Brief Amicus Curiae — Richardson v. Belcher

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Mm No. 1091

In The week

SUPREME COURT OF THE UNITED STATES \

*" October Term, 1970

ELLIOT L. RICHARDSON, Secretary of

Health, Education and Welfare, }

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‘Appellant . . yes 6

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vs.

RAYMOND BELCHER,

. Appellee

——

On Appeal from the United States District Court

__ for the Southern District of West Virginia

BRIEF OF THE AMERICAN TRIAL LAWYERS ASSOCIATION.

AS AMICUS CURIAE |

- INTEREST OF THE AMERICAN TRIAL LAWYERS ASSOCIATION

This brief amicus curiae is filed by the American Trial Lawyers Association.

The American TriahLawyers Association (““ATL”’) is a national association .

composed of lawyers regularly engaged in the trial and appeal of all types of

contested matters (including workmen’s compensation cases and social secu-

rity claims), sitting judges, law professors, lawyer-administrators, and other

lawyers, whose membership now numbers over 25,000, This association

through its appropriate officers and committees, has authorized its participa-

tion in this cause as amicus curiae. a,

One of the principal functions of ATL and its members is to establish and

protect the rights of individuals who have suffered injuries to their persons.

The decision of the Court in this cause will have far-reaching effects, not only

upon the rights of injured workmen, but also upon the rights of other in-

jured persons whose right to recover compensation for such injuries may be

limgted by statute. ATL has a strong inferest in insuring that such limitations.

witere necessary and proper, are not arbitrary or discriminatory.

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‘SUMMARY OF ARGUMENT

. It is the position of ATL that in the instant case, the District Court cor-

| - rectly held that the reduction of plaintiff's social security disability benefits

5 was unconstftutipnal as being in violation of the Due Process Clause of the :

Fifth Amendment of the U.S. Constitution, since the statute (Section 224 of

the Social-Security Act) authorizes such reduction only in the case of a narrow, ra

limited class, of persons, namely, those who are simultaneously receiving social

security disability benefits and disability payments pursuant to a workmen’s

_ compensation award, and such classification is patently arbitrary and lacks

any rational justification. a an oe

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ARGUMENT .

‘The factual background and statutory basis for this litigation are fully

discussed in the other briefs and need not be reiterated here. The issue in

q this case is a simple one: Is § 224 of the Social Security Act (42 U.S.C.

§ 424a) together with the relevant Department of Health, Education and

=. Welfare re regulations promulgated thereunder, invalid by reasgn of being in

. conflict with the Fifth Amendment to the United States Constitution?

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There can be no question but that the plaintiff in this case is a member of

a limited class of persons whose social security disability benefits are subject

to reduction. The statute singles out one and only one collateral source of --

disability compensation to he credited in whole or in part against social

security payments — workmen’s compensation awards. Only those persons “

whose disability happens to have arisen from a work-connected injury, alsa

have brought a claim for workmen’s compensation against their employer,

who have satisfied the notice, & provisions, limitations, burden of proof, and

2 all other substantive and protedural requirements’ of the particular state’s

; workmen’s compensation law, and finally have received a valid workmen’s

a compensation award, are subject , to having their social security disability

: benefits reduced or terminated. |

There are numerous other classes of persons receiving disability compen-

§ sation payments whose social security benefits are not subject to reduction.

; These include: . _¢

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L 1. Employees who suffer work-connected injuries but do not makea_

i : workmen’s compensation claim. With respect to certain employees, parti-

a cularly at the management level, the employer may have a policy of

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continuing to pay the employee’s salary during periods of Sickness or injury,

or for a specified period of time in the event of total and permanent disa-

bility. In such cases, the employee may elect to forego his potential work-

men’s compensation claim and accept in lieu théreof more favorable wage

continuation payments. Such payments do not cause a reduction in.social

security benefits. Or the employee fnay threaten to bring a workmen’s .

compensation claim, as a result of Which the employer may settle with the

employee by agreeing to some sort ‘of wage continuation plan. This is parti-

cularly likely where the employer is a self-insurer. with respect to workmen’s

compensation, See, e.g, W. Va. Code Ann. 23-2-9 (1970).. Again, such |

payments do not cause a reduction i in social security benefits.

. 7

— who suffer govi connected injuries while employed by an

snuplowes not covered by workmen’s compensation. In many states, in-

cluding West Virginia, some or all employers may elect not to.come ‘under

the provisions of the workmen’s compensation act.! As to the employers who

so elect, their employees’ injuries may be compensated by some form of

private wage continuation plan, e~ sioyer-funded disability income insurance,

or the proceeds of a tort action aj .. ‘t the employer: In such cases, arly

benefit received by the injuredem yee does not cause a reduction in his

social security benefits. _

3. Self-employed persons who suffer work-connected injuries. Persons ,

who are self-employed commonly purchase disability income insurance, -

_ since they are not covered by workmen’s compensation. Payments received

from such insurance do not cause a reduction in social security benefits, even .

where the i uy is Work-related.

4. Persons whose disability did not arise during the course and scope of

their employment. Many employers have wage continuation plans - - formal

and informal - - for disabled emptoyees which are provided even where the

disability did not arise out of the employment. Payments under such plans,

1. Twenty-three states, including West Virginia, permit employers to alect not to come

within the workmen’s compensation system, 3 Larson, Law of Workmen’s Compen-

sation 522, Appendix A, Table 7 (1971); W. Va. Code Ann., me § 23- 2-1, 23-2-8 (1970).

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whether employer- or insurance-funded, do not reduce social security benefits.

Further, many persons voluntarily purchase disability income insurance to

provide for the situation where the disability does not arise out of their em-

ployment. While such insurance commonly is limited by its terms to 80% or

~ 100% of the employee’s highest wages, there is typically no ) offset for social

security disability benefits, and payments received pursuant to such an

insurance contract do not reduce the individual’s social security benefits.

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5. Persons whose disabitity arises from injuries caused by a third party.

Many persons are rendered disabled by the negligence of some one other

a than his employer or co-employees. In any judgment or settlement re- ;

: ceived by the person disabled as a result of a tort claim against the third- 3

party tortfeasor, one of the elements of damages is lost wages, past and

future. Such damages are not subject to reduction by reason of callfferal

% benefits such as social security, and under the Social Security Act, the

: judgment or settlement does not cause a reduction in social security benefits.

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In all of the foregoing situations, (and undoubtedly other examples could

be found), an individual receives somé fornr of wage continuation or disability __

income in addition to social | security disability payments and which do not .

--——cause his social security payments to be diminished. Section- 224 of the Social

Security Act singles out only one specific type of collateral source benefit - -.

payments pursuant to a workmen’s compensation award - - to serve as an off-

set against social security benefits. Unquestionably, Section 224 is discrimina-

. tory, and on its face such Gisermamnaton must b¢ deemed arbitrary and

unjustifiable. .

‘The Fifth Amendment to the United States Constitution provides, in part:

Bidet aiseents

4 “No person shall . be ie peives of . + Property, without due process of law;

4 _ This Court has previously ruled that benefits under the Social Security

i Act are subject to the provisions of the Due Process Clause, and may not be

5 arbitrarily and unjustifiably withheld. Flemming v. Nestor, 343 U.S. 603,

d 611, 80 Sup. Ct. 1367, 1373 (1960). Although the particular provision of

a the statute questioned in that case was held not to violate the Due Process.

‘Clause, this Court stated:

2. Except that in most states, whoever pays the workmen’s compensation award is

entitled to be reimbursed out of any tort judgment or settlement recovered from

a third party. See 2 Larson, Law of Workmen’s Compensation 74.31,

pp. 226.105-226.118 (1970).

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“This is not to say, however, that Congress may exercise its power to -

modify the statutory scheme free of all constitutional restraint. The

interest of a covered employee under the Act is of sufficient substance

to fall within the protection from arbitrary governmental action afforded

by the Due Process Clause .... Particularly when we deal with a with-

holding of a noncontractual bench under a social welfare program such

as this, we must recognize that the Due Process Clause can be thought to

interpose a bar only if the statute manifests 4 patently arbitrary classi:

fication, utterly lacking in rational justification. ” :

See also Shapiro v. Thompson, 394 U.S. 618, 641-42, 89 Sup. Ct. 1322,

1335 (1969) (District of Columbia welfare benefits withheld in violation of |

Due Process Clause); Schneider v. Rusk, 377 U.S. 163, 168, 84 Sup. Ct 1187,

1190 (1964) (Fifth Amendment prohibits unjustifiable and arbitrary discrimi-

- nation in act of Congress); Bolling v. Sharpe, 347 U.S. 497, 499, 74 Sup. Ct.

693, 694 (1954) (same). Cf. Goldberg v. Kelly, 397 U.S..254, 90 Sup. Ct.

1011, 1017 (1970) (welfare benefits as “‘property”).

The question is , then, is theresany rational justification for the discrimmina-

tion which is. appyfent in Section 224 of the Social Security Act?

Clearly, there is no difference of any substance between the disability

income payments in any of the examples noted above and payments pur-

_ Suant to a workmen’s compensation award, either in source or quality.

Workmen’s compensation is paid for by the employer, either directly or |

through the purchase of insurance. It is a part of the cost of labor. Similarly,

the work-connected disability income payments in most of the examples

given above are funded either by the employer or by the employee himself.

Presumably, if paid for by the employee (through the purchase of insurance)

~ the cost is reflected in the wages paid to the employee, since the employer

who does not provide this fringe benefit must pay.extra wages to be compe-

titive. Of the examples given, only payments pursuant to a third-party tort

judgment or settlement are not funded by the employer or employee, and

there is no basis for a distinction between workmen’s compensation awards

and'such tort judgments or settlements vis-a-vis the reduction of social’

security benefits.

’

Furthermore, there is no reason to assume that workmen’s compensation

awards will be larger than the disability income benefits described in the

examples above so as to justify different treatment under the Social Security

Act. In fact, if anything, payments in the examples given above are apt to

be larger than workmen’s compensation benefits, since they are not subject

to the limitation’ of a factory payment schedule as in the case of workmen’s

compensation. :

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The Government in this case has not suggested any plausible rationale

for the discrimination contained in Section 224, Indeed, there is only one-r.

conceivable reason for singling out workmen’s compensation awards to*

offset social security payments - - administrative convenience of enforeement.

Workmen’s compensation awards are ordinarily matters of public record.

The Social Security Administration can obtain from” the states or court

records information as to the identity of those receiving \ workmen’s com-

pensation and the amount of their award. Other forms of disability income

_ payments, including most of those listed in the examples given above, are

not matters of public — or would not be so easily discovered.

“But administrative convenience is not a proper rationale for a statutory ©

provision-which discriminates against a narrow class of beneficiaries

and favors all other classes similarly situated. Congress has said that social

security disability benefits shall be primary as to all classes of persons

except thdse who also happen to qualify for and receive workmen’s com-

pensation awards, and as to them and them alone social security shall be .

secondary, much’like so-called “‘other insurance.”? This it cannot consti-

tutionally do.

We do not suggest that Congress could not validly reduce social] security

- payments pro tanto to the extent of benefits received from other sources.

» But in order to be valid, Sweh reduction should ericompass substantially

“all forms of disability income, regardless of the pacieutar statute, plan or

‘contract by which such income is paid.

Moreover, a statute providing for all forms of disability income to ‘reduce

social security benefits would present no unique problems of administrative

enforcement. For exdmple, an application for social:security disability bene-

fits could simply require the applicant to-disclose all other sources of

disability income, much as our tax laws now require voluntafy disclosure

‘of all taxable.income. This disclosure requirement:could be made a conti-

nuing one. Penalties could be provided for failure-tosmake such disclosure,

including forfeiture of social security benefits...In any event, the Government

cannot justify such elear discrimination on the grdund that a broader offset

provision would be more difficult to enforce. Indeed, its briefs do not

attempt to do so.

_ + It is suggested in the briefs that ¢ one justification for Section 224 is shat

its purpose is te encourage rehabilitation and to discourage malingering.

If that is true, and assuming that it will in fact have that-effect, then as we

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have previously ain it does not go far enough. There is no basis for.

assuming that*those-receiving workmen’scompensation are more likely.

_+ to malinger, or less likely to seek rehabilitation, than persons receiving

| disability income from any other source. In fact, the opposite may be a

. true, since many workmen’s compensation systems and insurers have re-

habilitation programs which are not available to persons receiving disa-

bility income from other sources, See, e.g., W.- Va.Code Ann. 23-4-9 :

(1970). In any event, if the policy of the statute is to encourage re-:

nabilitation, there remains no justification for applying that policy only

to a narrow class of disabled persons.

The Government also suggests that a possible purpose and effect of

Section 224 is to protect state workmen’s compensation systems, since if

social security disability benefits are primary, states may amend their work-

men’s compensation acts to shift the burden of a disabled worker’s com-

pensation to the social security system.. Upon examination, however, this _.

rationale also fails. In the first place, the states could do that under the -

present act if they wished to do so. There is nothing to prevent a.state

from making its workmen’s compensation benefits begin where social

security leaves off, making the maximum total disgbility benefit equal to

the eighty percent limitation of Section 224: Thus, Section 224 does

“nothing to effectuate any such policy. In the seobnd place, payments for

total and permanent disability are only a small part of the total scheme of © ae

compensation of any workmen’s compensation act. Benefits are also pro-

' vided for medical and hospital expenses, funeral expenses, rehabilitation,

specific scheduled losses, temporary total disability, permanent partial

disability, and other forms of loss,° all of which axe unaffected. by social .

security. Obviously, predictions of the demise of the state workmen’s

compensation systems in the absence of Section are grossly exaggerated.

Finally, it is argued that a purpose of Section 224 is to prevent double

_ payments for the same loss. If by this is meant.double payments from’

<> Public funds, the premise fails. Workmen’s compensation is funded either |

by private insurance or by payments by the employer to a state agency;

which acts merely as a depositary or conduit. Social security itself is

financed primarily through payments from participating employers and em-

ployees. Public funds are not involved: Moreover, as we have previously

shown, Section 224 acts only upon one narrow Class of pérsons receiving

3. See,e.g., W. Va.Code Ann., 23-4-3, 23-424, 23-4-6 (1970). ’

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“disBbility income from a collateral source. Social security may duplicate

disability. income received:from any other source. There is no justifica-

tion for a policy which limits its effect.to this one particular group.

‘The conclusion is inescapable that there is-no valid basis for Section |

224. Clearly, the statute “manifests a patently arbitrary classification,

utterly lacking in rational justification.” Flemming v. Nestor, 363 U.S.

603, 611, 80 Sup. Ct. 1367, 1373 (1960). As such, it is in violation of the

Due Process Clause and unconstitutional. .

. CONCLUSION

Fer the foregoing reasons, the American Trial Lawyers Association

> respectfully urges that the judgment of the United States District Court

for the Southern District of West Virginia be affirmed:

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Respectfully submitted, «

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aes ; a Edward J. Kionka

\ 105 West Washington Street

Belleville, Illinois 62220

. Counsel for the American Trial

a Lawyers Association, Amicus

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Curiae

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78 OCTOBER TERM, 1971.

Opinion of the Court * 404 ULS.-

RICHARDSON, SECRETARY OF HEALTH, EDU-

) CATION, AND WELFARE v. BELCHER ©

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE

SOUTHERN DISTRICT OF WEST VIRGINIA

No. 70-53. Argued October 13, 1971—Decided November 22, 1971

Section 224 of the Social Security Act, which requires a reduction in

social security benefits to reflect workmen’s compensation pay-

ments, has a rational basis and does not violate the Due Process

. Clause of the Fifth Amendment.

317 F. Supp. -1294, reversed.

Stewart, J., delivered the opinion of the Court, in which: BurcEr,

C, J., and Wuire and Brackmun, JJ., joined. Dovctas, J., filed a

dissenting opinion, post, p.-S4. MarsHa., J., filed a dissenting

opinion, in which BRENNAN, J., joined; post, p. 88.

Richard B. Stone argued the cause for appellant. With

him on the brief’ were Solicitor General Griswold, As-

sistant Attorney General Gray, and Kathryn H. Baldwin.

: John Charles Harris argued the cause and filed’a brief

for appellee. .

“a William E. Miller and Richard A. Whiting filed a brief

for the American Mutual Insurance Alliance et al. as

amici curiae urging reversal. |

Briefs of amici curiae urging affirmance were filed by .

Edward J. Kionka for the American Trial: Lawyers As-

sociation, and by Edward L. Carey, Harrison Combs, and

_M. E. Bovarsky for United Mine Workers of America.

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Mr. Justice STEWART delivered the opinion of the

Court.

The appellee was granted social security disability

benefits effective in October 1968, in the amount of

$329.70 per month for himself and his family. In Jan-

uary 1969, the federal payment was reduced to $225.30

\ cannon v. BELCHER 79°

78 Opinion of the Court

monthly under the “offset” provision. of Section 224 of

the Social Security Act, 79 Stat. 406, 42 U. S.C. § 424a,?

upon a finding that the appellee was receiving workmen’s

compensation benefits from the State of West Virginia

in the amount -of $203.60 per month. After exhaust-

ing his administrative remedies, the appellee brought

this action challenging the reduction of payments re-

quired by § 224 on the ground that the statutory pro-

vision deprived him of the due process of.law guaranteed

1 Section 224 provides, in pertinent part:

“(a) If for any month prior to the month in which an individual

attains the age of 62—

“(1) such individual ‘is entitled to benefits under section 423 of

‘this title, and

“(2) such individual is entitled for such month, under a work-

men’s compensation law or plan of the United States or a State,

_ to periodic benefits for a tegal or partial disability (whether or not

permanent), and the Secretary has, in a prior month, received notice

_ of such entitlement for sich month,

“the total of his benefits under section 423 of this title for such month

and of any benefits under section 402 of this title for such month

based on his wages and self-employment income shall be reduced

‘(but ‘not below zero) by the amaunt by phich the sum of—

“(3) such total of benefits under secYions 423 and 402 of this title

for such month, and

“(4) such periodic benefits payable oe actually paid) for such

month to such individual under the workmen’s compensation law or

plan, ; .

“exceeds the higher of—

“(5) 80 percentum of his ‘average current earnings.’. . .

-

“For purposes of clause (5), an individual’s average current earnings

means the larger of (A) the average monthly wage used for purposes

of computing his benefits under section 423 of this title, or (B) one-

sixtieth of the total of his wages and self-employment income (com-

puted 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 a wages and self-employment income were

highest... .” 42 U.S.C. § 424a (a).

sO OCTOBER TERM, 1971

Opinion of the Court | 404 U.S.

by the Fifth Amendment. The District Judge, dis- .

agreeing with other courts that have considered the

question,? held the statute unconstitutional. 317 F.

Supp. 1294. The Secretary of the Department of

- Health, Education, and Welfare appealed directly to this

Court’ under 28 U. S. C. §1252.* We noted probable

jurisdiction, 401 U. S. 935, and the case was briefed and

argued on the merits. We now reverse the Judgment of

the District Court.

In our last consideration of a challenge to the con-

stitutionality of a classification created under the Social

Security Act; we held that “a person covered by the Act .

has not such a right in benefit paymentgas would make

- every defeasance of ‘accrued’ interests violative of the

Due Presess Clause of the Fifth Amendment.” Flem-

ming v. Nestor, 363 U. S. 603, 611. The fact that social

security benefits are financed in part by taxes on an

employee’s wages does not in itself limit the power of:

Congress to fix the levels of benefits under the Act or

_the conditions upon which they may be paid. Nor does

an expectation interest in public benefits confer a con-

tractual right to receive the expected amounts. Our

decision in Goldberg v. Kelly, 397 .U. S. 254, upon which

‘2B. g., Gambill y. Finch, 309° F. Supp. 1 (ED Tenn. 1970) ;

Lofty v. Cohen, 325 F. Supp. 285, aff’d sub nom. Lofty v. Richardson,

440 F. 2d 1144 (CA6 1971): ‘Bartley v. Finch, 311 F. Supp. 876.

(ED Ky. 1970); Bailey v. Finch, 312 F. Supp. 918 (ND Miss. 1970) ;

Benjamin v. Finch, Civ. No. 32816, ED Mich., May 26, 1970, aff’d

sub nom. Benjamin v. Richardson, No. 20,714, CA6, Apr. 29, 1971;

Gooch vy. Finch, Civ. No. 6840, SD Ohio, July 13, 1970; Rodatz v.:

Finch, Civ. No. 69-170, ED IIl., Sept. 4, 1970, aff’d sub nom. Rodatz

v. Richardson, —— F. 2d —— (CA7 1971).

3“Any party may appeal to the Supreme Court from an inter-—

locutory or final judgment, decree or order of any. court of the

United States ..., holding an Act of Congress unconstitutional

in any civil action, suit, or proceeding to which the United States —

or any of its agencies, or any officer or employee thereof, as such

officer or in nore is a party.”

RICHARDSON v. BELCHER 81

78 a Opinion of the Court

the*District Court relied, held that as a matter of pro-—

cedural due process the interest of a welfare recipient in

the continued payment of benefits is sufficiently furnda-

mental to prohibit the termination of those benefits

without a prior evidentiary hearing. But there is no

. controversy over procedure in the present case, and the

analogy drawn in Goldberg between social welfare and

“property,” 397 U.S., at 262 n. 8, cannot be stretched to.

impose a constitutional limitation on the power of Con-

¢ress to make substantive changes i in the law of entitle- |

ment to public benefits.

- To characterize an Act of Congress as conferring a

“public: benefit” does’ not, of tourse, immunize it from

scrutiny under the Fifth Amendment. -We have held

that-“ft}he interest of a covered employee undér the

[Social Seeurity] Act is of sufficient substance. to fall

within the protection from arbitrary governmental ac-

tion afforded by the Due Process Clause.” Flemming v.

Nestor, supra, at 611. The appellee argues that the

classification embodied in § 224 is arbitrary because it

‘discriminates between those disabled employees who

receive workmen’s compensation and’ those who receive

compensation from private insurance or from. tort claim

awards. We cannot say that this difference i in treatment

is constitutionally invalid.

A statutory classification in the area of social welfare

is consistent with the Equal Protection Clause of the

Fourteenth Amendment if it is “rationally based and

free from invidious discrimination.” Dandridge v. Wil-

liams, 397 U. S. 471, 487. _ While the present case, involv-

-Ing as it does a federal statute, does not directly implicate

the Fourteenth Amendment's Equal Protection Clause,

a classification that meets the test articulated in Dand-

ridge is perforce consistent with the due process require-

ment of the Fifth Amendment. CE. Bolling v. Sharpe,

347 U.S. 497, 499.

82 OCTOBER TERM, 1971

Opinion of the Court 404 U.S,

To find a rational basis for the classification created

by § 224, we need go no further than-the reasoning of.

Congress as reflected in the legislative history. The |

predecessor of § 224, enacted in 1956 along with the

amendments first establishing the federal disability in-

surance program, required a full offset Of state or-fed-

eral ‘ workmen’s compensation : payments against ben-

efits payable upder federal disability insurance: 70 Stat.

816. It is self-evident that the offset reflected a judg-

ment by Congress that the workmen’s compensation and

_ disability insurance programs in certain instances served

a common purpose, and that the workmen’s’ compensa-

tion. programs should take precedence in the area of

overlap. The provision was repealed in 1958, 72 Stat.

1025, because Congress believed that “the danger that

duplication of disability benefits might produce unde-

sirable results [was] not of sufficient importance to justify

reduction of the social security disability benefits.” H.R.

Rep. No. 2288, 85th Cong., 2d Sess., p. 13.

In response to renewed criticism of the overlap between

the workmen’s compensation and the social security dis-

ability insurance programs, Congress re-examined the

problem in 1965. Data submitted to the legislative com-

mittees showed that in 35 of the 50 States, a typical ©

worker injured in the course of his employment and

eligible for both state and federal benefits received com-

pensation for his disability in excess of his take-home pay |

4The primary federal workmen’s compensation programs are the

Longshoremen’s and ‘Harbor Workers’ Compensation Act, 44 Stat.

1424, 33 U. S.C. § 901 et seq., applicable to employees in the Dis-

trict of Columbia and in maritime-related occupations, and the

F ederal Employees’ Compensation Act, 80 Stat. 532, 5 U.S.C. § 8101

et seq., applicable to employees of the Federal Government. The ©

overwhelming majority of workers in the United States are covered .

by state rather than federal programs, and thus we may refer gener-

ally to workmen’s compensation as a program of the States.

RICHARDSON v. staat 83

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78 - . Opinion of the Court

prior to the disability. Hearings on H. R. 6675 before

the Senate Committee on Finance, 89th Cong., ist Sess.,

pt. 2, p. 904. It was strongly urged that this situation

reduced the incentive of the worker to return to the job,

and impeded the rehabilitative efforts of the state pro- -

grams. Furthermore, it was anticipated that a perpetua-

tion of the duplication in benefits might, lead to the

erosion of the workmen’s compensation programs.’ The

legislative response was § 224, which, by limiting total

state and federal benefits to 80% of the employee’s aver- -

age earnings prior to the disability, reduced the duplica-

tion inherent in the programs and at the same time al-

lowed a supplement to workmen’s compensation where

the state payments were inadequate. .

The District Court apparently assumed that the only

basis for the classification established by § 224 lay in the

characterization of workmen’s compensation as a “public

benefit.” Because the state program. was financed by ©

employer contributions rather than by taxes, the Court

held that the “public” characterization afforded no ra-

tional basis to-distinguish workmen’s compensation from.

private insurance. We agree that a statutory .discrim-

‘ination between two like classes cannot be. rationalized

by assigning them different labels, but neither can two

unlike classes be made indistinguishablé by attaching to

them a common label. The original purpose of state

workmen’s compensation laws was to satisfy a neéd in-

° The Senate Committee on Finance, with which the 1965 amend-

ment originated, took note of “the goncern that has been expressed

by many witnesses in the hearings about the payment of disability

benefits concurrently with :benefits payable under State workmen’s

“ compensation programs.” §. Rep. No. 404, 89th Cong., Ist Sess.,

pt. 1, p. 100. Testimony concerning the anticipated effects of dupli-

cation upon the future of the state programs appears in Hearings

on H. R. 6675 ‘hefo the Senate Committee on Finance, 89th Cong.,

Ist Sess., pt. 1, Pp. 259, 366, pt. 2, Pp. 540, 738-740, 892-897,

949-954, 990. ,

84 OCTOBER TERM; 1971

Dovc.as, J., dissenting 404 U.S.

adequately met by private insurance or tort claim awards. -

‘Congress could rationally conclude that this need should .

continue to be met primarily by the St

federal program that began to dupheate the efforts of

the States might lead tothe grad weakening or atro-

phy of the state programs. C >

We have no occasion, within our limited function der

the Constitution, to consider whether the legitimate

purposes of Congress might have been better served

by applying the same offset to recipients of private

insurance, or to judge for ourselves whether the appre-

hensions of Congress were justified by the facts. if the

goals sought are legitimate, and the classification adopted

is rationallyrelated to the achievement of those goals,

then the action of Congress is not so arbitrary as to vio-

late the Due Process ‘Clause or the Fifth Amendment.

- The aan is *

Reversed.

- Mr. JUSTICE Doverad, dissenting.

I would affirm the judgment of the District Court. The ~

statutory classification upheld today is not “rationally.

based and free from invidious discrimination.” Dand-

ridge v. Williams, 397 U. S. 471, 487. -It is, in my view,

violative of the Federal Government’s obligation under

the Fifth Amendment’s Due Process Clause to guarantee

to all citizens equal protection of the laws. Bolling v.

Sharpe, 347 U. S. 497.

- Eligibility for social security disability benefits is prem-

ised upon 4 worker’s having attained “insured” status in

the course of an employment “covered” by the Act. It

is undisputed that. Raymond Belcher, and through. him

his wife and’two minor children, had so qualified in 1968

when he broke his neck while employed by the Poca-

hontas Fuel Co. in Lynco, West Virginia.* Indeed, his —

application for such benefits has been approved, and the

benefits, authorized and paid.

a

RICHARDSON ». BELCHER 85

78 ms Dovctas, J., dissenting

Section 224 of the Social ‘Security Act, however, re-

- quires that these benefits be substantially reduced solely

because Belcher also receives state Workmen’s compen-.

sation payments.- It is said that the duplicatioi of

benefits impedes rehabilitation, and may lead to:a cutting

back of state workmen’s compensation programs. Ante,

at 83.

The rehabilitation goal: does not explain the special

treatment given to workmen’s compensation beneficiaries.

There are many other important programs, both public

and private, which contain provisions fot disability pay-

ments affecting a substantial portion of the work. force,

and which do not’ *equire an offset under the Social Se-

curity Act. /

Thus, had Belcher’ s supplemental disability payment

come from a Veterans’ Administration program,' 4 Civil

Service Retirement Act’ or Railroad Retirement Act *

1In fiscal 1970, over 2,000,000 veterans received compensation for

service-connected disabilities under statutes adrhinistered by the

Veterans’ Administfation. Statistical Abstract of the United States

264 (1971) “Caereinafter. cited as Stgtistical Abstract): See generally

38 U. S. C. §301 et seq. Benefits are also provided to certain

veterans for -non-service-connected disabilities. See generally 38

U. S. C. -§501 et seg. In 1967, total disability benefits from all

Veterans’ Administration programs amounted to $3,197,906,000.

Berkowitz & Johnson, Towards An Economics of Disability: The

Magnitude and\ Structure of. Transfer.and Medical Costs, 5 J.

Human. Resources 271, 282 (1970) (hereinafter cited as Eco--

nomics of Disability). Ray mond Belcher indicated on his applica-

tion for social security disability benefits that he served for three

years during World War II. Transcript of Hearings before Appeals

Council 37. The record is silent, however, as to his’ potential

eligibility for non-service-connected veteran’s benefits.

* Employees covered by. the Civil Service Retirement Act, 5

U.S. C. § 8301 et seq., are entitled to a disability annuity after five

years of civilian service. Id., § 8337> In fiscal 1970, there- were

184,000 disabled annuitants. Statistical Abstract 284.

§ Title 45 U. S. C. §228a et seg. provides disability benefits for

railroad workers with 10 or more years of covered service. Covered

ae 2

y

. @ ; .

. wwe

86 = aOyTePER TERM, 1971 _

; a i, Sawating + 406.8.”

annuity, a private. disability insurance -policy,4 a self-

insurer,’ a voluntary wage-continuation plaa, or the pro-

eeeds in an action in tort arising from the disabling inj ury,

there would have been no reduction in his social security

_ benefits. The offset under § 224 applies only to federal

social security disability beneficiaries also receiving work-

men’s compensation .payments, a group which in “1965

| totaled only rant of, all social security disability bene-

“employment under this’ t and the Civil

excluded from coverageinder the Social Sepurity Act. i i however,

_& worker’s employment history separately qualifies him for dual

coverage, supplemental payments under neither of these Acts results

in an offset .of social security disability. payments. HEW_publica-

tion, Social Security Programs in_the United States 46, 108 =

(hereinafter cited as Programs).

* Participation in West Virginia's state ‘workmten’s omipenentbn

fund: is optional with the employer. W. Va. Code Ann. §§ 23-2-1,

23-2-8 (1970). An employer who ‘declines to participate, howeves.

must provide equivalent benefits through private insurance or a8 a ;

self-insurer. /d., at § 23-2-9. Had the Pocahontas F nel Co. elected

to pay premiums to a private carrier rather than to the state fund—a

‘decision over which Mr. Belcher presumably had_no control other than

that which might be exerted through the collective-bargaining proc-

-ess—the private insurance benefits would not have been offset under

§ 224. Over 26,000,000 employees are covered by some sort of pri-

_ vate insurance program. Programs 115. In 1967, disability benefits

from private insurance amounted to 1.3 billion dollars. Economics

of Qisability 278. This figure alone exceeded the total of all benefits

paid by workmen’s compensation programs for that year. “/bid.

° Were Mr. Belcher’s employer darge enough, it might ‘have de-_

termined to become a self-insurer with regpect to employee disability

claims. Disability payments from self-insurers were required by

state law to be at least equivalent to betiefits available through the

State fund, n. 3; supra, and they would also not be offset under § 224.

In 1969,. employers who were covered by private carriegs and who

were self-insurers paid.a combined total of $2 ,008 090, 000 in benefits:

State and federal workmen’s compensation funds paid only $604,-

000,000 in benefits, Statistical Abetemct 289.

~RN,

ice Reti#ement Act i is

a

4

efits,® and almost fourteeA percent ‘received’ benefits

| _ > 7

"RICHARDSON v. BELCHER’ ‘ 87

78 Dovetas, J., dissenting (ee:

ficiaries. - Yet, of. the 849,000 disabled workers who in

1965 received social .securjty- disability benefits,’ over °

sizteen percent. also received overlapping veteran’s ben-

from. private insurance -maintained under the auspices of

an employer or: a.union.’ Congress is, of course;—not

required to address itself to all aspects of a social prob-

lem in its legislation. It must @however, ‘justify, the

distinctions it draws between people otherwise simi-

larly situated. Rehabilitation incentives are not a ra-

tional justification fot the discrimination worked by

g204°% If it is at all rational to argue that duplicating .

payments “impede rehabilitation,” the argument must

apply to all such payments regardless of their source.

The nature ofthe supplemental benefit has no relation

to a worker’s incentive to return to work.

a>

Nor is § 224 designed to ‘stem a possible “erosion” of 7

state workmen’s compensation plans. As Mr. JUSTICE —

MARSHALL points out, post, at 94, § 224. itself provides

that there shall be no reduction of federal social security —

benefits with respect to those state workmen’s compen-

sation plans which themselves offset federal social security

6 1966 Survey of Disabled Adults, Office of Research & Statistics,

~ Social’ Security Administration, Table 5 (hereinafter cited as“Survey).

7

This figure was confirmed during the hearings which led to the

adoption of § 224 by Anthony J. Celebfezze, then Secretary of the

Department of Health, Education, ‘and’ Welfare. Hearings on H. R.

6678, befope the Senate Committee on Finance, 89th Cong., 1st Sess.,

pt. 1, p. 152, - oe =. oh | +

‘t Survey, Table 5. i, mi

Ibid... °° ,

9 Tbid. . 4 4

° Assuming the rationality of rehabilitation as a goal with respect

to temporary disabilities, there is still no justification for applying

an offset with. respect to disabilities concededly. permanent in nature.

’ Nevertheless, the statute requires this to be done. The record does

t

not reveal the,status of Mr, Belcher’s disability .