Small v. Sullivan

Decision Date21 September 1992
Docket NumberNo. 89-3700.,89-3700.
Citation820 F. Supp. 1098
PartiesCorene SMALL and Addie Liddell, on behalf of themselves and others similarly situated, Plaintiffs, v. Louis W. SULLIVAN, M.D., Secretary of Health and Human Services, Defendant.
CourtU.S. District Court — Southern District of Illinois





Joan A. Spiegel, Land of Lincoln Legal Assistance, Alton, IL, Richard D. Chase, Land of Lincoln Legal Assistance, East St. Louis, IL, for plaintiffs.

Laura J. Jones, Ranley R. Killian, Asst. U.S. Atty., Fairview Heights, IL, Robert Crowe, Trial Atty., Michael Shachat, Steven Exum, Dept. of Health & Human Services, Baltimore, MD, Felicia L. Chambers, Brian G. Kennedy, U.S. Dept. of Justice, Washington, DC, for defendant.


STIEHL, Chief Judge:

Before the Court are two Reports and Recommendations by United States Magistrate Judge Gerald B. Cohn recommending the denial of defendant's motion to dismiss and the granting of plaintiffs' motion for class certification. The defendant filed objections to both recommendations; therefore, this Court will make a de novo determination regarding those portions of the record to which objections were made. 28 U.S.C. § 636(b)(1).


Title II of the Social Security Act provides for the payment of insurance benefits to persons who have contributed to the program and who suffer from a physical or mental disability. 42 U.S.C. § 423(a)(1)(D). Title XVI of the Act provides for the payment of disability benefits to indigent persons under the Supplemental Security Income (SSI) program. 42 U.S.C. § 1382(a). The defendant, Secretary of Health and Human Services Louis W. Sullivan (the Secretary), is responsible for promulgating regulations pursuant to which determinations of disability are made. See Johnson v. Sullivan, 922 F.2d 346 (7th Cir.1990) (en banc).

This is a civil action brought by the named plaintiffs, Corene Small and Addie Liddell, in their individual capacities and on behalf of a class of persons whose claims for Social Security or SSI disability benefits were denied by Administrative Law Judge (ALJ) Robert E. Ritter. The plaintiffs seek a declaratory judgment that ALJ Ritter is biased against disability claimants generally and that such bias has deprived them of their right to fair hearings before an impartial judge in violation of the Social Security Act, 42 U.S.C. § 301 et seq., the Administrative Procedure Act, 5 U.S.C. § 551 et seq., and the Due Process Clause of the Fifth Amendment to the United States Constitution. The plaintiffs also seek an injunction restraining the defendant from assigning ALJ Ritter any future tasks involving discretion to determine disability claims. The Magistrate Judge held an evidentiary hearing on the pending motions, the transcript of which is included in the record before the Court.


The defendant filed a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6). In conjunction with this motion to dismiss, the Secretary advances several arguments challenging this Court's jurisdiction over certain members of the proposed class. A motion challenging a court's subject matter jurisdiction is properly filed under Fed.R.Civ.P. 12(b)(1), and the Court will so treat those portions of the Secretary's motion to dismiss raising jurisdictional arguments. The Secretary bases his jurisdictional challenge on two grounds. First, he asserts that the Court lacks jurisdiction because the plaintiffs' allegations of general bias do not present a judicially cognizable claim. Second, he argues that the Court lacks jurisdiction over all plaintiffs, except plaintiff Small, because the complaint fails to allege that the remaining plaintiffs exhausted their administrative remedies. Because the Secretary places primary emphasis on the second argument, the Court will address it first.

A) Exhaustion

Plaintiffs allege jurisdiction in this Court pursuant to 42 U.S.C. § 405(g); 42 U.S.C. § 1383(c); 28 U.S.C. § 1331; and 28 U.S.C. § 1361. Because the Court determines that jurisdiction is proper pursuant to 42 U.S.C. §§ 405(g) and 1383(c), it is unnecessary to address the alternative grounds asserted.

42 U.S.C. § 405(g) governs judicial review of decisions denying applications for social security benefits:

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 sixty days after the mailing to him of notice of such decision or within such further time as the Secretary may allow.

Judicial review of decisions denying applications for SSI benefits are governed by the provisions of both 42 U.S.C. §§ 405(g) and 1383(c)(3).

To obtain a "final decision" for purposes of § 405(g), a claimant is required to exhaust his or her administrative remedies by proceeding through a three stage administrative appeals process. Bowen v. City of New York, 476 U.S. 467, 106 S.Ct. 2022, 90 L.Ed.2d 462 (1986). After an initial disability determination is made by a state agency acting under the authority and control of the Secretary, the first step for a dissatisfied claimant is to seek a de novo reconsideration by the state agency. See Johnson, 922 F.2d at 348 (citations omitted). Next, the claimant may request a hearing before an ALJ within the Social Security Administration's Office of Hearings and Appeals. Id. Finally, the claimant may seek review of the ALJ's decision before an Appeals Council. Id. If still dissatisfied after proceeding through this process, the claimant has 60 days in which to file an action in federal court pursuant to § 405(g).

The Secretary argues that this Court lacks jurisdiction over any class members who did not obtain a "final decision" of the Secretary, or who did not file suit in federal court within 60 days of obtaining such a decision. However, in Mathews v. Eldridge, 424 U.S. 319, 328, 96 S.Ct. 893, 899, 47 L.Ed.2d 18 (1976), the United States Supreme Court held that the "final decision" requirement of § 405(g)

consists of two elements, only one of which is purely "jurisdictional" in the sense that it cannot be "waived" by the Secretary in a particular case. The waivable element is the requirement that the administrative remedies prescribed by the Secretary be exhausted. The nonwaivable element is the requirement that a claim for benefits shall have been presented to the Secretary.

Though typically the Secretary decides whether to waive the exhaustion requirement, judicial waiver is appropriate in some cases. Id. at 330, 96 S.Ct. at 900. "In determining whether exhaustion is required, federal courts must balance the interest of the individual in retaining prompt access to a federal judicial forum against countervailing institutional interests favoring exhaustion." McCarthy v. Madigan, ___ U.S. ___, ___, 112 S.Ct. 1081, 1087, 117 L.Ed.2d 291 (1992).

In City of New York, the Supreme Court applied this balancing test in the context of a class action challenging an internal, unpublished policy of the Secretary affecting determinations of disability. The Secretary challenged the composition of the class, contending, as he does here, that the Court lacked jurisdiction over any claimants who failed to exhaust their administrative remedies or who failed to bring a court action within 60 days of a final decision. With regard to claimants barred from seeking administrative remedies at the time the class action was filed, the Court held that waiver of exhaustion was appropriate because "members of the class could not attack a policy they could not be aware existed." City of New York, 476 U.S. at 482, 106 S.Ct. at 2031. The Court held that the same reasoning supported equitable tolling of the 60-day statute of limitations for bringing suit in federal court pursuant to section 405(g). Id. at 478-82, 106 S.Ct. at 2029-31.

The Court also held that waiver was appropriate for claimants who still had time to exhaust administrative remedies at the time the class action was filed. In so doing, the Court noted that the class action presented claims entirely collateral to the individual claims for benefits. The Court also relied upon the district court's finding that "the ordeal of having to go through the administrative appeal process" would cause the claimants irreparable harm. Id. at 483, 106 S.Ct. at 2032. Finally, the Court found that requiring exhaustion would not serve the purposes the exhaustion requirement was designed to further. Specifically, the Court reasoned that exhaustion was futile because the challenged policy applied regardless of the particular facts of the case and thus the advantages of compiling a detailed factual record and deferring to agency expertise were not implicated.

The holding in City of New York persuades the Court that waiver of the exhaustion requirement and equitable tolling of the 60-day statute of limitations is appropriate in this case. Here, the plaintiffs satisfy the nonwaivable jurisdictional requirement by alleging that each plaintiff filed or will file a claim for benefits which was or will be assigned to ALJ Ritter. Mathews, 424 U.S. at 329, 96 S.Ct. at 900. Moreover, it is clear that the plaintiffs' claims are collateral to their substantive claims of entitlement to disability benefits. See Johnson, 922 F.2d at 353 (a challenge to regulations governing adjudication of benefits claims is collateral to the merits of individual claims because invalidation of the regulations does not guarantee entitlement to benefits).

The Secretary contends, however, that, unlike the situation in City of New York, requiring exhaustion in this case is not an exercise in futility. He points to specific regulations addressing bias on the part of an ALJ:

An ALJ shall not conduct a hearing if he or she is prejudiced or partial with respect to any party or has any

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