Tyler J. v. Saul

Decision Date07 August 2019
Docket NumberCase No. 17 CV 50090
PartiesTyler J. Plaintiff, v. Andrew Marshall Saul, Commissioner of Social Security, Defendant.
CourtUnited States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)

Magistrate Judge Lisa A. Jensen

MEMORANDUM OPINION AND ORDER

Plaintiff Tyler J. (formerly known as Dennis K.) applied for Disability Insurance Benefits ("DIB") and Supplemental Security Income ("SSI") in 2009, and he was awarded those benefits by an Administrative Law Judge ("ALJ") in June of 2010. His disability benefits were reviewed in November of 2014 and were continued. Then, in May of 2015, Plaintiff was notified that the Social Security Administration ("SSA") needed to redetermine Plaintiff's eligibility for benefits because there was reason to believe that fraud was involved in certain cases involving evidence the SSA received from four doctors. Because one of those four doctors, Dr. Frederic Huffnagle, provided evidence to the SSA in Plaintiff's case, his case was redetermined. In conducting such redetermination, the SSA disregarded any evidence from Dr. Huffnagle. In July of 2016, the ALJ concluded, after conducting a new hearing and disregarding all evidence by Dr. Huffnagle, that Plaintiff was ineligible for DIB and SSI as of the date of his original application, and his benefits were terminated. After exhausting all administrative remedies, Plaintiff sued in this Court. The parties have consented to the jurisdiction of a United States Magistrate Judge for all proceedings pursuant to 28 U.S.C. § 636(c).

For the reasons set forth below, the Commissioner's decision denying Plaintiff's claims on redetermination is reversed, and this case is remanded.

I. Background

In 2009, Plaintiff applied for DIB and SSI. Plaintiff alleged a disability beginning on January 14, 2009, due to degenerative disc disease, lower back problems, bipolar disorder, depression, and anxiety. R. 282, 286. During the initial proceedings on his application, Plaintiff was represented by a social security lawyer, Eric C. Conn. Mr. Conn submitted records prepared by Dr. Huffnagle in support of Plaintiff's claims.

On June 1, 2010, without conducting a hearing, ALJ David Daugherty found Plaintiff disabled as of January 14, 2009. R. 118-22. ALJ Daugherty determined that Plaintiff's sciatica and low back strain/sprain were severe impairments. R. 120. Relying solely on evidence submitted by Mr. Conn from Dr. Huffnagle, ALJ Daugherty found that Plaintiff was limited to less than sedentary work and issued a fully favorable decision. R. 120-21.

In October of 2013, the U.S. Senate Committee on Homeland Security and Governmental Affairs issued a report accusing Mr. Conn and ALJ Daugherty of committing fraud. United States 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 (Oct. 7, 2019) ("Report"), available at https://www.hsgac.senate.gov/imo/media/doc/Staff%20Report-Social%20Security%20Disability%20Programs-2013-10-072.pdf. As set forth in the Report, Mr. Conn conspired with ALJ Daugherty and four doctors, one of whom was Plaintiff's medical source, Dr. Huffnagle. Id. at 2, 58-75. The Report stated that the SSA had learned about this wrongdoing as early as 2006. Id. at 2. After hearing testimony and investigating, the U.S.Senate Committee concluded that "inept agency oversight . . . enabled the misconduct to continue for years." Id. at 1.

By July of 2014, the SSA's Office of Inspector General ("OIG") had identified 1,787 current or former clients of Mr. Conn whose applications the OIG "had reason to believe, were tainted by fraud." Hicks v. Comm'r of Soc. Sec., 909 F.3d 786, 794 (6th Cir. 2018) (internal quotation marks omitted). Pursuant to the Social Security Act, the SSA is required to "immediately redetermine" a beneficiary's entitlement to disability benefits if, at any point after granting benefits, the SSA has "reason to believe that fraud or similar fault was involved in the application" for benefits. 42 U.S.C. § 405(u)(1)(A). Nonetheless, the OIG provided the 1,787 names to the SSA "with the understanding that SSA was not to take any adverse action against any individual on the list until further notice." Hicks, 909 F.3d at 794 (citation omitted).

On May 12, 2015, the OIG sent a referral letter to the SSA pursuant to Section 1129(a)(1) of the Social Security Act. Defendant's Motion to Dismiss, Attachment 2. The referral stated in part:

...the Social Administration (SSA) Office of The Inspector General (OIG) previously provided you with information regarding 1,787 individuals. These individuals were formerly represented by attorney Eric C. Conn, or his firm, and OIG has reason to believe that fraud was involved in their applications for Social Security benefits. Specifically, in these cases, OIG had, and still has, reason to believe that Mr. Conn or his firm submitted pre-completed "template" Residual Functional Capacity forms purportedly from Bradley Adkins, PH.D., Srinivas Ammisetty, M.D., Frederic Huffnagle, M.D., or David P. Herr, D.O. dated between January 2007 and May 2011, in support of the individuals' application for benefits.

Id. The letter went on to state that the OIG was not aware of any objections to the SSA moving forward with administrative processing of the redeterminations of the 1,787 individuals previously identified and told the SSA "that it may proceed with its redetermination of the cases of the individuals on the previously transmitted list." Id.

Six days later, on May 18, 2015, the SSA sent a letter to Plaintiff. The letter stated, "This is about the Administrative Law Judge's decision dated June 1, 2010." R. 160. It went on to explain that the SSA must redetermine Plaintiff's eligibility for benefits because: 1) there was reason to believe fraud was involved in certain cases involving Dr. Huffnagle (and three other doctors); 2) Dr. Huffnagle provided evidence in Plaintiff's case; and 3) the ALJ previously used that evidence to find Plaintiff disabled. The letter informed Plaintiff that during the redetermination process the SSA "must disregard any evidence from one of the medical providers above when the information was submitted by representative Eric C. Conn or other representatives associated with Mr. Conn's law office." R. 160. Finally, the letter stated that SSA had looked at Plaintiff's case again to see if the decision was supported after disregarding the evidence signed by Dr. Huffnagle and had concluded that the remaining evidence in Plaintiff's file did not support a favorable benefits determination. R. 161. As such, the SSA planned to send the case back to an ALJ for more action and a new decision. Plaintiff was informed that he could submit more evidence to the ALJ so long as it was "new and material" and concerned Plaintiff's "disability" starting on or before June 1, 2010. R. 162.

The SSA held a new hearing on Plaintiff's case, and ALJ John Dowling issued his decision on July 7, 2016. ALJ Dowling disregarded the April 27, 2010 medical report submitted by Dr. Huffnagle. R. 31. This included Dr. Huffnagle's report of Plaintiff's medical examination as well as his functional capacity findings. ALJ Dowling concluded that "there was insufficient evidence to support a finding of disability as of June 1, 2010. Therefore, the beneficiary's benefits are terminated, and SSA may treat any benefits previously received as overpayment." R. 41.

After exhausting his administrative remedies, Plaintiff filed an eight-count complaint in this Court. Plaintiff's Complaint alleges that the SSA's procedures and actions violated the Due Process Clause of the Fifth Amendment (Count I), the Social Security Act (Counts III, V and VI) the Administrative Procedures Act (Count II, IV and VII) and that the SSA's decision is not supported by substantial evidence (Count VIII).

The Commissioner filed a motion to dismiss Counts I through VII of Plaintiff's Complaint for failure to state a claim. Plaintiff filed a motion for summary judgment on the due process, Administrative Procedures Act ("APA"), and Social Security Act claims. Specifically, Plaintiff asked that the Commissioner's redetermination decision terminating benefits be outright reversed, and that this Court reinstate his benefits without the need for a remand. Plaintiff's Motion at 1, 20. Thereafter, the Commissioner filed the administrative record. Plaintiff supplemented his briefing by pointing to portions of the administrative record to further support his motion for summary judgment on the due process claim and also moved for summary judgment on his claim that ALJ Dowling's decision was not supported by substantial evidence.

After the issues were fully briefed, but before the motions were ruled upon, the Sixth Circuit issued an opinion in Hicks v. Commission of Social Security, 909 F.3d 786 (6th Cir. 2018). In Hicks, the Sixth Circuit was faced with essentially the same issues as are presented before this Court. The Hicks court ruled that the SSA's refusal to grant the plaintiffs an opportunity to rebut the OIG's assertion of fraud as to the Conn-related medical reports violated the plaintiffs' rights to procedural due process and violated the APA. Hicks, 909 F.3d at 804. Because of the ensuing decision rendered in Hicks, both parties in the present case were ordered to file a supplemental brief addressing that decision.

Hicks is the first of several cases around the country dealing with the Conn-related fraud to reach a court of appeals.1 The Seventh Circuit has directed district courts to "give most respectful consideration to the decisions of the other courts of appeals and follow them whenever [they] can." Colby v. J.C. Penney Co., 811 F.2d 1119, 1123 (7th Cir. 1987). A district court may not defer mechanically to other circuits, however, or abdicate its duty to independently...

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