Kramer v. Berryhill

UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

EDWARD W. KRAMER, :

: 3:18-CV-341

Plaintiff, : □

: (JUDGE MARIANI)

V. : (Magistrate Judge Schwab)

MARTIN O’MALLEY, Commissioner of : FILED

Social Security,’ SCRANTON

Defendant. OCT 18 2024

ren off

DEPUTY CLERK

MEMORANDUM OPINION

I. INTRODUCTION

Plaintiffs Motion for Attorney Fees Pursuant to the Equal Access to Justice Act (Doc.

31) is pending before the Court. Plaintiff asserts that an award of attorney's fees is

appropriate because the Court remanded the case to the Commissioner and the

Commissioner's decision was not substantially justified. (/d. at 1.) Defendant contends that

the Commissioner's position was substantially justified. (Doc. 33 at 1.) For the reasons set’

forth below, Plaintiffs Motion (Doc. 31) will be denied.

1 Pursuant to Federal Rule of Civil Procedure 25(d), Martin O’Mallley, the current Commissioner of

Social Security, replaces the former Commissioner as the Defendant to this action.

Il. BACKGROUND

On August 15, 2014, Plaintiff Edward Kramer applied for disability insurance benefits

and supplemental security income with a protective filing date of March 31, 2014, alleging

that he had been disabled since April 28, 2008. (Doc. 1 5; Doc. 7 5.) The Social Security

Administration denied the claim initially on September 18, 2014. (Doc. 1 6; Doc. 7 76.)

Following the initial denial, the case went before Administrative Law Judge Daniel Balutis

(“ALJ”), who concluded, on December 20, 2016, that Kramer was not disabled and denied

him benefits on that basis. (Doc. 8-2 at 31.) Kramer requested review of the ALJ’s decision

before the Social Security Administration’s Appeals Council. (Doc. 8-6 at 30-32.) The

Appeals Council denied his request for review on December 11, 2017, making the ALJ’s

decision the Commissioner's final decision. (Doc. 8-2 at 2.) Kramer then

filed a complaint with this Court on February 10, 2018, seeking judicial review of the

Commissioner's final decision to deny him benefits. (Doc. 1.)

In his three-page Complaint appealing the final decision of the Commissioner of

Social Security filed on February 10, 2018, Plaintiff did not identify any specific factual basis

for his appeal. (See Doc. 1.) Rather, Plaintiff generally said he had been continuously

disabled within the meaning of the Social Security Act since April 28, 2008, the facts of his

disability would be more fully set forth in the administrative proceedings to be filed by

Defendant, and Defendant's administrative decision was not supported by substantial

evidence, contained errors of law, and should be reversed. (Doc. 1 ff] 12, 14-15.)

In his brief in support of his appeal filed on July 31, 2018, Plaintiff challenged the

Commissioner's decision on three bases: (1) the ALJ erroneously rejected the opinion of the

opinion testimony of PA-C Debra Goodwin, Plaintiffs treating provider; (2) the ALJ

erroneously found that Kramer's depression was a non-severe impairment; and (3) the

decision contravenes the holding in Lucia v. SEC, 585 U.S. 237 (2018). (Doc. 13 at

3.)

Plaintiff's Appointments Clause challenge is the foundational issue upon which

Plaintiff's request for attorney's fees rests. As set out in the brief supporting his appeal filed

on July 31, 2018, Plaintiff argued that, in Lucia, the Supreme Court

held that ALJs at the SEC are “Officers of the United States,” and must be

appointed pursuant to the Appointments Clause of the United States

Constitution. Art. Il, § 2, cl. 2. Under the Court's reasoning, it appears that the

ALJs employed by the Social Security Administration are similarly subject to

the Appointments Clause. However, at the time of his decision in Plaintiff's

case, the ALJ had not been appointed as required by the holding in Lucia. Thus,

the ALJ did not exercise lawful authority when he denied Mr. Kramer's claim,

and this case should be remanded to an ALJ who has been constitutionally

appointed as required by Lucia.

(Doc. 13 at 13.)

In her January 30, 2019, Report and Recommendation, Magistrate Judge Susan

Schwab concluded that the ALJ’s decision to afford little weight to Goodwin’s assessment

and his determination that Kramer's depression was non-severe were supported by

substantial evidence. (Doc. 20 at 15.) Magistrate Judge Schwab also concluded that Plaintiff

waived his Appointments Clause argument because he failed to raise the issue at the

administrative level. (Doc. 20 at 20-21 (listing cases).)

While Plaintiff's objections (Doc. 23) were pending, the Commissioner filed

Commissioner's Uncontested Motion to Stay (Doc. 27) on June 27, 2019. The

Commissioner sought the stay because two notices of appeal had been filed in the Court of

Appeals for the Third Circuit on April 5, 2019, based on Lucia and the issue of whether a

plaintiff appealing a decision of the SSA forfeited an Appointments Clause challenge by

failing to raise the issued during administrative proceedings. (/d. J] 3 (citing Bizarre v.

Berryhill, 364 F. Supp. 3d 418 (M.D. Pa. 2019), App. No. 19-1773 (3d Cir.); Cirko v.

Berryhill, Civ. A. No. 17-CV-680, 2019 WL 1014195 (M.D. Pa. Mar. 4, 2019), App. No. 19-

1772 (3d Cir.)).) The Court granted the Motion and directed the parties to notify the Court

immediately upon a decision by the Circuit Court in Bizarre and/or Cirko. (Doc. 28 at 1.)

On May 29, 2020, Defendant filed a Status Update informing the Court that

[o]n January 23, 2020, the Third Circuit Court of Appeals issued a decision in

Cirko, obo Cirko v. Comm’r of Soc. Sec., 948 F.3d 148 (3d Cir. 2020), holding

that the plaintiff had not forfeited his Appointments Clause claim by failing to

raise it during administrative proceedings. On March 9, 2020, the

Commissioner filed a petition for rehearing en banc. That petition was denied

on March 26, 2020.

(Doc. 29 | 1.)

By Order of June 1, 2020, based on Defendant’s Status Update, the Court lifted the

stay imposed on November 6, 2019, did not adopt the Report and Recommendation,

vacated the Commissioner's decision, remanded the case to the Commissioner to conduct

a new administrative hearing before a constitutionally appointed ALJ, entered judgment in

favor of Plaintiff, and closed the case. (Id. J 2-6.) Thereafter, Plaintiff filed the motion for

attorney fees now pending. (Doc. 31.)

Ill. ANALYSIS

To resolve the issue of whether the Commissioner’s decision was substantially

justified such that the Commission would not be liable for attorney's fees, the Court looks to

the basic legal framework for an award of attorney's fees under the Equal Access to Justice

Act (“EAJA” “Act”). The EAJA provides as follows:

Except as otherwise specifically provided by statute, a court shall award to a

prevailing party other than the United States fees and other expenses, in

- addition to any costs awarded pursuant to subsection (a), incurred by that party

in any civil action (other than cases sounding in tort), including proceedings for

judicial review of agency action, brought by or against the United States in any

court having jurisdiction of that action, unless the court finds that the position

of the United States was substantially justified or that special circumstances

make an award unjust.

28 U.S.C. § 2412(d)(1)(A). In Morgan v. Perry, 142 F.3d 670 (3d Cir. 1998), the Circuit

Court explained what is meant by “substantially justified”:

The Supreme Court has defined substantial justification under the EAJA as

“justified in substance or in the main—that is, justified to a degree that could

satisfy a reasonable person.” Pierce v. Underwood, 487 U.S. [552, 565 (1988)].

That is to say, the government's position is substantially justified “if it has a

reasonable basis in both law and fact.” Hanover Potato Products, Inc. v.

Shalala, 989 F.2d [123, 128 (3d Cir. 1993)]. The government has the burden of

establishing that there is substantial justification for its position. /d. at 128. In

order to do so, the government must show: (1) a reasonable basis in truth for

the facts alleged; (2) a reasonable basis in law for the theory it propounded;

and (3) a reasonable connection between the facts alleged and the legal theory

advanced. /d.

The government's position under the EAJA includes “not only the position taken

in the litigation but the agency position that made the litigation necessary in the

first place.” Id. Thus, unless the government's pre-litigation and litigation

positions have a reasonable basis in both law and fact, the government's

position is not substantially justified. Id.; see also Taylor v. Heckler, 835 F.2d

1037, 1040 (3d Cir. 1988) (“[T]he government is deemed to have two positions

for EAJA purposes, both [of which] must be substantially justified... [I]f either

government position does not bear scrutiny, the prevailing party should be

awarded attorneys’ fees [and other reasonable fees and expenses].”).

Morgan, 142 F.3d at 683-84. To satisfy its burden, “the government must make a strong

showing that its position was substantially justified.” Nat. Res. Def. Council, Inc. v. U.S.

E.P.A., 703 F.2d 700, 712 (3d Cir. 1983) (internal quotation omitted); see also Washington

v. Heckler, 756 F.2d 959, 968 (3d Cir. 1985) (Aldisert, C.J., concurring) (quoting Nat. Res.

Def. Council, Inc., 703 F.2d at 712) (adding “this burden is not satisfied because the

government can point to “some evidence’ in its favor’).

The standard for determining whether, for purposes of the EAJA, a party has a

reasonable basis in law for a position was set out by the Court of Appeals in Washington:

If... the case turns on an unsettled or “close question of law,” ... the government

usually will be able to establish that its legal theory was “reasonable,” even if it

was not ultimately accepted as legal by the courts. When the government's

legal position clearly offends legal precedent, however, its position cannot be

said to be “substantially justified.”

Id. at 961-62 (quoting Dougherty v. Lehman, 711 F.2d 555, 563 (3d Cir. 1983)). “Therefore,

for the government, in relying entirely upon a legal argument, to establish that its position

was substantially justified, it must demonstrate that that argument presented an unsettled or

close question of law.” Lee v. Johnson, 799 F.2d 31, 38 (3d Cir. 1986).

Though not a per se rule, “Agency action found to be unsupported by substantial

evidence is virtually certain not to have been substantially justified under the Act.” Taylor v.

Heckler, 835 F.2d 1037, 1044 (3d Cir. 1988) (quoting H.R. Rep. No. 120, 99th Cong., 1st

Sess. 9-10, reprinted in 1985 U.S. Code Cong. & Admin. News 132, 138).

“Whether or not the position of the United States was substantially justified shall be

determined on the basis of the record (including the record with respect to the action or

failure to act by the agency upon which the civil action is based) which is made in the civil

action for which fees and other expenses are sought.” 28 U.S.C. § 2412(d)(1)(B). As noted

in Clarke v. INS, 904 F.2d 172, 175 n.5 (3d Cir. 1990), “because the EAJA is a ‘waiver of

the sovereign's traditional immunity from claims for attorney's fees,’ it had to be construed

strictly in favor of the United States.” /d. (quoting Smedberg Machine & Tool, Inc. v.

Donovan, 730 F.2d 1089 (7th Cir. 1984)); see also Kiareldeen v. Ashcroft, 273 F.3d 542,

554 (3d Cir. 2001) (citing Clarke, 904 F.2d at 175).

In the brief supporting Plaintiff's Motion for Attorney Fees, Plaintiff acknowledges the

three factors set out above which the Government must show to prevail on the argument

that it was substantially justified in its position. ((Doc. 32 at 2.) His claimed entitlement to

attorney’s fees is based solely on the following rationale:

In the instant case, the Court remanded the case to the Commissioner pursuant

to the Third Circuit holding in Cirko v. Comm’r of Soc. Sec. for a new hearing

before a constitutionally-appointed ALJ; thus, the ALJ’s decision was

constitutionally invalid and not reasonably based on the facts or controlling

caselaw, and was not substantially justified.

(Doc. 32 at 2.) Defendant argues that there was a reasonable basis for all substantially-

justified elements. (Doc. 33 at 7.)

Because the Supreme Court's 2018 decision in Lucia is the foundation for Plaintiff's

‘argument, the Court provides a summary of the decision and its ramifications set out in Carr

v. Saul, 593 U.S. 83 (2021), to provide context for the analysis which follows.

This Court... held in Lucia v. SEC, 585 U.S. [237 (2019)], that ALJs

within the Securities and Exchange Commission (SEC) had been

unconstitutionally appointed. Under the Appointments Clause, only the

President, “Courts of Law,” or “Heads of Departments” may appoint “Officers

of the United States.” Art. Il, § 2, cl. 2; see Lucia, 585 U.S. at [243].... The

Lucia Court determined that SEC ALJs were “Officers” rather than mere

employees because they held “a continuing office established by law,”

exercised “ ‘significant discretion’ when carrying out ... ‘important functions,’ ”

and often had the last word in SEC proceedings. Id. Consequently, the

appointment of SEC ALUs by SEC staff violated the Constitution. /d.

Like the SEC ALJs at issue in Lucia, SSA ALJs had been selected by

lower level staff rather than appointed by the head of the agency. On July 16,

2018, a few weeks after Lucia was decided, the SSA's Acting Commissioner

pre-emptively “address[ed] any Appointments Clause questions involving

Social Security claims” by “ratif[ying] the appointments” of all SSA ALJs and

“approv[ing] those appointments as her own.” 84 Fed. Reg. 9583 (2019). The

following year, the SSA issued a ruling stating that the Appeals Council should,

in response to timely requests for Appeals Council review, vacate preratification

ALJ decisions and provide fresh review by a properly appointed

adjudicator. /bid. That remedy was only available, however, to claimants who

had raised an Appointments Clause challenge in either their ALJ or Appeals

Council proceedings. /bid. Claimants who had not objected to the ALus'

appointments in their administrative proceedings would receive no

relief. See ibid.

993 U.S. at 86-87. Many claimants in the latter category sought relief in federal court

seeking new hearings before constitutionally appointed ALJs. Id. “The Commissioner did not

dispute that the ALJs who decided petitioners’ cases were unconstitutionally appointed, but

contended instead that petitioners had forfeited their Appointments Clause challenges by

failing to raise them before the agency.” /d.

As set out above, Plaintiff is in the latter category—he filed his Complaint in this

Court on February 10, 2018, without any mention of an Appointments Clause claim and

without having raised the claim at the administrative level. (See Doc. 1.) Lucia was decided

on June 21, 2018, and Plaintiff filed his brief in support of his appeal on July 13, 2018,

identifying an Appointments Clause claim based on Lucia with the substantive claims

regarding the opinion of his treating provider and the evaluation of his claimed mental

impairment. (See Doc. 13 at 3.)

A. Pre-Litigation Position □

In his reply brief (Doc. 35), Plaintiff expands upon the sole assertion set out in the

brief in support of his motion for attorney fees (Doc. 32). See supra p. 7. However, in his

pre-litigation argument, Plaintiff again points to the Commissioner's failure to provide a

constitutionally appointed ALJ (id. at 4-8) and concludes that the Commissioner

had a duty to obey the requirements of the Constitution, and was on notice at

least as far back as 1991 that his ALUJs were “Officers of the United States,” for

the reasons the Supreme Court explained in Freytag [v. Commissioner, 501

U.S. 868 (1991)]; Nevertheless, his Appeals Council denied Plaintiffs final

administrative appeal on December 17, 2017 and forced him to file this civil

action. He has never argued that his pre-litigation conduct was constitutional,

but only that Plaintiff forfeited the issue. Because his pre-litigation conduct was

not substantially justified, he cannot avoid an award of-EAJA fees in this case.

(Doc. 35 at 8.)

- Defendant maintains that all necessary elements are met. (Doc. 33 at 8-9.) As to

whether there is a reasonable basis in truth for the facts alleged, Hanover, 989 F.2d at 128,

Defendant specifically asserts that this element of the substantially-justified inquiry is

satisfied because it is not disputed that Plaintiff failed to raise an Appointments Clause

challenge at any point during the administrative proceedings. (Doc. 33 at 8-9.) The Court

agrees with Defendant's assessment that this fact is not disputed. Plaintiff first raised the

Appointments Clause challenge in his July 31, 2018, brief filed in support of his appeal of

the Commissioner's denial of benefits. (See Doc. 13 at 13.)

As to the second element, i.e., whether Defendant had “a reasonable basis in law for

the theory . . . propounded,” Hanover, 989 F.2d at 128, Defendant asserts that [alt the

administrative level, the Commissioner reasonably did not address the appointment of the

ALJ because Plaintiff never raised any objection at the administrative level. (Doc. 33 at 8-9.)

In support of this position, Defendant asserts that

[a]n administrative agency's action or inaction is reasonable if it does not offend

“settled law.” See Vacchio v. Ashcroft, 404 F.3d 663, 675 (2d Cir. 2005) (finding

the agency action substantially justified because, although the action was

found unconstitutional in other cases, “this issue [was] far from settled Jaw’)

(cited by Johnson v. Gonzales, 416 F.3d 205, 210 (3d Cir. 2005) (finding that

settled law made the government’s position unreasonable after new facts

required application of a different asylum standard)). No settled law mandates

that the Commissioner, through either an ALJ or the Appeals Council, must sua

sponte raise an Appointments Clause issue that was not raised by the claimant.

(Doc. 33 at 7-9.)

10

Defendant’s pre-litigation position that the Commissioner was not required to sua

sponte raise an Appointments Clause issue is supported by courts in the Third Circuit.

Handwerk v. Saul, Civ. A. No. 4:19-CV-1439, 2021 WL 4552266, at *4 (M.D. Pa. Oct. 4,

2021) (Wilson, J.) (citing Dove-Ridgeway v. Saul, Civ. A. No. 1:19-CV-35, 2021 WL

1827206, at *6 (D. Del. May 7, 2021) (holding that “the Commissioner was under no

obligation to sua sponte raise Appointments Clause challenges”); Flynn v. Saul, Civ. A. No.

19-58, 2021 WL 2577146, at *3 (E.D. Pa. June 22, 2021) (“Plaintiff has not cited any

authority, and this Court has found none, to support the position that the Commissioner,

through either an ALJ or the Appeals Council, must sua sponte raise an Appointments

Clause issue.”); Lenz v. Saul, Civ. A. No. 19-489, 2021 WL 2515167, at *3 (W.D. Pa. June

18, 2021) (collecting cases) (“[CJourts in this circuit have consistently held that...the

Commissioner did not act unreasonably in declining to raise an Appointments Clause issue

sua sponte in the absence of the issue being raised by the claimant.”); Powell v. Saul, Civ.

A. No. 18-4881, 2020 WL 3542250, at *4 (E.D. Pa. June 30, 2020) (noting that there is no

known authority requiring the Commissioner to raise Appointments Clause issues on behalf

of a claimant where the claimant fails to do so); Wojciechowski v. Saul, Civ. A. No. 18-3843,

2020 WL 3542248, at *4 (E.D. Pa. June 30, 2020) (same).

Further, because Lucia had not yet been decided when Plaintiff's case was pending

at the administrative level, the question of its potential impact was unsettled. McNeish v.

11

Saul, Civ. A. No. 18-582, 2020 WL 4060322 (E. D. Pa. July 20, 2020), addressed the

Defendant's pre-litigation position in a posture procedurally similar to the case at bar:

When the ALJ and Appeals Council rendered their decisions prior to both Lucia

and Cirko, the Appointments Clause jurisprudence was unclear and ‘“lack{ing]

guidance.” Lucia, 138 S. Ct. at 2065 (Sotomayor, J., dissenting). In Marant [v.

Saul, Civ. A. No. 18-4832, 2020 WL 3402416 (E.D. Pa. June 19, 2020)], Judge

Hey discusses the way in which ‘“[t]he pre-Lucia landscape on the ALJ

Appointments Clause issue stands in sharp contrast to other situations where

courts have found a pre-litigation position based on an interpretation of the law

was not justified.” 2020 WL 3402416, at *4. Judge Hey points to Natural

Resources Defense Council v. United States Environmental Protection

Agency, 703 F.2d 700, 712 (3d Cir. 1983), a case in which the Third Circuit

found that the government's pre-litigation position was not substantially

justified, and, therefore awarded EAJA fees to the plaintiff. /d. In National

Resources Defense Council, the government dispensed with notice and

comment rulemaking even though “[t]he law was already settled that this could

not lawfully be done.” /d. (quoting National Resources Defense Council, 703

F.2d at 712). Here, in contrast, the Commissioner's pre-litigation position was

not in flagrant violation of settled law.

2020 WL 4060322, at *3.

To the extent Plaintiff argues that the Commissioner was on notice “as far back as

1991 that his ALUs were ‘Officers of the United States,’ for the reasons the Supreme Court

explained in Freytag” (Doc. 35 at 6, 8), the Court agrees with the McNeish analysis of this

argument and conclusion that the plaintiff “incorrectly contends that Freytag gave rise to the

Commissioner's obligation to appoint ALJs pursuant to the Appointments Clause.” 2020 WL

4060322, at *4. McNeish reasoned that

[a]lthough Freytag laid the groundwork for Lucia, see Lucia, 138 S. Ct. at 2053

(“Freytag says everything necessary to decide this case.”), it had a limited

reach because it only established that “special trial judges” (STJs) of the United

States Tax Court qualify as officers rather than employees. Freytag, 501 U.S.

12

at 881-82. After Freytag, “the Court's Appointments Clause jurisprudence [still]

offer[ed] little guidance on who qualifies as an ‘Officer of the United States.”

Lucia, at 138 S. Ct. at 2064-65 (Sotomayor, J., dissenting). Although there are

similarities between STJs and ALJs, the question of whether Freytag extended

to ALUs was “an unsettled ... question of law” such that the Commissioner here

can “establish that [his] legal theory was reasonable, even if not ultimately

accepted as a legal rule by the courts.” Washington [v. Heckler, 756 F.2d 959,

961 (3d Cir. 1985)].

2020 WL 4060322, at *4.

The Court agrees with this reasoning and concludes that Defendant had a

reasonable basis in law for not raising an Appointments Clause claim sua sponte at the

administrative level.

The Court also finds that there is “a reasonable connection between the facts alleged

and the legal theory advanced,” Hanover, 989 F.2d at 128. Plaintiff's failure to raise an

Appointments Clause claim at the administrative level is reasonably connected to the

Commissioner's pre-litigation legal theory that the Commissioner was not required to sua

sponte raise an Appointments Clause issue. With this finding, Defendant has satisfied his

burden of showing that the Commissioner's pre-litigation position was substantially justified.

B. Litigation Position

Defendant identifies the Commissioner's litigation position as follows: “When Plaintiff

raised the issue before this Court, the Commissioner argued that Plaintiff had forfeited the

claim by failing to timely raise it at the administrative level.” (Doc 33 at 2.) In support of the

position, Defendant cites the unsettled nature of the law on the issue and the broad support

13

for the Commissioner's position at the time it was advanced (pre-Cirko). (Doc. 33 at 2 & n.1

(listing cases), 9-11 & n.2 (listing cases).)

Plaintiff criticizes the Commissioner's position, relying on Cirko and the predictability

of Cirko based on Sims v. Apfel, 530 U.S. 103, 107-10 (2000), as set forth in Byrd v. Saul,

469 F. Supp. 3d 351 (E. D. Pa. 2020). (Doc. 35 at 8-9.) Plaintiff also relies on Armstrong v.

Saul, 465 F. Supp. 3d 486 (E.D. Pa. 2020), and Peters v. Saul, CA 17-0937 (E.D. Pa. June

9, 2020), to support his argument that the Commissioner's litigation position was not

substantially justified. (Doc. 35 at 9.)

The Court concludes that Plaintiff's reliance on the cited cases is misplaced in that

they do not establish that the law was unsettled when Plaintiff filed his Appointments Clause

claim in federal court. As set out in McNeish, as of July 2020, the majority of judges in the

Eastern District agreed the Commissioner's litigation position that the plaintiff waived the

Appointments Clause challenge because it was not raised at the administrative level was

substantially justified. 2020 WL 4060322, at *6. Hoover v. Saul, 485 F. Supp. 3d 538 (M.D.

Pa. 2020) (Carlson, M.J.), noted the “growing tide of case law . . . exemplified by numerous

decisions by district courts throughout the Third Circuit which have denied EAJA claims.”

485 F.3d at 543 n.3.2 Both McNeish and Hoover identified Byrd as an exception to the

majority. 485 F. Supp. 3d at 543 n.3; 2020 WL 4060322, at “6.

2 Hoover ultimately did not decide the issue of whether the Commissioner's litigation position was

substantially justified because Magistrate Judge Carlson concluded that the question of entitlement to

EAJA fees rested on an independent unrelated issue. 485 F. Supp. 3d at 543.

14

McNeish succinctly explained its disagreement with Byrd: .

In Byrd, the court came to a different conclusion than most of the judges who

have addressed this issue in this district, and found that the Commissioner's

litigation position was not substantially justified because the Commissioner's

litigation position and other Eastern District of Pennsylvania judges’ analyses

did not account for Sims v. Apfel, 530 U.S. 103 (2000). 2020 WL 3469031, at

*2-3. In Sims, the Supreme Court found that claimants need not exhaust issues

before the Social Security Administration's Appeals Council to obtain judicial

review of those claims. See Cirko, 948 F.3d at 155 (explaining holding in Sims).

However, Sims did “not dictate the answer” to whether a claimant must exhaust

an issue before a Social Security Administration ALJ. Id. Therefore, this court

disagrees with the Byrd analysis and finds that Sims does not vitiate the finding

that the Commissioner's litigation position was substantially justified prior to

Cirko.

McNeish, 2020 WL 4060322, at *6.

Over a year later, the Byrd analysis was again discounted in Dove-Ridgeway v.

. Kijakazi, Civ. A. No. 19-35-LPS-MPT, 2021 WL 7209241 (E.D. Pa. Dec. 6, 2021), where the

District Court concluded that the case turned on an unsettled question of law, id. at *3.

In Byrd v. Saul, 469 F. Supp. 3d 351 (E.D. Pa. 2020), the court awarded EAJA

fees after concluding the Commissioner's position contradicted clearly

established law as set out in Sims v. Apfel, 530 U.S. 103 (2000). Other cases

from the same district, however, disagreed with Byrd’s characterization

of Sims as clearly applicable in this context. See, e.g., Cortese v. Comm’r of

Soc. Sec., 2020 WL 3498104, at *4n.43 (E.D. Pa. June 29, 2020) (“The issues

presented in the precedential Cirko opinion earlier this year did not appear to

be so easily governed by Sims.”); Diaz [v. Saul, Civ. A. No. 18-5070, 2020 WL

3127941, at *3 (E.D. Pa. June 12, 2020)] (noting Sims does not examine “the

narrow issue of whether a claimant must exhaust issues before an ALJ in the

[SSA context]’); see also Cirko, 948 F.3d at 155 (“[W]hile Sims does not dictate

the answer, its lessons loom large.”). The existence of a few cases reaching a

different conclusion only highlights that reasonable minds differed as to the

effect of relevant precedents at the time.

2021 WL 7209241, at *2.

15

The Court agrees that the outlier cases cited by Plaintiff (Doc. 35 at 9) do not

indicate that Defendant's legal theory was unreasonable such that the Commissioner's legal

position was not substantially justified.’ Rather, they are further indicators that the law was

unsettled at the relevant time.

As summarized in the Report and Recommendation adopted in the Dove-Ridgeway

Memorandum Order cited above,

“[p]re-Cirko ..., particularly within the Third Circuit, there existed sufficient

variation between decisions on whether or not an Appointments Clause

challenge needed to be raised in the administrative proceedings to render the

commissioner's position substantially justified” constituting the type of

“unsettled or close question of law’ that justifies the Government's position as

based on a reasonable theory of law.” [Marant v. Saul, Civ. A. No. 18-4832,

2020 WL 3402416, at “5 (E.D. Pa. June 19, 2020).] Significantly, in Carr [v.

Saul, 593 U.S. 83 (2021),] the Supreme Court explicitly noted the unsettled

nature of law on the issue[.]

- In Lucia, the Supreme Court held that a new hearing should be granted

if one makes a “timely challenge” to the constitutionality of the Appointment of

an ALJ ... but ... did not define what qualifies as a “timely challenge.” Therefore,

whether the claimant waives the Appointments Clause claim by failing to

exhaust it at the administrative level was an unsettled question at the time the

Commissioner filed his response[.] Carr, 593 U.S. at 95.

Dove-Ridgeway v. Saul, Civ. A. No. 19-35-LPS-MPT, 2021 WL 1827206, at *7 (D. Del. May

7, 2021), Report and Recommendation adopted sub nom. Dove-Ridgeway v. Kijakazi, Civ.

3 Research does not reveal that Byrd or Armstrong have been followed: a District Court opinion in

the Third Circuit. However, in an Order granting EAJA fees in Peters v. Saul, No. 17-0937 (E.D. Pa. Sept.

11, 2020), Judge Nitza I. Quinones Alejandro adopted the reasoning of Byrd and Armstrong in the footnote

explaining the award of EAJA fees.

16

A. No. CV 19-35-LPS-MPT, 2021 WL 720924 (D. Del. Dec. 6, 2021); see also Handwerk v.

Saul, Civ. A. No. 4:19-CV-1439, 2021 WL 4552266 (M.D. Pa. Oct. 4, 2021) (Wilson, J.)

(quoting Dove-Ridgeway, 2021 WL 1827206, at *5).

In Carr, the Court considered consolidated cases where the petitioners, SSA

plaintiffs seeking disability benefits, argued that they were entitled to new hearings before

different ALUs because “the ALJs who originally. heard their cases were not properly

appointed under the Appointments Clause of the U.S. Constitution.” 593 U.S. at 85. The

question for the Court was “whether petitioners forfeited their Appointments Clause

challenges by failing to make them first to their respective ALJs.” /d. Three separate

decisions from the Eighth and Tenth Circuits which adopted the Commissioner's view that

the SSA plaintiffs had forfeited their Appointments Clause claims were under review. Id.

The Court granted certiorari, 141 S. Ct. 813 (2020), to resolve the following Circuit split. In

the view of the Eight and Tenth Circuits,

petitioners could not obtain judicial review of their Appointments Clause claims

because they had not pressed those challenges in their administrative

proceedings. [Davis v. Saul], 963 F.3d 790, 793 (C.A.8 2020): [Hilliard v. Saul],

964 F.3d 759, 763 (C.A.8 2020); Carr v. Commissioner, SSA, 961 F.3d 1267,

1268 (C.A.10 2020). The Third, Fourth, and Sixth Circuits have all held the

opposite. In those Circuits, claimants may challenge the constitutionality of an

SSA ALJ's appointment for the first time in federal court. See Cirko v.

Commissioner of Social Security, 948 F.3d 148, 152 (C.A.3 2020); Probst v.

Saul, 980 F.3d 1015, 1020 (C.A.4 2020): Ramsey v. Commissioner of Social

Security, 973 F.3d 537, 546 (C.A.6 2020).

17

593 U.S. at 87. The Court held that the Courts of Appeals for the Eighth and Tenth Circuits

erred in imposing an issue-exhaustion requirement of petitioner's Appointments Clause

claims and reversed for further proceedings. /d. at 96.

Although the Supreme Court came down on the side of Cirko, the reason for granting

certiorari--the recognized Circuit split--indicates that the Supreme Court recognized the law

was unsettled during the litigation phase of this case. Therefore, the Court agrees with the

post-Carr analysis in Dove-Ridgeway and Handwerk and the conclusions reached by Judge

Stark of the Eastern District and Judge Wilson of the Middle District that, because of the

unsettled question of law, the Commissioner had a reasonable basis in law for its litigation

position that the plaintiff had forfeited an Appointments Clause claim even though the

position was not ultimately accepted by the courts, 2021 WL 7209241, at *3; 2021 WL

4552266, at *5.

The Court further agrees that the third and final prong of the analysis is satisfied in

that the Commissioner has established a reasonable connection between the facts alleged

(Plaintiffs failure to raise the Appointments Clause claim at the administrative level) and the

legal theory advanced (that Plaintiff forfeited the claim by failing to raise it at the

administrative level). See id.

Because Defendant has satisfied all elements of the substantially-justified inquiry

regarding the litigation position, the Court finds that Defendants litigation position was

substantially justified. Having previously found that Defendant's pre-litigation position was

18 .

substantially justified, Defendant has satisfied each element of the requisite inquiry, and the

Court will deny Plaintiffs motion for attorney fees.4

V. CONCLUSION .

For the foregoing reasons, the Court will deny Plaintiffs Motion for Attorney Fees

Pursuant to the Equal Access to Justice Act (Doc. 31). A separate Order will enter.

oo ~ \

Robert B-Mariani

United States District Judge

□ The Court declines to address Plaintiffs argument raised in his reply brief that the

Commissioner's position on other issues he raised in his brief in support of his appeal (Doc. 13) were not

substantially justified. (See Doc. 35 at 9.) Plaintiff does not mention this argument in his three-page opening

brief in support of his motion for EAJA fees (see Doc. 32 at 2 (asserting only that Defendant’s position

regarding the constitutional invalidity of ALJ’s decision was not substantially justified) based on Cirko)).

Further, there is no dispute that the case was remanded solely on the basis of the Appointments Clause

issue. (See Doc. 30.) Finally, Plaintiff's claims regarding his treating provider and his mental limitations

raised in the above-captioned action (see Doc. 13 at 3) were again found to be without merit on remand

and the ALJ's decision was affirmed on appeal to this Court. See Civ. A. No. 3:21-CV-1078, Doc. 27 at 12,

31 (M.D. Pa. Aug. 9, 2022).

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