Petition for Writ of Certiorari — Sullivan v. Finkelstein

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‘at Supreme Court, U.S,

BS 04 TD

i SEP 21 1989

in the doupceme Court of the Ginited.etates- “7

as ‘i OcTosBer TERM, 1989

Louis W. SULLIVAN, SECRETARY

OF HEALTH AND HUMAN SERVICES, PETITIONER

MARILYN FINKELSTEIN

it PETITION FOR A WRIT OF CERTIORARI

ee | TO THE UNITED STATES COURT OF APPEALS

4°. FOR THE THIRD CIRCUIT

oh.

ie | KENNETH W. STARR

, | Solicitor Genera:

ie STUART E. SCHIFFER

R i Acting Assistant Attorney General

sas ml THOMAS W. MERRILL

“Ry he Tia Deputy Solicitor General

TS a EDWIN S. KNEEDLER

, g’ Assistant to the Solicitor General

ee & ROBERT M. LOEB

Meir’ Attorney

aPC Deparimeni of Justice

Pog Al 8 Wi ton, D.C. 20530

aan (202) 633-2217

QUESTION PRESENTED

Whether, in an action under 42 U.S.C. 405(g) for

judicial review of the final decision of the Secretary of

Health and Human Services denying a claim for Social

Security disability benefits, the Secretary may appeal an

order of the district court that rejects the Secretary’s legal

basis for the denial of benefits and remands the cause to

the Secretary for a rehearing under a different legal stand-

ard.

(1)

TABLE OF CONTENTS

Page

EEE RE GL SSS c0ccccceccccccesss l

eaten cecdccccccccccsceccces 2

Statutory provisions involved ...................... 2

Statement ........... (PSN Saacsncceccrcsescccscess 4

Reasons for granting the petition ................... 10

EE LES EEE TEE 26

EG Eee hese cecssevisccccscecces la

eee cscs ecceccccceccscccess 3a

ee Cec au neecesseccesecccecss 19a

EEE Bees ce ecceesscccceccccss 2la

Nee ec ec cccccceescecccsss 25a

TABLE OF AUTHORITIES

Cases:

Avery v. Secretary of HHS, 762 F.2d 158 (1st Cir.

Eee eee kadeccscsccccccccces 18

Bachowski v. Usery, 545 F.2d 363 (3d Cir. 1976) .. 8,

10, 24

Baltimore Contractors, Inc. v. Bodinger, 348 U.S.

Eee a eka cccccccscccasces: 19

Beach v. Bowen, 788 F.2d 1399 (8th Cir. 1986) .... 22

Bender v. Clark, 744 F.2d 1424 (10th Cir. 1984)... 24, 25

Biddle v. Heckler, 721 F.2d 1321 (11th Cir. 1983) .. 25

Bohms v. Gardner, 391 F.2d 283 (8th Cir. 1967),

cert. denied, 390 U.S. 964 (1968) .............. 22

Bonner v. City of Prichard, 661 F.2d 1206 (lith

SSS EEE OE 24-25

Bowen v. City of New York, 476 U.S. 467 (1986) .. 7

Bowen v. Yuckert, 482 U.S. 137 (1987) .......... 6

Carson v. American Brands, Inc., 450 U.S. 79

EE SEITE 19

Catlin v. United States, 324 U.S. 229 (1945) ...... 12

(111)

Cases — Continued: Page

Cohen v. Beneficial Industrial Loan Corp., 337

kG 5 Peer TT 12, 13, 21

Cohen v. Board of Trustees of University of Medi-

cine, 867 F.2d 1455 (3d Cir. 1989) ............. 19

Cohen v. Perales, 412 F.2d 44 (Sth Cir. 1969),

oe ee ER ee ee 19, 20,

21, 22, 23

Colon v. Secretary of HHS, 877 F.2d 148 (Ast Cir.

BED bss c cccdeedseonseeseeséusueanaienn 23

Coopers & Lybrand v. Livesay, 437 U.S. 463

GDUED vkVédetdewssennseccucciasesseeeennn 13, 16

Dalto v. Richardson, 434 F.2d 1018 (2d Cir. 1970),

cert. denied, 401 U.S. 979 (1971) .............. 22

Daviess County Hospital v. Bowen, 811 F.2d 338

CRB Ge, GHD 6 oe ccecasviccanesunesacanessas 16, 23

Edgewater Hospital, Inc. v. Bowen, 857 F.2d 1123

Cri Ge. GED <n cccuntencoceunccsesenseuaeas 23

Edmond v. HHS, No. 89-3161 (6th Cir. Apr. 19,

SED kv vdncccvcddcoscavcessucsusnsenneueee 23

Ensey v. Richardson, 469 F.2d 664 (9h Cir

BRED 6nccccddensccncenseesesoeussumauane 23

Farr v. Heckler, 729 F.2d 1426 (11th Cir. 1984) ... 22

Firestone Tire & Rubber Co. v. Risjord, 449 U.S.

SER GIGEDD 0 os ccvesccdecenssedéenoueaewes 12!

Flanagan v. United States, 465 U.S. 259 (1984) .... 12, 18

Gardner v. Moon, 360 F.2d 556 (8th Cir. 1966) ... 24

Gilchrist v. Schweiker, 645 F.2d 818 (9h Cir.

SEO oo nc cccccenchssuedbedeueteneneenene 22

Gillespie v. United £ ites Steel Corp., 379 U.S.

| l Peers er 12

Gold v. Weinberger, 473 F.2d 1376 (Sth Cir.

— PPT ‘en tik - 2

Gulfstream Aerospace Corp. v. Mayacamas Corp.,

068 S. Ca. 0ESB CIGEED.... ccpcvcccccccsccsedeus 18

Harper v. Bowen, 854 F.2d 678 (4th Cir. 1988) .... 16, 24

Haywood v. Bowen, 862 F.2d 873 (Sth Cir.

Peer 6 0n00s0euneeeeel

Cases — Continued: Page

Heckler v. Campbell, 461 U.S. 458 (1983) ........ 18

Howell v. Schweiker, 699 F.2d 524 (ilth Cir.

ee a on 06666 666640444400 60% 22

Huie v. Bowen, 788 F.2d 698 (i lth Cir. 1986) ..... 25

Hunt v. Bankers Trust Co., 799 F.2d 1060 (Sth Cir.

ee oo wba wees 19

1.A.M. Nat'l Pension Fund v. Cooper Industries,

Inc., 789 F.2d 21 (D.C. Cir. 1986) ............ 19

International Products Corp. v. Koons, 325 F.2d

ee ne cues bib eeeeens 19

Jamieson v. Folsom, 311 F.2d 506 (7th Cir.), cert.

denied, 374 U.S. 487 (1963) .................. 23

Jordan v. Heckler, 721 F.2d 349 (11th Cir. 1983) . 25

Lauro Lines S.R.L. v. Chasser, 109 S. Ct. 1976

ee eee a ed ce ttbheceseesees 13

Lopez Lopez v. Secretary of HEW, 512 F.2d 1155

Ee been edd ladiedenecdeues ¢4 23

Mall Properties, Inc. v. Marsh, 841 F.2d 440

(Ist Cir.), cert. denied, 109S. Ct. 128 (1988) .... 22, 25

Marshall v. Celebrezze, 351 F.2d 467 (3d Cir.

ELE EIS a ae 22

Mayersky v. Celebrezze, 353 F.2d 89 (3d Cir

CC ebclieeb ed edubucdwes%seds 6 secedocceces 22

McCoy v. Schweiker, 683 F.2d 1138 (8th Cir

GE, URS IES Fe a rr 24

McGill v. Secretary of HHS, 712 F.2d 28 (2d Cir.

1983), cert. denied, 465 U.S. 1068 (1984) ....... 23

Memorial Hospital System vy. Heckler, 769 F.2d

1043 (Sth Cir. 1985) ...........0.00.000000.. 22

Midland Asphalt Corp. v. United States, 109 S. Ct.

EE ee 13

Mitchell v. Forsyth, 472 U.S. 511 (1985) ......... 12

Morgantown v. Royal Insurance Co., 337 U.S.

Ec acc e cc eceseesecceeceses 19

Cases — Continued: Page

Occidental Petroleum Corp. v. SEC, 873 F.2d 325

ae: i ere Pe 10, 14,

18, 22, 25

Palmer v. City of Chicago, 806 F.2d 1316 (7th

Cir. 1986), cert. denied, 481 U.S. 1049 (1987)... 18

Paluso v. Mathews, 573 F.2d 4 (10th Cir. 1978) ... 23

Pickett v. Bowen, 833 F.2d 288 (11th Cir. 1987) ... 25

Richardson v. Perales, 402 U.S. 389 (1971) ....... 22

Richardson-Merrill, Inc. v. Koller, 472 U.S. 424

GERD cv ccccevessdcdnnceteseteunesenusesoers 13

Souch v. Califano, 599 F.2d 577 (4th Cir. 1979) ... 24

Stack v. Boyle, 342 U.S. 1 (1951) .. 2.6... eee eee 12

Stone v. Heckler, 722 F.2d 464 (9th Cir. 1983) .... 18, 23

Sullivan v. Hudson, 109 S. Ct. 2248 (1989) ..... 15, 16, 17

Sullivan v. Zebley, cert. granted, No. 88-1377

Diba 1S, TEER occ cvcccccccdvccsecescccosces 7

Switzerland Cheese Ass’n v. E. Horne’s Market,

Ree... KIB UB. FHSS oo ccccccecedecosdecss 19

Thompson v. Enomoto, 815 F.2d 1323 (9th Cir.

BEET oc cvvccéevivcveteccéviusdeeedaaeteses 19

United States v. Louisiana-Pacific Corp., 846 F.2d

43 Bite Clk. OGERD 2 oo ccccccvceucticdecsoussess 18

United States v. Nixon, 418 U.S. 683 (1974) ...... 22

United Steelworkers, Local 1913 v. Union R.R.,

648 F.2d 905 (3d Cir. 1981)... 2.0... ce ee ee eee 8

Van Cauwenberghe v. Biard, 108 S. Ct. 1945

eee Pe 12

Whitehead v. Califano, 596 F.2d 1315 (6th Cir.

ee ees 23

Statutes, regulations and rule:

Act of Aug. 10, 1939, ch. 686, § 201, 53 stat.

GDGBD. .wwccevcsccaccdsveeveebabueneeeneneee 23

Equal Access to Justice Act, 28 U.S.C. 2412(d) ... 15

Vil

Statutes, regulations and rule — Continued: Page

Social Security Act, 42 U.S.C. 301 ef seq.:

Tit. Il, 42 U.S.C. 401 ef seg. (1982 &

i << cc acecececevsuse nese 4-5

42 U.S.C. 405(g) (§ 205(g)) ........ 3, 6, 11, 15,

17, 20, 21, 22, 23

42 U.S.C. 423(d)(IMA) .. 22.2. 5

42 U.S.C. 423(d)(2)(A) (1982 & Supp. IV

DCist ete dhdddnehanseedsesees 5

42 U.S.C. 423(d)(2)(B) (1982 & Supp. IV

DU MPRbdeehieeacedenas c0neese-c 5-6

Tit. XVI, 42 U.S.C. 1383 et seg. (1982 & Supp.

EE 7

Social Security Amendments of 1967, Pub. L. No.

90-248, § 158(b), 81 Stat. 869 ................ 5

a ee 22

EE passim

EE 2

BD Ws MOEED cc ccc cc ccccccccccccccs 11, 18, 19

EE 2

ee I ED vv cScccccccccécccccsnvesses 2

20 C.F.R. Pt. 404, Subpt. P:

| EE 6

Section 404.1506(a)(1) ...........00.0000... 6

Section 404.1520(e) ...........0.00.0..... 7

Section 404.1520(f) ............0.00...... 7

Section 404.1545 ..............0.0.000.... 7

Section 404.1545(a) ...................... 7

Beemer SO6.0SGE 2... cece eee 7

Section 404.1S77 .............cc cece cuees 6

Section 404.1578(a) ..............0....... 6

EEE 6

EIS He MED occ c cece cc ccsccccccccecs 20

Vill In the Supreme Court of the Gnited States

Miscellaneous: Page OcToBER TERM, 1989

P. Bator, D. Meltzer, P. Mishkin & D. Shapiro,

The Federal Courts and the Federal System (3d

ed. 1988) WETTTTTTILITT TTL jee 19 No.

33 Fed. Reg. (1968):

Di, FEED oc cccccccccccessccsoseteeuseseee 6 Louis W. SULLIVAN, SECRETARY

p. 11,751 WTTTITITT tt 6 OF HEALTH AND HUMAN SERVICES, PETITIONER

SR Peer 6

MARILYN FINKELSTEIN

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

The Solicitor General, on behali of the Secretary of

Health and Human Services, respectfully petitions for a

writ of certiorari to review the judgment of the United

States Court of Appeals for the Third Circuit in this case.

OPINIONS BELOW

The opinion of the court of appeals, as amended by

order dated May 19, 1989 (App., infra, la-12a), and the

opinion of Judge Becker dissenting from the denial of

rehearing en banc (App., infra, 23a-24a), are reported at

869 F.2d 215, 220. The opinion of the district court (App.

infra, 13a-18a) is unreported.

(1)

JURISDICTION

The judgment of the court of appeals (App., infra,

|9a-20a) was entered on March 3, 1989, and a petition for

rehearing was denied on May 24, 1989 (App., infra,

21a-22a). By order dated August 9, 1989, Justice Brennan

extended the time within which to file a petition for a writ

of certiorari to and including September 21, 1989. The

jurisdiction of this Court is invoked under 28 U.S.C.

1254(1).

STATUTORY PROVISIONS INVOLVED

|. Section 1291 (28 U.S.C.) provides in relevant part:

The courtiof appeals (other than the United States

Court of Appeals for the Federal Circuit) shall have

jurisdiction of appeals from all final decisions of the

district courts of the United States * * * except where

a direct review may be had in the Supreme Court.

7s. *

2. Section 1292(a) (28 U.S.C.) provides in relevant

part:

Except as provided in subsections (c) and (d) of this

section, ['] the courts of appeals shall have jurisdic-

tion of appeals from:

(1) Interlocutory orders of the district courts of

the United States, * * * or of the judges thereof,

' Subsections (c) and (d) of 28 U.S.C. 1292 concern appeals to the

United States Court of Appeals for the Federal Circuit, and they

therefore have no application to this case.

granting, continuing, modifying, refusing or

dissolving injunctions, or refusing to dissolve or

modify injunctions, except where a direct review

may be had in the Supreme Court;

3. Section 205(g) of the Social Security Act, as

codified at 42 U.S.C. 405(g), provides (bracketed numbers

added):

{1} Any individual, after any final decision of the

Secretary made after a hearing to which he was a par-

ty, irrespective of the amount in controversy, may ob-

tain a review of such decision by a civil action com-

menced within sixty days after the mailing to him of

notice of such decision or within such further time as

the Secretary may allow. [2] Such action shall be

brought in the district court of the United States for

the judicial district in which the plaintiff resides, or

has his principal place of business, or, if he does not

reside or have his principal place of business within

any such judicial district, in the United States District

Court for the District of Columbia. [3] As part of his

answer the Secretary shall file a certified copy of the

transcript of the record including the evidence upon

which the findings and decision complained of are

based. [4] The court shall have power to enter, upon

the pleadings and transcript of the record, a judgment

affirming, modifying, or reversing the decision of the

Secretary, with or without remanding the cause for a

rehearing. [5] The findings of the Secretary as to any

fact, if supported by substantial evidence, shall be

conclusive, and where a claim has been denied by the

Secretary or a decision is rendered under subsection

(b) of this section which is adverse to an individual

who was a party to the hearing before the Secretary,

because of failure of the claimant or such individual

to submit proof in conformity with any regulation

prescribed under subsection (a) of this section, the

court shall review only the question of the conformity

with such regulations and the validity of such regula-

tions. [6] The court may, on motion of the Secretary

made for good cause shown before he files his

answer, remand the case to the Secretary for further

action by the Secretary, and it may at any time order

additional evidence to be taken before the Secretary,

but only upon a showing that there is new evidence

which is material and that there is good cause for the

failure to incorporate such evidence into the record in

a prior proceeding; and the Secretary shall, after the

case is remanded, and after hearing such additional

evidence if so ordered, modify or affirm his findings

of fact or his decision, or both, and shall file with the

court any such additional and modified findings of

fact and decision, and a transcript of the additional

record and testimony upon which his action in modi-

fying or affirming was based. [7] Such additional or

modified findings of fact and decision shall be

reviewable only to the extent provided for review of

the original findings of fact and decision. [8] The

judgment of the court shall be final except that it shall

be subject to review in the same manner as a judg-

ment in other civil actions. [9] Any action instituted in

accordance with this subsection shall survive not-

withstanding any change in the person occupying the

office of Secretary or any vacancy in such office.

STATEMENT

1. Respondent is the widow of a wage earner who died

on August 27, 1980, fully insured under Title II of the

Social Security Act, 42 U.S.C. 401 ef seq. (1982 & Supp.

IV 1986). On November 25, 1983, she applied for widow’s

disability benefits under Title Il, based on coronary heart

disease.

The statutory standard of disability for widows,

widowers, and surviving divorced spouses? is different

from and more stringent than that for wage earners. In the

case of a wage earner, the Social Security Act provides

that the term “disability” means the “inability to engage in

any substantial gainful activity by reason of any medically

determinable physical or mental impairment which can be

expected to result in death or which has lasted or can be

expected to last for a continuous period of not less than 12

months” (42 U.S.C. 423(d)(1(A)). The Act further pro-

vides that a wage earner shall be determined to be under a

disability only if his impairment is “of such severity that he

is not only unable to do his previous work but cannot,

considering his age, education, and work experience,

engage in any other kind of substantial gainful work which

exists in the national economy” (42 U.S.C. 423(d)(2)(A)

(1982 & Supp. IV 1986)). By contrast, under 42 U.S.C.

423(d)(2)(B) (1982 & Supp. IV 1986), which was enacted in

1968,’ a widow shall not be determined to be disabled

unless her impairment is “of a level of severity which under

regulations prescribed by the Secretary is deemed to be

sufficient to preclude an individual from engaging in any

gainful activity.”

The regulations implementing the latter statutory sec-

tion, which were promulgated soon after passage of Sec-

? For convenience, we shall hereafter refer to this class of persons as

“widows.”

* Social Security Amendments of 1967, Pub. L. No. 90-248, §

158(b), 81 Stat. 868.

tion 423(d)(2)(B) in 1968,* provide that a widow’s impair-

ment is deemed to be of sufficient severity to preclude

gainful activity only if it meets or equals the severity of an

impairment included in the Listing of Impairments in Ap-

pendix | to 20 C.F.R. Part 404, Subpart P. 20 C.F.R.

404.1577, 404.1578(a). Thus, under the regulations

prescribed by the Secretary, a widow’s impairment is

evaluated on the basis of medical factors alone. The

Secretary does not consider any further limitations on the

widow’s ability to work that may result from the adverse

effects of her age, education, and work experience, as he

would in the case of an adult wage earner. 20 C.F.R.

404.1577, 404.1578(a); see Bowen v. Yuckert, 482 U.S.

137, 140-142, 149 n.7 (1987); id. at 163-164 & n.3

(Blackmun, J., dissenting).

2. The Secretary denied respondent's application for

widow’s disability benefits under Section 423(d)(2)(B),

concluding that respondent’s coronary condition did not

meet or equal an impairment contained in the section of

the Listing that identifies presumptively disabling im-

pairments of the cardiovascular system (App., infra, 16a).

After respondent exhausted her administrative remedies

through the Appeals Council, she sought judicial review of

the Secretary's final decision, pursuant to 42 U.S.C.

405(g), in the United States District Court for the District

of New Jersey.

The district court held that the Secretary's decision that

respondent’s coronary impairment did not meet or equal a

listed impairment was supported by substantial evidence

(App., infra, 17a). It further held, however, that the

Secretary may not deny widow's disability benefits on that

basis alone, but instead must make an individualized

* 33 Fed. Reg. 11,749, 11,751, 11,755 (1968), adding 20 C.F.R.

404.1504, 404. 1506(a)(1).

determination of the functional impact of the impairment

on the claimant in order to determine whether she in fact

retains sufficient residual functional capacity to perform

any gainful activity (ibid.).° The effect of this ruling was

to invalidate the Secretary’s longstanding regulations to

the extent they require an applicant for widow's disability

benefits to have an impairment that meets or equals a

listed impairment.* The court therefore remanded the

cause to the Secretary with directions “to inquire whether

[respondent] may or may not engage in any gainful activi-

ty, as contemplated by the Act” (id. at 18a). See also id. at

25a (ordering “that the matter be remanded to the

Secretary for further proceedings in accordance with [the]

Court’s opinion”).

3. The Secretary appealed the district court’s remand

order. He argued that the regulations requiring an appli-

cant for widow’s disability benefits to show that she has an

impairment that meets or equals the Listing are valid, and

* A claimant's “residual functional capacity” (RPC) is “what [the

claimant] can do despite [his] impairment” (20 C.F.R. 404.1545).

Under governing regulations, the Secretary measures a claimant's

RFC only for the purpose of determining whether a wage-earner ap-

plicant can perform his past work or other work in the national

economy, in light of his age, education, and work eXperience. 20

C.F.R. 404.1520¢e) and (f), 404.1545(a), 404.1561; Bowen v. City of

New York, 476 U.S. 467, 471 (1986). Because the Secretary does not

make such a determination in the case of an applicant for widow's

benefits, there is no need for him to measure a widow's RFC.

* A similar issue on the merits is before this Court in Sullivan v.

Zebley, cert. granted, No. 88-1377 (May 15, 1989). Zebley involves the

validity of the Secretary's regulations that require an applicant for

child’s disability benefits under the Supplemental Security Income

Program established by Title XVI of the Social Security Act, 42

U.S.C. 1383 ef seq. (1982 & Supp. IV 1986), to show that he has an

impairment that meets or equals the severity of an impairment con-

tained in the same adult Listing at issue here or in a special children’s

that the district court therefore should have affirmed the

Secretary’s final decision because it correctly concluded

that his finding that respondent did not have such an im-

pairment was supported by substantial evidence. On

March 3, 1989, the court of appeals dismissed the

Secretary’s appeal for lack of jurisdiction, holding that the

district court’s order was an interlocutory order, not a

“final decision,” for purposes of 28 U.S.C. 1291. App., in-

fra, \a-l2a, 19a-20a.

The court of appeals first noted that it previously had

articulated a general rule that “ ‘remands to administrative

agencies are not ordinarily appealable under section

1291,’ because “[sJuch a remand is -typically an in-

terlocutory step in the adjudicative process and, therefore,

not a final order” (App., infra, 4a, quoting United

Steelworkers, Local 1913 v. Union R.R., 648 F.2d 905,

909 (3d Cir. 1981)). The court acknowledged that its prior

cases did recognize an exception to that general rule for

“cases in which an important legal issue is finally resolved

and review of that issue would be foreclosed ‘as a practical

matter’ if an immediate appeal were unavailable” (App.,

infra, 4a-Sa). But after reviewing its prior cases (id. at

Sa-9a), the court found that exception inapplicable here,

because “ ‘it is not inexorably so’ ” that the legal ruling on

which the district court’s order was based would escape ap-

pellate review (id. at 9a, quoting Bachowski v. Usery, 545

F.2d 363, 373 (3d Cir. 1976)). See generally App., infra,

9a-12a. The court reasoned that whether the district court

properly invalidated the Listing requirement would be

subject to review by the court of appeals if events after the

district court's remand order unfolded in a particular way,

namely: (a) if the Secretary, after considering respondent's

residual functional capacity on remand, made an in-

dividualized determination that respondent is not pre-

cluded from engaging in any gainful activity; (b) if re-

spondent sought judicial review of that decision of the

Secretary; (c) if the district court reversed the Secretary’s

new decision and ordered an award of benefits; and (d) if

the Secretary appealed that subsequent order of the

district court to the court of appeals. /d. at 9a-10a, Ila.

The court acknowledged that the Secretary may be

denied any appellate review of the district court’s legal rul-

ing if events did not unfold in the manner just

described — specifically if, on remand, the Appeals Coun-

cil was required to find respondent disabled and awarded

her benefits under the district court’s view of the statutory

standards governing widow’s disability benefits. App., in-

fra, Ya-10a, 11a. But the court concluded that this possible

preclusion of any opportunity for the Secretary to obtain

appellate review o: the central legal issue in the case was

“of no more significance” than it was in several prior Third

Circuit cases (id. at 11a).

The court of appeals also acknowledged that, in prior

cases, it had found appellate jurisdiction over district court

orders that required an agency to hold a hearing or to con-

duct further proceedings on remand, on the theory that the

order constituted a final rejection of the agency’s position

that no hearing or other further proceedings were required

(App., infra, 7a-9a, 12a). But the court found that ra-

tionale inapposite here, because, in its view, the legal issue

presented here was not whether the governing statute or

regulations require¥ a hearing, but whether an additional

factor (respondent’s residual functional capacity) must be

considered by the Secretary before he makes a final admin-

istrative adjudication of the benefit claim (id. at 12a).

4. The Secretary’s petition for rehearing en banc was

denied, with three judges dissenting (App., infra, 21a-22a).

Judge Becker, who was a member of the panel, explained

his vote for rehearing en banc in a statement that was

joined by Judges Sloviter and Stapleton (id. at 23a-24a).

Judge Becker stated that he had joined the panel’s opinion

because he felt bound to do so by the Third Circuit’s deci-

sion in Bachowski v. Usery, 545 F.2d 363 (1976), even

though Bachowski “seems inconsistent at least with the

spirit of [the Third Circuit’s] later jurisprudence” (App.,

infra, 23a). But if free to do so, Judge Becker explained,

he would hold that the court of appeals had appellate

jurisdiction in this case, following the reasoning of the

District of Columbia Circuit’s recent decision in Occiden-

tal Petroleum Corp. v. SEC, 873 F.2d 325, 328-332 (1989).

Judge Becker elaborated (App., infra, 23a):

In [Occidental Petroleum), Judge Ginsburg, speak-

ing for the court, expressed the view that Congress

did not intend that the final order rule place an agen-

cy in a position of dependence upon the self-interest

of others in order to get review of a legal decision that

dictates the standards and procedures to be applied by

the agency in making its decisions. Here,-as in Oc-

cidental, the Secretary is between the proverbial rock

and a hard place. If the Secretary, bound by the

district court’s opinion, grants benefits on remand to

[respondent], he cannot appeal. If the Secretary does

not grant benefits on remand, whether or not the legal

issue will be reviewed depends on whether [respond-

ent] decides to press an appeal.[’]

REASONS FOR GRANTING THE PETITION

The court of appeals has held that the Secretary of

Health and Human Services may not appeal a district

court order that rejects the legal basis for the Secretary’s

decision denying benefits and remands the cause for a

? On September 8, 1989, the district court, with respondent's con-

sent, stayed its order of remand pending this Court’s disposition of the

instant petition for a writ of certiorari.

rehearing by the Secretary under different legal standards.

Contrary to the view of the court of appeals, such an order

is a “final decision” of the district court within the mean-

ing of 28 U.S.C. 1291, because it finally determines that

the decision of the Secretary that is before the court on

judicial review is contrary to law and because the Secretary

may be deprived of an opportunity for appellate review of

the district court’s legal ruling if he is required to award

benefits on remand under the legal standards imposed by

the district court. The text of 42 U.S.C. 405(g) confirms

this conclusion, because it deems the judgment of a district

court that affirms, modifies or reverses the Secretary’s

decision, “with or without remanding the cause for a

rehearing” by the Secretary, to be a “final judgment,” sub-

ject to appellate review like any other final judgment in a

civil action. Such an order also is appealable pursuant to

28 U.S.C. 1292(a)(1), because it enjoins the Secretary to

conduct a new hearing under different legal standards.

The question whether the Secretary may appeal an order

remanding the cause to him for redetermination under dif-

ferent legal standards is one of substantial and recurring

importance in litigation arising under the Social Security

Act, and it has generated conflicting holdings among the

courts of appeals in cases arising under that Act. The ques-

tion of the appealability of remand orders also is of

substantial importance outside the Social Security context.

Review by this Court therefore is clearly warranted.

1. a. The court of appeals erred in concluding that it

did not have jurisdiction over the Secretary’s appeal.

Under 28 U.S.C. 1291, the courts of appeals have jurisdic-

tion of appeals from all “final decisions” of the district

courts. A party ordinarily may not take an appeal under

Section 1291 “until there has been a decision by the

District Court that ‘ends the litigation on the merits and

leaves nothing for the court to do but execute the judg-

ment.’ ” Van Cauwenberghe v. Biard, 108 S. Ct. 1945,

1949 (1988), quoting Catlin v. United States, 324 U.S. 229,

233 (1945). This general rule avoids the disruption of

ongoing proceedings in the trial court that would be occa-

sioned by “piecemeal appellate review,” and thus promotes

the “efficient administration of justice” (Flanagan v.

United States, 465 U.S. 259, 264 (1984)). In addition, the

rule “ ‘emphasizes the deference that appellate courts owe

to the trial judge as the individual initially called upon to

decide the many questions of law and fact that occur in the

course of a trial,’ ” thereby respecting the “ ‘independence

of the district judge, as well as the special role that in-

dividual plays in our judicial system.’” Van Cauwen-

berghe v. Biard, 108 S. Ct. at 1949 n.3, quoting Firestone

Tire & Rubber Co. v. Risjord, 449 U.S. 368, 374 (1981).

By the terms of Section 1291, however, “it is a final deci-

sion that Congress has made reviewable,” not a final judg-

ment. Stack v. Boyle, 342 U.S. 1, 12 (1951) (opinion of

Jackson, J.). As a result, “ ‘a decision “final” within the

meaning of § 1291 does not necessarily mean the last order

possible to be made in [the] case.’” Mitchell v. Forsyth,

472 U.S. 511, 524 (1985), quoting Gillespie v. United

States Steel Corp., 379 U.S. 148, 152 (1964). And in deter-

mining whether a particular type of order is immediately

appealable under Section 1291, the requirement of finality

must be given a “practical rather than a technical construc-

tion.” Cohen v. Beneficial Industrial Loan Corp., 337

U.S. 541, 546 (1949).

Heretofore, the Court has considered the application of

28 U.S.C. 1291 in the context of orders entered during or

at the conclusion of unitary proceedings in the district

court itself. In that setting, the practical construction of

Section 1291 has been most evident in the “collateral

order” doctrine, which recognizes a small class of deci-

sions that are immediately appealable under Section 1291

even though they do not terminate the proceedings in the

district court. That class consists of decisions “which final-

ly determine claims of right separate from, and collateral

to, rights asserted in the action, too important to be denied

review and too independent of the cause itself to require

that appellate consideration be deferred until the whole

case is adjudicated.” Cohen v. Beneficial Industrial Loan

Corp., 337 U.S. at 546. See, e.g., Midland Asphalt Corp.

v. United States, 109 S. Ct. 1494, 1497 (1989). Under the

common formulation of the collateral order doctrine, an

order, to be immediately appealable, must (1) “conclusive-

ly determine the disputed question,” (2) “resolve an impor-

tant issue completely separate from the merits of the ac-

tion,” and (3) “be effectively unreviewable on appeal from

a final judgment.” Coopers & Lybrand v. Livesay, 437

U.S. 463, 468 (1978). See, «~~ Lauro Lines S.R.L. vy.

Chasser, 109 S. Ct. 1976, 1978 (. 989); Richardson-Merrill,

Inc. v. Koller, 472 U.S. 424, 431 (1985).

b. This case differs from the Court’s prior cases apply-

ing the finality requirement of Section 1291. The order at

issue here was not entered in ordinary civil or criminal

litigation in district court, in which adjudication of all

legal and factual issues takes place in unitary proceedings

before the court. The order was entered in the quite dif-

ferent context of judicial review of final agency action,

which in turn was the product of distinct administrative

proceedings and embodied the agency’s considered deter-

mination of all issues of fact and law bearing on respond-

ent’s claim for benefits.

The district court’s order in this case was a “final deci-

sion” for purposes of 28 U.S.C. 1291 because it finally

determined that a particular decision of the Secretary was

contrary to law and remanded the matter to the Secretary

to conduct a fresh round of administrative proceedings

under different legal standards. Although the district

court might have occasion to consider respondent’s claim

for benefits again at a later date—if respondent sought

judicial review of the new decision rendered by the

Secretary on remand—the focus of the judicial pro-

ceedings at that point would be on the Secretary’s second

decision. Moreover, if the factual record before the

Secretary on remand should require him to find respond-

ent disabled and award her benefits under the legal stand-

ards imposed by the district court, the Secretary could not

ordinarily seek judicial review of his own decision in favor

of the claimant. The court of appeals in fact acknowl-

edged that in those circumstances, its construction of 28

U.S.C. 1291 would require the Secretary to forgo ail op-

portunity for appellate review of the district court’s in-

validation of the Listing approach. But see note 10, infra.

The foregoing considerations have led the courts of ap-

peals to apply the principles of finality under Section 1291

with a practical regard for the unique aspects of a civil ac-

tion for judicial review of agency action. They have held

that, as a general rule, an order remanding a matter to an

administrative agency for further proceedings is in-

terlocutory, not final, and therefore may not be im-

mediately appealed under 28 U.S.C. 1291. See Occidental

Petroleum Corp. v. SEC, 873 F.2d 325, 329-330 (D.C.

Cir. 1989) (collecting cases from every circuit). But as the

District of Columbia Circuit further explained in Occiden-

tal Petroleum, the courts have recognized an exception to

that rule where the remand order finally disposes of a legal

issue on which the agency’s decision was based, and the

agency may not have an effective opportunity to appeal at

a later date. See id. at 330-332. The order in the instant

case falls within this exception, as Judge Becker recog-

nized in urging the Third Circuit to follow Occidental

Petroleum. Indeed, as we explain below (see pages 23-24,

infra), the courts of appeals have long recognized the right

of the Secretary to take an appeal in circumstances such as

those presented here.

c. The district court’s order in this case was a “final

decision” for purposes of 28 U.S.C. 1291 under either of

two alternative theories. On the one hand, if the pro-

ceedings before the court are regarded as largely distinct

from those before the agency, the remand order is ap-

pealable because it effectively terminated the relevant

judicial proceedings. The order represented a final rejec-

tion of a particular decision of the Secretary (which denied

respondent’s application for benefits on the ground that

her impairment did not meet or equal the Listing), and re-

turned the claim for benefits to the Executive Branch of-

ficer charged with administering the disability program.

On the other hand, if the proceedings before the

Secretary and those before the court are regarded as

separate components of one broader controversy regard-

ing respondent’s claim for benefits,* the district court's

order is appealable under principles analogous to those

underlying the “collateral order” doctrine that the Court

has recognized for certain orders entered in the course of

on-going proceedings in the district court. This is so

because the order finally resolves an important legal issue

concerning the validity of the Secretary's regulations

governing widow’s disability claims; that issue is separate

from the factual issues (concerning respondent's ability to

perform gainful activity) that will be considered in further

administrative proceedings on remand and in any subse-

* In Sullivan v. Hudson, 109 S. Ct. 2248, 2254-2257 (1989), the

Court held that proceedings before the Secretary on remand from a

district court are sufficiently related to the civil action for judicial

review under 42 U.S.C. 405(g) to permit a court to award attorney's

fees for services rendered before the Secretary on remand as part of its

award under the Equal Access to Justice Act (EAJA), 28 USC

2412(d), for services rendered in judicial proceedings.

quent judicial review of the Secretary’s second decision in

the district court;’ and the Secretary may not have an ef-

fective opportunity for appellate review of that legal issue

at a later date.'®

* In the familiar context of unitary proceedings in the district court,

an order that invalidates governing regulations and sets the case for

trial under a different legal standard would not satisfy the second

prong of the three-prong test for collateral orders announced in

Coopers & Lybrand, 437 U.S. at 468, because the legal issue regarding

the validity of the regulations would not be “completely separate from

the merits of the action.” See Daviess County Hospital v. Bowen, 811

F.2d 338, 342 (7th Cir. 1987). However, neither the Cohen rule nor its

particular requirement of a “separate” legal issue should be applied in

precisely the same manne” in the distinct context of judicial review of

agency action. But see Harper v. Bowen, 854 F.2d 678, 681-682 (4th

Cir. 1988).

The second prong of the Coopers & Lybrand test, like the first

prong (which requires that the legal issue be “conclusively

determined”), prevents an appeal before all relevant legal and factual

issues have been fully developed and resolved at trial; if the legal issue

addressed by the district court's order is separate, there is much less

chance that subsequent developments at trial will cast new light on the

issue Or prompt the court to reconsider it. In the instant case,

however, there will be no further development of legal or factual

issues by the district court at a trial, since the further proceedings

ordered by the district court will be conducted in an administrative

forum. Moreover, because any deviation by the Secretary from the

legal standard imposed by the district court's remand order would

itself be legal error (Sullivan v. Hudson, 109 S. Ct. at 2254), the validi-

ty of the widow's disability regulations will not be open for considera-

tion in the administrative proceedings on remand (or, presumably, in

proceedings in the district court on judicial review of the Secretary's

new decision). Thus, the very nature of judicial review of agency ac-

tion —and of an order remanding a matter to the agency for further

proceedings under different legal standards —ensures that the legal

issue resolved by the remand order will be sufficiently separate from

the issues to be considered in further proceedings to satisfy the con-

cerns underlying this Court's Coopers & Lybrand test.

‘* In Harper v. Bowen, 854 F.2d at 681, the court believed it was

“possible” that the Secretary might be able to appeal the legal ruling

Moreover, under either theory, the balance of con-

siderations that have informed the development of finality

principles under 28 U.S.C. 1291 supports the Secretary's

right of appeal here. Because the order constitutes a final

rejection of the Secretary’s reliance on the Listing as a

basis for rejecting respondent's claim—and because the

rehearing of the claim mandated by the district court will

taxe place before the Secretary, not the court —an appeal

by the Secretary would not interfere with on-going pro-

ceedings in the district court or undermine the in-

dependence or special role of the district judge. Con-

versely, a refusal to allow the Secretary to appeal the order

invalidating his longstanding regulatory requirement for

widow’s disability claims wou/d undermine the special role

and distinct responsibilities of the Secretary, the Executive

embodied in the district court's remand order even if he was required

to award benefits on remand under the different legal standards im-

posed by the district court. The court based that belief on its view that

the Secretary must file the additional administrative record and deci-

sion on remand with the district court, and it suggested that the court

could then enter a judgment in favor of the claimant on the basis of

that additional record and decision and that the Secretary might be

able to appeal from such a judgment.

Contrary to the Fourth Circuit's view, however, nothing in 42

U.S.C. 405(g) requires the Secretary, after a remand based on legal er-

ror in the Secretary's first decision, to file with the district court a new

decision in favor of the claimant. The only situation in which 42

U.S.C. 405(g) requires a further filing with the court is specified by the

sixth sentence of Section 405(g), which applies where the district court

remands the cause to the Secretary for the receipt of additional

evidence before the court reaches the merits of the Secretary's deci-

sion. See Sullivan v. Hudson, 109 S. Ct. at 2254. lt may also be ap-

propriate for the Secretary to file his new decision with the district

court following the distinct type of remand at issue here for the limited

purpose of enabling the district court to determine whether to award

attorney's fees under the EAJA, since only then would the claimant be

a prevailing party. /d. at 2254-2255.

Branch officer entrusted with responsibility for imple-

menting the Social Security Act and rendering decisions on

claims arising under it. Such a rule of non-appealability

also would impose an unwarranted burden on “an already

overburdened agency” (Heckler v. Campbell, 461 U.S.

458, 468 (1983)), because it would require the Secretary to

conduct additional proceedings that would prove to be un-

necessary and wasteful of scarce resources if (as the

Secretary firmly believes) the regulations governing

widow’s disability claims are ultimately found to be valid.

See Occidental Petroleum, 873 F.2d at 329; Stone v.

Heckler, 722 F.2d 464, 467 (9th Cir. 1983); cf. Palmer v.

City of Chicago, 806 F.2d 1316, 1318-1319 (7th Cir. 1986),

cert. denied, 481 U.S. 1049 (1987). Thus, recognition of

the Secretary’s right to appeal the order at issue here would

promote, not undermine, the “efficient administration of

justice” (Flanagan, 465 U.S. at 264).

d. For similar reasons, if the remand order is not

regarded as a final judgment that effectively terminated

the relevant proceedings in the district court, the court of

appeals also had jurisdiction in this case under 28 U.S.C.

1292(aX(1). Section 1292(a)(1) vests the courts of appeals

with jurisdiction of appeals from interlocutory orders

granting or denying injunctions. The district court’s order

in this case had the effect of granting an injunction,

because it did more than simply remand the cause; it

“directed” the Secretary to conduct further proceedings to

inquire whether respondent can engage in any gainful ac-

tivity (App., infra, 18a). See Avery v. Secretary of HHS,

762 F.2d 158, 160 (ist Cir. 1985); but see United States v.

Louisiana-Pacific Corp., 846 F.2d 43, 45 (9th Cir. 1988).

The order did not merely govern the conduct of the parties

in connection with proceedings before the district court

itself on matters unrelated to substantive issues in the case.

See Gulfstream Aerospace Corp. v. Mayacamas Corp.,

108 S. Ct. 1133, 1138 (1988); International Products Corp.

_— ile

v. Koons, 325 F.2d 403, 406-407 (2d Cir. 1963). Rather, it

granted partial relief on the merits and ordered further

proceedings in a different forum. Compare Switzerland

Cheese Ass'n v. E. Horne’s Market, Inc., 385 U.S. 23, 25

(1966); Baltimore Contractors, Inc. v. Bodinger, 348 U.S.

176, 183 (1955); Morgantown v. Royal Insurance Co., 337

U.S. 254, 257-258 (1949); Hunt v. Bankers Trust Co., 799

F.2d 1060, 1066-1067 (Sth Cir. 1986).''

2. a. Both of the alternative theories of appealability

under 28 U.S.C. 1291 discussed above were articulated in

Cohen v. Perales, 412 F.2d 44, 48-49 (Sth Cir. 1969), rev'd

on other grounds, 402 U.S. 389 (1971), the seminal deci-

sion confirming an agency's right of appeal in cir-

cumstances such as these. In Perales, the district court

reversed the Secretary's decision denying the claim for

benefits and remanded for a new hearing on the ground

that the written reports of medical experts, on which the

administrative law judge relied, did not constitute substan-

tial evidence to support the Secretary’s decision denying

the claim for benefits. The court of appeals held that it

'' The Third and District of Columbia Circuits have construed Cer-

son v. American Brands, Inc., 450 U.S. 79, 84-90 (1981), not to re-

quire a showing, in all circumstances, that an order granting an in-

junction must have serious and perhaps irreparable consequences in

order to be appealable under 28 U.S.C. 1292(a(1). See Cohen v

Board of Trustees of University of Medicine, 867 F.2d 1455,

1466-1468 (3d Cir. 1989); 1.A.M. Nat'l Pension Fund v. Cooper In-

dustries, Inc., 789 F.2d 21, 24.3 (D.C. Cir. 1986); see also Baltimore

Contractors, 348 U.S. at 182 (“The appealability of routine in-

terlocutory injunctive orders raised few questions.”); P. Bator, D

Meltzer, P. Mishkin & D. Shapiro, The Federal Courts and the

Federal System 1816-1817 (3d ed. 1988). But see Thompson

Enomoto, 815 F.2d 1323, 1327 (9th Cir. 1987).

had jurisdiction over the Secretary’s appeal from the

district court’s order under 28 U.S.C. 1291.'7 *°

In holding that the order was “final” in the usual sense

of concluding the judicial proceedings, the Fifth Circuit in

Perales relied on the fourth and eighth sentences of 42

U.S.C. 405(g). See 412 F.2d at 48. The fourth sentence

provides that on judicial review, a district court “shall

have power to enter * * * a judgment affirming, modify-

ing, or reversing the decision of the Secretary, with or

without remanding the cause for a rehearing.” The eighth

sentence provides that “[{t}he judgment of the court shall

be final except that it shall be subject to review in the same

manner as a judgment in other civil actions.” These two

sentences make it clear that a district court order that sets

aside the Secretary’s decision on the merits because of legal

error is not deprived of its finality — at lea’! insofar as the

Secretary’s right of appeal is concerned — simply because

the district court also remands the cause for a rehearing by

the Secretary.'? Whether or not it remands the cause, the

district court’s ruling constitutes a final rejection of the

first decision of the Secretary. If the Secretary again finds

the claimant not disabled in the proceedings on remand, it

would be that second decision of the Secretary that would

be the subject of any subsequent application for judicial

'2 See also Gold v. Weinberger, 473 F.2d 1376, 1378 (Sth Cir. 1973).

') The term “judgment” is a term of art that “includes a decree and

any order from which an appeal lies.” Fed. R. Civ. P. 54(a). Accord-

ingly, Congress's use of the term “judgment” in the fourth sentence of

42 U.S.C. 405(g) to encompass orders that remand the cause to the

Secretary strongly supports the Secretary's right of appeal here. This

conclusion is reinforced by the specification in the eighth sentence that

the “judgment” of the district court (which necessarily includes those

mentioned in the fourth sentence that remand the cause to the agency)

“shall be final” and “shall be subject to review in the same manner as a

judgment in other civil actions.”

review. For this reason, the Fifth Circuit in Perales cor-

rectly relied on 42 U.S.C. 405(g) in finding jurisdiction

over the Secretary’s appeal because the district court's

order effectively terminated the relevant judicial pro-

ceedings.

The Fifth Circuit in Perales also relied on “collateral

order” principles in finding the district court’s remand

order appealable. 412 F.2d at 48-49. It noted that the

district court not only had denied the motions for sum-

mary judgment and reversed the Secretary's decision on

the merits, but also had established standards for the ad-

mission of hearsay evidence in the administrative pro-

ceedings on remand. Following this Court's admonition to

give Section 1291 a practical rather than a technical con-

struction, the Fifth Circuit concluded that such an order

fit the rationale of Cohen v. Beneficial Industrial Loan

Corp. The court reasoned that “{ujniess the Secretary is

allowed to appeal from this order, he will never be able to

reach the questions involved, because on the next appeal,

if there is one, the sole question may be the substantiality

of the evidence, and not its admissibility.” 412 F.2d at 48.

b. The Fifth Circuit stressed in Perales that not all re-

mand orders in Social Security cases are immediately ap-

pealable. The court specifically referred in this regard to

orders covered by the sixth sentence of Section 405(g),

which allows a district court, before it reaches the merits

of the Secretary's decision, to remand the cause to the

Secretary for the receipt of additional evidence. 412 F.2d

at 48. This procedure was included to provide a

mechanism for the receipt of newly discovered evidence in

a case in which judicial review of the Secretary's decision is

based on the administrative record.'* By contrast, the

'* We agree that such an order is not appealable, because it does not

represent a final rejection of the Secretary's decision that 1s the subject

order in this case (like that in Perales) did represent a final

rejection of the Secretary’s decision, which denied re-

spondent’s claim because her impairment did not meet or

equal the Listing.

c. This Court reversed the Fifth Circuit's ruling on the

merits in Perales, without questioning the jurisdiction of

the court of appeals over the Secretary’s appeal from the

district court’s remand order. See Richardson v. Perales,

402 U.S. 389 (1971). Because the jurisdictional issue was

discussed at length in the Fifth Circuit’s opinion —and

because the jurisdiction of this Court under 28 U.S.C.

1254(1) depended on whether the case was properly “in”

the court of appeals under 28 U.S.C. 1291 (see United

States v. Nixon, 418 U.S. 683, 690, 692 (1974)) —the Court

presumably would have adverted to the jurisdictional issue

if it had questioned the correctness of the Fifth Circuit’s

resolution of it. Since that time, a number of other courts

of judicial review. See Perales, 412 F.2d at 48, citing Bohms v. Gard-

ner, 381 F.2d 283 (8th Cir. 1967) (Blackmun, J.), cert. denied, 390

U_S. 964 (1968). The prior Third Circuit Social Security cases cited by

the panel below were remands pursuant to the sixth sentence of 42

U.S.C. 405(g). See App., infra, Sa, citing Mayersky v. Celebrezze, 353

F 2d 89 (3d Cir. 1965); Marshall v. Celebrezze, 351 F.2d 467 (3d Cir.

1965). Moreover, in Bohms, Mayersky, and Marshall, the appeal

from the remand order was taken by the claimant, not the Secretary.

A number of courts have held that the claimant may not appeal a re-

mand order under 28 U.S.C. 1291, since he may seek judicial review

of any adverse decision of the Secretary on remand. See Daito v.

Richardson, 434 F. 2d 1018 (2d Cir. 1970), cert. denied, 401 U.S. 979

(1971); Beach v. Bowen, 788 F.2d 1399 (8th Cir. 1986), Gilchrist v.

Schweiker, 645 F.2d 818 (9th Cir. 1981); Farr v. Heckler, 729 F.2d

1426 (Lith Cir. 1984); Howell v. Schweiker, 699 F.2d $24 (11th Cir.

1983); see also Occidental Petroleum, 873 F.2d at 331-332; Mail Pro-

perties, Inc. v. Marsh, 41 F.2d 440, 442-443 (ist Cir.), cert. denied,

109 S. Ct. 128 (1988); Memorial Hospital System v. Heckler, 169 F 24

1043 (Sth Cir. 1985).

)

of appeals have followed Perales. In fact, insofar as we

have been able to ascertain, it was not until quite recently,

long after 42 U.S.C. 405(g) was enacted in 1939,'* that any

court has held that the Secretary may not appeal a remand

order under Section 405(g) in circumstances such as those

presented here.

3. The jurisdictional ruling by the Third Circuit in this

case conflicts not only with the decision in Perales but also

with the decisions of a number of other courts of appeals.

The First, Sixth, Ninth and Tenth Circuits have followed

Perales in finding jurisdiction over appeals by the

Secretary from remand orders. See Colon v. Secretary of

HHS, 877 F.2d 148, 149-151 (ist Cir. 1989); Lopez Lopez

v. Secretary of HEW, 512 F.2d 1155, 1156 (1st Cir. 1975);

Edmond v. HHS, No. 89-3161 (6th Cir. Apr. 19, 1989);'¢

Stone v. Heckler, 772 F.2d 464, 466-468 (9th Cir. 1983);

Ensey v. Richardson, 469 F.2d 664 (9th Cir. 1972); Paluso

v. Mathews, 573 F.2d 4, 7-8 (10th Cir. 1978) (Black Lung

case); see also McGill v. Secretary of HHS, 712 F.2d 28,

29-30 (2d Cir. 1983) (dictum), cert. denied, 465 U.S. 1068

(1984). The Seventh Circuit has reached a similar result

under the parallel judicial review provisions of the

Medicare Act. See Daviess County Hospital v. Bowen, 811

F.2d 338, 341-342 (7th Cir. 1987); Edgewater Hospital,

Inc. v. Bowen, 857 F.2d 1123 (7th Cir. 1988).'’ Moreover,

the District of Columbia Circuit, which apparently has not

had occasion to address the appealability issue in the

'S Act of Aug. 10, 1939, ch. 686, § 201, 53 Stat. 1368.

'* But cf. Whitehead v. Califano, $96 F.2d 1315, 1319 (6th Cir.

1979) (Secretary may not appeal remand order by magistrate where

Secretary did not first appeal order to district court).

'? The Seventh Circuit had expressed a similar view in dictum in an

earlier decision under the Social Security Act that was cited in Perales.

See 412 F.2d at 48, citing Jamieson v. Folsom, 311 F.2d $06, 507 (7th

Cir.), cert. denied, 374 U.S. 487 (1963).

Social Security context, recently held in Occidental

Petroleum, after a thorough examination of the issue in an

analogous context, that an agency may appeal a remand

order under 28 U.S.C. 1291. See also Bender v, Clark, 744

F.2d 1424, 1426-1428 (10th Cir. 1984).

Other courts of appeals that also once held the Secretary

may appeal a remand order have since expressed a con-

trary view, albeit without acknowledging their own con-

trary precedent.'* For example, although the Fourth Cir-

cuit previously had followed Perales in holding that the

Secretary could appeal a remand order in a Black Lung

case (see Souch v. Califano, 599 F.2d 577, 578 n.1 (1979)),

it more recently held, without mentioning its prior ruling,

that the Secretary may not appeal a remand order under

similar circumstances. See Harper v. Bowen, 854 F.2d 678

(4th Cir. 1988). Similarly, although the Eighth Circuit had

found jurisdiction over an appeal by the Secretary even

prior to Perales (Gardner v. Moon, 360 F.2d 556, 558 n.2

(8th Cir. 1966)), it since has stated in dictum, without

mentioning Moon, that the Secretary may not take an ap-

peal under 28 U.S.C. 1291. McCoy v. Schweiker, 683 F.2d

1138, 1141 n.2 (8th Cir. 1982) (en banc). Most

remarkably, the Fifth Circuit recently held in an un-

published order that the Secretary could not appeal a re-

mand order, and it did so without even citing its own con-

trary precedent in Perales. See Haywood v. Bowen, No.

88-1280 (Nov. 30, 1988) (862 F.2d 873 (1988) (Table)).'*

'® Even the Third Circuit, in the Bachowski decision upon which

the panel relied in this case, appeared to acknowledge the correctness

of the Perales ule, while finding it inapplicable on the facts of

Bachowski itself. 545 F.2d at 367 & n.16, 372-373. By contrast, the

Third Circuit did not even cite Perales and its progeny in its decision in

this case.

'* The Eleventh Circuit, which is bound by Fifth Circuit precedents

(see Bonner v. City of Prichard, 661 F.2d 1206, 1207 (lith Cir.

The jurisdictional issue presented by this case is of

recurring importance in litigation arising under the Social

Security Act, since claimants increasingly raise jurisdic-

tional objections to appeals by the Secretary from remand

orders, even in circuits that previously had sustained the

Secretary’s right of appeal. The jurisdictional issue also is

one of recurring importance outside the Social Security

context, where it has generated thoughtful analyses by

several other courts of appeals that have sustained the

agency’s right of appeal. See Occidental Petroleum Corp.

v. SEC, supra; Mall Properties, Inc. v. Marsh, 841 F.2d

440, 442-443 (Ist Cir.), cert. denied, 109 S. Ct. 128 (1988);

Bender v. Clark, supra. The decision of the Third Circuit

conflicts with these jurisdictional rulings outside the Social

Security context, as well as those, discussed above, in cases

arising directly under that Act. Review by this Court

therefore is plainly warranted.

1981) (en banc)), has expressly followed the Fifth Circuit's Perales

precedent in finding several remand orders appealable. See Picket! v.

Bowen, 833 F.2d 288, 290-291 (lith Cir. 1987); Huie v. Bowen, 788

F.2d 698, 701-703 (lith Cir. 1986). In two other cases, however, it

dismissed appeals by the Secretary in brief orders, without even citing

Perales. See Jordan v. Heckler, 721 F.2d 349 (\\th Cir. 1983); Biddle

v. Heckler, 721 F.2d 1321 (1ith Cir. 1983).

CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully submitted.

KENNETH W. STARR

Solicitor General

STUART E. SCHIFFER

Acting Assistant Attorney General

THOMAS W. MERRILL

Deputy Solicitor General

EDWIN S. KNEEDLER

Assistant to the Solicitor General

ROBERT M. LOEB

Attorney

SEPTEMBER 1989

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 88-5318

MARILYN FINKELSTEIN, APPELLEE

Oris R. Bowen, M.D., SECRETARY OF HEALTH AND

HUMAN SERVICES, APPELLANT

On Appeal from the United States District Court for

the District of New Jersey

(D.C. Civil Action No. 85-0345)

[Filed Mar. 3, 1989]

OPINION

BEFORE: BECKER, HUTCHINSON and SciRICA,

Circuit Judges

HUTCHINSON, Circuit Judge.

The Secretary of Health and Human Services

(Secretary) appeals an order of the United States District

Court for the District of New Jersey. The district court

had remanded this action for widow’s disability benefits

under the Social Security Act to the Secretary for con-

sideration of the applicant’s residual functional capacity.

(la)

That order is not final for purposes of appellate review.

We will therefore dismiss this appeal for lack of jurisdic-

tion.

On November 25, 1983, Mrs. Marilyn Finkelstein ap-

plied for disabled widow’s benefits pursuant to 42

U.S.C.A. § 423(d)(2)(B) (West Supp. 1988). Her applica-

tion was denied both initially and on reconsideration.

After a hearing on September 28, 1984, an Administrative

Law Judge (ALJ) determined that Mrs. Finkelstein’s heart

ailment did not meet or equal an impairment listed in the

regulations' and denied benefits. That denial became the

Secretary’s final decision on December 11, 1984, when the

Appeals Council denied Mrs. Finkelstein’s request for

review.

Pursuant to 42 U.S.C.A. § 405(g) (West 1983), Mrs.

Finkelstein filed suit in the district court, claiming that the

ALJ’s decision was not supported by substantial evidence.

The district court rejected this argument, but nevertheless

remanded the case to the Secretary “for reasons other than

those cited by [the] plaintiff.” Finkelstein v. Bowen, No.

85-0345, slip op. at § (D.N.J. Feb. 18, 1988). It directed

the Secretary to consider “the functional impact of plain-

tiff’s ailment,” id., in order to determine whether, beyond

the issue of equivalence of impairments, Mrs. Finkelstein

could yet engage in any gainful activity. Jd. at 6. This ap-

peal followed.

On the merits, the Secretary argues that, in the case of

widow’s disability benefits, the statute and applicable

regulations require him to look only to whether an appli-

cant’s impairment meets or equals an impairment listed in

' 20 C.F.R. Part 404, Subpart P, Appendix | (1987).

the regulations.? The inquiry, he contends, does not ex-

tend, as in the case of a wage earner’s disability, to ex-

amination of residual functional capacity.’ Instead, the

Secretary argues, a widow’s disability is governed by a

stricter standard‘ and a denial of benefits is required if her

? Under the Social Security Act, a widow is not disabled “unless

her physical or mental impairment or impairments are of a level of

severity which under regulations prescribed by the Secretary is deemed

to be sufficient to preclude an individual from engaging in any gainful

activity.” 42 U.S.C.A. § 423(d)(2)(B).

The “regulations prescribed by the Secretary” for deeming im-

pairments sufficiently severe to preclude any gainful activity mandate

a two-step inquiry. First, a widow is not disabled if she is “doing

substantial gainful activity.” 20 C.F.R. § 404.1578(b) (1987). Second,

a widow is disabled if her “impairment(s) has specific clinical findings

that are the same as those for any impairment in the Listing of Im-

pairments in Appendix | or are medically equivalent to those for any

impairment shown there.” Jd. § 404.1578(a)(1). These impairments,

by virtue of their inclusion in the regulatory listing, are considered

“severe enough to prevent a person from doing any gainful activity.”

Id. § 404.1525(a) (1987).

> Under the Social Security Act, a wage earner’s disability is de-

fined, in relevant part, as “inability to engage in any substantial gain-

ful activity by reason of any medically determinable physical or men.

tal impairment.” 42 U.S.C.A. § 42344) 1A) (West Supp. 1988). The

process for determining a wage earner’s disability includes inquiries in-

to whether the wage earner is engaged in substantial gainful activity,

has a severe impairment, and whether this impairment meets or equals

any in the regulatory listing. However, if a wage earner’s impairment

does not meet or equal any in the listing, the inquiry continues for the

purpose of determining whether his residual functional capacity

allows him to do past work and, finally, whether his residual func.

tional capacity, along with vocational factors like age, education, and

past work experience, allows him to do any other work. 20 CFR

§ 404.1520 (1987).

* The regulations expressly state that age, education, and past work

experience are ignored when evaluating a widow's disability 20

C.F.R. § 404.1577 (1987). On the merits, the issue is whether a widow

impairment is not equivalent to one listed in the regula-

tions.

At the threshold, we are faced with the question of ap-

pellate jurisdiction. Both parties initially asserted’ that we

have jurisdiction under 28 U.S.C.A. § 1291 (West Supp.

1988). That section gives us the authority to review “final

orders” of the federal district courts. We have said that

“remands to administrative agencies are not ordinarily ap-

pealable under section 1291.” United Steelworkers of

America Local 1913 v. Union R.R., 648 F.2d 905, 909 (3d

Cir. 1981). Such a remand is typically an interlocutory step

in the adjudicative process and, therefore, not a final

order. Jd. Therefore, we can exercise appellate jurisdiction

over this case only if it comes within an exception to the

ordinary rule.

Case law does provide examples of a narrow exception

to the normal rule of non-appealability. Application of

this exception is limited to cases in which an important

whose impairment does not meet or equal any in the listing is entitled

to have her residual functicnal capacity considered. Because we lack

appellate jurisdiction over the district court's interlocutory order

remanding the case to the Secretary, we express no opinion on that

issue. We have held, however, that a stricter standard does apply in

widow's disability cases. See, e.g., Smith v. Schweiker, 671 F.2d 789,

790 (3d Cir. 1982) (“the test for establishing entitlement to disability

benefits is more stringent for widows”).

* At oral argument on September 8, 1988, we requested letter

memoranda on this question of appellate jurisdiction. By her letter

memorandum dated September 21, 1988, Mrs. Finkelstein now con-

tends that the district court's order is not appealable and that we lack

jurisdiction. The Secretary contends the district court's order is ap-

pealable. The parties’ positions on jurisdiction are, of course, not con-

trolling.

legal issue is finally resolved and review of that issue

would be foreclosed “as a practical matter” if an im-

mediate appeal were unavailable. See, e.g., AJA Assocs.

v. Army Corps of Eng’rs, 817 F.2d 1070, 1073 (3d Cir.

1987). Whether applying the normal rule or the exception,

our inquiry focuses on “the particular order brought to

this court.” Bachowski v. Usery, 545 F.2d 363, 372 (3d

Cir. 1976); see also United Steelworkers, 648 F.2d at 909

(“To assess these contentions, we must consider the nature

of the district court’s order.”).

After examining the circumstances of the cases applying

the normal rule of non-appealability and those holding

that appellate jurisdiction over particular remand orders is

available, we have concluded that the exception to the nor-

mal rule does not apply. Therefore, we lack appellate

jurisdiction.

We turn first to cases in which we applied the normal

rule and held district court remand orders interlocutory

rather than final. In Marshall v. Celebrezze, 351 F.2d 467

(3d Cir. 1965) (per curiam), a Social Security disability

case, the Secretary asked the district court to remand so he

could take additional evidence. The district court granted

the motion and the applicant appealed. We dismissed the

appeal as interlocutory. See also Mayersky v. Celebrezze,

353 F.2d 89 (3d Cir. 1965) (district court remand to obtain

additional evidence in Social Security disability case not

final).

Our decision in Bachowski is particularly relevant.

Alleging violations of the Labor-Management Reporting

and Disclosure Act and other irregularities, Bachowski

sought to overturn the results of a union officer election.

The Secretary of Labor refused to file suit to set aside the

election, but gave no reasons. Bachowski filed an action

against the Secretary, in district court, seeking an order

compelling him to file suit. The district court dismissed the

case for lack of subject matter jurisdiction. On appeal, we

held that the district court did have subject matter jurisdic-

tion and that the scope of judicial review extended to the

factual basis for the Secretary's decision not to file suit as

well as the factors on which he relied in reaching it.

Bachowski v. Brennan, 502 F.2d 79, 90 (3d Cir. 1974). On

certiorari, the Supreme Court agreed that the district court

had subject matter jurisdiction and that the Secretary was

required to provide “a statement of reasons supporting his

determination.” Dunlop v. Bachowski, 421 U.S. 560, 571

(1975). It held, however, that judicial review “should be

confined to examination of the ‘reasons’ statement, and

the determination whether the statement, without more,

evinces that the Secretary’s decision is so irrational as to

constitute the decision arbitrary and capricious.” Jd. at

572-73. On remand, the district court ordered the

Secretary to submit a supplemental reasons statement

after finding the initial statement inadequate. Bachowski

v. Brennan, 405 F. Supp. 1227, 1234 (W.D.Pa. 1975).

Upon examining the supplemental statement, the district

court held that the method the Secretary used to determine

whether the alleged violations affected the outcome of the

election and, therefore, whether to bring suit, was irra-

tional. It remanded for a recount with directions as to the

proper counting method. Bachowski v. Brennan, 413 F.

Supp. 147, 151 (W.D.Pa. 1976).

On appeal, we held this remand was interlocutory.

Bachowski, 543 F.2d at 372. Ultimately, the complaint

sought an order directing the Secretary to file suit. The

district court remanded only for further proceedings. We

distinguished “the ultimate substantive issue presented by

[the] appeals” from “the final question posed by Mr.

Bachowski’s complaint.” Jd. at 372 n.58. “It is the answer

to the latter, not the former inquiry that constitutes a final

judgment under the traditional test of finality.” Jd. We

also said that the issue of the proper method for counting

votes might not escape later review. “By way of illustra-

tion, if the Secretary, after remand, would continue in his

refusal to bring suit, and the district court ordered him to

do so, the viability of the mode of review employed by [the

court] would be before us on review.” /d.

This case does not present circumstances analogous to

the cases in which we held there was appellate jurisdiction.

United Steelworkers is an example of such a case. We ex-

pressly based our holding on the peculiar circumstances of

the case. There, the district court's order set aside the deci-

sion of a public law board, directed that on remand one

member of the board be removed, and further directed the

board to remand the case to the railroad for a de novo in-

vestigative hearing into the termination of one of its

employees. United Steelworkers, 648 F.2d at 909. In

analyzing the order to decide if it was “final” and therefore

appealable for purposes of § 1291, we held that it had “the

practical effect of dismissing the present litigation”

because it “permanently disposed of all findings and

orders of the Board.” /d. at 909, 910. We also concluded

that, due to the very limited scope of judicial review over

board findings under the Railway Labor Act, the railroad

would probably not be able to appeal the Board's order

after a remand, thereby precluding any future opportunity

to challenge the district court’s order. /d. at 910.

Therefore, “because of the unusual circumstances of [the]

case,” we found the order final. /d. at 911.

Horizons Int'l, Inc. v. Baldrige, 811 F.2d 154 (3d Cir.

1987), is another example illustrating the exception to the

normal rule of non-appealability. It involved the issuance

of a certificate of review*® by the Secretary of Commerce

for a proposed joint venture in the export sale of caustic

soda and chlorine. Horizons challenged the issuance of the

certificate and moved to limit discovery to the ad-

ministrative record. The government moved for summary

judgment. The district court remanded the case to the

Secretary and the Attorney General to consider five

specific questions “which raise genuine issues of material

fact concerning whether the grant of a certificate of review

.. . Was arbitrary, capricious, and an abuse of discretion.”

/d. at 158. The five questions necessarily involved material

outside of the administrative record. We held this order

was final on two grounds. As in United Steelworkers, it

acted both as a final disposition of the issues on appeal

and an effective preclusion of future review. We reasoned

that a remand would require further proceedings based on

evidence outside of the agency record, thereby mooting

the agency’s contention that the present record was ade-

quate to support its action. Jd. at 160. We distinguished

this order from an order postponing final disposition

where the plaintiff did not yet have a vested interest in ob-

taining the relief he sought. See e.g., Bachowski, 545 F.2d

at 363.

In AJA Associates, the Army Corps of Engineers

(Corps) had denied AJA’s application for a dredge-and-fill

permit in connection with property it owned in Florida.

AJA filed suit to set aside the denial and the Corps moved

for summary judgment. The district court held that AJA

* A certificate of review provides limited antitrust immunity and

must be approved by both the Secretary of Commerce and the At-

torney General. See Horizons International, 811 F.2d at 157.

was entitled to appear at an “ ‘informal oral hearing

before a proper agency officer’ ” to respond to the Corps’

reasons for denying the permit. AJA Associates, 817 F.2d

at 1072 (quoting district court order). We said this order

was final because the district court's decision “opens up

for all applicants the argument, raised after permit denial,

that due process requires a hearing in their particular

cases.” Jd. at 1073. If the Corps conducted a hearing and

either denied or granted a permit, the right-to-hearing

issue would have been moot on appeal. /d. “[W)hen a

district court finally resolves an important legal issue in

reviewing an administrative agency action and denial of

appellate review before remand to the agency would

foreclose appellate review as a practical matter, the re-

mand order is immediately appealable.” /d.

Likewise, in United States v. Spears, 859 F.2d 284 (3d

Cir. 1988), we held that a district court order directing a

federal agency to comply with a Pennsylvania statute re-

quiring notice before foreclosure proceedings was final.

As in AJA Associates, the issue would have become moot

and escaped review whether or not, on remand, the agency

complied and gave the notice. Spears, 859 F.2d at 287.

The Secretary argues that he will be unable to raise the

issue of whether a widow's residual functional capacity is

relevant to her claim for widow's disability benefits later if

we do not exercise appellate jurisdiction over this par-

ticular remand order. We rejected the same argument by

the Secretary of Labor in Bachowski and by Conrail! in

Brotherhood of Maintenance of Way Employees v. Con-

solidated Rail Corp., 864 F.2d 283 (3d Cir. 1988). As in

Bachowski, “it is not inexorably so” that consideration of

this issue will escape review.

Bachowski is similar in its procedural posture to this

case. If the Secretary, after consideration of Mrs. Finkel-

10a

stein’s residual functional capacity on remand, persists in

refusing benefits and the district court orders that they be

granted, the issue of whether residual functional capacity

is relevant would be subject to our review. The possibility

that it would be unreviewable if the Secretary awards

benefits is no different than the possibility in Bachowski

that the district court's order directing certain vote count-

ing procedures would be unreviewable if the Secretary

decided to file suit to set aside the election after utilizing

those procedures. Review may become unavailable, but it

is not necessarily unavailable, as in AJA Associates.

Recently we held that a district court order remanding a

railroad employees’ discipline case to the National

Railroad Adjustment Board “to ‘hear evidence as to

whether [the employees] were sufficiently responsible for

the accidents in question to warrant their dismissal’ ” was

interlocutory. Brotherhood of Maintenance of Way

Employees, id. at 285 (quoting district court order).

Although Brotherhood is distinguishable on the ground

that the Adjustment Board, there the agency, was not a

party, we nevertheless relied on the general principle “that

district court orders remanding cases to administrative

agencies are not final and appealable.” Jd. at 285-286. We

did so despite expressing concern over the district court's

apparent interference with the arbitration board’s power.

Id. at 289. We distinguished United Steelworkers because

there the order “ ‘had the practical effect of dismissing the

present litigation and review of the legal questions raised

by this appeal will be foreclosed if not permitted now.” ”

Id. at 286 (quoting United Steelworkers, 648 F.2d at 909).

in discussing Bachowski, Judge Sloviter went on to say:

The Secretary and the union appealed the district

court's remand order to this court arguing, as Conrail

argues here, that if this court did not accept jurisdic-

tion the Secretary “may very well [be] deprive[d] . . .

of any opportunity to test the correctness of the scope

of review employed by [the district court].” /d. at 372.

We rejected this argument on the ground that the

mode of review used by the district court would be

reviewable if the district court later ordered the

Secretary to file suit, an issue that remained unde-

cided.

Id. Despite the fact that the agency was not a party,

Brotherhood points up how strongly the finality principle

of avoiding piecemeal review pulls in favor of permitting

even a decision interfering with other important policies to

stand.’

Here, too, the ultimate question of whether the district

court correctly ordered the Secretary to consider Mrs.

Finkelstein’s residual functional capacity would become

reviewable if the district court orders the Secretary to

grant benefits because she is so lacking in residual func-

tional capacity that she cannot engage in any gainful ac-

tivity. Although the Secretary may be denied review if he

orders benefits to be paid upon consideration of Mrs.

Finkelstein’s residual functional capacity, that possibility

is of no more significance than the possible unavailability

of review was to Conrail in Brotherhood of Maintenance

of Way Employees. Of course, if benefits are denied, Mrs.

Finkelstein may obtain review.

The principle of finality serves important inceetions!

functions. In serving them, issues which seem burning to

the litigants in the course of an individual dispute often

disappear, become subsumed in the final decision, and

escape review in a particular case. When they involve ques-

tions of general significance they are likely to recur in

’ We recognize the importance of the distinction between our case

of Bachowski on the one hand and Brotherhood on the other. We do

not therefore believe Brotherhood is controlling, but instead look to

Bachowski, which we believe does control.

12a

future cases in a posture which does present them for ap-

pellate review. Such is this case. It deals with an issue like-

ly to recur in future cases and arises in an administrative

procedure strongly analogous to common law adjudica-

tion of individual disputes.

The particular district order here at issue is in-

terlocutory, not final. The district court remanded Mrs.

Finkelstein’s case to the Secretary “for further pro-

ceedings.” It ordered the Secretary to consider her residual

functional capacity before deciding the question of

eligibility. This remand concerned the factors for con-

sideration in the adjudicatory process and not, as in AJA

Associates, supra, only the form that process must take.

Here, as in Bachowski, the district court remanded for

further consideration according to its guidelines. In

Bachowski, the guidelines related to the method of vote

counting; here, they relate to consideration of residual

functional capacity. Unlike the appellant in Horizons In-

ternational, Mrs. Finkelstein has no vested right in

anything; the court did not take away something. which she

had already been given, but postponed final disposition in

her case until the Secretary had considered an additional

factor. Unlike AJA Associates, the district court did not

order a hearing when the issue was whether the statute or

the regulations required a hearing; instead, it ordered con-

sideration of an additional factor before final administra-

tive adjudication of the benefit issue.

The institutional concerns precluding appellate review

of non-final orders prevail and deprive this Court of ap-

pellate jurisdiction over the district court’s order remand-

ing this case to the agency for consideration of residual

functional capacity. The district court’s order remanding

Mrs. Finkelstein’s case to the Secretary for consideration

of her residual functional capacity in determining her

eligibility for widow’s disability benefits is interlocutory,

not final. Accordingly, we will dismiss this appeal for lack

of appellate jurisdiction.

l3a

APPENDIX B

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

CIVIL NO. 85-345 (GEB)

MARILYN FINKELSTEIN, PLAINTIFF

Vv.

Oris R. Bowen, M.D., SECRETARY OF HEALTH AND

HUMAN SERVICES, DEFENDANT

[Filed Feb. 18, 1988]

OPINION

Brown, District Judge

Plaintiff, Marilyn Finkelstein, seeks review under

§ 205(g) of the Social Security Act, as amended, 42 U.S.C.

§ 405(b), to review a final determination of the Secretary

of Health and Human Services (Secretary) which denied

plaintiff's application for widow’s disability insurance

benefits under sections 202(e) and 223 of the Social

Security Act, as amended.

Standard of Review

A decision of the Administrative Law Judge (ALJ)

concerning disability benefits must be upheld by the Court

if after review of the record, there is substantial evidence

supporting the decision. 42 U.S.C. § 405(g). Substantial

evidence has been defined as “more than a mere scintilla.

It means such relevant evidence as a reasonable mind

might accept as adequate to support a conclusion.”

l4a

Richardson v. Perales, 402 U.S. 389, 409 (1971) (citations

omitted). This Court is to look at the record as a whole

and then determine whether or not there is substantial

evidence to support the decision. Taybron v. Harris, 667

F.2d 412, 413 (3d Cir. 1981) (quoting Hess v. Secretary of

Health, Education and Welfare, 497 F.2d 837, 841 (3d

Cir. 1974)).

Prior Proceedings

Plaintiff initially filed an application for widow’s in-

surance benefits on November 25, 1983. The application

was denied on February 3, 1983 and again upon recon-

sideration on March 28, 1984. On September 12, 1984, a

hearing was held before an Administrative Law Judge

(ALJ) to review plaintiff's application. The ALJ’s decision

of September 28, 1984 found the plaintiff to be not a

“disabled widow within the meaning of the Social Security

Act.” This decision became the final decision of the

Secretary when the Appeals Council denied plaintiff's re-

quest for review on December 11, 1984. The plaintiff then

filed a complaint in this Court appealing the ALJ’s deci-

sion.

Evidence Presented

Plaintiff was born on August 11, 1930. She is the widow

of a wage earner who died fully insured on August 27,

1980. Plaintiff's physician, Dr. Su, submitted his analysis

wherein he states that plaintiff suffers form [sic] frequent

chest pain and has a strong family history of coronary

heart disease. (Tr. 144-45). Also, he states that plaintiff

“has always had an abnormal cardiogram, namely, left

ventricular hypertrophy with ST depression of ischemia.

Examination revealed hoio systolic murmur at apex sug-

gestive of mitral regurgitation.” (/Jd.) The physician con-

1Sa

cludes that plaintiff suffers from “1) Arteriosclerotic cor-

onary heart disease with coronary insufficiency with recur-

rent angina, class III B. 2) Mitral valve prolapse syndrome

with frequent palpitations.” (/d.) In a letter dated June 27,

1984, Dr. Su also maintains that “[t}here is no doubt in my

mind that Mrs. Finkelstein is totally disabled physically

and also requires medical supervision regularly.” (Tr.

146-47).

Also before the ALJ were the interrogatories pro-

pounded by the ALJ on Dr. Arthur Bauman. Dr. Bauman

answered “no” to the following: “In your opinion, does the

claimant suffer from an illness or impairment which meets

the specific criteria in the Listing of Impairments.” In

response to the question of whether plaintiff suffers from

“an impairment or illness, or combination of impairments

or illnesses which is the equivalent of a listed impairment,”

Dr. Bauman states “possibly but hard data—stress test

+/or coronary arteriography absolutely vital. Her

treating physician recommended a stress test, but she has

thus far refused.” (Tr. 161-62).

Discussion

A widow may obtain disability benefits if she has a

physical or mental impairment that is “of a level of sever-

ity which under the regulations prescribed by the Secretary

is deemed to be sufficient to preclude an individual from

engaging in any gainful activity.” 42 U.S.C. § 423(d)(2)(B)

(emphasis supplied). “To qualify for widow’s disability in-

surance benefits, [plaintiff] must meet a more stringent

standard than that applicable to wage-earner claimants: ‘a

widow's disability must be sufficiently severe to preclude

an individual from engaging in any gainful activity,

whereas a wage earner’s disability need be sufficient to

preclude an individual from engaging in any substantial

16a

gainful activity.’ Gallagher v. Schweiker, 697 F.2d 82, 84

n.2 (2d Cir. 1983). Compare 42 U.S.C. § 423(d)(2)A)

with id. 423(d)(2)(B).” Tolany v. Heckler, 756 F.2d 268,

269-70 (2d Cir. 1985). “Disability will be found if a

widow’s impairments have specific clinical findings that

are ‘the same as those for any impairment’ on the listing of

impairments in Appendix | [20 C.F.R. Part 404, Subpart

P, appendix 1] or are ‘medically equivalent’ to those for

any listed impairment.” /d. at 271.

Plaintiff argues in her brief that, given the two expert

medical opinions of Dr. Su and Dr. Bauman, “the ALJ

who heard this matter erred in finding that plaintiff did

not suffer from an impairment or combination of im-

pairments which was the equivalent of a Listed impair-

ment. It is on this basis that plaintiff submits that the Final

Decision of the Secretary is without substantial evidence.”

This Court disagrees. As required by Brewster v.

Heckler, 786 F.2d 581, 585 (3d Cir. 1986), the ALJ made

clear on the record his reasons for rejecting the opinion of

the treating physician. The ALJ held that:

Dr. Su’s statement that the claimant’s heart condition

is “equal to Ischemic Heart Disease as stated in 4.04

of appendix one [sic]” is conclusory in nature and is

unsubstantiated by references to the specific medical

signs and findings required by regulation (20 C.F.R.

404.1527-1529). As noted in Social Security Ruling

83-19, an impairment may be judged to be equivalent

to a listed impairment only if the medical findings

(defined as a set of symptoms, signs, and laboratory

findings) are at least equivalent in severity to the set

of medical findings for a listed impairment. In no in-

stance will symptoms alone justify a finding of

equivalency. Consequently, Dr. Su’s statement, stand-

ing alone, does not establish equivalency. [Tr. 12].

17a

However, a review of the record under the standards

discussed supra however indicates that the case must be

remanded to the Secretary for reasons other than those

cited by plaintiff. The record is devoid of any findings

regarding the functional impact of plaintiff's ailment.

The ALJ found that the “medical findings shown in the

medical evidence of record establish the existence of mitral

valve prolapse” (Tr: 13); as such, plaintiff may not be able

to engage in any activity. As the Second Circuit recently

held,

The procedure for widows explains that disability wi//

be found if the claimant has a listed impairment or

the equivalent; it does not state that such an impair-

ment is the only basis for meeting the statutory stand-

ard. If a claimant has an impairment that is not listed

and is not the medical equivalent of a listed impair-

ment, but the claimant nevertheless is unable to

engage in any gainful activity, it is difficult to see how

that person may be denied benefits. It would seem

anomalous if an impairment that is only presumed to

be disabling because it is listed results in allowance of

benefits, yet an impairment that in fact leaves the

claimant without the residual functional capacity to

engage in any gainful activity is insufficient to war-

rant benefits.

Tolany v. Heckler, 756 F.2d 268, 271 (2d Cir. 1985) (first

emphasis in original, second emphasis supplied). See also

Carathers v. Bowen, No. 85 C-6560, June 17, 1987,

Northern District of Illinois (available on Lexis) (“If in

fact the ALJ finds that [plaintiff] cannot work, it follows

that the combination of her impairments must equal the

severity of a listed impairment and that she therefore

should receive benefits.”); Williams v. Bowen, 636 F.

Supp. 699, 702-03 (N.D. Ill. (1986) (In reviewing demial! of

benefits, Court held, inter alia, “plaintiff correctly argues

that the ALJ did not consider the functional impact of her

hearing loss, i.e., the medically verified limitations on her

ability to hear in a normal work environment. Such a con-

sideration is required for the regulatory scheme to have

real world meaning.”)

As the ALJ made no findings in this regard, the Court

remands for further proceedings. The Secretary is directed

to inquire whether plaintiff may or may not engage in any

gainful activity, as contemplated by the Act.

19a

APPENDIX C

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 88-5318

MARILYN FINKELSTEIN

Vv.

Ottis R. Bowen, M.D., SECRETARY OF HEALTH AND

HUMAN SERVICES, APPELLANT

(D.C. Civil No. 85-0345)

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

[Entered Mar. 3, 1989]

JUDGMENT

Present: BECKER, HUTCHINSON and Scirica, Circuit

Judges

This cause came on to be heard on the record from the

United States District Court for the District of New Jersey

and was argued by counsel September 8, 1988.

On consideration of the within appeal from the

judgment of the said District Court entered February 19,

1988, it is now here ordered and adjudged by this Court

that the appeal is dismissed for lack of appellate

20a 2la

jurisdiction. Costs taxed against the appellant. All of the

above in accordance with the opinion of this Court.

APPENDIX D

UNITED STATES COURT OF APPEALS

ATTEST: FOR THE THIRD CIRCUIT

/s/ Sally Mrvos

Clerk

No. 88-5318

MARILYN FINKELSTEIN, APPELLEE

Certified as a true copy and issued in

lieu of a formal mandate on June |,

1989

Test: /s/ M. Elizabeth Ferguson

Chief Deputy Clerk, United States

Court of Appeals for the Third Circuit

Otis R. Bowen, M.D., Secretary oF HEALTH AND

HUMAN SERVICES, APPELLANT

(D.C. Civil Action No. 85-0345)

[Filed May 24, 1989)

SUR PETITION FOR REHEARING

Present: Seitz, HiIGGINBOTHAM, SLOviTer, Becker,

STAPLETON, MANSMANN, GREENBERG, HUTCHINSON,

Scirica, COWEN and NYGAArp, Circuit Judges

The petition for rehearing filed by appellant in the

above captioned matter having been submitied to the

who participated in the decision of this court and to

circuit judges of the circuit in

22a

Judge Becker would grant in banc rehearing for the

reasons set forth in his attached Statement Sur Denial of

Rehearing In Banc.

Judge Sloviter would grant in banc rehearing and joins

in Judge Becker's attached Statement.

By the Court,

/s/ William D Hutchinson _

Circuit Judge

DATED: May 24, 1989

23a

STATEMENT SUR DENIAL OF REHEARING IN BANC

Becker, Circuit Judge.

I joined in the panel opinion, because | felt bound by

our decision in Bachowski v. Usery, 545 F.2d 363 (3d Cir.

1976), even though that opinion seems inconsistent at least

with the spirit of our later jurisprudence. See United States

v. Spears, 859 F.2d 284 (3d Cir. 1988); AJA Associates v.

Army Corps of Engineers, 817 F.2d 1070 (3d Cir. 1987);

Horizons International, Inc. v. Baldridge, 811 F.2d 154

(3d Cir. 1987). | would hear this case in benc and hold that

we have appellate jurisdiction, following the rule adopted

by the D.C. Circuit in the case of Occidental Petroleum

Corp. v. Securities and Exchange Commission, No.

87-5279, slip. op. at 2-11 (D.C. Cir. April 21, 1989) (D.

Ginsburg, J.).

In that case, Judge Ginsburg, speaking for the court, ex-

pressed the view that Congress did not intend that the final

order rule place an agency in a position of dependence

upon the self-interest of others in order to get review of a

legal decision that dictates the standards and procedures to

be applied by the agency in making its decisions. Here, as

in Occidental, the Secretary is between the proverbial rock

and a hard place. If the Secretary, bound by the district

court’s opinion, grants benefits on remand to Mrs.

he appeal. If the Secretary does not

ii}

;

24a

| believe that the D.C. Circuit rule is a sensible applica-

thon of our existing jurisprudence, which provides a nar-

row exception to the normal rule of non-appealability in

cases in which an important legal issue is finally resolved

and review of that issue would be foreclosed “as a practical

matter” if an immediate appeal were unavailable. See

AJA, 817 F.2d at 1073. Unfortunately, I read Bachowski

as foreclosing our applying that rule to this fact pattern,

hence my vote for rehearing.

Judge Sloviter and Judge Stapleton agree with this state-

ment.

25a

APPENDIX E

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

MARILYN FINKELSTEIN, PLAINTIFF

Vv.

Otis R. Bowen, M.D., SECRETARY OF HEALTH AND

HUMAN SERVICES, DEFENDANT

Civil No. 85-345 (GEB)

This matter having come before the Court on appeal of

plaintiff pursuant to 42 U.S.C. §§ 405(g) and the Court

~ having considered the record below and the submissions of

both parties and for good cause shown

It is on this 16th day of February, 1988

ORDERED that the matter be remanded to the

Secretary for further proceedings in accordance with this

Court’s opinion filed even date herewith.

/s/ Garrett E. Brown, Jr.

GARRETT E. Brown, Jr., U.S.D.J.

US GOVERNMENT PRINTING OFFICE 1969— 24) 699/0050'

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