Johnson v. Sullivan

• Decision Date: 20 March 1991
• Docket Number: No. 89-2676,89-2676
• Parties: , Unempl.Ins.Rep. CCH 15842A Edna JOHNSON and Jerome Montgomery, Plaintiffs-Appellees, v. Louis W. SULLIVAN, M.D., Secretary of Health and Human Services, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 346

922 F.2d 346

32 Soc.Sec.Rep.Ser. 136, Unempl.Ins.Rep. CCH 15842A

Edna JOHNSON and Jerome Montgomery, Plaintiffs-Appellees, v. Louis W. SULLIVAN, M.D., Secretary of Health and Human

Services, Defendant-Appellant.

No. 89-2676.

United States Court of Appeals, Seventh Circuit.

Argued Nov. 3, 1989.

Reargued En Banc Nov. 27, 1990.

Issued Dec. 28, 1990.

Order on Denial of Rehearing and

Rehearing En Banc March 20, 1991.

John M. Bouman, Robert E. Lehrer, Theodora Rand, Legal Assistance Foundation of Chicago, Chicago, Ill., for plaintiff-appellee.

Anton R. Valukas, U.S. Atty., Linda A. Wawzenski, Asst. U.S. Atty., Office of the U.S. Atty., Chicago, Ill., Robert S. Greenspan, Frank A. Rosenfeld, Dept. of Justice, Civ. Div., Appellate Section, Washington, D.C., for defendant-appellant.

Before BAUER, Chief Judge, CUMMINGS, WOOD, Jr., CUDAHY, POSNER, COFFEY, EASTERBROOK, RIPPLE, MANION and KANNE, Circuit Judges. ^*

BAUER, Chief Judge.

This class action challenging various regulations and policies of the Secretary of Health and Human Services (the "Secretary") is now in its eighth year. In 1983, plaintiffs originally filed suit claiming that the Secretary's "severity regulation," the second step in a five-step disability screening analysis, violated the plain terms of the Social Security Act (the "Act"). Beyond this, the plaintiffs contended that the Secretary's policy of not considering the combined effects of non-severe impairments (the "no-combination" policy) also was contrary to the language and intent of the Act. In our first encounter with this case, we affirmed the district court's injunction against the use of either regulation. Johnson v. Heckler, 769 F.2d 1202 (7th Cir.1985) ("Johnson I" ). Upon reviewing a similar challenge in a case from the Ninth Circuit, however, the Supreme Court held the severity regulation facially valid as a de minimis screening device, Bowen v. Yuckert, 482 U.S. 137, 107 S.Ct. 2287, 96 L.Ed.2d 119 (1989), and therefore vacated our opinion for redetermination in light of this decision. See Bowen v. Johnson, 482 U.S. 922, 107 S.Ct. 3202, 96 L.Ed.2d 690 (1987). Following our remand, 834 F.2d 173 (7th Cir.1987), the district court held that although the severity regulation must now be accepted as a valid de minimis screening device, the Yuckert decision did not affect the reasoning or the holding of its injunction against the Secretary's no-combination policy. 697 F.Supp. 346 (N.D.Ill.1988), clarified at 714 F.Supp. 1476 (N.D.Ill.1989). We now review the Secretary's various challenges to this decision. For the following reasons, we affirm the district court on the merits, but reverse as to the proper composition of the plaintiff class and remand with instructions.

I. BACKGROUND

Title II of the Social Security Act provides for the payment of insurance benefits to persons who have contributed to the program and who suffer from a physical or mental disability. 42 U.S.C. Sec. 423(a)(1)(D). Title XVI of the Act provides for the payment of disability benefits to indigent persons under the Supplemental Security Income ("SSI") program. 42 U.S.C. Sec. 1382(a). Under either title, the Act defines "disability" as the "inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months...." 42 U.S.C. Secs. 423(d)(1)(A) & 1382(c)(3)(A). The Secretary of Health and Human Services has authority to promulgate various regulations in order to make such determinations. 42 U.S.C. Secs. 405(a) & 1383(d)(1). Since 1976, the Secretary has used a five-step sequential inquiry to determine whether a person is disabled and therefore entitled to benefits. 20 CFR Secs. 404.1520 & 416.920 (1983). ¹

Step two of the evaluation process examines whether a claimant's impairment is "severe." The regulation provides:

If you do not have any impairment or combination of impairments 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 CFR Secs. 404.1520(c) & 416.920(c) (emphasis added). If the claimant is determined not to suffer from a severe impairment, then disability benefits are denied. If the impairment is severe, however, the evaluation continues through three additional levels of analysis.

On August 20, 1980, the Secretary issued a list of impairments that were automatically considered to be nonsevere. SSR-82-55. Examples of per se non-severe impairments in the list included: osteoarthritis, hypertension, history of chest pain, colostomy, peptic ulcer, chronic liver disease, chronic renal disease, diabetes mellitus, epilepsy, and IQ of 80 or greater. Id. The Secretary also amended the procedure under step two by stating that she would "consider the combined effects of unrelated impairments only if all were severe." 45 Fed.Reg. 55574 (1980) (codified at 20 CFR Sec. 404.1522 (1983)).

An initial disability determination is made by a state agency acting under the authority and supervision of the Secretary. 42 U.S.C. Secs. 421(a) & 1383b(a); 20 CFR Secs. 404.1503 & 416.903 (1986). If the state agency denies a claim for benefits, the claimant may pursue a three-stage administrative review process. See Bowen v. Yuckert, 482 U.S. at 142, 107 S.Ct. at 2291. First, the state agency reconsiders the determination de novo. 20 CFR Secs. 404.909(a) & 416.1409(a). Second, the claimant may request a hearing before an administrative law judge ("ALJ") within the Bureau of Hearings and Appeals of the Social Security Administration. 42 U.S.C. Secs. 405(b)(1) & 1383(c)(1); 20 CFR Secs. 404.929, 416.1429 & 422.201 et seq. (1986). Third, the claimant may seek review of the ALJ's determination before the Appeals Council. 20 CFR Secs. 404.967 & 416.1467. After exhausting this administrative process, a dissatisfied claimant may seek review of the determination in federal district court. 42 U.S.C. Sec. 405(g). See Bowen v. City of New York, 476 U.S. 467, 472, 106 S.Ct. 2022, 2025, 90 L.Ed.2d 462 (1986).

II. PROCEDURAL HISTORY

This opinion represents the tenth time a court has written on this case. The district court carefully retraced the path of this cyclone at 697 F.Supp. 346-50, and we will not duplicate that effort. Nevertheless, some knowledge of the tortured procedural route of this case is needed to understand its current posture.

In 1982, Edna Johnson sought disability benefits under Title XVI of the Social Security Act, the SSI program. In a separate action, Jerome Montgomery pursued a claim under Title II, the Old-Age and Survivors Disability Insurance ("OASDI") program. That year, the Appeals Council of the Social Security Administration, applying the five-step process, rejected both claims. Neither claim survived the step two severity regulation. In 1983, Johnson and Montgomery filed suit in the Northern District of Illinois challenging several aspects of the Secretary's regulations concerning the determination of a disability. Their complaint subsequently was amended to maintain their suit as a class action pursuant to Fed.R.Civ.P. 23. On December 7, 1983, Judge Bua certified the proposed class, which included all persons in Illinois whose applications for benefits were denied or terminated due to the application of the step two severity regulation. 100 F.R.D. 70 (N.D.Ill.1983).

In an opinion issued September 19, 1984, Judge Bua granted plaintiffs' motion for summary judgment on their complaint. Johnson v. Heckler, 593 F.Supp. 375. Judge Bua found the severity regulation to be facially invalid and inconsistent with the Social Security Act, as it impermissibly increased the claimant's burden of proof. In addition, the plaintiffs contended, and Judge Bua found, that the supplemental regulations that barred consideration of the combined effects of any impairment defined as "non-severe" conflicted with the terms of the Act. The court entered an injunction barring further enforcement of the challenged regulations. Beyond this, Judge Bua ordered new disability hearings for class members, payment of retroactive benefits to claimants who were now determined to be disabled, and reinstatement of benefits terminated by the improper regulations. Id. at 378-82. The court subsequently rejected the Secretary's attempts to amend the judgment by challenging the size of the plaintiff class. 607 F.Supp. 875, 878-881 (N.D.Ill.1984). On appeal, this court affirmed the orders in all respects. Johnson I, 769 F.2d 1202, rehearing denied, 776 F.2d 166 (7th Cir.1985).

On June 8, 1987, while the Secretary's petition to the Supreme Court was pending, the Court issued its decision in Bowen v. Yuckert, 482 U.S. 137, 107 S.Ct. 2287, upholding the facial validity of the step-two severity regulation. The Court then granted certiorari on Johnson I, vacated this court's opinion, and remanded the case for redetermination in light of its decision in Yuckert. 482 U.S. 922, 107 S.Ct. 3202, 96 L.Ed.2d 690 (1987). We vacated that portion of the district court's injunction prohibiting the Secretary's application of the step-two severity regulation. 834 F.2d 173. We then remanded the remainder of the case to the district court for redetermination of the issues consistent with Yuckert. ²

On remand, in its order of October 6, 1988, the district court noted that "the Supreme Court (has) clearly rejected the notion that the severity regulation had altered the burden of proof for disability claimants." Johnson v. Bowen, 697 F.Supp. 346, 351 (N.D.Ill.1988). Judge Bua stated that his earlier decision enjoining the use of the severity regulation was based on his belief in its "inherent invalidity." Thus, he recounted that his earlier decision had found "that any application of...