Cost v. Social Security Administration ( 2011 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
______________________________
)
ERNEST A. COST, )
)
Plaintiff, )
)
v. ) Civil Action No. 08-2226 (RWR)
)
SOCIAL SECURITY )
ADMINISTRATION, )
)
Defendant. )
______________________________)
MEMORANDUM OPINION AND ORDER
Pro se plaintiff Ernest Cost brings a claim against the
Social Security Administration (“SSA”) under the Social Security
Act (“Act”), 42 U.S.C. §§ 301 et seq., seeking judicial review of
the SSA’s determination of his retirement insurance benefits on
the ground that the SSA improperly applied the windfall
elimination provision to reduce his benefits. SSA has filed a
motion to dismiss, arguing that Cost has failed to exhaust his
administrative remedies. Because SSA has not provided sufficient
evidence that Cost did not request an administrative hearing,
SSA’s motion to dismiss, converted to one for summary judgment,
will be denied. The parties will be ordered to show cause in
writing why the case should not be remanded to the SSA so that
the parties can avail themselves of the full administrative
review process.
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BACKGROUND
In August 2005, Cost applied for Retirement Insurance
Benefits under Title II of the Act. (Compl. ¶ 1; Def.’s Mem. in
Supp. of Mot. to Dismiss (“Def.’s Mem.”), Decl. of Howard Kelly
¶ 3(a).) SSA sent him an initial determination, stating that he
would receive benefits of $335 per month. (Compl. ¶ 3, Ex. 3.)
Cost sought reconsideration, asserting his entitlement to nearly
double the determined monthly benefit. (Id. ¶¶ 3-4, Ex. 4.) On
July 10, 2007, SSA issued a reconsideration determination,
stating that the initial determination subjected Cost’s benefits
to the “windfall elimination provision,” correctly reducing
Cost’s benefits. (Id. ¶ 5, Ex. 5.) Cost alleges that he mailed
a request for a hearing application form to the SSA on August 22,
2007. (Id. ¶ 6, Ex. 6.) He further alleges that after SSA
responded to his letter by faxing him the form, he mailed the
completed form to the SSA on September 2, 2007 and has not since
received a response. (Compl. ¶ 7; Pl.’s Opp’n to Def.’s Mot. to
Dismiss (“Pl.’s Opp’n”), Ex. at 5-7.1) SSA’s computer records do
not show that SSA received Cost’s request for a hearing. (Def.’s
Mem. at 4, Decl. of Howard Kelly ¶ 3(c) (“The computerized
records of the Office of Disability Adjudication and Review do
1
Cost’s exhibit is not paginated. Pagination, therefore,
has been supplied.
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not show that a request for a hearing was filed or received
[.]”), Ex. 3.) After receiving no response from the
SSA, Cost filed suit on December 24, 2008, alleging that the SSA
erred by applying the windfall elimination provision.
DISCUSSION
A plaintiff may seek judicial review in a district court of
a final decision of the Commissioner of Social Security. 42
U.S.C. § 405(g). The Social Security Act does not define the
term “final decision,” but it empowers the Commissioner of Social
Security to set out the procedures for obtaining a final decision
through regulations. See 42 U.S.C. § 405(a); Weinberger v.
Salfi, 422 U.S. 749, 766 (1975). When a claimant applies for
social security benefits, the Commissioner makes an initial
determination as to the claimant’s entitlement. 20 C.F.R.
§ 404.902. If the claimant is dissatisfied with the initial
determination, he may seek reconsideration by filing a written
request within sixty days. 20 C.F.R. §§ 404.907, 404.909(a)(1).
The reconsideration determination is binding unless a claimant
requests a hearing before an administrative law judge (“ALJ”)
within sixty days of receiving notice of the reconsideration
determination.2 20 C.F.R. §§ 404.921(a), 404.933(b)(1). If the
2
A claimant may seek judicial review in a district court
without completing the remainder of the administrative review
process if he requests an expedited appeal and “the only factor
preventing a favorable determination or decision is a provision
in the law [the claimant] believe[s] is unconstitutional.” 20
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claimant is dissatisfied with the ALJ’s hearing decision, he may
request review by the SSA’s Appeals Council within sixty days of
receiving notice of the hearing decision. 20 C.F.R. §§ 404.967,
204.968(a)(1). A claimant may seek an extension out of time of
any of these deadlines by showing good cause in writing. 20
C.F.R. §§ 404.909(b), 404.933(c), 404.968(b). The Appeals
Council’s decision is considered final, and a claimant may seek
judicial review of that decision in district court. 20 C.F.R.
§ 404.981; Califano v. Sanders, 430 U.S. 99, 101-02 (1977). SSA
has filed a motion to dismiss for lack of subject-matter
jurisdiction, arguing that Cost failed to exhaust his
administrative remedies because he filed his complaint before
receiving a hearing decision from an ALJ or review by the Appeals
Council. (Def.’s Mem. at 3.)
The phrase “exhaustion of remedies” refers to two distinct
legal concepts. Non-jurisdictional exhaustion “is a judicially
created doctrine requiring parties who seek to challenge agency
action to exhaust available administrative remedies before
bringing their case to court.” Avocados Plus Inc. v. Veneman,
370 F.3d 1243, 1247 (D.C. Cir. 2004); see also Salfi, 422 U.S. at
765 (justifying non-jurisdictional exhaustion as preventing
C.F.R. §§ 404.923, 404.924(d). Cost is challenging not the
constitutionality of the windfall elimination provision but
rather the provision’s applicability to him. (See Compl. ¶ 3.)
Thus, he was not entitled to expedited review.
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“interference with agency processes, so that the agency may
function efficiently and so that it may have an opportunity to
correct its own errors, to afford the parties and the courts the
benefit of its experience and expertise, and to compile a record
which is adequate for judicial review”). Jurisdictional
exhaustion, on the other hand, entails Congress predicating
judicial review on a litigant’s initial resort to the
administrative process. Id.; cf. Arbaugh v. Y & H Corp., 546
U.S. 500, 516 (2006) (“[W]hen Congress does not rank a statutory
limitation on [the statute’s] coverage as jurisdictional, courts
should treat the restriction as nonjurisdictional in
character.”). A court may exercise its discretion to excuse
compliance with a non-jurisdictional requirement, but not with a
jurisdictional requirement. Triad at Jeffersonville I, LLC v.
Leavitt, 563 F. Supp. 2d 1, 16 (D.D.C. 2008).
The Supreme Court has construed 42 U.S.C. § 405(g) as having
jurisdictional and non-jurisdictional exhaustion components. The
requirement that a plaintiff must first present his claim to the
agency is jurisdictional and cannot be waived, while the
requirement that the plaintiff must complete the agency review
process is non-jurisdictional and may be waived. See Shalala v.
Ill. Council on Long Term Care, Inc., 529 U.S. 1, 23 (2000)
(noting that “individual hardship may be mitigated . . . through
excusing a number of the steps in the agency process, though not
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the step of presentment of the matter to the agency”); Bowen v.
City of New York, 476 U.S. 467, 483 (1986) (“‘The waivable
element is the requirement that the administrative remedies
prescribed by the Secretary be exhausted. The nonwaivable
element is the requirement that a claim for benefits shall have
been presented to the Secretary.’” (quoting Mathews v. Eldridge,
424 U.S. 319, 328 (1976))). A motion to dismiss under Rule
12(b)(1) for lack of subject matter jurisdiction is inappropriate
where a defendant claims that a plaintiff failed to comply with
only the non-jurisdictional exhaustion requirement. See Hall v.
Sebelius, 689 F. Supp. 2d 10, 22 (D.D.C. 2009) (noting that
“dismissal under Rule 12(b)(1) for failure to exhaust is
inappropriate . . . inasmuch as requirements for exhaustion as
specified by the Social Security Act can be tolled or waived due
to equitable considerations”). SSA argues that Cost did not
exhaust the non-jurisdictional requirements that his claim be
heard by an ALJ and that he receive a decision from the Appeals
Council. (Def.’s Mem. at 3.) Therefore, its motion to dismiss
will be construed as one under Rule 12(b)(6) for failure to state
a claim.
When “matters outside the pleadings are presented to and not
excluded by the court” on a Rule 12(b)(6) motion, “the motion
must be treated as one for summary judgment under Rule 56.” Fed.
R. Civ. P. 12(d). A motion may be treated as one for summary
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judgment even if the parties have not been provided with notice
or an opportunity for discovery if they have had a reasonable
opportunity to contest the matters outside the pleadings such
that they are not taken by surprise. See Highland Renovation
Corp. v. Hanover Ins. Group, 620 F. Supp. 2d 79, 82 (D.D.C.
2009). Because both parties have cited documents or provided
evidence outside the pleadings with respect to the issue of
exhaustion, the motion will be treated as one for summary
judgment under Rule 56. See Augustus v. Locke, 699 F. Supp. 2d
65, 69 n.3 (D.D.C. 2010) (converting motion to dismiss for
failure to exhaust administrative remedies to a motion for
summary judgment).
Summary judgment may be granted when the moving party
demonstrates that there is no genuine issue as to any material
fact and that the moving party is entitled to judgment as a
matter of law. Fed. R. Civ. P. 56(a). In considering a motion
for summary judgment, a court is to draw all justifiable
inferences from the evidence in favor of the nonmovant. Cruz-
Packer v. Dist. of Columbia, 539 F. Supp. 2d 181, 189 (D.D.C.
2008) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255
(1986)). The relevant inquiry “is the threshold inquiry of
determining whether there is the need for a trial –– whether, in
other words, there are any genuine factual issues that properly
can be resolved only by a finder of fact because they may
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reasonably be resolved in favor of either party.” Liberty Lobby,
477 U.S. at 250. A genuine issue exists where the “evidence is
such that a reasonable jury could return a verdict for the non-
moving party[,]” as opposed to where the evidence is “so one-
sided that one party must prevail as a matter of law.” Id. at
248, 252.
SSA contends that it did not receive Cost’s hearing request
because he mailed it to the wrong address. (Def.’s Mem. at 4.)
Cost addressed his August 22, 2007 letter asking for a form HA-
501-U5 –– the form used to request a hearing from an ALJ –– to:
CHIEF COMMISSIONER
OFFICE OF INTL OPS
4-C-11 4TH FLR OPS BLD
6444401 SECYRITY BVLVD [sic]
BALTIMORE, MD 21235
(Compl., Ex. 6.) Cost mistyped the building’s proper street
address of “6401,” misspelled “Security,” and used a non-standard
abbreviation for boulevard. (Def.’s Mem. at 5.) SSA argues that
the address Cost used in this letter “is, presumably, the same
address that Plaintiff used when he allegedly returned the
completed form HA-501-U5 on September 2, 2007[.]” (Id.)
However, these errors appear to be typographical, and SSA
provides no evidence that Cost made the same mistakes when he
addressed his completed hearing request. In any event, Cost
claims that his incorrectly addressed August 22 letter reached
the SSA, which responded by faxing him the HA-501-U5 form that he
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completed and attempted to return to SSA. (Pl.’s Opp’n at 2.)
This argument is uncontested.3 Cost has provided a track and
confirm receipt, reflecting the delivery of a letter in Baltimore
on September 12, 2007. (Pl.’s Opp’n, Ex. at 7.) SSA notes that
the receipt is not evidence that the postal service delivered
Cost’s HA-501-U5 on September 12, but is evidence only that the
postal service delivered some letter on that date. (Def.’s Mem.
at 5.) While this receipt does not establish definitively that
SSA received Cost’s hearing request, neither does SSA’s evidence
establish definitively that Cost failed to request a hearing or
mailed the request to the wrong address. This issue presents a
genuine material factual dispute that a reasonable fact-finder
could resolve in favor of either party.
Assuming that Cost mailed a request for a hearing before an
ALJ, however, it is undisputed that he has not received that
hearing, nor has he received a decision from the Appeals Council.
Cost therefore has not pursued his claim at all requisite levels
of the administrative process, and he has not satisfied the
exhaustion requirement. See Hall, 689 F. Supp. 2d at 23 (finding
that plaintiff who “sought an administrative hearing, but
received no response from the SSA for approximately three years”
had not exhausted his administrative remedies). Instead, Cost’s
opposition is more appropriately construed as arguing that the
3
SSA did not file a reply.
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exhaustion requirement should be excused for him on the ground
that the SSA failed to schedule a hearing before an ALJ,
demonstrating the futility of pursuing his case at the
administrative level.
“[T]he exhaustion requirement may be waived only in the most
exceptional circumstances.” UDC Chairs Chapter, Am. Ass’n of
Univ. Professors v. Bd. of Trs. of the Univ. of D.C., 56 F.3d
1469, 1475 (D.C. Cir. 1995) (internal quotation marks omitted).
A court may waive the non-jurisdictional component of the
exhaustion requirement in § 405(g) if exhaustion would be futile.
See Triad at Jeffersonville, 563 F. Supp. 2d at 16. For
exhaustion to be futile, there must be a “‘certainty of an
adverse decision’ or indications that pursuit of administrative
remedies would be ‘clearly useless.’” UDC Chairs Chapter, 56
F.3d at 1475 (quoting Randolph-Sheppard Vendors of Am. v.
Weinberger, 795 F.2d 90, 105 (D.C. Cir. 1986)). Requiring
exhaustion is clearly useless when there is an undue delay in the
administrative proceedings and the plaintiff would suffer
prejudice from that delay when seeking subsequent court action.
Mobile Exploration & Producing U.S., Inc. v. Babbitt, 913 F.
Supp. 5, 14 (D.D.C. 1995). Courts in this district have excused
the exhaustion requirement for delays in the administrative
process of three or more years. See Hall, 689 F. Supp. 2d at 23
n.7 (recognizing that exhaustion requirement could be excused on
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the basis of the SSA’s nearly four-year delay in scheduling an
administrative hearing); Angel v. Pan Am. World Airways, Inc.,
519 F. Supp. 1173, 1177 (D.D.C. 1981) (excusing exhaustion
requirement after three-year delay), overruled on other grounds
by Paralyzed Veterans of Am., Inc. v. Civil Aeronautics Bd., 752
F.2d 694 (D.C. Cir. 1985). However, in Mobile Exploration, 913
F. Supp. at 14, the court held that a contemplated six-year time
frame for administrative proceedings would not constitute an
undue delay in the absence of any evidence that the agency
ultimately would be unwilling to consider the claim, since the
plaintiff had not demonstrated that it would suffer prejudice
from the delay.
Here, Cost has received half the benefits to which he
believes he was entitled during the years since he claims that he
requested an ALJ hearing. Arguably, the failure to grant the
hearing and the length of time over which the failure has
stretched could be evidence that requiring exhaustion would be
futile. However, the lack of a hearing here does not stem from
SSA’s lack of diligence in complying with a hearing request it
received. For whatever reason, SSA here never got a hearing
request, or so it claims. Nothing in the record suggests that
the SSA would be unwilling, after a remand, to consider Cost’s
claim at the ALJ and Appeals Council stages. Because the facts
here do not support the conclusion that requiring exhaustion
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would be futile, the exhaustion requirement will not be excused.
Indeed, a full and fair adjudication of Cost’s claims would be
best achieved by allowing the SSA an opportunity to correct any
of its own errors, and compiling a record which is adequate for
judicial review with the benefit of the SSA’s experience and
expertise. SSA’s motion will be denied, but the parties will be
ordered to show cause in writing why the case should not be
remanded to the SSA for an ALJ hearing.
CONCLUSION AND ORDER
SSA has not demonstrated that no reasonable jury could find
that Cost attempted to exhaust his administrative remedies by
submitting a request for a hearing before an ALJ. However, Cost
has not shown that the subsequent interruption in his
administrative proceeding warrants excusing the non-
jurisdictional exhaustion requirement. Accordingly, it is hereby
ORDERED that the defendant’s motion [10] to dismiss,
converted to a motion for summary judgment, be, and hereby is,
DENIED. It is further
ORDERED that the parties show cause in writing by April 14,
2011 why the case should not be remanded to the SSA for an ALJ
hearing.
SIGNED this 15th day of March, 2011.
__________/s/_______________
RICHARD W. ROBERTS
United States District Judge