Reply Brief — Barnhart v. Walton

FILED

JUL 27 2001

No. 00-1937

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In the Supreme Court of the United States

—

LARRY G. MASSANARI,

ACTING COMMISSIONER OF SOCIAL SECURITY,

PETITIONER

Vv.

CLEVELAND B. WALTON

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

REPLY BRIEF FOR THE PETITIONER

THEODORE B. OLSON

Solicitor General

Counsel of Record

Department of Justice

Washington, D.C. 20530-0001

(202) 514-2217

In the Supreme Court of the United States

No. 00-1937

LARRY G. MASSANARI,

ACTING COMMISSIONER OF SOCIAL SECURITY,

PETITIONER

V.

CLEVELAND B. WALTON

ON PETITICN FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

REPLY BRIEF FOR THE PETITIONER

Respondent does not dispute that the decision below

squarely conflicts with decisions of the Eighth and Tenth

Circuits on the first question presented. Nor does respon-

dent seriously dispute the decision’s enormous fiscal and pro-

grammatic consequences for Social Security. Instead, re-

spondent devotes most of his brief to defending the court of

appeals’ decision on the merits. That defense, however, is

unpersuasive, does not undermine the decision’s significance,

and does not decrease the need for this Court’s review.

A. 1. The first question presented is whether a claimant

is entitled to disability benefits under the Social Security Act

(Act), 42 U.S.C. 301 et seq., if, at the time his claim for bene-

fits is adjudicated, it is known that his disability (i. e., the

inability to engage in substantial gainful activity on account

of a medical impairment) neither lasted nor can be expected

to last for 12 consecutive months. Invalidating the Commis-

sioner’s longstanding construction of the Act, the court of

appeals held that the Act does not require—and indeed pre-

cludes the Commissioner from requiring—that the disability

last or be expected to last at least 12 months. Pet. App. 7a-

(1)

2

8a, 10a-lla. Instead, the court held, only the impairment

that gives rise to the inability to work need last or be

expected to last for 12 months. Id. at Sa, IIa.

As the petition explains (Pet. 15-17), the Tenth and

Eighth Circuits have reached precisely the opposite con-

clusion. In Alexander v. Richardson, 451 F.2d 1185 (1971),

cert. denied, 407 U.S. 911 (1972), the Tenth Circuit held that

an individual is not entitled to disability benefits unless both

the inability to engage in substantial gainful activity and the

impairment giving rise to that inability last 12 months. /d. at

1186 (“Inability to engage in any gainful activity and the

impairment which causes it cannot be separated. The two

components of disability must exist at the same time.”).

Even where an impairment is permanent, that court held,

the claimant “is not entitled to benefits” if “he is able to

engage in any gainful activities within a year from his

injury.” Ibid. The Eighth Circuit followed Alexander in

Titus v. Sullivan, 4 F.3d 590, 594-595 (1993).

Seeking to minimize the significance of that conflict, re-

spondent relies (Br. in Opp. 8-9) on Newton v. Chater, 92

F.3d 688, 694 (8th Cir. 1996), and Walker v. Secretary of

Health & Human Services, 943 F.2d 1257, 1260 (10th Cir.

1991). Neither Newton nor Walker, however, addressed

whether the disability or merely the underlying impairment

must last or be expected to last 12 months; and neither

purported to overrule Alexander or Titus. Instead, Newton

and Chater addressed the validity of the Secretary’s trial

work regulations, which are at issue in the second question

presented. See pp. 8-10, infra; Pet. 23-26. Indeed, in both

cases, the applicant’s disability—his inability to work on

account of his impairment—actually lasted 12 months, as

respondent concedes. Br. in Opp. 8 (in both cases “the claim-

ant’s return to work actually occurred more than 12 months

after onset”); see Walker, 943 F.2d at 1258; Newton, 92 F.3d

at 690. Thus, neither case dealt with whether a claimant is

entitled to benefits where, as here, he returns to work within

3

12 months of the alleged disability’s onset and before his

claim is adjudicated. In fact, Newton expressly recognized

(contrary to the decision below) that the disability, and not

merely the underlying medical impairment, must last 12

months. The payment of benefits, the court stated, is

“conditioned * * * upon the passage of five consecutive

months of [a] disability lasting twelve continuous months.”

Newton, 92 F.3d at 694 (emphasis added).

2. The court of appeals’ interpretation of the Act not only

creates a circuit conflict, but also would, if allowed to stand,

have enormous fiscal and administrative consequences. As

the petition explains (at 18), the Commissioner’s actuaries

estimate that the cost of complying with the Fourth Circuit’s

decision would be approximately $9.8 billion over the next 10

years. By dramatically relaxing a core requirement for

showing disability, moreover, the court of appeals’ decision

invites a substantial increase in the number of applications

the Commissioner must process, which already exceed 2

million annually. Although respondent complains that the

financial projections are based on the assumption that

beneficiaries would receive benefits indefinitely, that is not

true; the estimates account for the average duration of a

benefits award. Besides, an assumption that beneficiaries

would receive benefits indefinitely is hardly unjustified. The

Commissioner’s authority to terminate benefits for “medical

improvement” under 42 U.S.C. 423(f)(1) is greatly eireum-

scribed by the court of appeals’ decision. Where an individ-

ual already could work notwithstanding his impairment by

The Commissioner's estimates may prove conservative because they

do not attempt to account for the increase in applications that would be

caused by the court of appeals’ decision. See Pet. 18 n.5. Respondent

maintains that claimants will not decide whether to apply for benefits

based on a court decision. Br. in Opp. 14. But the number of applications

the Social Security Administration (SSA) receives ia directly linked to the

number of people who qualify for benefits. By relaxing the requirements

for disability benefits, the court of appeals necessarily increased the

number of applications SSA must process.

4

the time the award is made, it would often prove difficult if

not impossible to show further “medical improvement” to

justify termination. See Pet. 19.

3. Unable to contest the existence of a circuit conflict or

the fiscal significance of the decision below, respondent pri-

marily argues that the decision is correct and that the

Eighth and Tenth Circuits’ contrary decisions in Titus and

Alexander are not. The latter decisions, respondent asserts,

“blur{] the distinction between the duration requirement and

the severity requirement.” Br. in Opp. 7. Echoing the anal-

ysis of the court of appeals, respondent argues that the

phrase “which has lasted or can be expected to last for a

continuous period of not less than 12 months” in 42 U.S.C.

423(d)(1)(A) must modify the word “impairment,” not the

phrase “inability to engage in any substantial gainful activ-

ity.” Br. in Opp. 4; see also Pet. App. 7a-8a, 10a-lla. But

that grammatical parsing of the statute hardly demonstrates

Alexander and Titus to be incorrect, or the Commissioner’s

construction to be impermissible. To the contrary, respon-

dent’s construction ignores the fact that the definition of

“disability” requires not only an underlying medical impair-

ment that has lasted or can be expected to last for at least 12

months, but also an inability to engage in substantial gainful

activity “by reason of” that impairment. 42 U.S.C.

423(d)(1)(A). The inability to work and the impairment

giving rise to it thus are directly linked; it follows logically

that their durations are linked as well. Indeed, when Con-

gress amended the definition of disability by adding 42

U.S.C. 423(d)(2)(A) in 1967, it declared that an individual is

“under a disability” and entitled to benefits “only if” his

impairment is “of such severity” that it precludes all sub-

stantial gainful activity in the national economy. Respon-

dent offers no reason why that severity requirement, which

5

is a condition precedent to the finding of disability, does not

apply in each of the required 12 months of impairment.”

The Commissioner’s construction, moreover, is fully con-

sistent with respondent’s grammatical parsing. After all, if

one accepts that the phrase “which has lasted or can be

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

months” describes only the duration of the impairment, then

the statute is at most silent or ambiguous regarding the

duration of the inability to engage in substantial gainful

activity that the impairment must produce. Thus, Congress

has left a gap for the Commissioner to fill, and the Com-

missioner has reasonably determined that the disability

should be durationally coextensive with the impairment. See

65 Fed. Reg. 42,774 (2000); Social Security Ruling (S.S.R.)

73-7e (Cum. Bull. 1973). That decision must be upheld under

Chevron U.S.A. Inc. v. Natural Resources Defense Council,

Inc., 467 U.S. 837 (1984), so long as it is permissible, as

respondent concedes.’ Here, the Commissioner’s con-

2 Respondent cites regulations and legislative history that distinguish

between the “severity requirement” and the “duration requirement.” Br.

in Opp. 7. There is, of course, a distinction between how severe an impair-

ment must be (sufficiently severe to preclude all substantial gainful activ-

ity) and how long the impairment and resulting inability to work must last.

The materials respondent cites are fully consistent with the Commis-

sioner’s view that both the impairment and the resulting disability must

last at least 12 months.

3 Respondent does not dispute that, if the Commissioner's construc-

tion is permissible, it must be upheld under Chevron; he merely disputes

whether that construction is permissible. See Br. in Opp. 29-30. At the

same time, however, respondent suggests that the Commissioner’s cur- _

rent regulations are irrelevant because they were promulgated after the

Administrative Law Judge resolved his claim. Br. in Opp. 5 n.1, 30 n.8.

Respondent nowhere explains why that should make a difference where,

as here, these new regulations—which are entitled to deference no matter

when they were promulgated—merely restate the Commissioner’s long-

standing interpretation, see 65 Fed. Reg. at 42,774 (revisions “do not

represent a change” and are “consistent with SSR 82-52”), and that inter-

pretation is embodied in the Commissioner’s final decision in the adjudica-

tion of respondent's case.

6

struction is clearly permissible: Nothing in the Act declares

that there is no minimum duration requirement for the

inability to work, and the Act’s legislative history shows that

Congress specifically intended to require that the dis-

ability—which is defined as the inability to work on account

of the impairment—last or be expected to last at least 12

consecutive months. S. Rep. No. 404, 89th Cong., Ist Sess.

99 (1965) (benefits payable only if the claimant “has been or

can be expected to be totally disabled throughout a continu-

ous period of 12 calendar months” (emphasis added)); ibid.

(benefits payable where the disability has existed for 12

calendar months” or “the worker’s disability will continue

for a total of at least 12 calendar months” (emphasis added)).

See also Pet. 21-22.

For similar reasons, respondent’s reading contravenes

Congress’s intent because it converts Social Security into

precisely the sort of short-term disability program Congress

sought to avoid. See Pet. 21. Respondent attempts to an-

swer that point by relying on the five-month waiting period

under 42 U.S.C. 423(c)2)(A). Br. in Opp. 11, 17-18. But Sec-

tion 423(c)2)(A) does not help respondent. That waiting

period applies only to Title II’s disability insurance program,

and not to Title XVI's Supplemental Security Income (SSI)

program, which uses the same definition of disability. See

Pet. 5, 19. Consequently, under the court of appeals’ deci-

sion, the Commissioner apparently must pay SSI benefits if

an impairment of indefinite duration causes an inability to

work of as little as a month. Congress could not have in-

tended such a result.“ Further, Congress clearly concluded

‘ Respondent suggests that the SSI program should not require an

inability to work of any duration, citing regulations that permit disabled

individuals to receive SSI benefits despite working. Br. in Opp. 12. Those

regulations, however, say nothing about a waiting period, and apply only

after the applicant has met the definition of “disability” through a 12-

month inability to work, or a determination that the individual can be

expected to be unable to work for 12 months. The regulations nowhere

7

in 1965, when it enacted the current definition of disability in

42 U.S.C. 423(d)(1)(A), that even a six-month inability to

work was the sort of short-term disability that should not

qualify for benefits. See Pet. 21. Respondent’s reliance on

the five-month waiting period as sufficient protection for the

program is inconsistent with that judgment.

In any event, respondent misconstrues the purpose of the

five-month waiting period. Section 423(c)(2)(A) does not

address whether an individual suffers from a disability of

sufficient severity or duration to entitle him to benefits.

Instead, it addresses the time at which payments must begin

for a disability that qualifies under the Act. The waiting

period is a cost-saving device predicated on the principle

that, even with respect to a covered disability of 12 months

or more, workers ought to rely on a source of protection

other than Social Security disability insurance during the

first five months of disability. Indeed, when Congress short-

ened the waiting period from six months to five in 1972, it

recognized that that change would not alter the requirement

that the disability—the inability to work on account of the

‘medical impairment—last or be expected to last for at least

12 months. As the House Report explained, notwithstanding

the one-month decrease in the waiting period, “[nJo benefit is

payable * * * unless the disability is expected to last (or

has lasted) at least 12 consecutive months or to result in

suggest that an individual may qualify for SSI benefits on account of a

disability even if he returned to work before the 12-month period lapsed

and before his claim was adjudicated. Respondent’s further contention

that Title XVI benefits are not at issue here, id. at 12 n.3, is also incorrect.

Respondent sought benefits under both Title II and Title XVI, Pet. App.

39a, 52a; Resp. C.A. Br. 1, and the court of appeals understood both Title

II and Title XVI benefits to be at issue, see Pet. App. 2a. More important,

even if Title XVI benefits were not at issue in this case, respondent’s and

the court of appeals’ construction of “disability” applies with equal force to

that program, since Title II and Title XVI use the same definition of

disability.

8

death.” H.R. Rep. No. 231, 92d Cong., Ist Sess. 56 (1971)

(emphasis added).

B. Respondent devotes the bulk of his brief to the second

question presented, see Br. in Opn. 8-10, 15-31, which is

whether he was entitled to a trial work period. As the

petition concedes (Pet. 26 n.10), the Commissioner’: trial

work regulations have not fared well in the courts of appeals.

Seizing on that concession, respondent urges that review is

unnecessary because the courts of appeals are in substantial

agreement on the second question presented.

Respondent’s contention, however, in no way undermines

the need for review in this case because there concededly is a

circuit conflict on the first question presented, which has

enormous fiscal implications for the Social Security disability

program. Moreover, the second question is closely interre-

lated with the first and the two warrant resolution together.

Indeed, in this case, the court of appeals’ resolution of the

second question was a product of its decision on the first. As

that court acknowledged, its conclusion that respondent was

entitled to a trial work period was “conclusively settled” by

its earlier conclusion that respondent was “disabled” and

entitled to benefits notwithstanding his return to work

within 12 months of the alleged disability’s onset. Pet. App.

9a; Pet. 23 & n.8. That follows as a matter of logic as well.

Under the Act, the right to a trial work period attaches only

if the claimant is entitled to benefits. Pet. App. 9a. If the

5 Respondent suggests that his interpretation “eliminate(s] short-

term, transient disabilities” because Is lome impairments” will “never”

prevent work while “other impairments” would “never” be expected to

last 12 months. Br. in Opp. 11. But respondent ignores the large number

of people who have long-term impairments that cause them to be unable to

work for periods of less than twelve months. See, e.g., Alexander, 451

F.2d at 1186 (example of individual who loses a hand). Indeed, many

extremely common ailments (back injuries, etc.) may last a lifetime, but

are debilitating only for short or intermittent periods. Under respon-

dent’s construction, such short-term disabilities would be compensable

merely because the underlying impairment persists indefinitely.

9

individual’s return to work within 12 months of the alleged

disability’s onset prevents him from being entitled to bene-

fits, it necessarily prevents him from being entitled to a trial

work period as well.“ For that reason, respondent’s reliance

(Br. in Opp. 18-19) on the Eighth and Tenth Circuits’ deci-

sions in Walker and Newton is misplaced, even with respect

to the trial work issue. In each of those cases, the individual

was unable to work for a period of 12 full months. See pp. 2-

3, supra. They do not hold that an individual like respon-

dent, who returned to substantial gainful activity in less than

12 months and before his claim was adjudicated, is “entitled”

to benefits and thus to a trial work period as well.

In any event, respondent’s defense of the court of appeals’

decision on this issue is unpersuasive. Respondent’s primary

contention is that, under the Commissioner’s rule, whether

or not a particular applicant is entitled to benefits-may

depend in part on when the claim is adjudicated. Br. in Opp.

28. But that is a necessary consequence of Congress’s

decision to accommodate two distinct goals: (1) that the dis-

ability programs should not result in the payment of benefits

in cases of short-term, temporary disability, and (2) that

claimants whose impairments will prevent them from engag-

ing in substantial gainful activity for at least a year should

not be required to wait a full year before they can receive

6 The court of appeals’ decision on the second question would conflict

with Cieutat v. Bowen, 824 F.2d 348 (5th Cir. 1987), even if the issues were

wholly independent of each other. See Pet. 23 n.8. Although respondent

characterizes Cieutat as holding only that trial work could not occur

before the application for benefits was filed, Br. in Opp. 29, that is

incorrect. The Fifth Circuit held that, under the Act, services rendered

during a period of trial work shall be deemed not to have been performed

by an individual “in determining whether his disability”—once established

— has ceased.” 42 U.S. 422(c)(2) (emphasis added); 824 F.2d at 358-359.

The Fifth Circuit thus emphasized that work done “after the alleged onset

of disability” can be used to determine whether the claimant “ever became

disabled” or “established an entitlement to benefits” in the first place. 824

F. Ad at 358-359.

10

benefits. Congress sought to meet those goals by requiring

that the disability has lasted or can be expected to last for at

least 12 months. The Commissioner has reasonably con-

strued the Act as requiring the adjudicator to resolve that

issue based on the evidence available at the time of the dis-

ability determination. Where the disability determination

takes place within 12 months of the alleged disability’s onset,

and the evidence shows that the impairment currently pre-

vents substantial gainful activity, the adjudicator necessarily

must make a prediction about the disability’s expected

duration. That prediction in some instances may prove

wrong. But where the evidence shows, at the time of the

adjudication, that the individual has already returned to

substa*iial gainful activity, and did so within 12 months of

the alleged disability’s onset, there is no reason why the

adjudicator should be precluded from relying on that fact as

conclusive proof that the disability did not last (and thus

cannot be expected to last) 12 months. Indeed, such evi-

dence is routinely considered in other legal contexts. For

example, if a plaintiff suing in tort for lost prospective wages

returned to work before trial, the jury could take such post-

injury conduct into account even though that evidence would

not have been available had the trial taken place earlier.

Similarly, there is no reason why the Commissioner should

be barred from taking an applicant’s return to work into

account when determining whether the applicant is or was

under a disability that has lasted or can be expected to last

12 months.

* * * * *

For the reasons stated above, and in the petition for a writ

of certiorari, it is respectfully — that the petition

should be granted.

THEODORE B. OLSON

JULY 2001