Torres v. Chater ( 1997 )

Opinions of the United
1997 Decisions States Court of Appeals
for the Third Circuit
9-18-1997
Torres v. Chater
Precedential or Non-Precedential:
Docket
96-1883
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Recommended Citation
"Torres v. Chater" (1997). 1997 Decisions. Paper 222.
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Filed September 18, 1997
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 96-1883
EDWIN R. CORDOVA TORRES,
Appellee
v.
SHIRLEY S. CHATER,
Commissioner of Social Security,
Appellant
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
(D.C. Civ. No. 95-cv-02199)
Submitted Pursuant to Third Circuit LAR 34.1(a).
May 21, 1997
Before: GREENBERG, ROTH and WEIS, Circuit Judges.
Filed September 18, 1997
Jeffrey L. Greenwald, Esquire
640 Hamilton Mall, Suite 301
Allentown, PA 18101
Attorney for Appellee
Alfred R. Mollin, Esquire
Anne M. Lobell, Esquire
United States Department of Justice
Civil Division, Appellate Staff
10th & Pennsylvania Ave., NW
Washington, D.C. 20530-0001
James A. Winn, Esquire
Social Security Administration
3535 Market Street
Box 13716, Room 9100
Philadelphia, PA 19101
Attorneys for Appellant
OPINION OF THE COURT
WEIS, Circuit Judge.
When the Social Security Act was amended to eliminate
benefits for disability caused by alcohol and drug addiction,
Congress divided the claimants into two groups. The
district court decided that the distinction was based on
whether the disability existed on the effective date of the
amendment. We conclude, however, that the test is whether
the claims had been "finally adjudicated by the
Commissioner" before or after the effective date of the
amendment. Accordingly, we will reverse the order of the
district court.
After the denial of his original application for
Supplemental Social Security Income (SSI) benefits, the
claimant, Edwin R. Cordova Torres, reapplied, relying
principally on his alcoholism as the cause of his disability.
In 1994, an ALJ denied benefits and the Appeals Council
affirmed. Claimant filed his request for review by the
district court in May 1995. On March 21, 1996, the district
court remanded the case to the Commissioner "for further
determination as to the nature and extent of the plaintiff's
alcohol problem, his ability to control his condition and his
employability."
2
Almost two months later on May 16, 1996, the
Commissioner filed a motion under Federal Rule of Civil
Procedure 60(b)(6) to vacate the remand order because
legislation enacted on March 29, 1996 eliminated
alcoholism as a primary basis for SSI benefits. Exercising
its discretion, the district court concluded that the
Commissioner's motion was appropriate and considered it
on the merits.
The Commissioner contended that the amending
legislation barred further consideration of the plaintiff's
claim because it had not been "finally adjudicated by the
Commissioner" before March 29, 1996, as required by the
statute's effective date provision. The district court,
however, read the effective date language as directed toward
the existence or non-existence of disability on that day,
thus exempting cases pending on the date of enactment.
Accordingly, the court denied the Commissioner's motion.
I.
In view of the somewhat unusual procedural posture of
this case, we must first determine whether the order is
appealable. The district court's initial remand to the
Commissioner called for further review of evidence already
existing in the record. It was fifty-six days later when the
Commissioner filed her motion arguing that the change in
statutory law disposed of the claim in its entirety. Following
the rejection of her contentions by the district court, the
Commissioner appealed to this Court.
Rule 60(b) provides that on motion "the court may relieve
a party . . . from a final judgment, order, or proceeding for
. . . (6) any other reason justifying relief from the operation
of the judgment." Preliminarily, it would appear that an
order denying a Rule 60(b) motion is appealable under 28
U.S.C. S 1291. See Brower v. Director, Ill. Dep't of
Corrections, 434 U.S. 257, 263 n.7 (1978); Binker v.
Pennsylvania, 977 F.2d 738, 744 (3d Cir. 1992); Daily
Mirror, Inc. v. New York News, Inc., 533 F.2d 53, 56 (2d Cir.
1976) ("An order denying relief under Rule 60(b) is an
appealable order, but the appeal brings up only the
correctness of the order itself"); 11 Charles Alan Wright,
3
Arthur R. Miller & Mary Kay Kane, Federal Practice and
Procedure S 2871 (2d ed. 1995).
There is an interdependence between the "finality"
required for Rule 60(b) and section 1291. In some
instances, the Court of Appeals may not entertain an
appeal under section 1291 because the underlying order in
the district court is purely interlocutory and, thus, not
within the scope of Rule 60(b), which applies only to "final"
judgments and orders. An example of that situation might
be a discovery order or similarly preliminary step in
litigation being conducted in the district court.
In Kapco Manufacturing Co. v. C & O Enterprises, 773
F.2d 151, 154 (7th Cir. 1985), a district court order
directing the parties to reduce a settlement to writing was
interlocutory, an "intermediate step" and not "final." Hence,
the order was not within the scope of Rule 60(b) and, as
such, not appealable under section 1291. See also St.
Mary's Health Ctr. v. Bowen, 821 F.2d 493, 497 (8th Cir.
1987) (order granting partial summary judgment on liability
was interlocutory and not "final" under Rule 60(b) nor
appealable under 28 U.S.C. S 1291).
In Kapco, however, the Court pointed out the distinction
between preliminary directives issued during the course of
ordinary civil litigation, which the district court has the
power to modify, and orders remanding a case to an
administrative agency for reconsideration. Although such
remand orders are usually interlocutory, see AJA
Associates v. Army Corps of Engineers, 817 F.2d 1070,
1073 (3d Cir. 1987), they are not always so. If, for example,
a party alleges under Rule 60(b) that a remand had been
procured by fraud, denial of the motion would be
dispositive of that issue and "wrap up all matters pending
on the docket," thus making the decision final. Kapco, 773
F.2d at 153.
As we noted in Horizons International, Inc. v. Baldridge,
811 F.2d 154, 158 (3d Cir. 1987), "interpretations of
section 1291 announced in more garden variety civil
litigation suits are not controlling" in reviews of agency
actions. Such cases may present the issue "differently by
virtue of the relief sought and the type of relief ordered." Id.4
at 159. Although Horizons cited Marshall v. Celebrezze, 351
F.2d 467 (3d Cir. 1965) for the general proposition that a
remand to the Secretary of HEW for the taking of additional
evidence was interlocutory, id., we have recognized an
exception for cases where barring appellate review is the
practical result of those orders. United States v. Spears,
859 F.2d 284, 286 (3d Cir. 1988); AJA Assocs., 817 F.2d at
1073. In such instances, appeals are permissible.
In Sullivan v. Finkelstein, 496 U.S. 617 (1990), the
Supreme Court discussed the appealability of an order
remanding a disability benefits case to the Secretary of
HHS for a further review of the record. In the
circumstances of that case, the practical effect of the
remand was to abrogate some of the Secretary's
regulations.
The Court concluded that the remand order came within
the fourth sentence of 42 U.S.C. S 405(g), which authorizes
a district court to enter a "judgment affirming, modifying,
or reversing the decision of the [Secretary], with or without
remanding the cause for a rehearing." The Court doubted
that the Secretary could later appeal, if on remand, he
ordered payment of benefits. Consequently, the Secretary
would be denied appellate review of the district court's
ruling that invalidated the regulations. Id. at 625; see also
Travis v. Sullivan, 985 F.2d 919, 921 (7th Cir. 1993).
Finkelstein is not precisely on point because the remand
order in the present case did not directly impair the
Commissioner's ability to deny benefits. Moreover, it is not
the remand that is before us, but the refusal to grant the
Rule 60(b) motion. Therefore, it is the merits of that denial,
and not the remand, that we must address. See Brower,
434 U.S. at 263 n.7; Daily Mirror, 533 F.2d at 56.
Nevertheless, the case here is in the same posture as that
in Finkelstein. If we do not entertain the appeal at this time,
on remand the claimant may receive an award of benefits,
in which event he will not appeal, and it is very doubtful
that the Commissioner could appeal. See Finkelstein, 496
U.S. at 625. Consequently, the Commissioner would be
unable to secure appellate review of the alcohol and drug
abuse amendment as applied to this claim.
5
In the light of the circumstances present in this case, we
conclude that because the claim on remand would likely
escape appellate review, the district court properly
considered that order as final for purposes of Rule 60(b)
and appropriately considered the legal effect of the
alcoholism amendment. Consequently, the denial of the
motion is also final and appealable to this Court under
section 1291.
II.
Congress amended Title II of the Social Security Act in
1996 to bar the award of disability benefits based on
alcoholism or drug addiction. The amendment, codified at
42 U.S.C. S 423(d)(2)(C), reads as follows: "An individual
shall not be considered to be disabled for purposes of this
subchapter if alcoholism or drug addiction would (but for
this subparagraph) be a contributing factor material to the
Commissioner's determination that the individual is
disabled."
On its face, the amendment's relevance to this case is not
seriously questioned. The principal challenge is to the
construction of the amendment's effective date as it applies
to the claimant.
The relevant statutory language states: "The amendments
. . . shall apply to any individual who applies for, or whose
claim is finally adjudicated by the Commissioner of Social
Security with respect to, benefits under title II of the Social
Security Act based on disability on or after the date of the
enactment of this Act, and, in the case of any individual
who has applied for, and whose claim has been finally
adjudicated by the Commissioner with respect to, such
benefits before such date of enactment, such amendments
shall apply only with respect to such benefits for months
beginning on or after January 1, 1997." Pub. L. 104-121
S 105(a)(5)(A), 110 Stat. at 853; 42 U.S.C. S 405 note (1996).
The district court concluded that the claimant was not
barred because his application for benefits was not "based
on disability on or after" the effective date of the
amendment, March 29, 1996. Therefore, he could receive
benefits for the disability that existed before that time.
6
Similarly, the court believed that the claimant was not
seeking payments that would be received after January 1,
1997. Essentially, the district court's construction of the
amendment rests on the proposition that the clause "on or
after the date of the enactment" modifies the word
"disability." The Commissioner, on the other hand,
contends that the "on or after" clause modifies "applies for,
or whose claim is finally adjudicated by the Commissioner."
A number of district courts have discussed these two
views of the statutory language and have labeled the former
the "disability" and the latter the "adjudication"
interpretation. Among the opinions adopting the disability
construction are Hall v. Chater, No. 96C580 (N.D. Ill. Mar.
21, 1997) and Teitelbaum v. Chater, 949 F. Supp. 1206,
1212-13 (E.D. Pa. 1996). Cases adopting the adjudication
theory include Miller v. Callahan, 964 F. Supp. 939, 947
(D.Md. 1997); Connor v. Chater, 947 F. Supp. 56, 60
(N.D.N.Y. 1996); Sousa v. Chater, 945 F. Supp. 1312,
1328-30 (E.D.Cal. 1996); Santos v. Chater, 942 F. Supp.
57, 63 (D.Mass. 1996); Willis v. Chater, 939 F. Supp. 1236,
1239-40 (W.D.Va. 1996). Two Courts of Appeals have
referred to the amendment, but have not been required to
construe its statutory language. See Perkins v. Chater, 107
F.3d 1290 (7th Cir. 1997); Newton v. Chater, 92 F.3d 688(8th Cir. 1996).
Claimant argues that the amendment should be applied
prospectively only and relies on Landgraf v. USI Film
Products, 511 U.S. 244 (1994), in which the Court
discussed the effect of retroactive legislation on vested
substantive rights. Claimant reasons that because his
disability existed before the amendment was enacted, he
had a settled expectation of receiving benefits for the period
before the effective date.
Claimant has received no benefits and none have been
awarded. His status is simply that of an applicant.
Individuals in that category are entitled to procedural due
process, see Flatford v. Chater, 93 F.3d 1296, 1303-05 (6th
Cir. 1996); Kelly v. Railroad Retirement Bd., 625 F.2d 486,
489-90 (3d Cir. 1980), but as the Supreme Court has
reminded us, procedural due process does not impose a
constitutional limitation on Congress' power to make
7
changes in eligibility for certain entitlements. Atkins v.
Parker, 472 U.S. 115 (1985).
In Atkins, the Court rebuffed objections to a
congressional reduction of food stamp benefits: "[I]t must
be assumed that Congress had plenary power to define the
scope and the duration of the entitlement to food-stamp
benefits and to increase, to decrease, or to terminate those
benefits based on its appraisal of the relative importance of
the recipients' needs and the resources available to fund
the program." 472 U.S. at 129. Continuing in the same
theme, the Court said that when the legislature adjusts
benefit levels that "determination provides all the process
that is due." Id. at 129-30 (quoting Logan v. Zimmerman
Brush Co., 455 U.S. 422, 432-33 (1982)); see also United
States R.R. Retirement Bd. v. Fritz, 449 U.S. 166, 174
(1980) ("railroad benefits, like social security benefits, are
not contractual and may be altered or even eliminated at
any time.").
Thus, if a recipient's right to future benefits may be
terminated by a statute, it follows that an applicant who
has never been declared eligible may as well be deprived of
an inchoate right.
Claimant relies on the definition of "entitled" in Estate of
Cowart v. Nicklos Drilling Co., 505 U.S. 469 (1992), a case
brought under the Longshore and Harbor Workers'
Compensation Act, 33 U.S.C. S 901. There, the Supreme
Court said that "the normal meaning of entitlement
includes a right or benefit for which a person qualifies, and
it does not depend on whether the right has been
acknowledged or adjudicated." Id. at 477.
The question in Cowart was whether a person who had
sustained an injury in the workplace was an individual
"entitled to compensation" under the Act and, as such,
required to obtain his employer's consent before settling a
tort claim against a third party.
We note that the word "entitled" does not appear in the
effective date provisions of the alcoholism amendment.
Furthermore, usage in the Longshore and Harbor Workers'
Compensation Act does not carry over naturally to the
circumstances before us. Cowart did not address the
8
retroactivity problems of legislation affecting vested
entitlements.
More fundamentally, Landgraf discussed a statute that
did not disclose Congress' will on retroactivity. The
amendment at issue before us, however, does set out when
it will apply in terms that are sufficiently clear to provide
necessary guidance. See also Lindh v. Murphy, ___ U.S. ___,
No. 96-6298, 1997 WL 338568, at * 4 (U.S. June 23, 1997)
(normal rules of construction apply in determinations of a
statute's temporal reach).
The amendment focuses on when a claim is filed or
adjudicated. We are convinced that, grammatically, "after
the date of enactment" modifies the clause, "whose claim is
finally adjudicated by the Commissioner." The amendment
thus establishes two separate groups who are affected in
different ways.
1. Those whose claims were not "finally adjudicated by
the Commissioner" before March 29, 1996. The individuals
in this group receive no benefits. The Commissioner asserts
that the claimant falls into this category.
2. Those whose claims have been favorably and "finally
adjudicated by the Commissioner" before the effective date
of the amendment, March 29, 1996. The individuals in this
group had been receiving payments and were granted a
grace period until January 1, 1997 during which they could
adjust to the loss of the monthly income after that date and
perhaps reapply for benefits based on other disabilities.
There is a reasonable basis for the distinction between the
two categories -- the people who have never obtained
payment do not have the need to adjust as do those who
have received benefits in the past.
Strong support of the adjudication interpretation also lies
in the well-settled tenet of statutory construction that all
provisions of the statute must be construed together to give
each some independent meaning. Kowalski v. L & F Prods.,
82 F.3d 1283, 1287-88 (3d Cir. 1996). The language
applied to first category situations fits neatly when the
focus is on the date of adjudication. If a claim isfiled, or
finally adjudicated, post-enactment, the amendments apply
in full.
9
In contrast, if the focus is on the date of disability, then
the "final adjudication" language in the first category
becomes superfluous. Stated another way, if an individual
files a claim based upon a post-enactment disability, then
the date of final adjudication would be irrelevant because
the claim would have been void ab initio. Thus, in this
reading of the statute there is no phrase that explains in a
temporal way which applications are covered.
The weakness of the disability interpretation adopted by
the district court may be further demonstrated by an
examination of the results of applying it to the two
categories. In the first group (those whose claims had not
been "finally adjudicated"), payments "based on disability
on or after" March 29, 1996 would not be made, although
by implication benefits could be awarded for periods of
disability before that date. This result, although strained, is
not beyond reason.1
However, when the disability interpretation is applied to
the second category, the fallacy of this approach becomes
apparent. The point is illustrated by repeating below the
language that applies to the second category and inserting
the modifying language from the first category in brackets.
It reads: "[A]nd, in the case of any individual . . . whose
claim has been finally adjudicated by the Commissioner
with respect to, such benefits [based on disability] before
[March 29, 1996], such amendments shall apply only with
respect to such benefits [based on disability before March
29, 1996] for months beginning on or after January 1,
1997."
The result is confusing to say the least. Among other
things it leads to the question of whether benefits are due
for disability between March 29, 1996 and January 1,
1997.
It is persuasive, however, that the second category
_________________________________________________________________
1. We note, however, that SSI benefits are not payable for a period prior
to a claimant's application. 20 C.F.R. S 416.335; see also Cruse v.
Bowen, 867 F.2d 1183, 1185 (8th Cir. 1989). Thus, if a claimant applied
for SSI benefits based on alcoholism after March 29, 1996, the claim
would have to be based on disability after that date.
10
description deletes the words "based on disability" and
refers instead to a claim that "has been finally adjudicated
. . . with respect to, such benefits before . . . enactment."
Thus, when date of enactment is tied to a claim that has
been finally adjudicated, the meaning becomes quite clear
-- benefits awarded before the date of enactment continue
until January 1, 1997. Not only is this approach clearer, it
is consistent with the legislative history.
The Ways and Means Committee Report discusses the
effective date of the legislation as follows: "Generally,
changes apply to benefits for months beginning on or after
the date of enactment. However, an individual entitled to
benefits before the month of enactment would continue to
be eligible for benefits until January 1, 1997." H.R. Rep.
104-379, 1st Sess. 17 (1995). The tenor of the Report also
reflected Congressional intent to end benefits sooner rather
than later. "The intent of this proposal is to eliminate
payment of cash Social Security and SSI disability benefits
to alcoholics and drug addicts" and channel part of the
savings into treatment programs. Id.Implicit in claimant's argument is the notion of
unfairness. But drawing lines is the business of Congress
and inevitably individuals on the wrong side of the division
do not fare well. The result is unfortunate for those
adversely affected, but arbitrariness is often unavoidable.
Our study of the statute convinces us that it is the date
of adjudication, and not the time when disability exists,
that triggers the application of the effective date. "The
upshot is that our analysis accords more coherence to [the
amendment] than any rival we have examined. That is
enough." Lindh, 1997 WL 338568 at *8.
A remaining issue requires us to interpret the meaning of
the term "finally adjudicated by the Commissioner." Some
district court opinions hold that after the claim reaches the
district court it has been "finally adjudicated by the
Commissioner." See, e.g., Santos, 942 F. Supp. at 64;
Willis, 939 F. Supp. at 1241.
In light of the circumstances in this case, we have no
difficulty in concluding that the claim has not been "finally
adjudicated." The case was remanded by the district court
11
to the Commissioner for the specific purpose of further
adjudication. A claim subject to further hearing by the
Commissioner cannot be "finally adjudicated."
We conclude that the claim in this case is barred by the
statutory amendment.2 Accordingly, the order of the district
court will be reversed and the case will be remanded for
further proceedings consistent with this Opinion.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
_________________________________________________________________
2. Congress amended the relevant provisions ofS 105(b)(5) on August 5,
1997 as applicable to SSI claims. The current version reads:
(D) For purposes of this paragraph, an individual's claim, with
respect to supplemental security income benefits under title XVI
of
the Social Security Act based on disability, which has been
denied
in whole before the date of the enactment of this Act, may not be
considered to be finally adjudicated before such date if, on or
after
such date --
(i) there is pending a request for either administrative or
judicial
review with respect to such claim, or
(ii) there is pending, with respect to such claim, a
readjudication
by the Commissioner of Social Security pursuant to relief in a
class
action or implementation by the Commissioner of a court remand
order."
Technical Amendments Relating to Drug Addicts and Alcoholics,
Balanced Budget Act of 1997, SS 5525, 5528. We find no need to
consider either the application of this statutory change to the
case
before us, or its retroactivity.
12