JOHN DANIEL JUDE, individually and in his official capacity as administrator of the estate of Melissa Jude; EMMA BURCHETT, individually and in her official capacity as administratrix of the estate of Leroy Burchett, Plaintiffs-Appellants, v. COMMISSIONER OF SOCIAL SECURITY; UNITED STATES OF AMERICA, Defendants-Appellees.
No. 18-5188
UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT
November 1, 2018
RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit I.O.P. 32.1(b) File Name: 18a0244p.06. Argued: October 2, 2018. Decided and Filed: November 1, 2018. Before: SILER, MOORE, and ROGERS, Circuit Judges.
COUNSEL
ARGUED: Ned Pillersdorf, PILLERSDORF, DEROSSETT & LANE, Prestonsburg, Kentucky, for Appellants. Thomas Pulham, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellees. ON BRIEF: Ned Pillersdorf, PILLERSDORF, DEROSSETT & LANE, Prestonsburg, Kentucky, for Appellants. Thomas Pulham, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellees.
KAREN NELSON MOORE, Circuit Judge. Plaintiffs, administrators of the estates of their deceased spouses, appeal the district court‘s dismissal of their suit under the Federal Tort Claims Act (“FTCA“). They allege that the Social Security Administration (“SSA“) caused the suicide deaths of their spouses by improperly notifying them of the suspension of their disability benefits and of the need to redetermine their eligibility for benefits due to suspected fraud in their applications. The district court determined that it lacked jurisdiction to hear the claims because the Defendants’ challenged conduct fell within the FTCA‘s discretionary function exception. We agree with the district court that the discretionary function exception covers
I. BACKGROUND
Under the Social Security Act (“Act“), a person who claims entitlement to disability benefits must submit an application and provide evidence of his or her disability to the Social Security Administration. See
Plaintiffs allege that the SSA had reason to suspect that Conn was perpetrating this fraud as early as 2007 due to the reports of internal whistleblowers. In 2011, the Wall Street Journal published a story about Conn‘s exploits, suggesting that illegal practices were behind his success. Conn was indicted in 2016 on several criminal charges; he later pleaded guilty. Charles Andrus, the former Chief Administrative Law Judge at the Huntington, West Virginia SSA office, also pleaded guilty to retaliation against a whistleblower.
On May 18, 2015, the SSA‘s Appeals Council informed both Jude and Burchett via mail that the Office of the Inspector General had notified the SSA that there was reason to believe that fraud was involved in their applications for disability benefits. R. 21-3 (Jude Notice of Appeals Council Action) (Page ID #95); R. 21-4 (Burchett Notice of Appeals Council Action) (Page ID #101). The SSA told them that it was legally required to redetermine their eligibility for benefits based on available evidence of their disabilities, excluding from consideration any evidence that was suspected of being tainted by fraud. The SSA based its course of conduct on
Jude and Burchett, already sufferers of serious mental illnesses, were distressed by these notices and the immediate suspension of their benefits. Each requested additional time to gather evidence for use in the redetermination hearings. R. 21-7 (Jude Extension Request) (Page ID #111); R. 21-9 (Burchett Extension Request) (Page ID #114). However, about two weeks after the May SSA notices, Jude and Burchett each committed suicide. Both had already taken their own lives by the time that the SSA notified them that their requests for additional time to gather evidence had been granted. Around three weeks after the suspension-of-benefit letters were sent out, the SSA temporarily reinstated the benefits it had already suspended.
In June 2015, John Jude and Emma Burchett (Plaintiffs), the spouses and administrators of the estates of Melissa Jude and Leroy Burchett, respectively, filed administrative FTCA claims for wrongful death with the SSA. R. 21-11 (Jude SSA FTCA Claim) (Page ID #116); R. 21-12 (Burchett SSA FTCA Claim) (Page ID #118). Those claims were denied in December 2015. R. 21-13 (Jude SSA FTCA Denial) (Page ID #120); R. 21-14 (Burchett SSA FTCA Denial) (Page ID #121). In January 2016, Plaintiffs filed their complaint in federal district court against Carolyn Colvin in her official capacity as then-Acting Commissioner of Social Security at the SSA.1 In a first amended complaint Plaintiffs added the United States as an additional defendant and included additional allegations. The complaints asserted a claim under the FTCA,
The SSA made a fully favorable decision in February 2016 in Burchett‘s posthumous disability redetermination, having excluded the evidence that was tainted with suspicion of fraud. R. 21-16 (Burchett Fully Favorable Decision) (Page ID #132). Similarly, in March 2016 the SSA made a partially favorable decision in Jude‘s posthumous disability redetermination. R. 21-15 (Jude Partially Favorable Decision) (Page ID #123).
After Plaintiffs filed their First Amended Complaint, Defendants filed a Motion to Dismiss or in the Alternative Motion for
II. DISCUSSION
We review de novo the district court‘s grant of a motion to dismiss. Milligan v. United States, 670 F.3d 686, 692 (6th Cir. 2012). Federal courts are courts of limited jurisdiction: the plaintiff carries the burden of demonstrating that either the Constitution or a statute has granted the court jurisdiction over a given suit, and that it may therefore hear it. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). The United States has sovereign immunity and cannot be sued unless it expressly consents. FDIC v. Meyer, 510 U.S. 471, 475 (1994). “Sovereign immunity is jurisdictional in nature. Indeed, the ‘terms of [the United States‘] consent to be sued in any court define that court‘s jurisdiction to entertain the suit.‘” Id. (quoting United States v. Sherwood, 312 U.S. 584, 586 (1941)).
Plaintiffs named Nancy Berryhill, in her official capacity as Commissioner of Social Security, and the United States as defendants.4 In order to proceed in federal district court,
claims against these defendants must both have a jurisdictional basis and clear the sovereign immunity hurdle. Plaintiffs sue under the FTCA, alleging that Defendants committed torts by not initiating the redetermination process “immediately” after suspecting fraud, failing to conduct “individual assessments” of beneficiaries before informing them of the need for redeterminations, suspending benefits prior to the redeterminations, and giving beneficiaries a ten-day window to collect new evidence.5
As a preliminary matter, much of Plaintiffs’ briefing asserts that the SSA‘s handling of the Conn fraud fallout amounted to “affirmative misconduct.” Plaintiffs borrow this language from Schweiker v. Hansen, 450 U.S. 785 (1981), and argue that such a categorization should impact our analysis. However, Hansen and its “affirmative misconduct” language are entirely inapposite. Hansen considered whether the government could be estopped from denying retroactive benefits due to misleading statements made by a SSA field representative. Id. at 788. The Supreme Court determined that the SSA was not estopped from denying the claimant retroactive benefits and reserved the question of how an instance of affirmative misconduct on
the part of the field representative would have factored into the analysis. Id. at 788-89. Therefore Plaintiffs’ allegation of “affirmative misconduct” does not affect our analysis here.
The district court found that it lacked jurisdiction over Plaintiffs’ tort claims because they fell within the discretionary function exception to the FTCA. See
The United States has consented to be sued for conduct covered by the FTCA, waiving sovereign immunity where it applies. The FTCA grants the district courts
exclusive jurisdiction of civil actions on claims against the United States, for money damages . . . for injury or loss of property, or personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private person, would be liable to the claimant in accordance with the law of the place where the act or omission occurred.
The substance of cognizable FTCA claims, however, is further limited. FTCA actions are not available for claims “based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a federal agency or an employee of the Government, whether or not the discretion involved be abused.”
The discretionary function exception applies when two conditions are present. United States v. Gaubert, 499 U.S. 315, 322-25 (1991). First, the agency‘s action must include “an element of judgment or choice,” and cannot be dictated by authority that gives “the employee [ ] no rightful option but to adhere to the directive.” Berkovitz v. United States, 486 U.S. 531, 536 (1988). Second, the governmental decision must be “the kind that the discretionary function exception was designed to shield.” Id. This means that it must be “susceptible
In A.O. Smith Corp., we determined that the Army Corps of Engineers’ (“Corps“) decisions concerning the management of the Old Hickory Dam‘s water levels during a serious rainstorm were discretionary. 774 F.3d at 366. The relevant manuals provided that releasing water from the reservoir prior to the onset of a serious storm “[was] permitted” and “should be” done in some situations. Id. at 365. The language left room for the Corps to exercise discretion in its preparation for flooding. Id. The requirement that the Corps coordinate with operators of other dams to ensure that the dams collectively did not release too much water provided further evidence of discretion because the additional moving pieces necessitated the use of choice and judgment. Id. The Corps was required to “consider a plethora of factors prior to initiating [pre-flood drawdowns],” and therefore must manage competing “demands” in a way that required “some degree of operational flexibility.” Id.
In Myers v. United States, 17 F.3d 890, 895 (6th Cir. 1994), we held that the conduct of inspectors from the Mine Safety and Health Administration involved discretion because their instructions followed an “‘if/then’ logical structure” that required the inspectors to make particular preliminary assessments involving judgment or choice prior to acting. The decision whether the “predicate condition exists” involved sufficient discretion to satisfy the first prong of the Gaubert test even though the outcome of the preliminary assessment mandated specific corresponding next steps. Id.
In assessing whether the second Gaubert criterion is satisfied, we look to whether the decision-making surrounding the conduct was “susceptible to policy analysis.” Gaubert, 499 U.S. at 325. Such “social, economic, or political” policy analysis need not actually have occurred in the disputed instance, but rather the decision need only have been theoretically susceptible to policy analysis. A.O. Smith Corp., 774 F.3d at 370; Myers, 17 F.3d at 895. “[B]udgetary considerations” and “effectiveness inquiries” may factor into such policy analysis. A.O. Smith Corp., 774 F.3d at 370 (citing Graves v. United States, 872 F.2d 133, 137 (6th Cir. 1989); Reetz v. United States, 224 F.3d 794, 797 (6th Cir. 2000)).
The district court correctly determined that it lacked jurisdiction over Plaintiffs’ claims because the SSA‘s conduct involved choice and was susceptible to policy analysis. The Social Security Act gives some direction to the SSA as to how to handle instances where a suspicion of fraud arises.
The Commissioner of Social Security shall immediately redetermine the entitlement of individuals to monthly insurance benefits under this subchapter if there is reason to believe that fraud or similar fault was involved in the application of the individual for such benefits, unless a United States attorney, or equivalent State prosecutor, with jurisdiction over potential or actual related criminal cases, certifies, in writing, that there is a substantial risk that such action by the Commissioner of Social Security with regard to beneficiaries in a particular investigation would jeopardize the criminal prosecution of a person involved in a suspected fraud.
Finally, the Hearings, Appeals and Litigation Law Manual (HALLEX), a non-statutory SSA internal manual published by the Deputy Commissioner for Disability Adjudication and Review, also provides slightly more specific instruction on handling redeterminations necessitated by suspected fraud. HALLEX I-1-3-25, Processing Cases Under Sections 205(u) and 1631(e)(7) of the Social Security Act (Fraud or Similar Fault “Redeterminations“),
Gaubert‘s first criterion is satisfied because the SSA‘s handling of the situation was “discretionary” and not “controlled by mandatory statutes or regulations.” Gaubert, 499 U.S. at 328. The SSA‘s actions included a significant “element of judgment or choice.” Id. at 329. Plaintiffs have pointed to no SSA regulations that fix an exact period after suspicion of fraud during which recipients of disability benefits must be notified and redeterminations made, prevent the termination of disability benefits prior to redetermination when there is a suspicion of fraud, or mandate a certain period of time that beneficiaries must be given to collect new evidence to be used in the redeterminations. The SSA may exercise choice and judgment in fashioning a response that it deems appropriate.
Plaintiffs argue that the SSA did not have discretion to act because of the presence of the words “shall immediately” in
Plaintiffs also assert that the SSA did not have discretion to violate its regulatory “mandate [to] do an individual assessment of each individual.”6 R. 27 (First Am. Compl. at 6) (Page ID #259). Plaintiffs seem to argue that the SSA was negligent and violated its own
regulations by failing to assess individually the vulnerabilities of the affected beneficiaries to determine whether sending the letter was likely to set them down a suicidal path. See Corrected Br. of Appellants at 6 (“In fact[,] has [sic] an individual assessment of the Jude and Burchett files been done, as is required by SSA regulations, it would have been noted that benefits for these two were primarily or totally founded upon mental illness.“). Plaintiffs exaggerate the protections that the Act and HALLEX‘s individual screening provision actually extend. HALLEX‘s individual screening provision required only that the SSA check to see that fraud sufficiently undermined each of the affected beneficiaries’ prior benefit determinations before notifying them.
The second Gaubert criterion is also satisfied because the SSA‘s decisions about the appropriate procedure for handling the redetermination process were susceptible to policy analysis. Gaubert, 499 U.S. at 325. In deciding when to initiate redeterminations, the SSA had to consider the strength of the available evidence of fraud and the likelihood of further evidence emerging, and evaluate the priority of the Conn fraud in light of its limited resources and other responsibilities. The decisions to suspend benefits prior to the redetermination hearings and define the window for beneficiaries to gather new evidence were equally susceptible to the social, economic, and political policy analysis required by Gaubert‘s second step. The SSA had to consider the benefits of a speedy redetermination process as well as fairness concerns such as giving the beneficiaries sufficient time to gather new evidence. It had to balance fiscal concerns urging that it cease paying benefits to unqualified individuals against the likelihood that it would suspend the benefits of those who truly qualified for them. Regrettably, the SSA‘s chosen response to the Conn wreckage left many particularly vulnerable individuals in an unexpected
and deeply frightening position. Yet because the FTCA‘s discretionary function exception applies in this instance, the courts are not an available venue for those affected by this truly tragic situation to seek this type of redress.
We agree with the district court that the discretionary function exception covers the challenged conduct and therefore AFFIRM the dismissal.