On Appeal from the United States District Court for the Middle District of Pennsylvania (D.C. Civ. No. 82-1338)
Before: HUNTER, GARTH and HIGGINBOTHAM, Circuit Judges.
A. LEON HIGGINBOTHAM, JR., Circuit Judge.
This is an appeal from an order of the United States District Court for the Middle District of Pennsylvania denying a motion by the Secretary of Health and Human Services ("Secretary") for relief from judgment pursuant to Fed. R. Civ. P. 60(b). The underlying judgment, in accordance with the district court's determination that the Secretary could not lawfully recoup overpayments of Supplemental Security Income ("SSI") benefits by means of voluntary reductions in Old-Age, Survivors, and Disability Insurance ("OASDI") benefits, ordered that reference to cross-program recoupment be stricken from the Secretary's proposed SSI pre-recoupment procedural guidelines. For the reasons that follow, we will affirm the district court's denial of Rule 60(b) relief from that judgment.
Title XVI of the Social Security Act authorizes the Secretary to recoup overpayments of SSI benefits, and to waive recoupment if the beneficiary is without fault or if equity otherwise requires waiver. 42 U.S.C. § 1383(b) (1982). The Secretary's regulations do not provide for hearings prior to initial waiver determinations, but beneficiaries are entitled to informal hearings upon requests for reconsideration of denials of waivers. See 20 C.F.R. §§ 416.1413, 416.1415 (1985).
In 1982, the Secretary notified plaintiff Helen Page, a recipient of SSI benefits, that she had received an overpayment of $176.83. Page submitted a request for waiver of recoupment, which was denied, and the Secretary notified Page that her SSI benefits would be withheld until the overpayment was recovered. Page unsuccessfully sought reconsideration of the Secretary's refusal to grant a waiver. Page then brought this action in the district court seeking to challenge the lack of pre-recoupment hearings, on behalf of a class of all SSI recipients residing in Pennsylvania who had requested or would in the future request waivers of recoupment of SSI overpayments. The district court did not certify the class, but concluded that the Secretary is obliged to give SSI beneficiaries an opportunity for a hearing before denying them waivers of recoupments. See Page v. Schweiker, 571 F. Supp. 872, 879 (M.D. Pa. 1983). The district court ordered the Secretary to submit for its review proposed procedures for implementation of its mandate. Id.
Page urged the district court to order that procedures in place for OASDI waiver decisions be adopted for SSI waiver decisions. The OASDI procedures provide, inter alia, for voluntary cross-program recovery. See U.S. Department of Health and Human Services, Program Operation Manual System, § 02270.016(B)(10) (1983). On May 29, 1984, the Secretary submitted a set of proposed procedures that paralleled those used in OASDI cases. The proposal included a provision that persons subjected to SSI recoupment receive notice that they might elect to have SSI overpayments withheld from future OASDI benefits.
On June 7, 1984, Page presented the district court with objections to the Secretary's proposed procedures. Among these objections was an allegation that cross-program recoupment is unlawful under 42 U.S.C. § 407, which prohibits transfer or assignment of, or levy against, rights under the SSI program. For reasons that do not appear in the record, the Secretary made no response to Page's objections. On July 2, 1984, the district court held that cross-program recoupment is unlawful, and ordered that the pertinent part of the proposed procedural guidelines be stricken. The district court ordered that the procedures, as amended by its decision, be implemented within sixty days. Page v. Heckler, 587 F. Supp. 55 (M.D. Pa. 1984). On August 15, 1984, the Secretary filed a motion for relief from the judgment under Fed. R. Civ. P. 60(b), alleging "mistake" on the part of the district court in holding cross-program recoupment unlawful. The district court denied the motion, noting that the Secretary had waived this objection by failing to raise it prior to judgment and that the motion further delayed implementation of the new recoupment procedures, and reaffirmed its earlier holding that cross-program recoupment is unlawful. Page v. Heckler, 596 F. Supp. 1543 (M.D. Pa. 1984).
The Secretary first contends that the district court should have granted its motion for relief from judgment because Page lacked standing to challenge the cross-program recoupment provision, thus rendering void its judgment that the provision was unlawful. See Fed. R. Civ. P. 60(b)(4); Marshall v. Board of Education, 575 F.2d 417, 422 (3d Cir. 1978). Unlike the grant or denial of other motions under Rule 60(b), which may be reversed only for an abuse of discretion, determinations under 60(b)(4) are subject to plenary review. See Boughner v. Secretary of Health, Education and Welfare, 572 F.2d 976, 977 (3d Cir. 1978). The Secretary's motion in the district court, however, was made under 60(b)(1)(providing for relief due to "mistake, inadvertence, surprise or excusable neglect"), not Rule 60(b)(4), and did not advert to the issue of standing. For the reasons that follow, we decline to address that issue on this appeal from the denial of the Secretary's motion.
It is well-established that, absent "compelling circumstances," an appellate court will not reverse on grounds raised for the first time on appeal:
This prudential policy seeks to insure that litigants have every opportunity to present their evidence in the forum designed to resolve factual disputes. By requiring parties to present all their legal issues to the district court as well, we preserve the hierarchial nature of the federal courts and encourage ultimate settlement before appeal. It also prevents surprise on appeal and gives the appellate court the benefit of the legal analysis of the trial court.
Patterson v. Cuyler, 729 F.2d 925, 929 (3d Cir. 1984). We find here no compelling circumstances that would warrant departure from this prudential doctrine. Indeed, the Secretary had ample opportunity to raise this issue in the underlying action, in a direct appeal therefrom, or in its Rule 60(b) motion. As we discuss below, even now the Secretary may not be foreclosed from obligating this issue in the district court in the first instance. Sound judicial policy requires that they take that route.
Seeking to avoid this result, the Secretary correctly points out that the doctrine of standing is an aspect of the article III limitation of the federal judicial power to "cases" and "controversies." Thus, it goes to the subject matter jurisdiction of the district court and the validity of its judgment ab initio. See Warth V. Seldin, 422 U.S. 490, 498-99, 45 L. Ed. 2d 343, 95 S. Ct. 2197 (1975). Because the limited subject matter jurisdiction of the federal courts is so fundamental a concern in our system, the validity of a judgment may be attacked on this ground for the first time on appeal, and "[a]n appellate federal court must satisfy itself not only of its own jurisdiction, but also of that of the lower courts in a cause under review." See Mitchell v. Maurer, 293 U.S. 237, 244, 79 L. Ed. 338, 55 S. Ct. 162 (1934) (footnote omitted); 13 C. Wright, A. Miller & E. Cooper, Federal Practice & Procedure § 3522 (2d ed. 1984). To affirm an order or judgment not within the judicial power of the United States would be as serious a usurpation as issuing such an order in the first instance. That fact, however, does not help the Secretary here. The Secretary appeals from the order denying her Rule 60(b) motion, not from the judgment that she now contends is void. There is no doubt as to the district court's power to issue the order now before us, though -- of course -- that order may be erroneous. An order is not void merely because it is erroneous. Marshall, 575 F.2d at 422. The Secretary's contention, therefore, stands on no different footing than any other claim of error; absent compelling circumstances it must first be raised in the district court.*fn1 Because the Secretary's motion in the district court was based entirely on the ground of "mistake," we will limit our review to that issue. See Part III supra.
We do not, by so limiting our review, necessarily foreclose the Secretary from challenging the validity of the underlying judgment by a subsequent 60(b) motion, by an independent action, or by collateral attack. Indeed, its validity may even be subject to attack in a proceeding for contempt, as the collateral bar rule that prevents attack on an erroneous judgment does not insulate void judgments. United States v. United Mine Workers, 330 U.S. 258, 289-95, 91 L. Ed. 884, 67 S. Ct. 677 (1947). A void judgment remains void until such time jurisdiction is finally determined to exit, and, by virtue of the federal courts' "jurisdiction to determine jurisdiction," is elevated by its "bootstraps" to the status of a valid judgment, see United Mine Workers, 330 U.S. at 292 n.57; Vecchione v. Wohlgemuth, 426 F. Supp. 1297, 1307-1310 (E.D. Pa.) (describing the "bootstrap" principle), aff'd, 558 F.2d 150 (3d Cir.), cert. denied, 434 U.S. 943, 54 L. Ed. 2d 304, 98 S. Ct. 439 (1977), or litigation of the issue is precluded by the doctrine of res judicata. See Chicot County Drainage Dist. v. Baxter State Bank, 308 U.S. 371, 84 L. Ed. 329, 60 S. Ct. 317 (1940). Because the issue of standing was not presented to the district court, we have no occasion to decide at this time whether jurisdiction existed or whether the issue is foreclosed as res judicata.*fn2
The district court's final judgment, ordering the exclusion of cross-program recoupment from the Secretary's proposed procedures, was filed on July 2, 1984. On August 15, 1984, still within the time allowed for taking an appeal, Fed. R. App. P. 4(a), the Secretary filed her Rule 60(b) motion, contending that the district court erred as a matter of law in holding cross-program recoupment illegal. The district court denied relief, first noting that the Secretary had waived this contention by failing to respond when the district court requested briefing prior to final judgment, and also that the motion would further delay implementation of the new procedures mandated by the district court's September 2, 1983 order. Though it did not feel compelled to do so, the district court did go on, "in the interest of putting to rest further disputes," Page v. Heckler, 596 F. Supp. 1543, 1544 (M.D. Pa. 1984), to reject the Secretary's position on the merits. We believe that it was well within the district court's discretion to deny relief on the former grounds, and therefor do not reach the merits of the Secretary's position.
We note at the outset that, under well-established principles, Rule 60(b) is not a substitute for an appeal. See Martinez-McBean v. Government of the Virgin Islands, 562 F.2d 908, 911 (3d Cir. 1977). Were the rule otherwise, the time limitations on appeal set by Fed. R. App. P. 4(a), and on motions to alter or amend judgments under Fed. R. Civ. P. 59(e), would be vitiated. Accordingly, some courts have held that legal error without more cannot be corrected under Rule 60(b). See, e.g., Silk v. Sandoval, 435 F.2d 1266, 1267-68 (1st Cir.) (noting that contrary view would make Rule 60(b) coextensive with Rule 59), cert. denied, 402 U.S. 1012, 91 S. Ct. 2189, 29 L. Ed. 2d 435 (1971). Others have held that legal error may be characterized as "mistake" within the meaning of Rule 60(b)(1), but only where the motion is made, as here, within the time allowed for appeal. See, e.g., Barrier v. Beaver, 712 F.2d 231 (6th Cir. 1983); International Controls Corp. v. Vesco, 556 F.2d 665 (2d Cir. 1977), cert. denied, 434 U.S. 1014, 98 S. Ct. 730, 54 L. Ed. 2d 758 (1978). See generally, Note, Relief from Final Judgment Under Rule 60(b)(1) Due to Judicial Errors of Law, 83 Mich. L. Rev. 1571 (1985). This court has yet to decide this issue,*fn3 and we do not do so now. Regardless of whether it would have been within the district court's discretion to grant relief under 60(b)(1) for legal error, it was certainly no abuse of discretion to deny it under the circumstances presented.
In denying Rule 60(b) relief, the district court noted:
The Secretary . . . had ample opportunity to oppose the modifications suggested by plaintiff and did not do so timely. She now seeks to bring the cross recovery matter to our attention by use of a motion after failing to comply with a briefing schedule set by court order. For us to allow such a practice is to invite repetition of attempted sidestepping of orderly procedure. This we decline to do. . . .
Under our local rules, the Secretary's failure to file timely opposition may result in her being deemed unopposed to the modifications suggested by plaintiff. Though this stance may seem harsh, it is no more inequitable than permitting a party to do nothing initially and then later assert a position that could have and should have been raised ...