Finnegan v. Matthews, 79-4158

• Decision Date: 16 April 1981
• Docket Number: No. 79-4158,79-4158
• Parties: Terry R. FINNEGAN, Sr., Plaintiff-Appellant, v. David MATTHEWS, Secretary of Health, Education and Welfare of the United States, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1340

641 F.2d 1340

Terry R. FINNEGAN, Sr., Plaintiff-Appellant, v. David MATTHEWS, Secretary of Health, Education and Welfare of the United States, Defendant-Appellee.

No. 79-4158.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Dec. 10, 1980.

Decided April 16, 1981.

Thomas Bothwell, Clarkston, Wash., for plaintiff-appellant.

Carroll D. Gray, Spokane, Wash., for defendant-appellee.

Appeal from the United States District Court for the Eastern District of Washington.

Before GOLDBERG, ^* FERGUSON and BOOCHEVER, Circuit Judges.

GOLDBERG, Circuit Judge:

This case presents the novel problem of interpreting a grandfather clause authored by Congress as part of its 1972 rewriting of sections of the Social Security Act ("Act"). Defendant, the Secretary of Health, Education and Welfare (hereinafter "Secretary" or "HEW"), seeks to rely on its own regulations, written after the passage of the Act, to read the prose of congressional Magi as those of legislative Indian givers, and to interpret a wise, fair grandfather clause as a grizzly, old miser. Because we find this Scrooge-like transmogrification of the clause to be inconsistent with its plain meaning and legislative history, with subsequent intimations by the judicial readership, and with the dictates of both policy and common sense, we reject the position of the Secretary.

I. PORTRAIT OF A GRANDFATHER: THE CLAUSE

In October, 1972, Congress repealed the categorical assistance program (Title XIV of the Social Security Act) which had provided federal grants to state-administered disability assistance programs. 42 U.S.C.A. §§ 1351-1355, Pub.L. No. 92-603, 86 Stat. 1484 § 303 (repealed 1972). At the same time, Congress established a program identified as Supplemental Security Income for Aged, Blind and Disabled ("SSI"), which became effective in January 1974. 42 U.S.C.A. §§ 1381-1383 (West 1974). Under the federally-administered SSI program, the federal government assumed the burden of providing benefits directly to those needy people who were "disabled" as defined in the Act. 42 U.S.C.A. § 1381 (West 1974).

As part of the definition of "disability" under the Act, Congress included the following "grandfather" clause:

(A)n individual shall also be considered to be disabled for purposes of this subchapter if he is permanently and totally disabled as defined under a State Plan approved under subchapter XIV or XVI of this chapter as in effect for October 1972 and received aid under such plan (on the basis of disability) for December 1973 (and for at least one month prior to July 1973), so long as he is continuously disabled as so defined. 42 U.S.C.A. § 1382c(a)(3)(E) (Supp.1980).

The requirement that the individual be disabled for at least one month prior to July 1973 was introduced as a last minute amendment to the original provision. The purpose of this "rollback" amendment was to prevent states from transferring their welfare recipients onto the disability rolls in anticipation of the federal takeover. Those individuals who received disability aid under a state plan during December 1973 but who had not received aid under such plan for at least one month prior to July 1973 known as "rollbacks" were subsequently classified, pursuant to agency regulations, as "presumptively disabled" and thus were eligible to receive SSI benefits until an initial determination of eligibility could be made. See 42 U.S.C.A. § 1383(a)(4)(B) (Supp.1980); 20 C.F.R. § 416.954. In contrast, the availability of federal disability benefits to those individuals who had received aid under a state plan for at least one month prior to July 1973 commonly known as "grandfatherees" is controlled solely by the operation of the statutory grandfather clause. ¹

II. FINNEGAN'S ACHE

On November 16, 1972 appellant Finnegan's application for state disability was approved by the state of Washington disability review board. Finnegan received benefits from the state until January 1 1974 at which time he was converted to and began receiving benefits from the federal SSI program. Based on the time period during which he had received disability benefits pursuant to the state plan, Finnegan qualified as a grandfatheree under the Act.

In December, 1975, Finnegan received notice that his benefits would cease on the basis that his medical condition had allegedly improved and his disability had ceased. Finnegan challenged these conclusions and contested the decision to terminate his benefits. At the agency hearing, the administrative law judge ("ALJ") concluded that Finnegan's medical condition had not improved, but nevertheless found that HEW was entitled, based on agency regulations, to make an "initial determination" of Finnegan's eligibility. Reviewing the evidence presented at the hearing, and based on an independent reading of the formerly employed state statute, Washington Administrative Code, Section 388-24-370, ² the ALJ concluded that Finnegan was not "disabled." The district judge affirmed the finding that Finnegan's condition had not improved, but concluded that the Secretary had the authority to "initially determine" the eligibility of both grandfatherees and rollbacks. Finding that substantial evidence supported the "initial determination" of no disability in the case at bar, the district judge affirmed the termination of Finnegan's benefits.

III. TO HAVE OR HAVE NOT: TWO INTERPRETATIONS OF THE CLAUSE

On appeal, Finnegan argues that the grandfather clause of the Act operated to automatically qualify grandfatherees to receive SSI benefits. Having been qualified by congressional grandfathering to receive benefits or, more correctly, having been exempted from the requirement that a potential recipient's eligibility be "initially determined" by the Secretary Finnegan contends that it was improper for the Secretary to terminate his benefits based on an "initial determination" and in the absence of any express finding of either medical improvement or error in the earlier state determination of eligibility. ³

In support of its right to "initially determine" a grandfatheree's eligibility for SSI benefits and, therefore, to terminate such benefits without a finding of medical improvement or error in the earlier state assessment of eligibility, HEW advances a significantly different interpretation of the grandfather clause. HEW argues that the clause was intended merely to guarantee the continued receipt of benefits by grandfatherees pending the Secretary's "initial determination" of continued disability. In contrast, individuals classified as "rollbacks" faced the danger of having had their benefits terminated (as of January 1, 1974), pursuant to the Act, pending the "initial determination" of their disability based on federal standards. ⁴ Thus, HEW argues, the grandfather clause should be read not to displace the agency regulations governing the proper means of determining eligibility, but merely to provide for continued payment until a proper determination could be made.

The main HEW regulation governing "initial determinations" provides:

Initial Determinations

The Administration shall, with respect to the application (or conversion) of ... any individual who is or claims to be an eligible individual ..., make findings of fact setting forth pertinent conclusions and an initial determination with respect to eligibility for supplemental security income benefits and the amount of such benefits.... 20 C.F.R. § 416.1403(a).

HEW reasons that since Finnegan was being "converted" to the federal SSI program, and since the grandfather clause should not be read to displace regulation 416.1403(a), Finnegan was required to satisfy an initial determination of eligibility in order to prevent the termination of his benefits. Since substantial evidence supports the finding that, based on an "initial determination," Finnegan was not disabled, HEW concludes that the decision to terminate benefits should be affirmed.

IV. IN QUEST OF THE HOLY GRAIL: SEARCHING FOR THE MEANING OF THE STATUTE

While success for the novelist often lies in suggestive ambiguity allowing the readers to share in the process of creation, perfection for a statute's crafter lies in unquestionable clarity, forcing his audience to participate only in the process of implementation. When those charged with the responsibility of enforcing a statute find sufficient ambiguity by which to substitute creation for rote implementation, the judiciary must insure that the interpretation of the statute conforms to the probable intent of statute's collective authors. Not gifted with literary omniscience, the judiciary must rely on the words of the statute, legislative history, subsequent case law, common sense and consideration of relevant policy implications in order to properly shape its critique.

(a) Plain Meaning

The best indicator of what statutory words mean is what they say. ⁵ In the present case, the grandfather clause provides that grandfatherees like Finnegan are to "be considered disabled for purposes of (the federal statute) if (they are) ... disabled as defined under a state plan ... so long as they are continuously disabled as so defined." 42 U.S.C.A. § 1382c(a)(3)(E) (Supp.1980) (emphasis added). The words "as so defined" refer back to the state definition of "disabled" and seem to be largely dispositive of the case. The grandfathered beneficiary is assured of receiving benefits, and correlatively, is legislatively exempt from ever having to meet the federal eligibility criteria, as long as he continues to satisfy the criteria formerly adopted and employed by the appropriate state in assessing "disability."

It is relatively easy to locate the former state statute based on which a grandfatheree was ruled to be "disabled;" ⁶ however, even the wisdom of hindsight will often be insufficient to allow an ALJ to understand fully how a state disability statute had been routinely interpreted and applied by the relevant...