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Withrow v. Concannon

filed: August 19, 1991.


Appeal from the United States District Court for the District of Oregon. D.C. No. CV-88-424-RE. James A. Redden, District Judge, Presiding.

William C. Canby, Jr., Alex Kozinski and Stephen S. Trott, Circuit Judges. Trott, Circuit Judge, dissenting. Opinion by Judge Canby; Dissent by Judge Trott.

Author: Canby

CANBY, JR., Circuit Judge:

Plaintiffs, who are applicants for or recipients of Aid to Families with Dependent Children, Food Stamps, or Medicaid, brought this class action in the United States District Court for the District of Oregon against Kevin Concannon as Director, Oregon Department of Human Resources' and Freddye Webb-Petett*fn1 as Administrator of the Department's Adult and Family Services Division. Plaintiffs sought declaratory relief and an injunction compelling the defendants to hold hearings and issue administrative decisions under the Aid to Families with Dependent Children (AFDC), Food Stamp, and Medicaid programs within federally prescribed time limits. The plaintiffs alleged that the defendants' failure to issue timely decisions violated federal statutes, implementing regulations and the due process clause of the Fourteenth Amendment.*fn2 Both sides moved for summary judgment. Holding that the defendants had substantially complied with the regulations, the district court granted the defendants' motion for summary judgment. We reverse that decision and remand for further proceedings consistent with this opinion.


We review de novo the district court's judgment dismissing this case on the defendants' motion for summary judgment. See, e.g., California Architectural Bldg. Prods. v. Franciscan Ceramics, 818 F.2d 1466, 1468 (9th Cir. 1987), cert. denied, 484 U.S. 1006, 98 L. Ed. 2d 650, 108 S. Ct. 698 (1988).

Congress created the AFDC, Food Stamp, and Medicaid programs to deliver subsistence income, nutrition, and medical care to eligible recipients. 42 U.S.C. § 601 et seq. ; 42 U.S.C. § 1396a et seq. ; 7 U.S.C. § 2011 et seq. The federal government partially funds each of these programs. A state's participation is optional, but participating states must comply with federal requirements. See King v. Smith, 392 U.S. 309, 316, 20 L. Ed. 2d 1118, 88 S. Ct. 2128 (1968). Oregon has chosen to participate in all three programs. The Adult and Family Services Division (AFSD) administers the programs in Oregon.

In each assistance program an applicant or recipient aggrieved by a state agency's action has the right to a "fair hearing." 42 U.S.C. § 602(a)(4) (AFDC); 42 U.S.C. § 1396a(a)(3) (Medicaid); 7 U.S.C. § 2020(e)(10) (Food Stamps). Federal regulations, which have the force and effect of law, require each state agency to take final action within ninety days from the date a hearing is requested in the AFDC and Medicaid programs, and within sixty days in the Food Stamp program. 45 C.F.R. § 205.10(a)(16)(1) ("Prompt, definitive, and final administrative action shall be taken within 90 days from the date of the request for a[n] [AFDC] hearing"); 42 C.F.R. § 431.244(f) ("The agency must take final administrative action within 90 days from the date of the request for a [Medicaid] hearing"); 7 C.F.R. § 273.15(c)(1) ("Within 60 days of receipt of a request for a fair [Food Stamps] hearing, the State agency shall assure that the hearing is conducted, a decision is reached, and the household and local agency are notified of the decision").

Although these regulations direct that the agencies administering the three programs "shall" or "must" provide hearings within a prescribed time, defendants argue, and the district court held, that all that is required of the state is that the agency be in "substantial compliance" with the federal regulations. This argument is not without support. The AFDC statute provides that federal funding of a state's program may be terminated if the state has failed "substantially" to comply with the federal hearing standards. 42 U.S.C. § 604(a)(2). Food Stamp funding may be terminated when a state fails to comply with such federal standards without "good cause." 7 U.S.C. § 2020(g). These provisions have led one circuit to conclude that Congress could not have intended that states be held to any higher standard than that of "substantial compliance" when applicants or recipients seek an injunction to assure timely decisions. Shands v. Tull, 602 F.2d 1156, 1160-61 (3rd Cir. 1979).

We are not convinced, however, that the standard for termination of federal funding, a virtual death sentence for a state's program, is the appropriate one to define the rights of applicants and recipients of program benefits. The funding standard is not intended to be the measure of what the regulations require;*fn3 it is intended to measure how great a failure to meet those requirements should cause funds to be cut off. The language of the federal regulations is unequivocal, and states that a decision "shall" or "must" be made within the specified number of days.*fn4 The regulations' commands effectuate the purposes of the federal categorical programs, to render reasonably prompt assistance to persons in dire need. From the standpoint of the applicants or recipients who are denied hearings and decisions within the time mandated by federal regulations, it is no comfort to be told that there is no federal remedy*fn5 because the state is in "substantial compliance" with the federal requirements.

We conclude that the district court erred, then, in determining that plaintiffs were entitled to no more than substantial compliance. The defendants argue, in effect, that it is not practical for them to achieve total compliance as a program, and it would be improper to compel them to do so by injunction. An injunction requiring adherence to the regulations, however, imposes no inappropriate obligation on the state. As the Seventh Circuit observed when it upheld an injunction requiring Indiana to comply with the requirements of the Food Stamp Act:

Because the defendants are required to comply with the Food Stamp Act under the terms of the Act, we do not see how enforcing compliance imposes any burden on them. The Act itself imposes the burden; this injunction merely seeks to prevent the defendants from shirking their responsibilities under it.

Haskins v. Stanton, 794 F.2d 1273, 1277 (7th Cir. 1986). The fact that absolutely perfect compliance is unattainable does not of itself preclude an injunction requiring the state to comply with the regulations.

As with any program of this size, a few inadvertent errors are inevitable, and we are confident that the district court will not exercise its equitable powers to hold the state in contempt for every minor, inadvertent infraction of the Act if the court is satisfied that the ...

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