United States District Court, N.D. Illinois, Western Division
Tyler J. Plaintiff,
Andrew Marshall Saul, Commissioner of Social Security, Defendant.
MEMORANDUM OPINION AND ORDER
A. JENSEN MAGISTRATE JUDGE
Tyler J. (formerly known as Dennis K.) applied for Disability
Insurance Benefits (“DIB”) and Supplemental
Security Income (“SSI”) in 2009, and he was
awarded those benefits by an Administrative Law Judge
(“ALJ') in June of 2010. His disability benefits
were reviewed in November of 2014 and were continued. Then,
in May of 2015, Plaintiff was notified that the Social
Security Administration (“SSA”) needed to
redetermine Plaintiffs eligibility for benefits because there
was reason to believe that fraud was involved in certain
cases involving evidence the SSA received from four doctors.
Because one of those four doctors, Dr. Frederic Huffnagle,
provided evidence to the SSA in Plaintiffs case, his case was
redetermined. In conducting such redetermination, the SSA
disregarded any evidence from Dr. Huffnagle. In July of 2016,
the ALJ concluded, after conducting a new hearing and
disregarding all evidence by Dr. Huffnagle, that Plaintiff
was ineligible for DIB and SSI as of the date of his original
application, and his benefits were terminated. After
exhausting all administrative remedies, Plaintiff sued in
this Court. The parties have consented to the jurisdiction of
a United States Magistrate Judge for all proceedings pursuant
to 28 U.S.C. § 636(c).
reasons set forth below, the Commissioner's decision
denying Plaintiffs claims on redetermination is reversed, and
this case is remanded.
2009, Plaintiff applied for DIB and SSI. Plaintiff alleged a
disability beginning on January 14, 2009, due to degenerative
disc disease, lower back problems, bipolar disorder,
depression, and anxiety. R. 282, 286. During the initial
proceedings on his application, Plaintiff was represented by
a social security lawyer, Eric C. Conn. Mr. Conn submitted
records prepared by Dr. Huffnagle in support of Plaintiff s
1, 2010, without conducting a hearing, ALJ David Daugherty
found Plaintiff disabled as of January 14, 2009. R. 118-22.
ALJ Daugherty determined that Plaintiffs sciatica and low
back strain/sprain were severe impairments. R. 120. Relying
solely on evidence submitted by Mr. Conn from Dr. Huffnagle,
ALJ Daugherty found that Plaintiff was limited to less than
sedentary work and issued a fully favorable decision. R.
October of 2013, the U.S. Senate Committee on Homeland
Security and Governmental Affairs issued a report accusing
Mr. Conn and ALJ Daugherty of committing fraud. United States
Senate Committee on Homeland Security and Governmental
Affairs, How Some Legal, Medical, and Judicial
Professionals Abused Social Security Disability Programs for
the Country 's Most Vulnerable: A Case Study of the Conn
Law Firm (Oct. 7, 2019) (“Report”),
As set forth in the Report, Mr. Conn conspired with ALJ
Daugherty and four doctors, one of whom was Plaintiffs
medical source, Dr. Huffnagle. Id. at 2, 58-75. The
Report stated that the SSA had learned about this wrongdoing
as early as 2006. Id. at 2. After hearing testimony
and investigating, the U.S. Senate Committee concluded that
“inept agency oversight . . . enabled the misconduct to
continue for years.” Id. at 1.
of 2014, the SSA's Office of Inspector General
(“OIG”) had identified 1, 787 current or former
clients of Mr. Conn whose applications the OIG “had
reason to believe, were tainted by fraud.” Hicks v.
Comm'r of Soc. Sec., 909 F.3d 786, 794 (6th Cir.
2018) (internal quotation marks omitted). Pursuant to the
Social Security Act, the SSA is required to
“immediately redetermine” a beneficiary's
entitlement to disability benefits if, at any point after
granting benefits, the SSA has “reason to believe that
fraud or similar fault was involved in the application”
for benefits. 42 U.S.C. § 405(u)(1)(A). Nonetheless, the
OIG provided the 1, 787 names to the SSA “with the
understanding that SSA was not to take any adverse action
against any individual on the list until further
notice.” Hicks, 909 F.3d at 794 (citation
12, 2015, the OIG sent a referral letter to the SSA pursuant
to Section 1129(a)(1) of the Social Security Act.
Defendant's Motion to Dismiss, Attachment 2. The referral
stated in part:
…the Social Administration (SSA) Office of The
Inspector General (OIG) previously provided you with
information regarding 1, 787 individuals. These individuals
were formerly represented by attorney Eric C. Conn, or his
firm, and OIG has reason to believe that fraud was involved
in their applications for Social Security benefits.
Specifically, in these cases, OIG had, and still has, reason
to believe that Mr. Conn or his firm submitted pre-completed
“template” Residual Functional Capacity forms
purportedly from Bradley Adkins, PH.D., Srinivas Ammisetty,
M.D., Frederic Huffnagle, M.D., or David P. Herr, D.O. dated
between January 2007 and May 2011, in support of the
individuals' application for benefits.
Id. The letter went on to state that the OIG was not
aware of any objections to the SSA moving forward with
administrative processing of the redeterminations of the 1,
787 individuals previously identified and told the SSA
“that it may proceed with its redetermination of the
cases of the individuals on the previously transmitted
days later, on May 18, 2015, the SSA sent a letter to
Plaintiff. The letter stated, “This is about the
Administrative Law Judge's decision dated June 1,
2010.” R. 160. It went on to explain that the SSA must
redetermine Plaintiffs eligibility for benefits because: 1)
there was reason to believe fraud was involved in certain
cases involving Dr. Huffnagle (and three other doctors); 2)
Dr. Huffnagle provided evidence in Plaintiffs case; and 3)
the ALJ previously used that evidence to find Plaintiff
disabled. The letter informed Plaintiff that during the
redetermination process the SSA “must disregard any
evidence from one of the medical providers above when the
information was submitted by representative Eric C. Conn or
other representatives associated with Mr. Conn's law
office.” R. 160. Finally, the letter stated that SSA
had looked at Plaintiffs case again to see if the decision
was supported after disregarding the evidence signed by Dr.
Huffnagle and had concluded that the remaining evidence in
Plaintiffs file did not support a favorable benefits
determination. R. 161. As such, the SSA planned to send the
case back to an ALJ for more action and a new decision.
Plaintiff was informed that he could submit more evidence to
the ALJ so long as it was “new and material” and
concerned Plaintiffs “disability” starting on or
before June 1, 2010. R. 162.
held a new hearing on Plaintiffs case, and ALJ John Dowling
issued his decision on July 7, 2016. ALJ Dowling disregarded
the April 27, 2010 medical report submitted by Dr. Huffnagle.
R. 31. This included Dr. Huffnagle's report of Plaintiff
s medical examination as well as his functional capacity
findings. ALJ Dowling concluded that “there was
insufficient evidence to support a finding of disability as
of June 1, 2010. Therefore, the beneficiary's benefits
are terminated, and SSA may treat any benefits previously
received as overpayment.” R. 41.
exhausting his administrative remedies, Plaintiff filed an
eight-count complaint in this Court. Plaintiff's
Complaint alleges that the SSA's procedures and actions
violated the Due Process Clause of the Fifth Amendment (Count
I), the Social Security Act (Counts III, V and VI) the
Administrative Procedures Act (Count II, IV and VII) and that
the SSA's decision is not supported by substantial
evidence (Count VIII).
Commissioner filed a motion to dismiss Counts I through VII
of Plaintiff's Complaint for failure to state a claim.
Plaintiff filed a motion for summary judgment on the due
process, Administrative Procedures Act (“APA”),
and Social Security Act claims. Specifically, Plaintiff asked
that the Commissioner's redetermination decision
terminating benefits be outright reversed, and that this
Court reinstate his benefits without the need for a remand.
Plaintiff's Motion at 1, 20. Thereafter, the Commissioner
filed the administrative record. Plaintiff supplemented his
briefing by pointing to portions of the administrative record
to further support his motion for summary judgment on the due
process claim and also moved for summary judgment on his
claim that ALJ Dowling's decision was not supported by
the issues were fully briefed, but before the motions were
ruled upon, the Sixth Circuit issued an opinion in Hicks
v. Commission of Social Security, 909 F.3d 786 (6th Cir.
2018). In Hicks, the Sixth Circuit was faced with
essentially the same issues as are presented before this
Court. The Hicks court ruled that the SSA's
refusal to grant the plaintiffs an opportunity to rebut the
OIG's assertion of fraud as to the Conn-related medical
reports violated the plaintiffs' rights to procedural due
process and violated the APA. Hicks, 909 F.3d at
804. Because of the ensuing decision rendered in
Hicks, both parties in the present case were ordered
to file a supplemental brief addressing that decision.
is the first of several cases around the country dealing with
the Conn-related fraud to reach a court of
appeals. The Seventh Circuit has directed district
courts to “give most respectful consideration to the
decisions of the other courts of appeals and follow them
whenever [they] can.” Colby v. J.C Penney Co.,
811 F.2d 1119, 1123 (7th Cir. 1987). A district court may not
defer mechanically to other circuits, however, or abdicate
its duty to independently decide a legal question.
Id. A posture somewhere in between some deference
and complete deference is proper when cases in different
circuits challenge the same practice of the same defendant,
particularly if different outcomes would place the defendant
under inconsistent obligations. Id. at 1124;
Wilkins v. Just Energy Grp, Inc., No. 13-CV-5806,
2019 U.S. Dist. LEXIS 47486, at *11 (N.D. Ill. Mar. 22,
2019). With these concepts in mind the Court turns to the
argues that his right to procedural due process was violated
when he was prevented from challenging the OIG's
allegation of fraud related to Dr. Huffnagle's medical
reports. That allegation of fraud automatically resulted in
the exclusion of all records from Dr. Huffnagle. Without
those records, the ALJ determined that Plaintiff was not
disabled. Plaintiff argues he should have had the opportunity
to prove that Dr. Huffnagle's records were not fraudulent
as they related to him. By preventing him from challenging
the OIG's factual assertion of fraud, Plaintiff asserts
he was deprived of the absolute right to a meaningful
hearing, which necessarily must include a fair opportunity to
rebut the governments factual assertions before a neutral
decisionmaker. Plaintiff's Motion at 10.
exact issue was addressed by the Sixth Circuit in
Hicks. The Hicks plaintiffs were eleven
former Conn clients, who had been subjected to
redetermination hearings based on a “reason to believe
that fraud or similar fault was involved” in their
original hearing. Hicks, 909 F.3d at 793-94
(internal quotation marks omitted) (quoting 42 U.S.C. §
405(u)(1)(A)). They lost their benefits after a rehearing in
which they were prevented from contesting that fraud had
occurred. They each sued in federal court. The individual
cases were consolidated on appeal to the Sixth Circuit.
Hicks plaintiffs, like Plaintiff here, argued that
procedural due process requires, at a minimum, “a fair
opportunity to rebut the Government's factual assertions
before a neutral decisionmaker.” Id. at 797.
The Sixth Circuit agreed. They noted that the Supreme Court
has recognized the immutable principle that “where
governmental action seriously injures an individual and
reasonableness of the action depends on fact findings, the
evidence used to prove the Government's case must be
disclosed to the individual so that he has an opportunity to
show that it is untrue.” Id. (quoting
Greene v. McElroy, 360 U.S. 474, 496 (1959)).
Relying on Green, the Hicks court held that
because the SSA's action “‘depends on fact
findings' that the plaintiffs have not been provided the
opportunity to rebut, the government's process is
constitutionally inadequate.” Hicks, 909 F.3d
Commissioner in the present case urges this Court to
disregard the Sixth Circuit's decision in Hicks
because the opinion demoted the three-part balancing test set
forth by the Supreme Court in Mathews v. Eldridge,
424 U.S. 319 (1976) to “back-up status, ” which
the Commissioner argues is contrary to Supreme Court and
Seventh Circuit law. Defendant's Supplemental Brief at 3.
court in Hicks considered whether the case should be
decided using the Mathews three-part balancing test.
Hicks, 909 F.3d at 797. It was persuaded however by
the plaintiffs' argument that minimum due process rights
cannot be balanced away. Id.
Court agrees with the interpretation of the Sixth Circuit
that the Mathews test does not apply to cases
deciding whether minimum due process rights were violated.
The Mathews case itself was one that sought to
determine whether a pre-deprivation hearing was required
before social security benefits could be taken away.
Mathews v. Eldridge, 424 U.S. 319 (1976). There
already existed post-deprivation procedures for challenging
the government's actions. Thus, the Court used the
balancing test to determine whether additional protections
were necessary. Id. at 335.
United States v. James Daniel Good Real Prop., 510
U.S. 43, 53 (1993), the Court explained that the
Mathews test is reserved for situations when the
court is determining whether a pre-deprivation versus a
post-deprivation hearing is required. The Court noted that
the right to “prior notice and a hearing is central to
the Constitution's command of due process.”
Id. The Court further stated:
We tolerate some exceptions to the general rule requiring
predeprivation notice and hearing, but only in extraordinary
situations where some valid governmental interest is at stake
that justifies postponing the hearing until after the event.
Whether the seizure of real property for purposes of civil
forfeiture justifies such an exception requires an
examination of the competing interests at stake, along with
the promptness and adequacy of later proceedings. The
three-part inquiry set forth in Mathews v. Eldridge,
424 U.S. 319, 47 L.Ed.2d 18, 96 S.Ct. 893 (1976), provides
guidance in that regard.
Id. (internal quotation marks and citations
Seventh Circuit's application of the Mathews
test is consistent with the Supreme Court's direction in
James Daniel, 510 U.S. 43. See Parrett v.
Connersville 737 F.2d 690, 696 (7th Cir. 1984)
(“Mathews v. Eldridge [ ] merely requires a
comparison of the costs and benefits of giving the plaintiff
a more elaborate procedure than he actually
received.”); Sutton v. Milwaukee, 672 F.2d
644, 645 (7th Cir. 1982) (describing the Mathews
test as a “simple cost-benefit test of general
applicability for deciding whether due process requires
notice and hearing before government may deprive a person of
property”). In Sutton, the court applied
Mathews to determine whether, even though post
towing procedural protections existed, due process required
notice and hearing before a car was towed.
case that the Commissioner cites, Van Harken v. City of
Chicago, 103 F.3d 1346 (7th Cir. 1997), further supports
the Hicks court's interpretation of the
Mathews test. See Defendant's
Supplemental Brief at 4. In Van Harken, the court
was asked to determine whether a process for adjudicating
parking tickets comported with due process. Van
Harken, 103 F.3d at 1348. The process allowed the
adjudicator to decide the violation based on the ticket
itself without requiring the issuing police officer to appear
and testify. Id. at 1350. The court applied the
Mathews test. Id. at 1351. However, like
the facts in Mathews, Sutton, and
Parrott, the procedure at issue provided the plaintiffs
with post-deprivation procedures to contest the ticket.
Id. at 1350.
present case, this Court is not being asked to determine if
Plaintiff deserved a more elaborate opportunity to contest
the Government's allegations of fraud. Plaintiff had no
opportunity to contest the government's factual
allegations of fraud, either before the redetermination
hearing, during the hearing, or at any time after the
hearing. He simply was forced to accept, without any
opportunity to rebut, that Dr. Huffnagle's medical
reports about him were fraudulent and thus could not be used
to support his claim for disability. The right to rebut the
Government's factual assertions (whether pre or
post-deprivation) is a basic requirement of procedural due
process. Hamdi v. Rumsfeld, 542 U.S. 507, 533 (2004)
(holding that due process required notice of the
government's factual basis and a fair opportunity to
rebut the government's factual assertions before a