County of Alameda v. Caspar W. Weinberger, Etc.

The United States Department of Health, Education, and Welfare [“HEW”], claiming that it had overpaid the State of California $11,020,249 in grants under the Social Security Act, deducted a portion of the asserted overpayments from its current quarterly grants to the State. Several counties and the State sued to prevent further deductions and to secure release of monies withheld. The district court granted a preliminary injunction. HEW and the other federal defendants appealed and sought a stay pending determination of the appeal. We expedited the appeal. We affirm the issuance of the preliminary injunction and dismiss as moot the application for a (continued) stay.

In December 1968, the State of California submitted to HEW for its approval a welfare plan involving aid to the aged, the blind, and the disabled, to be effective retroactively to July 1, 1968. The plan included the “formula” that federal financial participation would be 75 percent for “mixed caseload” and “general administrative and overhead” costs. On March 19, 1969, the State advised its county welfare agencies that HEW’s approval of the plan (including the 75 percent formula) was pending and that if the…