Chilicky v. Schweiker

• Decision Date: 12 August 1986
• Docket Number: No. 84-2828,84-2828
• Citation: 796 F.2d 1131
• Parties: , 14 Soc.Sec.Rep.Ser. 267, Unempl.Ins.Rep. CCH 16,917 James CHILICKY, Dora Adelerte, and Spencer Harris, Plaintiffs-Appellants, v. Richard SCHWEIKER, former Secretary of Health and Human Services; John Svahn, former Commissioner of the Social Security Administration; and William R. Sims, Director of the Arizona Disability Determination Service, in their individual capacities, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1131

796 F.2d 1131

55 USLW 2114, 14 Soc.Sec.Rep.Ser. 267,

Unempl.Ins.Rep. CCH 16,917

James CHILICKY, Dora Adelerte, and Spencer Harris, Plaintiffs-Appellants, v. Richard SCHWEIKER, former Secretary of Health and Human

Services; John Svahn, former Commissioner of the Social

Security Administration; and William R. Sims, Director of

the Arizona Disability Determination Service, in their

individual capacities, Defendants-Appellees.

No. 84-2828.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Dec. 2, 1985.

Decided Aug. 12, 1986.

William E. Morris, Southern Ariz. Legal Aid, Inc., Tucson, Ariz., for plaintiffs-appellants.

Barbara L. Herwig, Howard S. Scher, Dept. of Justice, Civil Div./Appellate Staff, Washington, D.C., for defendants-appellees.

Appeal from the United States District Court for the District of Arizona.

Before BROWNING, SNEED, and HUG, Circuit Judges.

HUG, Circuit Judge:

This case concerns the personal liability of certain state and federal officials and their immunity from damages arising from their alleged violations of citizens' constitutional rights. Appellants, whose Old Age, Survivors and Disability Insurance ("OASDI") and/or Supplemental Security Income ("SSI") disability benefits had been terminated during disability reviews in 1981, appeal the dismissal of their claims that appellees, the Secretary of Health and Human Services, the Commissioner of the Social Security Administration, and the Arizona state official who administered these disability benefits programs, unconstitutionally violated their rights under the Fifth Amendment in terminating appellants' benefits.

Appellants received disability benefits under Title II of the Social Security Act, 42 U.S.C. Sec. 401 et seq. (1982), or under the Supplemental Security Income program, 42 U.S.C. Sec. 1381 et seq. (1982). In 1980, Congress established, effective January 1, 1982, a continuing disability review ("CDR") process to insure that only those individuals whose medical conditions still warranted disability status received payment; however, the Secretary of Health and Human Services (the "Secretary" and "HHS," respectively) implemented the CDR process in March 1981. Appellants' disability benefits were terminated by the CDR process; however, they were ultimately reinstated, either through the administrative appeals process or under the provisions of the Social Security Disability Benefits Reform Act of 1984, Pub.L. No. 98-460, 98 Stat. 1794.

On August 20, 1982, appellants James Chilicky, Spencer Harris, and Doris Adelerte, together with seven other similarly situated persons, filed suit against Richard Schweiker, then HHS Secretary, John Svahn, Social Security Commissioner, and William R. Sims, Arizona Director of Disability Determinations. ¹ The complaint asserted that the appellees ordered, sanctioned, or implemented numerous practices, in violation of federal law and the Fifth Amendment, in administering the CDR process, which culminated in the termination of appellants' benefits. The appellants alleged, inter alia, that the appellees: (1) improperly accelerated the starting date of the CDR process from the statutory effective date of January 1982 to the earlier date of March 1, 1981; (2) illegally nonacquiesced in the law of this circuit; (3) failed On July 15, 1983, the district court stayed the proceedings pending disposition of Lopez v. Heckler. See Lopez v. Heckler, 725 F.2d 1489, 1493-96 (9th Cir.1984) (detailing procedural history), vacated and remanded, --- U.S. ----, 105 S.Ct. 583, 83 L.Ed.2d 694 (1984). The district court vacated the stay on April 6, 1984.

                to apply any uniform written standards in implementing the CDR process;  (4) failed to render decisions consistent with allegedly dispositive evidence;  and (5) used an impermissible "quota system" under which state agencies were required to terminate a certain number of recipients. 2   On November 15, 1982, prior to submission of an answer, appellees filed a motion to dismiss under Fed.R.Civ.P. 12(b)(6), asserting, inter alia, a lack of both subject matter jurisdiction and personal jurisdiction for insufficiency of service of process
                

Because of the Lopez decision and actions taken by HHS prior to, and as a result of, the 1984 Disability Benefits Reform Act, appellants withdrew their requests for class certification and for declaratory and injunctive relief. Thus, the only claim remaining was their claim for money damages against appellees in their individual capacities for due process violations in implementing the CDR process. Appellants' surviving claim is predicated on the constitutional tort theory of Bivens v. Six Unknown Named Agents, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971). On October 16, 1984, the district court dismissed the claim, ruling as a matter of law that all appellees were insulated from liability under the doctrine of qualified immunity. The district court found that the acceleration of the CDR process, the problems encountered at the state level, and the standards utilized in the review process, including the purported nonacquiescence policy of the Secretary in decisions of the Ninth Circuit, were not violations of clearly established statutory or constitutional rights of which a reasonable person should have known.

DISCUSSION

A. Jurisdiction

1. Subject Matter

Appellees argue that the district court lacks subject matter jurisdiction of appellants' constitutional tort cause of action. Their argument is predicated on the assumption that appellants' action "arises under" the Social Security Disability Act; thus, appellees contend, section 405(h), 42 U.S.C. Sec. 405(h) (1982), precludes appellants' lawsuit. We disagree.

Section 405(g), 42 U.S.C. Sec. 405(g) (1982) provides that "[a]ny individual, after any final decision of the Secretary made after a hearing to which he was a party ... may obtain a review of such decision by a civil action ... brought in the district court of the United States ...." and that the "court shall have the power to enter, upon the pleadings and transcript of the record, a judgment affirming, modifying, or reversing the decision of the Secretary ...."

Section 405(h) states:

The findings and decision of the Secretary after a hearing shall be binding upon all individuals who were parties to such hearing. No findings of fact or decision of the Secretary shall be reviewed by any person, tribunal, or governmental agency except as herein provided. No action against the United States, the Secretary, or any officer or employee thereof shall be brought under section 1331 or 1346 of Title 28 to recover on any claim arising under [Title II of the Social Security Disability Act].

We agree with appellees that appellants' claim for money damages may not be raised under section 405(g); that section does not expressly grant the district court the power to award money damages to remedy the emotional distress caused by erroneous administrative decisions or processes. Rather, the only remedy available under section 405(g) is the retroactive payment of disability benefits that were wrongfully terminated. Appellants have already had their benefits retroactively restored by the Secretary; they now seek further compensation by instituting a lawsuit for money damages. Section 405(g) affords no such relief.

We disagree, however, with appellees' contention that section 405(h) prohibits any non-section 405(g) action against the appellees from being brought under the Fifth Amendment due process clause. ³ Section 405(h) only precludes actions "arising under" Title II of the Social Security Disability Act, a section 405(g)-type action for disability benefits, from being instituted prior to exhaustion of administrative remedies. Heckler v. Ringer, 466 U.S. 602, 104 S.Ct. 2013, 2021-22, 80 L.Ed.2d 622 (1984); Weinberger v. Salfi, 422 U.S. 749, 764-66, 95 S.Ct. 2457, 2466-67, 45 L.Ed.2d 522 (1975). Appellants do not pursue their remaining claim in an effort to have their disability benefits restored; this has been done. Rather, they seek damages for constitutional violations purportedly committed by appellees in terminating appellants' disability benefits. Consequently, this action does not arise under Title II of the Social Security Disability Act and is thus not barred by section 405(h). The district court has subject matter jurisdiction under 28 U.S.C. Sec. 1331 over appellants' due process claim against all appellees. Ellis v. Blum, 643 F.2d 68, 75-76 (2d Cir.1981). See also Kuehner v. Schweiker, 717 F.2d 813, 816-17, 819 (3d Cir.1983), vacated and remanded on other grounds, --- U.S. ----, 105 S.Ct. 376, 83 L.Ed.2d 312 (1984); Ostroff v. State of Florida Dept. of Health and Rehabilitation Services, 554 F.Supp. 347, 354 (M.D.Fla.1983) (federal defendants).

2. Personal Jurisdiction

Although not expressly decided by the district court, Schweiker and Svahn contend that venue in the District Court of Arizona was improper and that the district court lacked personal jurisdiction over them because (1) the issuance of service of process was unauthorized and, thus, defective; and (2) there were not sufficient minimum contacts between the federal defendants and the State of Arizona necessary to satisfy the requirements of International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945), and the Arizona long-arm statute. ⁴ Appellants argue that the district court did have personal jurisdiction over Schweiker and Svahn in their individual capacities, but that even if service of process was insufficient, personal jurisdiction under the Arizona long-arm statute was lacking, and venue was improper, these appellees waived their objections under Fed.R.Civ.P. 12(g) and (h).

Fed.R.Civ.P. 12, and specifically subdivisions (g) and (h), promote the early and simultaneous presentation and determination of preliminary defenses. Rule 12(g) requires that a party who raises a defense by motion...