## Facts

- Hazel Waters-Haskins received food stamp assistance while caring for grandchildren, first as a foster parent and later after adopting them in 1997.
- She received a foster parent subsidy before adoption and an adoptive parent subsidy after adoption from a separate state agency.
- In her food stamp applications and recertifications, she accurately reported the subsidies and the change in their status after adoption.
- The Human Services Department properly excluded the foster subsidy from countable income, but mistakenly continued to exclude the adoptive subsidy, which should have been counted and would have made her ineligible.
- The Department continued issuing benefits for years based on this misclassification.
- After discovering the mistake, the Department determined her income (including Social Security and disability income) made her ineligible and asserted a department-error overpayment claim for February 2004 through January 2005 totaling $4,476.
- An ALJ rejected her equitable estoppel defense; the district court affirmed.
- The Court of Appeals reversed as premature, reasoning equitable defenses should await the agency’s exercise of federal authority to settle, adjust, or compromise the claim.

## Issues

1. Whether equitable estoppel can bar a state agency from enforcing a food stamp overpayment claim when the overpayment resulted solely from agency error and the recipient fully complied with reporting obligations.
2. Whether judicial consideration of equitable estoppel is premature until the agency first attempts settlement, adjustment, or compromise under federal law.

## Decision

- The New Mexico Supreme Court reversed the Court of Appeals and held the Department was equitably estopped from enforcing the $4,476 overpayment claim.
- The Court rejected the prematurity rationale and decided equitable estoppel on the existing administrative and judicial record.
- The Court accepted that the overpayment claim was otherwise valid and undisputedly caused by department error, but concluded equity barred recovery in these circumstances.

## Legal Principles

- Equitable estoppel may apply against the government in limited circumstances when “right and justice” require it, and more than ordinary agency mistake is shown by the overall circumstances.
- A prolonged agency practice that repeatedly calculates and issues benefits can constitute a misrepresentation of eligibility when the recipient has fully and accurately reported relevant information.
- Reasonable reliance is supported when the recipient lacks practical means to detect the agency’s technical eligibility error and is given no reason to question the agency’s computations.
- Detriment may be shown where recoupment would impose substantial hardship after benefits were received and spent for basic subsistence.
- Courts may adjudicate equitable defenses to an overpayment claim without waiting for the agency to pursue discretionary settlement or compromise procedures.

## Conclusion

The court held that, although the agency had a valid department-error overpayment claim under the food stamp program, the agency’s long-running misclassification of reported income, the recipient’s reasonable reliance and lack of fault, and the hardship of repayment justified applying equitable estoppel to bar recoupment, and the defense was not premature.


Waters-Haskins v. Hum. Servs. Dep’t, 210 P.3d 817 (N.M. 2009)