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July 31, 1986

TRUEMAN RICE, individually and on behalf of all others similarly situated, Plaintiff,
MARGARET M. HECKLER, Secretary of Health and Human Services, and CESAR A. PERALES, Commissioner of the State of New York Department of Social Services, Defendants

The opinion of the court was delivered by: LASKER


On July 21, 1983 Trueman Rice filed this Social Security action on behalf of himself and other New York residents who, pursuant to 42 U.S.C. 1382c(a)(3)(E) (1976), had been "'grandfathered' into the [Supplementary Security Income ("SSI")] program on January 1, 1974 because they had been recipients of benefits under the State of New York's Aid to the Disabled Program."

As the Court of Appeals for this Circuit recently explained in Wheeler v. Heckler, 719 F.2d 595 (2d Cir. 1983), the classification of certain SSI recipients as "grandfatherees" arises from Congress' enactment in October 1972 of the "Supplemental Security Income for the Aged, Blind and Disabled" program, 42 U.S.C. §§ 1381 et seq. (1976). The purpose of the new law was to unify the various federally funded state disability programs then in existence by establishing a national standard for disability. Id. at 597. In addition, to protect the rights of individuals who previously were determined to be disabled under state standards that were more favorable than the new federal standard, Congress enacted a "grandfather clause," pursuant to which

an individual shall also be considered to be disabled for purposes of this sub-chapter if he is permanently and totally disabled as defined under a State plan approved under Subchapter XIV or XVI of this chapter as in effect for October 1972 and received aid under such plan (on the basis of disability) for December 1973 (and for at least one month prior to July 1973), so long as he is continuously disabled as so defined.

 42 U.S.C. § 1382c(a)(3)(E).

 The gravamen of the complaint in this action is that plaintiffs' SSI benefits have been discontinued without it first being determined that they are no longer disabled under the standards of the "Aid to the Disabled" program, the New York State program that was in effect in October 1972.

 In addition to challenging the alleged failure to apply the New York programs' criteria, the complaint alleges (1) that the Secretary of Health and Human Services ("the Secretary") failed to notify the plaintiff and the class that their impairments would be evaluated under both the State and federal programs' criteria; (2) that 20 C.F.R. §§ 416.907 and 416.994 have been promulgated in violation of the Administrative Procedure Act because Sections 416.907 and 416.994 do not provide for review under the Aid to the Disabled Act's standards and (3) that the Secretary's failure to gather appropriate evidence and evaluate plaintiffs' claims under the State criteria violates plaintiffs' right as intended beneficiaries of the contract between the Secretary and the Commissioner of the State of New York Department of Social Services by which the Commissioner makes the determinations of disability for purposes of SSI eligibility. *fn1"

 In addition to seeking declaratory relief on the basis of the violations alleged above, plaintiffs *fn2" seek reinstatement of their benefits and an injunction prohibiting the Secretary from discontinuing their benefits

for purported medical reasons without (1) determining whether their impairments have improved to the extent that they are no longer disabled under the Aid to the Disabled program's disability criteria, (2) sending the class members notices that inform them that their impairments will be evaluated under the Aid to the Disabled program's disability criteria, and (3) securing the class members' medical records on which the decisions were based that they were disabled under New York's Aid to the Disabled program's disability criteria.

 Subsequent to the filing of the complaint several judicial or legislative developments have occurred which are relevant to plaintiffs' cause of action. First, in Wheeler v. Heckler, 719 F.2d 595 (2d Cir. 1983), the Court of Appeals for this Circuit has held that grandfatherees must be evaluated under the appropriate state standard regardless of the difficulty in ascertaining the state criteria:

The grandfather provision, section 1382c(a)(3)(E), unambiguously provides that those previously determined to be eligible for disability benefits are to remain eligible if they satisfy the substantive standards of either current federal law *fn3" or the state law in force as of October 1972.

 Id. at 600.

 Second, the Social Security Disability Benefits Reform Act of 1984, Pub. L. 98-460, 98 Stat. 1794 (1984) ("Reform Act") was enacted on October 9, 1984. The Reform Act establishes a new medical improvement standard for evaluating continued disability *fn4" and provides that members of medical improvement classes that have been certified before September 19, 1984 are eligible for review under the Reform Act's new criteria. *fn5" The Reform Act further provides that claimants whose cases are remanded may elect to receive interim benefits. *fn6"

 Third, in Schisler v. Heckler, 80 Civ. 572 (W.D. N.Y.), a medical improvement class action in the Western District of New York, see Schisler v. Heckler, 574 F. Supp. 1538, 1541 (W.D.N.Y. 1982), an order was entered on December 3, 1984, which clarified the scope of a class that had been certified on August 12, 1982. See Schisler v. Heckler, 107 F.R.D. 609 (W.D.N.Y. 1984), aff'd in part, rev'd in part on other grounds, 787 F.2d 76 (2d Cir. 1986). It is evident from the amended order that the plaintiffs in this litigation are members of the Schisler class. Moreover, since the class was originally certified before September 19, 1984, the class members, including the plaintiffs in the instant litigation, have had their cases remanded to the Secretary for readjudication pursuant to the Reform Act.

 Finally, at various times throughout the litigation, the parties in this case have explored the possibility of settlement. At least partially as an outgrowth of the negotiations, in the Spring of 1984, the Secretary issued two amendments to the Social Security Administration Office of Hearings and Appeals Handbook ("the Handbook"), "Section 1-351-53" and "Appendix C," together with a Social Security Administration Program Circular ("the Program Circular"). The amended Handbook contains the Secretary's description of the disability provisions of the approved state plans which were in effect for October 1972, and requires notice of the evaluation process to be sent to all grandfatherees. The Program Circular provides that cessation notices sent to grandfathered SSI recipients must indicate that their individual impairments were evaluated under both federal and state criteria.


 The Secretary moves to dismiss the complaint on the grounds that the "unique circumstances occasioned by the passage of the Reform Act," (pursuant to which the plaintiffs are entitled to have their claims readjudicated) and the actions taken by the Secretary, have made plaintiffs' claims moot.

 Plaintiffs respond that the complaint, insofar as it alleges claims unrelated to medical improvement, *fn7" should not be dismissed because "the relief [the Secretary] has implemented provides no assurance whatsoever of retroactive relief to persons who received inadequate notice" and "her new instructions continue to provide for inadequate notice and standards in grandfather cases."

 Under the law, this litigation is moot only if

(1) it can be said with assurance that there is no reasonable expectation that the alleged violation will recur and (2) interim relief or events have completely and irrevocably eradicated the effects of the alleged violations.

 County of Los Angeles v. Davis, 440 U.S. 625, 631, 59 L. Ed. 2d 642, 99 S. Ct. 1379 (1979) (citations omitted).

 In this case, whether the claims are moot depends largely upon whether the Secretary's new procedures provide for the correct application of the New York State standards.

 The parties agree that the New York State plan that was in effect in October 1972 is contained in a publication of the New York State Department of Social Services called Manual Bulletin 173 ("the Manual Bulletin" or "the Bulletin"). The Secretary's new instructions for reviewing grandfatherees' cases may be found in Section 1-351-53 of the Office of Hearings and Appeals Handbook and Interim Circular No. 186. See also 20 C.F.R. § 416.994(d) (1986). The Secretary's version of the New York State criteria is also contained in the Social Security Administration's Program Operations Manual System ("the POMS"). In discussing the components of the Secretary's new instructions the parties primarily refer to the POMS.

 Although plaintiffs challenge the adequacy of the new guidelines, their initial brief did not indicate in what manner the new instructions failed to comply with the law. Accordingly, after studying plaintiffs' brief and hearing argument on the motion, the Court requested that the plaintiffs supplement their earlier submissions with statements setting forth with particularity the alleged deficiencies of the new instructions. Subsequent rounds of submissions, further requests for specific statements of alleged inadequacies, and further argument on the motion have narrowed the dispute to the following issues: (1) whether the Secretary's plan is inadequate because it does not provide for a social worker to be part of the review team; (2) whether the Secretary's instructions are deficient because they fail to include certain items which are contained in the Manual Bulletin (the New York State publication containing the 1972 Aid to the Disabled program's criteria); (3) whether the form used by the Secretary to obtain information relevant to the eligibility determination is incomplete; and (4) whether the Secretary's combined actions provide adequate assurance that plaintiffs' claims will be reviewed under state law criteria. Each subject is discussed below.


 Plaintiffs' primary challenge to the adequacy of the Secretary's new instructions is that the federal version of the State plan that is contained in the Program Operations Manual (POMS) does not require a social worker to be a part of the review team. Plaintiff argues that, although The New York State Department of Social Services now employs persons with the title of "Disability Analyst," in 1972, New York used social workers. Plaintiffs further maintain that social workers are necessary to evaluate properly the impact of the social factors on the recipient's impairments and ability to work, as the New York State plan requires.

 The Secretary answers that the New York State plan does not require the use of social workers, that failure to include social workers on the review team is not a substantive deviation from the state criteria, and that there is no evidence that Disability Analysts cannot adequately evaluate non-medical factors in disability determinations.

 The question whether the composition of the review team is a substantive component of a state plan was considered in Wheeler v. Schweiker, 547 F. Supp. 599, 609 (W.D.N.Y. 1982), rev'd on other grounds, 719 F.2d 595 (2d Cir. 1983). In Wheeler, the District Court concluded:

The manner in which the Vermont AD plan administrators organized their review teams was procedural only, and forms no part of a State plan definition of disability which the defendants are bound by 42 U.S.C. § 1382c(a)(3)(E) to apply to "grandfatherees." As defendants rightly point out, the adoption of the unique procedural aspects of the various State plans would be inconsistent with the evenhanded administration of the SSI program throughout the country. Congress, in creating the Supplemental Security Income program, intended to create "a single Federal program." H.R. Rep. No. 93-672, 93d Cong., 1st Sess. (1973), reprinted in U.S. Code Cong. & Ad. News 3177, 3183. To require each SSI grandfatheree's continuing eligibility for benefits to be judged according to the State procedures under which he or she was first found disabled would result in fifty-one separate SSI programs. In our mobile society, the Secretary could be burdened with administering all or most of these programs side-by-side even within one state, to evaluate "grandfatherees" who have changed their state of residence since first found disabled. Nothing in 42 U.S.C. § 1382c(a)(3)(E) or its legislative history compels this result.

 547 F. Supp. at 609.

 On appeal, the Second Circuit Court of Appeals remanded the case for the District Court to more fully ascertain the Vermont State plan requirements. Wheeler v. Heckler, 719 F.2d at 601. However, the Court of Appeals did not disturb the District Court's conclusion that the makeup of the review team is merely procedural. The Secretary argues that the District Court's reasoning in Wheeler is applicable to the instant action.

 Although we find the Wheeler rationale to have substantial merit, if the decision is meant to hold that the review team's composure can never create a situation where there is a substantive deviation from a state plan's criteria, we would disagree. For example, a review team which did not have any person on it who was capable of assessing non-medical factors might well be considered a substantive deviation from the State plan. Nevertheless, absent such a gross deviation from state plan procedures or substantial evidence indicating that the makeup of the team inherently results in the misapplication of state law criteria, composite differences in the review team do not rise to the level of a substantive departure from the State plan.

 In this case, however, the Manual Bulletin itself appears to indicate that only the functional equivalent of a degreed social worker (as opposed to an actual degreed social worker) is required to be part of the review team. It is true that, on the ...

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