668 F.

2d 194

Zoraida ZAMBARDINO, Appellee,

v.
Richard SCHWEIKER, Secretary of the Department of Health
and
Human Services, and Francis J. McDonough, Social
Security District Manager, Jersey City,
New Jersey, Appellants.
No. 81-1799.

United States Court of Appeals,

Third Circuit.
Argued Nov. 9, 1981.
Decided Dec. 28, 1981.

Juan del Real, Acting Gen. Counsel, Barbara Spivak, Regional Atty.
(argued), Tamar K. Klein, Barbara Strauss, Asst. Regional Attys., Dept. of
Health and Human Services, New York City, Mary C. Cuff, Asst. U. S.
Atty., Civ. Div., Newark, N. J., for appellants.
Theodore A. Gardner (argued), Hudson County Legal Services, Jersey
City, N. J., for appellee.
Before SEITZ, Chief Judge, GARTH, Circuit Judge, and POLLAK,
District Judge.*
OPINION OF THE COURT
SEITZ, Chief Judge.

I.

The Secretary of Health and Human Services appeals from a final order of the
district court granting Zoraida Zambardino's motion for class certification and
granting Zambardino's motion for summary judgment in a modified form. This
court has jurisdiction under 28 U.S.C. 1291 (1976).

On February 29, 1980, the Social Security Administration (SSA) determined

that Zoraida Zambardino had become eligible for disability benefits under the
Supplemental Security Income (SSI) program, 42 U.S.C. 1381-1383 (1976)
as of September, 1979. Two months later, the SSA district office in Jersey City,
New Jersey, notified Zambardino that she was entitled to an initial lump sum
payment of $1,170.00 for the period from September 1979, the date of her
disability, to May 1980, when she received her first monthly SSI check of $130.

During this period of retroactive entitlement, Zambardino had been receiving

$81.00 per month under the Aid to Families with Dependent Children program
(AFDC), 42 U.S.C. 601-644 (1976). Pursuant to a regulation promulgated
by the Secretary, 20 C.F.R. 416.1151(a)(2) (1979), the Jersey City SSA office,
in calculating Zambardino's lump sum SSI payment, deducted the AFDC
benefits she had received between September 1979 and May 1980 from her
retroactive entitlement. The regulation excludes assistance payments from an
SSI recipient's income in computing benefit levels if such payments are "funded
wholly by a state or by a political subdivision of a state." 20 C.F.R. 416.1151(a)
(2) (1979) (current version codified at 20 C.F.R. 416.1124(c)(2) (1981)).
Because the federal government provides fifty percent of the funding for New
Jersey's AFDC program, the SSA counted all of Zambardino's interim AFDC
benefits as income to reduce her retroactive SSI payment dollar-for-dollar.

Zambardino requested reconsideration of the retroactive payment, arguing that

the regulation impermissibly narrows 42 U.S.C. 1382a(b)(6) (1976), which
excludes from income assistance "based on need and furnished by any state."
The request was denied. After an administrative law judge upheld the
Secretary's determination, it was affirmed by the Appeals Council. This action
followed.

Zambardino alleged that 20 C.F.R. 416.1151(a)(2) directly conflicts with 42

U.S.C. 1382a(b)(6), and sought a declaratory judgment that the regulation
was invalid.1 On behalf of herself and a class of similarly situated New Jersey
SSI recipients, she sought an order directing the Secretary to pay the amount
withheld from lump sum SSI payments by reason of 20 C.F.R. 416.1151(a)
(2). Both parties moved for summary judgment.

The district court held that the Secretary's regulation impermissibly conflicts
with section 1382a(b)(6) of the statute. The court granted Zambardino's motion
for summary judgment in part, however, holding that that statute permits the
Secretary to offset the federal contribution to AFDC recipients but not the
state's portion as well. The court concluded that Zambardino was entitled to

receive only the state portion of AFDC benefits that the Secretary had deducted
pursuant to the regulation. The court also granted Zambardino's motion for
class certification against the Secretary's objection that the unnamed class
members had failed to exhaust their administrative remedies.
II.
7

The SSI program is designed to meet basic subsistence needs of aged, blind, or
disabled individuals. The benefit level of eligible recipients is reduced by any
income that is not excluded under 42 U.S.C. 1382a(b) (1976). Before 1976,
section 1382a(b)(6) excluded from income "assistance described in section
1382e(a) of this title which is based on need and furnished by any State or
political subdivision of a State." Section 1382e(a) described "Optional State
Supplementation" programs that were cash payments made on a regular basis as
part of an approved plan of state supplementation of SSI. In 1976, Congress
amended section 1382a(b)(6) to provide:

8 In determining the income of an individual (and his eligible spouse) there shall
(b)
be excluded9....
10

(6) assistance, furnished to or on behalf of such individual (and spouse), which

is based on need and furnished by any State or political subdivision of a State.

11

The Secretary promulgated a regulation to define the scope of section 1382a(b)

(6):

12

Assistance based on need furnished to or on behalf of an eligible individual ...

shall not be considered in determining countable income under Title XVI
provided: ...

13

(2) The assistance payment is funded wholly by a state or a political subdivision

of a state ... When Federal or non-public moneys are provided for the assistance
payment, e.g., when there is a specific Federal/State program of project or
formula grants (such as grants-in-aid under Title IV-A of the Act) (AFDC), the
assistance payment is not funded wholly by a state or political subdivision.
20 C.F.R. 416.1151 (1979)

14

After an AFDC recipient begins receiving SSI benefits, states must terminate

AFDC payments to maintain a qualified program eligible for federal funds. 42

U.S.C. 602(a)(24) (1976). In addition, states may recoup from the SSI
recipients the state-funded portion of any interim AFDC benefits, but are not
required to do so. If a state chooses to seek reimbursement, the SSA treats the
state contribution to interim AFDC payments as a loan and thus excludes such
payments from the lump sum benefit calculation. See Moore v. Colautti, 483
F.Supp. 357, 363 (E.D.Pa.1979), aff'd 633 F.2d 210 (3d Cir. 1980). The dispute
in this case arises because New Jersey has elected not to recoup its portion of
AFDC payments. N. J. Administrative Code 10:82-3.7(a)(4)(ii) (1980).
15

Although neither the pre-amended version of section 1382a(b)(6) nor the

regulation promulgated thereunder, 416 C.F.R. 1151 (1976), explicitly
sanctioned the deduction of AFDC benefits from lump sum SSI checks, it is
undisputed that the Secretary engaged in this practice under prior law. See
Jones v. Califano, 576 F.2d 12, 14-16 (2d Cir. 1978) (indicating that the
Secretary deducted AFDC payments from lump sum SSI checks prior to 1976
statutory amendments.). Zambardino does not argue, and we are not prepared to
assume, that the Secretary's practice before 1976 conflicted with the preamended version of section 1382a(b)(6).2

16

Zambardino argues that Congress amended section 1382a(b)(6) to permit states

to forego recoupment without causing a reduction in SSI benefits and that the
district court correctly held that the Secretary's regulation impermissibly
narrows the statute by adding the requirement that assistance be entirely state
funded in order to be excluded. The Secretary contends that Congress did not
intend its amendment of the statute to alter the wholly state funded requirement
implicit in the pre-amended version of section 1382a(b)(6). Instead, he argues
that the amendment was intended to encourage states to provide assistance to
certain individuals in public institutions. Thus, in his view, it merely broadened
the types of wholly state funded assistance that states could provide without
causing reductions in recipients' SSI benefits.

A.
17

As the agency charged with administering the SSI program, the Department's
interpretation of the statute is entitled to deference. Udall v. Tallman, 380 U.S.
1, 16, 85 S.Ct. 792, 801, 13 L.Ed.2d 616 (1965). Only if, after an examination
of the statutory language, the legislative history, and the overall statutory
scheme, it appears that a regulation is "inconsistent with the statutory mandate
... or frustrate(s) the policy that Congress sought to implement" will we reject
administrative constructions of a statute. Federal Election Commission v.
Democratic Senatorial Committee, --- U.S. ----, ----, 102 S.Ct. 38, 42, 70

L.Ed.2d --- (1981). See Rochester v. Baganz, 479 F.2d 603, 606 (3d Cir. 1973)
("Regulations issued pursuant to the broad rulemaking authority granted to the
Secretary (of the Department of Health and Human Services) by 42 U.S.C.
1302 must be sustained if reasonably related to the purposes of the Act.").
18

Section 1382a(b)(6) itself does not contain a requirement that excludable

assistance must be wholly state funded. The absence of such a requirement
lends some credence to the district court's view that Congress intended to
exclude any assistance that is funded by a state. Even if we accept the district
court's conclusion that the statute plainly requires exclusion, however, we are
not foreclosed from examining its legislative history to divine congressional
intent. E.g., Train v. Colorado Public Interest Group, 426 U.S. 1, 10, 96 S.Ct.
1938, 1942, 48 L.Ed.2d 434 (1976).

19

Congress' primary purpose in amending section 1382a(b)(6) was to facilitate its

desire to permit states to subsidize residents of public institutions serving less
than 16 residents without causing a reduction in SSI benefits. The amendment
was contained in section 505(b) of P.L. 94-566, 90 Stat. 2667, 2686 (1976),
which was entitled, "Eligibility of Individuals in Certain Institutions." Section
505(a) provides:

20 In General.-Section 1611(e)(1) of the Social Security Act (42 U.S.C. 1382(3)

(a)
(1) (1976)) is amended ... by adding at the end thereof the following new
subparagraph:
21 As used in subparagraph (A), the term "public institution" does not include a
(C)
publicly operated community residence which serves no more than 16 residents.
22

Section 505(b), which amended section 1382a(b)(6), was labelled a

"Conforming Amendment."

23

The Senate Finance Committee's report contains the following comment on

section 505:

Eligibility of Individuals in Certain Institutions

24
(Sec. 505 of the Bill)
25
26

Present law provides that individuals who are in nonmedical public institutions
are not eligible for SSI benefits.... The bill would amend present law to provide
that the prohibition against SSI payments to persons in public institutions would
not be applicable in the case of publicly operated community residences which

serve no more than 16 residents. In addition, the bill provides that Federal SSI
payments would not be reduced in the case of assistance based on need which is
provided by States and localities. This would allow States and localities to
supplement the Federal SSI benefits through either direct or indirect assistance
to persons in public institutions. It would also allow States and localities to
provide emergency and other special need assistance without causing a
reduction in their federal SSI payments.
27

S.Rep.No.1265, 94th Cong., 2d Sess. 29, reprinted in (1976) U.S.Code Cong. &
Ad.News 5997, 6023 (hereinafter S.Rep.No.1265).

28

Similarly, the House Conference Report accompanying P.L. No. 94-566

explains that section 505 would "exclude publicly operated community
residences which serve no more than 16 residents from being deemed public
institutions in which individuals are ineligible for SSI benefits."
H.Conf.Rep.1745, 94th Cong., 2d Sess. 27, reprinted in (1976) U.S.Code Cong.
& Ad.News 5997, 6048.

29

We acknowledge that some language in the Senate Report would support a

more expansive view of Congress's purpose in amending section 1382a(b)(6),
e.g., S.Rep.No.1265, 29, reprinted in (1976) U.S.Code Cong. & Ad.News at
6023 ("(The bill) would also allow States and localities to provide emergency
and special need assistance to SSI recipients without causing a reduction in their
Federal SSI payments."). Nonetheless, in light of the purpose of the
amendment, we do not believe that this language compels the conclusion that
Congress intended to alter the existing policy regarding income exclusion.
Indeed, it seems unlikely that this passage would encompass the AFDC
program, because AFDC cannot fairly be characterized as a program of
"emergency and special needs assistance." See 42 U.S.C. 601 (1976)
(Authorizing AFDC appropriations to "encourag(e) the care of dependent
children in their own houses ... to help maintain and strengthen family life and
to help ... parents and relatives to attain or retain capability for the maximum
self-support and personal independence consistent with the maintenance of
continuing child care and protection.").

30

Although it is true that, as a general proposition, we must presume that

Congress intended the plain language of the statute, where the legislative
history casts doubt on Congress's intent, "we must allow ourselves some
recognition of the existence of sheer inadvertence in the legislative process."
Cass v. United States, 417 U.S. 72, 83, 94 S.Ct. 2167, 2173, 40 L.Ed.2d 668
(1974), quoting Schmid v. United States, 436 F.2d 987, 992 (Ct.Cl.1971). Such
recognition seems appropriate in this case. Congress clearly intended to change

existing law regarding certain types of state assistance to individuals in small

public institutions. It is equally clear that Congress amended section 1382a(b)
(6) to accommodate this objective. Significantly, there is little evidence in the
legislative history that Congress sought to alter the wholly state funded
requirement. In light of the limited purpose of the amendment, we believe that
the Secretary reasonably construed the statute.
B.
31

The Secretary's interpretation of section 1382a(b)(6) also finds support in other

provisions that shed light on the interplay contemplated by Congress between
the AFDC and SSI programs. In 1972, Congress amended the AFDC statute to
provide that a recipient of SSI may not simultaneously receive benefits under
the AFDC program. To receive federal funding, state AFDC plans must
"provide that if an individual is receiving benefits under (SSI) then, for the
period for which such benefits are received, such an individual shall not be
regarded as a member of a family for purposes of determining the amount of
the benefits of the family under (AFDC)." 42 U.S.C. 602(a)(24) (1976). In
the House Report accompanying the amendment, the Ways and Means
Committee stated that the provision would continue "the usual rule against
payment of benefits under more than one public assistance plan by excluding
from benefits under the family programs any individual who elects to receive
aid under Title XX, Assistance for the Aged, Blind and Disabled." H.Rep. 231,
92d Cong., 2d Sess. 185, reprinted in (1972) U.S.Code Cong. & Ad.News,
4989, 5171.

32

As the district court correctly observed, section 602(a)(24) is not directly

applicable here. It requires only that states terminate AFDC benefits to
individuals who are simultaneously receiving SSI payments and contemplates
that any duplication be remedied by terminating AFDC payments. We believe,
however, that the Secretary could have reasonably inferred from section 602(a)
(24) a general congressional intent to preclude simultaneous recovery under
both the AFDC and SSI programs. The interpretation of section 1382a(b)(6)
urged by Zambardino would indirectly conflict with such a reading of section
602(a)(24), and the Secretary permissibly construed the section so as to avoid
conflict. See Citizens to Save Spence County v. Environmental Protection
Agency, 600 F.2d 844, 871 (D.C.Cir.1979).

33

Moreover, a holding that Congress intended the 1976 amendment to enable

states to supplement SSI benefits with unrecouped interim AFDC payments
would appear to apply with equal force to simultaneous receipt of AFDC
benefits by recipients of SSI. This would directly conflict with Congress'

requirement in section 602(a)(24) that states terminate AFDC benefits to SSI

recipients. Since Zambardino became, in effect, an SSI recipient in September
1979, the onset of her disability, the Secretary's regulation avoids a statutory
conflict in the only way possible: by requiring the deduction of previous AFDC
payments from her retroactive SSI payment. Thus, although Congress did not
authorize the Secretary to deduct AFDC payments from retroactive SSI
benefits, we cannot say that the Secretary exceeded his broad grant of
rulemaking authority, see 42 U.S.C. 1302 (1976), to effectuate congressional
intent.
34

We believe it is also significant that prior to the 1976 amendment of section

1382a(b)(6), the Secretary had promulgated a regulation giving an identical
interpretation to state assistance in another context. In an effort to encourage
states to provide interim assistance to SSI beneficiaries, Congress enacted 42
U.S.C. 1383(g) (1976). The section permits the Secretary to withhold from
SSI recipients the amount of interim assistance provided by states and to
reimburse the states for such assistance. "Assistance" is defined in 42 U.S.C.
1383(g) as "(a)ssistance financed from State and local funds." In May, 1976,
the Secretary promulgated a regulation interpreting the interim assistance
statute, which explicitly excludes "(a)ssistance payments financed in whole or
part from Federal funds (e.g. to families with dependent children)" from the
coverage of the statute. 20 C.F.R. 416.1911(b)(3) (1977).

35

We are aware that the Secretary's interpretation of section 1382a(b)(6)

effectively nullifies the decision of New Jersey to forego reimbursement of its
portion of interim AFDC benefits to provide additional assistance to its
residents. There is no question however, that Congress has great latitude in
defining income for the purpose of calculating benefits under entitlement
programs. We believe that the Secretary's interpretation of the scope of the
exclusions in section 1382a(b)(6) is supported by the structure and the
legislative history of the 1976 amendments, as well as the overall social welfare
scheme. Therefore, we cannot say that it is impermissible.

III.
36

In light of our conclusion that the Secretary reasonably construed section

1382a(b)(6), we need not reach the issue of class certification.

IV.
37

The order of the district court will be reversed and the district court will be
directed to grant the Secretary's motion for summary judgment.

Honorable Louis H. Pollak, United States District Judge for the Eastern District
of Pennsylvania, sitting by designation

Zambardino also challenged section 12340.1(a) of the Department's Claims

Manual, which provides in relevant part:
When an AFDC recipient (including one in foster care) applies for SSI
payments, the AFDC payments made for the claimant during the months for
which the individual is later determined to be eligible for SSI are unearned
income to the individual and reduce the SSI payment dollar for dollar; i.e. the
SSI payment is reduced only until the discontinuance of the AFDC payment.

In a House Report accompanying P.L. 233, 87 Stat. 947 (1973) which provided
for an increase in Social Security and SSI benefits, the Ways and Means
Committee observed:
The Congress, in developing the supplemental security income program,
established a uniform benefit structure which was regarded as the Federal
responsibility. It recognized that States might wish to add to the amount of the
federal benefit.... However, its clear and unequivocal intention was that such
payments would be a State responsibility and wholly State financed.
H.Rep.No.627, 93d Cong., 1st Sess. 9 (1973) reprinted in (1973) U.S.Code
Cong. & Ad.News 3177, 3184.
Although expressions of congressional intent made by subsequent Congresses
are not accorded substantial weight, see United States v. United Mine Workers,
330 U.S. 258, 67 S.Ct. 677, 91 L.Ed. 884 (1947) (remarks of senators in 1943
not authoritative statement of congressional intent in 1932, when Congress
enacted legislation), we believe that this House Report, accompanying a bill
enacted 16 months after the passage of the first SSI legislation, and before the
latter's effective date, is entitled to some probative value.