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McElrath v. Colvin

United States District Court, D. Massachusetts

July 27, 2016

KAREN M. MCELRATH, Individually and as Representative Payee for N.M.M., D.S.M., and S.M.M., Plaintiff,
v.
CAROLYN W. COLVIN, Acting Commissioner, Social Security Administration, Defendant.

          MEMORANDUM AND ORDER

          ALLISON D. BURROUGHS U.S. DISTRICT COURT JUDGE

         Karen McElrath brought this suit against Carolyn Colvin, Acting Commissioner of the Social Security Administration (the “Commissioner”), requesting judicial review of a final decision of the Commissioner, pursuant to 42 U.S.C. § 405(g). Ms. McElrath contends that in 2011, her husband, Scott McElrath, was erroneously appointed representative payee for their three children, and that during this time, Mr. McElrath misused funds intended for their children. On two separate occasions, the Social Security Administration (“SSA”) investigated the alleged misuse, and each time, it concluded that there had not been any misconduct. Ms. McElrath’s Complaint, filed on May 29, 2015, alleges that the SSA was negligent in its appointment of Mr. McElrath, its payment of benefits to Mr. McElrath, and its investigation into Mr. McElrath’s alleged misuse use of funds. [ECF No. 1].

         Currently pending is the Commissioner’s Motion to Dismiss, which was filed on November 20, 2015. [ECF No. 14]. In the Motion to Dismiss, the Commissioner argues that the Court lacks subject matter jurisdiction over the Complaint and further, that the Complaint is barred by the statute of limitations. Ms. McElrath filed her opposition to the motion to dismiss on May 19, 2016. [ECF No. 21]. On May 31, 2016, the Court granted the Commissioner leave to file a reply brief, but no reply has been filed at this time. [ECF No. 23]. For the reasons stated herein, the Motion to Dismiss is GRANTED.

         I. Factual Background

         According to Ms. McElrath, [1] she first learned that Mr. McElrath had been approved to receive Social Security Disability Benefits on April 8, 2011, at a court hearing in Middlesex County Probate and Family Court. [ECF No. 1 ¶ 4]. Later that month, she learned that on or about March 15, 2011, Mr. McElrath had been appointed representative payee for their three children, and had received retroactive benefits for the children in the amount of $20, 853. Id. ¶ 5. Ms. McElrath alleges that the SSA did not timely inform her or her children that Mr. McElrath had been appointed representative payee or that he had received payments for the children. Id. Ms. McElrath subsequently submitted paperwork to become the representative payee (she is currently their representative payee), as well as a Statement of Claimant or Other Person to the fraud investigative unit of the SSA, in which she alleged that Mr. McElrath had impermissibly retained benefits intended for their children. Id. ¶ 6, Ex. B.

         On or about June 26, 2012, Ms. McElrath received a letter from the SSA stating that they had not found any misuse of funds, and that all of the funds distributed to Mr. McElrath had been used for the benefit of the children. Id. ¶ 11. Soon thereafter, Ms. McElrath filed a request for reconsideration, and on September 19, 2012, she received an additional letter from the SSA stating that her Request for Reconsideration had been denied and that no misuse of funds had been found. Id. ¶ 14. The Notice of Reconsideration stated that if Ms. McElrath disagreed with the decision, she could appeal it to an Administrative Law Judge (“ALJ”), which she did. Id. ¶¶ 14-15. On October 15, 2012, Ms. McElrath filed a request for hearing, and on January 15, 2013, she received a Notice of Hearing from the SSA, stating that a hearing before an ALJ had been scheduled for March 28, 2013. Id. ¶¶ 15, 18.

         On March 26, 2013, two days before the hearing was scheduled to take place, Ms. McElrath received a Notice of Dismissal from the ALJ stating that her request for a hearing had been dismissed. Id. ¶ 21. The Commissioner filed a copy of the ALJ’s decision with the motion to dismiss. [ECF No. 15-4]. In the decision, the ALJ found that “[a] misuse of funds determination is not an initial determination with appeal rights, ” and that it was therefore “appropriate . . . to dismiss the request for hearing because the claimant and his representative do not have a right to a hearing.” Id. at 10 (citing 20 C.F.R. §§ 405.305 and 405.380(d)). He noted that Ms. McElrath had not previously raised the issue of the SSA’s negligence or failure to investigate the possible misuse of funds; she had only challenged the investigators’ conclusion that there was no misuse of funds, which is not an initial determination subject to administrative review. Id. at 10-11. On April 9, 2013, Ms. McElrath appealed the ALJ’s decision, and on June 3, 2014, she received a Notice of Appeals Counsel denying her request for review. [ECF No. 1 ¶¶ 23-24]. The Notice stated that:

We found no reason under our rules to review the Administrative Law Judge’s Dismissal. The regulatory provisions under 20 CFR 202.902(x) is not applicable to your case because the agency did not issue a determination under agency policy finding the former representative payee misused your funds. Under agency policy POMS GN 03101.080 appeals for representative actions are administrative actions that are not initial determinations and are not subject to administrative or judicial review.

Id. ¶ 24. On July 15, 2014, Ms. McElrath sent the Appeals Counsel a written request for an extension of time to file a civil action for judicial review. Id. ¶ 27. In a letter dated October 24, 2014, the Appeals Counsel denied her request. [ECF No. 15-6].

         On July 24, 2014, Ms. McElrath sent a formal request for investigation to the Lowell, Massachusetts SSA office, regarding the SSA’s alleged failure to follow procedure when appointing a representative payee, failure to verify custody of the children, failure to notify beneficiaries that a representative payee had been appointed, and failure to properly investigate an individual requesting to be appointed representative payee. [ECF No. 1 ¶ 29]. She has not received a response to her request for investigation. Id. ¶ 33-34.

         II. Discussion

         The Commissioner has moved to dismiss Ms. McElrath’s Complaint for lack of subject matter jurisdiction and for failure to file this lawsuit within the applicable statute of limitations. Both of the Commissioner’s arguments arise from Section 405(g) of the Social Security Act (the “Act”), 42 U.S.C. § 405(g), which sets forth the procedures and conditions for judicial review of the Commissioner’s decisions. Ms. McElrath purports to bring this action under Section 405(g) of the Act. [ECF No. 1 ¶ 3]. Section 405(g) provides, in relevant part, that:

Any individual, after any final decision of the Commissioner of Social Security made after a hearing to which he was a party, irrespective of the amount in controversy, may obtain a review of such decision by a civil action commenced within sixty days after the mailing to him of notice of such decision or within such further time as the Commissioner of Social Security may allow.

42 U.S.C. § 405(g). The Commissioner argues that the Court lacks subject matter jurisdiction because there was never a “final decision of the Commissioner . . . made after a hearing, ” and that Ms. McElrath’s filing is untimely because it was not “commenced within sixty days after the mailing to h[er] of notice.” As explained further below, the Court agrees with ...


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