Summary
holding that "generally the SSA does not have any authority to engage in retroactive rule-making."
Summary of this case from Smith v. Comm'r of Soc. Sec. Admin.Opinion
3:20-cv-281 RRB
11-12-2021
DIANE E. HUGHES, CLARENCE O. HUGHES, Plaintiffs, v. KILOLO KIJAKAZI, Acting Commissioner of Social Security, Defendant.
ORDER ALLOWING PLAINTIFFS TO APPLY TO WITHDRAW APPLICATIONS
RALPH R. BEISTLINE SENIOR UNITED STATES DISTRICT JUDGE.
Plaintiffs, Diane and Clarence Hughes, proceeding pro se, filed a Complaint alleging that Social Security Administration (SSA) employees failed to give them complete and accurate information to make informed decisions regarding Social Security Retirement when they filed their Early Social Security Retirement applications in 2006 and 1993. Plaintiffs wish to withdraw one or both of their applications and refile pursuant to SSA’s established procedure for doing so.
Docket 1.
The facts and applicable law are discussed in more detail in the Order at Docket 13. Briefly, Plaintiffs complain that the SSA Claims Representatives who assisted them in 1993 and 2006 failed to provide information critical to making an informed 1 retirement decision and, as a result, they both took Early Retirement resulting in a significant loss of income compared to other retirement options that were available.Plaintiffs say they have attempted since 2016 to resolve the issue, and “wish to withdraw and refile their Social Security Options.” An unfavorable ALJ decision issued on March 25, 2021, concluding that SSA employees did not provide misinformation to Plaintiffs, and that Mrs. Hughes “cannot withdraw her 2006 application for retirement benefits and retroactively refile for retirement benefits,” because on December 8, 2010, the Agency established a 12-month time limit, from the first month of entitlement, for the withdrawal of retirement applications.
Docket 1. They estimate a loss between $120,000 and $140,000.
Dockets 1-1, 11. Plaintiffs alternatively seek to recoup their alleged damages by seeking relief under 20 CFR § 404.633(c), alleging damages as a result of misinformation provided by SSA employees. Id.
Docket 11-8 at 3, citing 20 CFR § 404.623; compare 20 C.F.R. § 404.640 (Effective December 8, 2010) and 20 CFR 404.640 (Effective to December 7, 2010).
Noting that this matter had languished in the system for far too long, and that it turned on a relatively straightforward legal question, the Court offered relevant legal analysis sua sponte. In summary, before December 8, 2010, the SSA allowed retirement beneficiaries to withdraw their retirement application, for any reason and at any point in time , and refile it at a later date. The Court noted that at least two courts have found that the 12-month time limit was “impermissibly retroactive” as applied to individuals similarly situated to Plaintiffs. The Court explained that regulations cannot be applied retroactively 2 unless several conditions are met, and that generally the SSA does not have any authority to engage in retroactive rule-making.
Docket 13.
See Low v. Berryhill, 334 F.Supp. 3d 1165, 1170 (W.D. Wash. 2018) (finding 12-month time limit impermissibly retroactive as applied to Plaintiff); Terwilleger v. Comm’r of Soc. Sec., 2019 WL 336877, at *7 (S.D. Ohio Jan. 28, 2019), report and recommendation adopted sub nom., Terwilliger v. Comm’r of Soc. Sec., 2019 WL 1317880 (S.D. Ohio Mar. 22, 2019).
Docket 13, citing Kokal v. Massanari, 163 F.Supp. 2d 1122, 1134 (N.D. Cal. 2001) and Low v. Berryhill, 334 F.Supp. 3d 1165, 1170 (W.D. Wash. 2018) (“Congress generally has not granted the SSA retroactive rulemaking authority.).
The ALJ did not address the fact Diane Hughes first filed for retirement in 2006, before the 12-month restriction, and this Court concluded that the ALJ improperly applied the new regulation retroactively to Plaintiffs. When considering a Social Security administrative appeal, this Court “must affirm the Commissioner’s decision if it is supported by substantial evidence and if the Commissioner applied the correct legal standards.” Accordingly, this Court concluded that “reversal of the ALJ is warranted due to a purely legal error.” The Court stated that “it appears that Plaintiffs are entitled to withdraw and refile their retirement applications which were filed prior to December 8, 2010, pursuant to the SSA’s established procedure,” but gave Defendant the opportunity to respond before ruling.
Larson v. Saul, 967 F.3d 914, 922 (9th Cir. 2020) (citing Holohan v. Massanari, 246 F.3d 1195, 1201 (9th Cir. 2001)).
Moreover, this Court concluded that “a decision based upon this straightforward legal analysis of the regulation eliminates the need to wade into the murky waters of ‘misinformation,’ which would be intensely factual and unnecessarily time-consuming.” Docket 13 at 13.
Id.
Without specifically conceding the issue of retroactivity, the Commissioner agrees that remand is required in this case, but disagrees that Plaintiffs should “automatically” be allowed to withdraw and refile their applications. Instead, the Commissioner submits that this Court should remand this matter to the Appeals Council, which in turn “will instruct the ALJ to conduct efforts to develop the record and evaluate 3 whether Plaintiffs meets all requirements in accordance with 20 C.F.R. § 404.640(b)(1)-(3) to withdraw and refile their applications.” Thus, the Commissioner argues that “further factfinding on the part of the ALJ is required,” because the regulations “contain additional requirements before an application may be withdrawn.”
Docket 20.
Id.
According to 20 C.F.R. § 404.640 (effective until December 7, 2010), applications such as Plaintiffs’ could be withdrawn if four conditions were met:
• A written request for withdrawal is filed at a place described in § 404.614by the claimant or a person who may sign an application for the claimant under § 404.612;
• The claimant is alive at the time the request is filed;
• Any other person whose entitlement would be rendered erroneous because of the withdrawal consents in writing to it; and
• All benefits already paid based on the application being withdrawn are repaid or we are satisfied that they will be repaid.
“[A]n application for benefits, or a written statement, request, or notice is filed on the day it is received by an SSA employee at one of our offices or by an SSA employee who is authorized to receive it at a place other than one of our offices.” 20 C.F.R. § 404.614(a).
20 C.F.R. § 404.640(b)(3). The regulation is silent as to what is satisfactory evidence of future repayment.
The Commissioner correctly identifies a flaw in the Court’s prior statement that “it appears that Plaintiffs are entitled to withdraw and refile their retirement applications . . . pursuant to the SSA’s established procedure.” A more accurate statement is that Plaintiffs are entitled to apply to withdraw their retirement applications, pursuant to the SSA’s 4 established procedure. But the Court disagrees with the remainder of the Commissioner’s arguments.
Docket 13 at 13.
The procedure the Commissioner suggests could take months, if not years, to complete. Plaintiffs are now 76 and 91 years old. In light of the requirement of 20 C.F.R. § 404.640(a)(2), time is of the essence. Moreover, according to the SSA website,an individual wishing to withdraw their retirement application simply must fill out Social Security Form SSA-521, and “send the completed form to your local Social Security office. We will notify you when there is a decision about your request and let you know the amount of benefits you need to repay.” The two-page form contains checkboxes for SSA use in the event that “benefits not repaid” or “consent(s) not obtained” prevents approval of the request. But there is no requirement that an ALJ “conduct efforts to develop the record and evaluate whether Plaintiffs meet all requirements.” A signature of an “SSA Employee” such as “Claims Authorizer” is all that is required for approval. However, there is no indication on the form as to how long the SSA may take to consider the application, the fact that the decision is not made locally, how the supplemental information is obtained by SSA, or the possibility that once the form is submitted, existing payments could immediately cease pending a decision.
As of May 3, 2021. Docket 11.
https://www.ssa.gov/benefits/retirement/planner/withdrawal.html#how (Last visited November 10, 2021).
A copy of this form is attached to this Order
.
20 C.F.R. § 404.640(b)(2) and (3).
While administrative procedure may require this Court to remand to the ALJ, nothing prevents Plaintiffs from promptly filing their applications without waiting for 5 “permission” from the ALJ to do so. Plaintiffs’ rights to file withdrawal applications are not contingent on the ALJ’s blessing. Rather, Plaintiffs currently have this right for reasons explained in this Court’s prior Order. But nothing about this Court’s analysis considers whether an application to withdraw and refile is in the Plaintiffs’ best interests. That decision is between Plaintiffs and their financial, tax, legal, and any other advisors. Plaintiffs are correct that they should have been permitted to apply to withdraw their applications under the pre-December 10, 2010, rules, but whether or not it is wise to do so remains up to them.
Plaintiffs may wish to attach copies of this Court’s orders to any SSA-521 application.
CONCLUSION
In light of the foregoing, it is hereby ordered as follows:
1. The ALJ’s March 25, 2021, decision is REVERSED and REMANDED based upon legal error with respect to the retroactivity of 20 C.F.R. § 404.640 (Effective December 8, 2010);
2. The Court makes no findings with respect to the ALJ’s conclusion that SSA employees did not provide misinformation to Plaintiffs; and
3. This matter will be held open for 60 days. If no further filings are received, it will be DISMISSED WITHOUT PREJUDICE at that time.6
The Supreme Court defines “dismissal without prejudice” as “dismissal without barring the plaintiff from returning later, to the same court, with the same underlying claim.” Semtek Int’l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 505, 121 S.Ct. 1021, 1027, 149 L. Ed. 2d 32 (2001).
IT IS SO ORDERED. 7