SSR 86-15c: SECTION 202 OF THE SOCIAL SECURITY ACT (42 U.S.C. 402) WITHDRAWAL OF AN APPLICATION FOR BENEFITS -- VALIDITY OF REQUIREMENT THAT WITHDRAWAL BE IN WRITING
20 CFR 404.640
Bascetta v. Sec. of HHS, 1A Uempl. Ins. Rep. (CCH) ¶ 16,135 (U.S.D.C., E.D., N.Y. 1985)
- The claimant filed an application for wife's insurance benefits on January 12, 1978. Although she elected reduced benefits as of April 1978 when she reached age 62, the claimant did not actually receive any benefits until January 1980 because of her husband's excess earnings. The reduction applicable to the benefits due the claimant for months prior to the month she reached age 65 (i.e., January 1980 though March 1981) was based on her age as of the date she elected benefits as shown on her application (i.e., age 62 as of April 1978). Because it would result in a larger benefit, the claimant wanted the reduction to be based on her age as of the date she actually began receiving benefits (i.e., age 63 and 9 months as of January 1980). The Social Security Administration held that, if the claimant had wanted the reduction to be based on her age as of January 1980, then she should have withdrawn her application and reapplied later. At a hearing before an administrative law judge (ALJ), the claimant's husband testified that he had orally withdrawn his wife's application in a telephone conversation with a Social Security district office employee in January 1978. Although 20 CFR 404.640 requires that an application must be withdrawn in writing, the ALJ held, in finding for the claimant, that the claimant's "failure to submit a written withdrawal should be considered a mere technicality that should not be imposed to arrive at an inequitable result." The Appeals Council reversed the ALJ's decision, based on the language of the regulation, and this became the final decision of the Secretary. The claimant then filed a court appeal. The district court noted that it was "not empowered to disregard valid implementing regulations in particular cases whenever their application appears to be somewhat unfair or particularly onerous." The court further noted that the intent of 20 CFR 404.640 requiring the written withdrawal of applications was to "reduce to a minimum the possibility of fraud, confusion and laxity of administration." Therefore, the district court found that because such an intent was reasonably related to the purpose of the Social Security Act, the regulation was valid on its face and thus, must be enforced by the courts. In view of this finding, the district court held that the Secretary's decision was legally correct.
SIFTON, District Judge:
This is an action brought under Section 205(g) of the Social Security Act (the "Act"), 42 U.S.C. § 405(g), to review a final determination of the Secretary of Health and Human Services (the "Secretary") which denied plaintiff's request for reconsideration of the amount of benefits she was awarded for fifteen months between January 1980 and April 1985 as the wife of an insured wage earner. Both parties now move for judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure.
In May 1975, plaintiff's husband, the wage earner, filed an application for retirement benefits based on an entitlement date of August 1975, when he reached the age of 65. However, because of excess earnings, he did not begin receiving benefits until July 1977.
Plaintiff, the wage earner's wife, was born on April 16, 1916, and filed an application for wife's insurance benefits on January 12, 1978, requesting that her benefits start as of April 1, 1978, when she would turn 62 years old. On January 27, 1978, 15 days after plaintiff filed her application, the wage earner notified the Social Security District Office that he was returning to work in February 1978 and anticipated continued earnings in 1978 that would prevent payment benefits in 1978. As a result the wage earner's benefits were suspended, and plaintiff was advised on April 5, 1978, that she would not receive benefit payments as of April 1978, as she had requested. At the hearing before an administrative law judge ("ALJ") on plaintiff's request for a redetermination of her benefit amounts, plaintiff's husband testified that he requested that his wife's benefits be cancelled along with his own in a January phone conversation with a Miss Holiday of Social Security.
The wage earner continued to work until October 1979, when he again stopped working and advised the agency that he would earn less than his exempt amount of 1980. He requested that payments resume and that plaintiff's payment begin as of January 1980. The Social Security Administration complied with these requests, calculating plaintiff's benefits based on her age as of the date of her original application, January 12, 1978, when plaintiff was 62 years old, rather than her age when she began to receive benefits in January 1980 of 63 years and 9 months. On June 4, 1981, plaintiff requested a reconsideration of her benefit amount. Plaintiff alleged that she was entitled to 45% of her husband's earnings rather than the 37.5% that she had been paid beginning in January of 1980 at age 62.
On September 10, 1981, plaintiff's benefits award for the months in which she had received payments prior to reaching age 65 was reaffirmed. Plaintiff was advised that her benefits would, however, be recomputed retroactive to April 1981, the month plaintiff turned 65, and adjusted to take into account the number of months before age 65 in which she did not receive benefits.
Eventually in 1983 the issue was brought before an administrative law judge ("ALJ"). The Administration contended that, if plaintiff wanted her benefits based on the date payments actually started in January 1980, then she should have withdrawn her original application in writing and resubmitted it later. Section 404.640 of Regulation 4 of the Social Security Administration, 20 C.F.R. § 404.640, requires that an application can only be withdrawn in writing.
On April 29, 1983, the ALJ held that plaintiff's failure to submit a written withdrawal should be considered a mere technicality that should not be imposed to arrive at an inequitable result. The ALJ found that plaintiff's monthly benefits from January 1980 to April 1981 (15 months) should be recalculated on the basis of her age as of January 1980, i.e., 63 years and 9 months, rather than her age of 62 years when the original application was filed.
On May 20, 1983, the Director of Operations, Northeastern Programs Service center wrote to the Officer of Hearings and Appeals stating that her office disagreed with the decision of the ALJ. On June 28, 1983, the Appeals Council notified plaintiff that it would review the decision of the ALJ. On July 25, 1983, the Appeals Council determined that the decision of the ALJ was wrong and wrote a letter to plaintiff informing her of their decision. The plaintiff requested that she be allowed to appear before the Council. The Appeals Council denied the request, stating that the case did not involve a significant question of law or policy. On November 29, 1983, the formal decision of the Appeals Council was made, and that decision is now the final decision of the Secretary.
As is apparent from the foregoing, what is involved in this case are the provisions of the Act that afford an option of obtaining retirement benefits prior to the usual retirement age of 65 and provide for an adjustment of benefit rate in accordance with the age at which the benefits are claimed in order to ensure that similarly situated beneficiaries will receive approximately equal total payouts whether they claim their benefits at age 65 or before.
In this case, plaintiff claimed benefits are the earliest possible time at which she became entitled to them (age 62). However, because of her husband's excess earnings, she did not actually receive any payments pursuant to this claim until well into her 63rd year. In calculating the benefits paid to her subsequent to age 65, allowance has been made pursuant to the applicable regulations for the fact that she did not actually receive a large part of the benefits claimed by her prior to reaching age 65, that is, while her benefit payments after age 65 are lower than they would have been if she started receiving them at age 65, the reduction in her benefits take into account only benefit payments actually paid prior to age 65.
However, with respect to payments received by plaintiff prior to age 65, those payments have been calculated as if they had been actually paid out each month from the date they were first requested, that is, at age 65, even though those benefits were not actually received by plaintiff because of excess earnings on the part of her husband. The Secretary's reason for proceeding in this fashion is that the regulations provide that the rate of benefits paid prior to age 65 is to be determined according to the age of the beneficiary at the date the application for payment is initially made. Only if the application is formally withdrawn in writing can plaintiff avoid the use of the date in her initial application to calculate the rate at which her benefits are calculated. The Secretary concedes that adhering to this requirement will not achieve the purpose of the statutory scheme of equalizing total benefits actually distributed. She argues, however, that in the situation presented by this case the requirement for written applications and written withdrawal of applications to reflect the existence of potential claims against the social security system is sufficiently important in terms of the orderly administration of the system to require denial of plaintiff request for adjustment. This Court agrees.
Although it is true that the Social Security Act and regulations thereunder are to have a liberal application in accord with the remedial and humanitarian aims of the Act, Eiseahaver v. Mathews, 536 F.2d 681 (2d Cir. 1981), a regulation valid on its face must be enforced by courts if it is "reasonably related to the purpose of enabling legislation." Hansen v. Harris, supra, 619 F.2d at 947, quoting Mourning v. Family Publications Service, 411 U.S. 356, 369 (1973). In Hansen, the court was faced with a regulation analogous to that presented here -- a requirement that social security applications be in written form. 20 C.F.R. §404.601(c). The court held that the regulation was valid on its facing, stating:
- The [Act], supplemented by its regulations, was intended to eliminate or at least reduce to a minimum the possibility of fraud, confusion and laxity in its administration. The vastness of the program makes it essential to adhere to the written application procedure, if there is to be an orderly and controllable system of management for approving claims and paying out insurance benefits.
Id. at 947, quoting Goff v. Weinberger, No. H.74-276 [1975-1976 CCH UNEMPLOYMENT INSURANCE REPORTS, § 14,470] (D. Conn. 1975), aff'd without opinion, 538 F.2d 309 (2d Cir), cert. denied, 429 U.S. 896 (1976).
In the present case, the regulation requiring written withdrawals as applied to applications for benefits made prior to age 65 is reasonably related to the purpose of the Act, and the purpose of the requirement is to "reduce to a minimum the possibility of fraud, confusion and laxity of administration." Hansen, supra, 619 F.2d at 947. A rational distinction is made between optional benefit claims asserted prior to age 65 and the more customary claim made at age 65, since, in the former case, the claim on the public fisc cannot be anticipated until the application is filed and the option exercised. Thereafter, such an application remains a potential claim on the system until withdrawn in writing. In this case, the ALJ disregarded the explicit statutory scheme, relying instead on equitable notions of reasonableness and fairness to arrive at a result different from that compelled by regulation. The Appeals Council reversed the ALJ based on the language of the regulation. The Court is "not empowered to disregard valid implementing regulations in particular cases whenever their application appears to be somewhat unfair or particularly onerous." Hansen, supra at 947; see also Leimbach v. Califano, 596 F.2d 300, 304 (8th Cir. 1979).
* * * * * * *
This Court cannot rely solely on plaintiff's claim that she, through her husband, orally withdrew her application in a phone call to one Miss Holiday. As stated by Judge Friendly, dissenting in Hansen, such action "opens the door of the federal fisc not simply to [plaintiff] but to thousands who merely will make a detailed claim that they have done so and whom there is no effective means of rebutting. Millions of dollars will be spent simply to ascertain whether conditions of eligibility claimed in a subsequent written application existed at the time of the alleged oral one." Id. at 949. The same logic applies here. Great cost and delay can be caused by looking beyond the clear language of the regulation requiring a writing. The written withdrawal requirement was designed to foreclose such inefficient inquiry.
For the foregoing reasons, the Court finds that the Secretary's decision was legally correct.