The opinion of the court was delivered by: PATEL
Plaintiffs Laurie Q. et al, individually and on behalf of others similarly situated, are or were special needs foster children in the care and custody of defendant Contra Costa County ("the County"). Plaintiffs maintain that the County, allegedly the representative payee of Social Security benefits for the children, impeded the adoption process and used the benefits for purposes unrelated to the children. Plaintiffs also allege that defendant John Callahan, Commissioner of the Social Security Administration ("the Commissioner")
violated federal law by permitting the County to serve as representative payee.
The Commissioner filed a motion to dismiss the action for lack of subject matter jurisdiction. A hearing on the motion was held on March 14, 1997. The court questioned the parties regarding recent amendments to the relevant caselaw and ordered both sides to submit supplemental briefs. Having considered the parties' arguments and submissions, and for the reasons set forth below, the court now enters the following memorandum and order.
Laurie Q., Angel L., Megan W., Christina T., Rebecca T., Jesse B., Kendra G., and Cherida L. are the named plaintiffs in this action. Each is a minor who has been or is committed to the custody of the County and who is allegedly a past or present beneficiary of Supplemental Security Income ("SSI").
All of the children have disabilities or special needs, most deriving from pre-natal exposure to drugs and/or alcohol. Some of them were subject to sexual abuse. All were taken into legal custody, made dependents of the County, and placed into foster care. Because of their status as indigent disabled persons, plaintiffs are entitled to receive benefits that assist in alleviating expenses incurred as a result of their special needs. These benefits include SSI and Adoption Assistance Program ("AAP") funds.
Under the Social Security Act ("Act"), a qualified individual or organization may be appointed as a representative payee for an SSI beneficiary. 42 U.S.C. § 1383(a)(2)(A)(ii)(I). The payee receives the funds for the use and benefit of the SSI beneficiary. Id. The Commissioner must first make a finding that the representative payment is in the interest of the beneficiary, 42 U.S.C. § 1383(a)(2)(B)(I), and also must select the person, agency, organization or institution that will best serve the interests of the beneficiary. 20 C.F.R. § 415.620. When selecting payees for persons under 18, such as plaintiffs, an order of preference is used which incorporates factors such as natural or adoptive relation to or friendship with the beneficiary, custody of the beneficiary, contributions toward the beneficiary's support, and demonstrated concern for the beneficiary's well-being. 20 C.F.R. § 416.621(b). This order of preference, however, is not mandatory; rather, it is intended to be used as a guide. 20 C.F.R. § 416.621.
Once children in the County are taken into county custody under the foster care system, the County normally applies for SSI benefits and to act as the child's representative payee. Complaint P 22. According to plaintiffs, the Commissioner automatically approves appointment of the County as representative payee, without consideration of the relevant factors. Id. In addition, plaintiffs maintain, beneficiaries such as the children in this action are not notified by the Commissioner of the County's appointment as representative payee nor of their right to challenge the appointment through appeal procedures. Plaintiffs allege that the County misappropriates their benefits by, inter alia, using the funds in programs unrelated to their welfare. Complaint P 23.
Federal Rule of Civil Procedure 12(b)(1) allows a party to challenge a federal court's jurisdiction over the subject matter of the complaint. A complaint will be dismissed if, looking at the complaint as a whole, it appears to lack federal jurisdiction either "facially" or "factually." Thornhill Publishing Co. v. General Telephone & Electrics Corp., 594 F.2d 730, 733 (9th Cir. 1979). When attacking the complaint for lack of subject matter jurisdiction on its face, as defendants do here, all material allegations in the complaint will be taken as true and construed in the light most favorable to the plaintiff. NL Industries, Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir. 1986).
Most of plaintiffs' allegations in this action are against the County, who is not a party to the current motion to dismiss. There are, however, several causes of action against the Commissioner. To begin with, plaintiffs challenge the appointment by the Social Security Administration ("SSA")
of the County as representative payee to receive plaintiffs' SSI benefits. Furthermore, plaintiffs maintain that the Commissioner fails to adequately monitor the County in its performance as representative payee. Finally, plaintiffs allege that the Commissioner provides inadequate notice of the County's appointment as representative payee. Plaintiffs seek several forms of relief against the Commissioner, including a declaratory judgment that the Commissioner's actions violate federal law and injunctive relief requiring the Commissioner to follow federal law. Plaintiffs maintain that contrary to defendant's assertions, there are several bases for this court's subject matter jurisdiction over the action as it pertains to the Commissioner.
I. Jurisdiction Under 42 U.S.C. § 405(g)
Matters arising under Titles II and XVI of the Act, such as this one, are subject to judicial review pursuant to 42 U.S.C. § 405(g) which provides that:
Any individual, after any final decision of the Commissioner of Social Security made after a hearing to which he was a party, irrespective of the amount in controversy, may obtain a review of such decision by a civil action commenced within sixty days after the mailing to him of notice of such decision or within such further time as the Commissioner of Social Security may allow.
Section 405(g) is generally considered the sole avenue for judicial review under the Act. 42 U.S.C. § 405(h); Heckler v. Ringer, 466 U.S. 602, 617, 80 L. Ed. 2d 622, 104 S. Ct. 2013 (1984).
There are three requirements for judicial review pursuant to section 405(g). First, there must have been a "final decision of the Commissioner of Social Security made after a hearing to which [the plaintiff] was a party." 42 U.S.C. § 405(g). Second, any civil action must be "commenced within sixty days after the mailing to [the plaintiff] of notice of such decision or within such further time as the Commissioner of Social Security may allow." Id. Finally, the action must be brought in the appropriate district court, such as the district where the plaintiff resides. Id.
A. Final Decision Requirement
The final decision requirement
'consists of two elements, only of which is purely 'jurisdictional' in the sense that it cannot be waived by the Secretary in a particular case. The waivable element is the requirement that the administrative remedies prescribed by the Secretary be exhausted. The non-waivable element is the requirement that a claim for benefits shall have been presented to the secretary.'
Bowen v. City of New York, 476 U.S. 467, 483, 90 L. Ed. 2d 462, 106 S. Ct. 2022 (1986) (quoting Mathews v. Eldridge, 424 U.S. 319, 328, 47 L. Ed. 2d 18, 96 S. Ct. 893 (1976)); see also, Johnson v. Shalala, 2 F.3d 918, 921 (9th Cir. 1993).
This court does not have subject matter jurisdiction over this action if the presentment requirement is not met. Defendant argues that in order to meet the presentment requirement in a case such as this one, where plaintiffs challenge the designation of a representative payee, plaintiffs must as least show that they have sought reconsideration of the Commissioner's designation of a particular representative. Plaintiffs counter that where claimants have already successfully pursued a claim for entitlement, the presentment requirement is met.
a. Briggs and Post-Briggs Amendments
In Briggs v. Sullivan, the case primarily relied on by plaintiffs in their opposition to defendant's motion, the Ninth Circuit held that "the presentment requirement is satisfied when an individual makes a claim for benefits, and the Secretary determines that the claimant meets the eligibility requirements for those benefits." 886 F.2d 1132, 1139 (9th Cir. 1989). The Briggs plaintiffs challenged the non-receipt of their benefits as well as the procedure of deferring or suspending benefits pending the designation of a representative payee. The Ninth Circuit found that the claim at issue was "not, strictly speaking, a 'claim for benefits' in the sense in which the phrase was used by the Supreme Court in Mathews," but was rather collateral to an eligibility determination. Briggs, 886 F.2d at 1139. The court went on to state that "there was no requirement . . . that the class members 're-present' their claims to the Secretary in order to obtain review of the collateral issue." Id.
According to plaintiffs, Briggs is controlling law and makes clear that the fact that they have already been deemed to be eligible for benefits means that they have satisfied the presentment requirement. Since Briggs was decided however, Congress has amended the portions of the Act pertaining to representative payee selection and recruitment procedures. 42 U.S.C. § ...