Appendix — Heckler v. Lopez

Office -Suprems

No.

ALEXANDER L. ’

2 j

{

Cee We

Perice 14

, cia? ; oe . .

JUL 20 1954

pet.

!

_ Ag

STEVAS,

,

Iu the Supreme Coot of the United States

OCTOBER TERM, 1984

MARGARET M. HECKLER, SECRETARY OF HEALTH

AND HUMAN SERVICES, PETITIONER

Vv.

MARIO LOPEZ, ET AL.

APPENDIX TO

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

REx E. LEE

Solicitor General

RICHARD K. WILLARD

Acting Assistant Attorney General

KENNETH S. GELLER

Deputy Solicitor General

EDWIN S. KNEEDLER

Assistant to the Solicitor General

WILLIAM KANTER

HOWARD S. SCHER

Attorneys

Department of Justice

Washington, D.C. 20580

(202) 683-2217

—_—___—

BEST AVAILABLE COPY i

Df, i

AY

7

APPENDIX TABLE OF CONTENTS

Page

I ss ossabnbeneusenpnaiiananinies la

(Court of Appeals Opinion)

APPENDIX B .............. SR a a 46a

(Court of Appeals Order)

I ic vets anithanccntchaiiiesine 47a

(Court of Appeals Opinion and Order)

I I cca te alee ictcca irschsaccperhivinaceenneccsnrpeemiicibinactd 67a

(Court of Appeals Order)

FRET RISC TEAL (een ENA ENT ECO OE CONE 73a

(District Court Memorandum of Decision)

I a chcnatccdhapngsosuiinll 84a

(District Court Order)

APPENDIX G............. NE RR TR Aes EE a ES Ce ee ER 94a

(District Court Memorandum of Decision)

Pg | EERE SINR en ORS Oe I 98a

(District Court Amendments to Memorandum of

Decision and Order)

I a sesinsclipbalclemaiaedadbans 101la

(Statutes and Regulations)

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 83-6126

D.C. No. 83-0697-WPG(T)

MARIO LOPEZ, ET AL., PLAINTIFFS-APPELLEES

vs.

MARGARET M. HECKLER, Secretary of Health and

Human Services, ET AL., DEFENDANTS-APPELLANTS

Appeal from the United States District Court

for the Central District of California

William P. Gray, District Judge, Presiding

Argued and Submitted December 13, 1983

[Filed Feb. 22, 1984]

OPINION

Before PREGERSON, BOOCHEVER, and REIN-

HARDT, Circuit Judges

REINHARDT, Circuit Judge:

The Secretary of Health and Human Services

(“Secretary”) appeals a preliminary injunction or-

(1a)

2a

dering her to restore disability benefits to a large

number of former recipients of Social Security bene-

fits. Plaintiffs are a class consisting of disabled

workers and poor and disabled persons who had

earlier been found eligible for Social Security Dis-

ability Insurance (SSDI) benefits and Supplemental

Income (SSI) benefits respectively. See 42 U.S.C.

§§ 401-31 (1976 & Supp. V 1981) (SSDI) ; 42 U.S.C.

§§ 1381-83 (1976 & Supp. V 1981) (SSI). Plaintiffs

challenged the Secretary’s termination of their bene-

fits on the ground that the Secretary unconstitution-

ally refused to give effect to two decisions of this

court describing the procedures the statute requires

the Secretary to follow in terminating benefits. The

district court found that plaintiffs were likely to suc-

ceed on the merits of their claims. It also found that

many of the plaintiffs, deprived of the very means

with which to live, have either died or suffered fur-

ther illness as a result of the challenged conduct.

Accordingly, the court issued a preliminary injunc-

tion which, among other things, enjoined the Secre-

tary to reinstate the benefits of many of the plain-

tiffs pending litigation of this case.

The Secretary challenges the injunction on two

main grounds. First, she argues that the district

court lacked jurisdiction over many of the individuals

to whom it gave preliminary relief. She claims that

jurisdiction was lacking over those individuals who

had not exhausted their administrative remedies be-

fore commencing this action and over those indi-

viduals who had failed to commence this action

within sixty days of receiving a final decision from

the Secretary. Second, she argues that the district

court was barred by sovereign immunity from award-

ing interim benefits.

3a

FACTS

The preliminary injunction under review here was

granted to a class of former disability benefits recipi-

ents who are challenging the constitutionality of the

procedures used by the Secretary to terminate their

benefits. Plaintiffs made two constitutional argu-

ments in the district court—one based on the doctrine

of separation of powers, the other based on the due

process clause of the fifth amendment.

The separation of powers argument is a challenge

to the Secretary’s policy of “nonacquiescing” in two

decisions of this court. In Patti v. Schweiker, 669

F.2d 582 (9th Cir. 1982), and Finnegan v. Matthews,

641 F.2d 1340 (9th Cir. 1981), we held that, under

the applicable statutes, the Secretary was required,

before terminating a recipient’s Social Security bene-

fits, to come forward with evidence that a recipient’s

medical condition has improved.’ Although the Sec-

retary disagreed with the holdings in Patti and Fin-

negan, she did not seek Supreme Court review of

either case. Instead, she announced in published So-

cial Security rulings that she “does not acquiesce” in

and would not follow the holdings in either case. See

Social Security Rulings 82-10e and 82-49c. Accord-

ingly, she ordered that Social Security Disability

benefits be terminated for lack of disability regard-

1 Finnegan decided the question with regard to “grand-

fatherees,” i.e., individuals who had been transferred to the

federal rolls from a state public assistance plan when the

Supplemental Security Income (SSI) program was estab-

lished. Patti was an action brought by an SSI claimant who

was not a grandfatheree. Although the district court did not

subdivide the class it certified, we shall refer to class members

who were grandfatherees as “Finnegan-type claimants,” and

the other class members as “Patti-type claimants.”

4a

less of whether the recipient’s medical condition has

improved since the initial disability determination.

Id. See also Social Security Ruling B1-6.

Plaintiffs argue that the Secretary’s policy of ‘non-

acquiescing” in this court’s decisions violates the con-

stitutional doctrine of separation of powers. They

note that “it is, emphatically, the province and duty

of the judicial department to say what the law is.”

Marbury v. Madison, 5 U.S. (1 Cranch) 137, 177

(1803). They argue that, by “nonacquiescing,” the

Secretary is usurping the lawful authority of the

judiciary and placing herself above the law. That,

they claim, is a plain violation of the Constitution.

See also U.S. Const. art. II, § 3 (The President “shall

take Care that the Laws be faithfully executed.’’).

Plaintiffs’ second constitutional contention is based

on the due process clause of the fifth amendment.

The thrust of that argument is as follows: The due

process clause entitles applicants and recipients of

public benefits to have their claims fairly adjudicated

by the agency. Mathews v. Eldridge, 424 U.S. 319

(1976); Goldberg v. Kelly, 397 U.S. 254 (1970).

The Secretary’s policy of nonacquiescence, by fore-

ordaining the outcome of the hearings claimants will

receive, denies plaintiffs a meaningful opportunity to

be heard. The availability of judicial review does not

cure this flaw.

The Secretary opposed the preliminary injunction

on the ground that, except with regard to the parties

to a particular action, she is not bound to give effect

to court decisions. She also argued that plaintiffs in

any event would not suffer irreparable injury as a

result of the assertedly illegal action. Finally, she

argues that the court lacked jurisdiction over many

5a

of the class members and that the court lacked statu-

tory authority to award the type of relief prayed for.

The district court rejected the Secretary’s argu-

ments. It certified a class consisting of

all persons who live within this circuit, who (a)

receive or received Supplemental Security In-

come disability benefits or Social Security dis-

ability insurance benefits and have been or will

be considered for termination after August 30,

1981, or (b) receive or received Supplemental

Security Income disability benefits under the

“grandfather clause” of the Social Security Act,

42 U.S.C. § 1882¢(a) (8) (E), and have been or

will be considered for termination after August

25, 1980, such consideration being or having

been for the asserted reason that the claimant’s

disability had ceased.

The district court found that plaintiffs were likely

to succeed on the merits. It believed the Secretary

was violating the fundamental precept, first enunci-

ated in Marbury v. Madison, that government agen-

cies are required to follow and apply the law as

interpreted by the courts—the “cornerstone of the

doctrine of Separation of Powers that has served our

country so well.” It also found that the balance of

hardships as between the litigants tips sharply in

favor of the plaintiffs, who have “already suffered

deprivation of life’s necessities, further illness, or

-even death from the very disabilities that the Secre-

tary deemed them not to have,” and for whom

“[{r]etroactive relief would be inadequate, and per-

haps too late, to ensure that the purpose of the Social

Security disability benefits, i.e., provision of a mini-

mum standard of living for the poor and disabled,

will be served.” The court found that plaintiffs thus

6a

satisfied both of this circuit’s alternative tests for

granting a preliminary injunction.’ It accordingly

issued a preliminary injunction restraining the Sec-

retary from “failing to follow, implement or accord

precedential effect to” Finnegan and Patti, and from

implementing the nonacquiescence policy. In addi-

tion, paragraph 4(c) of the preliminary injunction

required the Secretary to notify the class members

that they may apply for reinstatement of benefits

and provided that those recipients who assert their

belief that they remain disabled would be entitled to

reinstatement of their benefits until the Secretary

terminates the benefits in compliance with Patti and

Finnegan.’

2 We have held that, to obtain a preliminary injunction, a

moving party must show “either a combination of probable

success on the merits and the possibility of irreparable injury,

or that serious questions are raised and the balance of hard-

ships tips sharply in the moving party’s favor.” Beltran v.

Meyers, 677 F.2d 1817, 1820 (9th Cir. 1982) (emphasis in

original).

3 Paragraph 4(c) of the Preliminary Injunction reads as

follows:

(c) In order to accomplish appropriate restoration of

disability benefits pending resolution of this action, the

court orders the defendants to implement the following

procedure:

(i) Within sixty (60) days following the date of

this order, the defendants will notify (a) each class

member who had been receiving Supplemental Secu-

rity Income Disability benefits under 42 U.S.C.

§ 1882c(a) (3) (E), and who was terminated from

such benefits after August 25, 1980, and (b) all

other persons who have been terminated from either

Title II social security disability insurance or Title

XVI Supplemental Security Income Disability after

Ta

The Secretary sought a stay of part of the pre-

liminary injunction pending appeal of that injunction

to this court. She did not seek to stay the injunc-

tion’s requirement that she give effect to the Patti

and Finnegan decisions with regard to all future

terminations. She only sought to stay paragraph

A4(c).

The Secretary’s request for a stay was denied by

both the district court and this court, see Lopez v.

Heckler, 712 F.2d 1482 (9th Cir. 1983), but then

granted by Justice Rehnquist, Heckler v. Lopez, 104

August 30, 1981, for the purported reason that his or

her disability had ceased, whether or not such person

has appealed, that:

Such person may apply for reinstatement of

benefits if he or she believes that his or her

medical condition has not improved following

the granting of disability benefits.

(ii) Upon receiving such application, the defendants

will forthwith reinstate and pay benefits in the

monthly amounts such person would have been re-

ceiving had his or her benefits not been interrupted.

(iii) Following such reinstatement, if the defendants

or their agents or employees conduct a disability in-

vestigation or other screening of such person, they

will apply the standards set forth in Patti v.

Schweiker and Finnegan v. Matthews and, if they

conclude that such person’s medical condition has

improved and he or she is no longer disabled, they

will identify the evidence relied upon to reach that

conclusion.

(iv) Following such review, persons who are noti-

fied of an initial determination that their benefits

shall cease shall be given an opportunity to contest

the determination and pending such review, they

shall continue to receive aid as provided in current

laws and regulations.

8a

S. Ct. 10 (1983) (Rehnquist, J., in chambers). Jus-

tice Rehnquist recognized that stay applications to

Circuit Justices on matters before courts of appeals

should rarely be granted, but felt that this case was

sufficiently unusual to warrant the requested relief.

104 S. Ct. at 12. Justice Rehnquist had serious doubt

whether paragraph 4(c)’s requirement that the Sec-

retary pay benefits to class members merely upon

their statement that they believe their medical condi-

tion has not changed since the Secretary’s earlier

determination was “consistent with 42 U.S.C. § 405

(i) or with this Court’s admonition in Schweiker v.

Hansen, 450 U.S. 785 (1981), that the courts have

a duty ‘to observe the conditions defined by Congress

for charging the public treasury,’ id., at 788 (quot-

ing Federal Crop Insurance Co. v. Merrill, 382 U.S.

380, 885 (1947) ).” 1048S. Ct. at 14. That problem,

Justice Rehnquist thought, was exacerbated by the

fact that the injunction gave relief to persons who,

Justice Rehnquist believed, had not exhausted their

administrative remedies or even presented their

claims to the Secretary as required by section 405 (g)

of the Social Security Act, 42 U.S.C. § 405(g) (Supp.

V 1981). Those factors, he felt, justified staying the

preliminary injunction even in the face of the ir-

reparable injury he assumed plaintiffs would suffer

without the injunction.

Plaintiffs then requested the Supreme Court to

vacate the stay entered by Justice Rehnquist. A di-

vided Court denied plaintiffs’ application. Heckler v.

Lopez, 104 S. Ct. 221 (1983). Justice Brennan filed

a dissenting opinion in which Justice Marshall joined.

Largely for the reasons stated in our opinion deny-

ing the stay, Justices Brennan and Marshall believed

that the Secretary was not likely to succeed on the

9a

merits of her claims, and that the “overwhelming

evidence of irreparable harm .. . should be the

determinative factor... .” 104 S. Ct. 225, 227.

They would therefore have vacated the stay.

Justice Stevens filed an opinion, in which Justice

Blackmun joined, concurring in part and dissenting

in part. Justices Stevens and Blackmun would have

vacated the stay except insofar as it covered persons

who had received final decisions from the Secretary

more than sixty days before the commencement of

this action and who had not timely sought judicial

review. Those persons’ right to seek review of their

termination decisions, Justices Stevens and Biackmun

believed, had expired by the time this action was

brought. Justices Stevens and Blackmun disagreed

with Justice Rehnquist, however, regarding the plain-

tiffs’ compliance with the Act’s presentation and

exhaustion requirements. With regard to persons

whose claims had not expired, Justices Stevens and

Blackmun believed the stay was improperly granted.

While recognizing that a Circuit Justice’s grant of a

stay is entitled to substantial deference and “should

not be disturbed simply because the other members

of the Court would have declined to grant the stay

as an original matter,” 104 S. Ct. at 222, they be-

lieved that this was a case in which reexamination of

the stay was proper. Accordingly, they would have

vacated the stay in part.

Save for the requirement that she notify class

members of their rights, the Secretary on this appeal

challenges the same provisions of the preliminary in-

junction she challenged in her application for a stay.‘

* Because she has already complied with the notification

requirement of paragraph 4(c) (i), any challenge to that

provision would be moot.

10a

She argues that (a) the court lacked jurisdiction over

the persons to whom it gave preliminary relief who

had either failed to exhaust their administrative

remedies or failed to initiate judicial review within

the requisite time period, and, (b) because the court

lacked statutory authority to award benefits, the

relief given was barred by the United States’ sov-

ereign immunity. She also argues that there would

appear to be no basis whatsoever for awarding relief

to persons whose benefits were terminated before

Patti and Finnegan became final.

BACKGROUND

This appeal does not raise issues of judicial inter-

ference in administrative agencies’ discretion to

formulate their own procedures, see Vermont Yankee

Nuclear Power Corp. v. NRDC, 435 U.S. 519, 524

(1978), or of courts “dictating to the agency the

methods, procedures, and time dimension” of in-

quiries within its jurisdiction. See FPC v. Trans-

continental Gas Pipe Line Corp., 423 U.S. 326, 333

(1976). While those considerations might conceiv-

ably be relevant in determining whether a court

should require the Secretary to come forth with evi-

dence of medical improvement before terminating

benefits, that is not the question before us now. For

the purposes of this appeal, the Secretary does not

challenge the correctness of our holdings in Patti and

Finnegan. Nor, indeed, is that question open in the

district court. We have already held that the Social

Security Act forbids the Secretary from terminating

benefits of persons she has determined to be disabled

until she comes forth with evidence of medical im-

provement. That is the law in this circuit.

lla

Far from raising questions of judicial interference

in executive actions, this case presents the reverse

constitutional problem: the executive branch defying

the courts and undermining what are perhaps the

fundamental precepts of our constitutional system—

the separation of powers and respect for the law.

See Marbury v. Madison, 5 U.S. (1 Cranch) 1387

(1803) ; Cooper v. Aaron, 358 U.S. 1 (1958).°

5In Marbury v. Madison, 5 U.S. (1 Cranch) 137, 177

(1803), the Supreme Court stated that “it is emphatically the

province and duty of the judicial department to say what the

law is.” In Cooper v. Aaron, 358 U.S. 1, 18 (1958), the Court

stated that

[Marbury v. Madison] declared the basic principle that

the federal judiciary is supreme in the exposition of the

law of the Constitution, and that principle has ever since

been respected by this Court and by the Country as a

permanent and indispensable feature of our constitutional

system.

In Cooper, the Court said that it followed from that “basic

principle” that the federal judicial interpretation of the Con-

stitution is the “supreme Law of the Land” referred to in the

supremacy clause, U.S. Const. art. VI, § 2. The Court reasoned

further that state officers, committed by oath to support the

Constitution, are bound by such interpretations of the instru-

ment. What the Court said with regard to the Constitution

applies with full force with regard to federal statutory law,

which is also the “supreme Law of the Land,” U.S. Const. art.

VI, §2 (“This Constitution, and the Laws of the United

States which shall be made in Pursuance thereof... shall be

the supreme Law of the Land.”’), and applies just as strongly

to federal executive officers, who, as the President’s repre-

sentatives, are required by the Constitution itself to ‘‘faith-

fully execute” the law. U.S. Const. art. II, §3. Indeed, in

Marbury v. Madison, Chief Justice Marshall derived the prin-

ciple of judicial review from the duty of courts to interpret

and apply ordinary law.

The Supreme Court’s recent holding in United States v.

Mendoza, U.S. (1984), is not to the contrary. In

12a

Of equal significance, the district court has found

that some class plaintiffs have already died or suffered

further illness as a result of the Secretary’s actions.

We agree with that finding. It follows that, in the

absence of an injunction, other old or infirm people

will die or be subjected to additional serious pain

and suffering. It is in that light that we must now

determine whether we should overturn the district

court’s preliminary injunction, an order that governs

the rights of the parties only until such time as the

case is decided on its merits.

Mendoza, the Court held that the doctrine of nonmutual col-

lateral estoppel does not apply against the United States. Ac-

cordingly, the government’s failure to appeal an adverse dis-

trict court decision on a constitutional question was held not

to prevent it from relitigating the same question in a case

against a different party. A contrary hoiding, the Court ex-

plained, would impose on the government, which litigates by

far more frequently than any private party, the onerous bur-

den of appealing every holding with which it does not agree

and would substantialiy thwart the development of important

questions of law by freezing the first final decision on a par-

ticular issue.

Plaintiffs here, however, do not seek to invoke collateral

estoppel. Nor do they contend that there is no judicial forum

in which the Secretary can obtain a ruling that she may

handle benefit claims in a manner she believes proper. Rather,

they argue only that the executive must give general effect

within a circuit to a final decision of the Court of Appeals for

that Circuit interpreting a federal law. Such a rule does not

limit the government’s ability to delay testing legal issues in

the Supreme Court until conflicts have arisen among the cir-

cuits. Nor does it otherwise limit the discretion and flexibility

the government needs in its handling of litigation. It requires

only that the executive branch recognize the authority of

appellate courts to interpret the law and that it refrain from

acting in an arbitrary and lawless manner.

13a

STANDARD OF REVIEW

In reviewing the grant or denial of a preliminary

injunction, we apply an abuse of discretion standard.

See Wilson v. Watt, 703 F.2d 395, 398 (9th Cir.

1983). We reverse only if we conclude that the dis-

trict court’s decision was based on an error of law

or on clearly erroneous findings of fact. See id.;

Beltran v. Myers, 677 F.2d 1317, 1319 (9th Cir.

1982); Aleknagik Natives Ltd. v. Andrus, 648 F.2d

496, 501 (9th Cir. 1980). Application of an incorrect

legal standard for preliminary relief and misappre-

hension of the law with regard to the underlying

issues in the case are grounds for reversal. See

Sports Form, Inc. v. United Press International, Inc.,

686 F.2d 750, 752 (9th Cir. 1982); Wright v.

Rushen, 642 F.2d 1129, 1132 (9th Cir. 1981).

Before granting a preliminary injunction, a dis-

trict court must find that the moving party has

demonstrated “either a combination of probable suc-

cess on the merits and a possibility of irreparable

injury, or that serious questions are raised and the

balance of hardships tips sharply in the moving

party’s favor.” Beltran v. Meyers, 677 F.2d 1317,

1320 (9th Cir. 1982) (emphasis in original). The

tests are “not separate,” but represent the “outer

reaches of ‘a single continuum.’” Los Angeles Me-

morial Coliseum Commission v. National Football

League, 634 F.2d 1197, 1201 (9th Cir. 1980) (quot-

ing Benda v. Grand Lodge of International Associa-

tion of Machinists and Aerospace Workers, 584 F.2d

308, 315 (9th Cir. 1978), cert. dismissed, 441 U.S.

937 (1979)). At no point in the continuum is the

court “bound to decide doubtful or difficult questions

of law.” Dymo Industries, Inc. v. Tapeprinter, Inc.,

326 F.2d 141, 153 (9th Cir. 1965). “[T]he relative

l4a

hardships to the parties” is the “critical element” in

deciding when a stay is justified. Benda, 584 F.2d

at 314-15. Finally, the public interest is a factor to

be strongly considered in cases such as this one. See

Warm Springs Dam Task Force v. Gribble, 565 F.2d

549, 551 (9th Cir. 1977).

For purposes of this appeal, the Secretary does not

dispute the district court’s finding that the balance

of hardships tips sharply in plaintiffs’ favor. Nor

does she deny that the public interest favors grant-

ing the injunction. The Secretary’s arguments re-

late only to some aspects of the merits of the case to

be litigated. Our task, therefore, is to review the

district court’s finding that the plaintiffs are likely

to succeed on the merits. To the extent we are con-

vinced that the district court misapprehended the

law in arriving at that conclusion, we must vacate

the injunction as an abuse of discetion. However,

to the extent we believe plaintiffs raise serious ques-

tions of law or are likely to prevail on those ques-

tions, we must, in light of the undisputed findings

concerning hardship and the public interest, affirm

the injunction. See Wilson v. Watt, 703 F.2d at

399. A court of appeals, like a district court, is

not required to resolve doubtful or difficult questions

of law at this preliminary stage. See Dymo Indus-

tries, Inc. v. Tapeprinter, Inc., 326 F.2d 141, 1438

(9th Cir. 1964) (“[O]n application for preliminary

injunction the [district] court is not bound to de-

cide doubtful and difficult questions of law.”’).

The Secretary argues that de novo review of the

district court’s decision is required because she is

challenging the district court’s jurisdiction to award

the relief it awarded here. The Secretary’s observa-

tion is no more than a specific application of the gen-

15a

eral rule stated above that all legal issue are review-

able de novo. We agree that no deference should be

given to the district court’s findings with regard to

legal, including jurisdictional, issues in this case and

that we should therefore review de novo the district

court’s finding that plaintiffs are likely to succeed on

the merits of those issues. With regard to any un-

derlying factual findings, however, we see no reason

to depart from the usual deferential standard of

review. }

Although the Secretary did not say so, she may

have been attempting to argue that we are required

to decide finally all jurisdictional issues, instead of

merely reviewing the district judge’s determination

that plaintiffs raised serious legal questions and

were likely to succeed on the merits. The cases she

cites, however, hold only that a grant of a prelimi-

nary injunction is an abuse of discretion when “want

of jurisdiction is evident upon the face of the bill,”

United States v. Corrick, 298 U.S. 435, 438 (1936),

and that a preliminary injunction should be over-

turned on appeal when there is “an insuperable ob-

jection to the maintenance of the suit in point of

jurisdiction and where it clearly appears that the

decree was the result of an improvident exercise of

judicial discretion,” Myers v. Bethlehem Steel Corp.,

303 U.S. 41, 52 (1988). Those cases are consistent

with our holding that “doubtful or difficult questions

of law” need not be finally resolved at this prelimi-

nary stage. See Dymo Industries, 326 F.2d 141, 143

(9th Cir. 1964). We see no reason to treat complex

jurisdictional issues any differently from other com-

plex legal issues. Nor do we think that an injunc-

tion that the court has jurisdiction to issue but

which covers too many individuals presents the same

16a

type of threshold jurisdictional problem as an injunc-

tion that the court has no jurisdiction to issue at all.

In any event, the argument that the Secretary may

have been attempting to make would be applicable

at most to three issues in this case—those involving

the presentation requirement, mandamus _jurisdic-

tion, and sovereign immunity. Those are the only

issues that are even arguably denominable as “‘ju-

risdictional.” As is made clear below, even if the

argument that we are required to decide those issues

is correct, it would not affect the outcome of this

appeal.

DISCUSSION *

I. CLASS MEMBERS WHOSE BENEFITS WERE

TERMINATED BEFORE PATTI AND FINNE-

GAN BECAME FINAL.

The preliminary injunction issued by the district

court grants relief to Finnegan-type claimants whose

benefits “have or will be terminated after August

25, 1980,” and to Patti-type claimants whose bene-

® Before discussing the issues raised in this appeal, a pre-

liminary point should be mentioned: although Justice Rehn-

quist considered many of the same issues upon granting the

Secretary’s stay request, we do not give controlling weight to

the decision of a majority of the Court not to vacate the stay

he granted. As Justice Stevens noted in his opinion concur-

ring in part and dissenting in part, “in considering an appli-

cation of this kind, substantial deference must be paid to the

judgment of the Circuit Justice .... The Circuit Justice’s

decision should not be disturbed simply because the other

members of the Court would have declined to grant the stay

as an original matter.” 104 S. Ct. 221, 222 (1983) (citation

omitted). Thus, we cannot assume from the Court’s action

that all the Justices in the majority agreed with Justice Rehn-

quist’s application of the relevant law.

17a

fits “have or will be terminated after August 30,

1981.” The district court arrived at those dates by

adding 60 days to the dates the respective decisions

became final and then subtracting a year. The 60

days represented the amount of time the district

court believed was available for the Secretary to seek

Supreme Court review of the decisions." The year

was subtracted because the Secretary has authority

to reopen an administrative decision for any reason

within one year. See 20 C.F.R. 404.988, 418.1466

(1983).

The Secretary argues that there is no basis for

granting any relief to claimants who had received

final decisions on their terminations before Patti

and Finnegan became final: We believe that the Sec-

retary is clearly correct on this point.

Although the regulations specifically authorize the

Secretary to reopen decisions within one year for any

reason, the Supreme Court has squarely held that

the Secretary’s decision not to reopen a case is, un-

less challenged on constitutional grounds, entirely a

matter of the Secretary’s discretion not reviewable

by the courts. Califano v. Sanders, 430 U.S. 99

(1977). This is not a case in which the refusal to

reopen raises constitutional problems. Indeed, claim-

ants who had received final decisions before the case

7™Under 28 U.S.C. § 2101(c) (1976), the government ac-

tually has ninety days in which to file a certiorari petition.

When this was pointed out to the district court, the court re-

fused to modify the injunction and instead reaffirmed the

sixty-day period as a compromise between the ninety days

urged by the government and the 30-day period urged by the

plaintiffs as the time allowed to seek a stay of the mandate of

a court of appeals. See Fed. R. App. P. 41(b). The court’s

decision in this regard was plainly within the scope of its

discretion.

18a

they rely on was decided cannot even raise the con-

stitutional challenge to the underlying termination

raised by the other claimants here. Thus, regardless

of how wrongful the district court may have believed

a refusal to reopen would have been under the cir-

cumstances presented by this case, the court lacked

the authority to grant any relief to claimants who

had received final decisions on their terminations be-

fore the case they rely on was decided. We therefore

vacate the preliminary injunction to the extent it

granted relief to Finnegan-type claimants whose bene-

fits were terminated before August 25, 1981, and to

Patti-type claimants whose benefits were terminated

before August 30, 1982, unless they then either were

in the process of appealing the termination or still

had time remaining for so doing.*

Il. PROCEDURAL REQUIREMENTS

A. 42 U.S.C. § 405(g)

Section 405(g) specifies three requirements for

judicial review of decisions by the Secretary: (1) a

final decision made after a hearing; (2) commence-

ment of a civil action within 60 days after the mail-

ing of notice of such decision, or such further time

as the Secretary may allow; and (3) filing of the

action in an appropriate district court. 42 U.S.C.

§ 405(g) (Supp. V 1981). On appeal, the Secretary

does not challenge the appropriateness of the district

court’s venue. She does argue, however, that some

8 The new dates retain the 60-day period that the district

court added to the dates the decisions became final. We have

held that the court’s decision so to limit the class was well

within its discretion. See supra note 7.

19a

plaintiffs have not met the first two requirements.

Her arguments are addressed below.

1. The Finality Requirement

The Supreme Court has interpreted the first re-

quirement—that of a final decision made after a

hearing—as consisting of two separate elements; (a)

the waivable element that administrative remedies

be exhausted (the exhaustion requirement), and (b)

the nonwaivable element that the claim for benefits

be presented to the Secretary (the presentation re-

quirement). Mathews v. Eldridge, 424 U.S. 319,

328 (1976). The two parts of the finality require-

ment will be addressed separately.

a. The Exhaustion Requirement

In Weinberger v. Salfi, 422 U.S. 749 (1975), the

Supreme Court held that the exhaustion requirement

was not jurisdictional, but could be waived. It recog-

nized that there were situations in which requiring

exhaustion ‘‘would not merely be futile for the ap-

plicant, but would also be a commitment of adminis-

trative resources unsupported by any administrative

or judicial interest.” 422 U.S. at 765-66. In such

cases, a decision may be deemed “final” before ex-

haustion of remedies is completed.

We believe that this is plainly the type of case

as to which exhaustion of remedies would be futile.

In Salfi, the Court described the policies behind the

exhaustion requirement:

Exhaustion is generally required as a matter of

preventing premature interference with agency

processes, so that the agency may function ef-

ficiently and so that it may have an opportunity

20a

to correct its own errors, to afford the parties

and the courts the benefit of its experience and

expertise, and to compile a record which is ade-

quate for judicial review.

433 U.S. at 765. None of those policies would be

proved by requiring exhaustion of administrative

remedies with regard to the constitutional questions

involved here. The question whether the Secretary

is bound to appiy the clear holdings of a United

States Court of Appeals to persons within the cir-

cuit who were not parties to the original action is,

one hopes, not a question as to which the Secretary

has much experience or expertise to offer. Nor would

compiling an administrative record be particularly

useful in resolving that question. The possibility of

the agency correcting its own errors at any level

but the very top is precluded by the Secretary’s or-

der that this court’s holdings not be followed. And

the formality with which the Secretary has expressed

her policy of nonacquiescence makes it clear that she

herself will not correct the error. Indeed, in her

briefs the Secretary does not even suggest the pos-

sibility that she might reconsider the validity of her

nonacquiescence policy. Instead, she argues that ex-

haustion is not futile because many of the claimants

may have their benefits reinstated even under the

nonacquiescence policy. Plainly, however, plaintiffs

are entitled to base their claims for benefits exclu-

sively on the argument that the Secretary’s refusal

to apply the law as interpreted in Patti and Finne-

gan is unconstitutional. Requiring the claimants to

go through several levels of administrative appeals

with that claim would clearly be a “commitment of

administrative resources unsupported by an adminis-

trative or judicial interest.” See Salfi, 422 U.S. at

2la

766. Indeed, such an exercise would seem to be the

very height of futility.

With regard to the underlying statutory claim,

the futility of exhaustion is even clearer. The issue

whether the Secretary must present medical evidence

before terminating benefits has not only already been

litigated through all the required administrative

levels, it has also already been decided by the federal

district courts in Patti and Finnegan and by this

court. On the underlying substantive claim, the posi-

tion of the Secretary could not be clearer. That

nothing short of a court order will suffice to vin-

dicate the asserted right is demonstrated glaringly

by the fact that the Secretary has only given effect

to the holdings in Patti and Finnegan with regard

to the parties to those actions. As the facts of this

case illustrate, exhaustion of administrative reme-

dies is futile by definition in any case challenging

an announced policy of nonacquiescence.®

The Court suggested in Salfi that determining

whether exhaustion is futile may be a question re-

served exclusively for the Secretary. 422 U.S. at

766 (“A court may not substitute its conclusion of

futility for the contrary conclusion of the Secre-

tary.”). In Eldridge, however, the Court made it

® Although the announcement of the policy of nonacquies-

cence removes any doubt about the futility of pursuing admin-

istrative remedies, we believe that, even in the absence of the

announcement, the Secretary’s disregard of the holdings in

Patti and Finnegan would certainly be enough to raise serious

questions as to whether pursuing administrative remedies

would be futile. We therefore hold that the required prelimi-

nary showing on this issue was satisfactorily made even by

those class members who, before the relevant Social Security

rulings were issued, had allowed the time for initiating an

administrative appeal to run.

22a

clear that, under certain circumstances, courts may

waive the exhaustion requirement over the Secre-

tary’s objection. The Court recognized that “cases

may arise where a claimant’s interest in having a

particular issue resolved promptly is so great that

deference to the agency’s judgment is inappropriate.”

424 US. at 330.

In Eldridge, plaintiff claimed that the Constitu-

tion entitled him to an evidentiary hearing before

termination of his benefits. The Court thought that

deferring to the Secretary’s conclusion regarding fu-

tility was inappropriate in that case because the con-

stitutional challenge was “entirely collateral” to the

claim for benefits and because, ‘“‘unlike the situation

in Salfi, denying Eldridge’s substantive claim ‘for

other reasons’ or upholding it ‘under other provisions’

. . . would not answer his constitutional challenge.”

424 U.S. at 331-32 (citation omitted).

Here, as in Eldridge, plaintiffs present a constitu-

tional challenge” entirely collateral to the substan-

10 Although plaintiffs have clearly framed their case as one

seeking to vindicate constitutional rights, three Justices, on

the limited pleadings and record presented to the Supreme

Court on the motion to stay the temporary restraining order,

signed opinions which appear to question whether plaintiffs’

claims are indeed constitutional. Justice Rehnquist viewed the

plaintiffs’ claims as alleging merely that the Secretary’s evi-

dentiary showing was insufficient. 104 S. Ct. at 15. And al-

though they did not elaborate, Justices Stevens and Blackmun

indicated that they too believed that the constitutional nature

of plaintiffs’ claims should be disregarded. 104 S. Ct. at 224.

We believe that plaintiffs’ claims may properly be treated

as constitutional for purposes of the inquiry before us. Al-

though plaintiffs’ standing rests on their entitlement to bene-

fits that the Secretary has terminated without the requirea

evidentiary showing, plaintiffs have based their claim for bene-

fits almost exclusively on constitutional arguments. More im-

23a

portantly, the Secretary defends her case on the merits by as-

serting her power to ignore the holdings of this court. Be-

cause the arguments on both sides are therefore predominantly

constitutional on the merits, deciding this case will almost

certainly require resolution of constitutional questions. For

purposes of determining whether exhaustion should be waived,

it is the constitutional nature of the questions to be resolved,

not of the right to be vindicated, that should be important.

As the Court explained in Califano v. Sanders, 430 U.S. at 109,

Salfi and Eldridge rested in part on the view that “[c]onsti-

tutional questions obviously are unsuited to resolution in ad-

ministrative hearing procedures and, therefore, access to the

courts is essential to the decision of such questions.” Thus,

even assuming that plaintiffs here are not seeking to enforce

their constitutional rights, we believe that this case should

be considered a constitutional one for purposes of determining

whether waiver of the exhaustion requirement is appropriate.

Whether plaintiffs’ claims are “constitutional” for purposes

of the 60-day limitation, see infra, is a somewhat more diffi-

cult issue. We believe, however, that plaintiffs have at least

raised serious legal questions with regard to that issue.

We also note that considering this a constitutional case

would not “open the floodgates,” even if we focused on the

right to be vindicated. Unlike the ordinary case in which the

Secretary is alleged to have applied the law incorrectly, and

which might arguably be framed in such a way as to impli-

cate the constitutional duty of the Secretary to apply the law

faithfully, the Secretary here has announced in plain terms

that she will not follow the holdings of this court. Clearly the

two types of cases are materially different. While with regard

to Patti and Finnegan the Secretary may have violated only a

statutory duty, with regard to recipients whose benefits were

terminated after Patti and Finnegan became final the Secre-

tary also violated her constitutional duty to execute the law

faithfully.

With regard to the second constitutional claim, the one based

on the due process clause, the source of the Justices’ doubts is

not as readily apparent. Although the Court has held that a

pretermination hearing is not constitutionally required in

cases such as this one, see Eldridge, 424 U.S. at 332-49, the

24a

tive claim for benefits.’ Also as in Eldridge, deny-

ing or upholding plaintiffs’ entitlement to benefits on

other grounds would not answer the constitutional

challenge.

Court relied in part on the availability of post-deprivation

hearings before the administrative agency. Claimants here

argue that the Secretary’s policy of nonacquiescence renders

those post-deprivation hearings meaningless. Although the

argument requires further exploration and refinement, it is

not on its face frivolous. In addition, the argument that a

procedural scheme permitting the Secretary to terminate bene-

fits without first coming forth with any evidence whatever

violates the due process clause also would not appear to be

frivolous.

This opinion discusses the Secretary’s arguments as ap-

plied to both the constitutional and the nonconstitutional

claims. As our opinion makes clear, we do not believe that the

constitutional nature of plaintiffs’ claims is likely to be deter-

minative of the issues involved.

1! The Secretary argues that “the contention made on be-

half of the class members that their benefits may not. be termi-

nated except upon a showing of medical improvement goes to

the very heart of the merits of their substantive claim for

disability benefits; it is not a ‘collateral’ issue like the asserted

right to a pretermination hearing involved in Mathews v. Fl-

dridge.”” The Secretary’s argument ignores the fact that the

question the Secretary sees as the issue on the merits has

already been decided by this court. The real issue on the

merits is whether tne Secretary must apply the holdings of

this court on a general basis within this circuit. Because we

agree with the district court that the plaintiffs are likely to

succeed on the merits of that issue, the underlying statutory

issue need not be reached. There can be no doubt that the

separation-of-powers issue is entirely collateral to the sub-

stantive claim for disability benefits.

Even with regard to the underlying statutory issue, however,

we believe that the Secretary’s argument is without merit.

Contrary to the Secretary’s suggestion, the claim that the

Secretary must come forth with some evidence of medical

25a

Even if we disregarded the constitutional nature

of plaintiffs’ claims, this is not an appropriate case

for deferring to the Secretary’s conclusion regarding

futility. If plaintiffs are regarded only as vindicat-

ing once again the right that this court has already

held in Patti and Finnegan they are entitled to, then

the claim is just as collateral to the substantive claim

for benefits as was Eldridge’s. And granting or

denying benefits on other grounds will still not an-

swer the claim being asserted—i.e., that the Secre-

tary may not terminate benefits before she presents

medical evidence of improvement. The only differ-

ence between this case and Eldridge would then be

that the asserted right in one case was constitutional

and in the other statutory. But in determining

whether deference to the Secretary on futility is

appropriate the important factors should be those that

bear on the reliability of the Secretary’s conclusions

regarding futility. Whether the source of the as-

serted right is the Constitution or a statute does

not appear to bear on that issue. See Heckler v.

Lopez, 104 8. Ct. 221, 224 (1983) (Stevens, J., con-

curring in part and dissenting in part) (“[T]t

should make no difference whether plaintiffs’ claim

is based on the statute or the Constitution.”) ; Lib-

improvement before terminating benefits is entirely distinct

from the question whether the claimant continues to be dis-

abled. As the Secretary herself concedes, claimants may be

found entitled to benefits even if Patti and Finnegan were not

applied, and they may be found ineligible for benefits even

under Patti and Finnegan. Like Eldridge, plaintiffs have

complained of the procedures used by the Secretary in termi-

nating benefits. We see no possible grounds for distinguishing

their claim that benefits may not be terminated except upon a

showing of medical improvement from the claim in Eldridge

that benefits may not be terminated except after a hearing.

26a

erty Alliance for the Blind v. Califano, 568 F.2d 333,

344 (3d Cir. 1977).

Indeed, deferring to the Secretary on futility seems

even less appropriate here than in Eldridge. Plain-

tiffs here have shown that the Secretary is deliber-

ately and unequivocally flouting the procedures she

is required by law to follow. In contrast to the situa-

tion in Eldridge, the Secretary here knows precisely

what the courts say the law is and is nevertheless

refusing to apply the law as so defined. That the

Secretary, as a member of the executive, is required

to apply federal law as interpreted by the federal

courts cannot seriously be doubted. See Marbury v.

Madison, 5 U.S. (1 Craneh) 187 (1803); U.S. Const.

art. II, §3 (The President “shall take Care that

the Laws be faithfully executed’’).”

Under the circumstances prevailing here, it is

likely not only that administrative appeals would

prove fruitless, but also that the Secretary is using

the exhaustion requirement as a mechanism to evade

the law she is required to apply. Once bad faith

and abuse of the statutory procedures have been

shown to the extent shown here, requiring exhaustion

seems not just unnecessary, but a perversion of the

12 The Secretary, in defending her nonacquiescence policy,

pointed out in the district court that the Internal Revenue

Service issues nonacquiescence rulings frequently. IRS non-

acquiescence rulings, however, are not applicable within the

circuit that rendered the opinion the IRS does not acquiesce in.

That is plainly a material difference. Because conflicts among

the circuits are inevitable, the executive clearly cannot be ex-

pected always to give nationwide effect to the holdings of a

Court of Appeals. But, far from supperting the Secretary’s

argument, the IRS’s nonacquiescence policy recognizes that

the holdings of a Court of Appeals must be given effect within

the circuit.

27a

administrative and judicial system. We believe that

the Secretary’s decision to terminate claimants’ ben-

efits without complying with the procedures required

by the statute became “final” with regard to each

class member, and thus immediately reviewable by

the district court, at the point each class member’s

benefits were terminated.

b. The Presentation Requirement

The Secretary argues that the nonwaivable ele-

ment of the finality requirement has not been met

because plaintiffs have not shown that all members

of the class have filed a claim for benefits. We dis-

agree. Courts have interpreted the presentation re-

quirement liberally. In Eldridge, the Court sug-

gested that all that was necessary to fulfill the non-

waivable element was a claim that may be said to

form the basis for “some decision by the Secretary.”

424 U.S. at 328. Accordingly, some courts have

found that mere termination of benefits fulfills the

presentation requirement. See Kuehner v. Schweiker,

717 F.2d 813, 817 (8d Cir. 1988); Ellison v. Cali-

fano, 546 F.2d 1162, 1164 (5th Cir. 1977); Wilson

v. Edelman, 542 F.2d 1260, 1270-71 (7th Cir. 1976) ;

Kennedy v. Harris, 87 F.R.D. 372, 376 (S.D. Calif.

1980). These decisions seem eminently sensible. Un-

derlying them is the theory that the claimant’s fail-

ure to report that his disability has ceased consti-

tutes a continuing claim for benefits and that that

claim is denied when the Secretary terminates the

benefits. All of the class members here have had

their benefits terminated by the Secretary and have

thus met the presentation requirement as defined

by these courts.

28a

Even if mere termination were not sufficient to

satisfy the presentation requirement, plaintiffs would

prevail on this issue. Each plaintiff, shortly before

his benefits were terminated, submitted a completed

Social Security questionnaire indicating that he be-

lieved he was still disabled and entitled to benefits.

The Supreme Court has held that section 405(g) re-

quires no more formal a presentation than that.

Eldridge, 424 U.S. at 329. Although in Eldridge the

plaintiff had submitted both a questionnaire and a

letter, the presence of the letter does not distinguish

Eldridge from this case. The point was that the

plaintiff had “specifically presented the claim that his

benefits should not be terminated because he was

still disabled.” Jd. Even without the letter, the ques-

tionnaire served that purpose in Eldridge, and it suf-

fices here as well. See also Heckler v. Lopez, 104

S. Ct. 221, 223 n.2. (1983) (Stevens, J., concurring

in part and dissenting in part) (“Eldridge’s letter

hardly added to the ‘claim’ he had already pre-

sented.”) ; cf. Wheeler v. Heckler, 719 F.2d 595, 599-

600 (2d Cir. 1983) (presentation requirement not

satisfied because “plaintiffs presented no allegations

that the unnamed plaintiffs had initiated even infor-

mal communications with SSA or DDSD, either prior

or subsequent to receipt of a termination notice.”).

The Secretary concedes, as she must, that the

presentation required by section 405(g) is not the

presentation of a challenge to the termination de-

cision. Eldridge would dispose of any such argu-

ment, for Eldridge presented both the questiunnaire

and the letter before his benefits were terminated.

Moreover, requiring that the claim be presented af-

ter the termination would have the curious effect

in this case of requiring that the presentation come

29a

after the final decision, when, as discussed above,

the statute clearly contemplates that the presentation

be the basis for the final decision. It is for the

same reason that the Secretary errs when she argues

that section 405(g) requires that the claim be pre-

sented after a tentative termination decision. If

presentation of the claim must form the basis for the

Secretary’s final decision, then it should form the

basis for her tentative decision as well. The Secre-

tary’s suggestion would have the effect of requiring

a presentation in the middle of the decision-making

process, whereas Congress appears to have envisioned

the presentation as the initiation of that process.

2. The Sixty-Day Limitation

Section 405(g) provides that judicial review of

final decisions of the Secretary must be “commenced

within sixty days after the mailing .. . of notice of

such decision or within such further time as the

Secretary may allow.” 42 U.S.C. §405(g) (Supp.

V 1981). The Secretary argues that the preliminary

injunction must be reversed insofar as it grants re-

lief to persons who received a final decision from the

Secretary more than 60 days before the commence-

ment of this action. Plaintiffs argue that, when ad-

ministrative exhaustion is waived, a time limita-

tion that comes into play only after administrative

exhaustion is completed must also be waived. Neither

argument is entirely correct.”

18 As noted above, Justices Stevens and Blackmun concurred

in the majority’s denial of plaintiffs’ application to vacate the

stay insofar as it stayed those parts of the preliminary injunc-

tion that applied to persons who had received final decisions

from the Secretary more than 60 days before the commence-

ment of this action and who had not timely sought judicial re-

30a

Insofar as plaintiffs argue that waiver of exhaus-

tion leaves them without an exhaustion date from

which to begin counting the 60 days, plaintiffs mis-

perceive the effect of a waiver of the exhaustion re-

quirement. Section 405(g) authorizes federal courts

to review “final decisions” of the Secretary. As Salfi

and Eldridge make clear, waiver of the exhaustion

requirement constitutes a determination, either by

the Secretary or by the court, that the Secretary’s

decision became sufficiently final to warrant judicial

review before exhaustion of administrative remedies

was completed. In demonstrating that administra-

tive exhaustion was futile in this case, plaintiffs have

also demonstrated that they have received a final

decision for purposes of the 60-day requirement.

The Secretary is mistaken, however, when she sug-

gests that the failure of some class members to com-

mence their civil action within 60 days of their final

decisions has resulted in the expiration of their

claims. As the Court made clear in Salfi, the 60-

day limitation is not jurisdictional. 422 U.S. at 764.

It is thus like the time limitation for initiation of

Title VII claims, which the Court held in Zipes v.

Trans World Airlines, Inc., 102 S. Ct. 1127 (1982),

was subject to waiver and equitable tolling. It is

view. We note, however, that in arriving at that conclusion,

Justices Stevens and Blackmun did not have the benefit of any

of the arguments presented on this appeal. Because Justice

Rehnquist did not rely on, or even discuss, the 60-day require-

ment in his opinion granting the stay, plaintiff did not address

the 60-day issue in their application to the Court. Nor, indeed,

had the arguments been presented adequately at any of the

preceding stages. Although the Secretary did briefly mention

the issue in her district court briefs, she did not urge the

argument. The district court did not discuss the issue in its

opinion.

8la

thus also like the other waivable requirement of sec-

tion 405(g¢)—the exhaustion requirement—which the

Court held in Eldridge was waivable by the Secre-

tary and, in unusual cases, by the court. The tradi-

tional requirements for equitable tolling of a statute

of limitations are not present here. And, because she

raised the issue, albeit in the must cursory manner,

before the district court, the Secretary may not be

deemed to have waived the 60-day requirement her-

self. We find, however, that plaintiffs are likely to

prevail on this issue under at least one of three sub-

stantial legal theories. They have, at any rate, raised

serious legal questions in all three instances.

First, we note that this is quite evidently not the

type of case Congress had in mind when it designed

the 60-day limitation. Section 405(¢)’s time limi-

tation differs significantly from ordinary statutes of

limitations, which generally allow plaintiffs consider-

ably more than 60 days in which to assert their legal

rights. See, e.g., Block v. North Dakota, 103 S. Ct.

1811 (1988) (12-year statute of limitations appli-

cable to actions to quiet title to real property in

which the United States claims an interest). Ordi-

nary statutes of limitations reflect a congressional in-

tention to preclude litigation of stale claims and to

allow parties to repose. In contrast, section 405(g),

like other statutes governing review of administra-

tive action, was designed to promote administrative

efficiency. It reflects Congress’s desire to facilitate

the processing of large numbers of administrative

claims.

In setting the time limitation for section 405(g)

claims, Congress had to accommodate the agency’s

interest in efficient procedures with the claimant’s

interest in having enough time to prepare his case.

32a

The brevity of the period it gave claimants suggests

that it designed the limitation for the run-of-the-mill

case involving a dispute over whether particular evi-

dence demonstrates a disability. With regard to

cases involving substantial legal, let alone constitu-

tional issues, 60 days may provide too short a period.

The problem is even graver when the case is one in

which the exhaustion requirement has been waived.

Unlike the ordinary claim for benefits, in which filing

a civil action is simply the next step in a procedure

that has been going on at the administrative level

for some time and in which a complete administra-

tive record has been compiled, plaintiffs in cases such

as the one before us would, if the ordinary period

were applied, have only 60 days from the time in

which the initial deprivation of their rights occurred

in which to prepare their cases for litigation. We

doubt that Congress considered that a 60-day limita-

tions period reasonably afforded protection to the

claimant’s interests in such cases. Indeed, limiting

claimant’s access to the courts in such cases to such

a short period might infringe upon the claimant’s

constitutional right to be heard “at a meaningful

time and in a meaningful manner.” See Armstrong

v. Manzo, 380 U.S. 545, 552 (1965). See also Boddie

v. Connecticut, 401 U.S. 371 (1971) (ordinarily valid

procedural requirements constitute unconstitutional

infringement on right of access to courts when ap-

plied to indigent welfare recipients seeking divorce).

In any event, a strong argument can be made that

the 60-day limitation does not apply where a serious

constitutional claim is presented. In Califano v.

Sanders, 430 U.S. 99 (1977), the Court explained

that the holding in Eldridge was derived from the

“well-established principle” that a statutory scheme

33a

should not be read “to take the ‘extraordinary’ step

of foreclosing jurisdiction unless Congress’ intent to

do so is manifested by ‘ “clear and convincing”’’ evi-

dence,” and that ‘when constitutional questions are

in issue, the availability of judicial review is pre-

sumed.” 4380 U.S. at 109 (quoting Salfi, 422 U.S. at

762). Sanders thus recognizes a special presumption

in favor of access to courts for the resolution of con-

stitutional questions. As discussed above, the limita-

tions period of section 405(g) is an unduly burden-

some procedural obstacle to judicial review of claims

such as this one, particularly when exhaustion of ad-

ministrative remedies has been waived. We believe

that the presumption referred to in Sanders may

well compel a holding that the 60-day limitations

period of section 405(g) does not apply to cases in-

volving substantial constitutional questions collateral

to a substantive claim for benefits.* Because plain-

tiffs have, at the least, raised serious legal questions

regarding the constitutional nature of their claims,”

they have made the required preliminary showing

that the 60-day limitation does not apply to them.

We also believe ‘that there is, at the least, a serious

possibility that plaintiffs will prevail on this issue on

4 The Secretary, quoting Block v. North Dakota, 103 S. Ct.

at 1822, points out that “[a] constitutional claim can become

time-barred just as any other claim can.” That observation,

however, misses the mark. The question before us is not

whether constitutional claims may be time-barred, but whether

the 60-day limitations period applies to constitutional claims

as well as ordinary claims for benefits. If the 60-day limita-

tion is inapplicable, then a substitute period must apply. Be-

cause we believe that none of these claimants waited unrea-

sonably long before asserting their claims, we find it unnec-

essary to ascertain how long the alternate period is.

15 See supra n.10.

34a

the theory that the 60-day iimitations period may be

waived over the Secretary’s objection. Although de-

termining whether to waive the 60-day limitations

period should ordinarily be a matter left to the Sec-

retary’s discretion, we believe that cases may arise

in which “deference to the agency’s judgment is in-

appropriate.” Eldridge, 424 U.S. at 330. We believe

that this is a case in which the conduct on the Sec-

retary’s part is so unusual as to render deference to

her judgment inappropriate. As we noted above, the

district court in this case found that plaintiffs were

likely to succeed on the merits of ‘their argument that

the Secretary is deliberately flouting the law she is

required to apply. Because there is no doubt what

this court says the Secretary must do, she must ex-

pect that all her terminations ignoring Patti and

Finnegan, will, if challenged, be reversed by all dis-

trict courts within this circuit. Only procedural flaws

in claimants’ challenges offer her any hope of success

in such courts. Thus, as we noted above, the Secre-

tary appears to be using the procedural requirements

as a mechanism for evading the law she is required

to apply. In extraordinary cases involving bad faith

on the part oi the Secretary, the Secretary’s interest

in administrative efficiency should give way to the

claimants’ interest in adequately preparing their

cases, an interest that, as we have seen, is not ade-

quately protected by the 60-day limitation in cases

such as this one.

Finally, we believe that, even if the limitations

period is applicable, the number of class members

whose claims would be time-barred is substantially

smaller than the Secretary suggests. In the analo-

gous Title VII context, the statute of limitations is

deemed tolled retroactively for all unnamed class

35a

members as of the time the class representative filed

his administrative charge with the EEOC. See Albe-

marle Paper Co. v. Moody, 422 U.S. 405, 414 n.8

(1975); Williams v. Owens-Illinois, Inc., 665 F.2d

918, 923 (9th Cir.), cert. denied, 108 S. Ct. 302

(1982); Inda v. United Air Lines, Inc., 565 F.2d

554, 559 (9th Cir. 1977), cert. denied, 435 U.S. 1007

(1978) ; see also B. Schlei & P. Grossman, E'mploy-

ment Discrimination Law 1263 (2d ed. 1983). The

statute is tolled even if the administrative charge

was not filed on behalf of a class. See Inda, supra.

The class representative’s administrative complaint

has that effect because when an employer acts in a

way that affects an entire class in an identical man-

ner, he cannot be heard to claim surprise over suits

by the other employees. Because the individual ad-

ministrative complaint should be adequate to give

.otice of the class-wide grievance, the purposes be-

hind the time limitation are served by tolling the

statute in that situation. See Bowe v. Colgate-

Palmolive Co., 416 F.2d 711, 719-20 (7th Cir. 1969),

cited with approval in Albemarle, 422 U.S. at 414

n.8.

In this case, the Secretary has similarly acted in a

way that affects an entire class in an identical fash-

ion. Certainly the Secretary should have known that

terminations made pursuant to her policy of re-

fusing to follow decisions of this court would be

challenged by the large number of people adversely

affected by that policy. As in the Title VII situation,

the filing of an individual administrative complaint

under such circumstances should suffice to give notice

that a class-wide dispute is involved. The Secretary

should not now be heard to express surprise at the

number of people challenging her ruling. We thus

36a

conclude that there is a strong possibility that plain-

tiffs will succeed in their argument that, in a sec-

tion 405(g) class action, the limitations period is

deemed tolled retroactively for unnamed class mem-

bers from the date a class representative first files an

administrative appeal.

B. Mandamus Jurisdiction.

Plaintiffs argue that the federal mandamus statute

provides an alternative basis for jurisdiction over

this case. In considering the Secretary’s motion for

a stay pending appeal, we did not find it necessary

to consider the availability of mandamus jurisdic-

tion. When the Secretary sought a stay in the Su-

preme Court, plaintiffs relied only on the grounds set

forth in our decision. Thus, none of the opinions of

the Justices of the Supreme Court considered the

mandamus issue. Because plaintiffs properly rely on

the mandamus statute as an alternative basis for

jurisdiction, we consider the issue now.

The mandamus statute provides that

[t]he district courts shall have original juris-

diction of any action in tiie nature of mandamus

to compel an officer or employee of the United

States or any agency thereof to perform a duty

owed to the plaintiff.

28 U.S.C. § 1361 (1976). The Secretary argues that

42 U.S.C. § 405(g) precludes reliance on bases of

jurisdiction other than 42 U.S.C. § 405(g). Section

405(h) reads, in relevant part, as follows:

No action against the United States, the Secre-

tary, or any officer or employee thereof shall be

brought under sections 1331 or 1346 of title 28

37a

to recover on any claim arising under this sub-

chapter.

42 U.S.C. §405(h) (1976). Although the statute’s

language would appear not to preclude jurisdiction

based on section 1361, the Secretary argues that the

Supreme Court has held that jurisdiction over bene-

fits claims may be based only on section 405(g). We

disagree.

The cases cited by the Secretary all hold that sec-

tion 405(g) precludes jurisdiction based on the gen-

eral federal question statute, 28 U.S.C. § 1331

(1976 & Supp. 1981). When presented with the ar-

gument that mandamus jurisdiction is similarly un-

available, the Court has consistently reserved the

question. See Eldridge, 424 U.S. at 382 n.12; Norton

v. Mathews, 427 U.S. 524, 529-30 (1976); Califano

v. Yamasaki, 442 U.S. 682, 697-98 (1979). We have

held, however, that mandamus jurisdiction is avail-

able in cases challenging the procedures used in ad-

ministering social security benefits. See Ringer v.

Schweiker, 697 F.2d 1291 (9th Cir. 1982), cert.

granted sub nom. Heckler v. Ringer, 103 S. Ct. 3535

(1983) ; Daniel H. Freeman Memorial Hospital v.

Schweiker, 656 F.2d 473 (9th Cir. 1981); Knuckles

v. Weinberger, 511 F.2d 1221 (9th Cir. 1975). In

this regard, we are in accord with other circuits that

have considered the question. See Ellis v. Blum, 648

F.2d 68 (2d Cir. 1981) ; Martinez v. Richardson, 472

F.2d 1121 (10th Cir. 1973). Our holding is also sup-

ported not only by the plain language of section 405

(g), but also by Congress’s failure, in amending

other jurisdictional provisions, to express disapproval

of the cases finding mandamus jurisdiction available

under such circumstances. See Ellis v. Blum, 643

F.2d at 80.

38a

The mandamus statute gives the district courts

jurisdiction to entertain “actions in the nature of

mandamus.” 28 U.S.C. § 1361 (1976). This require-

ment has been read to incorporate the common law

requirements for granting mandamus, ie, (1) that

the plaintiff have a plain right to have the act per-

formed, (2) that the defendant have a plain duty to

perform it, and (3) that there be no other adequate

remedy available to the plaintiff. See Kennecott Cop-

per Corp., Nevada Mines v. Costle, 572 F.2d 1349,

1356 (9th Cir. 1978); see generally, 1 J. Moore, J.

Lucas, H. Fink, D. Weckstein & J. Wicker, Moore’s

Federal Practice § 0.62[17] (2d ed. 1982). Here, the

first two requirements are clearly satisfied: the Sec-

_retary’s duty to perform the sought-after act was

made plain in Patti and Finnegan, and, because all

plaintiffs have had their benefits terminated as a

result of the Secretary’s failure to perform the act,

each has a plain right to have the act performed.

The only remaining question with respect to the

availability of mandamus is whether plaintiffs have

another adequate remedy. While we believe that it is

likely that plaintiffs have an adequate remedy under

section 405(g), our view is based on the assumption

that the 60-day limitation on the filing of suits is

inapplicable. If, however, the 60-day period does ap-

ply to each of the class members individually, we

believe that, for the reasons previously discussed, the

remedy would be inadequate and mandamus jurisdic-

tion would be fully available as an alternative basis

of jurisdiction.”

16 The Secretary does not question the timeliness of plain-

tiffs’ assertion of mandamus jurisdiction. In any event, man-

damus, like other equitable remedies, must be sought with

“reasonable promptness.” See United States v. DeLoach, 654

maaan eile an tenisitinh 01 ake!

AEWA wy eee at vw wUW ©

39a

Ill. SOVEREIGN IMMUNITY

The Secretary claims that the district court lacked

authority to award the preliminary relief awarded

here because she is shielded by sovereign immunity.

She argues that “a court may not award monetary

relief against the federal government absent a con-

gressional enactment waiving the United States’

sovereign immunity.” She points out that the only

statute authorizing payment of the type of benefits

awarded here permits payment only upon a “final

decision” by the Secretary or “final judgment” by a

court that a person is “entitled” to benefits. 42 U.S.C.

§405(i) (1976). Because the requirements set out

in the statute were not satisfied, she argues, the

relief given was inappropriate.

The Secretary’s argument that the preliminary re-

lief awarded here is inconsistent with the dictates of

section 405(i) is without merit. Section 405(i) au-

thorizes payment of benefits “[u]pon final judgment

of any court of competent jurisdiction, that any

person is entitled to” benefits. 42 U.S.C. § 405 (i)

(1976). Because each of the persons afforded relief

by the preliminary injunction had been receiving

benefits before the challenged action of the Secretary,

each had received a “final decision” from the Secre-

tary that he was “entitled to” benefits. Each is chal-

lenging the action of the Secretary revoking the

earlier final decision. The district court’s injunction

merely instructs the Secretary to reinstate that earlier

final decision pending determination of the validity

of the revocation. The payments are thus indeed

F.2d 763 (D.C. Cir. 1980) (unexplained delay of four years

precludes mandamus jurisdiction). All of the plaintiffs’ claims

were brought reasonably promptly given the nature of the

claims asserted.

40a

being made pursuant to a “final decision” of the

Secretary. |

The court’s power preliminarily to reinstate that

“final decision” by interdicting enforcement of the

otherwise superseding later decision is plainly en-

compassed in the federal court’s traditional equitable

power to grant preliminary relief. It is hornbook

law that “[{t]he general purpose of a preliminary in-

junction is to preserve the status quo pending final

determination of the action after a full hearing.” 7

J. Moore & J. Lucas, Moore’s Federal Practice © 65.04

[1] at 65-36 (2d ed. 1983). It is simuarty well

accepted that “[t]he status quo is the Sa ntested

status which preceded the pending “omtroversy.”

Westinghouse Electric Corp. v. Free Sewing Machine

Co., 256 F.2d 806, 808 (7th Cir. 1958); see Na-

tional Association of Letter Carriers v. Sombrotto,

449 F.2d 915, 921, 924 (2d Cir. 1971) ; District 50,

United Mine Workers of America v. International

Union, United Mine Workers of America, 412 F.2d

165, 168 (D.C. Cir. 1969); Minnesota Mining and

Manufacturing Co. v. Meter, 385 F.2d 265, 273 (8th

Cir. 1967) ; Tanner Motor Livery, Ltd. v. Avis, Inc.,

316 F.2d 804, 809 (9th Cir.), cert. denied, 375 U.S.

821 (1963); Warner Brothers Pictures, Inc. v. Git-

tone, 110 F.2d 292, 293 (3d Cir. 1940). A contrary

rule would predicate a claimant’s entitlement to pre-

liminary relief on his having learned of the contested

act sufficiently in advance to be able to file a lawsuit

and seek a restraining order. It would also allow

persons to shield themselves from equitable claims

simply by presenting potential disputants with faits

accomplis. Because section 405(i) evinces no con-

gressional intent to limit the traditional equitable

power of the courts to grant preliminary relief if the

Ala

moving party is likely to succeed on the merits and

would suffer irreparable injury without the relief,

we must conclude that the preliminary injunction

granted here was a proper exercise of the district

court’s equitable discretion.”

The Secretary cites the recent enactment of an

amendment to the Social Security Act, 42 U.S.C.

§ 1395, 96 Stat. 2497 (1988), as support for the

proposition that the law did not authorize courts to

award interim benefits pending adjudication of a

section 405(g) claim to persons whose benefits were

terminated before January 12, 1988. The Secretary

argues that that amendment, entitling persons who

are challenging termination of their benefits to con-

tinued benefits during their appeals, was designed to

7 Justice Rehnquist appeared troubled by the fact that,

under the injunction, “the Secretary’s obligation to pay is

triggered merely by the recipient’s statement in his applica-

tion that, in his subjective belief, his medical condition has not

improved since the earlier determination.” Heckler v. Lopez,

104 S. Ct. at 14. We agree that a mere application for benefits

would be an insufficient basis for a court order directing the

payment of benefits. Here, however, the district court’s power

to order reinstatement of class members’ benefits derives not

from the application but from the Secretary’s own final deci-

sion, which the district court has found likely to have been

improperly revoked. As we have already seen, the court’s tra-

ditional equitable powers include the power preliminarily to

interdict enforcement of the terminations, and thus to rein-

state the benefits of all the class members, if the traditional

requirements for preliminary relief are met. If the court could

have reinstated the benefits of all class members, then the

court’s injunction can be no less valid because it granted that

relief only to those who subsequently filed an application stat-

ing that they were still disabled. The application procedure

outiined in the injunction thus serves as a limiting device, not

as the source of the court’s authority to order the resumption

of benefits payments.

ee ee Ee ee. SO ele .LLUCle. TE

42a

cure a defect that Congress perceived in prior law.

That defect, the Secretary argues, was the absence

of authority to award the type of benefits awarded

here. Because the amendments apply only to persons

whose benefits were terminated after January 12,

1983, she continues, the court was without authority

to award the preliminary relief it awarded.

The Secretary’s argument is flawed in two re-

spects. First, the amendment she refers to applies

not only to persons whose benefits were terminated

after January 12, 1983, but also to persons whose

benefits were terminated before that date and who

have sought administrative review under section 221

(d) of the Social Security Act. Because the admin-

istrative exhaustion requirement was waived in this

case, this latter requirement should be deemed satis-

fied as well. More fundamentally, however, the

amendments were not at all designed to address the

problem of courts lacking power to grant preliminary

relief. The amendment only entitles claimants to

interim benefits pending administrative review. See

42 U.S.C. § 1395, 96 Stat. 2498 (1983). Congress’s

enactment of a law entitling claimants to interim

benefits pending their administrative appeal does not

in any way suggest that it believed courts lacked the

power to reinstate benefits pending judicial review in

cases otherwise satisfying the requirements for pre-

liminary relief. To the contrary, it suggests that

Congress believed that the existing scheme, which b

permitted judicial intervention only upon a “final

decision” of the Secretary, left claimants challenging

terminations without sufficient recourse during their

administrative appeals.

Neither would sovereign immunity be a bar to the

exercise of jurisdiction under the mandamus statute.

43a

In 1976, Congress amended section 702 of the Ad-

ministrative Procedure Act to provide specifically that

[a]n action in a court of the United States seek-

ing relief other than money damages and stat-

ing a claim that an agency or an officer or

employee thereof acted or failed to act in an

official capacity or under color of legal authority

shall not be dismissed nor relief therein be denied

on the ground that it is against the United

States or that the United States is an indispens-

able party.

5 U.S.C. § 702 (1982). That clearly constitutes a

consent to be sued in cases such as this. Plaintiffs

here were awarded preliminary injunctive relief, not

damages. The district court made it clear that it was

awarding only prospective relief; the preliminary in-

junction does not even order payment to the class

members of the benefits that they will have failed to

receive between the timue they were terminated and

the time the Secretary reinstates the benefits pur-

suant to the injunction. Although section 702 does

go on to provide that “[n]Jothing herein . . . confers

authority to grant relief if any other statute that

grants consent to suit expressly or impliedly forbids

the relief which is sought,” id., as we have seen,

nothing in the Social Security Act forbids the type

of equitable relief awarded here. Sovereign immu-

nity thus presents no obstacle to the availability of

mandamus as an alternative basis for jurisdiction.

44a

CONCLUSION

Because we see no basis for awarding relief to

claimants who had received final decisions on their

terminations before Patti and Finnegan were de-

cided, we vacate the preliminary injunction granted

by the district court insofar as it applies to Finnegan-

type claimants who had received final decisions on

their terminations before August 25, 1981, and Patti-

type claimants who had received final decisions on

their terminations before August 30, 1982. With

regard to all remaining plaintiffs, however, we affirm

the preliminary injunction. We conclude that section

405(g)’s presentation requirement was satisfied, that

it is likely (a} that section 405(g)’s exhaustion re-

quirement was properly waivable, (b) that its 60-

day limitation was probably inapplicable in this case,

and (c) that, in any event, the limitation was tolled

for most, if not all, class members. We also conclude

that, if plaintiffs do not prevail under section 405

(g), they will prevail under the mandamus statute.

Finally, we conclude that the relief awarded was

fully consistent with the requirements of section 405

(i) and therefore not barred by sovereign immunity.

A fortiori, therefore, we conclude that plaintiffs raise

serious legal questions. Accordingly, we affirm the

preliminary injunction, as modified above, in all

respects.

AFFIRMED IN PART; REVERSED IN PART.

BOOCHEVER, Circuit Judge, concurring.

I concur generally in Judge Reinhardt’s opinion

and share his concern over the Secretary’s refusal to

obey the decisional law of this circuit. I cannot

Amie = mesenenen

45a

agree, however, that a substantial question is pre-

sented as to whether claimants who received termina-

tion notices from the Secretary more than sixty days

prior to commencement of this class action and failed

to seek any review are time-barred by the sixty-day

limitation of § 405(g). The district court had no

jurisdiction under § 405(g) over those claimants.

See Heckler v. Lopez, U.S. -—, 104 S. Ct. 221,

223 (1983) (Stevens, J., concurring in part and

dissenting in part).

46a

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 83-6126

D.C. No. 83-0697-WPG[T]

MARIO LOPEZ, ET AL., PLAINTIFFS-APPELLEES

Vs.

MARGARET M. HECKLER, Secretary of Health and

Human Services, ET AL., DEFENDANTS-APPELLANTS

[Filed Feb. 22, 1984]

ORDER

Before: PREGERSON, BOOCHEVER, and REIN- !

HARDT, Circuit Judges

The time for issuance of the mandate is hereby

shortened to ten (10) days. If, within that period,

appellee files a request for a stay with the Circuit )

Justice, the mandate shall not issue until such time

as the Circuit Justice or the Supreme Court acts

upon such request. No petition for rehearing or re-

hearing en banc will be ‘entertained by the panel. :

47a

APPENDIX C

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 83-6126

D.C. No. 83-0697-WPG[T ]

MARIO LOPEZ, ET AL., PLAINTIFFS-APPELLEES

VS.

MARGARET M. HECKLER, Secretary of Health and

Human Services, ET AL., DEFENDANTS-APPELLANTS

Emergency Motion for a Partial Stay Pending

Appeal of a Preliminary Injunction Ordered by

the United States District Court for the

Central District of California

Honorable William P. Gray, District Judge,

Presiding

Decided August 24, 1983

[Filed Aug. 24, 1983]

OPINION AND ORDER

48a

Before: PREGERSON, BOOCHEVER, and REIN-

HARDT, Circuit Judges

REINHARDT, Circuit Judge:

The Secretary of Health and Human Services seeks

a partial stay pending appeal of a preliminary in-

junction issued by the United States District Court

for the Central District of California.’ See Fed. R.

App. P. 8(a); Ninth Circuit R. App. P. 6(h). The

order reauires the restoration of disability benefits

to a large number of Social Security recipients.

From 28,000 to 78,000 individuals may be eligible.

We reject the Secretary’s request for a stay and

allow the preliminary injunction to stand.

BACKGROUND

The underlying dispute before the district court in-

volves a class action? challenge to policies and proce-

dures used by the Secretary in terminating Social

Security disability benefits. See 42 U.S.C. §§ 401-431

(1976 and Supp. IV 1980) (Social Security Disabil-

ity Insurance (SSDI) benefits for disabled workers) ;

42 U.S.C. §§ 1381-1383 (1976 and Supp. IV 1980)

(Supplemental Security Income (SSI) benefits for

1 The Secretary also requested “in any event a temporary

stay.” We have previously denied that request.

2 The district court certified as the plaintiff class those Sup-

plemental Security Income and Social Security Disability In-

surance recipients who live within the Ninth Circuit and “who

have been or will be considered for termination after August

30, 1981, and SSI recipients under the ‘grandfather clause’ of

the Social Security Act who have been or will be considered

for termination after August 25, 1980, such consideration

being or having been for the asserted reason that the claim-

ant’s disability had ceased” [footnotes omitted].

49a

persons who are both poor and disabled). Accord-

ing to findings made by the district court, since

March of 1981 the Sccial Security Administration

has drastically increased the rate at which it reviews

the status of persons receiving disability benefits.°

As a result, the number of people who have had

their benefits terminated annually has doubled—

from 98,000 removed from the disability rolls in fiscal

year 1981 to 195,474 terminated in fiscal] year 1982.

Plaintiffs contend that the procedures used by the

Secretary of Health and Human Services in termi-

nating the benefits of disabled persons are in direct

violation of two decisions of this court. In Patti v.

Schweiker, 669 F.2d 582, 587 (9th Cir. 1982), and

Finnegan v. Matthews, 641 F.2d 1340, 1345 (9th

Cir. 1981), we held that before Social Security dis-

ability benefits can be terminated on the ground that

the recipient is no longer disabled, the Secretary

must introduce evidence that the recipient’s medical

condition has improved. The principal rationale un-

derlying these decisions is that the Social Security

Administration’s initial determination of disability

creates a presumption that the person remains dis-

abled. To terminate benefits, then, the Secretary is

“required to ‘meet or rebut’ ” the presumption “with

evidence that [the recipient’s] condition has im-

proved in the interim.” Patti, 669 F.2d at 587. See

also Rivas v. Weinberger, 475 F.2d 255, 252 (5th

Cir. 1973) (“Once evidence has been-presented which

supports a finding that a given condition exists it is

presumed in the absence of proof to the contrary

that the condition has remained unchanged.”’).

3 The district court found that. in calendar year 1980, 185,639

Continuing Disability Investigations (CDIs) were conducted;

in the fiscal year 1982, 485,262 CDIs were undertaken.

50a

The Secretary of Health and Human Services sub-

sequently announced that she “does not acquiesce”

in and therefore would not follow this court’s hold-

ings in Patti and Finnegan.’ See Social Security Rul-

ings 82-10c and 82-49c. Instead, the Secretary has

ordered that Social Security disability benefits be

terminated on the ground of lack of disability regard-

less of whether the recipient’s medical condition has

improved since the time of the initial disability de-

termination. See Social Security Ruling 81-6.

This policy was challenged by plaintiffs in district

court. Plaintiffs’ suit is framed in large part as a

constitutional challenge to the policy of nonacquies-

cence. Plaintiffs argue that the policy violates the

principles of separation of powers and stare decisis

as well as their rights to due process and equal

protection.

On June 16, 1983, in a thorough, careful, and well-

reasoned decision, Senior District Judge William P.

Gray granted plaintiffs’ motion for a preliminary in-

junction. The court restrained the Secretary “[f]rom

failing to follow, implement or accord precedential

effect to” Finnegan and Patti and from implement-

ing the nonacquiescence policy announced in Social

Security Rulings 82-10c, 82-49e, and 81-6.

The Secretary did not seek to stay these aspects

of the district court’s order. Rather, the government

requested that the following portion of the district

court’s injunction be stayed pending appeal:

(c)(i) Within sixty (60) days following the

date of this order, the defendants will notify

4 The Secretary did not seek Supreme Court review of our

decisions in either Patti or Finnegan. The indivicual litigants

in the two cases did, however, receive the relief mandated by

this court.

5la

(a) each class member who had been receiving

Supplemental Security Income Disability bene-

fits under 42 U.S.C. § 13882c(a)(3)(E), and

who was terminated from such benefits after

August 25, 1980, and (b) all other persons who

have been terminated from either Title II social

security disability insurance or. Title XVI Sup-

plemental Security Income Disability after Au-

gust 30, 1981, for the purported reason that his

or her disability had ceased, whether or not such

person has apnealed, that:

Such person may apply for reinstatement of

benefits if he or she believes that his or her

medical condition has not improved follow-

ing the granting of disability benefits.

(ii) Upon receiving such application, the de-

fendants will forthwith reinstate and pay bene-

fits in the monthly amounts such person would

have been receiving had his or her benefits not

beer. interrupted.

(iii) Foilowing such reinstaternent, if the de-

fendants or their agents or employees conduct a

disability investigation or other screening of

such person, they will apply the standards set

forth in Patti v. Schweiker and Finnegan v.

Matthews and, if they conclude that such per-

son’s medical condition has improved and he or

she is no longer disabled, they will identify the

evidence relied upon to reach that conclusion.

(iv) Following such review, persons who are

notified of an initial determination that their

benefits shall cease shall be given an opportunity

to contest the determination and pending such

review, they shall continue to receive aid as

provided in current laws and regulations.

52a

The Secretary’s request for a partial stay and for

a temporary stay, characterized by the government

as an “emergency motion,” was filed on Thursday,

August 11, 1983—56 days after the district court

issued the preliminary injunction and only four days

before the Monday on which the Secretary was re-

quired to notify terminated recipients of their eligi-

bility for reinstatement. This court received the

lengthy papers and record in this case on Friday,

August 12, 1983. On Saturday, August 13, we issued

a six page order rejecting the Secretary’s request

for a temporary stay and declining to act “on an

emergency basis” on the request for a partial stay.

Our decision was based in part on the fact that the

requirement that terminated recipients be notified

by August 15, 1983 of their potential eligibility for

benefits was the only immediate obligation imposed

upon the government. We reasoned that the bulk of

the administrative costs and the cost of reinstating

benefits—the source of the injury which the Secre-

tary argues justifies a stay—would not start to ac-

crue until later, when the former recipients begin re-

applying for benefits. Thus, we saw no necessity

to issue a temporary stay or to grant a partial stay

pending appeal on an “emergency” basis—especially

given the Secretary’s unexplained delay in seeking

such relief.

On Monday, August 15, 1983, the Secretary, in

compliance with paragraph (c)(i) of the district

court’s order, notified 28,557 members of the plain-

tiff class of their eligibility to reapply for disability

benefits. The issue remaining before us is whether

the Secretary must now comply with the remainder

of paragraph (c). In other words, while the appeal

from the preliminary injunction order is pending,

must the Secretary reinstate benefits to those dis-

53a

abled persons who file applications, and may she then

terminate those benefits only in accordance with the

procedures required by our decisions in Patti and

Finnegan?

STANDARD OF REVIEW

The standard for evaluating stays pending appeal

is similar to that employed by district courts in de-

ciding whether to grant a preliminary injunction.

See Nevada Airlines, Inc. v. Bond, 622 F.2d 1017,

1018 n.38 (9th Cir. 1980). In this circuit there are

two interrelated legal tests for the issuance of a

preliminary injunction. These tests are “not sepa-

rate” but rather represents “the outer reaches ‘of a

single continuum.’” Los Angeles Memorial Coli-

seum Commission v. National Football League, 634

F.2d 1197, 1201 (9th Cir. 1980). At one end of the

continuum, the moving party is required to show

both a probability of success on the merits and the

possibility of irreparable injury. Jd. See also Miss

Universe, Inc. v. Flesher, 605 F.2d 1180, 1134 (9th

Cir. 1979). At the other end of the continuum, the

moving party must demonstrate that serious legal

questions are raised and that the balance of hard-

ships tips sharply in its favor. Los Angeles Me-

morial Coliseum Commission, 634 F.2d at 1201; Miss

Universe, 605 F.2d at 1134. “[T]he relative hard-

ship to the parties” is the “critical element” in de-

ciding at which point along the continuum a stay is

justified. Benda v. Grand Lodge of International

Association of Machinists, etc., 584 F.2d 308, 314-15

(9th Cir. 1978), cert. dismissed, 441 U.S. 987 (1979).

In addition, in cases such as the one before us, the

public interest is a factor to be strongly considered.

See Warm Springs Dam Task Force v. Gribble, 565

F.2d 549, 551 (9th Cir. 1977).

54a

In this case, the Secretary seeks a stay pending

appeal of a preliminary injunction. Therefore, in

order to determine whether the Secretary has raised

serious legal questions or whether she has shown a

probability of success on the merits, we must evalu-

ate her arguments for overturning the district court’s

preliminary injunction on appeal. As a general rule,

we have held that an “order issuing or denying a

preliminary injunction will only be reversed if the

lower court abused its discretion or based its decision

upon erroneous legal premises.” Los Angeles Memo-

vial Coliseum Commission, 684 F.2d at 1200.

DISCUSSION

I. IRREPARABLE INJURY, THE BALANCE

OF HARDSHIPS, AND THE PUBLIC IN-

TEREST.

The Secretary’s contention that the government

will suffer substantial hardship in the absence of a

stay pending appeal is premised solely on the finan-

cial and administrative costs of reinstating disability

benefits to former recipients. According to the Secre-

tary, 28,557 terminated recipients were notified on

August 15, 1983, of their eligibility to reapply for

benefits. The government estimates that if every one

of these former recipients reapplies for benefits, the

total monthly cost of restoring benefits pending re-

adjudication of claims will be $12,000,000. The gov-

ernment puts the total administrative cost of imple-

menting the district court order at $10,300,000.

5 These estimates are contained in the Secretary’s amended

declaration received by this court on August 17, 1983. The

cost estimates previously supplied to the district court by the

government were almost three times as high: the monthly

5ba

The district court’s injunction will undoubtedly

impose some burden on the government. Even if we

accept the Secretary’s estimates at face value, how-

ever, the government has not demonstrated that the

balance of hardships tips in its favor.* On the con-

cost of reinstating benefits was put at $32,000,000, and the

total administrative cost was estimated at $28,000,000. Even

considering these much higher cost estimates, the district

court did not find that the disability insurance trust fund

would be endangered by the issuance of a preliminary injunc-

tion or that the balance of hardships tipped in the govern-

ment’s favor.

* There are several reasons to believe that the Secretary’s

arguments regarding financial harm are somewhat exag-

gerated. To begin with, most of the increased administrative

workload—the holding of hearings—will not occur automati-

cally ; rather, hearings will be necessary only in cases in which

the Secretary believes that there is evidence that she can in-

troduce to show an improvement in medical condition, and

thus a proper basis for terminating benefits.

Second, there is no evidence in the record that the increased

expenditures necessitated by the district court’s order would

imperil the Social Security trust fund. To the contrary, plain-

tiffs have presented evidence indicating that the trust fund

for disability insurance is currently solvent and that the long-

term actuarial predictions for the fund also indicate solvency.

Third, the government’s cost estimates irnore the increased

burden placed on state and local taxpayers by the Secretary’s

actions. According to one study presented by plaintiffs, 48°

of those Supplemental Security Income recipients terminated

in Michigan subsequently became eligible for other govern-

ment-funded welfare programs, while 7% entered psychiatric

facilities, 4°7 entered prisons or jails, 5% received outpatient

mental health services, and 2% died. Similarly, New York

state officials estimate that the Secretary’s disability termina-

tions would cost New York state and local governments $234

million annually in additional welfare costs as well as an extra

$165 million annually in mental] health care expenditures. The

Secretary’s estimates of harm to the taxpayer completely ig-

56a

trary, we agree with the district court’s conclusion

that the balance of hardships in this case strongly

favors plaintiffs.

Plaintiffs do not attempt to match in dollars and

cents the monetary harms that will allegedly be suf-

fered by the government. Yet the physical and emo-

tional suffering shown by plaintiffs in the record

before us is far more compelling than the possibility

of some administrative inconvenience or monetary

loss to the government. We find ample support for

Judge Gray’s persuasive finding “that some who

have unexpectedly lost benefits have already suffered

deprivation of life’s necessities, further illness, or

even death from the very disabilities that the Secre-

tary deemed them not to have.” Faced with such a

conflict between financial concerns and preventable

human suffering, we have little difficulty concluding

that the balance of hardships tips decidedly in plain-

tiffs’ favor.

We also consider it crucial that, because the mem-

bers of plaintiffs’ class are largely infirm and dis-

abled, their resources and life spans are by definition

extremely limited. Deprivation of benefits pending

trial might cause economic hardship, suffering or

nore these other costs. We seriously question whether the

public interest is served in this case by merely shifting the

tax burden from federal to state and local governments. See,

e.g., Leschniok v. Heckler, Nos 82-5676 & 82-665, slip op. at

6, 8 (9th Cir. Aug. 18, 1988) (noting “a shift of the welfare

burden from one program to another, from primarily federal

to primarily state sources of funds,” as a result of Social Se-

curity benefit terminations); Mental Health Association of

Minnesota v. Schweiker, 554 F. Supp. 157, 167 (D. Minn.

1982) (“There is no public interest in shifting financial re-

sponsibility for the psychiatrically disabled from a solvent

disability fund to state and local government.”).

57a

even death. Retroactive restoration of benefits would

be inadequate to remedy these hardships.’ Follow-

ing his thorough review of the record, Judge Gray

reached a similar conclusion: “Retroactive relief [for

plaintiffs] would be inadequate, and perhaps too late,

to ensure that the purpose of Social Security dis-

ability benefits, i.e., provision of a minimum stand-

ard of living for the poor and disabled, will be

served.” See also Leschniok v. Heckler, Nos. 82-5676

& 82-6065, slip op. at 8 (9th Cir. Aug. 18 1983)

(“We fail to comprehend the Secretary’s argument

that financial compensation at some future date,

should the claimants survive and prevail, mitigates

the hardship which is visited upon claimants and

their families each and every day.”); Caswell v.

Califano, 583 F.2d 9, 14 (1st Cir. 1978) (“It is

simply not true that a claimant for disability bene-

fits, not infrequently in dire financial circumstances

due to his disability, is truly made whole by retro-

active payments which he has had to survive well

over a year without.” ; Mental Health Association of

Minnesota v. Schweiker, 554 F. Supp. 157, 165-66

(D. Minn. 1982) (“[{C]lass members who have been

denied [disability] benefits or have had benefits ter-

minated have suffered serious harms . . . [that] are

not recompensable through a retroactive award of

benefits.”’) .

7 We also note, but do not place much emphasis on, the fact

that the government will have the opportunity to recover

benefits that were paid erroneously. The district court has

expressly conditioned the receipt of reinstated benefits under

the preliminary injunction on the Secretary’s right to recoup

such payments if the recipient is subsequently terminated in

accordance with Patti and Finnegan. This may well be more

of an illusory than a practical remedy. Mathews v. Eldridge,

424 U.S. at 347.

58a

Here, the question of the public interest is in-

separable from the issues relating to the relative

hardship suffered by the litigants. Up to now, we

have discussed the government’s interest only in the

narrowest terms—the administrative and financial

impact of the preliminary injunction. For purposes

of determining the relative hardship to the parties,

it may be appropriate to do so—to judge the govern-

ment’s narrow interest in terms of its role as a liti-

gant. In a broader sense, however, the government’s

interest is the same as the public interest. The gov-

ernment must be concerned not just with the public

fise but also with the public weal. In assessing this

broader interest, we are not bound by the govern-

ment’s litigation posture. Rather, we make an inde-

pendent judgment as to the public interest.

It is not only the harm to the individuals involved

that we must consider in assessing the public in-

terest. Our society as a whole suffers when we

neglect the poor, the hungry, the disabled, or when

we deprive them of their rights or privileges. So-

ciety’s interest lies on the side of affording fair

procedures to all persons, even though the expendi-

ture of governmental funds is required. It would be

tragic, not only from the standpoint of the indi-

viduals involved but also from the standpoint of

society, were poor, elderly, disabled people to be

wrongfully deprived of essential benefits for any

period of time. It would be unfortunate, but far less

harmful to society, were the government to succeed

in overturning the preliminary injunction but be

unable to recoup all or a portion of the funds.

In summary, the balance of hardships as between

the litigants lies sharply in favor of the plaintiffs.

When the public interest is included, that balance is

overwhelming.

59a

II. PROBABILITY OF SUCCESS ON THE

MERITS AND THE EXISTENCE OF SE-

RIOUS LEGAL QUESTIONS.

The Secretary makes two principal arguments re-

garding the merits of her appeal from the order

granting the preliminary injunction. First, the Sec-

retary attempts to defend her policy of ‘“non-

acquiescence” with federal court decisions. This de-

fense, presented in a footnote to the government’s

brief, is far from persuasive. To begin with, other

circuits that have considered the question have al-

ready rejected the Secretary’s argument that a federal

agency can legitimately ignore federal appeals court

precedents. See, e.g., Jones & Laughlin Steel Corp. v.

Marshall, 686 F.2d 32, 88 (8d Cir. 1980); ITT

World Communications v. FCC, 685 F.2d 32, 43 (2d

Civ. 1980) ; Ithaca College v. NLRB, 623 F.2d 224,

228-29 (2d Cir.), cert. denied, 449 U.S. 975 (1980);

Mary Thompson Hospital, Inc. v. NLRB, 621 F.2d

858, 864 (7th Cir. 1980); Allegheny General Hos-

pital v. NLRB, 608 F.2d 965, 970 (8d Cir. 1979).

See also Chee v. Schweiker, 563 F. Supp. 1362, 1364-

65 (D. Ariz. 1983); Siedlecki v. Schweiker, 563 F.

Supp. 43, 46-48 (W.D. Wash. 1983); Hillhouse v.

Harris, 547 F. Supp. 88, 93 (W.D. Ark. 1982).

Moreover, the cases cited by the Secretary to support

her position appear to be inapposite. In short, our

review of the relevant case law indicates that there

is little chance that the Secretary will succeed in her

argument that nonacquiescence is a legitimate policy,

or, to put it more precisely, that she will persuade us

that the district court committed a legal error in

concluding that there was a strong probability that

the plaintiffs would ultimately prevail on this funda-

mental issue.

60a

Second, it should be obvious that, even if the Sec-

retary’s issuance of nonacquiescence rulings regard-

ing Finnegan and Patti does not violate the Consti-

tution, each of her department’s decisions based on

those rulings will be rejected summarily whenever

challenged in this circuit. We see little chance that

the Secretary will convince this Court to the con-

trary.*

The majority of the Secretary’s attention is de-

voted to her second argument: that the district court

improperly exercised jurisdiction over some members

of plaintiffs’ class. The district court premised its

jurisdiction on 42 U.S.C. § 405(g), which provides a

limited avenue of judicial review upon the filing of a

complaint within 60 days of a final decision of the

Secretary.°

8 The Secretary also argues that her nonacquiescence rul-

ings issued after the decisions in Patti and Finnegan consti-

tute superceding regulations to which this Court should defer.

Because the Patti and Finnegan decisions were not based in

any way on particular Health and Human Services regula-

tions, we do not think the Secretary is likely to prevail on this

argument.

® There may be a basis for the district court’s jurisdiction

other than § 405(g). Plaintiffs claim that 28 U.S.C. § 1361

(1976) provides an independent basis for such jurisdiction.

Section 1361 gives the district court “original jurisdiction of

any action in the nature of mandamus to compel an officer or

employee of the United States or any agency thereof to per-

form a duty owed to the plaintiff.” We have recently held

that section 1361 offers “an independently adequate ground

for jurisdiction” in a case dealing with a “constitutional chal-

lenge” to the illegal termination of social security disability

insurance benefits. Leschniok v. Heckler, Nos. 82-5676 & 82-

6065, slip op. at 5 (9th Cir. Aug. 18, 1983). See also Elliot v.

Weinberger, 564 F.2d 1219, 1226 (9th Cir. 1977), aff'd in part,

rev'd in part on other grounds sub nom., Califano v. Yamasaki,

6la

In order to satisfy the section 405(g) require-

ments, plaintiffs must overcome several procedural

obstacles. First, plaintiffs must have presented a

claim for benefits to the Secretary. Contrary to the

Secretary’s assertion, there is substantial authority

for the proposition that this requirement is satisfied

once the Secretary has had an opportunity to act and

benefits have actually been terminated. See Ellison v.

Califano, 546 F.2d 1162, 1164 (5th Cir. 1977).

The second requirement under section 405(g) is

that a final decision must have been made by the

Secretary. This requirement may be waived by the

Secretary or excused or deemed complied with by the

court. See, e.g., Mathews v. Eldridge, 424 U.S. 319,

328 (1976); Jones v. Califano, 576 F.2d 12, 18-19

(2d Cir. 1978); Liberty Alliance for the Blind v.

Califano, 568 F.2d 333, 346 (8rd Cir. 1977). Some

of the named plaintiffs and an unknown number of

the plaintiff class have exhausted all administrative

remedies and obtained final decisions; these plain-

tiffs indisputably are properly before the district

court. The Secretary argues, however, that there is

no jurisdiction over the other plaintiffs. The district

court evaluated the Secretary’s arguments and de-

442 U.S. 682 (1979). Plaintiffs contend that, in light of the

Secretary’s flagrant noncompliance with Patti and Finnegan,

mandamus is appropriate because “the claim is clear and cer-

tain and the duty of the officer is ministerial and so plainly

prescribed as to be free from doubt.” Elliot v. Weinberger,

564 F.2d at 626. Plaintiffs also contend that section 1361 juris-

diction exists because they are making a constitutional chal-

lenge to the procedures used by the Secretary rather than

seeking the payment of benefits, citing Ringer v. Schweiker,

697 F.2d at 1294, 1296. Since the district judge found juris-

diction under § 405(g), he did not find it necessary to con-

sider or resolve the section 1361 question.

62a

cided that the plaintiffs’ failure to exhaust their ad-

ministrative remedies was excusable because it would

have been futile to require plaintiffs to pursue ad-

ministrative remedies in the face of the Secretary’s

announced policy of nonacquiescence. The district

court’s analysis finds strong support in two decisions

that were thoroughly considered and discussed by

Judge Gray in his opinion: Weinberger v. Salfi, 422

U.S. 749, 765-66 (1975); and Ringer v. Schwerker,

697 F.2d 1291 (9th Cir. 1983), cert. granted, 103

S. Ct. 3535 (June 27, 1983). —

There is much additional support for the district

court’s conclusion that the section 405(g) exhaustion

requirement does not apply in this case. First, plain-

tiffs have raised constitutional challenges to the Sec-

retary’s nonacquiescence policies. The Second Circuit

has held that the exhaustion requirement should be

waived where constitutional challenges similar to the

ones in this case are raised. See Jones v. Califano,

576 F.2d at 18-19. See also Mathews v. Eldridge,

424 U.S. at 330 (“It is unrealistic to expect that the

Secretary would consider substantial changes in the

current administrative review system at the behest

of a single aid recipient raising a constitutional chal-

lenge in an adjudicatory context. The Secretary

would not be required to even consider such a chal-

lenge.”). Second, the Third Circuit has decided that,

even as to statutory rather than constitutional issues,

the exhaustion requirement can be waived whenever

the Secretary has taken a “final position” on a ques-

tion. See Liberty Alliance for the Blind v. Califano,

568 F.2d at 346 (“The test for exhaustion of a statu-

tory issue in an individual case . . . should be whether

the Secretary has taken a final position on that issue.

In the class context the test should be no different.’’).

63a

See alse Jones v. Califano, 576 F.2d at 19 (waiver of

exhaustion requirement when “the Secretary had had

ample opportunity . . . to modify his position.’’).

Finally, the district court emphasized the obvious

undesirability, as well as the due process and equal

protection implications, of the dual system of benefit

review created by the Secretary’s nonacquiescence

policy. As the district court noted,

[t]he policy of nonacquiescence announced by

the Secretary creates two standards governing

claimants whose disability benefits are termi-

nated as a result of such nonacquiescence. If

such a claimant has the determination and the

financial and physical strength and lives long

enough to make it through the administrative

process, he can turn to the courts and ultimately

expect them to apply the law as announced in

Pattt and Finnegan. If exhaustion overtakes

him and he falls somewhere along the road lead-

ing to such ultimate relief, the nonacquiescence

and the resulting termination stand. Particu-

larly with respect to the types of individuals

here concerned, whose resources, health and pro-

spective longevity are, by definition, relatively

limited, such a dual system of law is prejudicial

and unfair.

The Second Circuit expressed a similar view in Jones

v. Califano, 576 F.2d at 19.°

1° Jones involved a conflict between the Secretary and the

Department’s Appeals Council. Despite the fact that the Ap-

peals Council had ruled repeatedly in favor of the claimants,

the Secretary continued to adhere to a disapproved regula-

tion. The Second Circuit held that the exhaustion require-

ment need not be met in light of the Secretary’s refusal to

eres ~~ = ae

64a

The third requivement under section 405(g) is

that plaintiffs’ appeals must have been brought within

60 days of the Secretary’s final decision. The Sec-

retary argues that all decisions not chailenged within

60 days are unappealed and thus have a res judicata

effect in later proceedings. Because the 60-day re-

quirement can be waived by the parties, Mathews v.

Eldridge, 424 U.S. at 328 n.9 (1976) ; Weinberger v.

Salfi, 422 U.S. at 763-64, it need not be taken into

consideration on appeal if not raised before the dis-

trict court. Id. See also Rowland v. Califano, 588

F.2d 449 (5th Cir. 1979). There is no indication in

the record currently before us that the 60 day re-

quirement was raised by the Secretary below; nor is

there any mention of the requirement in the district

court’s decision. In any event, the administrative

res judicata bar is ordinarily not applied when an

agency’s decision is challenged on constitutional

grounds. Califano v. Sanders, 480 U.S. 99, 109

(1977).

In a recent decision cited in a footnote in the gov-

ernment’s brief, the Second Circuit dismissed, for

lack of jurisdiction, a class action compiaint filed by

persons whose disability benefits had been terminated.

Smith v. Schweiker, 709 F.2d 777 (2d Cir. 1988).

The disabled persons argued, inter alia, that specific

evidence of medical improvement was required be-

fore benefits could be terminated. In Smith, how-

ever, all the named individuals had successfully ap-

pealed their terminations and were actually receiving

change his policy. This case was remanded so that the dis-

trict court could consider the propriety of class-wide relief

and thus avoid “two standards of benefit calculation, one for

claimants who seek review by the Appeals Council and one

for claimants who do not.” 576 F.2d at 19.

65a

the benefits in question at the time of the litigation.

Moreover, no constitutional challenge similar to that

made by plaintiffs here was raised. While the gov-

ernment may take some comfort from some of the

analysis and comments contained in the Second Cir-

cuit’s opinion, and while the opinion may have the

effect of limiting Jones v. Califano, supra, to some

extent, Smith appears unlikely to affect significantly

our view of the issues before us.”

Although the Secretary may have raised “sericus

legal yuestions,”’ she has failed to make a showing of

probability of success on the merits. Considered both

individually and collectively, the Secretary’s argu-

ments do not persuade us that there is a probability

that this court will reverse the district court’s deci-

sion to grant a preliminary injunction.

CONCLUSION

The Secretary has the weaker position on both

aspects of the interrelated test governing stays. The

balance of hardships tips sharply toward the plain-

tiffs, even without including the public interest fac-

tor, and it is not probable that the Secretary will

succeed on the merits of her appeal from the order

granting a preliminary injunction. Finally, the pub-

lic interest strongly supports denial of the stay.

The request for a partial stay is DENIED.

11 The Secretary also contends that the district court’s pre-

liminary injunction awards retroactive relief to plaintiffs and

thus improperly “grants the plaintiffs all the affirmatives re-

lief sought.” We disagree. The district court’s order does

not award any retroactive benefit payments. As the court

said, “[i]t would be inappropriate to grant such an award at

this juncture . . . because this controversy has not been fully

litigated and the plaintiffs have not requested such relief.”

66a

PREGERSON, Circuit Judge, concurring.

I concur completely in Judge Reinhardt’s opinion.

I write separately only to emphasize my concern over

the Secretary’s avowed policy of nonacquiescence

with Ninth Circuit law as enunciated in Patti v.

Schweiker, 669 F.2d 582 (9th Cir. 1982), and Fin-

negan v. Matthews, 641 F.2d 1840 (9th Cir. 1981).

The Secretary’s ill-advised policy of refusing to obey

the decisional law of this circuit is akin to the repudi-

ated pre-Civil War doctrine of nullification whereby

rebellious states refused to recognize certain federal

laws within their boundaries. The Secretary’s non-

acquiescence not only scoffs at the law of this circuit,

but flouts some very important principles basic to

our American system of government—the rule of

law, the doctrine of separation of powers imbedded

in the constitution, and the tenet of judicial suprem-

acy laid down in Marbury v. Madison, 5 U.S. (1

Cranch) 137 (1803). The government expects its

citizens to abide by the law—no less is expected of

those charged with the duty to faithfully administer

the law.

67a

APPENDIX D

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 83-6126

D.C. No. 83-0697-WPG[T]

Central Dist. of California

MARIO LOPEZ, ET AL., PLAINTIFFS-APPELLEES

vs.

MARGARET M. HECKLER, Secretary of Health and

Human Services, ET AL., DEFENDANTS-APPELLANTS

[Filed Aug. 18, 1983]

ORDER

Before: Pregerson and Reinhardt, Circuit Judges.

On August 11, 1983, the Secretary of Health and

Human Services filed an emergency motion for a

partial stay pending appeal from a federal district

court order entered June 16, 1983. She also seeks

“in any event a temporary stay.” F.R. App. P. 8(a);

Ninth Circuit R. App. P. 6(h). The standard for

evaluating stays pending appeals is similar to that

employed by district courts in considering whether to

grant a preliminary injunction See Nevada Airlines,

68a

Inc. v. Bond, 622 F.2d 1018 (9th Cir. 1980). Conse-

quently, a stay pending appeal is appropriate when

there is a strong likelihood of success on the merits

and possible irreparable injury, or when serious ques-

tions are presented and the balance of hardships

tips sharply in the movant’s favor. See Los Angeles

Memorial Coliseum Comm'n v. National Football

League, 634 F.2d 1197, 1200 (9th Cir. 1980). “These

are not separate tests but the outer reaches ‘of a

single continuum.’ Benda, supra, 584 F.2d at 315.”

Id. In cases like the one before us, the public in-

terest also is a factor to be strongly considered. See

Warm Springs Dam Task Force v. Gribble, 596 F.2d

549, 551 (9th Cir. 1977). Here, success on the merits

means success on appeal from the order granting the

preliminary injunction rather than success on the

merits of the underlying case. “An order issuing or

denying preliminary injunction will normally be re-

versed only if the lower court abused its discretion

or based its decision upon erroneous legal premises.”

Los Angeles Memorial Coliseum Comm’n, 634 F.2d

at 1200.

The underlying dispute in this case concerns a

class action challenge to the procedures used by the

Secretary of Health and Human Services for termi-

nating Social Security disability benefits. See 42

U.S.C. §§ 401-431. (Social Security Disability Insur-

ance benefits for disabled workers); 42 U.S.C.

§§ 1381-1883 (c). (Supplemental Security Income dis-

ability benefits for persons who are both poor and

disabled). The district court’s June 13, 1983 order

granted plaintiffs’ motion for a preliminary injunc-

tion. The government seeks a stay pending appeal of

the following aspect of that order:

69a

(c) (i) Within sixty (60) days following the

date of this order, the defendants will notify

(a) each class member who had been receiving

Supplemental Security Income Disability bene-

fits under 42 U.S.C. § 1882(a) (8) (E), and who

was terminated from such benefits after August

25, 1980, and (b) all other persons who have

been terminated from either Title II social se-

curity disability insurance or Title XVI Sup-

plemental Security Income Disability after Au-

gust 30, 1981, for the purported reason that his

or her disability had ceased, whether or not

such person has appealed, that:

Such person may apply for reinstatement of

benefits if he or she believes that his or her

medical condition has not improved follow-

ing the granting of disability benefits.

(ii) Upon receiving such application, the de-

fendants will forthwith reinstate and pay bene-

fits in the monthly amounts such person would

have been receiving had his or her benefits not

been interrupted.

(iii) Following such reinstatement, if the de-

fendants or their agents or employees conduct a

disability investigation or other screening of

such person, they will apply the standards set

forth in Patti v. Schweiker and Finnegan V.

Matthews and, if they conclude that such per-

son’s medical condition has improved and he or

she is no longer disabled, they will identify the

evidence relied upon to reach that conclusion.

(iv) Following such review, persons who are

notified of an initial determination that their

benefits shall cease shall be given an opportunity

to contest the determination and pending such

70a

review, they shall continue to receive aid as pro-

vided in current laws and regulations.

(Emphasis added.)

The government argues that a decision is required

by Monday, August 15, the sixteenth day after the

issuance of the district court’s order, and that its

motion for a stay must be decided on an emergency

basis. We note, however, that while the district

court’s order was issued on June 16, 1983, the Secre-

tary’s motion for a stay was not filed until Thurs-

day, August 11—56 days later, and the moving

papers were not received by the judges authorized

to act until Friday, August 12. In fact, on Friday

we received voluminous materials from the parties

that we have not yet had an opportunity to review

thoroughly. In light of its characterization of this

situation as an “emergency,” the government’s lack

of an explanation for its delay in requesting a stay is

disturbing.

Moreover, the only portion of the district court’s

order that must be implemented by Monday is the

requirement that the Secretary notify each qualify-

ing member of plaintiffs’ class that “[s]uch a person

may apply for reinstatement of” Social Security dis-

ability benefits (subparagraph (c)(i) [sic]. Thus,

the only immediate obligation imposed on the Secretary

is that such notifications be made. Neither the bulk

of the administrative costs complained of nor the

actual reinstatement of benefit payments will begin

until the class members complete their applications

and submit them to the Secretary. These matters are

covered in subsequent portions of the district court’s

order.

Given the government’s apparent delay in filing

its motion and the fact that notification is the only

71a

action that must be performed immediately, we find

no justification for issuing a stay pending appeal on

an emergency basis or issuing a temporary stay.

Almost all of the harms that the government will

allegedly suffer derive from the actions it must take

onee the benefit applications are filed. There is no

allegation that the simple requirement that qualified

plaintiffs be notified will cause the government either

irreparable injury or substantial hardship. On the

other hand, the record indicates that plaintiffs’ class

is likely to suffer substantially from any delay at

this stage of the proceedings. That class is largely

composed of those who are ill and disabled, and, as

the district court noted, “whose resources, health

and prospective longevity are, vy definition, rela-

tively limited.” The district court found “that some

who have unexpectedly lost benefits have already

suffered deprivation of life’s necessities, further ill-

ness, or even death from” their disabilities. A delay

in the implementation of the district court’s order

that qualified plaintiffs be notified of their eligibility

to reapply for benefits could well result in suffering

that would prove to have been totally unjustified

should plaintiffs ultimately prevail.

As noted, the principal aim of the government’s

motion for a stay is to prevent the expenditure of

funds that will occur once the benefits applications

are received. These expenditures are required as a

result of subparagraphs ¢c(ii) (iii) and (iv) of the

district court’s order. The full motions panel will

proceed rapidly to evaluate the merits of the Secre-

tary’s motion.

We fully expect to decide, prior to the time when

the government must begin to comply with subpara-

graphs c(ii) (iii) and (iv) of the district court’s

72a

order, whether a stay pending appeal is appropriate.

In the meantime, in our opinion, the mailing of the

notices in compliance with subparagraph c(i) of that

order is clearly in the public interest.

We thus decline to act on an emergency basis on

the Secretary’s request for a stay pending appeal.

We will, however, give immediate attention to that

request and issue a decision promptly. We deny the

request for a temporary stay.

73a

APPENDIX E

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

Civil No. 83-0697-WPG(T)

MARIO LOPEZ, ET AL., PLAINTIFFS

Vv.

MARGARET M. HECKLER, ET AL., DEFENDANTS

[Filed Jun. 16, 1983]

MEMORANDUM OF DECISION

This is a proposed class action against the Secre-

tary of Health and Human Services and the Com-

missioner of the Social Security Administration,

challenging procedures used in terminating Social

Security disability benefits." The plaintiffs are

1 At issue here are two kinds of social security disability

benefits. Title II of the Social Security Act established dis-

ability insurance benefits for disabled workers, 42 U.S.C.

§ 401, et seq. (SSDI). These benefits are based upon the in-

dividual’s earnings record and are paid without regard to

financial need.

Title XVI of the Social Security Act created Supplemental

Security Income Disability benefits for persons who are both

poor and disabled, 42 U.S.C. § 1381, et seg. (SSI). SSI bene-

74a

twenty assertedly disabled individuals and fourteen

organizations, the former bringing suit on behalf of

themselves and those similarly situated. Eighteen of

the plaintiffs also seek to have the terminations of

their individual benefits reversed pursuant to 42

U.S.C. § 405(g). The plaintiffs have filed motions

for vacation of reference to the magistrate, class

certification and preliminary injunction; the defend-

ants have filed a motion to dismiss for lack of juris-

diction. The defendants’ motion is denied and the

plaintiffs’ motions are granted, as set forth in the

terms of the order filed with this memorandum.

Beginning in March 1981, the Social Security Ad-

ministration (SSA) noticeably accelerated the rate

at which it reviews the disability status of those re-

ceiving disability benefits. In the calendar year

1980, 185,689 Continuing Disability Investigations

(CDIs) were conducted;* in the fiscal year 1982,

435,262 CDIs were conducted.* It would appear that

the acceleration of the review process resulted in a

fits are paid to eligible poor persons whose income and re-

sources fall below a specified level. Disability recipients whose

SSDI benefits are less than the monthly SSI benefit level in a

particular state are also eligible to receive partial SSI benefits

to supplement their SSDI benefits.

2C. Pepper, Impact of the Accelerated Review Process on

Cessations and Denials in the Social Security Disability In-

surance Program, 97th Cong., 2d Sess. (1982), reprinted in

Social Security Disability Insurance Program: Cessations

and Denials: Hearing Before the House Select Committee on

Aging, 97th Conz., 2d Sess. 3 at 10 (1982).

3 Letter from Paul B. Simmons, Deputy Commissioner for

Programs and Policy, Social Security Administration to Sen-

ator John Heinz, responding to questions from Senator Heinz

submitted on April 12, 1983 (Plaintiff Reply Brief, Exhibit

Z).

75a

dramatic increase in terminations. In fiscal year

1982, 195,474 beneficiaries were removed from the

disability rolls, as compared with 98,800 terminated

in fiscal year 1981.*

In two recent opinions, the Court of Appeals of

this circuit held that before disability benefits may

be terminated for lack of disability, the Secretary

must produce evidence showing improvement in the

recipient’s medical condition. Patti v. Schwetker,

669 F.2d 582 (9th Cir. 1982)* and Finnegan v.

Matthews, 641 F.2d 1340 (9th Cir. 1981).° The

* Td.

5In Patti, SSI disability benefits were terminated and the

plaintiff challenged such termination on the grounds that the

decision was not based on substantial evidence, that her pro-

cedural rights were abused, and that the termination resulted

from illegal use of social security regulations as a substitute

for an individualized inquiry into her disability. The Court

of Appeals reversed the district court’s affirmance of termina-

tion, holding that the initial decision that plaintiff was dis-

abled gave rise to a presumption that she still was disabled.

669 F.2d at 587. The court ruled that the Secretary, in termi-

nating a recipient, must “ ‘meet or rebut’” the presumption

with evidence that the recipient’s medical condition has im-

proved in the interim. Jd. This presumption imposes upon the

Secretary the burden of coming forward with evidence that a

recipient’s condition has changed, a burden that had not been

met in that case. Id.

6In Finnegan, a recipient of SSI disability benefits under

the “grandfather clause” of the Social Security Act challenged

his termination. The grandfather clause, 42 U.S.C. § 1382c

(a) (3) (E), provides that an individual shall be considered

disabled if he is permanently and totally disabled as defined

under an approved state plan, had received aid under such

plan during a specified time in 1973, and so long as he is con-

tinuously disabled as so defined. The Court of Appeals held

that the Secretary “may not terminate benefits absent a show-

76a

Secretary has announced that she “does not ac-

quiesce” in these decisions and has issued rulings to

her subordinates, including administrative law

judges, directing them not to act in accordance with

these precedents.”

The plaintiffs challenge the constitutionality of

the Secretary’s policy of mnonacquiescence on the

grounds that it violates the principles of Separation

of Powers and stare decisis, as well as the plaintiffs’

right to due process. The Government denies that

the policy of nonacquiescence is illegal and contends

that the effect of the nonacquiescence rulings is

merely to preserve the Secretary’s right to ask the

courts of appeals, and possibly the Supreme Court,

to overrule decisions like Patti and Finnegan in ap-

propriate cases.

This court notes that this litigation invoives more

than 42 U.S.C. § 405(g) claims and is a class action

in which injunctive relief is requested. Since 28

U.S.C. § 686 does not empower magistrates to deter-

mine pretrial matters with respect to such actions,

and since the parties agree that vacation of refer-

ing of previous clear and specific error [in the initial determi-

nation] or medical improvement which is sufficient to estab-

lish that an applicant is no longer ‘continuously disabled as so

defined.’” 641 F.2d at 1345.

™SSR 82-49c states the SSA’s nonacquiescence in Patti v.

Schweiker, 669 F.2d 582 (9th Cir. 1982).

SSR 82-10c states the SSA’s nonacquiescence in Finnegan

v. Matthews, 641 F.2d 1340 (9th Cir. 1981).

SSR 81-6 directs that where the evidence obtained at the

time of a continuing disability investigation establishes that

the individual is not currently disabled or blind, a finding of

cessation is appropriate, irrespective of whether or how much

the individual’s condition has medically improved since the

prior favorable determination.

_

77a

ence to the magistrate should be granted for the

purpose of these motions, the vacation will be or-

dered.

With respect to the defendants’ motion tc dismiss

for lack of jurisdiction, the court finds that this case

fits within the exception to the exhaustion of admin-

istrative remedies requirement enunciated in Wein-

berger et al. v. Salfi et al., 422 U.S. 749 (1975).

There, the Supreme Court ruled that the three-judge

district court did have jurisdiction to consider a con-

stitutional challenge by some plaintiffs to certain

Social Security eligibility requirements. Those plain-

tiffs had not exhausted the administrative processes

by taking their grievances to an administrative law

judge or the SSA’s Appeals Council. The Court noted

that formal exhaustion was not required there be-

cause the purposes of exhaustion—to prevent prema-

ture interference with agency processes and to pro-

vide the agency an opportunity te correct its own

errors—had been served, once the Secretary “has sat-

isfied himself that the only issue is the constitution-

ality of a statutory requirement, a matter which is

beyond his jurisdiction to determine... .” Id, at

765.

The Ninth Circuit Court of Appeals has noted that

where a ruling by the Secretary, while “nominally

leaving the administrative review process open for

claims . . .,” in effect makes the result of that proc-

ess “both pre-ordained and immutable,” the Salfi ex-

ception applies. Ringer et al v. Schweiker, 697 F.2d

1291, 1295 (9th Cir. 1982). The court noted that

such a ruling “not only makes appeals futile... .,”

but also “indicates that the Secretary believes ap-

peals are worthless to the Agency as well as to the

claimant.” Jd. at 1295-6.

78a

Here, in view of the Secretary’s attitude, clearly

enunciated in her ruling directing administrative law

judges and the Appeals Council to ignore Patti and

Finnegan, and not to apply a medical improvement

standard in disability termination cases, appeals

would indeed be futile. Thus, exhaustion of remedies

would serve no useful purpose in this instance. Un-

der the authority of Salfi, supra, and Ringer, supra,

the defendants’ motion to dismiss will be denied.

Regarding the plaintiffs’ motions for class certifi-

cation and for a preliminary injunction, the issues

raised are inextricably intertwined with each other

and with the merits of the plaintiffs’ constitutional

challenge. Our Court of Appeals has stated that to

obtain a preliminary injunction the moving party

must demonstrate “either a combination of probable

success on the merits and the possibility of irrepa-

rable injury, or that serious questions are raised and

the balance of hardships tips sharply in the moving

party’s favor.” Beltran et al. v. Meyers et al., 677

Fd 1317, 1820 (9th Cir. 1982) (emphasis in orig-

inal). The plaintiffs have fulfilled both tests.

As to the first test, they have demonstrated prob-

able success on the merits by making a strong argu-

ment that agencies are bound by the laws of the cir-

cuit. “It is emphatically the province and duty of

the judicial department to say what the law is.

Those who apply the rule to particular cases must of

necessity expound and interpret that rule.” This

principle was laid down many years ago by Chief

Justice Marshall in the landmark case of Marbury v.

Madison, 5 U.S. (1 Cranch) 187, 177 (1803). It has

generaliy been accepted and acclaimed ever since, and

it is the cornerstone of the doctrine of Separation of

Powers that has served our country so well. Thus,

19a

governmental agencies, like all individuals and other

entities, are obliged to follow and apply the law as

it is interpreted by the courts. The courts of appeals

in other circuits categorically have denied the au-

thority of a federal executive body to nonacquiesce in

the law enunciated by our courts of appeals. AI-

legheny General Hospital v. NLRB, 608 F.2d 965

(3d Cir. 1979) (holding that a NLRB order predi-

cated on the agency’s disagreement with the Court of

Appeals’ interpretation of a statute is operating out-

side the law and thus unenforceable) ; accord, Ithaca

College v. NLRB, 628 F.2d 224, 228 (2d Cir. 1980)

(“as must a district court, an agency is bound to

foliow the law of the circuit.”’).

In announcing the policy of nonacquiescence that is

challenged here, the Secretary commented that in

“many” instances the evidence on which disability

was originally allowed “may not be available, or may

not even exist.’”’ Such a circumstance would, indeed,

make it very difficult, perhaps impossible, fully to ap-

ply the rule announced by the Court of Appeals in

Patti and Finnegan. If such problems arise, as they

occasionally may do, the obligation of the administra-

tive body is to do the best that it can to proceed in

harmony with the rule, and infer only such exception

as is made by the facts in the particular case. But

for the Secretary to make the general assertion that

a decision of the Court of Appeals is not to be fol-

lowed because she disagrees with it is to operate out-

side the law.

The policy of nonacquiescence announced by the

Secretary creates two standards governing claimants

whose disability benefits are terminated as a result

of such nonacquiescence. If such a claimant has the

determination and the financial and physical strength

and lives long enough to make it through the ad-

80a

ministrative process, he can turn to the courts and

ultimately expect them to apply the law as an-

nounced in Patti and Finnegan. If exhaustion over-

takes him and he falls somewhere along the road

leading to such ultimate relief, the nonacquiescence

and the resulting termination stand. Particularly

with respect to the types of individuals here con-

cerned, whose resources, health and prospective lon-

gevity are, by definition, relatively limited, such a

dual system of law is prejudicial and unfair.

The plaintiffs have fulfilled the second requirement

of the first test for preliminary injunction by show-

ing that delay for the litigants creates a strong

possibility of irreparable injury. The record shows

that some who have unexpectedly lost benefits have

already suffered deprivation of life’s necessities, fur-

ther illness, or even death from the very disabilities

that the Secretary deemed them not to have. Retro-

active relief would be inadequate, and perhaps too

late, to ensure that the purpose of Social Security

disability benefits, i.e., provision of a minimum stand-

ard of living for the poor and disabled, will be

served.

As to the second test for preliminary injunction,

the plaintiffs’ claim that the Secretary’s failure to

abide by federal appellate precedents denies them

due process of law certainly raises serious legal ques-

tions. Because many plaintiffs have their sole means

of support at stake, the balance of hardships tips

sharply in their favor. Thus, under both alternative

tests for preliminary injunction, the plaintiffs have

demonstrated their right to provisional relief pend-

ing the final disposition of this case.

The plaintiffs request certification of both a nation-

wide class and a Ninth Circuit subclass for the pur-

——w siann

8la

pose of this injunction. As to the proposed Ninth

Circuit class, the plaintiffs define it to be “all per-

sons whose rights and benefits are, have been, or will

be denied by defendants’ express refusal to follow

the judicial precedent” set by the Patti and Finnegan

cases. This court now finds that this group fulfills

the requirements for class certification under Federal

Rule of Civil Procedure 23(a). Since the defendants

estimate that the proposal class will include over

72,000 terminees, not to mention those future ter-

minees who will be protected by the requested injunc-

tion, the class is indeed “‘so numerous that joinder of

all members is impracticable.” The common constitu-

tional challenge to the policy of nonacquiescence is a

legal claim shared by all class members. The class

representatives’ claims are typical of those of the

class since they stem from the same course of con-

duct, again the nonacquiescence, and pose the same

constitutional challenge thereto. The representatives

are adequate because they have no interests antago-

nistic to the class members and seek the identical

relief sought for the class. Moreover, counsel for

these representatives are able and experienced in

protecting the interests of the poor.

The proposed Ninth Circuit class also fulfills the

requirement of Federal Rule of Civil Procedure 23

(b) (2). Final injunctive relief is appropriate with

respect to the class as a whole because the Secretary

has acted on grounds generally applicable to the

class, i.e., her alleged authority to nonacquiesce in

Patti and Finnegan. Thus the proposed class action

will be adjudged maintainable, pursuant to Rule 23

(c) (1).

82a

In light of the foregoing, this court certifies a class

of plaintiffs who live within this circuit, consisting

of SSI and SSDI recipients who have been or will be

considered for termination after August 30, 1981,°

and SSI recipients under the “grandfather clause” of

the Social Security Act who have been or will be con-

sidered for termination after August 25, 1980,° and

excluding those who have been or will be terminated

due to reasons unrelated to current disability or

medical improvement (e.g., actual return to work or

improvement in financial condition).

While sympathetic with plaintiffs’ challenge to the

Secretary’s nonacquiescence policy, this court declines

to certify a nationwide class and issue an injunction

in gross. This court is unfamiliar with the nature

and extent of the Secretary’s interference by non-

acquiescence with federal appellate precedent in other

circuits. Courts in those circuits will be better

equipped to preserve the law as announced by their

respective courts of appeals than is this court.

All members of the class here established have a

right to the protection of the law of this circuit.

The injunction to be issued will permit restoration of

8 This date represents the date on which Patti became final

(i.e., the date upon which the Court of Appeals denied rehear-

ing and rehearing en banc (June 30, 1982) plus sixty days, the

time during which the Secretary could have sought review of

the decision (August 30, 1982) ), minus one year (August 30,

1981). The one year is subtracted because the Secretary has

authority, for any reason, to reopen cases up to one year after

administrative decisions become final. 20 C.F.R. §§ 404.988,

416.1488.

® This date represents the date on which Finnegan became

final (August 25, 1981) minus one year (August 25, 1980).

‘

a ee ee a ee:

i r "

83a

benefits," subject to termination proceedings that

will follow the requirements of the law.

DATED: June 16, 1983.

/s/ William P. Gray

WILLIAM P. GRAY

United States District Judge

10 This court is mindful that the provisional remedy pre-

scribed in the accompanying order does not restore the class

members to the status quo existing before termination. To do

so would require an award to each class member of those bene-

fits not received by virtue of the Secretary’s failure to termi-

nate them in accordance with the law of this circuit. It would

be inappropriate to grant such an award at this juncture,

however, because this controversy has not been fully litigated

and the plaintiffs have not requested such relief.

84a

APPENDIX F

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

Civil No. 83-0697-WPG (T)

MARIO LOPEZ, ET AL., PLAINTIFFS

v.

MARGARET M. HECKLER, ET AL., DEFENDANTS

[Filed Jun. 16, 1983]

ORDER

Pursuant to the Memorandum of Decision filed

this date,

IT IS ORDERED THAT:

1. The reference to the magistrate of the matters

concerned in this order is vacated.

2. The defendants’ motion to dismiss for want of

jurisdiction is denied.

8. The plaintiffs’ motion for certification of a

Ninth Cireuit class is granted, and such class shall

consist of all persons who live within this circuit,

who (a) receive or received Supplemental Security

Income Disability benefits or social] security disabil-

ity insurance benefits and have been or will be con-

sidered for termination after August 30, 1981, or

(b) receive or received Supplemental Security In-

85a

come Disability benefits under the “grandfather

clause” of the Social Security Act and have been or

will be considered for termination after August 25,

1980. This class does not include those who have

been or will be terminated due to reasons unrelated

to current disability or medical improvement (e.g.,

actual return to work or improvement in financial

condition).

The plaintiffs’ motion for certification of a nation-

wide class is denied.

4. The plaintiff's motion for a preliminary injunc-

tion is granted as follows:

The defendants, their agents and employees are

enjoined and restrained within the Ninth Circuit:

(a) From failing to follow, implement or accord

precedential effect to Finnegan v. Matthews, 641

F.2d 1840 (9th Cir. 1981) and Patti v. Schweiker,

669 F.2d 582 (9th Cir. 1982), copies of which are

contained in Exhibits A and B, attached hereto.

(b) From implementing the nonacquiescence pol-

icy contained in Social Security Rulings Nos, 82-10c,

82-49¢ and 81-6, attached hereto, Exhibits A, B and

C. 7

(c) In order to accomplish appropriate restora-

tion of disability benefits pending resolution of this

action, the court orders the defendants to implement

the following procedure:

(i) Within sixty (60) days following the date

of this order, the defendants will notify (a)

each class member who had been receiving Sup-

plemental Security Income Disability benefits

under 42 U.S.C. § 1882c(a)(3)(E), and who

was terminated from such benefits after August

25, 1980, and (b) all other persons who have

been terminated from either Title II social secu-

86a

rity disability insurance of Title XVI Supple-

mental Security Income Disability after August

30, 1981, for the purported reason that his or

her disability had ceased, whether or not such

person has appealed, that:

Such person may apply for reinstatement

of benefits if he or she believes that his or

her medical condition has not improved fol-

lowing the granting of disability benefits.

(ii) Upon receiving such application, the de-

fendants will forthwith reinstate and pay bene-

fits in the monthly amounts such person would

have been receiving had his or her benefits not

been interrupted.

(iii) Following such reinstatement, if the de-

fendants or their agents or employees conduct

a disability investigation or other screening of

such person, they will apply the standards set

forth in Patti v. Schweiker and Finnegan v.

Matthews and, if they conclude that such per-

son’s medical condition has improved and he or

she is no longer disabled, they will identify the

evidence relied upon to reach that conclusion.

(iv) Following such review, persons who are

notified of an initial determination that their

benefits shall cease shall be given an opportunity

to contest the determination and pending such

review, they shall continue to receive aid as pro-

vided in current laws and regulations.

DATED: June 16, 1983.

/s/ William P. Gray

WILLIAM P. GRAY

United States District Judge

87a

EXHIBIT A

SECTION 1614(a)(3)(E) (42 U.S.C. 1382¢e(a) (3)

(E) SUPPLEMENTAL SECURITY INCOME—

CONTINUANCE OR CESSATION OF A GRAND-

FATHEREE’S DISABILITY—A RULING OF

NON-ACQUIESCENCE

20 CFR 416.994 (e) SSR 82-10e

Finnegan v. Matthews, 641 F.2d 13380 (1981)

The Social Security Administration (SSA) does

not acquiesce in the court’s decision.

The claimant, who had been receiving State dis-

ability welfare payments since 1972, was grand-

fathered into the Supplemental Security Income

(SSI) program on January 1, 1974. Section 1614

(a) (3) (E) of the Social Security Act (the Act) pro-

vides for the continued payment of SSI benefits to

a grandfatheree who “is permanently and totally dis-

abled as defined under a State plan ... so long as

he is continuously disabled as so defined.” Follow-

ing a continuing disability investigation, SSA deter-

mined that the claimant’s SSI benefits would ter-

minate because he did not meet the requirements for

entitlement at the time of the continuing disability

investigation. This determination was affirmed by

the district court.

The court of appeals, however, reversed SSA’s de-

termination. It found that SSI disability benefits to

a grandfatheree may not be terminated unless SSA

shows that there was either a material improvement

in the grandfatheree’s medical condition or a clear

and specific error in the prior State determination.

Because neither of those conditions was shown by

884

SSA to be met, the court held that SSA’s termination

of the claimant’s SSI benefits was improper.

SSA believes that the court’s standard for deter-

mining whether SSI disability benefits to a grand-

fatheree should terminate would be impossible to ad-

minister and that the correct standard for making

such a determination is in 20 CFR 416.994(e) ; i.e.,

that disability of a grandfatheree terminates when

his or her “disability as shown by current medical or

other evidence does not meet the criteria of the ap-

propriate State plan” and does not meet the Federal

criteria. Many grandfatherees were on State dis-

ability rolls for years before conversion, and the evi-

dence on which they were originally allowed may not

be available, or may not even exist. Therefore, in

those cases, SSA could not possibly prove either “ma-

terial improvement” or “clear and specific error’ in

the prior State determination. Thus, under 20 CFR

416.994(e) the grandfatheree properly remains in

SSI benefit status only until it is found that the

grandfatheree’s disability, as shown by current medi-

cal or other evidence, meets neither the State nor

Federal definition of disability. SSA believes that

this regulation is fully consistent with the require-

ments of section 1614(a) (3) (E) of the Act and with

congressional intent.

Consequently, SSA holds that the standard in 20

CFR 416.994(e), and not the one set forth by the

court, should apply in determining whether the dis-

ability of a title XVI grandfatheree has ceased.

[The court of appeals’ opinion in Finnegan v.

Mathews is appended to the ruling but is not re-

produced here].

89a

EXHIBIT B

SECTION 1614(a)(3)(A) (42 U.S.C. 1882¢(a) (3)

(A)) SUPPLEMENTAL SECURITY INCOME

—CONTINUANCE OR CESSATION OF A NON-

GRANDFATHEREE’S DISABILITY—A RUL-

ING OF NONACQUIESCENCE

20 CFR 416.994 SSR 82-49c

Patti v. Schweiker, 9th Circuit, Civ. No. 80-5763

(2/18/82)

The Social Security Administration (SSA) does

not acquiesce in the court’s decision.

The claimant had been receiving supplemental se-

curity income (SSI) benefits as a disabled individual

since 1976. In December 1977, SSA informed the

claimant that her disability had ceased. After a

hearing in March 1978, this determination was re-

versed by an administrative law judge (ALJ) and

the claimant’s benefits were continued. SSA then in-

formed the claimant that her disability had ceased in

April 1979, and that determination was affirmed by

the district court.

The Court of Appeals, however, reversed SSA’s

determination. The court found that the determina-

tion of disability in 1978 gave rise to a presumption

at the hearing in 1979 that the claimant was still

disabled. While the opinion acknowledges that this

presumption does not shift the burden of proof and

the claimant still has the burden of proving her case,

the court found that the presumption imposes on the

Secretary the burden of going forward with evidence

that the claimant’s condition has medically improved

or otherwise changed. Finding that there was essen-

90a

tially no evidence to support a conclusion that the

claimant’s condition had changed, the court held that

SSA’s determination that the claimant’s disability

had ceased was not supported by substantial evidence.

In essence, the court has concluded that SSA must

show that an SSI recipient’s condition has improved

or otherwise changed before it can determine that

the recipient’s disability has ceased. SSA disagrees

with the court’s conclusion that medical improve-

ment or other change is required in these cases.

Regardless of whether medical improvement or

other change is or is not shown, under 20 CFR

416.994(b)(1), a determination of cessation is ap-

propriate for an SSI nongrandfatheree if the recipi-

ent is not disabled under the Federal criteria, i.e.,

current medical or other evidence shows that the re-

cipient is able to engage in substantial gainful

activity.‘

Since the claimant in Patti is an SSI grand-

fatheree, SSA determined that~her disability ceased

in April 1979 because it found, on the basis of cur-

rent medical evidence, that she was capable of en-

gaging in substantial gainful activity (i.e., she does

not meet, the Federal definition of disability).

As noted above, under 20 CFR 416.994(b) (1), is-

sued in August 1980, SSA is not required to show

medical improvement or other change in order to

terminate SSI disability benefits. However, the final

administrative decision in Patti was issued prior to

August 1980 so that the court’s decision in Patti was

based on an administrative decision involving regula-

tions no longer in effect. Moreover, the Court of Ap-

* A showing of medical improvement or other change is also

not required in cessation cases involving an SSI grandfatheree

(see SSR 82.100 [sic] (Jan. 1982) ).

9la

peals in Patti did not even address either the August

1980 reguiations or the earlier regulations governing

when disability ceases. For these reasons (and since

there are other Court af Appeals decisions which do

not require a showing of improvement to terminate

disability benefits), we believe that Patti does not

provide a judicial interpretation of the disability

regulations which should be followed.

Consequently, SsA holds that, even if current

medical or other evidence does not show ‘‘medical im-

provement” or other change, the disability of a non-

grandfathered SSI recipient is suject to cessation if

such evidence shows that the recipient is able to en-

gage in substantial gainful activity (i.e., the recipi-

ent does not meet the Federal definition of dis-

ability).

[The court of appeals’ opinion in Patti v. Schweiker,

is appended to the ruling but is not reproduced

here}.

92a

EXHIBIT C

Continuance cr Cessation

(Previously Published as PPS-54) SSR 81-6

TITLES II AND XVI: CONTINUANCE OR

CESSATION OF DISABILITY OR BLINDNESS

PURPOSE: To state the policy of determining

whether disability of blindness under titles II and

XVI continues or ceases.

CITATIONS (AUTHORITY): Sections 221 and

1631 of the Social Security Act, Regulations No. 4,

sections 404.1579, 404.1586 and 404.1594, Regula-

tions No. 16, section 416.994.

PERTINENT HISTORY: Under operating guides

which have been in effect for approximately 3 years,

disability or blindness is found to have ceased when

current evidence shows that the individual does not

meet the definition of disability or blindness under

which his or her claim was allowed, it is not neces-

sary to show that the individual’s medical condition

has “improved” since the prior determination. How-

ever, prior regulations had been interpreted by some

to mean that before cessation of disability or blind-

ness could be found, there must have been a positive

showing of medical improvement. Such an _ inter-

pretation precluded a finding of cessation in cases

where current evidence showed that the individual

was not disabled or blind, but it could not be shown

that actual “improvement” had taken place. The

regulations have now been revised to clarify this

issue.

93a

POLICY STATEMENT: Where the evidence ob-

tained at the time of a continuing disability investi-

gation (CDI) establishes that the individual is not

currently disabled or blind, a finding of cessation is

appropriate. It will not be necessary to determine

whether or how much the individual’s condition has

medically improved since the prior favorable deter-

mination.

EFFECTIVE DATE: Final regulations covering

this policy were effective August 20, 1980, the date

of publication in the Federal Register (45 FR 55566).

CROSS-REFERENCES: Program Operations Man-

ual System section 2864; Claims Manual Section

6700ff; Disability Operating Manual section 500ff.

|

94a

APPENDIX G

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

Civil No. 83-697-WPG(T)

MARIO LOPEZ, ET AL., PLAINTIFFS

v8,

MARGARET M. HECKLER, ET AL., DEFENDANTS

[Filed Jul. 27, 1983]

MEMORANDUM OF DECISION

On June 16, 1983, following a hearing, this court

entered an order directing, among other things, that

certain people that had been terminated from re-

ceiving social security disability benefits might apply

for reinstatement of those benefits, and that the de-

fendants would be obliged to resume payment to all

people so applying, pending further investigation or

screening by the defendants in accordance with such

order. On July 138, 1983, a further hearing took

place. The court then took under submission the

question of whether the defendants should be entitled

to recoup such interim payments, made pursuant to

the order of June 16, 19838, if, as a result of the sub-

sequent investigation and screening, it is ultimately

95a

determined, under standards directed by the court,

that the medical condition of the individual concerned

had improved as of the time of prior termination of

benefits.

The court now concludes that such recoupment

would be justified, subject to the qualification that

no such recoupment shall be made from “. . . any

person who is without fault if such adjustment or

recovery would .. . be against equity and good con-

science.” 42 U.S.C. § 404(b).

The action of the court in ordering reinstatement

stemmed from the conclusion that the defendants had

been terminating benefits without giving adequate

consideration to the requirement that evidence be

produced showing improvement in the recipient’s

medical condition. Thus, the court has required that

the defendants “take another look” at the case of

each person that applies for reconsideration and make

a new determination based upon medical evidence.

If the further review fails to establish evidence that

the claimant’s medical condition had or has improved,

his reestablished benefits will continue and the in-

terim payments will prove to have been justified.

On the other hand, if the subsequent finding is that

medical evidence was produced at the earlier hearing

th

This text is long and has been trimmed here. Open the source document for the complete record.