[Federal Register Volume 59, Number 161 (Monday, August 22, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-20362]
[[Page Unknown]]
[Federal Register: August 22, 1994]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Social Security Administration
20 CFR Part 416
RIN 0960-AD66
Appeal Rights Following Mass Change Resulting in Reduction,
Suspension, or Termination of State Supplementary Payments
AGENCY: Social Security Administration, HHS.
ACTION: Final rules.
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SUMMARY: We are amending our current rules with regard to initial
determinations in order to revise our policy on providing appeal rights
when a State-initiated mass change in federally administered State
supplementary payment level amounts results in the reduction,
suspension or termination of a recipient's State supplementary
payments, or when Federal administration of State supplementary
payments has been terminated.
DATES: These rules are effective August 22, 1994.
FOR FURTHER INFORMATION CONTACT: Jack Schanberger, Legal Assistant, 3-
B-1 Operations Building, 6401 Security Boulevard, Baltimore, MD 21235,
(410) 965-8471. For information on eligibility or claiming benefits,
call our national toll-free number 1-800-772-1213.
SUPPLEMENTARY INFORMATION: Section 1616(a) of the Social Security Act
(the Act) authorizes the Secretary of Health and Human Services (the
Secretary) to enter into agreements with the States under which the
Secretary administers the States' supplementary payments. State
supplementary payments are cash benefits paid on a regular basis to
individuals who are receiving Federal Supplemental Security Income
(SSI) benefits, or who, but for their income, would be eligible to
receive SSI benefits. When the Social Security Administration, acting
as the Secretary's delegate, has entered into an agreement with a State
for the Federal administration of these supplementary payments, the
State transfers the funds necessary to make these payments to us and we
make these payments to the recipients. States that make State
supplementary payments but that have not elected Federal administration
make the payments themselves directly to recipients. If a State elects
Federal administration, we charge the State an administration fee as of
October 1, 1993, for each supplementary payment we make on behalf of
the State, pursuant to section 13731 of the Omnibus Budget
Reconciliation Act of 1993 (Pub. L. 103-66). A federally administered
State supplementary payment is included in the same payment with the
Federal SSI benefit where both a State supplementary payment and a
Federal SSI benefit are payable. The payment level amounts of State
supplementary payments are determined by the States. From time to time,
States may change the payment level amounts, either by increasing them,
or by reducing them.
Our existing regulations provide in Sec. 416.1402(b) that
reduction, suspension, or termination of SSI benefits is an initial
determination. The regulations at Sec. 416.2005(d) provide that,
generally, the regulations in effect for the SSI program are applicable
in the Federal administration of State supplementary payments.
Therefore, any reduction, suspension, or termination of federally
administered State supplementary payments is also an initial
determination. Section 416.1404 provides that we will mail to the
affected recipient a written notice of our initial determination,
including the right to a reconsideration before the determination takes
effect. Further, Sec. 416.1413b provides that a recipient has 60 days
within which to appeal our determination that we plan to reduce,
suspend, or terminate his or her benefits.
In the current process under our regulations, we consider the
reduction, suspension or termination of State supplementary payments to
be an initial determination, mail appropriate written notice of our
initial determination and provide appeal rights to all affected
recipients. We apply this process even with respect to mass changes in
State supplementary payment level amounts, i.e., a State-initiated
change in the level(s) of federally administered State supplementary
payments payable to all recipients of State supplementary payments or
to categories of such recipients, due, for example, to State
legislative or executive action. In many such cases in which a
recipient appeals the reduction, suspension, or termination of his or
her State supplementary payments due to the State-initiated mass
change, he or she wishes only to dispute the propriety, fairness, or
legality of that mass change, for example, and not to dispute the
application of that mass change to the facts of his or her case, i.e.,
not to dispute the revised benefit computation.
We believe that this policy of providing affected recipients the
right to appeal the State's action in reducing payment levels in these
cases is not required by the Act or by fundamental principles of
procedural due process. Moreover, in the past, this policy has had a
needless administrative impact on us since we do not control, nor can
we alter, the State-initiated mass change. This impact was demonstrated
most recently when a large federally administered State supplementary
payment State, as a result of a State law change, initiated an across-
the-board reduction in its State supplementary payment levels. Over
27,000 affected individuals appealed to us the resulting reduction,
suspension, or termination of their State supplementary payments on the
basis that the State-initiated mass change was unfair to them, and not
because they wished to dispute the resulting computation of their
benefits. The vast majority of affected individuals requested benefit
continuation at the previously established payment levels, pending
issuance of decisions on the initial appeals, as set forth in
Sec. 416.1336(b). SSA provided appeal opportunities to individuals. It
then informed them that their appeals were denied on the basis that SSA
had no authority to order the State to repeal its law and reinstate
State supplementary payments to their former higher levels. Since
States must provide the funding for State supplementary payments, in
some cases the State incurred additional program costs while the
individuals' appeals were pending. Processing these actions served only
to exacerbate existing workload backlogs by diverting scarce workpower
resources from other necessary service delivery activities.
The courts have stated clearly that the legal sufficiency of an
agency's procedures with respect to recipients of public assistance who
are experiencing such a mandated change in their entitlement will be
measured first under an agency's statute and regulations. If no
violation of the statute or regulations is found, then it must be
determined if the agency's procedures violate constitutional due
process requirements. In Atkins v. Parker, 472 U.S. 115 (1985), the
United States Supreme Court considered whether the Food Stamp Act
required that an individual hearing be provided for every household
affected by a general change in the law. The Court found that the Food
Stamp Act distinguished between an adverse action based on the
particular facts of an individual case, on the one hand, and a mass
change initiated by the State or Federal Government affecting the
entire caseload of recipients or significant portions thereof, on the
other hand, with Congress only contemplating hearings on individual
fact-based adverse actions.
Our existing regulations do not relieve us from providing appeal
rights to recipients for mass change actions in their State
supplementary payments. Nevertheless, we believe that there is no
requirement in the Act that we provide a recipient of a federally
administered State supplementary payment an opportunity to appeal a
reduction, suspension or termination of his or her payments resulting
from a State-initiated mass change, if that individual does not dispute
the application of that mass change to the facts of his or her case.
Like the Food Stamp Act, only appeal rights with respect to individual
adverse actions appear to be contemplated under the Social Security
Act.
With regard to constitutional due process requirements, we believe
that those requirements mandate that an individual whose benefits are
reduced, suspended or terminated as a result of a State-initiated mass
change be afforded the full measure of appeal rights in a matter in
which he or she disputes the application of that mass change to the
facts of his or her particular case, that is, in a case where the
recipient alleges that we have improperly computed his or her benefits
as a result of the mass change. In Goldberg v. Kelly, 397 U.S. 254
(1970), the United States Supreme Court held that fundamental notions
of due process of law required that individuals who sought to challenge
the termination of their public entitlements as ``resting on incorrect
or misleading factual premises or on misapplication of rules or
policies to the facts of particular cases'' be afforded a hearing in
which they could ``defend by confronting any adverse witnesses and by
presenting * * * arguments and evidence orally.'' Id. at 268.
In light of the Atkins v. Parker and Goldberg v. Kelly decisions,
we do not believe that full appeal rights under our administrative
review system are required in situations where claimants are contesting
only the State legislative or executive action which results in a
change in the level(s) of the federally administered State
supplementary payments. Instead, under these regulations, claimants
will receive notice of the State-initiated mass change and be given
appeal rights only with respect to the calculation of their individual
benefit amount made pursuant to the mass change. These procedures
follow the rationale of the Atkins v. Parker decision which
distinguished adverse actions based on mass changes from adverse
actions based on the facts of an individual case and still provide an
opportunity to contest the factual bases or the application of rules to
particular facts as is required by the Goldberg v. Kelly decision.
In cases where the individual desires to appeal the reduction,
suspension or termination resulting from a State-initiated mass change
only to dispute the propriety, fairness, or legality, for example, of
the mass change, and presents no claim that his or her benefits have
been improperly calculated, then we believe that the Act and procedural
due process do not require that we provide such an individual the right
to appeal that action. As indicated above, State supplementary payment
levels are established by the States. Any change in those levels as
they apply across the caseload of State supplementary payment
recipients is, for the most part, a matter within the control and
jurisdiction of the States. We are required to administer the States'
payment levels under the Act, regulations and provisions of the
Federal/State Supplementation Agreements and have no right, power or
authority to find State-initiated mass changes in those levels to be
unfair, illegal or improper, nor can we order the States to increase
those payment levels.
In preparing these regulatory changes, we have noted the
Secretary's regulations for the Administration for Children and
Families regarding the availability of a hearing in cases of mass
change in the Aid to Families With Dependent Children program. Those
regulations provide in 45 CFR 205.10(a)(5) that ``[a] hearing need not
be granted when either State or Federal law requires automatic grant
adjustments for classes of recipients unless the reason for an
individual appeal is incorrect grant computation.'' We believe that a
similar approach is appropriate where a mass change in the level of a
federally administered State supplementary payment is the result of
State legislative or executive action.
Thus, because of the futility of affording individuals affected by
a State-initiated mass change the opportunity to appeal the effects of
that mass change in cases involving no disputed facts but only a claim,
for example, regarding the propriety or legality of the mass change
itself, we believe that it is appropriate for us to amend our
regulations so as to limit the opportunity to appeal, and the
corresponding right to continue to receive benefits pending a decision
on the initial appeal, as set forth in Sec. 416.1336(b), only to those
cases involving disputed facts. We, therefore, are revising our
regulations at Sec. 416.1401 to define a ``mass change'' as a State
initiated change in the level(s) of federally administered State
supplementary payments applicable to all recipients of such payments,
or to categories of such recipients, due, for example, to State
legislative or executive action. In addition, we are revising our
regulations at Sec. 416.1402 by adding a paragraph (n) to state that
only our calculation of the amount of change in an individual's State
supplementary payment amount which results from a mass change is an
initial determination, subject to administrative and judicial review,
and continuation of benefits pursuant to Sec. 416.1336(b).
We also are revising our regulations at Sec. 416.1403(a) to provide
that a determination to reduce, suspend, or terminate federally
administered State supplementary payments due to a State-initiated mass
change in the level of such payments is not an initial determination,
except as is provided in Sec. 416.1402(n), i.e., only our calculation
of the amount of the change in the State supplementary payment is an
initial determination. In addition, we are revising Sec. 416.1403(a) to
clarify that the termination of Federal administration of State
supplementary payments is not an initial determination. The termination
of Federal administration of these payments means only that the State
has assumed the responsibility for the issuance of its supplementary
payments. The amount of State supplementary payments an individual
receives will not change because of the termination of Federal
administration. The only change will be that the State will be making
the payments. There will be no adverse impact to the recipients solely
due to the change. Further, we are revising Sec. 416.1403(b) to explain
that we will provide to these recipients a notice of the termination of
Federal administration, although the determination will not be subject
to administrative or judicial review.
Early in the SSI program, which became effective January 1, 1974,
several States terminated Federal administration of their State
supplementary payments. Although there have been no recent
terminations, we are revising Sec. 416.1403 to clearly state our policy
on the effect of terminations.
Comments on Notice of Proposed Rulemaking
On August 10, 1993, we published proposed rules in the Federal
Register at 58 FR 42514 with a 60-day comment period. We received 3
letters with comments. Following are summaries of those comments and
our responses to them.
Comment: Claimants should not be denied the right to challenge a
reduction in State supplementary payments below federally mandated
levels.
Response: Federal law does not mandate State supplementary payment
levels. States are free to establish those levels in amounts that they
alone determine are appropriate. In certain cases, reduction by a State
of its payment levels below those established by section 1618 of the
Act may result in the loss of the State's eligibility for payments
pursuant to title XIX. In such cases, SSA has no authority to order the
State to reinstate its State supplementary payment levels at or above
the levels established by section 1618. Accordingly, no purpose would
be served by permitting claimants to appeal a reduction in State
supplementary payment levels below those established by section 1618.
Comment: The regulations should require SSA to afford each affected
recipient with written notice and the opportunity for a hearing,
consistent with Goldberg v. Kelly, 397 U.S. 254 (1970), before reducing
that recipient's State supplementary payment.
Response: Publication of these regulations will not affect SSA's
current practice of first sending written notice to the recipient
informing him or her of the mass change and of its impact on his or her
benefit amount or eligibility before effectuating any reduction,
suspension, or termination as a result of that mass change. Provision
of such written notice is consistent with the requirements of
Secs. 416.1402(b), 416.1404(c), 416.1413b, and 416.1336. Such notice
will also inform the recipient of his or her right to appeal the
determination to reduce, suspend or terminate his or her payment as a
result of the mass change. However, that right to appeal, and the
corresponding right to request benefit continuation, will be limited
only to those cases in which the individual contends that our
calculation of the amount of the change in his or her State
supplementary payment resulting from the mass change is incorrect.
Individuals will be informed that there will be no right to appeal the
determination on any other grounds. As explained in the discussion
under Supplementary Information, we believe these procedures to be
fully consistent with Goldberg v. Kelly, 397 U.S. 254 (1970).
Comment: After a mass change in State supplementary payments, SSA
must be prepared to carefully explain to recipients the resulting
adjustment in their benefit checks and be prepared to handle a heavy
volume of calls and requests for information from those recipients.
Response: We will ensure that our notice language will clearly
explain the mass change that is occurring; how it will affect the
recipient's monthly payment; and how, and in what instance, the
recipient may invoke his or her right to appeal our determination. In
the event of a mass change, we will prepare our offices to respond to
an increase in phone-in inquiries and will issue to those offices
instructional materials to assist them in responding to those
inquiries. We have initiated these actions in prior instances of mass
change and expect to do so again as the need arises.
Comment: SSA should try to require States to provide advance notice
to the SSI recipient community of the State's decision to reduce State
supplementary payments.
Response: We have no authority to compel a State to provide to its
citizens advance notice of its decision to initiate a mass change in
the level of its State supplementary payments. We are generally
informed of a State's decision to initiate a mass change when such
information becomes a matter of public knowledge. In the past, prior to
initiating a mass change, we have endeavored to discuss the impact with
responsible State officials and expect to do this in the event of
future mass changes.
Comment: The Supplementary Information section of the proposed
regulations is misleading because recent legislation requires States to
pay fees for Federal administration of their State supplementary
payments. This requirement is important because it may affect the
State's ability to pay the cost of State supplementary payments.
Response: We agree and have amended the discussion under
Supplementary Information to reflect the fact that as of October 1,
1993, we charge States that have elected Federal administration of
their State supplementary payments an administration fee for each
supplementary payment made on behalf of the State, pursuant to section
13731 of the Omnibus Budget Reconciliation Act of 1993 (Pub. L. 103-
66).
Comment: SSA should inform each State of the potential loss of
medicaid payments that can accompany a reduction or termination of a
State supplementary payment.
Response: We believe that all States that supplement the Federal
SSI benefit are aware that reduction of State supplementary payment
levels below those levels established by section 1618 of the Act may
result in the loss of their eligibility for payments pursuant to title
XIX. Indeed, we periodically discuss with those States the impact of
section 1618 of the Act on their payment levels.
Comment: Allowing appeals in mass change cases only if the
individual contests the computation of his or her revised State
supplementary payments creates a threshold jurisdictional issue that
will further complicate the appeals process and will not result in a
significant cost savings to SSA.
Response: We disagree. By limiting appeals only to cases in which
the recipient disputes the computation of his or her State
supplementary payment resulting from a mass change, SSA will effect a
significant cost savings. Furthermore, by prohibiting the pursuit of
such claims through the administrative and judicial process, SSA will
avoid the substantial administrative consequences that can result when
large numbers of individuals who wish only to contest the propriety,
fairness, or legality of a mass change request appeals of reductions,
suspensions, or terminations resulting from that mass change.
Based on our responses to the comments on the proposed rules, we
have not changed the text of the proposed rules. In these final rules,
we made only several nonsubstantive changes to the proposed rules. We
are, therefore, publishing the proposed rules essentially unchanged as
final rules.
Regulatory Procedures
Executive Order No. 12866
The Office of Management and Budget has reviewed these rules and
determined they meet the criteria for a significant regulatory action
under E.O. 12866.
Regulatory Flexibility Act
We certify that these final rules will not have a significant
economic impact on a substantial number of small entities since these
rules affect only individuals. Therefore, a regulatory flexibility
analysis as provided in Pub. L. 96-354, the Regulatory Flexibility Act,
is not required.
Paperwork Reduction Act
These final rules impose no additional reporting or recordkeeping
requirements subject to OMB clearance.
(Catalog of Federal Domestic Assistance Program No. 93.807,
Supplemental Security Income)
List of Subjects in 20 CFR Part 416
Administrative practice and procedure, Aged, Blind, Disability
benefits, Public assistance programs, Supplemental Security Income
(SSI), Reporting and recordkeeping requirements.
Dated: June 28, 1994.
Shirley Chater,
Commissioner of Social Security.
Approved: July 22, 1994.
Donna E. Shalala,
Secretary of Health and Human Services.
For the reasons set out in the preamble, we are amending subpart N
of part 416 of 20 CFR chapter III as follows:
PART 416--SUPPLEMENTAL SECURITY INCOME FOR THE AGED, BLIND, AND
DISABLED
1. The authority citation for Subpart N of Part 416 continues to
read as follows:
Authority: Secs. 1102, 1631, and 1633 of the Social Security
Act; 42 U.S.C. 1302, 1383, 1383b.
2. Section 416.1401 is amended by adding the following new
definition after the definition for ``Determination:''
Sec. 416.1401 Definitions
* * * * *
Mass change means a State-initiated change in the level(s) of
federally administered State supplementary payments applicable to all
recipients of such payments, or to categories of such recipients, due,
for example, to State legislative or executive action.
* * * * *
3. Section 416.1402 is amended by deleting ``and'' at the end of
paragraph (l), replacing the period at the end of paragraph (m) with a
semicolon, inserting ``and'' after the semicolon, and by adding
paragraph (n) to read as follows:
Sec. 416.1402 Administrative actions that are initial determinations.
* * * * *
(n) Our calculation of the amount of change in your federally
administered State supplementary payment amount (i.e., a reduction,
suspension, or termination) which results from a mass change, as
defined in Sec. 416.1401.
4. Section 416.1403 is amended by adding paragraphs (a)(15),
(a)(16), and (b)(3) to read as follows:
Sec. 416.1403 Administrative actions that are not initial
determinations.
(a) * * *
(15) The determination to reduce, suspend, or terminate your
federally administered State supplementary payments due to a State-
initiated mass change, as defined in Sec. 416.1401, in the levels of
such payments, except as provided in Sec. 416.1402(n).
(16) Termination of Federal administration of State supplementary
payments.
(b) * * *
(3) If there is a termination of Federal administration of State
supplementary payments.
[FR Doc. 94-20362 Filed 8-19-94; 8:45 am]
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