United States District Court, S.D. West Virginia, Huntington Division
MEMORANDUM OPINION AND ORDER
C. Chambers, Chief Judge
before the Court is Defendant's Motion to Dismiss the
Second Amended Complaint (ECF No. 36) pursuant to Federal
Rule 12(b)(6). The motion has been fully briefed and is now
ripe for review. For the following reasons, the Court GRANTS
Defendant's motion and DISMISSES all of Plaintiff's
case challenges the redetermination procedure initiated by
the Social Security Administration (SSA) in accordance with
statutory guidelines. After originally being denied benefits,
Mr. Kevin Robertson was awarded Title II disability
benefits on appeal by Administrative Law Judge
(ALJ) David B. Daugherty on December 3, 2010. Pl.'s
Second Am. Compl., ECF No. 32, at ¶¶ 35, 39.
On his appeal, Robertson sought the assistance of Attorney
Eric C. Conn. Id. at ¶ 35. David P. Herr, D.O.,
evaluated Robertson, and the subsequent medical report was
included in Robertson's file submitted to ALJ
Office of the Inspector General (OIG) began investigations on
disability cases filed with the SSA by Conn, or Conn's
law firm, and those decided by ALJ Daugherty. Id. at
¶¶ 12-13. The OIG notified the SSA that there was
reason to believe that fraud or similar fault was involved in
disability benefits applications submitted by Conn that
contained evidence from Bradley Adkins, Ph.D., Srinivas
Ammisetty, M.D., Frederic Huffnagle, M.D., and David P. Herr,
D.O. Id. at ¶¶ 16-17. By memorandum, the
OIG notified the SSA that they could proceed with the
redetermination process on 1, 787 individuals who used
Conn's law firm and one of the listed doctors in
receiving benefits. Id. at ¶ 18. This notice,
dated May 12, 2015, initiated the redetermination process
under challenge here. Id.
Social Security Act Redetermination Process
Social Security Act (the Act) describes the redetermination
process the SSA must undertake when referred to by the OIG or
when the SSA uncovers fraud itself. By statutory mandate, as
soon as the OIG “has reason to believe that fraud was
involved in the application of an individual for monthly
insurance benefits”, the OIG must refer the
information, including the individual claimant at issue, to
the SSA. See 42 U.S.C. § 1320a-8(1). After this
referral, or when the SSA through its own investigation has
reason to believe fraud or similar fault is involved, the SSA
“shall immediately redetermine” those cases
involving fraud or similar fault. 42 U.S.C. §
405(u)(1)(A). In the redetermination process, the SSA
“shall disregard any evidence if there is reason to
believe that fraud or similar fault was involved in the
providing of such evidence.” 42 U.S.C. §
to this statutory scheme, the SSA sent letters on or around
May 18, 2015 to most of the individuals involved in these
affected cases, including Robertson, because they had
received Conn's, or Conn's law firm's,
representation. Pl.'s Second Am. Compl., ECF No.
32, at ¶ 19. The notices specified that the
claimants' benefits would be redetermined without the use
of medical evidence submitted by Adkins, Ammisetty,
Huffnagle, or Herr. Id. If the Appeals Council
decided that the evidence remaining in the file did not
support the previous favorable decision, the SSA would refer
the case back to an ALJ for a new decision. Id. at
¶ 20. The ALJ could not consider any of the medical
evidence tainted by the suspected fraud or similar fault.
Id. Claimants had ten days to submit new evidence
demonstrating disability at the time of the original benefits
award, which the ALJ would consider in redetermination.
redetermination hearing decides whether the disability
claimant qualified for benefits at the time of the original
application. See Hearings, Appeals, & Litigation Law
Manual (HALLEX) I-1-3-25(C)(3) (“[A]n adjudicator will
be directed to consider the claim(s) only through the date of
the final and binding determination or decision on the
beneficiary's or recipient's application for
benefits.”). The adjudicator's decision must rely
only on new evidence and evidence remaining in the file after
excluding the tainted evidence as mandated by § 405(u).
HALLEX I-1-3-25(C)(4)(c). Interpreting the language in §
405(u), HALLEX provides that “adjudicators do not have
discretion to reconsider the issue of whether the identified
evidence should be disregarded when based on an OIG referral
….” HALLEX I-1-3-25(C)(4)(a). A claimant can
appeal the adjudicator's decision to discontinue
disability benefits, but when based on an OIG referral,
“the beneficiary or recipient may not appeal the
agency's statutory mandate to conduct the redetermination
or to disregard evidence ….” HALLEX
conducting the redetermination process with various
claimants, several rulings have clarified when an ALJ could
consider evidence from the prohibited doctors. Pl.'s
Second Am. Compl., ECF No. 32, at ¶ 23. If the
doctor was a treating health care provider and the submitted
evidence contained treatment notes, the information was
admissible. Id. If the doctor's medical report
was included outside the investigated time frame of January
2007 to May 2011, the evidence was admissible. Id.
If the evidence from the doctors was not elicited by Conn or
Conn's law firm, the evidence was admissible.
Id. Thus, the SSA would only disregard the evidence
when the information was obtained by a non-treating
physician, when the evidence was collected within the
investigatory time frame, and when the doctor was retained by
Conn or Conn's law firm.
worked for approximately twenty years as a land surveyor
before experiencing disabling mood swings and panic attacks
that prevented his work starting in 2006. Id. at
¶ 34. Robertson applied for disability benefits, but an
ALJ issued an unfavorable decision in April of 2010.
Id. at ¶ 35. On his appeal, Robertson retained
Conn and had a consultation with Dr. Herr. Id. ALJ
Daugherty awarded Robertson benefits in December of 2010, and
that decision became the SSA's final decision.
Id. at ¶ 39. On or about May 22, 2015,
Robertson received a notice from the SSA that his benefits
were suspended for reason to believe that there was fraud in
disability cases involving medical records from Adkins,
Ammisetty, Huffnagle, and Herr. Id. at ¶ 40.
The notice advised Robertson that any medical evidence from
these doctors would be disregarded from his file, but
Robertson could submit new medical information and other
evidence supporting his disability within ten days.
Id. at ¶ 41.
attended the redetermination hearing in front of a new ALJ on
October 18, 2015. Id. at ¶ 42. The ALJ
determined that the remaining evidence in Robertson's
file was insufficient to establish disability from 2009 and
terminated Robertson's benefits. Id. at
¶¶ 42-44. The Appeals Council affirmed the
ALJ's decision, and Robertson timely brought this appeal
for judicial review. Id.
filed the instant case on April 22, 2016. Pl.'s
Compl., ECF No. 2. The original complaint sought federal
jurisdiction under 42 U.S.C. § 405(g). Id. at
¶ 3. The case challenged the redetermination process as
violating the Act, the Fifth Amendment of the Constitution,
and the Administrative Procedure Act (APA). Id. at
¶¶ 8, 10, 12. The fourth count specifically
challenged the unfavorable decision of the ALJ as being
unsupported by substantial evidence. Id. at ¶
had previously filed another case, brought as a class action,
in this district challenging the process of redeterminations.
See Robertson v. Colvin (Robertson I), No.
3:16-cv-2113 (S.D. W.Va.). That case was dismissed by this
Court, in part to prevent improper claim splitting. See
Robertson I, Civ. No. 3:16-2113, 2016 WL 5853725, at
*7-8 (S.D. W.Va. Oct. 5, 2016). Robertson subsequently
amended the instant complaint to include class action
allegations and more fully detail the procedural challenges
to replicate the dismissed case. See Pl.'s First Am.
Compl., ECF No. 16. In so doing, Robertson removed the
direct substantive challenge alleging that the ALJ decision
was not supported by substantial evidence. After Defendant
filed a motion to dismiss the First Amended Complaint, which
was fully briefed by the parties, Plaintiff was allowed to
file a Second Amended Complaint. See Pl.'s Second Am.
Compl., ECF No. 32. This complaint removed the class
action allegations, removed jurisdictional bases not under
§ 405(g), and altered the request for relief to seek the
reinstatement of the favorable ALJ decision from 2010 as
SSA's final decision. Defendant filed the instant Motion
to Dismiss to challenge the procedural claims for failure to
state a claim under Federal Rule 12(b)(6). Def.'s
Mot. to Dismiss, ECF No. 36.
Rule 8(a) requires a complaint to include “a short and
plain statement of the claim … showing entitle[ment]
to relief.” Fed.R.Civ.P. 8(a)(2). To overcome a motion
to dismiss under Federal Rule 12(b)(6), a complaint must also
be plausible. Bell Atl. Corp. v. Twombly, 550 U.S.
544, 546 (2007). This standard requires a plaintiff to set
forth the “grounds” for an “entitle[ment]
to relief” that is more than mere “labels and
conclusions, and a formulaic recitation of the elements of a
cause of action will not do.” Id. at 555
(internal quotations and citations omitted). A complaint must
contain “sufficient factual matter, accepted as true,
to state a claim to relief that is plausible on its
face.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (internal quotations and citation omitted). Facial
plausibility exists when a claim contains “factual
content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged.” Id. (citation omitted).
the factual allegations in the complaint as true (even when
doubtful), the allegations “must be enough to raise a
right to relief above the speculative level ….”
Twombly, 550 U.S. at 555 (citations omitted). If the
allegations in the complaint, assuming their truth, do
“not raise a claim of entitlement to relief, this basic
deficiency should … be exposed at the point of minimum
expenditure of time and money by the parties and the
court.” Id. at 558 (internal quotations and
citations omitted). Finally, “[a]lthough for the
purposes of a motion to dismiss we must take all of the
factual allegations in the complaint as true, we are not
bound to accept as true a legal conclusion couched as a
factual allegation.” Iqbal, 556 U.S. at 678
(internal quotations and citation omitted).
asserts that Plaintiff's allegations must be dismissed
for failure to state a claim because the SSA's
redetermination process complies with the Constitution, the
Act, and the APA.Although Plaintiff requests that his
benefits be reinstated in the prayer for relief, Plaintiff
did not bring a separate claim challenging whether the
ALJ's decision to terminate Plaintiff's benefits was
based on substantial evidence. Thus, Defendant argues that
the Court can dismiss the entire case under the standards of
Federal Rule 12(b)(6).
reviewing these claims, the Court cannot deny the unfairness
of the circumstances surrounding Plaintiff's case and
other claimants similarly situated. The SSA has yet to find
any of the affected claimants at fault for their originally
awarded disability benefits. The actions allegedly taken by a
select few have, in turn, caused calamity for many. The Court
is aware of the hardships that Plaintiff and other claimants
have suffered in just trying to survive without the main, or
only, source of income provided for years by the SSA. The
Court is sympathetic to these hardships, but the Court's
decision must be confined within the law and legal precedent.
A court's task is to interpret the law and not rewrite or
misconstrue it to avoid injustice. Congress created the
redetermination process, and the Act's inefficiencies,
thus, are Congress's to solve. In view of that, the Court
analyzes each of Plaintiff's causes of action in order.
Due Process under Fifth Amendment
Count I, Plaintiff alleges two separate violations of the Due
Process Clause in the Constitution. The first violation
asserts that Defendant failed to provide Plaintiff a
meaningful hearing in front of a neutral decision maker
before terminating Plaintiff's disability benefits.
Pl.'s Second Am. Compl., ECF No. 32, at ¶
49. Plaintiff argues that a meaningful hearing must include
an opportunity to confront and rebut the predicate finding of
fraud that triggered the redetermination process.
Id. The second violation alleges that Defendant
failed to redetermine Plaintiff's benefits immediately as
the Act requires. Id. at ¶ 50. Plaintiff
asserts that Defendant knew of the fraudulent conduct by
Conn, ALJ Daugherty, and the doctors when the investigation
began in 2007, and Defendant violated the immediacy
requirement in the Act by waiting until 2015 to redetermine
claimants' benefits. Id.
challenges these due process allegations, claiming that
Plaintiff had a meaningful hearing when a neutral ALJ weighed
all the admissible evidence and considered Plaintiff's
arguments as to why the evidence showed disability before
issuing a decision terminating Plaintiff's benefits.
Def.'s Mem. in Supp., ECF No. 37, at 6-7.
According to Defendant, Plaintiff does not need to challenge
the OIG's determination that there was reason to believe
fraud existed to have a meaningful hearing because that
finding only triggered the redetermination process.
Id. at 8. Plaintiff, however, could challenge the
actual finding that directly led to his benefits'
termination-the finding of insufficient evidence.
Id. Defendant argues that this level of due process
follows constitutional requirements. Id. Two
district courts agreed with this analysis, balancing the
factors in Mathews v. Eldridge and concluding that
due process does not require an evidentiary hearing on fraud.
Id. at 9-10 (citing Carter, 2016 WL
6794790; Perkins, 2016 WL 7332989). Plaintiff argues
that a third district court judge, Judge Amul R. Thapar,
correctly ruled on the due process issue, holding that the
redetermination process prevented meaningful review by
prohibiting claimants from objecting to the fraud assertion.
Pl.'s Resp., ECF No. 38, at 9-10 (citing
Hicks, 2016 WL 5944715). Like Judge Thapar,
Plaintiff asserts that Defendant cannot balance away due
process rights with other administrative concerns when the
current system fails to meet minimal standards. Id.
the immediacy challenge, Defendant argues that the SSA acted
in a timely manner after the OIG referral, but even if the
SSA acted slower than mandated, the Act is silent as to the
effect of the delay. Def.'s Mem. in Supp., ECF
No. 37, at 12-13. Nothing in the Act bars redetermination if
the SSA fails to act immediately, so Defendant argues that
the SSA could not violate Plaintiff's due process rights
in this manner. Id. Plaintiff's Response does
not challenge Defendant's arguments regarding the
immediacy allegations within the complaint. See Hayes v.
D.C., 923 F.Supp.2d 44, 49 (D.D.C. 2013) (finding that a
court can consider an argument conceded if not addressed in
dispositive motion response).
Plaintiff could not challenge the determination of possible
fraud in the original disability application, the
redetermination hearing satisfies constitutional due process
by allowing Plaintiff to object to the factual determination
that directly formed the ALJ's decision to terminate
benefits. The final decision that Plaintiff did not qualify
for disability benefits did not turn on the fraud
determination; the decision turned on the sufficiency of
evidence. The OIG's referral based on the reason to
believe fraud existed triggered the redetermination process,
and Plaintiff was given the full opportunity, with assistance
from the SSA, to develop new evidence to prove his
disability. The SSA also acted swiftly after receiving the
OIG referral, and the Act does not offer any remedy, much
less a bar from action, for any delay that did occur.
Therefore, the Court finds that the redetermination process
provided Plaintiff a timely and meaningful hearing that fully
complied with the Due Process Clause of the Constitution.
Requirements of Due Process
Fifth Amendment states that “[n]o person shall be
… deprived of life, liberty, or property, without due
process of law.” U.S. Const. amend. V. Due process
requires that the citizen be afforded an “opportunity
to be heard.” Goldberg v. Kelly, 397 U.S. 254,
267 (1970) (quoting Grannis v. Ordean, 234 U.S. 385,
394 (1914)). This hearing must be conducted “at a
meaningful time and in a meaningful manner” to conform
to the constitutional requirements of due process.
Id. (quoting Armstrong v. Manzo, 380 U.S.
545, 552 (1965)).
process is not, however, a strict construction, and courts
look to the particular circumstances involved to determine
whether due process is violated. See Morrissey v.
Brewer, 408 U.S. 471, 481 (1972) (“due process is
flexible and calls for such procedural protections as the
particular situation demands”). The
“consideration of what procedures due process may
require under any given set of circumstances must begin with
a determination of the precise nature of the government
function involved as well as of the private interest that has
been affected by governmental action.” Kelly,
397 U.S. at 263 (quoting Cafeteria & Rest. Workers Union
v. McElroy, 367 U.S. 886, 895 (1961)). Courts ...