Briggs v. Sullivan

954 F.2d 534, 1992 WL 1623

• Court: Court of Appeals for the Ninth Circuit
• Decided: January 9, 1992
• Docket: No. 90-15747
• Status: Published

Opinions

TANG, Circuit Judge:

This class action law suit alleges that the practices of the Secretary of the United States Department of Health and Human Services (“Secretary”) denied plaintiffs benefits to which they were entitled.¹ This appeal presents three issues: (1) whether the Secretary fails to investigate representative payee applicants as required by 42 U.S.C. § 405®(2) and 42 U.S.C. § 1383(a)(2)(B); (2) whether the plaintiffs (hereafter “Briggs”) are entitled to a declaratory judgment for duplicate payments when representative payees whom the Secretary did not investigate, steal or misuse benefits; and (3) whether the Secretary has a duty to find suitable representative payees for those plaintiffs (hereafter “Pierce”) whose disability is drug addiction or alcohol abuse. The District court granted the Secretary’s motion for summary judgment on each of these claims. Briggs and Pierce appeal. We affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

Charles Briggs suffers a disabling mental impairment, a condition which renders him eligible to receive disability payments from the federal government. Because of the nature of Briggs' impairment, the Secretary has decided that Briggs’ federal benefit payments should be paid to a representative payee to act essentially as a trustee for Briggs, paying his basic expenses and giving him money as necessary and prudent.

Robert Pierce, another appellant in this case, is also disabled. Because his benefits constitute “Supplemental Security Income Payments” and because his disability stems in part from alcohol or drug addiction, the Secretary is required by statute to make the payments to which Pierce is entitled to a representative payee rather than directly to Pierce.

Briggs, and others similarly situated, sued to compel the Secretary to pay their benefits directly to them while they sought a representative payee or a replacement for a representative payee. Robert Pierce, and others similarly situated, sought the same type of order and also to compel the Secretary to designate suitable “representative payees” for them.

This case was previously before us on an appeal from the denial of a preliminary injunction. Briggs I, 886 F.2d at 1134. At that time, we held that several subgroups of the plaintiff class of Social Security (“Title II”) and Supplemental Security Income (“Title XVI”) recipients were entitled to a preliminary injunction on their claim that the Secretary was unlawfully withholding payments to plaintiffs who, for various reasons, did not have a responsible representative payee. Id. at 1148.

On remand, the district court entered a permanent injunction enjoining the Secretary from refusing to pay directly Title II or Title XVI benefits to eligible California recipients who have been determined to need but do not have representative payees. This ruling has not been appealed.

The Secretary’s current practice in appointing payees has several components. First, the Secretary requires the payee to fill out an application. Second, the Secretary conducts an interview with the prospective payee. The Secretary often also conducts an interview with the beneficiary. The payee is required to sign the application under a heading which states:

I know that anyone who makes or causes to be made a false statement or representation of material fact in an application or for use in determining a right to payment under the Social Security Act commits a crime punishable under Federal law by fine, imprisonment or both. I affirm that all information I have given in this document is true.

The Secretary verifies the payee’s Social Security number through its computer system. The Secretary will frequently make outside contacts to determine if the payee is suitable.

The injunction did not cover Title XVI recipients eligible for benefits because of drug abuse or alcoholism. As to the process for the appointment of representative payees for these Title XVI recipients, the district court granted partial summary judgment to the Secretary and held that: (1) the Secretary's screening program fulfills his statutory duty to investigate representative payees; (2) the plaintiffs are not entitled to duplicate payments for benefits misused by representative payees; (3) the Secretary breached no obligation to locate suitable representatives for drug or alcohol dependent recipients; and (4) those beneficiaries who are legally incompetent but without representative payees are not entitled to direct payments.

The plaintiffs appeal all but the fourth ruling. The Secretary asserts that this court lacks jurisdiction to review the adequacy of the investigation conducted by the Department of Health and Human Services. We reject this jurisdictional contention and we affirm the district court’s judgment.

II. STANDARD OF REVIEW

We review a grant of summary judgment de novo. Kruso v. International Tel. & Tel. Corp., 872 F.2d 1416, 1421 (9th Cir.1989), cert. denied, — U.S. —, 110 S.Ct. 3217, 110 L.Ed.2d 664 (1990). We must determine whether, viewing the evidence in the light most favorable to the nonmoving party, there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. Tzung v. State Farm Fire and Casualty Co., 873 F.2d 1338, 1339-40 (9th Cir.1989).

III. DISCUSSION

1. The Duty of the Secretary to Investigate Representative Payees.

Briggs argues that the Secretary routinely does nothing that could be construed as an investigation. The Secretary asserts, on the other hand, that both we and the district court lack jurisdiction to examine this claim. Despite the Secretary’s continuing objection to our jurisdiction, we reaffirm our holding in Briggs I that we have jurisdiction in this case. 886 F.2d at 1137-42.

A. The Secretary’s Duty to Investigate

The district court held that the Secretary has a duty to investigate representative payees. The district court did not err in this conclusion. This holding was premised on the language of 42 U.S.C. § 405(j)(2) and 42 U.S.C. § 1383(a)(2)(B). Section 405(j)(2) states:

Any certification made ... for payment to a person other than the individual entitled to such payment must be made on the basis of an investigation carried out either prior to such certification or within forty-five days after such certification, and on the basis of adequate evidence that such certification is in the interest of the individual entitled to such payment (as determined by the Secretary in regulations). The Secretary shall ensure that such certifications are adequately reviewed.

The legislative history of this section reveals that investigation of the suitability of representative payees was a significant congressional concern. H.R.Conf.Rep. No. 1039, 98th Cong., 2d Sess. 43, reprinted in 1984 U.S.Code Cong. & Admin.News 3080, 3101. The House Report on section 405(j) stated that the Secretary might be required to appoint representative payees prior to the completion of an investigation, but “the Secretary should do so cautiously.” Id. Congress dictated that large lump sum retroactive payments should “not ordinarily be paid to new representative payees until the investigation of their suitability has been successfully completed.” Id.

The Senate Report reflects this same concern:

When the Social Security Administration finds that such individuals cannot manage their own funds, it has a serious obligation to exercise caution i[n] selecting an alternate payee and to undertake reasonable efforts to assure proper use of and accountability for the benefits disbursed to that payee. The Committee amendment would establish a statutory base for that obligation of the agency.

S.Rep. No. 466, 98th Cong., 2d Sess. 29 (1984). The statutory language and the legislative history thus set forth the Secretary’s duty to investigate representative payees. The next question is whether the Secretary fulfills that obligation.

B. The Extent of the Investigation

Briggs asserts that the legislative history of 42 U.S.C. §§ 405(j)(2) and 1383(a)(2)(B) indicates that Congress intended a duty to conduct an investigation of greater proportions than that which the Secretary presently performs. Specifically, Briggs argues that the statutory term “investigation” requires something more than the mere taking of an application.

i. The Administrative Procedures Act

The district court held that the scope of the Secretary’s investigation was beyond review because the Administrative Procedure Act (“APA”) prevents judicial review of decisions which are “committed to agency discretion by law.” 5 U.S.C. (a)(2). The APA precludes review when “ ‘in a given case’ there is no law to be applied.” Strickland v. Morton, 519 F.2d 467, 470 (9th Cir.1975) (emphasis omitted) (quoting Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 410, 91 S.Ct. 814, 821, 28 L.Ed.2d 136 (1971)).

When a court is asked to review agency action in instances where considerable discretion is committed by statute to an official, the court lacks jurisdiction due to the provisions of § 701(a)(2) only when the agency action of which plaintiff complains fails to raise a legal issue which can be reviewed by the court by reference to statutory standards and legislative intent.

Strickland, 519 F.2d at 470.

Here, the Secretary has no discretion whether to conduct an investigation. The legislative history clarifies congressional intent with regard to the investigation requirement. Additionally, the Supreme Court has, in other contexts, explained what constitutes an adequate investigation. See Brotherhood of Ry. & Steamship Clerks v. Association for the Benefit of Non-Contract Employees, 380 U.S. 650, 662, 85 S.Ct. 1192, 1198, 14 L.Ed.2d 133 (1965) (duty to investigate is a duty to make such investigation as the nature of the case requires; an investigation is essentially informal, not adversarial; it is not required to take any particular form); Inland Empire Dist. Council v. Millis, 325 U.S. 697, 706, 65 S.Ct. 1316, 1321, 89 L.Ed. 1877 (1945) (same). Because we have statutory standards, case law, and legislative intent indicating Congress’s desires, we conclude that the APA does not prohibit our review of the Secretary’s investigation of representative payees.

ii. The Agency’s Construction of Statutes

When construing statutes, we show “ ‘great deference to the interpretation given the statute by the officers or agency charged with its administration.’ ” E.P.A. v. National Crushed Stone Ass’n, 449 U.S. 64, 83, 101 S.Ct. 295, 307, 66 L.Ed.2d 268 (1980) (quoting Udall v. Tallman, 380 U.S. 1, 16, 85 S.Ct. 792, 801, 13 L.Ed.2d 616 (1965)). Here, we review the agency’s construction of 42 U.S.C. §§ 405(j)(2) and 1383(a)(2)(B).

Our first inquiry is whether Congress has directly spoken to the precise question at issue. Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842, 104 S.Ct. 2778, 2781, 81 L.Ed.2d 694 (1984). While the House and Senate reports shed some light on requirements for an investigation, they do not speak to the precise question of the nature and extent of the Secretary’s duty to investigate. We therefore conclude that Congress has not specifically addressed the issue of how extensive an investigation is required of the Secretary.

When confronted with congressional silence, we examine “whether the agency’s answer is based on a permissible construction of the statute.” Id. at 843, 104 S.Ct. at 2782. The agency’s interpretation of the statute is “given controlling weight unless [it is] arbitrary, capricious, or manifestly contrary to the statute.” Id. at 844, 104 S.Ct. at 2782 (footnote omitted).

In determining whether the agency’s construction meets this standard, the relevant inquiry is “whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment.” Volpe, 401 U.S. at 416, 91 S.Ct. at 824. We are “not empowered to substitute [our] judgment for that of the agency.” Id.

iii. Analysis of Investigation Conducted By Secretary

Railway Clerks and Inland Empire provide useful parallels for this case. Both dealt with a requirement that the National Labor Relations Board investigate controversies concerning the representation of employees in union disputes. In both cases, the court held that an “investigation” is “essentially informal, not adversarial]. The investigation is not required to take any particular form.... ” Inland Empire, 325 U.S. at 706, 65 S.Ct. at 1321; Railway Clerks, 380 U.S. at 662, 85 S.Ct. at 1198. “These principles [that an investí-gation is informal] are particularly apt here where Congress has simply told the Board to investigate and has left to it the task of selecting the methods and procedures which it should employ in each case.” Railway Clerks, 380 U.S. at 662, 85 S.Ct. at 1199.

In this case, the Secretary (1) takes evidence from the prospective representative payee on an application form; (2) conducts an interview with the payee and often times the beneficiary; (3) requires the payee to sign the application under knowledge of the penalty for perjury; (4) verifies the payee’s social security number; and (5) makes outside contacts. These procedures, the Secretary concludes, amount to an adequate investigation. The Secretary’s conclusion is not a clear error of judgment. It is neither arbitrary nor capricious. It takes into account the relevant factors of the purpose of the investigation and the allocation of the Secretary’s resources. We therefore hold that the Secretary adequately investigates representative payees.²

C. Due Process

Briggs argues that due process demands that the Secretary conduct a more thorough investigation. Briggs asserts that the interest of an individual in continued receipt of benefits is a statutorily created property interest. Mathews v. Eldridge, 424 U.S. 319, 332, 96 S.Ct. 893, 901, 47 L.Ed.2d 18 (1976). Briggs further asserts that the failure of the government adequately to investigate representative payees results in the deprivation of these benefits. Citing Mathews, Briggs argues that the district court should have balanced the plaintiffs’ interest in the benefits and the value of the extra investigative procedure against the government’s interest in not conducting a more thorough investigation. We disagree.

Briggs is correct that the continued receipt of benefits is a statutorily created property interest. Briggs is also correct that we must then ask whether the governmental procedures for distributing these benefits affords the recipients due process of law. We must ask whether the recipients’ interest in enhanced procedures outweighs the government’s interest in administrative convenience. See Zinermon v. Burch, 494 U.S. 113, 110 S.Ct. 975, 984-85, 108 L.Ed.2d 100 (1990) (discussing Mathews). Because we find the governmental interest weightier, we reject Briggs’ contention.

The recipients’ interest in enhanced procedures is somewhat limited. Although receipt of the benefits is very important, the recipients are already accorded substantial procedural protection. The recipient is given notice and an opportunity to be heard. The prospective payee is also interviewed and is required to give information under penalty of perjury. In some cases, additional investigation is undertaken, the threat of which helps to maintain the integrity of the process.

The recipients’ interest in enhanced procedures is also limited by the fact that the loss results in part from the wilfulness of private actors. Although imposing additional investigatory duties on the Secretary might decrease the likelihood of loss, the decrease would be limited by the government’s inability to control the ultimate actions of the payees.

On the other hand, the governmental interest in administrative convenience cannot be overlooked. The fiscal and administrative burdens of requiring the government to provide representative payees would be substantial. In the alternative, subjecting every prospective payee to rigorous investigation would be costly and time-consuming, and anything less would be unlikely to result in substantial improvement in the rate of loss.

In sum, the Mathews balance in this case falls solidly in favor of the existing procedures. Although those losses that do occur are highly regrettable, the Constitution only requires the government to take reasonable measures, not perfect ones. Requiring the Secretary to succeed in all of his efforts would be to require the impossible. Though the procedures now in place are not perfect, they are reasonable. Accordingly, Briggs’ due process claim must fail.

D. Promulgation of New Regulations

Briggs asserts that the Secretary is required to promulgate new regulations because the statutory provision mandating the investigation states that the certification must be made “as determined by the Secretary in regulations.” 42 U.S.C. § 4050)(2), § 1383(a)(2)(B). Briggs cites Pulido v. Heckler, 758 F.2d 503, 507 (10th Cir.1985) as support for this proposition.

Pulido is inapposite. In that case the Secretary had authored no regulations. Id. at 506. In Briggs’ case, however, there are regulations codified at 20 C.F.R. §§ 404.-2001 through 404.2055 and §§ 416.601 through 416.635. Therefore Pulido is not dispositive or persuasive authority.

Additionally, we note that the Secretary advised Congress that the agency would not enact new regulations because the agency felt that its policies already fulfilled the requirements of the 1984 legislation. Report to the Congress by the Secretary of Health and Human Services, Implementation of Section 16 of Public Law 98-460, Social Security Disability Benefits Reform Act of 1984 at 3. Since this report, Congress has not ordered the promulgation of new regulations. In light of Congress’s apparent acquiescence, we conclude that the district court did not err in refusing to hold that new regulations are required.

2. Declaratory Judgment.

Briggs and Pierce argue that the district court erred in failing to grant them a declaratory judgment that the Secretary must pay benefits not received by the beneficiaries due to the failure of the Secretary to conduct an adequate investigation. Because we have concluded that the Secretary investigates representative payees in accordance with its statutory mandate, the district court did not err in refusing to grant the requested relief.³

3. Duty to Find Representative Payees for Title XVI Beneficiaries.

Pierce argues that the Social Security Act and the Secretary’s regulations impose a duty to find payees for recipients whose disability is based on drug or alcohol abuse. The district court held that, even if this duty exists and is enforceable, the Secretary already does all that he can to find a suitable and willing payee.

Pierce relies on language in 42 U.S.C. § 1383(a)(2)(A) which states “the Secretary shall provide for making payments of the benefit to any” representative payee. We find no enforceable duty to seek out representative payees contained in this language.

Pierce also relies on 20 C.F.R. § 416.650 which states: “When we learn that the interests of the beneficiary are not served by continuing payment to the present payee or that the present payee is no longer able to carry out the payee responsibilities, we try to find a new payee.” We find no enforceable duty to find representative payees in the language of this regulation either. We conclude the Secretary has no statutory duty to find representative payees for recipients of Title XVI benefits whose disability is related to drug or alcohol abuse.

IV. CONCLUSION

We hold that the Secretary investigates payees as required by 42 U.S.C. § 402(j)(2) and § 1383(a)(2)(B). Accordingly, Briggs and Pierce are not entitled to a declaratory judgment that they should be repaid benefits misused by payees. Finally, the Secretary has no enforceable duty to find representative payees for those beneficiaries whose disability is based on drug abuse or alcoholism. The judgment of the district court is therefore

AFFIRMED.

1 . A detailed account of the underpinnings of this case and the statutory framework against which it is set appears in Briggs v. Sullivan, 886 F.2d 1132 (9th Cir.1989) (Briggs I).

2 . Briggs and Pierce argue that Holt v. Bowen, 712 F.Supp. 813 (D.Colo.1989), stands for the proposition that the Secretary fails to adequately investigate representative payees. In that case, however, the Secretary made no investigation of the plaintiffs payee. That court specifically narrowed its holding by stating: “We do not infringe upon the Secretary’s authority to determine the scope of the investigation of proposed representative payees. However, at a minimum, such an investigation should include appropriate background questions along with a face to face interview.” Holt, 712 F.Supp. at 818. The Secretary requires both these procedures. Therefore, Briggs’s reliance on Holt is misplaced.

3 . Briggs and Pierce cite the recent amendment to 42 U.S.C. §§ 405(j) and 1383(a)(2) which provides that the Secretary must certify for payment to the beneficiary an amount equal to the amount of misused benefits where the negligent failure of the Secretary to investigate or monitor a representative payee results in the misuse of the benefits. Briggs' argument in the district court and before us was confined to a narrow issue of statutory construction: that is, the definition of the Secretary’s investigatory duty under 42 U.S.C. §§ 405(j) and 1383(a)(2)(B). Briggs neither argued nor established that the Secretary's actions constituted tortious negligence. Therefore, this amendment is not relevant to our disposition of this case.