Court Opinion

ID: 9966357
Source: CourtListenerOpinion
Date Created: 2024-05-06 20:00:57.193326+00
Date Added: 2024-06-11T08:24:52.005249
License: Public Domain

NOT RECOMMENDED FOR PUBLICATION
                               File Name: 24a0201n.06

                                             No. 23-5981

                          UNITED STATES COURT OF APPEALS                              FILED
                               FOR THE SIXTH CIRCUIT                                May 06, 2024
                                                                            KELLY L. STEPHENS, Clerk
                                                      )
 MARY ELIZABETH SEXTON,
                                                      )
        Plaintiff -Appellant,                         )
                                                      )    ON APPEAL FROM THE UNITED
 v.                                                   )    STATES DISTRICT COURT FOR
                                                      )    THE EASTERN DISTRICT OF
 COMMISSIONER OF SOCIAL SECURITY,                     )    KENTUCKY
        Defendant-Appellee.                           )
                                                      )                               OPINION

Before: BUSH, NALBANDIAN, and MURPHY, Circuit Judges.

       JOHN K. BUSH, Circuit Judge. Plaintiff Mary Elizabeth Sexton seeks to enjoin the

Commissioner of the Social Security Administration (SSA) from ceasing her disability benefits

while awaiting resolution of her appeal of an unfavorable determination from the SSA. The district

court denied Sexton’s motion, determining that she was not likely to succeed on the merits of her

claim. For reasons that follow, we affirm.

                                                 I.

       This case arose after several individuals orchestrated a fraudulent scheme to defraud

the government of over 550 million dollars. See Hicks v. Comm’r of Soc. Sec., 909 F.3d 786,

793 (6th Cir. 2018); Kirk v. Comm'r of Soc. Sec. Admin., 987 F.3d 314, 318 (4th Cir. 2021). The

group included Eric Conn, a Kentucky attorney who represented disabled clients seeking social

security benefits; Frederic Huffnagle, a physician who signed off on medical evaluations proving
No. 23-5981, Sexton v. Comm’r of Soc. Sec.

that Conn’s clients were disabled; and David Daugherty, an administrative law judge (ALJ) who

provided Conn’s clients with favorable determinations. Hicks, 909 F.3d at 792–93.

       Mary Sexton was one of Conn’s former clients. Sexton applied for social security benefits

with Conn’s representation in March 2006, alleging that she was disabled beginning November

24, 2005. Daugherty issued a decision in her favor in April 2007, relying exclusively on a report

from Dr. Huffnagle to find that she was disabled.

       The SSA first learned about Conn’s fraudulent scheme in 2006, when two of its employees

reported that they suspected fraudulent activity was occurring in the Huntington, West Virginia

SSA office. Hicks, 909 F.3d at 793. In 2011, the Office of the Inspector General (OIG) initiated

an investigation, which ultimately revealed that Conn had submitted over 1,700 applications for

benefits with fraudulent supporting documentation. As a result, in 2015, the SSA began to

redetermine eligibility for beneficiaries whose applications were suspected to contain fraudulent

information.   The Appeals Council notified Sexton that her file had been flagged for a

redetermination hearing because the OIG suspected that Huffnagle’s report was fraudulent. After

excluding Dr. Huffnagle’s medical report, an ALJ decided in 2016 that insufficient evidence

supported Sexton’s claim that she was disabled under the Social Security Act (the Act) at the time

she was awarded benefits.

       After the Appeals Council denied her request for review, Sexton filed suit in 2016

challenging the ALJ’s determination. In 2018, we decided in Hicks that the SSA violated the Due

Process Clause of the Fifth Amendment when, during redetermination hearings, the government

refused to allow claimants to rebut allegations that the medical reports included in their

applications were fraudulent. 909 F.3d at 804. In 2019, the district court remanded Sexton’s case

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No. 23-5981, Sexton v. Comm’r of Soc. Sec.

to the SSA for further proceedings, consistent with Hicks. The court also directed the SSA to

reinstate Sexton’s benefits.

       In 2020, the Appeals Council notified Sexton that her case was remanded to an ALJ for

another redetermination hearing. The SSA suspended in-person hearings following the onset of

the COVID-19 pandemic. The SSA informed Sexton on three separate occasions that she could

hold her redetermination hearing by phone or videoconference, but she declined, and thus stalled

the proceedings. In November 2021, she sought to permanently enjoin the Commissioner from

initiating redetermination proceedings, but her complaint was dismissed for failure to exhaust

administrative remedies because she did not obtain a final agency decision before suing. Sexton

v. Comm’r of Soc. Sec., No. 6:21-CV-187, 2022 WL 1751003, at *1, 6 (E.D. Ky. May 31, 2022).

       Sexton’s second redetermination hearing was held in 2022. An OIG witness testified at

the hearing about the impact of Conn’s fraudulent scheme on Sexton’s 2006 application, and he

was cross-examined by Sexton’s attorney. Sexton and her mother also testified about her condition

from 2005 through her initial award of benefits in 2007. After considering the testimony from the

hearing, the medical evidence in the record, and Sexton’s objections, the ALJ determined that

Sexton was not disabled during the relevant time period and ceased her benefits.1 The ALJ did

not consider Dr. Huffnagle’s report, finding that there was “reason to believe” that the report was

fraudulent “[g]iven the similarities between Mr. Conn’s admitted fraud scheme and the facts of

this case.” Admin. Tr., R. 14-1, PageID 2276.

       Sexton filed this action in January 2023, challenging the ALJ’s disability determination

and seeking to enjoin the SSA from stopping her benefits during the appeal process. She also

1
 Sexton filed additional applications for disability benefits in 2015, 2016, 2017, and 2019, all of
which were denied.
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No. 23-5981, Sexton v. Comm’r of Soc. Sec.

requested an evidentiary hearing so that she could present evidence regarding the merits, and to

demonstrate the irreparable harm she would suffer if her benefits ceased immediately. The district

court denied her request for a hearing because the parties did not dispute any of the facts in her

underlying action. The court also denied Sexton’s motion for a preliminary injunction, holding

that she had not demonstrated that she was likely to succeed on the merits, or that she would suffer

irreparable harm without benefits during her appeal of the ALJ’s decision. Sexton timely appealed

the denial of her request for injunctive relief.

                                                   II.

        We review a district court’s ultimate decision about whether to issue a preliminary

injunction for an abuse of discretion. Daunt v. Benson, 956 F.3d 396, 406 (6th Cir. 2020). In

granting injunctive relief, a district court abuses its discretion when it “improperly applie[s] the

governing law, use[s] an erroneous legal standard, or relie[s] upon clearly erroneous findings of

fact.” City of Pontiac Retired Emps. Ass’n v. Schimmel, 751 F.3d 427, 430 (6th Cir. 2014)

(en banc) (per curiam).

        District courts consider four factors when determining whether to grant a preliminary

injunction: “(1) whether the movant has a strong likelihood of success on the merits; (2) whether

the movant would suffer irreparable injury absent the injunction; (3) whether the injunction would

cause substantial harm to others; and (4) whether the public interest would be served by the

issuance of an injunction.” Bays v. City of Fairborn, 668 F.3d 814, 818–19 (6th Cir. 2012).

“Although no one factor is controlling, a finding that there is simply no likelihood of success on

the merits is usually fatal.” O’Toole v. O’Connor, 802 F.3d 783, 788 (6th Cir. 2015) (quoting

Gonzales v. Nat’l Bd. of Med. Exam’rs, 225 F.3d 620, 625 (6th Cir. 2000)). “[T]he party seeking

a preliminary injunction bears the burden of justifying such relief.” ACLU Fund of Mich.

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No. 23-5981, Sexton v. Comm’r of Soc. Sec.

v. Livingston Cnty., 796 F.3d 636, 642 (6th Cir. 2015) (quoting McNeilly v. Land, 684 F.3d 611,

615 (6th Cir. 2012)). We grant the “extraordinary remedy” of a preliminary injunction only when

the party seeking injunctive relief “clear[ly] show[s]” that she is entitled to it. Winter v. Nat. Res.

Def. Council, Inc., 555 U.S. 7, 22, 24 (2008).

       1. Likelihood of Success on the Merits

       We first consider whether Sexton is likely to succeed on the merits of her underlying claim.

Sexton argues that the SSA violated its duty under the Act by failing to “immediately redetermine”

her benefits. 42 U.S.C. § 405(u)(1)(A). She also claims that the SSA denied her adequate

procedural protections during her redetermination hearing, violating her right to procedural due

process under the Fifth Amendment. We address each claim in turn.

               a.      Statutory Claim

       Sexton challenges the timeliness of her 2022 redetermination hearing, arguing that the

SSA’s failure to “immediately” redetermine her benefits violated the Act. The Act requires that the

SSA “immediately redetermine the entitlement of individuals to monthly insurance benefits . . . if

there is reason to believe that fraud or similar fault was involved in the application of the individual

for such benefits.” 42 U.S.C. § 405(u)(1)(A).

       Sexton argues that although the SSA was aware of allegations of fraud as early as 2006, it

failed to conduct redetermination hearings “immediately,” in violation of the Act. But we have

considered and rejected this very argument, as the district court correctly concluded. In Hicks, we

held that even if the SSA failed to comply with the Act’s timing provision when it initiated

redetermination efforts nine years after first learning about Conn’s scheme, there was no statutory

violation because the Act does not provide a remedy for noncompliance. 909 F.3d at 811–12 (“[I]f

a statute does not specify a consequence for noncompliance with statutory timing provisions, the

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No. 23-5981, Sexton v. Comm’r of Soc. Sec.

federal courts will not in the ordinary course impose their own coercive sanction.”) (quoting United

States v. James Daniel Good Real Prop., 510 U.S. 43, 63 (1993)). We explained that it “seems

counterintuitive to hold that a failure to reverse fraudulent determinations quickly enough

precludes the government from reversing those determinations at all.” Id. at 813. Rather than

prevent redetermination hearings wholesale, we explained that the government could “implement

greater procedural protections” to minimize prejudice from the SSA’s delay. Id.

        Hicks controls our analysis here. Even if the SSA failed to “immediately” hold Sexton’s

redetermination hearing after learning of Conn’s fraud, the statute provides Sexton no relief for

that delay. The district court therefore did not err when it rejected Sexton’s claim that the

Commissioner’s failure to hold a prompt redetermination hearing violated the Act.

                b.      Procedural Due Process Claim

        Sexton next argues that the delay in holding her redetermination hearing violated her rights

to due process under the Fifth Amendment. She also claims that because of the delay, she was

unable to access case files that would have supported her claim. We find that Sexton’s due process

claim is not likely to succeed because she was granted adequate procedural protections at her

redetermination hearing, and because she has not identified additional procedures to which she is

constitutionally entitled.

        Beneficiaries have a strong property interest in the continued receipt of Social Security

benefits. Mathews v. Eldridge, 424 U.S. 319, 332 (1976); Flatford v. Chater, 93 F.3d 1296,

1305 (6th Cir. 1996). Consequently, the government must implement certain procedures before

depriving claimants of that interest. Mathews, 424 U.S. at 332. We held in Hicks that when the

SSA has reason to believe fraud was involved in a benefits application, the government must, at a

minimum, “proffer some actual basis for believing that the plaintiffs’ evidence is fraudulent”; and

                                                -6-
No. 23-5981, Sexton v. Comm’r of Soc. Sec.

the plaintiff must “have an opportunity to ‘rebut the Government’s factual assertions before a

neutral decisionmaker.’” 909 F.3d at 799 (quoting Hamdi v. Rumsfeld, 542 U.S. 507, 533 (2004));

see also Kirk v. Comm’r of Soc. Sec., 987 F.3d 314, 326–327 (4th Cir. 2021) (holding that

claimants were denied adequate procedural protections when ALJs excluded evidence from

physicians who were associated with Conn and refused to allow plaintiffs to contest that fraud

determination).

       We also considered whether the plaintiffs were entitled to additional procedures under the

three-pronged test articulated in Mathews v. Eldridge. Hicks, 909 F.3d at 799–804 (citing 424 U.S.

at 335). Mathews requires courts to weigh three factors to determine “the constitutional adequacy

of [administrative] procedures” “prior to the initial termination of benefits”: “[f]irst, the private

interest that will be affected by the official action; second, the risk of an erroneous deprivation of

such interest through the procedures used, and the probable value, if any, of additional or substitute

procedural safeguards; and [third], the Government’s interest.” 424 U.S. at 333–35. The Hicks

court held that the first and third Mathews factors favored the plaintiffs, as “social security

disability beneficiaries have a substantial interest in receiving their benefits,” and providing

beneficiaries the opportunity to rebut allegations of fraud did not impose an extraordinary burden

on the government. 909 F.3d at 802–04. Under the second factor, the court concluded that the

risk of erroneous deprivation was “intolerably high whenever claimants are precluded from

rebutting material factual assertions about their case.” Id. at 801.

       But unlike in those cases, Sexton had an adequate opportunity to challenge the SSA’s fraud

determination. Following Hicks, the SSA published an Acquiescence Ruling listing procedures

that it would implement to comply with our ruling. Social Security Acquiescence Ruling 19-1(6),

Hicks v. Commissioner of Social Security: Disregarding Evidence During Redeterminations

                                                 -7-
No. 23-5981, Sexton v. Comm’r of Soc. Sec.

Under Sections 205(u) and 1631(e)(7) of the Social Security Act, 85 Fed. Reg. 6255-02, 2020 WL

529791 (Feb. 4, 2020). The SSA specified that before an ALJ excluded evidence that was

suspected to be fraudulent, the adjudicator “will consider the individual’s objection to the

disregarding of that evidence.” Id.

       Sexton’s second redetermination hearing occurred after the Acquiescence Ruling was

issued, and her hearing complied with its requirements. Sexton had the opportunity to object to

the agency’s assertions of fraud, and to present evidence rebutting those allegations. In support of

her claim, she presented her own evidence that included testimony from her mother and a

vocational expert. Also, a witness from the OIG testified at her hearing to explain why he believed

Sexton’s application contained fraudulent information, and the witness was cross-examined by

Sexton’s attorney. After considering Sexton’s supporting evidence and objections, the ALJ

ultimately excluded the evidence submitted from Dr. Huffnagle as fraudulent and denied her claim

based on the remaining evidence in the record. Because she had the chance to rebut the OIG’s

assertion of fraud and to present evidence supporting her claim, Sexton has not demonstrated that

the procedures employed at her hearing violated her due process rights.

       Moreover, she has not identified additional procedures that she was denied at her hearing.

Sexton argues that due to the government’s delay, she could not obtain necessary case files from

Conn’s office that may have been burned by Conn or confiscated by the government. But the

government asserts that it has provided Sexton with several medical files, including documents

from her initial eligibility timeframe. Sexton has not specified which missing files would aid her

in challenging the SSA’s determination.

       We recognize that, because of the delay, Sexton may have been prejudiced in her ability to

establish her initial eligibility. But, to the extent she claims that there are no circumstances in

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No. 23-5981, Sexton v. Comm’r of Soc. Sec.

which her redetermination hearing would be constitutional, her claim fails under Hicks. 909 F.3d

at 813 (holding that cancelling redetermination hearings would be “counterintuitive” and would

undermine the general purpose of the statute, which is to “enable the SSA to end fraudulent

determinations more quickly than the reopening procedures at that time allowed”). So, although

Sexton may have been prejudiced by the delays, she did not show that she was entitled to any

additional procedural protections under the Fifth Amendment, beyond what we recognized in

Hicks. Nor has she specified which materials she lacks to establish her case. Accordingly, the

district court did not err by finding she is not likely to succeed on the merits of her due process

claim.

         2. Irreparable Injury

         Generally, “a preliminary injunction issued where there is simply no likelihood of success

on the merits must be reversed.” S. Glazer’s Distribs. of Ohio, LLC v. Great Lakes Brewing

Co., 860 F.3d 844, 849 (6th Cir. 2017) (quoting Winnett v. Caterpillar, Inc., 609 F.3d 404, 408

(6th Cir. 2010)). But, for the sake of completeness, we next consider whether Sexton would suffer

irreparable harm if her request for injunctive relief was denied. D.T. v. Sumner Cnty. Schs.,

942 F.3d 324, 327 (6th Cir. 2019). “This Court has the power to grant an injunction pending

appeal to prevent irreparable harm to the party requesting such relief during the pendency of the

appeal.” Overstreet v. Lexington-Fayette Urb. Cnty. Gov’t, 305 F.3d 566, 572 (6th Cir. 2002). To

warrant a preliminary injunction, a party must demonstrate harm that is “certain and immediate,”

and not “speculative or theoretical.”       Mich. Coal. of Radioactive Material Users, Inc.

v. Griepentrog, 945 F.2d 150, 154 (6th Cir. 1991).2

2
  The denial of an injunction can result in irreparable harm if the underlying claim is based on a
constitutional violation. Overstreet, 305 F.3d at 578. But because we hold that Sexton is not likely
                                                -9-
No. 23-5981, Sexton v. Comm’r of Soc. Sec.

       Sexton claims that she would suffer irreparable emotional and physical harm if her benefits

were terminated while her appeal of the ALJ’s decision is pending. She claims that she would

suffer severe financial injury if her request for injunctive relief was denied, including potential

homelessness. She also explains that Social Security benefits are her sole source of income, and

her only means to obtain treatment for her health conditions.

       We have held that the disruption of government benefits constitutes an irreparable injury

when such a loss would adversely affect “the proper maintenance of [one’s] health” and the

“interruption of the care might cause irreversible physical harm.” Int’l Res., Inc. v. N.Y. Life Ins.,

950 F.2d 294, 302 (6th Cir. 1991); see also Welch v. Brown, 551 F. App’x 804, 813–14 (6th Cir.

2014) (finding irreparable harm where plaintiffs submitted three affidavits describing how losing

benefits would deprive them of access to necessary medical treatments). But here, as the district

court correctly noted, Sexton does not explain what her essential medical treatment entails, or how

her inability to obtain that treatment would result in permanent harm. Her allegations that she

would potentially become homeless without the injunction are similarly speculative. While we

are sympathetic to Sexton’s circumstances, she has not provided any additional evidence to

contradict the district court’s determination that she failed to show irreparable harm.3 We therefore

hold that the second factor weighs against granting injunctive relief.

       3. Substantial Harm to Others and Public Interest

       Lastly, we must assess whether granting the injunction would harm the opposing party and

the public interest. Wilson v. Williams, 961 F.3d 829, 844 (6th Cir. 2020). These two factors

to succeed on the merits of her due process claim, we find no irreparable harm caused by the
alleged constitutional injury.
3
  The record reflects that Sexton has delayed proceedings before the district court by failing to
timely file her merits brief. Sexton’s delay in litigating her underlying claim undermines her
                                                -10-
No. 23-5981, Sexton v. Comm’r of Soc. Sec.

“merge when the Government is the opposing party.” Nken v. Holder, 556 U.S. 418, 435 (2009).

Sexton claims that the government’s interest in avoiding fraudulent payments is “negligible” in

comparison to the severe harm she will suffer if she is denied benefits.

       The district court did not abuse its discretion in holding that these factors weigh against

granting injunctive relief. While the SSA is obligated to provide benefits to qualifying recipients,

the government also has a duty to protect public funds by denying benefits to individuals who are

not disabled under the Act. Valot v. Se. Loc. Sch. Dist. Bd. of Educ., 107 F.3d 1220, 1227 (6th Cir.

1997). Thus, holding a hearing to determine whether Sexton actually qualifies for benefits serves

the public interest, as does halting her benefits while those redetermination proceedings are

pending. And here, because we agree with the district court that Sexton likely is not entitled to

relief under the Act or the Due Process Clause of the Fifth Amendment, it does not serve the public

interest to reinstate her benefits pending resolution of her appeal before the district court.

                                                 III.

       The district court’s holding that Sexton failed to establish that she is entitled to injunctive

relief is not an abuse of discretion. We therefore AFFIRM.

allegations of irreparable harm. In some circuits, that delay can be seen as dispositive and is alone
sufficient to deny a request for injunctive relief. Ng v. Bd. of Regents, 64 F.4th 992, 998–99 (8th
Cir. 2023); Colony Grill Dev., LLC v. Colony Grill, Inc., 23-507-cv (L), 23-691-cv (CON), 2023
WL 6890675, at *4 n.4 (2d Cir. Oct. 19, 2023).
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