Source: https://supreme.justia.com/cases/federal/us/404/78/case.html
Timestamp: 2016-05-25 09:22:46
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Matched Legal Cases: ['§ 424', '§ 224', '§ 1252', '§ 224', '§ 224', '§ 224', '§ 224', '§ 224', '§ 224', '§ 224', '§ 23', '§ 92', '§ 232', '§ 224', '§ 224']

Richardson v. Belcher :: 404 U.S. 78 (1971) :: Justia U.S. Supreme Court Center Log In
› Richardson v. Belcher
Richardson v. Belcher 404 U.S. 78 (1971)
U.S. Supreme CourtRichardson v. Belcher, 404 U.S. 78 (1971)Richardson v. BelcherNo. 70-53Argued October 13, 1971Decided November 22, 1971404 U.S. 78APPEAL FROM THE UNITED STATES DISTRICT COURT
STEWART, J., delivered the opinion of the Court, in which BURGER, C.J., and WHITE and BLACKMUN, JJ., joined. DOUGLAS, J., filed a dissenting opinion, post, p. 404 U. S. 84. MARSHALL, J., filed a dissenting opinion, in which BRENNAN, J., joined, post, p. 404 U. S. 88.
The appellee was granted social security disability benefits effective in October 1968, in the amount of $329.70 per month for himself and his family. In January, 1969, the federal payment was reduced to $225.30 Page 404 U. S. 79 monthly under the "offset" provision of Section 224 of the Social Security Act, 79 Stat. 406, 42 U.S.C. § 424a, [Footnote 1] upon a finding that the appellee was receiving workmen's compensation benefits from the State of West Virginia in the amount of $203.60 per month. After exhausting his administrative remedies, the appellee brought this action challenging the reduction of payments required by § 224 on the ground that the statutory provision deprived him of the due process of law guaranteed Page 404 U. S. 80 by the Fifth Amendment. The District Judge, disagreeing with other courts that have considered the question, [Footnote 2] held the statute unconstitutional. 317 F.Supp. 1294. The Secretary of the Department of Health, Education, and Welfare appealed directly to this Court under 28 U.S.C. § 1252. [Footnote 3] We noted probable jurisdiction, 401 U.S. 935, and the case was briefed and argued on the merits. We now reverse the judgment of the District Court.
Flemming v. Nestor, 363 U. S. 603, 363 U. S. 611. The fact that social security benefits are financed in part by taxes on an employee's wages does not, in itself, limit the power of Congress to fix the levels of benefits under the Act or the conditions upon which they may be paid. Nor does an expectation of public benefits confer a contractual right to receive the expected amounts. Our decision in Goldberg v. Kelly, 397 U. S. 254, upon which Page 404 U. S. 81 the District Court relied, held that, as a matter of procedural due process, the interest of a welfare recipient in the continued payment of benefits is sufficiently fundamental to prohibit the termination of those benefits without a prior evidentiary hearing. But there is no controversy over procedure in the present case, and the analogy drawn in Goldberg between social welfare and "property," 397 U.S. at 397 U. S. 262 n. 8, cannot be stretched to impose a constitutional limitation on the power of Congress to make substantive changes in the law of entitlement to public benefits.
A statutory classification in the area of social welfare is consistent with the Equal Protection Clause of the Fourteenth Amendment if it is "rationally based and free from invidious discrimination." Dandridge v. Williams, 397 U. S. 471, 397 U. S. 487. While the present case, involving as it does a federal statute, does not directly implicate the Fourteenth Amendment's Equal Protection Clause, a classification that meets the test articulated in Dandridge is perforce consistent with the due process requirement of the Fifth Amendment. Cf. Bolling v. Sharpe, 347 U. S. 497, 347 U. S. 499. Page 404 U. S. 82
In response to renewed criticism of the overlap between the workmen's compensation and the social security disability insurance programs, Congress reexamined the problem in 1965. Data submitted to the legislative committees showed that, in 35 of the 50 States, a typical worker injured in the course of his employment and eligible for both state and federal benefits received compensation for his disability in excess of his take-home pay Page 404 U. S. 83 prior to the disability. Hearings on H.R. 6675 before the Senate Committee on Finance, 89th Cong., 1st Sess., pt. 2, p. 904. It was strongly urged that this situation reduced the incentive of the worker to return to the job, and impeded the rehabilitative efforts of the state programs. Furthermore, it was anticipated that a perpetuation of the duplication in benefits might lead to the erosion of the workmen's compensation programs. [Footnote 5] The legislative response was § 224, which, by limiting total state and federal benefits to 80% of the employee's average earnings prior to the disability, reduced the duplication inherent in the programs and, at the same time, allowed a supplement to workmen's compensation where the state payments were inadequate.
The District Court apparently assumed that the only basis for the classification established by § 224 lay in the characterization of workmen's compensation as a "public benefit." Because the state program was financed by employer contributions, rather than by taxes, the court held that the "public" characterization afforded no rational basis to distinguish workmen's compensation from private insurance. We agree that a statutory discrimination between two like classes cannot be rationalized by assigning them different labels, but neither can two unlike classes be made indistinguishable by attaching to them a common label. The original purpose of state workmen's compensation laws was to satisfy a need inadequately Page 404 U. S. 84 met by private insurance or tort claim awards. Congress could rationally conclude that this need should continue to be met primarily by the States, and that a federal program that began to duplicate the efforts of the States might lead to the gradual weakening or atrophy of the state programs.
"* * * *" "For purposes of clause (5), an individual's average current earnings means the larger of (A) the average monthly wage used for purposes of computing his benefits under section 423 of this title, or (b) one-sixtieth of the total of his wages and self employment income (computed without regard to the limitations specified in sections 409(a) and 411(b)(1) of this title) for the five consecutive calendar years after 1950 for which such wages and self employment income were highest. . . ."
Eligibility for social security disability benefits is premised upon a worker's having attained "insured" status in the course of an employment "covered" by the Act. It is undisputed that Raymond Belcher, and through him his wife and two minor children, had so qualified in 1968 when he broke his neck while employed by the Pocationtas Fuel Co. in Lynco, West Virginia. Indeed, his application for such benefits has been approved, and the benefits authorized and paid. Page 404 U. S. 85
Thus, had Belcher's supplemental disability payment come from a Veterans' Administration program, [Footnote 2/1] a Civil Service Retirement Act [Footnote 2/2] or Railroad Retirement Act [Footnote 2/3] Page 404 U. S. 86 annuity, a private disability insurance policy, [Footnote 2/4] a self-insurer, [Footnote 2/5] a voluntary wage continuation plan, or the proceeds in an action in tort arising from the disabling injury, there would have been no reduction in his social security benefits. The offset under § 224 applies only to federal social security disability beneficiaries also receiving workmen's compensation payments, a group which in 1965 totaled only 1.4% of all social security disability beneficiaries. [Footnote 2/6] Page 404 U. S. 87 Yet, of the 849,000 disabled workers who in 1965 received social security disability benefits, [Footnote 2/7] over fourteen percent also received overlapping veteran's benefits, [Footnote 2/8] and almost fourteen percent received benefits from private insurance maintained under the auspices of an employer or a union. [Footnote 2/9] Congress is, of course, not required to address itself to all aspects of a social problem in its legislation. It must, however, justify the distinctions it draws between people otherwise similarly situated. Rehabilitation incentives are not a rational justification for the discrimination worked by § 224. [Footnote 2/10] If it is at all rational to argue that duplicating payments "impede rehabilitation," the argument must apply to all such payments regardless of their source. The nature of the supplemental benefit has no relation to a worker's incentive to return to work.
Nor is § 224 designed to stem a possible "erosion" of state workmen's compensation plans. As MR. JUSTICE MARSHALL points out, post at 404 U. S. 94, § 224 itself provides that there shall be no reduction of federal social security benefits with respect to those state workmen's compensation plans which themselves offset federal social security Page 404 U. S. 88 benefits against state payments. Thus, the statute encourages States concerned about overcompensation of disabled workers to cut back on their own programs. But the "rational basis" discerned by the majority requires the statute to have precisely the opposite purpose. I would affirm the judgment of the District Court.
Before this 53-year-old appellee became disabled in March, 1968, he was supporting his wife and two children on total yearly earnings of approximately $6,600. Once disabled, he could not work, but he and his family were awarded federal social security disability benefits totaling $329.70 per month. [Footnote 3/1] Because his employer had chosen to set up a workmen's compensation fund, appellee also became entitled to workmen's compensation benefits totaling $203.60 per month. These were his only forms of disability compensation. Had appellee been allowed to keep his initial award of federal benefits, his income would have totaled nearly $6,400 a year, somewhat less than he had earned before his disability. But because of the offset provision of § 224, appellee's monthly federal payments were reduced, solely because the supplement to his federal benefits was in the form Page 404 U. S. 89 of state workmen's compensation. As a result, appellee's total yearly income was reduced to $5,146.80.
Starting from the assumptions that federal social security insurance, like welfare assistance, is a "public benefit" in which the beneficiaries have neither contract nor property interests, and that statutory classifications affecting the basic needs of individuals are viewed no differently under the Constitution from classifications in the area of business regulation, the Court concludes that the classification here has a reasonable basis and is consistent with the Fifth Amendment. To reach today's result, the Court revitalizes Flemming v. Nestor, 363 U. S. 603 (1960), [Footnote 3/2] and extends the doctrine of Dandridge v. Williams, 397 U. S. 471 (1970), to statutory classifications under federal law. [Footnote 3/3] Thus, the Court today Page 404 U. S. 90 holds that Congress can take social security benefits from a disabled worker as long as it does not behave in an "arbitrary" way; classifications in the federal social security law are consistent with the Fifth Amendment if they are "rationally based and free from invidious discrimination."
Dandridge v. Williams, supra, at 397 U. S. 521 (MARSHALL, J., dissenting); cf. Williams v. Rhodes, 393 U. S. 23, 393 U. S. 30 (1968). Under this approach, it is necessary to consider more than the character of the classification and the governmental interests in support of the classification. Judges should not ignore what everyone knows, namely that legislation regulating business cannot be equated with legislation dealing with destitute, disabled, or elderly individuals. Thus, in assessing the lawfulness of the special disadvantages suffered here by workmen's Page 404 U. S. 91 compensation beneficiaries, the Court should consider the individual interests at stake. Federal disability payments, even when supplemented by other forms of disability compensation, provide families of disabled persons with the basic means for getting by. I would require far more than a mere "rational basis" to justify a discrimination that deprives disabled persons of such support in their time of need.
This is not to say that an offset scheme is intrinsically impermissible. Arguably, Congress has an interest in paying greater benefits to people who are relying completely on the federal social security program, and lesser benefits to people who have other sources of disability compensation. But the question here is not whether Congress has the power to prevent "duplicative" payments that might exceed previous take-home pay and might thereby discourage disabled workers from returning to work. [Footnote 3/5] The issue is whether Congress may single Page 404 U. S. 92 out for the purpose of applying the offset only those who are receiving workmen's compensation, and exclude those who are receiving similar supplemental disability compensation from other sources. A concern about excessive combined benefits and "rehabilitation" does not explain that distinction.
Workmen's compensation programs serve precisely the same function as other forms of disability insurance and Page 404 U. S. 93 tort damage suits. The payments assist workers in the same way, and satisfy the same need. Indeed, in appellee's home State of West Virginia, as in lost States, workmen's compensation is, by statute, the complete functional equivalent of tort liability, since employers who participate in workmen's compensation cannot be sued for tort damages by disabled employees. W.Va.Code Ann. § 23-2-6. Moreover, no distinction can be drawn on the basis of the source of the payments. In West Virginia, as in most States, workmen's compensation is financed privately, just like other forms of insurance and like tort damages. Usually the benefits are paid directly by the employer (as a self-insurer) or by the employer's insurance carriers (in which case the employer pays the premiums). See 3 A. Larson, Law of Workmen's Compensation § 92.10, p. 444 (1971); W.Va.Code Ann. § 232-1 et seq. I see no basis for singling out workmen's compensation programs for special protection or solicitude.
"A matter of equal concern is the impact of Federal disability payments on State workmen's compensation programs. Legislative proposals have been offered in several States (Colorado, Florida, Maryland, and Minnesota) to reduce workmen's compensation benefits by the amount of [social security] disability benefits payable to a disabled worker. If other States follow this direction . . . we believe it Page 404 U. S. 94 will be only a matter of time until State workmen's compensation programs are destroyed."
Id. at 252. I am unable to see how § 224 is connected to this asserted rationale. The federal offset provision provides for the reduction of federal benefits if the total of those benefits and the workmen's compensation benefits exceeds 80% of "average current earnings." However, federal benefits may not be reduced if the workmen's compensation plan provides for a reduction of its benefits in the event of an overlap. § 224(d). Thus, if a State or employers in the State want to save money, the federal statute invites them to reduce workmen's compensation benefits by means of an offset provision of their own. I do not see how it is possible to argue that the federal statute is designed to prevent States from adopting their own offset provisions. If anything, the States are encouraged to cut back on their programs. [Footnote 3/7] Page 404 U. S. 95
The plain fact is that Congress passed this offset provision because it thought disabled persons should not receive excessive combined disability payments. Perhaps by oversight, [Footnote 3/9] it arbitrarily singled out workmen's compensation benefits from the universe of disability compensations, and required that workmen's compensation alone was to be offset against federal social security. If the majority's "rational basis" test in fact is to have any meaning, Congress cannot be permitted to single out recipients of workmen's compensation for this adverse Page 404 U. S. 96 treatment. The burden of reduced federal benefits -- so devastating to the families of the once-working poor -- cannot be imposed arbitrarily under the Fifth Amendment. In my view, that has happened here. I dissent. [Footnote 3/10]