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February 14, 2005.

LAKISHA REYNOLDS, GEORGINA BONILLA, APRIL SMILEY, LUE GARLICK, ADRIANA CALABRESE, JENNY CUEVAS, and ELSTON RICHARDS, on their own behalf and on behalf of all others similarly situated, Plaintiffs,
RUDOLPH GIULIANI, as Mayor of the City of New York, JASON TURNER, as Commissioner of the New York City Human Resources Administration, BRIAN J. WING, as Commissioner of the New York State Office of Temporary and Disability Assistance, and BARBARA DEBUONO, as Commissioner of the New York State Department of Health, Defendants.

The opinion of the court was delivered by: WILLIAM PAULEY, District Judge


This class action was brought on behalf of qualified welfare beneficiaries who claim to have been deprived of federally sponsored cash assistance, food stamp and Medicaid benefits in violation of federal and state law. Plaintiffs brought this action against Rudolph Giuliani as Mayor of the City of New York and Jason Turner as Commissioner of the New York City Human Resources Administration ("HRA") (collectively, the "City defendants"), as well as Brian J. Wing as Commissioner Page 2 of the New York State Office of Temporary and Disability Assistance ("OTDA") and Barbara DeBuono as Commissioner of the New York State Department of Health ("DoH") (collectively, the "State defendants"). The Complaint ("Compl.") alleges violations of the Food Stamp Act, 7 U.S.C. § 2020 et seq., the Medicaid Act, 42 U.S.C. § 1396 et seq., and New York law. The Complaint further alleges that those violations support individual claims pursuant to 42 U.S.C. § 1983. Plaintiffs seek declaratory relief and a permanent injunction ordering defendants to process applications for food stamps, Medicaid and cash assistance in accord with federal and state law. For the following reasons, plaintiffs' requested relief is granted.

As required by Rule 52, this Court sets forth its findings of fact and conclusions of law.


  I. Background

  The factual background and regulatory framework undergirding plaintiffs' claims are set forth in three prior memoranda and orders of this Court. See Reynolds v. Giuliani, 35 F. Supp. 2d 331 (S.D.N.Y. 1999) ("Reynolds I"); Reynolds v. Giuliani, 43 F. Supp. 2d 492 (S.D.N.Y. 1999) ("Reynolds II"); Page 3 Reynolds v. Giuliani, 118 F. Supp. 2d 352 (S.D.N.Y. 2000) ("Reynolds III").

  Following enactment of the Personal Responsibility and Work Opportunity Reconciliation Act ("PRWORA"),*fn1 the City defendants began converting their Income Support Centers — the primary vehicle for distributing public assistance — into Job Centers to comply with PRWORA. The City defendants operate twenty-nine Centers that are either Job Centers or Income Support Centers scheduled for conversion to Job Centers. (Declaration of Patricia Smith, dated Feb. 2, 2001 ("Smith Decl.") ¶¶ 2-3.) On average, those Centers process between 12,000 and 15,000 applications for public assistance each month. (Smith Decl. ¶¶ 2-3.) Many of those applications are combined with applications for food stamps and Medicaid. (Smith Decl. ¶¶ 2-3.)

  On December 16, 1998, plaintiffs filed this action alleging that certain policies and practices of HRA and OTDA prevent eligible individuals from applying for and timely receiving food stamps, Medicaid and cash assistance. Reynolds I, 35 F. Supp. 2d at 337. Plaintiffs claim that defendants are violating federal and state law by: (1) failing to provide or Page 4 accept initial applications and improperly deterring potential applicants; (2) failing to make correct eligibility determinations and failing to provide immediate needs grants or expedited food stamp service to eligible applicants on a timely basis; (3) failing to make eligibility determinations regarding applicants' food stamp and Medicaid applications separate from the eligibility determinations regarding their cash assistance applications; and (4) failing to provide applicants with timely and adequate written notices of determinations of their eligibility for these benefits. (Compl. ¶¶ 3, 255-57, 260, 262-64.)

  On January 25, 1999, this Court granted a preliminary injunction requiring the City defendants to accept and process applications for food stamps, Medicaid and cash assistance. Reynolds I, 35 F. Supp. 2d at 347-48. That injunction also barred the City defendants from opening any new Job Centers or converting existing Income Support Centers to Job Centers pending a hearing on the adequacy of a corrective action plan. Reynolds I, 35 F. Supp. 2d at 347-48.

  On February 5, 1999, the Food and Nutrition Service at the U.S. Department of Agriculture ("USDA") concluded that the converted Job Centers were impeding access to public assistance. (See Declaration of Steven Ptak, dated Feb. 2, 2001 ("Ptak Page 5 Decl.") Ex. 3: Attach. at 6-14.) The USDA report requested a corrective action plan and recommended that OTDA monitor local district operations to ensure compliance with all applicable food stamp regulations. (Ptak Decl. Ex. 3: Attach. at 6-24.)

  In response to the USDA report, OTDA staff reviewed operations at twelve Job Centers. OTDA concluded that "New York City had implemented corrected procedures to address the deficiencies identified in the USDA Program Access Review." (Ptak Decl. Ex. 13.) OTDA further found that the City was fulfilling its obligations under federal and state law. (See Ptak Decl. Ex. 13: Attach. at 2 (draft report, Ex. 16).)

  On May 24, 1999, this Court approved the City defendants' corrective action plan ("CAP") and modified the preliminary injunction to permit the City defendants to open three additional Job Centers. See Reynolds II, 43 F. Supp. 2d at 497-98. The CAP specified that individuals seeking benefits would be informed of their right to apply for them during their initial contact with any Job or Income Center. See Reynolds II, 43 F. Supp. 2d at 495-96. The CAP also provided for training, audits and a "spot check" program of unannounced inspections. (Declaration of Jacquelyn Flaum, dated Feb. 1, 2001 ("Flaum Decl.") ¶ 3.) Page 6

  In July and August 1999, OTDA reviewed nine Centers and again concluded that the Job Centers were fulfilling their responsibilities to public assistance applicants. (Ptak Decl. Ex. 21 at 1, Ex. 24.) Consequently, on December 10, 1999, the City defendants applied for a further modification of the preliminary injunction and offered results from an August 1999 audit of applications submitted from May through July 1999 (the "August 1999 Audit"). After a three-day hearing in December 1999 and January 2000, this Court found that the City defendants had failed to demonstrate sufficient improvement to warrant modification of the preliminary injunction. See Reynolds III, 118 F. Supp. 2d at 352. Additionally, this Court denied the State defendants' motion to dismiss the complaint and their application to modify the preliminary injunction. This Court also certified a class consisting of "all New York City residents who have sought, are seeking, or will seek to apply for food stamps, Medicaid, and/or cash assistance at a Job Center." Reynolds III, 118 F. Supp. 2d at 392.

  On February 8, 2001, plaintiffs consented to vacatur of that portion of this Court's January 25, 1999 Order staying the opening of new Job Centers and the conversion of existing Income Support Centers to Job Centers. That concession was based on the results of an audit of applications filed in September 2000 at Job Centers and Income Support Centers to Page 7 measure their performance (the "September 2000 Audit"). The September 2000 Audit focused on the twenty-nine Centers where benefits applications were being processed and reviewed a statistically significant sample of applications filed in New York City.

  In April 2001, this Court conducted a bench trial. The September 2000 Audit was the centerpiece of the trial. The City defendants presented testimony from Patricia M. Smith, Executive Deputy Director of the Family Independence Administration, Dr. Jessica Pollner, an expert in statistical analysis (Trial Transcript ("Trial Tr."), at 69), and William Waldman, an expert in the operation and administration of public assistance programs and in national human services policy as it affects state public assistance programs. (Trial Tr. at 177.) Plaintiffs' only witness was Richard Faust, an expert in sampling and statistics.

  II. City Defendants

  A. The Application Process

  While the application process for public assistance varies depending on the Center, a client's first interaction is with a receptionist. (City Defendants' Proposed Findings of Fact ("City Defs. Findings") ¶ 3.) If a prospective applicant indicates a desire to apply for public assistance benefits, the Page 8 receptionist is required to provide an Applicant Job Profile, i.e., an application, to be completed by the applicant. (City Defs. Findings ¶ 3.) Once the application is completed, the receptionist checks to see if the applicant has an active or pending case at another Income Support or Job Center. (City Defs. Findings ¶ 3.) After an application is completed, a Center employee registers it in the State's computerized Welfare Management System ("WMS") database. A registration number is assigned memorializing the application date. (City Defs. Findings ¶ 3; Smith Decl. ¶¶ 7-8.)

  Once the application is registered, a Center employee interviews the applicant to determine eligibility. (City Defs. Findings ¶ 4.) At Job Centers, that interview must cover subjects including emergency assistance, employment counseling and general eligibility guidelines for the different public assistance programs. (City Defs. Findings ¶ 4.) In addition, eligibility interviewers are required to address various social issues that may arise. For example, applicants who are victims of domestic violence are referred to an HRA domestic violence liaison. (City Defs. Findings ¶ 4.) Applicants for ongoing assistance who have an immediate need may also be eligible for "pre-investigative" grants during the time their application is pending. (City Defs. Findings ¶ 4; Smith Decl. ¶ 10.) Page 9

  During the eligibility interview, a Center worker reviews the application to determine whether the applicant needs immediate benefits, and completes a history sheet explaining why the applicant came to the Center and identifying any needs. (City Defs. Findings ¶ 5; Smith Decl. ¶ 11.) When determining whether applicants are eligible for pre-investigative benefits, family size, income, resources, citizenship or immigration status and identification are considered. (City Defs. Findings ¶ 5; Smith Decl. ¶ 11.) Applicable codes are entered into the WMS and forms including, inter alia, an expedited service worksheet for food stamps; a Form 145HH, notifying the applicant of HRA's decision to grant or deny an immediate needs grant and/or expedited food stamps; a Form DSS-3575, authorizing the payment of any immediate benefit; a Form DSS-3574, authorizing the issuance of expedited food stamps; and the form DSS-3517, which provides demographic data about the applicant are completed. (City Defs. Findings ¶ 5; Smith Decl. ¶ 11.) In addition, appointment referrals are made and applicants are finger-imaged. (City Defs. Findings ¶ 5; Smith Decl. ¶ 11.) After review by a Center supervisor, the paperwork is entered into the WMS and applicants receive written notice of any decision on their benefits applications.

  A "Notice of Decision on Food Stamps and/or Cash Assistance to Meet an Immediate Need" is issued advising Page 10 applicants whether they will receive an immediate needs grant or expedited food stamps, and the reason for the decision. (City Defs. Findings ¶ 30.) Applicants withdrawing their applications receive a "Notification of Application Withdrawal" informing them that they may qualify for food stamps or Medicaid even though they did not complete their cash assistance applications. (City Defs. Findings ¶ 30.) Finally, an "Action Taken on Your Application" form is provided to advise applicants of their eligibility for assistance. (City Defs. Findings ¶ 30.) If the application is denied, that form explains the reasons for the denial and advises applicants of their right to a fair hearing if they wish to challenge the denial. (City Defs. Findings ¶ 30.)

  B. The September 2000 Audit

  The September 2000 Audit was conducted pursuant to a protocol established by the parties from a statistically significant sample of applications filed in September 2000 at 29 Income Support and Job Centers in New York. (See Fourth Report of Plaintiffs' Expert Richard Faust ("Fourth Faust Rep.") ¶¶ 6-13; City defendants' Expert Jessica Pollner's Report ("Pollner Rep.") at 5.) The audit assessed whether: (a) expedited food stamp and immediate needs cash grants were timely provided to those eligible for such grants; (b) applications for food Page 11 stamps, Medicaid and cash assistance were withdrawn based on inaccurate or misleading information; (c) separate food stamps and Medicaid determinations or referrals were made as required when cash assistance applications were denied or withdrawn; and (d) notice concerning expedited food stamps, immediate needs cash grants, Medicaid and cash assistance was timely and adequate. (Fourth Faust Rep. ¶ 14; Pollner Rep. at 5.)

  A sample of 597 applications was selected from a population of 13,972 names within the City defendants' Eligibility Verification Review ("EVR") database. The sample included applications filed in September 2000 and applications filed prior to that time that were withdrawn or rejected on the same day they were filed. (Fourth Faust Rep. ¶¶ 6, 9, 11-12; Declaration of Jessica Pollner ("Pollner Decl.") at 1-3.) The EVR data system captures information from the WMS regarding applicants scheduled for an appointment with an EVR office. (Fourth Faust Rep. ¶ 7.) The parties then selected 559 applications from the EVR list for review. (Fourth Faust Rep. ¶ 11.)

  The EVR database did not include applications withdrawn on the day they were filed. To address that omission, the parties sampled applications filed in September 2000 that were not entered into the EVR system by collecting case files for all September 2000 applications identified as withdrawn or Page 12 rejected on the first day (the "withdrawn sample"). (Fourth Faust Rep. ¶¶ 8, 12; Pollner Rep. at 2-3.) A total of 37 such cases were selected for audit, 36 of which were used in the audit results. (Fourth Faust Rep. ¶ 12; Pollner Rep. at 2-3.)*fn2

  However, the data supplied by the City defendants did not represent all withdrawn cases recorded on the application logs. (Fourth Faust Rep. ¶ 13.) Thus, plaintiffs created a supplemental list of withdrawn applications from the logs maintained by the Job Centers and drew a supplemental sample from that list. That supplemental list contained an additional 825 names. At the direction of this Court, HRA attempted to locate the files for those applications but succeeded in retrieving only two (the "supplemental withdrawn sample"). (Fourth Faust Rep. ¶ 13.)

  The September 2000 Audit minimized disputes over data from applicant files. (Fourth Faust Rep. ¶ 27; Plaintiffs' Proposed Findings of Fact ("Pls. Findings") ¶ 34.) The parties disagreed over only 8 of the 559 EVR sample, and 8 of the withdrawn and supplemental withdrawn sample cases. (Pls. Findings ¶ 34; Fourth Faust Rep. ¶ 27.) Page 13

  However, after the September 2000 Audit was completed, the City defendants embarked unilaterally on a second review of cases for which the plaintiffs and the City defendants had both concluded that either (1) expedited food stamps or immediate needs cash grants were erroneously denied, or (2) an application was withdrawn based on inaccurate or misleading information. Based on this second review, the City defendants changed their determinations in 34 cases. (Declaration of Michael Bermudez, dated Mar. 9, 2001 ("Bermudez Decl.") ¶¶ 5, 16-20, 22; Deposition of Michael Bermudez, dated Mar. 19, 2001 ("Bermudez Dep."), at 69-70, 82-83.)

  The City defendants engaged in opportunistic rummaging within the data set that led to a significant change in their statistics. Specifically, the City defendants determined that the relevant pool was the total number of applications rather than the total number of eligible applications. That alteration of the denominator had a profound effect on statistical comparisons of the City defendants' success rates. This Court agrees with plaintiffs that the proper base from which HRA's success or failure rates are calculated is the number of eligible applicants, not the number of overall applicants. Compliance with the food stamp, Medicaid and cash assistance laws should be measured according to how many eligible Page 14 applicants are incorrectly denied benefits.*fn3 Moreover, because the City defendants' second review was dehors the agreed-upon protocol for the September 2000 Audit and not subject to challenge by plaintiffs, it does not bear the same indicia of reliability as the earlier results.

  Faust also evaluated the EVR sample of 559 cases for possible bias. Because the size of the population sampled was unknown, the total withdrawn population could not be identified. (Fourth Faust Rep. ¶¶ 40-42.) Nevertheless, Faust concluded that "based on the sampling protocol, the 36 withdrawn applications audited from the initial withdrawn list should be representative of the . . . applications initially retrieved. . . . [T]here is no reason to expect any better performance among the non-retrieved applicants than among the retrieved applications." (Fourth Faust Rep. ¶ 43.) Thus, although the City defendants lack accurate information concerning the number of withdrawn applications, this Court concurs with Faust that there is no reason to expect any better performance among the non-retrieved applications than among the retrieved ones. Page 15

  In contrast, Pollner combined the EVR sample with the withdrawn sample. (Supplemental Report of Jessica Pollner ("Supp. Pollner Rep.") at 1-2.) While Faust considered that statistical method inappropriate, he nevertheless re-ran his results combining the 36 applications in the withdrawn sample with the EVR sample, thereby testing Pollner's procedure. Faust concluded that combining the samples did not significantly affect the overall audit procedures. (Fourth Faust Rep. ¶¶ 45-46.)

  Therefore, this Court finds that the September 2000 Audit was conducted in accord with generally accepted survey principles and generally recognized statistical standards. Specifically, this Court concludes that: (1) the EVR sample is representative of the EVR population from which it was selected; (2) the inclusion of the withdrawn sample in the results of the September 2000 Audit does not materially alter the outcome; (3) the data gathered was accurately reported; and (4) the data was analyzed in accord with accepted statistical principles. See Manual for Complex Litigation (4th) § 11.493. The findings of the September 2000 Audit are discussed below.

  1. Expedited Food Stamps

  The Food Stamp Act requires that states provide food stamps to certain needy households on an expedited basis. See Page 16 7 U.S.C. § 2020(e)(9). All applicants for food stamps must be screened to determine whether they qualify for expedited issuance of food stamps. See 7 U.S.C. § 2020(e)(9); 7 C.F.R. § 273.2(i)(2). New York law requires that eligible applicants be provided with expedited food stamps within five days. See 18 N.Y.C.R.R. § 387.8 (a)(2)(i)(a); see also 7 U.S.C. § 2020(e)(9) (seven-day requirement). It bears noting that the statutory regimes focus on eligible applicants. See 7 U.S.C. § 2020(e)(3); 7 C.F.R. § 273.2(g); 42 U.S.C. § 1396d(a).

  Faust's and Pollner's calculations show nearly identical citywide performance in providing expedited food stamp service within the five-day period set forth by New York State law: 69 percent versus 69.31 percent, respectively. (Pls. Ex. 49: Fourth Faust Rep., Table C-2; Pollner Supp. Rep. at 14, Table 13.) Both parties agree that the Job Centers provide expedited food stamp services within five days to no more than 72 percent of the applicants who receive expedited food stamps and that the citywide average is approximately 69 percent. (Pls. Ex. 49: Fourth Faust Rep., Table C-2; Pollner Supp. Rep. at 14, Table 13.)*fn4 Page 17

  Faust and Pollner were in substantial agreement concerning the percentage of applicants properly denied expedited food stamps because of ineligibility. Faust calculated that 33 percent of applicants were actually ineligible to receive expedited food stamps. (Fourth Faust Rep., Table C-3, at Pls. Ex. 49.) Pollner's original report showed that applicants were properly denied expedited food stamps because they were ineligible 42.67 percent of the time. (Pollner Rep. at 15 (Table 10).) Even taking Pollner's revised data, the percentage of ineligibles only increased to 45.09 percent. (Supp. Pollner Rep. at 6; Fourth Faust Rep. Table C-3, at Pls. Ex. 49.) Accordingly, the range of eligible applicants who were denied expedited food stamps is between 57.33 percent (Pollner) and 67 percent (Faust).

  2. Immediate Needs Grants

  Where applicants for Medicaid, food stamps or cash assistance are in immediate need, temporary assistance must be granted pending completion of an eligibility investigation. N.Y. Soc. Serv. Law § 133; see Gonzales v. Blum, Page 18 486 N.Y.S. 2d 630, 632 (Sup.Ct. 1985) ("There is no doubt that this section establishes the right of public assistance applicants to pre-investigative relief should it appear that they are in immediate need."). Applicants in need are entitled to immediate needs grants even when ongoing eligibility has not yet been established. See 18 N.Y.C.R.R. § 351.8(c)(4).

  Faust and Pollner were in virtual agreement concerning the City defendants' rate of compliance with the same-day requirement once an immediate needs grant was authorized: 69 percent versus 69.31 percent, respectively. (Pls. Findings ¶ 58.) Both experts agree that the Job Centers provided immediate needs grants on the same day as requested to no more than ...

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