McLellan v. Commissioner, Social Security Administration
Filing
34
OPINION AND ORDER entered by Judge Marcia S. Krieger on 12/22/19. Granting 16 Motion to Dismiss for Failure to State a Claim and Ms. McLellan's remaining claims in this action are DISMISSED. Denying as moot 26 Motion for Order. Denying as moot 27 Motion to Appoint Counsel. Denying 28 Motion to Amend/Correct/Modify. Denying as moot 29 Motion for Hearing/Conference. Denying as moot 31 Motion for Order. Denying as moot 32 Motion to Appoint Counsel. (rkeec)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Senior District Judge Marcia S. Krieger
Civil Action No. 18-cv-00070-MSK
SALLY A. MCLELLAN,
Plaintiff,
v.
COMMISSIONER, SOCIAL SECURITY ADMINISTRATION,
Defendant.
______________________________________________________________________________
OPINION AND ORDER
______________________________________________________________________________
THIS MATTER comes before the Court pursuant to the Defendant’s (“SSA”) Motion to
Dismiss (# 16), Ms. McLellan’s response (# 23), and the SSA’s reply (# 24).1 Ms. McLellan has
also filed a Motion for Leave to Supplement (# 28) her Complaint, to which the SSA has filed no
response. Also pending are numerous motions (# 26, 27, 29, 31, 32) by Ms. McLellan, variously
seeking appointment of counsel, an update on the status of the case, or an expedited ruling.
According to Ms. McLellan’s pro se2 Complaint (# 1), she applied for Social Security
Disability benefits in March 2007. After extended administrative proceedings, in October 2017,
the SSA found Ms. McLellan eligible for benefits retroactively to July 2012. Ms. McLellan
Without seeking leave, Ms. McLellan filed a surreply (# 25). In the interests of
completeness of the record, the Court has considered that surreply.
1
The Court construes Ms. McLellan’s pro se filings liberally. Haines v. Kerner, 404 U.S.
519, 520-21 (1972).
2
1
contends that she has begun receiving her monthly benefit payments, but has yet to receive any
“backpay” – that is, the retroactive payments.3
Supplemental submissions from Ms. McLellan and filings by the SSA flesh out Ms.
McLellan’s claims somewhat, and the Court recites those additional facts simply for purposes of
clarity and context, without actually relying on them as part of the Court’s analysis. On October
13, 2017, an ALJ determined that Ms. McLellan was entitled to benefits retroactive to August
2012, totaling $30,402.90. For various reasons (including avoiding conflict with certain meanstesting that applies to a claimant’s entitlement to ongoing benefits), when retroactive benefit
payments owed to a claimant exceed a certain amount, the SSA will not pay them out in a lump
sum. Instead, the SSA makes such payments “in not more than 3 installments [ ] made at 6month intervals,” with the first two installment payments determined by a formula. 20 C.F.R. §
416.545(b). Pursuant to this rule, in March 2018, the SSA made a first installment payment to
Ms. McLellan in the amount of $2, 250.
There are certain exceptions to the installment payment rule, allowing the first two
installment payments to be increased above the formula-driven amount if the claimant has
outstanding debts for necessities like clothing or shelter. 20 C.F.R. § 416.545(d)(1)(i). It
appears that, at some point in time, Ms. McLellan requested that her installment payment be
increased due to outstanding debts she owed for rent payments. She states that she “received
correspondence” in late March 2018 “dismissing my request for reconsideration of my award.”
Separately, Ms. McLellan also alleged that she twice requested that the SSA increase her
monthly benefit amount in response to an increase in her rent, but that the SSA never responded
to that request. The Court dismissed (# 14) her request for mandamus relief on this issue due to
lack of subject matter jurisdiction.
3
2
It appears that SSA made the second installment payment six months later, in or about
September 2018. However, rather than paying any sums to Ms. McLellan, SSA made a payment
of $11,571 to the State of Colorado. This payment appears to be pursuant to 42 U.S.C. §
1383(g). That statute provides that, upon the written authorization of a claimant, the SSA may
“withhold [retroactive] benefits due with respect to that individual and may pay to a State . . . an
amount sufficient to reimburse the State [ ] for interim assistance furnished on behalf of the
individual by the State.” See generally Johns v. Stewart, 57 F.3d 1544 (10th Cir. 1995) (finding
that such practice does not contravene the Social Security Act). According to a September 5,
2018 letter from the State of Colorado to Ms. McLellan, Ms. McLellan had previously “signed
an authorization giving Social Security the authority to reimburse the State . . . for assistance
given to you under the State Aid to the Needy Disabled State Only program.” The State of
Colorado provided Ms. McLellan a calculation of the aid payments she had received under that
program between 2012 and 2017, with the total coming to $11,571.
It would appear that the third installment payment, in the final amount of $16,581.19,4
would have been due in or about March 2019. The record before the Court does not indicate
whether that payment was made, and if it was, to whom and in what amount(s).
A. Motion to dismiss
The SSA moves (# 16) to dismiss Ms. McLellan’s claim, arguing that the Court’s subjectmatter jurisdiction extends only to “final” decisions of the agency. 42 U.S.C. § 405(g), (h). The
Ms. McLellan’s Complaint (and other filings) requests payment of interest on the
retroactive benefit amount owed to her. Claimants are not entitled to interest on retroactive
benefits. See Abulkhair v. Commissioner, 450 Fed.Appx. 117, 119 (3d Cir. 2011).
4
3
SSA argues that determinations about when and how to pay retroactive benefits are not “final”
benefits subject to judicial review. 5
42 U.S.C. § 405(g) provides that “any individual, after any final decision of the
Commissioner [ ] made after a hearing . . ., may obtain review of such decision by a civil action
commenced within sixty days after the mailing to him of notice of such decision.” 42 U.S.C. §
405(h) provides that “no findings of fact or decision of the Commissioner [ ] shall be reviewed . .
. except as herein provided.” Thus, the Court’s jurisdiction to hear Ms. McLellan’s claim exists
only to the extent that she is challenging a “final decision . . . made after a hearing.”
In Smith v. Berryhill, 139 S.Ct. 1765, 1774 (2019), the Supreme Court sought to define
what constitutes a “final decision” under the Social Security Act. It must be “final,” in the sense
of “terminal” – that is, “the final stage of review” under the SSA’s own regulations. Id. It must
also be “made after a hearing,” in the sense that it is “tethered to” a hearing that is “a matter of
legislative right rather than agency grace.” Id. at 1775. In so holding, the Smith Court
distinguished its case – in which the claimant sought an initial award of benefits and had a
The procedural basis of the SSA’s motion is somewhat unclear. In the first paragraph of
the motion and in footnote 1, the SSA explains that actions seeking review of a final agency
decision must be brought within 60 days of the decision. It states that it construes Ms.
McLellan’s action to be such an untimely request for review, and thus, it considers its motion to
be one to dismiss on statute of limitation grounds under Fed. R. Civ. P. 12(b)(6), not a subjectmatter jurisdiction motion under Rule 12(b)(1). But in the Statement of the Case and elsewhere
in its motion, the SSA argues that “this Court does not have jurisdiction over this action.”
Moreover, the SSA has submitted several exhibits to its motion, which would not properly be
before the Court on a Rule 12(b)(6) motion but could be considered under Rule 12(b)(1).
Ultimately, the Court need not determine whether the SSA’s motion arises under Rule
12(b)(1) or 12(b)(6). For the ease of the reader, the Court has recited certain facts that fall
outside of the four corners of Ms. McLellan’s Complaint, but the Court has not considered those
facts for purposes of its evaluation. Moreover, the Court has treated the well-pled facts alleged
by Ms. McLellan’s Complaint as true. In such circumstances, the Rule 12(b)(1) and 12(b)(6)
analyses are not materially different.
5
4
hearing before an ALJ, only to have his appeal of the ALJ’s ruling denied on timeliness grounds
– from Califano v. Sanders, 430 U.S. 99, 108 (1977), in which the Court held that a claimant’s
petition to reopen a prior final decision – a petition that was denied by the SSA without a hearing
– was not subject to judicial review because “the opportunity to reopen final decisions and any
hearing convened to determine the propriety of such action are afforded by the Secretary’s
regulations and not by the Social Security Act.”
It is not completely clear what rule Smith purports to lay down. In Keller v.
Commissioner, 748 Fed.Appx. 192, 194 (10th Cir. 2018), the 10th Circuit seems to have read
Smith extremely narrowly, construing it to establish that “the district court’s jurisdiction is
limited to reviewing the agency’s final decision on an initial claim for benefits” (not, as in both
Califano and Keller, a request by a claimant to reopen a prior denial of such a claim). If that is
the correct reading of Smith, Ms. McLellan’s claim challenging the SSA’s decision to pay her
retroactive benefits in installments is not a “final decision” because, clearly, it is not an “initial
claim for benefits.”
Alternatively, one might read Smith to teach that matters arising under statute can, if
pursued to conclusion, result in a “final decision,” whereas procedures that are created solely by
regulation cannot. If that is the correct reading, Ms. McLellan’s claim challenging the payment
of her retroactive benefits via installment still fails. The Social Security Act itself has relatively
little to say on how and when such payments are made. 42 U.S.C. § 404(a)(1) provides that
“whenever the Commissioner [ ] finds that more or less than the correct amount of payment has
been made to any person, . . . proper adjustment or recovery shall be made under regulations
prescribed by the Commissioner.” (Emphasis added.) In other words, although Congress
5
requires that an underpayment be rectified, it leaves discretion to the Commissioner to determine
how and when additional payments are made. As explained above, the Commissioner has done
so in the form of the installment payment scheme described in 20 C.F.R. § 416.545(b). That
scheme does not describe any hearing procedure that claimants are entitled to if they disagree
with the timing or amount of installment payments. (Indeed, it does not even appear that the
regulation confers any discretion upon the Commissioner to decide whether to make installment
payments. If the unpaid benefit amount exceeds an objectively-calculable threshold, interim
payments in specifically-defined amounts are mandatory.) Thus, the installment payment
scheme is a “matter of agency grace,” not a “legislative right” that entails a right to a hearing
and, thereafter, judicial review under 42 U.S.C. § 405(g). As such, the Court lacks the power to
hear Ms. McLellan’s challenge to the SSA’s invocation of the installment payment plan for her
retroactive benefits.6
Yet another way of reading Smith is that the notion of a “final decision” is tied to the
exhaustion of the SSA’s four-step appeal procedure. 139 S.Ct. at 1772 (“modern-day claimants
must generally proceed through a four-step process before they can obtain review from a federal
court”). 20 C.F.R. § 416.1400 “describe[s] the process of administrative review and explain[s
claimants’] right to judicial review after you have taken all the necessary administrative steps.”
(Emphasis added.) The administrative process requires a claimant to: (i) obtain an initial
determination, (ii) request reconsideration of an unfavorable determination, (iii) request a
The same analysis and same result would apply to the extent that Ms. McLellan can be
understood to be challenging the SSA’s rejection of her request for an increased first or second
installment payment due to her claim of having outstanding debts for shelter or other necessities.
Once again, the ability to request modifications to the installment payments are matters created
by “agency grace,” not statutory command.
6
6
hearing before an ALJ, and (iv) request review of the ALJ’s decision by the Appeals Council. It
is only “[w]hen you have completed the steps of the administrative review process” that a
claimant “may request judicial review by filing an action in federal court.” 20 C.F.R. §
416.1400(a)(1)-(5). To the extent that Smith requires complete exhaustion of the administrative
review process before an determination becomes a “final decision,” Ms. McLellan’s Complaint
does not allege that she sought and obtained an ALJ hearing or review by the Appeals Council of
her objections to the SSA paying her retroactive benefits via installments. Thus, once again, the
Court must conclude that Ms. McLellan’s claim is not seeking review of a “final decision” under
§ 405(g).
Accordingly, because Ms. McLellan’s Complaint does not allege facts that would suggest
that her dispute over the SSA’s resort to installment payments of her retroactive benefits is a
“final decision” eligible for judicial review, the Court grants the SSA’s motion to dismiss.
B. Request to amend
On May 23, 2019, Ms. McClellan requested leave to amend and supplement her
Complaint to add several additional contentions and claims: (i) an allegation that on March 21,
2017, the SSA “reaffirmed [its] decision to impute shelter income to the plaintiff with a 60-day
appeal period”; (ii) that on March 21, 2017, Ms. McLellan “appealed [the] decision to impute
shelter income to her by requesting a hearing by an ALJ”; (iii) that on September 5, 2018, the
SSA paid more than $11,500 of her retroactive benefits to the State of Colorado “without lawful
authority to do so”; (iv) that on January 10, 2019, the SSA “denied [Ms. McLellan] the
opportunity for a hearing before an ALJ,” apparently relating to the release of her back payments
to the State of Colorado, “without opportunity for appeal”; (v) on April 16, 2019, the SSA
7
“dismissed [her] appeal regarding imputed income without a hearing before and ALJ and without
opportunity for appeal”; (vi) a new claim that in November 2017, Ms. McLellan requested an
increase in her monthly benefit amount due to increased renal expenses, that the SSA failed to
take action on that request until May 2018, and that in January 2019 the SSA denied an apparent
request by Ms. McLellan for an ALJ hearing regarding “the delay in rental increase”; and (vii) an
amendment to her Prayer For Relief to include requests for declarations that: (a) she “received no
shelter income as imputed to her,” (b) the SSA “had no lawful authority to redirect $11,571 of
[her] backpay” to the State of Colorado; (c) her “rental increase became effective December 1,
2017” instead of May 2018, and (d) “all funds payable [to her] must be paid immediately.”
Fed. R. Civ. P. 15(a) provides that leave to amend a complaint should be “freely
granted.” But the Court may deny a request to amend if the proposed amendment is the product
of undue delay or would be futile, insofar as the amended claim would nevertheless be subject to
dismissal. Hasan v. AIG Property Casualty Co., 935 F.3d 1092, 1101-02 (10th Cir. 2019). Some
of the matters Ms. McLellan proposes to add reflect her undue delay in seeking to amend. 42
U.S.C. § 405(g) requires that a claimant seek judicial review of a final decision within 60 days of
the mailing of the notice of that decision. To the extent that Ms. McLellan contends that the
January 10, 2019 denial of her request for a review of the SSA’s decision to divert her retroactive
benefits to the State of Colorado constitutes a “final decision,” her request in May 2019 to amend
her complaint to assert a claim for review comes more than 60 days beyond the date of the SSA’s
decision. Thus, such a claim would be untimely even if the Court were otherwise inclined to
permit amendment. The same is true of Ms. McLellan’s proposed new claim attacking the SSA’s
January 2019 decision denying her request for a retroactive rental increase.
8
Moreover, all of Ms. McLellan’s proposed new allegations or new claims would be futile
for the same reasons discussed above: they are not “final decisions” subject to judicial review
under § 405(g). The grant or denial of rental increases or the imputation of rental income to her
are not initial applications for benefits, and thus, they would not be subject to judicial review
under the test in Keller. Most are matters considered under agency regulations, not statutory
rights, and thus, would appear to fall outside the scope of judicial review according to a fair
reading of Smith.
At most, only Ms. McLellan’s challenge to the SSA’s diversion of a substantial portion of
her back benefits to the State of Colorado derives from a statutory source (a source with which
Ms. McLellan might not be familiar), but even a claim premised upon that diversion of funds
would be futile. As noted above, the Social Security Act authorizes the SSA to divert a
claimant’s retroactive benefits to a state as recoupment of state-supplied benefits if the claimant
has given written authorization to do so. 42 U.S.C. § 1383(g). Ms. McLellan’s proposed
amended complaint does not allege that she did not give such written authorization. To the
contrary, she attaches a letter from the State of Colorado that seems to explain that she did give
such an authorization, as such an authorization is required of all potential claimants who apply
for benefits from the state under that program. Thus, any putative claim by Ms. McLellan that
purports to challenge the diversion of her benefits to the State of Colorado is futile because she
has not alleged any facts showing that the SSA acted inconsistently with the statutory language.
Accordingly, the Court denies Ms. McLellan’s request to amend as futile.
For the foregoing reasons, the SSA’s Motion to Dismiss (# 16) is GRANTED, and Ms.
McLellan’s remaining claims in this action are DISMISSED. Ms. McLellan’s Motion For
9
Leave to Amend (# 28) her Complaint is DENIED. Ms. McLellan’s remaining motions (# 26,
27, 29, 31, 32) seeking appointment of counsel, expedition of the case, or a report on the case
status are denied as moot.
Dated this 22nd day of December, 2019.
BY THE COURT:
Marcia S. Krieger
Senior United States District Judge
10
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?