Argued April 1, 1991.
Decided April 30, 1991.
James Roy Williams (argued), Young Reverman Co., Cincinnati, Ohio, for plaintiff-appellee.
Anne K. Kleinman (argued), Richard A. Urbin, Dept. of Health and Human Services, Office of the Gen. Counsel, Region V, Chicago, Ill., for defendant-appellant.
Appeal from the United States District Court for the Southern District of Ohio.
The Secretary of Health and Human Services ("Secretary") appeals the District Court's judgment granting relief to the claimant Nellie Pohlmeyer pursuant to Pohlmeyer's motion under Federal Rule of Civil Procedure 60(b) to alter an earlier District Court decision. In the new judgment the District Court ordered the Secretary to recompute the amount of Pohlmeyer's disability benefits. The issue presented on appeal is whether the District Court had jurisdiction to review the Secretary's determination of the amount of Pohlmeyer's disability benefits, where Pohlmeyer's failed to seek administrative review of the benefit amount determination. This amount was determined after an earlier District Court decision on the issue of disability. We find that the District Court lacked jurisdiction to consider Pohlmeyer's claim, and therefore REVERSE the judgment of the District Court.
Nellie Pohlmeyer filed an application for Social Security disability benefits in May 1981. On July 9, 1986, following a lengthy series of administrative decisions, the District Court found Pohlmeyer to be disabled due to statutory blindness, with an onset date of April 1, 1981. That determination is not at issue here.
On September 14, 1986, Pohlmeyer was issued an Award Certificate by the Secretary. This Award Certificate indicated the Secretary's determination of the amount of Pohlmeyer's benefits. This calculation included a reduction in Pohlmeyer's potential benefits due to the offset provision of 42 U.S.C. § 424a(a). That offset provision operates to reduce the amount of Social Security benefits due to individuals who receive certain disability-related pension benefits under a state plan. Pohlmeyer was receiving disability benefits under the Ohio Public Employee Retirement System, a type of state disability benefits covered by section 424a(a). The Award Certificate, a copy of which was sent to Pohlmeyer's attorney, notified Pohlmeyer that she had 60 days to request reconsideration of the agency's determination regarding the amount of her benefits. Pohlmeyer did not seek reconsideration of the Secretary's benefit amount determination.
Pohlmeyer seems to have understood the offset issue and that her disability benefits were affected. On July 11, 1986, two days after the District Court held that she was disabled with an onset date of April 1, 1981, Pohlmeyer asked the court to amend the judgment to find that she had become disabled on January 1, 1981. Apparently, Pohlmeyer asked the District Court to amend the onset date in order to avoid the effect of the statutory offset provision, 42 U.S.C. § 424a(a), which was applicable to persons who became disabled after February 1981. The District Court denied Pohlmeyer's motion.
On May 16, 1989, more than two and one-half years after receiving the Award Certificate, Pohlmeyer first challenged the Secretary's benefit amount determination by filing a motion in the District Court pursuant to Federal Rule of Civil Procedure 60. The "final judgment, order, or proceeding" from which relief was being sought under Rule 60(b) was the District Court's decision in July 1986, finding Pohlmeyer to be disabled. However, that earlier judgment contained no decision regarding benefit amounts. Indeed, the only decision regarding benefit amounts was made by the Secretary following the District Court's determination regarding disability. Specifically, Pohlmeyer's Rule 60 motion asked the District Court to apply the holding in Dunkin v. Secretary of Health and Human Services, No. CI-85-1801 (S.D.Ohio, June 24, 1987), and to order the Secretary to recompute the amount of her benefits without a statutory offset. In Dunkin, the claimant who had disputed the Secretary's offset decision by pursuing his administrative and judicial remedies, obtained a judgment that the offset provision was not properly applied by the Secretary in his case. Through oversight or inadvertence, the Secretary failed to respond to Pohlmeyer's Rule 60 motion.
On October 20, 1989, the District Court granted Pohlmeyer's Rule 60 motion, "reopened" the earlier case which dealt with the question of disability, and rendered a judgment ordering the Secretary to adjust the amount of Pohlmeyer's benefits in accordance with the decision in Dunkin. The District Court also noted that, pursuant to local rules, failure to oppose a motion may be grounds for granting it and that the Secretary's failure to oppose Pohlmeyer's Rule 60 motion provided additional support for granting it.
The decision was actually made on August 17, 1989, although judgment was not entered until October 20, 1989. The District Court made this clear in an order of May 1, 1990.
The Secretary filed a timely notice of appeal from the District Court's order. Subsequent to filing that appeal the Secretary filed a motion under Federal Rule of Civil Procedure 59(e) requesting the District Court to reconsider its October 20, 1989 order. The Secretary argued that Pohlmeyer had failed to exhaust her administrative remedies regarding the benefit amount determination, that the Rule 60 motion was untimely, and that Dunkin was inapplicable to this case, which was finalized well before Dunkin was decided. The Secretary then voluntarily dismissed its appeal to this Court so that the District Court would have jurisdiction to consider the Rule 59(e) motion to alter or amend judgment. On May 1, 1990, the District Court denied the Secretary's Rule 59(e) motion, concluding that the Secretary had not provided a satisfactory explanation for failing to respond to Pohlmeyer's Rule 60 motion in a timely manner. The court did not discuss or even mention the various grounds asserted by the Secretary for altering or amending the District Court's October 20, 1989 order. The Secretary timely filed this appeal.
The Secretary contends, inter alia, that the District Court did not have subject matter jurisdiction to review the Secretary's benefit amount determination of September 14, 1986. The standard of review on the issue of subject matter jurisdiction is de novo review. In the case of disputes involving the Social Security Act ("Act"), Congress has authorized judicial review pursuant to 42 U.S.C. § 405(g), which provides in relevant part that
[a]ny individual, after any final decision of the Secretary made after a hearing to which he was a party, . . . may obtain a review of such decision by a civil action commenced within sixty days after the mailing to him of notice of such decision or within such further time as the Secretary may allow. (Emphasis added).
Furthermore, 42 U.S.C. § 405(h) provides in part that "[n]o findings of fact or decision of the Secretary shall be reviewed by any person, tribunal, or governmental agency except as herein provided."
The Secretary correctly points out that two elements are necessary to establish federal court jurisdiction to review decisions of the Secretary. First, a claimant must exhaust his administrative remedies and, second, the Secretary must issue a final decision. See Matthews v. Eldridge, 424 U.S. 319, 327-29, 96 S.Ct. 893, 899-900, 47 L.Ed.2d 18 (1976). Although the Secretary may waive the exhaustion requirement, the Secretary did not do so in this case. The Supreme Court has indicated that under section 405(g) the power to determine when finality has occurred, and judicial review is allowed, ordinarily rests with the Secretary. Id. at 330, 96 S.Ct. at 900; Weinberger v. Salfi, 422 U.S. 749, 766, 95 S.Ct. 2457, 2467, 45 L.Ed.2d 522 (1975). Therefore, the Secretary may specify such requirements for exhaustion as he deems necessary for the effective and efficient administration of the program. Salfi, 422 U.S. at 766, 95 S.Ct. at 2467.
Pursuant to this broad grant of authority, the Secretary promulgated regulations that explain the procedures the agency will follow in determining rights under the Act, describe the process of administrative review, and provide for a claimant's right to judicial review after all necessary administrative steps have been taken. See 20 C.F.R. §§ 404.900 et seq. (1990). The regulations at 20 C.F.R. §§ 404.900(a)(1)-(4) describe the four steps of the administrative review process: "Initial determination"; "Reconsideration"; "Hearing before an administrative law judge"; and "Appeals Council review." The regulation at 20 C.F.R. § 404.902 lists a number of administrative actions that are "initial determinations" subject to administrative and then judicial review. This list clearly states that a determination about "[t]he amount of your benefit" is an "initial determination." 20 C.F.R. § 404.902(c). The regulations also very clearly state that "[w]hen you have completed the steps of the administrative review process . . ., we will have made our final decision. If you are dissatisfied with our final decision, you may request judicial review. . . ." 20 C.F.R. § 404.900(a)(5). Finally, the regulations warn that "[i]f you are dissatisfied with our decision in the review process, but do not take the next step within the stated time period, you will lose your right to further administrative review and your right to judicial review. . . ." 20 C.F.R. § 404.900(b).
The applicable regulations are unchanged from those in effect in 1986 when Pohlmeyer and her counsel were informed of the Secretary's benefit amount determination.
In this case, the Secretary's September 14, 1986 benefit amount determination was an "initial determination" subject to administrative and judicial review. When Ms. Pohlmeyer failed to seek reconsideration of that determination within the specified 60 days, the initial determination became binding pursuant to 20 C.F.R. § 404.905. While it is "binding," the unappealed benefits calculation is not a "final decision after a hearing" subject to judicial review under 42 U.S.C. § 405(g). Because the Secretary has not waived the jurisdictional exhaustion requirement, Pohlmeyer has failed to establish a right to judicial review of the Secretary's benefit amount calculation. Consequently, the District Court lacked jurisdiction to review the Secretary's benefit amount determination in the process of ostensibly "reopening" the court's earlier judgment on the question of disability. See also Bartley v. Finch, 311 F. Supp. 876, 878 (E.D.Ky. 1970), aff'd, 404 U.S. 980, 92 S.Ct. 442, 30 L.Ed.2d 364 (1971) (no jurisdiction to consider challenge to Secretary's benefit determination under 42 U.S.C. § 424a without having exhausted administrative remedies); Bailey v. Finch, 312 F. Supp. 918, 920 (N.D.Miss. 1970) (same).
Accordingly, the judgment of the District Court is REVERSED and the action is REMANDED to the District Court with instructions to dismiss the Rule 60(b) motion for lack of jurisdiction.