Hicks v. Comm'r of Soc. Sec.

• Decision Date: 21 November 2018
• Docket Number: 17-5212,17-5214,17-5614,17-5215,17-5598,17-5216,17-5213,17-5211,Nos. 17-5206,s. 17-5206
• Citation: 909 F.3d 786
• Parties: Amy Jo HICKS (17-5206); Linda Blackburn (17-5211); Willie Ousley, on Behalf of the Estate of Patricia L. Ousley (17-5212); Cherrie Justice (17-5213); Leah Ann Jenkins (17-5214); Shelia Darlene Adams (17-5215); Roy G. Hale, Jr. (17-5216), Plaintiffs-Appellees, John Lee Perkins (17-5598); Carolyn Griffith, Timothy L. Howard, and Robert Martin (17-5614), Plaintiffs-Appellants, v. COMMISSIONER OF SOCIAL SECURITY, Defendant-Appellant, (17-5206 / 5211 / 5212 / 5213 / 5214 / 5215 / 5216), Defendant-Appellee (17-5598 / 5614).
• Court: U.S. Court of Appeals — Sixth Circuit

909 F.3d 786

Amy Jo HICKS (17-5206); Linda Blackburn (17-5211); Willie Ousley, on Behalf of the Estate of Patricia L. Ousley (17-5212); Cherrie Justice (17-5213); Leah Ann Jenkins (17-5214); Shelia Darlene Adams (17-5215); Roy G. Hale, Jr. (17-5216), Plaintiffs-Appellees,

John Lee Perkins (17-5598); Carolyn Griffith, Timothy L. Howard, and Robert Martin (17-5614), Plaintiffs-Appellants,

v.COMMISSIONER OF SOCIAL SECURITY, Defendant-Appellant,

(17-5206 / 5211 / 5212 / 5213 / 5214 / 5215 / 5216), Defendant-Appellee (17-5598 / 5614).

Nos. 17-5206

17-5211

17-5212

17-5213

17-5214

17-5215

17-5216

17-5598

17-5614

United States Court of Appeals, Sixth Circuit.

Argued: March 7, 2018

Decided and Filed: November 21, 2018

ARGUED: Thomas Pulham, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for the Commissioner of Social Security. Arpit K. Garg, WILMER CUTLER PICKERING HALE AND DORR LLP, Washington, D.C., for Plaintiffs. ON BRIEF: Thomas Pulham, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for the Commissioner of Social Security. Arpit K. Garg, WILMER CUTLER PICKERING HALE AND DORR LLP, Washington, D.C., Ned Pillersdorf, PILLERSDORF, DEROSSETT & LANE, Prestonburg, Kentucky, Evan B. Smith, APPALACHIAN CITIZENS’ LAW CENTER, Whitesburg, Kentucky, Charnel M. Burton, APPALACHIAN RESEARCH AND DEFENSE FUND OF KENTUCKY, INC., Hazard, Kentucky, Francis E. Budde, MORGAN & MORGAN, Atlanta, Georgia, Kelly L. Ward Wallen, APPALACHIAN RESEARCH AND DEFENSE FUND, Prestonsburg, Kentucky, for Plaintiffs. Charles L. Martin, MARTIN & JONES, Decatur, Georgia, for Amicus Curiae.

Before: MOORE, GIBBONS, and ROGERS, Circuit Judges.

MOORE, J., delivered the opinion of the court in which GIBBONS, J., joined, and ROGERS, J., joined in Part II.C. ROGERS, J. (pp. 813–27), delivered a separate dissenting opinion.

OPINION

KAREN NELSON MOORE, Circuit Judge.

When individuals in this country are unable to work because of physical or mental disabilities

, they may file for Social Security Disability Insurance ("SSDI") and Supplemental Security Income ("SSI") benefits. The eleven plaintiffs here all filed for these benefits, and they all eventually received them. The trouble, however, is that they were represented in their efforts by Eric Conn, a Kentucky attorney who secured benefits for his clients by submitting fraudulent reports to the Social Security Administration ("SSA"). An Administrative Law Judge ("ALJ"), David Daugherty, also participated in the scheme by taking bribes from Conn to assign Conn’s cases to himself and issue favorable rulings.

Nearly ten years after the SSA first learned of Conn’s and Daugherty’s possible wrongdoings, it initiated efforts to "redetermine" plaintiffs’ eligibility for benefits. The SSA held new hearings before new ALJs to determine plaintiffs’ entitlement to benefits as of the date of their original applications—i.e., seven to ten years earlier. During the redetermination process, the SSA disregarded all medical evidence submitted by the four doctors participating in Conn’s scheme on the ground that such evidence was tainted by fraud. Plaintiffs had no opportunity to rebut the agency’s assertion of fraud as to this medical evidence. Ultimately, all plaintiffs were deemed ineligible for SSDI and SSI benefits as of the date of their original applications, and their benefits were terminated. After exhausting all administrative remedies, plaintiffs brought suit in federal district court.

The eleven cases presented in this consolidated appeal appeared before three different district judges. Though the precise nature of their claims somewhat varied, all plaintiffs alleged that the SSA’s procedures and actions violated the Due Process Clause of the Fifth Amendment, the Administrative Procedure Act ("APA"), and the Social Security Act. We now hold that the plaintiffs are entitled to summary judgment on their due-process claim, the SSA is entitled to summary judgment on plaintiffs’ claims under the Social Security Act, and the SSA is not entitled to summary judgment on plaintiffs’ claims under the APA. We therefore AFFIRM the district court’s judgment in cases numbered 17-5206, 17-5211, 17-5212, 17-5213, 17-5214, 17-5215, 17-5216, and AFFIRM in part, REVERSE in part, and REMAND for further proceedings consistent with this opinion in cases numbered 17-5598 and 17-5614.

I. BACKGROUND

The SSDI and SSI programs provide disability benefits to individuals with physical or mental impairments

that preclude them from working. 42 U.S.C. §§ 423(d)(2)(A), 1382c(a)(3)(B). The eleven plaintiffs in this consolidated appeal had each applied for SSDI and/or SSI benefits between June 2006 and October 2008, and their applications were initially denied. Either before or after these initial denials, each plaintiff retained Eric Conn, a Kentucky attorney, to assist with the application process. With Conn’s counsel, each plaintiff then submitted a timely request for a hearing before an ALJ. In each of these cases, the plaintiff’s application included medical records from one of four examining doctors—Bradley Adkins, Ph.D., Srinivas Ammisetty, M.D., Frederic Huffnagle, M.D., or David P. Herr, D.O. And in each of these cases, ALJ David Daugherty relied exclusively on the doctors’ medical opinions to conclude on the record (i.e., without holding a hearing) that plaintiffs were disabled and thereby entitled to either SSI or SSDI benefits. In particular, in each case Daugherty’s discussion of his determination to award benefits read, more-or-less verbatim, as follows:

Having considered all of the evidence, I am satisfied that the information provided by Dr. [Adkins, Ammisetty, Huffnagle, or Herr] most accurately reflects the claimant’s impairments and limitations. Therefore, the claimant is limited to less than sedentary work at best.

After considering the evidence of record, the undersigned finds that the claimant's medically determinable impairment could reasonably be expected to produce the alleged symptoms, and that the claimant’s statements concerning the intensity, persistence and limiting effects of these symptoms are generally credible.

E.g. , 16-cv-53 (Blackburn), R. 26-1 (Ex. 6A, Daugherty Decision at 3) (Page ID #281).

According to the SSA, plaintiffs’ change of fortune was not coincidental. Instead, SSA alleges that Conn, Daugherty, and the four doctors identified above were engaged in a widespread scheme to secure SSI and SSDI benefits for Conn’s clients based on fraudulent disability applications. SSA Br. at 12–15. The scheme, according to the SSA, worked like this: Conn created a limited number of template Residual Functional Capacity ("RFC") forms, which he or attorneys in his office filled out ahead of time. Id. at 13. These forms, which are normally meant to convey a claimant’s "ability to do work-related activities on a day-to-day basis in a regular work setting," 16-cv-154 (Hicks), R. 42-2 (Adkins Report, RFC Form) (Page ID #1438), were purportedly manipulated to ensure that they satisfied the SSA’s criteria for establishing a disability. Id. The doctors above then signed these forms without making any adjustments, and Conn submitted the forms to the SSA on behalf of his clients. Id. Daugherty, who was allegedly receiving bribes from Conn, then assigned Conn’s cases to himself and issued favorable rulings to Conn’s clients. Id. at 14–15; Pls. Br. at 4.

The SSA first learned about possible wrongdoing involving Daugherty and Conn as far back as 2006, when a senior case technician and a master docket clerk in the SSA’s Office of Disability Adjudication and Review (which houses the ALJs) raised concerns that Daugherty was reassigning Conn’s cases to himself and rapidly deciding them in the claimants’ favor. U.S. ex rel. Griffith v. Conn , No. CIV. 11-157-ART, 2015 WL 779047, at *1–2 (E.D. Ky. Feb. 24, 2015). A Wall Street Journal article published in May 2011 highlighted Daugherty’s practice of taking Conn’s cases and awarding benefits and noted that "[a] possible connection between Messrs. Daugherty and Conn is a subject of the inspector general’s investigation." Damian Paletta, Disability-Claim Judge Has Trouble Saying "No," Wall St. J., May 19, 2011. Also in 2011, the U.S. Senate Committee on Homeland Security and Governmental Affairs launched an investigation into Daugherty’s unusually quick adjudication of disability claims and unusually high rate of granting benefits. The Committee issued a report in October 2013 finding that "Judge Daugherty worked with Mr. Conn in inappropriate ways to approve a high volume of cases submitted by the Conn Law Firm." Senate Committee on Homeland Security and Governmental Affairs, How Some Legal, Medical, and Judicial Professionals Abused Social Security Disability Programs for the Country’s Most Vulnerable: A Case Study of the Conn Law Firm 5 (Oct. 7, 2013) [hereinafter, Senate Report], available at https://www.hsgac.senate.gov/imo/media/doc/REPORT%20Conn%20case%20history%20report-final%20%20(10-7-13).pdf.

After the Wall Street Journal article was published, but before the SSA took any steps to initiate redetermination proceedings in these cases, Conn purportedly made significant efforts to destroy records, "including medical records for active disability claims." Id. at 121. According to the Senate Report, a shredding company sent Conn an invoice on June 23, 2011 for the destruction of more than 26.5 thousand pounds of documents for the Conn Law Firm, which is, according to the Report, the equivalent of 2.65 million sheets of paper. Id. at 122. Before the article, the shredding company had previously shred documents for Conn in smaller batches (e.g., 5.6 thousand pounds of paper in June 2010; 5.9 thousand pounds of paper in September 2010; and 7.3 thousand pounds of paper in November 2010). Id. An affidavit submitted by a former Conn Law Firm employee in one of the cases below confirms that medical records "were destroyed by fire or by shredding, although not all medical records were destroyed." 16-cv-154...