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Supreme Court Ruling on Social Security Disability Could Have Broad Effects

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What You Need to Know

  • The case hinges on how strict an agency's standards for appealing administrative law judge decisions can be.
  • Justice Sonia Sotomayor wrote that no exhaustion of remedies requirement applies in this case.
  • The case is part of a long-running dispute over the constitutionality of federal agencies' administrative law judge programs and other dispute resolution programs.

People seeking Social Security Disability Insurance (SSDI) benefits have won a Supreme Court ruling that could affect a wide range of cases that involve federal agencies’ use of administrative law judges.

The court ruled 9-0 Thursday, in Carr et al. v. Saul (Case Number 19-1442), that the claimants did not have to attack the constitutionality of the Social Security Administration administrative law judge system when they first filed their cases to have the right to base appeals based on that issue today.

The Supreme Court ruled 6-3 in 2018, in connection with Lucia v. SEC, that the Securities and Exchange Commission had been using an unconstitutional process to appoint administrative law judges in 2018. Other federal agencies had been using similar processes to appoint their administrative law judges.

The plaintiffs in the Carr case had started their SSDI claims before the Lucia ruling came out.

Lawyers for the Social Security Administration said the disability claimants should have exhausted their remedies at the start of the case, by questioning the constitutionality of the Social Security Administration claim determination system, to have a right to file an appeal based on the Lucia ruling now.

The Court’s Opinions

Justice Sonia Sotomayor wrote, in an opinion in which all of the justices joined at least in part, that no exhaustion of remedies requirement applies in this case, because there is no law or regulation requiring Social Security disability claimants to exhaust remedies.

Justice Clarence Thomas wrote in a concurring opinion that the Social Security Administration administrative proceedings are too informal and nonadversarial for an exhaustion-of-remedies requirement to make sense.

“A few regulatory provisions direct claimants to advocate on their own behalf by objecting to problems, including if the agency misidentifies issues before the hearing or if the ALJ [administrative law judge] is ‘prejudiced or partial,’” Thomas wrote.

“But these unsurprising reminders that a claimant should not sit idly on the sidelines hardly demand that the penalty for overlooking an argument is forfeiture. On the contrary, such a permanent consequence would be surprising in light of the flexible, ‘informal’ mechanisms that undergird the entire agency review process,” he explained.

Constitutionality Debate

The case is part of a long-running dispute over the constitutionality of federal agencies’ administrative law judge programs and other dispute resolution programs.

Lawyers for the Pacific Legal Foundation, an independent legal policy organization general seen as conservative, have argued in a friend-of-the-court brief that the idea of applying the remedy exhaustion doctrine to a Social Security disability case “presents greater threats to liberty and property when invoked by agencies with coercive powers.”

“Agencies like the Consumer Financial Protection Bureau (CFPB), Securities and Exchange Commission (SEC), and Federal Trade Commission have broad powers to investigate and charge individuals with violations of laws — and of the agencies’ own regulations — and  prosecute alleged violations through in-house administrative proceedings,” Pacific Legal Foundation lawyers wrote.

“The question whether these agencies’ structure and proceedings are constitutional is a question of law for the judicial branch,” they said.

The Pacific Legal Foundation lawyers asserted that administrative law officials working for the SEC, the FTC, the CFPB and other agencies “wield vast power” and “enjoy vast discretion as they investigate and prosecute.”

“Such broad power threatens unconstitutional and arbitrary exercise of executive authority,” the Pacific Legal Foundation lawyers wrote.

The Pacific Legal Foundation brief may be a sign that parties unhappy with federal administrative proceedings will look to the Carr opinion for ideas about how to challenge efforts to resolve federal regulatory disputes outside of the courts.

Parties could, for example, use arguments from the Carr opinions to object to any federal agency efforts to apply strict procedural rules to individuals involved in administrative proceedings.

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The U.S. Supreme Court building, in Washington. (Photo: Diego M. Radzinschi/ALM)