Lead Opinion
OPINION OF THE COURT
Mаry , Ann Kelly petitions this court to review a final decision of the Railroad Retirement Board.
I.
Kelly applied for a disabled child’s annuity under the Railroad Retirement Act. 45 U.S.C. ,§ 231a(d)(l)(iii)(C) (1976). She filed her application more than a month before her twenty-second birthday. To be eligible for a disabled child’s annuity, the applicant, irrespective of age at time of application, must suffer from a disability which began before the age of twenty-two. Kelly claimed that she was under a mental disability, severe depression.
At the administrative hearing Kelly testified that she began to suffer from anxiety, insomnia and depression during high school. Unable to sleep for several days on end, she could not concentrate on her studies. Catching up on lost sleep caused her to miss school frequently. Her insomnia interrupted her class attendance to the extent that she was denied a diploma at graduation because she failed to meet the school attendance requirement.
Meanwhile, Kelly obtained a series of clerical jobs. She lasted a few days at each. The same symptoms continued: her insomnia prevented punctual appearance at work. She complained that anxiety, prоduced by the presence of co-workers, interfered with her task performance.
On June 10, 1975, Kelly applied to the Railroad Retirement Board for a child’s disability annuity, based on the earnings of her father, a deceased railroad worker. 45 U.S.C. § 231a(d)(l)(iii)(C) (1976). For the purpose of the Act, a child is under disability if his permanent physical or mental condition prevents him from engaging in any regular employment. Id. at § 231a(d)(3).
In March 1979, more than three years, nine months after Kelly filed her application, the Railroad Retirement Board issued its final decision finding her ineligible. The Board found that “it has not been established that Appellant is unable to engage in any regular employment by a disability which began before the age 22.”
This court may “enter a decree affirming, modifying, or reversing the decision of the Board, with or without remanding the cause for rehearing.” 45 U.S.C. § 355(f) (1976).
II.
Kelly urges that the administrative procedure that determined her ineligible to receive a child’s disability annuity failed to comply with due process. The threshold question is whether a claimant initially denied benefits has a sufficient property interest in the benefits to be protected by the fifth amendment guarantee of Due Process. See generally, Board of Regents v. Roth,
“To have a property interest in a benefit, a person . . . must . . . have a legitimate claim of entitlement to it.” Board of Regents v. Roth, supra,
We note that in Goldberg v. Kelly, the posture of the welfare claimants was that they had been determined ineligible to continue receiving benefits.
Kelly contends that the Railroad Retirement Board committed three violations of her right to procedural due process. First, the administrative appeals process lasted an unreasonable length of time. Second, contrary to its own regulations, the Board obtained additional “evidence” on Kelly’s application without notifying her and offering her the opportunity to rebut the “evidence”. Third, the administrative hearing officer contacted Kelly directly to question her on her application. This, Kelly alleges, violated her right to be represented by counsel, as guaranteed by the Bоard’s regulations. Although each of these allegations presents serious procedural flaws, we need not reach the constitutional question with respect to the second and third contentions. With respect to those, an agency’s violation of its regulations is sufficient to taint its act. We must, however, consider the due process implications of the unreasonable delay.
III.
The Railroad Retirement Board took nearly four years from the date of Kelly’s application to issue its final decision. The Board has established a three tiered system of administrative review. The applicant must obtain an initial decision from the Bureau of Retirement Claims. 20 C.F.R. § 260.1(a) (1979). If adverse, he must then appeal this decision to a referee of the Bureau of Hearings and Appeals. Id. at § 260.4(a) (1979). In turn this decision, if adverse, must be appealed to the Railroad Retirement Board. Id. at § 260.6(a) (1979).
A situation such as this, where the administrative review process of a single disability application extended to nearly four years, is wholly inexcusable. Compare Mathews v. Eldridge,
Kelly’s prolonged review process is not unique. In Parker v. Railroad Retirement Board, the agency took six years to determine that an annuity applicant was not disabled.
Although the Board concedes that extraordinary and unreаsonable delays violate due process, it argues that this delay is neither. The merits of that argument are patently frivolous. The Board also argues that the delay was necessitated by the need to gather additional medical evidence. The record does not support this inference; rather, after evidence was amassed, an opinion was more than one year forthcoming. The Board also seeks to justify the delay by the backlog of eases and limited resources of the Board. Whatever its internal problems, the Board has the power to implement regulations that would accelerate the agency review process. Four years is totally out of phase with the requirements of fairness.
IV.
Kelly assigns error to the Board’s acquisition of an additional medical opinion of Dr. Jakalas without informing her and giving her the chance to rebut it. This evidence, in the form of a memorandum, was independently sought by the Appeals Referee after the oral hearing and before a decision was issued. The memorandum stated:
All the medical evidence in file was reviewed. It is concluded that the appellant’s residual capacities do not restrict her from full-time light gainful activities, involving less responsibilities and tensiоn, as already reported in my January 4,1977 memo to you and August 9, 1977 note to Mr. R. W. Gliva. Psychiatric care could help this person in her adjustment to life, but her impairment is not so severe as to preclude all work. (App. at 43).
This memorandum is substantially the equivalent of the opinion rendered by the Appeals Referee, and is also reflected in the Board’s affirmance of the opinion. The memorandum is evidence on which the decision was based.
The Board eschews all obligation to reveal evidence to Kelly and argues that the burden is on the applicant to request the full record from the Board. The Board сontends that, had Kelly requested her record, the additional evidence would have been revealed.
The Board’s position flies in the face of its own regulations, which place the burden on the agency to notify an applicant, summarize the newly acquired evidence for him, and afford him an opportunity to refute it. 20 C.F.R. § 260.4(f) (1979)
By codifying this procedure into its governing regulations, the Railroad Retirement Board recognized that “[Fjairness can rarely be obtained by secret, one-sided determination of facts decisive of rights.” “Secrecy is not congenial to truth-seeking . . .” Anti-Facist Committee v. McGrath,
The Board failed to adhere to its own regulаtions governing its duties when it independently obtains information relevant to an application for benefits. It is a well established proposition that an agency is bound by its regulations. United States v. Nixon,
In Matthews v. Railroad Retirement Board,
We see no reason why this applicant should undergo another bout in the agency. Four years is enough. Moreover, if the agency does not conform tо the regulations it wrote to assure a fair hearing and an accurate determination of eligibility, then the agency should not be permitted to rely on that evidence in making its decision. To permit the agency to do it over again, this time correctly, gives the agency no incentive to comply at the start and penalizes the applicant by requiring her to return to the agency forum because of the agency’s errors. Therefore this court when reviewing the record for substantial evidence supporting the agency’s decision will disregard the “evidence” that Kelly had no opportunity to rebut. Failure to comply with its regulations renders the agency’s act null.
V.
The Board’s regulations give claimants the right to be represented by counsel in the administrative process determining their eligibility for benefits. 20 C.F.R. §§ 260.2(e)(3), 262.12 (1979).
The Board addressed this issue in its opinion. It agreed with appellant that the Referee should not have contacted Kelly, and offered a “regret of this breach of profes
To begin with, Kelly was questioned about matters directly bearing on whether she was so depressed as to be eligible for a disability annuity. This evidence was taken without her gggnáel being present, although she had elected to be represented by counsel. We fail to see how the taking of evidence in the absence of counsel when the appellant has exercised the right to be represented by counsel can be mere harmless error.
Moreover, the memo to the file of that ex parte conversation includes reference to facts absolutely irrelevant to any determination of disability. The memo reports that Kelly never identifies herself when she answers the telephone because collection agencies are after her for payments. This information has no bearing on Kelly’s eligibility for a disability annuity and does not belong in an applicant’s file. Such irrelevance would not have been' extracted had the Referee respected Kelly’s elected right to have counsel present during any questioning of her. Nor would it have been preserved in her application file. We view this as a very serious breach of a fair procedure, and of Kelly’s rights, and not as the Board did — as a breach of courtesy. Therefore, because the Board violated its regulations entitling Kelly to be represented by counsel, we shall not consider the memorandum of the conversation as “evidence” in the record when reviewing the Board’s decision. That information was illegally acquired by the Board when it failed to follow its regulations and is therefore entitled to no weight.
VI.
In denying Kelly’s application for a disability annuity, the Board found that Kelly was not disabled because her condition was not severe enough to prevent her “from doing work which doеs not involve much stress.” See 45 U.S.C. § 231a(d)(3) (1976). In the absence of fraud, a court of appeals will not disturb the Board’s decision to deny disability benefits if it is “supported by substantial evidence in the record, when viewed in the light that the record in its entirety furnishes . . . .” Stephens v. Railroad Retirement Board,
The medical evidence in the record consists of six professional evaluations. She was examined and treated by five psychiatrists, two of them Board certified. Both Board certified doctors reported that Kelly is not able to work. Each psychiatrist diagnosed her condition as depressive neurosis. Dr. Gnassi, who was one of the Board certified examining physicians, characterized her depressive neurosis as severe, and further stated that she had a severe cyclo-thymic personality, that is, that she has “high moods” as well as “lows.” App. at 45. Dr. Swartznburg, the other Board certified psychiatrist, reported that Kelly’s prognosis was “quite guarded.” App. at 49. He re
In addition to the medical evidence on the record, the Board relied on the lay observations of the Appeals Referee as evidence in the Record. The question arises whether an administrative law judge’s untrained observations as to whether an applicant is under a disability constitutes “evidence” which the Board could rely on to support its decision.
This court has twice refused to permit an ALJ’s lay observation that a clаimant appears healthy to constitute substantial evidence supporting the ALJ’s ultimate finding of physical nondisability. Lewis v. Califano,
The Board found that Kelly had not made a serious effort to improve her mental condition because of her noncooperation with her therapists. App. at 67. We believe the Board’s focus to be misplaced. In Parker v. Railroad Retirement Board,
To qualify for a child’s disability annuity Kelly need only prove that she was under a disabling mental condition, i. e., one which prevented her from working, that would result in death or last longer than one year and which began before the age twenty-two. See note 5 and accompanying text, supra. She need not establish that her condition would not improve with treatment. Therefore, the Board’s finding that with proper medical treatment her condition would probably improve, App. at 67, is irrelevant to the initial eligibility determination. It is also contrary to the medical evidence, which characterized her рrognosis as “quite guarded” and “fair.”
We must now determine whether there is substantial evidence in the record supporting the Board’s determination that Kelly’s condition is not so severe that she cannot work. The evidence in the record consists of reports from six professionals who have examined Kelly. Five psychiatrists reported that Kelly was a depressive neurotic, ranging from “mildly depressed” to “severely depressed.” Additionally, one psychiatrist reported that Kelly had a severe cyclothymic personality, that is, as having recurring cycles of “highs” and “lows”. Three psychiatrists commented,, two of them Board cеrtified, on whether Kelly would be able to work. They agreed unanimously that she could not.
Where there is conflict in the evidence in the record, an ALJ is “free to choose between properly submitted medical opinions.” Gober v. Matthews, supra,
Moreover, the bulk of evidence in the record supports the contrary conclusion— that Kelly is disabled. This court has the authority to reverse or modify the Board’s decision without remanding the case to the agency. 45 U.S.C. § 355(f) (1976); Parker v. Railroad Retirement Board, supra,
We will reverse the Board’s decision without remand for further hearing, because
Accordingly the decision of the Railroad Retirement Board is reversed and the case remanded to the Board for the allowance of disability benefits to Kelly.
Notes
. 45 U.S.C. § 231g (1976).
. 45 U.S.C. § 231a(d)(l) (1976) provides that the following survivors of a deceased Railroad employee are entitled to annuities:
(iii) a child . who . (C) will, without regard to his age, be under a disability which began before he attained age twenty-two or before the close of the eighty-fourth month following the month in which his most recent entitlement to an annuity under this paragraph terminated because he ceased to be under a disability, and who is unmarried and was dependent upon the employee at the time of the employee’s death.
. 45 U.S.C. § 231a(d)(3) (1976) provides that For purposes of paragraph (i) or (iii) of subdivision (1), a widow, widower, or child shall be under a disability if her or his permanent physical or mental condition is such that she or he is unable to engage in any regular employment. The provisions of subsection (a)(3) of this section as to the proof of disability shall apply with regard to determinations with respect to disability under subdivision (1).
. 45 U.S.C. § 231g (1976), the jurisdictional provision of the Railroad Retirement Act, incorporates the jurisdictional grant of the Railroad Unemployment Act, 45 U.S.C. § 355(f) (1976).
. 20 C.F.R: 208.10(a) (1979) provides that for the purpose of an annuity the term permanent physical or mental condition means a physical or mental impairmеnt that can be expected to • result in death or has lasted, or can be expected to last for a continuous period of not less than twelve months.
. See note 4, supra.
. 20 C.F.R. § 260.4(f) (1979) provides that:
The appellant . shall be afforded full opportunity to present evidence upon any controversial question of fact . . ; to examine and cross-examine witnesses; and to present argument in support of the appeal. If, in the judgment of the referee, evidence not offered by the appellant is available and is relevant and material to the merits of the claim, the referee may obtain such evidence upon his or her own initiative. If new evidence is obtained by the referee subsequent to an oral hearing, the referee shall notify the appellant or his or her representative that such evidence was obtained and shall describe the nature of the evidence in question. In such event, the appellant shall have the right to submit rebuttal evidence or argument or to an oral hearing to confront such new evidence, (emphasis supplied).
Additional procedural protection is also provided by 20 C.F.R. § 260.2(e) (1979), which affords the following rights to a claimant: (1) to submit evidence, (2) to be represented by counsel (3) to cross examine all witnesses.
. 20 C.F.R. § 260.2(e) (1979) provides that:
(e) The beneficiary shall upon request have the opportunity to review, prior to the hearing, his or her claim folder and all documents pertinent to the issues raised. A hearing conducted under this section shall be informal. At the hearing the beneficiary shall be afforded the following rights:
(1) To present his or [sic] case orally and to submit evidence, whether through witnesses or documents;
(2) To cross-examine adverse witnesses who appear at the hearing; and
(3) To be represented by counsel or other person.
20 C.F.R. § 262.12 (1979) provides that:
(a) Power of attorney. A claimant shall not be required to hire, retain or utilize the services of an attorney. In the event a claimant desires to be represented by аnother person, he shall file with the Board prior to the time of such representation a power of attorney signed by him and naming such other person as the person authorized to represent the claimant with respect to matters in connection with his claim.
. The ALJ reported that at “the hearing the appellant displayed no unusual characteristics . . . She was neat and clean . . . there was no observable deterioration of personal habits .... She did exhibit some tenseness, but not more than is shown by many other appellants during a hearing [Kelly’s] answers were well formulated . [N]or was there anything in her attitude whiсh revealed her to be other than an ordinary normal individual.” App. at 53-54. The Appeals Referee also noted that there was no evidence of suicidal ideation, compulsive behavior or disorientation. He concluded that “[i]n the absence of any of these later manifestations . appellant’s impairments were not of such severity as to establish disability for all work.”
. See reports of Drs. Gnassi, Schwartzburg and Jalali, App. at 45, 49, 50, respectively.
Concurrence Opinion
concurring.
I agree with the result in this case and concur in Parts I, IV, V and VI of the opinion. I share Judge Hunter’s concern about an administrative process characterizеd, as this one was, by unreasonable delay. However, we are constrained to avoid passing upon a constitutional question if the case might be disposed of on statutory grounds, Hagans v. Lavine,
The holding in Parts IV and V of this opinion is that the procedures used by the Board violate its own regulations. These serious defects would require, at a minimum, a reversal and remand. Because we also find in Part VI that there was no substantial evidence to support the Board’s decision that Kelly was not disabled, we direct the allowance of disability benefits. In light of this posture of the case, I see no reason to reach the due process issue discussed in Parts II and III.