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Robertson v. Berryhill

United States District Court, S.D. West Virginia, Huntington Division

March 28, 2017

NANCY A. BERRYHILL, in her official capacity as Acting Commissioner of the Social Security Administration, Defendant.


          Robert C. Chambers, Chief Judge

         Pending 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 claims.

         I. Background

         This 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[1] 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 Daugherty.[2] Id.

         The 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.

         a. Social Security Act Redetermination Process

         The 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. § 405(u)(1)(B).

         Pursuant 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. Id.

         A 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 I-1-3-25(C)(6).

         While 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.

         b. Robertson's Background

         Robertson 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.

         Robertson 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.

         c. Procedural History

         Robertson 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 ¶ 14.

         Robertson 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.

         II. Legal Standard

         Federal 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).

         Accepting 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).

         III. Discussion

         Defendant 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.[3]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).

         In 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.

         a. Due Process under Fifth Amendment

         In 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.

         Defendant 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. at 10-12.

         Addressing 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).

         Although 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.

         i. Requirements of Due Process

         The 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)).

         Due 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 ...

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