Justiniano et al v. Social Security Administration et al

Filing 15

Opinion & ORDER granting 10 Motion to Dismiss for Lack of Jurisdiction; granting 8 Motion for Extension of Time to Answer; granting 12 Motion for Leave to File. Plaintiffs' claims are dismissed without prejudice. Judgment shall be entered in a separate docket entry. Signed by Judge Jay A. Garcia-Gregory on 8/3/2016. (AP)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO

DANIEL JUSTINIANO, et al.,
Plaintiffs,
v.

CIVIL NO. 15-02593 (JAG)

THE SOCIAL SECURITY ADMINISTRATION,
et al.,
Defendants.
OPINION AND ORDER
GARCIA-GREGORY, D.J.
Pending before this Court is a Motion to Dismiss for lack of subject matter jurisdiction,
or in the alternative, for failure to state a claim, pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6),
correspondingly, filed by Defendants, the Social Security Administration and Carolyn W.
Colvin—the Commissioner of the Social Security Administration—(collectively “Defendants”).
Docket No. 10. Plaintiffs Daniel Justiniano, Francisco Menéndez and Person A (collectively
“Plaintiffs”) timely opposed. Docket No. 11. Defendants filed a reply. Docket No. 12-1. Plaintiffs’
complaint challenges the redetermination process followed by the Social Security
Administration (the “Agency”) and the Commissioner of the Social Security Administration (the
“Commissioner”) in order to assess if fraud was involved in their insurance disability benefits
application and the subsequent administrative review process. Docket No. 1. The issue before
the Court is whether Plaintiffs followed the statutorily mandated administrative procedures of
the Social Security Act (“SSA” or “Act”) to obtain judicial review. The Court holds that Plaintiffs

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2

did not follow the statutorily mandated administrative procedures of the SSA, and thus this
Court does not have subject matter jurisdiction over Plaintiffs’ claims. Accordingly, the Court
GRANTS Defendants’ Motion to Dismiss.
BACKGROUND1
The SSA was amended by The Social Security Independence and Program Improvements
Act of 1994, Pub. L. No. 103–296, 108 Stat 1464, to add provisions addressing fraud or similar
fault in individuals’ applications for benefits. Section 405(u) of the Act, as amended, orders the
Commissioner to “immediately redetermine the entitlement of individuals to monthly insurance
benefits under [Title II] if there is reason to believe that fraud or similar fault was involved in the
application of the individual for such benefits.” 42 U.S.C. § 405(u)(1)(A). Moreover, the Agency
has “the authority to suspend current benefits after giving proper notice to the beneficiary.”
HALLEX I-1-3-25 C.2, 2014 WL 2889588.2
In August 2013, the Social Security Administration’s Office of the Inspector General
(SSA-OIG) and the Federal Bureau of Investigations (FBI) filed criminal charges against Dr. José
R. Hernández González, among others, for making false statements or representations to the
Agency. Because Dr. Hernández González had provided evidence in Plaintiffs’ cases—that was
used to find them disabled and entitled to the insurance disability benefits—the Agency notified
Plaintiffs of the suspension of their benefits. Thereupon, the Agency initiated a redetermination
process pursuant to Section 405(u) of the Act. As a result, Plaintiffs’ insurance disability

1

For purposes of Defendant’s Motion to Dismiss, all facts are taken from Plaintiff’s complaint, Docket No.
1, and are presumed to be true.
2
The Hearings, Appeals and Litigation Law (HALLEX) Manual is available at
https://www.ssa.gov/OP_Home/hallex/I-01/I-1-3-25.html.

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benefits were terminated. Plaintiffs sought reconsideration of the redeterminations, and the
Agency affirmed the decisions to terminate their benefits. Consequently, Plaintiffs requested a
hearing before an administrative law judge (ALJ). Nevertheless, before such hearing occurred,
Plaintiffs filed suit in this Court challenging the redetermination process and the subsequent
administrative review process.
STANDARD OF REVIEW
Under Fed. R. Civ. P. 12(b)(1), a defendant may move to dismiss an action for lack of
subject matter jurisdiction. As courts of limited jurisdiction, federal courts must narrowly
construe jurisdictional grants. See e.g., Alicea–Rivera v. SIMED, 12 F.Supp.2d 243, 245 (D.P.R. 1998).
Consequently, the party asserting jurisdiction has the burden of demonstrating the existence of
federal jurisdiction. See Murphy v. United States, 45 F.3d 520, 522 (1st Cir. 1995); Droz–Serrano v.
Caribbean Records Inc., 270 F.Supp.2d 217 (D.P.R. 2003). When deciding whether to dismiss a
complaint for lack of subject matter jurisdiction, the Court “may consider whatever evidence has
been submitted, such as depositions and exhibits.” See Aversa v. United States, 99 F.3d 1200, 1210
(1st Cir. 1996).
Under Fed. R. Civ. P. 12(b)(6), a defendant may move to dismiss an action for failure to
state a claim upon which relief can be granted. In Bell Atl. Corp. v. Twombly, 550 U.S. 544, 569
(2007), it was held that to survive a motion to dismiss under Rule 12(b)(6), a complaint must
state enough facts to “nudge [the plaintiff’s] claims across the line from conceivable to
plausible.” Therefore, to preclude dismissal pursuant to Fed. R. Civ. P. 12(b)(6), the complaint
must rest on factual allegations sufficient “to raise a right to relief above the speculative level.” Id.

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at 555. At this stage, the Court accepts all well-pleaded factual allegations as true, and draws all
reasonable inferences in the plaintiff’s favor. See Correa-Martínez v. Arrillaga-Belendez, 903 F.2d 49,
51 (1st Cir. 1988). Thus, the plaintiff bears the burden of stating factual allegations regarding
each element necessary to sustain recovery under some actionable theory. Goolev v. Mobil Oil Corp.,
851 F.2d 513, 514 (1st Cir. 1988). Courts need not address complaints supported only by “bald
assertions, unsupportable conclusions, periphrastic circumlocutions, and the like.” Aulson v.
Blanchard, 83 F.3d 1, 3 (1st Cir. 1996).
Above all, a district court faced with “motions to dismiss under both Fed. R. Civ. P.
12(b)(1) and 12(b)(6), absent good reason to do otherwise, should ordinarily decide the 12(b)(1)
motion first.” Ne. Erectors Ass'n of BTEA v. Sec'y of Labor, Occupational Safety & Health Admin., 62 F.3d
37, 39 (1st Cir. 1995) (citing See 5A Charles Wright & Arthur Miller, Federal Practice and Procedure
§ 1350, at 210 (1990); Bell v. Hood, 327 U.S. 678, 682 (1945)). Motions brought under Rule 12(b)(1)
are subject to the same standard of review as Rule 12(b)(6) motions. Negrón–Gaztambide v.
Hernández–Torres, 35 F.3d 25, 27 (1st Cir. 1994); Torres Maysonet v. Drillex, S.E., 229 F.Supp.2d 105,
107 (D.P.R. 2002).
ANALYSIS
Pending before this Court is Defendants’ Motion to Dismiss Plaintiffs’ complaint. Docket
No. 10. First, Defendants argue that Plaintiffs’ complaint must be dismissed for lack of subject
matter jurisdiction. Id. Accordingly, they allege that Plaintiffs have not complied with the
statutorily mandated administrative procedures of the SSA, nor does their case fall under an
exception to obtain judicial review without complying with such process. Id. Furthermore,

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Defendants contend that Plaintiffs’ request for mandamus relief fails because the necessary prerequisites for such relief are not met. Id. In the alternative, Defendants assert that Plaintiffs’
allegations fail to state a claim upon which relief can be granted, since the regulations that
Defendants allegedly violated do not apply to the redetermination process pursuant to Section
405(u) of the SSA, 42 U.S.C. § 405(u), at issue in this case. Id.
In response to Defendants’ Motion to Dismiss, Plaintiffs assert that this Court has federal
question jurisdiction pursuant to 28 U.S.C. § 1331 because their complaint arises under the Due
Process Clause of the U.S. Constitution, and pursuant to the Mandamus Statute, 28 U.S.C. §
1361.3 Docket No. 11. Plaintiffs argue that their complaint does not arise under the SSA, thus it is
not subject to its statutorily mandated administrative procedures to obtain judicial review. Id.
Plaintiffs admit to initiating the administrative review process. Id. Nevertheless, Plaintiffs’ also
argue that they were forced to file suit in this Court because exhausting the administrative
remedies would have resulted in no review at all of their constitutional claims. Id. With respect
to their entitlement to mandamus relief, Plaintiffs state that § 1361 is a valid basis for
jurisdiction, but do not show if and how the pre-requisites for such relief are met. Id. On the
other hand, Plaintiffs contend that their complaint states a claim upon which relief may be
granted because their statutory right to a pre-deprivation hearing, under 42 U.S.C. § 405(b)(2),
was denied. Id.
A district court should ordinarily address a 12(b)(1) motion before a 12(b)(6) motion. See
De La Cruz v. Irizarry, 946 F. Supp. 2d 244, 249 (D.P.R. 2013) (citations omitted). For that reason,
3

However, Plaintiffs’ complaint also asserts federal question jurisdiction under the SSA and the Code of
Federal Regulations.

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this Court first determines if it has subject matter jurisdiction over Plaintiffs’ complaint. In
order to do so the following issues are to be resolved: (1) whether Plaintiffs’ claims arise under
the SSA; if so, (2) whether Plaintiffs’ followed the statutorily mandated administrative
procedures of the SSA to obtain judicial review; (3) whether Plaintiffs’ claims fit under the
Illinois Council exception; and (4) whether jurisdiction under the Mandamus Statute, 28 U.S.C. §
1361, is available.
This Court holds that, in light of the relevant provisions and regulations of the SSA along
with their interpretation by the Supreme Court, Plaintiffs’ claims arise under the SSA.
Accordingly, Plaintiffs had to follow the statutorily mandated administrative procedures of the
SSA. Their failure to do so, coupled with the fact that their claims do not fit under the Illinois
Council exception, leaves this Court without subject matter jurisdiction over the claims they
have presented in this suit. Moreover, Plaintiffs have not met the necessary pre-requisites to
obtain mandamus relief. Since this Court does not have jurisdiction, we do not consider whether
Plaintiffs’ complaint states a claim upon which relief can be granted under Fed. R. Civ. P.
12(b)(6). As a result, Plaintiffs’ complaint is dismissed.

I.

Claims Arising Under The Social Security Act (“SSA” or “Act”)
The Court holds that Plaintiffs’ complaint arises under the SSA. It has been established

that an action arises under the SSA when “both the standing and the substantive basis for the
presentation” of the claims is the SSA. See Weinberger v. Salfi, 422 U.S. 749, 760-61 (1975); Heckler v.
Ringer, 466 U.S. 602, 615 (1984). It is clear that an action arises under the SSA if it challenges the
Agency’s denial of a Social Security benefit. See Shalala v. Illinois Council on Long Term Care, Inc., 529

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U.S. 1, 10 (2000). In this case, the essence of Plaintiffs’ complaint is a challenge to the Agency’s
termination of their disability benefits through the redetermination process of Section 405(u).
Since Plaintiffs are challenging a denial of their benefits, their complaint arises under the SSA. 4
Notwithstanding this clear precedent, Plaintiffs argue that their complaint arises under
the Constitution because they are challenging the constitutionality of the Agency and the
Commissioner’s actions, and any considerations under the SSA are merely collateral. Docket No.
11 at 4-11. This argument is meritless. The Supreme Court has made clear that regardless of the
legal grounds a plaintiff uses to challenge a denial of benefits, an action challenging the
lawfulness of that denial arises under the SSA. See Illinois Council, 529 U.S. at 10 (2000)
(interpreting “arising under” to include any action challenging a benefit denial “irrespective of
whether the individual challenges the agency's denial on evidentiary, rule-related, statutory,
constitutional, or other legal grounds.”) (emphasis added). Moreover, an action requesting
benefits can arise under both the Constitution and the SSA. See Salfi, 422 U.S. at 760-61. In this
case, the underlying reason for Plaintiffs’ suit is the Agency’s termination of their benefits.
Plaintiffs specifically request that this Court reinstate their disability benefits. See Salfi, 422 U.S.
at 761 (“To contend that [an action seeking a judgment directing the Secretary to pay Social
Security benefits] does not arise under the [SSA] is to ignore both the language and substance of
the complaint . . . .”). Thus, regardless of the means used by Plaintiffs to challenge the Agency’s
decision, Plaintiffs’ complaint arises under the SSA.

4

Although Plaintiffs are challenging the Agency’s termination of previous benefits, rather than the denial
of an initial request for benefits, the Court sees no significance in this distinction. The bottom line is the
same—Plaintiffs are challenging an Agency decision denying them benefits.

Civil No. 15-2593 (JAG)

II.

8

Statutorily Mandated Administrative Procedures
Since Plaintiffs’ complaint arises under the SSA, Sections 405(g) and (h) of the Act

apply, and Plaintiffs have to exhaust all administrative remedies in order to obtain judicial
review. Section 405(h) of the Act specifically states that “[n]o action against the United States,
the Secretary, or any officer or employee thereof shall be brought under section 1331 . . . of Title
28 to recover on any claim arising under this subchapter.” Therefore, Plaintiffs cannot invoke—
as they do—section 1331 as the jurisdictional basis to their complaint. Their only avenue for
judicial review is Section 405(g) of the Act, “which requires the exhaustion of the administrative
remedies provided under the Act as a jurisdictional prerequisite.” Mathews v. Eldridge, 424 U.S.
319, 327 (1976).
The Court holds that Plaintiffs failed to comply with Section 405(g), thus judicial review
is not available. Section 405(g) of the SSA states, in part, that “[a]ny individual, after any final
decision of the Commissioner of Social Security made after a hearing to which he was a party,
irrespective of the amount in controversy, may obtain a review of such decision.” 42 U.S.C. §
405(g). This final decision requirement has been held as “central to the requisite grant of
subject-matter jurisdiction.” Salfi, 422 U.S. at 763-64. Furthermore, this requirement consists of
two elements: (1) that a claim for benefits shall have been presented to the Secretary
(nonwaivable element); and (2) that the administrative remedies prescribed by the Secretary be
exhausted (waivable element). Eldridge, 424 U.S. at 328 (1976).
The waivable element allows the Secretary to “waive the exhaustion requirement if he
satisfies himself, at any stage of the administrative process, that no further review is warranted
either because the internal needs of the agency are fulfilled or because the relief that is sought is

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beyond his power to confer.” Id. at 330. This exhaustion requirement can also be waived by a
court, if a plaintiff presents a collateral claim “to his claim for benefits” and there is a “colorable
showing that his injury could not be remedied by the retroactive payment of benefits after
exhaustion of his administrative remedies.” Ringer, 466 U.S. at 618. Given that neither the
Secretary nor the Court have waived the exhaustion requirement, Plaintiffs had to proceed with
the administrative review process as indicated in Sections 404.900 to 404.982 of Title 20 of the
Code of Federal Regulations in order to obtain judicial review.5 Their failure to do so, as
explained below, leaves this Court without authority to review their complaint.
As soon as Plaintiffs’ insurance disability benefits were terminated, they appealed the
Commissioner’s decision at the reconsideration level. See 20 C.F.R. § 404.907. The
Commissioner’s decision was affirmed, so they proceeded to request a hearing before an ALJ. See
20 C.F.R. § 404.929. However, before such hearing took place, Plaintiffs filed the present action.
By doing so, they skipped two steps in the administrative process: (1) obtaining an ALJ's
decision and (2) appealing the ALJ’s decision before the Appeal Council. See 20 C.F.R. §§
404.929, 404.944, 404.967. Thus, even though Plaintiffs met the nonwaivable element of
presenting a claim for benefits to the Secretary, they did not meet the waivable element of
exhausting the applicable administrative remedies. As a result, Plaintiffs failed to comply with
the final decision requirement of Section 405(g) of the SSA, and judicial review over their
complaint is not available.

5

The Court notes that Plaintiffs have not asked the Court to waive the second requirement, nor does the
Court see a reason to do so.

Civil No. 15-2593 (JAG)

III.

10

Illinois Council Exception
Contrary to Plaintiffs’ belief, the Illinois Council exception does not apply to their case.

This exception only applies if the exhaustion of administrative remedies will result in the
practical denial of judicial review. Illinois Council, 529 U.S. at 22. In other words, if Plaintiffs “can,
at some point, using some process, obtain judicial review of [their] claims,” the exception does
not apply. Puerto Rican Ass'n of Physical Med. & Rehab., Inc. v. United States, 521 F.3d 46, 49 (1st Cir.
2008) (citing Accord Am. Chiropractic Assoc., Inc. v. Leavitt, 431 F.3d 812, 816 (D.C. Cir. 2005)). In
Illinois Council, it was stated that “[t]he fact that the agency might not provide a hearing for a
particular contention, or may lack the power to provide one . . . is beside the point because it is the
‘action’ arising under the [Social Security] Act that must be channeled through the agency.” Id. at
23. Accordingly, Plaintiffs not being able to challenge the findings of fraud in the
redetermination process does not result in “complete preclusion of judicial review” of the
Agency’s determination—which can still be reviewed by an ALJ, the Appeals Council and finally
by the Court. Id. Moreover, Plaintiffs’ argument that their constitutional claims will not be
reviewed fails, since “a court reviewing an agency determination under § 405(g) has adequate
authority to resolve any statutory or constitutional contention that the agency does not, or
cannot, decide.” Id. Consequently, Plaintiffs’ complaint does not fit within the Illinois Council
exception, and they have to comply with Sections 405(g) and (h) of the SSA in order to obtain
judicial review.

Civil No. 15-2593 (JAG)

IV.

11

Mandamus Statute (28 U.S.C. § 1361)
A district court has original jurisdiction “of any action in the nature of mandamus to

compel an officer or employee of the United States or any agency thereof to perform a duty owed
to the plaintiff.” 28 U.S.C. § 1361. The United States Supreme Court has not decided whether
Section 405(h) of the SSA precludes statutory mandamus jurisdiction over claims arising under
the Act. Ringer, 466 U.S. at 616. However, mandamus jurisdiction is only available if the
following conditions are met: (1) plaintiff has exhausted all other avenues of relief; (2) the
defendant owes him a clear nondiscretionary duty; and (3) plaintiff has no other adequate means
to attain the relief he desires. Id.; and Kerr v. U. S. Dist. Court for N. Dist. of California, 426 U.S. 394,
403 (1976). Particularly, mandamus relief should be invoked “only in extraordinary situations.”
Kerr, 426 U.S. at 402 (1976) (citing Will v. United States, 389 U.S. 90, 95 (1967); Bankers Life & Cas.
Co. v. Holland, 346 U.S. 379, 382-385 (1953); Ex parte Fahey, 332 U.S. 258, 259 (1947)).
The Court holds that it does not have jurisdiction under the Mandamus Statute.
Plaintiffs have failed to “provid[e] the necessary backbone” to hold that mandamus jurisdiction
exists—they have not shown if and how the pre-requisites for such relief are met. Hernández v.
Smith Kline Beecham Pharm., No. 02-2750 (DRD), 2005 U.S. Dist. LEXIS 27995, at *17 (D.P.R. Oct.
31, 2005). Therefore, their argument is considered waived. Id. (citing United States v. Zannino, 895
F.2d 1, 17 (1st Cir. 1990)).6 In the alternative, this Court believes the conditions for mandamus
jurisdiction are not met. Plaintiffs have not exhausted all other avenues of relief. They have a

6

In Zannino, the First Circuit stated: “it is not enough merely to mention a possible argument in the most
skeletal way, leaving the court to do counsel’s work, create the ossature for the argument, and put flesh
on its bones.” Id. at 17.

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pending hearing before an ALJ and the option to appeal the ALJ’s decision in the Appeals
Council. See 20 C.F.R. §§ 404.900, 404.929, 404.967. Furthermore, Plaintiffs have an adequate
remedy in Section 405(g) of the SSA for challenging the Commissioner’s decision to terminate
their benefits. As a result, mandamus jurisdiction is not available.
CONCLUSION
In view of the foregoing, this Court lacks subject matter jurisdiction pursuant to
Sections 1331 and 1361 of Title 28 of the United States Code, as well as, pursuant to Section
405(g) of the SSA, 42 U.S.C. § 405(g). Therefore, Defendants’ Motion to Dismiss is GRANTED.
Judgment shall be entered accordingly.
IT IS SO ORDERED.
In San Juan, Puerto Rico, this 3rd day of August, 2016.
s/ Jay A. Garcia-Gregory
JAY A. GARCIA-GREGORY
United States District Judge