Must claimants seeking Social Security benefits administratively exhaust their constitutional claims before seeking judicial review?
This case asks the Supreme Court to determine whether Social Security claimants must exhaust constitutional legal issues before an intra-agency adjudicative body—such as a Social Security Administration administrative law judge or appeals board—before seeking review of that issue in court. Petitioner Willie Carr argues that a requirement of issue exhaustion is inappropriate for his Appointments Clause challenge because no statute mandates issue exhaustion and a judicially-crafted requirement would break with historical precedent. Respondent Andrew Saul, Commissioner of the Social Security Administration, counters that a general rule of judicial economy is applicable here, and that all issues can and must be exhausted before an administrative body before a claimant can seek review. This case has important implications for the procedural ease of new challenges to prior adverse benefits rulings for Social Security claimants, as well as the dockets of reviewing courts.
Questions as Framed for the Court by the Parties
Whether a claimant seeking disability benefits under the Social Security Act forfeits an appointments-clause challenge to the appointment of an administrative law judge by failing to present that challenge during administrative proceedings.
In 2014, Willie Earl Carr attempted to claim disability benefits from the Social Security Administration (“SSA”). Carr v. Comm’r, SSA at 5. In 2017, administrative law judges (“ALJs”) denied the claims. Id. Carr then sued in the Northern District of Oklahoma. Id. at 6. After Carr sued, the Supreme Court decided Lucia v. S.E.C., determining that ALJs “must be appointed by the President, a court, or the head of the agency,” and the SSA Commissioner subsequently formally appointed the already-serving ALJs. Id. at 2. Following these appointments, Carr raised new arguments under the Appointments Clause of the Constitution, claiming that since the ALJs had not initially been appointed under the Appointments Clause as articulated in Lucia, the denial of his claim was invalid. Id. at 6. The SSA countered that Carr waived his claim because he did not raise it in the initial hearings for disability benefits. Id. at 2. The District Court upheld the denial of disability benefits but found that the decision was made in violation of the Appointments Clause. Id. at 3. The District Court vacated the ALJs’ decision and ordered new hearings in front of ALJs that were appointed in compliance with the Appointments Clause. Id. The SSA appealed. Id. at 6.
The United States Court of Appeals for the Tenth Circuit agreed with the SSA that, in most cases, parties must make all their claims within administratively-prescribed procedures before filing a lawsuit. Id. at 8. The Court of Appeals further agreed that if a party did not make such claims during those proceedings, those claims are waived. Id. The Court of Appeals described the procedure that claimants for SSA disability benefits must follow, which includes an opportunity to contest any decisions made by SSA ALJs. Id. at 4. The Court of Appeals also analyzed a relevant Supreme Court case that resulted in a split decision, Sims v. Apfel, and looked at the concurrence for the relevant analysis in this case. Id. at 8. In that concurrence, Justice O’Connor argued that it does not always make sense for parties to exhaust all of their claims within an administrative framework, especially when the SSA’s procedures do not necessarily require such an action. Id. at 11–12. The SSA did not argue in this case that any statute or procedure required Carr to exhaust his claims before suing. Id. at 12. Nevertheless, the Court of Appeals found that the exhaustion rule applied here anyway. Id. The Court of Appeals reasoned that the exhaustion rule, if applied, would have given the SSA a chance to correct the Appointments Clause error and would have increased efficiency within the court system and the SSA. Id. at 13.
The Court of Appeals dismissed the case on June 15, 2020. Id. at 18. The Supreme Court granted Carr’s petition for a writ of certiorari on November 9, 2020. The Supreme Court consolidated this case for briefing and oral argument with Davis v. Saul (20-105).
SHOULD A BROAD ISSUE EXHAUSTION RULE APPLY?
Petitioner Carr argues that there is no support for a “general rule” of judicially mandated issue exhaustion, and that courts have often acted in an ad hoc fashion with respect to the doctrine. Brief for Petitioners, Willie E. Carr et al. at 33–34. Even if such a rule existed, Carr maintains that his claim would qualify for an exception, as the SSA has no technical expertise on Appointments Clause matters. Id. at 35. Carr contrasts his claim with Lucia v. S.E.C, an Securities and Exchange Commission (“SEC”) Appointments Clause claim, as the Court’s ruling in that case relied on an express statutory issue exhaustion requirement, which is not present here. Id. at 35. Carr asserts that agencies regularly present new legal issues to reviewing courts, and that it would be inequitable to prohibit claimants from doing the same. Id. at 36.
Should issue exhaustion apply, rendering his claims forfeited, Carr argues that the Court should excuse the forfeiture. Id. at 39. Carr asserts that the Court has previously excused forfeiture of non-jurisdictional constitutional matters that are “structural.” Id. Carr maintains that because the agency has clearly acknowledged the unconstitutional appointments, it is appropriate for the Court to entertain his claim, as the matter is structural. Id. at 40. This exemption, Carr explains, is central to the conception of separation of powers, because it provides a judicial check on executive agency action. Id.
On the other hand, Respondent Andrew M. Saul contends that forfeiture rules should still apply in this case. Brief for Respondent, Andrew M. Saul, Commissioner of Social Security at 25. According to Saul, contrary to Carr’s argument, the forfeiture rule is not new, and the Supreme Court should apply it here. Id. Saul further argues that previous Supreme Court cases in this area are not improvisational, as Carr claims, and that the Supreme Court has always relied on a general rule of forfeiture. Id.
Saul further argues that the Supreme Court’s precedent of forfeiture law still applies today. Id. at 27. Forfeiture rules, Saul contends, function as the Court’s mechanism for determining which arguments the Court will hear. Id. According to Saul, these rules are squarely within the Court’s authority, and the Court could alter forfeiture rules to allow claims like Carr’s if it so chooses. Id. Further, Saul argues that the Supreme Court is well equipped to hear cases that require applying “background rules to constitutional claims” and that, since the Supreme Court itself modified the common law in this area, the Supreme Court can determine which actions the court system can take. Id. at 27–28. Despite Carr’s reliance on Sims v. Apfel, Saul claims, the Supreme Court in that case did not create a broad rule that would mandate an exception to forfeiture rules for SSA cases. Id. at 32. Saul posits that the Supreme Court precedent on which Carr relies is consistent with the Supreme Court’s previous application of forfeiture rules, despite Carr’s claim of inconsistency in the Court’s application of forfeiture rules to administrative proceedings. Id. at 26.
WAS THE APPOINTMENTS CLAUSE CLAIM FORFEITED?
Carr argues that because there is no statutory or regulatory issue exhaustion requirement in SSA proceedings, he has not forfeited his Appointments Clause claim and is entitled to judicial review. Brief for Petitioners at 18–19. Carr asserts that because SSA proceedings are not adversarial in nature, a judicially-imposed doctrine of issue exhaustion would be inappropriate under the framework set forth in Sims v. Apfel. Id. at 23–24. In Sims, Carr notes, the Court held that because SSA proceedings were non-adversarial, claimants did not need to exhaust all issues in the intra-agency appeal process for those issues to be preserved for later judicial review. Id. Carr emphasizes that judicial proceedings and SSA proceedings are materially unakin, and that SSA proceedings lack many of the procedural guardrails of a trial. Id. at 26. Additionally, because the intra-agency review process allows claimants to raise new issues on appeal, Carr maintains the rationale for requiring issue preclusion in the same mode as the judicial appellate process does not exist. Id. at 27.
Further, Carr avers that the SSA had not put benefits claimants on notice as to any potential issue exhaustion requirement at the time of his original claim. Id. at 29. Carr argues that because the SSA itself expects that the ALJ or Appeals Board will raise new issues on their own initiative, the SSA demonstrably requires remedy exhaustion but not issue exhaustion. Id. Carr asserts that the SSA could have provided meaningful notice to claimants regarding Appointments Clause challenges at the time but chose not to, instead preferring to leave claimants in the dark while instructing ALJs not to entertain Appointments Clause challenges. Id. at 31.
To support his contention that courts often hear constitutional claims, such as his Appointments Clause claim, even when administrative routes have not been exhausted, Carr cites a string of common law cases. Id. at 38. Specifically, Carr disputes the notion that requiring issue exhaustion on his claim would promote judicial fairness or efficiency. Id. at 39. As the SSA had already renounced its ability to hear Appointments Clause challenges, Carr asserts that it would be a waste of resources to compel him and similarly situated claimants to bring a claim before agency review. Id. at 39. In that vein, Carr also argues that requiring issue exhaustion would necessitate re-tooling the entire SSA claim review process, a much more intensive and costly endeavor than simply permitting judicial review. Id. at 41.
Saul argues that because Carr did not raise the Appointments Clause during the initial SSA proceedings, he cannot do so now. Brief for Respondent at 11. Saul brings support from previous Supreme Court cases that held that a party must generally bring all claims during administrative proceedings before doing so in court. Id. Saul also argues that even though the Supreme Court has ruled that a party is entitled to a new hearing if the previous one violated the Appointments Clause, the Supreme Court also held that the aggrieved party must have challenged the violation in a “timely” manner, and that Carr did not do so here. Id.
Saul notes that in this instance, neither Congress nor the SSA have passed explicit statutes or regulations about whether courts can consider issues that a party did not raise in an SSA proceeding. Id. at 11–12. Based on this, Saul argues that the Supreme Court should apply the general rule that a claimant must raise an Appointments Clause issue during initial SSA proceedings or forfeit the claim. Id. at 12. Saul supports this argument by pointing to cases dating from the early 1900s, and extending to recent years, in which the Supreme Court refused to hear claims that had not been raised in administrative proceedings. Id. at 12–13. Saul further argues that this rule promotes fairness and efficiency, and that it is the job of administrative agencies to make initial decisions, while courts are only supposed to review them. Id. at 14.
Beyond the issue of claim forfeiture, Saul argues that Carr is not entitled to a new hearing with new ALJs under the Appointments Clause. Id. at 15. Saul posits that even though the ALJs may have been wrongfully appointed, common law does not require that any of their past actions be invalidated. Id. Saul points to a common law rule establishing that any actions that an appointed person takes in the position to which they were appointed are valid as long as the actions are within the responsibilities of that position. Id. Saul further argues that even though the Supreme Court limited that rule in later cases, the Supreme Court still required the aggrieved party to challenge the appointments in a timely manner. Id. at 16–17. Saul claims that Carr had numerous opportunities to object to the ALJs’ appointments, and that his failure to do so means that he is not entitled to a new hearing. Id. at 19–20.
THE IMPORTANCE OF INSTITUTIONAL EFFICIENCY
The National Organization of Social Security Claimants’ Representatives (“NOSSCR”), in support of Carr, argues that the burden of additional procedural rules would be detrimental to many Social Security beneficiaries, including persons who suffer from physical or mental impairment. Brief of Amicus Curiae NOSSCR, in Support of Petitioners at 6–7. The NOSSCR contends that Congress and the courts intended for the agency and judicial review processes on these claims to be especially protective for this very reason. Id. at 7. The SSA’s own rules prevent ALJs from adjudicating issues over which they have no jurisdiction, the NOSSCR maintains, but those same rules do not alert claimants that they must either raise a claim during the process or forfeit it on review. Id. at 13. The NOSSCR asserts that it is the ALJ’s error, not a claimant’s, when a claim’s record is not sufficiently developed. Id. at 16. Further, the NOSSCR posits that because many claimants cannot afford counsel at these agency proceedings, these sorts of issues can very often be forfeited by the most vulnerable people. Id. at 25–26. Likewise, Carr argues that an adverse ruling would force disadvantaged and unsophisticated claimants to identify complex legal issues from the outset, resulting in a dramatic increase in bureaucratic paperwork. Brief for Petitioners, Willie E. Carr et al. at 42.
In contrast, Saul argues that efficiency and fairness concerns dictate that Carr is not entitled to a new hearing. Brief for Respondent, Andrew M. Saul, Commissioner of Social Security at 11. Saul claims that it is simpler to apply existing background rules, which would result in forfeiture, instead of creating exceptions specifically for SSA cases. Id. at 29. Carving out special exceptions for some agencies, Saul maintains, would force courts to make “policy-laden judgements,” which would contravene “modern principles of statutory interpretation.” Id. Additionally, Saul argues that forfeiture applies in this case based on precedent and practicality. Id. at 28. According to Saul, clear application of existing rules simplifies proceedings for lower courts, notifies parties of their obligations, and allows Congress to more easily fulfill its legislative role. Id. at 29.
EFFICACY OF APPLICABLE PROCEDURES
The National Association of Disability Representatives (“NADR”), in support of Carr, argues that many of the government’s concerns regarding a flood of claims similar to Carr’s are overblown according to the government’s own data. Brief of Amicus Curiae NADR, in Support of Petitioners at 4. The NADR contends that even among the pending cases in federal courts, very few deal with Appointments Clause challenges. Id. at 9–10. The NADR maintains that contingency-fee representation statutes create an environment where only the most meritorious of disability claims will be litigated. Id. at 16. Finally, the NADR contends that there are no perverse incentives in not requiring issue exhaustion on this matter. Id. at 16–17.
On the other hand, Saul argues that allowing a forfeiture exception for claimants like Carr would thwart the SSA’s administrative process by enabling claimants to delay raising their claims until after the agency reviewed their applications. Brief for Respondent at 20. Saul points to the procedural steps that disability claimants and the SSA must follow and argues that if courts do not follow forfeiture rules, claimants would be able to circumvent the process and undermine the purpose of the administrative procedures. Id. Saul further claims that the SSA is unique in that its size prohibits constantly granting new hearings. Id. at 20–21. Due to the large number of claims that the SSA hears each year, Saul posits that the system that is already in place would not function effectively if the SSA would have to grant new hearings based on claims that disability claimants make in court. Id. at 21. Finally, Saul contends that this reasoning also applies to situations regarding changes in the law, such as this case. Id.
- Kimberly Strawbridge Robinson, Justices Trade Blockbusters for “Meat and Potatoes” in 2021, Bloomberg Law (Jan. 4, 2021).
- Matthew Borges, Supreme Court to Hear Appointments Clause Challenge to Administrative Judges, Jurist (Nov. 10, 2020).