MEMORANDUM OPINION AND ORDER GRANTING SUMMARY JUDGMENT
These matters are pending for consideration of Defendant Carolyn Colvin, Acting Commissioner of Social Security’s, motions to dismiss in part. Pursuant to Rule 56 of the Federal Rules of Civil Procedure and the Notices entered in each case, the motions to dismiss in part were converted to motions for summary judgement in part. The parties were given time to respond, and the matters are ripe for review. Because there are no disputes regarding the material facts, and because resolution of the legal issues favor the defendant, the Acting Commissioner’s motions will be granted.
I. BACKGROUND
Ashland Civil Action No. 0: 16-017— Buster Carter
Plaintiff Buster Carter is a resident of Lawrence County, Kentucky. Prior to his application for disability benefits, Carter worked for 10 years as a coal miner and approximately 20 years as a truck driver. [Ashland Civil Action No. 0: 16-017; Record No. 4, pp. 4, 5] After being denied Social Security Disability Insurance benefits (“DIB”) in a January 29, 2009 application, Carter submitted new medical evidence and requested a hearing on April 27, 2010. [Ashland Civil Action No. 0: 16-017; Record No. 7-1, p. 4] No hearing was held, however. Instead, Carter’s application was approved in a fully-favorable, on-the-record decision dated August 3, 2010. [Id. at p. 1] The decision found Carter to have been disabled since November 22, 2008. [Id.] Carter was represented in the latter action by attorney Eric Conn, and the new medical evidence was submitted by Dr. Frederic Huffnagle, M.D. (now deceased). [Id.] Administrative Law Judge (“ALJ”) David Daugherty reviewed Carter’s case and issued the on-the-record decision. [Id.]
Conn, Huffnagle, and Daugherty have been implicated in a scheme to defraud the Social Security Administration.
Ashland Civil Action No. 0: 16-061— Crystal R. Meade
Plaintiff Crystal Meade also is a resident of Lawrence County, Kentucky. [Ashland Civil Action No. 0: 16-061; Record No. 1, p. 1] Prior to her application for disability benefits, Meade worked for the State of Kentucky for approximately 20 years pro
Pikeville Civil Action No. 7: 16-051— Timothy L. Howard
Plaintiff Timothy Howard is a resident of Knott County, Kentucky. [Pikeville Civil Action No. 7: 16-051; Record No. 1, p. 1] Prior to his application-for disability benefits, Howard worked as a gas well operator, electrician, and maintenance technician. [Pikeville Civil Action No. 7: 16-051; Record No. 12-1, p. 34] After being denied Social Security Disability Insurance Benefits (“DIB”) in a December 28, 2006 application, Howard submitted new medical evidence and requested a hearing on May 31, 2007. [Id. at p. 21] Without holding a hearing, ALJ David Daugherty issued a fully-favorable decision on July 9, 2007, concluding that Howard had been disabled since May 11, 2006. [Id.] Howard was represented in the latter action by Eric Conn and ALJ Daugherty relied on the opinions of Dr. Frederic Huffnagle, M.D. [Id. at p. 7]
Pikeville Civil Action No. 7: 16-059— Rodney Justice
Plaintiff Rodney Justice is a resident of Pike County, Kentucky. [Pikeville Civil Action No. 7: 16-059; Record No. 1, p. 1] Prior to his application for disability benefits, Justice worked as a coal miner and heavy laborer. [Pikeville Civil Action No. 7: 16-059; Record No. 19-1, p. 24] After being denied Social Security Disability Insurance Benefits (“DIB”) in an October 31, 2006 application, Justice submitted new medical evidence and requested a hearing on April 26, 2007. [Pikeville Civil Action No. 7: 16-059; Record No. 13-1, p. 21] Without holding a hearing, ALJ David Daugherty issued a fully-favorable decision on June 8, 2007, concluding that Justice had been-disabled since April 6, 2005. [Id.] Justice was represented in the latter action by Eric Conn and ALJ Daugherty relied on the opinions of Dr. Frederic Huffnagle, M.D. [Id. at pp. 4, 7]
Pikeville Civil Action No. 7: 16-068— Margie Lewis
Plaintiff Margie Lewis is a resident of Floyd County, Kentucky. [Pikeville Civil Action No. 7: 16-068; Record No. 1, p. 1] Prior to her application for disability benefits, Lewis worked as a nursing aide and daycare assistant. [Pikeville Civil Action No. 7: 16-068; Record No. 17-1, p. 48] After being denied Social Security Disability Insurance Benefits (“DIB”) in a March 30, 2009 application, Lewis submitted new medical evidence and requested a hearing on May 21, 2009. [Id. at p. 15] Without conducting a hearing, ALJ David Daugherty issued a fully-favorable decision on July 2, 2009, concluding that Lewis had been disabled since June 30, 2008. [Pike-ville Civil Action No. 7: 16-068; Record No. 10-1, pp. 4, 7] Lewis was represented in the latter action by Eric Conn and ALJ Daugherty relied on the opinions of Dr. Frederic Huffnagle, M.D. [Id. at pp. 4, 6.]
Pikeville Civil Action No. 7: 16-075— Daniel L. Doucette
Plaintiff Daniel Doucette is a resident of Magoffin County, Kentucky. [Pikeville Civil Action No. 7:16-075; Record No. 1, p. 1] Doucette has past relevant work experi
Pikeville Civil Action No. 7: 16-101— Carolyn Griffith
Plaintiff Carolyn Griffith is a resident of Pike County, Kentucky. [Pikeville Civil Action No. 7: 16-101; Record No. 1, p. 1] After being denied Supplemental Security Income benefits (“SSI”) in a February 18, 2008 application, Griffith submitted new medical evidence and requested a hearing on June 24, 2008. [Pikeville Civil Action No. 7: 16-101; Record No. 11-2, p. 6] Griffith was subsequently awarded SSI benefits on July 31, 2008, based on a finding that she had been disabled since February 8, 2008. [Pikeville Civil Action No. 7: 16-101; Record No. 11-1, p. 1] In her latter application for' SSI benefits, Griffith was represented by attorney Conn. [Id.] She received a fully-favorable, on-the-record decision by ALJ Daugherty, which relied on medical evidence submitted by Dr. Bradley Adkins, Ph.D. [/A] As noted in footnote 1 above, Adkins also is charged in a scheme to defraud the Social Security Administration.
Pikeville Civil Action No. 7: 16-111— Robert Martin
Plaintiff Robert Martin is a resident’ of Floyd County, Kentucky. [Pikeville Civil Action No. 7: 16-111; Record No. 1, p. 2] Martin has past relevant work experience as a truck driver. [Pikeville Civil Action No. 7: 16-111; Record No. 18-3, p. 39] Martin filed an application for Social Security Disability Insurance Benefits (“DIB”) on August 12, 2008, and an application for Supplemental Security Income (“SSI”) on August 29, 2008. [Id. at 24] The claim was denied both initially and upon reconsideration. [Id.] Martin then made a written request for a hearing, with assistance of attorney Conn, on April 9, 2009. [/A] Upon the new request, Martin received a fully-favorable decision from ALJ Daugherty on June 11, 2009. [Pikeville Civil Action No. 7: 16-111; Record No. 10-1, p. 1] ALJ Daugherty, relying on evidence submitted by Dr. Frederic Huffnagle, M.D., and without holding a hearing, found Caudill to have been disabled beginning on August 4, 2008. [Id.] ■
Pikeville Civil Action No. 7: 16-153— Stanley Caudill
Plaintiff Stanley Caudill is a resident of Letcher County, Kentucky. [Pikeville Civil Action No. 7: 16-153; Record No. 1, p. 1] Caudill has past relevant work experience as a maintenance mechanic helper. [Pike-ville Civil Action No, 7: 16-153; Record No. 18-3, p. 28] On March 19,2008, Caudill filed an application for Social Security Disability Insurance Benefits (“DIB”) alleging a period of disability beginning on December 22, 2006, [Id. at p. 18] The claim was denied both initially and upon reconsideration. [Id.] Caudill then made a written request for a hearing,’ with assistance of attorney Conn, on September 23, 2008. [Id.] Upon the new request, Caudill received a fully-favorable decision from ALJ Daugherty on March 5, 2009. [Pikeville Civil Action No. 7: 16-153; Record No. 9-1, p. 1] ALJ Daugherty, relying on evidence submitted by Dr. Frederic Huffna-gle, M.D., and without holding a hearing,
a. The Commissioner’s Authority
In 1994, Congress amended the Social Security Act (“the Act”) to create -a streamlined process for the Social Security Administration (the “Agency”) to terminate benefits if and when there is reason to believe fraud was involved in the application for those benefits. Specifically, Congress added sections 205(u), 1129(1), and 1681(e)(7) to the Act [42 U.S.C. §§ 405(u), 1320a-8(l), 1388(e)(7) ], to require immediate redetermination of benefits under such circumstances. See Pub. L. No. 103-296, § 206(d), the Social Security Independence and Program Improvements Act of 1994, 108 Stat. 1464,1514. The legislative history suggests that Congress was displeased with the amount of time taken by the Agency to terminate disability benefits in cases of suspected fraud.
Reading the statutory language to require a process distinct from the already existing reopening procedure, the Commissioner established a framework for handling these redeterminations, consistent with authority prescribed in sections 205 and 1631 of the Act, 42 U.S.C. § 405, 1383.
The current rulings interpreting sections 205(u), 1129(Z), and 1631(e)(7) of the Act are 16-1p, 81 Fed. Reg. 13436, and 16-2p, 81 Fed. Reg. 13439. These rulings went into effect on March 14, 2016, after some of the plaintiffs’ redetermination hearings were held.
b. Conn Cases
Apart from a few distinctions noted below, the procedural background of plaintiffs’ claims are identical. According to letters provided as exhibits to the motions to dismiss, on July 2, 2014, the Office of the Inspector General (“OIG”) sent notice pursuant to § 1129(Z) of the Act, 42 U.S.C. § 1320a-8(Z). [See, e.g., Ashland Civil Action No. 0: 16-017; Record No. 7-1, p. 9, Memorandum from the OIG Acting Counsel to the General Counsel of the Social Security Administration.] The notice referred 1,787 applications, all involving attorney Conn, for which it had reason to believe fraud was involved. [Id.] For reasons not stated in the record, this initial referral was with the understanding that no adverse action would be taken against any of the individuals on the list, until further notice. [Id.]
On May 12, 2015, the OIG notified the Commissioner that there were no objections “to [the Agency] moving forward with its administrative processing of the redeterminations of the 1,787 individuals whose names were previously provided by OIG to [the Agency] on July 2, 2014.” [Id.] Six days later, the plaintiffs were notified by the Agency that there was reason to believe fraud or similar fault was involved in their applications for benefits. [See, e.g., Ashland Civil Action No. 0: 16-017; Record No. 7-1, p. 10.]
Via letters captioned “Notice of Appeals Council Action,” the Agency informed the plaintiffs that, pursuant to this notification, it was required to redetermine their benefits under sections 205(u) and 1631(e)(7) of the Act, 42 U.S.C. § 405(u), 1383(e)(7). [Id.] The notice explained that, as part of the redetermination, the Agency was not permitted to consider evidence submitted by any of the four physicians believed to have been involved in the alleged fraud. [Id. at p. 11] The letters also informed the plaintiffs that, having undertaken the rede-termination, a preponderance of the non-disregarded evidence did not support their previous disability finding. [Id.] Because of this conclusion by the Appeals Council, the Agency planned to set aside their favorable decisions and send their cases back to a new ALJ for further consideration and issuance of a new decision. [M] The plaintiffs were given 10 days to submit additional evidence to the Appeals Council before their cases would be sent to a new ALJ. [Id. at p. 12] Extensions were made available when requested, and the record reflects that Plaintiff Griffith was granted a 30-day extension. [Pikeville Civil Action No. 7:16-101; Record No. 33, p. 14]
The plaintiffs’ cases were then remanded to new ALJs for new hearings, and the plaintiffs were permitted to submit further evidence to the ALJ prior to the new hearings. [See, e.g., Ashland Civil Action No. 0: 16-017; Record No. 7-1, p. 10.] Some plaintiffs, such as Griffith, obtained counsel to assist them at their hearings [Pikeville Civil Action No. 7: 16-101; Record No. 11-1, p. 3], while others, such as Carter, did not have counsel [Ashland Civil
II. THE APPLICABLE STANDARD OF REVIEW
Under Rule 56 of the Federal Rules of Civil Procedure, “[t]he court shall grant summary judgment if the movant shows that there is no dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “A genuine issue of material fact exists when there is ‘sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.’ ” Chao v. Hall Holding Co.,
III. LEGAL ANALYSIS
Plaintiffs raise two primary claims. The first, which is the subject of this opinion, is that they were entitled to challenge the Social Security Administration’s reason-to-believe that fraud was involved in their award of benefits. As a legal basis for this claim, plaintiffs cite the Due Process Clause of the Fifth Amendment, the reopening procedures of the Social Security Act, and the formal adjudication requirements of the Administrative Procedures Act. One plaintiff also alleges a violation of the Equal Protection Clause. The second claim, which was not subject of the motions for summary judgment, is that the redeterminations of plaintiffs’ claims were not supported by substantial evidence,
a. The Due Process Claims
The plaintiffs argue that their due process rights were violated because they were not given adequate notice of the fraud allegation specific to their applications and were not provided the opportunity to challenge that allegation. It is true that, apart from the general allegations against Conn, Daugherty, Adkins and Huffnagle, the plaintiffs have not been presented with evidence of fraud specific to their applications. It is also correct that the plaintiffs were not given an opportunity to rebut the assertion there is reason to believe fraud was involved in their prior award of benefits. However, the plaintiffs’ revocation of benefits did not turn on the fraud allegation. Rather, the revocation turned on the lack of sufficient evidence to support the initial benefits award. Further, because plaintiffs were given a full opportunity to supplement and/or develop new evidence to substitute for the excluded evidence, they were not denied due process.
i. The Plaintiffs’ Arguments
Plaintiffs present nearly identical arguments contending that the redetermi-nation process violates due process.
ii. The Due Process Test
Due process is not a fixed concept. Rather, it “is flexible and calls for such procedural protections as the particular situation demands.” Morrissey v. Brewer,
In evaluating Eldridge’s claim, the Court acknowledged that disability benefits constitute a statutorily-created property interest.
After outlining the basic due process framework, the Eldridge Court discussed the process that is required before any deprivation may occur. It noted that in only one case (i.e., Goldberg v. Kelly) had the Court held that “a hearing closely approximating a judicial trial” was necessary.
First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government’s interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail.
Applying this test, the Court found that Eldridge was not entitled to a pre-termi-nation hearing. Regarding the first factor, it determined that, because the claimant would be awarded full retroactive relief if he ultimately prevailed, his sole interest was in the “uninterrupted receipt of the source of his income pending [a] final administrative decision on his claim.” Id. at 340,
Regarding the second factor, the Court looked to what process was currently in place. It noted, that unlike Goldberg, where a wide variety of information was relevant to the welfare determination, the disability determination was based on “routine, standard, and unbiased medical reports by physician specialists.” Id. at 344,
Finally, the Court looked at the public interest, including the administrative burden and costs of providing a pre-termi-nation evidentiary hearing in all cases, as of right. Id. at 347,
Ultimately, the Court concluded that, more important than the “ad hoc weighing of fiscal and administrative burdens against the interests of a particular category of claimants” was the determination of “when, under our constitutional system, judicial-type procedures must be imposed
The Eldridge test has been used broadly over the past decades, and applies here in evaluating whether the redetermination process afforded plaintiffs comports with due process. See Ferriell v. Comm’r of Soc. Sec.,
Before evaluating whether due process requires a hearing on the fraud allegation, the Court must consider the role of the fraud allegation in the termination of plaintiffs’ benefits. Under sections 205(u) and 1631(e)(7) of the Social Security Act, the fraud allegation has two effects. First, it triggers a redetermination of benefits. Second, it establishes a rule that any evidence related to the alleged the fraud is to be disregarded during the redetermination.
1. The First Eldridge Factor: Private Interest
Social Security benefits are government entitlements, and it is undisputed that individuals have a constitutionally protected property interest in such entitlements.
Eldridge held that the interest will be highest where the interest in question constitute “the very means by which [plaintiffs] live.”
Plaintiff Griffith was’ a Title XVI recipient solely. [Pikeville Civil Action No. 7:16-101; Record No. 11-1, p. 6] Because Title XVI benefits are based in part on financial need, they are more akin to welfare benefits. However, the record' does establish that Griffith’s Title XVI benefits were not her sole source of household income.
There remain other options available for plaintiffs. Plaintiffs Griffith and Martin are not barred from reapplying for Title XVI benefits, because Title XVI benefits require no qualifying quarters of employment. In fact, the record reflects that Griffith has reapplied. Of course, the Title II recipients may also now apply for Title XVI benefits, granted they fall within the income range.
Importantly, all plaintiffs may apply for waivers of their overpayment. If waivers of overpayment are granted (which is likely), and the plaintiffs are awarded Title XVI benefits, the award will go a long way to making them whole. One of the factors for waiver of overpayment is whether the beneficiary was at fault for the overpayment. See 42 U.S.C. § 404(b). That is, as stated in SSR 16-lp, the Commissioner considers whether the claimant bears individual responsibility for the overpayment, in determining whether to grant a waiver. The Commissioner, thereforé, would need specific evidence that a plaintiff was at fault for the overpayment to deny a waiver. Counsel for the Commissioner represented during á hearing in a related case, Pike-ville Civil Action No. 7: 16-035-JMH, that the Agency currently has no such evidence of individual fault for any of the Correlated plaintiffs.
The record does not reflect whether hearings are provided when former beneficiaries apply for waivers. However, Griffith cites Califano v. Yamasaki,
2. The Second Eldridge Factor: The Risk of Erroneous Deprivation
Accepting that the loss of these benefits will constitute a considerable hardship for plaintiffs, the focus turns to the risk of erroneous deprivation of these benefits. Despite the hardship, plaintiffs remain entitled to the benefits only if they meet the statutory parameters for disabled status; The risk of erroneous deprivation is evaluated in light of the procedural protections in place.
During the redetermination process, the Agency examines all of the evidence considered at the time of the original award, with the exception of evidence related to the alleged fraud. Individuals subject to the redeterminations are entitled to submit new evidence, as long as the evidence relates to the time period of the original award. Individuals have two separate opportunities to submit new evidence. First, new evidence may be submitted after the initial notification, before the Appeals Council remands the case to an ALJ. If this evidence is not sufficient to change the determination of the Appeals Council, the case will be remanded for a new ALJ hearing. Individuals are then entitled to submit further evidence prior to their hearing before the new ALJ. Importantly, when requested, the Agency will assist beneficiaries in obtaining and developing new evidence. This newly-developed evidence may serve as a substitute for any excluded evidence.
The redetermination process imposes a possible difficulty of acquiring new medical evidence to show signs of a sometimes decades-old disability. Such a task is burdensome, considering that medical record retention practices often result in records being destroyed within that time frame. However, the Agency will consider newer records that provide backward-looking evidence of disability. Further, the Agency will assistance beneficiaries in obtaining new evidence of a pre-existing disability, which is possible because an individual’s present physical state is likely to show signs of historical conditions.
The greatest risk of erroneous deprivation come from the exclusion of certain evidence. Of course, this risk depends entirely upon the probative value of the excluded evidence. In the cases of plaintiffs Carter and Griffith, for example, neither Drs. Huffnagle nor Adkins were the plaintiffs’ treating physicians. The testimony of non-treating physicians is, by rule, not given heavy weight in applications for benefits.
Because the evidence being ignored is most likely entitled to little (rather than controlling) weight, and because plaintiffs may, with the assistance of the SSA, effectively substitute for the forgone evidence, the risk of “erroneous deprivation” is low. The plaintiffs in these cases have one thing in common: the record before the ALJ on redetermination is voluminous, and contains hundreds of pages of evidence that was available at the initial denials.
The plaintiffs propose as a substitute safeguard allowing a hearing on whether the evidence should be excluded. Because the statute requires the Agency to disregard any evidence that is believed to be fraudulent, such a hearing would include a determination of whether there is reason to believe fraud existed. Evaluating the probative value of such a procedure means considering who might be subpoenaed to testify, and who would bear the burden of proof. It seems the government would have to show by a preponderance of evidence that fraud existed, and the plaintiffs would have to rebut that showing. Because there is evidence sufficient for a criminal indictment, the government would likely have little trouble meeting its burden.
In truth, there need be no specific showing that fraud existed in a particular plaintiffs case if there is sufficient evidence demonstrating a conspiracy among the key actors in their disability determination. However, it is quite unlikely that the plaintiffs could succeed in rebutting such a showing where their potential witnesses are under criminal indictment. Additionally, any evidence plaintiffs may present to show they were properly eligible for disability benefits would not be relevant to whether fraud was involved.
In theory, the substitute safeguard proposed by the plaintiffs would have substantial probative value because, if a plaintiff is able to refute the reason to believe fraud or similar fault was involved, then the redetermination process would be unnecessary. And without reason to believe there was fraud, the plaintiffs would not only be entitled to use the excluded evidence, they could avoid the redetermination altogether. In reality, however, the probative value of a hearing on the fraud will be of negligible Valúe.- The plaintiffs’ core interest is in the retention of their disability benefits, not in avoiding the redetermination. While a successful rebuttal of the fraud allegation would seem to ensure continued receipt of benefits (notwithstanding other avenues the Agency has available for reopening or redetermination), the inability to rebut the allegation does not compromise the plaintiffs’ right to prove they were legitimately eligible for benefits. In short, while proper entitlement to benefits is irrelevant to the fraud allegation, it is wholly relevant during the redetermination proceeding. When it comes to the actual probative value of a fraud hearing on the plaintiffs’ ability to retain their benefits, the reality is that it will be relatively meaningless at this stage.
3. The Third Eldridge Factor: The Government’s Interest
The third factor for consideration is the government’s interest, including the func
The Agency does not allege, at this stage, that the plaintiffs had knowledge of or were involved in the alleged fraud. Criminal prosecutions are ongoing for those allegedly responsible for the claimed fraud. Part of the fraud allegation is that the physicians were signing pre-completed residual functional capacity forms. The Agency may not have proof of fraud in each particular circumstance, but neither does it wish to deprive deserving individuals of benefits to which they are rightfully entitled. Congress decided to strike the balance by requiring a redetermination that disregards fraudulent evidence, and the Agency developed processes through which beneficiaries may submit new evidence to supplement their dated application, and may receive assistance in doing so. The United States has undertaken criminal proceedings where warranted. To require a full-fledged judicial-type hearing on the fraud in this administrative context would frustrate the ability of the redeter-mination process to operate. Requiring the Commissioner to obtain the relevant evidence from the OIG, and present it to each individual defendant could also risk compromising the criminal prosecutions.
Additionally, as mentioned above, the validity of any single piece of evidence is no defense to whether it was created as part of the fraud conspiracy. Given the number of beneficiaries that have been successful through the redeterminations,
Despite the substantial interest of plaintiffs in their Social Security benefits, the risk of erroneous deprivation is not enough to warrant the substitute safeguard they seek. Further, the additional process they seek could substantially interfere with other important interest. In the end, because the fraud allegation is not the proximate cause of their benefits being removed, unlike the enemy-combatant determination in Hamdi (which was the direct cause of Hamdi’s confinement) and because plaintiffs are given a meaningful opportunity to substitute for the excluded evidence, they have not been deprived due process.
In addition, being subject to a redeter-mination without a threshold adjudication does not violate due process. As was the
iii. Lack of a Complete Record
Griffith raises an additional due process challenge, claiming that there is no exhibit list from the initial determination attached to the redetermination. [Pikeville Civil Action No. 7:16-101; Record No. 15-1, p. 7] She contends that, without the list, it would be impossible to properly evaluate on redetermination whether the initial award was supported by the record that existed at the time. As an initial matter, this claim was not raised in her Complaint, but rather in her response to the motion to dismiss. Leave to amend, as required by Fed. R. Civ. P. 15(a), is to be “freely given when justice so requires.” Foman v. Davis,
Even if this claim has not been waived, it fails on the merits. Griffith failed to indicate, even generally, what evidence was absent during the redetermination. In her reply to the motion for a preliminary injunction, Griffith alleges that “there are errors or omissions present in the 2015 exhibit list which hint at the incomplete nature of the Commissioner’s reconstruction of Plaintiffs file.” [Pikeville Civil Action No. 7: 16-101; Record No. 32, p. 2] While a failure to provide a complete and accurate record is problematic, Griffith has provided only a suggestion of an incomplete record, noting unspecified “errors or omissions” which “hint” at an incomplete record. Unspecified “hints” are not enough to demonstrate a likely success on the merits.
Griffith cites Island Creek Coal Co. v. Holdman,
While waived as a claim under due process, Griffith may develop this argument under her claim that the redetermination was not supported by substantial evidence. The substantial evidence claim was not raised at the preliminary injunction stage, and was not challenged in the Commissioner’s partial motion to dismiss. At the pre
b. The Equal Protection Claim
Plaintiff Carter also raises an Equal Protection Clause challenge. Carter’s Amended Complaint states, “[t]he plaintiff seeks a declaratory judgment from the Court that the Defendant’s actions described herein violated the Equal Protection Clause of the United States Constitution.” He goes on to assert that “[t]he Plaintiff is a persons [sic] receiving Social Security Disability benefits” and “[t]he Defendant has not alleged any wrongdoing by Plaintiff.” [Ashland Civil Action No. 0: 16-017; Record No. 4, p. 9] Piecing the allegations together, Carter claims that having his benefits terminated in the absence of an allegation of wrongdoing violates equal protection.
The Equal Protection Clause bars “distinctions which either burden a fundamental right, target a suspect class, or intentionally treat one differently from others similarly situated without any rational basis for the difference.” Radvansky v. City of Olmsted Falls,
To be sure, the Agency does make a distinction regarding who may challenge fraud allegations. Where fraud allegations are discovered by or referred to the Commissioner directly, and a redetermination is undertaken because of such allegations, the beneficiary is given the opportunity to challenge the fraud allegation in their hearing before an ALJ. However, when referrals are made through OIG, the Commissioner does not permit a challenge to the fraud allegation. Assuming that disability benefits or the right to challenge the evidence presented against a claimant is a fundamental right, the distinction drawn by the Agency has a rational basis. The OIG is a quasi-independent office within the Agency, and its sources of information may differ from those of the Commissioner. Therefore, it is reasonable that the Commissioner would permit a hearing to challenge fraud allegations that arise through her office, but not those that arise through the OIG.
c. The Social Security Act
Apart from their due process challenges, the plaintiffs allege that a hearing on the alleged fraud should be required as a matter of statutory interpretation. The crux of the parties’ disagreement is whether the language of the Act leaves room for the Agency to provide hearings, as part of the redetermination process, on OIG’s finding that there is reason to believe fraud was involved in an application for benefits. The Agency is entitled to deference in interpreting its own statutes, and
i. A Reopening versus a Redetermination
The parties do not address in detail the distinction between the reopening and the redetermination procedures. However, the Agency contends that, under the reopening procedure, it makes a finding regarding whether a beneficiary is currently entitled to benefits, as opposed to' only considering whether he or she was entitled at the date of his or her original grant. As argued by the Agency here, Congress was well-aware of the procedures for reopenings at the time it passed the legislation mandating the redetermination process. Given that the purpose of the new legislation was to create a streamlined process to cut-off fraudulently obtained benefits, and because Congress knew the reopening process was “cumbersome and unworkable,” it stands to reason that it did not intend for the same process to be utilized.
Further, while there is little ambiguity on this point, the Commissioner’s interpretation is entitled to deference. The interpretation is expressed in Social Security Ruling 16-lp, which makes clear that “[Qraud and similar fault redeterminations under sections 205(u) and 1631(e)(7) of the Act are distinct from reopenings as described in 20 CFR 404.987 — 404.996 and 20 CFR 416.1487 — 416.1494.” SSR 16-lp n.l. Section (D)(3) of the same ruling states that “[a]n individual may appeal our finding of fraud or similar fault. However, we will not administratively review information provided by SSA’s Office of the Inspector General under section 1129(Z) of the Act regarding its reason to believe that fraud was involved in the individual’s application ’ for -benefits.” As the Sixth Circuit stated in Garcia v. Sec’y of Health & Human Servs.,
The conclusion that redeterminations under sections 205(u) and 1631(e)(7) are distinct from reopenings is not expressed only in a footnote, but it is apparent also from the- Social Security Administration’s promulgation of distinct guidelines for the process, most notably HALLEX 1-1-3-25. Additionally, the distinction between per
ii. The Effect of Delaying the Redetermination Process
The plaintiffs also claim that the OIG and the Commissioner violated the Act by failing to undertake the redeterminations “immediately.” Title 42 of the United States Code, section 405(u), provides that the Commissioner is to act immediately to redetermine benefits where there is reason to believe that fraud was involved in a beneficiary’s application. While the Commissioner may have had reason to believe fraud was taking place in 2006, the statutory mandate for fraud investigations is vested in the OIG. [Ashland Civil Action No. 0: 16-017; Record No. 17, p. 10] The language of 42 U.S.C. § 1320a — 8(¿) provides that the OIG is to make information available to the Commissioner immediately when there is reason to believe fraud has taken place, but it provides that the OIG may delay if such a referral would interfere with a pending criminal investigation. Because triggering redetermination proceedings for some 1,800 individuals would have interfered with criminal proceedings, and because § 405(u) requires that the redetermination proceedings begin immediately upon notice of possible fraud, any delay in the referral period was justified here.
Many years passed between the initial accusations of wrongdoing (2007) and the initial (purported) reports to the OIG (2009), and action being taken on the rede-terminations (2015). This lapse is at least partially understandable, given the process of investigating and substantiating these claims takes time, especially where internal misconduct and alleged cover-ups were involved. The statute contemplates delay so as to not interfere with criminal or civil proceedings. The plaintiffs apparently believe that, if individuals employed by the Social Security Administration were responsible for the delay by their unlawful actions, the Agency must pay the price and not be permitted to proceed. This argument fails because “the doctrine of unclean hands ... may not be invoked against a governmental agency which is attempting to enforce a congressional mandate in the public interest.” S.E.C. v. Gulf & W. Indus., Inc.,
The plaintiffs allege that there was inexcusable delay in redetermining their benefits, which prejudiced them because the lapse of time made it more difficult to present additional evidence to bolster their claims of disability. Admittedly, a more expeditious process would have benefitted all parties involved, including the public fisc. In fact, this is the very reason for the statutory command that such redetermina-tions be undertaken immediately. Unfortunately, the delay that the plaintiffs reference, including alleged adverse action against whistleblowers, was part-and-parcel to the fraud on which the redetermina-tions are based. As held by other courts, the doctrine of unclean hands is only avail
It may be that, for some plaintiffs, a more prompt redetermination would have made it easier to find substitute medical evidence. But if the time lapse makes it difficult or unlikely that anyone can prevail through the redetermination process, the proper remedy is through the due process clause. The statutory immediacy prescription is not a statute of limitations, but a directive tied to the purpose of the statute (i.e., the prompt termination of fraudulently obtained benefits). More expeditious re-determinations would have benefitted all parties and the public, but the plaintiffs have failed to show; that the time lapse actually amounts to a violation of the statute, or that a remedy exists for such a bare statutory violation. See Transamerica Mortgage Advisors, Inc. (TAMA) v. Lewis,
The plaintiffs further argue that, to excuse the delay, a written certification from the United States Attorney is required. In the present case, the Agency has not provided a written certification that proceeding with the redeterminations would hamper the ongoing criminal investigation. Regardless of whether a certification exists, it is not clear that plaintiffs would have a claim because there is no evidence in the statutory language to suggest that those who received benefits through a fraudulent scheme (whether witting or unwitting participants) are the class of individual meant to be protected by the immediacy requirement. Instead, the statutory history suggests that the immediacy requirement was intended to protect the public fisc.
iii. Other Considerations
Despite the Court’s finding that Congress intended the redetermination process to be distinct from reopenings, or that the Agency’s determination is entitled to deference, plaintiffs allege a hearing on the fraud allegation is required nonetheless. Counsel for a plaintiff in a related proceeding stated that, because Congress intends its statutes to be interpreted in a Constitutional way, it follows that a hearing on the fraud allegation must be part of the redetermination process. [See Hearing Transcript, Pikeville Civil Action No. 7: 16-035-JMH; Record No. 54, p. 43.] However, because the plaintiffs have not made the requisite showing that the absence of a hearing is constitutionally problematic, this argument is without merit.
If, as shown, Congress intended to streamline the process for terminating benefits, it is not clear that they envisioned hearings on the fraud allegations. Because the fraud allegation is the trigger for the redetermination, if beneficiaries are able to challenge the fraud allegation, it must be before the redetermination process goes forward. This is contrary to another option where beneficiaries would still be subject to a redetermination, but would be able to use otherwise excludable evidence. Therefore, the remedy to which the plaintiffs are
Again, without reason to believe there is fraud, there is no statutory basis for the redetermination process. It would be a very cumbersome process if Congress had drafted section 206(u) of the Act to read “where ■ there is reason to believe fraud existed, the Commissioner shall provide the beneficiary the opportunity to rebut the fraud allegation, and if unable to rebut the fraud allegation, the Commissioner will proceed to determining benefits while disregarding all evidence that there is reason to believe is fraudulent.” This is not the framework Congress put into place,
d. The Administrative Procedures Act
The plaintiffs further allege that the Commissioner violated the Administrative Procedures Act. Plaintiffs argue that the redetermination procedures should have been subject to notice and comment rulemaking, and that the redetermination hearings should have been conducted as formal “on the record” adjudications. This argument also lacks merit.
Notice and comment rulemaking is required for new rules that bind, not for interpretative rules, or for rules of an agency’s organization, procedures, and practice. 5 U.S.C. § 553(b)(3)(A).' Therefore, the redetermination procedures are not subject to notice and comment rule-making. The second APA contention regards formal adjudication. The APA establishes procedures for adjudications required by statute to be “on the record after opportunity for an agency hearing.” 5 U.S.C. § 554. The statute governing redeterminations, 42 ' U.S.C. § 405(u)(l)(A), has no such requirement. Therefore, the suggestion that “on the record” adjudication is required fails.
Finally, the plaintiffs allege that the OIG’s involvement in the redetermination process is a violation of 5 U.S.C. § 554(d)’s prohibition on third party involvement in adjudications. This prohibition, as part of the rules for on-the-record adjudication, does not apply to the redeterminations. Even if redeterminations were subject to on-the-record adjudication, the OIG did not direct the outcome or otherwise involve itself in the redetermination process. And because a separate statute mandates the referral process, this provision of § 554(d) would be without effect.
i, On-the-Record Adjudication
Much of what the plaintiffs seek under the Due Process Clause and the Social Security Act they also seek under the APA; that is, the opportunity to present their cáse against the fraud allegation and to present rebuttal witnesses. Because there wás no formal finding of fraud, there is no argument to rebut. The requirement for formal, on the record adjudication is found at 5 U.S.C. § 554. The statute prescribes specific procedures where a statute requires adjudication “on the record after opportunity for an agency hearing.” The statutes governing redeterminations (i.e., 42 U.S.C. §§ 405(u)(l)(A) and 1383(e)(7)) do not require a hearing. Therefore, the suggestion that “on the record” adjudication is required is equally misplaced.
ii. Notice and Comment Rulemaking
Notice and comment rulemaking is required for new rules that bind, not for interpretative rules, or rules of an agency’s organization, procedures, and practice. 5 U.S.C. § 553(b)(3)(A). Plamtiffs allege that “if,' or the extent to which they do, follow HALLEX as law, it violates and does not comport with notice and comment rule-making.” [See, e.g., Pikeville Civil Action No. 7:16-101, Record No. 14, p. 10.]
iii. Decisions Directed by a Third Party
In pertinent part, 5 U.S.C. § 554(d) states that “[a]n employee ■ or agent engaged in the performance of investigative or prosecuting functions for an agency in a case may not, in that or a factually related case, participate or advise in the decision, recommended decision, or agency review pursuant to section'557 of this title, except as witness or counsel in public proceedings.” As discussed above, the formal adjudication requirements of 5 U.S.C. § 554 are not applicable to the redetermination process and, therefore, neither is subsection 554(d). However, even if § 554(d) were applicable, it is not clear the redeter-mination process would violate it, because the third party involvement is directly authorized and required by the Act.
While the OIG is not wholly independent from the Commissioner, it has no role in the decisions merits decision of whether to continue or rescind benefits. Its only role is to make the probable cause determination regarding fraud, which, as discussed above, is determinative as to only some evidence (evidence which may be substituted for). The Agency’s final decision is not being directed by the OIG. Rather, it is made by an ALJ who is not subject to the supervision or the direction of the OIG.
IV. CONCLUSION
Plaintiffs’ contentions under the Equal Protection Clause, Social Security Act, and Administrative Procedures Act are easily resolved in favor of the Agency. Because the procedural protections afforded by the Agency satisfy any concern about the exclusion of suspect evidence, plaintiffs’ due process arguments are also unconvincing. While there is little doubt that plaintiffs have been put in an unfortunate position as a result of the circumstances giving rise to this litigation, the fact remains that plaintiffs were given a meaningful opportunity to reprove eligibility. The purpose of the redetermination procedures, in line with the mission of the Agency, is to determine whether beneficiaries are properly entitled to benefits. Because the procedure comports with due process, the legal issues in these actions favor the agency. And because there exist no material discrepancies that would be appropriate for resolution by a trier of fact, the Acting Commissioner’s motions will be granted. Accordingly, it is hereby
ORDERED that Defendant Carolyn Colvin, Acting Commissioner of Social Security’s motions for summary judgment in part [Ashland Civil Action No. 0: 16-017; Record No. 7] [Ashland Civil Action No. 0: 16-061; Record No. 6] [Pikeville Civil Action No. 7: 16-051; Record No. 12] [Pike-ville Civil Action No. 7: 16-059; Record No. 13] [Pikeville Civil Action No. 7: 16-068; Record No. 16] [Pikeville Civil Action No. 7: 16-075; Record No. 5] [Pikeville Civil Action No. 7: 16-101; Record No. 11] [Pikeville Civil Action No. 7; 16-111; Rec
Notes
. On April 1, 2016, a federal grand jury returned an indictment against Eric Conn, David Daugherty, and Alfred Adkins. [See Lexington Criminal Action No. 5: 16-022-DCRJ The indictment contains 18 substantive counts and several additional forfeiture counts. The counts are related to allegations of fraud that are discussed in this Memorandum Opinion and Order. The criminal action has been deemed to be complex with a trial scheduled in 2017. The criminal action is pending before the undersigned.
On June 1, 2016, a criminal information was filed before the undersigned, charging former Administrative Law Judge Charlie Paul Andrus with conspiring with Eric Conn and others to retaliate against individuals who had provided information relating to the alleged fraudulent scheme. [See Lexington Criminal Action No. 5: 16-056-DCRJ Defendant Andrus entered a guilty plea at the time the information was filed.
. 140 Cong. Rec. H 4750-03,
. Staff of Subcomm. on Oversight of the H. Comm. On Ways & Means, 103rd Cong., Rep. on Reforms to Address Supplemental Security Income Fraud and Abuse Involving Middlemen 7 (Conun. Print 1994) available at http:// congressional.proquest.coro/legisinsight?id= CMP-1994-WAM-0010& type=.PRINT.
. Section 205(a) states:
The Commissioner of Social Security.shall have full power and authority to make rules and regulations and to establish procedures, not inconsistent with the provisions of this title, which are necessary or appropriate to carry out such provisions, and shall adopt reasonable and proper rules and regulations to regulate and provide for the nature and extent of the proofs and evidence and the method of taking and furnishing the same in order to establish the right to benefits hereunder.
. For example, Carter's redetermination hearing was held on September 29, 2015. [Ash-land Civil Action No. 0: 16-017; Record No. 7-1, p. 3] The ALJ’s decision was issued on November 4, 2015. [Id.] Review by the Appeals Council was denied on December 15, 2015. [Id.] Griffith's hearing was held on February 1, 2016. [Pikeville Civil Action No. 7: 16-101; Record No. 11-1, p. 3] The ALJ’s decision was issued on February 22, 2016. ’ [Id.] Review by the Appeal Council of this decision was denied on March 21, 2016 (after the new rulings took effect). [Id.]
. The right of appeal in Title XVI cases is provided by § 1383(c)(3). This statutory section expressly adopts the § 405(g) standards.
. Plaintiff Griffith further argues that, as a Title XVI recipient, she is entitled to heightened protection. [Pikeville Civil Action No. 7: 16-101; Record No. 15-1, p. 8] Under Tatum v. Mathews,
. Four of the nine were granted pauper status.
. As stated during the hearing on the plaintiffs' motions for injunctive relief, Griffith resides with her daughter and a disabled sister, both of whom have independent sources of income. Furthermore, Griffith has begun receiving food stamps.
. The record suggests that Plaintiff Carter now qualifies for Social Security retirement benefits. [Ashland Civil Action No. 0: 16-017, Record No. 1-1, p. 3; statement of Counsel for Commissioner at August 29, 2016 hearing] As represented by counsel for the Agency, if Carter applies for a waiver of overpayment, his retirement benefits will resume during the pendency of the waiver determination. And if the overpayment waiver is ultimately approved, Carter will suffer no ongoing harm. His interest at stake will then be any lost benefits between the termination of his benefits and his return to pay status.
. While the finding of fraud is a predicate fact without which their termination of benefits would not have occurred as it did, a "but for” cause to use the language of tort law, it is not the proximate cause of the termination. The proximate cause of the termination was the lack of sufficient evidence, outside the evidence deemed tainted, to support the finding of disability.
. See Hearing Transcript, Pikeville Civil Action No. 7: 16-035-JMH; Record No. 54, p. 21.
. Id. atp. 20.
. Roughly 46% according to Counsel for the Acting Commissioner. See Hearing Transcript, Pikeville Civil Action No. 7: 16-035-JMH; Record No. 54, p, 5.
. See Hearing Transcript, Pikeville Civil Action No. 7: 16-035-JMH; Record No. 54, p. 20.
. Staff of Subcomm. on Oversight of the H. Comm. On Ways & Means, 103rd Cong., Rep. on Reforms to Address Supplemental Security Income Fraud and Abuse Involving Middlemen 7-8 (Comm. Print 1994) available at http:// congressional.proquest.com/legisinsight?id= CMP-1994-WAM-0010& type=PRINT
. Id.
. “Where courts have permitted equitable defenses to be raised against the government, they have required that the agency’s misconduct be egregious and the resulting prejudice to the defendant rise to a constitutional level.”