Cost v. Social Security Administration

• Court: District Court, District of Columbia
• Decided: March 15, 2011
• Docket: Civil Action No. 2008-2226
• Status: Published

Opinion

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 -

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. - 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.

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 - 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.

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 - 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.

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 - 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:

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 - 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

3 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.

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 - 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

hearing.

SIGNED this 15th day of March, 2011.

__________/s/_______________ RICHARD W. ROBERTS United States District Judge