Constance v. Secretary of Health and Human Services, s. 81-1322

• Decision Date: 05 March 1982
• Docket Number: 81-1323,Nos. 81-1322,s. 81-1322
• Citation: 672 F.2d 990
• Parties: Cornelius CONSTANCE, Plaintiff, Appellee, v. SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant, Appellee, Alexander E. Sharp, etc., Defendant, Appellant. Cornelius CONSTANCE, Plaintiff, Appellee, v. SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

Page 990

672 F.2d 990

Cornelius CONSTANCE, Plaintiff, Appellee, v. SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant, Appellee, Alexander E. Sharp, etc., Defendant, Appellant.

Cornelius CONSTANCE, Plaintiff, Appellee, v. SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant, Appellant.

Nos. 81-1322, 81-1323.

United States Court of Appeals,

First Circuit.

Argued Oct. 9, 1981.

Decided March 5, 1982.

Stephen S. Ostrach, Asst. Atty. Gen., Government Bureau, Boston, Mass., with whom Francis X. Bellotti, Atty. Gen., Boston, Mass., was on brief, for the State appellant.

Larry K. Banks, Atty., Social Security Division, Dept. of Health and Human Services, Washington, D. C., with whom Edward F. Harrington, U. S. Atty., Boston, Mass., and Thomas S. Martin, Acting Asst. Atty. Gen., Washington, D. C., were on brief, for appellant Secretary of Health and Human Services.

Peter Benjamin, Springfield, Mass., with whom Kenneth P. Neiman, Holyoke, Mass., was on brief, for appellee.

Before CAMPBELL and BREYER, Circuit Judges and WYZANSKI, ^* Senior District Judge.

BREYER, Circuit Judge.

This case raises the question of whether a federal statute providing a special federal payment to certain disabled persons (those with "essential persons") permits the state to reduce correspondingly its own state payments dollar for dollar. We find that the federal statute was specifically intended to give the states this authority, and we therefore reverse a district court holding to the contrary.

I

The appellee, Cornelius Constance, first received disability benefits in 1973 under a state program of "Aid to the Permanently and Totally Disabled." Under this "APTD" program, Constance's wife, Sydonia, was not entitled to receive assistance in her own right. But because she lived with Constance and was "essential" to his care and well-being, Constance's benefits included an "essential person" allowance on her account.

On January 1, 1974, the APTD program in Massachusetts and all similar programs of assistance to the aged, blind and disabled throughout the nation were replaced by the federal Supplemental Security Income, or "SSI" program. Pub.L. No. 92-603, 86 Stat. 1465 (codified at 42 U.S.C. §§ 1381 et seq. (1974)). See generally Schweiker v. Gray Panthers, --- U.S. ----, ----, 101 S.Ct. 2633, 2637, 69 L.Ed.2d 460 (1981); Reichenthal v. Harris, 492 F.Supp. 637, 639 (E.D.N.Y.1980). For purposes of this case, it is important to understand four aspects of the SSI program. First, SSI was designed to "federalize" assistance to the disabled. Prior to SSI, the disabled poor received state payments; and the federal government reimbursed the states for one-half the benefits provided. Under SSI, however, the federal government sends directly to the individual a check, which for the most part represents a federal payment but which may also represent a state contribution for which the federal government is reimbursed. SSI also aimed at administrative simplicity; eligibility is based on nationwide income and resource tests; federal payments are nationally uniform.

Second, SSI encourages states to make additional, "optional" payments by excluding such payments from its definition of (disqualifying) income, thus ensuring that an additional dollar of state payment will not lead to a dollar's reduction in the federal payment. 42 U.S.C. § 1382e(a). SSI will administer these optional state payments if the state wishes, sending the state payment to the recipient as part of the SSI check. Apparently most, if not all, states determine the amount of additional state contribution in the same way as Massachusetts. They set "ceiling" figures for recipients in different categories, and then provide for each recipient the difference between the federal contribution and the ceiling. If there are other states following a different system-say, a system under which the state contributes a fixed additional sum of dollars to the federal payment-we have been unable to find them. See Staff of Senate Comm. on Finance, 95th Cong., 1st Sess., Report on the Supplemental Security Income Program 247-54 (Comm. Print 1977) (Appendix Tables 8 & 9). The exact details of the state payment system are worked out in an agreement between the state and the federal Social Security Administration ("SSA"), subject to state law and to constraints contained in the Social Security Act and SSA regulations. See 42 U.S.C. § 1382e(a) and (b). For example, for ease of administration, SSA limits the number of "ceiling" categories that a state may set. ¹ See 20 C.F.R. §§ 416.2020 and 416.2030.

Third, SSI contains a "mandatory" state supplementation provision. Pub.L. No. 93-66, § 212, as amended (printed in the notes following 42 U.S.C.A. § 1382). This provision was enacted in response to fears that many welfare recipients would be worse off in 1974 under SSI than they were in 1973 under the prior state programs. These fears led Congress to "grandfather" state welfare beneficiaries into SSI at their old payment levels. It did this by requiring the states to provide supplements to the grandfathered beneficiaries sufficient to ensure that their overall income never fell below the amount they received before SSI.

Fourth, the SSI legislation includes an uncodified "essential person" provision. Pub.L. No. 93-66, § 211, as amended (printed in the notes following 42 U.S.C.A. § 1382). This provision applies to any SSI beneficiary who (i) lives with an "essential" person (e.g., a wife not eligible for SSI herself), and (ii) who actually received an allowance on account of that person under a state program of aid in 1973 prior to SSI. ² It protects the benefit levels of these particular recipients by providing a special federal supplement about equal to what the states had paid before federalization.

Constance received payments under this federal-state system in 1974 and 1975. In May 1975, however, the SSA came to believe that it was overpaying Constance for reasons (related to his receipt of other income) not pertinent here. See note 3, infra. An SSA hearing examiner confirmed that Constance received certain overpayments, but he also believed that Constance had been underpaid under Massachusetts' program of "optional supplementation." Simplifying the figures somewhat and focusing on the representative month of January 1974, Constance received a basic SSI grant of $140 per month. In addition, he received a federal "essential person" allowance of $70 per month bringing his total federal payment up to $210 per month. ³ Massachusetts supplemented this payment by roughly $5, because that was the amount needed to reach the income "ceiling" of $215 appropriate to Constance's "optional supplementation" category. ⁴ If the federal government had not given Constance the $70 "essential person" supplement, Constance would still have been entitled to a total payment of $215 per month, and Massachusetts would have contributed $75 rather than just $5.

The hearing examiner concluded that this was improper. In his view, by subtracting the federal "essential person" payment from the amount it would otherwise contribute, Massachusetts effectively deprived Constance of the "essential person" benefit. He therefore recommended that Massachusetts be required to raise its supplementary payments to Constance by the amount of his "essential person" allowance, so that Constance would receive the same $75 state supplement as (and end up $70 better off than) individuals who did not receive federal "essential person" payments.

The Appeals Council of the SSA refused to follow the hearing examiner on this point, noting that it was aware of no statute or legal authority that compelled such additional payments. On review, the district court agreed with the hearing examiner and reversed the Appeals Council, finding the relevant legal authority in the federal "essential person" statute. ⁵ The SSA and the Commonwealth of Massachusetts ⁶ appeal from the district court's decision. ⁷ We reverse.

II

Although we disagree with the district court's ultimate decision on the issue in this case, we believe that the court correctly recognized that the "essential person" statute lies at the heart of Constance's claim. As far as we are aware, that statute aside, the federal government complied with all relevant laws by providing Constance with his basic payment plus "essential person" allowance; and Massachusetts complied with all other federal statutes, with state law, ⁸ and with its federal-state SSI agreement ⁹ when it created its "ceiling" system, when it created categories, ¹⁰ and when it paid Constance an amount sufficient to reach the ceiling in his category. ¹¹ Rather here, the issue is whether the federal "essential person" provision, in explicitly requiring the federal government to pay an "essential person" allowance, implicitly requires the states so to structure their optional supplementation programs that this allowance is effectively passed through to the SSI recipient.

For several reasons, we do not believe that the "essential person" provision imposes any such implicit obligation upon the states.

Initially, the Social Security Administration argues that this provision was intended to do no more than provide "grandfather-type" protection of payment levels for a particular group of recipients-those who received "essential person" benefits in 1973. Congress's concern arose out of fear that federalization of the state benefit programs would lead some recipients (including many receiving state "essential person" benefits) to receive lower benefits in 1974 than they had in 1973. This concern can be met by interpreting the statute to make certain that this group receives at least as much in 1974 as they received in 1973. But there is no reason to go further. See S.Rep.No. 93-249, 93d Cong., 1st Sess. 24 (1973), U.S.Code Cong. & Admin.News. 1973 p. 1507; The Need for Protecting Aged, Blind and Disabled Welfare Recipients from Suffering a...