Tremblay v. Sullivan

October 11, 1996 [NOT FOR PUBLICATION]

UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT

No. 95-2267

NANCY TREMBLAY,

Plaintiff, Appellant,

v.

LOUIS SULLIVAN, SECRETARY OF HEALTH AND HUMAN SERVICES,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Mark L. Wolf, U.S. District Judge]

Before

Torruella, Chief Judge,

Cyr and Stahl, Circuit Judges.

Nancy Tremblay on brief pro se.

Donald K. Stern, United States Attorney and Thomas D. Ramsey,

Assistant Regional Counsel, on brief for appellee.

October 10, 1996

Per Curiam. Claimant Nancy Tremblay appeals a

district court order upholding a decision of the Commissioner

of Social Security that reduced her Social Security

disability benefits to zero due to her receipt of a

disability pension under the Civil Service Retirement System

(CSRS). We affirm.

I.

Undisputed Facts

The relevant facts are as follows. Claimant is a former

accountant for the U.S. Army Corps of Engineers who suddenly

went blind at the age of 27 due to a rare hereditary disorder

(Leber's optic neuropathy). This condition rendered her

disabled within the meaning of 42 U.S.C. 423. Prior to

becoming disabled, claimant had worked in the private sector

between 1977 and 1981, earning wages that were "covered" by

Social Security. See Das v. Secretary of Health and Human

Services, 17 F.3d 1250, 1253 & n. 2 (9th Cir. 1994)("For

purposes of the Social Security Act, wages upon which an

individual pays social security taxes are 'covered' wages and

those upon which an individual pays no social security tax

are 'noncovered.'" (citation omitted)). Between 1983 and

1987, claimant worked for the federal government, earning

wages that were not covered by Social Security but that

rendered her eligible to receive a disability pension under

the CSRS after she became blind.

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Claimant applied for Social Security disability benefits

(SSDI) and for disability retirement benefits under the CSRS.

She began receiving benefits under both programs in late 1988

and early 1989.1 Toward the end of 1989, the Social Security
1

Administration (SSA) notified claimant that her Social

Security benefits should have been withheld due to her

receipt of the CSRS pension. The SSA's determination was

based on the offset provision in 42 U.S.C. 424a.

The Offset Provision

Congress enacted 424a in 1965 in response to renewed

concern that many disabled workers were receiving disability

payments in excess of their working wages as a result of

their dual eligibility for benefits under the federal Social

Security and state worker's compensation programs. It was

believed that, inter alia, this situation decreased a

worker's incentive to return to work. Consequently, Congress

enacted 424a, "which, by limiting total state and federal

benefits to 80% of the employee's average current earnings

prior to disability, reduced the duplication inherent in the

programs and at the same time allowed a supplement to

workmen's compensation when the state payments were

inadequate." Richardson v. Belcher, 404 U.S. 78, 83

1Claimant's CSRS benefits were $919 per month. Claimant's
1
Social Security benefits totalled approximately $540 per
month. This figure included claimant's monthly SSDI benefit
and an additional sum in child's benefits that claimant
received on behalf of her daughter.

-3-

(1971)(holding 424a does not violate the Due Process

Clause).

This court and others have indicated in dicta that

424a generally allows disabled workers to retain 80% of their

pre-disability income or earnings before their Social

Security benefits will be reduced under the offset provision.

See, e.g., Davidson v. Sullivan, 942 F.2d 90, 92 (1st Cir.

1991)(noting that under 424a total worker's compensation

and social security benefits may not exceed 80% of worker's

"predisability income"); Sciarotta v. Bowen, 837 F.2d 135,

140 (3d Cir. 1988)(noting that in enacting 424a, Congress

"intended to 'limit[] total state and federal benefits to 80%

of the employee's average earnings prior to the

disability'")(citation omitted); Swain v. Schweiker, 676

F.2d 543, 544 (11th Cir.), cert. denied, 459 U.S. 991

(1982)("[g]enerally, the [ 424a] offset applies when the

total of an individual's benefits and worker's compensation

exceeds 80% of his or her pre-disability earnings and it

reduces the federal benefits by the excess"); Freeman v.

Harris, 625 F.2d 1303, 1306 (5th Cir. 1982)(similar). But

the statute does not mandate this result in every case.

With certain exceptions immaterial to the present case,

424a provides that in any given month in which an

individual under age 65 is entitled to both Social Security

disability benefits under 42 U.S.C. 423 and other periodic

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disability benefits, e.g., those paid under worker's

compensation or under any other law or plan of the United

States, the total Social Security disability benefits and any

related 402 benefits based on that individual's wages and

self-employment income (e.g., child's benefits):

shall be reduced (but not below zero) by
the amount by which the sum of -

(3) such total ... [Social Security]
benefits under sections 423 and 402 ...,
and

(4) such periodic benefits payable (and
actually paid) ... under such laws or
plans,

exceed the higher of -

(5) 80 per centum of ... [the
individual's] "average current earnings",
or

(6) the total of such individual's
[Social Security] disability insurance
benefits under section 423 ... and of any
monthly insurance benefits under section
402 ... prior to reduction under this
section.

Thus, 424a requires that a person's Social Security

benefits be reduced by the amount by which the sum of his

Social Security and other disability benefits exceeds the
the

higher of: (a) 80% of his "average current earnings" as
higher of

defined by 424a, or (b) his total Social Security benefits.

The statute goes on to define "average current earnings", in

relevant part, as the largest of:

(A) the average monthly wage ... used for
purposes of computing ... [the

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individual's Social Security] benefits
under section 423...,

(B) one sixtieth of the total of ... [the
individual's] wages and self-employment
income ... for the five consecutive
calendar years after 1950, for which such
wages and self-employment income were
highest, or

(C) one-twelfth of the total of ... [the
individual's] wages and self-employment
income ... for the calendar year in which
he had the highest such wages and income
during the period consisting of the
calendar year in which he became disabled
... and the five years preceding that
year.2
2

See 42 U.S.C. 424a.

Claimant's Case

In applying the offset provision, the SSA determined the

claimant's "average current earnings" under the "High 5"

method based on the wages that she earned during her first

years of "covered" employment, i.e., 1977-1981.3 Eighty
3

percent of her "average current earnings," as so calculated,

was $307.20, an amount substantially less than claimant's

total Social Security benefits. When the latter was

2The computation method outlined in subparagraph (B) is
2
called the "High 5" method, while that outlined in
subparagraph (C) is called the "High 1" method. Both methods
compute "average current earnings" without regard to the
limitations on the maximum earnings creditable for Social
Security purposes specified in 42 U.S.C. 409(a)(1) and
411(b)(1).

3These wages were much lower than those claimant earned
3
during her last years of "non-covered" employment as an
accountant with the federal government.

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subtracted from the sum of claimant's Social Security and

CSRS benefits, as required by 424a(a)(3)-(6), the $919 CSRS

benefit was left as the amount to be "offset", or subtracted

from, claimant's total Social Security benefits. However,

since claimant's CSRS benefit exceeded her Social Security

benefits, and 424a prohibits reducing Social Security

benefits below zero, application of a $919 offset effectively

reduced claimant's Social Security benefits to zero.

Claimant disputed the SSA's computations and requested

reconsideration. The SSA reaffirmed its position both on

reconsideration and in a subsequent decision by an

administrative law judge (ALJ), who found that the offset

provision had been properly applied. The Appeals Council

upheld the ALJ's decision, thus rendering it the final

decision of the Commissioner.

Claimant thereafter commenced this proceeding for

judicial review, arguing, inter alia, that Congress did not

foresee her situation when it enacted 424a and that the

SSA's application of the offset provision resulted in an

undue hardship on her. Noting that her remaining CSRS

benefit fell substantially short of 80% of her pre-disability

earnings, claimant maintained that the SSA should have

computed her "average current earnings" based on her non-

covered federal earnings from 1983-1988, a method that would

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leave her Social Security benefits intact. Claimant urged

the district court to follow a similar unpublished case which

reinstated a blind claimant's Social Security benefits after

the SSA had eliminated them under the offset provision. See

Dunkin v. Secretary of Health and Human Services, No. 1-C-85-

1801, slip op., 1987 WL 109706 (S.D. Ohio, 1987)(holding SSA

erred in reducing claimant's benefits to zero after computing

his "average current earnings" based only on his years of

covered employment).4
4

The district court upheld the Commissioner. The court

rejected claimant's contention that the offset provision

should not apply to blind persons, reasoning that other

provisions of the Social Security Act and regulations showed

that Congress and the Commissioner clearly knew how to make

exceptions for the blind when they wished to do so. Relying

on Smith v. Sullivan, 982 F.2d 308, 311-15 (8th Cir.

1992)(holding that SSA correctly excluded claimant's non-

covered federal earnings from calculation of his "average

current earnings"), the court also found that the SSA

properly calculated the offset. Claimant appeals this

decision.

II.

4 Claimant also argued that Congress did not intend the
4
offset provision to apply to her because other sections of
the Social Security Act and regulations treat blind claimants
more leniently than those with other disabilities.

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The discrete question before us is whether the

claimant's "average current earnings", as defined in 424a,

were properly based only on claimant's years of "covered"

employment or whether, as claimant contends, they instead

should have been based on her most recent years of "non-

covered" employment. Our standard of review is well-

established:

When a court reviews an agency's
construction of the statute which it
administers, it is confronted with two
questions. First, always, is the
question whether Congress has directly
spoken to the precise question at issue.
If the intent of Congress is clear, that
is the end of the matter, for the court,
as well as the agency, must give effect
to the unambiguously expressed intent of
Congress. If, however, the court
determines Congress has not directly
addressed the precise question at issue,
the court does not simply impose its own
construction of the statute, as would be
necessary in the absence of an
administrative interpretation. Rather,
if the statute is silent or ambiguous
with respect to the specific issue, the
question for the court is whether the
agency's answer is based on a permissible
construction of the statute.

Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S.

837, 842-43 (1984).

While claimant concedes that a literal interpretation of

424a compels the conclusion that "average current

earnings" must be based on "covered earnings," she urges us

to reject such an interpretation in favor of one which

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comports with her view of Congressional intent.5 As we
5

explain below, we reject claimant's arguments, for they are

not supported by either the plain language of the statute nor

a fair reading of its legislative history. We begin with the

language of the statute. See Stowell v. Secretary of Health

and Human Services, 3 F.3d 539, 542 (1st Cir. 1993).

The Statute

We first observe that nothing on the face of 424a

indicates whether claimant's "average current earnings" may

be based only on "covered" earnings. The Commissioner argues

that the plain language of 42 U.S.C. 409(a) and 410(a)

requires the exclusion of claimant's "non-covered" earnings

from the computation of her "average current earnings"

because her federal earnings may not be deemed "wages" under

the Social Security Act. We agree.

The definition of "average current earnings" in

424a(a) depends on either the "average monthly wage" used to

compute a claimant's Social Security benefits or the

claimant's "wages and self-employment income."6 The Social
6

5Claimant also contends that the Commissioner's
5
interpretation of "average current earnings" violates due
process and equal protection because the claimant in Dunkin

was allowed to keep his Social Security benefits while
claimant's Social Security benefits have been eliminated.

6As claimant was never self-employed, and does not contend
6
that her average current earnings should have been based on
the average monthly wage used to compute her Social Security
benefits, we confine our analysis to the meaning of the term
"wages."

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Security Act defines the term "wages" as "remuneration paid

... after 1950 for employment...." 42 U.S.C. 409(a). The

definition of the term "employment" excludes service such as

that performed by claimant for the federal government. See 42

U.S.C. 410(a).7 It follows, then, that because claimant's
7

federal service does not qualify as "employment," her federal

earnings may not be deemed "wages" for purposes of computing

her "average current earnings" under the offset provision.

Accord Smith v. Sullivan, 982 F.2d at 313-15; Prather v.

Shalala, 844 F. Supp. 239, 240-41 (D. Md. 1993), aff'd, 14

F.3d 595( 4th Cir. 1994); Clevinger v. Sullivan, 813 F. Supp.

421, 422 (E.D. Va. 1993); cf. Viney v. Gardner, 310 F.

Supp. 76, 77-78 (E. D. Mich. 1970)(holding term "wages" in

424a is defined by 409(a)).

The plain meaning of a statute's text must be given

effect "unless it would produce an absurd result or one

742 U.S.C. 410(a) excludes from the definition of
7
"employment" any post-1950 "[s]ervice performed in the employ
of the United States ... if such service - (A) would be
excluded from the term 'employment' for purposes of this
subchapter if the provisions of paragraphs (5) and (6) of
this subsection as in effect in January 1983 had remained in
effect, and (B) is performed by an individual who - ... (ii)
is receiving an annuity from the Civil Service Retirement and
Disability Fund ...." Tremblay worked for the federal
government after 1950 and receives a CSRS annuity. Her work
would have been excluded from the definition of "employment"
if 5 and 6 of 410 as in effect in January 1983 had
remained in effect, for the latter paragraph excluded from
the definition of employment federal service covered by a
retirement system established by federal law. Consequently,
claimant's federal work is excluded from the definition of
"employment."

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manifestly at odds with the statute's intended effect."

Parisi by Cooney v. Chater, 69 F.3d 614, 617 (1st Cir. 1995).

Relying on excerpts from 424a's legislative history,

claimant contends that the offset resulting from the

exclusion of her non-covered federal earnings from the

computation of her "average current earnings" violates

Congress's intent to leave disabled workers with 80% of their

pre-disability earnings. She maintains that her CSRS pension

equals only 31.7% of the monthly salary she earned before

she became blind and that Congress expressly intended to

avoid leaving disabled workers with such a slim amount.

Claiming that "overwhelming" case law supports her position,

claimant urges us to reject a literal interpretation of the

statute in favor of one that furthers Congress's intent to

leave disabled workers with 80% of their pre-disability

earnings.8
8

While we recognize the ongoing debate over the propriety

of using legislative history as a means to discern a

statute's intent, see, e.g., Strickland v. Commissioner,

Dept. of Human Services, 48 F.3d 12, 17 (1st Cir.), cert.

8Claimant contends that such cases as Sciarotta v. Bowen,
8
837 F.2d at 138; Swain v. Schweiker, 676 F.2d at 546-47; and

Merz v. Secretary of Health and Human Services, 969 F.2d 201,

206 6th Cir. 1992), support her contention that this court
should reject the literal meaning of the statute in favor of
one which furthers Congressional intent. Neither these nor
the remaining cases that claimant cites address the precise
issue before us. Therefore, they are not controlling.

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denied, 116 S. Ct. (1995)(collecting cases), we will assume

that we "may consult relevant legislative history ... to

confirm an interpretation indicated by the plain language [

of a statute]." Grunbeck v. Dime Savings Bank of New York,

FSB, 74 F.3d 331, 336 (1st Cir. 1996). We conclude that the

legislative history, while occasionally ambiguous, on the

whole supports the Commissioner's interpretation of the

statute.

Legislative History

Claimant is correct that the Senate Finance Committee

report that accompanied 424a, as originally enacted,

indicates that Congress intended the offset provision to

leave disabled workers with 80% of their "average monthly

earnings prior to the onset of disability." However, the

latter phrase was qualified. The report states that:

The new offset provision ... provides for
a reduction in the social security
disability benefit (except where the
State workmen's compensation law provides
for an offset ...) in the event that the
total benefits paid under the two
programs exceed 80 percent of the
worker's average monthly earnings prior
to the onset of disability. Under this
provision, the worker's average monthly
earnings would be defined as the higher
of (a) his average monthly wage used for
purposes of computing his social security
disability benefit or (b) his average
monthly earnings, in employment covered
in employment covered
by social security, during his highest 5
by social security
consecutive years after 1950.... This
reduction formula would generally avoid
the inequity encountered under the
previous offset provision, where the

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reductions that were required frequently
resulted in benefits that replaced no
more than 30 percent or so of the
worker's earnings at disablement.

S. Rep. No. 404, 89th Cong., 1st Sess., 100 (1965), reprinted

in 1965 U.S. Code Congressional and Administrative News 1943,

2040. (emphasis supplied). The emphasized language shows

that Congress intended "average current earnings" to be

synonymous with "covered" earnings. This assumption is

repeated in other parts of the Senate Report. See id. at

2041 (describing hypothetical application of 424a in which

worker's "average monthly wage" is based on his "average

covered earnings"); id. at 2200 (computing worker's "average

current earnings" based on wages and income "credited to his

social security account"). Thus, when the legislative

history excerpts that claimant cites are read in context, it

appears that Congress was speaking only of "covered" earnings

when it expressed a desire to leave disabled workers with 80%

of their pre-disability earnings and to avoid leaving workers

with only 30% of such earnings.9
9

9Subsequent legislative history that accompanied the early
9
amendments to 424a also supports the view that Congress
intended "average current earnings" to be based only on
"covered" earnings. See, e.g., S. Rep. No. 744, 90th Cong.,

1st Sess. (1967), reprinted in 1967 U.S.C.C.A.N. 2834, 2884

(noting that "average current earnings" under 424a equalled
the larger of a worker's average monthly wage used for
computing his social security benefit or his average monthly
earnings during the 5 consecutive years of highest covered
highest covered
earnings after 1950); H. Rep. No. 231, 92d Cong., 2d Sess. 57
earnings
(1972), reprinted in 1972 U.S.C.C.A.N. 4989, 5044 (same).

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In short, the plain language of the Social Security Act,

42 U.S.C. 409, 410 and 424a, directs the exclusion of

claimant's non-covered federal earnings from the calculation

of her "average current earnings" and the offset applied

here. Apart from a single excerpt referring to "non-covered

wages," the legislative history of 424a confirms this

result. Whatever doubts might be raised by this excerpt are

put to rest by more recent developments. We note that in

January 1989, Senator Moynihan offered an amendment to the

offset provision that would have specifically allowed the

non-covered earnings of former public employees such as

claimant to be considered in calculating "average current

earnings." See S. 213, 101st Cong., 1st Sess. 1115 (1989).

That amendment was not passed. See Prather v. Sullivan, 844

F. Supp. at 241 n. 1; Clevinger v. Sullivan, 813 F. Supp. at

The only contrary indication that we have been able to find
appears in a Senate Budget Committee Report that accompanied
the Omnibus Budget Reconciliation Act of 1981. Inter alia,

that Act extended the offset provision so that it would apply
to individuals receiving disability benefits from federal,
state, or local governments. The Budget Committee report, in
an apparent reference to the "High 1" method, says that,
"average current earnings generally refers to the highest
annual amount of covered and non-covered wages earned during
non-covered wages
the 6-year period consisting of the year in which the worker
becomes disabled and the 5 preceding years...." S. Rep. No.
139, 97th Cong., 1st Sess. 428 (1981), reprinted in 1981

U.S.C.C.A.N. 693, 694 (emphasis supplied). This single
statement is alone insufficient to undermine the previous
expressions of Congressional intent to base "average current
earnings" only on "covered" earnings. "Congress cannot amend
a statute merely by inserting the proposed change in a
congressional report...." Strickland v. Commissioner, Dept.

Human Services, 48 F.3d at 18.

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422 n. 2. "To be sure, non-action by Congress is ordinarily

a dubious guide" to legislative intent. Brown v. Secretary

of Health and Human Services, 46 F.3d 102, 108 (1st Cir.

1995). But thereafter, the SSA promulgated Social Security

Ruling (SSR) 92-2a. That ruling indicated that the

Commissioner would require "average current earnings" to be

based only on "covered" earnings. Although the offset

provision has been amended in other respects since this

ruling was published, Congress has done nothing to alter the

Commissioner's interpretation of "average current earnings."

This strongly suggests that the Commissioner's interpretation

comports with Congress's intent. Cf. United States v.

Rutherford, 442 U.S. 544, 554 n. 10 (1979)(Congressional

inaction after agency position has been fully brought to the

attention of the public and Congress suggests agency has

correctly discerned legislative intent).10
10

III.

Conclusion

10As other courts have noted, there are several reasons
10
why the decision to base "average current earnings" only on
"covered earnings" is reasonable. See,e.g., Smith v.

Sullivan, 982 F.2d at 344 (noting that it is logical to

exclude wages on which an individual has not paid Social
Security taxes from computation of benefit limit); Prather v.

Sullivan, 844 F. Supp. at 241 ("Congress's decision to

exclude non-covered wages from the average current earnings
calculation ... is rationally related to the goal of
preserving scarce resources where the individual receives
benefits from other sources.").

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Where the plain language and legislative history of the

statute indicate that the Commissioner's interpretation is

consistent with Congress's intent, this court may not devise

a contrary interpretation. We further discern no due

process or equal protection violation arising from the fact

that the plaintiff in Dunkin had his Social Security benefits

reinstated while claimant's benefits have been eliminated.

Apart from the fact that Dunkin lacks precedential value as

an unpublished decision, it was decided before the SSA

promulgated SSR 92-2a. "An agency that is charged with

administering a statute remains free to supplant prior

judicial interpretations of that statute as long as the

agency interpretation is ... reasonable ...." United States

v. LaBonte, 70 F.3d 1396, 1405 (1st Cir. 1995), cert.

granted, 116 S. Ct. 2545 (1996).11 At bottom, claimant's
11

arguments challenge the Commissioner's policy judgment that

non-covered earnings must be excluded under the offset

provision. "When a challenge to an agency construction of a

statutory provision, fairly conceptualized, really centers on

the wisdom of the agency's policy, rather than whether it is

a reasonable choice within a gap left open by Congress, the

challenge must fail." Chevron v. Natural Resources Defense

Council, 467 U.S. at 866. Accordingly, the judgment of the

11Claimant's argument that the district court engaged in
11
misconduct by relying on the defendant's memorandum is wholly
meritless.

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district court is affirmed.

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