The US Supreme Court Thursday held that Social Security disability claimants are not bound by the issue-exhaustion requirement in administrative law judge (ALJ) hearings.
Writing for a 9-0 court, Justice Sonia Sotomayor concluded that although the Social Security claimants in Carr v. Saul did not raise the issue of an improper ALJ appointment at their hearings, failure to do so did not prevent the claim from being heard in federal court.
Issue exhaustion is the principle that parties in an administrative review first raise an issue with the agency before bringing the matter to federal court. This gives the agency an opportunity to respond and address the issue. Often, the requirement is mandated by statute.
In jurisdictions where no statute has been enacted, the court may impose issue exhaustion if the hearing is sufficiently adversarial, as opposed to inquisitorial. Adversarial hearings generally require the claimants to develop the issues.
Thursday’s ruling found that hearings for social security claimants are more inquisitorial, therefore, issue exhaustion should not be imposed. Similar to Appeals Council hearings, which are the last stage of administrative review for Social Security benefits and are not bound by issue exhaustion, hearings before ALJs do not burden the parties with developing the issues. ALJs have the obligation to investigate and develop arguments.
“Regulations also provide that ALJs will ‘loo[k] fully into the issues’ themselves … and may ‘raise a new issue’ at ‘any time … before mailing notice of the hearing decision’,” the court stated.
Some civil rights groups applauded the decision, saying that there would be a practical issue requiring claimants to argue constitutional law before ALJs who do not have the expertise to decide on such matters.