Marturello v. Angus

TACHA, Circuit Judge.

Appellant, the Secretary of Health and Human Services (HHS), appeals an order of the district court granting summary judgment in favor of the Plaintiff Amy Martu-rello and issuing a permanent injunction. On appeal, the Secretary of HHS contends that his policy, declaring a recipient who fails to file a monthly report of income received ineligible to receive benefits, is a reasonable interpretation of the Social Security Act, 42 U.S.C. §§ 601 et seq., and implementing federal regulations.- We reverse.

BACKGROUND

Congress established the Aid to Families with Dependent Children (AFDC) program as a cooperative federal-state effort that is designed to enable each state' to furnish financial assistance to needy children and their families. 42 U.S.C. § 602. Pursuant to a state plan, local authorities administer the AFDC program. Each state plan must conform to the requirements of the AFDC statute and its implementing regulations. Id. The federal statute requires, among other things, that each recipient file a monthly report of income received. Id. § 602(a)(14).

Marturello, a Utah AFDC recipient, began receiving AFDC assistance in December of 1981. In March of 1987, while she was receiving AFDC assistance, Marturello began earning approximately fifty dollars per month delivering newspapers. Martu-rello failed to file monthly reports of this income. In November of 1987, when the state agency discovered Marturello’s failure to report this income, it declared her ineligible to receive AFDC benefits for the months that she failed to file a report. The state agency subsequently informed Martu-rello that she would be required to pay back the benefits pursuant to the requirements of federal law.

After exhausting her administrative remedies, Marturello brought an action against the state agency in the United States District Court for the District of Utah. The state agency impleaded the Secretary of HHS as a third-party defendant. The district court granted summary judgment in favor of Marturello and issued an injunction enjoining the defendant from applying its sanction of ineligibility to AFDC recipients who fail to file monthly reports.

DISCUSSION

To resolve this appeal, we must determine what penalty Congress intended to impose on AFDC recipients who fail to file a report as required by 42 U.S.C. § 602(a)(14). To determine whether the penalty imposed by the agency in this case comports with Congress’ intent, we follow a two-step process. If the intent of Congress is clear from the plain language of the statute, then we must give effect to that intent and our inquiry ends. If, however, we find that the statute is silent or ambiguous, then we examine whether the Secretary’s interpretation of the statute is reasonable. See Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984).1

Section 602(a)(14) provides that “the State agency will require each family to which it furnishes aid to families with dependent children ... to report, as a condition to the continued receipt of such aid, ... each month to the State agency on — (i) the income received.” (Emphasis added.) The district court found that although § 602(a)(14) clearly requires a recipient to file a report of income received, the penalty provision of § 602(a)(8) makes it unclear what penalty should be imposed for a failure to file. Section 602(a)(8)(B)(i)(III) provides that the state agency shall not disregard any earned income if a person “failed without good cause to make a timely report (as prescribed by the state plan pursuant to paragraph (14)) to the State agency of earned income received in such month.” (Emphasis added.) The district court found that because “a person who fails to file any report at all also could be regarded as having failed to file a timely report ... an ambiguity exists under the *734statute as to whether the penalty imposed by section 602(a)(8) applies to the situation where no report at all is filed.”

After reviewing the plain language of the statute, we conclude that § 602(a)(14) unambiguously provides a specific penalty for the failure to file a report. Section 602(a)(14) contains one of several conditions of eligibility that a state is required to impose on all recipients of AFDC. The section states that a report including the amount of income received must be filed “as a condition to the continued receipt of such aid.” This section unambiguously applies to an individual who fails to file any report whatsoever. Most importantly, the word “condition” is not ambiguous in the context of § 602(a)(14). The language of the subsection unequivocally provides that a recipient can only continue to receive benefits if a report is filed. Any other reading of the statute would ignore the word “condition” and render it a nullity. “It would seem virtually tautological that when a statute imposes conditions or qualifications on any right or benefit granted therein, such prerequisites must be satisfied before any enforceable statutory entitlement can be said to exist.” Hill v. Ibarra, 954 F.2d 1516, 1522 (10th Cir.1992). Therefore, § 602(a)(14) clearly makes a recipient ineligible when the recipient fails to file a report including income earned.

We also conclude that § 602(a)(8) does not affect the unambiguous nature of § 602(a)(14). The two sections provide different penalties for two different- situations. Section 602(a)(8), on the one hand, imposes a penalty on individuals who, without good cause, fail to file a timely report. On the other hand, § 602(a)(14) applies when no report is filed at all. Further, whereas the focus of § 602(a)(14) is a family’s eligibility to receive aid, the focus of § 602(a)(8) is whether the state agency should disregard income earned by a recipient in determining thé amount of benefits to be paid. .The determination regarding the amount of benefits necessarily can be made only after an applicant or recipient is found to be eligible. Therefore, § 602(a)(8) is not applied until a recipient files a report within the contemplation of the statute and implementing regulations. No report was filed in this case for income received between March and November of 1987.

We therefore hold that the statute is unambiguous and that filing a report including the amount of income received is a condition to the receipt of benefits. Having determined that the statute is unambiguous, we must give effect to the clear intent of Congress. As articulated by the Eighth Circuit, “[technical requirements are conditions of eligibility under the law, and if conditions are not met, a payment to an ineligible family must be recovered.” Johnston v. Iowa Dep’t of Human Servs., 932 F.2d 1247, 1249 (8th Cir.1991) (reviewing an ineligibility ruling based on the failure of a recipient family’s primary wage earner to register for work with the state public employment office). Because Marturello failed to satisfy the condition of § 602(a)(14), she was ineligible to receive AFDC payments during the time period when shé failed to file a report including income earned. The order of the district court is REVERSED.

. Because we conclude that the statute is clear and unambiguous, we need not proceed to the secondary inquiry regarding the reasonableness of the agency's interpretation.