Appendix — Bowen v. Jordan

a oe

— ee ee

In the Supreme Court of the United States

OCTOBER TERM, 1987

Otis R. BOWEN, SECRETARY OF

HEALTH AND HUMAN SERVICES, APPELLANT

Vv.

JEANNE A. JORDAN, ET AL.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF OKLAHOMA

Otis R. BOWEN, SECRETARY OF

HEALTH AND HUMAN SERVICES, PETITIONER

Vv.

JEANNE A. JORDAN, ET AL.

ON WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

CONSOLIDATED APPENDIX

CHARLES FRIED

Solicitor General

RICHARD K. WILLARD

Assistant Attorney General

ALBERT G. LAUBER, JR.

Deputy Solicitor General

EDWIN S. KNEEDLER

Assistant to the Solicitor General

CHRISTINE R. WHITTAKER

Attorney

Department of Justice

Washington, D.C. 20530

(202) 633-2217

“*

TABLE OF CONTENTS

Page

Appendix A (district court order of Apr. 10, 1987) ...... la

Appendix B (notice of appeal of May 8, 1987} -............ 6a

Appendix C (district court order of Sept. 26, 1980) ...... 8a

Appendix D (district court order of Mar. 17, 1983)...... 23a

Appendix E (district court order of Mar. 26, 1984) ...... 4la

Appendix F (district court order of July 2, 1984)........ 44a

Appendix G (district court order of Jan. 18, 1985) ........ 48a

Appendix H (court of appeals opinion of Jan. 5,1987).. 56a

Appendix I (court of appeals opinion of Sept. 24,1985).. 63a

Appendix J (court of appeals order of June 19, 1987).... 73a

Appendix K (court of appeals order of Apr. 16, 1986).. 75a

Appendix L (statutory provisions involved) .................. 76a

(1)

ct

APPENDIX A

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF OKLAHOMA

No. CIV-79-994-W

JEANNE A. JORDAN, ET AL., PLAINTIFFS

vs.

OTIs T. BOWEN, M.D., Secretary

of Health and Human Services, DEFENDANT

[Filed Apr. 10, 1987]

ORDER

This action was initiated by the plaintiffs on Sep-

tember 7, 1979, to challenge the Social Security Ad-

ministration’s (SSA) failure to monitor individuals

who act as representative payees for the receipt and

disbursement of Social Security and Supplemental

Security Income benefits. The plaintiffs brought

ve vious claims including a claim under the due proc-

ess clause of the fifth amendment. They contended

that the SSA had violated their due process rights

by failing to implement an accounting system by

which to determine if representative payees were

carrying out their statutory duty to spend the bene-

fits received solely for the use of the plaintiff-

beneficiaries.

(la)

2a

On March 17, 1983, this Court issued its Order

rejecting the position of the defendant, Richard S.

Schweiker, then Secretary of Health and Human

Services (the Secretary), that the SSA had no obli-

gation to monitor the expenditures of benefits by

representative payees. Jordan v. Schweiker, No.

CIV-79-994-W, slip op. at 17 (W.D. Okla. March 17,

1983). The Court found that “the discretionary ac-

counting procedures . . . in effect [did] not provide

due process to the social security beneficiaries for

whom representative payees [had] been appointed.”

Id. The Secretary was directed to institute a man-

datory periodic accounting system within one year.

Id.

In an attempt to comply with the Court’s Order

of March 17, 1983, the Secretary took a random sur-

vey of only ten percent (10%) of all payees. Such

action prompted the plaintiffs to file a Motion for

Order Enforcing Judgment.

On March 26, 1984, the Court in ruling on the

motion found that the due process rights of the

plaintiff could only be protected by universal annual

accountings and directed the Secertary to take “im-

mediate steps” to implement such a system. Jordan

v. Schweiker, No. CIV-79-994-W, slip op. at 3 (W.D.

Okla. March 26, 1984). Upon subsequent motion by

the Secretary, then Margaret Heckler, the Court

aniended its Order of March 26, 1984, to allow the

SSA to monitor state institutional payees through

its on-site review programs. Jordan v. Heckler, No.

CIV-79-994-W (W.D. Okla. July 2, 1984).

On August 29, 1984, the Secretary filed a notice

of appeal with the United States Court of Appeals

for the Tenth Circuit from this Court’s Order of

March 26, 1984, as amended, July 2, 1984. There-

after on October 16, 1984, the Secretary filed with

3a

this Court a Motion for Indicative Ruling and Re-

lief from Judgment under Rule 6(0(b)(6), F-.R.

Civ.P.

In the motion, the Secretary argued that recent

legislation had been enacted which was contrary to

this Court’s Order requiring mandatory accounting

of all representative payees. The legislation, the So-

cial Security Disability Reform Act of 1984, Section

16, Pub. L. No. 98-460 (effective October 9, 1984),

created a mandatory accounting system but ex-

empted from such system the parents and spouses

serving as representative payees for beneficiaries in

their custody.

On January 18, 1985, the Court acknowledged that

it was without jurisdiction to grant the motion but

advised the parties if such a motion under Rule 60

(b) were considered by the Court it would deny the

relief requested. The Court stated in part:

“While the Court is well aware of the deference

usually given Congressional actions, the fact

that Congress has enacted some reforms does not

change the constitutional requirements. The

only way by which the Secretary can avoid the

mandatory annual accounting is to establish

that beneficiaries’ due process rights are being

adequately provided through some alternative

means ... [N]o such showing has been made

for either of the two categories [spousal/par-

ental payees and federal institutions] set out

above. Beneficiaries in these two categories

have the same rights under the due process

clause as do all other beneficiaries for whom

representative payees have been appointed.”

Jordan v. Heckler, No. CIV-79-994-W, slip op. at

6-7 (W.D. Okla. January 18, 1985).

4a

On January 5, 1987, the United States Court of

Appeals for the Tenth Circuit found that the Sec-

retary, then Otis R. Bowen, M.D., had abandoned

the earlier appeal filed August 29, 1984, wherein

this Court’s Order of March 26, 1984, as amended,

July 2, 1984, had been challenged and further that

the Secretary had failed to file a timely notice of

appeal from this Court’s Order of January 18, 1985.

Jordan v. Bowen, 808 F.2d 733, 736 (10th Cir.

1984). The appellate court dismissed the appeal

without addressing the correctness of the latter Or-

der. Now pending before the appellate court is a

Petition for Rehearing and Suggestion for Rehear-

ing En Rane and a Motion in the Alternative for

Stay of Action on Rehearing Petition.

The matter now comes before this Court on the

Secretary’s Motion for Relief of Judgment filed pur-

suant to Rule 60(b)(6) wherein the Court is asked

to vacate its Orders of March 17, 1983, and March

26, 1984, as amended, July 2, 1984. The plaintiffs

have responded in opposition to the motion and again

the parties have acknowledged that this Court is

without jurisdiction to grant the instant motion.

E.g., Aune v. Reynders, 344 F.2d 835, 841 (10th

Cir. 1965). The Court can either deny the motion

or, if it concludes that the motion has merit, should

so advise the parties who can then request the appel-

late court to remand the matter so that this Court

can act. Id.

The Court has reviewed the motion and the objec-

tions thereto of the plaintiffs and again finds that

the Secretary is not entitled to the relief sought.

The Court not only has engaged once in the analysis

required by Mathews v. Eldridge, 424 U.S. 319

(1976), see Order of March 17, 1983, but also has

EE

5a

already considered the legislative provisions cited by

the Secretary and the need for protecting the due

process rights of those beneficiaries for whom par-

ents or spouses have been appointed representative

payees. See Order of March 26, 1984, as amended

July 2, 1984. Thus, the Court finds it unnecessary

to readdress those arguments presented by tlie Sec-

retary. Accordingly, the Secretary’s instant Motion

for Relief of Judgment should be and is hereby

DENIED.

ENTERED this 10th day of April, 1987.

/s/ Lee R. West

LEE R. WEST

United States District Judge

6a

APPENDIX B

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF OKLAHOMA

CIV 79-994-W

JEANNE A. JORDAN, ET AL., PLAINTIFFS

-U8-

Otis T. BOWEN, M.D., Secretary

of Health and Human Services, DEFENDANT

{Filed May 8, 1987]

NOTICE OF APPEAL

NOTICE IS HEREBY GIVEN that the defend-

ant, Otis T. Bowen, M.D., Secretary of the Depart-

ment of Health and Human Services, hereby appeals

to the Supreme Court of the United States from the

final Order entered in this action on April 10, 1987.

This appeal is taken pursuant to 28 U.S.C. § 1252

and 28 U.S.C. § 2101.

Dated this 8th day of May 1987.

Ta

Respectfully submitted,

RICHARD K. WILLARD

Assistant Attorney General

WILLIAM S. PRICE

United States Attorney

Western District of Oklahoma

/s/ Roger Griffith

ROGER GRIFFITH

Assistant U.S. Attorney

8a

APPENDIX C

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF OKLAHOMA

CIV-79-994-W

JEANNE A. JORDAN, individually and on behalf

of all other persons similarly situated, PLAINTIFF

vs.

PATRICIA R. HARRIS, individually and in her

official capacity as Secretary of Health and

Human Services, DEFENDANT-

[Filed Sep. 26, 1980]

ORDER

Background

This cause is before the Court on defendant’s Mo-

tion to Dismiss for lack of jurisdiction or in the

alternative to Deny Class Certification.

The plaintiff, Jeanne A. Jordan, became entitled to

disability benefits under Title II of the Social Security

Act in December, 1976. Although legally competent,

it was determined that she was not capable of man-

aging her benefits. Her sister, Cathy J. Culp, was

therefore, designated as representative payee for Ms.

9a

Jordan, pursuant to the Social Security Administra-

tion’s procedures under § 205(j) of the Social Secu-

rity Act, 42 U.S.C. § 405(j), in which the Secretary

may designate a representative payee to whom the

payment of benefits is made on behalf of a benefi-

ciary.’

In October, 1977, upon a determination that she

was no longer disabled, Ms. Jordan’s benefits were

terminated. As a result, Ms. Jordan alleges Ms. Culp

forced her to leave her home and ceased in any way

to act on Ms. Jordan’s behalf, (Plaintiff’s Complaint

{7 23 and 24). Ms. Jordan administratively appealed

the termination of her benefits and, after ten months,

an administrative law judge reinstated her benefit

status, effective from October 1977. However, the

notice of her reinstatement, dated September 9, 1978,

and the check for her past-due benefits which had

accrued during the pendency of her appeal were sent

to Ms. Culp, even though, plaintiff alleges, neither

she nor her counsel was informed that Ms. Culp

would be the payee. Plaintiff further alleges that at

that time the whereabouts of the former payee were

unknown to plaintiff and her attorney and that she

had not even seen the payee for over one year.

On September 29, 1978, Ms. Jordan’s husband,

Michael A. Jordan, applied tc be his wife’s repre-

- sentative payee. On November 13, 1978, Ms. Jordan’s

1 Title 42 § 405(j) reads:

When it appears to the Secretary tnat the interest of

an applicant entitled to a payment would be served there-

by, certification of payment may be made, regardless of

the legal competency or incompetency of the :ndividual

entitled thereto, either for direct payment to such appli-

cant, or for his use and benefit to a relative or some other

person.

10a

attorney wrote the first in a series of letters request-

ing that the Social Security Administration reim-

burse Ms. Jordan for the past-due benefit check and

another monthly benefit check which Ms. Jordan did

not receive.

Ms. Jordan alleges that her plight was aggravated

when the Secretary immediately disclaimed any fur-

ther responsibility for the paid-out benefits on being

informed that they had been missent. She contends

that it was a year later before the Social Security

Administrator communicated retrieval-of-check in-

formation to her attorney. Plaintiff alleges that there

is no rehabilitative procedure applicable to her case.

Finally, plaintiff alleges that the defendant, solely

for administrative convenience, has suspended the re-

quirement that the representative payees, whom the

defendant had designated, make an annual account-

ing of the funds received. Thus, she seeks in addi-

tion, mandatory annual accountings by payees.

Statement of Issues

Unsatisfied with the results of her attorney’s cor-

respondence with the Social Security Administration

regarding her representative payee, on September 7,

1979, Ms. Jordan, as a recipient of disability-

insurance benefits under Title II of the Social Secu-

rity Act and in “representative payment” status,

filed this civil action on behalf of herself and all

others similarly situated. She alleges, inter alia, that

the Social Security Administration’s procedures pur-

suant to §205(j) of the Social Security Act, 42

U.S.C. § 405(j) and the corresponding regulations

20 C.F.R. §§ 404.1601, 404.1602, 404.1609, for the

representative payment of Social Security benefits,

deny her and the alleged class due process of law

_—__

lla

under the Fifth Amendment to the Constitution of ~

the United States. In support of this allegation, she

contends that the defendant Secretary of Health and

Human Services has proceeded under § 205(j) of

the Social Security Act to name representative pay-

ees to receive the beneficiaries’ payments without

any semblance of due process as to notice and hear-

ing whereby the beneficiaries are unable to prescribe

or even nominate whom the payee should be.

Accordingly, the plaintiff asks this court to take

jurisdiction pursuant to 42 U.S.C. § 405(g) or 28

U.S.C. § 1361, to certify this section as a class action

pursuant to Rule 23(c)(1), to declare § 405(j) and

its implementing regulation unconstitutional; to en-

join the Secretary from further enforcement of § 405

(j); and to order the promulgation of new regula-

tions.

On February 12, 1980, as a result of negotiations

aimed at settling this civil action, a check in the

amount of $2,356.90 was sent to Ms. Jordan as pay-

ment of benefits for the period from November 1977

through October, 1978. Ms. Jordan has refused to

withdraw this law suit, however, contending that this

payment has no bearing on the issues in this case.

In response to plaintiff’s allegations and requests

for relief, the defendant has made Motion to Dismiss

and in the alternative, Motion to Deny class certifica-

tion, asserting that even if plaintiff has a claim aris-

ing under the Constitution that such constitutional

question must first be resolved through exhaustion of

administrative remedies as dictated by 42 U.S.C.

§ 405(j). Defendant, in support of its motion to

deny class certification, states that its action to re-

store payments wrongfully made to plaintiff’s repre-

sentative payee and subsequent actions to name an-

12a

other representtive payee deprive plaintiff of the

status of being representative of the class.

Jurisdiction

The Secretary of Health and Human Services, the

defendant herein, submits that this Court lacks juris-

diction grounded on Title 28 U.S.C. § 1361, the fed-

eral mandamus statute, and contends further that

subject-matter jurisdiction for judicial review of

matters arising under Title II of the Social Security

Act is exclusively limited to section 205(g) of the

Act, 42 U.S.C. § 405(g)? and the limitation set forth

in section 205(b) of the Act, 42 U.S.C. § 405(h).?

2 Section 405(g) provides, in pertinent part:

Any individual, after any final decision of the Secre-

tary made after a hearing to which he was a party,

irrespective of the amcunt 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 Secre-

tary may allow. Such action shall be brought in the dis-

trict court of the United States for the judicial district

in which the plaintiff resides or has his principal place of

business, or, if he does not reside or have his principal

place of business within any such judicia! district, in the

United States District Court for the District of Columbia.

3 Section 405 (h) reads:

The findings and decision of the Secretary after a hear-

ing shall be binding upon all individuals who were parties

to such hearing. No findings of fact or decision of the

Secretary shall be reviewed 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 of Title 28 to recover on any claim arising under

this subchapter.

|

13a

The Secretary argues that review is not available to

plaintiffs because they have not satisfied the juris-

dictional prerequisites to review under § 405(g), to

wit, exhaustion of remedies and receipt of a final

decision.

Plaintiff, on the other hand, contends that this case

is not concerned with establishing an entitlement or

claim for Social Security benefits, but with a consti-

tutional right to due process regarding a claim or

entitlement that is already an established property

right. Therefore, plaintiff contends exhaustion of

remedies is not required. She further argues that she

has met the “final decision” requirement under § 405

(g)(h) and that in any case, because her claim is a

constitutional challenge, jurisdiction under Title 28

U.S.C. § 1361 is also proper.

In view of the recent decision of Califano v.

Yemaski, US. , 99 S.Ct. 2545, 2553

1979, in which the Court commented on the District

* Courts’ and the Court of Appeals’ “somewhat short

shrift” in failing to give due consideration to the

statutory remedy in preference to “unnecessary con-

stitutional adjudication”, and in view of the holding

in Weinberger v. Salfi, 422 U.S. 749, 95 S.Ct. 2457,

2465 (1975), that in some cases, “the Social Security

Act provides jurisdiction for constitutional challenges

to its provisions”, this Court will analyze the statu-

tory provisions first to determine if they are a basis

for jurisdiction in this case.

Analysis of 28 U.S.C. § 405(q)

as Jurisdictional Basis

Based on our interpretation of Justice Rehnquist’s

opinion in Weinberger v. Salfi, supra, and its prog-

eny, this Court believes that the limitations the Sec-

l4a

retary attributes to 42 U.S.C. § 405(g) are not con-

trolling in the case at bar. In Salfi the Court held:

“$405(h) ... extends to any “action” seeking

to recover on any Social Security claim.”

422 U.S. 762, 95 S.Ct. 2465.

As plaintiff has assiduously argued, however,

there is no controversy here about whether the plain-

tiffs are entitled to recover on a Social Security

claim. Thus, while Salfi focused on trying to recover

on a Social Security claim by establishing an entitle-

ment, and Mathews v. Eldridge, 424 U.S. 319, 47

L.Ed.2d 18, 96 S.Ct. 893 (1976), on trying to re-

cover Social Security claims that were being ter-

minated, in the case at bar there is no issue as to

any claim of entitlement arising under 42 U.S.C.

§ 405(g). Plaintiffs have been determined as en-

titled and thus they have “property” interests con-

stitutionally protected. For the Court in Mathews v.

Eldridge held:

“'3] Procedural due process imposes con-

straints on governmental decision which deprive

individuals of “liberty” or “property” interests

within the meaning of the Due Process Clause

of the Fifth or Fourteenth Amendment. The

Secretary does not contend that procedural due

process is inapplicable to terminations of Social

Security disability benefits. He recognizes, as

has been implicit in our prior decisions, e.g.,

Richardson v. Belcher, 404 U.S. 78, 80-81, 92

S.Ct. 254, 256-257, 30 L.Ed.2d 231 (1971);

Richardson v. Perales, 402 U.S. 389, 401-402,

91 S.Ct. 1420, 1427-1428, 28 L.Ed.2d 842

(1971); Flemming v. Nestor, 363 U.S. 603, 611,

80 S.Ct. 1367, 1372-1373, 4 L.Ed.2d 1435

15a

(1960), that the interest of an individual in

continued reecipt of these benefits is a statuto-

rily created “property” interest protected by the

Fifth Amendment.” (emphasis added)

Id. at 424 U.S. 332, 333, 96 S.Ct. 901-902.

Thus, what we have at issue is, in our opinion,

a purely constitutional question, a matter collateral

to an entitlement a challenge to a procedure that

allows the Secretary to (1) make an ex parte ap-

pointment of another to receive the benefits without

so much as a by-your-leave from the recipients, and

(2) a procedure that does not require the payee to

give an annual accounting of the benefits that he has

received on behalf of the recipient.

Despite this collateral constitutional claim, how-

ever, plaintiff argues that this court has jurisdiction

under § 405(¢). We do not think so. In both Salfi

and Eldridge, supra, and in subsequent comments on

those cases in Califano v. Sanders, 430 U.S. 99, 97

S.Ct. 908 (1977), the Court discussed that requisite

of a “final decision” from the Secretary before in-

voking 405(g) jurisdiction. 430 U.S. 108-109, 97

S.Ct. 986.

The plaintiff, however, citing Mathews v. EI-

dridge, supra, argues that she has met the “final deci-

sion” requisite. Eldridge holds that the “final deci-

sion” is the Secretary’s response to Eldridge’s claim

of protest to the Secretary when he was notified that

his current status as a recipient was to be ter-

minated. 422 U.S. 328-329, 96 S.Ct. 899-900. The

Court said:

“Salfi identfiied several conditions which must

be satisfied in order to obtain judicial review -

under § 405(g). Of these, the requirement that

there be a final decision by the Secretary after

16a

a hearing was regarded as “central to the requi-

site grant of subject-matter jurisdiction ... .”

422 U.S., at 764, 95 S.Ct. at 2466. Implicit in

Salfi, however, is the principle that this condi-

tion consists of two elements, only one of which

is purely “jurisdictional” in the sense that it

cannot be “waived” by the Secretary in a par-

ticular case. The waivable element is the re-

quirement that the administrative remedies pre-

scribed by the Secretary be exhausted. The non-

waivable element is the requirement that a

claim for benefits shall have been presented to

the Secretary. Absent such a claim there can be

no “decision” of any type. And some decision by

the Secretary is clearly required by the statute.

* * * *

Eldridge has fulfilled this ervcial nrerequisite.

Through his answers to the state agency ques-

tionnaire, and his letter in response to the tenta-

tive determination that his disability has ceased,

he specifically presented the claim that his bene-

fits should not be terminated because he was

still disabled. This claim was denied by the

state agency and its decision was accepted by

the SSA.” (emphasis added)

Furthermore, the Salfi Court says that notwith-

standing a constitutional challenge, judicial review

under § 405(g)(h) requires: (1) a final decision of

the Secretary made after a hearing, (2) commence-

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

ing of notice of such a decision, and (3) filing of the

action in an appropriate district court, with only

the first requirement being “central to the requisite

grant of subject-matter jurisdiction.” Jd. at 422

U.S. 763-764, 95 S.Ct. 2466.

17a

While it is true that plaintiffs’ constitutional claim

in Salfi was only “colorable’’, in which plaintiffs were

trying to establish entitlement to social security

benefits and in this case entitlement is already estab-

lished, under 405(g) it appears that a “final deci-

sion” on the controversy at issue is nonetheless re-

quired, and this Court does not believe that plaintiff

has met this “final decision” requirement.

Plaintiff, we think, misconstrues the term “final

decision” by arguing that her claims for social secu-

rity benefits and her being adjudged a qualified

recipient is a “final decision” in regard to this case.

While it is true that plaintiff’s being declared a

qualified recipient is a “final decision’ by the Sec-

retary, that “final decision” has uo bearing on this

controversy. Here, we think, “final decision” would

have been plaintiff’s protesting administratively the

procedures for the Secretary’s selection of a “repre-

senttaive payee,” and the Secretary’s decision to this

response. |

Therefore, we hold that this Court does not have

jurisdiction under 42 U.S.C. § 402(g), but we fur-

ther hold that 42 U.S.C. § 402(g) is not intended to

control in this case, or if it does, it is unconstitu-

tional and, a fortiori, not applicable. While Congress

may, by statute, vest constitutional rights. Once

vested such rights cannot be proscribed by substitute

mandatory administrative procedures in place of

constitutional remedies. Congress and the agencies

which it creates simply lack the power to make ad-

ministrative regulations superior to rights arising

under the Constitution. Courts are created to decide

those rights.

Furthermore, dicta in Califano v. Sanders, supra,

says the following regarding constitutional claims:

18a

“Constitutional questions obviously are unsuited

to resolution in administrative hearing proce-

dures and, therefore, access to the courts is es-

sential to the decision of such questions... .

[W]hen constitutional questions are in issue,

the availability of judicial review is presumed,

and we will not read a statutory scheme to take

the “extraordinary” step of foreclosing jurisdic-

tion unless Congress’ intent to do so is mani-

fested by ‘clear and convincing’ evidence. 422

U.S. at 762, 95 S.Ct., at 2465; Johnson v.

Robinson, 415 U.S. 361, 366-67, 94 S.Ct. 1160,

1165-66, 39 L.Ed.2d 389 (1974).”

430 U.S. 108, 97 S.Ct. 986.

Analysis of Title 28 U.S.C. § 1361

As Basis for Jurisdiction

This Court now examines the mandamus statute

to determine if it has jurisdiction under Title 28

U.S.C. § 1361. This statute reads in toto:

“$1361. Action to compel an officer of the

United States to perform his duty

The district courts shall have original juris-

diction 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.”

This statute has traditionally been used to compel

compliance with due process requirements and to

provide jurisdiction “to declare the due process re-

quirements applicable to [the challenge] proceed-

ings.” Elliott v. Weinberger, 564 F.2d 1219, 1226

(9th Cir. 1977). See also, Ryan v. Shea, 525 F.2d

19a

268, 271-272 (10th Cir. 1975); Knuckles v. Wein-

berger, 511 F.2d 1221 (9th Cir. 1975).

In Ryan v. Shea, supra, the Tenth Circuit said of

Salfi and 28 U.S.C. § 1361:

“.. In the instant case we are not concerned

with the denial of a claim as such, but with the

determination by the Secretary to terminate

disability benefits in an allegedly unconstitu-

tional manner, i.e., without notice and hearing.

“ . . In sum, Salfi does not apply and 42 U.S.C.

§ 405(g) is certainly not in our view the exclu-

sive way to tackle the precise problem here

sought to be raised.

“We therefore conclude that the triai court

had jurisdiction to entertain the present proceed-

ing under 28 U.S.C. § 1361.”

Id. at 272.

Regarding the mandamus statute, the Ninth Cir-

cuit in Elliott v. Weinberger, 564 F.2d 1219, 1227

(1977), commented:

“TNo] clear and convincing evidence exist[s}

that Congress intended to limit mandamus juris-

diction at all by § 405(h). Section 1361 did not

exist when § 405(h) was enacted in 1935 pre-

cluding jurisdiction under section 41 of Title 28

for recovery of Social Security claims. In at least

one other instance where Congress intended a

statutory limitation to encompass § 1361, a spe-

cific amendment to the limiting statute was

made.”

The Court further comments at 1227, note 12:

“When § 405(h) was enacted in 1935, section

41 of Title 28 contained all of that title’s grants

20a

of jurisdiction to district courts, including

§ 1331’s predecessor. See, 28 U.S.C. § 41(1)

(1940). It did not contain any grant to federal

courts to entertain actions in the nature of man-

damus. It was not until 1962 when Congress, in

enacting § 1361, extended to all federal courts

jurisdiction to hear suits seeking mandamus re-

lief—such jurisdiction prior thereto reposed only

in the federal courts of the District of Columbia.

Thus, § 1361 actions cannot be considered pre-

cluded under § 405(h) simply because § 1361 did

not exist when § 405(h) was enacted. One might

argue that Congress intended all further addi-

tions to Title 28’s grants of jurisdiction to be, by

_ the mere statutory location of those additions,

subsumed within the proscription of § 405(h).

However, no such congressional intent is any-

where evidenced.”

Therefore, the Court holds under the above author-

ity that 28 U.S.C. § 1361 is the jurisdictional basis

for its hearing this case in which recipients of Social

Security benefits (1) challenge the Secretary’s ap-

pointment of representative payees to receive their

Social Security benefits without giving them adequate

notice and a meaningful opportunity for a prior hear-

ing on the initial selection of an individual as a repre-

sentative payee (or continuation of an individual as

a representative payee when a beneficiary’s benefits

have been interrupted), and (2) seek to enforce what

they claim is a constitutional right to a mandatory

and annual accounting by payees.

Class Certification

Pursuant to the Federal Rules of Civil Procedure,

Rule 23(c)(1), (a), and (b)(2) and Rex v. Owens

2la

ex rel. State of Oklahoma, 585 F.2d 432, 435 (10th

Cir. 1978), this Court certifies Jeanne A. Jordan, as

representative of the class, and as a class all recipi-

ents and Social Security benedts (Title II of the

Social Security Act, as amended) and Supplemental

Security Income (Title XVI of the Act) who now

have or have had a representative payee within six

years prior to the filing of this action. The class does

not include the following persons:

(1) Those who are named plaintiff or are mem-

bers of a plaintiff class in pending actions

against the Secretevy which raise similar

issues in other disvuricts.

(2) Those who have participated as plaintiffs or

members of a plaintiff class in litigation

against the Secretary on similar issues, if a

decision on the merits has been rendered.

Inasmuch as we hold that this Court’s jurisdiction

is grounded on Title 28 U.S.C. § 1361 and not on 42

U.S.C.§ 405(g), this Court need not consider the ob-

jections the Secretary raises under § 405(g).

Regarding the Secretary’s allegation that the claim

of the named plaintiff is not typical of the claims

alleged on behalf of the class, we disagree. All quali-

fied recipients of Social Security benefits which Ms.

Jordan wants to include in the class, can claim the

same deprivation of constitutional rights alleged by

Ms. Jordan: (1) denial of due process caused by the

lack of provision for prior hearings in the selection

process of a representative payee, (2) denial of due

process from a lack of hearing in the event of inter-

ruption and reinstatement of benefits before auto-

matically continuing the representative payee in that

status, and (3) denial of due process because of the

elated

22a

lack of a mandatory annual accounting requirement

in the representative payment program.

Thus, we do not see that the legal competence or

incompetence of a Social Security beneficiary is con-

trolling inasmuch as a recipient, even if incompetent,

still has constitutional rights, and the same is true of

minors and institutionalized people. Vecchione v.

Wohlgemath, 377 F.Supp. 1361, aff'd, 558 F.2d 150,

cert denied, Beal v. Vecchione, 434 U.S. 943, 98 S.Ct.

439, 54 L.Ed.2d 304 (1974).

Finally, this Court does not agree that because the

Secretary has, after months have passed, made res-

titution to Ms. Jordan, that as to her the case is

moot. That argument belies the obvious; that is, that

Ms. Jordan is still subject to the same alleged mal-

feasance. Restitution in no way reduced the risk of

further injury since the same procedures that allowed

the first injury are still in full force and effect. See,

Southern Pacific Terminal Co. v. ICC, 219 U.S. 498,

515, 31 S.Ct. 279, 288, 55 L.Ed. 310 (1911), for the

principle that the case will not be moot if the issue is

capable of repetition, yet evading review. This prin-

ciple was followed in Rex v. Owens, supra.

WHEREOF, defendant’s Motions to Dismiss and

to Deny Class Certification are denied. This Court

takes jurisdiction and certifies this case as a class-

action suit.

IT IS SO ORDERED this 25th day of September,

1980.

/s/ Lee R. West

United States District Judge

”

23a

APPENDIX D

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF OKLAHOMA

CIV-79-994-W

JEANNE A. JORDAN, ET AL., PLAINTIFFS

vs.

RICHARD S. SCHWEIKER, Secretary of Health and

Human Services, DEFENDANTS

[Filed Mar. 17, 1983]

ORDER

This matter comes before the Court upon the

Motion for Summary Judgment, or Alternatively, to

Dismiss of the defendant and the Cross-Motion for

Summary Judgment of the plaintiffs. Defendant

filed a Reply Brief and plaintiffs filed a Supplemental

Memorandum in Support of Cross-Motion for Sum-

mary Judgment. Oral argument on these cross-

motions was held March 2, 1983.

Plaintiff Jeanne A. Jordan became entitled to dis-

ability insurance benefits under Title II of the Social

Security Act in December 1976. Although legally

competent, it was determined that she was not capable

of managing her benefits. Her sister, Cathy J. Culp,

aaa ae

24a

was therefore designated as representative payee for

Ms. Jordan.

In October 1977, upon a determination that she was

no longer disabled, Ms. Jordan’s disability benefits

were terminated. As a result, Ms. Jordan alleges, Ms.

Culp forced her to leave her home and ceased in any

way to act on Ms. Jordan’s behalf. Ms. Jordan ad-

ministratively appealed the termination of her bene-

fits and after a hearing before an administrative law

judge her benefit status was reinstated effective from

October 1977. However, the notice of her reinstate-

ment, dated September 9, 1978, and the check for her

past-due benefits which had accrued during the pend-

ency of her appeal, were sent to Ms. Culp.

On September 29, 1978, Ms. Jordan’s husband,

Michael A. Jordan, applied to be her representative

payee. On November 13, 1978, Mr. Jordan was des-

ignated as representative payee for his wife and

began receiving monthly benefits on her behalf.

Plaintiff filed her Complaint on September 7, 1979.

On February 12, 1980, a check in the amount of

$2,356.90 was sent to Ms. Jordan as payment of ben-

efits for the period from November 1977 through

October 1978.

On September 26, 1980, this Court took jurisdic-

tion and certified this case as a class-action suit. On

April 5, 1982, this Court granted plaintiffs’ Motion

to Intervene Barbara Leeds.

Maude Miller, on February 11, 1977, was recom-

mended by the Social Security Administration (SSA)

to be made representative payee on behalf of Barbara

Leeds. barbara Leeds agreed to the appointment of

Maude Miller as her representative payee. However,

on April 27, 1977, Barbara Leeds requested that pay-

ments be made directly to herself.

25a

On June 6, 1977, Maude Miller was directed to

make an accounting of how benefits received on be-

half of Barbara Leeds from June 1974 through May

1977 were used. On December 27, 1978, Barbara

Leeds alleged misuse of funds by Maude Miller. SSA

found no misuse. Barbara Leeds requested a recon-

sideration of this finding. On January 10, 1980, SSA

found, after a review of the case that its “previous

decision, that misuse is not an issue, was correct.”

Defendant contends that procedures for the repre-

sentative payment of social security benefits do not

violate a beneficiary’s right to due process of law;

that due process does not require mandatory periodic

accounting by representative payees; and that this

case should be dismissed for lack of jurisdiction.

Plaintiff contends that under either 42 U.S.C. § 405

(j) or the Due Process Clause of the Fifth Amend-

ment the Secretary of Health and Human Services is

required to provide the opportunity for an oral hear-

ing prior to the initial selection or continuation of a

payee; that mandatory periodic accountings are re-

quired by the provisions of the Social Security Act

allowing for representative payment and due process;

and that full administrative and judicial review of

claims of misuse is required by the Due Process

Clause and by statute.

On a motion for summary judgment, this Court

must construe the facts in a way most favorable to

the nonmovant. United States v. Diebold, Inc., 369

U.S. 654 (1962). Cross-motions for summary judg-

ment are to be treated separately; the denial of one

does not require the grant of another. See S.E.C. v.

American Commodity Exchange, Inc., 545 F.2d 1361

(10th Cir. 1976). The existence of any “genuine

issue as to any material fact precludes the grant of

|

26a

summary judgment.” Rule 56, Fed.R.Civ.P. This

Court does not find that any genuine issue of mate-

rial fact exists, therefore summary judgment is

appropriate.

Jurisdiction

Defendant contends that this case should be dis-

missed for lack of jurisdiction. In its Order of Sep-

tember 26, 1980, this Court dealt with defendant’s

claim of lack of jurisdiction and found that this Court

has jurisdiction under 28 U.S.C. § 1361. Accordingly,

defendant’s Motion for Summary Judgment based

upon its claim of lack of jurisdiction should be and is

hereby DENIED.

Oral Hearing Prior to the Initial Selection

or Continuation of a Payee

The defendant states that the Secretary’s authority

to appoint a representative payee for social security

benefits is set forth in section 405(j) of the Social

Security Act, 42 U.S.C. § 405(j). The Secretary has

implemented the mandate of section 405(j) through

20 C.F.R. §§ 404.1601-1610 and §§ 416.601-690 and

Part 02 of the Social Security Administration’s Pro-

gram Operation Manual System.

Under these procedures, prior to a determination

that a beneficiary is in need of a representative payee

and prior to the selection of a payee, the SSA pro-

vides all adult beneficiaries who have not been ad-

judged legally incompetent with advance notice of

the proposed determinations. POMS GN 00502.240.

The advance notice provides the beneficiary with the

opportunity to object to the proposed determinations

before they are formalized and to submit additional

information. The advance notice states that if no

notice protest is received within ten days, the pro-

LL ee ee a

27a

posed action will be processed. POMS GN 00502.-

300B.

If a beneficiary protests the proposed determina-

tion, considerable weight is given to the protest. In

such cases, direct payment continues unless convinc-

ing evidence clearly establishes that the beneficiary

is not able to handle his or her own funds. POMS

GN 00502.260. Where no protest is received, or

there is sufficient evidence to appoint a representa-

tive payee in spite of a protest, the payee is proc-

essed and the beneficiary is sent a formal notice of

the determination which provides information re-

garding his or her right to appeal. POMS GN

00504.285A. Thus, for an adult beneficiary not ad-

judged legally incompetent, there is advance notice

of both the determination of need for representative

payee status and the determination of who the rep-

resentative payee will be. Both the “need” and the

“who” determinations are “initial” determinations

subject to full administrative appeal and judicial re-

view. 20 C.F.R. § 404.905(n).

For adult beneficiaries who have been adjudged

legally incompetent the procedures are slightly dif-

ferent. In such cases the determination regarding

the “need” to appoint a representative payee is not

an initial determination and is, therefore, not sub-

ject to the administrative appeal process. The de-

termination regarding “who” will be appointed rep-

resentative payee is, however, an initial determina-

tion and is, therefore, subject to full advance notice

and post-determination appeal procedures. 20 C.F.R.

§ 404.905(n). Where the legal representative of the

adjudged incompetent beneficiary is not the proposed

payee, an advance notice of proposed payee selection

is provided the legal representative. The advance

notice gives the legal representative an opportunity

|

28a

to object to the proposed payee selection before it is

formalized and to submit additional information.

The advance notice states that if no protest is re-

ceived within ten days, the proposed action will be

processed. POMS GN 00502.245, 00502.300C. Where

no protest is received, or where there is sufficient evi-

dence to appoint a particular payee in spite of a pro-

test, the payee action is processed and the legal

guardian is sent a formal notice of the determina-

tion which provides information regarding the right

to appeal the determination. POMS GN 00504.285B.

The defendant claims that the SSA goes to great

length to find a representative payee who is genuinely

interested in the welfare of the beneficiary. POMS

GN 00502. The relationship of the potential payee

with the beneficiary is evaluated. Preference is given

to a legal guardian, spouse, relative, friend or lastly

an institution. POMS GN 00502.130.

The defendant contends that in ordér to monitor

the impact of these procedures SSA listed all initial.

and post-entitlement rep payee determinations be-

tween January 1977 and June 1979. Of over 52,000

rep payee determinations on initia! claims, less than

2% of the beneficiaries protested the proposed de-

termination. Of those protests, SSA’s determination

was split evenly in sustaining the protest or making

the determination in spite of the protest. In over

287,000 post-entitlement rep payee determinations

only 4.4% of the affected beneficiaries protested.

SSA’s determinations upon protest were evenly split

with a 2.3% of the protests honored and 2.1% of the

proposed determinations made in spite of the protest.

Defendant further contends that requiring a hear-

ing before the selection of a rep payee would create

a hardship for the beneficiary. Pursuant to 20 C.F.R.

€

Ti icc

29a

404.95(n) the rep payee selection determination is an

“initial determination” snbject to the Secretary’s

four-step administrative appeal and ultimate judicial

review pursuant to 405(g) of the Act, 42 U.S.C.

405(g). Defendant contends that it is more sensibie

for SSA to certify payment of benefits to its choice

as payee rather than to have certification of payment

of benefits delayed awaiting the outcome of an ad-

versary hearing to settle a dispute over a rep payee

selection.

Defendant, therefore, contends that neither the

Social Security Act nor the Due Process Clause of

the Fifth Amendment requires the opportunity for

an oral hearing prior to the selection of a repre-

sentative payee.

Plaintiffs contend that the Secretary’s policy of

limiting an “incapable” beneficiary to written ob-

jections does not adequately protect the beneficiary

from appointment of an incompetent or untrust-

worthy payee absent a prior hearing. Plaintiffs fur-

ther contend that in evaluating a payee-applicant’s

“concern for a beneficiary’s best interest” the Secre-

tary must assess the state of mind hence, credibility)

of the payee-applicant which requires an oral “‘face-

to-face” meeting. Therefore, plaintiffs contend that

both 42 U.S.C. § 405(j) and the Due Process Clause

of the Fifth Amendment require that the Secretary

provide adequate notice and a meaningful oppor-

tunity for a prior hearing concerning the initial se-

lection or continuation of an individual as payee.

The United States Supreme Court in Mathews v.

Eldridge, 424 U.S. 319, 335, stated that

identification of the specific dictates of due proc-

ess generally requires consideration of three dis-

tinct factors: First, the private interest that

30a

will be affected by the official action; second, the

risk of an erroneous deprivation of such interest

through the procedures used, and the probable

value, if any, of additional or substitute proce-

dural safeguards; and finally, the Government’s

interest, including the function involved and t

fiscal and administrative burdens that the addi-

tional or substitute procedural requirement

would entail.

This Court concludes that application of the factors

in Mathews v. Eldridge to the facts in this case is

necessary.

This Court agrees with plaintiffs that the private

interest of beneficiaries in the receipt and proper

use of social security benefits is substantial.

This Court does not agree with plaintiffs’ conten-

tions that the risk of error under the Secretary’s pro-

cedures is great and the value of an oral hearing

prior to selection or continuation of a payee is sub-

stantial. In Tidwell, et al. v. Califaiw, et al., Nos.

73-C-3014 and 74-C-183 (N.D. Ill., March 5, 1979),

plaintiffs filed suit on behalf of all individuals who

had been or were at that time patients in Illinois

state mental hospitals. The panel addressed the

issues of whether or not “due process requires an

initial determination at the Incompetency Need Stage

and whether due process requires more than the ‘pan-

oply of administrative and judicial review rights’

which are provided by the initial determination

where it is required.” The Tidwell court initially

found the Secretary’s old (prior to 1976) representa-

tive payee procedures were in violation of the Fifth

Amendment and so ruled. Tidwell, et al. v. Wein-

berger, Nos. 73-C-3014 and 74-C-183 (N.D. Ill., June

23, 1976). Subsequently, the Secretary’s current pro-

3la

cedures were implemented and considered by the

Tidwell court which stated at p. 8-9:

In our Order we indicated that Mathews v.

Eldridge, 424 U.S. 319 (1976), addresses the

issue of whether procedures prior to and during

the selection of a representative payee meet due

process standards. In weighing the different fac-

tors then under consideration and juxtaposing

our findings against the Hld7idge criteria, we

held that “the administrative procedures in the

present case obviously lack any procedural safe-

guards.” (Order, p. 17). We also found, how-

ever, that, although need stage hearings would

provide the greatest safeguards, they were not

constitutionally required. (Order, p. 16).

It was in the context of these findings that we

set forth the criteria, heretofore mentioned, that

must be followed during a determination to ap-

point a representative payee. We have examined

the revised regulations, and now find that they

satisfy our criteria and therefore comport with

due process requirements. *

In Fulk, et al. v. Moritz, et al., No. C74-230 (N.D.

Ohio, September 28, 1981) plaintiffs were individ-

uals who were committed for rehabilitative treat-

ment to institutions under control of the Ohio De-

partment of Mental Health and Mental Retardation.

A three-judge panel addressed the issue of whether

or not federal defendants provided the plaintiffs with

procedural safeguards when designating representa-

* That part of the decision relied upon by this Court was

not appealed by State of Illinois to the United States Court

of Appeals, Seventh Circuit, in Tidwell v. Schweiker, 677 F.2d

560, 564 (7th Cir. 1982).

32a

tive payees for benefits to which plaintiffs are en-

titled under federal law. The court at page 5 stated

that

[i]t is clear today that at the very least the mat-

ter of who shall be named as a designated payee

requires full notice and hearing, and is appeal-

able, by proper procedural steps, to the United

States Courts.

Originally, a three-judge court of the North-

ern District of Illinois found, in the case of Tid-

well, et al. v. Weinberger, Nos. 73-6-3014 and

74-6-183 (June 28, 1976), that the earlier pro-

visions did not comport with due process. How-

ever, upon a later motion by the defendant in

these cases to alter or amend the judgment, that

Court held that it had examined the revised reg-

ulations and found that they comport with due

process.

This Court agrees with the conclusions of the

Tidwell court. Even if this Court had jurisdic-

tion to determine the issue, it would find that

the plaintiffs’ substantive claims are without

merit, and this action should be dismissed.

In McGrath v. Weinberger, 541 F.2d 249, 254 (10th

Cir. 1976), cert. denied, 430 U.S. 933 (1977), the

action was brought by two social security recipients

to challenge the constitutionality of the SSA proce-

dure whereby a recipient may be determined to be

incapable of managing his monetary benefits and a

representative payee appointed. The Court held that

“the Due Process Clause does not demand that prior

notice and an opportunity for a hearing be afforded

Social Security beneficiaries who are determined to

be incapable of managing their own benefits.” Fi-

nally, in Mathews v. Eldridge, swpra,- respondent

33a

brought the action challenging the constitutionality

of the procedures for terminating disability benefits.

The Supreme Court held at page 321 that “an evi-

dentiary hearing is not required prior to the termi-

nation of Social Security disability payments and the

administrative procedures prescribed under the Act

fully comport with due process.”

This Court concludes that neither 42 U.S.C.

§ 405(j) nor the Due Process Clause of the Fifth

Amendment requires the Secretary to provide the

opportunity for an oral hearing prior to the initial

selection or continuation of a representative payee.

Given the procedures in effect for the determination

that a beneficiary is in need of a representative payee

and for the selection of a representative payee, this

Court finds that the risk that a representative payee

will be appointed who will not care for the welfare

of the beneficiary is slight and the provision for an

oral hearing prior to the selection of a payee will not

significantly reduce the risk of possible error. The

procedures provided sufficiently protect a benefici-

ary’s right to due process and further are in balance —

with the Government’s fiscal and administrative bur-

den. While this Court is sympathetic to plaintiffs’

claims, “procedural due process rules are shaped by

the risk of error inherent in the truth-finding process

as applied to the generality of cases, not the rare

exceptions.” Mathews v. Eldridge, supra, at page

344. Accordingly, this Court finds that the plaintiffs’

Cross-Motion for Summary Judgment with respect

to the provision of an oral hearing prior to the initial

selection or continuation of a payee should be and is

hereby DENIED and defendant’s Motion for Sum-

mary Judgment should be and is hereby GRANTED.

EE

34a

Mendatory Periodic Accountings

The defendant contends that due process does not

require mandatory periodic accountings by represen-

tative payees. Defendant states that there are more

than 5 million social security Seneficiaries in need of

representative payment and for whom a payee has

been selected and that an enormous fiscal and admin-

istrative burden would be created if each payee were

required to file periodic accounts with the Social Se-

curity Administration. In addition, defendant claims

that misuse in the rep payee program is limited to

.5% of the cases. Defendant contends that the com-

prehensive procedures for the determination of need

for representative payment and selection of a payee

in conjunction with discretionary accounting provide

adequate protection for the beneficiaries’ property in-

terest without creating an oppressive fiscal burden.

Defendant also contends that 42 U.S.C. § 405(j)

does not vest beneficiaries with a right to “receipt

and proper expenditure” of their benefits. Defendant

cites Watson v. Califano, 487 F.Supp. 179, 186 S.D.

N.Y. 1979), aff'd, 622 F.2d 577 (2nd Cir. 1980). In

Watson minor children of a disabled worker sued the

Secretary of Health, Education and Welfare to re-

cover disability benefits paid for their benefit to their

father as their representative payee. The court

stated

Because section 405 ( j) does not require any on-

going supervision or representative payees, and

because section 405(a) gives the Secretary full

power to promulgate any regulations which are

necessary or appropriate to carry out that sub-

chapter, “a court has quite literally no indicia

by which it may evaluate that exercise (of dis-

35a

cretion) and hence no power of review under

§ 701(a)(2).” Greater New York Hospital

Ass’n v. Mathews, supra, at 498.

If the Secretary’s actions were subject to re-

view, the failure over a five year period to en-

sure that the benefits would be used for the bene-

ficiaries would be found inexcusable. The lan-

guage of the regulations and the suspended por-

tions of the Social Security Claims Manual indi-

eates that the Social Security Administration

was keenly aware of the need to supervise rep-

resentative payees in order to protect benefici-

aries. In addition, the requirement of some type

of annual accounting would not have been an

undue burden on the Administration, but would

have been vorne by the representative payee re-

quired to prepare the submission. Even if the

Administration lacked the resources to review

the submission, or to verify them every third

year as provided by the Manual, the mere threat

of review and potential federal prosecution may

have been enough to induce Mr. Watson to use

the money for the benefit of his children.

* * * *

The situation here is a very unfortunate one,

but one for which there is no remedy for the

plaintiffs. Absent a broader jurisdictional grant

and a more stringent Congressional mandate, the

court is unable to impose upon the Secretary

duties and responsibilities beyond those required

in the statute.

Plaintiffs in Watson asserted that the jurisdiction of

the court was based on 42 U.S.C. § 405(g), see page

182. Apparently, the court was not presented with

a due process claim concerning the need for manda-

———

36a

tory periodic accounting nor was Watson a class-

action suit.

Plaintiffs contend that by definition, an individual

who has been determined correctly to need a repre-

sentative payee is not capable of monitoring or super-

vising the payee. Plaintiffs state that although de-

fendant maintains that its preliminary study shows

the rate of misuse of funds by payees to be only

5%, defendant also contends that an additional 1.3%

of payees in the small preliminary sample were

guilty of “improper” use, 20% of payees performed

in a manner less than satisfactory, 7.4°> of the cases

examined warranted a change of payee, 6.1% of the

~ayees kept inadequate records and another 17.9%

uf ne payees had at least minor inconsistencies in

their records. Plaintiffs state that their arguments

do not depend on a contention that the majority of

payees misuse funds; rather, plaintiffs contend that

the risk of misuse or of other improper use is real,

significant, and inherent in any representative pay-

ment system and that a recognition of such risk must

enter into any analysis of the proper conduct of the

representative payment program.

Plaintiffs further contend that using defendant’s

figures that the $9.7 million cash value of the 489

work-years saved by eliminating accounting and veri-

fication from the representative payee workload in

1979 divided by the 4,460,123 Social Security and

S.S.L beneficiaries who had representative payees re-

sulted in a savings of $2.17 per beneficiary in payee

status. Plaintiffs claim that not only is $2.17 a small

fraction of each beneficiary’s annual entitlement but

that accounting will negate much of the cost incurred

from payouts to representative payees not perform-

ing their duties satisfactorily.

ee er a

37a

Applying the factors in Mathews v. Eldridge,

supra, this Court again finds that the private interest

of beneficiaries in the receipt and proper use of social

security benefits is substantial. This Court also finds

that the risk of an erroneous deprivation of this in-

terest through the procedures used is great and the

probable value of mandatory accounting is substan-

tial. This Court also finds that the fiscal and admin-

istrative burdens that mandatory accounting would

entail would not be great.

In this class-action suit this Court has been pre-

sented with a due process claim concerning the need

for mandatory periodic accounting. This Court con-

cludes that the discretionary accounting procedures

now in effect do not provide due process to the social

security beneficiaries for whom representative payees

have been appointed. Accordingly, defendant’s Mo-

tion for Summary Judgment with respect to the pro-

vision for mandatory periodic accounting should be

and is hereby DENIED. Plaintiffs’ Cross-Motion for

Summary Judgment with respect to the provision for

mandatory periodic accounting should be and is

hereby GRANTED. Defendant is directed to imple-

ment appropriate mandatory periodic accounting pro-

cedures within one year from the date of this Order.

Administrative and Judicial Review

of Cla ims of Misuse

Defendant contends that neither the Social Secu-

rity Act nor the Fifth Amendment requires admin-

istrative and judicial review of a claim of misuse

made by a beneficiary against his representative

payee. Defendant contends that the Social Security

Act makes it clear that the payment of benefits pur-

suant to section 405(j) is “a complete settlement and

38a

satisfaction of any claim, right, or interest in and

to such payment.” Section 405(k) of the Act, 42

U.S.C. 405(k). No due process violation exists due

to failure of the Secretary to provide administrative

and judicial review of a determination on a misuse

claim because the claimant is deprived of nothing.

Accordingly, defendant contends, the Secretary is not

liable to the beneficiary for misuse by the rep payee

of the beneficiary’s funds; rather, if in fact a rep

payee has converted funds of the beneficiary, the

beneficiary can seek redress in state courts.

Plaintiffs contend that when an individual who

has discovered that his or her representative payee

misused benefits files a complaint of misuse with the

Secretary, the Secretary’s decision concerning misuse

of benefits is, as a practical matter, dispositive of

whether that individual will obtain redress of misuse

of benefits or remain permanently deprived of all or

part of the benefits to which he or she is entitled. If

the SSA finds that misuse has occurred, its policy is

to set in force various mechanisms in order to obtain

redress for the beneficiary. Plaintiffs further contend

that the Secretary’s refusal to provide a hearing on a

decision concerning misuse of benefits is that if a

decision of “no misuse” is made the mechanisms

available to the SSA for redress of misuse will not be

triggered and the beneficiary will have no further

practical remedy.

Applying the factors in Mathews v. Eldridge,

supra, this Court again finds that the private interest

of beneficiaries in the receipt and proper use of social

security benefits is substantial. However, this Court

finds that the risk of an erroneous deprivation of this

interest through the procedures used is small and the

probable value of administrative and judicial review

er ed

39a

of claims of misuse is not substantial. Additionally,

the fiscal and administrative burdens that adminis-

trative and judicial review of claims of misuse would

entail would be great. Accordingly, this Court finds

that the plaintiffs’ Cross-Motion for Summary Judg-

ment with respect to the provision of administrative

and judicial review of claims of misuse should be and

is hereby DENIED and defendant’s Motion for Sum-

mary Judgment should be and is hereby GRANTED.

In summary, after a review of the contentions of

the parties individually and as a whole to determine

the “multiple effect”, this Court finds that the defend-

ant’s Motion for Summary Judgment based upon its

claim of lack of jurisdiction should be and is hereby

DENIED; that the plaintiffs’ Cross-Motion for Sum-

mary Judgment with respect to the provision of an

oral hearing prior to the initial selection or continua-

tion of a payee should be and is hereby DENIED and

defendant’s Motion for Summary Judgment should be

and is hereby GRANTED with respect to this issue;

that the defendant’s Motion for Summary Judgment

with respect to the provision for mandatory periodic

accounting should be and is hereby DENIED and

plaintiffs’ Cross-Motion for Summary Judgment with

respect to the provision for mandatory periodic ac-

counting, should be and is hereby GRANTED; and

that the plaintiffs’ Cross-Motion for Summary Judg-

ment with respect to the provision of administrative

and judicial review of claims of misuse should be and

is hereby DENIED and defendant’s Motion for Sum-

mary Judgment should be and is hereby GRANTED

as it pertains to administrative and judicial review

of claims of misuse. Defendant is directed to comply

with this Order with respect to the provision for man-

40a

datory periodic accounting within one year from the

date of this Order.

IT IS SO ORDERED this 17th day of March, 1983.

/s/ Lee R. West

LEE R. WEST

United States District Judge

Entered In Judgment Docket

on 3-11-83

4la

APPENDIX E

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF OKLAHOMA

CIV-79-994-W

JEANNE A. JORDAN, ET AL., PLAINTIFFS

Vs.

RICHARD S. SCHWEIKER, Secretary of Health and

Human Services, DEFENDANT

[Filed Mar. 26, 1984]

ORDER

This matter comes before the Court upon plaintiffs’

Motion for Order Enforcing Judgment. The parties

submitted written memoranda and presented oral

arguments on March 20, 1984.

On March 17, 1983, this Court directed the defend-

ants to implement appropriate mandatory accounting

procedures within one year in order to provide due

process to social security beneficiaries for whom

representative payees have been appointed. A judg-

ment was entered and the defendants appealed from

that judgment. Thereafter, defendant requested that

the appeal be dismissed and the Court of Appeals

granted the request.

The Social Security Administration (SSA) formu-

lated a plan which it contends complies with the

Fl on cst nie

42a

requirements of this Court’s Order. The plaintiffs

allege that the proposed plan does not comport with

this Court’s mandate. Briefly stated, SSA’s proposed

plan requires that a form be sent to a random sample

of ten percent payee repersentatives. After the forms

are returned to SSA, they would be evaluated and if

the answers provided by the representatives raised

any questions, personal contact would be made and

an additional form filled out.

Plaintiffs object to the proposed plan contending

that it is inadequate. According to the plaintiffs, the

form to be sent to the selected representative payees

(Form SSA-623) does not require the representative

payee to account for expenditures of social security

benefits. Plaintiffs further argue that all representa-

tive payees should be required to complete an account-

ing form annually. Lastly, the plaintiffs contend that

the Secretary’s procedure for the review of account-

ings is inadequate.

The defendant contends that the proposed plan is

both effective and efficient. According to the defend-

ant, Form SSA-623 is an initial form designed to be

an indicator of representative payee performance and

not a final accounting statement. The defendant fur-

ther contends that having a random sample of repre-

sentative payees complete Form SSA-623 is adequate

because SSA could not annually review accounting

forms from all representative payees. Requiring only

10 percent of the representative payees to complete

Form SSA-623 lessens needless paperwork for both

SSA and the representative payees. The defendant

also contends that the procedure for review of repre-

sentative payee accour. ng forms is adequate.

After considering the written submissions by the

parties and the oral arguments of counsel, the Court

43a

is persuaded that the substantial interest of Social

Security beneficiaries for whom representative payees

have been appointed can only be adequately protected

by requiring universal annual accountings. The Court

is net convinced, however, that the Form SSA-623

adopted by the defendant is inadequate as an initial

indicator of payee performance. The Court is mind-

ful of the limited information which may be gleaned

from this form, but the SSA-623 appears to be an

acceptable compromise between ease in understanding

and interpretation for the representative payees on

one hand, and the need for adequate safeguards on

the other. Additionally, a more complete accounting

on Form SSA-624 will be required when answers on

SSA-623 indicate thére is such a need.

At this time, it appears that the defendant’s pro-

posals for verifying information on Form SSA-623 is

adequate, and the Court is not dispoged to set a mini-

mum number of forms which must be verified. The

Court assumes, of course, that the defendants will

verify a reasonable number of forms in order to pro-

tect the social security beneficiaries’ interest.

Accordingly, it is the order of this Court that the

defendant take immediate steps to provide all repre-

sentative payees with SSA-623 forms and ensure the

completion and return of those forms. The def€ndant

is further ordered to implement or maintain reason-

able methods of verifying information submitted by

representative payees.

IT IS SO ORDERED this 26th day of March, 1984.

caw. Wie PRE WS hen bl i abe

s/ Lee R. West

LEE R. WEST

United States District Judge

e

e

Da wn

44a

APPENDIX F

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF OKLAHOMA

CIV-79-994-W

JEANNE A. JORDAN, ET AL., PLAINTIFFS

Vs.

MARGARET HECKLER, Secretary

of Health and Human Services, DEFENDANTS

{Filed July 2, 1984]

ORDER

This matter comes before the Court upon Motion

to Amend by the defendant, the Secretary of Health

and Human Services. The plaintiffs have responded

in opposition to this motion.

By Order dated March 26, 1984, this Court ruled

that the Secretary’s proposed accounting program

was inadequate to comply with the Court’s summary

judgment ruling of March 17, 1983. The Court

determined that in order to protect all beneficiaries

for whom SSA has selected representative payees,

all such payees must be required to annually report

to the Secretary. The Secretary’s proposal form

SSA-623 was found to be an adequate initial indica-

tn th Ot

45a

tor of the propriety of the expenditure of the bene-

ficiary’s Social Security funds.

In her motion te amend, the Secretary has re-

quested that the required universal accounting be

waived for those beneficiaries who are institutional-

ized in the State facilities for the mentally ill and

mentally retarded for whom the State institutions

act as representative payee. As an alternative to the

annual completion of form SSA-623 for these bene-

ficiaries, the Secretary proposes the performance of

on-site inspections at these institutions. The on-site

review program was instituted in 1970 to monitor

the performance of State institutions as representa-

tive payees. These inspections include interviews

with staff members, review of the institution’s ex-

penditures and review of the institution’s records

for individual beneficiaries. The Social Security Ad-

ministration has implemented some changes in the

existing structure for conducting these on-site re-

views. The program proposed by the Secretary (the

Boston pilot program) significantly reduces the

amount of time the Social Security Administration

staff members spend at the institution and also

abolishes interviews with the beneficiaries. On the

other hand, the results of the inspection are made

immediately available to the institution’s administra-

tion instead of the lengthy delay under the old pro-

gram. These on-site inspections are to be conducted

at least once every three years.

The Secretary suggests that the revised on-site

review program provides meaningful information re-

garding the expenditure of funds for these institu-

tionalized beneficiaries. According to the Secretary,

the needs of beneficiaries confined to institutions are

distinct from those of other beneficiaries and are bet-

46a

ter addressed by a program specifically designed for

them.

In opposition to this motion, plaintiffs argue that

although an on-site review program might be an ac-

ceptable method of protecting institutionalized bene-

ficiaries, the program proposed by the Secretary is

inadequate. In particular, plaintiffs object to the

discontinuation of interviews with individual bene-

ficiaries and the lack of a requirement that each

institution be visited only once every three years.

Plantiffs contend that the institutions should be re-

quired to complete form SSA-623 for all patients.

According to plaintiffs, the institutions already

maintain all information for completing the form

so the additional burden on the institution would

be slight. Additionally, plaintiffs contend that re-

viewing these forms along with the institution’s in-

dividual patient accounts would provide adequate

protection for the institutionalized beneficiary.

The Court is persuaded that the distinct needs of

beneficiaries who are mentally ill or retarded and

institutionalized in state or federal institutions and

for whom the institution is the representative payee,

can be better met by an on-site program than by the

completion of form SSA-623. In order to adequately

protect the needs of institutionalized beneficiaries,

each institution acting as a representative payee

must be the subject of an on-site review at least once

every three years. The outline of the review con-

ducted in the Boston pilot program appears to be

adequate to protect the interests of these bene-

ficiaries. The immediate communication of the re-

sults of the review to the institution’s staff is par-

ticularly desirable. *

While the Court is somewhat concerned by the -

frequency of the on-site reviews and their duration,

a ee eC a ee

47a

it is also apparent that these reviews are not the

only evaluations of institutional performance which

are conducted. In addition to the on-site inspections

by reviewing teams, the district Social Security of-

fices monitor the institution’s performance as a rep-

resentative payee. State mental health agencies also

review the performance of institutions in providing

care to the beneficiaries. The highly regulated

nature of these institutions makes institutional mis-

appropriation of funds less likely than in the case of

individual representative payees.

Accordingly, it is the order of this Court that due

to the distinct posture of beneficiaries institutional-

ized in state and federal facilities for the mentally

ill and mentally retarded, the Secretary need not re-

quire the completion of form SSA-623 by institutions

acting as payee representatives for those institu-

tions. In lieu of this annual accounting procedure,

the Secretary will perform on-site inspections at

each of these institutions at least once every three

years, as well as providing continual monitoring by

district social security offices.

IT IS SO ORDERED this 2nd day of July, 1984.

/s/ Lee R. West

LEE R. WEST

United States District Judge

482

APPENDIX G

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF OKLAHOMA

CIV-79-994-W

JEANNE A. JORDAN, ET AL., PLAINTIFFS

vs.

MARGARET HECKLER, Secretary

of Health and Human Services, DEFENDANT

[Filed Jan. 18, 1985]

ORDER

This matter comes before the Court upon defend-

ant’s Motion For An Indicative Ruling and For Re-

,lief From Judgment. This case is currently pending

before the United States Court of Appeals for the

Tenth Circuit, therefore this Court is without juris-

diction to rule on a motion for relief from judgment

pursuant to Rule 60(b). The Court will, however,

grant defendant’s motion for an indicative ruling

and advise the parties that were such a motion pre-

sented, it would be denied.

Factual Backaround

Only a brief narration of the facts of this lengthy

case is necessary in order to dispose of this motion.

49a

On March 17, 1983, this Court entered an order find-

ing, inter alia, that the due process clause of the

Fifth Amendment required that the Social Security

Administration implement mandatory, periodic ac-

counting procedures:

Applying the factors in Mathews v. Eldridge,

supra, this Court again finds that the private

interest of beneficiaries in the receipt and

proper use of social security benefits is substan-

tial. This Court also finds that the risk of an

erroneous deprivation of this interest through

the procedures used is great and the probable

value of mandatory accounting is substantial.

This Court also finds that the fiscal and admin-

istrative burdens that mandatory accounting

would entail would not be great.

In this class-action suit this Court has been

presented with a due process claim concerning

the need for mandatory periodic accounting.

This Court concludes that the discretionary ac-

counting procedures now in effect do not provide

due process to the social security beneficiaries

for whom representative payees have been ap-

pointed.

Order, March 17, 1983.

On March 26, 1984, this case was once more be-

fore the Court.’ At that time the Court was asked

to determine whether defendant’s plan to submit an

accounting form to only ten percent of payee repre-

sentatives was adequate to comply with the Court’s

. 1 Notice of appeal of the Court’s March 26, 1984, order was

filed by defendant on August 29, 1984. It is this appeal which

is currently pending before the United States Court of Ap-

peals for the Tenth Circuit.

| ee ee

50a

order. The Court found that the substantial interest

of Social Security beneficiaries for whom representa-

tive payees have been appointed could be adequately

protected only by requiring universal annual account-

ings.

The Secretary thereafter requested that the Court

amend its March 26, 1984, order so as to exempt

from the mandatory annual accountings State insti-

tutions which act as representative payees for bene-

ficiaries who are institutionalized in State facili-

ties. The Court did allow the Secretary to waive the

filing requirements of these representative payees.

However, the Court made it clear that its decision

to waive the annual accounting by these institutions

was due to the careful scrutiny these representative

payees receive from other sources:

While the Court is somewhat concerned by

the frequency of the on-site reviews and their

duration, it is also apparent that these reviews

are not the only evaluations of institutional per-

formance which are conducted. In addition to

the on-site inspections by reviewing teams, the

district Social Security offices monitor the

institution’s performance as a_ representative

payee. State mental health agencies also review

the performance of institutions in providing

care to the beneficiaries. The highly regulated

nature of these institutions makes institutional

misappropriation of funds less likely than in the

ease of individual representative payees.

Contentions of the Parties

In her motion, the Secretary argues that the Court

should indicate its willingness to grant a motion for

relief from judgment or order pursuant to Rule

5la

60(b), Fed. R. Civ. P. In support of her argument,

the Secretary relies on Rule 60(b) (6):

“On motion and upon such terms as are just,

the court may relieve a party or his legal repre-

sentative from a final judgment, order, or pro-

ceeding for the following reasons: ... (6) any

other reason justifying relief from the operation

of the judgment.”

Rule 60(b) (6), Fed. R. Civ. P. Defendant argues

that she is entitled to such relief due to the enact-

ment of Public Law No. 98-460. According to the

Secretary, that statute conflicts with the Court’s or-

der requiring mandatory annual accounting and the

order should, therefore, be amended to comply with

the statute.

In response plaintiffs argue that the Court has al-

ready determined that mandatory periodic account-

ing is required by the due process clause of the Fifth

Amendment. According to plaintiffs, this constitu-

tional requirement establishes a minimal requirement

of payee accountability which was not abrogated by

the enactment of Public Law No. 98-460.

Indicative Ruling

Normally, the filing of a notice of appeal deprives

the trial court of jurisdiction. The trial court does,

however, retain jurisdiction to consider how it would

rule on a Rule 60(b) motion. Aune v. Reynders, 344

F.2d 835, 841 (10th Cir. 1965). If the Court indi-

cates that it will grant the motion the movant may

then ask the Court of Appeals to remand the case,

thus avoiding the necessity of a ruling on the appeal.

Id. In order to expedite this already old case, the

Court will grant defendant’s motion for an indica-

tive ruling.

52a

The Court must, however, agree with plaintiffs’

argument that defendant is not entitled to relief

from judgment.

The Social Security Disability Benefits Reform

Act of 1984, Public Law No. 98-460, was enacted on

Octoebr 9, 1984. Section 16 of Public Law No. 98-

460 provides the following:

Sec. 16.(a) Section 205(j) of the Social Se-

curity Act is amended by inserting “(1)” after

“(j)” and by adding at the end thereof the fol-

lowing new paragraphs:

* * * - *

(3)(A) In any case where payment under

this title is made to a person other than the

individual entitled to such payment, the Secre-

tary shall establish a system of accountability

monitoring whereby such person shall report not

less often than annually with respect to the use

of such payments. The Secretary shall establish

and implement statistically valid procedures for

reviewing such reports in order to identify in-

stances in which such persons are not properly

using such payments.

(B) Subparagraph (A) shall not apply in

any case where the other person to whom such

payment is made is a parent or spouse of the

individual entitled to such payment who lives in

the same household as such individual. The Sec-

retary shall require such parent or spouse to

verify on a periodic basis that such parent or

spouse continues to live in the same household

as such individual.

(C) Subparagraph (A) shall not apply in

any case where the other person to whom such

payment ‘s made is a State institution. In such

53a

cases, the Secretary shall establish a system of

accountability monitoring for institutions in

each State.

(D) Subparagraph (A) shall not apply in

any case where the individual entitled to such

payment is a resident of a Federal institution

and the other person to whom such payment is

made is the institution.

(E) Notwithstanding subparagraphs (A),

(B), (C), and (D), the Secretary may require

a report at any time from any person receiving

payments on behalf of another, if the Secretary

has reason to believe that the person receiving

such payments is misusing such payments...

Section 16(b) of Public Law No. 98-460 amends

Section 1631(a)(2) of the Social Security Act by

adding the same requirements as those in Section

16(a) for payments made to representative payees

under Section 1631(A) (2).?

As defendant notes, the amendments in Section 16

differ in two respects from the requirements set out

in this Court’s orders, e.g., (1) representative payees

who are parents or spouses of the beneficiary and

who are living in the same household with the bene-

ficiary need only verify the continuation of that liv-

ing arrangement and are not required to file an an-

nual accounting; and (2) Federal institutions are

exempt from accounting.

2 Implicit in Congress’ exception for spouses and parents

who live in the same house is the assumption that a repre-

sentative payee who is closely related to the beneficiary need

not be monitored as closely as others. The Court directs the

readers attention to the original complaint in this case in

which the named plaintiff, Jeanne Jordan, challenged the

propriety of her sister’s actions while her sister acted as

Jordan’s representative payee.

54a

Defendant has not offered any evidence that the

due process requirements relied upon by this Court in

its prior orders have been satisfied. The Court quite

specifically ruled in its March 17, 1983, order that

due process required mandatory periodic accounting

by payee representatives. While the Court is well

aware of the deference usually given Congressional

actions, the fact that Congress has enacted some re-

forms does not change the constitutional require-

ments. The only way by which the Secretary can

avoid the mandatory annual accounting is to estab-

lish that beneficiaries’ due process rights are being

adequately provided through some alternative means.

The Court’s finding that due process was being pro-

vided in the case of institutional beneficiaries was the

basis for the Court’s allowing the Secretary to waive

an accounting by State institutions under certain cir-

cumstances. However, no such showing has been

made for either of the two categories set out above.

Beneficiaries in these two categories have the same

rights under the due process clause as do all other

beneficiaries for whom representative payees have

been appointed.

Defendant shouid not read this order as an invi-

tation to present further evidente on the two cate-

gories of beneficiaries above. The Court is aware

that with a case of such magnitude it is difficult to

anticipate all questions which may arise in imple-

menting a program such as here prescribed. How-

ever, the Secretary has had several chances to pre-

sent the necessary evidence and has failed to do so.

The Court will not indefinitely delay the termination

of this case to allow the Secretary to present evidence

which could have been presented at least ten months

ago.

55a

Accordingly, it is the order of this Court that de-

fendant’s Motion For An Indicative Ruling should be

and hereby is GRANTED. The Court has determined

that it could not grant a Rule 60(b) motion were

such motion presented.

IT IS SO ORDERED this 18th day of January,

1985.

/s/ Lee R. West

LEE R. WEST

United States District Judge

56a

APPENDIX H

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

No. 84-2226

JEANNE A. JORDAN, ET AL., PLAINTIFFS-APPELLEES

Vv.

OTIS T. BOWEN, Secretary of Health and

Human Services, DEFENDANT-APPELLANT

Appeal from the United States District Court

For the Western District of Oklahoma

(D.C. No. CIV-79-994-W)

[Viled Jan. 5, 1987]

Before HOLLOWAY, Chief Judge, and BALDOCK

and MeWILLIAMS, Circuit Judges.

MeWILLIAMS, Circuit Judge.

Under the Social Security Act, a “representative

payee” appointed by the Secretary of Health and

57a

Human Services receives benefits for the use of a

“beneficiary” unable to manage his or her own af-

fairs. 42 U.S.C. §$405(j) and 1383(a)(2). The

individual plaintiffs brought the present action in

September, 1979, against the Secretary, seeking,

inter alia, to compel the Secretary to adopt a plan

calling for mandatory periodic accounting by such

representative payees. There are approximately 5.5

million Title II and Title XVI beneficiaries in repre-

sentative payment status.

In September, 1980, the district court certified a

nationwide plaintiff class consisting of all recipients

of Social Security benefits (Title I1) and Supple-

mental Security Income (Title XVI) who then had

a representative payee or had such a payee within

six years prior to the filing of the action. Discovery

ensued, and thereafter the plaintiffs and the defend-

ant filed motions for summary judgment.

On March 17, 1983, the district court ruled against

the plaintiffs on all issues raised by the motions for

summary judgment except the one that precipitates

the present appeal. In this latter regard, the district

court held that due process requires mandatory peri-

odie accounting by representative payees and ordered

the Secretary to “implement appropriate mandatory

periodic accounting procedures within one year from

the date of this Order.” Both parties appealed from

this order. The Secretary later moved to dismiss his

appeal, which motion was granted and his appeal

was dismissed. The plaintiffs’ cross-appeal continued

and was later heard by a panel of this Court, which

affirmed that portion of the order of the district court

which the plaintiffs appealed. Jordan v. Heckler, 744

F.2d 1397 (10th Cir. 1984).

On February 1, 1984, plaintiffs filed a motion to

enforce the judgment and order of March 17, 1983.

58a

proposed accounting program for representative pay-

The Secretary, in \ meantime, had developed a

ees, which, in essendy, included notification to all

representative payees that they must maintain rec-

ords regarding the use of benefits received and that

they might be required to account for the use of

these benefits. Further, under the proposed plan,

there would be an annual selection of 10 percent of

these representative payees for an actual accounting

and a follow-up verification for those payees who did

not respond to the request for an accounting or those

response was inadequate."

The plaintiffs objected to the Secretary’s proposed

plan, and the district court, after hearing, on March

26, 1984, rejected the proposed plan, holding, .in es-

sence, that due process required that all representa-

tive payees make a periodic accounting. Specifically,

the district court ordered the Secretary to take “im-

mediate steps to provide all representative payees

with SSA-623 forms and ensure the completion and

return of those forms. The defendant is further or-

dered to implement or maintain reasonable methods

of verifying information submitted by representative

”2

payees.

1We do not know whether a formal proposed accounting

program was actually submitted to the district court. How-

ever, the essentials of the p-ogram were outlined in docu-

ments filed with the district court and inc'uded in the record

on appeal. As proposed, the plan would have resulted in

annual accountings for approximately 550,000 beneficiaries

whose payments were made through representative payees.

2SSA Form-623 was an initial form designed to be an

indicator of representative payee performance. Based on the

payee’s responses or non-responses, the form could trigger

Form SSA-624, which would require more detailed expendi-

tures information and involve a home visit and interviews.

59a

The Secretary filed a notice of appeal from the

district court’s order of March 26, 1984.° That ap-

peal was dismissed by this Court as being premature

since a motion under Fed. R. Civ. P. 59 was then

pending in the district court. On July 2, 1984, the

district court granted the Rule 59 motion and

amended its earlier order of March 26, 1984, to the

end that the Secretary need not require the completion

of form SSA-623 by institutions acting as repre-

sentative payees for mentally ill and mentally re-

tarded beneficiaries within their institutions, the dis-

trict court believing that an on-site inspection of such

institutions was sufficient.‘ On August 29, 1984, the

Secretary again filed a notice of appeal from the dis-

trict court’s order of March 26, 1984, as amended

by its order of July 2, 1984. A stay of the district

court’s order, as amended, was granted by another

panel of this Court.

On October 9, 1984, the Social Security Disability

Benefits Reform Act of 1984, Pub. L. No. 98-460,

98 Stat. 1794, became law. Section 16 of this Act

provides for monitoring of all representative payees

through, inter alia, an accounting program. The stat-

ute, however, exempts from the accounting program

all representative payees whose beneficiaries are

their children or their spouse and who live in the

same household as the representative payee. We are

advised that the Secretary, while the present appeal

3 We express no opinion as to whether the district court’s

order of March 26, 1984, is a final judgment. From the record

before us it is difficult to tell.

* The district court ordered that institutions acting as rep-

resentative payees must undergo on-site reviews by the Sec-

retary at least once every three years; further, continual

monitoring by district Social Security offices must be provided.

60a

was pending in this Court, filed a motion in the dis-

trict court for an “Indicative Ruling” and Relief

from Judgment, asserting that the new statutory ac-

counting requirements were adequate and thus the

district court’s earlier order was unnecessary.’ In

connection with that motion, the district court, by

order of January 18, 1985, recognized that it had no

jurisdiction to grant relief from judgment under

Fed. R. Civ. P. 60(b) since an appeal was then pend-

ing in this Court. However, the district court, citing

Aune v. Reynders, 344 F.2d 835 (10th Cir. 1965),

“indicated” that it would not grant any relief from

judgment on the grounds urged by the Secretary, Le.,

the intervening Act of Congress. In thus indicating,

the district court opined that the 1984 Act of Con-

gress did not measure up to the requirements of due

process, and that due process required some form of

mandatory periodic accounting by a/l representative

payees, excepting only institutions acting as repre-

sentative payees.

The present appeal is from the district court’s or-

der of March 26, 1984, as amended by its order of

July 2, 1984. Appellate procedure requires that an

appellant's brief shall contain an argument with ap-

pellant’s contentions with respect to the issues pre-

sented, and the reasons therefor, with citations to

the authorities, statutes and parts of the record re-

lied on. Fed. R. App. P. 28(a)(4). Appellants who

fail to argue the issue in their brief are deemed to

have waived their contention on appeal. Bledsoe v.

Garcia, 742 F.2d 1237, 1244 (10th Cir. 1984).

In this Court, the Secretary makes no attack, as

such, on the March 26 order of the district court.

* The motion is not included in the record before us. Hence,

we do not know its contents.

6la

In other words, the Secretary in the present appeal

makes no argument that an annual accounting by 10

percent of the representative payees meets due proc-

ess. Accordingly, the Secretary has, in a real sense,

abandoned any challenge to the order from which the

appeal is taken. In such circumstance, the appeal

should be dismissed.

However, the Secretary, in the present appeal, at-

tempts to challenge, and vigorously so, the district

court’s so-called indicative order of January 18,

1985. In this connection, the Secretary argues that

the 1984 Act of Congress is constitutional, i.e., it is

not violative of due process even though because of

its exceptions it does not require mandatory periodic

accounting by all representative payees, and that the

Act therefore controls. We do not regard that par-

ticular matter to be before us in the present appeal.

In its order of January 18, 1985, the district court

relied on Aune v. Reynders, 344 F.2d 835 (10th Cir.

1965) as authority for its consideration of the Sec-

retary’s motion for relief from judgment. In Aune,

at page 841, this Court spoke as follows:

In ordinary civil cases the rule is that after an

appeal has been taken the district court retains

jurisdiction to consider and deny a Rule 60(b)

motion and, if it indicates that it will grant the

motion, the movant may then ask the Court of

Appeals to remand the case so that the district

court may act. If the motion is denied, the

movant may appeal from the order of denial.

In its order of January 18, 1985, the district

court purported to “grant” the Secretary's motion

for an indicative ruling, but, at the same time, the

district court also clearly stated that it would nof

62a

grant the Secretary any relief from the judgment

entered on March 26, 1984. Although such does not

comport precisely with the language from Avne

above cited, the effect of the district court’s order of

January 18, 1985, was, and clearly so, to deny the

Secretary any relief from judgment." From our

search of the record before us, no appeal was taken

by the Secretary from the district court’s order of

January 18, 1985. Therefore, the correctness of that

particular order is not before us by direct appeal

and cannot somehow be rejected into the appeal from

the district court’s order of March 26, 1984.

This appeal is dismissed.

* This Court in Aune cited Greear v. Greear, 288 F.2d 466

(9th Cir. 1961). In Greear, the Ninth Circuit commented as

follows:

In such circumstances the proper procedure is for ap-

pellant to file its rule 60(b) motion in the district court.

If that court indicates that it will grant the motion, ap-

pellant should then make a motion in this court for a

remand of the case in order that the district court may

grant such relief, following which a supplemental record

showing such proceedings may be filed in this court.

Appellant may appeal from an order of the district court

denying the rule 60(b) motion, and appellee may appeal

from an order of the district court granting such relief,

any such appeal to be consolidated with the pending

appeals. Citing Binks Mfg. Co. v. Ransburg Electro-

Coating Co., 281 F.2d 252, 260-61 (7th Cir. 1960) ; Ferrell

v. Trailmobile, Inc., 223 F.2d 697, 699 (5th Cir. 1955);

Smith v. Pollin, 194 F.2d 349-350, (D.C. Cir. 1952).

63a

APPENDIX I

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

Nos. 83-1636, 84-1438

JEANNE A. JORDAN, individually, and on behalf

of all other persons similarly situated,

PLAINTIFF-APPELLANT

v.

MARGARET M. HECKLER, individually, and in her offi-

cial capacity as Secretary of the Department of

Health and Human Services, DEFENDANT-APPELLEE

JEANNE A. JORDAN, individually, and on behalf

of all other persons similarly situated,

PLAINTIFF-APPELLEE

v.

MARGARET M. HECKLER, individually, and in her offi-

cial capacity as Secretary of the Department of

Health and Human Services, DEFENDANT-APPELLANT

Sept. 24, 1984

Rehearing Denied Jan. 22, 1985

in No. 84-1438

64a

Before SETH, Chief Judge, and DOYLE and

SEYMOUR, Circuit Judges.

SETH, Chief Judge.

The Social Security Act at 42 U.S.C. § 405(j) pro-

vides that benefits under certain circumstances may

be paid directly to the applicant or to a representa-

tive for the benefit of the applicant. Thus:

“When it appears to the Secretary that the inter-

est of an applicant entitled to a payment would

be served thereby, certification of payment may

be made, regardless of the legal competency or

incompetency of the individual entitled thereto,

either for direct payment to such applicant, or

for his use and benefit to a relative or some other

person.”

The “certification” is the significant act of the Sec-

retary in this context. Procedures have been estab-

lished to determine the “need” for a representative

and “‘who” it should be with notice to the claimant.

The trial court concluded that the procedure was

adequate under the statute and met due process re-

quirements after making the evaluation under

Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893,

47 L.Ed.2d 18, and Tidwell v. Schweiker, 677 F.2d

560 (7th Cir.). This issue was considered by this

court in McGrath v. Weinberger, 541 F.2d 249 (10th

Cir.).

Thus, this is the approved procedure for the deter-

mination of “need” and who is to act as a representa-

tive. The plaintiffs in the trial court contested this

issue asserting that more was required. However,

they did not pursue their appeal on this issue. Their

appeal or cross-appeal is now directed only to claims

65a

that the person selected as a representative as above

described has misapplied the funds.

In this context we should first note a significant

and basic statutory provision in 42 U.S.C. § 405(k)

which relates to the remaining issue of misuse. This

subsection reads in part:

“Any payment made after December 31, 1939,

under conditions set forth in subsection (j), any

payment made before January 1, 1940, to, or on

behalf of, a legally incompetent individual, and

any payment made after December 31, 1939, to

a legally incompetent individual without knowl-

edge by the Secretary of incompetency prior to

certification of payment, if otherwise valid under

this title, shall be a complete settlement and sat-

isfaction of any claim, right or interest in and

to such payment.”

Under the statute the payment to the representative

discharges the Secretary from any further obligation

“as to such payment.” The plaintiffs thus challenge

the procedure followed by the Secretary in handling

claims made by beneficiaries (or for them) of misuse

of funds by the representative certified to receive

payment as above described. The plaintiffs urge that

uuder 42 U.S.C. § 405(b) there should be a hearing

and review when such a claim of misuse is made.

The Secretary’s position and the regulations promul-

gated under § 405(b) is that only actions which pre}-

udice the claimant’s rights specifically provided in

the Act trigger an administrative hearing and judi-

cial review. These actions are described as “initial

determinations” in the regulations. Claims as to a

representative’s misuse of funds are not within that

category under the regulations. See Califano v. San-

66a

ders, 430 U.S. 99, 97 S.Ct. 980, 51 L.Ed.2d 192. The

claimant’s right to payments under § 405(j) is es-

tablished by the certification of payment to the rep-

resentative.

Under existing procedure the agency examines the

objection and makes a decision to request restitution

or to take no action. There is no “hearing” on the

claim. Again, the Secretary has discharged her duty

upon certification and payment. A claim may be the

basis. for a change in the representative, but this

does not have any consequences as to the dollars.

There is an adequate remedy for impairment of the

free use of benefits. McGrath v. Weinberger, 541

F.2d 249 (10th Cir.).

The only action that the agency can take if there

appears to be a misapplication of funds by the payee

is to “request” restitution and refer the incident to

the General Accounting Office. Claims of this nature

in this appeal have no relation whatsoever to a ter-

mination of benefits or to the dollars from the

agency. The claims could however go against the

representative as an individual with state law reme-

dies available. The regulations provide procedures

for change of representatives. Requests for a change

of representative may be made at any time. The trial

court on this matter of claims of misuse of funds

again made an analysis under Mathews v. Eldridge,

424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18, and we

agree that the circumstances do not warrant the

treatment of such claims as an initial determination.

As we have seen, a hearing on claims of misuse

would add no statutorily required nor due process

procedures. The trial court ordered that the agency

require, beginning at a date in the future, periodic

accountings by the representatives. The Secretary

67a

apparently has agreed to do this. The accountings

would in no way change the legal nature of the pro-

ceedings taken on misuse complaints under the Act

or as to due process nor add requirements.

We express no opinion as to whether accountings

can be required under the Act or for due process

reasons.

The judgment of the trial court is affirmed as to

its disposition of ail issues except the one relating to

accountings by representatives which is not consid-

ered to be an issue on this appeal.

IT IS SO ORDERED.

84-1438

This is an appeal by the Government (consolidated

with No. 83-1636) of an Order which assessed attor-

ney fees against it in the amount of $76,159.20 under

the Equal Access to Justice Act (28 U.S.C. § 2412).

The suit challenged the procedure whereby repre-

sentatives are selected to receive payments on behalf

of Social Security benefit recipients, whether such

representatives should be required to make periodic

accountings, and how complaints of misuse of funds

should be handled.

The portion of the case which was appealed is set

forth above in No. 83-1636, Jordan v. Heckler.

In this appeal the Government asserts that the trial

court was in error in using, at least in part, 28

U.S.C. § 2412(b) of the Act, and so placing reliance

on a common fund or common benefit theory. The

Government also challenges the ‘exceptional success”

determination by the trial court as it was applied to

decide compensable hours in view of the plaintiffs’

success on but one out of the three claims advanced.

68a

The issue whether the several claims were related or

unrelated for this purpose is also raised.

We must conclude that the doctrines arising from

traditional practice in equity of common fund or

common benefit included in 18 U.S.C. § 2412(b) are

not applicable to this case. The trial court referred

to and used § 2412(b) in its analysis and order. The

court in part said: “[J]urisdiction over the subject

matter of this suit makes possible an award that will

operate to spread the costs proportionately among

each of these beneficiaries.”

An award of fees against the Secretary does not

have such a consequence. If the award is taken from

the Social Security Trust Fund it will not in any

way reduce the payments to Social Security recipi-

ents in representative status. The Trust Fund comes

from Social Security taxes on all workers and from

general Treasury funds. Is is simply an award

against the Government or all persons who pay Social

Security taxes and is not related or restricted to

those who number some four million.

This situation thus does not resemble the suit

against the union in Hall v. Cole, 412 U.S. 1, 93 S.Ct.

1948, 36 L.Ed.2d 702, nor the shareholder derivative

cases such as Mills v. Electric Auto-Lite Co., 396 U.S.

375, 90 S.Ct. 616, 24 L.Ed.2d 5938, the issue in

Sprague v. Ticonic Nat’l Bank, 307 U.S. 161, 59 S.Ct.

777, 83 L.Ed. 1184, nor the pension fund in Kiser v.

Huge, 517 F.2d 1275 (D.C.Cir.).

In Mills the court determined that with the fees

paid by the corporation, the benefits of the merger

suit would be proportionately spread among the

shareholders which was the group benefited. In the

union case, Hall v. Cole, 412 U.S. 1, 93 S.Ct. 1943,

36 L.Ed.2d 702, the benefits under the disclosure act

obtained by the action accrued to each union member

69a

and payment out of union funds according to the

Court “shift[s] the costs of litigation to ‘the class

that has benefited ....’” Thus the costs are spread

among the group members who have benefited and

spread in a reasonable and fair manner. The “spread-

ing” of the burden in the case before us was not

among the group which was benefited but placed on a

much larger group, most of whom had no interest.

Of course, the basic considerations are expressed

by the Court in Alyeska Pipeline Co. v. Wilderness

Society, 421 U.S. 240, 95 S.Ct. 1612, 44 L.Ed.2d 141,

where reference in a note is made to its previous

opinions:

“In this Court’s common-fund and common-

benefit decisions, the classes of beneficiaries were

small in number and easily identifiable. The

benefits could be traced with some accuracy, and

there was reason for confidence that the costs

could indeed be shifted with some exactituue to

those benefiting.”

There is no way in the case before us that with the

fees assessed against the Secretary there was any

allocation to those four million recipients with repre-

sentative payees if they were the parties benefited.

Thus again in Boeing Co. v. Van Gemert, 444 U.S.

472, 100 S.Ct. 745, 62 L.Ed.2d 676, the Court said

after discussing the common fund cases and the

origin of the doctrine:

“The doctrine rests on the perception that per-

sons who obtain the benefit of a lawsuit without

contributing to its cost are unjustly enriched at

the successful litigant’s expense.”

And:

70a

“Jurisdiction over the fund involved in the liti-

gation allows a court to prevent this inequity by

assessing attorney’s fees against the entire fund,

thus spreading fees proportionately among those

benefited by the suit.”

The Court in Boeing also refers to the statements in

Alyeska where shifting of fees was appropriate. Thus

where the classes benefited were “small in number

and easily identifiable,” the “benefits could be traced

with some accuracy,” where the shifting could be

accomplished, “with some exactitude to those bene-

fiting.” Thus the fees here considered can properly

be assessed only under § 2412(d) which in part pro-

vides that the court shall award fees unless it finds

that “the position of the United States was substan-

tially justified or that special circumstances make an

award unjust.” A maximum per hour rate is speci-

fied. The fees are to be “reasonable” and based on

the “prevailing market rate.” The “reasonable” pro-

viso would seem to draw into the consideration of

fees the opinions under other statutes wherein the

reasonable standard is expressly provided.

As the opinion on the merits indicates, the plain-

tiffs advanced three claims and they prevailed on one

—that representatives should be required to file peri-

odie accountings. The claim for a hearing before a

representative was designated and was lost as was a

claim for a hearing on claims made against repre-

sentatives for misuse of funds.

Plaintiffs’ success was partial. The trial court de-

termined that plaintiffs were the prevailing parties

apparently based on the accounting claim. This ap-

pears to be a close question. We cannot say however

that the trial court abused its discretion. The Secre-

tary had some years before instituted an accounting

requirement although of a limited scope. This was

Tla

dropped, according to the record, because of budget

limitations. During the same period as the litigation

was underway a study was being conducted as to

the need for accountings. This study was completed

and filed with the court. It concluded that account-

ings were necessary. The Secretary did not appeal

the trial court’s order as to accounting, and indicated

that it agreed with it. The Secretary asserts in this

appeal that she did not oppose in principle the ac-

counting claim in the trial court. The trial court’s

original order was in general terms.

We have considered various aspects of attorney

fees claims under several statutes in Cooper v. Singer,

719 F.2d 1496 (10th Cir.), Ramos v. Lamm, 713 F.2d

546 (10th Cir.), Gurule v. Wilson, 635 F.2d 782

(10th Cir.), Battle v. Anderson, 614 F.2d 251 (10th

Cir.), and in Francia v. White, 594 F.2d 778 (10th

Cir.), and other cases.

The Supreme Court in Hensley v. Eckerhart, 461

U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40, shortly be-

fore our decision in Ramos v. Lamm, laid down the

basic considerations. The Court in March of this

year in Blum v. Stenson, USS. , 104 S.Ct.

1541, 79 L.Ed.2d 891, in a 42 U.S.C. § 1988 claim,

set forth most if not all of the basic standards. It

also contains a strong message for the simplification

of the analysis. Blum also describes the assumptions

or presumptions now to be applied to the typical ele-

ments. For example, the novelty and complexity are

“reflected” in the number of hours; the “skill” ele-

ment and “quality” are reflected in the reasonable-

ness of the rates. The Court also there states that

“results” are subsumed in other factors used to calcu-

late a reasonable fee.” Further, in Blum the Court

said: “Nor do we believe that the number of persons

benefited is a consideration of significance in calculat-

72a

ing fees under § 1988.” (Emphasis in original.)

Apparently the only element not treated in Blum was

that of “risk” of loss.

Blum, of course, starts with the position (as in

Hensley) that the prevailing market rate times rea-

sonable hours should produce a reasonable fee. The

inference in Blum is that a strong showing is re-

quired for a variation.

Blum also for our purposes repeats the “excep-

tional success” formulation. Thus:

“In sum, we reiterate what was said in Hensley:

‘where a plaintiff has obtained excellent results,

his attorney should recover a fully compensatory

fee. Normally this will encompass all hours rea-

sonably expended on the litigation, and indeed in

some cases of exceptional success an enhance-

ment award may be justified.’ Hensley, [461]

U.S., at [435] [103 S.Ct., at 1940].”

We understand the “excellent results” pertain to the

entire litigation—considering it as a whole.

The court here decided that the plaintiffs had ob-

tained “excellent results” although they did not pre-

vail on all their claims. We do not know whether we

would have arrived at the same conclusion, but we

cannot say that the trial court abused its discretion.

The trial court made a finding that the Government’s

position was not substantially justified, and we find

no abuse of discretion on this point.

Thus the fees should be computed on all the hours

reasonably expended in the litigation by plaintiffs’

counsel within the statutory limitation on the hourly

rate since no special circumstances have been found

to exist. The trial court made no determination.

The case (84-1438) is remanded for a determina-

tion of fees as provided herein. IT IS SO OR-

DERED.

ee |

ee

73a

APPENDIX J

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

No. 84-2226

JEANNE A. JORDAN, individually and on behalf of

all other persons similarly situated,

PLAINTIFF-APPELLEE

vs.

Otis R. BOWEN, individually and in his official ca-

pacity as Secretary of the Department of Health

and Human Services, DEFENDANT-APPELLANT

June 19, 1987

Before Honorable William J. Holloway, Jr., Honor-

able Robert H. McWilliams, Honorable Monroe G.

McKay, Honorable James K. Logan, Honorable Step-

hanie K. Seymour, Honorable John P. Moore, Hon-

orable Stephen H. Anderson, Honorable Deanell R.

Tacha and Honorable Bobby R. Baldock, Circuit

Judges

The court has for consideration in the captioned

case:

1. Appellee’s motion to vacate the court’s April 16,

1986 order staying orders of the United States Dis-

T4a

trict Court for the Western District of Oklahoma

pending appeal and appellant’s response.

2. Appellant’s petition for rehearing and sugges-

tion for rehearing en banc, appellee’s memorandum

in opposition thereto, and appeliant’s motion to stay

action on the petition for rehearing.

3. Appellant’s letter of April 27, 1987, and ap-

pellee’s motion to strike that letter.

Upon consideration whereof, the hearing panel,

consisting of Judges Holloway, McWilliams and Bal-

dock, denies appellee’s motion to strike and orders

appellant’s April 27, 1987 letter docketed and in-

cluded in the case file.

The hearing panel further denies appellants’ mo-

tion to stay action on the petition for rehearing and

hereby denies the petition for rehearing.

The petition for rehearing having been denied by

the panel to whom the case was argued and sub-

mitted, and no member of the panel nor judge in

regular active service on the Court having requested

tha. the Court be polled on rehearing en banc, Rule

35, Federal Rules of Appellate Procedure, the sug-

gestion for rehearing en banc is denied.

Issuance of the mandate on June 29, 1987, pur-

suant to Fed.R.App.P. 41(a) will automatically ter-

minate the stay entered on April 16, 1986, and will

render appellee’s motion to vacate the stay moot.

‘'s/ Robert L. Hoecker

ROBERT L. HOECKER

Clerk

T5a

APPENDIX K

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

No. 84-2226

JEANNE A. JORDAN, individually and on behalf of

all other persons similarly situated,

PLAINTIFFS-APPELLEES

v.

Otis T. BOWEN, Secretary of Health and

Human Services, DEFENDANT-APPELLANT

April 16, 1986

Before Honorable John P. Moore and Honorable

Deanell R. Tacha, Circuit Judges, United States

Court of Appeals

This matter is before the court on appellees’ mo-

tion to dismiss the appeal for lack of jurisdiction and

appellant’s motion for stay pending appeal.

Upon consideration thereof, it is ordered that the

motion to dismiss is denied.

It is further ordered that orders of the United

States District Court for the Western District of

Oklahoma in case No. CIV 79-994-W entered March

26, 1984, and July 2, 1984, are stayed during the

pendency of this appeal. It is further ordered that

appellees’ answer brief shall be filed and served

within thirty days of the date of this order.

/s/ Robert L. Hoecker

ROBERT L. HOECKER

Clerk

76a

APPENDIX L

STATUTORY PROVISIONS INVOLVED

1. Section 205(j) of the Social Security Act, as

amended by Section 16 of the Social Security Dis-

ability Benefits Reform Act of 1984, Pub. L. No.

98-460, 98 Stat. 1809, and as coidfied at 42 U.S.C.

(Supp. III) 405(j), provides:

Certification for direct or indirect payment; in-

vestigation; accountability monitoring; excep-

tions; reports to Congress

(1) When it appears to the Secretary that

the interest of an applicant entitled to a pay-

ment would be served thereby, certification of

payment may be made, regardless of the legal

competency or incompetency of the individual

entitled thereto, either for direct payment to

such applicant, or for his use and benefit to a

relative or some other person.

(2) An certification made under paragraph

(1) for payment to a person other than the in-

dividual entitled to such payment must be made

on the basis of an investigation, carried out

either prior to such certification or within forty-

five days after such certification, and on the

basis of adequate evidence that such certification

is in the interest of the individual entitled to

such payment (as determined by the Secretary

in regulations). The Secretary shall ensure that

such certifications are adequately reviewed.

(3)(A) In any case where payment under

this subchapter is made to a person other than

the individual entitled to such payment, the Sec-

Te

77a

retary shall establish a system of accountability

monitoring whereby such person shall report not

less often than annually with respect to the use

of such payments. The Secretary shall establish

and implement statistically valid procedures for

reviewing such reports in order to identify in-

stances in which such persons are not properly

using such payments.

(B) Subpargraph (A) shall not apply in any

case where the other person to whom such pay-

ment is made is a parent or spouse of the indi-

vidual entitled to such payment who lives in the

same household as such individual. The Secre-

tary shall require such parent or spouse to verify

on a periodic basis that such parent or spouse

continues to live in the same household as such

individual.

(C) Subparagraph (A) shall not apply in

any case where the other person to whom such

payment is made is a State institution. In such

cases, the Secretary shall establish a system of

accountability monitoring for institutions in

each State.

(D) Subparagraph (A) shall not apply in

any case where the individual entitled to such

payment is a resident of a Federal institution

and the other person to whom such payment is

made is the institution.

(E) Notwithstanding subparagraphs (A),

(B), (C), and (D), the Secretary may require

a report at any time from any person receiving

payments on behalf of another, if the Secretary

has reason to believe that the person receiving

such payments is misusing such payments.

(4)(A) The Secretary shall make an initial

report to each House of the Congress on the im-

78a

plementation of paragraphs (2) and (8) within

270 days after October 9, 1984.

(B) The Secretary shall include as a part of

the annual report required under section 904 of

this title, information with respect to the imple-

mentation of paragraphs (2) and (3), including

the number of cases in which the payee was

changed, the number of cases discovered where

there has been a misuse of funds, how any such

cases were dealt with by the Secretary, the final

disposition of such cases, including any criminal

penalties iniposed, and such other information as

the Secretary determines to be appropriate.

2. Section 1631(a) (2) of the Social Security Act,

as amended by Section 16 of the Social Security Dis-

ability Benefits Reform Act of 1984, Pub. L. No.

98-460, 98 Stat. 1809-1810, and codified at 42 U.S.C.

(Supp. III) 1383(a) (2), provides:

§ 1383. Procedure for payment of benefits

(a) Time, manner, form, and duration of pay-

ments; promulgation of regulations

* * * * *

(2)(A) Payments of the benefit of any in-

dividual may be made to any such individual or

to his eligible spouse (if any) or partly to each,

or, if the Secretary deems it appropriate to any

other person (ineluding an appropriate public or

private agency) who is interested in or concerned

with the welfare of such individual (or spouse).

Notwithstanding the provisions of the preceding

sentence, in the case of any individual or eligible

spouse referred to in section 1382(e) (3) (A) of

this title, the Secretary shall provide for making

payments of the benefit to any other person (in-

79a

cluding an appropriate public or private agency )

who is interested in or concerned with the wel-

fare of such individual (or spouse).

(B) Any determination made under subpara-

graph (A) that payment should be made to a

person other than the individual or spouse en-

titled to such payment must be made on the basis

of an investigation, carried out either prior to

such determination or within forty-five days

after such determination, and on the basis of

adequate evidence that such determination is in

the interest of the individual or spouse entitled

to such payment (as determined by the Secretary

in regulations). The Secretary shall ensure that

such determinations are adequately reviewed.

(C) (i) In any case where payment is made

under this subchapter to a person other than the

individual or spouse entitled to such payment,

the Secretary shall establish a system of account-

ability monitoring whereby such person shall re-

port not less often than annually with respect to

the use of such payments. The Secretary shall

establish and implement statistically valid pro-

cedures for reviewing such reports in order to

identify instances in which such persons are not

properly using such payments.

(ii) Clause (i) shall not apply in any case

where the other person to whom such payment is

made is a parent or spouse of the individual en-

titled to such payment who lives in the same

household as such individual. The Secretary shall

require such parent or spouse to verify on a

periodic basis that such parent or spouse con-

tinues to live in the same household as such in-

dividual.

80a

(iii) Clause (i) shall not apply in any case

where the other person to whom such payment

is made is a State institution. In such cases, the

Secretary shall establish a system of account-

ability monitoring for institutions in each State.

(iv) Clause (i) shall not apply in any case

where the individual entitled to such payment is

a resident of a Federal institution and the other

person to whom such payment is made is the

institution.

(v) Notwithstanding clauses (i), (ii), (iii),

and (iv), the Secretary may require a report at

any time from any person receiving payments

on behalf of another, if the Secretary has reason

to believe that the person receiving such pay-

ments is misusing such payments.

(D) The Secretary shall make an initial re-

port to each House of the Congress on the imple-

mentation of subparagraphs (B) and (C) within

270 days after October 9, 1984. The Secretary

shall include in the annual report required un-

der section 904 of this title, information with

respect to the implementation of subparagraphs

(B) and (C), including the same factors as are

required to be included in the Secretary’s report

under section 405(j) (4) (B) of this title.

W ou. 6. GOVERNMENT PRINTING orrics,; 1987 181483 40427