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White v. Bowen

decided: December 18, 1987.

WILLIAM R. WHITE, MADELEINE HYMAN, JUAN ROSARIO, MARTHA BESS, RAMON VALLE, AND CONSTANCE MIRAGLIA, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED; CAROLYN CLEE, SHARON GRANT, SOLE HEIRS OF HAROLD JOHNSON, DECEASED; AND GEORGE ORTEGA, PLAINTIFFS-APPELLANTS,
v.
OTIS R. BOWEN, M.D., SECRETARY OF HEALTH AND HUMAN SERVICES, DEFENDANT-APPELLEE



Appeal from orders of the United States District Court for the Southern District of New York (Robert L. Carter, Judge), granting defendant-appellee's motion for judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c) and denying plaintiffs-appellants' motion pursuant to Fed. R. Civ. P. 59 following entry of judgment to amend the definition of the class of plaintiffs. Affirmed.

Kaufman and Altimari, Circuit Judges, and Tenney, District Judge.*fn*

Author: Altimari

ALTIMARI, Circuit Judge:

A class of disables workers who were found eligible for Old-Age, Survivors, and Disability Insurance ("OASDI") benefits under Title II of the Social Security Act of 1935, as amended (the "Act"), 42 U.S.C. § 401 et seq., and for Supplemental Security Income ("SSI") benefits under Title XVI of the 1972 amendments to the Act, 42 U.S.C. § 1381 et seq., appeal from the dismissal of their complaint against defendant-appellee Dr. Otis R. Bowen, Secretary of the Department of Health and Human Services (the "Secretary"), in which they alleged that the Secretary's method of calculating retroactive OASDI and SSI benefits violates the Act. The United States District Court for the Southern District of New York (Carter, J.) certified the class and defined it to include "all persons residing in New York State who concurrently applied for, or were concurrently determined eligible for," OASDI and SSI benefits, and whose retroactive OASDI benefits "were or will be reduced" because the Secretary "has paid or will pay to a local social services agency an amount alleged to be [a portion of] the . . . recipient's retroactive SSI benefits" as reimbursement to that agency for interim welfare assistance. White v. Heckler, 108 F.R.D. 85, 86 (S.D.N.Y. 1985).

In granting the Secretary's motion for judgment on the pleadings, the district court held, 636 F. Supp. 1235 (S.D.N.Y. 1986), that the Secretary's practice is not inconsistent with the language and legislative history of both the original windfall offset provision of the Act, 42 U.S.C. § 1320a-6 (1982), and such provision as amended by the Deficit Reduction Act of 1984, Pub. L. No. 98-369, § 2615, 1984 U.S. Code Cong. & Admin. News (98 Stat.) 1132 (codified at 42 U.S.C. 1320a-6 (Supp. III 1985)). The district court also held that the Secretary's policy of calculating retroactive SSI benefits first in order to ensure the availability of a source of funds for reimbursement to state and local social services agencies does not violate 42 U.S.C. § 407 (Supp. III 1985), which provides in effect that retroactive SSI benefits, but not retroactive OASDI benefits, may be used to reimburse such agencies for interim welfare assistance.

After the district court entered judgment in favor of the Secretary, plaintiffs-appellants moved to amend the class pursuant to Fed. R. Civ. P. 59 on the basis of newly discovered evidence. The district court noted that the evidence offered by plaintiffs in support of their motion merely reiterated material that had already been considered by the court when it dismissed the complaint, and consequently denied the motion to open the judgment. 116 F.R.D. 12 (S.D.N.Y. 1987). For the reasons discussed below, we affirm.

I. Statutory Framework

The Act provides eligible disabled workers benefits under the OASDI and SSI programs. A disabled worker often will qualify for both programs -- and, indeed, is encouraged to submit applications for both types of benefits. THe OASDI program requires that applicants meet the insurance coverage requirements of that program, which depends upon prior employment. The SSI program contains the same disability requirement as the OASDI program, but the SSI program does not depend on insurance coverage for purposes of determining eligibility. Rather, SSI benefits are paid solely on the basis of economic need. If an individual currently is eligible for benefits under both programs, SSI payments are reduced or eliminated entirely because OASDI benefits constitute countable income under the SSI program. Adjustment in prospective SSI benefits to offset for the payment of OASDI benefits is done automatically to avoid a windfall recovery of SSI benefits are paid only to those recipient who are in need.

Appellants do not challenge this offset of prospective OASDI and SSI benefits. The issue on this appeal concerns the offset of retroactive OASDI and SSI benefits. After a disabled worker applies for benefits under both programs, there is normally a period of time during which the applicant is awaiting a determination by the Secretary regarding eligibility. Once the Secretary makes an affirmative determination of eligibility, the applicant is entitled to an award of OASDI and SSI benefits retroactive to the date of the initial application.

While awaiting a determination of eligibility for federal benefits, members of the plaintiff class received interim welfare assistance from New York, like other states, provides such interim assistance on the expectation that it will be reimbursed by the Secretary from the recipient's retroactive SSI award. Claimants of state benefits typically sign a form which authorizes the Secretary to withhold from an eligible recipient's retroactive SSI award an amount sufficient to reimburse the state or local welfare agency for providing interim benefits. Under the Act, only retroactive SSI benefits interim benefits. Under The Act, only retroactive SSI benefits, and not OASDI benefits, can be assigned to creditors such as New York State. See 42 U.S.C. § 1383(g) (1982); id. § 407 (Supp. III 1985) (creditor anti-assignment provision).

II. Challenged Procedure

Through an accounting maneuver, the Secretary has managed to avoid a windfall in federal and state benefits by calculating retroactive SSI benefits first as if a disabled claimant were not eligible for OASDI benefits. By calculating retroactive benefits in this manner, a comparatively large amount of the total package of federal benefits is denominated as SSI while a comparatively small amount is denominated as OASDI. The Secretary then deducts from the comparatively large SSI award an amount sufficient to reimburse the state or local welfare agency for the interim assistance that it provided while the claimant was awaiting a determination of eligibility for federal benefits. If the Secretary calculates federal benefits in this way, the offset between retroactive OASDI and SSI benefits is such that the retroactive SSI award is sufficient in most case to allow the Secretary to reimburse the states for interim welfare assistance. If, on the other hand, the Secretary were to calculate retroactive OASDI benefits first -- as appellant contend the Act requires -- then the retroactive SSI award generally would not be sufficient to fully reimburse the state for such assistance, and a windfall would result in favor of the claimant.*fn1

Appellant are claimant that because that because the Secretary's policy of calculating SSI benefits first violate the Act, they are entitled to the windfall that results when their federal retroactive benefits are not fully offset by the amount of ...


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