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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. State, Dept. of Health & Social Services, Division of Public Assistance v. Gross (4/24/2015) sp-7001

State, Dept. of Health & Social Services, Division of Public Assistance v. Gross (4/24/2015) sp-7001

         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, email  

                                                                                      

         corrections@akcourts.us.  



                   THE SUPREME COURT OF THE STATE OF ALASKA  



STATE OF ALASKA,                                       )  

DEPARTMENT OF HEALTH AND                               )        Supreme Court No. S-15339  

SOCIAL SERVICES, DIVISION OF                           )  

PUBLIC ASSISTANCE,                                     )        Superior Court No. 3AN-12-09838 CI  

                                                       )  

                           Petitioner,                 )        O P I N I O N  

                                                       )  

                  v.                                   )        No. 7001 - April 24, 2015  

                                                       )  

LESTER GROSS,                                          )  

                                                       )  

                           Respondent.                 )  

                                                       )  



                  Petition for Review from the Superior Court of the State of  

                               

                  Alaska, Third Judicial District, Anchorage, Erin B. Marston,  

                                                              

                  Judge.  



                  Appearances:  Kathryn R. Vogel, Assistant Attorney General,  

                  Anchorage,  and  Michael  C.  Geraghty,  Attorney  General,  

                  Juneau, for Petitioner.  Mark Regan, Disability Law Center  

                                                   

                  of Alaska, Anchorage, for Respondent.  



                  Before:  Fabe, Chief Justice, Winfree, Stowers, Maassen, and  

                                                          

                  Bolger, Justices.   



                  MAASSEN, Justice.  



I.       INTRODUCTION  



                  An applicant for federal disability benefits applied for state benefits that are  

                                                    



intended  to  provide  basic  assistance  while  the  federal  application  is  pending.    The  


----------------------- Page 2-----------------------

Division of Public Assistance - the division of the Alaska Department of Health and  



                                                                             1  

                                                                                                          

Social Services that administers the state program                             - denied  these interim benefits,  



                                                                                

relying  on  a  subset  of  the  criteria  that  the  Social  Security  Administration  uses  to  



                                                                                                

determine eligibility for federal benefits.   The superior court reversed this  decision,  



                                      

holding that Alaska law required the Department to apply the same federal substantive  



                                                                                       

criteria and procedural requirements to its determination of eligibility for state interim  



benefits.  The Department petitioned for review, and we granted the petition.  



                                                                                                                        

                    We conclude that, while state law does not require the Department to  track  



the federal analysis exactly when it assesses eligibility for state interim benefits, the  



                                                                                                             

Department's application of the law erroneously excludes a category of applicants who  



will be found to be disabled for purposes of federal benefits and who therefore should  



                                                                                                                  

be entitled to interim assistance.  We therefore affirm the superior court's decision in  



part, reverse it in part, and remand for further proceedings.  



II.       FACTS AND PROCEEDINGS  



          A.        Facts  



                    Certain persons who are disabled and unable to work are entitled to federal  



                                                                                                

Supplemental Security Income  (SSI) benefits administered by the United States Social  



                                      2  

                                                                                                           

Security  Administration.                  In  determining  whether  an  applicant  is  "disabled"  and  



therefore entitled to SSI benefits, the Social Security Administration uses a five-step  



          1         See  7  Alaska  Administrative  Code  (AAC)  40.040  (2015)  ("Assistance  



under  this  chapter  will be  granted  only  upon  application  to  the  division.");  7  AAC  

                                          

40.900(4) (2015) ("In this chapter, . . . 'division' means the division of public assistance  

                                                           

of the Department of Health and Social Services.").  



          2         See 42 U.S.C.  1381 (2012); 20 C.F.R.  416.110 (2014).  



                                                              - 2 -                                                        7001
  


----------------------- Page 3-----------------------

                                                                   3  

process  outlined  in  federal  regulations.                            Steps  one  and  two  are  satisfied  if  the  

                                                                                                                                 



Administration  finds  first  that  the  applicant  is  not  currently  engaged  in  "substantial  



                          4 

gainful activity"  and second that the applicant has a "determinable physical or mental 

                                                        



impairment" lasting at least one year or likely to result in death, significantly limiting the  

                                                           



                                                                                                             5  

applicant's "physical or mental ability to do basic work activities."   If these first two  

                    



steps are satisfied, an individual may qualify for SSI benefits at step three, where the  

                                



Administration considers whether the medical severity of the applicant's impairment  



                                                                                             6  

"meets or equals" a disability listed in federal regulations.   



                     Individuals  who  satisfy  the  first  two  steps  but  do  not  qualify  for  SSI  



                                                                                                               

benefits at step three may nonetheless qualify through steps four and five.  At step four,  



                                                          

the Social Security Administration considers whether the applicant, despite his or her  



                                                                                                                   

impairment, can perform work he or she has done in the past; if so, the applicant is not  



                                                                  7  

                                                                      If the applicant cannot perform past work,  

disabled and not entitled to SSI benefits. 



however, the analysis proceeds to step five.  



                                          

                     At step five the Social Security Administration considers the applicant's  



                                                                                 8 

ability to do other work in the national economy;  if the applicant can perform other 



                                                                                                                         

work, he or she is not disabled and not entitled to SSI benefits.  The burden shifts at this  



           3         See 20 C.F.R.  416.920(a)(4) (describing five-step process in general);   



FRANK BLOCH , BLOCH ON  SOCIAL SECURITY  3:7 (2015 ed.).  



           4         20 C.F.R.  416.920(a)(4)(ii), 416.920(b).  



           5         Id.  416.920(c), 416.909.  



           6         Id.    416.920(d).  The  qualifying  impairments are listed at id.   404, subpart  



P, appendix 1.  Id.  416.920(a)(4)(iii).  



           7         Id.  416.920(f), 416.920(h), 416.960(b).  



           8         Id .  416.920(g), 416.920(h), 416.960(c).  



                                                                  - 3 -                                                            7001
  


----------------------- Page 4-----------------------

                                                                                                      

step  of  the  federal  analysis,  and  the  Administration,  rather  than  the  applicant,  is  



"responsible  for  providing  evidence  that  demonstrates  that  other  work  exists  in  



                                                                            

significant  numbers  in  the  national  economy  that  [the  applicant]  can  do,  given  [the  



                                                                                                   9  

applicant's]  residual  functional  capacity  and  vocational  factors."     Burden-shifting  



                                                                                                               

requires that the Administration present the testimony of a vocational expert when other  



                                                 10  

methods of proof are insufficient.     If the Administration fails to carry its burden, the  

applicant is considered disabled and entitled to SSI benefits.11  



                                                                             

                   Determining eligibility for SSI can be a time-consuming process, lasting  



many  months.    To  help  alleviate  hardship  during  the  long  application  period,  state  



interim       assistance        programs         pay     "assistance        financed        from      State      or    local  



                

funds . . . furnished for meeting basic needs" of SSI applicants while their eligibility for  



                                                     12  

                                                                                               

federal benefits is being determined.                    The federal government reimburses Alaska for  



                                                

the interim assistance payments the State makes to individuals who are ultimately found  



                              13 

                                                                                                                        

to be entitled to SSI,           but the State is responsible for determining the parameters of its  

interim assistance program, including the requirements for eligibility.14  



          9        Id.  416.960(c)(2).  



          10       Id.  416.966(e); see also BLOCH ,  supra note 3,  3:36.  



          11       See Bowen v. Yuckert, 482 U.S. 137, 146  n.5 (1987); Erickson v. Shalala ,  



9 F.3d 813, 816-17 (9th Cir. 1993).  



          12       42 U.S.C.  1383(g)(3) (2012).  



          13       See  id.  1383(g)(3)-(4); 20 C.F.R.  416.1901(a).  



          14       See, e.g., Kraft v. Comm'r of Pub. Welfare, 496 N.E.2d 1379, 1383-86  



(Mass. 1986) (discussing the relationship of federal and state law  in interim assistance  

and stating that the f   ederal statute and regulations "evince an intent to delegate to the  

States the power to determine the amount of such  assistance  and eligibility guidelines . . .  

                                                                                                           (continued...)  



                                                            - 4 -                                                      7001
  


----------------------- Page 5-----------------------

                                                                                             

                   Alaska's interim assistance program is governed by AS 47.25.455, which  



provides:  "The department shall pay at least $280 a month to a person eligible for  



                                                                                           

assistance under this chapter while the eligibility of the person for benefits under [the SSI  



                                              15  

Program]  is  being  determined."                   A  regulation,  7  AAC  40.180,  provides  that  the  



Department will determine whether an applicant is eligible for interim assistance based  



                          

on  "whether  the  applicant  is  likely  to  be  found  disabled  by  the  Social  Security  



Administration, including whether the applicant's impairment meets . . . [the] Social  



                                                                                      

Security Administration disability criteria for the listings of impairments described in  



                                                         16  

                                                             The regulation further specifies that, "[i]n  

20 C.F.R. 404, subpart P, appendix  1." 



determining whether an applicant's disability meets [these] criteria," the Department will  



               

consider, among other things, whether the "impairment affects the applicant's activities  



                               

of  daily  living"  and  whether  "the  applicant  can  perform  any  other  work,  including  



                        17  

sedentary work."            



         14(...continued)  



[and] authorize the States to determine the appropriate methodology for calculating the  

                                                                              

amount of reimbursement due.").  



         15        AS 47.25.455(a).  



         16        7   AAC   40.180(b)(1)(B)   (2015).                  The   regulation   also   requires   the  



Department  to  examine  "the  SSI  program's  presumptive  disability  criteria  under  

20 C.F.R. 416.934," 7 AAC 40.180(b)(1)(A), but Gross has not alleged eligibility under  

those criteria.  



                   While 7 AAC 40.180 has been amended since the events in question in this  

case, that amendment simply updated references to the Code of Federal Regulations  

without  changing  the  substance  or  structure  of  the  regulation.    Compare  former  

7 AAC 40.180 (am. 1/11/06), with 7 AAC 40.180 (am. 12/7/13).  We therefore refer to  

the regulation's most recent published version here.  



         17        7 AAC 40.180(c)(3), (4).  



                                                          - 5 -                                                   7001
  


----------------------- Page 6-----------------------

          B.        Proceedings  



                    Lester Gross applied for federal SSI benefits and state interim assistance  



benefits in December 2011.  He claimed eligibility for both based on a serious mental  



                                                               

disorder.  The Department denied Gross's application for interim assistance.  Based on  



                                                                                                      

information that Gross provided and using the five-step SSI analysis, the Department's  



                                                       

disability  adjudicator  determined  at  step  five  that  Gross  was  not  likely  to  be  found  



eligible for SSI because there was "other work in the national economy" that he could  



perform, and that he was therefore not eligible for interim assistance.  



                    Gross requested a hearing, which was held in March 2012.  The Department  



                                                                          

presented testimony from its disability adjudicator but not from a vocational expert.  The  



                                                                                                      

hearing  officer,  interpreting  7  AAC  40.180  as  incorporating  all  substantive  and  



                                                                                       

procedural aspects of the SSI analysis, concluded that Gross had failed to prove disability  



at step three.  Proceeding to the remaining steps, however, the hearing officer concluded  



                                                           

that under step five "the burden of proof shifts from the applicant to the agency" and that  



the Department had failed to meet its burden because it did not provide evidence that the  



                            

jobs  it  identified  for  Gross  actually  existed  in  significant  numbers  in  the  national  



economy, nor had it provided the testimony of a vocational expert that Gross could  



                                                                              

perform  those  jobs.    The  hearing  officer  therefore  found  Gross  eligible  for  interim  



assistance.  

                    After both Gross and the Department filed proposals for agency action,18  



                                                                                                      19  

the   Department's   deputy   commissioner   issued   a   final   decision.                                   The   deputy  

                                                                                        



          18        A proposal for action states a party's position as to whether the agency  



should  adopt,  reverse,  modify,  or  take  other  action  on  a  hearing  officer's  proposed  

decision.  See AS 44.64.060(e).  



          19        See  AS 44.64.060(e)(5) (stating that the agency may, "in writing, reject,  



                                                                                                           (continued...)  



                                                            - 6 -                                                      7001
  


----------------------- Page 7-----------------------

                                                                                                        

commissioner ruled that "7 AAC 40.180 incorporates only . . . steps 1, 2, and 3 of the SSI  



disability analysis" for determinations of eligibility for interim assistance, and that the  



                                                                                                                    

regulation "does not require the Department to follow the analyses used in steps 4 and 5  



                              20  

of the SSI analysis."             "In particular," the deputy commissioner concluded,  



                   7 AAC 40.180 does not require the Department to present  

                                                                                        

                   evidence through a vocational expert, and does not place any  

                                         

                   burden on the Department to prove[] (as SSA is required to  

                   do at step 5 of its analysis)[] that there is particular work in  

                   the national economy that the applicant is able to perform.  



Accordingly, because the hearing officer had determined that Gross was not likely to be  

                                                                                                         



found disabled at step three of the SSI analysis - finding him disabled only at step five  

                                                                         



- the deputy commissioner determined that Gross was not eligible for state interim  

                                                                    



assistance.  



                                                                                                

                   Gross appealed the deputy commissioner's decision to the superior court,  

which reversed it.  Based on our decisions in Moore v. Beirne21  

                                                                                             and State, Department  



                                                              22  

                                                                   the  superior  court  concluded  that  the  

of  Health  &  Social  Services  v.  Okuley, 



                                                              

Department, when determining eligibility for the state interim assistance program, must  



follow all five steps of the SSI analysis.  



                                                                                                           

                   The Department petitioned for review. It argued that neither AS 47.25.455  



nor 7 AAC 40.180 requires it to undertake the full five-step federal analysis in evaluating  



          19(...continued)  



modify, or amend an interpretation or application in the proposed decision of a statute  

or regulation directly governing the agency's actions by specifying the reasons for the  

                                                                                                         

rejection, modification, or amendment, and issue a final agency decision").  



          20       Both emphases in original.  



          21       714 P.2d 1284 (Alaska 1986).  



          22       214 P.3d 247 (Alaska 2009).  



                                                            - 7 -                                                     7001
  


----------------------- Page 8-----------------------

                                                                                                     

eligibility for state interim assistance, and that its interpretation of the statute is otherwise  



                                                                                                                        

permissible.  The Department asked that we reverse the superior court's decision and  



reinstate the decision of the deputy commissioner.  



                      We granted the petition.  



III.       STANDARDS OF REVIEW  



                      "When  a  superior  court  acts  as  an  intermediate  appellate  court  in  an  



                                                                                                                 23  

administrative matter, we review the merits of the agency's decision."                                                



                                                                                                   

                      The agency's decision in this case is based on its application of a regulation.  



                                                                               

When examining regulations that were properly promulgated, "[w]e limit our review to  



 'whether the regulations are consistent with and reasonably necessary to carry out the  



                                                                                                                                 

purposes of the statutory provisions and whether the regulations are reasonable and not  



                    24  

arbitrary.'  "             "In  making  the  consistency  determination,  we  use  our  independent  



judgment unless the 'issue involves agency expertise or the determination of fundamental  



                                                                                            25  

                                                                                                 "But the specific form our  

policy questions on subjects committed to an agency.' " 



                                                                                                                           

independent  review  takes  is  distinct  from  pure  de  novo  review.                                             We  apply  the  



                                                                                                                         

substitution-of-judgment standard," by which we "adopt the rule of law  that is most  



           23  

                      State, Dep't of Commerce, Cmty. & Econ. Dev., Div. of Ins. v. Alyeska                     

Pipeline Serv. Co. , 262 P.3d 593, 596 (Alaska 2011).  



           24         Lakosh v. Alaska Dep't of Envtl. Conservation , 49 P.3d 1111, 1114 (Alaska  

                                                                                                  

2002) (alterations omitted) (quoting Kelly v. Zamarello , 486 P.2d 906, 911 (Alaska  

 1971));  accord   Grunert   v.   State,   109   P.3d   924,   929   (Alaska   2005);  see   also  

                                                                                                 

AS 44.62.030.  



           25         Lakosh , 49 P.3d at 1114 (quoting O'Callaghan v. Rue, 996 P.2d 88, 94  



(Alaska 2000)).  We have explained that " 'reasonable necessity is not a requirement  

separate from consistency' and the scope of review should center around consistency  

                                                                                      

with the authorizing statute."  Bd. of Trade, Inc. v. State, Dep't of Labor, Wage & Hour  

                                                                                                       

Admin. , 968 P.2d 86, 89 (Alaska 1998) (quoting State, Bd. of Marine Pilots v. Renwick,  

                                                      

936 P.2d 526, 531-32 (Alaska 1997)).  



                                                                   - 8 -                                                            7001
  


----------------------- Page 9-----------------------

                                 

persuasive  in  light  of  precedent,  reason,  and  policy,  but  in  doing  so  we  give  due  



deliberative  weight  'to  what  the  agency  has  done,  especially  where  the  agency  



                                                   26  

interpretation is longstanding.' "                      In this case, the Department's interpretation is due  



                                                        27  

little deference based on longevity;                        Gross's case appears to be the first in which the  



Department has adopted the interpretation at issue here, as the deputy commissioner  

noted in her decision.28  



IV.        DISCUSSION  



                             

                     The Department argues that AS 47.25.455 does not require use of the full  



                       

five-step SSI analysis to determine eligibility for interim assistance and that 7 AAC  



                                                                          

40.180 - which the Department interprets as requiring only the first three steps - is  



                                                                                                           

therefore consistent with the statute.  But because this interpretation of the statute would  



exclude from the interim assistance program an entire category of applicants potentially  



eligible for SSI, we reject the Department's argument.  



           26         Heller v. State, Dep't of Revenue , 314 P.3d 69, 73 (Alaska 2013) (quoting  



Chugach Elec. Ass'n, Inc. v. Regulatory Comm'n of Alaska                                      , 49 P.3d 246, 250 (Alaska     

2002)).  



          27  

                                                                                        

                     See, e.g., Totemoff v. State, 905 P.2d 954, 968 (Alaska 1995) (stating that  

                                        

"if agency interpretation is neither consistent nor longstanding, the degree of deference  

                                                                                               

it deserves is substantially diminished" (citing Bowen v. Am. Hosp. Ass'n , 476 U.S. 610,  

646 n.34 (1986))); Underwater Constr., Inc. v. Shirley, 884 P.2d 150, 153 n.11 (Alaska  

1994) (refusing to give agency's inconsistent statutory interpretation any deference).  



          28  

                                                                                                                             

                     While the Department suggests that it has advanced this argument in prior  

administrative proceedings, nothing in the record on appeal shows this to be the case.  

In  the  decision  on  Gross's  application,  the  deputy  commissioner  observed:  "The  

                                                             

Department is mindful that the ALJ's proposed decision followed the interpretation of  

                                                                                                                    

the Interim Assistance regulations previously applied by the Department's former Office  

     

of Hearings and Appeals, and the interpretation adopted by the Director of the Division  

of Public Assistance in the Director's Appeal decision issued on October 7, 2011 in  

OHA Case No. 11-FH-188."  



                                                                 - 9 -                                                          7001
  


----------------------- Page 10-----------------------

          A.       Why We Apply The Substitution Of Judgment Standard Of Review  



                   The Department argues that determining eligibility for interim assistance  



is "a policy decision and a judgment squarely within the agency's area of expertise,"  



which we should review only to determine whether it has a reasonable basis.  We use  



                                                                                 

reasonable basis review "when the interpretation at issue implicates agency expertise or  



the determination of fundamental policies within the scope of the agency's statutory  



                29  

functions."           Because  the  question  in  this  case  is  one  of  statutory  interpretation  -  



requiring a determination of the legislature's intent in creating the interim assistance  



                                                                                          

program  -  we  conclude  that  the  substitution  of  judgment  standard  of  review  is  



appropriate instead.  



                                                                                               

                   In support of its argument for reasonable basis review, the Department cites  



                                        30  

                                              In  that  case  we  examined  whether  the  Department  of  

Marathon  Oil Co.  v.  State. 



             

Natural Resources had permissibly denied a lessee's request to apply retroactively a  

                                                                                    31   We found the governing  

                                                                                               

specific methodology for calculating royalties on gas leases.  

statute ambiguous as to "whether retroactive contract pricing is permitted."32  We applied  

                                                                                      



the  reasonable  basis  standard  of  review  because  of  our  recognition  that  "[a]llowing  

                                                                                                    



retroactivity  could  have  important  consequences  for  how  royalties  are  assessed  and  



          29       Marathon Oil Co. v. State, Dep't of Natural Res. , 254 P.3d 1078, 1082  



(Alaska 2011) (citing Matanuska-Susitna Borough v. Hammond , 726 P.2d 166, 175  

(Alaska 1986)).  



          30       254 P.3d 1078 (Alaska 2011).  



          31       See id. at 1081-82.  



          32       Id. at 1085.  



                                                         -  10 -                                                   7001
  


----------------------- Page 11-----------------------

paid," consequences the agency was more qualified than the courts to weigh.33                                           We  



                                                                                              

observed that "[t]he state royalty and audit system is complicated, and DNR has expertise  



                                                                                                             34  

in deciding when retroactive application makes sense within that system."                                        We also  



noted   that   we   were   "especially   inclined   to   defer   when   the   agency's   statutory  



                                                                                     35  

interpretation is long-standing," as it was in Marathon Oil .  



                                                         

                   The question in this case is whether the Department may, consistent with  



the interim assistance statute, definitionally exclude persons who are eligible for SSI  



from  eligibility  for  state  interim  assistance.    Unlike  Marathon  Oil ,  answering  that  



question  does  not  require  the  "resolution  of  policy  questions  which  lie  within  the  



agency's  expertise  and  are  inseparable  from  the  facts  underlying  the  agency's  



               36 

                                                                                                               

decision."         Rather, the answer depends on the legislature's intent in creating the interim  



                                                                                            

assistance program.  "The question whether [the Department] properly interpreted the  



                                                                                                           

legislature's mandate . . . is answerable through 'statutory interpretation or other analysis  



of legal relationships about which courts have specialized knowledge and experience.'  



Because this preliminary legal question resides within the traditional province of judicial  



          33       Id. at 1082.  



          34       Id.  



          35       Id. at 1085.  



          36       Id. (quoting Earth Res. Co.  v.  State,  Dep't of Revenue , 665 P.2d 960, 964  



(Alaska 1983)).  



                                                           -  11 -                                                    7001
  


----------------------- Page 12-----------------------

                                                                         37  

                                                                                    

review and involves no technical expertise,"                                 we employ the substitution of judgment  



               38  

standard.            



                              

                      The Department also urges us to defer to its interpretation because the adult  



                                                                                                                               

public  assistance  statutes  -  of  which  the  interim  assistance  program  is  a  part  -  



generally grant it the authority to "adopt regulations, not inconsistent with law, defining  



                                                                                                                39  

need, [and] prescribing the conditions of eligibility for assistance."                                              But the grant of  



                                                                                                                          

regulatory authority in this case is unlike the broad grants of authority at issue in cases  



                                                                                 40  

                                                                                                                                  

in which we have deferred to an agency decision.                                      Instead, because the issue is one of  



                                                                 

statutory interpretation, we apply  the  substitution of judgment standard, giving little  



                                                                                                                              41  

deference to the agency's new interpretation of the law, as explained above.                                                      



           37         Lakosh v. Dep't of Envtl. Conservation                          , 49 P.3d 1111, 1117 (Alaska 2002)     



(quoting Kelly v. Zamarello , 486 P.2d 906, 916 (Alaska 1971)).  



           38         Heller v. State, Dep't of Revenue , 314 P.3d 69, 73 (Alaska 2013) ("Because  

                                                                                                       

the  interpretation  involves  legislative  intent  rather  than  agency  expertise,  we  apply  

                                                                                        

independent review here.").  



           39         AS 47.05.010(9).  



           40  

                                                                                                                  

                      Cf. Kenai Peninsula Fisherman's Coop. Ass'n v. State, 628 P.2d 897, 903  

                                                                                                              

(Alaska  1981)  (reasoning  that  a  statute  allowing  the  Board  of  Fisheries  to  "make  

regulations it considers advisable" indicated "that the legislature intended to give the  

Board discretion to decide methods of regulation"); Kelly v. Zamarello , 486 P.2d 906,  

                                              

912 (Alaska 1971) (reasoning that a statute for competitive oil and gas leasing describing  

                                                         

"such  bonus as may be accepted by the Commissioner" of DNR indicated "that the  

            

legislature intended to give the Commissioner broad authority to determine the kind of  

                                                                              

bonus he will accept").  



           41  

                                                       

                      See Tesoro Alaska Petroleum Co. v. Kenai Pipe Line Co., 746 P.2d 896,  

                                        

902-04  (Alaska  1987)  ("Tesoro  argues  that  we  should  apply  the  'reasonable  basis'  

standard  because  the  issues  raised  in  these  cases  involve  agency  expertise  and  

fundamental policy considerations in an area where the administrative agency has been  

                                                                                                                         (continued...)  



                                                                   -  12 -                                                             7001
  


----------------------- Page 13-----------------------

                    Finally, in deciding this appeal we do not need to address whether the  

Department's decision of Gross's case has a reasonable basis in the regulation.42                                          For  



                                                      

purposes of our decision we assume that the Department's application of 7 AAC 40.180  



                                                              

was based on a reasonable interpretation of it, leaving for our independent review only  



                                                          

the question whether the regulation as so interpreted is consistent with the statute it was  



intended to implement.  



                                          

          B.	       A Failure To Consider Steps Four And Five Of The SSI Analysis In  

                    Determining Eligibility For Interim Assistance Is Inconsistent With  

                    AS 47.25.455.  



                                                                                                                         

                    The Department argues that nothing in AS 47.25.455 mandates use of the  



complete five-step federal SSI analysis to assess eligibility for state interim assistance,  



                                                                                                       

and that its interpretation of 7 AAC 40.180 as incorporating only the first three steps is  



therefore consistent with the statute.  In particular, the Department argues that it is not  



                                         

required, as it would be at step five of the SSI analysis, to carry the burden of proving  



the existence of other work in the national economy that the applicant can perform, or  



                                                                

to present expert testimony on that subject.  We agree that the Department is not required  



                                                                      

to exactly replicate all procedural aspects of the five-step analysis; however, to the extent  



       

the Department's interpretation excludes from interim assistance an entire category of  



          41(...continued)  



granted  broad  regulatory  authority.  .  .  .                 [But  b]ecause  this  case  involves  statutory  

                                                                

interpretation, we conclude that the independent judgment test is the appropriate standard  

of review."); supra notes 27-28 & accompanying text.  



          42  

                          

                    Cf. Davis Wright Tremaine LLP v. State, Dep't of Admin., 324 P.3d 294,  

                                                 

301 (Alaska 2014) ("Assuming a regulation is valid, we review whether an agency's  

                              

interpretation of its regulation is plainly erroneous and inconsistent with the regulation  

- i.e., whether it has a reasonable basis." (citation omitted) (internal quotation marks  

omitted)).  



                                                            -  13 -	                                                     7001
  


----------------------- Page 14-----------------------

                                                                                                                    

disabled applicants - those who are entitled to federal benefits only because of step five  



- it is inconsistent with the statute.  



                    Alaska Statute 47.25.455(a) provides that "[t]he department shall pay at  



                                                                                                                     

least  $280  a  month  to  a  person  eligible  for  assistance  under  this  chapter  while  the  



                                                                                            

eligibility of the person for benefits under [the SSI program] is being determined."  The  



Department contends that, because the statute requires that interim assistance be provided  



                                                                                                 

"while the eligibility of the person" for SSI is being determined, the legislature could not  



have intended that the Department apply the same analysis as that used by the federal  



                                               

government to determine SSI eligibility.  It argues that the structure of the adult public  

assistance statutes in general supports its interpretation.43  



                                                   

                    "[W]e interpret [a] statute according to reason, practicality, and common  



                                                                         

sense, considering the meaning of the statute's language, its legislative history, and its  



               44  

purpose."          The language and structure of the relevant statutes do not directly answer  



                                                                                             

the question whether the test for state interim assistance must be the same as that for SSI,  



                                                                                 

but they do suggest that the two should closely track. Alaska Statute 47.25.455 specifies  



                                                   

that benefits are to be paid "to a person eligible for assistance under this chapter while  



          43        The  Department  also  argues  that  the  "policy  and  purpose"  of  Alaska  



Statutes Chapter 47 generally is "to cooperate and coordinate with the United States  

                                

government in administering public assistance," a purpose which is fulfilled through the  

                    

reimbursement agreement between the state and federal governments, rather than through  

an  identical  definition  of  disability.    The  provisions  allowing  for  reimbursement  of  

interim assistance payments from the federal government, however, were not part of the  

                                                                                         

initial  interim  assistance  program,  ch.  138,    18,  SLA  1982,  and  their  subsequent  

                       

addition, ch. 29,  6, SLA 1993, did not imply a change in the overall purpose of or  

                                                    

conditions  of  eligibility  for  the  program.    See,  e.g.,  1993  House  Journal  87-88  

(Governor's transmittal letter); Testimony of Jan Hansen, Div. of Pub. Assistance, at  

33:30-34:45, Hearing on H.B. 67 Before the House Judiciary Comm., 18th Leg., 1st  

Sess. (Mar. 15, 1993) (discussing interim assistance).  



          44  

                                                                                 

                    Louie v. BP Exploration (Alaska), Inc. , 327 P.3d 204, 206 (Alaska 2014).  



                                                              -  14 -                                                      7001
  


----------------------- Page 15-----------------------

                                                                                                

the  eligibility  of  the  person  for  benefits  under  [the  federal  SSI  program]  is  being  



determined"; the adult public assistance chapter specifies that a person is eligible if he  



or she is disabled, and it defines "disabled" in the same way the federal SSI program  



               45  

defines it.    The Department is correct, however, that the text of AS 47.25.455, which  



                                                                      

requires interim assistance payments "while the eligibility of the person for benefits  



                       

under [SSI] is being determined" and therefore contemplates a more expedited decision,  



                                                                                                                   

does not necessarily require that the test for interim assistance be exactly the same as the  



test for SSI.  

                    We  directly  addressed  the  interim  assistance  statute  once  before.46                                 In  



                                                    

Moore v. Beirne , we held that AS 47.25.455 did not permit the Department to terminate  



                                                                                                                          

interim assistance benefits based on the federal authorities' preliminary denial of SSI  



                     

benefits, but instead that interim assistance benefits must continue until the applicant's  



          45        Compare AS 47.25.615(5) (defining "disabled" as "being unable to engage                           



in substantial gainful activity by reason of a medically determinable physical or mental                              

impairment that can be expected to result in death or that has lasted or can be expected  

to  last  for  a  continuous  period  of  not  less  than  12  months"),  with  42  U.S.C.  

 1382c(a)(3)(A) (2012) (stating that "an individual shall be considered to be disabled  

for purposes of [the SSI program] if he is unable to engage in any substantial gainful  

activity by reason of any medically determinable physical or mental impairment which  

                                                                                                        

can be expected to result in death or which has lasted or can be expected to last for a  

                                                                                                   

continuous period of not less than twelve months"); see also 7 AAC 40.030 (stating that,  

to  be  eligible  for  adult  public  assistance,  "[a]n  applicant  must  meet  the  eligibility  

requirements of the SSI program . . . and the eligibility requirements set forth in [the  

                                                                                                                          

Adult Public Assistance] chapter").  



          46        While the parties discuss our decision in  State, Dep't of Health & Soc.  



                                         

Servs. v. Okuley, 214 P.3d 247 (Alaska 2009), that case does not affect our analysis here.  

The  facts  underlying  Okuley  related  to  the  Department's  failure  to  comply  with  the  

Administrative Procedure Act in enacting a prior version of 7 AAC 40.180.  See id. at  

249-50 & 250 n.6.  The merits of the case, however, related to attorney's fees issues  

raised in subsequent class-action litigation, see id. at 252-58, and did not involve the  

interim assistance program itself.  



                                                              -  15 -                                                      7001
  


----------------------- Page 16-----------------------

SSI appeals had been exhausted and the Social Security Administration made a final  

                                                                                                                

                                                                     47   The Department argues that nothing in  

decision on her entitlement to federal benefits.  

                   

                                                                                 



Moore  requires it to use the full five-part SSI analysis, and that Moore supports its  

            



interpretation of the statute because we recognized in that case that applicants for interim  

                                                                                             

assistance and SSI are not similarly situated for equal protection purposes.48  



                    The Department is partly correct.  As we noted in Moore , the legislature in  



creating the interim assistance program intended to codify the Department's past practice  

                                              



of paying state benefits to SSI applicants while their entitlement to federal benefits was  



                           49  

                                At that time, eligibility for interim assistance was assessed simply  

being determined.                                                                                          



through the report of an accredited physician about the applicant's likely entitlement to  

                                      



                         50  

federal benefits,           a process far less rigorous than the current one.  Nothing in Moore  



requires the Department to exactly replicate the SSI analysis when it assesses eligibility         



for interim assistance.  



                                                                                                                             

                    However, as we noted in Moore , "[t]he purpose of interim assistance is to  

                                                                                                         51 and the history  

alleviate hardship on applicants for SSI during the application period," 



of the program confirms that the legislature intended benefits to be broadly available to  

                                                                                                     



meet this purpose.  It was recognized during development of the program that the waiting  

                                                                                          



          47        714 P.2d 1284, 1287 (Alaska 1986).  



          48        See id. at 1287-88.  



          49        Id.  at  1286;  see  also  Testimony  of  Rod  Betit,  Director,  Div.  of  Pub.  



Assistance, at 48:30-51:30, Hearing on C.S.H.B. 357 (Rules) Before the Sen. Health,  

Educ. & Soc. Servs. Comm., 13th Leg., 1st Sess. (May 5, 1982).  



          50        Moore , 714 P.2d at 1           285  ("Interim assistance payments are granted after  



a preliminary examination of the applicant by a physician or psychiatrist." (citing prior  

version of 7 AAC 40.180)).  



          51        Id .  



                                                             -  16 -                                                       7001
  


----------------------- Page 17-----------------------

                                                                                                                  

time  for  a  determination  of  SSI  eligibility  was  growing  longer,  and  that  assistance  



                                                                                                                                       52  

                                                                                                   

otherwise available to meet applicants' basic needs during this period was insufficient. 



Furthermore, when enacting the interim assistance program into law, the legislature  



                                                                                                                         

eliminated the availability of other benefits pending a final SSI determination - benefits  



                                                         

for  which  all  SSI  applicants  had  formerly  been  eligible  -  intending  that  interim  

assistance fill the gap.53  



                                                                                

                     And as already noted, the method of assessing eligibility at the time of the  



statute's passage involved a much less rigorous process; rather than satisfying the federal  



                                                                                    

eligibility criteria, an applicant for interim assistance had merely to "demonstrate[] some  



                                                                                           54  

                                                                                               As the legislature intended  

likelihood of meeting the statutory criteria for eligibility." 



                                                                                                                                55 

                                                                                                                                   this  

to adopt the program currently in operation when it codified interim assistance, 



again  suggests  a  broadly  available  benefit.    The  interim  assistance  statute  has  been  



           52        See  Testimony   of  Rod  Betit,  Director,  Div.  of  Pub.  Assistance,  at  



48:30-51:00, Hearing on C.S.H.B. 357 (Rules) Before the Sen. Health, Educ. & Soc.                                   

Servs.  Comm.,  13th  Leg.,  1st  Sess.  (May  5,  1982)  (discussing  development  of  the  

program codified as interim assistance in AS 47.25.455).  



           53  

                                                                                                                        

                     Medicaid coverage for the interim period was eliminated as part of the  

                                                                                                                   

package of legislation that included AS 47.25.455.  Ch. 138,  13, SLA 1982 (codified  

                                                                                                    

as  amended  at  AS  47.07.020(e));  Testimony  of  Rod  Betit,  Director,  Div.  of  Pub.  

Assistance, at 48:20-51:00, Hearing on C.S.H.B. 357 (Rules) Before the Sen. Health,  

Educ. & Soc. Servs. Comm., 13th Leg., 1st Sess. (May 7, 1982) (discussing genesis of  

                                                

program  codified  as  Interim  Assistance);  Comments  of  Chairman  Charlie  Parr,  at  

06:30-11:00, 43:45-45:00, Hearing on C.S.H.B. 357 (Rules) Before the Sen. Health,  

Educ. & Soc. Servs. Comm., 13th Leg., 1st Sess. (May  7, 1982) (discussing cuts to  

                                                                                            

Medicaid benefits granted to individuals prior to a full federal disability determination  

                                                                                                    

and proposal to increase amount of Interim Assistance granted to cover medical bills  

prior to final determination).  



           54        Moore , 714 P.2d at 1287.  



           55        See supra note 49.  



                                                                -  17 -                                                          7001
  


----------------------- Page 18-----------------------

amended  since  its  codification,  but  nothing  in  the  later  legislative  history  alters  its  



broadly inclusive purpose.  



                                                                                                          

                    Also aiding our analysis is the rule "that a remedial statute is to be liberally  



                                                       56  

construed to effectuate its purposes."    Federal courts have recognized that the Social  



                                                                                                  57  

                                                                                                      We recognize the  

Security Act is remedial and must therefore be liberally construed.  



same remedial purposes in Alaska's interim assistance program, which - as part of  



                                                                  

Alaska's adult public assistance statutes - is intended "to furnish financial assistance  



                                                                                   

as far as practicable to needy aged, blind, and disabled persons, and to help them attain  

self-support and or self-care."58  



                    The Department's interpretation of 7 AAC 40.180 to include only steps one,  



                                                                                                        

two, and three of the SSI analysis in determining eligibility for interim assistance would  



                                                              

render an entire category of persons who are eligible for SSI - those deemed disabled  



                                                      

at step five - ineligible for interim assistance.  While the Department asserts that "[n]o  



argument  or  findings  have  been  made  in  this  case  to  support  a  theory  that  [its]  



                      

interpretation  of interim assistance actually results in an under-inclusive granting of  



          56        State ex rel. Smith v. Tyonek Timber, Inc.                    , 680 P.2d 1148, 1157 (Alaska  



1984).  



          57        See Doran v. Schweiker, 681 F.2d 605, 607 (9th Cir. 1982) ("The Social  

                                                                                                    

Security Act is remedial, to be construed liberally."); Haberman v. Finch , 418 F.2d 664,  

667  (2d  Cir.  1969)  ("[T]he  Social  Security  Act  is  a  remedial  statute,  to  be  broadly  

                                                                                                            

construed and liberally applied."); see also Granberg v. Bowen , 716 F.Supp. 874, 878  

                                                                  

(W.D.Pa.  1989)  (stating  that  the  Supplemental  Security  Income  program  "is  to  be  

construed liberally to further its remedial purposes").  



          58        AS 47.25.590(b) (emphasis added).  



                                                            -  18 -                                                      7001
  


----------------------- Page 19-----------------------

                                                                      

interim assistance benefits to individuals later adjudicated disabled by SSI," such under- 

inclusion is an inevitable result of the Department's interpretation.59  



                                                                           

                    The Department is certainly correct that it is consistent with AS 47.25.455  



                                                                                                            60 

                                                                                                               by the Social  

to limit interim assistance benefits to those "likely to be found disabled" 



                                                                            

Security Administration for purposes of SSI and that, in doing so, it need not exactly  



                                                        

replicate the entire set of procedures the Administration employs to determine eligibility  



                                                                              

for the federal program.  However, the Department may not exclude from eligibility for  



                                                                                                                 61  

                                                                                                                     We leave  

interim assistance the entire category of persons eligible for SSI at step five. 



                                                                                             

it  to  the  Department  to  decide  in  the  first  instance  how  it  will  satisfy  the  statutory  



mandate.  



          59        Counsel for the Department suggested at oral argument before us that its  



three-step application of 7 AAC 40.180 effectively incorporates the substance of steps  

                                                                                                   

four  and  five  because  subsection  (c)(4)  provides  that  "[i]n  determining  whether  an  

applicant's disability meets the criteria set out in (b)(1)(B) of this section" (which is  

essentially step three of the SSI analysis), "the department will consider whether . . . the  

                                                                                                                              

applicant can perform any other work, including sedentary work."  But the SSI analysis  

                                                  

explicitly excludes consideration of vocational factors, such as the ability to perform  

                                                                                                  

other work, at step three.  20 C.F.R.  416.920(d) (2014) ("If you have an impairment(s)  

                                                       

which meets the duration requirement and is listed in appendix 1 or is equal to a listed  

impairment(s), we will find you disabled without considering your age, education, and  

                                    

work experience.") (emphasis added). Under the Department's interpretation, therefore,  

                                                           

consideration of vocational factors could only serve to exclude from state benefits those  

who would be entitled to federal benefits at step three.  



          60        7 AAC 40.180.  



          61  

                                                                                                        

                    Gross also argues that, by deciding his case based on a new interpretation  

                                                                                                           

of  7  AAC  40.180  imposed  by  the  commissioner  after  the  hearing,  the  Department  

violated his due process rights.  Because we decide today that fuller consideration of  

Gross's case is required under AS 47.25.455, we do not reach his due process claim.  



                                                             -  19 -                                                       7001
  


----------------------- Page 20-----------------------

V.                          CONCLUSION  



                                                        We AFFIRM the superior court's decision in part, REVERSE it in part, and                                      



REMAND to the Department for proceedings consistent with this opinion.  



                                                                                                                                                                                           - 20 -                                                                                                                                                     7001
  

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