966 F.2d 1124 (7th Cir. 1992), 90-3857, Gay v. Sullivan

Docket Nº:90-3857, 90-3858.
Citation:966 F.2d 1124
Party Name:Margaret 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.
Case Date:June 30, 1992
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

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966 F.2d 1124 (7th Cir. 1992)

Margaret GAY, Laura Kuykendall, Ruby Williams, et al.,



Louis W. SULLIVAN, M.D., Secretary of United States

Department of Health and Human Services,


Nos. 90-3857, 90-3858.

United States Court of Appeals, Seventh Circuit

June 30, 1992

Argued April 28, 1992.

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.,

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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).

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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.


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...

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