On Appeal from the United States District Court For the Eastern District of Pennsylvania. D.C. Civil No. 83-1201.
Before ADAMS, HIGGINBOTHAM and SLOVITER, Circuit Judges.
Ordinarily, disability benefits under either Title II or Title XVI of the Social Security Act will be terminated when the recipient's medical condition has improved. See Kuzmin v. Schweiker, 714 F.2d 1233 (3d Cir. 1983). In Section 301 of the Social Security Disability Amendments of 1980, Pub. L. No. 96-265, Title III, § 301, 94 Stat. 441, 449-50 (codified as amended at 42 U.S.C. §§ 425(b), 1383(a)(6) (1982)), Congress provided that recipients of disability benefits who were participating in approved vocational rehabilitation programs could not be terminated because of medical improvement if the Commissioner of Social Security determined that completion of the program would increase the likelihood that [the recipient would] be permanently removed from the disability benefit rolls." The plaintiff, Judith Paskel, who was participating in such a program, was nonetheless terminated without the Congressionally-mandated Section 301 determination.
It has been the position of the Secretary of Health and Human Services, relying on her own regulation, that Paskel and similarly situated persons are not entitled to a Section 301 determination. The Secretary's regulation, 20 C.F.R.§ 416.1338(a)(1984), applicable to beneficiaries such as Paskel who are receiving Supplemental Security Income under Title XVI, limits the Section 301 determination to those persons who "at the time [they] began participating in the [vocational rehabilitation] program . . . were not expected to recover medically before the scheduled completion date of the program." The comparable regulation for those persons receiving disability payments under Title II is 20 C.F.R. § 404.1586(f) (1984). They will be referred to throughout as one regulation.
Plaintiff filed suit contending that this regulation was invalid because it contradicted the clear language of the statute. The district court certified Paskel as the representative of the following class:
All individuals who reside in Pennsylvania whose Social Security and SSI benefits the Social Security Administration has considered, or is presently considering, without making appropriate and mandated determinations to continue disability benefits under 42 U.S.C. §§ 425(b) and 1383(a)(6), while the individual was enrolled or is enrolled in a Vocational Rehabilitation Program.
Paskel v. Heckler, 99 R.F.D. 80, 84 (E.D. Pa. 1983). After modifying the class,*fn1 the district court granted summary judgment for the plaintiff, Paskel v. Heckler, 563 F. Supp. 1095 (E.D. Pa. 1983), which was thereafter made applicable to the class. In the portion of the district court's initial order of March 30, 1983 directed to Paskel's claims, the court entered judgment for Paskel, awarded her back benefits, reinstated present benefits and enjoined the Secretary from terminating her benefits without a Section 301 determination. With respect to the class, the court ordered reinstatement of benefits and enjoined the Secretary from terminating class members without Section 301 determinations.
The Secretary has appealed, defending the validity of her regulation. The plaintiff class cross-appealed, challenging the district court's modification of the class and its failure to grant back benefits to the class members. After oral argument, there was substantial supplemental briefing with regard to the effect on the issues in the cross-appeal of the Social Security Disability Benefits Reform Act of 1984, Pub. L. No. 98-460, 98 Stat. 1794, enacted October 9, 1984, and the Supreme Court's actions in Heckler v. Lopez, 469 U.S. 1082, 105 S. Ct. 583, 83 L. Ed. 2d 694 (1984), and Heckler v. Kuehner, 469 U.S. 977, 105 S. Ct. 376, 83 L. Ed. 2d 312 (1984). Thereafter, the plaintiff class, with the consent of the court, voluntarily withdrew its cross appeal without prejudice to its right to seek a final judicial determination of the issue therein in another case or forum. Thus, the only remaining issue before this court in this action is that presented by the government in its appeal, which relates to Section 301(a) of the Social Security Disability Amendments of 1980 and the Secretary's regulation with regard thereto.
The issue can be clarified by reviewing the case of the named plaintiff and class representative, Judith Paskel, who applied for SSI benefits in June 1979. She was found to be disabled due to a seizure disorder diagnosed as grand mal epilepsy. The Pennsylvania State Agency placed Paskel on its "diary system" which requires recipients periodically to supply additional medical information to justify continuing eligibility. This system is employed to monitor recipients who, for one reason or another, are deemed likely to improve, and who are therefore subject to continuing disability investigation.
In May 1981, Paskel enrolled in a state-approved vocational rehabilitation (VR) program. Pursuant to her diary schedule, she was medically re-examined in February 1982 and was found to have medically improved. She was therefore notified that her benefits would terminate without the Secretary's having made a Section 301 determination. She filed a pro se administrative appeal on the issue of improvement, but, after a de novo hearing, the ALJ held that her disorder was under control. Paskel, now with counsel, sought review of the ALJ's decision in the Appeals Council, raising the claim that she was denied a Section 301 determination as well as offering additional evidence of continued seizures and depression. Termination of her benefits, however, had allegedly deepened her depression, and in January 1983, she attempted suicide. During this period, she gave up plans for vocational rehabilitation. The Appeals Council rejected both of her arguments and, on February 2, 1983, denied her request for review.*fn2
Paskel's complaint in district court sought declaratory and injunctive relief for the class of disability recipients participating in VR programs who had been denied Section 301 determinations. It also sought immediate reinstatement for Paskel on the ground that, contrary to the ALJ's finding, she had not medically improved.
In granting summary judgment on the merits first for Paskel and then for the class, the district court held that the portion of the regulation on which the Secretary relied in failing to make a Section 301 determination for Paskel is invalid because it "cuts short the statutory coverage provided by the words of the statute itself" and is ...