SSR 72-37c: SECTION 224(a) (42 U.S.C. 424(a)). -- DISABILITY INSURANCE BENEFITS -- REDUCTION UPON RECEIPT OF STATE WORKMEN'S COMPENSATION PAYMENTS -- CONSTITUTIONALITY

20 CFR 404.408

SSR 72-37c

Richardson v. Belcher , 404 U.S. 78, 92 Sup. Ct. 254 (Supreme Court

of the United States, November 22, 1971)

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 January 1969, the federal payment was reduced to $225.30

monthly after the "offset" provision of Section 224 of the Social Security

Act. 79 Stat. 406, 42 U.S.C. § 424a (1970

ed.), [1] 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 exhausting his

administrative remedies, the appellee brought this action challenging the

reduction of payments required by § 224 on the grounds that the statutory

provision deprived him of the due process of law guaranteed by the Fifth

Amendment. The District Judge, disagreeing with other courts that have

considered the question, [2] held

the statute unconstitutional. 317 F.Supp. 1294. The Secretary appealed

directly to this Court under 28 U.S.C. §

1252. [3] 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 constitutionality 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 payments as

would make every defeasance of 'accrued' interests violative of the Due

Process Clause of the Fifth Amendment." Flemming 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

ents as

would make every defeasance of 'accrued' interests violative of the Due

Process Clause of the Fifth Amendment." Flemming 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 contractual right to receive the expected amounts. Our

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

District Court relied, held that as a matter of procedural due process the

interest of a welfare recipient in the continued payment of benefits is

sufficiently fundamental 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 f. 8, cannot be

stretched to impose a constitutional limitation on the power of Congress

to make substantive changes in the law of entitlement to public

benefits.

To characterize an act of Congress as conferring a "public benefit" does

not, of course, immunize it from scrutiny under the Fifth Amendment. We

have held that "[t]he interest of a covered employee under the [Social

Security] Act is of sufficient substance to fall within the protection

from arbitrary governmental action afforded by the Due Process Clause." Flemming v. Nestor , 363 U.S., 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 in treatment is

constitutionally invalid.

Due Process Clause." Flemming v. Nestor , 363 U.S., 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 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.

Williams , 397 U.S. 471, 487. While the present case, involving as it

does a federal statute, does not directly implicate the Fourteenth

Amendment's Equal Protection Clause, a classification which meets the test

articulated in Dandridge is perforce consistent with the due

process requirement of the Fifth Amendment. Cf. Bolling v. Sharpe ,

347 U.S. 497, 499.

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 insurance

program, required a full offset of state or

federal [4] workmen's

compensation payments against benefits payable under federal disability

insurance. 70 Stat. 816. It is self-evident that the offset reflected a

judgment by Congress that the workmen's compensation and disability

insurance programs in certain instances served a common purpose, and that

the workmen's compensation 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 undesirable results [was] not of sufficient importance to

justify reduction of the social security disability benefits." H.R. Rep.

No

ommon purpose, and that

the workmen's compensation 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 undesirable 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 disability insurance programs,

Congress re-examined the problem in 1965. Data submitted to the

legislative committees 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 compensation for his disability in excess of

his take-home pay prior to the disability. Hearings on H.R. 6675 before

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

programs. Furthermore, it was anticipated that a perpetuation of the

duplication in benefits might lead to the erosion of the workmen's

compensation programs. [5] The

legislative response was § 224, which, by limiting total state and federal

benefits to 80% of the employee's average earnings prior to the

disability, reduced the duplication inherent in the programs and at the

same time allowed a supplement to workmen's compensation where the state

payments were inadequate.

fits might lead to the erosion of the workmen's

compensation programs. [5] The

legislative response was § 224, which, by limiting total state and federal

benefits to 80% of the employee's average earnings prior to the

disability, reduced the duplication inherent in the programs and at the

same time allowed 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 rational basis to

distinguish workmen's compensation from private insurance. We agree that a

statutory discrimination between two like classes cannot be rationalized

by assigning them different labels, but neither can two unlike classes be

made indistinguishable by attaching to them a common label. The original

purpose of state workmen's compensation laws was to satisfy a need

inadequately met by private insurance or tort claim awards, Congress could

rationally conclude that this need should continue to be met primarily by

the States, and that a federal program which began to duplicate the

efforts of the States might lead to the gradual weakening or atrophy of

the state programs.

We have no occasion, within our limited function under 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 apprehensions of Congress

were justified by the facts. If the goals sought are legitimate, and the

classification adopted is rationally related to the achievement of those

goals, then the action of Congress is not so arbitrary as to violate the

Due Process Clause of the Fifth Amendment.

The judgment is

Reversed .

to recipients of private

insurance, or to judge for ourselves whether the apprehensions of Congress

were justified by the facts. If the goals sought are legitimate, and the

classification adopted is rationally related to the achievement of those

goals, then the action of Congress is not so arbitrary as to violate the

Due Process Clause of the Fifth Amendment.

The judgment is

Reversed .

[Mr. Justice Douglas filed a dissenting opinion. Mr. Justice Marshall

filed a separate dissenting opinion, in which Mr. Justice Brennan

joined.]

[1] Section 224 provides, in

pertinent part:

[2] E.g., Gambill v.

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, April 29, 1971; Gooch v. Finch ,

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

69-170, ED Ill., 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 interlocutory 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 employee, is a party."

, _____ F.2d _____ (CA7 1971).

[3] "Any party may appeal to the

Supreme Court from an interlocutory 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 employee, is a party."

[4] The 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 . (1970 ed),

applicable to employees in the District of Columbia and in

maritime-related occupations, and the Federal Employees' Compensation Act,

80 Stat. 532, 5 U.S.C. §§ 8101 et seq . (1970 ed), 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 generally to workmen's compensation as a program of

the States.

[5] The Senate Committee on

Finance, with whom the 1965 amendment originated, took note of "the

concern 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." S. Rep. No. 404, 89th Cong.,

1st Sess., p. 100. Testimony concerning the anticipated effects of

duplication upon the future of the state programs appears in Hearings on

H.R. 6675 before the Senate Committee on Finance, 89th Cong., 1st Sess.,

at 252, 259, 366, 540, 738-740, 892-897, 949-954, 990.