McKenzie v. Heckler, Civ. No. 4-84-182.

• Court: United States District Courts. 8th Circuit. United States District Court of Minnesota
• Writing for the Court: DIANA E. MURPHY
• Citation: 602 F. Supp. 1150
• Parties: Jacqueline McKENZIE, Plaintiff, v. Margaret M. HECKLER, Secretary of the Department of Health and Human Services, Defendant.
• Decision Date: 07 February 1985
• Docket Number: Civ. No. 4-84-182.

602 F. Supp. 1150

Jacqueline McKENZIE, Plaintiff,
v.
Margaret M. HECKLER, Secretary of the Department of Health and Human Services, Defendant.

Civ. No. 4-84-182.

United States District Court, D. Minnesota, Fourth Division.

February 7, 1985.

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COPYRIGHT MATERIAL OMITTED

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Laurie N. Davison, Legal Aid Society, Minneapolis, Minn., for plaintiff

Mac Davis, Dept. of Health and Human Services, Baltimore, Md., and Paul W. Day, Asst. U.S. Atty., Minneapolis, Minn., for defendant.

MEMORANDUM OPINION AND ORDER

DIANA E. MURPHY, District Judge.

Jacqueline McKenzie, brings this action seeking declaratory and injunctive relief against defendant, Margaret M. Heckler, Secretary of the Department of Health and Human Services (the Secretary), alleging that the Social Security Administration's policy of postponing the calculation and payment of retroactive Disability Benefits (RSDI) until after retroactive Supplemental Security Income (SSI) benefits have been calculated violates the Social Security Act and the Administrative Procedure Act (APA). Jurisdiction is alleged under 42 U.S.C. § 405(g) and § 1383(c), and 28 U.S.C. § 1361. This court issued an order conditionally certifying a class¹ and enjoining the Secretary from sending any retroactive SSI benefits of class members to county welfare agencies in Minnesota until a determination could be made on the merits. This matter is now before the court upon plaintiff's motions for class certification and summary judgment. Both sides have agreed that this action can be properly resolved upon summary judgment. Oral argument was scheduled, and written materials have been submitted by the parties, as well as the National Organization of

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Social Security Claimants' Representatives, amicus curae

BACKGROUND

Plaintiff filed an application for RSDI under Title II of the Social Security Act on September 30, 1980, and an application for SSI under Title XVI of the Social Security Act on January 9, 1981. While these programs both provide funds to the disabled, they each have different characteristics. RSDI is a government insurance program. To qualify, one must have worked and contributed to the Social Security trust fund the requisite number of quarters prior to becoming totally disabled. Eligibility for RSDI is not dependent on financial need. The SSI program, by contrast, is a needs based program. SSI provides monthly payments to totally disabled individuals, but only if their income and assets are below certain limits established by Congress and the Secretary. One can be eligible for SSI even if one has never worked and contributed to the Social Security trust fund. The disability test for SSI is identical to the disability test for RSDI.

Eligibility for RSDI and SSI is generally determined concurrently. This process lasts several months to several years, depending upon whether the claimant is found eligible initially or only after lengthy appeals. After a claimant is found eligible for both SSI and RSDI disability benefits, it is the established policy of the Social Security Administration to postpone calculating and paying retroactive RSDI benefits until after retroactive SSI benefits have been paid. See Program Operations Manual System (POMS), §§ GN02610.005 and GN02610.045. The retroactive SSI benefits are paid directly to the county as reimbursement for welfare benefits paid. Then the Social Security Administration calculates the amount of the retroactive RSDI benefits. The retroactive RSDI amount is reduced by the retroactive SSI already paid to the county, and the balance, if any, is paid to the claimant.

In plaintiff's case, her initial applications to both programs were denied and she filed a timely request for hearing on April 6, 1981.

While plaintiff was pursuing her Social Security appeal, she applied for and received welfare payments from Hennepin County under the Minnesota Supplemental Aid (MSA) Program. As a condition of receiving MSA, she signed an agreement authorizing the Social Security Administration to reimburse Hennepin County for MSA out of any retroactive SSI award she might receive. Under the agreement, the county would be reimbursed only if she were found eligible for SSI and only for MSA paid to Ms. McKenzie in those months during which she was found to have been eligible for SSI.

The statutory authority for the payment of retroactive SSI to counties as reimbursement for interim welfare assistance was enacted by Congress in 1974. Act of August 7, 1974, Pub.L. No. 93-368, § 5, 88 Stat. 420, codified at 42 U.S.C. § 1383(g). This statute applies only to SSI benefits. RSDI benefits may not be paid to counties as reimbursement for interim welfare benefits.

A hearing on the disability appeal was held before an Administrative Law Judge (ALJ). On May 17, 1982, the ALJ found that plaintiff met the disability requirements for RSDI effective July 1980, and for SSI effective January 1981.

Plaintiff began receiving prospective RSDI benefits in August of 1982 in the amount of $235.20. On September 14, 1982, plaintiff's attorney wrote to the district office to inquire why the claimant had not yet received her Award Certificate and her retroactive RSDI award. Plaintiff never received a response to this letter.

On January 13, 1983, plaintiff was sent an SSI Notice of Decision relating to her eligibility for SSI benefits. She was found eligible for SSI benefits from January of 1982 through July of 1982. Since she had received no other income for the period of January of 1982 through July of 1982, she was awarded SSI of $264.70 from January to June 1982, and $284.30 for July 1982 for a total of $1,872.50. The retroactive SSI

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award was sent to the Hennepin County Welfare Department pursuant to 42 U.S.C. § 1383(g). Plaintiff had received $340 per month from the Hennepin County Welfare Department between January and July 1982 for a total of $2,272.20. Thus, Hennepin County retained the entire retroactive SSI award pursuant to the interim assistance agreement

Plaintiff objected to the calculation and payment of her retroactive SSI award prior to the calculation and payment of her retroactive RSDI award and appealed from the January 13, 1983 SSI Notice. She received a final decision by the Appeals Council denying her Request for Review on January 9, 1984, thereby exhausting her administrative remedies.

On March 6, 1984, plaintiff filed her complaint in this action. She filed an amended complaint on March 26, 1984 to maintain her suit as a class action.

Plaintiff contends that she was eligible for approximately $215 per month in RSDI benefits between January and July of 1982, and $70 per month in SSI benefits. If her retroactive RSDI benefits had been calculated and paid simultaneously with her SSI benefits, or prior to the SSI award, plaintiff charges that she would have received RSDI of $1,505 ($215 × 7) for the period of January through July 1982; Hennepin County would have received $490 ($70 × 7) pursuant to its interim assistance agreement.

Since the retroactive SSI benefits were calculated and paid prior to the RSDI benefits, plaintiff contends that she will receive virtually no Social Security benefits for January through July 1982. She states that Hennepin County has retained the entire retroactive SSI award and when her retroactive RSDI benefits are awarded, they will be reduced ("offset") by the amount of SSI which would not have been paid had the RSDI been paid when due. 20 C.F.R. § 404.408b(b) (1983).

Plaintiff charges that the Secretary's policy is a violation of the Social Security Act since it deprives claimants of retroactive RSDI benefits which they would receive if their RSDI benefits were calculated and paid either simultaneously with, or prior to, their SSI benefits. She also contends that the Secretary failed to follow the provisions of the APA.

DISCUSSION

A. Class Certification

The Secretary alleges that class certification is inappropriate because the court lacks jurisdiction over members of the class who have not exhausted their administrative remedies. She contends that under 42 U.S.C. § 405(g), the sole basis for jurisdiction, each member of the class must have received a final decision of the Secretary after a hearing and have filed a civil action in an appropriate district within 60 days after the mailing of the notice of decision.² She notes that she has not waived the exhaustion requirement and argues that the court may not do so either. Because plaintiff has not demonstrated that other claimants besides herself have met this requirement, the Secretary maintains that plaintiff has failed to satisfy the numerosity requirement of Fed.R.Civ.P. 23.

Plaintiff, on the other hand, argues that jurisdiction is proper over the entire class because the exhaustion requirement of 42 U.S.C. § 405(g) may be properly waived. Alternatively, plaintiff contends that mandamus jurisdiction is available under 28 U.S.C. § 1361 because the Secretary has a clear non-discretionary duty to comply with 42 U.S.C. § 405(i) and with the APA.

To demonstrate jurisdiction under 42 U.S.C. § 405(g),³ class members must meet two prerequisites. Heckler v. Ringer, ___ U.S. ___, 104 S.Ct. 2013, 2023, 80

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L.Ed.2d 622 (1984); Mathews v. Eldridge, 424 U.S. 319, 328, 96 S.Ct. 893, 899, 47 L.Ed.2d 18 (1976). The first is a nonwaivable requirement that a claim for benefits shall have been presented to the Secretary. Id. This requirement may be satisfied without the claimant actually filing a formal appeal. See Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976). (Plaintiff satisfied this step by returning a questionnaire to the Secretary.) The second prerequisite, that administrative remedies be fully pursued, may be waived by the court when plaintiff's claim is "wholly collateral" to the claim for benefits, and where plaintiff makes a "colorable showing" of...