Pennsylvania, Department of Public Welfare v. Sebelius, 674 F.3d 139

DPW appeals a district court ruling sustaining HHS’s directive to remit $5,609,572 of recovered AFDC overpayments to the federal government.
HHS OIG audit found DPW recovered AFDC overpayments (Oct 1, 1996–June 30, 2006) but did not reimburse the federal share.
DAB upheld HHS’s demand to remit the federal share and rejected DPW’s challenges to HHS authority and policies.
DPW argued PRWORA’s transition to TANF and the SAA barred HHS from relying on its own audit; and that DPW could retain overpayments.
DPW challenged DAB’s FOIA indexing as FOIA injury; DPW sought review under APA, and DPW alleged lack of standing for FOIA claim.
Court applies de novo review to APA issues and FOIA standing; affirms district court’s rulings.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether §116(b)(3)(A) requires use of the SAA for all close-out claims.	DPW: SAA exclusive for AFDC close-out audits.	HHS: §116(b)(3)(A) allows HHS audits alongside SAA; not exclusive.	No; not exclusive; HHS may conduct its own audit.
Whether DPW must remit the federal share of recovered AFDC overpayments.	DPW: retains funds under equitable entitlement and policy interpretations.	HHS entitlement based on statute and later audits; DPW not entitled.	DPW must remit the federal share.
Whether the repayment obligation under the pre-1996 AFDC statute remains unambiguous.	DPW: Pennhurst unambiguously requires clear notice of repayment.	Section 603(b)(2) provides clear notice of reduction in payments.	Not ambiguous; repayment obligation clear.
Whether TANF fiscal caps prevent DPW from using AFDC overpayments to supplement TANF.	DPW: TANF cap not exceeded because of potential bonuses; funds may be retained.	Cap applies; cannot supplement TANF with AFDC funds.	DPW cannot use AFDC recoveries to augment TANF beyond cap.
Whether DPW has standing to pursue a FOIA claim regarding DAB indexing.	DPW asserts injury from inadequate FOIA index and search tools.	No concrete injury; no standing.	DPW lacks standing.

United States v. Yellow Cab Co., 340 U.S. 543 (1951) (expressions of broad terms must be read in context)
Pennhurst State School & Hosp. v. Halderman, 451 U.S. 1 (1981) (unambiguous notice required for conditional grants)
Arlington Cent. Sch. Dist. Bd. of Educ. v. Murphy, 548 U.S. 291 (2006) (Pennhurst notice requirements apply to public schooling context)
Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (injury-in-fact necessary for standing)
Cervase v. Office of the Fed. Register, 580 F.2d 1166 (3d Cir. 1978) (injury-in-fact in FOIA access context)