[Federal Register Volume 60, Number 25 (Tuesday, February 7, 1995)]
[Rules and Regulations]
[Pages 7117-7120]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-2946]



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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Social Security Administration

20 CFR Part 422

RIN 0960-AD45


Organization and Procedures; Procedures of the Office of Hearings 
and Appeals; Authority of Appeals Officers To Deny a Request for 
Appeals Council Review

AGENCY: Social Security Administration, HHS.

ACTION: Final rule.

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SUMMARY: This final rule amends our regulations on the organization and 
procedures of the Appeals Council to authorize Appeals Officers, as 
well as members of the Appeals Council, to deny a request for review of 
a decision by an Administrative Law Judge (ALJ) in cases in which 
denying the request for review gives the parties to the ALJ decision a 
right to seek judicial review of that decision.

EFFECTIVE DATE: This final rule is effective February 7, 1995.

FOR FURTHER INFORMATION CONTACT: Lois Berg, Paralegal Specialist, 3-B-1 
Operations Building, 6401 Security Boulevard, Baltimore, Maryland 
21235, (410) 965-1713. For information on eligibility or claiming 
benefits, call our national toll-free number, 1-800-772-1213.

SUPPLEMENTARY INFORMATION:

Background

    We are amending Sec. 422.205 of our regulations to authorize 
Appeals Officers, as well as members of the Appeals Council, to decide 
whether to deny a request for review of an ALJ decision and thereby 
make the decision subject to judicial review under section 205(g) of 
the Social Security Act (the Act).
    Part 422 of 20 CFR provides information regarding the organization 
and procedures of the Social Security Administration (SSA). Subpart C 
of Part 422 describes the procedures of the Office of Hearings and 
Appeals (OHA). Section 422.205 describes the organization and functions 
of the Appeals Council, a part of OHA.
    By direct delegation of authority from the Secretary of Health and 
Human Services (the Secretary), the Appeals Council is authorized to 
review hearing decisions and orders of dismissal issued by SSA's ALJs. 
Through the exercise of this authority, the Appeals Council is 
responsible for ensuring that the final [[Page 7118]] decisions of the 
Secretary involving benefits under Titles II, XI, XVI and XVIII of the 
Act and Part B of title IV of the Federal Mine Safety and Health Act of 
1977, as amended, are proper and in accordance with the law, 
regulations, and binding agency policy established in Social Security 
Rulings and Acquiescence Rulings.
    Currently, 22 Appeals Council members, hereinafter referred to as 
either ``Administrative Appeals Judges (AAJs)'' or ``members,'' 
comprise the membership of the Appeals Council. The Associate 
Commissioner for OHA is the Chair of the Appeals Council and is the 
administrative officer directly responsible to the Commissioner of 
Social Security for carrying out OHA's mission of holding ALJ hearings 
and deciding appeals. Each AAJ, other than the Chair, is assisted by an 
Appeals Officer who presently serves as a legal clerk. 
Organizationally, Appeals Officers are a part of the Appeals Council.
    The Appeals Council considers appeals under titles II, XI, XVI, and 
XVIII of the Act, and under Part B of title IV of the Federal Mine 
Safety and Health Act of 1977, as amended. The regulations setting 
forth the responsibilities of the Appeals Council appear in 20 CFR Part 
404 (Subpart J, Secs. 404.967 et seq.), Part 410 (Subpart F, 
Secs. 410.657 et seq.), Part 416 (Subpart N, Secs. 416.1467 et seq.), 
and 42 CFR Part 405 (Subpart G, Secs. 405.701(c) and 405.724, and 
Subpart H, Sec. 405.815), Part 417 (Subpart Q, Sec. 417.634), and Part 
473 (Subpart B, Secs. 473.46 and 473.48(b)). These regulations provide 
that after an ALJ has issued a decision or dismissed a request for a 
hearing, the Appeals Council may review a case on its own motion or at 
the request of a party to the hearing decision or dismissal. The 
Council may deny or dismiss a party's request for review, or it may 
grant the request and either issue a decision or remand the case to an 
ALJ. If the Appeals Council denies a request for review of a decision 
by an ALJ, the ALJ's decision becomes a final decision of the Secretary 
subject to judicial review under the provisions of section 205(g) of 
the Act except when judicial review is precluded in certain Medicare 
cases. If the Appeals Council grants a request for review and issues a 
decision, that decision also becomes a final decision of the Secretary 
subject to judicial review under section 205(g) of the Act except in 
certain Medicare cases.
    Sections 404.970 and 416.1470 of 20 CFR describe cases involving 
Social Security and supplemental security income benefits payable under 
title II and title XVI of the Act that the Appeals Council will review. 
Those sections provide that the Appeals Council will review a case if 
the action, findings or conclusions of the ALJ are not supported by 
substantial evidence; there is an error of law; or there appears to be 
an abuse of discretion by the ALJ. Those sections also provide that the 
Appeals Council will review a case that presents a broad policy or 
procedural issue that may affect the general public interest. The same 
standards apply to determine if the Appeals Council will review a case 
under titles XI and XVIII of the Act and under Part B of title IV of 
the Federal Mine Safety and Health Act of 1977, as amended.
    Over the years, there have been questions about the functions and 
operations of the Appeals Council. Some commenters have questioned the 
usefulness of review by the Appeals Council. Several studies have 
addressed the role of the Appeals Council, resulting in many 
recommendations for improving the Council's structure and operations.
    In its Recommendation 87-7: A New Role for the Social Security 
Appeals Council (adopted December 18, 1987), the Administrative 
Conference of the United States (ACUS) concluded that the high volume 
of work of the Council (up to 500 cases per member per month) precluded 
it from detecting emerging problems, identifying new issues to be 
resolved, and identifying and developing needed policies. ACUS 
recommended that the Secretary and SSA restructure the Appeals Council 
in ``a fashion that redirects the institution's goals and operations 
from an exclusive focus on processing the stream of individual cases 
and toward an emphasis on improved organizational effectiveness'' (1 
CFR 305.87-7). To this end, ACUS recommended that ``the Appeals Council 
should be provided the authority to reduce significantly its caseload 
and also be given, as its principal mandate, the responsibility to 
recommend and, where appropriate, develop and implement adjudicatory 
principles and decisional standards for the disability determination 
process.'' ACUS also recommended that the agency enhance the status of 
the Appeals Council and provide law clerks to its members.
    To address the workload problems ACUS discussed in its 
recommendation, SSA decided, in 1988, to add Appeals Officers to the 
Council to enable the members to focus their attention on the more 
complex and significant cases, including those cases presenting 
important policy or procedural issues.
    Appeals Officers presently assist AAJs in considering 
recommendations made by the Council's support staff in OHA's Office of 
Appellate Operations. Appeals Officers, who are attorneys, also act as 
the AAJs' staff attorneys, researching and providing legal memoranda on 
issues arising from cases that come to the attention of the Appeals 
Council. However, because the Appeals Officers do not have authority 
under our existing regulations to carry out any of the decisionmaking 
responsibilities of the AAJs, one or more AAJs must make these 
decisions.
    Research we have supported since we established the Appeals Officer 
position has persuaded us that if the Appeals Officers are authorized 
to assume some of the responsibilities of the AAJs, the AAJs will be 
able to focus more of their attention on cases that present broad 
policy or procedural issues. In a report commissioned by ACUS in 1989 
(Report and Recommendations on the Social Security Administration's 
Administrative Appeals Process), Professor Frank S. Bloch discussed the 
Appeals Council's workload and stated that the Council could not be 
expected to assume a meaningful review function for all claims that 
might be presented to it. One of the recommendations in the report was 
that the Appeals Council be authorized ``to use staff or lower level 
Council members to deny a request for review, and limit the review of 
cases by the Appeals Council to those raising significant policy 
issues.'' See Recommendation No. 12.
    To complete the changes we contemplated when we established the 
Appeals Officer position, we are amending Sec. 422.205 to authorize 
Appeals Officers, as well as AAJs, to deny a request for Appeals 
Council review of a hearing decision by an ALJ in any case in which the 
Act would provide an opportunity for judicial review of such hearing 
decision following a denial of a request for Appeals Council review. 
Because an ALJ's dismissal of a request for a hearing is not subject to 
judicial review, AAJs alone will continue to decide whether to grant or 
deny a request for review of a hearing dismissal. For the same reason, 
only AAJs will be empowered to exercise the Council's authority to 
dismiss a request for review or refuse a request to reopen a decision 
of an ALJ or the Appeals Council. The AAJs also retain exclusive 
authority to grant a request for review of a hearing decision or a 
dismissal, to decide to review a case on the Appeals Council's own 
motion, to remand a case to an ALJ, or to issue a final decision. 
[[Page 7119]] 
    In exercising the authority provided to them under the final rule, 
the Appeals Officers will be required to apply the same criteria as the 
AAJs in determining whether to deny a request for review. The Appeals 
Officers will apply the standards set forth in Secs. 404.970 and 
416.1470, which specify when the Appeals Council will review a case, in 
deciding the appropriate action. The Appeals Officers will continue to 
receive guidance, direction and supervision from the AAJs, including 
instructions as to specific issues or kinds of cases requiring the 
attention of the AAJ.
    While an Appeals Officer will have authority to deny a request for 
review of an ALJ decision, he or she also may refer a case to an AAJ 
with a recommendation if the case involves complex factual issues or 
complicated interpretative issues of law and/or regulation. In 
addition, the analysts in OHA's Office of Appellate Operations will 
submit all recommendations to grant review directly to the AAJs for 
disposition.
    We believe that the amendment of Sec. 422.205, which will provide 
Appeals Officers a specific and limited authority, will allow the 
Appeals Council to give the public a more timely response to their 
requests for review, increase the ability of the AAJs to carry out 
their important function of providing review of many ALJ decisions, and 
improve the quality and efficiency of the service the Appeals Council 
is able to provide. The revised process will expedite bringing the 
``close cases,'' which are normally more complex, to the attention of 
the AAJs and also allow the AAJs to focus on cases raising significant 
issues.

Public Comments on the Proposed Rule

    We published a proposed rule to amend Sec. 422.205 with a Notice of 
Proposed Rulemaking (NPRM) in the Federal Register on January 10, 1994, 
59 FR 1363. We provided interested persons and organizations 60 days to 
comment. A correction to the preamble to the proposed rule was 
subsequently published on March 16, 1994, 59 FR 12211. We received two 
comments on the proposed rule from a single commenter, a legal services 
organization that represents Medicare beneficiaries. We have carefully 
considered the comments and the changes proposed by the commenter. As 
discussed below, we have adopted one of the changes recommended by the 
commenter in the final rule.
    Comment: The commenter believed that the proposed rule would result 
in some cases being processed more quickly, but also thought that it 
would add a step to the process in instances in which the Appeals 
Officer decides not to deny a request for review and an AAJ must then 
decide whether to deny or grant review. The commenter perceived this as 
an additional step that could actually add more time to the process and 
suggested that if the proposed rule were adopted, there should be time 
limits within which Appeals Officers must make their decisions.
    Response: We are not making this suggested change. We believe the 
modified process involves no additional step, even in the situation of 
concern to the commenter, and that the process will expedite 
disposition of the Appeals Council's workload.
    Under the regulations as amended by this final rule, AAJs will 
receive cases to consider for possible review in two ways. As in the 
past, where an analyst believes a case should be reviewed under the 
applicable standards, the analyst will submit a recommendation for 
review directly to an AAJ for disposition. In addition, where an 
analyst recommends denial of review and the Appeals Officer believes 
that the Council should review the case, or that an AAJ should consider 
the case for possible review, the Appeals Officer will submit the case 
to an AAJ with a recommendation.
    Under the regulation in effect prior to the publication of this 
final rule, AAJs were required to consider all the cases in which 
analysts recommended denial of review in an effort to identify those in 
which review might be appropriate notwithstanding the analyst's 
recommendation to the contrary. Under the final rule, the AAJs will 
focus their attention on cases in which analysts recommend review and 
those additional cases that Appeals Officers decide should be brought 
to their attention. Where the Appeals Officer refers a case, the issues 
in it will be focused for the AAJ by virtue of the recommendations of 
the analyst and the Appeals Officer. Thus, as we stated earlier in this 
preamble and in the preamble to the NPRM, we believe that the revised 
process will expedite the bringing of ``close cases'' to the attention 
of the AAJs and increase their ability to carry out the important 
function of reviewing many ALJ decisions, while also allowing the 
Appeals Council to deny or grant the public's requests for review more 
promptly.
    Comment: The commenter also thought that the number of cases denied 
review could increase because the only action the Appeals Officers 
could take would be to deny requests for review, and because the goal 
of increasing the Appeals Council's ``organizational effectiveness'' 
seems to imply that the desired outcome is more denials of review. The 
commenter believed this change would occur in the context of a 
situation in which the number of Medicare cases the Council can 
consider is already limited by standards concerning the monetary 
amounts at issue.
    The commenter was concerned that if the Appeals Council reviews 
fewer cases, the proposed rule would have a significant, adverse impact 
on low-and-moderate income Medicare beneficiaries, limiting some to 
seeking relief through court actions they cannot afford and denying 
others any further opportunity to pursue relief (because the access of 
Medicare beneficiaries to district court review is restricted by 
monetary minimums on the amount in controversy). The commenter 
recommended requiring that an AAJ consider all cases in which judicial 
review would not be possible because of the amount at issue, noting 
that this change would not address the concern about court costs 
prohibiting additional appeals.
    Response: As discussed in our response to the prior comment, we 
believe the modified process will increase the capacity of the Appeals 
Council to identify and review ALJ decisions that should be reviewed 
pursuant to the applicable regulatory standards. The intent of the 
revised process provided for in the final rule is to increase the 
Appeals Council's organizational effectiveness by increasing its 
capacity to identify and review ALJ decisions that should be reviewed, 
including, but not limited to, those that present important policy or 
procedural issues. The revised process should reduce the number of 
individuals who must file civil actions to obtain relief.
    An individual's right to an ALJ hearing in a Medicare case is 
contingent, in part, on whether or not the claim or claims at issue 
meet the amount in controversy requirements set forth in the Act. There 
are, however, no monetary thresholds that limit the Appeals Council's 
authority to consider reviewing a decision or dismissal issued by an 
ALJ on a Medicare claim. For example, if an ALJ dismisses a request for 
hearing because the amount in controversy requirement has not been met, 
a party may request the Appeals Council to review and vacate the 
dismissal action. If the request for hearing should not have been 
dismissed under the applicable standards, the Council will grant the 
request for review and vacate the hearing dismissal. [[Page 7120]] 
    We are adopting in the final rule the commenter's recommendation to 
require AAJs to consider all requests for Appeals Council review in 
cases in which judicial review would be precluded by the monetary 
amount at issue. This change from the proposed rule is consistent with 
our overall intent, which is to empower Appeals Officers to deny 
requests for review of hearing decisions when such action results in a 
final decision on which the claimant has a right to seek judicial 
review under section 205(g) of the Act. To adopt this recommendation, 
we are making a change in the final rule to specify an additional 
category of cases in which the authority to deny a request for review 
will remain exclusively with the AAJ.
    The change we are making in the final rule, see below, reserves to 
the AAJs exclusive authority to deny a request for review of an ALJ 
hearing decision in any case in which the Secretary's final decision 
after an ALJ hearing is not subject to judicial review. Such cases are 
identified in Sec. 422.210(a) and include cases under title XI as well 
as cases under title XVIII.
    There is no right to judicial review under section 205(g) of the 
Act where the Appeals Council denies a party's request that the Council 
review and vacate an ALJ's dismissal of a request for a hearing 
(because there is no final decision of the Secretary after an ALJ 
hearing in these instances). Where a request for a hearing is dismissed 
based on application of a monetary minimum and the Council denies a 
request for review, the monetary minimum effectively precludes judicial 
review. The final rule, like the proposed rule, addresses the 
commenter's concerns regarding the exercise of the Council's authority 
to deny a request for review in such cases since it provides that only 
AAJs will have authority to deny a request for review of an ALJ 
dismissal of a request for a hearing.

Change in the Final Rule

    After considering the comments on the NPRM, we are publishing a 
final rule that differs in one respect from the proposed rule. The 
second sentence of Sec. 422.205(c) as proposed stated: ``The denial of 
a request for review of a hearing dismissal, the dismissal of a request 
for review, or the refusal of a request to reopen a hearing or Appeals 
Council decision concerning a determination under Sec. 422.203(a)(1) 
shall be by such member or members of the Appeals Council as may be 
designated in the manner prescribed by the Chair or Deputy Chair.'' For 
the reasons discussed above, we are revising that sentence in the final 
regulation to state: ``The denial of a request for review of a hearing 
dismissal, the dismissal of a request for review, the denial of a 
request for review of a hearing decision whenever such hearing decision 
after such denial would not be subject to judicial review as explained 
in Sec. 422.210(a), or the refusal of a request to reopen a hearing or 
Appeals Council decision concerning a determination under 
Sec. 422.203(a)(1) shall be by such member or members of the Appeals 
Council as may be designated in the manner prescribed by the Chair or 
Deputy Chair.''

Regulatory Procedures

Executive Order No. 12866

    We have consulted with the Office of Management and Budget (OMB) 
and determined that this rule does not meet the criteria for a 
significant regulatory action under Executive Order 12866. Thus, the 
rule is not subject to OMB review.

Regulatory Flexibility Act

    We generally prepare a regulatory flexibility analysis that is 
consistent with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 
through 612) unless the Secretary certifies that a rule will not have a 
significant economic impact on a substantial number of small entities. 
Individuals are not included in the definition of a small entity. 
However, for the purposes of the RFA, we consider the majority of 
Medicare providers, physicians and suppliers to be small entities.
    Inasmuch as the final rule does not alter the standards for Appeals 
Council review, we believe that it will have little, if any, effect on 
providers, physicians and suppliers which request Appeals Council 
review of Medicare claims. Accordingly, we have determined, and the 
Secretary certifies, that this final rule will not result in a 
significant economic impact on a substantial number of small entities. 
Therefore, we have not prepared an RFA analysis.

Paperwork Reduction Act

    This regulation imposes no new reporting or recordkeeping 
requirements requiring OMB clearance.

(Catalog of Federal Domestic Assistance Program Nos. 93.773 
Medicare-Hospital Insurance; 93.774 Medicare-Supplementary Medical 
Insurance; 93.802 Social Security-Disability Insurance; 93.803 
Social Security-Retirement Insurance; 93.804 Social Security-Special 
Benefits for Persons Age 72 and Over; 93.805 Social Security-
Survivors Insurance; 93.806 Special Benefits for Disabled Coal 
Miners; and 93.807 Supplemental Security Income.)

List of Subjects in 20 CFR Part 422

    Administrative Practice and Procedure, Freedom of Information, 
Organization and Functions (government agencies), Social Security, 
Reporting and recordkeeping requirements.

    Dated: November 10, 1994.
Shirley Chater,
Commissioner of Social Security.

    Approved: January 31, 1995.
Donna E. Shalala,
Secretary of Health and Human Services.

    For the reasons set out in the preamble, we are amending Part 422 
of Chapter III of Title 20 of the Code of Federal Regulations as 
follows:

PART 422--ORGANIZATION AND PROCEDURES

    1. The authority citation for Subpart C continues to read as 
follows:

    Authority: Secs. 205, 221, 1102, 1869, and 1871 of the Social 
Security Act; 42 U.S.C. 405, 421, 1302, 1395ff, and 1395hh; sec. 
413(b) of the Federal Mine Safety and Health Act of 1977; 30 U.S.C. 
923(b).

    2. Section 422.205 is amended by revising paragraph (c) to read as 
follows:


Sec. 422.205  Review by Appeals Council.

* * * * *
    (c) The denial of a request for review of a hearing decision 
concerning a determination under Sec. 422.203(a)(1) shall be by such 
appeals officer or appeals officers or by such member or members of the 
Appeals Council as may be designated in the manner prescribed by the 
Chair or Deputy Chair. The denial of a request for review of a hearing 
dismissal, the dismissal of a request for review, the denial of a 
request for review of a hearing decision whenever such hearing decision 
after such denial would not be subject to judicial review as explained 
in Sec. 422.210(a), or the refusal of a request to reopen a hearing or 
Appeals Council decision concerning a determination under 
Sec. 422.203(a)(1) shall be by such member or members of the Appeals 
Council as may be designated in the manner prescribed by the Chair or 
Deputy Chair.
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[FR Doc. 95-2946 Filed 2-6-95; 8:45 am]
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