Administrative Review Process; Incorporation-by-Reference of Oral Findings of Fact and Rationale in Wholly Favorable Written Decisions

AGENCY:

Social Security Administration (SSA).

ACTION:

Final rules with request for comments.

SUMMARY:

We are revising our regulations to provide an alternative procedure that an Administrative Law Judge (ALJ) may use, in certain situations, to satisfy the existing requirement for issuing a written decision that gives the findings of fact and the reasons for the decision. If an ALJ enters a wholly favorable, oral decision into the record of a hearing, the ALJ, in certain situations, may fulfill the existing requirement for issuing a written decision that gives the findings and the reasons for the decision by issuing a written decision that incorporates by reference the findings of fact and the reasons stated orally at the hearing. Under the regulations as revised, this incorporation-by-reference procedure may not be used if the ALJ determines that the oral findings and reasons should be changed in the written decision. Where the ALJ determines that a change is required, the ALJ must issue a written decision that sets forth the findings of fact and the reasons for the decision under the existing procedure, without relying on the incorporation-by-reference procedure.

DATES:

These rules are effective October 20, 2004. To be sure your comments are considered, we must receive them no later than December 20, 2004.

ADDRESSES:

You may give us your comments by: using our Internet site facility (i.e., Social Security Online) at http://policy.ssa.gov/pnpublic.nsf/LawsRegs or the Federal eRulemaking Portal at http://www.regulations.gov;; e-mail to regulations@ssa.gov; telefax to (410) 966-2830; or letter to the Commissioner of Social Security, P.O. Box 17703, Baltimore, MD 21235-7703. You may also deliver them to the Office of Regulations, Social Security Administration, 100 Altmeyer Building, 6401 Security Boulevard, Baltimore, MD 21235-6401 between 8 a.m. and 4:30 p.m. on regular business days. Comments are posted on our Internet site, or you may inspect them on regular business days by making arrangements with the contact person shown in this preamble.

Electronic Version: The electronic file of this document is available on the date of publication in the Federal Register on the Internet site for the Government Printing Office, http://www.gpoaccess.gov/fr/index.html. It is also available on our Internet site facility at http://policy.ssa.gov/pnpublic.nsf/LawsRegs.

FOR FURTHER INFORMATION CONTACT:

Robert J. Augustine, Social Insurance Specialist, Office of Regulations, 100 Altmeyer Building, Social Security Administration, 6401 Security Boulevard, Baltimore, MD 21235-6401, (410) 965-0020 or TTY 410-966-5609, for information about this notice. For information on eligibility or filing for benefits, call our national toll-free number, 1-800-772-1213 or TTY 1-800-325-0778, or visit our Internet site, Social Security Online, at http://www.socialsecurity.gov.

SUPPLEMENTARY INFORMATION:

Background

We decide claims for Social Security benefits under title II of the Social Security Act (the Act) and for Supplemental Security Income (SSI) benefits under title XVI of the Act in an administrative review process that generally consists of four steps. Generally, individuals who are not satisfied with our initial determination may request reconsideration. Individuals who are not satisfied with our reconsidered determination may request a hearing, which is held by an ALJ in the Office of Hearings and Appeals (OHA). Individuals who are not satisfied with an ALJ's decision may request review by our Appeals Council. Individuals who have completed these steps and are not satisfied with our final decision may request judicial review of the decision in the Federal courts.

On September 25, 2003, at a hearing before the House Ways and Means Subcommittee on Social Security, we outlined a long-term approach for achieving improvements in the overall disability determination process, especially for the purpose of reducing the time required to process disability claims. (A description of the approach is available at http://mwww.ba.ssa.gov/pressoffice/pr/DDPImprovement-pr.htm.)

To improve the process in the interim, we have implemented a number of initiatives that could be undertaken in the short-term. At the ALJ hearing level, the short-term initiatives we have implemented include—

• Involving ALJs in early screening of claims to identify those claims in which a wholly favorable decision can be made on-the-record without a hearing;
• Developing a new, electronically generated short-form format for use in wholly favorable decisions;
• Allowing ALJs to announce at the hearing wholly favorable, oral decisions that are followed by written decisions; and
• Expanding the use of technology in OHA, including the use of video teleconferencing, speech recognition software, and digital recording of hearings.

Our existing regulations generally give an ALJ broad discretion in determining how hearings are to be conducted and do not preclude the ALJ from entering a wholly favorable, oral decision into the record at the close of the hearing (see 20 CFR 404.929, 404.944, 404.950, 416.1429, 416.1444, and 416.1450). When we implemented the oral decision initiative in 2002, we gave our ALJs discretion to issue oral decisions when they concluded, upon full inquiry into the issues at the hearing, that a wholly favorable decision should be issued. This initiative contemplated that following the hearing, the ALJ would create and issue a short-form written decision to fulfill the requirements of 20 CFR 404.953 and 416.1453, which require issuance of a written decision that “gives the findings of fact and the reasons for the decision.”

To facilitate greater use of the oral decision procedure when its use is warranted, we are amending our regulations to authorize ALJs to issue wholly favorable, written decisions that incorporate by reference the findings of fact and reasons for the decisions that were orally stated by the ALJ at the hearing. Such written decisions will satisfy the existing regulatory requirement that an ALJ issue a written decision that “gives the findings of fact and the reasons for the decision.”

Under these final rules with request for comments, the wholly favorable written decision issued subsequent to the hearing may incorporate the oral findings and rationale by reference only if the ALJ determines that it is not necessary to change the oral findings or rationale in any way. If the ALJ determines that the oral findings or rationale should be changed, the written decision may not incorporate the orally stated findings and rationale by reference. The ALJ must issue a written decision that sets forth the findings of fact and the reasons for the decision under the existing procedures.

We believe that the changes made by these rules will facilitate use of the oral decision procedure by eliminating the duplicative work that is involved in ALJs repeating the oral findings and reasons in the written decision. We expect that these rules will increase the efficiency with which the oral decision procedure may be used and will reduce the time required to issue wholly favorable decisions.

Explanation of Changes

We are amending §§ 404.953 and 416.1453 to provide that if an ALJ enters a wholly favorable, oral decision into the record of a hearing, the ALJ may fulfill the existing requirement for issuing a written decision that gives the findings of fact and the reasons for the decision by issuing a written decision that incorporates by reference the findings of fact and the reasons stated orally at the hearing. As noted above, the ALJ may use this procedure only if the ALJ does not determine that a change in the oral findings or reasons is required.

These final rules specify that, where the ALJ determines that a change in the oral findings or reasons stated at the hearing is required, the ALJ must issue a written decision that sets forth the findings of fact and the reasons for the decision under our existing procedures for issuing written decisions. We are precluding use of the incorporation-by-reference procedure in these instances because it could be confusing for claimants and for our personnel who must subsequently effectuate or review the ALJ's decision.

When the circumstances for using the incorporation-by-reference procedure are present, the ALJ is not required by these rules to rely on that procedure to give the findings of fact and the reasons for his or her decision. The ALJ retains the discretion in these circumstances to issue a decision in the short-form or full-length format. Our intent is to provide ALJs with a range of useful options for issuing wholly favorable decisions. Under these final rules, an ALJ who makes a wholly favorable oral decision at the hearing is required to include in the record, as an exhibit entered into the record at the hearing, a checksheet that sets forth key data, findings of fact, and narrative rationale for the decision. Preparation of the checksheet will aid the ALJ in determining if a wholly favorable decision is warranted. When the ALJ decides not to state an oral decision, the checksheet will constitute a working paper of the ALJ and will not be entered into the record. The checksheet will assist our staff in preparing a decision when an oral decision is stated but the incorporation-by-reference procedure is not used. The checksheet will also provide information needed by our personnel who implement or evaluate decisions that rely on the incorporation-by-reference procedure.

As revised by these final rules, §§ 404.953 and 416.1453 specify that the incorporation-by-reference procedure will be used only in categories of cases that we identify in advance as suitable for its use. To begin with, we plan to apply this procedure, which requires use of a specialized checksheet and changes in our notice procedures, only in initial adult disability claims under title II and title XVI of the Act (excluding disabled widow/widowers and disabled adult child cases under title II).

The revised regulations further specify that when we use the incorporation-by-reference procedure in a decision, we will provide the party or parties to the hearing a record of the oral decision upon written request. The parties will be advised of their right to request a record of the oral decision in the notice of the decision. We may provide the record in the form of a typed transcript or a tape recording, a compact disc of a digital recording, or eventually an electronically propagated digital recording. We believe this procedure will help to ensure that the notice of decision is clear and easy to understand.

In implementing these final rules, we will issue guidance instructing ALJs to explain to the parties, when announcing an oral decision, that the incorporation-by-reference procedure will not be used if the ALJ determines that the oral findings and reasons for the decision require change or if the ALJ decides that the procedure should not be used for any other reason. The ALJ will also explain that if the incorporation-by-reference procedure is not used, the written decision will set forth the findings of fact and the reasons for the decision in writing using our existing procedures and discuss any changes in the findings and reasons as stated at the hearing. The ALJ will further explain to the parties that they will be given an opportunity to comment on any possible changes that would make the written decision that is to be issued less than wholly favorable.

Our implementing instructions will also provide that the written decision issued by an ALJ when the incorporation-by reference procedure is used shall be brief and shall be issued as an integral part of the notice of decision that we issue. Where the incorporation-by-reference procedure is used, the notice of decision will not attach a separate written decision (as all notices of decisions issued by ALJs currently do).

Clarity of the Final Rules

Executive Order 12866, as amended by Executive Order 13258, requires each agency to write all rules in plain language. In addition to your substantive comments on these rules, we invite your comments on how to make the rules easier to understand. For example:

• Have we organized the material to suit your needs?
• Are the requirements in the rules clearly stated?
• Do the rules contain technical language or jargon that isn't clear?
• Would a different format (grouping and order of sections, use of headings, paragraphing) make the rules easier to understand?
• Would more (but shorter) sections be better?
• What else could we do to make the rules easier to understand?
• Could we improve clarity by adding tables, lists, or diagrams?

Regulatory Procedures

Pursuant to section 702(a)(5)of the Social Security Act, 42 U.S.C. 902(a)(5), we follow the Administrative Procedure Act (APA) rulemaking procedures specified in 5 U.S.C. 553 in the development of our regulations. The APA provides exceptions to its notice and public comment procedures when an agency finds that there is good cause for dispensing with such procedures on the basis that they are impracticable, unnecessary, or contrary to the public interest. We have determined that, under 5 U.S.C. 553(b)(B), good cause exists for dispensing with the notice and comment procedures in this case. Good cause exists because these rules only modify the procedures we use to issue wholly favorable decisions and do not change the substantive requirements that such decisions must satisfy. Therefore, we find that prior public comment on these rules is unnecessary.

We are issuing these rules as final rules with a request for comments because we are interested in receiving public comments on the substance of these rules. We will make any changes in the rules that we determine are warranted by the comments we receive, and will issue revised rules if necessary. We also wish to consider the public comments on these rules in further assessing and developing our approach to making long-term changes to the disability claim process.

In addition, we find good cause for dispensing with the 30-day delay in the effective date of a substantive rule, as provided for by 5 U.S.C. 553(d). Considering the average processing times that individuals pursuing appeals of disability claims currently face, we find that it is in the public interest to make these rules effective upon publication.

Executive Order 12866, as Amended by Executive Order 13258

We have consulted with the Office of Management and Budget (OMB) and determined that these final rules with request for comments meet the criteria for a significant regulatory action under Executive Order 12866, as amended by Executive Order 13258. Thus, they were reviewed by OMB.

Regulatory Flexibility Act

We certify that these rules will not have a significant economic impact on a substantial number of small entities as they affect individuals only. Therefore, a regulatory flexibility analysis as provided in the Regulatory Flexibility Act, as amended, is not required.

Paperwork Reduction Act

These final rules with request for comments contain reporting requirements in §§ 404.953(a) and 416.1453(a), as revised. We estimate that there will be 5,000 annual respondents, who will each make 1 request. We estimate that it will take an average of 5 minutes per request for an estimated annual burden of 417 hours. An Information Collection Request has been submitted to OMB for clearance. While these rules will be effective upon publication, these burdens will not be effective until cleared by OMB. We are soliciting comments on the burden estimate; the need for the information; its practical utility; ways to enhance its quality, utility and clarity; and on ways to minimize the burden on respondents, including the use of automated collection techniques or other forms of information technology. Comments should be submitted and/or faxed to the OMB desk officer for SSA within 30 days of publication of this final rule at the following address/number: Office of Management and Budget, Attn: Desk Officer for SSA, Fax Number: 202-395-6974.

To receive a copy of the OMB clearance package, you may call the SSA Reports Clearance Officer on 410-965-0454.

(Catalog of Federal Domestic Assistance Program Nos. 96.001, Social Security-Disability Insurance; 96.002, Social Security-Retirement Insurance; 96.003, Social Security-Special Benefits for Persons Aged 72 and Over; 96.004, Social Security-Survivors Insurance; 96.006, Supplemental Security Income)

List of Subjects

20 CFR Part 404

• Administrative practice and procedure
• Blind
• Disability benefits
• Old-Age
• Survivors and Disability Insurance
• Reporting and recordkeeping requirements
• Social Security

20 CFR Part 416

• Administrative practice and procedure
• Aged
• Blind
• Disability benefits
• Public assistance programs
• Reporting and recordkeeping requirements
• Supplemental Security Income (SSI)

For the reasons set out in the preamble, subpart J of part 404 and subpart N of part 416 of chapter III of title 20 of the Code of Federal Regulations are amended as set forth below:

PART 404—FEDERAL OLD-AGE, SURVIVORS AND DISABILITY INSURANCE (1950-  )

1. The authority citation for subpart J of part 404 continues to read as follows:

Authority: Secs. 201(j), 204(f), 205(a), (b), (d)-(h), and (j), 221, 225, and 702(a)(5) of the Social Security Act (42 U.S.C. 401(j), 404(f), 405(a), (b), (d)-(h), and (j), 421, 425, and 902(a)(5)); sec. 5, Pub. L. 97-455, 96 Stat. 2500 (42 U.S.C. 405 note); secs. 5, 6(c)-(e), and 15, Pub. L. 98-460, 98 Stat. 1802 (42 U.S.C. 421 note).

2. Section 404.953 is amended by redesignating current paragraph (b) as paragraph (c) and adding a new paragraph (b), to read as follows:

PART 416—SUPPLEMENTAL SECURITY INCOME FOR THE AGED, BLIND AND DISABLED

3. The authority citation for subpart N of part 416 continues to read as follows:

Authority: Secs. 702(a)(5), 1631, and 1633 of the Social Security Act (42 U.S.C. 902(a)(5), 1383, and 1383b).

4. Section 416.1453 is amended by redesignating current paragraphs (b) and (c) as paragraphs (c) and (d) respectively and adding a new paragraph (b), to read as follows: