Opinion ID: 549855
Heading Depth: 2
Heading Rank: 1

Heading: The Pre-Finkelstein Established Law

Text: 58 Until recently, judicial proceedings dealing with the review of the Secretary's decisions in Social Security cases were governed by the following rules. A claimant dissatisfied with the Secretary's administrative decision could obtain judicial review of that decision by filing a complaint in district court. See 42 U.S.C. Sec. 405(g). In that review, the federal courts would review the Secretary's decisions to ensure both that the Secretary abided by the correct legal principles and that there existed substantial evidence to support the Secretary's decision. If the court determined that the Secretary erred in the administrative proceedings, the court could choose one of two options: it could either order the Secretary to award benefits to the claimant or it could remand the case back to the Secretary for further consideration. If the former alternative were chosen, the Secretary could immediately appeal the district court's order, see Martindale, 890 F.2d at 412-13; if the district court adopted the latter approach, however, its decision remanding the case was viewed as an interlocutory order, not subject to immediate appeal. See Taylor v. Heckler, 778 F.2d at 677. 59 Assuming that the district court remanded the case to the Secretary for further consideration, it was commonly understood that the district court retained jurisdiction over the matter to review the Secretary's actions after remand. This procedure not only had been mandated by several federal courts including this one, see, e.g., Taylor, 778 F.2d at 677 & n. 2; Guthrie v. Schweiker, 718 F.2d 104, 106 (4th Cir.1983), but was the accepted view of the Secretary as well. See Hudson, 490 U.S. at ----, 109 S.Ct. at 2255; Brown v. Secretary of Health & Human Services, 747 F.2d 878, 884 (3d Cir.1984). In other words, it was the acknowledged rule in Social Security cases that when a district court vacated the Secretary's final decision and ordered a remand to the Secretary for further proceedings, that order (1) was a nonappealable order (at least in this circuit), (2) did not terminate the district court's jurisdiction over the matter, and (3) was not a final judgment for EAJA purposes. See Taylor, 778 F.2d at 677-78. 60 After conducting additional administrative proceedings, it was commonly accepted that the Secretary would then return to the district court and present its decision along with supporting transcripts and documents to the district court. Brown, 747 F.2d at 884; Guthrie, 718 F.2d at 106. At that point, the district court would determine whether the Secretary followed its instructions on remand and would then enter judgment affirming, modifying, or reversing the Secretary's decision. See Hudson, 109 S.Ct. at 2255; Brown, 747 F.2d at 884. It was this order after the proceedings on remand that was the final, appealable decision. Under the 1985 amendments and the subsequent case law, the thirty-day time limit for filing an attorney's fee application under the EAJA commenced when the sixty days for filing an appeal expired. 61 In all four cases before us, the motion for attorney's fees was filed more than thirty days after the district court's dismissal order following remand, but within ninety days after that order was filed. Thus, all four motions would be timely under the general rule. The Secretary makes three arguments for a different result. 62 B. Appealability of the Post-Remand Order when the Secretary Has Granted Full Benefits in the Administrative Proceeding Conducted Pursuant to the Court-Ordered Remand 63 First, the Secretary argues that he possessed no grounds to appeal the district court's dismissal order following the remand so that the order was nonappealable and the usual sixty days for appeal was inapplicable. The foundation of this argument is that the Secretary granted full benefits during the proceedings on remand and thus had no grounds to appeal his own decision. 11 The Secretary asserts that no justiciable issue existed 12 because the district court affirmed the Secretary's own decision and dismissed the litigation. However, looking at the issue from the claimants' perspective, it is not at all apparent why the Secretary, having defended his initial decision in the district court and having received an adverse interlocutory ruling, might not desire to challenge that adverse ruling after the final judgment following remand. The fact that the Secretary, under the compulsion of the district court's remand order, arrived at a new decision need not change the fact that the Secretary might believe the first remand decision was erroneous. Under general legal principles, earlier interlocutory orders merge into the final judgment, and a party may appeal the latter to assert error in the earlier interlocutory order. See generally, 9 J. Moore, B. Ward, J. Lucas, Moore's Federal Practice p 110.07 (2d ed. 1990). Applying that principle here, we find it entirely reasonable for a claimant to believe that the Secretary, having finally obtained an appealable judgment of the district court, might seek to obtain review of the district court's earlier remand order. See 42 U.S.C. Sec. 405(g) (the judgment of the district court shall be final except that is shall be subject to review in the same manner as a judgment in other civil actions.). 64 We note that there is conflicting dicta in several cases as to whether the Secretary can obtain judicial review of an earlier interlocutory remand order. We have located at least two circuit court opinions, including one from our predecessor circuit, that suggest that such review could be obtained once the district court dismissed the litigation. See Harper v. Bowen, 854 F.2d 678, 681 (4th Cir.1988) (intimating that the Secretary could obtain review after the district court entered a final judgment in the case); Barfield v. Weinberger, 485 F.2d 696, 698 (5th Cir.1973) (per curiam) (rejecting Secretary's argument that Secretary's right to review district court's remand order will probably be irreparably lost unless interlocutory review is granted). 13 On the other hand, we are aware that, in at least two other opinions from this circuit's predecessor, panels have suggested that the Secretary would not be able to challenge an earlier remand decision if forced to wait until after the litigation has concluded. See Gold v. Weinberger, 473 F.2d 1376, 1378 (5th Cir.1973) (using this justification to allow interlocutory appeal of district court's remand order); Cohen v. Perales, 412 F.2d 44 (5th Cir.1969), rev'd on other grounds sub nom., Richardson v. Perales, 402 U.S. 389, 91 S.Ct. 1420, 28 L.Ed.2d 842 (1971) (same). 65 The power of the suggestions made in these latter two cases, however, was called into question in light of this court's later observations in Taylor v. Heckler, 778 F.2d 674 (11th Cir.1985). In both Gold and Cohen, this court's predecessor, expressing concerns that subsequent events might potentially insulate the district court's remand order, permitted the Secretary to file an immediate appeal from district court remand orders. However, in Taylor, this court appeared to repudiate the holdings of these two cases when it stated that [t]his circuit treats all remand orders to the Secretary as interlocutory orders, not as final judgments, 778 F.2d at 677 (emphasis in original), thereby appearing to endorse the observations in Barfield v. Weinberger, 485 F.2d at 698, that interlocutory review of a remand order was unnecessary because review of all issues could be obtained once the matter was ultimately resolved. 14 66 Given the foregoing state of the case law, the best that can be said of the Secretary's position is that there was some doubt as to whether the Secretary could appeal the final post-remand judgment to assert error in the earlier interlocutory order. Under these circumstances, we conclude that the thirty days should not commence until the usual sixty days for appeal expires. A contrary ruling would contravene the clear Congressional intent that the thirty-day deadline not be construed in an overtechnical manner and the clear Congressional intent that the deadline not be a trap for the unwary. Thus, we reject the Secretary's first argument. 67 C. Appealability of the Post-Remand Order If It Were Pursuant to Settlement 68 The Secretary's second argument is that three of the cases were, in effect, settled and that the post-remand judgments dismissing those cases were, in effect, dismissals pursuant to settlement. Of course, if the judgment was entered pursuant to a settlement, it would not be appealable, and the thirty days would commence immediately. We discuss the Secretary's settlement argument with respect to the Myers case in Part VI. The Secretary also makes the settlement argument with respect to Parker and Cohen. In both cases, after the Secretary had granted full benefits during the remand proceedings, the Secretary moved in the district court for an order affirming the Secretary's decision and dismissing the case. The Secretary argues that this gave notice to Parker and Cohen that the Secretary was, in effect, settling the litigation. 69 We reject the Secretary's argument. Neither the fact that the Secretary awarded full benefits during the remand proceedings nor the fact that the Secretary filed the post-remand motion in the district court can obscure the fact that the full benefits were awarded only because the district court had rejected the Secretary's defense of the initial determination, vacated the Secretary's original decision and remanded the case for further proceedings. Although the Secretary later sought a final judgment from the district court, only the Secretary knew whether the final judgment was being obtained in order to settle the case, or on the other hand, in order to precipitate the entry of a final judgment from which the Secretary could appeal to assert error in the earlier, interlocutory remand order. We readily conclude that the Secretary's actions in the Parker case and the Cohen case fall far short of providing the claimants with clear and unequivocal notice that the Secretary intended to settle the cases and waive its right to appeal the final post-remand judgment of the district court. Absent such clear and unequivocal notice, the Secretary retained the potential to file an appeal from the post-remand judgment until the time for filing the appeal expired. Only then was the judgment final and nonappealable under EAJA. 70 D. Appealability of the Post-Remand Orders In Light of Finkelstein 71 The Secretary's third argument for a different result is that the settled law described above was inextricably altered by Sullivan v. Finkelstein, --- U.S. ----, 110 S.Ct. 2658, 110 L.Ed.2d 563 (1990). In Finkelstein, the Supreme Court held that certain district court remand orders are immediately appealable. The Court observed that 42 U.S.C. Sec. 405(g) provides for two distinct forms of district court action in reviewing decisions of the Secretary. 15 Under the sixth sentence of Sec. 405(g), the district court may 72 on motion of the Secretary made for good cause shown before he files his answer, remand the case to the Secretary for further action by the Secretary, and it may at any time order additional evidence to be taken before the Secretary, but only upon a showing that there is new evidence which is material and that there is good cause for the failure to incorporate such evidence into the record in a prior proceeding.... 73 Should the district court enter a remand order pursuant to this sixth sentence, the district court retains jurisdiction over the entire proceedings and will review the Secretary's subsequent actions. 16 The clear implication is that a sixth sentence remand order is not immediately appealable. Finkelstein, --- U.S. at ---- n. 8, 110 S.Ct. at 2665 n. 8. 74 In contrast to a nonappealable sentence six remand, the Supreme Court held that the sentence four remand in Finkelstein was immediately appealable. Sentence four of Sec. 405(g) grants the district court general authority to affirm, modify or reverse a decision of the Secretary with or without a remand: 75 The court shall have power to enter, upon the pleadings and transcript of the record, a judgment affirming, modifying, or reversing the decision of the Secretary, with or without remanding the cause for a rehearing. 76 In Finkelstein, the district court implicitly invalidated the Secretary's regulation which treated the spouse of a wage earner less favorably than the wage earner, and remanded the case to the Secretary for a determination of benefits without consideration of the regulation held to be invalid. The Secretary appealed to the Third Circuit. That court dismissed the appeal for lack of jurisdiction relying upon its established law that such remand orders were interlocutory. The Supreme Court granted certiorari to determine whether the Secretary may immediately appeal a district court order effectively declaring invalid regulations that limit the kinds of inquiries that must be made to determine whether a person is entitled to disability insurance benefits and remanding a claim for benefits to the Secretary for consideration without those restrictions. Finkelstein, --- U.S. at ----, 110 S.Ct. at 2661. Reversing the decision of the Third Circuit, the Supreme Court held that the district court's order entered pursuant to sentence four of Sec. 405(g) was immediately reviewable, notwithstanding the fact that the district court remanded the case to the Secretary. 77 The Secretary interprets Finkelstein to mean that any and every order by a district court remanding a Social Security case pursuant to sentence four of Sec. 405(g) is a final order which is immediately reviewable. 17 The Secretary argues that three of the four cases before us (Parker, Grimes, and Cohen ) involved remand orders that were, at least in part, sentence four remands. Finkelstein makes clear, the Secretary posits, that the Secretary could have appealed those remand orders. Because those remand orders were not then appealed, the Secretary argues that any claim that the Secretary may have had that those remand orders were erroneous was waived. Since the Secretary granted full relief on remand, the only possible basis for appealing the post-remand order was potential error in the earlier interlocutory remand order; this having been waived, the Secretary argues that the post-remand order was nonappealable, and thus the thirty-day time limit commenced immediately upon entry by the district court of the post-remand order. 78 For purposes of the cases before us, we can assume arguendo the Secretary's interpretation of Finkelstein and assume that under Finkelstein the Secretary could have immediately appealed the district court's remand order in Parker, Grimes and Cohen, and could not have appealed from the district court's final order following the remand. Because we conclude that Finkelstein should not be applied retroactively to the cases before us, we need not decide upon its proper interpretation. 18 79 The general rule is that decisions are applied retroactively. However, in Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971), the Supreme Court set out the test for determining when a judicial decision should not be applied retroactively in civil litigation: 80 First, the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied, ... or by deciding an issue of first impression whose resolution was not clearly foreshadowed.... Second it has been stressed that we must ... weigh the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective operation will further or retard its operation. Linkletter v. Walker, supra, 381 U.S. at 629, 85 S.Ct. [1731] at 1738 [14 L.Ed.2d 601]. Finally, we have weighed the inequity imposed by retroactive application, for [w]here a decision of this Court could produce substantial inequitable results if applied retroactively, there is ample basis in our cases for avoiding the 'injustice or hardship' by a holding of nonretroactivity. Cipriano v. City of Houma, supra, 395 U.S. at 706, 89 S.Ct. [1897] at 1900 [23 L.Ed.2d 647 (1969) ]. 81 404 U.S. at 106-07, 92 S.Ct. at 355. See also Ackinclose v. Palm Beach County, Fla., 845 F.2d 931 (11th Cir.1988). Applying the first factor, we readily conclude that the Finkelstein interpretation urged upon us by the Secretary would constitute at least a decision of first impression whose resolution was not clearly foreshadowed. As our discussion in Section V.A, supra 672-73 indicates, the law prior to Finkelstein was well established, both in this circuit and others, that remand orders of the kind now before us were interlocutory and were not immediately appealable. Not only was this the established law in several courts of appeal, but it was also the accepted view of the Secretary. See Sullivan v. Hudson, 490 U.S. at ----, 109 S.Ct. at 2255 (The Secretary concedes that a remand order from the district court to the agency is not a final determination of the civil action and that the district court retains jurisdiction to review any determination rendered on remand.) (quotation omitted). The Finkelstein interpretation urged upon us by the Secretary was certainly not clearly foreshadowed; rather, the contrary result was foreshadowed in Sullivan v. Hudson, which contained strong dicta that a sentence four remand was not a final judgment, citing with apparent approval the opinions of the several courts of appeal to that effect. 490 U.S. at ----, 109 S.Ct. at 2255 (As in this case, there will often be no final judgment in claimant's civil action for judicial review until the administrative proceedings on remand are complete.). 82 In applying the second Chevron factor, we look to the purpose and effect of the underlying substantive statute to determine whether retroactive operation of the new rule would further or retard its purpose. See Ackinclose, 845 F.2d at 934. It is clear that the purpose of the EAJA would be retarded by retroactive application. Congress intended that the thirty-day deadline for seeking attorney's fees be interpreted broadly and that courts should avoid overtechnical constructions which would be a trap for the unwary. Social Security claimants have reasonably relied upon well-established law prior to Finkelstein. Under that settled law, remand orders of the type now before us were interlocutory in nature and not immediately appealable. Only after the remand proceedings when the district court entered its order affirming the Secretary's decision on remand could a final judgment be obtained, and the thirty-day time limit began to run when the time for appealing that district court order expired. Retroactive application of the Secretary's interpretation of Finkelstein would clearly be a trap for the unwary and thus would violate the express intent of Congress. 83 The final Chevron component also counsels nonretroactivity. We have already noted that the reliance of Social Security claimants on the pre-Finkelstein law was reasonable. See Ackinclose, 845 F.2d at 935. Retroactive application to defeat that reasonable reliance would clearly produce substantially inequitable results. Moreover, retroactive application would also be inequitable from the Secretary's perspective. If the remand order were deemed to be immediately appealable and the Secretary's failure to appeal constitutes a waiver, the Secretary might very likely have relied upon established law in failing to appeal an adverse remand order immediately, and then be trapped when retroactive application of Finkelstein rendered the final order after remand nonappealable. 84 Applying the Chevron factors, we readily conclude that the Secretary's interpretation of Finkelstein should not be retroactively applied to the cases before us. See Saint Francis College v. Al-Khazraji, 481 U.S. 604, 107 S.Ct. 2022, 2025-26, 95 L.Ed.2d 582 (1987). Under then prevailing law, the remand orders in the cases before us were interlocutory, nonappealable orders. 19 The interlocutory remand order would merge under general rules into the final post-remand judgment, and the Secretary could potentially appeal the final post-remand judgment to assert error in the earlier interlocutory order.