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TRAHAN v. REGAN

July 12, 1989

AVA P. TRAHAN, ET AL., Plaintiffs,
v.
DONALD R. REGAN, ET AL., Defendants



The opinion of the court was delivered by: GASCH

 OLIVER GASCH, UNITED STATES DISTRICT JUDGE

 Plaintiffs in this case, pursuant to 28 U.S.C. § 2412(d), renew their application for an award of attorneys fees and costs in accordance with the remand order of the Court of Appeals. Plaintiffs assert that the application is made on the grounds that plaintiffs are the prevailing parties and that the government's position was not substantially justified.

 I. BACKGROUND

 Although the Court of Appeals' previous decision in Trahan v. Regan, 262 U.S. App. D.C. 369, 824 F.2d 96 (D.C. Cir. 1987), was vacated by the Court of Appeals en banc on its own motion, see Order dated August 1, 1988, that Court's review of the background and procedural history of this case remains accurate.

 
The litigation that precipitated the present fee proceeding arose from SSA's [the Social Security Administration's] implementation of a new policy to verify the income and assets of [Supplemental Security Income] Benefits recipients. The Benefits program, administered by SSA, is designed to provide cash assistance to needy individuals who are elderly, blind or disabled. See Title XVI of the Social Security Act, 42 U.S.C. §§ 1381-1383c (1982). To be eligible for assistance, such individuals must meet financial qualifications established by SSA. See 42 U.S.C. § 1382; 20 C.F.R. §§ 416.1100-.1266 (1986). Regulations prescribed by SSA require Benefits recipients to supply the agency with the evidence necessary to prove eligibility and with any information that the agency requests. See 20 C.F.R. § 416.200. If an individual fails to comply with an SSA request, the agency may determine that the individual is ineligible to receive Benefits and suspend any further payments. See 20 C.F.R. §§ 416.1322, 416.714(b). Before discontinuance of Benefits may occur, however, SSA must afford a recipient extensive procedural protections, including notice and a hearing. See, e.g., 42 U.S.C. § 1383(c)(3); 20 C.F.R. § 416.1336, 416.1407-.1494.
 
In order to ensure that SSA provides assistance only to eligible individuals and in correct amounts, the Social Security Act directs the agency to verify an applicant's representation of eligibility through corroborating evidence from other sources and additional information obtained as necessary. See 42 U.S.C. § 1383(e)(1)(B). The statute does not identify any specific sources for this supplemental evidence. Congress, however, required that other federal agencies "provide such information as the [SSA] needs for purposes of determining eligibility for or amount of benefits, or verifying other information with respect thereto." 42 U.S.C. § 1383(f).
 
Prompted by reports of widespread abuse in the Benefits program, the General Accounting Office (GAO), in two separate reports, recommended that the SSA verify eligibility by using tax information collected by the IRS. The International [sic] Revenue Code's (Code) stringent confidentiality requirements, however, erected a substantial roadblock to this source of information. The IRS may release tax data only as explicitly authorized by section 6103 of the Code. See 26 U.S.C. § 6103(a) (1982). The section lists many federal agencies to which the IRS may release otherwise confidential tax information, but it does not authorize disclosure of the information at issue here to SSA. See 26 U.S.C. § 6103(c)-(o). Under subsection 6103(c), however, the IRS may release tax information, "subject to such requirements and conditions [as] it may prescribe by regulations, . . . to such person or persons as the taxpayer may designate in a written request or a consent to such disclosure." In light of these provisions, GAO made two recommendations: GAO suggested that Congress amend the Code to provide specific authorization for the IRS to release the needed information to SSA or, in the alternative, that SSA attempt to obtain the desired information by soliciting the recipients' consent to such disclosure.
 
Because legislative change was not immediately forthcoming, the agencies pursued GAO's second recommendation. SSA, together with GAO and the IRS, developed a notice-and-consent form designed to give SSA access to the desired information pursuant to subsection 6103(c) of the Code. The form consisted of two parts. In the first part, SSA attempted to notify Benefits recipients of the purpose of their requested consent:
 
We want the [IRS] to give us information from your tax records. The [IRS] will give us the information if you sign the form below.
 
We will compare this tax information with what you told us about your income and what you own to make sure we are paying the right amount in your [Benefits] checks.
 
The notice then advised recipients that:
 
You have a choice about signing the form. But we must have accurate information about your income and what you own to pay your [Benefits] checks. If you do not sign the form, your [Benefits] checks may be affected.
 
The second part of the form constituted the recipient's "consent." It requested the recipient's signature, authorizing the IRS to disclose to SSA information relating to the recipient's unearned income. In a separate document sent only to agency area office staff, SSA explained that those who refused to consent would be subject to suspension procedures. Refusal to sign the form apparently was, by itself, grounds for suspending Benefits. In May 1982, SSA mailed the form to each of four million former and current Benefits recipients. Almost three million recipients, including appellees, signed and returned the form to SSA, as SSA had requested.
 
In June 1982, eight Benefits recipients filed a class action against SSA alleging various statutory and constitutional violations with respect to the notice-and-consent forms. Plaintiffs sought to enjoin the SSA from gaining access to the tax information covered by the forms. The district court granted SSA's motion for summary judgment. The trial judge explained that because the case was "premature," he had dismissed the complaint without reaching the merits. Tierney v. Schweiker, Civ. Action No. 82-1638 (D.D.C. July 6, 1982). Plaintiffs appealed the decision to [the United States Court of Appeals for the District of Columbia Circuit].

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