Marilyn Boley v. Carolyn W. Colvin
Filing
Filed opinion of the court by Judge Easterbrook. Watters is overruled. This opinion has been circulated to all judges in active service under Circuit Rule 40(e). None requested a hearing en banc. The district court s judgment is VACATED, and the case is REMANDED with instructions to decide whether substantial evidence, and appropriate procedures, underlie the decision that Boley lacks good cause for her delay in seeking intra-agency review. Frank H. Easterbrook, Circuit Judge; Daniel A. Manion, Circuit Judge and Ilana Diamond Rovner, Circuit Judge. [6595257-1] [6595257] [13-1252]
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Case: 13-1252
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In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 13-‐‑1252
MARILYN R. BOLEY,
Plaintiff-‐‑Appellant,
v.
CAROLYN W. COLVIN, Acting Commissioner of Social Securi-‐‑
ty,
Defendant-‐‑Appellee.
____________________
Appeal from the United States District Court for the
Southern District of Indiana, Evansville Division.
No. 3:12-‐‑cv-‐‑27-‐‑RLY-‐‑WGH — Richard L. Young, Chief Judge.
____________________
ARGUED OCTOBER 2, 2013 — DECIDED AUGUST 4, 2014
____________________
Before EASTERBROOK, MANION, and ROVNER, Circuit Judg-‐‑
es.
EASTERBROOK, Circuit Judge. Marilyn Boley asked the So-‐‑
cial Security Administration for disability insurance benefits.
The agency denied her request initially and on reconsidera-‐‑
tion. A person dissatisfied with such a decision has 60 days
to request a hearing by an administrative law judge. 20
C.F.R. §404.933(b)(1). Boley took about nine months—but
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she had a reason. When the Administration made its deci-‐‑
sion on reconsideration, it notified Boley but not her lawyer,
despite 20 C.F.R. §404.1715(a), which requires notice to the
claimant’s representative. Boley was ill at the time (she was
preparing for a double mastectomy) and relied on her law-‐‑
yer to protect her interests; she did not know, until it was too
late, that her lawyer was in the dark.
After finding out what had happened, Boley’s lawyer re-‐‑
quested a hearing. An ALJ dismissed that request, ruling it
untimely despite the agency’s conceded failure to follow
§404.1715(a). Regulations allow the agency to extend the
time when “good cause” justifies the delay. 20 C.F.R.
§§ 404.911, 404.933(c). In response to written submissions,
the ALJ ruled that Boley lacked “good cause” because she
had received notice and could have filed a request herself. A
federal district judge then dismissed her petition for judicial
review, ruling that the ALJ’s decision to dispense with an
oral hearing means that the court lacks subject-‐‑matter juris-‐‑
diction. Boley v. Astrue, 2013 U.S. Dist. LEXIS 9557 (S.D. Ind.
Jan. 24, 2013).
The district judge relied on 42 U.S.C. §405(g), which au-‐‑
thorizes review of the agency’s final decisions. This statute
provides:
Any individual, after any final decision of the Commissioner of
Social Security made after a hearing to which he was a party …
may obtain a review of such decision by a civil action com-‐‑
menced within sixty days after the mailing to him of notice of
such decision or within such further time as the Commissioner
of Social Security may allow.
The ALJ’s decision in Boley’s case had not been made “after
a hearing”, and that, the judge thought, is that. On this un-‐‑
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derstanding, an agency can prevent judicial review of any
claim for benefits by the expedient of refusing to hold a hear-‐‑
ing, even when the claimant is entitled to one.
The district court assumed that “hearing” necessarily
means an oral procedure required by a statute or regulation.
That is a possible reading—and one that Rios v. Secretary of
Health, Education, and Welfare, 614 F.2d 25, 26–27 (1st Cir.
1980), adopted—but not an inevitable one. McNatt v. Apfel,
201 F.3d 1084 (9th Cir. 2000), concluded that a claimant had
received a hearing, and was entitled to judicial review, when
the SSA had made a final decision after a process that should
have included live testimony but erroneously failed to do so.
And in federal courts, a third meaning of “hearing”—one
that dispenses with any need for oral presentations—is
common. District courts that grant summary judgment, after
receiving papers and legal argument but not live testimony,
write that they have decided after a hearing. Similarly a
court of appeals will state that it has “heard and deter-‐‑
mined” an appeal even though it did not hold oral argu-‐‑
ment. On this understanding, “hearing” means an oppor-‐‑
tunity to be heard out to the extent the tribunal itself deems
appropriate. The Supreme Court held in Richardson v. Per-‐‑
ales, 402 U.S. 389 (1971), that Social Security benefits may be
denied without oral testimony from important witnesses; the
Court did not hint that it was thus preventing judicial re-‐‑
view by authorizing decision without a §405(g) “hearing”.
We think the third possibility—that “hearing” means
whatever process the Social Security Administration deems
adequate to produce a final decision—is the most satisfacto-‐‑
ry. Although no court of appeals has adopted that view ex-‐‑
plicitly, Shrader v. Harris, 631 F.2d 297, 300 (4th Cir. 1980),
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does so implicitly. Shrader was in much the same position as
Boley: she failed to make a timely request for decision by an
ALJ; the agency decided that the delay was not justified by
“good cause”; the claimant then sought judicial review. The
Fourth Circuit concluded that the agency’s decision lacked
the support of substantial evidence and remanded for a de-‐‑
cision on the merits.
The district court distinguished Shrader on the ground
that Shrader was mentally ill and could not protect her own
interests, while Boley was only physically ill. But this is un-‐‑
related to the meaning of “hearing” in §405(g). Shrader itself
emphasized that the claimant had presented a constitutional
argument. We return to that subject below; for now it is
enough to observe that, if an agency acts without a “hear-‐‑
ing” when it rejects (on a paper record) an argument that
good cause supports a belated request for administrative re-‐‑
view, then the nature of the claimant’s impairment or legal
argument is irrelevant. That’s what it means to say that the
court lacks subject-‐‑matter jurisdiction, which is the power to
decide whether a legal argument is sound. See Gonzalez v.
Thaler, 132 S. Ct. 641, 648 (2012); Bell v. Hood, 327 U.S. 678
(1946). A court cannot say: “the plaintiff has a good claim, so
there is jurisdiction, but an incorrect claim would be dis-‐‑
missed for want of jurisdiction.”
Our conclusion that “hearing” means a decision after
whatever process the Social Security Administration itself
elects to use follows from Weinberger v. Salfi, 422 U.S. 749,
763–67 (1975), and Mathews v. Eldridge, 424 U.S. 319, 326–32
(1976). In Salfi a claimant contended that one portion of the
Social Security Act violated the Constitution, and that with
this defect corrected she would be entitled to benefits. The
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agency denied her application without an oral hearing, rul-‐‑
ing that, given the statutory language, none of the potential
factual issues was material to the claim. In Eldridge a claim-‐‑
ant contended that the Due Process Clause of the Fifth
Amendment entitled him to a hearing on a factual dispute;
the agency disagreed and resolved his case without an oral
hearing.
In both Salfi and Eldridge the agency made a final deci-‐‑
sion after a process the agency deemed adequate, and in
both cases that process did not include an oral hearing. Both
Salfi and Eldridge sought judicial review and were met with
arguments that the absence of an oral hearing meant that
§405(g) foreclosed jurisdiction. In each case, the Supreme
Court held that jurisdiction existed. Salfi observed that it
would be “futile and wasteful” (422 U.S. at 767) to hold an
oral hearing if the agency thought that the claim could be
finally resolved without one, and added:
the [agency] may, of course, award benefits without requiring a
hearing. We do not understand the statute to prevent [it] from
similarly determining in favor of the applicant, without a hear-‐‑
ing, all issues with regard to eligibility save for one as to which
[it] considers a hearing to be useless.
Ibid. It followed, the Court thought, that §405(g) had been
satisfied. This necessarily means that a “hearing” for the
purpose of that statute is a decision after whatever proce-‐‑
dures the agency elects to use, and that a decision not to
hold an oral hearing does not close the courthouse door.
Eldridge concluded that §405(g) creates two requirements,
only one of which is strictly jurisdictional in the sense that it
cannot be waived by the parties. “The waivable element is
the requirement that the administrative remedies prescribed
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by the [agency] be exhausted. The nonwaivable element is
the requirement that a claim for benefits shall have been pre-‐‑
sented to the [agency]. Absent such a claim there can be no
‘decision’ of any type. And some decision by the [agency] is
clearly required by the statute.” 424 U.S. at 328. Once again
the Court’s point is that §405(g) allows judicial review when
a claim has been presented and finally decided, whether or
not the agency thinks live testimony necessary. Boley filed a
claim for benefits and pursued it as far as the agency permit-‐‑
ted; under Salfi and Eldridge she is entitled to judicial review
of her contention that the agency mishandled her case.
Thirty-‐‑four years ago, however, this circuit held other-‐‑
wise. Watters v. Harris, 656 F.2d 234 (7th Cir. 1980), is materi-‐‑
ally identical to Boley’s situation. Watters missed the admin-‐‑
istrative deadline for seeking a decision by an ALJ and con-‐‑
tended that good cause justified the delay. Without an oral
hearing, an ALJ rejected that argument and issued a final de-‐‑
cision denying Watters’s claim for benefits. When Watters
asked the judiciary to find that good cause indeed existed,
we dismissed for want of jurisdiction and held that the
agency’s decision not to take oral testimony blocks judicial
review. We relied on Califano v. Sanders, 430 U.S. 99 (1977),
for the proposition that only if a federal statute requires the
agency to hold an oral hearing to resolve a particular claim,
and the agency complies, is judicial review possible.
Sanders does not hold anything that sweeping. It did not
purport to overrule Salfi or Eldridge. The Court considered
whether §405(g) allows review of a decision denying a mo-‐‑
tion to reopen a final decision that had denied an application
for benefits. The Court held not, because §405(g) sets a 60-‐‑
day limit on petitions for judicial review. “[A]n interpreta-‐‑
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tion that would allow a claimant judicial review simply by
filing—and being denied—a petition to reopen his claim
would frustrate the congressional purpose, plainly evi-‐‑
denced in §[4]05(g), to impose a 60-‐‑day limitation upon judi-‐‑
cial review of the Secretary’s final decision on the initial
claim for benefits. Congress’ determination so to limit judi-‐‑
cial review to the original decision denying benefits is a poli-‐‑
cy choice obviously designed to forestall repetitive or belat-‐‑
ed litigation of stale eligibility claims. Our duty, of course, is
to respect that choice.” 430 U.S. at 108 (citation omitted). In
other words, one opportunity for judicial review is enough;
a claimant who bypasses that chance cannot create another
by a procedure that would evade a statutory deadline.
Watters extended Sanders by applying the same approach
to the 60-‐‑day limit for seeking intra-‐‑agency review by an
ALJ. 656 F.2d at 239. It attributed this time limit to §405(g)
itself, apparently not appreciating that the 60-‐‑day time for
seeking review by an ALJ was created by regulation rather
than statute—and that the regulation allows more time for
good cause. A court ought not assume that good cause is
missing, and that judicial review would frustrate the regula-‐‑
tion, when the existence of good cause is the very issue the
claimant seeks to present. A district court’s decision that
good cause for an extension exists (or doesn’t) is subject to
appellate review. See Pioneer Investment Services Co. v.
Brunswick Associates LP, 507 U.S. 380 (1993). Judicial review
of an ALJ’s decision about good cause no more defeats the
normal time limit than appellate review of a district court’s
decision about good cause defeats the normal time limit.
When discussing Salfi and Eldridge, the panel in Watters
observed that those claimants had presented constitutional
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arguments, which in the panel’s view justified judicial re-‐‑
view even when claims arising under statutes and regula-‐‑
tions are unreviewable. 656 F.2d at 240. Yet the panel did not
explain what this has to do with the meaning of the word
“hearing”, which concerns the agency’s procedure rather
than the nature of the legal argument by which a claimant
seeks to upset the administrative decision. Sanders made a
similar observation in passing—likewise without linking it
to the meaning of “hearing”. 430 U.S. at 109. But unlike Wat-‐‑
ters, Sanders limited to one the opportunities for judicial re-‐‑
view, rather than eliminating even the initial opportunity.
Eldridge distinguished between the need for the presenta-‐‑
tion of a claim to the agency, which it held to be jurisdiction-‐‑
al, and the need for exhaustion of the administrative process,
which it thought to be non-‐‑jurisdictional. The dispute in
Watters, as in this case, concerns whether the claimant ex-‐‑
hausted those procedures by filing a timely request for re-‐‑
view: the claimant says yes (when “good cause” is consid-‐‑
ered), and the agency says no. If, as Salfi and Eldridge estab-‐‑
lish, the only jurisdictional element of §405(g) is the need for
a formal administrative claim, then the court has subject-‐‑
matter jurisdiction to resolve the parties’ controversy.
Making jurisdiction turn on the presence of a constitu-‐‑
tional argument not only lacks support in the text of §405(g)
but also would lead claimants to present unnecessary consti-‐‑
tutional arguments. Boley has done just that, perhaps in re-‐‑
sponse to the observations in Watters. Boley contends that
the Due Process Clause requires an oral hearing on her con-‐‑
tention that her medical condition, and the agency’s failure
to send its decision to her lawyer, jointly establish “good
cause” for a belated petition for administrative review. Boley
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also appears to contend that, as a substantive matter, the
Constitution requires the agency to find that good cause ex-‐‑
ists and to ensure that claimants’ lawyers receive notice. Yet
it is an important principle that courts never start with con-‐‑
stitutional arguments. See, e.g., New York City Transit Author-‐‑
ity v. Beazer, 440 U.S. 568, 582 (1979).
The first question in a case such as this ought to be the
meaning of “good cause” in the regulation. If there is a ma-‐‑
terial dispute of fact, the need for an oral hearing should be
derived from the Administrative Procedure Act, not from
the Constitution. See generally Rehman v. Gonzales, 441 F.3d
506 (7th Cir. 2006) (a genuine issue about due process is pre-‐‑
sented only if the statute and regulations fail to provide no-‐‑
tice and an opportunity for a hearing). Reading “hearing” in
§405(g) in a way that forces courts to resolve constitutional
questions unnecessarily, while bypassing statutes, regula-‐‑
tions, and principles of administrative law that might suffice
to decide the case, has nothing to recommend it—and if
Congress set out to force the judiciary to render unnecessary
constitutional decisions, the language of §405(g) would be an
odd way to do so.
We conclude that Watters is wrongly decided. We recog-‐‑
nize that there is an established conflict on this issue, with
McNatt and Shrader favoring Boley and a greater number of
circuits, including Rios (see page 3 above) and the panel in
Watters, the other way. Watters relied on Ortego v. Weinberger,
516 F.2d 1005, 1007–08 (5th Cir. 1975), and Cappadora v. Cele-‐‑
brezze, 356 F.2d 1, 4 (2d Cir. 1966). Cappadora long preceded
both Salfi and Eldridge; Ortega came between those cases and
did not discuss Salfi other than to observe that 28 U.S.C.
§1331 does not supply jurisdiction in Social Security cases.
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Yet neither the Second Circuit nor the Fifth Circuit has
changed course after Eldridge. The Sixth and Tenth Circuits
have adopted the same view, see Hilmes v. Secretary of HHS,
983 F.2d 67 (6th Cir. 1993); White v. Schweiker, 725 F.2d 91
(10th Cir. 1984). The Third Circuit has held that constitution-‐‑
al arguments, but not others, can be entertained when the
agency does not hold an oral hearing. Penner v. Schweiker,
701 F.2d 256, 260 (3d Cir. 1983).
The prospect of moving from one side of a conflict to an-‐‑
other is not attractive, especially when the conflict is so old
and the Supreme Court has been content to allow the disa-‐‑
greement to continue. Nonetheless, we have a duty to apply
§405(g) the way the Supreme Court did in Salfi and Eldridge,
and we very much want to give the statute a reading that
avoids unnecessary constitutional litigation of the kind that
Watters and similar decisions invite.
Watters is overruled. This opinion has been circulated to
all judges in active service under Circuit Rule 40(e). None
requested a hearing en banc.
The district court’s judgment is vacated, and the case is
remanded with instructions to decide whether substantial
evidence, and appropriate procedures, underlie the decision
that Boley lacks “good cause” for her delay in seeking intra-‐‑
agency review.
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