I-5-4-15.Campbell, et al. v. Sullivan

Attachment 1. Order Dated March 26, 1990, as Amended on April 25, 1990 and Letter, Stipulation and Order Filed November 19, 1990

[DATE FILED: 03/26/1990]

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
EASTERN DIVISION

This matter is before the court on defendant's resisted Motion for Dismissal or in the Alternative for Summary Judgment, filed July 15, 1988, and on plaintiffs' resisted Motion for Summary Judgment, filed Novemeber 16, 1988. Defendant's motion to dismiss denied. Motions for summary judgment granted in part and denied in part. Defendant ordered to reconsider claims in accordance herewith.

The plaintiff class in this matter seeks declaratory and injunctive relief against defendant for improperly denying social security disability benefits and supplemental security income benefits based on determinations that plaintiffs' impairments were not severe.

At the outset, it is useful to review the relevant statutes, regulations, and social security rulings. Under the Social Security Act an individual is disabled if he is unable:

to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months....

42 USC § § 423(d)(1)(A), 1382c(a)(3)(A) (1989). This definition is limited so that

an individual... shall be determined to be under a disability only if his physical or mental impairment or impairments are of such severity that he is not only unable to do his previous work but cannot, considering his age, education, and work experience, engage in any other kind of substantial gainful work which exists in the national economy....

42 USC § 423(d)(2)(A), 1382c(a)(3)(B) (1989).

Defendant has established regulations which provide steps for evaluating disability. 20 CFR §§ 404.1520(a), 416.920(a) (1989). At step one, if the claimant is engaged in substantial gainful activity, defendant determines that the claimant is not disabled. If the claimant is not engaged in substantial gainful activity, defendant considers the claimant's physical and mental impairment(s) in step two. The step two regulations, 20 CFR §§ 404.1520(c) and 416.920(c) (1989) (severity regulations), provide¹:

You must have a severe impairment. If you do not have any impairment(s), which significantly limits your physical or mental ability to do basic work activities, we will find that you do not have a severe impairment and are, therefore, not disabled. We will not consider your age, education, and work experience. However, it is possible for you to have a period of disability for a time in the past even though you do not now have a severe impairment.

The severity regulations provide that an impairment is not severe if it does not significantly limit one's physical or mental ability to do basic work activities such as standing, walking, lifting, handling, seeing, speaking, hearing, understanding, and following simple instructions. 20 CFR §§ 404.1521, 416.921 (1989).

Additionally, beginning in 1980 and up until the passage of the Social Security Disability Benefits Reform Act of 1984, Pub. L. No. 460, 98th Cong., 2d Sess., 98 Stat. 1794 (effective date 12/1/84), the Secretary would “consider the combined effects of unrelated impairments only if all (were) severe and expected to last twelve months.” 20 CFR §§ 404.1522, 416.922(1984). The 1984 amendment to the Social Security Act countermanded this interpretation, requiring the Secretary to consider “the combined effect of all of the individual's impairments without regard to whether any such impairment, if considered separately, would be of such severity.” 42 USC. § 423(d)(2)(C).

Defendant has published Social Security Rulings (SSRs) which are binding on all components of the Social Security Administration. 20 CFR § 422.408(1989). SSR 82-55 provided that at step two of the evaluation process²:

when we may decide that an impairment is not severe, we do not consider the effects of age, education, and work experience (i.e., the vocational factors) since in such cases the determination is based on medical considerations alone. Similarly, the individual's RFC is not assessed in cases in which the individual's impairment is determined to be not severe. In such cases, the RFC assessment is not relevant because it is based upon functional limitations which result from a severe impairment, and thus, it only comes into play at a letter stage in he sequential evaluation process.

* * *

Inasmuch as a nonsevere impairment is one which does not significantly limit basic work-related functions, neither will a combination of two or more such impairments significantly restrict the basic work-related functions needed to do most jobs.

SSR 82-56 provides that:³

[w]hen there is no significant limitation in the ability to perform... basic work-related functions, an impairment will not be considered to be severe even though it may prevent the individual from doing work that the individual has done in the past. Inasmuch as a nonsevere impairment is one which does not significantly limit basic work-related functions, neither will a combination of two or more such impairments significantly restrict the basic work-related functions needed to do most jobs.

On October 21, 1985, the court held that the regulations at 20 CFR §§ 404.1520(c), 404.1521, 416.920(c), 416.921, and SSR 82-55 and those portions of SSR 82-56 relating to non-severe impairments were invalid and beyond defendant's statutory authority. Specifically, the court held that those regulations and rulings did not allow for consideration of vocational factors or a claimant's residual functional capacity in determining the severity of an impairment, and therefore they were in conflict with 42 USC §§ 423(d)(2)(A) and 1382c(a)(3)(B) which required consideration of those matters. The court further held that defendant's former policy of refusing to consider the combined effects of impairment which were individually found not to be severe, established at 20 CFR §§ 404.1522 and 416.922 (1984), was contrary to the plain meaning of 42 USC §§ 423(d)(2)(A) and 1382c(a)(3)(B). The court then ordered specific relief.

On appeal, the Eighth Circuit Court of Appeals entered a stay pending the Supreme Court's determination of Bowen v. Yuckert, 482 U.S. 137, 96 L.Ed. 2d 119 (1987), and thereafter vacated this court's decision and remanded for further consideration in light of the Yuckert decision. Briefs and arguments have been received, with the last filing having been submitted on June 2, 1989.

Prior to addressing the pending motions, it is useful to revisit the claims raised in plaintiffs' complaint:⁴

1. Plaintiffs challenged the facial validity of the severity regulations. Specifically, plaintiffs asserted that the severity regulations were contrary to 42 USC §§ 423(a) and 1382c(a) (3), and that they were promulgated in violation of the Administrative Procedure Act (APA) (5 USC §§ 523 et seq.) See Counts 1 and 2.

2. Plaintiffs asserted that defendant's former policy enunciated in 20 CFR §§ 404.1522, 416.922(1984) SSR 82-55, and SSR 82-56, whereby defendant refused to consider the combined effects of impairments which were individually found not to be severe, was contrary to the plain meaning of 42 USC §§ 423(d)(2)(A) and 1382c(a)(3)(B). Similarly, plaintiffs urged that the regulations and rulings permitting this result were promulgated in violation of the APA. See Counts 3 and 4.

3. Plaintiffs assert that defendant's policy and practice of denying/terminating benefits on the ground that an impairment was not severe was applied in an arbitrary and capricious manner in violation of 42 USC §§ 405 and 1383, the APA, and the Due Process Clause of the Fifth Amendment. See Count 5.

As previously noted, plaintiffs sought and obtained declaratory and injunctive relief, which was later vacated by the Court of Appeals.

DEFENDANT'S MOTION TO DISMISS, OR IN THE
ALTERNATIVE, FOR SUMMARY JUDGMENT

Defendant first urges that Yuckert resolved all the issues in this matter against plaintiffs, and therefore defendant seeks dismissal of plaintiffs' claims. Alternatively, defendant requests a summary judgment on the following grounds:

1. Yuckert upheld the facial validity of the severity regulations.

2. Plaintiffs are barred from challenging the application of the severity regulations.

3. If not barred from presenting a challenge to the application of the severity regulations, plaintiffs' challenge (i) cannot be maintained as a class action and (ii) is without merit.

4. Even if plaintiffs' misapplication challenge is meritorious, judicial waiver of the exhaustion of administrative remedies is unwarranted.

5. The analytical framework of the Yuckert decision requires reconsideration of the combined impairments issue.

PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT

Plaintiffs seek summary judgment and declaratory and injunctive relief on the following grounds:

1. That defendant's former policy of refusing to consider the combined effects of impairments individually found to be non-severe violates the Social Security Act. Plaintiffs seek reconsideration of the claims of all class members affected by this policy.

2. That defendant systematically misapplied the severity regulations, and continues to do so. Plaintiffs seek reconsideration of the claims of all class members affected by the alleged misapplication.

3. Plaintiffs seek an order enjoining the Secretary from using the severity regulations or, in the alternative, from using them in a manner inconsistent with Yuckert.

Due to their interrelationship, plaintiffs' and defendant's motions shall be considered together. The court notes that plaintiffs have not raised their APA claim at any point since the remand to this court, and therefore it shall be considered abandoned.

In Yuckert the Supreme Court addressed an individual claimant's challenge to the severity regulation pertaining to Title II benefits.⁵ The Court there upheld the facial validity of the severity regulation against the same facial validity challenge made here. Nevertheless, Yuckert did not address the pending misapplication challenge, nor did Yuckert address the Secretary's failure to consider the combined effects of impairments individually found to be non-severe. Accordingly, defendant's motion for dismissal on the basis of Yuckert having resolved all matters herein shall be denied.

Yuckert having upheld the facial validity of the severity regulations, plaintiffs have abandoned their challenge to facial validity. Defendant is entitled to summary judgment on this point.

SYSTEMATIC MISAPPLICATION OF SEVERITY REGULATIONS

Before addressing the merits of plaintiffs' misapplication claim, the court must focus on two matters raised by defendant. First, defendant asserts that plaintiffs' challenge to the regulation as they are applied is beyond the scope of this litigation. Defendant contends that this litigation has thus far been limited to the validity of the severity regulations and that plaintiffs failed to pursue their challenge to the application of those regulations.

Defendant's assertion is without merit. Plaintiffs specifically raised the application issue in their complaint, and fairly referred to the issue in their supplemental memorandum (docket #36) at pages 9-11. Plaintiffs emphasized and initially succeeded on the facial validity challenge, and therefore they did not have a ruling on the application challenge. This result will not be held to bar them from challenging the severity regulations as they are applied. This is not a matter of whether an issue has been preserved for appellate review applicable to the question of whether an application challenge may be made in this court. The Court of Appeals simply vacated this court's decision, and remanded for reconsideration in light of Yuckert. To the extent that defendant urges that only the issues discussed in Yuckert may now be reconsidered, it is noteworthy that a majority of the Yuckert court discussed the potential misapplication of the severity regulations.⁶ Finally, again noting that this issue was raised in plaintiffs' complaint, there is no danger of unfair surprise to defendant. The issue of application of the severity regulations is properly and fairly before the Court. Cf. FRCP 15 (leave to amend should be freely granted when justice so requires).

Second, defendant contends that even if the application challenge is properly before the court, it should not proceed a class action. Defendant urges that (1) there is already a established avenue of judicial review available; (2) the plaintiffs are not challenging any act or omission applicable to the class as a whole; and (3) appropriate declaratory and injunctive relief cannot be fashioned for large numbers of necessarily fact specific determinations.

The fact that there already exists an avenue for individual judicial review is no impediment to class certification under FRCP 23. Moreover, to the extent that plaintiffs assert the Secretary has established erroneous standards which result in systematic and class-wide misapplication of the regulation, a class action remains an appropriate vehicle for presentation of the plaintiffs' claims. See FRCP 23. See also Bailey v. Sullivan, 885 F.2d 52, 57-58 (3rd Cir. 1989); Wilson v. Sullivan, 709 F.Supp. 1351, 1357 (D.N.J. 1989); Dixon v. Bowen, 673 F.Supp. 123 (S.D.N.Y. 1987), later proceeding, 126 FRD 483 (S.D.N.Y. 1989). Cf. Johnson v. Bowen, 697 F.Supp. 346, 351-352 n.6 (N.D. Ill. 1989) (subsequent history omitted) (class action is an inappropriate vehicle for challenging random [rather than systematic] misapplication of facially valid severity regulation). Finally, the court is satisfied that if necessary, appropriate relief can be fashioned. Defendant's contentions are without merit.

Having considered and rejected defendant's two preliminary concerns, the court turns to the substantive issue of systematic misapplication.

Even though Yuckert held that the severity regulations are facially valid, plaintiffs urge that injunctive relief remains appropriate to halt the alleged continuation of systematic misapplication of those regulations. Plaintiffs also assert that they are entitled to summary judgment on the issue of past systematic misapplication of the severity regulations.

The standard governing a summary judgment motion is well known. Summary judgment should not be granted unless the pleadings, depositions, answers to interrogatories, and admissions on file, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. FRCP 56(c). It is an extreme remedy, not to be entered unless the moving party has established his right to a judgment with such clarity as to leave no room for controversy and unless the other party is not entitled to recover under any discernible circumstances. Equal Employment Opportunity Commission v. Liberty Loan Corp., 584 F.2d 853, 857 (8th Cir. 1978). In passing upon a motion for summary judgment the court is required to view the facts in the light most favorable to the party opposing the motion. Adickes v. S.H. Kress & Co. 398 U.S. 144, 158-59 (1970).

Plaintiffs urge that they are entitled to summary judgment on their misapplication claim based upon official and published policy statements, internal documents, quality assurance returns, court cases, and statistics showing a substantial increase in the use of the severity regulations. Plaintiffs have chosen to split their analysis into two parts, the first involving the period prior to October of 1985, the effective date of SSR 85-28, and the second part involving the period after publication of that ruling.

PRE-SSR-85-28

While the Secretary's regulations have long permitted denial of claims on medical considerations alone⁷, the “not severe” language was first introduced in 1978⁸, followed by the 1980 codification of the sequential evaluation process embodying the “not severe” language in step two.⁹ Although there was no substantive change in the regulatory standard other than purported technical clarifications, plaintiffs assert that it is undisputed that in the late 1970's there was a substantial national increase in the number of claims disallowed on the basis of a finding of non-severe impairments. See Background Materials and Data on Programs within the Jurisdiction of the committee on Ways & Means, 1986 Ed. Mouse Comm. On Ways and Means, 99th Cong. 2d Sess. 114 (March 3, 1986), Plaintiffs' undisputed facts, p. 4 (docket #87). Indeed, it is undisputed that the Ways and Means report shows that 8.4% of total disallowances in 1975 were based upon a finding of no severe impairments, and quite steadily that category of disallowances rose to a national high water mark of 43.2% of total disallowances in 1981 followed by 38.9% in 1982, 39.4% in 1983, 34.3% in 1984, and 23.3% in 1985. Plaintiffs urge that the dramatic escalation on the national percentages of disallowances based on the use of the severity regulations demonstrates system-wide misapplication resulting in excessive denials.¹⁰

Yuckert establishes that the second step evaluation with the severity regulations may be used only as a threshold screening device to deny claims where there is no significant impairment to the claimant's ability to do basic work activities. See Id., 482 U.S. at 158, 96 L.Ed. at 137, Justices O'Connor and Stevens concurring. Nevertheless, plaintiffs' statistics do not make out a violation of this de minimis standard. They are national in scope. Defendant makes the unresisted representation that the percentage of denials in Iowa attributable to non-severity grounds from 1979 to 1984 was 21.7%, 26.2%, 22.5%, 20.6%, 24.1%, and 22.8%, respectively. See defendant's resistance filed December 30, 1988 at p. 10 (docket #96), and attachment D appended thereto. Accordingly, in this case with a class of Iowa plaintiffs, plaintiffs' statistics simply do not support their claim.

Next, plaintiffs urge that the use of some of the twenty examples listed in SSR 82-55 led to the denial of benefits to individuals due to a “non-severe impairment” when those individuals actually met the statutory definition of disability, resulting in misapplication of the severity regulations. Specifically, plaintiffs point to two parts of SSR 82-55: 1.a and 1.b. SSR 82-55 1.b. declares the following to be a non-severe impairment: Traumatic fracture of a vertebral body in the absence of metabolic bone disease, with loss of less than 50 percent of height in the vertebra without significant physical findings or neurologic abnormalities."

Plaintiffs pose a hypothetical situation where an individual whose only past work has been unskilled heavy farm labor has the condition set forth in SSR 82-55 1.b. Plaintiffs urge that this individual, with no education, no skilled work experience, and who is closely approaching retirement age, would be found disabled under Rule 203.01 of the Medical Vocational Guidelines if his claim is not denied at step two due to a finding of no severe impairment. However, absent consideration of age, education and vocational factors, and based solely upon the “negative listing” of SSR 82-55 1.b., this individual would be denied benefits at step two of the sequential evaluation process.

While it appears that plaintiffs' hypothetical farm laborer would fall within the suggested Medical Vocational Guideline if he were unable to return to his past work, the conclusion which plaintiffs draw from their hypothetical example is deficient in the following respect. In its definition example 1.b. is qualified by the requirement that there be no “significant physical findings.” As the court understands this, it means that 1.b. is defining a situation where, notwithstanding the traumatic fracture, there are no limits on the claimant's ability to lift, bend, walk, carry, etc.

Presumably, if there is no significant physical finding or neurological abnormality, the claimant will be able to return so his past work. Plaintiffs have not come forward with any proposed undisputed fact or other evidence to the contrary. While it might be unusual that an individual with such a fracture would have no significant physical findings under these circumstances, i.e., no pain, no motion limitation, no lifting limitation, no prophylactic limitation to prevent further injury, etc., it is not irrational for the Secretary to establish that whenever this combination of circumstances is found, the result shall be a finding of no severe impairment. If there is to be any merit in plaintiffs' assumption that the claimant cannot return to his past work, there must necessarily and logically be physical findings of some significance. Lacking these, plaintiffs' hypothetical does not establish or support a claim of systematic misapplication.

Plaintiffs' second hypothetical involving osteoarthritis as described in SSR 82-55 1.a. suffers from a similar shortcoming. To the extent that the osteoarthritis is a accompanied by minimal abnormal findings as defined in the example, the example is not in conflict with the regulation or statute so as to support plaintiffs' systematic misapplication claim. While plaintiffs urge that “it seems obvious” that these examples would preclude heavy work, the narrow definitions discussed above lead to the opposite conclusion. Consistent with this discussion, the court notes that to the extent a claimant's condition produces severe or prolonged pain, it falls outside the scope of the example. See Id.

COURT CASES

Plaintiffs urge that “the many reported cases in which the Secretary misapplied the severity regulation reveal [the establishment of] an erroneous severity standard.”

That the Secretary has often incorrectly decided individual cases on step two grounds establishes no more than that fact. Random misapplication is undoubtedly inevitable in the enormous volume of claims processed by the Secretary. However, plaintiffs' bare assertion that there exist multiple individual cases of misapplication falls far short of even suggesting or establishing systematic misapplication.

POST-SSR 85-28

Plaintiffs assert that even after the October, 1985 implementation of SSR 85-28, the Secretary is continuing the alleged systematic misapplication of the severity regulation. Plaintiffs urge that notwithstanding the withdrawal of SSR 82-55, the examples of non-severe impairments have been reborn in companion sources such as a “Program Circular” (exhibit J attached to plaintiffs' undisputed facts), and the recently published Physicians Training Manual on Impairment Evaluation, SSA Pub. No. 64-027 (June 1988) (see docket No. 99).

In light of the court's holding that the challenged examples in SSR 82-55 were not overly restrictive in violation of Yuckert, the court finds no merit in plaintiffs' contention that the retention of similar examples results in the Secretary's maintenance of the step two threshold at a level which denies benefits to individuals that meet the statutory definition of disability.

QUALITY ASSURANCE RETURNS

Plaintiffs assert that the Secretary periodically conducts “quality assurance returns,” requesting state Disability Determination Services (DDSs) to re-evaluate a case when it is felt that the case was improperly evaluated. Plaintiffs assert that from October, 1985 through February 11, 1988, there were returns in approximately 69 cases requesting state DDS agencies to reevaluate whether the claimant set the severity threshold. See Exhibit “M” attached to plaintiffs' undisputed facts (docket No. 7). While each of the 69 claimants had previously been granted benefits, 47 were denied benefits upon re-evaluation. Plaintiffs assert that this statistic demonstrates that step two is applied in a manner which, in violation of Yuckert, denies benefits to individuals whose claims for benefits would otherwise survive later steps of the sequential evaluation process.

The outcome of 69 of what defendant represents were hundreds of thousands of cases considered by state DDS's from October, 1985 through February, 1988, is far too small a number to be probative of systematic misapplication. To the contrary, the statistically insignificant request for re-evaluation in only 69 cases nationwide over this period of time suggests that on a broader scale, as a percentage of total cases, the Secretary is not attempting to use the severity step in anything more than a de minimis manner. The court notes that plaintiffs neither assert nor have they attempted to show that the 47 claimants in question were entitled to benefits.

Plaintiffs further urge that SSR 85-28 “continues the illegal practice of considering impairments ”not severe“ even though they affect the claimant's ability to do past work.” In support, plaintiffs point to that part of SSR 85-28 which provides as follows:

At the second step of the requested evaluation, then, medical evidence alone is evaluated in order to assess the effects of the impairment(s) on ability to do basic work activities. If this assessment shows the individual to have the physical and mental ability(ies) necessary to perform such activities, no evaluation of past work....is needed.

Id.

Plaintiffs state that SSR 85-28 limits the foregoing proposition by not allowing a denial at the severity step where “the person cannot perform his or her past relevant work because of the unique features of that work.....” Plaintiffs then argue that a screening procedure which permits denial where a claimant's impairment prevents return to past work in not the type of de minimis screening step acknowledged as permissible under Yuckert.

In making this argument, plaintiffs disregard SSR 85-28's explicit direction that basic work activities are the abilities and aptitudes necessary to do most jobs, and that “in the absence of contrary evidence, it is reasonable to conclude that an individual whose impairment do not preclude the performance of basic work activities is, therefore, able to perform his or her past relevant work.” Id. See also Yuckert 482 U.S. at 153, n.11, 96 L.Ed 2d at 134 n. 11. Yuckert noted that “[t]he severity regulation increases the efficiency and reliability of the evaluation process by identifying at an early stage those claimants whose medical impairments are so slight that it is unlikely they would be found to be disabled even if their age, education, and experience were taken into account.” Id., 482 U.S. at 153, 96 L.Ed. 2d at 134. A fair reading of SSR 85-28 belies plaintiffs' overly constricted interpretation. The language discussing “unique features of past relevant work” is clearly an additional caution within an SSR which already directs evaluators to use great care. Plaintiffs' continuing misapplication claim based on the language of SSR 85-28 is without merit.

Based upon the foregoing analysis and discussion regarding the claimed systematic misapplication of the severity regulations, the court finds that plaintiffs have failed to establish their right to judgment.

In reviewing defendant's cross-motion for summary judgment on the systematic misapplication issue, the court is mindful that its function “is not to weigh the evidence, but rather to determine as a matter of law whether there are genuine factual conflicts.” Agristor Leasing v. Farrow 826 F.2d 732, 734 (8th Cir. 1987). Of course, and as noted earlier, “in making this determination, the court is required to view the evidence in the light most favorable to the non-moving party and to give that party the benefit of all reasonable inferences to be drawn from the underlying facts.” Id. However, “there is no issue for trial unless there is sufficient evidence favoring the non-moving party for a jury to return a verdict for that party. If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 91 L.Ed. 2d 202, 212 (1986) (citations omitted). Stated differently, if the record as a whole does not contain evidence from which reasonable jurors might conclude that plaintiffs have met their burden of proof, summary judgment may be granted in favor of defendant. Perry v. Kunz, 878 F.2d 1056, 1060 (8th Cir. 1989).

In light of the foregoing standards, and upon consideration of the entire record submitted by plaintiffs, the court finds no dispute as to any material fact. The court concludes that the statistical and other evidence submitted by plaintiffs is merely colorable at best, and not significantly probative of systematic misapplication.¹¹ While plaintiffs' statistics show a substantial national increase in severity disallowances after promulgation of the step two regulations, that dramatic increase is not demonstrated by plaintiffs' statistics with respect this class of Iowa plaintiffs. Similarly, the policy statements, internal documents, quality assurance returns and uncited court cases fail to breathe life into plaintiffs' systematic misapplication claim. Accordingly, the court concludes that defendant is entitled to summary judgment on this point.

In denying relief, the court does not mean to suggest that the Secretary has uniformly properly applied the severity standard. To the contrary, and as observed in Johnson v. Bowen, supra, “the court has little doubt that the [Secretary] has not consistently applied a de minimis severity standard in each individual case.” Id., 697 F.Supp. at 351 n.6 (citations omitted). Nevertheless, and in accordance with this court's observation regarding plaintiffs' “court cases” assertion, infra, class relief is not the remedy for random misapplication. Those random class members who upon rehearing believe their claims have been subjected to an improper severity standard, i.e., greater than de minimis, may individually appeal from the denial of their claims.

COMBINED IMPAIRMENTS

Prior to the passage of the Social Security Disability Benefits Reform Act of 1984, Pub.L. No. 460, 98th Cong., 2d Session 98 Stat. 1794, the Secretary did not consider the combined effects of unrelated impairments unless all were severe and expected to last twelve months. 20 CFR §§404.1522, 416.922 (1984). The court previously concluded that the Secretary's former policy of refusing to consider the combined effect of impairments which were individually found to be not severe violated the Social Security Act. The Secretary asserts that the analytical framework of Yuckert did not even discuss the combination of non-severe impairments issue. Nevertheless, the Secretary now attempts to rekindle his argument, urging that the statutory definition of disability uses the term “impairment” in the singular. See § 423(d)(1)(A). From this use of the singular term “impairment,” the Secretary argues that his pre-1985 regulation requiring that a claimant have at least one impairment that satisfies the severity standard was consistent with the statute. Similarly, the Secretary urges that the 1984 amendment to the Social Security Act requiring him to consider the combined effect of impairments without regard to severity was a substantive change in the law, rather than a legislative clarification.

The use of the singular term “impairment” in 42 USC § 423(d)(1)(A) “cannot bear the weight the Secretary ascribes to it.” Bailey v. Sullivan, supra, 885 F.2d at 60. Congress has not yet seen the need to alter the singular term in § 423(d)(1)(A) even though Congress explicitly clarified the evaluation process by requiring the Secretary to consider the combined effect of all impairments without regard to their individual degree of severity in § 423(d)(2)(C). Additionally, the court rejects the Secretary's contention that the 1984 amendment created new law rather than clarifying existing law. Bailey v. Sullivan, supra, 885 F.2d at 61; Johnson v. Heckler, 769 F. 2d 1202, 1214 (7th Cir. 1985) rehearing en banc denied, 776 F.2d 166, vacated and remanded on other grounds, 482 U.S. 922, 96 L.Ed. 2d 690 (1987), modified on other grounds, 697 F.Supp. 346 (N.D. Ill. 1988), later proceeding 714 F.Supp. 1476 (N.D. Ill. 1989).

Absent explicit Supreme Court approval of the Secretary's former practice, the court sees no reason to disturb its earlier invalidation of the non-combination policy mandated by 20 CFR §§ 404.1522 and 416.922 and SSR 82-55 and that part of SSR 82-56 which pertains to non-severe impairments. Bailey v. Sullivan, supra, 885 F.2d at 60-61; Johnson v. Bowen, supra, 697 F.Supp. at 352-353. The Secretary shall be required to identify class members affected by the former policy, and to reconsider the claims of these individuals.

EXHAUSTION OF ADMINISTRATIVE REMEDIES

Defendant urges that those claimants who failed to exhaust administrative remedies may not now have their claims reconsidered. In support, defendant cites Pittston Coal Group v. Sebben, 109 S.Ct. 414, 102 L.Ed. 2d 408 (1988), and City of New York v. Bowen, 476 US 476, 90 L.Ed. 2c 462 (1987).

The class defined by this court's order of February 28, 1985 is limited to claimants:

Who are pursuing or will pursue timely administrative or judicial appeals, or, if not pursuing timely appeals, who have received or will receive an adverse decision at any level of the administrative review process on or after July 1, 1984.

The complaint in this case was filed on August 30, 1984. Pursuant to the foregoing order, only those claimants who were then currently engaged in the administrative process or who had received a decision sixty days or less from the filing of the complaint were included in the class. Upon the filing of the complaint, any then unexpired limitation period was tolled for all class members. See 7B Wright & Miller, Federal Practice and Procedure, § 1800 at 455 (2d Ed. 1986). Accordingly, this class certification does not raise the prospect of the resurrection of claims to which the bar of res judicata has attached. The class defined in this case does not present a situation where the court is compelling “the readjudication of claims decided under erroneous standards but not directly appealed to the courts within the time prescribed.” Pittston Coal Group v. Sebben, supra, 102 L.Ed. 2d at 416. Pittston Coal Group v. Sebben is thus distinguishable, and therefore defendant's reliance on that case is misplaced. This court waived only the futile requirement that plaintiffs with then live claims continue to work their way through administrative channels until exhaustion of both the claimant and administrative remedies. The court did not waive any claimant's failure to directly appeal or pursue administrative remedies.¹² The court did not waive any claimant's failure to directly appeal or pursue administrative remedies within the time proscribed. The Secretary has not raised any matters which persuade the court to change its original view on the exhaustion question. Judicial waiver of exhaustion of administrative remedies continues to be appropriate as it pertains to the plaintiffs entitled to relief in this class action. Bailey v. Sullivan, supra , 885 F.2d at 65. See also Polaski v. Heckler, 751 F.2d 943 (8th Cir. 1984), vacated and remanded, 476 U.S. 1167, 90L.Ed. 2d 974, reinstated, 804 F.2d 456 (8th Cir. 1987). The class thus includes all claimants that satisfied the foregoing requirements, yet who failed to exhaust administrative remedies or seek judicial review between the time the complaint was filed in this case and the time of the final decision on the merits.

As a final matter and in accordance with the foregoing analysis and discussion, the court shall deny plaintiffs' request for an order enjoining (1) the use of the severity regulations or (2) their use in a manner inconsistent with Yuckert. While the Secretary is bound to follow Yuckert, the court has found no Yuckert violation.

The court's order of October 21, 1985, as amended November 27, 1985, having been vacated, this order shall be entered in its stead. All issues before the court in this matter have been resolved herein.

It is therefore

ORDERED

1. Defendant's motion to dismiss is denied.

2. Defendant's motion for summary judgment on the facial validity of the severity regulations is granted.

3. Plaintiffs' motion for an order enjoining the Secretary from using the severity regulations inconsistently with Yuckert is denied.

4. Re: Systematic misapplication of the severity regulations:

   Plaintiffs' motion for summary judgment denied;

   Defendant's motion for summary judgment granted;

   Plaintiffs' misapplication claim is dismissed.

5. Re: Secretary's former policy of refusing to consider combined effect of non-severe impairments:

   Defendant's motion for summary judgment denied;

   Plaintiffs' motion for summary judgment granted.

   It is declared that the defendant's former policy of refusing to consider the combined effect of impairment which were individually found not to be severe was contrary to the plain meaning of 42 USC §§ 423(d)(2)(A) and 1382c(a)(3)(B) and therefore violated the Social Security Act.

6. By not later than Friday, April 20, 1990, defendant shall establish procedures for the identification of all class members affected by the Secretary's former policy of refusing to combine non-severe impairments, to-wit, those claimants or recipients whose benefits were denied or terminated at step two of the five-step eligibility test, and whose multiple non-severe impairments were not considered in combination pursuant to 20 CFR §§404.1522 and 416.922, and SSRs 82-55 and 82-56. Defendant shall contemporaneously issue and distribute instructions for compliance with this order, including procedures for the identification of class members and the evaluation of their claims.

7. Defendant shall forthwith provide plaintiffs' attorneys with copies of all memoranda, notices, instructions, directives, and any other documents issued to effect compliance with this order as those documents are issued.

8. Upon identification of the affected class members, the Secretary shall:

   1. forthwith notify these class members that their claim for benefits is being reviewed, that the prior denial or termination may have been in error, and that the claimant will be entitled to retroactive benefits if it is determined that the prior determination was erroneous;

   2. in accordance with paragraphs 7 and 8 of the court's order of October 21, 1985, as amended on November 27, 1985, reconsider the claims of these class members, taking into consideration the combined effect of all impairments, and considering each class member's claim for the entire time period from the date of the original application to the date of the reconsideration. See Johnson v. Sullivan, 714 F.Supp. 1476, 1481 (N.D. Ill. 1989);

   3. reinstate benefits pending reconsideration of the claim(s) of any of these class members whose benefits were terminated; and

   4. grant retroactive benefits to class members who, upon reconsideration, are found disabled.

   The Secretary shall implement this relief with all deliberate speed.

9. By not later than April 20, 1990, defendant shall transmit a copy of this order and instructions to comply herewith to all appropriate personnel within the Social Security Administration, including ALJ's and the Appeals Council.

March 26, 1990.

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF IOWA

[Date Filed: 4/25/90]

IT IS ORDERED AND ADJUDGED

1. Defendant's motion to dismiss is denied.

2. Defendant's motion for summary judgment on the facial validity of the severity regulations is granted.

3. Plaintiffs' motion for an order enjoining the Secretary from using the severity regulations inconsistently with Yuckert is denied.

4. Re: Systematic misapplication of the severity regulations:

   Plaintiffs' motion for summary judgment denied;

   Defendant's motion for summary judgment granted;

   Plaintiffs' misapplication claim is dismissed.

5. Re: Secretary's former policy of refusing to consider combined effect on non-severe impairments:

   Defendant's motion for summary judgment denied;

   Plaintiffs' motion for summary judgment granted.

   It is declared that the defendant's former policy of refusing to consider the combined effect of impairments which were individually found not to be severe was contrary to the plain meaning of 42 USC §§ 423(d)(2)(A) and 1382c(a)(3)(B) and therefore violated the Social Security Act.

6. By not later than Friday, April 20, 1990, defendant shall establish procedures for the identification of all class members affected by the Secretary's former policy of refusing to combine non-severe impairments, to wit, those claimants or recipients whose benefits were denied or terminated at step two of the five step eligibility test, and whose multiple non-severe impairments were not considered in combination pursuant to 20 CFR §§ 404-1522 and 416.922, and SSRs 82-55 and 82-56. Defendant shall contemporaneously issue and distribute instructions for compliance with this order, including procedures for the identification of class members and the evaluation of their claims.

7. Defendant shall forthwith provide plaintiffs' attorneys with copies of all memoranda, notices, instructions, directives, and any other documents issued to effect compliance with this order as those documents are issued.

8. Upon identification of the affected class members, the Secretary shall:

   1. forthwith notify these class members that their claim for benefits is being reviewed, that the prior denial or termination may have been in error, and that the claimant will be entitled to retroactive benefits if it is determined that the prior determination was erroneous;

   2. in accordance with paragraphs 7 and 8 of the court's order of October 21, 1985, as amended on November 27, 1985, reconsider the claims of these class members, taking into consideration the combined effect of all impairments, and considering each class member's claim for the entire time period from the date of the original application to the date of the reconsideration. See Johnson v. Sullivan, 714 F.Supp. 1476, 1481 (N.D. Ill. 1989);

   3. reinstate benefits pending reconsideration of the claim(s) of any of these class members whose benefits were terminated; and

   4. grant retroactive benefits to class members who, upon reconsideration, are found disabled.

   The Secretary shall implement this relief with all deliberate speed.

9. By not later than June 4, 1990, defendant shall transmit a copy of this order and instructions to comply herewith to all appropriate personnel within the Social Security Administration, including ALJ's and the Appeals Council.

Approved as to form

Re:   Campbell v. Sullivan; C 84-2085

Dear Judge McManus:

Through negotiations the parties have arrived at a stipulation which would implement your April 25, 1990, Order in this case. So there are no misunderstandings, we would ask that you sign off on the stipulation so there will be a document of record relating to implementation of your Order.

Please let me know if this procedure is unacceptable. Thank you.

RIT/lah

cc: Martin Ozga
Lawrence A Lavey

[DATE FILED: 11/19/1990]

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
EASTERN DIVISION

This matter is before the court on a letter and stipulation received from defendant's counsel on November 5, 1990. The Clerk shall file the letter and stipulation.

In his letter, defendant makes the representation that the parties have entered into a stipulation as to the implementation of paragraph 8(a) of the court's amended judgment of April 25, 1990, and defendant has supplied the original signed stipulation. Defendant asserts that the parties wish to have the court sign the stipulation so that there will be a document of record relating to implementation of the court's order.

It is the court's view that the parties' wishes regarding the creation of a record will be satisfied by causing the stipulation to be filed as it presently exists, without the court's signature.

It is therefore

ORDERED

The Clerk shall file defendant's letter and the parties' stipulation.

November 19, 1990.

[DATE FILED: 11/19/1990]

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
EASTERN DIVISION

IT IS STIPULATED by plaintiffs and defendant, through their respective counsel, that paragraph 8(a) of the Court's April 25, 1990 Amended Order shall be implemented by the following procedures:

1. The Social Security Administration (SSA) shall, by means of its data processing systems identify the names, Social Security numbers and last known addresses of potential class members who between July 1, 1984 and November 30, 1984 had a disability claim denied, or whose disability benefits were terminated based upon finding that he or she did not have a severe impairment.

2. SSA shall send a notice by first class mail to each potential class member identified pursuant to paragraph 1 of this stipulation at his or her last known address. These notices will instruct the potential class member to return an enclosed preaddressed postage paid postcard or form within 30 days from receipt of the notice if he or she wishes to receive relief pursuant to the Court's Amended Order and Opinion.

3. If a potential class member receives a notice and does not respond within the required 30 days, he or she may be denied class member status absent a finding of “good cause” for late filing under the current instructions for “good cause” as defined in § GN 03101.020 of SSA's Programs Operations Manual System.

4. An individual who had a claim readjudicated pursuant to Polaski v. Heckler, 751 F.2d 943 (8th Cir. 1984) which is duplicative of the issues addressed in his or her Campbell claim will not receive a notice or readjudication.

5. For those individuals who respond to the notice, SSA will locate (and/or reconstruct, if necessary) and screen the applicable claims folders to determine if they are class members. Those individuals who have been determined not to be class members will be notified in writing of such determination and will be further informed of their right to a review thereof, in accordance with the procedures set forth in ¶ 6 of this Stipulation.

6. Individuals who disagree with a finding that they do not meet the class membership criteria, may contact or write plaintiffs' class counsel for additional review. Class counsel may, within 60 days of the date of the class membership determination notice, in turn notify in writing an individual to be designated in the Office of the General Counsel, Department of Health and Human Services, Social Security Administration, Altmeyer Building, 6401 Security Boulevard, Baltimore Maryland 21235, that he wishes to review the individual's claims file. Within 45 days of class counsel's written request to review the file, SSA will make available that individual's claim file at a designated SSA field office location in Iowa, and notify class counsel in writing. At the expiration of 45 days after the written notification to class counsel, if class counsel has still not reviewed the file, it shall be assumed that class counsel no longer wishes to review the claims file and the agency's non-class membership determination shall become final. If class counsel's review of the file establishes that there is a dispute as to whether the individual is a class member, class counsel will again notify the Office of the General Counsel, Department of Health and Human Services. Both parties will then have authority to resolve the dispute by negotiation. In the event the parties are unable to settle the dispute, either party may submit any unresolved dispute to the Court for final resolution by proper motion.

7. After the class member's record is updated, his or her claim will be reopened. The reopening shall be at the reconsideration level, with determinations being appealable to an Administrative Law Judge upon request made pursuant to the procedures set forth at 20 C.F.R. §§ 404.933, 416.1433. Appeal an Administrative Law Judge decision will be to the Appeals Council, upon request made pursuant to the procedures set forth at 20 C.F.R. §§ 404.968, 416.1468. Class members will retain right to judicial review as provided in 42 U.S.C. §§ 405 (g) and 1383(c)(1) and (3). (See paragraph 6 above for resolution of disputed class membership).

8. A class member with a current claim active and pending at any administrative level of review will have all other claims covered by the Court's Order and Judgment consolidated with the current claim.

9. In the event that a notice mailed pursuant to paragraph 2 of this Stipulation is returned as undeliverable, SSA will attempt to obtain updated addresses by providing a computer tape to the Iowa State Department of Social Services, with a request for the performance by the letter of a computerized match with public assistance, food stamp and/or other relevant records. SSA will thereafter mail a second notice to all potential class members for whom updated addresses are obtained, and will have no further obligation to locate those individuals whose current addresses have not been obtained despite the efforts undertaken pursuant to this Stipulation.

SO ORDERED:


_____________/s/_______________
EDWARD J. MCMANUS, Senior Judge

_______________________________
Date

¹ While the court cites to the 1989 regulations, these regulations have remained essentially unchanged since the 1980 codification of the sequential evaluation process. See footnote 9, infra.

² SSR 82-55 was rescinded in April of 1985. See SSR 85-III II.

³ SSR 82-56 was superseded by SSR 86-8, which mandates consideration of the combined effects of impairments without regard to whether they are individually non-severe.

⁴ The sixth count of the complaint, not addressed here, was that the Secretary's decision as to Mulinda Campbell was not supported by substantial evidence on the record as a whole. That count is no longer an issue in this case..

⁵ The claimant in Yuckert sought only Title II benefits. Nevertheless, the severity regulations for both Title II (20 CFR §404.1520(c)) and Title XVI (20 CFR 416.920(c)) are identical, and therefore the Yuckert decision applies with equal force to Title XVI claims.

⁶ See Justice O'Connor's [illegible].

⁷ See 20 CFR §404.1502(a) (1961).

⁸ See 20 CFR 416.904(1978).

⁹ See 45 Fed. Reg. 55566 (August 20, 1980), 20 CFR §§404.1520, 416.920 (1981).

¹⁰ Justices O'Connor and Stevens, concurring, observed that statistical evidence showing an approximate 32% jump in disallowances after promulgation of the step-two regulations suggested step two had been systematically applied in a manner inconsistent with the statute. Yuckert, supra, 482 U.S. at 157, 96 L.Ed. 2d at 136. Justices Blackman, Brennan and Marshall, dissenting, agreed with this observation. Id., 482 U.S. at 179, 96 L.Ed. 2d at 150.

¹¹ Cf. Justice O'Connor's concurring observation, noted infra, that misapplication was suggested by statistics showing an approximate 32% increase in denial of claims at the “not severe” stage after the promulgation of the step two regulations. Yuckert, supra, 482 U.S. at 157, 96 L.Ed. 2d at 136.

¹² The court found the exhaustion requirement futile due to the fact that the challenge was addressed to the Secretary's established policy, and exhaustion was therefore “not likely to further distill agency policy.” Mental Health Association V. Heckler, 720 F.2d 965, 970 (8th Cir. 1983).

Attachment 2. CAMPBELL COURT CASE FLAG/ALERT

CAMPBELL COURT CASE FLAG/ALERT

                   TITLE: 

II       CATEGORY: 2

REVIEW 
    PSC      MFT   DOC       ALERT 

DATE

OFFICE
1160 
       1        A 

   B37         06/04/91


            FUN 

           NAME
                        NORMA 

J 
MILLARD

        SSN 
OR HUN     RESP DTE 
   TOE
        107-18-3286 

               840

   FOLDER 

LOCATION 
INFORMATION
TITLE   CFL   CFL DATE    ACN         PAYEE 

ADDRESS

 II     2910  00/00/00                NORMA 

J. 
MILLARD
                                      2310 

MORENSEN 
DR
                                      APT 

6
 
                                     AMES 

IA
 
                                     50010

    REVIEWING OFFICE:

    REHABILITATION EDUCATION AND SERVICES 
BRANCH
    DISABILITY DETERMINATION 
DIVISION
    510 EAST 12TH STREET, 2ND 
FLOOR
    DES MOINES, IOWA 
50319

                        OR

                  APPROPRIATE 

DDS

Attachment 3. Route Slip on Case Flag for Screening

Campbell      Class      Action      Case

SCREENING            NECESSARY

Claimant's Name: __________________________________

SSN: __________________________________

This claimant may be a Campbell class member. The attached folder location information indicates that a current claim folder is pending in your office. Accordingly, we are forwarding the attached alert [and prior claim folder(s)] for association, screening for class membership, consolidation consideration and possible readjudication.

Please refer to HALLEX Temporary Instruction 5-4-15 for additional information and instructions.

TO: ______________________________

___________________________________

___________________________________

___________________________________

Attachment 4. Campbell Screen Sheet

Attachment 5. Route Slip for Routing Class Member Alert (and Prior Claim Folder(s)) to ODIO or PSC — OHA No Longer Has Current Claim

REMARKS

CAMPBELL CASE

Claimant: ___________________________

SSN: ________________________________

OHA received the attached alert [and prior claim folder(s)] for screening and no longer has the current claim folder. Our records show that you now have possession of the current claim. Accordingly, we are forwarding the alert and any accompanying prior claim folder(s) for association with the current claim. After associating the alert with the current claim, please forward to the appropriate DDS for screening and possible readjudication. SEE POMS DI 42525.005 OR DI 12525.005.

Attachment

DO NOT use this form as a RECORD of approvals, concurrences, disposals,
clearances, and similar actions.

OPTIONAL FORM 41 (Rev. 7-76)

*U.S.GPO:1985-0-461-274/20020 Prescribed by GSA

FPMR (41 CFR) 101-11.206

Attachment 6. Non-Class Membership Notice

SOCIAL

SECURITY Important Information

NOTICE

______________________________________

From: Department of Health and Human Services

Social Security Administration

______________________________________

___________________________ DATE: __________________

___________________________ CLAIM NUMBER: __________________

___________________________

We are writing to tell you that we received your request to review your earlier claim for disability benefits under the Campbell, et al. v. Sullivan court decision. We have looked at your case and have decided that you are not a class member. This means that we will not review our earlier decision that you were not disabled. The reason you are not a class member under the Campbell court decision is checked below.

Why You Are Not a Class Member

You are not a Campbell class member because:

• You did not reside in Iowa at any time between July 1, 1984, and November 30, 1984, inclusive.

• As an Iowa resident, you did not receive a decision denying or terminating disability benefits at any administrative level between July 1, 1984, and November 30, 1984, inclusive.

• You appealed the decision denying you disability benefits, and the appeal was decided after November 30, 1984.

• There was no final denial or termination decision made on the basis of a finding that you did not have a severe impairment(s).

• Your benefits were denied for some reason other than your medical condition. The reason was:

  ______________________________________________

We Are Not Deciding If You Are Disabled

It is important for you to know that we are not making a decision about whether you are disabled. We are deciding only that you are not a Campbell class member.

If You Are Disabled Now

If you think you are disabled now, you should fill out a new application at any Social Security office.

If You Have Any Questions

If you have any questions, you may contact your local Social Security office. If you call or visit one of our offices, please have this letter with you. It will help us answer your questions.

Additionally, if you have someone helping you with your claim, you should contact him or her.

A copy of this letter is being sent to the attorneys for the class. If they disagree, we may change our minds and look at your case again. If you disagree, you may write or call class counsel, who will answer your questions about class membership without charge. The name, address and telephone number of class counsel is:

Martin Ozga, Attorney
Legal Services Coporation of Iowa
312 Eighth Street, Suite 300
Des Moines, Iowa 50309
(515) 243-2151 (Des Moines Area)
1-800-532-1275 (Statewide)

Si usted no entiende esta carta, llevela a la oficina de Seguro Social arriba mencionada para que se la expliquen.

Attachment 7.

REMARKS

CAMPBELL CASE

Claimant: ___________________________

SSN: ________________________________

We have determined that this claimant is not a Campbell class member. (See screening sheet and copy of non-class membership notice in the attached claim folder(s).) SEE POMS DI 12525.005

Attachment

DO NOT use this form as a RECORD of approvals, concurrences, disposals,
clearances, and similar actions.

OPTIONAL FORM 41 (Rev. 7-76)
*U.S.GPO:1985-0-461-274/20020 Prescribed by GSA
FPMR (41 CFR) 101-11.206

Attachment 8. Class Membership Notice

SOCIAL

SECURITY Important Information

NOTICE

______________________________________

From: Department of Health and Human Services

Social Security Administration

______________________________________

___________________________ DATE: __________________

___________________________ CLAIM NUMBER: __________________

___________________________

We are writing to tell you that we received your request to review your earlier claim for disability benefits under the Campbell, et al. v. Sullivan court decision. We have looked at your case and have decided that you are a class member. This means that you will have a new chance to prove your claim. The new review will use the standards set by the Court.

Additional Evidence

We expect to receive many requests for review and it may take several months before we review your file. In the meantime, you will be contacted to submit medical and other evidence about your past and current condition.

You May Be Eligible To Have Benefits Started Again

If you were already receiving disability benefits when we terminated your earlier claim, you may be eligible to have your benefits started again for the current month and continue until we decide your case. If this applies in your case, we will get in touch with you and tell you how to get these monthly benefits.

If You Have Any Questions

If you have any questions, you may call, write, or visit any Social Security office. Most questions can be answered by telephone. If you have a representative or someone helping you with your claim, you should contact him or her. If you do not, you may contact one of the Legal Aid offices in you area or you may contact:

Martin Ozga, Attorney
Legal Services Corporation of Iowa
312 Eighth Street, Suite 300
Des Moines, Iowa 50309
(515) 243-2151 (Des Moines Area)
1-800-532-1275 (Statewide)

Attachment 9. Acting Associate Commissioner's Memorandum Dated February 21, 1991, Entitled “The Standard for Evaluating 'Not Severe' Impairments”

During the past few months, the Office of the General Counsel (OGC) has requested voluntary remand in a number of cases, denied by the Secretary at step two of the sequential evaluation, on the grounds that the decisions have not been fully consistent with SSA policy and the Supreme Court's opinion in Bowen v. Yuckert, 482 U.S. 137 (1987).

Despite the Yuckert decision, extensive litigation, both in individual cases and in significant class actions, continues on the issue of how the Agency applies the step two standard expressed in Social Security Ruling (SSR) 85-28. Because the courts continue to give step two denials close scrutiny, I am asking all adjudicators and decision writers to carefully review SSR 85-28 to ensure that they are applying the proper standard for adjudicating claims at step two.

In accordance with SSR 85-28, a step two denial is appropriate only in very limited situations. The evidence must establish that the claimant's impairment, or combination of impairments, is so slight that it does not have more than a minimal effort on the individual's ability to perform basic work activities. When the medical evidence is inconclusive and does not clearly establish the effect of a claimant's impairment(s), or when the evidence shows more than a minimal effect, the claim may not be denied at step two.

Decisions denying claims at step two must include a comprehensive analysis of all the evidence of record and a decisional rationale consistent with SSR 85-28. Even when the medical evidence of record clearly fails to establish that the claimant has more than a slight mental or physical abnormality, the decision must clearly show that the adjudicator evaluated all the evidence and must articulate the reasons for finding that the impairment(s) is not severe. Furthermore, when the claimant has a medically determinable impairment(s) which might reasonably be expected to cause pain or other symptoms, the decision must include an evaluation of the claimant's subjective complaints using the factors outlined in SSR 88-13 or its equivalent, i.e., SSR 90-lp for Fourth Circuit cases.

If hearing office personnel have questions or need copies of applicable instructions, they should contact the appropriate Regional Office. Regional Office Personnel should direct their questions to the Division of Field Practices and Procedures, Office of the Chief Administrative Law Judge.

Attachment 10.

Campbell Class Action Case

READJUDICATION            NECESSARY

Claimant's Name: __________________________________

SSN: __________________________________

This claimant is a Campbell class member. After expiration of the retention period, forward claim folder(s) to the ____________________ DDS for readjudication.

If the claimant has filed a civil action and elected to remain in court for review of the subsequent claim, forward the Campbell claim folder(s) without delay to the ____________________ DDS for readjudication.

Send folders to: (Insert name and address of appropriate DDS)

_______________________________________
_______________________________________
_______________________________________
_______________________________________
(Destination code: ____)

Attachment 11. ALJ Dismissal to DDS

DEPARTMENT OF
HEALTH AND HUMAN SERVICES
Social Security Administration
OFFICE OF HEARINGS AND APPEALS

ORDER OF DISMISSAL

This case is before the Administrative Law Judge pursuant to a request for hearing filed on _________________ with respect to the application(s) filed on _________________.

In accordance with an order of the United States District Court for the Northern District of Iowa in the case of Campbell, et al. v. Sullivan, No. C 84-2085 (N.D. Iowa Apr. 25, 1990), the claimant has requested review of the final (determination/ decision) on the prior application(s) filed on ______________. The claimant has been identified as a Campbell class member and is entitled to have the final administrative denial of the prior application(s) reviewed under the terms of the Campbell final judgment order. Because the claimant's current claim shares certain common issues with the prior claim, the undersigned hereby dismisses without prejudice the request for hearing.

The claimant's current application(s) will be associated with the prior claim(s) and forwarded to the _______________________ Disability Determination Service which will conduct the Campbell readjudication.

The disability determination service will notify the claimant of its new determination and, if unfavorable, give notice of the claimant's right to file a new request for hearing.

Attachment 12. Notice Transmitting ALJ Order of Dismissal

NOTICE OF DISMISSAL

Claimant's Name
Address
City, State Zip

Enclosed is an order of the Administrative Law Judge dismissing your request for hearing and returning your case to the _______________ Disability Determination Service which makes disability determinations for the Social Security Administration. Please read this notice and Order of Dismissal carefully.

What This Order Means

The Administrative Law Judge has sent your current claim and your Campbell class member claim back to the ______________ Disability Determination Service for further processing. The enclosed order explains why.

The Next Action on Your Claim

The ____________________ Disability Determination Service will contact you to tell you what you need to do. If you do not hear from the ______________ Disability Determination Service within 30 days, contact your local Social Security office.

Do You Have Any Questions?

If you have any questions, contact your local Social Security office. If you visit your local Social Security office, please bring this notice and the Administrative Law Judge's order with you.

Enclosure

cc:
(Name and address of representative, if any)
(Social Security Office (City, State))

Attachment 13. Cambell Class Member Flag for HO Use (DDS Readjudication)

Campbell Class Action Case

READJUDICATION            NECESSARY

Claimant's Name: __________________________________

SSN: __________________________________

This claimant is a Campbell class member. The attached Campbell claim folder was forwarded to this hearing office for possible consolidation with a current claim.

• The Administrative Law Judge has determined that the prior and current claims do not share a common issue and, therefore, should not be consolidated.

  OR

• The claims have not been consolidated because:

  ______________________________________________

  ______________________________________________

Accordingly, we are forwarding the attached alert and prior claim folder(s) to your location for any necessary Campbell readjudication action.

We are sending the alert and prior folder(s) to:

(Insert name and address of appropriate DDS)

____________________________________________

____________________________________________

____________________________________________

____________________________________________

(Destination code: _____ )