Bowen v. City of New York

• Decision Date: 02 June 1986
• Docket Number: No. 84-1923,84-1923
• Parties: Otis R. BOWEN, Secretary of Health and Human Services, et al., Petitioners v. CITY OF NEW YORK et al
• Court: U.S. Supreme Court

476 U.S. 467

106 S.Ct. 2022

90 L.Ed.2d 462

Otis R. BOWEN, Secretary of Health and Human Services, et al., Petitioners

v CITY OF NEW YORK et al.

No. 84-1923.

Argued Feb. 26, 1986.

Decided June 2, 1986.

Syllabus

The Social Security Act provides benefits to disabled persons under two programs administered by the Social Security Administration (SSA): the Social Security Disability Insurance Program (SSD) and the Supplemental Security Income Program (SSI). Regulations for both programs establish a five-step "sequential evaluation" process for determining eligibility for benefits. The initial determination of whether an individual is disabled is made by a state agency under the authority and control of the Secretary of Health and Human Services (Secretary). This determination is subject to review by the SSA. The disappointed claimant is then afforded a three-stage administrative review process. Proceeding through these three stages exhausts the claimant's administrative remedies. Thereafter, he may seek judicial review in Federal District Court, but must do so within 60 days of the Secretary's final decision as required by 42 U.S.C. § 405(g). Respondents brought a class action against the Secretary and the Commissioner of the SSA, seeking relief on behalf of all individuals residing in New York who had, within a specified time period, been denied disability benefits or whose benefits were terminated pursuant to an allegedly illegal internal policy of the Secretary. The District Court certified the class as including claimants who had not complied with the 60-day requirement for seeking judicial review and other claimants who had not exhausted their administrative remedies and obtained a final decision of the Secretary as required by § 405(g). Holding that the policy in question was illegal, the District Court ordered the Secretary to reopen the decisions denying or terminating benefits and to redetermine eligibility. The Court of Appeals affirmed.

Held:

1. The District Court properly included in the class claimants who had received a final decision from the Secretary but did not seek judicial review within the statutory 60-day period. The 60-day requirement is not jurisdictional but rather constitutes a statute of limitations. Equitable tolling of that requirement is consistent with Congress' intent in enacting § 405(g), and on the facts of this case the equities are in favor of tolling. Tolling serves the Act's purpose where the internal policy prevented the claimants from knowing of a violation of their rights. Pp. 2029-2031.

2. The District Court also properly included in the class claimants who failed to exhaust their administrative remedies. The court did not err in waiving exhaustion not only as to those claimants whose time to pursue further administrative appeals had lapsed but also as to those who still had time to pursue administrative remedies at the time the suit was filed. For claimants whose time to pursue further remedies had lapsed, exhaustion is excused for the same reasons requiring tolling of the 60-day statute of limitations. Since the claimants could not attack a policy of which they were unaware, it would be unfair to penalize them for not exhausting under such circumstances. It was also proper to waive the exhaustion requirement with respect to those claimants who still had time to file suit. The claims in the suit are collateral to the claims for benefits that class members had presented administratively. The class members neither sought nor were awarded benefits in the District Court, but rather challenged the Secretary's failure to follow the regulations. Moreover, the claimants would be irreparably injured if the exhaustion requirement were now enforced against them. The relief afforded by the District Court was fully consistent with the policies underlying exhaustion. Pp. 2031-2033.

742 F.2d 729 (CA2 1984) and 755 F.2d 31 (CA2 1985), affirmed.

POWELL, J., delivered the opinion for a unanimous Court.

Edwin S. Kneedler, Washington, D.C., for petitioners.

Frederick A.O. Schwarz, Jr., New York City, for appellees.

Justice POWELL delivered the opinion of the Court.

This class action was brought pursuant to 42 U.S.C. § 405(g) challenging an internal policy of the Secretary of Health and Human Services that had the effect of denying disability benefits to numerous claimants who may have been entitled to them. The issues presented are whether the District Court correctly included within the class (i) claimants who had received a final decision on their individual claims for benefits more than 60 days prior to the filing of this action, and (ii) other claimants who had not exhausted their administrative remedies.

I

The Federal Government provides benefits to disabled persons under two distinct programs administered by the Social Security Administration (SSA). The Social Security Disability Insurance Program (SSD) established by Title II of the Social Security Act, 49 Stat. 622, as amended, 42 U.S.C. § 401 et seq., pays benefits to disabled persons who have contributed to the program and who suffer from a mental or physical disability. The Supplemental Security Income Program (SSI) established by Title XVI of the Act, 86 Stat. 1465, as amended, 42 U.S.C. § 1381 et seq., provides benefits to indigent disabled persons. Both statutes define "disability" as the "inability to engage in any substantial gainful activity. . . ." §§ 423(d)(1)(A), 1382c(a)(3)(A). An individual is found to be under a disability only if "his physical or mental impairment or impairments are of such severity that he is not only unable to do his previous work but cannot, considering his age, education, and work experience, engage in any other kind of substantial gainful work which exists in the national economy." §§ 423(d)(2)(A), 1382c(a)(3)(B).

Pursuant to statutory authority, the Secretary of Health and Human Services (Secretary) has adopted complex regulations governing eligibility for SSD and SSI payments. 20 CFR pt. 404, subpart P (1985) (SSD); 20 CFR pt. 404, pt. 416, subpart I (1985) (SSI). The regulations for both programs are essentially the same and establish a five-step "sequential evaluation" process. The first step determines whether the claimant is engaged in "substantial gainful activity." If he is, benefits are denied. 20 CFR §§ 404.1520(a), (b), 416.920(a), (b) (1985). If he is not engaged in such activity, the process moves to the second step, which decides whether the claimant's condition or impairment is "severe"—i.e., one that significantly limits his physical or mental ability to do basic work activities. If the impairment is not severe, benefits are denied. §§ 404.1520(c), 416.920(c). If the impairment is severe, the third step determines whether the claimant's impairments meet or equal those set forth in the "Listing of Impairments" (listings) contained in subpart P, appendix 1, of the regulations, 20 CFR §§ 404.1520(d), 416.920(d). The listings consist of specified impairments acknowledged by the Secretary to be of sufficient severity to preclude gainful employment. If a claimant's condition meets or equals the listed impairments, he is conclusively presumed to be disabled and entitled to benefits. If the claimant's impairments are not listed, the process moves to the fourth step, which assesses the individual's "residual functional capacity" (RFC); this assessment measures the claimant's capacity to engage in basic work activities. If the claimant's RFC permits him to perform his prior work, benefits are denied. §§ 404.1520(e), 416.920(e).¹ If the claimant is not capable of doing his past work, a decision is made under the fifth and final step whether, in light of his RFC, age, education, and work experience, he has the capacity to perform other work. §§ 404.1520(f), 416.920(f). If he does not, benefits are awarded.

The determination whether an individual is disabled is made initially by a state agency acting under the authority and control of the Secretary. 42 U.S.C. §§ 421(a), 1383b(a); 20 CFR §§ 404.1503, 416.903 (1985); see Heckler v. Day, 467 U.S. 104, 106, and n. 4, 104 S.Ct. 2249, 2251, and n. 4, 81 L.Ed.2d 88 (1984). All decisions by the state agency are subject to Quality Assurance Reviews by the Regional Office and by the Central Baltimore Offices of SSA. If the responsible SSA officials determine during either review that a state agency erred, the case is "returned" to the State for correction.

The disappointed claimant is afforded a three-stage administrative review process beginning with de novo reconsideration by the State of the initial determination. 20 CFR §§ 404.909(a)(1), 416.1409(a) (1985). If a claimant is dissatisfied with the state agency's decision on reconsideration, he is entitled to a hearing by an administrative law judge (ALJ) within SSA's Office of Hearings and Appeals. 42 U.S.C. § 405(b)(1) (1982 ed., Supp. II), 42 U.S.C. § 1383(c)(1); 20 CFR §§ 404.929, 416.1429, 422.201 et seq. (1985).²

If the ALJ's decision is adverse to the claimant, the claimant may then seek review by the Appeals Council. 20 CFR §§ 404.967-404.983, 416.1467-416.1483 (1985). Proceeding through these three stages exhausts the claimant's administrative remedies. Following the determination at each stage, a disappointed claimant is notified that he must proceed to the next stage within 60 days of notice of the action taken or the decision will be considered binding. E.g., 20 CFR §§ 404.905, 404.909(a)(1), 416.1405, 416.1409(a), 404.955(a), 404.968(a)(1), 416.1455(a), 416.1468(a) (1985). Thereafter, he may seek judicial review in federal district court, pursuant to 42 U.S.C. § 405(g). See 42 U.S.C. §§ 421(d), 1383(c)(3); 20 CFR §§ 404.900(a)(5), 404.981, 416.1400(a)(5), 416.1481, 422.210 (1985).³

II

On February 8, 1983, respondents, the City of New York, the New York City Health and Hospitals Corporation, and two state officials, suing on their own behalf and as parens patriae,...