Second Circuit Approves of Federal Question Jurisdiction over Claims Asserting Property Rights Created by the Social Security Act

Per Binder & Binder PC v. Barnhart , 481 F.3d 141 (2d Cir. Mar. 27, 2007):

Binder now claims that there are three possible sources of subject matter jurisdiction: federal question jurisdiction, see 29 U.S.C. § 1331; mandamus, see 28 U.S.C. § 1361; and the judicial review provision of the Act, see 42 U.S.C. § 405(g).

Under § 405(g):

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. Such action shall be brought in the district court of the United States for the judicial district in which the plaintiff resides, or has his principal place of business, or, if he does not reside or have his principal place of business within any such judicial district, in the United States District Court for the District of Columbia.

42 U.S.C. § 405(g) (emphasis supplied). We suggested in Binder I that this section is "seemingly inapplicable to Binder's suit because [it] limits judicial review to those decisions involving 'a party.' " Binder I, 399 F.3d at 130 (citing Cordoba v. Massanari, 256 F.3d 1044, 1047 (10th Cir.2001)). We now so hold: because Binder was not a party in the proceedings before the SSA, it cannot avail itself of section 405(g).

Normally, Section 405(h) channels all challenges that "arise under" the Act through the proper administrative proceedings by forbidding federal suits that have not been administratively reviewed first. See 42 U.S.C. § 405(h) ("The findings and decision of the Commissioner of Social Security after a hearing shall be binding upon all individuals who were parties to such hearing. No findings of fact or decision of the Commissioner of Social Security shall be reviewed by any person, tribunal, or governmental agency except as herein provided. No action against the United States, the Commissioner of Social Security, or any officer or employee thereof shall be brought under section 1331 or 1346 of Title 28...."). Thus, as we explained in Binder I, federal question jurisdiction does not generally lie under section 28 U.S.C. § 1331 for suits brought under the Social Security Act, even if they raise constitutional questions. See Ill. Council, 529 U.S. at 10-15, 120 S.Ct. 1084; Heckler v. Ringer, 466 U.S. 602, 614-16, 104 S.Ct. 2013, 80 L.Ed.2d 622 (1984); Mathews v. Eldridge, 424 U.S. 319, 326-32, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976); Weinberger v. Salfi, 422 U.S. 749, 760-61, 95 S.Ct. 2457, 45 L.Ed.2d 522 (1975).

Judicial review is available to a plaintiff under 28 U.S.C. § 1331, however, where, as here, there are no alternative means to review a federal claim arising under the Social Security Act. See Ill. Council, 529 U.S. at 19, 120 S.Ct. 1084 (suggesting that § 405(h) does not bar federal question jurisdiction "where application of § 405(h) would not simply channel review through the agency, but would mean no review at all" (interpreting Bowen v. Mich. Acad. of Family Physicians, 476 U.S. 667, 106 S.Ct. 2133, 90 L.Ed.2d 623 (1986))); Fanning v. United States, 346 F.3d 386, 399 (3d Cir.2003) ("[T]he Court in Illinois Council seemed to read Michigan Academy as creating an exception to the channeling requirement of § 405(h) in those cases where no judicial review is available at all."); Buchanan v. Apfel, 249 F.3d 485, 490 (6th Cir.2001) ("The language of § 405(h) indicates that Congress never contemplated a situation where someone other than a party pursuing entitlement benefits would seek a review of a colorable claim that the Commissioner engaged in a statutory or constitutional violation. In addition, there is no clear and convincing evidence that Congress intended to deny a judicial forum for such a claim."); Furlong v. Shalala, 238 F.3d 227, 233-34 (2d Cir.2001) ("Whatever else the Illinois Council Court may have intended to do with respect to the recognition of federal court jurisdiction over Medicare challenges, it clearly stated ... that courts should not interpret [ § 405(h) ] as requiring such a problematic foreclosure of review in all circumstances."); see also Binder I, 399 F.3d at 131 (same).

We suggested in our prior opinion that "[i]f one conceives of Binder's claims (both constitutional and statutory) as arising out of property rights created by section 406 of the Act, then there probably is federal jurisdiction." Binder I, 399 F.3d at 133. Upon further review, we conclude that this is the best way to characterize Binder's claims for relief and that we do indeed have jurisdiction to consider them. Specifically, we now hold that Binder may invoke federal question jurisdiction under 28 U.S.C. § 1331 because, were such jurisdiction unavailable, it would be unable to obtain any judicial review of its claims under the Act.