Vicky Harris v. Comm'r of Soc. Sec. ( 2020 )

RECOMMENDED FOR PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 20a0290p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
┐
JOYCE RAMSEY (19-1579); JOSEPH FORTIN (19-1581); │
MICHAEL SHOOPS (19-1586); ANTHONY HUTCHINS (19- │
1889); VICKY HARRIS (19-1977); SUSAN FLACK (19- │
> Nos. 19-1579/1581/1586/
3886), │ 1889/1977/3886
Plaintiffs-Appellants, │
│
v. │
│
│
COMMISSIONER OF SOCIAL SECURITY, │
Defendant-Appellee. │
┘
Appeals from
United States District Court for the Eastern District of Michigan at Detroit
19-1579: No. 2:17-cv-13713—Nancy G. Edmunds, District Judge;
19-1581: No. 2:18-cv-10187—David M. Lawson, District Judge;
19-1586: No. 2:18-cv-10444—Nancy G. Edmunds, District Judge;
19-1889: No. 2:18-cv-10182—Robert H. Cleland, District Judge;
19-1977: No. 2:18-cv-11042—Stephen J. Murphy, III, District Judge.
United States District Court for the Southern District of Ohio at Columbus
19-3886: No. 2:18-cv-00501—Sarah Daggett Morrison, District Judge.
Argued: May 1, 2020
Decided and Filed: September 1, 2020
Before SILER, WHITE, and DONALD, Circuit Judges.
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COUNSEL
ARGUED: David F. Chermol, CHERMOL & FISHMAN, LLC, Philadelphia, Pennsylvania, for
Appellants Ramsey, Fortin, Shoops, and Harris. Mahesha P. Subbaraman, SUBBARAMAN
PLLC, Minneapolis, Minnesota, for Appellant Flack. Joshua M. Salzman, UNITED STATES
Nos. 19-1579/1581/1586/ Ramsey, et al. v. Comm’r of Soc. Sec. Page 2
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DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee. ON BRIEF: Mahesha P.
Subbaraman, SUBBARAMAN PLLC, Minneapolis, Minnesota, Carol Herdman, HERDMAN
YEAGER LLC, Columbus, Ohio, for Appellant Flack. Jason M. Turkish, Ryan T. Kaiser,
Melissa M. Nyman, NYMAN TURKISH PC, Southfield, Michigan, for Appellants Ramsey,
Fortin, Shoops, and Harris. Daniel S. Jones, LAW OFFICES OF CHARLES E. BINDER AND
HARRY J. BINDER, LLP, New York, New York, for Appellant Hutchins. Kevin M.
Parrington, Luis Pere, Christopher L. Potter, Lisa G. Smoller, Timothy S. Bolen, SOCIAL
SECURITY ADMINISTRATION, Boston, Massachusetts, Meghan O’Callaghan, SOCIAL
SECURITY ADMINISTRATION, Chicago, Illinois, for Appellee.
WHITE, J., delivered the opinion of the court in which DONALD, J., joined. SILER, J.
(pp. 14–15), delivered a separate dissenting opinion.
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OPINION
_________________
HELENE N. WHITE, Circuit Judge. Plaintiffs-Appellants Social Security disability
benefit and supplemental security income benefit claimants (“claimants”) appeal from district
court orders rejecting their Appointments Clause challenges to the administrative law judges
(ALJ) who heard their cases, on the basis that they forfeited the issue by not raising it during
their administrative proceedings. For the reasons that follow, we VACATE the judgments of the
district courts and REMAND these consolidated cases to the Social Security Administration for
new hearings before constitutionally appointed ALJs other than the ALJs who presided over
claimants’ first hearings.
I.
Claimants in these consolidated cases sought Social Security disability and/or
supplemental security income (SSI) benefits. In each case, the application for benefits was
denied, and an ALJ upheld the decision to deny benefits. After requesting review by the Appeals
Council and being denied relief, claimants sought judicial review of the denial of benefits.
While the appeals were pending, claimants moved to raise an issue they had not raised during the
administrative hearing process—an Appointments Clause challenge to the ALJs’ appointments.
In the wake of the Supreme Court’s decision in Lucia v. Securities & Exchange Commission,
138 S. Ct. 2044 (2018), that the ALJs of the Securities and Exchange Commission (“SEC”) had
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not been appointed in a constitutionally legitimate manner and therefore remand for a de novo
hearing before a different ALJ was required, the claimants argued that a similar constitutional
problem exists here that entitles them to new hearings before different ALJs.1
The Commissioner did not contest the merits of claimants’ Appointments Clause
challenge; rather, the Commissioner argued that the claimants forfeited review of the issue
because they failed to raise it during their administrative hearings. The district courts agreed
with the Commissioner that the Appointments Clause challenges were forfeited and affirmed the
denial of benefits on the merits. The claimants now appeal.
II.
A.
The question is one of issue exhaustion: must the claimants have raised their
Appointments Clause challenge before the ALJ in order to preserve that challenge for judicial
review. As we explained in Jones Brothers, Inc. v. Secretary of Labor, 898 F.3d 669 (6th Cir.
2018) and again in Island Creek Coal Co. v. Bryan, 937 F.3d 738, 745 (6th Cir. 2019), to
“resolve an agency’s argument that a party failed to exhaust a post-Lucia constitutional
challenge[,]” we ask three questions. Island Creek, 937 F.3d at 745-46. First, must a party
seeking judicial review of the agency’s decision exhaust issues with that agency? If so, did the
party properly exhaust their claim? Finally, “[i]f not, do these constitutional claims nevertheless
fall within an exception to the exhaustion requirement?” Id. at 746.
1In Lucia, the Court held that because SEC ALJs exercise “significant discretion” in carrying out their
“important functions,” the Appointments Clause, U.S. Const. art. II, § 2, cl. 2, requires that they be appointed by the
President, a court of law, or a head of department. 138 S. Ct. at 2053. Because SEC ALJs had not been so
appointed, the Court held that the proper remedy was a de novo hearing before a constitutionally appointed officer
other than the officer who first heard the case. Id. at 2055. Like SEC ALJs, Social Security ALJs were not
appointed by the President, a court, or the head of department. Rather, they were hired by the Office of Personnel
Management. In anticipation of claimants making similar arguments in Social Security cases, the Acting
Commissioner of Social Security ratified the appointments of all Social Security ALJs on July 16, 2018, thereby
foreclosing any future Appointments Clause challenges to ALJ decisions after that date. However, the ALJs’
decisions upholding the denial of benefits in claimants’ cases were made before the ALJs’ appointments were
ratified.
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Although we are presented with an issue not yet addressed in this circuit, three other
circuits have recently considered this precise issue. In Cirko v. Commissioner of Social Security,
948 F.3d 148 (3d Cir. 2020), the Third Circuit held that issue exhaustion of an Appointments
Clause challenge is not required in Social Security proceedings. Id. at 159. Recently, the Tenth
and Eighth Circuits disagreed with Cirko in Carr v. Commissioner of Social Security, 961 F.3d
1267 (10th Cir. 2020), and Davis v. Commissioner of Social Security, 963 F.3d 790 (8th Cir.
2020). We find Cirko to be the best reasoned and most persuasive opinion, and we agree with
Cirko that exhaustion of Appointments Clause challenges in this particular administrative
scheme is not required.
We note initially that we have rejected categorical arguments that “longstanding
principles of administrative law” compel the enforcement of a “universal exhaustion requirement
across all federal statutes in common-law fashion.” Island Creek, 937 F.3d at 746. As we
explained in Island Creek, “exhaustion primarily raises a question of statutory interpretation
about ‘the particular administrative scheme at issue.’” Id. (quoting Weinberger v. Salfi, 422 U.S.
749, 765 (1975)). Thus, an analysis of whether exhaustion is required cannot be divorced from
the administrative scheme under review. See, e.g., id. (“On closer inspection, though, the
Department of Labor’s generic framing—unconnected, as it is, to any specific statute—
overstates things.”).
The “Supreme Court has identified three categories of statutory schemes [to aid courts]
when deciding if a specific statute contains an issue-exhaustion mandate.” Id. The first category
of issue-exhaustion requirements are “creatures of statute.” Sims v. Apfel, 530 U.S. 103, 107
(2000). In Jones Brothers, we found that the Mine Act required exhaustion because the statute
specifically stated that “[n]o objection that has not been urged before the [Federal Mine Safety
and Health Review] Commission shall be considered by the court, unless the failure or neglect to
urge such objection shall be excused because of extraordinary circumstances.” 30 U.S.C.
§ 816(a)(1). The second category of issue-exhaustion requirements involves statutes that do not
explicitly require exhaustion “but permit agencies to adopt regulations detailing their internal
claims-processing rules.” Island Creek, 937 F.3d at 747. Where this is the case, “it is common
for an agency’s regulations to require issue exhaustion in administrative appeals.” Sims,
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530 U.S. at 108. As long as the exhaustion regulation comports with the governing statute from
which it arises and the agency does not misinterpret it or apply it in an arbitrary manner, courts
generally enforce the regulation by refusing to consider unexhausted issues. Island Creek,
937 F.3d at 747. For example, we concluded in Island Creek that the Black Lung Benefits Act
fell into this second category of exhaustion because a regulation required parties “to file petitions
for review identifying ‘specific issues to be considered’ by the Board.” Id. at 749. Because of
this regulation, we concluded that a claimant must exhaust an Appointments Clause challenge
before the Board in order for it to be the subject of later judicial review.
The Commissioner concedes that there are no statutory or regulatory exhaustion
requirements governing Social Security proceedings.2 This leaves us with the final category—
judicially imposed exhaustion requirements. The Supreme Court has held that “a court may still
impose an implied exhaustion rule as long as the rule comports with the statutory scheme.” Id. at
747. In Sims, the Court explained that “[t]he basis for a judicially imposed issue-exhaustion
requirement is an analogy to the rule that appellate courts will not consider arguments not raised
before trial courts.” 530 U.S. at 108. “In determining whether exhaustion is required, federal
courts must balance the interest of the individual in retaining prompt access to a federal judicial
forum against countervailing institutional interests favoring exhaustion.” McCarthy v. Madigan,
503 U.S. 140, 146 (1992). This inquiry is “intensely practical . . . because attention is directed to
both the nature of the claim presented and the characteristics of the particular administrative
2Despite the concession, portions of the Commissioner’s briefing could be construed as suggesting that
such a regulatory-exhaustion requirement exists. For instance, in describing the regulations governing adjudication
of Social Security cases, the Commissioner notes the regulation requiring that “[t]he claimant must identify all
objections at the earliest possible juncture.” Comm’r Br. at 17 (citing 20 C.F.R. § 416.1433(a)(3)). But, that
regulation governs how a claimant requests an initial hearing before an ALJ, so its statement that a claimant
“should” include in her request “the reasons [she] disagree[s] with the previous determination or decision” concerns
the agency’s initial decision and is not a directive that a claimant should prospectively argue against the legitimacy
of an as-yet-unassigned ALJ’s appointment. See 20 C.F.R. § 416.1433(a)(3) (emphasis added). The Commissioner
additionally cites 20 C.F.R. §§ 404.940, 416.1440 in support of the assertion that the regulations require claimants to
notify the ALJ at the earliest opportunity of any objections to the ALJ who will conduct the hearing. Those sections,
however, deal with the disqualification of ALJs and are plainly directed at allegations of bias or special interest, not
to allegations that the hearing officer has been appointed in a constitutionally infirm manner. See 20 C.F.R. §
404.940 (“An administrative law judge shall not conduct a hearing if he or she is prejudiced or partial with respect to
any party or has any interest in the matter pending for decision.”). Even if this regulation could encompass
challenges to an ALJ’s appointment, the remedy contemplated by the regulation is reassignment to another ALJ who
might also have been improperly appointed at the time. Therefore, we agree with the parties that Social Security
regulations do not require exhaustion.
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procedure provided.” Id. (internal quotation marks and citations omitted). Here, both factors
weigh against imposing an exhaustion requirement for Appointments Clause challenges in Social
Security proceedings.
Characteristics of the Particular Administrative Scheme
The parties appropriately focus much of their briefing on the Supreme Court’s decision in
Sims, which is the Court’s latest opinion on exhaustion requirements in Social Security
proceedings. There, the Court considered whether issue exhaustion is required at the Appeals
Council level. The Court held that a claimant who exhausts administrative remedies “need not
also exhaust issues in a request for review by the Appeals Council in order to preserve judicial
review of those issues.” 530 U.S. at 112. The votes in Sims were fractured, however, and no
rationale for why a claimant need not exhaust issues at the Appeals Council commanded the
votes of five Justices. We summarize the positions below.
Five Justices agreed that “the desirability of a court imposing a requirement of issue
exhaustion depends on the degree to which the analogy to normal adversarial litigation applies in
a particular administrative proceeding.” 530 U.S. at 109. Thus, the Court noted, in typical
adversarial proceedings, “courts require administrative issue exhaustion as a general rule because
it is usually appropriate under an agency’s practice for contestants in an adversary proceeding
before it to develop fully all issues there.” Id. (cleaned up). Where the onus is on the parties to
develop the issues to be decided, “the rationale for requiring issue exhaustion is at its greatest.”
Id. at 110. “Where, by contrast, an administrative proceeding is not adversarial . . . the reasons
for a court to require issue exhaustion are much weaker.” Id.Justice Thomas’s plurality opinion concluded that issue exhaustion should not be
required at the Appeals Council because the analogy to judicial proceedings is at its weakest in
Social Security cases for several reasons. First, “Social Security proceedings are inquisitorial
rather than adversarial.” Id. at 110-11. The ALJ, not the parties, is responsible for developing
the administrative record by “investigat[ing] the facts and develop[ing] the arguments both for
and against granting benefits.” Id. The Commissioner does not have a representative appear—
either at the initial hearing before the ALJ or at the Appeals Council—to oppose the claimant’s
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request for benefits. And the regulations specifically state that the Administration’s review
process is informal and non-adversarial. Id. at 111.
Additionally, the regulations suggest that the Social Security Administration (SSA) does
not depend on individual claimants to flag issues for review. A claimant requesting review by
the Appeals Council is provided a form with only three lines for the “request for review,” and a
notice included with the form explains that it can be completed in approximately 10 minutes. Id.
at 112. Although a claimant is allowed to present a brief with this request, the claimant is not
required to do so. The Appeals Council, unlike some other agencies, is not specifically limited
by the regulations to addressing only those issues raised by the claimant. Indeed, the Appeals
Council’s review is plenary, and the Appeals Council may conduct such a review sua sponte
without a request from the claimant. The Sims plurality noted that the encouragement of agency-
driven development of the issues in Social Security cases is understandable given the large
number of claimants who proceed pro se or who are represented by non-attorneys. For these
reasons, the plurality concluded that the “adversarial development of issues by the parties . . .
simply does not exist” and that “the general rule [of issue exhaustion] makes little sense in this
particular context.” Id.Justice O’Connor concurred in part and in the judgment that exhaustion is not required at
the Appeals Council, but did not join the part of the plurality opinion that concluded exhaustion
should not be required because the analogy to adversarial proceedings is at its weakest in Social
Security cases. In her view, “the agency’s failure to notify claimants of an issue exhaustion
requirement in this context is a sufficient basis for [the] decision.” Id. at 113 (O’Connor, J.,
concurring in part and in the judgment). Justice O’Connor noted that “[r]equiring issue
exhaustion is particularly inappropriate here, where the regulation and procedures of the Social
Security Administration (SSA) affirmatively suggest that specific issues need not be raised
before the Appeals Council.” Id. In support, Justice O’Connor observed that the regulations do
not require claimants to file a brief with the Appeals Council. Moreover, claimants using the
form provided by the agency are “provide[d] only three lines (roughly two inches) for the
statement of issues and grounds for appeal, and the SSA estimates that it should take a total of 10
minutes to read the instructions, collect the relevant information, and complete the form.” Id.Nos. 19-1579/1581/1586/ Ramsey, et al. v. Comm’r of Soc. Sec. Page 8
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Because the agency’s regulations “provide no notice that claimants must also raise specific
issues before the Appeals Council to reserve them for review in federal court,” Justice O’Connor
concluded additional exhaustion requirements are inappropriate. Id. at 113-14.
All agree that Sims does not dictate the result here because the Sims Court made clear that
it was only deciding the issue before it—whether issue exhaustion is required at the Appeals
Council—and explained that “[w]hether a claimant must exhaust issues before the ALJ is not
before us.” Id. at 107. We are presented with the question Sims specifically reserved. In
addressing that question, we agree with the Third and Tenth Circuits that the Marks rule requires
us to treat Justice O’Connor’s concurrence as the holding of the Court, as it reached the same
result on the narrowest grounds. See Marks v. United States, 430 U.S. 188, 193 (1977) (“When a
fragmented Court decides a case and no single rationale explaining the result enjoys the assent of
five Justices, the holding of the Court may be viewed as that position taken by those Members
who concurred in the judgments on the narrowest grounds.” (quotations marks omitted)); Carr,
961 F.3d at 1272; Cirko, 948 F.3d at 155 n.4 (3d Cir. 2020).
As it turns out, however, both approaches yield the same result. Under Justice
O’Connor’s approach, an implied exhaustion requirement is inappropriate because the agency’s
regulations provide no notice to claimants that their failure to raise an Appointments Clause
challenge at the ALJ level will preclude them from later seeking a judicial decision on the issue.
In fact, just as with appeals to the Appeals Council, the regulations do not require claimants to
state their case or present written arguments during ALJ hearings. See 20 C.F.R. § 404.949;
Cirko, 948 F.3d at 156. The regulations also confirm agency-driven development of the issues.
Although the regulations allow any party to raise a new issue if the ALJ does not do so, there is
nothing in the regulations explaining that failing to raise the issue precludes the claimant from
seeking a judicial decision on that issue.
The one difference in the regulations governing ALJ hearings is the regulation that a
claimant “should” state “the reasons [she] disagree[s] with the previous determination or
decision” when requesting an initial hearing before an ALJ. 20 C.F.R. § 416.1433(a)(3)
(emphasis added). Although that regulation might provide greater justification for requiring
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issue exhaustion at the ALJ level of claims of error in the agency’s initial decision, it is plainly
not a directive requiring claimants to prospectively raise arguments about the constitutional
inadequacy of an as-yet-unassigned ALJ’s appointment. Therefore, because Social Security
regulations “provide no notice that claimants must also raise specific issues before the [ALJ] to
reserve them for review in federal court,” 530 U.S. at 113-14, Justice O’Connor’s approach
would not require exhaustion of an Appointments Clause challenge before the ALJ.
Similarly, the reasons the Sims plurality rejected an issue-exhaustion requirement for
Appeals Council hearings apply just as strongly to proceedings before an ALJ. The analogy to
normal adversarial litigation remains at its weakest because the proceeding is inquisitorial rather
than adversarial. On this point, we disagree with the Tenth Circuit’s Carr decision’s assertion
that “even if SSA ALJ review of disability claims is largely non-adversarial, Appointments
Clause challenges are adversarial.” 961 F.3d at 1275. This position is belied by the
Commissioner’s ratification of all SSA ALJ appointments and the SSA’s decision not to contest
the merits of claimants’ Appointments Clause challenge here or in any similar case. In the wake
of Lucia, the Commissioner issued Social Security Ruling 19-1p (effective March 15, 2019),
which was intended to grant relief to any claimant who “(1) timely requests Appeals Council
review of an ALJ’s decision or dismissal issued before July 16, 2018 [the date the Commissioner
ratified the appointments]; and (2) raises before us (either at the Appeals Council level or
previously had raised at the ALJ level) a challenge under the Appointments Clause to the
authority of the ALJ who issued the decision or dismissal in the case.” Although that Ruling 3
does not aid the claimants here, it underscores that there is little about the SSA’s response to the
claimants’ Appointments Clause challenges that has been adversarial. Thus, under either
approach, the characteristics of this particular administrative scheme weigh against implying an
issue-exhaustion requirement for Appointments Clause challenges.
3This ruling also undermines the Commissioner’s argument that requiring exhaustion would have furthered
one of the principal justifications for requiring exhaustion: providing the agency with an opportunity to correct its
own mistakes. In fact, before this ruling, the Commissioner had instructed ALJs not to take any action on
Appointments Clause challenges. See U.S. SOC. SEC. ADMIN., EM-180003: Important Information Regarding
Possible Challenges to the Appointment of Administrative Law Judges in SSA’s Administrative Process 1-2 (eff. Jan.
30, 2018). Until March 2019, there was no evidence that the agency had taken any corrective action, despite the
mounting number of Appointments Clause challenges around the country and the agency’s awareness that SSA
ALJs’ appointments might have been constitutionally inadequate. See Cirko, 948 F.3d at 159 n.12.
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The Nature of the Claim Presented
Because “agencies, not the courts, ought to have primary responsibility for the programs
that Congress has charged them to administer[,] [e]xhaustion concerns apply with particular
force when the action under review involves the exercise of the agency’s discretionary power or
when the agency proceedings in question allow the agency to apply its special expertise.”
McCarthy, 503 U.S. at 145. This rationale explains why the circuit courts in many of the cases
cited by the Commissioner concluded that issues particularly within the agency’s expertise were
forfeited when not raised during administrative proceedings. For example, in Maloney v.
Commissioner of Social Security, 480 F. App’x 804 (6th Cir. 2012), we held that a claimant
“ha[d] waived any argument stemming from the exclusion of [claimant’s sister-in-law’s
testimony]” because the claimant failed to raise that issue before the Social Security Appeals
Council. Id. at 810. And, in Anderson v. Barnhart, 344 F.3d 809 (8th Cir. 2003), the Eighth
Circuit held that a claimant waived any argument that the ALJ failed to consider the claimant’s
morbid obesity as an impairment because “[the claimant] never alleged any limitation in function
as a result of his obesity in his application for benefits or during the hearing.” Id. at 814. That
decision relied on earlier Eighth Circuit precedent holding that an ALJ is under no “obligation to
investigate a claim not presented at the time of the application for benefits and not offered at the
hearing as a basis for disability.” Id. (citing Pena v. Chater, 76 F.3d 906, 909 (8th Cir. 1996)).
And, in Shaibi v. Berryhill, 883 F.3d 1102 (9th Cir. 2017), the court held that a claimant could
not challenge a vocational expert’s testimony by seeking to introduce new evidence for the first
time in the district court to rebut that testimony, at least when the claimant was represented by
counsel. Id. at 1109. Finally, in Mills v. Apfel, 244 F.3d 1 (1st Cir. 2001), the First Circuit
refused to allow a claimant to argue in the district court that the ALJ erred by improperly
applying a particular regulation because the claimant had not made the argument to the ALJ or
the Appeals Council.” Id. at 8.
These cases are distinguishable because an Appointments Clause challenge involves
neither an exercise of discretion, nor an issue within the agency’s special expertise. 4 Rather, it
4To the extent these appeals ask us to predict whether the Supreme Court would extend Sims to the initial
ALJ hearing, it is noteworthy that even the four dissenting Justices in Sims conceded that constitutional challenges
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involves a question of constitutional law, and we agree with the Third Circuit that “exhaustion is
generally inappropriate where a claim serves to vindicate structural constitutional claims like
Appointments Clause challenges, which implicate both individual constitutional rights and the
structural imperative of separation of powers.” Cirko, 948 F.3d at 153 (citing Glidden Co. v.
Zdanok, 370 U.S. 530, 536-37 (1962)); see also Mathews v. Eldridge, 424 U.S. 319, 30 (1976)
(“It is unrealistic to expect that the Secretary would consider substantial changes in the current
administrative review system at the behest of a single aid recipient raising a constitutional
challenge in an adjudicatory context.”); Freytag v. C.I.R., 501 U.S. 868, 879 (1991) (declining to
enforce exhaustion of an Appointments Clause challenge). The importance of the constitutional
claim weighs in favor of providing a forum in which the claim can be adjudicated and against
implying an exhaustion requirement. This is especially so given the substantial number of
claimants who appear before an ALJ pro-se or through non-attorney representatives. While pro-
se claimants or non-attorney representatives might be able to make cogent arguments about why
the initial agency decision denying disability benefits was incorrect, they are unlikely to
recognize that there is a structural constitutional error affecting the legitimacy of the ALJ who is
to hear the initial appeal of that decision. And, as we noted above, they are not given notice by
SSA regulations that the failure to raise such a claim forecloses them from doing so in the future.
The Commissioner responds that our decisions in Jones Brothers and Island Creek
foreclose any argument that the constitutional nature of the Appointments Clause challenge
affects whether exhaustion is appropriate. But, those decisions hold only that the constitutional
nature of the claimants’ Appointments Clause challenge cannot override explicit statutory- or
regulatory-exhaustion requirements. Because there are no such requirements here, these
decisions do not control our analysis. To the contrary, they support our decision that a greater
number of factors bear on the question whether exhaustion should be required (or whether an
are a recognized exception to the “ordinary principle[] of administrative law” that a litigant must raise issues below
in order to obtain court review. See Sims, 530 U.S. at 114-15 (Breyer, J., dissenting) (“Although the rule has
exceptions, it applies with particular force where resolution of the claim significantly depends upon specialized
agency knowledge or practice. In this case, petitioner asked the reviewing court to consider arguments of the kind
that clearly fall within the general rule, namely, whether an administrative law judge should have ordered a further
medical examination or asked different questions of a vocational expert. No one claims that any established
exception to this ordinary ‘exhaustion’ or ‘waiver’ rule applies. See, e.g., . . . Mathews v. Eldridge, 424 U.S. 319,
329 n.10 (1976) (constitutional claims).”).
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exception to exhaustion applies) in the absence of explicit statutory- or regulatory-exhaustion
requirements. See, e.g., Island Creek, 937 F.3d at 751 (“When it comes to exceptions, a sharp
divide separates statutory from prudential exhaustion. For exhaustion rules that originate with a
clear statutory command, courts have ‘refus[ed] to add unwritten’ exceptions on top of those in
the text itself . . . [but], [f]or exhaustion rules that originate with judicial prudence, courts have
felt free to adopt ‘judge-made exceptions’ in the same prudential fashion.”). Indeed, in Island
Creek, we distinguished the Supreme Court’s decision in Freytag, which excused a forfeited
Appointments Clause claim because of the constitutional nature of the challenge, on the grounds
that “Freytag treated the exhaustion mandate in that tax context as arising on purely prudential
grounds, which allowed it to adopt any purely prudential exception that it felt proper.” Id. at
754. Not only is an implied exhaustion requirement inappropriate for Appointments Clause
challenges in Social Security proceedings, but the recognition of constitutional claims as an
exception to prudential exhaustion requirements further supports our conclusion.
Because both the characteristics of this particular administrative scheme and the nature of
the claim weigh against implying an exhaustion requirement, we agree with the claimants that
their failure to raise the Appointments Clause challenge before the agency does not foreclose
their ability to seek judicial review of that claim. Our holding is narrow. Because the inquiry
whether to imply an exhaustion requirement depends in part on the nature of the claim presented,
we hold only that a claimant does not forfeit an Appointments Clause challenge in a Social
Security proceeding by failing to raise that claim before the agency.5 We do not “opine on any
5Because our holding is narrow, we disagree with the Commissioner that our ruling would greatly burden
the SSA. See Cirko, 948 F.3d at 159 (noting that, because of the procedural rules governing the timeline for seeking
review of an ALJ’s decision, “[t]he effect of our decision today, then, is limited to the hundreds (not hundreds of
thousands) of claimants whose cases are already pending in the district courts, a drop in the bucket relative to the
thousands of claims that the SSA has voluntarily ordered (and thus apparently has the resources enabling) the [SSA]
to review”). We also disagree with the Commissioner’s broader argument that such a rule would encourage
“sandbagging” by allowing a claimant to sit on an Appointments Clause challenge and only raise it in district court
should the claimant suffer an adverse decision before the agency. As an initial matter, the Commissioner’s
ratification of SSA ALJs has cured any Appointments Clause problem with SSA ALJs, so the Commissioner’s
argument must refer instead to Appointments Clause challenges to ALJs of other administrative agencies. As we
have explained, however, whether an implied exhaustion requirement is appropriate depends in part upon the
specific administrative scheme at issue. Therefore, our holding today in no way decides whether a similar result
would be appropriate for Appointments Clause challenges to the ALJs of other administrative agencies. In Sims, the
Court wrote that “[a]lthough the question is not before us, we think it likely that the Commissioner could adopt a
regulation that did require issue exhaustion.” 530 U.S. at 108. The agency’s decision not to impose such a
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issue-exhaustion requirement in this context beyond Appointments Clause challenges, as that is
the question before us today.” Cirko, 948 F.3d at 153 n.3.
B.
In Lucia, the Supreme Court held that the SEC’s ALJs are inferior officers who must be
appointed consistently with the Appointments Clause in part because they hold “continuing
office[s] established by law” and exercised “significant discretion when carrying out
. . . important functions.” 138 S. Ct. at 2053 (quotations omitted). The Commissioner has not
contested—either here or before the Third, Eighth, or Tenth Circuits—the merits of the
claimants’ argument that SSA ALJs are also inferior officers who were required to be, but were
not, appointed consistently with that clause. Because the Commissioner has effectively
“conceded the premise,” Cirko, 948 F.3d at 152, claimants are entitled to the remedy that Lucia
held was appropriate: a new hearing before ALJs other than the ALJs who conducted their
original hearings.
III.
For the foregoing reasons, we VACATE the judgments of the district courts and
REMAND these cases to the Social Security Administration for new hearings before ALJs other
than the ALJs who presided over claimants’ original hearings.
requirement in the twenty years since Sims was decided does not persuade us that it is prudent for us to imply an
unwritten exhaustion requirement for Appointments Clause challenges now.
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DISSENT
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SILER, Circuit Judge, dissenting. In spite of a very engaging and thoughtful majority
opinion, I respectfully dissent. I would find that the claimants for benefits from the Social
Security Administration (SSA) were obligated to assert their objections to the Administrative
Law Judges (ALJs) at or before the time of the ALJ hearing and their failure to assert those
objections constitutes a forfeiture of their challenges to the legal authority of the ALJs to preside
in the case. Thus, when the cases came before the district court on appeal from the ALJs,
claimants were precluded from objecting to the legality of the ALJs. As the majority explains,
other circuits have considered this exact issue. I choose to follow the reasoning from Carr v.
Comm’r, 961 F.3d 1267, 1274-76 (10th Cir. 2020), and Davis v. Saul, 963 F.3d 790, 794-95 (8th
Cir. 2020).
I agree with the analysis of the majority that from Island Creek Coal Co. v. Bryan,
937 F.3d 738, 745-46 (6th Cir. 2019), there is a three-step procedure to analyze the question
before us. That is basically the same test from Jones Brothers, Inc. v. Sec’y of Lab., 898 F.3d
669, 673-77 (6th Cir. 2019). Island Creek was different because, there, a regulation required the
parties to file petitions for review identifying “specific issues to be considered by the Board.”
937 F.3d at 749 (citation omitted). As recognized by the majority, the decision in Sims v. Apfel,
530 U.S. 103 (2000), is significant to this decision, but there was no majority decision which
controls this case. The concurring opinion from Justice O’Connor is considered the most cited
part of the fractured opinion, but the majority here admits that Sims does not control our present
case, because Sims involved whether issue exhaustion is required at the Appeals Council.
I would follow the reasoning in Carr. As Carr indicates, the Social Security ALJs must
notify claimants of the specific issues to be decided at each hearing, pursuant to 20 C.F.R.
§ 404.938(b)(1), but the court decided that the exhaustion of the Appointments Clause challenges
“is necessary even without a statutory or regulatory requirement.” Carr, 961 F.3d at 1275 n.7.
I agree with the conclusions in Carr and Davis that the exhaustion requirement promotes both
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judicial and agency efficiency. Had the claimants raised the question at the ALJ level, the
Commissioner could have quickly rectified the problem and avoided the situation we have here,
that is, having to rehear all cases after the proper appointments of the ALJs.
Unlike the majority, I am concerned that not requiring exhaustion would encourage
“sandbagging.” See Carr, 961 F.3d at 1275 n.9; Davis, 963 F.3d at 795. Failing to object at the
ALJ level allows the claimant to get two bites at the apple. The wiley lawyer knows that she can
let the case proceed through the administrative level. If the claimant receives benefits, then the
lawyer need not object to the appointment of the ALJ. However, if the claimant loses at the ALJ
level, that lawyer would raise the issue before the district court, forcing a new hearing before
another ALJ.
I respectfully dissent and would affirm the district court.