20 CFR 404.601(d) and 404.607(b)

SSR 72-63c

Tillman v. Richardson, U.S.D.C., M.D. Ala., Civil Action No. 904-E (11/19/71)

Where a claimant who filed an application in September 1968 for a period of disability and disability insurance benefits, was found to be entitled to a period of disability commencing January 1964 and disability benefits commencing September 1967, held, claimant's retroactive entitlement to benefits (in accordance with 42 U.S.C. 423(b) can begin no earlier than September 1967, the twelfth month before the month in which his application was filed, regardless of the earlier date of onset of his disability; while the claimant may have been eligible for disability insurance benefits sooner, entitlement to such benefits is a "created right" * * * unknown to the common law" and the filing of an application is a condition precedent to such entitlement; further held, incompetency of the claimant in immaterial and does not extend such retroactive entitlement.

JOHNSON, District Judge:

On January 7, 1964, Barbara B. Tillman was admitted to Bryce Hospital. She was diagnosed as having personality trait disturbance, emotionally unstable personality.[1] On September 19, 1968, John W. Tillman, her husband next friend, filed an application[2] for the establishment of a period of disability and for disability benefits on his wife's earning record. The application alleged as the date of onset January 7, 1964[3] the date of admission to Bryce Hospital. On March 17, 1970, a hearing examiner of the Bureau of Hearings and Appeals, Social Security Administration, decided "that the wage earner, based on application filed on September 19, 1968, is entitled to a period of disability commencing on January 7, 1964, and to disability insurance benefits under Sections 216(i) and 223, respectively, of the Social Security Act, as amended.[4] The decision became the "final decision" of the defendant Secretary. This action followed.

The only dispute between the parties is the petitioner's contention "that she is entitled to disability insurance benefits for the entire period of time beginning January 7, 1964, through September, 1967, which period of time the examiner found the petitioner to be laboring under a mental disablement that was totally incapacitation." This issue was first raised at the conclusion of the hearing when the hearing examiner commented that in the event of a ruling for the plaintiff "benefits would be payable as of September, 1967."[5]

All benefits for the period commencing with the month of September, 1967, have been paid. The plaintiff now seeks a determination that she is entitled to benefits for months during her period of disability commencing in January, 1964, through the month of August, 1967. The Secretary denies that the plaintiff is entitled to such benefits and relies upon Section 223 of the Social Security Act, as amended, 42 SC 423(b) which provides in pertinent part that:

An individual who would have been entitled to a disability insurance benefit for any month had he filed application therefor before the end of such month shall be entitled to such benefit for such month if he files such application before the end of the twelfth month immediately succeeding such month. (Emphasis Added).

In the quoted language, Congress clearly recognized that an individual could be under a "disability" as defined in the statute[6] and yet not be "entitled to a disability insurance benefit." In order to "be entitled to a disability insurance benefit" congress established four conditions precedent. 42 USC 423(a)(1)(A-D, inclusive). those conditions are that the individual seeking to become "entitled to a disability insurance benefit" by (1) insured; 92) under the age of sixty-five; (3) file an application for benefits; and, (4) be under a disability. In the instant case, the condition precedent of filing an application was not accomplished until four and one-half years after the onset of the disability. Had the plaintiff, or those having her in their care, filed an application earlier, benefits would have been payable earlier. The procedure for the preparation and filing of the application, as eventually pursued by the plaintiff through a next friend was available. 20 CFR 404.603.

All the plaintiff's arguments rest on the unarticulated premise that entitlement to social security benefits can somehow become vested before the filing of an application therefor. This simply is not the case. Social security benefits are "created rights" unknown to the common law. Only upon compliance with the conditions prescribed by Congress can an individual become entitled to such benefits. Fleming v. Nestor, 363 U.S. 603 (1960. The plaintiff cites no authorities, and non have found, to support the proposition contended for in this case. The filing of an application for social security benefits is a condition precedent to entitlement without regard to whether an individual is or is not in fact disabled. Craig v. Finch, 416 F.2d 721 (5th Cir. 1969), cert. denied sought is in fact incompetent[7] is immaterial. Coyv. Folsom, 228 F.2d 276 (3rd Cir. 1955) ; Donnelly v. Gardner, 286 F.Supp. 288 (W.D. Wisc. 1968). The latter case is on all fours with the situation now presented.

A rhetorical question implied in the plaintiff's brief is this:

If I am entitled to no disability insurance benefits prior to the month of September, 1967, why am I required to seek to establish a period of disability with the date of onset prior to that time?

The answer to this question is that it is to plaintiff's advantage to seek to do so in order to receive maximum benefits. The amount of benefits payable are provided by Section 215 of the Act, 42 USC 415. The computation of benefits is tied to the concept of "average monthly wage." Huska v. Gardner, 367 F.2d 863 (5th Cir. 1966) cert. denied390 U.S. 965. The period of disability is excluded from the computation of "average monthly wage." 42 USC 415(b)(2 and 3). The higher the "average monthly wage," the higher the benefits to which the plaintiff is entitled. During a period of disability, it is obvious that the plaintiff could have no income, that is if the plaintiff has income, this is prima facie evidence of gainful employment. If the period of disability i.e., the period during which the plaintiff is in fact disabled and has no income, is included ;in the span of time during which the "average monthly wage" is computed, the period of zero income will act to reduce the "average monthly wage." Under the present system, the "average monthly wage," and hence the level of benefits, is tied directly to the earnings made prior to the onset of the period of disability. It is to the plaintiff's advantage to establish the period of disability in order to avoid having a period of no income included in the computation of average monthly wage.

In exercising jurisdiction under Section 205(g) of the Act, 42 USC 405(g), the standing practice is to treat the answer of the defendant Secretary of Health, Education and Welfare as both an answer and motion for summary judgment in that review is ordinarily limited to facts appearing in the record. Cf. Craig v. Finch, supra. In this case, however, the plaintiff does not argue that the final decision of the Secretary as it relates to the facts in dispute is not supported by substantial evidence. Instead, plaintiff contests the application of the law to the facts as found. Under these circumstances, dismissal for failure to state a claim upon which relief may be granted is more appropriate. Coy v. Folsom, supra.

Accordingly, it is the ORDER, JUDGMENT and DECREE of the Court that this cause be and the same is hereby dismissed.

MR. JUSTICE STEWART delivered the opinion of the Court.

The appellee was granted social security disability benefits effective in October 1968, in the amount of $329.70 per month for himself and his family. In January 1969, the federal payment was reduced to $225.30 monthly under the "offset" provision of Section 224 of the Social Security Act 79 Stat. 406, 42 U.S.C. § 424a (1970 ed.),[8] upon finding that the appellee was receiving workmens compensation benefits from the Stat of West Virginia in the amount of $203.60 per month. After exhausting his administrative remedies, the appellee brought this action challenging the reduction of payment required by § 224 on the grounds that the statutory provision deprived him of the due process of law guaranteed by the Fifth Amendment. The District Judge, disagreeing with other courts that have considered the question,[9]held the statute unconstitutional. 317 F. Supp. 1294. The Secretary appealed directly to this court under 28 U.S.C. § 1252.[10] We noted probable jurisdiction, 401 U.S. 935, and the case was briefed and argued on the merits. We now reverse the judgment of the District Court.

In our last consideration of a challenge to the constitutionality of a classification created under the Social Security Act, we held that "a person covered by the Act has not such a right in benefit payments as would make every defeasance of 'accrued' interests violative of the Due Process Clause of the Fifth Amendment." Flemming v. Nestor, 363 U.S. 603, 611. The fact that social security benefits are financed in part by taxes on an employee's wages does not in itself limit the power of Congress to fix the levels of benefits under the Act or the conditions upon which they may be paid. Nor does an expectation interest in public benefits confer a contractual right to receive the expected amounts. Our decision in Goldberg v. Kelly, 397 U.S. 254, upon which the District Court relied, held that as a matter of procedural due process the interest of a welfare recipient in the continued payment of benefits is sufficiently fundamental to prohibit the termination of those benefits without a prior evidentiary hearing. But there is no controversy over procedure in the present case, and the analogy drawn in Goldberg between social welfare and "property," 397 U.S., at 262 f. 8, cannot be stretched to impose a constitutional limitation on the power of Congress to make substantive changes in the law of entitlement to public benefits.

To characterize an act of Congress as conferring a "public benefit" does not, of course, immunize it from scrutiny under the Fifth Amendment. We have held that "[t]he interest of a covered employee under the [social Security] Act is of sufficient substance to fall within the protection from arbitrary governmental action afforded by the Due Process Clause." Flemming v. Nestor, 363 U.S., at 611. The appellee argues that the classification disabled employees who receive workmen's compensation and those who receive compensation from private insurance or from tort claim awards. We cannot say that this difference in treatment is constitutionally invalid.

A statutory classification in the area of social welfare is consistent with the Equal Protection Clause of the Fourteenth Amendment if it is "rationally based and free from invidious discrimination." Dandridge v. Williams, 397 U.S. 471, 487. While the present case, involving as it does a federal statute, does not directly implicate the Fourteenth Amendment's Equal protection clause, a classification which meets the test articulated in Dandridge is perforce consistent with the due process requirement of the Fifth Amendment. Cf. Bolling v. Sharpe, 347 U.S. 497, 499.

To find a rational basis for the classification created by § 224, we need go no further than the reasoning of Congress as reflected in the legislative history. The predecessor of § 224, enacted in 1956 along with the amendments first establishing the federal disability insurance program, required a full offset of state or federal[11] workmen's compensation payments against benefits payable under federal disability insurance. 70 Stat. 816. It is self evident that the offset reflected a judgment by congress that the workmen's compensation and disability insurance programs in certain instances served a common purpose, and that the workmen's compensation programs should take precedence in the area of overlap. The provision was repealed in 1958, 72 Stat. 1025, because Congress believed that "the danger that duplication of disability benefits might produce undesirable results [was] not of sufficient importance to justify reduction of the social security disability benefits." H. R. Rep. No. 2288, 85th Cong., 2d Sess., p. 13.

In response to renewed criticism of the overlap between the workmen's compensation and the social security disability insurance programs, Congress re-examined the problem in 1965. Data submitted to the legislative committees showed that in 35 of the 50 States, a typical worker injured in the course of his employment and eligible for both state and federal benefits received compensation for his disability in excess of his take-home pay prior to the disability. Hearings on H.R. 6675 before the Senate Committee on Finance, 89th Cong., 1st Sess., p. 904. It was strongly urged that this situation reduced the incentive of the worker to return to the job, and impeded the rehabilitative efforts of the state programs.[12] The legislative response was § 224, which, by limiting total state and federal benefits to 80% of the employee's average earnings prior to the disability, reduced the duplication inherent in the programs and at the same time allowed a supplement to workmen's compensation where the stat payments were inadequate.

The District Court apparently assumed that the only basis for the classification established by § 224 lay in the characterization of workmen's compensation as a "public benefit." Because the state program was financed by employer contributions rather than by taxes, the Court held that the "public" characterization afforded no rational basis to distinguish workmen's compensation from private insurance. We agree that a statutory discrimination between two like classes cannot be rationalized by assigning them different labels, but neither can two unlike classes be made indistinguishable by attaching to them a common label. The original purpose of state workmen's compensation laws was to satisfy a need inadequately met by private insurance or tort claim awards, Congress could rationally conclude that this need should continue to be met primarily by the States, and that a federal program which began to duplicate the efforts of the States might lead to the gradual weakening or atrophy of the state programs.

We have no occasion, within our limited function under the Constitution, to consider whether legitimate purposes of Congress might have been better served by applying the same offset to recipients of private insurance, or to judge for ourselves whether the apprehensions of Congress were justified by the facts. If the goals sought are legitimate, and the classification adopted is rationally related to the achievement of those goals, then the action of Congress is not so arbitrary as to violate the Due Process Clause of the Fifth Amendment.

The judgment is


[Mr. Justice Douglas filed a dissenting opinion. Mr. Justice Marshall filed a separate dissenting opinion, in which Mr. Justice Brennan joined.]

[1] As required by Section 205(g) of the Social Security Act, 42 USC 405(g), the defendant Secretary of Health, Education and Welfare has filed a certified copy of the transcript of the record as part of his answer.

[2] References in footnotes 1,2,3,4,5 and 7 to transcript page no. 5 omitted. [ED.]

[3] The original application listed the date of onset of the period of disability as May 25, 1961. At the hearing, the application was amended to allege the date of January 7, 1964.

[4] Omitted. [ED.]

[5] The plaintiff's attorney argued that the evidence reflected the plaintiff to have been incompetent continuously since her admission to Bryce Hospital and that this incompetence should toll or bar the application of any statute or regulation which might operate to prevent the plaintiff from receiving benefits from the onset of her disability.

[6] 42 USC 416(i)(1).

[7] It is assumed, arguendo, that this record would support a finding that the plaintiff has in fact been legally incompetent continuously since January 7, 1964. The record does not reflect whether the plaintiff has ever been adjudicated non compos mentis. Nor does the record reflect whether the plaintiff has either a general or special guardian or whether a committee has been appointed to administer her affairs. The hearing Examiner did not purport to determine the legal competence, vel non. of the plaintiff. The defendant Secretary has acquiesced in the filing and processing of the plaintiff's application through a next friend. 20 CFR 404.603.

[8] Section 224 provides, in pertinent part:

"If for any month prior to the month in which an individual attains the age of 62 --
"(1) such individual is entitled to benefits under section 423 of this title, and
"(2) such individual is entitled for such month, under a workmen's compensation law or plan of the United States or a State, to periodic benefits for a total or partial disability (whether or not permanent), and the Secretary has in a prior month, received notice of such entitlement for such month, the total of his benefits under section 423 of this title for such months and of any benefits under section 402 of this title for such month based on his wages and self-employment income shall be reduced (but not below zero) by the amount by which the sum of --
"(3) such total of benefits under sections 423 and 402 of this title for such month, and
"(4) such periodic benefits payable (and actually paid)j for such month to such individual under the workmen's compensation law or plan, exceeds the higher of --
"(5) 80 percentum of his 'average current earnings' . . . "For purposes of clause (5), an individual's average current earnings means the larger of (A) the average monthly wage used for purposes of computing his benefits under section 423 of this title, or (B) one-sixtieth of the total of his wages and self-employment income (computed without regard to the limitations specified in sections 409(a) and 411(b)(1) of this title) for the five consecutive calendar years after 1950 for which such wages and self-employment income were highest.

[9] E.g., Gambill v. Finch, F. Supp 1 (ED Tenn. 1970); Lofty v. Cohen, 325 F. Supp. 285, aff'd sub nom. Lofty v. Richardson, 440 F. 2d 1144 (CA6 1971) ; Bartley v. Finch, 311 F. Supp. 876 (ED Ky. 1970); Bailey v. Finch, 312 F. Supp. 918 (ND Miss. 1970); Benjamin v. Finch, Civ. No. 32816, ED Mich., May 26, 297-, aff'd sub nom. Benjamin v. Richardson, No. 20, 714 CA6, April 29, 1971; Gooch v. Finch, Civ No. 6840, SD Ohio, July 13, 1970; Rodatz v. Finch, Civ. No. 69-170, ED Ill., Sept. 4, 1970, aff'd sub nom. Rodatz v. Richardson, _____ F.2d _____ (CA7 1971).

[10] "Any party may appeal to the Supreme Court from an interlocutory or final judgment, decree or order of any court of the United States . . . . holding an Act of Congress unconstitutional in any civil action, suit, or proceeding to which the United States or any of its agencies, or any officer or employee thereof, as such officer or employee, is a party."

[11] The primary federal workmen's compensation programs are the Longshoreman's and Harbor Workers' Compensation Act, 44 Stat. 1424, 33 U.S.C. § 901 et. seq. (1970 ed.), applicable to employees in the District of Columbia and in maritime-related occupations, and the Federal Employees' Compensation Act, 80 Stat. 532, 5 U.S.C. §§ 8101 et seq. (1970 ed), applicable employees of the federal Government. The overwhelming majority of workers in the United States are covered by state rather than federal programs, and thus we may refer generally to workmen's compensation as a program of the States.

[12] The Senate Committee on Finance, with whom the 1965 amendment originated, took note of "the concern that has been expressed by any witnesses in the hearings about the payment of disability benefits concurrently with benefits payable under State workmen's compensation programs." S. Rep. No. 404, 89th cong., 1st sess., p. 100. Testimony concerning the anticipated effects of duplication upon the future of the state programs appears in Hearings on H.R. 6675 before the Senate Committee on Finance, 89th Cong., 1st Sess., at 252, 259, 366, 540, 738-740, 892-897, 949-959, 990.

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