on Mar 1, 2021
at 3:46 pm
Wednesday’s argument in Carr v. Saul involves a surprisingly basic question of administrative law: when claimants in an administrative process (Social Security in this case) must raise a particular issue before the agency if they wish to preserve their right to raise that issue on judicial review of the agency’s final decision. The Supreme Court has many decisions and a well-understood framework for deciding when claimants must raise claims in the administrative process – “exhausting” their administrative remedies. It is quite clear, for example, that Social Security claimants must go first to the Social Security Administration before they come to federal court. But the justices have said little about the distinct question of what issues they must present when they are exhausting those remedies. Carr (along with a consolidated case, Davis v. Saul) gives the court an opportunity to address that question.
To provide some context, the specific argument that Willie Earl Carr (and several other claimants) want to present is that the administrative law judge before whom they presented their claim did not have the authority to consider their claim because the ALJ was not validly appointed. All agree that the ALJ in fact was not validly appointed. That conclusion follows from the Supreme Court’s 2018 decision in Lucia v. Securities and Exchange Commission, holding that the process for appointing ALJs in the SEC violated the Constitution’s appointments clause. The claimants in this case did not raise that issue in their administrative proceedings, but did raise it when they challenged the agency’s decision in federal court after the decision in Lucia. When the lower courts held that the claimants were barred from seeking a hearing before a properly appointed ALJ, the Supreme Court agreed to review the case.
The argument for the claimants is simple: A previous decision rejecting an issue-exhaustion requirement at the appellate stage of agency Social Security proceedings (Sims v. Apfel) should control the decision here. To explain, decisions of the Social Security Administration proceed in three stages. First, the agency decides whether to award benefits. Second, dissatisfied claimants are entitled to a hearing before an ALJ to review the agency’s decision. Third, claimants dissatisfied with the ALJ’s decision can ask the SSA’s Appeals Council to review the decision of the ALJ. In this week’s case, the claimants failed to raise their appointments clause challenge before the ALJ; in Sims, the claimants failed to raise their challenge before the Appeals Council.
The claimants argue that the reasoning of Sims applies here. Justice Clarence Thomas’s opinion for a plurality pointed out that because no statute or regulation obligated claimants to exhaust particular issues before the agency, the only source of such a rule would be a judicially implied exhaustion doctrine. Because review by the Appeals Council in the SSA is not adversarial, the plurality thought it inappropriate to blame the claimant for a failure to identify the relevant issues for litigation and so it refused to imply an issue-exhaustion rule. Justice Sandra Day O’Connor concurred in the decision, reasoning that the failure of the SSA to notify claimants of any issue-exhaustion rule made it inappropriate for courts to imply one.
The claimants argue that the same reasoning applies here. There is still no statute or regulation requiring claimants to exhaust particular issues before the agency – in the 20 years since Sims, the SSA has not even proposed such a regulation. Similarly, the proceeding before the ALJ is no more adversarial than proceedings before the Appeals Council – the ALJ is charged with collecting the relevant evidence on behalf of the claimant, investigating the facts, and developing arguments on behalf of the claimant. Finally, the agency does not notify claimants that they must present all of their issues before the ALJ if they hope to preserve them for future litigation.
More generally, the claimants point out that the agency was well aware of the appointments clause challenge (which was in litigation at the time) but advised ALJs that they should not address it. Because it would have been futile for the claimants to have presented that claim to the ALJs, the claimants argue they should not be punished for their failure to do so. Finally, the claimants point out that adding issue-exhaustion requirements would increase the need for Social Security claimants to hire counsel. That would complicate those proceedings and their cost for claimants, who often do not employ counsel under the current system.
The government does its best to sidestep Sims. It argues that the court’s decisions reflect a consistent rule that parties forfeit claims that they fail to present before administrative agencies, pointing primarily to the 1952 decision in United States v. L.A. Tucker Truck Lines. The government argues that Sims does not apply here because claimants play a much more active role before ALJs than they do before the Appeals Council (which has broad discretion whether to review any particular decision). Finally, it rejects the notion that raising the challenges before the ALJ would have been futile, contending that the agency might have corrected the appointments problem sooner if more claimants had brought it to the agency’s attention.
My reaction to this case is that the government wants very much for the court to limit or retreat from Sims. I also think the justices will have little taste for adopting by judicial implication something that the agency so easily could do by regulation if it was willing to face the adverse attention. So I find it most unlikely that Thomas will find the government’s position persuasive and expect many of the younger justices will accept his understanding of his own opinion. Only Justice Stephen Breyer remains from the dissenters in Sims, and I don’t really see him pressing hard for a position that will only complicate matters for Social Security claimants. But we’ll know more by Wednesday afternoon.