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STATE OF MICHIGAN COURT OF APPEALS

MEGAN SMITH, NICOLE KELLY, ROSHAWNDA WILLIAMS, and NICOLE JOHNSON, Plaintiffs-Appellees, v DEPARTMENT OF HUMAN SERVICES DIRECTOR, Defendant-Appellant.

FOR PUBLICATION June 26, 2012 9:05 a.m.

Nos. 309447; 309894 Genesee Circuit Court LC No. 11-097052-CZ

Before: SERVITTO, P.J., and METER and FORT HOOD, JJ. METER, J. These consolidated appeals involve a class action by individuals whose benefits under a cash-assistance program administrated by the Department of Human Services (DHS) in accordance with the Social Welfare Act, MCL 400.1 et seq., were terminated. In Docket No. 309447, defendant DHS Director appeals as of right from the circuit court's order granting summary disposition to plaintiffs with respect to their claim that the DHS Director exceeded her authority in implementing a 60-month time limit for receiving cash-assistance benefits for members of plaintiffs' class. In Docket No 309894, the DHS Director appeals as of right from the injunctive relief ordered by the circuit court based on this determination. We affirm in part and reverse in part. I. BACKGROUND This case involves cash-assistance benefits provided to individuals under the Family Independence Program (FIP), as established under the Social Welfare Act and amended by 2011 PA 131, effective October 1, 2011. Pursuant to MCL 400.57a(1), "[t]he department[1] shall

The "department" is defined in the Social Welfare Act to mean the Family Independence Agency, MCL 400.1(4), but the Family Independency Agency was renamed the Department of Human Services pursuant to an executive reorganization order effective March 15, 2005. See MCL 400.226.

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establish and administer the family independence program to provide assistance to families who are making efforts to achieve independence." The time limit established by the Legislature for FIP assistance to be paid to an individual, beginning October 1, 2007, is "not longer than a cumulative total of 48 months during that individual's lifetime." MCL 400.57r. A recipient of FIP assistance who does not comply with his or her individual family self-sufficiency plan is penalized by having payments temporarily or permanently terminated, and those penalty months are still counted towards the 48-month total. MCL 400.57g(4). The Social Welfare Act also contains exclusions from the 48-month limit, even though payment is made to a recipient. MCL 400.57p. The instant class action arose because the DHS uses federal Temporary Assistance for Needy Families (TANF) funds to administer the FIP program, and an application of the 48month limit under the Social Welfare Act, with the exemptions established by the Legislature, leaves some individuals eligible for FIP benefits even though they exhausted TANF funds. The purpose of TANF is to increase the flexibility of states in operating a program designed to: (1) provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives; (2) end the dependence of needy parents on government benefits by promoting job preparation, work, and marriage; (3) prevent and reduce the incidence of out-of-wedlock pregnancies and establish annual numerical goals for preventing and reducing the incidence of these pregnancies; and (4) encourage the formation and maintenance of two-parent families. [42 USC 601(a).] 42 USC 601(b) specifies that the TANF's provisions "shall not be interpreted to entitle any individual or family to assistance under any State program funded" by TANF. The federal law generally provides for a 60-month limit on the use of TANF funds,2 42 USC 608(a)(7)(A), but it is subject to the following express rules of interpretation: (E) Rule of interpretation. Subparagraph (A) shall not be interpreted to require any State to provide assistance to any individual for any period of time under the State program funded under this part. (F) Rule of interpretation. This part shall not be interpreted to prohibit any State from expending State funds not originating with the Federal Government on benefits for children or families that have become ineligible for

While a state may exempt a family by reason of hardship subject to certain limitations under 42 USC 608(a)(7)(C), it is undisputed in this case that the DHS's current policy does not allow for hardship exemptions.

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assistance under the State program funded under this part by reason of subparagraph (A). [MCL 42 USC 608(a)(7).] Each of the four plaintiffs in this case received a "notice of case action" from the DHS, dated October 11, 2011, which specified that FIP benefits were being cancelled effective November 10, 2011, for the following reason: The intended action results from a change in law and policy that placed a lifetime time limit on the receipt of assistance through the Family Independence Program because the person(s) listed below has received 60 months or more of benefits, which is the time limit allowed for eligibility. The notice gave each plaintiff a right to a hearing to contest the DHS's calculation that assistance should stop because of the 60-month limit. The notice was provided to affected recipients of the cash-assistance benefits pursuant to an action in the United States District Court in which the adequacy of prior notices provided by the DHS was challenged by various individuals on procedural due-process grounds. On October 28, 2011, plaintiffs filed this action against the DHS Director on behalf of themselves and other similarly situated individuals3 to challenge the DHS Director's authority to impose the 60-month time limit through the implementation of an administrative policy. The circuit court initially granted plaintiffs' motion for a preliminary injunction to enjoin the DHS Director from terminating the cash-assistance benefits based on the 60-month limit. The circuit court also ordered that the case could proceed as a class action on behalf of "all current and future FIP recipients who have been or will be denied or terminated from FIP assistance based on a 60 month limit when they have not received FIP for 48 countable months under the Social Welfare Act." In an earlier interlocutory appeal in this case, this Court, in lieu of granting leave to appeal, peremptorily reversed and vacated the preliminary injunction because "[p]laintiffs failed to establish a likelihood of prevailing on the merits of their claim." Smith v Dep't of Human Servs Dir, unpublished order of the Court of Appeals, entered November 3, 2011 (Docket No. 306846). Following this decision, the DHS moved for reconsideration of the circuit court's order granting the class certification. The DHS also moved for summary disposition under MCR 2.116(C)(8) and (C)(10) with respect to plaintiffs' substantive claim, while plaintiffs moved for summary disposition under MCR 2.116(C)(10). The circuit court denied the DHS's motion for reconsideration. In addition, it resolved the cross-motions for summary disposition in favor of plaintiffs based on its determinations that (1) the Social Welfare Act created an entitlement to FIP assistance for individuals who comply with the FIP's family self-sufficiency plan and (2) the DHS Director exceeded her authority under the separation of powers doctrine by imposing time limits that are not authorized by the

Plaintiffs also filed the action as next friends of their minor children, but the circuit court did not rule on their motions to be appointed next friends.

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Social Welfare Act. Based on its determinations, the circuit court entered a judgment (1) permanently enjoining the DHS Director from terminating or denying cash-assistance benefits "based on time limits unless and until it is determined that [class members] have received [benefits] for more than forty-eight countable months under the time limits set by the Social Welfare Act" and (2) enjoining the DHS Director from terminating or denying cash-assistance benefits "to Plaintiffs and members of the Class based on a 60 month limit that starts counting months prior to the October 1, 2007 started [sic] date established by statute and does not have the exemptions required by the Social Welfare Act." The DHS filed two appeals with this Court to challenge the circuit court's determinations. In Docket No. 309447, the Michigan Supreme Court denied the DHS Director's bypass application for leave to appeal, but directed this Court to consider the case on an expedited basis, stating: The Court of Appeals is DIRECTED to decide this case on an expedited basis, considering whether: (1) the circuit court erred in concluding that defendant may not implement limits on the duration of welfare benefits as part of its authority to establish eligibility criteria for family independence program recipients under MCL 400.57a(3) and/or MCL 400.57b(1)(f) and, if so, (2) whether plaintiffs are entitled to summary disposition on the alternative ground that defendant failed to comply with the requirements of the Administrative Procedures Act [APA], MCL 24.201 et seq. [Smith v Dep't of Human Servs, ___ Mich ___; ___ NW2d ___ (Docket No. 144913, decided April 13, 2012).] II. STANDARD OF REVIEW We review de novo a circuit court's decision concerning a motion for summary disposition. Driver v Naini, 490 Mich 239, 246; 802 NW2d 311 (2011). Issues involving statutory construction are also reviewed de novo. Id. at 246. Whether the constitutional principle of separation of powers was violated is also reviewed de novo. People v Garza, 469 Mich 431, 433; 670 NW2d 662 (2003). Although the circuit court did not state the subrule of MCR 2.116(C) on which it relied to resolve the parties' cross-motions for summary disposition, because the parties' motions relied on evidence that went beyond the documentary evidence filed with plaintiffs' complaint, we find review under MCR 2.116(C)(10) appropriate. Healing Place at North Oakland Med Ctr v Allstate Ins Co, 277 Mich App 51, 55; 744 NW2d 174 (2007). A motion under MCR 2.116(C)(10) tests the factual sufficiency of a claim based on substantively admissible evidence. MCR 2.116(G)(6); Maiden v Rozwood, 461 Mich 109, 120-121; 597 NW2d 817 (1999). A court should grant the motion if the submitted evidence fails to establish a genuine issue of material fact and the movant is entitled to judgment as a matter of law. Allison v AEW Capital Mgt, LLP, 481 Mich 419, 424-425; 751 NW2d 8 (2008).

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III. SEPARATION OF POWERS Because the circuit court's decision to invalidate the DHS Director's action rested on a determination that the separation of powers doctrine was violated, we shall first address the applicability of this doctrine to the parties' dispute. Const 1963, art 3,

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