Updated: Mar 24
LUCIA ET AL. v. SECURITIES AND EXCHANGE COMMISSION
The Supreme Court decided on June 21, 2018 to reverse the Court of Appeals for the D.C. Circuit that found that SEC ALJ’s were employees rather than officers.
—Read the Supreme Court Decision here
Issue: The SEC charged petitioner, Raymond Lucia, with violating securities law and assigned ALJ Elliot to adjudicate the case. Judge Elliot found Lucia had violated the law and imposed sanctions. Lucia argued that the administrative proceeding was invalid because Judge Elliot had not been constitutionally appointed. Therefore, the case revolved around the difference between government officers and employees and how they should be appointed. The decision was partially based on Freytag, which has similar arguments involving government officials’ powers, i.e., the responsibilities of a judge and finality of their decision. The power emphasized in Freytag was a judge’s authority to conduct trials, take testimony, rule on admissibility of evidence, and enforce discovery orders. The analysis also involved determining if the judge’s decision is deemed an action of the Commission and are they in a permanent position. In Freytag, the government official was determined to be an officer because of their power and should have been appointed pursuant to the Appointments Clause. In Lucia, the SEC ALJ is found to be an officer and should have been appointed under the Appointments Clause.
Ruling and Law: According to Lucia, the SEC ALJ is an “Officer of the United States” and thus subject to the Appointments Clause, which states that only the President, “Courts of Law,” or “Heads of Departments” can appoint “Officers.” In Lucia, SEC staff members appointed ALJs; therefore, Judge Elliot lacked constitutional authority to do his job. Lucia wins.
—Read the Appointments Clause here
Remedy: The Supreme Court decided the remedy should be a new hearing before a properly appointed ALJ, and the ALJ cannot be the ALJ who decided the case. Notably, this is relevant to SSA Appeals Councils’ remanded cases. Under Lucia, SSA ALJs are officers and on remand a different ALJ needs to hold a hearing and/or make a decision on-the-record.
Executive Order: Following Lucia, on July 10, 2018, President Trump issued an Executive Order removing new SSA ALJs from the competitive service. Attorneys seeking an ALJ position will no longer endure the competitive examination and service selection procedures because ALJs are considered “officer of the United States’ and must be chosen under the Appointments Clause. This gives Agency heads and the President much more power to select ALJs.
—Read the Executive Order here
Social Security: How does this affect the SSA and disability advocates? The outcome is unsure as we wait for the dust to settle. Advocates want to be ensured of a fair hearing with no political pressure from management to determine the outcome of the case. SSA ALJs still want their independence to make accurate decisions free from outside pressure. Many are concerned that ALJs will now be stacked with political appointees. Those who are hoping to become ALJ’s are finding their process just changed dramatically. Determining who will become an ALJ is now in the hands of the President, Agency, and Courts—not OPM. The Office of Personnel Management (OPM) previously managed the ALJ selection process. Will this new process help the many competent SSA attorneys and disability representatives step into an ALJ position and help reduce the hearing backlog?
Change is inevitable and typically propels us in the right direction. We will all learn something from the process so that claimants are provided better advocacy solutions, and the Social Security Disability process becomes more reliable and efficient. Choosing the ALJ corps may have become more efficient and strategic rather than torturous and unpredictable. Electing a President and choosing the next SSA Commissioner just became more important to Social Security Disability advocates. We may not know the outcome yet, but it's important to stay positive. Let's give credit to the attorneys representing Lucia—it was a clever move.