DANIEL JUSTINIANO; FRANCISCO MENÉNDEZ; PERSON A, Plaintiffs, Appellants,
SOCIAL SECURITY ADMINISTRATION; NANCY A. BERRYHILL, Acting Commissioner of the Social Security Administration [*], Defendants, Appellees.
FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
PUERTO RICO [Hon. Jay A. García-Gregory, U.S. District
Andrés Colón Volgamore for appellants.
Pulham, Attorney, Appellate Staff, Civil Division, U.S.
Department of Justice, with whom Benjamin C. Mizer, Principal
Deputy Assistant Attorney General, Rosa E.
Rodríguez-Vélez, United States Attorney, and
Mark B. Stern, Attorney, Appellate Staff, Civil Division,
were on brief, for appellees.
Howard, Chief Judge, Torruella and Barron, Circuit Judges.
BARRON, Circuit Judge.
Social Security Administration ("SSA") terminated
the disability benefits that Daniel Justiniano and Francisco
Menéndez -- the plaintiffs-appellants -- had been
receiving. The SSA did so based on a concern that the
medical evidence that supported Justiniano's and
Menéndez's applications for those benefits was
fraudulent because in each case that evidence was traceable
to a physician who was the subject of a federal fraud
and Menéndez each challenged administratively the
SSA's decision to terminate the benefits for which they
had applied. Justiniano and Menéndez contended that,
among other things, the SSA, in so deciding, neither
adequately notified them of the evidence of fraud nor
provided them with an opportunity to challenge that evidence.
Justiniano and Menéndez contended that, in
consequence, the SSA violated their constitutional right to
due process of law and their rights under the Social Security
Act and its implementing regulations.
the two men had exhausted the administrative review process,
however, they filed suit in federal court. In that suit, they
sought various kinds of relief based presumably on the same
grounds as the claims that they had presented to the SSA in
seeking to continue to receive their benefits. The government
moved to dismiss the suit, and the District Court did so for
lack of subject matter jurisdiction based on the
plaintiffs' failure to have exhausted their
and Menéndez now appeal that jurisdictional ruling.
Because they have failed to show that they could not obtain a
restoration of their benefits through the administrative
review process, despite evidence suggesting that they would
have a substantial chance of doing so, we affirm.
undisputed facts are drawn from the complaint and certain
documents and affidavits that were filed by the parties
below. See Aversa v. United States, 99 F.3d 1200,
1209-10 (1st Cir. 1996). For several years, Justiniano and
Menéndez received benefits under the Social Security
disability insurance program established by Title II of the
Social Security Act, 42 U.S.C. §§ 401-34.
November of 2013, however, the SSA notified Justiniano and
Menéndez that their benefits were being suspended
pending a redetermination of their entitlement to them. The
SSA was acting pursuant to a provision in the Social Security
Act, 42 U.S.C. § 405(u), by which "[t]he
Commissioner of Social Security shall immediately redetermine
the entitlement of individuals to monthly insurance benefits
. . . if there is reason to believe that fraud or similar
fault was involved in the application of the individual for
such benefits." Id. § 405(u)(1)(A).
Section 405(u) provides that, during the redetermination
process, the SSA "shall disregard" any evidence in
an application for benefits that the agency has "reason
to believe" is fraudulent. Id. §
405(u)(1)(B). And, the provision further specifies, the SSA
"may terminate" a claimant's benefits if, after
reviewing what evidence is left in the application for
benefits, "there is insufficient evidence to support
[an] entitlement" to benefits. Id. §
the SSA's notices to Justiniano and Menéndez
explained that a redetermination of the disability benefits
that each had been receiving was necessary because each of
their applications for those benefits possibly contained
medical evidence from one of several suspects who was under
federal investigation for fraud in connection with the filing
of disability benefits applications. Those notices indicated,
however, that additional evidence could be presented to the
SSA in support of the disability benefits application.
Medical reports from doctors whom Justiniano and
Menéndez allege they consulted were received by the
agency following those notices.
two months of sending the notices regarding the suspension of
the benefits, the SSA completed the process of redetermining
the benefits for Justiniano and Menéndez and
separately notified each of them of the termination of the
benefits that they had been receiving. Each termination
notice explained that the SSA had "disregarded"
medical evidence in the benefits application that had been
provided by a physician who had pleaded guilty in the fraud
investigation. In consequence, each notice explained that,
based on a review of the evidence that remained in each
application for benefits, the applicant was "not
disabled" and thus not entitled to disability benefits.
plaintiff requested reconsideration of the SSA's decision
to terminate benefits. The SSA then confirmed its termination
decisions in the summer of 2014. The SSA advised both
Justiniano and Menéndez that they could appeal from
the benefits termination decisions by requesting a hearing
before an administrative law judge ("ALJ"). Both
Justiniano and Menéndez did so.
October of 2015, however, in advance of any hearing before an
ALJ on either Justiniano's or Menéndez's
administrative appeal, they jointly filed this suit in the
United States District Court for the District of Puerto Rico.
Their complaint in that suit challenges the SSA's
termination of their benefits on the following grounds.
complaint alleges that the SSA's termination decision in
each case was made without providing (1) adequate notice of
the evidence of fraud that the SSA relied on in making its
decision to disregard the medical evidence contained in the
plaintiffs' benefits' applications and (2) any
opportunity to challenge the finding of fraud in their
individual cases. The plaintiffs also deny in their
complaint that any medical evidence in their benefits
applications was fraudulent. Their complaint thus alleges
that the SSA "reopen[ed]" the plaintiffs' cases
"in bulk" simply by relying on evidence of fraud
from "unrelated" cases that merely happened to
contain medical evidence from the same physicians who
provided evidence in the plaintiffs' cases.
complaint further alleges that the termination notices that
the SSA sent to the plaintiffs were "boilerplate"
that neither informed the plaintiffs "what actions (if
any) by the plaintiffs constituted fraud" nor identified
"what evidence the [SSA] relied on to make its
decision." In addition, the complaint alleges that the
plaintiffs were "not allowed to challenge the decision
that fraud or similar fault was present in their individual
cases" and that, during the redetermination process,
"[t]he only evidence that would be received was evidence
of [a] medical nature and only evidence in support of a
finding of the existence of impairment, " thus excluding
any "[e]vidence of the existence or inexistence of
basis of these allegations, the complaint contends that the
SSA's benefits termination decisions violated various
legal requirements. In particular, the complaint alleges that
"[t]he presumption of fraud inherent in the [SSA's]
decisions violates the plaintiffs' Fifth Amendment right
to the due process of law." In this regard, the
complaint asserts that "[t]he basic [tenets] of due
process require that the [SSA] carry the initial burden of
proof of fraud in the specific cases before the cases can be
reopened, the medical determinations revised and benefits
terminated. Due process further requires adequate
notification of any accusation against the plaintiffs . . .
complaint also alleges that the SSA's termination process
violated the Social Security Act and its implementing
regulations. Specifically, the complaint alleges that the SSA
had "reopen[ed]" the cases without complying with
20 C.F.R. § 404.988(c)(1), which provides that "[a]
determination, revised determination, decision, or revised
decision may be reopened . . . [a]t any time if . . . [i]t
was obtained by fraud or similar fault." The complaint
contends that the regulation's reference to the reopening
of "[a] determination" (singular) requires
redeterminations to be made "on a case by case
basis" based on evidence of fraud specifically tied to
each individual case.
relief that the plaintiffs seek in their suit includes a
declaratory judgment that the SSA's bulk redetermination
of their disability benefits violated the federal
Constitution, the Social Security Act, and certain
regulations; actual and statutory damages; and a
reinstatement of their benefits. The plaintiffs also request
payment of benefits that were not paid during the termination
period and an injunction against billing them for an
overpayment of benefits. Moreover, in their complaint,
Justiniano and Menéndez seek to assert not only their
own claims but also those of a putative class of similarly
situated people whose disability benefits had been terminated
in connection with the same federal fraud investigation that
formed the basis for the decision to terminate their
Justiniano and Menéndez moved to have their putative
class certified, however, the SSA filed a motion to dismiss.
The motion sought dismissal, in part, under Rule 12(b)(6) of
the Federal Rules of Civil Procedure on the ground that the
plaintiffs had failed to state a claim upon which relief
could be granted. The motion also sought dismissal under Rule
12(b)(1) on the ground that, regardless of the merits of the
plaintiffs' legal claims, the District Court lacked
subject matter jurisdiction under 42 U.S.C. §§
405(g) and (h) because the plaintiffs had failed to exhaust
the administrative remedies available to them before filing
405(g) provides that "[a]ny individual, after any final
decision of the Commissioner of Social Security made after a
hearing to which he was a party . . . may obtain review of
such decision" in federal district court. And Section
405(h) in turn states:
No action against the United States, the Commissioner of
Social Security, or any officer or employee thereof shall be
brought under section 1331 [federal question jurisdiction] or
1346 [federal defendant jurisdiction] of Title 28 to recover
on any claim arising under this subchapter [governing the
Social Security old-age, survivors, and disability insurance
consequence of these two provisions, a claim for benefits
that "arises under" the Social Security Act must
comply with Section 405(g) in order for a federal district
court to have jurisdiction over that claim. There are
generally two requirements that must be met in order for a
claim for benefits that "arises under" the Social
Security Act to be in compliance with Section 405(g).
"a claim for benefits shall have been presented to the
Secretary." Mathews v. Eldridge, 424 U.S. 319,
328 (1976).Second, "the administrative remedies
prescribed by the Secretary [must] be exhausted."
Id. These two requirements together ensure that an
individual seeking federal judicial relief in a case
"arising under" the Social Security Act is doing
so, as Section 405(g) requires, "after any final
decision of the Commissioner of Social Security made after a
hearing to which he was a party."
for present purposes, although the presentment requirement is
not waivable, the exhaustion requirement may be. Id.
Moreover, in some cases, the exhaustion requirement is waived
by the federal court itself and thus without the
Secretary's consent through what is known as a judicial
waiver of exhaustion. Heckler v. Ringer, 466 U.S.
602, 618 (1984) (citing Eldridge, 424 U.S. at
respect to the jurisdictional question, the government argued
in its motion to dismiss that the plaintiffs' claims in
their complaint "arise under" the Social Security
Act. The government further argued that the plaintiffs had
not yet received "final decisions" from the SSA
because although the plaintiffs presented their claims to the
SSA, they failed to exhaust the administrative appeals
process. Accordingly, the government contended that the
District Court lacked subject matter jurisdiction.
plaintiffs responded below to the motion to dismiss for lack
of subject matter jurisdiction by arguing that the claims in
their complaint did not "arise under" the Act. The
plaintiffs contend on appeal that they also argued below, in
the alternative, that -- even assuming that their claims did
"arise under" the Act -- the plaintiffs qualified
for a judicial waiver of the exhaustion requirement. With
respect to judicial waiver, the plaintiffs contend that they
asserted that the claims set forth in their complaint in
federal court were "fit for resolution" and
"outside of the Commissioner's discretion, "
and that "exhaustion of the current administrative
procedure would be futile" and further delays would
result in "undue hardships, dire need and undue
plaintiffs also argued that, insofar as the exhaustion
requirement would otherwise bar their claims from being heard
in federal court, the plaintiffs were still entitled to bring
their suit in federal court pursuant to Shalala v.
Illinois Council on Long Term Care, Inc., 529 U.S. 1
(2000). Illinois Council held that where Section
405(h) "would not simply channel review through the
agency, but would mean no review at all" by the federal
courts of the agency action, then Section 405(h)'s
jurisdictional bar does not apply. Id. at 19.
District Court granted the government's motion to dismiss
for lack of subject matter jurisdiction (and thus did not
address whether the complaint failed to state a claim). The
District Court reasoned that the plaintiffs' claims arose
under the Social Security Act, and thus that the plaintiffs
had to meet the presentment and exhaustion requirements in
order to comply with the requirements of Section 405(g). The
District Court concluded that, although the plaintiffs
complied with the presentment requirement, the plaintiffs did
not satisfy the exhaustion requirement because the plaintiffs
had neither obtained a decision from an ALJ nor appealed from
that decision to the SSA's Appeals Council.
the possibility of a judicial waiver of the exhaustion
requirement, the District Court stated that the plaintiffs
"have not asked the Court to waive the . . .
requirement, nor does the Court see a reason to do so."
Finally, the District Court ruled that the Illinois
Council exception to Section 405(h)'s jurisdictional
bar, encompassing situations where channeling the claims
through the agency would result in "no review at all,
" did not apply. 529 U.S. at 19.
plaintiffs now appeal the District Court's jurisdictional
ruling. The plaintiffs bear the burden of proving subject
matter jurisdiction. Aversa, 99 F.3d at 1209. Where,
as here, the facts are largely uncontested and the issue is a
"nearly pure" question of law, we review de novo a
district court's decision to grant the motion to dismiss
for lack of subject matter jurisdiction. Valentín
v. Hosp. Bella Vista, 254 F.3d 358, 363 (1st Cir. 2001).
begin with the plaintiffs' contention that their federal
court claims do not "arise under" the Social
Security Act and are therefore not subject to the
jurisdictional limitations set forth in Section ...