Social Security Procedural Improvements Act of 1986

Social Security Procedural Improvements Act of 1986 - Title I: Improvements in Administrative Determinations of Disability Entitlements - Amends title II (Old Age, Survivors and Disability Insurance) of the Social Security Act to make the Secretary of Health and Human Services' decision to assume a State's disability determination function discretionary.

Authorizes the Secretary to implement a plan concerning the assumption of the disability determination function from a State when a State notifies the Secetary that it no longer wishes to perform such function. Converts to employment with the Department of Health and Human Services those permanent State employees whose disability determination function is assumed by the Secretary either at the Secretary's discretion or upon the State's request, provided, in the latter case, the Secretary declines to implement the plan authorized above. Sets forth provisions, regarding the administration of the conversion of State employees to Federal employment, which take an employee's State service into account in computing the Federal pay and benefits to which such employee is entitled.

Allows certain senior employees to elect to remain covered under State retirement plans rather than converting to the Federal Civil Service Retirement and Disability program. Provides for the transfer of funds to the Civil Service Retirement and Disability Fund to cover the civil service retirement annuity due former State employees. Reduces the amount of such annuity available to former State employees to the extent such employee is entitled to State retirement benefit payments.

Title II: Establishment of Social Security Court; Abolition of Appeals Council and Interim Benefits in Cases of Delayed Final Decisions - Establishes the Social Security Court which shall have exclusive jurisdiction over actions arising under titles II, XVI (Supplemental Security Income), and XVIII (Medicare) of the Social Security Act.

Authorizes any individual who was a party to a hearing to which the Secretary has rendered a final decision to bring a timely action for review of such decision in the Social Security Court. Authorizes the Court to affirm, modify, or reverse the Secretary's decision, but restricts the Court's authority to reconsider factual findings.

Amends title VII (Administration) of the Act to provide for the President's appointment of 20 judges to the Court. Authorizes the chief judge of the Court to divide the Court into divisions of one or more judges which may sit anywhere within the country so that claimants have a reasonable opportunity to appear before the Court without great inconvenience. Allows the Court, within certain guidelines, to prescribe its procedural rules and punish by fine or imprisonment contempt of its authority. Requires the claimant and Secretary to be given notice and the opportunity to be heard upon a proceeding in the Court or its divisions.

Provides that within 60 days of a division's decision such decision shall be the decision of the Court, unless, within that period, a party petitions the Court's chief judge, or the chief judge makes his own motion, for the Court's review of the decision. Directs the Court to have any of its decisions which the chief judge determines to have precedential value published for public use.

Gives the United States Court of Appeals for the Federal Circuit exclusive jurisdiction to review Social Security Court decisions upon the claimant's or Secretary's appeal, but prohibits such appeal until the Social Security Court has reviewed or denied a petition for review of its decision.

Abolishes the Department of Health and Human Services' Appeals Council without limiting the Secretary's authority to hold hearings and conduct investigations.

Amends titles II and XVI (Supplemental Security Income) of the Act to require individuals to be paid interim benefits in cases where an administrative law judge has determined their entitlement to certain benefits, but the Secretary's final decision has not been issued within 90 days of the judge's decision.

Sets forth effective date and transitional provisions.