Coffey v. Schweiker

• Decision Date: 05 April 1983
• Docket Number: No. 82-1498.,82-1498.
• Citation: 559 F. Supp. 1375
• Parties: Dan J. COFFEY, Plaintiff, v. Richard SCHWEIKER, Secretary of Health and Human Services, Defendant.
• Court: U.S. District Court — District of Kansas

559 F. Supp. 1375

Dan J. COFFEY, Plaintiff, v. Richard SCHWEIKER, Secretary of Health and Human Services, Defendant.

No. 82-1498.

United States District Court, D. Kansas.

April 5, 1983.

David H.M. Gray, Wichita, Kan., for plaintiff.

Stephen K. Lester, Asst. U.S. Atty., Wichita, Kan., for defendant.

MEMORANDUM AND ORDER

KELLY, District Judge.

This matter involves the judicial review of a decision by the Secretary of Health and Human Services adverse to the claimant. Currently pending before the Court are a motion by the claimant for summary judgment or in the alternative to remand the case to the Secretary for further consideration, and a motion by the Secretary to dismiss for want of jurisdiction. Both sides have briefed their respective positions, and this Court heard counsels' oral arguments on February 28, 1983. The case at bar presents a perplexing situation, for although it appears claimant's application for Social Security benefits is meritorious, this Court lacks the authority to reach the merits of claimant's case. The Court must regrettably conclude jurisdiction is lacking.

Claimant turned 65 in February 1981, and was awarded retirement benefits effective January 1981. However, by letter dated April 1, 1981, the Secretary notified claimant that no further benefits would be paid, because in the Secretary's opinion the claimant was still working and being paid for his work in an amount in excess of the maximum allowed. Before reaching retirement age, claimant operated a food brokerage business in Wichita, Kansas, and before reaching age 65 he sold all of the corporate stock in his business to a son who had worked with him for a number of years. Claimant retained a consulting contract, and his former corporation also paid him regularly for a covenant not to compete contained in the sales contract of the business. In addition, he owned the building housing the brokerage business as well as another business tenant. His old corporation paid him a monthly rent for its portion of the building. The Social Security Administration determined the above transactions were a sham and that claimant was still in actual control of the business. Consequently, the Social Security Administration considered the income from the covenant not to compete as "earned income," and that the portion of the rent paid by the corporation was excessive and should also be considered "earned income."

Claimant requested a reconsideration of this initial adverse decision. However, on December 8, 1981, the Secretary affirmed the original decision after reconsideration. At this point claimant had 60 days from September 8, 1981, to request a hearing before an Administrative Law Judge (ALJ). Both claimant and his attorney received notice of the September 8 decision and the necessity of requesting a hearing before an ALJ within 60 days. However, it is admitted that claimant's attorney took no action within this period. This oversight was noticed eventually and on January 4, 1982, with new counsel, claimant requested a hearing before an ALJ. His new attorney's letter requesting the hearing explained the cause for the untimely request. Unfortunately, in a written determination dated February 20, 1982, the ALJ decided the oversight by claimant's first attorney did not provide "good cause" for extending the 60-day period.

This Court's jurisdiction to review Social Security Administration decisions is limited to the review of "final decisions" only. 42 U.S.C. § 405(g) provides:

Any individual, after any final decision of the Secretary made after a hearing to which he was a party, irrespective of the amount in controversy, may obtain a review of such decision by a civil action commenced within 60 days after the mailing to him of notice of such decision or within such further time as the Secretary may allow.

(Emphasis supplied). At the time of oral argument in this case, this Court's initial inclination was that the "good cause" decision by the ALJ on February 20, 1982, was the type of "final decision" contemplated by the above statute. However, the Court's research has reluctantly convinced the Court that the ALJ's decision on February 20, 1982, was not on the merits and thus not a "final decision" which can be reviewed here in the absence of further exhaustion of administrative remedies. The Court recognizes, regrettably, that once the 60-day time period for requesting a hearing before the ALJ was past, the claimant's ability to fully exhaust his administrative remedies was lost, making judicial review here impossible.

The most important precedent regarding this jurisdictional issue is Califano v. Sanders, 430 U.S. 99, 97 S.Ct. 980, 51 L.Ed.2d 192 (1977). Here the claimant sought judicial review of the Social Security Administration's refusal to reopen a disability case long after the time for seeking administrative review of the initial denial had expired. The Supreme Court held that 42 U.S.C. § 405(g) limited the judicial review of Social Security Administration decisions to only a "final decision of the Secretary made after hearing." 430 U.S. at 108, 97 S.Ct. at 986, 51 L.Ed.2d at 201. The Supreme Court reasoned that since the Social Security Act did not require the Secretary to have a hearing before deciding whether to reopen a prior final decision, 42 U.S.C. § 405(b), such a decision was not the type of "final decision of the Secretary made after hearing" which could be the subject of judicial review. Similarly, in the case at bar, the Secretary's consideration of whether "good cause" exists for extending the time for requesting a hearing before an ALJ, 20 C.F.R. § 404.933(c), is not mandated by the Social Security Act, and therefore the Secretary's judgment is discretionary. Since the Social Security Administration was not required to grant plaintiff a hearing before an Administrative Law Judge due to the untimely request, and the Secretary's decision not to extend the time for requesting a hearing is discretionary, no "final decision after a hearing" exists on which this Court can base jurisdiction.

The most recent decision we have located on this issue is Penner v. Schweiker, 701 F.2d 256 (3rd Cir.1983). Here claimant's initial disability claim was denied, and this decision was affirmed upon reconsideration. Although claimant received a copy of the Secretary's reconsideration determination, his attorney did not, and consequently the 60-day period in which the claimant had to seek review by the Appeals Council expired before claimant or his counsel took further action. Although the Third Circuit ultimately found jurisdiction based on a constitutional question, which we shall discuss further below, it held the District Court had no jurisdiction based on 42 U.S.C. § 405(g), because the claimant's request for hearing was untimely filed. The Secretary's decision that "good cause" did not exist for extending time was not judicially reviewable.

Another pertinent case is Watters v. Harris, 656 F.2d 234 (7th Cir.1980). Here, a claimant was denied benefits initially and again upon reconsideration. After the second adverse decision, she took no further action until long after the time period for requesting a hearing before an ALJ had expired. When she eventually requested an extension of the period for requesting such a hearing, the ALJ found she had not shown "good cause" to extend the deadline. The Appeals Council then denied her request for review of the ALJ's decision. The Seventh Circuit agreed with the trial court's determination that it lacked jurisdiction to review the Secretary's decision to not grant an extension of time in which to request a hearing. In discussing Califano v. Sanders and the applicable statut...