Unpublished Disposition, 841 F.2d 1129 (9th Cir. 1983)

MEMORANDUM^* 

Sometime in 1983, the secretary to retired District Court Judge George Harris received notice that Judge Harris' supplementary medical insurance coverage, 42 U.S.C. § 1395, had been terminated in October 1982. On September 5, 1983, Judge Harris' secretary sent a Request for Reconsideration. She advised the Social Security Administration (SSA) that "the beneficiary is not capable of handling any of his business affairs...." The SSA issued a Reconsideration Determination in March 1984 affirming the termination. In November 1984, an Administrative Law Judge (ALJ) upheld that decision. The ALJ's decision became the final decision of the Secretary of Health and Human Services.

Judge Harris died in October 1983. Gail Harris Getty, Judge Harris' daughter and the special administrator of his estate, filed a complaint in the United States District Court for the Central District of California, seeking review of the adverse decision of the Secretary. On cross-motions for summary judgment, the district court affirmed the Secretary's decision. Getty appealed the decision of the district court.

The quarterly payments for Judge Harris' insurance premiums were paid regularly from 1966 through the first quarter of 1982. The Medicare billings for the second and third quarters of 1982 were returned to the Social Security Administration "SSA" as undeliverable. Judge Harris had moved one year earlier, and the Post Office was no longer forwarding his mail; the forwarding order had expired automatically. Due to nonpayment of premiums, Judge Harris' coverage was terminated October 1, 1982, when the grace period for paying overdue premiums ended. 42 U.S.C.A. Sec. 1395(q) (1985); 42 C.F.R. Sec. 405.921 (1986). The quarterly payments were approximately thirty-six dollars.

The ALJ correctly stated that the issue was whether there had been good cause for the failure to make timely payments. 42 C.F.R. Sec. 405.929 (1986). However, the ALJ erred in his analysis of the issue. He gave the following explanation for his conclusion that good cause had not been shown:

The Claimant, Gail Harris Getty, apparently had been receiving these [billing] notices on the decedent's behalf and paying his premiums. By receiving these notices, she was on actual notice that the Administration had the claimant's old San Francisco address on its records. She was under duty, therefore, to contact the Social Security office in order to change the address. Furthermore, when no billing notice was received at the usual three-month interval, the claimant was under a duty to inquire as to the absence of such notice. She had a duty to go to her Social Security office to make certain that her father's supplementary medical insurance benefit would not terminate. She was under a duty to make reasonable effort [s] to assure the premium payment. The evidence fairly shouts she failed this duty. Therefore, for these several reasons, the claimant did not have good cause for failing to pay the premiums in order to maintain the decedent's supplementary medical insurance benefits in force.

The ALJ's finding that good cause had not been shown was premised on his belief that Getty had a legal duty regarding Judge Harris' insurance payments that she did not fulfill. That premise is legally erroneous. Getty was not Judge Harris' legal guardian while he was alive. She had no legal duty to pay Judge Harris' premiums. Thus, SSA's authority to terminate Judge Harris' coverage could not turn on Getty's actions or inactions.

The letter Judge Harris' secretary sent the SSA put it on notice of the claim of Judge Harris' incompetence and the record contains much evidence on which an affirmative finding could have been based. The legal question properly before the ALJ, one he never addressed, was whether incompetence on the part of Judge Harris constituted good cause--that is, whether someone forfeits his insurance coverage after many years of having made payments simply because he is incapable of paying the premiums due to legal incompetence. At oral argument the Secretary contended that a rule requiring SSA to consider a claimant's legal competence would put too heavy a burden on the agency, given that it processes over 150 million claims each year. The Secretary argued that it would not be practicable for him to determine if "each and every one of those claimants" was legally competent. He said that he is under no legal duty to affirmatively seek out people, question them, and determine whether they wish to pay delinquent payments. The Secretary's argument is not persuasive, and entirely misses the point. Under the claimant's view of the case, the Secretary would not have an independent duty of investigation when coverage lapsed, or at any other time. Claimant's point is quite different. Claimant contends that legal incompetence should constitute a basis for a finding of "good cause" in cases in which persons filing requests for reinstatement make an affirmative showing that such incompetence was the cause of the nonpayment of premiums.¹  His contention is one the Secretary must address before we express our view on its merits.

The basis for the ALJ's decision was contrary to law, and reversal is therefore required. See 5 U.S.C. § 706(2) (a); Pathfinder Mines Corp. v. Hodel, 811 F.2d 1288, 1290 (9th Cir. 1987). The case is remanded to the ALJ so that he may determine the issues relating to legal incompetence. If the ALJ determines that good cause has been shown, Judge Harris' coverage should be retroactively reinstated upon the payment by his estate of the premiums due.

For the reasons given above, the district court's decision is reversed and remanded. The panel will retain jurisdiction of any future appeals.

REVERSED AND REMANDED.

SNEED, Circuit Judge, dissenting:

I have considerable sympathy with plaintiff's effort to reinstate her father's supplementary medical insurance coverage. Its benefits would assist in providing some financial assistance with respect to the months prior to Judge Harris' death in 1983. I also understand the sense of justice that motivates the majority.

However, as I see it, the majority has erected a false issue, viz., the failure of the ALJ to consider whether incompetence on the part of Judge Harris was the cause of the non-payment of premiums. The proper issue is whether on the basis of all the facts of this case there was good cause for failure to pay the premiums with respect to Judge Harris' supplementary medical insurance coverage. This issue was confronted by the ALJ, as well as by the district court; the ALJ concluded that good cause was not shown and the district court held that this conclusion was neither arbitrary nor capricious. The district court was correct.

The ALJ was aware of Judge Harris' condition during the period in which premiums were not paid. The record before the ALJ prepared by plaintiff's counsel quite adequately reveals this condition. Non-payment of premiums by reason of incompetence alone, however, is not good cause under the regulations. See 42 C.F.R. Sec. 405.929 (1986). Incompetence, as well as many other facts, is relevant in determining the existence of good cause, but the ALJ on remand has no authority under the regulations to hold that the condition of Judge Harris without more establishes good cause.¹  To remand this case to have the ALJ express himself to that effect before "we express our views on the merits" is pointless. If the majority believes that the failure to make incompetence alone good cause is arbitrary and capricious it should say so presently. Such a holding would be ill advised in my opinion, but it would shorten the administrative and judicial processes generated by this case.

The majority's assertion of legal error on the part of the ALJ by reason of his assertion that the plaintiff had a "duty" to pay the premiums is also incorrect. The majority reads the opinion of the ALJ to mean that he considered the plaintiff to be Judge Harris' legal guardian which, of course, she wasn't. It is worth observing that although the majority modified the noun "duty" with the adjective "legal," thus justifying the assertion that the ALJ committed a legal error, the ALJ omitted the adjective in his discussion. He spoke of the plaintiff's "duty" to pay the premiums in the "good cause" context. The thrust of his discussion is that the cause of the premium non-payment was the failure of the plaintiff to continue the payment of the premiums which she had undertaken. There is nothing erroneous about that, either in fact or in law.

Each of us at various times has wished that a general rule designed to shape the conduct of many could be suspended for the benefit of the one that we feel is particularly deserving. Sometimes it is possible because any injustice to many is extremely attenuated. Perhaps the majority believes that this is such a case. I do not. To me the non-payment of premiums has its source in the plaintiff's double oversight--the failure to notify the proper agency of the Health and Human Services of the change of address of Judge Harris, and the failure to continue the premium payments even in the absence of the receipt of premium notices. There was no good cause for this failure.