To: Attorneys and Advocates Interested in Hyatt
From: Class Counsel for Hyatt III
Re: Hyatt v. Barnhart - Update
Date: February 2002

This is to provide important information to attorneys and representatives handling Hyatt III claims and others interested in the Hyatt class action. We want to update you on some very significant developments and issues in the case that have occurred over the past year.

A. SETTLEMENT SUBCLASS MEMBERS TO RECEIVE FULL APPEAL RIGHTS

As a result of a recent agreement reached with class counsel, SSA has agreed that all settlement subclass members will prospectively have their clams re-opened and will receive FULL appeal rights. The settlement subclass members will now have the same appeal rights as the primary subclass members.

Until this agreement was reached, the settlement subclass (which consisted of all individuals whose disability claims were finally denied or terminated by NC DDS on or after August 6, 1990 and before November 14, 1991) received a disability redetermination with limited appeal rights. Class counsel had identified, and brought to the attention of SSA's counsel, numerous systemic problems with this process. To avoid further litigation over this issue, SSA agreed to simply do away with the subclass distinction, for all practical purposes.

This is great news for Hyatt claimants, as those claimants with full appeal rights have a much higher success rate in terms of reversing SSA's prior termination or denial. This process is expected to begin immediately. This will apply prospectively only.

B. SSA BEGINS RE-PROCESSING OF CLASS DENIALS, AS PER THE OCTOBER 1999 COURT ORDER BY JUDGE MULLEN

For new advocates and to refresh your memory:

Between 1994 and 1996, class counsel had identified systematic problems with SSA's implementation of the 1994 Settlement Order with respect to class membership denials. These issues were:

• SSA's reliance on a post-Hyatt SSA decision (an ALJ decision dated after August 6, 1990 or a DDS decision dated after November 13, 1991) to deny class membership, even though that decision did not reopen and decide on the merits all prior Hyatt eligible claims.

• SSA's practice of denying class membership to an individual who was fully paid as of his amended onset date on a subsequent claim, but who was not fully paid back to the onset date alleged in a prior Hyatt-eligible application.

• SSA's practice of denying Hyatt III class membership to an individual who timely requested Hyatt III relief but who previously requested Hyatt II relief and then withdrew or failed to pursue the Hyatt II claim.

After unsuccessful attempts to negotiate with SSA, class counsel Doug Sea, Mac Sasser and John Wester, filed motions with the federal district court to enforce the Settlement Agreement. Judge Mullen agreed in all respects with class counsel's position on each of these issues. As a result of Judge Mullen's order, SSA agreed to essentially eliminate the class membership screening.

Under this proposal, SSA is to give a Hyatt III merits review to all individuals who requested Hyatt III relief except for those falling within these narrow exceptions:

1. Cases screened out under codes 8 and 9 (no allegations of or conditions associated with pain) prior to October 1, 1999.
2. Cases previously screened out that class counsel raised as improper screen-outs, but that after negotiation, class counsel agreed with SSA's position.
3. Cases screened out and sent to SSA for review after March 8, 1996 and to which class counsel raised no objections.
4. Cases where it is very clear that no claim was filed or denied during the relevant time period.

The POMS and HALLEX instructions for this new process are available on our website: www.ncjustice.org/hyatt.

C. ISSUES CLASS COUNSEL REMAINS CONCERNED ABOUT

We continue to be concerned about how SSA is implementing the Hyatt orders, including Judge Mullen's most recent order. These areas of concern include:

Timely Processing of Claims: SSA still has tens of thousands of claims to process, six years after the Hyatt Settlement Order was signed. Many claimants have died awaiting a Hyatt review, and others have waited too long to have their claims re-heard. We are negotiating with SSA for ways to address this problem.

Notices of Decisions. We have many concerns relating to notices being sent to claimants since implementing Judge Mullen's most recent order. These concerns range from failure to send a copy of all notices to class counsel, sending incorrect notices, sending notices with incorrect or incomplete appeals instructions, and failure to adequately explain that a claim was reviewed yet again pursuant to a new court order. We have brought these issues to the attention of SSA and are awaiting resolution.

"Fully paid" determinations. We have concerns that SSA is using the "Notice of No Benefits Due" notice inappropriately. While we have received comparatively few copies of merits decisions and class denial decisions, we have received hundreds of copies of these "fully paid" notices. It appears that in many of these cases, this notice is being sent after SSA is making the same type of determination that SSA agreed to "essentially eliminate." We suspect that SSA is not considering all Hyatt applications when making a determination that a claimant was fully paid. Of course, this is the very issue that caused Class Counsel to file the motion to enforce the Settlement Agreement. We are trying to resolve this issue with SSA. If you have a client who received one of these notices inappropriately, please let us know.

Association of 1696s. Class counsel continues to hear from some attorneys and advocates that SSA is not always associating the 1696 form with Hyatt claims. SSA claims they have resolved any problems with this issue. Please continue to provide us with examples, if you continue to face problems.

If you have any questions, or want more information, please contact Carlene McNulty (919-856-2161, or carlene@ncjustice.org). For information about Hyatt claims, contact Nicole Dozier (919 856-2146 or nicole@ncjustice.org). Our fax number is 919-856-2175.