Petition for Writ of Certiorari — Lofty v. Richardson

TABLE OF CONTENTS

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Question Presented ..............cc cece eens

Statutes, Constitutional Provisions and Regula-

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6. Reason for Granting Writ of Certiorari........

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Appendix B—42 U.S.C.A. 424a, Pub. L. 89-97, Title

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16

19

TABLE OF AUTHORITIES

Cases Cited: Page

Bartley v. Finch, 311 F. Sgpp. 876 (1970)........ 5,7

Belcher v. Richardson, 317 F. Supp. 1294 (S.D.W.

Ws EE hve ead accniees PAT Pr ere errr 4,7

Bolling v. Sharpe, 347 U.S. 497 (1954).......... 8

Flemming v. Nestor, 363 U.S. 603 (1960)..... d, 7, 8, 9, 16

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

Helvering v. Davis, 301 U.S. 619 (1937).......... 5

Knapezyk v. Ribicoff, 201 F. Supp. 283 (N.D. Ill.

Ee re rer errr rey frre 9

Morey v. Doud, 354 U.S. 457 (1957) .............. 8

Railway Express Agency v. New York, 336 U.S.

WE EE 5 Neb vi oko es esas eed ncennesvdenewas 15

Schneider v. Rusk, 377 U.S. 163 (1964).......... 8

Shapiro v. Thompson, 394 U.S. 618 (1969)...... 8

Sherbert v. Verner, 374 U.S. 398, 404 (1963)...... 8

Williamson v. Lee Optical Co., 348 U.S. 483 (1955) 8

Texts Cited:

3 Larson, Workmen’s Compensation Law, Sec.

eee eT ere Ter eT Te eee 13

2 Schneider, Workmen’s Compensation Text, Sec.

TTT Teer ee TTT ee Tee 13

Statutes Cited: Page

Title 42, U.S.C.

ED vc cascceccdveensecinekeadtel 10

co 9

Section 405(g) .............. grtiteeeeeeees 3

Section 423 ...........ccccce (vie bee eee 11, 12

II ios) wa coda wiedeeceer doses 2, 3, 4

ED hace ee ka cit neelgee eee 11

Mich. Stats Ann.:

Ek re Seal aneaue aks 13

IE BRUNY aancain sa wwnevucncenvcncccns 14

Ore. Rev. Stats §656.002 et Me Sikcdawstnae ees er 14

West Virginia Code 23-3-1...................06... 6

Wyo. Stats §27-63 et seq. ................0....... 14

IN THE

Supreme Court of the United States

_—_—-——- '

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

Ss aeainienh aimee

To the Honorable, the Chief Justice of the

Umited States and the Associate Justices of

the Supreme Court of the United States:

The petitioner, by his attorneys Kelman, Loria, Downing

& Schneider prays that a Writ of Certiorari issue to re-

5)

—

view the opinion and judgment of the United States Court

of Appeals for the Sixth Circuit entered in this matter on

March 4, 1971.

1. OPINION BELOW

The opinion of the United States Court of Appeals for

the Sixth Cireuit decided and filed on March 4, 1971 and

judgment in accordance with that opinion hereinafter (set

forth appendix A) is not yet officially reported.

2. JURISDICTION

The jurisdiction of this court is invoked under Tile 28

U.S.C. §1254(1).

3. QUESTION PRESENTED

Does Section 224 of the Social Security Act as amended

in 1965, 42 U.S.C. §424a deny Fifth Amendment Due Pro-

cess of Law by unreasonably singling out workmen’s com-

pensation as the only offset against social security dis-

ability benefits?

4. STATUTES, CONSTITUTIONAL PROVISIONS,

AND REGULATIONS INVOLVED

Section 424, Title 42 U.S.C. (set forth appendix B).

5. STATEMENT OF THE CASE

On March 29, 1966 petitioner filed an application for

social security disability benefits, asserting inability to

engage in “substantial gainful activity’? from and after

January 19, 1966. The application was allowed and a per-

iod of disability was established, effective J anuary 19,

1966. Petitioner and his auxiliary beneficiaries, his wife

and five children, became entitled to benefits totalling

$269.80 per month, commencing August, 1966. However,

those benefits were reduced to $25.80 per month on the

ground that havng received a net lump-sum redemption

settlement of his workmen’s compensation claim under

Michigan Law, Section 224 of the Social Security Act, as

amended in 1965 (42 U.S.C. §424a), required such reduction.

Petitioner protested the reduction and was granted a

hearing before a Social Security Hearing Examiner. The

Examiner rendered a decision sustaining the Administra-

tion determination and crediting of benefits. On J anuary

18, 1968, the Social Security Administration Appeals

Council refused review of the Hearing Examiner’s deci-

sion.

Petitioner ‘then filed a civil suit in the United States

District Court for the Eastera District of Michigan,

Southern Division, pursuant to the jrdicial review provi-

sions of 42 U.S.C. §405(g) contending that section 224

of the Social Security Act as amended in 1965 denied Fifth

Amendment Due Process of Law by unreasonably singling

out workmen’s compensation as the only offset against

social security disability benefits. Defendant-respondent

interposed a motion for summary judgment which was

granted by the United States District Judge by order en-

tered on March 25, 1970. .

4

Pursuant t stasis mae and provided. petitioner filed

an appeal wy the Vntet State Sour of Appees for the

Sixth Cireait amd sid Coot rendered en opinion deted

Mareh 4, 191 speeding te veetitutionelity of Section

224a (appendiz 4.

ct

6. REASON POR GRANTING WRIT OF CERTIORARI

An important federn. yueeien 2 presented in this cose

In that petitioner 2eeerm te ue weny or reduction of

Social seemrity Cisatacy “euette we wouek ne end bis de

f

pendents have teen serutet mur 42 USC. (Abe de

prives petitioner 2nd ss cepemders of property withont

due proses of law 22 crctetes or te Fifth Amendment

of the Constitatica of ste Utes Breer. ox chee sel provi-

ions 36 diserim nas eget peer eel other persons

2A

In similar sitnacicas. 24 we vivdetive of Sue process.

In addition, the asent ee oe ct eppropriese one for

review under Sapreme (ourt Bue 14 y) teense there

exists a conflict mm tee coceene of our Federe) Courts on

this question

.- -

On September 1) 10 me Ute Sete: Lnetrie Conrt

for the Seathern Listes of Weer Virgie hended down

ite decision in <te ase of Koywirns Ecker 1. Kichardsm,

317 F. Sapp. 12% DWV LO oe wren the our:

held:

In woe therefore. =o ned thet in the cirenm-

Sarees 6 yam + ae. tue eppvlicntion of Section

ZA anes. Ee one ualiy epylied sine w do

6 WEA Cerise so of Cue press end equal pro-

tert 7 the aw wer we Fife end Fourwenth

Amendments.”

5

In reaching the above cited conclusion, the United States

District Court for the Southern District of West Virginia

made the following pertinent findings :

“*It cannot be seriously contended that the Social

Security Act itself is unconstitutional for its con-

stitutionality has been upheld in a long line of cases.

Helverinmg v. Davis, 301 U.S. 619 (1937) * * * It is

equally well settled that entitlement to social secu-

rity benefits is subject to all conditions set out in

the Social Security Act under which benefits are

to be paid. Flemming v. Nestor, 363 U.S. 603 (1960).

“We have been referred to several unreported

decisions of district courts and one reported deci-

sion, Bartley v. Finch, 311 F. Supp. 876 (E.D. Ky.

1970), in support of the defendant’s position that

Section 224 may be constitutionally applied, and it

would indeed be easy for us to follow that path.

However, we are not convinced that the issue raised

in this case deserves such cavalier treatment es-

pecially in view of the more recent decision of the

Supreme Court in Goldberg v. Kelly, 397 U.S. 254

(1970), which tends to elevate entitlement to welfare

to the status of a property right and to surround it

with all the safeguards required by due process.

‘Therefore, since the Court in Goldberg appears

to have determined that entitlement to welfare is in

the nature of a property right, protected by the Due

Process Clause of the Fifth Amendment, by the

same rationale it must be determined that one who

has made direct contribution to the social security

fund and becomes entitled to disability benefits

thereunder should and ought to be accorded equal .

status and protection. For it seems to us to be

patently unfair for the welfare recipient, under

Goldberg, to have a‘ property right status’ with all

the procedural safeguards of due process, while

the social security recipient, under Nestor, is de-

prived of such status and protection.

6

“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 be-

comes eligible to receive the benefits, provided by

the Social Security Act has no indefeasible property

right to such benefits, is no longer to be considered

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 contribu-

tion to the fund from which he draws benefits does

have a recognizable property right to such benefits

and one which is protected by all the safeguards of

due process.

‘‘The defendant, in justification of these dis-

criminatory features of the offset provision, argues

that its purpose was to avoid duplication of public

benefits. If this be its true purpose, it is certainly

a laudable one and one with which this Court could

wholeheartedly accept. However, the argument is

inapplicable here for, as previously shown, work-

men’s compensation in West Virginia is not a gift

from the public largesse, but rather is an entitle-

ment arising from a contractual relationship be-

tween employer and employee, sanctioned by law,

whereby each gave up a legal right in return for a

concomitant legal benefit.”

‘‘That no public funds are involved is made abun-

dantly clear by the provisions of West Virginia

Code 23-3-1. There, it is provided that the Work-

men’s Compensation Fund shall be supported by

‘premiums and other funds paid thereto by em-

ployers,’ from which shali be paid all benefits due

the employees or their dependents and the expenses

of administering the law. No public funds being

thus involved, the defendant’s argument that plain-

tiff’s workmen’s compensation award should be

treated as a public benefit obviously becomes quite

untenable and must be rejected.”

As indicated above, the District Court of West Virginia

refused to follow the decision of the three-judge panel in

EAST RE PL DCS RII RELL LOREEN, I OOPS ER SRR IRAN EET

OTT PLATENS OOS ING, SRI PION 8 ELT CAT SM IM TRAN ROO SET POT EI CA ly —

eae

7

Barthey v. Finch, 311 F. Supp. 876 Eastern District of Ky

(1970) which upheld the constitutionality of Section 224.

It is petitioner’s understanding that the United States

Supreme Court has agreed to review the decision in the

Belcher case and that the Bartley decision has also been

appealed to the United States Supreme Court. In order

that petitioner’s rights be fully protected, it is petitioner’s

request that certiorari be granted by the Supreme Court

to hear this matter so that this case can be disposed along

with the other cases pending before this Court (referred

to above) which likewise are based upon the question of

the constitutionality of Section 224a.

The Question is Substantial

The Fifth Amendment to the Constitution of the United

States of America provides in pertinent part that:

_“‘No person shall * * * be deprived of life, liberty

or property, without due process of law * * * ”

Neither Section 224 nor any other benefit provision of

the Social Security Act is beyond the reach of Fifth Amend-

ment due process. The fact that Congress need never have

enacted a system of social security, the fact that benefits

granted under such a system of Social Security, might be

labeled a “privilege” and not a “vested right,” in no way

removes the system from the requirements of fairness and

rationality expressed in the Due Process Clause, and in no

sense insulates the statute from judicial review for con-

stitutionality. As stated in Flemming v. N estor, 363 US.

603, 611 (1960) : ‘“The interest of a covered employee under

the [Social Security] Act is of sufficient substance to fall

within the protection from arbitrary governmental action

afforded by the Due Process Clause.” Accord: Sherbert v.

8

Verner, 374 U.S. 398, 404 (1963) (unemployment benefits) ;

Shapiro v. Thompson, 394 U.S. 618, 89 S. Ct. 1332, 1327 n.

6 (1969) (welfare benefits).

Secton 224, providing as it does for the reduction of

social security disability benefits where the claimant hap-

pens to be receiving workmen’s compensation, is constitu-

tionally defective even under the narrowest conception

of due process. That is so not because an offset scheme is

intrinsically impermissible but because the isolation of

workmen’s compensation and only workmen’s compensation

for the purpose of curtailing social security disability bene-

fits is thoroughly arbitrary and grossly discriminatory.

It is well accepted that the Fifth Amendment incorpo-

rates the fundamentals of equal protection of law. Bolling

v. Sharpe, 347 U.S. 497, 499 (1954); Schneider v. Rusk,

377 U.S. 163, 168, (1964) (‘‘While the Fifth Amendment

contains no equal protection clause, it does forbid discrim-

ination that is ‘so unjustifiable as to be violative of due

process.’’’). Flemming v. Nestor), supra, states the test

of permissible classification in these terms:

“‘TWle must recognize that the Due Process

Clause can be thought to interpose a bar only if the

statute manifests a patently arbitrary classification,

utterly lacking in rational justification.”

1The quoted passage is ee, this qualifier clause: “Par-

ticularly when we deal with a withholding of a non-contractual benefit

under a social welfare program such as this . . .” That language can

be misleading because it suggests that the Court’s standards of con-

stitutionality sre somehow less severe in relation to a “social welfare

program.” That is not the case, as is seen in Sherbert v. Vernor and

Shapiro v. Thompson, supra. Moreover the Supreme Court has used

practically identical language as that quoted above from Nestor to de-

' seribe the standards of equal protection as applied to non-welfare legis-

lation. See Williamson v. Lee Optical Co., 348 U.S. 488, 489 (1955);

cf. Morey v. Doud, 354 U.S. 457 (1957).

|

9

While Flemming v. Nestor obviously imposes a heavy

burden on parties assailing constitutionality, a careful

analysis of the benefit-reduction provisions of Section 224

does disclose ‘‘a patently arbitrary classification, utterly

lacking in rational justification.” A statutory classifica-

tion is “patently arbitrary” and “utterly lacking in rational

justification” if it does not subserve a permissible legis-

lative objective. Moreover, the classification must be a

rational means to a lawful end, and if it is not that, then

it is discrimination for the sake of discrimination, thus

invidious and thus unconstitutional.

In the court below, the Government suggested two not

entirely distinguishable Congressional objectives in re-

ducing social security benefits when the claimant is receiv-

ing workmen’s compensation. ( 1) To prevent the payment

of excessive combined benefits, (2) to avoid duplication of

public benefits.

Payment of Excessive Combined Benefits

The Government’s first contention is that Congress de-

vised the offset formula in order to preclude a disability

claimant from receiving amounts in excess of his earnings

while working, and thus “profiting” from his misfortune.

We do not deny that such a purpose is constitutionally

open to Congress. This is by no means to say that the legis-

lative wisdom of such « policy is unimpeachable. The

benefit-reduction provision has had an in-again, out-again

history. It was added in 1957 and abandoned in 1969. See

Knapczyk v. Ribicoff, 201 F. Supp. 283 (N®°D. Ill. 1962).

It returned in 1965, Pub. L. 89-97, Title III, §335, 79 Stat.

~ |} 406. As the court below indicated, a similar Congressional

purpose seems to animate Section 203 (b) of the Act (42

U.S.C. §408(b)), which calls for reducing old-age benefits

by reason of excess earnings.

TEESE R EATS AE RT ARE BA AR RSE

f,

10

The gravamen of our complaint is that Section 224 quite

arbitrarily singles out workmen’s compensation from a

broad universe of other forms of benefits payable for injury

or disability. Thus a concern about excessive combined

benefits does not explain why a social security disability

claimant who has received a tort damage award or settle-

ment for the same injury giving rise to his disability will

still receive full social security benefits. Or why social se-

curity benefits will not be reduced where the claimant is

receiving the proceeds of a disability insurance policy

which he or his employer has purchased. Nor is cencern

about ‘‘excessive combined benefits” compatible with the

exemption contained in Section 244 for persons 62 or older.

For them, the Act does not require any reduction in social

security benefits because of workmen’s compensation. Sep-

arate provision is made in Section 202(q), 42 U.S.C. 8402

(q), for reduction of disability benefits hecause the claimant

4s receiving old-age benefits. However, this still leaves a

62 year old claimant in a preferred position with respect

to his combined social security and workmen’s compensa-

tion benefits. If, as the Government maintains, it is reason- |

able to preclude a claimant from receiving benefits greater _

than earnings while working, on what conceivable basis it

ig rational to do so only in the case of a workmen’s com-

pensation recipient who is under age 62, but not in the

cases of older claimants, or claimants with tort recoveries

(often far larger than workmen’s compensation awards or

settlements), or claimants with private disability insu-

rance? If anything, there is much less reason for discrimi-

nating against a workmen’s compensation recipient than

an ordinary tort victim, since the compensation recipient

in the most realistic sense has paid for his compensation

rights by his labor.

Moreover, a professed Congressional purpose to pre-

vent a combination of benefits exceeding former earnings

2 PS or oe BNR GES: YA ar NO! SW ET Eh hae ~

ees .

11

does not explain why the reduction formula of Section 224

limits total benefits to a sum 20 per cent below average

current earnings. Surely that limitation cannot be ex-

plained as an incentive-to-work or an anti-malingering de-

vice—for the obvious reason that the claimant must not

only satisfy the stern test of disability set forth in Section

223 of the Act (42 U.S.C. $423), but specific provision is

made in Section 225 (42 U.S.C. $425) for suspension of

benefits where the Secretary believes that the claimant’s

disability has ceased.

The expressed fear that combined social security and

workmen’s compensation payments would deter rehabili-

tation and that this forms a ‘‘reasonable basis” for the

discrimination of workmen’s compensation beneficiaries

under Section 224 becomes even more unrealistic and un-

persuasive when one realizes the minute number of social

security disability beneficiaries who are also receiving bene-

fits under workmen’s compensation plans of insurance.

Robert M. Ball, Commissioner of social security has testi-

fied :

“ (A)bout 98 percent of the cases that are eligi-

ble for payments under social security law have

disabilities that are not work connected. The big

diagnostic categories for the social security pro-

gram are chronic illnesses such as heart disease,

mental disorders, cancer, stroke, and not conditions

that are not ordinarily work connected. Hearings

on H. R. 6675, Senate Committee on Finance, 89th

Cong., ist sess., p. 153 (1965).”’

Further, then ‘‘ccretary of Health, Education and Wel-

fare, Celebrezze, and Commissioner Ball both testified

that only two percent of all disability insurance cases

would be covered by workmen’s compensation:

12

*‘About 2 percent of the total number of disability

beneficiaries that we have now would be eligible

for both workmen’s compensation and social secu-

rity disability benefits. Under the amendment (1965

liberalizing of the definition of disability) we be-

lieve the percentage would stay about the same.

Hearings on H.R. 6675, supra at 152, 153.”

In addition, statistics given by Robert M. Ball, Commis-

soner of social security show how few workmen’s compen-

sation beneficiaries have a disability which extends beyond

the six months waiting period for which no social security

disability benefits are payable (52 USCA 423 (c) (2)). In

_ testimony on the bill that includes Section 224 (Hearings

on H.R. 6675, Senate Committee on Finance, Vol. IT, 89th

Cong., 1st sess. (1965), pp. 907-908, 922) Commissioner

Ball furnished statistics that in 1951 of 68,944 workmen’s

compensation awards only 842 had disabilities lasting

more than 175 days. From 1955-61 there were on the aver-

age 650,000 yearly workmen’s compensation awards. Of

this only some 500 to 600 a year were for permanent total

disability or 0.08-0.10 percent; major permanent partial

disability averaged 2.5 percent yearly; minor permanent

partial disability averaged 23-25 percent yearly and tem-

porary total disability averaged 71.5-73 percent yearly.

When the original offset existed, July 1957 to July 1959,

only 2.7 percent of social security disability cases were

offset.

Thus it can be seen, that from statistics of the Social

Security Admunistration itself, that only approximately 2

percent of all social security disability beneficiaries are

also beneficiaries under a workmen’s compensation plan

of insurance. And what of the 98 percent, many of whom

must certainly receive other income in the form of private

insurance benefits, investment income or non-workmen’s

ETE ES LINL ORS SS LITEM PERLE IE Le NINES REND tO el PELE LAREN GIR SN A RG Ce OMIT EVR Shes Homey OU

PARAL ERIE ANG WHEE rp Ne LRA IONS >

13

compensation personal injury awards? Are they more re-

liable than the 2 percent receiving workmen’s compen-

sation benefits and can it be said that they would be less

deterred from rehabilitation, though their combined bene-

fits might well exceed their average prior wage? We think

not.

Duplication of Public Benefits

The second rationale advanced by the Government for

Section 224 as stated in its brief to the District Court and

Court of Appeals is as follows:

“{Blenefits which are not workmen’s compensa-

tion but are received as a result of a non-work con-

nected disability are significantly different—public

monies are not involved and there is no duplication

of public benefits which the Congress by enactment

of the statute sought to avoid.”

Again assuming that it is open to Congress to preclude

or limit the ‘‘duplication of public benefits,” the Govern-

ment argument completely misconceives and misdescribes

workmen’s compensation. The Government asserted below

that workmen’s compensation is ‘‘significantly different”

from benefits received as a result cf non-work connected

disability because the former entails the expenditures of

‘“‘public monies,” as the latter does not.

This simply is not so. Workmen’s compensation benefits

in most states are paid either directly by the employer

(as self-insurer) or by the employer’s insurance carrier.

See 3 Larson Workmen’s Compensation Law $92.10, p. 444;

2 Schneider, Workmen’s Compensation Text §2482, p. 207.

In Michigan an employer may make payment by one of

four methods set forth in Comp.. Laws §414.1, M. S. A.

$17,195:

14

‘First, upon furnishing satisfactory proof or

bond in a reasonable amount as may be determined

by the commission, to said commission of his sol-

vency and financial ability to pay the compensation

and benefits hereinbefore provided for, to make

such payments directly to his employees, as they

may become entitled te receive the same under the

terms and conditions of this act; or

“Second, to insure against such liability in any

employer’s liability company authorized to take

such risks in the State of Michigan; or

‘‘Third, to insure against such liability in any

employer’s insurance association organized under

the laws of the state of Michigan; or

“Fourth, to request the commissioner of in-

surance of the state of Michigan to assume the ad-

ministration of the disbursement. of the premiums

and assessments necessary to pay the same * * * ”

It should be noted that even the last method of payment,

through the administrative instrumentality of the state

accident fund, in no way involves the use of ‘‘ public money.”

Indeed the statute, Comp. Laws §415.1, M.S.A. §17.199, q

specifically states that ‘‘neither the commissioner of insur-

ance nor the state of Michigan shall become liable or re-

sponsible for the payment of claims for compensation

under the provisions of this act beyond the extent of the

funds so collected and received by him... ”

According to the Larson and Schneider treatises, supra,

only five states provide for a state industrial accident fund

as the exclusive vehicle for -2vment (Nevada, North Da-

kota, Oregon, Washington, and Wyoming), but, again, the

state fund is not composed of pubitic monies but of pre-

miums paid by the employers. See, e.g., Ore. Rev. Stats

$656.002 et seq., Wyo. Stats. §27-63 et seq.

PELE ay ROT ae ON HE CSET NS,

15

Thus the premise on which the Government's “‘duplica-

tion of public benefits” rationale depends is entirely in-

applicable to workmen’s compensation benefits. In fact,

Section 224 of the Social Security Act would actually

permit a claimant to receive funds which are public in the

most literal sense (i.e., taxpayer-provided) without suf-

fering diminution of his social security disability benefits

in @ case, for example, in which the claimant received a

tort recovery from a municipality, state, or other unit of

government.

To invalidate Section 224, as we urge this Court to do,

would not deprive Congress of the power to impose a ceil-

ing on combined benefits. It would only require Congress,

should that be its policy, to ect in an even-handed manner

with respect to all practically and rationally indistinguish-

able benefit sources. Writing in Railway Express Agency

v New York, 336 U.S. 106, 112-13 (1949) (concurring

opinion), Mr. Justice Robert Jackson developed this point

with his customary grace of expression :

“Invalidation of a statute or ordinance on due

process grounds leaves ungoverned and ungovern-

able conduct which many people find objectionable.

“Invocation of the equal protection clause, on

the other hand, does not disable any governmental

body from dealing with the Subject at hand. It

merely means that the prohibition or regulation

must have a broader impact. I regard it as a salu-

tary doctrine that cities, states and the Federal

Government must exercise their powers so as not

to discriminate between their inhabitants except

upon some reasonable differentiation fairly related

to the object of regulation. This equally is not

merely abstract justice. The framers of the Con-

stitution knew, and we should not forget today, that

there is no more effective practical guaranty

against arbitrary and unreasonable government

14

than ww recurs wa tue priueipier Of law whieh

CfGiasA WF ee ys & erty Wut be un-

pose generat (“Currersery. uvtumy gpene the

Bae oy RSET ete ft eo etrvery we w allow

these fleas teed But Cuvee UY 2 few to Whom

they wll army peel tI tone 10 epmpe the

tehitieal retro aa mogEt ve visited upon

them 2 arger runner vere effete Court can

taAZe BG “ACS? memes WY eeBUre tet lewe will be

past than we rere ue ee ee eRe Wo Uperation.”

In ita present form Sem 2 eee ut atverse treat

ment th resitaenta of were + sulmpeuseuen and to them

alome. N-ther 17 tte pire ue Goverment suugnt w

aserite te, Comgree aa stuvuely yueufy tue treatment

Barring te sro of oe eau oyettive tw wich

benefit-retusuea lace. uM Ov oremer: scompensauon ub

relevant amd meme 124 eres ty ub tne pection stands

aa an act of eee eT we Te vee ents Of Workmen's

COMMPENSAUGE of % Va) et ue aeves for curtailing the

System's tenets orcinw Secer of owurse it sufficient

justifiestiom for tne creeoee Te Coperiucnetion in short

is invidious im te scares peut. Aud for the court

to declare 2 Tevatcn ff Pd Asuendient due process

here is net % extent gutucea fur segieetive wisdom. put

to fired thas Seta 2 ew owen fle within the

prohilated we cose or Fem +. Nestor, supra,

beramse it “manatees ¢ teri erutrery ceselficetion

utteriy laszing = ratte guewtemuv.”

17

CONCLUSION

For the reasons aforementioned, petitioner does pray

that a Petition for Writ of Certiorari to the Court of Ap

peals for the Sixth Circuit should be granted.

Respectfully submitted,

JEROME W. KELMAN

For Kelman, Loria,

Downing & Schneider

Attorneys for Petitioner

2800 Cadillac Tower

Detroit, Michigan 48226

961-7363

19

APPENDIX A

No. 20484

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Barber Lofty, Plaintiff-Appellant,

v.

Elliott L. Richardson,

Secretary of Health, Educaton and Welfare,

Defendant-Appellee.

Appeal from the United States District Court for the

Eastern District of Michigan, Southern Disrict.

Decided and Filed March 4, 1971

Before: Edwards and Miller, Circuit J udges, and O’Sul-

livan, 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 previous 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 patently arbitrary classification.

20

We begin our consideration of this case, as indeed we

must, with the Supreme Court’s last ruling upon an invi-

dious 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 4

covered employee under the Act is of sufficient sub-

stance to fall within the protection from arbitrary

governmental 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 Con-

gressional judgment expressed in that section is

sound or equitable, or whether it comports well or ill

with the purposes of the Act. ‘Whether wisdom or un-

wisdom resides 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 concern here, as often, is with power, not with

widom. Helvering v. Davis, supra, at 644. Particu-

larly when we deal with a withholding of a noncon-

tractual benefit under a social welfare program such

as this, we must recognize that the Due Process Clause

can be thought to interpose a bar only if the statute

manifests .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 app2llant asks 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

H

:

:

21

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 disability for Social Se-

curity benefits.

Taking into account the Workmen’s Compensation settle-

ment, the Secretary reduced claimant’s Social Security

benefits from $269.80 a month to $25.80 per month for 44

months, or until the Compensation settlement had been ex-

hausted at the rate of $57 per week. This action was taken

under 42 U.S.C. § 424(a), as amended, (Supp. V, 1969),

which placed a Iimit of 80% of claimant’s previous average

‘monthly earnings upon the total of Social Security and

Workmen’s Compensation benefits which he was to re-

ceive. 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 elimi-

nate Workmen’s Compensation benefits and throw full re-

sponsibility 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 in-

surance proceeds and benefits resulting from damage suits

in civil courts. It is claimed that existence of these benefits

without deductions makes the selection of Workmen’s Com-

22

pensation as the only deduction against Social Security

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

amendment referred to above and held that ‘‘it is therefore

reasonable to preclude a claimant from receiving amounts

as @ 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 ar-

bitrary within the meaning of Flemming v. Nester, 363

U.S. 603 (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 protecion clauses.

Irn the following two cases, former Chief Justice Warren

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

legislatures are presumed to have acted within their

constitutional power despite the fact that, in practice,

their laws result in some inequality. A statutory dis-

crimination will not be set aside if any state of facts

reasonably may be conceived to justify it. See Kotch

v. Board of River Port Puot’s Comm’rs, 330 U.S. 552;

Metropolitan Casualiy Ins. Co. v. Brownell, 294 U.S.

580; Lindsley v. National Carbonic Gas Co., 220 US.

61; Atchison, T. dé S. F. R. Co. v. Matthews, 174 US.

Ub 6 Pe A AP dit oh ahs oh aa ae the i

23

96.” McGowan v. Maryland, 366 US. 420, 425-26

(1961). (Footnotes omitted.)

**[S]Jome 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-

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 ma-

terials normally resorted to for ascertaining their

grounds for action are otherwise silent, and their

statutory classifications will be set aside only if no

grounds can be conceived to justify them. See Mc-

Gowan v. Maryland, 366 U. S. 420 (1961); Kotch v.

Board of River Pilot Commissioners, 330 U. S. 552

(1947) ; Lindsley v. National 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 losing an entire remedial scheme sim-

ply because it failed, though 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).” Mce-

Donald v. Board of Election Commissioners of Chi-

cago, 394 U. S: 802, 809, (1969).

Even more recently Justice Stewart dealt with a some-

what similar classification argument:

“In 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 imper-

24

fect. If the classification has some ‘reasonable basis,’

it does not offend the Constitution simply because

the classification ‘is not made with mathematical

nicety or because in practice it results in some in-

equality.’ Lindsley v. National Carbonic Gas Co., 220

US. 61, 78. ‘The problems of government are practical

ones and may justify, if they do net require, rough

accommodations — illogical, it may be, and unscien-

tific.” Metropolis Theatre Co. v. City of Chicago, 228

US. 61, 69-70. ‘A statutory discrimination will not be

set aside if any state of facts reasonably may be con-

ceived to justify it.” McGowan v. Maryland, 366 U.S.

420, 426.” Dandridge v. Williams, 397 U. S. 471, 485

(1970).

With these rule pertaining to legislative power before

us,’ we turn directly to the backgrcunc 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 (if) ). When benefits for total and per-

1The McGowan, McDonald and Dandridge cases are, of course, at-

tacks upun state statutes, wherein appellant’s reliance was upon the

equal protection clause of the Fourteenth Amendment. As to an as-

sertion 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. Boll-

ing 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 would apply a fortiori

to this attack upon a federa! statutory classification where reliance is

had on due process.

25

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, 1958,

Pub. L. No. 85-840, Sec. 206, 72 Stat. 1025.

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 majority

of them originating with large employers or large em-

ployer organizations—let to reenactment of the Workmen’s

Compensation offset (in somewhat different form) in the

Soc. Sec. Amendments of 1965, eff. Jan. 1, 1966, Pub. L.

No. 89-97, Tit. III, $335, 79 Stat 106. 42 U.S.C. § 424(a),

as amended, (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 L. J. Dikovics,

representing ‘he Council of State Chambers of Commerce,

told the Seuate subcommittee:

Thousands of disabled workers today are receiv-

ing more tax-free income from social security disability

benefits combined with State workmen’s compensation

benefits than they were receiving before they became

ill or were injured. Section 303 would add many more

thousands to this number. When tax-free social insur-

ance benefits exceed earning power there is little 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

26

in several States (Colorado, Florida, Maryland, and

Minnescta) to reduce workmen’s compensation benefits

by the amount of OASI disability benefits payable to

a disabled worker. If other Sta.es follow this direc-

tion and section 303 of this bill is enacted, we believe

it will be only a matter of time until state workmen’s

compensation programs are destroyed.

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 indus-

try 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, employers

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 object to any

action which could have an adverse effect on safety

programs and on the remarkable downswing in dis-

abling accidents that has taken place over the last

three decades. Hearings on H.R. 6675 Before the Sen-

ate Comm. 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.

mails ATI Ove ein) ek WRI Sw aera et

27

Chart I—Duplication of workmen’s compensation disabil-

ity benefits by social security benefits in H.R. 6675

Alabama

Alaska

Arizona

Arkansas

California

Colorado

‘Connecticut

Delaware

Combined

workmen’s

compensa- Average

tion and weekly

social take-home

security pay?

benefits }

$ 96.62 $ 67.96

District of Columbia 137.48 86.30

Florida

Georgia

Hawaii

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

172.00 130.10

22210 90.06

92.05 65.16

142.00 101.21

111.60 86.55

127.77 88.35

113.97 79.30

101.26 69.05

94.97 66.74

142.85 87.11

110.26 81.56

122.85 86.73

108.97 78.94

105.60 78.08

107.26 81.38

102.38 78.59

98.14 77.12

Workmen’s Combined

compensa- benefits

tion percentage

maximum of

weekly take-home

benefit 5 pay

$ 38.00 142

100.06 132

152.50 247

35.00 141

70.00 140

43.75 129

59.00 145

50.00 144

70.00 159

42.00 147

37.00 142

75.00 164

45.00 135

55.00 142

45.00 138

42.00 185

42.00 182

41.00 139

35.00 127

Aa el a et On

~-a- --

he Lf

a> *-

nr oe

aes a

Zi DW

SL.

FS

27 DW

57 OY

47

4S)

Fhe

ar

29

Combined Workmen’s Combined

workmen’s compensa- benefits

compensa- Average tion percentage

State tion and weekly maximum of

social take-home weekly take-home

security pay 2 benefit 2 pay

benefits 1

South Carolina 90.38 63.93 35.00 141

South Dakota 101.60 78.40 38.00 130

Tennessee 96.80 68.07 38.00 142

Texas 98.14 77.06 35.00 127

Utah 122.40 90.41 52.80 135

Vermont 103.26 69.00 44.00 150

Virginia 98.26 69.52 39.00 141

Washington 122.57 * 89.40 57.69 137

West Virginia 100.31 * 82.88 38.00 i271 *

Wisconsin 130.18 83.50 64.00 156

Wyoming 118.51 * $4.37 55.38 140

Longshoremen’s Act 114.67 * 70.00

1 Compensation benefits for temporary total disability payable to a

worker with a wife and 2 children. Social Security benefits provided

in H.R. 6675 (medicare bill), pp. 164-165.

2 Average weekly wages less Federal income and social security

taxes (4 deductions). Based upon wages of employees to whom com-

pensation paid, July 1964—National Council on Compensation Insur-

ance.

*As of May 1965. Includes maximum allowance for temporary

total disability for worker with a wife and 2 children. (Michigan and

New York reflect benefit increases contained in bills that have passed

their legislature.)

* Figures not available to National Council on Compensation In-

surance for monopolistic State fund. Source: Production workers in

manufacturing—1960 Statistical Supplement, Monthly Labcr Review,

pp. 33-85 (U.S. Department of Labor).

5 Figures not available—varies in each State.

OLE LON LALO LE LOLI SEL EG LOVEE DT IG SE ALLO LERLE AIOE LLE IE ELIOT TE LIGA ILE WO REL EL" OI ET FE ON NAT

30

Hearings on H.R. 6675 Before the Senate Comm. on

Finance, 89th Cong., 1st Sess., p. 898 (1965).

It is clear that employer advocates of the offset amend-

ment outweighed their opponents in numbers of spokes-

men and of exhibits tendered. But an opposing point of

view was presented by the Secretary of Health, Education

and Welfare’ and two of his top associates who sought to

delay enactment of any change until a more thorough

study had been made.

Secretary Celebrezze. Senator, I think yesterday I

explained that the Advisory Council on Social Secur-

ity, which made a report recently, asked that a study

be made, and the House Ways and Means Committee

in their report also directed us to make a study of the

extent and effects of the overlap between social se-

curity and workmen’s compensation and to report by

December 1966. I think I stated yesterday that per-

haps 2 percent of the disability beneficiaries under

social security also receive workmen’s compensation,

and that there were many factors that had to be con-

sidered in connection with this question. This issue

has to be studied in depth.

I can’t give you an off-the-cuff opinion on it, but let

me tell you what some of the basic problems would be.

First of all, if at the time of disability the man has

a low-paying job, of course, that would have a bear-

ing upon the amount of benefits he would receive.

‘Then, if a man is totally disabled as of a certain

period, even though under a combination of work-

2 Hon. Anthony J. Celebrezze, now a Judge of this court.

3L

men’s compensation and social security disability bene-

fits he may receive more than his wages were, I think

we have to give some consideration to the fact that

had he not been disabled his wages would have been

substantially higher, say, 10 or 15 years later, and to

find a way of taking account of that fact.

Another element is that the (Congress of the United

‘States in 1958 repealed the offset provision that had

been in effect because it presented a great many tech-

nical and administrative problems. In certain cases,

the offset provision resulted in delays in paying dis-

ability benefits because of the slow process, in some

instances, of determination under workmen’s compen-

sation and because we couldn’t move until we knew

what the amount of compensation was when the award

had been made.

So there are many problems that have to be staffed

out and thoroughly considered.

I think the House Ways and Means Committee in

its wisdom arrived at the right conclusion—that there

is a need for the Social Security ‘Administration to

make a thorough study of this question and to report

back to Congress by December of 1966. Hearings on

H.R. 6675 Before the Senate Comm. on Finance, 89th

Cong., 1st Sess., p. 146 (1965).

However persuasive this statement might appear to us,

it is clear that the Senate committee did not desire to wait.

Its report on which subsequently the Senate and then the

House acted favorably provided:

(b) Reduction of disability benefits on account of re-

ceipt of workmen’s compensation benefits

32

The committee has taken note of the concern that

has been expressed by many witnesses in the hear-

ings about the payment of disability benefits concur-

rently with benefits payable under State workmen’s

compensation programs. While data of the kind re-

quested by the House ‘Committee on Ways and Means

in its report on this bill are not now available, the

committee believes that amendatory legislation should

not await completion of the requested study. Although

there is some dispute as to the number of workers

who receive benefits under these two programs and

whether these payments are excessive, the committee

believes that it is desirable as a matter of sound” prin-

ciple to prevent the payment of excessive combined

benefits.

The committee believes that the provision it is

recommending avoids the problems and inequities of

the earlier offset provision in the social security law

for reducing monthly disability benefits by the amount

of any other benefit to which a worker was entitled

under State workmen’s compensation laws, which was

in effect from July 1957 to July 1958, but was repealed

then. The new offset provision recommended by the

committee provides for a reduction in the social se-

curity disability benefit (except where the State work-

men’s compensation law provides for an offset against

social security disability benefits) in the event the total

benefits paid under the two programs exceed 80 per-

cent of the worker’s average monthly earnings prior

to the onset of the disability. Under this provision,

the worker’s average monthly earnings would be de-

fined as the higher of (a) his average monthly wage

used for purposes of computing his social security dis-

33

ability benefit or (b) his average monthly earnings, in

employment covered by social security, during his high-

est 5 consecutive years after 1950. (In no event, how-

ever, would the total benefits payable with respect to

a worker be reduced below the amount of the unre-

duced monthly social security benefits.) This reduc-

tion formula would generally avoid the inequity en-

countered under the previous offset provision, where

the reductions that were required frequently resulted

in benefits that replaced no more than 30 percent or

so of the worker’s earnings at disablement. S. Ren

No. 404, 89th Cong., Ist Sess., p. 100 (1965).

This then brings us to consideration of appellant’s argu-

ment that the disputed amendment represents “a patently

arbitrary classification, utterly lacking in rational justifi-

cation.” Flemming v. Nestor, 363 U.S. 603, 611 (1960), and

hence must be declared void. It seems to us that the result

contended for by appellant would represent a very nar-

row construction of the congressional power to enact,

amend and modify social legislation as required by the

circumstances reported to Congress concerning its opera-

tion. If (as appellant concedes) the rationale for prevent-

ing double coverage is a reasonable one (whether we might

individually agree with it or not) then we believe that

Congress also had the right to make it applicable to Work-

men’s Compensation claimants and not to do so as to

recipients of damage action judgments and private insur-

ance proceeds.

The legislative history of this amendment shows a great

many complaints were registered before Congress about

Workmen’s Compensation Social Security double coverage.

The record is devoid of any complaints at all about double

coverage resulting from private insurance or negligence

aanraeesneennnees — ya ARE ALN HL PE ORIENT RAE EEE

34

actions in courts. It is neither novel nor necessarily ir-

rational for Congress to fail to act upon a problem about

which they have received no complaints and have been

supplied no information, even when Congress, as here,

does act upon a somewhat parallel problem as to which it

had both. —

Still another reason which might reasonably be conceived

to justify the congressional classification is that adminis-

tratively it would be relatively simple to enforce the Work-

men’s Compensation deductions, whereas separating out

the wage benefits from civil damage judgments, or deter-

mining who had received private insurance benefits, might

offer administrative problems of 9. serious nature.

Finally, it is entirely conceivable to us that Congress

may have considered Social Security benefits and Work-

men’s Compensation benefits to be more arguably dupli-

cative of one another than could appropriately be claimed

concerning Social Security benefits and the other two types

of payments. Both Social Security and Workmen’s Com-

pensation programs are social welfare legislation. Private

accident or disability insurance is a private contract, fre-

quently paid for entirely by the recipient. And, of course,

court awards for injuries are private rights derived from

the common law involving the principle of compensation for

negligence or fault.

Most of the argument for the Workmen’s Compensation

off-set came from employers who generlly pay all of the

costs for Workmens’ Compensation and half the costs of

the Social Security be. -fits. Their argument before Con-

gress was that they were paying twice for the same injury.

This argument would have, of course, no merit at all in

relation to a damage action award or to the proceeds of

privately purchased accident or disability insurance.

35

As we have already indicated, our conclusion is that Sec-

tion 424(a) does not violate the due process clause of the

United States ‘Constitution.

‘As to the other two issues presented in appellant’s brief,

we affirm the judgment of the District Court for the rea-

sons set forth in the opinion of the District. Judge.

The judgment of the District Court is affirmed.

APPENDIX B

42 U.S.C.A. 424a, Pub. L. 89-97, Title III, 335, 79 Stat. 406,

Amended Jan 2, 1968, Pub. L. 90-248, Title I, 159(a),

81 Stat. 869

(a) If for any month prior te the month in which an

individual attains the age of 62—

(1) such individual is entitled to benefits under sec-

tion 423 of this title, and

(2) such individual is entitled for such month, under

a workmen’s compensation law or plan of the United

States or a State, to periodic benefits for a total or

partial disability (whether or not permanent), and the

Secretary has, in a prior month, received notice of

such entitlement for suck month,

the total of his benefits under section 423 of this title for

such month and of any benefits under ection 402 of this

title for such month based on his wages and self-employ-

ment income shall be reduced (but not below zero) by the

amount by which the sum of—

(3) such total of benefits under sections 423 and

402 of this title for such month, and

7 Ea See a ae LO OE RIN AN ES LIT ELIT LOT

(4) such periodic benefits payable (und actually

paid) for such month to such individual under the

workmen’s compensation law or plan,

exceeds the higher of—

(5) 80 percentum of his “average current earn-

ings’’, or

(6) the total of such individual’s disability insur-

ance benefits under section 423 of this title for such

month and of any monthly insurance benefits under

section 402 of this title for such month based on his

wages and self-employment income, prior to reduc-

tion under this sectica.

In no case shall the reduction in the total of such benefits

under sections 423 and 402 of this title for a month (in a

continuous period of months) reduce such total below the

sum of—

(7) the total of the benefits under sections 423 and

402 of this title, after reduction under this section,

with respect to all persons entitled to benefits on the

basis of such individual’s wages gnd self-employment

income for such month which were determined for

such individual and such persons for the first month

for which reduction under this section was made (or

which would have been so determined if all cf them

had been so entitled in such first month), and

(8) any increase in such benefits with respect to

such individual and such persons, before reduction

under this section, which is made effective for months

after the first month for which reduction under this

section is made.

37

For purposes of clause (5), an individual’s average cur-

rent earnings means the larger of (A) the average monthly

wage used for purposes of computing his benefits under

section 423 of this title, or (B) one-sixtieth of the total

of his wages and self-employment income (computed with-

out regard to the limitations specified in sections 409(a)

and 411(b) (1) of this title) for the five consecutive cal-

endar years after 1950 for which such wages and self

employment income were highest. In any case where an

individual’s wages and self-employment income reported

to the Secretary for a calendar year reach the lim*tations

specified in sections 409(a) and 411(b) (1) of this title,

the Secretary under regulations shall estimate the total

of such wages and self-employment income fcr purposes

of clause (B) of the preceding sentence on the basis of

such information as may be available to him indicating

the extent (if any) by which such wages and self-employ-

ment income exceed such limitations.

(b) If any periodic benefit under a workmen’s compen-

sation law or plan is payable on other than a monthly

basis (excluding a bevefit payable as a lump sum except

to the extent that it is a commutation of, or a substitute

for, periodic payments), the reduction under this section

shall be made at such time or times and in such amounts

as the Secretary finds will approximate as nearly as prac-

ticable the reduction prescribed by subsection (a) of this

section. .

((¢) Reduction of benefits under this section shall be

made after any reduction under subsection (a) of section

403 of this title, but before deductions under such section

and under section 422(b) of this title.

(d) 'The reduction of benefits required by this section

shall not be made if the workmen’s compensation law or

38

plan under which a periodic benefit is payable provides

for the reduction thereof when anyone is entitled to bene-

fits under this subchapter on the basis of the wages and

self-employment income of an individual entitle“ to bene-

fits under section 423 of this title.

(e) If it appears to the Secretary that an individual

may be eligible for periodic benefits under a workmen’s

compensation law or plan which would give rise to reduc-

tion under this section, he may require, as a condition of

certification for payment of any benefits under section 423

of this title to any individual for any month and of any

benefits under section 402 of this title for such month

based on such individual’s wages and self-employment in-

come, that such individual certify (i) whether he has filed

or intends to file any claim for such periodic benefits, and

(ii). if he has so filed, whether there has been a decision on

such claim. ‘The Secretary may, in the absence of evidence

to the contrary, rely upon such a certification by such in-

dividual that he has not filed and does not intend to file

such a claim, or that he has so filed and no final decision

thereon has been made, in certifying benefits for payment

pnursuant to section 405(i) of this title.

(f) (1) In the second calendar year after the year in

which reduction under this section in the total of an indi-

vidual’s benefits under section 423 of this title and any

benefits under section 402 of this title based on his wages

and self-employment income was first required (in a con-

tinuous period of months), and in each third year there-

after, the Secretary shall redetermine the amount of such

benefits which are still subject to reduction under this sec-

tion; but such redetermination shall not result in any de-

crease in the total amount of benefits payable under this

subchapter on the basis of such individual’s wages and

39

self-employment income. Such redetermined benefit shall

be determined as of, and shall become effective with, the

January following the year in which such redetermination

was made.

(2) In making the redetermination required by para-

graph (1) of this subsection, the individual’s average cur-

rent earnings (as defined in subsection (a) of this section)

shall be deemed to be the product of his average current

earnings as initially determined under subsection (a) of

this section and the ratio of (i) the average of the taxable

wages of all persons for whom taxable wages were re-

ported to the Secretary for the first calendar quarter of

the calendar year in which such redetermination is made,

to (ii) the average of the taxable wages of such persons

reported to the Secretary for the first calendar quarter of

the taxable year in which the reduction was first computed

(but not counting any reduction made in benefits for a

previous period of disability). Any amount determined

under the preceding sentence which is not a multiple of $1

shall be reduced to the next lower multiple of $1.

(g¢) Whenever a reduction in the total of benefits for any

month based on an individual’s wages and self-employ-

ment income is made under this section, each benefit, ex-

cept the disability insurance benefit, shall first be propor-

tionately decreased, and any excess of such reduction over

the sum of all such benefits other than the disability in-

surance benefit shall then be applied to such disability

insurance benefit.