The opinion
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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JOSE E. MEDINA,
Plaintiff,
MEMORANDUM AND ORDER
- against - 17-CV-6885 (RRM)
COMMISSIONER OF SOCIAL SECURITY,
Defendant.
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ROSLYNN R. MAUSKOPF, Chief United States District Judge.
Plaintiff Jose E. Medina, who pled guilty to wrongfully obtaining Social Security
Disability Insurance (“SSDI”) benefits and agreed to repay those benefits in order to settle a
related forfeiture action, now brings this action against the Commissioner of Social Security,
principally arguing that the Social Security Administration (“SSA”) deprived him of due process
by failing to afford him 1) an opportunity to challenge the finding that fraud was involved in his
SSDI application and 2) a hearing to determine whether Medina was entitled to the very SSDI
benefits that were the subject of the earlier criminal and civil proceedings. Medina and the
Commissioner now cross-move for judgment on the pleadings, with the Commissioner arguing,
among other things, that the SSA’s administrative process properly afforded preclusive effect to
Medina’s admission in the criminal and forfeiture proceedings.
For the reasons set forth below, the Commissioner’s motion is granted, Medina’s motion
is denied, and this action is dismissed.
BACKGROUND
The following facts are drawn from the Administrative Record (“AR”) (Doc. No. 30),
and from the Affidavit of Jose E. Medina, Jr., dated April 4, 2019, (the “Medina Affidavit”)
(Doc. No. 25-1). Except as otherwise indicated, these facts are not in dispute.
From January 1988 through September 30, 2007, he worked as a police officer for the New York
City Police Department (“NYPD”). (AR 130, 137.) During that period, he suffered several
injuries in the line of duty, at least three of which required surgery. First, in July 2001, he
suffered an injury to his right knee while chasing a perpetrator. (Medina Aff. ¶ 3.) He had an
MRI on December 26, 2001, which indicated that he had a tear in the medial meniscus. (AR
193.) Dr. Arnold Goldman, the NYPD’s orthopedic surgeon approved surgery on March 14,
2002, but Medina did not have arthroscopic surgery to repair the damage until December 16,
2002. (AR 245.) By that time, Medina had complex tears of both the medial and lateral menisci
and a large amount of hypertrophic synovitis – i.e., thickening and inflammation of the
synovium, the connective tissue that lines the inside of the bubble-like structure that surrounds
the knee joint. (Id.; see https://www.hss.edu/condition-list_synovitis.asp). The surgeon, Dr.
Francis Lanzone, shaved down the synovium to access the joint and performed partial
meniscectomies, removing portions of the “shredded” medial meniscus and the torn lateral
meniscus. (AR 245.) Medina underwent “extensive physical therapy” following the surgery,
then returned to full duty. (AR 263.)
In March 2, 2004, Medina suffered an injury to his left knee while jumping over fences in
pursuit of a perpetrator. (Medina Aff. ¶ 6.) After trying conservative treatments, including
physical therapy and anti-inflammatory drugs, Medina had an MRI on January 28, 2005, which
revealed a horizontal tear in the lateral meniscus. (AR 242, 248.) Dr. Goldman approved
surgery on April 8, 2005, and Dr. Lanzone performed a second arthroscopic surgery on May 9,
2005. (AR 173, 248, 263.) That surgery revealed not only a parrot-beak type tear in the lateral
1 Numbers preceded by “AR” denote pages in the Administrative Record.
performed a partial meniscectomy and an abrasion chondroplasty to smooth the damaged portion
of the condyle. (Id.) Following the surgery, Medina applied for disability retirement, but that
application was denied by the Medical Board of the Police Pension Fund. (AR 263.)
On April 13, 2005, Medina sustained an injury to his right shoulder while attempting to
effect an arrest. (AR 263; Medina Aff. ¶ 7.) He went to the Emergency Department of the New
York Medical Center of Queens, where X-rays of the shoulder proved negative. (AR 208, 236–
37, 263.) Although the emergency room doctors diagnosed a shoulder sprain and told him to
follow up with the hospital’s orthopedic clinic, (AR 239), Medina went to Dr. Lanzone, who
ordered an MRI. (AR 241.) While that study did not show any evidence of a rotator cuff tear, it
did show degenerative changes at the acromioclavicular, or AC, joint, with some impingement
on the rotator cuff. (AR 241.)3 Dr. Lanzone diagnosed Medina with both impingement
syndrome and a partial tear of the rotator cuff and performed a third arthroscopic surgery on
August 5, 2005. (AR 243.) The doctor shaved away part of the acromion to relieve the
impingement and, after removing a bursa (a fluid-filled sac or saclike cavity), used a
thermoelectric wand to release the coracoacromial ligament. (AR 243.)
Following surgery, Medina attended physical therapy (“PT”) for a period of
approximately two years, during which he worked “off and on” at a desk job. (Medina Aff. ¶ 8;
AR 129.) His recovery did not proceed smoothly, as evidenced by the fact that Medina followed
up with Dr. Lanzone on 25 occasions from August 11, 2005, to January 9, 2007. (AR 264.) At
2 Osteochondritis (also called osteochondritis dissecans) is a condition that occurs when a lack of blood to the joint
causes the bone inside to soften. See https://my.clevelandclinic.org/health/diseases/21073-osteochondritis-
dissecans. In this case, the bone involved was a condyle, one of two rounded protuberances at the bottom of the
femur or thigh bone.
3 The AC joint is where the collarbone, or clavicle, meets a portion of the shoulder blade called the acromion. See
https://www.hopkinsmedicine.org/health/conditions-and-diseases/ac-joint-problems.
application, Dr. Lanzone wrote to the Article II Medical Board of the Police Pension Fund on
three occasions to recommend that Medina be retired from the NYPD. On October 21, 2005, Dr.
Lanzone wrote that Medina had “weakness and pain” in both knees and his right shoulder which
would prevent him from climbing or running up or down stairs. (AR 261.) Dr. Lanzone
repeated that assessment ten days later in a letter dated November 1, 2005, but added that
Medina’s quadriceps and right deltoid had atrophied; that he had crepitus and swelling in the
knees, and had a “positive impingement test” in the right shoulder. (AR 259.) However, Dr.
Lanzone’s assessments were contradicted by Dr. Arnold Goldman, the NYPD’s surgeon who
examined Medina on December 29, 2005, and opined that Medina’s prognosis was good. (AR
264.) The doctor authorized PT for the right shoulder and left knee and placed Medina on
“limited capacity.” (Id.)
On March 2, 2006, Dr. Lanzone wrote a third letter, noting that Medina had a limited
range of motion in the right knee and shoulder and opining that he could not stand for more than
15 minutes, sit for more than an hour, or run or jump. (AR 256–57.) On April 17, 2006, Medina
appeared before the Article II Medical Board of the Police Pension Fund, which found – contrary
of Dr. Lanzone’s findings – that Medina had a normal range of motion both knees and no
atrophy in either knee. (AR 263.) The Medical Board recommended disapproval of the
retirement application.
In 2006, Dr. Goldman examined Medina four more times, re-authorizing physical therapy
for the right shoulder and left knee on each occasion. On May 25, 2006, the doctor opined that
Medina’s prognosis was fair, and placed him on “restricted duty.” (AR 264.) On July 17, 2006,
Dr. Goldman found the prognosis was fair for the right shoulder. (Id.) On October 5 and
on restricted duty. (AR 265.)
On December 8, 2006, Medina reapplied for Accident Disability Retirement. (AR 262.)
In support of that application, Dr. Lanzone sent the Medical Board a letter dated March 1, 2007,
which again opined that Medina could not stand for more than 15 minutes, sit for more than an
hour, or run or jump. (AR 254–55.) On April 2, 2007, the Medical Board examined Medina
again. Although the Board noted that Medina walked with a “minimal limp” on the right side
and had difficulty standing on his heels and toes and squatting down, its findings with respect to
Medina’s knees were largely normal. (AR 265–66.) In contrast, the Board found that Medina’s
range of motion in the right shoulder was limited and “very painful,” that the “impingement sign
on the right shoulder was at 70° and was acutely positive,” and that there was some atrophy in
the right deltoid area. (AR 265.) The Board was unable to assess Medina’s muscle strength in
the upper right extremity because Medina was in “significant pain” during this portion of the
examination. (Id.) The Board diagnosed Medina with “Chronic Derangement of the Right
Shoulder Status Post Arthroscopic Surgery with Residuals,” opined that there were “significant
objective findings” precluding him from performing the full duties of an NYPD officer, and
recommended that his application for Accident Disability Retirement be granted. (AR 266.) The
Record does not indicate when Board of Trustees of the Police Pension Fund acted on this
recommendation, but Medina retired on September 30, 2007. (AR 129.)
On June 15, 2007, Medina began seeing Dr. Edward R. Sodaro, Jr., a psychiatrist,
because he was feeling depressed and anxious. (Medina Aff. ¶ 13; AR 132.) Dr. Sodaro
diagnosed Medina with major depression and post-traumatic stress disorder (“PTSD”). (AR
132.) The doctor prescribed psychotherapy and various medications: Citalopram, an
antidepressant; Xanax, a sedative, to treat his anxiety; and Ambien for insomnia. (AR 132–33.)
At some point, Medina met a man named Thomas Hale, who professed to be an attorney
who could assist him in applying for Social Security benefits. (Medina Aff. ¶ 10.) Medina is
uncertain as to precisely when he met Hale – recalling that it was either shortly before or after his
retirement, (id. ¶ 10) – but states that he did not meet Hale until sometime after he began visiting
Dr. Sodaro, (id. ¶ 13). While Medina states that Hale completed and submitted an application for
SSDI on his behalf, (id. ¶ 11), no such application appears in the Administrative Record.
However, the fact that the Administrative Record lists a “protective filing date” of June 11, 2008,
(AR 140), suggests that someone contacted the SSA with respect to Medina’s claim on that
date.4
On November 1, 2008, Medina retained an attorney named Raymond G. Lavallee to
prosecute his claim for Social Security benefits. (AR 52.) That same day, Lavallee helped
Medina to file an Application for SSDI, which alleged that Medina had been unable to work
since September 30, 2007. (AR 110.) That application listed both mental and physical
impairments, stating that Medina was suffering from a major depressive disorder, PTSD, and
pain in both knees and his right shoulder. (Id.)
In connection with this application, Lavallee submitted two psychiatric evaluations from
Dr. Sodaro: one dated September 29, 2008, (AR 268–273), and one dated March 11, 2009, (AR
293–99.) Both evaluations indicated that Medina was suffering from a major depressive disorder
and PTSD, and exhibited features of an avoidant personality disorder. (AR 272, 298.)5 Both
evaluations stated that Medina was receiving “ongoing cognitive behavioral psychotherapy” and
4 The record reflects a protective filing date of June 11, 2008. The protective filing date is the date the applicant first
contacts the SSA indicating an intent to file an SSDI application.
5 People with avoidant personality disorder avoid social situations due to fear of rejection and being judged by
others. See https://my.clevelandclinic.org/health/diseases/9761-avoidant-personality-disorder.
273, 299.) In addition, the evaluations stated that Medina suffered from narcolepsy and sleep
apnea, a chronic sinus condition from working at Ground Zero from September 2001 to February
2002, and diminished pulmonary function. (AR 269–70, 294–95.)
Medina’s application was processed by the New York State Office of Temporary and
Disability Assistance (“OTDA”), which referred Medina to Louis Tranese, D.O., for a
consultative orthopedic examination. In a report dated February 18, 2009, Dr. Tranese opined
that Medina had moderate limitations in performing overhead activities and in lifting and
carrying heavy objects with his right arm, but no limitations in using his hands for fine and gross
manual activities. (AR 290.) He further opined that Medina had moderate limitations in his
abilities to squat, kneel, crouch, and climb stairs frequently and mild to moderate limitations in
his abilities to stand for long period or walk long distances. (Id.) However, the doctor perceived
no other physical functional deficits. (Id.)
The OTDA also referred Medina for a consultative psychiatric examination, but Medina
thrice failed to appear. (AR 324.) In addition, the OTDA Examiner had difficulty obtaining
Medina’s medical records. The Examiner obtained Dr. Lanzone’s operative reports and a few
other documents from Day-Op Center of Long Island, where the operations occurred. (AR 40.)
The Examiner also obtained records from New York Hospital Medical Center of Queens relating
to Medina’s April 13, 2005, visit and a March 4, 2004, visit to the Emergency Department in
which Medina principally complained of chest pains. However, the Examiner did not obtain
charts or other office records from Drs. Lanzone or Sodaro.
On May 7, 2009, the Examiner denied Medina’s application for SSDI benefits. In his
Explanation of Determination, the Examiner noted that, although the OTDA contacted Medina’s
medical sources, it was “unable to obtain all the evidence … needed” to ascertain the severity of
appear for the consultative psychiatric examinations, but paperwork contained in the
Administrative Record indicates that the SSDI application was denied both due to Medina’s
failure to cooperate with the Examiner’s efforts to obtain medical records and to submit to a
consultative psychiatric examination. (See AR 118.)
On May 11, 2009, Lavallee filed a request for a hearing before an Administrative Law
Judge (“ALJ”). (AR 62.) That request asserted that Medina was “totally disabled as evidenced
by the medical reports submitted by … treating psychiatrist Dr. … Sodaro and Dr. … Lanzone
….” (Id.) In early April 2011, ALJ David Z. Nisnewitz scheduled a hearing for June 7, 2011.
(AR 63.) At or about that time, the ALJ also issued letter requesting that a psychologist, Sharon
Grand, Ph.D., attend the hearing. (AR 77.)
On May 13, 2011, Medina was examined and evaluated by Dr. Stephen G. Zolan, an
orthopedist, apparently at the request of Lavallee. (AR 327–29.) Dr. Zolan opined that Medina
“basically ha[d] frozen shoulder” on his dominant right side, making it “almost impossible … to
do physical work of any sort.” (AR 328.) This condition not only prevented him from carrying
or lifting more than ten pounds and doing overhead or repetitive work, but also limited his “fine
manipulative functionality.” (AR 329.) Dr. Zolan also found that Medina had arthritis in the
weight-bearing joints in his lower extremities which limited his ability to stand and sit. (Id.)
The doctor opined that Medina’s “poor functional capacities” rendered him “unfit, not only for
the occupation of a police officer …, but for physical or sedentary occupations of any sort ….”
(Id.) Dr. Zolan believed that these conditions were permanent and unlikely to improve with
treatment. (Id.)
Although Dr. Grand and a vocational expert appeared at the June 7, 2011, hearing, (AR
28), the Administrative Record does not include a transcript of the hearing, so the Court does not
Nisnewitz did not rely on their testimony in his June 24, 2011, decision, which held that Medina
was disabled as of September 30, 2007. (AR 28–35.) In contrast, the ALJ gave “significant
probative weight” to the opinions of Drs. Zolan and Sodaro, finding that they had “support in the
medical record.” (AR 34.)
In holding that Medina was disabled, the ALJ followed the five-step sequential process
for making disability determinations, which is prescribed in 20 CFR §§ 404.1520(a) and
416.920(a).6 First, the ALJ determined that Medina had not engaged in substantial gainful
activity since September 30, 2007. (AR 30.) Second, ALJ Nisnewitz held that Medina had
medically determinable severe impairments. (Id.) The ALJ did not specifically identify these
impairments, stating only that Medina alleged “a combination of physical and mental
impairments” and that the medical record established that Medina had sustained “a series of
orthopedic injuries” during the course of his employment as a police officer. (Id.) However, in
reaching that conclusion, the ALJ relied in large part on the reports of Drs. Sodaro and Zolan.
(AR 31–32.)
At the third step of the analysis, the ALJ found that Medina did not have an impairment
or combination of impairments that met or medically equaled one of the impairments listed in 20
6 The Second Circuit has described this five-step process as follows:
First, the Commissioner considers whether the claimant is currently engaged in substantial gainful
activity. If he is not, the Commissioner next considers whether the claimant has a “severe
impairment” which significantly limits his physical or mental ability to do basic work activities. If
the claimant suffers such an impairment, the third inquiry is whether, based solely on medical
evidence, the claimant has an impairment which is listed in Appendix 1 of the regulations. If the
claimant has such an impairment, the Commissioner will consider him [per se] disabled....
Assuming the claimant does not have a listed impairment, the fourth inquiry is whether, despite
the claimant’s severe impairment, he has the residual functional capacity to perform his past work.
Finally, if the claimant is unable to perform his past work, the Commissioner then determines
whether there is other work which the claimant could perform.
Talavera v. Astrue, 697 F.3d 145, 151 (2d Cir. 2012) (quoting DeChirico v. Callahan, 134 F.3d 1177, 1179–80 (2d
Cir. 1998)).
of the entire record, found that Medina did not have the residual functional capacity to perform
even sedentary work. (Id.) The ALJ acknowledged that this finding was based, in part, on
evidence supplied by Drs. Sodaro and Zolan. The ALJ held that the record evidence established
that Medina’s knee pain prevented him from sitting, standing, or walking for six hours in an
eight-hour workday and that his right shoulder pain prevented him from effectively performing
overhead activities and from lifting and carrying ten pounds. (Id.) However, the ALJ also held
that Medina’s ability to function was “further eroded due to sleep apnea” and his mental
impairments, which reduced his “capacity for social interaction, daily activities, and sustained
attention and concentration.” (Id.)
At the fifth and final step, the ALJ determined that Medina could not return to his past
relevant work as a police officer. (AR 34.) He then referred to the applicable medical-
vocational guidelines set forth in 20 C.F.R. Part 404, Subpart P, Appendix 2, which prescribed a
finding of disabled. (AR 34–35.) The ALJ concluded that Medina had been under a disability,
as defined in the Social Security Act, since September 30, 2007, through at least June 24, 2011 –
the date of the decision. (AR 35.)
The Subsequent Criminal Proceedings
In 2014, Medina was indicted in connection with a sweeping investigation by the New
York County District Attorney’s Office into a large-scale Social Security Disability insurance
fraud. The fraudulent scheme was described as follows by Judge Pauley of the United States
District Judge for the Southern District of New York in a civil action involving other participants
in the scheme:
The masterminds of the scheme, the “Lavallee Group,” approached retired police
officers … and offered to prepare fraudulent applications for Social Security
Disability Insurance (“SSDI”) in exchange for cash kickbacks from the resulting
SSDI benefits. The Lavallee Group sent [the retired officers] to selected mental-
as post-traumatic stress disorder, anxiety disorder, and depression. [The retired
officers] … used these diagnoses to file fraudulent SSDI applications, which were
prepared by the Lavallee Group and contained substantively identical claims.
Once they obtained the SSDI benefits, [the officers] paid the Lavallee Group in
cash increments of less than $10,000.
Blessinger v. City of New York, No. 17-CV-108, 2017 WL 3841873, at *1 (S.D.N.Y. Sept. 1,
2017). Two of the members of the Lavallee Group were Lavallee and Hale. (AR 165.) In
addition, Medina acknowledges that Drs. Sodaro and Zolan were alleged to have been involved
in the scheme. (Medina Aff. ¶ 14.)
Since the indictment – New York County Indictment No. 794/2014 – is not part of the
Administrative Record and has not been provided to the Court by the parties, it is unclear
precisely what charges Medina was facing. Medina states that he was indicted for “grand
larceny by false pretenses” – which is a theory of larceny – but does not specify the offenses with
which he was charged. Medina’s Memorandum of Law in Support of his Motion for Judgment
on the Pleadings (“Medina’s Memo”) (Doc. No. 25) at 3.) The Commissioner states that Medina
was indicted for grand larceny in the fourth degree but does not allege whether Medina was also
facing other charges. (Commissioner’s Memorandum of Law in Support of the Cross-Motion
Doc. No. 27) at 3.) The minutes of Medina’s plea and sentencing suggest that grand larceny in
the fourth degree was either one count of a multi-count indictment or a lesser included offense of
a count which charged Medina with grand larceny in the second degree. (Plea/Sentence Minutes
(Doc. No. 25-4) at 2–3, 5.)
Regardless of the charges, it is undisputed that on July 11, 2014, Medina entered into a
Plea Agreement. (AR 103–06.) That agreement resolved both the criminal case against Medina
and related forfeiture action brought by the New York County District Attorney in his capacity
as a “Claiming Authority.” With respect to the criminal action, Medina admitted that on or
around October 1, 2007, he knowingly and intentionally and acting in concert with others caused
(AR 103–04.) He further admitted that, by making these false representations, he collected
unauthorized payments from the SSA in the amount of $143,154.10 between March 2008 and
June 2013. (AR 104).
The Plea Agreement provided that if Medina satisfactorily allocuted, the District
Attorney would recommend a conditional discharge and 100 hours of community service. That
conditional discharge was conditioned on, among other things, Medina’s payment of restitution.
In paragraph 6 of the Plea Agreement, Medina agreed to pay restitution in the amount of
$143,154.10 – “which represents the loss suffered by SSA” – and admitted being liable for that
amount. (AR 104.) The Plea Agreement stated that the failure to pay would be a “material
breach” of the Plea Agreement. (Id.)
The conditional discharge was also conditioned on his settling the civil forfeiture action
by stipulating to forfeit the $143,154.10. With respect to the civil action, the Plea Agreement
states that prior to the execution of the Plea Agreement, Medina would stipulate to settle the
forfeiture action. (AR 104.) The Plea Agreement anticipated that the Forfeiture Stipulation
would result in the entry of a Forfeiture Order. The District Attorney would then move to
dismiss “the civil suit … in conjunction with this matter.” (AR 105.)
On July 11, 2014, Medina appeared before Justice Daniel Fitzgerald in the Supreme
Court of the State of New York, New York County, to enter his plea of guilty. Medina did not
allocute in the manner anticipated in the Plea Agreement. Instead, Justice Fitzgerald read the top
count of the indictment to Medina – which was grand larceny in the second degree – then asked
if the facts stated in that charge were true. (Plea/Sentence Minutes at 5–6.) As a result, Medina
admitted that between October 1, 2007, and December 20, 2013, he, acting in concert with
others, “stole property from an owner, specifically the Social Security Administration, and the
judge accepted the plea. (Id. at 7.) Medina then waived the pre-sentence report, and the Justice
Fitzgerald imposed the promised sentence. (Id. at 8.)
The Redetermination Proceedings
On or before February 25, 2014, the New York County District Attorney’s Office alerted
the Commissioner to the Lavellee Group’s scheme. (Doc. No. 25-2, Ex. F.) Subsequently, the
Commissioner learned, from either the New York District Attorney’s Office and/or the SSA’s
Office of the Inspector General (“OIG”) that Medina had pled guilty to obtaining through false
representations SSDI benefits to which he was not entitled. (AR 6.)
On April 20, 2017, Administrative Appeals Judges Christopher S. Hargis and Sunmee Jo
issued a Notice of Appeals Council Action, (AR 165–68), advising Medina that the Appeals
Council was redetermining his entitlement to disability benefits pursuant to section 205(u) of the
Social Security Act, 42 U.S.C. § 405(u). That Notice referenced Medina’s guilty plea and stated
that, since the Appeals Council was “not allowed to consider any evidence submitted in
connection with [his] application for benefits” in redetermining his case, there was insufficient
evidence to support his entitlement to disability benefits. (AR 165–66.) The Appeals Council
stated that it planned to issue a decision holding that Medina was not disabled from September
20, 2007, through June 24, 2011, the date of ALJ Nisnewitz’s decision, because the evidence did
“not establish a severe, medically determinable impairment to support a finding of disability
during the relevant period at issue.” (AR 166.) The Notice gave Medina 30 days in which to
submit “more evidence or a statement about the facts and the law” relating to his case, but noted
that the Appeals Council could consider more evidence only if it was “new and material” and
related to a disability starting on or before June 24, 2011. (AR 166–67.) The Notice also stated
issue a decision if it did not hear from Medina within the 30 days. (Id.)
On June 7, 2017, the Appeals Council, believing that Medina had not responded to the
Notice, entered a decision holding that there was “insufficient evidence to support [Medina’s]
entitlement to benefits under the application filed on June 11, 2008.” (AR 8.) The Appeals
Council provided two bases for that decision. First, as proposed in the Notice, it disregarded all
evidence submitted in connection with Medina’s application and found that the record no longer
established a severe, medically determinable impairment during the relevant period at issue.
(AR 7.) Second, noting that the DISCO DIB Insured Status Report, (AR 126–27), revealed that
Medina had earned $19,743.97 in calendar year 2008, the Appeal Council held that Medina had
engaged in substantial gainful activity since September 30, 2007, (AR 7). Accordingly, the
Appeals Council terminated Medina’s entitlement to benefits. (AR 8.)
On July 20, 2017, an attorney retained by Medina – Joseph W. Murray – wrote to the
Appeals Council requesting that it reopen its decision. (AR 171–72.) In that letter (hereafter,
“Murray’s First Letter”), Murray implied that the Appeals Council had overlooked his May 18,
2017, letter requesting an extension of the 30-day deadline. (AR 169.) Murray not only attached
a copy of that letter, but attached some new evidence: a six-page report from Donald I. Goldman,
M.D., to Murray, dated June 9, 2017; a one-page letter from Lennon Turner, MPH, to Medina
dated June 27, 2017; and a handwritten, two-page letter from Claudia Smuglin, M.D., dated July
3, 2017.
The letter from Dr. Donald Goldman – an orthopedic surgeon and a Fellow of the
American Academy of Disability Evaluating Physicians – stated that he had examined Medina in
orthopedic surgical consultations on at least two occasions: initially, on October 16, 2013, and
most recently on June 1, 2017. (Doc. No. 25-2, Ex. K2, at 1–2.) Although the doctor’s letter
findings of the June 2017 examination and evaluated Medina’s residual functional capacity as of
that date. Dr. Goldman’s report included a review of Medina’s surgical history, and summarized
Dr. Lanzone’s assessments of Medina’s functionality. (Id. at 3–4.) But, because Dr. Goldman
first saw Medina in 2013, the doctor did not, and could not, offer an opinion as to Medina’s
condition or RFC prior to that date.
The letter from Dr. Smuglin, a psychiatrist, stated that Medina had been under her care
since March 31, 2014. (Doc. No. 25-2, Ex. M2, at 1.) She further stated that she had treating
Medina for recurrent, severe Major Depressive Disorder and chronic PTSD with individual
psychotherapy, relaxation techniques, and various medications. (Id.) However, because Dr.
Smuglin began treating Medina in 2014, she did not, and could not, offer an opinion as to
Medina’s condition prior to that date. Rather, she opined only that he continued to have
symptoms of clinical depression and PTSD and remained in need of further psychiatric care. (Id.
at 2.)
The letter from Mr. Turner, the Lead Scientist for Panel Maintenance at the World Trade
Center Health Registry, was a cover letter, enclosing “a report with [Medina’s] answers
regarding [his] 9/11 exposures and experiences taken from [his] 2003–04 WTC Health Registry
survey.” (Doc. No. 25-2, Ex. L2.) Turner’s letter stated that Medina’s eligibility to enroll in the
registry was based on the information that he himself had provided, and that neither his
“eligibility nor self-reported symptoms on the 2003–04 Registry survey were independently
verified by Registry personnel.” (Id.) The letter further stated: “Registry staff did not conduct
any physical exams or screenings at enrollment.” (Id.)
Although Murray’s First Letter did not request a further extension of time in which to
submit evidence, Murray sent the Appeals Council a second letter (hereafter, “Murray’s Second
the case against him,” (Murray’s Second Letter (Doc. No. 25-2) at 1), but sought to portray
Medina as “a victim of the fraud,” allegedly “perpetrated without Medina’s knowledge by …
Hale,” (id. at 2). Murray’s Second Letter alleged that the SSA violated Medina’s due process
rights by failing to conduct the redetermination immediately upon learning of the New York
County District Attorney’s investigation into the Lavallee Group, and asserted that Medina
would not have been implicated in the wrongdoing if the SSA had taken down the Lavallee
Group when it first learned of their scheme. (Id. at 3.) The letter also accused the SSA and New
York County District Attorney’s Office of violating Medina’s rights under the Health Insurance
Portability and Accountability Act of 1996 (“HIPAA”) by introducing portions of Medina’s
confidential SSDI file into evidence at the criminal trial of another defendant without Medina’s
consent and over his objection. (Murray’s Second Letter at 4.)
Murray’s Second Letter attached 30 exhibits, which Murray characterized as containing
“overwhelming documentary medical evidence to support the conclusion that he was completely
disabled by his combination of impairments.” (Id.) Of the 30 exhibits, only 20 were medical
records or opinions. Seven of the 20 were documents already included in the Administrative
Record or attached to Murray’s First Letter. Of the remaining 13 documents, all but two – a one-
page note Dr. Smuglin wrote on November 10, 2015, to excuse Medina from jury duty,
(Murray’s Second Letter, Ex. I2), and voluminous pharmacy records, (id., Ex. J2) – related either
to cardiac problems or sinus, nasal, and pulmonary problems which had not been raised in the
initial SSDI application. Notably, neither of Murray’s letters addressed the question of whether
Medina engaged in substantial gainful activity in calendar year 2008.
On September 21, 2017, the Appeals Council issued its decision, holding that Medina
“was not disabled as defined in the Social Security Act at any time from September 30, 2007, the
(AR 362.) The Appeals Council granted Murray’s July 20, 2017, request to reopen the case and
considered the evidence attached to Murray’s First Letter, as well as three documents the
Appeals Council received from “the beneficiary”: a Disability Report – Adult (Form SSA-
3368), a Disability Report – Field Office (Form SSA-3367), and a copy of Dr. Tranese’s report.
(AR 356, 360–61.) However, the Appeals Council held that the latter three documents were
duplicative of documents already contained in the Administrative Record; that Dr. Donald
Goldman and Dr. Smuglin began treating Medina years after June 24, 2011, and therefore could
not opine as to his condition prior to that date; and that the Turner letter attached information
about Medina’s “self-reported symptoms” but did not “reflect any specific medical findings or
evaluation.” (AR 360–61.) The Appeals Council made no mention of having received Murray’s
Second Letter, and did not expressly consider any of the evidence attached thereto. The Appeals
Council also disregarded all evidence submitted in connection with Medina’s application for
benefits, noting that the Social Security Act required it to do so “because fraud was involved in
providing that evidence.” (AR 360.)
The Appeals Council then redetermined the ALJ’s decision, and denied benefits on two
grounds. First, the Appeals Council held that Medina engaged substantial gainful activity in
calendar year 2008, though he did not engage in substantial gainful activity between January 1,
2009, and June 24, 2011. (AR 362.) Second, the Appeals Council held that, after excluding all
the evidence described above, there was no longer evidence of “any medically determinable
impairment[,] or combination of impairments, which had more than a minimal effect on his
ability to do basic work activities.” (Id.) Since Medina failed to make the showing of a “severe
impairment,” as required at step two of the five-step analysis, the Appeals Council held that there
was insufficient evidence to support his Medina’s entitlement to Social Security benefits. (AR
Notice which informed him of the final decision of the Commissioner and his right to seek
judicial review of that decision, (AR 356).
This Action
On November 24, 2017, Medina, still represented by Murray, commenced this action,
principally requesting that the Court modify the Commissioner’s decision and grant Medina the
maximum monthly SSDI benefits. His complaint (Doc. No. 1) contained three causes of action,
the first two of which alleged violations of Medina’s procedural due process rights. The first
cause of action alleged that the Commissioner failed to provide Medina an opportunity to have a
hearing before an ALJ either before or after reaching the determination that there was
insufficient evidence to support his entitlement to SSDI benefits. (Complaint ¶¶ 9–12.) The
second cause of action alleged that the Commissioner denied Medina a meaningful opportunity
to challenge the initial determination that fraud was involved in the preparation of Medina’s
SSDI application and that the SSA’s rulings and procedures manual deprived any ALJ and/or
members of the Appeals Council the discretion to determine whether the evidence contained in
that application was fraudulent. (Id. ¶¶ 15–16.) The third cause of action alleged that the
Commissioner’s redetermination was erroneous, unsupported by substantial evidence, and/or
contrary to law.
Medina and the Commissioner now cross-move for judgment on the pleading pursuant to
Rule 12(c) of the Federal Rules of Civil Procedure. The first two points in Medina’s Memo,
dated April 4, 2019, (Doc. No. 25), largely expand on the due process arguments raised in the
complaint’s first two causes of action. First, citing to Hicks v. Commissioner of Social Security,
909 F.3d 786 (6th Cir. 2018), Medina argues that he was not permitted “a fair opportunity to
rebut” an assertion by the SSA’s OIG that fraud was involved in his claim of disability. Medina
criminal activity and was untainted by fraud. Second, citing to the SSA’s Hearing, Appeals, &
Litigation Law Manual (“HALLEX”) I-1-3-25(C)(5), which addresses when a hearing is
necessary before redetermination, Medina argues that he should have been granted a hearing into
what evidence from his initial application was tainted.
The third and fourth points in Medina’s Memo contain arguments which, although raised
before the Appeals Council, were not raised in the complaint. In the third point, Medina notes
that 42 U.S.C § 405(u)(1)(A) requires the Commissioner to perform a redetermination of benefits
“immediately” upon a finding of fraud, that the New York County District Attorney’s Office
informed the Commissioner of the Lavellee Group’s fraudulent scheme in February 2014, but
that the Commissioner waited for three years before commencing the redetermination
proceedings against him. Medina asserts that this delay rendered the redetermination “improper”
and that Medina is, for some unexplained reason, entitled to have his SSDI benefits reinstated in
full. In the fourth point, Medina asserts that the money he received in 2008 was “back pay”
resulting from negotiations between the NYPD and the City of New York, and that the Appeals
Council erred in finding that he engaged in substantial gainful activity in calendar year 2008.
The Commissioner’s Memo, (Doc. No. 27), argues that the Appeals Council properly
followed the statutory mandate of 42 U.S.C. § 405(u). With respect to Medina’s claim that he
was denied due process because he was not permitted a full and fair opportunity to rebut the
OIG’s findings of fraud, the Commissioner argues that the Appeals Council “properly afforded
issue-preclusive effect to [Medina’s] admissions in his guilty plea, in connection with which [he]
had already been given a full and fair process.” (Commissioner’s Memo at 12.) With respect to
Medina second due process argument, the Commissioner, citing SSR 16-1p, 2016 WL 931538
(March 14, 2016), argues that the Appeals Council was required to disregard all evidence
general provisions of HALLEX I-1-3-25(C)(5) is misplaced because it ignores the more specific
provisions of HALLEX I-5-6-4, which dictates how to conduct redeterminations of claims
brought by participants in the Lavallee scheme, (Commissioner’s Memo at 20).
The Commissioner makes two arguments with respect to Medina’s claim that the
Commissioner improperly delayed the redetermination. First, the Commissioner argues that 42
U.S.C. § 405(u) serves to protect the SSA, and does not provide a private right of action to
claimant for delays in the redetermination process. (Id. at 22.) Second, the Commissioner notes
that Medina has not explained how he was prejudiced by the delay. (Id.)
The Commissioner does not address the merits of Medina’s claim that the Appeals
Council erred in finding that he engaged in substantial gainful activity in 2008. Rather, the
Commissioner notes that the Appeals Council “proceeded past step one of the sequential
evaluation process,” finding insufficient evidence of a medically determinable impairment at step
two. (Id. at 22, n. 11.) The Commissioner reasons that even if the Appeals Council’s
determination at step one was erroneous, that error had no bearing on the decision to deny
entitlement to benefits and was, therefore, harmless. (Id.)
STANDARD OF REVIEW
A final determination of the Commissioner of Social Security upon an application for SSI
benefits is subject to judicial review as provided in 42 U.S.C. § 405(g). See 42 U.S.C. §
1383(c)(3). A court’s review under 42 U.S.C. § 405(g) of a final decision by the Commissioner
is limited to determining whether the SSA’s conclusions were supported by substantial evidence
in the record and were based on a correct legal standard. Lamay v. Comm’r of Soc. Sec., 562
F.3d 503, 507 (2d Cir. 2009); see Johnson v. Bowen, 817 F.2d 983, 985 (2d Cir. 1987). The
district court has the “power to enter, upon the pleadings and transcript of the record, a judgment
without remanding the cause for a rehearing.” 42 U.S.C. § 405(g).
“Substantial evidence” connotes “more than a mere scintilla. It means such relevant
evidence as a reasonable mind might accept as adequate to support a conclusion.” Richardson v.
Perales, 402 U.S. 389, 401 (1971); see also Veino v. Barnhart, 312 F.3d 578, 586 (2d Cir. 2002).
“In determining whether substantial evidence supports a finding of the Secretary [now,
Commissioner], the court must not look at the supporting evidence in isolation, but must view it
in light of the other evidence in the record that might detract from such a finding, including any
contradictory evidence and evidence from which conflicting inferences may be drawn.” Rivera
v. Sullivan, 771 F. Supp. 1339, 1351 (S.D.N.Y. 1991). The “substantial evidence” test applies
only to the Commissioner’s factual determinations. Similar deference is not accorded to the
Commissioner’s legal conclusions or to the agency’s compliance with applicable procedures
mandated by statute or regulation. See Townley v. Heckler, 748 F.2d 109, 112 (2d Cir. 1984)
“Where there is a reasonable basis for doubt whether the ALJ applied correct legal
principles, application of the substantial evidence standard to uphold a finding of no disability
creates an unacceptable risk that a claimant will be deprived of the right to have her disability
determination made according to the correct legal principles.” Johnson, 817 F.2d at 986.
However, where application of the correct legal principles to the record could lead only to the
same conclusion reached by the Commissioner, there is no need to remand for agency
reconsideration. Zabala v. Astrue, 595 F.3d 402, 409 (2d Cir. 2010).
DISCUSSION
A. The Redetermination Process
The redetermination procedure at issue in this case was enacted as part of the Social
Security Independence and Program Improvements Act of 1994, and is codified as section
to:
immediately redetermine the entitlement of individuals to monthly insurance
benefits under this subchapter if there is reason to believe that fraud or similar
fault was involved in the application of the individual for such benefits, unless a
United States attorney, or equivalent State prosecutor, with jurisdiction over
potential or actual related criminal cases, certifies, in writing, that there is a
substantial risk that such action by the Commissioner of Social Security with
regard to beneficiaries in a particular investigation would jeopardize the criminal
prosecution of a person involved in a suspected fraud.
42 U.S.C. § 405(u)(1)(A). “When redetermining the entitlement, or making an initial
determination of entitlement, of an individual under this subchapter, the Commissioner of
Social Security shall disregard any evidence if there is reason to believe that fraud or
similar fault was involved in the providing of such evidence.” 42 U.S.C. § 405(u)(1)(B).
“If, after redetermining pursuant to this subsection the entitlement of an individual to
monthly insurance benefits, the Commissioner of Social Security determines that there is
insufficient evidence to support such entitlement, the Commissioner of Social Security
may terminate such entitlement and may treat benefits paid on the basis of such
insufficient evidence as overpayments.” 42 U.S.C. § 405(u)(3).
On March 14, 2016, the Commissioner issued Security Ruling (SSR) 16-1p to explain the
process the SSA used to redetermine an individual’s entitlement to or eligibility for benefits
when there is reason to believe that fraud or similar fault was involved in that individual's
application for benefits. As the SSR 16-1p itself notes, “SSRs do not have the same force and
effect as statutes or regulations.” SSR 16-1p, 2016 WL 1029284, at *1. However, “Social
Security rulings are entitled to deference except when they are plainly erroneous or inconsistent
with the Social Security Act.” Genier v. Astrue, 298 F. App’x 105, 108 (2d Cir. 2008) (summary
order) (quoting Gordon v. Shalala, 55 F.3d 101, 105 (2d Cir. 1995)). In addition, SSRs “are
1029284, at *1 (citing 20 CFR 402.35(b)(1)).
Under SSR 16-1p, “any individual or entity whose actions affect an individual’s
application for monthly benefits” may be found to have committed fraud or similar fault. SSR
16-1p (A)(4), 2016 WL 1029284, at *3. The term “any individual or entity” includes “a
claimant, beneficiary, auxiliary, recipient, spouse, representative, medical source, translator,
interpreter, and representative payee.” Id. The SSA “will disregard any evidence supplied,
prepared, or signed by a source when there is a reason to believe that the source provided the
evidence knowing it was incorrect or incomplete or concealed information knowing it was
material to the determination, even if it includes a report prepared or signed by another source,
such as lab findings and x-rays.” SSR 16-1p(C)(2)(a), 2016 WL 1029284, at *4. However,
during the redetermination, the SSA “will consider evidence that was provided absent fraud or
similar fault, and that relates to the individual’s entitlement and eligibility from the time of the
individual’s original allowance, even if that evidence was not presented previously.” SSR 16-
1p(A)(5), 2016 WL 1029284, at *3. In addition, “If the individual believes he or she is currently
disabled, he or she may file a new application while appealing” the SSA decision on
redetermination. SSR 16-1p(A)(8), 2016 WL 1029284, at *3.
Applying SSR 16-1p, HALLEX provides a specific redetermination procedure to be used
by its Office of Appellate Operations (“OAO”) as to redetermining the applications of SSDI
beneficiaries who participated in the Lavallee Group’s scheme. HALLEX I-5-6-4(II)(A) directs
the OAO employees to verify that “the beneficiary’s plea agreement contains admissions that the
beneficiary knowingly and intentionally made false representations to SSA in order to obtain
disability benefits.” If the plea agreement contains such an admission, the employees are to
“[d]isregard all evidence in the claim(s) file under section 205(u) of the Social Security Act,”
“the beneficiary submits additional evidence showing a new critical or disabling mental
condition that does not relate to the period at issue [or] if the beneficiary submits evidence
showing a physical impairment (whether during or after the period at issue), … OAO staff will
inform the beneficiary that he or she may file a new application.” HALLEX I-5-6-4(II)(C).
In this case, the Appeals Council followed the procedures set forth in SR 16-1p and
HALLEX I-5-6-4 to the letter. According to their decision dated June 7, 2017, the Appeals
Council was alerted to the Lavellee Group’s scheme by both the New York District Attorney’s
Office and the OIG and knew that Medina had pled guilty to obtaining through false
representations SSDI benefits to which he was not entitled. (AR 6.) Since there was reason to
believe that fraud or similar fault was involved in Medina’s SSDI application, the Appeals
Council was required to initiate redetermination proceedings. See 42 U.S.C. § 405(u)(1)(A).
Moreover, since Medina’s plea agreement contained admissions that the beneficiary knowingly
and intentionally made false representations in his SSDI application in order to obtain disability
benefits, (AR 103–04), the Appeals Council was required to disregard all evidence in Medina’s
claim file in making that redetermination. See SSR 16-1p(C)(2)(a); HALLEX I-5-6-4(II)(A).
In accordance with HALLEX I-5-6-4(II)(B), the Appeals Council sent Medina a notice
dated April 20, 2017, informing him that, since the Appeals Council was “not allowed to
consider any evidence submitted in connection with [his] application for benefits” in
redetermining his case and that, absent this evidence, there was insufficient evidence to support
his entitlement to disability benefits. (AR 165–66.) The notice stated that the Appeals Council
planned to issue a decision holding that Medina was not disabled from September 20, 2007,
through June 24, 2011, but gave Medina 30 days in which to submit “more evidence or a
statement about the facts and the law” relating to his case. (AR 166.) The notice advised
related to a “disability” starting on or before June 24, 2011. (AR 167.)
Apparently unaware that Medina requested an extension of the 30-day period, the
Appeals Council terminated Medina’s benefits on June 7, 2017. Since the Appeals Council
could not consider the evidence introduced by Medina (or Hale or Lavallee on his behalf), there
was unquestionably “insufficient evidence to support [Medina’s] entitlement to benefits under
the application filed on June 11, 2008.” (AR 8.) Indeed, there was no medical evidence
whatsoever.
Murray’s First Letter, dated July 20, 2017, advised the Appeals Council that it had
overlooked Medina’s request for an extension, and requested that the Appeals Council reopen its
decision and consider three items of new evidence: a report from Dr. Donald Goldman, dated
June 9, 2017; a letter from Lennon Turner, MPH, to Medina dated June 27, 2017; and a
handwritten letter from Claudia Smuglin, M.D., dated July 3, 2017. (AR 171.) Murray’s First
Letter did not state or imply that Medina wanted to introduce any new evidence aside from these
three items, much less request additional time to do so.
In its September 21, 2017, decision, the Appeals Council granted Medina’s request to
reopen and considered the three pieces of new evidence. The Appeals Council correctly noted
that since Drs. Goldman and Smuglin first treated Medina years after ALJ Nisnewitz rendered
his decision on June 24, 2011, their reports could not contain evidence and opinions relating to
the period between September 30, 2007, and June 24, 2011. (AR 360.) In addition, the Appeals
Council correctly noted that the Turner letter attached information about Medina’s “self-reported
symptoms” but did not “reflect any specific medical findings or evaluation.” (AR 360–61.) The
Appeals Council also considered three documents received directly from Medina – (AR 356,
application. (See AR 128–35; 140–42; 287–90. )
After considering the evidence attached to Murray’s First Letter and the evidence
provided by Medina, there was still no evidence of any medical impairments, much less severe
medical impairments. Accordingly, the Appeals Council correctly held that Medina’s SSDI
claim failed at the second step of the five-step analysis. Since the Appeals Council applied the
correct legal principles and since its conclusions were supported by substantial evidence, its
redetermination to terminate Medina’s entitlement to SSDI benefits is affirmed.7
To be sure, there was new evidence attached to Murray’s Second Letter. However, there
is no indication that this letter, dated September 15, 2017, arrived before September 21, 2017,
when the Appeals Council issued its final decision. That decision discussed the evidence
attached to Murray’s First Letter in some detail, but makes no mention of Murray’s Second
Letter or the voluminous attachments thereto.
Moreover, the Murray’s Second Letter did not contain medical or psychiatric evidence
which would have established Medina’s disability during the relevant period. Aside from seven
documents which were already contained in the Administrative Record, only two documents – a
one-page note Dr. Smuglin wrote on November 10, 2015, to excuse Medina from jury duty,
(Murray’s Second Letter, Ex. I2), and voluminous pharmacy records, (id., Ex. J2) – related to the
disabilities alleged in Medina’s SSDI application. In her note, Dr. Smuglin again noted that she
7 Since the Court has determined that the Appeals Council correctly denied Medina’s application at step two, the
Court need not consider the question of whether the Appeals Council was correct when, at step one of the analysis, it
determined that Medina engaged in significant gainful employment in 2008. However, the Court notes that this
decision was also correct. Annual earnings in excess of amounts calculated in accordance with the formula set forth
in 20 C.F.R. § 404.1574(b)(2) create a rebuttable presumption of substantial gainful employment. See Patterson v.
Colvin, No. 14-CV-6224P, 2015 WL 5036934, at *16 (W.D.N.Y. Aug. 26, 2015). In 2008, the amount was $940 a
month, or $11,280 a year. Id. The DISCO DIB showed that Medina earned $19,743.97 in 2008, (AR 127), and
there was no evidence in the Administrative Record to rebut the presumption that Medina was engaged in substantial
gainful employment in 2008.
And the pharmacy records – although relating to the period between September 30, 2007, and
June 24, 2011 – did not by themselves establish a severe impairment. The other documents
attached to Murray’s Second Letter related to cardiac problems or sinus, nasal, and pulmonary
problems which had not been raised in the initial SSDI application.
B. The Due Process Challenges
Medina’s due process arguments rely on authority which is not controlling and/or
inapplicable to the circumstances of this case. Medina’s first argument – that he was not
permitted “a fair opportunity to rebut” the OIG’s finding that fraud was involved in Medina’s
application – principally relies on Hicks v. Commissioner of Social Security, a 2018 Sixth Circuit
case which held that the SSA’s refusal to accord beneficiaries fair opportunity to rebut assertions
that medical reports were fraudulent constituted deprivations of the minimum protections of
procedural due process. However, since Hicks is a Sixth Circuit opinion, it is not controlling on
this Court. Even if it were, Medina is collaterally estopped from raising the arguments raised in
Hicks.
1. Collateral Estoppel
Courts have long recognized that “the determination of a question directly involved in
one action is conclusive as to that question in a second suit.” B & B Hardware, Inc. v. Hargis
Indus., Inc., 575 U.S. 138, 147 (2015) (quoting Cromwell v. County of Sac, 94 U.S. 351, 354
(1877)). “In order for collateral estoppel to apply the court must determine that ‘(1) the issues in
both proceedings are identical, (2) the issue in the prior proceeding was actually litigated and
actually decided, (3) there was full and fair opportunity to litigate in the prior proceeding, and (4)
the issue previously litigated was necessary to support a valid and final judgment on the merits.’”
New York v. Julius Nasso Concrete Corp., 202 F.3d 82, 86 (2d Cir. 2000) (quoting NLRB v.
verdict or guilty plea, constitutes estoppel in favor of the United States in a subsequent civil
proceeding as to those matters determined by the judgment in the criminal case.” Id. (quoting
United States v. Podell, 572 F.2d 31, 35 (2d Cir. 1978)). To determine what that previous
criminal proceeding “necessarily decided, … a court must ‘examine the record of a prior
proceeding, taking into account the pleadings, evidence, charge, and other relevant matter.’”
Bravo-Fernandez v. United States, 137 S. Ct. 352, 359 (2016) (quoting Ashe v. Swenson, 397
U.S. 436, 444 (1970)).
In this case, Medina was charged with acting in concert with Lavellee, Hale, and others to
commit grand larceny in the second degree. Under New York law, “a person steals property and
commits larceny when, with intent to deprive another of property or to appropriate the same to
himself or to a third person, he wrongfully takes, obtains or withholds such property from an
owner thereof.” N.Y. Penal Law § 155.05(1). Larceny can be committed in a number of ways,
including by “obtaining property by false pretenses.” Id. § 155.05(2)(a). “With regard to
larceny by false pretenses, the Penal Law incorporates the historical elements that were applied
at common law, i.e., a false material statement about a past or presently existing fact.” People v.
Norman, 85 N.Y.2d 609, 619 (1995). Accordingly, a person is guilty of larceny by false
pretenses “when that person makes a false representation of a past or existing fact while aware
that such representation is false, and obtains possession and title to the property as a result of the
owner’s reliance upon such representation.” N.Y. Crim. Jury Instructions, § 155.05 (instructions
for “Alternative Theories of Larceny”).
In his plea agreement, Medina agreed to plead guilty to grand larceny in the fourth degree
on the theory that he, knowingly and intentionally and acting in concert with others, caused false
representations to be made in order to obtain SSDI benefits. (AR 103–04.) He admitted that, as
March 2008 and June 2013 of $143,154.10. (AR 104.) In addition, he agreed to forfeit that
money and to pay restitution in that amount. (Id.) In light of these admissions, Medina is
estopped from arguing – as did the plaintiffs in Hicks – that he was denied a full and fair
opportunity to contest the OIG’s finding that fraud or similar fault was involved in his
application for SSDI benefits.
Medina is correct in arguing that the prior criminal proceedings did not determine that all
of the evidence included in Medina’s SSDI application was fraudulent. However, his argument
ignores the SSA’s interpretation of § 405(u), as set forth in SSR 16-1p. That Social Security
Ruling required that the Appeals Council ignore any evidence supplied by a claimant who
admitted to fraud in the preparation of the application. See SSR 16-1p(C)(2)(a), 2016 WL
1029284, at *4. While that Social Security Ruling does not have the same force and effect as a
statute or regulation, see SSR 16-1p, 2016 WL 1029284, at *1, it is not plainly erroneous or
inconsistent with the Social Security Act and is entitled to deference. See Genier, 298 F. App’x
at 108; Gordon, 55 F.3d at 105.
2. Entitlement to a Hearing
The Court also rejects Medina’s claim that he was denied due process because the
Appeals Council failed to afford him a hearing before the ALJ. HALLEX I-5-6-4(II)(C), which
specifically addresses the question of whether a hearing may be held in connection with the
redetermination process, provides that “[a]bsent unusual circumstances, adjudicators will not
conduct additional hearing proceedings to develop the evidentiary record in these cases.” To be
sure, HALLEX I-5-6-4(II)(C) states that the “OAO will generally offer a hearing when [1] [t]he
favorable decision was issued without a hearing; or [2] [t]he favorable decision was issued after
a minimal hearing where the beneficiary or recipient offered little or no testimony.” However,
hearing.
In this case, Medina has not explained what, if any, evidence he could offer at a hearing
that would establish his disability. While Medina might be able to testify to his functional
limitations, his testimony alone could not establish that these limitations were caused by a
medically determinable impairment. Thus, even assuming that ALJ Nisnewitz never conducted a
hearing or that Medina provided little or no testimony at that hearing, Medina has not established
that he was prejudiced by the failure to conduct a hearing.
C. The “Immediacy” Requirement
As noted above, Medina also argues that the redetermination proceeding was “improper”
because the SSA did not commence the proceeding for several years after being informed by the
New York County District Attorney’s Office of the Lavellee Group’s fraudulent scheme. As
Medina correctly notes, 42 U.S.C § 405(u)(1)(A) requires the Commissioner to perform a
redetermination of benefits “immediately” upon a finding of fraud. However, as the
Commissioner correctly argues, Medina does not have a private right of action for this delay.
“When analyzing whether a statute implies a private right of action, our ‘interpretive
inquiry begins with the text and structure of the statute and ends once it has become clear that
Congress did not provide a cause of action.’” Moya v. U.S. Dep't of Homeland Sec., 975 F.3d
120, 128 (2d Cir. 2020) (quoting Alexander v. Sandoval, 532 U.S. 275, 288 n.7 (2001)); see also
Lopez v. Jet Blue Airways, 662 F.3d 593, 596 (2d Cir. 2011). A federal statute can create a
private cause of action expressly or by implication, Republic of Iraq v. ABB AG, 768 F.3d 145,
170 (2d Cir. 2014), but if “[n]o provision of [a statute] explicitly provides for a private right of
action for violations of [specific provisions of that statute], ... we must presume that Congress
did not intend one.” Doe v. Merck & Co., 803 F. App’x 559, 560 (2d Cir. 2020) (summary
Doe). A court can only find an implied cause of action where “the underlying statute can be
interpreted to disclose the intent to create one.” Stoneridge Inv. Partners, LLC v. Scientific-
Atlanta, 552 U.S. 148, 164 (2008). The key is ascertaining whether the statute “‘displays an
intent to create not just a private right but also a private remedy.’” Republic of Iraq, 768 F.3d at
170 (quoting Sandoval, 532 U.S. at 286). Ultimately, the statute’s text and structure must “yield
a clear manifestation of congressional intent to create a private cause of action before a court can
find such a right to be implied.” Lopez, 662 F.3d at 596.
Nothing in 42 U.S.C § 405(u) expressly creates a private right of action. Thus, the Court
must presume that Congress did not intend to create one. See Doe, 803 F. App’x at 560;
Olmsted, 283 F.3d at 432. Medina has not overcome that presumption by pointing to anything in
the statute’s text and structure that manifests Congressional intent to create a private right of
action, and the Court’s own review of the statute finds nothing to suggest such intent.
Accordingly, the Court cannot find that § 405(u) implies a private right of action. See Lopez,
662 F.3d at 596. Moreover, even if a private right of action existed, there is nothing to suggest
that the proper remedy for the Commissioner’s failure to comply with the immediacy
requirement would be waiver of the statutorily mandated redetermination process.
For the reasons set forth herein, Medina’s motion for judgment on the pleadings is
denied, and the Commissioner’s cross-motion for judgment on the pleadings is granted. The
Commissioner’s final decision is affirmed, and this action is dismissed.
The Clerk of Court is respectfully directed to enter judgment for the Commissioner and
close this case.
SO ORDERED.
Dated: Brooklyn, New York Roslynn R. Mauskopf
November 30, 2020
ROSLYNN R. MAUSKOPF
Chief United States District Judge