Reply Brief — Sullivan v. Finkelstein

- _%

-

7

wt pbb Cope vu, Ve

FILED

(% \ JAN S 199

, . } R.

No. 89-504 ect am

rs

3n the Supreme Court of the Hnited States

OcToser TERM, 1989

Louis W. SULLIVAN, SECRETARY

OF HEALTH AND HUMAN SERVICES, PETITIONER

v.

MARILYN FINKELSTEIN

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

REPL\ “RIEF FOR THE PETITIONER

KENNETH W. STARR

Solicitor General

Department of Justice

Washington, D.C. 20530

(202) 633-2217

TABLE OF AUTHORITIES

Page

Cases:

Cohen v. Beneficial Industrial Loan Corp., 337 U.S.

a 7

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

EE ene ene ceeeesaseeenet 4,7,9

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

SNES a 8

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

DED duendaddesasbsanetonedesecconceeess 5

Davidson v. Secretary of HHS, No. 88-1472 (10th

iit i en eeceeuaauese 8

Daviess County Hospital v. Bowen, 811 F.2d 338 (7th

ei oe eee ecceees ~

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

EE .

Edmond v. Secretary of HHS, No. 89-3161 (6th Cir.

EE .

Ensey v. Richardson, 469 F.2d 664 (Mh Cir. 1972) .. .

FCC v. Pottsville Broadcasting Co., 309 U.S. 134

DT sibdunaeuusedacesoosessesooeceesoocs 5

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

Di) jih ted detebeneneaeneeenecees 8

Jamieson v. Folsom, 311 F.2d $06 (7th Cir.), cert

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

Lopez Lopez v. Secretary of HEW, S\2 F.2d 1155

inn cceaseennseeeneess 8,9

Mitchell v. Forsyth, 472 U.S. S11 (1985S) ....... 6

Newpark Shipbuilding & Repair, Inc. v. Roundtree,

723 F.2d 399 (Sth Cir.), cert. denied, 469 U.S. 818

TEEPE TTTTCTTTTTTT ITT TTT TTT Tee 7

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

Sie GE EEE coccccecccccccccsccccecccs 9

Paluso v. Mathews, $73 F.2d 4 (0th Cir.

PEERS TT TTTTT TTT TTT TTT TTT 8,9

Cases — Continued: Page

Pickett v. Bowen, $33 F.2d 263 (1 1th Cir. 1987) . . . 8

Souch v. Califano, 399 F.2d 577 (4th Cir.

SRUED cccoccoccesosoeseoosessnnntt 7

Stone v. Heckler, 722 F.2d 464 (Sh Cir.

GREED ccccoccocecscecessesennnat 8

Sullivan v. Hudson, 109 S. Ct. 2248 (1989) .... 4

Statutes and rule:

Equal Access to Justice Act, 28 U.S.C.

GC 4

Se 7

UBC. GB ccccccocccosceens 1, 2, 4,6

> GEG. Gee coccccococesousnnsnann 7

@ UBC. GRD .ccocccesoceesse 2, 3, 4, 6,7

Pee. B. Gan F. SED ccccccocosoceseunanan 2

In the Supreme Court of the Gnited States

OCTOBER TERM, 1989

No. 89-504

Louis W. SULLIVAN, SECRETARY

OF HEALTH AND HUMAN SERVICES, PETITIONER

Vv.

MARILYN FINKELSTEIN

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

REPLY BRIEF FOR THE PETITIONER

Respondent's defense of the court of appeals’ jurisdictional rul-

ing (see Br. in Opp. 12-38) entirely ignores one of the two alter-

native theories under which the district court’s order is appealable

pursuant to 28 U.S.C. 1291 and fails to recognize the distinct

nature of judicial review of agency action that underlies the other

theory. Respondent's further contention (Br. in Opp. 42-56) that

the jurisdictional issue does not in any event warrant review is

fatally undermined by her concession that the decision below con-

flicts with the decisions of five other courts of appeals.

1. a. The district court order in this case is appealable under

either of two alternative theories. First, the order is a “final deci-

sion” for purposes of 28 U.S.C. 1291 because it constitutes a final

rejection of the particular decision of the Secretary before the

(1)

2

district court and therefore terminated the relevant judicial pro-

ceedings. The administrative decision before the court denied

respondent’s application for benefits on the ground that her im-

pairment did not meet or equal the Listing of Impairments, as

required by the regulations governing claims for widow’s disability

benefits. The district court sustained, as supported by substan-

tial evidence, the Secretary’s finding that respondent does not

have such an impairment. Pet. App. 16a. But instead of affirm-

ing the Secretary’s decision, the court remanded the cause to the

Secretary to inquire into whether respondent is in fact unable to

perform any gainful activity. /d. at 17a-18a, 25a. Respondent

does not dispute that the court’s order effectively invalidated the

regulation requiring a claimant for widow’s benefits to show that

she has an impairment that meets or equals the Listing and

directed the Secretary to render a new decision under a different

legal standard. A district court order having that effect is a “final

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

The text of 42 U.S.C. 405(g) confirms this conclusion. The

fourth sentence of Section 405(g) provides that the district 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.” This language aptly describes what the district

court did here: the court “affirm[ed]” the Secretary’s decision in-

sofar as he found that respondent does not have an impairment

that meets or equals the Listing; it “modif[ied]” or “revers[ed]”

the Secretary’s decision insofar as it denied respondent’s claim

on that basis; and it “remand[ed] the cause for a rehearing,” at

which the Secretary must apply a different legal standard than

the one set forth in the governing regulations. Congress’s use of

the term “judgment” indicates in itself that such an order is ap-

pealable, because the word “judgment” is a term of art that “in-

cludes a decree and any order from which an appeal lies.” Fed.

R. Civ. P. 54(a). But however that may be, the eighth sentence

of 42 U.S.C. 405(g) 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.”

Respondent ignores the fourth and eighth sentences of 42

U.S.C. 405(g), which speak directly to the appealability issue,

3

and focuses instead (Br. in Opp. 22-27, 29-31, 52-55) on the sixth

sentence. In her view, the sixth sentence suggests that essentially

all orders that include a remand to the Secretary are interlocutory

and nonappealable because that sentence provides for the

Secretary to file amended findings and decision with the court

after a remand. Respondent misapprehends the statutory scheme.

The sixth sentence of Section 405(g) authorizes the court to

order a remand to the Secretary in certain circumstances other

than those addressed by the fourth sentence —i.e., other than

those in which the court remands the cause as part of its ruling

on the merits. The sixth sentence provides:

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 pro-

ceeding; 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 addi-

tional record and testimony upon which his action in modi-

fying or affirming was based.

The sixth sentence requires the Secretary to file with the court

any additional or modified findings of fact or decision he makes

on remand because that sentence furnishes a mechanism for con-

ducting further administrative proceedings before the court passes

on the validity of the Secretary's decision. Thus, it is only after

the Secretary reconsiders his own decision in light of the “new

evidence” (or in light of other circumstances that prompted a pre-

answer remand) that the court can properly pass on the validity

of that decision and affirm, modify or reverse it.' An order

' Respondent's quotation and discussion of the sixth sentence of Section

405(g) (Br. in Opp. 21-24, 28-30) omit any reference to the critical requirement

that there be “new evidence” to justify a remand other than one requested by

the Secretary prior to filing his answer. It is consistent with the Secretary's

4

remanding the case for this limited purpose is not appealable

under 28 U.S.C. 1291, because it does not constitute a final rul-

ing by the court that the Secretary’s decision is erroneous. Cohen

v. Perales, 412 F.2d 44, 48-49 (Sth Cir. 1969), rev’d on other

grounds, 402 U.S. 389 (1971).

Contrary to respondent’s contention, the order in the instant

case was not governed by the limited remand authority in the

sixth sentence of Section 405(g), because: (i) it was not entered

on the motion of the Secretary (either before or after he filed

his answer), and (ii) it was not made on the basis of a showing

or finding that there was “new evidence” material to the Secretary’s

decision. Instead, the district court remanded the case to the

Secretary only as a consequence of its holding that his decision

denying respondent’s claim was legally erroneous because it was

based solely on the finding that her impairment did not meet or

equal the Listing. As we have explained, a remand made only

as an incident to the court’s ruling on the merits is governed by,

and is appealable under, the fourth and eighth sentences of Sec-

tion 405(g).

Respondent argues (Br. in Opp. 22-23, 29-32, 39-40) that our

submission in this regard is inconsistent with Sullivan v. Hud-

son, 109 S. Ct. 2248 (1989). That case, however, involved the

availability of attorney’s fees under the Equal Access to Justice

Act, 28 U.S.C. 2412(d)(1)(B), following a remand to the

Secretary. The Court did not discuss the appealability of a re-

mand order of the sort at issue here or the specific language in

the fourth and eighth sentences of Section 405(g) that refers to

such an order as a “judgment” that is “final” and “subject to review

in the same manner as a judgment in other civil actions.”

b. In the alternative, the order at issue here is appealable under

principles analogous to those underlying the “collateral order”

doctrine that the Court has applied to certain orders entered in

primary jurisdiction to require the Secretary to receive and weigh ali evidence

bearing on the claim. And it would be inconsistent with the requirement under

42 U.S.C. Section 405(g) that the district court's judgment be entered “upon

the pleadings and transcript of [the administrative] record,” for the court to

receive and weigh newly discovered evidence in the first instance.

5

the course of on-going proceedings in a district court. See Pet.

15-16, 21. Respondent does not dispute that the district court

decided an important legal issue concerning the validity of the

regulations governing applications for widow’s disability benefits.

She argues, however, that the order is not appealable because

that issue is not “completely separate” from the merits of her claim

for benefits. Br. in Opp. 18-19, 20-21, quoting Coopers &

Lybrand v. Livesay, 437 U.S. 463, 468 (1978). Respondent

disregards the significant legal and practical distinctions, for ap-

pealability purposes, between an order remanding a matter to

an agency for a new round of administrative proceedings and

an order entered in on-going proceedings in the district court itself.

As this Court has observed (FCC v. Pottsville Broadcasting Co.,

309 U.S. 134, 141 (1940)):

A review by a federal court of the action of a lower court

is only one phase of a single unified process. * * * The

technical rules derived from the interrelationship of judicial

tribunals forming a hierarchical system are taken out of their

environment when mechanically applied to determine the

extent to which Congressional power, exercised through a

delegated agency, can be controlled within the limits of the

“judicial power” conferred by Congress under the

Constitution.

The district court’s order in this case was not merely one step

toward an adjudication of the merits of respondent's claim for

benefits by the court itself. To the contrary, the order removed

the claim from the immediate cognizance of the court and re-

turned it to the jurisdiction of the officer of a coordinate Branch

in whom Congress has vested the power to adjudicate claims for

Social Security benefits, subject only to limited review by the

courts. Moreover, the legal issue resolved by the district court

cannot be reconsidered by the Secretary in the rehearing on re-

mand, which will address the distinct question whether respon-

dent is in fact unable to perform any gainful activity. The district

court’s order therefore finally determined the legal issue of the

validity of the Secretary's regulation, and that issue is sufficiently

distinct from the factual issues that would be resolved on semand

6

to render the order a “final decision” within the meaning of 28

U.S.C. 1291. Compare Mitchell v. Forsyth, 472 U.S. 511, 527-528

(1985). That is especially so since entertaining the Secretary's ap-

court or the Secretary, while refusing to entertain the appeal would

require new and unwarranted proceedings before the Secretary.

Respondent’s related assertion (Br. in Opp. 28-36) that the

Secretary should not be permitted to take an appeal now because

appellate consideration of the validity of the widow’s disability

regulations might not be entirely foreclosed following the remand

likewise ignores the distinct nature of judicial review of ad-

ministrative action. As an initial matter, nothing in Section 405(g)

expressly provides for the Secretary to obtain judicial review (in-

cluding appellate review) of his own decision if he determines

on remand that he must award benefits under the legal standards

imposed by the district court. See Pet. 17 n.10. But even if respon-

dent is correct (Br. in Opp. 28-33) that the Secretary nevertheless

may obtain court of appeals review by filing his new decision

on remand with the district court, requesting the court to enter

a judgment affirming that decision, and then appealing the judg-

ment that affirms his own decision, certainly nothing in Section

405(g) requires the Secretary to pursue that awkward course, and

thereby to accept the burden of a remand before obtaining ap-

pellate review on a dispositive legal issue that underlies his own

carefully considered decision denying a claim for benefits. To

the contrary, the fourth and eighth sentences of Section 405(g)

expressly contemplate that the Secretary may take an immediate

appeal from a district court order holding the Secretary's deci-

sion denying a claim for benefits legally erroneous, even though

the court has remanded the cause to the Secretary for a rehear-

ing and even though the same claim for benefits therefore might

be brought back before the district court following the remand.

Respondent’s proposal to postpone all appellate review until the

Secretary has rendered a new decision on remand thus both fails

to accord the respect due the official of a coordinate Branch who

is charged with administering the Act and conflicts with the text

of Section 405(g).

7

2. Respondent’s contention (Br. in Opp. 42-56) that the

jurisdictional issue does not in any event warrant review is without

merit. We have shown (Pet. 19-25) that the decision below con-

flicts with the Fifth Circuit’s seminal holding in Cohen v. Perales,

supra, and with similar holdings by a number of other courts

of appeals.

a. In Perales, the district court remanded the case to the

Secretary for a rehearing under different evidentiary principles.

The Fifth Circuit held that it had jurisdiction over the Secretary's

appeal on both of the theories discussed above —i.e., that the

fourth and eighth sentences of Section 405(g) rendered the re-

mand order an appealable final judgment, and that the order was

appealable under principles of practical finality derived from the

collateral order doctrine of Cohen v. Beneficial Industrial Loan

Corp., 337 U.S. 541 (1949). 412 F.2d at 48-49. As we have ex-

plained (Pet. 22-23), and as respondent does not dispute, the

jurisdictional ruling in Perales has special significance because

it was not disturbed by this Court when it reversed the Fifth Cir-

cuit on the evidentiary issue, even though the Court’s own jurisdic-

tion under 28 U.S.C. 1254(1) depended on whether the case was

properly “in” the court of appeals.

Respondent questions (Br. in Opp. 55-56) the continuing

precedential force of Perales as a result of the Fifth Circuit's en

banc decision in Newpark Shipbuilding & Repair, Inc. v. Round-

tree, 723 F.2d 399, cert. denied, 469 U.S. 818 (1984). That case,

however, involved the distinct question whether the court of ap-

peals had jurisdiction under 33 U.S.C. 921(c) over an order of

the Benefits Review Board that remanded a claim to an ad-

ministrative law judge for further proceedings. In holding that

it did not have jurisdiction, the en banc Fifth Circuit did not even

cite, much less overrule, Perales. Respondent also attempts (Br.

in Opp. 52-55) to distinguish Perales on the ground that this case

involves only a remand for the taking of additional evidence,

whereas in Perales the Fifth Circuit also made an evidentiary rul-

ing adverse to the Secretary. But as we have explained above,

the district court in this case did not simply remand to allow the

Secretary to consider newly discovered evidence, while reserv-

ing judgment on the validity of the decision of the Secretary

that was before the court on judicial review. Instead, like the Fifth

Circuit in Perales, it found the Secretary’s decision legally er-

roneous, resolved a distinct legal issue in the process, and re-

manded to the Secretary for further proceedings under different

legal standards. Respondent's attempt to cistinguish Perales

therefore is without merit.

b. We also have shown (Pet. 23-24) that the decision below

squarely conflicts with holdings by the First, Sixth, Seventh, Ninth

and Tenth Circuits that the Secretary may appeal a district court

order holding the Secretary’s decision legally erroneous and

remanding for further proceedings under different legal standards

or evidentiary principles. See Colon v. Secretary of HHS, 877

F.2d 148, 149-151 (ist Cir. 1989); Lopez Lopez v. Secretary of

HEW, $12 F.2d 1155, 1156 (ist Cir. 1975); Edmond v. Secretary

of HHS, No. 89-3161 (6th Cir. Apr. 19, 1989); 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);

Jamieson v. Folsom, 311 F.2d 506, 507 (7th Cir.), cert. denied,

374 U.S. 487 (1963); Stone v. Heckler, 722 F.2d 464, 466-468

(9th Cir. 1983); Ensey v. Richardson, 469 F.2d 664 (Mh Cir. 1972);

Paluso v. Mathews, $73 F.2d 4, 7-8 (10th Cir. 1978) (Black Lung

case).? Indeed, the Secretary's appeal in Edmond presents the

same issue on the merits as his appeal in the instant case (the

validity of the widow’s disability regulations), and the Sixth Cir-

cuit, in contrast to the court below, held that it has jurisdiction

over the Secretary’s appeal from the district court’s order reman-

ding the cause to the Secretary to determine whether the claimant

can engage in any gainful activity. See also Davidson v. Secretary

of HHS, No. 88-1472 (10th Cir. Oct. 12, 1989) (making a

“preliminary determination” in favor of jurisdiction over

Secretary's appeal in similar widow’s case).

2 The Fourth, Eighth, and Eleventh Circuits also have heid such orders ap-

pealable (Souch v. Califano, $99 F.2d $77, $78 a.1 (4th Cir. 1979), Gardner

v. Moon, 160 F.2d 956, 558 n.2 (8th Cir. 1966); Pickett v. Bowen, $33 F.2d

288, 290-291 (11th Cir. 1987)), although, without mentioning those rulings,

the Fourth and Eleventh Circuits have recently heid (and the Eighth Circus

has recently stated im dictum) that such an order is not appealable. See Pet.

24 & 0.19.

Respondent points out (Br. in Opp. 47-49) that several of the

cases upon which we rely involved challenges to the jurisdiction

of the district court or a requirement that the Secretary redeter-

mine the claim under different evidentiary standards. But re-

spondent does not explain why this distinguishes the cases for

purposes of appellate jurisdiction, since her contention that a legal

issue resolved by the district court in remanding the cause should

be raised in an appeal following the remand would apply equal-

ly to those issues. Moreover, even if we assume, arguendo, that

the distinctions respondent identifies in these cases are material,

she does not even attempt to distinguish the other cases upon

which we rely. She merely refers to them as a “small number”

of decisions that have allowed appeal without extended discus-

sion. Br. in Opp. 49-50 & n.10. This effort to minimize the clear

circuit conflict is unavailing, because the contrary decisions she

attempts to dismiss in this manner were rendered dy no less than

five other circuits. Moreover, two of those five decisions were

rendered prior to and were cited in support of the jurisdictional

ruling in Perales itself (see 412 F.2d at 48, citing Jamieson and

Gardner), two others expressly relied upon Perales, which did

extensively discuss the appealability issue (see Lopez Lopez, $12

F.2d at 1156; Paluso, $73 F.2d at 8); and the fifth (and most

recent) was rendered only after the Sixth Circuit specifically re-

quested the Secretary to brief the jurisdictional issue (Edmond).

Finally, although the question of the appealability of remand

in Social Security cases, the right of the agency concerned to ap-

peal a remand order has been sustained in other contexts as well.

See Occidental Petroleum Corp. v. SEC, 873 F.2d 325, 329-330

(D.C. Cir. 1989); Pet. 23-25. This important and recurring

jurisdictional issue therefore warrants resolution by this Court.

For the foregoing reasons and the additional reasons stated

in the petition, it is respectfully submitted that the petition for

a writ of certiorari should be granted.

KENNETH W. STARR

Solicitor General

JANUARY 1990

& US GOVERNMENT PRINTING OFFICE 1988 262 20200887