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$2.5 Million in Confiscated COVID-19 Relief Funds Returned to Arkansas Prisoners After Court Issues Injunction

by David M. Reutter

As of June 6, 2022, the Arkansas Department of Corrections (DOC) had returned $2,551,198 in confiscated federal relief or stimulus funds to state prisoners, according to Communications Director Cindy Murphy.

A permanent injunction granted by the U.S. District Court for the Eastern District of Arkansas on March 16, 2022, allowed DOC “to continue using any federal relief or stimulus funds received by a prisoner to pay off that prisoner’s existing court fines, fees, costs, or restitution,” but it required that “[a]ny federal relief or stimulus funds remaining after such obligations are satisfied must be returned to the prisoner” within 90 days of the confiscation.

The Court’s order made permanent a preliminary injunction granted on September 3, 2021, when Plaintiffs were found likely to succeed in proving that diverting their stimulus payments violated the Takings Clause of the Fifth Amendment and the procedural component of the Due Process Clause of the Fourteenth Amendment. [See: PLN, Nov. 2021, p.14.]

To help Americans financially during the COVID-19 pandemic, Congress enacted legislation providing that every American adult who earned $75,000 or less receive payments of $1,200, $600, and $1,400 in 2020 and 2021. Prisoners qualified to receive the payments, but “the State of Arkansas did not consider that a wise use of federal taxpayer funds,” the Court observed.

So, on May 6, 2021, Arkansas enacted Act 1110, directing DOC to confiscate any “federal relief or stimulus funds” received by state prisoners “on or after October 13, 2020.” It further directed those funds be used to pay any court fines, fees, or restitution that the prisoner owed, with any excess to be distributed to an “inmate welfare fund … and the Division of Correction Inmate Care and Custody Fund Account.”

Dozens of prisoners filed actions in federal court challenging confiscation of their stimulus funds or to prevent confiscation when those funds arrived. The Court selected suits filed by prisoners Steven Hayes, Anthony Lamar, and Winston Holloway as test cases, granting them a preliminary injunction that prevented confiscation of any funds in excess of court fines, fees, or restitution owed by the prisoner.

In the wake of that order, DOC moved the Court to make the injunction permanent. The Court denied that motion, stating the prisoners were entitled to a full airing of their legal issues, as they took exception to part of the Court’s ruling. The prisoners, now represented by counsel, moved for summary judgment. The Court upheld its previous ruling and rejected new arguments related to an alleged substantive Due Process violation. It also rejected an argument for an award of prejudgment interest, as that would not only violate sovereign immunity but also require an award of something DOC did not receive or take.

Thus the prisoner’s motion for summary judgment was granted in part and denied in part. The Court’s permanent injunction allowed DOC to confiscate stimulus checks to pay court fines, fees, or restitution owed by the prisoner, but the agency was required to return any excess to prisoners within 90 days of the confiscation. While the preliminary injunction applied to the three test prisoner cases, the Court made the permanent injunction statewide because it had widespread implications and DOC requested a statewide injunction. The dozens of other cases were then deemed moot, though any prisoner with a pending case is required to use his or her individual case number rather than the master case number on future proceedings.

Plaintiffs are represented in their suit by attorneys John E. Tull III and Noah P. Watson of the Little Rock firm of Quattlebaum, Grooms & Tull PLLC. See: Hayes v. Graves, 2022 U.S. Dist. LEXIS 47001 (E.D. Ark.) 

Additional source: Arkansas Democrat Gazette

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Related legal case

Hayes v. Graves