Andrew Cirko v. Commissioner Social Security ( 2020 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
________________
19-1772
________________
ANDREW M. CIRKO, on behalf of
Sandra L. Cirko, Deceased
v.
COMMISSIONER OF SOCIAL SECURITY,
Appellant
________________
19-1773
________________
JOHN STEVEN BIZARRE, JR.
v.
COMMISSIONER SOCIAL SECURITY,
Appellant
________________
On Appeal from the United States District Court
for the Middle District of Pennsylvania
(D.C. Nos. 1-17-cv-00680, 1-18-cv-00048)
District Judge: Honorable Christopher C. Conner
________________
Argued November 13, 2019
Before: AMBRO, KRAUSE, and BIBAS, Circuit Judges
(Opinion filed: January 23, 2020)
Daniel J. Aguilar, Esq.
United States Department of Justice
Civil Division
Room 7266
950 Pennsylvania Avenue, N.W.
Washington, DC 20530
Joshua M. Salzman [ARGUED]
United States Department of Justice
Room 7258
950 Pennsylvania Avenue, N.W.
Washington, DC 20530
Counsel for Appellant
Thomas D. Sutton [ARGUED]
Leventhal Sutton & Gornstein
3800 Horizon Boulevard
Suite 101
Trevose, PA 19053
Counsel for Appellee
2
_________________________
OPINION OF THE COURT
_________________________
KRAUSE, Circuit Judge.
This case presents the question whether claimants for
Social Security disability benefits must exhaust Appointments
Clause challenges before the very administrative law judges
(ALJs) whose appointments they are challenging. Because
both the characteristics of the Social Security Administration
(SSA) review process and the rights protected by the
Appointments Clause favor resolution of such claims on the
merits, we hold that exhaustion is not required in this context
and therefore will affirm.
I. BACKGROUND
The facts here are simple. After Appellees’—Andrew
M. Cirko (on behalf of his late wife Sandra L. Cirko) and John
Steven Bizarre—disability claims were denied by ALJs
employed by the Social Security Administration, the Supreme
Court held in Lucia v. SEC, 138 S. Ct. 2044 (2018), that ALJs
in the Securities and Exchange Commission (SEC) exercised
“significant discretion” in carrying out “important functions”
and were therefore required under the Appointments Clause,
U.S. Const. art. II, § 2, cl. 2, to be appointed by the President,
a court of law, or a head of department. Id. at 2053 (citation
omitted). Because the ALJs of the SEC were not so appointed,
the petitioner there was entitled to a new hearing before a
different constitutionally appointed ALJ. See id. at 2055.
3
When Lucia was decided, Appellees here were already
in the process of challenging the SSA’s denial of their claims
in the District Court, and although they had not previously
raised this claim, they immediately demanded new hearings on
the ground that the ALJs of the SSA were likewise
unconstitutionally appointed. In response to Lucia and in light
of an executive order concluding that “at least some—and
perhaps all—ALJs are ‘Officers of the United States’ and thus
subject to the Constitution’s Appointments Clause,” Exec.
Order No. 13,843, 83 Fed. Reg. 32,755 (July 13, 2018), the
Acting Commissioner of Social Security conceded the premise
and in short order reappointed the agency’s administrative
judges, including both the ALJs and the Administrative
Appeals Judges (AAJs) of the SSA’s Appeals Council, under
her own authority.1 Nonetheless, the Commissioner argued
that Appellees were not entitled to relief because they had not
previously presented their Appointments Clause challenges to
their ALJs or the Appeals Council and thus had not exhausted
those claims before the agency.
In a comprehensive and analytically rigorous opinion,
the District Court declined to require exhaustion, vacated the
agency’s decisions, and remanded for new hearings before
different, properly appointed ALJs. The Commissioner now
appeals.
1
Acting Commissioner Nancy Berryhill, who took
these actions, was replaced by Commissioner Andrew Saul on
June 17, 2019. See Commissioner, Soc. Sec. Admin.,
https://www.ssa.gov/agency/commissioner.html (last visited
Dec. 28, 2019). Commissioner Saul represents the agency
here.
4
II. DISCUSSION2
The Commissioner’s appeal requires us to decide
whether SSA claimants may raise Appointments Clause
challenges in federal court without having exhausted those
claims before the agency. The Commissioner argues, based on
Supreme Court case law and our precedent, that the general
rule of exhaustion applies in these circumstances so the District
Court should have dismissed Appellees’ appeals.3 As
explained below, we disagree.
2
The District Court had jurisdiction under 42 U.S.C.
§ 405(g). We have appellate jurisdiction under 28 U.S.C.
§ 1291. We review the District Court’s legal rulings de novo.
Schaudeck v. Comm’r of Soc. Sec. Admin, 181 F.3d 429, 431
(3d Cir. 1999).
3
We use “exhaustion” in this opinion to mean issue
exhaustion, i.e., a requirement that claimants “raise specific
issues . . . to reserve them for review in federal court.” Sims v.
Apfel, 530 U.S. 103, 113 (2000) (O’Connor, J., concurring in
part and concurring in the judgment). Like the Court in Sims,
which also addressed issue exhaustion, we rely upon McCarthy
for guidance, id., even though McCarthy dealt with the issue of
administrative exhaustion—i.e., the rule warning claimants
that “completely failing” to seek relief through the agency
process will “forfeit the right to seek judicial review,” id.(citing 20 C.F.R. § 404.900(b)). Nothing in this opinion,
however, should be taken to suggest that SSA claimants are
relieved entirely from the administrative-exhaustion
requirement so understood, nor do we opine on any issue-
5
The Commissioner concedes that there is no statutory
or regulatory exhaustion requirement that governs SSA
proceedings. Thus, whether we should impose an exhaustion
requirement here “is a matter of sound judicial discretion.”
Cerro Metal Prods. v. Marshall, 620 F.2d 964, 970 (3d Cir.
1980). To determine whether to impose an exhaustion
requirement where we have not done so before, we must assess
(a) the “nature of the claim presented,” (b) the “characteristics
of the particular administrative procedure provided,” and
(c) the proper “balance [between] the interest of the individual
in retaining prompt access to a federal judicial forum [and]
countervailing institutional interests favoring exhaustion.”
McCarthy v. Madigan, 503 U.S. 140, 146 (1992). As
explained below, each of these three considerations supports
the conclusion that exhaustion of Appointments Clause claims
is not required in the SSA context.
A. The Nature of Appointments Clause Claims Does
Not Favor Exhaustion
We begin with the “nature of [Appellees’] claim.” See
McCarthy, 503 U.S. at 146. As a general matter, exhaustion is
appropriate for certain claims involving “exercise of the
agency’s discretionary power or when the agency proceedings
in question allow the agency to apply its special expertise.” Id.
at 145. But 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
exhaustion requirement in this context beyond Appointments
Clause challenges, as that is the question before us today.
6
separation of powers. Glidden Co. v. Zdanok, 370 U.S. 530,
536–37 (1962).
The importance of the Appointments Clause has been
recognized since our nation’s founding. In the colonial system,
appointments were distributed in “support of a despicable and
dangerous system of personal influence,” The Federalist
No. 77, at 421 (Alexander Hamilton) (E.H. Scott ed., 1894),
that enabled officers to “harass our people, and eat out their
substance,” The Declaration of Independence para. 12 (U.S.
1776). Indeed, the “power of appointment to offices” was seen
in the Founding Era as “the most insidious and powerful
weapon of eighteenth century despotism.” Freytag v. Comm’r,
501 U.S. 868, 883 (1991) (quoting Gordon S. Wood, The
Creation of the American Republic 1776–1787 79, 143
(1969)). By requiring that all “Officers of the United States”
be appointed by the president, a head of department, or a court
of law, see U.S. Const. art. II, § 2, cl. 2, our Founders sought
to replace that “despicable and dangerous system,” The
Federalist No. 77, supra, at 421, with one that favored political
accountability and neutrality, and our Supreme Court has
upheld the protection of the Clause in various cases for the
express purpose of “protec[ting] individual liberty,” NLRB v.
Noel Canning, 573 U.S. 513, 571 (2014) (Scalia, J.,
concurring) (citation omitted), and upholding the “principle of
separation of powers,” Buckley v. Valeo, 424 U.S. 1, 121
(1976).
An individual litigant need not show direct harm or
prejudice caused by an Appointments Clause violation. As the
D.C. Circuit has noted, “it will often be difficult or impossible
for someone subject to a wrongly designed scheme[, including
an Appointments Clause violation,] to show that the design—
the structure—played a causal role in his loss.” Landry v.
7
FDIC, 204 F.3d 1125, 1131 (D.C. Cir. 2000). But this
difficulty to show direct harm does not diminish the important
individual liberty safeguarded by the Appointments Clause.
Such harm is presumed.
Two cases recognizing these principles, Lucia and
Freytag, bear heavily on our decision today. In Lucia, where
the Court held that the ALJs of the SEC were
unconstitutionally appointed, it ordered the agency to provide
the petitioner with a new hearing before a constitutionally
appointed ALJ different from the original ALJ, explaining that
the petitioner had made a “timely challenge” by contesting the
validity of the ALJ’s appointment at the agency appeals level—
though not, apparently, before the ALJ himself. 138 S. Ct. at2053–54, 55. And while the Lucia Court did not expound on
what made the challenge “timely,” it did cite Freytag, where the
Court had declined to enforce exhaustion in the Appointments
Clause context. See id. at 2053–54 (citing Freytag, 501 U.S. at871–82).
In Freytag, the petitioners not only “fail[ed] to raise a
timely objection to the assignment of their cases to [the] judge”
they claimed was unconstitutionally appointed, but they also
affirmatively “consent[ed] to the assignment.” 501 U.S. at
878. “[A]s a general matter,” the Court acknowledged, “a
litigant must raise all issues and objections at trial.” Id. at 879.
Yet, it explained, “the disruption to sound appellate process
entailed by entertaining objections not raised below does not
always overcome . . . the strong interest of the federal judiciary
in maintaining the constitutional plan of separation of powers.”
Id. (internal quotation marks and citation omitted). And given
the strength of that interest in an Appointments Clause claim,
the Court excused exhaustion and heard the challenge on the
merits. Id. at 880.
8
As the Commissioner here emphasizes, neither Lucia
nor Freytag map perfectly onto our case: The former
addressed a different agency and a claimant who raised the
Appointments Clause challenge at least on administrative
appeal, 138 S. Ct. at 2050; and the latter also addressed a
different agency, and it excused the petitioner’s failure to
exhaust rather than holding that there was no exhaustion
requirement in the first instance, 501 U.S. at 878–80. But these
cases guide us as we chart our course by instructing that
Appointments Clause challenges—given their importance to
separation of powers and, ultimately, individual liberty—are
claims for which a hearing on the merits is favored.
B. The Characteristics of SSA Review Counsel Against
Requiring Exhaustion for This Claim
We turn next to the “characteristics of the particular
administrative procedure provided here.” McCarthy, 503 U.S.
at 146. We are guided by the teaching of Sims v. Apfel, 530
U.S. 103 (2000), the Supreme Court’s most recent
pronouncement on issue exhaustion in SSA proceedings.
In Sims, the Supreme Court resolved a question closely
analogous to this one: whether claimants must exhaust issues
before the SSA’s Appeals Council to obtain judicial review of
those claims. See 530 U.S. at 107 (plurality opinion); id. at 113(O’Connor, J., concurring in part and concurring in the
judgment). The Court based its holding on two unusual
features of the SSA review process: first, the Court emphasized
that because no SSA regulations required exhaustion to the
Appeals Council, imposing an “additional requirement[]” of
exhaustion would penalize claimants who did “everything that
the agency asked,” see id. at 114 (O’Connor, J., concurring in
part and concurring in the judgment); second, the Court
9
explained that the inquisitorial nature of Appeals Council
hearings rendered the case for exhaustion “much weaker”
because the AAJs did not rely upon the parties “to develop the
issues in an adversarial administrative proceeding” anyway,
see id. at 109–10 (plurality opinion).4 For those reasons
together, the Court declined to require claimants to exhaust
claims before the Appeals Council.5 See id. at 109–10
(plurality opinion). The Court noted, however, that “[w]hether
a claimant must exhaust issues before [an] ALJ is not before
us,” leaving that question for a case in which it was squarely
presented. Id. at 107 (plurality opinion).
4
The Court here consisted of the plurality plus Justice
O’Connor’s concurrence. See 530 U.S. at 104. Under the rule
of Marks v. United States, 430 U.S. 188, 193–94 (1977)
(holding that the narrowest opinion of a fragmented Court
controls), Justice O’Connor’s analysis—which joined the
portions of the plurality’s opinion cited here—controls. See
Sims, 530 U.S. at 113 (O’Connor, J., concurring in part and
concurring in the judgment) (joining Parts I and II-A of
plurality opinion).
5
As discussed further below, see infra n.11, these
unique characteristics of the SSA, particularly the lack of any
statutory or regulatory issue-exhaustion requirements, are what
separate this case from other post-Lucia decisions holding that
plaintiffs’ Appointments Clause challenges to ALJs of other
agencies are forfeited because they failed to raise them before
the agency. See, e.g., Island Creek Coal Co. v. Bryan, 937 F.3d
738, 746, 749 (6th Cir. 2019) (Department of Labor); Malouf
v. SEC, 933 F.3d 1248, 1258 (10th Cir. 2019) (SEC).
10
That is the case before us today as concerns
Appointments Clause challenges. And while Sims does not
dictate the answer, its lessons loom large. Like Appeals
Council hearings, ALJ hearings have no express exhaustion
requirement.6 See, e.g., McWilliams v. Berryhill, No. 18-5180,
2019 WL 2615750, at *8 (E.D. Pa. June 26, 2019) (“No matter
how tortured the reading, the SSA regulations fail to squarely
address [exhaustion].”). And like Appeals Council hearings,
ALJ hearings are inquisitorial and driven by the agency rather
than the claimant: Whereas ALJs must “look[] fully into the
issues,” “[a]ccept[] as evidence any documents that are
material to the issues,” and “decide when the evidence will be
presented and when the issues will be discussed,” 20 C.F.R.
§ 404.944, claimants need not even state their case or present
written arguments, see id. § 404.949. The two rationales
driving Sims thus generally apply to ALJs no less than AAJs,
so the “characteristics of the particular administrative
procedure provided here,” McCarthy, 503 U.S. at 146, likewise
cut against an exhaustion requirement for Appointments
Clause challenges.
C. A Balancing of the Individual and Governmental
Interests Weighs Against Exhaustion
With these points in mind, we turn to our ultimate task
of “balanc[ing] the interest of the individual in retaining
prompt access to a federal judicial forum against
countervailing institutional interests favoring exhaustion.”
McCarthy, 503 U.S. at 146. This consideration too counsels
against an exhaustion requirement.
6
The Commissioner concedes this point.
11
1. The Individual Interest Is High
We begin with the individual interest. As we have
explained, the Appointments Clause is aimed at more than an
abstract division of labor between the branches of government:
“The structural principles secured by the separation of powers
protect the individual as well,” Bond v. United States, 564 U.S.
211, 222 (2011), so a citizen’s ability to enforce it through a
merits hearing is critical to “protec[ting] individual liberty,”
Noel Canning, 573 U.S. at 571 (Scalia, J., concurring). Yet
that ability would be severely compromised in two respects
were exhaustion required here.
First, an exhaustion requirement for Appointments
Clause claims would impose an unprecedented burden on SSA
claimants who are subject, not to an adversarial process, but to
an inquisitorial review process. While exhaustion may be
broadly required in an agency where “it is usually ‘appropriate
under [the agency’s] practice’ for ‘contestants in an adversary
proceeding’ before it to develop fully all issues there,” Sims,
530 U.S. at 109 (alteration in original) (quoting United States
v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 36–37 (1952)),
the SSA’s inquisitorial system does not fit that description. In
the SSA, “[t]he [agency], not the claimant, has primary
responsibility for identifying and developing the issues,” Sims,
530 U.S. at 112, such that the ALJ takes “an active
investigatory role” and “shoulders a statutory obligation to
obtain evidence,” “to order medical testing,” and “to request
witnesses,” Jon C. Dubin, Torquemada Meets Kafka: The
Misapplication of the Issue Exhaustion Doctrine to
Inquisitorial Administrative Proceedings, 97 Colum. L. Rev.
1289, 1303 (1997). And while the ALJ plays a starring role—
authorized even to subpoena witnesses of their own accord,
12
20 C.F.R. § 404.950(d)—the claimant may choose to play a bit
part and still have his claim determined. After all, claimants
are not required to develop facts, let alone make legal
arguments. See Dubin, supra, at 1302–04. Requiring
exhaustion in this case would upend this arrangement by
forcing claimants—despite the informal, non-adversarial
nature of the review process—to root out a constitutional claim
even beyond the power of the agency to remedy, or
alternatively risk forfeiture.
Second, an exhaustion requirement would prejudice
those claimants who go unrepresented at their ALJ hearings
and then, perhaps with the benefit of counsel, seek to raise such
a claim in federal court.7 These pro se claimants already face
“a disadvantage in the unfamiliar world of law because they
lack the specialized training of attorneys” and struggle to
recognize technical legal claims like the Appointments Clause
claims here.8 Pilgrim v. Littlefield, 92 F.3d 413, 418 (6th Cir.
1996). Requiring exhaustion would make the consequences of
7
Notably, a large percentage—roughly thirty percent—
of claimants go unrepresented at their ALJ hearings. See Social
Security Administration (SSA) Annual Data for Representation
at Social Security Hearings, Soc. Sec. Admin. (May 23, 2018),
https://www.ssa.gov/open/data/representation-at-ssa-
hearings.html.
8
See also Faretta v. California, 422 U.S. 806, 835
(1975) (noting “the dangers and disadvantages of self-
representation”); Higgs v. Att’y Gen., 655 F.3d 333, 340 (3d
Cir. 2011) (“Pro se pleadings are often submitted by
individuals with limited skills and technical expertise in the
law.”).
13
that disadvantage irreparable by precluding these claimants
from vindicating their rights under the Appointments Clause in
federal court proceedings. And we have little reason to think
those rights will elsewhere be vindicated: While ALJs must
probe for meritorious arguments more carefully where
claimants are unrepresented, Reefer v. Barnhart, 326 F.3d 376,
380 (3d Cir. 2003), even the most diligent ALJ is unlikely to
raise a sua sponte objection to his own appointment.
The need to protect those individual rights is especially
acute, however, where, as here, claimants’ “physical condition
and dependency on the disability benefits” are at
issue. Mathews v. Eldridge, 424 U.S. 319, 331 (1976).
Disability benefits are usually claimants’ primary source of
income9—highlighting the need for both the appearance and
reality of fair adjudicators appointed impartially under the
Appointments Clause and making the “nature of [a disability]
claim” an “important factor[]” in determining whether to take
federal jurisdiction over a procedurally flawed administrative
appeal, id. at 331 n.11. Indeed, we have said that in such cases
“the claimant’s interest in having the constitutional issue
resolved promptly is so great that further deference to agency
procedures is inappropriate.” Mattern v. Mathews, 582 F.2d
248, 253 (3d Cir. 1978).
In short, the individual interest in Appellees’
Appointments Clause challenge being heard on the merits is
high, and an exhaustion requirement would seriously erode it.
9
See Michelle Stegman Bailey & Jeffrey Hemmeter,
Characteristics of Noninstitutionalized DI and SSI Program
Participants, 2010 Update, tbl. 4 (2014).
14
2. The Governmental Interest Is Low
The Government’s interest in requiring exhaustion here,
on the other hand, is negligible at best. Traditionally, two
governmental interests favor exhaustion: deference to agency
expertise and opportunity for agency error correction. Neither
is implicated here.
The first, deference to agency expertise, is rendered
irrelevant here by the well-worn maxim that constitutional
questions, including Appointments Clause challenges, are
“outside the [agency’s] competence and expertise.”10 Free
Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S.
477, 491 (2010). “[C]ourts are at no disadvantage in
answering” Appointments Clause claims, id., and the
10
The Commissioner cites Elgin v. Department of
Treasury, 567 U.S. 1 (2012), for the proposition that claimants
must exhaust constitutional challenges even if the agency lacks
authority to decide them. But that argument relies upon a
patent misreading of Elgin, which neither dealt with exhaustion
nor remarked upon the agency’s competence to hear
constitutional claims. See id. at 16–17. The Commissioner
also contends that the Appointments Clause challenge here is
not materially different than a claim for an ALJ’s recusal,
which we held in Ginsburg v. Richardson, 436 F.2d 1146 (3d
Cir. 1971), was waived when it had not been raised before the
agency. Id. at 1152. But in Ginsburg the claimant failed to
follow the “proper procedure” provided by agency regulations
for seeking recusal, and that relief, had she followed the
procedure, was one the ALJ was capable of providing. Id. at
1152, 1152 n.4. That is not the case here, so Ginsburg does
not control.
15
Commissioner therefore has no legitimate basis to argue that
agency expertise requires that those claims be exhausted before
the agency.
The second traditional rationale for exhaustion is no
more applicable. We need not give an agency the opportunity
for error correction that it is incapable of providing—i.e.,
where it is not “empowered to grant effective relief.” See
McCarthy, 503 U.S. at 147. This case falls squarely in that
category: At neither the trial nor the appellate levels could the
SSA’s administrative judges cure the constitutionality of their
own appointments, whether by reappointing themselves, see
Lucia, 138 S. Ct. at 2051 (explaining that “the President, a
court of law, or a head of department” must appoint ALJs), or
by transferring the case to a constitutionally appointed ALJ,
see Appellant’s Br. 6 (conceding that all SSA ALJs were
unconstitutionally appointed prior to Lucia).
The Commissioner urges an error-correction theory
whereby ALJs presented with an Appointments Clause
challenge might “note[] their concerns regarding the
constitutionality of their appointments” to the Commissioner,
eventually “enabling the Commissioner to take corrective
action.” Appellant’s Br. 21 (citing L.A. Tucker, 344 U.S. at36–37). But the Supreme Court rejected this exact argument
in Mathews v. Eldridge, where it observed that “[i]t 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,” particularly as “[t]he
Secretary would not be required even to consider such a
challenge.” 424 U.S. at 330; see also McNeese v. Bd. of Educ.,
373 U.S. 668, 675–76 (1963) (refusing to require state-court
exhaustion where theory of relief there was “tenuous”). So too
16
here, where the Commissioner himself concedes that claimants
have “no access . . . to the [C]ommissioner directly.”11 Tr. 7:4–
6. Thus, the only avenues then available to claimants to seek a
remedy—hearings before ALJs or AAJs—were incapable of
providing it, and we decline to adopt the Commissioner’s
attenuated and speculative theory of relief.12
11
That alone distinguishes this case from the out-of-
Circuit authority on which the Commissioner relies where the
challengers, in fact, could have obtained relief from the
agency. That is true of both the SSA cases he cites outside the
Appointments Clause context, see Shaibi v. Berryhill, 883 F.3d
1102, 1109 (9th Cir. 2017) (challenge to vocational expert’s
methods); Anderson v. Barnhart, 344 F.3d 809, 814 (8th Cir.
2003) (challenge to evidentiary ruling); Mills v. Apfel, 244 F.3d
1, 8 (1st Cir. 2001) (same), and the Appointments Clause cases
he cites outside the SSA context, see Energy W. Mining Co. v.
Lyle, 929 F.3d 1202, 1206 (10th Cir. 2019); Jones Bros., Inc.
v. Sec’y of Labor, 898 F.3d 669, 677 (6th Cir. 2018); In re
DBC, 545 F.3d 1373, 1379 (Fed Cir. 2008). But it is not true
here, at the intersection of those two spheres, where the only
agency actors to whom the challengers had access—the
administrative judges themselves—lacked authority to provide
a remedy.
12
We note the likely futility of claimants raising such
concerns in those venues because the SSA was aware that the
ALJ appointments might be rendered unconstitutional by the
Supreme Court yet declined to take corrective action until well
after Lucia was decided. See Soc. Sec. Admin., EM-18003:
Important Information Regarding Possible Challenges to the
17
Unable to invoke either of the two traditional
exhaustion rationales, the Commissioner asserts a third: that an
adverse ruling would open the floodgates to the “many
hundreds of cases in federal district courts in which
disappointed claimants have sought to raise unpreserved
Appointments Clause challenges for the first time.”
Appellant’s Br. 27. And those cases, we are told, are “just the
tip of the iceberg” because ALJs issued 493,000 appealable
dispositions in fiscal year 2018 and, without an exhaustion
requirement, “every disappointed claimant could obtain a do-
over before a new ALJ simply by raising a Lucia claim in
district court.” Appellant’s Br. 28.
But we deal in facts, not hyperbole, and, on inspection,
the purported flood is actually a trickle. Under the applicable
procedural rules, claimants must appeal the Appeals Council’s
decision to the District Court within sixty days, 42 U.S.C.
§ 405(g), and Lucia was decided more than a year ago, 138 S.
Ct. at 2044. That means every claimant whose benefits were
denied prior to Lucia has long since either filed an appeal in
district court or become time-barred from doing so. Those
whose claims were still at the initial stage will have their claims
adjudicated by a constitutionally appointed ALJ. And the SSA,
in the meantime, has promulgated administrative guidance
instructing that claimants with cases then pending on
administrative appeal would have their claims reviewed de
novo before the now-duly-appointed Appeals Council.13 The
Appointment of Administrative Law Judges in SSA’s
Administrative Process 1–2 (effective Jan. 30, 2018).
13
See SSR 19-1p; Titles II & XVI: Effect of the
Decision in Lucia v. Securities and Exchange Commission
18
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
Appeals Council to review.
In sum, there is little legitimate governmental interest in
requiring exhaustion here. And, as we have explained, the
individual interests on the other side of the ledger are
substantial. For those reasons, and considering the special
character of both the agency and the constitutional claim at
issue, we decline to require exhaustion.
III. CONCLUSION
For the foregoing reasons, we will affirm the judgment
of the District Court and remand these consolidated cases to
the Social Security Administration for new hearings before
constitutionally appointed ALJs other than those who presided
over Appellees’ first hearings.
(SEC) On Cases Pending at the Appeals Council, 84 Fed. Reg.
9582–9583 (Mar. 15, 2019).
19