Solicitor General Memo Makes Social Security's Lucia Headache Worse

     The Solicitor General represents the federal government before the Supreme Court. This is from a memo from the Solicitor General to General Counsels at federal agencies concerning the recent Supreme Court decision in Lucia v. SEC:

... As discussed below, to the extent feasible and consistent with law, we advise agencies ... (3) in pending cases in which no Appointments Clause challenge was timely made and preserved, to argue that any such challenge is forfeited; and (4) in pending cases in which an Appointments Clause challenge was timely made and preserved, to seek a voluntary remand to the agency to provide a hearing before a different, properly appointed ALJ, consistent with Lucia. ...

A threshold question is who exactly is covered by the Supreme Court's decision in Lucia. Although the Court's specific holding is narrow, its reasoning sweeps more broadly. For the reasons discussed below, we conclude that all ALJs and similarly situated administrative judges should be appointed as inferior officers under the Appointments Clause, and that Department Heads should ratify and approve the appointments of existing ALJs and administrative judges accordingly. ...

The Court's decision in Lucia does not directly address the constitutional status of administrative law judges appointed under 5 U.S.C. 3105 who do not preside over adversarial administrative hearings or possess powers equivalent to those of the SEC ALJs in Lucia. For example, Lucia does not squarely resolve the status of ALJs who preside over ex parte hearings for applicants seeking federal benefits. Nonetheless, much of the reasoning of Lucia applies with equal force to such ALJs: while they may not preside over adversarial trials, they do take testimony, preside over hearings, receive and weigh evidence, and employ various mechanisms for obtaining compliance with their orders. Accordingly, taking into account both the Supreme Court's reasoning in Lucia and the importance of ensuring the President's oversight of the execution of the laws, the Department of Justice no longer plans to argue that such ALJs are employees rather than inferior officers. Agencies should appoint all ALJs as inferior officers. ...

Many agencies, however, use other non-ALJ officials-often termed "administrative judges" or "administrative appeals judges"-to preside over hearings and issue initial or appellate decisions in agency adjudications. While there will be case-by-case questions, we anticipate that many of these adjudicative officials will qualify as inferior officers under Lucia, especially if they preside over adversarial hearings and have the four specific forms of authority highlighted by the Court in Lucia. Again, taking into account both the Supreme Court's reasoning in Lucia and the importance of ensuring the President's oversight of the execution of the laws, the Department does not expect to defend the appointment of such officials by individuals other than the Department Head on the ground that they are mere employees. Accordingly, we recommend that agencies appoint such non-ALJ adjudicators as inferior officers in the same manner as ALJs, consistent with the advice in this memorandum, or contact us with further questions, as appropriate. ...

The Constitution not only specifies the manner in which officers of the United States must be appointed, but also limits the extent to which officers may permissibly be shielded from removal by the Department Head. ... Many litigants have already argued that ALJs are impermissibly shielded from removal because, by statute, ALJs can only be removed "for good cause established and determined by the Merit Systems Protection Board on the record after opportunity for hearing before
the Board." 5 U.S.C. § 7521(a). ...

The Department of Justice is prepared to defend the constitutionality of Section 7521, as properly construed. As the government argued in the Supreme Court in Lucia, Section 7521's "good cause" standard for removal is properly read to allow for removal of an ALJ who fails to perform adequately or to follow agency policies, procedures, or instructions.

      The key points here as I see them:

• The federal government isn't going to defend the constitutionality of Social Security ALJ decisions issued prior to the date they were officially appointed by the Acting Commissioner.
• The federal government will try to defend these cases only on the grounds that the claimant did not raise the issue administratively (issue preclusion).
• It's not completely clear but it seems very likely that the federal government will not try to defend the constitutionality of the decisions of Social Security's Administrative Appeals Judges who make decisions at the Appeals Council prior to their appointment by the Acting Commissioner. (There has been no announcement that they have been so appointed but I imagine they have. I would appreciate information on this point.)
• The federal government will defend ALJs who are challenged on the grounds that they may only be removed by the Merit Systems Protection Board but only by saying that "as properly construed" that ALJs may be removed far more easily than has been the case in the past.

       The issue preclusion argument that Social Security will make isn't a strong one. There is a Supreme Court decision holding that issue preclusion doesn't apply to Social Security cases generally. Social Security will have an especially hard time getting the courts to accept issue preclusion in these cases since the agency announced earlier in the year that neither ALJs nor the Appeals Council could consider arguments concerning the constitutionality of ALJ appointments. How can you demand that an argument have been raised when you're announced to the world that you wouldn't consider the argument even if it was raised? Even if the agency could somehow get around that, there is the question of when the issue must be raised. Is it enough to raise the issue before the Appeals Council?

     Social Security won't follow my advice but I'll give it anyway. The Solicitor General just took away your strongest argument -- that Social Security ALJs could be distinguished from SEC ALJs. The agency may as well hold up its hands and surrender. Remand all the cases pending at the Appeals Council. Accept voluntary remands in all cases pending in federal courts.  You'd clear out the Appeals Council backlog and you'd avoid an avalanche of federal court cases that you're going to lose.

     The extent to which Appeals Council decisions will be affected is unclear. Is a denial of review enough to be a problem for Social Security? What about a remand order? It's not a final decision. Does it even matter considering that the ALJs were unconstitutional?

     Can Social Security and other agencies defend the constitutionality of the ALJ removal procedures? How hard will the federal government even try to defend on this point? Their logic sounds strained to me. I doubt that their hearts are in it. I'm pretty sure that the Federalist Society thinks that the removal procedures are unconstitutional. The Trump Administration has nearly subcontracted its legal policy decisions to the Federalist Society.

     Will Social Security try to remove more ALJs than they have in the past on the grounds that it should be far easier to remove ALJs than it has been in the past?