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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

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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