Cirko v. Commissioner of SSA
What Now? Review of the Third Circuit Decision in Cirko v. Commissioner of SSA
On Jan. 23, the Third Circuit issued a precedential opinion on challenges to Social Security Administration (SSA) Administrative Law Judges (ALJs) in Cirko v. Commissioner, 948 F.3d 148 (3d Cir. 2020) regarding application of exhaustion requirements to Lucia v. SEC, 138 S. Ct. 2044 (2018). On Feb. 14, the Social Security Disability Committee hosted a CLE led by Thomas Sutton, appellees’ counsel (there were two – Cirko and Bizarre).
The opinion opens with:
This case presents the question whether claimants for Social Security disability benefits must exhaust Appointments Clause challenges before the very administrative law judges (ALJs) whose appointments they are challenging. Because both the characteristics of the Social Security Administration (SSA) review process and the rights protected by the Appointments Clause favor resolution of such claims on the merits, we hold that exhaustion is not required in this context and therefore will affirm.
That wraps it all up, so why read any further? Well, here’s a juicy tidbit on how Cirko came about: After Lucia, which involved an ALJ at the SEC, the Solicitor General “announced” via confidential memorandum to all agency counsel in the federal government that, in his opinion, Lucia applied to all federal ALJs. Reuters somehow got ahold of the memo and published it, and that really was the first time SSD attorneys became aware that Lucia would be directly applicable to SSA ALJ’s – now considered officers of the U.S. subject to the Appointments Clause in Article II of the Constitution according to the government’s own statement.
At the heart of Cirko is that claimants have statutory rights to due process hearings before an ALJ with a valid appointment, and that harm is presumed from the fact that they did not have a hearing before a properly appointed officer. Whether there should be a judicially imposed exhaustion requirement where there is no statutory or regulatory requirement of exhaustion was determined by a three-part test:
(a) the ‘nature of the claim presented,’ (b) the ‘characteristics of the particular administrative procedure provided,’ and (c) the proper ‘balance [between] the interest of the individual in retaining prompt access to a federal judicial forum [and] countervailing institutional interests favoring exhaustion.’ McCarthy v. Madigan, 503 U.S. 140, 146 (1992).
The Court concluded:
(a) the nature of Appointments Clause claims does not favor exhaustion; (b) the characteristics of SSA review counsel against requiring exhaustion for this claim; and (c) a balancing of the individual and governmental interests weighs against exhaustion.
Sutton warned of implications going forward: If you have a client whose case was heard by an ALJ prior to July 16, 2018 and you haven’t already raised the Appointments Clause issue in whatever forum your case is currently pending – whether the SSA, the Appeals Council or District Court – you should do so right away. There’s no better time than with a clear precedent standing in our circuit.
Case update: On March 26, 2020, the Third Circuit denied the SSA Commissioner’s Petition for En Banc and Panel Rehearing.
Reprinted with permission from the May 2020 edition of the Philadelphia Bar Reporter © 2020 Philadelphia Bar Association. All rights reserved. Further duplication without permission is prohibited (contact (215) 238-6300 or reporter@philabar.org).
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