Lead Opinion
When individuals in this country are unable to work because of physical or mental disabilities, they may file for Social Security Disability Insurance ("SSDI") and Supplemental Security Income ("SSI") benefits. The eleven plaintiffs here all filed for these benefits, and they all eventually received them. The trouble, however, is that they were represented in their efforts by Eric Conn, a Kentucky attorney who secured benefits for his clients by submitting fraudulent reports to the Social Security Administration ("SSA"). An Administrative Law Judge ("ALJ"), David Daugherty, also participated in the scheme by taking *792bribes from Conn to assign Conn's cases to himself and issue favorable rulings.
Nearly ten years after the SSA first learned of Conn's and Daugherty's possible wrongdoings, it initiated efforts to "redetermine" plaintiffs' eligibility for benefits. The SSA held new hearings before new ALJs to determine plaintiffs' entitlement to benefits as of the date of their original applications-i.e., seven to ten years earlier. During the redetermination process, the SSA disregarded all medical evidence submitted by the four doctors participating in Conn's scheme on the ground that such evidence was tainted by fraud. Plaintiffs had no opportunity to rebut the agency's assertion of fraud as to this medical evidence. Ultimately, all plaintiffs were deemed ineligible for SSDI and SSI benefits as of the date of their original applications, and their benefits were terminated. After exhausting all administrative remedies, plaintiffs brought suit in federal district court.
The eleven cases presented in this consolidated appeal appeared before three different district judges. Though the precise nature of their claims somewhat varied, all plaintiffs alleged that the SSA's procedures and actions violated the Due Process Clause of the Fifth Amendment, the Administrative Procedure Act ("APA"), and the Social Security Act. We now hold that the plaintiffs are entitled to summary judgment on their due-process claim, the SSA is entitled to summary judgment on plaintiffs' claims under the Social Security Act, and the SSA is not entitled to summary judgment on plaintiffs' claims under the APA. We therefore AFFIRM the district court's judgment in cases numbered 17-5206, 17-5211, 17-5212, 17-5213, 17-5214, 17-5215, 17-5216, and AFFIRM in part, REVERSE in part, and REMAND for further proceedings consistent with this opinion in cases numbered 17-5598 and 17-5614.
I. BACKGROUND
The SSDI and SSI programs provide disability benefits to individuals with physical or mental impairments that preclude them from working.
Having considered all of the evidence, I am satisfied that the information provided by Dr. [Adkins, Ammisetty, Huffnagle, or Herr] most accurately reflects the claimant's impairments and limitations. Therefore, the claimant is limited to less than sedentary work at best.
After considering the evidence of record, the undersigned finds that the claimant's medically determinable impairment could reasonably be expected to produce the alleged symptoms, and that the *793claimant's statements concerning the intensity, persistence and limiting effects of these symptoms are generally credible.
E.g. , 16-cv-53 (Blackburn), R. 26-1 (Ex. 6A, Daugherty Decision at 3) (Page ID #281).
According to the SSA, plaintiffs' change of fortune was not coincidental. Instead, SSA alleges that Conn, Daugherty, and the four doctors identified above were engaged in a widespread scheme to secure SSI and SSDI benefits for Conn's clients based on fraudulent disability applications. SSA Br. at 12-15. The scheme, according to the SSA, worked like this: Conn created a limited number of template Residual Functional Capacity ("RFC") forms, which he or attorneys in his office filled out ahead of time.
The SSA first learned about possible wrongdoing involving Daugherty and Conn as far back as 2006, when a senior case technician and a master docket clerk in the SSA's Office of Disability Adjudication and Review (which houses the ALJs) raised concerns that Daugherty was reassigning Conn's cases to himself and rapidly deciding them in the claimants' favor. U.S. ex rel. Griffith v. Conn , No. CIV. 11-157-ART,
After the Wall Street Journal article was published, but before the SSA took any steps to initiate redetermination proceedings in these cases, Conn purportedly made significant efforts to destroy records, "including medical records for active disability claims." Id. at 121. According to the Senate Report, a shredding company sent Conn an invoice on June 23, 2011 for the destruction of more than 26.5 thousand pounds of documents for the Conn Law Firm, which is, according to the Report, the equivalent of 2.65 million sheets of paper. Id. at 122. Before the article, the shredding company had previously shred documents for Conn in smaller batches *794(e.g., 5.6 thousand pounds of paper in June 2010; 5.9 thousand pounds of paper in September 2010; and 7.3 thousand pounds of paper in November 2010). Id. An affidavit submitted by a former Conn Law Firm employee in one of the cases below confirms that medical records "were destroyed by fire or by shredding, although not all medical records were destroyed." 16-cv-154 (Hicks), R. 22-1 (Slone Aff. ¶ 3) (Page ID #1082). This former employee also averred that "[i]t was routine practice in Mr. Conn's office not to submit any medical records to Social Security or the Office of Disability Adjudication and Review on a claimant's claim once they were assigned to Judge David B. Daugherty." Id.
By July 2014, the Social Security Administration's Office of the Inspector General ("OIG") had identified 1,787 individuals-all of whom had been represented by Conn-whose applications, the OIG "had reason to believe," were tainted by fraud. 16-cv-154 (Hicks), R. 10-1 (OIG Letter) (Page ID #146). This tag has statutory significance. Under the Social Security Act, the SSA is required to "immediately redetermine" a beneficiary's entitlement to disability benefits if, at any point after granting benefits, the SSA has "reason to believe that fraud or similar fault was involved in the application" for benefits.
On May 12, 2015, the OIG sent the SSA another letter stating that the OIG "still has[ ] reason to believe" that fraud was involved in the 1,787 applications identified in July 2014.
With that, the SSA sent letters on May 18, 2015 to each of the eleven plaintiffs in this case (along with approximately 1,500 other individuals, see 16-cv-154 (Hicks), R. 25-1 (Salzmann Aff. ¶ 5) (Page ID #1125) ). Citing sections 205(u) and 1631(e)(7) of the Social Security Act (
According to the May 18, 2015 letters, the SSA had already reviewed plaintiffs' cases (less than a week after receiving notice from the OIG that it could proceed with the redetermination process) and had concluded that the remaining evidence in plaintiffs' files did not support their favorable benefits determinations.
The SSA held new hearings in plaintiffs' cases between December 2015 and March 2016. In each hearing, the new ALJ disregarded the medical reports initially submitted by Adkins, Ammisetty, Huffnagle, or Herr, considered all other medical evidence in plaintiffs' files, including newly submitted evidence that satisfied the two criteria above, and concluded that plaintiffs should not have been awarded benefits in the first place. E.g. , 16-cv-53 (Blackburn), R. 26-1 (Redetermination Decision at 13-25) (Page ID #212-24). The ALJs therefore "terminated" plaintiffs' benefits and informed plaintiffs that the "SSA may treat any benefits previously received as an overpayment."
Notably, in redetermining plaintiffs' eligibility for benefits, the SSA excluded all evidence submitted by Adkins, Ammisetty, Huffnagle, and Herr-not just the RFC forms that the OIG had identified as possibly fraudulent in its referral to the SSA.
After exhausting their administrative remedies, plaintiffs sought relief in federal district court. Plaintiffs challenged the SSA's procedures, actions, and decisions as violations of the Social Security Act, the Due Process Clause of the Fifth Amendment, and the Administrative Procedure Act. See, e.g. , 16-cv-154 (Hicks), R. 1 (Compl. ¶¶ 11-20) (Page ID #3-4). Seven of the cases proceeded before Judge Thapar (Hicks, Adams, Blackburn, Hale, Jenkins, Justice, and Ousley), which are referred to collectively here as Hicks v. Colvin ; three cases proceeded before Judge Reeves (Griffith, Howard, and Martin) and were decided together under the name Carter v. Colvin ; and one case proceeded before Judge Hood (Perkins v. Colvin ).
Judge Thapar focused first on Hicks, where he decided the constitutional due-process claim in Hicks's favor and granted partial summary judgment to Hicks on that ground on October 12, 2016. 16-cv-154 (Hicks), R. 36 (Mem. Op. & Order) (Page ID #1328-60). He then issued an order in each of the other six cases applying the Hicks opinion to them. E.g. , 16-cv-53 (Blackburn), R. 39 (Order) (Page ID #854-55). The SSA moved for reconsideration of the Hicks opinion, which Judge Thapar denied on December 21, 2016. 16-cv-154 (Hicks), R. 48 (Mem. Op. & Order) (Page ID #1608-21). In the meantime, Judge Reeves rejected plaintiffs' statutory and constitutional claims regarding the SSA's redetermination procedures in Carter and granted partial summary judgment to the SSA on November 15, 2016.
II. DISCUSSION
A. Due Process
Plaintiffs' due-process challenge focuses on the SSA's refusal to accord them an opportunity to rebut the OIG's assertion of fraud as to the Conn-related medical reports. Pls. Br. at 17. A preliminary question in this case is whether the three-factor balancing test laid out in Mathews v. Eldridge ,
Mathews dictates that the process due in any given instance is determined by weighing "the private interest that will be affected by the official action" against the Government's asserted interest, "including the function involved" and the burdens the Government would face in providing greater process. The Mathews calculus then contemplates a judicious balancing of these concerns, through an analysis of "the risk of an erroneous deprivation" of the private interest if the process were reduced and the "probable value, if any, of additional or substitute procedural safeguards."
Plaintiffs argue that this is "a case about the minimum protections of due process," and Mathews -which plaintiffs understand as a test "used to determine whether additional process (i.e., beyond the minimum) is required"-does not apply. Pls. Br. at 32. In particular, plaintiffs insist that "procedural due process" requires, at a minimum, "a fair opportunity to rebut the Government's factual assertions before a neutral decisionmaker," and this baseline procedural protection may not be "balanced away." Id. at 19 (quoting Hamdi ,
1. Minimum Due-Process Analysis
Long before Mathews , the Supreme Court recognized the "immutable" principle that "where governmental action seriously injures an individual, and the reasonableness of the action depends on fact findings, the evidence used to prove the Government's case must be disclosed to the individual so that he has an opportunity to show that it is untrue." Greene v. McElroy ,
The SSA argues, in effect, that the deprivation of plaintiffs' benefits in this case did not "depend on" the government's finding that the reports by Conn's doctors involved fraud, see
Moreover, in this consolidated appeal, the exclusion of the Conn-related medical reports is inextricably bound up with the denial of plaintiffs' benefits because, according to plaintiffs, they are now unable to provide sufficient substitute evidence of their initial eligibility for benefits. See Pls. Br. at 28-29. Perhaps plaintiffs would not have received a favorable outcome if their initial medical records were considered in the redetermination process,
According to the SSA, "the potential value of the excluded report" is irrelevant because "the 'right to present relevant evidence is not unlimited, but rather is subject to reasonable restrictions.' " SSA Br. at 45 (quoting United States v. Scheffer ,
Even if Scheffer were a relevant precedent, it offers no support for the SSA's contention that "the potential value of the excluded report" is irrelevant. Rather, Scheffer recognized that even generally applicable evidentiary rules may "raise a constitutional concern" if they "implicate a sufficiently weighty interest of the [plaintiff]."
2. Due-Process Analysis under Mathews
Applying the Mathews test leads to the same result. Mathews directs courts to weigh the private interest in a property right against the government's interest in avoiding additional or substitute process, in light of "the risk of an erroneous deprivation" of a property holder's interest "and the probable value, if any, of additional or substitute procedural safeguards." Mathews ,
[d]epending upon the tilt of the Mathews balance in a particular case, ... the timing and content of the [required] hearing may vary. Nevertheless, however weighty the governmental interest may be in a given case, the amount of process required can never be reduced to zero-that is, the government is never relieved of its duty to provide some notice and some opportunity to be heard prior to final deprivation of a property interest.
Propert v. District of Columbia ,
*800First, courts must consider when, in Mathews 's parlance, the "risk of an erroneous deprivation" is too high. At some foundational level, this factor is dispositive. After all, "some form of hearing is required before an individual is finally deprived of a property interest," Mathews ,
This is essentially how a plurality of the Supreme Court approached the Mathews test in Hamdi . The plurality first noted the strong interests at stake both for Hamdi and the government, Hamdi ,
Applying Mathews here, we conclude that the risk of an erroneous deprivation under the SSA's current framework is too high. The SSA argues that the current process leaves little room for error, as plaintiffs may rely on a host of other evidence beyond the Conn-related medical reports, including evidence that was not submitted in the initial determination, and the Conn-related reports would, in any event, be a low-weighted factor in the ALJ's analysis. SSA Br. at 35-43. But Supreme Court precedent, including precedent applying Mathews , indicates that any time a citizen is deprived of "notice of the factual basis" for a governmental determination and "a fair opportunity to rebut the Government's factual assertions before a neutral decisionmaker," the risk of error is too high. Hamdi ,
Moreover, even if the risk of an erroneous deprivation were not intolerably high whenever claimants are precluded from rebutting material factual assertions about their case, the risk of an erroneous deprivation is nevertheless too high in these cases. Even assuming fraud could be reliably detected through a blanket rule-a point the Supreme Court has previously called into doubt, see Califano v. Yamasaki ,
The divergence between the material identified by the OIG and the material excluded by the SSA highlights the danger of the SSA's approach. Not only are the OIG's assertions of fraud unreviewable, but the SSA's application of those assertions is unreviewable. Currently, the SSA asserts that it has "reason to believe" that all reports signed by Adkins, Ammisetty, Huffnagle, and Herr and submitted by Conn between January 2007 and May 2011 contained fraud. But what if the SSA instead declared that all reports signed by the four doctors-regardless of whether they were submitted by Conn-were tainted by fraud? What would preclude the SSA from interpreting the OIG's referral this broadly? In effect, the SSA insists that it may unilaterally select the criteria for fraud (based on vague statutory guidance) and then unilaterally select which evidence satisfies those criteria. With no adversarial input and no judicial oversight, the risk that nonfraudulent material will be erroneously excluded is impermissibly high.
The dissent essentially argues that the "reason to believe" standard is "nearly irrebuttable," and therefore due process affords plaintiffs no entitlement to attempt to rebut it. See Dissent at 821-22. We see things differently. The considerable liberties that the SSA has taken in interpreting and administering the "reason to believe" standard advocate in favor of a procedural check, not against it. In extolling the virtues of the non-adversarial "reason to believe" determination, the dissent draws an analogy to the Supreme Court's approval of a non-adversarial probable cause determination in criminal cases. See Dissent at 820-21 (discussing Kaley v. United States ,
The SSA nevertheless argues that it does not matter much whether nonfraudulent material is wrongly disregarded because the likelihood of a wrongful benefit determination remains low. SSA Br. 38-41. In support, the SSA notes that plaintiffs may submit new evidence showing the same facts as the excluded reports. Id. at 38-39. But plaintiffs persuasively argue that this procedural protection may be of little practical value for most claimants affected by Conn's scheme. Conn failed to turn in claimants' medical files once their cases were assigned to Daugherty and then seemingly destroyed a great deal of the files when news of his misconduct began to break, Senate Report at 122; 16-cv-154 (Hicks), R. 22-1 (Slone Aff. ¶ 3) (Page ID #1082), and it is understandably difficult to obtain new evidence of past disability. The SSA notes that plaintiffs did, for the most part, supplement their files with new evidence during the redetermination process. SSA Br. at 39. But simply because they fought on with whatever means remained available does not imply that they were not disadvantaged by their inability to contest the SSA's denial of their use of the reports. For similar reasons, the SSA's claim, which the dissent wholeheartedly embraces, see Dissent at 819-20, 821-22, that the excluded medical reports are relatively insignificant because they were never supposed to receive controlling weight in the benefits determination also fails, see SSA Br. at 39-41. Even if the excluded reports would generally not override contrary evidence from treating physicians, see
The remaining two Mathews factors also favor plaintiffs. The Supreme Court has long recognized that social security disability beneficiaries have a substantial interest in receiving their benefits, as "the hardship imposed upon the erroneously terminated disability recipient may be significant." Mathews ,
As to the government's interest in avoiding additional procedures, the SSA's position boils down to arguments about cost and administrative burden. The SSA believes plaintiffs' requested procedure would require an ALJ to hold a hearing in which an OIG agent would "testif[y] about how he came to believe that here was fraud in part of [the plaintiffs'] file[s]," and the plaintiffs would "cross-examine[ ] the agent and present[ ] evidence to show why [their medical reports] were all true." SSA Br. at 33 (quoting 16-cv-154 (Hicks), R. 36 (Mem. Op. & Order at 29) (Page ID #1356) ). The SSA contends that such a process would be "extraordinarily burdensome" and would "infringe on law enforcement efforts concerning the fraud scheme" because it would require ALJs to review the sufficiency and merits of the OIG's investigatory efforts. SSA Br. at 33-34. The SSA further argues that additional procedures would frustrate Congress's efforts to ensure that redeterminations occur quickly, as evidenced by the requirement that SSA "immediately redetermine" benefits upon developing a "reason to believe" that fraud was involved in the initial application. Id. at 35 (citing
These arguments are not compelling. We are particularly unpersuaded by the SSA's timing claims, given that the SSA waited nearly ten years after first learning about possible misconduct involving Conn and Daugherty to initiate redetermination proceedings. It seems disingenuous now to claim that plaintiffs should receive fewer procedural protections because the SSA is statutorily obligated to move quickly. Nor do we believe that "forcing OIG investigators to testify in over 1,500 redetermination hearings" would be particularly onerous given that SSA investigators would have to do the same thing if they developed a "reason to believe" fraud existed in 1,500 applications for benefits. See SSA Reply Br. at 18;
*804is concerned about interfering with ongoing law enforcement efforts, the SSA may secure a certification, in writing, from a state or federal prosecutor with jurisdiction over the investigations saying that the redeterminations would "jeopardize the criminal prosecution of a person involved in a suspected fraud," and the redetermination proceedings would halt.
At bottom, the district court in Hicks was right to conclude that refusing to allow plaintiffs to rebut the OIG's assertion of fraud as to their individual applications violates the Due Process Clause of the Fifth Amendment. We therefore AFFIRM the grant of partial summary judgment to plaintiffs in Hicks and REVERSE the partial grant of summary judgment to the SSA in Carter and Perkins .
B. Administrative Procedure Act ("APA")
Plaintiffs argue that the SSA violated the APA by (1) failing to comply with the APA's requirements concerning formal adjudications and (2) acting in an arbitrary and capricious manner by allowing claimants whose benefit determinations are suspected of fraud by the SSA to rebut assertions of fraud, but denying the same procedural protection to claimants whose benefit-determinations are suspected of fraud by the OIG. The district courts in Perkins and Carter rejected these arguments and entered partial summary judgment in the SSA's favor on plaintiffs' APA claims. We now REVERSE .
1. Failure to Comply with the Administrative Procedure Act's Formal-Adjudication Requirements
The APA distinguishes between formal adjudications, which must follow a set of "trial-type procedures," including "notice of 'the matters of fact and law asserted,' an opportunity for 'the submission and consideration of facts [and] arguments,' and an opportunity to submit 'proposed findings and conclusions' or 'exceptions,' " and informal adjudications, which "do not include such elements." Pension Ben. Guar. Corp. v. LTV Corp. ,
*805Pls. Reply Br. at 3; SSA Reply Br. at 36-37. The parties then part ways on two points. First, plaintiffs contend that the redetermination hearings, which were required to comply with the APA's requirements for formal adjudications, did not in fact do so. The SSA, in turn, argues that the redetermination hearings necessarily complied with the APA's formal-adjudication requirements because they conformed to
The SSA's first argument is somewhat hard to follow. If, as the SSA argues, "the protections provided by § 405(b)(1) are co-extensive with the APA's provisions on formal adjudication," SSA Reply Br. at 37, then the SSA's failure to comply with one act amounts to a violation of the other.
*806Baker ,
The SSA's second argument-that plaintiffs are actually contesting the OIG's fraud-determination process rather than the benefits-redetermination hearing, SSA Reply Br. at 37-38-fares no better. Plainly, plaintiffs' suit concerns the level of process they were accorded by the SSA in their redetermination hearings, not at the OIG-referral stage. The SSA cannot reframe plaintiffs' complaint to evade responsibility for failing to abide by the APA's requirements. The district courts in Perkins and Carter therefore erred in granting summary judgment to the SSA on plaintiffs' claims that the SSA's redetermination process violated the APA's formal-adjudication requirements
2. Disparate Treatment of Fraud Allegations Based on Originating Source
According to plaintiffs, the SSA also violated the APA's prohibition on "arbitrary" or "capricious" decisionmaking, see
In response, the SSA argues that it makes sense to treat OIG-based determinations of fraud differently than SSA-based determinations of fraud because adopting plaintiffs' proposed procedure would (1) be unduly burdensome on "both the law enforcement agency and SSA's ALJ corps," as the OIG is more likely than the SSA to conduct large-scale investigations, and therefore more beneficiaries are affected by OIG-based determinations of fraud than SSA-based determinations; (2) "risk interference with the investigation and resulting criminal prosecution"; and (3) "place the ALJs in the untenable position of reviewing the sufficiency of law enforcement efforts." SSA Reply Br. at 40.
*808Plainly, the SSA did not include any of the reasons it now offers for treating OIG-based determinations of fraud differently than SSA-based determinations of fraud in HALLEX. "[A]n agency's actions must be upheld, if at all, on the basis articulated by the agency itself," Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. State Farm Mut. Auto. Ins. Co. ,
In any event, even if we were to credit the SSA's post-hoc explanations for distinguishing between OIG- and SSA-based determinations of fraud, its purported justifications are insufficient. All of the SSA's rationales for distinguishing between claimants whose files were deemed fraudulent by the OIG and claimants whose files were deemed fraudulent by SSA turn on differences between the OIG and the SSA-not between the claimants. The SSA has not provided any citations to suggest agencies can distinguish between similarly situated claimants based on circumstances entirely outside their control, and there is good reason to believe such action violates the APA. In Miller v. Bond ,
We therefore REVERSE the district courts' grant of summary judgment in the Perkins and Carter cases to the SSA on plaintiffs' claims under the APA and REMAND for further proceedings consistent with this opinion.
C. Social Security Act
Plaintiffs allege two violations of the Social Security Act ("the Act"). First, they allege that the SSA violated the Act by redetermining plaintiffs' benefits without first proving that their initial determinations involved fraud, in violation of the SSA's procedures governing reopenings and common-law and statutory principles of res judicata. Second, plaintiffs argue that the SSA violated the Act by failing "immediately" to redetermine plaintiffs' entitlement to benefits, as required under
1. Reopenings and Res Judicata
Turning first to plaintiffs' "reopening" argument: SSA regulations authorize the SSA to "reopen" a determination of benefits if "[i]t was obtained by fraud or similar fault."
This claim is a nonstarter, as plaintiffs cannot establish that the procedures governing reopenings also govern redeterminations. Title
Plaintiffs' broader res-judicata argument fails for similar reasons. As plaintiffs note, common-law principles of res judicata generally preclude agencies from readjudicating prior determinations. Drummond v. Comm'r of Soc. Sec. ,
The SSA concedes that res judicata principles apply in the agency setting, but it argues that courts may not "impose rules of preclusion, as a matter of policy, when the interpretation of a statute is at hand. In this context, the question is not whether administrative estoppel is wise but whether it is intended by the legislature." SSA Reply Br. at 44 (quoting Astoria Fed. Sav. & Loan Ass'n v. Solimino ,
2. Failure to Act Immediately
In their final claim, plaintiffs argue that the SSA violated the Act by failing to "immediately redetermine" plaintiffs' entitlements to benefits, as required under
In response, the SSA contends that it complied with § 405(u), as it issued notices to plaintiffs regarding their redetermination hearings within a week of receiving a letter from the OIG stating there were no "objections to SSA moving forward with its administrative processing of the redeterminations" of the applications implicated in Conn's scheme. 16-cv-154 (Hicks), R. 10-1 (OIG Letter) (Page ID #146); SSA Reply Br. at 45-46. As plaintiffs rightly note, however, nothing in § 405(u) permits the SSA to delay redetermination proceedings until it receives a green light from the OIG. Pls. Reply Br. at 23-24. Section 405(u) directs the SSA to "immediately redetermine" benefits when "there is reason to believe that fraud or similar fault was involved in the application."
Nevertheless, the SSA prevails on this claim. In United States v. Montalvo-Murillo ,
[a] prompt hearing is necessary, and the time limitations of the Act must be followed with care and precision. But the Act is silent on the issue of a remedy for violations of its time limits. Neither the timing requirements nor any other part of the Act can be read to require, or even suggest, that a timing error must result in release of a person who should otherwise be detained.
Plaintiffs identify two exceptions to this general principle. First, they note that courts will enforce statutory timing requirements where the requirement is a "condition precedent" to authorizing agency action. Pls. Reply Br. at 26. The Supreme Court, however, has recently construed a statute with similar mandatory language as § 405(u) as not containing a condition precedent. See State Farm Fire & Cas. Co. v. United States ex rel. Rigsby , --- U.S. ----,
Plaintiffs argue that § 405(u) is "functionally identical to statutes in which the Supreme Court has held a condition precedent to be mandatory," Pls. Reply Br. at 26, but the sole case plaintiffs cite in support of this proposition- Hallstrom v. Tillamook Cty. ,
Second, plaintiffs argue that an agency's failure to comply with a statutory timing requirement may preclude later action "if individuals are 'injuriously affected' by the procedural violation." Pls. Br. at 66 (quoting French v. Edwards ,
However, the Supreme Court has also cautioned courts to consider "the general purpose" of statutes before imposing sanctions that "would undermine the very governmental interests that [the statute] is *813meant to protect." Rigsby ,
III. CONCLUSION
The Due Process Clause of the Constitution and the Administrative Procedure Act required the SSA to allow plaintiffs an opportunity to show why the medical reports uniformly and entirely disregarded in their redetermination proceedings were not, in fact, tainted by fraud. Because the district courts in the Perkins and Carter cases reached the opposite conclusion, we REVERSE and REMAND those cases, in part, for further proceedings consistent with this opinion. Because we agree with the district court's resolution of the Due Process claims in the Hicks line of cases, and because we agree with the district courts' resolutions of the Social Security Act claims in the Perkins and Carter cases, we AFFIRM the district courts' judgments as to those issues.
DISSENT
The SSA now alleges, based on a statement attached to the plea agreement that Conn recently signed in his criminal prosecution, that Conn's "fabrication of evidence was not limited to RFC forms." SSA Br. at 13. According to Conn's plea agreement, Adkins also exaggerated the length of his evaluations and estimated claimants' IQs rather than administering proper IQ tests. 17-cr-43, R. 9-1 (Factual Basis Statement ¶ 7) (Page ID #36). The OIG did not mention (and perhaps did not know about) these non-RFC examples of fraudulent behavior in its letter referring plaintiffs' cases to the SSA for redetermination. 16-cv-154 (Hicks), R. 10-1 (OIG Letter) (Page ID #146).
The plaintiffs in Carter also alleged that the SSA's redeterminations were not supported by substantial evidence. That claim was not the subject of the SSA's motions for summary judgment. E.g. , 16-cv-101 (Griffith), R. 43 (Mem. Op. & Order at 14) (Page ID #963).
This is not to say that a rule excluding only the RFC forms would satisfy due process. For reasons laid out above, such a rule would still deprive plaintiffs of an individualized opportunity to show that material critical to their cases should not be disregarded. But the SSA's actual decision to exclude not just the RFC forms, but also the four doctors' entire medical reports, is even more troubling.
The dissent, however, argues that we have never held that hearings under § 405(b)(1) are formal adjudications and have only said so in dicta. See Dissent at 823-24 (discussing Mullen v. Bowen ,
The dissent also maintains that redeterminations under § 405(u) are not governed by § 405(b)(1). Dissent at 823-25. The SSA has not advanced this argument. Rather, it maintains that "the redetermination process as implemented by SSA [ ] provides the protections guaranteed by § 405(b)(1)." See SSA Reply Br. at 36-37. Because the SSA has not made the argument presented by the dissent, we do not entertain it.
The SSA appears to read Richardson v. Perales ,
Plaintiffs raise three additional purported violations of the APA's requirements for formal adjudications. First, plaintiffs contend that the SSA "imposed" a "sanction" on plaintiffs based on evidence outside the record, in violation of
The dissent argues that plaintiffs forfeited their arbitrary-and-capricious claim because they did not raise it meaningfully below. See Dissent at 825-27. We conclude that the argument was sufficiently raised below to be preserved for appeal because it was not addressed "in a perfunctory manner, unaccompanied by some effort at developed argumentation" and plaintiffs did not merely "mention a possible argument in the most skeletal way." McPherson v. Kelsey ,
In one of the district court proceedings below, the SSA described the relevant HALLEX provisions as "interpretative rules" that "merely restate and interpret [42 U.S.C. §] 1383(e)(7) 's mandate that the agency redetermine eligibility for supplemental security income if there is a reason to believe that fraud was involved in an individual's application, and when redetermining eligibility, disregard evidence if there is reason to believe that fraud was involved in the provision of the evidence." 16-cv-101 (Griffith), R. 33 (Acting Comm'r's Reply in Supp. of Her Partial Mot. to Dismiss Pls.' Compl. at 11) (Page ID #286). Here, we presume that, as the SSA alleges, the provisions at issue are in fact interpretive rules. See Perez v. Mortg. Bankers Ass'n , --- U.S. ----,
The SSA argues that plaintiffs forfeited this argument by not raising it below. However, Hicks raised the point in her motion for partial summary judgment. 16-cv-154 (Hicks), R. 22 (Mot. for Partial Summ. J. at 27) (Page ID #1076) (noting the distinction between the OIG's fraud assertions and the SSA's fraud assertions and arguing that "[t]here is no statutory or regulatory basis for this distinction. Its arbitrary nature-that a beneficiary's evidentiary rights depend on which of the Defendant's employees happens to develop a belief about the beneficiary's award-itself suggests a due process of Administrative Procedure Act violation." (citing
Plaintiffs argue that "Auer deference is unwarranted for agency positions 'adopted in response to litigation,' " Pls. Reply Br. at 22-23, but the Supreme Court has not announced such a blanket rule. It has instead explained that Auer deference is "unwarranted when there is reason to suspect that the agency's interpretation 'does not reflect the agency's fair and considered judgment on the matter in question,' " which "might occur" when an agency's interpretation "is nothing more than a 'convenient litigating position.' " Christopher v. SmithKline Beecham Corp. ,
As Social Security Rulings presumably lack the force of law, they do not warrant Chevron deference. Smith v. Aegon Cos. Pension Plan ,
Dissenting Opinion
Is Mathews v. Eldridge , a bedrock of the modern law of procedural due process, still good law? One would hardly think so from the arguments of plaintiffs that it does not apply in this case, its marginalization by the district court in the Hicks case below, and its demotion to backup status by the majority.
I.
In the decade after the Supreme Court recognized in Goldberg v. Kelly that the continued receipt of government benefits was a property interest protected by the Due Process Clause, the Supreme Court gave clarity and coherence to that law.
The plaintiffs' attempt to shift the focus from the application of rock-solid precedent suggests that plaintiffs anticipate losing under that precedent. Indeed, plaintiffs do inexorably lose under the Mathews v. Eldridge test. First, while the plaintiffs' property interest in continued benefits is certainly substantial, the district court in Carter gave considerable reasons why that harm is categorically limited. Mathews makes clear that this weight-of-the-property-interest factor is to be determined categorically, that is, by the nature of the benefits rather than by the individual harm that one plaintiff may suffer. See Mathews ,
The court below in Hicks , concededly "avoid[ing]" the Mathews v. Eldridge analysis for the major part of its opinion, see Hicks v. Colvin ,
Such reasoning elides the whole carefully wrought structure of procedural due process. Standard due process analysis requires a clear identification of a property interest and the application of the Mathews v. Eldridge analysis to the deprivation of that interest. In this case there are two determinations, by two different administrative bodies, that affect two distinct interests. First there is the decision that eligibility must be redetermined, and second is the question of eligibility itself. There is no property or liberty interest in the first. The statute provides for a redetermination in certain circumstances that are independent of whether a claimant is eligible for benefits ("reason to believe" fraud on the part of the lawyer and doctor). There is no more a protected property interest in avoiding a redetermination in these circumstances than had the statute provided for random redeterminations or for redeterminations scheduled on a three-year interval. Indeed, plaintiffs do not claim to have a property interest in avoiding a redetermination.
*816Here, following ample notice, an administrative law judge terminated plaintiffs' disability benefits (the deprivation) because it determined there was not sufficient evidence of disability in the medical records initially submitted with the application, the new evidence submitted by plaintiffs, and any testimony given (the evidence) after hearing argument from plaintiffs and their counsel (the opportunity to challenge the evidence). That is textbook due process. The question is whether due process requires even more-specifically, an opportunity for plaintiffs to challenge the Inspector General's "reason to believe" that fraud was involved in their original applications, so that they might use the evidence excluded because of that belief. A straightforward balance of the Mathews factors says no.
Private Interest at Stake. As Mathews v. Eldridge itself makes clear, it is the general nature of the harm, and the types of relief that are generally available, that fix the weight of the property interest at stake. See
Here the parties agree that the property interest being deprived is the continued receipt of Social Security by an eligible recipient. But any plaintiff suffering from a current disability can establish a new forward-looking entitlement by filing a new application for benefits. If successful, those monthly payments should make up for the lost benefits going forward. All plaintiffs were informed of this right to submit new applications when they received unfavorable redetermination decisions, and five of the seven plaintiffs who have taken advantage of this right have been approved for benefits.
Plaintiffs may also apply for a waiver of overpayment, so long as they were not at fault for the fraudulent aspects of their prior application and collection of past payments would be inequitable. If granted, an overpayment waiver would relieve plaintiffs of having to pay back the years of benefits they had received before termination, otherwise one of the harshest consequences of an unfavorable redetermination. See
Together, an overpayment waiver coupled with a new, prospective benefits award drastically reduce the hardship of deprivation by allowing plaintiffs to retain earlier monthly payments and ensuring continuous benefits save only for the (likely short) period between the end of the old benefits and beginning of the new ones.
These protections are readily available to nearly every plaintiff who would benefit from the additional process sought-and it is those plaintiffs that our inquiry must focus on. These mitigators are not enough to zero out plaintiffs' interest in the receipt of their benefits, but they do go a long way in reducing the degree of deprivation created by an erroneous eligibility determination.
Public Interests at Stake . On the other side of the scale rest the weighty public interests in a functioning disability benefits regime free from the taint of fraud and from overly burdensome and costly procedures. Most obviously, there is an enormous public interest in avoiding the taint of fraud on determinations by one of the largest and most significant government benefits programs in the United States. Confidence in the integrity of the system of awarding benefits is crucial to public acceptance of the statutorily imposed obligation of almost all working Americans to pay Social Security taxes on their income. Permitting the award of benefits based on evidence provided by a doctor through a lawyer to an ALJ when all three have concededly conspired, at least in other cases, to defraud the Social Security disability benefits system obviously undermines confidence in the system. Avoiding this is a substantial public interest.
There are also significant administrative costs. As was the case in Mathews , the "most visible burden would be the incremental cost resulting from the increased number of hearings." See
What is more, grafting these sorts of evidentiary mini-trials onto the redetermination *818process would thwart Congress's objective of redetermining benefits effectively and immediately. The redetermination process was created to protect the agency from the lasting effects of benefits frauds. But to undo Congress's evidentiary restriction would serve to introduce categorically unreliable evidence back into the redetermination process and risk re-exposing the agency to the continuing effects of fraud. Congress had large-scale frauds like this in mind when it crafted a "streamlined procedure enabling the [Commissioner] ... to expeditiously terminate fraudulently obtained [disability] benefits." See 140 Cong. Rec. H4750-03 (1994) (Stmt. of Rep. Pickle). As did the Commissioner in implementing Congress's statutory design. We should be loath to substitute our own policy considerations for those unquestionably better suited-and constitutionally empowered-to make them. See Mathews ,
Plaintiffs argue that the burden of additional evidentiary hearings cannot be prohibitively heavy considering that the Commissioner provides similar hearings when agency staff-and not the Inspector General-has reason to believe fraud was involved in an application. But the Commissioner's argument does not hinge on the proposition that it would be impossible to provide the hearings, merely that the cost of doing so in these circumstances outweighs the benefits gained. Moreover, the Commissioner has good reason for treating those two scenarios differently-where a law enforcement entity like the Inspector General investigates and forms a reason to believe that fraud occurred, the cost of challenging that determination is higher and the benefit much lower. That is, in part, because Inspector General investigations are often much larger and more complex than their non-law-enforcement counterparts, and also because determinations by a law enforcement entity with investigative expertise serve as a check against arbitrariness and are less likely to be rebutted.
Risk of Erroneous Deprivation . Under a proper application of the Mathews balancing test, the additional procedure sought-the ability to present evidence from fraud-tainted sources-is hardly likely to reduce the risk of wrongful deprivation of the (properly identified) property interest at stake-continued receipt of eligible disability benefits. Once again, giving short shrift to the standard procedural due process analysis leads the analysis astray, here by permitting exaggeration of the risk of erroneous deprivation. Once the property interest at issue is properly identified as the loss of disability benefits, and not the avoidance of a redetermination or the use of certain evidence, it becomes clear that little increase in accuracy would result from considering evidence provided by Conn and one of the four conspiring doctors.
In evaluating the risk of erroneous deprivation, we start by evaluating the current administrative process. See Mathews ,
That is a lot of process. More importantly, it is process designed to minimize the risk that deserving applicants will be wrongly stripped of benefits. Two key features are worth emphasizing. First, the administrative law judge reviews anew all of the evidence from the original application, save only for the single report submitted by one of the crooked doctors. That review is significant because the Commissioner is statutorily charged during the initial stages of review (of the original application) to assist in "develop[ing] a complete medical history" of at least the twelve months preceding the application, including by scheduling consultative examinations where needed. See
Second, the opportunity to submit new evidence enables plaintiffs to fill in any gaps left open in the existing case file and to provide substitute evidence for any truthful information contained in the excluded reports. Of course, given the lapse of time, it may sometimes prove difficult to find substitute evidence, but those difficulties are eased in two significant ways. First, the earlier development of the case file means that the most relevant medical records should already be available to the administrative law judge. Second, where older records are unavailable, recipients may develop and submit new evidence, along with authority (expert testimony or otherwise) that such evidence bears on the relevant period. For example, a recipient, like Hicks, suffering from a cognitive disability could take an IQ test today and submit the results as evidence of prior disability, since intellectual capabilities generally remain stable throughout life, see Program Op. Manual Sys. (POMS) DI 24515.055; Williams v. Mitchell ,
Plaintiffs argue that the risk of an erroneous deprivation (from excluding evidence from a tainted combination of sources) is too high because there is too great a risk that, in any one case, the Inspector General might have had no "reason to believe" fraud was involved-meaning evidence was excluded that should not have been. But again, this conflates the risk of wrongfully excluding evidence with the risk of wrongfully terminating benefits. Plaintiffs have a protected interest in only the latter, and the risk of wrongfully excluding evidence is relevant only as it raises a serious risk of wrongfully terminating benefits-and in most cases it does not.
That is because the one-off reports by non-treating physicians that were excluded are weak evidence as a matter of agency regulation.
Thus, it is simply wrong to say that the exclusion virtually decides the ultimate issue of eligibility. Plaintiffs observe that because they were successful in their initial applications, when they had the reports, and only failed on redetermination, without them, they must be dispositive. But that observation forgets another, rather important, distinction: plaintiffs' original applications were granted by an administrative law judge on the Conn payroll who rubberstamped every application sent his way regardless of the evidence. The point is that any neutral administrative law judge to consider the reports on redetermination would be bound by regulation to afford them little, if any-and in no case, controlling-probative value.
Even assuming the reports might have some probative value, it would remain next to impossible for any plaintiff to rebut the Inspector General's "reason to believe" that fraud was involved-meaning any hearing on that question would be of little practical worth. The statute requires the Commissioner to "disregard any evidence if there is reason to believe that fraud or similar fault was involved in the providing of such evidence."
In Congress's view, it is a feature-not a bug-that this standard is so low. Having a "reason to believe" is not the end, but rather the beginning of the redetermination process, and a more adversarial determination would defeat the gateway function that the standard serves. It is also the *821type of determination that can be made reliably by a third party without an adversarial hearing. In Kaley , for instance, the Court held that the adversarial process "is far less useful to the threshold finding of probable cause," which "by its nature, is hard to undermine, and still harder to reverse."
For its part, the Supreme Court has upheld initial non-adversarial findings by independent third parties as a check against arbitrary deprivations. See, e.g. , F.D.I.C. v. Mallen ,
In sum, the redetermination inquiry asks whether plaintiffs would have been entitled to disability benefits at the time of their original applications had those applications not included evidence tainted by the possibility of fraud. To answer that question accurately and efficiently, an administrative law judge reviews the original claims file (which presents a snapshot of the claimant's medical condition at the time of her original application) and any newly submitted evidence by claimants or their experts and hears argument and testimony. There is little risk of error in that process-which is even further backstopped by judicial review.
Plaintiffs attempt to inject a specter of unpalatable error by citing the risk that outcome-determinative evidence might be wrongfully excluded in any given case. But that risk is practically nonexistent, and not at all improved by the evidentiary hearing sought. First, by regulation the excluded reports are of such little probative value that they could be outcome-determinative in only the rarest of cases. Second, the standard for excluding evidence-a mere "reason to believe" fraud was involved-is nearly irrebuttable. The rare cases do not dictate the amount of process constitutionally due. Considering the robust procedural safeguards in place, plaintiffs are not constitutionally entitled to additional, burdensome process with little real-world value.
In general, due process does not guarantee a right to present evidence of whatever type and in whatever form a party chooses. Even in the context of a criminal trial, a "defendant's right to present relevant evidence is not unlimited, but rather is subject to reasonable restrictions." United States v. Scheffer ,
*822Here, Congress and the Commissioner balanced plaintiffs' right to introduce evidence with other legitimate interests of ensuring accurate redeterminations based on reliable evidence and facilitating swift, efficient redeterminations in cases of large-scale frauds. In doing so, the federal rulemakers created a blanket prohibition of evidence that the Commissioner or Inspector General has reason to believe is fraudulent and thus unreliable, rather than allow for case-by-case reliability determinations that would be costly and time intensive. To square that prohibition with plaintiffs' right to introduce evidence, the process allows plaintiffs to submit new evidence to substitute for that which was excluded. That approach soundly balances the Mathews factors.
Indeed, the evidentiary restriction here is very much like the prohibition of polygraph evidence upheld in Scheffer . There, the Court held that a blanket prohibition on the use of polygraph evidence in military trials was reasonable because there was no scientific consensus on the general reliability of that evidence and because case-by-case reliability determinations would be difficult, if not unworkable. See Scheffer ,
Scheffer is not distinguishable on the theory that the restriction here depends on a particularized determination that aspects of the plaintiffs' records are tainted by fraud, whereas Scheffer involved a blanket prohibition. Such a purported distinction mistakes the nature of the Inspector General's inquiry and the standard for exclusion. The Inspector General developed the necessary "reason to believe" not by engaging in a hyper-particularized analysis of each plaintiff's records but by investigating and uncovering that the four doctors conspired with Conn to submit fraudulent reports. The Commissioner then excluded any reports submitted by one of those doctors at the behest of Conn. The only remotely individualized inquiry was to compile the list of claimants who submitted one of those reports-hardly an exercise requiring adversarial input. In overall function, then, the exclusion here works just like Scheffer's blanket prohibition.
It similarly misses the point to argue, in response, that the evidentiary restriction is unreasonable because it may exclude some evidence that was not fraudulent. Congress is free to (reasonably) exclude-in all cases -categories of evidence that it determines is inherently unreliable, even if that evidence might be trustworthy in some cases. The point is that it is too difficult or time consuming to determine when those cases arise. The Social Security benefits regime incorporates a good example of the principle: by statute, claimants can prove their disability only with evidence incorporating "medically acceptable clinical and laboratory diagnostic techniques." See
*823In short, a Mathews v. Eldridge balancing leads inexorably to the conclusion that there is no procedural due process violation in this case. Disregarding in this case the countless Supreme Court holdings that reaffirm Mathews v. Eldridge risks undermining public respect not only for the integrity of the Social Security system, but also for the commitment of the lower courts to follow foundational Supreme Court precedent.
II.
The Commissioner's redetermination process also survives the two challenges plaintiffs advance under the Administrative Procedure Act. First, plaintiffs argue that the hearings afforded during redeterminations do not live up to the standards of formal adjudications under the APA. That is a non-starter because redeterminations are not formal adjudications under the APA and thus need not meet those requirements. Regardless of whether they must meet those standards, they do.
Second, plaintiffs argue that it is arbitrary and capricious for the Commissioner to allow claimants an opportunity to challenge a "reason to believe" finding by the Commissioner, but not one by the Inspector General or another law-enforcement agency. This too fails out of the gate; plaintiffs have forfeited the argument by not developing it below. In any event, because the Commissioner has a non-arbitrary justification for tailoring the procedures according to the genesis of the "reason to believe" finding, those procedures are not arbitrary or capricious.
A.
Redeterminations are not formal agency adjudications under the APA and thus need not follow the detailed trial-like procedures the APA requires of formal adjudications. A formal adjudication is an agency adjudication that is statutorily required to be determined "on the record after opportunity for an agency hearing." See
With no "on the record" requirement in § 405(u) -the only statutory language expressly governing redeterminations-plaintiffs are forced to look elsewhere in search of their textual hook. According to plaintiffs, the necessary "on the record" requirement appears in § 405(b)(1), which governs the Commissioner's "decisions as to the rights of any individual applying for a payment under this subchapter." They argue that § 405(b)(1) compels an "on the record" hearing and applies to redeterminations under § 405(u). Both steps of that syllogism are shaky.
Contrary to plaintiffs' contention, we have not already held that hearings under § 405(b)(1) are formal adjudications. See Mullen v. Bowen ,
*824Even assuming § 405(b)(1) determinations are formal adjudications, that subsection does not govern redeterminations under § 405(u).
Reading formal-adjudication requirements into § 405(u) would subvert Congress's purpose in amending the statute to authorize streamlined redeterminations in cases of possible fraud. Even before the statute was amended to provide for redeterminations, the Commissioner was authorized to "reconsider" whether a recipient's disability had ceased, was no longer disabling, or ever existed to begin with-but "only after opportunity for an evidentiary hearing" that is "reasonably accessible" to the recipient. See § 405(b)(2)(B). It was this reconsideration process that Congress found "cumbersome and unworkable" in dealing with potential frauds. See 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 (Comm. Print 1994). The very essence of § 405(u) was to provide the Commissioner a quicker, more effective method of redetermining eligibility in cases of possible fraud. It makes no sense that Congress would supplement the existing unworkable procedures with a redetermination process subject to the same procedural hurdles. That reading would render Congress's 1994 addition of the redetermination process meaningless. The better reading is that redeterminations are not subject to the APA's trial-like requirements for formal adjudications.
In any event, the redeterminations here met those requirements. Plaintiffs fault the Commissioner for (1) imposing a "sanction" based on evidence outside the record,
First, the very same rule that prohibits an agency from imposing a "sanction" based on evidence outside the record, requires that the "agency as a matter of policy shall provide for the exclusion of irrelevant, immaterial, or unduly repetitious evidence." See
Second, § 556(d) requires cross-examination only "as may be required for a full and true disclosure of the facts," and expressly allows an agency, when "determining claims for money or benefits," to accept only written evidence so long as no party is prejudiced. Plaintiffs do not claim that cross-examination was necessary for a full and true disclosure of the facts concerning the redetermination of their eligibility; they seek to cross-examine the Inspector General about its fraud finding. But plaintiffs are not entitled to any hearing on the Inspector General's finding, much less a formal adjudication, and cross-examination on that finding has nothing to do with a full and true disclosure of the facts considered by the agency in redetermining plaintiffs' eligibility.
Third, the agency did not rest its redetermination on official notice of any material fact not in the record.
Fourth, no one from the Inspector General's office participated or advised in the "[administrative] decision" to which plaintiffs would apply the formal-adjudication rules, the redetermination of eligibility. See
B.
Plaintiffs' remaining APA claim also fails. It is neither arbitrary nor capricious for the Commissioner to shape the agency's internal procedures governing redeterminations according to which entity investigates and finds that there is "reason to believe" fraud was involved in an application. Plaintiffs do not argue that the Commissioner lacks the statutory power to *826establish procedures to carry out redeterminations. Nor could they, for the statute says nothing about the procedures for redeterminations, see
But that puts the cart before the horse. Plaintiffs forfeited their arbitrary-and-capricious challenge by failing to raise it meaningfully below. At most, plaintiffs made two passing references to the so-called arbitrary procedural distinction the Commissioner drew between Inspector General referrals and internal determinations of fraud. That these perfunctory references cite the statute setting out the arbitrary-and-capricious standard does not make up for plaintiffs' failure to develop these arguments as standalone claims. On the contrary, both references were made in support of other claims-once in the context of plaintiffs' due process challenge, and again in connection with their formal-adjudications argument. Issues cursorily mentioned without any sort of developed argument are routinely deemed forfeited. See, e.g. , Langley v. Daimler Chrysler Corp. ,
Forfeited or not, the challenge fails. The statute makes perfectly clear that the Commissioner is authorized to establish procedures that it deems appropriate for carrying out the redeterminations. See
The Commissioner does have a non-arbitrary justification for treating referrals from the Inspector General differently than fraud determinations made by non-investigatory, in-house personnel-namely, the distinct roles and competencies of those decisionmakers. For one, it would impose a significantly greater burden on investigators (than on agency staff or adjudicators) to subject them to countless evidentiary hearings. In part this is because the Inspector General and other law-enforcement officials play no ongoing role in redeterminations after their referral. Thus, to hold evidentiary hearings into their determinations would be to introduce a host of new actors into the redetermination process. And since the Inspector General and law-enforcement agencies are more likely to investigate large-scale frauds, the resulting hearings would often be more complicated and arduous. That is because an understanding of the broader investigation and findings is crucial to reviewing the *827individual fraud determinations. It makes good sense that the Commissioner would choose not to impose these burdens on the Inspector General, where doing so would divert considerable resources away from the office's statutory mission to investigate and detect benefits fraud.
In contrast, it is also reasonable for the Commissioner to align redetermination procedures following its own findings of fraud with the procedures required for initial determinations under § 405(b)(1). By its terms, § 405(b)(1) governs initial determinations and not redeterminations. But that does not mean the Commissioner acts arbitrarily by fashioning redetermination procedures that borrow from those used in initial determinations. Because § 405(b)(1) provides for review of the Commissioner's decisions-but not the Inspector General's-it makes sense that redetermination procedures would allow for review of the Commissioner's finding of fraud, but not one by another entity.
It is ironic that plaintiffs fault the agency for providing review of its own findings of fault, when that review is merely a substitute for the check that is inherent in Inspector General referrals-a finding of fault by an independent third party. As discussed earlier, the Supreme Court has held that a finding of probable fault by an independent body demonstrates that a resulting deprivation is not arbitrary, "baseless[,] or unwarranted." See Gilbert v. Homar ,
Far from arbitrary, the Commissioner's procedural choices are reasonable and further rather than hinder the congressional mandate to detect benefits fraud and terminate improper awards more efficiently and effectively.
III.
I join Part II.C. of the majority opinion, but otherwise dissent. The agency's actions challenged in this case do not violate procedural due process or the Administrative Procedure Act.
See the following cases where the Supreme Court applied Mathews v. Eldridge balancing: Nelson v. Colorado , --- U.S. ----,
Against this phalanx of cases, plaintiffs cite Dusenbery v. United States ,
According to plaintiffs' brief, they "are not requesting an opportunity to challenge the factual basis for OIG's overall investigation, i.e., its claim that Conn committed a general fraud."
This point is not answered by the analogy the majority draws to a hypothetical variation of the Hamdi facts. The present case is not analogous to allowing Hamdi the hollow opportunity to contest his ultimate status as an "enemy combatant" but not the underlying fact that he was captured on the battlefield in Afghanistan (a fact all but dispositive of the ultimate question). Apples to apples, the evidentiary exclusion here is like allowing Hamdi a very real and meaningful opportunity to contest before a neutral arbiter his status as an enemy combatant and that he was captured on the battlefield in Afghanistan (and any other fact used to justify his detention)-only requiring that he do so without relying on, say, letters from persons the CIA has reason to believe are affiliated with al-Qaeda, because Congress determined that evidence of that kind is categorically unreliable in determining enemy combatant status.
One plaintiff, Griffith, experienced no gap in her monthly payments because of the timing of her overpayment waiver and successful new application.
Departing from the standard analysis for procedural due process also risks the incoherent anomaly of looking at the sought procedural protection as the property interest. The property interest in this case, for instance, is the eligible receipt of disability benefits, not the desired procedural protection of permitting evidence from identified fraudsters. Admitting the evidence is instead a proposed procedure asserted to be required under the Mathews v. Eldridge balance to protect the property interest in disability benefits. Treating admission of the evidence itself as the protected property interest facilitates unsound reliance on cases like Goldberg and Hamdi that involved property and liberty interests far weightier than those in Eldridge and this case. For this reason, the purported analogies in the rhetorical opening to the Hicks opinion below, concerning terrorists and lying employees, are false ones. See Hicks ,
It is not at all contradictory to say that the Inspector General's "reason to believe" finding is easily and reliably made and yet burdensome to testify about at individualized hearings. The plaintiff-specific findings are reliably made, in part, because they are deduced from the broader investigation into and discovery of the pattern of submitting fraudulent forms of a particular kind. But that also means that the Inspector General would have to present evidence of the broader conspiracy (from which the individualized findings are deduced) to substantiate the specific application of that broader evidence in each and every case.
The majority argues that the risk of erroneous deprivation is too high in these cases because the Commissioner excluded more evidence than the Inspector General had reason to believe was fraudulent. But that is not quite right. In its referral, the Inspector General notified the Commissioner of its reason to believe that "Mr. Conn or his firm submitted pre-completed 'template' Residual Functional Capacity forms purportedly from" one of the four identified doctors. Along with each of those RFC forms, Conn submitted the evaluation notes of those doctors purporting to be the basis for the (fabricated) conclusions in the RFC forms. Thus, based on the referral, the Commissioner excluded these RFC forms and the accompanying examination notes, which together formed a medical report or opinion. It makes no sense to suggest that the Inspector General did not have reason to believe that the evaluation notes submitted along with and serving as the basis of the conclusions contained in the fabricated RFC forms were similarly tainted by fraud.
The Commissioner does argue the point that redeterminations under § 405(u) are not required by § 405(b)(1), see Comm'r. Reply at 36-37, quoting Robertson v. Berryhill , No. 16-cv-3846,
Our 1992 order in Baker v. Director, Office of Workers' Compensation Programs ,