USCA1 Opinion
October 11, 1996 [NOT FOR PUBLICATION]
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
____________________
No. 95-2267
NANCY TREMBLAY,
Plaintiff, Appellant,
v.
LOUIS SULLIVAN, SECRETARY OF HEALTH AND HUMAN SERVICES,
Defendant, Appellee.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Mark L. Wolf, U.S. District Judge]
___________________
____________________
Before
Torruella, Chief Judge,
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Cyr and Stahl, Circuit Judges.
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____________________
Nancy Tremblay on brief pro se.
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Donald K. Stern, United States Attorney and Thomas D. Ramsey,
________________ _________________
Assistant Regional Counsel, on brief for appellee.
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October 10, 1996
____________________
Per Curiam. Claimant Nancy Tremblay appeals a
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district court order upholding a decision of the Commissioner
of Social Security that reduced her Social Security
disability benefits to zero due to her receipt of a
disability pension under the Civil Service Retirement System
(CSRS). We affirm.
I.
Undisputed Facts
________________
The relevant facts are as follows. Claimant is a former
accountant for the U.S. Army Corps of Engineers who suddenly
went blind at the age of 27 due to a rare hereditary disorder
(Leber's optic neuropathy). This condition rendered her
disabled within the meaning of 42 U.S.C. 423. Prior to
becoming disabled, claimant had worked in the private sector
between 1977 and 1981, earning wages that were "covered" by
Social Security. See Das v. Secretary of Health and Human
___ ___ ______________________________
Services, 17 F.3d 1250, 1253 & n. 2 (9th Cir. 1994)("For
________
purposes of the Social Security Act, wages upon which an
individual pays social security taxes are 'covered' wages and
those upon which an individual pays no social security tax
are 'noncovered.'" (citation omitted)). Between 1983 and
1987, claimant worked for the federal government, earning
wages that were not covered by Social Security but that
rendered her eligible to receive a disability pension under
the CSRS after she became blind.
-2-
Claimant applied for Social Security disability benefits
(SSDI) and for disability retirement benefits under the CSRS.
She began receiving benefits under both programs in late 1988
and early 1989.1 Toward the end of 1989, the Social Security
1
Administration (SSA) notified claimant that her Social
Security benefits should have been withheld due to her
receipt of the CSRS pension. The SSA's determination was
based on the offset provision in 42 U.S.C. 424a.
The Offset Provision
____________________
Congress enacted 424a in 1965 in response to renewed
concern that many disabled workers were receiving disability
payments in excess of their working wages as a result of
their dual eligibility for benefits under the federal Social
Security and state worker's compensation programs. It was
believed that, inter alia, this situation decreased a
_____ ____
worker's incentive to return to work. Consequently, Congress
enacted 424a, "which, by limiting total state and federal
benefits to 80% of the employee's average current earnings
prior to disability, reduced the duplication inherent in the
programs and at the same time allowed a supplement to
workmen's compensation when the state payments were
inadequate." Richardson v. Belcher, 404 U.S. 78, 83
__________ _______
____________________
1Claimant's CSRS benefits were $919 per month. Claimant's
1
Social Security benefits totalled approximately $540 per
month. This figure included claimant's monthly SSDI benefit
and an additional sum in child's benefits that claimant
received on behalf of her daughter.
-3-
(1971)(holding 424a does not violate the Due Process
Clause).
This court and others have indicated in dicta that
424a generally allows disabled workers to retain 80% of their
pre-disability income or earnings before their Social
Security benefits will be reduced under the offset provision.
See, e.g., Davidson v. Sullivan, 942 F.2d 90, 92 (1st Cir.
___ ____ ________ ________
1991)(noting that under 424a total worker's compensation
and social security benefits may not exceed 80% of worker's
"predisability income"); Sciarotta v. Bowen, 837 F.2d 135,
_________ _____
140 (3d Cir. 1988)(noting that in enacting 424a, Congress
"intended to 'limit[] total state and federal benefits to 80%
of the employee's average earnings prior to the
disability'")(citation omitted); Swain v. Schweiker, 676
_____ _________
F.2d 543, 544 (11th Cir.), cert. denied, 459 U.S. 991
_____ ______
(1982)("[g]enerally, the [ 424a] offset applies when the
total of an individual's benefits and worker's compensation
exceeds 80% of his or her pre-disability earnings and it
reduces the federal benefits by the excess"); Freeman v.
_______
Harris, 625 F.2d 1303, 1306 (5th Cir. 1982)(similar). But
______
the statute does not mandate this result in every case.
With certain exceptions immaterial to the present case,
424a provides that in any given month in which an
individual under age 65 is entitled to both Social Security
disability benefits under 42 U.S.C. 423 and other periodic
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disability benefits, e.g., those paid under worker's
____
compensation or under any other law or plan of the United
States, the total Social Security disability benefits and any
related 402 benefits based on that individual's wages and
self-employment income (e.g., child's benefits):
____
shall be reduced (but not below zero) by
the amount by which the sum of -
(3) such total ... [Social Security]
benefits under sections 423 and 402 ...,
and
(4) such periodic benefits payable (and
actually paid) ... under such laws or
plans,
exceed the higher of -
(5) 80 per centum of ... [the
individual's] "average current earnings",
or
(6) the total of such individual's
[Social Security] disability insurance
benefits under section 423 ... and of any
monthly insurance benefits under section
402 ... prior to reduction under this
section.
Thus, 424a requires that a person's Social Security
benefits be reduced by the amount by which the sum of his
Social Security and other disability benefits exceeds the
the
higher of: (a) 80% of his "average current earnings" as
higher of
defined by 424a, or (b) his total Social Security benefits.
The statute goes on to define "average current earnings", in
relevant part, as the largest of:
(A) the average monthly wage ... used for
purposes of computing ... [the
-5-
individual's Social Security] benefits
under section 423...,
(B) one sixtieth of the total of ... [the
individual's] wages and self-employment
income ... for the five consecutive
calendar years after 1950, for which such
wages and self-employment income were
highest, or
(C) one-twelfth of the total of ... [the
individual's] wages and self-employment
income ... for the calendar year in which
he had the highest such wages and income
during the period consisting of the
calendar year in which he became disabled
... and the five years preceding that
year.2
2
See 42 U.S.C. 424a.
___
Claimant's Case
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In applying the offset provision, the SSA determined the
claimant's "average current earnings" under the "High 5"
method based on the wages that she earned during her first
years of "covered" employment, i.e., 1977-1981.3 Eighty
3
percent of her "average current earnings," as so calculated,
was $307.20, an amount substantially less than claimant's
total Social Security benefits. When the latter was
____________________
2The computation method outlined in subparagraph (B) is
2
called the "High 5" method, while that outlined in
subparagraph (C) is called the "High 1" method. Both methods
compute "average current earnings" without regard to the
limitations on the maximum earnings creditable for Social
Security purposes specified in 42 U.S.C. 409(a)(1) and
411(b)(1).
3These wages were much lower than those claimant earned
3
during her last years of "non-covered" employment as an
accountant with the federal government.
-6-
subtracted from the sum of claimant's Social Security and
CSRS benefits, as required by 424a(a)(3)-(6), the $919 CSRS
benefit was left as the amount to be "offset", or subtracted
from, claimant's total Social Security benefits. However,
since claimant's CSRS benefit exceeded her Social Security
benefits, and 424a prohibits reducing Social Security
benefits below zero, application of a $919 offset effectively
reduced claimant's Social Security benefits to zero.
Claimant disputed the SSA's computations and requested
reconsideration. The SSA reaffirmed its position both on
reconsideration and in a subsequent decision by an
administrative law judge (ALJ), who found that the offset
provision had been properly applied. The Appeals Council
upheld the ALJ's decision, thus rendering it the final
decision of the Commissioner.
Claimant thereafter commenced this proceeding for
judicial review, arguing, inter alia, that Congress did not
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foresee her situation when it enacted 424a and that the
SSA's application of the offset provision resulted in an
undue hardship on her. Noting that her remaining CSRS
benefit fell substantially short of 80% of her pre-disability
earnings, claimant maintained that the SSA should have
computed her "average current earnings" based on her non-
covered federal earnings from 1983-1988, a method that would
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leave her Social Security benefits intact. Claimant urged
the district court to follow a similar unpublished case which
reinstated a blind claimant's Social Security benefits after
the SSA had eliminated them under the offset provision. See
___
Dunkin v. Secretary of Health and Human Services, No. 1-C-85-
______ ______________________________________
1801, slip op., 1987 WL 109706 (S.D. Ohio, 1987)(holding SSA
erred in reducing claimant's benefits to zero after computing
his "average current earnings" based only on his years of
covered employment).4
4
The district court upheld the Commissioner. The court
rejected claimant's contention that the offset provision
should not apply to blind persons, reasoning that other
provisions of the Social Security Act and regulations showed
that Congress and the Commissioner clearly knew how to make
exceptions for the blind when they wished to do so. Relying
on Smith v. Sullivan, 982 F.2d 308, 311-15 (8th Cir.
_____ ________
1992)(holding that SSA correctly excluded claimant's non-
covered federal earnings from calculation of his "average
current earnings"), the court also found that the SSA
properly calculated the offset. Claimant appeals this
decision.
II.
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4 Claimant also argued that Congress did not intend the
4
offset provision to apply to her because other sections of
the Social Security Act and regulations treat blind claimants
more leniently than those with other disabilities.
-8-
The discrete question before us is whether the
claimant's "average current earnings", as defined in 424a,
were properly based only on claimant's years of "covered"
employment or whether, as claimant contends, they instead
should have been based on her most recent years of "non-
covered" employment. Our standard of review is well-
established:
When a court reviews an agency's
construction of the statute which it
administers, it is confronted with two
questions. First, always, is the
question whether Congress has directly
spoken to the precise question at issue.
If the intent of Congress is clear, that
is the end of the matter, for the court,
as well as the agency, must give effect
to the unambiguously expressed intent of
Congress. If, however, the court
determines Congress has not directly
addressed the precise question at issue,
the court does not simply impose its own
construction of the statute, as would be
necessary in the absence of an
administrative interpretation. Rather,
if the statute is silent or ambiguous
with respect to the specific issue, the
question for the court is whether the
agency's answer is based on a permissible
construction of the statute.
Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S.
______________ _________________________________
837, 842-43 (1984).
While claimant concedes that a literal interpretation of
424a compels the conclusion that "average current
earnings" must be based on "covered earnings," she urges us
to reject such an interpretation in favor of one which
-9-
comports with her view of Congressional intent.5 As we
5
explain below, we reject claimant's arguments, for they are
not supported by either the plain language of the statute nor
a fair reading of its legislative history. We begin with the
language of the statute. See Stowell v. Secretary of Health
___ _______ ___________________
and Human Services, 3 F.3d 539, 542 (1st Cir. 1993).
__________________
The Statute
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We first observe that nothing on the face of 424a
indicates whether claimant's "average current earnings" may
be based only on "covered" earnings. The Commissioner argues
that the plain language of 42 U.S.C. 409(a) and 410(a)
requires the exclusion of claimant's "non-covered" earnings
from the computation of her "average current earnings"
because her federal earnings may not be deemed "wages" under
the Social Security Act. We agree.
The definition of "average current earnings" in
424a(a) depends on either the "average monthly wage" used to
compute a claimant's Social Security benefits or the
claimant's "wages and self-employment income."6 The Social
6
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5Claimant also contends that the Commissioner's
5
interpretation of "average current earnings" violates due
process and equal protection because the claimant in Dunkin
______
was allowed to keep his Social Security benefits while
claimant's Social Security benefits have been eliminated.
6As claimant was never self-employed, and does not contend
6
that her average current earnings should have been based on
the average monthly wage used to compute her Social Security
benefits, we confine our analysis to the meaning of the term
"wages."
-10-
Security Act defines the term "wages" as "remuneration paid
... after 1950 for employment...." 42 U.S.C. 409(a). The
definition of the term "employment" excludes service such as
that performed by claimant for the federal government. See 42
___
U.S.C. 410(a).7 It follows, then, that because claimant's
7
federal service does not qualify as "employment," her federal
earnings may not be deemed "wages" for purposes of computing
her "average current earnings" under the offset provision.
Accord Smith v. Sullivan, 982 F.2d at 313-15; Prather v.
______ _____ ________ _______
Shalala, 844 F. Supp. 239, 240-41 (D. Md. 1993), aff'd, 14
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F.3d 595( 4th Cir. 1994); Clevinger v. Sullivan, 813 F. Supp.
_________ ________
421, 422 (E.D. Va. 1993); cf. Viney v. Gardner, 310 F.
___ _____ _______
Supp. 76, 77-78 (E. D. Mich. 1970)(holding term "wages" in
424a is defined by 409(a)).
The plain meaning of a statute's text must be given
effect "unless it would produce an absurd result or one
____________________
742 U.S.C. 410(a) excludes from the definition of
7
"employment" any post-1950 "[s]ervice performed in the employ
of the United States ... if such service - (A) would be
excluded from the term 'employment' for purposes of this
subchapter if the provisions of paragraphs (5) and (6) of
this subsection as in effect in January 1983 had remained in
effect, and (B) is performed by an individual who - ... (ii)
is receiving an annuity from the Civil Service Retirement and
Disability Fund ...." Tremblay worked for the federal
government after 1950 and receives a CSRS annuity. Her work
would have been excluded from the definition of "employment"
if 5 and 6 of 410 as in effect in January 1983 had
remained in effect, for the latter paragraph excluded from
the definition of employment federal service covered by a
retirement system established by federal law. Consequently,
claimant's federal work is excluded from the definition of
"employment."
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manifestly at odds with the statute's intended effect."
Parisi by Cooney v. Chater, 69 F.3d 614, 617 (1st Cir. 1995).
________________ ______
Relying on excerpts from 424a's legislative history,
claimant contends that the offset resulting from the
exclusion of her non-covered federal earnings from the
computation of her "average current earnings" violates
Congress's intent to leave disabled workers with 80% of their
pre-disability earnings. She maintains that her CSRS pension
equals only 31.7% of the monthly salary she earned before
she became blind and that Congress expressly intended to
avoid leaving disabled workers with such a slim amount.
Claiming that "overwhelming" case law supports her position,
claimant urges us to reject a literal interpretation of the
statute in favor of one that furthers Congress's intent to
leave disabled workers with 80% of their pre-disability
earnings.8
8
While we recognize the ongoing debate over the propriety
of using legislative history as a means to discern a
statute's intent, see, e.g., Strickland v. Commissioner,
___ ____ __________ _____________
Dept. of Human Services, 48 F.3d 12, 17 (1st Cir.), cert.
________________________ _____
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8Claimant contends that such cases as Sciarotta v. Bowen,
8 _________ _____
837 F.2d at 138; Swain v. Schweiker, 676 F.2d at 546-47; and
_____ _________
Merz v. Secretary of Health and Human Services, 969 F.2d 201,
____ ______________________________________
206 6th Cir. 1992), support her contention that this court
should reject the literal meaning of the statute in favor of
one which furthers Congressional intent. Neither these nor
the remaining cases that claimant cites address the precise
issue before us. Therefore, they are not controlling.
-12-
denied, 116 S. Ct. (1995)(collecting cases), we will assume
______
that we "may consult relevant legislative history ... to
confirm an interpretation indicated by the plain language [
of a statute]." Grunbeck v. Dime Savings Bank of New York,
________ _______________________________
FSB, 74 F.3d 331, 336 (1st Cir. 1996). We conclude that the
___
legislative history, while occasionally ambiguous, on the
whole supports the Commissioner's interpretation of the
statute.
Legislative History
___________________
Claimant is correct that the Senate Finance Committee
report that accompanied 424a, as originally enacted,
indicates that Congress intended the offset provision to
leave disabled workers with 80% of their "average monthly
earnings prior to the onset of disability." However, the
latter phrase was qualified. The report states that:
The new offset provision ... provides for
a reduction in the social security
disability benefit (except where the
State workmen's compensation law provides
for an offset ...) in the event that the
total benefits paid under the two
programs exceed 80 percent of the
worker's average monthly earnings prior
to the onset of disability. Under this
provision, the worker's average monthly
earnings would be defined as the higher
of (a) his average monthly wage used for
purposes of computing his social security
disability benefit or (b) his average
monthly earnings, in employment covered
in employment covered
by social security, during his highest 5
by social security
consecutive years after 1950.... This
reduction formula would generally avoid
the inequity encountered under the
previous offset provision, where the
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reductions that were required frequently
resulted in benefits that replaced no
more than 30 percent or so of the
worker's earnings at disablement.
S. Rep. No. 404, 89th Cong., 1st Sess., 100 (1965), reprinted
_________
in 1965 U.S. Code Congressional and Administrative News 1943,
__
2040. (emphasis supplied). The emphasized language shows
that Congress intended "average current earnings" to be
synonymous with "covered" earnings. This assumption is
repeated in other parts of the Senate Report. See id. at
___ __
2041 (describing hypothetical application of 424a in which
worker's "average monthly wage" is based on his "average
covered earnings"); id. at 2200 (computing worker's "average
___
current earnings" based on wages and income "credited to his
social security account"). Thus, when the legislative
history excerpts that claimant cites are read in context, it
appears that Congress was speaking only of "covered" earnings
when it expressed a desire to leave disabled workers with 80%
of their pre-disability earnings and to avoid leaving workers
with only 30% of such earnings.9
9
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9Subsequent legislative history that accompanied the early
9
amendments to 424a also supports the view that Congress
intended "average current earnings" to be based only on
"covered" earnings. See, e.g., S. Rep. No. 744, 90th Cong.,
___ ____
1st Sess. (1967), reprinted in 1967 U.S.C.C.A.N. 2834, 2884
_________ __
(noting that "average current earnings" under 424a equalled
the larger of a worker's average monthly wage used for
computing his social security benefit or his average monthly
earnings during the 5 consecutive years of highest covered
highest covered
earnings after 1950); H. Rep. No. 231, 92d Cong., 2d Sess. 57
earnings
(1972), reprinted in 1972 U.S.C.C.A.N. 4989, 5044 (same).
_________ __
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In short, the plain language of the Social Security Act,
42 U.S.C. 409, 410 and 424a, directs the exclusion of
claimant's non-covered federal earnings from the calculation
of her "average current earnings" and the offset applied
here. Apart from a single excerpt referring to "non-covered
wages," the legislative history of 424a confirms this
result. Whatever doubts might be raised by this excerpt are
put to rest by more recent developments. We note that in
January 1989, Senator Moynihan offered an amendment to the
offset provision that would have specifically allowed the
non-covered earnings of former public employees such as
claimant to be considered in calculating "average current
earnings." See S. 213, 101st Cong., 1st Sess. 1115 (1989).
___
That amendment was not passed. See Prather v. Sullivan, 844
___ _______ ________
F. Supp. at 241 n. 1; Clevinger v. Sullivan, 813 F. Supp. at
_________ ________
____________________
The only contrary indication that we have been able to find
appears in a Senate Budget Committee Report that accompanied
the Omnibus Budget Reconciliation Act of 1981. Inter alia,
_____ ____
that Act extended the offset provision so that it would apply
to individuals receiving disability benefits from federal,
state, or local governments. The Budget Committee report, in
an apparent reference to the "High 1" method, says that,
"average current earnings generally refers to the highest
annual amount of covered and non-covered wages earned during
non-covered wages
the 6-year period consisting of the year in which the worker
becomes disabled and the 5 preceding years...." S. Rep. No.
139, 97th Cong., 1st Sess. 428 (1981), reprinted in 1981
_________ __
U.S.C.C.A.N. 693, 694 (emphasis supplied). This single
statement is alone insufficient to undermine the previous
expressions of Congressional intent to base "average current
earnings" only on "covered" earnings. "Congress cannot amend
a statute merely by inserting the proposed change in a
congressional report...." Strickland v. Commissioner, Dept.
__________ ____________________
Human Services, 48 F.3d at 18.
______________
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422 n. 2. "To be sure, non-action by Congress is ordinarily
a dubious guide" to legislative intent. Brown v. Secretary
_____ _________
of Health and Human Services, 46 F.3d 102, 108 (1st Cir.
______________________________
1995). But thereafter, the SSA promulgated Social Security
Ruling (SSR) 92-2a. That ruling indicated that the
Commissioner would require "average current earnings" to be
based only on "covered" earnings. Although the offset
provision has been amended in other respects since this
ruling was published, Congress has done nothing to alter the
Commissioner's interpretation of "average current earnings."
This strongly suggests that the Commissioner's interpretation
comports with Congress's intent. Cf. United States v.
___ ______________
Rutherford, 442 U.S. 544, 554 n. 10 (1979)(Congressional
__________
inaction after agency position has been fully brought to the
attention of the public and Congress suggests agency has
correctly discerned legislative intent).10
10
III.
Conclusion
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____________________
10As other courts have noted, there are several reasons
10
why the decision to base "average current earnings" only on
"covered earnings" is reasonable. See,e.g., Smith v.
___ ____ ________
Sullivan, 982 F.2d at 344 (noting that it is logical to
________
exclude wages on which an individual has not paid Social
Security taxes from computation of benefit limit); Prather v.
_______
Sullivan, 844 F. Supp. at 241 ("Congress's decision to
________
exclude non-covered wages from the average current earnings
calculation ... is rationally related to the goal of
preserving scarce resources where the individual receives
benefits from other sources.").
-16-
Where the plain language and legislative history of the
statute indicate that the Commissioner's interpretation is
consistent with Congress's intent, this court may not devise
a contrary interpretation. We further discern no due
process or equal protection violation arising from the fact
that the plaintiff in Dunkin had his Social Security benefits
______
reinstated while claimant's benefits have been eliminated.
Apart from the fact that Dunkin lacks precedential value as
______
an unpublished decision, it was decided before the SSA
promulgated SSR 92-2a. "An agency that is charged with
administering a statute remains free to supplant prior
judicial interpretations of that statute as long as the
agency interpretation is ... reasonable ...." United States
_____________
v. LaBonte, 70 F.3d 1396, 1405 (1st Cir. 1995), cert.
_______ _____
granted, 116 S. Ct. 2545 (1996).11 At bottom, claimant's
11
_______
arguments challenge the Commissioner's policy judgment that
non-covered earnings must be excluded under the offset
provision. "When a challenge to an agency construction of a
statutory provision, fairly conceptualized, really centers on
the wisdom of the agency's policy, rather than whether it is
a reasonable choice within a gap left open by Congress, the
challenge must fail." Chevron v. Natural Resources Defense
_______ _________________________
Council, 467 U.S. at 866. Accordingly, the judgment of the
_______
____________________
11Claimant's argument that the district court engaged in
11
misconduct by relying on the defendant's memorandum is wholly
meritless.
-17-
district court is affirmed.
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