[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]
BILLING CODE 4190-29-P