Gilbert v. Sullivan

Opinion

USCA1 Opinion

March 9, 1995
                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT

                                 ___________________

No.  93-2309

NORMA GILBERT,
                                Plaintiff, Appellant,

                                          v.

              LOUIS W. SULLIVAN, SECRETARY OF HEALTH AND HUMAN SERVICES,
                                 Defendant, Appellee.

                                 ____________________

ERRATA SHEET

The opinion of this Court issued on March 6, 1995 is amended
          as follows:

               On Page 5, line 15, delete "see, e.g.,"
                                           ___  ____

               On Page 5, line 16, delete "see, e.g.,"
                                           ___  ____

               On Page 5, line 17, delete "see, e.g.,"
                                           ___  ____

               On  Page 6, lines 12-13,  delete "828 F.  Supp. 815 (D.Colo.
          1993), aff'd,"
                 _____

March 6, 1995

                                [NOT FOR PUBLICATION]
                            UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT 

                                 ___________________

No. 93-2309

NORMA GILBERT,

                                Plaintiff, Appellant,

                                          v.

              LOUIS W. SULLIVAN, SECRETARY OF HEALTH AND HUMAN SERVICES,

                                 Defendant, Appellee.

                                  __________________

                     APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF RHODE ISLAND

                     [Hon. Ernest C. Torres, U.S. District Judge]
                                             ___________________

                                 ___________________

                                        Before

                               Selya, Boudin and Stahl,
                                   Circuit Judges.
                                   ______________

                                 ___________________

               David B. Green on brief for appellant.
               ______________
               Edwin J. Gale, United  States Attorney, Stephanie S. Browne,
               _____________                           ___________________
          Assistant  United States  Attorney,  Randolph W.  Gaines,  Acting
                                               ___________________
          Deputy Chief Counsel for Social Security, A.  George Lowe, Deputy
                                                    _______________
          Chief Counsel for Social Security Disability Litigation, and Mary
                                                                       ____
          Ellen  Russell, Office  of the  General Counsel,  Social Security
          ______________
          Division, Department of  Health and Human Services,  on brief for
          appellee.

__________________



__________________



Per Curiam.   Claimant Norma  Gilbert appeals a district
                 __________

            court judgment affirming the  Secretary's refusal to reopen a

            prior denial of social security disability benefits.

                                          I
                                          I
                                          _

                 In June  1990, Gilbert filed her  second application for

            social security disability benefits and, after a hearing, was

            found to have been disabled since April 30, 1984.  A November

            1984 application had alleged the same impairment and the same

            disability  onset date.  The 1984 claim was filed without the

            assistance of counsel and Gilbert failed to pursue the denial

            past   the  reconsideration   stage.     As  a   result,  the

            reconsidered  denial became  the final  agency determination.

            See 20 C.F.R.   404.921.   In 1990, Gilbert sought  to reopen
            ___

            the earlier  application.  Because  more than five  years had

            elapsed  between  the  adverse  notification   on  the  first

            application and  the filing  of the current  application, the

            Administrative Law Judge (ALJ)  found no record indication of

            fraud  or clear  error  under 20  C.F.R.    404.988(c)(1)  or

            (c)(8) to  warrant reopening  the first determination,  which

            was deemed administratively final.   Subsequently, the agency

            limited Gilbert's retroactive benefits to June 1989, one year

            preceding the second application. See  42 U.S.C.   423(b); 20
                                              ___

            C.F.R.   404.621(a)(1)(i).

                 In district court, Gilbert complained that the Secretary

            improperly refused  to pay disability benefits  from May 1984

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to June 1989  and raised  a constitutional  challenge to  the

            reopening refusal.   Claimant  also contended that  there had

            been  a de  facto reopening  of the  1984 application.1   The
                    __  _____

            district court concluded  that the ALJ  had not reopened  the

            prior determination and, without reaching  the constitutional

            question, dismissed the complaint  for lack of subject matter

            jurisdiction under the authority  of Califano v. Sanders, 430
                                                 ________    _______

            U.S. 99, 108 (1977).2  Gilbert's motion  for summary judgment

            was also denied, and this appeal ensued.

                 Our review of  a dismissal  for lack  of subject  matter

            jurisdiction is  de novo.   See Shea  v. Rev-Lyn  Contracting
                                        ___ ____     ____________________

            Co.,  868 F.2d 515, 517 (1st Cir. 1989).  Reopening decisions
            ___

            are  a  matter of  agency  discretion and  generally  are not

____________________

            1.  Contrary to  claimant's assertions, however, there  is no
            authority for a de  facto reopening "at any time"  absent the
                            __  _____
            narrow exceptions laid  out in   404.988(c)(1)-(c)(11).   The
            Secretary's discretion  to reopen  cannot be extended  beyond
            the  scope of the regulatory scheme, 20 C.F.R.   404.988, and
            all reopenings,  whether express  or implied, are  subject to
            those regulatory requirements.  Since claimant wholly  failed
            to  identify any  fraud  or  clerical  error,  20  C.F.R.    
            404.988(c)(1),(c)(8),   in   connection   with    the   first
            application, the Secretary lacked discretion to reopen and no
            constructive reopening  could have  occurred.  See  Coates on
                                                           ___  _________
            behalf of Coates v. Bowen, 875 F.2d 97, 102 (7th Cir. 1989).
            ________________    _____

            2.  The Secretary's motion  to dismiss under Fed.  R. Civ. P.
            12(b)(1)  included an affidavit  with relevant administrative
            decisions  attached  as exhibits,  but  without the  complete
            administrative  record.   We have  indicated before  that the
            better  practice   is  the  routine  filing   of  the  entire
            administrative record.  Torres v. Secretary  of HHS, 845 F.2d
                                    ______    _________________
            1136, 1137  n.1 (1st Cir.  1988).   Nonetheless, the  limited
            record  before us  is  sufficient to  decide the  essentially
            legal question presented here. 

                                         -3-



subject  to  judicial review,  but an  exception exists  if a

            colorable  constitutional claim is  presented.   Sanders, 430
                                                             _______

            U.S. at  109; Dudley v. Secretary  of HHS, 816 F.2d  792, 795
                          ______    _________________

            (1st  Cir. 1987); Carver v.  Secretary of HHS,  869 F.2d 289,
                              ______     ________________

            292 (6th  Cir. 1989) ("[C]ourts have  consistently upheld the

            imposition of the doctrine  of administrative res judicata in

            social  security  cases   except  under  circumstances   that

            implicate  a  colorable  constitutional  issue.").    Gilbert

            argues that  the denial notices given when she was proceeding

            pro  se  on  the  first  application   did  not  explain  the
            ___  __

            consequences of reapplying  for benefits rather  than seeking

            further  administrative review,  and  therefore violated  her

            procedural due process rights.3

                 Gilbert relies  on Gonzalez v. Sullivan,  914 F.2d 1197,
                                    ________    ________

            1203  (9th Cir.  1990),  which held  that the  initial denial

____________________

            3.  Procedural  due process  in the  social  security context
            requires  no  more than  an opportunity  to  be heard  "`at a
            meaningful time  and in a  meaningful manner.'"   Mathews  v.
                                                              _______
            Eldridge,  424 U.S.  319,  333 (1976)  (quoting Armstrong  v.
            ________                                        _________
            Manzo, 380 U.S. 545, 552 (1965)).
            _____

                                         -4-



notice  Gonzalez  received   violated  due   process.4     In

            pertinent part, the denial notice in Gonzalez informed:
                                                 ________

                 If you do not  request reconsideration of your case
                 within the  prescribed time period, you  still have
                 the right to file another application at any time.

            Id.  The Gonzalez  court found  that  notice constitutionally
            ___      ________

            infirm because it failed to inform how to appeal a denial:

                 [T]he form of the  notice used here is sufficiently
                 misleading that it introduces  a high risk of error
                 into the disability process. . . . The notice given
                 in this  case does not clearly indicate  that if no
                 request   for   reconsideration   is    made,   the
                 determination  is  final.   We  conclude  that  the
                 notice violates appellant's  fifth amendment  right
                 to due process.

            Id.  
            ___

                 Other courts have recognized that the  particular notice

            form  used in  Gonzalez poses  serious due  process concerns.
                           ________

            See, e.g.,  Day v.  Shalala, 23 F.3d 1052, 1065-66 (6th  Cir.
            ___  ____   ___     _______

            1994); Aponte  v. Sullivan,  823 F. Supp.  277, 282  (E.D.Pa.
                   ______     ________

            1993);  Christopher v. Secretary of  HHS, 702 F. Supp. 41, 43
                    ___________    _________________

            (N.D.N.Y. 1989);  Butland v.  Bowen,  673 F.  Supp. 638,  641
                              _______     _____

            (D.Mass. 1987); Aversa v. Secretary of HHS, 672 F. Supp. 775,
                            ______    ________________

            777  (D.N.J. 1987); Dealy v.  Heckler, 616 F.  Supp. 880, 887
                                _____     _______

                                
            ____________________

            4.  The  Gonzalez   decision  became   the  subject   of  the
                     ________
            Secretary's Acquiescence Ruling 92-7(9)  (published September
            30, 1992).  According to the ruling, claimants who received a
            Gonzalez notice before July  1, 1991 and did not  appeal, but
            ________
            subsequently filed another  application that either requested
            a reopening of  the prior determination or  requested some or
            all  of the  benefits then  claimed, were  entitled to  a new
            determination  based on  the  merits of  their claim  without
            regard  for  the usual  time  limits  imposed upon  reopening
            requests.

                                         -5-



(W.D.Mo. 1984);  see also  Burks-Marshall v. Shalala,  7 F.3d
                             ___ ____  ______________    _______

            1346, 1349 (8th Cir. 1993) (dictum).5   

                 Gilbert's  notice is  not  available, but  the Secretary

            concedes that  it is substantially the same  as that rejected

            in  Gonzalez.  As it is undisputed that claimant received the
                ________

            kind of Gonzalez notice that courts have uniformly recognized
                    ________

            as inadequate, we find that Gilbert has proffered a colorable

            constitutional claim and the district  court had jurisdiction

            to review the denial of reopening.  

                                          II
                                          II
                                          __

                 The  Secretary  argues,  however,  that   Gilbert's  due

            process  claim   is  not   colorable  because  she   has  not

            demonstrated that she forfeited her right to appeal the prior

            denial  in  reliance on  the notice.    The question  was not

            discussed in  Gonzalez, but we  believe that reliance  on the
                          ________

            defective  notice is  a core  ingredient of  claimant's prima
                                                                    _____

            facie  showing of a  due process deprivation.   "Without such
            _____

            reliance,  the   injury  is  not  fairly   traceable  to  the

            challenged  action."  Gilbert v. Shalala, __ F.3d __, 1995 WL
                                  _______    _______

            16762,  *2 (10th  Cir. Jan.  17, 1995).   Only  claimants who

            detrimentally relied on an  inadequate notice could have been

____________________

            5.  In Gilbert  v. Shalala,  828 F.  Supp.  815, 816  (D.Colo
                   _______     _______
            1993), aff'd, __  F.3d __, 1995 WL 16762 (10th  Cir. Jan. 17,
                   _____
            1995), the  court reached a different  conclusion, but there,
            the allegedly  deficient Gonzalez notice also  contained this
                                     ________
            language:  "A new application is not the same as an appeal of
            this determination." 

                                         -6-



injured by it and were entitled to reopen their applications.

            Day,  23 F.3d  at 1066;  see also  Burks-Marshall, 7  F.3d at
            ___                      ___ ____  ______________

            1349;  Delyria v.  Shalala, 856  F. Supp.  1432, 1443  (D.Or.
                   _______     _______

            1994);  Butland, 673 F.Supp. at  642; Dealy, 616  F. Supp. at
                    _______                       _____

            886; cf. Air Line Pilots  Ass'n v. Precision Valley Aviation,
                 ___ ______________________    __________________________

            Inc., 26 F.3d 220, 226 (1st Cir. 1994) (party invoking unique
            ____

            circumstances  exception to  untimely notice  of appeal  must

            show  that  detrimental  reliance  on judicial  statement  or

            action was objectively  reasonable); Jimenez-Nieves v. United
                                                 ______________    ______

            States, 682 F.2d 1,  4 (1st Cir. 1982)  (justifiable reliance
            ______

            upon  a representation--taking action or refraining from it--

            is   an  essential   element   of  the   tort  of   negligent

            misrepresentation).  Thus,  to succeed on  the merits of  her

            constitutional claim,  Gilbert must  show that she  relied on

            the flawed notice and was prejudiced.    

                 Day, 23  F.3d  at 1066,  assigned essentially  objective
                 ___

            criteria by which  to assess  whether or not  a claimant  had

            established  injury   because  of  reliance   upon  erroneous

            information:    those  claimants who  received  an inadequate

            denial  notice, reapplied  (rather than  appealing the  prior

            denial), and were met with either a res judicata defense or a
                                                ___ ________

            reduced award had detrimentally  relied on the faulty notice.

            See id.  & n.17; see  also Delyria, 856 F.  Supp. at 1439-40.
            ___ ___          ___  ____ _______

            We  agree,  in the  circumstances  presented  here, that  the

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detrimental reliance test  governs the showing claimant  must

            make to succeed on her procedural due process claim.

                 Parsing Day's formulation,  undisputed historical  facts
                         ___

            of record  support a finding of detrimental  reliance in this

            case.   Gilbert  was  denied benefits  on  her prior  pro  se
                                                                  ___  __

            application; she  received an admittedly  defective Gonzalez-
                                                                ________

            type notice, and, acting in conformity with the notice, filed

            a  new  application  requesting   a  reopening.    She  later

            testified  that  she did  not know  how  to appeal  the prior

            denial.  That  Gilbert did  not appeal but  instead chose  to

            reapply for the  same benefits evidences her reliance  on the

            Secretary's  erroneous  advice.     See  n.4,  supra.    Upon
                                                ___        _____

            redetermination,   Gilbert   received  retroactive   benefits

            reduced  to one  year and  suffered the  loss of  almost five

            years of benefits.  Since the record indicates  both reliance

            on erroneous advice and  concomitant actual harm, we conclude

            that the  Secretary's refusal to  reopen violated  claimant's

            due process rights. 

                 If  the 1990  application  had  been  claimant's  first,

            payment of  retroactive disability benefits would  clearly be

            limited  to one year prior  to the application.   42 U.S.C.  

            423(b); 20 C.F.R.   404.621(a)(1); Crady v. Secretary of HHS,
                                               _____    ________________

            835 F.2d 617, 619-20 (6th Cir. 1987).  Since we conclude that

            claimant has  interposed a meritorious  constitutional claim,

            the procedural bar  to reopenings after four years is lifted,

-8-



and the relevant  application date  for retroactive  benefits

            purposes would  be  the  onset  date  claimed  in  the  first

            application.  See,  e.g., Ferguson v. Sullivan,  718 F. Supp.
                          ___   ____  ________    ________

            1269,  1271-72  (W.D.N.C.   1989)  (constitutional   interest

            implicated   by  claimant's   mental  incapacity   to  pursue

            administrative  appeal required  that disability  benefits be

            calculated from previous application); see also Culbertson v.
                                                   ___ ____ __________

            Secretary  of  HHS,  859  F.2d 319,  322-24  (4th  Cir. 1988)
            __________________

            (similar).   The award of one year of retroactive benefits is

            too skimpy and benefits must be calculated from the April 30,

            1984 disability date.

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III
                                         III
                                         ___

                 Ordinarily,  having decided that  the district court had

            jurisdiction to review the  reopening denial, we would remand

            for further consideration below and not address the merits of

            the case.   In the  distinctly unusual circumstances  of this

            case,  where  the  record   is  for  all  practical  purposes

            complete,  where the  Secretary's  concession  regarding  the

            critical notice language is conclusive  as to the content  of

            claimant's   notices,  and   where   Gilbert's  reliance   is

            sufficiently evidenced in the record to  enable this court to

            decide the  largely legal  question  whether the  Secretary's

            reopening rules should be relaxed, a remand is not required. 

            See Guglietti v.  Secretary of  HHS, 900 F.2d  397, 399  (1st
            ___ _________     _________________

            Cir. 1990); see  also Young v. Bowen, 858 F.2d  951, 956 (4th
                        ___  ____ _____    _____

            Cir. 1988); King v. Commissioner, 458 F.2d 245, 249 (6th Cir.
                        ____    ____________

            1972).

                 We   conclude    that    the   Secretary    could    not

            constitutionally refuse to reopen Gilbert's first application

            and  that   claimant  should  have  been  awarded  disability

            benefits for  the  period commencing  April  30, 1984.    The

            judgment  of the district court  is reversed and  the case is

            remanded  with  instructions  to   return  the  case  to  the

            Secretary for an award of  disability benefits from April 30,

            1984.

                 Reversed and remanded.
                 ______________________

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