Ward v. Commissioner of Social Security

United States Court of Appeals
For the First Circuit

No. 99-1884

CLIFFORD WARD,

Appellant,

v.

COMMISSIONER OF SOCIAL SECURITY,

Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE

[Hon. Morton A. Brody, U.S. District Judge]

Before
Boudin, Circuit Judge,
Bownes, Senior Circuit Judge,
and Lynch, Circuit Judge.

Francis M. Jackson, with whom Jackson & MacNichol was on brief,
for appellant.

Joseph E. Dunn, Assistant Regional Counsel, Social Security
Administration, Office of the General Counsel, with whom Jay P.
McCloskey, United States Attorney, James M. Moore, Assistant United
States Attorney, and Arthur J. Fried, General Counsel, Social Security
Administration were on brief, for appellee.
May 2, 2000

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 BOWNES, Senior Circuit Judge. This is an appeal from an

order of the United States District Court for the District of Maine

(Brody, J.) affirming a final decision of the Commissioner of Social

Security. The Commissioner found that Plaintiff-Appellant Clifford L.

Ward’s retirement insurance benefits were properly reduced pursuant to

the Windfall Elimination Provision (“WEP”) of the Social Security Act,

42 U.S.C. § 415(a)(7) (1994). Ward has appealed. Because we find that

the WEP applies, we affirm the district court’s order.

I. Facts and Procedural History

Clifford L. Ward was born on March 30, 1932. He served in

the U.S. Air Force from December 28, 1951, to November 28, 1955, and

from January 10, 1956, to August 31, 1972. Ward then worked as a

civilian federal employee in the Augusta, Maine field office of the

U.S. Department of Agriculture (“USDA”) Food and Nutrition Service from

June 9, 1974, until his retirement in 1988.

In January 1984, the State of Maine assumed responsibility

for the Child Nutrition Program, in which Ward worked. On May 17,

1984, the New England regional office sent Ward a letter notifying him

that his position was one of two GS-11 positions in the Augusta field

office that had been reclassified as GS-9 positions. The letter stated

that “a Reduction in Force must be conducted to eliminate the GS-11

positions which are no longer needed and fill two positions at the GS-9

grade level.” Ward’s supervisor gave him the option of either

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accepting one of the vacant, lower-grade positions or being subject to

separation from federal service. The offer provided that if Ward

accepted the lower-grade position he would be entitled to grade

retention benefits for two years, with indefinite pay retention

thereafter. Ward accepted the lower-grade position.

In March 1986, Ward received notice from the Food and

Nutrition Service (“FNS”) that “early-out” retirement was being offered

for eligible FNS employees nationwide, from April 1, 1986 until June 1,

1986, subject to an earlier ending date. Ward did not apply for

“early-out” retirement.

On October 20, 1988, Ward applied for retirement, effective

December 31, 1988. He also waived his military retirement pay at this

time, in order to use military service credit towards his civil service

retirement benefits. Upon retirement, Ward received a monthly civil

service pension of $1,601.00, which was increased to $1,649.00 in 1993.

Ward submitted an application for Social Security retirement

insurance benefits on January 31, 1994, which included a “modified

benefit formula questionnaire” for determination of benefits if the WEP

applied. He became entitled to monthly Social Security payments

beginning in April 1994, the first month in which he reached 62 years

of age. In July 1994, Ward received notice from the Social Security

Administration that his benefits had been calculated at $262.00 per

month.

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 After receiving this notice, Ward filed a request for

reconsideration with the Social Security Administration on September

15, 1994, stating: “The Windfall Elimination Provision should not

apply. A reduction in force in 1984 allows for retirement eligibility.

Also an 86 early out made me eligible to retire.” The agency affirmed

its initial determination in a letter sent to Ward on October 12, 1994,

on the grounds that Ward did not meet the exceptions to the imposition

of the modified benefit formula. On December 9, 1994, Ward filed a

request for a hearing before an administrative law judge (“ALJ”).

At the April 16, 1996 hearing, the ALJ determined that Ward

had received the maximum social security benefits to which he was

entitled because he did not meet the exceptions to application of the

WEP.1 Specifically, the ALJ found that Ward was not eligible for a

1
The WEP, as codified at section 415(a)(7)(A) of 42 U.S.C.,
provides, in pertinent part:

In the case of an individual whose primary
insurance amount would be computed under
paragraph (1) of this subsection, who–

(i) attains age 62 after 1985 . . .

and who first becomes eligible after 1985 for a
monthly periodic payment . . . which is based in
whole or in part upon his or her earnings for
service which did not constitute “employment” as
defined in section 410 [“non-covered service”] .
. . , the primary insurance amount of that
individual during his or her concurrent
entitlement to such monthly periodic payment and
to old-age or disability insurance benefits shall
be computed or recomputed under subparagraph (B).

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civil service discontinued service retirement in 1984 because he had

taken no affirmative action to waive his eligibility to a military

retirement pension. Ward claims that this finding was erroneous and

the Commissioner agrees that it was.

In July 1996, Ward filed a request for review of the ALJ’s

decision. Two years later, the Appeals Council notified him that there

was no basis to grant his request for review. Because the Appeals

Council declined to review the ALJ’s decision, it became the final

decision of the Commissioner with respect to Ward’s claim. See 42

U.S.C. § 405(g) (1994); Da Rosa v.Secretary of Health and Human Servs.,

803 F.2d 24, 25 (1st Cir. 1986) (per curiam).

Ward brought a civil action in the United States District

Court for the District of Maine, pursuant to 42 U.S.C. § 405(g),

The pertinent computation in subparagraph (B) provides:

There shall then be computed (without regard to
this paragraph) a second amount, which shall be
equal to the individual’s primary insurance
amount under paragraph (1) of this subsection,
except that such second amount shall be reduced
by an amount equal to one-half of the portion of
the monthly periodic payment which is
attributable to noncovered service performed
after 1956 (with such attribution being based on
the proportionate number of years of such
noncovered service) and to which the individual
is entitled (or is deemed to be entitled) for the
initial month of his or her concurrent
entitlement to such monthly periodic payment and
old-age or disability insurance benefits. 42
U.S.C. § 415(a)(7)(B)(i).

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seeking review of the Commissioner’s final decision. Ward contended

that the Commissioner incorrectly applied the WEP to reduce his

retirement insurance benefits. The Magistrate Judge (Cohen, J.), in

his report and recommendation, recommended affirmance of the

Commissioner. The Magistrate Judge held, inter alia, that the ALJ had

erred in finding that Ward had to waive his military pension benefits

in order to establish eligibility for a pension, but that Ward

nonetheless did fall under WEP because the 1984 notice did not make him

eligible for a pension. On July 1, 1999, the district court adopted

the Magistrate Judge’s report and recommendation and entered an order

affirming the Commissioner’s decision. This appeal followed.

II. Standard of Review

Judicial review of a Social Security claim is limited to

determining whether the ALJ used the proper legal standards and found

facts upon the proper quantum of evidence. We review questions of law

de novo, but defer to the Commissioner’s findings of fact, so long as

they are supported by substantial evidence. See Nguyen v. Chater, 172

F.3d 31, 35 (1st Cir. 1999) (per curiam).

III. Discussion

The ultimate issue is whether Ward is exempt from the WEP;

this turns on whether he was eligible for a pension before 1986. We

also consider whether, because the ALJ used a different and erroneous

ground for decision, we are required to remand.

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 The WEP applies to individuals whose careers were split

between employment covered by Social Security and government employment

with pension benefits. See Das v. Department of Health and Human

Servs., 17 F.3d 1250, 1253 (9th Cir. 1994). The reason behind the WEP

was that an individual who had been employed as a federal employee with

pension benefits and also was entitled to Social Security retirement

benefits would receive a windfall because he would be eligible for both

Social Security and federal civil service pension payments. See id.

The WEP provides a modified formula for calculating the Social Security

benefits of persons first eligible after 1985 for both Social Security

retirement benefits and a civil service pension. See 42 U.S.C.

§ 415(a)(7)(B).

This case turns on a seemingly simple dispute. Ward contends

he was eligible for a civil service pension in 1984, and is thus exempt

from the WEP’s modified formula for calculation of benefits. The

Commissioner contends that Ward was not eligible for his civil service

pension until 1986, and is subject to the WEP.

On appeal, Ward proffers three arguments: (1) the district

court erred in failing to remand when it determined that Ward’s case

had not been properly evaluated by the Commissioner because of an error

of law by the ALJ; (2) the district court erred in “going behind” the

conclusions of experts and evaluating the factual record directly; and

(3) the district court used an improper legal standard when it allowed

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the Commissioner to raise the issue of harmless error when it had not

been raised at the administrative level. The first and third arguments

dovetail and will be discussed together, followed by a discussion of

the second argument.

Ward’s first argument is that the district court erred in

failing to remand this case to the Appeals Council after it determined

that Ward’s claim had not been properly evaluated by the Commissioner

because of an error of law by the ALJ. Ward contends that because the

ALJ applied an improper legal standard in determining whether he was

exempt from the WEP, the district court should have reversed and

remanded the case to allow the Commissioner to apply the proper legal

standard. We disagree.

While an error of law by the ALJ may necessitate a remand,

see Da Rosa, 803 F.2d at 26, a remand is not essential if it will

amount to no more than an empty exercise. See Dantran, Inc. v. United

States Dep’t of Labor, 171 F.3d 58, 73 (1st Cir. 1999); Schaal v.

Apfel, 134 F.3d 496, 504 (2d Cir. 1998) (“Where application of the

correct legal standard could lead to only one conclusion, we need not

remand.”). The ALJ’s error prevented him from inquiring into whether,

apart from waiving his military retirement benefits, Ward was eligible

for his civil service pension in 1984. Since, however, the record is

fully developed and Ward has made no showing that a remand is necessary

for the taking of new and material evidence, we can determine on appeal

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whether the evidence supports the Commissioner’s decision under the

appropriate test. See Benitez v. Califano, 573 F.2d 653, 657 (9th Cir.

1978).

Although the parties improperly use the terminology of

“harmless error doctrine,” as though this were an issue of the improper

admission of evidence, we understand the agency to mean, in a

colloquial sense, that there was no harm from the ALJ’s use of an

erroneous ground of decision because there was an independent ground on

which affirmance must be entered as a matter of law. See, e.g., Perez

Torres v. Secretary of Health and Human Servs., 890 F.2d 1251, 1255

(1st Cir. 1989) (using the words harmless and error colloquially);

Sprague v. Director, Office of Workers’ Compensation Programs, 688 F.2d

862, 870 n.17 (1st Cir. 1982) (same); Miles v. Harris, 645 F.2d 122,

124 (2d Cir. 1981) (same).

Ward contends that the record contains evidence by experts

in the field that he was subjected to a reduction in force in 1984

which made him eligible for a pension. The first item is a letter

dated May 3, 1994, to him from James E. Schillinger, Chief of Human

Resources Management Service at the Department of Veterans Affairs

(“Schillinger letter”). This letter was submitted to the ALJ. The

Schillinger letter states, in pertinent part:

It is my professional opinion that [Ward] would
have been eligible for a Civil Service
Discontinued Service Retirement in 1984 if he had

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 waived his military retirement pay. The basis
[sic] eligibility for discontinued service
retirement is 25 years of service at any age or
20 years of service at age 50. Mr. Ward would
have met both of these criteria by waiving his
military retirement. The Civil Service
regulation and law provide for such option.
Therefore, Mr. Ward would have been eligible in
1984 if he had a notice of his job abolishment
and prior to any reasonable offer.

The second item is a letter dated May 17, 1984, to Ward from Ward’s

employer, the USDA Food and Nutrition Service, also submitted to the

ALJ, notifying Ward that his position had been reclassified pursuant to

a reduction in force. We have already discussed this letter, supra at

pp. 1-2.

Ward also points to a letter dated July 3, 1996, that he

received from Maureen Hardy, USDA Food and Consumer Service Acting

Personnel Officer for the Northeast Region (“Hardy letter”), which he

submitted to the Appeals Council in support of his request for review

of the ALJ’s decision. As already noted, the Appeals Council denied

review. The Hardy letter says, in pertinent part:

There are no records currently available
documenting the Reduction in Force of 1984. But
a review of the information that you provided and
based on the Civil Service Rules and Regulations
as set forth in the Code of Federal Regulations
Chapter 831, it appears that you would have been
eligible for a Civil Service, Discontinued
Service Retirement in 1984 only if you waived
your military retirement pay. Basic eligibility
for a Civil Service Discontinued Retirement was
25 years of service at any age or 20 years of
service at age 50. Your documentation indicates

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 that you would have met this criteria if you had
you [sic] waived your military retirement pay.2

Ward argues that because the experts’ letters were

uncontradicted by the Commissioner at the administrative level, the

only way the district court could have held he was not eligible for a

pension in 1984 was by “going behind the opinions of the experts.”

Ward, however, has not directly confronted the issue of

whether he actually met the statutory requirements of eligibility to a

pension in 1984. We address this issue.

The language of the WEP, which applies the modified benefit

formula to anyone “who first becomes eligible after 1985 for a monthly

periodic payment,” does not specify how a court is to determine when an

individual is “eligible.” Other jurisdictions have held that an

individual becomes eligible for his civil service pension, for WEP

purposes, at the time he satisfies all prerequisites to the payment of

benefits. See Das, 17 F.3d at 1253; Newton v. Shalala, 874 F. Supp.

296, 300 (D. Or. 1994), aff’d, 70 F.3d 1114 (9th Cir. 1995); Johnson v.

2There is a split in the circuits on what consideration a federal
court should afford to new evidence presented to the Appeals Council
when the Appeals Council denies review of the ALJ’s decision. Compare
Perez v. Chater, 77 F.3d 41, 45 (2d Cir. 1996) (holding new evidence
submitted to the Appeals Council is part of the administrative record
for the purposes of judicial review) with Eads v. Secretary of Health
and Human Servs., 983 F.2d 815, 818 (7th Cir. 1993) (holding new
evidence is not part of the administrative record where Appeals Council
denied review). We decline to decide this issue, which has not been
presented to us by the parties, and assume arguendo that the Hardy
letter, for whatever it is worth, is properly part of the record.

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Sullivan, 777 F. Supp. 741, 743-44 (W.D. Wis. 1991). This is,

logically and legally, a sound rule, and we thus adopt it.

The statute governing eligibility for civil service

retirement is 5 U.S.C. § 8336(d) (1994 & Supp. III 1997).3 It is

3Title 5, section 8336(d) provides:

An employee who–

(1) is separated from the service involuntarily,
except by removal for cause on charges of
misconduct or delinquency; or

(2) while serving in a geographic area designated
by the Office of Personnel Management, is
separated from the service voluntarily during a
period in which the Office determines that–

(A) the agency in which the employee is
serving is undergoing a major reorganization, a
major reduction in force, or a major transfer of
function; and

(B) a significant percent of the employees
serving in such agency will be separated or
subject to an immediate reduction in the rate of
basic pay (without regard to subchapter VI of
chapter 53 of this title or comparable
provisions);

after completing 25 years of service or after
becoming 50 years of age and completing 20 years
of service is entitled to an annuity. . . .
Notwithstanding the first sentence of this
subsection, an employee described in paragraph
(1) of this subsection is not entitled to an
annuity under this subsection if the employee has
declined a reasonable offer of another position
in the employee’s agency for which the employee
is qualified, which is not lower than 2 grades
(or pay levels) below the employee’s grade (or
pay level), and which is within the employee’s

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undisputed that Ward met this section’s age and length of service

requirements because in 1984 he would have either completed 25 years of

service or become 50 years old and completed 20 years of service.

However, Ward would only have been entitled to an “early-out” pension

in 1984 if he met the separation requirements under section 8336(d)(1)

or (d)(2). Ward does not claim that he was eligible for a pension

under (d)(2) (voluntary separation).

Ward’s contention as to (d)(1) (involuntary separation) is

that the 1984 RIF notice rendered him eligible for a pension because

his separation would have been “involuntary” if he declined the offer

of a position two grades lower than his abolished position. The

question is what Ward did, not what “would have been.” Ward’s citation

of Yarbrough v. Office of Personnel Management, 770 F.2d 1056 (Fed.

Cir. 1985), is totally inapposite.

A federal employee who is separated from the service

involuntarily is not entitled to a pension if the employee declined a

reasonable offer of another position. See 5 U.S.C. § 8336(d); 5 C.F.R.

§ 831.503(a) (1999). In the 1984 letter notifying Ward that his GS-11

position was to be abolished, his employer offered him a vacant GS-9

position. Even assuming, dubitante, that Ward could be “eligible” for

a pension when he was never separated from service – because he

accepted the offered job – and the proper question is whether the 1984

commuting area (emphasis ours).

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offer was “reasonable,” the only conclusion that can be reached is that

the offer was reasonable. The only ground on which Ward says the offer

was not reasonable is location; there was no loss of pay or benefits.

Ward argues that there are insufficient facts in the record

for us to determine whether the offer was reasonable because the 1984

RIF letter only refers to the competitive area of the GS-11 food

program specialist position he held, and does not indicate whether the

GS-9 position the letter offered him was within his commuting area.

See 5 U.S.C. § 8336(d); 5 C.F.R. § 831.503(b). This argument is

contradicted by the text of the 1984 notice, which makes it clear that

the two GS-9 positions were located in the same office as the two GS-11

positions which were abolished.4 Ward’s contentions are not only

untenable, they ignore the facts.

Ward nonetheless says the matter must be remanded because

there is a dispute of fact as to whether the offered GS-9 position was

“reasonable” in lights of his experts’ opinions that he was “eligible

4
The May 17, 1984 notice from the USDA Food and Nutrition Service
provides:

In January, 1984 the state of Maine assumed
responsibility for the administration of the
Child Nutrition (ROAP) Programs. This action
resulted in the review and subsequent
reclassification to the GS-9 level of two GS-11
Food Program Specialist positions in the Augusta,
Maine Field Office.

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for a pension.” Although expert testimony may at times be helpful in

specialized areas, these conclusions of law were for the court to draw.

See Nieves-Villanueva v. Soto-Rivera, 133 F.3d 92, 99-101 (1st Cir.

1997). The expert testimony offered did not address the point on which

this case turns, but rather addressed the issue of waiver of military

retirement pay, and is inapposite.

IV. Conclusion

Ward became eligible for his civil service pension only as

of April 1, 1986, when he satisfied all prerequisites to the payment of

benefits. Thus, the Commissioner of Social Security acted properly in

reducing Ward’s social security retirement benefits pursuant to the

WEP. Accordingly, the order of the district court is affirmed.

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