a year with health, education and welfare in the courts

A YEAR WITH HEALTH, EDUCATION AND WELFARE IN THE COURTSAuthor(s): Harold HarperSource: Administrative Law Review, Vol. 21, No. 1 (NOVEMBER, 1968), pp. 87-100Published by: American Bar AssociationStable URL: http://www.jstor.org/stable/40691103 .

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A YEAR WITH HEALTH, EDUCATION AND WELFARE IN THE COURTS

By

Harold Harper*

In the period under review* HEW was brought into court upon such diverse subjects as Food, Drugs and Cosmetics, Air Pollution, Education, and Social Security. During the period, only one question came before the Supreme Court, but shortly after the period reviewed the Supreme Court decided two cases, one of great importance and one of importance only to lawyers.

Food, Drugs and Cosmetics

On May 22, 1967, the Supreme Court rendered three significant decisions relating to pre-enforcement remedies against rules promulgated by the Commissioner by authority of the Secretary, under the Food, Drugs and Cosmetics Act. Abbott Laboratories v. Gardner, 387 U.S. 136; Toilet Goods Assn. v. Gardner, 387 U.S. 158; Gardnerv. Toilet Goods Assn., 387 U.S. 167.

The question presented in the three cases was whether such rules might be attacked by suits for injunction and declaratory judgment prior to their enforcement. The decisions were that under certain circumstances they might be.

The Act itself (21 U.S.C. § 371) afforded a direct right of appeal to the Court of Appeals from rules of the Commissioner in seven instances, but these were limited specifically as to subject matter,1 and did not covery any of the rules before the court. The Government contended that these instances permitting direct appeal justified the inference that if Congress had intended judicial review in other instances it would have said so.

The Administrative Procedure Act also (Title 5, U.S.C. §§ 702, 704) provided for a review by the District Court, but only from final agency action. This would not warrant interference with the enforcement of a regulation by injunction or declaratory judgment. Of course, there was

*Adapted from a Sub-Committee Report to the Committee on Judicial Review, Section of Administrative Law, covering the period March 1, 1967 through February 29, 1968.

'U.S.C. 341, common name for food; 343 (j) special dietary foods; 344 (a) contaminated food; 346 poisonous substance; 351 (b) deteriorated drugs; 352 (d) narcotics; (h) drug liable to deterioration.

87



88 SECTION OF ADMINISTRATIVE LAW

also always the right of appeal from the District Court to the Court of Appeals in cases of seizure and forfeiture, Government injunction, and criminal conviction.

The Court held that, notwithstanding these remedies, a rule might be attacked by suit for injunction or for declaratory judgment in the district court even before the Government attempted enforcement. The court imposed two requisites to the prosecution of such suits. "In determining whether a challenge to an administrative regulation is ripe for review a two-fold inquiry must be made; first to determine whether the issues tendered are appropriate for judicial resolution, and second to assess the hardship to the parties if judicial relief is denied at that stage." (387 U.S. 162).

In Abbott Laboratories v. Gardner, 387 U.S. 136, the attack was on a regulation which required the manufacturer, in labeling and advertising, to print the established name of the drug, in letters at least half the size of the proprietary name, "every time" the proprietary name was employed.

The Court held that the issue tendered was ripe for judicial determination, and that the impact on the manufacturer was sufficiently severe, since (p. 152):

"As the District Court found on the basis of uncontested allegations, 'Either they must comply with the every time requirement and incur the costs of changing over their promotional material and labeling or they must follow their present course and risk prosecution.' 228 F.Supp. 855,861."

Accordingly, the decision of the Third Circuit Court of Appeals (352 F.2d 286, 1 1/1/65), which had dismissed the case for lack of jurisdiction, was reversed.

Likewise, in Gardner v. Toilet Goods Assn., 387 U.S. 167, affirming the Second Circuit (360 F.2d 677, 4/13/66), the Court held a cosmetic regulation purporting to be interpretive of the Color Additive Amendment (21 U.S.C. § 376), was properly attacked by a suit for injunction and declaratory judgment. The rule was attacked because it included in the articles to be listed and certified, not only the color additives, but also the diluent, and the finished product. The Court held the issue tendered "ripe" for judicial resolution, and the burden of compliance sufficient to entertain the suit.

On the other hand, in Toilet Goods Assn. v. Gardner, affirming the Second Circuit (360 F.2d 677, 4/13/66), the Court held that the District Court should have declined jurisdiction on discretionary grounds. The Regulations there attacked provided that the Commissioner might under



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certain circumstances order inspection of certain facilities and data, and that further certification of additives might be refused to those who declined to permit inspection until compliance.

The Court held that there could be no question but that this regulation, promulgated in a formal manner after notice and evaluation of submitted comments, is a final agency action and was the type of legal issue with which the courts had occasionally dealt without requiring a specific attempt at enforcement. However, the plight of the manufacturer was not such as to require immediate relief. The Commissioner might not ask an inspection, and if it was refused the Commissioner might not refuse certification. The manufacturer aggrieved could have review after enforcement under § 10 of the Administrative Procedure Act (5 U.S.C.

§ 704). Accordingly, present relief was properly refused. Upon the principal question whether in a suitable case pre-enforcement

relief might be granted on a suit for injunction or declaratory judgment in the District Court, the Supreme Court stood 7 to 2. Mr. Justice Fortas in a dissent, in which Mr. Justice Clark concurred, believed that the Court's approach "improperly and unwisely gives individual federal district judges a roving commission to halt the regulatory process, and to do so on the basis of abstractions and generalities instead of concrete fact situations, and that it impermissibly broadens the license of the courts to intervene in administrative action by means of threshold suit for injunction rather than by the method provided by statute." (387 U.S. p. 174).

Mr. Justice Clark spoke feelingly of his unfortunate experience in purchasing drugs and said 'The labels involved here mislead the public by passing off ordinary medicines as fancy cures." (387 U.S. p. 201)

Whether or not these Supreme Court decisions are regarded as revolutionary, it is obvious that they will have effect far beyond the atmosphere of the drugstore or the beauty parlor.

The way having been cleared by the decision in the Color Additive case, the District Court proceeded to consider the merits in Toilet Goods Association v. Gardner, 278 F.Supp. 786 (Tyler, D.J., 1/8/68). It held that the Color Additive Amendment, 21 U.S.C. § 376, was limited in its requirement of listing and certification to the color additive itself, that is, the dye or pigment effecting the color change. It did not justify a regulation purporting to be made under the section which would require pre-market clearance of the diluent, or of the cosmetic as a finished product, nor a regulation which failed to recognize the statutory exemption granted all coal-tar hair dyes for which the statutory warning (21 U.S.C. § 36 1)2 is given. The court granted the plaintiffs summary

2 A warning against possible skin irritations and against dyeing eye lashes or eye brows.




judgment, which presumably was for a declaratory judgment and the pre- enforcement injunction.

The mechanics of rule making by the Secretary came under review in Pharmaceutical Manufacturers Association v. Gardner, 381 F.2d 271 (D.C. Cir. 6/16/67). The Secretary first publishes a proposal giving all persons an opportunity to present their views orally or in writing. Thereafter he may by order act upon such proposal. Within thirty (30) days after the order is made, those adversely affected may file objections. Provisions follow for a hearing; the order is not to take effect, except in emergencies, prior to the ninetieth (90) day after its publication. In case the validity of the order is questioned, the person adversely affected may petition the Court of Appeals.

Pharmaceutical Manufacturers Association sought an injunction to halt the rule-making process. The rules concerned "Food For Special Dietary Uses" and "Dietary Supplements and Vitamin and Mineral- Fortified Foods". The merits of the rules are not discussed. The plaintiffs claimed that what had been done was invalid because the Secretary before promulgating the order (and giving opportunity to object) had omitted the publication of the preliminary proposal for general comment, a process known as "sifting". It seems that back in 1962 the Commissioner had

proposed and publicized a regulation dealing with dietary supplements and mineral-fortified foods which varied in some respects from the rule as finally passed in 1966. The Court was of opinion that this earlier publication might be regarded as satisfying 21 U.S.C. § 371, but that in any event, since plaintiffs would have the right to petition the Court of Appeals for review when the order became effective, the District Court had not erred in denying injunctive relief. The case cannot be considered to stand for any proposition except the ancient one that injunction is an extraordinary remedy and may be withheld in the discretion of the court. The following comment is interesting (p. 282):

"One need not feel that the record reveals a model of sure-footed administrative performance in order to conclude that appellants do not presently require judicial protection against the continuance of this administrative proceeding. The courts sit to assure substantial fairness, not to discipline agencies for awkwardness in their staff work."

Rutherford v. American Medical Assn., et al., 379 F.2d 641 (7 Cir. 6/23/67) adhered to the rule that the administrative remedy must first be exhausted. It was a bizarre class suit by persons alleging that they had been or could be benefited by the cancer drug Krebiozen, but that the



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American Medical Society, the Food & Drug Administration and others were engaged in an unlawful conspiracy to prevent the distribution of the drug in interstate commerce. The court noted Krebiozen had not been approved, exempted or denied approval under 21 U.S.C. § 355, and no application was pending before the F.D. A. It was argued that the drug was non-toxic, but the court pointed out "toxicity is not the sole criterion to be applied by the F.D. A. to new drugs. Effectiveness of the drug as well as its safety and the safety of its manufacturing procedures is a relevant criterion." Plaintiff contended that Krebiozen was not a drug, but a biological product not falling within the scope of the Food, Drug and Cosmetic Act.3 The court said if that were so it would have to meet the more stringent licensing provisions of the Public Health Service Act4, which it had not done. Accordingly, it was held that the District Court had properly dismissed plaintiffs' suit. The court noted that it had not considered questions regarding plaintiffs' standing to sue, venue, or the propriety of a class action under Rule 23, F.R.Civ.P.

Sugarman v. Forbragd, 267 F.Supp. 817 (N.D. Cal. 5/1 1/67, Zirpoli, D.J.) was a petition for a writ of mandatory injunction to require the Secretary of HE&W to approve the petitioner's application for permission to sell for use in blended or soluble coffee a cargo of coffee beans that had been damaged by fire, smoke and sea water. The Secretary, after a hearing of which the petitioner had notice, had ruled that the coffee beans were "adulterated". The court held that Agency hearings under 21 U.S.C. § 381 (a) are informal, not subject to review under the Administrative Procedure Act, and because the matter is committed to the discretion of the Administrative Agency there is no available judicial review. Note that this case was decided before the Supreme Court decisions in Toilet Goods and Abbott Laboratories.

Attention is called to United States v. Articles o j Drug (Quinaglute), 268 F. Supp. 245 (E.D. Mo. 2/25/67, Harper, D.J.); United States v. Articles of Drug (Quick-O-ver), 274 F. Supp. 443 (D. Md. 10/27/67, Thomsen, D.J.) and AMP Inc. v. Gardner, 275 F.Supp. 410 (SDNY 9/29/67, Tenney, D.J.)

These were all seizure cases and, therefore, not strictly within this survey. They are interesting, however, as to the necessity for, and the deference paid to Agency determination.

In the first case, a heart remedy, Judge Harper confined himself to the question whether "Quinaglute" was subject to clearance by the F & D

321 U.S.C. Chap. 9. 442 U.S.C. §262.




Administration as a new drug. He held that "Quinaglute" did not have sufficient commercial or professional standing on October 10, 1962, the date of the amendment by Public Law 87-781, to come within the "grandfather clause" of that amendment, and that, since there was no consensus of professional opinion now in its favor, it was subject to clearance as a new drug; as it had not been cleared by the Commissioner, it had been properly seized.

In Quick-O-ver, four variations of the drug had been seized as misbranded for failure to secure clearance from the Secretary of HE&W as a new drug. The court sustained the condemnation of numbers 1, 2 and 3 but not of 4, from which ephedrine and phenacetin had been removed and replaced by caffein and acetaminothen. Since No. 4 was only prescribed for a "hangover", and the Government did not contend it was dangerous, it was not subject to seizure.

In AMP, the court considered a device to prevent bleeding and held that, although mechanical, it was a new drug and subject to seizure for failure to obtain clearance as such.

Air Pollution

The operation of a chicken processing company was claimed to be polluting the air in Maryland and, across the state line, in Delaware. In Bishop Processing Co. v. Gardner, 275 F.Supp. 780 (D. Md. 11/15/67, Thomsen, D.J.), the processor petitioned for a declaratory judgment, and for judicial review under the Federal Administrative Procedure Act. Jurisdiction was claimed not only under that Act but also under 28 U.S.C. § 133 1.5 A public hearing had been held under the provisions of the Clean Air Act, 42 U.S.C. § 1857 et seq. and the Secretary had made a cease and desist order. The petition for review was dismissed. The court said that the Secretary has no power himself to impose sanctions; what he may do is to request the Attorney General to bring action for the abatement of the pollution. In such an action, the court pointed out, the petitioner might interpose such defenses as it had. The court agreed with the Secretary that the case was not yet ripe for judicial decision under Abbott Laboratories v. Gardner, 387 U.S. 136, supra.

Education

The decisions in which Health, Education and Welfare was involved during the period surveyed were in the field of civil rights and of religious freedom.

5A case arising under the Constitution and Laws (federal question).



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Civil Rights Alabama sued in the District Court and obtained from it an injunction

against the Secretary HEW from enforcing an order terminating payment of approximately 100 million dollars in Federal funds to the Alabama Department of Pensions & Security. The Secretary appealed. Alabama then petitioned the Court of Appeals for direct review of the Secretary's order, and its motion to consolidate the appeal and the petition was granted. The case is Gardner v. State of Alabama, Department of Pensions & Security, 385 F.2d 804 (5 Cir. 8/29/67).

The controversy arose from the refusal of the Alabama Department to make a statement satisfactory to the Secretary of proposed compliance with a regulation of the Secretary, 45 C.F.R. Part 80, § 80.1-80.13, issued pursuant to § 602 of the Civil Rights Act, 42 Ü.S.C. § 2000d-l, and § 601, 42 U.S.C. § 2000d, which forbade discrimination under any program receiving Federal financial assistance. The first question was one of jurisdiction, Alabama contending that jurisdiction to review the action of the Secretary was in the District Court. Five titles of the Social Security Act (42 U.S.C. §§301, et seq.) were involved. As to four of these (Titles I, I V, X and XI V) a petition to review the action of the Secretary in rejecting a state plan lay to the Court of Appeals (42 U.S.C. § 1316). In the case of Title V, "Child Welfare Services," the act was silent on review. The Court held that the proceedings on Title V should be assimilated, and that it alone had the right to review in all the titles affected. It pointed out that the Supreme Court in Abbott Laboratories and Toilet Goods had not held that the District Court must exercise a reviewing function in all cases.

On the merits, the court held the Secretary's regulation and the requirement of a statement in effectuating it were valid. True, Alabama, if it signed the statement, would have difficulty in withholding funds from private institutions which discriminated, but the statement was interpreted to mean that the State authority would do the best it could. The District Court was reversed.

In Lee v. Macon County Board of Education, 270 F. Supp. 859 (M.D. Ala. 7/28/67) a three-judge court had ordered the desegregation of all schools in the State. The Secretary had terminated or deferred Federal financial assistance to the several school systems. The Court directed the Secretary to rescind such action, holding that each of such school systems was in all respects eligible to receive Federal financial assistance under the 1964 Civil Rights Act, 42 U.S.C. § 2000d. "There can be no administrative supervision or review of a judicial decree" (p. 866). The Secretary's findings should have been brought to the attention of the Court. The Court, however, recognized the right and duty of the




Department to examine the performance on the part of the school systems of the desegregation order, and to supervise and audit the systems for the purpose of determining if the school systems are effectively implementing the order of the Court.

Religious Freedom

The First Amendment (freedom of religion) was invoked in Protestants, et ai v. United States, 111 F.Supp. 473 (S.D. Ohio 2/20/67, Weinman, D.J.). "Protestants and other Americans united for separation of church and state" brought suit to declare Title II, Elementary and Secondary School Act of 1965, 20 U.S.C. §§ 821, 827 unconstitutional, to enjoin the payment of Federal funds to parochial schools, and to require a return of the amounts already paid. The action was dismissed solely on the ground that plaintiffs were without standing to sue.6

Subsequent to the period which this article surveys, and on June 10, 1968, the Supreme Court decided the important case of Flast v. Cohen, Secretary of HEW.7 Individual plaintiffs, alleging that they were federal income taxpayers, sought to enjoin the implementation by the Department of 20 U.S.C. §§205,241 e, 241 f, 821,823 (a) (3) (B) so far as they set up a program for financial assistance to private schools, particularly with reference to the supplying of textbooks and other instructional material "for the use of children and teachers in public and private elementary and secondary schools [which would have included parochial schools]." The expenditure of public funds to carry out this program was claimed to be in contravention of the Establishment of Religion and Free Exercise clauses of the First Amendment.

Plaintiffs were met at the threshhold with the proposition that merely as federal taxpayers, without any further interest in the matter, they were without standing to sue. In Frothingham v. Mellon, 262 U.S. 447 (1923), the Supreme Court had ruled that a federal taxpayer is without standing to challenge the constitutionality of a federal statute. That ruling had stood for forty-five years "an impenetrable barrier to suits against Acts of Congress brought by individuals who can assert only the interest of federal taxpayers."

6If the plaintiffs had alleged they were Federal taxpayers the decision that they were without standing to sue would have been overruled by Flast v. Cohen, 36 LW4601 (U.S. Sup. 6/10/68). However, they expressly disavowed suing as taxpayers in order to avoid Frothingham v. Mellon, 262 U.S. 447 (1923); they chose to rely solely upon a claimed infringement of their religious freedom.

7392 U.S. 83.



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In Flast v. Cohen, the Court held that these taxpayers had the requisite standing to sue, and reversed a three-judge court, with the effect of sending the case back to that court for a determination on the merits. In so doing, the Court did not purport to overrule Frothingham entirely, holding that it still applied where the litigant was seeking merely to save the Government money or to rearrange fiscal responsibility between the Federal Government and a state. In order that taxpayers may have such standing to sue: "first the challenged expenditure must form part of a federal spending program, and not merely be 'incidental' to a regulatory program; and second, the constitutional provision under which plaintiff claims must be 4a specific limitation, upon Congress' spending powers."8

Mr. Justice Harlan in dissent assailed these criteria, pointing out that the Establishment and Free Exercise clauses contained no more restraint on spending money than did other provisions of the Constitution with which a Federal spending program might be said to conflict. There were three concurring opinions. Fortas, J. would confine the decision to an attack on legislation said to contravene the Establishment and Free Exercise clauses. So would Stewart, J. Douglas, J., on the other hand, considered that it would not be possible to limit the effect of the decision, and that the Court should be "rid of Frothingham here and now."

Social Security

The Secretary of HEW was most often brought into court on questions arising under the Social Security Act.9 In the period surveyed, the Courts of Appeal considered 51 of these cases. In 28, the position of the Secretary was sustained. In the District Courts during the same period there were 49 social security cases. Of these the Secretary was sustained in 27, and in one partially so. There is no room in this article to discuss each case in detail.

Disability Most of the cases deal with disability benefits. All of the cases give

recognition to the familiar rule that the Secretary must be sustained if his findings are supported by substantial evidence.

A good definition of "substantial evidence" is found in Stewart v. Gardner, 270 F.Supp. 92, 93 (S.D. W.Va. 7/18/66), affirmed on opinion below 379 F.2d 554 (4 Cir. 3/21/67):

8A concise statement of the Court's decision taken from Harlan, J. in dissent, 392 U.S. p. 121.

^U.S.C.Chap.T.




"In construing the term 'substantial evidence,' the courts have held it to be more than a scintilla, but less than a preponderance. * * * It is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion, Celebrezze v. Bolas, 316 F.2d 498 (8 Cir. 1963), and it must be based on the record as a whole."

The courts insist that the hearing is not de novo. "Only when the law permits it may we use our writ to assuage the hurts that come unbidden to our fellow human beings." O'Sullivan, C. J. in Lane v. Gardner, 374 F.2d 612, 618 (6 Cir. 3/10/67).

However, a reading of a number of the cases both in the Courts of Appeal and in the District Court creates the impression the court considers the facts quite fully and, if convinced that the claimant ought to have a disability benefit, remands the case to the Secretary with the direction to grant it. A corollary to the "substantial evidence" rule has evolved. If the claimant shows that he is unable to continue at his customary work, the burden is shifted to the Secretary to show that the claimant can be employed suitably to his education and training, and "that the work which the claimant is capable of performing exists within the geographic area in which he can reasonably be expected to market his labor." Fields v. Gardner, 378 F.2d 4, 5 (4 Cir. 5/29/67). See also Bran- don v. Gardner 3ΊΊ F.2d 488 (4 Cir. 4/19/67); Boyd v. Gardner 377 F.2d 718 (4 Cir. 4/4/67). Moreover, the fact that a claimant attempts to work does not bar his receipt of the benefit. Lejtwich v. Gardner, 377 F.2d 287 (4 Cir. 5/1/67).

The District Court cases are principally concerned with an evaluation of the physical and mental condition of the claimant with respect to his ability to earn a living. The Courts have rejected the too strict requirements of the Secretary, insisting that the Trial Examiner make his own determination and not accept without question the ipse dixit of experts. For example, the Court directed that a disability benefit be granted where the claimant, according to the doctors, was unreasonably refusing to submit to a spine-fusion operation. Morse v. Gardner, 272 F.Supp. 618 (E.D. La. 8/10/67).

The courts have gone so far as to disregard the restrictions placed by regulation upon the granting of disability benefits. On a reversal and remand, the Secretary has been directed to make a factual determination of the truth and reliability of claimant's claim of pain, and to disregard Regulations 404.1510, which directs that pain be disregarded unless it can be traced to a medical cause. Homm v. Gardner, 267 F.Supp. 926 (W.D.Mo. 5/8/67). The Secretary has also been told to disregard Regu-



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lations 404. 15 19(c) which rules out a "personality disorder" as a disability. Underwood v. Gardner 267 F.Supp. 802 (W.D. Mo. 5/4/67).

One or two points of law attract interest. A determination of disability by the Veterans Administration is disregarded. Reeves v. Gardner, 269 F.Supp. 635 (W.D. Ark. 6/16/67). Likewise, the discharge from the Army for medical cause is not recognized. Echols v. Gardner, 276 F.Supp. 499 (S.D.Tex. 5/19/67).

Widows

Claims to widowhood required the attention of the courts. In Cain v. Secretary, 3ΊΊ F.2d 55 (4 Cir. 4/21/67), the court reversed

the District Court which had annulled the Secretary's determination. It was held that the Secretary had properly applied state law in determining that a decree of divorce, being barred by laches from attack under South Carolina law, could not be disregarded in the awarding of a benefit.

In another case, Dolan v. Celebrezze, 381 F.2d 231 (2 Cir. 1/18/67), the decedent had been married twice. The claimant of the first marriage was held entitled to the benefit, overruling a determination of the Secretary based upon the presumption of the validity of the second marriage.

Gardner v. Oldham, 381 F.2d 804 (5 Cir. 8/15/67) was also a case in which two women competed for the widow's benefit. The Secretary had been sustained by the District Court in determining that Dorothy, who had the older claim, was a common-law wife. The Court of Appeals approved this determination, but remanded the case so that Phyllis, who claimed under a later ceremonial marriage, might have her day in court.

Children

Children present problems. The disabled person had supported the child but there had been no formal adoption until more than 24 months (the statutory limit) after the disability began. The court held that as Tennessee did not recognize "equitable adoption" as a source of inheritance, no benefit could be paid to the child under 42 U.S.C. § 402(d). Bray v. Gardner, 268 F.Supp. 328 (E.D. Tenn. 3/20/67).

In Perez v. Gardner, 277 F.Supp. 985 (E.D. Wise. 12/30/67), social security benefits had been denied to three children born and living in Puerto Rico, the putative father having been domiciled in New York at the time of his death. The court found that on the question of inheritance New York would have yielded to Puerto Rico; that by the Puerto Rico Constitution no chidren are illegitimate; all may inherit freely from the father or mother. Accordingly, the order was vacated, and the benefit payments directed for the three. A fourth child was unlucky in having been born in Wisconsin.




In Dowell v. Gardner, 386 F.2d 809 (6 Cir. 1967), the Secretary ruled that the insured, who had deserted his children, could not upon the evidence be determined to be dead. The District Court had annulled, but was reversed and the Secretary sustained, since "Congress has not provided for benefits to children of an insured parent who has deserted them but only for children of an insured parent who is dead."

The case of illegitimate children was considered in Cruz v. Gardner, 375 F.2d 453 (7 Cir. 3/30/67). The District Court was reversed and the decision of the Secretary upheld under 42 U.S.C. § 416(h)(2)(A) which made the test whether the children would inherit personal property by state law. Under Indiana law these children would not inherit since (1) paternity had not been established by law during the father's lifetime, and (2) the putative father had not married the mother and acknowledged the children as his own. An ex parte determination of an Indiana Court was disregarded. However, § 339 P.L. 89-97 (July 30, 1965) amended the law so as to include a child where the insured father "is shown by evidence satisfactory to the Secretary to have been the father of the applicant and such insured individual was living with or contributed to the support of the applicant at the time such insured individual died." Since the children in this case met this requirement the case ended happily for them, but the benefits were to be allowed only from the date of a new application which had been filed following the amendment.

An interesting case is Rasmussen v. Gardner, 374 F.2d 589 (10 Cir. 3/9/67). A husband applied for lump-sum death benefits for a deceased wife and for benefits on behalf of her three children based on the earning record of his deceased wife. The Secretary had found that the wife was not insured at the time of her death. It appeared that the husband in reporting for self-employment insurance had allocated to himself all of the earnings of the hotel which he and his wife had jointly owned and operated. If a proper division had been made, the wife would have been fully covered. It was held that the wife's social security account should be restated so as to show half of the self-employment earnings by the wife, and the Secretary was directed to grant benefits accordingly.

A strange case is Brooks v. Gardner, 276 F.Supp. 20 (W.D. Va. 11/16/67), where the Secretary had denied mother's benefits. She had been divorced and her insured husband died in jail. The court sustained the Secretary as to payments claimed prior to the 1965 Amendment, since he had not been supporting her. The court, however, directed benefit under U.S.C. § 402(g)(l)(F)(i)(III), which permitted the benefit if at the time of the death of the insured there was in effect a court order obligating him to provide substantial contribution to the support of his former wife. The



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State Court had made an order suspending the application for alimony payments until after the insured's discharge. The District Court accepted this as equivalent, and granted the mother's benefit commencing at the time of the Amendment. It thus sustained the Secretary as to claims prior to the Amendment and reversed him as to subsequent payments.

Old Age

Questions are presented as to the right of the Secretary to deduct earnings from the old age benefit. In C/ow v. Gardner, 270 F.Supp. 231 (E.D. Wise. 6/30/67), the Secretary had determined that there should be deducted from claimant's benefits his earnings as manager of an apartment house. Sixteen months after the determination, the Secretary had been asked to open the case and receive evidence that the real manager was the wife. The court refused to find "an abuse of discretion on the Secretary's part." "Even though this Court, considering the matter de novo, may reach a different conclusion * * * "

Procedure

The path to judicial review, an action in the District Court under 42 U.S.C. 405(g), is well trod, and there is no reported case in which the claimant has been turned back for any defect in his proceeding for a review. The courts do insist upon an exhaustion of administrative remedies and, in the case of social security, this means the taking of an appeal from the Hearing Examiner to the Council of Appeals. It is stated as a "general proposition that an administrative decision on a prior application for benefits is res judicata to all subsequent applications involving the same issues, in the absence of a timely appeal." Weatherred v. The Secretary, 275 F.Supp. 69, 72 (E.D. Okla. 11/1/67). The matter lies res judicata with the Trial Examiner's decision if there is no timely request for a hearing by the Council of Appeals; Id. Where there is a remand to the Secretary by the District Court the departmental hearing is de novo. Rush ν. Gardner, 273 F.Supp. 753 (N.D. Ga. 8/5/67).

Counsel Fees The subject of counsel fees has also received attention. It is error for the

District Court to grant compensation for work before the administrative tribunal. It may only do so for work in the courts. This involves two applications - one to the District Court and one to the Secretary - in each case "for the aliquot part of his total fee." Gardner v. Menendez, 373 F.2d 488 (1 Cir. 3/2/67). Twenty-five per cent is the maximum. 42 U.S.C. §406(b)(l,2).




The rule was thought to be that the fee is limited to the primary benefit secured and not to be measured by incidental wife and children benefits also. Hopkins v. Gardner, 374 F.2d 726 (7 Cir. 3/15/67). However, on April 2, 1968, the Supreme Court reversed Hopkins and held that the fee may be applied to the benefits obtained for the insured and for his family. Hopkins v. Cohen, 390 U.S. 530 (4/2/68).

There can, of course, be no fee unless there is a benefit, but the District Court may fix the fee (in this case it was twenty per cent) to be paid from benefits resulting from a remand to the Secretary for further consideration. Conner v. Gardner, 381 F.2d 497 (4 Cir. 7/25/67). An attorney-client agreement will be considered, but is not conclusive. When a claimant has appealed from the determination of his claim, the District Court loses jurisdiction to fix his counsel's fee. Robinson v. Gardner, 374 F.2d 949 (4 Cir. 3/7/67).

Conclusion

The Department of Health, Education and Welfare covers a wide field. The litigation which it generates deals with such diverse subjects that no general statement is possible with regard to it. The high peak of the period under review was the decision of the Supreme Court in Toilet Goods and Abbott Laboratories which places in the hands of persons subject to departmental or bureau rules the weapons of injunction and declaratory judgment to prevent injury from an invalid rule before enforcement of the rule has even been attempted.

A twin high peak is Flast v. Cohen, making an opening in the bar which has heretofore excluded all federal taxpayer actions attacking laws or procedures alleged to be unconstitutional. A forecast may be hazarded that subsequent decisions will demolish that bar entirely.



a year with health, education and welfare in the courts

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