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Kuehner v. Heckler

December 9, 1985

FRANK KUEHNER, DOROTHY BURAYAK, RICHARD BURNS, ALICE HETHERINGTON, FRANK JENNINGS, JR., PHILIP FISHER, CLINTON FOYAL, SOLOMON KATZ, RAYMOND STANIEWICZ, JAMES LOUGHLIN, MARGARET DOUGLAS, LAWRENCE COOK, STEVEN SVERDLOW, ELAINE FLEIGELMAN, JAMES MC KEOWN, AND RIVA YANOVSKAYA, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED APPELLEES
v.
MARGARET M. HECKLER, SECRETARY, U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES, JOHN A. SVAHN, COMMISSIONER, SOCIAL SECURITY ADMINISTRATION, BARRY STERN, SECRETARY, PENNSYLVANIA DEPARTMENT OF LABOR & INDUSTRY, JOHN DELPAINE, DIRECTOR, PENNSYLVANIA DISABILITY DETERMINATION BUREAU; MARGARET M. HECKLER, SECRETARY OF THE UNITED STATES DEPARTMENT OF HEALTH AND HUMAN SERVICES (HHS), APPELLANT



On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. Civil No. 82-1839)

Author: Becker

Before: GARTH, BECKER, and VAN DUSEN, Circuit Judges

Opinion OF THE COURT

BECKER, Circuit Judge

In April 1981, plaintiff Frank Kuehner and a number of other Pennsylvania citizens filed a civil action in the district court for the Eastern District of Pennsylvania on behalf of themselves and a class consisting of all Pennsylvania residents whose disability benefits had been terminated or threatened with termination by the Social Security Administration. The gravamen of plaintiffs' complaint was that their benefits had been unfairly terminated because the Social Security Administration had used an improper and unduly harsh "current evidence" standard to determine that they were ineligible for benefits. Plaintiffs sought injunctive relief and mandatory application of a more lenient "medical improvement" standard. In the midst of a protracted legal battle, Congress passed the Social Security Benefit Reform Act of 1984 which directs the Social Security Administration to use the medical improvement standard urged by the plaintiffs and provides that the cases of members of the plaintiff class be remanded to the Social Security Administration for reevaluation in accordance with the new standard.

The issue we decide today is whether the plaintiff class can include those whose grievances arose as long ago as June 1, 1976, the date on which the Social Security Administration surreptitiously adopted the "current evidence" standard, or whether 42 U.S.C. § 405(g)(1982), which gives aggrieved claimants sixty days to commence civil actions challenging termination decisions, limits the class to those whose benefits were terminated since February 38, 1982, sixty days prior to its commencement of the action. Because we find that the Social Security Benefit Reform Act makes the sixty-day limitation of § 405(g) inapplicable to the plaintiff class,*fn1 we affirm the judgment of the court below which held that the class included those persons whose benefits were cut off after June 1, 1976.*fn2

I. BACKGROUND

A. The Statutory Background Before 1984

1. The Standard for the Review of the Termination of Disability Benefits: Medical Improvement or Current Evidence

Among the myriad benefits programs administered by the Social Security Administration (SSA) are the Social Security Disability Insurance program (SSDI), 42 U.S.C. §§ 401 et seq., and the Supplemental Security Income for the Aged, Blind, and Disabled (SSI), 42 U.S.C. §§ 1381 et seq. Under each of the programs, a controversy developed in the late 1970's and 1980's about what the SSA was required to demonstrate to terminate a recipient's benefits. There were two contending standards. The first, the "medical improvement standard," required the SSA examiner to determine whether the disability for which the recipient had originally been granted benefits had improved sufficiently to allow the recipient to return to work. The second standard, the "current evidence standard," allowed the SSA examiner effectively to reopen the question of disability and consider anew whether the recipient should never have received disability benefits. The difference between the medical improvement standard and the current evidence standard is analogous to that between deferential and de novo judicial review. The current evidence standard makes it much easier than the medical improvement standard to terminate benefits; hence, the choice of standard can make a significant difference to benefit recipients, especially in close cases.

Until June 1, 1976, the SSA used the medical improvement standard. On that date, however, the Secretary of Health, Education and Welfare (now Health and Human Services) instructed all administrators of SSDI and SSI to use the current evidence standard rather than the medical improvement standard. Although this was a distinct and significant change in SSA practice, the change was not effected through standard notice and comment procedure announced in the Federal Register as mandated by the Administrative Procedure Act, 5 U.S.C. § 553. Instead, the Secretary simply sent amendments of the operating guidelines to the state and federal agencies that administered the SSDI and SSI programs.*fn3 The changes were effected, therefore, without the knowledge of the public.

The SSA continued to sue the current evidence standard without public announcement until July 3, 1979 when it announced several proposed rules in the Federal Register. 44 Fed. Reg. 38, 879 (July 3, 1979). Among the proposed changes was a switch from the medical improvement standard -- which had prevailed de jure in not de facto -- to the current evidence standard. Id. at 38, 882. The announcement admitted that the SSA had been using the standard it was only now proposing for "[a]bout two [sic] years." Id. at 38,882. The final rules were promulgated on August 20, 1980, 45 Fed. Reg. 55, 566 (August 20, 1980),*fn4 and codified in 20 C.F.R. §§ 404.1501 - .1598 and various other sections. The official adoption of the current evidence standard for the medical improvement standard was codified in 20 C.F.R. §§ 404.1579, 404,1594, and 416.994.

Suits were brought in several circuits challenging the SSA's shift from the medical improvement standard to the current evidence standard. Several circuits, including our own, held that SSA was bound by the Social Security Act to use some form of the medical improvement test. See Haynes v. Secretary of Health and Human Services, 734 F.2d 284, 287-88 (6th Cir. 1984); Dotson v. Schweiker, 719 F.2d 80, 82 (4th Cir. 1983); Kuzmin v. Schweiker, 714 F.2d 1233, 1237 (3d Cir. 1983) ("in a termination proceeding, once the claimant has introduced evidence that his or her condition remains essentially the same as it was at the time of the earlier determination, the claimant is entitled to the benefit of a presumption that his or her condition remains disabling"); Simpson v. Schweiker, 691 F.2d 966, 969 (11th Cir. 1982) (in a benefits case, the court "must ascertain whether the Secretary's finding of improvement to the point of no disability is supported by substantial evidence"); Patti v. Schweiker, 669 F.2d 582, 586-87 (9th Cir. 1982).

2. Frequency of Review: Medical Diary or CDI

In addition to the controversy about the choice between the current evidence standard and the medical improvement standard, there was also some question about how frequently benefit recipients would be reviewed to see if they should be terminated. Until March 1981, the SSA followed the "medical diary program," according to which the SSA picked out a few benefit recipients for fairly close observation. Those recipients were chosen because they had great potential for medical recovery. Under this program, relatively few recipients received regular review, and it was therefore a lenient program form the point of view of most recipients.

In 1980, Congress, concerned that too many people who were no longer disabled were still receiving SSDI or SSI benefits, passed 42 U.S.C. § 421(h) which required review at least every three years for all cases. The across-the-board reviews commenced in March 1981 under the continuing disability investigations (CDI) program.

3. Reviewability of SSA Decisions by Federal Courts

Congress has specifically provided for judicial review of disability benefit decisions by the SSA. 42 U.S.C. § 405(g) (1982) states:

Any individual, after any final decision of the Secretary made after a hearing to which he was a party irrespective of the amount in controversy, may obtain a review of such decision by a civil action commenced within sixty days after the mailing to him of notice of such decision or within such further time as the Secretary may allow.

Section 405(g) thus appears to impose two conditions for jurisdiction: a complainant must have received a final decision from the SSA and must have filed a claim within sixty days of receiving notice of that decision.*fn5 This court has previously held that the finality condition is analytically separable into two subconditions: presentment of a claim by the complainant to the SSA, and exhaustion of administrative remedies. See Liberty Alliance of the Blind v. Califano, 568 F.2d 333, 344 (3d Cir. 1977). See also Kuehner v. Schweiker, 717 F.2d 813, 817 (3d Cir. 1983), vacated and remanded, 469 U.S. 977, 105 S. Ct. 376, 83 L. Ed. 2d 312 (1984).

B. Procedural History of the Present Case Through Passage of the Social Security Disability Benefits Reform Act of 1984

On April 29, 1982, plaintiffs, a class of Pennsylvania residents whose SSDI and SSI benefits had been terminated, filed a complaint in the Eastern District of Pennsylvania alleging that the terminations had been wrongful because the SSA had used the current evidence standard rather than the medical improvement standard in reviewing their cases. Plaintiffs sought declaratory and injunctive relief preventing SSA from continued use of the current evidence standard. ...


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