November 20, 1995 United States Court of Appeals For the First Circuit
No. 95-1230
ANTHONY PARISI, II, A MINOR, BY HIS PARENT AND NATURAL GUARDIAN, LORRALEE COONEY,
Plaintiff, Appellee,
v.
SHIRLEY S. CHATER, COMMISSIONER OF SOCIAL SECURITY,
Defendant, Appellant.
ERRATA SHEET ERRATA SHEET
The opinion of this Court issued on November 8, 1995 is corrected as follows:
On page 6, line 8: Replace "Parisi, Jr.'s" with "Anthony's";
On page 7, line 1, page 7, line 2, and page 14, line 18: Replace "Energy" with "Education".
United States Court of Appeals For the First Circuit
ANTHONY PARISI, II, A MINOR, BY HIS PARENT AND NATURAL GUARDIAN, LORRALEE COONEY,
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Robert E. Keeton, U.S. District Judge]
Before
Stahl, Circuit Judge,
Campbell, Senior Circuit Judge,
and Lynch, Circuit Judge.
Steve Frank, Attorney, United States Department of Justice, with
whom Frank W. Hunger, Assistant Attorney General, Donald K. Stern,
United States Attorney, and William Kanter, Attorney, United States
Department of Justice were on brief, for appellant. Sandra L. Smales, with whom Raymond Cebula was on brief, for
appellee.
November 8, 1995
LYNCH, Circuit Judge. In 1991 when Anthony Parisi, LYNCH, Circuit Judge.
II ("Anthony") was nine years old, the Social Security
Administration reduced the amount he was receiving in
dependent child's benefits on account of his disabled father
Anthony Parisi ("Parisi") from $464 a month to $262 a month.
The purported justification for the reduction is a provision
in the Social Security Act ("SSA") that sets a maximum amount
that can be paid out on a single wage earner's account. If
the benefits paid on that account exceed the maximum, a
reduction is required to comply with the cap. The cap was
exceeded in this case, the agency says, when Parisi's wife
(who is not Anthony's mother and with whom Anthony does not
live) was deemed "entitled" under one subsection of the
statute to spousal benefits on Parisi's account. Another
part of the same section of the statute, however, prohibited
any portion of those benefits from actually being paid to
her. The question is whether those spousal "benefits," which
were never actually payable, were properly counted toward the
family maximum cap. We conclude that they were not and
accordingly affirm the district court's reversal of the
agency's determination.
I. Factual Background
While married to Adriana Parisi, Anthony Parisi, a
fisherman, had a child, Anthony Parisi, II, with Lorralee
Cooney of Gloucester, Massachusetts. Anthony lives with Ms.
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Cooney, who has sole custody of him and brings this action on
his behalf.
In February 1988, Parisi became disabled, and he and
Anthony, as his dependent, started receiving payments on his
account as a wage earner.1 In 1991, Adriana Parisi applied
for and became eligible for early retirement ("old-age")
benefits under the SSA based on her own wage-earner's record.
By operation of the statute, she was automatically deemed
also to have applied for and to qualify for spousal benefits
on Parisi's account. See 42 U.S.C. 402(r)(1). However,
because the benefits to which Adriana was entitled on her own
account exceeded the spousal benefits for which she qualified
on her husband's account, it was determined that she could be
paid benefits only on her own account.
The agency also decided, however, that Adriana's
spousal benefits even though not actually payable to her or
anyone else still had to be counted toward the SSA's
statutory limit (the "family maximum") on benefits available
on a single worker's record. Because the benefits Anthony
was already receiving, when combined with Parisi's own
benefits and Adriana's (non-payable) spousal benefits,
exceeded the statutory maximum amount, the agency reduced
Anthony's dependent benefits. Lorralee Cooney was so
1. It is undisputed that Anthony was and still remains entitled to receive dependent child's benefits on the basis of Parisi's work record.
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notified. On reconsideration at Cooney's request, the agency
reaffirmed its decision to reduce Anthony's benefits.
The agency's determination was appealed to an
administrative law judge ("ALJ"), who concluded that
Adriana's non-payable spousal benefits should not be counted
toward the family maximum. The agency appealed the ALJ's
decision to the Social Security Appeals Council, which
reversed the ALJ. The Appeals Council's decision was
appealed to the district court. See 42 U.S.C 405(g). The
agency argued that under the plain language of the SSA,
calculation of the family maximum includes all
"entitlements," not just entitlements that result in actual
payment. The district court disagreed. It concluded that
the SSA's "family maximum" cap on benefits was meant to
include only "effective entitlements" (entitlements that
result in some actual payment), not "conditional
entitlements," and that because Adriana Parisi's spousal
benefits were only conditional (upon her not being entitled
to a larger benefit on her own wage-earner's account), they
were not properly counted toward the family maximum.
II. Relevant Statutory Provisions
The two statutory provisions primarily at issue are
42 U.S.C. 403(a) and 42 U.S.C. 402(k)(3)(A). The former
contains the "family maximum" provision and the latter is the
provision that prevents Adriana Parisi from being actually
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paid any spousal benefits on the basis of Parisi's work
record (which she would otherwise have received under section
402(b)(1)). Section 403(a) provides in pertinent part as
follows:
. . . [T]he total monthly benefits to which beneficiaries may be entitled under section 402 or 423 of this title for a month on the basis of the wages and self-employment income of [an] individual [wage-earner] shall . . . be reduced as necessary so as not to exceed [the maximum amount set by statute].
42 U.S.C. 403(a)(1). And section 402(k)(3)(A) provides in
relevant part:
If an individual is entitled to an old-age or disability insurance benefit for any month and to any other monthly insurance benefit for such month, such other insurance benefit for such month, after any reduction . . . under section 403(a) of this title, shall be reduced, but not below zero, by an amount equal to such old-age or disability insurance benefit . . . .
42 U.S.C. 402(k)(3)(A).
The parties agree that, because the monthly amount
of Adriana Parisi's old-age benefits on her own work record
exceeds the amount of spousal benefits she could be paid on
her husband's record under section 402(b)(1),
section 402(k)(3)(A) has the result of reducing to zero the
payable amount of Adriana Parisi's spousal benefits. It is
also agreed that Adriana's own old-age benefits, as well as
Parisi's benefits, are not subject to reduction under section
403(a). Thus the only payable benefits at stake are
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Anthony's.2 The statutory issue is whether the amount of
"total monthly benefits to which beneficiaries may be
entitled" for purposes of section 403(a) must include what
the monthly amount of Adriana's spousal benefits would have
been under section 402(b)(1) but for the operation of section
402(k)(3)(A) of the statute. If Adriana's non-payable
spousal benefits are included in the family maximum
calculation, then Anthony's benefits were properly reduced.
If not, then the district court's judgment must be affirmed.
III. Discussion
Our analysis begins with the text of the statute.
If the meaning of the text is clear, then that meaning must
be given effect, unless it would produce an absurd result or
one manifestly at odds with the statute's intended effect.
St. Luke's Hosp. v. Secretary of HHS, 810 F.2d 325, 331 (1st
Cir. 1987). If the relevant text and congressional intent
are ambiguous, then an agency's reasonable interpretation is
entitled to deference. See Chevron U.S.A., Inc. v. Natural
Resources Defense Council, Inc., 467 U.S. 837 (1984). No
deference, though, is due an agency interpretation that is
inconsistent with the language of the statute, contrary to
the statute's intended effect, arbitrary, or otherwise
2. The parties also agree that if Adriana had actually been paid spousal benefits on Parisi's account, then a corresponding reduction in benefits for Anthony would have been warranted under the family maximum provision.
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unreasonable. See Massachusetts Dep't of Energy v. United
States Dep't of Education, 837 F.2d 536, 541 (1st Cir. 1988).
A. The Statutory Language
The agency claims that its position is plainly
supported by two aspects of the statutory text: the term
"entitled" in section 403(a), and the phrase "after any
reduction . . . under section 403(a)" in section
402(k)(3)(A). We conclude that the statutory text does not
support the intuitively troubling result urged by the agency.
The Commissioner of Social Security ("Commissioner")
emphasizes that the family maximum is formulated on the basis
of entitlement, and that section 403(a) never speaks in terms
of benefits actually received. Thus, the argument goes,
because subsection (b)(1) of section 402, considered in
isolation, "entitles" Adriana Parisi to spousal benefits on
the basis of her husband's SSA record, such benefits must be
included in the family maximum calculation, even though the
same section of the statute just a few paragraphs later, see
402(k)(3)(A), operates to render those very benefits wholly
non-payable.
The Commissioner's argument is strained, and
certainly not dictated by the statutory text's plain
language. Section 403(a)(1) of the SSA limits and requires
the reduction "as necessary" of the "total monthly benefits
to which beneficiaries may be entitled under section 402
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. . . on the basis of the wages and self-employment income of
[the wage-earner, here Mr. Parisi]." 42 U.S.C. 403(a)
(emphasis added). The agency's claim that section 403(a)
requires the inclusion of all "entitlements" in the family
maximum computation begs the question whether a so-called
"entitlement" created in one part of section 402 that is
simultaneously prevented from yielding any actually payable
benefit by another applicable portion of section 402 can
properly be deemed an "entitle[ment] under section 402" at
all.3 We doubt that it can. Indeed, even according to the
agency's own regulatory definition, a person is "entitled" to
a benefit only when that person "has proven his or her right
to benefits for a period of time." 20 C.F.R. 404.303.
Here, Adriana Parisi has "proven" no right to benefits under
section 402 (taken as a whole) for any period of time.
We need not decide, however, whether the
Commissioner's understanding of the term "entitlement" is
somehow supportable, because the agency's argument, even
taken on its own terms, does not carry the day. For one
3. It would seem an unconventional usage at best to say that Adriana Parisi is entitled to benefits which the statute
clearly disallows in her case, leaving her with not even an expectancy of receiving them. Cf. Board of Regents v. Roth,
408 U.S. 564, 576-77 (1972) (an entitlement, contrasted to a
mere expectancy, creates a property interest protected by the Fourteenth Amendment); Goldberg v. Kelly, 397 U.S. 254, 260-
66 & n.8 (1970) (deprivation of statutory entitlement
triggers procedural due process concerns); see also Bell v.
Burson, 402 U.S. 535, 539 (1971) (similar).
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thing, the claim that section 403(a) is concerned primarily
with "entitlements" is not, in fact, fully borne out by the
actual language of the statute. Section 403(a) places a
limit not on entitlements per se, but rather on "the total
monthly benefits to which beneficiaries may be entitled under
section 402 . . . ." 42 U.S.C. 403(a) (emphases added). A
natural reading of this language suggests that the primary
object of limitation is the "total monthly benefits" produced
by the operation of section 402 as a whole, and not, as the
Commissioner argues, theoretical entitlements created by one
fragment of section 402 considered in artificial isolation
from the rest of that same section, and wholly apart from the
benefits that ultimately attach. Here, the total benefits to
which Adriana Parisi might be deemed "entitled" under section
402 when that section is considered in its entirety
amount to zero. Hence, Adriana's putative benefits under
section 402 could not possibly contribute anything to the
family maximum computation under section 403(a).
In addition to requiring an unnatural reading of the
statute, the Commissioner's argument is logically unsound.
Under the Commissioner's "pure entitlement" approach, section
403(a) is said to place a ceiling on pure entitlements,
regardless whether any payable benefits attach thereto. If
the total amount of entitlements available on a single
worker's record exceeds the statutory limit, so the theory
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goes, a reduction under section 403(a) is required, whether
the excess entitlements produce payable benefits or not. On
the other hand, the Commissioner simultaneously claims that
when the total amount of "entitlements" causes the family
maximum cap to be exceeded, it is the payable benefits that
are subject to reduction under the statute. This position is
internally inconsistent. If the thrust of section 403(a) is
to place a limit on entitlements, it is contradictory to say
that compliance with the family maximum cap can be achieved
through a reduction of payable benefits. Because under the
Commissioner's logic, an "entitlement" is entirely separate
from the payable benefits (if any) that attach, it would seem
to follow that a reduction in benefits paid could never be
effective to achieve compliance with the cap.
We conclude that the Commissioner's contention that
section 403(a) is concerned purely with theoretical
entitlements, irrespective of whether any actually payable
benefits attach thereto, is supported neither by the language
of the statute nor by reason.
We also are unpersuaded by the Commissioner's
argument to the extent it rests on the phrase "after any
402(k)(3)(A). The Commissioner contends that this phrase
specifically instructs that the reduction under
section 403(a) for compliance with the family maximum
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provision be computed before any reduction is taken under
section 402(k)(3)(A), and that, therefore, for purposes of
section 403(a), Adriana Parisi's spousal benefits must be
treated (contrary to fact) as if they were fully payable.
The Commissioner reads too much into the phrase
"after any reduction . . . under section 403(a)." Section
402(k)(3)(A) is triggered when an individual who is entitled
to old-age benefits on her own social security record (as
Adriana is in this case) is also facially entitled to some
other simultaneous benefit (in this case, spousal benefits on
Parisi's account). In substance, section 402(k)(3)(A) has
the effect of authorizing such an individual to receive
payment of the larger of the two simultaneous benefits, but
not both.4 Thus, section 402(k)(3)(A) requires comparing
the size of the beneficiary's "other" benefit with her own
old-age benefit. The "after any reduction under section
403(a)" language in section 402(k)(3)(A) ensures that, in
determining the amount of the "other" simultaneous benefit in
question, the calculation will take into account any
reduction to the "other" benefit that would otherwise be
required under section 403(a). This prevents the old-age
4. More precisely, the provision entitles the beneficiary to payment of her old-age benefit plus the difference between
the "other" benefit and the old-age benefit, if that difference is greater than zero. This is the same as saying that the beneficiary is entitled to an amount equal to the larger of the two simultaneous benefits in question.
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beneficiary from receiving, by operation of the simultaneous
benefits provision, any amount of benefits that would
otherwise be excluded as exceeding the cap imposed by section
403(a).5
There is nothing in the language of section
402(k)(3)(A) or section 403(a), however, that dictates that
the family maximum computation cannot take into account the
fact that an entitlement that would normally contribute to
the family maximum amount has been reduced to zero by
operation of the simultaneous benefits provision of section
402(k)(3)(A). It is true that the computation required under
section 402(k)(3)(A) requires a provisional determination
whether the "other" simultaneous benefit (here, Adriana's
spousal benefits) would, if payable, be subject to reduction
under section 403(a). But this computation is only necessary
for the purpose of determining what portion of the two
simultaneous benefits the beneficiary (Adriana) is entitled
to receive. There is no language in section 402(k)(3)(A),
and certainly not in section 403(a), requiring that the
5. Suppose, for example, that a beneficiary is simultaneously entitled to receive her own old-age benefit of amount B and a spousal benefit of amount S. Suppose also that if the spousal benefit were payable, the family maximum cap would be exceeded, and the spousal benefit (S) would be reduced by the amount of the statutory reduction, to amount S(r). The "after any reduction" language in section 402(k)(3)(A) ensures that the beneficiary will receive an amount equal to the larger of B and the reduced S(r), not
simply the larger of B and S.
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family maximum computation ignore the actual results of the
simultaneous benefits determination of section 402(k)(3)(A).
To the contrary, the statutory language suggests an
interplay between section 403(a) and section 402(k)(3)(A)
that belies the position advanced by the Commissioner.
Section 403(a) requires only such "reduc[tion] as necessary
so as not to exceed" the family maximum. The determination
of whether a reduction is necessary in this case depends upon
the calculation of the "total monthly benefits" to which
Adriana Parisi "may be entitled under section 402" on the
basis of her husband's SSA record. As explained, that amount
is zero. Hence, the relevant "total monthly benefits"
available under section 402 on Parisi's work record (combined
with Parisi's own benefits) do not exceed the statutory
ceiling. It cannot be "necessary," then, to reduce Anthony's
benefits.
We conclude that the Commissioner's position does
not follow from the plain language of section 402(k)(3)(A)
and section 403(a).
B. Legislative History
As the district court observed, the interpretation
urged by the Commissioner produces a result that Congress
apparently sought to avoid. The most illuminating
legislative comments are found in connection with the
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enactment of the 1949 amendments to the SSA, which changed
the previously existing family maximum provision:
Under the present law, the total of the family benefits for a month is reduced to the maximum permitted by section [403(a)] prior to any deductions on account of the occurrence of any event specified in the law . . . . Section [403(a)] as amended by the bill reverses this procedure and provides that the reduction in the total benefits for a month is to be made after the deductions. As a result, larger family benefits will be payable in many cases.
S. Rep. No. 1669, 81st Cong., 2d Sess. (1950), reprinted in
1950 U.S.C.C.A.N. 3287, 3361. After this statement, the
Senate Report set forth a hypothetical scenario illustrating
that under the amendments to section 403(a), the family
maximum provision would not operate to reduce a child's SSA
benefits on account of a family member's nominal entitlement
to benefits that are not actually payable. See id.
Congress expressed an intent that section 403(a) not
operate to deprive a dependent child of SSA benefits on the
basis of theoretical entitlements that produce no actual
benefits. The agency's reading of the statute is
inconsistent with that intent.
C. Regulatory Language
Our conclusion that the Commissioner's
interpretation of the statute is inconsistent with both its
text and intended effect suffices, under Chevron, to obviate
any requirement of deference to the agency's position. See
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Massachusetts Dep't of Energy, 837 F.2d at 541. We add,
however, as a capstone to our analysis, that the Social
Security Administration's own regulations are at odds with
its proposed construction of the statute. The regulation
that describes generally the effect of the family maximum
provision explains its operation in this way:
Family Maximum. As explained in 404.403,
there is a maximum amount set for each insured person's earnings record that limits the total benefits payable on that
record. If you are entitled to benefits as the insured's dependent or survivor, your benefits may be reduced to keep total
benefits payable to the insured's family
within these limits.
20 C.F.R. 404.304(d) (emphasis added). The regulation that
more specifically describes the operation of the family
maximum provision contains similar language:
The Social Security Act limits the amount of monthly benefits that can be paid for
any month based on the earnings of an insured individual.
20 C.F.R. 404.403(a)(1) (emphasis added).
The agency's own interpretative regulations thus
interpret the family maximum provision as operating to limit
the "amount of benefits that can be paid" on a single
worker's account. They do not state that section 403(a) caps
the total amount of entitlements that might be available on
an account. That the agency has chosen in its own
regulations to describe the family maximum as placing a
ceiling on benefits paid or payable casts further doubt on
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its contention here that section 403(a) is concerned with
capping pure entitlements, regardless of the amount of
payable benefits that attach.
To similar effect is language contained in the
agency's written rulings on Anthony's benefits as
communicated to Lorralee Cooney. In the first letter from
the Social Security Administration to Cooney notifying her
that her son's benefits were to be reduced, the agency
explained that the reduction was required because the statute
imposes a "limit on how much we can pay on each person's
Social Security record [emphasis added]." And later, in a
letter reaffirming its initial decision after
reconsideration, the agency informed Cooney that the family
maximum provision "limits the total amount of the benefits
payable on an individual's earnings record."
The regulations and agency statements quoted above
support the conclusion we adopt here, namely, that the
"family maximum" provision of section 403(a) operates to
limit only those benefits that are payable on a single
worker's account.
D. Policy Considerations
We observe, finally, that the purported policy
reasons offered in support of the Commissioner's construction
of the statute lack persuasive force.
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The agency says its position prevents families from
receiving duplicative or excessive benefits. In this case,
the Commissioner asserts, applying section 403(a) in the
manner suggested would have the effect of making the total
amount of benefits payable to the "family unit" (Parisi,
Anthony, and Adriana) roughly the same as it was before
Adriana became entitled to receive her own old-age benefits.
The problem with this rationale is twofold. First,
the family maximum provision (despite its common appellation)
is written not as a broad limitation upon the amount that a
family unit can receive in total SSA benefits, but rather as
a specific limitation upon the amount of benefits available
on the basis of a single worker's record. See 20 C.F.R.
404.403(a)(1) (explaining that section 403(a) places a
maximum "for each person's earnings record that limits the
total benefits payable on that record" (emphasis added)).
Adriana "earned" her old age benefits through her own years
in the work force, not because she was the wife of Parisi.
The question under section 403(a) is not whether the family's
benefits have exceeded a certain level, but whether the
benefits payable on a single wage-earner's account have
exceeded the statutory maximum.
Second, the agency's suggestion that the reduction
of benefits to Anthony prevents duplicative payments to the
"family unit" rings hollow. Anthony lives with his natural
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mother, not with Adriana and Parisi. The agency does not
suggest that any portion of Adriana's or Parisi's benefits
reaches the child. The agency's statement that "the family
unit continues to receive approximately the same overall
benefits as it did before" thus distorts reality. In fact,
under the agency's interpretation, Anthony receives only half
the benefits he was receiving before; and because neither the
father's nor Adriana Parisi's own benefits are subject to
reduction under the family maximum provision, it is only the
child who has been adversely affected by the agency's action
in this case.
The other purported policy justification offered in
defense of the Commissioner's position is that reduction of
the child's benefits in this case is required to uphold the
meaning of "entitlement." The Commissioner contends that
because section 403(a) places a limit on "entitlements," and
because Adriana Parisi is "entitled" to spousal benefits
under one subsection of the statute (even though those
benefits are not payable), failure to include those non-
payable benefits in the family maximum tally will dilute the
meaning of "entitlement" under the SSA.
We find this reasoning unpersuasive. The flaw in
this argument is the same as the flaw underlying its plain
meaning argument: it incorrectly assumes that section 403(a)
is concerned with keeping pure "entitlements" under the
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statutory limit. To the contrary, as we concluded above,
section 403(a) operates in this case to limit the total
amount of benefits payable on a single wage-earner's record
under the relevant benefits provisions (read as a whole), not
to limit entitlements theoretically available under one
subsection of the statute considered in artificial isolation.
In any event, although this conclusion negates the
Commissioner's claim that Adriana Parisi's non-payable
spousal benefits must be included in the family maximum
calculation, it does not directly undermine the
Commissioner's purported definition of "entitlement," nor is
it necessarily inconsistent with saying here that Adriana
Parisi has, in some abstract sense, an "entitlement" to
spousal benefits under section 402(b)(1) read in isolation
from the rest of section 402. We hold only that Adriana's
non-payable spousal benefits do not count toward the section
403(a) "family maximum."
E. Conclusion
We conclude that the Commissioner's proposed
construction of section 403(a) is not supported by the
language of the statute, is logically flawed, is inconsistent
with the statute's intended effect, is contrary to the
agency's own interpretative regulations, and is not supported
by any sound considerations of policy. Accordingly, we do
not defer to the Commissioner's position under the principles
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of Chevron, and we hold that section 403(a) operates to limit
the total amount of benefits actually payable on a single
worker's record, not the amount of entitlements theoretically
available.6
In this case, because Adriana Parisi's "entitlement"
under section 402(b)(1) to spousal benefits on Parisi's work
record produces zero payable benefits as a result of the
operation of section 402(k)(3)(A), no such benefits are
included in the computation required under section 403(a).
Consequently, the total amount of benefits payable on the
basis of Parisi's work record does not exceed the maximum
imposed by the statute, and it is not "necessary" for
purposes of section 403(a) to reduce Anthony's benefits. The
district court correctly reversed the decision of the Social
Security Appeals Council.
Affirmed.
6. Our reasoning differs from that employed by the district court. The district court's analysis distinguished between "effective" and "conditional" entitlements. This distinction, although sensible, has no roots in the statutory language. We rely, instead, on the notion that section 403(a) places a limit not upon non-payable "entitlements" created by an isolated subsection of the SSA, but upon payable benefits in this case, the total benefits yielded by section 402 of the SSA read as a whole. This notion is semantically supported by the statutory framework and by the agency's own regulations, which speak specifically in terms of payable benefits (e.g., 20 C.F.R. 404.304(d)).
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