City of New York v. Heckler

742 F.2d 729, 1984 U.S. App. LEXIS 19154
Court of Appeals for the Second Circuit·Decided August 27, 1984·No. No. 1095, Docket 84-6037·Published·Cited by 113 cases

Opinion

JON 0. NEWMAN, Circuit Judge:

The Secretary of Health and Human Services appeals from a judgment of the District Court for the Eastern District of New York (Jack B. Weinstein, Chief Judge) invalidating a procedure used by the Social Security Administration (“SSA”) in the determination of original and continuing eligibility of claimants for disability benefits. City of New York v. Heckler, 578 F.Supp. 1109 (E.D.N.Y.1984). The ruling affects a class of persons with severe mental illnesses. The class is estimated to include more than 50,000 New York residents. The Secretary raises no challenge on appeal to the District Court’s invalidation of the challenged procedure, which has since been abandoned. However, the appeal presents substantial and complicated issues concerning the jurisdiction of the District Court to adjudicate the class members’ challenge and to award relief. For reasons that follow, we affirm the judgment of the District Court.

Background

The invalidated procedure concerns one aspect of the elaborate process by which [732]*732people are determined to be eligible for disability benefits under the Social Security Disability Insurance (“DI”) program, established by Title II of the Social Security Act (“the Act”), 49 Stat. 622, as amended, 42 U.S.C. § 401 et seq. (1982), and the Supplemental Security Income (“SSI”) program established by Title XVI of the Act, 76 Stat. 197, as amended, 42 U.S.C. § 1381 et seq. (1982). More specifically, we are concerned with the five-step “sequential evaluation” process adopted by the Secretary to govern determination of initial and continuing eligibility for disability benefits under both DI and SSI programs.

The first step in the sequential process is a decision whether the claimant is engaged in “substantial gainful activity.” If so, benefits are denied. 20 C.F.R. §§ 404.-1520(a), (b), 416.920(a), (b) (1983). If not, the second step is a decision whether the claimant’s medical condition or impairment is “severe.” If not, benefits are denied. 20 C.F.R. §§ 404.1520(c), 416.920(c). If the impairment is “severe,” the third step is a decision whether the claimant’s impairments meet or equal the “Listing of Impairments” set forth in subpart P, app. 1, of the social security regulations, 20 C.F.R. §§ 404.1520(d), 416.920(d). These are impairments acknowledged by the Secretary to be of sufficient severity to preclude gainful employment. If a claimant’s condition meets or equals the “listed” impairments, he or she is conclusively presumed to be disabled and entitled to benefits. If the claimant’s impairments do not satisfy the “Listing of Impairments,” the fourth step is assessment of the individual’s “residual functional capacity,” i.e., his capacity to engage in basic work activities, and a decision whether the claimant’s residual functional capacity permits him to engage in his prior work. If the residual functional capacity is consistent with prior employment, benefits are denied. 20 C.F.R. §§ 404.1520(e), 416.920(e). If not, the fifth and final step is a decision whether a claimant, in light of his residual functional capacity, age, education, and work experience, has the capacity to perform “alternative occupations available in the national economy.” Decker v. Harris, 647 F.2d 291, 298 (2d Cir.1981); 20 C.F.R. §§ 404.1520(f), 416.920(f). If not, benefits are awarded.

The procedural irregularity challenged in this litigation concerns the fourth step of the sequential evaluation process—the determination of residual functional capacity. In disregard of the regulatory requirement to conduct an individualized assessment of the residual functional capacity of each claimant, SSA, informally and without public disclosure, adopted an administrative practice that effectively imposed a presumption upon the determination of eligibility for DI benefits: Claimants whose mental impairments were not as severe as those in the Listing of Impairments were presumed to retain a residual functional capacity sufficient to perform at least unskilled work.1 This presumption was conclusive as to most claimants with mental impairments that were “severe” but not “listed.” The practical effect of the presumption was to end the sequential process for most class members at the third step. The only class members who might progress through the fourth and fifth steps and receive benefits were those over 50 with extreme vocational deficiencies and “severe” but unlisted mental impairments. These class members, despite the presumption concerning residual functional capacity, might be found eligible for benefits by virtue of the medical-vocational “grid” regulation, 20 C.F.R. subpart P, app. 2 (1983), [733]*733but the force of the presumption could still adversely affect their claims.2

The presumption concerning residual functional capacity was applied throughout the elaborate administrative process by which claims for initial and continuing disability benefits are determined. The presumption guided determinations made by the New York State Office of Disability Determinations, pursuant to its contract with the SSA and review decisions made at the regional and national levels by SSA officials. Upon the de novo reviews conducted by administrative law judges, the presumption was not required to be applied, but the District Court found that AU’s often relied on determinations of residual functional capacity that were tainted by use of the presumption earlier in the review process.

On February 8, 1983, the City of New York and the New York City Health and Hospitals Corporation, the Commissioner of the New York State Department of Social Services, and the Acting Commissioner of the New York State Office of Mental Health, suing on their own behalf and as parens patriae, and eight named, individuals brought this class action against the Secretary and the Commissioner of SSA on behalf of

All individuals residing in the State of New York who have applied for or received Title II and/or Title XYI benefits on or after April 1, 1980, and who have been found by defendants to have a mental impairment which is severe ... and whose applications for benefits have been or will be denied or whose benefits have been or will be terminated, on the basis of defendants’ determination that such persons are capable of substantial gainful activity.

Plaintiffs sought declaratory and injunctive relief enjoining the Secretary from continuing to apply the unwritten presumption concerning residual functional capacity. The complaint invoked jurisdiction under the Social Security Act, 42 U.S.C. § 405(g) (1982), and the mandamus statute, 28 U.S.C.

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City of New York v. Heckler, 742 F.2d 729, 1984 U.S. App. LEXIS 19154 (2d Cir. 1984).

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