Housing authorities have the authority to conduct hearings on matters material to their operation, and to issue subpoenas ordering attendance at such hearings and the production of documents. 35 R.C.W. § 35.82.070(8). They also have the power of eminent domain over private property. 35 R.C.W. § 35.82.110. In the apparent opinion of the Washington legislature, it was necessary that public housing authorities enjoy these powers, and that local officials retain control over the authorities' exercise of these powers, because of the "essential government functions" housing authorities perform. 35 R.C.W. § 35.82.010.
Although any interpretation of the language of the Act and HUD's administrative offset regulation is clearly a matter of federal law, the functions and powers of housing authorities, as articulated and defined by statute, inform the federal law determination in this context. Here, HACK's state law powers make clear that HACK is, if not an agency of state government, at least a "unit of local government" within the meaning of the Act and HUD's administrative offset regulation.
Accordingly, neither apply in this case, and HUD was not bound to comply with their express procedural requirements before deciding to implement its recoupment scheme.
Having departed from the statutory and regulatory scheme, however, matters become less clear. HACK argues that, absent the express authorization to undertake administrative offset contained in the Act and HUD's regulation, HUD has no authority to undertake its recoupment scheme. In essence, HACK argues that a general common law right of government agencies to undertake specific, extra-statutory recoupment mechanisms such as that proposed by HUD does not exist, and that express statutory authorization is a precondition to the implementation of any such scheme.
As HACK notes, the Supreme Court "pretermitted" this issue in Bell v. New Jersey, 461 U.S. 773, 782 n.7, 76 L. Ed. 2d 312, 103 S. Ct. 2187 (1983), by finding that the statute at issue in that case did authorize non-litigation recoupment.
Absent a definitive statement from the Supreme Court, this Court finds substantial support for the proposition that HUD enjoys the common law right to recoup, in the manner proposed, the funds erroneously advanced to HACK,
and rejects HACK's assertion that the Act or HUD's regulations have somehow displaced or modified that right. The federal government's common law right to recoup erroneously disbursed funds is firmly established and has been consistently recognized. See, e.g. State of California v. Bennett, 829 F.2d 795 (9th Cir. 1987); Bechtel v. Pension Benefit Guaranty Corporation, 251 U.S. App. D.C. 53, 781 F.2d 906 (D.C. Cir. 1986) aff'ing 624 F. Supp. 590 (D.D.C. 1984); Woods v. United States, 724 F.2d 1444 (9th Cir. 1984); Mt. Sinai Hosp. v. Weinberger, 517 F.2d 329 (5th Cir. 1975). Cf. United States v. Wurts, 303 U.S. 414, 416, 82 L. Ed. 932, 58 S. Ct. 637 (1938). The variation in the above cases as to the manner of recoupment, which HACK cites as somehow limiting HUD's recoupment options, instead appears to this Court to underscore the breadth of the common law remedy.
Two of the foregoing decisions are particularly instructive. In Bechtel, the Pension Benefit Guaranty Corporation undertook to satisfy the ERISA obligations of a defunct steel company. Several years after the PBGC had begun payments to the company's ex-employees, the PBGC realized that the level of payments had been incorrectly calculated at the outset, and that the recipients had received more than they should have. Accordingly, the PBGC notified the recipients that it would recoup the amount of the overpayment by reducing subsequent monthly payments -- in essence, the method of recoupment that HUD proposes here. The employees in Bechtel challenged the PBGC's authority to undertake the recoupment scheme, alleging that ERISA's specification of a particular right of offset for payments made prior to the termination of a plan (29 U.S.C. § 1345), abrogated the more general common law right of recoupment.
The Court of Appeals for the District of Columbia, affirming the District Court, disagreed with the employees. The Court found that, absent an express legislative abrogation of the federal government's "general right of recoupment," there exists a presumption that the federal government may recover, in the manner employed in that case (as well as in the instant case), funds inadvertently dispersed. 781 F.2d at 907. In this Court's view, Congress has not specifically abrogated HUD's common law right to undertake the proposed recoupment scheme; accordingly, the presumption identified by the Court of Appeals in Bechtel applies here as well.
Similarly, in Mt. Sinai, the Secretary of Health, Education and Welfare (now Health and Human Services) determined that Mt. Sinai Hospital had received $ 6.3 million more in Medicare payments than it should have received. The Secretary notified Mt. Sinai of its intention to freeze future Medicare payments to the hospital to offset the amount claimed. Mt. Sinai sued to enjoin the offset, arguing that the Social Security Act's complex administrative scheme -- including a provision allowing offset against beneficiaries, but nothing permitting offset against a provider, such as the hospital -- abrogated the common law right.
The Fifth Circuit disagreed. The court stated that Congress had intended to retain the common law right, and noted, in a point of particular relevance here, that the "recoupment right does not always fit consistently and logically into the statutory system, but the alternative of no right to recoup produces even more severe incongruities." 517 F.2d at 338. The court also emphasized that "provisions apparently contrary to the government's right to recoup serve important functions that complement rather than displace or supersede the recoupment right." Id.
Here, although HUD's right to undertake its recoupment scheme perhaps lacks express statutory authorization, and may not fit smoothly among the legislative provisions squarely addressing the federal government's right to recoup funds erroneously disbursed, it is nevertheless this Court's view that the right does exist in this case. Rather than displacing it, the Act and HUD's offset regulation serve to complement that right. HUD is entitled, assuming that it is correct in assessing the existence and amount of the overpayment,
to recover the overpayments from HACK by reducing by appropriate amounts the level of HACK's future annual subsidies.
II. HUD DID NOT INFRINGE UPON HACK'S DUE PROCESS RIGHTS IN ARRIVING AT ITS FINAL DECISION
HACK argues that, even if HUD is not obligated to comply with the specific procedures contained in the Act and HUD's offset regulation, HUD at least bears the burden of providing constitutionally sufficient procedure before implementing its recoupment scheme. This Court agrees.
The issue then becomes whether HUD has respected HACK's rights under the Fifth Amendment in arriving at its determination here. This Court holds that it has.
Due process in this context does not require adherence to a set procedural formula for arriving at a final agency determination of HACK's rights. See Mathews v. Eldridge, 424 U.S. 319, 334, 47 L. Ed. 2d 18, 96 S. Ct. 893 (1976) ("due process, unlike some legal rules, is not a technical conception with a fixed content unrelated to time, place and circumstances.") (quoting Cafeteria Workers v. McElroy, 367 U.S. 886, 6 L. Ed. 2d 1230, 81 S. Ct. 1743 (1961); Koch, Administrative Law and Practice, § 7.22 (1985) ("The exact procedures to be derived from the due process requirement will vary depending upon the particular situation being examined."). At a minimum, however, a "fundamental requirement of due process is the opportunity to be heard at a meaningful time and in a meaningful manner." Mathews, 424 U.S. at 333.
The substance of this requirement is set forth in Mathews ' classic paradigm of due process -- constitutionally adequate procedure is based upon an evaluation of (1) the magnitude of the interest at stake, (2) the risk of an erroneous decision pursuant to current procedures and the value of additional procedure, and (3) the government's interest in the current procedure in light of the costs, fiscal and administrative, of additional procedure. Id. at 335.
Applying these criteria to the instant case, the Court finds that HUD's procedure satisfied the duties imposed by the Fifth Amendment. Concededly, there is little question that HUD's recoupment scheme will have a substantial impact upon HACK's operating budget for the next five years, and therefore implicates a substantial interest. This fact, however, must be weighed against the nature of the dispute between HACK and HUD. Unlike that presented in the typical due process context, the dispute here is essentially legal, not factual.
It is accepted that where an administrative dispute requires little or no factual development for resolution, abbreviated procedure is constitutionally acceptable. See, e.g., Beth Rochel Seminary v. Bennett, 263 U.S. App. D.C. 341, 825 F.2d 478, 482 (D.C. Cir. 1987) ("No constitutional right to a hearing arises where the dispositive facts are not in dispute."); Sullivan v. Carignan, 733 F.2d 8, 9-10 (1st Cir. 1984) (full hearing not required where dispositive facts not in dispute).
Accordingly, under these circumstances, HUD's failure to conduct a formal hearing before finalizing its decision -- the purported deficiency at the center of HACK's complaint -- cannot be said to have deprived HACK of its right to due process. Under the Mathews analysis, the provision of a formal hearing would have added little or nothing to the accuracy of the decisionmaking process. In rendering its final decision, HUD (both in Washington and Seattle) had before it and considered
extensive written submissions of HACK's counsel describing HACK's position; it is therefore difficult to see how the benefits of a formal hearing would have justified its costs. By its nature, HUD's decision did not require a detailed investigation followed by trial-type findings of fact. HUD had all that it needed to make a fair decision -- it appears to have understood quite well the nature of HACK's objections -- and the absence of a hearing or additional process in no way impugns the accuracy of that decision. See Eguia v. Tompkins, 756 F.2d 1130, 1138 (5th Cir. 1985) ("when a determination is for the most part based upon objective documentary evidence, there is less reason to fear that lack of a formal hearing will result in an erroneous decision"). Accordingly, under Mathews, and particularly in light of the nature of HUD's decision, this Court concludes that HACK has been provided with all of the process to which it is constitutionally entitled under the Fifth Amendment.
Moreover, even if HUD's procedures prior to the filing of this lawsuit had been constitutionally deficient, following the filing of the complaint HUD appears to have offered HACK a hearing before an agency official who possessed the authority to issue a final decision, as well as all non-privileged documents responsive to HACK's request, in return for a stay of this litigation. HACK refused the offer. In so refusing a tender of constitutionally sufficient process, HACK may well have waived its right to complain of a due process violation before this Court. See, e.g., Dusanek v. Hannon, 677 F.2d 538, 543 (7th Cir. 1982) ("[A government agency] cannot be held to have violated due process requirements when it has made procedural protections available and the plaintiff has simply refused to avail himself of them.").
To summarize: Because neither the Act nor HUD's administrative offset regulation apply in this case, because HUD retains the common law right to recoup the overpayments to HACK in the manner proposed, and because HUD complied with the requirements of due process in arriving at its decision to recover the purported overpayments from HACK, summary judgment is granted in HUD's favor.