Like members of the class they propose to represent, the named plaintiffs were denied benefits because the Secretary applied the regulation which the Third Circuit invalidated in Baeder. They seek the opportunity to have the final determination of disability focus on all relevant factors mandated by the Act. There is no potential for conflict among class members because all of them want their individual cases to be evaluated fairly, with all relevant factors taken into account. Furthermore, plaintiffs' counsel has considerable experience in Social Security litigation and will ably represent the interests of the class. Declaration of Richard Yaskin, October 1, 1984, paras. 14-16. Accordingly, the commonality, typicality and adequacy of representation requirements of Fed. R. Civ. P. 23(a) are satisfied.
Plaintiffs have defined the class by reference to the scope of the Secretary's challenged policies. It is clear that the Secretary has acted or refused to act on grounds generally applicable to the class, thereby making injunctive or declaratory relief with respect to the class as a whole appropriate. Fed. R. Civ. P. 23(b)(2). See Alliance to End Repression v. Rochford, 565 F.2d 975, 978 (7th Cir. 1977).
Two other district courts have recently certified class actions which challenged the severity regulations at issue here. Dixon, supra, 589 F. Supp. 1512 (S.D.N.Y. 1984); Smith, supra, 595 F. Supp. 1173. District judges in New Jersey have also certified class actions challenging other applications of the Secretary's regulatory authority. Tustin, supra, 591 F. Supp. 1049; Rivera v. Heckler, 568 F. Supp. 235 (D.N.J. 1983) (Lacey, J.). See generally Kuehner v. Schweiker, 717 F.2d 813 (3rd Cir. 1983).
B. The Jurisdictional Requirement of § 405(g)
A class may be certified under the Act only if each prospective class member individually satisfied the jurisdictional requirements of 42 U.S.C. § 405(g).
Califano v. Yamasaki, 442 U.S. 682, 701, 704, 61 L. Ed. 2d 176, 99 S. Ct. 2545 (1979); Mathews v. Diaz, 426 U.S. 67, 71, 48 L. Ed. 2d 478, 96 S. Ct. 1883 n.3 (1976); Weinberger v. Salfi, 422 U.S. 749, 764, 45 L. Ed. 2d 522, 95 S. Ct. 2457 (1975).
Section 405(g) provides that a claimant may obtain judicial review only after the Secretary renders a "final decision" on his application for benefits after a hearing to which he was a party. Pursuant to her rulemaking authority under 42 U.S.C. § 405(a), the Secretary has determined that a final decision is rendered on a claim under Title II or Title XVI only after the Appeals Council has either issued a decision or denied a claimant's request for review. See, Heckler v. Ringer, 466 U.S. 602, 104 S. Ct. 2013, 80 L. Ed. 2d 622 (1984); Salfi, supra, 422 U.S. at 765; 20 C.F.R. §§ 404.900(a)(5), 404.981, 416.1400(a)(5), 416.1481. In short, the Secretary's regulations require full exhaustion of administrative remedies prior to judicial review.
As certified, the class included "all persons in the State of New Jersey who have filed or will file applications for disability benefits . . . and whose benefits have been or will be denied or terminated based upon a finding of no severe impairment. . . ." Order of October 9, 1985. The cutoff date for the class as now defined is July 26, 1985, so claimants who received decisions of the Secretary before that date and who failed either to file a complaint in federal district court or to appeal to the next administrative level within 60 days after receiving such decision.
The court notes as a preliminary matter that it may see fit to broaden or narrow the temporal scope of the class in the future.
The class includes a subclass of disability applicants who may have received a decision of the Secretary on or after July 26, 1984 and failed to appeal it within the requisite 60 days. Defendant argues strenuously that the failure to exhaust administrative remedies automatically bars those persons from inclusion in any class which may obtain injunctive relief. However, members of this subclass are properly included in the certified class because they fall within a judicially created exception to the exhaustion requirement of section 405(g).
The Supreme Court has held that the Secretary may waive the exhaustion requirement and that the courts are also empowered to do so in appropriate circumstances. Mathews v. Eldridge, 424 U.S. 319, 47 L. Ed. 2d 18, 96 S. Ct. 893 (1976); Diaz, supra, 426 U.S. at 76. In permitting certification of a class of Title XVI recipients whose benefits had been reduced or terminated, the Third Circuit held that exhaustion of administrative remedies could be properly waived by the court if the legal issue presented was statutory and if the Secretary had assumed a fixed and final position. Liberty Alliance of the Blind v. Califano, 568 F.2d 333, 345-46 (3rd Cir. 1977), citing Eldridge, supra. More recently, the Third Circuit applied Liberty Alliance to find § 405 (g) jurisdiction despite the lack of exhaustion of remedies by members of a proposed class. Kuehner v. Schweiker, supra. The majority looked at whether the Secretary had taken a fixed and final position, thereby rendering exhaustion futile. A concurring opinion by Judge Becker observed that the Supreme Court's decisions in Eldridge and Salfi had identified two further criteria: (1) the unexhausted claim must be at least substantially collateral to the question of whether plaintiffs should continue to receive disability benefits; and (2) requiring exhaustion must impose substantial hardship on, or cause irreparable harm to, plaintiffs. Kuehner, supra, 717 F.2d at 822.
The Secretary contends that her position on the issue of non-severe impairment is fluid, not "fixed and final," and points to her new SSR to prove her point. But the new SSR does not represent changes in the Secretary's stance toward disability claimants. It is merely a glib reformulation of policies which have been implemented for several years. In these circumstances, it should be futile to require all members of the identified subclass to exhaust administrative remedies, despite the Secretary's protestations that certain claimants might be granted benefits were they to pursue administrative appeals.
In addition, plaintiffs have demonstrated that they will suffer irreparable harm for which post hoc relief would be inadequate. See supra. Compare Dixon, supra, 589 F. Supp. 1512, slip op. at 10.
Defendant argues that the unexhausted claims are not substantially collateral but are in fact identical to plaintiffs' claims for benefits. Even if the Secretary's argument is correct, the court believes that waiver of exhaustion is nonetheless appropriate because plaintiffs have clearly satisfied the requirements of futility and irreparable harm. "The core principle that statutorily created finality requirements should, if possible, be construed so as not to cause crucial collateral claims to be lost and potentially irreparable injuries to be suffered remains applicable." Eldridge, supra, 424 U.S. at 331, n.11. The Supreme Court's approach is practical and its decisions do not establish whether each of the individual relevant factors must be present before a court may waive exhaustion. City of New York v. Heckler, 742 F.2d 729, 736 (2nd Cir. 1984), cert. granted, 474 U.S. 815, 106 S. Ct. 57, 88 L. Ed. 2d 46 (1985), citing Eldridge, supra, and Ringer, supra.16 Fairness and justice dictate that the exhaustion requirement should be deemed waived for members of the proposed class. Compare Smith v. Schweiker, 709 F.2d 777, 780 (2nd Cir. 1983).
For all the foregoing reasons, the court will grant plaintiffs' motions for preliminary injunctive relief and class certification. An order setting forth both the scope of relief and the definition of the class will be entered.