41 N.Y.2d 724 (1977)
When recouping overpayments from public assistance grants, social services agencies must limit the recoupment amount to avoid undue hardship for the recipient, even when the overpayment is due to an advance for shelter allowance.
Summary
Roberts v. Smith addresses the issue of how much the New York City Department of Social Services can recoup from a public assistance grant when the recipient owes money for both unreported income and a shelter allowance advance. The court held that the department’s recoupment was excessive, because it created an undue hardship on the recipient family. The court reasoned that any agreement to repay the shelter allowance at a rate exceeding the undue hardship threshold was not truly voluntary, as the alternative was eviction. This case emphasizes the importance of balancing the need to recover funds with the necessity of ensuring a minimum standard of living for public assistance recipients.
Facts
The petitioner, a recipient of home relief, received notice that his public assistance grant would be reduced to recoup money advanced for rent arrearages (to prevent eviction) and for concealing unemployment insurance income. The Department of Social Services sought to recoup $43.37 biweekly for rent arrearages and $39.60 biweekly for concealed income. A fair hearing reduced the income recoupment to $16.50 biweekly (10% of household needs) but upheld the full shelter allowance recoupment. The petitioner challenged this decision, arguing the recoupment limitations should apply equally and that the distinction between types of overpayment denied him equal protection.
Procedural History
The petitioner initiated an Article 78 proceeding challenging the Department of Social Services’ decision. Special Term dismissed the petition, upholding the decision of the hearing officer. The Appellate Division reversed, finding no rational basis for different recoupment limitations based on the type of overpayment. The case then went to the New York Court of Appeals.
Issue(s)
Whether the limitations on recoupment set out in section 352.31(d)(4) of the Department of Social Services regulations apply to recoupment for shelter allowance advances, preventing recoupment that causes undue hardship to the recipient.
Holding
Yes, because recoupment from public assistance grants, including shelter allowance advances, is limited to amounts that do not cause undue hardship, and an agreement to a higher recoupment rate is not truly voluntary when the alternative is eviction.
Court’s Reasoning
The court reasoned that the purpose of home relief is to provide for the basic needs of individuals and families. Reducing the subsistence allowance by 36% (through the combined recoupments) created an undue hardship, contravening the intent of section 352.31(d)(4) of the regulations, which limits recoupment to avoid undue hardship. The court stated, “Where the amount of a grant is determined on a subsistence level, there is an inevitable presence of hardship in any reduction of benefits.”
The court rejected the argument that the shelter allowance recoupment was based on a voluntary agreement. Because the advance was only provided to prevent eviction, the recipient’s choice between agreeing to the recoupment and facing homelessness was not a free and willing decision. The court emphasized the coercive nature of the situation, considering the recipient’s family. The court stated, “For this recoupment agreement to be considered voluntary it must be both knowingly and willingly made…But it cannot be considered willingly made.”
The court acknowledged that recoupment of shelter allowances is permissible, but only within the limitations established to prevent undue hardship. It found it unreasonable to allow greater recoupment for shelter allowance advances than for cases of willful and fraudulent withholding of income information, which are subject to recoupment limitations to prevent undue hardship.
The court referenced parallel federal regulations restricting recoupment in federally funded programs to avoid undue hardship (45 CFR 233.20[f]). The court concluded that while recoupment provisions of section 352.7(g)(7) are valid, they are subject to the limitations established in section 352.31(d)(4).