United States District Court, D. Colorado
SALLY A. MCLELLAN, Plaintiff,
v.
COMMISSIONER, SOCIAL SECURITY ADMINISTRATION, Defendant.
OPINION AND ORDER
MARCIA
S. KRIEGER, SENIOR UNITED STATES DISTRICT JUDGE
THIS
MATTER comes before the Court pursuant to the
Defendant's (“SSA”) Motion to Dismiss
(# 16), Ms. McLellan's response
(# 23), and the SSA's reply (#
24).[1] Ms. McLellan has also filed a Motion for
Leave to Supplement (# 28) her Complaint, to
which the SSA has filed no response. Also pending are
numerous motions (# 26, 27, 29, 31, 32) by
Ms. McLellan, variously seeking appointment of counsel, an
update on the status of the case, or an expedited ruling.
According
to Ms. McLellan's pro se[2] Complaint (#
1), she applied for Social Security Disability
benefits in March 2007. After extended administrative
proceedings, in October 2017, the SSA found Ms. McLellan
eligible for benefits retroactively to July 2012. Ms.
McLellan contends that she has begun receiving her monthly
benefit payments, but has yet to receive any
“backpay” - that is, the retroactive
payments.[3]
Supplemental
submissions from Ms. McLellan and filings by the SSA flesh
out Ms. McLellan's claims somewhat, and the Court recites
those additional facts simply for purposes of clarity and
context, without actually relying on them as part of the
Court's analysis. On October 13, 2017, an ALJ determined
that Ms. McLellan was entitled to benefits retroactive to
August 2012, totaling $30, 402.90. For various reasons
(including avoiding conflict with certain means-testing that
applies to a claimant's entitlement to ongoing benefits),
when retroactive benefit payments owed to a claimant exceed a
certain amount, the SSA will not pay them out in a lump sum.
Instead, the SSA makes such payments “in not more than
3 installments [ ] made at 6-month intervals, ” with
the first two installment payments determined by a formula.
20 C.F.R. § 416.545(b). Pursuant to this rule, in March
2018, the SSA made a first installment payment to Ms.
McLellan in the amount of $2, 250.
There
are certain exceptions to the installment payment rule,
allowing the first two installment payments to be increased
above the formula-driven amount if the claimant has
outstanding debts for necessities like clothing or shelter.
20 C.F.R. § 416.545(d)(1)(i). It appears that, at some
point in time, Ms. McLellan requested that her installment
payment be increased due to outstanding debts she owed for
rent payments. She states that she “received
correspondence” in late March 2018 “dismissing my
request for reconsideration of my award.”
It
appears that SSA made the second installment payment six
months later, in or about September 2018. However, rather
than paying any sums to Ms. McLellan, SSA made a payment of
$11, 571 to the State of Colorado. This payment appears to be
pursuant to 42 U.S.C. § 1383(g). That statute provides
that, upon the written authorization of a claimant, the SSA
may “withhold [retroactive] benefits due with respect
to that individual and may pay to a State . . . an amount
sufficient to reimburse the State [ ] for interim assistance
furnished on behalf of the individual by the State.”
See generally Johns v. Stewart, 57 F.3d 1544
(10th Cir. 1995) (finding that such practice does
not contravene the Social Security Act). According to a
September 5, 2018 letter from the State of Colorado to Ms.
McLellan, Ms. McLellan had previously “signed an
authorization giving Social Security the authority to
reimburse the State . . . for assistance given to you under
the State Aid to the Needy Disabled State Only
program.” The State of Colorado provided Ms. McLellan a
calculation of the aid payments she had received under that
program between 2012 and 2017, with the total coming to $11,
571.
It
would appear that the third installment payment, in the final
amount of $16, 581.19, [4]would have been due in or about March
2019. The record before the Court does not indicate whether
that payment was made, and if it was, to whom and in what
amount(s).
A.
Motion to dismiss
The SSA
moves (# 16) to dismiss Ms. McLellan's
claim, arguing that the Court's subject-matter
jurisdiction extends only to “final” decisions of
the agency. 42 U.S.C. § 405(g), (h). The SSA argues that
determinations about when and how to pay retroactive benefits
are not “final” benefits subject to judicial
review.[5]
42
U.S.C. § 405(g) provides that “any individual,
after any final decision of the Commissioner [ ] made after a
hearing . . ., may obtain review of such decision by a civil
action commenced within sixty days after the mailing to him
of notice of such decision.” 42 U.S.C. § 405(h)
provides that “no findings of fact or decision of the
Commissioner [ ] shall be reviewed . . . except as herein
provided.” Thus, the Court's jurisdiction to hear
Ms. McLellan's claim exists only to the extent that she
is challenging a “final decision . . . made after a
hearing.”
In
Smith v. Berryhill, 139 S.Ct. 1765, 1774 (2019), the
Supreme Court sought to define what constitutes a
“final decision” under the Social Security Act.
It must be “final, ” in the sense of
“terminal” - that is, “the final stage of
review” under the SSA's own regulations.
Id. It must also be “made after a hearing,
” in the sense that it is “tethered to” a
hearing that is “a matter of legislative right rather
than agency grace.” Id. at 1775. In so
holding, the Smith Court distinguished its case - in
which the claimant sought an initial award of benefits and
had a hearing before an ALJ, only to have his appeal of the
ALJ's ruling denied on timeliness grounds - from
Califano v. Sanders, 430 U.S. 99, 108 (1977), in
which the Court held that a claimant's petition to reopen
a prior final decision - a petition that was denied by the
SSA without a hearing - was not subject to judicial review
because “the opportunity to reopen final decisions and
any hearing convened to determine the propriety of such
action are afforded by the Secretary's regulations and
not by the Social Security Act.”
It is
not completely clear what rule Smith purports to lay
down. In Keller v. Commissioner, 748 Fed.Appx. 192,
194 (10th Cir. 2018), the 10th Circuit
seems to have read Smith extremely narrowly,
construing it to establish that “the district
court's jurisdiction is limited to reviewing the
agency's final decision on an initial claim for
benefits” (not, as in both Califano and
Keller, a request by a claimant to reopen a prior
denial of such a claim). If that is the correct reading of
Smith, Ms. McLellan's claim challenging the
SSA's decision to pay her retroactive benefits in
installments is not a “final decision” because,
clearly, it is not an “initial claim for
benefits.”
Alternatively,
one might read Smith to teach that matters arising
under statute can, if pursued to conclusion, result in a
“final decision, ” whereas procedures that are
created solely by regulation cannot. If that is the correct
reading, Ms. McLellan's claim challenging the payment of
her retroactive benefits via installment still fails. The
Social Security Act itself has relatively little to say on
how and when such payments are made. 42 U.S.C. §
404(a)(1) provides that “whenever the Commissioner [ ]
finds that more or less than the correct amount of payment
has been made to any person, . . . proper adjustment or
recovery shall be made under regulations prescribed by
the Commissioner.” (Emphasis added.) In other
words, although Congress requires that an underpayment be
rectified, it leaves discretion to the Commissioner to
determine how and when additional payments are made. As
explained above, the Commissioner has done so in the form of
the installment payment scheme described in 20 C.F.R. §
416.545(b). That scheme does not describe any hearing
procedure that claimants are entitled to if they disagree
with the timing or amount of installment payments. (Indeed,
it does not even appear that the regulation confers any
discretion upon the Commissioner to decide whether to make
installment payments. If the unpaid benefit amount exceeds an
objectively-calculable threshold, interim payments in
specifically-defined amounts are mandatory.) Thus, the
installment payment scheme is a “matter of agency
grace, ” not a “legislative right” that
entails a right to a hearing and, thereafter, judicial review
under 42 U.S.C. § 405(g). As such, the Court lacks the
power to hear Ms. McLellan's challenge to the SSA's
invocation of the installment payment plan for her
retroactive benefits.[6]
Yet
another way of reading Smith is that the notion of a
“final decision” is tied to the exhaustion of the
SSA's four-step appeal procedure. 139 S.Ct. at 1772
(“modern-day claimants must generally proceed through a
four-step process before they can obtain review from a
federal court”). 20 C.F.R. § 416.1400
“describe[s] the process of administrative review and
explain[s claimants'] right to judicial review after
you have taken all the necessary administrative
steps.” (Emphasis added.) The administrative
process requires a claimant to: (i) obtain an initial
determination, (ii) request reconsideration of an unfavorable
determination, (iii) request a hearing before an ALJ, and
(iv) request review of the ALJ's decision by the Appeals
Council. It is only “[w]hen you have completed the
steps of the administrative review process” that a
claimant “may request judicial review by filing an
action in federal court.” 20 C.F.R. §
416.1400(a)(1)-(5). To the extent that Smith
requires complete exhaustion of the administrative review
process before an determination becomes a “final
decision, ” Ms. McLellan's Complaint does ...