2

Hearings and Appeals Process in Brief

Since most of the hearings pending are in the disability area (both Social Security and SSI) the process described will be for that type of claim. The application for disability is made at the Federal social security district office where the claimant is interviewed and the sources of medical evidence are recorded. The case is then sent to the State agency which, operating under contract with the Social Security Administration, makes the initial determination of disability. If a claimant is dissatisfied with an initial denial of disability by the State agency he can request a reconsideration within 6 months of notice of denial. The reconsideration is also carried out by the State agency but by personnel other than those who made the initial determination. If upon reconsideration the claimant is again denied benefits he will be given a hearing before an administrative law judge (ALJ) providing he files a request within 6 months of notice of the denial. Under SSI this period is 30 days at both levels. (Prior to 1960 an individual could request either a hearing or a reconsideration.) If the claim is denied by the administrative law judge, the claimant has 60 days to request review by the Appeals Council. The appeals council may also, on its own motion, review a decision within 90 days of the ALJ's decision. The Appeals Council may review, affirm, modify, or reverse the decision of the ALJ or it may remand it to the ALJ for further development. The claimant is notified in writing of the final action of the Appeals Council, and is informed of his right to obtain further review by commencing a civil action within 60 days in a district court of the United States.

Issues Explored

The present "crisis" in the social security appeals process is linked to the tremendous backlog of disability hearing cases and the resultant delay that beneficiaries encounter in going through the process of exhausting their administrative 1 remedies. A recent study indicates that the average time for a disability case from application to award or final administrative denial is over a year and a half, and roughly half of this time is attributable to the hearing process. The result has been many complaints from affected parties, which engendered a letter to the chairman of the full committee from 73 Members of Congress requesting the hearings which will be held during September and October before the Subcommittee on Social Security on this subject. The appeals crisis is not new, however, and its growth has roughly paralleled the growth of the social security disability program and the addition, in recent years, of black lung appeals and the establishment of an SSI disability program. Social security retirement and survivors and medicare cases play a relatively minor role in terms of number of cases requiring hearings (see table 8 for breakdown of hearings by type of claim).

As will be seen from table 1, the median time for disability hearings has been lengthy in the past as well as in recent years.2

Equally important as speed of processing of cases, is the question of the quality of adjudication. The rate of reversal of initial denials of disability has become so substantial in recent years that it has been cited by the Administration as one of the reasons for the growing actuarial deficit in the disability insurance system. Moreover, questions continue to be raised as to the uniformity of decisionmaking throughout the various elements of the system.

This paper will attempt to outline some of the main issues in the appeals process. Areas covered will include the applicability of the Administrative Procedure Act (APA) to hearings under the Social Security Act so far as it affects the appointments and control of hearing officers with particular emphasis

1 A growing number of social security and black lung cases have been appealed to district courts and the median time for their disposition is over a year and increasing.

2 During the period 1957-59 the average processing time for hearing varied between 250-300 days.

3

on the APA coverage for SSI hearings and the legislation that has been recently reported out by the Public Assistance Subcommittee which overrides an interpretation of the Civil Service Commission. Other areas dealt with are various mechanisms-ad hoc and otherwise-for dealing with the hearing backlog: (1) the wholesale remanding of cases to the State agencies where a hearing has been requested—a re-reconsideration (2) the institution of face-to-face contact with claimants on reconsideration by the State agency and (3) the reducing the time that a social security claimant has to appeal an adverse decision. Also under consideration is the increased use of paralegal personnel in the hearings process, a topic which was discussed in the Committee Staff Report of July 1974. Also there will be discussion of the impact of social security cases on the Federal courts and some very important pending cases before Federal courts which could greatly increase the number of appeals. In the Eldridge case the Supreme Court will determine the applicability of Goldberg v. Kelly to social security disability cases and conceivably require a hearing before any termination of social security benefits. The administration in its brief before the Supreme Court in the Eldridge case has stated that an adverse decision would require about 11,000 additional hearings a year. Finally, some of the problems of reconciling the need for speed in adjudication with uniformity and quality of adjudication will be discussed.

Application of the APA to Social Security Cases

The social security appeals procedure which was established in 1939 antedates the Administrative Procedure Act (APA) which was enacted in 1946. In fact, the Attorney General's committee which was primarily responsible for the form of the APA used Social Security Act procedures as a model and considered the APA "largely declaratory" of its provisions.

The Ways and Means Committee and the executive branch in past years have always assumed that social security appeals were under the APA. The Administrative Law Section of the American Bar Association recently has taken this position in a brief filed before the Supreme Court in Richardson v. Perales, (1971) 402 U.S. 410:

The Administrative Procedure Act applies to social security cases. It permits consideration of hearsay evidence while preserving the right of cross-examination. The case before this Court can and should be decided through application of the Administrative Procedure Act.

The bar association brief stated that the APA applies in "every case of adjudication required by statute to be determined on the record after opportunity for an agency hearing" (5 U.S.C. 554(a)) and hearings on social security, claims do not come under any of the six exceptions to this statutory requirement. A court of appeals had held in the Perales case that the APA was inapplicable on the ground that 5 U.S.C. 556(b) states that the act "does not supersede the conduct of specified classes of proceedings in whole or in part by or before boards or other employees specifically provided for by or designated under statute." On appeal, the Supreme Court held that "we need not decide whether the APA has general application to social security disability claims, for the social security administrative procedure does not vary from that prescribed by the APA. *** Hearsay, under either Act, is thus admissible up to the point of relevancy." It then held that the social security procedures comply with the due process requirements of the Constitution.

Encouraged by the Supreme Court decision to avoid taking a position on whether the APA applies and other Supreme Court decisions in recent years which have given more weight to administrative ramifications of hearing requirements, some commentators have stated that the APA should not be applied to social security cases. These recent Supreme Court cases are somewhat at odds with earlier cases such as Wong Yang Sung. In that case Justice Jackson refused to accord weight to the argument that an APA hearing would cause the

4

Government inconvenience and added expense, stating "of course it will, as it will to nearly every agency to which it is applied. But the power of the purse belongs to Congress which has determined that the price for greater fairness is not too high." Wong Yang Sung v. McGrath (1950) 339 U.S. 33.

Others, who are not so certain that their position can be sustained on legal grounds, believe that wise public policy may call for the exemption of the growing number of social welfare cases from APA coverage. Opposed to this view are those who believe APA hearing safeguards are as necessary for adjudication of individual program rights as they are for corporations affected by regulatory agency action. The panel which will appear before the subcommittee on September 26, 1975 will include administrative law experts on both sides of this issue.

Briefly, what does APA coverage mean and how does it affect the right to and nature of the hearing? A large body of case law seeking to answer these questions has developed since both the Social Security Act and the APA were enacted. The Supreme Court has held in a series of cases that the due process clause of the Constitution protects an individual from final denial of a substantial benefit without opportunity for a hearing. Flemming v. Nestor, (1960) 363 U.S. 603; Goldberg v. Kelly, (1960) 397 U.S. 603. Moreover, these cases and others have spelled out the procedural components of the hearing which must be present to meet due process requirements. Such elements as adequate notice, access to evidence, right to cross examination, right to counsel and written finding and reasons for decision, etc. Also due process requires that the person who takes evidence and makes the decision be impartial, that the trier of fact cannot be prosecutor in the same matter, and that he cannot have been involved in the matter previously as an agency staff person. These also are requirements of the APA but there are other requirements in the APA which go beyond the due process requirements. It is in the area of the qualification of the hearing officer and his relationship to the agency adjudicating the claim that the APĂ imposes requirements which are unique from those the courts have thus far stated are required by due process.

Hearing Officer Qualifications

The qualifications of hearing officers are established by the Civil Service Commission. Initially, in 1947, the CSC prescribed 6 years of experience in legal proceeding to qualify for appointment but bar membership was not required. This remained unchanged until 1964. However, to meet an earlier “appeals crisis" following establishment of the social security disability program the Congress enacted legislation in 1959 to allow the appointment of temporary hearing examiners "who have been admitted to practice before a Federal or State court of record who have had a minimum of 3 year's experience in the adjudication of claims for retirement, survivors, or disability benefits.” (Public Law 85-766 extended through December 31, 1960, by Public Law 86-158). In the transmittal of the draft language for the temporary examiners the Commissioner of Social Security stated:

* * * we would propose to comply with all provisions of the Administrative Procedure Act except those related to initial appointment. In other words, the classification and salary of the hearing examiner positions would be determined by the Civil Service Commission and all hearings would be conducted in strict compliance with the Administrative Procedure Act. Further, we would assure administratively that the persons appointed would exercise complete independence of judgment and would not be subject to any control or influence of the administrative agency-the Bureau of Old-Age and Survivors Insurance.

The American Bar Association's Administrative Law Section at that time opposed in principle the use of temporary examiners, although they acknowledged the problem of the work load crisis. This also was the stance of the Harrison subcommittee of Ways and Means which in its 1960 report was

5

concerned with the fact that the "temporary examiners came almost exclusively from the administering agency:

The subcommittee was concerned by the use of "temporary" hearing examiners recruited from the Bureau under a temporary suspension of the full requirements of the Administrative Procedure Act. In view of the tremendous backlog of cases awaiting hearings, this action may have been necessary. As a matter of principle, however, it does not seem desirable that hearing examiners be taken from the agency whose decisions they are reviewing and to which they will ultimately return. The subcommittee is, therefore, gratified to learn that all these examiners will be separated from the staff by the end of the fiscal year and that such authority will not be requested from the Appropriations Committee in the future. We have no reason to believe that the "temporary" examiners have treated claimants unfairly, but agree with the American Bar Association testimony that the principles of the Administrative Procedure Act should not continue to be disregarded through annual exceptions to its provisions.

In 1962, the Administrative Conference recommended the evaluation of candidates on the basis of training and experience and oral and written examination with lawyers participating in the evaluation of qualifications. After issuance of these recommendations, an Advisory Committee on Hearing Examiners established by the CSC reviewed all aspects of the personnel program. The qualification standards, including bar membership, and the examining procedures adopted by the CSC as a result of this study were issued in 1964. In 1970, the CSC adopted a recommendation of the Administrative Conference which gave added weight to trial experience in order to broaden the base of recruitment.

Currently, ALJ's must have 7 years of "qualifying experience," at least two of which must be within the 7-year period immediately preceding the date of his application; must consent to having confidential questionnaires (referred to by CSC as "vouchers") sent to employers, supervisors, law partners, judges, co-counsel and opposing counsel in cases in which he has participated; must demonstrate writing ability by preparing, under CSC supervision, a sample opinion which is examined for clarity, conciseness and legal soundness; and must participate in an oral interview by a board composed of a CSC official, a practicing attorney from the ABA and a Chief ALJ or an ALJ.

"Qualifying experience," as this term is used in the CSC Announcement for ALJ, means, inter alia, (1) judicial experience; (2) the preparation, trial, hearing or review of administrative law cases at the Federal, State, or local level; or (3) the preparation and trial of cases in courts of unlimited and original jurisdiction or appeals therefrom.

Mr. Edwin Yourman, a panelist for the September 26 hearing, has recently completed a report for the Social Security Administration on the hearings and appeals process which questions whether the limitation of "regulatory" or qualifying administrative law experience described in the Civil Service announcement for ALJ's is of "rational relevance", as required by regulation (5 C.F.R. 3000.103(b)), for the selection of ALJ's for beneficiary-type hearings. He believes that a different and broader concept of qualifying experience for those recruited as ALJ's to conduct SSA beneficiary hearings would more clearly comply with CSC regulations. The requirement of seven years of experience in the trial or of adjudication of cases, without permitting the substitution or other experience for a portion of the period, seems excessive." He also notes that the CSC office of ALJ's will not always certify names for needed SSA ALJ positions and questions whether the Civil Service Commission has authority to exercise this control. He cites 5 U.S.C. 3105 3 and Ramspeck v. Federal Trial

5 U.S.C. § 3105 states:

" 3105. Appointment of hearing examiners.

"Each agency shall appoint as many hearings examiners as are necessary for proceedings required to be conducted in accordance with sections 556 and 557 of this title. Hearing examiners shall be assigned to cases in rotation so far as practicable, and may not perform duties inconsistent with their duties and responsibilities as hearing examiners."

59-762 O - 75-2

6

Examiners Conference (1953) 345 U.S. 128, where the Supreme Court, in another connection, stated that the APA "does not reduce the responsibility of the (administrative) agency to see that it has a sufficient number of competent examiners to handle its business properly." Other commentators have argued that in the recent APA-SSI dispute, discussed in more detail later in this print, that once the Department of Health, Education, and Welfare had determined that the APA was applicable the Civil Service Commission should have provided the registers requested in that it has only ministerial responsibility in this area. Yourman would, however, retain Civil Service supervision of ÅLJ's to avoid actual or potential agency control but suggests the establishment of a separate register for ALJ's which will provide personnel for beneficiary hearings. He

states:

*** There are sufficient differences between regulatory and beneficiary hearings to call for careful development of separate sets of qualification standards. Thus the personality, experience and skill necessary to preside over and evaluate the issues in a complex case involving trade or transportation economics, in which several parties and the government are represented by highly specialized counsel, bears little resemblance to the characteristics needed for a social security beneficiary hearing, where it is essential that the presiding officer's actions reassure the claimant that his case will be fully presented and considered. The economic case seems to call for an aloofness from involvement with either side, while a beneficiary hearing requires a warm and sympathetic approach and even a certain involvement to make sure that the claimant's case has been fully developed and presented.

Robert G. Dixon, Jr., another panelist at the September 26 hearing, has written in a similar vein "that the most creative thought is needed to work out models for future welfare adjudication, which has-and should-a distinctively different ethic from the hard-nosed economic regulatory adjudication ethic which produced the APA in the first place". Professor Dixon, of course, is speaking in a broader context than Mr. Yourman who is only speaking of separate registers.

As a caveat Mr. Yourman states that "we make our recommendation on the assumption that the ALJ's selected to conduct beneficiary hearings will not have a second-class status, and that standards and recruitment for this type of ALJ will be adequate to ensure a register of quality applicants".

Agency Control of Hearing Officers

The question of agency control over hearing officers is a fundamental issue of Administrative Procedure Act coverage. It is here that the major difference exists between the SSI hearing officer and the social security administrative law judge (ALJ). The APA was designed to insure the independence of a hearing examiner (now called ALJ's) from the agency in which he operates, by placing his pay, promotion, and tenure under the Civil Service Commission. The sections of the APA which carry out this purpose have been codified in sections 5362 and 7521 of title 5, United States Code.1

Under SSI, however, the regulations provide that no such appointment shall be made without the prior approval of the Secretary and that the agency will also review the work of the hearing examiners to determine whether it is of "an acceptable level of competence." In addition, the regulations provide that the Secretary "may promote a hearing examiner," and the Secretary is also

45 U.S.C. §5362 states:

"Hearing examiners appointed under section 3105 of this title are entitled to pay prescribed by the Civil Service Commission independently of agency recommendations or ratings and in accordance with subchapter III of this chapter of this title and chapter 51 of this title.' 5 U.S.C. § 7521 states:

"A hearing examiner appointed under section 3105 of this title may be removed by the agency in which he is employed only for good cause established and determined by the Civil Service Commission on the record after opportunity for hearing."