Lofty v. Richardson

• Decision Date: 04 March 1971
• Docket Number: No. 20484.,20484.
• Citation: 440 F.2d 1144
• Parties: Barber LOFTY, Plaintiff-Appellant, v. Elliott L. RICHARDSON, Secretary of Health, Education and Welfare, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

440 F.2d 1144 (1971)

Barber LOFTY, Plaintiff-Appellant, v. Elliott L. RICHARDSON, Secretary of Health, Education and Welfare, Defendant-Appellee.

No. 20484.

United States Court of Appeals, Sixth Circuit.

March 4, 1971.

Morton E. Schneider, Detroit, Mich., Kelman, Loria, Downing & Schneider, Detroit, Mich., on the brief, for appellant.

James C. Hair, Jr., Department of Justice, Washington, D. C., William D. Ruckelshaus, Asst. Atty. Gen., Kathryn H. Baldwin, Atty., Department of Justice, Washington, D.C., James H. Brickley, U. S. Atty., Detroit, Mich., on the brief, for appellee.

Before EDWARDS and MILLER, Circuit Judges, and O'SULLIVAN, Senior Circuit Judge.

EDWARDS, Circuit Judge.

In this case appellant attacks the constitutionality of an amendment to the Social Security Act adopted in 1965 (42 U.S.C. § 424a, as amended, (Supp. V, 1969)) which had the effect of reducing a claimant's Social Security disability benefits by the amount of Workmen's Compensation benefits received by him where the total received under the two programs exceeded 80% of his previous average monthly wages. Appellant claims this provision violates the due process clause of the United States Constitution because when Congress made Workmen's Compensation the only subject for such deductions, it thereby created a patently arbitrary classification.

We begin our consideration of this case, as indeed we must, with the Supreme Court's last ruling upon an invidious classification argument in a Social Security case.

"This is not to say, however, that Congress may exercise its power to modify the statutory scheme free of all constitutional restraint. The interest of a covered employee under the Act is of sufficient substance to fall within the protection from arbitrary governmental action afforded by the Due Process Clause. In judging the permissibility of the cut-off provisions of § 202(n) from this standpoint, it is not within our authority to determine whether the Congressional judgment expressed in that section is sound or equitable, or whether it comports well or ill with the purposes of the Act. `Whether wisdom or unwisdom resides in the scheme of benefits set forth in Title II, it is not for us to say. The answer to such inquiries must come from Congress, not the courts. Our concern here, as often, is with power, not with wisdom.\' Helvering v. Davis, supra, 301 U.S. 619 at page 644, 57 S.Ct. 904 at page 910 81 L.Ed. 1307. Particularly when we deal with a withholding of a noncontractual benefit under a social welfare program such as this, we must recognize that the Due Process Clause can be thought to interpose a bar only if the statute manifests a patently arbitrary classification, utterly lacking in rational justification." Flemming v. Nestor, 363 U.S. 603, 611, 80 S.Ct. 1367, 1373, 4 L.Ed.2d 1435 (1960). (Emphasis added.)

Since we cannot say that the classification herein attacked was "utterly lacking in rational justification," we cannot hold as appellant asks that Congress was without power to pass the 1965 amendment.

Claimant in this case was granted total and permanent disability benefits under the Social Security Act starting in 1966. In June of 1966 he accepted a lump sum "redemption settlement" in full payment of his Workmen's Compensation claim arising out of the same injuries which produced his total and permanent disability for Social Security benefits.

Taking into account the Workmen's Compensation settlement, the Secretary reduced claimant's Social Security benefits from $269.80 a month to $25.80 per month for 44 months, or until the Compensation settlement had been exhausted at the rate of $57 per week. This action was taken under 42 U.S.C. § 424a, as amended, (Supp. V, 1969), which placed a limit of 80% of claimant's previous average monthly earnings upon the total of Social Security and Workmen's Compensation benefits which he was to receive. Section 424a required that only the difference, after deduction of Workmen's Compensation benefits, should be paid by Social Security.

This reduction formula was adopted by Congress in 1965, effective January 1, 1966. Much of the testimony which preceded its adoption argued that double disability benefits close to or exceeding prior earnings defeated the purpose of motivating injured beneficiaries back toward productive work and tempted the states to reduce or eliminate Workmen's Compensation benefits and throw full responsibility on the national Social Security scheme.

The amendment enacted by Congress is now attacked, not because the purposes claimed for it might not be arguably rational grounds for congressional action, but because Congress in establishing the reduction provision referred to above did not also include such benefits as private insurance proceeds and benefits resulting from damage suits in civil courts. It is claimed that existence of these benefits without deductions makes the selection of Workmen's Compensation as the only deduction against Social Security benefits an arbitrary and capricious classification which cannot stand when tested against the due process clause.

The District Judge who heard this case below dismissed it with a brief opinion, 325 F.Supp. 285, which cited the reasons for the amendment referred to above and held that "it is therefore reasonable to preclude a claimant from receiving amounts as a result of retirement or disability far in excess of his earnings received while working." The District Judge held that the classification involved herein was not patently arbitrary within the meaning of Flemming v. Nester, 363 U.S. 603, 80 S.Ct. 1367, 4 L.Ed.2d 1435 (1960).

We have already set forth above the essential holding of the Flemming case upon which the District Judge based decision. But there is a good deal of case law which serves to illustrate the breadth of legislative power accorded the Congress (or the states) by the Supreme Court's interpretation of the constitutional limitations contained in the due process and equal protection clauses.

In the following two cases, former Chief Justice Warren wrote for the Court:

"The constitutional safeguard is offended only if the classification rests on grounds wholly irrelevant to the achievement of the State\'s objective. State legislatures are presumed to have acted within their constitutional power despite the fact that, in practice, their laws result in some inequality. A statutory discrimination will not be set aside if any state of facts reasonably may be conceived to justify it. See Kotch v. Board of River Port Pilot Com\'rs, 330 U.S. 552, 67 S.Ct. 910, 91 L.Ed. 1093; Metropolitan Casualty Ins. Co. of New York v. Brownell, 294 U.S. 580, 55 S.Ct. 538, 79 L.Ed. 1070; Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61, 31 S.Ct. 337, 55 L.Ed. 369; Atchison, T. & S. F. R. Co. v. Matthews, 174 U.S. 96, 19 S.Ct. 609, 43 L.Ed. 909." McGowan v. Maryland, 366 U.S. 420, 425-426, 81 S.Ct. 1101, 1105, 6 L.Ed. 2d 393 (1961). (Footnotes omitted.)

"Some basic guidelines have been firmly fixed. The distinctions drawn by a challenged statute must bear some rational relationship to a legitimate state end and will be set aside as violative of the Equal Protection Clause only if based on reasons totally unrelated to the pursuit of that goal. Legislatures are presumed to have acted constitutionally even if source materials normally resorted to for ascertaining their grounds for action are otherwise silent, and their statutory classifications will be set aside only if no grounds can be conceived to justify them. See McGowan v. Maryland, 366 U.S. 420, 81 S.Ct. 1101, 6 L.Ed.2d 393 (1961); Kotch v. Board of River Port Pilot Commissioners, 330 U.S. 552, 67 S.Ct. 910, 91 L.Ed. 1093 (1947); Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61, 31 S.Ct. 337, 55 L.Ed. 369 (1911). With this much discretion, a legislature traditionally has been allowed to take reform `one step at a time, addressing itself to the phase of the problem which seems most acute to the legislative mind,\' Williamson v. Lee Optical of Oklahoma, Inc., 348 U.S. 483, 489, 75 S.Ct. 461, 465, 99 L.Ed. 563 (1955); and a legislature need not run the risk of losing an entire remedial scheme simply because it failed, through inadvertence or otherwise, to cover every evil that might conceivably have been attacked. See Ozan Lumber Co. v. Union County National Bank, 207 U.S. 251, 28 S.Ct. 89, 52 L.Ed. 195 (1907)." McDonald v. Board of Election Commissioners of Chicago, 394 U.S. 802, 809, 89 S.Ct. 1404, 1408, 22 L.Ed.2d 739 (1969).

Even more recently Justice Stewart dealt with a somewhat similar classification argument:

"In the area of economics and social welfare, a State does not violate the Equal Protection Clause merely because the classifications made by its laws are imperfect. If the classification has some `reasonable basis,\' it does not offend the Constitution simply because the classification `is not made with mathematical nicety or because in practice it results in some inequality.\' Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61, 78, 31 S.Ct. 337, 340, 55 L.Ed. 369. `The problems of government are practical ones and may justify, if they do not require, rough accommodations — illogical, it may be, and unscientific.\' Metropolis Theatre Co. v. City of Chicago, 228 U.S. 61, 69-70, 33 S.Ct. 441, 443, 57 L.Ed. 730. `A statutory discrimination will not be set aside if any state of facts reasonably may be conceived to justify it.\' McGowan v. Maryland, 366 U.S. 420, 426, 81 S.Ct. 1101, 1105, 6 L.Ed.2d 393." Dandridge v. Williams, 397 U.S. 471, 485, 90 S.Ct. 1153, 1161, 25 L.Ed.2d 491 (1970).

With these rules pertaining to legislative power before us,¹ we turn directly to the background and purpose of the disputed amendment.

The legislative record plainly shows that Congress had the Workmen's Compensation-Social Security overlap before it as a problem for a decade. When the Social Security Act was first passed in 1935, it provided no...