Goulet v. Schweiker, Civ. A. No. 82-3.

• Court: United States District Courts. 2nd Circuit. District of Vermont
• Writing for the Court: Kirk I. Victor, U.S. Dept. of Justice, Washington, D.C., for defendants
• Citation: 557 F. Supp. 1250
• Parties: Frederick GOULET, on behalf of himself and all others similarly situated v. Richard S. SCHWEIKER, in his official capacity as Secretary of the Department of Health and Human Services and Donald T. Regan, in his official capacity as Managing Trustee of the Federal Disability Insurance Trust Fund.
• Docket Number: Civ. A. No. 82-3.
• Decision Date: 24 February 1983

557 F. Supp. 1250

Frederick GOULET, on behalf of himself and all others similarly situated
v.
Richard S. SCHWEIKER, in his official capacity as Secretary of the Department of Health and Human Services and Donald T. Regan, in his official capacity as Managing Trustee of the Federal Disability Insurance Trust Fund.

Civ. A. No. 82-3.

United States District Court, D. Vermont.

February 24, 1983.

557 F. Supp. 1251

Thomas Garrett and Michael D. Sirotkin, Vermont Legal Aid, Inc., Burlington, Vt., for plaintiffs.

Kirk I. Victor, U.S. Dept. of Justice, Washington, D.C., for defendants.

COFFRIN, Chief Judge.

This is an action brought by Frederick Goulet challenging the decision of the defendant Secretary of the Department of Health and Human Services (hereinafter "the Secretary"), to reduce the amount of Disability Insurance Benefits (DIB) benefits awarded to plaintiff under Title II of the Social Security Act, 42 U.S.C. § 401 et seq., pursuant to 42 U.S.C. § 1320a-6, as an offset to the excess supplemental security income (SSI) benefits already received by plaintiff. Section 1320a-6 provides that where an individual is found entitled to retroactive Title II benefits for one or more months during which he received SSI benefits, the retroactive benefits otherwise payable shall be reduced by an amount equal to the SSI benefits which would not have been paid had the individual received the Title II benefits at the time they were due.¹ The provision was enacted to prevent "windfalls" of SSI payments which occurred when a person received retroactive Title II benefits for a period during which he had already received SSI benefits. See S.Rep. No. 408, 96th Cong. 2d Sess. 78, reprinted in 1980 U.S.Code Cong. & Ad.News 1356. The provision became effective on July 1, 1981.²

Plaintiff alleges that the Secretary has improperly applied this statutory provision to claims which were adjudicated or determined before July 1, 1981. Plaintiff seeks to have a nationwide class certified for the purpose of bringing a class action to challenge the Secretary's alleged policy of deliberately delaying the adjudication or determination of joint DIB and SSI claims during the months prior to July 1, 1981. Such a delay would then allow the Secretary to apply the new amendment and authorize similar offsetting deductions to claims which the plaintiffs allege should be insulated from such deductions. The parties differ as to their definitions of "adjudication" and/or "determination" and over which is the applicable term. Two other individuals have filed motions to intervene alleging that their benefits have been similarly reduced.³ The question on the merits turns upon what is meant by the words "entitlement for which is determined on or after July 1, 1981" contained in Pub.L. 96-265; 42 U.S.C. § 1320a-6 note. A preliminary issue, that of jurisdiction, must be resolved before the court can reach the merits, however. The resolution of this issue depends upon the characterization of plaintiff's claim.

Background

Plaintiff applied for DIB and SSI benefits based upon disability on June 17, 1980.

557 F. Supp. 1252

Both applications were denied originally and again upon reconsideration. An Administrative Law Judge (ALJ) conducted a hearing and issued a decision on June 22, 1981. The ALJ determined that plaintiff was disabled as of August 28, 1979; his Title II benefits were to begin in February 1980, after the statutory five-month waiting period. See 42 U.S.C. § 423(c)(2). Plaintiff's entitlement to SSI benefits was effective June 17, 1980, the date of his application. On July 2, 1981, a benefit authorizer acted on plaintiff's claim. On July 22, 1981, plaintiff was sent an SSI payment entitlement notification, and his SSI benefits began shortly thereafter. On September 17, 1981, plaintiff was sent a Title II award certificate, which explained the new provisions of section 1320a-6 and stated that plaintiff's benefits were subject to reduction if he fell within the statutory specifications. On November 4, 1981, plaintiff was notified that section 1320a-6 was applicable and that his benefits would be reduced. This notice explained that plaintiff's social security benefits were being reduced because he had received supplemental security income payments during the same period for which he received social security benefits. The notice went on to say that if plaintiff had any questions, he could contact any social security office. At the bottom of the form in bold print it was stated: "Important: See other side for an explanation of your appeal rights and other information." On October 30, 1981 plaintiff received a check in the amount of $3887 for partial payment of the retroactive benefits due him. There was no interruption in the payment of plaintiff's SSI benefits. On January 7, 1982, plaintiff filed the initial complaint in this action in this court. On the same day plaintiff filed a request with the Department of Health and Human Services for reconsideration of the reduction in his Title II retroactive benefits

On June 28, 1982, Robert Sanderson petitioned the court to intervene in the present action. The government has no objection to such intervention. Sanderson was an applicant for DIB and SSI benefits who received a favorable ALJ decision as to his eligibility on April 8, 1981. Sanderson's award of retroactive benefits, similarly to Goulet's, was later reduced to offset the SSI benefits paid to Sanderson during the period of Title II retroactive eligibility. Like Goulet, Sanderson requested reconsideration; it was denied. He then requested and received a hearing before an ALJ. On October 25, 1982, the ALJ decided in favor of Sanderson. That is, the ALJ determined that the offset by the Secretary of Sanderson's social security benefits was incorrect. The opinion directed the Secretary to pay to Sanderson the amount of monies withheld.⁴

Jurisdiction

The Secretary has filed a motion to dismiss, alleging that the plaintiff has failed to exhaust his administrative remedies as required by 42 U.S.C. § 405(g), effectively precluding the jurisdiction of this court. Plaintiff asserts jurisdiction pursuant to 42 U.S.C. § 405(g) (the Social Security Act) and 28 U.S.C. § 1361 (mandamus jurisdiction).

(a) The Social Security Act (42 U.S.C. § 405(g))

The Social Security Act provides an exclusive avenue for pursuit of claims involving benefits under the Act. It does not preclude judicial review, but prescribes procedures which must be complied with prior to any such review. Section 1631(c)(3) of the Act, 42 U.S.C. § 1383(c)(3), which incorporates section 205(g) of the Act, 42 U.S.C. § 405(g), provides SSI recipients with an opportunity for judicial review of claims under the Act. Section 405(g) states in relevant part:

Any individual, after any final decision of the Secretary made after a hearing to which he was a party ... may obtain a review of such decision by a civil action ....

557 F. Supp. 1253

This jurisdictional statute is made exclusive by section 205(h) of the Act, 42 U.S.C. § 405(h), (also incorporated by section 1631(c)(3)) which states:

The findings and decisions of the Secretary after a hearing shall be binding upon all individuals who were parties to such hearing. No findings of fact or decision of the Secretary shall be reviewed by any person, tribunal, or governmental agency except as herein provided.

The United States Supreme Court construed these statutory provisions in Weinberger v. Salfi, 422 U.S. 749, 95 S.Ct. 2457, 45 L.Ed.2d 522 (1975) and held that, in order for a district court properly to entertain an action under section 405(g), two conditions must be satisfied. First, a claim for benefits must have been presented to the Secretary. Second, there must have been a final decision after a hearing. The Supreme Court has held, however, that only the first condition is a mandatory requirement. The second — the requirement that the claimant exhaust his administrative remedies — can be waived either by the Secretary, Mathews v. Diaz, 426 U.S. 67, 96 S.Ct. 1883, 48 L.Ed.2d 478 (1976) or, under certain circumstances, by the court on its own determination. Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976).

Plaintiff in the instant action characterizes his status as that of a recipient, not a claimant, and argues that by virtue of the administrative process involving a hearing by an ALJ and the Secretary's approval of the decision that plaintiff was disabled and entitled to benefits, he has met the literal requirements of section 405(g). In other words, plaintiff asserts that he has presented a claim to the Secretary and that a final decision has been made. Defendants, on the other hand, characterize plaintiff's claim as one totally separate and distinct from his initial claim for disability benefits. Defendants assert that plaintiff is now contesting not whether or not he is entitled to disability benefits, but rather the amount of disability benefits to which he is entitled.

Plaintiff admits that he filed for reconsideration of the reduction of his retroactive payments. Title 20 C.F.R. § 404.907 (1982) makes it clear that reconsideration is merely the first step in the administrative review process that the agency provides if a claimant is dissatisfied with an initial determination.⁵ Furthermore, it is clear that the agency considers the decision to reduce benefits and the amount offset as one which is subject to the administrative process. The government filed a copy of the Federal Register, 47 F.R. 4985, 4987 (February 3, 1982), which contained the public commentary in response to the SSA's Notice of Proposed Rulemaking regarding offsetting previously received supplemental security income payments against retroactive Title II benefit payments for the same period:

Issue: Initial determinations.

Nine commenters raised the question of whether SSI offset computations and refigurings are considered initial

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