Carr v. Saul

• Citation: 141 S.Ct. 1352
• Decision Date: 22 April 2021
• Docket Number: No. 19-1442, No. 20-105,19-1442
• Parties: Willie Earl CARR, et al., Petitioners v. Andrew M. SAUL, Commissioner of Social Security; John J. Davis, et al., Petitioners v. Andrew M. Saul, Commissioner of Social Security, Thomas Hilliard, Petitioner v. Andrew M. Saul, Commissioner of Social Security
• Court: United States Supreme Court

141 S.Ct. 1352

Willie Earl CARR, et al., Petitioners

v.Andrew M. SAUL, Commissioner of Social Security;

John J. Davis, et al., Petitioners

v.Andrew M. Saul, Commissioner of Social Security,Thomas Hilliard, Petitioner

v.Andrew M. Saul, Commissioner of Social Security

No. 19-1442

No. 20-105

Supreme Court of the United States.

Argued March 3, 2021

Decided April 22, 2021¹

Mahesha P. Subbaraman, Subbaraman PLLC, Minneapolis, MN, Wes Kappelman, Kappelman Law Firm, Ames, IA, Kannon K. Shanmugam, Counsel of Record, William T. Marks, Joel S. Johnson, E. Garrett West, Paul, Weiss, Rifkind, Wharton & Garrison LLP, Washington, DC, Sudhir V. Rao, Zalman Rothschild, Paul, Weiss, Rifkind, Wharton & Garrison LLP, New York, NY, for Petitioners.

Paul F. McTighe, Jr., Tulsa, OK, Lisa S. Blatt, Sarah M. Harris, Counsel of Record, Charles L. McCloud, Thomas W. Ryan, Andrew L. Hoffman, Williams & Connolly LLP, Washington, DC, for Petitioners.

Elizabeth B. Prelogar, Acting Solicitor General Counsel of Record, Brian M. Boynton, Acting Assistant Attorney General, Edwin S. Kneedler, Deputy Solicitor General, Vivek Suri, Austin L. Raynor, Assistants to the Solicitor General, Mark B. Stern, Joshua M. Salzman, Daniel Aguilar, Amanda L. Mundell, Attorneys Department of Justice, Washington, DC, for Respondent.

Justice SOTOMAYOR delivered the opinion of the Court.

When the Social Security Administration (SSA) denies a claim for disability benefits, a claimant who wishes to contest that decision in federal court must first seek a hearing before an administrative law judge (ALJ). The petitioners here did just that: They each unsuccessfully challenged an adverse benefits determination in ALJ proceedings, and they now ask for judicial review. Specifically, petitioners argue that they are entitled to new hearings before different ALJs because the ALJs who originally heard their cases were not properly appointed under the Appointments Clause of the U.S. Constitution. The question for the Court is whether petitioners forfeited their Appointments Clause challenges by failing to make them first to their respective ALJs. The Court holds that petitioners did not forfeit their claims.

I

The six petitioners in these consolidated cases each applied for disability benefits between 2013 and 2015.¹ After their applications were denied, petitioners followed the prescribed steps for seeking administrative review. They sought reconsideration of the agency's initial determination, received a hearing before an ALJ, and requested review by the SSA's Appeals Council. See 20 CFR § 404.900(a). Petitioners were unsuccessful at every stage, concluding with the Appeals Council, which denied discretionary review.

This Court then held in Lucia v. SEC , 585 U.S. ––––, 138 S.Ct. 2044, 201 L.Ed.2d 464 (2018), that ALJs within the Securities and Exchange Commission (SEC) had been unconstitutionally appointed. Under the Appointments Clause, only the President, "Courts of Law," or "Heads of Departments" may appoint "Officers of the United States." Art. II, § 2, cl. 2; see Lucia , 585 U.S., at ––––, 138 S.Ct., at 2050. The Lucia Court determined that SEC ALJs were "Officers" rather than mere employees because they held "a continuing office established by law," exercised " ‘significant discretion’ when carrying out ... ‘important functions,’ " and often had the last word in SEC proceedings. Id., at –––– – ––––, 138 S.Ct., at 2052-2053. Consequently, the appointment of SEC ALJs by SEC staff violated the Constitution. Id., at ––––, ––––, 138 S.Ct., at 2047, 2055.

Like the SEC ALJs at issue in Lucia , SSA ALJs had been selected by lower level staff rather than appointed by the head of the agency. On July 16, 2018, a few weeks after Lucia was decided, the SSA's Acting Commissioner pre-emptively "address[ed] any Appointments Clause questions involving Social Security claims" by "ratif[ying] the appointments" of all SSA ALJs and "approv[ing] those appointments as her own." 84 Fed. Reg. 9583 (2019). The following year, the SSA issued a ruling stating that the Appeals Council should, in response to timely requests for Appeals Council review, vacate preratification ALJ decisions and provide fresh review by a properly appointed adjudicator. Ibid. That remedy was only available, however, to claimants who had raised an Appointments Clause challenge in either their ALJ or Appeals Council proceedings. Ibid. Claimants who had not objected to the ALJs' appointments in their administrative proceedings would receive no relief. See ibid.

Petitioners fell into this latter category. By the time the SSA issued its ruling, their administrative proceedings had concluded, and they were seeking review of the SSA's decisions in federal court. Following Lucia , each petitioner asked the Federal District Court (or, in some cases, the Federal Magistrate Judge) for a new hearing before a constitutionally appointed ALJ. The Commissioner did not dispute that the ALJs who decided petitioners' cases were unconstitutionally appointed, but contended instead that petitioners had forfeited their Appointments Clause challenges by failing to raise them before the agency.

In three separate decisions (covering all six petitioners), the U.S. Courts of Appeals for the Eighth and Tenth Circuits adopted the Commissioner's forfeiture argument. In those Circuits' view, petitioners could not obtain judicial review of their Appointments Clause claims because they had not pressed those challenges in their administrative proceedings. 963 F.3d 790, 793 (C.A.8 2020) ; 964 F.3d 759, 763 (C.A.8 2020) ; Carr v. Commissioner, SSA , 961 F.3d 1267, 1268 (C.A.10 2020). The Third, Fourth, and Sixth Circuits have all held the opposite. In those Circuits, claimants may challenge the constitutionality of an SSA ALJ's appointment for the first time in federal court. See Cirko v. Commissioner of Social Security , 948 F.3d 148, 152 (C.A.3 2020) ; Probst v. Saul , 980 F.3d 1015, 1020 (C.A.4 2020) ; Ramsey v. Commissioner of Social Security , 973 F.3d 537, 546 (C.A.6 2020). The Court granted certiorari to resolve this conflict. 592 U.S. ––––, 141 S.Ct. 813, 208 L.Ed.2d 397 (2020).

II

Administrative review schemes commonly require parties to give the agency an opportunity to address an issue before seeking judicial review of that question. The source of this requirement (known as issue exhaustion) varies by agency.² Typically, issue-exhaustion rules are creatures of statute or regulation. Sims v. Apfel , 530 U.S. 103, 107–108, 120 S.Ct. 2080, 147 L.Ed.2d 80 (2000) ; see United States v. L. A. Tucker Truck Lines, Inc. , 344 U.S. 33, 36, n. 6, 73 S.Ct. 67, 97 L.Ed. 54 (1952) (collecting statutes). Where statutes and regulations are silent, however, courts decide whether to require issue exhaustion based on "an analogy to the rule that appellate courts will not consider arguments not raised before trial courts." Sims , 530 U.S. at 108–109, 120 S.Ct. 2080. The Commissioner concedes that no statute or regulation obligated petitioners to raise their Appointments Clause challenges in administrative proceedings. See Brief for Respondent 12, 35, n. 2; Tr. of Oral Arg. 39. Instead, the Commissioner asks this Court to impose a judicially created issue-exhaustion requirement in these cases.

A

"[T]he desirability of a court imposing a requirement of issue exhaustion depends on the degree to which the analogy to normal adversarial litigation applies in a particular administrative proceeding." Sims , 530 U.S., at 109, 120 S.Ct. 2080. In conducting this inquiry, courts must take care not to "reflexively ‘assimilat[e] the relation of ... administrative bodies and the courts to the relationship between lower and upper courts.’ " Id., at 110, 120 S.Ct. 2080 (quoting FCC v. Pottsville Broadcasting Co. , 309 U.S. 134, 144, 60 S.Ct. 437, 84 L.Ed. 656 (1940) ). Instead, "[t]he inquiry requires careful examination of ‘the characteristics of the particular administrative procedure provided.’ " 530 U.S., at 113, 120 S.Ct. 2080 (O'Connor, J., concurring in part and concurring in judgment) (quoting McCarthy v. Madigan , 503 U.S. 140, 146, 112 S.Ct. 1081, 117 L.Ed.2d 291 (1992) ). The critical feature that distinguishes adversarial proceedings from inquisitorial ones is whether claimants bear the responsibility to develop issues for adjudicators' consideration.³

With respect to the nature of the SSA proceedings at issue here, our inquiry starts from the baseline set by Sims v. Apfel . There, this Court held that issues not raised before the Appeals Council (the final stage of administrative review within the SSA) are nonetheless preserved for judicial review. In so holding, the Court explained that "the rationale for requiring issue exhaustion is at its greatest" when "the parties are expected to develop the issues in an adversarial administrative proceeding," but "the reasons for a court to require issue exhaustion are much weaker" when "an administrative proceeding is not adversarial." 530 U.S., at 110, 120 S.Ct. 2080.

The plurality went on to explain that "[t]he differences between courts and agencies are nowhere more pronounced than in Social Security proceedings," where administrative "proceedings are inquisitorial rather than adversarial." Id., at 110–111, 120 S.Ct. 2080. Regulations governing SSA proceedings "expressly provide that the SSA ‘conduct[s] the administrative review process in an informal, nonadversary manner’ " and assures claimants that the SSA " ‘will consider at each step of the review process any information you present as well as all the information in our records.’ " Id., at 111, 120 S.Ct. 2080 (quoting 20 CFR § 404.900(b) (1999) ). At the Appeals Council level, "the Council's review is plenary unless it states otherwise." Sims , 530 U.S., at 111, 120 S.Ct. 2080 (plurality opinion). Rather than appear "as a litigant opposing the claimant," the Commissioner serves "just as an adviser to the Council." Ibid. Claimants are not required to file a brief; indeed, the...