Sheppard v. Sullivan

Citation906 F.2d 756
Decision Date26 June 1990
Docket NumberNo. 89-5288,89-5288
Parties, 30 Soc.Sec.Rep.Ser. 307, Unempl.Ins.Rep. CCH 15562A Allen SHEPPARD, Appellant, v. Louis W. SULLIVAN, M.D., Secretary of the Department of Health & Human Services.
CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)

Randal Smith-Minor, of the bar of the U.S. District Court for the District of Columbia, pro hac vice, by special leave of the Court, with whom Lynn E. Cunningham, Washington, D.C., was on the brief, for appellant.

Marina Utgoff Braswell, Asst. U.S. Atty., with whom Jay B. Stephens, U.S. Atty., John D. Bates and R. Craig Lawrence, Asst. U.S. Attys., were on the brief, for appellee. Daniel J. Standish, Asst. U.S. Atty., also entered an appearance for appellee.

Before EDWARDS, SILBERMAN and WILLIAMS, Circuit Judges.

Opinion for the Court filed by Circuit Judge STEPHEN F. WILLIAMS.

STEPHEN F. WILLIAMS, Circuit Judge:

Having won his case before an administrative law judge, a social security claimant saw certain retroactive benefits recalculated and reduced by the Appeals Council of the Social Security Administration. He attacks this reduction on three grounds: that the Appeals Council lacked authority to reopen the ALJ's decision on its own motion; that it improperly recalculated and reduced the amount of retroactive disability benefits; and that the SSA rules establishing the method for adjusting those benefits should have been subject to notice-and-comment and to publication under the Administrative Procedure and Freedom of Information Acts. The district court approved the Appeals Council ruling, and we affirm.

* * *

Allen Sheppard applied for Supplemental Security Income ("SSI") and Social Security Disability Benefits in September 1981 and June 1982 respectively. These claims were denied at an initial level within the Social Security Administration both on first filing and on reconsideration. See Joint Appendix ("J.A.") 16 (decision of Appeals Council Nov. 18, 1986). Sheppard successfully appealed the determination to an ALJ, who found him entitled retroactively to both types of payment. See id.; see generally Charles H. Koch, Jr., & David A. Koplow The Fourth Bite at the Apple: A Study of the Operation and Utility of the Social Security Administration's Appeals Council, 17 Fla.State U.L.Rev. 199, 218-24 (1990) (describing claims process), reprinted from 1987 Admin.Conf. U.S. 629. The agency paid out almost $10,000 in SSI (through the District of Columbia's Department of Human Services, which deducted the amount of interim assistance it had extended Sheppard during the pendency of his federal claim), notifying Sheppard in the meantime that when his disability benefits were paid they would be offset by the SSI payments. The offset cut Sheppard's retroactive disability benefit from more than $8000 to less than a hundred. He sought reconsideration of the reduction at the claims level but lost.

Sheppard again appealed to an ALJ, who again reversed, in January 1986, restoring the disability benefits to the unadjusted full amount. (So far as we can discern from the record, however, the larger amount was not paid.) In July the Appeals Council notified Sheppard of its decision to reopen the case for "good cause" under 20 CFR Sec. 404.988(b) (1989), because the ALJ's ruling was "erroneous on the face of the evidence"; and in November it formally reinstated the original determination to award only the reduced disability benefit. Sheppard took his case to district court, which upheld the reduction in benefits, see Memorandum and Order, No. 87-303 (D.D.C. June 16, 1989), and this appeal followed.

I

Sheppard first challenges the Appeals Council's authority, under SSA regulations, to reopen the ALJ's favorable ruling. He reads the regulations as providing for reopening only at the initiative of a claimant, arguing that SSA's laxer interpretation would swallow parallel provisions providing for Appeals Council "review " of ALJ rulings within a mere 60 days--as opposed to the four-year limit on reopening for "good cause" under Sec. 404.988(b). Sheppard also asserts that the Appeals Council failed to meet the "good cause" threshold to which it held itself.

Inartful as the regulations may be, SSA's interpretation of them is defensible. SSA regulations speak mostly to the claimants and thus are sprinkled throughout the "you" (signifying beneficiaries) and "we" (signifying the SSA). See 20 CFR Sec. 404.901 (1989) (definitions of "we" and "you"). This style is apparently grounded in a belief that if regulations sound folksy they will be "clearer and easier for the public to use." 45 Fed.Reg. 52,078 (1980) (stating purpose of revised SSA regulations); see also Note, Untangling "Operation Common Sense": Reopening and Review of Social Security Administration Disability Claims, 87 Mich.L.Rev.1946, 1946 (1989). Introducing the procedure for reopening and revision, Sec. 404.987(b) tells the reader that "[y]ou may ask that a determination or a decision to which you were a party be revised." Nowhere in these provisions is the would-be beneficiary explicitly warned that the SSA may reopen on its own initiative.

But neither do the regulations exclude the possibility, and we think a fair reading allows it. Section 404.987(b) continues: "The conditions under which we will reopen a previous determination or decision are explained [below]." (Emphasis added.) Of course that could refer only to openings at the behest of a claimant, but it need not be so restricted. More significant is the inclusion of various conditions for reopening which in a great proportion of cases only the SSA would invoke. Determinations may be reopened at any time on a finding (among others) that the claimant committed fraud, that he was convicted of a crime bearing on the determination to be reopened, or that he murdered the person whose death payments the claimant stands to collect. See Sec. 404.988(c). Sheppard argues that would-be beneficiaries might invoke these theories in order to increase their share of payments granted wholly or largely to others. This evidently is possible, but it seems implausible as the exclusive purpose of the provisions, with the counterintuitive effect of barring the SSA from revoking on its own, in the interest of the public fisc, payments made to defrauders, murderers and other criminals. See Munsinger v. Schweiker, 709 F.2d 1212, 1215 (8th Cir.1983). Besides, the SSA explained at the time that its 1980 redraft of regulations was not intended to substantively alter preexisting provisions, see 45 Fed.Reg. 52,078 (1980), which expressly provided for reopening at the SSA's bidding. 20 CFR Sec. 404.956(b) (1961).

Sheppard argues that if the reopening regulations, which permit reopening "for any reason" within 12 months of an initial determination, see Sec. 404.988(a), apply to both sides, then the 60-day limit on seeking "review," see 20 CFR Secs. 404.968 & 404.969 (1989), is superfluous. Sheppard spots a violation of the canon requiring a distinct meaning for every provision of a regulatory structure. See Chrupcala v. Heckler, 829 F.2d 1269, 1272-73 (3rd Cir.1987); McCuin v. Secretary of HHS, 817 F.2d 161, 168 (1st Cir.1987); Butterworth v. Bowen, 796 F.2d 1379, 1388-89 (11th Cir.1986).

Quite apart from the canon's heroic assumptions about the systematic and encyclopedic rationality of agencies, cf. Fort Stewart Schools v. FLRA, --- U.S. ----, ----, 110 S.Ct. 2043, 2045, 109 L.Ed.2d 659 (1990) (noting contrary assumption of ex abundanti cautela ), the argument overlooks facts that give independent life to the time limits on review. They run, for an ALJ decision, from the date of that decision. The limits for reopening, by contrast, run from the date of an "initial determination" by the SSA. In some instances the 12-month limit on reopening for any reason may have expired before the ALJ's ruling, in which case the Appeals Council's only fully discretionary power to change an outcome will be through "review," see Cieutat v. Bowen, 824 F.2d 348, 355-56 (5th Cir.1987), with the back-up of power to reopen within four years under Sec. 404.988(b) limited to instances of "good cause."

Sheppard responds that under the SSA's reading of "good cause" this is no limit at all. 1 But two of the "good cause" provisions are plainly narrow, relating to new and material evidence and to clerical computation errors. 20 CFR Sec. 404.989(a)(1) & (2). The third allows reopening where "[t]he evidence that was considered in making the ... decision clearly shows on its face that an error was made". Sec. 404.989(a)(3). While we accept the SSA view that this encompasses clear errors of law, see Fox v. Bowen, 835 F.2d 1159, 1163-64 (6th Cir.1987), we do not read it as all-encompassing. Section 404.989(b), for instance, explicitly precludes reopening on the ground of an intervening change in legal interpretation. And while "clear" is itself one of the least clear terms in the language (perhaps most commonly a flag for the absence of any convincing argument), we take it to work some real limitation. See George by George v. Schweiker, 563 F.Supp. 888, 890 (D.Minn.1982). In practice, it appears that review is routine, reopening rare. See Cieutat, 824 F.2d at 355 n. 9.

Finally we have a due process attack, which the First Circuit invoked as a basis for reading the regulations to preclude reopening on the Appeals Council's initiative. See McCuin, 817 F.2d at 171-75; see also Chrupcala, 829 F.2d at 1273-74. McCuin reasoned that the "good cause" reopening power denied claimants an entitlement to finality in administrative decisions and did not supply fair notice. We are not convinced.

As to finality, the First Circuit seemed to move directly from citation of cases applying precepts of res judicata in administrative proceedings, University of Tennessee v. Elliott, 478 U.S. 788, 797-98, 106 S.Ct. 3220, 3225-26, 92 L.Ed.2d 635 (1986); ...

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