LOUIS W. SULLIVAN, M.D., SECRETARY OF HEALTH AND HUMAN SERVICES, PETITIONER V. NELLEY LIDY, JR. No. 90-1344 In The Supreme Court Of The United States October Term, 1990 The Solicitor General, on behalf of Louis W. Sullivan, M.D., 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 Fifth Circuit in this case. Petition For A Writ Of Certiorari To The United States Court Of Appeals For The Fifty Circuit TABLE OF CONTENTS Question Presented Opinions below Jurisdiction Constitutional provision, statutes and regulation involved Statement Reasons for granting the petition Conclusion OPINIONS BELOW The opinion of the court of appeals (App., infra, 1a-5a) is reported at 911 F.2d 1075. The opinion of the district court (App., infra, 6a-8a) is unreported. JURISDICTION The judgment of the court of appeals (App., infra, 66a) was entered on September 17, 1990. A petition for rehearing was denied on November 28, 1990 (App., infra, 65a). The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). CONSTITUTIONAL PROVISION, STATUTES AND REGULATION INVOLVED 1. The Fifth Amendment to the United States Constitution provides: No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb, nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation. 2. Section 205 of the Social Security Act, as amended, 42 U.S.C. 405, provides in pertinent part: A. 42 U.S.C. 405(b)(1): The Secretary is directed to make findings of fact, and decisions as to the rights of any individual applying for a payment under this subchapter. Any such decision by the Secretary which involves a determination of disability and which is in whole or in part unfavorable to such individual shall contain a statement of the case, in understandable language, setting forth a discussion of the evidence, and stating the Secretary's determination and the reason or reasons upon which it is based. Upon request * * *, he shall give such applicant * * * reasonable notice and opportunity for a hearing with respect to such decision, and, if a hearing is held, shall, on the basis of evidence adduced at the hearing, affirm, modify, or reverse his findings of fact and such decision. * * * The Secretary is further authorized, on his own motion, to hold such hearings and to conduct such investigations and other proceedings as he may deem necessary or proper for the administration of this subchapter. In the course of any hearing, investigation, or other proceeding, he may administer oaths and affirmations, examine witnesses, and receive evidence. Evidence may be received at any hearing before the Secretary even though inadmissible under rules of evidence applicable to court procedure. B. 42 U.S.C. 405(d): For the purpose of any hearing, * * * authorized or directed under this subchapter, * * * the Secretary shall have power to issue subpoenas requiring the attendance and testimony of witnesses * * *. C. 42 U.S.C. 405(g): Any individual, after any final decision of the Secretary made after a hearing to which he was a party, irrespective of the amount in controversy, may obtain a review of such decision by a civil action commenced within sixty days after the mailing to him of notice of such decision or within such further time as the Secretary may allow. * * * The court shall have power to enter, upon the pleadings and transcript of the record, a judgment affirming, modifying, or reversing the decision of the Secretary, with or without remanding the cause for a hearing. The findings of the Secretary as to any fact, if supported by substantial evidence, shall be conclusive. * * *. 3. 20 C.F.R. 404.950(d)(1) provides: When it is reasonably necessary for the full presentation of a case, an administrative law judge or a member of the Appeals Council may, on his or her own initiative or at the request of a party, issue subpoenas for the appearance and testimony of witnesses and for the production of books, records, correspondence, papers, or other documents that are material to an issue at the hearing. QUESTION PRESENTED A regulation of the Secretary of Health and Human Services (20 C.F.R. 404.950(d)(1)) authorizes an administrative law judge, on finding that a subpoena is "reasonably necessary for the full presentation of a case," to issue such a subpoena for a disability benefits hearing under the Social Security Act. The question presented in this case is whether, even in the absence of the showing of need required by this regulation, the Due Process Clause provides an applicant for disability benefits with an "absolute right" to subpoena and orally examine a physician whose written report is accepted as evidence by the Secretary. STATEMENT 1. In 1982, respondent Nelley Lidy, Jr., having undergone surgery for back injuries, applied for a determination that he was entitled to disability benefits under the Social Security Act as a person who was unable "to engage in any substantial gainful activity by reason of (a) medically determinable physical * * * impairment." 42 U.S.C. 423(d)(1)(A). The application was denied, however, because respondent was gainfully employed at the time the application was submitted. App., infra, 13a. 2. Respondent thereafter sought reconsideration of his application for disability benefits, reciting that his employment had been terminated after a recurrence of his injury. App. infra, 13a. While this application was pending, respondent was treated for his injury by Dr. Louis A. Finney. On March 28, 1984, finding that respondent's general physical condition was now "within normal limits," Dr. Finney released respondent "to return to gainful employment" (App., infra, 14a). 3. Prior to the administrative hearing on respondent's application for disability benefits, respondent requested the agency to subpoena Dr. Finney for an oral examination pursuant to 20 C.F.R. 404.950(d)(1). This regulation authorizes the administrative law judge to issue a subpoena when "reasonably necessary for the full presentation of a case." Ibid. /1/ The administrative law judge denied respondent's request for an oral examination of Dr. Finney, ruling instead that respondent should first depose the doctor by written interrogatories. App., infra, 23a-24a. 4. Respondent thereafter issued written interrogatories to Dr. Finney. Respondent was not satisfied with Dr. Finney's responses and applied again to the administrative law judge for a subpoena. At the same time, respondent also sought to serve a second set of written interrogatories on Dr. Finney. App., infra, 55a-56a. 5. The administrative law judge denied both requests. The judge found that Dr. Finney had provided thorough answers to respondent's first set of written questions and that further inquiry would be unproductive and "would border on harrassment (sic)." App., infra, 56a. 6. The administrative law judge thereafter issued his decision on the merits, denying the application for disability benefits based upon a finding that a condition of disability did not exist. App., infra, 48a-64a. After the Appeals Council denied respondent's request for further administrative review, respondent brought an action for judicial review in federal district court pursuant to 42 U.S.C. 405(g). /2/ 7. The district court upheld the agency's determination. The court held that respondent's request to subpoena and orally examine Dr. Finney was a matter committed to the discretion of the administrative law judge under 20 C.F.R. 404.950(d)(1), and that the judge did not abuse this discretion in denying the request in this case. App., infra, 8a. The court therefore found that the written report of Dr. Finney was properly received and considered by the agency and, "being so considered, constitute(d) substantial evidence in support of the decision." Ibid. See 42 U.S.C. 405(g) (findings supported by substantial evidence "shall be conclusive"). 8. The court of appeals vacated the judgment of the district court and remanded the case for further proceedings. The court held that due process requires that applicants for disability benefits be afforded an "absolute right" to subpoena and orally examine the reporting physician. App., infra, 4a. In reaching this conclusion, the court of appeals relied on this Court's decision in Richardson v. Perales, 402 U.S. 389 (1971), and on decisions in other circuits that have read Perales to require, as an element of due process, that disability applicants be afforded the right to subpoena and cross-examine reporting physicians at the agency hearing. App., infra, 4a, citing, e.g., Coffin v. Sullivan, 895 F.2d 1206 (8th Cir. 1990); Wallace v. Bowen, 869 F.2d 187 (3d Cir. 1989). 9. The court of appeals further concluded that, since the Due Process Clause requires that the applicant be afforded an absolute right to subpoena the reporting physician for oral examination, the court would give no effect to the regulation permitting a subpoena to be refused by the administrative law judge when the evidence sought is not "reasonably necessary for the full presentation of the case." App., infra, 4a, quoting 20 C.F.R. 404.950(d). The court of appeals acknowledged, however, that Lidy had "failed to make" the showing required by the regulation as a precondition to issuance of the subpoena. App., infra, 4a. REASONS FOR GRANTING THE PETITION The issues presented by this case are of substantial significance to the proper administration of the federal disability benefits program and, ultimately, to federal administrative action generally. The Fifth Circuit's sweeping decision is not only important to the orderly administration of an important federal program but is in conflict with the rulings of several other courts of appeals. The holding of the court of appeals that every applicant for federal disability benefits has an "absolute right" to subpoena and orally examine every reporting physician threatens to impose enormous financial and procedural burdens on a program under which "(m)illions of claims are filed every year" (Schweiker v. Chilicky, 487 U.S. 412, 424 (1988)). The decision threatens these same far-reaching consequences to administrative action generally, for, as this Court observed in Richardson v. Perales, 402 U.S. 389 (1971), the procedural structure of the Administrative Procedure Act was "modeled upon the Social Security Act." Id. at 409. In reaching its conclusion in this case, the court of appeals failed to apply the three-part analysis of due process requirements articulated by this Court, and applied by the Court to Social Security Act eligibility determinations, in Mathews v. Eldridge, 424 U.S. 319, 334 (1976). The court of appeals thus failed to consider whether an "absolute right" to subpoena and examine reporting physicians would materially alter the risk of erroneous eligibility determinations and whether such a right would unduly and inefficiently burden the administrative process. Instead of applying the analysis required by Mathews v. Eldridge, the court of appeals concluded (App., infra, 4a) that the due process right of a disability applicant to subpoena and examine reporting physicians had been established by this Court as a direct holding in its decision in Richardson v. Perales, 402 U.S. at 402. In so ruling, the court of appeals has misapplied this Court's decisions and has created a conflict with the decisions of other courts of appeals. 1. "(D)ue process is flexible and calls for such procedural protections as the particular situation demands." Morrissey v. Brewer, 408 U.S. 471, 481 (1972). In determining the procedural safeguards that must be provided before Social Security Act disability benefits may be terminated, the Court has established a three-part analysis: "(I)dentification of the specific dictates of due process generally requires consideration of three distinct factors: First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail. Mathews v. Eldridge, 424 U.S. at 335. See Ake v. Oklahoma, 470 U.S. 68 (1985). Applying this analysis in the context of the "unusually protective" statutory process for the administrative review and disposition of disability claims (Schweiker v. Chilicky, 487 U.S. at 424, quoting Heckler v. Day, 467 U.S. 104, 106 (1984)), the court of appeals should have upheld the agency's regulation that authorizes subpoenas for the examination of reporting physicians when they are "reasonably necessary for the full presentation of (the) case" (20 C.F.R. 404.950(d)(1)). Since the required showing of reasonable necessity was not made by respondent in this case (App., infra, 4a), the administrative decision should have been sustained. First, the private interest involved in this case is not the right to "continued" enjoyment of a benefit or entitlement such as the Court has addressed in its prior decisions. E.g., Atkins v. Parker, 472 U.S. 115, 128 (1985); Cleveland Board of Education v. Loudermill, 470 U.S. 532, 538 (1985); Goldberg v. Kelly, 397 U.S. 254, 261-264 (1970). Instead, this case involves merely the right to apply for an initial determination of eligibility. This Court has never held that an applicant for a government benefit has a "property" interest to which due process protections could be said to apply. /3/ See Walters v. National Association of Radiation Survivors, 473 U.S. 305, 320 n.8 (1985). Even if such an interest does exist, it is clearly of a different magnitude from that of a person who is challenging the termination of a benefit to which he has previously been determined to be eligible. See Mathews v. Eldridge, 424 U.S. at 341. Moreover, the initial determination of an application for eligibility is made in a "non-adversary" hearing (id. at 339), where the interest of both the applicant and the government is that of obtaining "accuracy and promptness" in the decision. Califano v. Boles, 443 U.S. 282, 285 (1979). The procedures, if any, required by the guarantee of due process should be designed to foster, not burden, those objectives. Second, it cannot be said that an "absolute right" to subpoena and orally examine every reporting physician in a disability case will meaningfully reduce the risk of erroneous determinations of eligibility. The Social Security Act expressly authorizes the agency to consider evidence that would be "inadmissible under rules of evidence applicable to court procedure." 42 U.S.C. 405(b)(1). The Court has thus recognized that the agency may properly receive and consider hearsay evidence, including written medical reports, that would be excluded if offered in a court of law. See Richardson v. Perales, 402 U.S. 389, 402 (1971). The Court similarly has observed that a determination of "physical * * * condition" is a "more sharply focused and easily documented decision than the typical determination of welfare entitlements" and that the potential value of an "oral presentation to the decisionmaker" is accordingly less. Mathews v. Eldridge, 424 U.S. at 343, 344. Where, as here, an administrative decision is one that properly can be made on the basis of written reports, this Court has held that the opportunity to appear and present one's own evidence "adequately safeguards against serious risks of error." Greenholtz v. Inmates of the Nebraska Penal & Correctional Complex, 442 U.S. 1, 15 (1979). Under the Social Security Act and its implementing regulations, the government has afforded disability applicants the right to appear and present their evidence (42 U.S.C. 405(b)(1)) as well as the opportunity to obtain a subpoena to compel testimony of other witnesses upon a showing that the evidence is "reasonably necessary" to the applicant's case. 20 C.F.R. 404.950(d)(1); see 42 U.S.C. 405(d). /4/ Due process surely does not require more, for a procedure for obtaining evidence that is not "reasonably necessary" to the case could not reasonably be said to reduce meaningfully the risk of an erroneous administrative decision. See Mathews v. Eldridge, 424 U.S. at 335. Moreover, the court of appeals gave no consideration whatever to the enormous administrative burden that an "absolute right" to subpoena every reporting physician would create. This Court has emphasized that the "magnitude of (the task of administering the federal disability benefits program) is not amendable to the full trappings of the adversary process lest again benefit levels be threatened by the costs of administration." Califano v. Boles, 443 U.S. at 285. If an "absolute right" to subpoena reporting physicians exists for each of the "(m)illions of claims * * * filed every year" (Schweiker v. Chilicky, 487 U.S. at 424), the additional delays and costs imposed on the administration of the program would be staggering. While these additional costs may not be of "controlling weight in determining whether due process requires a particular procedural safeguard * * *, the Government's interest, and hence that of the public, in conserving scarce fiscal and administrative resources is a factor that must be weighed." Mathews v. Eldridge, 424 U.S. at 348. 2. Instead of conducting the due process analysis required by this Court's decisions, the court of appeals concluded (App., infra, 4a) that an "absolute right" to subpoena reporting physicians in disability cases had already been established by Richardson v. Perales. In Perales, this Court held that a written report of a physician could be received as evidence by the agency in a disability hearing, and could constitute "substantial evidence" upon which the agency may rely in forming its decision, even though the physician did not personally appear at the hearing to sponsor the report by oral testimony. 402 U.S. at 402. In reaching that decision, the Court emphasized the "underlying reliability and probative value" of such written medical reports and the lack of bias in the work of "these independent physicians." The Court also noted that the agency proceeding is not adversary in nature, that the written reports are prepared by "specialists concerning a subject whom they had seen," that "written medical reports" have been admitted "even in formal trials * * * as an exception to the hearsay rule," and that "the cost of providing live medical testimony" at thousands of disability hearings each year "would be a substantial drain on the trust fund and on the energy of physicians already in shor supply." Id. at 402-406. The Court in Perales did not address the question whether the Due Process Clause established an "absolute right" to subpoena the reporting physician. The Court was aware, however, that the agency's regulations authorized issuance of a subpoena upon a showing of reasonable necessity for the evidence. See 402 U.S. at 397 (a "claimant may request the issuance of subpoenas"), citing 20 C.F.R. 404.926 (1970) (subpoenas may be issued if "reasonably necessary for the full presentation of a case"), recodified as 20 C.F.R. 404.950(d)(1). The fact that the applicant could obtain oral testimony upon a showing of "need" through the agency subpoena process was deemed important in Perales, for the Court stressed that the use of a physician's written report without oral testimony was proper in those situations "where need (for oral testimony) has not been demonstrated by a request for a subpoena." 402 U.S. at 406. The court of appeals mistakenly read Perales to require that subpoenas be granted without a demonstration of "need." Both by its express terms and by its reference to the agency subpoena process, Perales indicates that subpoenas are required only when "need" has "been demonstrated by a request for a subpoena." 402 U.S. at 406. As the Fourth Circuit stated in Souch v. Califano, 599 F.2d 577, 580 n.5 (1979), when this Court "spoke (in Perales) of a claimant's 'right' to subpoena, we think the reference was to his right to request issuance of a subpoena -- not his absolute right to have a subpoena issued upon request." 3. The decision of the court of appeals in this case is in conflict with the decisions of other courts of appeals. The decision of the court below contradicts the decisions of the Third Circuit in Wallace v. Bowen, 869 F.2d 187, 193 (1988), /5/ and the Fourth Circuit in Souch v. Califano, 599 F.2d at 580 n.5, and Taylor v. Weinberger, 528 F.2d 1153, 1156 (1975), which have squarely rejected the concept of an "absolute right" to subpoena the reporting physi-claim for a disability benefits hearing. See also Berger v. Secretary of HHS, 835 F.2d 635, 640-641 (6th Cir. 1987). /6/ While several of the decisions relied on by the court of appeals in this case plainly do not support an "absolute right" to subpoena reporting physicians, /7/ the decision of the Eighth Circuit in Coffin v. Sullivan, 895 F.2d 1206, 1212 (1990), properly may be read to be consistent with such a holding (see App. 4a). In short, the courts of appeals have not spoken with a single voice on the subject. A clear conflict now exists among their decisions. This conflict will inevitably cause confusion and inefficiency in the national administration of the federal disability benefits program. The conflict should therefore be resolved by this Court. CONCLUSION The petition for a writ of certiorari should be granted. Respectfully submitted. KENNETH W. STARR Solicitor General STUART M. GERSON Assistant Attorney General DAVID L. SHAPIRO Deputy Solicitor General KENT L. JONES Assistant to the Solicitor General FEBRUARY 1991 /1/ 20 C.F.R. 404.950(d)(1) was adopted under authority of 42 U.S.C. 405(d), which grants the Secretary power to issue subpoenas, and 42 U.S.C. 405(a), which authorizes the Secretary to adopt rules "to regulate and provide for the nature and extent of the proofs and evidence and the method of taking and furnishing the same in order to establish the right to benefits hereunder." /2/ While the case was pending in district court, the parties agreed to a remand for findings under newly issued regulations on the question of mental impairment. After these proceedings on remand, the finding of no disability was confirmed by the agency (App. infra, 47a) and the case was returned to district court. /3/ Nor was this question presented or addressed in the courts below in this case. /4/ Moreover, as the facts of this case reflect, the applicant is also permitted to depose the reporting physician by written interrogatories and thereby probe for potential errors in the report. /5/ In Wallace v. Bowen, the Third Circuit held that due process requires that subpoenas be allowed by the agency when "cross-examination is necessary to the full presentation of the case." 869 F.2d at 193. This decision merely requires what the agency's regulations (20 C.F.R. 404.950(d)(1)) had long provided. The Fifth Circuit erroneously cited Wallace v. Bowen as support for its holding that applicants for disability benefits have an "absolute right" to subpoena reporting physicians. See App., infra, 4a. /6/ In Wallace and Souch, the court held that a request for a subpoena had been improperly denied, but did so on the basis that the requisite showing of need had been made. In Berger, the court upheld the administrative law judge's refusal to subpoena an agency employee (who had initially denied the application for retirement benefits) on the ground that the requisite showing of need had not been made. /7/ See note 5, supra. Figueroa v. Secretary of HEW, 585 F.2d 551, 554 (1st Cir. 1978), and Townley v. Heckler, 748 F.2d 109, 114 (2d Cir. 1984), on which the court of appeals relied (App. infra, 4a), refer simply to an applicant's right to "cross examine," without considering or resolving the issue presented in this case. APPENDIX