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PUBLISHED OPINION
Case No.:                                                             95-1025-FT
Complete Title
of Case:
URLENE LILLY,
Petitioner-Appellant,
v.
WISCONSIN DEPARTMENT OF
HEALTH AND SOCIAL SERVICES,
                                                                      Respondent-Respondent.
Submitted on Briefs:                                                  July  21,  1995
Oral Argument: ----
COURT                                                                 COURT OF APPEALS OF WISCONSIN
Opinion Released:                                                     December  19,  1995
Opinion Filed:                                                        December  19,  1995
Source of APPEAL                                                      Appeal from an order
Full Name JUDGE                                                       COURT:                                    Circuit
Lower Court.                                                          COUNTY:                                   Milwaukee
(If "Special",                                                                                                  JUDGE: THOMAS P. DOHERTY
so indicate)
JUDGES:                                                               WEDEMEYER, P.J., FINE and SCHUDSON, JJ.
Concurred:                                                            ----
Dissented:                                                            ----
Appellant
ATTORNEYSFor  the  petitioner-appellant  the  cause  was  submitted
on  the  briefs  of  Coral  D.  Pleas  of  Legal  Action  of
Wisconsin, Inc. of Milwaukee.
Respondent
ATTORNEYSFor    the    respondent-respondent    the    cause    was
submitted   on   the   briefs   of   Donald   P.   Johns,
assistant attorney general.




COURT OF APPEALS
DECISION
DATED AND RELEASED
NOTICE
DECEMBER 19, 1995
A party may file with the Supreme Court                                          This opinion is subject to further editing.
a petition to review an adverse decision                                         If  published,  the  official  version  will
by the Court of Appeals.  See § 808.10 and                                       appear  in  the  bound  volume  of  the
RULE 809.62, STATS.                                                              Official Reports.
No.   95-1025-FT
STATE OF WISCONSIN                                                               IN COURT OF APPEALS
URLENE LILLY,
                                                                                 Petitioner-Appellant,
v.
WISCONSIN DEPARTMENT OF
HEALTH AND SOCIAL SERVICES,
Respondent-Respondent.
APPEAL from an order of the circuit court for Milwaukee County:
THOMAS P. DOHERTY, Judge.  Reversed.
Before Wedemeyer, P.J., Fine and Schudson, JJ.
WEDEMEYER, P.J.    Urlene Lilly appeals from a circuit court order
affirming a decision of the Department of Health and Social Services (DHSS),
which affirmed the decision of the Milwaukee County Department of Social
Services (the county) to terminate her Aid to Families with Dependent Children




No.   95-1025-FT
(AFDC).    The county terminated Lilly's AFDC benefits when she failed to
submit a completed income worksheet by the county's deadline.   Pursuant to
this court's order dated May 10, 1995, this case was submitted to the court on
the expedited appeals calendar.   Because once Lilly submitted the completed
form  to  the  county,  the  county  was  required  to  redetermine  her  benefits
pursuant to WIS. ADM. CODE §§ HSS 201.09(3)(b) & (c), we reverse.
The facts necessary to resolve this appeal are undisputed.   Lilly
applied for AFDC benefits prior to July 1993, and the county determined that
she was eligible for those benefits.   On August 6, 1993, the county financial aid
worker assigned to Lilly's case provided her with a "Request for Verification
Letter."    The letter specifically asked Lilly to complete a "Self Employment
Income Worksheet" so that it could determine if she was earning income from
Akeem Enterprises, a business owned by her brother-in-law.   Lilly was advised
that the deadline for returning the form to the county was September 6, 1993.
Lilly failed to return the completed worksheet to the county by the
deadline.    On September  14,  1993, the county notified Lilly that her AFDC
benefits would terminate on October 1, 1993.   Lilly failed to provide the county
with a completed worksheet in a meeting on September 15, 1993, but she did
submit the form on September  23,  1993.1    The worksheet showed that Lilly
received no income from Akeem Enterprises.   However, the county declined to
redetermine Lilly's benefits after she provided the necessary information, and
her benefits were terminated on October 1, 1993.
Lilly appealed the termination of her benefits to DHSS.   DHSS
held a hearing on October 7, 1993.   On October 28, 1993, DHSS affirmed the
county's  decision,  determining  that  Lilly  had  failed  to  provide  financial
1  DHSS notes that Lilly testified at the review hearing that she had, in fact, provided the
completed form to the county prior to September 5, 1993, and denied having told the financial-aid
worker on September 15, 1995 that she had not brought the completed form.  DHSS points out that
its  examiner  disbelieved  her  testimony,  and  that  this  court  is  required  to  defer  to  their
determinations of witness credibility.
Although we agree that this court must defer to DHSS credibility judgments, given that we
decide  this  appeal  on  purely  legal  grounds,  DHSS  determinations  of  Lilly's  credibility  are
immaterial.
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No.   95-1025-FT
information to the county in a timely manner, and that, as a result, the county
had properly terminated her benefits.  DHSS did not, however, address whether
Lilly's submission of the completed form on September 23,  1993, required a
redetermination of her eligibility for benefits.
Lilly sought circuit court review, arguing that she submitted the
required financial information prior to the actual termination of her benefits and
that once she had done so, DHSS should have redetermined her eligibility for
benefits under WIS. ADM. CODE § HSS 201.09(3)(b).   WIS. ADM. CODE § HSS
201.09(3)  sets  forth  the  circumstances  under  which  an  AFDC  recipient's
eligibility "shall be redetermined."   Subsection (b) provides that the recipient's
eligibility shall be redetermined "[p]romptly after a report is obtained which
indicates changes in the recipient's circumstances that may affect eligibility[.]"
The circuit court held that, for Lilly, "[n]o such change" in her circumstances had
occurred.  The circuit court reasoned:
[Lilly]'s benefits were terminated not because her income was
previously  too  high  and  subsequently  dropped
down.   Her benefits were terminated because [she]
failed  to  comply  with  the  verification  procedures.
Therefore, [Lilly]'s argument must fail.
The circuit court concluded that Lilly would be eligible for redetermination six
months from the date of her initial eligibility.    See WIS. ADM. CODE  § HSS
201.09 (3)                                                                            (d) (recipient's eligibility shall be redetermined "within 6 months from
the date initial eligibility is determined and every 6 months thereafter").
On appeal, Lilly renews her argument that her submission to the
county of the completed financial statement on September  23,  1993, was a
change in her circumstances that could affect her eligibility such that DHSS was
required to redetermine her eligibility for benefits.  We agree.  We also conclude
that the agency should have redetermined her eligibility for benefits under WIS.
ADM. CODE § HSS 201.09(3)(c) (a recipient's eligibility "shall be redetermined ...
[a]t any time the agency can justify the need.")
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No.   95-1025-FT
In an appeal involving an administrative agency's decision, this
court reviews the decision of the administrative agency, not that of the circuit
court.   Wisconsin Pub. Serv. Corp. v. Public Serv. Comm'n, 156 Wis.2d 611, 616,
457 N.W.2d 502, 504 (Ct. App. 1990).    This court generally defers to an agency's
interpretation of its rules, Pfeiffer v. Board of Regents, 110 Wis.2d 146, 155, 328
N.W.2d 279, 283 (1983), but we will not defer to an interpretation that "directly
contravenes the words of the statute, is clearly contrary to legislative intent, or is
otherwise unreasonable or without rational basis."   Lisney v. LIRC, 171 Wis.2d
499, 506, 493 N.W.2d 14, 16 (1992).
We   conclude   that   the   administrative   agency's   refusal   to
redetermine Lilly's eligibility for benefits after she filed the completed form is
without  support  in  the  statutes  and  the  administrative  regulations,  and  is
without rational basis.  The AFDC program is designed to:
encourag[e] the care of dependent children in their own homes or
in the homes of relatives by enabling each State to
furnish financial assistance  ... to needy dependent
children and the parents or relatives with whom they
are living to help maintain and strengthen family life
and to help such parents or relatives to attain or
retain capability for the maximum self-support and
personal    independence    consistent    with    the
maintenance   of   continuing   parental   care   and
protection...
42 U.S.C. § 601 (1985).   As paraphrased by Wisconsin courts, the purpose of the
AFDC program is "to allow needy children to remain with their families and to
free single parents from the necessity of working outside the home so they
could provide care for their children."   Woodman v. DHSS, 96 Wis.2d 466, 469,
292 N.W.2d 352, 354 (Ct. App. 1980), rev'd on other grounds, 101 Wis.2d 315, 304
N.W.2d 723 (1981).
Wisconsin's statutory scheme for determining a person's eligibility
for AFDC benefits, see § 49.19 et seq., STATS., clearly anticipates an applicant's
cooperation with the agency in determining financial eligibility.    Failure to
comply with the agency's fact-finding can be grounds for denial or termination
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No.   95-1025-FT
of benefits.   See, e.g., WIS. ADM. CODE §§ HSS 201.07 (applicants and recipients
shall provide full and correct information to the agency) and 201.08 (failure to
provide verification of income, incapacitation, etc., when person has the power
to do so will result in denial of benefits).
There  appears  to  be  no  dispute  that  the  county  properly
terminated Lilly's benefits when she failed to provide the county with the
financial information it had requested in a timely manner.    Although Lilly
claimed at the hearing that she had, in fact, complied with the agency's requests,
we accept for purposes of this appeal the agency's determination that she had
not.  We agree with DHSS's contention on appeal that the agency clearly has the
authority to deny or terminate benefits for an applicant's or recipient's failure to
comply  with  requests  for  information.     Contrary  to  DHSS's  arguments,
however, that is not the issue to be resolved here.
When  Lilly  submitted  the  completed  verification  report,  her
"circumstances that may affect eligibility" changed within the meaning of WIS.
ADM. CODE § HSS 201.09(3)(b).   Lilly had lost her eligibility for benefits even
though she still apparently qualified for them because she failed to submit the
required information.  Once she complied with the county's request for financial
information, her "circumstances changed" because she had then provided the
agency with the information necessary to redetermine her eligibility.  Under the
plain language of the regulation, the agency was required to redetermine her
eligibility "promptly" after the verification material was obtained.   This reading
of the regulation is consistent with the purpose of AFDC.
Similarly,   once   Lilly   submitted   the   necessary   financial
information, the county should have redetermined her eligibility because it
could "justify the need" to do so under WIS. ADM. CODE § HSS 201.09(3)(c).
Redetermination of Lilly's eligibility was "justified" at that time in order to fulfill
the purpose of AFDC to "encourag[e] the care of dependent children in their
own homes."   42 U.S.C. § 601 (1985).
As  we  have  already  noted,  DHSS  contends  that,  under  its
eligibility rules, if a recipient fails to comply with its requests it can terminate
benefits.   Again, there is no question but that it can take such action.   However,
when a recipient subsequently submits the requested information, the agency
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No.   95-1025-FT
must then redetermine eligibility under WIS. ADM. CODE § HSS 201.09(3).  DHSS
points to no regulation or statute—and we are aware of none—to support its
suggestion  that a  recipient's single failure to  comply with agency  requests
authorizes it to continue to deny benefits after the person complies with the
request and otherwise establishes his or her eligibility for benefits.   Common
sense dictates the contrary.
By the Court.—Order reversed.
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