Razey v. Heckler

• Decision Date: 22 July 1986
• Docket Number: No. 85-3639,85-3639
• Citation: 785 F.2d 1426
• Parties: , Unempl.Ins.Rep. CCH 16,748 Harvey B. RAZEY, Plaintiff-Appellant, v. Margaret M. HECKLER, Secretary of Health and Human Services, Defendant- Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1426

785 F.2d 1426

13 Soc.Sec.Rep.Ser. 82, Unempl.Ins.Rep. CCH 16,748

Harvey B. RAZEY, Plaintiff-Appellant, v. Margaret M. HECKLER, Secretary of Health and Human Services Defendant- Appellee.

No. 85-3639.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Oct. 9, 1985.

Decided April 1, 1986.

As Amended on Denial of Rehearing and Rehearing En Banc July

22, 1986. ^*

Robert P. Stephens, Spokane, Wash., for plaintiff-appellant.

Richard Wetmore, Seattle, Wash., for defendant-appellee.

Appeal from the United States District Court for the Eastern District of Washington.

Before GOODWIN, ALARCON, and POOLE, Circuit Judges.

GOODWIN, Circuit Judge:

After receiving a favorable decision from an administrative law judge upon his claim for disability benefits, Harvey B. Razey was notified by the Appeals Council of the Social Security Administration that his claim had been reviewed and denied pursuant to 20 C.F.R. Secs. 404.969 and 404.970 (1985). He appealed to the district court and now appeals its grant of summary judgment in favor of the Secretary. We affirm.

I. The Appeals Council's Authority to Review the Case.

Razey's principal argument is that the Appeals Council lacked the authority to review the ALJ's grant of disability benefits to him. He argues that 20 C.F.R. Sec. 404.970(a) (1985), which sets forth four grounds upon which the Appeals Council "will review" an ALJ's decision, limits the authority of the Appeals Council to initiate sua sponte review of an ALJ's decision to cases falling within one of those four categories. ¹ The circuits do not agree on the exclusivity of Sec. 404.970(a). Compare Lopez-Cardona v. Secretary of Health and Human Services, 747 F.2d 1081 (1st Cir.1984) and Baker v. Heckler, 730 F.2d 1147 (8th Cir.1984) with Scott v. Heckler, 768 F.2d 172 (7th Cir.1985) and Newsome v Secretary of Health and Human Services, 753 F.2d 44 (6th Cir.1985). At issue is the tension between Sec. 404.970(a) and 20 C.F.R. Sec. 404.969 (1985). ² Although Sec. 404.970(a) standing alone may be read to limit the Appeals Council's review powers to the listed categories, Sec. 404.969 appears to afford the Council complete discretion in selecting cases for review. This court, in Taylor v. Heckler, 765 F.2d 872, 874-75 (9th Cir.1985), refused to read Sec. 404.970(a) as exclusive.

In Lopez-Cardona v. Secretary of Health and Human Services, 747 F.2d 1081 (1st Cir.1984), the First Circuit rejected the argument now asserted by Razey. In that case, the Appeals Council, relying upon Sec. 404.970(a)(3), reviewed sua sponte an ALJ's grant of disability benefits on the grounds that it was unsupported by substantial evidence. The court found that although the ALJ's decision was supported by substantial evidence, the Appeals Council did not violate the Secretary's regulation by reviewing the case. 747 F.2d at 1083. It reasoned:

Generally, in an intra-agency appeal, the agency has all the powers it would have had in making the initial decision unless it limits the issues by notice or regulation. See 3 Davis Administrative Law Treatise Sec. 14:19 (1980). Clearer language is needed before we would find an agency meant to give up its powers.... Hence, even though the ALJ's decision was supported by substantial evidence, the Appeals Council did not violate its regulations by initiating review.

Id.

The Secretary's intention as to the relationship between Secs. 404.969 and 404.970(a) is unclear. Although Sec. 404.970(a) could reasonably be read to limit the Council's discretion to engage in sua sponte review, it could also be read as providing notice of those cases in which the Council will exercise its power under Sec. 404.969. This circuit in Taylor v. Heckler read Sec. 404.970(a) to mandate review in those cases falling within its provisions, and read Sec. 404.969 to authorize review of all ALJ disability decisions. 765 F.2d at 874-75. The Secretary's interpretation of the regulations at issue is consistent with that of Taylor. Although her brief in this case did not address the tension between Secs. 404.969 and 404.970(a), she has argued in other cases that the Appeals Council's discretion to act under Sec. 404.969 is not limited by Sec. 404.970(a). See, e.g., Scott v. Heckler, 768 F.2d 172, 178-79 (7th Cir.1985). We generally defer to an administrator's interpretation of her own regulations unless it is "plainly erroneous or inconsistent with the regulation." 2 K.C. Davis, Administrative Law Treatise Sec. 7:22 at 105-06 (2d ed.1979). Although these regulations are subject to several interpretations, the Secretary's reading of them is not plainly erroneous.

Congress has afforded the Secretary broad discretion in this area. See 42 U.S.C. Sec. 405(a)(1982). Like the First Circuit, we decline to read her regulations as limiting her statutory discretion in the absence of a clearer indication of an intention to do so.

The Eighth Circuit, in deciding that Sec. 404.970(a) does not limit the Appeals Council's discretion to act under Sec. 404.969, looked to the practical effect of reading Sec. 404.970(a) as exclusive. See Baker v. Heckler, 730 F.2d 1147 (8th Cir.1984). It reasoned that because the Appeals Council cannot know prior to conducting its review whether or not an ALJ's decision was supported by substantial evidence, review pursuant to Sec. 404.970(a)(3) would have to be terminated if the decision was in fact so supported. The court stated, "[t]he question of power to review must, as a practical matter, be addressed and decided at a preliminary stage, not after the review is completed, at a time when a negative answer to the question would render the whole review process nugatory." 730 F.2d at 1150.

We find this reasoning to be persuasive. Leaving the question of reviewability open until the substantial evidence question has been resolved cuts against treating Sec. 404.970(a) as limiting the Appeals Council's discretion. Both the Secretary and the applicant have an interest in knowing before the review process begins which cases are in fact subject to sua sponte review.

Other circuits have rejected the Lopez-Cardona and Baker reasoning. Razey relies primarily upon Newsome v. Secretary of Health and Human Services, 753 F.2d 44 (6th Cir.1985), and Parris v. Heckler, 733 F.2d 324 (4th Cir.1984). Newsome addressed the issue of the standard of review to be applied by the court in reviewing a Council's reversal pursuant to Sec. 404.970(a) of an ALJ's grant of benefits. The court held that it was the decision of the ALJ and not that of the Appeals Council that it should subject to a substantial evidence review. Without addressing the issue of the relationship between Secs. 404.969 and 404.970(a), it read Sec. 404.970(a) as limiting the Secretary's power to review the decisions of the administration's initial factfinder. See also Parker v. Heckler, 763 F.2d 1363 (11th Cir.1985) (following Newsome with one judge dissenting on the grounds that Baker states the better-reasoned approach), reh'g granted and opinion vacated, 774 F.2d 428 (11th Cir.1985). Parris also reads Sec. 404.970(a) to limit the Appeals Council's discretion to initiate sua sponte review. The Parris court refused, however, to review the ALJ's decision, reading Sec. 404.970(a)(3) to require only that the Appeals Council apply the substantial evidence standard of review to the ALJ's decision. 733 F.2d at 326.

The Seventh Circuit, agreeing with the Newsome conclusion that Sec. 404.970(a) limits the Appeals Council's sua sponte review power, rejected the Secretary's argument that although the Council had invoked Sec. 404.970(a)(3), its decision to review was proper under Sec. 404.969. Scott v. Heckler, 768 F.2d 172, 178-79 (7th Cir.1985). It relied upon the notion that administrative agencies are bound to follow their own regulations. Id.

We find the Newsome, Parris, and Scott cases unpersuasive because they fail to address the threshold issue of the meaning of the Secretary's regulations. To find that the Secretary has violated her own regulations would require us to treat Sec. 404.970(a) as limiting her statutorily mandated discretion. Further, under 42 U.S.C. Sec. 405(g)(1982), we review the final decision of the Secretary. She has designated the Appeals Council's decision as final. See 20 C.F.R. Sec. 404.981 (1985). Newsome and Parker ignore this designation and review the ALJ's decision for substantial evidence. Because we decline to read the regulations as limiting the Secretary's discretion to structure the disability determination process, we reject the Fourth, Sixth and Seventh Circuits' analyses. ³

Because of our reluctance to limit the intra-agency appeal process absent an indication that the Secretary intended to limit internal review, the deference to which the Secretary is entitled in reading her own regulations, and the illogic of making reviewability turn upon the merits of the ALJ's decision, we hold that the Appeals Council's discretion under Sec. 404.969 to initiate review of an ALJ's disability determination is not limited by Sec. 404.970(a).

II. The Appeals Council's Decision.

The Appeals Council's denial of benefits constitutes a factual determination which we review under the substantial evidence standard. 42 U.S.C. Sec. 405(g)(1982). Evidence is substantial when a reasonable person might accept it as adequate to support a conclusion. Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 1427, 28 L.Ed.2d 842 (1971); Hall v. Secretary of Health, Education and Welfare, 602 F.2d 1372, 1375 (9th Cir.1979). It is more than a scintilla, but less than a preponderance. Richardson v. Perales, 402 U.S. at 401, 91 S.Ct. at 1427. Reviewing the record as a whole, we find that the Council's decision was supported by substantial evidence.

The ALJ and the Appeals Council agreed that Razey's exertional limitations would not preclude him from engaging in sedentary work. The Appeals Council also found that Razey was...