Colorado TANF Recipients Win Due Process Challenge to Sanction Notices

From July 2001 Welfare News

On July 5, 2001 a Colorado appellate court handed a resounding victory to TANF recipients when it ruled unanimously that the Adams County welfare agency’s TANF sanction notices violate procedural due process requirements. The Court of Appeals affirmed the decision of the lower court which had declared the notices constitutionally inadequate, enjoined their use, ordered reversal and removal of sanctions based on the inadequate notices and ordered restitution of benefits withheld under the inadequate notices. The case, Weston v. Cassata, is a major victory for the plaintiff class and appears to be the first appellate decision to address the legal issue of whether TANF recipients have a constitutionally protected property interest in TANF benefits when the state TANF statute provides that there is "no entitlement." The court concluded that this language does not preclude a finding of a protected property interest when other state statutes require that assistance be provided to those who meet statutory criteria. Its decision on this point will be very useful if a similar issue arises in other states with "no entitlement" language.

Background:

The complaint was originally filed as a class action against the Denver County and Adams County welfare agencies and the state welfare agency to challenge sanction notices used by the counties at various times since July 1997. Denver County then settled with the plaintiffs, adopted new notices, and agreed to restore lost benefits and reverse illegal sanctions. Denver County reportedly paid 1,900 families some $1.2 million.

The challenged notices were issued by the county using computer-generated text developed by the state agency. In preparing individual sanction notices, county workers selected standard messages from the state’s computer system but did not include case specific information. One of the challenged defects was that the notices did not specify the particular conduct that led to the sanction. For example, one set of notices simply said that the individual failed to cooperate with either the "works requirement, child support requirement, or immunization requirement of the Colorado works program."

The notices had other defects: they failed to cite relevant county and state policy, to provide the amount of the sanctions, and included inaccurate information about the appeal time. Although binding administrative decisions had found the notices deficient, the county had refused to take corrective action. The lower court issued a favorable decision finding that the notices violate federal and state due process, and the county defendants appealed. The state agency defendants did not appeal.

The Court of Appeals decision:

In considering the constitutional claim, the court turned first to the county’s argument that plaintiffs did not have a constitutionally protected property interest in TANF benefits because the federal and state welfare statutes contain language that there is "no entitlement" to benefits. While the 1996 federal law eliminated an individual’s absolute entitlement to benefits, the court found that the new block grant structure meant that the federal government would provide funds to the states if they were available and the state met certain conditions. Once a state receives block grant funds "for the express purpose of distribution as welfare benefits, welfare recipients will receive the money if they comply with the statutory standards." Further, "once welfare recipients have complied with the statutory standards and have begun receiving welfare benefits, the right to welfare benefits is a property right that cannot be compromised without procedural due process protections." The court described the due process right under the block grant structure as not involving a guarantee of receiving benefits but rather as a guarantee that if and when a benefit is granted, the government will use a decisionmaking process that will correctly apply the eligibility rules to an individual’s case.

Having concluded that plaintiffs have due process rights, the court examined the notices. It had no trouble agreeing with the lower court that the notices failed to meet the minimum standards for notice set out in state regulations and therefore were constitutionally inadequate.

The court also rejected other arguments raised by the county. It found that the county defendants were "persons" for purposes of 42 U.S.C. §1983, since they were responsible for implementing and enforcing the state statute. The court also rejected the argument that plaintiffs had failed to exhaust administrative remedies. It emphasized the principle that exhaustion is not required when the agency will not provide the requested relief and when the defendant seeks to avoid judicial review. Although individuals who appealed a sanction were reinstated, the court concluded that because individuals were reinstated, there was no possibility of judicial review of the adequacy of notices. Furthermore, the county refused to correct the inadequate notices even when administrative decisions found them inadequate. This case, brought as a class action, sought systemic relief, which was broader than the relief available in the administrative process.

After the lower court decision, Adams County reportedly paid over $500,000 to some 900 welfare families. It is not clear whether the defendant will appeal the latest decision.

Weston is a good example of the growing involvement of the private bar in welfare litigation. Plaintiffs were represented in the trial court and on appeal by private firms. The firms involved in the appeal are Davis, Graham & Stubbs, LLP; Hoffman Reilley Pozner & Williamson, LLP, Law Offices of Kimberley E. Ghiselli, LLC; Faegre & Benson. These firms have contributed their extensive litigation experience, worked closely with advocates, and achieved a significant victory for Colorado low-income families. Maureen Farrell of the Colorado Center on Law and Policy (msfarrell@qwest.net) has also worked on the case. The Welfare Law Center extends its congratulations to all those who involved in this victory.

The July 5, 2001 decision is available on the web at http://www.cobar.org/coappcts/ca2001/ct07052.htm.

Other related developments:

Colorado advocates are continuing their efforts to get the state agency to improve its welfare notices. They recently succeeded in defeating the state’s attempt to delete from its regulation the specific requirements as to the content of notices and instead to leave it to the counties to comply with due process.