## Facts

- The Social Security Administration (SSA) asserted that Mary L. Grice and others had received Social Security benefit overpayments.
- To collect the alleged debts, SSA used the federal tax refund offset program under 31 U.S.C. § 3720A, reducing plaintiffs’ federal income tax refunds.
- The offsets targeted overpayments more than ten years old.
- Prior Treasury rules had limited referral of debts for refund offset to within ten years after the government’s right of action accrued.
- In 2011, SSA amended its regulations to permit collection by tax refund offset regardless of when the overpayment occurred, and applied the change to older debts.
- Plaintiffs alleged they did not receive meaningful advance notice of the overpayments or the impending offsets because SSA sent notices to outdated addresses while sending other SSA mailings to their current addresses.
- SSA later refunded the intercepted amounts but maintained that the underlying debts remained valid.
- Plaintiffs brought a putative class action alleging constitutional and statutory violations; SSA moved to dismiss on jurisdictional, exhaustion, standing, and pleading grounds.

## Issues

1. Whether 42 U.S.C. § 405(h) barred district court jurisdiction over claims challenging SSA’s tax refund offsets and notice practices.
2. Whether plaintiffs were required to exhaust administrative remedies, and whether exhaustion could be excused for constitutional claims collateral to benefits determinations.
3. Whether plaintiffs plausibly alleged a Fifth Amendment procedural due process violation based on SSA’s alleged failure to provide notice reasonably calculated to reach them.
4. Whether retroactive application of the 2011 regulatory change eliminating the ten-year limit plausibly stated a due process claim.
5. Whether the Ex Post Facto Clause applied to SSA’s retroactive use of tax refund offsets to collect civil overpayment debts.
6. Whether plaintiffs had Article III standing to pursue claims tied to collateral consequences such as alleged credit reporting.

## Decision

- The court granted the motion to dismiss in part and denied it in part.
- The court declined to dismiss all claims under § 405(h), concluding plaintiffs sufficiently alleged colorable constitutional claims collateral to individual overpayment determinations.
- The court allowed due process claims to proceed regarding (1) allegedly inadequate notice of overpayments and offsets and (2) the retroactive elimination of the ten-year limitation for refund offsets.
- The court dismissed the Ex Post Facto claim because the clause applies to penal laws, not civil debt-collection measures.
- The court dismissed certain additional claims, including some related to alleged credit reporting, for lack of standing and/or other jurisdictional defects.

## Legal Principles

- Claims “arising under” the Social Security Act are generally channeled through the administrative review scheme by 42 U.S.C. § 405(h), but courts may hear colorable constitutional claims that are collateral to benefits determinations.
- Exhaustion of administrative remedies may be waived where constitutional claims are collateral and exhaustion would be futile, effectively unavailable, or would risk irreparable harm.
- Procedural due process requires notice reasonably calculated, under all the circumstances, to apprise affected persons of the action and allow an opportunity to respond; sending critical notices to an address the agency knew or should have known was obsolete can be constitutionally inadequate.
- Retroactive civil regulatory action may violate due process when it is arbitrary or imposes special hardships or oppressive effects.
- The Ex Post Facto Clause is limited to criminal or penal laws and does not apply to civil collection mechanisms.
- Article III standing requires a concrete, non-speculative injury traceable to the challenged conduct and redressable by the court.

## Conclusion

The court permitted plaintiffs to pursue Fifth Amendment due process claims attacking SSA’s allegedly deficient notice practices and the retroactive use of tax refund offsets to collect decades-old overpayments, while narrowing the case by dismissing the Ex Post Facto theory and certain other claims on jurisdictional and standing grounds.


Grice v. Colvin, 97 F. Supp. 3d 684 (D. Md. 2015)