The opinion of the court was delivered by: RODRIGUEZ
This case is before the court on the motion of defendant, the Secretary of Health and Human Services ("the Secretary"), to dismiss under Fed. R. Civ. P. 12(b)(6) (failure to state a claim upon which relief can be granted).
Plaintiff Guiseppe Aversa filed an application for disability benefits on August 4, 1983 alleging that he had become disabled on September 2, 1977. This application was denied, and plaintiff did not appeal this denial. Plaintiff again applied for benefits on September 18, 1984. This application was denied both initially and upon reconsideration. An Administrative Law Judge ("ALJ") dismissed plaintiff's request for a hearing on April 4, 1986, stating that "The determination, issued on September 20, 1983 by the Social Security Administration, has become final and binding on the issue of 'disability' through August 4, 1983." Plaintiff then sought review of the ALJ's decision by the Appeals Council and submitted additional evidence in support of his claim. By letter of June 19, 1986 the Appeals Council denied plaintiff's request for review of the ALJ's dismissal of plaintiff's hearing request. The letter stated that the Appeals Council had carefully considered plaintiff's counsel's contentions as well as the additional evidence that had been submitted. The letter further stated that "the Appeals Council believes that the evidence submitted with your request for review is new, but it does not materially alter the ALJ's finding that you were not disabled prior to August 4, 1983." Plaintiff filed an action in this court on June 19, 1986 seeking reversal of the Secretary's decision and an award of disability benefits.
Defendant advances two arguments in support of its motion. First, it contends that the Secretary's initial denial of benefits constitutes administrative res judicata with respect to plaintiff's claimed disability as of September 2, 1977 and that the Secretary's refusal to grant a hearing with respect to this claim is not reviewable by this court. Second, defendant argues that dismissal of a hearing request is not a final decision of the Secretary within the meaning of § 205(g) of the Social Security Act, 42 U.S.C. § 405(g), that § 205(g) provides the exclusive method of judicial review of the Secretary's decisions, and that this court is therefore without jurisdiction over the action.
Plaintiff argues that he has never had a hearing on his claim for benefits, that res judicata is only applicable to proceedings of an adjudicative nature, and that res judicata can therefore not be applied to plaintiff's claim for relief. He argues that the application of res judicata to bar his claim would deny him his constitutional right to due process of law. He asserts that, in any event, defendant waived res judicata when an HHS employee informed him that he could re-apply for benefits when he was no longer receiving Federal Worker's Compensation benefits. Plaintiff contends also that the Appeals Council actually reconsidered the merits of his claim and that this reconsideration amounts to a de facto reopening of the claim, subjecting it to judicial review.
Section 205(g) of the Act provides in part that "any individual, after any final decision of the Secretary made after a hearing to which he was a party . . . may obtain a review of such decision by a civil action commenced within sixty days. . . ." While this section provides the mechanism for obtaining judicial review of final decisions of the Secretary, it does not provide any guidance as to when a decision of the Secretary is final, and thus subject to review. Section 205(a) of the Act confers the power and authority on the Secretary to make rules and regulations and to establish procedures, not inconsistent with the provisions of Title II of the Act, which are necessary or appropriate for carrying out those provisions. Pursuant to this authority, the Secretary has promulgated a series of regulations, codified in 20 C.F.R. Ch. III, Part 404, to provide for the determination of the eligibility of claimants for benefits under Title II, as well as the procedures by which the decisions of the Secretary become final within the meaning of § 205(g).
20 C.F.R. § 404.957(c) authorizes the Secretary to dismiss a request for a hearing where the ALJ
decides that there is cause to dismiss a hearing request . . . because -- (1) The doctrine of res judicata applies in that we have made a previous determination or decision under this subpart about your rights on the same facts and on the same issue or issues, and this previous determination has become final by either administrative or judicial action;. . . .
A determination becomes final either when res judicata is properly invoked after a hearing, see Coulter v. Weinberger, 527 F.2d 224 (3d Cir. 1975), or when the Appeals Council affirms a decision of the ALJ, or denies a request for review of a decision of the ALJ. See Rankin v. Heckler, 761 F.2d 936, 941 (3d Cir. 1985); Celebrezze v. Hudgins, 346 F.2d 113, 114 (5th Cir. 1965); Baker v. Gardner, 362 F.2d 864, 865 (3d Cir. 1966).
Res judicata effect is only to be accorded to a decision of the Secretary which is adjudicative in nature, i.e. where the decision is rendered after a full and fair hearing, similar to that which would result from a court proceeding. Delamater v. Schweiker, 721 F.2d 50, 53 (2d Cir. 1983); Stuckey v. Weinberger, 488 F.2d 904, 910 (9th Cir. 1973). An exception to this rule exists where a claimant has failed to pursue his administrative appeals and has not presented new facts in his subsequent application for benefits. Thompson v. Schweiker, 665 F.2d 936, 940 (9th Cir. 1982). Where the doctrine of res judicata is properly invoked by the Secretary, that decision constitutes a final order within the meaning of Section 205(g) and may be reviewed by the district court. See Coulter v. Weinberger, 527 F.2d 224, 228 (3d Cir. 1975). It follows that where res judicata is not properly invoked, its application by the Secretary does not constitute a final order within the meaning of Section 205(g).
Here the ALJ applied res judicata to dismiss plaintiff's request for a hearing, even though the initial determination denying plaintiff benefits was not a final decision since it was not adjudicative in nature. This was improper under the regulation.
Plaintiff's failure to request reconsideration of the initial determination did not make the determination final. HHS informed plaintiff in its September 20, 1983 letter, that if he did not request reconsideration of his case within the prescribed time period, he could still file another application at any time. Plaintiff was led to believe that he would not be prejudiced if he did not request reconsideration of the initial determination. The ALJ then used this determination, made without a hearing, as grounds for denying plaintiff's request for a hearing based on the doctrine of res judicata. Failure to afford plaintiff a hearing before depriving him of a recognized ...