State’s high court to hear dispute over welfare denials

The Indiana Supreme Court will review a court ruling that found that the state's Family and Social Services Administration wrongly cut off welfare benefits for "failure to cooperate" without telling recipients specifically what they did wrong.

The state appeals court ruled against the agency in December, reversing part of a trial court decision in favor of the FSSA in a class action lawsuit brought by the American Civil Liberties Union.

The Supreme Court agreed on Friday to hear the case. Oral arguments have not yet been scheduled.

The 2008 lawsuit argued that the FSSA sent notices denying or cutting off Medicaid, welfare or food stamps because of missing documents in clients' applications, but never told clients which documents were missing.

In one case, the agency cut off Medicaid to a woman with hearing problems and other disabilities after a telephone interview that she had trouble understanding and refused to meet with her in person. A Marion County judge found the agency's treatment of the woman violated federal law, including the Americans with Disabilities Act, and the appeals court agreed.

The lawsuit stems largely from an error-plagued effort to privatize and automate much of the FSSA's day-to-day functions. Gov. Mitch Daniels canceled that contract with IBM in October 2009, and the state replaced that system with a "hybrid" system including both automation and face-to-face contact.

The appeals court held that the FSSA notices didn't provide clients enough information to adequately appeal the agency's denial of their benefits.

"Mindful that an individual receiving an FSSA adverse action notice likely has a physical, mental, or economic disadvantage (or combination thereof), it is unreasonable to expect that the recipient can act to protect his or her interests without specific information," the Court of Appeals said.

And, the judges said, "we can discern no great burden upon the FSSA to identify the specific reason for its denial decision."

In a brief seeking a Supreme Court hearing, the FSSA argued that its system of notices is sufficient. The agency said it contacts welfare recipients multiple times, both verbally and in writing.

The agency also contends that the denial notices include a code outlining the broad category in which the client's application was deemed inadequate — such as failure to verify income — though it doesn't cite which specific document was missing — such as a paycheck stub or W2.

The FSSA argued that this type of notice is sufficient for recipients to correct their applications or file an appeal, and applicants generally have been apprised of what documents are missing earlier in the process.

The agency argued that the Court of Appeals ruling set a standard higher than what is necessary for due process.