RICHARDSON v. WRIGHT
Legal provision: Social Security, as amended, including Social Security Disability Benefits Reform Act, but excluding Medicare, Medicaid, Supplemental Security Income, and Aid to Families with Dependent Children
Argument of Gray
Chief Justice Warren E. Burger: We will hear arguments next in 70-161, Richardson against Wright and 5211, Wright against Richardson.
Mr. Gray I think you may proceed now.
Mr. Gray: Good afternoon Mr. Chief Justice and may it please the Court.
These two cases are here before the Court on cross appeals and have been consolidated for purposes of argument.
These cases arise from a final judgment, a statutory Three-Judge Court for the United States District Court of the District of Columbia.
The court below held that Section 225 of the Social Security Act was unconstitutional and that under that Act the recipient of the Social Security Disability Insurance was not afforded the opportunity for an oral hearing prior to suspension.
The court below relied on the decision of this Court in a recent case, Goldberg v. Kelly, which has since become rather well-known in this particular field of the law.
Section 225 of the Social Security Act permits the Secretary of the Department of Health, Education, and Welfare on information obtained by him or submitted to him to suspend the benefits, the payments to a Social Security Disability Insurance recipient pending further investigation.
This particular section of the Social Security Act has no provision whatsoever for a hearing.
It should be noted also Your Honors that this particular section of the Social Security Act has been commented on in the floor debates of the Congress and in the reports of the various committees of the Congress and its purpose has been explicitly stated to permit the Secretary to protect the Social Security Trust Funds to administer the Social Security Disability Insurance Program in a practical, efficient and helpful manner so as to assist the maximum number of beneficiaries within the resources available.
This case first arose when the appellee, cross appellant, one Radie Wright, applied in the Washington D.C. District Office for Social Security benefits.
Mr. Wright had worked since the age of 14 and had been recently hospitalized in October of 1965 to be exact in his application, for Social Security Disability Insurance benefits which was filed June 1, 1966.
Justice William J. Brennan: Well, excuse me Mr. Gray, may I ask, do I understand that the Secretary has now adopted the procedures and required States to adopt procedures which rather provide most of the requirements of Goldberg?
Mr. Gray: No sir, Mr. Justice Brennan, that is not quite the case.
He has adopted procedures suggested by the United States District Court for the District of Columbia to a certain extent and I would --
Justice William J. Brennan: I am not going as far as were they applicable to Goldberg?
Mr. Gray: Not going as far as the holding of the District Court nor as far as the cross appellants would like the Secretary to go.
Justice William J. Brennan: No, but how do I compare with the requirements in Goldberg on termination of welfare?
Mr. Gray: They would not go as far I do Your Honor.
Justice William J. Brennan: Where would it -- in what respect would they go for?
Mr. Gray: They would go -- let me tell you perhaps Your Honor right at this point in time what they would do.
The District Court below, as a part of its holding, stated that the recipient should receive timely notice and an opportunity to respond and the Secretary has gone that far in his new regulations going out through the Social Security Disability Insurance System to state that State agencies shall not recommend suspension until they contact that recipient.
Give him timely notice, offer him the opportunity to present his case which I might --
Justice William J. Brennan: Meanwhile, continuing the payment of benefits?
Mr. Gray: Yes.
There would be no suspension or recommendation initiated sir.
I might point out, Mr. Justice Brennan, as you well know, Your Honor that at this point in time a recipient or an applicant can come right into that District Office now at the very first step of intake with counsel in tow and can have that counsel assisting at every step of the proceeding right along, right up to the point that --
Justice William J. Brennan: I did not mean to interrupt you, would you complete?
Mr. Gray: Yes sir.
Justice Harry A. Blackmun: Mr. Gray, let me follow through at this point if I may.
Somewhere along the line would you tell us what you think the District Court ordered here that is not covered by the new regulation?
This ties in to Mr. Justice Brennan --
Mr. Gray: Yes sir, I was about to tell you that right now Mr. Justice Blackmun.
The District Court below thought that as an additional step there might be an occasion on which an informal hearing could be held before an impartial official or hearing examiner and they also went one step further and said that when the evidence is found to contradict that evidence held by the Social Security Administration there might very well be a formal hearing and the next step they took was to say that we are not going to prejudge this matter.
We are going to permit the Social Security Administration to develop pre-suspension procedures at which time they would then take a look and see if those procedures meet all the requirements that we are laying out here and the government’s position in the Court here today Your Honors is that we go along with the first part of the court’s order below and we agree that --
Justice William J. Brennan: Now, that is a notice --
Mr. Gray: Yes sir, timely notice --
Justice William J. Brennan: And an opportunity to protest?
Mr. Gray: That is right.
Justice William J. Brennan: In what form?
Mr. Gray: In the form of written submissions.
Justice William J. Brennan: And -- but no hearing?
Mr. Gray: No hearing Mr. Justice Brennan.
Justice William J. Brennan: And the written submissions of course are considered by whom?
Mr. Gray: They are considered right up the line.
They would become a part of that claimant’s file folder and they would become a part right there at the State Agency and would carry right on at the line all the way into the Federal District Court for review.
Justice William J. Brennan: Therefore, I gather, unlike what is required before termination of welfare, an opportunity for a hearing before is not an impartial at least more or less independent --
Mr. Gray: We do not --
Justice William J. Brennan: -- under the operation here. Here I guess he gets a notice and a chance to protest in writing and that is the end of it, is it?
Mr. Gray: Well, he gets a -- in our regulations too he also gets a second chance at that same State Agency level.
He does not come in right away and the State Agency still is of that mind, they notify him again and he is given ten days more --
Justice William J. Brennan: To do what?
Mr. Gray: To do the same thing, file a written submission, but the extent of his relief there, Your Honor in fact is a --
Justice William J. Brennan: But in any effect his case is decided on the basis of what he submits in writing without a hearing, would that be your --
Mr. Gray: That is correct.
Justice William J. Brennan: Yeah.
Mr. Gray: That is correct.
On a basis of what he submits in writing Your Honor and in addition what the State Agency has compiled in the way of evidence from the hospitals, the physicians, the laboratory, the vocational rehabilitation people that treated him.
Justice William J. Brennan: Yes, but he does not get (Voice Overlap).
He got -- he gets to know -- he gets (Inaudible) in the other hearing, the challenge, any of the other materials that have been collected by the agency?
Mr. Gray: Let me say that he gets no opportunity but I think Your Honor, he gets no opportunity in a legal sense as we lawyers understand it.
But let me say Your Honor that the Social Security Administration, as you well know and this Court knows, leans over backwards to be of help and assistance to individuals and I have not, despite this doubt in my mind, and I think if Secretary Richardson was standing before this Court he would say the same thing.
If that recipient came in to that State Agency down there in Virginia which involves one of these cases, the cross appellant Atkins, with his attorney and told that that State Agency would permit that recipient and his attorney to make all the points they wanted to make right there and they would build that record and that record would move right on up the line just as they desire to build it.
But if you are speaking Your Honor in terms of a hearing as we understand it under the due process clause, with all of the protections that Your Honors specified in the opinion of the Court which you have delivered in Goldberg, no, we do not have seen it all -- (Voice Overlap).
Justice William J. Brennan: (Voice Overlap) should be.
In neither of these cases where the provisions of the new regulation provided even though there were no regulation that is neither of these got the kind of notice with the opportunity to file written protest.
Mr. Gray: Not the times that we mentioned Your Honor in our supplemental brief.
Justice William J. Brennan: Yes.
Mr. Gray: But other things were done with which of course are -- they are in my statement of facts that --
Chief Justice Warren E. Burger: I want to be sure that I have it clear, they would get more now than they did not get at the time they were processed?
Mr. Gray: That is correct.
Chief Justice Warren E. Burger: Under the Secretary’s regulation?
Mr. Gray: That is correct too.
Chief Justice Warren E. Burger: Independent of the District Court?
Mr. Gray: But the Secretary -- I think it must be the -- it must be stated Mr. Chief Justice if the new regulation of the Secretary, appearing in our supplemental brief, was developed and published as a result of a portion of the opinion of the Three-Judge Court below sir.
Justice Thurgood Marshall: Mr. Gray, you said that when they submit their written statement, it goes right up to the line?
Mr. Gray: Yes sir because of the part --
Justice Thurgood Marshall: Is that the same line it went up the (Inaudible)?
Mr. Gray: It comes a part of the claimant’s folder and it goes --
Justice Thurgood Marshall: Well, I mean if there is no difference to what happened before except you got this one statement from the claimant.
Mr. Gray: That is correct Mr. Justice Marshall.
It goes in --
Justice Thurgood Marshall: And the claimant does not know what happens to any one of those steps?
Mr. Gray: I do not think that the -- that statement can be made Mr. Justice Marshall because in these types of cases, unlike other cases the claimant either goes to work, his work activity, he holds in his hands a control, his work activity, generates activity --
Justice Thurgood Marshall: If he is able.
Mr. Gray: Or his improved -- yes sir, or in the improvement in his physical condition.
So, we do not have a claimant here who is blinded Your Honor.
We have a claimant here who really knows --
Justice Thurgood Marshall: But does he know what this person said about him?
Mr. Gray: I do not think that he would know what this person said about him.
Justice Thurgood Marshall: Or any other person?
Mr. Gray: No sir.
He would know what his own position said about him certainly.
Justice Thurgood Marshall: Well, he had never finds out within that documentary that goes up the line?
Mr. Gray: I would say that you are correct, Mr. Justice Marshall, in that he does not look at it, but what I said before in the response to a question of Mr. Justice Brennan and I think if Secretary Richardson were here, he would say it, that if that claimant walked into that State Agency with his attorney, he would get it.
Justice Thurgood Marshall: I agree with you fully, but really you know Secretary Richardson (Voice Overlap) in all his offices. (Voice Overlap)
Mr. Gray: I know but that does not mean (Voice Overlap).
That is right, they are human beings, they are very interested in the fairness and integrity of the --
Justice Thurgood Marshall: I assume that too and I also assume that a fair judge and a fair jury will do well but we still have a hearing?
Mr. Gray: Oh, I know in some cases you do for certain reasons which do not exist in these cases Your Honor.
Justice Thurgood Marshall: Why cannot you give a hearing (Inaudible)?
Mr. Gray: We feel that there is no over palling individual private reason to hold a hearing here that is so great that it necessarily must override in our system of jurisprudence of governmental function representing the interest of so many people that are at stake in the administration of this program.
Justice Harry A. Blackmun: Mr. Gray, are you finding comfort in the Java case of last term and the other one, was it Perales?
Mr. Gray: Perales, -- I find that, I find comfort in both cases.
In Perales because of the opinion and the extent to which that opinion went and in the Court’s holding there in Java.
The Court, as you know Mr. Justice Blackmun, did not reach the constitutional question raised in that unemployment compensation case on the West Coast.
I feel, of course, that that Lower Court was in error and I think there is a case now in New York (Inaudible) and the New York State Labor Department where contrary result was reached in the Java case.
Justice Harry A. Blackmun: Well, actually, the Secretary’s position is not very different than it was in Perales.
The same arguments have been made, the volume of claims and practical necessities and the like, are they not?
Mr. Gray: Well, I think that is certainly is true.
Then we might go even a little further than we went in Perales in trying to explain in a little greater detail the procedures that are involved here because we feel that these procedures are the matrix in which the government case rests.
These are the things that this Court must look at first to see whether the constitutional rights of these individuals who are to benefit from this system enacted by the Congress are being infringed upon and we rather vigorously convene in our brief that they are not.
That the governmental function must prevail.
We do not argue that the public purse necessarily is so sacred.
We say more than the conservation is involved here.
It is rather the allocation of these resources.
Shall these resources be allocated to assist others who are in need to maximum and it to extent or shall they be tied up in a vast hearing bureaucracy for which there is no real constitutional need in these types of cases.
This case, these facts are not a Goldberg context at all.
I do not see that context here.
Unknown Speaker: (Inaudible) Mr. Chief Justice with Mr. Wright –-
Mr. Gray: Mr. Wright went in and made this application and at the time he made the application, he completed item 21 of the application and he also received the standard information which every applicant receives that if he goes back to work, he should report that.
If his physical condition improves, he should report that.
If he applies for workman’s compensation, he should report that.
His application was completed.
The District Office referred it to the State Agency, which is the Department of Vocational Rehabilitation here in the District of Columbia.
All the papers, including his records from Freedman’s Hospital and from the Veteran’s Administration, all were examined and a decision was made that Mr. Wright was indeed disabled within the meaning of the of the terms of the Act.
His illness, in point of fact, was rather severe at the time following his hospitalization for hemorrhaging and it stemmed all around cirrhosis to the liver, hypertension, chronic gastritis and in fact, the Social Security Administration, their BDI, Bureau of Disability Insurance deemed his physical condition to be so severe that he was not routinely programmed ahead for a review as they do regularly, in order once again, to keep track of all these applicants.
Time passed, this was in 1966 and he began receiving payments from May 1, time passed and Mr. Wright apparently began to feel better because in 1970, earnings began to show up in the Bureau of Disability Insurance for Mr. Wright.
Now, how did they show up?
The employers, in reporting these earnings, report them to, of course the Internal Revenue Service which in turn reports them over to the Social Security Administration for posting in the Social Security Account and those folks know who is receiving Social Security Disability Insurance and there is a transfer, a cross-indexing so that a recipient of Social Security Disability Insurance working and receiving earnings will have wage postings on his account and this occurs within the Social Security Administration.
When BDI learned of earnings for Mr. Wright, earnings for the June quarter of 1968 for the December quarter of 1968 and for the first quarter of 1969, they immediately cause the field investigation to be instituted and that referral was made to the Social Security District Office in the District of Columbia.
An interviewer went to call upon Mr. Wright.
The interview was less than satisfactory.
Mr. Wright was a little difficult to communicate with, but he did indicate that he had worked.
The young lady who interviewed him stated to him that indeed, it looked as though his Social Security Disability Insurance benefits might be in jeopardy because of his having worked.
That of course is one of the provisions of the Social Security Act, one of the definitions of disability, if an individual is able to engage in substantial gain from activity he cannot be disabled under the Act.
Well, the investigation proceeded and as it turned out, Mr. Wright had indeed, apparently felt better because he worked, he not only worked in the June 1968 quarter to December 1968 quarter, that he worked in every quarter of the calendar year 1969 and he earned approximately six hundred dollars and some cents in 1968 and Four Thousand and Fort-one dollars and some cents in 1969.
Now, when all these verification went through in the District –-
Justice Potter Stewart: How long the time lag is there administratively if all goes routinely between the –-
Mr. Gray: Mr. Justice Stewart, the time lag here is a little long because normally it is nine months.
Justice Potter Stewart: Before it gets to –- before it gets to the BDI?
Mr. Gray: Before it gets to BDI and before BDI triggers of the field investigation.
Justice Potter Stewart: Nine months from what?
Nine months from the reporting to –- Prior to the (Voice overlap)
Mr. Gray: From the reporting of the employer, (Voice Overlap)
Justice Potter Stewart: (Voice Overlap) to the commissioner?
Mr. Gray: Yes sir, when the employer has to report earnings to the Social -- to the Internal Revenue Service and -–
Justice Potter Stewart: Yes, yes.
And it is --
Mr. Gray: And it was a little –-
Justice Potter Stewart: Normally nine-months lag?
Mr. Gray: It was a little longer in this case because BDI instituted their field investigation in February 2, 1970, but in any event that when that was compiled, BDI sent the report back to the District of Columbia, Department of Vocational Rehabilitation for a further look at this case, even though here it was obvious, that the man had worked, was in violation, no longer disabled, no longer entitled under the law, but the case folder went back.
An additional look-see was taken and the District Office concluded that Mr. Wright had indeed engaged in substantial gainful activity and was no longer therefore entitled to Social Security Disability Benefits.
He was so notified and the letter of notification indicated that his trial work period had completed.
There is another distinguishing feature from the welfare recipient.
The Social Security disability recipient may work for a period of nine months, none of which need be consecutive, but the law, that Congress has seen fit and the Secretary in his implementing regulations has seemed fit to permit this recipient to go back and try to rehabilitate himself.
Try to get back into the mainstream, the society so to speak.
Mr. Wright had indeed, utilized more than his nine months trial work period.
And he was determined to have ceased to be disabled as of August of 1969, and his benefits, he was advised that his benefits were going to be suspended and they were indeed suspended for a short period of time.
Justice Thurgood Marshall: Is this by a computer?
Mr. Gray: Sir?
Justice Thurgood Marshall: Was this information from a computer?
Mr. Gray: I must presume it is because based on my own knowledge Mr. Justice Marshall, from having been in HEW that knowing that SSA is heavily computerized, it is the only way they could handle the workload that they handle it and I must assume that that is correct.
Justice Thurgood Marshall: When you said a young lady went and talked to her --
Mr. Gray: That is at the District Office level Mr. Justice Marshal.
Justice Thurgood Marshall: What else of -- what other reliable information do you have other than the computer --
Mr. Gray: Oh, we do not rely on the computer at all.
We would be violated to that Mr. Justice Marshall.
A verification is made if this wages paid by direct contact with the recording employer.
No reliance is placed on that computer for that kind of verification.
Chief Justice Warren E. Burger: Computer just triggers the further inquiries, I think?
Mr. Gray: That is right.
That is a micro switch Mr. Chief Justice.
It begins this whole procedures, it starts at all doing.
Justice Harry A. Blackmun: There is no dispute about the fact that the earnings, is there in the case?
Mr. Gray: No sir.
In any event, Mr. Wright brought the suit and he was without benefits for a short period of time.
He brought suit on May 13, 1970.
On May 14, 1970, Judge Gasch issued a temporary restraining order restraining the Secretary from suspending Mr. Wright’s benefits and that action was taken and Mr. Wright has been paid the benefits since then.
And then Mr. John D. Atkins, plaintiff intervener, enters this case.
He does not come into the case until about August, but he comes in as a plaintiff intervener on the basis that he had been hospitalized by reason of mental illness.
And he was hospitalized over in the Veterans Administration Hospital at Perry Point, Maryland.
And he was hospitalized in December of 1966 and began receiving benefits some six months thereafter and remained in that hospital over there until January 7 of 1969.
The Social Security Administration, for some reason or another, did not find out that Mr. Atkins was no longer in Perry Point until about September of 1969 when his check was returned from Perry Point VA Hospital to the Social Security Administration to BDI.
Apparently, Perry Point had been forwarding his checks to Mr. Atkins because Mr. Atkins had left the VA Hospital at Perry Point, Maryland and had gone over to Virginia to another hospital, mental hospital, Western Hospital at Salem, Virginia, stayed there, a short period of time then went down to the Veteran’s Administration Hospital at Roanoke.
But when Social Security received the notice, received the check back that immediately triggered off in accordance with its procedures a continuing disability investigation and they had to find out what Mr. Atkins was up to.
So, the claim folder went first to Towson, Maryland and then it went down to Virginia, but suffice to say the case finally became one before the State Agency there in Virginia.
The State Agency went through the same routine.
They contacted Mr. Atkins, talked with his clinical psychologist, looked very, very carefully at the medical evidence then available to them and made a decision that Mr. Atkins condition had physically improved sufficiently so that he was no longer disabled.
Mr. Atkins, this occurred on February 3, 1970, on February 4, 1970, Mr. Atkins wrote to Social Security Administration and protested, submitted his own evidence.
His wife called BDI three or four times.
His Congressman got in touched with Social Security Administration and to compress the facts in view the fact time is rapidly running out on me, Your Honors, he was reinstated.
His case was sent back rather quickly.
Another hard look was taken at additional evidence and he was reinstated and I think if I may Mr. Chief Justice, I would like to reserve the balance of my time for any rebuttal.
Chief Justice Warren E. Burger: Very well, Mr. Gray.
Argument of Robert N. Sayler
Mr. Robert N. Sayler: Mr. Chief Justice and may it please the Court.
I am here representing several named individuals in the class of disability recipients.
The government’s presentation has made clear that we are dealing here with a complicated statutory scheme.
That should not obscure the fact that the legal issues in this case are uncomplicated, had been considerably narrowed in this Court.
When this case begun nearly two years ago, the government was arguing that the provision in the statute authorizing summary suspension of disability payments was constitutional.
Now, Judges Gasch, Robb and Matthews disagreed.
The government has abandoned that contention and this Court it concedes that that statutory section is unconstitutional and it concedes that there is a right to an opportunity to a hearing before disability benefits are terminated.
Now, these are the propositions that we had been attempting to establish in this case.
We had assumed that once they were recognized that would obviate the necessity for action by this Court and that has not proved to be the case because in this Court, the government contends that the right to a hearing it would provide means a paper hearing and calls a hearing on paper.
By this, the government says it would provide notice if it found conflicting evidence.
It would provide a brief summary of evidence adverse to the recipient, providing opportunity to file his paper.
It would not under any circumstances, regardless, whether or not conflicting evidence of continuing disability existed.
It would not provide opportunity for an oral proceeding of any kind, would not assure decision by an impartial decision maker.
The government’s basic position is that these latter procedural protections are unnecessary because the decisions in this area, uniquely objective and reliable, as Mr. Gray just said, the government bends over backwards to assure that recipients may stay on the roles.
There is one overwhelming statistic which demonstrates the difficulty the government has in sustaining that position.
Present time, hearings are required as a matter of statutory right after termination, many months down the road.
In those cases, paper determinations that disability has ceased are reversed in 55% of the cases.
More times than not, when the recipient gets to the hearing has an opportunity to tell his the story, present affirmative evidence, cross-examine would prevail.
Unknown Speaker: Is that post any issue, proceedings, somewhat like the post termination proceeding in the welfare cases?
Mr. Robert N. Sayler: Yes, that is right Your Honor.
Chief Justice Warren E. Burger: Do they then get back payments retroactively?
Mr. Robert N. Sayler: That is right Your Honor.
The statute requires that.
The problem of course during many months --
Unknown Speaker: You pay as to way down the road, how long?
Mr. Robert N. Sayler: The statistics in the record, somewhere between four and six months.
Different statistics had been supplied from one time to another.
They are all set out in the briefs.
Considerable period is consumed while the recipient is cut-off from payments.
Once he gets to that hearing, more times than not, he prevails.
Justice William J. Brennan: Well, I gather – well, I do not -- what if they had been at the time this case was brought, but I gather under the new procedures until the so called paper hearing proceeding has been completed, the recipient will continue to get this disability benefits?
Mr. Robert N. Sayler: That is my understanding on the basis of --
Justice William J. Brennan: Then they determine it and then the post termination proceeding is, I think how long, six months or more?
Mr. Robert N. Sayler: Something to three or four months beyond the paper --
Justice William J. Brennan: And then in that interval (Voice Overlap), the initial termination or suspension, whatever label is put upon it, he gets no disability to wholly benefit unless they are reinstated at the post termination hearing?
Mr. Robert N. Sayler: That is right.
Unknown Speaker: And then if he does get them reinstated, they are retroactive are they to the date of suspension or --
Mr. Robert N. Sayler: That is right, just as was the case in the welfare area, precisely the same.
And we think that that 55% statistic is more eloquent than pages of testimony to demonstrate the importance of the protections we seek and the inadequacy of the procedures that are now followed or that would be followed under the protections the government has now undertaken to provide.
Justice William J. Brennan: And I gather your position is nothing sort of the Goldberg procedures which satisfy the constitution, is that it?
Mr. Robert N. Sayler: Your Honor, we take from Goldberg the language that the Court in that case was undertaking to prescribe the minimum, what it called the rudimentary bearing up of due process.
And we are --
Justice William J. Brennan: Do you think anything more than what is required in this situation?
Mr. Robert N. Sayler: Your Honor, we are seeking only those rudimentary protections provided in the Goldberg situation.
Justice William H. Rehnquist: Mr. Sayler, I noticed in the government’s brief, they relied rather heavily on Cafeteria Workers versus McElroy and you and your reply to them treated that case in a footnote as if it were virtually limited to its fact, at least that is one impression one could get from your treatment of it.
Do you disagree with the general statements of the Court in McElroy that due process is a flexible concept and you have to analyze it precisely what it is that you are affecting before you decide what procedures will be accorded?
Rebuttal of Gray
Mr. Gray: Not at all, Mr. Justice Rehnquist.
Our basic proposition is that Cafeteria established basic propositions which have been set forth in number of other cases that the Court is obliged to indulge in a balancing of the interest of the government on the one side, and persons affected by governmental interest on the other side.
We think this is the case where the balance must be struck very much on the side of the recipient in view of depressing the disability payments.
We have indicated the statistics in our brief on this point.
Facts are that disability recipients are over half dependent on disability benefits for their income.
Most of them are over 80% dependent.
As a category, the disability recipients have very low level of educational attainment which very much hampers their prospects to gain substantial income once they are terminated the disability role.
Their work experience, even those who are able to work, is not very bright and their labor experience is characterized by extremely high unemployment.
It is characterized by mostly part time work.
Our point is that the prospect of a man who is cut-off from the disability program, a man who must have qualified in the first instance under the most rigid definition of disability.
That is not a man who is in any sense a potential Olympic champion.
There is a man who needs those moneys and that is why Congress has provided them to him.
He needs them in the same sense that the welfare recipient needed those moneys in the Goldberg situation.
Chief Justice Warren E. Burger: I suppose the balancing factor that would fit under what you just referred to in relation to Cafeteria Workers case, would be the amounts that are paid out in disability payments to people for periods after they have become ineligible.
Does the record show anything about the dollar amounts or either estimates or accurate figures on that?
Rebuttal of Robert N. Sayler
Mr. Robert N. Sayler: Yes.
The average recipient receives according to the government’s figure something along the lines of $200.00 a month and the government has undertaken an estimate of what it would cost hear hearings, an opportunity for a hearing satisfying the Goldberg for its standards and it is determined that it was cost something in the neighborhood of $16 million.
Now, the problem with that estimate, Your Honor, is that it assumes that every person who is terminated in an effort to gain an unwarranted payments would demand a hearing and experience under Goldberg in the welfare context does not bear that out at all.
Less than 10% of the District of Columbia persons who are cut-off from welfare are now demanding hearing.
Government also assumes that the government would prevail with every one of these hearings.
Every one of them and that there would therefore be improper payments in every case.
In fact, again it is losing more of these cases than it is winning.
We have recomputed those figures on the basis of government statistics and the cost would be considerably less than one million dollars even assuming twice as many recipients sought a hearing as now seeking a post termination hearing.
Even assuming that the government had no power to collect any over-payments it might make and it has substantial statutory power to collect over-payments in the disability context unlike the welfare context where the government has no power to collect over-payments and even assuming that this hearing would require a full two months over and above the paper hearing that the government has now --
Chief Justice Warren E. Burger: Is your estimate a million dollars for the whole United States, for the personnel necessary, the expense necessary that --
Mr. Robert N. Sayler: We have computed this on the basis Your Honor as the government had computed it on the basis of payments that would be made to recipients in the interim as distinguished from undertaking any computation --
Chief Justice Warren E. Burger: But I was thinking that geographical areas, is that for the District of Columbia or the whole United States?
Mr. Robert N. Sayler: No.
That figure I have just given you is for the entire country.
There are some 37,000 cessations a year in this area, something in the neighborhood of 4,000 recipients have been seeking hearings.
I computed that on the basis of the entire country.
What I have not undertaken --
Chief Justice Warren E. Burger: Your suggestion is that you could have the machinery for the 4,000 cases could be handled for a million dollars?
Mr. Robert N. Sayler: It would be considerably less than million dollars.
What I want to make clear is that we have not undertaken to compute the cost to the government of operating this machinery.
We are trying to figure out how many, how much money would be expended in making payments which might be determined after the hearing --
Chief Justice Warren E. Burger: You are not talking about administrative?
Mr. Robert N. Sayler: That is right.
Chief Justice Warren E. Burger: So I was --
Mr. Robert N. Sayler: The government did not undertake that show it needed.
Chief Justice Warren E. Burger: Oh, I see.
I was thinking of the figure that is in a footnote, I think in the Goldberg case or the parallel New York case that in Los Angeles County alone, the 12,000 employees who serviced the welfare recipients and therefore a million dollar figure would not go very far as being (Voice Overlap).
Mr. Robert N. Sayler: That is right.
The point (Voice Overlap)
Chief Justice Warren E. Burger: (Inaudible) would it?
Mr. Robert N. Sayler: I am sorry, Mr. Chief Justice.
The point that illustrates is that the Welfare Program where prior hearings were held acquired towards the size of the disability program, both in the numbers of recipients and the numbers of cessation.
Chief Justice Warren E. Burger: While I have you interrupted Mr. Sayler, I suppose you would agree that in some respect, this program is analogous to a private insurance contract for disability insurance, the standards I suspect are very much the same, total and permanent disability.
In general there is an analogy there, would you agree?
Mr. Robert N. Sayler: To some extent, Your Honor.
There is no half-way disability in this program.
It is all (Voice Overlap) that there is no partial disability.
And the insurance programs generally have attempted to use a more objective standard to determine disability.
They use schedules, person qualifies under schedule will actuall is or is not disabled.
The government in this program has undertaken a quite more elaborate scheme.
This program is to be based on the individual facts of each individual case as the regulations make clear.
Chief Justice Warren E. Burger: What happens to a policy holder in a life insurance or accident insurance is receiving total and permanent disability from let us say the Aetna or one of the other large companies and they discover that he is working full time and making 5, 6, $8,000.00 a year, what do they do to his payments ordinarily?
Mr. Robert N. Sayler: In the event they determined what?
Chief Justice Warren E. Burger: That he is earning a lot of money.
That he is no longer totally and permanently disabled.
They would terminate it, would they not?
Mr. Robert N. Sayler: I would take it that would be a factor that the insurance company would take into account (Voice Overlap) take an inquiry.
Chief Justice Warren E. Burger: You will write him a letter and tell him his payments are being stopped, do they not?
Mr. Robert N. Sayler: One would hope that an insurance company would do more than that.
It would undertake an inquiry to determine that fact.
Chief Justice Warren E. Burger: Well, I am assuming that they have found these circumstances of his earnings prior to an inquiry and perhaps sent investigators out who watch him leave in the morning and in a very large case, you probably known of them, take moving pictures of him, the man playing golf or whatever it may be.
I am sure you do not have any welfare recipients doing that, but you -- this is the technique that an insurance company employee -- employees had been -- they sent him a letter and stop the payments, do they not?
Mr. Robert N. Sayler: Your Honor, I am trying to make two points in response to that.
One is that the insurance disability program used, were used considerably more objective standard disability than the Federal Program.
The other is that one would assume that an insurance company would apply its standards fairly and if that standards requires, as Federal Regulations do in the disability area that a thorough inquiry into all the facts be made, the termination not be based on any easy litmus test, termination not be based solely on earnings as the regulation say, not be based solely on a doctor’s report, which the regulation say.
If an insurance company --
Justice Byron R. White: Well, that sounds to me Mr. Sayler like a really a question of law you have here whether than the fact in question requiring a hearing?
Mr. Robert N. Sayler: I am not sure I understand the -- the question of whether disability continues --
Justice Byron R. White: (Voice Overlap) would automatically terminates -- was it automatically terminates when it verifies earnings of a certain amount?
Mr. Robert N. Sayler: Some of the cases, Your Honor.
More of the cases are so called medical cessations.
Government has a doctor’s report --
Justice Byron R. White: Were and -- Mr. Wright’s case that was an earnings case.
Mr. Robert N. Sayler: That was an earnings case.
Justice Byron R. White: And you are saying that the government may not terminate just upon verification of earnings?
Mr. Robert N. Sayler: That is right, Your Honor.
Justice Byron R. White: And is that a question of law or is it a factual matter for a hearing?
Mr. Robert N. Sayler: No.
The regulations make that a question of fact.
They say that the mere fact that a recipient has earned money is not the end of the inquiry, but the beginning of it.
He has an opportunity to share how he performed whether he was able to continue.
In Mr. Wright’s case he was not.
He undertook the work and could not continue.
He had to stop.
Regulations say that is the kind of inquiry that should be undertaken and that is the kind of inquiry that is undertaken at the end of the road and a post termination hearing is now required as a matter of statutory right.
Justice Byron R. White: Well, I take that there was a personal interview with Mr. Wright and he verifies his earnings that he had?
Mr. Robert N. Sayler: That is right.
Justice Byron R. White: And -- but nevertheless he claims he was still disabled?
Mr. Robert N. Sayler: That is right and he undertook the hearing, he asked for a hearing at that point.
Justice Byron R. White: Yes.
But he had an opportunity to say anything he wanted to at that time?
Mr. Robert N. Sayler: Well.
Justice Byron R. White: Either personally in the interview or in writing afterwards.
Mr. Robert N. Sayler: That is right.
Justice Byron R. White: He could have give -- he could have revealed any of the circumstances which would indicate that despite his earnings he was still disabled.
Mr. Robert N. Sayler: Yes.
But he would not have protections provided in Goldberg, a chance to meet the decision maker face to face, to demonstrate his disability, to show it, tell his story, to cross-examine.
Justice Byron R. White: (Voice Overlap). He had an interview?
Mr. Robert N. Sayler: Had an interview with the claims representative and the government says in its brief is not qualified to make the judgments of medical disability.
Justice Byron R. White: Or he could have told him anything he wanted to?
Mr. Robert N. Sayler: That is right.
I am not disputing that, Mr. Justice White.
I am saying is that questions arise in this context to inherently complicate his objective.
That is what the legislative history says.
That is what the regulation say.
The 55% reversal rate which arises only on the basis of terminations on the basis of either medical evidence or employers report is eloquent testimony that these are tough fact questions.
Indeed, in some respects they are the identical fact questions that arise in the welfare context because this Court has required prior hearings under Welfare Disability Programs that raise precise same issues as it raised in these cases.
We say that Goldberg rules this case.
The same kind of tough complex fact issues, the same kind of pressing interest in receiving benefits.
No basis in the Social Security Act which governs both disability and welfare to distinguish Goldberg in this case.
In fact, the government has recognized the close connection between the two.
It argued in its brief in the Goldberg case to this Court that it would be inconsistent to provide hearings in a welfare context and not in the disability context.
They went on to say the disability case was the a fortiori case because the disability recipient has a mandatory condition of his entitlement, must have contributed substantial funds for a protracted period, precise funds from which he proposes to draw his benefits.
It is not true with the welfare context.
As this Court said in Flemming and Nestor, in that sense Social Security benefits are earned, a functioning member of the economy ought to be able to draw upon that economy when they are protected against the -- taken place.
We think it would be intolerable to distinguish the disability case and the welfare case.
That would create the anomalous result.
A man who has contributed his money over the years and worked would have fewer procedural protections than the welfare recipient who is not required to contribute to a fund.
Chief Justice Warren E. Burger: How would you analyze -- analogize that to a man who has bought, taken an insurance policy privately?
Mr. Robert N. Sayler: Well, I think there is --
Chief Justice Warren E. Burger: Do you think the Aetna Insurance Company, for example, must give notice before they terminate payments and a hearing as a matter of due process?
Now, I am not talking about what they do, what their practices are, what their contract provides, but would it be the constitutional obligation in a private insurance of disability -- for disability?
Mr. Robert N. Sayler: Well, I think the same as -- I would say the answer comes out the same way.
If one buys a permanent disability protection policy which I happen to have now.
I paid my money for five years.
If I become disabled tomorrow, I am entitled as a matter of contract law, the benefits, I paid my money, I have earned it.
I cannot turn around and say, Oh! No.
We do not think we should be paying those moneys.
Justice William H. Rehnquist: But you do not have the right to insist to the insurance company to grant you a hearing.
If you do not like what the insurance company does, you go to Court?
Mr. Robert N. Sayler: I go to Court to enforce my contract and of course we all recognize that the fact that we are talking about, the Federal Government administering a major Federal Program for the general welfare of the people and that is in a poor distinction (Voice Overlap)
Justice Potter Stewart: When we are talking about the Fifth Amendment which does not apply to an insurance, private insurance company, it applies to the Government of the United States.
That the Government shall not deprive any --
Mr. Robert N. Sayler: That is right.
Justice Potter Stewart: Am I right?
Mr. Robert N. Sayler: That is the point I was trying to make is that I would awfully important a distinction, but the analogy between insurance and a disability recipient’s right to claim benefits when the protected against when the claim transpires, these are very close one.
One other reason we think that it would be intolerable to distinguish Goldberg in this case is that the upshot would be that the States which administer the Welfare Program would be upheld to a higher procedural due process requirement under the Federal Constitution then with the Federal Government which administers the Social Security Program.
I want to say one final word about the relief we seek in this Court.
That the Court can either do two things.
It can remand to lower court to enjoin further terminations without affording the preliminary hearings, satisfying Goldberg and Kelly standards.
The character of the government’s argument has suggested an alternative approach.
The government now does concede the unconstitutionality of the exception in the Act which permits summary termination.
Now, admitting the unconstitutional, unconstitutionality of that provision leaves that stand in standing.
Only the general requirement in the Act that an oral hearing must precede final agency action, that is set forth in Sections 405 and 421, Section 1303 of the Act is the severability provision which says if one provision is declared unconstitutional the rest of the Act remains standing.
What this would mean would be that the general requirement would have take oral hearings which are now statutorily required as a matter of statutory construction would have to be held before disability benefits could be terminated.
This in effect gives the matter back to Congress and it says the summary suspension that you have undertaken will not satisfy the recent teachings of this Court.
We declare that Section unconstitutional.
Congress at that point either leaves the existing oral hearings as they are and order them to speed it up.
Congress on the other hand may decide that it does want to have some sort of a preliminary determination before the full scale APA hearing and it may decide that it wants to institute a Goldberg and Kelly type oral hearing which meets just the rudimentary requirements of due process.
This we think should more appropriate be -- appropriately be determined by the Congress rather than the government in their brief which has undertaken at 13th hour in this case to rewrite a summary suspension provision into the Act of Congress.
The essence of our case is that as the Court said in Perales, the Social Security System must be fair.
We do not think procedures which fall short of the Goldberg and Kelly standards can be said to be fair.
We would urge this Court to make it clear that those standards obtained in this area as well as in other areas.
Chief Justice Warren E. Burger: Thank you, Mr. Sayler.
Mr. Gray you have three minutes left.
Rebuttal of Gray
Mr. Gray: Thank you Mr. Chief Justice.
May it please the Court, I would like just to make a brief comment regarding Mr. Sayler’s statement concerning reversal rate.
The appendix D in the government’s brief contains the statistics for Fiscal Year 1971 and much can be done with figures as we all know and I think the only fair way to handle this particular matter of the reversal rate and the -- that play on numbers is to take the actual number of claims that are processed and then trace those through and find the reversals and that brings you to a 6.6% rate of reversal.
That speaks something for the system.
At least, there are sufficient number of individuals somewhere throughout this total number of claims who do not feel that the system has dealt with them unfairly and I would merely submit to the Court that this kind of a consideration be given to dealing with statistics.
I would like also to point out once again and reaffirm the fact that the government has not conceded anything.
This is not summary decapitation that we are engaged in here and we have never considered it to be and we have not conceded any point of constitutionality and we standby firmly the points made in our brief to this Honorable Court.
Thank you, Mr. Chief Justice.
Chief Justice Warren E. Burger: Thank you Mr. Gray.
Thank you Mr. Sayler.
The case is submitted.