Rodrigues v. Donovan

• Decision Date: 26 August 1985
• Docket Number: No. 84-1712,84-1712
• Parties: Sherwood T. RODRIGUES, Plaintiff-Appellant, v. United States Secretary of Labor, Raymond J. DONOVAN, et al., Defendants- Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1344

769 F.2d 1344

Sherwood T. RODRIGUES, Plaintiff-Appellant, v. United States Secretary of Labor, Raymond J. DONOVAN, et

al., Defendants- Appellees.

No. 84-1712.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Oct. 4, 1984.

Decided Aug. 26, 1985.

Sherwood T. Rodrigues, pro per.

Judith D. Lazenby, Sunnyvale, Cal., for plaintiff-appellant.

Sandra Willis, Asst. U.S. Atty., San Francisco, Cal., for defendants-appellees.

Appeal from the United States District Court for the Northern District of California.

Before WALLACE, KENNEDY and FLETCHER, Circuit Judges.

FLETCHER, Circuit Judge:

Rodrigues challenges the termination of his workers' compensation benefits, contending that he has been deprived of due process. The district court dismissed his claim for lack of subject matter jurisdiction, on the basis that Rodrigues had failed to exhaust available administrative remedies. We reverse and remand.

I. FACTS

From January 1969 to July 1972, Sherwood Rodrigues was employed as a bank examiner with the Federal Home Loan Bank Board. In November 1972, Rodrigues filed a claim with the Office of Workers' Compensation Programs, United States Department of Labor (OWCP). OWCP determined that Rodrigues was totally disabled and awarded compensation for his disability from December 9, 1971.

In the fall of 1977, the Internal Revenue Service (IRS) began investigating Rodrigues for tax evasion. The IRS concluded that Rodrigues had been employed as an accountant and had received earnings from 1971 through 1979. The IRS communicated this to OWCP and also referred the matter to the United States attorney, who brought criminal charges against Rodrigues for failure to file tax returns, 26 U.S.C. Sec. 7203 (1982), and for filing false claims for disability payments with the Department of Labor, 18 U.S.C. Secs. 287, 1920 (1982).

On July 19, 1979, before Rodrigues was tried on the criminal charges, OWCP notified Rodrigues by letter that his disability benefits had been suspended. The OWCP letter also asked him to submit a statement detailing his employment and earnings since 1971. Through counsel, Rodrigues responded that he had not worked for anyone since he left government employment and that he had not had any employment earnings. Rodrigues also requested a hearing concerning "why he [had] been disqualified for further benefits."

OWCP responded by letter that Rodrigues had not been disqualified for further benefits, but that they merely were suspended pending resolution of the criminal action. The letter stated, "If Mr. Rodrigues is found not guilty of the charges, appropriate benefits will be reinstated." The letter did not mention Rodrigues's request for a hearing.

In September 1982, the criminal action against Rodrigues was concluded. Rodrigues was convicted after a jury trial on the tax return charges, but the government agreed to dismiss the charges relating to false disability claims in return for Rodrigues's agreement not to appeal his conviction on the other counts. OWCP did not reinstate Rodrigues's benefits, however. Instead, it initiated an investigation of Rodrigues's employment and earnings through the Office of Inspector General (OIG). Rodrigues asserts that from 1979 onward, he made numerous efforts to have his benefits reinstated and repeatedly received reassurances from OWCP personnel that a decision was imminent. But, as of November 1983, sixteen months after the conclusion of the criminal action, OWCP had not issued any formal decision.

Rodrigues's counsel demanded that a final decision be rendered. Finally, on December 27, 1983, based on "additional information" obtained from the OIG investigation, ¹ OWCP issued a decision formally rejecting Rodrigues's claim for benefits. The stated reason for the termination was that Rodrigues was employable and had been employed in the field of public accounting. The decision letter stated that OWCP had reached its conclusions based on "[e]vidence of record," but the letter did not set forth what that evidence was.

OWCP issued a second decision on January 9, 1983, concluding that Rodrigues had been overpaid benefits in the amount of $97,163.76 for the period from 1971 to 1979 because he "failed to report his employment activities correctly."

Rodrigues requested administrative hearings with regard to both OWCP decisions. Then, on February 6, 1984, Rodrigues filed this action in the district court, seeking injunctive relief to compel the Secretary to reinstate benefits from September 1982, until an administrative hearing could be held. The complaint alleged that OWCP's handling of Rodrigues's claim had violated fifth amendment due process.

The district court denied Rodrigues's motion for a preliminary injunction and, on its own motion, dismissed the action for lack of subject matter jurisdiction. Rodrigues timely appealed.

While the case has been on appeal to this court, OWCP has advised Rodrigues that an administrative hearing will be held on his claims.

II. DISCUSSION

The district court concluded that it lacked subject matter jurisdiction because Rodrigues had not exhausted his administrative remedies. Jurisdiction and exhaustion in this case, however, are separate issues, and the district court should have treated them as such. See United States v. California Care Corp., 709 F.2d 1241, 1248 (9th Cir.1983); SEC v. G.C. George Securities, Inc., 637 F.2d 685, 688 & n. 4 (9th Cir.1981); Montgomery v. Rumsfeld, 572 F.2d 250, 252-53 (9th Cir.1978). We address these issues separately here.

A. Jurisdiction

Rodrigues's compensation claim arose under the Federal Employees Compensation Act (FECA), 5 U.S.C. Secs. 8101-8151 (1982), which provides:

The action of the Secretary or his designee in allowing or denying a payment under this subchapter is--(1) final and conclusive for all purposes and with respect to all questions of law and fact; and (2) not subject to review by another official of the United States or by a court by mandamus or otherwise.

5 U.S.C. Sec. 8128(b) (1982). The Secretary contends this provision divested the district court of jurisdiction to hear this action. We disagree.

Courts have long indulged in a presumption favoring judicial review of agency action. The Supreme Court has stated that "only upon a showing of 'clear and convincing evidence' of a contrary legislative intent should the courts restrict access to judicial review." Abbott Laboratories v. Gardner, 387 U.S. 136, 141, 87 S.Ct. 1507, 1511, 18 L.Ed.2d 681 (1967); accord Lindahl v. Office of Personnel Management, --- U.S. ----, 105 S.Ct. 1620, 1627, 84 L.Ed.2d 674 (1985); Dunlop v. Bachowski, 421 U.S. 560, 568, 95 S.Ct. 1851, 1858, 44 L.Ed.2d 377 (1975). The "clear and convincing evidence" standard is not talismanic. See Block v. Community Nutrition Institute, --- U.S. ----, 104 S.Ct. 2450, 2454, 81 L.Ed.2d 270 (1984). The question is one of congressional intent; whether a statute precludes judicial review "is determined not only from its express language, but also from the structure of the statutory scheme, its objectives, its legislative history, and the nature of the action involved." Id. at ----, 104 S.Ct. at 2454 (citations omitted), quoted in Lindahl v. Office of Personnel Management, 105 S.Ct. at 1627.

Section 8128(b) of FECA precludes judicial review of an action of the Secretary "in allowing or denying a payment." The conduct of the Secretary that Rodrigues challenges in this action is not the "allowing or denying [of] a payment," but rather the manner in which his claim was decided. He contends that he has been denied procedural due process. He does not seek to have his disability claim decided by the district court. He is not arguing in any respect the merits of his underlying compensation claim. Rodrigues's procedural challenge is entirely collateral to his underlying substantive claim for benefits. See Boettcher v. Secretary of Health & Human Services, 759 F.2d 719, 721 (9th Cir.1985); cf. Heckler v. Ringer, 466 U.S. 602, 104 S.Ct. 2013, 2021, 80 L.Ed.2d 622 (1984) (challenge to procedures was "inextricably intertwined" with claim for benefits, therefore claim should not be separated into procedural and substantive elements).

The presumption in favor of judicial review is especially strong in cases in which constitutional challenges are raised. "Constitutional questions obviously are unsuited to resolution in administrative hearing procedures and, therefore, access to courts is essential to the decision of such questions." Califano v. Sanders, 430 U.S. 99, 109, 97 S.Ct. 980, 986, 51 L.Ed.2d 192 (1977). Indeed, if Congress intended to preclude judicial review of the constitutionality of a statutory procedural scheme, that likely would raise a substantial question concerning the constitutionality of the statute itself. Weinberger v. Salfi, 422 U.S. 749, 762, 95 S.Ct. 2457, 2465, 45 L.Ed.2d 522 (1975). Several cases have refused to read statutory finality provisions to preclude review of constitutional claims. See, e.g., Johnson v. Robison, 415 U.S. 361, 373-74, 94 S.Ct. 1160, 1168-69, 39 L.Ed.2d 389 (1974); Rosen v. Walters, 719 F.2d 1422, 1423 (9th Cir.1983); Parodi v. Merit Systems Protection Board, 702 F.2d 743, 745-49 (9th Cir.1982); Humana, Inc. v. Califano, 590 F.2d 1070, 1080-81 (D.C.Cir.1978); Trinity Memorial Hospital, Inc. v. Associated Hospital Service, Inc., 570 F.2d 660, 665-67 (7th Cir.1977); Ralpho v. Bell, 569 F.2d 607, 620-22 (D.C.Cir.1977).

The structure of FECA and the language of section 8128(b) convince us that Congress's intent was that the courts not be burdened by a flood of small claims challenging the merits of compensation decisions, see, e.g., Soderman v. United States Civil Service Commission, 313 F.2d 694, 695 (9th Cir.1962) (per curiam), cert. denied, 372 U.S. 968, 83 S.Ct. 1089, 10 L.Ed.2d 131 (1963), and that the Secretary should be left free to make the policy choices associated with disability decisions. Cf. United...