Justiniano v. Social Security Administration
876 F.3d 14
| 1st Cir. | 2017Background
- Justiniano and Menéndez received Social Security disability benefits that the SSA suspended and then terminated after redeterminations triggered by a federal fraud investigation into physicians who provided medical evidence in their files.
- SSA notices stated the agency would "disregard" medical evidence it had reason to believe was fraudulent under 42 U.S.C. § 405(u); after disregarding certain physician reports, SSA found insufficient remaining evidence and terminated benefits.
- Both claimants requested reconsideration and hearings before ALJs but filed suit in district court before exhausting their administrative appeals, alleging inadequate notice and no opportunity to contest the fraud finding (constitutional and statutory/regulatory claims) and seeking reinstatement, damages, and class relief.
- The government moved to dismiss for lack of subject-matter jurisdiction under 42 U.S.C. §§ 405(g) and (h) for failure to exhaust; the district court dismissed for lack of jurisdiction. Plaintiffs appealed.
- The First Circuit held the plaintiffs' claims "arose under" the Social Security Act, rejected the "no review at all" exception, and affirmed dismissal because judicial waiver of exhaustion was not warranted given the substantial chance claimants could obtain relief administratively.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do plaintiffs' claims "arise under" the Social Security Act (triggering §405(h) limits)? | Claims challenge deprivation of process tied to entitlement to benefits; therefore claims do not solely arise under the Act. | Claims stem from agency termination of benefits and thus arise under the Act. | Held: Claims arise under the Act (Salfi/Illinois Council framework applies). |
| Does §405(g) jurisdictional exhaustion bar the district suit? | Even if §405(g) applies, judicial waiver of exhaustion is available because exhaustion would be futile and cause irreparable harm. | Plaintiffs failed to exhaust administrative remedies; therefore district court lacks jurisdiction. | Held: Presentment satisfied but exhaustion required; plaintiffs did not exhaust and no waiver warranted. |
| Does Illinois Council exception ("no review at all") apply because agency bars review of fraud findings? | Agency practice preventing plaintiffs from challenging fraud finding forecloses meaningful judicial review after exhaustion, so exception applies. | Agency review plus federal review under §405(g) will permit courts to develop evidentiary record; exception does not apply. | Held: Illinois Council exception inapplicable; exhaustion followed by §405(g) review can provide adequate judicial review. |
| Is judicial waiver of exhaustion appropriate (Eldridge/City of New York factors)? | Claims are collateral and plaintiffs face irreparable harm; policy is systemwide and SSA has formalized the policy, so exhaustion would be futile. | Waiver is improper because administrative process has returned many favorable results and agency expertise/exhaustion may rectify harm. | Held: Although claims are collateral and irreparable-harm claim is plausible, plaintiffs failed to show futility—the administrative process has produced many successful reinstatements—so judicial waiver denied. |
Key Cases Cited
- Mathews v. Eldridge, 424 U.S. 319 (Sup. Ct. 1976) (recognized judicial waiver of exhaustion where prompt resolution is essential and claim is collateral; set Eldridge factors).
- Weinberger v. Salfi, 422 U.S. 749 (Sup. Ct. 1975) (claims "arise under" the Social Security Act when the Act provides standing and substantive basis).
- Bowen v. City of New York, 476 U.S. 467 (Sup. Ct. 1986) (elaborated Eldridge factors; permitted waiver for systemic agency policy challenges and irreparable harm).
- Shalala v. Illinois Council on Long Term Care, Inc., 529 U.S. 1 (Sup. Ct. 2000) (§405(h) bars federal claims that would channel review through agency except where channeling would mean "no review at all").
- Heckler v. Ringer, 466 U.S. 602 (Sup. Ct. 1984) (discussed judicial waiver of exhaustion doctrine).
- Doyle v. Sec'y of Health & Human Servs., 848 F.2d 296 (1st Cir. 1988) (First Circuit discussion of waiver only for systemwide policies and related practical considerations).
- Wilson v. Sec'y of Health & Human Servs., 671 F.2d 673 (1st Cir. 1982) (exhaustion promotes agency correction, expertise, and judicial economy).
- McDonald v. Sec'y of Health & Human Servs., 834 F.2d 1085 (1st Cir. 1987) (noted limited benefit of administrative record when policy is formalized but did not decide waiver issue).