Hicks v. Colvin

• Citation: 214 F.Supp.3d 627
• Decision Date: 12 October 2016
• Docket Number: Civil No. 16–154–ART
• Parties: Amy Jo HICKS, Plaintiff, v. Carolyn W. COLVIN, Acting Commissioner of Social Security, Defendant.
• Court: U.S. District Court — Eastern District of Kentucky

214 F.Supp.3d 627

Amy Jo HICKS, Plaintiff,

v.Carolyn W. COLVIN, Acting Commissioner of Social Security, Defendant.

Civil No. 16–154–ART

United States District Court, E.D. Kentucky, Southern Division. Pikeville.

Signed October 12, 2016

Evan Barret Smith, Appalachian Citizens' Law Center, Whitesburg, KY, Joseph R. Lane, Ned Pillersdorf, Pillersdorf, Derossett & Lane, Prestonsburg, KY, for Plaintiff.

Amanda B. Gilman, Social Security Administration, Baltimore, MD, John S. Osborn, III, U.S. Attorney's Office, Lexington, KY, Laura Ridgell–Boltz, Meghan Frei Berglind, Social Security Administration, Denver, CO, for Defendant.

MEMORANDUM OPINION AND ORDER

Amul R. Thapar, United States District Judge

If the government threw Amy Jo Hicks in jail because she was a member of Al Qaeda, she would get a chance to challenge that factual assertion before a neutral arbiter. See Hamdi v. Rumsfeld , 542 U.S. 507, 533, 124 S.Ct. 2633, 159 L.Ed.2d 578 (2004). If the government fired her because she lied on an employment form, she would get a chance to challenge that factual assertion before a neutral arbiter. See Cleveland Bd. of Educ. v. Loudermill , 470 U.S. 532, 544, 105 S.Ct. 1487, 84 L.Ed.2d 494 (1985). And if the government took away her stove because she was late on her installment payments, she would get a chance to challenge that factual assertion before a neutral arbiter. See Fuentes v. Shevin , 407 U.S. 67, 82–84, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972). But when the government redetermined her right to disability payments—and categorically excluded some of her medical evidence because it had "reason to believe" the evidence was fraudulent—she never got a chance to challenge that factual assertion before anyone.

The question here is whether that redetermination process violated the Due Process Clause. It did. The Due Process Clause ensures that people receive meaningful hearings. And meaningful hearings give people the opportunity to challenge the government's factual assertions—at least where, as here, those assertions affect their rights.

The Court must therefore remand this case so that the SSA can give Hicks adequate process. That process need not involve a whole new mini-trial. The SSA must simply give Hicks the opportunity to challenge the basis for excluding evidence she wishes to present. That additional safeguard does not place an onerous burden on the SSA, and is necessary to assure that people do not lose their entitlements because of decisions made in the dark.

I.

A.

Back in September 2007, Hicks suffered from headaches, depression, and anxiety, as well as injuries to her right arm, neck, back, head, legs, and hips. R. 1 ¶ 4. She applied to the SSA for disability benefits, and, after testifying at an administrative hearing, received those benefits. Id. ¶ 5. The lawyer who helped prepare her application was "Mr. Social Security" himself, Eric C. Conn,¹ who secured benefits for thousands of others as well. See R. 10 at 5.

As plenty of coaches have said in plenty of halftime speeches, however, it's not what you do that matters, but how you do it. How Conn got his clients their benefits was, allegedly, by fraud. For years, the government says, Conn orchestrated a social-security scam that involved himself, an administrative law judge (ALJ) named David Daugherty, and four doctors. R. 25 at 3–4. When a client would walk into Conn's office, Conn would have a template medical form waiting. Id. at 4. Conn completed the form himself and sent it off to one of the doctors, who would sign it allegedly without examining the client at all. Id. Conn would then request an administrative hearing. Id. Daugherty would assign the case to himself, accept the false medical records into evidence, quickly award benefits, and collect a kickback from Conn. Id.

At some point, the SSA's Office of the Inspector General (OIG) began investigating. By July 2014, the OIG discovered that at least 1,787 people—all former Conn clients—had submitted a template medical form sometime between 2007 and 2011. Id. at 18.

B.

That discovery jumpstarted an interlocking series of statutes and regulations called the redetermination process. Under one part of the Social Security Act, "[a]s soon as the [OIG] has reason to believe that fraud was involved" in a benefits application, it "shall" refer that information to the SSA. 42 U.S.C. § 1320a–8(l). When the OIG says such things, the SSA listens. Indeed, it has to: Under another part of the Act, the SSA "shall immediately redetermine" a person's entitlement to benefits "if there is reason to believe that fraud was involved" in that person's application. 42 U.S.C. § 405(u)(1)(A). Further, the SSA "shall disregard any evidence" during the redetermination process "if there is reason to believe that fraud ... was involved in the providing of such evidence." Id. § 405(u)(1)(B). In somewhat plainer English: When the OIG discovers fraud in an application, it must alert the SSA; the SSA must then redetermine whether the applicant actually deserved benefits at the time she applied for them; and in doing so, the SSA may not consider any part of the application that contains the suspected fraud.

As usual, the statute leaves something to the agency's imagination—such as how, exactly, to make the process work. In the Social Security Administration Hearings, Appeals, and Litigation Law Manual ("HALLEX," for short), the SSA has filled in those gaps. See HALLEX § I–1–3–25;² see also Policy Interpretation Ruling, 81 Fed. Reg. 13436 (Mar. 14, 2016) (providing public notice of the SSA's interpretation of the redetermination statutes). The HALLEX manual is an internal-guidance document laying out the procedures that the SSA follows when it must redetermine someone's entitlement to social-security benefits. The SSA "will offer the opportunity for a hearing" before cancelling a person's benefits. Id. § I–1–3–25(C)(5) (citing Goldberg v. Kelly , 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970) ). The SSA will even help that person develop new evidence, should she need it to prove that she deserved her benefits at the time she applied for them. Id. § I–1–3–25(C)(4)(b).

The SSA will not, however, look at any part of the person's original application that the OIG has said contains fraud. At redetermination hearings, ALJs "do not have discretion to reconsider" whether to disregard evidence the OIG has identified. Id. § I–1–3–25(C)(4)(a). According to the SSA's internal regulations, ALJs must simply pretend that the evidence no longer exists. Nor can a beneficiary appeal the SSA's decision to disregard evidence when the OIG was the one to flag that evidence as fraudulent. Id. § I–1–3–25(C)(6). The OIG's word is, effectively, gospel.

C.

Conn's alleged scheme was just what Congress built the redetermination process to address. As required by Section 1320a–8(l), the OIG sent the SSA a referral letter identifying 1,787 applications that bore the mark of Conn. R. 25–1 at 5. With "reason to believe that fraud was involved in th[ose] applications," the OIG saw no "objections to SSA moving forward" with the redetermination process. Id. So, as required by Section 405(u)(1)(A), the SSA moved forward: After getting word from the OIG, the SSA had no choice but to give 1,787 old applications another look. R. 25 at 16. But, as required by its own regulations, the SSA looked past the template medical forms and any other evidence that Conn's doctors had submitted on the applicants' behalves. HALLEX § I–1–3–25(C)(4)(b).

Facing the possibility that it was funding so many undeserving beneficiaries, the SSA worked quickly.³ Flipping through the old applications, the SSA picked out those that, after "disregarding the suspect evidence identified by the OIG," did not have sufficient evidence to support their claims. R. 25 at 9. That group turned out to include 86% of the applications that the OIG had identified, or about 1,500 people. Id. at 9 n.4. Then—less than a week after the OIG had said that it could move forward—the SSA notified about 1,500 people that an ALJ would redetermine their entitlements. Id. at 9; see also R. 1–1.

Hicks was one of those people. Her redetermination hearing took place on February 1, 2016. See R. 1 ¶ 9. "The relevant period for this hearing," the ALJ explained at the outset, "is from September 1, 2007, through July 2, 2008," the period when Hicks had applied for benefits. See Certified Administrative Record at 34. All evidence, old and new, had to pertain to that period; the ALJ was interested in the past. But he was not interested in one specific part of it—any evidence that Hicks had submitted from Conn's doctors. Id. at 30 ("[W]e exclude evidence from certain doctors during the relevant period. I'll issue a new decision based on the remaining evidence.").

So Hicks once again found herself in an administrative hearing, testifying about the state of her health in 2007. But this time, she was not testifying in 2007—she was testifying about 2007 from almost ten years in the future. According to Hicks, this was no easy task. Like many of Conn's clients, she had been found disabled in the first place because of her "mental deficits and illnesses," which "hamper[ed] [her] ability to recall accurately [her] medical histor[y]." R. 22 at 20. Nor was hard evidence easy to come by. What evidence she had she apparently gave to Conn, who has since "los[t]" or "destroy[ed]" it. Id. Plus, if any remained, it would have done her little good. Hicks said at oral argument, for example, that she had undergone psychological testing in 2007. The only problem was that one of Conn's doctors had run the test. As the ALJ instructed, while Hicks told her story the second time, she had to leave any visits with, statements by, or evidence from Conn's doctors out of it. And so, with a bad memory and little evidence, Hicks attempted to recall specific medical facts from nearly ten years before.

See, e.g. , Certified Administrative Record at 45, 48.

After the hearing, the ALJ...