“The claimant may rebut a presumption based 19 on earnings with evidence of his inability to be self employed or to perform the job well, without 20 special assistance, or for only brief periods of time.”
How later courts described this case
- “The claimant may rebut a presumption based 19 on earnings with evidence of his inability to be self employed or to perform the job well, without 20 special assistance, or for only brief periods of time.”
Written by the judges who cited it.
The opinion
1
2 UNITED STATES DISTRICT COURT
3 NORTHERN DISTRICT OF CALIFORNIA
4
5 T.W., Case No. 21-cv-07822-SVK
6 Plaintiff,
ORDER ON CROSS-MOTIONS FOR
7 v. SUMMARY JUDGMENT
8 COMMISSIONER OF SOCIAL Re: Dkt. Nos. 38, 42
SECURITY,
9
Defendant.
10
11 I. INTRODUCTION
12 This dispute comes before the Court in an unusual procedural posture. In short, at the time
13 of the administrative hearing on Plaintiff’s application for Social Security disability benefits, the
14 Administrative Law Judge (“ALJ”) concluded upon review of the record that Plaintiff’s work
15 history did not reflect the requisite period of time without earnings to qualify for benefits. This
16 concern led to discussions among the ALJ, counsel, and Plaintiff pursuant to which Plaintiff
17 withdrew his request for a hearing and, in light of the withdrawal, the ALJ dismissed the claim.
18 Plaintiff now complains, among other issues, that the ALJ’s conclusion regarding his earnings was
19 based on a mistake of fact. This Court, upon a review of the record that necessarily includes the
20 hearing transcript, finds that the record regarding Plaintiff’s earnings is at best ambiguous and
21 therefore remands this action for further proceedings.
22 II. RELEVANT BACKGROUND
23 Plaintiff filed applications for Disability Insurance Benefits (“DIB”) and Supplemental
24 Security Income (“SSI”) under Titles II and XVI of the Social Security Act in October 2016, alleging
25 that he became disabled on December 1, 2007. Dkt. 21 - Certified Administrative Record (“AR”) – at
26 AR 178-179, 180-85. After the Social Security Administration denied the claims both initially and
27 upon reconsideration, an ALJ convened a hearing on February 7, 2018. AR 68-81, 126-31, 134-40.
1 issued an order on February 14, 2018 dismissing Plaintiff’s request for a hearing. AR 64-67. Plaintiff
2 filed a request for Appeals Council review of the ALJ’s decision. AR 61. The Appeals Council
3 denied Plaintiff’s request for review in August 2021. AR 1-2. In this case, Plaintiff seeks judicial
4 review of the Defendant Commissioner’s decision under 42 U.S.C. § 405(g). The Parties have
5 consented to the jurisdiction of a magistrate judge. Dkt. 11, 13.
6 After the Commissioner filed the AR, Plaintiff filed a petition arguing that the
administrative record was incomplete. Dkt. 28-29. The Court directed that Plaintiff’s petition
7
would be treated as a motion to supplement the administrative record and set a briefing schedule.
8
Dkt. 30. In reviewing the briefing on Plaintiff’s motion, the Court ordered additional briefing on
9
the issue of whether it has subject matter jurisdiction over this case. Dkt. 32. Following the
10
additional briefing, the Court issued an order in which it concluded that this Court has subject
11
matter jurisdiction, denied Plaintiff’s motion to supplement the AR, and set a schedule for further
12
proceedings. Dkt. 36.
13
Now before the Court are the Parties’ cross-motions for summary judgment. Dkt. 38
14
(Plaintiff’s motion for summary judgment);1 Dkt. 42 (Defendant’s cross-motion for summary
15
judgment). The cross-motions for summary judgment are now ready for decision without oral
16
argument. See Civ. L.R. 16-5.
17
III. ISSUE FOR REVIEW
18
1. Did the ALJ properly dismiss Plaintiff’s request for a hearing?
19
IV. STANDARD OF REVIEW
20
This Court is authorized to review the Commissioner’s decision to deny Social Security
21
benefits, but “a federal court’s review of Social Security determinations is quite limited.” Brown-
22
Hunter v. Colvin, 806 F.3d 487, 492 (9th Cir. 2015); see also 42 U.S.C. § 405(g). Federal courts
23
“leave it to the ALJ to determine credibility, resolve conflicts in the testimony, and resolve
24
ambiguities in the record.” Brown-Hunter, 806 F.3d at 492 (internal quotation marks and citation
25
omitted).
26
27
1 The Commissioner’s decision will be disturbed only if it is not supported by substantial
2 evidence or if it is based on the application of improper legal standards. Id. “Under the
3 substantial-evidence standard, a court looks to an existing administrative record and asks whether
4 it contains sufficient evidence to support the agency’s factual determinations,” and this threshold
5 is “not high.” Biestek v. Berryhill, -- U.S. --, 139 S. Ct. 1148, 1154 (2019) (internal quotation
6 marks, citation, and alteration omitted); see also Rounds v. Comm’r of Soc. Sec. Admin., 807 F.3d
7 996, 1002 (9th Cir. 2015) (“Substantial evidence” means more than a mere scintilla but less than a
8 preponderance; it is “such relevant evidence as a reasonable mind might accept as adequate to
9 support a conclusion”) (internal quotation marks and citations omitted). The Court “must consider
10 the evidence as a whole, weighing both the evidence that supports and the evidence that detracts
11 from the Commissioner’s conclusion.” Rounds, 807 F.3d at 1002 (internal quotation marks and
12 citation omitted). Where the evidence is susceptible to more than one rational interpretation, the
13 Court must uphold the ALJ’s findings if supported by inferences reasonably drawn from the
14 record. Id.
15 Even if the ALJ commits legal error, the ALJ’s decision will be upheld if the error is
16 harmless. Brown-Hunter, 806 F.3d at 492. But “[a] reviewing court may not make independent
17 findings based on the evidence before the ALJ to conclude that the ALJ’s error was harmless” and
18 is instead “constrained to review the reasons the ALJ asserts.” Id. (internal quotation marks and
19 citation omitted).
20 V. DISCUSSION
21 A. Plaintiff’s Hearing
22 The ALJ in this case dismissed Plaintiff’s request for a hearing on the basis that Plaintiff,
23 through his representative, asked to withdraw the request. AR 67. The ALJ’s order of dismissal
24 stated:
25
The record in this action shows that the claimant was fully advised of the effects of
26 this action, including dismissal of the request for hearing with the result that the
reconsideration determination would remain in effect. The undersigned is satisfied
27 that the claimant understands the effects of his withdrawal of the request for
hearing.
1 Id. As a result of the dismissal of Plaintiff’s request for a hearing, the reconsideration
2 determination dated February 16, 2017, which concluded that Plaintiff was not eligible for
3 benefits, remained in effect. Id.
4 The ALJ’s order of dismissal facially complies with Social Security regulations which, as
5 discussed in Section V.B. below, permit an ALJ to dismiss a claimant’s request for hearing upon
6 request of the claimant. However, the ALJ’s dismissal order must be viewed in the context of the
7 discussion initiated by the ALJ at the hearing that prompted claimant to ask to withdraw his
8 request for a hearing, which related to the issue of whether Plaintiff had engaged in substantial
9 gainful activity (“SGA”) that would preclude him from receiving Social Security benefits.
10 After Plaintiff was sworn in, the ALJ questioned him as follows:
11
Q: Okay. Now are you still working?
12
A: Yes.
13
Q: Okay. And are you working at Knowledge Learning
14 Corporation?
15
A: Yeah, still there.
16 AR 72. Immediately following this exchange, the ALJ introduced exhibits into the record, then
17 stated as follows:
18 ALJ: Now, if you could look at 6D, please, and 7D, two
earnings. You will see that the records are showing SGA earnings
19 as far as we go. We go up to the first quarter of 2017.
[Plaintiff] just testified that he’s still working, so I do not
20 have 12 months of non-SGA earnings or --
21 AR 72-73. Plaintiff’s attorney then stated:
22
ATTY: That’s correct, Your Honor. I -- in my review of the
23 file just recently, I noticed that, and --
AR 73.
24
The ALJ then addressed Plaintiff as follows:
25
26
Q: The […] issues is that under the law
27 […]
condition or not, because SGA is what we -- is our shorthand for
1
substantial gainful activity. It’s an amount . It changes every
2 year. The Commissioner determines how much it is. And like, for
example, this year, it is $1,180 a month. If you earn that much,
3 you’re not entitled to benefits, period. As I said, it doesn’t
matter what your physical condition is or your mental condition,
4 it’s just you're not entitled to benefits. And the last -- as I
said, what I -- my last one is the first quarter of 2017, you
5
earned $8,629. I’m showing SGA wages the entire period: 2016;
6 2015. So I just can’t find you disabled and qualified for benefits
with that. I applaud you for working even though you have a
7 seizure disorder and problems, but we have to have a period where
you’re not earning money before we can determine benefits.
8
A: Okay . How long should that --
9
10 Q: Generally, it’s 12 months.
Id.
11
The ALJ asked Plaintiff’s counsel if he had talked to Plaintiff “about just withdrawing his
12
application, so he doesn’t have a denial on the record?” AR 74. Plaintiff’s counsel indicated that
13
he had not discussed the issue with Plaintiff but asked to speak with him for a moment. Id. After
14
an off-the-record discussion, Plaintiff’s counsel stated that he had spoken to Plaintiff “and he
15
would make a motion to withdraw the claim at this point.” AR 75. The ALJ explained to Plaintiff
16
that “the previous denial from the reconsideration folks,” which stated he was not entitled to
17
benefits, “is left in effect.” Id.
18
Plaintiff then asked to speak and explained that he had a bike accident in 2016 following a
19
seizure. AR 76. The ALJ and Plaintiff then had the following exchange:
20
21 ALJ: Yeah, I can’t go against the law.
22 CLMT: Yeah. Yeah, exactly. I understand that, too.
23
ALJ: And that’s it’s just -- and in fact, even if I did,
24 if I tried to approve it, the paying benefits folks, as soon as
they got it, would call up the office and say, hey, he’s got all
25 these earnings, you know?
26 CLMT: Yeah.
27
ALJ: What is it’s just -- I mean , this part of it is
1
CLMT: I know. I understand.
2
AR 76-77. After Plaintiff explained that “it’s sort of a crunch between my job and the doctors”
3
and that he has to “leave work to visit the doctor constantly” and has to “miss work constantly,”
4
the ALJ stated that if a time came when Plaintiff could not work “there is no reason you can’t
5
reapply for benefits” and “by withdrawing your application, there is absolutely no effect.” AR 77.
6
The ALJ went on to comment that it was “[v]ery weird” that no one had mentioned the SGA issue
7
to Plaintiff earlier “because usually, at the field office, they pull up the earnings statement while
8
you’re there, and they show it to you.” AR 79.
9
Near the end of the hearing, the ALJ stated that she accepted Plaintiff’s motion to
10
withdraw the application, which “will leave in effect the finding that you’re not disabled at this
11
time [and] [y]ou’re not entitled to benefits.” AR 80. The ALJ stated that “if I issued a Decision,
12
then next time you filed an application, my Decision would be there on the record, and then there
13
are some legal hurdles you have to go through to – so that it doesn’t apply indefinitely into the
14
future and things, so this is cleaner … since there’s nothing that can be done, you know. This
15
will – this leaves you a blank slate for the future.” Id.
16
17 B. Statutory framework behind an ALJ hearing
To evaluate the ALJ’s dismissal of Plaintiff’s request for a hearing in this case, it is
18
necessary to review the relevant statutory framework. A claimant’s applications for DIB and SSI
19
benefits are initially decided by a state disability examiner. See 20 C.F.R. § 404.900; 20 C.F.R.
20
§ 416.1400.2 If the agency denies the claim initially, the claimant may request reconsideration of
21
the denial by a different disability examiner. 20 C.F.R. § 404.900(a)(2). If the agency denies the
22
claim at reconsideration, the claimant may request a hearing, and the case is sent to an ALJ who
23
works for the Social Security Administration. 20 C.F.R. § 404.900(a)(3). The ALJ issues a
24
written decision following the hearing. Id. If the ALJ denies the claim, the claimant may request
25
26
2 The DIB and SSI regulations relevant to this case are virtually identical, and therefore only the
27
DIB regulations are cited in the remainder of this order. Parallel SSI regulations are found in 20
1 review by the Appeals Council. 20 C.F.R. § 404.900(a)(4). If the Appeals Council denies review
2 of the ALJ’s decision, that constitutes the final decision of the Commissioner of Social Security,
3 and within 60 days the claimant can file a civil action in United States District Court requesting
4 review of the final decision. 42 U.S.C. § 405(g). A prerequisite to bringing such a civil action is
5 that the Commissioner’s final decision be made following an ALJ hearing. Id.
6 An ALJ may dismiss a claimant’s request for a hearing under certain circumstances
7 specified in the Social Security regulations, including where “[a]t any time before notice of the
8 hearing decision is mailed, [the party] that requested the hearing ask[s] to withdraw the request.”
9 20 C.F.R. § 404.957(a). Such a withdrawal request “may be submitted in writing to the
10 administrative law judge or made orally at the hearing.” Id. The Social Security Administration’s
11 Hearings, Appeals and Litigation Law Manual (“HALLEX”), which sets forth “guiding principles
12 and procedures” to agency staff including ALJs, requires that before an ALJ can dismiss a request
13 for a hearing following a claimant’s voluntarily withdrawal, the “record must show” that “the
14 claimant understands the effects of the withdrawal (i.e., that the request for hearing will be
15 dismissed and the dismissal will be binding unless it is vacated)” and “the ALJ determines that
16 dismissal is appropriate.” HALLEX I-1-0-3, I-2-4-20.3
17 C. SGA Legal Framework
18 To interpret the discussion at the hearing that led to the dismissal of this case, which is set
19 forth in Section V.A. above, the Court also considers the rules concerning SGA as they relate to
20 claims for Social Security benefits. According to the Social Security Act, a disability means an
21 “inability to engage in any substantial gainful activity by reason of any medically determinable
22 physical or mental impairment which can be expected to result in death or which has lasted or can
23 be expected to last for a continuous period of not less than 12 months.” 42 U.S.C. § 423(d)(1)(A).
24 It follows that a claimant who is engaged in SGA cannot be found disabled, no matter what his
25 medical condition, age, education, or work experience. 20 C.F.R. § 404.1520(b). The activity
26
27
3 HALLEX “does not carry the force of law” and is “not binding on the agency.” Roberts v.
1 must be both substantial and gainful. “Substantial work activity is work activity that involves
2 doing significant physical or mental activities,” even if it that work is done on a part-time basis or
3 with reduced wages or responsibilities than the individual’s former work. 20 C.F.R.
4 § 404.1572(a); Katz v. Sec'y of Health & Human Servs., 972 F.2d 290, 292 (9th Cir. 1992) (citing
5 Keyes v. Sullivan, 894 F.2d 1053, 1056 (9th Cir. 1990)). “Gainful work activity is work activity
6 that [a claimant] do[es] for pay or profit.” 20 C.F.R. § 404.1572(b). “Work activity is gainful if it
7 is the kind of work usually done for pay or profit, whether or not a profit is realized.” Id.; see also
8 Corrao v. Shalala, 20 F.3d 943, 946 (9th Cir. 1994).
9 A presumption of SGA arises if a claimant earns, on average, more than the amounts
10 specified in the Social Security guidelines. Keyes, 894 F.3d at 1056; see also 20 C.F.R.
11 § 404.1574(a)(1), (b)(1) (“Generally, in evaluating your work activity for substantial gainful
12 activity purposes, our primary consideration will be the earnings you derive from the work
13 activity.”). However, “[t]he mere existence of earnings over the statutory minimum is not
14 dispositive.” Keyes, 894 F.2d at 1056. Instead, “[t]he presumption is rebuttable by the claimant.”
15 Corrao, 20 F.3d at 948. Factors to be considered in determining whether the presumption is
16 rebutted include “the responsibilities and skills required to perform the work, the amount of time
17 the individual spends working, the quality of the individual's work, [and] special working
18 conditions.” Id.; see also Keyes, 894 F.2d at 1056 (“The claimant may rebut a presumption based
19 on earnings with evidence of his inability to be self employed or to perform the job well, without
20 special assistance, or for only brief periods of time.”); 20 C.F.R. § 404.1574(a)(2), (3) (in
21 determining whether the claimant has done SGA, the agency does not consider “any income that is
22 not directly related to [the claimant’s] productivity,” such as where the work is being subsidized or
23 the claimant is working in a sheltered or special environment).
24 D. Review of the Record
25 Although Plaintiff agreed following the discussion of SGA at the hearing to withdraw his
26 request for a hearing, he now argues that the ALJ’s conclusion about his SGA was based on a
27 mistake of fact. See Dkt. 38 at 13. Specifically, Plaintiff argues that his average monthly income
1 As indicated above, the hearing at which the ALJ raised the issue of Plaintiff’s SGA took
2 place on February 7, 2018. AR 68. The ALJ stated that the records showed SGA earnings “up to
3 the first quarter of 2017” and that Plaintiff “just testified that he’s still working, so I don’t have 12
4 months of non-SGA earnings.” AR 72-73. However, the record concerning whether Plaintiff had
5 SGA in the 12 months before the hearing is unclear. Supporting the ALJ’s conclusion regarding
6 Plaintiff’s SGA is his testimony at the hearing that he was “still” working for the same employer,
7 Knowledge Learning Corporation. AR 72. The ALJ did not question Plaintiff and there is no
8 other evidence in the hearing transcript of the amount of work he was performing or the wages he
9 had received. At the hearing, the ALJ referred to Exhibits 6D and 7D, which are wage and
10 earnings reports. See AR 208-216. The ALJ’s reference to records showing SGA earnings in the
11 first quarter of 2017 (see AR 72) appears to be a reference to a report dated September 19, 2017
12 that states that Plaintiff was paid wages of $8,629 in the first quarter of 2017. AR 208. However,
13 the same report explains that as used in the report “QUARTER MEANS WHEN THE
14 PAYMENTS WERE MADE.” AR 209. Thus, this single entry does not establish that the wages
15 Plaintiff received in the first quarter of 2017 were for work performed in that quarter. Moreover,
16 even if Plaintiff had performed some work in the first quarter of 2017, that would not rule out the
17 possibility that the work was performed early in that quarter and that Plaintiff nevertheless had 12
18 months without SGA before the February 7, 2018 ALJ hearing. In addition, several portions of
19 the AR contradict the wage report for the first quarter of 2017 because they indicate that Plaintiff
20 did not receive any income in 2017. See AR 198 (Kindercare Education LLC income of “NONE”
21 for 2017), AR 205 (same), AR 199 (no entry for 2017 in list of annual income from Kindercare),
22 AR 207(wage earnings of “.00” for 2017); see also AR 186 (earnings report for “Yrs:2002-2017”
23 with no entry for 2017). A wage report in the record also indicates that the wages paid to Plaintiff
24 ////
25 ////
26 ////
27 ////
1 dropped from $7,734 in the third quarter of 2016 to $5,784 in the fourth quarter of 2016. AR
2 208.4 Plaintiff stated at the hearing that he had a bicycle accident in 2016 and at the time of the
3 hearing in February 2018 was missing work frequently. AR 77. Therefore, even if Plaintiff was
4 still working in the same job as of February 2018, it does not necessarily follow that he was
5 earning income at the same level as previous years.
6 Accordingly, from the existing record it is unclear whether Plaintiff’s earnings in the 12
7 month period before the February 7, 2018 ALJ hearing reached the limit that would give rise to a
8 presumption that Plaintiff had engaged in SGA.
9 Moreover, as indicated above, the record is silent on any facts that might have rebutted the
10 presumption of SGA. Although normally the claimant bears the burden of rebutting the SGA
11 presumption, in the procedural posture of this case Plaintiff cannot be faulted for the absence of
12 rebuttal evidence in the record. The agency did not cite SGA as a ground for denying Plaintiff’s
13 claim either originally or on reconsideration. See AR 126-140. Indeed, the ALJ commented at the
14 hearing that it was “[v]ery weird” that no one from the agency had mentioned the SGA issue to
15 Plaintiff earlier. AR 79. In addition, although a claimant’s income may establish a presumption
16 that he is engaged in SGA, “these guidelines are only a presumption and do not relieve an ALJ of
17 the duty to develop the record fully and fairly.” Corrao, 20 F.3d at 948. The ALJ did not fulfill
18 that duty here.
19 VI. CONCLUSION
20 Based on the facts of this case, the Court cannot conclude that the ALJ was correct in her
21 statements to Plaintiff that “we can’t pay benefits” because he had engaged in SGA (see AR 73),
22 which is what prompted Plaintiff to agree to dismissal of his request for a hearing. Accordingly,
23 the Court GRANTS Plaintiff’s motion for summary judgment and DENIES the Commissioner’s
24 cross-motion for summary judgment on this issue. This matter is remanded for further
25
26 4 Plaintiff filed a declaration with his summary judgment reply brief in which he makes certain
statements about his income in 2017. See Dkt. 43-1 ¶¶ 53-54. However, because this declaration
27 was not filed with Plaintiff’s original summary judgment motion, the Court does not consider the
1 proceedings. The Court does not reach the other issues raised by Plaintiff in his motion for
2 summary judgment.
3 SO ORDERED.
4 || Dated: September 7, 2023
5
Suesien var
4 SUSAN VAN KEULEN
United States Magistrate Judge
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