# Petition for Writ of Certiorari — Benjamin v. Richardson > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385605_1620%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1971 - **Citation:** 404 U.S. 986 ## Text SUBJECT INDEX Page Table of Cases and Other Citations............... ili TEE ORCE CET. TECTER CCT TELE ETE 2 SE” 6i5 SkaGhb aad 26656 06SR 060 Soa sean Ces 3 Questions Presented for Review ................. 3 Statutes and Constitutional Provisions Involved... 4 SS GE ON GUD i vc bcccckcaceccsennen ans 4-7 Reasons for Granting Writ of Certiorari.......... 7-30 A. This Court Should Settle the Meaning of Section 224 of the Social Security Act...... 7-18 1. A Michigan “Redemption” Settlement is Not a Commutation of or a Substitute for Periodic Payments ............... 7-9 2. The Secretary and the Lower Court Limit “Lump Sum” in Section 224 to Claimant’s Attorneys Fees and Past SE IO snc cccchsdenkoandens 10-14 3. The Lower Court’s Construction of Sec- tion 224 Conflicts with this Court’s Rules of Statutory Construction and with the Purposes of the Statute .............. 14-18 B. Section 224 of the Social Security Act is Contrary to the Fifth Amendment of the United States Constitution. This Court has Other Cases involving these issues before it 18-26 1. Arbitrary Discrimination .............. 18-22 2. Impairment of Contractual Obligations 3. The Rights-Privilege Distinction of Flem- ming v. Nestor, Upon Which the Lower 23. Court Opinions in Lofty and in the In- stant Case are Based, Has Been Aban- doned by this Court .................. C. The Secretary’s Failure to Apply Section 159 Of Public Law 90-248 in Computing Claimant’s Earnings Presents Another Im- portant Federal Question ................. Conclusion Of es Om oP ae REE ne eo a eeeeee Appendix A: Opinions of Courts and Agencies.... Court of Appeals, Sixth Circuit .............. PTT OTe TT TT TTT TET ET eT Te SI TI 4 6 5 6.046605 ba cnnccecsencanins Hearing Examiners ...........0sececeeeeees EE Sha Vicccsannkeesganene bane der SE UG bsU dG eeE Ra hWioneeked ba-shOuss bacedas 24-26 eee rn eee ili INDEX TO AUTHORITIES CITED Table of Cases Page Bartley v. Richardson, Sup. Ct. No. 703, review sought of 311 F. Supp. 876 (E.D. Ky., 1970). .18, 19, 31 Belcher v. Richardson, 8S. Ct. No. 1091, reviewing 317 F. Supp. 1294 (S.D. W. Va. 1970). .2, 18-20, 26, 31 Bolling v. Sharpe, 347 U.S. 497 (1954)............ 22 California Dept. of Human Resources Development v. Java, — U.S. —, 39 Law Week 4481 (1971) 22 Daniel v. Goliday, 398 U.S. 73, (1970)............ 26 Davidson v. Gardner, 370 F. 2d 803 (6th Cir. 1967) 17 Delno v. Celebrezze, 347 F. 2d 159 (9th Cir. 1965) 17 Ewing v. Black, 172 F. 2d 331 (6th Cir. 1949).... 17 Flemming v. Nestor, 363 U.S. 603 (1960)........ 24-26 Fox v. Employment Sec. Commis., 379 Mich. 579 NEE | 4 ctb andes shaakeheeadanegaeeaaneusees 22 Goldberg v. Kelley, 397 U.S. 254 (1970).......... 26 Heikkila, v. Celebrezze, 222 F. Supp. 629 (N.D. Calif. ER rere re Pm rye pat at ar ON mene 25 Helvering v. Davis, 301 U. S. 619 (1937)........... 14 Kennedy v. Mendoza-Martinez, 372 U.S. 144 (1963) 25 Lofty v. Richardson, Sup. Ct. No. 1758, review sought of 440 F. 2d 1144 (6th Cir. No. 20484, SEE | sNkudedeaceeeshcedsawananes 2, 6, 7, 13, 19, 24, 31 1V Miley v. Finch, — F. Supp. —, CCH Un. Ins. Reps. Fedl. Para. 15,848 (‘2.D. Mich 1970).......... 12-14 Nebbia v. New York State, 291 U.S. 507 (1933).. 22 A. H. Phillips, Inc. v. Walling, 324 U.S. 490 (1945) 17 Porter v. Shibe, 158 F. 2d 68 (10th Cir. 1946).... 22 Quaker City Cab Co. v. Pennsylvania, 277 U.S. 389 CRUE... cavaWbbachece sucewéekensede¥eeseUunn 21, 22 Reynolds v. Gardne., 271 F. Supp. 676 (W.D. Va. 1966), aff'd 381 F. 2d 380 (4th Cir. 1967)...... 17 Rusk v. Cor*. 369 U.S. 367 (1962)........... ive “Se St. Luke’s Hospital Assoc. of Cleveland, Ohio v. United States, 333 F. 2d 157 (6th Cir. 1964).. 17 Sayers v. Gardner, 380 F. 2d 940 (6th Cir. 1967)... 14,15 Schwing v. United States, 165 F.2d 518 (3d Cir. BOE carcedseneues scene sb0eeenerascssacees 17 Shapiro v. Thompson, 394 US. 618 (1969)........ 25 Sherbert v. Verner, 374 U.S. 398 (1963).......... 25 Slone v. Finch —- F. Supp. —, CCH Un. Inc. Rep. Fedl. Para. 16,093 (S.D. Ohio, 1970).......... ll Charles C. Steward Machine Co. v. Davis, 301 U.S. 3, BPR rer rt errr errr errr re le Swann v. Adam, 385 U\S. 440 (1967)............. 25 United States v. American Trucking Ass’n, 310 U.S. Se CE Wu ceWecwbesendhdnbecesabenees dees 16, 17 United States v. Brown, 381 US. 437 (1965)...... 25 United States v. Silk, 331 U.S. 704 (1947)......... 14,17 Vv Page Wehmeier v. W.E. Wood Co., 377 Mich. 176 (1965) 8, 9, 12, 13 Wells v. Rockefeller, 394 U.S. 542 (1969)........ 25 Wheeler v. Montgomery, 397 U. S. 280 (1970).... 26 Constitution, Statutes, Rules and Miscelianeous Constitution of the United States: Article I, Section 10.............ccceeeeeeees 98 ere DO a k.nn deen dkncncccnaascodsaas 7, 18-26 Fourteenth Amendment ..................... 22, 23 16A Corpus Juris Secundum, “Constitutional Law,” Us Ge 6 ocak sc doeénnsakscassassnenstessanne 23 82 Corpus Juris Secundum, “Statutes,” Secs. 346 | Pree rr Perr rer oe. rrr ere rr re 61 Federal Rules of Civil Procedure: BOE SD nc dO Svncndcvebenacaddaucadewadeos SD POE a Sab ee nvkkened es dewasnedieakad 6 The Legal Process, Hart and Sacks (1957 Cam- bridge Tentative Ed.) ...........cccccccceece 16 Public Law 90-248, Section 159 (1967)........ 3, 6, 7, 27-30 Social Security Act (42 U.S.C.A. Sees. 301 e¢ seq.): Section 201(%) (42 U.S.C.A. See. 401(b)...... 19 Page Section 202 (a) and (n) (42 U.S.C.A. Sec. 402 i Fer erere eT Peer reer ry eee 10, 17, 24 Section 205(g) (42 U.S.C.A. Sec. 405(g)...... 5 Section 215 (42 U.S.C.A. Sec. 415)............ 27 Section 223 (42 U.S.C.A. Sec. 423).......... 16, 23, 26 Section 224 (42 U.S.C.A. Sec. '424a) ...... 3, 5-7, 3-14, 16, 18-31 Section 303 (a)(1) (42 U.S.C.A. See. 503(a)(1)) 22 Supreme Court Rules: Fe APPT Eee ST TTT eee CTT CTT Te 2 Title 28, U.S.C. Section 1254 (1)............eceee 3 2 U.S. Congressional & Administrative News, 1967 27, 28 U.S. Senate Hearings on H.R. 6675............... 20 Workmen’s Compensation Act of Michigan, Part II, ‘Sec. 22 (Comp. Laws Sec. 412.22, Mich. Stat. Be WU Se ns Aa keh edaee a eede aes 7-9 IN THE Supreme Court of the United States —— mw aw ew mr me “TERM, 1971 ——— Supreme Court No, ...........00 Court of Appeals No. 20714 —~—— JOHNNEY BENJAMIN, Petitioner, ve ELLIOTT RICHARDSON, SECRETARY OF HEALTH, EDUCATION AND WELFARE, Respondent. —p— PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT a To the Honorable, the Chief Justice of the Umited States and the Associate Justices of the Supreme Court of the Umted States: R The petitioner, by his attorneys, prays that a Writ of Certiorari issue to review the opinion and judgment of the United States Court of Appeals for the Sixth Circuit en- tered in this matter on April 29, 1971. 2 Petitioner asks that this Petition be considered along | with that in Lofty v. Richardson, Supreme Court No. 1758. The Petition in Lofty was filed on May 28, 1971. Counsel for petitioner Lofty concurs with this request. OPINIONS BELOW Said opinion and judgment of the United States Court of Appeals for the Sixth Circuit is not yet officially reported. (See Appendix A, pp. 35-35). Petitioner, in accordance with Rules 23" (a) and (i) also includes the following opinions in Appendix A: 1. July 13, 1970 Order of District Court Judge Damon Keith Denying Motion for Rehearing of Plaintiff’s Motion for Summary Judgment,....F. Supp. .... (E.D. Mich) (pp. 43-48); May 20, 1970 Memoranda Opinion and Order of Judge Keith....F. Supp.... (35- 43); March 17, 1969 Decision of Appeals Council (48-53) ; December 3, 1968 Decision of Hearing Examiner Fenster (53-60) ; and April 12, 1968 Decision of Hearing Examiner Ferguson (61-69)* Petitioner also therein includes the lower Court opinion in the companion case of Lofty v. Richard- son, Swpreme Court No. 1758 certiorari to 440 F. 2d 1144 (6th Cir. March 4, 1971) (70-84). Another companion case is Belcher v. Richardson, Supreme Court No. 1091 appeal from 317 F. Supp. 1294 (S.D. W. Va., 1970). This Court agreed to hear Belcher on March 1, 1971. 1 Petitioner will herein usually be called “claimant.” Petitioner was often referred to as “plaintiff’ befcre the District Court. Re- spondent will usually be called “the Secretary.” 2 Petitioner only includes the portion of the first Hearing Ex- aminer’s Decision relevant to the last question presented to this Court. This portion shows claimant’s combined earning from two jobs (65). JURISDICTION The jurisdiction of this court is invoked under Title 28 U.S.C. Section 1254 (1). QUESTIONS PRESENTED FOR REVIEW 1. Was the total ‘‘redemption” settlement received by claimant a lump sum payment exempt under Section 224 (b) from the reduction provisions of Section 224(a) of the Social Security Act? 2. Assuming arguendc that claimant’s total ‘“‘redemp- tion” settlement was not exempt under Section 224 (b) of said Act, should the Secretary have allocated part of claim- ant’s lump sum settlement to future medical expenses rather than strictly limiting claimant’s lump sum settle- ment to substitute for weekly payments, past medical ex- penses and attorneys fees? 3. Does Section 224 of the Act, as construed by the Sec- retary, deprive claimant of property without due process of law in that it arbitrarily discriminates against workmen’s compensation claimant who has paic into the trust fund the same amount of money as other claimants and by effec- tively nullifying claimant’s private settlement agreement. 4, May the Secretary fail to apply Section 159 of Public Law 90-248 in computing the earning of claimant, who had been working two jobs when injured? STATUTES AND CONSTITUTIONAL PROVISIONS INVOLVED Section 224 of the Social Security Act [Title 42, U.S.C. Section 424a], Section 159 of Public Law 90-248, and the Fifth Amendment to the Constitution of the Nuited States. The relevant portions of the Statute are included in Ap- pendix B. STATEMENT OF THE CASE Claimant was shot in the back on April 20, 1966 while employed by the Log Cabin Bar in Detroit, Michigan. (53, 65) He received Workmen’s Compensation bene- fits from April 20, 1966 through April 1, 1967, which in- ‘cluded weekly payments of $58.13 and furnishing of hos- pital and medical care. The benefits received by plaintiff were voluntarily paid by his employer’s Workmen’s Com- pensation insurer, and no determination of his employer’s liability for such benefit was ever made under the Michi- gan Workmen’s Compensation Act. (56) A dispute arose between claimant and his employer’s insurer over the correct amount of his weekly compensa- tion payment, and claimant filed an application for ad- justment of claim with the Workmen's Compensation De- partment. While his application was pending, claimant’s weekly benefits were terminated by his employer’s in- surer. The employer’s insurer filed an Answer to claim- ant’s application denying all liability. Settlement nego- tiations were then carried on between aitorneys for the parties. Thereafter, on September 7, 1967, the Michigan Workmen’s Compensation Department approved a “re- demption” settlement agreement entered into by the claim- ae i 4) ant and his employer’s insurer providing for the lump sum payment to him of $10,000.00. On September 27, 1967, payments were made by the employer’s insurer pursuant to said redemption agreement, (53, 56, 57) Claimant was working two jobs when shot. (65) His regular day-time job was at a car dealer’s and he also worked evenings at the bar. His combined monthly earn- imgs at his two occupations before his jury were $709.00. (65) The monthly combination of full workmen’s com- pensation and Social Security disability benefits would be only $372.90. Claimant was found to be disabled in the decision of Hearing Examiner Milton C. Ferguson on April 12, 1968 (69) He thereupon became entitled to benefits on his application for a period of disability and for disability insurance benefits. Thereafter, his disability benefits were reduced because of the receipt of Workmen’s Compensa- tion benefits. The reduction was predicated on Section 224 of the Act (85-89) Claimant sought review of the reduction in his benefits. Examiner Fenster fownd in part: “.. . this lump sum award had all the earmarks of a settlement of a lawsuit rather than a substitute for periodic payments.” (58; emphasis ours) The Examiner concluded that claimant was entitled to his full benefits without reduction. (60) Thereafter, the Social Security Administration Appeals Council on its own motion reversed the decision of Hear- ing Examiner Fenster, and applied the reduction provi- sions of Section 224. (48-53) Although evidence of claimant’s two jobs and of his combined earnings was presented to the Appeals Council, it did not recompute claimant’s average monthly earnings 6 from and after February 1, 1968, as required by Section 159 of Public Law 90-248. The decision of the Appeals Council became the final decision of the Secretary subject to review under Section 205 (g) of the Act. [Title 42, U.S.C. Sec. 405(g¢)] Claim- ant brought an action in the District Court against the Sec- retary challenging the decision that his disability benefits were subject to reduction pursuant to Section 224. Claim- ant’s action further challenged the Secretary’s failure to apply Section 159 of Public Law 90-248 in computing plaintiff’s earnings. Claimant and the Secretary both Moved for Summary Judgment. The District Court, on May 28, 1970, denied claimant’s Motion and granted the Secretary’s Motion for Summary Judgment. (35-43) Claimant, pursuant to Rules 52 (b) and 59 (a)(2) of the Federal Rules of Civil Procedure, Moved the District Court tc amend its Findings and Judginent and for a New Hearing. The Court, on July 15, 1970, denied claimant’s said Motion and denied his request for Oral Argument. (43-48) Claimant then appealed to the Court of Appeals. That Court, on April 12, 1971, in a Per Curiam Order, affirmed the District Court’s judgment. (33-35) The Secretary had contended that the lump sum exemp- tion provision of Section 224 (b) was limited to medical expenses and to legal fees. The Court of Appeals held that a Michigan ‘‘redemption” settlement always consti- tutes in part a commutation of periodic compensation pay- ments. The Court held that claimant’s Social Security bene- fits may be reduced by his entire lump sum Workmen’s Compensation settlement, except for the unpaid medical expenses and attorneys fees, which the Secretary had de- ducted. The Court did not attribute any of ciaimant’s set- 7 tlement to future medical expenses, saying that claimant had not proven the amount of said future expenses. The lower Courts rejected claimant’s constitutional ar- guments, basing their decisions on Lofiy v. Richardson, pe- tition for certiorari pending before this Court in Case No. 1738. (440 F.2d 1144, 1971, and 325 F. Supp. 285, 1970) The Court of Appeals ignored the Secretary’s failure to recompute claimant’s earnings, because of his second job, as required by Scction 159 of Public Law 90-248. REASONS FOR GRANTING WRIT OF CERTIORARI Important Federal Questions are Presented By The Lower Court’s Construction of Section 224 of the Social Security Act, Important Constitutional Questions aze Presented by Said Section 224 Itself, and This Court is Considering Cases Involving The Constitutional Questions A. This Court Should Settle the Meaning of Section 224 of the Social Security Act. These Statutory construction issues were present but were not litigated in Lofty, supra.‘'The only question pre- sented to this Court in Lofty is similar tu Petitioner’s question No. 3, supra. 1. A Michigan “Redemption” Settlement is Not a Commutation of or a substitute for Periodic Pay- ments, The Michigan Workmen’s Compensation Act allows a commutation of or a substitute for periodic payments by means of a “lump sum advance;” Part II, Section 22 of the Act provides in part: 8 “. . . [S]Jaid compensation commission may at any time direct in any case, if special circumstance be found which in its judgment require the same, that the deferred payments due under this Act be commuted on the present worth thereof at 5 per cent per annum to 1 or more lump sum payments.” (Mich. ‘Comp. Laws, Sec. 412.22; Mich. Stats. Ann. Sec. 17.172) Had claimant received a “lump sum advance’’ pursuant to the above statutory provision the Secretary would have acted correctly in applying the reduction because the ‘‘luamp sum advance” would have been a commutation of, or a substitute for, periodic payments. However, under Michigan law the payment recewed by claimant was not a commutation of, or a substitute for, perwdtc payments; claimant received a lump sum by way of a ‘‘redemption” settlement which is an entirely different concept under Michigan law. With respect to a ‘‘redemption” the Michigan Work- men’s Compensation Act provides in Part II, Section 22 as follows: “(Any liability resulting from an injury] may be redeemed by the payment of a lump sum by agree- ment of the parties, subject to the approval of the commission, . . .” (M.§. A. 17.172). The difference between the ‘‘redemption” under Michigan law and the “lump sum advance” include the following: (1) The “redemption” constitutes a settlement in full of all rights of claimants of actual and possible liability of employers in regard to not only weekly benefits, but medi- cal and hospital expenses, cost of nursing care and reha- bilttation through vocational training, as well, for his en- tire life. Wehmeter v. W. E. Wood Co., 377 Mich. 176, 139 9 N. W. 2d 733 (1966). In contrast, the ‘‘lump sum advance” covers weekly benefits only and is a commutation of substi- tute for such periodic benefits. (2) The “redemption” is like an out of court settle- mest of a contested claim; the amount agreed upon is a negotiated compromise and considers many factors, in- cluding the question of liability. In contrast, the ‘‘lump sum advance” is directly and solely a commutation of de- ferred weekly benefits based on their present worth at 5% per year; (3)' The ‘‘redemption”, when approved, allows attor- ney fees of up to 15% of the amount of the settlement under Michigan Workmen’s Compensation rules; in contrast, the attorney fee in connection with the lump sum advance is entirely discretionary with the Hearing Referee who con- siders it; in practice either no fee is allowed or a mere nominal fee is permitted. The Michigan Supreme Court, in Wehneicr v. W. E. Wood Co., supra held that a ‘‘redemption’’ settlement, under Michigan law, was not the same as a “‘lump sum ad- vance” of weekly Workmen’s Compensation payments. The Court of Appeals, while purporting to rely upon Weh- meter, supra, holds that a Michigan redemption settle- men is always at least in part a “commutation of, or sub- stitute for, periodic payments” for purposes of Sections 224(a) and (b) of the Social Security Act. (34) Thus, the Court of Appeals’ construction of Michigan law con- flicts with the holding of the highest Court of Michigan. The decisions of the Secretary and the Court of Ap- peals are contrary to and, in effect, nullify the specific language of Subsection 224(b). If this lump sum redemp- tion settlement is a ‘‘commutation of” or a “substitute for” periodic payments, then any lump sum would be. This, in effect, nullifies the ‘lump sum proviso.” 10 2. The Secretary and the Lower Court Limit “Lump Sum” in Section 224 to Claimant’s At- torneys Fees and Past Medical Expenses The Court of Appeals, in this case accepted the Secre- tary’s argument that the ‘‘lump sum” exception be limited to claimant’s attorneys fees and medical payments. This argument is faulty. If Congress had so intended to limit ‘lump sum,” then it could easily have said so. Other sta- tutes, such as the Michigan Workmen’s Compensation Act, specifically deal with medical payments. Furthermore, ‘*Iump sum” is broader than the meaning suggested by the Secretary in other parts of the Social Security Act. (See, e.g., Sec. 202(n)(1)(c} in regard to ‘‘lump sum death pay- ment.”’) The mischief inherent in the Court’s Order is apparent from its conclusion that a Michigan redemption settle ment “aiways constitutes m part a commutation of perio- dic payments.” (34) That means that the lump sum ex- ception is written out of the Act for all Michigan workers. Petitioner submits that the Court errs by holding that part of cvery Michigan redemption settlement is a substi- tute for periodic payments. But assuming arguendo that the Court is correct, this cannot justify the Court’s con- clusion that claimant’s entire redemption settlement (less attorneys fees and past medical expenses) should be treated as a commutation of or substitute for periodic payments. The lower Court holds claimant responsible for not having proven what part of his redemption settle- ment was made up of future medical expenses, thereby also winning exclusion of them from the reduction com- putation. This would have required claimant over a year after the settlement was consummated and when claimant 11 appeared before the Hearing Examiner or two years later’ when the matter came before the District Court, to show what part of the settlement was apportioned to future medical expenses. Such an undertaking would have been sheer deception and pure speculation because the nature of this redemption settlement precludes an apportion- ment by the weekly payments and medical expenses. Other Courts place this burden on the Secretary. The identical issue was involved in Slone v. Finch,. ... .F. Supp. ...-, CCH Un. Ins. Rep. Para. 16,093 (S. D. Ohio; Novem- ber 27, 1970). Claimant Slone received a Jump sum settle- ment of $8,000 under the Ohio Workmen’s Compensation Act. Two thousand dollars had been paid by claimant as attorney’s fees. The Secretary concluded that the entire $6,000 remaining was a commutation of periodic payments and, thus, substantially reduced claimants Social Secu- rity disability benefits. Judge Hogan grapsed this issue and, in a well reasoned opinion, stated in part: “It is quite clear to this Court that if the Com- mission makes a given award to a given person for a given number of weeks and thereafter, on ap- plication, the ‘(Commission commutes that to a lump. sum payment, then the lump sum payment is merely a commutation of or substitute for periodic pay- ments as that term is used in Section 424 and would clearly furnish the basis for an appropriate deduc- tion. The other secticn and the one specifically in- volved in this case is Revised Code Section 4123.65. This section is entitled, ‘Application for final settle- ment.’ ... As we pointed out initially, this is an unusual situation. Gambill v. Finch, 309 F. Supp. 1 (E.D. Tenn., 1970) is a pure and simple commutation case. The same is true of Ladner v. H.E.W., 304 F. Supp. i2 474 (Miss., 1969). In other words, in the Ladner case the Act itself as applied to the facts settled the periodic payments and, after the periodic pay ments had been settled, the commutation took place. In thts record there never occurred any event based on which either the period involved in a pe- riodic payment or the amount involved in a periodic payment was determined, The only thing that was determined in this case by the action of the Com- mission was that $8,000.00 was a fair amount to pay, not in any communtation, but in exchange for a release of whatever claim it was this plaintiff made. We point out that the claimant, is zart of this set- tlement, not only released any basic claim he had for periodic payment but also released any claim which he might ever have in the future for any medical or hospital expenses... . The Secretary has made no finding in respect of how much of the settlement amount represented a ‘substitute for’ periodic payments and how much represented & ‘substitute for’ future ‘lump sum’ payments for medical expense.” (at pp. 2167, 2168; emphasis added) The Court remanded the case to the Secretary. The U. S. Attorney served notice of appeal in January, but with- drew it in February, 1971. The Judge’s distinction be- tween the two Sections in the Ohio Statute is similar to the distinction made by the Michigan Supreme Court in Wehmeicr, supra. The Court of Appeals here overlooked such distinction. Ironically, District Judge Keith, who had decided the instant case, issued a later decision which reaches the same result as in Slone, supra. In Miley v. Finch,.... F. Supp....., CCH Un. Ins. Reps. Para. 15,848 (E.D. Mich. June 12, 1970), the Court rejected claimant’s constitu- tional arguments, relving upon his decision in the instant 13 case and upon Lofty, supra. But the Court remanded the case to the Secretary, holding in part: “Finally, plaintiff argues that the secretary failed, prior to applying the offset provisions of the act, to reduce the amount of the redemption by any payment for future medical expenses included in the settlement agreement. . . It is unquestionably the law in Michigan that a redemption amount encompasses payment of weekly benefits and all past and future medical expenses. See Wehmeier v. W.E. Wood Company (1966) 377 Mich 176. If such is the case in Michigan, then, prior to any application of the offset provisions of the Social Se- curity Act, a determination must be made on each redemption amount as to what portion represents a commutation of our substitute for periodic pay- ments and what portion represents settlement for past and future medical expenses. The record in this matter contains no such deter- mination; at best the transcript contains a ‘Report of Contact, Workmen Compensation Payment Re- port’ from the Lansing, Michigan District Office, stating the conclusion that the amount of $5,929.15 excludes ‘medical and/or attorney’s fees.’ As the record is void of evidence to support this conclusion, which apparently was adopted by the Sec- retary, there is no basis in fact on which this Court may affirm this decision. Therefore, as to this third issue, the matter must be reversed and remanded so that the Secretary may, with the assistance of evidence submitted by the plaintiff or the Work- men’s (Compensation Board, make a determination as to what portion of the redemption amount con- stituted a commutation or substitute for periodic payments and what portions represents payments for past and future medical expenses. 14 It seems to this Court that, in view of the decision of Wehmeier, supra, such a determination would be required in every case where a redemption amount effectuates an offset.” (Emphasis added; at 2499) In the instant case, the Secretary deducted some law- yer’s fees and an amount for past medical expenses from the offset. The Secretary neglected claimant’s future and present medical expenses. District Judge Keith, in ruling ‘for the Secretary in the instant case, treated plaintiff Miley better than petitioner herein. 3. The Lower Court’s Construction of Section 224 Conflicts with this Court’s Rules of Statutory Construction and with the Purposes of the Stat- ute... The errors inherent in the Secretary’s and the Court of Appeals decisions go beyond doing violence to the lan- guage of the Act. Said decisions are also contrary to the purposes of the Social Security Act and to this Court’s rules of Statutory construction. This Court discussed the history of the Act and its bene- ficiai purposes, paritcularly in regard to its unemployment and old age portions, in Charles C. Steward Mach. Co. v. Davis, 301 U.S. 548, 586-588 (1937), Helvering v. Davis, 301 U.S. 619, 641-645 (1987), both opinions by Mr. Justice Cardozo, and in United States v. Sk, 331 U.S. 704, 710 (1947), by Mr. Justice Reed. The purpose of the disability benefits portions was dis- cussed in Sayers v. Gurdner, 380 F. 2d 920 (6th Cir. 1967), in part as follows: “Because of the repeated necessity of reversing the Secretary in these cases, we should go back to A NS ee a ISS PEDERI 1d the origins of the Statute and consider first things first. The Act was adopted pursuant to a public policy unknown to the common law, designed for the protection of society, and enacted to alleviate the burdens which rest on large number of the popu- lation because of the insecurities of modern life, particularly those accompanying old age, unemploy- ment and disability, through the establishment in advance of a provident fund for the needy worker, out of which he wili be paid disability denefits, annuities, and compensation; and there is no ques- tion that the Social Securities Act is constitu- tional.” ae ca * * * “The Social Security Act brought with it, among other provisions, the right to disability benefits for workers who have become disabled from doing the work—usually the hard manual work-—that they have done during their lives. “In McGaha v. Ribicoff, 262 F. Supp. 161, 167, the court, in a case involving disability benefits under the Social Security Act reversed the Hearing Examiners and states... . “Pinched by poverty, beset by adversity, driven by necessity, one may work to keep the wolf away from the door though not physically able to work; - and, under the law in this case, the fact that the woman worked to earn her living did not prevent a jury from finding, from the evidence before it that she was totally and permanently disabled even while working.’” (at 942 of 380 F. 2d; emphasis supplied) The Court in Sayers, reversed the District Court’s affir- mance of a denial of disability payments and directed that benefits be paid.® 8’ The Court discussed the large percentage of times in which the Secretary has been reversed in disability cases as bearing upon the standards of judicial review (at 942 and 948). aan iit, mea nee i" ¥ “ pe that Sd 16 This Court and most other Courts hold that the purpose of legislation governs its interpretation. See, for example, United States v. American Trucking Assn., 310 U.S. 534, 543, 544 (1940); and see The Legal Process, by Professors Henry Hart and Albert Sacks, at pp. 1082 and 1339 of 1957 Cambridge Tentative Edition). The view of the Secretary, as upheld by the Court of Ap- peals, is contrary to the beneficial purposes of the Social Security. Act and its Section 223 providing for disability benefits. It also nullifies the Section 224(b) “lump sum” exception. (See discussion, swpra, at p. 9) The Secretary’s decision does not even square with the presumed purpose of Section 224(a)-——that is to avoid du- plication or pyramiding of benefits so that an individual cannot receive more money in a combination of benefits than he would have received if he continued to work. The application of the Section in this claimant’s case does not accomplish the legislative purpose; he had two jobs and the addition of Social Security benefits to his lump sum compensation settlement would not come close te his lost income. (See Statement of the Case, supra, at pp. 4, 5): In the case at bar, the court broadly construed an ex- ception to receipt of benefits (i.e., the Workmen’s Compen- sation offset); the Court narrowly construed the Subsec- tion 224(b) lump sum exclusion from this offset. And, final- ly the Court broadly construed ‘commutation” or ‘‘substi- tute” in Subsection 224(b). The Court’s aforedescribed standards of construction are all contrary to the general rule of construing a beneficial statute liberally or broadly to allow benefits and narrowly construing its disqualify- ing provisions, or those which might reduce benefits. 82 Corpus Juris Secundum, ‘‘Statutes,’’ Section 382 (at 891- 894). In this respect, the lower Court’s decision is contrary 17 to the decisions of this Court, to the decisions of other Cir- cuit Courts and even to its own earlier decisions. See, for example, United States v. Silk, 331 U.S. 704, 712 (1937); Schwing v. United States, 165 F. 2d 518, 520, 521 (3d Cir. 1948; and Ewing v. Black, 172 F. 2d 331 (6th Cir. 1949) ; compare A. H. Phillips, Inc. v. Walling, 324 U.S. 490, 493 (1965). Delno v. Celebrezze, 347 F. 2d 159 (9th Cir. 1965), was an appeal from a judgment sustaining the decision of the Appeals Council which had denied plaintiff’s application for old-age insurance benefits under Section 202(a) of the Act. (At 161) The Court of Appeals vacated said judg- ment. In regard to construction of the Act, the Court said, in part: “The record indicates that the Appeals Council applied the ‘services to occupant’ exception nar- rowly, and included borderline items in the rental exclusion. The general statutory preference for coverage would seem to require the opposite ap- proach.” (At 165; emphasis ours) See also, Davidson v. Gardner, 370 F. 2d 803, 807, 808 (6th Cir. 1967). Claimant here has had Social Security taxes taken out of his pay. To deny coverage or to reduce it by something which le would have received anyway is to reach an ab- surd and unfair result. Statutes, where at all possible, must be construed to avoid such a result. See, for example, U.S. v. American Trucking Assn., Inc., 310 U.S. 534 and St. Luke’s Hospital Association of Cleveland, Ohio v. United States, 333 F. 2d 157, 163, 164 (6th Cir. 1964). Compare Reynolds v. Gardner, 271 F. Supp. 676 (W.D. Va 1966), af- firmed 381 F. 2d 380 (4th Cir. 1967). 18 Neither defendant Secretary nor the lower Courts gave any sensible meaning to the term ‘‘lump sum” in Section 224. Based upon the Statutory construction issues alone, this Court should hear this case. B. Section 224 of the Social Security Act is Contrary to the Fifth Amendment of the United States Con- stitution, This Court has Other Cases involving these issues before it. Section 204, as construed by the Secretary, deprives Pe- titioner of property without due process of law in at least two respects: 1. It unreasonably discriminates against claimant pe- titioner as compared with other disabled workers who paid Social Security taxes and who received their full disability benefits under the Social Security Act; and 2. It effec- tively nullifies claimant’s private settlement agreement by taking Social Security disability benefits away from claim- ant, in an amount equal to what he receives under said settlement agreement. These issues present important Federal questions. The first constitutional issue is the same as is before this Court in Belcher v. Richardson, Case No. 1091, re- viewing 317 F. Supp. 1294 (S. D. W. Va. 1970), Bartley v. Richardson, Case No. 108, seeking review o. 311 F. Supp. 876 (E. D. Ky. 1970) and Lofty v. Richardson, Case No. 1758, petition for certiorari pending. In Belcher, the United States District Court for the Southern District of West Virginia held: 19 “In sum, therefore, it is held that in the circum- stances of plaintiff’s case, the application of Sec- tion 224 cannot be constitutionally applied, since to do so would deprive him of due process and equal pretection of the law under the Fifith and Fourteenth Amendments.” In Lofty and Bartley, the lower Courts, as in the instant ease, upheld the Section’s constitutionality. Thus, this Pe- tition should be granted to help resolve the conflict in the decisions of our Federal Courts on this question. In order that petitioner’s rights be fully protected, peti- tioner requests that this Petition be considered with the Petition in Lofty, supra, and that this Court hear this case so that this case can be decided along with said other eases pending before this Court. C‘aimant has been required by law to make certain So- cial Security tax contributions over a period of years while engaged in covered employment. These contributions in part have been placed in the Federal Disability In- surance Trust Fund created by Congress. [Title 42 U.S.C.A. See. 401(b) ] Claimant suffered a work-connected injury for which he received a monetary settlement. Congress directs that his Social Security Disability Benefits from the trust fund shall be reduced because of the receipt of workmen’s com- pensation benefits. Another person, who has made the same Social Security tax contributions to the trust fund, may suffer a disability which is not work-connected in ori- gin and for which he receives a private settlement; the Act permits him to receive full Social Security Disability Bene- fits out of the trust fund. Such a difference in treatment between persons re- quired to make the same Social Security tax contributions 20 ‘to the trust fund is unreasonably discriminatory resulting in an arbitrary reduction in disability benefits. As such, Section 224 of the Social Security Act is unconstitutional as an infringement of claimant’s rights not to be deprived of property without due process of law guaranteed to him by the Fifth Amendment to the United States Constitu- tion. (U.S.C.A. Constitution, Amendments 1 to 5, p. 482.) If the intent of Congress in enacting Section 224 was to avoid duplication and pyramiding of benefits so that an individual cannot receive more money in combination of benefits than he would have received if he continued to work (Hearings before the Committee on Finance— United States Senate on H. R. 6675, pp. 146-151 [Part I)), it was arbitrary to reduce Social Security benefits by Workmen’s Compensation, because such compensation is a public-borne cost of industry. As such, it is owed the in- dividual by his employer or by his employer’s private in- surer under the public policy to compensate him for injury suffered in the service of our modern indystrial society. See the quote from Belcher v. Richardson, infra at page 26. At the same time, the worker is individually taxed to build a separate trust fund under Social Security out of which disability benefits may be paid to him. His Social Security tax contributions are self-borne, not as a volun- tary but as a mandatory supplemental insurance program required by law. Under these circumstances, should not claimant be entitled to both benefits, in full, even at the risk of receiving more in benefits than he did in prior earnings? The savings otherwise accumulated or the bene- fits of a private disability insurance policy but for the tax would have been available to him. Moreover, it is sub- mitted that the feared “‘pyramiding” is more a theory than a practical reality. In most cases, full Social Security Dis- ability Benefits would simply close the gap to insure dur- 21 ing disability continuing income about the size of previous earnings and in a few cases would it exceed by any sub- stantial sum the full average weekly earnings of the man before injury. Claimant has been permanently injured. He will suffer pain and physical impairment the rest of his life. Surely some portion of his redemption settlement and of his So- cial Security benefits is ‘‘compensation” for this injury. Finally, in this claimant’s case the combined workmen’s compensation benefits and Social Security benefits would be $336.10 less than his total earnings from both jobs be- fore injury. (65) The Secretary’s failure to recompute claamant’s earnings to reflect ints second job, makes the application of Section 224(a) to this claimant especially harsh and arbitrary. In analyzing the alleged reasonableness of a classifica- tion made in a statute, a court must look to the purpose of the statute involved. As Justice Brandeis said, while dissenting in Quaker City Cab Co. v. an 277 U.S. 389 (1928) : “|. . the classification must insist wpon a differ- ence which is real, as distinguished from one which is seeming, specious, or fanciful, so that all actually situated similarly will be treated alike; that the obect of the classification must be the accomplish- ment of a purpose or the promotion of a policy, which is within the permissible functions of the State; and that the difference must bear a relation to the object of the legislation which is substantial, as distinguished from one which is speculative, re- mote or negligible. . . .” (At 406, emphasis sup- plied). . The majority held that the classifications in the Statute were not “based on a real and substantial difference hav- 22 ing reasonable relation to the subject of the legislation.” (At 402). Compare Porter v. Shibe, 158 F. 2d 68, 73 (10th Cir. 1946), where the Court relied upon Nebbia v. People of State of New York, 291 U.S. 502, 525, (1933), and Fox v. Michigan Employment Sec. Commis., 379 Mich. 579 (1967). The determination of whether a Federal law is uncon- stitutionally unreasonable within the Fifth Amendment is similar to the question of the validity of state action within the Fourteenth Amendment’s equal protection clause. See, for example, Bolling, et al v. Sharpe, et al, 347 U.S. 497, 499 (1954). In Cahfornia Dept. of Human Resources Development, et al v. Java, et al,....US....., 39 Law Week 4491 (Case No. 507; April 26, 1971), this Court unanimously voided Sections of the California Unemployment Insurance Code which were contrary to the purposes of the Federal unem- ployment insurance program as expressed in Section 303 (a)(1) of the Social Security Act. [Title 42, U.S.C.A. See. 503 (a)(1)] We.have seen, supra, that Section 224, as construed by the Secretary is contrary to the purposes of the Social Se- curity Act, and its Sections 223 and 224. For this reason, Section 224(a) cannot stand as against the standards for constitutionality which Federal and state laws must meet. 95 2. Impairment of Contractual Obligations The second part of constitutional issue has not yet been discussed in the cases before this Court. The due process clause of the Fifth Amendment projects persons, such as claimant from Federal action which im- pairs contractual obligations.* In this regard, it is stated in 16A Corpus Juris Secundum, ‘‘Constitutional Law,” Section 610: “In general valid contracts are property and can- not be interfered with without due process of law, and this rule applies whether the obligee is a pri- vate individual, a municipality, a state, or the United States.” (At p. 740; emphasis supplied) Claimant entered a valid settlement agreement with his employer’s insurance company as a result of injuries suf- fered by claimant. The Secretary, by his erroneous con- struction of Section 224 of the Act, takes away disability benefits otherwise due claimant because of said private settlement agreement. This action attaches a new disad- vantage or liability to claimant’s settlement agreement. This azreement is, in effect, nullified just as if Congress had passed a law requiring any person who receives health or accident insurance benefits to pay an equivalent amount to the United States Treasury Department. Compare Article I, Section 10, and the Fourteenth Amendment due process clause as to state action which unreasonably affects con- tracts. 24 3. The Rights-Privilege Distinction of Flemming v. Nestor, Upon which the Lower Court Opinions in Lofty and in the Instant Case are Based, Has Been Abandoned by this Court. The lower Courts, in dismissing claimant’s Constitu- tional arguments, merely cited the opinions in Lofty v. Finch, 325 F. Supp. 285, (E.D. Mich. 1970), affirmed 440 F. 2d 1144 (6th Cir. 1971). The Lofty case is now before this Court in Case No. 1758. First, Lofty’ does not involve a person who, as claimant in the instant case, had two jobs when disabled. Thus, in this case, the arbitrariness of the Secretary’s construction of the Act is even more apparent. Secondly, Lofty is wrong. The Courts in Lofty, primarily relied upon Flemming v. Nestor, 363 U.S. 603 (1960), in rejecting plaintiff Lofty’s Constitutional arguments. In Nestor, supra, the District Court (169 F. Supp. 922) held Section 202 (n) [42 U.S.C. Sec. 402(n)] unconstitu- tional. That Section terminates Social Security Old Age benefits payable to a deported alien. The Supreme Court, with present Justices Black, Brennan and Douglas dissent- ing, reversed the District Court. The majority opinion was mainly based upon its view that citizens do not have an ‘accrued property right” to Social Security benefits. How- ever, the Court majority did stress: “This is not to say, however, that Congress may exercise its power . . . free of all constitutional restraint. The interest of a covered employee under the Act is of sufficient substance to fall within the protection from arbitrary governmental action afforded by the Due Process Clause.” (At 611) 25 Compare Sherbert v. Verner, 374 U.S. 398, 405 (1963), opinion by Justice Brennan (who dissented in Nestor) ; the Court (though citing the above quote from Nestor) under- cut Nestor’s view of the difference between rights and privileges. Nestor is not the instant case. And we submit that the result in Nestor is ludicrous and unjust. Fortunately, this Court drifted away from its views in Nestor and, finally, completely rejected the philosophy upon which Nestor was based. In Kennedy v. Mendoza-Martinez, 372 U.S. 144 (1963), a statute allowing deportation for evading the draft wag held unconstitutional as imposing punishments without due process of law. This was contrary to Nestor where he had been deported and deprived of Social Security because of his past communist activities. The dissenting justices said the majority opinion was contrary to Nestor (at 209). Nestor has also been cited by dissenting justices in at least the following cases: Rusk v. Cort, 369 U.S. 367 (1962) ; United States v. Brown, 381 U.S. 487, 462, 467 (1965), where this Court, in affirming the Court of Appeals, held unconstitutional Section 504 of the Labor-Management Re- porting and Disclosure Act of 1959; Wells v. Rockefeller, 394 U.S. 542, 550 (1969); and Swann v. Adams, 385 U.S. 440 (1967), where this Court held unconstitutional New York Congressional Redistricting and Florida Legisla- tive Reapportionment, and Shapiro v. Thompson, 394 U.S. 618 (1969), where a Connecticut law denying welfare bene- fits to citizens who have not resided there one year was held unconstitutional. Compare Heikkila v. Celebrezze, 222 F. Supp. 629 (N.D. Calif. 1963), where the Court limited Nestor to its peculiar facts (at 631 and 632). The rights-privilege distinction, upon which Nestor was based, may have been finally put to rest in Goldberg u, Kelley, 397 U.S. 254, 261 (1970). See also Wheeler v. Mont- gomery, 397 U.S. 280 (1970); and Daniel v. Goliday, 398 U.S. 73 (1970) In Belcher v. Richardson, supra, the Court discussed Nestor in relation to Goldberg v. Kelley, as follows: “Thus, we must conclude that the concept es- poused by the majority in Nestor, that one who has contributed to the social security fund and later becomes eligible to receive the benefits provided by the Social Security Act has no indefeasible prop- erty right to such benefits, is no longer to be con- sidered a viable and controlling precedent for that principle, in view of the more recent holding in Goldberg that a welfare recipient who has made no direct contribution to the fund from which he draws benefits does have recognizable property right to such benefits and one which is protected by all the safeguards of due process.” (Emphasis ours; at 2014) It is claimant’s view that Congress never intended Sec- tion 224 to apply to lump sum setlements, such as received by him; in fact, Congress, in Subsection 224(b), expressly exempted such settlements from any Wurkmen’s Compen- sation offset. (See discussion, swpra, at pp. 7-8). How- ever, the Secretary’s refusal to properly construe and apply Section 224, unconstitutionally interferes with and impairs claimant’s contract and property rights. We ask this Honorable Court to carefully examine Sec- tion 224, as herein construed, in light of its own purpose and with regard to the expressed purposes of the Social Security Act and its Section 223 with which Section 224, .as construed below, conflicts. This Court should then hold that Section 224 is contrary to the Fifth Amendment of the United States Constitution. C. The Secretary’s Failure to Apply Section 159 Of Public Law 90-248 in Computing Claimant’s Earn- ings Presents Another Important Federal Question. Prior to 1968, the computation of earnings for disability benefits and other Social Security benefits were limited to those earnings from which Social Security taxes were taken. For example, in 1967 the maximum earnings sub- ject to Social Security taxes were $6,600.00. Many persons, of course, earned more than said maxi- mum amount. Claimant having had two jobs at the time of his injury, was one of such persons. (65) The Congress of the United States did not think it fair or right for the disability benefits due such persons to be based only upon earnings subject to Social Security taxes. In December, 1967, Congress enacted, and the President signed, Section 159 of Public Law 90-248 to correct this situation. This amended Section 224 (a); compare Sub- sections 215(a),(c)(2) and(f)(2); and see 2 U.S. Congres- sional and Administrative News, 1967 at pp. 2834, 2835, 2847, 2873, 2874, 2853, 2884, 3046, 3047, 3060, and 3104) which state in part: “Disability Benefits Affected by the Receipt of Workmen’s Compensation. The dill would modify one of the provisions in present law for determining the amount of combined social security and work- men’s compensation benefits that can be paid when a disabled worker is eligible under both programs. In these cases, the computation of average earn-. ings could inciude earnings in excess of the annual amount taxable under social security.” (at 2847; emphasis supplied) Section 224 of the Act as amended by section 159 of Pub- tic Law 90-248 provides in pertinent part: 28 “For purposes of clause (5), an individual’s aver- age current earnings means the larger of (A) the average monthly wage used for purposes of com- puting his benefits under section 223, or (b) one- sixtieth of the total of his wages and. self-employ- ment income (computed without regard to the limi- tations specified in sections 209(a) and 211(b)(1) for the five consecutive calendar years after 1950 for which such wages and self-employment income were highest.” (Emphasized words added by sec- tion 159, supra, effective for benefits for months after January, 1968; (86, 87) The Secretary used $273.00 as the ‘‘average monthly wage”, upon which the disability benefits were based. The Secretary justifies this by stating that it is higher than $245.00, the figure calculated by the Secretary to be claim- ant’s highest monthly wage for the past five years. The Secretary erroneously failed to take claimant’s $709.00 combined earnings as the average monthly wage for disability income purposes. Secondly, the five-year aver- age must also now reflect both jobs of claimant. This Amendment was made effective in regard to any Social Security benefits to be paid after February, 1968. (Ibid, at 3104) The earnings of persons, such as claimant were to be recomputed after February 29, 1968 and higher benefits were to accordingly be paid. (See Historical Note after 42 U.S. C. A. Sec. 424a) Increased benefits were to be paid to claimant whether or not his lump sum settlement is used to offset his So- cial Security disability benefits. (See 2 U.S. Cong. & Admin. News, 1967, at pp. 2873, 2874, 2883 and 2884) The Secretary failed to apply said Amendment to claim- ant’s earnings and to his benefits based upon such earn- 29 ings. This is impermissible. The evidence of claimant’s two jobs and income was submitted to the Examiner. (65) Before the Appeals Council, as the Secretary has ad- mitted, claimant clearly and expressly requested recompu- tation. The Secretary, however, disregarded the Amend- ment and refused to make the required recomputation. Claimant then brought suit and again expressly raised said issue. For example, the third Argument in claimant’s Brief to the District Court and the third question pre- sented the Court of Appeals was the same as this argu- ment to this Court. Claimant’s counsel, at the hearing be- fore the District Judge, stressed this argument. The Sec- retary never answered this argument in his Brief nor orally. The Secretary ignored the issue as he had ignored the Amendment. Neither the Secretary nor the District Judge objected to claimant’s raising this issue. The District Judge, incredibly, in his Memorandum Opin- ion and Order of May 28, 1970, refused to consider this issue and stated that it never had been raised at the ad- ministrative level. (41, 42) Claimant filed a Motion to Amend Findings and Judg- ment and for a New Hearing based upon the Court’s deci- sion on this argument. The Secretary in his Answer to Plaintiff's Motion to Amend Findings, challenged for the first time claimant’s right to the recomputation, arguing that claimant had not produced evidence at the administra- tive level to support this conclusion. Claimant did produce such evidence by his own state- ments and by furnishing supporting financial records. Fur- thermore, the Hearing Examiner found as a fact that claimant had been working two jobs. (65) There was sufficient evidence in the record to require such recompu- 30 tation. Had the Secretary ‘really wanted more evidence, then he could have obtained it. The District Judge, in denying claimant’s Motion to Amend Findings, held that claimant’s evidence of two jobs and the money earned at said jobs did not “fairly apprises the Secretary of claimant’s claim that Section 159 of Pub- lic Law 90.248 was possibly applicable.”* (47) But claimant expressly cited said Section 159 to the Appeals Council and asked that his earnings be recomputed. Claimant respectfully submits that the District Judge (based upon his May 28 Opinion) overlooked claimant’s evidence. The Secretary must administer the Act in accordance with its beneficial purposes and ensure that a disabled worker receives his full benefits under the Statute. It is wrong for the Secretary to act as if disabled workers are somehow getting away with something when they receive their full benefits. The Court of Appeals ignored this question. Thus, the lower Court has sanctioned the Disirict Court’s allowing the Secretary to avoid applying Section 159 of Public Law 90-248. While this practice may not present as far reaching a Federal question as the other issues, it is important that this Court exercise its supervisory powers and require the Secretary to consider and to apply Section 159 of Public Law 90-248 to claimant’s claim for benefits. 5 Claimant did not ask the District Judge to usurp the administra- tive function. In claimant’s Brief to the District Judge, we urged that the Court remand this case to the Secretary with instructions to recom- pute claimant’s earnings and benefits as required by said Public Law 90-248. 31 CONCLUSION The Constitutional issues are before this Court in at least three other cases. The lower court opinion conflicts with that of a three judge District Court in Belcher v. Richardson, Supreme Court No. 1091. The issues coucern- ing the proper meaning and application of Section 224 of the Social Security Act are significant and substantial. For the aforementioned reasons, Petitioner prays that his Petition for Writ of Certiorari to the Court of Appeals for the Sixth Circuit be granted. Respectfully submitted, /s/ Jordan Rossen 8000 East Jefferson Avenue Detroit, Michigan 48214 (313) 926-5216 and Eames, Petrillo, Wilcox, and Kerwin /s/ Leonard A. Wilcox, Jr. 900 Guardian Building Detroit, Michigan 48226 (313) 963-3750 Attorneys for Petitioner Dated: July 16, 1971. NTC ne a APPENDIX A OPINIONS OF COURTS AND AGENCIES a UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT COURT Johnney Benjamin, Plaintiff-Appellant v. Elliott L. Richardson, Secretary of Health, Education and Welfare Defendant-Appellee No. 20,714 PER CURIAM ORDER Decided and Filed April 29, 1971 Before: Weick, Peck and Kent, Circuit Judges. This is an appeal from a judgment of the District Court affirming a decision of the Secretary of Health, Education and Welfare. After finding the claimant, the plaintiff- appellant herein, to be disabled within the meaning of the Social Security Act, the Secretary determined that the disability benefits to which the claimant would be entitled were required to be reduced pursuant to Section 224 of the Act (42 U.S.C. § 424) by the amount of a lump sum settlement received by the claimant under the Michigan Workmen’s Compensation Act (Mich. Stat. Ann. 17.172). Claimant attacks both the factual correctness and the con- stitutionality of the Secretary’s determination. Section 224(a) of the Social Security Act (42 U.S.C. § 424 (a)) provides that when a claimant entitled to re- 34 ceive Social Security disability benefits also receives perio- dic disability benefits under a state workmen’s campensa- tion or like plan, a reduction in the Social Security bene- fits must be made by the amount in which the claimant’s combined Social Security disability benefits and his work- men’s compensation benefits exceed 80% of his previous average monthly earnings. Section 224(b) (42 U.S.C. § 424(b)) excludes from the reduction computation, how- ever, any lump sum received by the claimant under a work- men’s compensation plan unless the tump sum payment constitutes a “commutation of, or substitute for, periodic payments” under such plan. Therefore, the principal is- sue before the Secretary cnd the District Court was whe- ther the lump sum received by the claimant here under the Michigan Workmen’s Compensation Act constituted, in whole or in part, a ‘‘commutation of, or substitute for, periodic payments” under the Michigan plan. We agree with the District Court’s conclusion that under Michigan law a “redemption’”’ settlement of the type entered into herein always constitutes, in part, a commutation of perio- dic compensation payments. Wehmeier v. W. FE. Wood Co., 377 Mich. 176, 139 N.W. 2d 733 (1966). Thus it was incum- bent on the claimant, as part of his burden of proof, to show any unpaid medical expenses, future medical ex- penses or any other amounts which should have been ex- cluded from the lump sum. Other than certain unpaid medi- cal expenses and attorney fees shown by the claimant, which the Secretary did exclude from the lump sum in making his reduction computation under Section 224, claimant failed to show any amounts which should have been excluded. Claimant’s alternative argument attacking the constitu- tionality. of Section 224 of the Act raises issues previously considered and negatively resolved by this Court. Lofty v. 35 Rachardson,....F. 2d ....(No. 20,484, decided and filed March 4, 1971). Accordingly, ) It is ordered that the judgment of the District Court be and it is hereby affirmed. Entered by Order of the Court Carl W. Reuss, Clerk MEMORANDA OPINION AND ORDER OF MAY 28, 1970 By Hon. Daxz emer uae tue Wormer’: Compenseuon eae area 57 Law. In other words, the common law liability rales as to negligence are inapplicable. In the facts of this case, the liability of the employer was not clear and persuasive. Claimants’ attorney recom- mended the settlement to his client because of two issues which would have to be decided in a plenary hearing. These issues were whether or not the gunshot wound arose out of and in the course of claimant’s employment. The other issue was a medical one and had to do with whether or not a functional overlay was disabling within the Work- men’s Compensation Act.” In accordance with procedures set up by the Workmen’s Compensation Department, a hearing was heid so that the Redemption Award could be considered by the Referee. The follewing exchange took place between the Referee and the claimant: “The Referee: Mr. Benjamin, as your attorney has explained to you, if you tried your case and you could show that as a consequence of your injury that you could not work you could collect compensation for every week that you were off work for the rest of your life because of the injury. You could also get medical treatment for your injury for the rest of your life. So you have got life-long coverage in terms of com- pensation for every week you are off work because of the injury, anda even if you are working, if you need medical attention you could get that medical attention and have it paid for by the employer if it was proven that you received an injury at work and then, as a con- sequence, you needed medical attention. Now, you are 2 Exhibit 16, page 3—Transcript of proceedings before a Referee of the Workmen’s Compensation Department. 58 giving all that up in exchange for this settlement. And when you settle your case, if you settle your case and I approve it, you are giving up all your rights that you have against the Defendant here, the Log Cabin Bar, and closing the case against them. A. Yes, sir. The Referee: Do you understand that? A. Yes, sir. The Referee: And do you want to do that? A. Yes. The Referee: And do you realize that if you had some medical costs in the future that come about as a result of this injury that you will have to pay for those yourself and that the Company will not do it? A. Yes. I talked that over with my wife. The Referee: Okay. Do you want me to approve this settlement? A. Yes, I do.” (Exhibit 16, pages 11, 12 and 13.) It is clear from the statements of the Referee and of counsel that this lump sum award had all he earmarks of a settlement of a lawsuit rather than a substitute for periodic payments. Now the Redemption Order signed by the Workmen’s ‘Compensation Referee had a printed paragraph which states that the agreement to redeem by a single payment was in lieu of weekly payments.° However, this statement taken by itself does not show that this payment was a substitute for periodic payments. The Workmen’s Compensation Department of Michigan has a procedure for an advance payment of benefits based 3 Exhibit 15. 59 on actuarial formula.* There is no doubt but that an ad- vance payment based on the formula would be a substi- tute for periodic payments. ‘Counsel for claimant has pointed out that the Michigan Statutes were recently revised to permit a Redemption Award without the prerequisite of a six month payment period. This would tend to show that Michigan Law no longer requires ay periodic payments prior to the ap- proval of a lump sum redemption award. The facts of this case show that the defendant employer in the workmen’s compensation case set forth various de- fenses as to liability in his answer to claimant’s com- plaint.* The lump sum settlement or Redemption Award was hammered out by the parties after some agonizing delib- eraticn. Claimant’s attorney recommended to the claim- ant that he accept this award since it would eliminate some of the risks of a non-suit in the event of a trial or plenary hearing. Section 224(b) of the Social Security Act excludes from the reduction provisions a lump sum benefit payment. The payment oi the $10,000 was a lump sum benefit payment. Was this lump sum payment a substitute for or a com- mutation of periodic payments? The undersigned Hear- ing Examiner does not think so. Therefore, the undersigned Hearing Examiner finds that the Redemption Award to Johnney Benjamin was a lump sum payment and not a substitute for a commuta- tion of periodic payments. 4 Exhibit 22. 5 Exhibit 12, 60 ‘Claimant’s counsel has attacked the constitutionality of Section 224 of the Social Security Act. The undersigned Hearing Examiner is called upon to administer the Social Security Act as a quasi-judicial officer. It is well estab- lished that an administrative officer has no authority to pass upon the constitutionality of an act which he is called upon to administer.° _ ‘The finding in this case is limited to the facts in the instant case. This decision does not stand for the general proposition that all Redemption Awards are lump sum payments and are subject to the Exemption Provisions of Section 224(b) of the Social Security Act. Decision _ The Reduction Provisions of Section 224 of the Social Security Act are not applicable to claimant’s disability benefits. /s/ Sidney J. Fenster Hearing Examiner 2700 Broderick Tower Bldg. Detroit, Michigan 48226 Date: December 3, 1968 6 Public Utilities Commission v. U.S., 355 U.S. 584; 78 S. Ct. 446. 61 HEARING EXAMINER’S DECISION Department. of HEALTH, EDUCATION, AND WELFARE Social Security Administration Bureau of Hearings and Appeals In the case of , Johnney Benjamin (Claimant) Claim for Period of Disability and Disability Insurance Benefits Johnney Benjamin (Wage Earner) 247-48-2649 (Social Security Account Number) This case is before the Hearing Examiner pursuant to Section 205(b) of the Social Security Act, as amended, (42 USC 405(b)), hereinafter referred to as the Act, on a request for hearing filed on December 226, 1967 by Johnney Benjamin, the claimant herein, who is dissatisfied with de- terminations made by the Social Security Administration which initially and on reconsideration disallowed his ap- plication for a period of disability and disability insurance benefits under the provisions of Sections 216(i) and 223 of the Act (42 USC 416(i) and 423). The claimant’s said application was filed on March 16, 1967 and it alleged that, because of an impairment described as “bullet lodged in back,” he became unable to work on April 20; 1966. A hearing, at which the clairoant personally appeared and testified, was held on February 28, 1968 before the undersigned Hearing Examiner at Detroit, Michigan. The claimant was represented by his attorney, Leonard A. ‘ Wilcox, Jr., Esquire. 62 Issues Involved The general issues in this case are whether the claimant is entitled to a period of disability and to disability in- surance benefits under Sections 216(i) and 223, respec- tively, of the Act. The specific issue to be decided is whether the claimant, during the time he met the earnings requirement of the Act, became unable to engage in any substantial gainful activity by reason of a medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. Applicable Statutes and Regulations Sections 216(i) and 223 of the Act, insofar as pertinent to this case, define “disability” as “inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months.” Subsection (d) of Section 223 of the Act provides, in part, as follows: ‘*(2)(A) An individual . . . shall be determined to be under a disability only if his physical or mental impairments are of such severity that he is not only unable to do his previous work but cannot, consider- ing his age, education, and work experience, engage in any other kind of substantial gainful work which exists in the national economy, regardless of whether such work exists in the immediate area in which he 63 lives, or whether a specific job vacancy exists for him, or whether he would be hired if he applied for work. For purposes of the preceding sentence . . . ‘work which exists in the national economy’ means work which exists in significant numbers either in the region where such individual lives or in several regions of the country... . 3 (3) For purposes of this subsection, a ‘physical or mental impairment’ is an impairment that results from anatomical, physiological, or psychological ab- normalities which are demonstrable by medicaily ac- ceptable clinical and laboratory disgnostic techniques (5) An individual shall not be considered to be under a disability unless he furnishes such medical and other evidence of the existence thereof as the Sec- retary may require.” Sections 216(i) and 223 of the Act further provide that - an individual shall not be considered to be under a dis- ability unless he was “a fully insured individual” and has social security credits for not less than 20 calendar quar- ters of work during a period of 40 calendar quarters end- ing in or after the calendar quarter in which he became disabled. Sections 404.1502, 404.1015-404.1519 and 404.1523-404.- 1524, inclusive, of Subpart P, Title 20 of the Code of Fed- eral Regulations, indicate what proof is required to estub- lish entitlement to disability insurance benefits under the Act and what standards will be applied for evaluating such evidence. In substance, these sections of the Regulations provide that although primary consideration is given to the sever- 64 ity of the individual’s medically determinable physical or mental impairment, consideration also is given to other factors such as the individual’s age, education, training and work experience in determining his ability to engage in «ay substantial gainful activity. In evaluating the rela- tive severity of an individual’s medically determinable im- »airment, consideration is given, among other things, to how much the impairment affects his abilities to move about, handle objects, see, hear, speak, understand and reason. Summary of Claimant’s Testimony The claimant testified substantially as follows: He was born on September 17, 1931 in Hartsville, South Carolina. He completed 7 grades of schoo] but when he was “around 17 years old” he dropped out of school and worked for a year for the Plain Glass Construction Com- pany in Hartsville. That company was engaged in building 5 and 10¢ stures and the claimant worked as a general construction laborer for $2.25 per hour. In 1949 he moved to the Detroit, Michigan area and from 1949 to 1950 he worked as a laborer for $1.80 per hour for the New Haven Foundry, Mt. Clemens, Michigan. From 1950 to 1952 he worked at a salary of $60.00 a week for Ernie Grissom Ford, Warren, Michigan in the reconditioning of cars. That work involved putting old cars into “new” condition and the claimant’s work was to clean the interior of the cars doing the necessary spraying, painting and waxing. From 1952 to 1956 he worked as a machine operator at $2.79 an hour for the Chrysler Corporation, Warren, Mich- igan. He was laid off because of a strike and he obtained work in the reconditioning of cars for the Edmond Olds- mobile, Detroit, Michigan and for Krajenke Buick, Ham- 65 tramck, Michigan. He held down both jcbs during the same period, 1956 to 1959, one job paying him $100.00 a week and the second job paying him $15.00 per car. From August 1959 to August 1962 he worked at reconditioning cars for Hi Dawson Ford, Detroit, Michigan at a salary of $110.00 per week. Daring part of that time, namely from 1960 to 1962, ne also held down a second job recon- ditioning cars for Tommy C. Rector, Detroit, Michigan and was paid $15.00 per car. From August 1962 to August 1963 he worked for Bill Snetheamp in Detroit at $140.00 per week doing “painting and parts delivery.” From August 1963 to April 20, 1966 he worked for Stark Hickey in Detroit at $80.00 a week, driving a “wrecker,” lubri- cating vehicles, delivering parts and performing other gen- eral chores. From January 15, 1966 to April 20, 1966 he also worked as bar manager of the Log Cabin Inn, South- field, Michigan at a salary of $100.00 a week. During those months he worked for Stark Hickey from 7 a.m. to 3:30 p.m. and then at the Log ‘Cabin Bar until 2:30 or 3 a.m. Shortly after midnight of April 20, 1966 a customer at the Log Cabin Inn threatened the claimant with violence and the claimant put in a call for the police. Before the police arrived the claimant was shot in the back. He was taken by the police to the Henry Ford Hospital where he. remained until May 3, 1966. He was told by the doctors in the hospital that a bullet was lodged in his spine at about the location of his 8th thoracic vertebra and that the sur- gical removal of the bullet might result in a permanent paralysis. It therefore was decided not to remove the bullet and it continues to be lodged against his spine. When he was discharged from the hospital on May 3, 1966 he was told that he cculd go back to work. Although the owner of the Log Cabin Inn refused to — give him any employment he obtained work as a laborer Ne rte oe 66 for the Braver Lumber Company in Detroit and he re- ported for work there on September 9, 1966. However, after he had worked only two hours he “passed out” on the job. He was taken to Dr. John B. Greene where he had an X-ray taken. Dr. Greene told him that the X-ray showed a bullet lodged “near his spine.” The doctor told him that he was not “quite healed” inside. After several months, when he felt he might be strong enough to return 40 work, he applied for a job at several places, one of them being the Ford Motor ‘Company Rouge Plant, Gate 6. He was given a physical examination but was refused employ- ment because of the bullet in his back. He also went to the Dodge Plant where he was given a physicai examination and again refused employment because of the bullet in his back. Other companies where he applied for work also turned him down. He frequently was told that he was not a good insurance risk for employment. He finally did ob- tain employment at the Ditzler Auto Painting Company in Detroit on April 1, 1967 at a salary of $90.00 a week, his job being to mix paints. He found that he could not tol- erate the paint fumes, however, and he was assigned to driving a truck. As that work also involved loading and unloading containers of paint he quickly discovered. that he was not able to do any lifting so had to give up his em- ployment with the Ditzler Auto Painting Company on April 15, 1967. Subsequently the Braver Company prom- ised to give him “light’’ work, so he started work there in August 1967. However, certain “heavy” tasks later were assigned to him, such as picking up kegs of nails, which he found he could not do. Whenever he tried to lift a keg of nails he ‘‘could feel the bullet in his back, and sharp pains would radiate from his back up and down his spine and into his right shoulder.” The bullet “feels like a ball bearing and hurts all the time,” particularly when he i ape: 67 “Jeans over.” He had to quit work at the Braver Lumber Company after being there only one month. He next found employment with the Michigan Automotive Replacement Company as a truck driver and “handling stock’’ at a sal- ary of $80.00 a week. As this work also involved the load- ing and unloading of the truck he drove, such loads in- cluding batteries, crankshafts, spark plugs, etc., he found the work too exhausting and he had to quit that job on December 15, 1967. His next employment was for Floyd Rice, a Ford Dealer in Detroit, at a salary of $85.00 a week, “driving cars.” In this work he is not required to do anything except work as a “carhop” which merely involves driving a car out of the dealer’s yard and taking the customers to their homes. On this job he works from 3:30 p.m. to midnight, five days a week. He started work for Floyd Rice on January 2, 1968 and has continued to work there ever since. He ob- tained this job through his friend, Paul Garagan, the serv- ice manager for Floyd Rice. Mr. Garagan had been accus- tomed to stop at the Log Cabin Inn to “have a few beers” after he got off work at midnight at Floyd Rice’s. He and the claimant became acquainted and developed a friend- ship. After the claimant was injured and became unable to return to work at the Inn or to do any heavy physical work Mr. Garagan told the claimant that he could have a job with Floyd Rice as long as Mr. Garagan was the serv- ice manager there, and that his job there would only in- volve driving carg and would not include any heavy lift- ing or other physical labor. However, Mr. Garagan warned the cleimant that Mr. Garagan’s boss might not approve of the claimant’s employment if it became known that the claimnt only had to drive cars whereas the other ‘‘carhops” who worked for Floyd Rice had additional duties which involved some hard physical labor. Consequently, & ce ina) He taimadt ine wv cuY Ow wo ue mer mH eit eomtimie 6 word fur Fovve De The daimasnc *ue ter wetfed tun: ue bet Deen married ames (DS. wie ess ut eaten «Fe aiweve likes % work Tory Aart mt et we oer at postivic. He bane stg tat wn ne st eee te. et ot BOOT ee he sympiest ia wut Of wore Ur OMe you Me womld go tw mia wenn pass 0" eure auc work auvtuer fol wre Sue na myut ur ZAprl 2. WE. nowever. be Lee Ist wen tue “i in wr oo tue verwout type of work Le aast tome gre-ane > Oo ony ue umeDe G0 any ft ag UIT 16 a2 see one aullty & wend etreen or Twat ainda ot eo oo tae wore Of © reondiuenmes care” Faas w oe uu" Ue iC Wore peut fume. Pirmernare ss" sues ue urygucr um tue Log Cab Inn, ne 24a Ten wer eu” oie “a eee ary wore Wiers Hers 27 mye: wo”) auc ue uv “frigntened of tara 2 wuld we oc cee 1 gt Beer Ww Work = «& ter.” Bevery =me 16 tet Br eUNeUEE emg EUOD Mt Dring: teem ae nema ous exper Tre are wuere the gniles 9 uviest ‘mse ol tu time” The paw “throw Sage 2 snags : Ela tality mete meee Cuerss pile.” “water pile” aa “geen ern” et preertives wy Ur ©. L. Cadwell Cnmmas: iar tie emer. siniet tug: ue Led served ae the Hacmant? sce on ot preperatuer. flume auc prosecc- sen 1? 24 em wm te Ley Wa0u ios for Woremen's Comtensaion utes ue Mecuger Stee Wormer’ Con- pense aaa ee te ee sac teen paid. triemed 1 “amyecexiuer ivy wore tear er monte. and hefsrs ae ve tet tee cunmmpeirir Limeied vefore the seamed ¢ Cunmeuecion Suerc tue cman and the Bt Pau lasses Vongqer. wie: wee toe surans carrier 69 for the Log Cabin Inn, entered into a redemption agree- ment which was subsequently approved after hearing by the Workmen’s Compensation Board; and that the claim -was redeemed for a cash payment of $10,000. Counsel for the claimant further stated that there was never a find- ing by the Workmen’s Compensation Board that the claim- ant was “totally disabled.” Decision Accordingly, it is the decision of the Hearing Examiner that the claimant Johnney Benjamin, based on his applica- tion filed on March 16, 1967, is entitled to a period of dis- ability beginning on April 20, 1966 and to disability in- surance benefits under the provisions of Sections 216(i) and 223, respectively, of the Social Security Act, as amended. /s/ Milton C. Ferguson, Hearing Examiner Date: April 12, 1968 70 DECISION IN LOFTY v. RICHARDSON _ No. 20484 UNITED STATES COURT OF APPEALS For the Sixth Circuit Barber Lofty, Plaintiff-Appellant v. Elliott L. Richardson, Secretary of Health, Education and Welfare, Defendant-Appellee. Appeal from the United States District Court for the Eastern District of Michigan, Southern Division. Decided and Filed March 4, 1971. Before: Edwards and Miller, Circuit Judges, and O’Sullivan, Senior Circuit Judge. Edwards, Circuit Judge. In this case appellant attacks the constitutionality of an amendment to the Social Secu- rity Act adopted in 1965 (42 U.S.C. § 424(a), as amended, (Supp. _V, 1969)) which had the effect of reducing a claim- ant’s Social Security disability benefits by the amount of Workmen’s Compensation benefits received by him where the total received under the two programs exceeded 80% of his previovs average monthly wages. Appellant claims this provision violates the due process clause of the United States Constitution because when Congress made Work- men’s Compensation the only subject for such deductions, it thereby created a paiently arbitrary classification. We begin our consideration of this case, as indeed we must, with the Supreme Court’s last ruling upon an in- vidious classification argument in a Social Security case. “This is not to say, however, that Congress may exercise its power to modify the statutory scheme free of all constitutional restraint. The interest of a cov- ered employee under the Act is of sufficient substance 7L to fall within the protection from arbitrary govern- ment: . action afforded by the Due Process Clause. In judging the permissibility of the cut-off provisions of § 202 (n) from this standpoint, it is not within our authority to determine whether the Congressional judgment expressed in that section is sound or equita- ble, or whether it comports well or ill with the pur- poses of the Act. ‘Whether wisdom or unwisdom re- sides in the scheme of benefits set forth in Title II, it is not for us to say. The answer to such inquiries must come from Congress, not the courts. Our con- cern here, as often, is with power, not with wisdom.’ Helvering v. Davis, supra, at 644. Particularly when we deal with a withholding of a noncontractual bene- fit under a social welfare program such as this, we must recognize that the Due Process Clause can be thought to mterpose a bar only if the statute mani- fests a patently arbitrary classification, utterly lacking in rational justification.” Flemming v. Nestor, 363 U.S. 603, 611 (1960). (Emphasis added.) Since we cannot say that the classification herein at- tacked was ‘‘utterly lacking in rational justification,” we cannot hold as appellant csks that Congress was without power to pass the 1965 amendment. Claimant in this case was granted total and permanent disability benefits under the Social Security Act starting in 1966. In June of 1966 he accepted a lump sum “‘redemp- tion settlement’’ in full payment of his Workmen’s Com- pensation claim arising out of the same injuries which produced his total and permanent disabiilty for Social Se- curity benefits. Taking into account the Workmen’s Compensation settlement, the Secretary reduced claimant’s Social Secu- 72 rity benefits from $269.80 a month to $25.80 per month for 44 months, or until the Compensation settlement had been exhausted at the raie of $57 per week. This action was taken under 42 U.S.C. § 424(a), as amended, (Supp. V., 1969), which placed a limit of 80% of claimant’s previous average monthly earnings upon the total of Social Security and Workmen’s Compensation benefits which he was to receive. Section 424(a) required that only the difference, after deduction of Workmen’s Compensation benefits, should be paid by Social Security. This reduction formula was adopted by Congress in 1965, effective January 1, 1966. Much of the testimony which preceded its adoption argued that double disability bene- fits close to or exceeding prior earnings defeated the pur- pose of motivating injured beneficiaries back toward pro- ductive work and tempted the states to reduce or eliminate Workmen’s Compensation benefits and throw full respon- sibility on the national Social Security scheme. The amendment enacted by Congress is now attacked, not because the purposes claimed for it might not be argu- ably rational grounds for congressional action, but because Congress in establishing the reduction provision referred to above did not also include such benefits as private insu- rance proceeds and benefits resulting from damage suits in civil courts. It is claimed that existence of these bene- fits without deductions makes the selection of Workmen’s Compensation as the only deduction against Social Secu- rity benefits an arbitrary and capricious classification which cannot stand when tested against the due process clause. The District Judge who heard this case below dismissed it with a brief opinion which cited the reasons for the amendinent referred to above and held that “it is there- 73 fore reasonable to preclude a claimant from receiving amounts as a result of retirement or disability far in excess of his earnings received while working.” The District Judge held that the classification involved herein was not patently arbitrary within the meaning of Flemming v. Nes- tor, 363 U.S. 693 (1960). We have already set forth above the essential holding of the Flemming case upon which the District Judge based decision. But there is a good deal of case law which serves to illustrate the breadth of legislative power accorded the Congress (or the states) by the Supreme Court’s interpre- tation of the constitutional limitations contained in the due process and equal protection clauses. In the following two cases, former Chief Justice War- ren wrote for the Court: ‘The constitutional safeguard is offended only if the classification rests on grounds wholly irrelevant to the achievement of the State’s objective. State legisla- tures are presumed to have acted within their consti- tutional power despite the fact that, in practice, their laws result in some inequality. A statutory discrimi- nation will not be set aside if any state of facts rea- sonably may be conceived to justify it. See Kotch v. Board of River Port Pilot Comm’rs, 330 U.S. 552; Metropolitan Casualty Ins. Co. v. Brownell, 294 U.S. 580; Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61; Atchison, T. € 8S. F. R. Co. v. Matthews, 174 U. S. 96.” McGowan v. Maryland, 366 U.S. 420, 425-26 (1961). (Footnotes omitted.) ‘‘[SJome basic guidelines have been firmly fixed. The distinctions drawn by a challenged statute must bear some rational relationship to a legitimate state end and will be set aside as violative of the Equal Protec- 74 tion Clause only if based on reasons totally unrelated to the pursuit of that goal. Legislatures are presumed to have acted constitutionally even if source inaterials normally resorted to for ascertaining their grounds for action are ctherwise silent, and their statutory classifications will be set aside only if no grounds can be conceived to justify them. See McGowan v. Mary- land, 366 U.S. 420 (1961); Kotch wv. Board of River Port Pilot Commissioners, 330 U.S. 552 (1947) ; Lind- sley v. Natural Carbonic Gas Co., 220 U.S. 61 (1911). With this much discretion, a legislature traditionally has been allowed to take reform ‘‘one step at a time, addressing itself to the phase of the problem which seems most acute to the legislative mind,’’ Williamson v. Lee Optical of Oklahoma, Inc., 348 U.S. 483, 489 (1955); and a legislature need not run the risk of los- ing an entire remedial scheme simply because it failed, through inadvertence or otherwise, to cover every evil that might conceivably have been attacked. See Ozan Lumber Co. v. Union County National Bank, 207 U.S. 251 (1907).” McDonald v. Board of Election Commis- stoners of Chicago, 394 U.S. 802, 809 (1969). Even more recently Justice Stewart dealt with a some- what similar classification argument: “Tn the area of economics and social welfare, a State does not violate the Equal Protection Clause merely because the classifications made by its laws are im- perfect. If the classification has some ‘reasonable ba- sis’, it does not offend the Constitution simply because the classification ‘is not made with mathematical nicety or because in practice it results in some inequality.’ Lindsey v. National Carbonic Gas Co., 220 U.S. 61, 78. ‘The problems of government are practical ones and 75 may justify, if they do not require, rough accomo- dations—illogical, it may be, and unscientific.’ Metro- polis Theatre Co. v. City of Chicago, 228 U.S. 69-70. ‘A statutory discrimination will not be set aside if any state of facts reasonably may be conceived to justify it.” McGowan v. Maryland, 366 U.S. 420, 426”. Dan- dridge v. Williams, 397 U.S. 471, 485 (1970). With these rules pertaining to legislative power before us,’ we turn directly to the background and purpose of the disputed amendment. The legislative record plainly shows that Congress had the Workmen’s Compensation-Social Security overlap be- fore it as a problem for a decade. When the Social Secu- rity Act was first passed in 1935, it provided no disability benefits. Act of Aug. 14, 1935, ch. 531, 49 Stat. 620 et seq., (42 U.S.C. § 301 (ff)). When benefits for total and per- manent disability were first added in 1956, Congress did require the offset of Workmen’s Compensation Act of Aug. 1, 1956, Pub. L. No. 880, 70 Stat. 816-17. Two years later, however, acting on the assumption that the impact of the duplication was relatively slight, the offset provision was repealed. Act of Aug. 28, 1950 Pub. L. No. 85-840, Sec. 206, 72 Stat. 1025. 1The McGowan, McDonald and Dandridge cases are, of course, at- tacks upon state statutes, wherein appellant’s reliance was upon the equal protection clause of the Fourteenth Amendment. As to an asser- tion of an arbitrary classification argument, there is a wide area of overlap between the effect of the Fifth Amendment’s due Process clause and the Fourteenth Amendment’s equal protection clause. Bolling v. Sharpe, 347 U.S. 497, 499 (1954). If there be a difference between the effect of these two clauses, it would appear that since the equal protection clause is the more “ex- plicit” of the two clauses, the cases quoted above weuld apply a fortiori to this attack upon a federal statutory classification where reliance is had on due process, 76 In the years which followed it is clear that Congress received a great number of complaints about the repeal of the offset. These complaints—the overwhelming majo- rity of them originating with large employers or large employer organizations—lead to reenactment of the Work- men’s Compensation offset (in somewhat different form) in the Soc. Sec. Amendments of 1965, eff. Jan. 1, 1956, Pub. L. No. 89-97, Tit. ITI, § 335, 79 Stat. 406, 42 U.S.C. § 424(a), as amendec’, (Supp. V, 1969). Hearings were held before adoption of Section 424(a) only in the Senate—but the record there amply serves to indicate the rationale of its advocates. Thus Ll. J. Dikovies, representing the Council of State Chambers of Commerce, told the Senate subcommittee: Thousands of disabled workers today are receiving more tax-free income from social security disability benefits combined with State workmen’s compensation benefits than they were earning before they became ill or were injured. Section 303 would add many more thousands to this number. When tax-free social insu- rance benefits exceed earning power there is little in- centive for a disabled person to accept the risk, pain, and struggle involved in attempting to become self- supporting again. A matter of equal concern is the impact of Federal disability payments on State workmen’s compensation programs. Legislative proposals have been offered in several States (Colorado, Florida, Maryland, and Min- nesota) to reduce workmen’s compensation benefits by the amount of OASI disability benefits payable to a disabled worker. If other States follow this direction and section 303 of this bill is enacted, we believe it will be only a matter of time until State workmen’s com- pensation programs are destroyed. 17 If that happens, a major impetus for this country’s remarkable achievements in occupational safety will be destroyed also. Workmen’s compensation insurance costs are based on the actual loss experience of in- dustry groups and of individual employers. This gives the employer a direct financial incentive to improve safety on the job. If workmen’s compensation costs are absorbed into the social security program, em- ployers without safety programs and those whose employment is hazardous would pay no more than those employers who have adopted safety programs or who have less hazardous employment. We strenuously ob- ject to any action which could have an adverse effect on safety programs and on the remarkable down- swing in disabling accidents that has taken place over the last three decades. Hearings on H.R. 6675 Before the Senate Com. on Finance, 89th Cong., Ist Sess., p. 259 (1965). And J. Dewey Dorsett, representing the American In- surance Association, presented a table purporting to show that continued duplication of benefits under terms of the then pending bill would mean at least some payments in excess of prior average “take home pay” in every state, and up to a maximum of 247% in the instance of Arizona. 78 Chart I—Duplication of workmen’s compensation disability benefits by social security benefiis in H.R. 6675 Combined Workmen’s Combined workmen’s compensa- benfits compensa- average tion percentage tion and weekly maximum of social take-home weekly take-home State security pay 2 benefit? pay benefits 2 MIE nnn 40 bas cearenss $ 96.62 $ 67.96 $ 38.00 142 ME. dekadesedascceunes 172.00 130.10 100.00 132 BE, oe kkcddecscsnsassa 222.10 90.06 152.50 247 Arkansas ..cccccccccccces 92.05 65.16 35.00 141 CE ota decncwaseace 142.00 101.21 70.00 140 GEE bho wccvasncsccens 111.60 86.55 43.75 129 Connecticut ............-. 127.77 88.35 59.00 14€ BD nc xdcccarecsccss 113.97 79.30 50.00 144 District of Columbia....... 137.48 86.30 70.00 159 DEED. eadakacavradaeaccaen 101.26 69.05 42.00 147 CNR an sincakensasdsaass 94.97 66.74 37.00 142 EE cGadbncasnsedceuas 142.85 87.11 75.00 164 DE cas kkadnnedn disadvan 110.26 81.56 45.00 135 DED nedesandsdscatecea 122.85 86.73 55.00 142 BREED skacduddeccacesrce 108.97 78.94 45.00 138 DE: