SSR 72-63c: SECTION 223(b) (42 U.S.C. 423(b)). -- DISABILITY INSURANCE BENEFITS -- APPLICATION REQUIREMENT -- LIMITATION ON RETROACTIVITY

20 CFR 404.601(d) and 404.607(b)

SSR 72-63c

Tillman v. Richardson , U.S.D.C., M.D. Ala., Civil

Action No. 904-E (11/19/71)

JOHNSON, District Judge:

On January 7, 1964, Barbara B. Tillman was admitted to Bryce Hospital.

She was diagnosed as having personality trait disturbance, emotionally

unstable personality. [1] On

September 19, 1968, John W. Tillman, her husband next friend, filed an

application [2] for the

establishment of a period of disability and for disability benefits on his

wife's earning record. The application alleged as the date of onset

January 7, 1964 [3] the date of

admission to Bryce Hospital. On March 17, 1970, a hearing examiner of the

Bureau of Hearings and Appeals, Social Security Administration, decided

"that the wage earner, based on application filed on September 19, 1968,

is entitled to a period of disability commencing on January 7, 1964, and

to disability insurance benefits under Sections 216(i) and 223,

respectively, of the Social Security Act, as

amended. [4] The decision became

the "final decision" of the defendant Secretary. This action followed.

The only dispute between the parties is the petitioner's contention "that

she is entitled to disability insurance benefits for the entire period of

time beginning January 7, 1964, through September, 1967, which period of

time the examiner found the petitioner to be laboring under a mental

disablement that was totally incapacitation." This issue was first raised

at the conclusion of the hearing when the hearing examiner commented that

in the event of a ruling for the plaintiff "benefits would be payable as

of September, 1967." [5]

time beginning January 7, 1964, through September, 1967, which period of

time the examiner found the petitioner to be laboring under a mental

disablement that was totally incapacitation." This issue was first raised

at the conclusion of the hearing when the hearing examiner commented that

in the event of a ruling for the plaintiff "benefits would be payable as

of September, 1967." [5]

All benefits for the period commencing with the month of September, 1967,

have been paid. The plaintiff now seeks a determination that she is

entitled to benefits for months during her period of disability commencing

in January, 1964, through the month of August, 1967. The Secretary denies

that the plaintiff is entitled to such benefits and relies upon Section

223 of the Social Security Act, as amended, 42 SC 423(b) which provides in

pertinent part that:

In the quoted language, Congress clearly recognized that an individual

could be under a "disability" as defined in the

statute [6] and yet not be

"entitled to a disability insurance benefit." In order to "be entitled to

a disability insurance benefit" congress established four conditions

precedent. 42 USC 423(a)(1)(A-D, inclusive). those conditions are that the

individual seeking to become "entitled to a disability insurance benefit"

by (1) insured; 92) under the age of sixty-five; (3) file an application

for benefits; and, (4) be under a disability. In the instant case, the

condition precedent of filing an application was not accomplished until

four and one-half years after the onset of the disability. Had the

plaintiff, or those having her in their care, filed an application

earlier, benefits would have been payable earlier. The procedure for the

preparation and filing of the application, as eventually pursued by the

plaintiff through a next friend was available. 20 CFR 404.603.

filing an application was not accomplished until

four and one-half years after the onset of the disability. Had the

plaintiff, or those having her in their care, filed an application

earlier, benefits would have been payable earlier. The procedure for the

preparation and filing of the application, as eventually pursued by the

plaintiff through a next friend was available. 20 CFR 404.603.

All the plaintiff's arguments rest on the unarticulated premise that

entitlement to social security benefits can somehow become vested before

the filing of an application therefor. This simply is not the case. Social

security benefits are "created rights" unknown to the common law. Only

upon compliance with the conditions prescribed by Congress can an

individual become entitled to such benefits. Fleming v. Nestor , 363 U.S. 603 (1960. The plaintiff cites no authorities, and

non have found, to support the proposition contended for in this case. The

filing of an application for social security benefits is a condition

precedent to entitlement without regard to whether an individual is or is

not in fact disabled. Craig v. Finch , 416 F.2d 721 (5th

Cir. 1969), cert. denied sought is in fact

incompetent [7] is immaterial. Coy v. Folsom , 228 F.2d 276 (3rd Cir. 1955) ; Donnelly v. Gardner , 286 F.Supp. 288 (W.D. Wisc. 1968). The latter case

is on all fours with the situation now presented.

A rhetorical question implied in the plaintiff's brief is this:

her an individual is or is

not in fact disabled. Craig v. Finch , 416 F.2d 721 (5th

Cir. 1969), cert. denied sought is in fact

incompetent [7] is immaterial. Coy v. Folsom , 228 F.2d 276 (3rd Cir. 1955) ; Donnelly v. Gardner , 286 F.Supp. 288 (W.D. Wisc. 1968). The latter case

is on all fours with the situation now presented.

A rhetorical question implied in the plaintiff's brief is this:

The answer to this question is that it is to plaintiff's advantage to

seek to do so in order to receive maximum benefits. The amount of benefits

payable are provided by Section 215 of the Act, 42 USC 415. The

computation of benefits is tied to the concept of "average monthly

wage." Huska v. Gardner, 367 F.2d 863 (5th Cir. 1966) cert. denied 390 U.S. 965. The period of disability is excluded from

the computation of "average monthly wage." 42 USC 415(b)(2 and 3). The

higher the "average monthly wage," the higher the benefits to which the

plaintiff is entitled. During a period of disability, it is obvious that

the plaintiff could have no income, that is if the plaintiff has income,

this is prima facie evidence of gainful employment. If the period

of disability i.e., the period during which the plaintiff is in fact

disabled and has no income, is included ;in the span of time during which

the "average monthly wage" is computed, the period of zero income will act

to reduce the "average monthly wage." Under the present system, the

"average monthly wage," and hence the level of benefits, is tied directly

to the earnings made prior to the onset of the period of disability. It is

to the plaintiff's advantage to establish the period of disability in

order to avoid having a period of no income included in the computation of

average monthly wage.

act

to reduce the "average monthly wage." Under the present system, the

"average monthly wage," and hence the level of benefits, is tied directly

to the earnings made prior to the onset of the period of disability. It is

to the plaintiff's advantage to establish the period of disability in

order to avoid having a period of no income included in the computation of

average monthly wage.

In exercising jurisdiction under Section 205(g) of the Act, 42 USC

405(g), the standing practice is to treat the answer of the defendant

Secretary of Health, Education and Welfare as both an answer and motion

for summary judgment in that review is ordinarily limited to facts

appearing in the record. Cf. Craig v. Finch, supra. In this

case, however, the plaintiff does not argue that the final decision of the

Secretary as it relates to the facts in dispute is not supported by

substantial evidence. Instead, plaintiff contests the application of the

law to the facts as found. Under these circumstances, dismissal for

failure to state a claim upon which relief may be granted is more

appropriate. Coy v. Folsom, supra.

Accordingly, it is the ORDER, JUDGMENT and DECREE of the Court that this

cause be and the same is hereby dismissed.

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 under the "offset" provision of Section 224 of the Social Security

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

ed.), [8] upon finding that the

appellee was receiving workmens compensation benefits from the Stat of

West Virginia in the amount of $203.60 per month

the amount of $329.70 per month for himself and his

family. In January 1969, the federal payment was reduced to $225.30

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

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

ed.), [8] upon finding that the

appellee was receiving workmens compensation benefits from the Stat 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 payment 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, [9] held

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

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

1252. [10] 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. 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

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 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.

ithin 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 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 [11] 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

mmon 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. [12] 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 stat payments were

inadequate.

the job, and impeded the rehabilitative efforts of the state

programs. [12] 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 stat 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 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] As required by Section

205(g) of the Social Security Act, 42 USC 405(g), the defendant Secretary

of Health, Education and Welfare has filed a certified copy of the

transcript of the record as part of his answer.

[2] References in footnotes

1,2,3,4,5 and 7 to transcript page no. 5 omitted. [ED.]

[3] The original application

listed the date of onset of the period of disability as May 25, 1961. At

the hearing, the application was amended to allege the date of January 7,

1964.

[4] Omitted. [ED.]

[5] The plaintiff's attorney

argued that the evidence reflected the plaintiff to have been incompetent

continuously since her admission to Bryce Hospital and that this

incompetence should toll or bar the application of any statute or

regulation which might operate to prevent the plaintiff from receiving

benefits from the onset of her disability.

[6] 42 USC 416(i)(1).

[4] Omitted. [ED.]

[5] The plaintiff's attorney

argued that the evidence reflected the plaintiff to have been incompetent

continuously since her admission to Bryce Hospital and that this

incompetence should toll or bar the application of any statute or

regulation which might operate to prevent the plaintiff from receiving

benefits from the onset of her disability.

[6] 42 USC 416(i)(1).

[7] It is assumed, arguendo, that this record would support a finding that the plaintiff has in

fact been legally incompetent continuously since January 7, 1964. The

record does not reflect whether the plaintiff has ever been adjudicated non compos mentis . Nor does the record reflect whether the

plaintiff has either a general or special guardian or whether a committee

has been appointed to administer her affairs. The hearing Examiner did not

purport to determine the legal competence, vel non . of the

plaintiff. The defendant Secretary has acquiesced in the filing and

processing of the plaintiff's application through a next friend. 20 CFR

404.603.

[8] Section 224 provides, in

pertinent part:

[9] E.g., Gambill v. Finch, 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, 297-, 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).

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, 297-, 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).

[10] "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."

[11] The primary federal

workmen's compensation programs are the Longshoreman'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

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.

[12] The Senate Committee on

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

concern that has been expressed by any 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, 949-959, 990.