Court Opinion

ID: 9686418
Source: CourtListenerOpinion
Date Created: 2023-08-24 15:46:31.751516+00
Date Added: 2024-06-11T18:18:18.816885
License: Public Domain

ADAMS, Circuit Judge,
concurring.
For nearly two decades, federal courts have endeavored to define the contours of due process rights applicable to state and federal entitlement programs. Today, this court turns its attention to the procedural constraints that due process places upon the Pennsylvania system of workmen’s compensation terminations.
In Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1969), the Supreme Court made it clear that the creation of a state entitlement program vests its recipients with due process protection against arbitrary termination of benefits. While Goldberg mandated an evidentiary hearing prior to termination of benefits under the Aid to Families with Dependent Children (AFDC) program, its emphasis upon the destitution of AFDC recipients left open the possibility that due process could be satisfied by less than a pre-termination evidentiary proceeding for the bene*234ficiaries of other entitlement programs. Subsequently, in Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976), the Court held that certain termination proceedings for Social Security disability benefits could be discontinued despite the absence of an evidentiary hearing and not violate due process so long as the termination procedures were sufficiently reliable. Because workers’ compensation is manifestly more comparable to the disability benefits involved in Mathews than the more protected AFDC benefits in Goldberg, I believe that further elaboration of the due process question presented in this case is in order.
I.
Recipients of statutorily created benefits have a property interest in the continued receipt of those benefits. Board of Regents v. Roth, 408 U.S. 564, 576-578, 92 S.Ct. 2701, 2708-2709, 33 L.Ed.2d 548 (1972); Bell v. Burson, 402 U.S. 535, 539, 91 S.Ct. 1586, 1589, 29 L.Ed.2d 90 (1971); Goldberg, supra, 397 U.S. at 261-62, 90 S.Ct. at 1016-17. The existence of this constitutionally protected property interest was not disputed in Mathews, where the Court noted,
Procedural due process imposes constraints on governmental decisions which deprive individuals of “liberty” or “property” within the meaning of the Due Process Clause of the Fifth or Fourteenth Amendment____
The Court consistently has held that some form of hearing is required before an individual is finally deprived of a property interest____ The fundamental requirement of due process is the opportunity to be heard “at a meaningful time and in a meaningful manner.”
424 U.S. at 332-33, 96 S.Ct. at 901-902 (citations omitted).
Taking the lead from Mathews, this Court must determine whether the Pennsylvania supersedeas provision offers recipients of workmen’s compensation payments a “meaningful time” and “meaningful manner” to challenge terminations of such payments within the scope of due process. This determination must be made in the context of the specific “time, place and circumstances” of the challenged state procedure. Cafeteria Workers v. McElroy, 367 U.S. 886, 895, 81 S.Ct. 1743, 1748, 6 L.Ed.2d 1230 (1961); Morrissey v. Brewer, 408 U.S. 471, 481, 92 S.Ct. 2593, 2600, 33 L.Ed.2d 484 (1972). Thus under Mathews a reviewing court is compelled to balance the following factors:
First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government’s interest, including the function involved and the fiscal administration burdens that the additional or substitute procedural requirement would entail.
424 U.S. at 335, 96 S.Ct. at 903.
My concern in the present case is with the second of the enumerated Mathews factors: whether the supersedeas termination procedure is sufficiently reliable to protect against erroneous termination. As the majority opinion makes clear, the challenged Pennsylvania statute offers the terminated compensation recipient only post-facto restoration of benefits. While the statute does allow for interest on the unpaid amounts found to be due as well as attorneys’ fees in case of wrongful termination, a principal question in this proceeding, as I see it, is whether such an arrangement offers sufficient indicia of reliability to satisfy constitutional due process requirements.
II.
In Mathews the Supreme Court weighed the specific needs of the recipient class and the prescribed termination procedures that allow for the cessation of benefits without a full evidentiary hearing. The Court found that the potential injury to a discontinued recipient was the same as in Goldberg: the interrupted receipt of income pending final administrative review of the *235termination decision. Two critical factors distinguished the affected class in Mathews from that in Goldberg. First, as in the present case, disability recipients are not as destitute as AFDC recipients and therefore the “potential deprivation here is likely to be less than in Goldberg____” 424 U.S. 841, 96 S.Ct. at 906.1 Second, Mathews focused on “the fairness and reliability of the existing pre-termination procedures, and the probable value, if any, of additional procedural safeguards.” 424 U.S. at 343, 96 S.Ct. at 907. Mathews identified eight features of the social security disability statute that provided sufficient evidence of fairness and reliability:
1. Termination follows continuing eligibility monitoring by a physician and non-medical administrator;
2. There is periodic communication between the two monitors and the disability recipient;
3. In case of conflict between the monitors and the disability recipient, the recipient is examined prior to termination by an independent physician;
4. The recipient is provided immediate notice of agency intent to terminate benefits;
5. The recipient and/or his/her representative is allowed full access to all information relied upon by the state agency prior to termination and is allowed to respond in writing and submit additional evidence;
6. The state agency determinations are not final until reviewed by an examiner in the Social Security Administration’s Bureau of Disability Insurance;
7. Benefits are terminated two months after the date when disability is found to have ceased in order to minimize economic shock;
8. Final determination is premised on technical, medical evaluation which does not require adversarial process beyond the submission of affidavits and documentary evidence.
424 U.S. at 337-38, 96 S.Ct. at 904. The Pennsylvania supersedeas termination procedure therefore must be scrutinized in light of these features to determine whether it comports with the due process requirements of the Constitution.
III.
Judged against the procedures approved by the Supreme Court in Mathews, the Pennsylvania supersedeas statute has two grave faults. First, the statute imposes no requirement of notice to the employee prior to termination. Under 77 Penna.Stat.Ann. § 774 (Purdon 1982), the filing of a supersedeas petition, accompanied by an affidavit of a physician declaring that the claimant has recovered, suspends compensation benefits to the extent that such benefits would cease if all the allegations contained in the petition were true; the challenged statute makes no mention of pre-termination notice. According to the deposition testimony of Workers’ Compensation Referee Irvin Stander, medical examination reports and other documentary materials are not generally made available to the claimant until after termination and, on occasion, not until the actual post-termination hearing. Exhibit 61, at 7-12. Referee Stander acknowledged that he was aware of hearings at which “the claimant has never seen the report, he doesn’t know what the report says, and he doesn’t know what evaluation has been made of his disability ____” Id. at 12.
The failure to give notice distinguishes the supersedeas provision from the Penn*236sylvania non-evidentiary hearing termination procedure for unemployment benefits upheld in Ross v. Horn, 598 F.2d 1312 (3d Cir.1979), cert, denied, 448 U.S. 906, 100 S.Ct. 3048, 65 L.Ed.2d 1136 (1980). See also, Wilkinson v. Abrams, 627 F.2d 650 (3d Cir.1980); Basciano v. Herkimer, 605 F.2d 605 (2d Cir.1978) (due process not violated by New York disability retirement benefits termination procedure because it gave notice to the claimant and allowed him or her to present evidence challenging the termination). Moreover, as the majority opinion notes, the Supreme Court of Iowa struck down a state summary termination procedure similar to the challenged Pennsylvania statute for this precise failure to provide pre-termination notice. Auxier v. Woodward State Hospital-School, 266 N.W.2d 139 (Iowa 1978), cert, denied, 439 U.S. 930, 99 S.Ct. 319, 58 L.Ed.2d 324 (1979). Relying on Mathews, the court in Auxier held:
[D]ue process demands that, prior to termination of workers compensation benefits, except where the claimant has demonstrated recovery by returning to work, he or she is entitled to a notice which, as a minimum, requires the following:
(1) the contemplated termination,
(2) that the termination of benefits was tb occur at a specified time not less than 30 days after notice,
(3) the reason or reasons for the termination,
(4) that the recipient had the opportunity to submit any evidence of documents disputing or contradicting the reasons given for termination, and, if such evidence or documents are submitted, to be advised whether termination is still contemplated,
(5) that the recipient had the right to petition for review....
Id. at 142-43. Similarly, the West Virginia Supreme Court of Appeals held that a state workmen’s compensation termination must be preceded by written notice, an opportunity for the claimant to furnish relevant countervailing information, and an opportunity under the applicable state statute to an evidentiary hearing upon timely protest to an adverse order. Mitchell v. State Workmen’s Compensation Comm’r, 256 S.E.2d 1, 11-13 (W.Va.1979). See also Carr v. SAIF Corp., 65 Or.App. 110, 670 P.2d 1037, 1046 (C.A.1983) (in banc) (Oregon workers’ compensation termination requires preliminary notice of proposed cessation and of the evidence upon which termination is premised, as well as an opportunity to respond); Steele v. North Dakota Workmen’s Comp. Bureau, 273 N.W.2d 692, 700-701 & n. 4 (S.Ct.N.D.1978), (reliance on Mathews and Goldberg to require notice, additional reliance on state law to require formal hearing if any material fact is disputed). Cf. Laird v. Workers’ Compensation Bd., 147 Cal.App.3d 198, 195 Cal.Rptr. 44 (1983) (termination requires preliminary hearing).2
The second deficiency in the Pennsylvania arrangement is that it provides no independent check by state authorities on the termination certification by a physician. Thus a physician employed by an insurance carrier, to whom a disabled worker must periodically report, may at any point certify that the disability has ceased. As noted above, that certification alone immediately terminates benefits under the supersedeas provision. Although Mathews does not require a full evidentiary hearing, the Supreme Court has nevertheless observed, “[ojrdinarily, due process of law requires an opportunity for ‘some kind of hearing’ prior to the deprivation of a significant property interest.” Memphis Light Gas & Water Div. v. Craft, 436 U.S. 1,19, 98 S.Ct. 1554, 1565, 56 L.Ed.2d 30 (1978). See generally, Friendly, Some Kind of Hearing, 123 U.Pa.L.Rev. 1267 (1975). We need not set forth the precise minimum safeguards that would protect a termination not accom*237panied by an evidentiary hearing. However, it bears comment that the technical, medical testimony that insured reliability in Mathews was followed by two tiers of independent state and federal agency review prior to termination of benefits. In short, the use of the unchecked recommendation of a physician in the employ of an interested party to terminate a benefit in which a recipient has a cognizable property interest is at odds with the due process concepts set forth in Mathews and Goldberg.
IY.
Because the Pennsylvania supersedeas proceeding affords the affected party no notice and because it fails to provide a mechanism for insuring the relative reliability of its termination proceedings, the challenged Pennsylvania statute must fall. The centrality of the notice defect and the insufficient guarantee of decisionmaker impartiality requires this Court to hold that prospect of future settlement of the claim, even with the payment of interest and an attorneys’ fee, does not satisfy the constitutional requirements of due process. Accordingly, I join in the result reached by the majority.
Judges GREEN and POLLAK have authorized me to say that they join in this statement.

. In Goldberg the Court emphasized:
The crucial factor in this context — a factor not present in the case of ... virtually anyone else whose governmental entitlements are ended— is that termination of aid pending resolution of a controversy over eligibility may deprive an eligible recipient of the very means by which to live while he waits.
397 U.S. at 264, 90 S.Ct. at 1018. Mathews found this exigency created by poverty not to apply to disability recipients, "although the degree of difference can be overstated.” 424 U.S. at 341, 96 S.Ct. at 906.

. Other state systems which avoid the due process problems present in no-notice procedure include those of Washington, see Herron v. McClanahan, 28 Wash.App. 552, 625 P.2d 707 (1981) (presentation of documentary and deposition evidence to a jury), Florida see Wellcraft Marine Corp. v. Turner, 435 So.2d 864, 865 (Fla. App. 3 Dist.1983) (employer/carrier has burden of proof in any contested disability termination proceeding), and Maine, see Merrifield v. Hannaford Bros. Co., 409 A.2d 1313 (S.Ct.Me.1980) (same).