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Guillemette v. Colvin

United States District Court, N.D. Illinois, Eastern Division

September 29, 2016

RORY E. GUILLEMETTE, individually and on behalf of all others similarly situated, Plaintiff,
CAROLYN W. COLVIN, Acting Commissioner of Social Security, in her official capacity, Defendant.



         Before the Court is defendant's motion to dismiss the complaint (or alternatively for summary judgment in part), which is granted for the reasons explained below.


         Plaintiff, Rory E. Guillemette, is a 39-year-old man who was born blind. He has received Supplemental Security Income (“SSI”) benefits since 1995. On December 27, 2010, the Social Security Administration (“Administration”) issued plaintiff a notice informing him that he was overpaid SSI benefits in the amount of $16, 102 during the period from November 2008 to October 2010, because the SSA believed that plaintiff had accumulated resources in that period that were in excess of the amount permitted under 20 C.F.R. § 416.1205 to remain eligible for SSI benefits. Plaintiff then requested a waiver of the overpayment and was denied, and filed a request for reconsideration, which was also denied. Plaintiff requested, and had, a hearing before an administrative law judge (“ALJ”), who issued a written decision on September 20, 2011, denying the waiver request. Plaintiff then filed an administrative appeal. In a letter dated January 23, 2013, the Administration's Appeals Council notified plaintiff that it had sent his case back to an ALJ because it was unable to review the matter due to the fact that the recording upon which the ALJ based his decision could not be located.

         Before a new hearing was held, plaintiff filed a second request for a waiver of the overpayment on September 9, 2013. In a letter dated September 13, 2013, the Administration informed plaintiff that it was waiving the collection of the overpayment. On September 27, 2013, the ALJ sent plaintiff a Notice of Dismissal stating that he was dismissing plaintiff's request for a hearing because “[a]nother part of Social Security made a fully favorable decision on” plaintiff's application for waiver. The ALJ also stated in the Notice that if plaintiff did not seek to set aside the dismissal within sixty dates, it would become final.

         In July 2014, plaintiff authorized Associated Bank to obtain his credit report in connection with a mortgage on real property. Plaintiff was informed by “the originator” that the Administration had reported to the credit reporting agencies a debt related to the overpayment dispute as to which plaintiff had received a fully favorable decision.

         In September 2014, the Administration sent plaintiff a letter stating that, upon review of plaintiff's September 9, 2013 request for waiver of overpayment, “we may be changing our decision.” The letter also informed plaintiff that he had the right to have a “personal conference” with the Administration before a decision was made. The conference was held on October 3, 2014. On October 8, 2014, the Administration notified plaintiff's attorney that it had decided not to waive collection of the overpayment. Shortly thereafter, plaintiff submitted a third request for waiver of the overpayment, which the Administration deemed a request for reconsideration and denied. On December 4, 2014, plaintiff requested a hearing before an ALJ. As of July 23, 2015, the date plaintiff filed the complaint in the instant case against the Acting Commissioner of the Administration, a hearing had not yet been held.

         Plaintiff asserts the following claims in his complaint. In Counts I and II, he brings facial and as-applied challenges to three federal regulations, 20 C.F.R. §§ 416.1487, 416.1488, and 416.1489, which permit the Administration to reopen and revise final determinations under certain conditions. Plaintiff alleges that these regulations are unconstitutional inasmuch as they give the Administration the ability “to reopen and revise favorable final determinations after a hearing with an ALJ or Appeals, ” which leaves plaintiff “with no finality of decision.” (ECF No. 1, Compl. ¶¶ 52, 55.) In Count III, plaintiff seeks an injunction against any further attempts to recover the overpayment, and in Count IV he seeks reimbursement of “all monies paid, including monies withheld or offset.” (Id. ¶ 62.) In Count V, plaintiff alleges that defendant violated the notice requirements of 31 U.S.C. § 3711 by failing to give him notice that his debt would be reported to the credit bureaus. Plaintiff seeks a declaratory judgment in Count VI that interprets § 3711 as preventing defendant from reporting disputed overpayments to the credit bureaus while an appeal is pending. In Count VII, plaintiff seeks an injunction directing defendant to remove the previously-reported disputed debt from his credit report.

         Defendant moves to dismiss the complaint.


         A. Legal Standards

         A Rule 12(b)(1) motion seeks dismissal of an action over which a court allegedly lacks subject-matter jurisdiction. “In evaluating a challenge to subject matter jurisdiction, the court must first determine whether a factual or facial challenge has been raised.” Silha v. ACT, Inc., 807 F.3d 169, 173 (7th Cir. 2015) (citing Apex Dig., Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443 (7th Cir. 2009)). “A factual challenge contends that there is in fact no subject matter jurisdiction, even if the pleadings are formally sufficient.” Id. (emphasis, internal quotation marks, and citation omitted). “In reviewing a factual challenge, the court may look beyond the pleadings and view any evidence submitted to determine if subject matter jurisdiction exists.” Id. “In contrast, a facial challenge argues that the plaintiff has not sufficiently alleged a basis of subject matter jurisdiction.” Id. (emphasis, internal quotation marks, and citation omitted). “In reviewing a facial challenge, the court must accept all well-pleaded factual allegations as true and draw all reasonable inferences in favor of the plaintiff.” Id. Defendant's motion raises both kinds of challenges.

         B. Claims Related to the Reopening of Plaintiff's Favorable Waiver Determination (Counts I-IV)

         Defendant argues that plaintiff's claims in Counts I through IV are moot because, after plaintiff filed his complaint, an ALJ issued in September 2015 a “Notice of Decision Fully Favorable” concluding that plaintiff does not have to pay back the $16, 102 overpayment. This contention is properly understood as a factual challenge to ...

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