885 F.2d 52 (3rd Cir. 1989), 88-5886, Bailey v. Sullivan

Docket Nº:88-5886, 88-5036 and 88-5903.
Citation:885 F.2d 52
Party Name:Unempl.Ins.Rep. CCH 14882A Irvin BAILEY, on Behalf of Himself and All Others Similarly Situated v. Louis W. SULLIVAN [1], M.D., Secretary of Health and Human Services of the United States of America, Appellant. Irvin BAILEY, on Behalf of Himself and All Others Similarly Situated, Appellant, v. Louis W. SULLIVAN [1], M.D. Secretary of Health and Hum
Case Date:September 06, 1989
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit
 
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885 F.2d 52 (3rd Cir. 1989)

Unempl.Ins.Rep. CCH 14882A

Irvin BAILEY, on Behalf of Himself and All Others Similarly Situated

v.

Louis W. SULLIVAN 1, M.D., Secretary of Health

and Human Services of the United States of

America, Appellant.

Irvin BAILEY, on Behalf of Himself and All Others Similarly

Situated, Appellant,

v.

Louis W. SULLIVAN 1, M.D. Secretary of

Health and Human Services of the United States of America.

Nos. 88-5886, 88-5036 and 88-5903.

United States Court of Appeals, Third Circuit

September 6, 1989

Argued April 27, 1989.

Rehearing and Rehearing In Banc Denied in Nos. 88-5886 and

89-5036 Jan. 3, 1990.

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[Copyrighted Material Omitted]

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Peter B. Macky (argued), Sunbury, Pa., Paul Welch, Lock Haven, Pa., Frederick M. Stanczak, Legal Services of Cent. N.Y., Syracuse, N.Y., Jonathan M. Stein, Community Legal Services, Philadelphia, Pa., for appellants/cross appellees.

James J. West, U.S. Atty., Barbara L. Kosik, Asst. U.S. Atty., Donald A. Gonya, Chief Counsel for Social Sec., Randolph W. Gaines, Deputy Chief Counsel for Social Sec., A. George Lowe, Chief, Disability Litigation Branch, Wendy J. Miller (argued), Office of the Gen. Counsel, Social Sec. Div., Dept. of Health and Human Services, Ellicott City, Md., for appellee/cross-appellant.

Before SEITZ [*], SLOVITER, and GREENBERG, Circuit Judges.

OPINION

SLOVITER, Circuit Judge.

I.

Introduction

This appeal and cross-appeal are from orders of the district court entered in a class action challenging the Secretary of Health and Human Service's regulations and rulings with respect to the severe impairment inquiry in making disability determinations. This is the second time this case has been before us. Appellants, a class of social security claimants who had been denied Social Security disability or Supplemental Security Income (SSI) disability because their impairments were found not to be severe, appeal from an order of the district court dismissing in its entirety those portions of the complaint which make as applied challenges to certain of the Secretary's regulations and rulings governing severity. See Bailey v. Bowen, 699 F.Supp. 51 (M.D.Pa.1988). Appellants argue that the district court erred in refusing to permit this action to proceed as a class action on the plaintiffs' claim that the Secretary had systematically misapplied the severity regulations pursuant to a secret policy. The Secretary cross-appeals that portion of the district court's order which concluded that the prior regulations which prohibited the Secretary from evaluating the combined effect of nonsevere conditions were invalid on their face. Additionally, both parties challenge the district court's definition of the class, and plaintiffs appeal from an order of the district court denying them leave to amend the complaint. App. II at 13. The appeal presents primarily questions of law over which our review is plenary.

II.

Facts and Proceedings Below

Although there are no factual matters ripe for our consideration on this appeal, the protracted procedural history of this case is of relevance. This case began in 1983 when named plaintiff, Irvin Bailey, filed an action for judicial review of a final decision of the Secretary denying him SSI benefits. Bailey amended his complaint to assert a class action challenging the validity of the Secretary's severity regulations on behalf of all social security claimants who had been denied benefits at step two of the Secretary's five-step sequential evaluation process. Specifically, the plaintiffs challenged the regulations at 20 C.F.R. Secs. 404.1520(c), 404.1522, 416.920(c), 416.922 2 and Social Security Ruling (SSR) 82-55,

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contending that the regulations impermissibly allowed the Secretary to determine severity on the basis of medical factors without considering the vocational factors (age, education, work experience) which are relevant at later phases of the sequential evaluation, and that they impermissibly prohibited the Secretary from considering the cumulative impact of several nonsevere impairments. Plaintiffs also challenged the various regulations under the Administrative Procedure Act.

The district court certified a class consisting of persons in Social Security Region III who had been denied SSA or SSI benefits on the ground that their impairments were not severe. The class was eventually redefined to include only those claimants residing in Pennsylvania or Delaware. The class was limited to claimants who had received a final decision of the Secretary denying benefits and who had a petition for review pending in federal court at the time of the decision in the class action and those claimants who had received unfavorable rulings from the Secretary but who had not exhausted their administrative remedies.

The district court granted summary judgment for the plaintiffs, and ordered that the Secretary readjudicate the claims of all class members without applying any of the challenged regulations. On the first appeal to this court, we vacated and remanded for reconsideration in light of Bowen v. Yuckert, 482 U.S. 137, 107 S.Ct. 2287, 96 L.Ed.2d 119 (1987), in which the Supreme Court upheld the facial validity of the regulations which excluded the vocational factors from consideration at the severity stage, i.e., 20 C.F.R. Secs. 404.1520(c) & 416.920(c).

On remand, plaintiffs no longer pressed their facial challenge to the regulations that had been upheld in Yuckert, but sought to proceed on their challenge to the regulations as applied. In fact, plaintiffs sought leave to amend the complaint to clarify that this was their remaining challenge to the severity regulations and to add a challenge to SSR 85-28 which had replaced the previously challenged SSR 82-55. The district court denied leave to amend in both respects.

The district court adhered to its prior decision that insofar as the regulations, 20 C.F.R. Secs. 404.1522 and 416.922, precluded consideration of the combined effect of nonsevere impairments, they violated the SSA because they require multiple impairments to be considered individually rather than in combination. However, the district court dismissed the plaintiffs' claims of misapplication of the severity regulations adopting the portion of the magistrate's report which concluded that in light of Yuckert, such claims were not appropriate for a class action. 3

We will address in turn the district court's rulings on the severity regulations, the projected amendments to the complaint, the combination policy, claims under the APA, and the class composition issues.

III.

Dismissal of Plaintiffs' Claims

Challenging Regulations as Applied

Under the Social Security Act,

an individual ... shall be determined to be under a disability only if his physical

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or mental impairment or impairments are of such severity that he is not only unable to do his previous work but cannot ... engage in any other kind of substantial gainful work....

42 U.S.C. Sec. 423(d)(2)(A) (1982) (emphasis added); see also 42 Sec. 1382c(a)(3)(B) (1982) (same definition for SSI).

Plaintiffs' amended complaint sought a declaratory judgment that:

Defendant's regulation and policy of denying and terminating Title II (SSDI) and Title XVI (SSI) disability benefits to individuals who are disabled but who are denied or terminated on the basis of the lack of a "severe" impairment violates 42 U.S.C. Sec. 423(d) and Sec. 1382c(a)(3) and, the United States Constitution and, therefore, is invalid.

App. I at 104 (emphasis added).

Prior to 1978 the Secretary's regulations provided that a claimant could be denied benefits on medical considerations alone "where the only impairment is a slight neurosis, slight impairment of sight or hearing, or similar abnormality or combination of slight abnormalities." 20 C.F.R. Sec. 404.1502(a) (1968). Plaintiffs refer to this regulation as effecting a "slight impairment" or de minimis policy with respect to nonseverity rulings.

In 1978, when the Secretary promulgated the five-step evaluation process currently in use, he reworded this regulation to provide as follows:

Where an individual does not have any impairment(s) which significantly limits his or her physical or mental capacity to perform basic work-related functions, a finding shall be made that he or she does not have a severe impairment and therefore is not under a disability without consideration of the vocational factors.

20 C.F.R. Sec. 404.1503(c) (1979). The Secretary subsequently revised this regulation to read as follows:

If you do not have any impairment(s) which significantly limits your physical or mental ability to do basic work activities, we will find that you do not have a severe impairment and are, therefore, not disabled. We will not consider your age, education, and work experience.

20 C.F.R. Sec. 1520(c) (1980). Plaintiffs have not argued that the 1980 change was substantive rather than editorial.

At the time the wording of the regulations changed from "slight impairment" to "not ... severe," the Secretary stated that the change "was not intended to alter the levels of severity for a finding of disabled or not disabled." 43 Fed.Reg. 9297 (1978); see also 43 Fed.Reg. 55357-58 (1978). If the impairment is determined to be severe, the sequential evaluation requires consideration of whether the claimant is conclusively presumed disabled because the impairment fits within one of the listed impairments. If not, the evaluation continues by determining if claimant can perform his or her past work or, finally, whether s/he is able to perform other work in the economy. See 20 C.F.R. Sec. 404.1520(d)-(f) (1988). The Secretary's avowed purpose in...

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