Policy Research Articles and Reports

Schmidt v. State of Nebraska Department of Social Services: Delay Without Accountability

[Added: February 1999]

The struggle of Jean Schmidt to obtain adoption assistance for her daughter exemplifies two recurring themes in adoption advocacy.

1. Although the Schmidt's victory was inconclusive, parents can use their hearing rights to protect themselves from capricious treatment by the state.
2. Delay is the ally of bureaucratic state children services systems. If justice delayed is justice denied, then states are not sufficiently accountable for errors of omission or commission in handling applications for adoption assistance after finalization.

In November, 1998, the Nebraska Supreme Court determined that in denying their application for Title IV-E adoption assistance, the State Department of Social Services failed to comply with federal and state regulations governing an applicant's right to an administrative hearing. Unfortunately, the decision came over three years after the Schmidts first applied for assistance on the grounds that they:

• finalized the adoption without being told about subsidy programs for special needs children; and

• discovered, after their child was diagnosed with reactive attachment disorder and other problems, that information about their child's family history had not been disclosed prior to the final decree of adoption.

Both situations are cited in federal PIQ 92-02 as "extenuating circumstances" and grounds for examination of a child's eligibility for Title IV-E assistance after an adoption has been finalized. The procedure for determining the existence of extenuating circumstances is the administrative "fair" hearing system. Each state is required to establish administrative hearings as an appeals process for applicants who are denied access to federal and state social programs.

Unfortunately for the Schmidts, their hard won victory was far from complete. The Nebraska Supreme Court addressed only the state agency's failure to follow the regulations governing the family's right of appeal. In declaring the actions taken by the State Department of Social Services to be invalid and violations of the Schmidts' due process rights, the family was faced with the unenviable prospect of applying for adoption assistance all over again.

The Supreme Court noted that state regulations called for the DSS adoption specialist to review the Schmidt's application for assistance. If the application was denied, then the family had a right to a hearing. Instead of following this procedure, a hearing was held without a formal denial of assistance. After the hearing was held, the Director of the DSS determined that the family did not have the right to a review of their child's eligibility for adoption assistance through an administrative hearing after all. The court found, however that by attempting to deny the Schmidt's right to a hearing on the merits of the IV-E application, the Director ended up making both the initial and final determination which was contrary to state law. Nebraska regulations authorized the DSS Director to review hearing decisions, but not to override the hearing process altogether.

The Nebraska DSS compounded procedural blunders with serious policy errors that further confused the issue and prevented its timely resolution. The DSS insisted that the child was not eligible for Title IV-E adoption assistance because she was not a ward of the state at the time of the adoption. The agency cited a 1983 Nebraska statute in support of its position. In staking out its position, the state had apparently missed a series of federal Policy Interpretation Questions (PIQs) that confirmed the potential eligibility of children who were placed for adoption by private agencies. The clearest of these interpretations was PIQ 87-5 which addressed the following question.

QUESTION:

In some States, statutory requirements for adoption subsidy programs limit eligibility under title IV­E to children when they are committed or relinquished to the State agency. Are these provisions consistent with the requirements of title IV-E, section 473 (a) (2) of the Social Security Act?

INTERPRETATION:

No. State statutes which limit access to the Title IV­E Adoption Assistance Program by the addition of eligibility requirements beyond those required under the Federal statute are not in conformance with title IV­E. . . . . . . . . While it is necessary for a child to be under the responsibility of the State agency in order to be eligible for title IV­E foster care (section 472(a)(2) requirement), there will be other situations in which children with special needs are in care under the responsibility of private, non­profit agencies without the involvement of the State agency. When adoption is the goal for such children, and they are determined to be AFDC or SSI­eligible, the title IV­E agency may not exclude them from consideration or approval, if they are otherwise found eligible for adoption assistance in accordance categories of children who are not in the care of the state agency.

Clearly, the DSS had failed to keep pace with federal policy which had from the outset allowed private agency children to participate in the IV-E adoption assistance program. Ironically, by insisting that children in the care of private agencies were excluded from the adoption subsidy program, the state jeopardized its federal funding.

Carol Williams, Associate Commissioner of the U.S. Department of Health and Human Services and Head of the Children's Bureau re-affirmed the children's inclusion of private agency children in responding to a series of questions submitted by Vermont attorney Gerry Follansbee (Stewart) in 1996. Follansbee asked Ms. Williams, "is a child with special needs who is adopted through a private, non­profit agency eligible or adoption assistance after a final decree of adoption?

Ms. Williams answer was unequivocal. "Yes," she wrote, " a child whose placement and care are the responsibility of a private, non­profit agency may be eligible for title IV­E adoption assistance payments after a final decree of adoption. The child must meet the eligibility requirements in section 473 (a) (1) of the Social Security Act [section 673 (a) (1) of the U.S. Code] and be determined by the State to be a child with special needs in accordance with 473 (c) of the Act [section 673 (c) of the U.S. Code]." The Schmidts submitted PIQ 87-05 and a copy of Williams' letter as exhibits in support of their appeal

The Director of the Nebraska DSS also contended that extenuating circumstances did not exist in the Schmidt's case because the family had never actually applied for adoption assistance. In a stunning display of logic abetted by ignorance of federal policy, the Director maintained that PIQs submitted by the Schmidts were not relevant because they only applied to "reconsiderations" of applications for assistance. Since no decision had ever been made, there could be no reconsideration. If no extenuating circumstances existed, the Schmidt family was not entitled to a hearing.

As the Nebraska Supreme Court pointed out, all applicants to IV-E adoption assistance are entitled to administrative hearings if they are denied benefits. In the case of parents applying after finalization, the role of the hearing is to determine if extenuating circumstances justify a review of the child's eligibility for adoption assistance. The question of extenuating circumstances has no bearing on a family's right to a hearing.

PIQ 92-02 is the federal policy document that set forth guidelines through which parents could apply for adoption assistance after finalization. The document lists "failure by the state agency to advise adoptive parents of the availability of adoption assistance" as an extenuating circumstance entitling the family to a review of their child's eligibility. In highlighting this issue, federal officials were attempting to address a long-standing and widely recognized problem. Many families who adopted special needs children had never applied for adoption assistance before finalization because they had insufficient knowledge of subsidy programs. Obviously, such people would not be asking the state to "reconsider" their child's eligibility for adoption assistance, but to make a determination that should have been made years before. The idea that parents who had never been applied before had no avenue of redress was completely contrary to federal policy. The Schmidts included PIQ 92-02 among its list of supporting documents.

The state's obligation to inform prospective parents extends to private agencies under its jurisdiction. This responsibility was upheld in Ferdinand v. Department For Children and Their Families, a May 13, 1991 U.S. District Court decision, as grounds for allowing an adoptive family apply for and receive adoption assistance after finalization. Like the Schmidt's daughter, the child in the Ferdinand case was placed for adoption by a private agency licensed by the state. The federal court justified its position by citing federal adoption assistance regulations at CFR which stipulate that "the State agency must actively seek ways to promote the adoption assistance program" (See 768 Federal Supplement, 401, District of Rhode Island, 1992 for the Ferdinand decision).

Carol Williams also supported this position in her letter to Attorney Follansbee (Stewart). "The very purpose of the title IV­E adoption assistance program," wrote Williams, "is to encourage the adoption of hard­to­place children. Notification to potential adoptive parents about its availability is an intrinsic part of the program Accordingly, the private non­profit agency's failure to the parents may be considered an extenuating circumstance . . . . ."

To settle any disagreements about the authority of PIQs, Follansbee (Stewart) asked Williams to comment on the "significance of Policy Interpretation Questions issued by the U.S. Department of Health and Human Services" and asked if they were "interpretations of the law"? Williams answered that "Policy Interpretation Questions and other issuances developed by this Department are interpretations of statute and are disseminated as a mechanism to further clarify statutes and regulations that are already in place."

As it turned out, the Nebraska DSS not only denied adequate due process to the family, but opposed the application by citing a state law that placed Nebraska' adoption assistance program out of compliance with federal law and subject to fiscal sanctions.

The family actually cited not one but two extenuating circumstances listed in PIQ 92-02 that justified a review of their daughter's application for adoption assistance. In addition to not being notified about adoption subsidy programs, "relevant facts" regarding the child and her family background were "known and not presented to the adoptive parents prior to legalization of the adoption."

One of the greatest sources of frustration to adoptive families is that state's have a great deal of flexibility to help adoptive children with special needs if they look for reasons to say "yes" rather than "no." The Schmidt's daughter is clearly eligible for adoption assistance and the case could have been resolved years ago in the best interest of the child. Hopefully, a new state administration will be sufficiently chastened by the injustices perpetrated on this family to bring a second appeal to a speedy and successful resolution.