O'Kane, James v. Apfel, Kenneth S. ( 2000 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 99-2572
James O’Kane,
Plaintiff-Appellant,
v.
Kenneth S. Apfel, Commissioner
of Social Security,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 97 CV 6589--Blanche M. Manning, Judge.
Argued March 27, 2000--Decided August 23, 2000
Before Flaum, Chief Judge, and Posner and Williams,
Circuit Judges.
Williams, Circuit Judge. In 1993, James O’Kane
applied for disability benefits. The Social
Security Administration denied his application.
After unsuccessfully appealing his claims
administratively, O’Kane filed suit against
Kenneth S. Apfel, the Commissioner of Social
Security ("Commissioner"), asking the district
court to reverse the decision of the
Administrative Law Judge who denied O’Kane’s
benefits claims. Both parties moved for summary
judgment. The district court denied O’Kane’s
motion for summary judgment and granted the
Commissioner’s cross-motion for summary judgment.
O’Kane now appeals, and we affirm.
I
On February 17, 1993, O’Kane applied for
disability benefits under the Social Security Act
("Act"), 42 U.S.C. sec.sec. 416(i), 423, 1382, on
the basis of his alcoholism. On May 6, 1993, the
Social Security Agency ("Agency") denied O’Kane’s
application for benefits. For the next four
years, O’Kane continued to pursue his claims
through administrative channels. At each step,
his claims were denied.
Meanwhile, Congress amended the Social Security
Act in 1996 to prohibit the payment of social
security disability benefits based on an
applicant’s alcoholism or drug addiction. See
Contract with America Advancement Act of 1996,
Pub. L. 104-121, 110 Stat. 847. The Act now
provides that "[a]n individual shall not be
considered to be disabled for purposes of this
subchapter if alcoholism or drug addiction would
(but for this subchapter) be a contributing
factor material to the Commissioner’s
determination that the individual is disabled."
42 U.S.C. sec. 423(d)(2)(C).
On September 18, 1997, after exhausting his
administrative remedies, O’Kane timely filed a
complaint in the United States District Court for
the Northern District of Illinois. The parties
filed cross motions for summary judgment. O’Kane
moved for summary judgment on the ground that the
decision to deny him benefits was not supported
by substantial evidence. The Commissioner, in his
motion for summary judgment, argued solely that
the 1996 amendments to the Act ("Amendments")
barred O’Kane’s 1993 benefits application.
The district court ruled in the Commissioner’s
favor. The court found that the Amendments apply
to claims for benefits pending in the Agency as
of March 29, 1996 and bar O’Kane, as a matter of
law, from receiving disability benefits. The
district court’s decision to grant the
Commissioner’s motion for summary judgment
presents a pure question of law, which we review
de novo, accepting as true all of O’Kane’s
evidence and drawing in his favor all reasonable
inferences. See Reed v. McBride, 178 F.3d 849,
852 (7th Cir. 1999).
II
The dispute in this case centers around the
Amendments’ effective date provision. The
Amendments
apply to any individual who applies for, or whose
claim is finally adjudicated by the Commissioner
of Social Security with respect to, benefits
under [this subchapter] based on disability on or
after [March 29, 1996], 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 [March 29,
1996], such amendments shall apply only with
respect to such benefits for months beginning on
or after January 1, 1997.
42 U.S.C. sec. 405 (note) (emphasis added).
O’Kane argues that "on or after March 29, 1996"
applies to the date of an applicant’s disability.
Under this "disability interpretation," O’Kane
would be entitled to benefits based on his
alcoholism from the time he applied for them,/1
February 17, 1993, until March 29, 1996. The
Commissioner argues, on the other hand, that "on
or after March 29, 1996" modifies the clause "who
applies for" and the clause "whose claim is
finally adjudicated by the Commissioner." Under
this "adjudication interpretation," O’Kane would
not be entitled to any benefits because his
claims were not finally adjudicated prior to
March 29, 1996.
The Third and Eighth Circuits have adopted the
adjudication interpretation. See Adams v. Apfel,
149 F.3d 844, 846 (8th Cir. 1998); Torres v.
Chater, 125 F.3d 166, 171 (3d Cir. 1997)./2
Before today, we had not decided whether to adopt
either the adjudication or the disability
interpretation. See Maggard v. Apfel, 167 F.3d
376, 379 (7th Cir. 1999) (electing not to decide
between the disability and adjudication
interpretations). Today, we adopt the
adjudication interpretation.
A. Plain Language of Statute
The plain language of the Amendments supports
the adjudication interpretation. When
interpreting congressional statutes, we first
look at the plain language of the statute because
that is the best way to determine congressional
intent. See Reves v. Ernst & Young, 507 U.S. 170,
177 (1993); United States v. Hayward, 6 F.3d
1241, 1245 (7th Cir. 1993) (holding that "when
the language of a statute is clear and
unambiguous, no need exists for the court to
examine the legislative history, and the court
must give effect to the plain meaning of the
statute").
The disability interpretation muddles the second
half of the effective date provision./3 We agree
with the Third Circuit that concluded:
when the disability interpretation is applied to
the second category, the fallacy of [the
disability interpretation] 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."
Torres, 125 F.3d at 171.
O’Kane argues that there is no reason to insert
"based on disability" into the second half of
this effective date provision. He claims that the
second category simply carves out a limited
exception to the first category where eligibility
is pegged to the date of disability. He contends
that the exception creates a limited grace period
for those individuals whose claims were finally
adjudicated prior to March 29, 1996--they are
eligible to receive benefits until January 1,
1997. Finally, O’Kane asserts that the date of
disability is not relevant to this exception.
We are not convinced by O’Kane’s argument. Both
clauses of the effective date provision are
parallel in structure. Apart from Congress’ use
of "such" in the second clause to avoid
repetition, both clauses have precisely the same
grammatical and textual structure. Consequently,
if O’Kane is going to argue that the effective
date modifies disability in the first clause,
then the date must also modify disability in the
second clause. The result makes little, if any,
sense. For example, it is impossible to determine
whether benefits are due for alcoholism
disabilities between March 29, 1996 and January
1, 1997. Consequently, we find that the
adjudication interpretation is the clearer
approach. Accord Adams, 149 F.3d at 846; Torres,
125 F.3d at 171.
The disability interpretation would make the
"finally adjudicated" language superfluous.
Courts should interpret statutes so as to "give
effect, if possible, to every clause and word."
In re Lifschultz Fast Freight Corp., 63 F.3d 621,
628 (7th Cir. 1995). If the date of disability
governs, then the date of final adjudication is
irrelevant. O’Kane argues that the term "finally
adjudicated" makes clear that the Amendments do
not simply apply to those who apply for
post-March 1996 benefits but also to those who
have already been declared eligible to receive
post-March 1996 benefits. O’Kane’s
interpretation, however, would create more
superfluous language. If the disability
interpretation is correct, Congress could have
simply stated that the Amendments apply to
individuals who are claiming disability benefits
under this subchapter for claims after March 29,
1996. See Torres, 125 F.3d at 170-71 (finding
that "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").
O’Kane counters that the adjudication
interpretation renders superfluous at least two
phrases of the effective date provision. First,
the adjudication interpretation renders
superfluous the phrase "who applies for." Under
the adjudication interpretation, the availability
of benefits depends upon the date a claim is
adjudicated. Consequently, O’Kane argues that the
date on which one applies is irrelevant. While
O’Kane may be technically correct, the phrase
"who applies for" is useful for differentiating
the statute’s two clauses. For claimants who have
filed but not had their claims finally
adjudicated, the Amendments are effective on
March 29, 1996. The Amendments are not effective
until January 1, 1997, however, for a filed claim
that has been finally adjudicated.
Second, O’Kane claims that the adjudication
interpretation renders the phrase "based on
disability" superfluous. The adjudication
interpretation precludes benefits to any
individual "whose claim is finally adjudicated by
the Commissioner . . . on or after March 29,
1996." This interpretation reads the same with or
without the phrase "based on disability." This
phrase is useful, however, because the relevant
subchapter of the Act includes not only
disability benefits but also other types of
Social Security benefits--e.g., benefits for old
age, survivors, and the blind.
Finally, O’Kane argues that the last antecedent
rule of statutory construction supports the
disability interpretation. This rule states "that
where one phrase of a statute modifies another,
the modifying phrase applies only to the phrase
immediately preceding it." Northwest Forest
Resource Council v. Glickman, 82 F.3d 825, 832
(9th Cir. 1996); accord Elliot Coal Mining Co. v.
United States Dep’t of Labor, 17 F.3d 616, 629
(3d Cir. 1994); see also Norman J. Singer,
Sutherland on Statutory Construction sec. 47.33
(4th ed. 1985) (stating that "qualifying words
and phrases, where no contrary intention appears,
refer solely to the last antecedent"). Under this
rule, "on or after March 29, 1996" modifies
disability because "based on disability"
immediately precedes "on or after March 29,
1996." While O’Kane correctly applies the last
antecedent rule, the result is nonsensical. If
the effective date modifies disability, the
sentence is missing a verb--e.g., disability
"occurred" after March 29, 1996. The
Commissioner’s approach is simpler--we need only
read a comma into the statute, instead of
guessing which verb Congress intended. For all of
the above reasons, we find that the adjudication
interpretation accords more coherence to the
effective date provision than the disability
interpretation.
B. Legislative History
Although both sides argue that legislative
history supports their interpretation of the
effective date provision, the history is not
conclusive. Although we find that the statute’s
language supports the adjudication
interpretation, we will address both parties’
arguments.
The only report that describes the purpose of
the effective date provision states:
Effective Date. 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. No. 104-379, para. 7 (1995) (available
at 1995 WL 717402). Both sides argue that this
report supports their interpretation. However,
the phrase "changes apply to benefits" does not
conclusively answer whether it is "benefits
finally adjudicated after March 29, 1996" or
"benefits for disabilities after March 29, 1996."
The Commissioner also argues that subsequent
amendments enacted by Congress support the
adjudication interpretation and explicitly reject
the disability interpretation. These amendments
state that
an individual’s claim . . ., 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.
Ticket to Work and Work Incentives Improvement
Act of 1999, Pub. L. No. 106-70 sec. 401, 113
Stat. 1860, 1906 (codified as amended at 42
U.S.C. sec. 405 (note) (1999) [hereinafter
Technical Amendments])./4
Contrary to the Commissioner’s argument, this
language simply clarifies when a claim is
"finally adjudicated." The phrase "finally
adjudicated" is important under both the
adjudication interpretation and the disability
interpretation. It identifies those individuals
who are eligible for a grace period--until
January 1, 1997--regardless of the date of their
disabilities.
The Commissioner also argues that the Technical
Amendments were enacted to counter Teitelbaum v.
Chater, 949 F. Supp. 1206 (E.D. Pa. 1996), which
had adopted the disability interpretation. It is
just as likely, however, that the Technical
Amendments were promulgated to address several
court rulings that held that a claim was "finally
adjudicated" when a claimant had exhausted
administrative remedies. See, e.g., Newton v.
Chater, 92 F.3d 688, 695 n.3 (8th Cir. 1996);
Santos v. Chater, 942 F. Supp. 57, 63-64 (D.
Mass. 1996). Consequently, the Technical
Amendments arguably abrogated these rulings, and
not Teitelbaum, by explicitly defining "finally
adjudicated" to exclude claims for which there is
a pending request for judicial review.
C. Retroactive Effect
O’Kane also contends that the adjudication
interpretation creates an impermissibly
retroactive effect. Absent clear congressional
intent, courts should presume that legislation
does not apply retroactively. See Landgraf v. USI
Film Prods., 511 U.S. 244, 265, 272-73, 285-86
(1994). When Congress clearly intends to preclude
benefits for applications pending at the time of
a statute’s enactment, we must follow Congress’
wishes. See id. at 280. Moreover, O’Kane is an
applicant; he has received no benefits and none
has been awarded. While he is entitled to
procedural due process, "[t]he procedural
component of the Due Process Clause does not
’impose a constitutional limitation on the power
of Congress to make substantive changes in the
law of entitlement to public benefits.’" Atkins
v. Parker, 472 U.S. 115, 129 (1984) (quoting
Richardson v. Belcher, 404 U.S. 78, 81 (1971)).
Consequently, O’Kane has not acquired a
substantive property right in his potential
benefits based upon pre-Amendment law.
Under the adjudication interpretation, the
Amendments would have a retroactive effect. Such
an interpretation changes the legal treatment of
a disability that arose prior to the date of
enactment. Thus, the adjudication interpretation
disentitles O’Kane to benefits that had accrued
prior to March 29, 1996. Although O’Kane
correctly states that the disability
interpretation avoids this retroactive result, we
find that Congress clearly intended to deny
benefits to claims pending on or after March 29,
1996 and that the adjudication interpretation is
clearly permissible. See Landgraf, 511 U.S. at
280.
D. Fairness and Justice
Finally, O’Kane argues that the disability
interpretation avoids unfairness and injustice.
When construing statutes, courts should avoid
"absurd and unjust consequences." Grebe v.
Wheeler Catering Co. (In re Andrews), 172 F.2d
996, 999 (7th Cir. 1949). "[S]tatutes should be
construed in the most beneficial way the language
will permit to prevent absurdity, hardship, or
injustice." Id. O’Kane claims that the
adjudication interpretation denies him alcoholism
benefits because of a prejudicial delay caused by
an error on the part of the administrative court.
While this may be true, Congress deliberately
precluded benefits to pending claims. "[D]rawing
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." Torres, 125 F.3d at 171.
III
For the foregoing reasons, the opinion of the
district court is Affirmed.
/1 See 20 C.F.R. sec. 416.335 (SSI benefits are
payable as of the application date).
/2 The Ninth Circuit will probably adopt the
adjudication interpretation as well. See Hiblar
v. Apfel, 205 F.3d 1351 (9th Cir. 1999) (table)
(text available at 1999 WL 1253218).
/3 The second half of the effective date provision
states that "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 [March 29, 1996], such
amendments shall apply only with respect to such
benefits for months beginning on or after January
1, 1997."
/4 The Technical Amendments noted that "The
amendments made by this section [amending this
note] shall take effect as if included in the
enactment of section 105 of the Contract with
America Advancement Act of 1996 (Public Law 104-
121; 110 Stat. 852 et seq.)."