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Empire Justice Center's Reopening Comments to SSA

September 30, 2013

 

Office of Regulations and Reports Clearance
Social Security Administration
107 Altmeyer Building
6401 Security Boulevard
Baltimore, Maryland 21235 -6401
Submitted on www.regulations.gov

Re:  Request for comments on SSA’s rules of administrative finality, Docket No. SSA-2013-001

Dear Social Security Administration:

These comments are submitted by the Empire Justice Center in response to the “Notice and request for comments” published at 78 Fed. Reg. 46309 (July 31, 2013), regarding whether and how the Social Security Administration (SSA) should change its rules of administrative finality.

The Empire Justice Center is a statewide not -for-profit law firm. Our mission is to protect and strengthen the legal rights of poor, disabled or disenfranchised people in New York through systems change advocacy, training and support to other advocates and organizations, and high quality direct civil representation. As part of our mission, we represent  a number of low-income disability claimants before SSA. We work with advocates throughout New York State who provide similar services, in particular advocates who are funded by the State of New York under the Disability Advocacy Program (DAP) to represent low- income claimants who have been denied disability benefits. We submit these comments on behalf of the New York DAP providers.

In several reports, most recently in July 2012, the SSA Inspector General has been critical of SSA’s reopening regulations and policies.  For the most part, these reports point out that the regulatory time limits on reopening for “good cause” constrain SSA’s ability to correct overpayments – both for paid benefits and future benefits – that have been caused not by fraud or similar fault, but due to incorrect posting of earnings to the beneficiary’s record.

In the most recent report,[1] the Inspector General recommended that SSA “[e]valuate its administrative finality policies and regulations and consider revising the rules to al low for the collection of more debt.”  SSA agreed with this recommendation and we assume that this request for comments is part of the Agency’s evaluation process.

As an organization that advocates on behalf of people with disabilities, our comments reflect the perspective of claimants and beneficiaries.  While we generally support the goal of achieving increased efficiency throughout the adjudicatory process, we caution that limits must be placed on the goal of administrative efficiency for efficiency’ s sake alone.  The purposes of the Social Security and SSI programs are to provide cash benefits to those who need them and have earned them and who meet the eligibility criteria. While there may be ways to improve the process from the perspective of the agency, the critical measure for assessing initiatives for achieving administrative efficiencies must be how they affect the very claimants and beneficiaries for whom the system exists.

I.   The current time frames for reopening should be consistent for both Titles II and XVI, but not extended beyond one year for any reason or four years for good cause .

Reopening policies raise issues of due process, reliance, and fairness for both the agency and claimants. The ability to rely on a decision that has become final is fundamental to our adjudication processes and has been described as essential to the maintenance of social order. McCuin v. Bowen, 817 F.2d, 161 (1st Cir. 1987), citing Southern Pacific Railroad co. v. United States , 168 U.S. 49 (1897). A lack of finality raises issues of substantive and procedural due process for claimants. The beneficial purpose of the Social Security Act requires that claimants and beneficiaries be able to rely on SSA’s decision - making and be free from arbitrary processes.

On the other hand, both the agency and claimants have an interest in reasonable opportunities to seek corrected decisions through reopening. As emphasized by the Inspector General, the agency is interested in paying neither too much nor too little to any particular beneficiary. The agency also has an interest in avoiding the administrative costs of readjudications ad infinitum. Claimants and beneficiaries have an interest in obtaining correction of decisions resulting in underpayment of benefits not addressed through the appeals process. The opportunity to reopen an earlier decision may be the only means of recourse.

In considering any changes to the existing reopening regulations, these sometimes-conflicting needs and expectations must be balanced. But as noted above, we believe that the critical measure for assessing any initiatives must be how they affect the very claimants and beneficiaries for whom the system exists. With that in mind, we believe that some changes suggested in the request for comments may be appropriate, but others are not.

We agree that the differing time frames for reopening for good cause under the Title II and Title XVI programs are unnecessarily complex. We recognize the importance of protecting the most vulnerable Title XVI beneficiaries from unexpected changes to the benefits upon which they rely. SSI beneficiaries are very poor; the SSI Federal Benefit Rate of $710 is 74% of the 2013 federal poverty guideline for an individual ($958).[2]

On the other hand, we have seen the disparities resulting when an SSI claimant with clear good cause is more limited in reopening a past denial of benefits than a similarly situated Title II claimant because of the shorter SSI good cause reopening provision.  An SSI claimant who has new and material evidence demonstrating disability at an earlier time now has only two years from the denial of the earlier claim to present that evidence, while a Title II claimant with the same evidence could seek reopening two years later, for a total of four years later. This simply is not fair.

Thus, on balance, we support the expansion of the SSI period for reopening for good cause from two to four years to give SSI beneficiaries the additional time in which to correct underpayments. Four years for good cause, however, should be the outside limit on reopening for good cause, striking the balance between finality, due process, and the opportunity to obtain correct correction of underpayments.

We do not believe that the one -year limit on reopening for any reason should be changed. This is an extraordinary exception to finality expectations and should be limited. The request for comments raises concerns that the current 12-month time frame does not give SSA “adequate time to correct errors in determinations or decisions without applying the complex good cause rules….” As discussed below, however, the agency already has additional reopening power under the existing regulations that more than compensates for the limitations imposed by the one -year rule.

Moreover, SSA has additional time by virtue of its six -month “diligent pursuit rule,” which we support in its current iteration at 20 C.F.R. §404.991a.  Any further extension would be unfair to beneficiaries, who would be left in a state of limbo as t o whether their benefits would be discontinued or decreased. They would be unable to plan for even the short -term future if a decision by SSA could remain pending beyond six months. Such insecurity would be too burdensome for many already vulnerable beneficiaries.

In the alternative, if SSA decides to extend the one-year time period, we suggest that it be extended to no more than eighteen months for all parties, but that the six month “diligent pursuit” rule for SSA be eliminated.

Finally, we do not support revising the rules to allow for changes to an individual’s current and future payments if the reopening provisions are not applicable. The Inspector General has raised concerns about millions of dollars in incorrect payments, allegedly because of limitations imposed by the current reopening regulations. But the report mentions significant amounts of underpayments as well.

As noted above, however, the need for finality is paramount. Indeed, SSA acknowledged in its 2007 response to the Inspector General’s recommendations to revise the reopening regulations, that “correcting a record more than four years in the past could cause undue hardship for our beneficiaries.” Even minor changes to their monthly checks could wreak havoc in their lives. The majority claimants do not have deep pockets and need to be able to rely on SSA decisions concerning the benefits available for their support.

As noted above, SSI beneficiaries are very poor. Social Security Disability Insurance beneficiaries fare little better; the average disability benefit is $1129, just above 100% of poverty. Most have no other income than their benefits from Social Security.  http://www.soci alsecurity.gov/pressoffice/basicfact.htm . In short, most beneficiaries eke out a living from check to check and are ill -equipped to deal with arbitrary processes and unexpected changes in the benefits on which they have come to rely. Plus, the passage o f time interferes with a beneficiary’s ability to defend against proposed changes to benefits based on earnings records, living arrangements, etc. Memories will have faded, records destroyed or misplaced, or critical information becomes unavailable. In fact, some information needed to make decisions lies only in the hands of the agency, and is unavailable to beneficiaries.

Furthermore, SSA already has unlimited reopening power where incorrect decisions were based on fraud or similar fault. The current regulations provide that reopening may occur “at any time” if “fraud or similar fault” is involved.  20 C.F.R. §§ 404. 988(c)(1) and 416.1488(c).  It is important to recognize that the cases examined by the Inspector General did not involve fraud or similar fault.

SSA also has a great deal of flexibility in correcting payments and assessing SSI overpayments in light of its ability to consider “deemed” initial determinations within the reopening time frames. See, e.g., POMS §§ SI04070.030, et seq. And the agency has exceptional power, pursuant to SSR 82-66, to retroactively suspend or terminate SSDI benefits due to substantial gainful activity after the Trial Work Period.

We believe that Congress’s failure to adequately fund the agency’s administrative budget over the past few years has had a greater effect on SSA’s ability to make the correct decision at the right time , rather than the perceived limitations of reopening regulations. According to recent remarks by Congressman Xavier Becerra (D -CA), Ranking Member of the House Ways and Means Social Security Subcommittee, SSA’s budget has been cut by almost one billion dollars since 2011, and it has lost nearly 11,000 highly trained employees to budget cuts over the past three years alone. http://becerra.house.gov/index.php?option=com_content&view=article&id=1133:ranking-member-xavier-becerras-opening-statement-at-social-security- subcommittee-hearing-on-social-security-disability-fraud-conspiracy-in-puerto-rico-&catid=3:press-release s. Lack of trained personnel to conduct the necessary reviews in a timely manner should not become a pretext to remove basic due process protections from these regulations.

II.  Provide the right to appeal the denial of a request to reopen.

Not all actions by SSA give the individual the right to administrative and judicial review.  “Initial determinations” that trigger administrative and judicial review are listed at 20 C.F.R. §§ 404.902 and 416.1402.  Actions that are not initial determinations “may be reviewed” by SSA but “are not subject to the [SSA] review process.”  Denying a request to reopen a determination or a decision is not an “initial determination.” 20 C.F.R. §§ 404.903(l) and 416.1403(l).[3]

We recommend that SSA provide, at a minimum, administrative review of a request to reopen.  Such a provision would provide a fair procedure to enforce the existing reopening regulations.

There already is regulatory precedent for providing administrative review of another category of discretionary actions.  By regulation, claimants have the right to request review by the Appeals Council of ALJ dismissals,[4] even though dismissals are considered discretionary actions, which are not subject to judicial review.

Providing for the right to appeal a denial of a request to reopen makes sense in light of the requirement that the ALJ must dispose of all issues in connection with a Request for Hearing, including the issue of reopening.  As discussed infra, under certain circumstances, the ALJ must address the issue of reopening in a separate Notice and decision.  HALLEX I -2-9-80.  The ALJ must provide sufficient rationale in the notice to support the decision on that issue.  It is not sufficient for the ALJ to merely state that he or she is denying a reopening request.  The ALJ must include sufficient rationale to indicate that he or she considered the issue of reopening and the basis for a decision on this issue.

III.    A new application for benefits made within the time frames of the reopening regulations should be considered a request for reopening.

As noted above, the reopening provisions are as important to claimants and beneficiaries as to the agency. Claimants and beneficiaries rely on the reopening regulations to correct underpayments not addressed through the appeals process. They typically have little to no understanding of the complex rules that determine benefit eligibility and payment amount, and frequently do not recognize an incorrect decision within the time for filing an appeal. It is often only if they encounter a knowledgeable legal or community advocate that a potential underpayment is discovered. The opportunity to invoke the reopening regulations may be their only means of recourse.

In the scenario advocates see most frequently, a claimant who has not appealed an earlier denial in a timely fashion is unaware that she may be able to seek reopening of the denial. This option typically does not come to light unless and until an advocate, in the course of representing a claimant in an appeal of new application, recognizes that the earlier denial is within the reopening time frame. Even if this right is recognized by the claimant or advocate, requests for reopening in this context are frequently ignored by the agency.

First, claimants are thwarted in their efforts to seek reopening by the requirement that requests for reopening must be made in writing. POMS GN04001.050A (Title II); POMS SI 04070.015B (Title XVI). The POMS further state that it is not enough for the claimant just to complete a new application; a claimant must take some affirmative action in writing. POMS GN 04001.050A (Title II); POMS SI 04070.015B (Title XVI). A claimant’s new application for benefits will serve as an affirmative action in writing only if the new application contains a statement that the prior determination or decision was incorrect.

Second, this problem is exacerbated by ALJs who ignore earlier applications that could be subject to reopening. This can happen even when the claimant has alleged an onset date coinciding with that alleged in the early applications. In fact, advocates report that ALJs sometimes ignore written or testimonial requests for reopening that are within the parameters of the reopening regulations.

At least one court has held that a claimant's new application can constitute a request for reopening. In Purter v. Heckler, 771 F.2d 682 (3d Cir. 1985), the claimant filed a new application that requested retroactive benefits back to the time covered by his earlier appliction (i.e., the same onset date). At stake in Mr. Purter’s case was his eligibility for Title II benefits. His insured status had expired by the time he filed his third application. The court held that Purter’s failure to characterize his third application as a petition to reopen was not a bar to its finding good cause to reopen an earlier claim that encompassed his date last insured. 771 F.2d at 695.

Reopening of earlier claims based on subsequent applications can be of great significance to claimants, even if a date last insured is not at stake. New and material evidence developed or discovered in the course of a new application frequently demonstrates an earlier onset of disability. If this evidence is considered under the good cause provisions of the reopening regulations, a claimant could be entitled to additional retroactive benefits. As noted above, most claimants are impoverished even after they are awarded benefits. Many are desperately in need of additional funds. The mere fact that they did not make a formal petition for reopening should not preclude their receipt of any additional retroactive benefits they deserve. See, e.g., Crady v. Secretary of HHS, 835 F.2d 617, 619-620 (6th Cir. 1987)(awarding benefits retroactive to the original application where the court found the first of three applications amenable to reopening).

We thus recommend that SSA clarify its regulations to provide that every application for benefits will be deemed to constitute a written request for reopening of any prior denial of benefits that was not timely appealed but was made within the reopening time frame.

As discussed infra, HALLEX I-2-9-80 requires that the ALJ must address the issue of reopening in a separate Notice and decision, and must provide sufficient rationale in the notice to support the decision on that issue. We reiterate our recommendation that SSA clarify its policy to ensure that claimants receive the full due process requirements provided in the regulations and HALLEX. Furthermore, any ALJ decision that omits a ruling on a reopening request – either an explicit request or by one made virtue of an application filed within the reopening time frame – should be reviewable by the Appeals Council.

Finally, we suggest that SSA make greater efforts t o remind claimants that the option to request reopening exists.

IV.     The DSI reopening regulations should be rescinded.

The New England states in SSA’s Region I are subject to somewhat different reopening rules than are the rest of the states. Pursuant t o the DSI (Disability Service Improvement) initiative, different reopening rules apply to initial disability claims filed on or aft er August 1, 2006, in a Region I state. Much of DSI has been rescinded but some pieces remain. The DSI regulations provide that SSA will be following its regular reopening rules at 20 C.F.R. §§ 404.987 – 404.996 and 20 C.F.R. §§ 416.1487 – 416.1494 for DSI case decisions until there has been a final decision after a hearing. After the ALJ decision, more restrictive reopening rules apply:  The reopening period is six months from the date of the final decision and new and material evidence can no longer be used as a good cause reason to reopen. 20 C.F.R. §405.601.

We urge that SSA not adopt or expand use of the DSI re opening rules and that it rescind their use in SSA’s Region I . These rules add complexity to already difficult to follow and administer reopening rules. In addition, these rules, added to the fact that the disability record essentially closes five business days prior to the ALJ hearing (20 C.F.R. §§ 405.331, 405.401, 405.430), often disadvantage the most vulnerable claimants, especially with regard to the lack of the new and material evidence good cause reason. Many of the most vulnerable claimants lack supports an d assistance, seek legal assistance late if at all, often have inadequate, fragmented health care, and often fail to understand appeal rights and procedures. The result means reapplications or continuing underpayments for individuals who are homeless or live in substandard conditions. The beneficial purpose of the Social Security Act requires a better process.

V.       Clarify due process protections for ALJ reopening of a subsequent allowance.

Following an Appeals Council or court remand on a prior application, we receive reports from claimants’ representatives of some ALJs who inform the representative of their intention to reopen and deny the subsequent allowance unless the claimant agrees to withdraw the prior remanded application.  Claimants are placed in a precarious situation, given their understandable fear of jeopardizing regular, monthly income. On the other hand, several years of benefits may be at risk, given the lengthy time it takes to obtain an Appeals Council or court decision.

HALLEX I-2-9-80 allows an ALJ to address the issue of reopening if conditions exist for reopening.  However, if the ALJ intends to reopen a favorable determination and the revised decision will be less than fully favorable to the claimant, the ALJ “must” notify the claimant in advance of the planned reopening action and the decision the ALJ intends to issue.  The claimant must be provided with the opportunity to appear at a hearing on the issue.  This HALLEX section also sets out the requirements for the Notice to the claimant (Section B) and for the contents of the reopened decision (Section C).  Section B requires the ALJ to provide sufficient rationale in the notice to support the decision on that issue and the basis for that decision.

This requirement has received judicial support.  In Wyatt v. Barnhart, 349 F.3d 983 (7th Cir. 2003), the Seventh Circuit reversed the ALJ’s reopening of a favorable decision because he had not specified any rationale. The claimant/appellant was found disabled in an Octob er 1993 ALJ decision.

More than one year later in November 1994, the ALJ notified him by letter that he had decided to reopen his case.  Another hearing was held and the ALJ issued a revised decision, now finding that the claimant/appellant was not disabled.  The Appeals Council remanded, but th e ALJ again found that he was not disabled and the Appeals Council denied the request for review.

The only issue on appeal was whether the original allowance had been reopened improperly; the court did not review the propriety of the ALJ’s final disability determination.  Because “[t]he discretion to reopen a case lies solely with the ALJ, … we can affirm the decision to reopen only on the basis of the ALJ’s stated reasons.” The ALJ’s letter notifying the appellant/claimant of the reopening only stated that the case was being reopened “[p]ursuant to 20 CFR 404.988 and 20 CFR 416.1488.”

The court found this notice inadequate: “These references are unhelpful because the cited provisions list or cross reference all o f the more than twenty grounds on which SSI and DIB cases may be reopened.”  349 F.3d at 984.  The notice fell “far short” of SSA’s own policy, as stated in the POMS, that the “mere mention” that reopening does or does not apply is not sufficient.  POMS GN 04001.080.  “Although there may have been good reason to reopen Wyatt’s case, the ALJ’s letter provides us with no plausible basis for affirming that decision.”  349 F.3d at 984.

The ALJ’s apparent reason for reopening t he allowance was that the claimant/appellant returned to work shortly after the July 1993 ALJ hearing and did not inform SSA until early November 1993, just after he received the favorable ALJ decision.  In court, SSA did not defend the decision to reopen based on any evidence that was before the ALJ.  Rather, SSA argued, in hindsight as part of its litigation position, that the ALJ was justified in reopening the case because the appellant/claimant had, according to SSA, engaged in fraud or similar fault.  The court rejected this argument:

“[T]here simply is no evidence that Wyatt did anything wrong. He neither lied to the ALJ nor attempted to simultaneously receive benefits and earn wages without the agency’s knowledge.  Id. at 985.

In conclusion, the court emphasized the importance of providing a rationale and explaining the basis for reopening:

[T]he grounds for reopening must be narrowly applied when the [agency] proceeds against a claimant. Because errors can cause considerable hardship, the regulations should be liberally applied i n favor of beneficiaries. [citation omitted] Here, the ALJ’s stated reasons – as well as the alternative grounds the Commissioner proposes – fail to satisfy those regulations.

Id. at 986.  The court reversed and ordered that the original favorable decision from 1993 be reinstated.

While SSA’s regulations and policy require that notice be provided with adequate rationale and basis for the proposed reopening, it appears that not all ALJs comply with this requirement.  We recommend that SSA clarify its policy to ensure that claimants receive the full due process requirements provided in the regulations and HALLEX.

Thank you for consideration of our comments.

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End Notes

 1 Significance of Administrative Finality in the Social Security Administration’s Programs , No. A-08-11-21107 (July 2012).

 2 See 78 Fed. Reg. 5182 (Jan . 24, 2013).

 3 The Supreme Court weighed in on this issue in Califano v. Saunders , 430 U.S. 99 (1977), where it held that a decision not to reopen a prior, final decision is discretionary and does not constitute a “final decision” under 42 U.S.C. § 405(g).  Thus, it ordinarily is not subject to judicial review.  Id. at 107-09.  There is an exception where a “colorable constitutional claim” is presented.

4 20 C.F.R. §§ 404.967 and 416.1467 . 

For more information, please contact:


Louise M. Tarantino

Empire Justice Center
119 Washington Avenue
Albany, NY  12210 


(518) 462-6831
(518) 935-2852
ltarantino@empirejustice.org



Catherine M. Callery (Kate)

Empire Justice Center
Telesca Center for Justice
One West Main Street, Suite 200
Rochester, NY  14614 


(585) 454-4060
(585) 454-4019
kcallery@empirejustice.org