Gray v. Berryhill
OPINION AND ORDER GRANTING Defendant's Motion to Dismiss for Lack of Subject-Matter Jurisdiction 30 and DENYING AS MOOT Plaintiff's Second Motion for Temporary Restraining Order 16 . Signed by District Judge Laurie J. Michelson. (KJac)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
PAMELA A. GRAY,
Case No. 17-12433
Honorable Laurie J. Michelson
Magistrate Judge Mona K. Majzoub
Acting Commissioner Social Security
OPINION AND ORDER GRANTING DEFENDANT’S MOTION TO DISMISS
FOR LACK OF SUBJECT-MATTER JURISDICTION  AND DENYING AS
MOOT PLAINTIFF’S SECOND MOTION FOR TEMPORARY RESTRAINING
Plaintiff Pamela Gray suffers from quadriparesis, a condition related to complications from
polio. (R. 1, PID 30.) Because of her disability, she receives Supplemental Security Income (SSI).
Earlier this year, the Social Security Administration (the agency) learned that Gray was no longer
homeless and had been residing in a health and rehabilitation center since October 2015. As a
result, the agency reduced Gray’s benefits and sought reimbursement for the overpayments she
received while living in the medical facility. Gray challenged the reduction to her benefits, which
the Commissioner denied. The agency advised her of her right to seek a hearing before an
Administrative Law Judge. But Gray instead filed this suit, hoping to reinstate her prior benefit
amount. (R. 1.)
Before the Court are two motions. Gray seeks a temporary restraining order. (R. 16.) As a
result of the severe reduction in her monthly benefits, Gray contends she is no longer able to pay
the monthly rental fee for a locker that stores her most treasured possessions and belongings.
(R. 15, PID 110.) The Commissioner seeks dismissal of the case on the grounds that this Court
lacks subject-matter matter jurisdiction over Gray’s complaint and Gray has not stated a claim
upon which relief can be granted. (R. 30.) For the reasons set forth below, the Court agrees with
the Commissioner that it lacks subject-matter jurisdiction over Gray’s complaint. As such, while
the Court is not unsympathetic to Gray’s predicament, the Court must deny her request for a TRO.
From August 13, 2015, through October 8, 2015, Gray was homeless and lived in a
Salvation Army shelter. (R. 1, PID 31.) While living there, Gray continued to receive her regular
monthly SSI payment of roughly $726.1 (R. 1, PID 3.)
Starting in October of 2015, Gray moved into the Warren Woods Health and Rehabilitation
Center. (R. 1, PID 18.) Gray claims a state-appointed guardian placed her in Warren Woods
without her consent, and because she was moved into the short-term wing, she believed her stay
would be temporary. (R. 16, PID 123–24.) So she did not inform the agency of the change to her
living situation. (R. 1, PID 6.) But medical complications prolonged her stay at Warren Woods,
and eventually the facility moved her to the long-term ward. (Id.)
In early 2017, Gray began to receive letters from the agency. One from March 3 informed
Gray that due to her change in residence and failure to let the agency know, the agency had
overpaid her. (R. 16, PID 136.) The agency claimed that Gray owed $11,887.88. (R. 16, PID 136.)
The agency further explained that it would reduce Gray’s benefits to $30 per month because she
From what the parties provide, the precise SSI amount Gray received is not clear. Gray
alleges she received around $735 per month. (R. 1, PID 3.) But an agency letter attached to her
complaint shows that between November 2015 and January 2017 Gray received from $726 per
month to $1,459.00. (R. 16, PID 137.)
was living in a “public institution and Medicaid did not pay more than half the cost” of her care.
(R. 16, PID 136; R. 1, PID 16–19.)
Gray says that in April 2017, she asked the agency for a waiver of repayment and to
reconsider the reduction in benefits as she was still homeless. (R. 1, PID 6, 14.)
About one month later, the agency denied Gray’s petition to reconsider, informing her that
residing at Warren Woods Rehabilitation Center did not qualify her as homeless. (R. 1, PID 14.)
The agency advised her of her right to request an administrative hearing, explained the
administrative appeals process, and provided the time-frame for pursuing an appeal. (Id.) Gray did
not pursue an administrative hearing or administrative appeal. (R. 1, PID 3.) According to Gray,
the appeals process takes over eighteen months. And, she says, because the local Social Security
office lost her waiver application, any administrative appeal is “foreclosed from giving needed
relief.” (R. 1, PID 3.)
In June 2017, the agency told Gray she would receive $37 in monthly SSI payments
(instead of the $30 it mentioned in March). The agency’s letter explained that Gray was living “in
a medical facility, like a hospital or nursing home,” and that “Medicaid was pay[ing] for more than
half the cost of [her] care.” (R. 1, PID 18.) The agency also informed Gray she could receive up to
$735 per month if she moved into an independent living situation. (Id.) Gray provides evidence
that, since April 2017, she has been trying to move into an independent living situation. (R. 1, PID
It appears that this reduction in Gray’s SSI comes from various provisions of the Social
Security Act and its implementing regulations. For example, the Act provides, in relevant part:
In any case where an eligible individual . . . is, throughout any month . . . in a
medical treatment facility receiving payments (with respect to such individual . . .)
under a State plan approved under title XIX, . . . the benefit under this title for such
individual for such month shall be payable (subject to subparagraph (E))—(i) at a
rate not in excess of $360 per year . . . .
42 U.S.C. § 1382(e)(1)(B)(i). As the implementing regulations more clearly explain, “reduced SSI
benefits are payable to persons . . . who are in medical treatment facilities where a substantial part
(more than 50 percent) of the cost of their care is paid by a State plan under title XIX of the Social
Security Act (Medicaid).” 20 C.F.R. §416.414. Another part of the eligibility framework requires
a one-third benefit reduction when an SSI recipient lives in another person’s household throughout
a month, and they do not pay for the food and shelter they receive from the household, see POMS,
SI 00835.200, The One-Third Reduction Provision, while homeless or transient individuals are
entitled to continue to receive the full amount of their SSI benefits, see POMS, SI 00835.060,
Transients, Homeless Individuals, and LA/ISM Determinations.
In July 2017, prior to the completion of the administrative appeal process, Gray filed this
lawsuit pro se. (R. 1.)2 She has filed two complaints (R. 1, 15), two ex parte motions for a
temporary restraining order (R. 3, 16), and several emergency attachments (R. 9, 19, 23, 28, 29).
The essence of her filings is her dissatisfaction with the agency’s automatic benefit reduction
scheme based on a recipient’s living situation. (R. 1, PID 6.) She further alleges that she should
have been classified as homeless, or at least entitled to a three-month grace period. (R. 1, PID 5.)
And she also alleges that she is entitled to a waiver of the overpayment. (R. 1, PID 6.)
Gray’s complaints do not contain any separate counts. But it appears she raises an
administrative challenge to the Commissioner’s benefit-reduction determination (R. 15, PID 105–
07.) She also claims that automatic reductions in SSI benefits violate the Social Security Act
In late September, Gray petitioned the Commissioner for a waiver to avoid repaying the
$11,888.87 in alleged overpayments. (R. 27, PID 181.)
because they fail to take individual need into consideration. (R. 1, PID 6–10.) And she argues that
automatic reductions in benefits based upon a living situation violate procedural due process and
equal protection. (R. 1, PID 6–10, 35.)
At the time she filed her Complaint, Gray also filed an ex parte motion for TRO. (R. 3.)
Gray claimed that because of the benefits reduction she could no longer afford to pay the monthly
rent on a storage unit for her personal belongings. (Id.) She was concerned the storage company
would auction off her possessions once she missed her payment deadline. (Id.; R. 7, PID 66.) The
Court denied ex parte relief for failure to demonstrate irreparable injury pursuant to Federal Rule
of Civil Procedure 65, but ordered the Commissioner to respond to Gray’s motion within seven
days of receipt of service. (R. 5, PID 61.)
Gray has since filed a second motion for a temporary restraining order, raising substantially
the same arguments. (R. 16.) The Commissioner responded, urging the court to deny the motion
for lack of subject-matter jurisdiction and evidence of irreparable harm. (R. 27, PID 181–83.) Then
the Commissioner moved to dismiss the matter entirely for lack of subject-matter jurisdiction and
for failure to state a claim upon which relief can be granted. (R. 30, PID 213–15.)
Gray responded to the Commissioner’s motion to dismiss in the form of a Petition for a
Pretrial Conference. (R. 31.) Gray acknowledges the Commissioner’s motion, argues the merits of
her waiver claim, and claims the agency should pay the monthly rental fee on her storage locker.
(R. 31, PID 217–18.) She does not address the merits of the Commissioner’s jurisdiction
arguments, and instead asks for a “Pre-Trial conference” to “sort through these matters, and save
justice.” (Id. at 220.)
The Court begins (and ends) with the Commissioner’s claim that this Court lacks subjectmatter jurisdiction over Gray’s complaint. Even where a defendant moves to dismiss a complaint
for lack of subject-matter jurisdiction, the plaintiff still has the burden of pleading facts sufficient
to support a finding of jurisdiction. Armbruster v. Quinn, 711 F.2d 1332, 1135 (6th Cir. 1986); see
also Moir v. Greater Cleveland Regional Transit Authority, 895 F.2d 266, 270 (6th Cir. 1990).
Where an individual disputes determinations made by the Commissioner, the Social
Security Act limits a federal court’s power to hear the dispute. In particular, two subsections of the
act are relevant to determining the court’s jurisdiction: 42 U.S.C. § 405(g) and § 405(h).
Subsection 405(g) permits an individual to file a civil complaint challenging a decision
made by the Commissioner, but only after receiving “a final decision of the Commissioner of
Social Security made after a hearing to which [the individual] was a party.” 42 U.S.C. § 405(g).
According to the Supreme Court, a “final decision” means that an individual has (1) presented the
claims to the agency and (2) exhausted all available administrative remedies as required by 42
U.S.C § 405(h). See Shalala v. Illinois Council on Long Term Care, 529 U.S. 1, 20 (2000)
(“Congress, in both the Social Security Act and the Medicare Act, insisted upon an initial
presentation of the matter to the agency.”); see also B.P. Care, Inc. v. Thompson, 398 F.3d 503,
509 (6th Cir. 2005) (“Section 405 requires both that those challenging agency decisions present
their claims to the agency, and that they exhaust administrative remedies before suing in the
appropriate federal court.”). To exhaust all available administrative remedies as required by
§ 405(h) (and its implementing regulations), an SSI recipient must (1) receive an initial
determination from the agency, (2) petition for reconsideration, (3) request a hearing before an
administrative law judge, and (4) request review by the Appeals Council. 20 C.F.R.
§ 404.900(a)(1)-(4). After completion of all four steps, “[the agency] will have made [its] final
decision.” 20 C.F.R. § 404.900(b). And only then may an individual “request judicial review by
filing an action in a Federal district court.” Id.
It appears to be Gray’s position that the Commissioner erred in determining she lived in a
“medical treatment facility” and that, absent that error, she would be entitled to reinstatement of
her full SSI benefits and a waiver of overpayment. She also believes she has been homeless since
2015 and that the Commissioner erred in finding that her stay at Warren Woods Health and
Rehabilitation Center changed her transient status. In other words, Gray disputes two
administrative determinations made by the Commissioner.
With respect to her claims that the agency should grant her a waiver and classify her as
homeless, Gray has not alleged the existence or produced evidence of a “final decision” from the
agency. Gray says the agency denied her a formal hearing in April 2017. In support, she relies on
a May 12, 2017, letter from the agency denying her request for reconsideration. (R. 1, PID 14.)
But this letter explains that the process for challenging the denial for reconsideration requires a
request for a formal hearing. (Id.) And Gray neither alleges nor provides evidence of a hearing
before a Social Security administrative law judge. Thus, Gray has not exhausted her administrative
remedies—either on the challenge to her reduction in SSI benefits or her request for a waiver of
the repayment obligation. See 20 C.F.R. § 404.900(a).
Although Gray concedes that an ALJ did not adjudicate her claim, her argument is that a
hearing in her circumstances would have been futile. In particular, she believes an ALJ decision
would take 18 months, and, by then, she will have missed payments for her storage locker and her
possessions will have been sold. And with respect to her claim that the Commissioner should have
waived the overpayment, she says her local Social Security office lost her waiver application.
These special circumstances, she argues, combine to effectively make exhaustion futile.
In “certain special cases,” a federal court may deem it inappropriate to defer to the
Commissioner’s discretion and it may exercise jurisdiction despite a lack of exhaustion. Heckler
v. Ringer, 466 U.S. 602, 618 (1984). The first exists “‘where application of § 405(h) . . . would
mean no review at all.’” BP Care, Inc., 398 F.3d at 510 (quoting Illinois Council, 529 U.S. at 19).
The second exists where a plaintiff’s claim involves “procedural constitutional rights . . . ‘entirely
collateral’ from [a] substantive challenge to the Secretary’s termination decision.” See Cathedral
Rock, 223 F.3d at 364 (citing Mathews v. Eldridge, 424 U.S. 319, 330–32 (1976)). A collateral
claim is one that challenges the procedure by which the agency makes a benefits determination.
See Eldridge, 424 U.S. at 329–33.
Gray’s concerns about the fate of her storage locker during the administrative review
process and a waiver application allegedly lost by a local Social Security office do not fit into
either exception. Many who receive SSI may incur some form of “‘delay-related hardship’” while
winding through the administrative appeal process.3 See Cathedral Rock, 223 F.3d at 360 (quoting
Illinois Council, 529 U.S. at 13). And as Gray concedes, the administrative remedies remain open
to her. (R. 1, PID 3.) For one, there are no administrative impediments preventing her from
pursuing her claims all the way through the “special review” system established by § 405(h). She
could still request a hearing to have the agency reconsider their determination that she is not
And as the Court has previously ruled, Gray has not adequately demonstrated that an
auction of her possessions is imminent. Gray made the August payment and it is unclear what
transpired in September. (R. 13, PID 96.) Gray also concedes that it is possible a friend or charity
could pay for future rental payments. (R. 16, PID 117.) It is also unclear whether she has contacted
the storage company to request that they delay any adverse action or provide her with a monthly
payment plan. Nor has Gray made clear whether she is able to store her possessions elsewhere.
homeless. The upshot is that once Gray receives a final decision on her claims, she will have
satisfied § 405(h), and she may then seek judicial review consistent with § 405(g). So § 405(h)’s
exhaustion requirement does not leave Gray with effectively “no review at all.”4 As for the
“collateral claims” exception to exhaustion, Gray has mounted a direct challenge to the agency’s
benefits determination: she claims that the agency should change its classification decision (from
resident to homeless).
In sum, the record before the Court contains no evidence of a final decision from the
Commissioner with respect to Gray’s claims challenging the agency’s benefits reduction and
demand for repayment. So she has not exhausted as required by § 405(h). And she has not
persuaded the Court that she fits within either narrow exception to that exhaustion requirement.
So the Court lacks jurisdiction to consider Gray’s challenges to the agency’s administrative
determination to reduce her SSI benefits and deny a waiver for overpayments.
The Court also lacks subject-matter jurisdiction over Gray’s statutory and constitutional
Gray says the Commissioner violated the Social Security Act by reducing her benefits
“with no consideration of true need.” (R. 1, PID 7.) (R. 1, PID 6–10.) She alleges that “[a]utomatic
reductions based upon a living situation violates [sic] U.S. Constitutional guarantees of due process
and equal protection of the law.” (R. 1, PID 9.) Specifically, she believes due process requires a
pre-termination hearing in the narrow circumstance where an individual’s living-situation-change
triggers an automatic benefit reduction. (R. 1, PID 9.) Gray also claims the agency’s automatic
Gray may also urge the agency to expedite its appellate review process. See 20 C.F.R.
§ 404.923. Provided Gray meets the requirements set forth in 20 C.F.R. § 904.924, Gray may
receive a final decision from the agency faster than through the normal channel.
reductions violate equal protection to the extent they categorize individuals without regard to need.
(R. 1, PID 9; R. 9, PID 112; R. 28, PID 191.)
Again, there are no allegations nor evidence in the record that Gray presented her statutory
and constitutional claims to the agency. Nothing in Gray’s complaint (R. 1), amended complaint
(R. 15), the many emergency amendments (R. 9, 19, 23, 28, 29), or her response to the
Commissioner’s motion to dismiss to indicate that she first brought her statutory and constitutional
challenges before the agency. But the Supreme Court has long held that § 405(g) demands Gray
do so. Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1, 15 (reasoning that § 405(g)
requires an individual first present all claims, including statutory and constitutional challenges, to
agency action); Mathews v. Eldridge, 424 U.S. 319, 329 (1976) (holding that § 405(g) includes a
nonwaivable requirement that an individual present constitutional challenges to an agency before
raising them in federal court). And the Sixth Circuit agrees. See Cathedral Rock, 223 F.3d at 359
(“We have held that in order to obtain judicial review under § 405(g) a party must comply with
‘(1) a nonwaivable requirement of presentation of any claim to the Secretary . . . .’”)).
In sum, the Court lacks jurisdiction over Gray’s challenges to the SSA’s benefit-reduction
determination due to Gray’s failure to exhaust as required by § 405(h). And the Court lacks
jurisdiction over Gray’s statutory and constitutional challenges due to Gray’s failure to first present
those claims to the agency as required by § 405(g). So the Court GRANTS the Commissioner’s
motion to dismiss (R. 30) and DENIES as moot Gray’s Motion for a Temporary Restraining Order
s/Laurie J. Michelson
LAURIE J. MICHELSON
U.S. DISTRICT JUDGE
Dated: October 23, 2017
CERTIFICATE OF SERVICE
The undersigned certifies that the foregoing document was served upon counsel of record
and any unrepresented parties via the Court=s ECF System to their respective email or First Class
U.S. mail addresses disclosed on the Notice of Electronic Filing on October 23, 2017.
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?