O'Kane, James v. Apfel, Kenneth S. ( 2000 )


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  • In the
    United States Court of Appeals
    For the Seventh Circuit
    No. 99-2572
    James O’Kane,
    Plaintiff-Appellant,
    v.
    Kenneth S. Apfel, Commissioner
    of Social Security,
    Defendant-Appellee.
    Appeal from the United States District Court
    for the Northern District of Illinois, Eastern Division.
    No. 97 CV 6589--Blanche M. Manning, Judge.
    Argued March 27, 2000--Decided August 23, 2000
    Before Flaum, Chief Judge, and Posner and Williams,
    Circuit Judges.
    Williams, Circuit Judge. In 1993, James O’Kane
    applied for disability benefits. The Social
    Security Administration denied his application.
    After unsuccessfully appealing his claims
    administratively, O’Kane filed suit against
    Kenneth S. Apfel, the Commissioner of Social
    Security ("Commissioner"), asking the district
    court to reverse the decision of the
    Administrative Law Judge who denied O’Kane’s
    benefits claims. Both parties moved for summary
    judgment. The district court denied O’Kane’s
    motion for summary judgment and granted the
    Commissioner’s cross-motion for summary judgment.
    O’Kane now appeals, and we affirm.
    I
    On February 17, 1993, O’Kane applied for
    disability benefits under the Social Security Act
    ("Act"), 42 U.S.C. sec.sec. 416(i), 423, 1382, on
    the basis of his alcoholism. On May 6, 1993, the
    Social Security Agency ("Agency") denied O’Kane’s
    application for benefits. For the next four
    years, O’Kane continued to pursue his claims
    through administrative channels. At each step,
    his claims were denied.
    Meanwhile, Congress amended the Social Security
    Act in 1996 to prohibit the payment of social
    security disability benefits based on an
    applicant’s alcoholism or drug addiction. See
    Contract with America Advancement Act of 1996,
    Pub. L. 104-121, 
    110 Stat. 847
    . The Act now
    provides that "[a]n individual shall not be
    considered to be disabled for purposes of this
    subchapter if alcoholism or drug addiction would
    (but for this subchapter) be a contributing
    factor material to the Commissioner’s
    determination that the individual is disabled."
    42 U.S.C. sec. 423(d)(2)(C).
    On September 18, 1997, after exhausting his
    administrative remedies, O’Kane timely filed a
    complaint in the United States District Court for
    the Northern District of Illinois. The parties
    filed cross motions for summary judgment. O’Kane
    moved for summary judgment on the ground that the
    decision to deny him benefits was not supported
    by substantial evidence. The Commissioner, in his
    motion for summary judgment, argued solely that
    the 1996 amendments to the Act ("Amendments")
    barred O’Kane’s 1993 benefits application.
    The district court ruled in the Commissioner’s
    favor. The court found that the Amendments apply
    to claims for benefits pending in the Agency as
    of March 29, 1996 and bar O’Kane, as a matter of
    law, from receiving disability benefits. The
    district court’s decision to grant the
    Commissioner’s motion for summary judgment
    presents a pure question of law, which we review
    de novo, accepting as true all of O’Kane’s
    evidence and drawing in his favor all reasonable
    inferences. See Reed v. McBride, 
    178 F.3d 849
    ,
    852 (7th Cir. 1999).
    II
    The dispute in this case centers around the
    Amendments’ effective date provision. The
    Amendments
    apply to any individual who applies for, or whose
    claim is finally adjudicated by the Commissioner
    of Social Security with respect to, benefits
    under [this subchapter] based on disability on or
    after [March 29, 1996], and, in the case of any
    individual who has applied for, and whose claim
    has been finally adjudicated by the Commissioner
    with respect to, such benefits before [March 29,
    1996], such amendments shall apply only with
    respect to such benefits for months beginning on
    or after January 1, 1997.
    42 U.S.C. sec. 405 (note) (emphasis added).
    O’Kane argues that "on or after March 29, 1996"
    applies to the date of an applicant’s disability.
    Under this "disability interpretation," O’Kane
    would be entitled to benefits based on his
    alcoholism from the time he applied for them,/1
    February 17, 1993, until March 29, 1996. The
    Commissioner argues, on the other hand, that "on
    or after March 29, 1996" modifies the clause "who
    applies for" and the clause "whose claim is
    finally adjudicated by the Commissioner." Under
    this "adjudication interpretation," O’Kane would
    not be entitled to any benefits because his
    claims were not finally adjudicated prior to
    March 29, 1996.
    The Third and Eighth Circuits have adopted the
    adjudication interpretation. See Adams v. Apfel,
    
    149 F.3d 844
    , 846 (8th Cir. 1998); Torres v.
    Chater, 
    125 F.3d 166
    , 171 (3d Cir. 1997)./2
    Before today, we had not decided whether to adopt
    either the adjudication or the disability
    interpretation. See Maggard v. Apfel, 
    167 F.3d 376
    , 379 (7th Cir. 1999) (electing not to decide
    between the disability and adjudication
    interpretations). Today, we adopt the
    adjudication interpretation.
    A.   Plain Language of Statute
    The plain language of the Amendments supports
    the adjudication interpretation. When
    interpreting congressional statutes, we first
    look at the plain language of the statute because
    that is the best way to determine congressional
    intent. See Reves v. Ernst & Young, 
    507 U.S. 170
    ,
    177 (1993); United States v. Hayward, 
    6 F.3d 1241
    , 1245 (7th Cir. 1993) (holding that "when
    the language of a statute is clear and
    unambiguous, no need exists for the court to
    examine the legislative history, and the court
    must give effect to the plain meaning of the
    statute").
    The disability interpretation muddles the second
    half of the effective date provision./3 We agree
    with the Third Circuit that concluded:
    when the disability interpretation is applied to
    the second category, the fallacy of [the
    disability interpretation] becomes apparent. The
    point is illustrated by repeating below the
    language that applies to the second category and
    inserting the modifying language from the first
    category in brackets. It reads: "[A]nd in the
    case of any individual . . . whose claim has been
    finally adjudicated by the Commissioner with
    respect to, such benefits [based on disability]
    before [March 29, 1996], such amendments shall
    apply only with respect to such benefits [based
    on disability before March 29, 1996] for months
    beginning on or after January 1, 1997."
    Torres, 
    125 F.3d at 171
    .
    O’Kane argues that there is no reason to insert
    "based on disability" into the second half of
    this effective date provision. He claims that the
    second category simply carves out a limited
    exception to the first category where eligibility
    is pegged to the date of disability. He contends
    that the exception creates a limited grace period
    for those individuals whose claims were finally
    adjudicated prior to March 29, 1996--they are
    eligible to receive benefits until January 1,
    1997. Finally, O’Kane asserts that the date of
    disability is not relevant to this exception.
    We are not convinced by O’Kane’s argument. Both
    clauses of the effective date provision are
    parallel in structure. Apart from Congress’ use
    of "such" in the second clause to avoid
    repetition, both clauses have precisely the same
    grammatical and textual structure. Consequently,
    if O’Kane is going to argue that the effective
    date modifies disability in the first clause,
    then the date must also modify disability in the
    second clause. The result makes little, if any,
    sense. For example, it is impossible to determine
    whether benefits are due for alcoholism
    disabilities between March 29, 1996 and January
    1, 1997. Consequently, we find that the
    adjudication interpretation is the clearer
    approach. Accord Adams, 
    149 F.3d at 846
    ; Torres,
    
    125 F.3d at 171
    .
    The disability interpretation would make the
    "finally adjudicated" language superfluous.
    Courts should interpret statutes so as to "give
    effect, if possible, to every clause and word."
    In re Lifschultz Fast Freight Corp., 
    63 F.3d 621
    ,
    628 (7th Cir. 1995). If the date of disability
    governs, then the date of final adjudication is
    irrelevant. O’Kane argues that the term "finally
    adjudicated" makes clear that the Amendments do
    not simply apply to those who apply for
    post-March 1996 benefits but also to those who
    have already been declared eligible to receive
    post-March 1996 benefits. O’Kane’s
    interpretation, however, would create more
    superfluous language. If the disability
    interpretation is correct, Congress could have
    simply stated that the Amendments apply to
    individuals who are claiming disability benefits
    under this subchapter for claims after March 29,
    1996. See Torres, 
    125 F.3d at 170-71
     (finding
    that "if an individual files a claim based upon
    a post-enactment disability, then the date of
    final adjudication would be irrelevant because
    the claim would have been void ab initio").
    O’Kane counters that the adjudication
    interpretation renders superfluous at least two
    phrases of the effective date provision. First,
    the adjudication interpretation renders
    superfluous the phrase "who applies for." Under
    the adjudication interpretation, the availability
    of benefits depends upon the date a claim is
    adjudicated. Consequently, O’Kane argues that the
    date on which one applies is irrelevant. While
    O’Kane may be technically correct, the phrase
    "who applies for" is useful for differentiating
    the statute’s two clauses. For claimants who have
    filed but not had their claims finally
    adjudicated, the Amendments are effective on
    March 29, 1996. The Amendments are not effective
    until January 1, 1997, however, for a filed claim
    that has been finally adjudicated.
    Second, O’Kane claims that the adjudication
    interpretation renders the phrase "based on
    disability" superfluous. The adjudication
    interpretation precludes benefits to any
    individual "whose claim is finally adjudicated by
    the Commissioner . . . on or after March 29,
    1996." This interpretation reads the same with or
    without the phrase "based on disability." This
    phrase is useful, however, because the relevant
    subchapter of the Act includes not only
    disability benefits but also other types of
    Social Security benefits--e.g., benefits for old
    age, survivors, and the blind.
    Finally, O’Kane argues that the last antecedent
    rule of statutory construction supports the
    disability interpretation. This rule states "that
    where one phrase of a statute modifies another,
    the modifying phrase applies only to the phrase
    immediately preceding it." Northwest Forest
    Resource Council v. Glickman, 
    82 F.3d 825
    , 832
    (9th Cir. 1996); accord Elliot Coal Mining Co. v.
    United States Dep’t of Labor, 
    17 F.3d 616
    , 629
    (3d Cir. 1994); see also Norman J. Singer,
    Sutherland on Statutory Construction sec. 47.33
    (4th ed. 1985) (stating that "qualifying words
    and phrases, where no contrary intention appears,
    refer solely to the last antecedent"). Under this
    rule, "on or after March 29, 1996" modifies
    disability because "based on disability"
    immediately precedes "on or after March 29,
    1996." While O’Kane correctly applies the last
    antecedent rule, the result is nonsensical. If
    the effective date modifies disability, the
    sentence is missing a verb--e.g., disability
    "occurred" after March 29, 1996. The
    Commissioner’s approach is simpler--we need only
    read a comma into the statute, instead of
    guessing which verb Congress intended. For all of
    the above reasons, we find that the adjudication
    interpretation accords more coherence to the
    effective date provision than the disability
    interpretation.
    B.   Legislative History
    Although both sides argue that legislative
    history supports their interpretation of the
    effective date provision, the history is not
    conclusive. Although we find that the statute’s
    language supports the adjudication
    interpretation, we will address both parties’
    arguments.
    The only report that describes the purpose of
    the effective date provision states:
    Effective Date. Generally, changes apply to
    benefits for months beginning on or after the
    date of enactment. However, an individual
    entitled to benefits before the month of
    enactment would continue to be eligible for
    benefits until January 1, 1997.
    H.R. Rep. No. 104-379, para. 7 (1995) (available
    at 
    1995 WL 717402
    ). Both sides argue that this
    report supports their interpretation. However,
    the phrase "changes apply to benefits" does not
    conclusively answer whether it is "benefits
    finally adjudicated after March 29, 1996" or
    "benefits for disabilities after March 29, 1996."
    The Commissioner also argues that subsequent
    amendments enacted by Congress support the
    adjudication interpretation and explicitly reject
    the disability interpretation. These amendments
    state that
    an individual’s claim . . ., which has been
    denied in whole before the date of the enactment
    of this Act, may not be considered to be finally
    adjudicated before such date if, on or after such
    date--
    (i) there is pending a request for either
    administrative or judicial review with respect to
    such claim, or
    (ii) there is pending, with respect to such
    claim, a readjudication by the Commissioner of
    Social Security pursuant to relief in a class
    action or implementation by the Commissioner of
    a court remand order.
    Ticket to Work and Work Incentives Improvement
    Act of 1999, Pub. L. No. 106-70 sec. 401, 
    113 Stat. 1860
    , 1906 (codified as amended at 42
    U.S.C. sec. 405 (note) (1999) [hereinafter
    Technical Amendments])./4
    Contrary to the Commissioner’s argument, this
    language simply clarifies when a claim is
    "finally adjudicated." The phrase "finally
    adjudicated" is important under both the
    adjudication interpretation and the disability
    interpretation. It identifies those individuals
    who are eligible for a grace period--until
    January 1, 1997--regardless of the date of their
    disabilities.
    The Commissioner also argues that the Technical
    Amendments were enacted to counter Teitelbaum v.
    Chater, 
    949 F. Supp. 1206
     (E.D. Pa. 1996), which
    had adopted the disability interpretation. It is
    just as likely, however, that the Technical
    Amendments were promulgated to address several
    court rulings that held that a claim was "finally
    adjudicated" when a claimant had exhausted
    administrative remedies. See, e.g., Newton v.
    Chater, 
    92 F.3d 688
    , 695 n.3 (8th Cir. 1996);
    Santos v. Chater, 
    942 F. Supp. 57
    , 63-64 (D.
    Mass. 1996). Consequently, the Technical
    Amendments arguably abrogated these rulings, and
    not Teitelbaum, by explicitly defining "finally
    adjudicated" to exclude claims for which there is
    a pending request for judicial review.
    C.   Retroactive Effect
    O’Kane also contends that the adjudication
    interpretation creates an impermissibly
    retroactive effect. Absent clear congressional
    intent, courts should presume that legislation
    does not apply retroactively. See Landgraf v. USI
    Film Prods., 
    511 U.S. 244
    , 265, 272-73, 285-86
    (1994). When Congress clearly intends to preclude
    benefits for applications pending at the time of
    a statute’s enactment, we must follow Congress’
    wishes. See 
    id. at 280
    . Moreover, O’Kane is an
    applicant; he has received no benefits and none
    has been awarded. While he is entitled to
    procedural due process, "[t]he procedural
    component of the Due Process Clause does not
    ’impose a constitutional limitation on the power
    of Congress to make substantive changes in the
    law of entitlement to public benefits.’" Atkins
    v. Parker, 
    472 U.S. 115
    , 129 (1984) (quoting
    Richardson v. Belcher, 
    404 U.S. 78
    , 81 (1971)).
    Consequently, O’Kane has not acquired a
    substantive property right in his potential
    benefits based upon pre-Amendment law.
    Under the adjudication interpretation, the
    Amendments would have a retroactive effect. Such
    an interpretation changes the legal treatment of
    a disability that arose prior to the date of
    enactment. Thus, the adjudication interpretation
    disentitles O’Kane to benefits that had accrued
    prior to March 29, 1996. Although O’Kane
    correctly states that the disability
    interpretation avoids this retroactive result, we
    find that Congress clearly intended to deny
    benefits to claims pending on or after March 29,
    1996 and that the adjudication interpretation is
    clearly permissible. See Landgraf, 
    511 U.S. at 280
    .
    D.    Fairness and Justice
    Finally, O’Kane argues that the disability
    interpretation avoids unfairness and injustice.
    When construing statutes, courts should avoid
    "absurd and unjust consequences." Grebe v.
    Wheeler Catering Co. (In re Andrews), 
    172 F.2d 996
    , 999 (7th Cir. 1949). "[S]tatutes should be
    construed in the most beneficial way the language
    will permit to prevent absurdity, hardship, or
    injustice." 
    Id.
     O’Kane claims that the
    adjudication interpretation denies him alcoholism
    benefits because of a prejudicial delay caused by
    an error on the part of the administrative court.
    While this may be true, Congress deliberately
    precluded benefits to pending claims. "[D]rawing
    lines is the business of Congress and inevitably
    individuals on the wrong side of the division do
    not fare well. The result is unfortunate for
    those adversely affected, but arbitrariness is
    often unavoidable." Torres, 
    125 F.3d at 171
    .
    III
    For the foregoing reasons, the opinion of the
    district court is Affirmed.
    /1 See 20 C.F.R. sec. 416.335 (SSI benefits are
    payable as of the application date).
    /2 The Ninth Circuit will probably adopt the
    adjudication interpretation as well. See Hiblar
    v. Apfel, 
    205 F.3d 1351
     (9th Cir. 1999) (table)
    (text available at 
    1999 WL 1253218
    ).
    /3 The second half of the effective date provision
    states that "in the case of any individual who
    has applied for, and whose claim has been finally
    adjudicated by the Commissioner with respect to,
    such benefits before [March 29, 1996], such
    amendments shall apply only with respect to such
    benefits for months beginning on or after January
    1, 1997."
    /4 The Technical Amendments noted that "The
    amendments made by this section [amending this
    note] shall take effect as if included in the
    enactment of section 105 of the Contract with
    America Advancement Act of 1996 (Public Law 104-
    121; 
    110 Stat. 852
     et seq.)."