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Rosetti v. Shalala

filed: December 15, 1993.



Before: Greenberg, Nygaard and Lewis, Circuit Judges.

Author: Lewis


LEWIS, Circuit Judge.

The plaintiffs in this case, Peter Rosetti and a woman using the pseudonym Mary Doe, filed a class action complaint alleging that the Secretary of Health and Human Services ("the Secretary") had violated the Administrative Procedures Act ("APA"), 5 U.S.C. § 551 et seq., by using invalid rules and policies to determine whether people infected with the human immunodeficiency virus ("HIV") were entitled to disability benefits. Rosetti and Doe have HIV. At the time they filed their complaint, the Social Security Administration ("SSA") had denied their applications for benefits. They had appealed those decisions within the SSA's administrative review process but had not received final rulings from the agency.

Rosetti and Doe moved for class certification soon after filing their complaint. While the motion for certification was pending, administrative law Judges ("ALJ") ruled that they were entitled to disability benefits.

The district court dismissed the plaintiffs' motion for class certification without prejudice and then dismissed part of the case for lack of subject matter jurisdiction; approximately five months later, it dismissed the remainder of the case, sua sponte, under Rule 12(b)(6) of the Federal Rules of Civil Procedure.*fn1 The plaintiffs have appealed from the decisions dismissing the case, as well as from the district court's decision to dismiss their motion for class certification without prejudice.

We conclude that the district court acted without Article III jurisdiction in dismissing the case, because the named plaintiffs' claims became moot when the SSA granted them benefits.*fn2 For the same reason, we cannot reach the merits of their appeal. The case does, however, raise one question that the district court retained constitutional authority to consider: the propriety of certifying a class. The district court never addressed that issue. Consequently, we will vacate the challenged orders and remand the case so that the district court may determine whether a class should be certified.


The questions this case raises require us to review its legal, factual and procedural background at some length.

The plaintiffs allege that in evaluating claims for disability benefits filed by people with HIV, the Secretary*fn3 has used overly narrow criteria that fail to recognize some of the ways in which the virus can cause disabling impairments. Consequently, they contend, HIV victims who are in fact disabled, but who suffer from symptoms of the virus that the SSA's rules and policies have overlooked, are not awarded benefits to which they should be entitled.

The SSA administers two programs that provide disability benefits. The Social Security Disability Insurance Program ("SSDI"), 42 U.S.C. § 401 et seq., provides benefits to disabled people who have made contributions to the program. The Supplemental Security Income Program (SSI), 42 U.S.C. § 1381 et seq., provides benefits to disabled people who are indigent. The plaintiffs sought to represent a class that included applicants to both programs, as each employs the same statutory and regulatory criteria to determine whether an applicant is disabled and therefore eligible for benefits.

The statutes establishing SSDI and SSI define "disability" as "the inability to engage in substantial gainful activity by reason of any medically determinable physical or mental impairment . . . ." 42 U.S.C. §§ 423(d)(1)(A), 1382c(a)(3)(A). "An individual shall be determined to be under a disability," the statutes continue, only if his impairments "are of such severity that he is not only unable to do his previous work but cannot, considering his age, education, and work experience, engage in any other substantial gainful work which exists in the national economy . . . ." 42 U.S.C. §§ 423(d)(2)(A), 1382c(a)(3)(B).

The SSDI and SSI statutes authorize the Secretary to adopt rules and regulations for implementing the programs. 42 U.S.C. §§ 405(a), 1383(d)(1). Under those regulations, the SSA evaluates claims for benefits using a five-step process,*fn4 which the Supreme Court has described as follows:

The first two steps involve threshold determinations that the claimant is not presently working, and has an impairment which is of the required duration and which significantly limits his ability to work. See 20 CFR §§ 416.920(a) through (c) (1989). In the third step, the medical evidence of the claimant's impairment is compared to a list of impairments presumed severe enough to preclude any gainful work. See 20 CFR pt. 404, subpt. P, App. 1 (pt. A) (1989). If the claimant's impairment matches or is "equal" to one of the listed impairments, he qualifies for benefits without further inquiry. § 416.920(d). If the claimant cannot qualify under the listings, the analysis proceeds to the fourth and fifth steps. At these steps, the inquiry is whether the claimant can do his own past work or any other work that exists in the national economy, in view of his age, education, and work experience. If the claimant cannot do his past work or other work, he qualifies for benefits. §§ 415.920(e) and (f).

Sullivan v. Zebley, 493 U.S. 521, 525-26, 107 L. Ed. 2d 967, 110 S. Ct. 885 (1990). The plaintiffs brought this suit to challenge the way that claims for benefits based on HIV-related illness have been handled at the third step of this five-step process. As the Court stated, id., in step three, the SSA determines whether a claimant's impairment matches or "equals" an impairment contained in the listing that appears in the federal regulations governing benefits programs. See 20 C.F.R. pt. 404, subpt. P, app. 1 (1992).*fn5 The list of impairments appearing in the regulations is called, appropriately enough, the Listing of Impairments. According to the plaintiffs, claims filed by people with HIV have been wrongly denied because the Listing of Impairments, and the way in which the SSA has instructed its officials to compare symptoms of HIV to the impairments included in the Listing, fail to account for some disabling manifestations of the virus. As a result, the plaintiffs contend, these claimants do not qualify for benefits at step three. Instead, the officials evaluating their claims move on to steps four and five. The plaintiffs argue that because of the nature of the inquiry that occurs at those steps, as well as the common characteristics of people with HIV, claimants who should but do not qualify for benefits at step three are in no way assured of receiving favorable rulings at steps four and five.

A claimant who is not satisfied with the SSA's initial ruling on his or her claim for disability benefits may appeal that decision through the agency's administrative review process. State agencies acting on behalf of the SSA make the initial evaluations of social security claims. 42 U.S.C. §§ 421(a), 1383b(a). Claimants who choose to challenge those decisions may ask for de novo reconsideration by the same state agency. 20 C.F.R. §§ 404.907, 416.1407 (1992). Next, a claimant can request and receive a hearing before an ALJ with the SSA's Office of Hearings and Appeals. 42 U.S.C. §§ 405(b)(1), 1383(c)(1); 20 C.F.R. §§ 404.929, 416.1429 (1992). Finally, claimants wishing to challenge an ALJ's decision may bring an appeal before the SSA's appeals council. 20 C.F.R. §§ 404.967-404.982, 416.1467-416.1482 (1992). After completing this review process and thus exhausting their administrative remedies, disappointed claimants may challenge a final agency decision by filing suit in the district court. See Bowen v. City of New York, 476 U.S. 467, 478-486, 90 L. Ed. 2d 462, 106 S. Ct. 2022 (1986) (discussing limitations period and exhaustion requirement for challenging agency action in district court).

The Centers for Disease Control ("CDC") first identified the disease now known as Acquired Immune Deficiency Syndrome ("AIDS") in the summer of 1981. The SSA started receiving claims for disability benefits filed by people with AIDS in late 1982. HIV was discovered in 1983 and definitively shown to cause AIDS in 1984. See Jon Cohen, AIDS Research: The Mood is Uncertain, 260 Science 1254, 1258 (1993). In April, 1983, the SSA issued an emergency teletype that contained the first instructions its officials received for evaluating AIDS-related claims.

Again, when SSA officials*fn6 evaluate a claim for benefits, they compare the claimant's impairment with the listed impairments appearing in the regulations. Until quite recently, however, there was nothing in the regulations to which symptoms of HIV or AIDS could be compared. In order to enable its officials to handle claims based on HIV- or AIDS-related illness, the SSA provided them with official "guidance," beginning with the emergency teletype in 1983. This guidance consisted of Social Security Rulings,*fn7 materials included in the SSA's operating guide,*fn8 and notices circulated within the agency. These materials instructed officials evaluating claims that certain conditions resulting from HIV or AIDS should be treated as matching or medically equivalent to a listed impairment; claimants exhibiting the symptoms described in the guidance would therefore qualify for benefits at step three of the process, in the same way they would if the Listing had contained the impairment upon which they based their claims. The SSA's guidance further instructed officials that if a claimant had symptoms of HIV or AIDS which the materials making up the guidance did not describe, his or her condition might still meet or equal a listed impairment; according to the guidance, such claims would have to be evaluated on a case-by-case basis.

Because the SSA's guidance was made up of purely internal, subregulatory materials, it was not subjected to the formal rule making procedures that, under the APA, proposed regulations must go through before being adopted. See 5 U.S.C. § 553 (setting forth the APA rule making process). Although the Secretary had expressed his intention to promulgate a regulation addressing this issue as early as 1987, he did not attempt to do so until several years later. Thus, prior to December, 1991, the SSA could and did change its rules and policies for handling HIV- and AIDS-based claims as it saw fit, without having to contend with the APA's procedural requirements.

In mid-December, 1991, about six months after the plaintiffs filed this suit, the SSA updated its guidance for the final time by announcing a new Social Security Ruling. 56 Fed. Reg. 65498-65505 (Dec. 17, 1991). The next day, the Secretary published a notice of proposed rule making inviting public comment on a regulation that would govern the determination of whether people with immune system disorders are disabled and therefore entitled to benefits. See Fed. Reg. 65702-14 (Dec. 18, 1991). The content of the proposed regulation was the same as that of the Social Security Ruling that had been announced the previous day. Under the new regulation, the Listing of Impairments would be revised to include a new section and a new listing for the evaluation of HIV infection and AIDS. The SSA received comments on the proposed regulation through the early part of 1992 and was still evaluating them when the district court conducted a hearing in April of that year. The difficult and time-consuming process of adopting a new regulation dealing with this subject was delayed further because of the presidential election in November, 1992 and the resulting change in administrations. The new regulation was finally published in the Federal Register on July 2, 1993, several weeks after we heard oral argument in this case.

According to their complaint and motion for class certification, the plaintiffs brought this suit on behalf of all persons "residing in the Third Circuit" who had not received or would not receive fully favorable decisions in response to their claims for disability benefits based on HIV-related illness. However, the plaintiffs' submissions indicate that they actually sought to represent a somewhat smaller class; they contend that only certain people with HIV -- namely, women, children, intravenous drug users, poor people, and perhaps people of color*fn9 -- are harmed in the way the plaintiffs describe by the rules and policies that the SSA has used to determine whether a claimant with an HIV-related illness is disabled and therefore entitled to benefits.

In formulating rules and policies for evaluating claims for benefits based on HIV-related illness, the Secretary relied on studies conducted by the CDC. The plaintiffs allege that the CDC acquired its early understanding of AIDS and HIV from studies of white, male homosexuals, most of whom were relatively affluent; as a result, they contend, the CDC's definitions of the virus and the disease it causes, and of the conditions manifested in people with HIV and AIDS, have been underinclusive. They claim that different groups of people develop different symptoms of HIV and AIDS. Thus, the plaintiffs argue, a definition of an immune system disorder based entirely on the medical experience of relatively affluent, white, male homosexuals excludes other people -- such as women, children, intravenous drug users, poor people, and people of color -- who are suffering from HIV or AIDS, but who do not manifest their illness in the same way. According to the plaintiffs, the SSA's guidance, by relying on CDC definitions of HIV and AIDS, did not recognize the symptoms ...

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