971 F.2d 260 (9th Cir. 1992), 91-55267, J.L. v. Social Sec. Admin.

Docket Nº:91-55267.
Citation:971 F.2d 260
Party Name:J.L., and K.P., on behalf of themselves and all others similarly situated; Share Ourselves, Plaintiffs-Appellants, v. SOCIAL SECURITY ADMINISTRATION, Gwendolyn S. King, Commissioner of Social Security, and Louis D. Sullivan, M.D., Secretary of the Department of Health and Human Services, in their official capacities, Defendants-Appellees.
Case Date:July 15, 1992
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 260

971 F.2d 260 (9th Cir. 1992)

J.L., and K.P., on behalf of themselves and all others

similarly situated; Share Ourselves, Plaintiffs-Appellants,

v.

SOCIAL SECURITY ADMINISTRATION, Gwendolyn S. King,

Commissioner of Social Security, and Louis D. Sullivan,

M.D., Secretary of the Department of Health and Human

Services, in their official capacities, Defendants-Appellees.

No. 91-55267.

United States Court of Appeals, Ninth Circuit

July 15, 1992

Argued and Submitted Oct. 11, 1991.

Page 261

Gill Deford, Nat. Senior Citizens Law Center, Los Angeles, Cal., for plaintiffs-appellants.

Deborah Ruth Kant, U.S. Dept. of Justice, Washington, D.C., for defendants-appellees.

Page 262

Appeal from the United States District Court for the Central District of California.

Before: FLETCHER, NELSON, and BRUNETTI, Circuit Judges.

FLETCHER, Circuit Judge:

Appellants allege that certain practices of the Social Security Administration ("SSA") discriminate against them on the basis of handicap and seek declaratory, injunctive, and monetary relief under section 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794. They appeal the district court's dismissal of their complaint under Federal Rule of Civil Procedure 12(b)(6), and its holdings that section 504 does not authorize suit by private persons against the government, that sovereign immunity bars suit against the government, and that the district court is without jurisdiction to grant relief. Although our reasoning differs from that of the district court, we too dismiss, but without prejudice to allow the plaintiffs to pursue administrative remedies and then return to federal court if appropriate.

FACTS

For the purposes of this appeal, we accept as true all factual allegations in the complaint. J.L., K.P. and the class they seek to represent are mentally handicapped persons eligible for Supplemental Security Income ("SSI"). They allege that the application procedures for SSI are so complex and demanding that they cannot, due to their mental handicaps, obtain payments to which they are entitled. The application process involves requesting and properly completing lengthy application forms; waiting in crowded SSA offices; recalling and articulating detailed information about personal, medical and psychiatric history; securing and providing information and documents from outside sources; responding to written and oral instructions from numerous SSA employees; locating various offices to which they must report and timely keeping appointments; and comprehending and complying with strict time deadlines. Complaint p 16. The symptoms of many of the mentally ill applicants--severe confusion, memory loss, hallucinations, paranoid delusions, depression and mania, extreme fearfulness and anxiety, inability to concentrate, and inability to interact with strangers--make it impossible for them to complete the demanding application process. p 15, 17.

Plaintiff J.L., for example, has been diagnosed as paranoid schizophrenic; his symptoms include paranoid delusions, auditory hallucinations, poverty of affect, withdrawal, anxiety, fearfulness, and periods of confusion. His mental disability caused him to lose his job and to become destitute and homeless; it also prevented him from fulfilling the administrative requirements of the SSI application process. p 19-26. Plaintiff K.P. has been diagnosed as having major depression and post-traumatic stress disorder; her symptoms include memory loss, panic attacks, extreme anxiety, apathy, fatigue and withdrawal. She retreated to her bedroom, unable to leave the house or to work. Because of her mental illness, she was unable to travel without assistance to meet with SSA's psychiatrist, and her application was subsequently denied for her failure to do so. She has been unable to successfully complete subsequent applications. p 36-44.

Plaintiffs allege that SSA has failed to adopt policies or practices reasonably designed to accommodate the needs of applicants with mental disabilities. It does not supply extra assistance from staff, nor attempt to secure necessary information from friends, family, social workers or others. p 17. Plaintiffs allege that SSA's failure to accommodate to the needs of mentally disabled applicants constitutes discrimination on the basis of handicap. p 18.

On July 27, 1990, J.L. and K.P. brought suit, claiming that the SSA's application procedures violated section 504 of the Rehabilitation Act, codified at 29 U.S.C. § 794, which prohibits discrimination on the basis of handicap "under any program or activity conducted by any Executive agency." 1

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] The suit was brought as a class action, seeking to represent "all persons residing in the County of Orange [California] who are eligible for SSI but cannot obtain benefits, or whose benefits are delayed, because their mental illnesses prevent them from commencing or successfully completing the SSI application procedure." p 10. 2 By way of relief, plaintiffs seek a declaration that SSA's failure to assist mentally disabled applicants in completing the application process violates the Rehabilitation Act and that the application process itself denies SSI benefits to mentally disabled applicants because of their disabilities in violation of the Act. They also seek to enjoin SSA from discriminating against them in the future.

Plaintiff Share Ourselves ("SOS") is a private not-for-profit organization that provides material and financial assistance to the homeless, hungry and destitute of Orange County. SOS claims that SSA's discrimination against mentally handicapped SSI applicants has forced SOS to expend its resources to assist people who would otherwise not need its help. In addition to joining in the suit for declaratory and injunctive relief, SOS seeks $50,000 in damages to compensate it for the money it need not have spent absent the discrimination.

The complaint does not allege that any plaintiff pursued administrative remedies or otherwise tried to convince SSA to change its application procedures. Nor does it allege that such attempts would have been futile.

SSA filed a motion to dismiss, arguing, among other things, that section 504 did not authorize private suits against the federal government, that plaintiffs should pursue their remedies under the Administrative Procedures Act, and that SOS lacked standing to sue. The district court issued a Tentative Ruling that dismissed the section 504 claims as unauthorized by statute and barred by sovereign immunity, and also held that it lacked jurisdiction to entertain the claims. In an order filed December 6, 1990, the district court granted the motion to dismiss "in accordance with the Tentative Ruling," but allowed plaintiffs 30 days to amend their complaint. They did not do so; a final judgment was entered January 22, 1991. Plaintiffs timely appeal.

JURISDICTION

The district court in its Tentative Ruling concluded that it had no jurisdiction to hear the claim because federal question jurisdiction under 28 U.S.C. § 1331 is barred by 42 U.S.C. § 405(h). The district court erred. Section 405(h) provides that jurisdiction over cases "arising under" the Social Security Act can be had only upon the terms described in 42 U.S.C. § 405(g). Because plaintiffs' claims are predicated on the Rehabilitation Act, they do not "arise under" the Social Security Act. Jurisdiction under 28 U.S.C. § 1331 was not precluded, nor was it precluded under 28 U.S.C. § 1361 (mandamus).

Appellate jurisdiction over the final order of dismissal derives from 28 U.S.C. § 1291.

STANDARD OF REVIEW

Dismissals under Rule 12(b)(6) are matters of law, reviewed de novo. Klarfeld v. United States, 944 F.2d 583, 585 (9th Cir.1991).

DISCUSSION

I. STATUTORY SOURCES OF RELIEF

The parties agree that plaintiffs are entitled to a forum in which to air their claims of discrimination. They disagree over the forum and the vehicle: plaintiffs contend that they may obtain relief by suit commenced in district court under the Rehabilitation Act, while SSA insists that they must seek an administrative remedy under the Administrative Procedures Act, 5 U.S.C. §§ 701 et seq. ("APA"). We begin by examining the structures of the two statutes.

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The APA provides a mechanism for persons "suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action" to obtain judicial review and relief "other than money damages." 5 U.S.C. § 702. A reviewing court has the power to "compel agency action unlawfully withheld or unreasonably delayed." 5 U.S.C. § 706(1). It may also "hold unlawful and set aside agency action ... found to be--(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; ... [or] (C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right." 5 U.S.C. § 706(2). For agency action to be reviewable under the APA, it must be "final." 5 U.S.C. § 704. In this case, finality would require that plaintiffs exhaust the administrative procedure set forth in 45 C.F.R. § 85 ("Enforcement of Non-Discrimination on the Basis of Handicap in Programs or Activities Conducted by the Department of Health and Human Services"). 3

Section 504 of the Rehabilitation Act of 1973 (as amended) states:

No otherwise qualified individual with handicaps in the United States ... shall, solely by reason of her or his handicap, be excluded from the participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving Federal financial assistance or under any program or activity conducted by any Executive agency or by the United States Postal Service.

29 U.S.C. § 794. Like the APA, the Rehabilitation Act may be used to obtain redress from the government. "Congress unequivocally expressed its intent [in section 504] to provide handicapped victims of government...

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