Over twenty years ago, the Supreme Court issued a 5–4 decision in Sims v. Apfel,1530 U.S. 103, 104 (2000). rejecting the assertion that judicially created, common law2I use the terms “common law,” “judicially created law,” and “judge-made law” interchangeably. See John F. Duffy, Administrative Common Law in Judicial Review, 77 Tex. L. Rev. 113, 115 n.7 (1998). prudential principles precluded social security disability claimants from raising issues and arguments in federal court on judicial review of agency decisions, where those issues were not raised on administrative appeals before the Social Security Administration’s (“SSA”) Appeals Council. A four-member plurality of the Court, led by Justice Thomas and joined by Justices Stevens, Souter, and Ginsburg,3The plurality twice cited and relied on a law review article by the undersigned. Sims, 530 U.S. at 111–12 (plurality opinion) (citing Jon C. Dubin, Torquemada Meets Kafka: The Misapplication of the Issue Exhaustion Doctrine to Inquisitorial Administrative Proceedings, 97 Colum. L. Rev. 1289 (1997)). In their leading treatise on administrative law, Professors Kristin E. Hickman and Richard J. Pierce, Jr. observed that that “[t]he [Sims] plurality apparently found persuasive th[is] thoughtful and well-researched article.” 2 Kristin E. Hickman & Richard J. Pierce, Jr., Administrative Law Treatise § 17.8, at 1535 (6th ed. 2019). This Article builds on ideas I first introduced twenty-five years ago in Torquemada Meets Kafka and further developed as counsel of record on the Brief for Amici Curiae Social Security, Government Benefit Program, and Administrative Law Professors and Scholars in Support of Petitioners, Carr v. Saul, 141 S. Ct. 1352 (2021) (Nos. 19-1442, 20-105), 2020 WL 8021232. found that SSA’s Appeals Council proceedings were categorically incompatible with the requirement of common law issue exhaustion.4Sims, 530 U.S. at 111–12 (plurality opinion). The Sims plurality concluded that “issue exhaustion makes little sense in this particular context” and therefore “a judicially created issue-exhaustion requirement is inappropriate.” Id. at 112. The plurality reasoned that: (1) administrative issue exhaustion requirements “are largely creatures of statutes” or regulations, and no statute or regulation imposes such a requirement in this context;5Id. at 107 (majority opinion). (2) courts have sometimes applied judicially created, common law issue exhaustion, but “the desirability” and propriety of superimposing this principle on particular systems “depends on the degree to which the analogy to normal adversarial litigation applies in a particular administrative proceeding;”6Id. at 109. (3) because SSA proceedings are “inquisitorial,” informal, and non-adversarial—an administrative law judge (“ALJ”) investigates facts and develops arguments for all sides—“[t]he differences between courts and agencies are nowhere more pronounced than in Social Security proceedings;”7Id. at 110–11 (plurality opinion).; (4) SSA regulations expressly mandate that the agency conduct its review process “in an informal, nonadversary manner”8Id. at 111 (quoting 20 C.F.R. § 404.900(b) (1999)).; (5) a significant number of claimants lack attorney representation to identify and assert legal issues at the administrative levels; and (6) SSA supplies a form with only a three-line space to request appeals counsel review, which “strongly suggests that the Council does not depend much, if at all, on claimants to identify issues for review.”9Id. at 111–12.
Although relying on repeated references to the informal, inquisitorial, non-adversarial nature of ALJ hearings in its reasoning about appeals council stage issue exhaustion, the Sims plurality reserved the issue of applying the doctrine to the ALJ hearing stage since that specific issue was not before the Court.10Sims, 530 U.S. at 107. Justice O’Connor authored a concurring opinion, joining in much of the plurality opinion’s doctrinal analysis and rationales but finding that “the agency’s failure to notify claimants of an issue exhaustion requirement in this context is a sufficient basis for [the Court’s] decision.”11Id. at 113 (O’Connor, J., concurring in part and in the judgment). The article, Torquemada Meets Kafka, reasoned and documented in the first part of the article that common law issue exhaustion was inconsistent with the SSA’s inquisitorial, non-adversarial and informal adjudicative model, and in the second part of the article, that the SSA’s inadequate and misleading notice of such a requirement would independently undermine the doctrine’s applicability under equitable and due process principles. Dubin, supra note 3, at 1310–39. Whereas the plurality expressly relied on the article’s first part and principal reasoning, Justice O’Connor appeared to rely somewhat more heavily on the article’s second, alternative rationale in her decisive opinion concurring in the Court’s judgment. Justice O’Connor pointed out that although the SSA’s regulations make clear that failing to request review at the next stage within applicable time limits “will forfeit the right to seek judicial review, the regulations provide no notice that claimants must also raise specific issues before the Appeals Council to reserve them for review in federal court.”12Sims, 530 U.S at 113 (O’Connor, J., concurring in part and concurring in the judgment) (citations omitted). Justice O’Connor also reasoned that while the SSA represented to the Court that it did not invoke Appeals Council issue exhaustion in cases where claimants lack any form of representation13See id. at 113–14 (noting that the SSA’s representation to the Court that it did not assert issue exhaustion on appeals by unrepresented claimants “appear[ed] to be inaccurate” and citing a pro se case where the agency had nonetheless invoked issue exhaustion). and that claimants with attorney representatives, such as Ms. Sims, might be less likely to be misled, “it would be unwise to adopt a rule that imposes different issue exhaustion obligations depending on whether claimants are represented by counsel.”14Id. at 114.
Justice Breyer authored a dissent, joined by Chief Justice Rehnquist and Justices Scalia and Kennedy, arguing that common law issue exhaustion was well-established and supported in this context by general exhaustion rationales of agency error correction and autonomy without premature judicial intervention.15Id. at 114–17 (Breyer, J., dissenting). As to the Petitioner in Sims, since “no one claim[ed] that any established exception to this ordinary ‘exhaustion’ or ‘waiver’ rule applie[d],” issue exhaustion was appropriate.16Id. at 115. Finally, at the end of its opinion, the dissent purported to answer the question reserved by the plurality as to the applicability of common law issue exhaustion at the SSA ALJ hearing stage, opining, “Yet I assume the plurality would not forgive the requirement that a party ordinarily must raise all relevant issues before the ALJ.”17Id. at 117.
Because the Court in Sims left open the question of the propriety of a common law issue exhaustion requirement at the SSA’s ALJ-hearing stage of agency proceedings, and a four-member dissent purported to answer that question affirmatively, a small trickle of courts have occasionally applied common law issue exhaustion to preclude judicial review of issues not raised at the ALJ hearing stage. In 2020, that trickle turned into a flood as several courts, including two United States Courts of Appeals, applied ALJ-hearing-level issue exhaustion to bar federal court consideration of Article II constitutional challenges to the appointment of the ALJs who presided at the hearings from which the claimants appealed if those challenges had not been asserted at the ALJ hearing stage of proceedings.18See, e.g., Davis v. Saul, 963 F.3d 790, 793 (8th Cir. 2020), rev’d, 141 S. Ct. 1352 (2021); Carr v. Comm’r, SSA, 961 F.3d 1267, 1268 (10th Cir. 2020), rev’d sub nom. Carr v. Saul, 141 S. Ct. 1352 (2021). Three other U.S. Courts of Appeals rejected SSA hearing-level issue exhaustion in this context in 2020, creating a significant circuit split. See Probst v. Saul, 980 F.3d 1015, 1018 (4th Cir. 2020), cert. denied, 141 S. Ct. 2633 (2021); Ramsey v. Comm’r of Soc. Sec., 973 F.3d 537, 546 (6th Cir. 2020), cert. denied sub nom. Saul v. Ramsey, 141 S. Ct. 2699 (2021); Cirko ex rel. Cirko v. Comm’r of Soc. Sec., 948 F.3d 148, 152 (3d Cir. 2020). The Supreme Court’s 2018 decision in Lucia v. SEC,19138 S. Ct. 2044 (2018). invalidated the appointment of ALJs from the U.S. Securities and Exchange Commission on Article II grounds, thereby calling into question the constitutionality of federal ALJ appointments in all federal agencies, including the SSA.20Seeid. at 2051–54. See generally Frank S. Bloch & Jon C. Dubin, Social Security Law, Policy, and Practice: Cases and Materials 45–47 (Supp. 2022) (describing the Trump Administration’s post-Lucia Executive Order and U.S. Solicitor General policy memo applying Lucia to all federal ALJs, potential changes in the decisional independence of ALJs, the issuance of Social Security Ruling 19-1p implementing the SSA’s response to claims based on Lucia violations, and identifying lingering interpretive issues on SSR 19-1p and Lucia claims in SSA cases). In applying common law issue exhaustion at the ALJ-hearing level to Lucia-based challenges to the SSA ALJs’ appointments, these two circuits relied in varying degrees on the Sims dissent, the Sims plurality’s reservation of the ALJ-hearing-level issue exhaustion question, the absence of a majority opinion and single rationale commanding the Court’s judgment in Sims, and the narrowness and arguable distinguishability of the decisive concurring opinion by Justice O’Connor, among other assertions.21See Davis, 963 F.3d at 793 (“Whether a claimant must exhaust issues before an ALJ was not before the Court in Sims, 530 U.S. at 107, and our post-Sims decision in Anderson [v. Barnhart, 344 F.3d 809, 814 (8th Cir. 2003)] expressly required that step.” (citations omitted)); Carr v. Comm’r, SSA, 961 F.3d at 1274–75 (“[T]he Supreme Court in Sims cautioned that its holding did not apply to the issue before us. It held only that, when the claimant failed to raise issues in her petition for Appeals Council review, she did not waive her ability to raise those issues in district court. The Court emphasized that ‘[w]hether a claimant must exhaust issues before the ALJ is not before us.’ And the four-Justice dissent predicted that ‘the plurality would not forgive the requirement that a party ordinarily must raise all relevant issues before the ALJ’. . . . Justice O’Connor’s controlling concurrence relied on a narrower ground. . . . [Her] reasoning does not apply to SSA ALJ proceedings, where, as noted above, SSA regulations require claimants to object if they dispute the issues to be decided at their ALJ hearings.” (citations omitted)).
In the spring 2021 case of Carr v. Saul,22141 S. Ct. 1352 (2021). a unanimous Supreme Court resolved a split in the circuits and reversed the decisions of the two circuits that applied common law issue exhaustion to bar federal court consideration of Lucia-based Article II Appointments Clause challenges not previously asserted at the ALJ-hearing stage.23Id. at 1356. In those cases, the government conceded that all the SSA ALJ appointments were unconstitutional based on Lucia, but argued that the judicial challenges to the appointments were “waived” or “forfeited” by failing to raise the argument before the ALJs during hearing proceedings. In rejecting the government’s position, eight members of the Court reaffirmed the Sims plurality’s rationales for barring issue exhaustion at the SSA’s Appeals Council stage and their similar application at the ALJ-hearing stage due to the inquisitorial, non-adversarial, and informal nature of SSA ALJ hearings.24Id. at 1359 (“Much of what the Sims opinions said about Appeals Council review applies equally to ALJ proceedings.”). The majority opinion also pointed to the impropriety and futility of applying issue exhaustion to structural constitutional claims, which are ill-suited for agency resolution and which the agency and its ALJs are powerless to address or remedy.25Id. at 1360–62. The majority concluded:
[The confluence of] the inquisitorial features of SSA ALJ proceedings, the constitutional character of petitioners’ claims, and the unavailability of any remedy make clear that “adversarial development” of the Appointments Clause issue “simply [did] not exist” (and could not exist) in petitioners’ ALJ proceedings. The Courts of Appeals therefore erred in imposing an issue-exhaustion requirement on petitioners’ Appointments Clause claims.26Id.at 1362 (citing Sims v. Apfel, 530 U.S. 103, 112 (2000) (plurality opinion)).
However, the majority in a footnote also reserved the question, as not before the Court, whether SSA hearing level, common law issue exhaustion might be appropriate “[o]utside the context of Appointments Clause challenges, such as in the sphere of routine objections to individual benefits determinations.”27Id. at 1360 n.5. Justice Thomas, joined by Justices Gorsuch and Barrett, issued a concurring opinion finding that issue exhaustion should never apply in inquisitorial SSA proceedings and that the Court need not have also included analysis of the structural constitutional claim and futility considerations against issue exhaustion.28Carr, 141 S. Ct. at 1362–63 (Thomas, J., concurring in part and concurring in the judgment). Justice Breyer also issued a concurring opinion, reiterating his dissent in Simsabout the general propriety of issue exhaustion in all SSA proceedings and irrelevance, in his view, of the SSA’s inquisitorial and non-adversarial adjudicative model, but agreeing that “the Appointments Clause challenges at issue fall into the well-established [exhaustion] exceptions for constitutional and futile claims.”29Id. at 1363 (Breyer, J., concurring in part and concurring in the judgment).
In view of the question left open in the majority’s footnote in Carr, the separate opinion of Justice Breyer, and the presence of circuit decisions post–Sims applying common law ALJ-hearing-level issue exhaustion outside of the Appointments Clause or structural constitutional claim context, administrative law and social security scholars and lawyers have started to debate questions about the doctrine’s application to “routine” issues which could have been raised at the SSA’s ALJ-hearing stage after Carr.30I draw on my own involvement in the communities of administrative law and social security law scholars and lawyers, and related listservs and websites, for this observation. The first court to address Carr’s potential impact on the application of ALJ issue exhaustion on “routine” issues in SSA proceedings applied ALJ issue exhaustion to routine vocational evidence issues and dismissed Carr in a footnote, failing to identify or apply any of the considerations the Court articulated in Carr and Sims for determining the prudential propriety of common law issue exhaustion and pointing out simply that since the Carr Court reserved this question in footnote 5, its decision and analysis “is not applicable to the facts of this case.” Mitchell v. Saul, No. 2:20-cv-01936, 2021 WL 3032667, at *11 n.8 (D. Nev. July 16, 2021). As discussed infra Section IV.B, application of the Supreme Court’s reasoning and analyses in Carr and Sims would produce a different result in that context. Such a result would be far more concerning to lower income and medically infirm social security claimants, their representatives, and ALJs and SSA hearing-level adjudicative staff, than the limited number of cases involving usually transient or rare structural constitutional challenges, since the agency conducts nearly 800,000 hearings each year, virtually all involving such “routine” issues.
A judicially created issue exhaustion requirement for routine ALJ-hearing-level disability issues would hinder access to justice and to the courts and produce hardship from delay and bureaucratic disentitlement. An issue exhaustion requirement would negatively affect mostly lower income, sometimes elderly, medically challenged claimants, including persons with severe psychiatric and cognitive challenges, often with limited education, sometimes lacking facility in English and often lacking attorney representation. It would also exacerbate strains on an already overburdened “mass justice” hearing process and adjudicative system in an agency that has expressly declined to seek creation of such a requirement and process transformation through rulemaking.
This Article addresses that question left open in Carr. Part I supplies an overview of the SSA’s inquisitorial adjudicative system. Part II examines the SSA ALJ-hearing process and the Justices’ reasoning in Carr and Sims to inform resolution of the open question from Carr. Part III explores the doctrinal shortcomings in Justice Breyer’s now singular position about the general propriety of common law issue exhaustion in the SSA’s inquisitorial, non-adversarial system. Part IV examines common or likely “routine” contexts in which SSA ALJ-hearing-level issue exhaustion has been or could be asserted and the application (or misapplication) of issue exhaustion in three often-cited Court of Appeals decisions issued in the years between Sims and Carr. Part V evaluates the implications of the SSA’s failure to create a regulatory issue exhaustion requirement itself after being invited to do so over twenty years ago by the Court in Sims.
This Article concludes that the rationales of Carr and Sims foreclose applicability of common law issue exhaustion in the SSA context, even as to “routine objections” and issues so long as SSA proceedings remain inquisitorial, non-adversarial, and informal pursuant to the SSA’s claimant-protective statutory and regulatory scheme.31While the focus of this article is common law issue exhaustion in SSA proceedings, because of the uniquely enormous volume and magnitude of social security disability cases annually adjudicated, the Article’s analysis also applies broadly to other agencies and administrative proceedings utilizing inquisitorial, non-adversarial processes. See, e.g., FirstHealth Moore Reg’l Hosp. v. Becerra, No. 20-1007, 2021 WL 4262490, at *5–6 (D.D.C. Sept. 20, 2021) (citing and applying Carr and Sims and rejecting application of common law issue exhaustion to Medicare reimbursement appeal before an administrative tribunal within the U.S Department of Health and Human Services). It points out the potential harms and hardships to claimants and agency adjudicators alike from the imposition of this procedural requirement in the SSA’s ALJ hearings. Finally, this Article concludes by recommending that any further consideration of the application of issue exhaustion to SSA proceedings should be the product of a comprehensive, deliberative, open, and accountable process designed to reach a nationally uniform result and must balance impacts on claimants, the public, and the agency alike, such as through notice and comment rulemaking under the Administrative Procedure Act (“APA”)325 U.S.C. §§ 551–559. or through Congressional legislation.
I. Overview of the Social Security Disability Programs and Administrative Adjudication System
The Social Security programs are the nation’s largest social benefit programs, affecting nearly 97% of all Americans.33See Never Beneficiaries, Age 60 or Older, 2020, Soc. Sec. Admin., https://perma.cc/4CC2-US69 (discussing the characteristics of the three percent who never become beneficiaries); see also Richardson v. Perales, 402 U.S. 389, 399 (1971) (“The Social Security Act has been with us since 1935. It affects nearly all of us.” (citation omitted)). These programs provide a safety net and critical lifeline for many persons and families, especially those living on the margins.34Elise Gould, Social Security Kept 27 Million Americans Out of Poverty in 2013, Econ. Pol’y Inst. (Oct. 30, 2014), https://perma.cc/Z9BN-BBB3 (“Social Security is, by far, the most effective anti-poverty program in the United States. Without Social Security, an additional 8.6 percent of Americans, or nearly 27 million, would fall below the [Supplemental Poverty Measure] poverty threshold.”); see also White House, Social Security Disability Insurance: A Lifeline for American Workers and Families (2015), https://perma.cc/Q28S-5UEB (noting that the SSDI program alone annually “keep[s] about 3 million Americans out of poverty, and reduces the depth of poverty for another 1.9 million Americans”). Among the plethora of public benefit programs, Social Security, also known as Old Age, Survivors and Disability Insurance (“OASDI”), is a social insurance program. It is financed from separate trust funds for the Disability Insurance (“DI”) and the Old Age and Survivors’ Insurance (“OASI”) programs supported by payroll taxes on workers’ earnings.3542 U.S.C. § 401(a)–(b). Premiums in the form of Federal Insurance Contribution Act (“FICA”) taxes are automatically withheld from workers’ paychecks, enabling workers, and sometimes their families, to receive monthly benefits if the worker retires, dies, or becomes disabled.36See 42 U.S.C. §§ 401–422 (setting out statutory authority for the social security OASDI programs). The SSA also operates a means-tested, income-support program for low-income elderly persons and disabled adults and children known as the Supplemental Security Income (“SSI”) program, mostly for those lacking insurance coverage for OASDI.37See 42 U.S.C. §§ 1381–1383 (setting out statutory authority for the SSI program).
The statutory disability definition and SSA’s system for processing and adjudicating disability applications under the Social Security Disability Insurance (“SSDI”) and adult SSI disability benefits programs are identical. The Social Security Act defines disability as the inability to perform “any substantial gainful activity by reason of any medically determinable physical or mental impairment which . . . can be expected to last for a continuous period of not less than [twelve] months.”3842 U.S.C. § 423(d)(1)(A). The Social Security Act further provides in relevant part that
[a]n individual shall be determined to be under a disability only if his physical or mental impairment or impairments are of such severity that he is not only unable to do his previous work but cannot, considering his age, education, and work experience, engage in any other kind of substantial gainful work which exists in the national economy.39Id. § 423(d)(2)(A).
The Social Security Act further defines “work which exists in the national economy” to mean “work which exists in significant numbers either in the region where such individual lives or in several regions of the country.”40Id.
Through detailed regulations, the SSA has adopted a five-step sequential evaluation process to evaluate disability claims.41See 20 C.F.R. §§ 404.1520, 416.920 (2022). This five-step evaluative process operates like a flow chart; at each step, the claim is either resolved with a finding that the claimant is disabled or not disabled, or, if neither finding can be made, the process continues to the next step.42See Frank S. Bloch & Jon C. Dubin, Social Security Law and Practice in a Nutshell 83–85 (2021). For evaluations that reach the fifth and final step, the process ends with a finding that either the claimant is disabled or not disabled. The Supreme Court has summarized this five-step substantive disability evaluation process:
Step one determines whether the claimant is engaged in ‘substantial gainful activity.’ If he is, disability benefits are denied. If he is not, the decisionmaker proceeds to step two, which determines whether the claimant has a medically severe impairment or combination of impairments. . . .
. . . .
If the claimant does not have a severe impairment or combination of impairments, the disability claim is denied. If the impairment is severe, the evaluation proceeds to the third step, which determines whether the impairment is equivalent to one of a number of listed impairments that the [Commissioner] acknowledges are so severe as to preclude substantial gainful activity. If the impairment meets or equals one of the listed impairments, the claimant is conclusively presumed to be disabled. If the impairment is not one that is conclusively presumed to be disabling, the evaluation proceeds to the fourth step, which determines whether the impairment prevents the claimant from performing work he has performed in the past. If the claimant is able to perform his previous work, he is not disabled. If the claimant cannot perform this work, the fifth and final step of the process determines whether he is able to perform other work in the national economy in view of his age, education, and work experience. The claimant is entitled to disability benefits only if he is not able to perform other work.43Bowen v. Yuckert, 482 U.S. 137, 140–42 (1987) (citations omitted).
The SSA shoulders the affirmative burden of producing evidence of work that exists in significant numbers in the economy if a case reaches the fifth step of the process.44Id. at 146 n.5.
The SSA’s disability adjudication system for determining claims under this process has been labelled the “Mount Everest of bureaucratic structures”45Paul R. Verkuil, The Self-Legitimating Bureaucracy, 93 Yale L.J. 780, 781 (1984) (reviewing Jerry L. Mashaw, Bureaucratic Justice (1983)). stemming from the “largest adjudicative agency in the western world.”46Heckler v. Campbell, 461 U.S. 458, 461 n.2 (1983) (quoting Jerry L. Mashaw, Charles J. Goetz, Frank I. Goodman, Warren F. Schwartz, Paul R. Verkuil & Milton M. Carrow, Social Security Hearings and Appeals: A Study of the Social Security Administration Hearing System xi (1978)). There are more SSA ALJs adjudicating social security and SSI disability administrative hearings and more such cases than there are judges deciding and presiding over the smaller quantum of all civil and criminal cases and trials in all of the federal courts of the United States.47Mashaw et al., supra note 46, at xi; see also Authorized Judgeships, U.S. Courts, https://perma.cc/6W39-RQX4 (reporting 860 Article III authorized judgeships in 2021); Hearings and Appeals, Soc. Sec. Admin., https://perma.cc/5DSY-M5KR (reporting the Office of the Chief Administrative Law Judge oversees more than 1,500 ALJs).. The SSA system contains a four-stage adjudication process with three stages in addition to the hearing stage, and it processes over two million new claims and issues over 3.4 million decisions at the various stages each year.48See Soc. Sec. Admin., Annual Performance Report: Fiscal Years 2019–2021, at 44–46 (2020), https://perma.cc/4UHJ-QLVE (reporting 2.31 million completed claims, 544,000 reconsiderations, and 794,000 hearings for 2019, and targeting over 2.35 million completed claims for 2021); see also Off. Inspector Gen. Soc. Sec. Admin., Audit Report: Oversight of Administrative Law Judge Decisional Quality app. C, fig.C-1 (2017) [hereinafter Off. Inspector Gen., Audit Report], https://perma.cc/3JRS-3DN2; Hearings and Appeals, supra note 47. The original rationale for this multi-tiered administrative review system of claim denials for Social Security benefits is grounded in the program’s mandatory contributory nature; because payment of benefits appears as the return of contributions, “the erroneous denial of benefits appears as a form of theft.”49Matthew Diller, Entitlement and Exclusion: The Role of Disability in the Social Welfare System, 44 UCLA L. Rev. 361, 383 n.66 (1996). As Professor Matthew Diller has explained, “[e]xtensive possibilities for administrative review were intended to assure claimants that denials of benefits would be carefully scrutinized in recognition of the contributions they have made.”50Id.
As I have elsewhere described, the first two stages of the SSA administrative process include an initial application and reconsideration stage before the state disability determination services agencies.51See Jon C. Dubin, A Modest, Albeit Heavily Tested, Social Security Disability Reform Proposal: Streamlining the Adjudicative Process by Eliminating Reconsideration and Enhancing Initial Stage Development, 23 Geo. J. on Poverty L. & Pol’y 203 (2016) (describing and recommending changes in the initial and reconsideration stage of SSA’s four-stage disability adjudication process). The latter two (third and fourth) stages include hearings before federal ALJs at local offices of the SSA Office of Hearings Operations and administrative appeals before the SSA’s Appeals Council.52Id. at 205 n.15 (“[I]nitial and reconsidered determinations for benefits are handled by the state [disability determination] agencies, and administrative hearings and administrative appeals are handled by components of the SSA.”); see also 42 U.S.C. § 421(a). See generallyBowen v. City of New York, 476 U.S. 467, 471–72 (1986) (describing the four-stage administrative process and the division of state and federal responsibility). Within SSA’s Office of Analytics, Review, and Oversight, the Appeals Council considers appeals from ALJ-hearing decisions and acts as the final level of administrative review for the agency.53See Information About Social Security’s Hearings and Appeals Process, Soc. Sec. Admin., https://perma.cc/6Q7X-9NJY. After claimants have proceeded through all four stages of this process, they may seek judicial review of the SSA’s decision in a federal district court.54See 20 C.F.R. § 422.210 (2022).
II. The SSA ALJ-Hearing Process and its Manifest Incompatibility with Common Law Issue Exhaustion per Carr v. Saul
The considerable high-volume, assembly line, “mass justice” challenges of SSA disability program adjudication pervade the ALJ-hearing stage of adjudication.55Jerry L. Mashaw, Unemployment Compensation: Continuity, Change, and the Prospects for Reform, 29 U. Mich. J.L. Reform 1, 15–16 (1996). The SSA conducts nearly 800,000 hearings per year at its hearing offices around the country.56Off. Inspector Gen., Audit Report, supra note 48, at 46 (indicating that the SSA completed 793,863 ALJ hearings in 2019). Professor Jerry Mashaw has observed that “virtually all mass justice systems have decided that they are unable to function effectively without the active-adjudicator investigation, informal rules of evidence and procedure, and presiding officer control of issue definition and development that characterize an inquisitorial or examinational approach.”57Mashaw, supra note 55, at 16. The versatile, multifaceted, affirmative, and investigative functions of the SSA ALJ at the hearing stage have long been described by the courts:
When the claimant appears before an ALJ, he or she will appear before a person not wearing a judicial robe, who is required by law to act with three hats, (1) a judge, (2) a representative of the government who cross examines the claimant, and, (3) an adviser to the claimant, required by regulation to fully develop the case to see that the claimant has a fair hearing regardless of whether the claimant is represented by counsel or otherwise. . . . The burden of exploring all pertinent facts and issues rests with the ALJ and in many cases, the person is not represented by counsel nor by any other person.58Salling v. Bowen, 641 F. Supp. 1046, 1053 (W.D. Va. 1986); see also Carr v. Saul, 141 S. Ct. 1352, 1359 (2021) (“[I]t is the ALJ’s duty to investigate the facts and develop the arguments both for and against granting benefits.” (quoting Sims v. Apfel, 530 U.S. 103, 111 (2000) (plurality opinion))); Rausch v. Gardner, 267 F. Supp. 4, 6 (E.D. Wis. 1967) (describing the SSA hearing judge, 3-hat, multiple-role, model).
In addition, in the SSA’s non-adversarial hearing model, “[t]he Commissioner has no representative before the ALJ to oppose the claim for benefits.”59Sims, 530 U.S. at 111 (plurality opinion). Professor Bernard Schwartz pointed out that the SSA’s “inquisitorial” hearing model with multiple-role ALJs “may represent a practical method of dealing with many problems encountered in agencies dispensing mass justice[;] [t]he great need is to deal efficiently and fairly with a horde of cases, rather than to preserve all the accoutrements of the courtroom.”60Bernard Schwartz, Administrative Law § 5.29, at 285 (3d ed. 1991).
To ensure such a system is both efficient and fair, the courts have developed a large body of case law recognizing and enhancing statutory and regulatory obligations imposed on SSA ALJs, to develop issues and evidence at hearings for the benefit of claimants and to ensure a fair hearing, even when claimants are represented.61See Heckler v. Campbell, 461 U.S. 458, 471 (1983) (Brennan, J., concurring) (“[T]here is a ‘basic obligation’ on the ALJ in these nonadversarial proceedings to develop a full and fair record . . . .” (quoting Broz v. Schweiker, 677 F.2d 1351, 1364 (11th Cir. 1982))); see also id. at 471 n.1 (“The ‘duty of inquiry’ derives from claimants’ basic statutory and constitutional right to due process in the adjudication of their claims . . . .”). These expansive statutory and regulatory duties of the ALJs, beyond the general duty to develop the record,62See generally Carolyn A. Kubitschek & Jon C. Dubin, Social Security Disability Law and Procedure in Federal Court §§ 6:8–:9 (2022 ed.) (collecting cases and analyzing the ALJ’s duty to develop the record). include the obligation, in certain circumstances, to: order consultative medical evaluations of claimants by doctors and reports of those consultations;63See 20 C.F.R. §§ 404.1519, 416.919 (2022); Kubitschek & Dubin, supra note 62, § 6.12 (identifying circumstances when ALJs should or must procure consultative evaluations of claimants). produce vocational expert testimony;64See Kubitschek & Dubin, supra note 62, §§ 3:90, :92, :94 (identifying circumstances when ALJs must produce vocational expert hearing testimony). identify and reconcile in the record any conflicts between vocational expert testimony and the U.S. Department of Labor Dictionary of Occupational Titles;65SSR 00-4p, 65 Fed. Reg. 75,759 (Dec. 4, 2000). Social Security Rulings “represent precedent final opinions and orders and statements of policy and interpretations that [the SSA has] adopted” and “are binding on all components of the Social Security Administration.” 20 C.F.R. § 402.35(b)(1) (2022); see alsoHeckler v. Edwards, 465 U.S. 870, 873 n.3 (1984) (“Once published, a ruling is binding on all components of the Social Security Administration . . . .”). procure hearing testimony of a medical advisor;66SSR 18-01p, 83 Fed. Reg. 49,613 (Oct. 2, 2018).and make every reasonable effort to gather evidence from a claimant’s treating medical sources, and to recontact medical sources to clarify insufficient or inconsistent reports.67See 42 U.S.C. §§ 423(d)(5)(B), 1382c(a)(3)(H)(i); 20 C.F.R. §§ 404.1512(b)(1)(i), 416.912(b) (2022); How We Collect and Consider Evidence of Disability, 77 Fed. Reg. 10,651, 10,651–57 (Feb. 23, 2012). Among other affirmative responsibilities, ALJs are also emboldened with the authority to raise issues sua sponte.68See Carr v. Saul, 141 S. Ct. 1352, 1363 (2021) (Thomas, J., concurring in part and concurring in the judgment) (“ALJs can raise new issues sua sponte.” (citing 20 C.F.R. §§ 404.944, .946)).
When the ALJ or factfinder shoulders, or at least shares, such broad and far-reaching responsibilities for identifying and developing issues and evidence, in addition to developing the record and directing these intimate, face-to-face proceedings with informal, mass justice dispatch in an inquisitorial role, issue exhaustion is obviously less justified or appropriate.69See id. at 1359 (majority opinion) (“‘[T]he rationale for requiring issue exhaustion is at its greatest’ when ‘the parties are expected to develop the issues in an adversarial administrative proceeding,’ but ‘the reasons for a court to require issue exhaustion are much weaker’ when ‘an administrative proceeding is not adversarial.’” (emphasis added) (quoting Sims v. Apfel, 530 U.S. 103, 110 (2000))); id. at 1363 (Thomas, J., concurring in part and concurring in the judgment) (“This decidedly pro-claimant, inquisitorial process is quite unlike an adversarial suit in which parties are expected to identify, argue, and preserve all issues.”). By way of comparison, even in Germany’s somewhat more adversarial inquisitorial legal system, appeals from inquisitorial trials are not subject to issue exhaustion. See William B. Fisch, Recent Developments in West German Civil Procedure, 6 Hastings Int’l & Compar. L. Rev. 221, 260 n.254 (1983) (translating and quoting the German Civil Procedure Code (Zivilprozessordnung or ZPO) § 537 (1950): “The subject matter of argument and decision in the appellate court is all disputed points relevant to a claim sustained or rejected below, with respect to which the parties’ demands on appeal require argument and decision, even if these points were not argued or decided below.”). See generally John H. Langbein, The German Advantage in Civil Procedure, 52 U. Chi. L. Rev. 823, 823–25, 856–57 (1985) (describing how the German inquisitorial system avoids “[t]he excesses of American adversarial justice” and includes features such as fully de novo appellate review). As the Court in Carr explained, “The critical feature that distinguishes adversarial proceedings from inquisitorial ones is whether claimants bear the responsibility to develop issues for adjudicators’ consideration.”70Carr, 141 S. Ct. at 1358. Moreover, “Where claimants are not expected to develop certain issues in ALJ proceedings, it is generally inappropriate to treat those issues as forfeited.”71Id. at 1358 n.3.
Further, it is apparent that SSA ALJs have significantly wider and more meaningful inquisitorial and investigative duties to develop issues, arguments, and evidence at hearings than does the considerably more-removed Appeals Council at issue in Sims. Indeed, the Sims plurality opinion expressly relied on the ALJ’s inquisitorial hearing duties and functions in determining that prudential justifications did not support common law issue exhaustion at the Appeals Council.72See Sims, 530 U.S. at 110–11 (plurality opinion).
In addition, most legal issues do not arise and do not become legal issues until the ALJ issues a decision. One cannot often predict how an ALJ will rule, what the ALJ will find persuasive, and how the ALJ will apply facts to law in the final analysis. In that respect, the overwhelming majority of issues for appeal do not ripen into salient, identifiable legal issues until after the ALJ issues a decision. Both the broader hearing-level ALJ inquisitorial duties and issue ripeness occurring after the ALJ’s decision suggest that there are even greater prudential justifications against judicially imposing common law issue exhaustion at the ALJ-hearing stage than at the Appeals Council stage.
Further, the Appeals Council’s exercise of plenary review authority after ALJ proceedings, regardless of whether issues are raised at the hearing stage reinforces the agency’s expectation and understanding that hearing-level issue assertion is not a prerequisite to subsequent consideration of those issues. Unlike the operation of judicial waiver rules, where failure to raise an issue in a district court trial can preclude consideration in the court of appeals, the Appeals Council raises issues sua sponte even if the inquisitorial ALJ or claimants declined to do so and the Appeals Council does not treat such omissions in ALJ proceedings as an issue waiver.73See Carr, 141 S. Ct. at 1359 (citing Sims, 530 U.S. at 111 (plurality opinion)); id. at 1363 (Thomas, J. concurring in part and concurring in the judgment) (“[S]hould an ALJ err, the Appeals Council may review cases to correct anything from ‘error[s] of law’ to ‘broad policy or procedural issue[s] that may affect the general public interest.’” (quoting 20 C.F.R. § 404.970(a))); see also 20 C.F.R. §§ 404.900(b), 404.970(b), 404.976, 416.1500(b), 416.1570(b), 416.1576 (2022). That even SSA deems it irrelevant, for purposes of further agency review, whether claimants have raised issues at the hearing level further counsels against judicial imposition of such a rule to govern access to the courts and to judicial review of those issues in the agency’s decision.
In addition, the ALJ-hearing stage is unusually informal, being designed and advertised as claimant-accessible and claimant-protective. This structure and design further weighs strongly against the judicial imposition of formal common law issue exhaustion at that level. In evaluating and rejecting a challenge to the SSA hearing process in Richardson v. Perales,74402 U.S. 389 (1971). the Supreme Court declared:
There emerges an emphasis upon the informal rather than the formal. This, we think, is as it should be, for this administrative procedure, and these hearings, should be understandable to the layman claimant, should not necessarily be stiff and comfortable only for the trained attorney, and should be liberal and not strict in tone and operation. This is the obvious intent of Congress so long as the procedures are fundamentally fair.75Id. at 400–01.
The Supreme Court has also repeatedly emphasized that the agency’s adjudicative provisions were designed to be “unusually protective” of claimants.76Smith v. Berryhill, 139 S. Ct. 1765, 1776 (2019); Heckler v. Day, 467 U.S. 104, 106 (1984). Congressional intent supports this conclusion.77See H.R. Rep. No. 76-728, at 44 (1939) (“[I]t is not contemplated that the services of an agent or attorney will be necessary in presenting the vast majority of [SSA] claims . . . .”); Hearings Held by Administrative Appeals Judges of the Appeals Council, 85 Fed. Reg. 73,138, 73,139–40 (Nov. 16, 2020) (comparing the legislative histories of the Social Security Act and Administrative Procedure Act and observing “there are significant differences between an informal, non-adversarial Social Security hearing and the type of formal, adversarial adjudication to which the APA applies”). As Justices Thomas, Gorsuch, and Barrett observed in their concurrence in Carr: “[h]earings are so informal that lawyers, briefs, and even attendance are often optional.”78141 S. Ct. at 1363 (Thomas, J., concurring in part and concurring in the judgment) (citing §§ 404.948–.950).
Agency regulations and forms reinforce the agency’s focus on informality, simplicity, and claimant accessibility.79See 20 C.F.R § 404.900(b) (2022); id. § 416.1400(b) (“[W]e conduct the administrative review process in an informal, non-adversarial manner.”); see also Biestek v. Berryhill, 139 S. Ct. 1148, 1152 (2019). Analogous to the form the Sims plurality and Justice O’Connor found misleading for discouraging Appeals Council issue exhaustion in Sims, the SSA’s forms provided to claimants to request ALJ hearings are similarly misleading. In Carr, the Court found that
[l]ike the form supplied by the SSA to request Appeals Council review, the form to request an ALJ hearing provides roughly three lines for claimants to explain their disagreement with the agency’s determination, and the SSA ‘estimate[s]’ that it will take just ‘10 minutes to read the instructions, gather the facts, and answer the questions’ on that form.80Carr, 141 S. Ct. at 1359 (quoting Soc. Sec. Admin., OMB No. 0960-0269, Request for Hearing by Administrative Law Judge (2015), https://perma.cc/7ZRR-FF4S (Form HA–501–U5)); see also Soc. Sec. Admin., supra.
Lastly, “as with the Appeals Council, SSA ‘regulations provide no notice that claimants must . . . raise specific issues before’ the ALJ ‘to preserve them for review in federal court,’”81Carr, 141 S. Ct. at 1359–60 (quoting Sims v. Apfel, 530 U.S. 103, 113 (2000) (O’Connor, J., concurring in part and concurring in the judgment)). much less provide clear or fair warning of an issue exhaustion requirement to counter the pervasive reinforcement of hearing level informality and lay-claimant-accessibility.82See Sims, 530 U.S. at 108; id. at 113 (O’Connor, J., concurring in part and concurring in the judgment).
Beyond the agency’s myriad and pervasive representations of informality through its regulations and forms, the ALJs themselves often reinforce expectations of lay-claimant-accessibility and simplicity through comments and actions at hearings. In a decision by a district court rejecting application of common law hearing-level issue exhaustion to bar judicial consideration of a claimant’s constitutional objection to her ALJ’s appointment, the court recounted an exchange between the ALJ and claimant at the hearing’s outset:
The ALJ began by telling plaintiff that “[t]his is just an informal fact-finding process.” He went on to say:
The way I explain it to people, it’s no worse than if you and me were just sitting in your living room talking about your life. This isn’t Law and Order. This isn’t some kind of show that you’re watching where everyone is getting cross-examined. It’s real low key, no big deal.
The ALJ’s statement certainly indicates the non-adversarial nature of the hearing. But it goes well beyond that in its benign characterization of the proceeding. The ALJ equates the hearing to a casual conversation in plaintiff’s home with no legal consequences at all. The ALJ’s statement thereby reinforces the propriety of not applying the exhaustion requirement in this case.83Probst v. Berryhill, 377 F. Supp. 3d 578, 586 (E.D.N.C. 2019) (citations omitted), aff’d sub nom. Probst v. Saul, 980 F.3d 1015, 1025 (4th Cir. 2020), cert denied, 141 S. Ct. 2633 (2021).
Sometimes ALJs go further and actively discourage claimant representatives from raising issues and arguments and further developing the record because of the ostensibly informal nature of these hearings.84See, e.g., Ventura v. Shalala, 55 F.3d 900, 903 (3d Cir. 1995); Rosa v. Bowen, 677 F. Supp. 782, 784–85 (D.N.J. 1988). Some ALJs even discourage pro se claimants from seeking counsel as undesirable or unnecessary in these informal hearings.85See, e.g.,Kendrick v. Sullivan, 784 F. Supp. 94, 102–03 (S.D.N.Y. 1992) (listing cases demonstrating ALJs’ efforts to induce claimants to proceed without counsel, including one case, Spears v. Heckler, 625 F. Supp. 208, 209, 218 (S.D.N.Y. 1985), where the ALJ gave the claimant a “Hobson’s choice” of proceeding with the hearing pro se or having the case dismissed). Approximately 50% of SSI disability claimants and 40% of all claimants lack attorney representation.86See Monthly Processing Time Statistics, Soc. Sec. F., Jan. 2019, at 16, 17 , https://perma.cc/J7S9-49B3. A total of 295,916 claimants lacked attorney representation at their ALJ hearings in fiscal year 2018.87Id. Hearings are typically short, often lasting less than thirty minutes.88See, e.g., Watson v. Shalala, No. 92-5108, 1993 WL 391418, *1 (5th Cir. Sept. 22, 1993) (hearing lasted seventeen minutes and full transcript was nine pages); Carrier v. Sullivan, 944 F.2d 243, 245 (5th Cir. 1991) (hearing lasted twenty-six minutes); James v. Bowen, 793 F.2d 702, 705 (5th Cir. 1986) (hearing lasted ten minutes).
Indeed, this unusual adjudicative informality extends to the substantial constriction of SSA ALJs’ legal authority; ALJs are prohibited from applying or interpreting controlling case law from the courts of appeals—that has not been first interpreted and embodied in an SSA Acquiescence Ruling—even while adjudicating hearings within the circuits where the case law arose.89See SSR 96-1p, 1996 WL 374182 (July 2, 1996); Organization and Procedures and Application of Circuit Court Law, 63 Fed. Reg. 24,927, 24,930–31 (May 6, 1998). See generally Stieberger v. Sullivan, 738 F. Supp. 716, 757–60 (S.D.N.Y. 1990) (describing “informal non-acquiescence” through current SSA “acquiescence” policy). Despite the issuance of numerous courts of appeals decisions that have modified substantive SSA disability positions, the SSA effectively nullifies many such circuit precedents by declining to issue acquiescence rulings in the overwhelming majority of such cases.90For example, there are many precedential Third Circuit social security disability decisions with holdings that vary from agency policy. See, e.g., Allen v. Barnhart, 417 F.3d 396, 401, 404 (3d Cir. 2005) (placing significant limits on use of step-five, grid-based Social Security Rulings in a manner that is contrary to SSA policy and to those SSRs); Ramirez v. Barnhart, 372 F.3d 546, 554–55 (3d Cir. 2004) (limiting reliance on vocational expert testimony where an ALJ’s hypothetical question failed to include undisputed, non-trivial limitations in concentration, persistence, or pace and instead substituted a restriction to simple or routine tasks—a holding contrary to agency policy in SSR 96-8p). However, there is only one remaining Third Circuit acquiescence ruling on a substantive disability issue and no AR for either of the above two decisions. See Acquiescence Rulings: Third Circuit Court, Soc. Sec. Admin., https://perma.cc/MB44-MR4P (listing the four, total, current Third Circuit ARs including the only one acquiescing in a substantive initial eligibility disability law issue, AR 01-1(3), in Sykes v. Apfel, 228 F.3d 259 (3d Cir. 2000)). As a result, all of the agency’s ALJs are required to ignore and not consider many controlling, otherwise decisive precedential appellate court decisions at ALJ hearings. Because hundreds of federal court appeals are decided in reliance on such controlling circuit case law issues each year,91See generally Kubitschek & Dubin, supra note 62, at §§ 1:21–:26. their presentation in court is often determinative but their assertion in ALJ-hearing proceedings would be futile. The fact that ALJs at the hearing level are barred by SSA “acquiescence” policy from considering and applying precedents that are binding in federal court further militates against applying common law issue exhaustion and precluding such issues’ assertion in the only forum where they can be properly considered.92See Carr v. Saul, 141 S. Ct. 1352, 1361–62 (2021). Indeed, even Justice Breyer’s singularly narrow, and (as discussed below) doctrinally questionable, concurring opinion recognizes that “futil[ity]” is a recognized exception to even the most formal exhaustion requirements, much less judicially created common law issue exhaustion. See id. at 1363 (Breyer, J., concurring in part and concurring in the judgment).
As shown above, based on the comparative structure and functioning of the SSA’s ALJ-hearing and Appeals Council stages of review, there are multiple reasons why common law issue exhaustion is even less supportable and more incompatible at the ALJ-hearing level than at the Appeals Council level where the doctrine is categorically precluded by Sims. While the Court in Carr explained that “[m]uch of what the Sims opinions said about Appeals Council review applies equally to ALJ proceedings” and “[t]he parallels between ALJ and Appeals Council proceedings are many,”93Id. at 1359–60 (majority opinion). it also found that a consideration and a few regulatory provisions can be interpreted as adding some “comparatively more adversarial” elements to the hearing process.94Id. at 1360. Presumably, those elements led to the Court’s inclusion of footnote 5, cautiously reserving the question whether common law issue exhaustion at the ALJ-hearing level might ever apply to issues or objections that are more “routine” than the structural constitutional issue raised on judicial review in Carr.
However, closer examination of the identified consideration and those two regulatory provisions and their history reflects that these elements have a trivial, if any, impact on the pervasively informal, inquisitorial, non-adversarial, and claimant-protective nature of the hearing process and are more than offset by the prudential factors cited above (broader comparative affirmative inquisitorial responsibilities by the hearing ALJs and greater issue ripeness and relevance after the ALJ hearing and decision).
First, the Court suggested in Carr that one factor portending greater adversarial structure at the hearing level than at the Appeals Council was that ALJ-hearing proceedings are “mandatory” and available as of right, whereas Appeals Council review is merely “discretionary.”95See id. This suggestion semantically misconstrues the nature of the Appeals Council administrative appeal stage of review. Unlike truly optional or discretionary administrative appeals processes, such as the optional process from appeals from hearings in certain proceedings by the Department of Housing and Urban Development (“HUD”) analyzed by the Supreme Court in Darby v. Cisneros,96509 U.S. 137, 141, 149 (1993) (holding that HUD’s discretionary administrative appeal process—which provided at 24 CFR § 24.314(c) (1992), that “[a]ny party may request such a review in writing within 15 days of receipt of the hearing officer’s determination”—was not a mandatory exhaustion requirement pursuant to the APA and, therefore when bypassed by a party, did not preclude judicial review of HUD’s hearing decision). SSA claimants generally possess no “discretion” or option to decline to seek Appeals Council review if they will eventually seek judicial review of the agency’s final decision denying benefits.97See 20 C.F.R. § 422.210 (2022). See generally Carr, 141 S. Ct. at 1358 n.2 (“Issue exhaustion should not be confused with exhaustion of administrative remedies. There is no dispute in these cases that petitioners exhausted their administrative remedies, meaning that they proceeded through each step of the SSA’s administrative review scheme and received a ‘final decision’ before seeking judicial review.”). Where claimants have exhausted Appeals Council review once and have then obtained a federal court order on judicial review remanding the agency’s decision for further proceedings, if the claimants are then unsuccessful in the new hearing proceedings, they are provided the option to bypass the Appeal Council stage and proceed directly to federal court for further judicial review on this second or subsequent appeal in the case. See 20 C.F.R §§ 404.984(d), 416.1484(d) (2022). This Appeals Council stage is thus a mandatory step and regulatory exhaustion requirement that is a prerequisite to judicial review in all SSA cases except for a narrow category of cases involving exceptions to the agency’s statutory or regulatory exhaustion requirements.98See generally Kubitschek & Dubin, supra note 62, at §§ 7:19–:31 (analyzing statutory and regulatory exhaustion of administrative remedies or claims requirements and exhaustion exceptions in Social Security disability cases and collecting cases on the topic). For a discussion of the limited option to bypass the Appeals Council for a second or subsequent judicial review action occurring after an unsuccessful hearing court remand (and after having once sought Appeals Council review in the same case), see supra note 97 (discussing 20 C.F.R. §§ 404.984(d), 416.1484(d)). These exhaustion exceptions cover both the regulatory mandated ALJ-hearing level and Appeals Council stage exhaustion requirements.99See Kubitschek & Dubin, supra note 62, at §§ 7:19–:31.
While it is true that the Appeals Council only grants review in a limited number of cases (e.g., 15% in fiscal year 2020),100Soc. Sec. Admin., FY 2022 Congressional Justification 165 (2021), The vocabulary of Appeals Council activities can be confusing. When a claimant “requests review,” the Appeals Council investigates the file to determine whether the case should be considered for possible changes. This screening involves examining the complete file, reading all the exhibits, and sometimes playing a portion of the tape recording of the hearing. This process, however, is not termed “review”—that label is reserved for the action of the Appeals Council after it has decided to accept the case.
https://perma.cc/J86U-BBMT. what that means is that it finds “defects” only in that small percentage of cases.101See Charles H. Koch, Jr. & David A. Koplow, The Fourth Bite at the Apple: A Study of the Operation and Utility of the Social Security Administration’s Appeals Council, 17 Fla. St. U. L. Rev. 199, 244 (1990). It evaluates all appeals that are submitted but only finds errors meriting review in a relatively small percentage of the cases.102A comprehensive study of the SSA’s Appeals Council by Professors Charles Koch and David Koplow, commissioned by the Administrative Conference of the United States (ACUS), explained the SSA’s confusing verbiage pertaining to the Appeals Council review and the evaluation process of all SSA administrative appeals from ALJ hearing decisions:
Id. at 243 n.239. As the study explained, only if this evaluation (which is conducted in every case) reveals “defects” in the ALJ’s decision will the Council then grant “review.” Id. at 244. Accordingly, all timely administrative appeals from ALJ decisions are evaluated for error or defect.
The vocabulary of Appeals Council activities can be confusing. When a claimant “requests review,” the Appeals Council investigates the file to determine whether the case should be considered for possible changes. This screening involves examining the complete file, reading all the exhibits, and sometimes playing a portion of the tape recording of the hearing. This process, however, is not termed “review”—that label is reserved for the action of the Appeals Council after it has decided to accept the case.
Indeed, the Appeals Council’s low rate of discerning error or “defect” in ALJ hearings through this administrative appeal process and the Court’s further observation that most claimants file only a one-page appeal105Carr v. Saul, 141 S. Ct. 1352, 1360 (2021). may suggest that success at the Appeals Council stage is more commonly achieved by claimants who are fortunate enough to obtain counsel and can approach the administrative appeal stage as a more adversarial process. This would entail more meaningful briefing and supplementation efforts by claimants along with less expectation of inquisitorial, non-adversarial, claimant-protective agency assistance, than at the hearing stage.
Second, the Court identified the SSA’s notice of hearing regulations as a factor suggesting a potentially greater adversarial process at the hearings stage.106Id. Since those regulations provide that the notice of hearing include “[t]he specific issues to be decided in [the] case” and then require that the claimant notify the ALJ in writing of objections to those issues, they support greater expectation of adversarial issue identification and assertion by claimants.107See id.(quoting 20 C.F.R. § 404.938(b)(1) (2020)) (citing 20 C.F.R. § 404.939). Indeed, the Tenth Circuit in Carrsuggested sua sponte that those regulations perhaps established a regulatory hearing level issue exhaustion requirement.108See Carr v. Comm’r, SSA, 961 F.3d 1267, 1275 n.7 (10th Cir. 2020), rev’d sub nom. Carr v. Saul, 141 S. Ct. 1352 (2021). In its opposition to Carr’s certiorari petition, the SSA argued that this regulation justified rejection of the petition. See Brief for the Respondent at 11, Davis v. Saul, 141 S. Ct. 811 (2020) (No. 20-105), 2020 WL 6205327, at *11 (Sept. 29, 2020) (“[N]either Sims’ holding nor its reasoning extends to a failure to present an issue to the ALJ, rather than to the Appeals Council. . . . Quite the opposite, the agency’s regulations inform each claimant that the ALJ will notify him of the ‘specific issues to be decided’ at the hearing, and they instruct the claimant that, if he ‘object[s] to the issues to be decided,’ he ‘must notify the [ALJ] in writing at the earliest possible opportunity’ and ‘must state the reason(s) for [those] objection(s).’” (citing 20 C.F.R. §§ 404.938–.939, 416.1438–.1439)). By the time of its principal brief on the merits and oral argument, the SSA had abandoned this argument. See Carr, 141 S. Ct. at 1360 n.4 (“Commissioner ‘do[es] not argue that these regulations themselves impose a forfeiture rule that applies here.’”); see also id. at 1358 (“The Commissioner concedes that no statute or regulation obligated petitioners to raise their Appointments Clause challenges in administrative proceedings.”). However, the history and function of these regulations do not support these suppositions.
The regulation requiring objection to the issues in “[t]he notice of hearing” (now in 20 C.F.R. §§ 404.939; 416.1439 (2022)) was first promulgated for use in the SSI program in 1974109See Hearings, Appeals, and Judicial Review, 39 Fed. Reg. 37,976, 37,978, (Oct. 25, 1974) (appearing in 20 C.F.R. § 416.1433). and then extended to the Disability Insurance Benefit (“DIB”) program in 1976.110See Hearings, Appeals, and Judicial Review Under Titles II, and XVIII of the Social Security Act, 41 Fed. Reg. 51,585, 51,586 (Nov. 23, 1976) (appearing in 20 C.F.R. § 404.923). Typically, in disability program cases, the notice of hearing informs claimants that the ALJ will be deciding eligibility for DIB, SSI, or both, and whether the hearing’s focus is on the subject of a lower agency disability determination or on a non-disability issue prerequisite to benefits eligibility (such as the required income or resource levels for SSI benefits), or the validity of an overpayment determination.111See generally Soc. Sec. Admin., Hearing, Appeals and Litigation Law Manual I-2-2-10 (2016), https://perma.cc/3E2E-36HG (describing the SSA’s notice of issues).
The hearing notice does not delineate the many legal arguments and issues that may arise from adjudication of those benefit claims and, as such, does not call for objection to all such conceivable issues or arguments, or to the lack of comprehensive issue and argument delineation in the notice.112See id. Rather, SSA guidance has interpreted these regulations to inform claimants to object if ALJs erroneously frame the issues identified or noticed, not if ALJs fail to raise other issues or to predict issues which may arise based on how the ALJ chooses to conduct the hearing and decide the case. For example, SSA guidance requires a claimant requesting a hearing to challenge a denial of SSI benefits based on excess income to object that the hearing was incorrectly noticed about disability eligibility and not excess income.113See id. at exs. 1–2; see also Amendments to the Administrative Law Judge, Appeals Council, and Decision Review Board Appeals Levels, 72 Fed. Reg. 61,218, 61,231 (Oct. 29, 2007) (“If you believe that the issues contained in the hearing notice are incorrect, you should notify the [ALJ] in writing . . . no later than 5 business days before . . . the hearing.”).
Since the SSA anticipates that only ten claimants per year will object to the notice of issues pursuant to this regulation and it will take each of those claimants no more than thirty minutes to lodge all of their objections in writing,114SeeAmendments to the Administrative Law Judge, Appeals Council, and Decision Review Board Appeals Levels, 72 Fed. Reg. at 61,227. the agency’s announced expectations do not support the assumption of significant adversarial intrusion on the hearing process or the presence of a comprehensive issue identification requirement for claimants at their ALJ hearings. More fundamentally, when the SSA first promulgated this hearing-notice objection regulation in 1974, it expressly rejected a suggestion, in the notice and comment process, urging application of more adversarial, “formal advocacy” system rules, declaring:
In administering the programs for which it is responsible, it is the policy of the [SSA] to provide advice and assistance as necessary to insure the protection of every individual’s rights under the law.
. . . [F]rom the [SSA’s] past experience in dealing with individuals from all socio-economic backgrounds, the procedures for providing support and assistance to individuals have proven adequate without a formal advocacy approach. Therefore, the suggestion to provide an advocacy system for individuals under the [SSI] program is not accepted.115Hearings, Appeals, and Judicial Review, 39 Fed. Reg. 37,976, 37,976 (Oct. 25, 1974).
Third and finally, the Carr Court referenced as reflective of potential comparative adversarial hearing-level design a regulation “instruct[ing] claimants ‘to notify the [ALJ] at [the] earliest opportunity’ if they ‘object to the [ALJ] who will conduct [their] hearing.’”116Carr v. Saul, 141 S. Ct. 1352, 1360 (2021) (quoting 20 C.F.R. § 404.940 (2020)). This narrow regulation is designed to provide a mechanism to protect against bias, prejudice, unfair hearings, and conflicts of interest by ALJs in the relatively few cases where such overt or explicit bias can be identified by the SSA.117See generally Frank S. Bloch & Jon C. Dubin, Social Security Law, Policy and Practice: Cases and Materials 787–819 (2016)(examining explicit bias cases, discussing inexplicable racial disparities in ALJ decisions identified by the U.S. General Accounting Office, the SSA’s failure to develop sufficient processes and wherewithal to address the problem, the procedural and institutional culture hurdles mitigating against relief in such challenges, and paucity of claims seeking relief under the SSA’s ALJ bias provisions). As such, it does not suggest adversarial alteration of the hearing process in routine cases.
Moreover, this provision is neither confined to hearing-level objections nor phrased as a challenge, which must be raised at the hearing or forfeited. The regulation only suggests assertion at the “earliest opportunity,” which could very well not become apparent until after the ALJ’s decision and therefore beyond the hearing stage. Indeed, further agency guidance in a Social Security Ruling provides that: “[i]f, in conjunction with a request for review, the Appeals Council receives an allegation of ALJ unfairness, prejudice, partiality, or bias, the Appeals Council will review the claimant’s allegations and hearing decision under the abuse of discretion standard.”118SSR 13-1p, 2013 WL 633939, at *3 (Jan. 29, 2013); see also id. at *4 (“After reviewing the administrative record to evaluate the allegation of unfairness, prejudice, partiality, or bias by the ALJ under the abuse of discretion standard, the Appeals Council will send the claimant a notice, order, or decision explaining that it has considered the allegation under the abuse of discretion standard and stating whether it found an abuse of discretion”). The ruling further explains that “the Appeals Council may identify ALJ conduct that it determines warrants referral to the Division of Quality Service even if a claimant has not alleged it or filed a request for review with the Appeals Council.”119Id. at *5.
In short, and as explained by Justices Thomas, Gorsuch, and Barrett in Carr:
To be sure, a few regulatory provisions direct claimants to advocate on their own behalf by objecting to problems, including if the agency misidentifies issues before the hearing or if the ALJ is “prejudiced or partial.” But these unsurprising reminders that a claimant should not sit idly on the sidelines hardly demand that the penalty for overlooking an argument is forfeiture. On the contrary, such a permanent consequence would be surprising in light of the flexible, “informal” mechanisms that undergird the entire agency review process.120Carr, 141 S. Ct. at 1363 (Thomas, J., concurring in part and concurring in the judgment) (citations omitted); see also Sims v. Apfel, 530 U.S. 103, 110 (2000) (plurality opinion).
III. The Absence of a General Common Law Issue Exhaustion Rule for Inquisitorial Proceedings
Justice Breyer’s now singular position in concurring in Carr, expanding on his dissent in Sims, is predicated on the assumption of a pervasive, well-established general common law issue exhaustion rule, and the absence of any broad established exhaustion exception for inquisitorial proceedings like those conducted by the SSA. His concurrence in Carr, therefore, was predicated entirely on the reliance on quite limited “futility” and constitutional claims exceptions to exhaustion requirements generated by the Article II Appointment Clause issues, while reaffirming his view of the otherwise general and presumptive applicability of common law issue exhaustion in all other SSA hearing contexts, based on his advance balancing of prudential factors served through such a rule. Justice Breyer’s position stands in sharp contrast to the rest of the Court in Carr, and that of the five decisive Justices in Sims. That group of thirteen Justicesreasoned that any general rule of issue exhaustion had only arisen in adversarial contexts, and largely by statute or regulation, and therefore should not be extended to the SSA’s inquisitorial proceedings based on a balancing of relevant prudential factors.121See Carr, 141 S. Ct. at 1362; Sims, 530 U.S. at 111–12 (plurality opinion).
This distinction may seem merely one of semantics, but it has practical consequences for litigants and the courts. It raises questions about who bears the burden of either establishing the propriety of extending common law issue exhaustion to new contexts (presumably the agency) or of securing an exception to a pre-existing, presumptively applicable, common law issue exhaustion rule (presumably the claimant). For the reasons discussed below, the Court’s non-Breyer contingent has the far stronger position.
First, the noticeable introduction of issue exhaustion to SSA proceedings in judicial decisions did not begin until the late 1980s,122See Fandino v. Sec’y of Dep’t of Health & Hum. Servs., No. 86 Civ. 0010, 1987 WL 16150, at *5 n.4 (S.D.N.Y. Aug. 21, 1987) (referencing the SSA’s issue exhaustion assertion as a “novel argument”); see also Jozefick v. Shalala, 854 F. Supp. 342, 346 n.9 (M.D. Pa. 1994) (rejecting application of issue exhaustion and noting in 1994 that the SSA had not yet provided any authority supporting such a rule). well after both the Court’s purported establishment of common law issue exhaustion in the 1920s123The Court’s first decision suggesting the potential existence of a “general” issue exhaustion doctrine was United States v. L.A. Tucker Truck Lines, Inc., 344 U.S. 33, 37–38 (1952). In L.A.Tucker Trucks, the Court referenced four cases in a footnote to support its statement about a general issue exhaustion rule, with two cases dating back to the 1920s. See id. at 36 n.5 (first citing Spiller v. Atchison, Topeka & Santa Fe Ry. Co., 253 U.S. 117, 130 (1920); then United States ex rel. Vajtauer v. Comm’r of Immigr., 273 U.S. 103, 113 (1927); then United States v. N. Pac. Ry. Co., 288 U.S. 490, 494 (1933); and then Unemployment Comp. Comm’n v. Aragon, 329 U.S. 143, 155 (1946)). and the implementation of the SSA’s adjudicative processes for disability claims in the 1950s.124SeeSocial Security Amendments of 1956, Pub L. No. 84-880, § 103, 70 Stat. 807, 815 (1956) (codified at 42 U.S.C. § 423(c)(2)); Social Security Amendments of 1954, Pub. L. No. 83-761, § 106(d), 68 Stat. 1052, 1080 (1954) (codified at 42 U.S.C. § 416(i)(1)). The circuits adopting issue exhaustion for SSA proceedings did so largely as applied to the Appeals Council and not ALJ-hearing proceedings.125See, e.g., James v. Chater, 96 F.3d 1341, 1343–44 (10th Cir. 1996) (imposing common law issue exhaustion requirement applicable for SSA Appeals Council appeals); Paul v. Shalala, 29 F.3d 208, 210–11 (5th Cir. 1994) (same). These courts also heedlessly adapted issue exhaustion precedents from adversarial adjudicative contexts, sometimes based on statutory or regulatory issue exhaustion provisions, without any prudential balancing of the implications of extending such a rule to the inquisitorial, non-adversarial, and unusually informal characteristics of SSA proceedings.126Brief for Petitioner at *31 n.24, Sims v. Apfel, 530 U.S. 103 (2000) (No. 98-9537), 2000 WL 115893, at *31 n.24 (“The Fifth Circuit’s issue exhaustion rule in Paul v. Shalala, applied to Ms. Sims, was directly derived in part from the unexplained application of the formal appellate procedural issue preservation rule announced in In re Corrugated Container. The Sixth Circuit’s rule in Harper v. Secretary of Health [&] Human [Services] and the Eighth Circuit’s pre-Harwood rule, announced in Weikert v. Sullivan, each relied, without explanation, on a Sixth Circuit Black Lung worker’s compensation decision, Hix v. Director, Office of Workers’ Compensation Programs. The Hix case, in turn, relied on Cox v. Benefits Review Board[,] which clarified that these adversarial worker’s compensation hearings are governed by a duly promulgated issue exhaustion regulatory requirement that ‘a petition for review shall contain a statement indicating the specific contentions of the petitioner and describing with particularity the substantial questions of law or fact to be raised on appeal[,] 20 C.F.R. § 802.210(a) (1985).’ In Johnson [v. Apfel], Chief Judge Posner noted that the Seventh Circuit’s SSA issue exhaustion precedents arose from the application of a decision from ‘an unrelated area of administrative regulation.’ [involving “exhaustion of remedies,” not issue exhaustion]. The Ninth Circuit’s rule in Meanel v. Apfel was derived, without reasoning, from Avol v. Secretary of Health and Human [Services], a Medicare decision. Avol was derived, without explanation, from a decision in an adversarial immigration proceeding. Finally, the Tenth Circuit’s rule in James v. Chater relied on Pope, Harper,Weikert and other unpublished or inapposite cases, without any reasoning beyond the recognition that some courts had applied the general issue exhaustion rule to SSA proceedings.” (citations omitted)). Accordingly, issue exhaustion was introduced into SSA proceedings as a common law prudential rule without a single judicial decision considering or balancing the range of applicable prudential considerations inherent in a determination to create and extend such a rule to this context. When the courts of appeals in the late 1990s started to consider and balance a range of applicable prudential factors in this context, they uniformly rejected the application of issue exhaustion,127See Johnson v. Apfel, 189 F.3d 561, 562–64 (7th Cir. 1999) (rejecting the SSA’s Appeals Council issue exhaustion, citing with approval the law review article Torquemada Meets Kafka, Dubin, supra note 3, and inviting en banc consideration if there were any opposition to the suggestion to overrule six previous Seventh Circuit decisions applying SSA issue exhaustion); Harwood v. Apfel, 186 F.3d 1039, 1042–43 (8th Cir. 1999) (rejecting Appeals Council issue exhaustion, citing Torquemada Meets Kafka, Dubin,supra note 3, multiple times). thereby creating the initial circuit conflict requiring resolution in Sims.128Sims, 530 U.S. at 106.
Second, Justice Breyer’s assertion in Carr of a general or presumptive issue exhaustion rule applicable to SSA proceedings is predicated on a doctrinally unsound foundation. That proposition relied exclusively upon his dissenting opinion in Sims.129Carr v. Saul, 141 S. Ct. 1352, 1363–64 (2021) (Breyer, J., concurring in part and concurring in the judgment) (“I continue to believe that, ‘[u]nder ordinary principles of administrative law a reviewing court will not consider arguments that a party failed to raise in timely fashion before an administrative agency.’ I also adhere to my prior view that, in the particular context of the [SSA], a claimant ‘ordinarily must raise all relevant issues before the ALJ’ and that the ‘nonadversarial nature’ of the agency’s procedures is generally irrelevant to whether the ordinary rule requiring issue exhaustion ought to apply.” (citations omitted)); see also Sims, 520 U.S. at 114, 117 (Breyer, J. dissenting). In turn, the Sims dissent misapplied previous SSA exhaustion doctrine by conflating considerations applicable to statutory jurisdictional “exhaustion of remedies” or claims requirements with common law issue exhaustion to assert the vitality of a general, presumptively applicable, ALJ-hearing-level issue exhaustion requirement. After pointing out the “particularly important,” “ordinary ‘exhaustion of remedies’ rules” in social security cases,130See Sims, 530 U.S. at 117 (Breyer, J., dissenting). the Sims dissent signaled its belief that the plurality and concurring Justices’ rejection of Appeals Counsel issue exhaustion was limited to that process stage and those Justices would agree with retaining a mandatory, ALJ-hearing-level issue exhaustion requirement.131Id. The dissent stated:
Yet I assume the plurality would not forgive the requirement that a party ordinarily must raise all relevant issues before the ALJ. Cf. Shalala [v. Ill. Council on Long Term Care, Inc., 529 U.S. 1, 15 (2000)] (noting statute’s “nonwaivable and nonexcusable requirement that an individual present a claim to the agency before raising it in court”).132Id.
In Shalala v. Illinois Council on Long Term Care, Inc.,133529 U.S. 1 (2000). relied upon by the Sims dissent, the Court reaffirmed that the Social Security Act’s jurisdictional statute, 42 U.S.C. “§ 405(g), contains the nonwaivable and nonexcusable requirement that an individual present a claim to the agency before raising it in court.”134Id. at 15. In the Tenth Circuit’s opinion in Carr, from which certiorari was granted, the court expressly relied on and quoted this passage from the Sims dissent in its opinion to support applying issue exhaustion at the ALJ-hearing level to preclude consideration of petitioner’s Appointments Clause argument.135Carr v. Comm’r, SSA, 961 F.3d 1267, 1274 (10th Cir. 2020), rev’d sub nom. Carr v. Saul, 141 S. Ct. 1352 (2021).
However, the Sims dissent’s suggestion erroneously conflated the statutory jurisdictional requirement of presentment of a concrete claim for benefits to the agency with the prudential issue exhaustion doctrine and requirement of raising and developing specific issues to the ALJ to preserve those issues for judicial review. Issue exhaustion is not and never has been a statutory jurisdictional requirement applicable to SSA ALJ hearings, or one that is “nonwaivable and nonexcusable.” Indeed, the statutory, non-waivable, jurisdictional “presentment requirement” in SSA cases is satisfied simply by having a benefits application denied by the agency and does not even require ALJ-hearing-stage presentation, much less presentment of all issues that arise from the benefits application or claim to the ALJ.136See City of New York v. Heckler, 742 F.2d 729, 735–36 (2d Cir. 1984) (summarizing the Supreme Court’s statutory SSA jurisdictional, “presentment,” nonwaivable exhaustion requirement case law), aff’d sub nom. Bowen v. City of New York, 476 U.S. 467 (1986). See generally Bloch & Dubin, supra note 42, at 275–76 (describing the difference between the non-waivable (jurisdictional) and waivable exhaustion of remedies and claims requirements in SSA cases under Supreme Court precedents).
Finally, even the question of whether there is a generally accepted, well-established, doctrinally sound, and pervasive common law issue exhaustion requirement presumptively applicable to even entirely adversarial administrative proceedings is uncertain. The Supreme Court has not issued a decision involving common law issue exhaustion since United States v. L.A. Tucker Truck Lines, Inc.137344 U.S. 33, 37 (1952). seventy years ago. None of the four Supreme Court cases relied upon for the “general rule” discussed in L.A. Tucker Truck purports to establish such a generally applicable doctrine.138See Unemployment Comp. Comm’n v. Aragon, 329 U.S. 143, 155 (1946); United States v. N. Pac. Ry. Co., 288 U.S. 490, 494 (1933); United States ex rel. Vajtauer v. Comm’r of Immigr., 273 U.S. 103, 113 (1927); Spiller v. Atchison, Topeka & Santa Fe Ry. Co., 253 U.S. 117, 130 (1920); see also L.A. Tucker Truck, 344 U.S. at 36 n.5. More recently, the Sixth Circuit has comprehensively canvassed issue exhaustion case law and observed that “[t]he Court, however, has yet to identify the source of the judiciary’s authority to impose this ‘prudential’ [issue] exhaustion mandate on top of a statutory scheme that does not expressly contain one.”139Island Creek Coal Co. v. Bryan, 937 F.3d 738, 747 (6th Cir. 2019). While suggesting potential constitutional and statutory sources for such authority, the Sixth Circuit also opined that “[p]rudential exhaustion also sits uncomfortably next to the traditional rule that courts have ‘no more right to decline the exercise of jurisdiction which is given, than to usurp that which is not given.’”140Id. at 749 (quoting Cohens v. Virginia, 19 U.S. 264, 404 (1821)). See generally Duffy, supra note 2, at 140 (“[B]y far the vast majority of commentators now agree that, at a minimum, the ‘limitation on courts’ power to create federal common law is that the court must point to a federal enactment, constitutional or statutory, that it interprets as authorizing the federal common law rule.’” (quoting Martha A. Field, Sources of Law: The Scope of Federal Common Law, 99 Harv. L. Rev. 883, 887 (1986))).
IV. Issue Exhaustion (Mis)-Applied to “Routine” Hearing-Stage Objections in the Circuits
Apart from the plethora of recent court decisions involving application of common law issue exhaustion to the failure to raise structural constitutional Article II Appointments Clause objections to the presiding ALJ, only a small handful of courts of appeals decisions in the two decades after the 2000 Sims decision have applied hearing-level issue exhaustion on more basic issues and areas. Apart from the Sims holding and comparable applicability of the Sims rationales to the hearing stage, there are likely additional reasons for the paucity of court decisions applying issue exhaustion on routine issues from the hearing stage.141See 42 U.S.C. § 405(g).
First, as described above, most legal issues do not arise and do not become salient, identifiable legal issues until the ALJ issues a decision. In that respect, the Ninth Circuit has pointed out the illogic of seeking “to task claimants with objecting to the ALJ’s decision before it is written.”142Maxwell v. Saul, 971 F.3d 1128, 1130 (9th Cir. 2020) (internal quotation marks omitted). Second, the Social Security Act already contains protection against the assertion of new evidence or new factual issues on appeal through the sixth sentence of its judicial review statute, 42 U.S.C. § 405(g). That sentence provides that claimants can seek a federal court remand for a new hearing based on “new evidence which is material” where “good cause” can be demonstrated for failure to have introduced those facts into the administrative proceedings.14342 U.S.C. § 405(g) (“The court may, on motion of the Commissioner of Social Security made for good cause shown before the Commissioner files the Commissioner’s answer, remand the case to the Commissioner of Social Security for further action by the Commissioner of Social Security, and it may at any time order additional evidence to be taken before the Commissioner of Social Security, but only upon a showing that there is new evidence which is material and that there is good cause for the failure to incorporate such evidence into the record in a prior proceeding.”. In evaluating this unique and unusual provision of the Act, the Supreme Court observed:
As provisions for judicial review of agency action go, § 405(g) is somewhat unusual. The detailed provisions for the transfer of proceedings from the courts to the Secretary and for the filing of the Secretary’s subsequent findings with the court suggest a degree of direct interaction between a federal court and an administrative agency alien to traditional review of agency action under the Administrative Procedure Act. As one source puts it:
The remand power places the courts, not in their accustomed role as external overseers of the administrative process, making sure that it stays within legal bounds, but virtually as co[-]participants in the process, exercising ground-level discretion of the same order as that exercised by ALJs and the Appeals Council when they act upon a request to reopen a decision on the basis of new and material evidence.144Sullivan v. Hudson, 490 U.S. 877, 885 (1989) (quoting Mashaw et al., supra note 46, at 133).
The presence of a unique, detailed, three-part, express statutory provision to address the assertion of new facts on appeal, further undermines the suggestion that there is a prudential need for courts to evolve common law prudential doctrines to address these matters.
Nevertheless, there are two or three case contexts where courts have applied common law SSA-hearing-level issue exhaustion to more “routine” issues.145See, e.g., Shaibi v. Berryhill, 883 F.3d 1102, 1109 (9th Cir. 2017); Anderson v. Barnhart, 344 F.3d 809, 814 (8th Cir. 2003); Mills v. Apfel, 244 F.3d 1, 4 (1st Cir. 2001). As shown below, those cases either do not or no longer support SSA-hearing-level issue exhaustion. They either reflect the misuse of common law exhaustion doctrine to address matters resolved by express provisions of the Social Security Act or regulations, or a virtual complete failure to apply the considerations the Court enunciated in Sims and re-enforced in Carr through decisions, which either completely ignored Sims or the Sims Court’s reasoning, or applied pre-Sims issue exhaustion precedent. As such, those decisions were questionable at best after Sims and are even less sound precedent after Carr. Those decisions can be summarized as involving issue exhaustion in cases: (A) raising new allegations of the existence of an additional medical impairment on federal court appeal, not raised at the hearing; (B) raising questions about the methodology or adequacy of vocational expert testimony and vocational evidence, or compatibility or consistency of vocational testimony with agency-approved documentary vocational material, on federal court appeal, which were not raised at the hearing; or (C) raising miscellaneous issues not raised at the hearing and not falling into any category or pattern. Three often referenced cases from the courts of appeals, in each category are discussed below.
A. New Impairments on Judicial Review—Anderson v. Barnhart
At oral argument in Carr, Chief Justice Roberts asked petitioner’s counsel the following question, as the first question by any Justice:
[W]hat would prevent a claimant from arguing before the ALJ that he has a leg injury and then arguing for the first time in district court that he also has a back injury so that he can get a—you know, a second bite at the apple to recover an award?146Transcript of Oral Argument at 6, Carr v. Saul, 141 S. Ct. 1352 (2021) (No. 19-1442).
In Anderson v. Barnhart,147344 F.3d 809 (8th Cir. 2003). the Eighth Circuit addressed this fact pattern and held that a claimant’s failure to allege “any limitation in function as a result of his obesity in his application for benefits or during the hearing” precluded his assertion of error based on misevaluation of his morbid obesity as an impairment on appeal since “this claim was waived.”148Id. at 814. The agency in several briefs, including its Supreme Court respondent’s briefs in Carr and decisions from several other courts, has interpreted Anderson as part of a trio of courts of appeals decisions distinguishing Sims and supporting application of ALJ-hearing-level issue exhaustion, post-Sims.149See, e.g., Brief for the Respondent at 33, Carr, 141 S. Ct. 1352 (No. 19-1442) (citing Mills, Shaibi, and Andersonfor the proposition that “after Sims, a number of courts have held that the decision does not extend to the ALJ stage”);Brief for the Respondent to Petition for Writ of Certiorari at 10, Carr, 141 S. Ct. 1352 (No. 19-1442) (citing the same three circuit cases, Mills, Shaibi, and Anderson, stating: “[a]s multiple courts of appeals have correctly held, neither Sims’ holding nor its reasoning extends to a failure to present an issue to the ALJ, rather than to the Appeals Council”); Ramsey v. Comm’r of Soc. Sec., 973 F.3d 537, 545 (6th Cir. 2020) (citing the same three post-Sims circuit cases), cert. denied sub nom. Saul v. Ramsey, 141 S. Ct. 2699 (2021); Cirko ex rel. Cirko v. Comm’r of Soc. Sec., 948 F.3d 148, 158 n.11 (3d Cir. 2020) (same). This interpretation of Anderson is erroneous.
The Eighth Circuit’s Anderson decision made no mention of Sims and accordingly did not apply any aspect of the Sims Court’s reasoning in suggesting the claimant “waived” appellate consideration of the misevaluation of his morbid obesity through failure to properly join the issue in the administrative proceedings. More fundamentally, the Social Security Act and its regulations expressly and specifically address this fact pattern, thereby preempting the need for or propriety of common law in this context. Assuming the ALJ has otherwise discharged the affirmative duty to develop the record and statutory evidence-gathering obligations that are a part of the SSA’s inquisitorial hearing model described in Carr and Sims,150See Battles v. Shalala, 36 F.3d 43, 45 (8th Cir. 1994) (case remanded where ALJ failed to develop record as to one of claimant’s impairments: “[w]hile the [Commissioner] is correct that she is in under no duty to ‘go to inordinate lengths to develop a claimant’s case[,]’ it is also true that she must ‘make an investigation that is not wholly inadequate under the circumstances’” (citation omitted)). this fact pattern is fully addressable not by common law issue exhaustion, but rather under the claimant’s express statutory obligation to “furnish evidence of a medically determinable impairment” in 42 U.S.C.§ 423(d)(5)(A), or to demonstrate the absence of “substantial evidence” on appeal under 42 U.S.C. § 405(g). If Mr. Anderson presents no evidence of an obesity condition with impairing limitations, he has not overcome those express statutory obligations. More specifically, SSA regulations supply further guidance and provide that the SSA “will consider only impairment(s) you say you have or about which we receive evidence.”15120 C.F.R. §§ 404.1512(a), 416.912(a) (2022) (emphasis added). Finally, any effort by the claimant on the federal court appeal to supply new evidence of an additional impairment, or the additionally impairing consequences or effects of an impairment, would be expressly governed by the sixth sentence of 42 U.S.C. § 405(g) and the three-part standard described above.
In short, Anderson and the “new impairment on appeal” issue referenced by Chief Justice Roberts in the Carr oral argument, is not a fact pattern requiring common law issue exhaustion but is expressly addressed in the Social Security Act and regulations. To the extent the claimant in Anderson presented no evidence of the impairing effects of obesity, the Eighth Circuit’s decision is likely accurate based on the Act and regulations. However, if the court was attempting to create a new requirement that claimants also allege or argue the effects of an impairment at the ALJ-hearing-level stage in order to assert misevaluation of that impairment on judicial review, even when a claimant has already presented evidence of such impairment’s effects in the record, such a requirement and decision would be erroneous and in express violation of the SSA’s own regulations and not salvageable by reference to purportedly contrary common law.
B. New Questions on Judicial Review About the Adequacy, Methodology or Consistency of Vocational Expert Testimony—Shaibi v. Berryhill
In many SSA disability benefit program hearings, the ALJs procure the presence of vocational experts to supply testimony about a claimant’s ability to perform and make a vocational work adjustment to “jobs which exist in significant number in the economy” in order to meet the SSA’s burden of production under the Social Security Act and regulations.152See generally Jon C. Dubin, Social Security Disability Law and the American Labor Market 22–58 (2021) (describing the SSA’s work adjustment burden, forms of vocational evidence, and the vocational expert program); see alsoBowen v. Yuckert, 482 U.S. 137, 146 n.5 (1987) (describing SSA’s work adjustment burden and reasons behind the shift in burden to the SSA); Clarification of Rules Involving Residual Functional Capacity Assessments and of Use of Vocational Experts and Other Sources, 68 Fed. Reg. 51,153, 51,155 (Aug. 26, 2003) (same); 20 C.F.R. §§ 404.1512(b)(3), 416.912(b)(3). Vocational experts usually testify after claimants have testified and at the end of the hearing, so the first time a claimant hears vocational testimony and potentially can respond to it is not until the very end of the hearing. In addition, ALJs are often reluctant to grant subpoenas attempting even to discover the general anticipated bases and data sources of vocational expert testimony in advance of a hearing to prepare for it.153See, e.g., Krell v. Saul, 931 F.3d 582, 586–87 (7th Cir. 2019) (finding no categorical or “automatic” right to a pre-hearing subpoena for the vocational expert’s supporting source material or data and rejecting claimant’s request for this information as an exercise of the ALJ’s discretion).
Moreover, until the ALJ issues a decision in the case, it is not possible to know what aspects of a vocational expert’s testimony the ALJ found to be persuasive or potentially decisive. In many cases, the ALJ asks a series of varying hypothetical questions to the vocational expert based on differing interpretations of the medical evidence and claimant limitations, eliciting both “no jobs under the circumstances” and plentiful “specific jobs under the circumstances” answers, with gradations in between, in response to those alternative questions. It is often hard to discern which ALJ hypothetical question proffered to the vocational expert best reflects the ALJ’s ultimate assessment of the case.154See, e.g., Nazario v. Comm’r of Soc. Sec., 794 F. App’x 204, 212 (3d Cir. 2019) (“[T]he record, especially the vocational expert’s answers to the ALJ’s second and third hypotheticals, contains substantial evidence that [the claimant] suffers from a severe mental disability that renders her unable to engage in substantial gainful activity.”); Winsted v. Berryhill, 923 F.3d 472, 477 (7th Cir. 2019) (“The ALJ asked two additional hypothetical questions to the [vocational expert] about an individual who would either be off task 20% of the workday or would have two unscheduled absences per month—seemingly having in mind someone with ‘moderate difficulties with concentration, persistence, and pace.’ The [vocational expert] responded that neither individual could sustain employment. But these responses are not reflected in the ALJ’s decision. Because the ALJ did not include Winsted’s difficulties with concentration, persistence, and pace in the hypothetical he did consider, the decision cannot stand.”). When the ALJ in the decision finally selects a single hypothetical question as appropriately reflecting the claimant’s work-related limitations, the claimant’s challenge on appeal is often directed to the lack of supportability or inadequacy of the hypothetical question selected in the post-hearing decision, as opposed to an objection based exclusively on the adequacy of the vocational expert’s testimony during the hearing.155See Lanigan v. Berryhill, 865 F.3d 558, 566 (7th Cir. 2017) (rejecting suggestion of “waiver” of objections to the vocational expert’s testimony by not raising them at the hearing, and pointing out that “Lanigan is not challenging the vocational expert’s testimony,” but “[r]ather, he is challenging the lack of a substantial basis for the ALJ’s characterization of Lanigan’s mental [work-related functional capacity] in the hypothetical questions he posed to the vocational expert”).
Finally, in approximately 40% of all hearings, claimants lack attorney representation156See supra notes 86–87 and accompanying text. and must question vocational experts, if at all, pro se, or with assistance of a non-attorney representative not trained in the cross-examination of skilled professional witnesses. Accordingly, it is not surprising that under these circumstances, many arguments about the methodology, adequacy, and consistency of what ultimately proves to be decisive vocational expert hearing testimony are not apparent until after the ALJ has issued a decision expressly relying on such testimony and the claimant can retain counsel or assistance to make such challenges.
In Shaibi v. Berryhill,157883 F.3d 1102 (9th Cir. 2017). the Ninth Circuit held that “when a claimant fails entirely to challenge a vocational expert’s job numbers during administrative proceedings before the agency, the claimant forfeits such a challenge on appeal, at least when that claimant is represented by counsel.”158Id. at 1109. The court’s effort to somewhat soften the potentially harsh impact of its new common law, hearing-level issue exhaustion rule by confining its holding, at least initially, to cases where claimants have attorney (“counsel”) representation, failed to address Justice O’Connor’s express rejection of the propriety of such a distinction and attorney-restricted rule for the purposes of a judicially created common law issue exhaustion requirement in her decisive concurrence in Sims. See Sims v. Apfel, 530 U.S 103, 113–14 (O’Connor, J., concurring in part and concurring in the judgment). Moreover, in a non-precedential memorandum decision, the Ninth Circuit has since extended Shaibi’s ALJ issue exhaustion holding to a case with a claimant represented by a non-attorney, “lay representative eligible for direct payment of fees under the Social Security Act.” Keifer v. Saul, 789 F. App’x 581, 582 (9th Cir. 2020). In so doing, the Ninth Circuit followed and relied upon a pre-Sims, Ninth Circuit decision, Meanel v. Apfel,159172 F.3d 1111 (9th Cir. 1999). which did not apply the Court’s reasoning in Sims.160Id. The court in Meanel also relied solely on issue exhaustion precedents from adversarial systems without any consideration of the SSA’s unique, inquisitorial context. See supra note 123. The Ninth Circuit simply dismissed the claimant’s reliance on Sims as not pertinent since the Court in Sims reserved the question of the propriety of common law SSA-hearing-level issue exhaustion.161Id. at 1115. In a case also failing to apply Sims’ reasoning (or to even cite Sims), the Seventh Circuit appeared to adopt a similar and perhaps even more harshly preclusive hearing level issue exhaustion approach in this context. See Donahue v. Barnhart, 279 F.3d 441, 446–47 (7th Cir. 2002) (“[T]he vocational expert produced some job titles and numbers. At this point the expert could have been cross-examined (Donahue was represented by counsel) about where these numbers came from, and why the expert’s conclusion did not match the [DOT’s]. . . . Raising a discrepancy only after the hearing, as Donahue’s lawyer did, is too late. An ALJ is not obliged to reopen the record. On the record as it stands—that is, with no questions asked that reveal any shortcomings in the vocational expert’s data or reasoning—the ALJ was entitled to reach the conclusion she did.”).
The Ninth Circuit’s reasoning in Shaibi is no longer supportable after Carr. Applying the factors delineated by the Court in Sims and reinforced in Carr—focusing on the relevance of deviation from adversarial, non-inquisitorial adjudicative systems,162For example, because in the SSA’s inquisitorial system the ALJ possesses a general duty to develop the record and conduct questioning of all witnesses, the ALJ bears at least partial responsibility for the failure to question vocational experts about the adequacy, methodology, supportability, and consistency of their testimony. SeeRennaker v. Saul, 820 F. App’x 474, 479 (7th Cir. 2020) (“Although the [vocational expert] pointed to his own education, research, training, and experience in job placement and vocational rehabilitation to explain the kind of work Rennaker could perform, the [vocational expert] did not explicitly tie this background to his estimate of nationwide job numbers. . . . [G]iven the [vocational expert’s] sparse testimony, the ALJ did not do enough to develop the [vocational expert’s] testimony such that it would constitute substantial evidence. The ALJ asked only one question about the jobs cited by the [vocational expert]—whether these jobs were consistent with the job descriptions listed in the DOT. The manual does not provide job-number estimates, only job duties and requirements, so consistency with the manual would not provide a basis for the job-number estimates’ reliability.”). the degree of process formality, and the presence of proper, non-misleading notice and agency forms and announced expectations of specific issue presentation—does not support application of common law issue exhaustion under these circumstances. Moreover, even under traditional exhaustion principles applicable to adversarial, highly formal, and non-inquisitorial adjudicative systems,163See Robert J. Martineau, Considering New Issues on Appeal: The General Rule and the Gorilla Rule, 40 Vand. L. Rev. 1023 (1987)(describing origins, nature, extent, and exceptions to formal appellate court issue presentation and waiver doctrine requirements); see also Rhett R. Dennerline, Pushing Aside the General Rule in Order to Raise New Issues on Appeal, 64 Ind. L.J. 985 (1989) (same); Tory A. Weigand, Raise or Lose: Appellate Discretion and Principled Decision–Making, 17 Suffolk J. Trial & App. Advoc. 179 (2012) (same); Note, Raising New Issues on Appeal, 64 Harv. L. Rev. 652 (1951)(same). courts have applied exhaustion exceptions for pure legal issues.164See, e.g., United States v. Krynicki, 689 F.2d 289, 291–92 (1st Cir. 1982); Higginbotham v. Ford Motor Co., 540 F.2d 762, 768 n.10 (5th Cir. 1976). The legal sufficiency of vocational evidence that is inadequate, methodologically questionable, internally inconsistent, or inexplicably in conflict with authoritative sources recognized by the agency, such as the U.S. Department of Labor’s Dictionary of Occupational Titles (“DOT”),165See U.S. Dep’t of Labor, Dictionary of Occupational Titles (4th ed. 1991). are all potentially such pure legal issues.166See, e.g., Ruenger v. Kijakazi, 23 F.4th 760, 763 (7th Cir. 2022) (noting that as a matter of law, “in the context of job-numbers estimates, substantial evidence [standard of review] requires the ALJ to ensure that the vocational expert’s estimate is the product of a reliable methodology,” and that “a methodology is reliable when it is based on ‘well-accepted’ sources and the vocational expert explains her methodology ‘cogently and thoroughly’”); Brace v. Saul, 970 F.3d 818, 822 (7th Cir. 2020) (noting that as a matter of law, vocational expert job numbers testimony “must be supported with evidence sufficient to provide some modicum of confidence in its reliability” and “the ALJ ‘must require the [vocational expert] to offer a reasoned and principled explanation of the method [the vocational expert] used to produce it.’” (internal quotation marks omitted) (quoting Chavez v. Berryhill, 895 F.3d 962, 969–70 (7th Cir. 2018)); Goode v. Comm’r of Soc. Sec., 966 F.3d 1277, 1281, 1283 (11th Cir. 2020) (noting that as a matter of law, the vocational expert must have a reliable methodology and, in particular, must address the “matching problem” from using “one system to supply the job titles [(the DOT)] and another [system] [(the Standard Occupational Classification)] to provide the number of the jobs”). Moreover, none of those issues becomes ripe for consideration until after the ALJ’s issuance of the decision in the case and Sims unquestionably establishes that these legal issues need not be raised to the Appeals Council to preserve them for judicial review.
To the extent the Ninth Circuit in Shaibi was addressing a new factual issue on appeal as in Anderson (such as in this context, new vocational evidence), that scenario is governed by an express statutory standard in the sixth sentence of 42 U.S.C. § 405(g), not the common law issue exhaustion doctrine. Indeed, the Ninth Circuit reasoned, alternatively, that its holding was consistent with the “plain language” of that specific statutory provision and the requirement that in cases involving new evidence on appeal, “good cause for the failure to incorporate such evidence into the record in a prior proceeding” must be demonstrated to obtain relief.167Shaibi v. Berryhill, 883 F.3d 1102, 1109 (9th Cir. 2017). The claimant in Shaibi presented for the first time on appeal documentary evidence from governmental sources other than the DOT, including the County Business Patterns (“CBP”) published by the U.S. Census Bureau, and by the Occupational Outlook Handbook (“OOH”) published by the Bureau of Labor Statistics. See id. In rejecting the claimant’s assertion, the court reasoned in a footnote that while “[t]he DOT, CBP, and OOH are all listed in 20 C.F.R. § 404.1566(d) as data sources of which the Social Security Administration ‘will take administrative notice[,]’ [i]t does not follow that an ALJ must in every case reconcile conflicts sua sponte between each of those data sources and the [vocational expert’s] testimony.” Id. at 1109–10, 1109 n.6. It pointed out that the SSA mandated that ALJs only identify and reconcile conflicts between vocational expert testimony and the DOT (regardless of whether such conflicts were raised by claimants) through an explicit Social Security Ruling, SSR 00-4p. See id. It concluded that “unlike the DOT, which is comprised of self-contained descriptions of the requirements for performance of various jobs, using the job distribution information in the CBP and OOH requires information and inferences not contained in the documents themselves and so not amenable to an ALJ’s sua sponte consideration.” Id. at 1110 n.6. Whether the Ninth Circuit’s reasoning and result reflects a proper application of the administrative notice doctrine is at least debatable. That doctrine permits courts to consider facts as record evidence by taking “notice” of such facts provided certain safeguards are met. See generally 5 U.S.C. § 556(e); Dubin, supra note 152, at 31–39. By taking blanket notice of the OOH and CBP through binding SSA regulations (20 C.F.R. §§ 404.1566(d)(2), (5), 416.966(d)(2), (5) (2022)), it is unclear how the agency can eschew treating these sources as record evidence available to be considered on appeal, even if they were not formally introduced as evidence in the administrative record. However, while it is unclear from the court’s footnote in Shaibi if the claimant had sought to amplify the OOH and CBP with additional evidence “not contained in the documents themselves,” such supplementation on judicial review would be subject to the restrictions of § 405(g)’s sixth sentence. Either way, this fact pattern is expressly governed by the statute and regulations; not common law issue exhaustion. Moreover, unlike the court’s suggestion of a broad hearing-level issue exhaustion or strict “raise at the hearing or waive” rule on vocational evidence and issues, the Ninth Circuit permits new vocational evidence to be submitted to the SSA’s Appeals Council at the post-hearing-stage, which then becomes part of the administrative record that the court must consider on appeal and can use to form the basis for establishing error, or the lack of substantial evidence supporting findings based on vocational testimony at the hearing stage.168See Jaquez v. Saul, 840 F. App’x 246, 247 (9th Cir. 2021) (remanding where post-hearing vocational evidence submitted by claimant to the Appeals Council and considered, but not reconciled, undermined reliability of the vocational expert’s hearing testimony of 90,200 usher jobs, since the post-hearing evidence showed that 90% of usher jobs are only part-time positions). See generally Brewes v. Comm’r of Soc. Sec. Admin., 682 F.3d 1157, 1163 (9th Cir. 2012) (“[W]e hold that when the Appeals Council considers new evidence in deciding whether to review a decision of the ALJ, that evidence becomes part of the administrative record, which the district court must consider when reviewing the Commissioner’s final decision for substantial evidence.” (citing Tackett v. Apfel, 180 F.3d 1094, 1097–98 (9th Cir. 1999))). This obviates the need for a “good cause” showing for failing to introduce that vocational evidence at the hearing stage and further undermines any suggestion that the presence of the sixth sentence of § 405(g) supports, or is otherwise consistent with, a common law hearing-level issue exhaustion requirement.
A few courts have relied in part on common law, hearing-level issue-exhaustion-type considerations in narrowly interpreting a Social Security Ruling, SSR 00-4p169SSR 00-4p, 2000 WL 1898704 (Dec. 4, 2000). that expressly requires ALJs to identify and reconcile apparent conflicts between vocational expert testimony and the DOT. Both the Third and Seventh Circuits have held that where the “claimant did not point out the conflict [between the vocational expert testimony and DOT] at trial[,] [i.e., the hearing], she was required to show that the conflict was ‘obvious enough that the ALJ should have picked up on [it] without any assistance.’”170Zirnsak v. Colvin, 777 F.3d 607, 618 (3d Cir. 2014) (quoting Terry v. Astrue, 580 F.3d 471, 478 (7th Cir. 2009)). Neither court applied the Sims Court’s reasoning (or even cited Sims) in these opinions.171See generally Zirnsak, 777 F.3d 607; Terry, 580 F.3d 471.
In contrast, the Eleventh Circuit in Washington v. Commissioner of Social Security172906 F.3d 1353 (11th Cir. 2018). extensively cited and quoted Sims to reject such logic and interpret SSR 00-4p more broadly in affirming the ALJ’s affirmative responsibilities to identify and reconcile apparent and less obvious conflicts between vocational expert testimony and the DOT, independent of questioning by the claimant or counsel at the hearing stage. The Eleventh Circuit pointed out that
the Ruling does not cabin this duty with any language suggesting that it is limited to conflicts the ALJ is put on notice of by the claimant or by the [vocational expert;] [r]ather, by the terms of the Ruling’s statement of purpose, the ALJ’s duty is defined in an expansive manner.173Id. at 1362–63.
It then expressly quoted and applied the Sims Court’s extended reasoning about the significant differences between inquisitorial SSA proceedings and adversarial adjudication including the ALJ’s multifaceted investigative duties to identify and develop issues at hearings,174Id. at 1364 (“Unlike judicial proceedings, disability hearings ‘are inquisitorial rather than adversarial.’ Indeed, ‘[t]he differences between courts and agencies are nowhere more pronounced than in Social Security proceedings. Although many agency systems of adjudication are based to a significant extent on the judicial model of decision-making, the SSA is perhaps the best example of an agency that is not.’ Because Social Security hearings basically are inquisitorial in nature, ‘[i]t is the ALJ’s duty to investigate the facts and develop the arguments both for and against granting benefits.’ Thus, ‘the ALJ has a basic duty to develop a full and fair record. This is an onerous task, as the ALJ must scrupulously and conscientiously probe into, inquire of, and explore for all relevant facts.’ . . . [A]t the hearing stage, the Commissioner does not have a representative that appears ‘before the ALJ to oppose the claim for benefits.’ Rather, only the claimant—who often appears pro se—and the ALJ participate at the hearing stage. Thus, in numerous and varied ways, the SSA’s adjudicatory scheme exudes the air of an inquisitorial process. This too is important to our resolution of the case. First, it reinforces the idea that SSR 00-4p imposes an independent, affirmative obligation on the part of the ALJ to undertake a meaningful investigatory effort to uncover apparent conflicts, beyond merely asking the [vocational expert] if there is one. The Ruling is consonant with the nature of the entire Social Security regulatory scheme.” (citations omitted)). together with the Social Security Act’s unusually claimant-protective intent and structure,175Id. at 1365 (“Finally, the structure of the Social Security Act also reinforces our reading of the Ruling. As the Supreme Court has observed, ‘Congress designed [the Social Security Act] to be unusually protective of claimants.’ This too suggests that the ALJ has a duty to identify DOT data that may be helpful to a claimant.” (citations omitted)); see also Bowen v. City of New York, 476 U.S. 467, 480 (1986); Heckler v. Day, 467 U.S. 104, 106 (1984) (“To facilitate the orderly and sympathetic administration of the disability program of Title II, the Secretary and Congress have established an unusually protective four-step process”); Pearson v. Colvin, 810 F.3d 204, 210 (4th Cir. 2015) (“The policies animating the disability benefits adjudication process also support requiring the ALJ to make an independent identification of conflicts, and to do so for apparent conflicts. The Social Security Act is remedial in nature and ‘unusually protective’ of claimants.”). and held:
Thus, we conclude that SSR 00-4p is properly understood to impose an affirmative duty on the ALJs to identify apparent conflicts, ask the [vocational expert] about them, and explain how the conflict was resolved in the ALJ’s final decision. The text of the Ruling strongly suggests as much, and the inquisitorial nature of disability proceedings practically demands it.176Washington, 906 F.3d at 1365.
To the extent the circuits can be viewed as divided on this issue, the Supreme Court has at least preliminarily appeared to weigh-in on the side of the Eleventh Circuit, issuing an order granting certiorari and vacating and remanding an earlier, restrictive decision and interpretation of SSR 00-4p by the Eleventh Circuit in light of the subsequent Washington decision.177See Baker v. Comm’r of Soc. Sec., 139 S. Ct. 1257, 1257–58 (2019) (“[P]etition for writ of certiorari granted. Judgment vacated, and case remanded to the United States Court of Appeals for the Eleventh Circuit for further consideration in light of that court’s opinion in Washington v. Commissioner of Social Security.”), granting cert., vacating, remanding 729 F. App’x 870 (11th Cir. 2018). This action at least initially suggests the Supreme Court believes Washington reflects the appropriate law to apply on this issue.178While Supreme Court summary “GVR” (certiorari granted, judgment vacated and remanded) orders are not decisions on the merits, they do signal the Court’s belief that an intervening event provides a probable and appropriate basis for resolving the controversy before it. See Lawrence v. Chater, 516 U.S. 163, 167 (1996) (“Where intervening developments, or recent developments that we have reason to believe the court below did not fully consider, reveal a reasonable probability that the decision below rests upon a premise that the lower court would reject if given the opportunity for further consideration, and where it appears that such a redetermination may determine the ultimate outcome of the litigation, a GVR order is, we believe, potentially appropriate.”). The Second Circuit has also recently followed Washington. See Lockwood v. Comm’r of Soc. Sec. Admin., 914 F.3d 87, 94 (2d Cir. 2019) (“[W]e agree with the Eleventh Circuit that the Ruling must be read to ‘impose an independent, affirmative obligation on the part of the ALJ to undertake a meaningful investigatory effort to uncover apparent conflicts, beyond merely asking the [vocational expert] if there is one.’” (quoting Washington, 906 F.3d at 1364)).
C. Miscellaneous New Legal Issues on Judicial Review—Mills v. Apfel
In Mills v. Apfel,179244 F.3d 1 (1st Cir. 2001). the First Circuit held that the claimant’s failure at the hearing stage to assert that her sporadic and short-term past work as an assembly line worker, laundry worker, and motel chambermaid did not amount to “past relevant work” as a matter of law under SSA regulations and law—and therefore required the ALJ to determine whether she could perform other work which existed in significant numbers in the economy—constituted waiver of that argument on appeal.180Id. at 8. The court determined that it would not extend to the hearing level the Supreme Court’s Sims holding—which had rejected the application of common law issue exhaustion at the Appeal Council level—based on the plainly erroneous belief that only four justices supported that holding in Sims.181Id. Moreover, perhaps because the court believed the judgment in Sims somehow only included the support of a minority of the Supreme Court, it failed to evaluate any of the considerations militating against invocation of common law issue exhaustion applied in Sims and now reinforced by at least eight Justices in Carr.
Next, the First Circuit in Mills determined that while the impact from Sims of rejecting common law issue exhaustion at the Appeals Council stage was only “mild,” the consequences of failing to impose a common law issue exhaustion rule for the ALJ-hearing level “could cause havoc, severely undermining the administrative process.”182Id. The only suggestion of such potentially severe, process-undermining havoc offered by the court was an example from the procedural context in Mills: if the claimant, at the hearing, confronted the ALJ with the legal argument asserted on judicial review about the potential error in assessing her past relevant work at the fourth step in the SSA’s sequential evaluation process—that her past work, ranging from only one week on two jobs to only one month on another, might be deemed to have been too short-term for the jobs to have “lasted long enough for [the claimant] to [have] learn[ed]” them as a matter of law within the meaning of the agency’s regulations,183See 20 C.F.R. §§ 404.1565(a), 416.965(a) (2022) (“[W]e consider that your work experience applies when it was done within the last 15 years, lasted long enough for you to learn it, and was substantial gainful activity.”).—the ALJ could have proceeded to the fifth step of the process and procured evidence of other work which exists in significant number to which the claimant could adjust.184Mills, 244 F.3d at 8.
Rather than reflecting havoc, the court’s suggestion based on the facts in Mills is a routine, everyday occurrence. The ALJ has an unquestionable duty to apply the sequential evaluation process and the failure to do so is reversible error.185See Hill v. Colvin, 753 F.3d 798, 801 (8th Cir. 2014) (“An ALJ commits legal error if [she or he] fails to follow the sequential evaluation process.”); Mitchell v. Schweiker, 551 F. Supp. 1084, 1087–88 (W.D. Mo. 1982) (“It is important for the ALJ to follow the orderly framework set out in the [sequential evaluation regulations] to ensure uniformity and regularity in outcome as well as fairness to the claimant.”). There are countless potential legal errors an ALJ can make at each of the five separate stages of that process. If the ALJ determines that a claimant is not disabled at any of the steps, such as the first, second, or fourth steps in the process, there is a chance that the ALJ will err by not having proceeded to a subsequent step. Again, it is not until the ALJ issues a final decision evaluating the steps in the sequential evaluation process that issues involving legal errors at any of the potential steps are ripe for challenge.186Nor is there any assurance that a claimant’s more express identification of this potential sequential evaluation process error (as opposed to simply having record evidence of it through testimony or documents) would result in the ALJ’s agreement and a determination to proceed to the next step in the sequence in the hearing and decision.
The court’s reasoning in Mills is tantamount to holding that a claimant may not obtain judicial review of an ALJ’s violation of the law unless the claimant asks the ALJ not to violate the law at the administrative hearing. It excuses ALJs from an unquestioned, independent obligation to comply with and follow the law. Indeed, what would reflect an extraordinarily time-consuming and agency-resource-straining transformation of the SSA’s exceedingly informal, inquisitorial, non-adversarial, and claimant-protective mass justice process would be if each claimant had to brief or orally assert each of the hundreds of potential legal errors under the regulations, rulings, statutes, and case law that the ALJ could potentially make at every stage in the SSA’s sequential evaluation process, and do so at the hearing or hearing process in advance of the ALJ’s decision. This would be the logical and foreseeable impact of the First Circuit’s approach and reasoning in Mills. This result would also reflect an additional example of the illogical and inequitable suggestion of imposing a requirement “to task claimants with objecting to the ALJ’s decision before it is written.”187Maxwell v. Saul, 971 F.3d 1128, 1130 (9th Cir. 2020).
Finally, even under a fully adversarial and exceedingly formal adjudicative system where the Sims and Carrconsiderations would more properly support a common law issue exhaustion requirement, the pure legal issues generated from arguments based on violation of the plain language of agency regulations and interpretive case law might also elude exhaustion under the pure legal issue exception to such a judicially created rule.188See supra notes 162–63 and accompanying text.
V. The Implications of SSA’s Failure to Promulgate an Issue Exhaustion Rule After the Court’s Invitation in Sims
More than twenty years have elapsed since the Sims plurality invited the agency to promulgate an issue exhaustion rule it deemed truly necessary and desirable for its administrative scheme, as several federal agencies with formal, adversarial hearing processes have done.189See Sims v. Apfel, 530 U.S. 103, 108 (2000); see also, e.g., 10 C.F.R. § 2.341(b)(5) (2022) (issue exhaustion regulation for Nuclear Regulatory Commission); 12 C.F.R. § 308.39(b)–(c) (2022) (regulating issue exhaustion for Federal Deposit Insurance Corporation); 16 C.F.R. § 3.52(c) (2022) (regulating issue exhaustion for Federal Trade Commission). Indeed, in its opposition to certiorari in Sims in 1999, the government represented to the Court that “the Social Security Administration has the [issue exhaustion question presented] matter under review” and it “can be conclusively resolved by regulation.”190Brief for the Respondent in Opposition to Certiorari at 13, Sims, 530 U.S. 103 (No. 98-9537), 1999 U.S. S. Ct. Briefs LEXIS 1309, at *16. Yet, despite that express intent to review and potentially address any desired issue exhaustion rules or relevant changes to the administrative process for SSA by regulation, SSA has not heeded the Sims Court’s invitation or otherwise pursued the matter. Indeed, in the sixty-six years since enactment of the disability insurance benefits program, SSA has never issued a notice of proposed rulemaking on the subject.
What can be gleaned from the agency’s post-Sims inaction across five presidential administrations and ten SSA Commissioners or Acting Commissioners191See Social Security Commissioners, Soc. Sec. Admin., https://perma.cc/Y3C6-3F4P (listing SSA Commissioners from 1999 to the present). in that period? Even prior to SSA’s announcement of its intent to pursue an issue exhaustion rulemaking, Seventh Circuit Chief Judge Richard Posner, in rejecting judicial creation of an issue exhaustion rule for the SSA’s Appeals Council proceedings, stated the obvious: “the Social Security Administration knows how to draft a waiver rule.”192Johnson v. Apfel, 189 F.3d 561, 563 (7th Cir. 1999). Indeed, so does Congress, which has enacted an issue exhaustion statutory rule applicable to SSA’s limited, special adversarial proceedings to impose penalties against persons who knowingly make false statements during benefits adjudications.193See 42 U.S.C. § 1320a-8(d)(1) (“[N]o objection that has not been urged before the Commissioner of Social Security shall be considered by the court, unless the failure or neglect to urge such objection shall be excused because of extraordinary circumstances.”). See generally Jaxson v. Saul, 963 F.3d 645, 648 (7th Cir. 2020) (noting adversarial nature of § 1320a-8 fraud proceedings).
When the Supreme Court rejected a challenge to the SSA’s inquisitorial, multiple-role ALJ-hearing-stage model in Perales,194Richardson v. Perales, 402 U.S. 389, 410 (1971). the SSA defended the model by arguing that its replacement with a more adversarial and formal system would “scarcely be beneficial to claimants,” “add substantially to the administrative costs borne by the [social security] trust fund,” and “be contrary to Congressional intent to provide a simple procedure whereby claimants can establish their right to benefits.”195Dubin, supra note 3, at 1305–06 (quoting Reply Brief for Agency at 6 n.2, Perales, 402 U.S. 389 (No. 108). Perhaps the agency has concluded that, despite the convenience to the U.S. Department of Justice (“DOJ”),196I include the SSA’s Office of General Counsel in this designation as personnel responsible for defending the SSA’s administrative decisions on judicial review. See generallyNotice Announcing Addresses for Service of Process, 79 Fed. Reg. 4519 (Jan. 28, 2014) (announcing service of process on SSA Office of General Counsel to commence judicial review actions). defending the agency on judicial review and seeking the ability to dispose of many difficult issues and cases summarily when appeals reach federal court through an issue exhaustion technical bar, the policy and administrative adjudicative components of the SSA would not be well-served by such a rule. The potential impact from an avalanche of legal briefs and other steps to further judicialize the process to accommodate issue exhaustion would be significant.
If issue exhaustion were taken seriously by the agency with concomitant formalization of its claimant-protective model, and not simply adopted as a procedural obstacle for claimants to foreseeably diminish claimant access to the courts,197Cf. Dubin, supra note 51, at 203, 223–24 (noting that the agency has, in part, justified continuation of the controversial reconsideration or second SSA adjudication stage, after many years of testing its elimination, based on the cost of paying benefits and providing additional hearings at the third adjudication stage to claimants who would otherwise drop out and discontinue pursuit of their otherwise meritorious claims due to bureaucratic deterrence or discouragement, or personal and emotional exhaustion generated from the usually rubber stamp reconsideration process and a second denial notice). it would significantly alter the mass justice functioning of the current system. In turn, these changes would diminish process efficiency through bureaucratic delays and substantially undermine fairness to claimants. Many claimants in desperate need of life-support benefits will experience significant financial hardship due to the substantial delays.198Courts have recognized substantial hardship to claimants due to significant bureaucratic delay. See, e.g., LaBonne v. Heckler, 574 F. Supp. 1016 (D. Minn. 1983); Mason-Page v Bowen, 655 F. Supp. 255 (D.N.J. 1987); Mills v. Heckler, 595 F. Supp. 952 (S.D.N.Y. 1984); Cohen v. Heckler, 599 F. Supp. 837 (S.D.N.Y. 1984); Davenport v. Bowen, 709 F. Supp. 634 (E.D. Pa. 1989); Gomaz v. Heckler, 591 F. Supp. 1122 (E.D. Wis. 1984); cf. Heckler v. Day, 467 U.S. 104, 111 (1984) (conceding that a ninety-day or greater period between reconsideration request and reconsideration decision violates the Social Security Act’s requirement in 42 U.S.C. § 405(b) that SSA agency action not be unreasonably delayed). Others will also suffer “bureaucratic disentitlement”—the phenomenon of public benefit claimants with otherwise meritorious claims losing access to these entitlements due to bureaucratic or process obstacles, which many lack the capacity or endurance to surmount.199See generally Vicki Lens, Bureaucratic Disentitlement After WelfareReform: Are Fair Hearings the Cure?, 12 Geo. J. on Poverty L. & Pol’y 13 (2005) (discussing how the 1996 welfare reform law contributed to bureaucratic disentitlement and assessing whether the due process mandated pre-termination hearings provide meaningful protection against bureaucratic disentitlement); Michael Lipsky, Bureaucratic Disentitlement in Social Welfare Programs, 58 Soc. Serv. Rev. 3 (1984) (describing bureaucratic disentitlement and detailing how burdensome administrative processes inhibit access to entitlements).
Government studies have long documented that ALJ hearings are already regularly plagued by tremendous delay.200See, e.g., U.S. Gov’t Accountability Off., GAO-09-398, Social Security Disability: Additional Performance Measures and Better Cost Estimates Could Help Improve SSA’s Efforts to Eliminate Its Hearings Backlog (2009); U.S. Gov’t Accountability Off., GAO/HEHS-96-87, Backlog Reduction Efforts Underway; Significant Challenges Remain (1996). Having to address the additional administrative demands from further adversarial judicialization would likely produce a new round of chronic backlogs and chaos and exacerbate the strains on an already fragile adjudicative system. The time required for the hearing stage could increase substantially with significant additional preparation time needed by ALJs and their staffs for advance research on and processing of comprehensive legal briefs, filings, arguments, and documentary supplementation in cases with attorney representation. This would produce corresponding diminution in efficiency, heightened costs, and elevated resource allocation demands on the agency, while imposing significant hardships to claimants from substantial adjudication delay. Indeed, SSA’s mass justice hearing system essentially collapsed from similar pervasive and chronic problems under the strain of an ill-fated, limited experiment with adversarial hearings in the 1980s.201See Salling v. Bowen, 641 F. Supp. 1046, 1059–74 (W.D. Va. 1986) (enjoining the SSA’s adversarial demonstration project (SSARP) as violative of due process, finding systemic unreasonable delays, reduction in decisional quality, adjudicative inconsistency, and fundamental unfairness to claimants).
In light of the potential fallout of such a rule as implicitly recognized through the rulemaking inaction of the last ten SSA commissioners, and through observations of some prominent jurists, it is hard to assert that “prudence” mandates that the judicial branch carry the DOJ’s water on this matter and impose a rule which SSA’s policymakers have understandingly declined to seek.202See Ramsey v. Comm’r of Soc. Sec., 973 F.3d 537, 547 n.5 (6th Cir. 2020) (“In Sims, the Court wrote that ‘[a]lthough the question is not before us, we think it likely that the Commissioner could adopt a regulation that did require issue exhaustion.’ The agency’s decision not to impose such a requirement in the twenty years since Sims was decided does not persuade us that it is prudent for us to imply an unwritten exhaustion requirement for Appointments Clause challenges now.” (quoting Sims v. Apfel, 530 U.S. 103, 108 (2000))), cert. denied sub nom. Saul v. Ramsey, 141 S. Ct. 2699 (2021); Bradshaw v. Berryhill, 372 F. Supp. 3d 349, 359 (E.D.N.C. 2019) (“Nearly two decades have passed since the Supreme Court noted that the SSA’s regulations did not include an issue-exhaustion requirement, but that it was ‘likely that the Commissioner could adopt a regulation that did require issue exhaustion.’ The SSA could have addressed this issue at any time but did not do so. The complications arising from its failure to act do not justify judicial imposition of an issue-exhaustion requirement.” (quoting Sims, 530 U.S. at 108)). See generally Spiva v. Astrue, 628 F.3d 346, 353 (7th Cir. 2010) (noting the impropriety of DOJ attorneys substituting rationales to support SSA agency decisions in defending those decisions on federal court judicial review where the SSA adjudicators themselves have declined to adopt such rationales, since Congress’s delegation of adjudicative and policy authority on the SSA disability benefit programs and claims is to SSA, not DOJ) (citing Kevin M. Stack, The Constitutional Foundations of Chenery, 116 Yale L.J. 952, 1021 (2007)). Because the judicial imposition of common law ALJ issue exhaustion would reflect a significant alteration and judicialization of SSA’s uniquely informal hearing process, with much foreseen and unforeseen fallout from such adjudicative formalization, any such rule, if truly deemed necessary, should be implemented through a deliberative, open, participatory, and democratically accountable process—by Congress or through APA rulemaking designed comprehensively to address all such issues and not through piecemeal, judicial common law. As one district court reasoned, “[e]ven if it were appropriate for the judicial branch to design an issue-exhaustion requirement for Social Security proceedings, the courts are poorly equipped to do so in a way that adequately accounts for the interests of both the Administration and claimants.”203Bradshaw, 372 F. Supp. 3d at 360.
For example, under an issue exhaustion rule, what issues must be exhausted before the ALJ? All conceivable issues? Only those over which the ALJ has authority to address (i.e., no constitutional issues or issues from controlling circuit case law not interpreted in SSA Acquiescence Rulings)? Only factual issues? How fully must the issue be presented to be deemed “exhausted”? Must the issue be presented with specificity and detail?204Cf. Indep. Towers of Wash. v. Washington, 350 F.3d 925, 929 (9th Cir. 2003) (“[W]e review only issues which are argued specifically and distinctly in a party’s opening brief. Significantly, [a] bare assertion of an issue does not preserve a claim. (citations omitted)); United States v. Dunkel, 927 F.2d 955, 956 (7th Cir. 1991) (“A skeletal ‘argument[,’] really nothing more than an assertion, does not preserve a claim. . . . Judges are not like pigs, hunting for truffles buried in briefs.”). Or would it be enough to raise an issue in general terms to the ALJ and then expand the argument or rationale far more specifically and in greater detail on federal court judicial review?205See Shaibi v. Berryhill, 883 F.3d 1102, 1110 (9th Cir. 2017) (“It is enough to raise the job-numbers issue in a general sense before the ALJ [to avert issue forfeiture].”); McQueen v. Apfel, 168 F.3d 152, 155 (5th Cir. 1999) (permitting review of new issues on federal court appeal where they reflected “expansion of the general rationale” of an issue raised before the SSA’s Appeals Council, even prior to the Sims Court’s categorical rejection of Appeals Council issue exhaustion). Will the rule apply to pro se claimants or only represented ones?206Compare Sims, 530 U.S. at 114 (O’Connor, J., concurring in part and concurring in the judgment) (“[I]t would be unwise to adopt a rule that imposes different issue exhaustion obligations based on whether claimants are represented by counsel.”), with Shaibi, 883 F.3d at 1109 (judicially imposing ALJ issue exhaustion where the “claimant is represented by counsel”). Should non-attorney representatives be treated as “counsel” for a rule made applicable only to represented claimants?207See Keifer v. Saul, 789 F. App’x 581, 582 (9th Cir. 2020) (extending Shaibi’s ALJ issue exhaustion holding to a case with a claimant represented by a non-attorney, “lay representative eligible for direct payment of fees under the Social Security Act”). See generally Sears v. Bowen, 840 F.2d 394, 402 (7th Cir. 1988) (clarifying that the presumption of “best case” representation when claimant has attorney representation at the hearing “does not necessarily hold true when a claimant is represented by a nonlawyer”). In fiscal year 2018, 82,496 claimants were represented by non-attorneys. See Monthly Processing Time Statistics, supra note 86, at 17. Should there be exceptions to issue exhaustion based on prudential exceptions to the judicially created appellate waiver doctrine in formal adversarial judicial litigation and appeals, such as where “the new issue is purely legal, and the record pertinent to this issue can be developed no further”?208United States v. Krynicki, 689 F.2d 289, 291–92 (1st Cir. 1982). Or where “the public interest or justice so warrants”?209Franki Found. Co. v. Alger-Rau & Assocs. Inc., 513 F.2d 581, 586 (3d Cir. 1975). How many of the SSA’s rules, regulations, forms, and other administrative guidance would be deemed misleading, reflecting “bait and switch” notice, by assuring claimants of an informal, simple, and claimant-accessible hearing process, but then requiring formal hearing-level presentation of even complex legal arguments to preserve them for judicial review? Which of SSA’s forms, notices, regulations, and guidance would require repeal or significant modification to accommodate an issue exhaustion rule consistent with due process or equitable notice requirements, such as the putatively misleading language in 20 C.F.R.§§ 404.900(b), 416.1400(b), and SSA Form HA-501?210Cf. Dubin, supra note 3, at 1331–39 (describing potential due process and equitable notice obstacles to the SSA’s appeals council issue exhaustion from misleading notice in SSA forms and regulations).
If common law issue exhaustion were applied to SSA hearing proceedings, courts throughout the country would address the above issues in myriad varying ways, producing undesirable non-uniformity in the administration of a national program.211See Heckler v. Day, 467 U.S. 104, 116 (1984) (recognizing “Congress’[s] oft-repeated goal of uniform administration of the [Social Security] Act”). If issue exhaustion were otherwise deemed necessary and desirable for SSA proceedings, these issues and others generated from imposition of such a rule would undoubtedly benefit from a comprehensive, deliberative, open, and accountable process designed to reach a nationally uniform result and balance impacts on claimants, the public, and the agency alike, such as through notice and comment rulemaking under the APA, 5 U.S.C. § 553, or through Congressional legislation.
The political branches of government are best suited to determine whether or how an SSA issue exhaustion rule might be applied consistent with SSA’s uniquely informal, non-adversarial, and inquisitorial adjudication system, as well as the Social Security Act’s core, relevant legislative purposes. The non-judicial branches of government are equally well-suited to consider both the SSA’s present fiscal and operational realities and projected inevitable transformations of the SSA adjudicative process and overall pension system. A congressionally enacted issue exhaustion statute would be dispositive,212See supra note 193 and accompanying text (discussing 42 U.S.C. § 1320a-8(d)(1), the SSA’s adversarial-fraud-proceeding issue exhaustion statute). and a duly promulgated issue exhaustion regulation213Although the APA exempts matters related to grants and benefits from public rulemaking requirements, the SSA has agreed to be bound by APA rulemaking provisions, including the requirements of notice and public participation. See Public Participation in Rule Making, 36 Fed. Reg. 2532, 2532 (Feb. 5, 1971) (publicizing the SSA announcement to follow APA, notwithstanding the benefit exception in 5 U.S.C. § 553(a)); Administrative Practices and Procedures, 47 Fed. Reg. 26,860, 26,680 (June 22, 1982) (extending the announcement). After agreeing to be bound by the APA, an agency may not disregard its provisions on an ad hoc, case-by-case basis. See Rodway v. U.S. Dep’t of Agric., 514 F.2d 809, 814 (D.C. Cir. 1975); see also Recommendations of the Administrative Conference Regarding Administrative Practice and Procedure, 57 Fed. Reg. 30,101, 30,102 (July 8, 1992) (detailing the Administrative Conference of the United States’ recommendation encouraging APA § 553 notice and comment rulemaking on process rules and construing the procedural exemption narrowly). would be entitled to substantial deference under Chevron, U.S.A., Inc. v. Natural Resource Defense Council, Inc.214467 U.S. 837, 844–45 (1984).
Courts “accord deference to agencies under Chevron . . . because of a presumption that Congress, when it left ambiguity in a statute meant for implementation by an agency, understood that the ambiguity would be resolved, first and foremost, by the agency, and desired the agency (rather than the courts) to possess whatever degree of discretion the ambiguity allows.”215Smiley v. Citibank (S.D.), N.A., 517 U.S. 735, 740–41 (1996). Under the present system, Chevron deference is owed to the SSA’s adjudication process-informality regulations in 20 C.F.R. §§ 404.900(b) and 416.1400(b), which mitigate against the imposition of formal adversarial litigation doctrines; not the DOJ’s convenient litigating positions defending the SSA in judicial review actions.216See 20 C.F.R. §§ 404.900(b), 416.1400(b) (2022). In Bowen v. Georgetown University Hospital,217488 U.S. 204 (1988). the Supreme Court explained:
We have never applied the principle of [Chevron] to agency litigating positions that are wholly unsupported by regulations, rulings, or administrative practice. To the contrary, we have declined to give deference to an agency counsel’s interpretation of a statute where the agency itself has articulated no position on the question, on the ground that “Congress has delegated to the administrative official and not to appellate counsel the responsibility for elaborating and enforcing statutory commands.”218Id. at 212 (quoting Inv. Co. Inst. v. Camp, 401 U.S. 617, 628 (1971)); see also Smiley, 517 U.S. at 741.
The Court has further explained that “[t]he deliberateness of such positions, if not indeed their authoritativeness, is suspect.”219Smiley, 517 U.S. at 741. As in Georgetown Hospital, because “[d]eference to what appears to be nothing more than an agency’s convenient litigating position would be entirely inappropriate,”220Georgetown Hosp., 488 U.S. at 213; see also Kisor v. Wilkie, 139 S. Ct. 2400, 2417 (2019). an SSA ALJ issue exhaustion rule should be left to “the notice-and-comment procedures of the Administrative Procedure Act designed to assure due deliberation,”221Smiley, 517 U.S. at 741. or to Congress.
The Court’s recent decision in Carr, reaffirming the reasoning of Sims, should put to rest the debate over the propriety of judicially created issue exhaustion in any SSA adjudicative proceeding, including those at the ALJ-hearing stage involving “routine” issues. The Carr and Sims decisions require express consideration of the non-adversarial and informal nature of the adjudication context in question and those considerations will decisively weigh against common law issue exhaustion’s application to any of SSA’s inquisitorial proceedings. Courts’ extensions of common law issue exhaustion into these proceedings was mistaken from the outset and heedlessly adapted from inapposite or questionably supported precedents from adversarial adjudicative systems. Its further application should be discontinued and the post-Sims, pre-Carr precedents, attempting to apply issue exhaustion at the ALJ-hearing level should be viewed as no longer sound law.
In Perales, the Supreme Court declared that the SSA’s inquisitorial, multiple-hat-wearing judge model and “administrative structure and procedures, with essential determinations numbering into the millions, are of a size and extent difficult to comprehend. But . . . ‘[s]uch a system must be fair—and it must work.’”222Richardson v. Perales, 402 U.S. 389, 399 (1971). Some courts and agency policymakers have already identified the likely or potential harms and hardships to the agency and claimants alike from the superimposition of an issue exhaustion requirement, which would contravene the Perales Court’s directive on both counts. In the final analysis, any such balancing of the potential harms with the purported benefits of such an issue exhaustion rule—if such a requirement is to be further considered—should be conducted through APA rulemaking or by Congress with the opportunities to carefully balance the competing interests of all concerned.