Hyatt v. Heckler

• Decision Date: 12 February 1987
• Docket Number: Nos. 84-1381 and 85-2240,s. 84-1381 and 85-2240
• Citation: 807 F.2d 376
• Parties: , Unempl.Ins.Rep. CCH 17,092 Patrick H. HYATT; Herman O. Caudle and Mary P. Lovingood, on behalf of themselves and all others similarly situated, North Carolina Department of Human Resources, Disability Determination Services, Appellees, v. Margaret M. HECKLER, or her successor in office, Secretary of the United States Department of Health and Human Services, Appellant. Patrick H. HYATT SSN: 248-50-1848; Herman O. Caudle; Mary P. Lovingood on behalf of themselves and all others similarly situated; North Carolina Department of Human Resources, Disability Determination Services, Appellees, v. Margaret HECKLER, or her successor in office, Secretary of the United States Department of Health and Human Services, Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 376

807 F.2d 376

16 Soc.Sec.Rep.Ser. 52, Unempl.Ins.Rep. CCH 17,092

Patrick H. HYATT; Herman O. Caudle and Mary P. Lovingood,

on behalf of themselves and all others similarly situated,

North Carolina Department of Human Resources, Disability

Determination Services, Appellees, v. Margaret M. HECKLER, or her successor in office, Secretary

of the United States Department of Health and

Human Services, Appellant.

Patrick H. HYATT SSN: 248-50-1848; Herman O. Caudle; Mary

P. Lovingood on behalf of themselves and all others

similarly situated; North Carolina Department of Human

Resources, Disability Determination Services, Appellees, v. Margaret HECKLER, or her successor in office, Secretary of

the United States Department of Health and Human

Services, Appellant.

Nos. 84-1381 and 85-2240.

United States Court of Appeals Fourth Circuit.

Submitted Oct. 6, 1986.

Decided Dec. 5, 1986.

Rehearing and Rehearing En Banc Denied Feb. 12, 1987.

Richard K. Willard, Asst. Atty. Gen., Washington, D.C., Charles R. Brewer, U.S. Atty., Asheville, N.C., William, Kanter, Howard S. Scher, Appellate Staff Civil Div., Dept. of Justice, Washington, D.C., for appellant.

John R. Wester, Dan T. Coenen, Robinson, Bradshaw & Hinson, P.A., Charlotte, N.C., Charles McBrayer Sasser, Legal Services of Southern Piedmont, Inc., Charlotte, N.C., for appellees.

Before RUSSELL and HALL, Circuit Judges, and BUTZNER, Senior Circuit Judge.

BUTZNER, Senior Circuit Judge:

The Supreme Court vacated the judgment of this court ¹ and remanded this class action for further consideration in light of Bowen v. City of New York, --- U.S. ----, 106 S.Ct. 2022, 90 L.Ed.2d 462 (1986). The remand requires us to reconsider issues arising out of the Social Security Administration's policy of declining to apply the law of this circuit to disability claims involving diabetes mellitus, hypertension, and pain. We now affirm those provisions of the district court's judgment that remanded to the Secretary of Health and Human Services the disability claims of the members of subclasses who had not exhausted their administrative remedies or sought judicial review within 60 days of an adverse administrative decision. ² Affirmance overrules that part of our judgment which directed the district court to dismiss these claims. See 757 F.2d at 1460-61 (Part II). We also affirm the district court's award of attorney fees, which we had previously vacated. In all other respects we reinstate our prior judgment.

I

Bowen v. City of New York approved waiver of exhaustion of administrative remedies and tolling of the 60-day filing requirement for a class of claimants suffering from mental illness. Relying on unpublished internal memoranda that mandated a presumption inconsistent with established regulations, the Social Security Administration had denied benefits to mentally ill persons who were not aware of the basis of the agency's decisions. See 106 S.Ct. 2032. The Secretary contends that the claimants' mental impairment was the critical factor justifying waiver and tolling. He argues that consequently Bowen v. City of New York is not applicable to the case before us, and he urges us to reinstate our initial judgment.

Although waiver of the exhaustion requirement and tolling of the period of limitation will rarely be appropriate, we are not persuaded by the Secretary's argument that the principles the Supreme Court explained must be confined to claims involving mental impairments. The criteria that the Court specified are necessarily restrictive. Nevertheless, they may be applied to comparable agency procedures that are unlawfully imposed on a class of claimants.

Bowen v. City of New York establishes that exceptional circumstances may justify waiver of the requirement imposed by 42 U.S.C. Sec. 405(g) that a claimant must exhaust all administrative remedies by obtaining a final decision from the Secretary before seeking judicial review. After a person has presented a claim for benefits to the Secretary, exhaustion of administrative remedies may be excused if the claim is collateral to the claim for benefits, the claimants would be irreparably harmed, and relief is consistent with policies underlying the exhaustion requirement. See 106 S.Ct. at 2031-33. The Court cautioned that waiver would not be available if a claimant alleges mere deviation from applicable regulations in particular administrative proceedings. As the court emphasized, exhaustion is not to be excused by every allegation of irregularity in the agency proceedings. 106 S.Ct. at 2032.

The Court also held that the provision of section 405(g) requiring a claimant to commence a civil action for judicial review within 60 days of a final decision is a period of limitation subject to equitable tolling. 106 S.Ct. at 2029-31. This decision overrules those parts of Hyatt v. Heckler, 757 F.2d at 1460-61, Hunt v. Schweiker, 685 F.2d 121, 123 (4th Cir.1982), and Teague v. Califano, 560 F.2d 615, 618 (4th Cir.1977), that held the 60-day requirement to be jurisdictional.

II

Martin v. Secretary of Health, Education and Welfare, 492 F.2d 905, 909 (4th Cir.1974), held that end organ damage is not a prerequisite to the establishment of disability from hypertension or diabetes. Myers v. Califano, 611 F.2d 980, 981-82 (4th Cir.1980), held that administrative law judges should evaluate the effect of pain on a claimant's ability to work when the pain results from a medically diagnosed physical ailment even though the pain's intensity is shown only by subjective evidence.

The separation of powers doctrine requires administrative agencies to follow the law of the circuit whose courts have jurisdiction over the cause of action. In the absence of a controlling decision by the Supreme Court, the respective courts of appeals express the law of the circuit. See PPG Industries, Inc. v. NLRB, 671 F.2d 817, 823 n. 9 (4th Cir.1982).

On the basis of ample evidence the district court found that the Secretary instructed the North Carolina disability determination service and administrative law judges to follow the Secretary's regulations instead of circuit court decisions which conflict with the Secretary's interpretation of the Social Security Act. Also, the Secretary directed administrative law judges not to cite conflicting court decisions. 579 F.Supp. at 993-94, 996. ³ The Secretary's policy of nonacquiescence in the law of the circuit is well documented, and it has been the subject of congressional criticism. See Hyatt v. Heckler, 757 F.2d at 1459-60; H.R.Rep. 1039, 98th Cong., 2d Sess. 36-38, reprinted in 1984 U.S.Code Cong & Admin.News 3038, 3096. ⁴ The district court found, citing examples, that the Social Security Administration had applied the policy of nonacquiescence to members of several subclasses by failing to apply the law of the circuit in evaluating diabetes, hypertension, and pain.

In regard to hypertension and diabetes claimants, the Secretary's regulation SSR 82-55 prevented state employees from making any attempt to determine an individual's actual capacity to perform work. The district court also found that a number of claimants were denied a complete evaluation of their actual ability to engage in substantial gainful activity solely because of the Secretary's regulation SSR 82-58. State employees and physicians applying this regulation found claimants who suffered from medically diagnosed ailments not disabled because their subjective complaints of pain, no matter how severe or disabling, were not fully supported by objective clinical findings. 579 F.Supp. at 993-94.

Again citing examples, the district court found that both initial claimants and those whose benefits had been terminated suffered irreparable harm because the Social Security Administration failed to apply the law of the circuit. The district court found that the unjustified denial of benefits deprived many claimants of necessities and caused them to suffer anxiety, depression, and decline in health. 579 F.Supp. at 995.

The district court held that subclasses of claimants who had been denied benefits because the Social Security Administration had declined to apply the law of the circuit were entitled to have their claims reconsidered by the agency. It included in its remand to the Secretary members of the subclasses who had not exhausted their administrative remedies or who had not sought judicial review within 60 days. See 579 F.Supp. at 996-99.

III

In this action, as in Bowen v. City of New York, the claim is collateral to the claims for benefits. The class neither sought nor obtained benefits in the district court. Instead, they asked only that their claims for benefits be remanded to the Secretary for reconsideration in accordance with the Social Security Act as interpreted by the court of appeals of this circuit.

The claimants would be irreparably injured if the exhaustion requirement were enforced against them. Evidence supports the district court's findings of the claimants' anxiety and distress. Moreover, as the district court noted, even if a claimant persevered through the administrative proceedings, retained a lawyer, and succeeded in obtaining from a district court a ruling consistent with the law of the circuit, the award would likely be diminished by allowance of a fee of as much as 25%. Thus, retroactive benefits are not fully compensatory. See 579 F.Supp. at 995, 998.

For reasons similar to those explained in Bowen v. City of New York, the relief granted by the district court is consistent with the policies underlying exhaustion. The court made no awards. It allowed the agency to determine each claimant's eligibility for benefits. See 106 S.Ct. 2032.

The Court's observation in Bowen v. City of New York, 106 S.Ct. at 2032, applies to this case: "We should be especially sensitive to this kind of harm where the government seeks to require claimants to exhaust administrative remedies merely to enable them to receive the procedure they...