Stieberger v. Sullivan

Citation738 F. Supp. 716
Decision Date29 May 1990
Docket NumberNo. 84 CIV 1302 (LBS).,84 CIV 1302 (LBS).
PartiesTheresa STIEBERGER, et al., individually and on behalf of all persons similarly situated; and The City of New York, Plaintiffs, v. Louis W. SULLIVAN, as Secretary of Health and Human Services, et al., Defendants.
CourtU.S. District Court — Southern District of New York

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Legal Services for the Elderly, New York City (David S. Udell, Jonathan Weiss, of counsel), The Legal Aid Soc., New York City (Kalman Finkel, Helaine Barnett, Matthew Diller, of counsel), Burt Neuborne, Nancy Morawetz, M.F.Y. Legal Services, New York City (Wayne G. Hawley, of counsel), for plaintiffs and the plaintiff class.

Victor A. Kovner, Corp. Counsel, New York City (Alice Morey, Asst. Corp. Counsel, of counsel), for the City of New York.

Stuart Gerson, Asst. Atty. Gen., Civil Div., Dept. of Justice, Washington, D.C. (Sheila Lieber, Brian G. Kennedy, Terry M. Henry, of counsel), for defendants.

                                           TABLE OF CONTENTS
                  I. BACKGROUND .............................................................. 722
                     A. Procedural History of the Case ....................................... 722
                     B. The Administrative Review Process .................................... 723
                 II. DISCUSSION .............................................................. 724
                     A. Statute of Limitations ............................................... 724
                     B. Non-acquiescence ..................................................... 728
                        1. What Constitutes Non-acquiescence ................................. 728
                        2. The Legality of Non-acquiescence .................................. 730
                        3. Non-acquiescence in Second Circuit Precedent ...................... 730
                           a. Standing to Challenge Six Alleged Areas of Non-acquiescence .... 731
                           b. The Weight Accorded Treating Physician Opinions ................ 732
                           c. The Right to Cross-Examine the Authors of Post-Hearing
                               Reports ....................................................... 738
                           d. ALJ's Personal Observations .................................... 740
                           e. The Standards for Evaluating Credibility ....................... 742
                           f. The Duty to Accord Weight to the Determinations of Other
                               Agencies ...................................................... 744
                           g. The Duty to Assist Pro Se Claimants ............................ 745
                        4. SSA's Formal Acquiescence Policy .................................. 747
                           a. The Original Acquiescence Policy (Prior to June 1985) .......... 747
                           b. The Adoption of Interim Circular 185 (June 1985-December
                               1985) ......................................................... 748
                           c. Transmittal X-7 (December 1985-) ............................... 750
                           d. The Implementation of Interim Circular 185 and Transmittal
                               X-7 ........................................................... 751
                           e. Measures Taken Since Transmittal X-7 ........................... 755
                           f. Recent Amendments (January 1990-) .............................. 757
                III. CONCLUSION AND COMMENTS ON REMEDY ...................................... 758
                

SAND, District Judge.

Plaintiffs, a class of Social Security claimants and the City of New York, bring this action challenging two policies of the Social Security Administration: "non-acquiescence" and "Bellmon Review." Plaintiffs move for summary judgment with respect to their non-acquiescence claim, and defendants, citing the applicable statute of limitations, move for judgment on the pleadings, or in the alternative for summary judgment, with respect to the City of New York and a substantial portion of the plaintiff class. Some familiarity with this Court's earlier decision in this case is presumed. See Stieberger v. Heckler, 615 F.Supp. 1315 (S.D.N.Y.1985), vacated, 801 F.2d 29 (2d Cir.1986).

I. Background
A. Procedural History of the Case

This Court's prior decision provides a detailed description of the early procedural history of this case which will only be briefly summarized here. See Stieberger, 615 F.Supp. at 1321-23. Plaintiffs Theresa Stieberger and the City of New York commenced this action to challenge two policies implemented by the United States Department of Health and Human Services ("HHS") and the Social Security Administration ("SSA"): "non-acquiescence" and "Bellmon Review." "Non-acquiescence" is the agency's alleged policy of adjudicating claims without implementing the holdings in decisions of United States Courts of Appeal. Bellmon review is the agency's policy pursuant to which the decisions of Administrative Law Judges ("ALJs"), who had rendered a high percentage of proclaimant determinations in disability benefit cases, were subjected to agency-initiated review. Plaintiffs are moving for full summary judgment but are addressing only the non-acquiescence issue on the theory that they would be entitled to the same relief if they prevailed on one or both issues. Transcript of Oral Argument dated January 11, 1990 ("Tr.") at 12.

In this Court's decision of August 19, 1985, we denied defendants' motion to remand plaintiff Stieberger's case to SSA, granted plaintiff Patricia Happy's motion to intervene, denied a motion by Angel Vega to intervene, granted the motions of plaintiffs Milagros Sullivan and Harold Johnson to consolidate their actions with this action, and certified a class consisting of:

All New York State residents whose claims for benefits or continuation of benefits have been or will be denied or terminated pursuant to hearings before administrative law judges since October 1, 1981, based on a determination that they do not have a disability that prevents them from engaging in substantial gainful activity; and whose benefits have not been granted or restored through subsequent appeals.

615 F.Supp. at 1400. On the basis of a finding that plaintiffs were likely to prevail on the merits of their non-acquiescence claim, the Court granted a detailed preliminary injunction. The Court also found that plaintiffs had standing to challenge the Bellmon Review policy, but denied plaintiffs' motion for preliminary relief because SSA had discontinued the challenged aspects of the practice.1 On September 6, 1986, the Second Circuit vacated this Court's preliminary injunction on the ground that the relief granted in Schisler v. Heckler, 787 F.2d 76 (2d Cir.1986) ("Schisler I"), had removed the necessity for this Court's injunction. Stieberger v. Bowen, 801 F.2d 29 (2d Cir.1986). In Schisler I, the Second Circuit directed the District Court on remand to "state in relevant publications to be determined by the district court that adjudicators at all levels, state and federal, are to apply the treating physician rule of this circuit." 787 F.2d at 84. The final Schisler instructions were eventually set out in Schisler v. Bowen, 851 F.2d 43, 46-47 (2d Cir.1988) ("Schisler II").

On January 26, 1987, this Court granted plaintiffs motion to compel production of documents relating to the work of the Litigation Management Project and the Acquiescence Task Force. With plaintiffs' agreement, a protective order was issued prohibiting the disclosure of the contents of the documents to others. On January 11, 1990, this Court lifted the protective order, Tr. at 47, and on February 8, 1990, the Court of Appeals denied defendants' petition for a stay of the order lifting the protective order.

In 1986, defendants moved for summary judgment on statute of limitations grounds with respect to the City of New York and a portion of the plaintiff class. This Court determined that a decision on defendants' motion should be deferred until a dispositive motion on the merits was also before the Court. Defendants have now renewed their motion, and it is presently before the Court.

B. The Administrative Review Process

The Social Security Administration is responsible for administering the disability programs of the Social Security Act. SSA has set up a multi-step process for claimants seeking a determination that they are sufficiently disabled to be entitled to benefits. State disability determination services ("DDSs") make the initial determination relying upon a review physician or psychologist and a disability examiner neither of whom actually examine claimants. This determination is based upon a written record. In New York, the New York State Office of Disability Determinations ("ODD") performs this function pursuant to a contract with SSA. Under 42 U.S.C.A. ? 421(a)(2) (1983 & Supp.1989) and 20 C.F.R. ?? 404.1615(a), 404.1633(a) & (b), 416.1015(a), 416.1033(a) & (b) (1989), ODD is bound to apply SSA's standards and procedures for determining disability. Within 60 days of the receipt of a denial notice, a claimant may seek reconsideration by ODD. Except when a claimant is seeking reconsideration of a determination that he is no longer disabled, reconsideration determinations are also made without a hearing or an appearance by the claimant.

SSA uses a set of instructions known as the Program Operations Manual System ("POMS") to instruct ODD adjudicators how to apply policies relating to the disability program. A procedure called "quality assurance" is used by SSA to monitor and evaluate ODD's compliance with SSA policy. Specifically, SSA officials review a percentage of ODD's disability determinations. When quality assurance staff members determine that ODD has deviated from SSA policy in a particular case, SSA may return the case to ODD for correction or further development of evidence. A percentage of "performance accuracy" is recorded by SSA, and if the percentage falls below a fixed level for two or more quarters, SSA is authorized to intervene to undertake certain corrective measures. If SSA declares ODD to be...

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