Trahan v. Regan, 86-5051
| Decision Date | 26 October 1987 |
| Docket Number | No. 86-5051,86-5051 |
| Citation | 824 F.2d 96 |
| Parties | , 60 A.F.T.R.2d 87-5352, 87-2 USTC P 9535, 18 Soc.Sec.Rep.Ser. 467 Ava P. TRAHAN, et al. v. Donald T. REGAN, Secretary of the Treasury, et al., Appellants. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Appeal from the United States District Court for the District of Columbia (Civil Action No. 82-03004).
Gayle P. Miller, Atty., Dept. of Justice, with whom Joseph E. diGenova, U.S. Atty., Roger M. Olsen, Asst. Atty. Gen., and Michael L. Paup, Atty., Dept. of Justice, Washington, D.C., were on the brief, for appellants.
Gill Deford, with whom Neal S. Dudovitz, Los Angeles, Cal., Michael R. Schuster, Eileen P. Sweeney and Richard Hubbard, Washington, D.C., were on the brief, for appellees.
Before: MIKVA, RUTH B. GINSBURG and SILBERMAN, Circuit Judges.
Opinion for the Court filed by Circuit Judge MIKVA.
The Secretary of the Treasury and the Commissioner of Internal Revenue Service (IRS) challenge the district court's award of attorney's fees and litigation costs incurred by appellees in a suit against the IRS. Appellees, current and former participants in the Supplemental Security Income (Benefits) program, filed their fees application under the Equal Access to Justice Act (EAJA), 28 U.S.C. Sec. 2412(d)(1)(A) (1982 & Supp.III 1985), after obtaining a declaratory judgment preventing the IRS from releasing certain tax information to the Social Security Administration (SSA). The district court granted the application, holding that the challenged IRS action was not "substantially justified." We conclude that, under the standards governing EAJA fee awards, the district court correctly held that the IRS' position in this case was not "substantially justified." Further, we conclude that this case does not involve "special circumstances" that would make an award of fees unjust. Accordingly, we affirm the fee award.
The litigation that precipitated the present fee proceeding arose from SSA's implementation of a new policy to verify the income and assets of Benefits recipients. The Benefits program, administered In order to ensure that SSA provides assistance only to eligible individuals and in correct amounts, the Social Security Act directs the agency to verify an applicant's representation of eligibility through corroborating evidence from other sources and additional information obtained as necessary. See 42 U.S.C. Sec. 1383(e)(1)(B). The statute does not identify any specific sources for this supplemental evidence. Congress, however, required that other federal agencies "provide such information as the [SSA] needs for purposes of determining eligibility for or amount of benefits, or verifying other information with respect thereto." 42 U.S.C. Sec. 1383(f).
by SSA, is designed to provide cash assistance to needy individuals who are elderly, blind or disabled. See Title XVI of the Social Security Act, 42 U.S.C. Secs. 1381-1383c (1982). To be eligible for assistance, such individuals must meet financial qualifications established by SSA. See 42 U.S.C. Sec. 1382; 20 C.F.R. Secs. 416.1100-.1266 (1986). Regulations prescribed by SSA require Benefits recipients to supply the agency with the evidence necessary to prove eligibility and with any information that the agency requests. See 20 C.F.R. Sec. 416.200. If an individual fails to comply with an SSA request, the agency may determine that the individual is ineligible to receive Benefits and suspend any further payments. See 20 C.F.R. Secs. 416.1322, 416.714(b). Before discontinuance of Benefits may occur, however, SSA must afford a recipient extensive procedural protections, including notice and a hearing. See, e.g., 42 U.S.C. Sec. 1383(c)(3); 20 C.F.R. Secs. 416.1336, 416.1407-.1494.
Prompted by reports of widespread abuse in the Benefits program, the General Accounting Office (GAO), in two separate reports, recommended that the SSA verify eligibility by using tax information collected by the IRS. The International Revenue Code's (Code) stringent confidentiality requirements, however, erected a substantial roadblock to this source of information. The IRS may release tax data only as explicitly authorized by section 6103 of the Code. See 26 U.S.C. Sec. 6103(a) (1982). The section lists many federal agencies to which the IRS may release otherwise confidential tax information, but it does not authorize disclosure of the information at issue here to SSA. See 26 U.S.C. Sec. 6103(c)-(o). Under subsection 6103(c), however, the IRS may release tax information, "subject to such requirements and conditions [as] it may prescribe by regulations, ... to such person or persons as the taxpayer may designate in a written request or a consent to such disclosure." In light of these provisions, GAO made two recommendations: GAO suggested that Congress amend the Code to provide specific authorization for the IRS to release the needed information to SSA or, in the alternative, that SSA attempt to obtain the desired information by soliciting the recipients' consent to such disclosure.
Because legislative change was not immediately forthcoming, the agencies pursued GAO's second recommendation. SSA, together with GAO and the IRS, developed a notice-and-consent form designed to give SSA access to the desired information pursuant to subsection 6103(c) of the Code. The form consisted of two parts. In the first part, SSA attempted to notify Benefits recipients of the purpose of their requested consent:
We want the [IRS] to give us information from your tax records. The [IRS] will give us the information if you sign the form below.
We will compare this tax information with what you told us about your income and what you own to make sure we are paying the right amount in your [Benefits] checks.
The notice then advised recipients that:
You have a choice about signing the form. But we must have accurate information about your income and what you own to pay your [Benefits] checks. If you do not sign the form, your [Benefits] checks may be affected.
The second part of the form constituted the recipient's "consent." It requested the recipient's signature, authorizing the IRS to disclose to SSA information relating to the recipient's unearned income. In a separate In June 1982, eight Benefits recipients filed a class action against SSA alleging various statutory and constitutional violations with respect to the notice-and-consent forms. Plaintiffs sought to enjoin the SSA from gaining access to the tax information covered by the forms. The district court granted SSA's motion for summary judgment. The trial judge explained that because the case was "premature," he had dismissed the complaint without reaching the merits. Tierney v. Schweiker, Civ.Action No. 82-1638 (D.D.C. July 6, 1982). Plaintiffs appealed the decision to this court.
document sent only to agency area office staff, SSA explained that those who refused to consent would be subject to suspension procedures. Refusal to sign the form apparently was, by itself, grounds for suspending Benefits. In May 1982, SSA mailed the form to each of four million former and current Benefits recipients. Almost three million recipients, including appellees, signed and returned the form to SSA, as SSA had requested.
After the district court's dismissal in Tierney, SSA conveyed many of the signed forms to the IRS. Some of the same plaintiffs then filed suit against the IRS, alleging, inter alia, that the forms had been obtained by threat and coercion, rather than by consent, as required under subsection 6103(c) of the Code, and that the forms did not meet the requirements set forth in the applicable IRS regulations. Plaintiffs sought declaratory relief and an order enjoining the IRS from disclosing information based on the forms. A different trial judge dismissed the complaint on a variety of jurisdictional and remedial grounds, concluding that plaintiffs' claims were "insubstantial and frivolous." Trahan v. Regan, 554 F.Supp. 57, 63 (D.D.C.1982). Plaintiffs appealed this decision as well.
On appeal, this court consolidated the two cases. We reversed the ruling in Trahan and, as a result, found it unnecessary to reach the independent issues raised in Tierney. See Tierney v. Schweiker, 718 F.2d 449 (D.C.Cir.1983). Upon reaching the merits of the claims against the IRS, we concluded that the notice-and-consent forms were invalid in two major respects. First, we held that the form "does not meet the requirements of the IRS' own regulations," and therefore any reliance on the forms by the agency would be "invalid." Id. at 455. The Treasury Regulations pertaining to subsection 6103(c) require that the consent "be in the form of a written document pertaining solely to the authorized disclosure" and contain specific information including "[t]he taxable year covered by the return or return information." 26 C.F.R. Sec. 301.6103(c)-1(a) (1982). In this regard, the form at issue authorized the release of information "for all tax years beginning January 1, 1980, and subsequent." It contained no expiration date.
Second, emphasizing the importance of maintaining the confidentiality of tax returns, we found that the forms did not provide the "type of knowing and voluntary consent that [subsection 6103(c) of] the statute contemplates." Id. The forms failed to notify recipients of their procedural rights. And, as we found, because they "contained poorly-veiled threats that the recipients' benefits would be terminated if they failed to sign," the forms were likely to coerce recipients into relinquishing their statutory right to confidentiality. Id. at 456. Although we found that "the form used in this case [made] a mockery of the consent requirement," we specifically reserved judgment as to whether another form could...
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