Administrative Review Process; Identification and Referral of Cases for Quality Review Under the Appeals Council's Authority To Review Cases on Its Own Motion

Federal RegisterSep 25, 1997

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SOCIAL SECURITY ADMINISTRATION

20 CFR Parts 404 and 416

RIN 0960-AE53

Administrative Review Process; Identification and Referral of

Cases for Quality Review Under the Appeals Council's Authority To

Review Cases on Its Own Motion

AGENCY: Social Security Administration.

ACTION: Proposed rules.

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SUMMARY: We propose to amend our regulations to include the rules under

which a decision or order of dismissal that is issued after the filing

of a request for a hearing by an administrative law judge (ALJ) will be

referred to the Appeals Council for possible review under the Appeals

Council's existing authority to review cases on its own motion. The

proposed rules concern identification and referral procedures that we

currently follow to ensure the accuracy of decisions at the ALJ-hearing

step (hearing level) of the administrative review process, and new

quality assurance procedures that we are proposing under the Plan for a

New Disability Claim Process approved by the Commissioner of Social

Security in September 1994 (59 FR 47887). The procedures set forth in

the proposed rules apply to dispositions at the hearing level of the

administrative review process that are made by ALJs, and also to

dispositions at the hearing level that are not made by ALJs but are

subject to review under the Appeals Council's own-motion authority. The

latter type of dispositions currently consist of wholly favorable

decisions issued by attorney advisors and adjudication officers.

DATES: To be sure that your comments are considered, we must receive

them no later than November 24, 1997.

ADDRESSES: Comments should be submitted in writing to the Commissioner

of Social Security, P.O. Box 1585, Baltimore, MD 21235; sent by telefax

to (410) 966-2830; sent by E-mail to ``[email protected]''; or,

delivered to the Division of Regulations and Rulings, Social Security

Administration, 3-B-1 Operations Building, 6401 Security Boulevard,

Baltimore, MD 21235, between 8:00 A.M. and 4:30 P.M. on regular

business days. Comments may be inspected during these same hours by

making arrangements with the contact person shown below.

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

Division of Regulations and Rulings, Social Security Administration,

6401 Security Boulevard, Baltimore, MD 21235, (410) 965-6243 for

information about these rules. For information on eligibility or

claiming benefits, call our national toll-free number, 1-800-772-1213.

SUPPLEMENTARY INFORMATION:

Background

Under procedures set forth in Secs. 404.967 ff. and 416.1467 ff.,

and pursuant to a direct delegation of authority from the Commissioner

of Social Security (see 61 FR 35844, 35852, July 8, 1996), the Appeals

Council, a component in our Office of Hearings and Appeals (OHA),

reviews hearing decisions and orders of dismissal issued by ALJs of the

Social Security Administration (SSA). The Appeals Council may review a

decision or dismissal action of an ALJ at the request of a party to the

action or, under authority provided in Secs. 404.969 and 416.1469, on

its own motion. Through the exercise of its authority to review cases,

the Appeals Council is responsible for ensuring that the final

decisions of the Commissioner of Social Security under titles II and

XVI of the Social Security Act (the Act), as amended, are proper and in

accordance with the law, regulations, and binding agency policy.

The Appeals Council's authority to review cases on its own motion

also applies, at present, to two types of hearing-level cases that do

not result in decisions by ALJs. Under Secs. 404.942 and 416.1442,

attorney advisors of OHA are temporarily authorized to conduct certain

prehearing proceedings and to issue, where warranted by the documentary

evidence, wholly favorable decisions. Under the provisions of

Secs. 404.942 (e)(2) and (f)(3) and 416.1442 (e)(2) and (f)(3), such

decisions are subject to review under the own-motion authority of the

Appeals Council established in Secs. 404.969 and 416.1469. In addition,

under Secs. 404.943 and 416.1443, adjudication officers are authorized,

for test purposes, to conduct certain prehearing proceedings and to

issue, where warranted by the documentary evidence, wholly favorable

decisions. Under the provisions of Secs. 404.943(c)(2)(ii) and

416.1443(c)(2)(ii), such decisions are also subject to review on the

Appeals Council's own motion.

Under our regulations on the Appeals Council's procedures, if the

Appeals Council decides to review a case in response to a request for

review or on its own motion, it may issue a decision or remand the case

to an ALJ. The Appeals Council may also dismiss a request for hearing

for any reason that the ALJ could have dismissed the request.

A decision by the Appeals Council ``to review'' a hearing-level

decision means that the Appeals Council assumes jurisdiction to cause

that decision not to be the final decision of the Commissioner of

Social Security. A decision that the Appeals Council ``reviews'' will

be replaced by a new final action in the case, either by a decision or

dismissal order of the

[[Page 50267]]

Appeals Council or, if a hearing or other hearing-level proceedings are

required, by a decision or dismissal order issued following remand of

the case from the Council to an ALJ.

A decision by the Appeals Council to review a case is made when,

following a preliminary consideration of all aspects of the case to

determine if review is appropriate, the Council issues a notice

announcing a decision to review. The Council's standard notice of

review advises the parties of the reasons for the review and (unless

the Council issues a wholly favorable decision upon taking review) the

issues to be considered in proceedings before the Council or before an

ALJ on remand. In instances in which the Council reviews a hearing

level decision that has been issued based on the documentary evidence

without the holding of an oral hearing by an ALJ, the parties have the

right to such a hearing, except where the parties waive that right in

writing.

The existing provisions in Secs. 404.969 and 416.1469 on the

Appeals Council's authority to review cases on its own motion provide

that the Appeals Council itself may decide to review a case within 60

days after the date of the hearing decision or dismissal and that, if

the Council does review a case under this authority, it will provide

notice to the parties to the hearing decision or dismissal action.

Sections 404.969 and 416.1469 do not currently address the procedures

we use in identifying and referring cases to the Appeals Council for it

to consider for possible review on its own motion.

The Appeals Council has broad authority to review any case on its

own motion pursuant to Secs. 404.969 and 416.1469. The conditions under

which the Appeals Council will review a case, on request for review or

on its own motion, are set forth in Secs. 404.970 and 416.1470. Those

sections provide that the Council will review a case if: (1) There

appears to be an abuse of discretion by the ALJ; (2) there is an error

of law; (3) the action, findings or conclusions of the ALJ are not

supported by substantial evidence; or (4) there is a broad policy or

procedural issue that may affect the general public interest. Sections

404.970 and 416.1470 further provide that the Council will also review

a case if new and material evidence is submitted that relates to the

period on or before the date of the ALJ's decision and the Council

finds, upon evaluating the evidence of record and the additional

evidence, that an action, a finding or a conclusion of the ALJ is

contrary to the weight of the evidence currently of record as a whole.

In fiscal year 1996 (FY '96), the Appeals Council received 99,735

requests for review filed by parties to the actions of ALJs. Most of

the requests were for review of unfavorable decisions and dismissal

actions; some concerned partially favorable decisions. In FY '96, the

Council also considered 8,602 cases for possible review on its own

motion. Almost all of these cases involved favorable hearing-level

decisions that were referred to the Appeals Council under one of two

types of identification and referral procedures we currently use--

random sample procedures, which generated the majority of this workload

in FY '96, and ``protest'' procedures.

Existing Identification and Referral Procedures

Section 304(g) of Public Law 96-265 (1980) required SSA to

implement a program for initiating review of ALJ decisions in

disability claims. Under section 304(g), the Appeals Council considers,

for possible review on its own motion, a national random sample of

favorable ALJ decisions that have not been implemented, and, as

resources permit, a random sample of unappealed denial decisions and

dismissals. (See Social Security Ruling 82-13.)

The Appeals Council also considers, for possible review on its own

motion, a random sample of wholly favorable decisions issued by

attorney advisors under the time-limited provisions of Secs. 404.942

and 416.1442. Wholly favorable decisions issued by adjudication

officers under the testing provisions of Secs. 404.943 and 416.1443 are

also identified by random sampling for referral to the Appeals Council

for possible own-motion review. These procedures have been established

in accordance with commitments we made, in publishing the final rules

for the attorney advisor and adjudication officer provisions, to assess

carefully the quality of the decisions issued by the attorney advisors

and the adjudication officers (see 60 FR 34127 and 60 FR 47471,

respectively).

Our existing identification and referral procedures also include

those under which the SSA components responsible for implementing

hearing-level decisions--SSA Processing Centers (PCs) and Field Offices

(FOs)--refer (``protest'') certain cases to the Appeals Council for

possible review under its own motion authority. The PCs, which include

our Program Service Centers and the Office of Disability and

International Operations, refer cases directly to the Appeals Council;

FOs forward cases to a PC or an SSA Regional Office, which decides if

the PC or the Regional Commissioner should make a referral to the

Council.

The decisions of ALJs and the decisions currently issued by

attorney advisors and adjudication officers are subject to referral to

the Appeals Council under our protest procedures. Almost all protested

decisions are favorable decisions because almost all of the ALJ

decisions that require implementation are wholly or partially favorable

decisions under which benefit payments are to be effectuated (initiated

or continued), and because all decisions issued by attorney advisors

and adjudication officers are favorable. In protesting a decision, an

effectuating component may recommend that the decision be made more or

less favorable or unfavorable.

Effectuating components refer a case if the need for referral is

believed to be clear (not dependent on a judgment factor) because of

one of the following circumstances: (1) The decision contains a

clerical error which affects the outcome of the claim; (2) the decision

is clearly contrary to the Act, regulations or rulings; or (3) the

decision cannot be effectuated because its intent is unclear as to an

issue affecting the claim's outcome.

Effectuating components refer cases to the Appeals Council by

written memoranda. If the Council decides to review a referred case, it

provides the parties a copy of the effectuating component's referral

memorandum with the notice by which it advises the parties that it will

review the case.

We are proposing to amend our regulations to include rules on the

existing random sample and protest procedures discussed above. We have

decided to propose rules setting forth these procedures in connection

with our decision to propose, in furtherance of the Plan for a New

Disability Claim Process, that the Appeals Council's own-motion

functions be strengthened by establishment of a new process for

identifying and referring cases for possible review under the Council's

existing own-motion authority.

New Identification and Referral Procedures

The Appeals Council currently considers only a small percentage of

all favorable decisions issued at the hearing level for possible review

under its own-motion authority. (In FY '96, the Council's workload in

this area represented fewer than 3 percent of such decisions in that

year.) In addition, the processes we currently use to select decisions

for possible review on the Appeals Council's own motion are generally

not designed to identify, in

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any systematic way, hearing-level decisions that are likely to be

incorrect. The random sample processes bringing cases before the

Appeals Council do not identify cases other than by techniques designed

to assure randomness of selection within broadly identified categories

(i.e., allowances, unappealed denials, and dismissals). The

identification of ``protest'' cases that occurs in the effectuation

process is a secondary function of a process that is principally

focused on the prompt payment of benefits.

Based on the above considerations, we are proposing to establish

procedures under which our Office of Program and Integrity Reviews

(OPIR), the SSA component that oversees the review of State agency

determinations made under section 221(c) of the Act, will examine

certain allowance decisions at the hearing level and refer to the

Appeals Council the decisions that may not be supported by the record.

Decisions that have been issued at the hearing level will be included

in the OPIR-conducted examination process by random sampling and, as we

develop the computer systems and other technical capacities needed to

support this function, selective sampling that will rely on case

profiling and other sampling techniques to identify cases that involve

problematic issues or fact patterns that increase the likelihood of

error.

Under the proposed process, upon referral of a case by OPIR, the

Appeals Council would consider the case and OPIR's reasons for

believing the decision is not supported by the record and decide

whether to review the case in accordance with Secs. 404.969-404.970

and/or 416.1469-416.1470. If the Appeals Council decides to review an

OPIR-referred case, it would provide the parties a copy of OPIR's

referral with its notice of review. The 60-day time limit for the

Appeals Council to initiate review of a case under the authority and

standards provided in Secs. 404.969-404.970 and 416.1469-416.1470 would

apply to cases the Council considers for review in response to

referrals from OPIR.

Section 304(g) of Public Law 96-265 (see above) does not specify

the kind of identification and referral procedures that SSA should use

in implementing a program for initiating review of ALJ decisions in

disability cases. We believe that use of the new procedures we are

proposing, in combination with the existing identification and referral

procedures that we are proposing to regulate, would be consistent with

the kind of review contemplated by section 304.

An important purpose of the new procedures we are proposing is to

increase our ability to identify policy issues that should be clarified

through publication of regulations or rulings. We plan to monitor how

our policies are understood and implemented by post-adjudicative

evaluation of cases that are shown, as a result of their referral to

the Appeals Council, to pose significant policy or program issues.

Proposed Regulations

We propose to revise Secs. 404.969 and 416.1469, the regulations

that set forth the Appeals Council's authority to review cases on its

own motion, to state that we refer cases to the Appeals Council for it

to consider reviewing on its own motion. As proposed for revision,

Secs. 404.969 and 416.1469 describe the identification and referral

procedures we will follow and the action of the Appeals Council in

cases it considers for possible review on its own motion.

Sections 404.969 and 416.1469 as proposed will apply to all cases

that our regulations make subject to review on the Appeals Council's

own motion. These currently include, in addition to cases involving ALJ

decisions and dismissals, cases involving wholly favorable decisions

issued by attorney advisors under the time-limited provisions of

Secs. 404.942 and 416.1442, and cases involving wholly favorable

decisions issued by adjudication officers under the test procedures set

out in Secs. 404.943 and 416.1443.

Proposed Secs. 404.969(b) and 416.1469(b) specify that we will

identify a case for referral to the Appeals Council for possible review

under its own-motion authority before we effectuate a decision in the

case. These sections also provide that we will identify cases for

referral through random and selective sampling techniques, that we may

use these techniques in association with examination of the cases

identified by sampling, and that we will also identify cases for

referral through the evaluation of cases we conduct in order to

effectuate decisions.

Under Secs. 404.969(b)(1) and 416.1469(b)(1) as proposed, we may

conduct random and selective sampling of cases involving all types of

actions that occur at the hearing level of the administrative review

process (i.e., wholly or partially favorable decisions, unfavorable

decisions, or dismissals) and any type of title II or title XVI

benefits (i.e., different types of benefits based on disability and

benefits not based on disability). Our decision to propose these rules

rests on our conclusion that we should increase the number of favorable

disability decisions the Appeals Council considers for possible review

on its own motion to better balance review of favorable and unfavorable

decisions. However, the Council's existing authority to review cases on

its own motion covers all types of title II and title XVI cases

adjudicated at the hearing level, and these proposed rules will allow

use of the identification and referral procedures being set forth with

respect to all such cases.

Sections 404.969(b)(1) and 416.1469(b)(1) as proposed specify that

we will use selective sampling to identify cases that exhibit

problematic issues or fact patterns that increase the likelihood of

error. Under the provisions as proposed, the factors considered in

selective sampling will not include the identity of the decisionmaker

or the identity of the office issuing the decision.

Proposed Secs. 404.969(b)(1) and 416.1469(b)(1) also authorize but

do not require that we examine cases that have been identified through

random or selective sampling. Cases may be identified for referral by

random or selective sampling. The purpose of the examination of cases

that we may conduct is to refine the identification of cases in which

the action that has been taken is not supported.

Proposed Secs. 404.969(b)(2) and 416.1469(b)(2) provide that

effectuating components will identify cases for referral under criteria

presently used to identify clear error and circumstances preventing

effectuation of a decision. Any type of decision requiring effectuation

may be identified for referral under these provisions.

Under Secs. 404.969(c) and 416.1469(c), as proposed, we will make

referrals that occur as the result of a case examination or the

effectuation process in writing. The written referral will state the

referring component's reasons for believing that the Appeals Council

should review the case on its own motion. Sections 404.969(c) and

416.1469(c) as proposed also provide that referrals resulting from

selective sampling without a case examination may be accompanied by a

written statement identifying the issue(s) or fact pattern that caused

the referral, and that referrals resulting from random sampling without

a case examination will only identify the case as a random sample case.

A statement of the issue(s) or fact pattern identified in selective

sampling may be computer generated.

Proposed Secs. 404.969(d) and 416.1469(d) specify that the Appeals

Council's notice of review will include a copy of any written referral

provided

[[Page 50269]]

to the Appeals Council. These provisions also include language to state

clearly our long-standing policy that issuance of the notice of review

establishes when a decision to conduct a review occurs.

We are also proposing to include in Secs. 404.969(d) and

416.1469(d) a statement specifying our policy that, when the Appeals

Council is unable to decide whether to review a case on its own motion

within the 60-day period in which it may do so, it may consider whether

the decision should be reopened under the provisions of Secs. 404.987

and/or 416.1487, which authorize the Council to reopen a final decision

on its own initiative or at the request of a party to the decision, if

a condition for reopening stated in Secs. 404.988 and/or 416.1488 is

present. We are including this statement in the regulations to clarify

our long-standing policy that the Appeals Council may also reopen final

decisions in accordance with Secs. 404.987 and 416.1487 after the 60

days for initiating review under Secs. 404.969 and 416.1469 have

expired.

Electronic Version

The electronic file of this document is available on the Federal

Bulletin Board (FBB) at 9:00 a.m. on the date of publication in the

Federal Register. To download the file, modem dial (202) 512-1387. The

FBB instructions will explain how to download the file and the fee.

This file is in WordPerfect and will remain on the FBB during the

comment period.

Regulatory Procedures

Executive Order 12866

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

and determined that these rules do meet the criteria for a significant

regulatory action under Executive Order 12866. They were therefore

submitted to OMB for review.

Regulatory Flexibility Act

We certify that these regulations will not have a significant

economic impact on a substantial number of small entities because these

rules affect only individuals. Therefore, a regulatory flexibility

analysis as provided in the Regulatory Flexibility Act, as amended, 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; 96.002, Social Security-Retirement

Insurance; 96.003, Social Security-Special Benefits for Persons Aged

72 and Over; 96.004, Social Security-Survivors 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: September 12, 1997.

John J. Callahan,

Acting 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 proposed to be amended as set forth below.

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

(1950- )

20 CFR part 404, subpart J, is amended as follows:

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

read as follows:

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

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

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

3720A; sec. 304(g), Pub. L. 96-265, 94 Stat. 456 (42 U.S.C. 421

note); sec. 5, Pub. L. 97-455, 96 Stat. 2500 (42 U.S.C. 405 note);

secs. 5, 6 (c)-(e), and 15, Pub. L. 98-460, 98 Stat. 1802 (42 U.S.C.

421 note).

2. Section 404.969 is revised to read as follows:

Sec. 404.969 Appeals Council initiates review.

(a) General. Anytime within 60 days after the date of a decision or

dismissal that is subject to review under this section, the Appeals

Council may decide on its own motion to review the action that was

taken in your case. We may refer your case to the Appeals Council for

it to consider reviewing under this authority.

(b) Identification of cases. We will identify a case for referral

to the Appeals Council for possible review under its own-motion

authority before we effectuate a decision in the case. We will identify

cases for referral to the Appeals Council through random and selective

sampling techniques, which we may use in association with examination

of the cases identified by sampling. We will also identify cases for

referral to the Appeals Council through the evaluation of cases we

conduct in order to effectuate decisions.

(1) Random and selective sampling and case examinations. We may use

random and selective sampling to identify cases involving any type of

action (i.e., wholly or partially favorable decisions, unfavorable

decisions, or dismissals) and any type of benefits (i.e., benefits

based on disability and benefits not based on disability). We will use

selective sampling to identify cases that exhibit problematic issues or

fact patterns that increase the likelihood of error. Our selective

sampling procedures will not identify cases based on the identity of

the decisionmaker or the identity of the office issuing the decision.

We may examine cases that have been identified through random or

selective sampling to refine the identification of cases in which the

action taken may not be supported by the record.

(2) Identification as a result of the effectuation process. We may

refer a case requiring effectuation to the Appeals Council if the

decision cannot be effectuated because it contains a clerical error

affecting the outcome of the claim; the decision is clearly

inconsistent with the Social Security Act, the regulations, or a

published ruling; or the decision is unclear regarding a matter that

affects the claim's outcome.

result of a case examination or the effectuation process in writing.

The written referral based on the results of such a case examination or

the effectuation process will state the referring component's reasons

for believing that the Appeals Council should review the case on its

own motion. Referrals that result from selective sampling without a

case examination may be accompanied by a written statement identifying

the issue(s) or fact pattern that caused the referral. Referrals that

result from random sampling without a case examination will only

identify the case as a random sample case.

(d) Appeals Council's action. If the Appeals Council decides to

review a decision or dismissal on its own motion, it will mail a notice

of review to all the parties as provided in Sec. 404.973. The Appeals

Council will include with that notice a copy of any written referral it

has received under paragraph (c) of this section. The Appeals Council's

decision

[[Page 50270]]

to review a case is established by its issuance of the notice of

review. If it is unable to decide within the applicable 60-day period

whether to review a decision or a dismissal, the Appeals Council may

consider the case to determine if the decision or dismissal should be

reopened pursuant to Sec. 404.987.

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

DISABLED

20 CFR part 416, subpart N, is amended as follows:

1. The authority citation for subpart N is revised 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); sec. 304(g), Pub. L. 96-

265, 94 Stat. 456 (42 U.S.C. 421 note).

2. Section 416.1469 is revised to read as follows:

Sec. 416.1469 Appeals Council initiates review.