# Amicus Curiae Brief — Bowen v. Yuckert > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0086%3A11 ## Record - **Collection:** Supreme Court brief - **Document type:** Amicus Curiae Brief - **Published:** January 1, 1987 - **Citation:** 482 U.S. 137 ## Text Reus 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 13 16 20 21 21 ii 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 iv 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 ~l 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 22 7,21,22 10 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: © OR Be oc cake en wes cp esngesccsvescners 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 ll to 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). } | a | A 9 SN LAO, Me ban BS + sk ttl i a ae ae 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 10 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. 11 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). 12 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). 13 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). 14 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). 15 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. 16 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). 17 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). 18 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 19 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). 20 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). 21 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). 22 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). 23 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). 24 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). 25 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). 26 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. 27 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). 28 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). 29 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 --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0086%3A11. Public record. Not legal advice.