Mullen v. Bowen

Decision Date02 September 1986
Docket Number84-5352,Nos. 84-1455,s. 84-1455
Citation800 F.2d 535
Parties, 55 USLW 2147, 15 Soc.Sec.Rep.Ser. 34, Unempl.Ins.Rep. CCH 16,929 Luther D. MULLEN, Plaintiff-Appellant, v. Otis BOWEN, * Secretary of Health and Human Services, Defendant-Appellee. Richard G. SHEPHERD, Plaintiff-Appellant, v. Otis BOWEN, * Secretary of Health and Human Services, Defendant-Appellee.
CourtU.S. Court of Appeals — Sixth Circuit

Timothy A. O'Rourke, Thomas Hay, Anderson, Hay and Wonch, Lansing, Mich., for plaintiff-appellant in No. 84-1455.

John A. Smietanka, U.S. Atty., Grand Rapids, Mich., Martin F. Palus, Asst. U.S. Atty., Thomas Martin, William Kanter, Howard S. Scher, Appellate Staff, Civil Div., Dept. of Justice, Washington, D.C., for defendant-appellee in No. 84-1455.

Susan K. McParland, Michigan Legal Services, Detroit, Mich., Carolyn Carter, Legal Aid Society of Cleveland, Cleveland, Ohio, Eileen P. Sweeney, Nat. Senior Citizens Law Center, Washington, D.C., Neal S. Dudovitz, Sally Hart Wilson (argued), Peter Komlos-Hrobsky, Eugenie Denise Mitchell, Nat. Senior Citizens Law Center, Los Angeles, Cal., for amicus curiae.

Alva A. Hollon, Jr. (argued), Hollon, Hollon & Hollon, Hazard, Ky., for plaintiff-appellant in No. 84-5352.

Louis DeFalaise, U.S. Atty., Lexington, Ky., Karl L. Anderson, Monica Wheatley (argued), William Kanter, Dept. of Justice, Washington, D.C., Howard S. Scher, Lead Counsel, for defendant-appellee in No. 84-5352.

Before LIVELY, Chief Judge, and ENGEL, KEITH, MERRITT, KENNEDY, MARTIN, JONES, CONTIE, ** KRUPANSKY, WELLFORD, MILBURN, GUY and NELSON, Circuit Judges.

ENGEL, Circuit Judge.

We granted en banc rehearing in these consolidated social security disability appeals to resolve an inconsistency between two decisions by different panels of our court relating to the role of the Appeals Council in the scheme of review of disability determinations. Compare Newsome v. Secretary of Health and Human Services, 753 F.2d 44 (6th Cir.1985), with Beavers v. Secretary of Health, Education & Welfare, 577 F.2d 383 (6th Cir.1978). We are also necessarily required to consider what standard of review should be applied by the district courts and our circuit where the Appeals Council has disagreed with an administrative law judge's determination of disability and hence denied an award of benefits. We further consider whether, because of the Secretary's regulations, any different standard should govern our consideration depending upon how the issues were presented to the Appeals Council in the first place. To put these issues into their proper perspective, it is helpful at the outset to provide a brief overview of the relationship between the Secretary and the Appeals Council under the Social Security Act and regulations promulgated thereunder.

I.

The Secretary of Health and Human Services is entrusted with the responsibility of administering disability benefits under Title II of the Social Security Act (Act). Thus, section 205(b)(1) directs the Secretary "to make findings of fact, and decisions as to the rights of any individual applying" for disability benefits. 42 U.S.C. Sec. 405(b)(1). That section further authorizes the Secretary, "on his own motion, to hold such hearings and to conduct such investigations and other proceedings as he may deem necessary or proper for the administration" of benefits under the Act. 1 In addition, section 205(h) provides that "[t]he findings and decision of the Secretary after a hearing shall be binding upon all individuals who were parties to such hearing." 42 U.S.C. Sec. 405(h). Finally, section 205(g) provides that, for purposes of judicial review in a federal district court, "[t]he findings of the Secretary as to any fact, if supported by substantial evidence, shall be conclusive...." 42 U.S.C. Sec. 405(g).

Under this scheme, the Secretary's responsibilities are broad indeed. Yet given the number of cases handled by the Social Security Administration, it is obvious that the Secretary himself cannot participate in every disability determination. As the Supreme Court observed: "The system's administrative structure and procedures, with essential determinations numbering into the millions, are of a size and extent difficult to comprehend." Richardson v. Perales, 402 U.S. 389, 399, 91 S.Ct. 1420, 1426, 28 L.Ed.2d 842 (1971). Congress has therefore authorized the Secretary "to make rules and regulations and to establish procedures ... which are necessary or appropriate to carry out ..." his responsibilities under the Act. 42 U.S.C. Sec. 405(a).

Pursuant to these rulemaking powers, the Secretary has created and delegated to the Appeals Council all duties, powers and functions relating to the review of hearing decisions under Title II of the Act. See 20 C.F.R. Secs. 404.900-.996 (1985). See also 20 C.F.R. Sec. 422.205 (1985). Significantly, the Appeals Council has possessed this authority since at least 1946. 2

Under the Secretary's regulations, claims for social security benefits can come before the Appeals Council in a variety of ways. First, a disappointed wage earner, whose claims for coverage have been rejected by an administrative law judge (ALJ), may request review by the Appeals Council. 20 C.F.R. Sec. 404.967. In addition, the Secretary's regulations confer general review powers on the Council, a power commonly called "own-motion" review. 20 C.F.R. Sec. 404.969. The Appeals Council can also review a recommended decision that has been sent to it by an ALJ. 20 C.F.R. Sec. 404.977. The Appeals Council also has jurisdiction over a social security claim where a case has been remanded by a federal district court, 20 C.F.R. Sec. 404.983, and where the Appeals Council itself assumes the responsibility for conducting a hearing. 20 C.F.R. Sec. 404.956. The Secretary's regulations further provide that the Appeals Council will review a case if an ALJ commits an abuse of discretion, there is an error of law, the findings of the ALJ are not supported by substantial evidence, or there is an important policy issue that may affect the public interest. 20 C.F.R. Sec. 404.970(a). Finally, under the Secretary's regulations, the decision of the Appeals Council is binding upon the parties unless an action is commenced in a federal district court. See 20 C.F.R. Secs. 404.981, 422.210.

Thus, although purely a creature of administrative law, the Appeals Council, and its role in the overall scheme of the Act, is pervasive and longstanding. Moreover, because the Secretary has delegated to the Appeals Council his "duties, powers and functions relating to the holding of hearings" under the Act, it is well settled that final action by the Appeals Council becomes indeed the final determination of the Secretary for purposes of judicial review under section 205(g), 42 U.S.C. Sec. 405(g). See, e.g., Hall v. Celebrezze, 340 F.2d 608, (6th Cir.1965); Cody v. Ribicoff, 289 F.2d 394, 395 (8th Cir.1961); Goldman v. Folsom, 246 F.2d 776, 778 (3d Cir.1957); cf. Weinberger v. Salfi, 422 U.S. 749, 765, 95 S.Ct. 2457, 2466, 45 L.Ed.2d 522 (1975).

II.

Each of these appeals involves a disability determination by an ALJ favorable to the wage-earner but which was subsequently reversed by the Appeals Council. The issue then becomes whether the statutorily-mandated deference to findings of fact under 42 U.S.C. Sec. 405(g) runs in favor of the Appeals Council or in favor of the ALJ. In answering this question, we must also determine whether the exercise of the Appeals Council's power of review is limited by 20 C.F.R. Sec. 404.970(a). The difficulties presented by these issues are well illustrated by the two claims before us in these appeals.

Appeal No. 84-1455: Luther Mullen

Luther Mullen applied for disability benefits on June 22, 1981. After his application was initially denied, Mullen sought a hearing before an ALJ. The ALJ found that Mullen was suffering from two severe impairments and that, because of these impairments, Mullen could only perform sedentary work. After applying the medical-vocational grids, the ALJ concluded that, considering his age, education, and work experience, Mullen was disabled. The Appeals Council, however, on its own motion, reversed the ALJ's determination of disability. Upon reviewing the medical evidence, the Appeals Council concluded that Mullen was capable of doing light work and was therefore not disabled. The district court affirmed, finding substantial evidence to support the Secretary's decision as expressed by the Appeals Council.

Relying upon Newsome v. Secretary of Health and Human Services, 753 F.2d 44 (6th Cir.1985), a panel of our court initially noted that, "if the administrative law judge's decision was supported by substantial evidence, the Appeals Council had no authority to review the case and would have committed an error of law if it had done so." Mullen v. Secretary of Health and Human Services, 762 F.2d 509, 510 (6th Cir.1985). Because the court found that the ALJ's determination of disability was supported by substantial evidence, the court remanded the case to the district court and then to the Secretary for the purpose of awarding benefits. Thereafter, the Secretary filed a petition for rehearing en banc, challenging the correctness of the Newsome decision. That petition was granted on August 19, 1985.

Appeal No. 84-5352: Richard Shephard

Richard Shepherd initially filed an application for disability on August 30, 1974. The ALJ and the Appeals Council each initially denied benefits, but the district court remanded the case to the Appeals Council because the court could not determine whether there was substantial evidence for that denial. The district court further instructed the Appeals Council to develop medical and vocational evidence and to include a psychological evaluation. Thereafter, the Appeals Council remanded to the ALJ who took additional evidence and concluded that Shepherd was disabled. The ...

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