Hagans v. Commissioner of Social Security, 11-2526; Third Circuit, opinion by Chagares, U.S.C.J.; filed September 14, 2012. Before Circuit Judges Fuenes and Chagares, and Judge Pogue, Chief Judge, United States Court of International Trade, sitting by designation. On Appeal from the District Court [Sat below: Judge Hochberg] D.D.S. No. 01-8-7711 [33 pp.]

Mark Hagans appeals the cessation of his Social Security disability insurance benefits following a determination by the Social Security Administration (“SSA”) that he was no longer disabled. Hagans argues the District Court erred by reviewing his disability status as of Sept. 1, 2004 — the day on which, according to the SSA, Hagans’s disability ceased. This contention requires a decision as to what level of deference, if any, should be afforded to the SSA’s Acquiescence Ruling interpreting the cessation provision of the Social Security Act, as to the time of the SSA’s initial disability determination. Hagans further argues that substantial evidence does not support the SSA’s conclusion that he was not fully disabled as of Sept. 1, 2004.

Held: Giving deference to the SSA’s interpretation of § 423(f) in its Acquiescence Ruling, Hagans’s condition was correctly evaluated as of the date on which the agency first found that Hagans’s eligibility for disability benefits ceased.

The primary issue in this appeal involves Hagans’s assertion that the District Court erred by finding that the relevant date for determining whether he continued to be disabled was the date on which the SSA asserts that his disability had ceased — Sept. 1, 2004 — rather than the date of the ALJ’s hearing or the date of the ALJ’s ruling (Sept. 22, 2008, or February 26, 2009, respectively). Use of one of these later dates would bolster Hagans’s claim for disability benefits because he had advanced into a different age category by the time of the ALJ’s hearing.

The SSA contends that review of Hagans’s disability should be confined to the date on which the SSA first found that Hagans was no longer disabled — that is, Sept. 1, 2004. The provision that must be interpreted to resolve this dispute is 42 U.S.C. § 423(f). In support of its position, the SSA asserts that the circuit panel should follow AR 92-2(6), the Acquiescence Ruling it issued interpreting § 423(f) as requiring the evaluation of a benefits recipient’s disability status as of the time that the SSA first determined that cessation of benefits was proper.

Having first determined that § 423(f) is ambiguous, the circuit panel turns to the issue of whether Chevron deference is proper in this case, or whether a lesser degree of deference under Skidmore instead provides the appropriate framework for reviewing the SSA’s interpretation in AR 92-2(6).

The circuit panel concludes that Skidmore deference provides the proper lens through which to view AR 92-2(6). AR 92-2(6) contains the SSA’s interpretation of § 423(f) and represents the considered judgment of the SSA in determining how to manage a highly detailed and complex statutory scheme. Congress has imbued the SSA with the authority to enact regulations with legal effect, but the SSA elected not to do so and instead formulated its policy through the informal mechanism of an Acquiescence Ruling, a type of ruling that is nonbinding except within the agency. It is not entirely clear from the Supreme Court’s precedent whether the lack of the “force of law” is always fatal to the application of Chevron, but in any event, the lack of legal effect of this ruling, combined with the absence of formal notice-and-comment rulemaking and the failure of the SSA to describe its reasoning, cannot be counterbalanced by the SSA’s institutional desire for uniformity and ease of administration.

Under Skidmore‘s “sliding-scale” test, the circuit panel finds a relatively high level of deference is warranted. The SSA is an agency to which Congress has given “exceptionally broad authority” to manage a complex, nationwide administrative system. The need for uniformity in such an organization cannot be doubted. Moreover, administering the Social Security Act is the central purpose of the SSA, and the SSA has developed a massive body of expertise during the 56 years of the disability insurance program’s existence. Although the text of the Acquiescence Ruling does not explain the reasoning behind the SSA’s adoption of its interpretation, the SSA appears to have consistently applied this policy during the past 20 years and its reasons for creating a policy which sets a fixed date for review of a cessation determination are not difficult to discern.

Applying an appropriately high level of deference under Skidmore, the circuit panel finds the SSA’s interpretation of§ 423(f) sufficiently persuasive to defer to it. The interpretation contained in AR 92-2(6) represents the considered judgment of the agency and is in accordance with the SSA’s statutory mandate to set rules for the governance of the disability insurance program.

If the evidence is sufficient to show that Hagans was not disabled as of Sept. 1, 2004, he would not be entitled to benefits as of that date. Otherwise, a fully recovered disability benefits recipient who later relapsed could receive benefits for several years during which he was not actually disabled and was capable of work. Moreover, the ALJ’s role in a Social Security cessation proceeding is to review the SSA’s determination that a benefits recipient was not eligible for benefits as of a certain date, not to determine whether he might have become eligible at some later time.

The circuit panel affirms the district court’s finding that the SSA correctly evaluated Hagans’s condition as of the date on which the agency first found that Hagans’s eligibility for disability benefits ceased. Further, the determination that Hagans ceased to be disabled on September 1, 2004 was supported by substantial evidence on the record.

For Appellant — Joel M. Solow (argued) (Freeman & Bass). For Appellee — Joanne Jackson, Sathya Oum (argued), Social Security Administration Office of General Counsel.