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New Hampshire Supreme Court: Children’s SSI Is Not Income for the Whole Family

By Kay E. Drought & Ruth D. Heintz mother.jpg

Temporary Assistance for Needy Families (TANF) is a lifeline for many of our clients. While even the maximum benefit amounts are shockingly low, TANF can be indispensable for a family temporarily in need. A single parent may be in the workforce and lose a job due to a child being sick one too many days. Unemployment benefits may be available for a time, but when eligibility runs out, only TANF is left. Finding and maintaining employment in a rural state with little public transportation outside the few cities is extremely difficult without a reliable car. Subsidized housing is scarce, and the wait for a housing voucher can be a decade. Situations such as these are why TANF exists and must remain available. TANF is designed to “provide assistance to needy families so that children can be cared for in their own homes or in the homes of relatives.”

A State Legislature Takes Aim to Reduce TANF Spending

When an indigent family applied for TANF in New Hampshire before 2012, any household member who received Supplemental Security Income (SSI) was excluded from the TANF “assistance group” before the state Department of Health and Human Services determined TANF eligibility. Neither the individuals who received SSI nor their SSI dollars were part of the TANF eligibility calculation. They could use their SSI funds to support their unique needs as persons with severe disabilities. The rest of the family was eligible for and could rely on TANF to pay for rent, clothing, utilities, food, and other general family costs.

This scenario changed dramatically in January 2012 when the New Hampshire state legislature passed Senate Bill 198, which was intended to save the state a total of $8 million per year. S.B. 198 amended state law so that individuals receiving SSI were no longer excluded from the TANF assistance group.

Passage of S.B. 198 was based at least in part on the significant, and erroneous, belief that certain welfare recipients had been double-dipping. The New Hampshire House Finance Committee Majority Report incorrectly stated that recipients of state supplemental assistance or federal SSI had been allowed to “double dip” in public assistance. In fact, by excluding those individuals from a TANF assistance group under previous law and policy, New Hampshire ensured that each would properly receive benefits from the specific program—SSI, state supplemental assistance, or TANF—to which that individual was entitled.

The following year, the state adopted an administrative rule, Rule He-W 654.04(c), purportedly to authorize it to count SSI as “unearned income” for TANF purposes. By state statute and administrative rule, SSI recipients (both children and adults) were included as members of the TANF “assistance group,” and their SSI was counted dollar-for-dollar as assistance group income.

A Mom with Six Kids Seeks Help

Carrie Hendrick, the mother of six children, was directly affected by S.B. 198 and the state’s policy changes. Hendrick had been receiving a state TANF grant of $854 per month for her family of seven. When two of her sons were found eligible for children’s SSI due to their low income and severe disabilities, their SSI was included as TANF assistance group income, and Hendrick’s family was found ineligible for any TANF. Without TANF, Hendrick had no cash income to meet the most basic needs, including shelter and utilities, for the other five household members. Yet, as the representative payee of her two children receiving SSI, Hendrick had a legal duty under federal law to use the SSI only for the use and benefit of the two children whose severe disabilities had qualified them for SSI.

New Hampshire Legal Assistance filed suit on Hendrick’s behalf in our state superior court on June 10, 2014. To the state’s policy we raised both state and federal challenges, including a challenge to the state’s administrative rule.

Later that summer, another mom, Jamie Birmingham, came to us after her TANF grant had been reduced from $676 per month to $22 per month when one of her children was found eligible for SSI. Birmingham and her children joined the lawsuit as the second group of named plaintiffs.

Hendrick, Birmingham, and their children brought the following state and federal law claims in their putative class action lawsuit:

Support Comes from Within and Outside New Hampshire

Legal aid attorneys in other states had obtained preliminary federal court decisions in the cases of V.R. v. Ohl and Eneliko v. Dreyfuss, based on the same principles New Hampshire Legal Assistance was advocating. In these cases the federal courts granted either a temporary restraining order or a preliminary injunction prohibiting a state agency’s inclusion of a child’s SSI benefits in determining a household’s eligibility for TANF. In both cases the state agency stopped the illegal practice following the preliminary orders, and therefore the federal district courts were not required to make a final decision on the merits.

We also had a very helpful decision in which the New Hampshire Supreme Court recognized the unique nature of SSI benefits. The court decided that a parent’s child support, paid to support an adult son with disabilities, should not be reduced due to the son’s SSI because “[t]hese benefits reflect a determination by Congress that the government should assist certain persons with disabilities in meeting their increased costs of living.” The court “decline[d] to adopt a rule that has the potential to deduct from an SSI recipient’s already limited resources.”

Marc Cohan and Gina Mannix of the National Center for Law and Economic Justice assisted and advised us. To interpret decades of case law on public benefits, we needed to understand how TANF and its predecessor, Aid to Families with Dependent Children, considered both social security and SSI. Mannix led us through that thicket.

“Class” Litigation Is Filed Without Class Certification

We filed Hendrick as a putative class action. With the state attorney general’s office we explored whether the parties would need to litigate class certification. We ultimately entered into a stipulation in lieu of class certification, and the trial court approved the stipulation. The parties stipulated, among other points, that a decision in favor of the plaintiffs would apply prospectively to other families with children receiving SSI.

We also agreed to litigate the case on summary judgment and to attempt to reach agreement on stipulated facts. This strategy—cross motions for summary judgment—eliminated the need for discovery and allowed us to focus on the legal issues.

The Trial Court Upholds the State’s Policy

Following cross motions for summary judgment, the trial court issued an order in favor of the state. The trial court relied heavily on Sneed v. Saenz, which upheld California’s inclusion of a child’s social security dependents benefits in TANF family income. The trial court also relied on Bowen v. Gilliard, where the U.S. Supreme Court upheld the inclusion of children who are the subjects of court-ordered child support payments as mandatory household members under the former Aid to Families with Dependent Children program. The trial court in our case said that nothing was stopping the children’s mother from using all of the child’s SSI only for that child even if that SSI is included in the calculation of TANF benefits. The trial court rejected the Ohl and Eneliko federal court decisions as “preliminary” and not authoritative.

The plaintiffs’ briefs had explained the critical difference between children’s SSI as supplemental income for low-income children with severe disabilities to help with their extraordinary needs versus social security retirement or disability benefits, which a child receives based on a parent’s earnings. The trial court order did not appear to appreciate this critical distinction.

Amici Assist on Appeal

The plaintiffs appealed to the New Hampshire Supreme Court and raised the following legal questions:

  1. Is it unlawful for the state to terminate, reduce, or deny a household’s TANF because a child with disabilities in the household receives SSI? 
  2. Specifically, does inclusion of the child’s SSI as TANF assistance group income violate the federal Social Security Act and regulations?
  3. Is the child’s SSI “income that is not legally available” to the TANF “assistance group” under [New Hampshire Revised Statutes Annotated] 167:80[(IV)](g)?
  4. Is state administrative rule He-W 654.04(c), which requires inclusion of the child’s SSI in the income of the TANF assistance group, invalid under [New Hampshire Revised Statutes Annotated] 541-A:24?

Disability Rights Center–NH, the state’s Protection and Advocacy organization, filed an amicus curiae brief in support of the plaintiffs’ position in the appeal. Disability Rights Center–NH explained—on behalf of itself, the New Hampshire Association of Special Education Administrators, and the National Disability Rights Network—that the decision in Hendrick would “significantly affect[ ] the well-being and resources of the neediest children with disabilities and their families in this State.” The center’s brief explained that “families raising children with disabilities face overwhelming economic hardships compared with other families.” The center further explained that SSI for children “is a unique federal program administered by the Social Security Administration, specifically intended to alleviate the grave disparities and economic hardships borne by the poorest families who care for children with severe disabilities.... SSI payments are not intended to serve as a primary source of income for the rest of the family.” Disability Rights Center–NH shared its own expertise:

"In [our] experience, children with the most severe disabilities are far more likely to require frequent medical appointments (and related transportation costs and problems), therapeutic needs beyond those provided by Medicaid or school districts, and difficulty accessing free or low-cost sources of child care, because of the inability or unwillingness of providers to take on children with significant needs [internal footnote omitted]."

Disability Rights Center–NH explained how difficult even qualifying for SSI is for children. For instance, in New Hampshire 28,978 children had disabilities serious enough to require an individualized education program from a school district, but only 2,613 children in New Hampshire received SSI.

The Disability Rights Center–NH amicus brief, read in conjunction with the appellants’ briefs, presented a helpful guide for the court on the TANF and SSI landscape. The appellants and amici explained that the children received, at most, an SSI grant of $654 per month. The TANF grant for a family of seven, before the two children received SSI, was only $847.80 per month. Going into the oral argument, the New Hampshire Supreme Court was apprised of how meager the TANF and SSI grants were.

The New Hampshire Supreme Court Invites the Federal Government to Weigh in

A key point for the oral argument was the purpose of the federal law. We argued that the state law had to yield to federal law because our state law and policy frustrated the intent of federal law. At the January 13, 2016, oral argument before the New Hampshire Supreme Court, several of the justices expressed interest in the federal government’s perspective on the case and wondered why the federal government was not involved in light of the plaintiffs’ federal law claims. 

After the oral argument, the New Hampshire Supreme Court issued an order inviting the U.S. solicitor general to file an amicus brief setting forth the United States’ views on the federal questions:

  1. Is it unlawful for the state to terminate, reduce, or deny a household’s TANF because a child with disabilities in the household receives SSI?
  2. Does inclusion of the child’s SSI as TANF assistance group income violate the federal Social Security Act and regulations?

The plaintiffs received on March 8, 2016, a copy of correspondence from the U.S. Department of Justice to the clerk of the New Hampshire Supreme Court. The letter explained that the "Solicitor General is currently reviewing the Court’s invitation to submit a brief in this matter, in consultation with the Social Security Administration, the U.S. Department of Health and Human Services, and interested components of the U.S. Department of Justice. We also intend to schedule conversations with the parties later this month to afford them an opportunity to provide their views on the questions set forth above…. We currently expect to be in a position to submit a brief as amicus curiae, assuming one is authorized by the Solicitor General, by May 6, 2016."

New Hampshire Legal Assistance Visits the U.S. Department of Justice

As plaintiffs’ counsel, we traveled to Washington, D.C., to meet in person with representatives of the federal government. The executive director of Disability Rights Center–NH agreed to accompany us. The three of us met for one hour on March 23, 2016, with six representatives of the Justice Department, including one assistant to the solicitor general and two members of the civil division appellate staff. We were joined by phone by three attorneys from the Social Security Administration’s Office of the General Counsel, two members of the U.S. Department of Health and Human Services’ Office of the General Counsel, and the assistant U.S. attorney for the District of New Hampshire.

We argued that the United States should file an amicus brief and that its brief should support the plaintiffs. Our discussion with the federal attorneys seemed like an intense oral argument. The three of us responded to numerous questions. The federal government attorneys were extremely well prepared and asked us probing questions about our case and the legal theories. After one hour, they excused us so that they could telephone the New Hampshire state attorney general’s representatives to give them the same opportunity. The federal attorneys were noncommittal about their position.    

The Federal Government Weighs in

Legal Assistance and the New Hampshire attorney general’s office were notified by the Justice Department on May 5, 2016, that “[t]he Solicitor General has authorized amicus participation in the case.” Reading the title “BRIEF FOR THE UNITED STATES AS AMICUS CURIAE IN SUPPORT OF THE PLAINTIFFS-APPELLANTS” was thrilling. The federal government had committed to supporting our clients! The amicus brief was extremely well written, thorough, and persuasive. The Justice Department explained that, “unlike certain other federal benefits—including benefits provided under Title II of the Social Security Act—SSI funds may not be used to pay for the distinct needs of other household members” (internal citation omitted). The Justice Department explained that “the representative payee for a disabled child receiving SSI cannot use the SSI benefits to support other members of the child’s family or household” (internal citation omitted), yet “the core premise of the [New Hampshire Department of Health and Human Services’] rule is that a disabled child’s SSI payment constitutes cash available to the child’s entire household.” New Hampshire’s rule contravenes federal requirements and is therefore invalid pursuant to the supremacy clause of the U.S. Constitution, the Justice Department concluded. Even though states “enjoy broad flexibility to design their own TANF plans, this flexibility does not permit States to adopt rules that conflict with other federal programs.” 

The Justice Department also noted the preliminary conclusions of the two federal courts in Ohl and Eneliko, which considered the same question presented by this case and had found that those states’ laws were an obstacle to and in direct conflict with federal law requiring the representative payee to spend the SSI benefits solely for the use and benefit of the SSI beneficiary.

The Justice Department recommended that the New Hampshire Supreme Court reverse the order of the trial court and rule that New Hampshire Department of Health and Human Services Rule He-W 654.04(c) conflicts with federal law and is therefore preempted.

The New Hampshire Supreme Court Rules in Favor of the Representative Payee Mothers and Their Children

In a unanimous decision the New Hampshire Supreme Court agreed with the plaintiffs’ arguments, so elegantly presented by the Justice Department: “Congress intended the SSI program to provide an additional source of federal funds, separate from funds available to needy families with children under the TANF program, to provide disabled children with the minimum amount necessary to satisfy their basic needs.” The court embraced the reasoning and preliminary conclusions of the federal courts in Ohl and Eneliko and rejected Sneed v. Saenz because the federal regulations governing social security dependents benefits are “substantively different” from those for SSI benefits as they have different purposes.

The New Hampshire Supreme Court invalidated the New Hampshire Department of Health and Human Services administrative rule: “We agree with the Solicitor General that the Supremacy Clause does not permit the State to redirect federal benefits” as required by the state rule. The court continued: “The rule, by counting a disabled child’s SSI benefits as income available to the child’s ‘assistance group,’ treats the child’s benefits as a source of income for the entire household…. [T]he rule ‘stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.’” The court reversed and remanded the trial court decision.

On remand, the parties quickly reached agreement on a final judgment and an award of attorney fees. The trial court approved and entered the proposed court orders.

Hendrick Has a Ripple Effect on TANF and Other Public Benefits Programs

The New Hampshire Department of Health and Human Services responded promptly to the August 2016 decision of the New Hampshire Supreme Court. The agency stopped counting children’s SSI as TANF assistance group income. The department adopted first a temporary, and then a final, administrative rule, Rule He-W 654.04(d), to make clear that children’s SSI could not be included in TANF group income. The department also notified past TANF applicants of the change, so that those families could be encouraged to apply even if their children’s SSI had meant that they were deemed ineligible for TANF in the past.

Other state agencies responded to the New Hampshire Supreme Court ruling. For example, our state’s fuel-assistance program no longer considers children’s SSI as family income. New Hampshire Legal Assistance continues to monitor other public benefits programs to make sure that Hendrick is fully implemented even beyond the specific context of the case.

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