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STIEBERGER v. SULLIVAN

July 29, 1992

THERESA STIEBERGER, et al., Plaintiffs,
v.
LOUIS W. SULLIVAN, et al., Defendants.



The opinion of the court was delivered by: LEONARD B. SAND

STIPULATION AND ORDER REGARDING MODIFICATION OF SETTLEMENT

 The parties, by their respective attorneys, hereby stipulate and agree as follows:

 1. The parties construe the definition of the class on page 1 of the Settlement Agreement entered on the docket by the Court on June 22, 1992, as including individuals who resided in New York State on the date of the SSA decision to deny or terminate their claim for or continuation of disability benefits, unless they later established residence outside of New York State and SSA thereafter issued a final termination or denial on administrative review of the same claim.

 2. The Settlement Agreement is modified as follows, with alterations indicated by strikeouts and underlining:

 (A) "[9] (d) A class member shall be considered to have requested reopening if the class member (i) mails a postage prepaid, pre-addressed form enclosed with the individual notice, or (ii) makes a written request to any SSA FO or hearing office within the State of New York or to the Appeals Council, or (iii) telephones a request to any SSA FO or hearing office within the State of New York or the Appeals Council, or (iv) makes a request in person at any SSA FO or hearing office within the State of New York, or (v) makes a request in writing or in person to any SSA field office if the individual no longer resides in New York State."

 (B) "10. After a class member described in paragraph 8 requests reopening under paragraph 9 and is determined to meet the criteria in paragraphs B and 9, SSA will provide relief as explained in this paragraph. In adjudicating reopened claims, SSA shall require its decisionmakers and reviewers of decisions to apply the holdings in Second Circuit disability decisions in accordance with the provisions set forth in this settlement agreement, including the instruction set forth as Attachment 1, except that, in adjudicating reopened claims at the hearing and Appeals Council review levels outside of New York State for individuals who no longer reside in New York State, decisionmakers will use standards and procedures in effect in the state in which the individual resides at the time of the OHA decision. SSA will issue a reminder to decisionmakers and reviewers to apply the Circuit Court Case Guide in HALLEX in adjudicating reopened claims at the hearing and Appeals Council review levels outside of New York State for individuals who no longer reside in New York State. SSA shall require decisionmakers and reviewers to apply the law in effect on the date on which the new determination on the reopened claim is rendered."

 (C) "[10] (a) SSA shall reopen, and review de novo, class member claims, except that no claims shall be reopened Pursuant to this settlement for which SSA denied or terminated benefits on administrative review (on grounds other than that disability had been previously determined administratively in New York State prior to the issuance of Attachment 1) in a final decision or determination on a date when the individual no longer resided in New York State, and no claims shall be reopened pursuant to this settlement for which the denial or termination of benefits was affirmed on the merits by a final decision of a federal court under 42 U.S.C. § 405(g) except as provided by subparagraph 10(b)(4). No claim shall be subject to reopening for which the denial or termination of benefits was overturned as the result of an administrative or judicial appeal."

 (D) "[10] (b) Class members entitled to reopening under paragraph 8, who have civil actions pending pursuant to 42 U.S.C. § 405(g) or § 1383(c)(3) in one of the four United States District Courts situated in New York State or in the United States Court of Appeals for the Second Circuit based upon an Appeals Council denial of a request for review or an Appeals Council decision of denial or termination, issued on or before the date of issuance of Attachment 1, will be given the option of proceeding with their individual court cases or receiving reopening pursuant to this settlement. SSA shall promptly provide each such class member or the class member's representative in court with a notice (Attachment 3) explaining this option."

 (E) "[10 (b)] (4) If any such class member or his or her representative in court does not receive this notice, the class member shall have the right to have his claim reopened under this settlement, as a pending claim under subparagraph 10(e)(3), even after issuance of an adverse federal court decision, so long as the class member's court case was pending on or before (as appropriate) 60 days after the date of issuance of Attachment 1."

 (F) "[10 (d)] (3) As alerts are transferred to the FOs, reopened claims for class members currently residing in New York State will be integrated into the regular claims determination workload of the New York ODD and will be completed within a reasonable time and with no less priority than such regular claims. Reopened claims for class members who do not reside in New York State will also be completed within a reasonable time."

 (G) "[10 (e)] (4) In conducting each reopening of claims that are not pending, SSA shall develop the record in accordance with 20 C.F.R. §§ 404.1512-.1518, 416.912-.918 for a four-year period preceding the date SSA receives the request for reopening of the claims. In computing the four-year period, SSA shall not count any period for which the person (i) received disability benefits, (ii) received retirement benefits, (iii) has an active claim for disability or retirement benefits, or (iv) has a final denial or termination (on grounds other than that disability had been previously determined administratively in New York State Prior to the issuance of Attachment 1) issued on a date when the person no longer resided in New York State. SSA shall also develop the record for the period subsequent to the date SSA receives the request for reopening, unless the person has already demonstrated entitlement to benefits for this period. SSA need not develop the record for any period of time prior to the effective date of the earliest claim subject to reopening or for any period of time for which SSA determines that the individual is disabled without further development."

 (H) "[10 (e)] (5) If SSA determines (at any step of the sequential evaluation process) that the individual is not disabled, or is not entitled to disability benefits because of SGA, for all or any part of the period for which the record is developed under subparagraph 4, SSA will also develop the record for the additional earlier period for which there is in effect an application the determination on which establishes the opportunity for reopening as set forth in paragraph 8 (except for periods for which SSA has issued a final denial or termination on a date when the individual resided outside of New York State on grounds other than that disability had been previously determined administratively in New York State prior to the issuance of Attachment 1), if . . . ."

 (I) "[10 (e) ] (7) When a person is found entitled to disability benefits on a non-pending claim or claims reopened under this paragraph, all payments on such claims are subject to the regular payment, nonpayment and reduced payment provisions of the Social Security Act and payments will be made as follows . . .

 (iii) In computing the period for which payment is possible under subparagraphs 10(e)(7)(i) and (ii), SSA shall not count periods for which the person has already been paid disability or retirement benefits, periods for which the person may be eligible for payment under an active claim, or periods for which SSA has issued a final denial or termination (on grounds other than that disability had been previously determined administratively in New York State prior to the issuance of Attachment 1) when the person resided outside of New York State. In addition, payment need not be made on the basis of any application filed earlier than the application the determination on which establishes the opportunity for reopening as set forth in paragraph 8. Earlier periods of entitlement followed by periods of nonentitlement will be treated as closed periods . . ."

 On Behalf of Plaintiffs and the Plaintiff Class

 Dated: July 24, 1992

 DAVID S. UDELL, Esq. (DSU-4762), JONATHAN A. WEISS, Esq., Legal Services for the Elderly, 130 W. 42nd Street, 17th Floor, New York, New York 10036, Tel.: (212) 391-0120.

 Dated: July 24, 1992

 JANE E. BOOTH, Esq., MATTHEW DILLER, of Counsel, Civil Appeals & Law Reform Unit, The Legal Aid Society, 11 Park Place Room 1805, New York, New York 10007, Tel.: (212) 406-0745.

 Dated: July 24, 1992

 NANCY MORAWETZ, Esq., 249 Sullivan Street, New York, New York 10012, Tel.: (212) 998-6430

 Attorneys for the Plaintiff Class

 Dated: July 24, 1992

 WAYNE G. HAWLEY, Esq., JILL ANN BOSKEY, of Counsel, (JAB-3257), M.F.Y. Legal Services, 35 Avenue A, New York, New York 10009, Tel.: (212) 475-8000,

 Attorneys for Plaintiffs Theresa Stieberger, Milagros Sullivan, Patricia Happy and the Plaintiff Class

 O. PETER SHERWOOD, ESQ., Corporation Counsel of the City of New York, 100 Church Street, New York, New York 10007, Tel.: (212) 788-0971

 Dated: July 24, 1992

 NEIL CORWIN, Esq., Assistant Corporation Counsel,

 Attorneys for Plaintiff the City of New York

 On Behalf of Defendants

 Dated: July 22, 1992

 BRIAN G. KENNEDY (BGK-5814)

 TERRY M. HENRY (TMH-9885)

 Attorneys, United States Department of Justice, Civil Division, Federal Programs Branch, 901 E Street, N.W. Room 966, Washington, D.C. 20530, Tel.: (202) 514-3357

 Attorneys for Defendants

 SO ORDERED:

 LEONARD B. SAND

 UNITED STATES DISTRICT JUDGE

 Dated: July 29, 1992

 SETTLEMENT AGREEMENT

 WHEREAS, an amended class action complaint was filed on August 3, 1984, and

 WHEREAS, a plaintiff class was certified on August 19, 1985, and subsequently modified on December 20, 1985, and is now defined as

 
All New York residents whose claims for benefits or continuation of benefits have been, or will be denied or terminated since October 1, 1981, based on a determination that they do not have a disability that prevents them from engaging in substantial gainful activity and whose benefits have not been granted or restored through subsequent appeals

 WHEREAS, on May 29, 1990, the court rendered a decision on plaintiffs' motion for summary judgment and on defendants' motion for partial summary judgment and cross motion for judgment on the pleadings; and

 WHEREAS, the parties wish to avoid further litigation in this matter,

 THEREFORE, all parties to this civil action by their undersigned counsel, hereby agree, subject to the approval of the court, to the settlement of plaintiffs' claims in this litigation, in accordance with the following terms and conditions:

 1. Definitions that apply to this Settlement.

 (a) Disability Benefits -- Benefits provided by the Social Security Administration pursuant to Titles II and XVI of the Social Security Act for persons who meet the definition of disability contained therein.

 (b) Social Security Administration ("SSA") -- The Federal agency that is responsible for deciding claims for disability benefits. SSA includes the Office of Hearings and Appeals ("OHA") that decides such claims at the Administrative Law Judge ("ALJ") and Appeals Council levels of administrative review, and components that supervise and review the adjudication of claims by the Office of Disability Determinations. SSA also includes various offices which employ disability examiners.

 (c) Office of Disability Determinations ("ODD") -- The state agency that decides disability claims in the State of New York at the initial and reconsideration levels of administrative review on behalf of SSA pursuant to 20 C.F.R. §§ 404.1600 ff; 416.1000 ff.

 (d) Decisionmakers -- SSA and ODD personnel who decide disability benefit claims of New York State residents under 20 C.F.R. Part 404, Subpart P; Part 416, Subpart I.

 (e) Reviewers of decisions -- SSA and ODD personnel who conduct quality assurance, pre-effectuation or other reviews of determinations on disbility claims of New York State residents.

 (f) Second Circuit disability decisions -- Decisions of the United States Court of Appeals for the Second Circuit in which the Secretary of HHS is a party that are or will be published, that address the issue of whether an individual, or individuals is or are disabled within the meaning of 42 U.S.C. §§ 423(d), 1382(c) or that address the standards or procedures for making such determinations. Pursuant to this definition the following decisions are among those not considered "Second Circuit disability decisions:" Gutierrez v. Bowen, 898 F.2d 307 (2d Cir. 1990) Valente v. Sullivan ("Valente II"), 897 F.2d 54 (2d Cir. 1990); Barone v. Bowen, 869 F.2d 49 (2d Cir. 1989); Conley v. Bowen, 859 F.2d 261 (2d Cir. 1988); DeRienzis v. Heckler, 748 F.2d 352 (2d Cir. 1984); Matsibekker v. Heckler, 738 F.2d 79 (2d Cir. 1985); Valente v. Sec. of Health and Human Services, 733 F.2d 1037 (2d Cir. 1984); Delamater v. Schweiker, 721 F.2d 750 (2d Cir. 1983); Dietsch v. Schweiker, 700 F.2d 869 (2d Cir. 1983).

 (g) Date of settlement - Date on which this settlement is entered by the Court.

 (h) Computation of time - Time periods under this agreement: (i) exclude the day of the event from which the time period runs; (ii) for time periods of less than 11 days, exclude any day that an office that is responsible for taking the action under this agreement during the time period is closed for business (e.g., Saturday, Sunday, legal holiday, or due to weather or other emergency); and (iii) if such an office is closed on the date an action under this agreement is due, such action shall be due the next day the office is open for business.

 2. SSA shall direct all decisionmakers and reviewers of decisions to comply with holdings in Second Circuit disability decisions in adjudicating or reviewing claims for disability benefits in accordance with the provisions of this settlement agreement.

 3. SSA shall issue the attached instruction to all decisionmakers and reviewers of decisions (Attachment 1) within ten days of the date of settlement. The instruction shall be binding on all decisionmakers and reviewers of decisions. SSA shall publish the instruction in the Federal Register, the HALLEX, the Manual of Second Circuit Disability Decisions, described below at subparagraph 4(b), and the Program Operations Manual System ("POMS") and shall include the instruction in all introductory training materials distributed to decisionmakers and reviewers of decisions and all materials provided to administrative law judges who travel to New York to decide disability claims of New York State residents. SSA shall make good faith efforts to publish the instruction within 90 days after the date of settlement.

 4. (a) SSA shall provide each office of decisionmakers and reviewers of decisions with a copy of this settlement agreement.

 (b) SSA shall provide a Manual of Second Circuit Disability Decisions ("Manual") to all decisionmakers and reviewers of decisions. The Manual shall contain statements of the principal holdings of Second Circuit disability decisions issued before the date of settlement. The Manual need not describe each Second Circuit disability decision issued before the date of settlement but must state principal holdings that address whether an individual or individuals is or are disabled within the meaning of 42 U.S.C. §§ 423(d) or 1382(c) or the procedures and standards for making such determinations.

 (c) The parties agree that the statements of the holdings of Second Circuit disability decisions set forth in the Manual are good faith interpretations of the court's holdings. However, the parties do not stipulate that these statements are complete, or that they are the correct interpretations of Second Circuit disability decisions.

 (d) Following issuance of the Manual, SSA may, but is not required by this settlement agreement to, issue instructions with respect to any Second Circuit disability decision issued before the date of settlement. The provisions of subparagraphs 5(c) and 5(d) (with the exception of the first sentence of subparagraph 5(c)) apply to such instructions.

 (e) SSA shall add in a prominent location at the beginning of the section of the Circuit Court Case Guide in HALLEX that discusses caselaw of the Second Circuit the following text: "Adjudicators of disability claims of New York State residents involving medical or vocational issues are reminded that they are required to apply the controlling Second Circuit holdings set forth in the Manual of Second Circuit Disability Decisions attached to the instructions for implementing the Stieberger court-approved settlement." SSA shall also add this same text to the other sections of the HALLEX that discuss caselaw of the Second Circuit, including: (i) HALLEX I-3-390, Exhibit 1 ("Citation Guide Circuit Court Cases for Citation"). The Manual shall be available for inspection and copying by the public in SSA field and hearing offices in New York.

 (f) SSA may remove the instruction in the Manual concerning Schisler v. Sullivan at such time as the instruction is rescinded due to the modification, stay, or vacatur of the order in Schisler v. Sullivan, dated October 25, 1991, or other event that operates to rescind the instruction. The inclusion of the instruction concerning Schisler does not constitute an admission of any kind by SSA and is without prejudice to any claim, defense, or other contention that SSA may assert or raise in any other action.

 5. SSA shall use the following procedures with respect to Second Circuit disability decisions rendered after the date of settlement:

 (a) SSA shall require each office of decisionmakers and reviewers of decisions to maintain a volume containing copies of all Second Circuit disability decisions that are issued after the date of settlement. SSA shall provide each office of decisionmakers and reviewers of decisions with a copy of each Second Circuit disability decision promptly after it is issued by the Court for inclusion in the volume. The volume shall be readily accessible to decisionmakers and reviewers of decisions in each office.

 (b) Within ten days after the Second Circuit issues the mandate in a case or designates an opinion for publication, whichever is later, SSA will, by teletype or other written means, transmit to decisionmakers and reviewers of decisions a copy of or instruction pertaining to the Second Circuit disability decision. An instruction will include a summary of the decision together with a directive to follow the decision. Any decision or instruction distributed pursuant to this subparagraph shall be issued for inclusion in the Manual described in subparagraph 4(b).

 (c) If SSA distributes a decision pursuant to subparagraph 5(b) without an instruction, then within 90 days after the Second Circuit issues a mandate in a case or designates an opinion for publication, whichever is later, SSA will issue a written instruction to decisionmakers and reviewers of decisions at the initial and reconsideration levels regarding application of the holding of the Second Circuit disability decision. SSA may, but need not, issue such instructions to decisionmakers and reviewers of decisions in OHA. Once SSA has issued an instruction, it may at any subsequent time issue further instructions. If SSA determines that a holding of a Second Circuit disability decision has become obsolete (lacking in any precedential force at all, e.g., overruled by the Supreme Court, by the Second Circuit or by statute) SSA may issue written instructions to decisionmakers and reviewers of decisions stating the good faith basis of this determination and instructing them accordingly. SSA shall send any such instructions to five individuals or other entities specified on a list which plaintiffs' counsel will provide to defendants' counsel. Plaintiffs' counsel may periodically have the list revised or updated upon request communicated by plaintiffs' counsel to defendants' counsel. All instructions shall be issued for inclusion in the Manual described in subparagraph 4(b).

 (d) This agreement does not mandate minimum standards of sufficiency or accuracy for instructions issued pursuant to this paragraph. However, this agreement does mandate that instructions issued pursuant to this paragraph shall be based on good faith interpretations of disability decisions. This agreement does not preclude any claims brought in another action challenging the sufficiency or accuracy of such instructions, other than claims that the instructions are not based on good faith interpretations of disability decisions, nor does this agreement authorize such challenges or imply an agreement that such challenges may be maintained.

 (e)(1) If any party to an action decided by the Second Circuit seeks further review of the decision, either through a petition for rehearing or certiorari, or at any point when such a petition would be timely, SSA may issue written instructions to decisionmakers and reviewers of decisions not to apply some or all holdings stated in the decision and may rescind any instruction issued under subparagraphs 5(b) or (c) regarding that decision. The time period in which to issue instructions pursuant to subparagraph 5(c) regarding that decision shall be tolled for any period in which an instruction not to apply a Second Circuit holding issued pursuant to this subparagraph is in effect.

 (2) In the event that instructions are issued pursuant to subparagraph 5(e)(1) not to apply a holding of a Second Circuit disability decision and neither a petition for rehearing nor a petition for certiorari is granted, then, within ten days from the date the Second Circuit decision is no longer subject to further review through rehearing or certiorari, SSA shall, by teletype or other written instruction, rescind any instructions that were issued pursuant to subparagraph 5(e)(1).

 (3) In the event that instructions are issued pursuant to subparagraph 5(e)(1) not to apply a Second Circuit disability decision and a petition for rehearing or certiorari is granted, then within ten days from the date a final decision on the merits is rendered in that case, SSA shall by teletype or other written instruction notify decisionmakers and reviewers of decisions about the court's final decision. If the final decision is a new decision by the Second Circuit on rehearing, the new decision on rehearing shall replace the previous Second Circuit decision to the extent that decision has been superseded by the rehearing decision, and SSA shall modify or rescind any instructions that were issued pursuant to subparagraph 5(e)(1) accordingly. If the final decision is a Supreme Court decision, then SSA shall rescind any instructions issued pursuant to subparagraph 5(e)(1) for any holding of the Second Circuit to the extent it is not superseded by the Supreme Court's decision, and shall comply with any such holding in accordance with the procedures set forth in this paragraph for Second Circuit disability decisions generally.

 (4) When SSA issues a subparagraph 5(e)(1) instruction not to apply a holding of a Second Circuit disability decision, the instruction shall identify the issues addressed by the holding, and shall instruct each office of decisionmakers and reviewers of decisions to list any cases that might be affected if the holding were to be applied. In addition, the notice denying or partially denying any such claim will include the notice language stated in paragraph D.2 of Attachment 1. After a subparagraph 5(e)(1) instruction is rescinded, the responsible decisionmaking components shall promptly review the listed decisions as well as the decision of any unlisted claimant who shows that his or her claims decision made after the effective date of the subparagraph 5(e)(1) instruction may have been affected by application of the final court decision. Such reviews shall apply the final court decision unless it is inapplicable and shall assess disability for the time period covered by the claims decision under review unless the application of the final court decision requires development of the evidence; when development of the evidence is required, the review shall also assess current disability. Each claimant may appeal the decision made on his or her claim after such review. However, if review results in the determination that the final court decision is inapplicable to the claimant's case, the claimant may only appeal the issue of whether or not the final court decision is applicable to the claimant's case. This paragraph does not waive or foreclose any appeal rights that any claimant may have apart from the review provided for by this paragraph. SSA need not review any cases pursuant to this subparagraph in order to apply holdings of the Second Circuit to the extent that the holdings have been superseded by the Supreme Court or by the Second Circuit on rehearing.

 (5) Any instructions issued pursuant to subparagraph 5(e)(1) and any modification or rescission of such instructions issued pursuant to subparagraphs 5(e)(2) and (3) shall be published in the Federal Register.

 6. SSA shall rescind, insofar as applicable to claims of New York State residents for disability benefits, all written, oral, or computer-based instructions, policies, procedures, and rulings, other than regulations, (if any) to the extent that such directives state: (a) a general policy of nonacquiescence; (b) that the Secretary's decisionmakers and reviewers of decisions are bound only by rulings of the United States Supreme Court; (c) that decisionmakers and reviewers of decision shall not follow the law of the courts of appeals where the courts' holdings are in disagreement with the Secretary's interpretation of Titles II or XVI of the Social Security Act or the Secretary's implementation thereof; (d) that the Secretary's decisionmakers and reviewers of decisions are not to consider a decision of a court of appeals to be binding absent adoption of the holding in an acquiescence ruling; (e) that decisions of the courts of appeals apply only in a specific case in which a court of appeals ruling was rendered; or to the extent that such directives are inconsistent with the terms of this settlement. SSA shall instruct all decisionmakers and reviewers of decisions that any regulations are not to be applied to the extent that they contain statements or policies described in this paragraph. This paragraph does not require the Secretary of HHS to repeal 20 C.F.R. §§ 404.985, 416.1485.

 7. (a) In making any determination on any claim for benefits by any class member, SSA shall not, except to the extent stated in subparagraph (b), preclude the determination of whether a claimant is or, at any material time, was disabled under the Social Security Act on the ground that the issue had previously been determined administratively in considering a prior claim for benefits between October 1, 1981, and the date of issuance of Attachment 1.

 (b) This paragraph shall not apply in any of the following circumstances:

 (1) the class member was not a resident of New York State at the time of the prior ...


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