Rational basis with bite in Minnesota: unemployment benefits and personal-care assistants

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benefits and personal-care assistants Mel Cousins, Glasgow

1 Trinity College Dublin, Ireland From the SelectedWorks of Mel Cousins 2013 Rational basis with bite in Minnesota: unemployment benefits and personal-care assistants Mel Cousins, Glasgow Caledonian University Available at:

2 Rational basis with bite in Minnesota: unemployment benefits and personal-care assistants The Minnesota court of appeals has recently come to an interesting decision on equal protection and insurability of workers, ruling in Weir v ACCRA Care - that the exclusion of certain personal care assistants (PCA) from the unemployment insurance scheme was in breach of the Minnesota equal protection guarantee. 1 This note examines this recent decision, contrasting it with the approach under the federal equal protection clause. The case is one of a number in different jurisdictions in which less favorable treatment of family member carers has been struck down under equal protection and human rights law. 2 Facts Minnesota provides PCA services to certain individuals as part of its medical-assistance program. 3 The program allows some family members to become PCAs, but not parents, stepparents, and... spouses. 4 PCAs must be employed by a personal-care-assistanceprovider agency. 5 PCAs so employed are limited to providing and being paid for up to 275 hours per month. But the law authorizes the flexible use of authorized hours within a service authorization period covering no more than six months, in order to more effectively meet the needs and schedule of the recipient. 6 Weir cared for his mother as a PCA employed through ACCRA from March 2010 until she passed away in December He met all the statutory requirements to be a PCA for his mother. After her death, he applied for unemployment benefits based on his employment with ACCRA, but the Minnesota Department of Employment and Economic Development (DEED) deemed him ineligible because his employment was considered noncovered employment. Minnesota s unemployment insurance statutes were amended (effective July 1, 2010) to exclude employment of an individual who provides direct care to an immediate family member funded through the personal care assistance program. 7 He accepted that he fell within this excluded group but argued that the statute classifying his employment as 1 No. A , February 25, For interesting cases involving equal protection and family member personal carers in other jurisdictions (though not involving insurability issues) see British Columbia v. Hutchinson, 2005 BCSC 1421 (exclusion of family members from public scheme of support for care of disabled persons contrary to the prohibition on discrimination in the BC Human Rights Code) and Ministry of Health v Atkinson [2012] NZCA 184 (exclusion of family members from payment for the provision of disability support services to their children constituted unlawful discrimination contrary to the NZ Human Rights Act 1993). 3 Minn. Stat. 256B.0659 (2012). 4 Id., subd. 11(c). 5 Id., subd. 11(a)(2). 6 Id., subd. 11(a)(10) and subd Minn. Stat , subd. 20(20) (2012). `Immediate family member' means an individual's spouse, parent, stepparent, grandparent, son or daughter, stepson or stepdaughter, or grandson or granddaughter. Minn. Stat , subd. 19a (2012).

3 noncovered employment violated the equal protection clause of the Minnesota Constitution. 8 Law The Minnesota Constitution as part of its Bill of Rights - guarantees that No member of this state shall be disenfranchised or deprived of any of the rights or privileges secured to any citizen thereof, unless by the law of the land or the judgment of his peers. 9 This clause has been described by the Minnesota supreme court as a mandate that all similarly situated individuals shall be treated alike. 10 The court of appeals turned first to the issue of whether similarly situated individuals were treated differently by the law. Here the court relied heavily on another recent equal protection challenge to laws affecting personal care assistants. In Healthstar Home Health, Inc. v. Jesson, 11 the court of appeals had struck down 2011 legislation reducing the pay of personal care attendants who are related to recipients to 80% of the pay of non-relative personal care attendants, finding that the law violated the equal protection clause of the Minnesota Constitution. It had been accepted in that case that relative and non-relative PCAs were similarly situated. The court followed that precedent stating While relative is defined differently from immediate family member, this court in Healthstar based its analysis of whether the two groups are similarly situated on the fact that both groups of PCAs are required to comply with the same statutes, rules and regulations. As with relative PCAs, immediate-family-member PCAs have the same duties and are required to comply with all of the same statutes, rules, and regulations as all other PCAs. We therefore conclude that the statute denying unemployment benefits to PCAs caring for immediate family members treats similarly situated people differently. 12 As no suspect category or fundamental right was engaged, rational basis review applied. However, under the Minnesota Constitution, (1) The distinctions which separate those included within the classification from those excluded must not be manifestly arbitrary or fanciful but must be genuine and substantial, thereby providing a natural and reasonable basis to justify legislation adapted to peculiar conditions and needs; (2) the classification must be genuine or relevant to the purpose of the law; that is there must be an evident connection between the distinctive needs peculiar to the class and the prescribed remedy; and 8 He also argued because his employment with ACCRA was initially covered employment, he should have been notified of the statutory amendment but the court did not reach the issue. 9 Minn. Const. art. 1, Greene v. Comm'r of Minn. Dep't of Human Servs., 755 N.W.2d 713, 725 (Minn. 2008) (quotation omitted) WL , (Minn. App. Dec. 17, 2012). 12 Citation omitted.

4 (3) the purpose of the statute must be one that the state can legitimately attempt to achieve. 13 The Minnesota supreme court has stated that The key distinction between the federal and Minnesota tests is that under the Minnesota test `we have been unwilling to hypothesize a rational basis to justify a classification, as the more deferential federal standard requires. 14 The Minnesota test requires a reasonable connection between the actual, and not just the theoretical, effect of the challenged classification and the statutory goals. 15 Applying rational basis review The court of appeals found that the exclusion of PCAs failed all three steps. The first step in the analysis is to determine if there is a genuine and substantial distinction between those inside and outside the class. The Minnesota legislature had adopted the amendment under challenge because it was advised by DEED that a fraud problem existed that is more likely to occur with immediate-family-member PCAs. According to DEED, applicants would front-load all of the approved hours during any given six-month period, claiming that they worked extraordinarily high hours during the early weeks or months, and then collect unemployment benefits during the remainder of the time period.... These PCAs then collected both wages and unemployment benefits every year, which required the complicity of their family member clients.... While such manipulation would also theoretically be possible in non-family settings, it is substantially less likely. Non-family clients would have no motivation to seek unemployment benefits for unrelated PCAs, nor would they be likely to report that all of their care hours had been used up early in the six-month period, risking that the non-relative PCA would not follow through on the bargain, and continue showing up to provide care even after the hours were reported and the wages were paid. However, the court found that DEED offered no evidence or legal authority to support this allegation of fraud, nor had it offered any factual support on appeal. The legislation, therefore, was based purely on assumptions rather than facts. 16 Under the Minnesota rational-basis test, the court concluded that the distinction between immediate-family-member PCAs and non-immediate-familymember PCAs is arbitrary and does not provide a genuine and substantial basis for denying unemployment benefits to immediate-family-member PCAs who are legitimately unemployed. The next step was that there should be an evident connection between the distinctive needs peculiar to the class and the prescribed remedy. The articulated basis peculiar to the class was to eliminate fraudulently obtained unemployment benefits. But the court found 13 State v. Russell, 477 N.W.2d 886, 888 (Minn. 1991). 14 Ibid at Ibid. 16 Russell, 477 N.W.2d at 890.

5 that the statutory schemes for both the PCA program and the unemployment-insurance program already had fraud protections. 17 The court found no evidence that the existing statutory protections against fraud were inadequate. Nor did it seem likely to the court that denying immediate-family-member PCAs all unemployment benefits would entirely eliminate any potential for fraud. Under these circumstances, the court concluded that immediate-family-member PCAs were being arbitrarily denied unemployment benefits. Therefore the connection between the needs of the class and the prescribed remedy was too tenuous to pass constitutional muster. The final step of Minnesota's rational-basis test is to analyze whether the purpose of the amendment is one that the state can legitimately attempt to achieve. The court accepted that the protection of a governmental entity's financial stability was a legitimate public purpose. 18 However, the state may not achieve this purpose through illegitimate means. The court concluded that the classification in this case was overbroad because it created an irrebuttable presumption that any immediate-family-member PCA who applied for unemployment benefits was doing so fraudulently. As none of the three steps of Minnesota's rational-basis test is satisfied, the court held that the exclusion of immediate family member PCAs from unemployment insurance violated Minnesota's Equal Protection Clause. Insurability and the federal equal protection clause Although the precise issue in Weir does not appear to have been litigated under the federal equal protection clause, there are several federal cases all upholding exclusions from social security cover involving domestic and family employment. In Fisher v Secretary of Health, Education and Welfare,the petitioner a black woman who worked as a domestic servant challenged the minimum earnings requirement under which a person earning less than $50 per quarter from a single employer was excluded from social 17 For example, flexible use of the allocated PCA hours requires that there be a written month-to-month plan of the projected use of personal care assistance services, and the plan must ensure that the total authorized amount of personal care assistance services for each date span must not be used before the end of each date span in the authorization period. Minn. Stat. 256B.0659, subd. 15(d)(2). If PCA services cannot be used up on any given authorization period, the court concluded that there to be no opportunity for immediate-familymember PCAs to use up the hours at the beginning of the period and then collect unemployment. The court also pointed out that the unemployment statutes require that applicants are available for suitable employment and actively seeking suitable employment to be eligible for unemployment benefits. Minn. Stat , subd. 1 (2012). An immediate-family-member PCA participating in the scheme described to the legislature would be committing fraud if he certified that he was available for suitable employment. This is because, according to DEED, the immediate-family-member PCAs would continue showing up to provide care even after the hours were reported and the wages paid. If a PCA is still caring for the recipient, he is not available for suitable employment, and any statement to the contrary would be knowingly false. Minnesota law provides that [a]ny applicant who receives unemployment benefits by knowingly misrepresenting, misstating, or failing to disclose any material fact, or who makes a false statement or representation without a good faith belief as to the correctness of the statement or representation, has committed fraud. Minn. Stat , subd. 2(a) (2012). The statute imposes a mandatory penalty in the amount of 40% of the benefits fraudulently obtained. Id. 18 Lienhard v. State, 431 N.W.2d 861, 867 (Minn. 1988).

6 security coverage. 19 She argued that this discriminated against a class of employees on the basis of race, gender and economic status as, she argued, domestic workers were an identifiable black racial group, an identifiable sexual group of women, and an identifiable economic group of poor wage-earners. The court accepted that racial classifications were inherently suspect. However, it pointed out that the plaintiff must show an intention to discriminate. The plaintiff produced evidence that domestic workers were in general poor, black women, and argued that intent to discriminate should be found where it can be shown that Congress knew (or should have known) that a class was composed primarily of minority members. However, following previous Supreme Court decisions, in particular Jefferson v Hackney, 20 the court did not accept this far-reaching approach. Having rejected the higher standard of review, the court found that there was rational basis for the exclusion in the administrative difficulties in collecting tax from employers of domestic workers and in the unfairness of collecting tax from people who only worked occasionally when they would be unlikely to qualify for benefits. A different type of domestic employment was at issue in Tyson v Heckler,where a married, self-supporting man (who lived away from the parental home) was employed by his father. 21 However, the social security code then excluded services performed by a child under the age of 21 in the employ or his or her parent. The court of appeals applied the normal rational-basis standard and found that the legislative history, which indicated that the prevention of collusion was the objective of the rule, provided such a basis. This was not affected by the fact that the age of majority in many states was then 18 rather than 21 as the different age limits involved different concerns. Similarly in Cornelius v Sullivan, the court upheld the exclusion of non-business employment by a relative on the basis that it was rationally related to Congress aim to prevent fraud (although the administrative law judge had found the employment to be bona fide). 22 The court of appeals upheld this exclusion even though, as a result of various amendments to the original blanket exclusion, the exemption now discriminated on the basis of marital status in that employment of a parent was allowed if the son or daughter was a widow(er), a divorced person, or a person with a disabled spouse with a child. The court held that the distinction did not involve marital status but rather was based on the fact that a parent, who was the sole provider and caregiver because of divorce, death or disablement, was likely to have a legitimate need for domestic services provided by his or her parent. Although expressing its concerns about adapting the provision to contemporary social realities which might necessitate the full-time employment of both husband and wife, the court could not (or would not) say that the concerns expressed by Congress were unfounded nor the means adopted irrational. In Clift v Sullivan, the circuit court of appeals shortly upheld provisions which excluded work performed in the employment of a spouse from insurability. The court recalled that as long as a classification had some rational basis it was not unconstitutional and, as in Tyson and Cornelius, the prevention of collusion provided such a rationale. The fact that one might F.2d 493 (7 th. Cir. 1975) U.S. 535 (1972) F.2d 1029 (11 th Cir. 1984), cert. denied, 469 U.S. 853 (1984) , F.2d 1143 (11 th. Cir. 1991).

7 assume that such a provision has a greater impact on wives than it does on husbands is not even adverted to in the judgment. 23 Conclusion As the cases discussed above show, the application of the federal equal protection clause and rational basis review will almost inevitably lead to upholding the exclusion as long as there is any rational basis (actual or hypothetical) for the legislation. In particular, vague suggestions of the possibility of collusion or fraud will be sufficient to provide a rational basis for the exclusion of family members. However, the Minnesota courts apply a much more stringent approach to rational basis review. Indeed, the difference in approach lies not only in the Minnesota courts unwillingness to hypothesize a rational basis but also in their willingness to verify that a rational basis actually exists. In this case, the court scrutinized the suggestion by DEED that fraud was more likely to occur with immediate family member PCAs (a very similar argument to that accepted in Tyson v Heckler, Cornelius v Sullivan and Clift v Sullivan). However, the court in Weir found no evidence to support this suggestion. Further even if there had been evidence to support this argument it found that there was no evident connection between the claimed fraud and the prescribed remedy of denying unemployment benefits to all immediate-family-member PCAs. The approach adopted by the court seems correct. The court scrutinized the purported basis for the law and found no evidence to support it (rather than replacing its view for a view which could have been legitimately adopted by the legislature) The case does show the potential of rational basis review if a more searching approach was ever adopted by the federal courts. The case is also an example of a general trend whereby family carers who were, in the past, expected to provide care without any financial remuneration, are increasingly seeking to avail of such support. Reservations about this trend by administrations in various jurisdictions (including Canada, New Zealand and the USA) perhaps largely based on the traditional approach that family carers should provide their services without (public) financial reward are being found to be in breach of equal protection and human rights guarantees. 23 See also a number of recent decisions in which the courts have upheld the 20/40 rule - whereby in order to qualify for social security disability benefits a person must have worked for 20 out of the previous 40 quarters against equal protection challenges from persons who argued that this was discriminatory against persons unable to work due to disability or responsibilities as homemaker : Collier v Astrue 473 F.3d 444 (2007) cert. denied 128 S.Ct. 353 (2007); Winger v Barnhardt 320 F.Supp.2d 741 (Ill. DC. 2004).

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