Torres v. Chater, 96-1883

• Decision Date: 21 May 1997
• Docket Number: No. 96-1883,96-1883
• Parties: , 54 Soc.Sec.Rep.Ser. 247 Edwin R. Cordova TORRES, Appellee v. Shirley S. CHATER, Commissioner of Social Security, Appellant. . Submitted Pursuant to Third Circuit LAR 34.1(a)
• Court: U.S. Court of Appeals — Third Circuit

Page 166

125 F.3d 166

39 Fed.R.Serv.3d 437, 54 Soc.Sec.Rep.Ser. 247

Edwin R. Cordova TORRES, Appellee v. Shirley S. CHATER, Commissioner of Social Security, Appellant.

No. 96-1883.

United States Court of Appeals, Third Circuit.

Submitted Pursuant to Third Circuit LAR 34.1(a)

May 21, 1997.

Decided Sept. 18, 1997.

Jeffrey L. Greenwald, Allentown, PA, Attorney for Appellee.

Alfred R. Mollin, Anne M. Lobell, United States Department of Justice, Civil Division, Appellate Staff, Washington, DC, James A. Winn, Social Security Administration, Philadelphia, PA, Attorneys for Appellant.

Before: GREENBERG, ROTH and WEIS, Circuit Judges.

OPINION OF THE COURT

WEIS, Circuit Judge.

When the Social Security Act was amended to eliminate benefits for disability caused by alcohol and drug addiction, Congress divided the claimants into two groups. The district court decided that the distinction was based on whether the disability existed on the effective date of the amendment. We conclude, however, that the test is whether the claims had been "finally adjudicated by the Commissioner" before or after the effective date of the amendment. Accordingly, we will reverse the order of the district court.

After the denial of his original application for Supplemental Social Security Income (SSI) benefits, the claimant, Edwin R. Cordova Torres, reapplied, relying principally on his alcoholism as the cause of his disability. In 1994, an ALJ denied benefits and the Appeals Council affirmed. Claimant filed his request for review by the district court in May 1995. On March 21, 1996, the district court remanded the case to the Commissioner "for further determination as to the nature and extent of the plaintiff's alcohol problem, his ability to control his condition and his employability."

Almost two months later on May 16, 1996, the Commissioner filed a motion under Federal Rule of Civil Procedure 60(b)(6) to vacate the remand order because legislation enacted on March 29, 1996 eliminated alcoholism as a primary basis for SSI benefits. Exercising its discretion, the district court concluded that the Commissioner's motion was appropriate and considered it on the merits.

The Commissioner contended that the amending legislation barred further consideration of the plaintiff's claim because it had not been "finally adjudicated by the Commissioner" before March 29, 1996, as required by the statute's effective date provision. The district court, however, read the effective date language as directed toward the existence or non-existence of disability on that day, thus exempting cases pending on the date of enactment. Accordingly, the court denied the Commissioner's motion.

I.

In view of the somewhat unusual procedural posture of this case, we must first determine whether the order is appealable. The district court's initial remand to the Commissioner called for further review of evidence already existing in the record. It was fifty-six days later when the Commissioner filed her motion arguing that the change in statutory law disposed of the claim in its entirety. Following the rejection of her contentions by the district court, the Commissioner appealed to this Court.

Rule 60(b) provides that on motion "the court may relieve a party ... from a final judgment, order, or proceeding for ... (6) any other reason justifying relief from the operation of the judgment." Preliminarily, it would appear that an order denying a Rule 60(b) motion is appealable under 28 U.S.C. § 1291. See Browder v. Director, Ill. Dep't of Corrections, 434 U.S. 257, 263 n. 7, 98 S.Ct. 556, 560 n. 7, 54 L.Ed.2d 521 (1978); Binker v. Pennsylvania, 977 F.2d 738, 744 (3d Cir.1992); Daily Mirror, Inc. v. New York News, Inc., 533 F.2d 53, 56 (2d Cir.1976) ("An order denying relief under Rule 60(b) is an appealable order, but the appeal brings up only the correctness of the order itself"); 11 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2871 (2d ed.1995).

There is an interdependence between the "finality" required for Rule 60(b) and section 1291. In some instances, the Court of Appeals may not entertain an appeal under section 1291 because the underlying order in the district court is purely interlocutory and, thus, not within the scope of Rule 60(b), which applies only to "final" judgments and orders. An example of that situation might be a discovery order or similarly preliminary step in litigation being conducted in the district court.

In Kapco Manufacturing Co. v. C & O Enterprises, 773 F.2d 151, 154 (7th Cir.1985), a district court order directing the parties to reduce a settlement to writing was interlocutory, an "intermediate step" and not "final." Hence, the order was not within the scope of Rule 60(b) and, as such, not appealable under section 1291. See also St. Mary's Health Ctr. v. Bowen, 821 F.2d 493, 497 (8th Cir.1987) (order granting partial summary judgment on liability was interlocutory and not "final" under Rule 60(b) nor appealable under 28 U.S.C. § 1291).

In Kapco, however, the Court pointed out the distinction between preliminary directives issued during the course of ordinary civil litigation, which the district court has the power to modify, and orders remanding a case to an administrative agency for reconsideration. Although such remand orders are usually interlocutory, see AJA Associates v. Army Corps of Engineers, 817 F.2d 1070, 1073 (3d Cir.1987), they are not always so. If, for example, a party alleges under Rule 60(b) that a remand had been procured by fraud, denial of the motion would be dispositive of that issue and "wrap up all matters pending on the docket," thus making the decision final. Kapco, 773 F.2d at 153.

As we noted in Horizons International, Inc. v. Baldrige, 811 F.2d 154, 158 (3d Cir.1987), "interpretations of section 1291 announced in more garden variety civil litigation suits are not controlling" in reviews of agency actions. Such cases may present the issue "differently by virtue of the relief sought and the type of relief ordered." Id. at 159. Although Horizons cited Marshall v. Celebrezze, 351 F.2d 467 (3d Cir.1965) for the general proposition that a remand to the Secretary of HEW for the taking of additional evidence was interlocutory, id., we have recognized an exception for cases where barring appellate review is the practical result of those orders. United States v. Spears, 859 F.2d 284, 286 (3d Cir.1988); AJA Assocs., 817 F.2d at 1073. In such instances, appeals are permissible.

In Sullivan v. Finkelstein, 496 U.S. 617, 110 S.Ct. 2658, 110 L.Ed.2d 563 (1990), the Supreme Court discussed the appealability of an order remanding a disability benefits case to the Secretary of HHS for a further review of the record. In the circumstances of that case, the practical effect of the remand was to abrogate some of the Secretary's regulations.

The Court concluded that the remand order came within the fourth sentence of 42 U.S.C. § 405(g), which authorizes a district court to enter a "judgment affirming, modifying, or reversing the decision of the [Secretary], with or without remanding the cause for a rehearing." The Court doubted that the Secretary could later appeal, if on remand, he ordered payment of benefits. Consequently, the Secretary would be denied appellate review of the district court's ruling that invalidated the regulations. Id. at 625, 110 S.Ct. at 2663; see also Travis v. Sullivan, 985 F.2d 919, 921 (7th Cir.1993).

Finkelstein is not precisely on point because the remand order in the present case did not directly impair the Commissioner's ability to deny benefits. Moreover, it is not the remand that is before us, but the refusal to grant the Rule 60(b) motion. Therefore, it is the merits of that denial, and not the remand, that we must address. See Browder, 434 U.S. at 263 n. 7, 98 S.Ct. at 560 n. 7; Daily Mirror, 533 F.2d at 56.

Nevertheless, the case here is in the same posture as that in Finkelstein. If we do not entertain the appeal at this time, on remand the claimant may receive an award of benefits, in which event he will not appeal, and it is very doubtful that the Commissioner could appeal. See Finkelstein, 496 U.S. at 625, 110 S.Ct. at 2663. Consequently, the Commissioner would be unable to secure appellate review of the alcohol and drug abuse amendment as applied to this claim.

In the light of the circumstances present in this case, we conclude that because the claim on remand would likely escape appellate review, the district court properly considered that order as final for purposes of Rule 60(b) and appropriately considered the legal effect of the alcoholism amendment. Consequently, the denial of the motion is also final and appealable to this Court under section 1291.

II.

Congress amended Title II of the Social Security Act in 1996 to bar the award of disability benefits based on alcoholism or drug addiction. The amendment, codified at 42 U.S.C. § 423(d)(2)(C), reads as follows: "An individual shall not be considered to be disabled for purposes of this subchapter if alcoholism or drug addiction would (but for this subparagraph) be a contributing factor material to the Commissioner's determination that the individual is disabled."

On its face, the amendment's relevance to this case is not seriously questioned. The principal challenge is to the construction of the amendment's effective date as it applies to the claimant.

The relevant statutory language states: "The amendments ... shall apply to any individual who applies for, or whose claim is finally adjudicated by the Commissioner of Social Security with respect to, benefits under title II of the Social Security Act based on disability on or after the date of the enactment of this Act, and, in the case of any individual who has applied for, and whose claim has been finally adjudicated by the Commissioner with respect to, such benefits before such date of enactment, such amendments shall apply only...