V. Lor v. Dept. of Public Welfare (Majority Opinion)
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IN THE COMMONWEALTH COURT OF PENNSYLVANIA Vangnou Lor and Vang X. Lor, Petitioners v. Department of Public Welfare, Respondent BEFORE: : : : : : : : No. 1365 C.D. 2007 Submitted: February 1, 2008 HONORABLE DORIS A. SMITH-RIBNER, Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE JIM FLAHERTY, Senior Judge OPINION NOT REPORTED MEMORANDUM OPINION BY JUDGE SMITH-RIBNER FILED: April 24, 2008 Vangnou Lor (Vangnou) and his wife, Vang X. Lor (Vang), petition pro se to review the June 14, 2007 final order of the Secretary of the Department of Public Welfare (Department) that upheld the order of the Bureau of Hearings and Appeals (Bureau) denying on remand Vang's appeal from the Department's notices of claims for overpayments of cash assistance (CA) and food stamp (FS) benefits. The Lors argue that the Secretary's order is not supported by substantial, competent evidence and deprived them of their due process rights. Vang received CA and FS benefits for a nine-person household. In April 2001 Vangnou was laid off from work with Kelly Services. The Lancaster County Assistance Office (CAO) then removed Vang from the monthly reporting system. Vangnou returned to work for Kelly Services in May 2001 and reported his employment to the CAO in June 2001. The CAO, however, did not re-enroll Vang in the monthly reporting system. During a case review in 2002, the CAO discovered that Vang's benefits were not being adjusted based on Vangnou's wages from Kelly Services. Based on Vangnou's wage information obtained from Kelly Services, the CAO determined that Vang was entitled to $460.98 in CA benefits from June 14, 2001 to February 2002 but was paid $7488 during that period with an overpayment of $7027.02 and that she was entitled to $656 in FS benefits from August 2001 to February 2002 but was paid $5098 with an overpayment of $4442. During a case review in March 2003, the CAO further discovered that the Lors' daughter, Mai See, who turned eighteen in March 2002, was enrolled at the Harrisburg Area Community College as a full-time student in August 2002, which made her a household member ineligible to receive FS benefits. The CAO found an overpayment of $832 in FS from September 1, 2002 to April 30, 2003. After rescinding previous notices of overpayment claims, the Office of Inspector General (OIG) sent Vang new overpayment claim notices in September 2003. The Department's witnesses admitted that the overpayments resulted from the CAO's errors. The Administrative Law Judge (ALJ) determined that the Department's overpayment claims were correct and that Vang must repay the amount. The Bureau affirmed, but the Secretary set aside the Bureau's order and remanded the matter for the Bureau to accept from the Department copies of cancelled CA payment checks, to determine whether the twenty-percent earned income deduction was given to Vang in view of the CAO's administrative errors and to determine whether Mai See met any of the college student exemptions for FS eligibility under 7 C.F.R. §273.5. At a remand hearing, the Department's witnesses testified that the Department pays benefits through an EBT (Electronic Benefit Transfer) and does not issue checks. The Department presented EBT transcripts after the hearing. The ALJ found that Vang received and used CA benefits as claimed by the Department, that the Department allowed for the earned 2 income deductions and that Mai See did not meet any of the college student exemptions. The ALJ again denied the appeal, the Bureau affirmed and the Secretary denied Vang's request for reconsideration. In a memorandum opinion filed in Lor v. Department of Public Welfare (Pa. Cmwlth., No. 1079 C.D. 2005, filed January 3, 2006), this Court reversed the Secretary's order and remanded "for the conduct of a hearing with an orderly presentation of evidence by the Department, respecting the due process rights of the Lors." Slip Op. at 8. The Court concluded: The manner in which [EBT transcripts] were admitted into the record precluded any questioning of a Department witness as to the manner of their preparation or the details of the information included in them (such as identification of the location of ATM machines involved). There may be reasonable answers to the questions raised by the Lors, but they do not appear in the present record. Id. at 7 - 8. At remand hearings on May 1 and July 10, 2006, Vang claimed that she did not receive CA since August 2001 and that although she received some FS during the period in question she did not receive FS for Mai See after she turned eighteen in March 2002. Vang submitted 2006 notices from the United States Department of Treasury intercepting $3806 from the Lors' federal tax refund (Exhibit A-11) and $27 from Mai See's federal tax refund (Exhibit A-12) for the CA and FS overpayments. Vang contended that the overpayment claims were racially motivated, that she did not use the EBT card for CA during the overpayment period and that the EBT transaction transcripts were just "a piece of paper" and cannot constitute substantial evidence supporting the overpayment claims. Certified Record, N.T., July 10, 2006 Hearing, p. 27. 3 The Department presented an EBT transcript of a transaction history for Vang's account from June 2001 through March 2002, which listed the amount of each CA deposit, the amount of each withdrawal from Vang's account, the time of the transactions and the locations of ATMs where the transactions took place (Exhibit C-22). In responding to questions raised by Vang through interpretation by her daughter, Mai Xiong, the Department's witnesses testified that benefits are paid through the EBT system, not by checks; that the EBT accounts are managed by J.P. Morgan; that the transaction history documents come from the system administrator's internal process, which is an electronic exchange of information between the Department and J.P. Morgan; and that the CAO used Vangnou's wage information obtained from Kelly Services to calculate the CA overpayment. The Department's witnesses explained that CA benefits can be withdrawn at an ATM or used at a store while FS benefits can be used only at a store and that benefits paid to Vang were not returned to the Department as unused within sixty days. They stated that there were enough funds in her account on June 15, 2001 for her to withdraw $470 that day, as shown in the computer printout listing all the CA and FS transactions and funds in Vang's account from May 1 through June 16, 2001 (Exhibit C-23) and that different starting dates for the CA and FS overpayments are due to different budgeting methods used in calculating CA and FS benefits. Also, Mai See was eligible for FS when she turned eighteen as she was still in high school; because she graduated in June 2002 and was enrolled at the college in August she should have been removed from FS effective September 2002. The CAO found out about her enrollment in February 2003 and removed her from FS after giving proper notice. The Department's document (Exhibit C-19) showed that she received FS during the period in question. 4 The ALJ found on remand that the Department could not produce cancelled benefit checks because it had not issued checks to pay benefits since implementation of the EBT system. Accepting the testimony of the Department's witnesses as credible, the ALJ found that the EBT transaction transcripts are used in the course of the Department's everyday business, are reliable and trustworthy and corroborate each other providing consistent information. The ALJ also found that there was no indication that anyone other than the Lors could have used their EBT card; that benefits were not returned to the Department as unused within sixty days; that Mai See did not meet any of the college student exemptions and received FS benefits during the period in question; and that the Department gave Vang allowable earned income deductions in calculating the overpayments. The ALJ discerned no racially motivated actions or unfair treatment of the Lors and denied their appeal. The Bureau affirmed, and the Secretary issued a final order affirming the Bureau's order. The Secretary stated that while the Department is sympathetic it does not have discretion to disregard federal and state regulations requiring it to recover all incorrectly paid benefits, regardless of the cause of incorrect payments. The Department is required to collect overpaid CA and FS benefits even where the overpayment resulted from the agency's error. §273.18; 55 Pa. Code §§183.121(3), 255.4 and 501.12. See 7 C.F.R. See also Ishler v. Department of Public Welfare, 518 A.2d 596, 598 (Pa. Cmwlth. 1986) (holding that the Department is entitled to recoupment of over-issued food stamps caused by its administrative error "in view of the mandatory nature of the federal regulations [and] the possible jeopardy to the entire program in Pennsylvania if the Department fails to act in such circumstances"). The Lors argue that the ALJ erred in concluding that the Department presented substantial, competent evidence to 5 support the overpayment claims and in failing to consider their evidence. The Department counters that it is required to recover the overpayments regardless of the cause of the overpayments and that its documents constitute reliable business records supporting the claims.1 Commonwealth agencies are not bound by technical evidentiary rules, and "all relevant evidence of reasonably probative value may be received" after permitting "[r]easonable examination and cross-examination. ¦" Section 505 of the Administrative Agency Law, 2 Pa. C.S. §505. An agency may consider hearsay evidence if it is corroborated by other competent evidence. A.Y. v. Department of Public Welfare, Allegheny County Children & Youth Services, 537 Pa. 116, 641 A.2d 1148 (1994). The Uniform Business Records as Evidence Act, 42 Pa. C.S. §6108, provides in relevant part: (b) General Rule. A record of an act, condition or event shall, insofar as relevant, be competent evidence if the custodian or other qualified witness testifies to its identity and the mode of its preparation, and if it was made in the regular course of business at or near the time of the act, condition or event, and if, in the opinion of the tribunal, the sources of information, method and time of preparation were such as to justify its admission. The tribunal has discretion to determine whether the source of information, method and time of preparation justifies its admission. Appeal of Chartiers Valley School District, 447 A.2d 317 (Pa. Cmwlth. 1982). The CAO's income maintenance caseworker supervisor Lorraine Gutierrez and income maintenance administrator Robert Patrick testified regarding 1 The Court's review is limited to determining whether an error of law was committed, constitutional rights were violated, or necessary findings of fact are supported by substantial evidence. Gray v. Department of Public Welfare, 903 A.2d 647 (Pa. Cmwlth. 2006). 6 the manner in which the Department extracts information about EBT deposits and utilization of benefits through the technological interface system managed by J.P. Morgan. Accepting their testimony as credible, the ALJ found that the Department uses EBT transcripts in its everyday normal business practice and that those documents were reliable and trustworthy. The ALJ's findings establish that the documents presented by the Department are business records and are admissible as competent evidence to support the overpayment claims. Compare Appeal of Chartiers Valley School District, 447 A.2d at 324 (concluding that computer studies undertaken primarily as a development model, "not for the compilation of data to be used by the county for any of its normal governmental functions," were not admissible business records) (emphasis in original). The Lors again raise the questions they raised at the remand hearing.2 They contend that the Department erred in denying the request for copies of eligibility confirmation notices, which would establish the amount of CA benefit payments. They indicate that Mai See was removed from the FS household as of March 2002 when she turned eighteen and that the CA overpayment of $7027.02 does not match the total MAC transaction of $7490 shown in the transaction transcripts. The Lors reviewed the EBT transaction transcripts before the remand hearing, and Vang admitted that she received an EBT card and a confidential PIN for electronic benefit transactions and that only she and her husband had access. 2 They asked: why do the EBT transaction transcripts show different CA monthly benefits during the period in question; where did the CAO obtain Vangnou's wage information; why does the starting date for the CA and FS overpayment periods differ; why is there no problem with the calculation of her CA benefits after February 2002 when the CAO discovered its failure to adjust benefits later in July 2002; why did the amount of overpayments increase in each overpayment claim notice; why did it take the CAO one year to find out its mistake; and how could they withdraw $470 on June 15, 2001 when the Department deposited only $468 that day. 7 In response to Vang's question regarding the $470 withdrawal on June 15, 2001, Gutierrez referred to Exhibit 23 and explained that $102.50 in CA benefits was deposited into Vang's account on May 14, 2001, leaving a balance of at least $2.50 when $100 was withdrawn from her account on May 31, and that $470 could be withdrawn on June 15 because $468 was deposited into her account earlier on June 15. As to the difference between the total CA benefit payment amount of $7490 from June 14, 2001 to February 2002 and the CA overpayment claim of $7027.02, Gutierrez explained that the Lors were eligible for CA benefits of $260.64 in June 2001 and $200.34 in July 2001 based on their income. Gutierrez and the income maintenance supervisor Janice Tompers further explained that the different starting dates for the CA and FS overpayment period were due to different methods of calculating CA and FS benefits. The Department calculates CA benefits using "prospective budgeting," which is defined as "[t]he computation of the monthly assistance payment based on the best estimate of income and circumstances which will exist in the calendar month in which the monthly assistance payment is made." 55 Pa. Code §183.2. FS benefits are calculated under "retrospective budgeting," i.e., "[t]he computation of the amount of the assistance payment issued in the payment month based on actual income and circumstances which existed in the budget month." Id. Under this method, "[t]he budget month precedes the payment month by approximately 2 months." Id. Also, the CA overpayment period ended in February 2002 because the CAO began to adjust Vang's CA benefits during the case review in February 2002, although it did not discover the overpayment until July. The different monthly benefit amounts for September/October 2001 were due to the increase of "the shelter allowances" given in October. Certified Record, N.T., July 10, 2006 Hearing, p. 44. 8 Under federal regulations, an individual who is enrolled at least halftime in an institution of higher learning is ineligible to participate in the FS program unless the individual qualifies for one of the college student exemptions. 7 C.F.R. §273.5(a). The Lors do not challenge the ALJ's findings that Mai See was enrolled at the college as a full-time student in August 2002 and that she did not meet any of the college student exemptions. The Department's documents clearly showed that FS benefits were paid for Mai See during the period in question. Further, the ALJ did not abuse his discretion in sustaining the Department's objections to the Lors' request for copies of eligibility determination forms as the forms were irrelevant in deciding whether the overpayment claims were correct. The Court's careful review of the record demonstrates that the Lors were given a full opportunity to examine the documents presented by the Department and to raise any questions that they wished during the remand hearing. The Department's witnesses adequately explained all of the inconsistencies in the Department's documents asserted by the Lors, and the ALJ thoroughly reviewed all of the evidence presented by the Lors in rendering his decision. The record shows no violation of the Lors' due process rights, and the Department's evidence found credible by the ALJ is sufficient to support the overpayment claims. The Court therefore affirms the Secretary's final order. DORIS A. SMITH-RIBNER, Judge 9 IN THE COMMONWEALTH COURT OF PENNSYLVANIA Vangnou Lor and Vang X. Lor, Petitioners v. Department of Public Welfare, Respondent : : : : : : : No. 1365 C.D. 2007 ORDER AND NOW, this 24th day of April, 2008, the Court affirms the final order of the Secretary of the Department of Public Welfare. DORIS A. SMITH-RIBNER, Judge
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