# Appellants Brief — Richardson v. Belcher > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386413_0360%3A05 ## Record - **Collection:** Supreme Court brief - **Document type:** Appellants Brief - **Published:** January 1, 1971 - **Citation:** 404 U.S. 78 ## Text INDEX. Gambill v. Finch,-309 F. Supp. 1------------ - | (") 422-024—71——_1 ~ Opinion below____------------ Geeeeene ee eeee Jurisdiction __--------- ee ee eee ere Question presented_-____-_---./-----------+---- Statutes and regulations involved_-------- eeeeeee Statement __-_-__- eee ose eee e ee eee aeeeeees Summary of i ha da erecese Argument: | | | I. The reduction in Social Security benefits to reflect workmen’s compensation pay- “ments required by Section 224 has a reasonable basis____--------------.-- 6 II. The, reduction in benefits sequited by Section 224 does not deprive appellee of a_ property right in- violation of the | * due process clause ----------- peeecea 18 Conclusion - --- - foresee eee cy ee 20 Appendix___,----.---------------------- _.-.." ° 21 . CITATIONS | Cases: . Bailey v. Finch, 312 F. Supp. 918_---------- 7 Bartley v. Finch, 311 F. Supp. 876, pending on appeal, No. 703, October Ferm, 1970_-. 7 Benjamin v. Finch, Civ. No., rending before C.A. 6, No. 20714, 32816, E. D. Mich., - _ decided May 26, 1970- ne a eee Carrington v. Rash, 380 U.S. .89__.-.-------- Dandridge v. Williams, 397 U.S. 471__--- . 5,8,9, 19 Flemming v. Nestor, 363 U.S. 603_____- . 2,8,18,19 | Flemming v. Rhodes, 331 U.S. 100__-_-._------ / SRI ONIN NG LOI MER ION, IE NEO RLTEEN LF LO LIER AS AMEE N i ? ’ « Sbees-Comtinulh Page Goldberg v. Kelly, 397 U.S. 254_________-- 5, 18, 19 _ Gooch v.- Finch, Civ. No. 6840, Ss. D. Ohio, , Aecided July 18, 1970______-_---_---2--- 7. ‘Gruenwald v. Gardner, 390 F. 2d 591, certiorari , denied, 393 U.S. 982___.-___--_..-----+- 8 Kateenbach v. Morgan, 384 US. Pr een 16 Knapczyk v. Ribicoff, 201 F. Supp. 283- -__-- 10 Lofty v, Richerdson, C.A. 6, No. 20484, de- f cided Marth 4 1971, affirming . Lofty v.: “Cohen, Civ. No 30916, E.D. Mich., decided March 25, 1970._.-.-----------.-+---- _ 7, 15,16" ° - McDonald v. Board of Election, 394 U. S302... 8 Miley v. Finch, Civ. No. 33560,\E.D. Mich., a "~ decided June 12, 1970.......-4---------2 7 / . Nieves: v. Secretary of HEW, 1 CCH Unem- ‘ : ployment Ins. Rptr., “Fed. Matter ‘No. a ' 14,479 (Puerto Rico)_._._..----\-_------ 7 Rodatz v. Finch; Civ. No. 69-170, .D: Ill., _ _ decidéd September 8, 1970, pending before ee _. “CA. 7 No. 18,9514 -_-._-_- ee ee 7 *.. Shapiro v. Thompson,. 30% U. S. 618_________- : 9 Walters v. Flemming, 185 F.Supp. 288-__---- 10 Williamson v. Lee Optical Co., 348 U.S. 483. 5,16 Constitution, statutes and regulation: United States Constitution: ~ Fifth Amendment, Due Process Clause _ 8,18 Social Security Act: Sec. 205(g), 42 U.S.C. 405(g) eee .-.: 8 Sec. 223, 42 U.S.C. 423__..___________- 6 Sec. 224 (as enacted in 1956, 70 Stat. - 816-817, and i eat in 1958, 72 Stat. 10, 11 ' i . got aeipogt tea x Mies enti be Be aoe |. , Il , 4 Constitution, statutes and réirilétion —Continised _ Social Security Act—Continued Sec. 224 (as enacted in 1965, 79 Stat. 406, 42-U.8.C. (Supp. IJ, 1965-1966) 4924p, ~ and’ amended in tae 81 Stat. 869, 42 Saal * U.S.C. (Supp. V, 1965-1969) 424a)....- 2 . 3, 4, 5, 6,7, 9, 14, 15, 17, 18, 19, 21-25 Sec. 224(a), 42 U.S.C. 424a(a)_-.---____ 4,6 | ‘Bec. 224(b), 42 U.S.C. 424a(b)_________ 6 Went Virginia Workmen’s Compensation Law: ,W. Va, Code, Chap. 23 (1966 ed:)__:____ ee ~ . $23-1-1-- ~ 18 a4 § 23-2-6.-.__-.---.-------__-____. -18 § 23-2-8.________- oe 18 § 23-2-9___.---- ee _$. 18 20 C.F.R. 404.408_.__________ eee oe 4, 25-38 | Miscellaneous: Executive Hearings on ‘H. R. 1 Before the House Committee: zon. Ways and’ Means, ' 89th ‘Cong., ist Sess-__--_-_-- 11. Hearings on ‘H.R. 6675 Before. the Senne : Committee on Finance, 89th Cong., Ist Sess_.-- 2-2 11, 12, 13,15 | Hearings on H.R, 13549 Béfore the Senate Committee on Finance, 85th Cong., 2d Sess_ 11 | Hearings. on H.R. 2893 Before the House Committee on Ways and Means, 8ist Gong. ” Ist Sess., pt. Fane ae a ee 10: Hearings on 1 Social Security ‘Amend: sents of 1939 Before the House Cormmittee’on Ways — | and Means, 76th Cong., Ist Sess___._____ » 16 _. H. Rep. No. 213, 89th Cong., "Ist Rees. oe 1Be . H. Rep. No. 682, 89th-Cong., 1st Sess__.___- (44 H. Rep. No. 2288, 85th Cong., 2d Sess______ - dl H. Rep. No. 1189, 84th Cong., Ist Sess______ 10 ; o _ a ; a . : > . / e ; ¢ (reer negsnyy 7 > . » ‘ se ota . 2 eR . IV Miscellaneous—Continued | | ee EH. Rep. No. 2936, 84th Cong., 2d Sess_..--. 10 _ 48. Doc. No. 162, 80th Cong., 2d Sess... --- 9 S. Rep. No. 404, 89th Cong., Ist Sess... °; 14 S. Rep. No. 2388, 85th Cong., ‘2d. Sess_--—-— il an the Suis Gourt of the tit States _ OCTOBER TERM, 1970 No. 1091 ELuior L. RICHARDSON, SECRETARY OF HEAttTH, Epvuca- OF TION AND WELFARE, APPELLANT U. RaYMOND BELCHER ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA BRIEF FOR THE APPELLANT OPINION BELOW “The opinion of the district court Ton —_ ‘ie reported at 317 F. Supp. 1294. JURISDICTION | 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. 14-15). Notice of appeal was filed on: October 13, 1970 (App. 16) and probable jurisdiction was_ noted on March 1, 1971 (App. 19). The jurisdiction of this : (1). 2 Court is conferred by +28 U.S.C. 1252. Flemming v. Rhodes, 331 U.S. 100; Flemming v. Nestor, 363 U.S. 603, 604-08. | | QUESTION PRESENTED ‘Whether the provision in the Social ‘Security Act requiring the reduction of social security disability — benefits because of the simultaneous receipt of state workmen’s compensation benefits ‘is unconstitutional. STATUTES*AND REGULATIONS INVOLVED Section 424a of Title 42, United States Code (Supp. V) and the relevant Department of Health, Education and Welfare regulations are set forth in the app to this Brief, infra, pp. 21-38. STATEMENT Section 224 of the Social Security Act, 42 U.S.C. . (Supp. V) 424a, provides for certain reductions in social security benefits where the’ recipient also: re- ceives workmen’s compensation benefits. Appellee Raymond Belcher, a resident of West Virginia, was awarded monthly social security disability insurance . benefits beginning in October 1968 of $329.70 per month: (App. 34, 38). In January 1969 the Social Security. Administration, of the Department of Health, Education and Welfare notified Belcher that $104.40 would be withheld from his monthly social security benefits because he was receiving $47.00 a week, or $203.60 a month, in state workmen’s compensation, thereby reducing his monthly federal payments to i This total included $156.00 for himself and $57 .90 each for mia wife and two children, | 3 $295.30 (App. 26, 32, 35, 38). Upon reconsideration, the Social Security Administration determined that the initial reduction of Belcher’s social security benefits was correct (App. 33-35).? After a hearing (App. 19-303 the hearing examiner, upon de novo consideration of the case, upheld the - reduction of Belcher’s social security benefits, pursu- ant to Section 224 of the Social Security Act, be- cause of his receipt of state workmen’s compensation (App. 3642). Belcher sought review of the hearing -examiner’s decision (App. 42-43) but, after consid- eration of the entire record, the Appeals Council *: denied review and the hearing examiner’s decision. became the final decision of the Secretary (App. 43-44). . Thereafter, Belcher brought this action in the dis- trict court under 42 U.S.C. 405(g), seeking review of the final administrative determination (App. 2-5). Belcher alleged that Section 224 is unconstitutional because: (1) it discriminates irrationally between re- cipients of workmen’s compensation benefits, whose , social security benefits are reduced, and all other recipients of benefits or awards, such as private in- surance beneficiaries and successful tort plaintiffs, whose social security benefits are. not reduced; and (2) it deprives him and his family of property, in the form of social security benefits for which he has at least partially paid througly social security: taxes, ee \ 2 . e * Belcher was represented by an/ attorney throughout the . administrative proceedings, as well as before the district court. CIEE BEEP OH PLETE DERE MERA SEIS 08 APL A A Rs A A. 4 without due process of law (App. 3-5). Acting on the parties’ motions for summary judgment (App. 7), the district’ court held that Section 224 unconstitu- tionally discriminates against Belcher by requiring the reduction of his social security benefits and that “it deprives him of property without due process of law caPE 8-14). . SUMMARY OF ARGUMENT I. Section 224(a) of the Social Security Act pro-- vides for~a reduction of social security. benefits .for recipients of workmen’s compensation benefits. With _ the exception of the district court in this case, every court which has considered the constitutionality of Section 224(a) has upheld the statute. Here the district court held that Section 224 im- properly distinguishes, between recipients of work- men’s compensation benefits and recipients of awards such as private insurance proceeds and tort recoveries. * Belcher also -alleged that Section 224 is unconstitutional because it arbitrarily requires the reduction of his social se- curity benefits without taking account of attorney's fecs paid by him in connection with his workmen's compensation claim. The district court did not rule on ‘this allegation. At the ad- ministrative hearing, however, Belcher testified that he was not at that time paying. any attorney’s fee out of. the work- men’s compensation benefits he had been receiving, (App. 27). Moreover, 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) reproanees in the Appendix to this Brief, infra, p. 32. Sur aR RL eed . 5 But, as this Court held in Dandridge \ v. W illiams, 397 U.S. 471, a statutory classification in the area of so- cial welfare is valid if it has a ‘reasonable basis.” The legislative history of Section 224 demonstrates that the reduction requirement contained in that stat- - ute was reasonably designed to accomplish at least -two goals—to rehabilitate. the disabled worker and encourage him to return to productive work as soon as possible by avoiding the award of duplicating bene- fits, and to prevent the erosion or repeal of state workmen’s compensation systems. Though arguably Congress might have gone further in promoting its goal of rehabilitation by also requiring reduction for receipt of benefits from private sources, this Court | has frequently held that legislative reform is* not in- valid merely because it does not go far enough. F.g., Williamson v. Lee Optical Company, 348 U.S: 483. II. In holding that Section 224 unconstitutionally - ‘deprives appellant of a property right without due ~~? process of law, the district court misapplied Goldberg v. Kelly, 397 U.S. 254. Goldberg held that welfare benefits of an individual cannot .be terminated with- out an evideritiary hearing. Even if Goldberg were applicable to the disability benefits in question here, that case dealt only with the procedural rights of a person whose benefits are terminated because of al- leged failure to meet statutory qualification: Goldberg has no bearing » upon the substantive validity of a rational statutory limitation such as the qualification contained in Section 224. 422-024—-71——_2 6 - ARGUMENT I ° THE REDUCTION IN SOCIAL SECURITY BENEFITS TO REFLECT WORKMEN’S COMPENSATION PAYMENTS REQUIRED BY SECTION 224 HAS A REASONABLE BASIS. Section. 224(a) of the Social Security Act provides that for any month in which an individual under age 62 is entitled to both social, security benefits and periodic workmen’s copnpensation 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 compensation programs for that month exceeds the higher of (a) 80 percent’of the individ- -ual’s “average current earnings”‘ or (b) the total of certain other designated disability benefits. The con- +-An individual's “average current.earnings” is defiried as the .. larger of the avérage monthly wage used for. purposes of com- puting his -benefits undér 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 amendment§ (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-employment income for the five consecutive years dur- ‘ing which they were highest. are used to compute his “average current earnings,” then his actual earnings, rather than. those earnings creditable for purposes of social security (which have an upper limit), are to be used. Section 224(b) provides that, should uch an individual re- ~ ceive a lump sum. settlement as’ a substitute for or a commu- fation of periodic workmen's compensation benefits, the reduc- tidn “shall be made at such time or times. and in such amounts as the Secretary finds will approximate as nearly as, ‘practi- cable the reduction prescribed by subsection (a).” po 7 stitutionality of Section 224(a) has been litigated in numerous federal courts, all of which have apes the statute. Here the district couxt hela that Section 294 j im- properly. distinguishes between recipients of work- ‘men’s compensation benefits, whose social security benefits are reduced, and all other recipients of bene- fits -or awards, such as lee insurance beneficiaries ‘In addition to- Bartley ‘v. Finch, 311 F. Supp. 876 (E.D. Ky.), presently’ on 2ppeal to this Court, Bartley v. Richardson, No. 703, October Term, 1970, the constitutionality of Section 224 has been upheld in the followi ing cases: Vieves. v. Secretary of HEW, 1 CCH Unemployment Ins. Rptr., Fed. Matter No. 15,479 (Puerto: Rico) ; Gambill v. Finch, 309 F. Supp. 1 (E.D.— _Tenn.); Lofty v. Cohen (E.D. Mich. ‘Civ. No. -30916, decided - ~ March: 25, 1970), affirmed, Z oft, y v. Richardson (CA. 6,,.No. 20484, decided March 4, 1971)! Bailey v. Finch, 312 F. Stipp. 918 (N.D. Miss.) ; Benjamin v. Finch (ED. Mich:, Civ. - No. 32816, decided May 26, 1970, pending before the Sixth Cir~ cuit, No. 20714) ; Miley v. Finch (E.D. Mich., Civ. No. 33560, decided June 12, 1970); Gooch v. Finch (S.D. Ohio, Civ. No. 6840, decided July 13, 1970; and Redatz v. Finch (E.D. -IllL., Civ. No. 69-170, decided Se tember 8, 1970, pending before the Seventh Circuit, No. 18,954). ‘The following eases inv. olving cusllenies to the constitution- ality of Section. 224 are pending: Shects v. Finch (S.D. W. Va., Civ. No. BK 69-3) ; Richards v. Richardson (S.D. W. Va., Civ. - No. 70-168-CH) ; Cline vy, Richardson (S.D. W. Va., Civ. No. 1241), and Walker v. Richardson (S.D. W.. Va., Civ No. 1243) _ (stayed pending decision in this Court. in the instant case) ; Gillenwater v. Richardson (S.D. W. Va., Civ. No. 89-140-CH) ; Copeland v. Finch (W.D. Okla., Civ. No. 69-363) ; Wren v. Finch (W.D. Mich., Civ. No. 6171); ; McAlonan vy. Finch (W.D Mich., Civ. No. 6269) ; Schuster v. Richardson (W.D. Mich. , Civ. No. 6381) ; Hayiges vy. Richardson (E.D. Mich., Civ. No.- 35205) : Debkowski v. Richardson (E.D. Pa. , Civ. No. 70-2895) : Gross Vv. Richardson (E.D. Ark., Civ. No. PB <0-C-132) ; and Cantu v. Richardson (N.D. Tex., ‘Civ. No. CA 34187 B). S ~and successful tort plaintiffs, whose social ‘security benefits are not reduced (App. 13-14). But under the rationale of Dandridge ¥. Williams, 397 U.S. 471, ‘this distinction is valid. There this Court stated (p. 485) : In the area of economies and social .w clfare, a State does -not violate the Equal Pretection Clause merely because the classifications: made by its laws are imperfect. If -the classification: has some “reasonable basis,” it does not offend the Constitution simply hecatise the classifica- tion “is not made with mathematical nicety or because in’ practice it results in some inequal- ity.” Lindsley v. Natural. Carbonic Gas Co., 220 5 / U.S. 61, 78. ‘The pa ad of government are_ practical ones and’may justify, if they do not - require, rough ‘accommodations—illogical, it may be, and unscientific.” Metropolis Theatre Co, v. City of Chicago, 228 U.S. 61, 69-70. “A statutor y discrimination will not be set aside if any state of facts reasonably may be conceiyed to justify it.’ MeGowan v. Maryland, 366 US. 420, 426. 7 See afso, McDonald v. Board of. Election, 394 U:S. 802, 809. | — Although the alleged statutory dise ‘rimination chal- lenged here is’ federal, these principles are equally applicable in determining whether a statutory classi- fication violates the Due Process Clause of the Fifth — Amendment. Flemming v. Nestor, 363 U.S. 603, '611; Gruenwald v. Gardner, 390 F. 2d 591, 592 (C.A. 2), certiorari depied, 393 U.S. 982. Of course, the “rea- ‘sonable basis”’ test of equal protection and due proc- ess, rather.than the more strict ‘‘compelling [state] ~ Seed 9 interest” test (see Shapiro v. Thompson, 394 U.S. 618, 634; Carrington v. Rash, 380 U.S. 89), is appli- cable to the instant case. For here, as in. Dandridge, supra, we are not dealing with “freedoms guaranteed by the Bill of Rights” (397 U.S. at 484), but rather with benefits provided by statute. Thus, Section 224 _. is valid if there‘is a reasonable basis for requiring a reduction for’ workmen’s compensation beneficiaries. The? legislative history. of Section 224 demonstrates that there is a rensonnblé basis forthe reduction re- quirement. The offset of workmen’s compensation benefits against social security disability benefits was first suggested by the Advisory Council on Social: Se- curity in a 1948 report to the Senate Finance Com. ; mittee proposing a system. of social security disability benefits. The Advisory Council re¢ommended that such benefits be suspended for any period for whieh workmen’s compensation’ cash benefits -are payable under any state er federal ‘program because, ‘‘[i]f combined payments become a major fraction of prior earnings, the economic incentive for beneficiaries to return to work nay be insufficient” (S. ‘Doe. No. 162, 80th Cong., 2d Ses&,; p. 8)... ./ A bill war-introtueed at that time to amend the ° ‘Social Security Act to include temporary and perma: _nent disability insurance ‘benefits. But provisions for °In hearings on this bill before the Committee on W ays andi. Means of the House of Representatives, the following exchange concerning the bill’s reduction requirement togk place between Congressman Wilbur Mils and the then Commissioner of Social Security, Dr. Arthur Altmeyer: “Mr. Mirts. Workmen’s compensation has been established as a substitute for common-law actions against employers. If you / | 10/ disability insurance benefits were not added to the Social Security Act until the. Social Security Amend- ments of 1956. Included in those amendments was the D . predecessor to Section 224, which would hay required“. the full offset of Ry s compensation benefits against monthly disability insurance benefits.’ In 1958 the House Committee on Ways and Means recommended, and the Congress enacted, the’ repeal refuse [eociall cxapity cash fioieee [benefits]. ‘in this type * ‘of case, it would be consistent to do the same thing when there _ is a common-law right against anybody—for example, a per- sonal injury’ suit against a railroad—would it not? What I mean. is this: the loss of wages is part of the damage always sought to be recover€éd and is included in the judgment. when a judgment: is rendered.. Now, can you explain to the committee why the cash sickness benefits should be paid in the one case and denied in the other case’; ) “Dr. Atrmeyer. In the case of workmen’s compensation, the average State law has. specific provisions“ with regard to eli- gibility for the benefits and as regards the amount of .the | benefits, It would have an adverse effect upon workmen’s com- pensation Jews if the -benefits’ were paid under a Federal law for an injury sustained in the course of one’s employment that is compensable under a State workmen’s compensation law. The tendency, of course, would be for the States to push more and more of the burden of workmen’s compensation onto the sick- © ness disability system. That is the n.” ' (Hearings on H.R. 2882 Before thé House Committee. on Ways and Means, 81st Cong.; Ist Sess., pt. 2, pp. 1270-1271. See also,~ id., at pp. .1558-1559 “testimony of Professor Sumner H. Slichter). ) ' ;7See 70 Stat. 816-817; H. Rep. No. 1189, 84th Cong., 1st Sess., p. 6;_H. Rep. Ng. 2936 (Conf. Rep/j, 84th Cong.,.2d Sess., p. 25. This section was upheld, withdut ‘questa as to its consti- tationalsty, against attack by recipients of lump sum work- men’s compensation settlements granted under the laws of Massachusetts and Illinois, respectively, in Walters v. Flem- _ ming, 185. F. Supp. 288 (D. Mass.), and er v. Ribicoff, 201 F. Supp. 283 (N.D. IIl.). * X * . ad - ¢, " ; . * . a" o « . > . a- é . a OR fore -the Senate Committee on Finance, 89th Cong., ‘HEW, W. J. Cohen, Asst. Secretary of HEW, ‘Ball, Commissioner of Social Security) ; ¢d., pp. 249— of Section 224.° At the time of anil subsequent to such repeal, numerous obections were made’to the, elimina- tion of the offset provision. Most of them rested on . the theory that to permit the payment of double dis- ability benefits approaching or even exceeding earn- *ings prior to the onset of the disability would defeat _the basic purpose of the disability insurance pro- gram—to rehabilitate beneficiaries whenever possible and to encourage their return to productive .work— and .would. weaken state workmen’ Ss €0' ompensation programs.” - § Section 224 was repealed because it was believed that the duplication of disability benefits occurred so infrequently as not to warrant the undesirable results produced in individual . cases by the offset provision (H. Rep, No. 2288, 85th Cong., . 2d Sess., pp. 5, 13; S. Rep. No. 2388, 85th Cong. 2d Sess., pp. 4-5, 11; Pub. L. 85-840, Title II, Sec. 206, 72 Stat. 1025). *See the following testimony: HearfMigs on H.R. 13549 Be- fore the Senate Committee on Finance, 85th Cong., 2d Sess., pp. 241-242°(G. T. Fonda, Nat. Asso. of Mfrs.) ; Greater Boston Chamber of Commerce) ; 319, G49-3 46-347 _ (A. D. Marshall, U.S: Chamber of Commerce) ; | roe (E. R.~ Bartley, Ill. Mfrs. Asso.) ; and 398-400 (J. J. Maher, Com- merce & Industry Asso. of New Yop ; ; Executive Hearings on H.R. 1 Before the House Committeé“en. Ways and-Means, 89th Cong., 1st Sess., pp. 30-32; and Hearings on H.R. 6675 Be- Ist Sess., pp. 130-131,. 146-153,"219-292 (A. J. Celebrezze, Schlotterbeck, U. S. ‘Chamber of Commerce) ; 258-260 (L. J. Dikovics, Couneil ’ of State Chambers of Commerce) ; 363-367, 370-373 (M. Z. Eubank, Commerte & Indystry Asso. of New York) ;, 422 (R. E. King Jr., Nat. Asso. of Life Underwriters); 543 (M. Eddy, Am. Life Convention and Life Insurers. Conf.) ; . 818-819 (P. D. Hill, Int'l. Asso. of Health Underwriters) ; 892-903 (J. D. Dorsett, Am. Insurance Asso.) ; 949-954 (J. A. Flynn, New York Shipping Asso.) ; 987, 990 (J. A. Mann, 297 D r of | 12: _ : a In 1965 Congress gave further consideration to the offget of -workmen’s compensation benefits against. - disabilityinsurance benefits. The House took no_ ac- Til. State Chamber of Commerce) and 1030-10383 (W. A. Paice: han, Int’l. Asso. of Industrial Accident Boards snd Conmiis- sions). In 1965 L. J.. Dikovies, representing the. Council. of State Chambers of Commerce, told a subconimittee of the Sen- ate Committee on Finance that: ~ * Thousands of disabled workers today are, receiv ing more tax-free income from social security disability benefits combined with State workmen’s compensation benefits than they were earning before they became ill or were injured. * * * When tax-free social insurance benefits exceed earning power there is little incentive for a disabled per- son to accept the risk, pain, and struggle involved in at- tempting to become sel f- -supporting again. .° A matter of equal concern is the impact of Federal . ‘disability payments on State workmen's compensation programs. Legislative proposals have been offered in sev- eral States (Colorado, Florida, Maryland, and Minnesota) to reduce workmen’s compensation benefits by the amount of OAST disability benefits payable to a disabled worker. If other States follow this direction and section 303. of this bill is enacted, we believe it will be only a matter of time until State workmen’s compensation programs are destroyed. 7 . If that happens, a major aes for this country’s re- markable achievements in occupational. safety will he de- stroyed also. Workmen’s .compensation insurance costs are based on the actual loss experience of industry groups and of individual employers. This gives the employer a direct _ financial incentive to improve safety on the job. If work- men’s compensation. costs are absorbed into the social security program, employers without safety programs and those whose employment is hazardous would pay no more . than. thosé employers who ‘have adopted. safety programs or who have less hazardous employment. We svenugye'y object to any action which could have an adverse @ffect on safety programs’ and on the remarkable downswing in - + eS ee eee Fung CARE 20 VERT ae SRA LEE ROT ANA S s * Bay 18 tion in the first instance,” but the Senate Committee on Finance, prompted by data indicating that in 35 - of the 50 states, the average combined amounts of so- - ial security benefits and workmen’s compensation payments to a. worker with a wife and two ‘children exceeded the worker’s take home pay while working (Hearings on H.R. 6675 Before the Senate Corhmittee on Finance, 89th Cong., 1st Sess., p. 151; see also, id., pp. .892-923), determined that. immediate agtion was necessary. In its report recommending the present version of Section 224, the Committee stated : ° Although there is some ‘dispute as to the num- ber of workers who receive benefits under these: . two programs and whether these. payments are excessive, the committee believes that it is de- sirable as a matter of sound principle to pre- vent the payment of excessive combined bene- fits.’*: disabling accidents that has taken. place over thw last three decades. . * * * : x* Hearings on H. R. 6675 Before the neues Committee on mane, 89th Cong., Ist Sess:, p. 259 (1965). .- 10 The Committee on Ways and hisene while aoding the eXx- pressions of concern over the payment of double benefits, de- ’ termined to await the additional information on the overlap and its effects which if had requested of the Advisory Council on Social Security (H. Rep. No. 213, 89th Cong., 1st Sess., p. 90). _4 Persons testifying: in favor of immediate legislative action are listed in note 9, supra. The Secretary of Health, Education and Welfare Sppoeed any legislative action until a more thor-. ough study could be made. Id., pp. 130-131, 146. 12The report continued: — The committee believes that. the provision it is recom- mending avoids the problems and inequities of the earlier offset provision ‘in the social security law for epaueing 422-024—71—_8 a : ‘ . : . GENE LEE NORAD SOT IIR ETN NT ei POND TY B PRIORY! IROOM IM 0 parc PC ty 4 ‘The present version of Section 224 was adopted in conference (H. Rep. No. 682, 89th Cong., Ist Séss., pp. 63-64) and was added to the law as part of the Social Security Amendments of 1965, effective Janu- ary 1, 1966 (Pub. L. 89-97, Title III, Sec. 339, “ Stat. 406). | . This legislative history reve . that Congress | wanted to preserve the basic pur pose underlying the social security disability insurance system—that of sae - 7 a . monthly disability benefits by the amount of any other benefit to which a. worker was entitled under State. work- men’s compensation laws, which was- in effect from July - 1957 to July 1958, but was repealed then. The new offset. provision recogmended by the committee. provides for a reduction. in thp social security disability benefit (except where the Stasé workmen’s compensation law provides for _ an offset .agdinst social security disability benefits} in the event the total benefits paid under the two programs ex- ceed 80 percent of the worker’s average monthly earn- ings prior to the onset. of disability. Under this provision, the worker’s average monthly earnings would be defined as the higher of (a) his average monthly wage used for purposes of computing. his. social security disability . bene- fit or (b) his average monthly earnings, in employment covered by social security, during his highest 5 consecutive years after 1950. (In no event, however, would the ‘total benefits payable with respect to a worker be reduced below _ the amount of the unreduced monthly social security bene- fits). This reduction formula would generally avoid the in- equity encountered under the previous offset provision, where the reductions that were required frequently re- sulted in benefits that replaced no more than 380 percent or so of the worker’s earnings at’disablement. * * x. * x a: Rep, No. 404, 89th Cong:, 1st Sess., P. 100. See .also id., pp. 260-264. (NS et eee BBS cate 5g SSE 39 15 rehabilitating the disabled’ worker and encouraging him to return to productive work as soon as he can— and that it feared the payment of excessive disability — _ beriefits would defeat that purpose. In addition, Con- ' gress wanted to prevent the erosion or repeal of’ state workmen’s compensation systems, which it felt would eventually otcur should the federal disability system duplieate the state systems. These congressional pur- poses provide a reasonable basis for the reduction « requirement. ermore, the manner by which the reduction is car¥ied out under Section 224 (as ex- ' plained: by the. Senate Committee on Finance, supra, note 12) is reasonable. Section 224, then, satisfies the requirements of due process and equal protection.” _. This conclusion is not undermined by the fact that the reduction is not made for private disability insur- . ance benefi¢iaries or for successful tort plaintiffs. es order to achieve its purpose of avoiding excessive dis- > ability benefits, Congress might well have gone further and applied the reduction provision of Section 224 to those who receive compensation from private sources as well as to beneficiaries of workmen’s compensation "statutes. But, as this Court has frequently held, leg-. .. islative reform is not invalid merely because it does not go far enough. “‘[T]hé reform may take one step at a time, addressing itself to the phase of the prob- _ lem which seems most acute to the legislative mind.” 4 %In the only court of appeals decision on the issue to date, the constitutionality of Section 224 was upheld against an at- tack on equal protection-grounds. Lofty v. Richardson — 5, No. 20484, decided March 4, 1971). Williamson vy. Lee Optical Co., 348 U.S. 483, or See Katzenbach v. M organ, 384 U. s. 641, 657." - - 14There is evidence that Congress, cen the science of of the social security disability insurance program, has tried not — to discourage disability beneficiaries from precuring additional protection through private means, such as private insurance. See, ¢.g., recommendation 2 of the Advisory Council on Social Security submitted to Congress in 1938 (Hearings on Social Security Amendments of 1989 Before the House Committee on Ways and Means, 76th Cong., 1st Sess., vol. 1, p. 37) and its ex- planation by Dr. Arthur Altmeyer, the Chairman of the Social Security Board (id., vol. 3, p. 2286). Moreover, in Lofty v. Richardson, supra, note 13, the Sixth Cir- cuit sugpested several additional reasons for requiring the reduc- tion only for receipt of workmen’s —, benefits (slip opinion, pp. 12-18) : —< The legislative history of this amendment shows a seal, many complaints were registered before Congress about - Workmen’s Compensation-Social Security double coverage. _ The record-is-devoid of any complaints-at alt about double _ coverage resulting from private insurance or negligence actions in courts. It is neither novel nor necessarily irra- tional for Congress to fail to act upon a ‘problem about which they have received no complaints and have been supplied no information, even when Congress, as here, does act upon a somewhat parallel prouiem as to which it had both. - Still another reason which might reasonably be con- ceived to justify the congressional classification is ‘that administratively..it would be relatively simple to enforce the Workmen’s Compensation deductions, whereas separat- ing out the wage benefits from civil damage judgments, or determining who had received private insurance benefits, might offer administrative problems of a serious nature. Finally;--it is entirely conceivable to us that Congress may have considered Social Security benefits and Work- men’s Compensation benefits to be more arguably duplica-- ‘tive of one another than could appropriately be claimed concerning Social Security benefits and the other two types of payments. Both Social Security and Workmen’s Com- ’ “ -_ ov simmer : : : - _ a aS. fe SEE ASAE RY BOSON LG Ia ALN os SPRAY IT i Sil 17 “< We add only that the equal protection ground re-_ lied upon by the court below in invalidating the stat- ute—that receipt of West Virginia workmen’s com- pensation benefits, -because they are private in nature, cannot t constitutionally. support the reduction of simul- taneously received social security disability bene- fits—is unwarranted. Our argument in support 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 secu- rity disability system—namely, rehabilitating the dis- _ abled worker and encouraging him to return to pro- ductive 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- cial security payments to recipients of such dupli- eating benefits. Thus, even if the court’s characteriza- tion of West Virginia workmen’s compensation bene- fits as private in nature is correct—which is highly questionable “—that characterization does not render invalid the reduction of social security payments paid -to- state workmen’s compensation beneficiaries. pensation programs are social welfare legislation. Private accident or disability insurance is 4 private contract, fre- quently paid for entirely by the recipient. And, of course, ‘court awards for injuries are private rights derived from the common law involving the principle of compensation for negligence or fault. * As in all other jurisdictions, both state and federal, the workmen’s compensation system in West Virginia exists solely by virtue of state legislation (W. Va. Code, Chap. 23 (1966 ed.). Moreover, the West Virginia eystem is administered by t ‘ey, en, ca THE REDUCTION IN BENEFITS BEQU!IRED BY SECTION 224 | DOES NOT DEPRIVE APPELLEE OF A PROPERTY RIGHT IN "VIOLATION OF THE DUE PROCESS CLAUSE The distriet_dourt also held Section 224 oncons . tutional on the ground that the statute deprives Bel- cher of a property right—his’ disability benefits—_ without due process of law. In support of this holding the court cited Goldberg v. Kelly, 397 US. 254, which held that the welfare benefits of an individual. re- ecipient cannot be terminated without an ‘evidentiary | hearing (id. at 260-261). According to the court below, the reasoning of Goldberg—whith it construed as imbuing welfare benefits with a. property-right — status—applies equally to social. security disability benefits and, consequently, Section 224 cannot consti- _‘tutionally reduce Belcher’s right to receive social security disability benefits (App. 9-12): Even if Goldberg were extended to apply. to the ' social security disability benefits. in. question here, ' however, the conclusion reached by the district court would not follow. In Flemming v. Nestor, 363 U.S. 603, this Court sustained the statutory: termination of the _ social security old-age benefits ofan alien deported a state commissioner (W. Va. Code, § 23-1-1) and operates lely because of the sanctions imposed by state law.. Thus, while private employers may elect not to participate in the sys- tem (W..Va. Code, § 23-2-6), employers so deciding must. pro- vide their own method of compensation, which must be. ap- proved by the commissioner, and post sufficient: bond to insure payment of compensatign and expenses to their injured em- . ployees (W. Va. Code, § 23-2-9; see also, id:,.§ 23-2-8). -~ a ee o— 19 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 indéfeasible property right to those Bene- | _ fits. The court below determined that Goldberg had implicitly overruled Nestor and required the invalida- tion of Section 224, But. Goldberg dealt only with the procedural rights of a person whose benefits are terminated because of alleged failure to meet statutory qualifications; it has no hearing whatsoever. upon the substantive validity of rational ‘statutory limitations such as the qualification in Section 224 held invalid by the court below. As this Court observed in Dar | dridge v. Williams, supra (397 U.S. at 487): The Constitution” may impose certain proce-— , dural safeguards upon systems of welfare ad-. ' ministration, Goldberg v. Kelly * * *. But the Constitution daes .not empower’ this Court to second-guess state officials charged with the dif- ficult responsibility of allocating limited public welfare funds among the myriad of potential recipients. * * * — Thus, under Nestor, as under Dandridge v: Williams, . supra, Congress could constitutionally reduce the so- cial security benefits awarded ‘to appellee and _ his family so long as that reduction was not based upon » a patently arbitrary classification (363% U.S. at 611). ~ CONCLUSION | | For the reasons stated, ie judgment of ‘the district court should be reversed. 2°. Respectfully submitted. | “Erwin N. GRIswoLp, _ Solicitor General. L. Patrick Gray, III, . . Assistant Attorney General. , RicHarD B. STONE, | A _- Assistant to the Solicitor General. : ' Karuryn H. BaLtpwin, J AMES C; Harr, JR, + © ee _ Attorneys. Apri 1971. : ~ . APPENDIX 42 U. S. C. 424a provides: §424a. RepucTIon oF . D1saBILIty BENEFITS ; . TurovuaH RECEIPT OF WORKMEN’ S COMPEN- SATION. . (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 se¢tion 423.of thi title, and. - (2) such individual i entitled for such | -month, under .a workmen’s compensation law or plan of the United States or a State, to speriodic ‘benefits for a total. or partial ' disability’ (whether or. “not permanent), and the Secretary hasy in a -prror month, re- - ceived notice: of spuich entitlement for such month, ’ the total of his bene ts 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 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, an (4) such periodic benefits payable’ (and actually paid) for such month to such in- 7 dividual under the workmen’s campensa- . tion law:or plan, exceeds the higher of — _ (5) 80 percentum. of his ‘‘average cur- rent earnings’, or | - (6) the total of such individual’s disabil- ity insurance benefits under. section 423 of this title for such month .and -of any : aye 22 monthly insurance benefits: under section 402 of this title for- such month based on his’.wages and self-employment income, prior to réduction under this section. In no-case shall the reduction in the total of. such benefits under sections.423 and 402 of this title for a month (in a continuous. ‘period of months) reduce such total below:the sum:-of— | (7) the total of the benefits under 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 morith 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 inerease 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. 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 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) ef 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 7 wages and self-employment income .for purposes 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 payable on other than a monthly basis (excluding a benefit 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. (c) Reduction of benefits under 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 self-employment income of an individual entitled to benefits 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’ Ss 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 title to any individual for any month and of any benefits under section 402 of this title for such month based on such individual’s wages and self-ernployment income, that such individual. certify (1) whether he has - « 24 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 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 décision thereon ‘has been made, in certifying benefits for payment pur- suant to section 405(1) of this title. a (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 or 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; but.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 income. * Such redetermined benefit. shall be determined as of, and shall become effective with, the Janu- ary following the year in which such’ redeter- , mination was made. (2) In making the redetermination require 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 (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 redetermination is made, to (11) the average of the taxable wages . 25 of . Such ‘persons reported to the Secretary for the first calendar quarter of the taxable year in which the reduction was first computed (but not counting any reduction made in benefits for a. previous period of disability). Any amount - determined under the preceding sentence which Is not a: multiple of $1 shall be reduced to the next lower multiple of $1. ~~ os (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- tionatély 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 insurante benefit. Part 404.408 of 20 C.F.R. provides: | $ 404.408 Repuction or BENEFITS Basep on Dis- _ ABILITY ON Accoun’: oF RECEIPT OF Work-- MEN’S COMPENSATION ° | (a) When reduction required. Under section .- 224 of the Act, a disability insurance benefit to Which an individual is entitled under section 223 of the Act 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: ae (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 26 © month for a total or partial disability (whether or not permanent) and (2) The Secretary has, ni a month before such month, received notice of such entitlement for such month, and, . (3) The period of disability involved begam 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 the reduction of such periodic benefit when anyone is entitled to a benefit under title IT of the Act on the basis of the earnings record of an individual entitled to a disability insur- ance benefit under section 223 of the Act. (ce) Amount of reduction—(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) by the amount by which the sum of such total of benefits and such peri- odie bénefits payable (and actually paid) for such month to such individual: under the work- men’s compensation law or plan exceeds the" higher of: (1) Eighty percent of his “average current earnings,’’ as defined in subparagraph (3) of this paragraph, or . (ii) the total of such tndividual’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- ‘duction 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: OO 74 | (i) The total of the benefits payable (after - redjiction under paragraph (a) of this‘section) to such beneficiaries for the first month for which reduction under this section is made, and ' . (11) Any increase in such benéfits which is ' made effective for months after the first month for which reduction under this section is made. __ (3) Average current earnings defined—(i) In general. An individual’s “average current - earnings” for purposes of this section means the larger of: Fe | _ (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 individ- ual’s wages and earnings from self-employ- ment without the limitations under: sections - 209(a) and 211(b)(1) of the Act for the 5 consecutive calendar years after_1950 for whieh- 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) ofthe Act for any ecal- ° 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. (11) Method of determining calendar year earnings in excess of the limitations under sec- tions 209(a) and 211(b)(1) of the Act—(a) In general. For the purposes of subdivision (1)(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- 28 able in the records of the Administration. (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 see- tions 209(a) and 211(b) (1) of the Act shall be determined by the use of such eviden¢e instead of by the use of estimates. (b) Estimated wage earnings—(1) One em- ployer iuvolved. In anv calendar vear after 1950 in which wages are reported for an indi- vidual, the wages credited to his earnings fec- | ord for each calendar quarter befere 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 ‘calendar quarter in which the maximum amount of earnings was attained and for each sueceed- 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 year for any ¢ al- endar quarter throngh the quarter in which the maximum amount of earnings was atfained.. 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 the following amounts of wages: 1st quarter___----_---_----------- $2. 400 2d quarter__--_--___----_~---- +--+ ee 2.550 Tl. UR ni ns eee ee es 1, 650 RUT ONO i eo eee eee ee 0 | a a a neee 6. 600 The maximum creditable 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.¢., the amount of $2,550 credited to the second quarter. Thus PM 29 W’s total estimated wages for the year 1966 are determined as follows: - 2 % Ist quarter.--_-9_----- fete $2, 400 - 2d quarter_____--2-- 2; 550 3d quarter___.------- ses "_-. §=6.2, 550 . 4th quarter_____-___-_----e et 2. 550 “Total _--_-_--_-_-2_-_-----<-____-_---" 10, 050 * (2) Two or more employers mvolved. 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 excéed the maximum amount of earnings oreditable 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 the provisions of (1) of this subdivision (ii) (bd). Krample. In the calendar year 1964 in which $4,800 is the maximum amount of earnings _ creditable under seé¢tion 209(a) of the Act, A worked for four employers. The - following amounts are creditable to his earnings record: Empioyer Employer ‘Employer Employer No. 1 No. No. 3 2 No. 4 Total . Ist quarter..9 $1, 400 $1, 200 80 80 2d quarter. 2-8-2, 1, 200 1, 200 150 300 3d quarter... 2. 2, 290 1, 200 0 1, 800 4th quarter... 0 1, 200 250 2, 7 $4, 800 $4, 800 $400 $4, 800 $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 aré deemed to equal $2,200 in each of these two quarters. Wages from Employer No. 2 reached the maximum in the fourth quarter, hut since all of the quarterly “amounts credited are equal, thére are no addi- tional deemed wages. Since, the total wages re- ported by Employer No. 3-never reached Stig 30 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: > . ee Employer Eimployer Employer No: ] . : 9: No. 2 No. 3 ‘No.4 Total Ist quarter............. . $1,400 —-$1, 200 £0 $0 2d quarter__--.- 2... -.- 1, 200 1, 200 150 300 3d quarter__....-..2--- 2, 200 1, 200 0 - 1,800 4th quarter_..--..--.-- 2, 200 1, 200 250 2, 700 ’ $7, 000 #4, 800 $400 $4, 800 £17, 000 (c) Estimated, earnings from self-employ- ment. In any’ such ¢alendar year in which self-employ ment income is credited to an indi- vidual’s earnifgs record and such credit equals. the maximum amount of earnings creditdble imder section 211(b) (1) of the. Act, the amount of earnings from self-employment. for such in- dividual’s taxable year is deemed to eqnal his total net earnings. from: self-employment as - _ shown in his tax returns on file in the records of the Administration. — Brample. In the calendar vear 1957 in which $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. C’s self-employment tax return for 1957 shows net. earnings from self-employment. of $8,300. Thus, C’s earnings from sel *-employ- ment are deemed to equal. $8,300 for 1957. (d) Wages and self-employment income tn- 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 « ings record: - 31 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—-+thder the provisions of (c) of this subdivision. . .4 | So Example. For the calendar year 1967 in which $6,600, is the maximuni yreditable earnings un- der sections 209(a) and 211(b) (1) of the Act, D. whe was both employed and self-employed has the following amounts credited to his earn- J . 4 LY - Wages Self-em ploy- “ 8 ment income . 4 = : Ist Quarter_.......... ep reeee eee eeeeeescseesee eed aces $1, 509 2d quarter... 22-290 ee a apes ceeeeees 1, 500 3d quarter. 1, 500 RO RIE since ttn ey pais een mn eeate bene cewnat as — 41, 500 : . $6,000 «$600, Since the amount of wages credited do not: equal or exceed the maximum amount creditable under 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 vear. Thus, D’s earnings for 1967 are estimated as follows: a WOO ie rc ee et S OK) Net earnings from self-employment _________ 2; 300 | ee 8. 300 (4) Reentitlement to disability insurance ben-— efits. If an iridividual’s-entitlement to disability insurance benefits terminates.and such individ- ual again becomes entitled to disability insur- ance benefits, the. amount of the reduction is again computed based on the figures specified in this paragraph (c) applicable to the subsequent _ entitlement. .? N- - o e (d.) Items included in, f¥ wérkmen’s compensatien award which are specifically identifiable as being for medical, légal or related: expenses paid_er in- eifrred by the individual in connection with his workmen’s compensation claim, pr. the.injury or occupational disease on which it is based, are excluded .in computing the reduction. under paragraph (a) of this section. “— ", (ey Certification by indiv idual concerning eligibility for workmén’s compensation pay- ment. Where it appears that an individual may. be eligible for a periodic benefit under & work- men’s compensation -law or plan which re give rise to reduction, under paragraph ea) at of this segtion, the individual. mh av We require a condition of certific: ao? for payment ‘of ane benefit under section 223 ef the Act to any in- dividual Tor any month, and of any benefit under ‘section 202 of the Act for such month based on such individual’s earnings record, to furnish evidence as requested by the Adminis- ., fren and to certify as to: (1) Whether he has filed or Aifonds to file any claim for such periodic benefit, and (2) Tf he has so filed, whether there has been 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 heen. made, in cer- tifying any’ benefit for. payment pursuant. to: section 205(i) of the Act. (f) Workmen’s compensation benefit payable on. other than a monthly basis. Vghere work- men’s compensation benefits: are paid period- ically but not monthly, or in a lump sum as a commutation of or a substitute for periodic benefits, the reduction under this section 1s made . at such timé ‘or times and in- sueh amounts as the Administration determines will Punto tor reduction. Amounts — €» = =. Fn ee en eee tt en 4 + 33 eye. > approximate as nearly as practicable the reduc- | ‘tion required under paragraph (a) of this section. - * at ‘ & (g) Priorities. (1) For an explanation’ of when a reduction is made under this section where othér refluctions, deductions, etc., are involved, see § 404.402. -. me (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, eaéh benefit, except the disabil- ity insurance benefit, is first proportionately decreased, and any excess of such reduction disability insurance then applied to such} disability insurance benefit. | | Egample:. Under title" II of the Act, A is entifled to a monthly disability insurance. berie- fit: of $122. His wife, B, and his two children, C——* ~ and D, are entitled to monthly insurance-bene- - fits of $61 each. After adjustment for the fati- ‘lly 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 II. benefits of $273.80. In computing A’s ‘‘average current earnings,” it is determined that A’s average monthly: wage used ‘in compyting his benefit - rate is $340,:and his average monthly wage for his 5 years of* highest earnings after 1950 is $400. Therefore, 80 pergent of. his “average current earnings’ for purposess of the work- . men’s compensation deduction is $320. A becomes entitled to workmen’s cémpen- i sation’ of $48 & week, which converted to a‘. monthly rate amount to $208 a month. (i.c., ° 41/, times $48). The total monthly benefits pay- able under title II of the. Act ($273.80) plus . the* monthly workmen’s. compensgtion amount ($208) equals $481.80. The amount of the re- . duction for warkmen’s compensation is $161.80 ($481.80 rfinus $320) 3 and the family benefit ~ e sum of all such benefits other than the - - 34 ayable is $112 ($273.80 minus $161.80 equals 112). (The same result is obtained by sub- tracting the workmen’s compensation amount ($208) from the applicable limit ($320).) -In this example, the $161.80 reduction would _ be apphied first against the three section 202 benefits ($50.60 times 3 equals $151. 80) leaving $10 to be deducted from the disability 1 insurance benefit. .¢h) Effect of changes mn family comnantion. 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, ie, the same average monthly wage, ~ average current earnings, and workmen’s com- pensation amount ‘and the total benefits pay- able under title IT of the Act for the new num-— ber 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 remaigg 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 $110.30 based on an average monthly wage of $289. His wife, G, and his ehild, 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 vears 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 © SS . 35 average current earnings). The amount payable is figured as follows: | Total title II benefits...._.._.-.-. 2-88.88 $220. 70 $220. 70 Monthly workmen’s compensation........_.__............. 192.00 |... -------2 ee : 412. 70 Less 80 percent of F’s average current earnings....._- an 231. 20 |_-..--.--2.2.. Reduction amount..._...__.__. pices Seeeewes seman neens _ 181.50} - 181.50 Amount payable... 22-222... eee eee eeee | --ee 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 thart 80 peregnt of F’s average current earnings, the total family benefit becomes the applicable limit and the amount payable is fig- ured merely by deducting the workmen’s com- pensation. ($192) from the total title IT benefits ($233) leaving $41 payable to F. | (1) 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. 36 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 bene- fits under section 202 of the Act of $47.90 each (after reduction under section 203(a). to con-. ‘form to the family maximum.of $262.40). K becomes entitled to workmen’s compensation of $30 per week ($130 per month). The total fam- ily benefit is-higher by 10 cents than 80 percent of K’s average eurrent earnings (80 percent of $328, or. $262.40). T herefore, the reduction amount: equals the monthly w orkmen’s compen- sation. One-third of this amount (rounded downward to the nearest 10 cents), Le., $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 benefit to $122 and causes LL, M, and N’s benefits to he increased to $50.60 each (an increase ‘of $2.70). The benefits then pavable become: $122 to Kk, and $7.30 (i.e, $4.60. plus $2.70) each to L, AL, and N. In February 1967, O, another child of K, be- - eomes 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. © ~'G) 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 of 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 37 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 IT of the Act on the basis of such individ- ual’s wages and self-employment income. Such redetermined benefit is effective with the Janti- - ary following the year in which the redetermi- ‘ nation is made. eo _ | (2) Average current earnings. In making the. redetermination required by subparagraph (1) | of this paragraph, the individual’s “faverage current earnings’’ (as defined in paragraph (c)(3) of this section) is deemed to be the product of his average current earnings, as ini- tially determined under paragraph (c)(3) 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 fér 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 sof the taxable year in which the reduction was first computed (bit 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- plicable 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 | payable. 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 38 reason (such as a statutory increase or recom- | putation) the benefit has already been 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 benefits 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, 8S, are entitled to benefits under section 202 of the Act of $70 each. P becomes entitled to workmen’s compen- sation of $208 per month. In 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 benefits payable of $152 ($140 to P and $6 to R and 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 benefit is $140, and R’s and 8’s benefits are $16 each. If there had been a benefit increase in 1969 (either by a statutory increase or a recomputa- tig) increasing P’s benefit by $10 (to $150) ati each other benefit by $5 (to $11) the fam- ily would already be receiving $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 PSINTING OFFICE: 1971 s --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386413_0360%3A05. Public record. Not legal advice.