Richardson v. Belcher
404 U.S. 78 (1971)

Annotate this Case

U.S. Supreme Court

Richardson v. Belcher, 404 U.S. 78 (1971)

Richardson v. Belcher

No. 70-53

Argued October 13, 1971

Decided November 22, 1971

404 U.S. 78




Section 224 of the Social Security Act, which requires a reduction in social security benefits to reflect workmen's compensation payments, has a rational basis and doe not violate the Due Process Clause of the Fifth Amendment.

317 F.Supp. 1294, reversed.

STEWART, J., delivered the opinion of the Court, in which BURGER, C.J., and WHITE and BLACKMUN, JJ., joined. DOUGLAS, J., filed a dissenting opinion, post, p. 404 U. S. 84. MARSHALL, J., filed a dissenting opinion, in which BRENNAN, J., joined, post, p. 404 U. S. 88.

MR. JUSTICE STEWART delivered the opinion of the Court.

The appellee was granted social security disability benefits effective in October 1968, in the amount of $329.70 per month for himself and his family. In January, 1969, the federal payment was reduced to $225.30

Page 404 U. S. 79

monthly under the "offset" provision of Section 224 of the Social Security Act, 79 Stat. 406, 42 U.S.C. § 424a, [Footnote 1] upon a finding that the appellee was receiving workmen's compensation benefits from the State of West Virginia in the amount of $203.60 per month. After exhausting his administrative remedies, the appellee brought this action challenging the reduction of payments required by § 224 on the ground that the statutory provision deprived him of the due process of law guaranteed

Page 404 U. S. 80

by the Fifth Amendment. The District Judge, disagreeing with other courts that have considered the question, [Footnote 2] held the statute unconstitutional. 317 F.Supp. 1294. The Secretary of the Department of Health, Education, and Welfare appealed directly to this Court under 28 U.S.C. § 1252. [Footnote 3] We noted probable jurisdiction, 401 U.S. 935, and the case was briefed and argued on the merits. We now reverse the judgment of the District Court.

In our last consideration of a challenge to the constitutionality of a classification created under the Social Security Act, we held that

"a person covered by the Act has not such a right in benefit payments as would make every defeasance of 'accrued' interests violative of the Due Process Clause of the Fifth Amendment."

Flemming v. Nestor,363 U. S. 603, 363 U. S. 611. The fact that social security benefits are financed in part by taxes on an employee's wages does not, in itself, limit the power of Congress to fix the levels of benefits under the Act or the conditions upon which they may be paid. Nor does an expectation of public benefits confer a contractual right to receive the expected amounts. Our decision in Goldberg v. Kelly,397 U. S. 254, upon which

Page 404 U. S. 81

the District Court relied, held that, as a matter of procedural due process, the interest of a welfare recipient in the continued payment of benefits is sufficiently fundamental to prohibit the termination of those benefits without a prior evidentiary hearing. But there is no controversy over procedure in the present case, and the analogy drawn in Goldberg between social welfare and "property," 397 U.S. at 397 U. S. 262 n. 8, cannot be stretched to impose a constitutional limitation on the power of Congress to make substantive changes in the law of entitlement to public benefits.

To characterize an Act of Congress as conferring a "public benefit" does not, of course, immunize it from scrutiny under the Fifth Amendment. We have held that

"[t]he interest of a covered employee under the [Social Security] Act is of sufficient substance to fall within the protection from arbitrary governmental action afforded by the Due Process Clause."

Flemming v. Nestor, supra, at 363 U. S. 611. The appellee argues that the classification embodied in § 224 is arbitrary because it discriminates between those disabled employees who receive workmen's compensation and those who receive compensation from private insurance or from tort claim awards. We cannot say that this difference in treatment is constitutionally invalid.

A statutory classification in the area of social welfare is consistent with the Equal Protection Clause of the Fourteenth Amendment if it is "rationally based and free from invidious discrimination." Dandridge v. Williams,397 U. S. 471, 397 U. S. 487. While the present case, involving as it does a federal statute, does not directly implicate the Fourteenth Amendment's Equal Protection Clause, a classification that meets the test articulated in Dandridge is perforce consistent with the due process requirement of the Fifth Amendment. Cf. Bolling v. Sharpe,347 U. S. 497, 347 U. S. 499.

Page 404 U. S. 82

To find a rational basis for the classification created by § 224, we need go no further than the reasoning of Congress as reflected in the legislative history. The predecessor of § 224, enacted in 1956 along with the amendments first establishing the federal disability insurance program, required a full offset of state or federal [Footnote 4] workmen's compensation payments against benefits payable under federal disability insurance. 70 Stat. 816. It is self-evident that the offset reflected a judgment by Congress that the workmen's compensation and disability insurance programs in certain instances served a common purpose, and that the workmen's compensation programs should take precedence in the area of overlap. The provision was repealed in 1958, 72 Stat. 1025, because Congress believed that

"the danger that duplication of disability benefits might produce undesirable results [was] not of sufficient importance to justify reduction of the social security disability benefits."

H.R.Rep. No. 2288, 85th Cong., 2d Sess., 13.

In response to renewed criticism of the overlap between the workmen's compensation and the social security disability insurance programs, Congress reexamined the problem in 1965. Data submitted to the legislative committees showed that, in 35 of the 50 States, a typical worker injured in the course of his employment and eligible for both state and federal benefits received compensation for his disability in excess of his take-home pay

Page 404 U. S. 83

prior to the disability. Hearings on H.R. 6675 before the Senate Committee on Finance, 89th Cong., 1st Sess., pt. 2, p. 904. It was strongly urged that this situation reduced the incentive of the worker to return to the job, and impeded the rehabilitative efforts of the state programs. Furthermore, it was anticipated that a perpetuation of the duplication in benefits might lead to the erosion of the workmen's compensation programs. [Footnote 5] The legislative response was § 224, which, by limiting total state and federal benefits to 80% of the employee's average earnings prior to the disability, reduced the duplication inherent in the programs and, at the same time, allowed a supplement to workmen's compensation where the state payments were inadequate.

The District Court apparently assumed that the only basis for the classification established by § 224 lay in the characterization of workmen's compensation as a "public benefit." Because the state program was financed by employer contributions, rather than by taxes, the court held that the "public" characterization afforded no rational basis to distinguish workmen's compensation from private insurance. We agree that a statutory discrimination between two like classes cannot be rationalized by assigning them different labels, but neither can two unlike classes be made indistinguishable by attaching to them a common label. The original purpose of state workmen's compensation laws was to satisfy a need inadequately

Page 404 U. S. 84

met by private insurance or tort claim awards. Congress could rationally conclude that this need should continue to be met primarily by the States, and that a federal program that began to duplicate the efforts of the States might lead to the gradual weakening or atrophy of the state programs.

We have no occasion, within our limited function under the Constitution, to consider whether the legitimate purposes of Congress might have been better served by applying the same offset to recipients of private insurance, or to judge for ourselves whether the apprehensions of Congress were justified by the facts. If the goals sought are legitimate, and the classification adopted is rationally related to the achievement of those goals, then the action of Congress is not so arbitrary as to violate the Due Process Clause of the Fifth Amendment.

The judgment is


[Footnote 1]

Section 224 provides, in pertinent part:

"(a) If for any month prior to the month in which an individual attains the age of 62 --"

"(1) such individual is entitled to benefits under section 423 of this title, and"

"(2) such individual is entitled for such month, under a workmen's compensation law or plan of the United States or a State, to periodic benefits for a total or partial disability (whether or not permanent), and the Secretary has, in a prior month, received notice of such entitlement for such month,"

"the total of his benefits under section 423 of this title for such month and of any benefits under section 402 of this title for such month based on his wages and self employment income shall be reduced (but not below zero) by the amount by which the sum of --"

"(3) such total of benefits under sections 423 and 402 of this title for such month, and"

"(4) such periodic benefits payable (and actually paid) for such month to such individual under the workmen's compensation law or plan,"

"exceeds the higher of --"

"(5) 80 percentum of his 'average current earnings,'. . ."

"* * * *"

"For purposes of clause (5), an individual's average current earnings means the larger of (A) the average monthly wage used for purposes of computing his benefits under section 423 of this title, or (b) one-sixtieth of the total of his wages and self employment income (computed without regard to the limitations specified in sections 409(a) and 411(b)(1) of this title) for the five consecutive calendar years after 1950 for which such wages and self employment income were highest. . . ."

42 U.S.C. § 424a(a).

[Footnote 2]

E.g., Gambill v. Finch, 309 F.Supp. 1 (ED Tenn.1970); Lofty v. Cohen, 325 F.Supp. 285, aff'd sub nom. Lofty v. Richardson, 440 F.2d 1144 (CA6 1971); Bartley v. Finch, 311 F.Supp. 876 (ED Ky.1970); Bailey v. Finch, 312 F.Supp. 918 (ND Miss.1970); Benjamin v. Finch, Civ. No. 32816, ED Mich. May 26, 1970, aff'd sub nom. Benjamin v. Richardson, No. 20,714, CA6, Apr. 29, 1971; Gooch v. Finch, Civ. No. 6840, SD Ohio, July 13, 1970; Rodatz v. Finch, Civ. No. 69-170, ED Ill., Sept. 4, 1970, aff'd sub nom. Rodatz v. Richardson (CA7 1971).

[Footnote 3]

"Any party may appeal to the Supreme Court from an interlocutory or final judgment, decree or order of any court of the United States . . holding an Act of Congress unconstitutional in any civil action, suit, or proceeding to which the United States or any of its agencies, or any officer or employee thereof, as such officer or employee, is a party."

[Footnote 4]

The primary federal workmen's compensation programs are the Longshoremen's and Harbor Workers' Compensation Act, 44 Stat. 1424, 33 U.S.C. § 901 et seq., applicable to employees in the District of Columbia and in maritime-related occupations, and the Federal Employees' Compensation Act, 80 Stat. 532, 5 U.S.C. § 8101 et seq., applicable to employees of the Federal Government. The overwhelming majority of workers in the United States are covered by state, rather than federal, programs, and thus we may refer generally to workmen's compensation as a program of the States.

[Footnote 5]

The Senate Committee on Finance, with which the 1965 amendment originated, took note of

"the concern that has been expressed by many witnesses in the hearings about the payment of disability benefits concurrently with benefits payable under State workmen's compensation programs."

S.Rep. No. 404, 89th Cong., 1st Sess., pt. 1, p. 100. Testimony concerning the anticipated effects of duplication upon the future of the state programs appears in Hearings on H.R. 6675 before the Senate Committee on Finance, 89th Cong., 1st Sess., pt. 1, pp. 252, 259, 366, pt. 2, pp. 540, 738-740, 892-897, 949-954, 990.

MR. JUSTICE DOUGLAS, dissenting.

I would affirm the judgment of the District Court. The statutory classification upheld today is not "rationally based and free from invidious discrimination." Dandridge v. Williams,397 U. S. 471, 397 U. S. 487. It is, in my view, violative of the Federal Government's obligation under the Fifth Amendment's Due Process Clause to guarantee to all citizens equal protection of the laws. Bolling v. Sharpe,347 U. S. 497.

Eligibility for social security disability benefits is premised upon a worker's having attained "insured" status in the course of an employment "covered" by the Act. It is undisputed that Raymond Belcher, and through him his wife and two minor children, had so qualified in 1968 when he broke his neck while employed by the Pocationtas Fuel Co. in Lynco, West Virginia. Indeed, his application for such benefits has been approved, and the benefits authorized and paid.

Page 404 U. S. 85

Section 224 of the Social Security Act, however, requires that these benefits be substantially reduced solely because Belcher also receives state workmen's compensation payments. It is said that the duplication of benefits impedes rehabilitation, and may lead to a cutting back of state workmen's compensation programs. Ante at 404 U. S. 83.

The rehabilitation goal does not explain the special treatment given to workmen's compensation beneficiaries. There are many other important programs, both public and private, which contain provisions for disability payments affecting a substantial portion of the workforce, and which do not require an offset under the Social Security Act.

Thus, had Belcher's supplemental disability payment come from a Veterans' Administration program, [Footnote 2/1] a Civil Service Retirement Act [Footnote 2/2] or Railroad Retirement Act [Footnote 2/3]

Page 404 U. S. 86

annuity, a private disability insurance policy, [Footnote 2/4] a self-insurer, [Footnote 2/5] a voluntary wage continuation plan, or the proceeds in an action in tort arising from the disabling injury, there would have been no reduction in his social security benefits. The offset under § 224 applies only to federal social security disability beneficiaries also receiving workmen's compensation payments, a group which in 1965 totaled only 1.4% of all social security disability beneficiaries. [Footnote 2/6]

Page 404 U. S. 87

Yet, of the 849,000 disabled workers who in 1965 received social security disability benefits, [Footnote 2/7] over fourteen percent also received overlapping veteran's benefits, [Footnote 2/8] and almost fourteen percent received benefits from private insurance maintained under the auspices of an employer or a union. [Footnote 2/9] Congress is, of course, not required to address itself to all aspects of a social problem in its legislation. It must, however, justify the distinctions it draws between people otherwise similarly situated. Rehabilitation incentives are not a rational justification for the discrimination worked by § 224. [Footnote 2/10] If it is at all rational to argue that duplicating payments "impede rehabilitation," the argument must apply to all such payments regardless of their source. The nature of the supplemental benefit has no relation to a worker's incentive to return to work.

Nor is § 224 designed to stem a possible "erosion" of state workmen's compensation plans. As MR. JUSTICE MARSHALL points out, post at 404 U. S. 94, § 224 itself provides that there shall be no reduction of federal social security benefits with respect to those state workmen's compensation plans which themselves offset federal social security

Page 404 U. S. 88

benefits against state payments. Thus, the statute encourages States concerned about overcompensation of disabled workers to cut back on their own programs. But the "rational basis" discerned by the majority requires the statute to have precisely the opposite purpose. I would affirm the judgment of the District Court.

[Footnote 2/1]

In fiscal 1970, over 2,000,000 veterans received compensation for service-connected disabilities under statutes administered by the Veterans' Administration. Statistical Abstract of the United States 264 (1971) (hereinafter cited as Statistical Abstract). See generally 38 U.S.C. § 301 et seq. Benefits are also provided to certain veterans for non service-connected disabilities. See generally 38 U.S.C. § 501 et seq. In 1967, total disability benefits from all Veterans' Administration programs amounted to $3,197,906,000. Berkowitz & Johnson, Towards An Economics of Disability: The Magnitude and Structure of Transfer and Medical Costs, 5 J. Human Resources 271, 282 (1970) (hereinafter cited as Economics of Disability). Raymond Belcher indicated on his application for social security disability benefits that he served for three years during World War II. Transcript of Hearings before Appeals Council 37. The record is silent, however, as to his potential eligibility for non service-connected veteran's benefits.

[Footnote 2/2]

Employees covered by the Civil Service Retirement Act, 5 U.S.C. § 8301 et seq., are entitled to a disability annuity after five years of civilian service. Id. § 8337. In fiscal 1970, there were 184,000 disabled annuitants. Statistical Abstract 284.

[Footnote 2/3]

Title 45 U.S.C. § 228a et seq. provides disability benefits for railroad workers with 10 or more years of covered service. Covered employment under this Act and the Civil Service Retirement Act is excluded from coverage under the Social Security Act. If, however, a worker's employment history separately qualifies him for dual coverage, supplemental payments under neither of these Acts results in an offset of social security disability payments. HEW publication, Social Security Programs in the United States 46, 108 (1968) (hereinafter cited as Programs).

[Footnote 2/4]

Participation in West Virginia's state workmen's compensation fund is optional with the employer. W.Va.Code Ann. §§ 23-2-1, 23-2-8 (1970). An employer who declines to participate, however, must provide equivalent benefits through private insurance or as a self-insurer. Id. at § 23-2-9. Had the Pocationtas Fuel Co. elected to pay premiums to a private carrier rather than to the state fund -- a decision over which Mr. Belcher presumably had no control other than that which might be exerted through the collective bargaining process -- the private insurance benefits would not have been offset under § 224. Over 26,000,000 employees are covered by some sort of private insurance program. Programs 115. In 1967, disability benefits from private insurance amounted to 1.3 billion dollars. Economics of Disability 278. This figure alone exceeded the total of all benefits paid by workmen's compensation programs for that year. Ibid.

[Footnote 2/5]

Were Mr. Belcher's employer large enough, it might have determined to become a self-insurer with respect to employee disability claims. Disability payments from self-insurers were required by state law to be at least equivalent to benefits available through the state fund, n. 3, supra, and they would also not be offset under § 224.

In 1969, employers who were covered by private carriers and who were self-insurers paid a combined total of $2,008,000,000 in benefits. State and federal workmen's compensation funds paid only

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