On Appeal from the United States District Court for the Western District of Pennsylvania District Court Judge: The Honorable Gustave Diamond (D.C. Civil No. 01-cv-00283)
Before: Roth, Fuentes, and Aldisert, Circuit Judges
The opinion of the court was delivered by: Fuentes, Circuit Judge
Submitted Under Third Circuit L.A.R. 34.1(a) January 17, 2003
Pursuant to 42 U.S.C. § 405(g), Thomas Sanfilippo ("Sanfilippo") sought judicial review in the United States District Court for the Western District of Pennsylvania of the decision of the Commissioner of Social Security ("Commissioner") reducing his federal disability insurance benefits under Title II of the Social Security Act ("Act") by the net amount of a lump-sum workers' compensation settlement, prorated over a period of 4.3 years. Sanfilippo claims that his benefits should not be offset by his pre-settlement compensation rate. Rather, he claims that the lump-sum settlement should be prorated over his life expectancy. Because we agree that the Commissioner's use of the pre-settlement rate in prorating the settlement over a period of 4.3 years is based on a reasonable interpretation of the Act and is not otherwise arbitrary or capricious, we affirm the Order of the District Court granting summary judgment to the Commissioner.
I. Facts and Procedural History
On February 18, 1987, Sanfilippo, an arborist, suffered neck and back injuries while working. On April 2, 1993, he filed an application for disability insurance benefits. On May 28, 1996, an Administrative Law Judge ("ALJ") issued a decision awarding Sanfilippo benefits under the Act. In accordance with 42 U.S.C. § 424a(a), the Social Security Administration ("SSA") offset Sanfilippo's disability insurance benefits by $243.94 per week ($195.15 per week after the deduction of attorneys' fees), the amount paid by his employer pursuant to the Pennsylvania Workers' Compensation Act.
On July 7, 1998, the Pennsylvania Bureau of Workers' Compensation approved a compromise and release settlement between Sanfilippo and his employer. Under the terms of the settlement, Sanfilippo received a lump-sum payment of $55,000 and, in return, agreed to waive and release his entitlement to all future indemnity, medical and other benefits that might be available to him under the Pennsylvania Workers' Compensation Act.
In October 1998, SSA informed Sanfilippo that his disability insurance benefits would continue to be reduced by $195.15 per week - the amount of the lump-sum payment prorated over a period of 4.3 years. Sanfilippo requested reconsideration of this offset determination, and, on May 3, 1999, SSA informed Sanfilippo that the reduction of his disability insurance benefits had been properly calculated.
At Sanfilippo's request, an ALJ held a hearing on December 20, 1999. The ALJ granted Sanfilippo's request for leave to obtain additional information. On June 22, 2000, Sanfilippo submitted an amended order from the Pennsylvania Bureau of Workers' Compensation stating that the lump-sum payment of $55,000 represented payment in lieu of compensation equal to $29.59 per week for a period of 1,487 weeks, which was Sanfilippo's life expectancy. On July 17, 2000, the ALJ issued a decision reversing the reconsideration determination and holding that Sanfilippo's lump-sum payment should be prorated over his life expectancy rather than a 4.3 year period.
On September 8, 2000, the Appeals Council notified Sanfilippo that it was reviewing the ALJ's decision under the error of law provision of 20 C.F.R. § 404.969. On December 7, 2000, the Appeals Council issued a decision reversing the determination of the ALJ. The Appeals Council reinstated SSA's prior determination that Sanfilippo's lump-sum workers' compensation settlement should be prorated at the periodic rate received prior to the settlement. Pursuant to 20 C.F.R. § 404.981, the decision of the Appeals Council became the final decision of the Commissioner.
On February 9, 2001, Sanfilippo filed a complaint in the United States District Court for the Western District of Pennsylvania, in which he challenged the decision of the Appeals Council. On cross motions for summary judgment, the District Court granted the Commissioner's motion for summary ...