Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Olson v. Social Security Administration

United States District Court, D. North Dakota

March 3, 2017

Kevin L. Olson, Plaintiff,
v.
Social Security Administration, Nancy A. Berryhill, Acting Commissioner, and Department of the Treasury, Steven T. Mnuchin, Secretary of the Treasury, Defendants.

          REPORT AND RECOMMENDATION

          Alice R. Senechal United States Magistrate Judge.

         Plaintiff Kevin L. Olson (Olson) challenges the constitutionality of the Affordable Care Act (ACA), the Federal Insurance Contributions Act (FICA), and the Self-Employment Contributions Act (SECA). He also challenges the religious exemptions of those Acts. Olson seeks several forms of relief: (1) an injunction against payment of the taxes and penalties imposed under those statutes, (2) a declaratory judgment that he qualifies for the religious exemptions under those statutes, (3) a declaratory judgment that those statutes are unconstitutional, and (4) a refund of taxes and penalties he has paid pursuant to those statutes.

         As defendants, Olson named two federal entities and the heads of both entities. The defendants have moved to substitute the United States as the sole defendant, and to dismiss the complaint (1) for lack of subject matter jurisdiction, (2) alternatively, for failure to state a claim upon which relief can be granted, or (3) alternatively, to dismiss any claims against certain individuals and governmental entities for lack of personal jurisdiction and insufficient service of process.

         Because Olson is proceeding pro se, his pleadings are to be liberally construed. See Erickson v. Pardus, 551 U.S. 89, 93 (2007). Thus, in considering the pending motions, this court has considered all of the memoranda Olson has filed, [1] despite memoranda which far exceed the 40-page limitation of Civil Local Rule 7.1(A)(1)[2] and despite a surreply having been filed without pre-filing permission under Civil Local Rule 7.1(C). But, the court now advises Olson that any documents filed in the future must comply with all applicable local rules. Further, the court will impose a page limitation on any objection either side may file to this Report and Recommendation.

         I. Summary

         In part, this case involves issues regarding standing, sovereign immunity, and ripeness. For the reasons discussed below, the United States should be substituted as the sole defendant, and the district judge should conclude that the court lacks subject matter jurisdiction over all claims except those for injunctive and declaratory relief under the ACA. But, the district judge should further conclude that Olson has not stated plausible claims which would entitle him to any relief under the ACA. The defendants' motion to dismiss for lack of personal jurisdiction and insufficient service of process, or alternatively for failure to state a claim against other governmental agencies and employees, should be granted. The district judge should not consider any claims Olson raised subsequent to the complaint and the supplement to the complaint, or alternatively, the district judge should conclude that the claims not pled in the complaint or the supplement to the complaint fail to meet plausibility requirements. In summary, the district judge should dismiss Olson's complaint in its entirety.

         II. Background

         The FICA establishes a system under which employers are required to withhold Social Security and Medicare taxes from employees' earnings, and employers are required to transfer those withheld earnings to the Internal Revenue Service (IRS). The SECA requires self-employed persons to pay analogous Social Security and Medicare taxes directly to the IRS. Though Olson's complaint and briefs describe him as self-employed, those documents reference FICA rather than SECA. In their briefing, the defendants referenced the two statutes together, i.e., FICA/SECA, and this court has used the same method of reference.[3]

         Both FICA and SECA exempt members of certain religious sects whose tenets include conscientious objections to receipt of insurance benefits:

Any individual may file an application (in such form and manner, and with such official, as may be prescribed by regulations under this chapter) for an exemption from the tax imposed by this chapter if he [or she] is a member of a recognized religious sect or division thereof and is an adherent of established tenets or teachings of such sect or division by reason of which he [or she] is conscientiously opposed to acceptance of the benefits of any private or public insurance which makes payments in the event of death, disability, old-age, or retirement or makes payments toward the cost of, or provides services for, medical care (including the benefits of any insurance system established by the Social Security Act).

26 U.S.C. § 1402(g). The statute goes on to detail requirements of the religious exemption: evidence of membership in and adherence to the tenets or teachings of a religious sect, waiver of all benefits under the Social Security Act (SSA), a finding that the religious sect has tenets or teachings in opposition to acceptance of any insurance benefits, a finding that the religious sect has made reasonable provision for its dependent members for a substantial period of time, a finding that the religious sect has been in existence since December 31, 1950, and no benefits having become payable to the applicant before the applicant filed the SSA benefit waiver. Id.

         Since 2014, the ACA has required that individuals either be covered under a qualified health insurance plan or make a “shared responsibility payment (SRP)” when filing an annual tax return. 26 U.S.C. § 5000A. But, the ACA includes a religious exemption from that requirement. The ACA's religious exemption refers back to the FICA/SECA religious exemption:

         [“Applicable individual”] shall not include any individual for any month if such individual has in effect an exemption under [42 U.S.C. § 1311(d)(4)(H)] of the [ACA] which certifies that such individual is-

(i) a member of a recognized religious sect or division thereof which is described in section 1402(g)(1) [the FICA/SECA religious exemption], and
(ii) an adherent of established tenets or teachings of such sect or division as described in such section.

Id. § 5000A(d)(2). Thus, the requirements for application of the religious exemption to the ACA are analogous to those of the religious exemption to the FICA/SECA.

         Olson describes himself as self-employed since the late 1990s, as having renounced his membership in organized religion in 2002, and as having canceled all of his private insurance in 2005-2006. (Doc. #1, p. 2). Olson states, “My beliefs in GOD are one on ONE, and there is no religious tenets or requirements, it's all up to each individual as GOD requires, ‘You shall have no other gods before or besides ME.'” (Doc. #21-10, p. 6). Olson contends that the ACA and the FICA/SECA violate his right to freely practice his sincere beliefs, violate separation of church and state by “establishing a specific structure of religious tenets of compliance, ” violate his rights to self-determination, and “use[] coercion of loss of Medicare and Social Security benefits” if a religious exemption is granted. (Doc. #1, p. 2). Olson further asserts that the statutes discriminate against him based on age, construing section 1402(g)'s requirement that a religious sect have been in existence since 1950 as discriminating against any person born after that date. Id.

         Olson's complaint states that he has been “seeking resolution” of his objection to the religious exemptions since 2014. An attachment to Olson's responsive brief details contacts he made with members of North Dakota's Congressional delegation, with the former President of the United States, and with other elected officials prior to filing this lawsuit. (Doc. #21-10). The supplement to Olson's complaint describes a telephone call Olson made to the “Taxpayer Advocate Service, Tax Law Section” and also describes documents Olson submitted to the Federal Bureau of Investigation (FBI) to request initiation of criminal action against various government officials for alleged violations of his civil rights. (Doc. #14, pp. 5-6). (See also Doc. #21-15) (copy of complaint Olson submitted to the FBI). Olson contends that in March 2016, the ACA required him to either “[p]urchase health insurance in violation of [his] religious beliefs and practices or pay the illegal tax.”[4] (Doc. #14, p. 6).

         III. Motion to Substitute United States as Sole Defendant

         The complaint names the Social Security Administration, the Department of the Treasury, and the heads of each of those agencies as defendants.[5] Though not named as parties in the caption of the complaint, the request for relief in the original complaint includes requests for injunctive relief against the United States Congress and the President of the United States (present or future). (Doc. #1, p. 3). The supplement to the complaint includes a request that the following be added as parties, “the Department of Justice [DOJ] as a whole with additional specific application to [former] Attorney General Lynch and the Federal Bureau of Investigation as a whole with additional specific application to Mr. James B. Comey, Director of the FBI, and Mr. Richard T. Thornton, Special Agent in Charge, FBI Minneapolis Division.” (Doc. #14, p. 11).

         It is the defendants' position that the United States is the real party defendant and should be substituted for all of the currently named defendants.[6] In support of their position, the defendants cite Dugan v. Rank, which held that a suit is considered to be against the sovereign, i.e., the United States, “if the judgment sought would expend itself on the public treasury or domain, or interfere with the public administration, or if the effect of the judgment would be to restrain the Government from acting, or to compel it to act.” 372 U.S. 609, 620 (1963) (citations and quotation marks omitted); see also Coleman v. Espy, 986 F.2d 1184, 1189 (8th Cir. 1993). Additionally, the Department of the Treasury is not an entity that is subject to suit, because Congress has not authorized that department to be sued “eo nomine.” Gunnick v. U.S. Gov't, No. 08-781, 2008 WL 3166308, at *3 (D. Minn. Aug. 4, 2008).

         Olson objects to removing the individual department heads as defendants and to adding the United States as a defendant. (Doc. #14, p. 2; Doc. #21-1, p. 19). But, none of the constitutional or statutory authority which Olson cites in support of that position contradicts the law upon which the defendants rely and which is binding on the district courts. Therefore, the United States should be substituted as the sole defendant.

         IV. Motion to Dismiss for Lack of Subject Matter Jurisdiction

         The defendants contend that the court lacks subject matter jurisdiction for three reasons-that Olson does not have standing because he did not follow the established procedure to request the religious exemptions which he challenges, that the United States has not waived its sovereign immunity as to several claims which Olson has asserted, and that Olson's claims are not ripe for judicial review. Additionally, the defendants contend that this court lacks jurisdiction to the extent Olson alleges any claims pursuant to the Age Discrimination Act (ADA).

         A. Standing

         It is, of course, well-established, that a plaintiff must demonstrate three factors to have federal court standing: (1) an actual or imminent, and concrete and particularized injury in fact, (2) a causal relationship between the injury and the challenged conduct, and (3) a likelihood that the injury would be redressed by a favorable decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). When, as does Olson, a plaintiff challenges an action taken by one of the other branches of the federal government as unconstitutional, the standing inquiry is to be “especially rigorous.” Raines v. Byrd, 521 U.S. 811, 819-20 (1997).

         Olson's complaint and supplement allege several claims, and it is necessary to separately analyze whether he has standing to bring each of those claims. First, he asserts that the ACA and the FICA/SECA violate the First Amendment's Free Exercise Clause. (Doc. #1, p. 2; Doc. #14, pp. 2-4). He states that purchasing health insurance violates his religious beliefs and practices, (Doc. #14, p. 6), and that instead of purchasing health insurance in violation of those beliefs, he paid the ACA's SRP, id. at 7. He describes the SRP as an “illegal and unconstitutional tax”on his religious activities, and he describes the ACA as an “overreach of power.” Id. at 3, 14; see also id. at 6. He further states that he does not believe in life insurance or retirement insurance but that the government “forced” those upon him through the SSA.[7] Id. at 6.

         Second, Olson asserts that the ACA's religious exemption violates the First Amendment's Establishment Clause, since it “favors one religion over another” and is “excessive[ly] entangle[d] with religion.” Id. at 3, 15. He states that he “has no issue paying taxes that have no association of any kind with religion.” Id. at 7.

         Third, although Olson contends that the ACA and FICA/SECA religious exemptions are unconstitutional, he seeks a religious exemption from the SRP and from FICA/SECA taxes. Id. at 4-5, 16. He requests, however, that his exemptions not be conditioned on the statutorily required waiver of Medicare and Social Security benefits, since he has paid FICA/SECA taxes “for years.” (Doc. #1, p. 2).

         On one hand, Olson argues that the religious exemptions are unconstitutional and he does not assert an entitlement to those exemptions. On the other hand, he argues the exemptions are unconstitutional but asserts an entitlement to the exemptions without the required waiver of Medicare and Social Security benefits. The court separately addresses Olafson's standing to bring claims not asserting an entitlement to the religious exemptions and his standing to bring claims asserting entitlement to the religious exemptions.

         1. Claims Not Premised on Assertion of Entitlement to the Religious Exemptions

         The court has identified no Eighth Circuit cases addressing standing to challenge the religious exemptions at issue and so looks to cases from other circuits. In a DC Circuit case, the plaintiff argued the ACA's religious exemption unconstitutionally favored faith over nonbelief because it “allow[s] individuals to avoid both paying for insurance and paying the penalty if they abjure insurance for religious reasons, but not if they abjure it for secular reasons.” Cutler v. U.S. Dep't of Health & Human Servs., 797 F.3d 1173, 1180 (D.C. Cir. 2015). The DC Circuit found the plaintiff had adequately alleged an injury in fact “to his constitutional right not to be treated differently-not to be penalized for lacking insurance-just because he is not religiously motivated.” Id. The DC Circuit further found that the plaintiff was “explicit that he [was] injured by being forced to choose between paying for compliant insurance and paying a penalty. That is the type of direct and concrete injury that satisfies Article III, regardless of how many people face the same financial choice.” Id. (citation omitted).

         Olson's claim is analogous. He argues that the ACA's religious exemption favors members of organized religions over those who hold similar religious beliefs but who are not part of an organized religious sect, because it allows those who qualify for the religious exemption to avoid both paying for insurance and paying the SRP if they renounce insurance, but not if they do so for personal religious reasons unrelated to membership in an organized religious sect. Also, similarly to the Cutler plaintiff, Olson contends that he was injured by being forced to choose between abandoning his belief system (by paying for insurance) and paying an SRP. Thus, it appears that Olson has alleged an actual injury with regard to those claims which are not premised on an assertion of entitlement to the religious exemption. Additionally, he has sufficiently alleged that his injury stems from the ACA and that the injury could be redressed if the court were to grant Olson the relief he has requested. The district judge should therefore conclude that Olson has standing to bring claims not asserting an entitlement to the religious exemption.

         Olson's arguments on this issue center on the ACA's SRP. But, he also raises claims not premised on an entitlement to the FICA/SECA religious exemption. As discussed above, Olson alleges that he is treated differently than others who, like him, abjure insurance for religious reasons. Although it is contrary to his religious beliefs, Olson is required to pay, and he has paid, FICA/SECA taxes designated for insurance benefits. That alleged injury stems directly from the FICA/SECA, and it could be redressed if this court were to grant the relief Olson requests. So, as with his claims not asserting an entitlement to the ACA religious exemption, the district judge should also conclude that Olson has standing to bring claims not asserting an entitlement to the FICA/SECA religious exemption.

         2. Challenges Premised on Assertion of Entitlement to the Religious Exemptions

         The defendants argue that, because he has not personally claimed and been denied the ACA and FICA/SECA religious exemptions, Olson has not pled an “injury in fact” and so does not have standing to challenge those exemptions. That argument, however, would apply only to Olson's assertion of an entitlement to the religious exemptions.

         The parties do not cite, and this court's research has not identified, Eighth Circuit cases addressing the question of whether one must apply for and be denied the religious exemptions in order to have standing to challenge those exemptions. The defendants rely on a Seventh Circuit case, an Establishment Clause challenge to a statute which exempts housing benefits provided to a “minister of the gospel” from inclusion in gross income for purposes of federal income taxation. Freedom From Religion Found., Inc. v. Lew, 773 F.3d 815, 821 (7th Cir. 2014) (hereinafter “FFRF”). In FFRF, the plaintiffs received a housing allowance as a portion of their salaries from the foundation-an organization of atheists and agnostics-and the defendant questioned their standing to challenge the ministerial housing exemption.

         As the Seventh Circuit discussed, an injury sufficient to demonstrate standing may be “particularly elusive” in the context of an Establishment Clause challenge. Id. at 819. But there are several recognized paths to standing to bring an Establishment Clause challenge; the FFRF plaintiffs asserted standing based on having “incurred a cost or been denied a benefit on account of their religion.” Id. at 820 (quoting Ariz. Christian Sch. Tuition Org. v. Winn, 563 U.S. 125, 130 (2011)).

         The Seventh Circuit found that the FFRF plaintiffs had no standing because they had not claimed and been denied the housing allowance exemption which they sought to challenge:

The plaintiffs here argue that they have standing because they were denied a benefit (a tax exemption for their employer-provided housing allowance) that is conditioned on religious affiliation. This argument fails, however, for a simple reason: the plaintiffs were never denied the parsonage exemption because they never asked for it. Without a request, there can be no denial. And absent any personal denial of a benefit, the plaintiffs' claim amounts to nothing more than a generalized grievance about [the exemption's] unconstitutionality, which does not support standing. . . . In other words, the mere fact that the tax code conditions the availability of a tax exemption on religious affiliation does not give a plaintiff ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.