Petition for a Writ of Certiorari — Limback v. Weinberger

LIBRARY JUN 6 197%

MUPREME COURT, U. &

IN THE SUPREME COURT OF THE

UNITED STATES

OCTOBER TERM, 1974

Health, “Education & Welfare,

Defendant-Appellee.

PLAINTIFF-APPELLANT’S

PETITION FOR WRIT

OF CERTIORARI

Writ & JaaSkELAINen

F. Hreser Maram (Of Counsel)

Attorneys for Plaintiff-Appellant

101 erg Street

TABLE OF CONTENTS

Pages

SSSI Ree seep ae nO a ii

I ei elec tik ueasipliisistsionscanhccockssinpenseelcainninede 1

Reference to the Official and Unofficial Reports of

the Opinions Delivered in the Courts Below ...... 1

Concise Statement of the Grounds on which Juris-

diction of this Court is Invoked 220.002.0000... 2

Question Presented for Review ..0.0.0...0.0.00.000000000ceee-. 2

Constitutional Provision and Statutes which the Case

Involves .......... Pane MaldstactbdaalecenainideeiisaiesisnaithesiCharesbaatesbaeniedsc 2

Concise Statement of the Material Facts of the Case .. 4

Direct and Concise Argument Amplifying the Rea-

sons Relied Upon for the Writ 0.000000... 6

I I sec sescdacaniemsinnnbannncie 17

Opinions and Orders of the Lower Courts ............... 18, 24

PENILE SOE: NEAT AAT T hl yy tee shor atten. 85

ii

INDEX TO AUTHORITIES

Cases Cited

Pages

Bolling v Sharpe, 347 US 497, 74 S Ct 693 (1954) .. 13

Flemming v Nestor, 363 US 603, 80 S Ct 1367

UNNI Sot cc casaschacesereseapastebaecsmmcatareneedisadtnatae tise. 6,9

Lofty v Richardson, 440 F2d 1144 (1971) .......... 16

Richardson v Belcher, 404 US 78, 92 S Ct 254

ER AEN OO IES: 10-12, 16

Statutes Cited

United States Constitution, Amendment V .......... 2-5,6

es ee niece adcecieeenns 6

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MCLA 418.161; MSA 17.237 (161) 0002. 13

MCLA 418.351; MSA 17.237 (351) ....2.2.2.2......es000-- 14,15

MCLA 418.355; MSA 17.237 (355) 00000000... 14,15

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IN THE SUPREME COURT OF THE

UNITED STATES

OCTOBER TERM. 1974

ee hee

Joun H. Limsack,

Plaintiff-Appellant,

v.

Caspar W. WetxBercer, Secretary of

Health, Education & Welfare,

Defendant-A ppellee.

PLAINTIFF-APPELLANT’S PETITION

FOR WRIT OF CERTIORARI

APPEARANCE

Now comes F. HUBERT MATHER (Of Counsel) of the

firm of Wisti & Jaaskelainen, and hereby enters his appear-

ance for and on behalf of the Plaintiff-Appellant in the

above-entitied cause and petitions this Court for a writ

of certiorari.

REFERENCE TO THE OFFICIAL AND UNOFFICIAL

REPORTS OF THE OPINIONS DELIVERED IN THE

COURTS BELOW

An opinion and order was delivered by the Honorable

Noel P. Fox in the above-entitled matter in the District

Court of the United States for the Western District of

Michigan on September 25, 1973. In his opinion and order,

Judge Fox granted a summary judgment against the Plain-

tiff-A ppellant.

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2

On appeal to the United States Court of Appeals for the

Sixth Circuit, the summary judgment of the District Court

was affirmed in an order by Judges Edwards, Peck, and

Engel filed March 12, 1974.

The orders of District Court and Court of Appeals are

unofficial and are appended to this petition.

CONCISE STATEMENT OF THE GROUNDS ON WHICH

JURISDICTION OF THIS COURT IS INVOKED

The date of the order sought to be reviewed, the order of

the Sixth Circuit Court of Appeals in regard to the above-

entitled matter, is March 12, 1974.

The statutory provision believed to confer jurisdiction

on the Supreme Court to review the judgment or decree in

question by certiorari is 28 USC § 1254 which provides in

pertinent part:

‘*Cases in the courts of appeals may be reviewed by

the Supreme Court by the following methods:

(1) By writ of certiorari granted upon the petition

of any party to any civil or criminal case, before or

after rendition of judgment or decree * * *’’

QUESTION PRESENTED FOR REVIEW

WHETHER THE. PLAINTIFF-APPELLANT

HAS BEEN UNCONSTITUTIONALLY DE-

PRIVED OF SOCIAL SECURITY BENEFITS

BY THE OPERATION OF SECTION 224a OF

THE SOCIAL SECURITY ACT.

CONSTITUTIONAL PROVISION AND STATUTES

WHICH THE CASE INVOLVES

The Fifth Amendment to the United States Constitu-

tion provides:

‘‘No person shall be held to answer for a capital, or

otherwise infamous crime, unless on a presentment or

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3

indictment of a Grand Jury, except in cases arising in

the land or naval forces, or in the Militia, when in

actual service in time of War or public danger; nor

shall any person be subject for the same offense to be

twice put in jeopardy of life or limb; nor shall be com-

pelled in any criminal case to be a witness against him-

self, nor be deprived of life, liberty, or property, with-

out due process of law; nor shall private property be

taken for public use, without just compensation.’’

Section 224a of the Social Security Act (42 USC 424a)

provides, in relevant part:

‘*(a) If for any month prior to the month in which

an individual attains the age of 62 —

(1) such individual is entitled to benefits under

section 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

such month,

the total of his benefits under section 423 of this title

for such month and of any benefits under section 402

of this title for such month based on his wages and

seif-employment income shall be reduced (but not be-

low zero) by the amount by which the sum of —

(3) such total of benefits under section 423 and

402 of this title for such month, and

(4) such periodic benefits payable (and actually

paid) for such month to svch individual under

the workmen’s compensation law or plan,

exceeds the higher of —

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

ings’’, or

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

surance benefits under section 423 of this title for

such month and of any monthly insurance bene-

fits under section 402 of this title for such month

based on his wages and self-employment income,

prior to reduction under this section.

‘*For purposes of clause (5), an individual’s av-

erage current earnings means the larger of (A) the

average monthly wage used for purposes of comput-

ing his benefits under section 423 of this title, or (B)

one-sixtieth of the total of his wages and self-employ-

ment income computed without regard to the limita-

tions specified in section 409 (a) and 411 (b) (1) of

this title) for the five consecutive calendar years after

1950 for which such wages and self-employment in-

come were highest. In any case where an individual’s

wages and self-employment income reported to the

Secretary for a calendar year reach the limitations

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

title, the Secretary under regulations shal] estimate

the total of such wages and self-employment income

for 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-employment income exceed such limi-

‘ations.”’

CONCISE STATEMENT OF THE MATERIAL FACTS

OF THE CASE

From 1942 until 1968, or for a period of twenty-six (26)

years, John Limback, the claimant, was employed as a

trammer underground in a copper mine.

Mr. Limback has been disabled from undertaking gainful

employment since 1968. His disabling condition has heen

diagnosed as chronic obstructive pulmonary emphysema,

chronic bronchitis, and pulmonary osteoarthropathy.

The claimant filed an epplication for Old Age, Survivors,

and Disability Insurance on October 7, 1969. A peried of

disability for the claimant was established before the So-

cial Security Administration beginning July 15, 1968.

On June 4, 1970, the Social Security Administration in-

formed Mr. Limback that benefits would not be paid te him

or his dependents for the period between May, 1970 and

April, 1971 because he had received a lump sum settlement

of a Workmen’s Cempensation case in the net amount of

Eleven Thousand Four Hundred Seventy-five ($11,475.00)

Dollars. This offset was made pursuant to 42 USC § 4244,

as amended, which places a limit of eighty (80%) percent

of a claimant’s average monthly earnings upon the total

Social Security and Workmen’s Compensation benefits

which a claimant may receive.

Mr. Limback has protested this ruling of the Sociai Se-

curity Administration by pursuing his administrative rem-

edies fully before the Hearing Examiner and the Appeals

Council. i

On May 1, 1972, the claimant requested a review of the

decision of the Social Security Administration by bringing

a civil action in the Federal District Court for the West-

ern District of Michigan. The Defendant moved for a

summary judgment which was granted by the District

Court in an opinion and order dated September 25, 1973.

The claimant appealed the judgment of the District

Court, but the Sixth Circuit affirmed the District Court in

an opinion dated March 12, 1974.

The sole issue now before the Supreme Court is the con-

stitutionality of 42 USC § 424a which provides for an off-

set of Social Security benefits for persons who have been

injured in industrial accidents and, consequently, receive

workmen’s compensation benefits. The claimant contends

that 42 USC § 424a denies his right to due process of law.

The basis for federal jurisdiction in the court of first in-

stance ix this matter is 42 USC § 405 (g) which provides

for judicial review of Social Security cases pending before

the Secretary of Health, Education and Welfare.

Beierrinicginces.« Fs tS padictt

6

DIRECT AND CONCISE ARGUMENT AMPLIFYPNG

THE REASONS RELIZD UPON FOR THE WRIT

Except in the instances of a few important groups (such

as employees of the United States government and certain

domestic and agricultural employees), all persons in the

United States who are self-employed or who are wage earn-

ers are required by law to contribute tax monies to the

Federal Old Age and Survivors Insurance Trust Fund.

See the Federal Insurance Contributions Act (26 USC §

3101 et. seq.), the Self-Employment Contributions Act of

1954 (26 USC § 1401 et. seq.) and § 201 of the Social Se-

eurity Act (42 USC § 401). The monies contributed to

these funds are distributed as Old Age, Survivors, and Dis-

ability Insurance Benefits. See § 202 and § 223 of the

Social Security Act (42 USC § 402 and § 423).

Thus, the Federal Old Age, Survivors, and Disability In-

surance system is conceived on a vast scale and supported

by a major segment of our society. Those who contribute

to this insurance scheme have no choice in the matter but

rather are required to do so by law. Consequently, these

contributors, who often have no other form of insurance or

are inadequately insured at best, have a considerable stake

in the benefits provided by the system. Yet, the Social Se-

eurity Act, in and of itself, does not provide a guarantee to

protect contributors from being eventually disenfran-

chised as a result of arbitrary governmental action of their

right to share in the benefits of the system. Only the

United States Constitution provides such a guarantee.

The Fifth Amendment to the United States Constitution

provides that no person shall be ‘‘deprived of life, liberty,

or property without due process of law.’’ The Supreme

Court has held that the interest of a covered employee un-

der the Social Security Act is of sufficient substance to fall

within the protection from arbitrary governmental action

afforded by the Due Process Clause. Flemming v Nestor,

363 US 603, 611. 80 S Ct 1367, 1373 (1960).

In the instant case, the Plaintiff contends that arbitrary

governmental action of the sort prohibited by the Due Pro-

7

cess Clause is embodied ing’ 224a of the Social Security

Act (42 USC § 424a), which provides in relevant part:

‘*(a) If for any month prior to the month in which

an individual attains the age of 62 —

(1) such individual is entitied to benefits under

section 423 of this title, and

(2) such tadividual 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

— received notice of such entitlement for

such month,

the total of his benefits under section 423 of this title

for such month and of any benefits under section 402

of this title for such month based on his wages and

self-employment income shall be reduced (but not be-

low zero) by the amount by which the sum of —

(3) such total of benefits under section 423 and

402 of this title for such month, and

(4) such periodic benefits payable (and 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’’,

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

surance benefits under section 423 of this title for

such month and of any monthly insurance bene-

fits under section 402 of this title for such month

based on his wages and self-employment income.

prior to reduction under this section.”

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

current earnings means the larger of (A) the aver-

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age 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 without regard to the limitations

specified in section 409 (a) and 411 (b) (1) of this

title) for the five consecutive calendar years after 195

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 limitations

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

title, the Secretary under regniations shall estimate

the total of such wages and self-employment income

for 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-employment income exceed such limn-

tations.’’

Section 224a serves to deprive a class of persons of their

right to full participation under the Social Security Act —

a right which they have earned by their contributions.

Men whe are disabled in the course of their employment

and who receive workmen’s compensation suffer an offset

of their Sociai Security disability benefits because of Sec-

tion 224a. This offset insures that those affected by it will

not receive from the state workmen’s compensation system

and from the Social Security Administration more than an

amount which is equal to the greater of the Social Secur-

ity disability benefits which they would have received had

they not heen the recipients of workmen’s compensation or

eighty (80% ) percent of their ‘‘average current earnings”’

as defined by Section 224a. For several reasons this off-

set is unjust and inequitable.

Section 224a is unjust beeause it deprives men and

women of insurance benefits which they have earned

through their contributions. As Mr. Justice Douglas

pointed out in his dissenting opinion in Flemming v Nestor,

363 US 603, 631-632, 80 S Ct 1367, 1383-1384 (1960) :

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‘*Social Security payments are not gratuities. They

are products of a contributory system, the funds being

raised by payment from employees and employers

alike, or in case of self-employed persons, by the indi-

vidual alone. See Social Security Board v Neirotko, *

327 US 358, 364, 66 S Ct 637, 640, 90 L Fd 718. The

funds are placed in the Federal Old-Age and Survi-

vors Insurance Trust Fund, 42 USC ¢ 401 (a), 42

USCA § 401 (a): and only those who contribute to the

fund are entitled to its benefits, the amount of bene-

fits being related to the amount of contributions made. r

See Stark, Social Security: Its Importance to Law-

yers, 43 ABAJ 319, 321 (1957). As the late Senator

George, long Chairman of the Senate Finanee Com-

mittee and one of the authors of the Social Security

system, said:

~

‘There has developed through the years a feeling

both in and out of Congress that the contributory

social insurance principle fits our times — that it

serves a vital need that cannot be as well served

otherwise. It comports better than any substi-

tute we have discovered with the American con-

cept that free men want to earn their security and

not ask for doles — that what is due as a matter

of earned right is far better than a gratuity. ** *

PMO ne

* * *

2p A PEA eet

‘Social security is not a handout; it is not char-

ity; it is not relief. It is an earned right based

upon the contributions and earnings of the indi-

vidual. As an earned right, the individual is

eligible to receive his benefit in dignity and self-

respect.’ 102 Cong Ree 15110.”’

Thus, Social Security benefits are a form of insurance.

They are not welfare. They should not be viewed as a dole.

but rather as a consideration which the federal govern-

ment is contractually obligated to pay. The government

should not be allowed to arbitrar: ily forsake this obligation

even though it gives a poliey reason for the repudiation of

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this obligation which might seem well-founded on its face

but, which, in fact, does not withstand close scrutiny.

The Supreme Court has cited two grounds which might

serve as a rational basis for Section 224a in Richardson v

Belcher, 404 US 78, 83, 92 S Ct 254, 258 (1971). The first

was that combined state and federal benefits in excess of

take-home pay earned prior to disability reduces the incen-

tive of the worker to return to the job and impeded the re-

nabilitative @fforts of the state programs. The second

ground was that duplication of benefits might lead to ero-

sion of state workmen’s compensation programs. Conse-

quently, the Supreme Court has upheld the constitutional-

ity of Section 224a.

But, to justify a law which treats two groups of persons

unequally and which takes from one group a right which

they have earned, it should not be enough merely to recite

a few legitimate goals as the intended purpose of the law.

In addition, there shouid be some rational relationship be-

tween the purposes which the law is intended to serve and

the actual effect of the law. Noble purposes may be attrib-

uted to any law no matter how arbitrary or offensive to

notions of due process that law may be. The true test of

whether a law discriminates, but by doing so effects a ra-

tional, legitimate purpose, on the one hand, or merely dis-

criminates invidiously, on the other hand, is the actual

operation of that law in practice.

In practice, Section 224a achieves no legitimate end. It

does not serve to prevent the erosion of state workmen’s

compensation programs because, as Mr. Justice Marshall

indicated in his dissenting opinion in Belcher:

‘*More pointedly, however, it defies logic to claim that

§ 224 could to any extent protect or encourage work-

men’s compensation in the manner suggested by the

Court. In support of its claim that § 224 might dis-

courage the erosion of workmen’s compensation, the

appellant relies heavily on a statement made by a rep-

resentative of the Council of State Chambers of Com-

merce to a subcommittee of the Senate Committee on

Finance:

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11

‘A matter of equal concern is the impact of Fed-

eral disability payments on State workmen’s

compensation programs. Legislative proposals

have been offered in several States (Colorado,

Florida, Maryland, and Minnesota) to reduce

workmen’s compensation benefits by the amount

of (social security) disability benefits payable to

a disabled worker. If other States follow this

direction * * * we believe it will be only a matter

of time until State workmen’s compensation pro-

grams are destroyed.’ Hearings on H.R. 6675

before the Senate Committee on Finance, 89th

Cong., Ist Sess, pt. 1, p. 259.

In addition, the Government refers to the testimony

of another Chamber of Commerce representative: :

‘Encroachment by social security is hampering

efforts to improve the State workmen’s compen-

sation systems where improvements are needed.

Faced with sharply rising costs and the duplica- F

tion of benefits, employers in several States have

supported legislative proposals to reduce work-

men’s compensation benefits by the amount of

social security disability benefits.’ Zd.. at 252.

SEWER

I am unable to see how § 224 is connected to this as-

serted rationale. The federal offset provision pro-

vides for the reduction of federal benefits if the total

of those benefits and the workmen’s compensation

benefits exceeds eighty (80%) percent of ‘‘average

current earnings.’’ However, federal benefits may

not be reduced if the workmen’s compensation plan

provides for a reduction of i#s benefits in the event of

an overlap. § 224 (d). Thus, if a State or employers

in the State want to save money, the federal statute

invites them to reduce workmen’s compensation bene-

fits by means of an offset provision of their own. I

do not see how it is possible to argue that the federal

statute is designed to prevent States from adopting

their own offset provisions. If anything, the States

are encouraged to cut back on their programs.’ Rich-

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ardson v Belcher, 404 US 78, 93-94, 92 S Ct 254, 263-

264 (1971).

Moreover, Section 224a complicates the practice of

Workmen’s Compensation law by discouraging seitlements

between employers and employees in cases where there are

disputes over the liability of the employer to pay compen-

sation. Social Security disability benefits, taken together

with workmen’s compensation benefits, are frequently all

the income that a worker has to rely upon in the event of

disability. Income from these sources is invariably mod-

est at best. In the absence of Section 224a, a worker who

is disabled for life might rely upon his Social Security

benefits to maintain himself and his dependents and use a

workmen’s compensation settlement to pay the mortgage

on his home or send his children to college. But Section

224a mandates that Social Security benefits be offset where

workmen’s compensation settlements are made. Frequent-

ly, most or all of a workmen’s compensation settlement is

eaten away in this manner. Thus, workmen are not en-

couraged to settle their compensation claims because they

have little to lose by not doing so. Thus, settlements which

were once mutually beneficial to employees and the em-

ployers are discouraged and a heavy burden is placed on

both employers and state workmen’s compensation sys-

tems.

Nor is there any rational basis for the use of Section

224a as a means to encourage rehabilitation. Section 224a

afi.,cts most severely those workers whose income is very

low. These people are often barely able to support them-

selves on 100% of their ‘‘average current earnings’’. Sec-

tion 224a insures that those of them who are disabled will

“never receive more than eighty (80%) percent of this

amount. It is not rational to ‘‘encourage’’ people to reha-

bilitate themselves by starving them or by forcing them to

forego ordinary human needs. This kind of ‘‘encourage-

ment’’ affects not only malingerers but also thousands of

working men and women who are truly disabled, many of

them permanently. It is not rational to punish many in

order to ‘‘eneourage’’ a few. Yet this is the effect of See-

tion 224a.

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In addition to the fact that Section 224a serves no ra-

tional purpose, it is also violative of the Federal Govern-

ment’s obligation under the Due Process Clause of the

Fifth Amendment to guarantee to all citizens equal protec-

tion of the Jaws. See Bolling v Sharpe, 347 US 497, 74S Ct

693. Only those who are disabled and who reeeive work-

men’s compensation benefits must suffer an offset of their

Social Security disability benefits. Others who reecive

benefits from collateral sources such as private insurers,

the Veteran’s Administration, and claims under ordinary

tort law, the Federal Employer's Liability Act and the

Jones Act do not share this handicap.

To illustrate the arbitrary effect of Section 224a, many

examples might be posed.

For instance, two workmen may work side by side at the

same job. Their employer may provide workmen’s com-

pensation benefits in the case of work-related disability and

sickness and accident benefits to cover disability which is

not work-related. Suppose that one of the employees is

disabled by sickness or an injury which is not work-related.

He will receive a full measure of beth Social Security dis-

ability benefits and sickness and accident benefits with no

offset. But if his co-worker sustains a work-related in-

jury, then the co-worker must suffer an offset of his Social

Security benefits against his workmen’s compensation.

Thus, Section 224a is effectively a penalty imposed upon

persons whose disability arises out of and in the course of

their employment.

Another example of the inconsistency inherent in Sec-

tion 224a may be found in Section 161 of the Michigan

Workmen’s Compensation Act (MCLA 418.161: MSA 17.-

237 (161)) which provides that policeinen or firemen may

waive the provisions of the Workmen’s Compensation Act

and elect to be covered by the charter of the municipal cor-

poration which employs them. In this instance, too, Sec-

tion 224a operates to deprive those who elect to be covered

by the workmen’s compensation act of all or a part of their

Social Seeurity benefits but does not affect those who

elect to be covered hy some other collateral source of dis-

ability benefits.

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Section 224a discriminates against workingmen and par-

ticularly against poor workingmen. Those persons whose

earnings are sufficiently high so that eighty (80%) per-

cent of their ‘‘average current earnings’’ under Section

224a exceeds their total Social Security. and workmen’s

compensation benefits are not affected by the offset of See-

tion 224a. Only those with very low incomes must suffer

an offset of their Social Security benefits.

For example, a man covered by the Michigan Workmen’s

Compensation Act who was disabled in a work-related ac-

cident in 1972 and who has three dependents will receive

workmen’s compensation at the rate of $101 per week or

$5252 per vear. See MCLA 418.351; MSA 17.237 (351)

and MCLA 418.355; MSA 17.237 (355). If the man’s ‘‘avy-

erage current earnings’’ under Section 224a were less than

$6565 per year ($5252 -— .30 — $6565) then his Social Se-

curity benefits will be totally offset as a result of Section

224a. If the man’s *‘avepage current earnings’’ under Sec-

tion 224a were greater than $6565 then he will suffer only

a partial offset cr perhaps no offset at all if his wage level

prior to his disability was sufficiently high.

To illustrate a point at which a workingman suffers no

offset, take as an example a man who is injured at work in

Michigan in 1972 and who has three dependents. His

‘‘computation base years’’ under the Social Security Act

are 1951-1972 if he was 21 years of age or older before

1951. Suppose that the man has been paid the maximum

amount of wages creditable for social security purposes in

each of these years, so that his creditable wages for the

period are: 1951-1954, $3,600 a year; 1955-1958, $4,200 a

year; 1959-1965, $4,800 a year; 1966 and 1967, $6,600 a

year; and 1968-1971, $7,800 a vear. The number of the

man’s ‘‘elapsed years’’ (21) reduced by 5 is 16. Choosing

the 16 highest of the man’s creditable years, it can be

determined that the total creditable wages paid to him in

these years amounted to $90,600. Dividing this figure by

192 (the number of months in 16 years) yields $471 (any

fraction of $1 is dropped). Using the table contained in

42 USC § 415, the man’s benefit (primary insurance

amount) is found to be $259.40. His maximum family bene-

fit, since he has three dependents, is $480 per month.

6 rey 66 OS

Beek are a ae Ca te

15

(These caleulations are based on 42 USC § 402 and § 415).

Thus, the total disability benefit for the man and his de-

pendants is $480 x 12 = $5760 per year. His workmen’s

compensation benefits are $101 per week or $5252 per

year. See MCLA 418.351; MSA 17.237 (351) and MCLA

418.395; MSA 17.237 (355). His total benefits from work-

men’s compensation and Social Security are $5760 + $5250

= $11,010 per year if he is not affected by _the offset of

Section 224a. Ile will not be affected by the atfset of See-

tion 224a if he earns more than $11,010 — .80 = $13,762.50.

Thus, it may be said generally that a man who was dis-

abled in a work-related accident in Michigan in 1972, who

has three dependents, and who has been working since 1950

will have his Social Security benefits totally offset if his

‘‘average current earnings’’ over the space of a year are

less than $6565 but will not have his Social Security hene-

fits offset at all if his ‘‘average current earnings’’ over the

space of a year are more than $13,762.50. If his average

current earnings are between these two figures, he will

suffer a partial offset which is inversely proportional to his

‘faverage current earnings.’’ From these caleulations, it

is evident that Section 224a is a regressive law which takes

from the poor and gives to the rich. Section 224a hardly

affects middle class workers who predominate in nation’s

suburbs, who are well-represented by progressive unions,

and who receive income of over $10,000.00 per year. On

the other hand, Section 224a generally operates to offset

the entire Social Security benefit due to poorer workers

who receive workmen’s compensation and who predomi-

nate in rural areas and the inner city.

The claimant in the instant ease. Mr. Limhack, is in the

latter group. Because his earnings as a copper miner in

northern Michigan were always very low (he never earned

more than $5100 in any given vear — see page 32 of the

transcript) the entire amount of his Social Security dis-

ability benefits for the period of May, 1970, through April,

1971, was offset against his net workmen’s compensation

settlement of $11,475.

The bitter irony of this situation is that it is poorer

workers who most desperately need Social Seeurity bene-

fits when they become disabled. Middle class workers who

—— LO Lt REN Rl DORCAS ELT

16

‘ are not affected by the offset will often have collateral

: sources of disability income through arrangements with

private insurers and their employers because they are

aware of the inadequacies of Social Security and Work-

; men’s Compensation benefits. But people at lower income

; levels seldom have the economic wherewithal to insure

themselves adequately. Consequently, Old Age, Survivors,

and Disability Insurance is their insurance — for them,

there is no other. Yet, in spite of their need, Section 224a

operates to deprive these poorer workers of this source of

income.

: In light of Richardson v Belcher, 404 US 78, 92 S Ct 254

: (1971) and Lofty v Richardson, 440 F2d 1144 (1971), which

have upheld the constitutionality of Section 224a and which

the Defendant-Appellee will inevitably cite in its reply

brief, the claimant’s appeal in the instant case must seem

a Quixotic venture, indeed. But, just as the old Don was

moved by a kind of desperation, so are the claimant and

others like him who are adversely affected by Section 224a.

Poor people have no lobby of the kind described in the

Lofty ease to tell their side of the story to Congress or to

rid themselves of the social injustice wrought by the work-

men’s compensation offset. They must rely solely upon

the safeguards afforded them by the United States Consti-

tution.

Section 224a does not rehabilitate. Section 224a does

not prevent the ‘‘erosion’’ of state workmen’s compensa-

tion laws. All that Section 224a does in its operation is

to take badly needed income away from a narrow class of

low income working people who have become disabled. No

other group of persons covered by the Social Security Act

must endure such a disadvantage. Section 224a is discrim-

inatory in its effect and arbitrary in its conception. It de-

prives persons without due process of law of a right which

they have earned.

IMPLANT

GR ATOR ER TR NA AIG en IO) RB AM

17

PETITION FOR CERTIORARI

The Plaintiff respectfully requests from this Court the

grant of a writ of certiorari.

Respectfully submitted,

Wistt & JAASKELAINEN

By: (s) F. Husert Matier (Of Counsel)

Attorneys for Plaintiff-Appellant

101 Quincy Street

Hancock, Michigan 49930

Telephone: 482-5220

Dated: May 24, 1974

OCB CLIO CEO Ei tlt OES a BP EM POA PAD YE ALAR 4 CES LIEDAECE:

18

OPINIONS AND ORDERS OF THE LOWER COURTS

iden) deere RINSE. er

OPINION AND ORDER

4 UNITED STATES OF AMERICA

z IN THE DISTRICT COURT OF THE UNITED STATES

i FOR THE WESTERN DISTRICT OF MICHIGAN

y SOUTHERN DIVISION

4

i JOHN H. LIMBACK,

y — Plaintiff.

v.. M 35-72 CA

CASPAR W. WEINBERGER,

3 Secretary of Health, Education

: and Welfare,

Defendant.

This is an action pursuant to Section 205(g) of the So-

cial Seeurity Act, 42 USC 405(¢), for judicial review of a

final decision of the Secretary of Health, Education and

Welfare, which affirms prior administrative determina-

tions applying the ‘‘workmen’s compensation offset’’ pro-

visions of Section 224 of the Social Security Act, 42 USC

424, against the disability insurance benefits to which plain-

tiff is entitled (42 USC 423) and against the wife’s insur-

anee benefits and the child’s insurance benefits to which

his wife and children are entitled [42 USC 402(b) and 402

(d)] under the Act.

Defendant has filed a motion for summary judgment pur-

suant to Rule 56 of the Federal Rules of Civil Procedure

on the ground that there is no genuine issue as to any

material fact, and that defendant is entitled to a judgment

as a matter of law. Plaintiff concedes there is no factual

dispute and that the issue is solely one of law.

j

!

19

The facis, briefly stated, are That a period of isability

was established for plaintiff beginning July 15, 1968 on the

basis of silicosis and related disablying conditions. By

notice of June 4, 1970, plaintiff was informed that he was

not eligible for benefits for the period May 1970 through

April 1971 because he had received a lump sum settlement

under the Michigan Workmen’s Compensation Act in the

net amount of $11,475.00, representing periodie payments

of $81.00 per week ($351.00 per month) beginning August

2, 1968, and that therefore total offset against disability

insurance benefits ($310.40 per month for the family) in

the period May 1970 through April 1971 was required un-

der the provisions of Section 224 of the Social Security

Act. Plaintiff does not dispute the acenracy of the muthe-

matical calculations, and stipulated as to their aecuraey

in the prior administrative proceedings. However, it is the

position of the plaintiff that the determination of the see-

retary is erroneous for two reasons:

(1) Section 224 of the Social Seenrity Act which re-

quires an offset against social security benefits to re-

flect workmen’s compensation payments is unconsti-

tutional in that it violates the equal protection clause

and due process clause of the Federal Constitution.

(2) If the offset was proper, it should have been re-

duced by the amount of medical expense he will be re-

quired to pay for the rest of his life,

THE CONSTITUTIONAL QUESTION

The constitutionality of Section 224! of the Social Se-

curity Act has been specifically upheld by the Supreme

1 Section 224 provides, in pertinent part:

‘*(a) If for any month prior to the month in which an

individual attains the age of 62 —

**(1) such an individual is entitled to benefits under

section 423 of this title, and

20

Court of the United States in Richardson v. Belcher, 404

U.S. 78 (1971), and by the Court of Appeals for the Sixth

Cireuit in Lofty v. Richardson, 440 F. 2d 1144 (Sixth Cir.

1971), cert. den. 404 U.S. 985 (1971). Plaintiff, confronted

with the authority of Richardson v. Belcher, supra, simply

argues that the rationale of the case is incorrect and that

the dissent in the case represents the sounder view. Even

if this were so, this court is, of course, bound by the deci-

1 (Continued) :

**(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 dis-

ability (w hether or not permanent), and the Secretary has,

in a prior month, received notice of such entitlement for

such month,

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

such month and of any benefits under section 402 of this

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

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

amount by which the sum of —

**(5) such total of benefits under sections 425 and 402

of this title for such month, and

**(4) such periodic benefits payable (and 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 earnings,’...

‘For purposes of clause (5), an individaal’s average

current 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

witheuat regard to the limitations specified in sections 409

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

calendar years after 1950 for which such wages and self-

employment i income were highest... .’’ 42 U.S.C. Section

4924(a).

REL AT TG LET IR LET IE OE IGE OTL A OF BI

21

sions of the highest court in the land and the decisions of

its own judicial circuit. :

Plaintiff also seeks to avoid the offset pro’ :sions of the 3

Act by claiming that Section 224(b) of the Act, 42 U.S.C.

424(b) provides for an offset of a lump-sum workmen’s

compensation payment which is ‘‘a commutation of, or a

substitute for, periodic payments,’’ but that the offset pro-

visions do not apply to a redemption scttlement under the

Michigan Workmen’s Compensation Act. The applicable

Michigan statute (MSA 17.237 (835), formerly MSA 17.-

172) provides for redemption of liability by payment of a

lump-sum by agreement of the parties. It also provides

for commutation of deferred payments by payment of a

lump sum. Although a distinction may be made under

Michigan law between a redemptivn settlement of a dis-

puted liability and a settlement by a way of commutation

of periodic payments admittedly due, the net effect is a

lump-sum payment. In either event, it is a payment under

a workmen’s compensation law in discharge of the em-

ployer’s liability under such law. In either event, the

claimant is permitted to accept his total award at one time

rather than in the form of periodic payments projected into

the future. Thus, it is clearly ‘‘a commutation of, or a

substitute for, periodic payments.”’

A similar argument, as here made by the plaintiff, was

made and rejected in Lofty v. Cohen, 325 F. Supp. 285

(E.D., Mich. 1970). The court stated at page 287:

‘*Plaintiff’s second contention is that the settlement

of his workmen’s compensation rights was a ‘redemp-

tion settlement’ not a commutation or a substitute for

periodic payments within the meaning of 42 U.S.C.A.

§ 424a(b) * * * The Michigan statute pursuant to

which the lump sum award was made clearly contem-

plates that such a lump sum payment is a substitute

for plaintiff’s claim for future periodic payments.”

This decision was affirmed sub nominee Lofty v. Rich-

ardson, supra.

Didi casio lcteisa ed Writ iriicrst ia reearaindatnonrnanies a

bo

to

REDUCTION FOR MEDICAL EXPENSES

Plaintiff also claims that even if an offset for workmen’s

compensation benefits was proper, there should have been

excluded from the offset his anticipated or future medical

expenses. Section 404.408(d) of Social Security Adminis-

tration Regulations No. 4, 20 C.F.R. Section 404.408(d), in

force at the time of the Seeretary’s determination, speci-

fied the items to be excluded in determining the workmen’s

compensation offset to be applied pursuant to Section 224

of the Act, supra. As stated therein, medical, legal, or re-

lated expenses paid or incurred in connection with the com-

pensation claim are excluded in determining the offset

where they are established by the award comprimise agree-

ment, or the other methods specified. Provision is also

made for exclusion of anticipated medical expenses, how-

ever, in this respect the regulation provides:

‘* Anticipated medical expenses not specified or item-

ized in the award or compromise agreement will not

be excluded.”*

In the present case, the award showed no specific allo-

cation of any amount as attributable to medical expenses.

However, plaintiff claims that nevertheless approximately

41.5% of the amount awarded should be exeluded as attrib-

uted to medical expenses ‘‘because a study was made by

the Michigan Department of Commerce indicating that

approximately that percentage of the amount expended on

Workmen’s Compensation during the fiseal years ending

June 30, 1963 and 1964 had to cover medical expenses and

were not cash benefits’’ to the claimant (Tr. 41).

Clearly, this estimate based on a general statistical study

does not satisfy the requirement of Section 404.408(d) of

the regulation that medical expenses not specified in an

award, agreement or court order be documented in specific,

itemized or otherwise clear and convineing fashion.

2 Section 404.408(d) of the regulation was argyaded sub-

sequent to the administrative determination Wi case,

Moreover, the identical argument here made by the

plaintiff was rejected in Lofty v. Cohen, supra, affirmed

sub nominee, Lofty v. Richardson, supra. The court stated

at page 291:

‘*Lastly is plaintiff’s contention that defendant should

somehow allocate 41.5 per cent of the workmen’‘s com-

pensation settlement to medical expense and prorate

the 58.5 per cent against ihe Social Security payment.

There is just no basis, iegal or practical, for such a

procedure. It would be contrary to Section 224(b).

In addition, there was no breakdown in the Redemp-

tion Order indicating that any particular percentage

thereof was for medical expenses,”’

For the reasons above set forth, it is ordered that de-

fendant’s motion for summary judgment be granted and

the complaint is hereby dismissed.

iT IS SO ORDERED.

Dated: Sept. 25, 1973.

Noel P. Fox

Chief District Judge

2 (Continued):

Even if the amended regulation were applicable here, the

statistical study upon which plaintiff relies would not meet

the proof standards of the amended regulation.

IRR ROB L ALAM EE AMALIA TESTI TTI “SO ay

ORDER

(Filed Mareh 12, 1974)

No. 73-2233

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

JOHN H. LIMBACK,

Plaintiff-Appellant

VS.

CASPAR W. WEINBERGER

Defendaut-A ppellee

Before: EDWARDS, PECK and ENGEL, Circuit Judges.

On consideration of an appeal from summary judgment

granted in favor of defendant-appellee and noting that the

sole issue in this case pertains to appellant’s claim that 42

U.S.C. §424(a) is unconstitutional, and further noting that

this question has been decided by the U.S. Supreme Court

in Richardson v. Belcher, 404 U.S. 78 (1971), the judgment

of the District Court is affirmed under Rule 8 of the Rules

of the United States Court of Appeals for the Sixth Cir-

cuit.

Entered by Order of the Court

(s) James A. Higgins

Clerk

hie Se CGR OPT DA eres at ee Lee P