Justiniano v. Soc. Sec. Admin., CIVIL NO. 15-02593 (JAG)

DANIEL JUSTINIANO, et al., Plaintiffs, v. THE SOCIAL SECURITY ADMINISTRATION, et al., Defendants.

CIVIL NO. 15-02593 (JAG)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF PUERTO RICO

August 3, 2016

OPINION AND ORDER

GARCIA-GREGORY, D.J.

Pending before this Court is a Motion to Dismiss for lack of subject matter jurisdiction, or in the alternative, for failure to state a claim, pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6), correspondingly, filed by Defendants, the Social Security Administration and Carolyn W. Colvin—the Commissioner of the Social Security Administration—(collectively "Defendants"). Docket No. 10. Plaintiffs Daniel Justiniano, Francisco Menéndez and Person A (collectively "Plaintiffs") timely opposed. Docket No. 11. Defendants filed a reply. Docket No. 12-1. Plaintiffs' complaint challenges the redetermination process followed by the Social Security Administration (the "Agency") and the Commissioner of the Social Security Administration (the "Commissioner") in order to assess if fraud was involved in their insurance disability benefits application and the subsequent administrative review process. Docket No. 1. The issue before the Court is whether Plaintiffs followed the statutorily mandated administrative procedures of the Social Security Act ("SSA" or "Act") to obtain judicial review. The Court holds that Plaintiffs did not follow the statutorily mandated administrative procedures of the SSA, and thus this Court does not have subject matter jurisdiction over Plaintiffs' claims. Accordingly, the Court GRANTS Defendants' Motion to Dismiss.

BACKGROUND¹

The SSA was amended by The Social Security Independence and Program Improvements Act of 1994, Pub. L. No. 103-296, 108 Stat 1464, to add provisions addressing fraud or similar fault in individuals' applications for benefits. Section 405(u) of the Act, as amended, orders the Commissioner to "immediately redetermine the entitlement of individuals to monthly insurance benefits under [Title II] if there is reason to believe that fraud or similar fault was involved in the application of the individual for such benefits." 42 U.S.C. § 405(u)(1)(A). Moreover, the Agency has "the authority to suspend current benefits after giving proper notice to the beneficiary." HALLEX I-1-3-25 C.2, 2014 WL 2889588.²

In August 2013, the Social Security Administration's Office of the Inspector General (SSA-OIG) and the Federal Bureau of Investigations (FBI) filed criminal charges against Dr. José R. Hernández González, among others, for making false statements or representations to the Agency. Because Dr. Hernández González had provided evidence in Plaintiffs' cases—that was used to find them disabled and entitled to the insurance disability benefits—the Agency notified Plaintiffs of the suspension of their benefits. Thereupon, the Agency initiated a redetermination process pursuant to Section 405(u) of the Act. As a result, Plaintiffs' insurance disabilitybenefits were terminated. Plaintiffs sought reconsideration of the redeterminations, and the Agency affirmed the decisions to terminate their benefits. Consequently, Plaintiffs requested a hearing before an administrative law judge (ALJ). Nevertheless, before such hearing occurred, Plaintiffs filed suit in this Court challenging the redetermination process and the subsequent administrative review process.

STANDARD OF REVIEW

Under Fed. R. Civ. P. 12(b)(1), a defendant may move to dismiss an action for lack of subject matter jurisdiction. As courts of limited jurisdiction, federal courts must narrowly construe jurisdictional grants. See e.g., Alicea-Rivera v. SIMED, 12 F.Supp.2d 243, 245 (D.P.R. 1998). Consequently, the party asserting jurisdiction has the burden of demonstrating the existence of federal jurisdiction. See Murphy v. United States, 45 F.3d 520, 522 (1st Cir. 1995); Droz-Serrano v. Caribbean Records Inc., 270 F.Supp.2d 217 (D.P.R. 2003). When deciding whether to dismiss a complaint for lack of subject matter jurisdiction, the Court "may consider whatever evidence has been submitted, such as depositions and exhibits." See Aversa v. United States, 99 F.3d 1200, 1210 (1st Cir. 1996).

Under Fed. R. Civ. P. 12(b)(6), a defendant may move to dismiss an action for failure to state a claim upon which relief can be granted. In Bell Atl. Corp. v. Twombly, 550 U.S. 544, 569 (2007), it was held that to survive a motion to dismiss under Rule 12(b)(6), a complaint must state enough facts to "nudge [the plaintiff's] claims across the line from conceivable to plausible." Therefore, to preclude dismissal pursuant to Fed. R. Civ. P. 12(b)(6), the complaint must rest on factual allegations sufficient "to raise a right to relief above the speculative level." Id. at 555. At this stage, the Court accepts all well-pleaded factual allegations as true, and draws all reasonable inferences in the plaintiff's favor. See Correa-Martínez v. Arrillaga-Belendez, 903 F.2d 49, 51 (1st Cir. 1988). Thus, the plaintiff bears the burden of stating factual allegations regarding each element necessary to sustain recovery under some actionable theory. Goolev v. Mobil Oil Corp., 851 F.2d 513, 514 (1st Cir. 1988). Courts need not address complaints supported only by "bald assertions, unsupportable conclusions, periphrastic circumlocutions, and the like." Aulson v. Blanchard, 83 F.3d 1, 3 (1st Cir. 1996).

Above all, a district court faced with "motions to dismiss under both Fed. R. Civ. P. 12(b)(1) and 12(b)(6), absent good reason to do otherwise, should ordinarily decide the 12(b)(1) motion first." Ne. Erectors Ass'n of BTEA v. Sec'y of Labor, Occupational Safety & Health Admin., 62 F.3d 37, 39 (1st Cir. 1995) (citing See 5A Charles Wright & Arthur Miller, Federal Practice and Procedure § 1350, at 210 (1990); Bell v. Hood, 327 U.S. 678, 682 (1945)). Motions brought under Rule 12(b)(1) are subject to the same standard of review as Rule 12(b)(6) motions. Negrón-Gaztambide v. Hernández-Torres, 35 F.3d 25, 27 (1st Cir. 1994); Torres Maysonet v. Drillex, S.E., 229 F.Supp.2d 105, 107 (D.P.R. 2002).

ANALYSIS

Pending before this Court is Defendants' Motion to Dismiss Plaintiffs' complaint. Docket No. 10. First, Defendants argue that Plaintiffs' complaint must be dismissed for lack of subject matter jurisdiction. Id. Accordingly, they allege that Plaintiffs have not complied with the statutorily mandated administrative procedures of the SSA, nor does their case fall under an exception to obtain judicial review without complying with such process. Id. Furthermore, Defendants contend that Plaintiffs' request for mandamus relief fails because the necessary pre-requisites for such relief are not met. Id. In the alternative, Defendants assert that Plaintiffs' allegations fail to state a claim upon which relief can be granted, since the regulations that Defendants allegedly violated do not apply to the redetermination process pursuant to Section 405(u) of the SSA, 42 U.S.C. § 405(u), at issue in this case. Id.

In response to Defendants' Motion to Dismiss, Plaintiffs assert that this Court has federal question jurisdiction pursuant to 28 U.S.C. § 1331 because their complaint arises under the Due Process Clause of the U.S. Constitution, and pursuant to the Mandamus Statute, 28 U.S.C. § 1361.³ Docket No. 11. Plaintiffs argue that their complaint does not arise under the SSA, thus it is not subject to its statutorily mandated administrative procedures to obtain judicial review. Id. Plaintiffs admit to initiating the administrative review process. Id. Nevertheless, Plaintiffs' also argue that they were forced to file suit in this Court because exhausting the administrative remedies would have resulted in no review at all of their constitutional claims. Id. With respect to their entitlement to mandamus relief, Plaintiffs state that § 1361 is a valid basis for jurisdiction, but do not show if and how the pre-requisites for such relief are met. Id. On the other hand, Plaintiffs contend that their complaint states a claim upon which relief may be granted because their statutory right to a pre-deprivation hearing, under 42 U.S.C. § 405(b)(2), was denied. Id.

A district court should ordinarily address a 12(b)(1) motion before a 12(b)(6) motion. See De La Cruz v. Irizarry, 946 F. Supp. 2d 244, 249 (D.P.R. 2013) (citations omitted). For that reason,this Court first determines if it has subject matter jurisdiction over Plaintiffs' complaint. In order to do so the following issues are to be resolved: (1) whether Plaintiffs' claims arise under the SSA; if so, (2) whether Plaintiffs' followed the statutorily mandated administrative procedures of the SSA to obtain judicial review; (3) whether Plaintiffs' claims fit under the Illinois Council exception; and (4) whether jurisdiction under the Mandamus Statute, 28 U.S.C. § 1361, is available.

This Court holds that, in light of the relevant provisions and regulations of the SSA along with their interpretation by the Supreme Court, Plaintiffs' claims arise under the SSA. Accordingly, Plaintiffs had to follow the statutorily mandated administrative procedures of the SSA. Their failure to do so, coupled with the fact that their claims do not fit under the Illinois Council exception, leaves this Court without subject matter jurisdiction over the claims they have presented in this suit. Moreover, Plaintiffs have not met the necessary pre-requisites to obtain mandamus relief. Since this Court does not have jurisdiction, we do not consider whether Plaintiffs' complaint states a claim upon which relief can be granted under Fed. R. Civ. P. 12(b)(6). As a result, Plaintiffs' complaint is dismissed.

I. Claims Arising Under The Social Security Act ("SSA" or "Act")

The Court holds that Plaintiffs' complaint arises under the SSA. It has been established that an action arises under the SSA when "both the standing and the substantive basis for the presentation" of the claims is the SSA. See Weinberger v. Salfi, 422 U.S. 749, 760-61 (1975); Heckler...