MARGARET M. HECKLER, SECRETARY OF HEALTH AND HUMAN SERVICES, PETITIONER V. SIDNEY J. WEBB No. 82-2094 In the Supreme Court of the United States October Term, 1982 The Solicitor General, on behalf of the Secretary of Health and Human Services, petitions for a writ of certiorari to review the judgment of the United States Court of Appeals for the Ninth Circuit in this case. Petition for a writ of certiorari to the United States Court of Appeals for the Ninth Circuit TABLE OF CONTENTS Opinions below Jurisdiction Statutory provisions involved Statement Reasons for granting the petition Conclusion Appendix A Appendix B Appendix C Appendix D Appendix E Appendix F Appendix G Appendix H Appendix I Appendix J OPINIONS BELOW The opinion of the court of appeals (App. A, infra, 1a-4a) is reported at 701 F.2d 81. The opinion of the district court (App. B, infra, 5a-14a) is reported at 509 F. Supp. 1091. The opinions arising out of the administrative proceedings (Apps. G, H, and I, infra, 20a-22a, 23a-36a, 37a-44a) are not reported. JURISDICTION The judgment of the court of appeals (App. D, infra, 16a-17a) was entered on March 7, 1983. On May 27, 1983, Justice Rehnquist extended the time for filing a petition for a writ of ceritorari to and including June 24, 1983. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). STATUTORY PROVISIONS INVOLVED The relevant statutory provisions are set out in App. J, infra, 45a-49a. QUESTION PRESENTED Whether Section 334(g)(1) of the Social Security Amendments of 1977, which creates an exception to the provision requiring that Social Security spousal benefits be reduced by the amount of government pension benefits, was intended to incorporate the gender-based dependency test that existed in the Social Security Act prior to Califano v. Goldfarb, 430 U.S. 199 (1977). STATEMENT This case involves the construction of the exception to the pension offset provision of the Social Security Amendments of 1977 (Pub. L. No. 95-216, Section 334(g)(1), 91 Stat. 1546, 42 U.S.C. (Supp. V) 402 note; App. J, infra, 47a-48a). The question presented here is closely related to those in Heckler v. Mathews, probable jurisdiction noted, No. 82-1050. 1. The Social Security Act provides spousal benefits for the wives, husbands, widows, and widowers of retired and disabled wage earners (42 U.S.C. (& Supp. V) 402(b), (c), (e), and (f)). Spousal benefits are based on the earnings of the retired or disabled wage earners, and are available to persons age 62 or over who are entitled to either minimal or no old-age or disability benefits on their own account. Prior to December 1977, the Act imposed a dependency requirement on men seeking spousal benefits; under this standard, benefits were payable only if husbands or widowers could demonstrate dependency on their wage-earner wives for one-half of their support. Former 42 U.S.C. 402(c)(1)(C) and (f)(1)(D). Women, on the other hand, could qualify for benefits without having to satisfy a dependency requirement. 42 U.S.C. 402(b). On March 2, 1977, this Court held that the one-half support requirement for widowers' benefits under former 42 U.S.C. 402(f) violated the equal protection component of the Due Process Clause of the Fifth Amendment. Califano v. Goldfarb, 430 U.S. 199 (1977). Thereafter, on March 21, 1977, the Court summarily affirmed two district court decisions striking down the one-half support requirement for husbands' benefits. Califano v. Silbowitz, 430 U.S. 924 (1977); Califano v. Jablon, 430 U.S. 924 (1977). Following these decisions, Congress amended the Social Security Act in December 1977. Social Security Amendments of 1977, Pub. L. No. 95-216, 91 Stat. 1509, 42 U.S.C. (Supp. V) 401 et seq. In light of this Court's rulings, Congress eliminated the one-half support eligibility requirements for widowers' and husbands' benefits. Section 334(b)(1) and (d)(1) of the Social Security Amendments of 1977, 42 U.S.C. (Supp. V) 402(c)(1) and (f)(1); see S. Rep. No. 95-572, 95th Cong., 1st Sess. 88, 93 (1977). At the same time, Congress realized that elimination of the one-half support requirements would create a serious fiscal problem for the Social Security trust fund. Generally, a person entitled to two different Social Security benefits does not receive the full amount of both benefits; rather, the benefits are off-set against each other so that the primary Social Security payment is reduced by the amount of the second benefit. 42 U.S.C. 402(k)(3)(A). /1/ In 1977, however, federal and state government pensions were not subject to the general offset provisions of the Social Security Act, and therefore a recipient of such a pension could receive both the government pension and unreduced spousal benefits under the Social Security Act. Elimination of the one-half support requirements made substantial numbers of retired federal and state employees eligible for unreduced spousal benefits based on their spouses' earnings. "This result(ed) in 'windfall' benefits to some retired government employees." S. Rep. No. 95-572, supra, at 28. Congress estimated that these windfall benefits would cost the Social Security system approximately $190 million in 1979 (ibid.). In order to reduce this fiscal drain, Congress included a "pension offset" provision in the 1977 amendments to the Act. Parallel to the already existing offset provision for dual Social Security benefits in 42 U.S.C. 402(k)(3)(A), this offset provision generally requires that spousal benefits be reduced by the amount of certain federal or state government pensions received by the Social Security applicant. /2/ Section 334(a)(2) and (b)(2) of the Social Security Amendments of 1977, 42 U.S.C. (Supp. V) 402(b)(4)(A) and (c)(2)(A). See S. Rep. No. 95-572, supra, at 27-28. The offset applies to spousal benefits payable "on the basis of applications filed in or after the month in which this Act is enacted (December 1977)." Section 334(f) of the Social Security Amendments of 1977, 42 U.S.C. (Supp. V) 402 note. While the pension offset was a reasonable and equitable means of dealing with windfall spousal benefits payments to federal and state retirees who, prior to 1977, had no expectation of receiving them, Congress was concerned about the effect of the new offset provision on those persons -- primarily women -- who were already retired or soon would retire from government service and who had planned their retirements on the assumption that they would receive full unreduced spousal benefits. Faced with the prospect that this latter group of spouses would, through no fault of their own, be deprived of the benefits they had long expected to receive, Congress chose to exclude them from the pension offset requirement. Thus, Section 334(g)(1) of the Social Security Amendments of 1977, 42 U.S.C. (Supp. V) 402 note, excepts from the operation of the pension offset those spouses eligible for a government pension prior to December 1982 who would have qualified for full spousal benefits under the Act "as it was in effect and being administered in January 1977." As noted above, in January 1977 the Act required men, but not women, to demonstrate dependency on their wage-earner spouses in order to receive spousal benefits. 2. In March 1977, respondent retired from his position with the Public Utilities Commission of the State of California and began receiving a state pension (App. B, infra, 6a). In August 1977, respondent's wife applied for her retirement benefits under the Social Security Act. One month later, in September 1977, respondent submitted an application for husband's benefits on his wife's account. However, respondent was not eligible for spousal benefits until December 1977 (id. at 5a), and therefore his application was deemed to have been filed in that month (id. at 6a). Respondent did not receive one-half of his support from his wife (id. at 11a). In September 1978, the Social Security Administration notified respondent that his monthly spousal benefit would be reduced by the amount of his state pension in accordance with the pension offset provision that had been enacted as part of the Social Security Amendments of 1977. Because respondent's pension exceeded his spousal benefits, no net payments under the Social Security Act were due him. In addition, the Social Security Administration advised respondent that he had been overpaid $394.50 between December 1977 and September 1978 because the offset provision had not been applied to him as required (App. B, infra, 6a; App. H, infra, 30a, 35a). Upon respondent's request for reconsideration, the Social Security Administration's initial decision was reaffirmed (App. I, infra, 37a-44a). Thereafter, respondent was granted a hearing before an administrative law judge. The ALJ concluded that the pension offset provision of the 1977 amendments applied to respondent and that respondent did not come within the exception to the offset because he "did not meet the support requirements in effect in January 1977" (App. H, infra, 33a). In addition, the ALJ found that recovery of the overpayments should be waived in light of "equity and good conscience" because respondent was without fault (id. at 34a-35a). The decision of the ALJ was affirmed by the Appeals Council on March 27, 1980, and became the final decision of the Secretary of Health and Human Services (App. G, infra, 20a-22a). 3. Respondent then brought this action in the United States District Court for the Northern District of California under Section 205(g) of the Social Security Act, 42 U.S.C. (Supp. V) 405(g). On cross-motions for summary judgment, the district court construed the exception clause to encompass respondent and therefore to exempt him from the offset provision (App. B, infra, 5a-14a). The court recognized that the exception clause, as written, incorporated the eligibility standard of the Social Security Act "as it existed and was administered in January of 1977," including "the requirement that the husband must have been receiving one-half of his support from his spouse" (id. at 11a). However, the court believed that such a gender-based provision was of "questionable constitutionality" in light of this Court's decisions in Goldfarb, Silbowitz, and Jablon (id. at 12a). Noting that "(w)hen alternative constructions of a statute are possible, the court must choose that interpretation which will avoid a declaration of unconstitutionality" (id. at 12a-13a), the court held "that only those constitutional portions of the Social Security Act as it stood in January 1977 are to serve as the measure of whether an individual has fulfilled the requirements necessary to qualify for the exception" (id. at 13a; emphasis added). The court of appeals affirmed the district court's interpretation of the statute (App. A, infra, 1a-4a). While acknowledging that "(t)he language of (the exception clause) appears clear enough" and would exclude respondent (id. at 4a; emphasis in original), the court stated that it "must inquire into Congress' intent" (ibid.). On that basis, the court held that "a fair interpretation (of the exception clause) is that Congress did not intend to enact unconstitutional legislation" (ibid.). Therefore, it "agree(d) with the district court that a better interpretation of (the exception clause) is that, when Congress referred to the 'requirements . . . in effect and being administered in January 1977,' it meant only the constitutional requirements" (ibid.; emphasis in original). REASONS FOR GRANTING THE PETITION This case is closely related to the appeal in Heckler v. Mathews, probable jurisdiction noted, No. 82-1050. /3/ In Mathews, the lower court held unconstitutional the exception to the pension offset provision of the Social Security Amendments of 1977 (Pub. L. No. 95-216, Section 334(g)(1), 91 Stat. 1546, 42 U.S.C. (Supp. V) 402 note; App. J, infra, 47a-48a) on the ground that the exception incorporates a gender-based dependency test that this Court had invalidated as a substantive eligibility standard in Califano v. Goldfarb, 430 U.S. 199 (1977). In the instant case, the court below, in order to avoid that constitutional issue, construed the exception clause not to incorporate a gender-based test. The question whether the Due Process Clause prohibits such a gender-based test in the exception provision is squarely presented by our jurisdictional statement in Mathews. For the reasons stated in our brief in Mathews, we submit that the exception is not unconstitutional. Since the strained interpretation of the exception provision adopted by the decision below was premised on the need to avoid that constitutional issue, the Court's resolution of the validity of the exception necessarily will bear on the court of appeals' reading of the clause. Moreover, in the motion to affirm in Mathews, appellee has raised the same issue of statutory construction that was decided in this case. Consequently, we have fully addressed the issue in our brief in Mathews. For the reasons there stated, we submit that the exception was intended to incorporate the gender-based standard of pre-Goldfarb law. It thus appears that the Court's decision in Mathews will directly resolve the statutory question presented here. Accordingly, the Court should hold this petition pending its decision in Mathews. /4/ CONCLUSION The petition for a writ of certiorari should be held pending decision in Heckler v. Mathews, No. 82-1050, and then disposed of in light of that decision. Respectfully submitted. REX E. LEE Solicitor General JUNE 1983 /1/ For example, if an individual is entitled both to benefits on his own work account and to spousal benefits, the worker's benefit is paid in full, with spousal benefits limited to the amount, if any, by which those benefits exceed the worker's benefit. /2/ Government pensions are subject to the offset if the employment upon which the pension is based was not covered under Social Security on the last day the individual was employed. Section 334(a)(2) and (b)(2) of the Social Security Amendments of 1977, 42 U.S.C. (Supp. V) 402(b)(4)(A) and (c)(2)(A). /3/ The court of appeals' decision in this case was rendered shortly before the Court noted probable jurisdiction in Mathews. We are serving respondent with a copy of our brief in Mathews. /4/ Because respondent was denied benefits prior to October 1979, he is not a member of the nationwide class certified by the district court in Mathews. See 82-1050 J.S. App. 10a-11a. Appendix Omitted