Gay v. Sullivan

Citation966 F.2d 1124
Decision Date30 June 1992
Docket NumberNos. 90-3857,90-3858,s. 90-3857
PartiesMargaret GAY, Laura Kuykendall, Ruby Williams, et al., Plaintiffs-Appellees, v. Louis W. SULLIVAN, M.D., Secretary of United States Department of Health and Human Services, Defendant-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)

John M. Bouman, Cheryl Graves, Legal Assistance Foundation of Chicago, Chicago, Ill., Linda L. Zazove, Land of Lincoln Legal Assistance Foundation, East St. Louis, Ill., Andrew Cohen (argued), Legal Assistance Foundation of Chicago, Chicago, Ill., for plaintiffs-appellees.

Michael C. Messer (argued), Gary A. Sultz, Department of Health and Human Services, Region V, Office of the General Counsel, Nancy K. Needles, Asst. U.S. Atty., Office of the U.S. Atty., Civ. Div. Appellate Section, Chicago, Ill., for defendant-appellant.

Before COFFEY and RIPPLE, Circuit Judges, and ESCHBACH, Senior Circuit Judge.

ESCHBACH, Senior Circuit Judge.

Supplemental Security Income (SSI) benefits, which are payable to needy aged, blind, and disabled individuals, depend on beneficiaries' other income. The more the beneficiary receives from other sources, the less SSI benefits he or she is allotted. 42 U.S.C. § 1382(b). This case arises from a glitch in the operation of two congressionally mandated policies regarding the Secretary of Health and Human Services' calculation of SSI beneficiaries' income.

The first policy is complementarity of welfare benefits: families that receive Aid to Families with Dependent Children (AFDC) 1 should not have their AFDC benefits reduced by virtue of the fact that one family member receives SSI. To achieve this policy, Congress has declared that as soon as a member of an AFDC family begins to receive SSI benefits, he or she is no longer regarded as a member of the family, and his or her income is not included in the family income. 42 U.S.C. § 602(a)(24). 2 Thus, section 602(a)(24) creates a sort of fiction whereby an individual cannot simultaneously receive both AFDC and SSI benefits; this fiction allows the individual's family to receive its full entitlement to both types of benefits. The second policy is accuracy in income estimations: Congress has mandated that the Secretary of Health and Human Services base SSI beneficiaries' income calculations on past income, rather than on less accurate projections of future income. Under this "retrospective monthly accounting" system (RMA), the secretary must compute a beneficiary's income based upon the recipient's income in a prior month. 42 U.S.C. § 1382(c)(1). Pursuant to this legislation, the Secretary elected to determine benefit amounts based upon beneficiaries' income two months before the months in which the benefits were to be received. 20 C.F.R. § 416.420(a).

Complementarity plus accuracy sometimes produces a perverse inaccuracy. Consider individuals who make the transition from AFDC eligibility to SSI eligibility. As soon as AFDC beneficiaries become eligible to receive SSI benefits, they are no longer eligible for AFDC. 42 U.S.C. § 602(a)(24). But because of the Secretary's two-month retrospective accounting system, these individuals will have AFDC payments included in their estimated incomes for the first two months of SSI eligibility even though they cannot receive both AFDC and SSI simultaneously. The intersection of the two policies causes the secretary automatically to overestimate SSI beneficiaries' income for two months, and thereby to underpay their benefits for two months.

Congress eventually eliminated this glitch by enacting the Omnibus Budget Reconciliation Act of 1987 (OBRA 1987) § 9106, codified at 42 U.S.C. § 1382(c)(5), which provides that AFDC payments received by an SSI beneficiary shall be counted toward income only in the month received. 3 Congress provided that this section, enacted in 1987, would "become effective April 1, 1988." § 9106(b).

But a class of people who made the transition from AFDC to SSI benefits before Congress eliminated the glitch brought suit against the Secretary for back SSI benefits. The class claims that the Secretary's method of computing their income violated their rights under the Due Process Clause of the Fifth Amendment to the United States Constitution, the Social Security Act, 42 U.S.C. § 301 et seq., and the Administrative Procedure Act, 15 U.S.C. § 551 et seq. The district court certified the plaintiff class, 4 and then granted it summary judgment on the ground that OBRA 1987, which was passed after the plaintiffs' benefits were paid but while the suit was pending in the district court, applied retroactively to benefits paid before its enactment. Thus, the plaintiffs prevailed below because the district court believed that Congress intended not only to eliminate the glitch for the future but to remedy its past effects. The district court did not reach the plaintiffs' other claims. Because we believe that Congress intended OBRA 1987 to apply prospectively only, we reverse the grant of summary judgment, vacate the entire district court order, and remand to the district court for consideration of the plaintiffs' other claims.

Analysis

We have recently discussed the confusion surrounding the law of retroactivity in great detail. See Mozee v. American Commercial Marine Service Company, 963 F.2d 929 (7th Cir.1992). In brief, the Supreme Court's retroactivity jurisprudence appears self-contradictory on the question whether, absent congressional directive, statutes apply prospectively or retroactively. Compare Bradley v. School Board, 416 U.S. 696, 715, 94 S.Ct. 2006, 2018, 40 L.Ed.2d 476 (1974) ("even where the intervening law does not explicitly recite that it is to be applied to pending cases, it is to be given recognition and effect") with Bowen v. Georgetown University Hospital, 488 U.S. 204, 109 S.Ct. 468, 471, 102 L.Ed.2d 493 (1988) ("Retroactivity is not favored in the law. Thus, congressional enactments ... will not be construed to have retroactive effect unless their language requires this result."). Seventh Circuit law reflects this confusion. Compare Littlefield v. McGuffey, 954 F.2d 1337, 1345 (7th Cir.1992) (statute is retroactive unless its application would result in manifest injustice or there is legislative intent to the contrary) with United States v. Kairys, 782 F.2d 1374, 1381 (7th Cir.1986) ("Legislative enactments are presumed prospective absent clear statements by Congress to the contrary."). Although the Supreme Court has declined so far to resolve these tensions, see Kaiser Aluminum & Chem. Corp. v. Bonjorno, 494 U.S. 827, 110 S.Ct. 1570, 1577, 108 L.Ed.2d 842 (1990), the Court's recent trend has certainly been toward prospectivity. See Bennett v. New Jersey, 470 U.S. 632, 105 S.Ct. 1555, 1561, 84 L.Ed.2d 572 (1985) (absent clear indication of retroactivity in statutes or legislative history, substantive standards governing grant amendments do not apply retroactively to previously made grants); Georgetown University Hospital, 109 S.Ct. at 475 (agencies do not have power to promulgate retroactive rules without express statutory delegation); Kaiser Aluminum, 110 S.Ct. at 1577-78 (when amendment of postjudgment interest statute specified effective date and tied interest calculation to date of entry of judgment, amendment did not apply retroactively to judgment entered before effective date). We do not need to predict the path of the Court's jurisprudence, however. Both lines of precedent agree that if congressional intent is clear, then it is controlling. Kaiser Aluminum, 110 S.Ct. at 1578; Mozee, 963 F.2d at 932. Moreover, we have already held in Mozee that prospectivity is "the general rule," and that retroactivity applies in only "a narrow category of cases" where the statute does not affect "substantive rights and obligations." Id. at 936-937. Even remedial statutes that do not affect substantive rights will not always apply retroactively, however, id. at 938-939 (holding that remedial provisions will not be applied retroactively on appeal where such application would force parties to relitigate issues already decided below), and the precise contours of this "narrow category" remain undefined. We do not need to decide whether OBRA 1987 § 9106 constitutes the type of remedial provision that ought to apply retroactively absent express congressional direction, because we believe that Congress intended the law to apply prospectively only.

The district court attempted to divine Congress' intent but asked the wrong question. The district court applied a version of the above-stated rule distinguishing between substantive and remedial statutes; 5 it held that statutes "which are remedial in nature ... shall be applied to all claims pending at the time of the statute's enactment." Mem.Op. at 12, 1990 WESTLAW 70379 at * 5. The district court then looked at the language of the statute and at the legislative history to determine whether Congress understood the law as remedial or substantive. The court ultimately decided that OBRA 1987 should be applied retroactively because Congress intended the statute to be a "technical improvement" in the method of calculating SSI payments for beneficiaries who are also AFDC recipients, and a technical improvement is remedial. Mem.Op. at 11, 1990 WESTLAW 70379 at * 5. The court further held that retroactive application would not result in "manifest injustice" to the Secretary. Mem.Op. at12-15, 1990 WESTLAW 70379 at *5-6.

The district court erred by misconstruing the issue of congressional intent. The first question is not whether Congress intended the law to be remedial or substantive. The court should have first decided whether Congress had a more specific intention regarding whether the law should apply retroactively. Only if congressional intent on that point is unclear does the remedial/substantive distinction come into play. See Kaiser Aluminum, 110 S.Ct. at 1577 ("where...

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    ...rule that "statutory provisions impacting substantive rights and obligations will not be retroactively applied"). Gay v. Sullivan, 966 F.2d 1124, 1127 (7th Cir.1992); see also Landgraf v. USI Film Products, 511 U.S. 244, 114 S.Ct. 1483, 128 L.Ed.2d 229 But where retroactivity is concerned, ......
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5 books & journal articles
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    • James Publishing Practical Law Books Social Security Disability Collection - James' Best Materials. Volume 2
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    ...in retroactive rulemaking, and (ii) the agency clearly intended the rule to be applied retroactively. Id., citing Gay v. Sullivan , 966 F.2d 1124 (7th Cir. 1992); Pope v. Shalala , 998 F.2d 473 (7th Cir. 1993). The court determined that the application of the revised listing to the claimant......
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    ...in retroactive rulemaking, and (ii) the agency clearly intended the rule to be applied retroactively. Id., citing Gay v. Sullivan , 966 F.2d 1124 (7th Cir. 1992); Pope v. Shalala , 998 F.2d 473 (7th Cir. 1993). The court determined that the application of the revised listing to the claimant......
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