Petition for Writ of Certiorari — Roers, Director of Minnesota Disability Determination Services v. Schoolcraft

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In The

Supreme Court of the United

October Term, 1992

WALTER ROERS, in his official capacity as Director of

the Disability Determination Services; R. JANE

BROWN, in her official capacity as Commissioner of

the Minnesota Department of Jobs and Training,

Petitioners,

VS.

DANIEL J. SCHOOLCRAFT; THEODORE THOMAS,

and JOSEPH DRUMBEATER, individually and on

behalf of all others similarly situated,

Respondents.

On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Eighth Circuit

PETITION FOR WRIT OF CERTIORARI

OF WALTER ROERS AND R. JANE BROWN

Husert H. Humpnrey II!

Attorney General

State of Minnesota

Of Commas CHaRLEs T. Morti

Dona.p E. Nortvik Assistant Attorney General

Special Assistant Counsel of Record

Attorney General 1100 Bremer Tower

Seventh Place & Minnesota St.

St. Paul, Minnesota 55101

(612) 296-3854

Counsel for Petitioners

Walter Roers and R. Jane Brown

COCKLE LAW BRIEF PRINTING CO, (800) 225-6964

OR CALL COLLECT (402) 342-283

QUESTIONS PRESENTED

As authorized by federal law, the State of Minnesota

makes initial determinations upon claims for Social Secu-

rity disability benefits filed by individuals in Minnesota.

The State makes those determinations on behalf of the

Secretary of Health and Human Services pursuant to a

plenary system of regulations promulgated by the Secre-

tary.

1. Are State officials who are responsible for direct-

ing these activities subject to suit predicated on 42 U.S.C.

§ 1983?

2. Are State officials who are responsible for direct-

ing these activities protected from suit pursuant to 42

U.S.C. § 405(h) to the same extent as “the United States,

the Secretary, or any officer or employee thereof?”

a a

TABLE OF CONTENTS

Page

CIES TRANS PURMOMINEMED £0 cea cnc in sactessvocecnes i

SAREE COR ATIC Os 0 on ko nc cactanveccucsues iii

SPEC GE PRION so ooh cho hndeb enna eee reheat 2

PU TOMI 6050 60:06 45h eee eR ea 2

STATUTORY AND REGULATORY PROVISIONS

EW USMEI WEE 6 isn 0h vince eedeecaeanee eae 3

STATEMENT OF THE CASE..............ccce0eee. 3

REASONS FOR ISSUANCE OF THE WRIT......... 7

A. The Eighth Circuit’s Holding That The State Peti-

tioners Are Subject To Suit Under 42 U.S.C.

§ 1983 For Their Disability Determinations Is In

Conflict With Decisions Of This Court And Other

CORO so «vs denne 00s oben koa 7

B. The Panel Erred In Refusing To Give Effect To 42

U.S.C. § 405(h) With Respect To The State Peti-

CIOUNIND 5 occ n ds 40ketaNcawak cs pean eens 13

COI LAPIS «00's sunnnig'e naan en eee ee eens 15

APU ROWE «5s seeacned ae sense eeeeniee eee A- 1]

1. Eighth Circuit Order Denying Petition for

PERORTUNE, ... 0 x i vino eeene es Gea A- 1

2. Eighth Circuit Panel Opinion................ A- 2

3. District Court Memorandum Order.......... A- 2

4. Federal Statutes Involved.................... A-51

5. Federal Regulations Involved................ A-58

6. State Statute Involved....................... A-60

lii

TABLE OF AUTHORITIES

Page

FEDERAL STATUTES:

26 US.C. § 1254(1).......... eee, 2

A 2

rs 2, 13

ce 2

i 13

a ce 2

42 U.S.C. § 405(g) .....0.0000000000000000.. 3, 5, 12, 14

me Ware, © O95) ........................ 3, 13, 14, 15

8 ons oo <5 c sche e's iecsccececccnc. 4

se ccc 3

I ois secs encnceocuecc... 5

ce errr 5, 11

I rs nk ooo NSE he deen Roce 5

cc 8 a 3

2 USC. § 42ifd)............ PES Kahane ee

sR 3, 14

ee 5

42 U.S.C. § en. 3 5

i 13, 14

| ee 13, 14

£2 U.S.C. § 1383(c)(3).................0.0.000..000... 2

|) ccc 4

42 US.C. § 1983......0.0000..0.00.00....3, 7,9, 12, 15

TABLE OF AUTHORITIES —- Continued

Page

MINNESOTA STATUTES:

ee UL OB eer Terre ye ry vee 6

Minn. Stat. § 268A.03(e) (1990)................. 3, 6, 10

FEDERAL DECISIONS:

Adams v. Weinberger, 548 F.2d 239 (8th Cir. 1977) ..... 4

Askew v. Bloemker, 548 F.2d 673 (7th Cir. 1976)...... 9

Bush v. Boys, 463 F.Supp. 59 (E.D. Va. 1978)........ 10

Decker v. U.S. Dept. of Labor, 564 FSupp. 1273

(Seek, Beas rcaneecabeveneeusanekecsconewces 10

Ellis v. Blum, 643 F.2d 68 (2d Cir. 1981).............. 9

Heckler v. Ringer, 466 U.S. 602 (1984)............... 13

Lugar v. Edmonson Oil Co., 457 U.S. 922 (1982)...... 8

Maine v. Thiboutot, 448 U.S. 1 (1980) ............... 10

Nebraska Health Care Ass’n v. Dunning, 778 F.2d

te ee er ere errr rer 10

Rosas v. Brock, 826 F.2d 1004 (11th Cir. 1987)........ 9

Smith v. Robinson, 468 U.S. 992 (1984).............. 11

Suter v. Artist M., 503 U.S. __, 112 S.Ct. 1360

Oe Re rn Re SON eee ene Fe - 10, 11

Weinberger v. Salfi, 422 U.S. 749 (1975) ............. 13

LOI RMT Pay.

Wright v. Roanoke Redevelopment and Housing

Authority, 479 US. 418 (1967) ................000. 11

TABLE OF AUTHORITIES ~- Continued

Page

FEDERAL RULES AND REGULATIONS:

he ee 5

20 C.F.R. §§ 404.1613(a), 416.1013(a)............ 6, 8, 14

20 C.F.R. §§ 404.1615(g), 416.1015(g)............ 3, 6, 12

20 C.F.R. §§ 404.1626, NS be hoes ik veee ceessincue

20 C.FR. §§ 404.1633, 416.1033..................... a

20 C.F.R. §§ 404.1640-404.1661, 416.1040-416.1062 ..... 6

ee ee We ON so cone id ea bk ae wnwk lancw ees 5

In The

Supreme Court of the United States

October Term, 1992

WALTER ROERS, in his official Capacity as Director of

the Disability Determination Services; R. JANE

BROWN, in her official capacity as Commissioner of

the Minnesota Department of Jobs and Training,

Petitioners,

vs.

DANIEL J. SCHOOLCRAFT; THEODORE THOMAS,

and JOSEPH DRUMBEATER, individually and on

behalf of all others similarly situated,

Respondents.

On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Eighth Circuit

PETITION FOR WRIT OF CERTIORARI

OF WALTER ROERS AND R. JANE BROWN

The state petitioners respectfully pray that a writ of

certiorari issue to review the decision and order of the

United States Court of Appeals for the Eighth Circuit

entered in the above-entitled proceeding on July 2, 1992.

OPINIONS BELOW

The decision of the Court of Appeals for the Eighth

Circuit is reported at 971 F.2d 81 and is reprinted in the

Appendix (App.) App. 2-19. The decision of the United

States District for the District of Minnesota is reported at

753 F.Supp 1478 (D.Minn. 1991) and is reprinted in the

Appendix. App. 20-50.

JURISDICTION

Alleging jurisdiction under 42 U.S.C. § 405(g), 42

U.S.C. § 1383(c)(3), 28 U.S.C. § 1331, 28 U.S.C. § 1361 and

28 U.S.C. § 1343(3), Respondents brought this suit in the

District of Minnesota. On January 3, 1991, the District of

Minnesota issued its decision granting the Petitioners’

motions for summary judgment.

Upon Respondents’ appeal to the Eighth Circuit pur-

suant to 28 U.S.C. § 1291, a three-judge panel reversed the

District Court. Petitioners filed petitions for rehearing

with suggestion for rehearing en banc which were denied

on October 9, 1992. On December 29, 1992, Mr. Justice

Blackmun signed an order extending to February 8, 1993

the time within which this petition may be filed. On

February 1, 1993, Justice Blackmun signed an order fur-

ther extending the time to file to February 22, 1993.

This Court has jurisdiction to hear this matter under

28 U.S.C. § 1254(1).

oe Se OSE STs TENE BE OCT OO NO

STATUTORY AND REGULATORY

PROVISIONS INVOLVED

42 U.S.C. § 405(g)

42 U.S.C. § 405(h)

42 U.S.C. § 421(a)

42 US.C. § 421(c)(1)

42 U.S.C. § 421(d)

42 U.S.C. § 421(e)

42 U.S.C. § 421(k)

42 U.S.C. § 1983

20 C.ER. §§ 404.1615(g) and 416.1015(g)

20 C.F.R. §§ 404.1626 and 416.1026

20 C.F.R. §§ 404.1633 and 416.1033

Minn. Stat. § 268A.03(e) (1990)

STATEMENT OF THE CASE

Respondents brought this action challenging the Peti-

tioners’ evaluation of their claims, and those of others

similarly situated, for Social Security disability benefits

under Title II, pertaining to covered Wwage-earners, or

Title XVI, for non-wage earners, of the Social Security Act

(“the Act”). Each of them claimed disability as a result of

alcoholism or some other drug dependency.

In Respondents’ original complaint, only Louis W.

Sullivan,! M.D., Secretary of the Department of Health

and Human Services, was named as a defendant. Subse-

quently, Respondents added the State Petitioners as

* Louis W. Sullivan has since been succeeded by Donna E.

Shalala as Secretary.

defendants, naming Joseph Samargia? in his official

capacity as Commissioner of, the Minnesota Department

of Jobs and Training and Walter Roers in his official

capacity as Minnesota’s Director of Disability Determina-

tion Services.

The gravamen of the complaint was that initial deter-

minations, and reconsideration determinations, were

being made without adequate consideration being given

to a finding of “loss of control” by alcoho) abusers as the

Respondents contend is required by Adams v. Weinberger,

548 F.2d 239 (8th Cir. 1977). The Respondents alleged that

a high reversal rate of these determinations upon appeal

to the Social Security Administration’s Office of Hearings

and Appeals where, the Complaint alleged, Adams was

being applied properly, established that the Adams case

was not being properly applied by the State Petitioners at

the initial and reconsideration stages.

The Secretary of Health and Human Services has

responsibility under the Social Security Act for establish-

ing and monitoring the process under which disability

determinations are made under Title II, Federal Old-Age,

Survivors and Disability Insurance Benefits and Title XVI,

Supplementary Security Insurance for Aged, Blind and

Disabled. 42 U.S.C. §§ 421 and 1383b(a), respectively.

State agencies are to make the determinations unless the

state has notified the Secretary that it chooses not to or

the Secretary has found the state has failed to make such

determinations consistent with the Act and regulations.

2 Joseph Samargia has since been succeeded by R. Jane

Brown as Commissioner.

42 U.S.C. § 421(a)(1). In the event a state agency fails to

make such determinations, or with respect to any persons

for whom a state agency declines to make determinations,

the Secretary is required to make the determinations. 42

U.S.C. § 421(g). The Secretary is required to provide

regulations and written guidelines to state agencies to be

used in making determinations as well as regulations

pertaining to the administration of the state agency.

§ 421(a)(2). These regulations must establish uniform

Standards for all levels of determination, review and

adjudication. 42 U.S.C. § 421(k). Furthermore, the Secre-

tary is required to review at least 50 percent of deter-

minations establishing disability and other

determinations to “assure a high level of accuracy in such

determinations.” 42 U.S.C. § 421(c). Individuals dissat-

isfied with the determination of a state agency are to be

accorded a hearing by the Secretary and have a right to

judicial review of the Secretary’s final decision. 42 U.S.C.

§§ 421(d), 405(g).

The Secretary has promulgated regulations govern-

ing state agencies in making determinations of disability

under Title II and Title XVI. 20 C.ER. § 404.1601, et seq.

and 20 C.F.R. § 416.1001, et seq., respectively. These regu-

lations provide for the issuance of guidelines by the

Secretary to the state agencies in a Program Operations

Manual System (POMS) which establishes a detailed

adjudicatory process for making disability determina-

tions. 20 C.F.R. §§ 404.1633, 416.1033. The regulations also

govern fiscal matters, 20 C.F.R. §§ 404.1626, 416.1026, and

establish performance standards “to help assure effective

and uniform administration of our disability programs

throughout the United States.” 20 C.F.R. §§ 404.1640-

404.1661, 416.1040-416.1062. Determinations of state

agencies are determinations of the Secretary, until

reviewed by the Secretary. 20 C.F.R. §§ 404.1613(a),

416.1013(a). State agencies are expressly relieved of the

responsibility for “defending in court any determination

made or any procedure for making determinations, under

these regulations.” 20 C.F.R. § 404.1615(g), 416.1015(g).

The Department of Jobs and Training (Department) is

a department of government of the State of Minnesota.

Minn. Stat. § 15.01 (1990). Disability Determination Ser-

vices (DDS) is a unit within the Department established

pursuant to Minn. Stat. § 268A.03(e) (1990). Although

DDS is part of the State government, it is 100% federally

funded. Its function is to determine individuals’ eligi-

bility for social security benefits under the Social Security

Act, consistent with directives issued by the Social Secu-

rity Administration (SSA). Affidavit of Walter J. Roers, JA

353.3 The Minnesota DDS has ranked highly in complying

with those directives — fourth in the nation. Deposition of

Walter J. Roers.

Subsequent to commencement of the suit, Mr. School-

craft and Mr. Drumbeater, upon reconsideration of their

claims by DDS, were determined to be disabled and

eligible for benefits in April, 1990. Mr. Thomas was found

eligible in February, 1991, upon appeal to the Office of

Hearings and Appeals.

3 “JA” refers to the Joint Appendix submitted to the Court

of Appeals.

Le ee Te

REASONS FOR ISSUANCE OF THE WRIT

A. The Eighth Circuit's Holding That The State Peti-

tioners Are Subject To Suit Under 42 U.S.C. § 1983

For Their Disability Determinations Is In Conflict

With Decisions Of This Court And Other Circuits.

In a decision contrary to estelished law and hold-

ings in other circuits, the Eighth Circuit held that the

Minnesota officials were acting under color of state law

for purposes of 42 U.S.C. § 1983 in making the disability

determinations at issue here. The Court below decided

that the State Petitioners are employees of a state agency

established pursuant to state law. It concluded, therefore,

that the State Defendants were acting under color of state

law even though the determinations were made on behalf

of the Secretary of Health and Human Services pursuant

to detailed regulations and guidelines promulgated by

the Secretary that govern the substantive and procedural

actions of the state officials.

The Eighth Circuit’s decision should be reviewed by

this Court because it is contrary to decisions of other

circuits and this Court, because it contravenes the

obvious intent of Congress to involve states in the dis-

ability determination process without subjecting them to

litigation costs or liability, and because it creates a strong

disincentive for state participation.

The DDS operates exclusively under the supervision

and control of the SSA. The Panel conceded as much

when it stated that “[t]he DDS acts under the authority

and control of the Secretary.” App. 5. Both state and

federal law authorize the states to make disability deter-

minations, but it is only federal statutes and regulations

that provide for the manner in which those determina-

tions are to be made. Regulations expressly provide that

the determinations are those of the Secretary. 20 C.F.R.

§§ 404.1613(a), 416.1013(a). The determinations are made

pursuant to federal regulations and are subject to review

by the SSA. Lastly, all of the state’s expenses incurred in

making such determinations are paid by the SSA.

In Lugar v. Edmonson Oil Co., 457 U.S. 922 (1982), the

Court analyzed the “state action” requirement as follows:

It... avoids imposing on the State, its agencies

or officials, responsibility for conduct for which

they cannot be fairly blamed. . . . Our cases

have .. . insisted that the conduct causing the

deprivation of a federal right be fairly attributa-

ble to the State. . . . First, the deprivation must

be caused by the exercise of some right or privi-

lege created by the State or by a rule of conduct

imposed by the state or by a person for whom

the state is responsible. . . . Second, the party

charged with the deprivation must be a person

who may fairly be said to be a state actor.

Id. at 937-38. In this case, the alleged deprivation cannot

be fairly attributed to the State because it is not caused by

the State Defendants. Nor can it be fairly said that the

State Petitioners are state actors since they are subject to

the plenary control of the Secretary in making Social

Security disability determinations. It is clear from the

statutory and regulatory framework that such determina-

tions do not carry the “weight of the State” but rather

carry the weight of the Secretary.

This degree of federal supervision has been found by

other circuit courts to support a holding that state

a eee

employees were not acting under color of state law. In Ellis v.

Blum, 643 F.2d 68, 83 (2d Cir. 1981), arising under a prior

system of state-federal agreements as opposed to the present

regulatory system, the Second Circuit held that New York

State officials who were performing disability determinations

under the Social Security Act were acting under color of

federal, not state, law so that suit against them could not be

predicated on section 1983. In Rosas v. Brock, 826 F.2d 1004

(11th Cir. 1987), a case arising from denial of benefits under

the Disaster Relief Act, state employees were held to be

acting under color of federal, not state, law where the

employees made the decision of entitlement to benefits

solely on the basis of federal regulations. The Court said:

“Where the challenged action by state employees is nothing

more than the application of federal rules, the federal

involvement in those actions is so pervasive that the actions

are taken under color of federal and not state law.” Id. at

1007. In Askew v. Bloemker, 548 F.2d 673 (7th Cir. 1976), the

Court refused to find police officers acting under color of

state law where they were being directed and funded by a

federal drug enforcement agency even though they were

paid by and reported to their local police departments. The

Court found there was “an indelibly federal hue upon the

activities .. . and the totality of the circumstances . . . clearly

show[ed] that these agents were acting pursuant to federal

authority and not under color of any state law.” Id. at 677.

The Eighth Circuit’s decision here is, therefore, in direct

conflict with the Second Circuit and runs counter to rulings

in the Eleventh and Seventh Circuits.

While some cases have allowed suit against state

defendants under section 1983 for failure to comply with

provisions of the Act, those cases all involve programs

where there existed a mixture of federal and state fund-

ing or regulation which supported a holding that the

state defendants were acting under color of state law. See

Maine v. Thiboutot, 448 U.S. 1 (1980) (state regulations

governing AFDC); Nebraska Health Care Ass’n v. Dunning,

778 F.2d 1291 (8th Cir. 1985) (state laws pertaining to

medicaid reimbursement); Decker v. U.S. Dept. of Labor,

564 F.Supp. 1273 (E.D. Wis. 1983) (county discretion in

placing Concentrated Employment and Training Act par-

ticipants in sectarian-related positions); Bush v. Boys, 463

F.Supp. 59 (E.D. Va. 1978) (state regulations pertaining to

food stamps). Here, funding and regulation is exclusively

federal; state law merely authorizes the Commissioner of

Jobs and Training to “maintain a contractual or regula-

tory relationship with the United States as authorized by

the Social Security Act.” Minn. Stat. § 268A.03(e) (1990).

Furthermore, the circuit court’s decision to allow

respondents to proceed against the state officials under

section 1983 is inconsistent with this Court’s decision in

Suter v. Artist M., 503 U.S. __, 112 S.Ct. 1360 (1992). In

Suter, the Court held that a provision requiring “reason-

able efforts on the part of states receiving funds under the

Adoption Assistance and Child Welfare Act of 1980 to

avoid removal of children from their homes” did not give

rise to a private cause of action under section 1983. The

Court noted that, subsequent to Maine v. Thiboutot, 448

U.S. 1 (1980), in which it was established that section 1983

is available as a remedy for violations of statutory as well

as constitutional provisions, the scope of its application

has been narrowed to preclude enforcement of a “viola-

tion of a federal statute where Congress has foreclosed

such enforcement of the statute in the enactment itself

and where the statute did not create enforceable rights,

privileges or immunities within the meaning of section

1983.” Suter, 503 U.S. at __, 112 S.Ct. at 1366, quoting

Wright v. Roanoke Redevelopment and Housing Authority,

479 U.S. 418, 423 (1987). The court also noted that, in

Smith v. Robinson, 468 U.S. 992 (1984), it had held that

Congress intended to foreclose a Section 1983 action

where it provided “a comprehensive remedial scheme” in

the statute itself. Suter, 503 U.S. at —__, n.11, 112 S.Ct. at

1366.

In this case, regulations Promulgated under the Act

provide a detailed adjudicatory scheme which the State is

obliged to follow. If the State does not follow that scheme,

the Secretary has the authority to change the determina-

tion in an individual case and to take steps to remedy the

State’s performance under the Act. As in Suter, the

requirements of the Act and regulations promulgated

thereunder are enforceable by the Secretary and do not

provide a basis for a claim against the State based on

section 1983.

The Panel’s decision also creates various practical

problems for all states performing disability determina-

tions. Since they are required by 42 U.S.C. § 421(a)(2) to

make determinations in conformance with the Act and

guidelines provided by the Secretary, they have no

authority to unilaterally apply case law holdings nor are

they equipped to do so in terms of staff expertise.

Instead, it is the Secretary’s responsibility to incorporate

court decisions into federal program guidelines. Only in

that way will the Act be implemented consistently across

the nation. Furthermore, inclusion of the State Petitioners

in this suit is directly contrary to 20 C.F.R. §§ 404.1615(g)

and 416.1015(g) relieving states from the responsibility of

“defending in court any determinations made, or any

procedure for making determinations, under these regu-

lations.”

Finally, allowing the Respondents to proceed against

the State Petitioners introduces uncertainty into the fed-

eral-state relationship regarding both the costs of litiga-

tion and any attorneys fees that might be awarded

pursuant to section 1988 against a state defendant in a

section 1983 suit. By proceeding against a state agency in

a section 1983 action, rather than completing the Act’s

administrative procedures and thereafter obtaining judi-

cial review of the Secretary’s final decisions as provided

by 42 U.S.C. § 405(g), Respondents claim attorneys fees

not obtainable under the Act. Respondents should not be

rewarded with attorneys fees for circumventing the reme-

dial framework established by the Act.

If states can be sued under section 1983 and subjected

to the costs of litigation and potential attorneys fees, they

will have a strong incentive to refuse to make disability

determinations even though the Act evinces a preference

by Congress that states make such determinations.

All of the above considerations support the conclu-

sion not only that the Eighth Circuit erred in finding a

cause of action against the State Petitioners under 42

U.S.C. § 1983, but also that this Court must grant review

to restore consistency among the circuits on the “under

color of state law” issue and to preserve the efficiency of

the disability determination process.

B. The Panel Erred In Refusing To Give Effect To 42

U.S.C. § 405(h) With Respect To The State Peti-

tioners.

42 U.S.C. § 405(h) provides that findings of fact and

decisions of the Secretary may be reviewed only as pro-

vided in the Act and precludes suits under section 1331

or 1346 of Title 28 against the “United States, the Secre-

tary, or any officer or employee thereof... to recover on

any claim arising under” the subchapter. See generally:

Weinberger v. Salfi, 422 U.S. 749 (1975), Heckler v. Ringer,

466 U.S. 602 (1984).

The Panel, in concluding respondents could proceed

under section 1331, held that the State Petitioners were

not protected from suit by 42 U.S.C. § 405(h) because they

were not federal officers or employees. Although it may

be literally correct that the state officials are not federal

employees, the Court’s decision produces a result not

intended by Congress. Rather, Congress intended by this

Provision to assure that claims arising under the disabil-

ity provisions of the Act be adjudicated pursuant to its

provisions. Under the statutory framework it enacted,

Congress could not have reasonably anticipated suits

against state employees under the circumstances of this

case.

There can be no question that there is a seamless

integration of the DDS into the benefit adjudication pro-

cess under the Act with truly plenary control of the DDS

by the SSA. Congress must have reasonably intended that

Section 405(h) apply to those engaged throughout the

process. Such an application is consistent with the Act

and regulations promulgated by the Secretary: an appeal

to the Secretary from the state agency decision is pro-

vided to dissatisfied claimants, 42 U.S.C. § 421(d); judicial

review of the Secretary’s final decision is expressly pro-

vided, 42 U.S.C. § 405(g); suits under 28 U.S.C. § 1331 and

§ 1346 for claims arising under the Act are expressly

precluded, 42 U.S.C. § 405(h); state agencies are entitled

to reimbursement of all expenses, 42 U.S.C. § 421(e); and

determinations of the DDS are determinations of the Sec-

retary, 20 C.F.R. §§ 404.1613(a), 416.1013(a). This suit is a

challenge to an area of administration of the Act for

which the Secretary is responsible. Given the statutory

framework, it is unreasonable to conclude that Congress

intended that the State Petitioners should be subject to

suit under section 1331 while the Secretary who exercises

plenary control of the adjudicatory process is not.

CONCLUSION

This Court should issue its writ of certiorari to the

Court of Appeals for the Eighth Circuit because:

‘1. There exists a clear conflict among circuits on the

issue of whether a section 1983 cause of action lies

against state officials responsible for performing disabil-

ity determinations under the Social Security Act. The

Eighth Circuit’s decision on this issue is in error.

2. The Eighth Circuit erred in construing section

405(h) of the Act to allow suit against the State Petitioners

performing disability determinations under the Social

Security Act.

Dated: February 22, 1993

Respectfully submitted,

Husert H. Humpurey III

Attorney General

State of Minnesota

Of Counsel:

Donato E. Norvik CHaRLes T. Motti

Special Assistant Assistant Attorney General

Attorney General Counsel of Record

1100 Bremer Tower

Seventh Place & Minnesota St.

St. Paul, Minnesota 55101

(612) 296-3854

Attorneys for Petitioners

Walter Roers and R. Jane Brown

A-1

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

No. 91-1643MNMI

Daniel J. Schoolcraft, * Order Denying

“Petition for Rehearing

Appellants. * and Suggestion for

VS. * Rehearing En Banc

Louis W. Sullivan, M.D., :

Appellee. *

The suggestion for rehearing en banc is denied.

Judge Bowman, Judge Beam, and Judge Loken would

grant the suggestion for rehearing en banc.

The petition for rehearing is also denied.

October 9, 1992

Order Entered at the Direction of the Court:

/s/ Michael E. Gans

Clerk, U.S. Court of Appeals, Eighth Circuit

A-2

Daniel J. SCHOOLCRAFT; Theodore Thomas,

and Joseph Drumbeater, individually and on

behalf of all others similarly situated, Appel-

lants,

Vv.

Louis W. SULLIVAN, M.D., Secretary of

Department of Health and Human Services;

Walter Roers, in his official capacity as Direc-

tor of the Disability Determination Services; R.

Jane Brown, in her official capacity as Com-

missioner of the Minnesota Department of

Jobs and Training, Appellees.

No. 91-1643.

United States Court of Appeals,

Eighth Circuit.

Submitted Nov. 13, 1991.

Decided July 2, 1992.

Rehearing and Rehearing En Banc

Denied Oct. 9, 1992.

Laurie N. Davison, Minneapolis, Minn., argued (M.

Francesca Chervenak, Kathleen M. Davis, and Barbara J.

Kuhn, on the brief), for appellants.

Howard S. Scher, Dept. of Justice, Washington, D.C.,

argued (Donald Notvik, Asst. Atty. Gen., St. Paul, Minn.,

on the brief), for appellees.

A-3

Before LAY,* Chief Judge, ARNOLD,"* Circuit Judge,

and STUART,*** Senior District Judge.

LAY, Chief Judge.

This is an appeal from the district court’s! award of

summary judgment dismissing a class action2 complaint

filed by three individuals, Daniel J. Schoolcraft, Theodore

Thomas and Joseph Drumbeater, against Louis W. Sul-

livan, Secretary of the Department of Health and Human

Services (Secretary), and Walter Roers and R. Jane Brown

in their official capacities as Director of Minnesota’s Dis-

ability Determination Services and Commissioner of the

Minnesota Department of Jobs and Training, respectively.

Plaintiffs challenged the Procedures and standards

applied by defendants to disability claims involving

chronic alcoholism or some other drug dependency. See

Schoolcraft v. Sullivan, 753 F.Supp. 1478 (D.Minn.1991). At

the time the class action was filed, January 25, 1990, each

“The HONORABLE DONALD P. LAY was Chief Judge of the

United States Court of Appeals for the Eighth Circuit at the time

this case was submitted and took senior status on January 7,

1992, before the opinion was filed.

**The HONORABLE RICHARD S. ARNOLD became Chief

Judge of the United States Court of Appeals for the Eighth

Circuit on January 7, 1992.

***The HONORABLE WILLIAM C. STUART, Senior United

States District Judge for the Southern District of lowa, sitting by

designation.

‘ The Honorable David S. Doty, United States District

Judge for the District of Minnesota.

? The class allegedly consists of over 4000 plaintiffs, each of

whom sought benefits based on disability due to chronic alco-

holism.

A-4

of the plaintiffs had applied for disability benefits by

reason of chronic alcoholism. The district court awarded

summary judgment to the defendants and dismissed the

complaint for lack of subject matter jurisdiction based

upon the plaintiffs’ failure to exhaust their administrative

remedies. Consequently, the court concluded that plain-

tiffs’ motion for class certification was moot. Jurisdiction

was alleged under 42 U.S.C. § 405(g) (1988), 28 U.S.C.

§§ 1331, 1343(3) and 1361 (1988).3

* Subsequent to the filing of the class action, Schoolcraft

and Drumbeater were awarded disability benefits in May 1990

and Thomas received benefits in February 1991. The defendants

allege that this moots the law suit. We must respectfully dis-

agree. The district court denied certification of the class as moot

on the basis that it lacked jurisdiction to entertain the complaint.

This court finds that jurisdiction to hear the case does lie with

the federal courts. Plaintiffs’ motion for class certification is not

moot as it was not decided upon the merits. Notwithstanding

the grant of eligibility, these plaintiffs continue to have a per-

sonal stake in the litigation because their continuing eligibility

is subject to periodic review. United States Parole Comm. v. Ger-

aghty, 445 U.S. 388, 100 S.Ct. 1202, 63 L.Ed.2d 479 (1980); Wilker-

son v. Bowen, 828 F.2d 117 (3d Cir.1987). Since the class action

was denied before the named plaintiffs were awarded disability

benefits, as part of our judgment we remand this cause for

determination of class certification with instructions that class

certification should relate back to January 25, 1990.

The instant case can be distinguished from Shipman v. Mis-

sourit Dep’t of Family Servs., 877 F.2d 678 (8th Cir.1989), cert.

denied, 493 U.S. 1045, 110 S.Ct. 842, 107 L.Ed.2d 837 (1990), in

which this court held that where plaintiffs fail to file a motion

requesting a ruling on the issue of class certification and the

district court does not rule on the issue, the court loses jurisdic-

tion where the named plaintiffs’ personal claims become moot.

A-5

The initial determination of a claim for disability

benefits is made by a state agency pursuant to regula-

tions, guidelines and standards established by the Secre-

tary. 42 U.S.C. §§ 421(a), 421(k)(1), 1383(a) (1988). If the

initial determination is adverse, the claimant may request

a de novo reconsideration of the claim by the same state

agency. 20 C.F.R. § 404.904-.909 (1991). In Minnesota, the

Disability Determination Services of the Minnesota

Department of Jobs and Training (DDS) has been desig-

nated to handle these first two Stages of the administra-

tive adjudication process. The DDS acts under the

authority and control of the Secretary. 42 U.S.C. §§ 421(a),

421(k)(1), 1383b(a) (1988); 20 C.ER. §§ 404.1503(a),

416.903(a) (1991). Failure to seek a reconsideration ren-

ders the initial decision binding on the claimant. If the

reconsideration is adverse, the claimant is entitled to a

hearing by the Secretary and may request a de novo

hearing before an administrative law judge (ALJ). 42

U.S.C. §§ 405(b)(1), 421(d), 1383(c)(1) (1988); 20 C.F.R.

§ 404.967-.981 (1991). Failure to request a hearing before

an ALJ renders the adverse reconsideration a final deci-

sion. If the ALJ’s decision is adverse to the claimant, the

claimant may appeal that decision, within sixty days, to

the Social Security Administration Appeals Council

(Appeals Council). A final decision exists once the

Appeals Council has denied review or has issued its own

decision. After exhausting these remedies, a claimant

may file a complaint in federal district court requesting

an award of benefits pursuant to section 405(g). See 42

U.S.C. §§ 421(d), 1383(c)(3). In the present case, plaintiffs

have admittedly not exhausted their administrative

remedies.

A-6

This suit is not for benefits.4 Unlike the plaintiffs in

Heckler v. Ringer, 466 U.S. 602, 104 S.Ct. 2013, 80 L.Ed.2d

622 (1984), in which the relief sought was a change in the

Secretary’s policy so that the claimants would not have to

resort to the administrative process to receive benefits,

the relief sought by plain‘iffs would not determine

whether they would receive benefits. The relief sought is

that defendants apply the same standards to plaintiffs’

claims for benefits at each stage of the administrative

process. See 42 U.S.C. § 421(k)(1) (“[t]he Secretary shall

establish by regulation uniform standards which shall be

applied at all levels of determination, review, and adjudi-

cation in determining whether individuals are dis-

abled. .. . ”). Plaintiffs allege that defendants do not

follow the five-step analysis required by the Secretary’s

regulations.® Specifically, plaintiffs allege that at the third

‘ At the time of this action, each individual claimant had

been denied benefits in the initial and reconsideration level by

the state defendants.

5 See Bowen v. City of New York, 476 U.S. 467, 470, 106 S.Ct.

2022, 2024, 90 L.Ed.2d 462 (1986). Assuming a claimant is not

engaged in substantial gainful activity and is found to suffer

from an impairment which is severe and limits the claimant's

basic work activity, then the administrative adjudication moves

to the third step of the five step analysis. If the impairment is

severe, the claim is evaluated under the third step of the

analysis to determine whether the claimant’s impairment meets

or equals the severity of an appropriate listed impairment. If a

claimant alleges disability based on alcoholism or dependency

on another drug, the claim is evaluated under section 12.09

listings. If it does meet or equal a listed impairment under

section 12.09, the claimant is conclusively presumed to be

disabled. When the impairment is severe but is not listed, then

the fourth stage of the analysis is used to assess the residual

a aaa — aii ee

A-7

step of the analysis the adjudicator is also or alternatively

required to consider whether the claimant is addicted to

alcohol and has “lost the voluntary ability to control its

use.” See Adams v. Weinberger, 548 F.2d 239 (8th Cir.1977).

Plaintiffs argue that Adams established an alternative to

section 12.90 listings. See supra note 5. Although the ALJ

and Appeals Council typically employ the Adams analysis

at stage three, the state defendants allegedly do not. The

record shows that at least two individuals who evaluate

claims at the state level testified that neither the Secretary

nor the Social Security Administration (SSA) had

instructed DDS employees that they must determine

whether a claimant can voluntarily control his or her use

of alcohol when evaluating a claim for disability benefits

due to drug dependency. These DDS employees were not

aware of any such requirement and had never applied the

Adams standard when evaluating such claims. Plaintiffs

assert that as the Adams standard is considered by the

ALj and the Appeals Council it ought to be considered at

the initial and reconsideration adjudications conducted

by the state DDS at the direction of the SSA and the

Secretary.

functional capacity (RFC) and to determine whether the

claimant is able to perform work formerly done. If he is able, he

is not considered disabled and the claim is denied. 20 C.FR.

§§ 404.1520(e), 416.920(e) (1991). If the claimant is not able to do

the former work, the analysis moves to the fifth and final stage

at which it is determined whether the claimant can do any other

work available in the national economy given the age,

education, and work experience of the person. If the claimant

cannot do any other work, disability is found. 20 C.F.R. § 404,

subpart P, appendix 1 (1991).

A-8

Although to some extent the merits relate to the

jurisdictional issue, resolution of the merits does not

determine the question of jurisdiction. We address only

whether the district court erred in its jurisdictional rul-

ing.

Section 405(g)

In order for the district court to have subject matter

jurisdiction under section 405(g), a claimant must have

presented a claim for benefits to the Secretary and

exhausted the administrative remedies prescribed by the

Secretary. See, e.g., Weinberger v. Salfi, 422 U.S. 749, 95

S.Ct. 2457, 45 L.Ed.2d 522 (1975). The second element of

jurisdiction, the exhaustion of the administrative

remedies, although jurisdictional, is nonetheless deemed

waivable. See, e.g., Mathews v. Eldridge, 424 U.S. 319, 331 n.

11, 96 S.Ct. 893, 900 n. 11, 47 L.Ed.2d 18 (1976) (jurisdic-

tional requirement of exhaustion under section 405(g)

relates to the requirement of finality). As the district court

notes, in the instant case the claimants, as defined in

plaintiffs’ motion for class certification, all satisfy the

jurisdictional requirement that a claim for benefits has

been made to the Secretary. The putative class consists

entirely of individuals who have not exhausted the

ments for judicial review: (1) a final decision of the Secretary

made after a hearing; (2) commencement of a civil action within

60 days after the mailing of notice of such decision; and (3) filing

of the action in an appropriate district court. Weinberger v. Salfi,

422 U.S. 749, 763-64, 95 S.Ct. 2457, 2465-66, 45 L.Ed.2d 522

(1975).

A-9

administrative remedies available to them, however.

Therefore, in order for their claims to be heard in federal

court, exhaustion must be waived.

Under Bowen v. City of New York, 476 U.S. 467, 106

S.Ct. 2022, 90 L.Ed.2d 462 (1986), waiver of administrative

exhaustion may be admitted only under special circum-

stances. The Secretary urges that such circumstances are

present only where the challenged policy was adopted in

secret and where (1) the issues were entirely collateral to

the claim for benefits; (2) the injury could not be

remedied by a retroactive payment; and (3) exhaustion

would be futile. City of New York, 476 U.S. at 483, 106 S.Ct.

at 2031, aff'g, City of New York v. Heckler, 742 F.2d 729 (2d

Cir.1984), aff’g, 578 F.Supp. 1109 (E.D.N.Y.1984). We agree

that waiver of administrative remedies is the exception to

the general rule. However, we find the present case pre-

sents an exceptional circumstance and waiver should be

allowed.”

City of New York began as a class action challenging

the SSA’s internal policy of determining disability bene-

fits based on a general listing of impairments instead of

individual assessments. The district court declared that

policy illegal, and the Secretary appealed the court’s deci-

sion to grant relief to claimants who had failed to exhaust

administrative remedies. The Supreme Court divided the

class into two groups. Relief for the first group, for whom

administrative remedies were no longer available when

7 As the Court has explained, the Secretary has discretion

to decide when to waive the exhaustion requirement, but cases

may arise where deference to the agency’s judgment is inap-

propriate. Eldridge, 424 U.S. at 330, 96 S.Ct. at 900.

A-10

the internal policy became public, was affirmed with little

explanation other than noting that requiring exhaustion

would be unfair because the claimants could not have

challenged the unknown policy. City of New York, 476 U.S.

at 478-82, 106 S.Ct. at 2029-31; see also Pittson Coal Group v.

Sebben, 488 U.S. 105, 123, 109 S.Ct. 414, 425, 102 L.Ed.2d

408 (1988). In addition, notwithstanding the fact that the

second group of plaintiffs still had time to exhaust their

administrative remedies at the time the suit was filed and

the Secretary’s secret policy was revealed, the Court

found jurisdiction to review their claims under section

405(g). City of New York, 476 U.S. at 482-86, 106 S.Ct. at

2031-33. In view of these factors, the district court erred

in ruling that a secret policy is a prerequisite to waiver of

exhaustion. Accord Marcus v. Sullivan, 926 F.2d 604 (7th

Cir.1991); Bailey v. Sullivan, 885 F.2d 52 (3d Cir.1989).

City of New York, relying on Mathews v. Eldridge, 424

U.S. 319, 331, 96 S.Ct. 893, 900, 47 L.Ed.2d 18 (1976),

requires that claimants show (1) their claims are collateral

to their claim of benefits; (2) that irreparable injury will

follow; and (3) that exhaustion would otherwise be futile.

We find that plaintiffs have established these prerequi-

sites to waiver and that the district court erred in dismiss-

ing their claim against the defendants for lack of

jurisdiction.

In the instant case, the district court refused to waive

the requirement of exhaustion of administrative

remedies, reasoning that (1) plaintiffs had not challenged

a secret policy of HHS; (2) plaintiffs’ claims were not

collateral to their individual claims for benefits; and (3)

claimants had not shown irreparable harm because

A-11

exhaustion of their administrative remedies and award-

ing of retroactive benefits, where appropriate, would

remedy the wrong. On this basis, the district court con-

cluded it did not have jurisdiction to entertain the com-

plaint under section 405(g).

Although their present contentions may be intert-

wined with their claims for benefits, plaintiffs’ claims are

nonetheless sufficiently collateral to justify waiver of

exhaustion. Here the class does not seek benefits in the

district court, rather, as in City of New York, They chal-

lenge the Secretary’s failure to ensure that uniform stan-

dards are applied at all levels of review. Like the claims

in City of New York, the plaintiffs’ claims in this case are

collateral to their claims for benefits. Despite its close

resemblance to the claim presented in Heckler v. Ringer,

466 U.S. 602, 104 S.Ct. 2013, 80 L.Ed.2d 622 (1984), the

City of New York Court determined that the issue in City of

New York was collateral because it involved the Secre-

tary’s failure to follow the applicable regulations. See also

Marcus v. Suliivan, 926 F.2d 604 (7th Cir.1991); Johnson v.

Sullivan, 922 F.2d 346, 351 (7th Cir.1991) (en banc); New

York v. Sullivan, 906 F.2d 910, 912-13 (2d Cir.1990). In City

of New York, the claimants were excused from administra-

tive exhaustion and allowed to proceed directly to district

court because they had challenged the very procedure by

which their claims were processed.® The Court found that

8 The central issue is whether plaintiffs’ claims fall within

the factual setting of City of New York or Ringer. In focusing on

whether exhaustion should be waived, the Supreme Court in

City of New York stated:

This case is materially distinguishable from one in

which a claimant sues in district court, alleging mere

A-12

whether claimants received the “procedure they should

have been afforded in the first place” was entirely collat-

eral to the merits of their claims for benefits. City of New

York, 476 U.S. at 484, 106 S.Ct. at 2032. The instant case

presents a similar situation.

The district court’s attempt to distinguish plaintiffs

claims as substantive rather than procedural is, under the

existing circumstance, not a controlling factor. The fact

remains that plaintiffs’ claims are independent of their

deviation from the applicable regulations in his par-

ticular administrative proceeding. In the normal

course, such individual errors are fully correctable

upon subsequent administrative review since the

claimant on appeal will alert the agency to the alleged

deviation. Because of the agency’s expertise in

administering its own regulations, the agency ordi-

narily should be given the opportunity to review

application of those regulations to a particular factual

context. Thus, our holding today does not suggest

that exhaustion is to be excused whenever a claimant

alleges an irregularity in the agency proceedings.

These claimants stand on a different footing from

one arguing merely that an agency incorrectly

applied its regulation. Rather, the District Court

found a systemwide, unrevealed policy that was

inconsistent in critically important ways with estab-

lished regulations.

City of New York, 476 U.S. at 484-85, 106 S.Ct. at 2032-33.

® Analysis regarding whether something is procedural or

substantive often leads to obtuse characterization of the issue.

In the present case, plaintiffs assert that state officials are apply-

ing standards at the initial stages of review which are inconsis-

tent with the Social Security Act and the Constitution. See supra

n. 5.

A-13

claims for disability and thus are sufficiently collateral to

support waiver of exhaustion.

Second, we find claimants have made a sufficient

showing of irreparable harm resulting from the defen-

dants’ practices. Claimants have produced over 200 affi-

davits which clearly demonstrate the harms caused by

administrative exhaustion in these individual cases.'° The

district court held that retroactive benefits provided an

adequate remedy. The overwhelming body of case law,

however, is to the contrary. See, e.g., Schweieker v. Chilicky,

487 U.S. 412, 108 S.Ct. 2460, 101 L.Ed.2d 370 (1988)

(months of delay in receipt of necessary Social Security

income on which one has depended for the very necessi-

ties of life cannot be fully remedied by the “belated

retroaction of benefits”); Eldridge, 424 U.S. at 331, 96 S.Ct.

at 900 (“an erroneous termination [of benefits] would

damage [claimant] in a way not recompensable through

retroactive payments”).

Finally, the district court determined that the pur-

poses underlying the exhaustion doctrine would not be

served if waiver were permitted in the present case. We

must again respectfully disagree. The purposes of admin-

istrative exhaustion are set forth in Weinberger v. Salfi, 422

U.S. 749, 95 S.Ct. 2457, 45 L.Ed.2d 522 (1975). In Salfi, the

Court explained that exhaustion is required in order that

1° For example, Thomas Smith was homeless until he was

awarded benefits by an ALJ 14 months after he had applied for

benefits. Smith Decl. { 15 Jt.App. 234, 236. Other members of the

class, such as Jerome Arnold, joseph Darikely and Dale

Leonard, were living on the streets as of the date of this appeal

because they could not find housing they could afford.

A-14

“the agency may function efficiently and so that it may

have an opportunity to correct its own errors, to afford

the parties and the courts the benefit of its experience and

expertise, and to compile a record which is adequate for

judicial review.” Id. at 765. The Sailfi Court found that

exhaustion would have been futile and inconsistent with

those policies, and characterized the relief ordered -

reopening the claims — as showing “proper respect for the

administrative process.” Id. Indeed, stressing the prag-

matic basis of the exhaustion doctrine, the Court has

directed that the doctrine’s application be governed by

the policies underlying the exhaustion requirement rather

than by “mechanical application of the Eldridge factors.”

City of New York, 476 U.S. at 484, 106 S.Ct. at 2032.

We find great similarity between the present case and

Mental Health Ass'n v. Heckler, 720 F.2d 965 (8th

Cir.1983).1! In holding that administrative remedies

should be waived, the Mental Health Ass'n court noted

that the irreparable harm inherent in the pursuit of

administrative relief and the apparent inadequacy of it to

redress the interests of the class were not alleviated but

rather exacerbated by reversals on appeal. Id. at 970. We

agree with claimants’ representation that eventual correc-

tion of the errors of DDS will not cure the alleged harm.

As plaintiffs urge, even though exhaustion may often

result in benefits being awarded it “never removes or

corrects the systemic errors at the initial and reconsidera-

tion stage[s] of the administrative process.” Appellants’

" Heckler v. Ringer, 466 U.S. 602, 104 S.Ct. 2013, 80 L.Ed.2d

622 (1984), involved the same issue, termination of mental

health benefits, later challenged in the City of New York case.

A-15

brief at 31. As the Second Circuit stated in Jones v. Cali-

fano, 576 F.2d 12 (2d Cir.1978), under analogous circum-

stances, with exhaustion requirements “SSA could

operate indefinitely . . . with two standards . . . one for

claimants who seek review by the Appeals Council, and

one for claimants who do not.” Id. at 17.

We think the most telling and forceful argument

plaintiffs make is that unless exhaustion is waived, if the

ALJ implements the correct procedures and applies the

correct standards and, where appropriate, awards bene-

fits, there will never be judicial review to challenge the

actions the DDS takes at the initial and reconsideration

stages. Exhaustion would be futile if the challenged pol-

icy could never be judicially reviewed. As stated in City of

New York: “We should be especially sensitive to this kind

of harm where the Government seeks to require claimants

to exhaust administrative remedies merely to enable them

to receive the procedure they should have been afforded

in the first place.” 476 U.S. at 484, 106 S.Ct. at 2032: see

also Barry v. Barchi, 443 U.S. 55, 63 n. 10, 99 S.Ct. 2642,

2648 n. 10, 61 L.Ed.2d 365 (1979) (no need to exhaust

procedures when action concerns the legality of those

procedures); Touche Ross & Co. v. SEC, 609 F.2d 570, 577

(2d Cir.1979) (to require appellants to exhaust their

administrative remedies would be to require them to

submit to the very procedures which they are attacking);

Jones v. Califano, 576 F.2d 12 (2d Cir.1978) (exhaustion

waived because futile in light of the Secretary’s final

position and the possibility of repeated reversai on

appeal frustrating review of the constitutional issue).

We conclude that the district court erred in failing to

waive the exhaustion requirement of section 405(g) and in

A-16

preventing the suit against the Secretary from proceed-

ing.

Section 1361

Jurisdiction under section 1361 by way of writ of

mandamus is sought only against the Secretary. Since we

find waiver of exhaustion and jurisdiction against the

Secretary established under section 405(g) review, we

need not discuss the plaintiffs’ mandamus claim.!2 We

note, however, that this court and other courts have

found an alternative basis for jurisdiction under section

1361 in similar circumstances. See, e.g., Mental Health

Ass'n v. Heckler, 720 F.2d 965, 971 n. 71 (8th Cir.1983). On

this ground the order dismissing the claim under man-

damus is vacated. The district court may well choose to

issue a writ of mandamus requiring the Secretary to

direct the state officials to follow the Secretary’s pro-

cedures and the standards of this circuit.

State Defendants

Plaintiffs assert jurisdiction against the state defen-

dants under sections 1331 and 1343(3).13 We think plain-

tiffs’ reliance on section 1343(3) is misplaced. As stated

12 Since we find jurisdiction under section 405(g), we need

not discuss section 1331 jurisdiction as to the plaintiffs’ consti-

tutional claims against the Secretary. See Mathews v. Eldridge, 424

U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976).

13 28 U.S.C. § 1343(3) states: “To redress the deprivation,

under color of any State law, statute, ordinance, regulation,

custom or usage, of any right, privilege or immunity secured by

the Constitution of the United States or by any Act of Congress

providing for equal rights of citizens or of all persons within the

jurisdiction of the United States.”

a ae ee

A-17

by the Court in Chapman v. Houston Welfare Rights Organi-

zation, 441 U.S. 600, 99 S.Ct. 1905, 60 L.Ed.2d 508 (1979):

The Social Security Act does not deal with

the concept of “equality” or with the guarantee

of “civil rights” as those terms are commonly

understood. The Congress that enacted § 1343(3)

was primarily concerned with providing juris-

diction for cases dealing with racial equality; the

Congress that enacted § 1343(4) was primarily

concerned with providing jurisdiction for

actions dealing with the civil rights enumerated

in 42 U.S.C. § 1985, and most notably the right

to vote. While the words of these statutes are

not limited to the precise claims which moti-

vated their passage, it is inappropriate to read

the jurisdictional provisions to encompass new

claims which fall well outside the common

understanding of their terms.

Chapman, 441 U.S. at 621, 99 S.Ct. at 1917 (footnote omit-

ted).

Nonetheless, the allegation is made that the state

defendants, acting under color of state law, violated the

federal regulations and applicable federal law (as well as

the United States Constitution). Under these circum-

stances, although plaintiffs do not expressly allege a vio-

lation under 42 U.S.C. § 1983 (1988), we find federal

question jurisdiction sufficiently pled under section 1331.

See Maine v. Thiboutot, 448 U.S. 1, 100 S.Ct. 2502, 65

L.Ed.2d 555 (1980).

The state defendants assert 42 U.S.C. § 405(h) (1988)

bars federal question jurisdiction against them. We dis-

agree. Section 405(h) reads: “No action against the United

States, the Secretary, or any officer or employee thereof

A-18

shall be brought under [28 U.S.C. § 1331 et seq.] to

recover on any claim arising under [Title II of the Social

Security Act].” See Weinberger v. Salfi, 422 U.S. 749, 756, 95

S.Ct. 2457, 2462, 45 L.Ed.2d 522 (1975); Schoolcraft, 753

F.Supp. at 1478, 1490. This provision expressly applies

only to officials of the United States. Although DDS is

responsible for carrying out the Secretary’s regulations

and policies, it operates pursuant to state statutory

authority. See Minn.Stat. § 268A.03(e) (1990). The Com-

missioner of Department of Jobs and Training is required

to:

maintain a contractual or regulatory relation-

ship with the United States as authorized by the

Social Security Act, as amended. Under this

relationship, the state will undertake to make

determinations referred to in those public laws

with respect to all individuals in Minnesota, or

with respect to a class or classes of individuals

in this state that is designated in the agreement

at the state’s request. It is the purpose of this

relationship to permit the citizens of this state to

obtain all benefits available under federal law.

Minn.Stat. § 268A.03(d).

The state defendants are neither officers nor employees of

the federal government.'4

Claimants allege that these state officers in their offi-

cial capacities, acting under color of state law, violated

federal law and the United States Constitution by failing

‘4 In this regard we disagree with the holding of the Second

Circuit that the state defendants are acting solely as agents of

the United States. See Ellis v. Blum, 643 F.2d 68 (2d Cir.1981).

A-19

to apply the proper criteria. On this basis plaintiffs prop-

erly assert federal question jurisdiction under section

1331.

Whether the challenged practices and policies are

inconsistent with or violative of the Secretary’s policies is

an issue for the district court to resolve. If plaintiffs’

claims have merit, as the depositions of the state officers

indicate, perhaps the Secretary and the claimants can

settle their differences. If the individuals are harmed, as

plaintiffs have alleged, the institutional concern should

be great and the wrong readily remedied.15

The judgment dismissing the plaintiffs’ claim for lack

of jurisdiction is vacated and the cause is remanded for

further proceedings in accordance with this opinion.

1S This entire litigation is somewhat bewildering to this

court. In oral argument the government stated that there is no

merit to plaintiffs’ claims because the DDS presently adheres to

the SSA’s standards and regulations which purportedly comply

with the legal standards and procedures claimants deem appli-

cable. Thus, the issue is whether the plaintiffs are correct in

asserting that the Secretary has failed to properly instruct the

state officials to do what the Secretary agrees should be done. If

all this is true, the Secretary can easily remedy this dispute and

save everyone a great deal of time and expense by entering into

a consent judgment in the district court specifically stating the

applicable standards are to be applied at each stage of the claim

evaluation process.

A-20

Daniel J. SCHOOLCRAFT, Theodore

Thomas, and Joseph L. Drumbeater,

individually and on behalf of all

other similarly situated, Plaintiffs,

Vv.

Louis W. SULLIVAN, M.D., Secretary

of the Department of Health and

Human Services, et al., Defendants.

Civ. No. 4-90-53.

United States District Court,

D. Minnesota,

Fourth Division.

Jan. 3, 1991.

M. Francesca Chervenak, Kathleen Marge Davis, John

S. Whitelaw, Laurie Nina Davison, Minneapolis, Minn.,

for plaintiffs.

Jerome Arnold, U.S. Atty., Robert Michael Small,

Asst. U.S. Atty., Minneapolis, Minn., Donna Morros

Weinstein, Chief Counsel, Region V, Donald T. McDougall

and Michael Messer, Asst. Regional Counsel, Chicago, IIl.,

for defendant.

Hubert H. Humphrey, III, Atty. Gen. and Donald E.

Notvik, Sp. Asst., St. Paul, Minn., for state defendants.

ORDER

DOTY, District Judge.

This matter is before the court on plaintiff’s motion

for class certification and defendants’ motion to dismiss

for either lack of subject matter jurisdiction or failure to

state a claim upon which relief may be granted, or in the

A-21

alternative, for summary judgment. Based on the file,

record and proceedings herein, the court grants defen-

dants’ motion for summary judgment.

BACKGROUND

The plaintiffs bring this action to challenge the

administrative process for evaluating social security dis-

ability claims in which the claimants allege alcoholism or

other substance abuse as the basis for their disability.

Titles II and XVI of the Social Security Act provide

monthly disability benefits to persons who are unable “to

engage in any substantial gainful activity by reason of

any medically determinable physical or mental impair-

ment."! 42 U.S.C. § 423(d)(1)(A); 42 U.S.C.

§ 1382c(a)(3)(A). The definition of disability is stringent

because the Act does not permit benefits for partial dis-

abilities. Stephens v. Heckler, 766 F.2d 284, 285 (7th

Cir.1985). The Act further imposes a durational require-

ment: an impairment must be disabling for a continuous

period of not less than twelve months. 42 U.S.C.

§ 423(d)(1)(A); Timmerman v. Weinberger, 510 F.2d 439, 443

(8th Cir.1975). Thus, medical conditions which are epi-

sodic and do not last for a continuous 12-month period

cannot constitute a disability within the meaning of the

Social Security Act, even if they are disabling for recur-

rent periods of less than twelve months. See, e. &-, Maher v.

' The regulations setting the disability standards under

Titles Il and XVI are the same in all relevant respects. Sullivan v.

Zebley, __ U.S. __, 110 S.Ct. 885, 888 n.3, 107 L.Ed.2d 967

(1990).

A-22

Secretary of Health & Human Servs., 898 F.2d 1106, 1109

(6th Cir.1989) (citing Schaffer v. Califano, 433 F.Supp. 1218,

1224 (D.Md. 1977)). In order to obtain benefits under

Titles II or XVI, a person must file a claim with the

Secretary alleging, among other things, the condition or

impairment which disables, and the date on which the

disability began. Once a claimant is deemed “disabled”,

benefits will continue as long as other nondisability

related criteria are met unless the claimant’s medical

condition has improved to the point where substantial

gainful activity can be performed.?

The Secretary has established a four-tier administra-

tive appeals process to resolve disputed disability claims.

The “initial determination” of a claim is made by a state

agency pursuant to regulations, guidelines, and perfor-

mance standards established by the Secretary (Initial

Stage). 42 U.S.C. §§ 421(a), 1383b(a). If the initial deter-

mination is adverse, the individual may request within 60

days a de novo reconsideration by the same state agency.

(Reconsideration Stage). Failure to seek further review

renders the initial determination binding. After an

adverse reconsideration decision, the claimant becomes

“entitled to a hearing thereon by the Secretary”. 42 U.S.C.

§§ 421(d), 1383(c)(1). The claimant may request a de novo

hearing before an administrative law judge (ALJ) within

? There are certain circumstances in which the Secretary

may find that disability has ended even though medical

improvement has not occurred, provided the claimant also can

perform substantial gainful activity under the circumstances.

For example, benefits may be terminated without medical

improvement if the recipient has undergone vocational therapy.

42 U.S.C. § 423(f)(2).

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60 days after the adverse reconsideration determination.

42 U.S.C. §§ 405(b)(1), 1383(c)(1). Failure to request an

ALJ hearing renders the reconsideration determination

binding. At the fourth stage, the claimant may appeal an

adverse ALJ decision, within 60 days, to the Appeals

Council, the highest appellate tribunal within the Social

Security Administration. If the claimant fails to make a

timely request for such review, the ALJ decision becomes

binding. For purposes of judicial review, a determination

of an individual’s claim for benefits becomes a “final

decision” only after the Appeals Council has either

denied review or granted review and issued its own

decision. This final decision then is subject to judicial

review pursuant to 42 U.S.C. § 405(g). See 42 U.S.C.

§§ 421(d), 1383(c)(3).

In Minnesota a state agency called the Disability

Determination Services of the Minnesota Department of

Jobs and Training (DDS) has been designated by the

Secretary to handle the first two stages of the administra-

tive process. Thus, the DDS determines whether the

claimant is disabled at the Initial Stage. If unsuccessful at

the Initial Stage, the claimant may ask the DDS for a

reconsideration. If unsuccessful at the Reconsideration

Stage, the claimant may request a hearing before an

administrative law judge who is employed by the Social

Security Administration.

Throughout the four-tier administrative appeals pro-

cess, a five-step analysis is used to determine whether a

claimant is “disabled” for purposes of the Act. In the first

step the Secretary determines if the claimant is working

or engaged in “substantial gainful activity” at the time of

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the determination. If yes, the claim for benefits is auto-

matically denied. 20 C.F.R. §§ 404.1520(a) & (b),

416.920(a) & (b) (1989). If the claimant is not engaged in

substantial gainful activity the Secretary moves to the

second step of the process and determines whether the

claimant has a physical or mental impairment which is

“severe”. An impairment is considered severe if it signifi-

cantly limits a claimant’s physical or mental ability to

perform basic work activity. If an impairment is not

severe, the claimant is not considered to be disabled and

the claim is denied. 20 C.F.R. §§ 404.1520(c), 416.920(c)

(1989). If the claimant is determined to have a severe

impairment, the Secretary moves to the third step to

determine whether the claimant’s impairment meets or

equals the severity of an appropriate listed impairment.

A listed impairment is one which is included, with its

symptoms, in the regulations governing the Title II and

Title XVI programs. If the Secretary determines that the

claimant has an impairment which meets or equals the

characteristics of a listed impairment the claimant is con-

clusively presumed disabled. 20 C.F.R. §§ 404.1520(d),

416.920(d) (1989). If the claimant’s impairment does not

meet or equal a listing, the Secretary goes to the fourth

step to determine whether the claimant is able to do work

formerly done. If the claimant is able to do the former

work the claimant is not considered disabled and the

claim is denied. 20 C.F.R. §§ 404.1520(e), 416.920(e) (1989).

If the claimant is not able to perform the former work, the

Secretary moves on to the fifth step to determine whether

the claimant can do any other work available in the

national economy, given the age, education, and work

experience of the person. If the claimant cannot do any

‘

;

A-25

other work, disability is found. 20 C.F.R. §§ 404.1520(f),

416.920(f) (1989).

At the third step of the evaluation process, if a claim-

ant alleges disability based on alcoholism or drug depen-

dency, the claim is evaluated under § 12.09 of the listings,

entitled “Substance Addiction Disorders”. 20 C.F.R., Part

404, Subpart P, Appendix 1 (1989). Section 12.09 is struc-

tured as a reference listing, see id. § 12.00(A), which

merely identifies other sections of the regulations that are

to be used when evaluating the behavioral, mental, or

physical changes resulting from the claimant’s regular

use of addictive substances. To establish a conclusive

presumption of disability, the claimant meets the required

level of severity if the requirements of any one of nine

categories listed under § 12.09 are met. The plaintiffs

contend that the Eighth Circuit has, in Adams v. Wein-

berger, 548 F.2d 239 (1977), articulated an additional stan-

dard which is equivalent to nine § 12.09 listings and

which must be used to evaluate disabilities based on

alcoholism or drug dependence. Under the plaintiffs’

interpretation, the Adams case mandates that in evaluat-

ing such disability claims, “the emphasis should be

placed on whether the claimant is addicted to alcohol and

as a consequence has lost the voluntary ability to control

its use.” Id. at 244. The plaintiffs further contend that the

DDS does not apply the Adams standard and thus

improperly denies benefits at the first two stages of the

3 The plaintiffs note that nine categories in § 12.09 represent

the Secretary’s current policy, but claim that the categories con-

flict with Adams. At the time, Adams was decided § 12.09 was not

in effect.

A-26

administrative process, the Initial and Reconsideration

Stages.

The plaintiffs seek class certification for all those

individuals alleging disability based on alcoholism or

other substance abuse who have been denied benefits at

the first two stages of the administrative process. The

plaintiffs’ initial motion for conditional class certification

was denied by this court in an order dated February 5,

1990. The plaintiffs now renew the motion seeking to

represent a class of persons defined as follows:

All persons residing in Minnesota:

1. Who have filed or will file an application for

Title II and/or Title XVI disability benefits, or

who receive or will receive Title II and/or Title

XVI disability benefits;

2. Who allege that they are unable to work in

whole or in part because of alcoholism or

another drug dependency.

3. Who have been or will be denied or termi-

nated by defendants either in an initial or a

reconsideration determination;

4. Who have not received a subsequent deci-

sion on the application or termination from an

administrative law judge; and

5. Whose initial determination was on or after

January 25, 1989, or whose reconsideration

determination was on or after November 21,

1989.

The plaintiffs note that none of the named plaintiffs had

exhausted their administrative remedies at the time this

action was filed. The plaintiffs’ complaint also confirms

A-27

that none of the members of the proposed class would

~ ever exhaust their administrative remedies because the

class is defined to include only those persons who have

had their claims for disability benefits denied or termi-

nated at the first two levels of administrative review. The

complaint further specifies that persons who do reach the

third step of the appeals process and receive an ALJ

decision automatically leave the class, regardless of

whether the ALJ’s decision was favorable or unfavorable.

Therefore, it is undisputed that the named plaintiffs and

the proposed class members have failed to exhaust their

administrative remedies. :

The plaintiffs also concede that exhaustion of admin-

istrative remedies would eliminate the errors of which

they complaint. The plaintiffs only allege that the DDS

does not apply the Adams standard at the Initial or Recon-

sideration Stages to evaluate claims based, in whole or in

part, on alcoholism or other drug dependency. In other

words, if a claimant’s impairment does not meet a § 12.09

listing at either the Initial or Reconsideration Stage, that

claim is denied or benefits are terminated without any

application of the so-called Adams standard. The plaintiffs

contend, however, that the administrative law judges cor-

rectly apply the Adams standard at the third stage of the

administrative process.4 The plaintiffs therefore concede

* Despite their assertion that the ALJ’s correctly apply the

Adams standard in the third step of the evaluation process,

plaintiffs also note that only 59% of the favorable ALJ decision

specifically rely on the Adams case.

A-28

that any such errors in the first two stages of the adminis-

trative process are subsequently corrected at the later

Stages of the administrative process.

The history of the named plaintiffs’ claims highlight

the significance of the plaintiffs’ concession that exhaus-

tion of administrative remedies would not be futile. Jos-

eph Drumbeater applied for supplemental security

income (SSI) on November 29, 1988. Drumbeater was

denied benefits in Initial and Reconsideration determina-

tions dated February 8 and June 23, 1989. On March 12,

1990, Drumbeater had a hearing before an administrative

law judge, who granted benefits from December 1, 1986,

the date on which Drumbeater claimed his disability had

begun.

Daniel J. Schoolcraft filed for Title II disability and

SSI benefits on September 9, 1989. After his claim was

denied at the initial level, Schoolcraft requested recon-

sideration on November 13, 1989. On March 22, 1990, the

DDS awarded Schoolcraft benefits on both his applica-

tions, finding him disabled since September 1, 1989.

Theodore Thomas filed his second application for

Title II disability benefits on July 26, 1989, alleging dis-

ability due to alcoholism since July 28, 1981. To receive

Title I] disability benefits a claimant must establish that

he was disabled on or before the date of the expiration of

his insured status. 42 U.S.C. § 416(i)(3). Thomas alleged

disability due to alcoholism since July 28, 1981, and fur-

ther alleged that his insured status for Title II disability

benefits had expired after the onset of his disability on

December 31, 1982. Thus, Thomas claimed he was eligible

for Title II benefits. After initial and reconsideration

A-29

denials, Thomas requested an ALJ hearing. On February

9, 1990, the ALJ dismissed the Title II claim because

Thomas’s previous application for Title II benefits was

based on the same time period and had already been

denied. The ALJ refused to reopen this earlier decision,

thus the question of whether Thomas had been disabled

prior to the expiration of his insured status may not be

relitigated. The ALJ’s decision not to reopen the prior

decision is not subject to judicial review. Califano v.

Sanders, 430 U.S. 99, 102-04, 97 S.Ct. 980, 982-83, 51 L.Ed.

2d 192 (1977).

Thomas also filed a claim for SSI benefits. Before he

received either an initial or reconsideration decision on

this claim, Thomas requested that it be accelerated to the

ALJ level so that it could be determined with his Title II

claim. The ALJ dismissed his Title II claim, supra, but did

not dismiss Thomas’s SSI claim because the date of the

termination of his insured status is irrelevant for a claim

of SSI benefits. Because Thomas’s Title !I claim was dis-

missed, however, the ALJ denied the acceleration request

and remanded the case to the DDS for an initial deter-

mination. Thomas’s SS! “laim remains pending before the

DDS.

The plaintiffs contend that this court has jurisdiction

to hear their claims under three separate provisions: (1)

the provisions for judicial review of final administrative

decisions pursuant to the Social Security Act, 42 U.S.C.

§ 405(g), 1383(c)(3); (2) federal question jurisdiction pur-

suant to 28 U.S.C. § 1331; and (3) mandamus jurisdiction

pursuant to 28 U.S.C. § 1361. The defendants contend that

jurisdiction is inappropriate under all three provisions

and ask this court to dismiss the case for lack of subject

NN cr ee ne

A-30

matter jurisdiction or failure to state a claim upon which

relief may be granted, or in the alternative, to grant

summary judgment.

ANALYSIS

Rule 56(c) of the Federal Rules of Civil Procedure pro-

vides that summary judgment “shall be rendered forthwith if

the pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits, if any show

that there is no genuine issue as to any material fact and that

the moving party is entitled to a judgment as a matter of

law.” This standard mirrors the standard for a directed ver-

dict under Federal Rule of Civil Procedure 50(a), which is

that the trial judge must direct a verdict if, under the govern-

ing law, there can be but one reasonable conclusion as to the

verdict. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106

S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). Stated in the negative,

summary judgment will not lie if the evidence is such that a

reasonable jury could return a verdict for the nonmoving

party. Id. at 248, 106 S.Ct. at 2510. With this standard at hand,

the court will consider the defendants’ motion for summary

judgment.

A. Jurisdiction Pursuant to 42 U.S.C. § 405(g)

Jurisdiction for judicial review of final decisions by

the Secretary is provided by 42 U.S.C. § 405(g),5 which

states that:

5 42 US.c. § 1383(c)(3), which deals with claims for supple-

mental security income, incorporates the standard of judicial

review provided in § 405(g).

A-31

Any individual, after any final decision of the

Secretary made after a hearing to which he is a

party, irrespective of the amount in controversy,

may obtain a review of such decision by a civil

action commenced within 60 days after the mail-

ing to him of notice of such decision or within

such further time as the Secretary may allow.

Such action shall be brought in the district court

of the United States for the judicial district in

which the plaintiff resides. . . .

The Supreme Court has held that the “final decision”

requirement of § 405(g) consists of two separate elements:

the jurisdictional, nonwaivable requirement that a claim

for benefits has actually been presented to the Secretary,

and the waivable requirement that the claimant has

exhausted all administrative remedies. Bowen v. City of

New York, 486 U.S. 467, 482-83, 106 S.Ct. 2022, 2031-32, 90

L.Ed.2d 462 (1986) (quoting Mathews v. Aldridge, 424 U.S.

319, 328, 96 S.Ct. 893, 899, 47 L.Ed.2d 18 (1976)). In the

present case, the class of claimants , as defined in plain-

tiffs’ motion for class certification, all meet the first ele-

ment of § 405(g), the jurisdictional requirement that a

claim for benefits has been made. The proposed class,

however, consists exclusively of persons who have not

met the second requirement, exhaustion of their adminis-

trative remedies. The class consists of all persons who

have been denied benefits at only the first two levels of

administrative review the Initial and Reconsideration

Stages. By definition, these claimants have neither pur-

sued the third stage of appeal, a de novo hearing before

an ALJ, nor the fourth stage, an appeal of an adverse AL]

decision to the Appeals Counsel. The plaintiffs contend

that this court should waive the exhaustion requirement

A-32

so that it will have jurisdiction under § 405(g) to decide

the claims of the proposed class.

In evaluating the application of the exhaustion

requirement, the Supreme Court has explained that:

the doctrine of administrative exhaustion

should be applied with a regard for the particu-

lar administrative scheme at issue. Exhaustion is

generally required as a matter of preventing

premature interference with agency processes,

so that the agency may function efficiently and

so that it may have an opportunity to correct its

own errors, to afford the parties and the courts

the benefit of its experience and expertise, and

to compile a record which is adequate for judi-

cial review.

Weinberger v. Salfi, 422 U.S. 749, 765, 95 S.Ct. 2457,

2466-67, 45 L.Ed. 2d 522 (1975) (citations omitted). The

court further noted that the exhaustion requirement is

“something more than a simple codification of the judi-

cially developed doctrine of exhaustion.” Id. at 766, 95

S.Ct. at 2467. The language of § 405(g) itself also supports

the exhaustion requirement by providing that an individ-

ual may obtain judicial review only “after a final decision

of the Secretary made after a hearing to which he was

party.” Interpreting this language, the Court has held that

a final decision is a condition of Congress’s waiver of

sovereign immunity, and thus is “central to the requisite

grant of subject-matter jurisdiction.” Salfi, 422 U.S. at 764,

95 S.Ct. at 2466. The Social Security Act does not define

“final decision,” leaving it to the Secretary to specify

what constitutes the “final decision” which terminates

the administrative process and triggers the right to judi-

cial review. Id. at 766 & n. 9, 95 S.Ct. at 2467 & n. 9. The

i a ae ern crneeee

A-33

Secretary in turn “has provided that a ‘final decision’ is

rendered ona ... claim only after the individual claim-

ant has pressed his claim through all designated levels of

administrative review.” Heckler v. Ringer, 466 U.S. 602,

606, 104 S.Ct.2013, 2017, 80 L.Ed.2d 622 (1984) (interpret-

ing “final decision” for Medicare claims); Salfi, 422 U.S. at

765, 95 S.Ct. at 2466-67 (interpreting finality under

§ 405(g)). The Supreme Court has also held that in class

actions where jurisdiction is based on § 405(g), a class

ordinarily may be certified only to the extent that each of

its members individually satisfies all jurisdictional

requirements, including the final decision requirement.

Salfi, 422 U.S. at 764, 95 S.Ct. at 2466 (discussing jurisdic-

tional requirements for a class under § 405(g)); cf. Califano

v. Yamasaki, 442 U.S. 682, 701, 703, 99 S.Ct. 2545, 2557-58,

2558-59, 61 L.Ed.2d 176 (1979) (involving certification of a

class action under 42 U.S.C. § 405(g)). Moreover, the

Supreme Court has specifically held that where the plain-

tiffs have fulfilled the nonwaivable requirement of pre-

senting a claim for benefits, but have failed to satisfy the

exhaustion requirement, the action should be dismissed

under § 405(g). Ringer, 466 U.S. at 617-19, 104 S.Ct. at

2022-24.

Despite the general requirement of exhaustion, the

Supreme Court has recognized that exhaustion may be

waived in certain rare circumstances. The plaintiffs rely

on Bowen v. City of New York, 476 U.S. 467, 106 S.Ct. 2022,

90 L.Ed.2d 462 (1986), as controlling authority on the

question of whether this court shouid waive the

A-34

exhaustion requirement.® In City of New York, the plain-

tiffs brought a class action seeking relief on behalf of all

individuals residing in New York who had, within a

specified time period, been denied disability benefits or

whose benefits had been terminated pursuant to an

allegedly illegal and secret internal policy of the Secre-

tary. Id. at 473, 106 S.Ct. at 2026. The Court waived

exhaustion on the basis of the “unique circumstances”

presented in City of New York, specifically “a systemwide,

unrevealed policy that was inconsistent in critically

important ways with established regulation” and was

nevertheless being used to evaluate an entire class of

claims. Id. at 485, 106 S.Ct. at 2032. The Court waived

exhaustion for currently pending claims because

“[mJembers of the class could not attack a policy they

could not be aware existed”, and thus it would be unfair

* Plaintiffs also cite a number of lower court decisions

which have excused the exhaustion requirement. See, e.g., Wilk-

erson v. Bowen, 828 F.2d 117, 121-22 (3rd Cir.1987); Polaski v.

Heckler, 751 F.2d 943, 951-52 (8th Cir.1984). However, with one

exception, none of the cases involve the key admission made by

the plaintiffs in the present case that exhaustion of administra-

tive remedies would remove the errors of which plaintiffs com-

plaint. The one exception, Jones v. Califano, 576 F.2d 12 (2d

Cir.1978), is easily distinguished from the present case. First, it

predates the now controlling City of New York case. Moreover,

Jones involved one disputed issue of Statutory construction and

the Secretary’s interpretation had already been judged incorrect

by both the Appeals Council of the Social Security Administra-

tion and a federal court. Id. at 17,20-21. In contrast, the present

case does not involve only one issue of Statutory interpretation.

Moreover, there has been no ruling on the merits which has been

adverse to the Secretary; indeed, the Third Circuit recently

upheld § 12.09 in Petition of Sullivan, 904 F.2d 826, 845 (3rd

Cir.1990).

A-35

to penalize the claimants for not exhausting their admin-

istrative remedies under the circumstances. Id. at 482, 106

S.Ct. at 2031 (citation omitted). Moreover, “under these

unique circumstances, there was nothing to be gained

from permitting the compilation of a detailed factual

record, or from agency expertise.” Id. The Supreme Court

specifically distinguished the City of New York claimants

from those persons “arguing merely that an agency incor-

rectly applied its regulation.” Id. The Supreme Court also

emphasized that even in situations where the court has

found a legally incorrect policy, such a finding still would

not necessarily justify a waiver of the exhaustion require-

ment. The Court expressly stated that it did not “suggest

that every internal policy that is . . . inconsistent with

legal requirements” and “touches upon the outcome of a

class of cases” would justify “excusing exhaustion”. Id. at

487, 106 S.Ct. at 2033-34. In City of New Ycrk, the Supreme

Court has thus required a very high standard to excuse

exhaustion, emphasizing that exhaustion “is the rule in

the vast majority of cases.” Id. at 486, 106 S.Ct. at 2033.

In the present case the policies challenged by the

plaintiffs clearly are not secret. The Secretary’s standards

for evaluating alcoholism and substance addiction claims

are published in Social Security Ruling 82-60 and in

§ 12.09 of the listing of impairments. 20 C.F.R. Part 404,

Subpart P, Appendix 1 (1989). The plaintiffs aliege the

incorrect handling of disability claims based on alcohol-

ism or drug dependence in the first two stages of the

administrative process, but they do not allege a secret

policy and thus, a central premise of the City of New York

A-36

holding is absent.” Moreover, the plaintiffs admit that in

the present case, unlike City of New York, there is no

systemwide problem in the appeals procedure, conceding

that any alleged errors at the first two levels of the

administrative process are corrected by appeal to admin-

istrative law judges.

The present plaintiffs also allege no policy which is

inconsistent with statute or regulations, but instead claim

that the DDS denial of benefits at the first two stages of

the administrative process is improper because it con-

flicts with a 1977 Eighth Circuit case, Adams v. Weinberger,

548 F.2d 239 (8th Cir.1977). In discussing the difficulty of

analyzing claims of disability based on alcoholism, the

Adams court noted that when evaluating such a claim,

“the emphasis should be placed on whether the claimant

is addicted to alcohol and as a consequence has lost the

voluntary ability to control its use.” Id. at 244 (citations

omitted). The plaintiffs argue that this language sets up

an additional standard which the Secretary must use in

step three of the five-step analysis when evaluating dis-

ability based on alcoholism or drug dependency, a stan-

dard that is equivalent to the other nine § 12.09 listings.

7? Cf. Pittston Coal Group v. Sebben, 488 U.S. 105, 109 S.Ct.

414, 102 L.Ed.2d 408 (1988). In Pittston, the Supreme Court

refused to excuse the limitations period for seeking review by

simply nothing that, unlike Bowen v. City of New York, “the

agency action here was no taken pursuant to a secret internal

policy, but under a regulation that was published for all to see.”

Id. at 123, 109 S.Ct. at 425. See also Petition of Sullivan, 904 F.2d

826, 833 n. 7 (3rd Cir.1990) (noting that a “secret policy permits

tolling of the time in which to seek judicial review of a denial of

benefits”).

A-37

See 20 C.F.R. Part 404, Subpart P, Appendix 1 (1989). The

plaintiffs contend that the DDS, during the initial and

Reconsideration Stages of the appeals process, does not

apply this additional, allegedly mandatory, standard

when reaching step three of the disability analysis, and

therefore improperly denies or terminates benefits. Under

step three of the five-step evaluation process, however,

the Secretary does not automatically award disability

benefits whenever a claimant evidences a lack of control

over drinking or drug use, but rather goes on to consider

whether the claimant, under the totality of circumstances,

is unable to engage in substantial gainful employment.

See Sullivan, 904 F.2d at 845. The plaintiffs essentially

argue that Adams establishes a per se disability test, that

is, the disability inquiry should end at step three of the

evaluation process on the mere diagnosis of alcoholism.

Thus, persons claiming alcoholism or other substance

abuse as a disability would not be required to show that

their impairments were severe enough to preclude sub-

stantial work. Interpreting Adams in this fashion, how-

ever, contradicts congressional intent to limit disability

benefits under the Social Security Act to only those per-

sons who are unable to perform substantial gainful activ-

ity. See 20 C.F.R. §§ 404.1520(a) & (b), 416.920(a) & (b)

(1989).

The plaintiffs’ interpretation of Adams is also ques-

tionable for a number of other reasons. The Adams lan-

guage on which plaintiffs rely was written in response to

an AL)’s finding that Adams could “cure” his disability

merely by stopping his drinking. The ALJ thus deter-

mined that Adams was not disabled, relying on a social

A-38

security regulation which stated that remediable condi-

tions could not be disabling. The Eighth Circuit noted

that courts should focus on whether a claimant possesses

the voluntary ability to stop drinking when determining

whether his or her alcoholism was a remediable condi-

tion. Contrary to plaintiffs’ clairs, the Adams court was

not thereby announcing a new standard for evaluating

alcoholism as a disability. The Adams court never sug-

gested that it was establishing an additional disability

standard, but rather indicated that it was merely constru-

ing the disability regulations in effect in 1977.8 548 F.2d at

242-44. Adams thus merely interpreted the then-existing

social security regulations, it did not seek to impose an

additional standard when a claimant alleged disability

because of alcoholism or drug dependency. Cf. Heckler v.

Campbell. 461, U.S. 458, 466, 103 S.Ct. at 1952, 1956-57, 76

L.Ed.2d 66 (1983) (holding that where a social security

Statute expressly delegates to the Secretary the respon-

sibility for implementing a provision, the court’s review

is limited to determining whether the resulting regulation

® The regulations interpreted by the Adams court have since

been replaced by the nine categories in § 12.09 of the current

Social Securities regulations. The plaintiffs in the present case

assert that § 12.09 is the Social Security Administration’s current

policy and that it conflicts with Adams. In Petition of Sullivan, the

Third Circuit examined the current policy under § 12.09 and

held that it did not violate prior court of appeals’ decisions. 904

F.2d 826, 844-47 (3rd Cir.1990). Specifically, the Third Circuit

found that the current policy does not violate either McShea v.

Schweiker, 700 F.2d 117, (3rd Cir.1983), or Purter v. Heckler, 771

F.2d 682 (3rd Cir.1985), two cases on which the current plaintiffs

rely. Id. at 844-45. The Third Circuit further held that the § 12.09

listings do not violate the Social Security Act. Id. at 847.

a i i Na tee a eS

A-39

exceeded the Secretary’s statutory authority and whether

the regulation is arbitrary and capricious). Nothing in the

Adams decision states that the standard set forth in that

case must be specifically incorporated by the Secretary at

the listing stage, step three of the five-step evaluation

procedure. The plaintiffs’ contention that the Adams stan-

dard is the equivalent of a § 12.09 listing is thus unsup-

ported by any language in Adams.

The plaintiffs’ interpretation of Adams also ignores

language in Adams, as well language in subsequent

Eighth Circuit decisions, which provides that in addition

to considering the issues of addiction and the voluntary

ability to control substance use, the Secretary’s evaluation

of an alcoholism claim must also include an inquiry into

whether the claimant's disability is “the kind of disability

with which the [Social Security] Act is intended to deal.”

Adams, 548 F.2d at 245 (citations omitted); Cruse v. Bowen,

867 F.2d 1183, 1186 (8th Cir. 1989) (noting that “the mere

presence of alcoholism is not necessarily disabling”); Met-

calf v. Heckler, 800 F.2d 793, 796 (8th Cir.1986) (citing

Adams for the proposition that “in order to establish a

disability predicated on alcoholism, the claimant must

show: (1) that he has lost self-control to the point of being

‘impotent to seek and use means of rehabilitation,’ and

(2) that his disability is encompassed by the [Social Secu-

rity] Act”). Disability under the Act requires both the

presence of a medical impairment and the inability by

reason of that impairment to perform any substantial

gainful activity. 42 U.S.C. §§ 423(d)(1)(A), 1382c(a)(3)(A).

to the extent that plaintiffs interpret Adams to mandate a

finding of disability without further consideration of the

effects of alcoholism on a claimant’s ability to work, their

A-40

interpretation is contrary to the plain language of the

social security statute.? Adams also does not support such

an interpretation; on the contrary, it acknowledges that a

claimant's alcoholism must be “the kind of disability with

which the Act is intended to deal.” Adams, 548 F.2d at 245.

The plaintiffs’ interpretation of Adams thus seeks to estab-

lish a standard that is unsupported by Adams and by

subsequent Eighth Circuit case law.

The plaintiffs in the present case, unlike those in City

of New York, allege no secret agency policy, relying

instead on a questionable interpretation of the Adams

case. In addition to the presence of a secret policy, the

Supreme Court in City of New York, also considered three

other factors when determining whether exhaustion

should be waived: (1) whether the claim for which

exhaustion is sought is entirely collateral to the claim for

benefits; (2) whether class members would be irreparably

injured if required to exhaust their administrative

remedies; and (3) whether completing the administrative

appeals process would serve the purposes underlying the

exhaustion requirement, specifically that “because of the

9 In Petition of Sullivan, the Third Circuit specifically

rejected an argument identical to the plaintiffs’, emphasizing

that:

Not all persons whose abuse of alcohol has pro-

gressed to the point that they are unable to control

their drinking are incapable of any gainful employ-

ment. Common medical understanding does not

Square with an assumption that every person who

meets the clinical definition of alcoholism, and is thus

unable to control his drinking, is ipso facto unable to

perform any gainful activity.

904 F.2d 826, 845 (3rd Cir.1990) (emphasis in original).

A-41

agency’s expertise in administering its own regulations, -

the agency ordinarily should be given the opportunity to

review application of those regulations to a particular

factual context”. 467 U.S. at 483-85, 106 S.Ct. at 2031-33.

These additional factors will be examined to determine if

exhaustion should be waived in the present case.

In City of New York, the Court considered whether the

claim raised by the plaintiffs was entirely collateral to

their claim for benefits, reasoning that waiver of exhaus-

tion would be indicated in cases where the claims raised

were entirely collateral to the plaintiffs’ claims for bene-

fits. Id. at 483, 106 S.Ct. at 2031-32 (quoting Mathews v.

Eldridge, 424 U.S. 319, 330, 96 S.Ct. 893, 990, 47 L.Ed.2d 18

(1976)). In City of New York, the plaintiffs sought to vindi-

cate a separate procedural right, the right to have their

claims decided accordingly to the Secretary’s published

criteria rather than the secret policy which they alleged

was being used. Id. at 482-83, 106 S.Ct. at 2031-32. Sim-

ilarly, in Mathews v. Eldridge, the claimant challenged a

procedural rule which provided a hearing only after a

person’s benefits had been terminated. 424 U.S. at 324-26,

96 S.Ct. at 897-99. Eldridge, however, did not challenge

the merits of the termination of his benefits, only the

adequacy of the termination process used. The Supreme

Court waived exhaustion because Eldridge’s challenge to

the hearing procedure was entirely collateral to his claim

for benefits. Id. at 330-31, 96 S.Ct. at 900-01.

In the present case, however, this factor does not

justify the waiver of exhaustion because the present

plaintiffs’ claims are not collateral to their claims for

benefits. The plaintiffs contend that persons who lack the

ability to voluntarily control their drinking are, on the

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basis of Adams, entitled to a presumption of disability in

step three of the evaluation process without reference to

the listings under § 12.09. The plaintiffs thus are not

merely asking for a pretermination hearing (as in

Eldridge) or challenging the failure to adhere to published

regulations (as in City of New York), they instead challenge

the Secretary’s substantive standards governing the enti-

tlement to benefits. The Supreme Court has already held

in Heckler v. Ringer that such claims are not collateral, but

rather are inextricably intertwined with a respondent’s

claim for benefits. 466 U.S. 602, 614, 104 S.Ct. 2013, 2021,

80 L.Ed.2d 622 (1984); Smith v. Schweiker, 709 F.2d 777 (2d

Cir. 1983). In Smith v. Schweiker, the Second Circuit

explained in similar circumstances that:

The claims raised in this action are hardly collat-

eral to the demand for benefits. Unlike Eldridge,

who was asserting a right to a particular kind of

procedure to which he was not entitled under

the Secretary’s .egulations, the plaintiffs here

claim only that, depending on the evidence

adduced, an illegal termination of their benefits

may result from the application of the Secre-

tary’s test for current disability.

Id. at 780. The present case also fails to raise claims that

are entirely collateral to the claims for benefits, and thus

under City of New York, the absence of this factor argues

against waiver of the exhaustion requirement.

The plaintiffs in the present case also fail to demon-

Strate irreparable harm, another factor considered by the

Court when waiving exhaustion in City of New York, 476

U.S. at 483-84, 106 S.Ct. at 2031-32. In excusing exhaus-

tion the Court heavily relied—upon the district court’s

A-43

finding that the City of New York class members would

suffer irreparable harm, not merely because their benefits

would be denied, but because the class of plaintiffs as

defined had severe mental disturbances, and requiring

them to exhaust their administrative remedies could trig-

ger severe medical setbacks. Id. The Court further noted

that many of the City of New York plaintiffs did have to be

hospitalized because of the trauma resulting from the

wrongful termination of their disability benefits. Id. at

484, 106 S.Ct. at 2032. In contrast, the plaintiffs in the

present case do not allege that benefits would be denied

throughout the administrative process, admitting that

any alleged errors in the process are corrected at the ALJ

stage. The plaintiffs also do not demonstrate that

exhausting the administrative process would itself cause

irreparable harm to any class members. Unlike the class

members in City of New York, the members of the pro-

posed class in the present case are no different than any

other claimant who has been denied benefits at the initial

stages of the administrative process. Moreover, in estab-

lishing a multi-tiered review process, Congress impliedly

determined that a retroactive award of benefits at a later

administrative stage is a fully adequate remedy to any

injury stemming from an incorrect denial of benefits at an

earlier administrative stage. See, e.g., Ringer, 466 U.S. at

627, 104 S.Ct. at 2028 (reasoning that “Congress must

have felt that cases of individual hardship resulting from

delays in the administrative process had to be balanced

against the potential for overly casual or premature judi-

cial intervention in an administrative system that pro-

cesses literally millions of claims every year”). The

plaintiffs also fail to demonstrate that any delay resulting

A-44

from the exhaustion requirement has actually harmed any

of the named plaintiffs. Indeed, the plaintiffs’ delay in

filing this lawsuit belies any claims of irreparable harm

stemming from the delay imposed by the administrative

process. Thus, the absence of any irreparable injury also

undercuts the plaintiffs’ request that exhaustion be

waived.

The final factor examined by the Court in City of New

York was whether completing the administrative process

would serve the purposes underlying the exhaustion

requirement. 476 U.S. at 484-85, 106 S.Ct. at 2032-33. As

the Supreme Court emphasized in Weinberger v. Salfi, 422

U.S. 749, 95 S.Ct. 2457, 45 L.Ed.2d 522 (1975), the exhaus-

tion requirement is intended to prevent “premature inter-

ference with agency processes” so that:

the agency may function efficiently and so that

it may have an opportunity to correct its own

errors, to afford the parties and the courts the

benefit of its experience and expertise, and to

compile a record which is adequate for judicial

review.

Id. at 765, 95 S.Ct. at 2466-67 (citations omitted). All of the

justifications for requiring exhaustion are present in this

case. In sharp contrast to City of New York, the plaintiffs in

the present case openly concede that exhaustion will

remove the alleged errors in the administrative process.

Moreover, the complexity of alcoholism and drug addic-

tion also supports the exhaustion requirement by allow-

ing the administrative process to proceed on a case-by-

case basis to determine whether a particular claimant has

the ability to control nis or her drinking or drug abuse,

and if not, whether the person can nevertheless perform

0 te!

A-45

any substantial gainful activity.!° See Sullivan, 904 F.2d at

845. Exhaustion also permits the agency to compile a

10 The Supreme Court has acknowledged the complexity of

alcoholism. In Traynor v. Turnage, 485 U.S. 535, 108 S.Ct. 1372, 99

L.Ed.2d 618 (1988), the Supreme Court sustained the validity of

a Veterans Administration regulation which classified all forms

of aicoholism as “willful misconduct”, except for alcoholism

that was “secondary to and a manifestation of an acquired

psychiatric disorder.” Id. at 538 n. 2, 550-52, 108 S.Ct. at 1376 n.

2, 1382-84. The Court noted that whether alcoholism “is a dis-

ease whose course its victims cannot control” is a “medical issue

on which the authorities remain sharply divided.” Id. at 552, 108

S.Ct. at 1383. See generally, Fingarett, The Perils of Powell: In

Search of a Factual Foundation for the “Disease Concept of Alcohol-

ism,” 83 Harv.L.Rev. 793, 802-08 (1970) (discussing the contro-

versy regarding the nature of alcoholism).

A survey of current literature also demonstrates the contro-

versy regarding the nature of alcoholism and other forms of

substance addiction. See, e.g., N. Heather & I. Robertson, Prob-

lem Drinking (2d ed. 1989) (discussing the various theories

regarding alcoholism, and arguing that problem drinking is not

a disease but rather a social psychological response to various

environmental stimuli); J. Beasley, Wrong Diagnosis, Wrong Treat-

ment: The Plight of the Alcoholic in America (1987) (arguing that

alcoholism results from an inherited biochemical difference

which should be treated by stabilizing an individual’s nervous

system through nutrition and exercise); Constructive Drinking

(M. Douglas ed. 1987) (examining alcohol use from an anthro-

pological perspective); Psychological Theories of Drinking and

Alcoholism (H. Blane & K. Leonard ed. 1987) (detailing nine

theories of alcoholism, including such theories as the social

learning theory, the tension reduction theory, and the interac-

tional theory).

Minnesota is a leader in chemical dependency treatment. As

of 1989, Minnesota treatment programs were admitting 40,000

people per year. The Minnesota Consolidated Chemical Depen-

dency Treatment Fund pays for treatment of 16,000 of these

people, and is being viewed as a national model for publicly

A-46

complete record and provides the agency with a full

opportunity to exercise its judgment and expertise to

evaluate such claims and correct any errors in the admin-

istrative process.!! Therefore, the purposes underlying

the exhaustion requirement will not be served if exhaus-

tion is waived in the present case.

Based on the foregoing analysis, it is obvious that

none of the unique circumstances which warranted the

waiver of exhaustion in City of New York is present in this

case. The plaintiffs do not challenge any secret policies

which are inconsistent with published regulations. They

funded chemical dependency treatment. Chemical Dependency

Program Division, Department of Human Services of the State

of Minnesota, Biennial Report 46 (1989). Minnesota has also been

a leader in curbing the spread of AIDS among intravenous drug

abusers. Id. Minnesota state agencies currently spend a total of

63.5 million dollars a year on alcohol and drug related pro-

grams. Id.

In 1989, Minnesota conducted and funded a household sur-

vey of drug and alcohol use among adults (age 18 and over)

living in Minnesota. The survey was designed to provide cur-

rent information regarding the extent of substance use in Min-

nesota, how that use compares with national figures, and how

use varies by region, sex, and race. Chemical Dependency Pro-

gram Division, Minnesota Department of Human Services, Min-

nesota Household Survey of Drug and Alcohol Use Among Adults,

Report No. 1 (1989).

"! Ironically, the plaintiffs ciaim that waiver of exhaustion

is required in the present case because “they seek declaratory

and injunctive relief requiring the defendants to develop the

evidence of their impairments fully and adequately... . ”

Instead of supporting the requested waiver, this assertion pro-

vides further evidence that plaintiffs should be required to

exhaust their administrative remedies to permit the agency to

compile a complete record.

A-47

also fail to prove that they would suffer irreparable harm

if required to exhaust their administrative remedies. They

raise claims which are not entirely collateral, but are

inextricably intertwined with their claims for benefits.

Finally, the policies which support the exhaustion

requirement would be served if the plaintiffs were

required to proceed to the third and fourth levels of the

administrative process. The plaintiffs essentially claim

that exhaustion of administrative remedies should be

waived because if exhaustion were required, persons

with possibly meritorious claims would be forced to pur-

sue their administrative appeals, would obtain benefits,

and would have no basis for complaint. This claim is

insufficient to support the requested waiver and thus the

court determines that the plaintiffs must exhaust their

administrative remedies. As a result, there is no basis for

jurisdiction pursuant to § 405(g).

B. Plaintiffs’ Assertion That This Court Has Jurisdiction

Pursuant to 28 U.S.C. § 1361

Under 28 U.S.C. § 1361:

The district courts shall have original jurisdic-

tion of any action in the nature of mandamus to

compel an officer or employee of the United

States or any agency thereof to perform a duty

owed to the plaintiff.

The plaintiffs claim that this section provides an alterna-

tive basis for jurisdiction over their claims. The Supreme

Court, however, specifically rejected this argument in

Heckler v. Ringer, 466 U.S. 602, 616-17, 104 S.Ct. 2013,

2022-23, 80 L.Ed.2d 622 (1984). In rejecting this alternative

A-48

basis for jurisdiction, the Court noted that “[t]he com-

mon-law writ of mandamus, as codified in 28 U.S.C.

§ 1361, is intended to provide a remedy for a plaintiff

only if he has exhausted all other avenues of relief and

only if the defendant owes him a clear nondiscretionary

duty.” Id. at 616, 104 S.Ct. at 2022. (citations omitted). The

Court then held that § 205(g) [sic] of the Social Security

Act clearly provides claimants with an adequate remedy

for challenging all aspects of the Secretary’s denial of

their claims, and thus, mandamus was not available as an

alternative basis for jurisdiction. Id. at 617, 104 S.Ct. at

2022-23. Following Ringer, this court has no jurisdiction

over plaintiffs’ claims under § 1361.

C. Plaintiffs’ Claim That Federal Question Jurisdiction Pro-

vides an Alternative Basis for Jurisdiction

The plaintiffs also claim that this court has jurisdic-

tion over their constitutional claims against Secretary

Sullivan under 28 U.S.C. § 1331, which states that:

The district courts shall have original jurisdic-

tion of all civil actions arising under the Consti-

tution, laws, or treaties of the United States.

The plaintiffs further assert that this court has jurisdic-

tion over their claims against the state officials, pursuant

to 28 U.S.C. §§ 1331 and 1343(a)(3). Under § 1343:

(a) The district court shall have original juris-

diction of any civil action authorized by

law to be commenced against any person:

(3) To redress the deprivation, under

color of any State law, statute, ordinance,

A-49

regulation, custom or usage, of any right,

privilege or immunity secured by the Con-

stitution of the United States or by any Act

of Congress providing for equal rights of

citizens or of all persons within the juris-

diction of the United States .. .

The plaintiffs’ attempt to maintain their suit on the basis

of federal question jurisdiction, however, is barred by the

provisions of the Social Security Act itself. As the

Supreme Court noted in Weinberger v. Salfi, 42 U.S.C.

§ 405(h) expressly provides that:

No action against the United States, the Secre-

tary, or any officer or employee thereof shall be

brought under [28 U.S.C. § 1331 et seq.] to

recover on any claim arising under [Title II of

the Social Security Act].

Weinberger v. Salfi, 422 U.S. at 756, 95 S.Ct. at 2462 (citing

Statute) (brackets in the original). The language of

§ 405(h) indicates that this jurisdictional bar is more than

a codified requirement of administrative exhaustion,

because it “states that no action shall be brought under

§ 1331, not merely that only those actions shall be

brought in which administrative remedies have been

exhausted.” Id. at 757, 95 S.Ct. at 2463. The wording of

§ 405(h), thus “bars district court federal-question juris-

diction over suits, such as this one, which seek to recover

Social Security benefits.” Id. at 756-57, 95 S.Ct. at 2462-63.

Following this analysis, this court has no federal question

jurisdiction over the plaintiffs’ claims.

CONCLUSION

Based on the foregoing analysis, this court has no

federal question jurisdiction over the plaintiffs’ claims.

A-50

Salfi, 422 U.S. at 756-57, 95 S.Ct. at 2462-63. The court also

has no jurisdiction pursuant to 28 U.S.C. § 1361 because

no writ of mandamus could properly issue in this case.

Ringer, 466 U.S. at 616, 104 S.Ct. at 2022. The court also

determines that waiver of exhaustion is not appropriate,

thus this court has no jurisdiction pursuant to 42 U.S.C.

§ 405(g). The court therefore grants the defendants’

motion for summary judgment.

Based on the foregoing analysis, IT IS HEREBY

ORDERED that:

1. Plaintiffs’ motion for class certification is denied

as moot;

2. Defendants’ motion for summary judgment is

granted;

3. Defendants’ motion to dismiss plaintiffs’ claim

for lack of subject matter jurisdiction or for failure to

State a claim upon which relief can be granted is denied

as moot;

4. Defendants’ appeal from the magistrate’s order

granting plaintiffs’ motion to compel responses to certain

deposition questions is denied as moot; and

5. Defendants Roers’ and Samargia’s appeal of the

magistrate’s order requiring R. Dougherty to answer cer-

tain deposition questions is denied as moot.

LET JUDGMENT BE ENTERED ACCORDINGLY.

SS Sy Se Ne de!

A-51

FEDERAL STATUTES

42 U.S.C. § 405(g) provides:

Any individual, after any final decision of

the Secretary made after a hearing to which he

was a party, irrespective of the amount in con-

troversy, may obtain a review of such decision

by a civil action commenced within sixty days

after the mailing to him of notice of such deci-

sion or such further time as the Secretary may

allow.

——______.

42 U.S.C. § 405(h) provides:

No findings of fact or decision of the Secre-

tary shall be reviewed by any person, tribunal,

or governmental agency except as herein pro-

vided. No action against the United States, the

Secretary, or any officer or employee thereof

shall be brought under section 1331 or 1346 of

Title 28 to recover on any claim arising under

this subchapter.

——______

42 U.S.C. § 421 (a) provides:

(1) In the case of any individual, the deter-

mination of whether or not he is under a disabil-

ity (as defined in section 416(i) or 423(d) of this

title) and of the day such disability began, and

the determination of the day on which such

disability ceases, shall be made by a State

agency, notwithstanding any other provision of

A-52

law, in any State that notifies the Secretary in

writing that it wishes to make such disability

determinations commencing with such month as

the Secretary and the State agree upon, but only

if (A) the Secretary has not found, under subsec-

tion (b)(1) of this section, that the State agency

has substantially failed to make disability deter-

minations in accordance with the applicable

provisions of this section or rules issued there-

under, and (B) the State has not notified the

Secretary, under subsection (b)(2) of this section,

that it does not wish to make such determina-

tions. If the Secretary once makes the finding

described in clause (A) of the preceding sen-

tence, the Secretary may thereafter determine

whether (and, if so, beginning with which

month and under what conditions) the State

may again make disability determinations under

this paragraph.

(2) The disability determinations

described in paragraph (1) made by a State

agency shall be made in accordance with the

pertinent provisions of this subchapter and the

standards and criteria contained in regulations

or other written guidelines of the Secretary per-

taining to matters such as disability determina-

tions, the class or classes of individuals with

respect to which a State may make disability

determinations (if it does not wish to do so with

respect to all individuals in the State), and the

conditions under which it may choose not to

make all such determinations. In addition, the

Secretary shall promulgate regulations specify-

ing, in such detail as he deems appropriate,

performance standards and administrative

requirements and procedures to be followed in

A-53

performing the disability determination func-

tion in order to assure effective and uniform

administration of the disability insurance pro-

gram throughout the United States. The regula-

tions may, for example, specify matters such as -

(A) the administrative structure and

the relationship between various units of

the State agency responsible for disability

determinations,

(B) the physical location of and rela-

tionship among agency staff units, and

other individuals or organizations perform-

ing tasks for the State agency, and standards

for the availability to applicants and bene-

ficiaries of facilities for making disability

determinations,

including the rate of accuracy of decisions,

the time periods within which determina-

tions must be made, the procedures for and

the scope of review by the Secretary, and, as

he finds appropriate, by the State, of its

performance in individual cases and in

classes of cases, and rules governing access

of appropriate Federal officials to State

offices and to State records relating to its

administration of the disability determina-

tion function,

(D) fiscal control procedures that the

State agency may be required to adopt, and

(E) the submission of reports and

other data, in such form and at such time as

the Secretary may require concerning the

State agency’s activities relating to the dis-

ability determination.

A-54

Nothing in this section shall be construed to

authorize the Secretary to take any action except

pursuant to law or to regulations promulgated

pursuant to law.

42 U.S.C. § 421(c) provides:

(1) The Secretary may on his own motion

Or as required under paragraphs (2) and (3)

review a determination, made by a State agency

under this section, that an individual is or is not

under a disability (as defined in section 416(i) or

423(d) of this title) and, as a result of such

review, may modify such agency’s determina-

tion and determine that such individual either is

or is not under a disability (as so defined) or

that such individual's disability began on a day

earlier or later than that determined by such

agency, or that such disability ceased on a day

earlier or later than that determination by such

agency.

(2) The Secretary (in accordance with para-

graph (3)) shall review determinations, made by

State agencies pursuant to this section, that indi-

viduals are under disabilities (as defined in sec-

tion 416(i) or 423(d) of this title). Any review by

the Secretary of a State agency determination

under this paragraph shall be made before any

action is taken to implement such determina-

tion.

(3)(A) In carrying out the Provisions of

paragraph (2) with respect to the review of

determinations made by State agencies pursuant

A-55

to this section that individuals are under disabil-

ities (as defined in section 416(i) or 423(d) of this

title), the Secretary shall review —

(i) at least 50 percent of all such deter-

minations made by State agencies on appli-

cations for benefits under this subchapter,

and

(ii) other determinations made by

State agencies pursuant to this section to the

extent necessary to assure a high level of

accuracy in such other determinations.

(B) In conducting reviews pursuant to sub-

paragraph (A), the Secretary shall, to the extent

feasible, select for review those determinations

which the Secretary identifies as being the most

likely to be incorrect.

_———

42 U.S.C. § 421(d) provides:

Any individual dissatisfied with any determina-

tion under subsection (a), (b), (c), or (g) of this

section shall be entitled to a hearing thereon by

the Secretary to the same extent as is provided

in section 405(b) of this title with respect to

decisions of the Secretary, and to judicial review

of the Secretary’s final decision after such hear-

ing as is provided in section 405(g) of this title.

A-56

42 U.S.C. § 421(e) provides:

(e) State’s right to cost from Trust funds

Each State which is making disability deter-

minations under subsection (a)(1) of this section

shall be entitled to receive from the Trust Funds,

in advance or by way of reimbursement, as

determined by the Secretary, the cost to the State

of making disability determinations under sub-

section (a)(1) of this section. The Secretary shall

from time to time certify such amount as is

necessary for this purpose to the Managing

Trustee, reduced or increased, as the case may

be, by any sum (for which adjustment here-

under has not previously been made) by which

the amount certified for any prior period was

greater or less than the amount which should

have been paid to the Sate under this subsection

for such period; and the Managing Trustee,

prior to audit or settlement by the General

Accounting Office, shall make payment from the

Trust Funds at the time or times fixed by the

Secretary, in accordance with such certification.

Appropriate adjustments between the Federal

Old-Age and Survivors Insurance Trust Fund

and the Federal Disability Insurance Trust Fund

with respect to the payments made under this

subsection shall be made in accordance with

paragraph (1) of subsection (g) of section 401 of

this title (but taking into account any refunds

under subsection (f) of this section) to insure

that the Federal Disability Insurance Trust Fund

is charged with all expenses incurred which are

attributable to the administration ot section 423

of this title and the Federal Old-Age and

a ae

A-57

Survivors Insurance Trust Fund is charged with

all other expenses.

—_—_—_

42 U.S.C. § 421(k) provides:

(1) The Secretary shall establish by regula-

tion uniform standards which shall be applied at

all levels of determination, review, and adjudi-

cation in determining whether individuals are

under disabilities as defined in section 416(i) or

423(d) of this title.

(2) Regulations promulgated under para-

graph (1) shall be subject to the rulemaking

procedures established under section 553 of

Title 5.

42 U.S.C. § 1983 provides:

Every person who, under color of any statute,

ordinance, regulation, custom, or usage, of any

State or Territory or the District of Columbia,

subjects, or causes to be subjected, any citizen of

the United States of other person within the

jurisdiction thereof to the deprivation of any

right, privileges, or immunities secured by the

Constitution and laws, shall be liable to the

party injured in an action at law, suit in equity,

or other proper proceeding for redress. For the

purposes of this section, any Act of Congress

application exclusively to the District of Colum-

bia shall be considered to be a statute of the

District of Columbia.

A-58

FEDERAL REGULATIONS

20 C.F.R. §§ 404.1626 and 416.1026 are identical in sub-

stance and provide:

(a) We will give the Staie funds, in

advance or by way of reimbursement, for neces-

sary costs in making disability determinations

under these regulations. Necessary costs are

direct as well as indirect costs as defined in 41

C.F.R. part 1-15, subpart 1-15.7 of the Federal

Procurement Regulations System for costs

incurred before April 1, 1984; and 48 C.F.R. part

31, subpart 31.6 of the Federal Acquisition Reg-

ulations System and Federal Management Circu-

lar A-74-4 as amended or superseded for costs

incurred after March 31, 1984.

(b) The State will submit estimates of

anticipated costs in the form of a buaget at the

time and in the manner we require.

which will be made available to it as well as

what anticipated costs are being approved.

(d) The State may not incur or make

expenditures for items of cost not approved by

us or in excess of the amount we make available

to the State.

(e) After the close of a period for which

funds have been made available to the State, the

State will submit a report of its expenditures.

Based on an audit arranged by the State under

Pub.L. 98-502, the Single Audit Act of 1984, or

by the Inspector General of the Department of

Health and Human Services or based on any

audit or review by the Social Security Adminis-

tration (see § 404.1627), we will determine

A-59

whether the expenditures were consistent with

cost principles described in 41 C.F.R. part 31,

subpart 31.6 and Federal Management Circular

A-741-4 for costs incurred after March 31, 1984:

and in other applicable written guidelines in

effect at the time the expenditures wee [sic]

made or incurred.

(f) Any monies paid to the State which are

used for purposes not within the scope of these

regulations will be paid back to the Treasury of

the United States.

20 C.F.R. §§ 404.1633 and 416.1033 are identical in sub-

stance and provide:

(a) We will provide the State agency with writ-

ten guidelines necessary for it to carry out

its responsibilities in performing the dis-

ability determination function.

(b) The State agency making determinations of

disability will comply with the written

guidelines in the Disability Insurance sec-

tions of the Program Operations Manual

System. This manual will also include cer-

tain policies, procedures, guides and oper-

ating instructions designated as advisory

or discretionary.

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20 C.F.R. §§ 404.1615(g) and 416.1015(g) are identical in

substance and provide:

The State agency will not be responsible for

defending in court any determination made, or

any procedure for making determinations;

under these regulations.

STATE STATUTE

Minn. Stat. § 268A.03(e) (1990) provides:

The commissioner shall:

Maintain a contractual relationship with the

United States as authorized by the Social Secu-

rity Act, as amended. Under this relationship,

the state will undertake to make determinations

referred to in those public laws with respect to

all individuals in Minnesota, or with respect toa

class or classes of individuals in this state that is

designated in the agreement at the state’s

request. It is the purpose of this relationship to

permit the citizens of this state to obtain all

benefits available under federal law.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.