Montes v. Berryhill

Background

Olga Montes sought review of the Social Security Administration’s final decision denying her applications for Social Security Disability Insurance and Supplemental Security Income benefits. She alleged disability based on severe cervical spinal stenosis, anxiety, depression, chronic migraines, and arthritis.

Administrative Law Judge Vincent Cascio held a hearing on December 21, 2017, at which Montes was represented by counsel. On April 11, 2018, Judge Cascio found that Montes had several severe impairments but retained the ability to perform sedentary work with limitations. Because jobs with those limitations were available in sufficient numbers in the national economy, he found that she was not disabled under the Social Security Act. The Appeals Council denied review on February 21, 2019, making the administrative law judge’s decision the Commissioner’s final decision.

The caption initially named Nancy A. Berryhill, the Acting Commissioner, as the defendant. The court ordered Andrew M. Saul substituted as defendant after he became Commissioner. The case name supplied for this summary is Montes v. Berryhill.

Motions and Arguments

Montes moved for judgment on the pleadings under Federal Rule of Civil Procedure 12(c). She primarily sought a remand for a new hearing before a properly appointed administrative law judge. Alternatively, she asked the court to reverse the benefits decision and award benefits. She also argued that Judge Cascio had made legal and evidentiary errors, including errors involving the treating-physician rule and the determination of her work capacity.

The Commissioner filed a cross-motion for judgment on the pleadings affirming the benefits decision. The Commissioner did not contest the substance of Montes’s argument that Social Security administrative law judges were subject to the Constitution’s Appointments Clause and had not been properly appointed before July 16, 2018. Instead, the Commissioner argued that Montes had forfeited the challenge by failing to raise it during the administrative process.

Appointments Clause Issue

The Appointments Clause governs the appointment of certain federal officers. Relying on the Supreme Court’s decision in Lucia v. Securities and Exchange Commission, Montes argued that Judge Cascio was an inferior officer who had to be appointed consistently with that constitutional provision. The hearing and Judge Cascio’s decision occurred before July 16, 2018, when the Acting Commissioner ratified the appointments of the Social Security Administration’s then-sitting administrative law judges.

The court first concluded that Montes was not required to raise the issue before the Appeals Council. The Supreme Court’s decision in Sims v. Apfel held that a court-created requirement to raise every issue before the Appeals Council was inappropriate. The court then considered the narrower question left open by Sims: whether Montes had to raise the Appointments Clause challenge before Judge Cascio.

The court reviewed conflicting appellate decisions. The Third and Sixth Circuits had held that Social Security claimants do not forfeit an Appointments Clause challenge by failing to raise it during agency proceedings. The Tenth and Eighth Circuits had reached the opposite conclusion. The Second Circuit had not decided the Social Security issue at the time of this opinion.

The court declined to impose a judicially created issue-exhaustion requirement. It reasoned that the Social Security regulations did not clearly tell claimants that they would lose an Appointments Clause challenge by failing to raise it before the administrative law judge. The regulations cited by the Commissioner addressed hearing requests, administrative law judge disqualification for bias or a personal interest, or other hearing procedures; the court found that they did not require claimants to raise a constitutional challenge to the judge’s appointment.

The court also emphasized that Social Security proceedings are informal and non-adversarial, with the administrative law judge responsible for developing the record. In the court’s view, an Appointments Clause challenge does not require the Social Security Administration to apply its specialized expertise. The agency’s guidance in effect when Judge Cascio acted also stated that administrative law judges and the Appeals Council lacked authority to decide such challenges. Requiring Montes to raise the challenge before the agency therefore would have been futile in the circumstances of this case.

Ruling

The court held that Montes had not forfeited her Appointments Clause challenge. Because Judge Cascio conducted the hearing and issued his decision before the relevant appointment ratification, the court concluded that Montes was entitled under Lucia to a new hearing before a different administrative law judge who had been properly appointed.

The court granted Montes’s motion for judgment on the pleadings to the extent it sought remand for that new hearing. It denied the Commissioner’s cross-motion for judgment on the pleadings. The court did not address Montes’s remaining arguments about the treating-physician rule, the work-capacity determination, or whether she was entitled to benefits. The Clerk was directed to enter judgment for Montes directing remand and close both motions.