De Lao v. Califano

• Decision Date: 19 September 1977
• Docket Number: 75-2987 and 76-2756,75-2633,Nos. 76-1365,s. 76-1365
• Citation: De Lao v. Califano, 560 F.2d 1384 (9th Cir. 1977)
• Parties: Santiago DE LAO and Frank Brito, Plaintiffs-Appellees, v. Joseph A. CALIFANO, Jr., successor to Caspar Weinberger, Secretary, Department of Health, Education, and Welfare, et al., Defendants-Appellants. Arthur FERGUSON, Plaintiff-Appellant, v. Joseph A. CALIFANO, Jr., successor to Caspar Weinberger, Secretary, Department of Health, Education, and Welfare, et al., Defendants-Appellees. Arthur FERGUSON, Plaintiff-Appellee, v. Joseph A. CALIFANO, Jr., successor to Caspar Weinberger, Secretary, Department of Health, Education, and Welfare, et al., Defendants-Appellants. Walter J. WHITE et al., Plaintiffs-Appellants, v. Joseph A. CALIFANO, Jr., successor to Caspar Weinberger, Secretary, Department of Health, Education, and Welfare, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1384

560 F.2d 1384

Santiago DE LAO and Frank Brito, Plaintiffs-Appellees, v.Joseph A. CALIFANO, Jr., successor to Caspar Weinberger,

Secretary, Department of Health, Education, and

Welfare, et al., Defendants-Appellants.

Arthur FERGUSON, Plaintiff-Appellant, v.Joseph A. CALIFANO, Jr., successor to Caspar Weinberger,

Secretary, Department of Health, Education, and

Welfare, et al., Defendants-Appellees.

Arthur FERGUSON, Plaintiff-Appellee, v.Joseph A. CALIFANO, Jr., successor to Caspar Weinberger,

Secretary, Department of Health, Education, and

Welfare, et al., Defendants-Appellants.

Walter J. WHITE et al., Plaintiffs-Appellants, v.Joseph A. CALIFANO, Jr., successor to Caspar Weinberger,

Secretary, Department of Health, Education, and

Welfare, et al., Defendants-Appellees.

Nos. 76-1365, 75-2633, 75-2987 and 76-2756.

United States Court of Appeals, Ninth Circuit.

Sept. 19, 1977.

Harry R. Silver, Dept. of Justice, Washington, D. C., argued for defendants-appellants in 75-2987 and 76-1365, and for defendants-appellees in 75-2633.

Steven L. Bunch, of Montana Legal Services Assn., Helena, Mont., argued for plaintiff-appellee in 75-2987 and for plaintiff-appellant in 75-2633.

Andrew M. Hull, Maricopa County Legal Aid Society, El Mirage, Ariz., argued for plaintiffs-appellees in 76-1365.

Appeal from the United States District Court for the District of Arizona.

Appeal from the United States District Court for the District of Montana Butte Division.

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

Before DUNIWAY and CHOY, Circuit Judges, and BONSAL, ^* District judge.

DUNIWAY, Circuit Judge:

These are class actions against the Secretary of Health, Education, and Welfare, challenging his termination, without a prior evidentiary hearing, of certain disability payments under the federal Supplemental Security Income program (SSI), 42 U.S.C. Ch. 7, Sub. Ch. XVI, §§ 1381ff.

I.STATUTORY AND FACTUAL BACKGROUND.

On October 30, 1972, Congress enacted the Social Security Amendments of 1972, Pub.L. 92-603, 86 Stat. 1329, which repealed three categorical assistance programs of federal grants to states for state-administered programs of assistance to poor persons, including disability programs under Title XIV of the Social Security Act.The amendments also established, in an amended Title XVI of the Social Security Act(42 U.S.C. § 1381 et seq.), a new federal program identified as the "Supplemental Security Income Program," which was to be administered by the Secretary and was to become effective January 1, 1974.

Under the new SSI program, the federal government assumed most of the burden of providing benefits to those needy persons who were disabled as defined by the Act.As part of the definition of disability, Congress included a "grandfather" clause whereby persons receiving disability benefits as of December, 1973, under a state plan approved under former Title XIV or XVI as in effect for October, 1972, were considered disabled for purposes of the new SSI program.86 Stat. 1471-72,42 U.S.C. § 1382c(a)(3)(A)(Supp. II, 1972).

After the Act was enacted, Congress became concerned that some states were transferring their welfare recipients to their disability rolls in anticipation of the federal takeover on January 1, 1974.On December 31, 1973, Congress amended the "grandfather" clause by striking it from subparagraph (A) and reenacting it as subparagraph (E), with a further requirement that in addition to receiving benefits in December, 1973, an individual must also have received benefits for at least one month prior to July, 1973.Pub.L. 93-233, Sec. 9,87 Stat. 947, 957.As a result, all persons who became qualified under a state plan after July 1, 1973, had to meet the new federal standards of disability to be eligible under the SSI program.

Although the Secretary did not have to pay any disability benefits to these "rollback" recipients, nevertheless, to avoid administrative difficulties and the imposition of hardship upon the recipients, he ordered that benefits be paid to all such persons, for a period up to three months, upon a basis of presumptive disability, until an eligibility determination could be made.¹

At the Secretary's request, Congress, too, recognized that a suspension of benefits could, indeed, be harsh in some situations and that three months was insufficient time in which to make eligibility determinations for all of these individuals.On March 28, 1974, it enacted Pub.L. 93-256,88 Stat. 52(1974), which provided that, pending an initial determination of eligibility under SSI, the Secretary could continue to pay presumptive benefits during 1974.²

The Secretary made his initial determinations of eligibility of the "rollback" recipients by reviewing the records of the state's disability assistance program for those recipients.No prior hearing was afforded to those in this "rollback" class who were found not to be disabled under the federal standards, and their benefits were withheld.Following the initial determination, those persons were given an opportunity for a full evidentiary hearing on the question of their eligibility.Those rollback recipients who were found to be eligible at such hearings recovered, pursuant to 42 U.S.C. § 1383(b), all benefits previously withheld.

II.THE PRESENT APPEALS.

A.De Lao (No. 76-1365) was brought on behalf of a class of individuals in Arizona who began receiving Aid to the Permanently and Totally Disabled (APTD) benefits from the state under its program after July 1, 1973, and who were initially determined by the Secretary to be ineligible for benefits under the federal SSI program, thus having those benefits terminated.The district court entered a final judgment which (1) enjoined the Secretary from withholding benefits until class members had been given notice and an opportunity for a prior evidentiary hearing and (2) awarded class members benefits retroactive to the date of termination.The Secretary appeals from that judgment.The district court stayed its injunction pending this appeal.

B. Ferguson(Nos. 75-2633and75-2987) was brought on behalf of a class of individuals in Montana who began receiving state Aid to the Disabled (AD) benefits under the state program after July 1, 1973, and were also initially determined by the Secretary to be ineligible for benefits under the SSI program.The district court entered a final judgment in favor of the Secretary, denying the motion to maintain a class action, dissolving the preliminary injunction, and dismissing the plaintiffs' action on the merits.This appeal followed.

C.White (No. 76-2756) is a similar suit brought on behalf of a class of individuals who began receiving Disability Assistance (DA) benefits from the state of Washington under its program after July 1, 1973, and were found by the Secretary to be ineligible for SSI benefits.The district court entered final judgment in favor of the Secretary, holding (1) that he had not violated plaintiffs' due process rights by failing to provide pretermination hearings; and (2) that a subclass of individuals, who were certified as disabled prior to July, 1973, but who did not receive DA benefits until after July 1, 1973, were not entitled to be "grandfathered" into the SSI program.³

The passage of time has rendered parts of the plaintiffs' claims moot.As we show, infra, the plaintiffs would have no entitlement to SSI benefits after the end of 1974.We also hold that those found to be ineligible for SSI benefits are not entitled to retroactive benefits for the period between the Secretary's determination that they were ineligible and the time when that determination was confirmed after a hearing, or the end of 1974, whichever was sooner.To arrive at these conclusions, we need not decide whether the plaintiffs were deprived of due process when the Secretary found them ineligible and terminated their benefits without first giving them a hearing.For purposes of these appeals, we assume that they were thereby denied due process.Moreover, we need not decide whether it was error for the court in De Lao to issue the injunction.It could not in any event have continued in effect beyond 1974.Nor need we decide whether these are proper class actions.The Secretary tells us that every member of the class has either been given a post-termination hearing or has failed to ask for one.In addition, the entitlement, if any, of the members of the class terminated at the end of 1974.

III.JURISDICTION.

The Secretary conceded at oral argument, and we agree, that jurisdiction in these cases was properly founded upon 42 U.S.C. § 405(g) which provides:

(a)ny 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 . . . .

Here the plaintiffs' constitutional challenges are entirely collateral to their substantive claims of entitlement.The Secretary's decision not to provide a pretermination hearing for the "rollback" recipients was final as to that issue; and, therefore, it was not necessary for them to exhaust any further administrative remedies before invoking § 405(g) jurisdiction.Mathews v. Eldridge, 1976, 424 U.S. 319, 326-32, 96 S.Ct. 893, 47 L.Ed.2d 18;Elliott v. Weinberger, 9 Cir., 1977, 564 F.2d 1219, at 1225-1226, n.8a, (1977).See also, Califano v. Sanders, 1977, 430 U.S. 99, 97 S.Ct. 980, 51 L.Ed.2d 192;Johnson v. Mathews, 8 Cir., 1976, 539 F.2d 1111, 1116-17;Tatum v. Mathews, 6 Cir., 1976, 541 F.2d 161, 163-64.

Jurisdiction was also appropriate under the federal mandamus statute,28 U.S.C. § 1361.⁴Elliott v. Weinberger, supra, at 1225-1226.See also, Wiren v. Eide, 9 Cir., 1976, 542 F.2d 757, 761, n.5.

IV.THE EXTENT OF PLAINTIFFS' INTEREST.

When filed, the actions presented the question whether the Secretary's termination of presumptive disability payments without prior evidentiary...