Hicks v. Colvin
214 F. Supp. 3d 627
E.D. Ky.2016Background
- In 2007 Amy Jo Hicks received Social Security disability benefits after an application prepared by attorney Eric C. Conn; the Office of Inspector General (OIG) later investigated Conn for using template medical forms and identified 1,787 suspect applications.
- Statutory scheme: when OIG has "reason to believe" fraud was involved, it must refer the matter to SSA, and SSA must "redetermine" entitlement and "disregard any evidence" the OIG identifies as fraudulent (42 U.S.C. §405(u), §1320a-8).
- SSA’s internal HALLEX guidance required adjudicators to exclude evidence identified by OIG and barred beneficiaries from contesting the OIG referral; SSA scheduled speedy redetermination hearings for ~1,500 former Conn clients.
- Hicks’s 2016 redetermination hearing excluded evidence from Conn’s doctors (the template forms) based on the OIG referral; without that evidence she could not effectively reconstruct her 2007 medical record and the ALJ revoked her benefits.
- Hicks sued, arguing the redetermination process violated the Fifth Amendment Due Process Clause because she was denied any opportunity to challenge the OIG’s factual assertion that her medical evidence was fraudulent; the district court considered cross-motions for summary judgment on the due-process claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether SSA’s redetermination procedure violated due process by precluding challenge to OIG’s "reason to believe" fraud finding | Hicks: the OIG assertion was a factual finding that decisively removed her primary evidence; due process requires an opportunity to rebut such factual assertions before a neutral decisionmaker | SSA: Hicks received a meaningful post-termination hearing about entitlement; statute requires disregarding evidence when SSA has reason to believe fraud; HALLEX guidance is a reasonable agency interpretation and process is adequate | Court: Held process was inadequate; excluding OIG-flagged evidence without allowing challenge violated due process; remand ordered for an opportunity to contest the exclusion |
| Whether SSA may adopt HALLEX rule barring adjudicators from reconsidering OIG referrals | Hicks: HALLEX’s absolute bar creates an irrebuttable rule and prevents adversarial factfinding; unconstitutional as applied | SSA: HALLEX follows statutory command to disregard fraudulent evidence; courts should defer (Chevron/Skidmore) and HALLEX is necessary to act swiftly against fraud | Court: HALLEX provision at issue is unconstitutional as applied; agency guidance lacks binding power to extinguish due-process rights; courts may not accept an interpretation that renders statute unconstitutional |
| Whether Mathews v. Eldridge balancing permits SSA’s limited process | Hicks: Mathews factors (private interest, risk of erroneous deprivation, government interest) favor additional procedure to contest OIG assertion | SSA: administrative costs and need for rapid fraud removal outweigh need for extra process; other remedies (new application, waiver) suffice | Court: Applying Mathews, plaintiff’s interest and risk of erroneous deprivation are substantial and government interest does not justify denying the minimal additional process requested; additional, limited procedure required |
| Appropriate remedy for the constitutional violation | Hicks: reverse and remand with instructions or award relief | SSA: process was lawful; no new relief required | Court: Granted Hicks partial summary judgment on due process, denied SSA’s cross-motion, and remanded for supplemental proceedings allowing Hicks to challenge the basis for excluding her evidence (no full retrial required) |
Key Cases Cited
- Hamdi v. Rumsfeld, 542 U.S. 507 (2004) (due process requires a fair opportunity to rebut government factual assertions before a neutral decisionmaker)
- Goldberg v. Kelly, 397 U.S. 254 (1970) (welfare benefits termination requires a meaningful pre-/pre-termination-style hearing)
- Mathews v. Eldridge, 424 U.S. 319 (1976) (framework for balancing private interest, risk of erroneous deprivation, and governmental interest in process)
- Cleveland Bd. of Educ. v. Loudermill, 470 U.S. 532 (1985) (property interest in employment requires opportunity to respond to factual allegations before termination)
- Greene v. McElroy, 360 U.S. 474 (1959) (government action based on undisclosed factual reports requires opportunity to rebut)
- Interstate Commerce Comm’n v. Louisville & Nashville R. R. Co., 227 U.S. 88 (1913) (right to full hearing includes presentation of facts and decision according to those facts)
- Vlandis v. Kline, 412 U.S. 441 (1973) (irrebuttable presumptions affecting rights violate due process when they preclude individual evidence)
- Califano v. Yamasaki, 442 U.S. 682 (1979) (recipients entitled to challenge factual determinations like "fault" in overpayment cases)
- Chevron U.S.A., Inc. v. Natural Resources Def. Council, Inc., 467 U.S. 837 (1984) (court deferential approach to reasonable agency statutory interpretations)
- Christensen v. Harris County, 529 U.S. 576 (2000) (agency manuals and policy statements lack the force of law and are not entitled to Chevron deference)