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Smith v. Berryhill

United States Supreme Court

May 28, 2019

RICKY LEE SMITH, PETITIONER
v.
NANCY A. BERRYHILL, ACTING COMMISSIONER OF SOCIAL SECURITY

          Argued March 18, 2019

          ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

         The Social Security Act permits judicial review of "any final decision . . . after a hearing" by the Social Security Administration (SSA). 42 U.S.C. §405(g). Claimants for, as relevant here, supplemental security income disability benefits under Title XVI of the Act must generally proceed through a four-step administrative process in order to obtain federal-court review: (1) seek an initial determination of eligibility; (2) seek reconsideration of that determination; (3) request a hearing before an administrative law judge (ALJ); and (4) seek review of the ALJ's decision by the SSA's Appeals Council. See 20 CFR §416.1400. A request for Appeals Council review generally must be made within 60 days of receiving the ALJ's ruling, §416.1468; if the claimant misses the deadline and cannot show good cause for doing so, the Appeals Council dismisses the request, §416.1471.

         Petitioner Ricky Lee Smith's claim for disability benefits under Title XVI was denied at the initial-determination stage, upon reconsideration, and on the merits after a hearing before an ALJ. The Appeals Council later dismissed Smith's request for review as untimely. Smith sought judicial review of the dismissal in a Federal District Court, which held that it lacked jurisdiction to hear the suit. The Sixth Circuit affirmed, maintaining that the Appeals Council's dismissal of an untimely petition is not a "final decision" subject to federal-court review.

         Held: An Appeals Council dismissal on timeliness grounds after a claimant has had an ALJ hearing on the merits qualifies as a "final decision . . . made after a hearing" for purposes of allowing judicial review under §405(g). Pp. 5-16.

         (a) The statute's text supports this reading. In the first clause ("any final decision"), the phrase "final decision" clearly denotes some kind of terminal event, and Congress' use of "any" suggests an intent to use that term "expansive[ly]," Ali v. Federal Bureau of Prisons, 552 U.S. 214, 218-219. The Appeals Council's dismissal of Smith's claim fits that language: The SSA's regulations make it the final stage of review. See 20 CFR §416.1472. As for the second clause ("made after a hearing"), Smith obtained the kind of hearing that §405(g) most naturally suggests: an ALJ hearing on the merits. This case differs from Califano v. Sanders, 430 U.S. 99, where the Court found that the SSA's denial of a claimant's petition to reopen a prior denial of his claim for benefits-a second look that the agency had made available to claimants as a matter of grace-was not a final decision under §405(g). Here, by contrast, the SSA's "final decision" is much more closely tethered to the relevant "hearing." A primary application for benefits may not be denied without an ALJ hearing (if requested), §405(b)(1), and a claimant's access to this first bite at the apple is a matter of legislative right rather than agency grace. There is also no danger here of thwarting Congress' own deadline, where the only potential untimeliness concerns Smith's request for Appeals Council review, not his request for judicial review following the agency's ultimate determination. Pp. 6-9.

         (b) The statutory context also weighs in Smith's favor. Appeals from SSA determinations are, by their nature, appeals from the action of a federal agency. In the separate administrative-law context of Administrative Procedure Act (APA) review, an action is "final" if it both (1) "mark[s] the 'consummation' of the agency's decisionmaking process" and (2) is "one by which 'rights or obligations have been determined,' or from which 'legal consequences will flow.'" Bennett v. Spear, 520 U.S. 154, 177-178. Both conditions are satisfied when a Social Security claimant has reached the final step of the SSA's four-step process and has had his request for review dismissed as untimely. While the administrative-exhaustion requirement "should be applied with regard for the particular administrative scheme at issue," Weinberger v. Salfi, 422 U.S. 749, 765, the differences between the two Acts here suggest that Congress wanted more oversight by the courts rather than less under §405(g) and that "Congress designed [the statute as a whole] to be 'unusually protective' of claimants," Bowen v. City of New York, 476 U.S. 467, 480. SSA is also a massive enterprise and mistakes will occur; Congress did not suggest that it intended for this claimant-protective statute to leave a claimant with no recourse to the courts if a mistake does happen. Pp. 9-10.

         (c) Smith's entitlement to judicial review is confirmed by "the strong presumption that Congress intends judicial review of administrative action." Bowen v. Michigan Academy of Family Physicians, 476 U.S. 667, 670. The heavy burden for rebutting this presumption is not met here. Congress left it to the SSA to define the procedures that claimants like Smith must first pass through, but it has not suggested that it intended for the SSA to be the unreviewable arbiter of whether claimants have complied with those procedures. Pp. 10-11.

         (d) The arguments of amicus in support of the judgment do not alter this conclusion. Amicus first argues that the phrase "final decision . . . made after a hearing" refers to a conclusive disposition, after exhaustion, of a benefits claim on the merits. However, this Court's precedents do not support that reading; the Appeals Council's dismissal is not merely collateral but an end to a proceeding in which a substantial factual record has already been developed and on which considerable resources have already been expended; and Smith's case is distinct from Sanders. Amicus also claims that permitting greater judicial review could risk a flood of litigation, given the large volume of claims handled by the SSA, but that result is unlikely, because the number of Appeals Council untimeliness dismissals is comparatively small, and because data from the Eleventh Circuit, which follows the interpretation adopted here, do not bear out amicus' warning. Third, amicus flags related contexts that could be informed by this ruling, but those issues are not before the Court. Finally, amicus argues that §405(g) is ambiguous and that the SSA's longstanding interpretation of its meaning-prior to a change of position in this case-is entitled to deference under Chevron U.S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, but this is not the kind of question on which courts defer to agencies. Pp. 11-14.

         (e) A reviewing court that disagrees with the procedural ground for the Appeals Council dismissal should in the ordinary case remand the case to allow the agency to address substantive issues in the first place. While there would be jurisdiction for a court to reach the merits, this general rule comports with fundamental administrative-law principles and is confirmed by the Court's cases discussing exhaustion in the Social Security context, see City of New York, 476 U.S.__, at 485. Pp. 14-16. 880 F.3d 813, reversed and remanded.

          OPINION

          SOTOMAYOR JUSTICE

         The Social Security Act allows for judicial review of "any final decision . . . made after a hearing" by the Social Security Administration (SSA). 42 U.S.C. §405(g). Petitioner Ricky Lee Smith was denied Social Security benefits after a hearing by an administrative law judge (ALJ) and later had his appeal from that denial dismissed as untimely by the SSA's Appeals Council-the agency's final decisionmaker. This case asks whether the Appeals Council's dismissal of Smith's claim is a "final decision . . . made after a hearing" so as to allow judicial review under §405(g). We hold that it is.

         I

         A

         Congress enacted the Social Security Act in 1935, responding to the crisis of the Great Depression. 49 Stat. 620; F. Bloch, Social Security Law and Practice 13 (2012). In its early days, the program was administered by a body called the Social Security Board; that role has since passed on to the Board's successor, the SSA.[1]

         In 1939, Congress amended the Act, adding various provisions that-subject to changes not at issue here- continue to govern cases like this one. See Social Security Act Amendments of 1939, ch. 666, 53 Stat. 1360. First, Congress gave the agency "full power and authority to make rules and regulations and to establish procedures . . . necessary or appropriate to carry out" the Act. §405(a). Second, Congress directed the agency "to make findings of fac[t] and decisions as to the rights of any individual applying for a payment" and to provide all eligible claimants-that is, people seeking benefits-with an "opportunity for a hearing with respect to such decision[s]." §405(b)(1). Third, and most centrally, Congress provided for judicial review of "any final decision of the [agency] made after a hearing." §405(g). At the same time, Congress made clear that review would be available only "as herein provided"-that is, only under the terms of §405(g). §405(h); see Heckler v. Ringer, 466 U.S. 602, 614-615 (1984).

         In 1940, the Social Security Board created the Appeals Council, giving it responsibility for overseeing and reviewing the decisions of the agency's hearing officers (who, today, are ALJs).[2] Though the Appeals Council originally had just three members, its ranks have since swelled to include over 100 individuals serving as either judges or officers.[3] The Appeals Council remains a creature of regulatory rather than statutory creation.

         Today, the Social Security Act provides disability benefits under two programs, known by their statutory headings as Title II and Title XVI. See §401 et seq. (Title II); §1381 et seq. (Title XVI). Title II "provides oldage, survivor, and disability benefits to insured individuals irrespective of financial need." Bowen v. Galbreath, 485 U.S. 74, 75 (1988). Title XVI provides supplemental security income benefits "to financially needy individuals who are aged, blind, or disabled regardless of their insured status." Ibid. The regulations that govern the two programs are, for today's purposes, equivalent. See Sims v. Apfel, 530 U.S. 103, 107, n. 2 (2000).[4] Likewise, §405(g) sets the terms of judicial review for each. See §1383(c)(3).

         Modern-day claimants must generally proceed through a four-step process before they can obtain review from a federal court. First, the claimant must seek an initial determination as to his eligibility. Second, the claimant must seek reconsideration of the initial determination. Third, the claimant must request a hearing, which is conducted by an ALJ. Fourth, the claimant must seek review of the ALJ's decision by the Appeals Council. See 20 CFR §416.1400. If a claimant has proceeded through all four steps on the merits, all agree, §405(g) entitles him to judicial review in federal district court.[5]

         The tension in this case stems from the deadlines that SSA regulations impose for seeking each successive stage of review. A party who seeks Appeals Council review, as relevant here, must file his request within 60 days of receiving the ALJ's ruling, unless he can show "good cause for missing the deadline." §416.1468.

         The Appeals Council's review is discretionary: It may deny even a timely request without issuing a decision. See §416.1481. If a claimant misses the deadline and cannot show good cause, however, the Appeals Council does not deny the request but rather dismisses it. §416.1471. Dismissals are "binding and not subject to further review" by the SSA. §416.1472. The question here is whether a dismissal for untimeliness, after the claimant has had an ALJ hearing, is a "final decision . . . made after a hearing" for purposes of allowing judicial review under §405(g).

         B

         Petitioner Ricky Lee Smith applied for disability benefits under Title XVI in 2012. Smith's claim was denied at the initial-determination stage and upon reconsideration. Smith then requested an ALJ hearing, which the ALJ held in February 2014 before issuing a decision denying Smith's claim on the merits in March 2014.

         The parties dispute what happened next. Smith's attorney says that he sent a letter requesting Appeals Council review in April 2014, well within the 60-day deadline. The SSA says that it has no record of receiving any such letter. In late September 2014, Smith's attorney sent a copy of the letter that he assertedly had mailed in April. The SSA, noting that it had no record of prior receipt, counted the date of the request as the day that it received the copy. The Appeals Council accordingly determined that ...


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