Lisa Probst v. Andrew Saul, 980 F.3d 1015

Background

Lisa Probst and Sharron Bradshaw applied for Social Security disability benefits; state agencies denied relief, ALJs upheld the denials, and the SSA Appeals Council declined review; both then sued in federal district court.
After their agency proceedings concluded, the Supreme Court decided Lucia v. SEC (2018), holding that certain ALJs are "Officers" under the Appointments Clause and must be properly appointed; Probst and Bradshaw then raised Appointments Clause challenges for the first time in district court.
The Commissioner argued the challenges were forfeited for failure to exhaust administrative remedies; district courts disagreed, granted judgment on the pleadings, and remanded for new hearings before properly appointed ALJs.
The Fourth Circuit affirmed, holding Social Security claimants need not administratively exhaust Appointments Clause challenges when no statute or SSA regulation requires exhaustion and the balancing factors from McCarthy v. Madigan favor allowing first-instance judicial consideration.
The court reasoned Appointments Clause claims are structural (not dependent on SSA expertise), SSA ALJ proceedings are non-adversarial (per Sims v. Apfel), and the agency already knew of the problem and later ratified ALJ appointments.
Concurring judge emphasized the government waived any argument that SSA regulations create an exhaustion requirement and would have relied on that waiver to dispose of the case.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether claimants forfeited Appointments Clause challenges by not raising them before the SSA	Probst/Bradshaw: No — they may raise the constitutional challenge in federal court despite not having raised it at the agency	Commissioner: Yes — plaintiffs forfeited the claim by failing to exhaust administrative remedies	Held: No forfeiture; exhaustion not required here
Whether any statute or SSA regulation requires issue exhaustion of Appointments Clause challenges	Plaintiffs: No applicable statutory/regulatory exhaustion exists	Commissioner: Regulations and administrative rules imply an exhaustion requirement	Held: No statute or convincing regulatory notice requires exhaustion; government waived strongest regulatory argument per concurrence
Whether Lucia imposes a categorical requirement to exhaust Appointments Clause claims before the agency	Plaintiffs: Lucia does not create a categorical exhaustion rule where none existed	Commissioner: Lucia’s statement about a "timely challenge" implies exhaustion is required	Held: Lucia did not create a categorical exhaustion rule; its petitioner had complied with statutory exhaustion that is absent here
Whether institutional interests (agency self-correction and administrative burden) justify imposing exhaustion	Plaintiffs: Institutional interests are weak here; agency already aware and later ratified appointments; disruption now limited	Commissioner: Requiring exhaustion would have prompted earlier agency correction and avoids widespread remands	Held: Institutional interests do not outweigh individual Appointments Clause protections; practical disruption is limited after ratification

Key Cases Cited

Lucia v. SEC, 138 S. Ct. 2044 (2018) (held certain ALJs are officers under the Appointments Clause)
Sims v. Apfel, 530 U.S. 103 (2000) (refused to impose issue-exhaustion for Appeals Council review; non-adversarial SSA process reduces exhaustion rationale)
McCarthy v. Madigan, 503 U.S. 140 (1992) (balancing test for judicially imposed exhaustion when no statute/regulation applies)
Freytag v. Comm’r of Internal Revenue, 501 U.S. 868 (1991) (Appointments Clause and structural separation-of-powers context)
L. A. Tucker Truck Lines, Inc. v. United States, 344 U.S. 33 (1952) (agency self-correction interest in exhaustion analysis)
Free Enterprise Fund v. PCAOB, 561 U.S. 477 (2010) (constitutional claims outside agency expertise may be litigated in court)
Cirko ex rel. Cirko v. Comm’r of Soc. Sec., 948 F.3d 148 (3d Cir. 2020) (refused to require exhaustion for SSA Appointments Clause claims)
Ramsey v. Comm’r of Soc. Sec., 973 F.3d 537 (6th Cir. 2020) (refused to require exhaustion for Appointments Clause challenges)
Davis v. Saul, 963 F.3d 790 (8th Cir. 2020) (required exhaustion for Appointments Clause challenges)
Carr v. Comm’r, SSA, 961 F.3d 1267 (10th Cir. 2020) (required exhaustion for Appointments Clause challenges)