Jurisdictional Statement — Richardson v. Belcher

Supreme Court brief1971

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aliens TERM, 1970

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= ™é, No.

Exxiot L.- RICHARDSON, SECRETARY OF Hisatirsr, Epv-

CATION AND WELFARE, APPELLANT

RaYMOND BELCHER

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR

| - THE SOUTHERN DISTRICT OF WEST VIRGINIA

JURISDICTIONAL STATEMENT

oPINton BELOW

The memorandum opinion and order of the United

States District Court for the Southern District of

West Virginia (App. A, infra, pp. 11-21) are not yet ‘

i weeds f

—a a

-The judgment of the district court declaring 42

U.S.C. 424a unconstitutional as. applied to appellee.

‘Belcher was entered on September 14, 1970 (App. A,

p. 21). A notice of appeal was filed on. October 13, 1970

(App. A, , pp. 21-23). The, jurisdiction of this

Court is conferred by 28 U.S:C. 1252: Fleming v. .

Rhodes, 331 U.S. 100; Flemming v. Nestor, 363 U.S.

603. : :

(1)

411-537-701

SERA PRR DS PEL IOP HEE ween TLR F

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er QUESTION PRESENTED ; ,

* ‘Whether the provision in the Social Security Act. |

~< requiring the reduction of social seeurity disability

benefits because of the simultaneous receipt of state

workmen’s compensation benefits is constitutional.

STATUTES AND REGULATIONS INVOLVED : }

Section 424a of Title 42, United: States Code (Supp.

V); together, with the relevant Department of Health,

Education and. Welfare regulations, are set forth in ,

Appendix B, infra, pp. 24-41.

STATEMENT >

Appellee ‘Raymond Belcher is a resident of West

Virginia who has had his social security disability |

. benefits reduced ‘under Section 224 of the Social :

~ Security Act, 42 U.S.C. (Supp. ‘V)+) 424a, because of — -— *®

his simultaneous receipt of periodic ~workmen’s com- >

pensation -benefits. He instituted this action for review

. of the administrative decision, seeking a declaration

_ that the section is unconstitutional and inapplicable to

-him.-This is a direct appeal from the order of a single-

‘judge district court holding Section 224 unconstitu-

_ tional and inapplicable to the appellee. | :

Section 224(a) provides that for any month in

which an individual under age 62 is entitled to both

social security -henefits and periodic workmen’s com-_

pensation benefits under any federal or state law, such

individual’s social security benefits shall be reduced

by the amount by which the total benefits received

under the social security and workmen’s compensa-

tion programs for that month exceeds the higher of:

“> * current earnings,” then his actual earnings, rather than those

(a) 80 percent of the individual’s “average current

earnings’’* or (b) the total of certain other designated

disability benefits. Section’ 224(b) ptovides~ that,»

should such an individual receive a lump sum settlenient __

as a substitute for or a. commutation of periodic

workmen’s compensation henelits, the reduction “*shall

be made at such time or times and in such amounts

“as the Secretary finds. will ‘approximate as. nearly as

eae the reduction preserpped by | subsection.

¢ a). ”? |

_ The facts of this case are’ : not in dispute. Belcher

was awarded disability insurance benefits. Because he

was also receiving. workmen’s compensation benéfits

' = -under West Virginia law, his disability benefits were

reduced as required by Section 224.’ After exhausting

his administrative. remedies, Belcher instituted the

4 An individual's “average current earnings” is defined as. the

_ larger of the average monthly wage used for purposes of com-

puting his benefits under 42 U.S.C. 423, or one-sixtieth of his:

total wages and ‘self-employment income for the five consecu-

tive years after 1950 when they were highest. The 1968 amend-

ments (Pub. L. 90-248, Title I, Sec.. 159(a), 81 Stat. 869)

changed ‘this clause to provide that when an individual’s wages

and self-employ ment income for the five consecutive years dur-

ing which they were highest are used to compute his “av erage

earnings creditable for purposes of social security anes have

an upper limit), are to be used.

‘? Beginning in October, 1968, Belcher was awarded ssenkhily

social security disability insurance benefits of $156.00 for him-

self and $57.90-each for his wife and two children, for a total |

. Of $329.70 per month. But in January, 1969, Belcher was

notified that $104.40 was being withheld from such monthly

social security benefits because he was receiving $47.00 a week,

or $203.60 a month in workmen's compensation, thereby redue-

ing his monthly federal- payments to $225.30 (Admin. Fr. 9,

12, 25-27 eee

4 .

” present action, alleging that Section 224 is uncon-

ee ee ee

stitutional because: (1) it discriminates irrationally |

between recipients of workmen’s compensation bene- -

fits: whose social security benefits are reduced, and

all other: repipients of-benefits or awards, such as pri-

vate insurance beneficiaries and successful tort plain-

~ tiffs, whose benefits are not- reduced and (2) ‘it de-

privés him and his family of property, in the form

of social security benefits for which he has at least

partially paid through social security taxes, without

due process of law.’ The district court held that Sec-

tion 224 unconstitutionally discriminates against

Belcher by requiring the reduation of his social se-

curity benefits and that it deprives him of property

without due process of law (App. A. pp. 11-19).

THE QUESTION.IS SUBSTANTIAL

1. In this case the district court invalidated a sig-

nificant provision of a major Act of Congress de-—

signed to effectuate proper legislative - ends.’ Every

’ Belcher also alleged that Section 224 was unconstitutional

because it arbitrarily required the reduction of his social security

_ benefits without taking account of attorney’s fees paid by him

in connection with his workmen’s compensation claim. The dis-

trict court did not rule on this allegation. At the administra-

tive hearing, however, Belcher testified that he was not at that

time paying any attorney’s fee out of the workmen’s compen-

‘sation benefits he had been receiving (Admin. Tr. 30-31). More-

over, the Secretary will take into account the payment of such

expenses, if they are identifiable, in computing the reduction:

See 20°C.F.R. 404.408 ¢d), App. B, infra, p. 34.

“4See the Government’s Motion to Affirm in Bartley v.

Richardson, No. 703, October Term, 1970, pp. 6-12, presently

_pending before this Court on appeal from a (district. court

-decision upholding the constitutionality of the same provision.

btn SE CR AUER ee SLE

~~ 7 ; 3 ; .

other .court which has considered this question has

* upheld the provision.’ | |

The need ‘for this Court to determine the constitu-

tionality of Section 224 is underscored by several

factors. The large number’ of.decided and pending

cases in which the statute’s constitutionality has been

challenged (see note dD, supra) demonstrates the f

widespregt significance of the question.’ Now that 7

a court kas invalidated the provision, further chal- :

lenges are likely to be made; all fifty, states, the | .%

District of Columbia, Puerto Rico and the. United ;

States have. workmen’s compensation laws. Since in "o£

many jurisdictions such laws have. characteristics |

‘In addition to Bartley, supra note 4, the constitutionality

of Section 224 has been upheld in the following cases: Vieves .

v. Secretary of HEW, 1 CCH Unemployment Ins. Rptr., Fed.

Matter No. 15,479 (Puerto Rico, 1969) ; Gambill v. Finch, 309

, F. Supp. 1 (E.D.-Tenn.) ; Barber Lofty v. Cohen (E.D. Mich.,

—___ Civil _No._30916, decided—Mareh 25, 1970, pending before the

Sixth Circuit, No. 20,484) ; Bailey v. Finch, 312 F. Supp. 918 ©

(N.D. Miss); Johnney Benjamin v. Finch (E.D. Mich., Civ.

No. 32816, decided May 26, 1970, ‘pending before: the Sixth

Cireuit, No. 20,714) ; Louis E. Miley v. Finck+.D. Mich., Civ.

No. 33560,edecided June 12, 1970); Edward O. Gooch y. Finch

, (S.D- Ohio, Civ. No. 6840, decided July 13, 1970).

The following cases involving challenges to the const itution-

~» ality of Section 224 are pending: Sheets v. Fivth (S.D. W.Va.,

Civil No. BK 69-3); Rodatz v. Finch. (ED. IIL, Civil No. 69- .

170); Copeland v. . Finch (W.D. Okla., Civil No. 69-363) ;

Wren v. Finch (W.D. Mich., Civil No. 6171); McAlonan v.

Finch (W.D. Mich., Civil No. 6269). ~~:

: ° The fiscal strain on .the social security fund that would be

‘Imposed by the: invalidation of Section 224 1s significant. The

Social Security Administration estimates that as a result of the:

statute’s offset provision, the reduction in. benefits throughout

the ‘country in 1970: will be $28,610,638. %

PEO IET ETE RY COME DN some

6...

similar to those of West Virginia relied upon: by the.

court below—namely, that in| that state workmen’s

compensation is a private rather than a public. right,

since it depends upon a contract ‘—the decision below,

if followed in. those areas, would result in the invali-

dation .of Section 224 inva papereneal portion ‘of the

country. . |

The court’s alternative ground for invalidating the.

statute—that it deprives appellee of property rights.

without due process of law—poses an even greater _

- threat to Section 224, and, indeed, to other important

provisions of the Social Security Act. For, should

-a claimant’s statutory right to disability benefits be

deemed to be an indefeasible property right not sub-

ject to any statutory limitations, doubt would be cast

upon other important provisions of the Act, such as .

_ those _requiring the reduction of an ‘individual’ s bene-.

fits because of bjs excess earnings (42 U.S.C: 403(b) )

and the limitation of benefits to children adopted by

an individual after he becomes entitled to benefits (42

U.S.C. 402(d)): :

2. Section 224: satisfies the requirements of due _

Under the w vaadanens rianpeation laws of all jurisdictions

_ the employer must pay for at. least a portion, if not all, of the

‘benefits, either through contributions to the state-regulated

fund, as in West Virginia, or through payment of premiums

to its insurance carrier. Out of fifty-three totdl jurisdictions,

including the states, the District of Columbia, Puerto Rico and

the United States, twenty-nine require private employers to —

participate in the workmen’s compensttio on system and twenty-

four allow private emplo rs to elect not to participate, on

penalty of loss of their common law defenses. 3 Larson, Work- —

men’s Compensation, ‘Table 7 at. pp. 522-523 a) and Supp.

1970, p. 117.

relied upon by the court below in striking it down “.

is well founded, _ - 1

We havé fully discussed the eontention that Section

224 discriminates unconstitutionally against recipients

of workmen’s compensation benefits jn our motion to

affirm in Bartley v. Richardson, supra, note 4, to

which we refer the Court. We add here only that the

reliance of the court below on the characterization of

West Virginia’s workmen’s compensation’ benefits as

private in nature is misguided.* Our argument in sup-

_ port-of Section 224 in no way depends upon whether

‘state workmen’s compensation benefits. are derived |

from public or private sources. Instead. our argument

is that in effectuating the purposes of the social se:

curity: disability system—namely, - rehabilitating the

disabled worker and eneouraging him to return to

“productive work as soon as he is able, and preventing

the erosion ‘or repeal of state workmen’s compensation

systems ‘—Congress rationally chose to reduce the so-

Even on its own terms, the court’s conclusion that work-

men’s compensation benefits are “private” is questionable. -As-

. in.all other jurisdictions, both state and federal, the workmen’s

compensation’ system in West Virginia xi ts solely by virtue

of state legislation (W. Va. Code, Chap. 23 (1966 ed.). More-

over, the West Virginia system is ‘administered by a it a

missioner. (W. Va. Code, § 23-1-1) and operates solely because

af the sanctions imposed by state law. Thus, while private em-

ployers may elect not to participate. in the system, employers

so deciding must provide their‘ewh method of: compensation,

which must be approved by the commissioner, and post sufficient

bond to insure payment of compensation and expenses to their

injured employees (W. Va. Code, § 23-249). _

* See our motion to affirm in Bartley, pp. 6-12.

3 : » &

cial security payments to sem of duplienting

benefits.” :

' 3. The district court ‘also held Section 994(a) un-

constitutional on the ground that the statute e deprives

Belcher of. a property right—his disability benefits—

without due process of law. In ‘support of this holding, ~

the court cited Goldberg v® Kelly, 397 U:S. 254, which -

held’ that the welfare benefits of an individual recipi- —

“ent cannot be terminated. without an evidentiary hear-

ing. According to the court below, the reasoning of

Goldberg applies equally to social security disability

benefits, «and, consequently, Section 224 cannot con-

stitutionally reduce Belcher’s right to receive social

security disability benefits. However, even if Goldberg.

were extended to apply to the . disability benefits in | |

question here,“ that case dealt only “with the proced-

ural rights of a person whose benefits are, terminated , f

10 As we explain in our motion to“affirm in Bartley, p. 12,

the fact that Congress might have gone further than it did,

‘So as to apply the offset provisions to recipients of -benefits

from sources such as private insurance or tort claim recovery,

does not invalidate the distinction questioned here. Legislative

reform “may take 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 Co., 348 U.S, 483, 489.

~ In Flemming v. Nestor, 363 U.S. 603, this Court sustained the

statutory termination of the social security old-age benefits of

an alien deported because of his membership in the Communist

party, adding _ that’ an individual who has become eligible to

receive benefits under the Social Security Act does not have

an indefeasible property right to those benefits. According to

the district court, Goldberg implicity overruled Nestor, and the

court considered this to be dispositive of the instant case. As

stated in the text, however, Goldberg did not deal withthe

a of rational statutory distinctions, and me a did

- not even refer to Nestor. a ‘hy ;

because of alleged failure to meet statutory qualifica-

tions. Goldberg has no bearing upon the substantive

validity: of rational statutory imitations such as the

qualification in Section 224 held invalid by the court

below.

, CONCLUSION

’ Hor the foregoing reasons, probable’ jtivisdiction

should be noted. . y se

Respectfully submitted. -

| Erwin N. GRISWOLD,

° Solicitor General.

CaRL EARDLEY,

Acting Assistant Attorney Geyeral.

_ Ricwarp B. STONE,

Assistant to. the Solicitor General. i

Roserr V. ZENER,

JAMEs C. Harr, Jr.,

| Attorneys.

Decemser 1970: : |

411-537—70 —2 ; _ ; ee

. .

’

« .

. _ APPENDIX A |

In the United States District Court for the Souther

-« s District of West Virginia. at Bluefield

* Civil Action No. (1185 '-

RayMonp BELCHER, PLAINTIFF

° Vv.

Meise Li RICHARDSON, Srourrany OF . Heatran,

Epvcarion | ‘aa ‘WELFARE, DEFENDANT

CHRISTIE, District. Judge: . : .

This is an action under Section 205(g) of the Social

Security. Act, 42. U.S.C.A. 405(gy, to review a final

decision of the Secretary of Health, Education and,

Welfare. A decision by a hearing examiner on Octo-

ber 31, 1969, became the final décision of the Secretary |

on January 20, 1970, when it was affirmed by the Ap-

‘peals Council. The matter is before the Court on the

cress motions of the parties for ey judgment

pursuant to Rule 56. ¥

The plaintiff filed’ an application for disability in-

surance benefits on May 20, 1968, alleging that he be-

came unable to wotk on March D5, 1968, as the result

of an injury. On May 20, 1968, his wife ‘and children ©

also applied for benefits under the Act. The Seer@tary

| having ‘determined that plaintiff was disabled with-

in the meaning’ gf the Act, all applicants were award- “

ed benefits on September 30, 1968, such benefits to

_ begin with the month of ctober 1968.

Later, plaintiff recéived an awatd tof $203. 66 per

month from the Workmen’s Compensation Fund of -

West Virginia as the result of a work-related i injury.

\ «any. F

$ : : /

a ee” Lae ose A WF

12°.

Upon learning of this award, the Soeial Security Ad-

ministration applied the ‘‘offset” provisions of Section .

224 of the Social Security Act, 42 U.S.C.A. 424(a).’

- On February 10, 1969, plaintiff’s attorney requested

a reconsideration of. the offset reductions which the

1 Section 224 of the Social Security Act, 42 U.S.C.A. Section

424, as arhended, July 30, 1965 and January 2; 1968, prov ides:

“(a) If for any month prior to the month in w rhich - “an in-

. dividual attains the age of 62—

-“(1) such individual is entitled to benefits under section 223,

and

*(2) such individual is entitled for such month, under 4

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 223 for such month and of . ~

any benefits under section 202 for such month based on his

wages and self-employment income will be reduced (but not

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

“(3) such total of benefits under sections 223 and. 202 for

such month, and »

“(4) such periodic benefits payable (and actually ails for

such month to such individual under the workmen’s cempen-

sation law or plan,

- exceeds the higher of— .

“(5) 80 per centum of his ‘average earnings’, or

“(6) the total of such individual’s disability insurance bene-

fits under section 223 for such month and of any monthly in-

surance benefits under section 202 for such month based on his

wages: and self-employment income, prior to reduction under

this section.

In. no case shall the reduction i in the total of such benefits under

sections 223 and 202 for a month (in a continuous period of

months) reduce such total below the Sum of —

“(7) the total of the benefits under section 223 and 202, after

reduction under this section, with respéct to all persons entitled —

to benefits on the basis of such individual’s wages and 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

Administration rejected on July 19, 1969. ‘Thereapén,

said attorney requested a hearing. held October 9,

1969, at which he presented argument supporting his

elaim that Section 224 deprived plaintiff and his fam-

ily of a property right without due process of law

and that it was discriminatory inasmuch as: it dis-

criminated unfairly between persons of a similar class.

On October 31, 1969, the hearing examiner issued his

bi dah

opinion upholding the legality of the reduction of F

benefits. This decision became the final decision of the .

Secretary on January 20, 1970, when it was affirmed i

by the Appeals Council. Thereupon, plaintiff ney ;

filed the.instant action in this'‘court. . :

As previously noted (footnote 1), See tion 2 24 pro-

. vides for a reduction in social scéurity disability bene-

ts for such time as the.claimant receives workmen’s

compensation .benefits for either total or partial, dis- ,

ability. Workmen’s compensation laws generally pro- |

vide compensation to employees for loss resulting from

industrial accidents and disease growing out of or

resulting from their employment. The need for such

a system arose out of conditions produced by modern

industrial development and was premised upon the

idea that the common-law rule of liability for person- --

al injuries incident to the operation of industrial en-

terprises, which was based upon the negligence of the

employer, with its defenses of contributory negligence,

fellow servant’s negligence, and assumption of risk,

was outmoded by modern conditions.

been so determined if all of. them had been so entitled i in such

first month), and

“(8) ‘any increase in such benefits with respect to such in-

dividual 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.”

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West Vir ginia’s s Workmen’s Compensation Law is

found in Chapter 23 of the West Virginia Code. The

law creates a ‘‘Workmen’s Compensation Fund” which

is sustained by contributions made to it by the em-

ployers who voluntarily elect to come under the pro-

visions of the law, such contributions being based

upon a percentage-of the gross wages of their em-

ployees. The employees make no-direct monetary con-

tributions to the fund and the system is state-op-

erated. Basically, the law takes from the employee his

common-law right to sue his employer for ‘damages

_ for negligence in return for payment from the fund

of limited or scheduled benefits for disability or death

resulting from or growing out of. the employment

relationship, regardless of any fault of the employer.

In West Virginia the relation of employer and em-

ployee, under the law, is termed contractual in nature,

the statute becoming an integral part of the contract

of employment, and imposing upon the employer and

~ employee, respectively, a limitation of rights and

liabilities. Gooding v. Ott, 77 W. Va. 487, 87 S.E.

862; Lancaster v. State Compensation Comins 125 W.

Va. 190, 23 S.E. 2d 601. Thus, in no sense of the word

ean one’s workmen’s compensation benefits be termed .

a gratuity; rather they must be treated as a contrac-.

tual entitlement. So it is seen that the issue before

this Court as to this aspect of the. case is whether or

not Section 224 of the Social Security Act, requiring

reduction in plaintiff’s social security benefits in pro-

portion to the amount of his workmen’s compensa-

tion benefits, may be constitutionally applied.

It cannot he seriously contended that the Social

Security Act itself is unconstitutional for its consti-

tutionality has been upheld in a long line of cases.

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

Steward Machine Company v. Davis, 301 U.S. 584

(1937), and Carmichael v. Southern Coal and Coke’

Company, 301 U.S. 495 (1937). It is equally well

‘Settled that entitlement to social security benefits is

subject to all conditions ‘set. out in the Soeial Security

Act under which benefits are to be paid. Flemming v.

Nestor, 363 U.S. 603 (1960) ; Gruenwald v. Gard-

ner, 396 F. 2d 591 (2d Cir. 1968), cert. den. Gruen-

wald v. Cohen, 393 U.S. 982 (1968) ; Price v. Flem-

ming, 168 F. Supp. 392 (D. Ct. NJ. 1968), affirmed

280 F. 2d 956 (3d Cir. 1960), cert. den. 365 U.S. 817

(1961). | |

N otwithstanding, as previously noted, plaintiff .

urges that the offset provision of Section 224 deprives -

him of his property (benefits) without due process

of law. The answer would seem to hinge upon whether

the plaintiff has such an indefeasible right’ or interest

in his social security benefits that the concept of due

process precludes application of the offset statute.

In Flemming v. Nestor, supra, the Court’ found -

that the old-age benefits of an alien, .deported for

cause under the Immigration and N ationality Act,

could be lawfully terninated without offending the’

Due-Process Clause of the Fifth Amendment. There

the’ Court rationalized that the noncontractural in-

terest of an employee covered by the Social Security

Act cannot be analogized to that of the holder of

an annuity, where the. right to benefits is based on

a contractual duty to pay premiums, and further,

that to hold otherwise would render the law too in-

~ flexible to permit necessary adjustment to ever-chang-

ing conditions. Justices Black, Douglas and Brennan

dissented, each filing.a separate dissenting opinion-and

each strongly arguing that the alien had a property

BRS AE.Y FRAN ta OO AB aH BP ig OUELLETTE i a a a atk a oe El Re

’

right in his old-age benefits and to deprive him of them —

was a violation of due process.

. We have been referred to several unreported de-

cisions of district courts and one reported decision,

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, especially 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 safe-

guards required by due process. Such benefits, the

* Court states (p. 262), are a matter of “statutory ;

entitlement for persons qualified to receive them,”’

and as support for this conclusion the Court, in foot-

note 8 of the same page, refers to an article in the

Yale Law Review stating that,

“Tt may be realistic today to regard. welfare

entitlements as more like ‘property’ than a

‘gratuity.’ ’’

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 thas

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

ee: of due process, while the social secu-

rity recipient, under Nestor, is deprived of such

status ‘and protection. The: distinction is not ‘only

completely illogical, but is grossly: inequitable. In-

deed, it appears to’run counter to the intent of

Congress as reflected by the comments by Senator

George, Chairman of the Senate Finance Committee,

at the time of the passage of the Social Security Act

concerning its purpose’ and character, as quoted ‘in

the Nestor dissent, p. 623: | a

' “**Tt comports better than any substitute we

have discovered with the American concept 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... .

(Emphasis added) .

“ “Social Security ts not a handout; it is not

charity; it is not relief. It is’an earned right

based upon the contributions and earnings of.

the individual. As an earned right, the individ-

ual-is ‘eligible to receive his benefit in dignity

and self-respéct.’’" (Emphasis added) - 102.

Cong. Ree. 15110. , : e

Thus, we must conclude that the concept espoused

by the majority in Nestor, that one who has contrib-

uted to the social security fund and later becomes

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 contribution to the

fund from’ which he draws benefits does have a recog-

nizable property right to such benefits and one which

is protected by all the safeguards of due process.

Tif

The other issue raised by the plaintiff is that the

offset provision of Section 224 creates arbitrary dis-

411-537—-70——3

"18

- erimination hetween two classes of disabled workers, -

essentially indistinguishable from each other except

that one is composed of those disabled persons who |

also receive workmen’s compensation benefits and the

other is composed of those disabled persons who also re-

ceive benefits from private disability insurance plans:

or tort claim awards, and that on the basis of this dif-

ference alone the first class has benefits reduced while -

the second class has benefits left untouched. In other_ ~

words, the plaintiff complains tliat if is patently arbi-—

| trary to single out for ‘the purpose| of applying the

offset only those who are receiving workmen’s compen-

sation and exclude those who are receiving benefits

from other sources.. The plaintiff further argues that

the offset provision also discriminates between those

who were disabled prior to June 1, 1965 and those who —

become disabled after June 1, 1965.

~The defendant, in justification of these diserimina-

tory features of the offset provision, argues that its

purpose was to avoid duplication of public benefits.

Tf this be its true purpose, it is certainly a laudable

one and one with which this Court could wholehearted-

ly accept. However, the argument is inapplicable here

for, as previously ‘shown, workmen’s compensation in

- West Virginia is not a gift from the public largesse, .

but rather is an entitlement arising from a contractual

relationship between employer and employee, sanc-

tioned by law, whereby each gave up a:legal right in

return for a concomitant legal benefit. That no public

funds are involved is made abundantly clear. by the

provisions of West Virginia Code, 23-3-1. There, it is

provided that the Workmen’s Compensation Fund shall

be supported by “premiums and other funds paid —

thereto by emplovers,’’ from which shall be paid all

benefits due the empldyees or their dependents and

the expenses of administering the law. No pul funds

- opinion a part of the record. .

being thus involved, the defendant’s argument that

_ plaintiff’s workmen’s compensation award should be

treated as a public benefit obviously becomes quite un-

tenable and must be rejected. © | a

In sum, therefore, it is held that in the. cireum-

“stances of \plaintiff’s case, the application of Section

224 cannot. be’ constitutionally applied, since to do so

would deprive him of due process and equal protection

| of the law under the Fifth and Fourteenth Amend:

ments. The motion of the plaintiff for summary judg-

ment will accordingly be granted and the motion of

the defendant for summary judgment will be denied@

An appropriate order may be presented making this

_ Swyey L. Curisrir,

United States District Judge.

United States District Court for the Southern District

of West Virginia at Bluefield |

Civil Action No. 1185

‘RayMOND BELCHER, PLAINTIFF

| wy. : .

Eviiot L. RICHARDSON, SECRETARY OF HeEattH,

EpucaTIon, AND WELFARE, DEFENDANT

JUDGMENT ORDER

- This cause having been submitted on brief, the tran-

script of record certified to this Court in the manner

preseribed by law, and upon plaintiff’s and defend-

_" ant’s motion for summary judgment; and the Court

_ having made its findings. of fact and conclusions of

_ law, as appears from its memorandum opinion dated

September 10, 1970, in which this Court expressed

20 . .

‘the opinion that defendant’s motion for summary

_ Judgment should be denied, and that an order should

be entered denymig the defendant the right to offset

workmert’s compensation payments from/ the Social.

Security benefits made to plaintiff, it is, therefore

ADJUDGED _Orverep that the memorandum opin-. .

ion of the Court, dated September 10, 1970, begand -

the same is hereby filed and made a part of the record

‘in this action, and that the de¢ision of the Secretary ~

of Health, Education, and Welfare; applying the off-

set provisions of Section -224 of the Social Security .

Act be, and the same is hereby reversed, and the pro-

posed offset by the Secretary. against the plaintiff be,

and it is hereby denied.

And be it further ApsupGEp and Orbeaey:

_ (1) That counsel for the defendant shall promptly

file with the Court a report stating the amount of

the ‘initial past due benefits to be paid the plaintiff

and/or any ancillary beneficiaries, pursuant to this

_ judgment order. A copy of such report ‘shall be fur-

nished by the defendant to counsel for the plaintiff;

and

; (2) That counsel for ,the plaintiff shall, within

fifteen (15) days of the entry of this judgment order,

file with the Oourt a verified petition for the ap-

‘proval and allowance’ of a fee for representing the

plaintiff in this Court, pursuant to the provisions of

Section 206(b)(1) of the Social Security: Act, as

amended July 30, 1965, 42 U.S.C.A. 406(b) (1), ex-

- hibiting therewith the original or a duplicate-original

of any written: contract of employment between the

attorney and the plaintiff, and in any event, showin

(a) what services were rendered by the attorney in

the case and specifically the amount of time he devoted

to it in this Court; (b) what expenses, if any, were

personally incurred by the attorney in the prosecu-

-) \

. \

‘tion of the case in this Court and for which he has

not been reimbursed by his client; and (¢c) what sums,

if any, have been paid the attorney by the plaintiff or

by anyone for the plaintiff for services rendered in

this Court: The petition Must @lso containcon affirma-

tion by the attorney that he will neither demand, re-

ceive nor accept from the plaintifigsr from anyone for

the plaintiff, any. feé or remuneration, for “services

rendered in this casé in this.Court other than that

approved and allowed py this Court sd dai aais to such

petition. :

And this case ‘shall remain: upon: the dackpt tintil |

such statement of initial benefits shall have been re-

ceived from the defendant and until the matters aris~

ing upon the petition for the approval and allowance

of an attorney’s fee to counsel for the plamtiff shall.

have been adjudicated. |

Enter: September 14, 1970. ,

| {s) Smney L. CHRISTIE,

United States District Judge.

. United States District Court for the Southern

District of West Virginia at Bluefield

Civil Action No. 1185

RAYMOND BELCHER —

Vv.

ExLiot L. RicHaRpsoON, SECRETARY OF Hearty,

EpvucaTION, AND WELFARE

Notice of Appeal to the Supreme Court of the United

~ States Pursuant to 28 U.S.C. 1252 and 2101

Notice is hereby given that Eliott L. Richardson,

Secretary of Health, Education and Welfare, defend- |

| ye

ae . y 22 J 7

ant herein, acting by and“through the United States

Attorney for the. Southern District of West Virginia,,.

hereby appeals to the Supreme Court of the United~. >

States, pursuant to 28 U.S.C. 1252 and 2101, from the .

Judgment entered in_ this action on September 14,

1970. . . : ¢ °

‘W. WarREN UPTON,, ©

United States Attorney, Southern District of

West Virgina, 4006 Federal. Building,

500 ean Street, Charleston, Ls Va.

25301. * ;

_—”

Distrig f West Virginia at Bluefield

United s District Coyrt for the Southern’

Civil so 1185 _—

RAYMOND BELCHER’ .

Pec os a +

‘Eviaot L. RIcHARDSON, SECRETARY OF HEALTH,

EpuGaTION, AND WEL#ARE

AFFIDAVIT OF SERVICE

4° STATE OF WEST VIRGINIA,

County of Kanawha:

W. Warren Upton, being first auly sworn on his -

oath deposes and says that he is a resident of the’ City

of Charleston, County of Kanawha, State of West ;

«Virginia. | |

That he is the United States Attbrney for the . oy

Southern District. of? West Virginia, at Bluefield, 4

West Virgini’ and f

_ That-on the 13th day of: Oitoner, 1970 he mailed,

postage ‘prepaid, a copy of Notice of Appeal To The’

‘Supreme Court Of The United pes, filed in the -

. abot & captioned case, ta counted for plaintiff-appellee,

_——— os

as follows: +

Mr. Marshall G. West = | a,

_ Attorney At Law | | |

~ P..O. Drawer 469 ~~ on

Pineville, West Virginia,24874 — . hs

“eN a

- W. WARREN Upton, |

U Inited ‘States Attorney, Southern District of

West Virginia, 4006 Federal Building,

ge 500 Quarrier Street, pried BV a:

25301. °° ° _

SusscriBep and Sworn to before me, thi 13th day

"of October, 1970, INS

(8S) Berry J EAN Muze,

Notary Public in and for |

Kanawha County, West Virginia.

_ My commission ‘expires September 10, 197 3,

S °°.

‘ .

| APPENDIX B

42 U.S.C. 424a provides:

W@424a. Repuction or Disapmity BENEFITS

THROUGH RECEIPT OF WORKMEN’S COMPEN-

SATION.

(a) If for any month orig the month in

-which an individual attains the age of 62—_

(1) such individual is entitled to benefits

‘under section 4239 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 éntitlement for such month,

the total of his benefits under section 423 of

this title for such month and of any benefits un-

der section 402 of this title for such month

based on his wages and self-employment 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

(4) such periodic benefits payable (and

actually paid (for such month to such in-

dividual under the workmen’s s compensation

aw or plan, exceeds the higher of— -

(5) 80 Noi of his ‘“‘average ouzreue

earnings”,

(6) the "total of such individual’s disabil- 7

ity insurance 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

(24)

self-employment income, prior to reduction

under this section. | :

In no ease 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 sec-

_ tions 423 and 402 of this title, after reduc-

_ tion under -this section, with respect to all

_ persons entitled to benefits on the basis of —

- Such individual’s wages and self-employ-

ment income for such month which were |

determined for such individual and such

persons for the first month for which re-

duction under this section was made (or

which would have been so determined if all

of them had been so entitled in such first

month), and. |

(8) any increase in such benefits with re-

spect 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 sec-

tion is made. a |

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

age current earnings means the larger of (A)

the average monthly wage used for purposes of

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 —

sections. 409(a} and 411(b)(1) of this‘ title)

for the five consecutive calendar years after

1950 for which such wages and self-employ- -

ment income were highest: In any case where

an individual’s wages and self-employment. in-

come reported to the Secretary for a calendar

year reach the limitations specified in sections

409(a) and 411(b)(1) of this title, the Secre-

tary under regulations shall estimate the total

- of such wages and self-employment income for

puropses of clause (B) of the preceding sen-

tence 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 limitations. -

(b) If any periodic benefit under a work-

men’s compensation law or plan is pavable on

_ other than a monthly. basis (exeluding a henefit

* 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 ap-

proximate as nearly as practicable the reduc-

tion prescribed by subsection (a) of this section.

shall be made after any reduction under subsec-

tion (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 com-

pensation law or plan under which a periodic

benefit is payable provides for the: reduction

thereof when anyone is entitled to benefits un-

der this subchapter on the basis of the wages

and seMemployment income of an ‘individual

entitled to henefits under section 423 of this

title.

(e) If it appears to the Secretary that an in-

dividual: may be eligible for periodic benefits un-

der a workmen’s compensation law or plan

which would give rise to reduction under this

section, he may require, as a condition of cer-

tification for- payment of any benefits under

section 423.of this tile to any individual] for

any month and of any benefits under section.

402 of this title for such month based on such in-

dividual’s wages and self-employment income,

that such individual certify (1) whether he has

filed or intends to file any claim for such pe-

riodic 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

PRE RERSRe ag Fase ORNL e NeRAE >

a Ao eet

such individual 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 pur-

suant 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 individual’s benefits under sec-

tion 423 of this title and any benefits under sec-

tion. 402 of this title based on his wages and

self-employment income was first required (in

a continuous period of months), and in each

third year thereafter, the Secretary shall re-

determine the amount of such benefits. which

are still subject to reduction under this section ;

— htit such redetermination shall not result in any

decrease in the total amount of benefits payable

under this subchapter on the basis of such in-.

dividual’s wages and self-employment imcome.

Such redetermined benefit shall be determined

as of, and shail become effective with, the Janu-

ary following the year in which such redeter-

mination was made. |

(2) In making the redetermination required

by paragraph (1) ‘of this subsection, the in-

dividual’s average current earnings (as.defined

in subsection (a) of this section) shall be

deemed to be the product of his average cur- .

rent earnings as initially determined under sub-

section (a) of this section and the ratio of (1)

the average. of the taxable wages of all persons

- for whom taxable wages were reported 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

a a a Sm ;

is not a milaple 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-employment income is made

_ under this section, each benefit, except the dis-

ability: insurance benefit, shall first be propor-

tionately decreased, and. any excess of such re-.

duction over the sum of all such benefits’ other

than the disability insurance benefit shall then

be applied to such disability insurance benefit.

Part 404.408 of 20 C.F.R. provides:

$ 404.408 Repuction or BrENEFITs Basen on. DIs-

ABILITY ON ACCOUNT OF RECEIPT OF Work-

MEN’S COMPENSATION.

(a) When reduction requir ed. Under section

224 of the Act, a disability insurance benefit. to

which an individual i is entitled under section 223 ~

of the Aet for a month after 1965 and before the

individual attains age 62 (and ‘any monthly

benefit for the same month payable to others

under section 202 of the Act on the basis of the

same earnings record) is reduced (except as

“ provided in paragraph (b) of this section) by

an amount as determined under paragraph (c)

of this section if:

(1) The individual. entitled to the disability

insurance benefit is also entitled under a work-

‘men’s compensation law or plan of the United

States or a State to a periodic benefit for such

month for a total or partial disability (whether

or not permanent) and . ~

(2) The Secretary has, in a month before

such month, received notice of such entitlement

for such month, and

(3) The period of. disability involved began .

after June 1, 1965.

(b) When reduction not made. The reduc-

tion of a benefit otherwise required by para-

graph (a) of this section is not made if the

workmen’s compensation -law .or plan under

which the periodic benefit is payable provides for

- under section 223 of.the Act.

made effective for months after the first month —

_ 29

tlie reduction of such periodic benefit when any-

one is entitled to a benefit under title II of the Act

on the basis of the earnings record of an individ-’

ual entitled to a disability insurance benefit

(ce) Amount of reduetion—(1) General. The

total of benefits payable for a month under sec-

tions 223 and 202 of the Act to which para-

graph (a) of this section ‘applies is reduced

(but not below zero) bythe amount by which

the sum of such total of benefits and such peri-

odie benefits. payable (and actually paid) for

such month to such individual under the work-

men’s ‘compensation Jaw or plan exceeds the

higher of: - .

(i) Eighty percent of his ‘‘average current

earnings,” as defined in subparagraph (3) of

this paragraph, or | = |

(ii) The total of such individuals’s dis-

ability insurance benefit for such month and all |

other benefits payable for such month based on

such individual’s earnings record, prior to re-

' duétion under this-section.

(2) Limitation on reduction. In no case may

the total of monthly benefits payable for a

month to the disabled worker and to the per-

sons entitled to benefits for such month on his

earnings record be less than:

-. (i) The total of the benefits payable (after

reduction under paragraph (a) of this section)

to such beneficiaries for the first month for

which reduction under this section is made, and

(ii) Any increase in such benefits which is

for which reduction under this section is made.

(3) Average current earnings defined—(i)

In general. An indiivdual’s ‘‘average current

earnings” for purposes of this section means

the larger of: 7

(a) The average monthly wage used for pur- ,

poses of. computing the individual’s disability

insurance benefit. under section 223 of the Act,

or | |

(b) One- sixtieth of the total of such iiiyiie

ual’s wages and earnings from self-employ-

_.ment without the limitations under sections

209(a) and 211 (b}(+)>-of:.the Act for the 5

. consecutive calendar years after 1950 for. which

such wages and .earnings from self-employ-

ment were highest. The extent by which such

individual’s wages and earnings from self-em-

ployment exceed the limitations under sections

209(a) and 211(b)(1) of the Act for any cal-

endar year after 1950 is computed in accord-

ance with the provisions of subdivision (ii) of

this subparagraph. Any amount so computed.

which is not a multiple of $1 is reduced to the

next lower multiple of $1.

(ii) Method of determining calendar year

earnings i excess of the limitations under sec-

tions 209(a) and ?11(b)(1) of the Act—(a)

In general. For the purposes. of subdivision.

(i)(b) of this subparagraph, the extent by,

which the wages or earnings from self-employ- |

ment of an individual exceed the maximum .

amount of earnings creditable under sections .

209(a) and 211(b)(1) of the Act in. any calen-

dar year after 1950 will ordinarily be estimated

on the basis of the earnings information avail-

able in the records of the Administiation. (See

Subpart I of this part.) If an individual ad-

duces satisfactory evidence of his actual. earn-

“Ings in any year, the extent, if any, by which

his earnings exceed the ‘limitations under sec-

tions 209(a) and 211(b)(1) of the Act shall be

determined by the use of such evidence instead

of by the use of estimates.

(b) . Estimated wage earnings—(1) One em-

ployer wvolved. In any calendar year after

1950 in which wages are reported for an indi-

vidual, the wages credited to his earnings record

for each calendar quarter before the quarter in

which the maximum amount creditable under |

section 209(a) of the Act is attained are deemed

to be the individual’s actual earnings for each

such quarter. The amount of wages for the

Misbe i es Peon

calendar quarter in which the maximum amount

of earnings was attained and for each succeed-

ing calendar quarter of that year, if any, in

which the individual worked is deemed to be

equal to the largest amount credited to his earn-

ings account in that calendar yéar for any eal-

endar quarter through the quarter in which the

maximum amount of earnings was attained.

Example. In the year 1966 in which $6,600

is the maximum creditable earnings amount

under section 209(a) of the Act. W worked for

the XYZ Company. His earnings record shows

Ist quarter____-_-_-___--__-_----__--------- $2, 400

2d quarter________-__-___-----_-----------_- 2, 550

3d quarter_-__.--.---.------1_-------__---- 1, 650

4th quarter_____-__-__-------- ~------------- 0

Total ____- (Mane ee eee eeeee eee 6, 600

‘The maximum ereditable earnings amount

was reached .in the third quarter. The amount.

of wages for that quarter and for the succeed-

ing fourth quarter is deemed to equal the high-

- est quarterly amount credited, i.e., the amount

of $2,550 credited to the second quarter. Thus

W’s total estimated wages for the year 1966 are

determined as follows: ° :

RUE CUO a ee ee $2, 400

2d quarter_____-____________. ae eeo eee 2, 550

Tie CANE ois re eee ee wee neenc eens 2, 550

4th quarter______---_--__________-_---_- Le 2, 550

Total _.__-__-_____ a Seer 10, 050.

(2) Two or more employers involved. In any

calendar year after 1950 in which- wages are

reported for an individual by more than one

employer, if the total wages reported by any -

employer equal or exceed the maximum amount

of earnings creditable under section 209(a) of

the Act, the total wages from such employer for

the quarters in which the individual worked for

that employer are estimated in accordance with

a provisions of (1) of this subdivision (ii)

Example. In the calendar year 1964 in which

$4,800 is the maximum amount of: earnings

creditable under section 209(a) of the Act, A

. 32

_worked for four employers. The following

amounts are creditable to his earnings record:

Employer Employer Employer Employer

No. 3 No. 4

No.1 _ No. 2 Total

Ist quarter___._...__.... $1, 400 $1,200 . $0 $0

2d quarter_.......-..-. : 1, 200 1, 200 150 . 300

3d quarter. -...--..--. 2,200 1, 200 0 1, 800

4th quarter_....-...._- ‘ -0 1, 200 250 2, 700

$4, 800 $4, 800 $400 $4,800 @e $14,800

Wages’ from Employer No. 1 reached the

maximum in the third quarter. For this quarter

and the succeeding fourth quarter, A’s wages

from Employer No. 1 are deemed to equal $2,200

in each of these two quarters. Wages from:

Employer No, 2 reach@d the maximum in the

fourth quart@x, but since all of the quarterly

amounts credited are equal, there are no addi-

tional deemed wages. Since the total wages re-

ported by Employer No. 3 never reached the

maximum, the actual amounts credited are

deemed to be his total wages from such em-

ployer. Wages from Employer No. 4 reached .

the maximum in the fourth quarter. However,

since this is the highest quarterly amount cred-

ited and there are no succeeding quarters, the.

total earnings from this employer are: deemed

to be the actual amounts credited. Thus, A’s

total wages for 1964 are estimated as follows:

Employer Employer Employer Employer

No.1 . No. 2 No. 3 No.4 Total

1st quarter___...-..-.--- $1, 400 $1, 200 $0 $0

2d quarter -.-_.-...---. 1, 200 1, 200 150 300

3d quarter___.---.-...-- . 2, 200 1, 200 0 1, 800

4th quarter___-_..---..- 2, 200 1, 200 250 2, 700

“(¢) Estimated earnings from self-em ploy-

ment. In any such calendar year in which.

self-employment income is credited to an individ- —

ual’s earnings record and such credit equals -

the maximum amount of earnings creditable

under section 211(b) (1) of the Act, the amount

‘of earnings from self-employment for such in-

dividual’s taxable year is deemed to equal his

total net earnings from self-employment as

shown in his tax returns on file in the records

of.the Administration.

Example. In the calendar year 1957 in 'ghicll

$4,200 is the maximum amount creditable as..

self-employment income under section 211(b)

(1) of the Act, C has maximum self-employ-

-ment income of. $4,200 credited to his earnings

record. €’s sel f-employ ment tax return for 1957

; shows net earnings from” self-employment of

"$8,300. Thus, C’s earnings from self-employ-.

ment are deemed to equal $6,300 for 1957.

“2. (d) Wages and self- -employment imcome in-

volved. In any such calendar year, in which

both wages and self-employment income are

credited to an individual’s earnings record, the

amount of such individual’s total earnings for +,

_ such calendar year is deemed to equal the total

of his wages as determined under the provisions

of -(b) of this subdivision and the amount of

his net earnings from self-employment as deter-

mined .under the provisions of (c¢) of. this

subdivision.

' _ Example. For the calendar year 1967 in which

_ $6,600 is the maximum creditable earnings un-

der sections 209(a) and 211(b)(1) of the Act,

D who was both employed and self-employed

has the following amounts credited to his earn-

ings record:

Wages Self-employ-

. -ment income

e 3

Ist quarter... _-...........--------- 2222-222 +222 eee eee eee $1, 508

2d quarter____-_-___-_-_ 2-2 [27 1, 500

3d quarter... -_- eee 1, 500 .

4th quarter, ewan seteest sss aseceeaececeuscsssseuslessck ck cee 1, 500

$6, 000 $600

ve ‘a /

ince the amount of wages credited do not

ual or exceed the maximtim amount creditable

. aifler section 209(a) of the Act, D’s total wages

for the year are deemed to be $6,000. However,

the amount’ of net earnings from self-employ-

- ment shown on D’s self-employment tax return

is $2,300. D’s earnings from self-employment:

/ are ‘deemed. to equal net earnings from self-

employment which: he reported for the year.

Thus, D’s earnings for 1967 are estimated as

follows: | . Hs

Wages -.---22------- guntieceonscuen, pease $6, 000

Net earnings from self-employment a ne ae 2, 300

Total ._---._--- pee ara nee penn coerce 8,300 .

(4) Reentitlement to disability insurance ben-

efits. If an individual’s entitlement to disability

insurance benefits terminates and such individ-

ual again becomes entitled to disability insur-

ance behefits, the amount of the reduction is

again computed based on the figures specified in

this paragraph (c) applicable to the subsequent

entitlement. —

(d) £tems not ‘counted for reduction. Amounts

included in the workmen’s compensation award

which are specifically identifiable as being fore”

medical, legal or related expenses paid or in-

curred by he individual in connection. with his

workmen’s compensation claim, or the injury. or

| occupational disease on which it is based, are

excluded in computing the reduction under

paragraph (a) of this séction.

(e) Certification by individual concerning —

eligibility for workmen’s compensation pay-

ment. Where it appears that an individual may |

be eligible for a periodic benefit under_a work--

men’s compensation law or plan which would

give rise to reduction under paragraph (a) of

this section, the individual may be required, ‘as’

-a condition of certification for payment of any

- benefit under section 223 of the Act to any in-

dividual for any month, and of any benefit ‘

«a

35 ¢

under section 202 of the Act for such month

based on such individual’s earnings record, t6

furnish evidence as requested by the. Adminis-

- tration and:to éertify as to: _ :

(1) Whether he has filed or intends file —

any claim for such periodic benefit, and «

(2) If he has so filed, whether there has beeh

a decision on such claim. In the absence of evi-

dence to the contrary, reliance may be placed

upon a certification ‘that he has not filed and

does ‘not intend to file such a claim, or that he

has filed and no decision has been made, in certi-

fying any benefit for payment pursuant to sec-

tion 205(1) of the Act.

(f) Workmen’s compensation benefit payable —

on other than a monthly basis. Where work-

men’s compensation benefits are paid periodi-

cally but not monthly, or in a lump-sum as a

commutation of or a substitute for periodic.

benefits, the reduction’ under this section is

made at such time*or times and in such

-amounts as the Administration determines will

approximate as nearly as practicable the reduc-

tion required under paragraph (a) of this’

- Y

section. |

(g) Priorties. (1) For an explanation of

when a: reductioi’ is made under this section _

where other reductions, deductions, etc., are

inyolved, see § 404.402. | |

(2) Whenever a reduction.in the total of

benefits for any month based on an individual’s

earnings record is made under paragraph (a)

of this section, each benefit, exeept the disabil- _

ity insurance: benefit, is first proportionatély

decreased, and any excess of such reduction

over the sum of all such benefits other than the

disability insurance benefit is-then applied to

such disability insurance benefit._—-

Example: Under title II of the Act, A is

entitled to a monthly disability ‘insurance bene-

fit of $122. His wife, B, and his two.children, C

and D, are entitled to monthly insur@tiice benefits

of $61 each. After adjustment for the fam-

ily maximum under section 203(a) of the Act,

the benefits are $122 for A and $50.60 for B,

C, and D making a total of title IT benefits of

$273. 80. In computing A’s “‘average current

earnings,” it is determined that A’s average

monthly wage used in computing his benefit

rate is $340, and his average monthly wage for

his 5 years of highest earnings after 1950 is

$400. Therefore, 80 percent of his “average

current earnings” for purposes of the work-

men’s compensation deduction is $320. °

A becomes entitled to workmen’s ‘compen-

. sation of $48 a week, which converted to a

monthly rate amount to $208 a month (i.e.,

41% times $48). The total monthly benefits pay-

able under title II of the Act ($273.80) plus

the monthly workmen’s compensation amount

( $208) equals $481.80. The amount of the reduc-

. tién’ for workmen’s compensation is $161.80

($481.80 minus $320); and.the family benefit

Seal fo Te ed ae, Se SS is

payable is $112 ($273.80: minus $161.80 equals _ .

$112). (The same result is obtained by subtract-

ing the workmen’s compensation amount ($208) «

from the applicable limit ($320).)

In this example, the $161.80 reduction would

be applied first against the three section: 202

~-benefits ($50.60 times 3 equals $151. 80) leaving

$10 te be deducted from the disability insurance

benefit.

‘(h) Effect of changes in family composition.

The addition or subtraction in the number of -

beneficiaries in a family may cause .the family

' benefit to become, or cease to be, the applicable

limit for reduction purposes under this section.

When the family composition changes, the

amount of the reduction is recomputed. as

though the new number of beneficiaries were en-

- titled for the first month the reduction was im-

‘ posed, iLe., the same average monthly wage,

average current earnings, ‘and workmen’s com- .

Pensation amount and the total benefits pay-

able under title II of the Act for the new number

of beneficiaries which would have been sub-

jected to reduction for that first month are

used. If the applicable limit both before and

after the change is 80 percent of the average

earnings, the amount payable remains the same

and is simply redistributed among the bene-

ficiaries entitled on the same-earnings record.

Example: F is entitled to disability insur-

ance. benefits of $110.80 based .on an average

monthly wage of $289. His wife, G, and his

child, H, are entitled to benefits under section

‘202 of the Act of $55.20 each. F becomes en-

titled to workmen’s compensation of $192 a

month. His average monthly wage for his 5

years of highest earnings after 1950 is $260.

The applicable limit on total benefits payable

under title II of the Act and workmen’s com-

pensation is $231.20 (i.e, 80 percent of F’s

average current earnings). The amount payable

is figured as follows: | . . |

“Total title IT benefits...-- =... eee eee] $220.70 $220. 70

Monthly workmen’s compensation....................___.. 192.00 |. _.-2 22222 eee

_ . 412. 70

_ Less 80 percent of F’s average current earnings.........._!- 231.20 |... ee

. Reduction amount .._.-..-... =. 22-2... 181. 50 181. 50

Amount payable... _... 2:2... 2 002 eee} | 39. 20

(Deducting . the workmen’s compensation

amount ($192) from 80 percent of the average

current earnings ($231.20) gives the same

amount payable. ($39.20).)

‘Later, another child, J, becomes entitled on

F’s earnings’ record and the ‘benefits after ad-

justment for the family maximum. but before

reduction for the workmen’s compensation be-

. come $110.30: to F, and $40.90 to G; H, and J

each. Since the- total family benefit is now

higher than 80 percent of F’s average current

earnings, the total family benefit becomes the

_ 38

applicable limit and the amount payable is fig-

ured merely by deducting the workmen’s com-

pensation ($192) from the total title II |

benefits ($233) leaving $41 payable to F.

(i) Effect on benefit increases. Any increase

in benefits due to a recomputation or a statu-

tory increase in benefit rates is not subject to

the reduction for workmen’s compensation and

does not change the amount to be deducted

from the family benefits. The increase is simply

added to what amount if any is payable. If a

new. beneficiary becomes entitled to monthly.

' benefits on the same earnings record after the

increase, the amount of the reduction: is redis-.

tributed among the new number of beneficiaries

entitled under section’202 of the Act and de-

ducted from their current benefit rate, —

-Example: K is entitled to disability insur-

ance benefits of $118.80 and his wife, L, and

his two children, M.and_ N, are entitled to hene-

fits under section 202 of the Act of $47.90 each

(after reduction under section 203(a) to —

form to the family maximum of $262.40)..

hecomes entitled to workmen’s compensation at

$30 per week ($130 per month). The total fam- -

ily benefit is higher by 10 cents than 80 percent

- of K’s average current earnings (80 percent of

$328, or $262.40). Therefore, the reduction

amount equals the monthly workmen’s compen-

sation. One-third of this amount (rounded

- downward to the nearest 10 cents), i.e., $43.30,

is deducted from L, M, and N’s benefits leaving

benefits payable as follows: $118.80 to K, and

| $4.60 each to L, M, and N.

Beginning .in September 1966, a statutory

increase raises K’s. disability insurance henefit

to $122 and causes L,-M, and N’s benefits to be

increased to $50.60 each (an increase of $2.70).

The benefits then-payable hecome: $122 to K,

and di 30 (i.e., $4.60 plus $2.70) each to L, M, ,

In February 1967, O, another child of K, be-

comes entitled to benefits under section 202 of

the Act based on K’s earnings record. The bene-

fits payable now become $122 to K, and $37.90

‘each to L, M, N, and O. The amount to be de-

ducted from the family remains the same, $130,

but is to be divided among four beneficiaries

instead of three. Deducting one-fourth of $130

($32.50) from $37.90 leaves $5.40: each to L,

M, N, and O, and $122 to K.* |

(j) Redetermination of benefits—(1) Gen-

eral, In the second calendar year after the year

in which reduction under this section in the

total of an individual’s benefits under section

223..0f the Act and any benefits under section

202 of the Act ‘based on his wages and self-

employment income is first required (in a con-

tinuous period of months), and in each third

‘year thereafter, the amount of such benefits .

which are still subject to. reduction under this

section. are redetermined, provided such re-

determination does not result in any decrease

in the total, amount of benefits payable under

title II of the Act on the basis of such individ-

ual’s wages and self-employment income. Such

redetermined benefit is effective;with thé Janu-

ary following the year in which the redetermi-

nation is made. - — - we &

(2) Average current earnings. In making the

redetermination required by subparagraph (1)

of this paragraph, the individual’s “average

current earnings” (as defined in. paragraph

(c)(3) of this section) is deemed to be the

_ product of his average current earnings as in-

itially- determined under paragraph (c)(3) of

this section and the ratio of: a

(i) The average of the taxable wages of all

persons for whom taxable wages were reported

to the Secretary for the first calendar quarter

of. the calendar year in which such redetermina-

tion 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 sen-

tence which is not a multiple of $1 is reduced

to the next lower multiple of $1.

(3) Effect of redetermination. Where the ap- -

plieable limit on total benefits previously used

was 80 percent of the average current earnings,

a redetermination under this paragraph may

cause an increase in the amount of. benefits

pavable. Also, where the limit previously used

was the total family benefit, the redetermina-

tion may cause the average current earnings

to exceed the total family benefit and thus be-

come the new applicable limit. If for some other

reason (such as a statutory increase or recom-

putation) the benefit has already heen increased

to a level which equals or exceeds the benefit

resulting from a redetermination under this

paragraph, no additional increase is made. A

redetermination is designed to bring henefits. -

into line with current wage levels when no other

change in payments has done so.

Example: Beginning January 1968, P is en-

titled to a disability insurance benefit of $140

and his wife, R,- and child, S, are entitled -to

benefits under section 202. ‘of the Act of $70

each. P becomes entitled to workmen’s corhpen-

sation of $208 per month. Tn this case, the ap-

plicable limit on the combined benefits is $360

. (80 percent: of P’s average current earnings).

Deducting the workmen’s compensation amount

of $208 from this limit leaves family henefits

payable of $152 ($140 to P and $6 to Rand S -

each). In 1970 a redetermination raises 80 per-

cent of P’s average current earnings to $380 ef-

fective January 1971. Thus, the family benefit

payable becomes $172 ($380 minus $208). P’s

41 .

benefit is $140, and R’s and S’s benefits are $16

each. |

If there had been a benefit increase in 1969

-(either by a statutory increase or a recomputa-

tion) increasing P’s benefit by $10 (to $150)

and each other benefit by $5 (to $11) the fam- -

ily would already be recéiving $172 ($150 plus

$11 plus $11 equals $172) at the time of redeter- .

mination, so that they would not get an addi-

tional increase. If the.1969 benefit increase

made less than $172 payable to the family, the.

‘redetermination would increase the benefit to

$172. Any statutory increase that takes effect

after the redetermination would be added to the

‘total family benefit. ; - |

‘US. GOVERNMENT PRINTING OFFICE: 1970

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.