Sims v. Apfel – Oral Argument – March 28, 2000

Media for Sims v. Apfel

Audio Transcription for Opinion Announcement – June 05, 2000 in Sims v. Apfel

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William H. Rehnquist:

We’ll hear argument next in Number 98-9537, Juatassa Sims v. Apfel.

Sarah H. Bohr:

Mr. Chief Justice, and may it please the Court:

This Court has held that Social Security proceedings are intended to be simple and informal, nonadversarial, nontechnical, and accessible even to the layman claimant.

Indeed, almost half of all claimants who attend Social Security administrative hearings do not have attorney representation.

This Court also noted that the Social Security Act is intended to be unusually protective of claimants.

Consistent with congressional intent, the Social Security Administration has promulgated and created a panoply of regulations, rules, forms, and notices which embody that simplicity, that informality, and that claimant supportive process mandated by Congress.

As conceded by the commissioner, the statute and regulations do not require that claimant specifically delineate any claims of error or specific issues when seeking review by the appeals council from an administrative law judge decision.

Antonin Scalia:

I thought the forms contain spaces in which you’re supposed to state the reason for your appeal.

Sarah H. Bohr:

The form in question contains three lines of space, and it states, my reasons for disagreement are.

Antonin Scalia:

Right.

Sarah H. Bohr:

It doesn’t state any warning on it that you must list specific issues.

There’s nothing in the notice of decision that is sent to the claimant when a claim is denied that warns the claimant that if they do not delineate specific issues in their appeal they will waive that right in Federal court and, in fact, significantly, Justice Scalia, the notice of decision, the one issued in this case, contains many other warnings.

It warns a claimant that if they file a new application it’s not the same thing as appealing.

They lose… they may lose benefits.

Antonin Scalia:

Well, this claimant was represented by counsel.

Sarah H. Bohr:

Yes, she was.

Antonin Scalia:

At every stage, no?

Now, the point you’re making now, that there’s no warning, I suppose would have some force in a case where you’re dealing with a layman.

But where you’re dealing with a lawyer who knows the usual rule in administrative cases that you have… indeed, any case, judicial or administrative, that you have to have complained about what you’re appealing, and if you don’t specify what it is, you abandon it.

Isn’t that the usual rule throughout the law?

Sarah H. Bohr:

Your Honor, in Social Security proceedings the scheme is different.

We have set up a very… Congress has established an informal, nonadversarial system of decisionmaking.

Social Security’s own regulations and rules do not require that a claimant specify issues.

In fact, the regulations provide that the review is plenary, meaning that all issues are before the Appeals Council unless the Appeals Council notifies the claimant that they intend to limit the issues, so the regulations–

William H. Rehnquist:

But–

Sarah H. Bohr:

–provide for a plenary review.

William H. Rehnquist:

–that doesn’t help you I don’t think, Ms. Bohr, because we’re talking here about whether you have to raise it before the Appeals Council.

Granted, you can take anything that happened before, before the Appeals Council.

We’re talking about whether you can take something that you didn’t take to the Appeals Council to the Federal court.

Sarah H. Bohr:

That’s correct, Mr. Chief Justice.

William H. Rehnquist:

So why don’t you have to–

Sandra Day O’Connor:

–Were you the counsel below–

Sarah H. Bohr:

Not at the Appeals Council level.

Sandra Day O’Connor:

–Ms. Bohr, at the Appeals Council level?

Sarah H. Bohr:

No, we were not.

Sandra Day O’Connor:

Why wouldn’t it be helpful to raise issues that the claimant thinks are important before the Appeals Council?

Sarah H. Bohr:

Well, certainly–

Sandra Day O’Connor:

It just strikes me as rather odd that the claimant wouldn’t want to raise them.

Sarah H. Bohr:

–Well, certainly in this case the record does reflect that Ms. Sims’ counsel raised many matters in her… in the appeal, but–

Sandra Day O’Connor:

Some, but apparently never claimed that the administrative law judge should have ordered a consultative examination.

That was never raised–

Sarah H. Bohr:

–No, it was not.

Sandra Day O’Connor:

–anywhere down the line until the district court, was it?

Sarah H. Bohr:

No, it was not.

I think certainly it can assist the process for claims to identify issues, and they do.

Most claimants list some kind of issues in support of their appeal.

The problem is that we have a scheme that doesn’t require that.

It doesn’t require that.

Stephen G. Breyer:

Where does it say it doesn’t?

I mean, the normal hornbook administrative law is just the same as for a district court and a court of appeals.

If you don’t raise an issue, you lose it.

Now, there can be exceptions to that, but I mean, unless there’s something that says there’s an exception, I don’t know why we’d assume there was one.

Sarah H. Bohr:

That is certainly a rule, and many agencies follow that rule–

Stephen G. Breyer:

No, no, it’s not an agency follows it.

To my knowledge, that is the uniform practice of the United States courts.

You raise an issue, or you lose it, with exceptions.

With exceptions.

Sarah H. Bohr:

–But you have to look at what are the prudential considerations for the application of common law issues of exhaustion, which is what you’re describing.

Stephen G. Breyer:

No, I’m just saying I never saw a case that didn’t follow that rule, and then what they usually argue about is whether there’s an exception, and there are many.

So I just wondered what there was here that would say… there may be many things that would take you out of what I’d call the hornbook rule, or maybe I’m wrong about the hornbook rule.

Stephen G. Breyer:

I’m just saying, I thought that’s what it was.

Sarah H. Bohr:

The hornbook rule you’re referring about is the… is a rule that claimants may be required to list issues, but you have to look at the whole statutory scheme we’re talking about.

You can’t just look at these things in a vacuum, and Congress, as this Court pointed out in the McCarthy v. Madigan case and the Darby v. Cisneros case, you have to look with consistency with the actual underlying congressional intent, and any applicable statutory and regulatory scheme, in determining whether exhaustion should be required at all, and issue exhaustion is part of the doctrine of exhaustion of administrative remedies.

And courts have also set forth certain exceptions from that rule, and they should not be applied, though, blindly.

You have to look at whether the prudential considerations are served, and the two primary ones identified in the McCarthy v. Madigan case were protection of agency autonomy and also judicial economy.

Those were the two reasons why you would require someone to exhaust administrative remedies.

Now, in this context we submit that those purposes are simply not served, because you have an agency that specifically talks about its proceedings are informal, they’re nontechnical, they’re… they are claimant supported, you have a process that doesn’t advise you–

Stephen G. Breyer:

Now, why?

That’s exactly what I… I’m glad… thank you for getting into this, because that’s… why does the fact that it’s informal make a difference?

I mean, I would have thought it’s all the more reason to bring up the things, or it’s at least no less of a reason, so why does that make a difference?

Sarah H. Bohr:

–It’s a combination of being informal, being simple, being nonadversarial, being–

Stephen G. Breyer:

Well, all that could say, let’s bring it up.

Sarah H. Bohr:

–all those factors make a difference.

Stephen G. Breyer:

We’ll actually get the lawyers out of the–

Sarah H. Bohr:

It’s a very unique process.

Social Security cases are not like other agencies.

We’re not talking about agencies where people come to hearings and they have… there’s parties on both sides with attorneys.

A Social Security hearing is very informal.

Stephen G. Breyer:

–I absolutely agree with you that there is that difference.

And now what my question is, is why should that make a difference in terms of whether you’d have to bring it up or not?

Sarah H. Bohr:

Because it makes a difference in terms of how the agency announces… the agency has, as I said earlier, a whole panoply of regulations, rules, forms, and notices, and all those–

Antonin Scalia:

Well, they can change that.

They can change that.

I mean–

Sarah H. Bohr:

–But they haven’t changed it.

Antonin Scalia:

–Well, I know they haven’t, but what you’re driving us to is to say that although SSA has been very… very liberal in saying, you don’t have to mention whatever your claim is, we’ll look at it, and if there’s anything that’s wrong we’ll correct it.

They may well be willing to do that internally, but if we now tell them that if you adopt this approach, they are going to be able to come to the courts and reverse you for something that you didn’t see, and that the claimant before you didn’t bring to your attention, they’re going to say, now, wait a minute.

Maybe we ought to require people to set forth the reasons that they’re complaining.

In other words, I don’t think it makes sense to punish the Social Security Administration by rendering their decisions more reviewable than the decisions of other agencies simply because they’ve decided to be more generous to the claimants.

I don’t see that it follows.

Sarah H. Bohr:

Your Honor, when you appeal a case to the Appeals Council, the… I think it’s significant that they don’t advise people that you have to raise issues.

You look at the Veterans Administration, which is a similar kind of agency like Social Security–

Antonin Scalia:

I agree that they don’t have to raise issues.

They don’t have to raise issues.

The Appeals Council is willing to consider issues that are not raised.

But that’s quite a separate question from whether, if you don’t raise it and the Appeals Council doesn’t see it, you can then haul the Appeals Council into court.

That’s a separate question, and I don’t see why it makes sense to say that because they’re generous, they should be more readily suable in district court than other agencies.

Sarah H. Bohr:

–Well, first of all, in the Social Security context, when the Appeals Council denies review, it’s the ALJ decision that goes into Federal court, not the Appeals Council denial.

Ruth Bader Ginsburg:

And if it went just to the ALJ and then directly to court, as Congress… that has been proposed, to cut out this Appeals Council altogether.

If it went from the ALJ to the court, then you would agree that you would have to raise in the district court any issue in order to get it on appeal?

Sarah H. Bohr:

Certainly.

There is a point that we concede that the informal, nonadversarial, claimant driven process changes to a more formal setting, and we contend that the way this scheme is currently set up, that point happens in Federal court.

When you file a claim in Federal court, despite the fact that we have a very simple kind of system for claimants, when you get to Federal court you have to raise all your issues.

Ruth Bader Ginsburg:

You spend about… the Appeals Council is the fourth rung or the third rung within the agency?

Sarah H. Bohr:

It is the fourth rung.

You apply initially, there is a decision made, then the claimant requests reconsideration, then, if they’re dissatisfied, the third step is a hearing before an administrative law judge, and then if they’re denied they must go through the fourth rung, which is the Appeals Council.

Now, this is a huge number of claims.

115,000 cases are filed there in the last fiscal year, and they have just 20 judges, and there is information we provided in our brief that there have been studies done which show that the average judge spends 15 minutes looking at a claim, they issue boiler plate denials… in fact, in 1995 they admitted that they no longer were going to even address the issues that claimants raised in their decisions.

So one of the main purposes of requiring people to exhaust a step is to look at… is to help the courts.

Well, how does it help the courts if they don’t even tell you in their decisions why they have denied the case?

William H. Rehnquist:

Ms. Bohr, it’s also very… it’s to help the agency I think, to let them correct a mistake, and it will be much easier for them to correct it if it’s called to their attention than if it’s not, if they’re simply bypassed and it’s raised for the first time in court.

Sarah H. Bohr:

Certainly we do not… Chief Justice, we certainly agree that the agency could set up a system like this if it wanted to.

William H. Rehnquist:

Well, it has set up… it has set up a system like this.

Sarah H. Bohr:

They haven’t set up a system where they are requiring claimants to raise specific issues.

William H. Rehnquist:

Well, the–

Sarah H. Bohr:

The regulations provide the review is plenary.

William H. Rehnquist:

–Well, but review… but provide… review in the Appeals Council is plenary.

Don’t… nothing here suggests that they’re treating it otherwise.

They’re not saying, as I understand it, that you must have raised an issue before you get to the Appeals Council in order to get it… in order to bring it to the Appeals Council.

What they’re saying is, you have to have raised it in the Appeals Council before you can go into court.

Sarah H. Bohr:

Yes, that is what the agency is doing, and this is not an… this is not something that’s provided for within the regulatory scheme.

It is a litigating position now that Social Security is taking in court matters is, they are raising this requirement, or this objection to claimants in Federal court to seek to bar them from raising issues when the vast majority of claims were never even notified of the need to raise the issues.

Stephen G. Breyer:

It says in the notice that they gave you, I take it, you have a right… not you, but your client, if you do not agree with the ALJ’s decision, you may file an appeal with the Appeals Council.

If you do not appeal, and the council does not review the ALJ’s decision on its own, you will not have a right to court review.

Sarah H. Bohr:

Yes.

Stephen G. Breyer:

So a lawyer receives that.

Now, when a lawyer receives that, I think that lawyer would know, I better appeal it if I want to go to court, and if a lawyer… you know, had a… a lawyer who knows the basic ground rules I think might also think, I better raise the issues.

Sarah H. Bohr:

Justice Breyer, that provision you’re referring to does certainly advise you of the need to exhaust, and there’s no dispute you have to exhaust that step.

You have to go to the Appeals Council in order to get… go into Federal court, but it doesn’t advise you and give you warnings.

Note in the following paragraph it says, you have a right to file a new application at any time, but filing a new application is not the same as appealing.

William H. Rehnquist:

What–

Sarah H. Bohr:

You might lose benefits.

It doesn’t warn you about it with the Appeals Council.

William H. Rehnquist:

–What is the point of requiring you to go to the Appeals Council, as you concede they do, if you don’t have to raise issues there that you later want to take to court?

Sarah H. Bohr:

Certainly people do raise issues, as I said, but the problem is, their own regulations don’t mandate that you specify your specific issues, and when you’re looking at imposing on a claimant this exhaustion requirement you have to look at the prudential considerations.

William H. Rehnquist:

So are you saying, Ms. Bohr, that if the agency were simply to adopt a rule that you must exhaust your issues before the Appeals Council in order to raise them in court, that would suffice?

Sarah H. Bohr:

Mr. Chief Justice, certainly we contend this is a matter for the agency and not for the court.

William H. Rehnquist:

Well now, I asked you a rather specific question.

I think it can be answered yes or no and then explain if you want to.

Sarah H. Bohr:

Yes, I think the agency could seek to do that.

They could seek to promulgate a regulation to require issue exhaustion, but, of course, it would have to be consistent with the congressional intent I’ve described earlier.

It would have to be consistent with the intent of the Social Security Act to be protective of claimants and the like.

It would have to subject to public debate about whether this is appropriate step, but at least at that point it would be subject to all the discussions that need to occur within the agency.

The agency has conceded that this should not apply to unrepresented claimants, for example, this policy.

Ruth Bader Ginsburg:

What does representation mean in drawing that line?

Sarah H. Bohr:

Well, that’s an unclear question.

The commissioner has not stated what does it mean to be a representative.

Anyone can represent a claimant in a Social Security case.

Ruth Bader Ginsburg:

Do you know how it works out in practice before the Social Security Administration, before the Appeals Council?

What percentage of the people are represented by counsel, what percentage by lay representatives, what percentage pro se?

Ruth Bader Ginsburg:

Do we have any information about that?

Sarah H. Bohr:

Yes.

There’s some information in our brief on page 40, footnote 28 we point out that 43.6 percent… and 1998 is the last year we have statistics.

43.6 percent of claimants do not have attorneys, so 50, about 56.4 have attorney representation.

Now, when you get down to… the Social Security statistics are unclear.

They just say, representation or attorney, or… they don’t say what a representative is.

You can have your mother represent you.

You… a parent can represent a child.

A neighbor can represent you.

So it’s rather… and they do not keep statistics regarding a representative being someone in the business of providing Social Security claimant representation, or someone who is just representing someone as a favor.

Ruth Bader Ginsburg:

But do we know what position the agency is taking with respect to who is a representative that will be held to this rule?

Is it only counsel?

In other words, is the agency saying, well, for people who are represented by a parent, a best friend, we don’t apply this rule?

Sarah H. Bohr:

Justice–

Ruth Bader Ginsburg:

Only when they are represented by counsel, counsel meaning–

Sarah H. Bohr:

–Justice Ginsburg, all the commission has stated in their documents is that they believe this rule should only apply to represented claimants.

They do not draw the line for us, and that’s certainly a question you could ask the Government, what does that mean?

They only state that they agree that unrepresented people, being pro se claimants, should not have this rule enforced.

Antonin Scalia:

–Well, I’m not sure they have to make that exception for anybody, lawyers representing or mothers representing.

I mean, you do not have any basis for objecting to a decision that you’ve gotten and asking… you know, saying it’s wrong, and therefore reverse it, unless you have some reason why it was wrong in mind.

I mean, you don’t have to be a lawyer… a rocket scientist or even a lawyer to know that when you’re complaining about a decision you must have some reason for complaining about it.

Why can’t any layman grasp that simple fact, and then there’s a line on the back, you know, the decision below was wrong because, you know, three lines.

Sarah H. Bohr:

Well, we have lodged here–

Antonin Scalia:

Why… I mean, my goodness, is this really something that–

John Paul Stevens:

–In that connection, could I ask just a factual question?

Am I correct in understanding that the claimant does not have to raise the issue before the ALJ?

Sarah H. Bohr:

–That’s correct.

There’s nothing currently that says that the claim–

John Paul Stevens:

It would seem to me the most consistent system, to follow Justice Scalia’s thought, would be one that… because what’s being reviewed when you get to court is the ALJ’s decision.

Sarah H. Bohr:

–And I think it’s significant on that point, Justice Stevens, that in the Social Security context the ALJ actually wears three hats.

Sarah H. Bohr:

This is not a typical adversarial administrative hearing.

In a Social Security hearing, the ALJ wears the hat of identifying the issues.

That’s the judge of the ALJ.

The ALJ decides what the issues are.

The ALJ is charged with a duty to develop the record.

Where… what other agencies require the decisionmaker to develop the file, to recontact a treating provider if the evidence is insufficient, to order examinations if the record is slight?

It also requires the ALJ to make a decision.

It’s an inquisitorial type of process.

It’s not a true adversarial system, so the ALJ in this system identifies the issues.

John Paul Stevens:

And if the ALJ commits an error that wasn’t even talked about in the ALJ proceeding, if the claimant is smart enough to raise it before the Appeals Council, the ALJ can be reversed.

Sarah H. Bohr:

Yes, and many times I will tell you there are many instances where claimants do not raise specific claims of error and the Appeals Council sends the cases back, because they review it, and they make a decision without identifying of issues.

John Paul Stevens:

Where is the principal record made?

Is there… there’s a record made of the ALJ’s proceeding, is there?

Sarah H. Bohr:

Yes.

At the ALJ level there’s a tape recording of the hearing, Justice Stevens.

John Paul Stevens:

But what is… what record is made of the Appeals Council proceeding?

Sarah H. Bohr:

There’s nothing before the Appeals Council.

They say they have oral arguments.

I think they had six in the last 10 years.

John Paul Stevens:

And yet that’s where we have the procedural regularity, before the Appeals Council.

Sarah H. Bohr:

So there’s nothing… there’s no, really, oral argument.

These matters are basically handled by nonattorneys, individuals–

William H. Rehnquist:

Let me ask you a little more detail on that, Ms. Bohr.

When you want to take a case from the ALJ to the Appeals Council, you have to file some sort of piece of paper, I assume, don’t you?

Sarah H. Bohr:

–Yes, and they… they’ll take an applied request for review.

They’ll take the form, but if you’re an attorney you don’t have to even use their form.

William H. Rehnquist:

And then, do you get a decision from the Appeals Council?

Sarah H. Bohr:

What you get is typically what we have here in our record.

This is an actual boiler plate decision.

I do hundreds of these cases.

Sarah H. Bohr:

I read records all the time.

We have the decision on page 71 of–

Sandra Day O’Connor:

Of what?

Sarah H. Bohr:

–Of the joint appendix, and what you have is, this is a totally… example of a boiler plate denial.

It’s exactly as I see in hundreds of these files.

This is all you ever get.

You have a recitation of the regulation, 404-970, of the basis they can review, and you have this sentence: The appeals Council has concluded that there is no basis under the above regulations for granting your request for review.

Accordingly, your request is denied, and the ALJ’s decision stands as the decision.

William H. Rehnquist:

Well, okay… now, what if the Appeals Council grants your… grants you review, and rules in your favor?

Obviously they don’t send this out.

Sarah H. Bohr:

No, if they grant review, which is a very small percentage of cases, then the system is different.

Then they do actually issue decisions, and then the decision looks more like an ALJ decision.

It reads like an ALJ decision, and that becomes a decision that’s appealed in the Federal court.

When they–

Anthony M. Kennedy:

So this is like–

Sarah H. Bohr:

–This is not a decision, it’s an action.

It’s not even a decision.

Anthony M. Kennedy:

–This is like certiorari denied.

Sarah H. Bohr:

Yes.

It’s an action, they deny it, and then you go into Federal court on the–

Anthony M. Kennedy:

If the certiorari… if there’s been a denial, can you go back to the Appeals Council and ask them to reconsider, or raise any new points?

Is there–

Sarah H. Bohr:

–There is a… the Social Security regulations have a reopening provision, and any claimant can seek reopening at the last level they have been at.

If the last level was the Appeals Council, they can ask the Appeals Council to reopen the case, based on new evidence, for example.

That does happen.

Claimants have new evidence, they can ask the Appeals Council to consider the new evidence, and they can ask the Appeals Council to extend the time to file–

Anthony M. Kennedy:

–What’s the time frame?

Sarah H. Bohr:

–I believe it’s 4 years for… to ask for reopening if you’re a Social Security claim–

Anthony M. Kennedy:

Well, can you ask for reopening after it’s gone to the district court?

Sarah H. Bohr:

–That doesn’t really happen.

Sarah H. Bohr:

I mean, typically what happens is that the Appeals Council is so backlogged, quite honestly, what happens is, an attorney writes a brief to the Appeals Council, they get this form letter back, and there’s no reference of their brief, so they write to the Appeals Council and they say, consider my brief, and they’ll reopen it to consider the arguments that were up there but they never found, and then they’ll write a decision with those arguments addressed.

Anthony M. Kennedy:

Well, if the attorney is prepared to go to district court at that point, having received a… an unfavorable ruling, what would be wrong with just saying he has to exhaust by asking the Appeals Council to raise any specific thing that’s been left out?

Sarah H. Bohr:

The problem is that… I believe what you’re asking, then, if you’ve been denied review and they haven’t given any reasons, you want them to go back and readdress the reasons?

Anthony M. Kennedy:

I’m saying, assuming we think there’s an exhaustion rule, since there’s already a 4-year period to ask the agency to relook at it, the attorney, before he goes to the district court, says, well, I want to give the Appeals Council first crack at this, so he just reopens and says, I want you to consider A, B, and C, which you might not have considered earlier in my three line letter.

Sarah H. Bohr:

Well, Your Honor, reopenings actually are quite difficult to get.

I mean, they don’t happen that often, and the only reason I’ve ever seen the Appeals Council reopen is to consider something that was submitted and was overlooked when they denied the review, and they’ll go back and reopen it to pull that… basically to include that they have now looked at this argument, or this new evidence that the claimant submitted to the Appeals Council.

Anthony M. Kennedy:

So the Appeals Council already has an exhaustion concept about his own reopening, doesn’t it, based on what you’ve just described?

Sarah H. Bohr:

They will… if you’ve submitted something to the Appeals Council it needs to be a part of the record, because if you’re going into Federal court–

Anthony M. Kennedy:

Well, that’s–

Sarah H. Bohr:

–the record is created from the documents that were the ALJ hearing, the transcript of the hearing, which is–

Anthony M. Kennedy:

–So now it sounds, as I said, that there is an exhaustion concept that the Appeals Council itself applies, at least for reopening, based on what you’ve just said.

Sarah H. Bohr:

–Justice Kennedy, I guess what I… I’m a little confused about your question.

There… I’m talking about a case where someone has appealed timely, and the information somehow didn’t get to the file.

Anthony M. Kennedy:

Well, you told me that there’s no reopening unless they’ve overlooked something that you have raised, and I said, that sounds to me like exhaustion in the present system that the Appeals Council already follows.

Sarah H. Bohr:

No, that’s not exactly what I meant to say.

There are specific requirements in the regulations in general for reopening.

They can be reopening for new… new evidence is the most common reason people seek reopening.

If there’s new evidence in their file, or there’s been a mistake, it’s obvious on the record, like someone’s earnings records were not accurate, and they were denied benefits because they weren’t sure, they can seek reopening to prove there was an error, those kinds of reasons.

But this is not… to the Appeals Council, the point is that you have to have a complete record to go into Federal court, and in my experience, when things are overlooked, it just… all it does is, they then issued the same letter I’ve just stated, stating we considered your brief dated such and such, and then that is what occurs.

I think it’s important to point out that Social Security proceedings are different from other administrative agencies, and the other agencies that have been described by the Government, they actually have statutes and regulations that require issue exhaustion, and here we have a system where not only do the rules and regulations not require, but we submit that the agency actually misleads claimants and discourages them from specifying the very issues they wish to raise, and that’s a very important point.

Antonin Scalia:

Do you think it’s up to the agency what rules of exhaustion the courts apply?

I mean, you know… or is it up to the courts?

Sarah H. Bohr:

The… in fact–

Antonin Scalia:

Can an agency–

Sarah H. Bohr:

–most agencies have regulations.

The ICC, the EPA, the Master… the Merit Systems Protection Board–

Antonin Scalia:

–I know, but suppose… the ICC’s gone, happily, but let’s pick one of the other agencies.

Suppose some other agency adopts a rule and says, we think that courts really need not require that issues be presented to us before courts decide them, and hence we advise everybody who practices before us that you need not raise issues before us first.

You can go to district court, or to the court of appeals, regardless of whether the issue was raised before us.

Do you think the courts would be bound by that?

Sarah H. Bohr:

–I think, Your Honor, you have to look at the prudential consideration.

This is what we’re looking at.

When the agency does not have a requirement, or perhaps has a requirement that doesn’t require issue exhaustion, as you’ve just described, Justice Scalia–

Antonin Scalia:

Right.

That’s what I’m asking.

Sarah H. Bohr:

–You have to look at the prudential considerations.

Antonin Scalia:

Well–

Sarah H. Bohr:

It doesn’t make sense to–

Antonin Scalia:

–what does it tell you?

Sarah H. Bohr:

–propose an issue exhaustion.

Antonin Scalia:

I think… I look at the prudential considerations, and what I say is, it’s none of the agency’s business.

Sarah H. Bohr:

But in this case–

Antonin Scalia:

That whether… you know, what we require in order to bring a case before the courts is up to the courts, not up to the agency.

Sarah H. Bohr:

–But according to the McCarthy v. Madigan case, you have to look at this matter not just as a global rule, but what makes sense given the congressional intent, and given the agency’s own rules and regulations and policies, and in this particular case, when you look at that, and you look at those considerations, their… the act, and the emphasis on an informality and nonadversarial system, the fact that the review is plenary by regulation before the Appeals Council, none of the prudential considerations for the application of issue exhaustion apply in this case.

It’s simply not consistent.

It’s not going to promote the agency autonomy when the agency provides itself that all issues are reviewed, and that the system is intended to be claimant friendly.

I’d like to reserve my remaining time.

William H. Rehnquist:

Very well, Ms. Bohr.

Mr. Stewart, we’ll hear from you.

Malcolm L. Stewart:

Thank you, Mr. Chief Justice, and may it please the Court:

The requirement that a claimant exhaust administrative remedies, and the proposition that we espouse that particular issues not raised at the Appeals Council should ordinarily be deemed waived, are technically distinct, but they serve similar purposes.

Both requirements reflect a recognition that judicial review of Federal agency action imposes significant costs on both the executive branch and the Federal courts, and those costs should not be imposed unless it’s clearly necessary, and in particular, courts should not intrude upon agency processes until the agency has had a chance to take its best shot at solving the problem internally.

Antonin Scalia:

But counsel for the other side says the agency doesn’t want its best shot.

The agency itself doesn’t care.

Malcolm L. Stewart:

I don’t think that’s an accurate characterization of agency practice, and I think perhaps it’s helpful to the Court to look at the regulatory provision that was being discussed.

It’s at appendix page 1 of the yellow brief, the petitioner’s reply, and the C.F.R. cite is 20 C.F.R. 404.970.

And what the regulation says, it says, cases the Appeals Council will review, the Appeals Council will review a case if, and then it lists various criteria which correspond pretty closely to the normal standards for appellate review or of judicial review of agency action, and I think our interpretation of that regulation is best clarified by contrasting it with this Court’s certiorari practice.

That is, it’s often said that the Supreme Court is not a court of error.

It happens frequently, I would imagine, that cases are brought before the Court on certiorari petitions, and even though a majority of the Justices, or perhaps even all the Justices, believe that the case was incorrectly decided below, the Court denies certiorari because the issue raises no… the case raises no legal issue of continuing importance.

This regulation makes clear that that’s not the way the Appeals Council approaches its business.

Malcolm L. Stewart:

If–

Ruth Bader Ginsburg:

But Mr. Stewart, the agency itself has determined that the Appeals Council is not going to be used in a certain number of cases, isn’t that so?

Malcolm L. Stewart:

–The agency is currently conducting an experiment in which, in selected States, we will dispense with the requirement that the claimant seek review in the Appeals Council as a prerequisite to seeking judicial review, and one of the purposes of that experiment is to determine whether the elimination of that stage of administrative review has the effect of increasing the rate at which disappointed claimants file suit in court.

Is this–

Ruth Bader Ginsburg:

–How long has that been going on, and how large is this experiment of displacing the Appeals Council?

Malcolm L. Stewart:

I believe it’s 10 States, and I believe the experiment has been going on since sometime in 1997, and it was originally characterized as a 3-year experiment.

My understanding is that at least the data collection phase is drawing to a close, although there may be an evaluation.

Ruth Bader Ginsburg:

But now–

William H. Rehnquist:

–Is the experiment… is it directed to eliminate the requirement of going to the Appeals Council at all, or just to eliminating the requirement that you raise issues before the Appeals Council?

Malcolm L. Stewart:

It would be directed to whether the requirement of going to the Appeals Council at all should be eliminated.

Again–

John Paul Stevens:

May I ask, on the experiment, just to… in that experiment, must they raise the issues before the ALJ as a predicate to raising them in court?

Malcolm L. Stewart:

–I mean, it varies a lot depending on the sort of issue you’ve raised, you want to raise.

In Richardson v. Piralis, for instance, this Court recognized that where a particular claim is capable of being raised before the ALJ, a claimant may be barred from raising it in Court thereafter, but–

John Paul Stevens:

Well, I’m not asking what we said in Richard.

What are they doing in the experiments?

Malcolm L. Stewart:

–The experiment doesn’t change the ongoing rules in that respect.

John Paul Stevens:

There’s no exhaustion requirement before the ALJ.

Malcolm L. Stewart:

I think it would be more accurate to say that the great majority of claims that we ultimately see in court are claims of a sort that really could not feasibly have been presented to the ALJ, because they were claims to the effect–

Stephen G. Breyer:

This is… I don’t understand this.

I may be missing something fundamental.

I thought the rule was you do have to raise your claims before the ALJ.

Malcolm L. Stewart:

–I think–

Stephen G. Breyer:

Unless you fall within some kind of exception.

For example, you’re making a claim on an interpretation of law that the ALJ wouldn’t have the power to resolve.

Malcolm L. Stewart:

–Well, I think a lot of the claims that we get in court are claims to the effect that the ALJ mislaid the evidence, the ALJ failed to provide a sufficient explanation for his ruling on a–

Stephen G. Breyer:

Obviously you can’t raise a claim before the ALJ that the ALJ made a mistake, but you have to raise the claim before the ALJ that the evidence entitles me to a victory, and then you say he made a mistake, because he thought it entitled me to a defeat.

Malcolm L. Stewart:

–I think that’s right, and I think there are cases… and in fact the district court did something similar in this very case.

That is, one of the claims the petitioner raised in the district court was that the ALJ had posed a defective hypothetical to the vocational expert.

Stephen G. Breyer:

The basic rule… I mean, I’ve seen… it seems to me from my own experience, which might not be typical, is there are thousands and thousands of claims where people come into Federal court, and what they say, basically, is I did have a bad back, I did have in combination with my physical, other physical disabilities and mental, sometimes mental problems, sufficient to overcome the grid, and they should have done it on the grid, or they should have done it in some other way, hundreds of cases like that.

Stephen G. Breyer:

Now, I thought… or thousands, and I thought in all of those cases the basic claim of evidence and so forth had to be raised before the ALJ.

Malcolm L. Stewart:

I think it is correct that if the claim was susceptible of being raised before the ALJ, it should be raised before the ALJ or it will be deemed waived.

The only point I’m making is, in our experience we see a very substantial number of claims that couldn’t feasibly have been raised before the ALJ because they are in terms a tax on what the ALJ–

John Paul Stevens:

You’re, of course, telling us something dramatically different from what your opponent said.

I… maybe you’re right.

You certainly both know a lot more about it than I do.

But she told us in response to a specific question by me that in the Appeals Council there was no exhaustion requirement whatsoever, she could raise anything she wanted to, and you’re saying that’s wrong.

Malcolm L. Stewart:

–I… no, I don’t doubt that she can raise it before the Appeals Council.

John Paul Stevens:

There’s no waiver in the Appeals Council?

Malcolm L. Stewart:

I’ve never seen an Appeals–

John Paul Stevens:

All right.

So suppose you have issue A, that was not raised before the ALJ, but was raised before the Appeals Council.

Can that issue be raised in the district court, in your view?

Malcolm L. Stewart:

–Not if the Appeals Council does not discuss it.

If the Appeals–

John Paul Stevens:

Say the Appeals Council does discuss it.

Malcolm L. Stewart:

–If the Appeals Council discusses it, it’s similar, we would submit, to the pressed or passed upon below rule that this Court invokes.

That is, on review of a State supreme court, even if a party–

John Paul Stevens:

So there’s no waiver rule applied to the ALJ.

The waiver rule applies only at the Appeals Council level and, as I understand it, only in some cases, not all?

Malcolm L. Stewart:

–I think there is… no, I think it is consistent with the pressed or passed on below rule.

The basic waiver rule is, if you don’t… if it was capable of being raised before the Appeals Council, and you don’t raise it there, then you’re waived from raising it after that, but I think, consistent with this Court’s pressed or passed upon below jurisprudence, even if the claim was not pressed below, if it was passed upon by the Appeals Council–

John Paul Stevens:

Let me ask another question.

Does it make a difference whether the claimant was represented or not?

Malcolm L. Stewart:

–We… our… SSA’s policy has been to invoke the administrative default principle only with respect to claimants who were represented before the Appeals Council.

John Paul Stevens:

And represented by whom?

Malcolm L. Stewart:

Represented either by an attorney or by a nonattorney.

John Paul Stevens:

By anyone.

Malcolm L. Stewart:

The large majority of people who are represented are represented by attorneys, and this, in order to decide this case, the Court need decide nothing more than that when there was an attorney representing the claimant–

John Paul Stevens:

Let me ask just one last question, and I’ll leave you alone.

John Paul Stevens:

Why don’t they spell out a regulation spelling all this out so everybody knows exactly what the rules are?

Malcolm L. Stewart:

–Well, I think part of it is perhaps suggested by a question that Justice Scalia asked, that there is something, perhaps not improper, but inherently problematic about an agency promulgating a regulation that purports to tell district courts how they’re supposed to conduct their review.

The agency can have a position on–

Ruth Bader Ginsburg:

Not tell district courts, Mr. Stewart, but lots of agencies have appeal instructions.

At every stage, they say, if you want to appeal, this is what you must do, and spell out the details, not directed at all to what the district court is going to find later, but just the audience for these instructions of the people who are governed by the system, and surely there are agencies… I would imagine the Department of Justice encourages agencies to do that, to clarify for the people the steps they must take in order to appeal.

Malcolm L. Stewart:

–Well, I think you’re right that there are agencies who have perhaps more precise regulations as to what the request for an administrative appeal is supposed to look like.

My point was that none of the regulations that are cited by the petitioner, and no regulation that I’m aware of, purports to describe what the consequences will be on judicial review of the failure–

Sandra Day O’Connor:

Yes, but it’s so odd that the agency that wants to take the position that the issues should be at least mentioned in writing the Appeals Council seeking review… I mean, it could do that without specifying what happens at the district court level… and say, as a claimant, you should set out the issues that you want the council to review, otherwise it won’t review them.

Malcolm L. Stewart:

–I mean–

Sandra Day O’Connor:

I mean, that could be done, couldn’t it?

Malcolm L. Stewart:

–I–

Sandra Day O’Connor:

And the agency could say, and we have a different rule if you’re not represented.

But to have this vague understanding is quite peculiar.

Malcolm L. Stewart:

–It could be done by regulation.

As we pointed out in our brief in opposition, the agency’s current intention, again, if the Court holds that it is entitled to invoke administrative default principles, would be to revise the forms that are provided to claimant’s representatives in order to alert them to the prospect that issues not–

Stephen G. Breyer:

Why can’t you… in the form that you have, it says, I request that the Appeals Council review the administrative law judge’s action on the above claim because.

Now, why couldn’t you just put, parenthesis, please list all your reasons, for if you don’t, you may find… you may find… that you can’t raise them later in a court review?

Malcolm L. Stewart:

–I don’t doubt that that could have been done, and I–

Stephen G. Breyer:

And moreover on the next page, not on… they didn’t do that, but the next page it happens to say, we estimate it will take you about 10 minutes to complete this form, so I imagine that somebody reading that might think, gee, I don’t… I have a million reasons why the ALJ was wrong.

Minimum, my lawyer just says list the top five, but I certainly can’t do it in 5 minutes.

Malcolm L. Stewart:

–Well, I think–

Stephen G. Breyer:

10 minutes.

Malcolm L. Stewart:

–I think the 10 minutes is more the ministerial act of actually filling out the form, of writing the words down.

It clearly wouldn’t encompass the stage of reading and assimilating the ALJ’s decision, deciding whether an appeal is worth taking, and then deciding what issues should be raised.

But I think a couple of points I would make, there’s no question that the agency could have stated these potential consequences more clearly, but I think the questions for this Court are, first, is the administrative default rule a good rule going forward and, second, if it’s a good rule going forward, is there any equitable basis for not applying the rule to that… this case?

Sandra Day O’Connor:

Well–

–Well, let me ask this.

Is it true that the Appeals Council reviews the whole record for any conceivable error, whether or not it’s been listed by the claimant?

Malcolm L. Stewart:

I think it’s accurate to say that the Appeals Council, within the time constraints, which are very substantial, will look beyond the particular claims of error that claimant’s–

Sandra Day O’Connor:

So a claimant could submit an appeal without specifying any grounds, and theoretically the Appeals Council will look at the whole record.

Malcolm L. Stewart:

–Well, theoretically the Appeals Council will look at the record to the extent that time permits, but I–

Stephen G. Breyer:

No, but Mr. Stewart, doesn’t the Appeals… don’t the regs in effect warrant that the Appeals Council will look at everything?

I’m not suggesting this is dispositive.

I’m looking on the reg on page 8 of the appendix of the blue brief, 404-976.

The Appeals Council may limit the issues it considers if it notifies you and the other parties of the issues it will review, which suggests to me that unless the Appeals Council negates issues, it is, in fact, warranting that it will look at everything, so that when you come to apply the pressed or passed upon rule, it’s fair to say, well, they passed upon absolutely everything that they didn’t specifically exclude.

Malcolm L. Stewart:

–I think the limitation of issues regulation is addressed more specifically to the class of cases in which the Appeals Council grants review but then requests further submissions by the parties, much as this Court might grant certiorari and then request–

Stephen G. Breyer:

How do I know that?

I certainly don’t know my way through these regs.

Malcolm L. Stewart:

–I guess the best indication I would have is that not every regulation is reprinted here, and if you look in the Code of Federal Regulations and view them sequentially, this comes after the regulation that deals with the circumstances under which the Appeals Council will grant review.

Antonin Scalia:

It says, it is entitled, that section, Procedures Before Appeals Council on Review.

Malcolm L. Stewart:

On Review, that’s correct.

Antonin Scalia:

So it’s obviously referring to what happens after review has been granted and review is being conducted.

Malcolm L. Stewart:

That’s correct.

Antonin Scalia:

So–

Ruth Bader Ginsburg:

–Before… during the review, at least the Eighth Circuit reported, and was this inaccurate, the Appeals Council routinely considers arguments not specifically raised by the claimants before it, a product of its duty to review an ALJ’s decision in an informal, nonadversary manner.

Malcolm L. Stewart:

I guess I… we would disagree with the suggestion that it is… that that duty is imposed by regulation, or that it in any way follows from the duty to conduct review.

Ruth Bader Ginsburg:

But if it does, isn’t it somewhat deceptive for the… if this is routine, as the Eighth Circuit thought it was, and then claimant comes along, or her coworkers have told her, well, that’s how they handle it–

Malcolm L. Stewart:

I mean, I–

Ruth Bader Ginsburg:

–and then the agency says no, not for you?

Malcolm L. Stewart:

–I think in a sense the notion that the claimant or the attorney would have that conception of the Appeals Council process is really inconsistent with the basic premise of hiring an attorney to represent you.

That is, Ms. Sims retained counsel, presumably contemplated that he would be paid in the event that the outcome was successful, and Mr. Parvin, who was the attorney at that time, accepted the representation on that understanding.

It would have made–

Ruth Bader Ginsburg:

So we had… this business about distinguishing between represented and unrepresented people, that’s a matter of grace within the agency now?

They have no legislation and no regulation that spells that out.

Malcolm L. Stewart:

–That’s correct, and all of this goes to agency practice in arguing before the courts.

That is, even as to unrepresented claimants the final determination would be made to the court as to whether claims not raised before the Appeals Council would be waived.

The Social Security Administration would simply be making clear its view as to what would be–

You–

Malcolm L. Stewart:

–most conducive to the fair operation of the system, but if I could return to this point just for a second about representation by an attorney, it would make no sense for a claimant to hire an attorney, to agree to pay him a portion of any recovery, and for the attorney to accept that representation agreement, if the supposition was that the Appeals Council was to perform precisely the same mode of review no matter what the content of the challenge was.

The whole point of–

–Oh, I don’t think that follows at all.

It seems to me an advocate can perform a useful function as an advocate even though the same issues would be considered by the judge in any event.

Malcolm L. Stewart:

–Well, that’s really precisely our point, that the fact that the Social Security Administration will typically go beyond the claims raised in the request for review and will look at other parts of the record to determine whether there was an error doesn’t vitiate the fact that the Appeals Council is assisted enormously by submissions that draw its attention.

John Paul Stevens:

May I ask if possibly a part of the motivation for treating claimants represented by lawyers less favorably than those on their own is to discourage lawyers from appearing?

Because if I remember correctly, years ago there was a fee limit on what the lawyers could collect, wasn’t there?

Malcolm L. Stewart:

Well, the–

John Paul Stevens:

Is that still in effect?

Malcolm L. Stewart:

–The fee… there is a fee limit on what lawyers can collect for representation of claimants before the agency.

John Paul Stevens:

What is that limit?

Malcolm L. Stewart:

I believe that it’s typically $4,000 or a quarter of the past due benefits.

John Paul Stevens:

I see.

William H. Rehnquist:

It used to be $10 when I practiced.

[Laughter]

And you couldn’t get a percentage, either.

I asked… I–

Malcolm L. Stewart:

But the fee for the administrative process is not paid by the agency.

The agency monitors the system and must pass on fee requests, but the fee is paid by the claimant, so the agency doesn’t have a financial incentive to reduce the extent of lawyer representation.

Now–

–I assume that because you’re here–

–He does have an incentive not to have a lawyer, because you’re better off without a lawyer when you get to court.

Malcolm L. Stewart:

–Well, I think the scheme is certainly such that if a claimant believed that the Appeals Council would provide precisely the same mode of review regardless of the content of the request, then you’re correct, the claimant would have no incentive to retain a lawyer.

I think the incentive is that people understand that’s not the way the system operates, that even though the Appeals Council will look beyond the four corners of the request for review, it is still much more likely to act favorably if the request for review precisely identifies the purported errors.

Antonin Scalia:

What percentage of cases do they in fact review?

Do you have any idea?

Malcolm L. Stewart:

The… in the past fiscal year they granted review in approximately 24 percent of the cases.

Around 2 percent there was an outright reversal, an award of benefits, and in the other 22 percent the cases were remanded to the ALJ.

But just to give you an idea of the significance of that figure, the total number of cases in which a wholly or partially favorable decision was issued was over 20,000 cases, and the number of new SSI and disability insurance cases that were filed in the Federal district court during the equivalent period was a little over 13,000 cases, still–

Anthony M. Kennedy:

I assume that because you’re here we can presume that the… this rule would be helpful to the agency?

I mean, if they have 140,000 appeals a year, it seems to me that maybe some of these reviewing officials have said, you know, I don’t want any more papers.

I don’t want elaborate attorney presentations, or–

Malcolm L. Stewart:

–I think–

Anthony M. Kennedy:

–How am I to assess that?

Is that something I can just guess?

Malcolm L. Stewart:

–I mean, I think you are correct in saying the fact that we are here defending this proposition indicates that the agency has concluded that on the whole, the benefits of this rule outweigh the costs.

Anthony M. Kennedy:

All right.

Now–

Malcolm L. Stewart:

It may be that in some instances this will cause the filing of over long requests for review in the Appeals Council, but on the whole, we think that if claimants more precisely identified the weaknesses in the ALJ’s decision, that the agency’s mission will be furthered.

Anthony M. Kennedy:

–You indicated toward the outset of your remarks that there are some issues that the district court will hear that the ALJ could not hear.

Malcolm L. Stewart:

Well–

Anthony M. Kennedy:

Can you give me an example?

Malcolm L. Stewart:

–I guess there are a couple of different permutations of that.

One would be, if the claim was the ALJ’s opinion reflected an erroneous legal premise, or the ALJ in his opinion… and this was the primary claim made here… the ALJ in his opinion ignored much of the documentary evidence that I had submitted without good reason, that is a claim that by its nature couldn’t be presented to the ALJ because you don’t know until the ALJ issues its ruling what weight it’s attached to particular evidence.

Anthony M. Kennedy:

Well, of course, that’s always true with–

Malcolm L. Stewart:

Right.

Anthony M. Kennedy:

–a court proceeding.

You don’t know what the error is until the decision comes down.

Malcolm L. Stewart:

That’s correct.

The only point I’m trying to make is that probably a… more Social Security cases than cases generally turn on questions of assessment of the evidence and less on questions of abstract principles of law.

Stephen G. Breyer:

I thought as far as exhaustion is concerned nobody’s ever… I mean, the point you just made has nothing to do with exhaustion.

As Justice Kennedy just said, in a district court, we look to see whether he presented the basic arguments pro and con in respect to the district judge.

We don’t… the fact that we couldn’t know what the district judge’s decision would be at the time has nothing to do with the issue.

Malcolm L. Stewart:

No, the–

Stephen G. Breyer:

The kind of thing I think you would say normally you don’t have to present to the ALJ, is a claim that, for example, this regulation that you’re following is contrary to the statute, or the… a statute is contrary to the Constitution, something that there would be a principle within the agency that he’s not supposed to make that decision.

That’s my understanding, so–

Malcolm L. Stewart:

–That’s absolutely correct, and that would be true of the Appeals Council as well, because the Appeals Council is not a policy making body.

Its duty is to apply established SSA policy to individual cases, and so a claim, for instance, that the regulation was violative of a statute, or the statute was violative of the Constitution, couldn’t be presented either to the ALJ or the Appeals Council.

John Paul Stevens:

–I have one other question.

In normal exhaustion principles, where there is an agency exhaustion requirement, and there’s a failure to exhaust, and you’re in the district court reviewing the agency’s action, or the court of appeals reviewing the agency action, if there’s a failure to exhaust, does the Article III court then have the discretion to send it back so that you have the opportunity to exhaust, or is there always a waiver, or is there–

Malcolm L. Stewart:

I mean–

John Paul Stevens:

–a great deal written about this?

Malcolm L. Stewart:

–There’s not a great deal written about this, although the bulk of the cases, or really all of the court of appeal cases that I have seen that have applied the rule that claims not raised before the agency will thereafter be deemed waived, have simply ignored or dismissed the claim once it was raised.

That is, presumably if you had a good reason for not raising the claim before the agency, the court would then consider it on the merits, but if you didn’t have a good reason for not raising it, the court typically wouldn’t remand to the agency to give you a second shot.

Stephen G. Breyer:

But suppose you had a good reason.

I mean, I thought there was an awful lot of discretion in this area, such that it’s exactly the same as when a case comes up to a court of appeals from the district court.

Maybe there’s a reason why she didn’t raise it, in which case you could send it back, or maybe even excuse it.

And here, where she’s pushing… your opponent is pushing the following reason.

Go read the forms and read the 10 minutes and so forth, and note the nature of the Appeals Council, and a lawyer might reasonably think I don’t have to.

There wasn’t good notice about what I was supposed to do.

Malcolm L. Stewart:

I mean, I think certainly it is entirely appropriate for the court to entertain the question, was there a good reason for not raising this before the agency, but I think here, the question would have to be answered in the negative, because on top of everything else, not only was the claimant represented by counsel, but there was a published opinion within the Fifth Circuit some 18 months previously that had said in the clearest possible language, issues not raised before the Appeals Council, absent extraordinary circumstances, can’t be raised in court.

So I think perhaps for that reason the petitioner didn’t attempt to argue in the court of appeals that yes, there would ordinarily be a waiver principle, but it was inapplicable here for good cause.

Rather, the petitioner argued that there was not properly–

John Paul Stevens:

Well, but you have the same scenario in the Seventh Circuit, and when it reached the Seventh Circuit they overruled their previous cases, unanimously, en banc.

Malcolm L. Stewart:

–They overruled them, but they certainly didn’t… I don’t think they could reasonably have overruled them on the ground that there was a lack of notice.

If the–

John Paul Stevens:

No.

They just thought the whole rule was not authorized by any regulation or anything else, and it didn’t make any sense.

That’s basically what they said.

Malcolm L. Stewart:

–They thought it was inconsistent with the… I mean, they made an argument much like petitioner is making–

John Paul Stevens:

Right.

Malcolm L. Stewart:

–that it was inconsistent with the manner in which the Appeals Council operates.

Ruth Bader Ginsburg:

And also, from the experience in the courts, that is, in a number of these cases there are hassles in the district court about whether you in fact raised the issue, because you’ve got only these three lines on the form.

In fact, in this very case, wasn’t one of the issues the Fifth Circuit said hadn’t been raised debated between the parties as to whether it was raised or not raised?

Malcolm L. Stewart:

That’s correct, and I think you are correct that that is an inevitable cost of default rules in any context, whether it be administrative default, default issues that are not… issues not raised before the district court are waived on appeal, habeas, there are a lot of situations in which in particular cases the inquiry into whether a particular claim was in fact preserved may be more complicated than an inquiry into the merits of the claim.

Ruth Bader Ginsburg:

Yes, and in fact didn’t it happen in… well, both the Eighth Circuit and the Seventh Circuit case said in the end the claimant lost on the merits, and the court thought it was not worthwhile hassling over whether it was waived or not, since it had no merit in any event.

Malcolm L. Stewart:

I agree that that is a possible outcome, but I think when we argue for administrative default in these cases our purpose is not to get the individual claim kicked out of court.

Our hope is that once these principles become established, claimants and their representatives will realize that in order to preserve claims for judicial review they must be raised before the agency, and the Appeals Council will be given a better opportunity to fix mistakes in a way that avoids the need for–

Ruth Bader Ginsburg:

But you may get rid of the Appeals Council altogether, because there must be some… well, you set up the experiment and 10 States don’t have it.

Is there also any consideration in the agency about revising the form so that people will know what they’re expected to do?

Malcolm L. Stewart:

–Definitely the agency has committed to revising the form, pending the determination by this court.

Obviously, if this Court held that the agency was not entitled to invoke administrative default principles, notice or no notice, we wouldn’t be advising claimants that the administrative default rule might apply.

Malcolm L. Stewart:

But if the Court holds that this is a permissible rule in Social Security cases, the agency has committed to revising the form in order to make–

Ruth Bader Ginsburg:

Committed to whom?

Malcolm L. Stewart:

–The form that would be sent to–

Ruth Bader Ginsburg:

No, I mean, this agency says… this Court says, agency, just do what you’re doing.

Why would the agency be motivated to change?

Malcolm L. Stewart:

–I think it is partly in order to avoid claims being kicked out unnecessarily, or perhaps a better answer would be, the agency as well as the courts benefit if claims are made clear to the Appeals Council, that the Appeals Council is given the best possible opportunity to fix mistakes.

Ruth Bader Ginsburg:

Then there’s no reason to wait on the court to make that decision.

Malcolm L. Stewart:

The only reason to wait on the Court is that, if we started up the machinery for printing hundreds of thousands of new forms that said, if you don’t raise these claims they may be barred in court, and then the Court 3 months later came out with a decision that said, we find this sort of rule to be fundamentally inconsistent with the nature of the Appeals Council and therefore it’s impermissible, questions of notice to one side, the agency obviously couldn’t advise claimants that they might be subject to a consequence that the Court had just said they wouldn’t be subject to.

John Paul Stevens:

Mr. Stewart, one question.

Are the members of the Appeals Council lawyers?

Malcolm L. Stewart:

I believe some are lawyers and some are not lawyers.

Antonin Scalia:

I hope that in this experiment that they’re doing they take into account not only whether more district court cases are filed without the appeal, but also whether uniformity is produced by having all of these appeals go… not get dumped right into Federal court.

I always thought the whole advantage of an administrative agency was to assure uniformity of decisionmaking, which–

Malcolm L. Stewart:

I think that’s correct, and in a certain category of cases the Appeals Council will remand the case to the ALJ for further explanation or clarification of the opinion, and sometimes the ALJ will adhere to the unfavorable benefits determination, but will offer a more persuasive explanation for that finding, and even if the case winds up in court, that effort was not wasted.

It ensures that the court is reviewing what is really the commissioner’s best articulation of his final decision.

Ruth Bader Ginsburg:

–Mr. Stewart on the question of uniformity, it’s been said that the Appeals Council does not follow case law, that it’s… that each case is set up on its own, and they don’t follow precedent.

Malcolm L. Stewart:

I think it’s something of an overstatement to say the Appeals Council doesn’t follow case… can’t look at case law.

The Appeals Council is bound by SSA policy, and the Appeals Council cannot use a published decision as a justification for deviating from established SSA policy.

It has to wait for the policy itself to change.

But if there is a question that is not controlled by any specific published SSA policy, the Appeals Council can look to case law to clarify that.

William H. Rehnquist:

Thank you, Mr. Stewart.

Ms. Bohr, you have 3 minutes remaining.

Sarah H. Bohr:

Thank you, Mr. Chief Justice.

The $10 limit you’re referring to was in VA cases, not in Social Security cases.

William H. Rehnquist:

My case was a Social Security case.

[Laughter]

Sarah H. Bohr:

What we’re looking at here is, the Government is coming into Court and they’re taking a litigating position, asking this Court to adopt a position that’s simply not supported by their own agency, policies, procedures, and forms.

I think it’s important that the form says it takes 10 minutes to complete.

I write these briefs for a living.

You cannot write an Appeals Council brief in 10 minutes.

Sarah H. Bohr:

8 to 10 hours minimum.

You need a record of the case, you have to ask the Appeals Council to send you the tape, the transcribing–

Anthony M. Kennedy:

The Government is just thinking how long it takes them to prepare a petition for certiorari, I think.

[Laughter]

Sarah H. Bohr:

–The other thing is, we’re talking about a national program.

There’s a need for uniformity in a national program.

The Government’s coming in here and they’re saying, well, it shouldn’t apply to people who have… who aren’t represented, so you’re going to have a system where some people have one rule, other people have another rule.

They’re coming into court, they’re admitting that some issues are futile.

They acknowledge that in their brief.

So you’re going to… so applying this rule is going to result in a huge amount of procedural litigation.

Was an issue raised or not?

Was someone represented or not?

Was it futile to raise it?

Why do we want to clog the Federal courts with procedural matters?

Why can’t we get to the issues and reach the issues if they’re meritorious?

We’re talking about disabled claimants who have been denied benefits, who are seeking to get benefits in Federal court.

Stephen G. Breyer:

Well, the reason that they… is that if you allow people to avoid exhaustion in several thousand cases every year, and many more, possibly, people will then go in and go to court, and they’ll just think of a whole lot of reasons that they never raised before, and the judges are busy, and magistrates are busy, and to have all these new reasons hitting them that nobody’s even looked at or thought about is… just adds to the work unnecessarily.

That’s the traditional reason.

Sarah H. Bohr:

I accept that, but if the point is that the agency itself doesn’t even provide reasons, how is it helping the court–

Stephen G. Breyer:

Because they resolve problems.

In 20,000 cases every year they resolve them, and those are 20,000 cases that the courts never see.

Sarah H. Bohr:

–And if the agency chooses to have that policy, then they should subject that kind of a policy to notice and comment.

Just changing a form is not subject to public debate.

Stephen G. Breyer:

You know, it’s… it is the basic background law, and there’s no need for it, but maybe their form isn’t good enough in explaining it.

Sarah H. Bohr:

But in contrast, for example, the VA form is very detailed.

It’s a page and a half to write your issues.

There’s a statement that you have to… you do this by identifying the issues you are appealing.

It’s very specific, instructing claimants.

Here, it’s a very misleading system.

Ruth Bader Ginsburg:

Does it add anything of the nature of… Mr. Stewart says… it isn’t… as I understand it, it doesn’t say anything about what’s going to happen to you, that you’ll be precluded in court, does it–

Sarah H. Bohr:

No, there’s no–

Ruth Bader Ginsburg:

–on the VA form?

Sarah H. Bohr:

–There’s nothing in the form itself or in the notice of the decision to the claimant warning the claimant of the… what would happen if the claimant fails to raise all issues.

William H. Rehnquist:

Thank you, Ms. Bohr.

Sarah H. Bohr:

Thank you.

William H. Rehnquist:

The case is submitted.