Doyle v. Shalala

United States Court of Appeals,

Fifth Circuit.

No. 94-40865.

Timothy D. DOYLE, Plaintiff-Appellant,

v.

Donna E. SHALALA, Secretary of Health and Human Services,
Defendant-Appellee.

Sept. 7, 1995.

Appeal from the United States District Court for the Eastern
District of Texas.

Before WISDOM, GARWOOD and DAVIS, Circuit Judges.

DAVIS, Circuit Judge:

Timothy D. Doyle, a disabled social security recipient,

challenges the validity of certain regulations of the Secretary of

Health and Human Services (the "Secretary") governing the

calculation of Supplemental Security Income ("SSI") benefits under

Subchapter XVI of the Social Security Act (the "Act"), 42 U.S.C. §

1382(c). The district court denied Doyle's motion for summary

judgment and granted the Secretary's cross-motion for summary

judgment. Because we conclude that the challenged regulations are

not inconsistent with the Act, we affirm.

I.

Doyle became eligible for SSI benefits on July 16, 1992. At

that time, the congressionally mandated benefit rate was $422.

Pursuant to agency regulations, the Secretary reduced Doyle's SSI

benefits in the first, second and third months of eligibility by

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the amount of "countable income"1 earned during the first month of

eligibility, even though that income was non-recurring.2

Accordingly, because Doyle had received countable income of $19 in

July (based on wages of $123), he received $208 in benefits for

July (pro-rated), and $403 in both August and September. In

October, he began receiving the $422 rate.

Doyle challenged the deduction of the non-recurring income in

August and September but the SSA rejected his appeal. After

exhausting his administrative remedies, he filed a complaint in the

district court, alleging that the agency's regulations governing

the calculation of benefits for the first three months of

eligibility violate § 1382(c) of the Act.3 The district court

denied Doyle's motion for summary judgment and granted the

Secretary's cross-motion for summary judgment. Doyle filed a

timely appeal.

1
Not all income is used to reduce the amount of SSI
benefits. The Act places a number of limitations on the nature
and amount of the applicant's income that will be considered in
calculating monthly benefits. The income remaining after
applying the appropriate exclusions, deductions and caps is
termed "countable income."
2
This income was "non-recurring," in that it did not
continue in the following months.
3
We reject the Secretary's argument that Doyle lacks
standing because he was not injured by the application of the
regulations. The Secretary argues that had Doyle waited until
August 1, 1992 to file for benefits, he would have received less
money overall. However, that is not the issue here. Rather, the
issue is whether his countable income of $19 in July should have
been triple-counted against him, though it was non-recurring.
Had the Secretary not triple-counted that income, Doyle would
have received $36 more in benefits. Thus, Doyle was injured by
the application of the regulations.

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 II.

A.

The only issue in this appeal is whether the Secretary's

regulations governing the computation of SSI benefits during a

beneficiary's first three months of eligibility violate Subchapter

XVI of the Social Security Act, 42 U.S.C. § 1382(c). To understand

this issue, it is first necessary to set out the statutory and

regulatory scheme governing the calculation of monthly SSI

benefits.

The SSI program, codified at 42 U.S.C. §§ 1381-1383c, was

added to the Act by the Social Security Amendments of 1972, Pub.L.

No. 92-603, § 301, 86 Stat. 1466 (effective Jan. 1, 1974). The

primary purpose of the SSI program was to assure a minimum monthly

level of income to individuals who are blind, aged, or disabled,

and whose income and monthly resources fall below the levels set

forth in 42 U.S.C. § 1382(a). Under the SSI program, eligible

beneficiaries receive monthly benefits at a level set by Congress.

42 U.S.C. § 1382(b). However, these benefits are reduced by

countable income received from other sources. Id.

Under the current Act, as amended by the Omnibus Budget

Reconciliation Act of 1981, Pub.L. No. 97-35, 95 Stat. 357, the

Secretary calculates monthly SSI benefits based on a "retrospective

monthly accounting" ("RMA") system. Under the RMA system, the

Secretary computes SSI benefits for the current month based on

"income" and "other relevant characteristics" in the second month

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preceding the current month. 42 U.S.C. § 1382(c)(1).4 Thus, for

example, the Secretary deducts "countable income" earned in January

from the beneficiary's March SSI payment.

The Act provides for an exception to the RMA method for

purposes of calculating SSI benefits for the first two months of

eligibility. Under § 1382(c)(2), the Secretary computes benefits

for the first month of eligibility (and the second month, if the

Secretary so chooses) based upon the beneficiary's "income" and

"other relevant circumstances" in the first month.5

4
Section 1382(c)(1) provides:

An individual's eligibility for a benefit under this
subchapter for a month shall be determined on the basis
of the individual's (and eligible spouse's, if any)
income, resources, and other relevant characteristics
in such month, and, except as provided in paragraphs
(2), (3), (4), (5), and (6) the amount of such benefit
shall be determined for such month on the basis of
income and other characteristics in the first, or if
the Secretary so determines, second month preceding
such month. Eligibility for and the amount of such
benefits shall be redetermined at such time or times as
may be provided by the Secretary.

The Secretary has elected to calculate current month
benefits based on income earned in the second preceding
month. See 20 C.F.R. § 416.420(a).
5
Section 1382(c)(2) provides, in pertinent part:

The amount of such benefit for the month in which an
application for benefits becomes effective (or, if the
Secretary so determines, for such month and the
following month) and for any month immediately
following a month of eligibility for such benefits (or,
if the Secretary so determines, for such month and the
following month) shall—

(A) be determined on the basis of the income of the
individual and the eligible spouse, if any, of such
individual, and other relevant circumstances in such
month....

4
 The Secretary has also adopted regulations pursuant to this

statutory scheme. 20 C.F.R. § 416.420 (1992).6 Pursuant to §

416.420(b)(1)-(2), the Secretary reduces benefits for the first and

second months of eligibility by the amount of countable income

received during the first month of eligibility. Benefits for the

third month of eligibility are also reduced by countable income

earned in the first month, pursuant to the standard RMA system

The Secretary has elected to use this method to
calculate benefits for both the first and second months of
eligibility. See 20 C.F.R. § 416.420(b)(2).
6
The regulations provide, in pertinent part:

(a) General rule. [SSA] use[s] the amount of [a
beneficiary's] countable income in the second month
prior to the current month to determine how much [his
or her] benefit amount will be for the current month.

(b) Exceptions to the general rule—

(1) First month of eligibility or eligibility after a
month of ineligibility. [SSA] use[s] [a beneficiary's]
countable income in the current month to determine [his
or her] benefit amount for the first month [he or she
is] eligible for SSI benefits or for the first month
[he or she] become[s] eligible for SSI benefits after a
month of ineligibility.

(2) Second month of initial eligibility or eligibility
after a month of ineligibility. [SSA] use[s] [a
beneficiary's] countable income in the first month
prior to the current month to determine how much [his
or her] benefit amount will be for the current month
when the current month is the second month of initial
eligibility or the second month following at least a
month of ineligibility.

(3) Third month of initial eligibility or eligibility
after a month of ineligibility. [SSA] use[s] [a
beneficiary's] countable income according to the rule
set out in paragraph (a) of this section to determine
how much [a beneficiary's] benefit amount will be for
the third month of initial eligibility or the third
month after at least a month of ineligibility.

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codified in § 416.420(a).

B.

Doyle argues that the regulations are flawed because they do

not allow the Secretary to consider the non-recurring nature of

income received in the first month and therefore have the effect of

triple-counting income that was only received once. For example,

if a beneficiary receives $50 of non-recurring countable income

during the first month of eligibility, the beneficiary suffers a

total reduction of $150 in benefits when he actually received only

$50 in total countable income. Doyle contends that the

"triple-counting" regulations are an invalid exercise of the

Secretary's authority because: (1) they violate the plain language

of the Act, and (2) they contradict the statutory purpose of the

SSI program.

First, Doyle argues that by failing to consider the

non-recurring nature of the first-month's income, the regulations

violate the mandatory statutory language contained in 42 U.S.C. §

1382(c)(1) and (c)(2). As discussed above, § 1382(c)(2), which

governs the computation of benefits for the first two months of

eligibility, provides that the benefits "shall ... be determined on

the basis of the income of the individual ... and other relevant

circumstances." (emphasis added). Section 1382(c)(1), which

governs the calculation of benefits for the remaining months,

provides that the benefits "shall be determined on the basis of the

individual's ... income, resources, and other relevant

characteristics in such month." (emphasis added).

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 Doyle contends that the non-recurring nature of first-month

income constitutes a relevant circumstance or characteristic which

the Secretary must consider in calculating benefits for the second

and third months of eligibility. Although the terms "other

relevant circumstances" and "other relevant characteristics" are

not defined anywhere in the Act, Doyle argues that various other

sections of the Act reflect Congress' concern with non-recurring

income, which in turn suggests that Congress considered

non-recurring income to be a relevant circumstance or

characteristic in calculating SSI benefits.

Second, Doyle argues that the Secretary's failure to consider

the non-recurring nature of first-month income contradicts the

statutory purpose in establishing the SSI program, which is to

provide a minimum subsistence level to eligible claimant's based

upon current need. According to Doyle, the legislative history

indicates that by enacting § 1382(c)(2) as an exception to §

1382(c)(1)'s RMA method, Congress intended to mitigate the

potential hardships caused by using the two-month retrospective

method to compute benefits for the first two months of eligibility.

This hardship would result from the usual disparity between income

earned in the two months preceding initial eligibility, when the

individual was not yet disabled, and income received during the

first month of eligibility. Doyle argues that by triple-counting

any first-month income, however, the regulations perpetuate the

very hardship that Congress sought to avoid.

III.

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 This court has not yet addressed the validity of these

regulations. The two courts that have specifically addressed this

issue have reached different results. Compare Jones v. Shalala, 5

F.3d 447 (9th Cir.1993) (holding that the regulations are invalid)

with Farley v. Sullivan, 983 F.2d 405 (2nd Cir.1993) (upholding the

regulations).

Doyle urges us to adopt the approach taken by the Ninth

Circuit in Jones. In that case, the Ninth Circuit held that the

plain language of the statute together with the legislative history

reflected a "clear and unambiguous" congressional intent that the

non-recurring nature of the first month's income is a "relevant

circumstance" that must be considered by the Secretary in

calculating benefits under § 1382(c)(2)(A). Jones, 5 F.3d at 451.

To support this conclusion, the court pointed to § 1382(c)(5),

which provides that payments received from one of the other aid

programs enumerated therein "shall be taken into account in

determining the amount of the benefit ... only for that month, and

shall not be taken into account in determining the amount of the

benefit for any other month."7 Id. The court concluded that

7
Section 1382(c)(5) provides:

Notwithstanding paragraphs (1) and (2), any income
which is paid to or on behalf of an individual in any
month pursuant to (A) a State plan approved under part
A of subchapter IV of this chapter (relating to aid to
families with dependent children), (B) section 672 of
this title (relating to foster care assistance), (C)
section 1522(c) of Title 8 (relating to assistance for
refugees), (D) section 501(a) of Public Law 96-422
(relating to assistance for Cuban and Haitian
entrants), or (E) section 13 of Title 25 (relating to
assistance furnished by the Bureau of Indian Affairs),

8
(c)(5) reflects congressional concern over double or

triple-counting non-recurring income earned in the first month of

eligibility. Id. In doing so, it reasoned that "[t]here is no

indication that Congress intended [ (c)(5) ] to be an exclusive

list of nonrecurring payments that should be deducted once." Id.

The court further held that the regulations are contrary to

the purposes underlying the SSI program and the RMA method.

According to the court, these purposes are: (1) the " "provi[sion

of] a minimally decent standard of living to destitute, blind, aged

and disabled individuals' "; and (2) " "the government's need to

prevent the dissipation of its resources through neglect, abuse or

fraud.' " Id. at 450 (quoting Lyon v. Bowen, 802 F.2d 794, 797

(5th Cir.1986)). The court emphasized the first purpose and

concluded that "[t]o be consistent with the humanitarian purpose of

the Act and ensure that claimants are able to maintain a minimum

subsistence level, the Secretary must deduct nonrecurring income

only once." Id. at 451-52.

The Secretary, on the other hand, urges us to follow the

Second Circuit's decision upholding the regulations. In Farley,

the Second Circuit held that the regulations do not violate the

plain language of the statute. 983 F.2d at 409. The court

reasoned that by leaving "relevant circumstances" undefined,

Congress delegated the responsibility for defining relevant

shall be taken into account in determining the amount
of the benefit under this subchapter of such individual
(and his eligible spouse, if any) only for that month,
and shall not be taken into account in determining the
amount of benefit for any other month.

9
circumstances to the broad discretion of the Secretary. Id. As

further support for this conclusion, the court pointed to the

permissive language in § 1382(c)(4), which provides:

[I]f the Secretary determines that reliable information is
currently available with respect to the income and other
circumstances of an individual for a month ..., the benefit
amount of such individual under this subchapter for such month
may be determined on the basis of such information.

(Emphasis added).

The court rejected the argument that § 1382(c)(5) reflects a

contrary intent. See id. In contrast to the Ninth Circuit, the

Second Circuit determined that the list contained in (c)(5) was

exclusive. Id. Thus, it reasoned, that (c)(5) does reflect a

congressional intent to consider non-recurring income as a relevant

circumstance. However, the court concluded that requiring

consideration of the non-recurring nature of income from the

enumerated sources, Congress implicitly left the decision to adjust

benefits on the basis of non-recurring income from non-enumerated

sources entirely to the Secretary's discretion. Id.

The Second Circuit further held that not only do the

regulations "comply with the text of the statute" but they also

"implement[ ] the statutory purpose." Id. While the court

recognized the dual purposes behind the statute and the RMA system,

it determined from the legislative history that "Congress was

concerned chiefly with adopting an accounting process that was

simple and would reduce the number of overpayments." Id. at 410.

The court thus concluded that the regulations' use of "information

for one month to calculate benefits for a three-month transitional

10
period" satisfied this goal of reducing paper work and bookkeeping

and thereby saving time and money. Id.

We agree with the Second Circuit's resolution of this issue.

In reviewing an agency's construction of a statute which it

administers, the court first must use "traditional tools of

statutory construction" to determine "whether Congress has directly

spoken to the precise question at issue." Chevron v. Natural

Resources Defense Council, 467 U.S. 837, 842-43 & n. 9, 104 S.Ct.

2778, 2781-82 & n. 9, 81 L.Ed.2d 694 (1984). If so, the court and

the agency "must give effect to the unambiguously expressed intent

of Congress." Id. at 842-43, 104 S.Ct. at 2781. However, "[i]f

the statute is silent or ambiguous" on the particular issue, the

court must determine "whether the agency's answer is based on a

permissible construction of the statute." Id. at 843, 104 S.Ct. at

2781.

In determining whether Congress has directly spoken to the

issue, the court may consider not only the plain meaning of the

statute, but also any pertinent legislative history. See id. at

845, 104 S.Ct. at 2783. We agree with the Second Circuit that the

intent of Congress is not made clear either in the statutory

language or in the legislative history. Congress' failure to

define "relevant circumstances" or "relevant characteristics," or

to enumerate any factors that the Secretary must consider in

determining such circumstances or characteristics, evidences an

intent to delegate that determination to the Secretary. We agree

with the Second Circuit that § 1382(c)(5) suggests that Congress

11
contemplated the problem of non-recurring income, but specifically

chose to enumerate certain types of non-recurring income that must

be considered only once, rather than create a broad rule. Because

Doyle's first-month income is not one of the types listed in

(c)(5), whether its non-recurring nature should be considered falls

squarely within the Secretary's discretion.

As to the second prong of Chevron, we conclude that the

regulations constitute a permissible construction of the statute.

Given the competing policy concerns behind that statute and the RMA

system, the language and the legislative history suggest that

Congress intended the Secretary to strike the appropriate balance

between these goals in defining "relevant circumstances" and

"relevant characteristics." Even if the regulations establish an

undesirable policy of reducing benefits below an acceptable level,

they are not an impermissible construction of the statute. The

regulations offer substantial benefits in reducing an excessive

number of overpayments and the attendant administrative expenses.

Because the Secretary's interpretation is a reasonable one, we

accept it. See id. at 843-44, 104 S.Ct. at 2782.

IV.

For the foregoing reasons, we affirm the district court's

grant of summary judgment in favor of the Secretary.

AFFIRMED.

* * * * * *

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