19. Federal Court Decisions & TRA

Hicks v Colvin – 19.17

Hicks v Colvin
Digest No. 19.17

Due Process/Fraud

Cite as: Hicks v Colvin, 214 F Supp 3d 627 (ED KY 2016).

Court: District Court, Eastern District of Kentucky
Appeal pending: Yes
Claimant: Amy Jo Hicks
Agency: Social Security Administration
Date of decision: October 12, 2016

View/download the full decision

HOLDING: Due process requires individuals to be able to challenge factual assertions made by the government as part of the government redetermining their eligibility for benefits.

FACTS: Claimant, who suffered several psychological and physical ailments, applied for Social Security disability benefits in 2007 with the help of Attorney Eric Conn. Claimant received benefits until 2014, when the SSA’s Office of Inspector General (OIG) discovered a fraudulent scheme orchestrated by Conn with the help of ALJ Daugherty and several doctors. The OIG ordered the SSA to redetermine 1,787 of Conn’s clients’ cases, hold new ALJ hearings, and disregard any evidence if there was reason to believe fraud was involved. At Claimant’s hearing the ALJ refused to review or admit her medical records because they were based on a template medical form that Conn used in his fraudulent scheme. Because so much time had passed, Claimant was unable to testify regarding her exact medical condition and diagnosis at the time she applied for benefits, so her benefits were cancelled.

DECISION: The OIG policy of ordering the SSA to automatically disregard evidence during the redetermination process if the OIG had reason to believe fraud was involved violated due process because it denied individuals a meaningful opportunity for a hearing at which they could challenge the OIG’s factual assertions of fraud.

RATIONALE: Due process requires the government to give individuals a “meaningful hearing” that will provide them with “a fair opportunity to rebut the Government’s factual assertions before a neutral decisionmaker.” Hamdi v Rumsfeld, 542 US 507, 533; 124 S Ct 2633 (2004). That includes giving the individual the right to present facts and have their case be decided according to those facts. Interstate Commerce Comm’n v Nashville RR Co, 227 US 88, 91; 33 S Ct 185 (1913). The OIG’s policy violated due process because it allowed the SSA to make a factual determination about an individual–that they committed fraud–without explaining its reasons or allowing the individual to challenge the determination. Although the SSA did give Claimant a hearing, because it excluded all her medical evidence and didn’t give her the opportunity to challenge the OIG’s determination that the evidence was fraudulent, her hearing was not “meaningful.”

The Court declined to give the OIG fraud policy Chevron deference because it was a policy, not a rule that had undergone notice-and-comment, and thus lacked the force of law. The Court also explained, citing Loudermill v Cleveland Board of Ed, 470 US 532, 541; 105 S Ct 1487 (1985), that although social security disability is an entitlement, so long as the government operates the program, it cannot take away benefits without due process. The Court held the portion of the OIG fraud policy unconstitutional that required ALJs to disregard the evidence it labelled fraudulent without giving those ALJs deference as the fact-finder to determine whether or not it was fraudulent. The Court suggested that, on rehearing, Claimant should be able to offer whatever evidence she wanted, and allow the ALJ discretion to determine whether it was fraudulent or should be admitted.

Digest author: Sarah Harper, Michigan Law, Class of 2017
Digest updated: December 23, 2017