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Melton v. Saul

United States District Court, W.D. Kentucky, Owensboro Division

October 29, 2019



          H. Brent Brennenstuhl, United States Magistrate Judge.


         Before the Court is the motion of Plaintiff, Harrison Melton, for attorney fees under the Equal Access to Justice Act (“EAJA”), 28 U.S.C. § 2412 (DN 20). Defendant, Andrew Saul, Commissioner of Social Security (“Commissioner”), has filed a response (DN 21). Melton's time to reply has expired. For the reasons set forth below, Melton's motion for attorney fees under the EAJA (DN 20) is DENIED.

         Pursuant to 28 U.S.C. § 636(c) and Fed.R.Civ.P. 73, the parties have consented to the undersigned United States Magistrate Judge conducting all further proceedings in this case, including issuance of a memorandum opinion and entry of judgment, with direct review by the Sixth Circuit Court of Appeals in the event an appeal is filed (DN 22). This matter is ripe for determination.


         Former attorney Eric Conn assisted Melton and thousands of other individuals in obtaining Social Security disability benefits (DN 20 PageID # 76). See Lewis v. Comm'r of Soc. Sec., No. 7:16-068-DCR, 2019 WL 5295187, at *1 (E.D. Ky. Oct. 18, 2019). In Melton's case, Administrative Law Judge David Daugherty (ALJ Daugherty) granted his disability application on the record (without an in-person hearing) on December 6, 2010 (DN 20 PageID # 76; DN 21 PageID # 85). Relying exclusively on a medical report submitted by Conn, ALJ Daugherty found Melton disabled from May 23, 2010 forward (DN 21 PageID # 85).

         The Social Security Administration's (SSA) Office of the Inspector General (OIG) later discovered that Conn obtained benefits for many of his clients through the largest Social Security fraud in the history of the benefits program. Lewis, 2019 WL 5295187, at *1-2. From at least 2004 through 2011, Conn paid four doctors to provide medical and psychological reports opining that his clients were unable to work regardless of their actual abilities.[2] Id. To further ensure client success in obtaining benefits (and his own ability to collect attorney fees), Conn paid Administrative Law Judge Daugherty to assign these cases to himself and then issue favorable rulings. Id.[3]

         On July 2, 2014, the OIG notified the SSA's General Counsel that it believed 1, 787 applications submitted by Conn involved fraud. Id. at *2. The OIG relayed this information with the understanding that the SSA would not take any action against the claimants until it received further notice from the OIG. Id. On May 12, 2015, the OIG notified the Commissioner that the Agency could move forward with administrative redeterminations of the 1, 787 individuals it identified on July 2, 2014. Id.

         On May 18, 2015, the SSA sent letters to the affected individuals advising that it was required to redetermine their eligibility for benefits under 42 U.S.C. §§ 405(u) and 1383(e)(7). Lewis, 2019 WL 5295187, at *2. The letters advised that the SSA was not permitted to consider any evidence submitted by the physicians believed to have been involved in the fraud. Id. The letters further explained that the Appeals Council had reviewed the affected cases. Id. Many individuals still qualified for benefits after the tainted evidence had been excluded. Id. But many other individuals were deemed not qualified for benefits after the tainted evidence was excluded. Id.

         The Commissioner provided these individuals with an opportunity to submit additional evidence to the Appeals Council demonstrating disability at the time their applications for benefits were initially approved. Id. If the Appeals Council concluded there was insufficient evidence to support the prior findings of disability, their cases were remanded to new Administrative Law Judges for redetermination proceedings. Id.

         Melton's case was one of the many remanded to a new Administrative Law Judge for redetermination (DN 20 PageID # 76; DN 21 PageID # 85). On August 16, 2016, an Administrative Law Judge conducted a redetermination hearing (DN 20 PageID # 76). Melton was not permitted to challenge the exclusion of the Conn-submitted doctor report (DN 20 PageID # 85). In an unfavorable decision dated January 5, 2017, the Administrative Law Judge found Melton was not disabled through the relevant period of May 23, 2010 to December 6, 2010 (Id.). On February 28, 2017, the Appeals Council denied Melton's appeal and affirmed the decision of the Administrative Law Judge (Id.). On June 6, 2017, Melton brought this civil action alleging that the final decision of the Commissioner did not comport with applicable legal standards, violated his due process rights, and was not supported by substantial evidence (DN 1).

         Meanwhile, on October 12, 2016, then United States District Judge Amul R. Thapar issued a decision in Hicks v. Colvin, 214 F.Supp.3d 627 (E.D. Ky. 2016). He observed that when the SSA redetermined Ms. Hicks right to disability payments it categorically excluded some of her medical evidence because the OIG had “reason to believe” the evidence was fraudulent. Id. at 630-46. Judge Thapar noted the OIG's factual assertion was crucial as it removed the only medical records Ms. Hicks could reasonably access nearly ten years after the original determination. Id. To defend her benefits Ms. Hicks needed the chance to challenge the assertion but she never got one. Id. For this reason, Judge Thapar concluded her hearing was not meaningful, and the redetermination process violated the Due Process Clause of the Fifth Amendment to the United States Constitution. Id. He remanded the case so the SSA could give Ms. Hicks adequate process which involves providing her with the opportunity to challenge the basis for excluding evidence she wishes to present. Id.

         On November 15, 2016, United States District Judge Danny C. Reeves issued a decision rejecting claims of nine plaintiffs that the redetermination procedure violated the Equal Protection and Due Process clauses of the United States Constitution, the Social Security Act, and the Administrative Procedure Act (APA). Carter v. Colvin, 220 F.Supp.3d 789 (E.D. Ky. 2016). Notably, he acknowledged the plaintiffs were not given an opportunity to rebut the OIG's assertion that fraud was involved in their prior award of benefits. Id. at 797-804. But Judge Reeves reasoned since their revocation of benefits turned on the lack of evidence to support the initial benefits award, not the fraud allegation, and they were given a meaningful opportunity to supplement and/or develop new evidence to substitute for the excluded evidence, they have not been denied due process. Id.

         In December 16, 2016, United States District Judge Joseph M. Hood issued a decision rejecting Mr. Perkins's claim that the redetermination procedure violated his right to due process and his challenge to the merits of the Commissioner's decision. Perkins v. Colvin, 224 F.Supp.3d 575 (E.D. Ky. 2016). In doing so, Judge Hood adopted Judge Reeves reasoning in Carter. Id. at 577-80.

         The plaintiffs in Carter and Perkins were permitted to take an interlocutory appeal. Lewis, 2019 WL 5295187, at * 2. The SSA filed a notice of appeal in Hicks. Id. These appeals were consolidated in the United States Court of Appeals for the Sixth ...

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