Administrative Review Process, Testing Modifications to Prehearing Procedures and Decisions by Adjudication Officers

Federal RegisterSep 13, 1995

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SOCIAL SECURITY ADMINISTRATION

20 CFR Parts 404 and 416

RIN 0960-AE06

Administrative Review Process, Testing Modifications to

Prehearing Procedures and Decisions by Adjudication Officers

AGENCY: Social Security Administration (SSA).

ACTION: Final rules.

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SUMMARY: We are amending our rules to establish authority to test use

of an adjudication officer who, under the Plan for a New Disability

Claim Process approved by the Commissioner of Social Security in

September 1994 (the disability redesign plan), would be the focal point

for all prehearing activities when a request for a hearing before an

administrative law judge (ALJ) is filed. The adjudication officer

position is an integral part of the disability redesign plan. We expect

that our tests of this position will provide us with sufficient

information to determine the effect of the position on the hearing

process. These final rules add two new sections setting out, for

purposes of the tests we will conduct, the responsibilities of the

adjudication officer in connection with a claim for Social Security or

Supplemental Security Income (SSI) benefits based on disability. Unless

specified, all other regulations related to our administrative review

process and the disability determination process remain unchanged.

EFFECTIVE DATE: September 13, 1995.

FOR FURTHER INFORMATION CONTACT: Harry J. Short, Legal Assistant,

Division of Regulations and Rulings, Social Security Administration,

6401 Security Boulevard, Baltimore, Maryland 21235, (410) 965-6243.

SUPPLEMENTARY INFORMATION:

Background

The Social Security Administration (SSA) decides claims for Social

Security benefits under title II of the Social Security Act (the Act)

and for SSI benefits under title XVI of the Act in an administrative

review process that generally consists of four steps. Claimants who are

not satisfied with the initial determination we make on a claim may

request reconsideration. Claimants who are not satisfied with our

reconsidered determination may request a hearing before an ALJ, and

claimants who are dissatisfied with an ALJ's decision may request

review by the Appeals Council. Claimants who have completed these steps

and who are not satisfied with our final decision, may request judicial

review of the decision in the Federal courts.

Generally, when a claim is filed for Social Security or SSI

benefits based on disability, a State agency makes the initial and

reconsideration disability determination for us. A hearing requested

after we have made a reconsideration determination is held by an ALJ in

one of the 132 hearing offices we have nationwide.

Applications for Social Security and SSI benefits based on

disability have risen dramatically in recent years. The number of new

disability claims SSA received in Fiscal Year (FY) 1994--3.56 million--

represented a 40 percent increase over the number received in FY 1990--

2.55 million. Requests for an ALJ hearing also have increased

dramatically. In FY 1994, our hearing offices had almost 540,000

hearing receipts, and the overwhelming majority of these receipts were

related to requests for a hearing filed by persons claiming disability

benefits. In that year, the number of hearing receipts we received

exceeded the number of receipts we received in FY 1990 by more than 70

percent. We expect hearing receipts to increase to more than 590,000 by

the close of FY 1995.

Despite management initiatives that resulted in a record increase

in ALJ productivity in FY 1994 and the hiring of more than 200 new ALJs

and more than 650 new support staff in that year, the number of cases

pending in our hearing offices has reached unprecedented levels--more

than 480,000 at the end of FY 1994 and more than 554,000 at the end of

July 1995.

In order to process this workload, the disability redesign plan

contains other changes to the disability determination process by which

SSA plans to decrease processing times while providing world-class

service. For example, the disability redesign plan envisions a

streamlined initial disability determination process which will result

in more timely determinations and the elimination of the

reconsideration step in the administrative review process for

disability claims. We expect that one consequence of these initiatives

will be an increase in the number of requests for hearings filed over

the next several years. In light of these growing workload

expectations, and to process more efficiently the hearing requests now

pending at our hearing offices, we are issuing these final rules

establishing the authority to test having an adjudication officer

conduct prehearing development and, if appropriate, issue a decision

wholly favorable to the claimant.

We expect that use of an adjudication officer, as described in our

disability redesign plan, will enable us to ensure development of a

more complete record and to issue decisions in a more efficient manner

when a request for a hearing has been filed. We anticipate that our

tests of the adjudication officer position will provide us with

information regarding the effect use of an adjudication officer has on

the current hearing process, and how to best use an adjudication

officer under the redesigned disability process. We will do this by

testing the adjudication officer position alone and in combination with

one or more of the tests we are conducting pursuant to the final rules

``Testing Modifications to the Disability Determination Procedures,''

which were published in the Federal Register on April 24, 1995 (60 FR

20023) (to be codified at 20 CFR 404.906 and 416.1406).

We consider testing and subsequently implementing use of an

adjudication officer to be a high agency priority. It is a

complementary approach to the short-term disability initiatives we

currently are undertaking. Our short-term initiatives are designed to

process more efficiently pending requests for hearings and reduce the

number of pending hearings to 375,000 at the end of calendar year 1996.

One key short-term initiative is set out in the final regulations we

published in the Federal Register on June 30, 1995 (60 FR 34126), which

temporarily authorize attorney advisors in our Office of Hearings and

Appeals (OHA) to conduct certain prehearing proceedings and, where

appropriate, issue decisions which are wholly favorable to the claimant

and any other party to the hearing. Our attorney advisor rules will no

longer be effective on June 30, 1997, unless they are extended by the

Commissioner of Social Security by publication of a final rule in the

Federal Register. The principal aim of the final rules authorizing

attorney advisors to conduct certain proceedings and issue wholly

favorable decisions is to expedite decisions on pending requests for

hearings. The use of an adjudication officer is focused on making

better use

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of existing resources, so that ongoing cases are processed more timely

and in a more efficient manner. These final rules authorizing us to

test use of an adjudication officer will allow us to test the effect of

a process that we expect will allow us to better manage the hearing

process in the years to come.

We find good cause for dispensing in this case with the 30-day

delay in the effective date of a substantive rule provided for by 5

U.S.C. 553(d). As explained above and in the notice of proposed

rulemaking (NPRM), the number of hearing requests pending at OHA has

reached unprecedented levels, and the number of requests for hearings

filed over the next several years is expected to continue to increase.

In view of the number of pending and expected hearing requests, the

beneficial effect we expect this rule to have on our ability to improve

our service to claimants, and the importance we place on ensuring that

we adjudicate claims timely and accurately, we find that it is in the

public interest to make these final rules effective upon publication.

Prehearing Procedures Under the Disability Redesign Plan

On April 15, 1994, SSA published a notice in the Federal Register

(59 FR 18188), setting out a proposal to reengineer the initial and

administrative review process we use to determine an individual's

entitlement to Social Security and SSI benefits based on disability.

Comments on this comprehensive and far-reaching proposal were

requested, and during the comment period that began on April 1, 1994,

and ended on June 14, 1994, SSA received, from a broad spectrum of

respondents, over 6,000 written responses and extensive oral comments.

The commenters expressed their belief that improvements were needed to

provide better service and to manage the claims process more

effectively. While some concerns were expressed, the commenters praised

SSA for taking on the task of redesigning the disability claim process.

On September 7, 1994, the Commissioner of Social Security accepted

the revised disability redesign plan that was submitted for her

approval on June 30, 1994, with the full understanding that some

aspects of the proposal would require research and testing. The plan as

approved by the Commissioner was published in the Federal Register on

September 19, 1994 (59 FR 47887).

The plan anticipates a redesigned, two-step process for deciding

Social Security and SSI claims based on disability. Under this process,

the claimant will receive an initial determination, and if the claimant

is not satisfied with this determination he or she may request an ALJ

hearing. When a hearing is requested in the redesigned process, the

focal point for prehearing activities will be an adjudication officer

who will work with, among others, claimants and their representatives.

Adjudication officers will have authority to make decisions wholly

favorable to the claimant after the hearing is requested but before it

is held where such decisions are warranted by the evidence.

The adjudication officer, together with the claimant and his or her

representative, will have responsibility for ensuring that claims

coming before ALJs are fully developed. The procedures outlined in the

disability redesign plan make the best use of the services of

representatives by more clearly defining the responsibility of

claimants and their representatives to submit evidence. In addition, we

anticipate that the hearing process will function more efficiently

under the disability redesign plan because the adjudication officer

will conduct an informal conference with a claimant's representative to

identify the issues in dispute and to prepare proposed written

agreements for the approval of the ALJ regarding those issues which are

not in dispute and those issues proposed for hearing. We would not ask

a claimant who does not have a representative to limit issues prior to

the hearing. However, if the claimant obtains representation after the

adjudication officer concludes that the case is ready for a hearing,

the ALJ will return the case to the adjudication officer who will

conduct an informal conference with the claimant and his

representative.

In these final rules we are adding new Secs. 404.943 and 416.1443.

These sections set out, for purposes of the tests we will conduct, the

responsibilities of the adjudication officer when a request for an ALJ

hearing is filed.

For many years, our hearing offices have productively used various

forms of prehearing development. We have conducted tests of a standard

prehearing development process under our existing regulatory authority.

This experience has given us some information about the effect the

establishment of an adjudication officer position may have on the

administrative review process. However, as we believe that further

information will allow us to better evaluate the effect the position

may have on the administrative review process, we will begin testing

use of the adjudication officer as soon as possible. The tests are

intended to assess whether the position meets the goals of the

disability redesign process and whether it will have an effect on

administrative and program expenditures. We also will manage closely

the tests of the adjudication officer position to ensure that the

procedures are consistently and effectively applied at all locations.

In accordance with the goals and directives of the National

Performance Review's Reinventing Government Programs I and II, and our

disability redesign plan, the role of the adjudication officer must be

flexible to make the best use of our available program resources and

also be consistent with providing world-class service to our customers.

Accordingly, under these final rules, the adjudication officer may

either be a qualified employee of SSA or an employee of a State agency

that makes disability determinations for us. The adjudication officer

may be located in our field offices or program service centers, in

State agencies that make disability determinations for us, in OHA, or

in our Regional Office of Program and Integrity Reviews.

Adjudication Officer Qualifications

The adjudication officer will be expected to bring relevant

experience to the position, with additional training provided as may be

necessary to complete the preparation of the individual to assume the

full range of duties. The adjudication officer must have a thorough

knowledge of the disability provisions, and be able to communicate

effectively in informal conferences and in writing. The adjudication

officer must be able to manage a substantial caseload, review

independently the information in the claims file, determine the need

for additional evidence, and evaluate the evidence under the applicable

provisions of the Act, our regulations and rulings. In addition, the

adjudication officer must be able to write factually and legally

correct decisions that can be readily understood by the claimant.

Evaluation of Tests of Prehearing Procedures and Decisions by

Adjudication Officers

These final rules establish the authority to test new prehearing

procedures involving use of an adjudication officer. We plan to test

the procedures in multiple sites, including our field offices and

program service centers, State agencies that make disability

determination for us, OHA, and our other regional offices to provide a

means of determining the effect of the procedures in those sites. Each

test will

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involve a representative mix of geographic areas and caseloads. Before

we commence each test, we will publish a notice in the Federal Register

designating the test site(s) and duration of the test. The notice will

also describe when the test will be conducted alone or in combination

with one or more of the tests we are conducting pursuant to the final

rules ``Testing Modifications to the Disability Determination

Procedures'' which we published in the Federal Register on April 24,

1995 (60 FR 20023) (to be codified at 20 CFR 404.906 and 416.1406). We

will evaluate test outcomes against the objectives of the disability

redesign:

Is the process user friendly?

Does the process maintain a high level of payment quality?

Does the process take less time?

Is the process efficient?

Does the process result in satisfying work for employees?

One of the most important aspects of our evaluation plan is to

measure the effect the procedures used by the adjudication officer has

on overall disability allowance rates. The responsibilities of an

adjudication officer are not designed to change the overall allowance

rates. In order to determine whether the actions taken by adjudication

officers result in processing improvements consistent with expected

outcomes, we will review evaluation results on a quarterly basis. If

our evaluation shows that overall allowance rates increase or decrease

unacceptably, we will cease use of, or make appropriate adjustments to

the prehearing procedures, consistent with this regulatory authority.

In the preamble to the final rules on ``Testing Modifications to

the Disability Determination Procedures,'' we indicated that we plan to

test the adjudication officer prehearing procedures, as well as other

aspects of the disability redesign which do not require regulatory

changes, in combination with one or more of the four models described

in those final rules at some test sites. This continues to be our

intention. Such tests will provide us with a body of information about

each individual part of the redesign, as well as whether the combined

effect of the redesign meets our goals of making the disability process

user friendly, more timely and more accurate and efficient. It will

also provide us with information about program expenditures in

connection with the overall redesign.

Public Comments

These regulatory provisions were published in the Federal Register

as an NPRM on June 9, 1995 (60 FR 30482). We provided the public with a

30-day comment period. We received 21 letters in response to this

notice from a variety of sources, including individuals employed by SSA

as attorney advisors or ALJs, State agencies which make disability

determinations for us, representatives of legal services organizations,

union representatives, and a private attorney.

In general, the comments expressed concerns regarding several

aspects of the proposed rule and requested that we not promulgate the

rule as proposed. Some comments suggested changes to the rules, or

identified provisions in the rule that the commenters believed required

clarification. Some of the comments we received were outside the scope

of the proposed rule, and therefore have not been addressed. The

substantive comments made by the commenters and our responses are set

out below. Because some of the comments were detailed, we condensed,

summarized or paraphrased them. We have, however, tried to summarize

the commenters's views accurately and respond to all of the significant

issues raised by the commenters.

As discussed in our responses to the comments we received, we have

made some changes to the proposed rule to clarify certain aspects of

the rule. However, as most of the comments we received related to

issues that we had considered previously in the development of the

disability redesign plan, we are issuing these final rules with no

substantive changes.

Comment: A number of commenters expressed concern that the proposed

rule would change the responsibilities of claimants and their

representatives for obtaining and submitting evidence.

Response: This is not our intent. Under the provisions of titles II

and XVI of the Act and our existing regulations, a claimant will not be

found disabled unless he or she submits evidence to support his or her

claim for disability benefits or SSI payments based on disability. (See

sections 223(d)(5)(A) and 1614(a)(3)(G) of the Act, and 20 CFR 404.704-

404.705, 404.935, 404.1512, 404.1514, 416.912(c), and 416.1435). The

claimant's responsibility regarding the submission of evidence to

support the claim for benefits is equally the responsibility of a

representative appointed by the claimant. (See 20 CFR 404.1710,

404.1715, 416.1510 and 416.1515).

The disability redesign plan reflects the principle of claimant and

claimant representative responsibility in the submission of evidence

while defining new procedures to promote effective cooperation between

SSA and claimants and their representatives in ensuring the development

of complete evidentiary records. The plan makes the best use of a

representative's services early in the process, and these final rules

do not impose on claimants or their representatives significant

responsibilities that they do not currently have.

Testing use of an adjudication officer as part of the prehearing

procedures we follow will allow us to assess the extent to which having

an adjudication officer work with claimants and representatives in

developing complete evidentiary records will contribute to improved and

more expeditious claims development and, thereby, a more effective

adjudication process.

Comment: Several commenters stated that the proposed rule would

result in different treatment of represented and unrepresented

claimants and encourage representation. Other commenters thought the

proposed rule would discourage representation.

Response: Like the proposed rule, these final rules contain

slightly different procedures in two areas--the development of

additional evidence and the holding of prehearing conferences. These

differences in procedures result from a claimant's decision to proceed

without representation. We believe that the differences in procedures

are warranted in both instances and that these final rules will not

result in unfair treatment of any claimants. The procedures reflected

in these final rules also involve a continuance of existing practices

in our hearing offices.

Our intent is neither to encourage nor discourage representation.

Rather, under these final rules, and as contemplated by the disability

redesign plan, we will remind the claimant of his or her right to

representation. The information regarding the right to representation

provided by the adjudication officer is designed to prevent delays

caused by a lack of understanding of that right and to encourage the

claimant to decide about the need for representation and choice of

representative as soon as practicable. In all cases, however, the

adjudication officer retains his responsibility to ensure complete

evidentiary development with the claimant and any appointed

representative and will work with the claimant and/or the

representative in developing evidence. The adjudication officer will

assist unrepresented claimants and, if necessary, claimant

representatives in securing evidence. Generally, unrepresented

claimants will more frequently need assistance than represented

claimants. However, all

[[Page 47472]]

claimants will be treated fairly and will be assisted if necessary in

meeting their obligations to produce evidence. That approach continues

current practices under which ALJs exercise a heightened responsibility

in assisting unrepresented claimants.

The adjudication officer and the claimant's representative will

participate in an informal conference. One of the purposes of this

informal conference is to attempt to reach proposed agreements for the

approval of the ALJ regarding the issues which are not in dispute and

those issues proposed for the hearing. However, the adjudication

officer may conduct an informal conference with an unrepresented

claimant, the main purpose of which will be to explain to the claimant

the issues which may arise at the hearing. In addition, if a claimant

obtains representation after the adjudication officer has concluded

that the case is ready for a hearing, the ALJ will return the case for

an informal conference with the adjudication officer. Under current

practice, personnel in our OHA hearing offices generally do not request

unrepresented claimants to participate in prehearing conferences, and

prehearing conferences are sometimes scheduled after a claimant who was

unrepresented obtains representation. The final rules do not contain

specific criteria regarding when an adjudication officer will hold an

informal conference with an unrepresented claimant so that the

adjudication officer will have some discretion in this area.

An essential function of the adjudication officer is to provide a

point of contact for unrepresented claimants in order to explain the

hearing process and the right to representation. The adjudication

officer also will give unrepresented claimants referral sources for

obtaining representation and copies of documents needed in appointing a

representative. Under current practice, personnel in our OHA hearing

offices remind claimants about their right to representation and

provide information about referral sources in acknowledging requests

for a hearing. The purpose of those actions, like the similar actions

to be taken by the adjudication officers, is to encourage prompt and

fully informed decisions about securing representation. There is no

attempt on our part to encourage or discourage representation. Under

the redesigned process, as under the current process, the decision to

proceed with or without representation will continue to be a decision

for the claimant to make.

Comment: Some commenters thought that the proposed rule would

create a new step in the administrative review process, would reduce

claimant access to an ALJ, and delay the adjudication of claims.

Response: An overriding purpose of the disability redesign plan is

to shorten and expedite the administrative process. To reach that goal,

the plan contemplates eventual elimination of the reconsideration step

and the creation of the adjudication officer position. Use of an

adjudication officer is not intended to serve as a replacement for

reconsideration, as some commenters thought. Instead, the disability

redesign plan contemplates the elimination of reconsideration because

the initial determination will be the result of a process that ensures

a more fully developed evidentiary record and provides an opportunity

for the claimant to present additional evidence at a predecision

interview. When a claimant is dissatisfied with the initial

determination and requests an ALJ hearing, the adjudication officer's

role will be to expedite the completion of any necessary prehearing

activities and to issue, where warranted by the evidence, a decision

which is wholly favorable to the claimant without the need for a

hearing.

Under these final rules, adjudication officers will not have

authority to deny claims or to dismiss requests for an ALJ hearing. The

intent of the redesign plan, and these final rules, is to increase

claimant access to the ALJ by reducing the time required to receive an

ALJ hearing in cases in which a hearing is necessary. Moreover, these

final rules preserve a claimant's right to a hearing which will be

conducted by an ALJ, if he or she is dissatisfied with the adjudication

officer's decision.

Comment: Other commenters expressed concern that the proposed rule

would force ALJs to hear cases that are improperly developed. These

commenters stated that the ALJ's authority to consider additional

evidence or issues should be clarified.

Response: We do not agree with the commenters' concerns that these

rules would force ALJs to hear and decide improperly developed cases.

Sections 404.943(b)(4) and 416.1443(b)(4) of the proposed rule stated

that at the point at which a case is referred for a hearing, ``the

administrative law judge conducts all further hearing proceedings,

including scheduling and holding a hearing and issuing a decision or

dismissal of your request for a hearing.'' New Secs. 404.943 and

416.1443 do not deny to an ALJ any authority he or she may exercise

under existing regulations. In order to make this point clearer,

however, we have clarified in these final rules that the proceeding an

ALJ may conduct can include the development of additional evidence.

Comment: Several commenters stated that the provision of the

proposed rule providing that the case would be returned to the

adjudication officer if the claimant obtained representation after the

AO concluded that the case was ready for a hearing, would create delays

and discourage representation.

Response: We do not agree with the commenters, and it is certainly

not our intent to create delays or to discourage representation. We

believe that this procedure will enable us to interact with the

claimant's representative in a better and more timely manner and that

the AO, working with the claimant's representative, will be able to

ensure that the evidentiary record is as complete as possible prior to

the hearing. By ensuring the development of a complete record before

the hearing, we intend that this procedure will expedite both the

hearing and the issuance of a hearing decision.

Comment: A number of commenters thought that the proposed rule was

purposely vague or unclear on how certain issues will be handled in the

process, e.g., the return of cases by an ALJ to an adjudication officer

and whether and how new evidence and issues could be considered by an

ALJ.

Response: As noted above and in the NPRM (60 FR 30482, 30483), new

Secs. 404.943 and 416.1443 establish authority to test having an

adjudication officer be the focal point of prehearing activities, as

described in the disability redesign plan. The redesign plan set forth

a broad description of a new disability process and of the adjudication

officer position and left operational, organizational and other details

of the process to be developed (59 FR 18188). Our intent is not to be

vague or unclear; rather, our intent is to authorize testing in which

detailed operating procedures may be addressed and developed

incrementally. As noted above, however, we have clarified in these

final rules that the ALJ may consider additional evidence, and is not

limited to the record developed by the claimant, his or her

representative and the adjudication officer. We also have clarified

that the written agreements prepared by the adjudication officer with

the claimant's representative are only proposed agreements for the

approval of the ALJ. These agreements are subject to acceptance by and/

or further development by the ALJ at the hearing. In addition, we have

clarified that the ALJ may return the case to the adjudication officer

for further development or to obtain additional

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evidence at any point on or before the date of the hearing.

Comment: Several commenters objected to a perceived acceleration of

the implementation of the adjudication officer, particularly before

other parts of the disability redesign were in place, including the

disability claims manager position called for in the disability

redesign plan.

Response: These final rules establish authority to test the use of

an adjudication officer; they do not establish the authority to

implement the use of the adjudication officer position on a nationwide

basis. The purpose of the rules is to test the use of an adjudication

officer position and its procedures in a variety of sites and

circumstances. We will test the position alone and in combination with

one or more of the tests we are conducting pursuant to the final rules

we recently published on ``Testing Modifications to the Disability

Determination Procedures'' (60 FR 20023). The modifications to be

tested under those rules include the position of disability claims

manager and elimination of the reconsideration level of the existing

disability claims process.

Comment: Two commenters expressed the view that DDS employees are

best suited for the adjudication officer position; five other

commenters stated that the adjudication officer should be an attorney

or have legal training.

Response: Comments regarding the qualifications of the adjudication

officer, throughout the planning process as well as in response to the

NPRM, essentially have fallen into the two categories reflected above.

The Commissioner has made a decision that for testing purposes the

adjudication officer may be an employee of SSA or a State agency that

makes disability determinations for us. The adjudication officer will

be expected to bring relevant experience to the position. While legal

experience is deemed desirable, it is not required, provided the

individual is qualified to communicate effectively in informal

conferences and in writing. The issues regarding whether the

adjudication officer must have the qualifications for an attorney

position are issues upon which testing information is required.

Comment: Two commenters expressed the view that the adjudication

officer should be located in OHA offices only.

Response: We have not adopted this comment. We believe the testing

of the adjudication officer position should not be limited to OHA

sites. Testing the position in a variety of sites will provide

information on the most effective location(s) for the adjudication

officers. We also wish to assess the feasibility of increasing

accessibility to claimants and their representatives by locating the

adjudication officers in community based sites.

Comment: Some of the commenters thought the proposed rule would

violate a claimant's right to due process under the Constitution and a

full and fair hearing under the Act if the rule precluded the ALJ from

considering new evidence or issues at the hearing.

Response: We do not agree that these rules violate a claimant's

right to due process under the Constitution or a full and fair hearing

under the Act in any way. These final rules do not preclude or

interfere with a claimant's right to a full and fair hearing before an

ALJ. Rather, the claimant's right to a hearing conducted by an ALJ is

explicitly preserved even in instances in which the adjudication

officer makes a wholly favorable decision. The preservation of the

claimant's right to an ALJ hearing is consistent with due process and

equal protection under the Constitution. Moreover, the due process

concerns expressed by the commenters were premised on the commenters'

belief that the proposed rule limited the ALJ's ability to consider

additional evidence or issues at the hearing. As we have discussed

above and clarified in these final rules, the ALJ's ability to consider

additional evidence or issues under these final rules remains the same

as it is under our current regulations.

Comment: A number of commenters expressed the view that the

adjudication officer is unnecessary because of the availability of

preferable alternatives, specifically the short-term disability

initiatives we are currently undertaking. Other commenters requested

that we clarify the relationship between the adjudication officer and

the attorney advisors in OHA who have been temporarily authorized to

make fully favorable decisions in certain instances pursuant to the

short-term disability initiatives.

Response: The adjudication officer is part of SSA's long term plans

for redesigning and fundamentally improving the disability claim

process. Our short-term initiatives are designed to process pending

workloads more efficiently, not to bring about the kind of changes that

will fundamentally improve the disability claim process.

The short-term disability initiatives include final rules issued on

June 30, 1995 (60 FR 34126) which temporarily authorize attorney

advisors in OHA to conduct certain prehearing proceedings and, where

appropriate based on the documentary record developed as a result of

these proceedings, to issue decisions that are wholly favorable to the

parties to the hearing. Although there are similarities in functions

under this short-term initiative and the adjudication officer process,

there are substantial differences as well. The primary focus of the

attorney advisor process is on the rapid identification of pending

cases in which a wholly favorable decision can be made without a

hearing. The adjudication officer also will identify claims in which a

wholly favorable decision may be made, but the adjudication officer's

functions are more broadly concerned with the full range of prehearing

activities, particularly development of the record.

Comment: A few commenters expressed concern that the proposed rule

provided no study protocol.

Response: We will have a study and evaluation plan in place to

assure a valid and accurate assessment of the degree to which use of an

adjudication officer attains the goals we wish to achieve before any

national implementation of the process. The approach we are following

in this regard is similar to the approach we are following in the

related testing to be conducted under final rules on ``Testing

Modifications to the Disability Determination Procedures'' (60 FR

20023, 20025).

Comment: Some commenters expressed concern that the proposed rule

provided no clearly defined decision-making standard.

Response: Adjudication officers will be bound by the Social

Security Act, the regulations, and Social Security Rulings, including

Social Security Acquiescence Rulings. They will also rely on other

guidance published by the agency. This is consistent with established

standards of decision making in SSA.

Comment: Other commenters expressed concern that the proposed rule

provided no specific quality assurance review procedures.

Response: We are establishing an intensive quality assurance review

program that will provide us with information regarding the quality of

the adjudication officer work process, as well as the procedures, sites

and the assumptions set out in detail in the disability redesign plan.

In addition, the final rules authorize the Appeals Council to review

the adjudication officer's decision on its own motion. No additional

changes in these final rules or existing regulations are required to

allow us to subject the decisions made by adjudication officers to

quality assurance review procedures.

[[Page 47474]]

Comment: Several commenters expressed concerns that the

adjudication officer position as proposed for testing violated Federal/

State principles applicable in the administration of the Social

Security disability programs, including the principle that States

cannot make decisions.

Response: We are of the opinion that sections 205(b)(1) and

221(a)(1) of the Act give the Commissioner, or her agents, broad

authority to determine rights to benefits under the Act. These sections

contain no language specifically excluding State DDS employees who

adjudicate disability claims for us from acting as agents of the

Commissioner in this regard. Moreover, having DDS employees as

adjudication officers is consistent with SSA's current regulations at

20 CFR 404.1613 and 416.1013 governing Federal and State jurisdiction

with respect to disability determination workloads and adding new

classes of cases and decision-makers.

Comment: Some commenters also expressed concern that the

adjudication officer process would require Federal oversight of

decisions made by employees of State agencies.

Response: The Social Security disability programs under titles II

and XVI of the Act establish a Federal program which includes a role

for the States in the adjudication process. As in all other areas of

the disability programs, the adjudication officer will be subject to

SSA oversight, both in effectuating the adjudication officer's wholly

favorable decisions and in quality assurance functions.

Comment: Several commenters expressed the view that the

adjudication officer process will increase administrative and program

costs, particularly on the basis that the process will not decrease OHA

workloads unless it results in the allowance of many cases.

Response: We are conducting these tests to determine whether use of

an adjudication officer will have an effect on program and

administrative expenditures. The adjudication officer's function is to

provide a focal point for all prehearing activities. While adjudication

officers may issue wholly favorable decisions where warranted, they can

contribute to the improvement of the disability process in other ways

as well. Use of an adjudication officer is not designed to change the

overall allowance rates. Moreover, as set out in the NPRM and above, in

order to determine whether the prehearing procedures result in

processing improvements consistent with expected outcomes, we will

review evaluation results on a quarterly basis and make appropriate

adjustments to, or cease use of, the prehearing procedures consistent

with this regulatory authority if there is evidence that overall

allowance rates increase or decrease unacceptably.

Comment: One commenter suggested changes to the proposed rules to

clarify in several places in the regulations that adjudication officers

may only issue wholly favorable decisions.

Response: We believe these final rules clearly limit the

adjudication officers to making wholly favorable decisions, and do not

require further clarification as suggested by the commenter.

Comment: Two commenters expressed the view that the 30-day comment

period was too short.

Response: We do not agree that a longer comment period was

warranted. We provided a shorter comment period than the 60-day period

we usually provide because of the salutary effect we expect these rules

to have on our ability to improve our service to claimants, and the

importance we place on ensuring that we adjudicate claims timely and

accurately. We also believe that the 30-day period is appropriate in

this instance because we previously provided the public an extended

opportunity to comment on all aspects of the disability redesign plan,

including the establishment of the adjudication officer position.

Comment: One commenter suggested that we add a sentence in

Sec. 404.943(b)(1) to clarify that a claimant's representative will be

allowed to participate in the interview with the claimant.

Response: We have not adopted this comment because the final rules

we are issuing provide authority for us to test the use of an

adjudication officer. They do not change in any way the rules we follow

regarding representation. Our existing regulations at 20 CFR 404.1705

and 416.1505 provide that claimants may obtain representation at any

time. We notify the claimant's representative of any administrative

actions we take, and we also afford the representative the opportunity

to participate in any meetings or interviews which we conduct with the

claimant he or she represents.

Comment: We were also asked by a commenter to clarify in

Sec. 404.943(a)(2) of the regulations that some persons would be

assigned to a control group for purposes of the tests we will conduct

under these final rules.

Response: Although we will have a control group, cases in this

group will be processed in accordance with our current regulations, and

the control group will be used to provide comparative data when we

evaluate the records of cases that were used in our tests. For these

reasons, a specific reference to the control group procedures is not

needed in these final rules, and the change suggested by the commenter

has not been made.

Comment: Two commenters asked us to clarify whether the

adjudication officer would schedule a date for the hearing with an ALJ.

Response: The answer to this question is no. These final rules do

not change our current procedures under which the ALJ schedules the

hearing. However, we will use two new methods in conjunction with the

tests we will conduct under these final rules to facilitate the ability

of the ALJ to schedule a hearing. Under the first method, before the

prehearing procedures are completed, the adjudication officer will ask

the claimant or the claimant's representative to provide two or three

dates within the following 35-50 days on which the claimant and his or

her representative could be available for a hearing. These dates will

be part of the record the adjudication officer forwards to the hearing

office, where the case will be reviewed and a hearing scheduled for one

of the dates in the file. The second method which we intend to test is

one where the adjudication officer will arrange the time and date for

the hearing by having the adjudication officer match a time acceptable

to the claimant and his or her representative with an available hearing

time out of a block of times for a hearing provided by the hearing

office. The block of times will be the time periods within the

following 2 to 3 months when time is available to hold hearings. The

adjudication officer, however, will not access individual ALJ

scheduling calendars and will not schedule a case with a specific ALJ.

Under either procedure, the hearing office will prepare and send out

the hearing notice 20 days prior to the hearing. The objective of both

methods is to ensure that the hearing is scheduled and held in a timely

and efficient manner following the conclusion of the prehearing

procedures.

Comment: One commenter requested that the provision in

Sec. 404.943(c)(1) be revised to clarify the authority of the

adjudication officer to issue a decision after a claim has been

referred to an ALJ, but before the hearing is held.

Response: We have revised Secs. 404.943(b)(4) and 416.1443(b)(4) to

clarify that an ALJ may return a claim to the adjudication officer for

further development prior to the hearing. Under

[[Page 47475]]

the final rules, the ALJ may return the claim to the adjudication

officer on or before the date of the hearing to complete the

development of the evidence and for such other action as necessary. If

the ALJ exercises this authority, the adjudication officer may make a

decision that is wholly favorable to the claimant if it is warranted by

the evidence, or the adjudication officer may refer the claim to the

ALJ when the additional prehearing procedures are completed.

Comment: One commenter requested us to clarify that, when the

claimant or representative is unable to agree with the adjudication

officer that the development of the evidence is complete, the

adjudication officer will note the disagreement and refer the claim to

the administrative law judge for further proceedings.

Response: We agree with the comment and have clarified

Sec. Sec. 404.943(b)(4) and 416.1443(b)(4).

Regulatory Procedures

Executive Order 12866

We have consulted with the Office of Management and Budget (OMB)

and determined that these final rules meet the criteria for a

significant regulatory action under Executive Order 12866. Thus, they

were subject to OMB review. These rules do not adversely affect State,

local or tribal governments. The administrative costs of the tests will

be covered within budgeted resources. No program costs are expected to

result from processing of the test cases. We have not, therefore,

prepared a cost/benefit analysis under Executive Order 12866.

Regulatory Flexibility Act

We certify that these regulations will not have a significant

economic impact on a substantial number of small entities because they

affect only individuals. Therefore, a regulatory flexibility analysis

as provided in Public Law 96-354, the Regulatory Flexibility Act, is

not required.

Paperwork Reduction Act

These regulations impose no new reporting or record keeping

requirements requiring OMB clearance.

(Catalog of Federal Domestic Assistance Program Nos. 96.001, Social

Security-Disability Insurance; 96.006, Supplemental Security Income)

List of Subjects

20 CFR Part 404

Administrative practice and procedure, Death benefits, Disability

benefits, Old-Age, Survivors and Disability Insurance, Reporting and

recordkeeping requirements, Social security.

20 CFR Part 416

Administrative practice and procedure, Aged, Blind, Disability

benefits, Public assistance programs, Supplemental Security Income

(SSI), Reporting and recordkeeping requirements.

Dated: August 23, 1995.

Shirley Chater,

Commissioner of Social Security.

For the reasons set out in the preamble, subpart J of part 404 and

subpart N of part 416 of chapter III of title 20 of the Code of Federal

Regulations are amended as set forth below.

PART 404--FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE

(1950- )

Subpart J--[Amended]

1. The authority citation for subpart J of part 404 continues to

read as follows:

Authority: Secs. 201(j), 205 (a), (b), and (d)-(h), 221(d), 225

and 702(a)(5) of the Social Security Act (42 U.S.C. 401(j), 405 (a),

(b), and (d)-(h), 421(d), 425 and 902(a)(5); 31 U.S.C. 3720A).

2. New Sec. 404.943 is added under the undesignated center heading

``Hearing Before an Administrative Law Judge'' to read as follows:

Sec. 404.943 Responsibilities of the adjudication officer.

(a)(1) General. Under the procedures set out in this section we

will test modifications to the procedures we follow when you file a

request for a hearing before an administrative law judge in connection

with a claim for benefits based on disability where the question of

whether you are under a disability as defined in Sec. 404.1505 is at

issue. These modifications will enable us to test the effect of having

an adjudication officer be your primary point of contact after you file

a hearing request and before you have a hearing with an administrative

law judge. The tests may be conducted alone, or in combination with the

tests of the modifications to the disability determination procedures

which we conduct under Sec. 404.906. The adjudication officer, working

with you and your representative, if any, will identify issues in

dispute, develop evidence, conduct informal conferences, and conduct

any other prehearing proceeding as may be necessary. The adjudication

officer has the authority to make a decision wholly favorable to you if

the evidence so warrants. If the adjudication officer does not make a

decision on your claim, your hearing request will be assigned to an

administrative law judge for further proceedings.

(2) Procedures for cases included in the tests. Prior to commencing

tests of the adjudication officer position in selected site(s), we will

publish a notice in the Federal Register. The notice will describe

where the specific test site(s) will be and the duration of the

test(s). We will also state whether the tests of the adjudication

officer position in each site will be conducted alone, or in

combination with the tests of the modifications to the disability

determination procedures which we conduct under Sec. 404.906. The

individuals who participate in the test(s) will be assigned randomly to

a test group in each site where the tests are conducted.

(b)(1) Prehearing procedures conducted by an Adjudication Officer.

When you file a request for a hearing before an administrative law

judge in connection with a claim for benefits based on disability where

the question of whether you are under a disability as defined in

Sec. 404.1505 is at issue, the adjudication officer will conduct an

interview with you. The interview may take place in person, by

telephone, or by videoconference, as the adjudication officer

determines is appropriate under the circumstances of your case. If you

file a request for an extension of time to request a hearing in

accordance with Sec. 404.933(c), the adjudication officer may develop

information on, and may decide where the adjudication officer issues a

wholly favorable decision to you that you had good cause for missing

the deadline for requesting a hearing. To determine whether you had

good cause for missing the deadline, the adjudication officer will use

the standards contained in Sec. 404.911.

(2) Representation. The adjudication officer will provide you with

information regarding the hearing process, including your right to

representation. As may be appropriate, the adjudication officer will

provide you with referral sources for representation, and give you

copies of necessary documents to facilitate the appointment of a

representative. If you have a representative, the adjudication officer

will conduct an informal conference with the representative, in person

or by telephone, to identify the issues in dispute and prepare proposed

written agreements for the approval of the administrative law judge

regarding those issues which are not in dispute and those issues

proposed for the

[[Page 47476]]

hearing. If you decide to proceed without representation, the

adjudication officer may hold an informal conference with you. If you

obtain representation after the adjudication officer has concluded that

your case is ready for a hearing, the administrative law judge will

return your case to the adjudication officer who will conduct an

informal conference with you and your representative.

(3) Evidence. You, or your representative, may submit, or may be

asked to obtain and submit, additional evidence to the adjudication

officer. As the adjudication officer determines is appropriate under

the circumstances of your case, the adjudication officer may refer the

claim for further medical or vocational evidence.

(4) Referral for a hearing. The adjudication officer will refer the

claim to the administrative law judge for further proceedings when the

development of evidence is complete, and you or your representative

agree that a hearing is ready to be held. If you or your representative

are unable to agree with the adjudication officer that the development

of evidence is complete, the adjudication officer will note your

disagreement and refer the claim to the administrative law judge for

further proceedings. At this point, the administrative law judge

conducts all further hearing proceedings, including scheduling and

holding a hearing (Sec. 404.936), considering any additional evidence

or arguments submitted (Secs. 404.935, 404.944, 404.949, 404.950), and

issuing a decision or dismissal of your request for a hearing, as may

be appropriate (Secs. 404.948, 404.953, 404.957). In addition, if the

administrative law judge determines on or before the date of your

hearing that the development of evidence is not complete, the

administrative law judge may return the claim to the adjudication

officer to complete the development of the evidence and for such other

action as necessary.

(c)(1) Wholly favorable decisions issued by an adjudication

officer. If, after a hearing is requested but before it is held, the

adjudication officer decides that the evidence in your case warrants a

decision which is wholly favorable to you, the adjudication officer may

issue such a decision. For purposes of the tests authorized under this

section, the adjudication officer's decision shall be considered to be

a decision as defined in Sec. 404.901. If the adjudication officer

issues a decision under this section, it will be in writing and will

give the findings of fact and the reasons for the decision. The

adjudication officer will evaluate the issues relevant to determining

whether or not you are disabled in accordance with the provisions of

the Social Security Act, the rules in this part and part 422 of this

chapter and applicable Social Security Rulings. For cases in which the

adjudication officer issues a decision, he or she may determine your

residual functional capacity in the same manner that an administrative

law judge is authorized to do so in Sec. 404.1546. The adjudication

officer may also evaluate the severity of your mental impairments in

the same manner that an administrative law judge is authorized to do so

under Sec. 404.1520a. The adjudication officer's decision will be based

on the evidence which is included in the record and, subject to

paragraph (c)(2) of this section, will complete the actions that will

be taken on your request for hearing. A copy of the decision will be

mailed to all parties at their last known address. We will tell you in

the notice that the administrative law judge will not hold a hearing

unless a party to the hearing requests that the hearing proceed. A

request to proceed with the hearing must be made in writing within 30

days after the date the notice of the decision of the adjudication

officer is mailed.

(2) Effect of a decision by an adjudication officer. A decision by

an adjudication officer which is wholly favorable to you under this

section, and notification thereof, completes the administrative action

on your request for hearing and is binding on all parties to the

hearing and not subject to further review, unless--

(i) You or another party requests that the hearing continue, as

provided in paragraph (c)(1) of this section;

(ii) The Appeals Council decides to review the decision on its own

motion under the authority provided in Sec. 404.969;

(iii) The decision is revised under the procedures explained in

Secs. 404.987 through 404.989; or

(iv) In a case remanded by a Federal court, the Appeals Council

assumes jurisdiction under the procedures in Sec. 404.984.

(3) Fee for a representative's services. The adjudication officer

may authorize a fee for your representative's services if the

adjudication officer makes a decision on your claim that is wholly

favorable to you, and you are represented. The actions of, and any fee

authorization made by, the adjudication officer with respect to

representation will be made in accordance with the provisions of

subpart R of this part.

(d) Who may be an adjudication officer. The adjudication officer

described in this section may be an employee of the Social Security

Administration or a State agency that makes disability determinations

for us.

PART 416--SUPPLEMENTAL SECURITY INCOME FOR THE AGED, BLIND, AND

DISABLED

1. The authority citation for subpart N continues to read as

follows:

Authority: Sec. 702(a)(5), 1631, and 1633 of the Social Security

Act (42 U.S.C. 902(a)(5), 1383, and 1383b).

2. New Sec. 416.1443 is added under the undesignated center heading

``Hearing Before an Administrative Law Judge'' to read as follows:

Sec. 416.1443 Responsibilities of the adjudication officer.

(a)(1) General. Under the procedures set out in this section we

will test modifications to the procedures we follow when you file a

request for a hearing before an administrative law judge in connection

with a claim for benefits based on disability where the question of

whether you are under a disability as defined in Secs. 416.905 and

416.906 is at issue. These modifications will enable us to test the

effect of having an adjudication officer be your primary point of

contact after you file a hearing request and before you have a hearing

with an administrative law judge. The tests may be conducted alone, or

in combination with the tests of the modifications to the disability

determination procedures which we conduct under Sec. 416.1406. The

adjudication officer, working with you and your representative, if any,

will identify issues in dispute, develop evidence, conduct informal

conferences, and conduct any other prehearing proceeding as may be

necessary. The adjudication officer has the authority to make a

decision wholly favorable to you if the evidence so warrants. If the

adjudication officer does not make a decision on your claim, your

hearing request will be assigned to an administrative law judge for

further proceedings.