WC v. Heckler

• Decision Date: 15 January 1986
• Docket Number: No. C83-865R.,C83-865R.
• Citation: 629 F. Supp. 791
• Parties: W.C., Plaintiff, v. Margaret M. HECKLER, Secretary of Health and Human Services, Defendant.
• Court: U.S. District Court — Western District of Washington

629 F. Supp. 791

W.C., Plaintiff, v. Margaret M. HECKLER, Secretary of Health and Human Services, Defendant.

No. C83-865R.

United States District Court, W.D. Washington, at Seattle.

October 28, 1985.

Order Granting Relief January 15, 1986.

William Rutzick, Kristin M. Houser, Schroeter, Goldmark & Bender, Seattle, Wash., for plaintiff.

Robert M. Taylor, Asst. U.S. Atty., Seattle, Wash., for defendant.

ORDER GRANTING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT

ROTHSTEIN, District Judge.

THIS MATTER comes before the court on cross motions for summary judgment. These motions were referred to Magistrate Philip K. Sweigert, who has now filed a detailed Report and Recommendation. The court has carefully considered the Report and Recommendation and all the materials submitted by the parties in response thereto. The court has also studied the relevant file and records.

This action is composed of two claims for relief. First, plaintiff seeks reversal of a decision by the Secretary of Health and Human Services to terminate his disability benefits under Title II of the Social Security Act and his Supplemental Security Income ("SSI") benefits under Title XVI of the Social Security Act. Plaintiff alleges that this decision is not supported by substantial evidence and is based on errors of law. Second, plaintiff, as representative of a class of individuals seeking disability and SSI benefits, challenges the validity of the so-called Bellmon Review Program implemented by the Secretary in 1981. Plaintiff alleges that the adoption of the Bellmon Review Program violated the notice and comment requirements of the Administrative Procedure Act ("APA").

I. FACTUAL BACKGROUND

Plaintiff received disability and SSI benefits for a number of years. On February 17, 1982, the Social Security Administration ("SSA") terminated his benefits based on a determination that his disability had healed and that, therefore, he was able to return to work. Plaintiff requested and received a hearing before an administrative law judge ("ALJ"). The ALJ found that plaintiff's disability continues, and he reversed the termination of plaintiff's benefits. Review of this ALJ decision was initiated on July 14, 1982, by a motion of the SSA Appeals Council, the body that issues final decisions on behalf of the Secretary of Health and Human Services. On April 21, 1983, the Appeals Council reversed the ALJ decision and terminated plaintiff's benefits.

It is undisputed that the ALJ decision in plaintiff's case was reviewed under the Bellmon Review Program. This program was implemented by the Secretary in response to the Bellmon¹ Amendment to the Social Security Act. The Bellmon Amendment provides:

The Secretary of Health and Human Services shall implement a program of reviewing, on his own motion, decisions rendered by administrative law judges as a result of hearings under section 221(d) of the Social Security Act, and shall report to the Congress by January 1, 1982, on his progress.

Social Security Disability Amendments of 1980, Pub.L. No. 96-265, § 304(g), 94 Stat. 441, 456. The Bellmon Amendment grew out of congressional concerns about the increasing number of disability decisions being appealed to ALJs, the high number of allowance decisions issued by ALJs, the accuracy of those decisions, and the policy that only ALJ decisions denying claims were subject to review. H.R.Rep. No. 944, 96th Cong., 2d Sess. 57, reprinted in 1980 U.S.Code Cong. & Ad.News 1392, 1405; S.Rep. No. 408, 96th Cong., 2d Sess. 53, reprinted in 1980 U.S.Code Cong. & Ad.News 1277, 1331.

In response to the Bellmon Amendment, the Secretary established the Bellmon Review Program, which was announced in Social Security Ruling ("SSR") 82-13.² The program was described in detail in a memorandum,³ dated September 24, 1982, from Louis B. Hays, Associate Commissioner of the SSA Office of Hearings and Appeals, to all SSA ALJs. According to the Hays memorandum, the program was begun on October 1, 1981. The program provided for own-motion review of ALJ decisions allowing disability benefits under Title II of the Social Security Act or allowing both disability and SSI benefits under Titles II and XVI of the Social Security Act. ALJs with individual allowance rates⁴ of 70 percent or higher and ALJs in hearing offices with aggregate allowance rates of 74 percent or higher were targeted for review. Half of the allowance decisions issued by targeted ALJs were evaluated by the Office of Hearings and Appeals for possible review, and 7½ percent of the allowance decisions issued by these ALJs were formally reviewed by the Appeals Council. On April 1, 1982, the targeted ALJs were divided into four groups based on own-motion rates.⁵ Each and every allowance decision by ALJs in the group with the highest own-motion rates was evaluated for possible review. In the group with the second-highest rates, 75 percent of the ALJs' allowance decisions were thus evaluated; in the group with the third-highest rates, 50 percent; and in the group with the lowest rates, 25 percent. In addition, the program was expanded so that 15 percent of all allowance decisions by targeted ALJs were formally reviewed by the Appeals Council. Finally, the program was expanded to provide review of a national random sample of ALJ allowance decisions, ALJ decisions referred from the SSA Office of Disability Operations, and decisions of all new ALJs.

While the record does not clearly set forth more recent developments concerning the Bellmon Review Program, the court understands that in early 1983 the Secretary ceased to target ALJs for review based on allowance rates. The Secretary continued, however, to target ALJs for review based on own-motion rates calculated from cases evaluated or reviewed as part of the national random sample. For a brief period, The Bellmon Review Program included some unappealed denial decisions issued by ALJs with high grant-review rates.⁶ On June 21, 1984, the Secretary eliminated from the Bellmon Review Program all review targeted at particular ALJs on the basis of prior performance.

Under the Bellmon Review Program, four ALJs in the State of Washington were targeted for review beginning October 1, 1981. Attachment to Letter of November 4, 1982, from P.J. Kurapka to William Rutzick, filed as Attachment to Declaration of Kristin Houser, May 3, 1984. Two more, including ALJ George W. Wise, who heard plaintiff's case, were targeted based on allowance rates for the six-month period ending January 1, 1982. Id. The ALJ decision in plaintiff's case was therefore among the decisions reviewed by the Appeals Council as a consequence of the decisionmaker's high allowance rate.

Plaintiff filed this action on June 24, 1983. In the Complaint, plaintiff alleges that the Appeals Council decision to terminate his benefits was not supported by substantial evidence and was based on errors of law. He therefore seeks reversal of the Appeals Council decision. He further alleges that the Bellmon Review Program, as outlined in SSR 82-13 and the Hays memorandum, was improperly adopted without APA notice and comment procedures. He therefore seeks an injunction against enforcement of all Appeals Council decisions in cases reviewed under the Bellmon Review Program.⁷ Plaintiff's APA claim focuses on the Secretary's former practice of targeting high allowance ALJs for own-motion review. For purposes of this Order, therefore, the term "Bellmon Review Program" will ordinarily refer to prior versions of the program in which ALJs were targeted for review based on allowance rates.

On September 21, 1983, plaintiff moved for class certification with respect to his APA claim. On October 26, 1983, the Secretary moved to remand plaintiff's individual claim for benefits in accordance with a preliminary injunction issued in Morrison v. Heckler, 582 F.Supp. 321 (W.D.Wash. 1983), a class action in which plaintiff was an unnamed class member. Pursuant to the Morrison v. Heckler preliminary injunction, the Secretary was to reconsider all class members' cases on a priority basis and determine whether her denial of benefits to each class member was consistent with certain Ninth Circuit decisions to which she had not acquiesced. In pertinent part, these Ninth Circuit decisions deal with the issues of medical improvement and uncontradicted treating physician opinion. By the Order of January 25, 1984, the court denied the Secretary's motion to remand and certified a class defined as follows:

All claimants within the State of Washington for Title II Social Security disability benefits or Title XVI Supplemental Security Income benefits who have received (or who receive during the pendency of his litigation) decisions from ALJ's reversing initial denials or terminations of disability and whose cases are then reviewed by the Appeals Council on its own motion pursuant to the Bellmon Amendment.

However, the court stayed proceedings for 60 days so that the Secretary might reconsider her termination of plaintiff's benefits. On March 19, 1984, the Appeals Council issued a supplemental decision which states that the termination of plaintiff's benefits is proper under Ninth Circuit law concerning medical improvement and uncontradicted treating physician opinion.

Plaintiff now moves for partial summary judgment on the class APA claim. The Secretary moves for summary judgment on both plaintiff's individual claim and the class APA claim.

II. PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT

The Magistrate recommends that the court grant plaintiff's motion for partial summary judgment on the class claim that the Bellmon Review Program was adopted in violation of APA notice and comment requirements. The Secretary objects to this recommendation on the grounds that the court lacks jurisdiction over the class claim and that the Bellmon Review Program is exempt from notice and comment requirements.

A. Jurisdiction

The Secretary asserts that the Disability...