Dixon v. Bowen, 83 Civ. 7001 (WCC)

• Decision Date: 05 November 1987
• Docket Number: No. 83 Civ. 7001 (WCC),83 Civ. 8264 (WCC),83 Civ. 8609 (WCC) and 84 Civ. 110 (WCC).,83 Civ. 7001 (WCC)
• Citation: 673 F. Supp. 123
• Parties: David DIXON, individually and on behalf of all others similarly situated, et al., Plaintiff, v. Otis R. BOWEN, M.D. Secretary of the Department of Health and Human Services, Defendant. And Other Related Cases.
• Court: U.S. District Court — Southern District of New York

673 F. Supp. 123

David DIXON, individually and on behalf of all others similarly situated, et al., Plaintiff, v. Otis R. BOWEN, M.D. Secretary of the Department of Health and Human Services, Defendant.

And Other Related Cases.

Nos. 83 Civ. 7001 (WCC), 83 Civ. 8264 (WCC), 83 Civ. 8609 (WCC) and 84 Civ. 110 (WCC).

United States District Court, S.D. New York.

November 5, 1987.

Robert Abrams, Atty. Gen. for the State of N.Y., New York City, for plaintiff-intervenors, Cesar Perales and the State of N.Y.; Mary Fisher Bernet, Asst. Atty. Gen., of counsel.

John E. Kirklin, The Legal Aid Society, Civil Appeals & Law Reform Unit, New York City (Matthew Diller, of counsel), Douglass J. Seidman, The Legal Aid Society, New York City (Jean Schneider, of counsel), Morton B. Dicker, The Legal Aid Society, New York City (Susan Sternberg, of counsel), for the plaintiff class.

Nancy Morawetz, Washington Square Legal Services, New York City (Barbara Quackenbos, Legal Intern, of counsel), Counsel to The Legal Aid Society.

Rudolph W. Giuliani, U.S. Atty., S.D. N.Y., New York City (Steven E. Obus, Asst. U.S. Atty., Sapna V. Raj, Sp. Asst. U.S. Atty., Annette H. Blum, Chief Counsel — Region II, Peter G. O'Malley, Asst. Regional Counsel, Office of the General Counsel, Dept. of Health and Human Services, of counsel), for defendant.

OPINION AND ORDER

WILLIAM C. CONNER, District Judge.

Plaintiffs are applicants for, or recipients of, benefits based on disability under the federal Supplemental Security Income ("SSI") and Old Age Survivor's Disability Insurance ("OASDI") programs, both of which are administered by the Secretary of Health and Human Services ("the Secretary") pursuant to the Social Security Act, as amended, 42 U.S.C. § 401 et seq. ("the Act"). They sue on behalf of themselves and all others similarly situated, seeking declaratory and injunctive relief against the Secretary's use of the severity regulations (20 C.F.R. §§ 404.1520(c) and 416.920(c)) in evaluating disability claims. Pursuant to these regulations, the Secretary is authorized to deny claims based on a finding that a claimant's impairment is not severe. Specifically, the Secretary determines, solely on the basis of medical factors, whether the claimant has a "severe" impairment which "significantly limits his physical or mental ability to do basic work activities." If the Secretary determines that a claimant's impairments are not severe, the Secretary may deny benefits on that basis alone without inquiring further.

This action was commenced in September 1983. By order dated July 26, 1984, Judge Lasker conditionally certified a statewide class consisting of all disability claimants whose benefits had been, or would in the future be, denied or terminated pursuant to the severity regulations or Social Security Ruling (SSR) 82-55, after July 20, 1983. The Court also granted a preliminary injunction, prohibiting the Secretary from denying or terminating disability benefits on the basis of the severity regulations. Dixon v. Heckler, 589 F.Supp. 1494, 1512 (S.D. N.Y.1984).

On appeal, the Second Circuit affirmed the court's order granting a preliminary injunction. Dixon v. Heckler, 785 F.2d 1102 (2d Cir.1986). Thereafter, the Supreme Court granted certiorari, vacated the judgment of the Court of Appeals and remanded the case for further consideration in light of its decision in Bowen v. Yuckert, ___ U.S. ___, 107 S.Ct. 2287, 96 L.Ed.2d 119 (1987), where the Court held that the legislative history and the language of the Act supported the Secretary's so called "step 2" regulation requiring disability claimants to make a threshold showing of impairment, based on medical criteria alone, before vocational factors would be considered. 107 S.Ct. at 2293-93. Subsequently, the Second Circuit ordered that the preliminary injunction issued by Judge Lasker be vacated, and remanded the case for further proceedings in light of Yuckert. See Dixon v. Heckler, 827 F.2d 765 (2d Cir.1987).

Following the ruling of the Supreme Court in Yuckert, defendant's counsel informed plaintiffs' counsel that the Secretary planned to reimplement the step 2 regulation on October 5, 1987. Plaintiffs maintain that because the record in this case demonstrates a systematic misapplication of the severity regulation, and shows that if the regulation is reimplemented this pattern of abuse will continue, this Court must enjoin application of the regulation and reinstate Judge Lasker's injunction.

Discussion

In ruling on these questions, defendant maintains the Court must take note of the fact that due to the Secretary's compliance with the preliminary injunction, the claims of the named plaintiffs, as well as the claims of the unnamed class members were readjudicated without reference to step two. Accordingly, defenants maintain, in light of the Supreme Court's decision in Yuckert, the Reform Act, the promulgation of new SSRs, and the Secretary's three-year compliance with the preliminary injunction, it is plain that the named plaintiffs lack standing to bring these claims, that continued class certification is inappropriate, and that no further relief is warranted in this case.

Since the entry of the injunction by Judge Lasker in 1984, SSR 82-55, the ruling challenged in plaintiffs' complaint has been rescinded, and SSR 82-56 has been superseded by SSR 86-8. Further, the Secretary has recently admonished in his new guideline:

Great care should be exercised in applying the not severe impairment concept. If an adjudicator is unable to determine clearly the effect of an impairment or combination of impairments on the individual's ability to do basic work activities, the sequential evaluation process should not end with the not severe evaluation step. Rather, it should be continued. In such a circumstance, if the impairment does not meet or equal the severity level of the relevant medical listing, sequential evaluation requires that the adjudicator evaluate the individual's ability to do past work, or to do other work based on the consideration of age, education, and prior work experience. Social Security Ruling 85-28.

In commenting upon this guideline in Yuckert, Justice O'Connor noted,

applied in this manner, step 2, I believe, can produce results consistent with the statute in the vast majority of cases and still facilitate the expeditious and just settlement of claims. Yuckert 107 S.Ct. at 2300.

In another recent opinion, the First Circuit Court of Appeals held that "the step 2 regulation, as interpreted by the Secretary in Ruling 85-28, ... is a valid de minimis screening device." The court noted that it found "no indication that Congress intended to preclude the Secretary from using medical factors alone to screen out applicants whose impairments are so minimal that, as a matter of common sense, they are clearly not disabled from gainful employment." The court went on to state that "where, as here, the statue expressly entrusts the Secretary with the responsibility for implementing a provision by regulation, judicial review is limited to determining whether the regulations promulgated exceeded the Secretary's statutory authority and whether they are arbitrary and capricious." McDonald v. Secretary of Health and Human Services, 795 F.2d 1118, 1122 (1st Cir.1986) quoting Heckler v. Campbell, 461 U.S. 458, 466, 103 S.Ct. 1952, 1957, 76 L.Ed.2d 66 (1983).

In Yuckert, Justice O'Connor observed that "respondent's evidence suggests that step 2 has been applied systematically in a manner inconsistent with the statute." Id. Indeed, a number of courts which have ruled on these related cases have noted that the evidence suggests that step 2 has been applied improperly.

Plaintiffs dispute defendant's first contention, that plaintiffs lack standing to continue this suit, by pointing out that a number of the original plaintiffs have not yet had their claims readjudicated. Plaintiff Carmen Feliciano's benefits were terminated on the grounds that her impairments were no longer severe. She is currently receiving interim benefits pursuant to paragraphs 4 and 6 of the preliminary injunction order and the interim benefit provisions of the Reform Act. See Declaration of Nancy Morawetz, dated October 5, 1987, at paragraph 3. According to plaintiffs, when the Secretary's prior decision to terminate Ms. Feliciano's benefits on the ground that her impairments are "not severe" is reevaluated, she will be subject to the same illegal practices that caused her benefits to be terminated prior to the filing of this lawsuit.

Further, according to the plaintiffs, there are many class members whose cases are still in the process of readjudication. One example of such a plaintiff is Carol Johnson, whose case was recently remanded by the Second Circuit. See Johnson v. Bowen, 817 F.2d 983 (2d Cir.1987). Ms. Johnson first applied for benefits before the Dixon injunction and her claim was rejected on the basis of the step 2 regulation. The Appeals Council then remanded her case pursuant to Dixon. Since that time, she has been pursuing administrative and judicial appeals. Most recently, the Second Circuit found that the Secretary had failed to follow the treating physician rule, and remanded for reconsideration of the claim. Thus, Ms. Johnson's claim which was denied once at step 2 has not reached a final adjudication. Absent continued injunctive relief, according to plaintiffs, Ms. Johnson will once again be subject to the misapplication of step 2.

Another example of a plaintiff who has still not yet received relief is Ms. Roza Piernik. See Declaration of Susan R. Sternberg, dated October 5, 1987. Ms. Piernik was denied disability benefits by the agency in 1983. While her case was on appeal in the Eastern District of New York, counsel for the parties stipulated to a remand pursuant to the Dixon injunction. In May 1985 the administrative law judge who presided at the remand hearing concluded that Ms. Piernik was disabled...