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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Heitz v. State, Dept. of Health & Social Services (08/28/2009) sp-6407
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
| ROBIN HEITZ, on behalf of herself and | ) |
| all those similarly situated, | ) |
| ) Supreme Court No. S- 13036 | |
| Appellants, | ) |
| v. | ) Superior Court No. 3AN-06- 13010 CI |
| ) | |
| STATE OF ALASKA, DEPARTMENT | ) O P I N I O N |
| OF HEALTH AND SOCIAL SERVICES, | ) |
| Karleen Jackson, in her official capacity | ) No. 6407 - August 28, 2009 |
| as Commissioner of the Department, | ) |
| OFFICE OF CHILDRENS SERVICES, | ) |
| and Tammy Sandoval, in her official | ) |
| capacity as Deputy Commissioner of the | ) |
| Office of Childrens Services, | ) |
| ) | |
| Appellees. | ) |
| ) | |
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, Mark Rindner, Judge.
Appearances: James J. Davis, Jr., Goriune
Dudukgian, Ryan Fortson, Northern Justice
Project, Anchorage, for Appellants. John W.
Erickson, Assistant Attorney General,
Anchorage, Talis J. Colberg, Attorney
General, Juneau, for Appellees.
Before: Fabe, Chief Justice, Eastaugh,
Carpeneti, and Winfree, Justices. [Matthews,
Justice, not participating]
WINFREE, Justice.
I. INTRODUCTION
Alleged prior overpayments of foster care
reimbursements were recouped by the state through a deduction
from a much-later monthly foster care reimbursement payment. The
foster parent contends the state violated her due process rights
by not providing adequate notice or opportunity to be heard
before the recoupment. The superior court held that the due
process clause did not protect the foster parents interest in
receiving foster care reimbursement payments and ruled in favor
of the state. Because a foster parent has a property interest in
state foster care reimbursement payments that may not be deprived
without due process protections, we reverse the superior courts
ruling and remand for further proceedings.
II. FACTS AND PROCEEDINGS
A. Facts
Robin Heitz is a licensed foster parent who has housed
and cared for foster children since 2004. Heitz receives a
monthly payment from the State of Alaska, Department of Health
and Social Services, Office of Childrens Services (OCS) to help
maintain foster children in her care.1 According to OCSs
handbook for foster families, foster parents receive
reimbursement after submitting billing documentation for the days
during which the foster parent provided care in the previous
month.
In 2005 OCS placed a foster child named Timothy2 in
Heitzs care. Timothy occasionally ran away from Heitzs home, and
Heitz notified OCS of each occurrence. Timothy stopped living
with Heitz in December 2005.
In September 2006 Heitz received a letter from an OCS
social worker informing her that OCS had audited Timothys case
and found there was an overpayment of foster care while he was
placed in [Heitzs] home. The letter stated:
Primarily this occurred when [Timothy] was
(1) in Cornerstone [an emergency shelter], or
(2) on the run from Cornerstone, or (3) in
the Johnson Youth Center following placement
and/or run from Cornerstone. I had continued
your foster care payment during times I
should have ceased payment.
The time period where these discrepancies
(overpayments) occurred was roughly 9/13/05
to 1/03/06. I anticipate when the Financial
Management Services has completed their audit
of foster care payments for [Timothy], they
will notify you of the amount of the
overpayment and repayment process.
In November 2006 Heitz received her monthly foster care
check for the five foster children living with her the previous
month. Heitz had expected the payment to be $2,438.46; instead,
OCS made a number of deductions from that sum so that Heitzs net
payment for the month was $491.42. Heitz presumed [t]hese
deductions were apparently the monies the State was deducting
from [her] as a result of [Timothy] running away from [her] back
in 2005.
OCS did not send Heitz a written notice before
recouping these funds. OCS concedes it erred in failing to send
Heitz any notice and contends that its standard procedure is to
send foster parents a letter explaining a proposed recoupment
before actually recouping funds.
B. Proceedings
A. Heitz filed a class action complaint for declaratory and
injunctive relief. She requested the court: (1) declare that
foster parents interest in receiving foster care payments is
protected by due process; (2) enjoin OCS from reducing or
terminating foster care reimbursements without first providing
foster parents due process compliant notices and due process
compliant hearings; (3) order OCS to provide such notices and
hearings to foster parents whose reimbursements were reduced or
terminated after November 20, 2004; and (4) order OCS to
reimburse Heitz the funds it recouped from her until she receives
constitutionally adequate notice and a hearing to contest the
recoupment.
The superior court certified a class consisting of all
foster parents in the state who had received foster care
reimbursements since November 20, 2004. Heitz filed a motion for
summary judgment. OCS opposed Heitzs motion, but did not move
for summary judgment in its own favor. At oral argument on the
motion, OCS argued for the first time that existing grievance
procedures set forth at 7AAC 54.205-.240 provide foster parents
due process. The superior court requested additional briefing on
this new argument. In an appendix to her supplemental brief
Heitz observed that OCS had proposed amending regulations to
apply to foster care payment disputes the same notice and hearing
requirements that currently apply to disputes over Medicaid, food
stamps, temporary assistance payments, and other state benefit
programs.3 OCS responded that it had declined to adopt these
proposed regulations because it believed foster parents do not
possess a protected property interest in foster care payments,
and as such, adoption of the regulations is not necessary.
The superior court denied Heitzs motion for summary
judgment, ruling that although the legal authority overwhelmingly
supports the notion that foster care children have an interest in
foster care payments sufficient to warrant due process
protections . . . any interest that foster care parents have in
foster care subsidies is minimal and insufficient to trigger due
process protection under the test annunciated by the United
States Supreme Court in [Mathews] v. Eldridge, 424 U.S. 319
(1976). (Emphasis in original.) Although the superior court did
not address the adequacy of the recoupment notices sent to foster
parents, it concluded that foster parents have no right to a
hearing to contest recoupment because the burden on OCS cannot be
justified given the interest affected.
Heitz appeals.
III. STANDARD OF REVIEW
A grant of summary judgment is reviewed de novo. We
will affirm if the record contains no genuine issue of material
fact and the moving party is entitled to judgment as a matter of
law.4
Whether the due process clause protects foster parents
interest in receiving foster care reimbursement payments and
whether OCSs notice and hearing procedures comply with due
process are question[s] of constitutional law which we review de
novo, adopting the most persuasive rule of law in light of
precedent, reason and policy.5
IV. DISCUSSION
A. Foster Parents Have a Protected Property Interest in
Reimbursement Payments for Foster Childrens Care.
A. Due process of law requires that before valuable property
rights can be taken directly or infringed upon by governmental
action, there must be notice and an opportunity to be heard.
When a party raises a due process claim, we first must determine
whether there is a deprivation of an individual interest of
sufficient importance to warrant constitutional protection.6 In
City of Homer v. Campbell7 we quoted approvingly the U.S. Supreme
Courts explanation:
The hallmark of property . . . is an
individual entitlement grounded in state law,
which cannot be removed except for cause.
Once that characteristic is found, the types
of interests protected as property are varied
and, as often as not, intangible, relating to
the whole domain of social and economic
fact.[8]
OCS reimburses licensed foster parents for the costs of
maintenance that are necessary to assure adequate care of foster
children in their custody.9 Reimbursement payments are made at a
standard rate10 multiplied by the number of days of care provided
in the previous month.11 If a licensed foster parent provides
care for a foster child, the parent is statutorily entitled to
receive a reimbursement payment. Foster care maintenance
reimbursements therefore satisfy the criterion for a protected
property interest we adopted in Campbell: they are an individual
entitlement grounded in state law, which cannot be removed except
for cause.12 Other courts have concluded that foster care
benefits . . . are a species of property that is protected under
the Constitution.13
OCS contends that the property interest in these
payments belongs only to foster children, not foster parents.
Citing Wilkerson v. State for the proposition that foster care
maintenance payments are not intended to be a source of income to
provide foster parents with the basic necessities of life,14 OCS
argues that a foster parent has no legitimate property interest
in these payments.
Wilkerson does not control our decision here because it
involved a different property interest than the one asserted by
Heitz. In Wilkerson OCS denied a foster care license to an
applicant who had been charged with a felony in the preceding ten
years; the applicant argued he was denied due process because he
did not have the opportunity to be heard regarding his criminal
record.15 We noted the applicants property interest in the
opportunity to provide foster care was marginal; because foster
care payments do no more than cover the foster childs own costs,
denial of the opportunity to provide foster care does not deny
the applicant any economic benefit.16
By contrast a person like Heitz, who actually cares for
foster children, receives foster care payments because prior
expenses are being reimbursed. If OCS erroneously denies
reimbursement payments to a parent who already has provided
foster care, that parent suffers a net loss of funds, unlike
someone denied the opportunity to provide foster care. We
therefore reject OCSs argument and conclude that a foster parents
interest in receiving foster care reimbursement payments is a
property interest protected by the due process clause.17
B. When OCS Recoups Alleged Prior Overpayments from Foster
Parents, It Must Provide Them with Notice and an Opportunity To
Be Heard.
A. [B]efore property rights can be taken or infringed upon by
government action, there must be notice of the action proposed to
be taken and an opportunity to be heard.18 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. 19 Because foster parents have a
protected property interest in receiving foster care
reimbursement payments for their previous care of foster
children, we hold that OCS must provide notice of its intent to
recoup funds and an opportunity to contest its decision before a
recoupment occurs.20
In determining whether notice of proposed agency action
is adequate, we apply the balancing test articulated by the U.S.
Supreme Court in Mathews v. Eldridge.21 The test balances:
First, the private interest that will be
affected by the official action; second, the
risk of an erroneous deprivation of such
interest through the procedures used, and the
probable value, if any, of additional or
substitute procedural safeguards; and
finally, the Governments interest, including
the function involved and the fiscal and
administrative burdens that additional or
substitute procedural requirements would
entail.[22]
The amount of information required in a notice depends
partly on the importance of the individual interest at stake.23
We previously have held that people receiving welfare benefits or
personal care attendant services (assistance with daily functions
like eating and bathing provided to disabled, low-income
individuals) have a brutal need for those benefits.24 Foster
parents need for reimbursement may not be as pressing in all
cases, but a failure to receive reimbursement payments may hinder
their ability to provide for the foster children in their care.
Their interest in these payments is therefore substantial.
We have held that due process requires an explanation
of the specific reasons 25 for reducing or terminating benefits on
an individual basis, and that the state must show how and why it
determined that a reduction in [benefits] was in order.26 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 . . . .
[S]uch notices should provide sufficient information to allow
recipients to detect and challenge mistakes.27
In Allen v. State, we held that when the state informed
a food stamp beneficiary of a planned recoupment of benefits, a
notice showing the amount the beneficiary had received, the
amount she was entitled to receive, and the difference between
the two figures was inadequate because the simple calculation
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.28 Providing the
specific facts and numbers underlying OCSs recoupment
calculation, as well as the legal authority for its actions, will
enable a foster parent to understand whether the recoupment is
justified, identify the specific facts in dispute, and resolve
potential errors more easily.
We do not perceive any great burden to OCS in supplying
this additional information. In Allen we observed that providing
more detailed calculations than the difference between the
beneficiarys asserted entitlement and the amount received was not
an unreasonable burden.29 It does not seem unduly burdensome for
OCS to include specific dates and figures in its letters
notifying foster parents of a planned recoupment, especially in
light of their interest in foster care funds and the utility of
this information in resolving recoupment disputes.
We thus conclude that OCS must provide notice to foster
parents of an intended recoupment of reimbursement. Notice must
include specific factual reasons and legal authority for the
recoupment and must also inform the parents of their right to
contest OCSs decision.30 Because there is a factual dispute as to
the content of letters OCS sends foster parents to notify them of
a planned recoupment, we remand the case to the superior court to
resolve this dispute and determine whether these notices comply
with due process.
V. CONCLUSION
We REMAND the case to the superior court for
proceedings consistent with this opinion.
_______________________________
1 See AS 47.14.100(b) (authorizing OCS to pay the costs
of maintenance that are necessary to assure adequate care of the
[foster] child); 7 Alaska Administrative Code (AAC) 53.020 (2005)
(The department will provide payment for a child placed in foster
care by the department unless another source of payment is
available for the childs care.).
2 A pseudonym is used to protect the childs identity.
3 See 7 AAC 49.010-.900.
4 Wilson v. MacDonald, 168 P.3d 887, 888 (Alaska 2007)
(internal citation omitted) (quoting DeNardo v. Bax, 147 P.3d
672, 676-77 (Alaska 2006)).
5 Baker v. State, Dept of Health & Soc. Servs., 191 P.3d
1005, 1009 (Alaska 2008); see also Wilkerson v. State, Dept of
Health & Soc. Servs., Div. of Family & Youth Servs., 993 P.2d
1018, 1021 (Alaska 1999).
6 Bostic v. State, Dept of Revenue, Child Support
Enforcement Div., 968 P.2d 564, 568 (Alaska 1998) (quoting
Frontier Saloon, Inc. v. Alcoholic Beverage Control Bd., 524 P.2d
657, 659 (Alaska 1974) and Herscher v. State, Dept of Commerce,
568 P.2d 996, 1002 (Alaska 1977)) (internal quotation marks
omitted).
7 719 P.2d 683, 684-85 (Alaska 1986).
8 Logan v. Zimmerman Brush Co., 455 U.S. 422, 430 (1982)
(internal quotation marks omitted).
9 AS 47.14.100(b); 7 AAC 53.020; Dept of Health & Soc.
Servs., Office of Childrens Servs., Alaskas Res. Family Handbook
27 (2009) (Reimbursements are intended to offset costs you have
already incurred, which means you submit your billing for the
days for which you have already provided care for [sic] in the
previous month.).
10 7 AAC 53.030(a).
11 7 AAC 53.080(a).
12 719 P.2d at 684-85 (quoting Logan, 455 U.S. at 430)
(internal quotation marks omitted).
13 Youakim v. McDonald, 71 F.3d 1274, 1288 (7th Cir. 1995)
(Perceiving no distinction between food stamps, welfare, or
disability benefits and foster care subsidies); see also Sockwell
v. Maloney, 431 F. Supp. 1006, 1012 (D. Conn. 1976) ([O]nce a
child is found in need of foster care and is placed in a foster
home, the child acquires a property interest in foster care
payments protected by the due process clause of the Fourteenth
Amendment.).
14 993 P.2d at 1023.
15 Id. at 1020, 1025.
16 Id. at 1023-24.
17 OCS also argues that even if a foster parent has a
protected property interest in reimbursement payments, the parent
has no protected interest in overpayments. Since the purpose of
administrative review is to determine whether there has been an
overpayment, the argument lacks merit.
18 Campbell, 719 P.2d at 685 (citing Goldberg, 397 U.S. at
267-68).
19 Allen v. State, Dept of Health & Soc. Servs., Div. of
Pub. Assistance, 203 P.3d 1155, 1167 (Alaska 2009) (quoting
Baker, 191 P.3d at 1009).
20 Our decision applies to the procedures required in the
case of recoupment only. Although the class certified below
includes all foster parents in the state who have received foster
care subsidies, we limit the effect of our decision to foster
parents from whom OCS recoups foster care reimbursement payments.
We express no opinion regarding the procedures applicable when
OCS terminates monthly payments or reimburses the foster parent a
lesser amount than was requested. We also express no opinion on
whether due process requires providing notice to persons other
than foster parents.
21 Baker, 191 P.3d at 1010 (citing Mathews, 424 U.S. at
334-45).
22 Mathews, 424 U.S. at 335 (internal citations omitted).
23 Allen, 203 P.3d at 1167.
24 Baker, 191 P.3d at 1010 (citing Goldberg, 397 U.S. at
261).
25 Id. at 1011 (quoting Schroeder v. Hegstrom, 590 F.
Supp. 121, 128 (D. Or. 1984)) (emphasis added in Baker).
26 Id.
27 Allen, 203 P.3d at 1167-68 (citing Ortiz v. Eichler,
794 F.2d 889, 893 (3d Cir. 1986)).
28 Id. at 1168. The notice and hearing procedures for
disputes over food stamps at issue in Allen are governed by
federal regulations; however, we held that when the regulations
are unclear as to precisely what information a notice must
contain, due process requirements may be used to fill in the
gaps. Id. at 1166.
29 Id. at 1168.
30 We do not reach any issues related to procedures to be
provided for a foster parent to contest a recoupment. We note
only that due process does not require a full-scale hearing in
every situation to which due process applies, Haggblom v. City of
Dillingham, 191 P.3d 991, 995 (Alaska 2008) (quoting Laidlaw
Transit, Inc. v. Anchorage Sch. Dist., 118 P.3d 1018, 1026
(Alaska 2005) (internal quotation marks omitted)), but that fair
resolutions of disputed facts can rarely be obtained by secret,
one-sided determinations, Campbell, 719 P.2d at 685 (quoting
Fuentes v. Shevin, 407 U.S. 67, 81 (1972) (internal quotation
marks omitted)).
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