The opinion of the court was delivered by: HERMAN
Plaintiffs were convicted, in state summary proceedings, of fraudulently receiving unemployment compensation benefits. As a result of these convictions, Plaintiffs, although otherwise qualified, were declared ineligible to receive benefits for a period of one year pursuant to Section 402(g) of the Pennsylvania Unemployment Compensation Act, 43 P.S. § 802(g). This action challenges the validity of § 402(g) on constitutional and statutory grounds. Both Plaintiffs and Defendants seek summary judgment. Although we decide the constitutional questions adversely to Plaintiffs, they are nonetheless substantial as defined by Hagans v. Lavine, 415 U.S. 528, 94 S. Ct. 1372, 39 L. Ed. 2d 577, and thus confer jurisdiction to determine the pendent state and federal statutory claims.
The first basis upon which Plaintiffs attack § 402(g) is that it is inconsistent with the Federal Social Security Act, 42 U.S.C. § 501, et seq., and thus void under the Supremacy Clause of the United States Constitution, Art. VI, Clause 2.
Specifically, Plaintiffs contend that the one-year disqualification provision of the Pennsylvania Act conflicts with the requirement of § 303 of the Federal Act, 42 U.S.C. § 503(a), that state statutory schemes provide for prompt payment of benefits:
"The Secretary of Labor shall make no certification for payment
to any State unless he finds that the law of such State, approved by the Secretary of Labor under the Federal Unemployment Tax Act, includes provision for --
(1) Such methods of administration . . . as are found by the Secretary of Labor to be reasonably calculated to insure full payment of unemployment compensation when due; . . . ."
Plaintiffs argue that when they initially established eligibility payment of benefits became "due", and that their subsequent disqualification pursuant to § 402(g) denied them benefits that were "due" contrary to § 303(a) of the Federal Act. This argument is fallacious in that it presupposes the outcome of the very inquiry that is now before the Court. If § 402(g) were invalid, as Plaintiffs assume, then benefits would indeed be "due" and § 303 of the Federal Act would require the state to provide prompt payment. Fusari v. Steinberg, 419 U.S. 379, 95 S. Ct. 533, 42 L. Ed. 2d 521 (1975); California Dept. of Human Resources v. Java, 402 U.S. 121, 91 S. Ct. 1347, 28 L. Ed. 2d 666 (1971). On the other hand, if § 402(g) is valid, which for reasons set forth in the remainder of this opinion we conclude it is, then no payments were ever "due" Plaintiffs and the question of payment "when due" does not arise.
Section 303(a) of the Federal Act is no more than a requirement that the state provide prompt payment of benefits to those who are eligible. It does not limit the power of the states to suspend or terminate eligibility for proper reasons, and it provides no basis for voiding an otherwise proper eligibility standard such as § 402(g) merely because it operates to deny compensation to some claimants to whom it would otherwise be due.
The second prong of Plaintiffs' statutory argument is that § 402(g) is contrary to the general policy of the Federal Social Security Act to maintain those who are unemployed through no fault of their own at subsistence levels without their having to resort to public assistance. See California Dept. of Human Resources v. Java, supra, 402 U.S. at 131, 91 S. Ct. at 1353, 28 L. Ed. 2d at 674. Since Plaintiffs have been forced to resort to public assistance during their ineligibility, they contend that the purpose of the Federal Act has been improperly frustrated. The weakness of this argument is that the disqualification of which Plaintiffs complain is specifically authorized by the Unemployment Tax Act, 26 U.S.C. § 3304(a)(10):
The Unemployment Tax Act, 26 U.S.C. §§ 3301-3309, and the Unemployment Compensation provisions of the Social Security Act, 42 U.S.C. §§ 501-504 both originated in the Act of August 14, 1935, 49 Stat. 620 et seq. See Historical Note to 26 U.S.C.A. § 3301 (1967). Together the two statutes form an integrated statutory scheme, and, although they are codified in different titles, they are so intimately connected that we do not see how a state enactment specifically authorized by the Unemployment ...