Amicus Curiae Brief — Bowen v. Yuckert

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IN THE

Supreme Court of the United

Ocroser TERM, 1986 ~

OTIS R. BOWEN, Secretary of Health and Human Services,

Petitioner,

vs.

JANET J. YUCKERT,

% Respondent.

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE NINTH CIRCUIT

AMICI CURIAE BRIEF IN SUPPORT OF RESPONDENT

OF ALABAMA, ALASKA, ARKANSAS, COLORADO,

FLORIDA, HAWAIL, ILLINOIS. INDIANA, IOWA, KANSAS,

KENTUCKY, LOUISIANA, MARYLAND, MICHIGAN,

MISSISSIPPI, NEBRASKA, NEW JERSEY, NEW MEXICO,

NEW YORK, NORTH CAROLINA, NORTH DAKOTA,

OHIO, OKLAHOMA, PENNSYLVANIA, SOUTH DAKOTA,

TEXAS, VERMONT, WISCONSIN, WYOMING

RoBERT ABRAMS

Attorney General of the

State of New York

Two World Trade Center

New York, New York 10047

(212) 488-3943

O. Perer SHERWOOD

Solicitor General

Counsel of Record

(Names and addresses of additional Attorneys General are listed infra.)

—_——

aieneeme

CuHar_es A. GrRADDICK

Attorney General

State of Alabama

Alabama State House

11 South Union Street

Montgomery, Alabama 36130

Haro_tp M. Brown

Attorney General

State of Alaska

Department of Law

Box K

Juneau, Alaska 99811

Joun STEVEN CLARK

Attorney General of the

State of Arkansas

201 East Markham Street

Heritage West Building

Little Rock, Arkansas 72201

Duane WooparpD

Attorney General of the

State of Colorado

State Services Building

1525 Sherman Street

Denver, Colorado 80203

Jim SMITH

Attorney General

State of Florida

The Capitol

Tallahassee, Florida 32301

Corrine K. A. WATANABE

Attorney General of Hawaii

State Capitol

Honolulu, Hawaii 96813

Net F. HarTIGAN

Attorney General

State of Illinois

Roma J. STEWART

Solicitor General

100 West Randolph Street

Chicago, Illinois 60601

LInLEy E. PEARSON

Attorney General of Indiana

219 Statehouse

Indianapolis, Indiana 46204

THOMAS J. MILLER

Attorney General

State of lowa

Department of Justice

Hoover Building

Des Moines, Iowa 50319

Rospert T. STEPHAN

Attorney General

State of Kansas

Kansas Judicial Center

Topeka, Kansas 66612

Davip L. ARMSTRONG

Attorney General

Commonwealth of Kentucky

Capitol Building

Frankfort, Kentucky 40601

Wi.uiaM J. GusrE, Jr.

Attorney General

State of Louisiana

Louisiana Department of Justice

234 Loyola Avenue, 7th Floor

New Orleans, Louisiana 70112

STEPHEN H. SAcHs

Attorney General of Maryland

Munsey Building

Calvert and Fayette Streets

Baltimore, Maryland 21202

FRANK J. KELLEY

Michigan Attorney General

525 West Ottawa Street

Lansing, Michigan 48913

Epwarp Lioyp PrrrMaNn

Attorney General

State of Mississippi

P.O. Box 220

Jackson, Mississippi 39205

Rosert M. SPIRE

Attorney General

State of Nebraska

State Capitol

Lincoln, Nebraska 68509

W. Cary Epwarps

Attorney General of New Jersey

Richard J. Hughes Justice Complex

CN 112

Trenton, New Jersey 08625

PauL BARDACKE

Attorney General

State of New Mexico

P.O. Drawer 1508

Bataan Memorial Building

Santa Fe, New Mexico 87504

Lacy H. THORNBURG

Attorney General

State of North Carolina

North Carolina Department of Justice

P.O. Box 629

Raleigh, North Carolina 27602

NIcHOLAS J. SPAETH

Attorney General

State of North Dakota

State Capitol

Bismarck, North Dakota 58505

ANTHONY J. CELEBREZZE, JR.

Attorney General for the

State of Ohio

State Office Tower

30 East Broad Street

Columbus, Ohio 43266

MicHaEL C. TURPEN

Attorney General

State of Oklahoma

State Capitol

Oklahoma City, Oklahoma 73105

LeRoy S. ZIMMERMAN

Attorney General

Commonwealth of Pennsylvania

16th Floor

Strawberry Square

Harrisburg, Pennsylvania 17120

Mark V. MEIERHENRY

Attorney General

State of South Dakota

State Capitol

Pierre, South Dakota 57501

State of Texas

Jim Matrox

Attorney General of Texas

P.O. Box 12548

Capitol Station

Austin, Texas 78711

Jerrrey ‘LL. AMESTOY

Attorney General

State of Vermont

Pavilion Building

Montpelier, Vermont 05602

Bronson C. La FOLLETTE

Attorney General

State of Wisconsin

P.O. Box 7857

Madison, Wisconsin 53707

A. G. McCLIntock

Attorney General

The State of Wyoming

Cheyenne, Wyoming 82002

TABLE OF CONTENTS

INTERESTS OF THE AMICI CURIAE STATES.

SUMMARY OF THE ARGUMENT

ARGUMENT

I. THE SOCIAL SECURITY ACT PROHIBITS

THE SOCIAL SECURITY

ADMINISTRATION FROM IMPOSING

MORE THAN A DE MINIMIS

THRESHOLD STANDARD UPON

CLAIMANTS FOR SOCIAL SECURITY

DISABILITY OR SSI DISABILITY

A. The Social Security Act

B. Before 1976, SSA Complied with the Act

by Applying a De Minimis Threshold

Standard

. BEGINNING IN 1976, SSA BEGAN

IMPOSING A THRESHOLD TEST FOR

DISABILITY BENEFITS THAT EXCEEDED

A DE MINIMIS STANDARD, THEREBY

UNLAWFULLY DEPRIVING CLAIMANTS

OF A FAIR OPPORTUNITY TO PROVE

THEIR ELIGIBILITY FOR BENEFITS

A. SSA Imposed Its New Severity Standard

Through its Quality Assurance Program

and Unpublished Internal Rules and Later

Through its Regulations

1. SSA Broadened the Definition of

“Slight” Impairment to Include

Increasingly Disabling Conditions

Without Reference to their Impact on

Individual Claimants

2. Concurrently, SSA Adopted a Policy

Requiring that Impairments be “Severe”

in Order to Warrant a Full Evaluation

ER RENE Ee

B. The State Disability Agencies and Even SSA

Itself Recognized that the New Threshold

Standard Exceeded a De Minimis Test .....

C. SSA’s Implementation of Its New Threshold

Standard Led to a Substantial Increase in

the Percentage of Claimants Denied Benefits

Without a Full Evaluation of Whether They

Could Do Substantial Gainful Work in

Light of Their Vocational Factors .........

III. SSA’S IMPROPER SEVERITY STANDARD

HAS IMPOSED SEVERE AND

IRREPARABLE HUMAN AND FINANCIAL

COSTS ON DISABLED PERSONS AND

THE STATES IN CONTRAVENTION OF

CONGRESSIONAL INTENT ..............

A. Application of SSA’s Severity Standard Has

Resulted in Incorrect Denials and

Terminations of Disability Benefits ........

B. SSA’s Severity Standard Has Resulted in the

Imposition of Added Costs Upon the State

and Local Governments in Contravention of

Congressional Intent to Relieve their Public

Assistance Costs for the Care of the Disabled

Page

IV. THE AMBIGUOUS NATURE OF SSA’S

NEWEST THRESHOLD SEVERITY

POLICY, SSA’S PRACTICE OF

REPEATEDLY CHANGING ITS

STANDARD DESPITE THE LACK OF ANY

CHANGE IN THE STATUTE, AND THE

STATES’ NEED FOR A CLEAR AND

PROPER POLICY WARRANT

AFFIRMANCE OF THE COURT OF ,

APPEALS’ JUDGMENT ..........----+-++> 25

+ + «aaa nr fer. or 29

TABLE OF AUTHORITIES

Cases: Page

Avery v. Heckler, 584 F. Supp. 312 (D. Mass.

RS ae ee ere ee ee ee ee 22

Baeder v. Heckler, 768 F.2d 547 (3d Cir. 1985) .. 6

Bastien v. Califano, 572 F.2d 908 (2d Cir. 1978) . 6

Brady v. Heckler, 724 F.2d 914 (11th Cir. 1984) . 7

Brown v. Heckler, 786 F.2d 870 (8th Cir. 1986). .

Campbell v. Heckler, 461 U.S. 458 (1983)....... 6

Campbell v. Heckler, 620 F. Supp. 469 (N.D.

re hdc ke ob c ema pee) bo 40 0 0 21

Channel v. Heckler, 747 F.2d 577 (10th Cir.

cae eu settee bie Lid deehinas own 6% on ¢ 6

Choratch v. Finch, 438 F.2d 342 (3d Cir. 1971).. 6

City of New York v. Heckler, 578 F. Supp. 1109

(E.D.N.Y.), aff'd, 742 F.2d 729 (2d Cir. 1984),

eg A BD eee 10,22,

Dixon v. Heckler, 589 F. Supp. 1491 (S.D.N.Y.

1984), aff'd, 785 F.2d 1102 (2d Cir. 1986),

petition for cert. filed, 55 U.S.L.W. 3017 (U.S.

Se bo oc d'e ees cccnedseec< 7,8,16,

Dixon v. Heckler, 589 F. Supp. 1512 (S.D.N.Y.

Uc aeewercoeeedsweeieeys 22

Doe v. Heckler, 568 F. Supp. 681 (D. Md. 1983) . 22

Estran v. Heckler, 745 F.2d 340 (5th Cir. 1984) . .

Evans v. Heckler, 734 F.2d 1012 (4th Cir. 1984) .

Francis v. Heckler, 749 F.2d 1562 (11th Cir.

Mens rdhweV aden becddbatadcchcc aleve cut

BPE pea YS

Hall v. Secretary of Health, Educ. and Welfare,

602 F.2d 1372 (9th Cir. 1979) ...............

Hansen v. Heckler, 783 F.2d 170 (10th Cir. 1986)

Hernandez v. Weinberger, 493 F.2d 1120 (1st

ETE TST SLE Tee a

Holden v. Heckler, 584 F. Supp. 463 (N.D. Ohio

REEF SSRIS 7 Saar ne a

Johnson v. Heckler, 769 F.2d 1202 (7th Cir.

1985), petition for cert. filed, 54 U.S.L.W.

3600 (U.S. Feb. 27, 1986)(No. 85-1442) .......

Lewis v. Weinberger, 515 F.2d 584 (5th Cir.

er Lee

McDonald v. Secretary of Health and Human

Services, 795 F.2d 1118 (lst Cir. 1986)........

Meneses v. Secretary of Health, Educ. and

Welfare, 442 F.2d 803 (D.C. Cir. 1971) ......

Minnesota Mental Health Assoc. v. Schweiker,

554 F. Supp. 157 (D. Minn. 1982), aff'd, 720

Wome Gee Got Cie. I0GD) ....... 5. wee cc acne.

O’Banner v. Secretary of Health, Educ. and

Welfare, 587 F.2d 321 (6th Cir. 1978) ........

Page

7,21,22

Papasan v. Allain, 106 S. Ct. 2932 ey

Regents of University of California v. Bakke, 438

U.S. 965 (1078)... 2. cece cece cere e ee eeees

Salmi v. Secretary of Health and Human Services,

774 F.2d 685 (6th Cir. 1985) ..........--. ch

San Antonio School District v. Rodriguez, 411

‘i. Se) . See Seer eee

Schisler v. Heckler, 107 F.R.D. 609 (W.D.N.Y.

1984), aff'd, 787 F.2d 76 (2d Cir. 1986).......

Smith v. Califano, 592 F.2d 1235 (4th Cir. 1979)

Smith v. Heckler, 595 F. Supp. 1173 (E.D. Ca.

BR ncxtonscunsensscseneneesrocerescces

Ne ir dei ndibs ye ens

Stone v. Heckler, 752 F.2d 1099 (5th Cir. 1985)..

Wilson v. Secretary of Health and Human

Services, 796 F.2d 36 (3d Cir. 1986)..........

Yuckert v. Heckler, 774 F.2d 1365 (9th Cir. 1985)

Federal Statutes and Regulations:

Tit. II, 42 U.S.C. §§ 401, et seq.

Serr rerrerT Terrier

42 U.S.C. § 42l(a)(1) ... 2... eee eee ee ees

42 U.S.C. § 421(D) ... 2. eee eee eee

Page

vii

Page

42 U.S.C. § 421(b)(1) .................... 2,8

Ge ty Ds ook Sebo ccddvcceccccs 2

42 U.S.C. § 421(c)(2)..................... 8

42 U.S.C. § 421(c)(3)............0........ 8

42 U.S.C. § 421(c)(3)(C).................. 2

OD We FG a won ccc ccccccccccnen 6

Tit. IV, 42 U.S.C. §§ 601, et seg. ............. 24

Tit. XVI, 42 U.S.C. §§ 1381, et seg. ........... 22

3 U.S.C. § RBBB)... ww ccc ccc eens ]

42 U.S.C. § 1383e(a)(3)................... 6

Social Security Disability Benefits Reform Act of

1984, Pub. L. No. 98-460, 98 Stat. 1794, et

seq.

DR oe ee 2

20 C.F.R.

Part 404

§ 404 1502(a)(1968) .................. 7

PEN on cdeetvcceboctastene: 4,14,28

ee or ne ec cwcucbweweddus 4

of 8 eee l

Part 416

Ss oes bs wipavtesadawenee dus 7

I cc ogi e red 4,14,28

Page

ee eee ade set ORee he eee 4

I MUD, cc cacecnsésceesees l

Part 422

PS ckpde nes w iene eneweetaee as 11

Federal Register:

43 Fed. Reg. 9296, 9303 (Mar. 7, 1978)......... 14,17

43 Fed. Reg. 55349, 55358 (Nov. 28, 1978) ...... 4,14,17

Federal Rules of Evidence

iin 055 646006065604 he denne 8

EE cuba cabetekeensensess6eses 8

Congressional Documents:

117 Cong. Rec. H21092 (June 21, 1971)......... 23

S. Rep. No. 1987, 83rd Cong., 2d Sess. (1954),

reprinted in 1954 U.S. Code Cong. & Admin.

ti een ehwakeenachheds s< 6

S. Rep. No. 2133, 84th Cong., 2d Sess. (1956),

reprinted in 1956 U.S. Code Cong. & Admin.

ae ee ee oe 6 23

S. Rep. No. 1856, 86th Cong., 2d Sess. (1960),

reprinted in 1960 U.S. Code Cong. & Admin.

se ee ek eeeawaseoe 23

S. Rep. No. 744, 90th Cong., Ist Sess. 43 (1967),

reprinted in 1967 U.S. Code Cong. & Admin.

| PPT e TET TT Tre Tree TTT TT 6

House Comm. on Ways and Means, Rep. No.

92-231, 92d Cong., 2d Sess. (1972), reprinted

in 1972 U.S. Code Cong. & Admin. News 4992 23

Page

Actuarial Condition of Disability Insurance -

1978, Subcomm. on Social Security of the

House Ways and Means Comm., 96th Cong.,

Ist Sess. 14-17 (Feb. 1, 1979) ................ 17

Background Material and Data on Programs

Within the Jurisdiction of the Committee on

Ways and Means, 1986 Ed., House Comm. on

Ways and Means, 99th Cong., 2d Sess. 114

EC pa cenatowk outbavdsetseuceces 4,8,20,

Social Security Disability Benefits Terminations:

New York: Hearing Before the Subcomm. on

Retirement Income and Employment of the

House Comm. on Aging, 97th Cong., 2d Sess.

Geen tok as en iwasceeniuscs. 24,25

Social Security Disability Insurance: Hearing

Before the Subcomm. on Social Security of the

House Ways and Means Comm., 98th Cong.,

Ist Sess. (June 30, 1983) .................... 10,23,24

Social Security Disability Reviews: A Federally

Created State Problem: Hearing Before the

House Comm. on Aging, 98th Cong., Ist Sess.

gf ee 25

Social Security Disability Reviews of the Mentally

Disabled: Hearings Before the Senate Comm.

on Aging, 98th Cong., Ist Sess. (Apr. 7 and 8,

RE REE 5 ap SRS en ee 24

Staff Data and Materials Related to the Social

Security Disability Insurance Program, Senate

Finance Comm., 97th Cong., 2d Sess. 21

NS SIS SOR SU ehh rsas sean Voubeenccccons 8

Page

Department of Health and Human Services

Documents:

SSA Ruling

EP re ree pene 11,26

hin i 6 ak cig eee Rae aee kaa 15,16,26

yr errr 20,26,

27,28

Kaa ee perere pny fererr-e 26

Compendium of Policy and Procedural Guidance

Memoranda Prepared by the Bureau of

IE Sv vccencesceccccccoeseses 13

Disability Insurance State Manual

PG? JL vo tbh b Ub oe +ud eee ~ 6 00NC4 Ss O80:0 7,8,11

Program Operations Manual System DI § 2107.C 1]

SSA Program Circular: Dis vility No. 12-85-OD

entitled, “Evaluation of Medical Impairments

That Are Not Severe,” dated January 14, 1986 . 27

Memorandum from Patricia M. Owens, Associate

Commissioner for Disability, to Disability

Determination Services Directors Re:

Clarification of “Not Severe Impairment” Policy

and Implementation Plans - ACTION, dated

ED ck cicccuecdadestheebery es 28

Memorandum from SSA Appeals Council to SSA

Office of Policy and Procedure Re: Recodifi-

cation of Regulations on Determining Disability

and Blindness, dated August 8, 1979.......... 19

Page

Memorandum from Leader, “Not Severe”

Impairment Workgroup to SSA Acting Deputy

to the Deputy Commissioner for Programs and

Policy Re: Final Report and Recommendations

of Workgroup - DECISION, dated August 23,

eye Be ry hee a ae 16,19

Office of Ass’t Secty for Planning and Evaluation,

Characteristics of General Assistance Programs

ER PE ony ae ae 24

Memorandum from Robert P. Bynum, SSA

Associate Commissioner of the Office of

Program Operations, to SSA Regional

Commissioner for the Dallas Region, dated

yy Phe Ags Gas a ea 13,15

Memorandum from Robert P. Bynum, SSA

Associate Commissioner of the Office of

Program Operations, to SSA Regional

Commissioner for the Chicago Region, dated

en 14

Memorandum from Robert P. Bynum, SSA

Associate Commissioner of the Office of

Program Operations, to All SSA Regional

Commissioners, dated January 14, 1977....... 14

Letter from Sidney Houben, Director, New York

State DDS, to Henry Riley, SSA Regional

Representative for the New York Region, dated

TE ee or 9 oo 13,14,17

Letter from Sidney Houben, Director, New York

State DDS, to Elmer Smith, Associate

Commissioner of the Office of Program Policy

and Planning of SSA, dated December 27, 1976 10,17

xii

Page

Memorandum from Joseph J. Kelly, SSA Regional

Commissioner for New York, to SSA Associate

Commissioner for the Office of Program

Operations, dated January 4, 1976 ........... 18

Memorandum from Martha A. McSteen, Regional

Commissioner for the Dallas Regional SSA

Office, to SSA Associate Commissioner for

Operational Policy and Procedures, dated

Cee iecde ebeveseccecs 11,12,18

Memorandum from Martha A. McSteen, Regional

Commissioner for the Bureau of Disability

Insurance for the Dallas Regional SSA Office,

to Robert P. Bynum, SSA Associate

Commissioner for the Office of Program

Operations, dated March 29, 1976............ 17,19,20

Memorandum from Jane Presley, Regional

Commissioner for the Regional Office for San

Francisco, to SSA Associate Commissioner for

Operational Policy and Procedures, dated

NE cake c ack adeedenecewceece 12

Memorandum from Jacob M. Wolf, Acting

Director, Office of Policy and Procedures in the

SSA Office of Hearings and Appeals, to Office

of Disability Programs in the SSA Office of

Operational Policy and Procedures, dated

January 2, 106] ..... 1... cece cece cece eee 19

Other Authorities:

Gottfried, Assemblyman Richard, New York's

Disabled Advocacy Program: Human Service

and Fiscal Savings (May, 1986) ...........-.. 25

Page

Mental Health Association of Pennsylvania,

Financial impact on Pennsylvania and Phila-

delphia on Terminations and Denials of

Benefits to SSI/SSDI Applicants and Recipients,

reprinted in April 7 and 8, 1983 Senate Aging

Comm. Hearing at 253-54................... 24

New York State Division of Operations Bureau of

Operations Analysis, Accelerated Continuing

Disability Investigation Cessations: A

Characteristics Profile of Affected Persons (July,

1982), reprinted in July 19, 1982 House Aging

Comean, EUR GREE ks 6 Kh adeenentns chiaci 24,25

State of Michigan Interagency Task Force on

Disability, The SSI/SSDI Disability

Controversy: How and Why the Social Security

Administration Has Reduced the Number of

SSI/SSDI Beneficiaries (April, 1983), reprinted

in June 20, 1983 House Aging Comm. Hearing

06 BOE . 000 dndeeeeveuedumneeeas 25

C. Wright, A. Miller & E. Cooper, Federal

Practice and Procedure § 4036 (1978)......... 8

ee ee een

oe Veen Ow be

Oe 8 Oe nate ee.

No. 85-1409

IN THE

Supreme Court of the United States

Ocroser TERM, 1986

OTIS R. BOWEN, Secretary of Health and Human Services,

Petitioner,

vs.

JANET J. YUCKERT,

Respondent.

ON WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR TI'E NINTH CIRCUIT

BRIEF OF THE AMICI CURIAE STATES

IN SUPPORT OF RESPONDENT

INTEREST OF THE AMICI CURIAE STATES

The interest of the amici States* arises in part from their

statutory and contractual duties to determine in the first instance

whether claimants are disabled for purposes of evaluating their

initial and continuing eligibility for Social Security Disability

[“SSD”] and Supplemental Security Income [“SSI”] benefits. 42

U.S.C §§ 421(a)(1) (SSD); 1383b(a) (SSI); 20 C.F.R. §§ 404.1601,

et seq.; 416.1001, et seq. Pursuant to federal law, the State Disability

* The amici States file this Amici Curiae Brief pursuant to Supreme Court Rule

36.4 which provides for filing such a brief without consent of the parties.

Determination Services [“DDSs”] must apply all applicable

federal statutes and regulations as well as all unpublished inter-

nal Social Security Administration [“SSA”] rules, program cir-

culars, manuals, informational digests, etc. [hereafter “standards”]

in making those determinations. 42 U.S.C. §§ 421(a)(1), 421(b).

Failure to comply with SSA’s standards can result in the imposi-

tion of severe financial sanctions against the DDSs or the assump-

tion of administrative control of the programs by SSA. 42 U.S.C.

§§ 421(b)(1); 421(c)(1); 421(c)(3)(C). As a result of legislation

enacted in 1984, these harsh penalties can now be imposed as

early as 180 days after a finding by SSA of State non-compliance!

The harshness of these penalties highlights the importance of SSA's

promulgating standards that are clear, complete, and in com-

pliance with the Social Security Act.

SSA's argument is based on its contention that in applying the

threshold severity regulations involved herein, it has consistent-

ly utilized a de minimis standard and thus has screened out only

those claimants whose impairments were so slight that they could

never be found disabled. Petitioner’s Brief at 13, 16, 29, 35. A

major purpose of this brief is to demonstrate that this conten-

tion is false. Since mid-1976, through increased case returns in

the Quality Assurance program, various unpublished internal

rules and, later, federal regulations, SSA applied and required

the State DDSs to apply a much stricter standard even though

the statute remained unchanged. Because of the central role they

play in the administration of the federal disability programs, the

amici States which, together, are responsible for processing ap-

proximately 62% of the total applications for SSD and SSI benefits

nationally,’ were in the best position to learn of SSA’s adoption

of this improper severity standard. Thus, they are uniquely

qualified to explain to this Court what that standard entailed and

why it has exceeded a de minimis standard.

' Social Security Disability Benefits Reform Act of 1984, P-L. No. 98-460.

§ 17(b)(1)(D)(i), codified as 42 U.S.C. § 421(b)(1).

* SSA Statistics, (June, 1986).

The amici States have a particularly strong interest in assur-

ing that this Court recognizes the true nature of SSA's severity

policy, as its imposition has placed the States in an untenable

position: either they applied the severity standard that many

believed, and which courts have found, to violate the Social

Security Act or they refused to do so and risked SSA's imposition

of harsh sanctions. Only if this Court affirms the appellate court's

decision will the States again be permitted to make proper

assessments of claimants’ disability as intended by Congress.

The amici States also file this brief because of the tremendous

human and financial costs that have been imposed by SSA's adop-

tion and application of the improper severity standard. As is

discussed more fully below, a primary congressional purpose in

establishing the SSD and SSI programs was to relieve States and

local governmental entities of the costs of providing public

assistance to disabled persons. SSA’s application of the improper

severity standard has frustrated this purpose, as it has resulted

and will continue to result in improper denials and terminations

of benefits for tens of thousands of truly disabled persons. Because

they are disabled, many of these persons have no other source

of income. The denial or termination of SSD and SSI benefits

has thus forced them to seek public assistance from State and

local governmental entities in order to secure shelter, food,

medical care and other basic necessities of life. The resulting in-

crease in costs to the States and localities, directly contrary to

congressional intent, will continue until this Court prohibits SSA

from applying a threshold severity standard which has more than

a de minimis impact.

SUMMARY OF THE ARGUMENT

The central issue before this Court is whether the threshold

severity test adopted and applied by SSA since mid-1976 is a de

minimis one, the only threshold standard permitted by the Social

Security Act. Prior to 1976, SSA complied with the Act by ap-

plying a “slightness” standard pursuant to which only those per-

sons who had an impairment/s) so minimal as not to preclude

any type of work activity were denied or terminated from disabili-

ty benefits on medical grounds alone without full consideration

of their age, education and work experience [“vocational factors”].

However, it has been the States’ experience that, since mid-1976,

SSA has imposed a threshold severity test that has exceeded a de

minimis standard, thereby precluding proper disability adjudica-

tions and preventing claimants who are unable to return to their

former employment due to an impairment from proving that they

are too disabled to engage in other work.

SSA first imposed the new severity standard through its Quality

Assurance program and unpublished internal policy statements

wherein SSA broadened the definition of “slight” impairment to

include increasingly disabling conditions, without reference to

their impact on the individual claimant. Subsequently, although

the Social Security Act was not amended in any relevant respect,

SSA published regulations requiring applications for disability

benefits to be denied on medical grounds alone as “not severe”

unless the claimant’s impairment(s) “... significantly limit the in-

dividual’s physical or mental capacity to perform basic work-

related functions.” 20 C.F.R. §§ 416.920(c), 416.921, 404.1520(c),

404.1521 as published in 43 Fed. Reg. 55349 (Nov. 28, 1978).

Together, these substantial policy changes resulted in the im-

position of far more than a de minimis threshold standard, a fact

recognized by various State DDS and SSA officials. The impact

of these changes was dramatic: the percentage of disability

claimants denied on the ground that their impairments were

“non-severe” increased more than five-fold from 8.4% of all SSD

applications in 1975 to 43.2% in 1981.

Despite its representations to the contrary, SSA has applied

this severity standard at all levels of the adjudicatory process, with

the result that hundreds of thousands of claimants were not ac-

corded a full disability evaluation with consideration of the

* Background Material and Data on Programs Within the Jurisdiction of the

Committee on Ways and Means, 1986 Ed., House Comm. on Ways and Means,

99th Cong., 2d Sess. 114 (Mar. 3, 1986) [hereafter 1986 Background Materials).

J teeth Sr tine + Pa at ae

Rt eee SV Oe et « ~ Heth Mie

claimant’s vocational factors as intended by Congress. Even if

these persons were too disabled to return to their prior employ-

ment, SSA’s new severity standard prevented them from show-

ing that they also could not perform other work in the economy.

As a result of this threshold severity standard, many claimants

were improperiy found to be ineligible for SSD or SSI disability

benefits on the ground that their impairments were “non-severe.”

Because SSA’s severity standard exceeded a de minimis test,

numerous federal appellate courts have either invalidated SSA's

threshold regulations or re-interpreted them to embody a de

minimis standard. SSA has recently attempted to return to its

prior slightness standard by issuing unpublished internal rulings.

But the new rulings are ambiguous, particularly when read in

conjunction with the unchanged published severity regulations.

In light of SSA’s prolonged application of the improper standard

and the severity policy’s continuing adverse impact on claimants,

especially those 55 years of age and older, the ambiguities in the

new rulings reveal the need for the Court to affirm the ruling

below, in effect requiring SSA to modify the regulations. Only

if this occurs will there be an end to SSA’s use of confused,

sometimes illegal, and frequently contradictory internal

interpretations.

ARGUMENT

I. THE SOCIAL SECURITY ACT PROHIBITS THE

SOCIAL SECURITY ADMINISTRATION FROM

IMPOSING MORE THAN A DE MINIMIS

THRESHOLD STANDARD UPON CLAIMANTS

FOR SOCIAL SECURITY DISABILITY OR SSI

DISABILITY BENEFITS.

A. The Social Security Act

Since establishment of the SSD and SSI programs in 1954 and

1974, respectively, the Social Security Act has defined disability

for both programs in terms of the claimant's vocational factors,

medical impairments, the impairments’ duration, and the func-

tional restrictions imposed by them.* Further, Congress intend-

ed that no one factor be considered to the exclusion of the others,

as evidenced by the legislative history that medical and voca-

tional factors be considered in all disability adjudications.’ Ac-

cordingly, SSA and DDSs are required to evaluate each claim

in terms of the individual’s ability to engage in past or other work.

Further, as every federal appellate court has ruled, once a

claimant shows that he or she is unable to return to prior employ-

ment because of a medical impairment, the burden shifts to the

Secretary to identify other work in the national economy which

the individual can perform.‘

This Court has ruled that SSA regulations directing specified

disability adjudications are valid only to the extent that they take

administrative notice of certain facts which would otherwise have

to be proven by repetitious testimony. Campbell v. Heckler, 461

U.S. 458, 467 (1983) (upholding SSA’s medical-vocational

guidelines). Following this reasoning, every federal appellate court

considering the issue has ruled that, as SSA admits in its Petition

at 23-24, the Act permits SSA to impose a de minimis threshold

standard only if that test screens out only those cases in which

the claimant’s impairments are so minimal that no set of voca-

tional factors, even if fully considered, could ever result in a

. 42 U.S.C. §§ 423(d); 1383e(a)(3).

* See e.g., S. Rep. No. 1987, 83rd Cong., 2d Sess. (1954), reprinted in 1954 U.S.

Code Cong. & Admin. News 3710, 3730; S. Rep. No. 744, 90th Cong., Ist Sess.

43 (1967), reprinted in 1967 U.S. Code Cong. & Admin. News 2834, 2880, 2883,

cited in Baeder v. Heckler, 768 F.2d 547, 551 (3d Cir. 1985).

* Francis v. Heckler, 749 F.2d 1562, 1564 (Lith Cir. 1985); Channel v. Heckler,

747 F.2d 577, 579 (10th Cir. 1984); Hall v. Secretary of Health, Educ. and

Welfare, 602 F.2d 1372, 1375 (9th Cir. 1979); Smith ov. Califano, 592 F.2d 1235,

1236 — 37 (4th Cir. 1979); O’Banner v. Secretary of Health, Educ. and Welfare,

587 F.2d 321, 323 (6th Cir. 1978); Bastien v. Califano, 572 F.2d 908, 912 (2d

Cir. 1978); Lewis v. Weinberger, 515 F.2d 584, 587 (5th Cir. 1975); Stark v.

Weinberger, 497 F.2d 1092, 1097 —98 (7th Cir. 1974); Hernandez v. Weinberger,

493 F.2d 1120, 1123 (Ist Cir. 1974); Garrett v. Richardson, 471 F.2d 598, 603 —04

(8th Cir. 1972); Meneses v. Secretary of Health, Educ. and Welfare, 442 F.2d

803, 807 (D.C. Cir. 1971); Choratch v. Finch, 438 F.2d 342, 343 (3d Cir. 1971).

finding of disability.’ Such a de minimis threshold standard would

preclude the need for a full consideration of vocational factors

while not denying benefits to those claimants who meet the Act's

definition of disability.

B. Before 1976, SSA Complied with the Act by

Applying a De Minimis Threshold Standar’.

Prior to 1976, as a matter of policy and practice, SSA applied

a de minimis standard in compliance with the Act. SSA’s published

regulations required that all claimants with a medically deter-

minable impairment (whether or not “severe”) receive a complete

assessment including consideration of medical and vocational fac-

tors. 20 C.F.R. § 404.1502(a)(1968). The only relevant exception

to this full evaluation requirement, i.e., the only cases in which

denials or terminations could be made on medical considerations

alone, were those in which the claimant had only a “slight” im-

pairment. Id.*

SSA's slightness regulations constituted no more than a de

minimis threshold standard because they defined “slight” to in-

volve “...only a slight departure from a normal condition.” 20

C.F.R. §§ 404.1502(a), 416.902(a). See also SSA Disability

’ McDonald v. Secretary of Health and Human Services, 795 F.2d 1118 (Ist Cir.

1986); Wilson v. Secretary of Health and Human Services, 796 F.2d 36 (3d Cir.

1986); Brown v. Heckler, 786 F.2d 870 (8th Cir. 1986); Dixon v. Heckler, 785

F.2d 1102 (2d Cir. 1986), petition for cert. filed, 55 U.S.LW. 3017 (US. July

2, 1986)(No. 86-2); Hansen v. Heckler, 783 F.2d 170 (10th Cir. 1986); Yuckert

v. Heckler, 774 F.2d 1365 (9th Cir. 1985); Salmi v. Secretary of Health and

Human Services, 774 F.2d 685 (6th Cir. 1985); Johnson v. Heckler, 769 F.2d

1202 (7th Cir. 1985), petition for cert. filed, 54 U.S.L.W. 3600 (US. Feb. 27,

1986)(No. 85-1442); Stone v. Heckler, 752 F.2d 1099 (5th Cir. 1985); Evans v.

Heckler, 734 F.2d 1012 (4th Cir. 1984); Brady v. Heckler, 724 F.2d 914 (lth

Cir. 1984).

* The other exceptions, not relevant to this case, permitted denial or termina-

tion of benefits without full assessment where the claimant was engaged in

substantial gainful activity and when the impairment was not expected to last

more than twelve months. 20 C.F.R. §§ 404.1502(a), 416.902(a).

Insurance State Manual § 321.B (Exhibit A).° Those regulations

deemed the following examples of impairments to be slight: “slight

neurosis, slight impairment of sight ox hearing, or other slight

abnormality or a combination of slight abnormalities.” Id. The

use of the term “slight,” the emphasis of SSA’s published regula-

tions on minimal impairment and the nature of the examples

cited, were all clear indications to the State DDSs that SSA’s policy

was that very few and only the most minor impairments were

to be determined “slight.”

SSA’s day-to-day practice was consistent with its written

policies. The vast majority of claimants were found to have im-

pairments which exceeded the de minimis threshold standard.

Indeed, in 1975, more than 90 % of all SSD claimants passed this

threshold test” and received a determination that was based at

least in part on an evaluation of their ability to perform past or

other work." In its pre-1976 reviews of samples of State DDS deci-

sions for compliance with SSA's policies, made pursuant to 42

U.S.C. §§ 421(b)(1) and 421(c)(2), (3), SSA rarely ruled that a

* All exhibits referenced herein appear in the amici States’ Appendix, copies

of which have been lodged with the Court. Most of these documents also ap-

pear in the Joint Appendix in Dixon v. Heckler, 785 F.2d at 1102 (a copy of

which has been lodged with the Court with the Respondents’ Brief in Opposi-

tion to Certiorari in that case) and are referenced by “DJA” followed by page

numbers.

The Court can take judicial notice of these documents pursuant to Federal

Rules of Evidence Rule 201(b)(2), (f), as it has taken notice of other documents

and information submitted by amici curiae. Regents of University of Califor-

nia v. Bakke, 438 U.S. 265, 316-17, 321-24 (1978); San Antonio School District

v. Rodriguez, 411 U.S. 1, 56-7, n. lll (1973). See also Papasan v. Allain, 106

S. Ct. 2932, 2935, n.1 (1986) (The Court can consider undisputed items in the

“public record”); 17 C. Wright, A. Miller & E. Cooper, Federal Practice and

Procedure § 4036 (1978).

" 1986 Background Materials at 114.

" In those years, only 47% of the claimants who passed this threshold test were

found eligible at the later steps. Staff Data and Materials Related to the Social

Security Disability Insurance Program, Senate Finance Comm., 97th Cong.,

2d Sess. 21 (Aug., 1982).

}

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claim which had been allowed should have been denied on

that the impairment was “slight.” This is additional proof

that SSA's policy permitted only those impairments which had

the most minimal impact on a claimant's functional ability to

be deemed “slight” and constitute a basis for denying or ter-

minating benefits on medical grounds alone.

I. BEGINNING IN 1976, SSA BEGAN IMPOSING A

THRESHOLD TEST FOR DISABILITY BENEFTTS

THAT EXCEEDED A DE MINIMIS STANDARD,

THEREBY UNLAWFULLY DEPRIVING CLAIM-

ANTS OF A FAIR OPPORTUNITY TO PROVE

THEIR ELIGIBILITY FOR BENEFTIS.

A. SSA Imposed Its New Severity Standard

Through Its Quality Assurance Program

and Unpublished Internal Rules and Later

Through its Regulations.

1. SSA Broadened the Definition of

“Slight” Impairment to Include

Increasingly Disabling Conditions

Without Reference to their Im-

pact on Individual Claimants.

Although the relevant sections of both the Act and, until 1979,

SSA’s published regulations, remained unchanged, the federal

agency began in 1976 to implement substantial policy changes

which would cause the denial and termination of benefits to hun-

dreds of thousands of persons without a proper assessment of

disability. First, SSA began requiring that impairments impos-

ing greater-than slight limitations now be deemed “slight.” This

change was initially implemented not through publication of

federal regulations with public notice or opportunity for com-

ment, or even by internal written instructions, but rather through

SSA’s Quality Assurance process. Whereas SSA had been approv-

ing virtually all State DDS determinations regarding the severi-

ty of claimants’ impairments, in mid-1976 SSA began returning

a number of cases in which benefits had been allowed after

consideration of medical and vocational factors.” SSA’s instruc-

tions accompanying the returned cases directed that the claimants’

impairments be found to be “slight” and that benefits be denied

or terminated without consideration of vocational factors."

These returns involved impairments of a far different character

than the three types of disabilities listed as “slight” in the published

federal regulations. See Section I.B., supra. For example, SSA

* DDSs must necessarily place great significance on Quality Assistance case

returns as they can reveal new SSA policies which the State agencies must apply

to avoid imposition of sanctions. See City of New York v. Heckler, 578 F. Supp.

1109, 1115-16 (E.D.N.Y.), affd, 742 F.2d 729 (2d Cir. 1984), affd, 106 S.Ct. 20292

(1986); Minnesota Mental Health Assoc. v. Schweiker, 554 F. Supp. 157, 163

(D. Minn. 1982), affd, 720 F.2d 965 (8th Cir. 1983); Social Security Disability

Insurance: Hearing Before the Subcomm. on Social Security of the House Ways

and Means Comm., 98th Cong,, Ist Sess. (June 30, 1983) [hereafter June 30,

1983 House Ways and Means Comm. Hearing) at 126 (Statement of Peter J.

McGough, Associate Director, Human Resources Division, United States General

Accounting Office).

" In December, 1976, the Director of the New York State DDS wrote to SSA

that:

(O)ur staff as well as staff in other State agencies have been ex-

gestions that a denial based on slight impairment is appropriate.

We have had difficulty in relating these individual cases to cur-

rent Regulations and the provisions in the State Manual.

Letter :rom Sidney Houben, Director, New York State DDS, to Elmer Smith,

Associate Commissioner of the Office of Program Policy and Planning of SSA,

dated December 27, 1976 at 1-2 (hereafter Houben Letter dated December

27, 1976](Exhibit B, DJA 300-301). Mr. Houben also recognized that the in-

creased case returns were a result of SSA’s concurrent adoption of the new

severity standard (See Section II.A.2, infra):

The proposed changes in the regulations make it clearer as to why

these returns have been forthcoming and we believe this supports

our feeling that this change is more than a technical clarification

of language.

directed the New York DDS to find the loss of an eye, hyperten-

sion, and colostomy to be “slight” impairments. This policy change

was eventually reduced to writing in December, 1978 when SSA

issued a list of impairments which were to be considered “non-

severe:

(1) loss of one eye or loss of vision in one eye; (2) essen-

tial hypertension with no evidence of retinal exudates,

hemorrhage or papilledema; congestive heart failure,

renal dysfuntion; or neurological residuals of

cerebrovascular accident; (3) colostomy, un-

complicated, with proper function of the stoma; (4)

epilepsy, with no major motor seizures for 12 months

or more; (5) 1.Q. of 80 to 90 in all major areas of in-

tellectual functioning.

SSA Disability Insurance State Manual § 321.B. (Exhibit A). This

list was expanded, through issuance of Program Operations

Manual System [“POMS”] DI § 2107.C in 1981 and SSA Ruling

82-55 in 1982 to include twenty examples of impairments which

were to be found “non-severe.” Examples of the listed conditions

were: osteoarthritis, excision of lumbar disc, obstructive airway

disease, and epilepsy. Id.

Clearly, the impairments included in these listings are of far

greater severity than those described in the pre-1976 listing of

“slight” impairments and in many instances impose more than

minimal restrictions. For example, the “loss of one eye,” which

necessarily impairs depth perception and peripheral vision, is far

more serious an impairment than “slight vision impairment.”

* SSA Rulings constitute policy with which SSA Administrative Law Judges

and the SSA Appeals Council must comply, as well as the State DDSs. 20 C.F.R.

§ 422.408.

As with the initial list issued in 1978, this expanded list of “non-severe” im-

pairments was never published in the Federal Register for public comment as

required by 7 U.S.C. § 553, despite requests from SSA’s own personnel. See

Memorandum from Martha A. McSteen, Regional Commissioner for the Dallas

Regional SSA Office, to SSA Associate Commissioner for Operational Policy

and Procedures, dated December 10, 1980 at 1 [hereafter 1980 McSteen

Memorandum] (Exhibit C, DJA 699).

Similarly, a gastrointestinal impairment requiring surgery such

as a colostomy, is much more serious than a mere “abnormality,”

sons with these conditions on medical grounds alone. Necessari-

ly, many more cases were denied and terminated without con-

sideration of the claimant’s vocational factors or functional

limitations.

In addition to being medically incorrect, SSA’s attempts to

generalize about specific impairments without consideration of

each claimant’s actual functional limitations was, for several

reasons, practically impossible to apply. SSA’s listings failed to

recognize that medical impairments can affect different persons

differently. For example, a physician might well advise a person

who had had a colostomy or disc surgery not to engage in medium

lifting or repeated bending” Indeed, it is medically impossible

to lump all claimants who are suffering from a particular im-

pairment into one group, irrespective of age, physical build, and

residual capacity to lift, stand, bend, carry weights, and state

that none of them have a severe impairment. However, the federal

standards required exactly that.

In addition, SSA’s expanded lists of non-disabling impairments

fail to recognize that even though two claimants may have the

same impairment, differing vocational factors can mean that one

will be able tc work and the other wil] not. By pre-empting

* See 1980 McSteen Memorandum at ] (Exhibit C, DJA 699).

consideration of these factors, the severity standard precluded

proper evaluations of claimants’ ability to work in a substantial

number of cases.”

2. Concurrently, SSA Adopted a Policy Requir-

ing that Impairments be “Severe” in Order to

Warrant a Full Evaluation of Disability.

Although the relevant provisions of the Social Security Act have

not been amended, in June, 1976, SSA issued the following pro-

posed regulatory change to the State DDSs:

. . .Medical considerations alone can justify a finding

that the individual is not under a disability where the

impairment is not severe, that is where the impairment

does not significantly limit the individual’s physical or

mental capacity to perform basic work related

functions.”

" See Section IIL.C., infra, for statistics showing the dramatic increase in the

number of disability claims denied for lack of a severe impairment subsequent

to the change in SSA's policy.

* Memorandum from Robert P. Bynum, SSA Associate Commissioner of the

Office of Program Operations, to SSA Regional Commissioner for the Dallas

Region, dated June 8, 1976 at 2 [hereafter June 8, 1976 Bynum Memorandum}

(Exhibit E, DJA 314). A copy of this Memorandum was distributed as SSA policy

to all State DDSs (along with the document marked as Exhibit J) through in-

clusion in SSA’s Compendium of Policy and Procedural Guidance Memoranda

Prepared by the Bureau of Disability Insurance. The Compendium included

copies of memoranda prepared by SSA to explain, clarify or amplify disability

policy or procedural concepts. While the preface to the Compendium indicated

that the memoranda were not official instructions, it did specify that the

memoranda were to be used by operations personnel for background and

reference. Another notice to all DDSs stated that the volume included copies

of “selected policy statements.” [Emphasis added. ] The Compendium has since

been superseded by other SSA guidelines which incorporate the policies therein.

The language of the proposed regulation was included in a letter from Sidney

Houben, Director, New York State DDS, to Henry Riley, SSA Regional Represen-

tative for the New York Region, dated December 23, 1976 at 1 [hereafter Houben

Letter dated December 23, 1976] (Exhibit F, DJA 298).

At the same time, the new policy also appeared in other internal

SSA documents,* announcements, and training materials” which

the State DDSs were required to apply in order to avoid imposi-

tion of the severe financial and administrative sanctions discuss-

ed above. However, not until more than two years after it had

implemented the new severity threshold requirement did SSA in-

corporate this policy in revised regulations," which were effec-

tive February 28, 1979. The new regulations provided:

Medical considerations alone can justify a finding that

an individual is not under a disability where the

medically determinable impairment is not severe. A

medically determinable impairment is not severe if it

does not significantly limit an individual’s physical or

mental capacity to perform basic work-related

functions.

20 C.F.R. §§ 404.1520(c); 416.920(c).

In several respects, SSA’s new severity policy constituted a

substantial departure from the agency’s prior policy. The major

change is the substitution of the “non-severe” threshold standard

for the prior “slight” standard, thereby imposing more than a

de minimis standard. See Section II.B., infra. Second, the revis-

ed federal regulations require that a claimant’s impairment be

” Memorandum from Robert P. Bynum, SSA Associate Commissioner for Of-

fice of Program Operations, to SSA Regional Commissioner for the Chicago

Region, dated December 27, 1976 at 1 (Exhibit G, DJA 649). A copy of this

Memorandum was distributed to all Regional Commissioners by Memorandum

from Mr. Bynum dated January 14, 1977 (Exhibit H, DJA 648).

* The new severity standard was discussed by SSA Central Office staff at a

December 8, 1976 meeting in Baltimore attended by State DDS staff and in-

cluded in background materials prepared for that meeting. See Houben Letter

dated December 23, 1976 at 1 (Exhibit F, DJA 298).

* 43 Fed. Reg. 55349 (Nov. 28, 1978). The regulation had been published in

proposed form earlier in the year. 43 Fed. Reg. 9303 (Mar. 7, 1978).

judged, not on the medical grounds of whether it constitutes a

minimal deviation from the individual's normal physical or men-

tal condition, but rather by whether it “significantly” interferes

with “most basic work activities” as performed by the average

individual. Further, the regulations do not define the term, “most

basic work activities,” nor what exertion or sustained capacity

to perform individual work activities such as lifting, standing,

bending, and carrying weights is required to meet this test.

Most troubling, the severity test revealed that SSA's new policy

and practice was to deny and terminate claims on medical

grounds alone even though the claimant was so impaired that

he or she could not r-turn te prior employment. This policy was

imposed on the Staies as early as June, 1976, see June 8, 1976

Bynum Memorandum at 1 (Exhibit E, DJA 313), and made bind-

ing on the ALJs and the Appeals Council in SSA Ruling 82-56.”

That Ruling, effective retroactively to August 20, 1980, states in

relevant part:

A finding of ability to engage in SGA may be justified

on the basis of medical considerations alone when the

degree of a medically determinable impairment is

found to be not severe. A not severe impairment may

consist of one or more separate conditions that do not

significantly limit the individual's physical or mental

capacity to perform basic work-related functions.

Performance of basic work-related functions involves

a capacity for sitting, standing, walking, lifting,

pushing, pulling, handh.g, seeing, hearing, com-

municating, and understanding and following simple

instructions. When there is no significant limitation

in the ability to perform these types of basic work-

related functions, an impairment will not be considered

to be severe even though it may prevent the individual

from doing work that the individual has done in the

past.

2 SSA Ruling 82-56 was never published in the Federal Register with the re-

quired opportunity for public comment.

SSR 82-56 at 112 (Emphasis added). SSR 82-56 directly con-

tradicted the Act’s requirement of full disability evaluation for

all claimants who suffer from more than a slight impairment.

More specifically, SSA Ruling 82-56 prevented claimants from

even showing that they could not return to their prior work, and

0 violated those court rulings specifying that the burden of proof

shifts to the Secretary upon such a prima facie showing, See Smith

v. Heckler, 595 F. Supp. 1173, 1179 (E.D. Ca. 1984). Persons

unable to do their past work clearly have more than minimal

impairments; yet SSA Ruling 82-56 prevented the State DDSs

from conducting a full disability evaluation including considera-

tion of vocational factors in these cases. SSA’s policy had an

adverse effect on all claimants but especially on those age 55 and

older, for whom SSA's medical-vocational guidelines would other-

wise direct a finding of disability on the basis of their age, educa-

tion and work experience once they had shown they were unable

to return to their prior employment.”

B. The State Disability Agencies and Even SSA

Itself Recognized that the New Threshold

Standard Exceeded a De Minimis Test.

Various State DDS administrators, as well as SSA’s own staff,

strongly objected to SSA's use of an increased threshold standard

which denied benefits to persons who were unable to perform

their prior work and were otherwise unable to engage in substan-

tial gainful employment. In one such protest, the Director of the

New York State DDS asserted, prior to amendment of the regula-

tions, that SSA’s implementation of the new severity standard

would:

.- Confuse our staff. We believe that it is a more restric-

tive definition and will result in claims being denied

1102 (2d Cir. 1986), petition for cert. filed, 55 US.LW. 3017 (US. July 2, 1986)

(No. 86-2). See also Memorandum from Leader, “Not Severe” Impairment

at 11 (Exhibit I, DJA 620).

because vocational factors were not considered along

with medical evidence.”

In another letter, he protested that the substitution of “non-severe”

for “slight” was “an amendment to the current Regulation...” and

went on to object that:

Although the panel at the public meeting as well as

the background statement for the meeting characteriz-

ed this change as a ‘technical clarification of language’,

we believe that a change in definition is involved. This

change will result in a substantially larger percentage

of claims which are automatically denied based on

medical considerations alone. Thus, claimants who cur-

rently are afforded an opportunity for consideration

of non-medical factors will no longer receive such

treatment.

Houben Letter dated December 27, 1976 at 1 (Exhibit B, DJA

300). Other State DDSs, including those in California and New

Mexico, also questioned the increased severity threshold standard

in communications with SSA and responses to congressional

inquiries.”

While SSA staff denied that a policy change had occurred,

characterizing it as a mere “technical clarification,” SSA's own

staff quickly recognized the substantial policy change it

represented. They protested that imposition of SSA's threshold

* Houben Letter dated December 23, 1976 at 1-2 (Exhibit F, DJA 298-99).

See, e.g., Memorandum from Martha A. McSteen, Regional Commissioner

for the Bureau of Disability Insurance for the Dallas Regional SSA Office, to

Robert P. Bynum, SSA Associate Commissioner for the Office of Program Opera-

tions, dated March 29, 1976 at 1 [hereafter 1976 McSteen Memorandum] (Ex-

hibit J, DJA 309). From 1982 until 1986, Mrs. McSteen was Acting Commis-

sioner of SSA. See also Actuarial Condition of Disability Insurance — 1978, Sub-

comm. on Social Security of the House Ways and Means Comm., 96th Cong.,

Ist Sess. 14—17 (Feb. 1, 1979).

* 43 Fed. Reg. 9296 (Mar. 7, 1978). See also 43 Fed. Reg. 55358 (Nov. 28, 1978).

severity standard was inconsistent with the published policy and

would have the effect of precluding full disability assessments

in a substantial number of cases. The SSA Regional Commis-

sioner for New York wrote a letter to the SSA Central Office

stating:

The DDSs have been questioning us with increasing

frequency about the issue of what constitutes a ‘slight’

impairment. Based on feedback from BDI quality

reviews, we must share their concern. Existing DISM

guidelines are being interpreted more broadly by C/O

reviewing staff in various case-related situations, as well

as in general publications such as the new DOM XV

on Quality Assurance.”

He went on to object to SSA‘s policy under which a claimant with

epilepsy who is restricted from driving, working at heights or

using sharp tools has only a “slight” impairment.”

Noting “a growing concern over the high incidence of not severe

denials at initial and reconsideration,” the SSA Regional Com-

699). She also stated her concern that use of different policies

(a “slightness” policy by States and a “severity” policy by the

federal Quality Assurance reviewers), would lead to more case

returns to State DDSs and the formulation of SSA policy through

the QA process. Id.

When SSA published the proposed severity regulations in 1978,

SSA's highest adjudicative branch, the SSA Appeals Council, ob-

jected that those regulations established a heightened standard

that was inconsistent with SSA’s public statement that it did not

York, to SSA Associate Commissioner for the Office of Program Operations,

dated January 4, 1976 at 1 (Exhibit K, DJA 303).

* Id. at 2.

Pa ete» at

— ee ee

intend to modify its prior slightness standard.” In 198] the Coun-

cil reiterated its position that the slightness standard it utilized

was inconsistent with SSA's new severity standard and requested

that the matter be dealt with before SSA issued a new listing

of “non-severe” impairments.”

Other SSA personnel specifically objected to the fact that the

new threshold severity standard permitted denial and termina-

tion of benefits in cases where the claimant could not return to

his or her former employment:

It is inconsistent almost to the point of being ridiculous

to characterize any impairment which prevents an in-

dividual from doing his customary work, no matter the

unique character of that work, as ‘slight’ in the context

of that individual's particular cases, if in fact, it is ‘the

primary reason for the individual’s unemployment.™

Even the Secretary of HHS has since admitted that the ap-

plication of the threshold severity standard constituted a policy

change. On August 23, 1983, a SSA workgroup issued an inter-

nal report on the severity regulations. That report stated:

Whatever SSA's actual conception of the minimum

impairment level was for policy purposes between 1975

and the present, its application of the concept in

deciding cases suggests a change of position. Yet, at the

same time, there was no corresponding change in the

Statute and, in fact, SSA itself stated that the regula-

tions did not constitute a change of standard.™

* Memorandum from SSA Appeals Council to SSA Office of Policy and Pro-

cedure Re: Recodification of Regulations on Determining Disability and Blind-

nes., dated August 8, 1979 at 2 (Exhibit L, DJA 667).

* Memorandum from Jacob M. Wolf, Acting Director, Office of Policy and Pro-

cedures in the SSA Office of Hearings and Appeals, to Office of Disability Pro-

grams in the SSA Office of Operational Policy and Procedures, dated January

2, 1981 at 3 (Exhibit M, DJA 728).

™ 1976 McSteen Memorandum at 2 (Exhibit J, DJA 310).

™ “Not Severe” Impairment Workgroup Report at 11 (Exhibit I, DJA 620).

These contemporaneous admissions by SSA officials that the

severity standard exceeded a de minimis test reveal the fallacy

of the agency’s recent statements that it has never applied more

than a “slightness” standard or that the improper severity stan-

dard did not have a massive adverse impact on disability

claimants. See SSA Ruling 85-28; n. 50, infra.

C. SSA's Implementation of Its New Threshold

Standard Led to a Substantial Increase in the

Percentage of Claimants Denied Benefits

Without a Full Evaluation of Whether They

Could Do Substantial Gainful Work in Light

of Their Vocational Factors.

That SSA's severity standard exceeded a de minimis standard

“vas just as clearly shown by the dramatic increase in the number

of SSD and SSI cases denied without consideration of vocational

factors, on the basis that the claimant did not suffer a severe im-

pairment. Prior to 1976, the percentage of claimants denied on

the grounds of “slight” impairment was very low: only 8.4% of

SSD claims were denied as “slight.”™

As a result of SSA’s imposition of the new severity standard,

the percentage of cases denied on the basis of “slight” impair-

ment skyrocketed. The following statistics reveal the magnitude

of SSA’s change in policy:

* 1986 Background Materials at 114. In addition, one SSA official noted that,

-- @ Dallas study of more than 2500 CRS reviewed cases strongly

suggested, on the basis of internal inconsistencies between the basis

code, diagnoses, and rationale, that fewer than 3% of SSI claims

are correctly denied on this basis.

1976 McSteen Memorandum at 1 (Exhibit J, DJA 309).

TITLE 1 DISALLOWANCES BASED ON

NON-SEVERE IMPAIRMENT™

Fiscal % of Total Fiscal % of Total

Year Disallowances Year Disallowances

1975 8.4 1981 43.2

1976 10.8 1982 38.9

1977 24.8 1982 39.4

1978 31.8 1984 34.3

1979 41.6 1985 23.3

1980 39.0

Il. SSAS IMPROPER SEVERITY STANDARD HAS IM-

POSED SEVERE AND IRREPARABLE HUMAN

AND FINANCIAL COSTS ON DISABLED PER-

SONS AND THE STATES IN CONTRAVENTION

OF CONGRESSIONAL INTENT.

A. Application of SSA’s Severity Standard Has

Resulted in Incorrect Denials and Termina-

tions of Disability Benefits.

The results of SSA’s court-ordered re-reviews of certain cases

previously denied on the basis of a “non-severe” impairment

reveals that the policy resulted in a substantial number of incor-

rect disability determinations. For example, in California, when

SSA re-reviewed the cases of claimants who had been denied for

this reason pursuant to the order in Smith v. Heckler, 595 F. Supp.

at 1173, the reversal rate at the administrative hearing level was

45% for the period March 8, 1985 through July 6, 1986. In New

* 1986 Background Materials at 114. The decrease in “non-severe” denials begin-

ning in 1984 was a result of court orders enjoining appliestion of the threshold

severity standard in 12 States which, together, process appr ximately 29% of

the disability applications nationally. SSA Statistics (June, 1986). The twelve

states were: Illinois (Johnson), lowa (Campbell v. Heckler, 620 F. Supp. 469

(N.D. Iowa 1985)), New York (Dixon), and Alaska, Arizona, California, Hawaii,

Idaho, Montana, Nevada, Oregon and Washington (Smith v. Heckler, 595 ¥-

Supp. at 1173).

York, new reviews pursuant to Dixon v. Heckler, 589 F. Supp.

at 1512, of claimants previously denied benefits as having “non-

severe” impairments, resulted in a reversal rate of 41% at the hear-

ing level. In other States in which SSA's severity standard was

enjoined, similar results appear. Thus, in Illinois, the approval

rate has climbed from 34.3% to 52% at the initial level since

entry of the injunction in Johnson v. Heckler and from 14.8%

to 34.1% at the reconsideration level.™

B. SSA’s Severity Standard Has Resulted in the

Imposition of Added Costs Upon the State and

Local Governments in Contravention of Con-

gressional Intent to Relieve their Public

Assistance Costs for the Care of the Disabled.

As recognized by several courts,” and revealed in the legislative

history, a principal congressional reason for enacting the SSD and

SSI programs was to relieve State and local governments of public

assistance costs for the care of the disabled, while assisting

disabled individuals by providing them a measure of income

security. Prior to the establishment of the SSD program in 1954,

the entire burden of caring for the needy disabled rested exclusive-

ly on State, local, and private sources. In enacting the SSD pro-

gram and the SSI program, which provide uniform federal cash

assistance grants for the indigent aged, blind and disabled, 42

U.S.C. §§ 1381, et seq., Congress recognized that many of the

potential beneficiaries of the programs were receiving public

* The cited statistics were derived from SSA reports produced in discovery in

the cited lawsuits.

™ City of New York v. Heckler, 578 F. Supp. at 1121; Dixon v. Heckler, 589

F. Supp. 1512, 1516 (S.D.N.Y. 1984); Holden v. Heckler, 584 F. Supp. 463, 48]

(N.D. Ohio 1984); Avery vo. Heckler, 584 F. Supp. 312, 316 (D. Mass. 1984).

See also Doe v. Heckler, 568 F. Supp. 681, 683 (D. Md. 1983) (Distinguishes

SSD from SSI program, recognizing that the latter is a federally-funded disability

benefits program replacing state-administered programs).

assistance funded by State and local governments,” that the cost

of providing these benefits was rising” and, just as significantly,

that establishment of the programs would result in substantial

savings to the States and local governments.”

Despite this clear congressional purpose, SSA's imposition of

the severity standard resulted in human® and financial costs for

the States and their disabled citizens. Due to their disabilities,

these persons were unable to return to work“ and many had

” See S. Rep. No. 2133, 84th Cong., 2d Sess. (1956), reprinted in 1956 U.S. Code

Cong. & Admin. News 3880 (noting that many of the older disabled workers

had relied on “State and local general assistance programs”); S. Rep. No. 1856,

86th Cong., 2d Sess. (1960), reprinted in 1960 U.S. Code Cong. & Admin. News

3623.

* House Comm. on Ways and Means, Rep. No. 92-231, 92d Cong., 2d Sess. (1972)

(hereafter 1972 House Report), reprinted in 1972 U.S. Code Cong. & Admin.

News 4992.

» When enacted, it was estimated that in its first year, the SSD program would

save the States $28 million. S. Rep. ) 2 1856, 86th Cong., 2d Sess. (1960),

reprinted in 1960 U.S. Code Cong. & Admin. News 3623. When the SSI pro-

gram was enacted in 1972, it was estimated that the program would save the

States $1.644 billion. 1972 House Report, reprinted in 1972 U.S. Code Cong.

& Admin. News 5202. See also the statements on the floor of the House of

Representatives by Rep. Wilbur Mills, Chairman of the Committee on Ways

and Means recognizing these savings, 117 Cong. Rec. H21092 (June 21, 1971).

“ The denial or loss of federal disability benefits resulted often not only in a

concurrent loss of dependents’ benefits for other family members, see 42 U.S.C.

§ 402, but also in medical decompensation, reinstitutionalization, family

breakups, and homelessness. City of New York v. Heckler, 578 F. Supp. at

1118-20.

« A 1979 SSA study concluded that only 1 in 10 persons denied disability benefits

later engages in substantial gainful activity. See June 30, 1983 House Ways and

Means Comm. Hearing at 239 (Statement of John D. Harris, President, Na-

tional Council of SSA Field Operations Locals, AFGE).

little or no other income;* so the denial or loss of federal disability

benefits led many to lose their homes, cars and other possessions.

Just as importantly, they were forced to become dependent on

relatives, borrow from friends, seek private charity, or apply for

State and/or locally-funded public assistance to feed, clothe, and

shelter themselves.

This public assistance took the form of cash benefits under the

Aid to Families with Dependent Children Program, 42 U.S.C.

§ § 601, et seqg., and State and locally funded General Assistance

programs,“ and Medicaid benefits,“ as well as the provision of

public shelters, food banks, medical care in public hospitals,

clinics, and nursing homes, and various social and rehabilitative

services, mostly funded with State and local revenues. In addi-

tion to these direct costs, there were other indirect costs to the

States and localities such as increased use of emergency medical

services and police services.“

* See, e.g., New York State Division of Operations Bureau of Operations Analysis,

Accelerated Continuing Disability Investigation Cessations: A Characteristics

Profile of Affected Persons (July, 1982) [hereafter New York State CDI Study],

reprinted in Social Security Disability Benefits Terminations: New York: Hear-

ing Before the Subcomm. on Retirement Income and Employment of the House

Comm. on Aging, 97th Cong., 2d Sess. (July 19, 1982) [hereafter July 19, 1982

House Aging Comm. Hearing] at 177 (The typical claimant terminated from

benefits was a single male, age 41, who has no income other than his disability

benefits.)

“ Statewide General Assistance is provided to recipients on a continuing basis

in 33 States. Dept. of Health and Human Services Office of Ass’t Sect’y for Plan-

ning and Evaluation, Characteristics of General Assistance Programs (May,

1983). In the remaining States, GA is available in some but not all counties,

or on an emergency, one-time only basis. Jd.

“ For example, in Pennsylvania, the cost of providing Medicaid benefits to in-

dividuals denied or terminated from federal disability benefits for all reasons

was estimated to be $42,609,567 annually. Mental Health Association of Penn-

sylvania, Financial Impact on Pennsylvania and Philadelphia on Terminations

and Denials of Benefits to SSI/SSDI Applicants and Recipients, reprinted in

Social Security Disability Reviews of the Mentally Disabled: Hearings Before

the Senate Comm. on Aging, 98th Cong., Ist Sess. 253—54 (Apr. 7 and 8, 1983).

* June 30, 1983 House Ways and Means Comm. Hearing at 136 (Statement

of Liane Levetan, Commissioner, DeKalb County, Georgia, on Behalf of the

National Association of Counties).

The full extent of State-funded assistance necessitated by SSA’s

improper severity standard is difficult to determine. However,

there are estimates that between 30 %* and 61%“ of the persons

terminated from federal disability benefits were eligible for GA

and AFDC benefits, with some estimates going higher.“ The

resulting shift, from the federal government to the States, of the

costs of caring for the disabled was in direct contravention of

Congress’ intent when it established the federal disability pro-

grams. The State and local governments will continue to be com-

pelled, improperly, to bear these costs until SSA is required to

apply a de minimis threshold standard in compliance with the

Act.

IV. THE AMBIGUOUS NATURE OF SSAS NEWEST

THRESHOLD SEVERITY POLICY, SSAS PRAC-

TICE OF REPEATEDLY CHANGING ITS STAN-

DARD DESPITE THE LACK OF ANY CHANGE

IN THE STATUTE, AND THE STATES’ NEED FOR

A CLEAR AND PROPER POLICY WARRANT

AFFIRMANCE OF THE COURT OF APPEALS’

JUDGMENT.

SSA recently issued two internal rules which, while they might

arguably be read to re-adopt the prior slightness standard, reveal

the need for revised SSA regulations. SSA Rulings 85-28 and 86-8

“ State of Michigan Interagency Task Force on Disability, The SSI/SSDI Disabili-

ty Controversy: How and Why the Social Security Administration Has Reduc-

ed the Number of SSI/SSDI Beneficiaries (April, 1983), reprinted in Social Securi-

ty Disability Reviews: A Federally Created State Problem: Hearing Before the

House Comm. on Aging, 98th Cong., Ist Sess. (June 20, 1983) at 544.

“ New York State CDI Study, reprinted in July 19, 1982 House Aging Comm.

Hearing at 177.

“ In New York, as a result of SSA's application of improper disability adjudica-

tion standards, courts have ordered the agency to re-review prior denial and

termination decisions in three cases. Schisler v. Heckler, 107 F.R.D. 609 (W.D.N-Y.

1984), affd, 787 F.2d 76 (2d Cir. 1986); Dixon v. Heckler, 589 F. Supp. at 1512;

City of New York v. Heckler, 578 F. Supp. at 1109. Approximately 75% of the

disability claimants reinstated as a result of these new reviews previously received

State and local public assistance. Gottfried, Assemblyman Richard N., New

York’s Disabled Advocacy Program: Human Service and Fiscal Savings (May,

1986).

withdraw SSA Rulings 82-55 and 82-56,” respectively, and pro-

vide that a claim is to be denied as “not severe” without con-

sideration of vocational evidence:

... when medical evidence establishes only a slight ab-

normality or a combination of slight abnormalities

which would have no more than a minimal effect on

an individual’s ability to work even if the individual’s

age, education, or work experience were specifically

considered (i.e., the person’s impairment(s) has no more

than a minimal effect on his or her physical or mental

ability(ies) to perform basic work activities.)

While these Rulings are incorrect in at least one respect and

some of the language, read in isolation, appears to return to a

“slightness” standard, other provisions of the Rulings suggest that

it was not SSA's intent to reintroduce a de minimis standard.”

For example, SSA Ruling 85-28 provides at page 23:

If the medical evidence establishes only a slight ab-

normality(ies) which has no more than a minimal ef-

fect on a claimant's ability to do basic work activities,

but evidence shows that the person cannot perform his

or her past relevant work because of the unique features

“ SSA's apparent effort to change its policy by returning to a slightness stan-

dard in SSA Ruling 85-28 was undermined by the agency’s failure to withdraw

SSA Ruling 82-56, which continued to provide that persons who could not return

to their prior work could be denied as having non-severe impairments. SSA Rul-

ing 86-8 attempts to cure this contradiction in policy by withdrawing SSA Rul-

ing 82-56.

” SSA Ruling 85-28 states that SSA's threshold standard has never been more

than a de minimis test. This is incorrect. See Section II.B. Indeed, ths cases

cited in the Ruling as supporting this conclusion reached the opposite conclu-

sion. Stone ov. Heckler, 752 F.2d at 1101; Estran v. Heckler, 745 F.2d 340, 341

(Sth Cir. 1984). In both of those cases, the courts ruled that SSA‘s severity regula-

tions exceeded any de minimis test as applied to the facts in the respective cases.

Rather than invalidate the improper regulations, those courts chose to require

SSA to interpret them as embodying a de minimis test.

of that work, a denial at the “not severe” step of the

sequential process is inappropriate.

To the extent that this exception is limited to “the unique features”

of past work, it appears to reflect a continuation of SSA's policy

of requiring denials and terminations for other claimants who

cannot return to their prior work because of their impairments,

without consideration of vocational factors. If this is true, SSA’s

threshold severity policy continues to transgress the Social Security

Act’s burden of proof requirements. Claimants would still be

denied benefits without being given the opportunity to prove that

they are unable to do their past work or to then have the burden

of proof shift to SSA to show other gainful activity that they can

perform. In addition, while SSA Ruling 85-28 refers to “ability

to do basic work activities” as evidence of a “non-severe” impair-

ment, the policy statement does not indicate whether a claimant

must be found able to perform only a few, most, or all of the

“basic work activities” to be denied benefits on this basis.

Further, SSA has issued internal rules interpreting SSA Rul-

ing 85-28 which, once again, set forth as SSA policy examples

of impairments which should be found “non-severe” despite the

inability of claimants to return to their former employment."

These rules, like SSA Ruling 85-28 itself, demonstrate the facili-

ty with which SSA adopts, withdraws, re-adopts and modifies

agency policy through internal rules, despite the lack of any

change in the relevant statutes. These repeated changes suggest

that SSA may continue to “re-interpret” the severity regulations

in contradictory ways unless they are modified to specify the

slightness standard which is consistent with the Act.

Added to the internal ambiguities in SSA Ruling 85-28 and

its subsequent interpretations is the fact that the federal agency

has never withdrawn or revised the applicable federal regula-

tions. Those regulations continue to require tnat claimants be

denied and terminated from benefits if their impairments do not

“.. Significantly limit the individual’s physical or mental capacity

* SSA Program Circular: Disability No. 12-85-OD entitled, “Evaluation of

Medical Impairments That Are Not Severe,” dated January 14, 1986 (Exhibit N).

to perform basic work-related functions.” 20 C.F.R. §§ 404.

1520(c); 416.920(c). As discussed above, at lezst siuce 1976, this

test has been applied as more than the slightness standard

referenced in SSA Ruling 85-28.

SSA's reliance on the seemingly conflicting standards in the

published regulations and unpublished internal rulings reveals

the confused state of SSA’s current threshold policy® and leaves

the State DDSs in an even more untenable position than before.

If they apply the published federal regulations as they have always

been applied, they would violate the Act’s requirement of pro-

viding disability assessments with full consideration of vocational

factors for all claimants with more than slight impairments. If

they do not comply with those federal regulations, they risk receiv-

ing more case returns and the imposition of severe financial and

administrative sanctions, recently accelerated through new legisla-

tion. Added to this confusing situation is the fact that if the State

DDSs apply the seemingly less restrictive but still ambiguous test

set forth in SSA Ruling 85-28, they also risk sanctions because

that standard would appear to conflict with the regulatory one.

For these reasons and because they continue to bear the public

assistance costs of caring for the disabled persons improperly

denied benefits, the amici States endorse respondent's position

that the federal regulations must be modified to comply with

the Act. The current regulatory prohibition against conducting

a full disability assessment unless the claimant’s impairment

* significantly limits” his or her ability to work must be amend-

ed. In its place, the regulations should provide that denials and

terminations at step two ‘ an occur only in those cases where the

claimant’s impairment(s) are so slight as to have no more than

a minimal impact on the individual’s ability to work.

= Even SSA has recognized that there has been “misunderstanding” with regard

to its severity policy. SSA Memorandum from Patricia M. Owens, Associate Com-

missioner for Disability, to Disability Determination Services Directors Re:

Clarification of “Not Severe Impairment” Policy and Implementation Plans -

ACTION, dated October 18, 1985 at 1 (Exhibit O).

CONCLUSION

For the reasons set forth above, the amici States urge the Court

to affirm the judgment of the Court of Appeals for the Ninth

Circuit.

Dated: New York, New York

October 3, 1986

Respectfully submitted,

ROBERT ABRAMS

Attorney General of the

State of New York

Two World Trade Center

New York, New York 10047

(212) 488-3943

O. PETER SHERWOOD

Solicitor General

Counsel of Record

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