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.
                                        - 2 -
            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
           Cost’s exhibit is not paginated.        Pagination, therefore,
    has been supplied.
                                    - 3 -
    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.
         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.
    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
           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
                                     - 4 -
    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.
                                   - 5 -
    “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.
    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
                                     - 6 -
    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.
    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
                                   - 7 -
    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
                                   - 8 -
    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:
         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
                                     - 9 -
    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
             SSA did not file a reply.
                                   - 10 -
    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.
    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
                                   - 11 -
    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
                                      - 12 -
    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
         SIGNED this 15th day of March, 2011.
                                      RICHARD W. ROBERTS
                                      United States District Judge