Luther D. Mullen v. Otis Bowen, Secretary of Health and Human Services, Richard G. Shepherd v. Otis Bowen, Secretary of Health and Human Services

BOYCE F. MARTIN, Jr., Circuit Judge, dissenting, with whom KEITH, JONES, and CONTIE, Circuit Judges, concur.

I quarrel with the majority’s interpretation of these regulations and the majority’s deference to the Secretary’s Appeals Council because the interpretation is illogical and the deference is unfair. I do not dispute that Congress bestowed upon the courts the power to review the final decisions of the Secretary. Nor do I dispute that Congress gave the Secretary the power to review decisions of administrative law judges. However, I do believe that the Secretary, by his own regulation 20 C.F.R. § 404.970 (a), limited his power to review administrative law judge decisions to four specific situations. The Secretary must abide by his own rules. United States v. Nixon, 418 U.S. 683, 694-96 , 94 S.Ct. 3090, 3100-01 , 41 L.Ed.2d 1039 (1974). These rules require that the Secretary analyze whether the decisions of the administrative law judges are supported by substantial evidence just as the judiciary must do in reviewing administrative law judge decisions which the Secretary adopts as his final decisions. Again, I do not quarrel with the Acts of Congress or the regulations of the Secretary, but only with the *558 majority’s interpretation of these regulations and laws.

I remain convinced that the majority’s interpretation of 20 C.F.R. §§ 404.969 and 404.970(a) is not sound in light of the plain language of those regulations. Not only is the majority’s interpretation incorrect, but the application of the substantial evidence standard to the Secretary’s Appeals Council is inequitable. Rather than reading the “may” in section 404.969 to state that the Appeals Council may review any administrative law judge decision and translating the “will” of section 404.970(a) to “must” creating four situations where the Appeals Council must review administrative law judge decisions, as the majority does, I remain convinced that the better interpretation is that applied in Newsome v. Secretary of Health and Human Services, 753 F.2d 44 (6th Cir.1985).

As we stated in Newsome , section 404.-970(a) limits the Appeals Council’s power to review administrative law judge decisions to the four situations listed in that section. If one of those four situations is not present, the Secretary’s Appeals Council has no authority to review the administrative law judge’s decision and his decision becomes the final decision of the Secretary. To determine whether the Appeals Council has the authority to review the administrative law judge’s decision, we as the reviewing court must determine whether, as one of the four situations requires, substantial evidence supports the administrative law judge’s decision. If substantial evidence supports the administrative law judge’s decision, the Appeals Council’s review is improper. The result is that the reviewing court applies the deferential substantial evidence to the administrative law judge’s decision whereas the majority applies it to the Appeals Council’s decision. Section 404.969 bestows on the Secretary the power to review administrative law judge decisions and limits that power temporally to allow review only within sixty days of the administrative law judge decision. Section 404.970(a) provides the criteria as to whether the Secretary’s Appeals Council may review an administrative law judge decision.

Although the Newsome interpretation appears to conflict with Beavers v. Secretary, Dep’t Health, Educ. & Welfare, 577 F.2d 383 (6th Cir.1978), Newsome actually refines Beavers. The Beavers panel, apparently unaware of the regulations now in question, decided nothing other than the statutory authority of the Secretary. There is no question that the Social Security Act authorizes the Secretary, not the administrative law judge, to make the final decisions. There is also no question, however, that the Secretary may, by regulation, provide that the administrative law judge’s decision will be the Secretary's final decision. See, e.g., 20 C.F.R. § 404.955 (circumstances in which the administrative law judge’s decision is final). The issue, then, is not whether the Secretary possesses statutory authority to make final decisions; the issue is whether the Secretary has, by regulation, circumscribed the authority of the Appeals Council to upset the findings of fact made by the administrative law judge.

The Newsome position has support. First, if the Secretary had intended section 404.969 to allow review of administrative law judge decisions for any reason, the regulation would have explicitly stated that. The Secretary has used “for any reason” language in other regulations. See 20 C.F.R. § 404.988 (a) (“A determination ... may be reopened — (a) Within 12 months of the date of the notice of the initial determination, for any reason”). Because the Secretary has explicitly used the “for any reason” language in the regulations, the courts should not read that language into section 404.969 when the Secretary has decided to leave it out.

Second, the interpretation of “may” as bestowing power and “will” as limiting power is supported by a similar judicial interpretation of two closely analogous regulations. The federal courts, including the Supreme Court, have rejected the majority’s interpretation of “may” and “will” when considering 20 C.F.R. § 404.957 (b) *559 and 20 C.F.R. § 404.958 , which have since been modified (now codified at 20 C.F.R. § 404.988 (b) and 20 C.F.R. § 404.989 (a)). Section 404.957(b) provided:

An initial ... decision may be reopened:

(b) After such 12-month period, but within 4 years after the date of the notice of initial determination ... to the party to such determination, upon a finding of good cause for reopening such determination or decision____

(Emphasis added).

Section 404.958 provided:

“Good cause” shall be deemed to exist where:

(a) New and material evidence is furnished after notice to the party to the initial determination;

(b) A clerical error has been made in the computation or recomputation of benefits;

(c) There is an error as to such determination or decision on the face of the evidence on which such determination or decision is based.

(Emphasis added). I fail to detect any difference in the meaning between “shall” and “will” — two forms of the same verb in the same tense — and so I treat them as identical. If the majority’s interpretation were applied in the context of sections 404.-957(b) and 404.958, one would expect courts to have held that the Secretary may reopen any case on a general showing of “good cause.” That is, the particularized criteria in section 404.958 do not exhaust the circumstances in which the Secretary may find good cause. Section 404.958 merely states when the Secretary must find good cause. But research disclosed not a single case where a court adopted the majority’s interpretation and held that the Secretary may find good cause in circumstances other than those in which the regulations said that he shall find good cause. On the contrary, every court considering the issue has indicated that the Secretary was permitted to find good cause only when the particularized criteria in section 404.958 were satisfied. See, s.g., Califano v. Sanders, 430 U.S. 99, 102 , 97 S.Ct. 980, 982 , 51 L.Ed.2d 192 (1977); Gaston v. Richardson, 451 F.2d 461 , 463 n. 2 (6th Cir.1971); Ortego v. Weinberger, 516 F.2d 1005, 1015 (5th Cir.1975); Ruiz-Olan v. Secretary, Dep’t of Health, Education & Welfare, 511 F.2d 1056 , 1057 (1st Cir.1975) (per curiam); Shelton v. Secretary, Dep’t of Health, Education & Welfare, 428 F.2d 81, 85 (3d Cir.1970). Moreover, the modified version of section 404.957(b) explicitly provides that the Secretary may find good cause only if the particularized criteria of the companion regulation are met, see 20 C.F.R. § 404.988 (b) (Secretary may reopen if he finds “good cause, as defined in section 404.989”); Bloodsworth v. Heckler, 703 F.2d 1233, 1238 (11th Cir.1983) (Secretary may reopen “only for the specific and substantial reasons catalogued in 20 C.F.R. §§ 404.988 and 404.989”), and we have held that the new versions of sections 404.957(b) and 404.958 were effected “without substantive change” in the law, see Gosnell v. Secretary of Health and Human Services, 703 F.2d 216 , 218 n. 1 (6th Cir.1983). It is indeed curious that although the courts have steadfastly refused to interpret these words to aid claimants seeking to reopen their claims, the majority now changes the interpretation when to do so works to the substantial detriment of claimants.

Though several circuits have adopted the reasoning of the majority, the Seventh Circuit, in Scott v. Heckler, 768 F.2d 172 (7th Cir.1985), has adopted the Newsome analysis after considering the opinions of other circuits which side with the majority opinion here. 1 The Scott court stated:

We think we have an obligation to determine whether the own motion review conducted by the Appeals Council was in fact justified under the standard *560 by which the Council justified it in theory. To rule otherwise would be to render the hearing before the administrative law judge essentially without effect, subject to the unbridled de novo review of the Appeals Council.

Id. at 178 .

Our focus should not be on what other circuits decide but on what decision is correct. Yet, we agree with the Scott court that the wisdom of the regulations, as interpreted in Newsome , cannot be doubted. Only this interpretation protects the integrity of the factfinding process at the administrative law judge level and shields that process from the undue influence of the Secretary who may be biased by his own administrative goals and statistics. If the relatively unbiased administrative law judge determines after a hearing that the claimant deserves benefits, and if that decision is supported by substantial evidence, equity demands that the claimant receive benefits. As long as the administrative law judge decides against the claimant, the Secretary’s Appeals Council will affirm. As a reviewing court, we defer to the administrative law judge’s decision, adopted by the Secretary, if substantial evidence supports it. We especially give great weight to the findings of the administrative law judge in recognition of the fact that the administrative law judge actually observes the claimant as he testifies. Yet, under the majority’s theory, if the administrative law judge awards benefits, the Appeals Council can, by way of a paper review, throw out the administrative law judge's determinations and deny benefits. In fact, nothing prevents the Appeals Council from simply reversing every administrative law judge award determination. Claimants would then be required to appeal to the courts and only if a court did not find substantial evidence to support the Secretary’s Appeals Council would the Secretary be required to pay benefits. Social Security claimants who are usually, by definition, in poor health and have a limited income should not be required to fight such an uphill and generally losing battle.

In both the Shepherd and Mullen situations, the majority determined that substantial evidence supports the administrative law judge findings of disability and decisions to award benefits. The majority then independently determined that the Appeals Council findings of no disability and decisions not to award benefits were supported by substantial evidence. Because with the Newsome interpretation, the deference of the substantial evidence standard is given to the administrative law judge’s findings, and because in both cases the majority has correctly found that substantial evidence supports the administrative law judge findings of disability, I believe that the Appeals Council improperly reviewed the cases. The Appeals Council reviews were not authorized by the Secretary’s regulations and therefore the findings of the administrative law judge should have been the findings of the Secretary. On that basis, I respectfully dissent.

. The Seventh Circuit denied rehearing and rehearing en banc in Scott . In Parker v. Heckler, 763 F.2d 1363, 1365 (11th Cir.1985), the Newsome interpretation was embraced, but that opinion was reversed by a rehearing en banc, Parker v. Bowen, 788 F.2d 1512 (11th Cir.1986) (en banc).