Opposition Brief — Bowen v. Dixon

No. 86-2 9) '

IN THE

Pre nar oun os.—

fo ma kL ED

Supreme Court of the United States

OcrTosBER TERM, 1986

SEP 5 198F

JOSEPH F. SPANIOL, JR.

CLERK

ae

OTIS R. BOWEN, as Secretary of Health and Human Services,

Petitioner,

DAVID DIXON, RICARDO RAMIREZ, OPHELIA CASEY,

DOMINGA CARRASQUILLO, JOANNE LOCKETT,

EULALIA TEREZ, CARMEN FELICIANO, and TOMASINA

GONZALEZ, individually and on behalf of all others similarly

situated,

Plaintiffs-Respondents,

—and—

THE STATE OF NEW YORK and CESAR PERALES, as Com-

missioner of the New York State Department of Social Services,

Plaintiffs-Intervenors-Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

RESPONDENTS’ BRIEF IN OPPOSITION

KALMAN FINKEL

Attorney-in-Charge

The Legal Aid Society

Civil Division

JOHN E. KirKLIn

ARTHUR J. FRIED

STEPHEN LOFFREDO

NANCY MORAWETZ

[Counsel of Record]

11 Park Place, Room 1805

New York, New York 10007

(212) 406-0745

Attorney for Plaintiffs-

Respondents

ROBERT ABRAMS

Attorney General of

the State of New York

O. Perer SHERWOOD

Solicitor General

[Counsel of Record]

PauL M. GLICKMAN

Mary FiIsHER BERNET

Assistant Attorneys General

2 World Trade Center

New York, New York 10047

(212) 488-3943

Attorney for Plaintiffs-

Intervenors-Respondents

>’

TABLE OF CONTENTS

Ng Se baa vs ck e bw a had oe

TO Te re

eee eee ehh a4 dae s ene cee nd ee

Counterstatement of the Case..................

I coca gan sekonasrencavsccens

Reasons Why the Petition Should be Denied .....

A. iesolution of Yuckert in the Secretary’s

Favor Would Not Dispose of the Issues

RE et

B. Regardless of the Outcome of Yuckert,

There is No Basis for Disturbing the Court

of Appeals’ Ruling Upholding the

Preliminary Injunction Entered by the

ech Sees das ceases. -

C. The Secretary Has Made No Showing That

He Would Be Prejudiced By Awaiting a

Final Trial on the Merits .................

IE OCC Nee ere ive ines Gans eecea sees

11

11

13

17

19

TABLE OF AUTHORITIES

Cases

Bowen v. City of New York, 54 U.S.L.W. 4536

oa s vva6 pace stein csaceecce

Bowen v. Yuckert, cert. granted, 54 U.S.L.W.

3573 (May 20, 1986) (No. 85-1409) ...........

Brady v. Heckler, 724 F.2d 914 (11th Cir. 1984) .

Brown v. Heckler, 786 F.2d 1870 (10th Cir. 1986)

City of Mesquite v. Aladdin’s Castle, Inc., 445

eee de ee de hobs s haa 42.00.0000

‘%

Dixon v. Heckler, No. 83-7001 (S.D.N.Y. Nov.

ee Si xie'n ss

Evans v. Heckler, 734 F.2d 1012 (4th Cir. 1984) .

Garza v. Heckler, 771 F.2d 871 (5th Cir. 1985) ..

Hansen v. Heckler, 783 F.2d 170 (8th Cir. 1986) .

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

Heckler v. Redbud Hospital District, 54 U.S.L.W.

ee Se ee

Johnson v. Heckler, 769 F.2d 1202 (7th Cir.

1985), petition for cert. filed, 54 U.S.L.W.

3600 (March 11, 1986) (No. 85-1442) .........

McDonald v. Secretary of Health and Human

Services, 795 F.2d 1118 (Ist Cir. 1986)........

Salmi v. Secretary of Health and Human Services,

774 F.2d 685 (6th Cir. 1985) ................

Page

14,16

13,16

15

3,14

14,16

14,15

Stone v. Heckler, 752 F.2d 1099 (5th Cir. 1985).. 14,15

Wilson v. Secretary of Health and Human

Services, 796 F.2d 36 (3rd Cir. 1986) ......... 14

Yuckert v. Heckler, 774 F.2d 1365 (9th Cir.

1985), cert. granted sub nom. Bowen v.

Yuckert, 54 U.S.L.W. 3573 (May 20, 1986)

i ciea hy as ten ib othab< ia sae ass 14

Statutes

Ps IE cbc ccccssicccccescesess 16

GR GG os oc oc ccc ccccccsuncces 3

re 3,8

Oe es boas acc caccceicceics 3

Disability Benefits Reform Act of 1984, Pub. L.

No. 98-460, 98 Stat. 1794, et seg. ............ 10,18

Regulations

20 C.F.R. Pt. 404, Appendix 2................. 5

a sce b kc cocavakudwe sas 6

Miscellaneous

A eh Peery Sree er ers yee 6,10,11,

15

Gi a's 60h 40S Ceo eR eeav eee ees 6

REY gece TE ah en a oe i, AI 10,11,15

Nits as debe hehe a eG ades sh dnseeesce xs 15 )

25 Fed. Reg. 8100 (Aug. 24, 1960) ............. 4

43 Fed. Reg. 9296 (Mar. 7, 1978) .............. 4 i

43 Fed. Reg. 58353 (Nov. 28, 1978) ............ 4

No. 86-2

IN THE

Supreme Court of the Wnited States

Ocroser TERM, 1986

OTIS R. BOWEN, as Secretary of Health and Human Services,

Petitioner,

vs

DAVID DIXON, RICARDO RAMIREZ, OPHELIA CASEY,

DOMINGA CARRASQUILLO, JOANNE LOCKETT,

EULALIA TEREZ, CARMEN FELICIANO, and TOMASINA

GONZALEZ, individually and on behalf of all others similarly

situated,

Ple__.tiffs-Respondents,

—and—

THE STATE OF NEW YORK and CESAR PERALES, as Com-

missioner of the New York State Department of Social Services,

Plaintiffs-Intervenors-Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

RESPONDENTS’ BRIEF IN OPPOSITION

INTRODUCTION

Petitioner, the Secretary of Health and Human Services, re-

quests that his petition for writ of certiorari be held pending the

Court’s decision in Bowen v. Yuckert, cert. granted, 54 U.S.L.W.

3573 (May 20, 1986) (No. 85-1409). (Pet. at 13). This request

should be denied because the issue on which the Secretary sought

and obtained review in Yuckert has no bearing on the validity

of the preliminary injunction in this case.

In Yuckert, the Secretary represented to this Court that there

was no need for a factual record regarding the issues in that case

because Yuckert raised solely the facial validity of the severity

regulation that the Secretary describes as a de minimis screen-

ing device. (Yuckert Reply Br. at 4). Because this case challenges

the Secretary's practices in implementing the severity regulation,

resolution of the issue the Secretary presents in Yuckert will not

dispose of the issues presented here. Indeed, every court of ap-

peals that has considered the question has recognized that the

legality of a severity rule that operates as more than a de minimis

screening device is a wholly separate question from the facial

validity of a de minimis rule permitting screening of claims

without full vocational evaluations. These courts have all held

that the Secretary cannot deny benefits on medical grounds alone

with a rule that is not de minimis. In this case, the District Court

made a preliminary finding that, in practice, the Secretary ap-

plies the severity regulation as more than a de minimis threshold,

and this finding has not been challenged on appeal. According-

ly, the judgment below will stand regardless of this Court's disposi-

tion of Yuckert.

Furthermore, the preliminary stage of the proceedings in this

case strongly counsels against reviewing or vacating the injunc-

tion issued below. At this stage, the parties have not yet com-

pleted discovery and the District Court has neither made final

factual findings nor crafted the terms of a final injunction. As

this case proceeds to trial on the merits, the Secretary will have

ample opportunity to introduce any relevant evidence and to pro-

pose any appropriate form of injunction, should the District Court

find that the Secretary's practices conflict with the Social Security

Act. The Secretary has made no showing that he would be prej-

udiced by awaiting such resolution in the District Court. Indeed,

the Secretary made no showing to the District Court that he

would be harmed by issuance of the preliminary injunction, has

never sought a stay of the injunction, and has never challenged

the District Court’s finding that the preliminary injunction is

necessary to prevent irreparable harm to the plaintiff class. Ac-

cordingly, certiorari should be denied at this stage in this litiga-

tion and the preliminary injunction should not be disturbed.

COUNTERSTATEMENT OF THE CASE

In his appeal to the Second Circuit and his petition to this

Court, the Secretary has not challenged the District Court's find-

ings of fact. His statement of the case, however, ignores the District

Court's central factual findings as well as the evidence before

the District Court. Due to the varly stage of the proceedings,

the facts have not yet bee fully developed. Those facts are

nonetheless of central importance to the question whether this

petition should be held and summarily disposed of as the

Secretary suggests. Accordingly, respondents shall set forth the

facts as currently reflected in the record.

1. The Social Security Act (“the Act”) provides that a person

is considered disabled if he is unable “to engage in any substan-

tial, gainful activity by reason of any medically determinable

physical or mental impairment which can be expected to result

in death or...to last for a continuous period of not less than twelve

months.” 42 U.S.C. § 423(d)(1)(A). The Act explains that “for pur-

poses of” applying this definition, a person “shall be determined

to be under a disability only if his physical or mental impair-

ment or impairments are of such severity that he is not only

unable to do his previous work but cannot, considering his age,

education, and work experience, engage in any other kind of

substantial gainful work which exists in the national economy...”

42 U.S.C. § 423(d)(2)(A). The Act further provides that a “physical

or mental impairment” is an impairment that results from

techniques.” 42 U.S.C. § 423(d)(3). All twelve courts of appeals

have interpreted the Act to provide that if a claimant demonstrates

that he has a physical or mental impairment that prevents him

from returning to his past work, he meets his prima facie burden

of proving disability. Johnson v. Heckler, 769 F.2d 1202, 1210 (7th

Cir. 1985) (citing cases), petition for cert. filed, 54 U.S.L.W. 3600

(March Ll, 1986) (No. 85-1442).

2. In this case, plaintiffs challenge the Secretary's regulations

and practices under which disability claims are denied on medical

>

grounds without any consideration of the claimant's ability to

perform past work or other work in light of both medical and

vocational factors. In support of their motion for a preliminary

injunction, respondents submitted evidence to the District Court

showing that the Secretary had deliberately instituted a harsher

standard for denying disability claims after a review of medical

factors alone while publicly proclaiming that his severity regula-

tion was merely a de minimis mechanism for screening out

frivolous claims.

3. From 1960 to 1978 the Secretary's regulations provided that

if a claimant had a medically determinable impairment, the claim

could be denied on medical grounds alone only if the impair-

ment was a “slight neurosis, slight impairment of sight or hear-

ing or other similar slight abnormality or combination of ab-

normalities.” 25 Fed. Reg. 8100 (Aug. 24, 1960). Under this regula-

tion, an impairment would not be denied as slight if it, in fact,

prevented the claimant from returning to past work. (J.A. 659").

4. In 1978, the Secretary altered these regulations to provide

that a claim could be denied on medical grounds alone if the

impairment was “not severe.” In introducing this language, the

Secretary announced in the Federal Register that the term “not

severe” was not intended to alter the standard for denying claims

on medical grounds alone. 43 Fed. Reg. 9296 (Mar. 7, 1978); 43

Fed. Reg. 58353 (Nov. 28, 1978).

5. Although the Secretary stated publicly that substitution of

the term “not severe” for the term “slight” was not a change in

standard, the uncontroverted evidence before the District Court

shows that he secretly implemented a new harsher standard for

screening out disability claims on medical grounds alone. In 1976,

two years prior to issuance of the “not severe” regulation, the

Secretary began returning large numbers of cases to State disabili-

ty determination services, which perform initial determinations

of disability. These “quality assurance” returns required denial

of claims as not severe that would not have been denied on

“].A.” refers to the Joint Appendix filed in the Court of Appeals, a copy of which

has been lodged with this Court.

Nel ly

medical grounds alone under prior standards. (Affidavit of Mar- —

vin Lachman, dated March 23, 1984, J.A. 275-319).

6. Both the New York Disability Determination Service and

other state disability services protested that these returns reflected

a heightened standard. In response, Robert Bynum, Associate

Commissioner for the Office of Program Operations of the Social

Security Administration, sent a memorandum to all regional com-

missioners informing them that the agency was departing from

a “slightness” standard and would be adopting regulations under

which a claim could be denied when an impairment was not

severe. (Memorandum to All Regional Commissioners from

Robert Bynum, January 14, 1977, J.A. 648-51).

7. After the Secretary issued the “not severe” regulations in 1978,

he sent state adjudicators a list of impairments that must always

be considered not severe. This list was included in an internal

manual entitled the Program Operations Manual System

(“POMS”); it was not published and was not subjected to notice

and comment rule making. The list included impairments that

would clearly prevent some claimants from returning to past

work. For example, a colostomy was listed as a “not severe” im-

pairment. Martha McSteen, then Regional Commissioner for the

Dallas Region, relayed comments that most surgeons would not

allow their patients to lift more than fifty pounds following

surgery. (J.A. 700). Under the Secretary's Medical Vocational

Guidelines, the Secretary has taken administrative notice that

a person with such a limitation cannot perform substantial gainful

activity if he has a history of more strenuous labor, and also suf-

fers from an adverse vocational profile. See 20 C.F.R. Part 404,

Appendix 2. Nonetheless, the manual instructions required a

denial of benefits to all persons with the designated medical

impairments.

8. In 1980, the severity regulation was rewritten to specify basic

work activities that would have to be “significantly limited” in

order to constitute a severe impairment. Commenting on these

regulations at the time they were issued, the Appeals Council — the

Social Security Administration’s highest adjudicative body —

stated that the regulations were inconsistent with the Secretary’s

stated position that the 1978 regulations did not represent a chang-

ed standard. The Appeals Council noted that if an impairment

significantly limited the capacity to understand simple instruc-

tions, for example, the claimant would be so seriously limited

that he probably could not perform any substantial gainful ac-

tivity even if there were no adverse vocational factors. (J.A. 667,

671).

9. When the 1980 regulations were published in final form,

the Secretary stated in response to public comments that the 1978

introduction of the severity regulation constituted an expansion

of the prior regulation permitting denial on medical grounds in

cases of slight impairments. (Pet. App. 38a). The Secretary stated

that he intended to study the efficiency of the new severity regula-

tion. The Secretary did not revise the proposed regulation in

response to the Appeals Council’s comments.

10. Following promulgation of the 1980 revisions to the severity

regulations, the Secretary issued two internal rulings designed

to enforce the heightened not severe standard on administrative

law judges and the Appeals Council. The first ruling, SSR 82-55,

listed twenty impairments that must always be treated as not

severe. The second ruling, SSR 82-56, made clear that an im-

pairment could be treated as not severe even if it prevented the

claimant from returning to his past work. Under 20 C.F.R. §

422.408, these rulings were binding on adjudicators at all levels

of the administrative process.

ll. To enforce these new rules, the Secretary conducted

“refresher courses” for administrative law judges. These courses

gave examples of claimants who should be denied as having “not

severe” impairments. One example is of a woman with a tortuous

aorta and documented narrowing of the two coronary arteries.

She had been diaynosed as having atypical angina and hyperten-

sive cardiovascular disease with coronary insufficiency. SSA’s own

consultative physician stated that she should not lift over 25

pounds. On these facts, the “refresher course” instructed that the

claim should be denied as not severe. Once again, this result ©

squarely conflicts with the Medical Vocational Guidelines, which

take administrative notice that a person with the described limita-

tions and an adverse vocational profile cannot engage in substan-

tial gainful activity. (J.A. 760-62).

12. The Secretary’s heightened standard for denying claims on

medical grounds alone resulted in a vast increase in claims denied

without any consideration of whether the claimant could per-

form past work or any other work. Between 1975, when the

Secretary last applied a “slightness” standard, and 1982, when

he published his initial list of twenty “not severe” impairments,

the percentage of claims denied on medical grounds alone climbed

from 8 to 40 percent. (Pet. App. 37a).

13. On August 23, 1983, a Social Security Administration

workgroup issued an internal report on the severity regulation.

The report concluded:

Whatever SSA's actual conception of the minimum im-

pairment level was for policy purposes between 1975

and the present, its application of the concept in

deciding cases suggests a change of position. Yet, at the

same time, there was no corresponding change in the

statute and, in fact, SSA itself stated that the regula-

tions did not constitute a change of standard.

(J.A. 620).

PROCEEDINGS BELOW

14. On February 17, 1984, plaintiffs filed a motion for a class-

wide preliminary injunction barring the Secretary from relying

on the severity regulation to deny disability claims in New York

State. On March 15, 1984, the State of New York and Cesar

Perales, Commissioner of the New York State Department of

Social Services, moved to intervene as party plaintiffs.

15. On June 22, 1984, District Judge Morris E. Lasker issued

a preliminary injunction temporarily enjoining application of the

severity regulation in the State of New York and requiring the

Secretary to reprocess claims that were pending as of the date

the complaint was filed. Judge Lasker also granted plaintiffs’ mo-

tion for class certification and the State plaintiffs’ motion for

intervention.

16. Judge Lasker based his preliminary injunction order on

alternative grounds. First, he rejected the Secretary’s argument

that 42 U.S.C. § 423(d)(2)(A) sets out an independent severity

requirement separate from an analysis of the person’s ability to

engage in substantial gainful activity in light of medical and voca-

tional factors. Judge Lasker found that the Secretary’s interpreta-

tion constituted a substantive rewriting of the statute, which on

its face requires that impairments be evaluated in light of voca-

tional characteristics. (Pet. App. 34a). Judge Lasker found unper-

suasive the argument that the 1967 amendments to the Social

Security Act, which introduced the term “severity,” indicated any

intention on the part of Congress to establish an independent

severity test in which the interaction of medical and vocational

factors could be ignored. Judge Lasker noted that when Con-

gress wished to permit the denial of benefits based on a predeter-

mined level of severity, it did so expressly, as in the case of disabled

widows. The contrast between the two statutory definitions pro-

vided strong evidence that Congress intended an individualized

assessment of medical and vocational factors for disabled workers.

(Pet. App. 4la-42a). Furthermore, by disregarding vocational con-

siderations altogether, the severity regulation violated longstand-

ing case law providing that a claimant establishes a prima facie

case of disability by demonstrating an inability to return to his

former work. Judge Lasker observed that “[t]he Secretary does

not argue that [Second] Circuit’s precedents regarding the alloca-

tion of the burden of proof are incorrect, but neither does she

suggest how they can be reconciled with the severity regulation.”

(Pet. App. 43a-44a).

17. Judge Lasker also rejected the Secretary’s argument that

on its face and as applied the severity requirement is merely a

de minimis screening mechanism designed to improve efficien-

cy in the adjudication of disability claims. Even assuming that

i

j

;

the Secretary has the authority to screen out claims involving im- ©

pairments which are de minimis, and without consideration of

vocational factors, Judge Lasker concluded that the severity

regulation does not set such a standard, either as written or as

applied. First, he noted that the language of the severity regula-

tion on its face is not de minimis. (Pet. App. 34a-35a). Second,

he considered the facts of the named plaintiffs and found that

none of the named plaintiffs’ impairments could be considered

de minimis. (Pet. App. 36a-37a). Third, Judge Lasker looked to

the rate at which claims were denied under the severity regula-

tion and the Secretary’s prior rules permitting denial of benefits

in cases of slight impairments. Noting the dramatic increase in

denials, Judge Lasker commented that “it would be absurd to

assume that the change in the regulations has not played a

substantial part in it.” (Pet. App. 37a). Judge Lasker considered

the Secretary’s own public statement in 1980 that he had “ex-

panded” the severity regulation in 1978 in order to limit the

number of cases in which vocational factors would be considered.

Judge Lasker found unpersuasive the Secretary’s argument that

this statement did not indicate an intent to limit entitlement.

He wrote:

[T]here can be no blinking the Secretary’s 1980 state-

ment that the regulation was intended to “limit[] the

number of cases” in which vocational factors would

be considered — something which, it would appear, can

only be accomplished by increasing the number of cases

decided on medical grounds alone.

(Pet. App. 38a).

18. Judge Lasker considered the appropriate scope of

preliminary relief. Based on his finding that the Secretary was

systematically denying disability benefits in violation of the Social

Security Act, Judge Lasker enjoined the Secretary from relying

on the policies in the severity regulation and rulings to deny

benefits. (Pet. App. 54a). In addition, Judge Lasker ordered the

Secretary to re-evaluate the claims of class niembers whose cases

were pending on the date the complaint was filed, since individual

=

10

appeals would merely delay evaluation under proper standards.

The Secretary did not argue for an alternative form of injunction.’

19. Following passage of the Disability Benefits Reform Act

of 1984, Pub. L. No. 98-460, 98 Stat. 1794, et seq., the Secretary

moved to vacate the District Court’s injunction against use of

the severity regulation on the ground that Congress had express-

ed approval of an independent medical severity threshhold. Plain-

tiffs argued in their opposition papers that nothing in the Reform

Act sanctioned an independent severity test and that, at most,

Congress may have indicated approval of de minimis efficiency

measures that eliminate only meritless claims. Plaintiffs presented

additional evidence obtained during discovery to establish that

the standard embodied in the severity regulation is not a de

minimis one. The Secretary presented no contrary evidence. Rul-

ing on the Secretary’s motion to vacate, Judge Lasker held that

nothing in the Reform Act or its legislative history sanctioned

the severity test employed by the Secretary.

20. The Secretary next appealed to the United States Court

of Appeals for the Second Circuit. In his brief on appeal, the

Secretary drew the court’s attention to Social Security Ruling

(SSR) 85-28, which was issued during the pendency of the ap-

peal. The Secretary argued that SSR 85-28 demonstrated that

the severity regulation eliminated from consideration only de

minimis impairments. The Secretary also informed the court that

a prior ruling, 82-55, listing impairments that would always

be treated as not“severe had been “obsoleted.” Plaintiffs objected

that it was unclear from the face of SSR 85-28 whether it would,

in fact, operate as a de minimis screening mechanism and that,

in any event, the District Court should be given an opportunity

to review the ruling to determine whether it constituted such a

clear abandonment of past practices as to provide a basis for

modifying the injunction. Plaintiffs also submitted evidence to

the Court of Appeals indicating that the Secretary was continuing

* The Secretary's proposed order only challenged certain time limits and technical

procedures for administering the order, which are not at issue in this appeal.

EE Taide, PE RS Bs ned a H

1}

to apply exampies such as those in the “obsoleted” SSR 82-55.° -

Plaintiffs invited the Secretary to make a motion to modify the

injunction to the District Court which would be in a position

to review all of this evidence. The Secretary has made no such

motion.

21. On March 6, 1986, the United States Court of Appeals for

the Second Circuit affirmed the District Court’s preliminary in-

junction. The panel noted that the Secretary had not challeng-

ed the District Court’s factual findings, the form of the injunc-

tion or plaintiffs’ demonstration of irreparable harm. The panel

concluded that plaintiffs had shown a likelihood of success in

showing that the severity regulation operates in a manner violative

of the Social Security Act. The panel did not address the issues

raised by SSR 85-28, thereby leaving the Secretary free to pur-

sue any appropriate relief in the District Court.

REASONS WHY THE PETITION SHOULD BE DENIED

A. Resolution of Yuckert in the Secretary’s Favor

Would Not Dispose of the Issues Presented Here.

The Secretary’s argument that the petition here should be held

and disposed of in light of the Court’s decision in Yuckert rests

on the conclusory assertion that “[i]f the Court sustains the validity

of the severity regulation in Yuckert, the preliminary injunction

must be reversed.” (Pet. at 12-13). This assertion is disingenuous

in light of the Secretary’s own statements to this Court in Yuckert.

In response to Yuckert’s argument that the absence of an ade-

quate factual record in that case made review inappropriate, the

Secretary assured the Court that “are is no need for factual

development,” because:

[t]he only issue before this Court is whether the

severity regulation is invalid on its face. That is a ques-

tion of law, and as respondent concedes, “[t]he Ninth

* See Addendum to Brief for Plaintiffs-Appellees and Plaintiffs-Intervenors-

Appellees, submitted to the Court of Appeals, at 109.

12

Circuit’s analysis is based on solely legal grounds.” If

the Court sustains the regulation against respondent’s

facial challenge, questions regarding its application in

particular factual circumstances can be resolved as they

arise.

Yuckert Reply Br. at 4 (emphases added).

The Secretary cannot have it both ways. Having sought review

in Yuckert by claiming that the case only presented the issue of

the severity regulation’s facial validity, he cannot now claim that

a decision in that case will dispose of fact-based challenges to

his application of the severity regulation. Indeed, the Secretary

expressly conceded that “questions regarding [the severity regula-

tion’s] application” fall outside the scope of his appeal in Yuckert.

Id.

Resolution of the instant case turns upon just such factual ques-

tions concerning the regulation’s application. To be sure, the

District Court below held that plaintiffs had established a

likelihood of demonstrating the facial invalidity of the severity

regulation.* But the District Court carried its analysis further, .

assumed the legality of a de minimis severity step, and, based

on the “clear evidence” before it, found that the Secretary was

systematically applying the severity test as an independent bar-

rier to eligibility, not simply as a de minimis screening device

for weeding out meritless claims. (Pet. 36a-38a; 44a). Thus, even

if the Secretary fully achieves the result he seeks in Yuckert - this

Court’s agreement that he may apply his severity regulation to

“screen out” those claimants whose impairments are so minimal

that they “would be found not to be disabled at subsequent steps

* It should be noted here that the Secretary’s sole quarrel with the Ninth Cir-

cuit’s judgment in Yuckert is that it purportedly prohibits any threshold severi-

ty step, even a de minimis step. (Yuckert Pet. at 7-11; 19-24). Although one ground

supporting the preliminary injunction here was that plaintiffs had demonstrated

the likelihood that the severity regulation facially conflicts with the Social Securi-

ty Act, the judgments below in no way bar the Secretary from ever instituting

a truly de minimis medical threshold test. (See Pet. 12a-l5a; 36a-39a; 54a).

Ale Eo Cie ——

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13

of the sequential evaluation process in any event” (Yuckert Pet.

at 23-24) —the preliminary injunction entered below would stand

on the District Court’s uncontested finding that the Secretary

has in fact applied the severity step not as a de minimis screen-

ing mechanism, but as an — and unauthorized eligibili-

ty restriction.

B. Regardless of the Outcome of Yuckert, There is

No Basis for Disturbing the Court of Appeals’ Rul-

ing Upholding the Preliminary Injunction Entered

by the District Court.

As explained above, the preliminary injunction entered by the

District Court rests in part on the District Court’s finding that

the Secretary has applied the severity regulation as an indepen-

dent eligibility restriction rather than as a de minimis screening

device. The District Court proceeded to find that plaintiffs were

likely to succeed in their challenge to the Secretary’s restrictive

severity practices and that plaintiffs were suffering irreparable

harm from these practices. On appeal to the Second Circuit, the

Secretary did not challenge the District Court’s findings of fact,

findings of irreparable harm or the form of the injunction.’ Ap-

plying the appropriate standard of review, the Court of Appeals

upheld the preliminary injunction as a proper exercise of judicial

discretion. Inasmuch as there is no real dispute as to the legal

conclusions and the factual findings that support the preliminary

injunction, there is no basis for either granting plenary review

or summarily \« ating and remanding the injunction in light of

this Court’s disposition of Yuckert.

1. The issue whether the Social Security Act permits a severity

test that is more than a de minimis screening device is clearly

not worthy of Supreme Court review. All ten circuit courts of

* In this Court, the Secretary has raised some objections to the scope of the

injunction, Pet. 10-12, but does not seek review of these issues. In fact, the

Secretary did not seek review of these questions in the Court of Appeals and,

consequently, cannot raise these questions for the first time in this forum. See

Heckler v. Campbell, 461 U.S. 458, 468 n. 12 (1983).

14

appeals that have addressed the “severity” issue have held that

the Social Security Act precludes a medical threshold test that

permits summary denial of claims involving more than a de

minimis or slight impairment.’ Although these courts differ as

to whether the proper remedy is to impose a narrow construc-

tion on the severity regulation or enjoin its use in its current form

altogether, all have condemned the Secretary’s imposition of a

substantive medical threshold that bars claims of individuals who

would otherwise be adjudged disabled. Moreover, the Secretary

himself no longer defends the severity regulation as an indepen-

dent eligibility criterion. He now defends it solely as a de minimis

threshold, a device designed to promote administrative efficien-

cy without denying benefits to any person whose claim would

be approved after a full vocational evaluation. Compare Stone

v. Heckler, 752 F.2d at 1103 (in which the Secretary argued that

the Act and regulations mandate a stringent medical severity

threshold) and Yuckert Pet. 22 (in which the Secretary embraces

narrow judicial construction of the severity regulation as a de

minimis threshold test).

2. The factual question whether the Secretary has applied more

than a de minimis threshhold is not properly subject to review

because it was not challenged below. Even if the Secretary had

challenged this finding, however, this issue is clearly not worthy

of Supreme Court review given the preliminary stage of these

proceedings and the deferential standard for reviewing factual

findings by lower courts. Moreover, the Secretary himself has

characterized the severity regulation as more than a de minimis

* McDonald v. Secretary of Health and Human Services, 795 F.2d 1118 (Ist Cir.

1986); Wilson v. Secretary of Health and Human Services, 796 F.2d 36 (3d Cir.

1986); Brown v. Heckler, 786 F.2d 1870 (10th Cir. 1986); Hansen v. Heckler,

783 F.2d 170 (8th Cir. 1986); Yuckert v. Heckler, 774 F.2d 1365 (9th Cir. 1985),

cert. granted sub nom. Bowen v. Yuckert, No. 85-1409 (May 19, 1986); Salmi

v. Secretary of Health and Human Services, 774 F.2d 685 (6th Cir. 1985); Johnson

v. Heckler, 769 F.2d at 1209-13; Evans v. Heckler, 734 F.2d 1012 (4th Cir. 1984);

Stone v. Heckler, 752 F.2d 1099 (Sth Cir. 1985); Brady v. Heckler, 724 F.2d

914 (Lith Cir. 1984).

15

threshold test in several court proceedings. See, e.g., Stone v.

Heckler, 752 F.2d at 1103; Salmi v. Secretary of Health and

Human Services, 774 F. 2d at 690; Garza... Heckler, 771 F.2d -

871 (5th Cir. 1985).

3. The District Court’s ruling on the form of the injunction

also was not challenged before the Court of Appeals and conse-

quently cannot be raised here for the first time. Even if this issue

had been preserved, it is clear that the District Court acted well

within its authority. Judge Lasker had before him substantial un-

controverted evidence that the Secretary interpreted and applied

his severity regulation as a harsh substantive standard that denied

benefits to claimants who were in fact disabled. The injunction

properly enjoins continued screening of disability claims based

on these policies, (Pet. App. 70a), and requires readjudication

of claims which were improperly rejected under the enjoined

policies.’

4. The issuance of Social Security Rulings 85-28 and 86-8 and

the “obsoletion” of Social Security Ruling 82-55 following entry

of the preliminary injunction also provide no basis for disturb-

ing the preliminary injunction. These administrative actions raise

serious factual questions that are best resolved by the District

Court prior to any consideration by the Court of Appeals or this

’ In criticizing (without seeking review of) the class certification order, the

Secretary seriously mischaracterizes the decision below. Judge Lasker explicit-

ly relied on both harm to the class and the futility of exhaustion in justifying

a waiver of exhaustion requirements. (Pet. App. 29a-30a). Moreover, the issue

of exhaustion in this case is similar to that in Bowen v. City of New York, 54

US.L.W. 4536 (U.S. June 2, 1986). Both cases concern a policy denying claimants

their right to a full sequential evaluation pursuant to a rule initially implemented

through quality assurance returns and actively hidden from public view. Finally,

the Secretary erroneously suggests that the order below requires payment of

benefits to persons who are not disabled. The injunction does nothing to change

the standard for determining disability. It only prevents the illegal screening

out of meritorious claims. The Secretary's reliance on Heckler v. Redbud Hospital

District, 54 U.S.L.W. 3027 (U.S. July 30, 1985) is misplaced. In Redbud, Justice

Rehnquist stayed a preliminary injunction requiring issuance of nationwide

regulations. He left in place those provisions of the preliminary injunction re-

quiring application of proper standards in determining reimbursement rates.

Court. All of these factual issues will be considered by the District

Court when it rules on the merits and fashions a final injunc-

tion.

First, the policies stated in the rulings are ambiguous. In par-

ticular, the rulings do not clearly abandon the Secretary's prior

practice of refusing to consider past work. Instead, they promise

to consider past work only when the work was “unique.” Courts

disagree as to whether this language actually embraces the rule

of all twelve circuits that a claimant makes out a prima facie

case by showing an inability to return to past work. Compare

McDonald v. Secretary of Health and Human Services, 795 F.2d

at 1125, with Hansen v. Heckler, 783 F.2d at 175. The meaning

of the Secretary's new rulings should be determined in the District

Court following review of the Secretary's instructional material,

quality assurance returns, and other factual matters. This inquiry

is especially important since the new rulings assert that they are

merely restating the policy that has always been in place. (Yuckert

Pet. 40a).

Second, as in any case in which a court is asked to permanently

enjoin practices that may have been abandoned in the course of

litigation, the District Court must consider any evidence that the

Secretary proffers showing that he has abandoned his illegal past

practices and is unlikely to return to them following vacatur or

modification of the injunction. See City of Mesquite v. Aladdins’s

Castle, Inc., 445 U.S. 283, 289 & n.10 (1982). In this case, the

District Court must consider the ease with which the Secretary

may issue and formally “obsolete” Social Security Rulings and

the Secretary's past pattern of stating one rule publicly while im-

plementing another internally. The District Court would also con-

sider the relevance of the Secretary's failure to employ formal

rulemaking procedures, in light of his statutory obligation to

follow rulemaking procedures on matters relating to disability.

See 42 U.S.C. § 421(k)(2).* These matters may be best addressed

* As this Court noted in Heckler o. Campbell, 461 U.S. at 470, formal rulemak-

ing provides an essential procedural safeguard when the Secretary seeks to

(Footnote Continued)

17

by the District Court on an appropriate motion or following a

trial on the merits. Indeed, the Court of Appeals specifically noted

that in fashioring final relief after trial, the District Court should

consider whether there were appropriate methods for narrow-

ing the scope of the injunction. (Pet. App. 15a). Changes in the

Secretary's practices, if any, would surely be considered at that

stage. At this stage in the litigation, none of these facts or legal

questions have been considered below and they are therefore not

properly presented for review by this Court.

C. The Secretary Has Made No Showing That He

Would Be Prejudiced By Awaiting a Final Trial

on the Merits.

Because the injunction entered below is a preliminary injunc-

tion, the Secretary remains free to present any additional facts

or arguments at the final trial on the merits. In addition, the

Secretary may return to the District Court to present any pro-

posals for modification of the injunction. The Secretary has made

no showing either to this or any other court, that he would be

prejudiced by pursing his claims in that forum.’ In contrast,

vacatur of the injunction would remove protections ordered by

the District Court and cause harm to members of the plaintiff

class.

dispense with individualized adjudication. The Secretary has never submitted

his assumptions about the availability of jobs for persons with “not severe” im-

pairments to this process. He suggests that a non-expert can simply guess on

a case-by-case basis whether an impairment would prevent anyone from engag-

ing in substantial gainful activity, irrespective of age, education, and work

experience.

* The Secretary presented no evidence to the District Court suggesting that he

would be harmed by entry of a preliminary injunction and did not seek a stay

from the injunction. Indeed, the injunction, which has been in effect for two

years, does not prevent the Secretary from denying benefits to anyone who fails

to meet the Act's criteria for evaluating disabilities. It only precludes use of an

alleged “screening” device that the District Court found to be a harsh substan-

tive standard causing irreparable harm to the plaintiff class.

18

1. The Sexretary erroneously suggests that the injunctive relief

to class members whose claims were previously adjudicated is

not relevant to the disposition of his petition because this relief

“is now being accomplished” and that, in any event, some class

members may be entitled to readjudications under the Disabili-

ty Benefits Reform Act of 1984. (Pet. 12 n.5). Most class members,

however, do not fall within the narrow scope of the Reform Act’s

provisions. Moreover, the relief ordered below “is now being ac-

complished” only as a result of the injunction below. If the in-

junction were reversed, these class members would lose their rights

to an immediate readjudication.” This result would be clearly

wrong since the Secretary no longer disputes that these class

members’ claims were originally adjudicated improperly. Indeed,

the Secretary is not even seeking review of the propriety of these

persons being included in the plaintiff class.

2. The injunction below also provides class members with

crucial relief from any ongoing application of an illegal severity

standard. As respondents set forth above, the record thus far in

this case provides overwhelming evidence that the Secretary has

applied an illegal medical threshhold test. The District Court's

injunction prevents hardship to class members by halting these

practices and assuring that class members will not have to take

each case individually to court in order to obtain proper adjudica-

tion of their claims. It does not, however, in any way alter the

ultimate standards for determining disability.

” Although the District Court order included time limits on readjudication,

these time limits only require the Secretaxy to make good faith efforts to comp-

ly with the time limits. The Secretary's most recent report to plaintiffs’ counsel

shows that of 4150 hearings scheduled pursuant to the injunction, 516 hearings

have not yet been held. Decisions have not been rendered in an additional 736

cases. Furthermore, the parties only recently entered into a consent order regar-

ding location of class members. Dixon v. Heckler, No. 83-7001 (S.D.N-Y. Nov.

15, 1985) (consent order). Because of delays in negotiating the terms of this order

and implementing instructions, many class members who had live claims as

of the date this case was filed have not yet had a new hearing scheduled. Thus,

there are even more class members who depend on continued enforcement of

the preliminary injunction in order to obtain proper adjudication of their claims

for benefits.

19

CONCLUSION

For the above stated reasons, the petition for certiorari should

be denied irrespective of this Court’s disposition of Bowen v.

Yuckert, No. 85-1409.

Respectfully submitted,

KALMAN FINKEL

Attorney-in-Charge

The Legal Aid Society

Civil Division

JouN E. Kirkiin

ARTHUR J. FRIED

STEPHEN LOFFREDO

Nancy MorAweETz

[Counsel of Record]

ll Park Place

Room 1805

New York, New York 10007

(212) 406-0745

Attorney for Plaintiffs-Respondents

ROBERT ABRAMS

Attorney General of the

State of New York

O. PETER SHERWOOD

Solicitor General

[Counsel of Record]

Paut M. GLICKMAN

Mary FisHer BERNET

Assistant Attorneys General

2 World Trade Center

New York, New York 10047

(212) 488-3943

Attorney for Plaintiffs-Intervenors-

Respondents

Dated: September 4, 1986