1 Soc.Sec.Rep.Ser. 205
Lucy E. MERCER and Ruth Havens, individually and on behalf
of all others similarly situated, Plaintiffs-Appellants,
v.
Bruce Lee BIRCHMAN and Richard S. Schweiker, Secretary of
the Department of Health and Human Services,
Defendants-Appellees.
No. 278, Docket 82-6142.
United States Court of Appeals,
Second Circuit.
Argued Nov. 1, 1982.
Decided Feb. 9, 1983.
Judith Stein Hulin, Charles C. Hulin and William A. Dombi, Legal Assistance to Medicare Patients, Willimantic, Conn., for plaintiffs-appellants.
Clifford M. Pierce, Asst. Regional Atty., Dept. of Health and Human Services, Boston, Mass., Alan H. Nevas, U.S. Atty., D. Conn., Frank H. Santoro, Asst. U.S. Atty., New Haven, Conn., for defendants-appellees.
Before FRIENDLY, KEARSE and PRATT, Circuit Judges.
FRIENDLY, Circuit Judge:
These appeals are from orders of Chief Judge Clarie in the District Court for Connecticut,
The cases have a long history, summarized in Judge Clarie's first opinion,
Mrs. Havens' Medicare claim, which arose from a stay in a nursing home in Rockville, Conn., likewise was denied by the SSA. Havens appealed, and a hearing was set before ALJ McCarthy. Allegedly the ALJ refused to allow her attorneys, the same legal services corporation, to make an oral argument.
On April 7, 1978, ALJ Birchman denied Mercer's claim and ALJ McCarthy denied Havens' claim. The district court certified a class consisting of Mercer "and those similarly situated, namely, all individuals who have been denied a reasonable opportunity for a hearing to appeal the denial of their Medicare benefits" on April 25, and granted leave for Havens to intervene on June 29, 1978.
Both Mercer and Havens appealed the actions of the ALJs to the SSA's Appeals Council. On September 29, 1978, it remanded Mercer's case for a de novo hearing before ALJ Dietrich,3 who communicated with Mercer's representatives on the availability of copies of the exhibits and on the timing of the hearing to suit Mercer's convenience. On December 14, 1978, the Appeals Council remanded Havens' case, on the ground that refusal to allow oral argument constituted a deprivation of due process, and instructed the ALJ to "schedule a supplemental hearing at a time and place convenient to all parties and give the claimant and/or her representative the opportunity to submit additional evidence and to present oral argument". The respective ALJs allowed Havens' claim on January 25, 1979, and Mercer's on April 30, 1979.
Although the administrative process had thus resulted in their clients' obtaining the entire monetary relief they had claimed, despite whatever errors the ALJs had made on the first round, the non-profit legal services corporation representing Mercer and Havens continued to press the action in the district court. On December 15, 1978, the judge denied the Secretary's motion to dismiss and allowed discovery. However, when plaintiffs moved for summary judgment, the judge reexamined the jurisdictional problem and found that "the Court does not have jurisdiction over this case, because the plaintiffs did not exhaust the administrative remedies available to them prior to the inception of the action."
The starting point for modern analysis of problems such as those here presented is Weinberger v. Salfi,
Salfi was shortly followed by Mathews v. Eldridge,
In Ellis v. Blum, supra,
Mercer's and Havens' claims for Medicare benefits were the paradigm of those where resort to the internal procedures of the SSA should be required. After an initial adverse determination of their claims and during the pendency of their district court action, Mercer and Havens followed the established course of administrative review. Their pursuit of administrative remedies could hardly be called futile or "foolish". Whereas Eldridge would have been asking the Secretary to change his regulations, Mercer and Havens were asking him to enforce them. As a result, not only did they receive the benefits they claimed but the procedural defaults of which they complained were acknowledged to be deviations from established agency regulations and were corrected. No question of statutory validity as in Salfi, no attack on the Secretary's prescribed regulations as in Eldridge, no conflict between the established procedures of cooperating agencies as in Ellis v. Blum rendered illusory the prospect of an administrative remedy for the wrongs these plaintiffs allege so as to justify resort to the courts before exhaustion.
In the year Mercer's and Havens' claims were considered, the SSA handled some 34,900,000 Medicare bills and some 6,900,000 other claims, of which approximately 20% were initially rejected, Social Security Administration, The Year in Review: The Administration of Social Security Programs, 1978 (1980). In an enterprise of such magnitude, it is essential that the agency provide machinery for self-correction and it has done precisely that.5 The first step, specified in 20 C.F.R. Sec. 404.909 (1977) is a request for reconsideration. Save for cases governed by the expedited appeals process, 20 C.F.R. Secs. 404.916a-916f,6 an unsuccessful request for reconsideration is followed by a hearing before an ALJ, 20 C.F.R. Sec. 404.917 et seq. and, if the result of that is adverse, a request for review by the Appeals Council, 20 C.F.R. Sec. 404.955 et seq. An important purpose of review by the Appeals Council is to ferret out procedural errors by the hundreds of ALJs employed by the SSA who conduct some 215,000 hearings every year, Social Security Administration: The Year in Review, supra. Precisely that purpose was served here. In Havens' case the Appeals Council explicitly directed that a new hearing should be held and oral argument allowed. While the remand in Mercer's case was predicated on another ground not relevant here, the Appeals Council took note of her procedural claims and observed that, while much is left to the discretion of the ALJ, he must "assure that a claimant is afforded the opportunity to properly present his/her case", see
The complaint here does not attack procedures established by the Secretary, a course which, under Justice Powell's comment in Eldridge or our own in Ellis, might render futile the resort to internal remedies. The procedures are unexceptional, and we do not read the complaint as claiming otherwise. 20 C.F.R. Sec. 404.934(a) states that:
Any party to a hearing shall have the right to appear before the presiding officer, personally or by representative, and present evidence and contentions.
Section 404.929 directs the ALJ to allow the parties or their designated representatives to question witnesses. Under Sec. 404.923, if written notice is given by a party objecting to the time and place fixed for a hearing and "good cause" is shown, the presiding officer may fix a new time or place. As for the number of a claimant's representatives, Sec. 404.927 provides that "[h]earings shall be open to the parties and to such other persons as the presiding officer deems necessary and proper," including, presumably, representatives without "unreasonable restrictions on [their] number" as sought in the complaint. On the issue of access to exhibits the Handbook of the Bureau of Hearings and Appeals (BHA) issued in July 19777 stated that:
Each party to a hearing has (1) the right to examine proposed exhibits in the case; (2) the right to object to the inclusion in the record of any particular document; and (3) the right to submit additional relevant documentary material.
A further instruction went into greater detail as to the right to prehearing disclosure of proposed exhibits. Upon request by a claimant or representative, photocopies were to be provided free of charge if the cost did not exceed $25 or if a reasonable showing was made that a copy of the record would be necessary in the claimant's preparation for the hearing. In any event exhibits were to be made available for examination at the hearing office. Notices of hearings advised claimants of their right to examine the exhibits before or on the day of the hearing. Whether or not the claimant made a request, the Hearing Assistant was required to meet with the claimant and/or representative just prior to commencement of the hearing, show them the proposed exhibits and, if necessary, explain these to them. Provision was also made for examination of additional exhibits submitted during or after the hearing.
Mercer's and Havens' claims in the district court related not to the Secretary's procedures but to the failure of two ALJs to apply them. These procedural deficiencies were promptly corrected as a result of action taken by the Appeals Council.8 The complaint did not allege that the action of ALJ Birchman in denying access to exhibits and refusing to allow more than one representative of the claimant to be present at the hearing was in any way typical;9 indeed it referred to the fact that many ALJs went to the full extent desired by plaintiff's attorney--fuller, we think, than is required, see note 8. The complaint likewise did not allege that ALJs regularly refused to grant reasonable adjournments or relocations of hearings and the intervenor's complaint said nothing about the frequency with which ALJs had denied oral argument. The discovery conducted by plaintiffs' attorneys adduced no evidence that any ALJ other than the one who handled Havens' case had denied the right to oral argument. On the exhibits question plaintiffs did produce an affidavit of a Miami attorney that beginning in March, 1980, the Miami office of the Bureau of Hearings and Appeals had denied use of its copying machines to him and, "with few exceptions", had refused to supply copies of exhibits in advance of hearings (but not to afford access to exhibits), and an affidavit from a Youngstown, Ohio, attorney that the Cleveland office had denied requests for photostatic copies of exhibits and had instituted such a policy for all ALJ's in that office, without specifying whether or not the required fees had been tendered or a showing of good cause for waiving the fees had been made. Without conceding that abuses with respect to requests for copies of exhibits had occurred but taking note of the instant suit, the Chief ALJ, on December 16, 1980, issued a bulletin reiterating the SSA's policy relating to exhibits.
We assume, arguendo, that, no matter how excellent the SSA's procedures, mandamus would lie on a showing that they were not working and that there was no sufficient indication of the Secretary's intention to make them work. Such was the situation in Ellis v. Blum, where plaintiff had repeatedly suffered from the same grievance, an established practice of state officials whom the Secretary had engaged to assist in administering the Act, and in the White, Burnette, and Sharpe cases, all involving interminable delay in the handling of claims by ALJ's, on which we relied in Ellis.10 These cases are quite different from what was presented here.
In sum, all that the papers before Judge Clarie revealed was that in a few instances the eminently fair procedures set up by the Secretary with respect to exhibits had broken down, that in one instance an ALJ had wrongly denied a request for oral argument and in another an ALJ had wrongly denied a request to allow a paralegal to be present, and that all these defects had been corrected by exhaustion of internal remedies, as plaintiffs had every reason to believe they would be before they brought this suit. This affords no basis for an action for mandamus under 28 U.S.C. Sec. 1361. It has never been expected that an organization so vast as the Social Security Administration can achieve absolute procedural perfection. As the Supreme Court noted in Richardson v. Perales,
The system's administrative structure and procedures, with essential determinations numbering into the millions, are of a size and extent difficult to comprehend. But, as the Government's brief here accurately pronounces, "Such a system must be fair--and it must work."
Congress has emphasized "the informal rather than the formal ... so long as the procedures are fundamentally fair."
Although this suffices to dispose of the case we add a word on the class certification. Our concern is not merely over certification of a nationwide class when the court had nothing save two isolated instances in Connecticut before it, see Califano v. Yamasaki,
Affirmed.
Notes
Mercer herself was unable to attend the scheduled hearing, and the ALJ proceeded in her absence. Thereupon Mercer claimed in her request for review by the SSA Appeals Council that the ALJ had denied her an opportunity to testify and had ruled her testimony irrelevant. Mercer did not press these claims in her federal district court action
Jurisdiction under Sec. 405(g) is extended to Medicare claims by 42 U.S.C. Sec. 1395ff(b)(1)
ALJ Birchman had left the Department of Health, Education and Welfare, as it then was, for assignment as an ALJ in the Federal Energy Regulatory Commission
We went on to say, id., at 78-79:
Rather one would expect the Secretary simply to retract an individual incomplete notice upon its discovery. Indeed, this is precisely the policy of the Secretary as stated in argument to this court and as demonstrated by the facts of this case. Twice plaintiff received allegedly inadequate pretermination notices and twice she complained, only to have the notices retracted and a new but equally defective one issued. We see no point in requiring plaintiff further to exhaust her administrative remedies before allowing her to litigate the question of the Secretary's duty to compel compliance with prescribed procedures.
The procedures for reconsideration, hearing, and appeal from denial of Medicare benefits are substantially the same as those relating to disability payments. 42 C.F.R. Sec. 405.701
This seems to have been framed to take care of the precise problem presented in Weinberger v. Salfi, supra,
Mercer's request of June 27, 1977, for a hearing on her claim and Havens' similar request of July 14, 1977, brought their cases under the June 1977 version of the BHA Handbook. An earlier version giving substantially the same right to examine proposed exhibits had been in effect since July 1974
The argument of plaintiffs' counsel that Mercer was given a copy of her record by ALJ Dietrich on remand not as a "regular practice" but as a "matter of special accommodation" takes the record out of context. The ALJ's remarks were directed not to a request to examine exhibits but to a request of the attorney that the ALJ "undertake to have the entire file xeroxed so that you may study it in the comfort of your office." This was what ALJ Dietrich characterized as "an unusual request which as you can understand is both expensive and burdensome" as to which "as a regular practice, I would have serious reservations about accommodating such requests as [a matter] of course." He then went on to say that since there had already been one hearing which was deficient or erroneous, "as a matter of special accommodation, I will have the proposed exhibits xeroxed and mailed to you after they have been selected and organized." Nothing indicates that if the attorney had simply requested the exhibits and offered to pay the costs (or had shown that these were less than $25 or that there was good cause for not demanding payment), or if the attorney had simply requested access to the exhibits, there would have been any difficulty
Plaintiffs elicited in discovery the statement of ALJ Birchman that "mechanical difficulties" with reproduction equipment at the Providence, R.I., Office of Hearings prevented his compliance with Mercer's request for copies of exhibits sent prior to the hearing. Instead, Birchman proposed to permit her representative to review the record in Providence immediately before the scheduled hearing and subsequent to the hearing did procure and send to her representative a photocopy of the exhibits for comments
The other cases mentioned in Ellis as grounded on mandamus jurisdiction,
Here, absent the class certification, the complaint would seemingly have had to be dismissed as moot once Mrs. Mercer and Mrs. Havens received their awards early in 1979 since it would be hard to show that as to them the situation was "capable of repetition, yet evading review", Southern Pacific Terminal Co. v. ICC,
