Appendix — Hyatt v. Bowen
Supreme Court brief1986
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No. | L —
Supreme Court, U.S.
FILED
SEP 19 1985
IN THE ih
Supreme Court of the United States
OCTOBER TERM, 1985
PATRICK M. HYATT, HERMAN O. CAUDLE ana
MARY P. LOVINGOOD, on behalf of themselves
and all others similarly situated,
Petitioners,
Ve
MARGARET M. HECKLER, or her successors in office,
SECRETARY OF THE UNITED STATES DEPARTMENT OF
HEALTH AND HUMAN SERVICES,
Respondent
and
NORTH CAROLINA DEPARTMENT OF HUMAN RESOURCES,
DISABILITY DETERMINATION SERVICES,
Intervenor-Nominal Respondent.
PETITION FOR A WRIT OF CERTIORARI TO
THE UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
APPENDIX TO PETITION
JOHN R. WESTER CHARLES MCBRAYER SASSER
(Counsel of Record) LEGAL SERVICES OF
DAN T. COENEN SOUTHERN PIEDMONT,
ROBINSON, BRADSHAW _ INC.
& HINSON, P.A. 6th Floor, 951 South
1900 Independence Center Independence Bouievard
Charlotte, North Carolina Charlotte, North Carolina
28246 28202
(704) 377-2536 (704) 376-1608
Attorneys for Petitioner
TABLE OF CONTENTS
CIR TTUTTIAAE, VII iain scsice cccudiseccseadinscscess
Article III, Section 1
Article II, Section 3
Amendment V
STATUTES AND REGULATIONS ............00000008 a nevenscumends
TE FR I I oe tnstisicieccpecavoanscnrbenwesacnons
42 U.S.C. Section 405(h)........ prabienorsasiceddenesepinsesenes
28 U.S.C. Section 1361 ...........: PENA SORES AORN ee
ee I We aiaccecsds csscnandnchihosniesiidesdyans
ee ee een
H. R. Conference Report 98-1-39...........cceeeeeeees
poi keep Re ES bo. an ee nar
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20 C.F.R. Subpart P, App. 1, Section 4.00C.........
SOCIAL SECURITY ADMINISTRATION REGULATIONS....
RAREST aS EAE SI ve SR oe ee Pee Ree
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ee oases cdatdaninas cuanginns
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I a ste Oo cas caepidamannnncginsins
HiHS/SSA interim Circular 155. ........0...000.-.ccee00002-.
AMERICAN BAR ASSOCIATION REPORT 110................
ORDER OF SUPREME COURT OF UNITED STATES
EXTENDING TIME TO FILE PETITION FOR WRIT OF
os Eos AERC D Oe OPO CREE NCTE OR oP OE
DECISION OF UNITED STATES COURT OF APPEALS,
I I iene
ORDER OF UNITED STATES COURT OF APPEALS
DENYING PETITIONS OF REHEARING IN BANC.......
FINDINGS OF FACT, CONCLUSIONS OF LAW AND
DECISION OF UNITED STATES DISTRICT COURT,
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NOnkh h LN NH
2 oOo oO ©
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—= MmWoimwNnN — =
58
JUDGMENT OF UNITED STATES DISTRICT COURT,
SA Bie er aceiasketnerscaconsavcsesnsecoccseces 92
ORDER OF UNITED STATES DISTRICT COURT
CERTIFYING A CLASS AND REQUIRING NOTICE ...... 95
AMENDED ORDER OF UNITED STATES DISTRICT
COURT ALLOWING ATTORNEYS’ FEES ............000c00+08 102
AFFIDAVIT OF JEAN HALL HINCKLEY .............:00ceeeeeees 113
ORDER OF UNITED STATES DISTRICT COURT
- FOLLOWING REMAND BY UNITED STATES COURT
OF APPEALS, JUNE 25, TFBS cccicinssccncesicssciscscisceeesees. 119
DEFENDANT’S OPPOSITION TO PLAINTIFFS’ SECOND
MOTION FOR ATTORNEY FEES. ...........-cccscsscscscoesseees 128
CONSTITUTION OF THE UNITED STATES
Article III, Section 1: The judicial Power of the United
States, shall be vested in one supreme Court, and in such
inferior Courts as the Congress may from time to time
ordain and establish. The Judges, both of the supreme and
inferior Courts, shall hold their Offices during good Beha-
viour, and shall, at stated Times, receive for their Services, a
Compensation, which shall not be diminished during their
Continuance in Office.
Article II, Section 3: [The President] shall take Care that
the Laws be faithfully executed, and shall Commission all
the Officers of the United States.
Amend. V: No person shall be . . . deprived of life, liberty,
or property, without due process of law ....
2
42 U.S.C. § 405(g): Any individual, after any final deci-
sion of the Secretary made after a hearing to which he was a
party, irrespective of the amount in controversy, may obtain
a review of such decision by a civil action commenced
within sixty days after the mailing to him of notice of such
decision or within such further time as the Secretary may
allow. Such action shall be brought in the district court of
the United States for the judicial district in which the plain-
tiff resides or has his principal place of business, or, if he
does not reside or have his principal! place of business within
any such judicial district, in the United States District Court
for the Dist:ict of Columbia. As part of his answer the Secre-
tary shall file a certified copy of the transcript of the record
including the evidence upon which the findings and decision
complained of are based. The court shall have power to
enter, upon the pleadings and transcript of the record, a
judgment affirming, modifying, or reversing the decision of
the Secretary, with or without remanding the cause for a
rehearing. The findings of the Secretary as to any fact, if
supported by substantial evidence, shall be conclusive, and
where a claim has been denied by the Secretary or a decision
is rendered under subsection (b) of this section which is
adverse to an individual who was a party to the hearing
before the Secretary, because of failure of the claimant or
such individual to submit proof in conformity with any regu-
lation prescribed under subsection (a) of this section, the
court shall review only the question of conformity with such
regulations and the validity of such regulations. The court
may, on motion of the Secretary made for good cause shown
before he files his answer, remand the case to the Secretary
for further action by the Secretary, and it may at any time
order additional evidence to be taken before the Secretary,
but only upon a showing that there is new evidence which is
material and that there is good cause for the failure to incor-
porate such evidence into the record in a prior proceeding;
and the Secretary shall, after the case is remanded, and after
3
hearing such additional evidence if so ordered, modify or
affirm his findings of fact or his decision, or both, and shall
file with the court any such additional and modified findings
off act and decision, and a transcript of the additional record
and testimony upon which his action in modifying or
affirming was based. Such additional or modified findings of
fact and decision shall be reviewable only to the extent pro-
vided for review of the original findings of fact and decision.
The judgment of the court shall be final except that it shall
be subject to review in the same manner as a judgment in
other civil actions. Any action instituted in accordance with
this subsection shall survive notwithstanding any change in
the person occupying the office of Secretary or any vacancy
in such office.
4
42 U.S.C. § 405(h): The findings and decision of the Sec-
retary after a hearing shall be binding upon all individuals
who were parties to such hearing. No findings of a fact or
decision of the Secretary shall be :eviewed by any person,
tribunal, or governmental agency except as herein provided.
No action against the United States, the Secretary, or any
officer or employee thereof shall be brought under section
1331 or 1346 or Title 28 to recover on any claim arising
under this subchapter.
28 U.S.C. § 1361: The district courts shall have 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 perform a duty owed to the plaintiff.
28 U.S.C. § 1651(a): The Supreme Court and all courts
established by Act of Congress may issue all writs necessary
or appropriate in aid of their respective jurisdictions and
agreeable to the usages and principles of law.
5
Pub. Law No. 98-460, 98 Stat. 1794 et seq.
STANDARD OF REVIEW FOR TERMINATION OF
DISABILITY BENEFITS AND PERIODS OF
DISABILITY
SEC. 2. (a) Section 223(f) of the Social Security Act is
amended to read as follows:
“Standard of Review for Termination of Disability
Benefits
“(f) A recipient of benefits under this title or title XVIII
based on the disability of any individual may be determined
not to be entitled to such benefits on the basis of a finding
that the physical or mental impairment on the basis of which
such benefits are provided has ceased, does not exist, or is
not disabling only if such finding is supported by —
“(1) substantial evidence which demonstrates that —
“(A) there has been any medical improvement in the
individual’s impairment or combination of impair-
ments (other than medical improvement which is not
related to the individual’s ability to work), and
“(B)(i) the individual is now able to engage in sub-
stantial gainful activity, or
“(ii) if the individual is a widow or surviving
divorced wife under section 202(e) or a widower or ©
surviving divorced husband under section 202(f), the
severity of his or her impairment or impairments is no
longer deemed, under regulations prescribed by the Sec-
retary, sufficient to preclude the individual from engag-
ing in gainful activity; or
“(2) substantial evidence which —
“(A) consists of new medical evidence and (in a case
to which clause (ii)(II) does not apply) a new assessment
of the individual’s residual functional capacity, and
demonstrates that —
6
“(i) although the individual has not improved
medically, he or she is nonetheless a beneficiary of
advances in medical or vocational therapy or
thechnology (related to the individual’s ability to
work), and
“(ii)(1) the individual is now able to engage in sub-
stantial gainful activity, or
“(I1) if the individual is a widow or surviving
divorced wife under section 202(e) or a widower or
surviving divorced husband under section 202(f), the
severity of his or her impairment or impairments is
no longer deemed under regulations prescribed by
the Secretary sufficient to preclude the individual
from engaging in gainful activity, or
“(B) demonstrates that —
“(i) although the individual has not improved
medically, he or she has undergone vocational ther-
apy (related to the individual’s ability to work), and
“(ii) the requirements of subclause (I) or (Il) of
subparagraph (A)(ii) are met; or
“(3) substantial evidence which demonstrates that, as
determined on the basis of new or improved diagnostic
techniques or evaluations, the individua!’s impairment or
combinatien of impairments is not as disabling as it was
considered to be at the time of the most recent prior
decision that he or she was under a disability or continued
to be under a disability, and that therefore —
“(A) the individual is able to engage in substantial
gainful activity, or
“(B) if the individual is a widow or surviving
divorced wife under section 202(e) or a widower or
surviving divorced husband under section 202(f), the
severity of his or her impairment or impairments is not
deemed under regulations prescribed by the Secretary
sufficient to preclude the individual from engaging in
gainful activity; or
.
“(4) substantial evidence (which may be evidence on
the record at the time any prior determination of the
entitlement to benefits based on disability was made, or
newly obtained evidence with relates to that determina-
tion) which demonstrates that a prior determination was
in error.
Nothing in this subsection shall be construed to require a
determination that a recipient of benefits under this title or
title X VIII based on an individual’s disability is entitled to
such benefits if the prior determination was fraudulently
obtained or if the individual is engaged in substantial gainful
activity (or gainful activity in the case of a widow, surviving
divorced wife, widower, or surviving divorced husband),
cannot be located, or fails, without good cause, to cooperate
in a review of the entitlement to such benefits or to follow
prescribed treatment which would be expected to restore his
or her ability to engage in substantial gainful activity (or
gainful activity in the case of a widow, surviving divorced
wife, widower, or surviving divorced husband). Any deter-
mination under this section shall be made on the basis of all
the evidence available in the individual’s case file, including
new evidence concerning the individual’s prior or curreni
condition which is presented by the individual or secured by
the Secretary. Any determination made under this section
shall be made on the basis of the weight of the evidence and
on a neutral basis with regard to the individual’s condition,
without any initial inference as to the presence or absence of
disability being drawn from the fact that the individua! has
previously been determined to be disabled. For purposes of
this subsection, a benefit under this title is based on an
individual’s disability if it is a disability insurance benefit, a
child’s, widow’s, or widower’s insurance benefit based on
disability, or a mother’s or father’s insurance benefit based
on the disability of the mother’s or father’s child who has
attained age 16.”
8
(b) Section 216(i)(2)(D) of such Act is amended by adding
at the end thereof the following: “The provisions set forth in
section 223(f) with respect to determinations of whether
entitiement to benefits under this title or title X VIII based
on the disability of any individual is terminated (on the
basis of a finding that the physical or mental impairment on
the basis of which such benefits are provided has ceased,
does not exist, or is not disabling) shall apply in ths same
manner and to the same extent with respect to determina-
tions of whether a period of disability has ended (on the
basis of a finding that the physical or mental impairment on
the basis of which the finding of disability was made has
ceased, does not exist, or is not disabling).”
(c) Section 1614(a) of such Act is amended by adding at
the end thereof the following new paragraph:
“(5) A recipient of benefits based on disability under this
title may be determined not to be entitled to such benefits on
the basis of a finding that the physical or mental impairment
on the basis of which such benefits are provided has ceased,
does not exist, or is not disabling only if such finding is
supported by —
“(A) substantial evidence which demonstrates that —
“(i) there has been any medical improvement in
the individual’s impairment or combination of
impairments (other than medical improvement
which is not related to the individual’s ability to
work), and
“(i1) the individual is now able to engage in sub-
stantial gainful activity; or
“(B) substantial evidence (except in the case of an
individual eligible to receive benefits under section
1619) which —
“(i) consists of new medical evidence and a new
assessment of the individual’s residual functional
capacity, and demonstrates that —
)
“(I) although the individual has not improved
medically, he or she is nonetheless a beneficiary of
advances in medical or vocational therapy or tech-
nology (related to the individual’s ability to work),
and
“(II) the individual is now able to engage in sub-
stantial gainful activity, or
“(ii) demonstrates that —
“(I) although the individual has not improved
medically, he or she has undergone vocational
therapy (related to the individual’s ability to
work), and
“(I1) the individual is now able to engage in sub-
stantial gainful activity; or
“(C) substantial evidence which demonstrates that, as
determined on the basis of new or improved diagnostic
techniques or evaluations, the individual’s impairment or
combination of impairments is not as disabling as it was
considered to be at the time of the most recent prior
decision that he or she was under a disability or continued
to be under a disability, and that therefore the individual
is able to engage in substantial gainful activity; or
“(D) substantial evidence (which may be evidence on
the record at the time any prior determination of the
entitlement to benefits based on disability was made, or
newly obtained evidence with relates to that determina-
tion) which demonstrates that a prior determination was
in error.
Nothing in this paragraph shall be construed to require a
determination that an individual receiving benefits based on
disability under this title is entitled to such benefits if the
prior determination was fraudulently obtained or if the indi-
vidual is engaged in substantial gainful activity, cannot be
located, or fails, without good cause, to cooperate in a review
of his or her entitlement or to follow prescribed treatment
which would be expected to restore his or her ability to
10
engage in substantial gainful activity. Any determination
under this paragraph shall be made on the basis of all the
evidence available in the individual’s case file, including
new evidence concerning the individual’s prior or current
condition which is presented by the individual or secured by
the Secretary. Any determination made under this paragraph
shall be made on the basis of the weight of the evidence and
on a neutral basis with regard to the individual’s condition,
without any initial inference as to the presence or absence of
disability being drawn from the fact that the individual has
previously been determined to be disabled.”
(d)(1) The amendments made by this section shall apply
only as provided in this subsection.
(2) The amendments made by this section shall apply
to—
(A) determinations made by the Secretary on or after
the date of the enactment of this Act;
(B) determinations with respect to which a final deci-
sion of the Secretary has not yet been made as of the date
of the enactment of this Act and with respect to which a
request for administrative review is made in conformity
with the time limits, exhaustion requirements, and other
provisions of section 205 of the Social Security Act and
regulations of the Secretary;
(C) determinations with respect to which a request for
judicial review was pending on September 19, 1984, and
which involve an individual litigant or a member of a
class in a class action who is identified by name in such
pending action on such date; and
(D) determinations with respect to which a timely
request for judicial review is or has been made by an
individual litigant of a final decision of the Secretary
made within 60 days prior to the date of the enactment of
this Act.
In the case of determinations described in subparagraphs
(C) and (D) in actions relating to medical improvement, the
11
court shall remand such cases to the Secretary for review in
accordance with the provisions of the Social Security Act as
amended by this section.
(3) In the case of a recipient of benefits under title II, X VI,
or XVIII of the Social Security Act —
(A) who has been determined not to be entitled to such
benefits on the basis of a finding that the physical or
mental impairment on the basis of which such benefits
were provided has ceased, does not exist, or is not disa-
bling, and
(B) who was a member of a class certified on or before
September 19, 1984, in a class action relating to medical
improvement pending on September 19, 1984, but was
not identified by name as a member of the class on such
date,
the court shall remand such case to the Secretary. The Secre-
_ tary shall notify such individual by certified mail that he
may request a review of the determination described in sub-
paragraph (A) baced on the provisions of this section and the
provisions of the Social Security Act as amended by this
section. Such notification shall specify that the individual
must request such review within 120 days after the date on
which such notification is received. If such request is made
in a timely manner, the Secretary shall make a review of the
determination described in subparagraph (A) in accordance
with the provisions of this section and the provisions of the
Social Security Act as amended by this section. The amend-
ments made by this section shall apply with respect to such
review, and the determination described in subparagraph
(A) (and any redetermination resulting from such review)
shall be subject to further administrative and judicial
review, only if such request is made in a timely manner.
(4) The decision by the Secretary on a case remanded by a
court pursuant to this subsection shall be regarded as a new
decision on the individual’s claim for benefits, which super-
sedes the final decision of the Secretary. The new decision
12
shall be subject to further administrative review and to judi-
cial review only in conformity with the time limits, exhaus-
tion requirements, and other provisions of section 205 of the
Social Security Act and regulations issued by the Secretary in
conformity with such section.
(5) No class in a class action relating to medical improve-
ment may be certified after September 19, 1984, if the class
action seeks judicial review of a decision terminating entitle-
ment (or a period of disability) made by the Secretary of
Health and Human Services prior to September 19, 1984.
(6) For purposes of this subsection, the term “action relat-
ing to medical improvement” means an action raising the
issue of whether an individual who has had his entitlement
to benefits under title II, XVI, or XVIII of the Social Secu-
rity Act based on disability terminated (or period of disabil-
ity ended) should not have had such entitlement terminated
(or period of disability ended) without consideration of
whether there has been medical improvement in the condi-
tion of such individual (or another individual on whose disa-
bility such entitlement is based) since the time of a prior
determination that the individual was under a disability.
(e) Any individual whose case is remanded to the Secre-
tary pursuant to subsection (d) or whose request for a review
is made in a timely manner pursuant to subsection (d), may
elect, in accordance with section 223(g) or 1631(a)(7) of the
Social Security Act, to have payments made beginning with
the month in which he makes such election, and ending as
under such section 223(g) or 1631(a)(7). Nothwithstanding
such section 223(g) or 1631(a)(7), such payments (if
elected) —
(1) shall be made at least until an initial redetermina-
tion is made by the Secretary; and
(2) shall begin with the payment for the month in which
such individual makes such election.
(f) In the case of any individual who is found to be under a
disability after a review required under this section, such
13
individual shall be entitled to retroactive benefits beginning
with benefits payable for the first month to which the most
recent termination of benefits applied.
(g) The Secretary of Health and Human Services shall
prescribe regulations necessary to implement the amend-
ments made by this section not later than 180 days after the
date of the enactment of this Act.
EVALUATION OF PAIN
Sec. 3. (a)(1) Section 223(d)(5) of the Social Security Act
is amended by inserting after the first sentence the following
new sentences: “An individual’s statement as to pain or
other symptoms shall not alone be conclusive evidence of
disability as defined in this section; there must be medical
signs and findings, established by medically acceptable
clinical or laboratory diagnostic techniques, which show the
existence of a medical impairment that results from anatom-
ical, physiological, or psychological abnormalities which
could reasonably be expected to produce the pain or other
symptoms alleged and which, when considered with all evi-
dence required to be furnished under this paragraph (includ-
ing statements of the individual or his physician as to the
intensity and persistence of such pain or other symptoms
which may reasonably be accepted as consistent with the
medical signs and findings), would lead to a conclusion that
the individual is under a disability. Objective medical evi-
dence of pain or other symptoms established by medically
acceptable clinical or laboratory techniques (for example,
deteriorating nerve or muscle tissue) mist be considered in
reaching a conclusion as to whether the individual is under a
disability.”
(2) Section 1614(a)(3)(H) of such Act (as added by section
8 of this Act) is amended by striking out “section 221(h)”
and inserting in lieu thereof “section 221(h) and 223(d)(5)”.
(3) The amendments made by paragraphs (1) and (2) shall
apply to determinations made prior to January 1, 1987.
14
(b)(1) The Secretary of Health and Human Services shall
appoint a Commission on the Evaluation of Pain (hereafter
in this section referred to as the “Commission”) to conduct a
study concerning the evaluation of pain in determining
under titles Il and XVI of the Social Security Act whether an
individual is under a disability. Such study shall be con-
ducted in consultation with the National Academy of
Sciences.
(2) The Commission shall consist of at least twelve
experts, including a significant representation from the field
of medicine who are involved in the study of pain, and
representation from the fields of law, administration of disa-
bility insurance programs, and other appropriate fields of
expertise.
(3) The Commission shall be appointed by the Secretary
of Health and Human Services (without regard to the
requirements of the Federal Advisory Committee Act)
within 60 days after the date of the enactment of this Act.
The Secretary shall from time to time appoint one of the
members to serve as Chairman. The Commission shall meet
as often as the Secretary deems necessary.
(4) Members of the Commission shall be appointed with-
out regard to the provisions of title 5, United States Code,
governing appointments in the competitive service. Mem-
bers who are not employees of the United States, while
attending meetings of the Commission or otherwise serving
on the business of the Commission, shall be paid at a rate
equal to the per diem equivalent of the rate provided for
level IV of the Executive Schedule under section 5315 of
title 5, United States Code, for each day, including travel-
time, during which they are engaged in the actual perform-
ance of duties vested in the Commission. While engaged in
the performance of such duties away from their homes or
regular places of business they may be allowed travel
expenses, including per diem in lieu of subsistence, as
15
authorized by section 5703 of title 5, United States Code, for
persons in the Government service employed intermittently.
(5) The Commission may engage such technical assistance
from individuals skilled in medical and other aspects of pain
as may be necessary to carry out its functions. The Secretary
shall make available to the Commission such secretarial,
clerical, and other assistance and any pertinent data pre-
pared by the Department of Health and Human Services as
the Commission may require to carry out its functions.
(6) The Secretary shall submit the results of the study
under paragraph (1), together with any recommendations, to
the Committee on Ways and Means of the House of Repre-
sentatives and the Committee on Finance of the Senate not
later than December 31, 1985. The Commission shall termi-
nate at the time such results are submitted.
16
From H.R. Conference Report 98-1-39:
10. ACQUIESCENCE OR NON-ACQUIESCENCE IN COURT OF
APPEALS DECISIONS
Present law
Claimants for benefits under the Social Security Act may
appeal State agency denials through several levels of admin-
istrative appeal. A claimant who wishes to continue to pur-
sue appeal may next turn to the Federal district court with
jurisdiction over his or her claim. The district court reviews
the record as complied by the agency to determine whether
substantial evidence existed for the agency’s decision. The
district court’s decision may be appealed, by the claimant or
the Secretary, to the Circuit Court with jurisdiction, and
ultimately to the Supreme Court (which may or may not
agree to hear the appeal).
Under the Federal judicial system, decisions by a Cnceiit
Court of Appeals constitute binding case law to be followed
by all district courts in that circuit. (District courts are not
bound by the case laws of other circuits and often develop
contrary case laws on the same issue.)
In general, if two circuits rule differently on a particular
issue, the Supreme Court will review the issue to settle the
dispute, although frequently the Court will decline to review
for an extended period of time if the issue is not ripe for
disposition, or if it is not of sufficient importance to warrant
immediate attention. If a particular policy is found by the
Supreme Court to be unconstitutional, or contrary to the
statute, that decision is binding on the agency.
Most social security cases decided in the Federal courts
have little value as precedent for SSA decisions, since most
reversals of agency determinations rest on the lack of sub-
stantial evidence for the agency’s position. However, in
some instances, the court’s opinion is based on matter of a
statutory interpretation.
17
The Social Security Administration abides by the final
judgments of Federal courts with respect to the individuals
in particular cases. It does not, however, consider itself
bound with respect to nonlitigants as far as adopting as
agency policy, either in the circuit or nationwide, the inter-
pretation underlying a Circuit Court’s decision. If the deci-
sion of a Circuit Court is contrary to the Secretary’s interpre-
tation of the Social Security Act and regulations, SSA, like
some other Federal agencies, issues a ruling stating that it
will not adopt the court’s decision as agency policy. There
are currently 7 such rulings of nonacquiescence by the Social
Security Administration.
House bill
Requires that a decision of a Circuit Court of Appeals
interpreting title II of the Social Security Act or its regula-
tions in a manner different from prevailing policy be
appealed to the Supreme Court or the Secretary must apply
the interpretation underlying that decision as agency policy
in the circuit. If the Supreme Court denies review, circuit-
wide acquiescence with that interpretation would be
required until the Supreme Court ruled on the issue.
Includes title X VI conforming amendment.
Effective date. — On enactment, with respect to all circuit
court decisions made on or after the date of enactment, and
with respect to circuit court decisions for which the Secre-
tary still has an opportunity to request review by the
Supreme Court.
Senate amendment
Requires SSA to notify Congress and print in the Federal
Register (within 90 days after decision date, or on the last
date available for appeal, whichever is later) an explanation
of the agency’s decision to acquiesce or not acquiesce in
decisions of the Circuit Courts relating to interpretation of
the Social Security Act or of regulations issued under the
18
Act. In cases where the Secretary is acquiescing, the report-
ing requirement would apply only to significant decisions.
States that nothing in the section shall be interpreted as
sanctioning any decision of the Secretary not to acquiesce in
the decision of a circuit court.
Effective date. — Applies to Court decisions rendered
after the date of enactment.
Conference agreement
The confererice agreement deletes both the House and
Senate language. The conferees do not intend that the agree-
ment to drop both provisions be interpreted as approval of
“non-acquiescence” by a federal agency to an interpretation
of a U.S. Circuit Court of Appeals as a general practice. On
the contrary, the conferees note that questions have been
raised about the constitutional basis of non-acquiescence
and many of the conferees have strong concerns about some
of the ways in which this policy has been applied, even if
constitutional. Thus, the conferees urge that a policy of non-
acquiescence be followed only in situations where the
Administration has initiated or has the reasonable expecta-
tion and intention of initiating the steps necessary to receive
a review of the issue in the Supreme Court.
The conferees reaffirm the congressional intent that the
Secretary resolve policy conflicts promptly in order to
achieve consistent uniform administration of the program.
This objective may be achieved in at least two ways other
than non-acquiescence when the agency is faced with con-
flicting interpretations of the meaning and intent of the
Social Security Act: either to appeal the issue to the Supreme
Court, or to seek a legislative remedy from the Congress.
When there are court rulings which the Secretary believes
are inconsistent with the meaning and intent of the law, the
Secretary should diligently pursue appropriate appeals chan-
nels on an expeditious basis. By refusing to apply circuit
court interpretations and by not promptly seeking review by
19
the Supreme Court, the Secretary forces beneficiaries to re-
litigate the same issue Over and over again in the circuit, at.
substantial expense to both beneficiaries and the federal gov-
ernment. This is clearly an undesirable consequence. The
conferees also feel that in addition to the practical adminis-
trative problems which may be raised by non-acquiescence,
the legal and Constitutional issues raised by non-acquies-
cence can only be settled by the Supreme Court. The confer-
ees therefore urge the Administration to seek a resolution of
this issue.
The conferees recognize that the realities of litigation do
not make it appropriate or feasible to appeal every adverse
decision with which the Secretary continues to disagree. In
such instances, however, the conferees strongly insist that
Congress’ judgment as to the appropriate policy should pre-
vail. The conferees expect the Secretary to propose what she
believes to be appropriate remedial legislation for congres-
sional consideration.
it is clearly undesirable to have major differences in statu-
tory interpretation between the Secretary and the courts
remain unresolved for a protracted period of time. The con-
ferees believe this legislation takes a major step toward
removing the obstacles to resolution by clarifying the statu-
tory language and congressional intent.
20
20 C.F.R. § 404.1529: If you have a physical or mental
impairment, you may have symptoms (like pain, shortness
of breath, weakness or nervousness). We consider all your
symptoms, including pain, and the extent to which signs and
laboratory findings confirm these symptoms. The effects of
all symptoms, including severe and prolonged pain, must be
evaluated on the basis of a medically determinable impair-
ment which can be shown to be the cause of the symptom.
We will never find that you are disabled based on your
symptoms, including pain, unless medical signs or findings
show that there is a medical condition that could be reasona-
bly expected to produce those symptoms.
20 C.F.R. § 404.1633 (b): The State agency making deter-
minations of disability will comply with the written guide-
lines in the Disability insurance section of the Program
Operations Manual System. This manual will also include
certain policies, procedures, guides and operating instruc-
tions designated as advisory or discretionary.
20 C.F.R. § 416.1033 (b): The State agency making deter-
minations of disability will comply with the written guide-
lines in the Disability Insurance section of the Program
Operations Manual System. This manual will also include
certain policies, procedures, guides and operating instruc-
tions designated as advisory or discretionary.
20 C.F.R. Subpart P, App. 1, § 4.00 C: Hypertensive vascu-
lar disease does not result in severe impairment unless it
causes severe damage to one or more of four end organs:
heart, brain, kidneys, or eyes (retinae). The presence of such
damage must be established by appropriate abnormal physi-
cal signs and laboratory findings as specified in 4.02 or 4.04,
or for the body system involved.
21
From SSR 82-55:
PURPOSE: To enunciate the policy regarding nonsevere
impairments and to provide examples of impairments that
are not severe in order to more clearly illustrate the level of
severity required before the concept of “nonsevere impair-
ment” can be applied in the sequential evaluation of
disability.
eK
The following examples are merely representative of the
types of impairments which would be considered not severe
and are not intended to be all inclusive.
xxx
4. Cardiovascular
a. Hypertension without significant organ damage, cur-
rent or past.
*x*x
7. Endocrine
a. Diabetes mellitus, adult onset, controlled on prescribed
therapy, without significant end-organ damage or
recent episodes of acidosis.
[Identical language appears at POMS 2107.]
22
From SSR 82-58:
PURPOSE: To state the policy and describe the consider-
ation given to symptoms, particularly that of pain, in the
evaluation of disability under titles II and XVI of the Social
Security Act.
KK
POLICY STATEMENT: Symptoms will not have a signif-
icant effect on a disability determination or decision unless
medical signs or findings show that a medical condition is
present that could reasonably be expected to produce the
symptoms which are alleged or reported. However, once
such a medical condition (e.g., disc disease) is objectively
established, the symptoms are still not controlling for pur-
poses of evaluating disability. Clinical and laboratory data
and a well-documented medical history must establish find-
ings which may reasonably account for the symptom in a
particular impairment. Objective clinical findings which can
be used to draw reasonable conclusions about the validity of
the intensity and persistence of the symptom and about its
effect on the individual’s work capacity must be present. For
example, in cases of back pain associated with disc disease,
typical associated findings are muscle spasm, sensory loss,
motor loss, and atrophy. There must be an objective basis to
support the overall evaluation of impairment severity. It is
not sufficient to merely establish a diagnosis or a source for
the symptom.
[Identical language appears at POMS 2205.]
23
SSR 81-6
TITLES If AND XVI:
CONTINUANCE OR CESSATION OF
DISABILITY OR BLINDNESS
PURPOSE: To state the policy for determining whether dis-
ability or 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; Regulations 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 necessary to show that the individual’s
medical condition has “improved” since the prior determi-
nation. However, prior regulations had been interpreted by
some to mean that before cessation of disability or blindness
could be found, there must have been a positive showing of
medical improvement. Such an interpretation 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.
POLICY STATEMENT: Where the evidence obtained at
the time of a continuing disability investigation (CDI) estab-
lishes 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
determination.
24
EFFECTIVE DATE: Final regulations covering this policy
were effective August 20, 1980, the date of publication in the
Federal Register (45 FR 55566).
Fis
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 secu-
rity 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 reversed by an adminis-
trative law judge (ALJ) and the claimant’s benefits were
continued. SSA then informed the claimant that her
disability had ceased in April 1979, and that determina-
tion was affirmed by the district court.
The Court of Appeals, however, reversed SSA’s
determination. The court found that the determination
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 condi-
tion has medically improved or otherwise changed.
Finding that there was essentially no evidence to sup-
port 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 improvement or other
change is required in these cases.
26
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 appropriate for an SS]
nongrandfatheree if the recipient is not disabled under
the Federal criteria; i.e., current medical or other evi-
dence shows that the recipient is able to engage in sub-
stantial gainful activity.
Since the claimant in Patti is an SSI non-
grandfatheree, SSA determined that her disability
ceased in April 1979 because it found, on the basis of
current medical evidence, that she was capable of
engaging 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), issued
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 adminis-
trative decision involving regulations no longer in
effect. Moreover, the Court of Appeals in Patti did not
even address either the August 1980 regulations or the
earlier regulations governing when disability ceases. For
these reasons (and since there are other Court of
Appeals decisions which do not require a showing of
improvement to terminate disability benefits), we
believe that Patti does not provide a judicial interpreta-
tion of the disability regulations which should be
followed.
27
Consequentiy, SSA holds that, even if current medi-
cal or other evidence does not show “medical improve-
ment” or other change, the disability of a non-
grandfathered SSI recipient is subject to cessation if
such evidence shows that the recipient is able to engage
in substantial gainful activity (i.e., the recipient does
not meet the Federal definition of disability).
28
SSR 82-64
TITLES If AND XVI:
THE OBLIGATION OF THE SOCIAL SECURITY
ADMINISTRATION (SSA) TO INVESTIGATE
CONTINUANCE OF DISABILITY AND
EVALUATION GUIDES FOR DETERMINING
WHETHER DISABILITY CONTINUES
PURPOSE: To state the obligations of SSA to investigate
continuance of disability and provide the standards and
evaluation guides for determining whether disability
continues.
CITATIONS (AUTHORITY): Sections 216(i), 223(d), and
1614(a) of the Social Security Act, as amended; Regulations
No. 4, Subpart P, sections 404.1530, 404.1589, 404.1590,
404.1593, and 404.1598; and Regulations No. 16, Subpart I,
sections 416.930, 416,989, 416.990, 416.993, and 416.998.
INTRODUCTION: This Program Policy Statement (PPS)
states the reason for conducting continuing disability inves-
tigations and contains an explanation of several policies for
evaluating disability claims which are to be used as guides in
deciding whether an individual is currently disabled. These
policies include finding that disability or blindness has
stopped if new evidence shows the person is not disabled or
blind as defined in the law, determining when a person
becomes disabled by another impairment, evaluating
residual functional capacity and vocational background,
securing consultative examinations to resolve medical
issues, and evaluating some special considerations in contin-
uing disability cases. These policies are applicable to all
determinations.
29
POLICY STATEMENT:
The Obligation to Investigate Continuance of Disability
Disability ceases when the physical or mental impairment
together with the vocational profile (i.e., his or her age, edu-
cation, work experience, etc.), where appropriate, does not
prevent the individual from engaging in substantial gainful
activity (SGA) or, subject to the trial work period (TWP)
provisions, the individual demonstrates, by working, the
ability to engage in SGA (except in certain title II cases
based on statutory blindness).
SSA has an obligation to terminate benefits based on disa-
bility and freeze periods when an individual is not disabled.
The primary purpose of a continuing disability investigation
(CDI) is to obtain complete and current information about
the disabled individual’s physical and/or mental condition
and any work activity. The information is required so that
an evaluator may determine whether the individual is still
under a disability.
The 1980 disability arnendments (P.L. 96-265) provide
certain work incentive benefits to persons who complete 9
months of trial work and whose disability ceases because of
their activity. To qualify for the work incentive benefits, the
person must continue to have a disabling impairment. CDI’s
are conducted in these cases if there is reason to question
whether the impairment continues to be disabling.
Evaluation Guides for Determining
Whether Disability Continues
The standards and the evaluation guidelines that apply in
determining initial disability also apply in determining
whether disability continues. The question to be resolved is
whether the individual is currently disabled. The fact that
the individual is currently receiving benefits on the basis of
disability does not shift the burden of establishing that disa-
bility is continuing from the claimant to SSA. All evidence
30
secured in connection with the original determination is in
the folder for consideration. However, the determination or
decision as to whether or not disability continues is not
controlled by any prior determination or decision which
established that the individual was disabled.
In determining whether the individual is currently dis-
abled, current medical evidence will be obtained. It is not
essential that the evidence indicate a change in the individ-
ual’s impairment. Thus, it is possible current evidence will
warrant a cessation of disability even where such evidence is
essentially similar to the evidence of record when disability
was originally established or when a prior CDI was con-
ducted. This is true regardless of the administrative or judi-
cial level at which disability was originally established or
previously continued. Also, the fact that disability is ceased
as a result of a CDI because the individual is not currently
disabled would not ordinarily raise a question regarding the
correctness of any prior determination or decision which
found that the individual was disabled.
In determining whether the individual is currently dis-
abled, the original impairments and any new conditions will
be considered. If a new, severe impairment begins in or
before the month in which the last impairment ceases to be
disabling (i.e., the month of cessation) disability is continued
until the individual has the capacity to engage in SGA. The
new impairment need not be expected to last 12 months or
result in death, but it must be severe enough to prevent the
person from performing SGA. If the individual again
becomes disabled after the month in which the last impair-
ment ceases to be disabling, there is a break in the continuity
of disability. This break requires a cessation of the last disa-
bility and independent consideration of any new impair-
ment for a new disability, even though the new impairment
may begin before the month of termination of the last period
a ee
31
of disability. Severity and duration requirements must be
met to establish a new disability.
If an individual’s impairment might reasonably have been
expected to improve (i.e., a medical reexamination diary was
established), a subsequent return to work before the month
of the scheduled medical reexamination is considered as a
possible indication of medical recovery. Where an individ-
ual’s return to work coincided with an established medical
reexamination diary, SSA may first learn of the individual’s
return to work through the individual’s responses at the time
of the continuing disability interview. SSA must carefully
consider the development aiready undertaken, if any, to
Jetermine whether further medical documentation is needed
and, if so, the type and extent necessary for a sound determi-
nation of continuance or cessation.
When an individual has been so severely impaired that an
allowance was justified, some residual impairment may
remain even after maximum treatment. The continuing disa-
bility evaluation process requires a determination as to
whether any residual impairment precludes the individual
from engaging in SGA.
When the question of continuing disability cannot be
resolved on medical consideration alone, and it is necessary
to consider vocational factors, and the individual is unable
to return to past relevant work, evaluation of the claimant’s
ability to make an adjustment to other work will include
consideration of skills acquired through vocational rehabili-
tation or other training. A new evaluation of the individual’s
present capacity to engage in SGA will be required in these
cases.
SSA must evaluate the evidence with care before prepar-
ing a determination (either continuance or cessation) to
assure that the total evidence accurately portrays the indi-
vidual’s current condition. When the medical and vocational
evidence of record covering the original impairment and any
32
new impairment establishes that the individual’s condition
together with the vocational profile, where appropriate, pre-
cludes SGA, in the absence of demonstrated SGA, a continu-
ance is warranted. If, however, the evidence demonstrates
that the individual’s condition together with the vocational
profile, where appropriate, does not preclude SGA, a cessa-
tion is appropriate. If information furnished by the individ-
ual concerning the current medical condition is consistent
with the statements from the treating physician which are
supported by clinical and laboratory findings, and there is
no reason to believe that the individual’s condition has
changed, a determination as to the continuance or cessation
of disability will be made without further development. In
all cases in which the evidence of record is unavailable,
inadequate, equivocal or inconclusive, a consultative exami-
nation will be obtained to resolve medical issues.
In disabled widow/widower cases, a finding of medical
cessation is appropriate when the medical evidence shows
the impairment does not meet or equal the Listing. In title
XVI childhood cases, a finding of medical cessation is
appropriate when the medical evidence shows the impair-
ment does not meet or equal the childhood impairment list-
ings in part B of the Listing of Impairments or the Part A
listings where the childhood listings are not appropriate.
Special Evaluation Considerations
The following considerations assume particular impor-
tance in evaluating continuing disability cases:
1. Temporary Improvement
Improvement that is only temporary does not warrant a
finding that the individual does not have a disabling
impairment. The probable duration of improvement
and the prognosis should be carefully considered, partic-
ularly if the disease is characterized by periods of remis-
sion followed by relapse. All factors must be considered
33
before it is concluded that improvement is more than
temporary.
Examination Reflecting Result of Rest
Conditions which become comparatively symptom-free
after prolonged rest must be given careful consideration.
Only where it can reasonably be expected that the capac-
ity for SGA can be maintained under ordinary condi-
tions of life in work setting of the type for which the
individual is qualified may a finding of cessation be
made.
Medical Regimen
Generally, when an individual is hospitalized or a treat-
ing physician markedly restricts an individual’s activi-
ties, the signs, sy.aptoms, and laboratory findings will
establish that a severe impairment exists which contin-
ues to prevent the individual from engaging in any SGA.
Hospitalization, prescribed therapy which prevents
work, or the judgment by the treating source that the
individual should not work are not, however, in them-
selves, sufficient evidence to support a finding of
continuance.
In making an independent judgment as to an individ-
ual’s ability to engage in SGA, the evidence provided by
the individual’s treating physician must by considered.
Careful consideration must always be given to the possi-
bility that the treating physician has additional medical
information not reflected in the file which might support
a finding of continuance. If, however, full development
has been undertaken and the evidence does not support
a finding of disability under existing policies and regula-
tions, a finding of cessation is appropriate.
34
Recommended Treatment Not Followed
In those cases where thé previously recommended treat-
ment has not been followed, all pertinent aspects, partic-
ularly with respect to why the recommended treatment
has not been carried out, should be developed. Where
the evidence establishes the individual’s unjustified fail-
ure to follow prescribed treatment which could be
expected to restore the capacity for SGA, a finding of
cessation should be made (see SSR 82-59 (PPS-78: Fail-
ure to Follow Prescribed Treatiment).)
Nonrollback Conversion Cases
Where the individual was a supplemental security
income grandfatheree and is receiving SSI benefits based
on disability, disability will be ceased when the individ-
ual’s impairment as shown by current medical or other
evidence does not meet the criteria of the appropriate
State plan or the Federal criteria (SSR 82-10C).
EFFECTIVE DATE: The policies covered by this PPS
have been in effect for many years except for the policy
on work incentives. This policy became effective
December |, 1980, as specified by the Social Security
Disability Amendments of 1980.
CROSS-REFERENCE: Program Operations Manual
System Part 4, Chapter II.
35
Department of
HEALTH AND HUMAN SERVICES
Sociai Security Administration
Office of Hearings and Appeals
INTERIM CIRCULAR NO. 185
Office of Hearings and Appeals Handbook
Applicability of Circuit Court Decisions at Administrative
Law Judge and Appeals Council Levels
1. Background
SSA has been subject to increasing litigation in recent years
involving a myriad of program issues. One of the most
troubling questions which has been raised by the Congress,
the Courts, and by the public at large has been the issue of
nonacquiescence. Recently, nonacquiescence has been the
subject of various law suits challenging its legality. More-
over, the Congress, in enacting the 1984 Disability Amend-
ments, indicated in the Conference Report on that legisla-
tion that the Secretary should seek a resolution of the issue.
These developments have led to a reexamination of the
agency’s practices. As a result, the Secretary has decided to
modify the longstanaing policy and has established the pro-
cedures described below. These procedures require that par-
ticular circuit court decisions will be considered prior to a
final decision of the Secretary being rendered on the case.
Until further notification, the procedures contained in this
Interim Circular supersede the instructions contained in sec-
tion | - 16 “Court Decisions” of the OHA Handbook.
A series of Social Security Rulings (SSRs) will be issued
identifying circuit court decisions which are at variance with
established SSA policy (i.e. the law, Regulations and SSRs)
for each of the circuits and which wiil be considered at the
Administrative Law Judge (ALJ) and Appeals Council (AC)
36
levels. These SSRs will provide a full description of the case
and an explanation of how SSA will apply the decision
within the circuit. They will be issued not as new adjudica-
tive policy but rather as a part of the agency’s procedures for
reviewing claims from the standpoint of Court of Appeals
law and as a part of the agency’s ongoing litigation manage-
ment program.
The ALJ should begin to address circuit court case law as
soon as these SSRs are published. Thereafter, if the ALJ
concludes that a circuit court decision, as interpreted by the
agency in an SSR, dictates an allowance (partial or full) in a
particular case while SSA policy would dictate a denial, a
recommended decision favorable to the claimant will be
issued by the ALJ and reviewed automatically by the AC.
Wherever reference is made in this Circular to “applicable
circuit court decisions,” “applicable circuit court case law”
or “circuit court case law” it means such decisions or case
law as interpreted by the agency in an SSR.
Il. ALJ Procedures
A. General
Where a request for hearing is received involving an issue on
which an SSR has been published which indicates that cir-
Cult court case law in the circuit in which the claimant
resides is at variance with SSA policy, the procedures dis-
cussed below will be followed.
B. Notice of Hearing
The usual notice of hearing procedures will be followed.
However, the notice of hearing will be revised to indicate
that in certain situations the agency will also consider the
applicable circuit court case law on the issue(s) to be
decided. As appropriate, model language will be furnished in
supplements to this IC.
37
C. Conduct of Hearing
As usual, the ALJ is to inquire fully into the matters at issue.
The inquiry must consider the applicable requirements
established by circuit court case law, if appropriate, in addi-
tion to those under agency policy. The opening statement by
the ALJ should indicate that the agency will consider
whether the claimant will be found eligible, entitled, contin-
ued, etc. under applicable circuit court case law as well as
under SSA policy.
D. Decision
Preparation of the decision will differ depending on how the
ALJ is prepared to rule in the case:
Where applicable circuit court case law differs from SSA
policy on a particular issue but the ALJ is prepared to rule
fully favorably to the claimant under SSA policy, the deci-
sion need not consider or address the applicable case law.
An initial ALJ decision should be issued in the usual
manner.
if the ALJ is prepared to find unfavorably to the claimant
under both SSA policy and applicable circuit court case
law, the decisional rationale should contain evaluation of
the evidence addressing both established SSA policy and
the case law. Findings and decisional language addressing
both established policy and applicable circuit court case
law should also be made. An initial ALJ decision should
be issued in the usual manner.
Where the ALJ is prepared to rule unfavorably to the
claimant under SSA policy but favorably to the claimant
under the agency’s interpretation of circuit court case law
as set forth in the applicable SSR, a recommended
favorable decision will be issued. The recommended deci-
sion should contain separate sections on the case law
which will be included following the standardized text
statement of SSA regulations. A separate section should
38
be included in the rationale using applicable circuit court
case law. This should follow the section on evaluation of
the evidence under established SSA policy. Separate rec-
ommended findings and a recommended decisional para-
graph under the case law will be made and included fol-
lowing the recommended findings under SSA policy.
Those sections of the recommended favorable decision
dealing with applicable circuit court case law should be
specifically identified as such so that the AC can readily
identify them in reviewing the recommended decision. As
an example, after the section headed FINDINGS in
which SSA policy would be applied, a separate section
headed FINDINGS — CIRCUIT LAW APPLIED should
be included.
E. Processing of Decision
All decisions issued under this Circular will be processed in
the usual manner. The usual notice to the claimant which
accompanies a decision (recommended or initial) will be
issued.
Ill. AC Procedures
A. ALJ Decision Favorable to the Claimant
Under SSA Policy
If own motion review is being considered where the ALJ
issued a favorable decision to the claimant under SSA policy
which the AC considers to be contrary to such policy, the AC
must determine whether a favorable decision could have
been made under applicable circuit court case law. If so, own
motion review need not be taken. If own motion review is
not taken, the ALJ’s favorable decision will become the final
agency decision. If it is not clear whether the case law would
result in a different decision, the AC should remand the case
to an ALJ for a hearing, as necessary, and recommended
decision on the issue of the effect of applicable circuit court
case law on the claim.
39
B. ALJ Decision Unfavorable to the Claimant Under Both
Agency Policy and Circuit Court Case Law
A claimant may request review of an ALJ hearing decision
which was unfavorable to the claimant under both SSA pol-
icy and applicable circuit court case law. Where the AC
agrees that the unfavorable decision is supported by substan-
tial evidence, the request for review will be denied. If the AC
believes that the decision is not correct with respect to SSA
policy, the usual AC procedures will be followed. Where the
AC believes that the decision with respect to the agency
policy is correct, but may be incorrect with respect to circuit
court case law, the request for review will be granted.
The following actions may be taken:
¢ If the AC believes that a decision favorable to the claim-
ant should have been recommended under applicable cir-
cuit court case law and from a litigation standpoint the
case might be expected to result in a court decision
adverse to the Secretary if an unfavorable administrative
decision were issued and judicial review were sought by
the claimant, a decision favorable to the claimant will be
issued by the AC.
e Where the AC believes that further development must be
undertaken with respect to circuit court case law, the case
will be remanded to the ALJ for that purpose.
* Where the AC believes that the decision unfavorable to
the claimant is correct with respect to SSA’s policy but
contrary to circuit court case law but believes the issue
should be relitigated in that circuit on the basis of that
case, the AC will prepare a draft unfavorable decision
which will be circulated and handled as described in sec-
tion C below.
40
C. ALJ Decision Unfavorable to the Claimant Under
SSA’s Policy — Favorable to the Claimant
Under Circuit Court Case Law
The AC will consider the recommended decision under its
usual criteria. After its review, if the AC agrees with the
ALJ’s findings under circuit law as interpreted by the
agency, the Council will ordinarily adopt the ALJ’s recom-
mended decision. If the AC is of the opinion that the ALJ’s
decision incorrectly interprets circuit law, corrective action
will be taken by the AC (i1.e., the AC will either issue a
revised decision unfavorable to the claimant or remand for
further development). A copy of the AC decision will be
forwarded to an SSA Special Policy Review Committee for
use in evaluating this procedure.
If the AC agrees with the ALJ’s conclusion in a decision
which is unfavorable to the claimant under SSA policy but
favorable to the claimant under circuit court law but
believes the issue involved should be relitigated in that cir-
cuit in the context of that case, the AC will prepare a draft
decision unfavorable to the claimant which will be for-
warded to the SSA Special Policy Review Committee for its
review. If the Committee decides that the case is an appro-
priate vehicle for relitigating the issue, the Office of the
General Counsel shall consult with the Department of Jus-
tice as to whether or not it believes relitigation of the issue is
appropriate. If relitigation is determined to be appropriate,
the AC’s unfavorable decision will be issued. If relitigation is
not appropriate in the particular case, the ALJ’s recom-
mended decision favorable to the claimant will be adopted
by the AC because it will have been decided that, from a
litigation standpoint, the case might be expected to result in
a court decision adverse to the Secretary if an unfavorable
administrative decision were issued and judicial review were
sought by the claimant.
4]
AMERICAN BAR ASSOCIATION
Report No. 110
BE IT RESOLVED, That the American Bar Association
urges the Social Security Administration to observe, in all
stages of administrative proceedings, the applicable deci-
sions of the United States Court of Appeals for the circuit in
which the matter has arisen, subject to the agency seeking
review in the United States Supreme Court.
BE IT FURTHER RESOLVED, That the American
Bar Association urges that, in the event the Social Security
Administration continues its nonacquiescence policy, in its
former or present form, Congress enact legislation to man-
date the agency to observe fully within each circuit the deci-
sions of the Court of Appeals within that circuit, subject to
the agency seeking review in the United States Supreme
Court.
Passed: July 10, 1985.
42
Supreme Court of the United States
No. A-977
PATRICK H. HYATT, ET AL.,
Applicants,
¥..
MARGARET M. HECKLER,
SECRETARY OF HEALTH HUMAN SERVICES, ET AL.
ORDER EXTENDING TIME TO FILE PETITION FOR
WRIT OF CERTIORARI
UPON CONSIDERATION of the application of counsel
for the applicants,
IT IS ORDERED that the time for filing a petition for a
writ of certiorari in the above-entitled cause be, and the
same is hereby, extended to and including September 20,
1985.
/s/ WARREN E. BURGER
Chief Justice of the United States
Dated this 3rd
day of July, 1985
43
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 84-1381
Patrick H. Hyatt: Herman OQ.
Caudie and Mary P. Lov-
ingood, on behalf of them-
selves and all others similarly
situated, North Carolina
Department of Human
Resources, Disability Deter-
mination Services,
Appellees,
VS.
Margaret M. Heckler, or her
successor in office, Secretary
of the United States Depart-
ment of Health and Human
Services
Appellant.
Appeal from the United States District Court for the West- —
ern District of North Carolina, at Charlotte. James B.
McMillan, District Judge. (C/A 83-655)
Argued: June 7, 1984 Decided: March 20, 1985
No. 84-1695
Patrick H. Hyatt; Herman O.
Caudle and Mary P. Lov-
ingood, on behalf of them-
selves and all others similarly
situated, North Carolina
Department of Human
Resources, Disability Deter-
mination Services,
Appellees,
«-VY-
Margaret M. Heckler, or her
successor in office, Secretary
of the United States Depart-
ment of Health and Human
Services,
Appellant.
Appeal from the United States District Court for the
Western District of North Carolina, at Charlotte. James B.
McMillan, District Judge. (C/A 83-655).
Submitted: August 9, 1984 Decided: March 20, 1985
Before RUSSELL and HALL, Circuit Judges, and
BUTZNER, Senior Circuit Judge.
Howard S. Scher, Attorney, Appellate Staff, Civil Divi-
sion, United States Department of Justice (Richard K. Wil-
lard, Acting Assistant Attorney General; Charles R. Brewer,
45
United States Attorney; William Kanter and Deborah R.
Kant, Attorneys, Appellate Staff, Civil Division, United
States Department of Justice, on brief) for appellants;
John R. Wester (Dan T. Coenen, Robert M. Bryan, Her-
man Spence, III, Fleming, Robinson, Bradshaw & Hinson,
P.A.; Jane Harper, Legal Services of Southern Piedmont.
Inc., on brief) for appellees in 84-1381; (John R. Wester,
Dan T. Coenen, Robert M. Bryan, Fleming, Robinson, Brad-
shaw & Hinson, P.A.; Charles McBrayer Sasser, Legal Serv-
ices of Southern Piedmont, Inc., on brief) for appellees in
84-1695; Jeffrey L. Bishop (Casey, Bishop, Alexander &
Murphy, P.A., on brief) for intervenor.
46
BUTZNER, Senior Circuit Judge:
The Secretary of Health and Human Services appeals
from the district court’s order enjoining the Secretary to
cease her policy of not following the decisional law of this
circuit regarding the initiation and termination of disability
benefits. The Secretary also assigns error to the district
court’s certification of a class whose claims are to be
reopened and readjudicated in accordance with the stan-
dards laid down by this circuit.! In a related appeal, the
Secretary questions the award of attorneys’ fees.
After the parties argued this appeal, Congress enacted the
Social Security Disability Benefits Reform Act of 1984,
which became effective October 9, 1984.2 The parties’ sup-
plemental briefs disclose that many of the issues raised on
appeal have been affected significantly by the new legisla-
tion. Furthermore, Heckler v. Day, 104 S. Ct. 2249 (1984),
and Heckler v. Ringer, 104 §. Ct. 2013 (1984), which were
decided after entry of the district court’s order, provide con-
trolling precedent for aspects of this legislation. The 1984
Act and the recent Supreme Court opinions require us to
vacate the district court’s judgment and remand the case.
'The district court’s opinion is reported as Hyatt v. Heckler, 579 F.
Supp. 985 (W.D.N.C. 1984). The district court subsequently revised the
published draft of the certification order. The revised subclasses are: ini-
tial claimants who allege disability from diabetes or hypertension, A(1)(a),
or pain, A(1)(b); claimants whose benefits were terminated, A(2) and B.
Pub. L. No. 98-460, 98 Stat. 1794 (1984).
47
I.
Terminated Berefits
The district court directed the Secretary to adjudicate the
termination of benefits in accordance with circuit prece-
dent.’ It certified subclasses of North Carolina residents who
were entitled to this relief.
We conclude that the 1984 Act cortrols the claims of all
members of the subclasses who assert that their benefits
have been terminated unlawfully. Section 2 of the 1984 Act
deals with the issue of medical improvement and prescribes
the standard of review for the termination of disability bene-
fits. These standards are broad enough to encompass all
impairments or combination of impairments, whether physi-
cal or mental, that provided the basis for the initial award of
benefits.
Section 2(d) of the Act deals with class actions relating to
medical improvement pending, as this one was, on Sepiem-
ber 19, 1984, for judicial review of the termination of bene-
fits. This section provides that the claims of named class
members are to be remanded to the Secretary for adjudica-
tion in accordance with the provisions of the Act. Also, the
claims of unnamed class members are to be remanded to the
Secretary, who is directed to notify them of their mght to
request administrative review.
The government protests that some subclass members |
whose benefits were terminated are not entitled to a remand
because they have not satisfied the requirements of section
2U5(g) of the Social Security Act, 42 U.S.C. §405(g). This
attack on the district court’s certification order, however,
does not survive the enactment of the 1984 legislation. By
directing remand of cases pending September 19, 1984, the
3See Dotson v. Schweiker, 719 F.2d 80 (4th Cir. 1983); Myers v.
Califano, 611 F.2d 980 (4th Cir. 1980); Martin v. Secretary, 492 F.2d 905
(4th Cir. 1974).
48
Act created an exception to the normal exhaustion require-
ments for actions, such as this, relating to medical improve-
ment. The import of this provision was explained by Senator
Dole:
The effective date provision does, however, permit all
class members of certified class actions to seek review
of their cases under the medical improvement standard
established by this act, even where they may not have
pursued their appeal rights in accordance with section
205 and the Secretary’s regulations.
130 Cong. Rec. $11454 (daily ed. Sept. 19, 1984).
Members of one of the subclasses, whose benefits are sub-
ject to termination, insist that they are entitled to have
claims involving pain evaluated by the Secretary on remand
according to this crcuit’s case law.* This contention is fore-
closed by section 3(a) of the 1984 Act which prescribes an
interim statutory standard for the evaluation of pain in all
determinations made prior to January |, 1987. Because their
cases were pending when the 1984 legislation was enacted,
the new statutory standard is applicable to their claims. See
Bradley v. Richmond School Board, 416 U.S. 696, 711-16
(1974); United States v. Schooner Peggy, 5 U.S. (1 Cranch)
102, 110 (1801). Contrary to the claimant’s contention, they
have no vested constitutional right to have their claims eval-
uated by standards that were in effect prior to the 1984 Act.
See Richardson v. Belcher, 404 U.S. 78, 80-81 (1971).
Another subclass included claimants whose benefits were
terminated because the Secretary did not follow this circuit's
precedent for evaluating hypertension or diabetes mellitus.°
The district court, concluding that this policy of nonacquies-
cence was unlawful, required the Secretary to follow circuit
precedent with regard to these impairments.
4See Myers v. Califano, 611 F.2d 980 (4th Cir. 1980).
5See Martin v. Secretary, 492 F.2d 905 (4th Cir. 1974).
a
49
Congress is aware of the Secretary's policy of nonacquies-
cence. As proposed by the House, the 1984 Act would have
required the Secretary to acquiesce or petition for certiorari.
The Senate bill would have required the Secretary to report
her decisions of nonacquiescence to the Congress and to
print her explanation in the Federal Register.°®
The conferees deleted both the House and the Senate
provisions, but they did not intend that deletion should be
interpreted as approval of nonacquiescence. On the con-
trary, they noted that questions had been raised concerning
the constitutionality of nonacquicscence, as well as the
application of the policy, even if constitutional. “By refusing
to apply circuit court interpretations and by not promptly
seeking review by the Supreme Court, the Secretary forces
beneficiaries to re-litigate the same issue over and over again
in the circuit, at substantial expense to both beneficiaries
and the federal government. This is clearly an undesirable
consequence.” Conference Report at 38, 130 Cong. Rec. at
H9831. The conferees reaffirmed that Congress intended the
Secretary to resolve policy conflicts promptly to assure uni-
form administration of the program. This objective, they
pointed out, may be achieved by diligently pursuing appeals
or by seeking a legislative remedy.’ The conferees urged
“that a policy of non-acquiescence be followed only in situa-
tions where the Administration has initiated or has the rea-
sonable expectation and intention of initiating the steps nec-
essary to receive a review of the issue in the Supreme
Court.” Conference Report at 37, 130 Cong. Rec. at H9831.
*See H.R. Rep. No. 1039, 98th Cong., 2d Sess. 36-38, reprinted in
130 Cong. Rec. H9831 (daily ed. Sept. 19, 1984) (hereinafter cited as
Conference Report).
"Also, section 10 of the Act directs the Secretary to establish pursu-
ant to the Administrative Procedure Act un.form standards for determin-
ing disability.
50
When the Conference Report is read in conjunction with
Heckler v. Day, 104 S. Ct. 2249 (1984), it becomes apparent
that the injunction must be vacated. In Day, the Court
vacated an injunction entered in a class action requiring the
Secretary to adjudicate all claims and pay benefits within
specified times. The Court held that the injunction was “an
unwarranted judicial intrusion into this pervasively regu-
lated area....” 104 S. Ct. at 2258. Its opinion rested to a
great extent on Congress’s rejection of legislation imposing
mandatory deadlines on disability reviews.
The controversy over nonacquiescence presents an analo-
gous situation. The conferees deleted a provision of the
House bill that would have required acquiescence in circuit
precedent in the absence of appeal. See Conference Report
at 37, 130 Cong. Rec. at H9831. Following the reasoning of
Day, we cannot approve an injunction imposing the same
restraints that Congress rejected.
Vacating the district court’s injunction does not leave
claimants without a remedy. In the unlikely event that the
Secretary spurns the Conference Report, the district courts
reviewing the Secretary’s decision are bound to apply circuit
precedent construing the Social Security Act. But this review
would be long and wasteful to the claimant and the govern-
ment. Both the district court and the conferees spoke force-
fully to avoid the harm and extravagance of the policy of
routine nonacquiescence. The Secretary should not deem
vacation of the injunction as approval of the policy.
We decline the claimants’ request that we instruct the
district court to retain jurisdiction for review of the Secre-
tary’s orders on remand terminating disability. Section
2(d)(4) provides that the Secretary’s decision of a remanded
case shall be regarded as a new decision subject to review
only in conformity with section 205 of the Social Security
Act. Section 2(d)(5) prohibits certification of a class relating
to medical improvement after September 19, 1984. These
eee EE Ee
51
provisions persuade us that Congress intended that judicial
review of remanded cases should not be the subject of a class
action. Individual review provides an adequate remedy.
We direct the district court to remand to the Secretary the
claims of the named plaintiffs and the unnamed class mem-
bers designated in subclasses A(2) and B, except those whose
claims have been mooted by award of benefits pendente lite.
After remand to the Secretary, the district court should relin-
quish jurisdiction over the claims of the plaintiffs end
unnamed class members.
Il.
Initial Benefits
We find merit in the government’s challenge to the district
court’s jurisdiction over some members of the subclasses
composed of claimants for initial benefits. The 1984 Act did
not provide initial claimants the same right of reconsidera-
tion that it granted claimants whose benefits were termi-
nated. Initial claimants, therefore, must be limited to those
who meet the requirements of section 205(g) of the Social
Security Act, 42 U.S.C. §405(g). Califano v. Yamasaki, 442
U.S. 682, 698-701 (1970).
Ordinarily section 405(g) requires exhaustion of adminis-
trative remedies before a claimant can seek judicial review.
The Court has recognized an exception to this requirement
for a claimant who has presented to the Secretary a claim |
that raises a legal issue wholly collateral to a claim for bene-
fits and who has made a colorable showing that his injury
cannot be remedied if exhaustion is required. Mathews v.
Eldridge, 424 U.S. 319, 326-32 (1976). The district court
applied this exception to the general rule and held that
exhaustion of remedies was not required.
In Heckler v. Ringer, 104 S. Ct. 2013, 2023 (1984), the
Court held that a claim that the Secretary was applying an
improper standard for entitlement was not wholly collateral
52
to a claim for benefits. Consequently, exhaustion was
required. Here, too, the claims that the Secretary has applied
improper standards with respect to pain, diabetes, and
hypertension are inextricably intertwined with claims for
benefits within the meaning of the exhaustion requirement
of section 405(g) as interpreted by the Supreme Court in
Ringer. Consequently, exhaustion of administrative reme-
dies is necessary for members of the subclasses composed of
claimants of initial benefits.
Section 405(g) also requires a claimant to file an action for
judicial review within 60 days after the Secretary’s final
decision. In this circuit, the 60-day requirement is consid-
ered to be jurisdictional, and unnamed class members are
not exempt from compliance. Hunt v. Schweiker, 685 F.2d
121 (4th Cir. 1982). We cannot accept the suggestion that we
should overrule Hunt, for, as a panel of the court, we lack
authority to do this.
On remand, we direct the district court to dismiss the
initial claims for disability of class members who have not
exhausted their administrative remedies or who have not
sought timely judicial review of the Secretary’s final deci-
sion. The district court should remand to the Secretary all
initial claimants in subclasses A(1)(a) and (b) who have satis-
fied the requirements of section 405(g). Those who raise the
issue of pain should be reconsidered by the Secretary in the
light of the interim statutory pain standard of section 3(a) of
the 1984 Act for the reasons we stated in Part I.
The Act does not address the diabetes and hypertension
standards. Nevertheless, we will not assume that the Secre-
tary will disregard the views expressed in the Conference
Report about the Secretary’s policy of nonacquiescence in
circuit law. The Secretary should have an opportunity to
reconsider these claims in light of circuit precedent and the
legislative history of the 1984 Act. The claimants are entitled
53 \
to a decision on this issue, so, if necessary, they can seek
review on an unequivocal administrative record.
After remand, the district court should relinquish jurisdic-
tion over the members of these subclasses for reasons men-
tioned in Part I. Section 405(g) provides an adequate proce-
dure for judicial review of individual claims in each of the
three districts of North Carolina where the claimants reside.
Il.
Identification of Unnamed Class Members
The district court’s order provided for identification of.
and notice to, unnamed class members. Section 2(d) of the
1984 Act supersedes the district court’s directions to the
Secretary with respect to class members whose benefits were
terminated.
The district court should amend its order and notice with
respect to claimants for initial benefits by providing that the
Secretary should identify and notify those members of sub-
classes A(1)(a) and (b) who have met the requirements of
§405(g).
IV.
Mandamus
The appellees contend that the court had mandamus juris-
diction over the claims of all plaintiffs under 28 U.S.C.
§1361. They argue that this independent ground obviates the
need to satisfy the jurisdictional prerequisites of §405. In
Heckler v. Ringer, 104 S. Ct. at 2022, the Court noted that
mandamus would issue only to a plaintiff who had
exhausted all other avenues of relief, and only if the defen-
dant owed the plaintiff a clear nondiscretionary duty. The
Court concluded that §405(g) provided an adequate remedy
for challenges to the Secretary’s denial of claims including
54
objections based on the Secretary’s policies. For these rea-
sons, we hold that mandamus is inappropriate. See also
Starnes v. Schweiker, 748 F.2d 217 (4th Cir. 1984).
V.
Intervention
The district court allowed the North Carolina Department
of Human Resources, Disability Determination Services to
intervene pursuant to Rule of Civil Procedure 24(b). The
department’s complaint challenges the Secretary’s policy of
nonacquiescence in Fourth Circuit precedent in the same
areas as the class action. It seeks declaratory and injunctive
relief prohibiting the Secretary from following this policy in
North Carolina. The department claims standing to sue
because of its role in administering the disability program
and as parens patriae. The Secretary contends that the
department lacks standing.
Ordinarily, rule 24(b) authorizes a district court to permit
an agency to intervene in an action that involves a statute
that it administers. But in this instance, which involves the
standards the Secretary uses for determining disability bene-
fits, sections 405(g) and 405(h) limit actions against the Sec-
retary to an individua! who seeks review of a final decision
made after a hearing to which he was a party. In Lowther v.
Montgomery County, 561 F.2d 1120 (4th Cir. 1977), we held
that neither a county nor an unincorporated association was
an individual entitled to sue under §405(g). The depart-
ment’s function of determining disability does not distin-
guish its situation from the plaintiffs’ in Lowther. A claim of
standing analogous to the department’s was rejected in
D'Amico v. Schweiker, 698 F.2d 903 (7th Cir. 1983). There
administrative law judges who sought to challenge the Secre-
tary’s instruction pertaining to the repayment of Social Secu-
rity benefits were denied standing to sue. The benefi-
ciaries — not the adjudicators — are the proper parties to
55
seek review under section 405(g). Lowther and D'Amico fore-
close the department’s standing in its own right.
The department also lacks standing to sue the federal gov-
ernment in its capacity as parens patriae. With respect to a
citizen’s rights in relation to the federal government, the
United States — not the state — occupies the status of
parens patriae. Massachusetts v. Mellon, 262 U.S. 447, 485-
86 (1923).
On remand, the district court should dismiss the depart-
ment’s complaint in intervention.
Vi.
Attorneys’ Fees
The Secretary has appealed the district court’s order
awarding attorneys’ fees (No. 80-1695). We vacate the award
and remand this issue to the district court for reconsidera-
tion in light of this opinion.
VII.
Summary
On remand, we direct the district court to take the follow-
ing action:
1. Vacate its order of injunctive and declaratory relief,
except as provided in paragraph 5 below.
2. Remand to the Secretary for reconsideration pursuant
to the Social Security Disability Benefits Reform Act of
1984 the claims of named parties and unnamed members of
subclasses A(2) and B whose benefits were terminated,
except those who have been granted awards pendente lite.
3. Dismiss the claims of initial claimants in subclasses
A(1)(a) and (b) who have not met the requirements of sec-
tion §405(g).
56
4. Direct the Secretary to identify and notify claimants for
initial benefits in subclasses A(1)(a) and (b), who meet the
requirements of §405(g), in accordance with procedures and
a notice prescribed by the district court.
5. Remand to the Secretary for reconsideration pursuant
to the interim pain standard of section 3(a) of the 1984 Act
the claims of initial claimants in subclass A(1)(b) who have
met the requirements of section 405(g).
6. Remand to the Secretary for reconsideration of her
policy of nonacquiescence in light of the 1984 Act’s legisla-
tive history and circuit precedent the claims of initial claim-
ants in subclass A(i)(a) who have met the requirements of
§$405(g).
7. After remand, relinquish jurisdiction of all remanded
claims and dismiss the claimants without prejudice to their
right to seek timely review of the final decisions of the Secre-
tary on remand in their respective judicial district pursuant
to §405(g).
8. Dismiss the complaint in intervention of the North
Carolina Department of Human Resources, Disability
Determination Services.
9. Reconsider the award of attorneys’ fees in light of this
opinion.
The judgments in 84-1381 and 84-1695 are vacated, and
the cases are remanded. Each party shall bear its own costs.
57
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 84-1381
Patrick H. Hyatt, et al,
Appellees,
versus
Margaret M. Heckler, etc.,
Appellant.
}
Appeal from the United States District Court for the West-
ern District of North Carolina, at Charlotte. James B.
McMillan, District Judge.
The appellant’s petition for rehearing and the appellee’s
petition for rehearing with suggestion for rehearing in banc
were submitted to this Court. As no member of the Court
requested a poll on the suggestion for rehearing in banc, and
As the panel considered the petitions for rehearing and is
of the opinion that they should be denied,
IT IS ORDERED that the petition for rehearing in banc is
denied.
Entered at the direction of Judge Butzner with the concur-
rence of Judge Russell and Judge Hall.
For the Court,
/s/ JOHN M. GREACEN
CLERK
Filed April 23, 1985.
IN THE DISTRICT COURT OF
THE UNITED STATES
FGR THE WESTERN DISTRICT OF
NORTH CAROLINA
Charlotte Division
C-C-83-655-M
PATRICK H. HYATT;
HERMAN QO. CAUDLE and
MARY P. LOVINGOOD, on
behalf of themselves and
all others similarly
Situated,
« Plaintiffs,
and
NORTH CAROLINA
DEPARTMENT OF HUMAN
RESOURCES, DISABILITY
DETERMINATION SERVICES,
Plaintiff-Intervenor,
-vS-
MARGARET M. HECKLER,
or her successors in office,
Secretary of the United
States Department of
Health and Human
Services,
Defendant.
FINDINGS OF FACT
CONCLUSIONS OF LAW
AND
DECISION THAT THE
UNITED STATES
SECRETARY OF
HEALTH AND HUMAN
SERVICES SHOULD
(1) STOP DENYING CLAIMS FOR SOCIAL SECURITY DIS-
ABILITY BENEFITS BASED CN HYPERTENSION OR DIABE-
TES MELLITUS UPON THE THEORY THAT WITHOUT
END-ORGAN DAMAGE (TO HEART, EYES, KIDNEYS OR
BRAIN) THE CLAIMANT DOES NOT HAVE A “SEVERE
IMPAIRMENT”
(2) STOP DENYING CLAIMS FOR SOCIAL SECURITY DISABIL-
ITY BENEFITS BASED ON PAIN, UPON THE THEORY THAT
SUBJECTIVE MANIFESTATIONS OF PAIN CANNOT BE
SS |
(3
~~
9
5
CONSIDERED DISABLING UNLESS THEY ARE SUP-
PORTED BY OBJECTIVE CLINICAL FINDINGS
STOP TERMINATING SOCIAL SECURITY BENEFITS WITH-
OUT SUBSTANTIAL EVIDENCE THAT THE RECIPIENT'S
DISABILITY HAS CEASED
— ALL OF WHICH THE SECRETARY PERSISTS IN DOING,
IN CONSCIOUS AND WILFUL DISREGARD OF PERTINENT
AND CONTROLLING DECISIONS OF THE UNITED STATES
COURT OF APPEALS FOR THE FOURTH JUDICIAL CiR-
CUIT OF THE UNITED STATES.
FINDINGS GF FAC cviicntngeemnnenamnaane
I. THE PARTIES AND THE ISSUES ...........
Il. CASE HISTORIES OF THE
INDIVIDUAL PLAINTIFFS AND
OTHERS
(a) FOUR FE FRO evcirtseeectcinertconsinn
(Ey) Herein GP. 6D vcetniccresateseensecncencsiadss
Cc) Dilan FE vc csckcccesncccncctanepincwverss
(d) Other Representative
Chk: WINE ooo cticciec cocecerenaraes
Il. HOW SOCIAL SECURITY CLAIMS
ARE HANDLED; REVIEW AND
TERMINATION, 1982-84 STYLE............
OCIIIIG, ss Siccocvdeneneamanenes
FRIED ce iviicsscctsinctintntaaumamaaoanenn
eI iisnccdccetdacicceoeen
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Tine TIO ooiocisnicscvoviccrccoccsrca ess
The Secretary’s Position ...........-.cccccsssseccreee
CONC LU CP EAA innikitccishicciotnmnnen
i. DEFENDANT’S MOTION TO DISMISS
FOR LACK OF JURISDICTION .............
Il. THE SUBSTANTIVE LEGAL MERITS
CP TRE CAiiccticxiscccconinbnetaewe
IY occ ciecaricctaxersiavepavecmcnrsaventenvoieniuaatimeanan
Page
l
]
61
FINDINGS OF FACT
I.
The Parties and the Issues
|. This is a class action against the Secretary of the United
States Department of Health and Human Services, challeng-
ing the policy of the Social Security Administration (SSA)
denying Social Security benefits and terminating Social
Security benefits, in the cases described below, in open vio-
lation of applicable decisions of the Fourth Circuit Court of
Appeals.
2. The individual plaintiffs and class members are appli-
cants for or former recipients of disability benefits under
Titles II and XVI of the Social Security Act, 42 U.S.C. §§401
et seq; 1381 et seq. The North Carolina Department of
Human Resources, Disability Determination Services
(DDS), has been authorized to intervene as a party plaintiff.
See, Nuesse v. Camp, 385 F.2d 694 (D. C. Cir. 1967); Fed. R.
Civ. P. 24(a); (b).
3. Plaintiffs contend that the Secretary, acting pursuant to
an express policy of refusal to comply with federal circuit
court decisions with which she disagrees, has promulgated
standards of eligibility for disability benefits which directly
contradict controlling decisions of the Fourth Circuit Court
of Appeals.
4. First, plaintiffs contend that the Secretary’s regulation’
SSR 82-55 disregards the Fourth Circuit’s holding in Martin
v. Secretary of Department of Health, Education and Welfare,
492 F.2d 905 (4th Cir. 1974), by requiring that medical
impairments such as diabetes mellitus and hypertension
shall not be considered disabling unless they are accompa-
nied by end-organ damage (i.e., damage to heart, eyes, kid-
neys or brain).
5. Second, plaintiffs contend that the Secretary’s regula-
tion SSR 82-58 disregards the Fourth Circuit’s holding in
62
Myers v. Califano, 611 F.2d 980 (4th Cir. 1980), by provid-
ing that subjective manifestations of pain shall under no
circumstances be considered disabling unless they are sub-
stantiated by objective clinical findings.
6. Finally, plaintiffs contend that the Secretary’s regula-
tions SSR 82-49c and SSR 81-6 disregard the holding of
Dotson v. Schweiker, 719 F.2d 80 (4th Cir. 1983), by provid-
ing that a person currently receiving benefits is not entitled
to a presumption of continuing disability, and may be found
to be no longer disabled, despite the absence of evidence that
the recipient’s condition has changed for the better since the
date when he or she was last determined to be disabled.
7. Plaintiffs have argued that SSA’s policy of “non-
acquiescence” is contrary to the Social Security Act: to the
separation of powers doctrine; to principles of res judicata,
stare decisis, and collateral estoppel; to the due process and
equal protection guarantees of the Fifth Amendment to the
United States Constitution; and to the Administrative Pro-
cedure Act. They seek both declaratory and injunctive relief
requiring the Secretary to adhere to the decisions of the
Fourth Circuit Court of Appeals in determining eligibility
for Social Security disability payments.
8. Pursuant to specific orders of court dated December 16,
1983, and January 13, 1984, all issues were consolidated
under Rule 65(a)(2), and the case was heard on January 18,
1984, on (1) defendant’s motion to dismiss; (2) plaintiffs’
motion for injunctive relief; (3) plaintiffs’ motion for class
certification; and (4) the merits of the case. The court
received all competent evidence offered on all issues by all
parties.
ee
63
Il.
Case Histories of the Individual Plaintiffs
(a) Patrick H. Hyatt
9. Plaintiff Patrick Hyatt is 47 years old, has a tenth grade
education, and last worked in 1973 as a long haul truck
driver. He lives in Mecklenburg County, North Carolina,
with his wife and two daughters. Between 1969 and 1974
plaintiff underwent a scries of back operations, including
several lumbar laminectomies with removal of ruptured
intervertebral discs. Since the time of his original surgery,
plaintiff has suffered from continuous, disabling back and
leg pain.
10. On January 7, 1974, plaintiff was found by the Social
Security Administration to be disabled due to degenerative
disc disease, post-lumbrosacral fusion problems, and depres-
sive reaction. He received Social Security disability benefits
from March, 1973, until September, 1981.
11. On September 10, 1981, DDS notified Hyatt that his
disability had ceased during July, 1981; his benefits were
terminated. DDS did not inform Hyatt that his condition
had improved since he was last determined by SSA to be
totally disabled. On October 5, 1981, plaintiff requested
reconsideration of this decision. On January 8, 1982, after
reconsideration, DDS upheld its original decision, informing
Hyatt that although he suffered irom “discomfort,” he did
not suffer from objective physical impairments that would
prevent him from doing work activity.
12. On December 10, 1982, Mr. Hyatt received a hearing
before a Social Security Administration administrative law
judge (ALJ). At the hearing, plaintiff testified that his severe
pain precluded him from engaging in even the slightest exer-
tional activities’ this evidence was substantiated by wit-
nesses. In connection with the hearing, the ALJ received as
evidence numerous reports rendered by plaintiff's regular
treating physician, Dr. Jerry M. Petty, a neurosurgeon.
64
Among his other findings, Dr. Petty stated that “Mr. Hyatt is
totally and permanently disabled for any type work and has
been for quite some time.” Tr. 160. Dr. Petty’s reports fol-
lowing Mr. Hyatt’s frequent visits throughout the past ten
years document Hyatt’s continuing and severe pain.
13. The ALJ also considered a report made by Dr. Ronald
C. Demas, to whom plaintiff was referred for a consultive
examination by DDS. Dr. Demas diagnosed plaintiff as suf-
fering from probable chronic low back strain, post
laminectomy changes. Tr. 148. Dr. Demas does not appear
to have considered the disabling effects of plaintiff's subjec-
tively experienced pain.
14. On January 7, 1983, the ALJ rendered his decision.
He determined that plaintiff's back condition constituted a
severe impairment, but stated that plaintiff retained the
residual functional capacity to preform sedentary work. The
ALJ did not accord plaintiff a presumption of continuing
disability, and he did not make any finding whether plain-
tiffs condition had improved since he was last found
disabled.
15. In his decision, the AL! took notice of plaintiff's
severe pain, but found that it was not disabling. The ALJ
stated that Dr. Petty was “overly impressed with the claim-
ant’s complaints of pain,” and stated that the job of SSA was
to determine whether a claimant is disabled “on the basis of
medical evidence and other findings.” Tr. 23-24. The ALJ
then proceeded to find that Hyatt’s pain is not disabling
when he limits his physical exertion. There is no evidence in
the file to support this finding.
16. On June 2, 1983, the SSA Appeals Council denied
review of ihe ALJ decision. Following that action, plaintiff
instituted this suit to review the Secretary’s fina! decision
pursuant to 42 U.S.C. §405(g).
65
17. At the trial, Mr. Hyatt testified that his disability
benefits amounted to $425 per month before they were ter-
minated. Since the payments were terminated, plaintiff has
received no income for himself. He receives $202 per month
in AFDC payments to provide support for his two children,
and the family also receives food stamps. The family’s
monthly rent is $175.
18. Mr. Hyatt and his family have experienced severe
financial distress since his benefits were terminated. Mr.
Hyatt was forced to sell his home because he fell behind on
the mortgage payments, and a number of his personal pos-
sessions, including an automobile and two chairs, have been
repossessed by the finance company. Mr. Hyatt testified that
he has fallen behind on a number of bills, including all the
utility bills; the family has been unable to buy clothing, or to
afford a diet that includes meat.
(b) Herman O. Caudle
19. Plaintiff Herman O. Caudle was 56 years old at the
time this suit was filed. He had a 10th grade education, and
nad worked in the past as a salesclerk, night watchman, and
maintenance man. Until the time of his death on October
24, 1983, Mr. Caudle lived with his wife in Winston-Salem,
North Carolina.
20. SSA originally found that Mr. Caudle was entitled to a
period of Social Security disability benefits beginning in
May, 1981, due to hypertension, control less than satisfac-
tory, with Grade II retinopathy, exogenous obesity, passive-
dependent personality, and depressive reaction with sleep
disorder. The evidence before the court established also that
Mr. Caudle weighed about 270 pounds, and suffered for a
period of years from hypertension which his doctors were
unable to control through medication. Exh. 25, p. 4; Exh. 11,
ae
66
21. In March, 1983, DDS informed Mr. Caudle that his
disability had ended. DDS affirmed its initial determinaticn
upon reconsideration. Plaintiff Caudle then requested a
hearing before an ALJ. A hearing was held on August 17,
1983, and on August 24, 1983, the ALJ issued his decision
that Mr. Caudle was no longer disabled because he did not
suffer from a “severe impairment.”
22. In reaching his decision, the ALJ did not accord Cau-
dle a presumption of continuing disability, and did not make
any finding that Caudle’s condition had improved since he
was last found by SSA to be disabled.
23. The ALJ found from the evidence before him that
Caudle suffered from hypertension, under less than satisfac-
tory control with Grade II-III retinopathy, but he found that
Caudle suffered from no end-organ damage (/.e., damage to
eyes, heart, kidneys, or brain).
24. The ALJ further found that plaintiff's subjective com-
plaints were not substantiated by objective clinical findings.
25. On October 21, 1983, Mr. Caudle filed a timely
request with the Appeals Council for review of the ALJ’s
decision; three days later he was dead, apparently from the
hypertension and other ailments which had disabled him for
several years.
26. Counsel for plaintiffs introduced the affidavit of plain-
tiff Caudle’s regular treating physician, Dr. Mary Fennell
Lyles, assistant professor of internal medicine at Bowman
Gray School of Medicine. Dr. Lyles, who treated Caudle
from 1979 until his death in 1983, discussed the severity of
Caudle’s hypertension, which she stated showed no medical
improvement, and in fact showed a progressive deteriora-
tion, despite a course of aggressive therapy. She also stated:
aera
67
“Anxiety, depression, and financial stress all further
complicated management of Mr. Caudle’s blood pres-
sure. I attribute a large portion of this emotional dis-
tress to worry over his benefit status, especially since
May of 1983.” Exh. 11, p. 1.
27. Dr. Lyles further stated that Dr. Joyce Reynolds, med-
ical examiner at Forsyth Memorial Hospital, had reported
her opinion that Mr. Caudle had died a cardiac death as a
complication of his hypertension. Dr. Lyles supported the
finding of Dr. Reynolds with her own opinion that “Mr.
Caudle’s disabling condition, severe hypertension, led to
aggravation of his angina and eventually to myocardial
infarction which was the probable cause of death.” Exh. 11,
D2.
28. Dr. Lyles added that she had attempted to hospitalize
Mr. Caudle before his death, to perform intensive diagnostic
procedures. Mr. Caudle had refused hospitalization due to a
lack of insurance coverage and the threatened loss of his
disability benefits. Dr. Lyles concluded that her patient “did
not receive optimal treatment because his benefits were cut
off.” Exh. 11, p. 3.
29. Counsel for plaintiffs also introduced the affidavit of
Herman Caudle’s widow, Mary Devers Caudle. Mrs. Caudle
stated in her affidavit that Mr. Caudle’s physical condition
had not improved, but instead had continued to decline.
from the time when he was originally awarded disability.
benefits. Additionally, she stated, Mr. Caudle grew very wor-
ried and upset about the termination of his benefits, spend-
ing more and more time alone in his room, and causing Mrs.
“audle great concern. Mrs. Caudle stated her belief that
“worrying about Social Security shortened Herman’s life.”
Exh. 10, p. 2.
(c) Mary P. Lovingood
30. Plaintiff Mary Lovingood is 57 years old, and cannot
read or write. In the past she worked as a pie maker and a
EE
ii
68
poultry cleaner. She lives with her husband in Charlotte,
North Carolina.
31. SSA originally found that Ms. Lovingood was disabled
due to chest pain, high blood pressure, and back and leg
pain. Lovingood received Social Security disability benefits
from 1974 until October, 1983. Her benefits were termi-
nated pursuant to a notice by DDS in August, 1983, that she
was no longer disabled.
32. In the explanation accompanying the notice of termi-
nation sent to Ms. Lovingood, DDS stated:
“Although you may have pain in your back and legs at
times, the report show ({sic] that you are able to stand,
walk, and use your legs in a normal manner.
The explanation further stated:
“Although your blood pressure is higher than normal, it
has not damaged your heart, kidneys or eyes [end-
organs].”
Exh. 25, p. 2.
33. DDS did not accord Ms. Lovingood a presumption of
continuing disability based on her prior entitlement to bene-
fits, nor did it make any finding that her condition had
improved since she was initially found to be disabled.
34. On September |, 1983, Ms. Lovingood requested
reconsideration of the DDS decision and her request was
denied. She then filed a request for a hearing before an ALJ
on October 15, 1983. Apparently, that request is still
pending.
35. Ms. Lovingood’s affidavit was received in evidence. In
her affidavit, plaintiff states that her condition has not
improved since SSA originally found that she was disabled.
In addition, Ms. Lovingood states that she has grown anx-
ious and depressed since learning that her disability benefits |
would be terminated. The termination of Ms. Lovingood’s
benefits reduced her family income by approximately 30 per |
69
cent; she and her husband now live on his income of $530
per month, and will experience difficulty in paying the costs
of their food, rent, utilities, insurance, and medical bills.
Ms. Lovingood did not elect to continue receiving her disa-
bility payments pending appeal of her case to an ALJ,
because she was afraid she would be unable to repay SSA if
she ultimately lost her case.
(d) Other Representative Class Members
36. Affidavits of several declarants were received in evi-
dence. From these affidavits and other evidence, the court
finds the following facts:
37. SSA has engaged in a consistent practice of terminat-
ing Social Security disability benefits without making any
finding that a recipient’s condition has improved since he or
she was originally determined to be disabled. Exhs. 8-24.
38. The loss of Social Security benefits often causes for-
mer recipients to suffer severe financial hardship. Many for-
mer recipients have become completely dependent on
others, such as the public welfare system, private charities,
or their children, for support. Still others have suffered the
loss of their homes (Exh. 16); their utilities (Exh. 19); or
their automobiles (Exh. 13).
39. The termination of benefits to disabled persons whose
conditions have not changed has often resulted in the inabil-
ity of these persons to secure proper medical treatment for —
the very conditions from which they are disabled, or other
conditions. Exh. 20 (claimant in debt for medicine); Exh. 14
(inability to purchase medicine); Exh. 13 (appointments —
with private treating physician no longer affordable); Exhs.
14, 16 (eye examinations and glasses not affordable); Exh. 21
(needed dental treatments cancelled).
40. Persons whose disability benefits are terminated with-
out any demonstration that their conditions have improved
often experience deep emotional distress due to resultant
CC —
70
financial pressures, which tends only to aggravate the sever-
ity of their physical or emotional disabilities. Exhs. 17-20;
a3.
41. On several known occasions, former recipients of disa-
bility benefits have died, shortly after their benefits were
terminated without any showing of improvement, from the
very conditions which SSA had determined were not disa-
bling severe impairmeats. Exhs. 15, 17, 18, 24.
Ill.
How Social Security Claims are Handled;
Reviews and Terminations, 1982-84 Style.
Background
42. Title II of the Social Security Act provides for disabil-
ity insurance benefits (SSDI) for disabled workers. 42 U.S.C.
$401 et seg. SSDI benefits are based upon an individual’s |
earnings record and are paid without regard to financial
need. Title XVI of the Socia! Security Act provides for sup-
plemental income (SSI) for persons who are both poor and
disabled. 42 U.S.C. §1381 ef seg. SSI benefits are paid to
eligible poor persons whose income and resources fall below
a certain level.
43. The disability standards for both the SSDI and SSI
programs are identical. Disability is defined as the “inability
to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment
which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of not less
than twelve (12) months.” 42 U.S.C. §423 (d)(1)(A); §1382
(c)(a)(3)(A).
44. The Social Security Administration (SSA), pursuant to
contract, has entrusted initial disability determinations to
the North Carolina Department of Human Resources, Disa-
bility Determination Services (DDS). In making disability
71
determinations, DDS, the state agency, follows, and is only
authorized to follow, disavility standards promulgated by
the federal agency, SSA. These standards are established by
directives in the Programs Operation Manual System
(POMS) utilized by DDS employees, and in various SSA
rulings (SSRs) and policy statements.
45. An initial claimant for disability benefits will be
referred to DDS, the state agency, for review. If the claim is
denied, the claimant may request reconsideration by DDS.
If the claim is still denied, the claimant may request a hear-
ing before a federal SSA Administrative Law Judge (ALJ). A
claimant who receives an adverse decision from an ALJ may
appeal the decision to the SSA Appeals Council. Finally, a
claimant who is denied benefits hy the Appeals Counc’
seek relief from that decision by suing in federal co. cL
U.S.C. §405 (g).
46. A claimant who ts found disabled at any stage of this
procedure is entitled to benefits. However, a person is eligi-
ble for benefits only as long as the disability continues. A
recipient of disability benefits is subject to a “continuing
disability investigation” (CDI) at least once every three
years. 42 U.S.C. §421 (h)(1).
47. The procedure for review of eligibility for benefits and
possible termination is essentially similar to the procedure
followed in initial applications for benefits. See 20 C.F.R.—
§404.900 et seqg.; §416.901 et seg. A recipient is contacted by
DDS and told that his or her case is being reviewed to
determine whether he or she is still disabled. If DDS deter-
mines that the recipient is no longer disabled, DDS sends the
recipient a letter informing him or her of the determination;
SSA terminates payments of benefits shortly thereafter. A
recipient may request reconsideration from DDS, and may
seek further review of a termination of benefits from (in
turn) an ALJ, the Appeals Council, and the federal courts.
a
ee
(An SSI reciptent need not seek reconsideration from DDS,
but instead may appeal directly to an ALJ.)
48. Persons whose benefits have been terminated are cur-
rently offered the option of continuing to receive benefits
pending appeal at the ALJ level. 42 U.S.C.A. §423(g)(1)
(West Supp. 1983) (“aid paid pending” program). However,
if the ALJ affirms the termination, all benefit payments are
terminated, and the benefits paid pending appeal may be
considered overpayments subject to recoupment by the Sec-
retary of Health and Human Services.
Procedure
49. The Secretary develops guidelines for substantive dis-
ability determinations. These guidelines are published as
Social Security regulations, 20 C.F.R. §400 et seq.; Social
Security rulings (SSRs); and Programs Operating Manual
Systems (POMs). They are used as a controlling reference by
DDS (state) and SSA (federal) employees who perform disa-
bility evaluations upon claimants.
50. Under the contract between the SSA and North Caro-
lina, the North Carolina Department of Human Resources,
Disability Determination Services, makes initial disability
determinations both for new applicants and for those recipi-
ents whose continuing disability status is reviewed. The state
employees are controlled by the federal regulations in mak-
ing disability determinations and may not vary from them.
If, for example, a DDS consulting physician expresses the
opinion that a claimant is disabled, that opinion will be
rejected by the state and federal examiners unless the medi-
cal impairments fit precisely within the guidelines estab- |
lished by the defendant.
51. SSA and DDS employees who evaluate claims for |
disability payments are charged with the duty of determin-
ing whether a claimant suffers from a “severe impairment” |
which limits the claimant’s ability to engage in, or wholly
73
prevents a claimant from engaging in, substantial gainful
activity.
52. SSA has published SSR 82-55, which is the same docu-
ment as POM 2107. These documents are entitled, “Medical
Impairments That Are Not Severe.” According to these doc-
uments SSA has determined that the following impairments
are not “severe,” and thus not disabling:
44a. Hypertension without significant organ damage,
past or present.
§]7.[a]. Diabetes mellitus, adult onset, controlled on pre-
scribed therapy, without significant end-organ damage
or recent episodes of acidosis.
These regulations are codified in 20 C.F.R. Subpart P,
Appendix 1, §4.00 C, which states:
Hypertensive vascular disease does not result in severe
impairment unless it causes severe damage to one or
more of four end-organs: heart, brain, kidneys, or eyes
(retinae).
53. DDS employees who evaluate the condition of disabil-
ity claimants automatically determine that individuals who
suffer from hypertension or diabetes mellitus are not dis-
abled from those illnesses, unless those individuals also suf-
fer from clinically substantiated end-organ damage. In such
cases, DDS employees do not make any attempt to deter-
mine an individual’s actual ability to perform work.
54. The Secretary offered no evidence to indicate that
either diabetes mellitus or hypertension is not disabling
unless it has already resulted in end-organ damage.
55. Carl Young, Supervisor of the Quality Assurance Unit
of DDS, testified at the trial and submitted an affidavit
which supports his testimony. Mr. Young supervised an
evaluation of a random sample of 407 cases closed by DDS
in late December, 1983. The closed cases included those of
Original applicants whose claims for benefits were denied,
74
and cases of former recipients whose benefits were termi-
nated. From this evaluation, Mr. Young determined that 15
percent of al: denials in the sample involved either hyperten-
sion or diabetes mellitus without any significant end-organ
damage. From all of the testimony, the court finds that a
substantial number of persons in North Carolina have been
denied a complete evaluation of their actual ability tc per-
form substantial gainful activity, solely because their ill-
nesses have not yet resulted in significant damage to their
eyes, kidneys, hearts or brains.
56. Symptoms, including pain, must be strictly judged by
a guideline (SSR 82-58 and POM 2205) entitled “Evaluation
of Symptoms”:
“POLICY STATEMENT: Symptoms will not have a sig-
nificant effect on a disability determination or decision
unless medical signs or findings show that a medical
condition is present that could reasonably be expected to
produce the symptoms which are alleged or reported.
However, once such a medical condition (e.g., disc dis-
ease) is objectively established, the symptoms are still
not controlling for purposes of evaluating disability.
Clinical and laboratory data and a well-documented
medical history must establish findings which may rea-
sonably account for the symptom in a particular impair-
ment. Objective clinical findings which can be used to
draw reasonable conclusions about the validity of the
intensity and persistence of the symptom and about its
effect on the individual’s work capacity must be pre-
sent. For example, in cases of back pain associated with
disc disease, typical associated findings are muscle
spasm, sensory loss, motor loss, and atrophy. There
must be an objective basis to support the overall evalua-
tion of impairment severity. /t is not sufficient to merely
establish a diagnosis or a source for the symptom.”
[Emphasis added. }
57. DDS employees who evaluate the condition of disabil-
ity claimants do not consider subjective claims of pain
which seem to them to be disproportionate to the clinical
medical evidence before them. These employees disregard
— a fle ee Kh ee
75
statements by the individual being evaluated concerning the
severity or intensity of his or her pain, unless those state-
ments are supported by objective clinical findings.
58. Dr. George M. Cooper, a medical consultant for DDS,
testified — and the court finds — that chronic severe pain
may limit a claimant’s functional capacity to a greater extent
than would be indicated by objective clinical findings alone.
An evaluating physician may be convinced, on the basis of
his or her professional judgment and an analysis of all the
evidence, that a claimant is totally disabled, yet the physi-
cian may be required by the Secretary’s regulations to find
the claimant not disabled due to a lack of objective clinical
findings to support the claimant’s complaints of pain.
59. Carl Young (see §]55, above) further testified that 16.4
percent of all the denials of benefits evaluated by his office
in late December, 1983, involved claims of significant pain,
the intensity of which was not supported by objective
clinical findings. From this testimony the court finds that a
significant number of persons in North Carolina have been
denied a complete evaluation of their actual ability to engage
in substantial gainful activity solely because their subjective
complaints of pain, no matter how severe or disabling, were
not fully supported by objective clinical findings.
Terminations
60. The Secretary has admitted, in SSRs 81-6, 82-64 and ~
82-49c, and through testimony in this court, that she does
not comply with the mandate of the Fourth Circuit in Dot-
son V. Schweiker, 719 F. 2d 80 (4th Cir. 1983), and that SSA
continues to terminate disability benefits without any dem-
onstration that the recipient’s condition has improved since
the time that he or she was originally found disabled.
61. Since October 5, 1981, in North Carolina, DDS has
adjudicated approximately 165,000 claims, of which approx-
imately 99,000 were denials or terminations. During 1983,
76
prior to September 7, 1983, DDS had terminated the Social
Security disability benefits of approximately 106 North
Carolinians per week. The total number of terminations
since October 15, 1981, is approximately 15,000.
62. Aileen Webster, witness for the plaintiffs, testified.
She also filed an affidavit which contains the substance of
her oral testimony. That affidavit is as follows:
I, Aileen Webster, being duly sworn, aver and say:
1. I have been employed by Disability Determination
Services (“DDS”) for the past 18 years, serving as a
disability specialist, a supervisor and, for the last five
years, as a section chief.
2. In connection with my duties as Section Chief, |
directed a review of the files of those 821 recipients
who, as of approximately November |, 1983, would
have been terminated for medical reasons but for the
moratorium. Specifically, I instructed supervisors to
review the medical evidence available at the time each
such claim was initially allowed and the medical evi-
dence currently available with respect to each such
claim and to determine, using common sense guide-
lines, whether there had been any medical improve-
ment. On the basis of that review, the supervisors
reported to me that 60.2% of the recipients who would be
terminated for medical reasons under the present guide-
lines had not experienced any medical improvement in
their condition. [Emphasis added. ]
This 12 day of January, 1984.
/s/ Aileen Webster
63. The court finds the facts to be as the above evidence
tends to show: Large numbers (whether 60.2% or somewhat
more or less) of the persons undergoing review of disability
under the Secretary’s present guidelines are being cut off the
Social Security rolls without eivdence that their conditions
have improved and without any presumption that their disa-
bilities continue. Those persons would continue to draw
benefits if the Secretary were following relevant decisions of
the Fourth Circuit Court of Appeals.
oi ie er
ee ee
77
Irreparable Harm
64. The termination and the unjustified denial of Social
Security disability benefits cause irreparable harm to eiigible
persons. Many become unable to pay for medicines, cloth-
ing, food, fuel, transportation and shelter. Termination and
denial of benefits cause anxiety, depression and decline in
health. Some former recipients have died following termina-
tion of benefits; posthumous reinstatement after appeal
doesn’t help them.
65. If the Social Security Administration were to provide
DDS with the files of disability claimants who reside in
North Carolina, DDS employees would be able to determine
by reviewing the files whether they showed (a) hypertension
or diabetes mellitus without significant end-organ damage:
(b) a subjective claim of disabling pain unsupported by
objective clinical medical findings; or (c) a termination of
benefits without any evidence that a claimant’s condition
had improved since he or she was last found disabled. The
court is satisfied from the evidence that the work and
expense necessary to locate and reevaluate the files of those
affected will produce no serious hardship upon the state or
federal administrators.
The Moratorium
66. On September 7, 1983, James M. Hunt, Jr., the Gov-
ernor of North Carolina, was sufficiently concerned about
the terminations of disability benefits payments in North
Carolina that he issued Executive Order No. 97 entitled
“Moratorium on Terminating Social Security Disability
Benefits.” Temporarily, such terminations have ceased.
67. In addition, the Social Security Administration on
December 7, 1983, ordered a nationwide temporary halt of
terminations of benefits due to Congress’ failure to extend
certain provisions of section 2, P.L. 97-455, which has
expired. Nevertheless, in both North Carolina and the rest of
78
the nation, disability termination decisions are still being
made at a rapid rate: the temporary nationwide halt only
relates to notifications to individuals that their eligibility for
benefits has ceased. Benefits are still being paid to those who
are considered no longer eligible, but those payments could
be terminated any day at the discretion of the Governor or
the Secretary. Moreover, North Carolina residents whose
benefits were terminated pursuant to SSA’s policies prior to
September 7, 1983, are not eligible to receive benefits under
the Governor’s order, and the cases of others who have filed
claims to have their benefits restored are currently wending
their way through the lengthy DDS and SSA appeals process.
The Secretary's Position
68. The Secretary of HHS accepts the decision of no court
short of the Supreme Court as precedent binding on her. She
views decisions of the United States circuit courts and dis-
trict courts as binding only on the litigants involved in a
case, and not as precedent which she must follow in other
similar cases. When a conflict arises between the decisions of
lower courts and the opinions of the Secretary, the Secretary
considers herself entitled to follow her own interpretations
of the Social Security Act rather than those rendered by
lower courts.
69. The Secretary has instructed all administrative law
judges handling Social Security disability cases to make “rea-
sonable efforts” to follow district or circuit court decisions
regarding procedural or evidentiary matters. However, SSA
has instructed its ALJs that when district court or circuit
court decisions interpreting the Act, Social Security regula-
tions, or SSA rulings conflict with the Secretary’s interpreta-
tions, the ALJs should not consider these court decisions
binding in future cases and should not cite such lower court
decisions in their opinions. ALJ decisions relying on federal
case law are often reversed by the SSA Appeals Council for
that reason. ALJs have becn informed that “the federal
ee
79
courts do not run SSA’s programs.” Associate Comm’r.,
Office of Hearings and Appeals, Memorandum to Adminis-
trative Law Judges (January 7, 1982).
70. The Secretary’s refusal to comply with court decisions
with which she disagrees is a continuing policy from which
SSA deviates only by publishing new regulations and rulings
that conform to judicial precedent. !-161, SSA Precedents.
CONCLUSIONS OF LAW
I.
Defendant’s Motion To Dismiss
For Lack Of Jurisdiction.
71. Defendant has moved to dismiss the complaints with
respect to all named and class plaintiffs except Mr. Hyatt, on
grounds that the court lacks subject matter jurisdiction over
the actions with respect to these claims. Defendant relies on
42 U.S.C. §405(g), which provides in pertinent part:
“Any individual, after any final decision of the Secretary
made after a hearing to which he was a party, irrespec-
tive of the amount in controversy, may obtain a review
of such decision by a civil action commenced within
sixty days after the mailing to him of notice of such
decision or within such further time as the Secretary
may allow.” [Emphasis added.]
72. Despite its literal language, the relief afforded by this
statute is not confined to individual Social Security claim- .
ants who file individual suits in district courts. The Supreme
Court has held that §405(g) provides an appropriate jurisdic-
tional basis for claims challenging the constitutionality of
provisions of the Social Security Act. Weinberger v. Salfi,
422 U.S. 749 (1975). The Court has also held that this stat-
ute provides jurisdiction over a claim challenging SSA’s pro-
cedures. Mathews v. Eldridge. 424 U.S. 319 (1976). Finally,
the Court has held that §405(g) permits federal courts to
entertain class actions and to grant injunctive relief.
Califano v. Yamasaki, 442 U.S. 682 (1979).
80
73. Defendant claims that only plaintiff Hyatt has
received a “final decision” of the Secretary which this court
has the authority to review under the statute, in that his is
the only claim that has been presented to the SSA Appeals
Council for review. The “final decision” requirement of
§405(g) consists of two elements. The first element, which is
purely jurisdictional in the sense that it cannot be waived, is
the requirement that a claim for benefits shall have been
presented to the Secretary. The second element, which can
be waived either overtly or constructively by the Secretary,
is the requirement that the administrative remedies be
exhausted. Matthews v. Eldridge, 424 U.S. at 328; Wein-
herger v. Salfi, 422 U.S. at 763-64; Aldrich v. Schweiker, 555
F. Supp. 1080, 1087 (D. Vt. 1982).
74. The first, non-waivable, element of the finality
requirement of §405(g) has been satisfied with respect to the
claims of all the named and proposed class plaintiffs. The
named plaintiffs have all presented claims for benefits to the
Secretary. The class proposed includes only those claimants
who (a) have presented initial claims for benefits or who, (b)
by joining in the proposed class or otherwise, will have noti-
fied the Secretary that they believe their benefits should not
be terminated. See, Mathews V. Eldridge, supra, at 323-24,
329 (jurisdictional requirement satisfied by answering state
agency questionnaire, and by writing letter in response to
tentative determination of disability cessation); Mathews vy.
Diaz, 426 U.S. 67, 75 (1976) (claim filed with Secretary by
Espinosa, after he had joined in District Court suit, satisfied
jurisdictional requirement); Kennedy v. Harris, 87 F.R.D.
372, 376 (S.D. Cal. 1980) (mere termination of benefits ful-
fills requirement of presenting a claim).
75. The Secretary’s claim that only she may waive the
§405(g) formal prerequisite to suit was rejected by the
Supreme Court when it stated:
81
Salfi suggested that under §405(g) the power to deter-
mine when finality has occurred ordinarily rests with
the Secretary since ultimate responsibility for the integ-
rity of the administrative program is [hers]. But cases
may arise where a claimant’s interest in having a partic-
ular issue resolved promptly is so great that deference
to the agency’s judgment is inappropriate.”
Mathews v. Eldridge, 424 U.S. at 330.
76. In Mathews v. Eldridge, the Supreme Court estab-
lished a method for determining whether a court may infer
waiver of the Social Security Act’s exhaustion requirement.
First, a court may infer waiver when the plaintiff's claim is
entirely collateral to his individual claim for benefits. 424
U.S. at 330-31. Further, the exhaustion requirement may be
deemed waived when the damages upon which a plaintiff's
claim for relief is based are of such a nature that he cannot
adequately be compensated by the relief that would accrue
from a judicial proceeding following exhaustion. /d. at 331.
Finally, federal courts have held that exhaustion may be
inferred when the Secretary’s position with respect to the
litigant’s claim is so fixed that further pursuit of administra-
tive remedies would be futile. Weinberger v. Salfi, supra, at
767; Liberty Alliance of the Blind v. Califano, 568 F.2d 333,
345 (3d Cir. 1977).
77. Plaintiffs have satisfied all the above tests for waiver,
and have provided additional reasons why the Social Secu-
rity Act’s exhaustion requirement should be waived. First, |
and most significantly, plaintiffs’ claims in this case are not
confined to direct claims for the payment of benefits.
Instead, plaintiffs seek to affect the procedures by which the
Secretary determines eligibility for benefits. Of course,
plaintiffs’ claims are generated from a belief that benefits
would be awarded to them if SSA were to apply lawful stan-
dards to the review of their cases. Nevertheless, that fact
does not convert their suit into a direct claim for benefits, in
which the court would be asked to review the record of each
ee
82
individual case to determine whether the Secretary’s deci-
sion is supported by substantiai evidence. In Mathews vy.
Eldridge, supra, the Supreme Court held that a plaintiffs
due process claim to a pre-deprivation hearing was collateral
to a substantive claim for benefits. 424 U.S. at 330. That the
plaintiff in Eldridge hoped ultimately to have his benefits
reinstated did not affect the court’s decision concerning the
essential nature of his claim.
78. Smith v. Schweiker, 709 F.2d 777 (2d Cir. 1983),
relied on by the Secretary, does not affect this decision. In
Smith, a panel of the Second Circuit Court of Appeals deter-
mined that a claim concerning the Secretary’s application of
a medical improvement standard, similar to a claim made in
this case, was not collateral to the plaintiffs’ substantive
claims for benefits. In rejecting the plaintiffs’ argument that
exhaustion of the claim could be inferred, the court stated:
“Exhaustion, moreover, would frame the issue in a
much clearer fashion than is possible when it is posed
as an abstraction. While the legal issue raised by plain-
tiffs may seem well-defined to them, it seems rather
unformulated to us. What is meant by evidence of med-
ical improvement, for example, is somewhat
ambiguous.”
709 F.2d at 780.
79. Unlike the abstract claims presented to the Second
Circuit panel in Smith, the claims raised by plaintiffs in this
case are all-too-sadly concrete. Plaintiffs here challenge the
Secretary’s refusal to follow three well-reasoned opinions by
the Fourth Circuit Court of Appeals which this court is
bound to follow. Where a legal standard has been clearly
enunciated, this court is authorized, and indeed required, to
determine whether the Secretary’s posture with regard to
that standard comports with the constitutional principles of
separation of powers and due process. In addition, in this
case, the court has received in evidence numerous docu-
ments from which this court as factfinder can decipher the
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Secretary’s questioned policies which are systematically
applied to all claims for benefits.
80. The plaintiffs have further demonstrated that the
harm they suffer cannot adequately be relieved by individual
judicial review following complete administrative exhaus-
tion of their claims. The Secretary has argued that whatever
harm plaintiffs may suffer from a possible misapplication of
the law to their cases will be compensated by the ultimate
retroactive payment of benefits upon successful litigation in
federal court. This claim overlooks several serious aspects of
plaintiffs’ situation.
81. First, as plaintiff Hyatt testified at the trial of this
case, termination of disability benefits means for many of
the members of plaintiffs’ class the difference between exis-
tence at a bare subsistence level, and the ability to pay the
utility bills to keep warm in freezing temperatures, or to
purchase an occasional item of clothing or piece of meat.
Even more seriously, the evidence reveals that many persons
whose disability benefits are terminated lose the ability to
pay for desperately needed medications and health care.
Indeed, many former recipients (some of whose benefits
were later reinstated on appeal) attested to the severe physi-
cal and mental stress occasioned by the termination itself. In
some cases, this severe stress was closely followed by death.
No amount of retroactive benefits can compensate for years
of deprivation and anxiety — which may even ultimately
result in death — resulting from the Secretary’s wrongful
practices. Another reason that retroactive benefits are not
fully compensatory is that one-quarter of the amount ulti-
mately awarded following district court litigation is often
paid, pursuant to 42 U.S.C. §406(b)(1), to the lawyer who
successfully represents the claimant in federal court.
82. Finally, the Secretary’s argument overlooks the fact
that the only claimants who will be retroactively compen-
sated for the Secretary’s application of an unlawful standard
84
of review are those “with the temerity to request. . . review.”
Aldrich v. Schweiker, 555 F. Supp. 1980, 1088 (D. Vt. 1982),
cuoting, Spear v. Harris, No. 80143, slip. op. at 7 (D. Vt. July
31, 1980). The possibility of the application of a double
standard to members of a group of potential disability pay-
ment recipients who are similarly situated provides further
necessity for an inference of waiver. See Rivera v. Heckler,
568 F.Supp. 235, 242 (D. N.J. 1983).
83. This case adequately questions and attacks the legality
of the Secretary’s rulings and guidelines for the determina-
tion of eligibility for benefits. To require each plaintiff to
exhaust her administrative remedies would serve no useful
purpose. Weinberger v. Salfi, supra, at 767.
84. Although the Secretary insists that her challenged rul-
ings fit within the letter of the law, she has made no repre-
sentation that they are subject to change at any time in the
near future. The particular rulings in question, then,
represent the Secretary’s fixed position, to which the court
has no doubt that the Secretary would adhere in reviewing
each individual, substantive claim for benefits.
85. A requirement of exhaustion in this case would be the
mere enforcement of formality, and a waste of administra-
tive and judicial resources. See, Kuehner v. Schweiker, 717 F.
2d 813, 817-818 (3d Cir. 1983); Graham vy. Heckler, 573
F.Supp. 1573, 1577-78 (N.D. W.Va. 1983). It would only
add hardship to hardship.
II.
The Substantive Legal Merits
Of The Case
86. The principle of separation of powers embodied in the
United States Constitution is that federal courts retain the
ultimate authority to interpret the law. Marbury v. Madison,
5 U.S. 137 (1803).
85
87. Decisions of the Fourth Circuit Court of Appeals
interpreting the Social Security Act are binding upon the
Social Security Administration when it decides claims of
people who live within the territorial jurisdiction of this
circuit. See, PPG Industries, Inc. v. N.L.R.B., 671 F.2d 817,
823 n. 9 (4th Cir. 1982). (The NLRB, a federal adjudicative
agency, was required to determine unfair labor practice cases
arising within the circuit in accordance with the decisions of
the Court of Appeals interpreting the National Labor Rela-
tions Act.)
88. In reaching its decision in PPG Industries, the Fourth
Circuit expressed the position that has been adopted by the
great majority of circuit courts addressing the question of an
agency’s refusal to follow the law of the circuit in which it
functions. Lopez v. Heckler, 713 F.2d 1432 (9th Cir. 1983);
Ithaca College v. NLRB, 623 F.2d 224 (2d Cir. 1980); Mary
Thompson Hospital, Inc. v. NLRB, 621 F.2d 858 (7th Cir.
1980); Allegheny General Hospital v. NLRB, 608 F.2d 965
(3d Cir. 1979); Federal-Mogul Corp. v. NLRB, 566 F.2d
1245, 1252 (Sth Cir. 1978). But see, Yellow Taxi Company of
Minneapolis V. NLRB, No. 80-1481 (D.C. Cir. November 4,
1983) (NLRB not required to conform its rulings to every
decision by court of appeals, but when law has been firmly
established, Board is required to give court great deference).
As the Court stated in Allegheny Hospital, supra:
A decision by this court, not overruled by the United
States Supreme Court, is a decision of the court of last
resort in this federal judicial district. Thus our judg-
ments. . . are binding on all inferior courts and litigants
in the Third Judicial District, and also on administra-
tive agencies when they deal with matters pertaining
thereto. .. [T]he Board is not a court nor is it equal to
this court in matters of statutory interpretation. Thus, a
disagreement by the NLRB with a decision of this court
is simply an academic exercise that possesses no author-
itative effect... For the Board to predicate an order on
its disagreement with this court’s interpretation of a
statute is for it to operate outside the law.
86
608 F.2d at 970, quoted in Ithaca College v. NLRB, supra,
623 F.2d at 228-29.
89. the law of this Circuit is that the Secretary may nol
require end-organ damage as an exclusive precondition to
the establishment of a disability from hypertension or diabe-
tes. Martin v. Secretary of Dept. of Health, Ed. & Welf., 402
F.2d 905 (4th Cir. 1974). In Martin, the Fourth Circuit
found that neither medical evidence nor the Social Security
Act required a finding that a person is not disabled from
hypertension or diabetes simply because he has not yet expe-
rienced end-organ damage.
90. The Secretary’s regulations SSR 82-55 and POM 2107
directly contravene the law of the Fourth Circuit by mandat-
ing that disability claimants who suffer from hypertension or
diabetes must conclusively be found not disabled unless they
exhibit significant end-organ damage.
91. SSA operated outside the law of this circuit by evaluat-
ing the disability status of plaintiffs Herman Caudle and
Mary Lovingood according to regulations which dictate that
claimants who suffer from diabetes or hypertension, but who
have not yet experienced any end-organ damage, are conclu-
sively deemed not disabled from either of those two
conditions.
92. The law of this Circuit requires the Secretary to evalu-
ate the disabling effects of a disability claimant’s pain even
though the intensity of the pain is shown only by subjective
evidence. Myers v. Califano, 611 F.2d 980 (4th Cir. 1980). In
Myers, the Fourth Circuit reversed a denial of disability
benefits which had rested on an SSA regulation requiring
that impairments “must be demonstrable by medically
acceptable clinical and laboratory diagnostic techniques.” Jd.
at 983.
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chal a he ac baat in a
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87
93. The Secretary’s regulations SSR 82-58 and POM 2205
directly contravene the law of the Fourth Circuit by mandat-
ing that symptoms will not have a significant effect on a
disability determination unless they are supported by objec-
tive clinical findings.
94. The fact that the Secreiary’s regulations may have
changed since the time of the Myers decision makes no dif-
ference for purposes of this analysis; the current regulations
are aS repugnant to the law as the regulation evaluated in
Myers. In Myers, the court found that the claimant had
established a sufficient case of disability in that the intensity
of ier pain, which was substantiated only by subjective evi-
dence, “had a specific physical cause.” Jd. The Secretary’s
regulation expressly contradicts the holding of Myers, as it
States: “It is not sufficient to merely [sic] establish a diagno-
sis or a source for the symptom.”
95. SSA expressly refused to follow the law of this Circuit,
in evaluating the disability status of plaintiffs Patrick Hyatt
and Mary Lovingood, when it faiied to consider the disa-
bling effects of the pain experienced by these plaintiffs not-
withstanding the fact that such pain was not supported by
objective clinical findings.
96. In Dotson v. Schweiker, 719 F.2d 80 (4th Cir. 1983),
reh. denied, ____ F.2d ____ (4th Cir. Jan. 11, 1984), the
Fourth Circuit, following the Administrative Procedure Act
and applying a “familiar principle” of the presumptive con-
tinuing validity of judicial and administrative decisions,
heid that a previous determination of disability gives rise to
a presumption that a claimant is still disabled. In order to
rebut this presumption and justify termination of benefits,
the Secretary is required to come forward with evidence that
a claimant’s condition has improved since the last disability
determination. The rule adopted by the Fourth Circuit in
Dotson has been applied by every federal court which has
88
directly considered the standards applicable to the termina-
tion of disability benefits. Patti v. Schweiker, 669 F.2d 582
(9th Cir. 1982); Kuzmin v. Schweiker, 714 F.2d 1233 (3d Cir.
1983); Simpson v. Schweiker, 691 F.2d 966 (11th Cir. 1982);
Doe v. Heckler, F. Supp. , No. M-83-2218 (D.
Md. Dec. 13, 1983); Graham v. Heckler, 573 F. Supp. 1573
(N.D.W.Va. 1983); Trujillo v. Schweiker, 558 F. Supp. 1058
(D. Colo. 1983).
97. Since Dotson did not invent, nor claim to invent, any
new rule of law, defendant’s claim that it should not apply to
pre-Dotson claims has no merit.
98. As she admits, the Secretary continues to determine,
without any showing that the recipients’ conditions have
improved, that persons receiving benefits are no longer dis-
abled. Thus the Secretary has explicitly chosen to disregard
the law of the Fourth Circuit with respect to terminations of
benefits.
99. Following her own regulations, and in direct contra-
vention of the law of this Circuit, the Secretary terminated
the disability benefits of plaintiffs Patrick Hyatt, Herman
Caudle, and Mary Lovingood without any evidence that the
condition of these plaintiffs had improved.
100. The Secretary contends that the Fourth Circuit’s
decision in Dotson is not binding law until the time for
appeal has run on that case. No authority is cited to support
this proposition. This court is bound by decisions of the
Fourth Circuit Court of Appeals from the day they are
issued; hence, in this case, the court is bound to apply the
law as it stands in this circuit. As the Second Circuit stated
in a similar case:
“When [the NLRB] disagrees in a particular case, it
should seek review in the Supreme Court. During the
interim before it has sought review or while review is
still pending, it would be reasonable for the Board to |
stay its proceedings in another case that arguably falls
89
within the precedent of the first one. However, the
Board cannot, as it did here, choose to ignore the deci-
sion as if it had no force or effect. Absent reversal, that
decision is the law which the Board must follow.”
Ithaca College v. NLRB, supra, at 228.
101. The Secretary has shown the court that she is abiding
by the Dotson decision with respect to Dotson, the individ-
ual plaintiff in that case (who is now deceased); that she has
not decided whether to appeal that case; and that she is
currently appealing another case in the Fourth Circuit which
raises the identical issues decided by the court in Dotson.
These actions, the Secretary contends, show “awareness and
respect” for the Fourth Circuit’s opinion in Dotson. Sec’y’s
Supplemental Memo of Points and Authorities in Oppos. to
Plaintiffs’ Motions for Prelim. Inj. and Class Cert., 12.
102. The Secretary’s position concerning the Dotson deci-
sion can hardly be characterized as “respectful.” Respect for
the law means obeying the law. In taking the position that
the Dotson decision need not be followed by her, the Secre-
tary has disobeyed the law of this Circuit.
103. This court can understand why the Secretary might
choose to appeal this issue in a case other than Dotson’s;
Dotson died, shortly after the Fourth Circuit’s decision was
rendered, from the very condition which the Secretary con-
tended was not disabling. However, the Secretary may not
continue an unlawful practice while she pursues, in an unre-
lated case, the issues conclusively determined by Dotson.
Such a position, if accepted by a court, would allow the
Secretary forever to escape the mandates of the law by aban-
doning appeals before a case reaches the Supreme Court for
decision, but continuing to assert that she is litigating the
issue by defending claims that have only freshly entered the
federal court system.
104. A cabinet member is not above the law of the land,
but is obligated to follow it. The Secretary is free to argue her
90
position in any case she chooses, but, absent express author-
ity from Congress or the federal courts, she can not offer an
appeal in a newly-filed and unrelated case as an excuse to
evade the law in this case.
105. The Secretary finally contends that her right to disre-
gard decisions of the Fourth Circuit Court of Appeals bas
recently been confirmed by the Supreme Court in its opinion
in United States v. Mendoza, 52 U.S.L.W. 4019 (January 10,
1984). In Mendoza, a unanimous Supreme Court held that
the government cannot be collaterally estopped from reliti-
gating a constitutiona! issue adjudicated against it at the
district court level in a different lawsuit brought by a differ-
ent party.
106. In Mendoza, a United States district court in Califor-
nia refused to hear the merits of a defense raised by the
government to a due process claim arising out of the Nation-
ality Act of 1940. The court’s reason for refusing to hear the
merits of the government’s defense was a prior decision
unfavorable to the government rendered in a similar case by
a different California United States district court. The
Supreme Court held that nonmutual collateral estoppel may
not lie against the government in such a case.
107. Mendoza is not in point. The pertinent holding of
Mendoza was only that the government must be allowed to
challenge a Jaw in court on its merits, not that an officer of
the government may disobey court decisions with which he
or she disagrees. This court has not refused to hear the mer-
its of anything defendant wanted to present; on the contrary
it has proceeded to the merits without unnecessary delay,
and has heard everything defendants had to offer. The plain-
tiffs have claimed that the Secretary does not follow the law
of the Fourth Circuit, and have cited authority, squarely in
point, to support this claim. The Secretary has asserted that
she does follow the law of the Circuit or, that where she does
91
not follow it, she is not required to. The Court has consid-
ered the Secretary’s case, has searched for its merits, and
finds none.
108. Plaintiffs say (brief in support of injunctive relief,
pp. 8-10) that their rights to “procedural due process” have
been denied. Defendant responded in a footnote. Procedural
due process does appear to be a valid additional basis of
decision. See Mathews v. Eldridge, 424 U.S. 319, 322 (1976)
(interest in continued receipt of disability benefits is a prop-
erty interest protected by the Fifth Amendment); Goldberg v.
Kelly, 397 U.S. 254, 271 (1970) (conclusion of agency as to
eligibility for welfare benefits must rest upon legal rules and
evidence presented at a hearing). I have always been puzzled
-as to hcw much one clarifies the concept of due process of
law (“that process which is due”) by calling that process
“procedural.” Moreover, the quest for procedural due pro-
; cess in this context leads inevitably for its identification
back to the cases of Myers, Martin and Dotson. Therefore,
although “procedural due process” is an additional valid
basis for this decision, I will not add more to what has
already been written.
DECISION
Plaintiffs have established a clear entitlement to have
| their claims for disability benefits reviewed pursuant to pro-
cedures that comport with the controlling decisions of this
circuit interpreting the Social Security Act. The court will
order relief consistent with this decision.
This 14 day of February, 1984.
— | heed. taketh 4
/s/ JAMES B. MCMILLAN
JAMES B. MCMILLAN
United States District Judge
i
92
IN THE DISTRICT COURT OF THE UNITED
STATES FOR THE WESTERN DISTRICT OF
NORTH CAROLINA
Charlotte Division
C-C-83-655-M
Patrick H. Hyatt; Herman O.
Caudle and Mary P. Lov-
ingood, on behalf of them-
selves and all others similarly
situated,
Plaintiffs,
and
North Carolina Department
of Human Resources, Disa-
bility Determination
Services,
Plaintiff-Intervenor,
-VS-
Margaret M. Heckler, or her
successors in office, Secretary
. of the United States Depart-
ment of Health and Human
Services,
Defendant.
JUDGMENT
Pursuant to the findings of fact and conclusions of law
previcusly entered, IT
IS HEREBY ORDERED,
ADJUDGED AND DECREED:
1. Defendant’s motion to dismiss the action for lack of
jurisdiction is DENIED.
2. Plaintiffs’ motion for certification of a class is
ALLOWED. The procedure for defining and notifying the
: ‘
—
93
class and instituting class action proceedings is being set out
in a separate order
IT IS HEREBY FURTHER ORDERED that the Secre-
tary of Health and Human Services is restrained and
enjoined:
1. To cease immediately her policy of refusing to follow
the law of the Fourth Circuit in implementing the Social
Security Act in North Carolina.
2. To begin immediately to follow the law of the Fourth
Circuit within North Carolina as it is expressed in Martin v.
Secretary of Health, Education and Welfare, 492 F. 2d 980
(4th Cir. 1974), Myers v. Califano, 611 F. 2d 905 (4th Cir.
1980), and Dotson v. Schweiker, 719 F. 2d 80 (4th Cir. 1983),
and to issue written directives to SSA and DDS officials and
other persons responsible for the administration of Social
Security disability programs in North Carolina, ordering
such persons to follow Fourth Circuit standards.
3. Within thirty (30) days from the date of entry of this
judgment, to provide the North Carolina Department of
Human Resources, Disability Determination Services, with
sufficient information with regard to disability claims to
enable DDS to identify the persons who may be entitled to
relief under this judgment.
IT IS HEREBY FURTHER ORDERED, ADJUDGED
AND DECREED: .
1. The case of plaintiff Hyatt is remanded for reconsidera-
tion by the Secretary in light of the findings of fact and
conclusions of law previously entered.
2. A class action order will be entered.
3. Defendant shall provide plaintiffs access to the claims
files sufficient to enable them to verify compliance with this
judgment.
94
4. The Secretary shall pay to the North Carolina Depart-
ment of Human Resources, Disability Determination Serv-
ices, any costs incurred by DDS in implementing the terms
of this judgment.
5. Defendant shall pay to plaintiffs’ counsel their costs
and reasonable attorneys’ fees and expenses incurred in this
case.
This 14 day of February, 1984.
/s/ JAMES B. MCMILLAN
James B. McMillan
United States District Judge
95
IN THE DISTRICT COURT OF
THE UNITED STATES
FOR THE WESTERN DISTRICT OF
NORTH CAROLINA
Chariotte Division
C-C-83-655-M
PATRICK H. HYATT; HERMAN O. CAUDLE
and MARY P. LOVINGOOD, on behalf
of themselves and all others
similarly situated,
Plaintiffs,
and
ORDER
NORTH CAROLINA DEPARTMENT OF
CERTIFYING
HUMAN RESOURCES, DISABILITY
A CLASS
DETERMINATION SERVICES,
Eh AND
Plaintiff-Intervenor,
REQUIRING
-VS-
NOTICE
MARGARET M. HECKLER, or her
successors in office, Secretary of
the United States Department of
Health and Human Services,
Defendant.
Pursuant to the findings of fact, conclusions of law and
judgment previously entered, and after consideration of fur-
ther argument and briefs, the class is defined as follows:
A. The Martin and Myers subclass —
(1) All North Carolina residents who, since Septem-
ber 10, 1981, have applied for disability benefits (SSI or
SSDI benefits) under the Social Security Act and whose
claims were denied, either in an initial determination or
another level of the administrative appeal procedure,
because:
96
(a) the Secretary or DDS relied upon an absence or
lack of end-organ damage, current or past, as determin-
ing that the claimant’s hypertension or diabetes mel-
litus was not a severe impairment; or
(b) the Secretary or DDS relied upon an absence or
lack of clinical findings as determining that the claim-
ant’s pain was not disabling; and
(2) All North Carolina residents whose benefits under
the statute have, since September 10, 1981, been termi-
nated or are subject to being terminated by the Secretary
or DDS on grounds that they were not disabled under the
Act for one or Loth of the reasons noted above in (a) and
(b); and
B. The Dotson subclass —
All North Carolina residents whose Social Security dis-
ability benefits have, since October 6, 1982, been termi-
nated or are subject to being terminated on grounds that
the recipients were noi disabled under the Act, without
findings, and substantial evidence to support those find-
ings, that, since the Secretary’s most recent determination
of disability as defined in the Act, there has been improve-
ment in their medical condition sufficient that they are no
longer disabled.
The court finds that the class meets the requirements for
certification of a class action under Federal Rule of Civil
Procedure 23(a) and 23(b)(2):
1. The class is so numerous (many thousands of claimants
whose benefits have been terminated or whose applications
have been denied) that joinder of all members is
impracticable.
2. The claims of the members of the class as defined above
present substantial common questions of law and fact. The
claims have one significant and all-important feature of
97
commonality, in that it is the procedures under which the
determinations are made (i.e., in disregard of controlling
court decisions) which all potential claimants are entitled to
attack.
3. The claims of class representatives Hyatt, Caudle and
Lovingood are typical of the claims of the class members.
4. The court finds that the named class representatives
will fairly and adequately represent and protect the interests
of the class.
5. The defendant has acted or refused to act on grounds
generally applicable to the class, thereby making appropriate
final injunctive relief or corresponding declaratory relief
with respect to the class as a whole.
6. The exhaustion requirements of 42 U.S.C. §405(g) are
met; the class includes only those persons who have
presented or will have presented, in appropriate fashion,
within the appropriate time limits, claims for benefits which
come within the claims specified in the class designations.
7. The date of September 10, 1981 in paragraphs A.(1)
and (2) is chosen because that is the date on which class
representative Hyatt was notified that his disability had
ceased, and on which he first became eligible to file a claim
for reconsideration. Class members should be entitled to
participate in this action as if they had filed claims on or
since the date Hyatt became eligible to file a claim.
8. The date of October 6, 1982, is chosen for the beginning
date of the group described in paragraph B. because that
date is one year before the decision of the Fourth Circuit
Court of Appeals in Dotson v. Schweiker, 719 F.2d 80 (4th
Cir. 1983). See 20 C.F.R. §404.988 and §416.1488 (Secretary
may reopen disability cases up to one year following final
determination).
98
Defendant objects to the use of October 6, 1982, as the
beginning date, arguing that the principle stated in Dotson is,
even now, not the law in this Circuit. Instead, in a stated
“spirit of cooperation with plaintiff's counsel,” defendant
proposes January 11, 1984, as the beginning date.
That proposal does not sound like cooperation.
As already stated by this court in its conclusions of law,
numbers 97 and 100, the Secretary was already bound to
apply the “medical improvement” standard before Dotson
was decided.
Since Dots
This text is long and has been trimmed here. Open the source document for the complete record.
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