1997 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

9-18-1997

Torres v. Chater

Precedential or Non-Precedential:

Docket

96-1883

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Recommended Citation

"Torres v. Chater" (1997). 1997 Decisions. Paper 222.

http://digitalcommons.law.villanova.edu/thirdcircuit_1997/222
Filed September 18, 1997

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 96-1883

EDWIN R. CORDOVA TORRES,

 Appellee

v.

SHIRLEY S. CHATER,

Commissioner of Social Security,

 Appellant

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

(D.C. Civ. No. 95-cv-02199)

Submitted Pursuant to Third Circuit LAR 34.1(a).

May 21, 1997

Before: GREENBERG, ROTH and WEIS, Circuit Judges.

Filed September 18, 1997

 Jeffrey L. Greenwald, Esquire

 640 Hamilton Mall, Suite 301

 Allentown, PA 18101

 Attorney for Appellee

 Alfred R. Mollin, Esquire

 Anne M. Lobell, Esquire

 United States Department of Justice

 Civil Division, Appellate Staff

 10th & Pennsylvania Ave., NW

 Washington, D.C. 20530-0001

 James A. Winn, Esquire

 Social Security Administration

 3535 Market Street

 Box 13716, Room 9100

 Philadelphia, PA 19101

 Attorneys for Appellant

OPINION OF THE COURT
WEIS, Circuit Judge.

When the Social Security Act was amended to eliminate

benefits for disability caused by alcohol and drug addiction,

Congress divided the claimants into two groups. The

district court decided that the distinction was based on

whether the disability existed on the effective date of the

amendment. We conclude, however, that the test is whether

the claims had been "finally adjudicated by the

Commissioner" before or after the effective date of the

amendment. Accordingly, we will reverse the order of the

district court.

After the denial of his original application for

Supplemental Social Security Income (SSI) benefits, the

claimant, Edwin R. Cordova Torres, reapplied, relying

principally on his alcoholism as the cause of his disability.

In 1994, an ALJ denied benefits and the Appeals Council

affirmed. Claimant filed his request for review by the

district court in May 1995. On March 21, 1996, the district

court remanded the case to the Commissioner "for further

determination as to the nature and extent of the plaintiff's

alcohol problem, his ability to control his condition and his

employability."

 2

Almost two months later on May 16, 1996, the

Commissioner filed a motion under Federal Rule of Civil

Procedure 60(b)(6) to vacate the remand order because

legislation enacted on March 29, 1996 eliminated

alcoholism as a primary basis for SSI benefits. Exercising

its discretion, the district court concluded that the

Commissioner's motion was appropriate and considered it

on the merits.

The Commissioner contended that the amending

legislation barred further consideration of the plaintiff's

claim because it had not been "finally adjudicated by the

Commissioner" before March 29, 1996, as required by the

statute's effective date provision. The district court,

however, read the effective date language as directed toward

the existence or non-existence of disability on that day,

thus exempting cases pending on the date of enactment.

Accordingly, the court denied the Commissioner's motion.

I.

In view of the somewhat unusual procedural posture of

this case, we must first determine whether the order is

appealable. The district court's initial remand to the

Commissioner called for further review of evidence already
existing in the record. It was fifty-six days later when the

Commissioner filed her motion arguing that the change in

statutory law disposed of the claim in its entirety. Following

the rejection of her contentions by the district court, the

Commissioner appealed to this Court.

Rule 60(b) provides that on motion "the court may relieve

a party . . . from a final judgment, order, or proceeding for

. . . (6) any other reason justifying relief from the operation

of the judgment." Preliminarily, it would appear that an

order denying a Rule 60(b) motion is appealable under 28

U.S.C. S 1291. See Brower v. Director, Ill. Dep't of

Corrections, 434 U.S. 257, 263 n.7 (1978); Binker v.

Pennsylvania, 977 F.2d 738, 744 (3d Cir. 1992); Daily

Mirror, Inc. v. New York News, Inc., 533 F.2d 53, 56 (2d Cir.

1976) ("An order denying relief under Rule 60(b) is an

appealable order, but the appeal brings up only the

correctness of the order itself"); 11 Charles Alan Wright,

 3

Arthur R. Miller & Mary Kay Kane, Federal Practice and

Procedure S 2871 (2d ed. 1995).

There is an interdependence between the "finality"

required for Rule 60(b) and section 1291. In some

instances, the Court of Appeals may not entertain an

appeal under section 1291 because the underlying order in

the district court is purely interlocutory and, thus, not

within the scope of Rule 60(b), which applies only to "final"

judgments and orders. An example of that situation might

be a discovery order or similarly preliminary step in

litigation being conducted in the district court.

In Kapco Manufacturing Co. v. C & O Enterprises, 773

F.2d 151, 154 (7th Cir. 1985), a district court order

directing the parties to reduce a settlement to writing was

interlocutory, an "intermediate step" and not "final." Hence,

the order was not within the scope of Rule 60(b) and, as

such, not appealable under section 1291. See also St.

Mary's Health Ctr. v. Bowen, 821 F.2d 493, 497 (8th Cir.

1987) (order granting partial summary judgment on liability

was interlocutory and not "final" under Rule 60(b) nor

appealable under 28 U.S.C. S 1291).

In Kapco, however, the Court pointed out the distinction

between preliminary directives issued during the course of

ordinary civil litigation, which the district court has the

power to modify, and orders remanding a case to an

administrative agency for reconsideration. Although such

remand orders are usually interlocutory, see AJA

Associates v. Army Corps of Engineers, 817 F.2d 1070,
1073 (3d Cir. 1987), they are not always so. If, for example,

a party alleges under Rule 60(b) that a remand had been

procured by fraud, denial of the motion would be

dispositive of that issue and "wrap up all matters pending

on the docket," thus making the decision final. Kapco, 773

F.2d at 153.

As we noted in Horizons International, Inc. v. Baldridge,

811 F.2d 154, 158 (3d Cir. 1987), "interpretations of

section 1291 announced in more garden variety civil

litigation suits are not controlling" in reviews of agency

actions. Such cases may present the issue "differently by

virtue of the relief sought and the type of relief ordered." Id.

 4

at 159. Although Horizons cited Marshall v. Celebrezze, 351

F.2d 467 (3d Cir. 1965) for the general proposition that a

remand to the Secretary of HEW for the taking of additional

evidence was interlocutory, id., we have recognized an

exception for cases where barring appellate review is the

practical result of those orders. United States v. Spears,

859 F.2d 284, 286 (3d Cir. 1988); AJA Assocs., 817 F.2d at

1073. In such instances, appeals are permissible.

In Sullivan v. Finkelstein, 496 U.S. 617 (1990), the

Supreme Court discussed the appealability of an order

remanding a disability benefits case to the Secretary of

HHS for a further review of the record. In the

circumstances of that case, the practical effect of the

remand was to abrogate some of the Secretary's

regulations.

The Court concluded that the remand order came within

the fourth sentence of 42 U.S.C. S 405(g), which authorizes

a district court to enter a "judgment affirming, modifying,

or reversing the decision of the [Secretary], with or without

remanding the cause for a rehearing." The Court doubted

that the Secretary could later appeal, if on remand, he

ordered payment of benefits. Consequently, the Secretary

would be denied appellate review of the district court's

ruling that invalidated the regulations. Id. at 625; see also

Travis v. Sullivan, 985 F.2d 919, 921 (7th Cir. 1993).

Finkelstein is not precisely on point because the remand

order in the present case did not directly impair the

Commissioner's ability to deny benefits. Moreover, it is not

the remand that is before us, but the refusal to grant the

Rule 60(b) motion. Therefore, it is the merits of that denial,

and not the remand, that we must address. See Brower,

434 U.S. at 263 n.7; Daily Mirror, 533 F.2d at 56.
Nevertheless, the case here is in the same posture as that

in Finkelstein. If we do not entertain the appeal at this time,

on remand the claimant may receive an award of benefits,

in which event he will not appeal, and it is very doubtful

that the Commissioner could appeal. See Finkelstein, 496

U.S. at 625. Consequently, the Commissioner would be

unable to secure appellate review of the alcohol and drug

abuse amendment as applied to this claim.

 5

In the light of the circumstances present in this case, we

conclude that because the claim on remand would likely

escape appellate review, the district court properly

considered that order as final for purposes of Rule 60(b)

and appropriately considered the legal effect of the

alcoholism amendment. Consequently, the denial of the

motion is also final and appealable to this Court under

section 1291.

II.

Congress amended Title II of the Social Security Act in

1996 to bar the award of disability benefits based on

alcoholism or drug addiction. The amendment, codified at

42 U.S.C. S 423(d)(2)(C), reads as follows: "An individual

shall not be considered to be disabled for purposes of this

subchapter if alcoholism or drug addiction would (but for

this subparagraph) be a contributing factor material to the

Commissioner's determination that the individual is

disabled."

On its face, the amendment's relevance to this case is not

seriously questioned. The principal challenge is to the

construction of the amendment's effective date as it applies

to the claimant.

The relevant statutory language states: "The amendments

. . . shall apply to any individual who applies for, or whose

claim is finally adjudicated by the Commissioner of Social

Security with respect to, benefits under title II of the Social

Security Act based on disability on or after the date of the

enactment of this Act, and, in the case of any individual

who has applied for, and whose claim has been finally

adjudicated by the Commissioner with respect to, such

benefits before such date of enactment, such amendments

shall apply only with respect to such benefits for months

beginning on or after January 1, 1997." Pub. L. 104-121

S 105(a)(5)(A), 110 Stat. at 853; 42 U.S.C. S 405 note (1996).

The district court concluded that the claimant was not

barred because his application for benefits was not "based
on disability on or after" the effective date of the

amendment, March 29, 1996. Therefore, he could receive

benefits for the disability that existed before that time.

 6

Similarly, the court believed that the claimant was not

seeking payments that would be received after January 1,

1997. Essentially, the district court's construction of the

amendment rests on the proposition that the clause "on or

after the date of the enactment" modifies the word

"disability." The Commissioner, on the other hand,

contends that the "on or after" clause modifies "applies for,

or whose claim is finally adjudicated by the Commissioner."

A number of district courts have discussed these two

views of the statutory language and have labeled the former

the "disability" and the latter the "adjudication"

interpretation. Among the opinions adopting the disability

construction are Hall v. Chater, No. 96C580 (N.D. Ill. Mar.

21, 1997) and Teitelbaum v. Chater, 949 F. Supp. 1206,

1212-13 (E.D. Pa. 1996). Cases adopting the adjudication

theory include Miller v. Callahan, 964 F. Supp. 939, 947

(D.Md. 1997); Connor v. Chater, 947 F. Supp. 56, 60

(N.D.N.Y. 1996); Sousa v. Chater, 945 F. Supp. 1312,

1328-30 (E.D.Cal. 1996); Santos v. Chater, 942 F. Supp.

57, 63 (D.Mass. 1996); Willis v. Chater, 939 F. Supp. 1236,

1239-40 (W.D.Va. 1996). Two Courts of Appeals have

referred to the amendment, but have not been required to

construe its statutory language. See Perkins v. Chater, 107

F.3d 1290 (7th Cir. 1997); Newton v. Chater, 92 F.3d 688

(8th Cir. 1996).

Claimant argues that the amendment should be applied

prospectively only and relies on Landgraf v. USI Film

Products, 511 U.S. 244 (1994), in which the Court

discussed the effect of retroactive legislation on vested

substantive rights. Claimant reasons that because his

disability existed before the amendment was enacted, he

had a settled expectation of receiving benefits for the period

before the effective date.

Claimant has received no benefits and none have been

awarded. His status is simply that of an applicant.

Individuals in that category are entitled to procedural due

process, see Flatford v. Chater, 93 F.3d 1296, 1303-05 (6th

Cir. 1996); Kelly v. Railroad Retirement Bd., 625 F.2d 486,

489-90 (3d Cir. 1980), but as the Supreme Court has

reminded us, procedural due process does not impose a

constitutional limitation on Congress' power to make

 7
changes in eligibility for certain entitlements. Atkins v.

Parker, 472 U.S. 115 (1985).

In Atkins, the Court rebuffed objections to a

congressional reduction of food stamp benefits: "[I]t must

be assumed that Congress had plenary power to define the

scope and the duration of the entitlement to food-stamp

benefits and to increase, to decrease, or to terminate those

benefits based on its appraisal of the relative importance of

the recipients' needs and the resources available to fund

the program." 472 U.S. at 129. Continuing in the same

theme, the Court said that when the legislature adjusts

benefit levels that "determination provides all the process

that is due." Id. at 129-30 (quoting Logan v. Zimmerman

Brush Co., 455 U.S. 422, 432-33 (1982)); see also United

States R.R. Retirement Bd. v. Fritz, 449 U.S. 166, 174

(1980) ("railroad benefits, like social security benefits, are

not contractual and may be altered or even eliminated at

any time.").

Thus, if a recipient's right to future benefits may be

terminated by a statute, it follows that an applicant who

has never been declared eligible may as well be deprived of

an inchoate right.

Claimant relies on the definition of "entitled" in Estate of

Cowart v. Nicklos Drilling Co., 505 U.S. 469 (1992), a case

brought under the Longshore and Harbor Workers'

Compensation Act, 33 U.S.C. S 901. There, the Supreme

Court said that "the normal meaning of entitlement

includes a right or benefit for which a person qualifies, and

it does not depend on whether the right has been

acknowledged or adjudicated." Id. at 477.

The question in Cowart was whether a person who had

sustained an injury in the workplace was an individual

"entitled to compensation" under the Act and, as such,

required to obtain his employer's consent before settling a

tort claim against a third party.

We note that the word "entitled" does not appear in the

effective date provisions of the alcoholism amendment.

Furthermore, usage in the Longshore and Harbor Workers'

Compensation Act does not carry over naturally to the

circumstances before us. Cowart did not address the

 8

retroactivity problems of legislation affecting vested
entitlements.

More fundamentally, Landgraf discussed a statute that

did not disclose Congress' will on retroactivity. The

amendment at issue before us, however, does set out when

it will apply in terms that are sufficiently clear to provide

necessary guidance. See also Lindh v. Murphy, ___ U.S. ___,

No. 96-6298, 1997 WL 338568, at * 4 (U.S. June 23, 1997)

(normal rules of construction apply in determinations of a

statute's temporal reach).

The amendment focuses on when a claim is filed or

adjudicated. We are convinced that, grammatically, "after

the date of enactment" modifies the clause, "whose claim is

finally adjudicated by the Commissioner." The amendment

thus establishes two separate groups who are affected in

different ways.

1. Those whose claims were not "finally adjudicated by

the Commissioner" before March 29, 1996. The individuals

in this group receive no benefits. The Commissioner asserts

that the claimant falls into this category.

2. Those whose claims have been favorably and "finally

adjudicated by the Commissioner" before the effective date

of the amendment, March 29, 1996. The individuals in this

group had been receiving payments and were granted a

grace period until January 1, 1997 during which they could

adjust to the loss of the monthly income after that date and

perhaps reapply for benefits based on other disabilities.

There is a reasonable basis for the distinction between the

two categories -- the people who have never obtained

payment do not have the need to adjust as do those who

have received benefits in the past.

Strong support of the adjudication interpretation also lies

in the well-settled tenet of statutory construction that all

provisions of the statute must be construed together to give

each some independent meaning. Kowalski v. L & F Prods.,

82 F.3d 1283, 1287-88 (3d Cir. 1996). The language

applied to first category situations fits neatly when the

focus is on the date of adjudication. If a claim isfiled, or

finally adjudicated, post-enactment, the amendments apply

in full.

 9

In contrast, if the focus is on the date of disability, then

the "final adjudication" language in the first category

becomes superfluous. Stated another way, if an individual

files a claim based upon a post-enactment disability, then

the date of final adjudication would be irrelevant because
the claim would have been void ab initio. Thus, in this

reading of the statute there is no phrase that explains in a

temporal way which applications are covered.

The weakness of the disability interpretation adopted by

the district court may be further demonstrated by an

examination of the results of applying it to the two

categories. In the first group (those whose claims had not

been "finally adjudicated"), payments "based on disability

on or after" March 29, 1996 would not be made, although

by implication benefits could be awarded for periods of

disability before that date. This result, although strained, is

not beyond reason.1

However, when the disability interpretation is applied to

the second category, the fallacy of this approach becomes

apparent. The point is illustrated by repeating below the

language that applies to the second category and inserting

the modifying language from the first category in brackets.

It reads: "[A]nd, in the case of any individual . . . whose

claim has been finally adjudicated by the Commissioner

with respect to, such benefits [based on disability] before

[March 29, 1996], such amendments shall apply only with

respect to such benefits [based on disability before March

29, 1996] for months beginning on or after January 1,

1997."

The result is confusing to say the least. Among other

things it leads to the question of whether benefits are due

for disability between March 29, 1996 and January 1,

1997.

It is persuasive, however, that the second category

_________________________________________________________________

1. We note, however, that SSI benefits are not payable for a period prior

to a claimant's application. 20 C.F.R. S 416.335; see also Cruse v.

Bowen, 867 F.2d 1183, 1185 (8th Cir. 1989). Thus, if a claimant applied

for SSI benefits based on alcoholism after March 29, 1996, the claim

would have to be based on disability after that date.

 10

description deletes the words "based on disability" and

refers instead to a claim that "has been finally adjudicated

. . . with respect to, such benefits before . . . enactment."

Thus, when date of enactment is tied to a claim that has

been finally adjudicated, the meaning becomes quite clear

-- benefits awarded before the date of enactment continue

until January 1, 1997. Not only is this approach clearer, it

is consistent with the legislative history.
The Ways and Means Committee Report discusses the

effective date of the legislation as follows: "Generally,

changes apply to benefits for months beginning on or after

the date of enactment. However, an individual entitled to

benefits before the month of enactment would continue to

be eligible for benefits until January 1, 1997." H.R. Rep.

104-379, 1st Sess. 17 (1995). The tenor of the Report also

reflected Congressional intent to end benefits sooner rather

than later. "The intent of this proposal is to eliminate

payment of cash Social Security and SSI disability benefits

to alcoholics and drug addicts" and channel part of the

savings into treatment programs. Id.

Implicit in claimant's argument is the notion of

unfairness. But drawing lines is the business of Congress

and inevitably individuals on the wrong side of the division

do not fare well. The result is unfortunate for those

adversely affected, but arbitrariness is often unavoidable.

Our study of the statute convinces us that it is the date

of adjudication, and not the time when disability exists,

that triggers the application of the effective date. "The

upshot is that our analysis accords more coherence to [the

amendment] than any rival we have examined. That is

enough." Lindh, 1997 WL 338568 at *8.

A remaining issue requires us to interpret the meaning of

the term "finally adjudicated by the Commissioner." Some

district court opinions hold that after the claim reaches the

district court it has been "finally adjudicated by the

Commissioner." See, e.g., Santos, 942 F. Supp. at 64;

Willis, 939 F. Supp. at 1241.

In light of the circumstances in this case, we have no

difficulty in concluding that the claim has not been "finally

adjudicated." The case was remanded by the district court

 11

to the Commissioner for the specific purpose of further

adjudication. A claim subject to further hearing by the

Commissioner cannot be "finally adjudicated."

We conclude that the claim in this case is barred by the

statutory amendment.2 Accordingly, the order of the district

court will be reversed and the case will be remanded for

further proceedings consistent with this Opinion.

 A True Copy:

Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

_________________________________________________________________

2. Congress amended the relevant provisions ofS 105(b)(5) on August 5,

1997 as applicable to SSI claims. The current version reads:

 (D) For purposes of this paragraph, an individual's claim, with

 respect to supplemental security income benefits under title XVI 

of

 the Social Security Act based on disability, which has been 

denied

 in whole before the date of the enactment of this Act, may not be

 considered to be finally adjudicated before such date if, on or 

after

 such date --

 (i) there is pending a request for either administrative or 

judicial

 review with respect to such claim, or

 (ii) there is pending, with respect to such claim, a 

readjudication

 by the Commissioner of Social Security pursuant to relief in a 

class

 action or implementation by the Commissioner of a court remand

 order."

 Technical Amendments Relating to Drug Addicts and Alcoholics,

 Balanced Budget Act of 1997, SS 5525, 5528. We find no need to

 consider either the application of this statutory change to the 

case

 before us, or its retroactivity.

 12