Vanhorn v. Saul, Civil Action Number 7:19-cv-00528-AKK

JEREMIAH VANHORN, Plaintiff, v. ANDREW SAUL, Commissioner of Social Security, Defendant.

Civil Action Number 7:19-cv-00528-AKK

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ALABAMA WESTERN DIVISION

November 9, 2020

MEMORANDUM OPINION

Jeremiah VanHorn brings this action pursuant to Section 205(g) of the Social Security Act ("the Act"), 42 U.S.C. § 405(g), seeking review of the final adverse decision of the Commissioner of the Social Security Administration ("SSA"). Among other things, VanHorn contends that the Administrative Law Judge ("ALJ") who issued the decision lacked authority to decide his claim because she was not properly appointed pursuant to the Appointments Clause of the Constitution. Doc. 1 at 4. The Commissioner moves for judgment on the pleadings on VanHorn's claim that the ALJ lacked authority to issue her decision, arguing that VanHorn waived the claim by failing to raise it during the administrative process. Doc. 9. After careful review, this court finds that the Commissioner's motion for judgment on the pleadings is due to be granted and that substantial evidence supports the ALJ's decision. Therefore, the decision denying benefits is due to be affirmed.

I.

VanHorn worked as a security guard and correctional officer before he stopped working at age forty due to his alleged disability. See R. 72, 184. Thereafter, VanHorn filed applications for a period of disability and disability insurance benefits and supplemental security income, alleging a disability onset date of October 11, 2015, due to impairments from heart disease and sleep apnea. R. 156-166. The SSA denied VanHorn's applications, R. 86, and VanHorn requested a hearing before an ALJ, R. 93. Following the hearing, the ALJ issued a decision denying VanHorn's claim. R. 7-19. Subsequently, the Appeals Council ("AC") denied VanHorn's request for review, rendering the ALJ's opinion the final decision of the Commissioner. R. 1, 152; see 42 U.S.C. § 405(g). After the AC denied VanHorn's request, he submitted a letter to the Council requesting that it reconsider its decision or grant him a new hearing because the ALJ who conducted his hearing was not properly appointed based on the Supreme Court's decision in Lucia v. S.E.C., 248 S. Ct. 2044 (2018). Doc. 11-1 at 1-3. The AC did not respond, see doc. 14 at 5, and VanHorn now seeks review in this court, doc. 1.

II.

Before addressing the merits of VanHorn's appeal, the court turns to his contention that the ALJ was not properly appointed in violation of the Appointments Clause of Article II of the Constitution, and, therefore, he is entitled to a new hearingbefore a properly appointed ALJ. See doc. 1 at 4. "The Appointments Clause requires that 'Officers of the United States' be appointed by the President, a court of law, or a head of a department.'" Pharmacy Doctors Enterprises, Inc. v. Drug Enforcement Admin., 789 F. App'x 724, 727-28 (11th Cir. 2019) (citing U.S. Const., art. II, § 2, cl.2). In Lucia v. S.E.C., the Supreme Court held that ALJs of the Securities and Exchange Commission qualify as "Officers" within the meaning of the Appointments Clause in part because the "ALJs issue decisions containing factual findings, legal conclusions, and appropriate remedies" that may become the final decision of the SEC if the Commission declines review. 138 S. Ct. at 2049, 2053-54. The Court further held that a party "'who makes a timely challenge to the constitutional validity of the appointment of an officer who adjudicates his case is entitled to relief'" in the form of "a new 'hearing before a properly appointed' official." Id. at 2055 (quoting Ryder v. United States, 515 U.S. 177, 182-83, 188 (1995)) (emphasis added).

Lucia does not address whether the SSA's ALJs are also officers for purposes of the Appointments Clause, but the Commissioner does not dispute that the ALJ here was acting as an officer and subject to the requirements of the Appointments Clause. Doc. 9 at 6, n.6. And, within a month of the decision in Lucia, and after the ALJ issued her decision in this case, the then Acting Commissioner of the SSA ratified the appointment of the SSA's ALJs and approved those appointments as herown to address any potential Appointments Clause issues. See SSR 19-1p, 84 Fed. Reg. 9582-02, 9583 (effective March 15, 2019). Thus, the court assumes that the ALJ in VanHorn's claim was an officer within the meaning of the Appointments Clause and that she had not been properly appointed prior to her decision denying VanHorn's claim. Consequently, VanHorn is entitled to a new hearing if he has not waived his claim challenging the ALJ's appointment.

"[A]rguments based on the Appointments Clause are nonjurisdictional and therefore subject to the ordinary rules of forfeiture . . . ." Pharmacy Doctors Enterprises, 789 F. App'x at 728; see also Freytag v. Comm'r of Internal Rev., 501 U.S. 868, 878 (1991). Thus, generally, a party seeking to challenge the appointment of the administrative official or ALJ deciding his case must raise the issue "while his case was pending before that court on direct review." Ryder, 515 U.S. at 180-82. In keeping with that general rule, the vast majority of courts that have considered the issue have held that a social security claimant waives an Appointments Clause challenge to an ALJ's decision if he fails to raise the issue at the administrative level.¹ And, although the Eleventh Circuit has not yet addressed the issue in thesocial security context,² it has found in a different context that a petitioner waived his Appointments Clause claim by not raising it in administrative proceedings. See Pharmacy Doctors, 789 F. App'x at 727-29 (citation omitted).

VanHorn urges the court to hold that he did not waive the claim, contending that (1) he raised the claim before the SSA; (2) he can properly raise the claim for the first time in the district court; and (3) even if he did not timely raise his claim in the administrative proceeding, that failure is excused under Freytag v. Commissioner of Internal Revenue, 501 U.S. 868 (1991). Doc. 11. For the reasons explained below, the court respectfully disagrees with VanHorn's contentions and finds that he has waived his claim challenging the appointment of the ALJ.

A.

To begin, as to VanHorn's contention that he asserted his Appointments Clause claim during the administrative proceedings in the SSA, VanHorn raised the claim after the AC denied review and the ALJ's decision denying benefits became the final decision of the Commissioner. See doc. 11-1; R. 1; 42 U.S.C. § 405(g).And, nothing suggests that VanHorn asked the SSA to reopen his case. See doc. 11-1 at 2. Thus, VanHorn did not raise a timely challenge to the validity of the ALJ's appointment during the administrative proceedings.

B.

Next, VanHorn argues that, based on Sims v. Apfel, 530 U.S. 103 (2000), he may raise his Appointments Clause claim for the first time in this court. Doc. 11 at 8-9. In Sims, the Supreme Court held that "[c]laimants who exhaust administrative remedies need not also exhaust issues in a request for review by the [AC] in order to preserve judicial review of those issues," but it did not address "[w]hether a claimant must exhaust issues before the ALJ." 530 U.S. at 107, 112. In a footnote, the Eleventh Circuit interpreted Sims as holding "that a Social Security claimant's failure to raise an issue at the administrative level does not deprive a court of jurisdiction to consider the issue when it is raised for the first time during judicial proceedings." Loudermilk v. Barnhart, 290 F.3d 1265, n.1 (11th Cir. 2002).

But, contrary to VanHorn's suggestion otherwise, Loudermilk does not stand for the proposition that a Social Security claimant never waives a claim by failing to raise it in the administrative proceeding. And, after deciding Loudermilk, the Eleventh Circuit has held on at least two occasions, albeit in unpublished opinions, that a claimant waived an issue or claim by failing to raise it in the administrative proceedings. See Sullivan v. Comm'r of Soc. Sec., 694 F. App'x 670, 672 (11th Cir.2017); Valdez v. Comm'r of Soc. Sec., 808 F. App'x 1005, 1009-10 (11th Cir. 2020). Thus, Loudermilk and Sims do not mandate a conclusion that a social security claimant can raise an Appointments Clause challenge for the first time in the district court. As a result, in light of the SSA's interest in having such challenges brought in a timely fashion³ and its requirement that a claimant raise objections to the ALJ at the "earliest opportunity," 20 C.F.R. § 404.940, the court joins the majority of other courts that have addressed the issue and finds that a social security claimant waives an Appointments Clause challenge to an ALJ's decision if he fails to raise the issue while his case is pending at the administrative level.

C.

Finally, VanHorn contends that his failure to raise the Appointments Clause claim during the administrative proceedings is excusable under Freytag v. Commissioner, 501 U.S. 868 (1991).⁴ In Freytag the Supreme Court reviewed achallenge to the appointment of the Tax Court's Special Trial Judge that the petitioner had not raised in the Tax Court, finding that the case was "one of those rare cases in which [the Court] should exercise [its] discretion to hear [a] challenge" that was not presented in the proceedings below. 501 U.S. at 779. But, VanHorn has not shown that this is a "rare" case that warrants excusing his failure to raise the challenge in the proceedings below. See Abbington, 2018 WL 6571208, at *7 (declining to apply Freytag to excuse the plaintiff's failure to raise his Appointments Clause claim before the SSA); Gagliardi, 441 F. Supp. 3d at 1292 (same) (citation omitted).

And, as at least two courts in the Circuit have recognized, the Court's decision in Lucia "did not create any new constitutional rules or standards . . . ." Burr v. Comm'r of Soc. Sec., 2019 WL 2821572, at * 2 (M.D. Fla. May 17, 2019); Abbington, 2018 WL 6571208,...