> **Eric Schnaufer, Attorney at Law**
>
> **1555 Sherman Ave. #303 Evanston, Illinois 60201**
>
> \(847\) 733-1232 Fax: (847) 733-7566

**eric@ schnaufer.com**

via Internet October 25, 2005

> Commissioner of Social Security Social Security Administration
> Baltimore, MD 21235
>
> • Comments on Exhaustion of Administrative Remedies
>
> July 27, 2005, Notice of Proposed Rulemaking ---
>
> Administrative Review Process for Adjudicating Initial Disability
> Claims
>
> 70 Fed. Reg. 43,590-624 (July 27, 2005)
>
> I. Introduction to Comments About Exhaustion of Administrative
> Remedies

These are comments about a single aspect of the Social Security
Administration\'s July 27, 2005, notice of proposed rulemaking regarding
the Administrative Review Process for Adjudicating Initial Disability
Claims (July 2005 NPRM). [See]{.underline} 70 Fed. Reg. 43,590-624 (July
27, 2005). They address the exhaustion of administrative remedies.

> I am an attorney in private practice who represents claimants for
> disability benefits under Titles II and XVI of the Social Security
> Act.
>
> II\. Distinction Between Exhausting Administrative Remedies With\
> Respect to a Claim and With Respect to an Issue Related to a Claim

Before discussing the July 2005 NPRM, the doctrine of the exhaustion of
administrative remedies is summarized. The exhaustion of administrative
remedies requires a claimant to utilize any mandatory procedure within
an agency to preserve either a claim or an issue related to the claim
for further administrative review or to preserve that claim or issue for
judicial review. Thus, exhaustion may relate solely to internal agency
procedures or connect internal agency procedures with later judicial
review.

> There are two general types of exhaustion of administrative remedies.
> First, there is exhaustion with respect to a claim. I will call this
> \"claim exhaustion.\" A claim is, for example, an application for
> Disability Insurance Benefits (DIB) under Title II of the Social
> Security Act. To exhaust administrative remedies with respect to a
> claim, a claimant must follow each step of any mandatory procedure for
> claim adjudication. Under the July 2005 NPRM, there are three steps:
> initial adjudication, adjudication by a Reviewing Official, and a de
> novo ALJ hearing.
>
> Eric Schnaufer October 25, 2005 Comments re: Exhaustion in SSA\'s July
> 27, 2005, NPRM\
> [Page 2]{.underline}
>
> In contrast claim exhaustion, there is the exhaustion of
> administrative remedies with respect to an issue related to the claim.
> I will call this \"issue exhaustion.\" For example, a claimant seeking
> disability benefits may argue that he or she is disabled because he or
> she cannot use his or her hands for any work. I will call this issue
> exhaustion as exhaustion with respect to a \"narrow issue\" such as a
> \"narrow hand issue.\" In each disability claim, there may be a dozen
> or more narrow issues, including the determination of a claimant\'s
> education, work experience, and abilities to sit, stand, walk, lift,
> talk, see, feel, and hear.
>
> III\. The July 2005 NPRM is Unclear and Ambiguous With Respect to
> Claim Exhaustion and Issue Exhaustion
>
> Regulations written for disability adjudication should be drafted so
> that they can be understood by unrepresented claimants and
> non-attorney adjudicators. The July 2005 NPRM is unclear and ambiguous
> with respect to claim exhaustion and issue exhaustion.
>
> A. The Regulations Related to Claim Exhaustion\
> At the ALJ Level Should Be Clarified
>
> Section 405.316(b)(l) provides that an ALJ\'s notice of hearing
> identify \"specific issues.\" 70 Fed. Reg. 43,613. Section 405.317(b)
> requires a claimant to object to the ALJ\'s identification of any
> \"issues.\" Id. Under longstanding Agency practice, \"issue\" in these
> special contexts refers to the broadest possible legal issue, e.g.,
> whether the claimant is under a \"disability.\" \"Issue\" in these
> contexts does not refer to a narrow issue such as a narrow hand issue.
> Any final regulation should make clear that the definition of
> \"issue\" in the context of a notice of hearing and any objection to a
> notice of hearing refers to claim exhaustion and not issue exhaustion.
> The final regulation should not permit any interpretation that in
> response to a notice of hearing, a claimant must under § 405.317(b)
> contend that he or she has a hand impairment.
>
> As a related matter, any final rule should clarify that §
> 405.325(a)-(b) also pertain to claim exhaustion, not issue exhaustion.
> Section 405.325(a) and (b) address \"issues\" before an ALJ. 70 Fed.
> Reg. 43,613. Under longstanding Agency practice, \"issues\" as defined
> in those regulations refer to the broadest possible legal issues,
> e.g., whether a claimant is disabled, and not to a narrow issue, such
> as a narrow hand issue.
>
> B. The Regulations Should Disavow Issue Exhaustion for\
> Internal Agency Procedures and for External Judicial Review

Issue exhaustion refers to raising an issue related to a claim such as a
narrow hand issue. If the Agency intends to impose issue exhaustion
either for its internal procedures or for later judicial review, the
Agency should do so in clear and unambiguous terms.

> Eric Schnaufer October 25, 2005 Comments re: Exhaustion in SSA\'s July
> 27, 2005, NPRM\
> [Page 3]{.underline}
>
> The July 2005 NPRM permits the interpretation that the Agency requires
> in some way issue exhaustion. According to § 405.334(b)(l), a claimant
> \"must\" address \"\[i\]ssues involved in the proceeding\" in any
> required prehearing statement. 70 Fed. Reg. 43,43,614. This could be
> interpreted as requiring issue exhaustion at the ALJ level. It could
> also be interpreted by a federal court as presaging issue exhaustion
> for judicial review. However, the consequence of failing to address a
> narrow issue is unspecified. Similarly, § 405.310(a)(3) requires a
> claimant to state the \"specific reasons\" for disagreement with the
> Reviewing Official. 70 Fed. Reg. 43,612. This could be interpreted as
> requiring issue exhaustion within Agency administrative review or as a
> prelude to issue exhaustion for judicial review.

The Agency should disavow issue exhaustion for its own internal
procedures and for later judicial review. In any final rule, the Agency
should not permit the interpretation that rules such as §§ 405.334(b)(l)
and 405.310(a)(3) establish issue exhaustion for either internal
administrative procedures or later judicial review.

> If the Agency actually contemplates imposing issue exhaustion for its
> own internal procedures or later judicial review, the Agency should
> reconsider that view. The Agency should preserve its current policy of
> not requiring issue exhaustion for its own administrative procedures
> (for ordinary disability claims) and of not requiring issue exhaustion
> for judicial review.
>
> First, Agency rules apply to represented and unrepresented claimants
> alike. Given that the July 2005 NPRM is premised on the fact that the
> definition of disability is complex, the Agency cannot fairly require
> unrepresented claimants to raise every material narrow issue. Instead,
> for unrepresented claimants the Agency should expect that they will
> not recognize many narrow issues relevant to the adjudication of their
> claims.
>
> Second, under the July 2005 NPRM and existing rules, administrative
> proceedings are non-adversarial for represented and unrepresented
> claimants. 20 C.F.R. § 404.900 (2005); 20 C.F.R. § 405. l(b). 70 Fed.
> Reg. 43,610. Issue exhaustion either within the Agency or on judicial
> review is inconsistent with the non-adversarial nature of adjudication
> of disability claims.
>
> Third, issue exhaustion is inconsistent with an ALJ\'s independent
> duty to develop the record. 20 C.F.R. § 404.944 (2005) (ALJ\'s duty to
> obtain relevant facts). Thus, even if a claimant does not raise
> expressly a narrow issue, an ALJ must him- or herself consider that
> issue. The July 2005 NPRM does not purport remove the duty of ALJs to
> develop an adequate record.
>
> Fourth, even if the Agency believes that issue exhaustion should be
> imposed on represented claimants alone, the rule would be difficult to
> administer and unfair in practice. The Agency allows a broad range of
> persons to serve as representatives, including a claimant\'s close
> relative who has no experience in disability adjudication. Claimants
> with inexperienced representatives would be penalized for the mistakes
> of their representatives even when the ALJs know that the
> representatives are inexperienced and unlikely to raise all the
> material narrow
>
> Eric Schnaufer October 25, 2005 Comments re: Exhaustion in SSA\'s July
> 27, 2005, NPRM\
> [Page 4]{.underline}
>
> issues.

Fifth, issue exhaustion would be inefficient. Claimants with
representatives who understood that the regulations required issue
exhaustion would submit lengthy memoranda trying to identify every
possible issue. This would be unnecessary. ALJs are very able to
adjudicate claims today without such defensive representation.
Additionally, ALJs would spend scarce resources ruling on whether a
narrow issue was preserved, not on whether the claimant was disabled.
Adjudication of disability claims should focus on whether the claimant
is entitled to benefits, not on whether the claimant has made a
procedural default with respect to a narrow issue.

Sixth, as the July 2005 NPRM is premised on the fact that all
adjudicators, including ALJs, need to be trained and retrained about the
definition of disability, the Agency should not require even represented
claimants to identify with precision every material narrow issue. This
is particularly so given that the July 2005 NPRM anticipates that many
administrative hearings will be truncated. 70 Fed. Reg. 43,43,614; 20
C.F.R. § 405.350. The Agency cannot fairly truncate oral hearings and at
the same time require comprehensive issue exhaustion.

> IV\. Summary
>
> The Agency should clarify the meaning of \"issue\" and expressly
> disavow issue exhaustion for its own internal administrative
> proceedings and later judicial review.
>
> Very truly yours,
>
> /s/ Eric Schnaufer Eric Schnaufer