# SSR 85-6c: SSR 85-6c: SECTION 224 (42 U.S.C. 424a) DISABILITY -- REDUCTION OF BENEFITS DUE TO RECEIPT OF A LUMP-SUM WORKERS' COMPENSATION SETTLEMENT -- FINALITY OF DECISION -- REOPENING FOR ERROR OF LAW

> Federal · Rulings · In force

URL: https://www.frixlaw.com/law-library/statutes/SSA_SSR_DI_SSR_85_6c

## Section

- **Citation:** SSR 85-6c
- **Heading:** SSR 85-6c: SECTION 224 (42 U.S.C. 424a) DISABILITY -- REDUCTION OF BENEFITS DUE TO RECEIPT OF A LUMP-SUM WORKERS' COMPENSATION SETTLEMENT -- FINALITY OF DECISION -- REOPENING FOR ERROR OF LAW
- **Jurisdiction:** Federal
- **Kind:** Rulings
- **Status:** In force
- **Text as of:** August 14, 2026
- **Source:** Compiled text
- **Location:** Social Security Rulings / DI / Worker's Compensation / SSR 85-6c

## Text

20 CFR 404.408, 404.969, 404.987, 404.988, and 404.989(a)(3)

SSR 85-6c

Munsinger v. Schweiker , 1A Unempl. Ins. Rep. ¶ 14,633 (8th Cir.
1983)

BRIGHT, Circuit Judge:

Ethel Munsinger appeals from the district
court's [1] judgment affirming
the decision of the Social Security Appeals Council to reduce Munsinger's
disability insurance payments. For the reasons outlined below, we affirm
the judgment of the district court.

I. Background

On February 18, 1976, Ethel Munsinger sustained a back injury while at
work. Beginning on February 18, 1976, she received temporary disability
benefits pursuant to the Iowa workers' compensation statute. Iowa Code
Ann. § 85 (Supp. 1983). Munsinger's worker's compensation benefits ceased
October 7, 1977. On December 29, 1977, Munsinger filed an application with
the Social Security Administration (SSA) to obtain disability insurance
benefits. Following the SSA's denial of her claim, Munsinger filed for
reconsideration. During this period, Munsinger also pursued an Iowa
workers' compensation action against her employer and its insurance
carrier. Munsinger subsequently entered into a settlement of her disputed
claim with the insurance carrier. On April 21, 1978, the Iowa Industrial
Commissioner entered an order approving the settlement, awarding $32,500
to Munsinger.

On November 1, 1978, the SSA denied Munsinger's application for
reconsideration. On January 30, 1979, however, an Administrative Law Judge
(ALJ) found Munsinger to be disabled and awarded her benefits based on a
period of disability beginning February 18, 1976. The SSA subsequently
informed Munsinger of the monthly amounts of her disability insurance
benefits and that her first payment, which represented retroactive
benefits, amounted to $4,085.70
reconsideration. On January 30, 1979, however, an Administrative Law Judge
(ALJ) found Munsinger to be disabled and awarded her benefits based on a
period of disability beginning February 18, 1976. The SSA subsequently
informed Munsinger of the monthly amounts of her disability insurance
benefits and that her first payment, which represented retroactive
benefits, amounted to $4,085.70. On August 3, 1979, however, the SSA
notified Munsinger that they had overpaid her $423.80 due to her receipt
of a "workmen's compensation lump-sum settlement" of $32,500, and that
future disability insurance benefits would be reduced accordingly.
Munsinger requested the SSA to reconsider its determination. On
reconsideration, the SSA affirmed the offset of Munsinger's lump sum
settlement. The SSA stated:

The reconsideration decision also stated that the SSA had deducted from
Munsinger's $32,500 worker's compensation settlement a total of $16,915.14
for attorney's fees, medical and other related expenses, and that the
balance of $15,584.86 would be prorated so that Munsinger's full
disability insurance benefits would resume n July 1982. On May 19, 1980,
Munsinger appealed the SSA's decision to an ALJ. After conducting a
hearing, the ALJ, on July 23, 1980, issued a decision finding that the SSA
had improperly reduced Munsinger's disability benefits. On January 19,
1981, however, the appeals council of the SSA notified Munsinger that it
had reopened her case because of an error on the face of the record. On
March 4, 1981, the appeals council reversed the ALJ's decision.
ision to an ALJ. After conducting a
hearing, the ALJ, on July 23, 1980, issued a decision finding that the SSA
had improperly reduced Munsinger's disability benefits. On January 19,
1981, however, the appeals council of the SSA notified Munsinger that it
had reopened her case because of an error on the face of the record. On
March 4, 1981, the appeals council reversed the ALJ's decision.

Munsinger then sought review of the Secretary's decision in federal
district court. Munsinger asserted that (1) the appeals council lacked
jurisdiction to reopen her case because it failed to act within sixty days
of the ALJ's decision, and (2) Munsinger's worker's compensation
settlement did not constitute a commutation of, or substitute for,
periodic payments, and, consequently, was not subject to disability
benefit offset.

Both parties moved for summary judgment. The district court granted the
Secretary's motion and entered judgment in favor of the Secretary. The
district court specifically found that the appeals council had
jurisdiction to reopen Munsinger's overpayment decision and that the
settlement constituted a substitute for periodic payments within the
meaning of 42 U.S.C. § 424a(b), and therefore, that the Secretary was
entitled to offset the settlement against Munsinger's social security
benefits. This appeal followed.

II. Discussion

A. Appeals Council Review

Munsinger contends on appeal that the appeals council lacked jurisdiction
to decide her case because it failed to act within sixty days of the ALJ's
decision as prescribed by 20 C.F.R. § 404.969 (1981). The Secretary
construes the regulations as permitting the appeals council to reopen a
case within four years of the initial determination when the ALJ's
decision contains an error of law.

We observed in Oglala Sioux Tribe of Indians v. Andrus , 603
F.2d 707 (8th Cir. 1979):
case because it failed to act within sixty days of the ALJ's
decision as prescribed by 20 C.F.R. § 404.969 (1981). The Secretary
construes the regulations as permitting the appeals council to reopen a
case within four years of the initial determination when the ALJ's
decision contains an error of law.

We observed in Oglala Sioux Tribe of Indians v. Andrus , 603
F.2d 707 (8th Cir. 1979):

Accordingly, we must determine whether the Secretary's interpretation
sustaining jurisdiction is plainly inconsistent with the wording of the
regulation.

Regulations promulgated by the Secretary authorize the appeals council to
initiate direct review of the determination of an ALJ "[a]nytime within 60
days after the date of a hearing decision or dismissal * * *." 20 C.F.R §
404.969 (1981). Sixty days passed before the appeals council reviewed the
ALJ's decision. The regulations, however, provide for a later reopening
under certain circumstances. Section 404.988 provides in pertinent
part:

"Good cause," as is relevant to this action, exists if "[t]he evidence
that was considered in making the determination or decision clearly shows
on its face that an error was made." 20 C.F.R. § 404.989(a)(3) (1981).

Munsinger urges that the reopening provisions of section 404.987 are
limited to claimants. While we agree that a claimant may utilize the
reopening provisions of section 404.987, we do not believe these
procedures are limited to claimants. Section 404.987 does not expressly
preclude reopening initiated by the administration, nor does it contain
language that inescapably leads to that conclusion. Indeed, section
404.988 contains several conditions upon which a determination can be
reopened which one would expect to be raised by the Secretary and not the
claimant. See e.g., 20 C.F.R. § 404.988(c)(1) (1981) (fraud or other
fault)
n 404.987 does not expressly
preclude reopening initiated by the administration, nor does it contain
language that inescapably leads to that conclusion. Indeed, section
404.988 contains several conditions upon which a determination can be
reopened which one would expect to be raised by the Secretary and not the
claimant. See e.g., 20 C.F.R. § 404.988(c)(1) (1981) (fraud or other
fault). Accordingly, we conclude that sections 404.987c permit the appeals
council to reopen sua sponte a prior final decision within the
circumstances outlined in 20 C.F.R. § 404.988.

The appeals council predicated reopening of Munsinger's case upon the
provisions of 20 C.F.R. §§ 404.988(b)-.989(a)(3). These sections permit
reopening within four years of the initial determination where "[t]he
evidence that was considered in making the determination or decision
clearly shows on its face that an error was made." 20 C.F.R. §
404.989(a)(3) (1981). Munsinger asserts that "error on the face of the
evidence" allows reopening only to revise factual errors appearing
in the record, and that the issue before the appeals council was
essentially a legal question, that is, whether a settlement of a disputed
worker's compensation claim is a commutation of, or substitute for,
periodic worker's compensation payments within the meaning of 42 U.S.C. §
424a(b). The Secretary urges, on the other hand, that errors of law are
errors on the face of the evidence within the meaning of section
404.989(a)(3).
appeals council was
essentially a legal question, that is, whether a settlement of a disputed
worker's compensation claim is a commutation of, or substitute for,
periodic worker's compensation payments within the meaning of 42 U.S.C. §
424a(b). The Secretary urges, on the other hand, that errors of law are
errors on the face of the evidence within the meaning of section
404.989(a)(3).

We have held that "error on the face of the evidence" occurs when
injustice has been done a claimant or there exists manifest error in the
record. Lauritzen v. Weinberger , 514 F.2d 561, 563 (8th Cir.
1975). In establishing this standard, we looked to judicial decisions and
the administration's Social Security Claims Manual. Courts of appeals
which have construed this or an analogous standard have generally involved
cases of alleged errors of fact or ultimate fact. See e.g., Wallace v. Weinberger , 528 F.2d 700, 705 (6th Cir. 1976): Ortego v. Weinberger , 516 F.2d 1005, 1017 (5th Cir. 1975); Lauritzen v. Weinberger, supra , 514 F.2d at 563-65. These cases do not,
however, bar the interpretation urged by the Secretary in this
action. [2]

The Social Security Claims Manual defines "error on the face or the
evidence" as follows:

A case may not be reopened "if the only reason for reopening is a change
of legal interpretation or administrative ruling upon which the
determination or decision was made." 20 C.F.R. 404.989(b) (1981) (Emphasis
added). However, the Claims Manual does not preclude reopening to revise a
determination based upon the application of an incorrect legal standard or
the misinterpretation of law existing at the time of the determination.
Indeed, the Manual contemplates a determination or decision that was
reasonable not only on the evidence but also on "the statute, regulations,
instructions, precedents, etc., existing at the time and the determination
or decision was made * * *." Social Security Claims Manual § 7015 (July
1979)
t legal standard or
the misinterpretation of law existing at the time of the determination.
Indeed, the Manual contemplates a determination or decision that was
reasonable not only on the evidence but also on "the statute, regulations,
instructions, precedents, etc., existing at the time and the determination
or decision was made * * *." Social Security Claims Manual § 7015 (July
1979). If the evidence clearly shows the result reached to have been
legally erroneous at the time it was reached, then it may fairly be said
that "[t]he evidence that was considered in making the determination or
decision clearly shows on its face that an error was made." 20 C.F.R §
404.989(a)(3) (1981).

Accordingly, we determine that the Secretary's interpretation of section
404.989(a)(3) to permit reopening for legal errors is not plainly
inconsistent with those regulations. We conclude, therefore, that the
appeals council had jurisdiction to reopen Munsinger's overpayment
decision to correct an error of law.

B. The Merits

Munsinger further argues on appeal that the district court erred in
concluding that the settlement of a disputed worker's compensation claim
is a substitute for periodic worker's compensation payments within the
meaning of 42 U.S.C. § 424a(b) to be offset against social security
disability benefits.

Section 424a requires offset of social security disability payments
against worker's compensation so that the total benefits received by the
worker do not exceed eighty percent of the claimant's predisability
income. 42 U.S. C. § 424a; see also Freeman v. Harris , 625
F.2d 1303, 1306 (5th Cir. 1980). Section 424a commutation is geared to
periodic payments received by the claimant. Section 424 a(b), however,
provides:
social security disability payments
against worker's compensation so that the total benefits received by the
worker do not exceed eighty percent of the claimant's predisability
income. 42 U.S. C. § 424a; see also Freeman v. Harris , 625
F.2d 1303, 1306 (5th Cir. 1980). Section 424a commutation is geared to
periodic payments received by the claimant. Section 424 a(b), however,
provides:

Under Iowa law, the settlement of a disputed worker's compensation claim
is not construed as a payment of weekly compensation. Iowa Code Ann. §
85.35 (Supp. 1983); see Rick v. Dyna Technology, Inc ., 204
N.W.2d 867, 870 (Iowa 1973). Munsinger argues that Iowa law is dispositive
of the issue before this court. We disagree. Whether Munsinger's federal
disability benefits can be offset by a portion of a lump sum settlement
authorized pursuant to state law is a federal question. The answer must
therefore be sought in the federal statute and its underlying policy,
notwithstanding conflicting sate law. Sola Electric Co . v. Jefferson Electric Co ., 317 U.S. 173, 176 (1942).

In enacting section 424a, Congress sought to eliminate the duplication of
benefits that it saw as threatening state workers' compensation programs
by encouraging the disabled not to return to work nor attempt any
rehabilitation. Richardson v. Belcher , 404 U.S. 78, 82-83
(1971); Freeman v. Harris, supra , 625 F.2d at 1306. The Iowa
workers' compensation law, with exceptions not relevant to this case,
provides the exclusive remedy for an employee against her employer for
injuries arising out of her employment. Iowa Code Ann. § 85.20 (Supp.
1983). [3] The settlement
absolved her employer from any liability under Iowa workers' compensation
law. We conclude that in settling her disputed claim, Munsinger received a
lump sum which represented periodic payments. Consequently, without an
offset, Munsinger would receive duplicative benefits
st her employer for
injuries arising out of her employment. Iowa Code Ann. § 85.20 (Supp.
1983). [3] The settlement
absolved her employer from any liability under Iowa workers' compensation
law. We conclude that in settling her disputed claim, Munsinger received a
lump sum which represented periodic payments. Consequently, without an
offset, Munsinger would receive duplicative benefits. To deny the
Secretary an offset of the settlement would frustrate congressional
intent. We determine that the Secretary's interpretation is consistent
with the purposes underlying section 424a(b), and therefore hold that the
settlement was a substitute for periodic payments within the meaning of
section 424a which the Secretary was entitled to offset against
Munsinger's social security benefits.

III. Conclusion

Accordingly, we affirm the judgment of the district court.

[1] The Honorable Harold D.
Vietor, United States District Judge for the Southern District of Iowa.

[2] We observe, however, that
two district courts have concluded that an error of law is not "error on
the face of the evidence." George v. Schoenker , 3-82 Civ.
495 (D. Minn. Aug. 4, 1982); Russell v. Califano , No.
C77-1059 (N.D. Ohio Sept. 19, 1978).

[3] Munsinger could not have
initiated her action against her employer as an independent tort action.
Her sole recourse existed under Chapter 85 for workers' compensation
benefits. Munsinger's ability to obtain a settlement in her case therefore
arose as a function in the workers' compensation statute. See Iowa Code
Ann. §§ 85.35 (Supp. 1983).

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