author: MANSMANN, District Judge.

text:
    DRAVO CORPORATION, a Pennsylvania corporation, Plaintiff, v. WHITE CONSOLIDATED INDUSTRIES, INC., a Delaware corporation, Defendant.
    Civ. A. No. 83-2769.
    United States District Court, W.D. Pennsylvania.
    Feb. 5, 1985.

      Edward F. Welsh, Anne B. Shearon, Par-melee, Miller, Welsh & Kratz, P.C., Pittsburgh, Pa., for plaintiff.
    Raymond G. Hasley, Dennis M. Morgenstern, Pittsburgh, Pa., for defendant.
   OPINION

MANSMANN, District Judge.

This matter comes before the Court on Defendant’s “Motion To Dismiss Pursuant Rule 12(b)(6), or, Alternately Rule 56 of the Federal Rules of Civil Procedure.” For the reasons set forth below, Defendant’s Motion is denied.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff Dravo Corporation (“Dravo”) is a Pennsylvania corporation which prior to 1973 had been engaged in the engineering and construction businesses, with major emphasis on projects in the civil minerals and mining fields. In early 1973, apparently to diversify its interests, Dravo became interested in the chemical and food-processing fields. To this end, it negotiated with Defendant White Consolidated Industries (“White Consolidated”), a Delaware corporation, and eventually purchased the business, technology and assets of two of its second-tier wholly-owned subsidiaries, Blaw-Knox Chemical Plants, Inc. and BlawKnox of Canada, Limited. The acquisition became effective on May 1, 1973, the date the agreement (“Acquisition Agreement”) was executed.

By the terms of the Acquisition Agreement, Dravo paid White Consolidated a total consideration of $8,320,000. The parties determined the individual assets involved in this transaction to be as follows:

Net Current Assets $ 395,063
Machinery and Equipment and Improvements to Leased Property 572,700
Technical Library 27,300
Drawings and Tracings 3,290,000
Patents and License Agreements 1,028,000
Trademarks 125,000
Computer Programs 75,000
Five-Year Non-Competition Agreement 2,500,000
Accumulated Research Assembled Technical Staff Other Intangible Assets Including Goodwill 306,937
TOTAL $8,320,000

In addition to assuming the assets of these two subsidiaries of White Consolidated, Dravo assumed certain liabilities, including White Consolidated’s on-going obligation under 40 in-process contracts, five of which are at issue instantly. These are the Far-Mar-Co., Inc. (“Far-Mar-Co.”), the Melaport (two), the Casa Grande (two) and the Lauhoff grain contracts.

With respect to the Far-Mar-Co. contract (which involved a soy bean protein concentrate plant in Missouri), Dravo asserts that at the time of the acquisition, White Consolidated represented to it that the Far-Mar-Co. contract was 98.4% completed, with approximately $10,000 in costs incident thereto which was to be offset by approximately $10,000 of additional revenue. Prior to completion, however, numerous difficulties apparently ensued and Dravo claims that it attempted to resolve these with Far-Mar-Co. Ultimately, in September of 1978, Far-Mar-Co. sued Dravo in the United States District Court for the Western District of Missouri.

At the time Far-Mar-Co. commenced suit against it, Dravo claims that it promptly notified White Consolidated of the action and offered it the opportunity to defend as required by Article 5(b) of the Acquisition Agreement. More specifically, Dravo, by the letter of Ernest A. Carpenter dated October 13, 1978 to Daniel R. Elliott, Jr., notified White Consolidated of the action, included a copy of the Far-Mar-Co. complaint and gave White Consolidated an opportunity to defend.

White Consolidated responded by letter of Daniel R. Elliott, Jr. dated October 23, 1978. In its letter, White Consolidated denied all responsibility under the Far-Mar-Co. contract and asserted that the notice requirements as set forth in Article 5(b) had not been met. In addition, White Consolidated made certain demands on Dravo and because of Dravo’s subsequent rejection of these demands, White Consolidated claimed that under ¶¶ 5a and 5c of the agreement that Dravo must indemnify and hold White Consolidated harmless from any responsibility resulting from the litigation in Missouri.

Other letters were exchanged between the parties, and ultimately Dravo opted to conduct its defense without White Consolidated as a party.

Subsequently, in July of 1982, a jury verdict in the amount of $155,000 was rendered against Dravo in the Far-Mar-Co. action. This suit was eventually settled for this amount without appeal and it was not until this resolution that Dravo sought relief against White Consolidated.

On April 27, 1979 Dravo filed a praecipe for writ of summons against White Consolidated in the Common Pleas Court of Allegheny County, Pennsylvania. It is uncontroverted that White Consolidated never filed a demand for a complaint, and it was not until October 13, 1983 (after the Far-Mar-Co. action was settled), that Dravo filed a complaint against White Consolidated. On the petition of White Consolidated, this action was removed to federal court based upon diversity of citizenship.

Prior to the service of an answer, White Consolidated moved this Court for an order dismissing this action pursuant to FED.R. CIV.P. 12(b)(6) or alternately pursuant to FED.R.CIV.P. 56, claiming, inter alia, that this action is barred by the applicable statutes of limitations. In this regard, White Consolidated claims that it is the four year statute of limitations contained in Article 2 of the Uniform Commercial Code, specifically 13 PA.CONS.STAT. § 2725 (Purdon 1984) applies, as it claims that the acquisition was a sale of “goods”, or at least essentially a sale of “goods”. Dravo, in contrast, asserts that the assets involved are not “goods” and submits that the six year statute of limitations set forth in 42 PA.CONS.STAT. § 5527(2) (Purdon 1981) applies, as this is an action for indemnification and breach of contract, to which the Uniform Commercial Code is not applicable.

In any event, White Consolidated further claims that under any statute of limitations the instant action is time-barred as it asserts that the praecipe for writ of summons does not commence an action and thus is not effective in tolling the statute of limitations. Dravo vehemently disputes this.

Finally, White Consolidated claims that irrespective of what limitations period applies, because it claims that Dravo failed to give the notice required under the Acquisition Agreement, that this action must be dismissed. Dravo denies this, and claims, at the very least, that this issue is a question which cannot be resolved on the current state of the record.

Thus, the immediate issues for resolution by this court are: (1) whether the praecipe for writ of summons had the effect of commencing the instant action; (2) which statutes of limitations apply; and (3) is the question of whether Dravo gave sufficient notice under the Acquisition Agreement resolvable at this stage, and if so, did Dravo give White Consolidated sufficient notice under the terms of the Acquisition Agreement.

DISCUSSION

(1) The Commencement of the Instant Action

Rule 1007 of the Pennsylvania Rules of Civil Procedure, 42 PA.CONS.STAT. Rule 1007 (Purdon 1975) (“Rule 1007”) provides, inter alia, that “[a]n action may be commenced by filing with the prothonotary (1) a praecipe for writ of summons ...”

Notwithstanding the clear language of the rule, White Consolidated argues that the action was not commenced until the Complaint dated October 13, 1983 was filed in Pennsylvania state court and submits that the Rule 1007 does not apply because this action was removed to federal court. This Court rejects these arguments.

Rule 1007 clearly states that the filing of a praecipe for writ of summons is one of three ways to commence an action [in a Pennsylvania state court]. Moreover, it is well established that such filing effectively tolls the statute of limitations. See, e.g., Lamp v. Heyman, 469 Pa. 465, 366 A.2d 882 (1976).

Although FED.R.CIV.P. 3 provides that “[a] civil action is commenced by filing a complaint with the court”, in the case sub judice, since it originated in Pennsylvania state court and was removed to federal court only after it had been “commenced”, this Court finds that this action was “commenced” on April 27, 1979, the date the praecipe for writ of summons was filed in Pennsylvania state court, not in October, 1983, the date the complaint was filed there. Of course, had this case not had its genesis in Pennsylvania state court, Rule 1007 would not apply.

(2) The Applicable Statutes of Limitation The Contract Claims

In its first eight counts, Dravo has pleaded causes of action for breach of warranty claims (Counts I, III, V, VII) and breach of contract claims (Counts II, IV, VI, VIII). Dravo asserts that since these actions are founded upon contract, the applicable statute of limitations is 42 PA.CONS.STAT. § 5527(2) (Purdon 1981), which provides a six year limitation period. Dravo further argues that since the causes of action did not accrue before the date of the Acquisition Agreement (“April 30, 1973”), and since the praecipe for writ of summons was filed within the six year period (April 27, 1979), the contract portion of its action is timely. Additionally, Dravo submits that with respect to its indemnity claims, the operative date is when the loss occurred, thus clearly making the breach of contract claims timely on the instant facts. With respect'to the breach of warranty claims, Dravo asserts a similar argument, and relies on 13 PA.CONS.STAT. § 2725(b) (Purdon 1984), which provides that the cause of action accrues when the breach occurs, among other things.

White Consolidated argues that the applicable statute of limitations is found in Article 2 of the Uniform Commercial Code, specifically 13 PA.CONS.STAT. § 2725(a) (Purdon 1984), which provides that an action for the sale of goods must be commenced within four years.

* * * * * *

In DeFilippo v. Ford Motor Company, 516 F.2d 1313 (3d Cir.1975), cert. denied, 423 U.S. 912, 96 S.Ct. 216, 46 L.Ed.2d 141 (1975), the United States Court of Appeals for the Third Circuit found the acquisition of an automobile dealership to be the purchase of “goods” and therefore to be governed by Article 2 of the Uniform Commercial Code. In doing so, the DeFilippo Court provided some guidance to a district court making such a determination. Specifically the DeFilippo Court stated, in order for the Uniform Commercial Code to be applicable, it is not necessary that every asset qualify as a “movable” item under § 2105:

Rather than a view of mechanical technicality or of mathematical nicety, a view of the reasonable totality of the circumstances should control the characterization of the contract for sale. If, viewed as a whole, it can be concluded that the essential bulk of the assets to be transferred qualify as ‘goods’, then it is appropriate to consider the transaction a ‘contract for the sale of goods’____
We believe it preferable to utilize a rule of reasonable characterization of the transaction as a whole.

Id. at 1323. (Emphasis added).

The assets in the DeFilippo action were primarily inventory (motor vehicles) and equipment which the court characterized as “goods.” After viewing “the transaction as a whole”, and after scrutinizing the list of assets, the DeFilippo court concluded that the transfer at issue was essentially “a contract for the sale of goods.” It therefore applied the appropriate provision of Article 2 of the Uniform Commercial Code.

Therefore, in conformity with the DeFilippo holding, in order for this Court to determine whether the Acquisition Agreement was essentially a “contract for the sale of goods,” it is necessary to view the transaction as a whole by examining the assets transferred. Conveniently, the parties have categorized the individual assets, and this Court will utilize their itemization.

With respect to the “drawings and tracings,” the largest single asset listed, this Court finds that in this context these are not “goods” as defined in Article 2 of the Uniform Commercial Code. The significance of these items in this transaction is not their physical properties, but the ideas conveyed therein. In this connection, this Court notes that in Department of Transportation v. Bethlehem Steel Corp., 28 Pa.Commw. 214, 368 A.2d 888 (1977) that the court similarly found bridge design plans not to be “goods” so as to implicate the Uniform Commercial Code.

With respect to the “five-year non-competition agreement”, White Consolidated does not actually dispute that it is an item not covered by Article 2 of the Uniform Commercial Code, but instead asserts that the amount allocated to it “should be subtracted from the total purchase price ... since the covenant not to compete is a further obligation of the seller rather than a transfer of a present asset.” This Court rejects this argument. The non-competition agreement is clearly an intangible not covered by Article 2 of the Uniform Commercial Code as, inter alia, it is neither “physical” nor “movable.”

Therefore, considering these two assets which total over half of the purchase price of the acquisition, this Court finds that is inappropriate to characterize this transaction as a sale of “goods” since the “essential bulk of the assets” does not “qualify as ‘goods’ ”. Accordingly, the statute of limitation set forth in 13 PA.CONS.STAT. § 2725 (Purdon 1984) is inapplicable here. Rather, the statute of limitation set forth in 42 PA.CONS.STAT. § 5527(2) (Purdon 1981) applies.

Since it is undisputed that the Acquisition Agreement was executed on April 30, 1973 or May 1, 1973, and since this Court has found that this action was commenced on April 27, 1979, which date is within the six year period set forth in 42 PA.CONS. STAT. § 5527(2) (Purdon 1981), it is unnecessary to determine if the individual claims for indemnity and breach of warranty accrued on later date(s).

THE TORT CLAIMS

In Count IX of the Complaint, Dravo has pleaded a cause of action in trespass. More specifically, Dravo alleges, inter alia, that White Consolidated made false and misleading representations and warranties (regarding the in-process contracts) in order to induce Dravo to enter into the Acquisition Agreement, and that Dravo relied upon these and has incurred damages as a result.

With respect to Count IX, this Court finds 42 PA.CONS.STAT. § 5527(6) (Purdon 1981) to be applicable. Since this provides that an action under that section must be brought within six years, and since the instant action was brought within six years of the date of the Acquisition Agreement, and because the record is undeveloped with regard to when such representations were made, at this stage of the proceedings it would be premature to rule on the timeliness of the tort claim. However, if it is later demonstrated that the representations alleged in Count IX were made more than six years before the date this action was commenced (April 27, 1979), then White Consolidated could make further application to the Court.

Based on the foregoing, with respect to every count of this Complaint, the Motion to Dismiss of White Consolidated based upon the statutes of limitations is denied.

(3) The Notice Requirements of the Acquisition Agreement

White Consolidated also argues that this action should be dismissed because it claims that Dravo did not give it the notice required under Article 5(b) of the Acquisition Agreement.

Without commenting on the merits of either party’s arguments on this issue, and without determining if this is a legal question for the Court or a factual question for the trier of fact, or a mixture of the two, this Court finds that this question cannot be resolved on the current state of the record.

Accordingly, the Motion to Dismiss of White Consolidated based upon Dravo’s failure to give the required notice is denied.

An appropriate Order shall issue.

      . See Exhibit N to the Acquisition Agreement.

      . Article 5(b) of the Acquisition Agreement provides:
      (b) Sellers shall indemnify and save Buyer harmless from and against any and all liability, damage and loss, including attorneys' fees, arising out of or in connection with any breach of covenant or agreement hereunder by Sellers or any of them, or out of or in connection with any inaccurate or incorrect representation or warranty or stipulation of Sellers or any of them contained herein, or out of or in connection with the failure of Sellers to have secured on or prior to the Closing Date any of the consents described in Section 11(e) hereof, and Sellers shall indemnify and save Buyer harmless from and against any and all claims, liabilities or obligations whatsoever, except those expressly assumed by Buyer under Section 5(a)(i) and (ii) hereof, resulting from the ownership of the Assets or the conduct of the Business prior to the Closing Date, provided Buyer shall give prompt written notice thereof to BK, and provided further that the Buyer shall, at the same time of giving such notice, give BK full authority to defend, adjust, compromise or settle the action, suit, proceeding or demand of which such notice shall have been given, in the name of Buyer or otherwise as BK shall elect.

      . This complaint contains nine separate counts involving the in-process contracts noted above. Specifically, these counts are as follows:
      I: Far-Mar-Co. (breach of warranty): II: Far-Mar-Co. (breach of contract); III: Casa Grande (breach of warranty); IV: Casa Grande (breach of contract); V: Lauhoff Grain (breach of warranty); VI: Lauhoff Grain (breach of contract); VII: Melaport (breach of warranty); VIII: Melaport (breach of contract); and IX: all contracts (trespass).

      . Although amended in 1982, the version in effect at the commencement of this action provides in pertinent part:
      § 5527. Six year limitation
      The following actions must be commenced within six years ...
      (2) An action upon a contract, obligation or liability ... founded upon ... [an] instrument in writing, except an action subject to another limitation specified in this subchapter____

      . Although in other portions of the Motion papers this date is stated as May 1, 1973, because this one-day discrepancy is not significant here, the Court will neither make a distinction nor differentiate between the two.

      . 13 PA.CONS.STAT. § 2725 (Purdon 1981) provides in pertinent part:
      (a) General Rule. — An action for breach of any contract for sale must be commenced within four years after the cause of action has accrued.

      . As defined in the Uniform Commercial Code, “goods" "means all things ... which are movable at the time of identification to the contract for sale other than the money in which the price is to be paid ..." 13 PA.CONS.STAT. § 2105(a) (Purdon 1984).

      . See n. 1, supra for the amount allocated to the individual assets and the total price.

      . White Consolidated’s Brief in Support at 13.

      . Therefore, this court need not and will not review the other assets acquired by Dravo to determine if they qualify as "goods" or "non-goods.”

      . See n. 5, supra.

      . 42 PA.CONS.STAT. § 5527(6) provides:
      (6) Any civil action or proceeding which is neither subject to another limitation specified in this subchapter nor excluded from the application of a period of limitation by section 5531 (relating to no limitation) must be commenced within six years.
      This Court notes that for actions commenced 60 days after December 20, 1982, 42 PA.CONS. STAT. § 5524(7) (which provides a two year statute of limitation) would be applicable. Because the commencement date of the instant action was prior to this time, 42 PA.CONS.STAT. § 5527(6) is applicable.

      . This Court notes that White Consolidated has also asserted that Dravo failed to give the notice required by Article 2 of the Uniform Commercial Code. Since this Court has already found Article 2 to be inapplicable here, White Consolidated’s argument will not be addressed further.


source: Caselaw Access Project

author: ROSENBERG, Senior District Judge. ILA JEANNE SENSENICH, United States Magistrate.

license: Public Domain

text:
    William T. MYERS, Plaintiff, v. SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant.
    Civ. A. 82-475.
    United States District Court, W.D. Pennsylvania.
    Feb. 6, 1985.
    John W. McTiernan, McArdle, Caroselli, Spagnolli & Beachler, Pittsburgh, Pa., for plaintiff.
    Anthony M. Mariani, Asst. U.S. Atty., Pittsburgh, Pa., Regional Atty., Office of Gen. Counsel, Region III, Dept, of Health and Human Services, Philadelphia, Pa., for defendant.
   ROSENBERG, Senior District Judge.

This memorandum supplements the Report and Recommendation of the magistrate to whom this case had been previously assigned. This is an appeal from the action of the defendant, Secretary of Health and Human Services in denying the plaintiff, William T. Myers, compensation for injuries he received at work on May 26, 1974.

The decision of the Secretary in denying the plaintiff any compensation under the Social Security Act is the second denial after the matter had been remanded to the Secretary previously for reconsideration. The reason set forth originally by the magistrate is that the Administrative Law Judge failed to comply with the requirements set particularly by the Court of Appeals for this Circuit as basic principles for the determination of such cases.

Briefly, these reasons were: (1) an administrative law judge rejected the findings of the medical experts as being “clearly contrary to the weight of the evidence, which indicates that the claimant can engage in at least sedentary work activity”; (2) the law judge failed to identify the evidence upon which he was relying when he made his decision and consider the weight and to what degree it was supported by objective medical evidence, as stated in Bittel v. Richardson, 441 F.2d 1193, C.A. 3, 1971, “a judge is required to consider a claimant’s symptomatology even if it is not accompanied by objective medical data”; (3) the law judge failed to indicate and consider the sincerity of the complaints of pain which presumably disabled the plaintiff; and (4) the law judge failed to make specific findings as to the claimant’s subjective complaints of pain, Smith v. Harris, 644 F.2d 985, C.A. 3, 1981; and in Smith v. Califano, 637 F.2d 968, 972, C.A. 3, 1981, “[A] claimant’s assertions of pain must be given serious consideration ... even where ... not confirmed by objective evidence”. *

After remand, the administrative law judge made another determination which was affirmed by the Appeals’ Council and the Secretary. On May 18, 1983, the law judge decided against the plaintiff and commented that he had observed the plaintiff throughout the hearing and that he perceived no signs of pain by the plaintiff. He concluded that from the preponderance of the evidence, the claimant failed to show that he “has experienced such as chest pain when exposed to excessive stress or back pain, and has not been of such severity so as to contra-indicate his ability to engage in substantial gainful activity and that said pain has not, in and of itself, been disabling within the meaning of the law and regulations”.

He further stated that the preponderance of the credible evidence of record indicates that the plaintiff’s heart and back conditions “have not been of such severity so as to preclude claimant’s, ability to engage in sedentary work or heavy lifting, prolonged walking or standing and exposure to industrial hazards would not be required”.

The administrative law judge spoke of preponderance of the evidence, but it will be seen that all subjective evidence by the plaintiff and objective evidence by the many medical experts were, in fact, “ex parte” by the plaintiff; nothing by the defendant.

The evidence submitted before the administrative law judge the first time was that the plaintiff was 43 years of age and married; that he worked as a truck driver and a forklift operator for about two years; that his job required him to lift up to 100 to 150 pounds; that he had to load and unload the truck; that he was injured in an accident at work on May 24, 1976; that he sustained a back injury; that he has not worked since that time due to his back injury and cervical sprain and arteriosclerotic heart disease which caused his chest pains; that he could drive his car for only short distances; that he could walk two to three blocks; that he could no longer engage in his former hobbies; that he had trouble sleeping at nights, although he did take sleeping pills and various medications which caused him to become drowsy and sleepy and at time blurred his vision; that he could sit for longer periods of time when he wore his back brace but the brace irritated his skin; that he felt he could lift 15 to 25 pounds; that he used glasses for reading; that he had been in the McKeesport Hospital from May 7, to May 13, 1978, after experiencing dizziness and chest pain for three months; that his myocardial scan was negative; that although it was felt he had coronary artery disease, his electrocardiogram did not show the appropriate changes and that the plaintiff could have had variant angina due to arterial spasms.

In 1978, Dr. Philip B. Holland, a specialist in orthopedic surgery, testified that an examination showed some episodes of pain in his upper back and coccyx; tightness and tenderness with splinting of lumbar spine with muscle tenderness of trapezius and neck muscles; that physical therapy had afforded the plaintiff frequent relief but that the plaintiff had daily pain in his lower back which radiated to his knees and that he had tension-type headaches. It was also Dr. Holland’s opinion that the plaintiff was unable to work because of his lower back strain and that he appeared to be permanently disabled.

Dr. Stephen A. Zubritsky, a specialist in internal medicine, reported that the plaintiff’s coronary arteriographic data revealed arteriosclerotic abnormalities, and that the plaintiff’s treatment should be restricted to medical therapy since he did not have any obstructive disease in the main coronary vessels that were of surgical degree.

In 1979, Dr. Holland again reported that the plaintiff continued to complain of pain in his lower back and it was his opinion that the plaintiff was “totally disabled from work”.

The plaintiff was again hospitalized at McKeesport Hospital from June 24 to June 30, 1979 because of increasing severity of his back pain and the diagnosis upon his discharge was lumbar radiculitis.

Dr. John P. Hodgson, a specialist in internal medicine, on June 25,1979, examined the plaintiff and reported his diagnosis was that of anginal syndrome, and that coronary spasm was suspected but not proven.

Dr. Shaukat Hayat, a specialist in general and neurological surgery, on August 3, 1979, reported that he had originally seen the plaintiff in June, 1979 when the plaintiff complained of back pain radiating down both legs which made it unbearable with walking and driving, and that his history suggested lumbar compression syndrome and indicated a slight bulging disc.

The plaintiff was again hospitalized at McKeesport Hospital from June 9 to 19, 1980, when the plaintiff complained of anorexia without nausea and vomiting. His electrocardiogram showed peak “Y” wave changes, borderline ST segment changes in the inferior leads and in sinus bradycardi. X-rays of the skull showed widening of the posterior fossa, and the final diagnosis was arteriosclerotic heart disease, empty-sella syndrome_(illegible).

On October 20, 1980, Dr. Holland again reported that the plaintiff continued to have pain in his lower back with radiation down his legs and episodes of numbness of both legs, especially his left leg, along with pain in his neck and upper extremeties; that he had been attending physical therapy three times a week and continued to report moderate relief of his symptoms. Dr. Holland also stated that he did not feel the plaintiff had made any real improvement since his last report.

On November 18, 1980, Dr. Rahat Chaudhry, a specialist in internal medicine, reported that his diagnosis was arteriocclerotic heart disease and suffering from ASHD and gastritis.

In December, 1980, Dr. Rudolph J. Buck, a specialist in internal medicine, reported that a treadmill test indicated subnormal exercise capacity and a negative though incomplete exercise test.

Dr. Holland again on March 27, 1981, reported that the plaintiff had continuous neck and lower back strain with intermittent moderate improvement with regression or radiation of pain into the arms and legs at times. This diagnosis was similar to those previously given as being caused by his May accident. The doctor said the plaintiff was unable to walk for more than a few minutes or stand for more than a half hour; that he was limited to very sedentary activities; that he had paravertebral muscle spasm and radicular syndrome; that at times he had sensory loss and limitations in his range of motion.

Following the remand, the Secretary then referred this action to an administrative law judge for another hearing on December 21, 1982, and during that hearing the plaintiff, himself, testified. He stated that he had pain in both legs and in his lower back, which went into his neck and head; that the pain went down his left shoulder and left arm; that the condition had worsened since surgery; that his legs collapse at the knee and he falls down; that the left leg gives way more than the right leg; that he had fallen down the stairs at least three times, and that he also falls when he is walking on the level; that chest pain occurs only when he is under stress and medication gives him only slight relief from his pain; that he gets physical therapy three times a week, which is moist heat and massage; that this therapy gives him relief from pain for a few hours and then the pain returns; that he cannot stand longer than one-half hour; that he cannot pick up objects from the floor; that he could lift five pounds from the table and that he could lift a total weight of ten pounds; that he can sit up for thirty or sixty minutes, depending upon the position; that he can care for his own personal needs and drive his car for about ten minutes; that he goes shopping with his wife, but his wife picks up the objects; that at the time of this hearing he weighed 122 and V2 pounds; when he had weighed 157 pounds at the time of his injury; and that he has no appetite and eats just one meal a day.

After the hearing the administrative law judge filed his decision in which he found the plaintiff was unable to perform his past relevant work but had the residual functional capacity to perform a full range of sedentary work, and therefore he was not entitled to disability insurance benefits. The law judge s decision was appealed to the Appeals Council and the Council adopted findings and conclusions of the administrative law judge.

The Report and Recommendation of the magistrate, which I accepted as factual and adopt as part of the findings of fact in this case, is that there were no contrary reports upon which the administrative law judge could have acted in support of his decision to deny the plaintiffs claim, and this was so in spite of the fact that the law judge is required to consider a claimant’s symptomatology even if it is not accompanied by objective medical data. Bittel v. Richardson, supra. The law judge’s decision contained no analysis of the evidence as is required by law. Dobrowolsky v. Califano, 606 F.2d 403, 409, C.A.3, 1979. The fact that the law judge had been able to see the plaintiff at the hearing and that the plaintiff was able to tolerate sitting throughout the hearing without showing any pain is not sufficient to displace supportive evidence which the administrative law judge must have to make such a determination. Van Horn v. Schweiker, 717 F.2d 871, C.A.3, 1983.

In Van Horn, supra, pursuant to Freeman v. Schweiker, 681 F.2d 727, 731, C.A. 11, 1982, the court criticized an administrative law judge’s reaching “his conclusion by relying solely on his own non-expert observations at the hearing — in other words, by relying on the soundly condemned ‘sit and squirm’ method of deciding disability cases.” What is to be dispraised most is the fact that a hearing officer, such as the administrative law judge, will without support of evidence, take it upon himself after only seeing a witness at a hearing, to say as did the law judge here, that the claimant at the hearing indicated no symptomatology that he was experiencing chest pains or back pains as that to which he had testified, or without any evidence to support it. He may not say “The preponderance of the credible evidence of record indicates that claimant’s heart and back conditions have not been of such severity so as to preclude claimant’s ability ...” Administrative Law Judge’s Opinion, May 18, 1983.

If a judicial officer, who is not a medical expert, without any supporting evidence, attempts to decide what is pain or its severity, such decision, as a matter of record, must be struck down. It is an opinion within the competence of the best medical experts to lay down understandable and significant descriptions of what pain and its severity may be. All of us on occasion have struck our thumbs accidently, or our so-called “crazy bone” in the elbow, and as of that moment suffered torturous pain. That pain, however, could never be felt by those who only looked on; nor could it have been so easily defined afterwards by the person who suffered it, with the statement “It hurt! Oh! It hurt badly!”

Even dictionaries give us no ability to actually feel pain, such for instance, that pain is “An unpleasant sensation, occurring in varying degrees of severity, as a consequence of injury, disease, or emotional disorder”, or, also, “suffering or distress”. The American Heritage Dictionary of the English Language, page 942, 1969.

Webster’s New Dictionary of Synonyms, page 589, 1978, describes pain in its various forms and applies such names to it as ache, pang, throe, twinge and stitch; agony, distress, suffering, passion, anguish and the like. When describing the word “throe” (as of labor and child birth), and because of its association with labor, the dictionary says, “... the term usually designates a violent and convulsive, as well as a recurrent pain ...”

Webster’s Third New International Dictionary, Unabridged, page 1621, 1966, attempts to compare pain in its various forms. One of its definitions probably provides the best description, “2a: a state of physical or mental lack of well-being or physical or mental uneasiness that ranges from mild discomfort or dull distress to acute often unbearable agony, may be generalized or localized, and is the consequence of being injured or hurt physically or mentally or of some derangement of or lack of equilibrium in the physical or mental functions (as through disease) and that usu. (sic) produces a reaction of wanting to avoid, escape or destroy the causative factor and its effect ... which had been merely a dull ache, was suddenly as keen as if a blade had been driven into her wound”.

And yet, after reading such descriptions, they instill no feeling. Thus, the layman-victim in testifying as a witness in a judicial proceeding, who speaks of his pain with its incapacitating results, does not have the capability of causing another layman to visualize or sensualize what the witness himself feels, or its effects upon his being.

I have searched The Merck Manual, Fourteenth Edition, 1982, the handbook of the medical profession, for a clear definition of what pain is but it refers to the focal bodily parts in which pain occurs by reason of injuries or ailments and describes each of these throughout the Manual (See Index “P” at page 2540).

Our courts also realize the complexity of pain and the determination of what constitutes disabling pain. That is so because, as has been said in Marcus v. Califano, 615 F.2d 23, 28, C.A.2, 1979, there is no “average person” standard for pain. Also, it was said in Ber v. Celebrezze, 332 F.2d 293, 299, C.A.2, 1964, “What one human being may be able to tolerate as an uncomfortable but bearable burden may constitute for another human being a degree of pain so unbearable as to subject him to unrelenting misery of the worst sort”. It is common knowledge that some individuals are stoics — that is, they characteristically show indifference to pleasure or pain.

It has also been recognized that pain is variable and may be unbearable at one moment and less intense at another. It was also recognized in Olson v. Schweiker, 663 F.2d 593, 597, C.Á.5, 1981, “We must recognize that the definition of a disability is not limited to cases where the sufferer is in intense pain every day. The nature of some disabilities dictates that there will be some good days but a very large number of excruciatingly bad days.”

And so it has been held that objective medical evidence as the underlying cause of pain is not necessarily required. Aubeufv. Schweiker, 649 F.2d 107, 108, 112-13, C.A.2, 1981. So, too, it was held in Marcus v. Califano, supra, “that a claimant’s impairment is not of a type that ordinarily causes disabling pain, is not sufficient reason to conclude that it does not cause the claimant severe pain.”

Further, it has been said in Stubbs v. Mathews, 544 F.2d 1251, 1255-56, C.A.5, 1977, “... although the administrative law judge’s determination of credibility is entitled to weight, benefits may not be denied in the face of uncontradicted evidence supporting the claimant’s subjective testimony.”

Also, in Wiggins v. Schweiker, 679 F.2d 1387, 1391, C.A.ll, 1982, “Failure to give subjective evidence of pain due consideration, because of the belief that such evidence must be corroborated by objective findings, has frequently been held to be reversible error”.

It is also appropriate here that I repeat what I said in Mosey v. Califano, 490 F.Supp. 1165, 1169 (W.D.Pa., 1980), and in Lightcap v. Celebrezze, 214 F.Supp. 209 (W.D.Pa., 196d2), in quoting Judge Kalodner in Goldman, Admis. of Estate of Goldman v. Folsom, 246 F.2d 776, 778, C.A.3, 1957, as follows:

In discharging that duty we must keep in mind, as adjured by the Supreme Court, that ‘courts must now assume more responsibility for the reasonableness and fairness’ of decisions of federal agencies ‘then (sic) some courts have shown in the past’ and “Reviewing courts must be influenced by a feeling that they are not to abdicate the conventional judicial function.’ ”

The plaintiff in this case, a 36 year old man at the time he was injured in an accident, sustained a back injury with low back and cervical strain and suffered from an arteriosclerotic heart disease causing chest pains; that he was compelled to wear an uncomfortable back brace; that his physical capacity for walking and exercising became nil; that he suffered from ASHD and gastritis, and that eventually matters worsened after the remand and after the second hearing before the administrative law judge; that he had neck, head, legs, back and shoulder pains; that his legs did not support him and caused him to fall; that in addition to chest pains, he was under stress and medication which gave him only slight relief; that physical therapy did give him some relief from the pain, but the pain would return; that he had no appetite but did eat one meal a day, and that his weight which had been 157 pounds at the time of his injury had fallen to 122 and lh pounds at the date of his rehearing.

While no comment was made by the administrative law judge on the weight loss in the evidence, it is common knowledge that loss of weight can be due only to voluntary or compulsive starvation or dieting, as the case may be. But when it occurs in the case of this particular plaintiff no such evidence exists, but the circumstantial evidence is worthy of consideration that his weight loss occurred because of the physical, stressful suffering in accordance with the plaintiff’s own testimony.

There is medical evidence upon the part of the plaintiff which supports his claim medically and there is no evidence before the administrative law judge to contradict it.

Under all the circumstances and the law as it applies to the evidence in this case, the findings of the administrative law judge, after the second hearing, must fall for lack of support. The motion of the plaintiff for summary judgment will be granted, and judgment entered for the plaintiff.

MAGISTRATE’S REPORT AND RECOMMENDATION ■

November 19, 1984

ILA JEANNE SENSENICH, United States Magistrate.

I. RECOMMENDATION

It is recommended that defendant’s motion for summary judgment be denied, that plaintiff’s motion for summary judgment be granted and that the decision of the Secretary, denying plaintiff’s application for disability insurance benefits, be reversed.

II. REPORT

This is an action timely filed under the Social Security Act, 42 U.S.C. Section 405(g), for review of a decision of the Secretary of the Department of Health and Human Services, finding that plaintiff is not totally and permanently disabled due to low back and cervical strain and arteriosclerotic heart disease causing chest pains.

This is the second time this action has been before this court for consideration. On September 14, 1982, the court adopted the report and recommendation of the magistrate dated August 20, 1982, denied defendant’s motion for summary judgment, denied plaintiff’s motion for summary judgment and remanded this action to the Secretary for reconsideration. A copy of the report and recommendation of August 20, 1982, is attached hereto and incorporated herein.

Following remand the Secretary remanded this action to an administrative law judge who conducted another hearing on December 21, 1982. During that hearing plaintiff testified that he had pain in both legs and his lower back which went into his neck and head (Tr. 185). The pain goes down into his left shoulder and left arm (Tr. 186). His condition has been worse since he had surgery. His legs collapse at the knee and he falls down (Tr. 186). His left leg gives away more than his right leg. At the time of the hearing this had been happening for 3V2 years. During 1982 he had fallen down the stairs at least three times. This also happens when he is walking on the level (Tr. 188). Plaintiff described his current medications. He was taking a muscle relaxer, pain medications, a sleeping pill, sorbitrates, inderal and nitrogylcerin. His chest pain occurs only when he is under extreme stress (Tr. 193). His medication gives him only slight relief from his pain. He gets physical therapy three times a week. This is moist heat and massage (Tr. 194). He had been getting physical therapy since 1976. It gives him relief from the pain for a few hours. Then the pain returns. He cannot stand longer than V2 hour (Tr. 198). He cannot walk more than two blocks on the level and cannot pick an object off the floor without a lot of pain (Tr. 199). He could lift five pounds from the table. The total weight he could lift would be ten pounds (Tr. 200). He can sit up to thirty or sixty minutes, depending on his position (Tr. 201). He can care for his own personal needs (Tr. 202). He can drive his car for about ten minutes. He goes shopping and to the doctor. He goes shopping with his wife and she picks objects up (Tr. 203). Some of his medications make him drowsy. At the time of the hearing his weight was 1222/2 pounds. It had been 157 when he was injured. He was 5T1" tall. He testified that he has no appetite and eats just one meal a day.

Plaintiff’s counsel submitted for consideration a report of Dr. Holland dated December 29, 1981, in which he reported that plaintiff’s complaints continued essentially unchanged. His neck and upper back pain and headaches were acute at times and less troublesome at others. He continued to receive physical therapy and was taking various pain medications and muscle relaxants. His overall condition was essentially unchanged. His overall prognosis was poor (Tr. 207). Submitted also was a report by Dr. Holland dated February 17, 1983, stating that he felt plaintiff was unable to engage in any substantial gainful activity (Tr. 209). Following the hearing the administrative law judge filed a recommended decision in which he found that plaintiff was unable to perform his past relevant work but had the residual functional capacity to perform a full range of sedentary work. Therefore he found that plaintiff was not entitled to disability insurance benefits. Plaintiff appealed to the Appeals Council which adopted the findings and conclusions of the administrative law judge.

The report and recommendation of August 20, 1982, noted that plaintiff had satisfied his burden of showing his inability to return to his former work and the burden had shifted to the Secretary to show other work he could perform. The reports by Dr. Holland expressing his opinion that plaintiff could not perform any work were entitled to substantial weight. There were no contrary reports and the administrative law judge was required to explain his reasons for rejecting uncontradicted medical evidence. The judge had failed to identify the evidence he was referring to when he commented that he rejected the opinion of Dr. Holland because his conclusions were “clearly contrary to the weight of the evidence, which indicates that the claimant can engage in at least sedentary work activity.” In that report it was noted that in the Third Circuit the judge is required to consider a claimant’s symptomatology even if it is not accompanied by objective medical data. Since he failed to do so, it was recommended that the action be remanded. It was further noted that pain itself can be a disabling condition and the judge had failed to make any findings relating to plaintiff’s complaints of disabling pain.

The recommended decision of the administrative law judge dated May 18, 1983, contained no analysis of the evidence as required by the Third Circuit. Dobrowolsky v. Califano, 606 F.2d 403, 409 (3d Cir.1979); Baerga v. Richardson, 500 F.2d 309, 312 (3d Cir.1974); Hargenrader v. Califano, 575 F.2d 434 (3d Cir.1978). He commented only that plaintiff had been able to tolerate sitting throughout the hearing without showing any pain. The court of appeals has rejected the “sit and squirm” test. Van Horn v. Schweiker, 717 F.2d 871 (3d Cir.1983). The only analysis by the judge was the following:

[T]he preponderance of the credible evidence of record, including observation of claimant at the hearing, indicates that any symptomatology “claimant has experienced such as chest pain when exposed to excessive stress or back pain, has not been of such severity so as to contra-indicate his ability to engage in substantial gainful activity and that said pain has not, in and of itself, been disabling within the meaning of the law and regulations.”
The preponderance of the credible evidence of record indicates that claimant’s heart and back conditions have not been of such severity so as to preclude claimant’s ability to engage in sedentary work or heavy lifting, prolonged walking or standing and exposure to industrial hazards would not be required.

This analysis would appear to be inadequate in light of the reports of Dr. Holland expressing his opinion that plaintiff could not work. The Appeals Council held that it could not consider plaintiff’s symptoms unless a specific symptom was established by clinical and laboratory data. Functional limitations must be accessed on the basis of objective physical findings. This is clearly contrary to Third Circuit law which requires the Secretary to give weight to testimony of subjective pain when it is supported by competent medical evidence. Dobrowolsky v. Califano, 606 F.2d 403, 409 (3d Cir.1979). See also, Bittel v. Richardson, 441 F.2d 1193 (3d Cir.1971); Taybron v. Harris, 667 F.2d 412, 415, n. 6 (3d Cir.1981); Podedworny v. Harris, 745 F.2d 210 (3d Cir.1984). Since the Appeals Council has indicated an inability to comply with Third Circuit law another remand would be pointless. The Secretary did not produce evidence to rebut the reports of Dr. Holland in which he expressed his opinion plaintiff was totally and permanently disabled. Therefore, it is recommended that defendant’s motion for summary judgment be denied, that plaintiff’s motion for summary judgment be granted and that the decision of the Secretary, denying plaintiff’s application for disability insurance benefits, be reversed.

In accordance with the Magistrates Act, 28 U.S.C. Section 636(b)(1)(B) and (C), and Rule 4 of the Local Rules for Magistrates, the parties are allowed ten (10) days from the date of service to file objections to this report and recommendation.

      . An employer would be hard put to employ such an. individual for any kind of employment under these circumstances.

      . The plaintiffs medical experts prove this statement to be untrue.

      . Descriptions but not definitions.

      . Where the ulnar nerve surfaces.

      . Description but not definition.

      . Describes but does not define.

      . Here the claimant produced both objective proof and consequent subjective proof of his bodily infirmities and their affects as a totality.


author: DIANA E. MURPHY, District Judge.

text:
    Jacqueline McKENZIE, Plaintiff, v. Margaret M. HECKLER, Secretary of the Department of Health and Human Services, Defendant.
    Civ. No. 4-84-182.
    United States District Court, D. Minnesota, Fourth Division.
    Feb. 7, 1985.

      Laurie N. Davison, Legal Aid Society, Minneapolis, Minn., for plaintiff.
    Mac Davis, Dept, of Health and Human Services, Baltimore, Md., and Paul W. Day, Asst. U.S. Atty., Minneapolis, Minn., for defendant.
   MEMORANDUM OPINION AND ORDER

DIANA E. MURPHY, District Judge.

Jacqueline McKenzie, brings this action seeking declaratory and injunctive relief against defendant, Margaret M. Heckler, Secretary of the Department of Health and Human Services (the Secretary), alleging that the Social Security Administration’s policy of postponing the calculation and payment of retroactive Disability Benefits (RSDI) until after retroactive Supplemental Security Income (SSI) benefits have been calculated violates the Social Security Act and the Administrative Procedure Act (APA). Jurisdiction is alleged under 42 U.S.C. § 405(g) and § 1383(c), and 28 U.S.C. § 1361. This court issued an order conditionally certifying a class and enjoining the Secretary from sending any retroactive SSI benefits of class members to county welfare agencies in Minnesota until a determination could be made on the merits. This matter is now before the court upon plaintiff's motions for class certification and summary judgment. Both sides have agreed that this action can be properly resolved upon summary judgment. Oral argument was scheduled, and written materials have been submitted by the parties, as well as the National Organization of Social Security Claimants’ Representatives, amicus curae.

BACKGROUND

Plaintiff filed an application for RSDI under Title II of the Social Security Act on September 30, 1980, and an application for SSI under Title XVI of the Social Security Act on January 9, 1981. While these programs both provide funds to the disabled, they each have different characteristics. RSDI is a government insurance program. To qualify, one must have worked and contributed to the Social Security trust fund the requisite number of quarters prior to becoming totally disabled. Eligibility for RSDI is not dependent on financial need. The SSI program, by contrast, is a needs based program. SSI provides monthly payments to totally disabled individuals, but only if their income and assets are below certain limits established by Congress and the Secretary. One can be eligible for SSI even if one has never worked and contributed to the Social Security trust fund. The disability test for SSI is identical to the disability test for RSDI.

Eligibility for RSDI and SSI is generally determined concurrently. This process lasts several months to several years, depending upon whether the claimant is found eligible initially or only after lengthy appeals. After a claimant is found eligible for both SSI and RSDI disability benefits, it is the established policy of the Social Security Administration to postpone calculating and paying retroactive RSDI benefits until after retroactive SSI benefits have been paid. See Program Operations Manual System (POMS), §§ GN02610.005 and GN02610.045. The retroactive SSI benefits are paid directly to the county as reimbursement for welfare benefits paid. Then the Social Security Administration calculates the amount of the retroactive RSDI benefits. The retroactive RSDI amount is reduced by the retroactive SSI already paid to the county, and the balance, if any, is paid to the claimant.

In plaintiff’s case, her initial applications to both programs were denied and she filed a timely request for hearing on April 6, 1981.

While plaintiff was pursuing her Social Security appeal, she applied for and received welfare payments from Hennepin County under the Minnesota Supplemental Aid (MSA) Program. As a condition of receiving MSA, she signed an agreement authorizing the Social Security Administration to reimburse Hennepin County for MSA out of any retroactive SSI award she might receive. Under the agreement, the county would be reimbursed only if she were found eligible for SSI and only for MSA paid to Ms. McKenzie in those months during which she was found to have been eligible for SSI.

The statutory authority for the payment of retroactive SSI to counties as reimbursement for interim welfare assistance was enacted by Congress in 1974. Act of August 7, 1974, Pub.L. No. 93-368, § 5, 88 Stat. 420, codified at 42 U.S.C. § 1383(g). This statute applies only to SSI benefits. RSDI benefits may not be paid to counties as reimbursement for interim welfare benefits.

A hearing on the disability appeal was held before an Administrative Law Judge (AU). On May 17, 1982, the AU found that plaintiff met the disability requirements for RSDI effective July 1980, and for SSI effective January 1981.

Plaintiff began receiving prospective RSDI benefits in August of 1982 in the amount of $235.20. On September 14, 1982, plaintiff’s attorney wrote to the district office to inquire why the claimant had not yet received her Award Certificate and her retroactive RSDI award. Plaintiff never received a response to this letter.

On January 13, 1983, plaintiff was sent an SSI Notice of Decision relating to her eligibility for SSI benefits. She was found eligible for SSI benefits from January of 1982 through July of 1982. Since she had received no other income for the period of January of 1982 through July of 1982, she was awarded SSI of $264.70 from January to June 1982, and $284.30 for July 1982 for a total of $1,872.50. The retroactive SSI award was sent to the Hennepin County Welfare Department pursuant to 42 U.S.C. § 1383(g). Plaintiff had received $340 per month from the Hennepin County Welfare Department between January and July 1982 for a total of $2,272.20. Thus, Hennepin County retained the entire retroactive SSI award pursuant to the interim assistance agreement.

Plaintiff objected to the calculation and payment of her retroactive SSI award prior to the calculation and payment of her retroactive RSDI award and appealed from the January 13, 1983 SSI Notice. She received a final decision by the Appeals Council denying her Request for Review on January 9, 1984, thereby exhausting her administrative remedies.

On March 6, 1984, plaintiff filed her complaint in this action. She filed an amended complaint on March 26, 1984 to maintain her suit as a class action.

Plaintiff contends that she was eligible for approximately $215 per month in RSDI benefits between January and July of 1982, and $70 per month in SSI benefits. If her retroactive RSDI benefits had been calculated and paid simultaneously with her SSI benefits, or prior to the SSI award, plaintiff charges that she would have received RSDI of $1,505 ($215 X 7) for the period of January through July 1982; Hennepin County would have received $490 ($70 X 7) pursuant to its interim assistance agreement.

Since the retroactive SSI benefits were calculated and paid prior to the RSDI benefits, plaintiff contends that she will receive virtually no Social Security benefits for January through July 1982. She states that Hennepin County has retained the entire retroactive SSI award and when her retroactive RSDI benefits are awarded, they will be reduced (“offset”) by the amount of SSI which would not have been paid had the RSDI been paid when due. 20 C.F.R. § 404.408b(b) (1983).

Plaintiff charges that the Secretary’s policy is a violation of the Social Security Act since it deprives claimants of retroactive RSDI benefits which they would receive if their RSDI benefits were calculated and paid either simultaneously with, or prior to, their SSI benefits. She also contends that the Secretary failed to follow the provisions of the APA.

DISCUSSION

A. Class Certification

The Secretary alleges that class certification is inappropriate because the court lacks jurisdiction over members of the class who have not exhausted their administrative remedies. She contends that under 42 U.S.C. § 405(g), the sole basis for jurisdiction, each member of the class must have received a final decision of the Secretary after a hearing and have filed a civil action in an appropriate district within 60 days after the mailing of the notice of decision. She notes that she has not waived the exhaustion requirement and argues that the court may not do so either. Because plaintiff has not demonstrated that other claimants besides herself have met this requirement, the Secretary maintains that plaintiff has failed to satisfy the numerosity requirement of Fed.R.Civ.P. 23.

Plaintiff, on the other hand, argues that jurisdiction is proper over the entire class because the exhaustion requirement of 42 U.S.C. § 405(g) may be properly waived. Alternatively, plaintiff contends that mandamus jurisdiction is available under 28 U.S.C. § 1361 because the Secretary has a clear non-discretionary duty to comply with 42 U.S.C. § 405(i) and with the APA.

To demonstrate jurisdiction under 42 U.S.C. § 405(g), class members must meet two prerequisites. Heckler v. Ringer, _ U.S. _, 104 S.Ct. 2013, 2023, 80 L.Ed.2d 622 (1984); Mathews v. Eldridge, 424 U.S. 319, 328, 96 S.Ct. 893, 899, 47 L.Ed.2d 18 (1976). The first is a nonwaivable requirement that a claim for benefits shall have been presented to the Secretary. Id. This requirement may be satisfied without the claimant actually filing a formal appeal. See Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976). (Plaintiff satisfied this step by returning a questionnaire to the Secretary.)? The second prerequisite, that administrative remedies be fully pursued, may be waived by the court when plaintiffs claim is “wholly collateral” to the claim for benefits, and where plaintiff makes a “colorable showing” of irreparable injury if exhaustion is not waived. Heckler v. Ringer, _ U.S. _, 104 S.Ct. 2013, 80 L.Ed.2d 622 (1984).

Plaintiff and her class clearly satisfy the nonwaivable presentment requirement. Each class member has applied for RSDI benefits and may be denied some or all of those benefits as a result of the challenged policy.

Plaintiff has met the second requirement of § 405(g), exhaustion of administrative remedies, by receiving a final decision from the Appeals Court and initiating this suit. In addition, waiver of this requirement seems appropriate for the class members under the Heckler v. Ringer analysis. In this case, the Secretary does not dispute the entitlement of the class to retroactive disability benefits. Rather, the disagreement is whether the benefits are to be SSI benefits or RSDI benefits. The class is defined prospectively, which ensures that, even if the class prevails, the Social Security Administration will have no greater liability than under current policy. Accordingly, the claim the class is pursuing is collateral to their claim for benefits.

The class has also demonstrated that the Secretary fails to give class members the necessary information which would cause an appeal. The notice which informs the claimant of the calculation of retroactive SSI and its payment to the county welfare department does not tell the recipient that the Secretary has intentionally delayed calculation of retroactive RSDI. Nor does it state that if RSDI were awarded first, it would be paid free from any claims by the county welfare department. Once the retroactive SSI benefits are paid, the harm becomes irreparable because the reduction of retroactive RSDI to reflect the retroactive SSI is then proper. To require exhaustion of administrative remedies when the class members lack adequate notice to protect their interests is unreasonable. Moreover, given the prospective nature of the class, exhaustion of administrative remedies is unnecessary.

Because waiver of the exhaustion requirement is appropriate, jurisdiction over the entire class exists under 42 U.S.C. § 405. Accordingly, plaintiff has demonstrated that the numerosity requirement of Fed.R.Civ.P. 23 is met. See Memorandum Opinion and Order dated November 8, 1985. In addition, since jurisdiction is proper under 42 U.S.C. § 405, plaintiffs argument concerning mandamus jurisdiction need not be addressed.

B. The Alleged Violations of the Social Security Act

Plaintiff contends that the Secretary’s application of the offset provision of section 1127 of the Social Security Act, 42 U.S.C. § 1320a-6, to claims for SSI and RSDI which are adjudicated concurrently is erroneous. She argues that the express language of the offset provision demonstrates that the offset does not apply where entitlement to SSI and RSDI are adjudicated concurrently. Plaintiff maintains that the legislative history of the provision further bolsters this construction, for Congress intended that the two programs be coordinated and treated as a totality with benefits being considered, calculated and paid together.

Plaintiff acknowledges that the claims of the class members will be determined under the offset provision, as amended by the Deficit Reduction Act of 1984. Pub.L. No. 98-369, § 2615, 6A U.S.Codé Cong. & Admin.News (98 Stat.) 1132 (1984) to be codified at 42 U.S.C. § 1320a-6. The new language, which covers retroactive benefits paid after February 1, 1985, clearly applies to claims for SSI and RSDI which are adjudicated concurrently. Plaintiff contends that the amendmént supports her claim that the previous version did not apply to concurrently adjudicated claims and that it enables the Secretary to avoid any windfall of benefits. She notes that her challenge to the Secretary’s policy of the timing of benefit calculation is' just as viable after the new amendment takes effect.

Plaintiff contends that the Secretary’s policy conflicts with 42 U.S.C. § 407, which protects RSDI benefits from creditors, and 42 U.S.C. § 406, which allows the Secretary to certify attorney’s fees for direct payment out of past-due RSDI benefits. She asserts that the Secretary’s policy is not entitled to much deference since it is not based upon statutory or regulatory language.

The Secretary takes a different view. She argues that application of the previous version of the offset provision to concurrent claims is proper, despite the findings of three federal courts to the contrary. The Secretary contends that plaintiff has suffered no financial detriment and that without application of this offset provision, there would be a windfall if plaintiff’s retroective RSDI benefits were paid before the SSI payments. This occurs, she argues, because section 1611(c)(1) of the Act, 42 U.S.C. § 1382(c)(1), and 20 C.F.R. 416.-1123(a) dictate that retroactive RSDI benefits would count as income for SSI purposes only for the month in which they were received, and not for all prior months in the retroactive period. As further support of her policy, she notes that no negative response arose from Congress when the General Accounting Office issued a report in 1980 urging her to take such an approach, and that the amendment to the offset provision makes it clear that Congress intended the offset provision to apply in concurrent cases.

The Secretary also argues that application of the offset provision does not contravene 42 U.S.C. § 407, because the interim assistance provision, 42 U.S.C. § 1383(g), expressly recognizes that such a payment is not an assignment of benefits under § 407. She contends that plaintiff improperly assumes that the Secretary sent RSDI benefits to the State instead of the SSI benefits which were properly sent to avoid the “double-dipping” of state interim assistance and federal disability benefits.

In addition, the Secretary asserts that attorney’s fees will not be limited by her policy since the amount of the fee is not based on the amount of retroactive benefits a claimant will receive. If the authorized fee exceeds the amount the Secretary can withhold — 25% of the claimant’s past due RSDI benefits — the attorney may collect the remainder of the fee from the claimant.

The language of the previous version of the offset provision refers to cases where a claimant for RSDI benefits is subsequently determined to be entitled to those benefits and “was” an individual to whom SSI benefits “were paid” for one or more months “during” the retroactive period. See 42 U.S.C. § 1320a-6. This language indicates that the provision was intended to apply only when SSI benefits were actually paid during the retroactive period as a result of an earlier adjudication. This court agrees with the three federal courts which have previously held that the offset provision does not apply in a concurrent case when SSI benefits are paid retroactively prior to RSDI benefits merely because they were calculated first. See Burnett v. Secretary of Health & Human Services, 563 F.Supp. 789, 792 (W.D.Ark.1983), appeal docketed No. 83-1992-WA (8th Cir. July 25, 1983); Carlisi v. Secretary of Health & Human Services, 583 F.Supp. 135 (E.D.Mich.1984); Booe v. Heckler, No. IP 81-826-C (S.D.Ind. Jan. 23, 1984). Contra, Grace Gallo v. Heckler, 600 F.Supp. 1513 (E.D.N.Y.1985). Since plaintiffs claims were adjudicated concurrently, the offset provision should not have been applied.

The class members’ claims will be calculated under the amended version of the offset provision. This provision makes explicit the Secretary’s authority to reduce retroactive SSI benefits by the amount of retroactive RSDI benefits already paid and eliminates the risk of a windfall. The amended version does not, however, authorize the Secretary to pay retroactive SSI benefits first. Nothing in the statutory language supports such an interpretation.

In addition, it is well-settled that two statutes should be interpreted, if possible, to give effect to each. E.g., Watt v. Alaska, 451 U.S. 259, 267, 101 S.Ct. 1673, 1678, 68 L.Ed.2d 80 (1981). The Secretary’s policy of delaying payment of retroactive RSDI conflicts with 42 U.S.C. § 407. This section has been interpreted to protect retroactive awards of RSDI benefits from claims by state welfare agencies for reimbursement of welfare paid while the recipient’s application for RSDI was pending. Philpott v. Essex County Welfare Board, 409 U.S. 413, 93 S.Ct. 590, 34 L.Ed.2d 608 (1973). In response to the Philpott decision, Congress created an exception to § 407 by authorizing the Secretary to pay retroactive SSI benefits to county welfare departments for reimbursement of interim assistance. 42 U.S.C. § 1383(g). Congress did not, however, amend Title II. RSDI benefits are still protected from claims by a state creditor. See, e.g., Tidwell v. Schweiker, 677 F.2d 560 (7th Cir.1982), cert. denied, 461 U.S. 905, 103 S.Ct. 1874, 76 L.Ed.2d 806 (1983); Moore v. Colautti, 483 F.Supp. 357 (E.D.Pa.1979), aff'd, 633 F.2d 210 (3d Cir.1980), held that Congress’ different treatment of RSDI and SSI benefits was rational because RSDI is financed partly from the recipient’s own past contributions.

By paying the SSI benefits first as though a claimant is not eligible for RSDI, the Secretary artificially transforms retroactive RSDI benefits into retroactive SSI benefits. These SSI benefits are then paid to the state, when they should have been protected as RSDI benefits under 42 U.S.C. § 407.

Besides depriving claimants of retroactive RSDI benefits in violation of 42 U.S.C. § 407, the Secretary’s policy harms claimants by reducing the amount of past due benefits out of which attorney’s fees can be withheld under 42 U.S.C. § 406(b). In enacting 42 U.S.C. § 406, Congress intended to encourage lawyers to represent disability claimants. See Dawson v. Finch, 425 F.2d 1192 (5th Cir.1970), cert. denied, 400 U.S. 830, 91 S.Ct. 60, 27 L.Ed.2d 60 (1970). The Secretary’s policy contravenes that effort. For these reasons, the court concludes that the Secretary’s policy of delaying the calculation of RSDI benefits is contrary to the Social Security Act.

C. The Alleged Violations of the Administrative Procedure Act

Plaintiff alleges that the Secretary has violated the APA, 5 U.S.C. § 553, et seq., by issuing provisions of the Program Operations Manual System (POMS) §§ GN02610.005 and GN02610.045, without complying with the formal rule-making and publication requirements. Plaintiff claims that the challenged policies do not fit into any of the limited exceptions to the formal rule-making requirements since these policies are substantive, affecting individual rights and objections. In addition, plaintiff argues that publication in the Federal Register is required under the Freedom of Information Act (FOIA), 5 U.S.C. § 552(a), since the provisions contain interpretations of general applicability.

The Secretary, on the other hand, contends that the challenged POMS sections do not violate the APA. First, the Secretary contends that she is not barred by the Social Security Administration’s 1971 “statement of policy” which voluntarily assumed the notice and comment procedures of the APA. 5 U.S.C. § 553(a)(2), which exempts from the rule-making requirements matters relating to “grants” or “benefits”, would then apply she argues. Second, even if the court finds as a general rule that the Secretary must follow the notice and comment procedures of the APA, she maintains that 5 U.S.C. § 553(b)(A) exempts the POMS since they are staff instructions which do not change the law as does a substantive rule. Finally, the Secretary contends that the POMS do not violate the FOIA, for they are not interpretive rules of general applicability which change existing practice, but are staff instructions which have been available under the applicable section of the FOIA, 5 U.S.C. § 552(a)(2)(C).

The challenged POMS sections are clearly rules as defined in 5 U.S.C. § 551(4). Unless specifically excepted by 5 U.S.C. §§ 553(a) or 553(b)(AHB), the POMS sections should have been promulgated with notice and an opportunity for public participation. The challenged provisions are not exempt from the rule-making requirements of the APA under § 553(a), however, even though they pertain to “grants” or “benefits”. The Secretary’s attempt to retract the 1971 waiver is ineffective. See Humana of South Carolina Inc. v. Califano, 590 F.2d 1070, 1084 and n. 104 (D.C.Cir.1978), affirming 419 F.Supp. 253, 260 (D.D.C.1976); Arlington Oil Mills Inc. v. Knebel, 543 F.2d 1092, 1095 n. 6 (5th Cir.1976). Nor are the POM provisions exempt under § 553(b)(A) which excludes “interpretive rules, general statements of policy, or rules of agency organization, procedure, or practice....” 5 U.S.C. § 553(b)(A). An interpretive rule is one that simply explains and sets forth with greater specificity that which a statute already requires. See, e.g., Gosman v. United States, 573 F.2d 31, 39, 215 Ct.Cl. 617 (1978); American Bancorp, Inc. v. Board of Governors of Federal Reserve System, 509 F.2d 29, 34 (8th Cir.1974). The Secretary has conceded that these POMS provisions actually changed the way in which the Social Security Administration processes benefits. The prior practice was to pay retroactive RSDI benefits as soon as they were calculated. Such a change is substantive in nature. See Levesque v. Block, 723 F.2d 175 (1st Cir.1983) (Secretary of Agriculture concedes that the choice of an effective date, not contained in the statute, is a substantive rather than procedural rule.)

Similarly, the challenged POMS provisions cannot be considered a general policy statement. A general policy statement does not establish a binding norm, but announces the agency’s tentative intentions for the future. General policy statements must leave the administrator free to exercise informed discretion. Ia. Power & Light Co. v. Burlington Northern, Inc., 647 F.2d 796, 811 (8th Cir.1981), cert. denied, 455 U.S. 907, 102 S.Ct. 1253, 71 L.Ed.2d 445 (1982); Brown Exp., Inc. v. United States, 607 F.2d 695, 701 (5th Cir.1979); Lewis-Mota v. Secretary of Labor, 469 F.2d 478, 482 (2d Cir.1972).

Finally, the POMS sections are not exempt as a “rule of agency organization, procedure, or practice.” Such an internal agency rule is mainly directed toward improving the efficient and effective operation of an agency, rather than determining the rights or interests of affected parties. See Batterton v. Marshall, 648 F.2d 694 (D.C.Cir.1980). See also Chrysler Corp. v. Brown, 441 U.S. 281, 99 S.Ct. 1705, 60 L.Ed.2d 208 (1979); Emerson Elec. Co. v. Schlesinger, 609 F.2d 898 (8th Cir.1979); Morton v. Ruiz, 415 U.S. 199, 232, 94 S.Ct. 1055, 1073, 39 L.Ed.2d 270 (1974); Lewis-Mota v. Secretary of Labor, 469 F.2d 478 (2d Cir.1972). The rule in question is not directed toward improving agency operations, and the POMS provisions should have been promulgated with notice and comment.

The Secretary also should have published the POM sections in the Federal Register. The FOIA requires publication of “substantive rules of general applicability”, “statements of general policy”, or “interpretations of general applicability.” 5 U.S.C. § 552(a)(1)(D). Federal courts have held that the FOIA requires publication of all administrative rules which have a “significant impact” on a segment of the public. See, e.g., Vigil v. Andrus, 667 F.2d 931, 938 (10th Cir.1982); Anderson v. Butz, 550 F.2d 459, 463 (9th Cir.1977); Dean v. Butz, 428 F.Supp. 477, 480 (D.Hawaii 1977); Lewis v. Weinberger, 415 F.Supp. 652, 659 (D.N.M.1976). As discussed above, the Secretary’s policy change has had a large impact on a significant number of people.

ORDER

Accordingly, based upon the above, and all the files, records, and proceedings herein,

IT IS HEREBY ORDERED that

1. Plaintiff’s motion for class certification is granted. The class is defined as all persons residing in Minnesota whose applications for SSI and RSDI have been or will be adjudicated concurrently, and whose retroactive SSI benefits will be paid to the local welfare agency pursuant to an interim assistance agreement.

2. Plaintiff’s motion for summary judgment is granted and the Secretary is enjoined from calculating and paying retroactive SSI benefits prior to calculating and paying retroactive RSDI benefits to any member of the class of persons plaintiff represents. The Secretary is further enjoined from deducting the SSI benefits to plaintiff McKenzie and paid to Hennepin County from her retroactive RSDI award.

      . The class was defined as all persons residing in Minnesota whose applications for SSI and RSDI have been or will be adjudicated concurrently, and whose retroactive SSI benefits will be paid to the local welfare agency pursuant to an interim assistance agreement.

      . 42 U.S.C. § 405(g) provides in pertinent part: Any individual, after any final decision of the Secretary made after a hearing to which he was a party ... may obtain a review of such decision by a civil action commenced within sixty days after the mailing to him of notice of such decision or within such further time as the Secretary may allow.

      . 42 U.S.C. § 1383(c)(3) incorporates § 405(g) and establishes jurisdiction over SSI claims.

      . Waiver of the exhaustion requirement is also appropriate under the factors enumerated by the Eighth Circuit in Mental Health Ass’n of Minnesota v. Heckler, 720 F.2d 965 (8th Cir.1983). Plaintiffs class has a strong interest in judicial review of the challenged policy at this juncture. Moreover, plaintiff alleges that defendant has taken a final erroneous position on a procedural issue. Plaintiff also contends that the Secretary’s practices thwart the intention of Congress to protect RSDI benefits from the claims of creditors, an established public policy. Under these circumstances, deference to the agency is unnecessary.

      . Apart from jurisdiction and numerosity, the . government has not challenged any other aspects of class certification. For reasons already stated in the Memorandum Opinion and Order dated November 8, 1984, plaintiffs class satisfies the requirements of Fed.R.Civ.P. 23.

      . The version of section 1127 of the Social Security Act, 42 U.S.C. § 1320a-6, which applies to plaintiff provides as follows:

        Section 1127. Notwithstanding any other provision of this Act, in any case where an individual—
      (1) makes application for benefits under ... [Title II] and is subsequently determined to be entitled to those benefits, and
      (2) was an individual with respect to whom supplemental security income benefits were paid under ... [Title XVI] (including State supplementary payments which were made under an agreement pursuant to section 212 of Public Law 93-66) for one or more months during the period beginning with the first month for which a benefit described in paragraph (1) is payable and ending with the month before the first month in which such benefit is paid pursuant to the application referred to in paragraph (1),
      the benefits (described in paragraph (1)) which are otherwise retroactively payable to such individual for months in the period described in paragraph (2) shall be reduced by an amount equal to so much of such supplemental security income benefits (including State supplementary payments) described in paragraph (2) for such month or months as would not have been paid with respect to such individual or his eligible spouse if the individual had received the benefits under ... [title II] at the times they were regularly due during such period rather than retroactively; and from the amount of such reduction the Secretary shall reimburse the State on behalf of which such supplementary payments were made for the amount (if any) by which such State's expenditures on account of such supplementary payments for the period involved exceeded the expenditures which the State would have made (for such period) if the individual had received the benefits under title II at the times they were regularly due during such period rather than retroactively. An amount equal to the portion of such reduction remaining after reimbursement of the State under the preceding sentence shall be covered into the general fund of the Treasury.

      . The amended version of section 1127 of the Social Security Act reads:
      ******
      (a) Notwithstanding any other provision of this Act, in any case where an individual—
      (1) is entitled to benefits under title II that were not paid in the months in which they were regularly due; and
      (2) is an individual or eligible spouse eligible for supplemental security income benefits for one or more months in which the benefits referred to in clause (1) were regularly due, then any benefits under title II that were regularly due in such month or months, or supplemental security income benefits for such month or months, which are due but have not been paid to such individual or eligible spouse shall be reduced by an amount equal to so much of the supplemental security income benefits, whether or not paid retroactively, as would not have been paid or would not be paid with respect to such individual or spouse if he had received such benefits under title II in the month or months in which they were regularly due.
      (b) For purposes of this section, the term "supplemental security income benefits” means benefits paid or payable by the Secretary under title XVI, including State supplementary payments under an agreement pursuant to section 1616(a) or an administration agreement under section 212(b) of Public Law 93-66.
      (c) From the amount of the reduction made under subsection (a), the Secretary shall reimburse the State on behalf of which supplementary payments were made for the amount (if any) by which such State's expenditures on account of such supplementary payments for the month or months involved exceeded the expenditures which the State would have made (for such month or months) if the individual had received the benefits under title II at the times they were regularly due. An amount equal to the portion of such reduction remaining after reimbursement of the State under the preceding sentence shall be covered into the general fund of the Treasury.
      (b) (sic) The amendment made by this section shall apply for purposes of reducing retroactive benefits under title II of the Social Security Act or retroactive supplemental security income benefits payable beginning with the seventh month following the month in which this Act is enacted; except that in the case of retroactive title II benefits other than those which result from a determination of entitlement following an application for benefits under title II following a period of suspension of termination of such benefits, it shall apply when the Secretary of Health and Human Services determines that it is administratively feasible.

      . Although these cases considered the Secretary’s policy in the context of attorney's fees, their analysis of the offset provision is directly applicable.

      . Section 407 provides broad protection to RSDI recipients:
      The right of any person to any future payment under this subchapter shall not be transferable or assignable, at law or in equity, and none of the moneys paid or payable or rights existing under this subchapter shall be subject to execution, levy, attachment, garnishment, or other legal process, or to the operation of any bankruptcy or insolvency law. 42 U.S.C. § 407.
      The protections of 42 U.S.C. § 407 were incorporated into the SSI program when that program was created by Congress in 1972. 42 U.S.C. § 1383(d)(1).

      . 42 U.S.C. § 406(b)(1) provides in pertinent part:
      Whenever a court renders a judgment favorable to the claimant under the subchapter who was represented before the court by an attorney, the court may determine and allow as part of its judgment a reasonable fee for such representation, not in excess of 25 percent of the total of the past-due benefits to which the claimant is entitled by reason of such judgment____

      . The Secretary contends that private attorneys will still represent people like plaintiff and her class because they can recover their authorized fees directly from claimants if adequate funds have not been withheld. This contention ignores reality. Most of plaintiffs class are, by definition, totally disabled and destitute, living on approximately $199 per month. Under the Secretary’s policy, much of the claimant's retroactive benefits will go directly to the county welfare agency, leaving little money to pay legal bills.

      . This section defines a rule as:
      the whole or a part of an agency statement of general or particular applicability and future effect designed to implement, interpret, or prescribe law or policy or describing the organization, procedure or practice requirements or an agency____ 5 U.S.C. § 551(4)

      . 5 U.S.C. § 553(a)(2) provides in pertinent part:
      [T]his section applies ... except to the extent that there is involved — a matter relating to agency management or personnel or to public property, loans, grants, benefits or contracts.