John R. Casey, Plaintiff-Appellant,
Nancy A. Berryhill, Acting Commissioner of Social Security, [*] Defendant-Appellee.
September 27, 2016
from the United States District Court for the Northern
District of Indiana, Hammond Division. No.
2:13-cv-00328-RL-JEM - Rudy Lozano, Judge.
Bauer, Rovner, and Hamilton, Circuit Judges.
Hamilton, Circuit Judge.
2009, the Social Security Administration notified Plaintiff
John Casey that he needed to repay about $334, 000 in
disability benefits he should not have received. Casey sought
a waiver, but an administrative law judge denied his request.
Six months later, Casey submitted an untimely request to the
Appeals Council seeking review of the ALJ's decision.
Casey argued that he had good cause for his delay. The
Appeals Council seemed to agree. On April 12, 2012, the
Council extended Casey's deadline to submit evidence or a
statement in support of his waiver claim. But on July 17,
2013, the Appeals Council reversed course, informing Casey
that it had dismissed his request for review because there
was "no good cause to extend the time for filing."
Casey then sued the Acting Commissioner of Social Security in
district court. The Commissioner moved to dismiss, and a
magistrate judge recommended granting the Commissioner's
motion. The district judge adopted the magistrate's
recommendation and dismissed the case.
district court erred. The action by the Appeals Council in
first granting and then retroactively denying Casey's
good cause request was arbitrary, having the effect of an
unfair bureaucratic bait-and-switch. To be sure, the Council
had discretion to determine initially whether Casey offered
good cause for his late administrative appeal. See 20 C.F.R.
§§ 404.968(b), 404.911. But having granted
Casey's request, the Council could not simply change its
mind and dismiss Casey's appeal on the theory that he had
not adequately justified his delay, after leading him on for
over a year without suggesting he needed to provide more
information, an affidavit, or anything else by way of
support. We reverse the judgment of the district court and
remand with instructions to remand this matter to the agency
for administrative proceedings consistent with this opinion.
recount the salient facts, which are drawn from the
administrative record and from Casey's complaint. We take
Casey's allegations as true in reviewing the district
court's judgment of dismissal. In 1979, Casey began
receiving Social Security disability insurance benefits. Two
years later, he entered the federal Witness Protection
Program. According to Casey, the United States Marshals
Service initially informed him that he could not
simultaneously receive both his witness protection stipend
and his disability benefits. Later, however, an agent of the
Marshals Service allegedly told Casey that he could receive
both income streams and that, as remuneration for cooperating
with the government, he would continue to receive disability
benefits throughout his natural life. He apparently received
both streams of income for some time; he later received
disability benefits while simultaneously earning income.
2009, the Social Security Administration notified Casey that,
in light of his earnings history, he had been overpaid $333,
893.90 in disability benefits. Casey did not seek timely
reconsideration of that determination, which became final
sixty days after he received the notice. See 20 C.F.R.
§§ 404.909(a), 404.905. Instead, in either February
or August 2010 (the record is unclear), Casey requested a
waiver of the overpayment pursuant to 42 U.S.C. §
404(b)(1), which provides: "In any case in which more
than the correct amount of payment has been made, there shall
be no ... recovery ... from any person who is without fault
if such ... recovery would defeat the purpose of [the Social
Security Act] or would be against equity and good
conscience." See also 20 C.F.R. § 404.506
(describing process for submitting waiver request).
Social Security Administration denied Casey's waiver
request in November 2010. After an evidentiary hearing, an
administrative law judge upheld that denial in an August 25,
2011 decision. Though Casey had argued that he was entitled
to rely on the Marshals Service's assurance that he would
receive disability benefits for life, the ALJ disagreed,
finding that there was "no proof" to substantiate
the alleged promise and that, in any event, Casey had
"many opportunities and incentive [sic] to
contact the Social Security Administration to inquiry
[sic] into his receipt of [disability]
benefits." The ALJ also cited Casey's "ability
to repay the overpayment" as a "significant
issue." (The ALJ had calculated Casey's gross
monthly income at over $15, 000 and had noted that Casey and
his wife owned real property with a net value of almost $600,
receiving notice of the ALJ's August 25, 2011 adverse
decision, Casey had sixty days to seek further review by the
Appeals Council. See 20 C.F.R. § 404.968(a). He did not
submit a timely request for review. However, in a March 2,
2012 letter, Casey's attorney at the time, Arman
Sarkisian, invoked the good cause exception for untimely
requests. See §§ 404.968(b), 404.911, 404.900(b).
Sarkisian advised the Appeals Council that neither he nor his
firm had received a copy of the ALJ's decision and that
he had learned of the decision only after contacting the
ALJ's chambers "several months" after the
decision issued. Sarkisian asked the Council to (1) find that
Casey had good cause for a late filing, (2) grant Casey
additional time to secure information, and (3) evaluate the
appeal as if it had been timely.
April 12, 2012 letter, the Appeals Council informed Sarkisian
that it had "granted your request for more time"
before acting on Casey's case, and it invited him to
submit evidence or legal argument within twenty-five days,
with the caveat that "[a]ny more evidence must be new
and material to the issues considered in the hearing
decision dated August 25, 2011." Sarkisian requested
additional extensions on April 24, 2012 and May 22, 2012,
both of which were granted. Sarkisian requested a further
extension on June 25, 2012: this time, the agency denied his
request, informing him that it would proceed with its action
based on the existing record.
17, 2013, the Appeals Council dismissed Casey's request
for review. The Appeals Council did not, however, address the
merits of Casey's request for reconsideration. Instead,
in its order, the Council characterized Casey's prior
correspondence as requesting additional time to
"complete a 'good cause' statement and to
provide the Administration with additional evidence regarding
his late filing." "To date, " the Council
wrote, "it does not appear that [Casey] has provided the
'good cause' statement he indicated would be
forthcoming." The Council concluded there was "no
good cause to extend the time for filing."
then brought suit under 42 U.S.C. § 405(g), a statute
authorizing judicial review of any "final decision"
by the Commissioner of Social Security. The Commissioner
moved to dismiss on the theory that Casey had failed to
exhaust his administrative remedies. According to the
Commissioner, although the Appeals Council afforded Casey
"an opportunity to show good cause for his untimely
request for review, " he failed to do so. The
Commissioner contended that because Ca- sey "did not
comply with the agency's deadlines and procedural rules,
and thus failed to properly exhaust his administrative
remedies/' the district court had "no authority
under section 405(g) to review the Commissioner's
decision." In opposition, Casey pointed out that (1) the
Appeals Council had granted his good cause request in its
April 12, 2012 letter and (2) the Council's dismissal
order actually advised him of his right to seek judicial
review. Nevertheless, the magistrate judge recommended that
the district court dismiss Casey's complaint. Citing our
decision in Boley v. Colvin,761 F.3d 803 (7th Cir.
2014), the magistrate judge recognized that the district
court had jurisdiction to review ...