author: MURRAY M. SCHWARTZ, Chief Judge.

text:
    UNITED STATES of America ex rel. Jerry Lee AXSELLE, Petitioner, v. Walter W. REDMAN, Warden; the Attorney General of the State of Delaware Charles M. Oberly, III; Eugene Maurer, Esq.; Arlen Mekler, Esq.; Patricia Hannigan, Asst. Pub. Def., Respondents.
    Civ. A. No. 84-680 MMS.
    United States District Court, D. Delaware.
    Dec. 17, 1985.

      Jerry Lee Axselle, petitioner, pro se.

      Loren C. Meyers, Deputy Atty. Gen., Dept, of Justice, Wilmington, Del., for respondents Redman, Oberly and Hannigan.
    Eugene Maurer, Jr., Arlen Mekler, Wilmington, Del., respondents, pro se.
   OPINION

MURRAY M. SCHWARTZ, Chief Judge.

Petitioner Jerry Lee Axselle, a prisoner at the Delaware Correctional Center, has filed a petition for writ of habeas corpus under 28 U.S.C. § 2254 challenging the constitutionality of his conviction on the ground he was denied effective assistance of counsel. For reasons discussed below, the writ will be granted unless the State of Delaware affords petitioner a new trial to commence within sixty days.

Petitioner was indicted and scheduled for trial before the Superior Court of the State of Delaware, in and for New Castle County. Shortly before trial, petitioner dismissed his privately retained attorney and requested a continuance in order to retain new counsel. On the court’s denial of the motion, petitioner represented himself at trial. The court appointed as standby counsel petitioner’s dismissed counsel, who was present throughout the trial.

Petitioner was convicted on four criminal counts, including possession of marijuana with intent to distribute and possession of a deadly weapon during commission of a felony. He appealed his conviction to the Delaware Supreme Court, alleging ineffective assistance of counsel on two separate grounds: 1) the trial court’s denial of a continuance to allow petitioner to seek other counsel; and 2) the trial court’s requiring petitioner to represent himself with his former attorney acting as standby counsel.

The Delaware Supreme Court rejected both facets of the ineffective assistance of counsel contention. It held that petitioner had failed to show good cause for a continuance and also that petitioner had elected to represent himself. Axselle v. State, 483 A.2d 632, slip op. at 2, 3 (Del.1984). The Delaware Supreme Court noted that the trial court’s appointment of petitioner’s former counsel as standby counsel was “well-established practice in the courts of this State,” and held that, under settled Delaware law, the appointment of standby counsel who was familiar with the case and who took an active part in the trial when permitted by the pro se defendant satisfied the requirement that a criminal defendant be afforded counsel. Id. at 3.

Petitioner, having exhausted his remedies at the state level as required by 28 U.S.C. § 2254(b), is properly before this Court. The Honorable N. Richard Powers, to whom Axselle's petition was referred for decision, recommended the writ be denied and the petition dismissed. Petitioner filed a timely objection to the Magistrate’s report and the matter is now before this Court for a de novo evaluation of the issues raised by the parties.

FACTS

Defendant Axselle was arrested on July 2, 1982 and indicted one month later. At arraignment on August 17, 1982, Eugene Maurer entered his appearance as defense counsel. Trial was set initially for October 4, rescheduled to October 12, and then set for November 22, 1982.

Defendant, according to his own and Maurer’s testimony, expressed dissatisfaction near the end of October, 1982, with the representation he was receiving. By letter dated November 1, 1982, Maurer advised defendant of the November 22 trial date and also that defendant was free to retain other counsel.

Defendant did not respond to this letter, and next contacted Maurer on Friday morning, November 19, 1982, at which time he discharged Maurer. That afternoon, Maurer and the prosecutor met in chambers with Judge Christie (now Chief Justice Christie) to discuss Maurer’s motion on behalf of defendant for a continuance. Judge Christie denied the motion.

• On Monday morning, November 22, 1982, defendant and Maurer appeared at 10:45 a.m. for a pretrial hearing before Judge Walsh (now Justice Walsh) to seek a continuance in order to obtain new counsel. The court denied defendant’s request as “untimely, lately filed, and prejudicial to the State,” and ordered the case to continue as scheduled. Transcript of Proceedings before Hon. Joseph T. Walsh, Jr. at 10, State v. Axselle, Crim.Action Nos. IN82-07-0394, 0396, 0397, 0398, 0399, 0400, & IN85-081567 (Del.Super. Nov. 22, 1982) (hereinafter cited as “Walsh Tr.”)

Judge Walsh informed defendant that he had to decide that morning whether to accept Maurer as his attorney, and that otherwise defendant would be responsible for conducting his own defense. Walsh Tr. at 11. The judge added he did not advise defendant to represent himself, “but if you want to do that, if that’s your choice, I can’t do anything to persuade you from that.” Id.

Immediately prior to trial on the afternoon of November 22 there was a further colloquy among Judge Balick (the trial judge), defendant, Maurer, and the prosecutor concerning defendant’s motion for continuance and his dissatisfaction with his attorney. The court told defendant that he would have to choose between representing himself with Maurer present as standby counsel and being represented by Maurer. Defendant replied, in part, “if I have to, I will try to handle it myself with some guidance along the way to procedures in the Court.” Transcript of Proceedings before Hon. Bernard Balick, Jr. and Jury at A-7, State v. Axselle, supra (Del.Super. Nov. 22, 1982) (hereinafter cited as “Balick Tr.”). The court answered, “Fine. That is the way we will do it then.” Id. at A-8.

Other than the exchanges described above, neither Judge Walsh nor Judge Balick made any further attempt to warn defendant of or explain to him the dangers of self-representation.

Defendant conducted his own defense at trial. The record reflects that as the trial continued, defendant made an increasing number of requests for assistance. On the morning of the second day of trial, defendant requested that the court appoint a public defender to advise him. The court refused. Balick Tr. at B-3 (Nov. 23, 1982). Defendant later during the second day of trial requested that Maurer make an objection for him. Id. at B-107 to B-108. Maurer complied and moved for a mistrial, which was denied. Maurer subsequently made three objections, id. at B-178, B-291, B-340, and a motion for judgment of acquittal on one charge proffered by the State. Id. at B-270. On the beginning of the third and last day of trial, defendant specifically requested Maurer to address the court on his behalf in order to introduce certain documents into the record. Id. at C-3 to C-6 (Nov. 29, 1982).

Defendant conducted the examination of witnesses throughout the course of the trial, see, e.g., id. at A-38 to A-67, B-81 to B-85, B-92 to B-103, testified on his own behalf, id. at B-331 to B-335, and made the opening and closing arguments to the jury. Id. at A-92 to A-97 (opening argument) & C-19 to C-39 (closing argument).

The jury returned a verdict of guilty on all counts.

ANALYSIS

The Sixth Amendment guarantees “[i]n all criminal prosecutions, the accused shall enjoy the right ... to have the Assistance of Counsel for his defence.” Extended to state-court proceedings by the Due Process clause of the Fourteenth Amendment, Gideon v. Wainwright, 372 U.S. 335, 344, 83 S.Ct. 792, 796, 9 L.Ed.2d 799 (1963), the Sixth Amendment withholds from the courts, in all criminal proceedings, the power and authority to deprive an accused of life or liberty unless the accused has or waives the assistance of counsel. Johnson v. Zerbst, 304 U.S. 458, 463, 58 S.Ct. 1019, 1022, 82 L.Ed. 1461 (1938).

Merely because a defendant appears pro se at trial does not establish a valid claim of ineffective assistance of counsel. The Supreme Court has held that the Sixth and Fourteenth Amendments guarantee an accused the right to conduct his own defense. Faretta v. California, 422 U.S. 806, 95 S.Ct. 2525, 45 L.Ed.2d 562 (1975). A defendant who validly waived the right to counsel cannot appeal on the ground of ineffective assistance; i.e., that his own performance was ineffective.

Petitioner’s claim of ineffective assistance of counsel is thus predicated on a claim that his waiver of the right to counsel was invalid. The Delaware Supreme Court held petitioner validly elected to represent himself. Axselle v. State, 483 A.2d 632, slip op. at 3 (Del.1983). Applying the waiver standard adopted by the Court of Appeals for the Third Circuit, however, this Court concludes petitioner’s waiver was invalid.

A. The Validity of Petitioner’s Waiver of the Right to Counsel

“A waiver is ordinarily an intentional relinquishment of a known right or privilege.” Johnson v. Zerbst, 304 U.S. at 464, 58 S.Ct. at 1023. The Supreme Court has cautioned “that ‘courts indulge every reasonable presumption against waiver’ of fundamental constitutional rights and that we ‘do not presume acquiescence in the loss of fundamental rights.’ ” Id. (citations omitted). The Supreme Court requires that the accused “ ‘knowingly and intelligently’ forgo” the benefits associated with the right to counsel. Faretta, 422 U.S. at 835, 95 S.Ct. at 2541 (quoting Johnson v. Zerbst, 304 U.S. at 464-65, 58 S.Ct. at 1023). To determine whether a defendant has intelligently waived the right to counsel depends upon the particular facts and circumstances surrounding that case, including the background, experience, and conduct of the defendant. Johnson v. Zerbst, 304 U.S. at 464, 58 S.Ct. at 1023. “Although a defendant need not have the skill and competence of a lawyer in order competently and intelligently to choose self-representation, a defendant should be made aware of the dangers and disadvantages of self-representation so that the record will establish that ‘he knows what he is doing and his choice is made with eyes open.’ ” Faretta, 422 U.S. at 835, 95 S.Ct. at 2541 (quoting Adams v. United States ex rel. McCann, 317 U.S. 269, 279, 63 S.Ct. 236, 241, 87 L.Ed. 268 (1942)).

1. The Welty Standard for Effective Waiver

The Court of Appeals for the Third Circuit set out in United States v. Welty, 674 F.2d 185 (3d Cir.1982), guidelines for a court to determine if the defendant is knowingly and intelligently waiving the right to counsel.

Defendant Welty on the day of his trial before the United States District Court requested an opportunity to obtain new counsel or to represent himself. The trial court considered this request merely a delaying tactic, and told defendant he would have to retain his appointed counsel or represent himself. Defendant responded “I’ll go without him” and the court thereupon dismissed defendant’s appointed counsel. Id. at 187. On direct appeal, the Third Circuit Court of Appeals reversed and remanded for a new trial, finding there had not been an effective waiver of the right to counsel. Id.

Welty requires a court to conduct certain inquiries when a defendant “on the eve of trial” seeks new counsel or, alternatively, to represent himself. Id. A court first must decide whether defendant’s request for new counsel is substantial enough to justify a continuance of the trial in order to allow the defendant to obtain new counsel. If the court determines a continuance is not justified, the court must next inquire whether defendant wishes to waive the right to counsel. The defendant must then either proceed pro se or retain existing counsel. Id.

A court must “take particular pains in discharging its responsibility to conduct those inquiries concerning substitution of counsel and waiver of counsel. Perfunctory questioning is not sufficient.” Id. A court should be properly chary of defendant’s motives for requesting new counsel; but even when the request is made on the eve of or during trial, a court must inquire into the reason for the defendant’s dissatisfaction with his existing attorney. Id. If, after making the appropriate inquiries, the court determines defendant has not shown good cause, the court may “properly insist that the defendant choose between representation by his existing counsel and proceeding pro se.” Welty, 674 F.2d at 188. See also McKee v. Harris, 649 F.2d 927, 930-31 (2d Cir.1981); Wilks v. Israel, 627 F.2d 32, 35-36 (7th Cir.1980); Maynard v. Meachum, 545 F.2d 273, 278 (1st Cir.1976).

Even if a court concludes defendant’s eleventh-hour attempt to obtain new counsel is merely a delaying tactic, once the request is denied a court still has the obligation to ensure that defendant’s choice between the remaining options — retention of the old counsel or self-representation — is made “knowingly and intelligently.” Welty, 674 F.2d at 188, 191. The defendant “should be made aware of the danger and disadvantages of self-representation, so that the record will establish that ‘he knows what he is doing and his choice is made with eyes open.” Id. at 188 (quoting Faretta, 422 U.S. at 835, 95 S.Ct. at 2541). That a defendant may have believed it possible to gain some improper advantage by firing his counsel and proceeding pro se does not mean the defendant understood all the implications and possible pitfalls of self-representation. Id. at 191.

A court should advise the defendant that he will have to conduct his defense according to the rules of evidence and of criminal procedure, with which the defendant may be unfamiliar; that the defendant may be hampered in presenting his best defense by his lack of knowledge of the law; and that the effectiveness of his defense may be diminished by his dual role as attorney and accused. Id.

Moreover, the court should apprise the defendant of the nature of the charges, the statutory offenses included within them, the range of allowable punishments thereunder, possible defenses to the charges and circumstances in mitigation thereof, and all other facts essential to a broad understanding of the whole matter.

Id. at 188-89 (quoting Von Moltke v. Gillies, 332 U.S. 708, 724, 68 S.Ct. 316, 323, 92 L.Ed. 309 (1948) (plurality opinion)).

The Welty court acknowledged that conducting a “searching inquiry” into waiver of counsel poses “a difficult task” for the court, particularly when the defendant appears “experienced in the litigation process and friction has developed between the defendant and his counsel.” Id. at 191. As the court observed, however, a judge routinely conducts such inquiries in taking guilty pleas, and “[w]e can expect no less of an inquiry here.” Id.

In analyzing the record before it, the Welty court concluded that the trial court had made “little inquiry into whether Welty’s decision to proceed pro se was made knowingly and intelligently.” Id. The court of appeals found “substantially more emphasis by the court upon forcing a quick decision from Welty than on ensuring an intelligent and thoughtful course of action.” Id. Finding it impossible to determine from the record whether Welty had truly understood the consequences of representing himself, the court remanded for a new trial. Id. at 196.

The Welty standard is fully applicable in the context of a habeas corpus petition. Piankhy v. Cuyler, 703 F.2d 728 (3d Cir. 1983).

2. Applying Welty to Petitioner’s Case

The first step of the Welty analysis is to determine whether the state trial court made sufficient inquiry into the reasons for defendant’s dissatisfaction with his attorney. The trial judge allowed Axselle to state at length his disagreements with counsel and his reasons for not seeking new counsel earlier. See Walsh Tr. at 2-3, 5-6, 7-9. Axselle admitted to the judge that he had had serious disagreements with attorney Maurer for over a month. Id. at 9. The Court holds Judge Walsh fully questioned defendant on this point and properly denied defendant’s request as untimely. However, the second inquiry a court must make under Welty —whether defendant made a knowledgeable and intelligent waiver of counsel — was not satisfied.

After denying defendant’s motion for a continuance, Judge Walsh did not advise defendant of the dangers of self-representation. The judge simply told defendant, “You have to make a decision this morning whether you’ll accept Maurer,” and that otherwise defendant would be responsible for his own defense. Walsh Tr. at 10. The advice the court offered defendant was far too abbreviated to satisfy the Welty standard:

I don’t advise that [conducting your own defense], but if you want to do that, I can’t do anything to persuade you from that. But, in any event, your ease will be tried today and you should get together with Mr. Maurer and decide to what extent he’s going to represent you.

Walsh Tr. at 11.

Nor was defendant advised sufficiently of the dangers of self-representation at the commencement of trial. Judge Balick, the trial judge, was apprised by both Maurer and the prosecutor of what had transpired that morning before Judge Walsh. When the judge asked defendant if he had anything to add, defendant stated his reluctance to proceed pro se: “I don’t think I indicated that I wanted to try this trial myself. I just wanted another lawyer who could help me go through the procedures. If I have to, I’ll do it myself. It’s not my desire____” Balick Tr. at A-6.

Despite this plainly expressed ambivalence, the court did not sufficiently warn defendant of the problems involved in self-representation. Like Judge Walsh, Judge Balick merely told defendant he had to make a choice. The judge stated:

We always advise persons against representing themselves and this advice is given especially when the charges are serious. And you have several felonies charged against you. But there is a constitutional right that you have to represent yourself and, therefore, your choice in view of the denial of the continuance is whether you will represent yourself and then simply have Mr. Maurer here to advise you when requested or whether you will allow him to represent you today. Now, as to that choice, have you made up your mind?

Id. at A-6 to A-7. Defendant again voiced his reluctance: “... if I have to, I will try to handle it myself with some guidance along the way to procedures in the Court.” Id. at A-7. The court answered:

Fine. That is the way we will do it then. I would point out that the decision on how to handle the case depends on what subject is at issue. If you are representing yourself, you will, of course, make all decisions, but even if he represents you, the basic decisions are made by you, namely, whether to plead guilty or to go to trial, whether to testify or not, and not by him, so that on these basic matters, he would simply be advising you and you would be making the decision and he would follow through. But I gather what you are telling me is that under the circumstances, you will represent yourself with his assistance and that is the way we will do it then____

This ended the discussion.

The trial record discloses that Mr. Axselle’s personality would not endear him to many with whom he came into contact. Under the circumstances, the trial judges would have been fully justified in believing Axselle was merely attempting to disrupt and delay trial with his request for removal of counsel.

Nevertheless, examining the record in this case leads this Court ineluctably to conclude that the two colloquies between the court and the defendant were insufficient to establish that defendant “knowingly and intelligently” waived his right to counsel, as required by Welty. The state court here has failed adequately to discuss with petitioner the “dangers and disadvantages of self-representation.” The record does not reflect that petitioner truly understood the consequences of representing himself. Heeding the admonition that a court must “indulge in every reasonable presumption against waiver,” Brewer v. Williams, 430 U.S. 387, 404, 97 S.Ct. 1232, 1242, 51 L.Ed.2d 424 (1977), the Court holds that petitioner did not effectively waive his right to counsel.

B. The Effect of Appointing Standby Counsel

Although the Delaware Supreme Court, relying in part on Welty, found the state trial court had not abused its discretion in denying Axselle’s motion for a continuance, the Supreme Court did not attempt to justify under Welty the adequacy of Axselle’s

waiver of the right to counsel. Instead, the Delaware Supreme Court focused on the trial court’s appointment of Maurer, the attorney whom Axselle had just dismissed, to serve as standby counsel. The Delaware Supreme Court in Axselle v. State, supra, slip op. at 3, cited as controlling precedent Hicks v. State, 482 A.2d 765 (Del.1984), under which a defendant

... was afforded a proper equivalent of a defense attorney (even if he had not made a complete waiver), [when] he was provided a standby attorney who was familiar with the case and ready, able, and willing to act on defendant’s behalf and who did in fact take an active part in his defense when the defendant permitted him to do so.

Hicks v. State, supra, slip op. at 3. I disagree.

The mere appointment of standby counsel can never cure a defective waiver. The issue is whether the presence of standby counsel in the factual context of this case cures an ineffective waiver of counsel. Although there might be circumstances in which the performance of standby counsel may cure a defective waiver, this is not such a case.

Axselle did not enjoy in any meaningful sense the benefit of counsel during his trial. Attorney Maurer early in the trial asked the court for permission to leave because of difficulties with Axselle. On the second day, Maurer told the court he understood he was not to play any active role unless specifically requested to do so by the defendant. The court told Maurer that he “should simply attempt to advise Mr. Axselle, and he can decide whether he wants to accept your advice.” Balick Tr. at B-14. As the trial progressed, defendant’s evident antipathy towards Maurer slackened, for he made several specific requests of Maurer. See supra pp. 335-36. Defendant, not standby counsel, continued to make all the strategic decisions normally made by counsel, however. The words of Justice Black describing Gideon are equally apt here:

Put to trial before a jury, [defendant] conducted his defense about as well as could be expected from a layman. He made an opening statement to the jury, cross-examined the State’s witnesses, presented witnesses in his own defense, ... and made a short argument emphasizing his innocence to the charge____

Gideon v. Wainwright, 372 U.S. 335, 337, 83 S.Ct. 792, 792, 9 L.Ed.2d 799 (1963).

The Court cannot interpret defendant’s requests to Maurer as proof that Maurer in any sense controlled the course of the litigation. Cf. McKaskle v. Wiggins, 465 U.S. 168, 182, 104 S.Ct. 944, 963, 79 L.Ed.2d 122 (1984) (it is “self-evident” that a pro se defendant’s request for standby counsel’s assistance does not deprive the defendant of control over his own defense). Conducting his own defense undoubtedly instructed the defendant in some of the practical difficulties of litigation. Defendant’s requests to Maurer appear to reflect a growing comprehension that presenting his case was not an easy undertaking and to constitute an unspoken admission that his earlier decision to proceed pro se was ill informed and against his own best interest. That the pro se defendant gradually realizes the unhappy consequences of his earlier decision to waive the right to counsel cannot cure the defective waiver, however. At mid-trial it is too late to turn back the clock.

CONCLUSION

Axselle has been denied the right to counsel guaranteed by the Sixth Amendment of the Constitution. The denial stems from his invalid waiver of the right to counsel. An order will issue directing that the writ of habeas corpus issue unless the State of Delaware affords Axselle a new trial to commence within sixty days.

      . THE DEFENDANT: Yes, sir. First, I’d like to ask that if I’m going to have a counsel up here to give me advice through the trial, that perhaps you could bring me up a Public Defender or something. Mr. Maurer and I just don't seem to be hitting off to this [sic] and I don’t think he’ll help me raise objections if I need it. If I could just get another lawyer, not even familiar with the case, to point out the legalities for me, it’s as good as I’ve got here.
      THE COURT: That is impractical. Mr. Maurer’s duty is to advise you.
      THE DEFENDANT: He’s not, though, Your Honor.
      THE COURT: Well, I am not satisfied of that. Apparently, you feel that that’s true, but so far, the only thing I have observed is you are not satisfied if the advice disagrees with your own opinion. That is not a basis for concluding that he is not performing his duty.
      THE DEFENDANT: Yes, Sir....
      Balick Tr. at B-3 to B-4 (Nov. 23, 1982).

      . Maurer moved for a mistrial on the ground that the State in the presence of the jury had commented on the defendant's right to remain silent. Balick Tr. at B-108 (Nov. 23, 1982). The trial judge denied the motion, on the ground that the State had merely been offering proof that the defendant had given up his right to remain silent after being given a Miranda warning. Id. at B-108 to B-109.

      . MR. MAURER: Excuse me, Your Honor. After the conversation I just had with the defendant, and I tried to explain to him what was going on at this point in time, he basically won’t listen to me and told me I could leave if I wanted to. I’d ask leave of the Court to be excused. That’s a choice he can make and I certainly don’t get any great pleasure out of sitting here while Mr. Axselle examines these witnesses. And if he doesn’t want my help and if he wants me to leave, I’d ask the Court to allow me to do that____
      Balick Tr. at A-78 (Nov. 22, 1982).

      . Mr. MAURER: Your Honor, I have two points, if I just might. The first one is, if I could just get — in light of what Mr. Axselle is saying and has been saying, if I could just get a clarification of my role here so that I don’t run into any problem at a later point in time. I perceive my role, at this point in time, to be to advise Mr. Axselle if he asks me. I have observed numerous things that have happened at this point in time which I would have objected to or advised him to do differently. I'm just going to keep my mouth shut unless he asked me to do something or asks for my advice, and when I tried to give him advice yesterday, he simply told me I could leave if I wanted to. So just so we can be real clear, I am not going to object no matter how bad something is, sua sponte or on my own, and I think Mr. Axselle said he wants to handle the case himself. And if he has something to ask me, that’s fine, and I hope that’s compatible to what the Court sees as my role, because I don't want to be accused at a later time of not objecting to something which should have been objected to or allowing something that happened not to happen. I don’t see that as my role here.
      Balick Tr. at B-12 to B-13 (Nov. 23, 1982).


source: Caselaw Access Project

author: COHN, District Judge.

license: Public Domain

text:
    Blanca DiNATALE, Plaintiff, v. SUBARU OF AMERICA, a foreign corporation, Defendant.
    Civ. No. 85-CV-5183-DT.
    United States District Court, E.D. Michigan, S.D.
    Dec. 17, 1985.

      Larry D. Barnett, Barnett & Bars, Pontiac, Mich., for plaintiff.
    Steven C. Nadeau, Dickinson, Wright, Moon, Van Dusen & Freeman, Detroit, Mich., for defendant.
   MEMORANDUM AND ORDER DENYING MOTION TO REMAND

COHN, District Judge.

I.

This is an automobile products liability case. On October 29, 1982, plaintiff, who had been severely injured in an automobile accident, filed suit in Wayne County Circuit Court against Subaru of America (Subaru), a foreign corporation which imported the automobile in which plaintiff was a passenger when she was injured, Fuji Heavy Industries, Ltd. (Fuji), a foreign corporation which manufactured the automobile, Sabra Dental Studio (Sabra), a Michigan corporation which employed the owner and operator of the automobile in which plaintiff was a passenger and the owner and operator, Robert Camargo (Camargo). Fuji was not served. Plaintiff subsequently sued Fuji in this court; the case is pending. On May 22, 1984 Camargo was dismissed from the Wayne County case by stipulation. On or about November 6, 1985 Subaru learned plaintiff resolved her dispute against Sabra and thereafter, on November 7, 1985, removed the Wayne County case to this court. The petition for removal alleged that a “settlement” had been entered into between plaintiff and Subaru which was (1) off the record; (2) not recorded in the form of an order so as to prevent removal; (3) evidenced by an exchange of letters which Subaru could not obtain; and (4) effectively a voluntary dismissal. Subaru argued that this “settlement” thereby created diversity between plaintiff and Subaru, the only parties remaining in the case.

On November 12, 1985 plaintiff moved to remand the case to the Wayne County Circuit Court on the ground Sabra had not been dismissed. On November 13, 1985 plaintiff’s counsel filed an affidavit in support of the motion to remand explaining the “settlement” with Sabra as merely an understanding not to attempt to collect any judgment against Sabra, as reflected in a letter dated September 6, 1985 from Sabra’s counsel to plaintiff’s counsel which reads as follows:

This will confirm the agreement we entered into. That agreement was that we would not further prosecute our Motion for Summary Disposition, on behalf of Sabra Dental Studios of Michigan, Inc., a Defendant in the case entitled [DiNatale v. Subaru ].
The consideration for our not continuing to prosecute the Motion on behalf of the Defendant, Sabra Dental Studios of Michigan, Inc., is the agreement whereby we would appear and remain throughout the trial of this cause. That no matter the outcome of the trial, the Plaintiff would not attempt any recovery against Sabra Dental Studios of Michigan, or any other Sabra entity. The consideration for the Plaintiff not attempting any recovery against Sabra Dental Studios of Michigan, or any other Sabra Dental entity would be the withdrawing of the Motion for Summary Disposition, on behalf of Sabra Dental Studios of Michigan, Inc., and allowing the matter to proceed to trial, in the normal course of the trial schedule by the Circuit Court, for the County of Wayne.
I do not feel that we need a formal agreement between ourselves, spelling out every item that has been stated above.

On November 13, 1985 a hearing was held on the motion to remand. It was then adjourned to November 25, 1985 to allow for further development of the record as to what precisely was the agreement between plaintiff and Sabra. It was plaintiffs position that the letter agreement was prompted by the likelihood that Sabra was uncollectible and therefore the agreement not to attempt collection of any judgment was a gesture only and that Sabra’s continued presence in the Wayne County case was a matter of substance. On November 25, 1985 the Court, still dissatisfied with the state of the record and the ambiguous nature of the agreement between plaintiff and Sabra, directed that Sabra’s lawyer be deposed.

Sabra’s laywer, in his deposition, was unable to explain the rather unorthodox agreement Sabra entered into with plaintiff. As far as the lawyer was concerned “any claim for damages against Sabra ...” had been resolved. The lawyer characterized the letter as a “Mary Carter Agreement”. To him “it was resolving the aspect as to Sabra of paying any money damages in regard to the claims made by the plaintiff”.

II.

A.

This is not a case of fraudulent joinder. As explained in Hart and Wechsler, The Federal Courts and The Federal System 1215 (2d ed. 1973):

The doctrine has long been recognized that the “fraudulent” joinder of a resident defendant is no bar to removal. If a petition for removal contained allegations sufficient, if proved, to show “fraud”, the state court was bound to grant the petition, leaving the proof to be made in the federal court. But the mere purpose to defeat removal did not constitute fraud, even though the resident defendant was known to be judgment-proof (emphasis added).

What is involved here is a proper interpretation of 28 U.S.C. § 1446(b) which reads:

If the case stated by the initial pleading is not removable, a petition for removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable.

Three cases are instructive.

In Heniford v. American Motors Sales Corp., 471 F.Supp. 328 (D.S.C.1979), the non-resident defendant removed the case following plaintiff’s final argument to the jury, in which his lawyer told the jury

Well, let’s look a little bit further here at Ralph [the resident defendant]. You know — and look here, don’t give a verdict against Ralph. We’re not actually suing Ralph because we’ve found out now— found out when this case come up, that Ralph was telling the truth by the records in this particular case.
I don’t want you to give a verdict against Ralph Cooke. No, we don’t want a verdict against that because we have now determined that this man is telling the truth and he has all along.

Id. at 332. The court held that the case became removable on the basis of this statement because “[b]y directing the jury not to return a verdict against Ralph Cooke plaintiff’s attorney, in effect, dismissed his claim against this defendant since he expressly announced plaintiffs did not seek to impress liability upon Ralph Cooke.” Id. at 333. The court said that the technical flaws in the removal — the fact that Ralph Cooke was not formally dropped and there was no paper representing a change of circumstances warranting removal — did not defeat the non-resident defendant’s right to remove.

In Erdey v. American Honda Co., Inc., 96 F.R.D. 593 (M.D.La.1983),' the plaintiff voluntarily settled with resident medical defendants under an agreement in which these defendants were released and plaintiff’s lawyer was instructed to dismiss the action against them. Under Louisiana law, because payment was coming from a patient’s compensation fund, the agreement was subject to state court approval after which a judgment was entered against the fund. Thereafter the remaining non-resident defendants removed the case to federal court. Plaintiff moved to remand arguing the medical defendants were not dismissed from the ease since no order of dismissal had been entered. The court declined to remand on the grounds there had been no adjudication on the merits and the litigation had been terminated by the voluntary act of the plaintiff. The court explained

Where plaintiff, by his voluntary act has definitely indicated his intention to discontinue the action as to the non-diverse defendant, plaintiff has indicated that he no longer desires to dictate the forum and the ease then becomes removable under 28 U.S.C. § 1446(b). Powers v. Chesapeake & O. Ry. Col., 169 U.S. 92 [18 S.Ct. 264, 42 L.Ed. 673] (1898). The technicality of how plaintiff’s intention is expressed is of no moment — it is the expression of the intent by plaintiff which makes the case removable.

Id. at 599.

Aynesworth v. Beech Aircraft Corporation, 604 F.Supp. 630 (W.D.Tex.1985), involved a fact situation similar to that in Heniford, supra. The case was removed to federal court on the grounds that plaintiffs in final argument concentrated primarily on their theory against the non-resident defendant and strongly urged the jury to find the non-resident defendant solely liable. Plaintiffs, however, did not state in absolute terms that they did not want the jury to find the resident defendants liable and said that if the jury in fact found the resident defendant liable they should return a verdict on that basis. The court distinguished Heniford, and remanded the case to state court, saying:

At no time did plaintiffs state they absolutely did not want the jury to return a verdict against the Texas defendant.

Id. at 636.

This case, as will be described, is substantially closer to Heniford and Erdey than Aynesworth.

B.

1.

In B., Inc. v. Miller Brewing Company, 663 F.2d 545 (5th Cir.1981), in a comprehensive discussion of the “question of a forum rather than substance” the court stressed the importance of federal courts establishing at the threshhold that “the dispute is within the province of controversies assigned to it by the Constitution and statute”, and if it fails to do so it “poaches upon the territory of a coordinate judicial system, and its decisions, opinions, and orders are of no effect”. Id. at 548. The court also stressed the obligation of “the party who urges jurisdiction upon the court ... bearpng] the burden of demonstrating that the case is one which is properly before the federal tribunal”. Id. at

549. This is especially important since an order denying a motion to remand on the grounds a case was improvidently removed is not immediately appealable. See 14A Wright, Miller & Cooper, Federal Practice and Procedure § 3740 at 596-98.

Federal courts have an obligation to police their jurisdictional powers with great scrutiny, particularly when it comes to the validity of transactions designed to defeat their jurisdiction. 14 Wright, Miller & Cooper supra, § 3641 at 141.

2.

Plaintiffs lawyer says the agreement with Sabra arose from the fact that he could not persuade his client to approve a dismissal of Sabra. The lawyer says that because his client does not speak English he could not convince her that Sabra was uncollectible and that she was unlikely to recover anything from Sabra even if she obtained a judgment. This does not suggest that plaintiffs lawyer did not intend by the letter agreement to settle the case as to Sabra; rather, this suggests at best that plaintiff did not formally approve her attorney’s agreement with Sabra.

I am satisfied, however, that plaintiff by the letter agreement, as was the situation in Heniford and Erdey, supra, unequivocally abandoned her claim against Sabra and that the sole purpose of the form of settlement with Sabra was to defeat Subaru’s right to remove the Wayne County case to federal court. Sabra effectively was dismissed from the Wayne County case. Accordingly, the motion to REMAND is DENIED.

SO ORDERED.

      . Modem Legal Glossary 333 (1980) describes "Mary Carter Agreements" as
      Contracts by which one co-defendant secretly agrees with the plaintiff that if such co-defendant will proceed with his defense, his own liability will decrease proportionately by increasing the liability of other co-defendants. Named after a Florida case involving the Mary Carter Paint Company, such agreements pose serious ethical problems.
      It is not necessary to discuss the implications of Mary Carter agreements with regard to this case, or whether in fact the "settlement” here constitutes a Mary Carter agreement.

      . See Z. Chafee, Jr., The Thomas M. Cooley Lectures, Second Series: Some Problems Of Equity 311-316 (1950).


author: WARRINER, District Judge.

text:
    UNITED STATES of America v. Reginald C. REILLY.
    Grim. 85-00020-01-R.
    United States District Court, E.D. Virginia, Richmond Division.
    Dec. 17, 1985.
    James R. Spencer, John McDougal, Asst. U.S. Attys., Richmond, Va., for plaintiff.
    James C. Roberts, Harold E. Starke, Jr., Richmond, Va., for defendant.
   ORDER

WARRINER, District Judge.

Defendant Reginald C. Reilly had filed a motion under Rule 35(b) for a reduction of his sentence. The motion is occasioned by the occurrence of frequent attacks of angina pectoris which, in the opinion of his physician, result from conditions of stress incident to defendant’s incarceration.

The motion was filed within 120 days after sentencing but it was filed during pendency of an appeal. The Court’s jurisdiction under such circumstances is not mentioned in defendant’s brief but as a court of limited jurisdiction, jurisdiction to hear and decide a matter must always be the first inquiry in every case.

My own research on the question of jurisdiction convinces me that I do not have jurisdiction to consider the motion for reduction of sentence under Rule 35(b) pending appeal. A case squarely on point is United States v. Ramey, 559 F.Supp. 60, 68 (E.D.Tenn.1981). In Ramey Judge Neese held:

[Defendant] made pro se a timely motion ... for a reduction of his sentence. Rule 35(b), Federal Rules of Criminal Procedure. This Court has no jurisdiction to consider [defendant’s] motion during the pendency of his appeal. Berman v. United States, (1937), 302 U.S. 211, 214 [58 S.Ct. 164, 166, 82 L.Ed. 204] [(1937)]....

Though Ramey is, as noted, directly on point, the authority cited by Judge Neese is not. Berman v. United States, 302 U.S. 211, 58 S.Ct. 164, 82 L.Ed. 204 (1937), did not involve a motion under Rule 35. Indeed, Berman involved procedural huggermugger in the district court at defendant’s request intended to aid defendant in his quest to avoid dismissal of his appeal of a district court conviction. I surmise that his appeal was not perfected within the required time after the original sentencing. Accordingly, he applied for resentencing with only token changes. The district court complied with his request and defendant proceeded to appeal from the “second” sentence.

A unanimous Supreme Court speaking through Chief Justice Hughes struck down this procedure, not on the basis of impropriety, nor on the basis of the lack of statutory authority, but purely on the basis of jurisdiction. The Court held:

As the first sentence was a final judgment and appeal therefrom was properly taken, the District Court was without jurisdiction during the pendency of that appeal to modify its judgment by resentencing the prisoner.

Berman at 214, 58 S.Ct. at 166.

What defendant here asks this Court to do is “to modify its judgment” during the pendency of an appeal. The Supreme Court in Berman says I have no such

authority. Judge Neese in Ramey says this holding of the Supreme Court applies to Rule 35(b) motions. His ruling is wholly in conformity with the general proposition that a properly filed appeal ousts a trial court of all substantive jurisdiction over the appealed litigation. Consistent with the language of the Supreme Court, with the specific authority of Ramey, and with the general proposition of law, I conclude this Court lacks jurisdiction to consider Mr. Reilly’s motion for reduction of sentence, timely filed, pending appeal. Accordingly, the motion is DISMISSED.

And it is so ORDERED.


author: JOHN GARRETT PENN, District Judge.

text:
    Cornelius J. MINIHAN, Plaintiff, v. AMERICAN PHARMACEUTICAL ASSOCIATION, Defendant.
    Civ. A. No. 85-989.
    United States District Court, District of Columbia.
    Dec. 17, 1985.

      Alan Banoy, Washington, D.C., for plaintiff.
    Michael McConihe, Washington, D.C., for defendant.
   MEMORANDUM

JOHN GARRETT PENN, District Judge.

The case is presently before the Court on defendant’s motion for summary judgment and plaintiff’s cross motion for partial summary judgment, to consider the existence, conditions and duration of plaintiff’s employment contract with defendant. Specifically, the parties move the Court to determine whether the employment contract guaranteed Mr. Minihan a permanent position with American Pharmaceutical Association. The complaint alleges that the defendant denied the plaintiff annual leave and terminated him in bad faith. Defendant asserts that all of these issues can be disposed of on its summary judgment motion. After careful consideration of the motion, the opposition thereto and the record in this case, the Court grants defendant’s summary judgment on the contract and punitive damages issues and grants summary judgment, sua sponte, for plaintiff on the issue of annual leave.

I

The facts are as follows. Plaintiff, Cornelius J. Minihan, a specialist in journalism and publications, applied for a position as Director of Publications with the American Pharmaceutical Association. Prior to this, Mr. Minihan was unemployed. Minihan Deposition at 10-12. On March 23, 1982, Dr. William Apple, then defendant’s president, interviewed Mr. Minihan and offered him a position as Director of Publications. The letter of employment, which purportedly confirmed the agreement, stated that Mr. Minihan would have “full-time; permanent” employment, at an annual salary of $40,000. Defendant Exhibit 1. The letter and allegedly Dr. Apple’s comments referred to the conditions of employment at the Association as set forth in the “American Pharmaceutical Association Personnel Policy Manual (Manual).” Defendant’s Exhibits 1 and 2, Minihan at 20. Mr. Minihan believed that “permanent” meant he was guaranteed employment for as long as he satisfactorily performed and he concluded that Dr. Apple’s statements “supported this view.” Minihan at 24. In late September or early October, Dr. Apple informed Mr. Minihan he intended to dissolve the Publications Division due to budgetary economies and staff reorganization. Although plaintiff was assured that he had performed commendably, his employment was scheduled to terminate on December 31, 1983. Minihan at 32, 33.

At this same time, a memorandum dated September 28,1983 notified all personnel of a change in the annual leave policy outlined in the manual. Employees were required to choose either to receive a lump sum payment of any annual leave in excess of 40 hours or have it deposited in a special medical account. Lack of appropriate notification would result in the annual leave automatically charged to the medical account and consequently not accessible upon termination. Defendant Exhibit 5. Mr. Minihan asserts that, in a conversation subsequent to the letter’s circulation and after oral notice of termination, Dr. Apple requested that he “stay on as a favor ...” until he could find a comparable job somewhere else. In addition, Dr. Apple allegedly assured plaintiff that arrangements would be made for his annual leave. Minihan at 34.

Dr. Apple died on December 17, 1983. Plaintiff then confirmed in writing his understanding of Dr. Apple’s promise for further employment and guaranteed annual leave. Defendant’s Exhibit 9. After Dr. Apple’s death, his successor Maurice Q. Bectel, advised Mr. Minihan, in a letter dated December 30, 1983, that he intended to pursue Dr. Apple’s original plan for reorganization. As a result, Mr. Minihan would be terminated on December 31, 1983 and paid an additional two weeks salary without any work obligation. Defendant’s Exhibit 10.

It is uncontested that Mr. Minihan performed his duties adequately. The focus of the dispute is whether the defendant could, by the terms of the employment agreement, terminate Mr. Minihan “without cause”. Plaintiff contends that the employment contract guaranteed him a position unless he performed unsatisfactorily. Minihan Complaint II 6.

II

Both parties agree that for the purposes of this motion, the Manual merges with the employment letter to form the employment agreement. In addition, it is uncontested that Dr. Apple, as president of the Association, offered Mr. Minihan “full-time; permanent” employment. Plaintiff’s evidence, primarily consisting of Ms. Weschler’s and his deposition, is in substantial agreement with the defendant’s. Plaintiff, avers that Dr. Apple made statements from which plaintiff understood the term “permanent” to mean he would continue employment with the defendant as long as he performed his job satisfactorily. See Plaintiff’s Statement of Material Facts About Which There Is No Genuine Dispute, 117. This conclusion or belief, however, does not evince Dr. Apple’s intent. More than a plaintiff’s belief in the permanence of employment is necessary to raise a material issue of fact. Sullivan v. Heritage Foundation, 399 A.2d 856, 859 (D.C.1979). After careful reading of the evidence, the Court concludes that there are no genuine issues of material fact and therefore, the summary judgment motion turns upon the applicable substantive law.

III

In employment situations, though the classic legal assumption is that the parties intend a contract of indefinite term, to be terminated at will, it is clear that parties may contract otherwise. The dis-positive element is the parties’ intent. Hodge v. Evans Financial Corp., 707 F.2d 1566, 1568 (D.C.Cir.1983). To deduce the parties’ intent the Court must consider the express terms of the contract, the circumstances surrounding its making and the consideration furnished. Id. at 1569.

In this case the express terms of the Manual and the employment latter categorize plaintiff’s position as “full-time permanent”. The Manual defines full-time as “an employee hired to work the Association’s normal work week on an ongoing basis until the employment is terminated by either the employee or the Association”. Defendant Exhibit 2, Section 201.1. The converse category, part-time, is defined as “an employee hired to work less than the Association’s normal work week on an ongoing basis until employment is terminated by either the employee or the Association.” Defendant’s Exhibit 2, Section 201.2. A temporary employee “is either a full-time or part-time employee hired other than on an ongoing basis, usually for a predetermined period of time or for the completion of a particular project.” Defendant’s Exhibit 2, Section 201.3 (emphasis the Court’s). Although the term permanent is not explicitly defined in the Manual, in its common usage the term infers an ongoing, continuous or non-temporary state. The question is whether the term permanent in the employment letter can be construed to represent anything more than the usual business contract for continuing employment, terminable at will by either party. After analyzing the relevant case law, the Court concludes that the ordinary construction is mandated.

In the context of an oral agreement, the Court of Appeals in Littell v. Evening Star Newspaper Co., 120 F.2d 36 (D.C.Cir.1941), reasoned that in the absence of clearly expressed intent, the “assumption will be that even though [the parties] speak in terms of ‘permanent’ employment the parties have in mind merely the ordinary business contract”, terminable at the will of either party. Id. at 37. Plaintiff urges this Court to conclude that because the word permanent is undefined in the Manual, its presence in the employment letter intimates a special meaning. Contracts are to be read by reference to the norms of conduct and common usages surrounding similar contracts. Greene v. Howard University, 412 F.2d 1128, 1135 (D.C.Cir.1969); Howard University v. Best, 484 A.2d 958, 967 (D.C.1984). Employment contracts for life are by their binding nature unusual contracts and logically not envisioned as ordinary business practice. Smith v. Beloit Corp., 40 Wis.2d 550, 162 N.W.2d 585, 587 (1968). Recently, the Court of Appeals classified a contract that promised employment until retirement and termination only for good cause, as “extremely unusual, almost inexplicable as a matter of business practice”. Albert Z. Hodge v. Evans Financial Corporation, 778 F.2d 794, 803 (D.C.Cir.1985). Logically, a contract for life constitutes a similar anomaly in the business world. The Court further explained that a contract terminable at will is the usual business understanding of the term permanent employment. A contract, however, could constitute permanent in the sense of terminable only for cause. Id. at 801.

Defendant argues that the agreement reflects an ordinary, terminable at will contract. The Court cannot entirely agree, because the Manual outlines conditions of termination, and therefore it does not evince a “pure at will” contract. Some of the applicable sections are summarized as follows; (1) After the three month probationary period all full-time employees must receive or give at least one week notice of termination, (2) the Association may opt for severence pay in lieu of notification. [Defendant’s Exhibit 2, Section 206.2.] (3) Part-time and temporary employees may be terminated or may leave without either notice or severence pay. [Defendant’s Exhibit 2, Section 206.3]; and (4) when the Association terminates “for cause” it does so pursuant to the reasons listed in Section 206.8. In this case, an employee is not entitled to notice or severence pay. It is clear that these provisions contractually mandate notification procedures but there is nothing which expressly limits termination only “for cause”.

Plaintiff contends that because the Manual does not specifically articulate other reasons for termination except those listed “for cause”, no additional reasons were envisioned. This interpretation confounds the obvious. Where procedures and time tables for notification are clearly set forth, and termination “for cause” requires no notification, the parties must have considered additional termination reasons. In fact, the Manual refers to termination due to lack of work or reduction in forces under another section entitled Equal Employment Opportunity Policy. Defendant’s Exhibit 2; Section 1:100.5. Nothing in the employment papers reflect an unusual interpretation of the term “permanent”, therefore the Court must consider other factors which may help infer the parties’ intent.

Although consideration is not necessary for a permanent contract, which guarantees employment for so long as an employee performs satisfactorily, it is a strong indication of the parties intent. Littell v. Evening Star Newspaper Co., 120 F.2d 36, 37 (D.C.Cir.1941). When parties suffer some detriment in exchange for acceptance of a permanent employment position, the logical inference is that the parties could not have contemplated summary discharge without liability. Riefkin v. E.I. DuPont de Nemours & Co., 290 F. 286, 289 (D.C. Cir.1923). In this case, Mr. Minihan was unemployed before he accepted Dr. Apple’s offer. There is no evidence of consideration or circumstances which might infer a guarantee by Dr. Apple, for life-time employment.

The Court concludes that the parties, by their actions and terms of agreement, did not intend to guarantee life-time employment. Therefore, the contract, as a matter of law will be construed as terminable at will by either party, modified only, but the notification requirements set forth in the Manual. Hodge, 707 F.2d at 1570.

IV

On the issue of punitive damages, the plaintiff offers a paucity of evidence to support such a claim. Although a plaintiff may sue on alternate theories of tort or contract, to recover, the evidence must support a willful, outrageous, evil, malicious or deliberately oppressive act. Mariner Water Renaturalizer of Washington, Inc. v. Aqua Purification, 665 F.2d 1066, 1071 (D.C.Cir.1981). Under the law of the District of Columbia, such damages are disfavored. Id. In light of the Court’s determination that the contract was basically terminable at will, the plaintiff’s evidence is not sufficient to support a finding or an inference of a deliberately wrongful or malicious act by defendants. See H & R Block, Inc. v. Testerman, 275 Md. 36, 338 A.2d 48 (1975).

V

Finally, Mr. Minihan claims he was denied annual leave. Defendant does not dispute that plaintiff, in fact, had accrued more than 40 hours of annual leave, instead defendant asserts its right to act in accord with established policies. In a memorandum dated September 28, 1983, Association personnel were notified of a change in the annual leave policy. Defendant urges the Court to rely solely on the procedure set forth in that memorandum and dismiss the plaintiff’s claim because he failed to properly follow the procedures. A company, however, follows established business customs which recognize the apparent, actual or implied authority of business officers to manage the ordinary corporate affairs. See 19 Am.Jur.2d, Corporations, 1169,1170 (1985). Mr. Minihan alleges that Dr. Apple specifically told him he would make arrangements for his annual leave. In reliance on this promise, the plaintiff took no further action. The Association does not dispute the plaintiff’s factual contention and is now estopped to argue improper procedure, since Dr. Apple, as president, had the apparent and implied authority to create special arrangements for employees in salary matters.

The plaintiff is entitled to judgment on this claim.

An appropriate order has been issued.

ORDER

This comes before the Court on defendant’s motion for summary judgment and plaintiff’s cross motion for partial summary judgment. After giving careful consideration to the motions, the oppositions thereto and the record in this case, the Court concludes that plaintiff’s motion for partial summary judgment must be denied, and that defendant’s motion for summary judgment must be granted, except with respect to the issue of annual leave. The Court further concludes that the plaintiff is entitled to judgment on the issue of annual leave and judgment is awarded sua sponte. A memorandum setting forth the reasons for the Court’s determination accompanies this order.

In view of the above, it is hereby

ORDERED that plaintiff’s motion for partial summary judgment is denied, and it is further

ORDERED that defendant’s motion for summary judgment is granted, except to the extent that it addresses the issue of annual leave, and it is further

ORDERED that the defendant shall pay to the plaintiff the amounts due to the plaintiff for accrued annual leave as set forth in the accompanying memorandum, and it is further

ORDERED that each party will bear its own costs.

      . References to Cornelius Minihan’s and Virginia Weschler’s depositions will be hereafter cited to as Minihan and Weschler, respectively.

      . Count II of plaintiff's complaint claims a violation of the District of Columbia’s Wage Payment Law which plaintiff later abandoned.

      . Plaintiff offers no evidence of exactly what Dr. Apple said except that Dr. Apple specifically mentioned staff members whom he had worked with for many years. Minihan pp. 14-15.

      . Exhibits 1A — IP, Defendant’s Supplemental Responses to Plaintiff's Discovery Requests, are Association employment letters issued in numerous hiring situations. Each one states the term, “full-time; permanent".

      . Both Mr. Minihan and Ms. Weschler agree that Dr. Apple, in fact, intended to terminate Mr. Minihan, with no apparent hesitation, except to express his concern that he was sorry it had to happen. Minihan p. 31, Weschler, p. 72.


author: ROBERT L. CARTER, District Judge.

text:
    Concetta PANZARINO, Plaintiff, v. Margaret M. HECKLER, Secretary of Health and Human Services, Defendant.
    No. 84 Civ. 7106 (RLC).
    United States District Court, S.D. New York.
    Dec. 18, 1985.

      Mid-Hudson Legal Services, Inc., (Thomas N.N. Angelí, Poughkeepsie, N.Y., of counsel), for plaintiff.
    Rudolph W. Giuliani, U.S. Atty., S.D. N.Y., New York City, Rosemarie E. Mat-era, Sp. Asst. U.S. Atty., Annette H. Blum, Regional Atty. — Region II, Fran Winter, Asst. Regional Atty., Office of the Gen. Counsel, Dept, of Health and Human Services, for defendant.
   OPINION

ROBERT L. CARTER, District Judge.

Plaintiff Concetta Panzarino seeks review of a decision by the defendant, the Secretary of Health and Human Services (HHS), terminating her Supplemental Security Income (SSI) benefits. The case is before the court on motions by both plaintiff and defendant for judgment on the pleadings pursuant to Rule 12(c), F.R. Civ.P.

Facts

By any account, the plaintiff is a remarkable woman. She suffers from amyotonia congenita. This disease and its attendant complications render her almost completely paralyzed — she can move her right thumb — from the neck down. The record paints a distressing portrait of her physical condition: Ms. Panzarino is “about 3V2' tall in a gnarled up position____ She has a sway back & and an extended chest & has to be hand fed.” Report of Contact, Record at 70. She uses a respirator twice a day and requires constant daily attendance. Despite these obstacles, Ms. Panzarino completed college and, until 1974, she supported herself. In July, 1977 she applied for and was found eligible to receive SSI benefits. In finding Ms. Panzarino eligible for SSI benefits, the Secretary approved her plan to achieve self-support (PASS), submitted pursuant to 42 U.S.C. §§ 1382a(b)(4)(B)(iv) & 1382b(a)(4). Although the record does not offer a contemporaneous version of this plan, a document submitted in the course of the instant termination proceedings shows that the Secretary approved a PASS that would enable Ms. Panzarino to become a registered art therapist for disabled children. Exhibit 16, Record at 76. The New York state requirements for that profession are a Master’s degree in therapy and one thousand hours of paid, supervised work as an art therapist.

Ms. Panzarino steadily pursued her PASS to become a registered art therapist. She completed her course work at New York University and started work on her master’s thesis. She began to fulfill the experience requirement by working at various part-time jobs. Yet ill-health interfered with her work and studies. Her physical condition renders her particularly prone to upper respiratory infections; various colds and viruses would keep her bedridden for one or two weeks at a time. Hearing, Record at 32. Other difficulties also hindered her progress; for example, she was often unable to find suitable attendants. Id. at 39. Nonetheless, she never abandoned pursuit of her goal of becoming a registered art therapist. Instead, she would reduce her course load, complete courses after the end of the term, or reduce the number of hours she worked. Id. at 33.

Originally, Ms. PanzarinO’s PASS was approved for an eighteen-month period. Her medical condition and other difficulties forced her to alter her timetable for completing her PASS. In 1979, she applied for and received an eighteen-month extension of her PASS. In January, 1981, she received a twelve-month extension.

In August, 1982 the Secretary notified Ms. Panzarino that her income exclusion had expired at the end of January, 1982 and that she was no longer eligible for SSI payments. A regulation promulgated by the Secretary, 20 C.F.R. § 416.1181(d), limits the period of income and resource exclusion to forty-eight months. Ms. Panzarino sought reconsideration of this decision; it was affirmed. Record, at 56. She then sought a hearing with an administrative law judge (AU). In July, 1983, the AU found that Ms. Panzarino had “substantially completed” her PASS and that she needed her SSI benefits (and concomitant Medicaid benefits) to continue fulfilling the work experience requirement. Despite the clear mandate of § 416.1181(d) limiting the income exclusion to a 48-month period, he found that the income exclusion should be continued for a “reasonable period of time to allow [Ms. Panzarino] an opportunity to complete her requirements for certification as an art therapist.” Hearing Decision, Record at 16.

The Appeals Council of HHS reviewed the AU decision on its own motion, pursuant to 20 C.F.R. §§ 416.1469 and 416.-1470(a)(2). In August, 1984, the Appeals Council reversed the AU decision, finding that there was no authority to extend the income exclusion beyond the 48 month period provided by 20 C.F.R. § 416.1181(d). This suit was timely filed in October, 1984. This court has jurisdiction to review the Secretary’s decision pursuant to 42 U.S.C. § 1383(c)(3).

Discussion

The regulation clearly prohibits extending the period of income exclusion beyond 48 months. The issue we must decide is simple: does this regulation violate Congress’s intent when it provided PASS benefits to the disabled? Mindful of the deference that we must grant the Secretary’s interpretation of the statute entrusted to her administration, we nonetheless find that it is.

In 1972, Congress replaced three separate programs for aid to the aged, blind and disabled with a single program, SSI. P.L. 92-603, 86 Stat. 1470. One of the chief objectives of this new program was to provide “[¡Incentives and opportunities for those able to work or to be rehabilitated that will enable them to escape from their dependent situations.” H.Rep. 92-231, 1972 U.S.Code Cong. & Admin.News 4989, 5133. The PASS income and resource exclusion was one of two means of doing so. Id. at 5138. As codified at 42 U.S.C. §§ 1382a(b)(4)(B)(iv) and 1382b(a)(4), any income or resources can be excluded from calculation of those available to a disabled person where the claimant “has a plan for achieving self-support approved by the Secretary.” The statute provides for income and resource exclusion “as may be necessary for the fulfillment of such plan.” Id. In passing these provisions, Congress intended that they be administered generously. The House Report accompanying the bill states that the committee sought “to provide every opportunity and encouragement to the blind and disabled to return to gainful employment.” 1972 U.S.Code Cong. & Admin.News at 5138 (emphasis supplied). The report went on to state that the “committee intends that these provisions be liberally construed if necessary to accomplish [this] objective[ ].” Id. Neither the language of the statute itself nor the legislative history places limitations of any sort on the income or resource exclusion once a PASS is approved.

The regulation at issue here was originally promulgated by the Department of Health, Education and Welfare (HEW) in 1974. Its substance remains unchanged since that time. When the regulation was promulgated, no purpose or justification was offered in support of an absolute time limit for the fulfillment of an approved PASS. See 39 Fed.Reg. 1359 (1974); 39 Fed.Reg. 29,588 (1974). The only discussion of the 48 month limitation demonstrates that HEW assumed that the disabled would strive for their occupational goals at the same pace as the non-disabled. HEW responded to a comment that the 48 month period effectively excluded professional education as a PASS objective: “While the obtaining of a professional or advanced degree might help an individual to more readily achieve his optimum earning capacity, this would go beyond the scope of the supplemental security income program, which provides only that he be given economic encouragement toward achieving his own self-support.” 39 Fed. Reg. at 29,589. This comment — addressed in greater detail infra — betrays HEW’s default assumption that disabled persons could indeed complete an undergraduate education in the same 48 months that a non-disabled person would need. The Secretary did not consider the additional obstacles faced by the disabled.

In support of this regulation, the Secretary relies upon the principle of deference to agency interpretations of the statutes delegated to their administration. Indeed, great weight must be given to an executive department’s interpretation of the statute that it is entrusted to administer. Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). The Supreme Court has noted that judicial restraint is especially warranted under some circumstances because of HHS’s unusually broad authority to administer certain sections of the complex Social Security Act. Schweiker v. Grey Panthers, 453 U.S. 34, 43, 101 S.Ct. 2633, 2639, 69 L.Ed.2d 460 (1981). In Grey Panthers, for example, the Secretary’s interpretation of the law was given “legislative effect” because of an express delegation of power to promulgate regulations on a specific issue. However, in this case, Congress did not “explicitly [leave] a gap for the agency to fill” by means of regulation. Chevron, U.S.A., 104 S.Ct. at 2782. Since rulemaking authority vis-a-vis PASSes is only implicit, the scope of our review is somewhat more searching than the “arbitrary, capricious, or manifestly contrary to the statute” standard of cases such as Grey Pan thers. The court may substitute its construction of a statute for HHS’s if the agency construction is unreasonable. Thus, although our review may be restrained, it is not without bite.

The court must scrutinize the regulation in terms of the statute’s language, purpose and legislative history. See Johnson v. Heckler, 769 F.2d 1202 (7th Cir. 1985). The legislative history provides compelling evidence of Congress’s intent when it created the PASS income and resource exclusion: to provide special incentives for a group with exceptional needs. It is unreasonable for HHS to devise a regulation such as this which fails to take those needs into account. The regulation frustrates both the literal mandate of the statute to provide for income and resource exclusion “as necessary” to fulfill an approved PASS, and the House Committee Report directive to provide “every opportunity and encouragement” to the disabled.

The issue presented is not the reasonableness of setting criteria for approval of proposed PASSes, but the reasonableness of setting time constraints on the opportunity to complete an approved PASS. The facts of this case illustrate the unreasonableness of the limitation. Ms. Panzarino never abandoned her work or her studies. Her difficulties in completing her PASS, although not wholly foreseeable, arose in connection with her disability. Only the inflexibility of the 48 month limitation period prevents her from achieving economic self-sufficiency. Surely this inflexibility violates the liberal construction of the PASS provision that the legislative history mandates.

The Secretary’s arguments in support of the regulation do not convince the court that it is a reasonable construction of the statute. First, the Secretary points out that the 48 month limit is not an unreasonably short period to achieve most occupational goals. The 48 month period may not be an unreasonable time for non-disabled persons to achieve most occupational goals. It is, however, unreasonable to set such a time limit for the disabled without consideration of their particular needs. Congress anticipated such consideration when it stated that the PASS provisions should be liberally construed.

Next, the Secretary insists that PASSes are designed to allow the disabled to achieve mere economic self-support, not the grandest of career ambitions. The time limitation enables her to reject plans that are too ambitious. In effect, the Secretary seeks to use the time limit as a proxy for regulating the permissible occupational objectives of a PASS. This argument reiterates HEW’s comment when the regulation was first promulgated in 1974. Time has not made this point relevant or persuasive. First, as was stated before, the criteria for approval of PASSes is not at issue here. Second, it is simply irrational to use a time limit as a proxy for limiting occupational objectives for the disabled, who cannot be expected to achieve their career goals at the same pace as the non-disabled.

Finally, the Secretary argues that the regulation should be upheld because it is uniform and efficient. This argument deserves short shrift. Efficiency in operation cannot make a regulation reasonable. Johnson, 769 F.2d at 1213.

The 48 month limitation of 20 C.F.R. § 416.1181(d) violates the Social Security Act. Plaintiff’s motion is granted and the decision of the Secretary is reversed and remanded for consideration without reference to the 48 month limitation of the regulation.

IT IS SO ORDERED.

      . The "Record" is the court transcript of administrative proceedings submitted by HHS.

      . Disabled persons are eligible for SSI benefits only if their income and resources fall below a certain statutory maximum. See 42 U.S.C. § 1382.

      . The regulation was originally promulgated as 20 C.F.R. § 416.1731. The relevant portion of that regulation differs only semantically from the current version. The current regulation, § 416.1181, sets forth the requirements of a PASS as follows:
      A plan to achieve self-support must—
      (a) Be designed especially for you;
      (b) Be in writing;
      (c) Be approved by us (a change of plan must also be approved);
      (d) Be designed for an initial period of not more than 18 months. We may extend the period for up to another 18 months if you cannot complete the plan in the first period. We may allow a total of up to 48 months to fulfill a plan for a lengthy education or training program;
      (e) Show your specific occupational goal;
      (f) Show what money you have and will receive, how you will spend it, and how you will use it to obtain your occupational goal;
      (g) Show how the money you set aside under the plan will be separated from your other funds.


author: FRANCIS J. BOYLE, Chief Judge.

text:
    Irene ROUSSEAU and Louise McKenna, Plaintiffs, v. Nancy BORDELEAU, in Her Capacity as Director of the Rhode Island Department of Human Services, Defendant/Third Party Plaintiff, v. Margaret HECKLER, in Her Capacity as Secretary of the Department of Health and Human Services, Third Party Defendant.
    Civ. A. No. 84-0538.
    United States District Court, D. Rhode Island.
    Dec. 18, 1985.
    Barry Best, James Hardy, Rhode Island Legal Services, Providence, R.I., for plaintiff.
    Carolyn Lembo, Sp. Asst. Atty. Gen., Providence, R.I., for defendant/third party plaintiff.
    Everett Sammartino, Asst. U.S. Atty., Providence, R.I., Nanct Nemon, Deputy Regional Atty., Region I, Boston, Mass., Donald G. Kosin, Jr., Office of the General Counsel, Washington, D.C., for third party defendant.
   OPINION

FRANCIS J. BOYLE, Chief Judge.

Plaintiffs seek a declaratory judgment that the policy of the Rhode Island Department of Human Services (DHS) of automatically denying a disability claim for Medical Assistance when the same applicant has been found ineligible for disability payments under the Supplementary Security Income (SSI) Program is a violation of the Social Security Act and the due process clause of the Constitution. Plaintiffs assert that DHS, the state agency responsible for administering the Medical Assistance Program, should be enjoined from denying Medical Assistance when the applicant has been denied disability benefits under the federal SSI Program. The Court grants the requested relief for reasons which follow.

The essential facts giving rise to this action are undisputed. Plaintiff Irene Rousseau is a 60 year old resident of Rhode Island. In January 1984, Plaintiff Rousseau filed a disability claim for SSI benefits with the United States Social Security Administration. SSI is a federal program that provides cash benefits to low income individuals who are aged, blind or disabled. On January 24, 1984, Plaintiff also filed a disability claim with the State of Rhode Island for Medical Assistance. DHS is the state agency which administers the Medical Assistance Program. The Medical Assistance or Medicaid Program pays the medical bills of needy people. Congress established the Medicaid program in 1965 as Title XIX of the Social Security Act to provide federal financial assistance to States choosing to reimburse needy persons for certain medical treatment costs. 42 U.S.C. § 1396 et seq. See Schweiker v. Hogan, 457 U.S. 569, 572, 102 S.Ct. 2597, 2600, 73 L.Ed.2d 227 (1982).

On May 25, 1984, the Social Security Administration denied Plaintiffs application for SSI benefits because she was not disabled as defined in the SSI statute. See 42 U.S.C. § 1382c. Plaintiff has pursued administrative review of the denial of SSI benefits through a hearing before an administrative law judge. She was denied benefits by the administrative law judge. Presently her appeal is pending before the Appeals Council of the Social Security Administration.

On June 1, 1984, Rhode Island Department of Human Services (DHS) notified Plaintiff that her claim for Medical Assistance was denied. This denial of state benefits resulted from the initial denial of federal benefits. DHS did not independently review Plaintiffs disability claim but based its decision entirely on the denial of SSI benefits. This action was a change from earlier policy. Until January 1984, DHS had independently reviewed disability based applications for Medical Assistance whether or not SSI benefits had been denied. In January 1984, pursuant to federal directives from the Department of Health and Human Services, the State began denying disability claims of persons who had been denied SSI benefits. The Rhode Island Department of Human Services (DHS) no longer independently reviewed applications but adopted determinations made by the United States Social Security Administration that an applicant was not totally disabled.

Plaintiff Rousseau claims that she is entitled to Medical Assistance benefits as one who is optional categorically needy. Under the Medical Assistance statute, the State must provide benefits to certain categories of individuals and then it has the option of providing benefits to other categories of individuals. 42 U.S.C. § 1396 et seq. A State participating in the Medical Assistance Program such as Rhode Island must provide assistance to the categorically needy. The categorically needy are those persons receiving federal aid through cash assistance programs such as Aid to Families with Dependent Children (AFDC) and SSI. 42 U.S.C. § 1396a(a)(10)(A). Rhode Island has opted to expand benefits to the optional categorically needy and the medically needy. The optional categorically needy are persons who meet the eligibility requirements of the AFDC or SSI programs (both financial and non-financial) but who are not recipients of AFDC or SSI benefits. 42 U.S.C. § 1396a(a)(10)(A). Plaintiff Rousseau claims that she meets the requirements of the optional categorically needy because she meets the disability requirements of the SSI Program although she does not receive SSI benefits. Plaintiff Rousseau asserts that the State Medical Assistance Program should make an independent review of her claim of disability and should not automatically deny her benefits solely because the Social Security Administration has determined that she is not disabled.

Plaintiff Louise McKenna is a 62 year old resident of Rhode Island. From 1975 to March 1984, Plaintiff McKenna was a recipient of SSI benefits because of a disability. During this time period, Plaintiff McKenna was eligible for Medical Assistance benefits as one who was categorically needy. 42 U.S.C. § 1396a(a)(10)(A). On February 26, 1984, just as she was about to lose her SSI benefits and concomitant Medical Assistance, Plaintiff was notified that her application for Widow’s Benefits (under Title II of the Social Security Act) was approved and she began receiving a regular Social Security check of $386 per month. This $386 monthly benefit from Social Security rendered Plaintiff financially ineligible for SSI irrespective of disability. Since Plaintiff’s income exceeded the limits for SSI, she did not appeal the determination by the Social Security Administration that she was no longer totally disabled. The State refuses Medical Assistance benefits to her.

On or about June 6, 1984, Plaintiff McKenna filed a claim for Medical Assistance with DHS which was based on total disability. Although her income exceeded the income guidelines for SSI, it was less than the maximum limits for Medical Assistance. Plaintiff McKenna asserts that she was eligible for Medical Assistance under the category of medically needy. The medically needy are persons who are unable to pay medical expenses whose incomes are too high for other federal financial assistance programs but whose incomes are within Rhode Island’s financial guidelines for Medical Assistance; medically needy have the same characteristics as the categorically needy. Massachusetts Association of Older Americans v. Sharp, 700 F.2d 749 (1st Cir.1983). DHS did not independently review Plaintiff’s disability claim but automatically found her ineligible for benefits solely because of the earlier finding by the Social Security Administration that she was not disabled. Plaintiff McKenna asserts that the policy of automatically denying her disability claim for Medical Assistance because of a Social Security Administration finding that she was not disabled as defined in the Social Security Statute 42 U.S.C. § 1382c violates 42 U.S.C. § 1396 et seq. of the Social Security Statute. Plaintiff contends that DHS is required to make an independent and impartial evaluation of her disability claim irrespective of a Social Security Administration determination regarding disability.

The parties to this action agree that before January 1984, DHS made its own determination regarding disability claims for Medical Assistance. Further, the parties agree that both the Medical Assistance Program and the SSI Program use the same definition of disability when evaluating a disability claim. The parties also agree that despite the use of the same standards, due to the complexity of the matters involved and the subjective element involved in resolving close questions, two different agencies applying the same standards may reach different results. It is possible that under the same circumstances the Social Security Administration could find that Plaintiffs Rousseau or McKenna did not meet the disability requirements of 42 U.S.C. § 1382c, and that DHS could find that they did. meet the disability requirements defined in 42 U.S.C. § 1382c and would therefore be eligible for Medical Assistance.

The United States Department of Health and Human Services has not adopted a regulation which requires denial of benefits by a State solely because an applicant has been denied SSI benefits. It is the present policy of DHS imposed upon it by the United States Department of Health and Human Services that it must adopt a federal finding of no disability.

Plaintiffs correctly contend that although the Medical Assistance Program was created by the Social Security Act and is governed by that Act and the regulations promulgated by the Secretary of Health and Human Services, it is a program administered entirely by the States. States administer their programs according to their “state plans.” 42 U.S.C. § 1396a(a).

Defendant/Third Party Plaintiff Bordeleau, Director of the Rhode Island Department of Human Services asserts that the State’s conduct in the administration of the Medical Assistance Program is in accord with the statute and regulations. She attributes changes in DHS’s policy regarding disability determinations to policy directives from the Defendant Secretary of Health and Human Services.

The Secretary of Health and Human Services relies on the .legislative history of 42 U.S.C. § 1396a(a)(10) and regulations. Defendant asserts that her interpretation of the Medical Assistance statute and regulations supports a finding that her policy regarding disability determinations must be considered to be correct. She relies on the Supreme Court statement:

We have often noted that the interpretation of an agency charged with the administration of the statute is entitled to substantial deference. Blum v. Bacon, 457 U.S. 132, 141 [102 S.Ct. 2355, 2361, 72 L.Ed.2d 728] (1982). Moreover the agency’s construction need not be the only reasonable one in order to gain judicial approval.

Connecticut Dept. of Income Maintenance v. Heckler, — U.S. -, 105 S.Ct. 2210 at 2215, 85 L.Ed.2d 577 (1985). Defendant cites various cases which support a finding in favor of the Secretary provided her interpretation is “not arbitrary or capricious” Home Health Services of the U.S., Inc. v. Schweiker, 683 F.2d 353, 357 (11th Cir.1982); and her interpretation of her regulations is reasonable even though it may not appear as reasonable as another interpretation. Homan & Crimen, Inc. v. Harris, 626 F.2d 1201, 1208 (5th Cir.1980).

Third Party Defendant asserts that her policy holding that SSI disability determinations control is the only reasonable interpretation of 42 U.S.C. § 1396a(a)(10). She asserts that her interpretation of 42 C.F.R. § 435.541(d) and 435.210 support her position. However, Third Party Defendant concedes that the situation at issue in this action was not anticipated and is not addressed directly in the regulations.

Thus an interpretation of the statute and regulations is required. Generally when interpreting a statute, the Court need not go beyond its language, unless it is ambiguous or rendered so by other statutory language in conflict with it. Green v. C.I.R., 707 F.2d 404 (9th Cir.1983). The Social Security Act and its implementing regulations are not easily read and interpreted. As the Supreme Court noted in Schweiker v. Gray Panthers, 453 U.S. 34, 43, 101 S.Ct. 2633, 2640, 69 L.Ed.2d 460 (1981) “The Social Security Act is among the most intricate ever drafted by Congress. Its Byzantine construction, as Judge Friendly noted, makes the act ‘almost unintelligible to the uninitiated.’ ” In his dissent in Herweg v. Ray, 455 U.S. 265, 279, 102 S.Ct. 1059, 1068, 71 L.Ed.2d 137 (1982) Chief Justice Burger noted that “the Medicaid program is a morass of bureaucratic complexity.” In Friedman v. Berger, 409 F.Supp. 1225-26 (D.S.N.Y.1976), Judge Wyatt noted that the “Medicaid statute ... is an aggravated assault on the English language, resistant to attempts to understand it. The statute is complicated and murky, not only difficult to administer and to interpret but a poor example to those who would like to use plain and simple expressions.” This action involves an issue created by a “policy statement” of the federal agency charged with the duty of accomplishing the already expressed policy of the Congress. A policy statement appears to be an internal determination of the agency, not subject to public comment as are regulations. Thus, an action twice removed from the statement of Congressional policy is at issue. As a policy statement, there is no basis to afford particular weight to the agency’s statement. With the above words of caution, the Court will attempt to interpret the statute and implementing regulations in a coherent framework with a purpose to construct the structure envisaged by Congress and without considering statutory phrases and regulations in isolation. U.S. v. Morton, 467 U.S. 822, 104 S.Ct. 2769, 81 L.Ed.2d 680 (1984).

The Medical Assistance program is almost entirely administered by the States. A substantial part of the cost is paid by the federal government to those States whose programs meet federal requirements. Under the statutory framework, the participating States must submit to the Secretary of Health and Human Services a “state plan” which delineates the manner in which the State intends to administer its Medical Assistance Program. 42 U.S.C. § 1396a(a). The state plan is required to have a single state agency administer or supervise the administration of the program. The state plan must:

(5) either provide for the establishment or designation of a single State agency to administer or to supervise the administration of the plan; or provide for the establishment or designation of a single State agency to administer or to supervise the administration of the plan, except that the determination of eligibility for medical assistance under the plan shall be made by the State or local agency administering the State plan approved under subchapter I or XVI of this chapter (insofar as it relates to the aged) if the State is eligible to participate in the State plan program established under subchapter XVI of this chapter, or by the agency or agencies administering the supplemental security income program established under subchapter XVI or the State Plan approved under part A of subchapter IV of this chapter if the State is not eligible to participate in the State plan program established under subchapter XVI of this chapter; (underscoring added)

42 U.S.C. § 1396a(a)(5).

Although this portion of the statute is not easily deciphered, it does specifically and literally direct that a participating State such as Rhode Island determine eligibility for Medical Assistance. This provision makes sense, in view of the fact that there is also a cost to the State to support the optional program of assistance. The regulations implementing this portion of the statute support this interpretation that it is the State that determines eligibility. 42 C.F.R. § 431.10(c). This subsection relates to provisions in the State plan to determine eligibility and it sets forth the options available. 42 C.F.R. § 431.10(d) specifically requires that the plan provide for written agreements between Federal and State agencies “stating the relationships and respective responsibilities of the agencies” for determination of eligibility.

Additional statutory support for the view that the States determine Medical Assistance eligibility can be found at 42 U.S.C. § 1383c. This section of the statute allows the Secretary to agree with the State to determine eligibility for Medical Assistance for the aged, blind and disabled and provides that the State must pay one-half of the cost of carrying out the agreement. Since the statute allows a State to contract away the powers to make disability determinations to the federal government, obviously, it assumes that the State has that authority in the first place. Section 1383c provides:

ELIGIBILITY FOR MEDICAL ASSISTANCE OF AGED, BLIND, OR DISABLED INDIVIDUALS UNDER STATE’S MEDICAL ASSISTANCE PLAN; DETERMINATION BY SECRETARY PURSUANT TO AGREEMENT BETWEEN SECRETARY AND STATE; COSTS
The Secretary may enter into an agreement with any State which wishes to do so under which he will determine eligibility for medical assistance in the case of aged, blind, or disabled individuals under such State’s plan approved under sub-chapter XIX of this chapter. Any such agreement shall provide for payments by the State, for use by the Secretary in carrying out the agreement, of an amount equal to one-half of the cost of carrying out the agreement, but in computing such cost with respect to individuals eligible for benefits under this sub-chapter, the Secretary shall include only those costs which are additional to the costs incurred in carrying out this sub-chapter.

42 U.S.C. § 1383c.

Further, in the regulations under this section, the Secretary has explicitly limited her role. By regulation, the Secretary has excluded determination of eligibility for those person otherwise eligible but whose income disqualifies them for SSI benefits. 20 C.F.R. § 416.2112 provides:

Limitations as to individuals covered by agreement to determine eligibility for medical assistance.
Determinations of Medicaid eligibility under an agreement are limited to individuals (a) who have been determined to be eligible individuals under title XVI of the Act; or (b) who are receiving a State supplementary payment which is federally administered or both.

The Secretary’s position is further clarified by 20 C.F.R. § 416.2107 which states:

Effect of agreement on existing Federal-State responsibilities.
The terms and conditions for approval of a State’s medical assistance plan under title XIX of the Act and the State’s responsibility under such plan remain unchanged except to the extent otherwise specifically provided for in the agreement. Thus, a State will continue to be responsible for any aspects of medical assistance eligibility determinations and other functions not specifically undertaken to be performed by the Secretary pursuant to the agreement____

Rhode Island’s contract with the Secretary is consistent with the foregoing regulations. According to Rhode Island’s agreement (euphemistically referred to as a Section 1634 Agreement), the Federal Department of Health and Human Services determines eligibility for SSI or other basic federal payments and notifies the State of those eligible for Medical Assistance benefits. Article II of the Agreement specifically lists the functions to be performed by the Secretary and limits her role to determinations concerning the categorically needy.

Although a person is not categorically needy, he or she may be optional categorically needy or medically needy The Secretary has excluded considering the eligibility of those who may be optional categorically needy or medically needy. Neither the statute nor the regulations provide that the State may not independently review applications of people who may fall into the category of medically needy or optional categorically needy. The Sixth Circuit in Crippen v. Kheder, 741 F.2d 102, 106 (1984) stated that although Plaintiff Crippen was no longer eligible for SSI and therefore not automatically eligible for Medical Assistance, “it does not follow, however that she [Plaintiff] is automatically ineligible for such benefits.” The Crippen Court interpreted 42 C.F.R. § 435.930b to require a State to continue to furnish Medical Assistance until the state agency determined a person ineligible. Id.

The regulation regarding “Determination of Disability” 42 C.F.R. § 435.541 supports the view that it is the State that determines eligibility for Medical Assistance. This regulation provides very specific procedures which a state must follow when making a determination on a disability claim and the documentation which must be filed. 42 C.F.R. § 435.541(d) specifically excludes from a further determination of disability individuals receiving SSI because of disability.

... If any agency provides Medicaid to individuals receiving SSI on the basis of disability, this section does not apply for those individuals

42 C.F.R. § 435.541(d).

The Secretary of Health and Human Services contends that subsection (d) means that 42 C.F.R. 435.541(a) through (c) of the requirements for disability determination do not apply when the SSI Program has determined the disability question. The Secretary attributes too much to the impact of § 435.541(d). It applies only to those determined to be disabled and qualified to receive SSI benefits. It has no meaning for those who are not receiving SSI benefits.

In other circumstances, there is support for the view that the State is to make an independent determination of eligibility for Medical Assistance before terminating Medical Assistant benefits. In Massachusetts Association of Older Americans v. Sharp, 700 F.2d 749 (1st Cir.1983), the First Circuit found that the agency responsible for administering the Medicaid Program could not automatically terminate benefits to recipients who were no longer eligible for AFDC (i.e. a categorically needy group). The Court found that the state agency must promptly redetermine eligibility when it receives information about changes in a recipient’s circumstances that may affect his or her eligibility under the categorically needy program pursuant to 42 C.F.R. § 435.916. In Gilman v. Helms, 606 F.Supp. 644 (1985), the New Hampshire District Court followed the reasoning of Sharp and found that 42 U.S.C. § 1396a required New Hampshire to redetermine the Medicaid eligibility of a recipient under the medically needy category before termination under the AFDC categorical assistance program for failure to comply with AFDC reporting requirements. Although both Sharp and Gilman involved AFDC recipients, AFDC recipients are categorically needy as are SSI recipients. Furthermore, in Sharp, the First Circuit relied on the SSI case of Stenson v. Blum, 476 F.Supp. 1331 (S.D.N.Y.1979), aff'd, without opinion, 628 F.2d 1345 (2d Cir), cert. denied 449 U.S. 885, 101 S.Ct. 239, 66 L.Ed.2d 111 (1980) Id. at 753. In Stenson, plaintiffs were a class of recently terminated SSI recipients who sought to have their Medicaid eligibility determined and to have benefits continued until they were at least afforded notice and an opportunity for a hearing. In the Stenson case, the Court found that 42 C.F.R. § 435.916 regarding prompt redetermination of Medicaid eligibility and 42 C.F.R. § 435.930 regarding the furnishing of benefits until an individual is found ineligible, required the state to reconsider a recipient’s eligibility for Medicaid. Id. at 1339-40. The Court held that the Section 1634 Agreement between the State of New York and the Secretary was consistent with the requirement that the state reevaluate terminated SSI recipients in order to determine continued entitlement to Medicaid. Id. at 1340-41.

The Medical Assistance statute and regulations provide the framework for appealing denials of claims. 42 U.S.C. § 1396a(a)(3); 42 C.F.R. 431.200. The regulations provide for an evidentiary hearing, 42 C.F.R. 431.205(b) as well as the requirement that the “hearing system meet the due process standards set forth in Goldberg v. Kelly, 397 U.S. 254 [90 S.Ct. 1011, 25 L.Ed.2d 287] (1970)”.... 42 C.F.R. 431.205(d). A meaningful hearing would not be afforded an applicant for Medicaid if the only issue is whether or not the applicant’s SSI application had been denied. The statute and regulations require that applications for Medical Assistance be reviewed independently of any denial action made by the Social Security Administration. A fair hearing process requires not only an independent review of an applicant’s claim of disability but also the possibility of a result different from the federal determination.

Congress has spoken through the statute that a State participating in the Medical Assistance Program is to determine eligibility. If a change is to be made, it is Congress’s right and responsibility to change the statute. Although the present procedure with both state and federal determinations involves two separate determinations which may result in inconsistent outcomes, this Court does not have the authority to legislate and to change the statute.

Conclusion

In conclusion, the Court holds that the policy applied by the Rhode Island Department of Human Services of automatically denying Medical Assistance benefits to individuals who have been found ineligible for SSI benefits due to disability violates the Social Security Act and the regulations promulgated thereunder.

For the foregoing reasons, the Rhode Island Department of Human Services is enjoined from automatically denying an application for Medical Assistance based on disability when the applicant has been denied SSI benefits based on the same disability; the State is to make an independent review of the applicant’s claim and is to rule on disability independently of any action taken by the Social Security Administration.

Plaintiffs have moved that their action receive class action status so that all similarly situated individuals would receive relief from this judgment. Since the relief granted by this Court can be expected to extend to all individuals similarly situated, no useful present purpose is served by granting the motion for class certification.

      . Since the resolution of Plaintiffs’ claim is based on statutory grounds, it is inappropriate to resolve any constitutional claim. A district court should decline to resolve constitutional issues if the controversy can be resolved on statutory grounds which are dispositive. Hagans v. Lavine, 415 U.S. 528, 543, 94 S.Ct. 1372, 1382, 39 L.Ed.2d 577 (1973).