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Bowen v. City of New York

No. 84-1923

Argued February 26, 1986

Decided June 2, 1986

476 U.S. 467

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE SECOND CIRCUIT

Syllabus

The Social Security Act provides benefits to disabled persons under two programs administered by the Social Security Administration (SSA): the Social Security Disability Insurance Program (SSD) and the Supplemental Security Income Program (SSI). Regulations for both programs establish a five-step "sequential evaluation" process for determining eligibility for benefits. The initial determination of whether an individual is disabled is made by a state agency under the authority and control of the Secretary of Health and Human Services (Secretary). This determination is subject to review by the SSA. The disappointed claimant is then afforded a three-stage administrative review process. Proceeding through these three stages exhausts the claimant's administrative remedies. Thereafter, he may seek judicial review in Federal District Court, but must do so within 60 days of the Secretary's final decision as required by 42 U.S.C. § 405(g). Respondents brought a class action against the Secretary and the Commissioner of the SSA, 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 were terminated pursuant to an allegedly illegal internal policy of the Secretary. The District Court certified the class as including claimants who had not complied with the 60-day requirement for seeking judicial review and other claimants who had not exhausted their administrative remedies and obtained a final decision of the Secretary as required by § 405(g). Holding that the policy in question was illegal, the District Court ordered the Secretary to reopen the decisions denying or terminating benefits, and to redetermine eligibility. The Court of Appeals affirmed.

Held:

1. The District Court properly included in the class claimants who had received a final decision from the Secretary but did not seek judicial review within the statutory 60-day period. The 60-day requirement is not jurisdictional, but rather constitutes a statute of limitations. Equitable tolling of that requirement is consistent with Congress' intent in enacting § 405(g), and, on the facts of this case, the equities are in favor of tolling. Tolling serves the Act's purpose where the internal policy [476 U.S. 468] prevented the claimants from knowing of a violation of their rights. Pp. GO>478-482.

2. The District Court also properly included in the class claimants who failed to exhaust their administrative remedies. The court did not err in waiving exhaustion not only as to those claimants whose time to pursue further administrative appeals had lapsed, but also as to those who still had time to pursue administrative remedies at the time the suit was filed. For claimants whose time to pursue further remedies had lapsed, exhaustion is excused for the same reasons requiring tolling of the 60-day statute of limitations. Since the claimants could not attack a policy of which they were unaware, it would be unfair to penalize them for not exhausting under such circumstances. It was also proper to waive the exhaustion requirement with respect to those claimants who still had time to file suit. The claims in the suit are collateral to the claims for benefits that class members had presented administratively. The class members neither sought nor were awarded benefits in the District Court, but rather challenged the Secretary's failure to follow the regulations. Moreover, the claimants would be irreparably injured if the exhaustion requirement were now enforced against them. The relief afforded by the District Court was fully consistent with the policies underlying exhaustion. Pp. GO>482-486.

742 F.2d 729 and 755 F.2d 31, affirmed.

POWELL, J., delivered the opinion for a unanimous Court. [476 U.S. 469]

Excerpts from the Majority Opinion by Justice Powell

….

The gravamen of respondents' complaint was that petitioners had adopted an unlawful, unpublished policy under which countless deserving claimants were denied benefits. They contended that the policy mandated a presumption -- applicable at the level of the initial state psychiatric assessment -- that a failure to meet or equal the listings was tantamount to a finding of ability to do at least unskilled work; that the presumption led to routine denials of benefits to eligible claimants; and that such a presumption was arbitrary, capricious, and violative of the Constitution, the Social Security Act, and the applicable regulations. Respondents claimed that this internal policy had the effect of eliminating steps four and five from the sequential evaluation process, and thus ignored the requirement for an individualized RFC assessment to determine whether a claimant with a severe condition is nonetheless able to work. They alleged that the policy was never published in the Federal Register, as required by the Administrative Procedure Act, but was nonetheless implemented [476 U.S. 474] through various internal memoranda and the "returns" process by which SSA sends cases back to the States for correction. Respondents contended that failure to make the policy known to claimants denied the individual plaintiffs and class members due process of law.

….

Petitioners also contend that the District Court erred in including in the class those members who failed to obtain a "final decision" from the Secretary as required by § 405(g). To obtain a final decision from the Secretary, a claimant is required to exhaust his administrative remedies by proceeding through all three stages of the administrative appeals process. Only a claimant who proceeds through all three stages receives a final decision from the Secretary. At the outset, we note that, by the time this lawsuit was filed, it was too late for a large number of class members to exhaust their claims, since expiration of the 60-day time limits for administrative appeals barred further access to the administrative appeals process. See 20 CFR §§ 404.905, 404.909(a)(1), 416.1405, 416.1409(a), 404.955(a), 404.968(a)(1), 416.1455(a), 416.1468(a) (1985). For these claimants, we conclude that exhaustion is excused for the same reasons requiring tolling of the statute of limitations. Since "[m]embers of the class could not attack a policy they could not be aware existed," 578 F.Supp. at 1118; see GO>Part III, supra, it would be unfair to penalize these claimants for not exhausting under these circumstances.

….

These claimants stand on a different footing from one arguing merely that an agency incorrectly applied its regulation. Rather, the District Court found a system-wide, unrevealed policy that was inconsistent in critically important ways with established regulations. Nor did this policy depend on the particular facts of the case before it; rather, the policy was illegal precisely because it ignored those facts. The District Court found that the policy was being adhered to by state agencies due to pressure from SSA, and that therefore exhaustion would have been futile. Under these unique circumstances, there was nothing to be gained from permitting the compilation of a detailed factual record, or from agency expertise. Cf. GO>McKart v. United States, 395 U.S. 185, GO>200 (1969).

….”