Legal Decisions: Wrongful Adoption

STATE OF MINNESOTA
COUNTY OF OLMSTED

IN THE DISTRICT COURT
THIRD JUDICIAL DISTRICT
CIVIL DIVISION

[Name deleted] Appellant
vs.
Minnesota Department of Human Services and Olmsted County Community Services,

ORDER AND MEMORANDUM

File No. [deleted]

Respondents.

Motions in the above-captioned matter came on for hearing before the undersigned judge on April 7, 1995.

Appellants were represented by Gary A. Debele, Minneapolis, Minnesota. Respondents were represented by Attorney Robert V. Sauer, Assistant Attorney General, State of Minnesota.

Upon the arguments and submissions of the parties, and upon all of the files, records, and proceedings herein, the Court makes the following

CONCLUSIONS OF LAW

1. The action taken by the Department of Human Services in determining that the state would not approve retroactive benefits is an administrative rule.

2. The Department did not follow the statutory rule making procedures in making that decision and it is therefore unenforceable.

3. Conclusion of law number 5 of the DECISION OF STATE AGENCY ON APPEAL dated 11-16-94, is therefore contrary to law and must be vacated.

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ORDER

1. The Order of the Commissioner of Human Services denying retroactive benefits to the appellants herein is rescinded. The matter is remanded for further proceedings consistent with this opinion.

2. The attached Memorandum is incorporated and made a part of this order.

Dated: August 4, 1995

BY THE COURT:
[signature]
Gerard W. Ring
Judge of District Court

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MEMORANDUM

This action involves Title IV-E adoption assistance, 42 U.S.C.673 (1991) (Social Security Act and Minn.Stat.259.67 (1994). The [name deleted] appealed from the order of the Commissioner of the Department of Human Services (DHS) which found them eligible for an adoption subsidy effective June 10, 1994. They contend their eligibility dates from the time of the finalization of the adoption of their daughter, [name deleted] in February 1983.

I.Standard of Review

A decision of an administrative agency may be reversed on appeal if the decision is:

(a) in violation of constitutional provisions; or
(b) in excess of the statutory authority or jurisdiction of the agency; or
(c) made upon unlawful procedure, or
(d) affected by other error of law; or
(e) unsupported by substantial evidence in view of the entire record as submitted; or
(f) arbitrary and capricious.

Minn.Stat. 14.69 (1994). Appellants have the burden of proof.
City of Moorhead v. Minnesota Pub. Util. Comm'n. 343 N.W. 2d 843, 849 (Minn. 1984).

II. Administrative Procedure

The policy adopted by DHS, as presented in Informational Bulletin No.93-68D, issued May 10, 1993, is as follows:

The effective date of the Adoption Assistance Agreement resulting from an affirmative fair hearing will be the date upon which the written appeal was received in the Appeals Division. The date of receipt is a consistent determinant with all appeals heard by the Department.

The Department has no statutory authority to pay retroactive monthly adoption assistance even though the U.S. Department of Health and Human Services agrees to participate in paying for retroactive benefits. Minnesota Statutes, section 259.40, subdivision 2,

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requires that an adoption assistance agreement must be entered into before the adoption is final. Without a valid preadoptive agreement, the Department has no other authority to pay adoption assistance.

The [name deleted] contend that this policy is a rule according to the Minnesota Administrative Procedure Act (APA), and should have been issued according rule-making procedures. Minnesota Statutes section 14.02 subd.4 defines a rule:

"Rule" means every agency statement of general applicability and future affect, including amendments, suspensions, and repeals of rules, adopted to implement or make specific the law enforced or administered by that agency or to govern its organization or procedure.

Any rule that an agency issues is subject to statutory, rule-making procedures. Minn.Stat. 14.05. Section. 14.03 subd.3 enumerates circumstances to which rule-making procedures do not apply, including "rules concerning only the internal management of the agency . . . that do not directly affect the rights of or procedures available to the public." Minn.Stat. 14.03 subd. 3(1). In determining whether a policy is a rule under the APA, the Court first looks to see if it falls within the general definition of a rule. Stony Ridge and Carlos View Terrace Ass'n v. Alexander, 353 N.W.2d 700, 703 (Minn Ct. App.1984). If the policy comes within the definition, the Court then determines whether any listed exceptions to the rule apply to the policy. Id.

Several Minnesota cases address the issue of determining what is a rule. In Stony Ridge and Carlos View, the court found that a policy of the Department of Natural Resources (DNR) concerning the selection of access sites for public waterways was not a rule, but a restatement of requirements enumerated in a statute. Id. at 703. In contrast, when an agency interprets a statutory term, the resulting policy is an interpretive rule, subject to rule-making procedures of the APA. SA-AG. Inc. v. Minn. Dept. of Transp., 447 N.W. 2d 1, 4-5 (Minn. Ct. App. 1989) (holding that agency's statement purporting to interpret statutory term "substantially in place" was an interpretive rule). Similarly, interpretive tools may have the legal authority of an interpretive rule only if they are adopted pursuant to APA rule-making procedures. Wenzel v.

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Meeker County Welfare Bd., 346 N. W. 2d 680, 683 (Minn. Ct.App.1984) (finding AFDC manual used by Board to interpret terms did not have force of rule without being adopted as such) . Finally, where agency policy purports to interpret a previously adopted agency rule, and that interpretation lacks support in the rule's language, the interpretation constitutes a separate rule which must be adopted to have effect. White Bear Lake Care Center v. Minn. Dept. of Pub. Welfare, 319 N.W.2d 7, 8-9 (Minn. 1982) (holding that agency's interpretation of its rule, which resulted in a practice of computing Medicaid cost change implementation on a per diem basis, constituted a different rule) .

Applying the definition of a rule to this statement of policy, I must conclude that it is a rule according to 14.02. The policy applies generally to all adoptive parents and has future effect. It was adopted to make specific its enforcement and implementation of Minn.Stat.259.67 and the federal Title IV-E adoption assistance fair hearing process set forth in ACF-PIQ-92-02 (June 25, 1992). Setting an effective date for benefits does not only concern the internal management of DHS, but directly affects rights of the public. It is unlike the Policy Statement in Stony Ridge. That statement set forth factors which should be considered in locating access to water ways. Nothing about those factors would include or eliminate any particular site. The policy in this case does affect the substantive rights of adoptive parents and in fact eliminates some claims while it includes others.

Respondents argue that the policy merely restates state law. If that is true, then of course it would not make any difference whether it is a rule or a policy. I am not persuaded that their interpretation of the statute is correct. Since I do not read the statute to prohibit the retroactive payments, the policy does not merely restate statutory requirements, but adds to and clarifies them. Accordingly, DHS's policy on the effective date of post-adoptive assistance agreements is a rule, and as such must be adopted pursuant to APA rule-making procedures to have effect.

The Commissioner's Order States that rule-making was not required because the decision, as a matter of policy, was discretionary with the agency. The Order cites File No. C8-94-1225, District Court, Second Judicial District, in which Judge Gearin affirmed the agency decision to reimburse from the date of appeal. She stated in her Memorandum that "(t)he decision

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regarding retroactive reimbursement is a policy one. It is discretionary with the agency. Only a legislative mandate can change that." Assuming arguendo that federal policy does not require states to reimburse retroactively to the date of eligibility, merely permitting a state to choose its own course of action does not ipso facto remove the state's decision, and the means by which it arrives at and announces it, from the ambit of the APA.

The policy constitutes an unpromulgated rule, and therefore has no effect until and unless it is adopted pursuant to proper procedure. The Commissioner's Order is erroneous and must be reversed on that ground.

III. Minnesota Statute 259.67--Adoption Assistance Program

Duty to Inform Parents of Adoption Assistance

The language of Minn. Stat.259.67 suggests some obligation on the part of DHS employees to inform potential adoptive parents of possible subsidies. Subsection (1) reads: "The commissioner of human services shall enter into an adoption assistance agreement with an adoptive parent or parents who adopt a child who meets the eligibility requirements . . ." Minn. Stat. 259.67(1) (emphasis added). Subsection (2) contains similar mandatory language: "The placing agency shall certify a child as eligible for adoption assistance according to rules promulgated by the commissioner." Minn. Stat. 259.67 (2) (emphasis added). The mandatory language suggests a duty on the part of DHS employees to initiate the child's eligibility determination, as well as a duty for the commissioner to enter into an adoption assistance agreement with the parents if the child is indeed eligible. See also Ferdinand v. Dept. of Children and Their Families, 768 F. Supp. 401, 404 (D.R.I. 1991), interpreting 45 C.F.R. 1356.40(f), which obligates a state agency to actively seek ways to promote the adoption assistance program, and Policy Announcement ACYF-PA-83-5 ("(T)he clear implication [of the regulation and announcement] is that the state has an affirmative duty to fully explain all available assistance programs so that potential adoptive parents can make an informed decision.")

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In contrast, as DHS notes, federal law requires placing agencies to first attempt to place a child without the subsidy, and did so at that time of [name deleted] adoption as well. 42 U.S.C, 473 (c) (2) (B); Minn. Stat 259.67 subd. 4(b)(1); Minn. R. 9560.0082 subd.4(B) (1993) (replacing 12 M.C.A.R. 2.200.C.4.c(4) (l982 reprint)). The rationale for this requirement is ostensibly to disburse funds to children and parents who are in true financial need. A duty to inform would not affect the policy of only providing assistance to those in true need. It would only provide notice to all who may be eligible of the availability of assistance. (Note that, in its brief dated May 5, 1995, DHS admitted that following the publication of ACF-PIQ-92-02, the state and county do have a duty to inform potential adoptive parents of the assistance program).

In this case, the Court need not reach this issue. Also, the federal government has already provided a procedure for cases in which parents were not informed of the adoption assistance program. See ACF-PIQ-88-06 (December 12, 1988); ACF-PIQ-92-02 (June 25, 1992).

G.W.R.

END OF DOCUMENT