1990).
52 7 C.F.R. 273.18(e)(3) (2008) (Each State agency must
develop and mail or otherwise deliver to the household written
notification to begin collection action on any claim.).
53 7 C.F.R. 273.18(e)(3)(iv) provides:
The initial demand letter or notice of
adverse action must include language stating:
(A) The amount of the claim.
(B) The intent to collect from all adults in
the household when the overpayment occurred.
(C) The type (IPV [Intentional Program
Violation], IHE [Inadvertent Household
Error], AE [Agency Error] or similar
language) and reason for the claim.
(D) The time period associated with the
claim.
(E) How the claim was calculated.
(F) The phone number to call for more
information about the claim.
(G) That, if the claim is not paid, it will
be sent to other collection agencies, who
will use various collection methods to
collect the claim.
(H) The opportunity to inspect and copy
records related to the claim.
(I) Unless the amount of the claim was
established at a hearing, the opportunity for
a fair hearing on the decision related to the
claim. The household will have 90 days to
request a fair hearing.
(J) That, if not paid, the claim will be
referred to the Federal government for
federal collection action.
(K) That the household can make a written
agreement to repay the amount of the claim
prior to it being referred for Federal
collection action.
(L) That, if the claim becomes delinquent,
the household may be subject to additional
processing charges.
(M) That the State agency may reduce any
part of the claim if the agency believes that
the household is not able to repay the claim.
(N) A due date or time frame to either repay
or make arrangements to repay the claim,
unless the State agency is to impose
allotment reduction.
(O) If allotment reduction is to be imposed,
the percentage to be used and the effective
date.
54 See, e.g., Ortiz v. Eichler, 794 F.2d 889, 892-93 (3d
Cir. 1986) (Although [the federal] regulations do not specify
precisely the information required for adequate notice, the
district court properly looked to requirements mandated by the
due process clause to flesh out the details.); Schroeder v.
Hegstrom, 590 F. Supp. 121, 127 (D. Or. 1984) (In determining
whether the notice at issue is adequate, I am guided by the
language of the regulations. The language of the regulations is
not sufficiently specific to be determinative, however.
Therefore, as other courts have done, I construe the regulations
as mandating compliance with the requirements of due process.).
55 Atkins v. Parker, 472 U.S. 115, 128 (1985).
56 Baker v. State, Dept of Health & Soc. Servs., 191 P.3d
1005, 1009 (Alaska 2008) (quoting Goldberg v. Kelly, 397 U.S.
254, 267 (1970)).
57 424 U.S. 319 (1976).
58 Baker, 191 P.3d at 1010 (citing Mathews, 424 U.S. at
334-35).
59 Id.
60 Id. at 1010-11.
61 See Ortiz v. Eichler, 794 F.2d 889, 895 (3d Cir. 1986)
(affirming lower court order that notices of benefit denial,
termination, and reduction must contain detailed calculation
information in class action by food stamp, Medicaid, and AFDC
applicants and recipients); Dilda v. Quern, 612 F.2d 1055, 1056-
57 (7th Cir. 1980) (holding that benefit reduction and
termination notices to AFDC recipient class after rebudgeting
violated due process because they did not reveal what deductions
were relied upon in calculating adjusted net amount of recipients
income); Banks v. Trainor, 525 F.2d 837, 842 (7th Cir. 1975)
(affirming preliminary injunction requiring notice with breakdown
of income and deductions so that recipients could determine
accuracy of new computations before class members food stamps
could be reduced after mass change in benefit calculation
method); Ford v. Shalala, 87 F. Supp. 2d. 163, 186 (E.D.N.Y.
1999) (holding that SSI benefit notices violated due process
because they did not provide enough calculation information to
allow recipients to determine whether their benefit amounts were
correct).
62 See Ortiz, 794 F.2d at 893 ([Proper] notice is
necessary to protect claimants against proposed agency action
resting on incorrect or misleading factual premises or on
misapplication of rules or policies to the facts of particular
cases. (quoting Goldberg v. Kelly, 397 U.S. 254, 268 (1970)));
Dilda, 612 F.2d at 1057 ([W]ithout these calculations, plaintiffs
have little protection against errors committed by the Department
in determining the amount of their grants.); Banks, 525 F.2d at
842 (Both Goldberg and Vargas require detailed notice of adverse
action as a protection against agency error and arbitrariness.);
Vargas v. Trainor, 508 F.2d 485, 490 (7th Cir. 1974) (Unless the
welfare recipients are told why their benefits are being reduced
or terminated, many of the mistakes that will inevitably be made
will stand uncorrected . . . .); Ford, 87 F. Supp. 2d. at 178
(Without this information, claimants cannot check the factual
much less the mathematical accuracy of [the Departments] intended
action.).
63 See supra note 2.
64 See, e.g., Dilda, 612 F.2d at 1057 ([T]he risk of
erroneous calculations by the Department far outweighs the
increased burden on the administration . . . . Due Process can
be satisfied by simply photocopying the work papers and enclosing
them with the notice . . . .); Ford, 87 F. Supp. 2d. at 182-85
(finding that requiring more detailed notice was in the public
interest despite the administrative burden of developing a new
computer program to produce budget worksheets to include in
notices to SSI recipients).
65 See 65 Fed. Reg. 41761 (July 6, 2000); Bliek v. Palmer,
102 F.3d 1472, 1476 (8th Cir. 1997).
66 7 C.F.R. 273.18(e)(3)(iv)(E) (2008).
67 7 C.F.R. 273.18(e)(3)(i).
68 See Vargas v. Trainor, 508 F.2d 485, 489-90 (7th Cir.
1974) (holding that benefit reduction and termination notices
that did not provide reasons for the agencys action violated due
process despite fact that recipients could call caseworkers to
learn the reasons and stating that [u]nder such a procedure only
the aggressive receive their due process right to be advised of
the reasons for the proposed action); Ortiz v. Eichler, 616 F.
Supp. 1046, 1062 (D. Del. 1985) (Defendants cite no authority for
the . . . argument . . . that plaintiffs must show that they were
actually harmed by inadequate notice and the Court finds it to
be without merit.), affd, 794 F.2d 889 (3d Cir. 1986).
69 As the Agencys counsel stated at oral argument, the
Agencys recoupment notices provide [recipients] the opportunity
to give a call to their caseworker and say you know what, I just
cant do that, theres no way that I can feed my family if youre
going to take that money, reduce my allotment, and so lets work
on it. Thats where the compromise authority that was granted to
the state division from the Secretary of Agriculture comes into
play.
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