Opinion ID: 1349375
Heading Depth: 2
Heading Rank: 1

Heading: The Wilson Case

Text: In Wilson, as in the present case, the ALJ violated the Social Security Administration's own procedural regulation. The regulation in Wilson, 20 C.F.R. § 404.1527(d)(2), provided, in part, that, [w]e will always give good reasons in our notice of determination or decision for the weight we give your treating source's opinion. The court gave three reasons for this procedural requirement. First, to let claimants understand the disposition of their cases. The quoted portion of the sentence is from Snell v. Apfel, 177 F.3d 128 (2d Cir.1999) in which the court said, the requirement of reason-giving exists, in part, to let claimants understand the disposition of their cases and perhaps especiallywhen those dispositions are unfavorable. Id. at 134. The Snell court explained that when a claimant knows her physician has deemed her disabled, and no reason has been given for rejecting that physician's opinion, she might be bewildered when told by an administrative bureaucracy that she is not, unless some reason for the agency's decision is supplied. Id. The Wilson court adopted this language and reasoning to illustrate the importance of a regulation that enables a claimant to understand the outcome of the claimant's case. Wilson, 378 F.3d at 544. The second reason given by the Wilson court for the regulation was that the requirement also ensures that the ALJ applies the treating physician rule. Id. The third reason for the requirement was that it permits meaningful review of the ALJ's application of the rule. Id. The Sixth Circuit in Wilson emphasized the importance of a federal agency following its own regulations: It is an elemental principle of administrative law that agencies are bound to follow their own regulations. As the Ninth Circuit well summarized in applying this principle: The Supreme Court has long recognized that a federal agency is obliged to abide by the regulations it promulgates. See Vitarelli v. Seaton, 359 U.S. 535, 545, 79 S.Ct. 968, 3 L.Ed.2d 1012 (1959); Service v. Dulles, 354 U.S. 363, 372, 77 S.Ct. 1152, 1 L.Ed.2d 1403 (1957); Accardi v. Shaughnessy, 347 U.S. 260, 267, 74 S.Ct. 499, 98 L.Ed. 681 (1954). An agency's failure to follow its own regulations `tends to cause unjust discrimination and deny adequate notice' and consequently may result in a violation of an individual's constitutional right to due process. Where a prescribed procedure is intended to protect the interests of a party before the agency, `even though generous beyond the requirements that bind such agency, that procedure must be scrupulously observed.' Vitarelli, 359 U.S. at 547, 79 S.Ct. 968, 3 L.Ed.2d 1012 (Frankfurter, J., concurring); see also Note, Violations by Agencies of Their Own Regulations, 87 Harv. L.Rev. 629, 630 (1974) (observing that agency violations of regulations promulgated to provide parties with procedural safeguards generally have been invalidated by courts). Id. at 545 (quoting Sameena, Inc. v. United States Air Force, 147 F.3d 1148, 1153 (9th Cir.1998) (parallel citations and circuit court citations omitted)). [1] Of great importance in the present case is the Wilson court's rejection of the argument that failure to follow the regulation in that case was harmless error. The court held that even if the record should show that there would be little chance for success if the case were remanded, a violation of the agency's own rules cannot be excused as harmless error. [A] procedural error is not made harmless simply because [the aggrieved party] appears to have had little chance of success on the merits anyway. Mazaleski v. Treusdell, 562 F.2d 701, 719 n. 41 (D.C.Cir.1977); see also Ingalls Shipbuilding, Inc. v. Dir., Office of Workers' Comp. Programs, 102 F.3d 1385, 1390 (5th Cir.1996). To hold otherwise, and to recognize substantial evidence as a defense to non-compliance with § 1527(d)(2), would afford the Commissioner the ability [to] violate the regulation with impunity and render the protections promised therein illusory. The general administrative law rule, after all, is for a reviewing court, in addition to whatever substantive factual or legal review is appropriate, to set aside agency action ... found to be ... without observance of procedure required by law. Administrative Procedure Act, 5 U.S.C. § 706(2)(D) (2001). Id. at 546. With reference to when an agency's violation of its own regulations would not require a remand, the court noted that when a regulation merely provides for the orderly transaction of the agency's business and does not confer any substantial right on a claimant, it is necessary for the claimant to show prejudice as a result of the violation before a remand is ordered. The Supreme Court has recognized the distinction between regulations intended primarily to confer important procedural benefits upon individuals and regulations adopted for the orderly transaction of business before [the agency]. Am. Farm Lines v. Black Ball Freight Serv., 397 U.S. 532, 538-39, 90 S.Ct. 1288, 25 L.Ed.2d 547 (1970) (internal quotation marks omitted). In the former case, the regulation bestows a substantial right on parties before the agency, and it is incumbent upon agencies to follow their own procedures ... even where the internal procedures are possibly more rigorous than otherwise would be required. Morton v. Ruiz, 415 U.S. 199, 235, 94 S.Ct. 1055, 39 L.Ed.2d 270 (1974); see also Vitarelli v. Seaton, 359 U.S. 535, 540, 79 S.Ct. 968, 3 L.Ed.2d 1012 (1959); United States ex rel. Accardi v. Shaughnessy, 347 U.S. 260, 267, 74 S.Ct. 499, 98 L.Ed. 681 (1954). In contrast, in the case of procedural rules adopted for the orderly transaction of business, an agency has the discretion to relax or modify its procedural rules and such action is not reviewable except upon a showing of substantial prejudice to the complaining party. Am. Farm Lines, 397 U.S. at 539, 90 S.Ct. 1288, 25 L.Ed.2d 547 (quotation omitted). Section 1527(d)(2) falls in the former category, creating an important procedural safeguard for claimants for disability benefits. Snell, 177 F.3d at 134. Id. at 547.