Johnson v. Bowen, 83 C 4110.

• Decision Date: 06 October 1988
• Docket Number: No. 83 C 4110.,83 C 4110.
• Parties: Edna JOHNSON, et al., Plaintiffs, v. Otis R. BOWEN, M.D., Secretary of Health and Human Services, Defendant.
• Court: U.S. District Court — Northern District of Illinois

697 F. Supp. 346

Edna JOHNSON, et al., Plaintiffs, v. Otis R. BOWEN, M.D., Secretary of Health and Human Services, Defendant.

No. 83 C 4110.

United States District Court, N.D. Illinois, E.D.

October 6, 1988.

Joseph A. Antolin, John Bouman, Robert Lehrer, Julie A. Nice, Legal Assistance Foundation of Chicago, Chicago, Ill., for plaintiffs.

Anton R. Valukas, U.S. Atty. by Linda A. Wawzenski, Asst. U.S. Atty., Chicago, Ill., for defendant.

MEMORANDUM ORDER

BUA, District Judge.

In 1984, plaintiffs in this class action suit successfully challenged several regulations governing the evaluation of federal disability claims. At the time, this court granted retroactive and prospective injunctive relief to plaintiffs. Four years later, after winding its way through the appellate courts, the case has returned to this court. In remanding this case, the Seventh Circuit instructed the court to conduct further proceedings in light of a subsequent Supreme Court decision. After complying with the Seventh Circuit's remand order, the court now modifies its original award to the plaintiff class. The court also orders immediate implementation of the modified injunctive relief.

PROCEDURAL HISTORY

The Secretary of Health and Human Services ("Secretary") has promulgated regulations governing the determination of eligibility for benefits under the Old-Age and Survivors Disability Insurance ("OASDI") and Supplemental Security Income ("SSI") programs. See 20 C.F.R. §§ 404.1520, 416.920. Pursuant to these regulations, the Social Security Administration ("SSA") employs a five-step sequential process when evaluating OASDI and SSI claims.¹ Based on his application of this five-step procedure, an administrative law judge ("ALJ") denied Edna Johnson's claim for SSI benefits in 1982. That same year, the SSA's Appeals Council applied the five-step analysis when it rejected Jerome Montgomery's appeal from the termination of his OASDI benefits. Neither Johnson's claim nor Montgomery's appeal survived step two of the five-step eligibility test. This second step, the so-called "severity regulation," requires each claimant to demonstrate that he suffers from a "severe" impairment "which significantly limits his physical or mental ability to do basic work activities." Id. §§ 404.1520(c), 416.920(c). In ruling against Johnson and Montgomery, SSA officials concluded that neither claimant had established the existence of a severe impairment.²

In 1983, one year after the SSA rejected their respective claims, Johnson and Montgomery filed suit against the Secretary. Their lawsuit challenged the validity of the Secretary's step two requirement as defined by 20 C.F.R. §§ 404.1520(c), 416.920(c), 404.1522, & 416.922 (1983), and Social Security Ruling ("SSR") 82-55 (rescinded 1985). Johnson and Montgomery contended that the Secretary's step two policy for evaluating impairments did not comply with the terms of the Social Security Act. The two plaintiffs also asserted that the challenged regulations violated their constitutional right to equal protection under the Due Process Clause of the Fifth Amendment.

Shortly after filing their complaint, Johnson and Montgomery moved to maintain their suit as a class action pursuant to Fed.R.Civ.P. 23. Their proposed class included all persons in Illinois whose applications for benefits were denied (or whose receipt of benefits was terminated) due to the application of the challenged regulations. On December 7, 1983, this court certified the class proposed by Johnson and Montgomery. 100 F.R.D. 70 (N.D.Ill.1983).

In the months that followed, both the plaintiff class and the Secretary moved for summary judgment. On September 19, 1984, this court granted plaintiffs' motion for summary judgment. 593 F.Supp. 375 (N.D.Ill.1984). The court found that the severity regulation, 20 C.F.R. §§ 404.1520(c) & 416.920(c), impermissibly imposed on each claimant a greater burden of proof than the Social Security Act required. In order to make out a prima facie case of disability under the Act, a claimant need only show that an impairment prevents him from doing his previous work. Jones v. Heckler, 702 F.2d 616, 620 (5th Cir.1983); Whitney v. Schweiker, 695 F.2d 784, 786 (7th Cir.1982). This court concluded that the severity regulation, by substituting the term "basic work activities" for "previous work," increased the evidentiary requirements for establishing a prima facie case of disability. 593 F.Supp. at 379-81. The court also ruled that certain supplemental regulations, 20 C.F.R. §§ 404.1522 & 416.922 and SSR 82-55, violated the Social Security Act by prohibiting consideration of the combined effect of multiple nonsevere impairments on a claimant's ability to work. Id. at 381. The court enjoined the Secretary from enforcing the challenged regulations insofar as they implemented the invalid policies of increasing the claimant's burden of proof and refusing to combine nonsevere impairments. In addition, the court ordered the Secretary to: (1) hold new disability hearings for class members; (2) reinstate benefits previously terminated by application of the invalid regulations; and (3) grant retroactive benefits to class members who, after a new hearing, are found to be disabled. Id. at 381-82.³

In her subsequent motion to alter or amend the court's summary judgment order, the Secretary argued that the plaintiff class improperly included claimants who had not fully satisfied procedural prerequisites. For instance, some class members had failed to comply with section 205(g) of the Social Security Act, 42 U.S.C. § 405(g), which requires claimants to seek judicial review of the Secretary's final decisions within 60 days after the mailing of notice of such decisions. Other members of the class had not yet exhausted their administrative remedies. With respect to these plaintiffs, the Secretary asserted that the court lacked jurisdiction. She urged the court to exclude from the class all claimants who had not satisfied the requirements of timely appeal and exhaustion. In addition to challenging the composition of the class, the Secretary questioned the court's substantive ruling on the validity of her step two policies. She asked the court to reconsider this ruling in light of recent case law and the 1984 Congressional amendment of the Social Security Act.

After weighing all of these arguments, this court denied the Secretary's motion to alter or amend the previous summary judgment order. 607 F.Supp. 875 (N.D.Ill. 1984). First, the court considered and rejected the Secretary's jurisdictional attacks on the size of the class. The court found that the 60-day requirement imposed by 42 U.S.C. § 405(g) constituted a statute of limitations rather than a jurisdictional bar. Therefore, because the Secretary had not previously asserted an affirmative defense based on § 405(g), the court concluded that the Secretary had waived the 60-day requirement for all class members. Id. at 877-78. As for the exhaustion of administrative remedies, the court itself elected to waive this requirement. In the court's view, two factors justified judicial waiver of the exhaustion requirement in this class action suit: (1) plaintiffs' challenge to the Secretary's regulations was collateral to the class members' claims for benefits; and (2) plaintiffs had a substantial interest in prompt judicial review. Id. at 878-80. The court also refused to reconsider its ruling that the challenged regulations violated the Social Security Act. Recent case law and Congressional action, which the Secretary had cited as a basis for reconsideration, did nothing to alter the court's earlier analysis of the regulations. Id. at 880-81.

In an order dated March 15, 1985, the court clarified its award of injunctive relief, providing the Secretary with detailed instructions for implementing the court-ordered remedy. 604 F.Supp. 1070 (N.D.Ill. 1985).⁴ Under the terms of this order, the Secretary would bear the responsibility of identifying class members. In addition, the court required the Secretary to provide plaintiffs' counsel with monthly statistical reports documenting the implementation of the prescribed relief.

The Secretary appealed to the Seventh Circuit, challenging both the size of the class and the invalidation of the step two regulations. The Court of Appeals affirmed this court's jurisdictional and substantive rulings in all respects. 769 F.2d 1202 (7th Cir.1985), vacated and remanded, ___ U.S. ___, 107 S.Ct. 3202, 96 L.Ed. 2d 690 (1987). After denying the Secretary's petition for rehearing, 776 F.2d 166 (7th Cir.1985), the Seventh Circuit granted a partial stay of injunctive relief on November 13, 1985. Pending the Secretary's filing of a petition for a writ of certiorari, the Court of Appeals stayed its mandate affirming the injunction insofar as it required the SSA to reopen closed cases.

In February 1986, the Secretary petitioned the U.S. Supreme Court for a writ of certiorari in the Johnson case. While this petition was pending, the Supreme Court upheld the facial validity of the Secretary's severity regulation in Bowen v. Yuckert, 482 U.S. 137, 107 S.Ct. 2287, 96 L.Ed.2d 119 (1987). Subsequently, the Court granted certiorari in Johnson, vacated the Seventh Circuit's judgment, and remanded the case to the Court of Appeals for further consideration in light of Yuckert. ___ U.S. ___, 107 S.Ct. 3202, 96 L.Ed.2d 690 (1987).

On remand, the Seventh Circuit vacated this court's injunction to the extent that it prohibited application of step two of the Secretary's sequential evaluation process. 834 F.2d 173. The Court of Appeals then remanded the case to this court for further proceedings in light of Yuckert. Shortly thereafter, the parties to this litigation commenced settlement discussions. Hopeful that these negotiations would produce a settlement, this court dismissed the Johnson case, retaining jurisdiction for 60 days in case the parties failed to reach...