Perkins v. SSA

Filing 46

MEMORANDUM OPINION & ORDER: Plaintiff's Motion for Preliminary Injunction (DE 17 ) is DENIED. Signed by Judge Joseph M. Hood on 10/6/2016. (TDA) cc: COR

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
SOUTHERN DIVISION at PIKEVILLE
JOHN LEE PERKINS,
Plaintiff,
v.
CAROLYN COLVIN, COMMISSIONER
OF SOCIAL SECURITY,
Defendant.

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Civil Case No. 16-cv-35-JMH

MEMORANDUM OPINION & ORDER

***

This matter is before the Court upon Plaintiff’s Motion for
Preliminary Injunction [DE 17].

The Commissioner has filed a

Response [DE 29], stating her objections to the motion, and
Plaintiff has filed a Reply [DE 34] in further support of his
Motion.

The Court has also had the benefit of the argument of

the parties, by counsel, at a hearing on September 7, 2016, at
which time the Court took this Motion under advisement.
careful

consideration,

the

Court

concludes

that

After

Plaintiff’s

motion should be denied.
I.
Plaintiff Perkins resides in Pike County, Kentucky.
September

27,

2006,

Perkins

filed

applications

for

On

benefits

under Title II (disability) and Title XVI (supplemental security
income or “SSI”) of the Social Security Act, claiming disability
since September 30, 2005, as a result of Meniere’s disease, a

disorder of the inner ear causing such symptoms as vertigo,
pain, and hearing loss.
initially

denied,

At some point after his claims were

Perkins

obtained

the

assistance

of

an

attorney, Eric C. Conn, in prosecuting his application. Perkins
then submitted new evidence and eventually requested a hearing.
No hearing was held, but, on July 6, 2007, his application was
approved

in

a

fully-favorable,

on-the-record

Administrative Law Judge David B. Daugherty.

decision

by

Daugherty found

that Perkins had been disabled since September 30, 2005, based
in part on the examination and report of Dr. Frederic Huffnagle.
In 2011, Perkins underwent a continuing disability review by
another physician who concluded that he was still disabled as of
that time.
Conn, Huffnagle, and Daugherty have since been implicated
in a scheme to defraud the Social Security Administration, which
scheme is the basis for the present controversy.
the

Office

of

the

Inspector

General,

Specifically,

Social

Security

Administration, discovered reason to believe that Conn or his
firm

were

involved

in

a

scheme

to

obtain

disbursement

of

retroactive and proactive disability benefits irrespective of
the

claimants’

actual

entitlement

to

benefits

using

pre-

completed “template” residual functional capacity forms which
purported to be from Bradley Adkins, Ph.D., Srinivas Ammisetty,
M.D., David P. Herr, D.O., or Huffnagle (who is now deceased),
2

dated

between

individuals’

January

2007

applications

and
for

May

2011,

benefits.

in
In

support
an

of

the

indictment

concerning this scheme, the United States alleges that Daugherty
assigned Conn’s cases to himself and solicited falsified medical
evidence from Conn so that he could issue favorable on-therecord decisions without hearings.1
provided

pre-completed

template

For his part, Conn allegedly
residual

functional

capacity

reports to doctors, including Huffnagle, who signed them without
amendment. After an award of benefits to his client, the United
States alleges that Conn received fees from the Social Security
Administration and withdrew cash from business account to make
payments to Daugherty.
This scheme was the subject of an investigation by the
Social Security Administration’s Office of the Inspector General
(“OIG”), which spanned the years from 2007 to 2015.

The OIG

sent notice to the Commissioner on July 2, 2014, pursuant to 42
U.S.C. § 1320a-8(1), advising that it had reason to believe
fraud was involved in 1,787 applications, all involving Conn.
The initial referral was made with no adverse action to be taken
against the applicants until further notice.

Further notice

came on May 12, 2015, when the OIG notified the Commissioner

1

On April 1, 2016, a federal grand jury returned an indictment in this
district against Eric Conn, David Daugherty, and Alfred Adkins containing 18
substantive counts, as well as several forfeiture counts.
[See Lexington
Criminal Action No. 5: 16-00022-DCR.]
That case remains pending at this
time, with a trial scheduled in 2017.

3

that it had no objections to the agency “moving forward with its
administrative processing of the redeterminations of the 1,787
individuals whose names were previously provided by OIG to [the
agency] on July 2, 2014.”2

Via letters sent six days later and

captioned “Notice of Appeals Council Action," the Commissioner
informed those individuals, including Perkins, that the agency
was required to redetermine their benefits under sections 205(u)
and 1631(e)(7) of the Act, 42 U.S.C. §§ 405(u), 1383(e)(7), in
light of the OIG’s notification.3
The Notice advised Perkins that the agency would not be
permitted

to

consider

evidence

previously

submitted

from

Dr.

Huffnagle, as he was one of the four physicians believed to have
been involved in the alleged fraud.

The same letter advised

Perkins that, having undertaken the redetermination, the Appeals
2
The Court notes, as well, that counsel for the Commissioner advised the Court
during the hearing on the present motion that a significant portion of the
1,787 applications impacted by the notice, 242 were determined to be disabled
based upon other evidence available in the records of those applications
without further adjudication before an ALJ. Approximately 46% of the
remaining applicants were subsequently determined to be disabled by an ALJ
upon reconsideration. From the perspective of those applicants, for whom the
process provided an opportunity to establish their disability and, thus,
their entitlement to benefits without reference to the allegedly fraudulent
materials submitted by Conn during their original application process, the
redetermination process cannot be said to be the abject failure that Perkins
claims.
3 The Court adopts and incorporates the detailed description of this process,
how it came to be, and how it was applied in the matters which were allegedly
part and parcel of the Conn scheme from Section I of Judge Reeves’ October 6,
2016, Memorandum Opinion and Order in Carter v. Comm’r of Soc. Sec., Civil
Action No. 0:16-cv-00017-DCR, DE 24 at 3-6 (E.D. Ky.), and Griffith v. Comm’r
of Soc. Sec., Civil Action No. 7:16-cv-00101-DCR, DE 34 at 3-6 (E.D. Ky.).
Notably, Perkins has not challenged Congressional authority to legislate the
redetermination process or, for that matter, to define what evidence may be
considered during the consideration of an application for benefits under the
Social Security Act.

4

Council

had

disregarded
disability.

determined
evidence

that

did

a

not

preponderance
support

a

of

the

determination

nonof

Perkins learned from the Notice that the agency

planned to set aside its earlier favorable decision and send his
case back to a new ALJ for further consideration and issuance
of a new decision unless he could submit additional evidence of
his disability prior to the date of his earlier award to the
Appeals within 10 days.
Perkins’ case was then remanded to a new ALJ for a new
hearing.

He was permitted to submit further evidence to the ALJ

prior to the hearing.
15,

2015,

with

Perkins attended this hearing on November

counsel

and

presented

some

medical

mostly relating to the period after July 6, 2007.

records,

On December

29, 2015, having disregarded Dr. Huffnagle’s report and Perkins’
interim continuing disability review, as he was obliged to do,
the ALJ found that there was insufficient evidence to support
Perkins’ initial disability determination from 2007, concluding
that Perkins was not disabled at the time that he was awarded
benefits by Daugherty.

Perkins then submitted his case to the

Appeals Council, which declined to reconsider the ALJ’s decision
on January 28, 2016. The denial constitutes final agency action,

5

and

Perkins

timely

filed

this

action

as

provided

for

by

42

U.S.C. § 405(g) on March 25, 2016.4 [See DE 1.]
In his Complaint, Plaintiff challenged the merits of the
ALJ’s

decision

and

asked

that

the

decision

“be

vacated

for

failure to bring a timely action and violating Plaintiff’s due
process rights.”

[Id. at 3, PageID #3.] Plaintiff filed the

present motion for preliminary injunction [DE 17], seeking to
prevent the termination of his benefits during the pendency of
this

action.

This

Court

entered

an

order

enjoining

the

termination of benefits prior to the resolution of the motion
[DE 28].
Perkins argues that, under Fed. R. Civ. P. 65(a), this
Court

should

benefits

while

enjoin
this

the

Commissioner

appeal

is

pending.

from

cutting

Such

relief

available as the exception rather than the rule.

off

his

is

the

As recently

set forth by Judge Reeves,
Preliminary injunctions are “extraordinary
and drastic remed[ies] . . . never awarded
as of right.” Platt v. Bd. of Comm'rs on
Grievances & Discipline of Ohio Supreme
Court, 769 F.3d 447, 453 (6th Cir. 2014)
(quoting Munaf v. Geren, 553 U.S. 674, 689–
90 (2008)). A plaintiff seeking injunctive
relief must show, either individually or in
combination, that: (1) he or she is likely
to succeed on the merits; (2) he or she is
likely to suffer irreparable harm in the
absence of preliminary relief; (3) the

4

As the Court learned during the hearing on this matter, Perkins has filed a
new application for benefits.

6

balance of equities tips in his or her
favor, and; (4) issuance of injunctive
relief is in the public interest. Platt, 769
F.3d at 453 (quoting Winter v. Natural Res.
Def. Council, Inc., 555 U.S. 7, 20 (2008)).
In considering the appropriateness of an
injunction, the court balances these four
factors. Id. See also Am. Civil Liberties
Union Fund of Michigan v. Livingston Cnty.,
796 F.3d 636, 642 (6th Cir. 2015); Bays v.
City of Fairborn, 668 F.3d 814, 818–19 (6th
Cir. 2012). In addition, “[a]lthough no one
factor is controlling, a finding that there
is simply no likelihood of success on the
merits
is
usually
fatal.”
O'Toole
v.
O'Connor, 802 F.3d 783, 788 (6th Cir. 2015)
(quoting Gonzales v. Nat'l Bd. of Med.
Examiners, 225 F.3d 620, 625 (6th Cir.
2000)). While a plaintiff need not prove his
or her case in full to obtain injunctive
relief, the proof necessary “is much more
stringent than the proof required to survive
a
summary
judgment
motion.”
Leary
v.
Daeschner, 228 F.3d 729, 739 (6th Cir.
2000).

Memorandum Opinion and Order, Carter v. Comm’r of Soc. Sec.,
Civil Action No. 0:16-cv-00017-DCR, DE 24 at 7 (E.D. Ky. Oct. 6,
2016); Memorandum Opinion and Order, Griffith v. Comm’r of Soc.
Sec., Civil Action No. 7:16-cv-00101-DCR, DE 34 at 7 (E.D. Ky.
Oct. 6, 2016).
In support of his argument that he is likely to succeed on
the merits, Perkins argues that he will be able to establish
that he was denied the process that he was due under the Fifth
Amendment to the United States Constitution by the Commissioner
when

his

matter

was

subjected

7

to

determination

because

the

Commissioner has never disclosed what evidence proves that there
was, in fact, reason to believe that fraud was involved in the
original award of benefits to him in 2007 and he has not had an
opportunity
Further,

to

he

challenge

argues,

he

the
was

credibility
not

provided

of

this

evidence.

an

opportunity

to

challenge the allegations of fraud as a matter of law because
the Appeals Council’s May 18, 2015 notice which commenced his
redetermination process “summarily accepted the allegation that
‘there was reason to believe fraud was involved.’”

[Memo. of

Law in Support of Motion for Prelim. Inj., DE 17-1 at 7-8,
PageID# 282-83 (quoting DE 13-1 at 15, PageID # 95).]

He argues

that, while he has no right to a full evidentiary hearing before
the termination of benefits under Mathews v. Eldridge, 424 U.S.
319

(1976),

conclusion

he
that

should
there

have
was

an

opportunity

reason

to

to

believe

challenge
that

fraud

the
was

involved in obtaining his initial award of benefits.
He argues, as well, that Defendant’s procedures constituted
a

violation

of

the

Administrative

Procedures

Act

(“APA”),

5

U.S.C. § 556(d)-(e), and the Social Security Act, 42 U.S.C. §
405(b), which would oblige the Commissioner to provide Plaintiff
with

her

reason

to

believe

that

fraud

was

involved

in

the

initial award of benefits to him and, thus, an opportunity to
challenge that conclusion on the basis of evidence adduced at a
hearing.

He argues that there has been a further violation of
8

the APA, 5 U.S.C. § 554(d), because the Appeals Council and the
ALJ

were

“responsible

to

or

subject

to

the

supervision

or

direction of an employee or agent engaged in the performance of
investigative or prosecuting functions for an agency,” i.e., the
Office

of

Inspector

General.

Next,

he

argues

that

the

Commissioner failed to “immediately” redetermine his entitlement
to

or

believe

eligibility
that

for

fraud

or

benefits
similar

upon
fault

discovering
was

“reason

involved

in

to
the

application” for those benefits under 42 U.S.C. §§ 405(u)(1)(A)
and 1383(e)(7)(A)(i) because over many years passed between the
initial complaints regarding the alleged fraud that triggered
his

redetermination

hearing

and

the

commencement

of

his

redetermination process.
Finally, Perkins contends that he will suffer irreparable
harm

in

the

absence

of

an

injunction

because

denial

of

his

benefits under the social security program will result not only
in the loss of the financial support from those benefits upon
which his family relies but also in the loss of health benefits
through Medicaid and that continuing his benefits is in the
public benefit because he will be able to support himself and
his family during the duration of this proceeding.
The Court disagrees with Perkins, rejecting his arguments
and adopting both the rationale set forth in the well-reasoned
decision entered by Judge Reeves with respect to substantially
9

similar motions in two matters pending before him, Carter v.
Comm’r of Soc. Sec., Civil Action No. 0:16-cv-00017-DCR, DE 24
(E.D. Ky. Oct. 6, 2016); Griffith v. Comm’r of Soc. Sec., Civil
Action No. 7:16-cv-00101-DCR, DE 34 (E.D. Ky. Oct. 6, 2016).
Specifically, the undersigned adopts and incorporates the legal
reasoning

and

the

conclusions

articulated

in

sections

II,

III(a)(i)(2), III(a)(i)(2)(A), III(a)(i)(2)(B), III(a)(i)(2)(C),
III(a)(i)(3), III(a)(iii)(1)-(iv), III(b), and III(c) of Judge
Reeves’ October 6, 2016, Memorandum Opinion and Order as his
own, without restating that reasoning in its entirety here.
The Court has carefully considered Perkins’ arguments, all
of which were also raised by the parties in Carter v. Colvin,
Civil
Civil

Action

No.

Action

injunctive
balanced.

No.

relief
See

0:16-cv-00017-DCR,

and

7:16-cv-00101-DCR,
is

Platt

not
v.

warranted
Bd.

of

Griffith
and

when

Comm’rs

v.

Colvin,

concludes
the
on

that

factors
Grievances

are
&

Discipline of Ohio Supreme Court, 769 F.3d 447, 453 (6th Cir.
2014) (quoting Winter v. Natural Res. Def. Council, Inc., 555
U.S. 7, 20 (2008)) (“A plaintiff seeking injunctive relief must
show, either individually or in combination, that: (1) he or she
is likely to succeed on the merits; (2) he or she is likely to
suffer irreparable harm in the absence of preliminary relief;
(3) the balance of equities tips in his or her favor, and; (4)
issuance of injunctive relief is in the public interest.”); see
10

also Am. Civil Liberties Union Fund of Michigan v. Livingston
Cnty.,

796

F.3d

636,

642

(6th

Cir.

2015);

Bays

Fairborn, 668 F.3d 814, 818–19 (6th Cir. 2012).
the

same

reasons

as

the

plaintiffs

in

Carter

v.

City

of

Ultimately, for
and

Griffith,

Perkins cannot show that there is a substantial likelihood of
success

on

the

merits

of

his

claims

of

constitutional

and

statutory defects in the redetermination process that he was
afforded by the Commissioner or that he is likely to suffer
irreparable harm in the absence of injunctive relief.

Further,

as articulated by Judge Reeves, the public interest militates in
favor of denying Plaintiff’s motion.
Accordingly,

IT

IS

ORDERED

that

Preliminary Injunction [DE 17] is DENIED.
This the 6th day of October, 2016.

11

Plaintiff’s

Motion

for