[Federal Register Volume 63, Number 129 (Tuesday, July 7, 1998)]
[Rules and Regulations]
[Pages 36560-36571]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-17633]
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SOCIAL SECURITY ADMINISTRATION
20 CFR Parts 404 and 416
RIN 0960-AE53
Administrative Review Process; Identification and Referral of
Cases for Quality Review Under the Appeals Council's Authority To
Review Cases on Its Own Motion
AGENCY: Social Security Administration (SSA).
ACTION: Final rule.
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SUMMARY: We are amending our regulations to include rules under which a
decision or order of dismissal that is issued after the filing of a
request for a hearing by an administrative law judge (ALJ) may be
referred to the Appeals Council for possible review under the Appeals
Council's existing authority to review cases on its own motion. These
final rules codify identification and referral procedures that we
currently use to ensure the accuracy of decisions that ALJs and other
adjudicators make at the ALJ-hearing step (hearing level) of the
administrative review process. The rules also codify new quality
assurance procedures to ensure the quality of dispositions at the
hearing level.
DATES: This rule is effective August 6, 1998.
FOR FURTHER INFORMATION CONTACT: Harry J. Short, Legal Assistant,
Office of Process and Innovation Management, Social Security
Administration, 6401 Security Boulevard, Baltimore, MD 21235, (410)
965-6243 for information about this notice. For information on
eligibility or claiming benefits, call our national toll-free number,
1-800-772-1213.
SUPPLEMENTARY INFORMATION:
Background
Under procedures set forth in Secs. 404.967 ff. and 416.1467 ff.,
and pursuant to a direct delegation of authority from the Commissioner
of Social Security, the Appeals Council, a component in our Office of
Hearings and Appeals (OHA), reviews hearing decisions and orders of
dismissal issued by ALJs and decisions issued by certain other
adjudicators. The Appeals Council may review an ALJ's decision or
dismissal of a hearing request at the request of a party to the action
or, pursuant to Secs. 404.969 and 416.1469, on its own motion. Through
the exercise of its authority to review cases, the Appeals Council is
responsible for ensuring that the final decisions of the Commissioner
of Social Security in claims arising under titles II and XVI of the
Social Security Act (the Act), as amended, are proper and in accordance
with the law, regulations, and rulings.
The Appeals Council's authority to review cases on its own motion
also applies, at present, to two types of hearing-level cases that do
not result in decisions by ALJs. Under Secs. 404.942 and 416.1442,
attorney advisors in OHA are authorized until July 1, 1998, to conduct
certain prehearing proceedings and to issue, where warranted by the
documentary evidence, wholly favorable decisions. Under the provisions
of Secs. 404.942 (e)(2) and (f)(3) and 416.1442 (e)(2) and (f)(3), such
decisions are subject to review under the own-motion authority of the
Appeals Council established in Secs. 404.969 and 416.1469. In addition,
under Secs. 404.943 and 416.1443, adjudication officers are authorized,
for test purposes, to conduct certain prehearing proceedings and to
issue, where warranted by the documentary evidence, wholly favorable
decisions. Under the provisions of Secs. 404.943(c)(2)(ii) and
416.1443(c)(2)(ii), such decisions are also subject to review on the
Appeals Council's own motion.
Under our regulations on the Appeals Council's procedures, if the
Appeals Council decides to review a case in response to a request for
review or on its own motion, it may issue a decision or remand the case
to an ALJ. The Appeals Council may also dismiss a request for hearing
for any reason that the ALJ could have dismissed the request.
A decision by the Appeals Council ``to review'' a hearing-level
decision means that the Appeals Council assumes jurisdiction and causes
that decision not to be the final decision of the Commissioner of
Social Security. A decision that the Appeals Council ``reviews'' will
be replaced by a new final decision or dismissal order of the Appeals
Council or, if a hearing or other hearing-level proceedings are
required, by a decision or dismissal order issued following remand of
the case from the Council to an ALJ.
A decision by the Appeals Council to review a case is made when,
following a consideration of the case to determine if review is
appropriate, the Council issues a notice of its decision to review. The
Council's standard notice of review
[[Page 36561]]
advises the parties of the reasons for the review and (unless the
Council issues a wholly favorable decision upon taking review) the
issues to be considered in proceedings before the Council or before an
ALJ on remand. In instances in which the Council reviews a hearing
level decision that has been issued based on the documentary evidence
without the holding of an oral hearing by an ALJ, the parties have the
right to such a hearing, except where the parties waive that right in
writing.
The existing provisions in Secs. 404.969 and 416.1469 on the
Appeals Council's authority to review cases on its own motion provide
that the Appeals Council itself may decide to review a case within 60
days after the date of the hearing decision or dismissal and that, if
the Council does review a case under this authority, it will provide
notice to the parties to the hearing decision or dismissal action.
Sections 404.969 and 416.1469 do not currently address the procedures
used in identifying and referring cases to the Appeals Council for it
to consider for possible review on its own motion.
The Appeals Council may review any case on its own motion pursuant
to Secs. 404.969 and 416.1469. The conditions under which the Appeals
Council will review a case, on request for review or on its own motion,
are set forth in Secs. 404.970 and 416.1470. Those sections provide
that the Council will review a case if: (1) There appears to be an
abuse of discretion by the ALJ; (2) there is an error of law; (3) the
action, findings or conclusions of the ALJ are not supported by
substantial evidence; or (4) there is a broad policy or procedural
issue that may affect the general public interest. Sections 404.970 and
416.1470 further provide that the Council will also review a case if
new and material evidence is submitted that relates to the period on or
before the date of the ALJ's decision and the Council finds, upon
evaluating the evidence of record and the additional evidence, that an
action, a finding or a conclusion of the ALJ is contrary to the weight
of the evidence currently of record as a whole.
In fiscal year 1996 (FY '96), the Appeals Council received 99,735
requests for review. In FY '97, the number of requests for review
received by the Appeals Council rose to 112,528. Most of these requests
were for review of unfavorable decisions and dismissal actions; some
concerned partially favorable decisions; and a few concerned decisions
that were wholly favorable regarding the benefits claimed, but were
found by a party to the decision to be less than fully satisfactory for
some other reason.
In FY '96, the Appeals Council considered 8,502 cases for possible
review under its own-motion authority; in FY '97, the Council
considered 8,012 cases for possible review under that authority. Almost
all of these cases involved favorable hearing-level decisions that were
referred to the Appeals Council under one of two types of
identification and referral procedures we currently use--random sample
procedures, which generated the majority of this workload, and
``protest'' procedures.
Existing Identification and Referral Procedures
The Appeals Council considers, for possible review on its own
motion, a national random sample of favorable ALJ decisions that have
not been implemented, and, as resources permit, a random sample of
unappealed denial decisions and dismissals. We conduct these random
sample procedures pursuant to sections 205(a), 702(a)(4) and 1631(d) of
the Act, which give the Commissioner of Social Security general
responsibility and authority for program administration and oversight.
The Appeals Council also considers, for possible review on its own
motion, a random sample of wholly favorable decisions issued by
attorney advisors under the provisions of Secs. 404.942 and 416.1442.
Wholly favorable decisions issued by adjudication officers under the
provisions of Secs. 404.943 and 416.1443 are also identified by random
sampling for referral to the Appeals Council for possible own-motion
review. These procedures have been established in accordance with
commitments we made, in publishing the final rules for the attorney
advisor and adjudication officer provisions, to assess carefully the
quality of the decisions issued by the attorney advisors and the
adjudication officers (see 60 FR 34126, 34127 (1995) and 60 FR 47469,
47471 (1995), respectively).
Our existing identification and referral procedures also include
those under which the SSA components responsible for effectuating
hearing-level decisions--SSA Processing Centers (PCs) and Field Offices
(FOs)--refer (``protest'') certain cases to the Appeals Council for
possible review under its own motion authority. The PCs, which include
our Program Service Centers and the Office of Disability and
International Operations, refer cases directly to the Appeals Council;
FOs forward cases to a PC or an SSA Regional Office, which decides if
the PC or the Regional Commissioner should make a referral to the
Council.
Decisions by ALJs, attorney advisors and adjudication officers are
all subject to referral to the Appeals Council under our protest
procedures. Almost all protested decisions are favorable decisions
because almost all of the ALJ decisions that require implementation are
wholly or partially favorable decisions under which benefit payments
are to be effectuated (initiated or continued), and because all
decisions issued by attorney advisors and adjudication officers are
wholly favorable. In protesting a decision, an effectuating component
may recommend that the decision be made more or less favorable or
unfavorable. The Appeals Council, however, will decide whether to
review such a case, and the appropriate disposition if it decides to
review a case, based on its consideration of the record and the
hearing-level decision.
Effectuating components refer a case if they believe the need for
referral is clear (not dependent on a judgment factor) because: (1) the
decision contains a clerical error which affects the outcome of the
claim; (2) the decision is contrary to the Act, regulations or rulings;
or (3) the decision cannot be effectuated because its intent is unclear
as to an issue affecting the claim's outcome.
Effectuating components refer cases to the Appeals Council by
written memoranda. If the Council decides to review a referred case, it
provides the parties a copy of the effectuating component's referral
memorandum with the notice by which it advises the parties that it will
review the case.
We are amending our regulations to include rules on the existing
random sample and protest procedures discussed above. We have decided
to codify these procedures in connection with the decision we made, in
furtherance of the Plan for a New Disability Claim Process (59 FR 47887
(1994) (henceforth, the Disability Redesign Plan)), to strengthen the
Appeals Council's own-motion functions by establishing a new process
for identifying and referring cases for possible review under the
Council's existing own-motion authority.
New Identification and Referral Procedures
The Appeals Council currently considers only a small percentage of
all favorable decisions issued at the hearing level for possible review
under its own-motion authority. (The Council's workload in this area
represented fewer than 3 percent of such decisions in FY
[[Page 36562]]
'96 and FY '97.) In addition, the processes currently used to select
decisions for possible review on the Appeals Council's own motion are
generally not designed to identify, in any systematic way, hearing-
level decisions that are more likely to be incorrect. The random sample
processes bringing cases before the Appeals Council do not identify
cases other than by techniques designed to assure randomness of
selection within broadly identified categories (i.e., allowances,
unappealed denials, and dismissals). The identification of ``protest''
cases that occurs in the effectuation process is a secondary function
of a process that is principally focused on the prompt payment of
benefits.
Based on the above considerations, we are establishing procedures
under which our Office of Quality Assurance and Performance Assessment
(OQA), the SSA component that oversees SSA's quality assurance
function, will examine certain allowance decisions at the hearing level
that have been selected through statistical sampling techniques. OQA
will refer to the Appeals Council for possible review the decisions it
believes meet the criteria for review by the Council. Decisions that
have been issued at the hearing level will initially be included in
this examination process by random sampling. As we develop the computer
systems and other technical capacities needed to support this function,
we will use selective sampling techniques that rely on case profiling
and other sampling methods that can identify cases which involve
problematic issues or fact patterns that increase the likelihood of
error.
Under the new process, upon referral of a case by OQA, the Appeals
Council will consider the case and OQA's reasons for believing that the
decision should be reviewed. The Appeals Council will decide whether to
review the case in accordance with Secs. 404.969-404.970 and/or
416.1469-416.1470. If it decides to review the case, the Appeals
Council will provide the parties a copy of OQA's referral, which will
be in writing, with its notice of review. The 60-day time limit for the
Appeals Council to initiate review of a case under the authority and
standards provided in Secs. 404.969-404.970 and 416.1469-416.1470 will
apply to cases the Council considers for review in response to
referrals from OQA.
The Act does not specify how SSA should review hearing-level
decisions. We believe that the new procedures we are establishing, in
combination with the existing identification and referral procedures
that we are including in our regulations, are appropriate procedures
for carrying out the program oversight responsibilities of the
Commissioner of Social Security.
An important purpose of the new procedures is to increase our
ability to identify policy issues that should be clarified through
publication of regulations or rulings. We plan to monitor how our
policies are understood and implemented through a post-adjudicative
evaluation process in which we will analyze differences of view between
the Appeals Council and OQA concerning cases referred under the new
procedures. We believe this post-adjudicative process, in conjunction
with the new OQA referral process, will increase our ability to
identify needed policy clarifications.
Regulatory Provisions
As revised in these final rules, Secs. 404.969 and 416.1469 set
forth the Appeals Council's own-motion authority and state that we
refer cases to the Appeals Council for it to consider reviewing under
that authority. Sections 404.969 and 416.1469 also describe the
identification and referral procedures we will follow and the actions
the Appeals Council will take in cases it considers for possible review
on its own motion. These sections apply to all cases that our
regulations make subject to own-motion review by the Council.
Sections 404.969(b) and 416.1469(b) specify that we will identify a
case for referral to the Appeals Council for possible review under its
own-motion authority before we effectuate a decision in the case. These
sections provide that we will identify cases for referral through
random and selective sampling techniques, that we may examine cases
identified by sampling to assess whether the criteria for review by the
Appeals Council are met, and that we will also identify cases for
referral through the evaluation of cases we conduct in order to
effectuate decisions.
Under Secs. 404.969(b)(1) and 416.1469(b)(1), we may conduct random
and selective sampling of cases involving all types of actions that
occur at the hearing level of the administrative review process (i.e.,
wholly or partially favorable decisions, unfavorable decisions, or
dismissals) and any type of title II or title XVI benefits (i.e.,
different types of benefits based on disability and benefits not based
on disability). Our decision to adopt these rules rests on our
conclusion that we should increase the number of favorable disability
decisions the Appeals Council considers for possible review on its own
motion to better balance the Council's review of favorable and
unfavorable decisions. However, the Council's existing authority to
review cases on its own motion covers all types of title II and title
XVI cases adjudicated at the hearing level, and these final rules will
allow use of the identification and referral procedures being set forth
with respect to all such cases.
Sections 404.969(b)(1) and 416.1469(b)(1) specify that we will use
selective sampling to identify cases that exhibit problematic issues or
fact patterns that may increase the likelihood of error. Under these
provisions, the factors considered in random and selective sampling
shall not include the identity of the decisionmaker or the identity of
the office issuing the decision.
Sections 404.969(b)(1) and 416.1469(b)(1) also authorize, but do
not require, that we examine cases that have been identified through
random or selective sampling. Cases may be identified for referral by
random or selective sampling. The purpose of the examination of cases
that we may conduct is to refine the identification of cases in which
one or more of the criteria for own-motion review by the Appeals
Council may be met.
Sections 404.969(b)(2) and 416.1469(b)(2) provide that effectuating
components will identify cases for referral under criteria they
presently use to identify cases that they believe exhibit clear error
and other circumstances preventing effectuation of a decision. Any type
of decision requiring effectuation may be identified for referral under
these provisions.
Under Secs. 404.969(c) and 416.1469(c), we will make referrals that
occur as the result of a case examination or the effectuation process
in writing. The written referral will state the referring component's
reasons for believing that the Appeals Council should review the case
on its own motion. Sections 404.969(c) and 416.1469(c) also provide
that referrals resulting from selective sampling without a case
examination may be accompanied by a written statement identifying the
issue(s) or fact pattern that caused the referral, and that referrals
resulting from random sampling without a case examination will only
identify the case as a random sample case. A statement of the issue(s)
or fact pattern identified in selective sampling may be computer
generated.
Sections 404.969(d) and 416.1469(d) specify that the Appeals
Council's notice of review will include a copy of any written referral
provided to the Appeals Council. These provisions also include language
clearly stating our long-standing policy that issuance of the notice of
review establishes when a decision to conduct a review occurs (see
[[Page 36563]]
Hearings and Appeals Litigation Law Manual (HALLEX), section I-3-301).
Sections 404.969(d) and 416.1469(d) also state our policy that when
the Appeals Council is unable to decide whether to review a case on its
own motion within the 60-day period in which it may do so, it may
consider whether the decision should be reopened under the provisions
of Secs. 404.987 and/or 416.1487, which authorize the Council to reopen
a decision that has become administratively final on its own initiative
or at the request of a party to the decision, if a condition for
reopening stated in Secs. 404.988 or 416.1488 is present. Inclusion of
this statement in the regulations clarifies our long-standing policy
that the Appeals Council may also reopen final decisions in accordance
with Secs. 404.987, 404.988, 416.1487, and 416.1488 after the 60 days
for initiating review under Secs. 404.969 and 416.1469 have expired
(see Social Security Acquiescence Ruling (AR) 87-2(11)).
Sections 404.969(d) and 416.1469(d) also state, finally, that if
the Appeals Council decides to review a decision on its own motion or
to reopen a decision as provided in these rules, the notice of review
or the notice of reopening issued by the Appeals Council will include,
where appropriate, information concerning the interim benefit
provisions of section 223(h) or section 1631(a)(8) of the Act, as
appropriate. This provision reflects existing practices we follow under
these statutory provisions.
Public Comments
These regulatory provisions were published in the Federal Register
as a notice of proposed rulemaking (NPRM) on September 25, 1997 (62 FR
50266). We received statements in response to the NPRM from 15
individuals and organizations. The individuals responding included ALJs
employed by SSA and attorneys who represent individuals claiming rights
under the Social Security and supplemental security income (SSI)
programs. The organizations responding included a number of legal aid
groups and four professional associations: The Association of
Administrative Law Judges, Inc., the National Association of Disability
Examiners, the National Council of Disability Determination Directors,
and the National Organization of Social Security Claimants'
Representatives.
Some commenters endorsed the proposed rules, with or without
recommending changes in the rules; others opposed the rules, with or
without recommending changes in the event of their adoption. Other
commenters accepted the general appropriateness of rules like those
proposed while also recommending changes in the final rules or
requesting assurances about how the rules would be applied. Generally,
the commenters who opposed the rules raised issues about the bases for
the proposed rules and contended that they were intended to intimidate
ALJs and would be unfair to claimants in general and to individuals
whose cases were included in the new procedures. Comments favoring
adoption of the rules generally emphasized the appropriateness of
better balancing the review of favorable and unfavorable decisions
issued at the ALJ-hearing step of the administrative review process.
The NPRM referred to the component that would perform the case
examinations included in the proposed new quality assurance procedures
as the ``Office of Program and Integrity Reviews.'' (See 62 FR 50266,
50268.) Since publication of the NPRM, this component's name has been
changed to the ``Office of Quality Assurance and Performance
Assessment.'' We have used the new name and its acronym, ``OQA,'' in
the above discussion of these final rules and in the following
discussion of the public comments and our responses.
Because some of the comments were detailed, we have condensed,
summarized or paraphrased them. We have, however, tried to summarize
the commenters' views accurately and to respond to all of the
significant issues raised by the commenters that are within the scope
of the proposed rules. For the reasons explained below in our responses
to specific comments, we have not adopted the recommendations against
promulgating these final rules or some of the specific recommendations
we received for changing the rules as proposed. However, in response to
the comments, as discussed below, we are clarifying the intent of the
rules in several respects and making five clarifying changes in the
regulatory language. For reasons discussed following the discussion of
the comments and our responses, we are also making one editorial change
in the regulatory language that is not in response to a specific
comment.
Comment: One commenter thought that the proposed rules would blur
the roles of the Appeals Council and OQA and shift to the Appeals
Council trend-spotting and policymaking functions that should be
performed by OQA.
Response: The Appeals Council has traditionally used its
adjudicative experience as a basis for providing comments and
recommendations in SSA's policymaking processes. An important purpose
of the new procedures is to make better use of the Council's
adjudicative experience for policymaking purposes. If the case
disposition the Appeals Council makes in response to a referral from
OQA indicates that the case may pose a significant policy or program
issue, a post-adjudicative evaluation will be performed. OHA will
participate in such evaluations to assure that the Council's
adjudicative experience is reflected in the assessment of the policy
and program issues the cases present. These procedures represent a new
way to make use of the Appeals Council's experience in our policymaking
processes; the procedures do not, in our judgment, blur the Council's
role as an adjudicative body.
Comment: One commenter stated that we should specify, as we have
already done with respect to our selective sampling procedures, that
the identity of the decisionmaker or the office issuing a decision will
also not be a factor in our random sampling and ``protest'' procedures.
Response: Because the random sampling procedures we are adopting
may be applied to variously defined categories of cases (e.g.,
unfavorable decisions issued between given dates), we believe it would
be appropriate to specify, in accordance with our intent, that the
identity of the decisionmaker or of the office issuing the decision
will not be a factor in either our random or our selective sampling
procedures. Accordingly, we have modified the provisions of
Secs. 404.969(b)(1) and 416.1469(b)(1), and the description of these
regulatory provisions set forth above, to make this point clear.
We believe that the identity of the decisionmaker or office would
clearly not be a factor that might be encompassed within the criteria
stated in Secs. 404.969(b)(2) and 416.1469(b)(2) for identifying cases
for referral as a result of the effectuation process. Therefore, we are
not modifying the language of those provisions in response to this
comment.
Comment: Several commenters were concerned about the proposed
provisions of Secs. 404.969(d) and 416.1469(d) that stated: ``If it is
unable to decide within the applicable 60-day period whether to review
a decision or dismissal, the Appeals Council may consider the case to
determine if the decision or dismissal should be reopened pursuant to
Sec. 404.987 [416.1487].'' These commenters expressed views to the
effect that these
[[Page 36564]]
provisions would effectively do away with the 60-day limit on own-
motion review and make the grounds for own-motion review applicable for
reopening purposes.
Response: As we discussed in the preamble to the NPRM and in the
above description of the regulatory provisions, the language in
question in this comment is intended to allow the Appeals Council to
``consider whether the decision should be reopened under the provisions
of Secs. 404.987 and/or 416.1487, which authorize the Council to reopen
a final decision on its own initiative or at the request of a party to
a decision, if a condition for reopening stated in Secs. 404.988 and/or
416.1488 is present.'' The regulatory provisions as proposed reflected
that intent by stating that the Council will consider if it should
reopen the decision or dismissal action ``pursuant to Sec. 404.987
[416.1487]'', because those sections make reopening contingent on
satisfaction of the requirements set forth in Secs. 404.988 and
416.1488. However, to make it unmistakably clear that we intend this
provision to allow a decision to be reopened only if a condition for
reopening described in Secs. 404.988 or 416.1488 is present and the
time limits established in those sections are also satisfied, we have
modified the regulatory language to provide that the Appeals Council
may determine if a decision or dismissal received under Secs. 404.969
or 416.1469 ``should be reopened pursuant to Secs. 404.987 and 404.988
[416.1487 and 416.1488].''
Comment: Several commenters thought that the intent of the proposed
provisions concerning reopening in Secs. 404.969(d) and 416.1469(d)
should be clarified relative to the decision of the United States Court
of Appeals for the Eleventh Circuit in Butterworth v. Bowen, 796 F.2d
1379 (11th Cir. 1986).
Response: In Butterworth, the Court of Appeals for the Eleventh
Circuit held that the Appeals Council could reopen an ALJ's decision
only if the case is ``properly before'' the Council, and that the
circumstances in which the Council would have an ALJ's decision
properly before it did not include those in which it had considered,
but not timely taken, own-motion review. The court concluded that:
``[W]e have not held that the Secretary is precluded from initiating
the reopening and revising of cases. We have only given section 404.969
its necessary force and recognized that it limits somewhat the
reopening jurisdiction of the Appeals Council.''
We acquiesced in the holding in Butterworth by publishing AR 87-
2(11). We issued this ruling because we determined that the court's
holding conflicted with our longstanding policies that the Appeals
Council may reopen any ALJ decision if the requirements in
Secs. 404.987 and 404.988 or 416.1487 and 416.1488 are met, and that
such reopening actions are subject only to the time limits set forth in
those regulations and not to time limits in any other regulations,
including the 60-day time limit in Secs. 404.969 and 416.1469.
In accordance with the provisions of 20 CFR Sec. 404.985(e)(4) and
416.1485(e)(4), we are rescinding AR 87-2(11). Sections 404.985(e)(4)
and 416.1485(e)(4) provide that an AR may be rescinded as obsolete if
we subsequently clarify, modify or revoke the regulation or ruling that
was the subject of the circuit court holding for which the AR was
issued. As explained in a notice of the rescission of AR 87-2 that we
are publishing concurrently with these final rules (see the notices
section of this Federal Register), we are rescinding this AR as
obsolete based on the language that we are including in
Secs. 404.969(d) and 416.1469(d) in these final rules to clearly state
our policy that the Appeals Council has authority to reopen, in
accordance with the requirements of Secs. 404.987, 404.988, 416.1487,
and 416.1488, ALJ decisions that come before it for possible own-motion
review. This language establishes that a case that has come before the
Appeals Council under the provisions of Secs. 404.969 or 416.1469, and
for which the 60-day period for taking own-motion review has lapsed, is
properly before the Council for the purpose of considering reopening
under the existing regulations on reopening. This language also
establishes that it is our intent that the Appeals Council's authority
to reopen an ALJ's decision in accordance with the provisions of those
regulations, which establish conditions for reopening that differ from
the conditions for own-motion review, should not be subject to the 60-
day time limit in Secs. 404.969 and 416.1469.
Comment: Several commenters believed that fundamental fairness
requires the Agency to accord ALJ decisions such finality as to
preclude the Appeals Council from reopening ALJ decisions referred to
it for possible own-motion review.
Response: Our regulations on reopening and revising determinations
and decisions allow us to reopen final, favorable and unfavorable
determinations and decisions under stated conditions, on our initiative
and at the request of claimants. These regulations enable us to provide
relief to individuals whose claims should not have been denied and to
protect the integrity of the Social Security and SSI programs by
reopening favorable determinations and decisions that should not have
been made. If an individual is dissatisfied with a revised
determination or decision made after reopening, the individual may
request further administrative or judicial review, as appropriate. We
believe that our rules on reopening are fundamentally fair and that
they do not deny appropriate finality to ALJ decisions or to any of our
final dispositions, all of which are subject to the same rules of
reopening.
Comment: Two commenters thought that, since these rules contemplate
that the number of favorable decisions reviewed by the Appeals Council
will increase, the rules should provide for informing claimants of
their rights to interim benefits under sections 223(h) and 1631(a)(8)
of the Act.
Response: Sections 223(h) and 1631(a)(8) of the Act provide that,
where an ALJ has determined after a hearing that an individual is
entitled to Social Security benefits based on disability or is eligible
for SSI benefits based on disability or blindness, and the Commissioner
of Social Security has not issued a final decision within 110 days
after the date of the ALJ's decision, such benefits shall be currently
paid for the months during the period specified in section 223(h) or
section 1631(a)(8), as appropriate. Any benefits paid under these
sections will not be considered overpayments unless the benefits were
fraudulently obtained. We have implemented sections 223(h) and
1631(a)(8) through guidance provided in our Program Operations Manual
System (POMS), sections DI 42010.205 ff. and SI 02007.001 ff., and in
our HALLEX, section I-3-655. We pay interim benefits under our
procedures if an ALJ has issued a favorable decision in a claim for
initial or continuing benefits based on disability or blindness, the
Appeals Council has either initiated review of the decision under its
own-motion authority or reopened the decision pursuant to our reopening
regulations, 110 days have elapsed since the date of the ALJ's
decision, and the Commissioner has not issued a final decision.
The notice the Appeals Council issues upon initiating own-motion
review or reopening of a decision covered by section 223(h) or section
1631(a)(8) advises claimants of the interim benefit provisions of those
sections. However, we believe it would be appropriate, in response to
this comment, to include language in Secs. 404.969(d) and 416.1469(d)
to inform claimants that they will be advised of the interim
[[Page 36565]]
benefit provisions of section 223(h) or section 1631(a)(8), if
appropriate, where the Appeals Council reviews a favorable ALJ decision
on its own motion or reopens such a decision as provided in the
regulations. Accordingly, we have added such language and modified the
description of these regulatory provisions set forth above to reflect
this addition.
Comment: One commenter stated that the proposed rule changes were
being made ``pursuant to'' section 304(g) of Pub. Law 96-265, the
provision of the Social Security Disability Amendments of 1980 commonly
referred to as the Bellmon Amendment. Two other commenters also thought
that the proposed rules relied on this statutory provision for their
basis or authority.
Response: As discussed above and in the preamble to the NPRM, we
are amending our regulations to include these new quality assurance
procedures to further the goals of the Disability Redesign Plan. More
specifically, we are including these procedures to better balance the
Appeals Council's review of favorable and unfavorable decisions and to
increase our ability to identify policy issues that should be clarified
through publication of regulations or rulings.
The statutory authority under which we are adopting these rules
includes sections 205(a), 702(a)(5), and 1631(d) of the Act, which give
the Commissioner of Social Security broad authority to establish rules
and procedures governing the process for determining claims for
benefits under titles II and XVI. We are also proceeding under sections
205(b) and 1631(c)(1) of the Act, which, in addition to directing the
Commissioner to hold hearings and render decisions on the basis of
evidence adduced at the hearing, also provide that: ``[t]he
Commissioner * * * is further authorized, on the Commissioner's own
motion, to hold such hearings and to conduct such investigations and
other proceedings as the Commissioner may deem necessary or proper for
the administration of this title.''
These rules are not being promulgated to carry out the provisions
of section 304(g) of Pub. Law 96-265 although this provision remains in
effect and supports the general proposition that SSA should conduct
some form of own-motion review of disability decisions issued by ALJs.
Because authority beyond that provided in the Act is not required for
the purposes of these rules, we have decided not to revise the
authority citations for Subpart J, Part 404, and Subpart N, Part 416,
to include references to section 304.
Comment: One commenter thought that the new quality assurance
procedures would misinterpret section 304(g) of Pub. Law 96-265 to
justify focusing exclusively on allowance decisions.
Response: In promulgating these rules, we are interpreting section
304(g) of Pub. Law 96-265 to be consistent with the Commissioner of
Social Security exercising his discretion to design and implement a
program, like that established in these rules, for having the Appeals
Council consider for review, on its own motion, disability decisions
issued by ALJs. We believe this interpretation comports with the intent
of section 304(g).
As discussed above and in the NPRM, these rules are intended to
achieve a better balance in the Appeals Council's review of favorable
and unfavorable decisions. While more than half of the unfavorable
decisions issued by ALJs in recent years have been made subject to
possible review by the Appeals Council as a result of claimant appeals,
the number of favorable decisions the Council considers for possible
review has represented less than three percent of the favorable
decisions of ALJs (see above). We believe that we can achieve a better
balance in the review of favorable and unfavorable decisions by
including in the workload of favorable decisions the Council considers
a relatively small number of cases that have been referred to the
Council because they involve problematic issues or fact patterns that
may increase the likelihood of error. As previously discussed, we
believe that post-adjudicative evaluation of such cases can increase
our ability to identify significant policy and program issues and to
make appropriate improvements in our policies. Under these new rules,
the Council's review functions should be better balanced in the sense
that the amount of meaningful information they generate concerning
issues and fact patterns that cause erroneous allowances will more
nearly balance the extensive information that is already available, as
a result of the request for review process and judicial review, about
issues and fact patterns that cause erroneous disallowances.
The preambles to the NPRM and these final rules specify that the
Appeals Council's existing authority to review cases on its own motion
covers all types of title II and title XVI cases. These rules will
allow use of the identification and referral procedures they set forth
with respect to all such cases. Sections 404.969(b)(1) and
416.1469(b)(1), as proposed and as adopted, state: ``We may use random
and selective sampling to identify cases involving any type of action
(i.e., wholly or partially favorable decisions, unfavorable decisions,
or dismissals) and any type of benefits (i.e., benefits based on
disability and benefits not based on disability).'' Thus, while we
currently see a need to better balance the review of favorable
disability decisions by ALJs with the review of unfavorable disability
decisions by ALJs, we are not preoccupied with the review of the former
type of cases and are, instead, mindful of the need to ensure that we
will have the flexibility in the future to use these new random and
selective sampling techniques to bring to the Council's attention any
mix of cases that it needs to consider to contribute in the most
meaningful manner possible to our ability to assure the quality of our
decisionmaking.
Comment: One commenter referred to the proposed procedures as the
``Bellmon Review Program II'' and contended that the ``selective
sampling'' procedures proposed in the NPRM were actually ``targeting''
procedures.
Response: The issues and controversies that arose concerning the
Bellmon Review Program of the 1980s are beyond the scope of the NPRM by
which we proposed these new quality assurance procedures. However, for
the reasons discussed below, we believe that it is important to
distinguish these new procedures from that earlier program.
In Association of Administrative Law Judges v. Heckler, 594 F.Supp.
1132, 1143 (D.D.C. 1984), the court concluded that an incautiousness
which it perceived in the Agency's use of terms such as ``targeting''
could have ``tended to corrupt'' the ability of the ALJs to decide
cases impartially. It is our intent, in promulgating these new
procedures, to use terminology that properly reflects the appropriate
purpose of these rules and to avoid using terms, such as ``targeting,''
that could incorrectly cause the procedures to seem intimidating. Given
the controversy that came to be associated with the Bellmon Review
Program, the new program we are establishing could also be made
incorrectly to seem intimidating by referring to it as the ``Bellmon
Review Program II.''
Comment: One commenter contended that the distinction between
``targeting'' ALJs and ``targeting'' profile cases is immaterial
because selective sampling is necessarily ``chilling'' if it is
associated with allowance rates or ``targeting'' of any sort,
especially in the ``close'' cases that ALJs are called on to decide.
Response: We believe that there are multiple, meaningful
differences
[[Page 36566]]
between case-selection procedures that identify case samples based on
case profiles, while also excluding the identity of the ALJ or the
hearing office as factors that may be considered in the selection of
cases, and case-selection procedures that use the identity of the ALJ
or the hearing office in the selection of cases. We also believe that
the case-selection procedures we are establishing will have no chilling
effect on the ability of ALJs to decide cases impartially, free from
Agency influence.
In the Bellmon Review Program of the 1980s, favorable decisions of
individual ALJs were initially included in the program based on the
rate at which the ALJ allowed cases. The rate at which the Appeals
Council reviewed an ALJ's decisions on its own motion was thereafter
used to determine both the percentage of the ALJ's decisions included
in the ongoing program and the time during which the ALJ's decisions
would continue to be subject to possible review under the program. By
contrast, under the program we are now establishing, no case will be
included in the program based on the ALJ's allowance rate, or any other
characteristic of the ALJ or of his or her record in deciding cases,
because this program excludes the identity of the ALJ as a selection
factor. These final rules will not cause the favorable decisions of any
ALJ to be included in our random or selective sampling procedures,
either at the start of the program or through its operation, at a
higher rate than are the favorable decisions of any other ALJ, except
as chance in random selection or in the distribution of cases
presenting problematic issues or fact patterns causes minor variations.
Under the new program, we will not advise adjudicators of the
particular case profiles that we are using at any given time to
identify cases for possible inclusion in the selective sampling portion
of the new procedures. Our selective sampling of cases will also
typically involve one or more random elements as a result of the
techniques used in gathering and controlling the size of samples. For
example, from all the cases that exhibit a profile, we might actually
select only those in which the final digit of the Social Security
number is odd and/or the decision is issued between certain dates.
Thus, even if an ALJ becomes aware of the use of a particular profile,
the ALJ will not necessarily know that a decision fitting that profile
will be included in the sample we gather concerning it. The ALJ will
also not know whether a case that is included in a selective sample
will be referred by OQA to the Appeals Council for possible own-motion
review. By contrast, under the Bellmon Review Program of the early
1980s, an ALJ could know that 100%, 75%, 50%, or 25% of his or her
favorable decisions would be subject to consideration for possible own-
motion review by the Appeals Council. To appreciate the contrast
between the new procedures we are establishing and past practices, it
should also be noted that, prior to 1975, the Appeals Council, through
its staff, routinely considered all ALJ favorable decisions for
possible review on the Council's own motion.
Under the current process, the unfavorable decisions of ALJs are
substantially more likely than their favorable decisions to be reviewed
(by the Appeals Council or a Federal court). Our decision to better
balance the Appeals Council's review of favorable and unfavorable
decisions by establishing these new procedures will lessen this
existing imbalance in a non-threatening way and, we believe, promote
independence and impartiality in decisionmaking.
Comment: One commenter thought the proposed procedures would be
``chilling'' based on the view that no need exists to affect actual
cases and that the Agency could improve decisionmaking sufficiently
through education, training and improved policymaking.
Response: We believe it is necessary to have the Appeals Council
review and act on cases referred to it under these procedures, where a
condition warranting review is present. The Appeals Council's issuance
of decisions reversing an adjudicator's decision and orders of remand
serves to correct error in individual cases. The Council's actions also
instruct individual adjudicators in the correct application of Agency
policy. We believe we cannot commit resources to increasing the Appeals
Council's consideration of favorable decisions without also making the
fullest possible use of its review functions to improve decisionmaking.
While we also intend to use knowledge and information gained through
the new procedures to improve policymaking (and to train adjudicators
in the resulting policy improvements), that intent does not obviate the
need to use the Appeals Council's review functions in all appropriate
ways.
We do not believe the independence of ALJs to issue favorable
decisions will be ``chilled'' by subjecting such decisions to possible
change as a consequence of these identification and referral
procedures. The Commissioner's responsibility to administer the Social
Security and SSI programs and to make final decisions determining
eligibility for benefits imposes on the Commissioner a duty to ensure
consistency and impartiality in the decisionmaking process. The
decisionmaking authority of ALJs is an authority to decide cases
impartially in a manner consistent with Agency policy; that authority
is not such that it should be ``chilled'' by any appropriate action the
Commissioner may take to ensure that his final decisions, favorable as
well as unfavorable, comply with the law, regulations and rulings.
Establishing quality assurance procedures that make it possible for the
Appeals Council to better balance its review of favorable and
unfavorable decisions is an appropriate action by the Commissioner of
Social Security.
Comment: Citing a memorandum that the Appeals Council recently
issued in connection with a specific case, one commenter contended that
SSA intends to pressure ALJs through feedback mechanisms reminiscent of
a feedback system associated with the Bellmon Review Program.
Response: In addition to providing feedback to ALJs through
decisions and remand orders of the Appeals Council, the Bellmon Review
Program of the early 1980s included, as a controversial element that
was never fully implemented, a companion, multi-stage system that was
intended to provide individualized, extra-adjudicative feedback and
counseling on the results of own-motion review under the program and,
thereby, to promote long term improvement in the decisionmaking of the
affected ALJs. We have not proposed, either in the Disability Redesign
Plan or in the NPRM for these rules, to establish any ongoing,
systematic process for providing ALJs extra-adjudicative,
individualized feedback in which we would try to use the results of
own-motion review by the Appeals Council to change an ALJ's
decisionmaking practices. These final rules intend that the quality of
ALJ decisionmaking should be improved principally through the
instructional effect of the remand orders and reversal decisions that
the Appeals Council will issue to individual ALJs under its own-motion
authority, and through the publication of clarifying regulations and
rulings that we will develop based on these new quality assurance
procedures and make available to all adjudicators, with additional
training as appropriate.
These rules establish no program for providing individualized
feedback and contemplate no feedback activities that could properly be
viewed as threatening by individual ALJs or the Corps of ALJs as a
whole. The memorandum cited in this comment was issued in a trial-run
[[Page 36567]]
we conducted of these new procedures in which the Appeals Council did
not actually exercise its own-motion authority. The memorandum was
issued to provide some feedback in a situation in which the Appeals
Council had not exercised its own-motion authority and, thus, could not
provide feedback in the form of an order of remand or a reversal
decision.
Comment: One commenter contended that the elimination of the
request for Appeals Council review step in the administrative review
process contemplated in the Disability Redesign Plan will greatly
reduce the number of appealed denial decisions, and that SSA's past
practices provide a convincing basis for concluding that the vast
majority of decisions subject to selective sampling will be allowance
decisions.
Response: The Disability Redesign Plan contemplates that favorable
and unfavorable decisions would be subject to review on the Appeals
Council's own motion in a redesigned disability claims process in which
the request for review step is eliminated. We have recently begun
testing elimination of that step of the existing process in a limited
number of disability claims in which an ALJ issues a decision that is
less than fully favorable (62 FR 49598 (1997)). If we eliminated the
request for review step as it is presently constituted in the
disability claims process (as we would do only after we have completed
the above test, evaluated the test results, consulted with key
stakeholders, and promulgated the necessary regulations through public
notice and comment procedures), we would seek to refer to the Appeals
Council, for possible review on its own motion, that mix of favorable
and unfavorable decisions that would best ensure, through their
consideration by the Council, the overall quality of ALJ
decisionmaking. Considering our responsibility to assure the accuracy
of unfavorable as well as favorable decisions, and the adverse effects
on our ability to manage the Social Security and SSI programs
effectively that could be expected to arise if we did not assure the
quality of the unfavorable decisions subject to judicial review, we
would have important reasons to refer to the Appeals Council a
sufficient number of unfavorable decisions to permit us to provide
meaningful Agency feedback to the ALJs and to identify policy issues
that should be clarified through publication of regulations or rulings.
Comment: Pointing out that the time the Appeals Council currently
requires to process its large request-for-review workload is high,
several commenters expressed the view that it would be unconscionable
to devote limited resources to the Council's own-motion workloads and
thereby subject claimants who have requested review to additional
delays.
Response: We recognized in the Disability Redesign Plan (59 FR
47889-47890) that placing additional resources into the existing
disability claim process is not a viable alternative for increasing our
ability to provide high-quality, responsible service to the public, and
that we need to undertake longer-term strategies to address the service
delivery problems affecting the disability process. We are adopting
these final rules to take a step in accomplishing the goals of the
disability redesign, the effectuation of which will inevitably entail
acceptance of some temporary reductions in some aspects of service
delivery in exchange for achieving long-term improvements. However, it
should also be noted that the rules we are adopting give us substantial
flexibility to determine the number of cases the Appeals Council
considers for possible own-motion review as a result of random and
selective sampling, and that we expect the rules to result in no change
in the number of cases that are ``protested'' to the Council by
effectuating components. Therefore, we anticipate that we will be able
to manage the implementation of the new procedures in a way which
minimizes any temporary reductions in service.
Comment: One commenter stated that use of statistical case profiles
in selecting cases to be brought before the Appeals Council is not
within the Appeals Council's ``own-motion jurisdiction,'' that the
``mindset'' associated with use of such a procedure is one that easily
allows for disregarding the established administrative review process.
Response: Under section 702(a)(7) of the Act, which accords the
Commissioner of Social Security full authority to assign duties and
delegate authority to officers and employees of SSA, the Commissioner
has delegated to the Appeals Council exclusive authority to decide to
conduct and to perform own-motion review of hearing-level decisions.
However, there are other functions that must be accomplished for SSA to
carry out head-of-agency, own-motion review of hearing-level decisions
issued nationwide. Such other functions include identifying and
referring to the Appeals Council cases that the Council may consider
for possible review under its own-motion authority. SSA has heretofore
assigned identification and referral functions to various components,
including those that perform random sampling and those that ``protest''
ALJ decisions. Under these final rules, the responsibility for
identifying and referring cases to the Council is expanded to include
OQA and the components that will perform operational-support functions
in our new selective sampling and examination procedures.
The use of case profiles in selective sampling is a function within
the Agency's authority that may properly be assigned to the Appeals
Council, OHA, and other SSA components. Promulgating regulations to
include such procedures in the set of procedures SSA uses to exercise
the Commissioner's own-motion authority does not denote a mindset prone
to disregard the administrative appeals process. Instead, that action
constitutes an appropriate initiative to improve the disability claims
process through rulemaking.
Comment: One commenter stated that the proposed quality review
program would likely ignore the substantial evidence rule as related to
the findings and conclusions of ALJs, and that the proposed program
will allow the Appeals Council to ``second guess'' the ALJ's findings
and conclusions concerning the credibility of evidence based on
``factors outside the record.'' Another commenter stated that we must
make it clear that the standard for review will be the substantial
evidence standard.
Response: The Appeals Council retains authority under
Secs. 404.969, 404.970, 416.1469 and 416.1470 to review a case, on
request for review or on its own motion, for any reason. It is the
practice of the Appeals Council, generally, to deny a request for
review, or to decline to review a case on its own motion, if the case
does not meet at least one of the criteria for review stated in
Secs. 404.970 and 416.1470, which set forth the reasons for which the
Appeals Council ``will'' review a case. (See HALLEX sections I-3-301-I-
3-307.)
Under the provisions of Secs. 404.970(a) and 416.1470(a), the
Appeals Council will review a case if the ALJ's decision is not
supported by substantial evidence or if another of the criteria for
review stated in those sections is met. Under the provisions of
Secs. 404.970(b) and 416.1470(b), if new and material evidence is
submitted to the Appeals Council that relates to the period on or
before the date of the hearing-level decision, the Appeals Council will
consider the ``entire record'', including the new and material evidence
submitted, and will decide to review the case if ``it finds that the
[ALJ's] action, findings, or conclusion is contrary to the
[[Page 36568]]
weight of the evidence currently of record.''
The additional evidence that the Appeals Council considers under
Secs. 404.970(b) and 416.1470(b) (if the evidence is new and material
and relevant to the period at issue) is typically submitted by
claimants or their representatives. In addition, under our existing
``protest'' procedures, effectuating components sometimes attach to
their memoranda to the Appeals Council potential evidentiary items
encountered in the activities these components conduct to effectuate
decisions. Thus, for example, if an updated earnings report that has
been secured to determine benefit amounts appears to show that the
claimant engaged in substantial gainful activity after the date on
which the hearing-level decision found that disability began, the
effectuating component may submit the earnings report to the Appeals
Council as an attachment to a protest memorandum. Under these final
rules, effectuating components will attach such items to the written
referrals they make under Secs. 404.969(c) and 416.1469(c).
Evidence that the Appeals Council considers under Secs. 404.970(b)
and 416.1470(b) to determine whether to review a case is not part of
the record of the decision that has been made at the hearing level, of
course, but it is part of the administrative record in any further
proceedings that may occur in the case. If the Council reviews the case
and a new decision is issued, any evidentiary items received under
these provisions are made part of the record for decision that is
established, either by an ALJ following remand or, if the Appeals
Council is able to issue a fully favorable decision, by the Council.
When a case-examination is conducted by OQA under the new quality
assurance procedures established by these final rules, the OQA analyst
who conducts the examination may consult with a medical or
psychological consultant to gain insight into whether the decision at
the hearing level was supported by the record upon which it was based.
Insights gained through such consultations may be reflected in the
written referrals that OQA will prepare, as provided in
Secs. 404.969(c) and 416.1469(c), to state its reasons for believing
that the Appeals Council should review the decision on its own motion.
However, the written referrals made by OQA will attach no statement or
writing by a consultant that could activate the additional-evidence
provisions of Sec. 404.970(b) or Sec. 416.1470(b). Those provisions
will also not be activated by the written referral itself, which will
document the procedural history of the case and express OQA's reasons
for believing the case should be reviewed. The written referral will
not constitute an evidentiary item to be weighed in decisionmaking. In
deciding whether to review cases referred by OQA, the Appeals Council
will apply the criteria set forth in Secs. 404.970(a) and 416.1470(a).
If the Council reviews the case, OQA's written referral will be
included in the procedural portion of the overall administrative record
of the case, but will not be part of the evidentiary record upon which
any subsequent decision is based.
Comment: Several commenters thought that the selective sampling of
allowance decisions would be unfair to individuals whose cases meet an
applicable case profile. The reasons given for this view included that
such individuals would effectively face a higher standard of proof than
other individuals (as a result of the chilling effect on ALJ readiness
to reach a favorable decision and the existence of a pre-judgment in
favor of denial), and that the decisions of these individuals would be
placed at special risk by being subjected to procedures that other
favorable decisions do not face.
Response: We have already discussed our reasons for believing that
these new procedures will not intimidate ALJs or chill their decisional
independence. We further note here that use of selective sampling to
identify cases based on the presence of problematic issues or fact
patterns involves, not a pre-judgment that these cases should be
denied, but a judgment that the chance of error in the cases so
identified is elevated as compared to the chance of error in cases that
do not involve such issues and patterns, and that consideration of the
cases presenting such issues and patterns provides an increased
opportunity to identify error and policy issues that should be
clarified through publication of regulations or rulings.
It is true, of course, that the cases of claimants whose allowance
decisions are selected for consideration for own-motion review will be
subjected to an examination not given to other cases and/or possible
review by the Appeals Council. However, for the reasons discussed
below, we believe that these rules minimize the number of cases we need
to expose to possible review on the Council's own motion.
Cases selected for possible own-motion review will be equally
affected whether chosen by random or selective sampling procedures. The
effects of own-motion procedures (which can include providing some
individuals who receive unfavorable decisions additional administrative
consideration through no action of their own) could not be wholly
eliminated except by subjecting all cases to own-motion consideration
or by eliminating own-motion functions altogether. The first of these
options is not currently feasible, and the second would be inconsistent
with the responsibility of the Commissioner of Social Security to
ensure consistency and uniformity in the allocation of benefits through
his final decisions.
Our decision to promulgate these rules rests on the judgment that
use of selective sampling procedures, together with our existing random
sampling and ``protest'' procedures, represents the best way to
minimize the number of cases we need to subject to possible own-motion
review while also maximizing the use we can make of our own-motion
capacities to identify erroneous decisions and to monitor operation of
the claims process effectively. Use of case examinations by OQA in
conjunction with selective sampling refines the identification of cases
that should be subjected to consideration by the Appeals Council for
own-motion review and reduces the number of cases that we need to
subject to such consideration.
In our judgment, the procedures we are adopting in these final
rules to improve the disability claims process are in accord with the
following views the United States Supreme Court expressed in Califano
v. Boles, 443 U.S. 282, 285 (1979), concerning how fairness can best be
assured to individuals seeking Social Security benefits:
* * * the Court has been sensitive to the special difficulties
presented by the mass administration of the social security system.
After the legislative task of classification is completed, the
administrative goal is accuracy and promptness in the actual
allocation of benefits pursuant to those classifications. The
magnitude of that task is not amenable to the full trappings of the
adversary process lest again benefit levels be threatened by the
costs of administration. Mathews v. Eldridge, 424 U.S. 319, 343-349,
96 S.Ct. 893, 906-910, 47 L.Ed.2d. 18 (1976); Richardson v. Perales,
402 U.S. 389, 406, 91 S.Ct. 1420, 1430, 28 L.Ed.2d. 842 (1971).
Fairness can best be assured by Congress and the Social Security
Administration through sound managerial techniques and quality
control designed to achieve an acceptable rate of error.
Comment: Several commenters expressed concern that SSA has not
specified the case profiles that will be used in selective sampling.
One commenter contended that this
[[Page 36569]]
omission violated the principle that regulations should not be vague
and indefinite. Another commenter contended that SSA would expose ALJs
to claims of bias by not identifying through notice and comment
procedures the types of cases to be ``targeted.''
Response: We are not specifying the problematic issues or fact
patterns that will be used in defining the case profiles to be employed
in selective sampling because these issues and fact patterns will
change over time and we will need flexibility to address such changes.
In addition, as we explained above in discussing the distinctions
between ``targeting'' and the selective sampling procedures we are
establishing, we do not plan to advise adjudicators of the particular
case profiles we are using at any given time. Considering that it will
also always be clear that neither the identity of the decisionmaker nor
the identity of the office issuing the decision has been a factor in
the selection of a case, we believe that these rules will not in any
way expose decisionmakers to charges of bias.
Comment: One commenter believed that the proposed rules would
create ``internal procedures'' and a new layer of administrative
``review'' without providing claimants the right to participate in
those procedures/review and to understand the criteria that the
examining component and the Appeals Council apply, until a
determination to review the favorable decision has been made.
Response: These final rules add no new layer of administrative
review. The only ``review'' of an ALJ's decision that can occur under
our regulations, as currently established and as amended by these
rules, is the ``review'' that occurs if and when, following its
preliminary consideration of a case, the Appeals Council decides to
review a case and announces its decision to review in a notice of
review. For the purposes of the Social Security and SSI claims process,
``own motion'' review means a review that is initiated absent any
motion/appeal or input by the claimant. The activities SSA conducts to
decide whether to exercise its own-motion authority (i.e.,
identification and referral procedures and the preliminary
consideration of cases that the Appeals Council conducts, with the
assistance of its staff) are internal functions; they constitute the
way this large Agency decides whether to exercise its authority to
initiate review of cases unilaterally. Where the claimant has not
requested review, the proceedings in which the claimant has a due
process right of participation are limited to those that occur if the
Appeals Council decides, for the Agency, to review the case.
Under these final rules, the Appeals Council retains exclusive
authority to decide to review a hearing-level case. The criteria the
Council will apply in deciding whether to review cases will remain, as
discussed above, those it currently applies under Secs. 404.969,
404.970, 416.1469, and 416.1470. In addition, the examination of cases
that OQA conducts under these final rules will be for the purpose of
assessing whether the criteria for review by the Appeals Council may be
met (or, in OQA'a view, are met). To make this point clear, we have
modified the provisions of Secs. 404.969(b)(1) and 416.1469(b)(1) that
state the purpose of the case examinations. We have also modified the
explanation of the case examination set forth above.
Comment: Two commenters likened the procedures proposed in the NPRM
to the procedures of the SSA Representation Project, a test project of
the 1980s in which an SSA representative could participate in certain
ALJ hearings and refer cases to the Appeals Council for possible own-
motion review. It was contended that OQA's function in the new
procedures would be like that of the SSA representative and would
involve the kind of advocacy that was criticized in Salling v. Bowen,
641 F. Supp. 1046 (W.D.Va. 1986).
Response: Under these final rules, OQA will examine cases that have
been initially identified through random and selective sampling
procedures to determine if a case should be the subject of a referral
and, if that issue is resolved in the affirmative, to state its reasons
for believing that the decision is not supported and should be
considered by the Appeals Council for possible review under its own-
motion authority. OQA, as the SSA component responsible for SSA's
quality assurance functions, will examine cases with no prior
involvement in those cases that might, even arguably, affect its
ability to impartially assess whether a referral is warranted under the
applicable law, regulations and rulings. The Appeals Council, which
will decide if own-motion review is appropriate, has, like ALJs and all
other SSA decisionmakers, no adjudicative duty other than to assure
that cases are decided impartially in accordance with Agency policy as
established through law, regulations, and rulings.
Based on the above considerations, we see no significant similarity
between the SSA Representation Project and the quality assurance
procedures we are establishing in these final rules. We also believe
that these procedures support our ability to continue to provide
informal, nonadversarial adjudication of cases in a high-volume
process.
Comment: One commenter indicated that, if SSA did not abandon the
proposed rules, it should amend the rules to provide that SSA will not
use the data gathered to keep records on ALJs or individual hearing
offices regarding allowance or own-motion rates or any similar
information, to prohibit the instituting of any form of continuing
education for ``targeted'' ALJs, and to provide for publishing any data
gathered in the program to all ALJs without mention of the name of any
ALJ or hearing office.
Response: As we discussed above, there will be no ``targeting'' of
ALJs under these rules, which preclude consideration of the identity of
a decisionmaker or of a decisionmaking office and of any data
concerning matters such as a decisionmaker's allowance or own-motion
rate, in the random sampling, selective sampling, and case-effectuation
procedures we are establishing in these final rules. We intend that
these rules should improve decisional quality principally through the
instructional effects of the Appeals Council's adjudicative actions and
through the policy clarifications we will develop based on these new
quality assurance procedures. The rules establish no program for
providing individualized feedback, contemplate no feedback activities
that should be threatening to individual ALJs or the Corps of ALJs as a
whole, and do not authorize or contemplate publishing data on named
ALJs or hearing offices.
We are not adopting the recommendation of this commenter that we
should modify these final rules to prescribe the uses that will be made
of data gathered as a result of the quality assurance procedures we are
establishing by these rules. The uses of management information is not
a matter within the scope of these rules.
Comment: One commenter believed that the new process would be
subject to the same harsh criticism as the ``targeted'' reviews of the
early 1980s absent satisfaction of the following requirements: ``Both
the process for selecting decisions to review and the criteria used in
the review must be scrupulously fair and free from bias. Selection of
cases must be made randomly. Individual ALJs cannot become targets.
Allowance and denial rates have no part in the selection process.
Reviewers must be clear that their standard for review is one of
substantial evidence supporting the ALJ's decision.''
[[Page 36570]]
Response: For reasons discussed above generally in response to
other comments, and as we further explain below specifically, we
believe that the new quality assurance procedures we are establishing
in these final rules exhibit each of the characteristics urged by this
commenter. We note that while the new procedures provide for selective
as well as random sampling, our selective sampling of cases will
typically involve random elements and will be scrupulously fair and
free from bias.
Individual ALJs cannot become targets under those procedures and
allowance and denial rates have no part in the selection process. The
new procedures and these rules cause no change in the criteria for
reviewing hearing level decisions and orders of dismissal, or in the
practices the Appeal Council follows in applying the substantial
evidence standard and other criteria in deciding whether to review a
case.
Other Changes
We have modified the provisions of Secs. 404.969(b)(2) and
416.1469(b)(2), and the explanation of those provisions set forth
above, to emphasize that a referral resulting from the effectuating
process rests on the belief of an effectuating component that a
decision cannot be effectuated (for a reason stated in those
provisions) and does not represent a pre-judgement by the Agency that
review of the decision is appropriate. The Appeals Council retains
exclusive authority under these final rules to decide for the Agency
whether a hearing-level decision should be reviewed.
Regulatory Procedures
Executive Order 12866
We have consulted with the Office of Management and Budget (OMB)
and determined that these rules do meet the criteria for a significant
regulatory action under Executive Order 12866. They were therefore
submitted to OMB for review. These rules do not adversely affect State,
local or tribal governments. The rules are expected to result in
administrative costs of less than $5 million annually and to have no
significant impact on program costs. Therefore, we have not prepared a
cost benefit analysis under Executive Order 12866.
Regulatory Flexibility Act
We certify that these regulations will not have a significant
economic impact on a substantial number of small entities because these
rules affect only individuals. Therefore, a regulatory flexibility
analysis as provided in the Regulatory Flexibility Act, as amended, is
not required.
Paperwork Reduction Act
These regulations impose no new reporting or record keeping
requirements requiring OMB clearance.
(Catalog of Federal Domestic Assistance Program Nos. 96.001, Social
Security-Disability Insurance; 96.002, Social Security-Retirement
Insurance; 96.003, Social Security-Special Benefits for Persons Aged
72 and Over; 96.004, Social Security-Survivors Insurance; 96.006,
Supplemental Security Income)
List of Subjects
20 CFR Part 404
Administrative practice and procedure, Death benefits, Disability
benefits, Old-Age, Survivors and Disability Insurance, Reporting and
recordkeeping requirements, Social Security.
20 CFR Part 416
Administrative practice and procedure, Aged, Blind, Disability
benefits, Public assistance programs, Supplemental Security Income
(SSI), Reporting and recordkeeping requirements.
Dated: May 27, 1998.
Kenneth S. Apfel,
Commissioner of Social Security.
For the reasons set out in the preamble, subpart J of part 404 and
subpart N of part 416 of chapter III of title 20 of the Code of Federal
Regulations are amended as set forth below.
PART 404--FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE
(1950- )
20 CFR part 404, Subpart J, is amended as follows:
1. The authority citation for subpart J of part 404 continues to
read as follows:
Authority: Secs. 201(j), 205(a), (b), (d)-(h), and (j), 221,
225, and 702(a)(5) of the Social Security Act (42 U.S.C. 401(j),
405(a), (b), (d)-(h), and (j), 421, 425, and 902(a)(5)); 31 U.S.C.
3720A; sec. 5, Pub. L. 97-455, 96 Stat. 2500 (42 U.S.C. 405 note);
secs. 5, 6(c)-(e), and 15, Pub. L. 98-460, 98 Stat. 1802 (42 U.S.C.
421 note).
2. Section 404.969 is revised to read as follows:
Sec. 404.969 Appeals Council initiates review.
(a) General. Anytime within 60 days after the date of a decision or
dismissal that is subject to review under this section, the Appeals
Council may decide on its own motion to review the action that was
taken in your case. We may refer your case to the Appeals Council for
it to consider reviewing under this authority.
(b) Identification of cases. We will identify a case for referral
to the Appeals Council for possible review under its own-motion
authority before we effectuate a decision in the case. We will identify
cases for referral to the Appeals Council through random and selective
sampling techniques, which we may use in association with examination
of the cases identified by sampling. We will also identify cases for
referral to the Appeals Council through the evaluation of cases we
conduct in order to effectuate decisions.
(1) Random and selective sampling and case examinations. We may use
random and selective sampling to identify cases involving any type of
action (i.e., wholly or partially favorable decisions, unfavorable
decisions, or dismissals) and any type of benefits (i.e., benefits
based on disability and benefits not based on disability). We will use
selective sampling to identify cases that exhibit problematic issues or
fact patterns that increase the likelihood of error. Neither our random
sampling procedures nor our selective sampling procedures will identify
cases based on the identity of the decisionmaker or the identity of the
office issuing the decision. We may examine cases that have been
identified through random or selective sampling to refine the
identification of cases that may meet the criteria for review by the
Appeals Council.
(2) Identification as a result of the effectuation process. We may
refer a case requiring effectuation to the Appeals Council if, in the
view of the effectuating component, the decision cannot be effectuated
because it contains a clerical error affecting the outcome of the
claim; the decision is clearly inconsistent with the Social Security
Act, the regulations, or a published ruling; or the decision is unclear
regarding a matter that affects the claim's outcome.
(c) Referral of cases. We will make referrals that occur as the
result of a case examination or the effectuation process in writing.
The written referral based on the results of such a case examination or
the effectuation process will state the referring component's reasons
for believing that the Appeals Council should review the case on its
own motion. Referrals that result from selective sampling without a
case examination may be accompanied by a written statement identifying
the issue(s) or fact pattern that caused the referral. Referrals that
result from
[[Page 36571]]
random sampling without a case examination will only identify the case
as a random sample case.
(d) Appeals Council's action. If the Appeals Council decides to
review a decision or dismissal on its own motion, it will mail a notice
of review to all the parties as provided in Sec. 404.973. The Appeals
Council will include with that notice a copy of any written referral it
has received under paragraph (c) of this section. The Appeals Council's
decision to review a case is established by its issuance of the notice
of review. If it is unable to decide within the applicable 60-day
period whether to review a decision or dismissal, the Appeals Council
may consider the case to determine if the decision or dismissal should
be reopened pursuant to Secs. 404.987 and 404.988. If the Appeals
Council decides to review a decision on its own motion or to reopen a
decision as provided in Secs. 404.987 and 404.988, the notice of review
or the notice of reopening issued by the Appeals Council will advise,
where appropriate, that interim benefits will be payable if a final
decision has not been issued within 110 days after the date of the
decision that is reviewed or reopened, and that any interim benefits
paid will not be considered overpayments unless the benefits are
fraudulently obtained.
PART 416--SUPPLEMENTAL SECURITY INCOME FOR THE AGED, BLIND, AND
DISABLED
20 CFR Part 416, Subpart N, is amended as follows:
1. The authority citation for subpart N continues to read as
follows:
Authority: Sec. 702(a)(5), 1631, and 1633 of the Social Security
Act (42 U.S.C. 902(a)(5), 1383, and 1383b).
2. Section 416.1469 is revised to read as follows:
Sec. 416.1469 Appeals Council initiates review.
(a) General. Anytime within 60 days after the date of a decision or
dismissal that is subject to review under this section, the Appeals
Council may decide on its own motion to review the action that was
taken in your case. We may refer your case to the Appeals Council for
it to consider reviewing under this authority.
(b) Identification of cases. We will identify a case for referral
to the Appeals Council for possible review under its own-motion
authority before we effectuate a decision in the case. We will identify
cases for referral to the Appeals Council through random and selective
sampling techniques, which we may use in association with examination
of the cases identified by sampling. We will also identify cases for
referral to the Appeals Council through the evaluation of cases we
conduct in order to effectuate decisions.
(1) Random and selective sampling and case examinations. We may use
random and selective sampling to identify cases involving any type of
action (i.e., wholly or partially favorable decisions, unfavorable
decisions, or dismissals) and any type of benefits (i.e., benefits
based on disability and benefits not based on disability). We will use
selective sampling to identify cases that exhibit problematic issues or
fact patterns that increase the likelihood of error. Neither our random
sampling procedures nor our selective sampling procedures will identify
cases based on the identity of the decisionmaker or the identity of the
office issuing the decision. We may examine cases that have been
identified through random or selective sampling to refine the
identification of cases that may meet the criteria for review by the
Appeals Council.
(2) Identification as a result of the effectuation process. We may
refer a case requiring effectuation to the Appeals Council if, in the
view of the effectuating component, the decision cannot be effectuated
because it contains a clerical error affecting the outcome of the
claim; the decision is clearly inconsistent with the Social Security
Act, the regulations, or a published ruling; or the decision is unclear
regarding a matter that affects the claim's outcome.
(c) Referral of cases. We will make referrals that occur as the
result of a case examination or the effectuation process in writing.
The written referral based on the results of such a case examination or
the effectuation process will state the referring component's reasons
for believing that the Appeals Council should review the case on its
own motion. Referrals that result from selective sampling without a
case examination may be accompanied by a written statement identifying
the issue(s) or fact pattern that caused the referral. Referrals that
result from random sampling without a case examination will only
identify the case as a random sample case.
(d) Appeals Council's action. If the Appeals Council decides to
review a decision or dismissal on its own motion, it will mail a notice
of review to all the parties as provided in Sec. 416.1473. The Appeals
Council will include with that notice a copy of any written referral it
has received under paragraph (c) of this section. The Appeals Council's
decision to review a case is established by its issuance of the notice
of review. If it is unable to decide within the applicable 60-day
period whether to review a decision or dismissal, the Appeals Council
may consider the case to determine if the decision or dismissal should
be reopened pursuant to Secs. 416.1487 and 416.1488. If the Appeals
Council decides to review a decision on its own motion or to reopen a
decision as provided in Secs. 416.1487 and 416.1488, the notice of
review or the notice of reopening issued by the Appeals Council will
advise, where appropriate, that interim benefits will be payable if a
final decision has not been issued within 110 days after the date of
the decision that is reviewed or reopened, and that any interim
benefits paid will not be considered overpayments unless the benefits
are fraudulently obtained.
[FR Doc. 98-17633 Filed 7-6-98; 8:45 am]
BILLING CODE 4190-29-P
