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In re Various Social Security Cases Affected by Sixth Circuit Decision in Berryhill

United States District Court, E.D. Kentucky

July 11, 2019

IN RE VARIOUS SOCIAL SECURITY CASES AFFECTED BY THE SIXTH CIRCUIT DECISION IN HICKS V. BERRYHILL, NO. 17-5206,

          MEMORANDUM OPINION AND ORDER

          Joseph M. Hood Senior U.S. District Judge.

         These matters come before the Court on the Commissioner's motions to remand pursuant to sentence six of 42 U.S.C. § 405(g) in the above-captioned cases. For the following reasons, the Court will deny the Commissioner's motions to remand pursuant to sentence six of 42 U.S.C. § 405(g) and remand the above-captioned cases under sentence four of 42 U.S.C. § 405(g).

         I. FACTUAL AND PROCEDURAL BACKGROUND

         The above-captioned cases arise from the plaintiffs, with the assistance of former attorney Eric C. Conn, being awarded Social Security disability benefits. Subsequently, the Social Security Administration's (“SSA”) Office of the Inspector General (“OIG”) developed reason to believe Conn, Administrative Law Judge David Daugherty, and four examining doctors, Bradley Atkins, Ph.D., Srinivas Ammisetty, M.D., Frederic Huffnagle, M.D., and David P. Herr, D.O., had participated in a fraudulent scheme to obtain benefits for Conn's clients, including the plaintiffs in the above-captioned cases.[1] Hicks v. Comm'r of Soc. Sec., 909 F.3d 786, 794 (6th Cir. 2018). On May 12, 2015, after the OIG investigated the suspected fraudulent conduct further and identified 1, 787 individuals whose applications appeared to be tainted by fraud, the OIG advised the SSA that it could move forward with redetermining the affected claimants' eligibility for benefits under 42 U.S.C. §§ 405(u) and 1383(e)(7)(A)(i). Id. “In particular, the OIG . . . ‘ha[d] reason to believe that Mr. Conn or his firm submitted pre-completed ‘template' Residual Functional Capacity [“RFC”] forms purportedly from [the four doctors identified above], dated between January 2007 and May 2011, in support of the individuals' applications for benefits.'” Id.

         On May 18, 2015, the Commissioner sent letters to the plaintiffs in the above-captioned cases, and approximately 1, 500 similarly situated individuals, explaining:

[T]he SSA needed to redetermine plaintiffs' eligibility for benefits because “there was reason to believe fraud was involved in certain cases involving [Adkins, Ammisetty, Huffnagle, and Herr], ” one or more of these doctors “provided evidence” in plaintiffs' cases, and the ALJ (i.e., Daugherty) “previously used that evidence to find [plaintiffs] disabled.”

Id. (citations omitted). “The letters further explained that during the redetermination process, the SSA ‘must disregard any evidence from one of the medical providers above when the information was submitted by representative Eric C. Conn or other representatives associated with Mr. Conn's law office.'” Id. at 794-95. “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.” Id. at 795 (footnote and citations omitted). “Beyond the RFC forms, the four doctors had submitted evidence detailing their examinations of plaintiffs, including any testing that they had performed and behavioral observations they had made.” Id. Upon redetermination, the Commissioner found the plaintiffs were not eligible for benefits. Id. at 795.

         The plaintiffs and many similarly affected individuals filed lawsuits alleging the SSA's redetermination process was unlawful. Judges in this Court issued conflicting rulings, and the issue was appealed to the United States Court of Appeals for the Sixth Circuit. Id. at 796. In Hicks, a split panel of the Sixth Circuit held in pertinent part, “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.” Id. at 813. Furthermore, the Sixth Circuit held, “[T]he plaintiffs are entitled to summary judgment on their due-process claim.” Id. at 792.

         Specifically regarding the SSA's requirements under the Administrative Procedures Act (“APA”), “[T]he APA provides that ‘[w]hen an agency decision rests on official notice of a material fact not appearing in the evidence in the record, a party is entitled, on timely request, to an opportunity to show the contrary.'” Id. at 805 (citing 5 U.S.C. § 556(e)). In Hicks, the Sixth Circuit found that plaintiffs similarly situated to those presently before this Court “have provided evidence demonstrating that the ALJs assigned to plaintiffs' redetermination hearings essentially rejected the only remaining medical opinions that could have established plaintiffs' claims based on the OIG's off-the-record determination that the records involved fraud- determinations plaintiffs had no opportunity to rebut or contest.” Id. Furthermore, the Sixth Circuit stated that in cases like those presently before this Court, where “the SSA's procedures failed to comply with the APA's formal-adjudication requirements, ” such as those found in 5 U.S.C. § 556(e), “the ALJ's failure to comply with § 556 would require reversal of the ALJ's determination and remand for further fact-finding unless the error was harmless.” Id. at 805 (citing Dixie Fuel Co., LLC v. Dir., Office of Workers' Comp. Programs, 820 F.3d 833, 846 (6th Cir. 2016); Baker v. Dir., Office of Workers' Comp. Programs, 980 F.2d 729, 1992 WL 361287, at *2 (6th Cir. 1992)). “[The Sixth Circuit] held in Baker that the ALJ's error was not harmless because the ALJ ‘essentially rejected the only remaining medical opinion that could have established [the plaintiff's claim]' based, in part, on his assessment of the drafting physician's qualifications, which were not included in the record.” Id. at 805-06 (citing Baker, 1992 WL 361287, at *2). Accordingly, in Hicks, the Sixth Circuit, finding plaintiffs such as those presently before this Court are like the plaintiff in Baker, stated the following:

[P]laintiffs have provided evidence demonstrating that the ALJs assigned to plaintiffs' redetermination hearings essentially rejected the only remaining medical opinions that could have established plaintiffs' claims based on the OIG's off-the-record determination that the records involved fraud-determinations plaintiffs had no opportunity to rebut or contest. The SSA's process therefore fails under the APA.

Id. at 806.

         The above-captioned cases were stayed pending the Sixth Circuit's decision in Hicks. The stay remained in effect while the Commissioner sought rehearing or en banc consideration in the Sixth Circuit, which was denied. While still considering whether to file a petition for a writ of certiorari to the United States Supreme Court regarding the Hicks decision, the Commissioner moved to remand the above-captioned cases to the Social Security Administration pursuant to sentence six of 42 U.S.C. § 405(g).[2] The plaintiffs contend remand should be under the fourth sentence of § 405(g).

         II. DISCUSSION

         Sentences four and six of 42 U.S.C. § 405(g) are the only kinds of remand permitted under the statute. Melkonyan v. Sullivan, 501 U.S. 89, 99-100 (1991). Sentence four of 42 U.S.C. § 405(g) states, “The court shall have power to enter, upon the pleadings and transcript of the record, a judgment affirming, modifying, or reversing the decision of the Commissioner of Social Security, with or without remanding the cause for a rehearing.” Sentence six provides the following:

The court may, on motion of the Commissioner of Social Security made for good cause shown before the Commissioner files the Commissioner's answer, remand the case to the Commissioner of Social Security for further action by the Commissioner of Social Security, and it may at any time order additional evidence to be taken before the Commissioner of Social Security, but only upon a showing that there is new evidence which is material and that there is good cause for the failure to incorporate such evidence into the record in a prior proceeding.

         Accordingly, under sentence four, the Court may make a substantive ruling regarding the correctness of the Commissioner's decision and enter a corresponding judgment either affirming, modifying, or reversing the decision. On the other hand, the Court may remand under sentence six in the two following scenarios: (1) Before filing a response in an action, the Commissioner may request remand in a motion that shows good cause for the remand; or (2) When new evidence comes to light that was both unavailable to the claimant at the time of the administrative proceeding and may have changed the outcome of the prior proceeding, and there is good cause shown ...


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