Reply Brief — Sullivan v. Zebley

In the Supreme Court of the

OctToser Term, 1988

Louis W. SULLIVAN, SECRETARY OF HEALTH

AND HUMAN SERVICES, PETITIONER _

Vv.

BRiAN ZPBLEY, ET AL.

*

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

REPLY BRIEF FOR THE PETITIONER

WILLIAM C. BRYSON

Acting Solicito, General

Department of Justice

Washington, D.C. 20530-0001

(202) 633-2217

TABLE OF AUTHORITIES

Cases:

Bowen v. Yuckert, 482 U.S. 137 (1987) ................

Burnside v. Bowne, 845 F.2d 587 (Sth Cir. 1988)...

cc cleleeusveeeees<

Cagle v. Bowen, No. 88-6069 (W.D. Ark. Apr. 24,

EEE EELS = 6 oe he ge a cng ae

Campbell v. Bowen, No. 3-88-0592 (M.D. Tenn. Apr. 3,

ROR ea a

Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984)... ..

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

Hinckley v. Secretary of HHS, 742 &.2d 19 (ist Cir. 1984)

Marcus v. Bowen, 696 F Supp. 364(N.D. Ill. 1988)... .

CS ee

Petreleoni v. Secretary of HHS, No. 87-2021 (10th Cir.

Wilkinson v. Bowen, 847 F.2d 660 (Lith Cir. 1987)...

Statutes, rules and regulations:

Social Security Disability Benefits Reform Act of 1984:

ow dda adeedee eas

42 U.S.C. 423d) 5B) (Supp. IV 1986) (§ Yb 1)) |.

es cad kaddeeceducdadeca’

42 U.S.C. 1382c(aX3F) (Supp. IV 1986) (§ 4(b)) .

Social Security Act, Tit. XVI, 42 U.S.C. 1381 ef seg. ..

Unemployment Compensation Amendments of 1976,

Pub. L. No. 94-556, § SO1(b), 9O Stat. 2685...

20 C.F.R.:

Pt. 404, Subpt. P, App. 1 ........

Pt. 416:

Section 416.904. ....... .

Section 416.904 (1975)...

Section 416.906........

Section 416.923 .._..

Section 416.924 ..__..

Section 416.925 ___.

Section 416.926(a) .

(iil)

IV

Miscellaneous: Page

39 Fed. Reg. (1974):

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40 Fed. Reg. (1975): °

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p. 31,783 ..... Diasacuuedeveonetadceceuckcuekes 8

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42 Fed. Reg. (1977):

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In the Supreme Court of the United States

OCTOBER TERM, 1988

No. 88-1377

Louis W. SULLIVAN, SECRETARY OF HEALTH

AND HUMAN SERVICES, PELITIONER

vy.

BRIAN ZEBLEY, ET Al.

ON PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

REPLY BRIEF FOR THE PETITIONER

The court of appeals in this class action invalidated the

regulations that have been utilized by the Secretary of

Health and Human Services since 1977 to adjudicate

claims for child’s disability benetits under the Supplemen-

tal Security Income (SSI) program established by Title

XVI of the Social Security Act, 42 U.S.C. 1381 ef seq.

Those regulations are designed to give specific content to

the statutory definition of “disability” tor purposes of

child’s benetits, which provides that a child ts disabled if

he suffers from an impairment that is of “comparable

severity” to an impairment that would render an adult

disabled. 42 U.S.C. 1382c(ay(3)(A). Moreover, the princi-

ple on which the regulations are based — that a child will be

found to be disabled only if his impairment meets or

equals a listed impairment — was embodied in the regula-

(1)

2

tions promulgated by the Secretary at the outset of the SSI

program in January 1974 and has been the basis for

reviewing hundreds of thousands of applications for

child’s disability benefits since that time.

Because the decision below substantially alters the set-

tled implementation of the child’s disability program and

conflicts with decisions of the First and Eleventh Circuits

upholding the same regulations, review by this Court is

clearly warranted. Respondents’ arguments to the cunirary

are without merit.

i. Respondents first take issue (Br. in Opp. 17-22)

with our submission (Pet. 15-17) that the decision of the

Third Circuit in this case conflicts with Hinckley v.

Secretary of HHS, 742 F.2d 19 (1st Cir. 1984), and Powell

v. Schweiker, 688 F.2d 1357 (11th Cir. 1982). The conflict, -

however, is manifest.

a. In Powell, the plaintiffs contended that the regula-

tions are invalid because (i) they assertedly are more

restrictive than those applicable to adults, and (ii) they do

not provide for an individualized, functionally based

determination of disability that parallels the consideration

of the vocational factors of age, education and work ex-

perience in the case of adult claimants whose impairments

do not meet or equal the listings in Appendix |. See 688

F.2d at 1360, 1362 n.13. These are the same contentions

upon which the Third Circuit in the instant case relied in

invalidating the regulations. See Pet. App. Ila-l2a, 13a,

l4a-l6a, 17a. The Eleventh Circuit, however, rejected

those contentions, concluding that children are not clearly

treated more restrictively than adults and that the regula-

tions are based on a reasonable interpretation of the

statutory standard that the child’s impairment be of “com-

parable severity.” 688 F.2d at 1360-1361.

In Hinckley, the First Circuit “joinfed] the Eleventh Cir-

cuit in upholding the Secretary's regulations” (742 F.2d at

3

23). In so doing, it expressly rejected the contention,

adopted by the Third Circuit in the instant case (Pet. App.

lla-l2a, 17a), that 42 U.S.C. 1382c(a)(3)A) requires the

Secretary to make an individualized consideration of

nonmedical criteria—such as the child’s age, education,

and functional limitations—that is parallel to the con-

sideration of an adult claimant’s residual functional

capacity (RFC) and his age, education, and work ex-

perience. See 742 F.2d at 22-23.

b. Respondents’ efforts to explain away the circuit

conflict are unavailing. For example, respondents describe

Powell and Hinckley as rejecting only the contention that

the Secretary must apply “vocational” criteria in

evaluating claims for child’s disability benefits. See Br. in

Opp. 17-19. However, Powell and Hinckley did not tocus

narrowly on the need io consider vocational factors as

such. The argument rejected by the First and Eleventh Cir-

cults in those cases was that the Secretary is required by

the Act to make an individualized assessment of the func-

tional impact that the impairment has on the child in a

manner that is analogous to the Secretary’s consideration

of an adult claimant’s RFC, age, education and work ex-

perience. See Powell, 688 F.2d at 1360, 1361; Hinckley,

742 F.2d at 22-23. That is the position adopted by the

Third Circuit in this case (Pet. App. 17a) and urged by

respondents in defense of the judgment below (Br. in Opp.

23, 26-29).

Respondents also argue (Br. in Opp. 20-22) that the cir-

cult conflict is of no current importance because Powell

and Hinckley were decided prior to the enactment of Sec-

tions 4(b) and %b)(1) of the Social Security Disability

Benefits Reform Act of 1984, 42 U.S.C. 1382c(a)3)(F)

and 423(d)(5)(B) (Supp. IV 1986). Those provisions re-

quire the Secretary to consider the combined effect of

several impairments at each step of the sequential evalua-

4

tion process (see Bowen v. Yuckert, 482 U.S. 137, 149-152

(1987)) and to consider all the evidence in the claimant’s

case record. Respondents’ reliance on the 1984 Act is

misplaced. Section 9(b)(1) does not modify any substan-

tive standards of disability; it is concerned only with the

evidence on which a decision under those standards must

be made. Section 4(b) likewise lends no support to

respondents’ position. Even before the 1984 Act was

passed, Social Security Ruling (SSR) 83-19 provided that

the combined impact of several impairments could be con-

sidered in determining whether a claimant’s impairments

equalled the listings,' and that requirement is carried for-

ward under current regulations.? Section 4(b) of the 1984

Act therefore casts no doubt on the Secretary’s longstand-

ing approach to evaluating claims for child’s disability

benefits, and respondents in fact point to no evidence of

congressional intent to mandate a change in that ap-

proach. In any event, the-Eleventh Circuit has expressly

adhered to its decision in Powell since the 1984 Act was

passed (Wilkinson v. Bowen, 847 F.2d 660, 661 (11th Cir.

' SSR 83-19 provides that equivalency may be found under any of

three circumstances, one of which is where the claimant has “a com-

bination of impairments (none of which meet or equal a listed impair -

ment), each manifested by a set of symptoms, signs, and laboratory

findings which, combined, are determined to be medically equivalent

in medical severity to that listed set to which the combined sets can be

most closely :clated” (SSR 83-18, West Soc. Security Rep’t Serv. (Rul-

ings) 90, 92 (Supp. 1988) (emphasis in original).

* See 20 C_F.R. 416.923 (stating that the combined effect of mutlti-

ple impairments will be considered “throughout the disability deter-

mination process”); 20 C.F.R. 416.926(a) (explaining the method for

determining whether a claimant’s “impairment(s) is medically

equivalent to a listed impairment”). In light of these regulatory provi-

sions and SSR 83-19, respondents err in contending (Br. in Opp. 8, 21)

that the listings do not allow for consideration of the combined effect

ot multiple impan ments.

5

1987)), thereby refuting respondents’ premise that the cir-

cuit conflict has been superseded by statute.

c. The circuit conflict that respondents deny was ob-

vious enough to the Third Circuit; which candidly

“recognize[d] that [its] decision places [it] in the minority

among the courts which considered the legality of these

regulations” (Pet. App. 16a). The court below further

acknowledged that “[t}he Secretary’s arguments on this ap-

peal are essentially those adopted by the courts in Powell

and Hinckley,” but it “decline{d] to accept” the

“reasoning” and “conclusion” of Powell and Hinckley (id.

at 13a), “find[{ing] neither decision persuasive” (id. at 12a).

Similarly, the district court decision upon which

respondents principally rely recognizes that the Third Cir-

cuit in this case “rejected the reasoning in Powell and

Hinckley” (Marcus v. Bowen, 696 F. Supp. 364, 381 (N_D.

Ill. 1988)).

d. In short, there is a clear and acknowledged conflict

between the decision below on the one hand and Powell

and Hinckley on the other.’ See also Burnside v. Bowen,

845 F.2d 587, 590-591 (Sth Cir. 1988); Petreleoni v.

Secretary of HHS, NO. 87-2021 (10th Cir. Oct. 26, 1988).

Furthermore, the legal issue is one of broad and recurring

> The conflict is all the more pronounced to the extent that the class

certitied by the district court, which apparently is of nationwide

scope, includes members in the First and Eleventh Circuits. If nation-

wide relief is ordered by the district court, the effect of the decision

below will be to allow the court of appeals in one circuit to overrule

the governmmeg circuit precedent in two other circu’ that have sus-

tamed the Secretary's regulatory approach. After th. -ourt of appeals

rendered its decision in this case, the Secretary filed a motion in the

district court to exclude from the class any individuals residing im the

First and Eleventh Circuigy in light of the decisions in Powell and

Hinckley, as well as in other jurisdictions in which decisions approv-

ing the regulations have been issued or suits challenging the regula-

tions are pending. The district court has not vet ruled on that motion.

6

importance in the administration of the SSI program,

because the challenged regulations are applied in the ad-

judication of more than 50,000 claims annually under the

SSI program.* The petition for a writ of certiorari

therefore snould be granted. That course would be consis-

tent with Heckler v. Campbell 461 U.S. 458 (1983), and

Yuckert, im which the Court likewise granted review in

light of circuit conflicts on questions of broad importance

in the administration of the disabi:ity program. See 461

U.S. at 464; 482 U.S. at 145-146.

2. Respondents’ defense of the Tinird Circuit's decision

on the merits (Br. in Opp. 22-29) warrants a brief reply.

a. The regulations governing the evaluation of child’s

disability claims were issued pursuant to the Secretary's

general rulemaking authority under 42 U.S.C. 405(a), as

augmented by his specific authority under Section 501(b)

of the Unemployment Compensation Amendments of

1976, Pub. L. No. 94-566, to “publish criteria to be

employed to determine disability (as defined in [42 U.S.C.

1382c(aX3(A)]) ia the case of persons who have not at-

tained the age of 18” (90 Stat. 2685). “Such legislative

regulations are given controlling weight unless they are ar-

bitrary, capricious, or manifestly contrary tc the statute.”

Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837, 843-844

(1984). Accord Campbell, 461 U.S. at 466: Yuckert, 482

* The same legal issue is pending before the Eighth Circuit in Nash

v. Bowen, No. 88-25 2, which is scheduled for oral argument on May

9, 1989, and betore the Ninth Circun in Burt v. Bowen, No. 88-3990,

which has not yet been scheduled for oral argument. In addition, since

the certiorar petition was filed, two other district courts have con-

sidered the same issue; one sustained the regulations (Campbell v.

Bowen, No. 3-88-0592 (M.D. Tenn. Apr. 3, 1989)) and one in-

validated them Cagle v. Bowen, No. 88-6069 (W_D. Ark. Apr. 24,

1YB8Y)).

-

U.S. at 145. Respondents have not shown that the regula-

tions at issue here are “manifestly contrary” to the statute.

Indeed, as we have shown (Pet. 9-15), the regulations con-

stitute a reasonable implementation of the statutory stand-

ard that the severity of a child’s impairment be “com-

parable” (not identical) to an impairment that would

render an adult disabled: the regulations provide that a

child wil! be found to be disabled if his impairment meets

or equals an impairment contained in the listing of quali-

fying impairments for adults in Part A of Appendix | to

the regulations, or if his impairment meets or equals an

impairment contained in a special listing in Part B of Ap-

pendix | of additional afflictions that are found primarily

in children or that have a particular effect on children.

Contrary to respondents’ contention (Br. in Opp. 23,

26-27), the regulations are not divorced from functional

considerations. As the Third Circuit acknowledged (Pet.

App. 1Sa-16a), the special listing in Part B contains those

impairments that the Secretary determined, after extensive

study and consultation with medical experts, to have an

impact on a child’s development that is comparable to the

effect that a disabling impairment has on an adult’s ability

to engage in substantial gainful activity.’

* The preamble to the :egulations issued in 1977 stated (42 Fed.

Reg. 14,/05):

The medical criteria were developed and formulated over a

2-year period by the Social Securntty Administration Medical Con-

sultamt Staff together with practi. ng physicians, and other pro-

fessionals, such as psychologists, who are experts im various

specialties, primarily pediatrics. In identifying these impairments

and the level of severity which would establish disability, these

professionals placed primary emphasis on the effects of physical

and mental impairments in children, the mmpact of the impair-

ment on the child’s activities, and the restrivions on growth,

learning, and development imposed on the child by the im-

8

b. Respondents’ contention that the regulations never-

theless are “inconsistent with congressional intent” (Br. in

Opp. 22) ignores both the origins of the Secretary's re-

quirement that an applicant for child’s disability benefits

must show that his impairment meets or equals the listings

and the indicia of congressional approval of that

evaluative approach.

On January 11, 1974, the Secretary promulgated regula-

tions governing determinations of disability under the SSI

program, which had just gone into effect on January |,

1974. See 39 Fed. Reg. 1624 (1974). Those regulations pro-

vided that a child under age 18 will be deemed disabled if

his impairment or impairments are listed in the appendix

or, if not listed, they “are determined by the [Social Securi-

ty] Administration, with appropriate consideration of the

particular effect of disease processes in childhood, to be

medically the equivalent of a listed impairment” (39 Fed.

Reg. 1626, adding 20 C.F.R. 416.904 (1975)). The regula-

tions were promulgated in final form on July 29, 1975. 40

Fed. Reg. 31,78, 5: 783. Thus, the evaluative approach

that respondents now caallenge was instituted at the outset

of the SSI preeram. Sach a contemporaneous interpreta-

tion and implementation of the statuie by the agency

charged with setting the program in motion is entitled to

great deference.

Significantly, moreover, the regulations prescribing the

listings approach were in effect in 1976 when Congress

enacted the statutory directive that the Secretary publish

“criteria” for evaluating disability in children. In fact, the

pairments. Those impairments which were determined to impact

on the child’s development to the same extent that the adult

criteria have on an adult's ability to engage in substantial gaintui

activity were deemed to be of “comparable severity” to the adult

listing

9

Senate Report on the 1976 Act recognized, quoting the

central regulatory provision, that “[t}he regulations which

have been issued with regard to disability for children state

that if a child’s impairments arg not those listed, eligibility

may still be met if the impairments ‘singly or in combina-

tion... are determined by the Social Security Adminis-

tration, with appropriate consideration of the particular

effect of the disease processes in childhood, to be medical-

ly the equivalent of a listed impairment.’ ” S. Rep. No.

1265, 94th Cong., 2d Sess. 24 (1976). Section 501(b) of the

1976 Act was enacted in response to concerns expressed by

State agencies and Congress that SSA had not issued more

specific or definitive guidelines to implement the general

principle of medical equivalence embodied in the regula-

tions quoted in the Senate Report. S. Rep. No. 1265,

supra, at 24-25. The Senate Report recognized the diffi-

culty of developing “objective criteria” for determining

how to apply the disability definition to children; but the

Committee perceived a need for uniform guidance, and it

noted that “SSA hald] been circulating draft regulations

with criteria for child disability for some time” (id. at 25).

This legislative history manifests no disagreement with the

basic regulatory requirement that a child’s impairment

must meet or equal a listed impairment, taking due ac-

count of the particular effect of the disease processes in

children. To the contrary, the statutory directive plainly

contemplated that the “criteria” to be issued by the

Secretary would implement that requirement.

In response to Section SOIl(b) of the 1976 Act, the

Secretary published proposed regulations in December

1976 (41 Fed. Reg. 33,042) and final regulations in March

1977 (42 Fed. Reg. 14,705). Those regulations retained the

10

general standards of disability for children that were con-

tained in 20 C.F.R. 416.904 (1975), including the general

standard of medical equivalence. 42 Fed. Reg.

14,707-14,708 (1977). But in order to furnish the more

specific guidance mandated by Congress, the regulations

added a new Part B to the Appendix of listed impairments,

which contained “additional medical criteria” for the

evaluation of children where the criteria in Part A do not

give appropriate consideration to the “particular disease

process in children.” 42 Fed. Reg. 14,708 (1977). The

Secretary made clear in the preamble to these regulations,

however, that the special listings in Part B did not contain

new substantive standards, bui rather were intended to

“clarify existing adjudicative guides” and “facilitate the

decision making process” by furnishing specific criteria

directly applicable to children. Jd. at 14,705. As a result,

the Secretary stressed, “[djeterminations of disability of

children have been made and will continue to be made

under the authority provided in § 416.904 and in con-

sideration of the basic requirements stated therein” (ibid. ).

Thus, the basic requirement that an applicant for child’s

disability benefits establish that his impaiiment meets or

equals a listed impairment was adopted by the Secretary at

the very outset of the SSI program and was given more

specific content in 1977 in the manner contemplated by

Congress. There accordingly is no merit to respondents’

contention that the Secretary’s current regulations

embodying the same approach (see 20 C.F.R. Pt. 404,

Subpt. P, App. 1; 416.906, 416.924, 416.925) are inconsis-

tent with congressional intent.

For the foregoing reasons and the additional reasoi.s

stated in the petition, it is respectfully submitted that the

petition for a writ of certiorari should be granted.

WrtiasweC. BRYSON

Acting Solwcutor General

May 1989

US GO. ERNMENT PRINTING OFFICE 1909 201 699 00299