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Pich v. Lightbourne

California Court of Appeals, Third District, Sacramento

November 13, 2013

SIM PICH et al., Plaintiffs and Appellants,
v.
WILL LIGHTBOURNE, as Director, etc., et al., Defendants and Respondents.

APPEAL from a judgment of the Superior Court of Sacramento County, No. 07CS01306 Lloyd G. Connelly, Judge.

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COUNSEL

Manatt, Phelps & Phillips, Benjamin G. Shatz, Michael M. Berger, Ronald S. Katz; Legal Services of Northern California, Stephen Goldberg, Jodie Berger; Western Center on Law and Poverty Inc., Robert D. Newman; Coalition of California Welfare Rights Organizations, Grace Galligher, Seth E. Blackmon; Bay Area Legal Aid, Robert P. Capistrano and Stephen Bingham, for Plaintiffs and Appellants.

Kamala D. Harris, Attorney General, Ismael A. Castro and Pauline Gee, Deputy Attorneys General, for Defendants and Respondents.

OPINION

NICHOLSON, Acting P. J.

A new computer system changed the way public welfare benefits are administered. The system automatically terminates or reduces aid if the recipient fails to submit required eligibility reports within certain deadlines unless the case worker inputs the required information upon the recipient’s ultimate submittal.

Plaintiffs alleged this feature of the computer system results in thousands of benefit recipients incorrectly losing their benefits or not receiving them within the time required by law. They sought a traditional writ of mandate compelling the state agency that supervises the administration of public welfare services by the state’s counties to exercise its supervisory mandate and alter the computer system, and the governing structure that oversees the system, to prevent the system from executing these automatic functions.

The trial court sustained general demurrers to plaintiffs’ first and second amended petitions without leave to amend. Disagreeing with plaintiffs’ appeal, we conclude the trial court did not err. Plaintiffs sought mandamus relief to compel the exercise of discretion in a particular manner, something a writ of mandate cannot do. Also, plaintiffs submitted exhibits which contradicted their factual claims that the state agency was not fulfilling its duty to supervise or that the counties were failing to comply with law on account of the computer system’s operation. We affirm.

BACKGROUND INFORMATION AND ALLEGED FACTS

Defendant State Department of Social Services (the Department) supervises the provision of public welfare services in the state. It is “designated as

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the single state agency with full power to supervise every phase of the administration of public social services... made by the state in order to secure full compliance with the applicable provisions of state and federal laws.” (Welf. & Inst. Code, § 10600.)[1] Two of the social service programs the Department oversees are CalWORKs and CalFresh.[2] Defendant Will Lightbourne is the Department’s current director.

The Department supervises the state’s 58 counties, which are charged with actually administering public social services within their boundaries. In the case of social services for which federal or state funds are provided, such as CalWORKs and CalFresh, counties are subject to the Department’s regulations and its control over the allocation of funds among the counties. (§ 10800; City and County of San Francisco v. State of California (1978) 87 Cal.App.3d 959, 966 [151 Cal.Rptr. 469].) Counties must comply with the Department’s regulations and abide by all of its lawful directives. (§ 10802.)

“Thus, the statutes establish an administrative hierarchy in which the [Department] exercises ultimate supervisory authority over the payment of welfare benefits and the county boards of supervisors, acting through the county welfare departments, function as agents of the [Department] in administering such payments.” (Ross v. Superior Court (1977) 19 Cal.3d 899, 907 [141 Cal.Rptr. 133, 569 P.2d 727].)

In 1997, the Legislature directed the Health and Welfare Data Center (now called the Office of Systems Integration (OSI)) to implement a “statewide automated welfare system” for a number of public social services programs, including CalWORKs and CalFresh. (§ 10823, subd. (a).)[3] OSI was to implement this automated system through no more than four county consortia. (§ 10823, subd. (a).) However, nothing in this legislative mandate to OSI transferred the Department’s program policy responsibilities over CalWORKs and CalFresh to OSI. (§ 10823, subd. (b).)

The Welfare Client Data System Consortium (the consortium) is one of the four county consortia that implemented an automated system. (§ 10823, subd. (a)(5).) It developed the CalWIN (CalWORKs Information Network)

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computer system to administer the CalWORKs and CalFresh programs and other social service programs in its 18 member counties.[4] It did so at a cost of $744 million, creating allegedly the largest program of its kind in the nation.

CalWIN is owned by the member counties and operated and maintained by the consortium. The consortium, in turn, contracts with a private company, Electronic Data Systems, to operate and maintain CalWIN on a day-to-day basis.

CalWIN automatically processes recipient information entered by a county case worker and makes eligibility determinations. Those determinations include initial eligibility determinations, calculations of monthly benefit amounts based on eligibility factors, quarterly and annual redeterminations of eligibility, and other determinations of when a recipient’s benefits should be reduced or terminated.

CalWIN also generates notices of action which warn benefit recipients of possible termination or other adverse action if required eligibility reports and information are not timely submitted or are incomplete. If the required information is not received, CalWIN may automatically terminate benefits or impose a penalty.

The automatic termination function is a significant change from past practice. Prior to the use of CalWIN, if the existing system was not timely updated by a case worker with a benefit recipient’s required information, eligibility continued until the case worker took action to discontinue benefits. In CalWIN, the reverse is true. If CalWIN is not timely updated by the case worker with the recipient’s required information, it will issue a notice to the recipient and eligibility will automatically be discontinued. The case worker will have to take some affirmative action to reinstate benefits in those circumstances where the recipient ultimately provides the required information.

CalWIN allows county case workers to bypass its automatic processing and to issue benefits manually if circumstances require. This override operation is called Non-System Determined Issuance (NSDI). Department regulations require counties to have in place procedures to issue benefits manually when necessary, and NSDI is one of those procedures.

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Plaintiffs are five individuals who allege CalWIN at one time or another automatically and erroneously terminated, reduced, or delayed their Cal-WORKs and CalFresh benefits. All of them ultimately had their benefits fully restored through administrative appeals.

Nonetheless, in 2007, they filed a petition for writ of traditional mandate against the Department and its director. They alleged their experiences with CalWIN were indicative of those had by other benefit recipients. They alleged on information and belief that CalWIN had systemic programming flaws that caused erroneous and automatic benefit terminations, reductions, and delays to thousands of benefit recipients.

The Department filed a demurrer to the original petition. It also filed a motion for a protective order to stay discovery plaintiffs had demanded be completed before the hearing on the demurrer.

In January 2008, the trial court sustained the Department’s demurrer with leave to amend. It found plaintiffs’ individual contentions of harm did not support any contention of a systemic failure of CalWIN to perform in compliance with laws and regulations: “There is just no factual allegation that support[s] that there is a systemic problem here.”

The court also granted the motion for protective order in part, but directed the parties to agree to a discovery schedule. Also, in light of its intention to be “reasonable but liberal” regarding discovery, the court placed no time limit on plaintiffs’ right to file an amended petition.

Plaintiffs filed their first amended petition in 2009. They alleged the same erroneous termination or reduction in their own benefits that they had alleged in the original complaint, with one plaintiff alleging an additional instance.[5] They again alleged they had subsequently received the full amount of benefits owed to them.

They continued to allege on information and belief that their experiences and those of others whose experiences were documented in exhibits attached to the first amended petition were indicative of systemic programming flaws

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in CalWIN that resulted in CalWORKs and CalFresh benefits being terminated, delayed, or reduced in violation of state regulations in thousands of individual cases. They pleaded five causes of action that alleged separate systemic failures in CalWIN and the Department’s supervision of the counties using CalWIN.

In support of their allegations, plaintiffs attached 42 exhibits to the first amended petition which they had obtained through discovery. We will discuss the causes of action and relevant exhibits in greater detail below.

The Department again filed a demurrer, and in November 2009, the trial court sustained the demurrer without leave to amend as to all causes of action except one. The court granted leave to amend as to the second cause of action regarding the alleged lack of use and oversight of CalWIN’s NSDI function, the override function that allows case workers to issue benefits manually. The trial court determined the first amended petition pleaded “no clear, specific or direct factual allegations to support [plaintiffs’] claims that [the Department], as a single state agency, failed to supervise and oversee the 18 CalWIN counties and their implementation of the automated CalWIN computer system in violation of state and federal law or to support their claims that the CalWIN system is defectively programmed and operates in violation of law or regulations.” The court noted the exhibits attached to the first amended petition demonstrated the Department in fact monitored and supervised the counties, contrary to the first amended petition’s allegations.

The trial court stated there was nothing in the law that “prohibits [the Department] from delegating to the counties the operation of and the decision-making as to the functionality of an automated computer welfare system. The Court further finds there is no violation of law or regulation based on the manner in which the CalWIN computer system is programmed to operate under any of the counts where there are no facts showing any widespread violations of law or regulations. Any alleged failures of data entries by a county case worker in conjunction with the CalWIN computer system or outside of the CalWIN system do not constitute systematic automated CalWIN problems that have resulted in widespread violations of law or regulations under any of the five counts. What functions are to be performed by the computer and what functions are to be reserved for human action or input is an administrative and management decision, and are not contrary to law and regulations.”

The court granted leave to amend on the second cause of action based solely on counsel’s representations that two consortium counties had written policies prohibiting the use of NSDI when CalWIN erroneously did not issue benefits.

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Plaintiffs filed a second amended petition in December 2009. This petition alleged the Department had violated its single state agency responsibilities by not determining whether any of the 18 member counties had a policy regarding the use of NSDI. It also alleged the Department had violated its responsibilities by failing to monitor whether CalWIN actually issued benefits timely when NSDI is used, and by failing to issue corrective instructions to counties on the proper use of NSDI. Plaintiffs sought a writ enjoining the Department to review county policies and monitor counties to ensure they require timely issuance of benefits through NSDI when CalWIN will not issue correct benefits. Plaintiffs attached a letter from the Department sent to counties reminding them of their need to use NSDI.

Once again, the Department filed a demurrer, and the trial court sustained the demurrer without leave to amend. The court found plaintiffs failed to allege any new or material facts to support their cause of action regarding NSDI policies. “There are no examples specifically pled that some CalWIN counties’ NSDI policies are causing any real problems of untimely or inaccurate benefits in violation of law or regulation.”

Plaintiffs appeal from the judgment of dismissal. They contend:

(1) The trial court applied the wrong standard of review by not accepting plaintiffs’ allegations as true for purposes of demurrer;

(2) The court erred by not enforcing the Department’s nondelegable duty as the single state agency to ensure timely issuance of benefits; and

(3) They pleaded sufficient facts showing the Department violated its duties as the single state supervising agency by allowing the consortium to make substantive policy, by allowing CalWIN’s automatic termination and reduction actions to continue in violation of due process, and by failing to ensure timely issuance of benefits.

In the alternative, plaintiffs assert the court erred by sustaining the demurrers without leave to amend, as they allegedly can ...


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