United States v. Vaello-Madero, 041020 FED1, 19-1390

Docket Nº:19-1390
Opinion Judge:TORRUELLA, CIRCUIT JUDGE.
Party Name:UNITED STATES OF AMERICA, Plaintiff, Appellant, v. JOSÉ LUIS VAELLO-MADERO, Defendant, Appellee.
Attorney:Michael Shih, Attorney, Appellate Staff, Civil Division, U.S. Department of Justice, with whom Laura E. Myron, Attorney, Appellate Staff, Joseph H. Hunt, Assistant Attorney General, and Abby C. Wright, Attorney, Appellate Staff, were on brief, for appellant. Hermann Ferré, with whom Juan O. Perla...
Judge Panel:Before Howard, Chief Judge, Torruella and Thompson, Circuit Judges.
Case Date:April 10, 2020
Court:United States Courts of Appeals, Court of Appeals for the First Circuit
 
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UNITED STATES OF AMERICA, Plaintiff, Appellant,

v.

JOSÉ LUIS VAELLO-MADERO, Defendant, Appellee.

No. 19-1390

United States Court of Appeals, First Circuit

April 10, 2020

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO [Hon. Gustavo A. Gelpí, U.S. District Judge]

Michael Shih, Attorney, Appellate Staff, Civil Division, U.S. Department of Justice, with whom Laura E. Myron, Attorney, Appellate Staff, Joseph H. Hunt, Assistant Attorney General, and Abby C. Wright, Attorney, Appellate Staff, were on brief, for appellant.

Hermann Ferré, with whom Juan O. Perla, Robert Groot, Curtis, Mallet-Prevost, Colt & Mosle LLP, and John W. Ferré-Crossley, were on brief, for appellee.

Dwyer Arce, and Kutak Rock LLP, on brief for Virgin Islands Bar Association, amicus curiae.

Carlos Lugo-Fiol, and Isaías Sánchez-Báez, Solicitor General of Puerto Rico, on brief for the Commonwealth of Puerto Rico, amicus curiae.

Verónica Ferraiuoli-Hornedo, on brief for Hon. Jenniffer A. González-Colón, Resident Commissioner of Puerto Rico, amicus curiae. Gregorio Igartúa, on brief for himself, amicus curiae.

Before Howard, Chief Judge, Torruella and Thompson, Circuit Judges.

TORRUELLA, CIRCUIT JUDGE.

This appeal raises a fundamental question of constitutional law requiring us to consider the equal protection component of the Fifth Amendment as it applies to the residents of Puerto Rico.1 Specifically, Appellee claims that the exclusion of Puerto Rico residents from receiving the disability benefits that are granted to persons residing in the fifty States, the District of Columbia, and the Northern Mariana Islands under the Supplemental Security Income (SSI) provisions of Title XVI of the Social Security Act, 42 U.S.C. §§ 1381-1383(f), contravenes the equal protection guarantees of the Fifth Amendment. Appellee in this case became eligible and commenced receiving SSI disability benefits while residing in New York. Nevertheless, these benefits were discontinued when the Social Security Administration (SSA) became aware that he had moved to Puerto Rico. The SSA proceeded to enforce the provision of this legislation that requires a recipient of SSI benefits to reside within the United States, defined by statute as the geographical territory of the fifty States, the District of Columbia, and the Northern Mariana Islands, and authorizes the termination of these payments if the recipient resides more than thirty consecutive days outside the "United States" as so defined. See id. §§ 1382c(a)(1)(B)(i), 1382c(e); see also Covenant to Establish a Commonwealth of the Northern Mariana Islands in Political Union with the United States of America, Pub. L. No. 94-241, § 502(a)(1), 90 Stat. 263, 268 (1976).

I. Background

A. The factual background of this appeal

SSI provides benefits to low income individuals who are older than sixty-five, blind, or disabled. See 42 U.S.C. §§ 1382(a), 1382c. In contrast to other types of federal insurance programs, like Social Security Title II benefits, 42 U.S.C. §§ 401-433, which are paid for by payroll taxes, Congress funds SSI from the general treasury. See 42 U.S.C. § 1381; see also Pub. L. No. 116-94, 133 Stat. 2534, 2603 (2019) (funding SSI for fiscal year 2020). SSI is a means-tested program, so only those individuals who meet the age, disability, or blindness requirements and fall beneath the federally mandated income and asset limits are eligible. 42 U.S.C. § 1382.2

Defendant-Appellee José Luis Vaello-Madero was born in 1954. Then, as now, all those born in Puerto Rico are citizens of the United States pursuant to the Jones Act of 1917, 39 Stat. 953, § 5 (1917), and subsequent legislation granting birthright citizenship to Puerto Rico's native-born inhabitants, see 8 U.S.C. § 1402.

In 1985, Appellee moved to New York where he resided until 2013. In the later part of his residence in New York, Appellee was afflicted with severe health problems, conditions which forced him to seek succor under the SSI program. In June 2012, Appellee was found eligible to receive SSI disability benefits and thus commenced receiving SSI payments, the monthly amounts deposited directly by the SSA into his checking account in a New York bank.

In July 2013, Appellee relocated to Loíza, Puerto Rico. According to Appellee, he moved there to help care for his wife, who had previously moved to Puerto Rico due to her own health issues.

Appellee contends that he first became aware of the SSI issues related to his moving to Puerto Rico in June 2016, when he filed for Title II Social Security benefits at the SSA office in Carolina, Puerto Rico. Thereafter, as a result of his disclosure to the SSA authorities that he had moved to Puerto Rico, on or about July 27, 2016, the SSA informed Appellee in a "Notice of Planned Action" that it was discontinuing his SSI benefits retroactively to August 1, 2014 because he was, and had been since that date, "outside of the U.S. for 30 days in a row or more." According to this notification, the SSA "consider[ed] the U.S. to be the 50 States of the U.S., the District of Columbia, and the Northern Mariana Islands." As previously alluded to, the SSA was acting pursuant to the statutory provisions that establish that to be eligible to receive SSI benefits the individual must be a "resident of the United States," 42 U.S.C. § 1382c(a)(1)(B)(i), defined therein "when used in a geographic sense, [as meaning, ] the 50 States and the District of Columbia," id. § 1382c(e). The Northern Mariana Islands were added within the coverage of SSI in 1976 pursuant to Section 502(a)(1) of Public Law 94-241. 90 Stat. 263, 268 (1976) (codified as 48 U.S.C. § 1801); see also 20 C.F.R. § 416.215.

B. The United States files suit in U.S. District Court

Approximately one year after the discontinuation of Appellee's SSI benefits, the United States filed an action against him in the U.S. District Court for the District of Puerto Rico. The United States sought to collect the sum of $28, 081, the amount the SSA claimed was owed by Appellee to the United States due to the allegedly improper payment of SSI benefits since his relocation to Puerto Rico. Jurisdiction was claimed pursuant to 28 U.S.C. § 1345, which applies to any civil case "commenced by the United States," and by virtue of a criminal statute, 42 U.S.C. § 408(a)(4), which provides for criminal penalties of up to five years' incarceration for fraudulent social security claims.

In the meantime, an SSA investigator sought and procured from Appellee, who at the time was unrepresented by an attorney, the signing of a Stipulation of Consent Judgment, which was thereafter filed in court by the United States. The court proceeded to appoint pro bono counsel to represent Appellee. Upon entering the case, Appellee's counsel moved to relieve him of the Stipulation, and further proceeded to file an answer to the complaint raising as an affirmative defense that the exclusion of Puerto Rico residents from the SSI program violated the equal protection guarantees of the Fifth Amendment.

Thereafter, the United States moved for voluntary dismissal without prejudice, stating that "out of an abundance of caution" it agreed to withdraw the Stipulation, and conceding that the criminal statute alleged did not confer jurisdiction on the district court in this case, which was civil in nature. The court denied the voluntary dismissal but proceeded to approve the withdrawal of the Stipulation.3 Considering that there remained no material facts in contention between the parties, and that the outcome of the case depended solely on the determination of a legal question, namely, whether the exclusion of persons residing in Puerto Rico from SSI coverage under the circumstances of this case violated the equal protection guarantees of the Constitution, both parties proceeded to file for summary judgment in support of their respective positions.

C. The opinion of the district court

On February 4, 2019, the district court issued its opinion. See United States v.

Vaello-Madero, 356 F.Supp.3d 208 (D.P.R. 2019). After disposing of various preliminary matters (none of which are the subject of this appeal or of relevance to its disposition), the court granted Appellee's Motion for Summary Judgment and denied Appellant's cross motion on the same issues, which in substance dealt with Appellee's allegation of the denial of equal protection in the categorical exclusion of SSI benefits to persons who reside in Puerto Rico. Id. at 211. The district court proceeded to distinguish the two Supreme Court cases on which Appellant plants its flag in an attempt to negate Appellee's equal protection claims, namely Califano v. Gautier Torres, 435 U.S. 1 (1978) (per curiam) and its sequel Harris

v. Rosario, 446 U.S. 651 (1980) (per curiam). Id. at 215 n.7. Appellant cited these cases as permitting the differential treatment of persons who resided in Puerto Rico, pursuant to the plenary powers granted to Congress under the Territory Clause, 4 "so long as there [was] a rational basis for [Congress's] actions," Harris, 446 U.S. at 651-52. The district court nevertheless ruled that Congress's decision to "disparately classify United States citizens residing in Puerto Rico" ran "counter to the very essence and fundamental guarantees of the Constitution itself." Vaello-Madero, 356 F.Supp.3d at 213. More on point, it concluded that Congress's actions in the present case "fail[] to pass rational basis constitutional muster" because "[c]lassifying a group of the Nation's poor and medically neediest United States citizens as 'second tier' simply because they reside in Puerto Rico is by no means rational." Id. at 214. It then expressed the view that the statute in question...

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