Petition for Writ of Certiorari — Barnhart v. Walton

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(1) Supreme Court, U.S.

FILED

001937 JUN 27 2002

No.

In the Supreme Court of fhe United States

LARRY G. MASSANARI, ACTING COMMISSIONER

OF SOCIAL SECURITY, PETITIONER

Vv.

CLEVELAND B. WALTON

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

THEODORE B. OLSON

Solicitor General

Counsel of Record

STUART E. SCHIFFER

Acting Assistant Attorney

General

EDWIN S. KNEEDLER

Deputy Solicitor General

JEFFREY A. LAMKEN

Assistant to the Solicitor

General

JOHN C. HOYLE

MARK S. DAVIES

Attorneys

Department of Justice

Washington, D.C. 20530-0001

(202) 514-2217

BEST AVAILABLE COPY)

QUESTIONS PRESENTED

Title II and Title XVI of the Social Security Act

define disability as the “inability to engage in any

substantial gainful activity by reason of any * * *

impairment which can be expected to result in death or

which has lasted or can be expected to last for * * *

not less than 12 months.” 42 U.S.C. 423(d)(1)(A); 42

U.S.C. 1382c(a)(3)(A) (1994 & Supp. IV 1998). Under

Title II, once a claimant is entitled to disability insur-

ance benefits, the claimant may engage in substantial

gainful activity during a “trial work period” of up to

nine (not necessarily consecutive) months without being

disqualified from receiving benefits. 42 U.S.C. 422(c).

The questions presented are:

1. Whether a claimant is entitled to disability bene-

fits under Titles II and XVI of the Social Security Act if

he has a physical or mental impairment that has lasted

or can be expected to last at least 12 months, but his

inability to engage in substantial gainful activity by

reason of that impairment has not lasted or cannot be

expected to last 12 months.

2. Whether a claimant under Title II may be under a

disability and entitled to a “trial work period” if, at the

time his disability insurance benefits claim is adju-

dicated, his impairment no longer prevents him from

performing substantial gainful activity.

(1)

TABLE OF CONTENTS

Page

Opinions below 1

Jurisdiction 1

Statutory provisions involved 2

Statement 2

Reasons for granting the petition 15

Conelusion 27

Appendi A 1a

Appendix B 15a

Appendix C 27a

Appendix D 28a

Appendix E 30a

Appendix F 36a

Appendix G 39a

Appendix H 47a

Appendix I 50a

Appendix J 52a

Appendix K 62a

Appendix L 63a

TABLE OF AUTHORITIES

Cases:

Alexander v. Richardson, 451 F.2d 1185 (10th Cir. .

1971), cert. denied, 407 U.S. 911 (1972) . 15, 16, 17, 18, 20

Bowen v. Yuckert, 482 U.S. 137 (1987) 3, 5,6

Chevron U.S.A. Inc. v. Natural Res. Defense

Council, Inc., 467 U.S. 887 (1984) 12, 22

Cieutat v. Bowen, 824 F. 2d 348 (5th Cir. 1987) 23

Cleveland v. Policy Mgmt. Sys. Corp., 526 U.S. 795

(1999) 4

Leftwich v. Gardner, 377 F 2d 287 (4th Cir. 1967) ........... 3

(IIT)

Cases—Continued: Page

McDonald v. Bowen, 818 F 2d 559 (7th Cir. 1986) 26

Newton v. Chater, 92 F.3d 688 (8th Cir. 1996) 26

Salamalekis v. Commissioner of Soc. Sec., 221 F.3d

828 (6th Cir. 2000) 26

Titus v. Sullivan, 4 F.3d 590 (8th Cir. 1993) 15, 17

Walker v. Secretary of Health & Human Servs.,

943 F 2d 1257 (10th Cir. 1991) 26

Statutes and regulations:

Employment Opportunities for Disabled Americans

Act, Pub. L. No. 99-643, 100 Stat. 3574 5

Social Security Act, 42 U.S.C. 301 et seq. 2

Tit. II, 42 U.S.C. 401 et seq. passim

42 U.S.C. 422 24

42 U.S.C. 422(c) 4, 22, 28, 24, 63a

42 UCS. C. Ae) 4, 68a

42 U.S.C. 422(c)(3) 4, 8, 9, 63a

42 U.S.C. 422(c)(4)(A) 4, 64a

42 U.S.C. 422(c)(4)(B) 4, 64a

42 US.C. 423(a) 13, 64a

42 U.S. C. e) ) (1958) 2

42 U.S. C. e) (2) 13, 69a

42 U.S. C. e ο 19, 69a

42 US.C. 423(d) 22

42 US. C. dA) 3, 7, 12, 20, 70a

42 U.S.C. d)) 21, 70a

42 U.S.C. 423(d)(2)(A) 3, 20, 70a

42 U.S.C. 423(d)(4)(A) 4, 5, 10, Tla

42 U.S. C. ) 19, 75a

Tit. XVI, 42 U.S.C. 1381 et seq. passim

42 US.C. 18 5, 87a

42 U.S.C. 1382c(a)(3)(A) (1994 & Supp. IV 1998) .. 5, 22, 87a

42 U.S.C. 189 5, 87a

Social Security Amendments of 1956, Pub. L. No. 880,

Tit. I, § 108, 70 Stat. 815 2

Statutes and regulations Continued: Page

Social Security Amendments of 1965, Pub. L. No.

89-97, Tit. ITI, § 303(a)(1), 79 Stat. 366 2,3

Social Security Amendments of 1972, Pub. L. No.

92-603, Tit. III, § 301, 86 Stat. 1465 5

20 C. F. R. (1986):

Pt. 404 2, 94a

Section 404. 1520 (1986) 6

Section 404. 15200b) 7, 98a

Section 404.1520(f) 7, 99a

Section 404.1571 7

Section 404.1574(b)(2) 10

Section 404.1592(d)(1) (2001), 65 Fed. Reg. 42,787

(2000) 8,9

Section 404.1592(d)(2) (2001), 65 Fed. Reg. 42,787

(2000) 24

Section 404.1592(d)(2)(iii) (2001), 65 Fed. Reg. 42,787

(2000) 9

Section 404.1594 20

Pt. 416 (1986):

Section 416.920 6

Miscellaneous:

60 Fed. Reg. 12,168 6, 15

65 Fed. Reg. 42,774 (2000) 6, 8, 9, 24, 25

H.R. Rep. No. 544, 90th Cong., Ist Sess. (1967) 4

S. Rep. No. 404, 89th Cong., Ist Sess. (1965) . 2, 3, 8, 21, 25

S. Rep. No. 744, 90th Cong., Ist Sess. (1967) 4

S. S. R. 73-7 (Cum. Ed. 1971-1975) 6

S. S. R. 82-52 (Cum. Ed. 1981-1985) 6, 10, 24

In the Supreme Court of the Anited States

LARRY G. MASSANARI, ACTING COMMISSIONER

OF SOCIAL SECURITY, PETITIONER

CLEVELAND B. WALTON

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

The Solicitor General, on behalf of the Acting Com-

missioner of Social Security, respectfully petitions for a

writ of certiorari to review the judgment of the United

States Court of Appeals for the Fourth Circuit in this

case.

OPINIONS BELOW

The opinion of the court of appeals (App., infra, la-

14a) is reported at 235 F.3d 184. The opinion and judg-

ment of the district court (App., infra, 15a-26a, 27a) are

unreported.

JURISDICTION

The judgment of the court of appeals was entered on

December 18, 2000. A petition for rehearing was

denied on February 27, 2001 (App., infra, 62a). On May

21, 2001, the Chief Justice extended the time within

which to file a petition for a writ of certiorari to and

(1)

including June 27, 2001. The jurisdiction of this Court is

invoked under 28 U.S.C. 1254(1).

STATUTORY PROVISIONS INVOLVED

Relevant provisions of the Social Security Act, 42

U.S.C. 301 et seg., and the relevant regulations, 20

C. F. R. Pts. 404 and 416, are set forth in the appendix to

the petition, App., infra, 63a-104a.

STATEMENT

This case concerns the meaning of a fundamental

term—“disability”—under the disability insurance pro-

gram established by Title II of the Social Security Act

(Act) and the Supplemental Security Income program

established by Title XVI of that Act.

1. a. Title II of the Social Security Act, 42 U.S.C.

401 et seq., which was first enacted in 1935, provides

old-age, survivor, and disability benefits for insured

individuals. Congress added the disability insurance

benefits provisions to Title II in 1956. Social Security

Amendments of 1956, Pub. L. No. 880, Tit. I, § 103, 70

Stat. 815. As originally enacted, the disability insur-

ance program provided for the payment of monthly

benefits to anyone who was unable to “engage in any

substantial gainful activity by reason of” an “impair-

ment which can be expected to result in death or to be

of long-continued and indefinite duration.” 42 U.S.C.

423(c)(2) (1958); S. Rep. No. 404, 89th Cong., Ist Sess.

98-99 (1965).

The requirement that the disability e of “long-

continued and indefinite duration” proved difficult to

administer and, in 1965, Congress amended the Act to

make the duration requirement more certain. See

Social Security Amendments of 1965, Pub. L. No. 89-97,

Tit. III, § 303(a)(1), 79 Stat. 366. In the previous

decade, a disability that lasted 12 months was found in

the “great majority” of cases to be of “long-continued

and indefinite duration” within the meaning of the Act

and thus sufficient to entitle the claimant to benefits. S.

Rep. No. 404, supra, at 99. A 12-month disability re-

quirement, Congress concluded, would generally pre-

vent the program, which was directed at long-term

disabilities, from being required to pay “disability bene-

fits in cases of short-term, temporary disability.” Jd. at

98. Accordingly, the Social Security Amendments of

1965 replaced the “long-continued and indefinite dura-

tion” requirement with a 12-month disability require-

ment. 79 Stat. 366. Title II of the Social Security Act

thus now provides:

The term “disability” means—inability to engage in

any substantial gainful activity by reason of any

medically determinable physical or mental impair-

ment which can be expected to result in death or

which has lasted or can be expected to last for a

continuous period of not less than 12 months.

42 U.S.C. 423(d)(1)(A).

Title II further provides that an individual “shail be

determined to be under a disability only if his physical

or mental impairment or impairments are of such sever-

ity that he is not only unable to do his previous work

but cannot, considering his age, education, and work

experience, engage in any other kind of substantial

gainful work which exists in the national economy.” 42

U.S.C. 423(d)(2)(A) (emphasis added); see Bowen v.

Yuckert, 482 U.S. 137, 147-148 (1987). That section was

added by the Social Security Amendments of 1967 in

response to a decision of the Fourth Circuit, Leftwich v.

Gardner, 377 F.2d 287 (1967), which had held that a

claimant was under a disability despite his performance

of work at a level that, according to the Secretary of

Health, Education and Welfare, demonstrated the

claimant’s ability to engage in substantial gainful

activity. See H.R. Rep. No. 544, 90th Cong., Ist Sess.

29, 31 (1967); S. Rep. No. 744, 90th Cong., Ist Sess. 46-

50, 263-264 (1967). The 1967 amendments also added a

provision directing that the Commissioner “shall by

regulations prescribe the criteria for determining when

services performed or earnings derived from services

demonstrate an individual’s ability to engage in sub-

stantial gainful activity,” and providing as a general

rule that “an individual whose services or earnings

meet such criteria shall * * * be found not to be

disabled.” 42 U.S.C. 423(d)(4)(A); see note 1, infra.

To encourage individuals to return to work, the Title

II disability insurance benefit program also provides

for a “trial work period” during which individuals may

engage in what would otherwise be considered “sub-

stantial gainful activity” without losing disability

benefits. 42 U.S.C. 422(c). The “period of trial work”

begins “with the month in which [the claimant] becomes

entitled to disability insurance benefits,” 42 U.S.C.

422(c)(3), and ends after the individual has performed

services for nine months (which need not be con-

secutive), or the month in which the disability actually

ceases, if that is earlier, 42 U.S.C. 422(c)(4)(A) and (B).

AIJAlny services rendered by an individual during a

period of trial work” are “deemed not to have been

rendered by such individual in determining whether his

disability has ceased in a month during such period.” 42

U.S.C. 422(c)(2). Thus, under the trial work provisions,

once an individual is entitled to benefits under the

disability insurance program, he may work for up to

nine months without losing benefits. See Cleveland v.

Policy Mgmt. Sys. Corp., 526 U.S. 795, 805 (1999).

b. Congress enacted Title XVI of the Social Security

Act, 42 U.S.C. 1381 et seg., in 1972 to provide Supple-

mental Security Income (SSI) to financially needy per-

sons who are aged, blind, or disabled. See Pub. L. No.

92-603, Tit. III, § 301, 86 Stat. 1465. Unlike Title II,

which is an insurance program, the SSI program

established by Title XVI is a welfare program that

looks to financial need. Bowen v. Yuckert, 482 U.S. at

140. Both programs, however, use the same definition

of disability. The SSI program thus provides that a

claimant is “disabled” for purposes of Title XVI if he is

“unable to engage in any substantial gainful activity by

reason of any medically determinable physical or

mental impairment which can be expected to result in

death or which has lasted or can be expected to last for

a continuous period of not less than twelve months,” 42

U.S.C. 1382¢c(a)(3)(A) (1994 & Supp. IV 1998), and

further provides that an individual “shall be determined

to be under a disability only if” the impairment is “of

such severity that” the individual cannot engage in any

“substantial gainful work which exists in the national

economy,” 42 U.S.C. 1382c(a)(3)(B). Unlike Title II's

disability insurance program, however, Title XVI’s SSI

program does not provide for a trial work period. See

Employment Opportunities for Disabled Americans

Act, Pub. L. No. 99-643, 100 Stat. 3574 (amending 42

U.S.C. 1382c to eliminate trial work period).

e. For approximately three decades, the Commis-

sioner of Social Security has interpreted the Social

l Beginning July 1, 1987, under Section 1619 of the Social

Security Act, 42 U.S.C. 1382h, a disabled SSI recipient who has

earnings ordinarily considered to represent substantial gainful

activity can still receive SSI payments so long as his income does

not make him financially ineligible to receive SSI.

Security Act as precluding an award of disability

benefits unless the claimant’s inability to perform

substantial gainful activity has lasted or can be

expected to last for 12 consecutive months. See, e.g.

Social Security Ruling (S.S.R.) 73-7 (Cum. Ed. 1971-

1975); S.S.R. 82-52, at 328 (Cum. Ed. 1981-1985) (“In

considering duration, it is the inability to engage in

[substantial gainful activity] that must last the required

12-month period.”). The Commissioner’s five-step

sequential evaluation process for adjudicating disability

claims, established by regulation and considered by this

Court on a number of occasions (see, e.g., Cleveland v.

Policy Mgmt. Sys. Corp., 526 U.S. at 804; Bowen v.

Yuckert, 482 U.S. at 140-142), has long incorporated at

the first step the requirement that the inability to

engage in substantial gainful activity last for at least 12

months. See Bowen v. Yuckert, 482 U.S. at 140 (citing

20 C. F. R. 404.1520, 416.920 (1986)); S.S.R. 82-52, at 331

(“The denial determination or decision for insufficient

duration should not be understood as independent of

the sequential evaluation process.”). The Commis-

sioner’s new final rules governing the determination of

substantial gainful activity and the trial work period

under Title II, issued last year, also incorporate that 12-

month disability requirement. See Determining Dis-

ability and Blindness; Substantial Gainful Activity

Guides, 65 Fed. Reg. 42,774 (2900) (final rules); see also

Determining Disability and Blindness; Substantial

Gainful Activity Guides, 60 Fed. Reg. 12,168 (1995)

(notice of proposed rulemaking).

Thus, — the Commissioner’s longstanding con-

struction of the Act, it is not enough that an individual's

underlying medical impairment has already lasted or

ean be expected to last for at least 12 months. 65 Fed.

Reg. at 42,774, 42,780. Instead, the disability—the

inability to engage in substantial gainful activity by

reason of the claimed impairment—must have lasted or

be expected to last for at least 12 months. Conse-

quently, a claimant who is able to work within one year

of the onset of his inability to work is generally not

considered disabled. As the Commissioner recently

explained, it has been his “longstanding interpretation”

of the Act that “the duration requirement to establish

disability will not be met and a disability claim will be

denied based on evidence that, within 12 months after

the onset of an impairment which prevented substantial

gainful activity and before [the agency] ha[s] issued any

notice of determination or decision finding disability,

the impairment no longer prevents substantial gainful

activity.” Ibid. See also 20 C.F.R. 404.1520(b) (“If you

are working and the work you are doing is substantially

gainful activity, we will find that you are not disabled

regardless of your medical condition or your age,

education, and work experience.“); 20 C. F. R. 404.1520(f)

(“Your impairment(s) must prevent you from doing

any other work.“); 20 C. F. R. 404.1571 (“If you are able

to engage in substantial gainful activity, we will find

that you are not disabled.”).

Disability determinations can also be made based on

the expected duration of the disability. In particular, if

the disability determination is made before the expira-

tion of 12 months after the onset of the alleged inability

to engage in substantial gainful activity, the claimant

may be determined to be disabled if the inability to

engage in substantial gainful activity is by reason of an

impairment that “can be expected to last” 12 months.

42 U.S.C. 423(d)(1)(A). Thus, it is not necessary for the

Commissioner to wait 12 months from the onset of the

alleged disability to adjudicate a disability claim.

Instead, so long as the inability to work “can be

expected” to last 12 months, the claimant may be

determined to be disabled. See 65 Fed. Reg. at 42,774

(“We believe that Congress provided that disability can

be found based on an impairment which ‘can be ex-

to last’ 12 months simply to provide a means for

us to adjudicate disability claims without having to wait

12 months from onset.”); S. Rep. No. 404, supra, at 99

(“[W]here disability has existed for 12 calendar months

or more, no prognosis would be required. Where a

worker has been under a disability which has lasted for

less than 12 months, the bill would require only a

prediction that the worker’s disability will continue for

a total of at least 12 calendar months after onset of the

disability.”).’

The Commissioner has also issued regulations

governing entitlement to a trial work period for pur-

poses of the disability insurance program under Title

II. Under the Social Security Act and the Commis-

sioner’s regulations, an individual is not entitled to a

trial work period unless the individual is “entitled to

disability insurance benefits.” 42 U.S.C. 422(c)(3) (trial

work period begins when individual “becomes entitled

to disability insurance benefits”); 65 Fed. Reg. at 42,787

(to be codified at 20 C.F.R. 404.1592(d)(1)(2001)) (“You

are generally entitled to a trial work period if you are

entitled to disability insurance benefits.”). As ex-

plained above, the Commissioner has determined that

entitlement to disability benefits is contingent on the

2 Because that disability determination turns on a prediction

that is sometimes wrong—i.e., a claimant who the Commissioner

expected would not be able to return to work within 12 months in

fact may return to work during that period—there is a narrow

class of individuals who are entitled to and receive disability

benefits even though they were able to work within 12 months of

the onset of their disability.

claimant being unable to engage in substantial gainful

activity, or being expected to be unable to engage in

such activity, for at least 12 months. Accordingly, an

individual who has been unable to work for a full 12-

month period is “entitled” to benefits and thus to a trial

work period; similarly, an individual who is determined

by the Commissioner to be expected to be unable to

work for such a period is “entitled” to benefits and a

trial work period. Ibid. But if the Commissioner does

not find that the individual is expected to be unable to

engage in substantial gainful activity for at least 12

months by reason of the impairment, and if the in-

dividual in fact returns to work within 12 months, the

individual is not entitled to benefits and is not entitled

to a trial work period. See 65 Fed. Reg. at 42,774

(“Because the person cannot become entitled to dis-

ability benefits in this situation, there can be no trial

work period.”). Accordingly, as the Commissioner’s

regulations explain, a claimant is not entitled to a trial

work period if he “perform[s] work demonstrating the

ability to engage in substantial gainful activity within

12 months of the onset of the impairment(s) that pre-

vented [the claimant] from performing substantial

gainful activity and before the date of any notice of

determination or decision finding that [the claimant is]

disabled.” 65 Fed. Reg. at 42,787 (to be codified at 20

C. F. R. 404.1592(d)(2)(iii) (2001)).

2. On Oetober 31, 1994, respondent Cleveland B.

Walton was terminated as an in-school suspension

teacher. After several work attempts, he was diag-

nosed in March 1995 as suffering from schizophrenia.

In May of that year, respondent began working part-

time as a cashier at a grocery store. By October 1995,

he earned more than $500 a month, raising a presump-

tion of substantial gainful activity under the regulations

issued by the Commissioner pursuant to 42 U.S.C.

423(d)(4) (A). See 20 C.F.R. 404. 1574(b)(2).“ Respon-

dent began to work full time at the grocery store in

December 1995, and he worked there successfully for

two years before being suspended for selling alcohol to

a minor. App., infra, 53a-54a; A. R. 440, 444.

In March 1995, respondent applied for disability

insurance benefits under Title II and SSI benefits

under Title XVI, citing his schizophrenia and related

depression. In 1996, the Administrative Law Judge

(ALJ) determined that respondent had not engaged in

substantial gainful activity and otherwise satisfied the

definition of disability for the period, which exceeded 12

months, between October 1994, when respondent was

discharged by the school district, and December 1995,

when respondent began to work full time at the grocery

store. App., infra, 52a-6la. The Appeals Council of the

Social Security Administration remanded the case to

determine whether respondent had engaged in sub-

stantial gainful activity within one year of the alleged

onset of his disability. Under S.S.R. 82-52, the Appeals

Council noted, such activity before the lapse of the 12-

month period following onset requires a denial of

benefits. Id. at 47a-49a. On remand, the ALJ denied

respondent’s claim for benefits. Id. at 39a-46a. Like

the Appeals Council, the ALJ noted that, under the

Commissioner’s construction of the Social Security Act

set forth in S. S. R. 82-52, a claim must be denied when

an individual returns to work within 12 months of the

8 As discussed above, p. 4, supra, Section 423(d)(4)(A) directs

the Commissioner to issue regulations for determining when

services performed or earnings derived from services demonstrate

an individual's ability to engage in substantial gainful activity and

thereby render him not disabled.

impairment’s onset. See id. at 4la (The “duration

requirement provides that [the claimant] must be

prevented from performing substantial gainful activity

for a 12-month period even if his impairment lasted or

was expected to last for 12 months.”). Reviewing the

evidence and applying the regulatory criteria for

determining whether work performed or earnings de-

rived from such work demonstrate an ability to engage

in substantial gainful activity, the ALJ concluded that

respondent had engaged in substantial gainful employ-

— as of merge 1995, ue one year of the onset of

impairmen pp., i » 4la-44a; see p. 4, supra.

Accordingly, the ALJ held that respondent on not dis

abled and was not entitled to benefits. App., infra, 45a.

The ALJ also determined that respondent was not

entitled to a trial work period. App., infra, 44a. Re-

spondent “returned to substantial gainful activity

beginning in October 1995,” the ALJ explained, and

thus could “not be found to be under a ‘disability’ be-

cause he was not prevented from working for any con-

tinuous period of 12 months.” Jbid. Because re-

spondent “is not under a disability, the ALJ further

explained, “he is not entitled to a cash benefit or to a

trial work period under the Regulations.” Ibid.

3. : — sought review in district court. The

™agis judge recommended ting summary

judgment in favor of the — — infru

30a-35a, and the district court accepted that recom.

1 — id. at 15a-26a.

magistrate and district court both concluded that

a claimant’s disability (de., his inability to engage in

substantial gainful activity) and not just his impairment

must last at least 12 months. In this case, they ob-

served, respondent had engaged in substantial gainful

activity within 12 months of the date of onset. Accord-

ingly, the magistrate and district court held that re-

— elaim failed at the first step of the sequential

evaluation process, because respondent could not be

found unable to engage in substantial gainful activity

for the requisite 12-month period. See App., infra, 23a-

33a-34a.

nthe magistrate and district court also rejected re-

spondent’s request for a trial work period. Because

respondent was not entitled to disability benefits, they

held, respondent was not entitled to a trial work period.

App., infra, 17a n.2, 34a.

4 Tocmt of appeals reversed. App., infra, 1a-14a.

The court of appeals sustained the ALJ’s conclusion

that respondent engaged in substantial work activity in

October 1995, less than 12 months after the onset of his

alleged inability to work, id. at 2a n.1, 5a, but it rejected

the Commissioner’s interpretation of the Act’s defini-

tion of disability, under which such activity rendered

respondent ineligible for benefits, id. at 6a-10a.

Applying the two-step test of Chevron U.S.A. Inc. v.

Natural Resources Defense Council, Inc., 467 U.S. 837

(1984), the court rejected the Commissioner’s inter-

pretation under step one as contrary to the “clear and

unambiguous” language of the statute. App., infra, 6a.

The statute’s text, in the court’s view, plainly requires

only that the impairment giving rise to the disability

last, or be expected to last, more than a year; the

inability to work itself, the court held, need not last that

long. Id. at 7a. The court first observed that 42 U.S.C.

423(d)(1)(A) defines disability as the “inability to

engage in any substantial gainful activity by reason of

any medically determinable physical or mental im-

pairment which can be expected to result in death or

which has lasted or can be expected to last for a

continuous period of not less than 12 months.” App.,

infra, 7a. The court then found it dispositive that the

phrase “which has lasted or can be expected to last for a

continuous period of not less than 12 months” modifies

“impairment,” not “inability to engage in substantial

gainful activity.” Jd. at 7a-8a. See also id. at 11a.

Accordingly, the court concluded that “a claimant

whose impairment was ‘expected to result in death,’ or

which ‘lasted’ or ‘was expected to last’ for a continuous

period of not less than twelve months may be disabled,

even if the inability to engage in substantial gainful

activity does not cause death or actually persist for

twelve months.” Id. at 8a. N

Having invalidated the Commissioner’s construction

of the statute, the court of appeals then concluded that

respondent is entitled to disability insurance benefits.

In this case, the court explained, respondent’s impair-

ment was expected to last (and did last) more than 12

months. Moreover, at the expiration of the five-month

waiting period after the onset of respondent’s disability

(Le., by April 1995), respondent had not returned to

work.‘ Accordingly, the court concluded that respon-

dent had met the statutory requirements for entitle-

ment to an award of disability insurance benefits under

Title II. App., infra, 9a. The court did not

address respondent’s claim for SSI benefits under Title

XVI of the Social Security Act, which has no statutory

waiting period.

The court of appeals also held that respondent was

entitled to a trial work period. App., infra, 9a-10a. Re-

spondent’s entitlement to a trial work period, the court

* Under 42 U.S.C. ) and (e) 2), there is no entitlement to

receive benefits until after the expiration of the earliest period of

five consecutive months “throughout which” the individual is

“under a disability.”

stated, is “conclusively settled” in his favor by the

court’s earlier conclusion that respondent was entitled

to disability benefits as of April 1995, when the five-

month waiting period expired. Id. at 9a. The court

noted that the period of trial work begins once the

claimant becomes entitled to disability benefits.

Having found that respondent was entitled to benefits

beginning in April 1995, the court further concluded

that respondent qualified for a nine-month trial work

period as of that date. Ibid. Because the “trial work

period precludes consideration of the October 1995

work!,“ the court stated, respondent “meets even the

Commissioner’s extra-statutory requirements for a

finding of disability i. e., that the inability to work,

like the underlying impairment, must have lasted or be

expected to last at least 12 months—since no work

“during the period of twelve months from his disability

onset date, October 31, 1994, could have been con-

sidered.” Id. at 10a.

The court also rejected the Commissioner’s construc-

tion of the Social Security Act as unreasonable under

the second step of Chevron. App., infra, 10a-13a. In so

doing, however, the court mostly repeated its textual

analysis of the Act. Jd. at 10a-lla. In addition, the

court rejected as unreasonable the Commissioner's

position that the trial work period cannot begin until

after either (a) benefits are granted or (b) the individual

is unable to work for 12 consecutive months. The Com-

missioner, the court noted, had interpreted the phrase

“ean be expected to last” in the definition of disability

as having been included “so that [the agency could]

‘adjudicate disability claims without having to wait 12

months from the alleged onset of disability, rather than

to permit claims to be allowed in the face of evidence

that the claimant’s impairment did not prevent sub-

stantial gainful activity for 12 continuous months. Id.

at 12a (quoting 60 Fed. Reg. at 12,168). The court re-

jected that interpretation because the Act does not

explicitly mention adjudication as a prerequisite to a

finding of disability; because no other part of the Act

“differentiates between claims adjudicated within

twelve months, and claims adjudicated after twelve

months”; and because “under the Commissioner’s inter-

pretation, a finding of disability, or entitlement to

benefits or a trial work period, would be determined, in

part, by when the Commissioner adjudicated a claim.”

Id. at 13a-14a.

REASONS FOR GRANTING THE PETITION

The court of appeals in this case set aside the

Commissioner’s longstanding—indeed, decades-old—

construction of a fundamental provision of the Social

Security Act, holding that claimants are entitled to

disability insurance benefits under Title II and Supple-

mental Security Income (SSI) benefits under Title XVI

of that Act even though they are able to work within a

year of the onset of their disabilities, so long as the

underlying impairment has lasted or can be expected to

last more than 12 months. That decision is in direct

conflict with the decision of the Tenth Circuit in

Alexander v. Richardson, 451 F.2d 1185 (1971), cert.

denied, 407 U.S. 911 (1972), and the decision of the

Eighch Circuit in Titus v. Sullivan, 4 F.3d 590, 594-595

(1993). If allowed to stand, it would impose an esti-

mated $9.8 billion in additional costs on the Social

Security disability programs over the next 10 years in

the Fourth Circuit alone, and would impose more than

$80 billion in additional costs over that same period if

applied nationwide. Finally, the court of appeals’

decision fundamentally misconstrues the Social

Security Act, converting programs that were intended

to address long-term disabilities into short-term dis-

ability programs that Congress specifically declined to

enact.

1. The court of appeals’ decision in this case squarely

conflicts with those of two other circuits. Invalidating

the Commissioner’s longstanding construction and

application of the Social Security Aet, the court of

appeals held that the Act does not require — and in fact

unambiguously forecloses the Commissioner from

interpreting it to require—that a claimant's disability

(i.e., the inability to work on account of an impairment)

last or be expected to last at least 12 months. Instead,

the court held, a claimant is entitled to benefits under

both the disability insurance program established by

Title II and the SSI program established by Title XVI

where the claimant’s inability to engage in substantial

gainful activity has not lasted and is not expected to

last 12 months, so long as the impairment that allegedly

gave rise to that inability lasts or is expected to last at

least 12 months. App., infra, IIa.

Two other courts of appeals, however, have reached

the opposite conclusion. In Alexander v. Richardson,

supra, for example, the Tenth Circuit affirmed the

denial of benefits because “this disability extended for a

period of less than twelve months, although there was

an impairment which lasted for more than one year.

451 F.2d at 1186. The court explained:

To recover disability benefits under — Aet .

plicant must be unable to engage in any su

stantial gainful activity. Disability is established by

showing a medically determinable mental or physi-

cal impairment which prevents [the applicant from]

engaging in any gainful activity. Inability to engage

in any gainful activity and the impairment which

causes it cannot be separated. The two components

of disability must exist at the same time.

Ibid. The court further concluded that the history of

the 1965 amendments to the Social Security Act, which

introduced the 12-month duration requirement, showed

that Congress intended to require that the disability—

i. e., the inability to work on account of the impairment

—and not merely the impairment itself last at least 12

months. Congress, the court explained, expressly de-

clared that it sought to require that insured workers be

or be expected to be “totally disabled,” i.¢., unable to

work, for the entire 12-month period. See id. at 1187.

The Eighth Circuit followed Alexander in Titus, 4 F.3d

at 594 (“We agree with the district court that the inter-

pretation of ‘duration of impairment’ was settled in

Alexander v. Richardson, 451-F.2d 1185 (10th Cir.

1971).”).

2. The court of appeals’ decision, moreover, has

profound programmatic and fiscal implications for the

Social Security programs. The question of how long a

claimant’s disability must last or be expected to last in

order for the claimant to be entitled to benefits is one of

the most fundamental issues in the administration of

the Title II and Title XVI disability programs, in which

approximately two million claims are filed annually. As

noted above, it is the longstanding position of the Com-

missioner that benefits are not awarded where the

claimant was capable of returning to work within 12

months after the onset of the inability to engage in

substantial gainful activity, and millions of claims have

been denied on that basis since the 12-month duration

requirement was enacted in 1965. The court of appeals’

decision thus represents a dramatic departure from the

way the disability programs long have been adminis-

tered.

The fiscal impact of that departure, moreover, is

potentially enormous. Obviously, many claimants who

are capable of working will have impairments that will

last for longer than a year. See, e.g., Alexander, 451

F.2d at 1186 (“For example, an applicant may have an

injury from which he has lost one of his hands. The

result is a physical impairment for the remainder of his

life, but if he is able to engage in any gainful activities

within a year from his injury he is not entitled to

benefits.”). We have been informed by the Social

Security Administration that its Office of the Chief

Actuary estimates that, in the Fourth Circuit alone, the

increase in disability insurance benefits and SSI

payments that would result from complying with the

decision would cost the Social Security programs ap-

proximately $9.8 billion over the next ten years (2002-

2011); if the decision were applied nationwide, the

estimated additional costs would be $80 billion.

The court of appeals’ decision, if allowed to stand,

would also have a substantial impact on the agency's

ability to administer the program effectively. Because

the decision relaxes the standards of eligibility for dis-

ability insurance benefits under Title II and for SSI

benefits under Title XVI, it may dramatically increase

the number of applications the agency must process;

5 These estimates may in fact prove somewhat conservative.

For example, the estimates are based on the number of denials on

duration grounds under current experience; they do not attempt to

account for the increase in applications for benefits that would be

caused by the court of appeals’ decision. Because the decision

below relaxes the requirements to qualify for benefits, a sub-

stantial increase in the number of applications appears likely if the

decision is not reversed.

the agency already must process several million appli-

cations under those programs each year. The impact

may be particularly profound in the context of Title

XV I’s SSI program. As discussed above, the disability

insurance program of Title II imposes a five-month

waiting period; thus, even if the applicant’s disability is

expected to last at least 12 months from the outset, the

applicant is not eligible for benefits until the disability

has lasted at least five months. 42 U.S.C. 423(c)(2)(A).

Unlike Title II, however, Title XVI does not impose a

waiting period. Thus, under the court of appeals’

decision, SSI benefits must be paid if an impairment

causes an inability to work of any duration. It is

unlikely that Congress intended such a result, or to

impose the resulting burdens on the agency.

The extent to which the court of appeals’ decision

undermines the fundamental premises of the Act is

underscored by its effect on the application of other

provisions of the Act. For example, under 42 U.S.C.

423(f)(1), the Commissioner may terminate benefits

where “the individual is now able to engage in sub-

stantial gainful activity” if “there has been any medical

improvement in the individual’s impairment.” Because

the court of appeals’ decision permits individuals to

obtain benefits even if their impairments no longer

prevent them from engaging in substantial gainful

activity, it would make terminations under Section

423(f)(1) problematic. Where the individual already

can work notwithstanding the impairment—where

maximum medical improvement has already been

0 To the extent the court of appeals intended to suggest

otherwise, see App., infra, 9a n.7, it was mistaken. The statutory

provisions cited in that footnote apply only under Title II of the

Act; they do not apply under Title XVI.

achieved—at the time the award is made, it may prove

difficult if not impossible to show further “medical

improvement” that could be a basis for termination.

The agency therefore could be required to continue

paying benefits indefinitely to individuals who can work

notwithstanding their impairments because it cannot

show “medical improvement” between the date of the

award and the date of the proposed termination. See 20

C.F.R. 404.1594.

8. The court of appeals’ decision rests on an

erroneous interpretation of the Act and a misappli-

cation of Chevron deference principles. The court

emphasized that the definition of disability requires

that the impairment last 12 months. App., infra, Ta-8a.

The court, however, ignored two critical features of the

statutory framework. First, the definition of disability

requires not only an underlying medical impairment

that has already lasted or can be expected to last in the

future for at least 12 months, but also an inability to

engage in substantial gainful activity “by reason of”

that impairment. 42 U.S.C. 423(d)(1)(A). The inability

to work and the impairment giving rise to that inability

are thus directly linked. Where, as here, the claimant

returns to work within 12 months, he does not meet the

definition of disability, because he does not have, for the

duration of the 12-month qualifying period, an inability

to work “by reason of” the underlying impairment.

Alexander, 451 F.2d at 1186 (“[ijnability to engage in

any gainful activity and the impairment which causes it

cannot be separated”). Second, the court ignored

Section 423(d)(2)(A), which was added to the definition

of disability in 1967 and provides that an individual is

disabled “only if” the impairment is “of such severity”

that it precludes substantial gainful activity. Where

the individual is able to engage in substantial gainful

activity, the impairment is not sufficiently severe and

the individual cannot be considered disabled. In this

case, the court of appeals effectively read out of the Act

Section 423(d)(2)’s command that the claimant be

considered disabled “only if” he is unable to work.

Furthermore, the legislative history of the 1965

amendments to the Social Security Act demonstrates

that Congress intended to require that the disability

(and not merely the impairment) last 12 months. When

Congress first imposed the 12-month duration require-

ment in 1965, it rejected a shorter six-month period

proposed in the House of Representatives’ version of

the bill. Explaining that decision, the Senate Finance

Committee noted that the “the House provision could

result in the payment of disability benefits in cases of

short-term, temporary disability.” S. Rep. No. 404,

89th Cong., Ist Sess. 98 (1965). “Under the House

provision,” the committee explained, “benefits could be

paid for several months in cases of temporary disability

resulting from accidents or illnesses requiring a limited

period of immobility.” Ibid. To avoid awarding benefits

in cases of only temporary disability, the Senate com-

mittee believed it “necessary to require that a worker

be under a disability for a somewhat longer period than

6 months in order to qualify for disability benefits.”

Ibid. (emphasis added). By eliminating the require-

ment that the inability to engage in substantial gainful

activity must last 12 months, the court of appeals’

decision creates precisely the short-term disability

benefits program Congress sought to avoid. And that

result conflicts with Congress’s intent, evident through-

out the legislative history, that the disability last 12

months. See id. at 98 (bill modified “to provide for the

payment of disability benefits for an insured worker

who has been or can be expected to be totally disabled

throughout a continuous period of 12 calendar

months“).

At the very least, in light of the text, strueture and

legislative history of the Act, the Commissioner’s long-

standing interpretation of the definition of disability is

reasonable and therefore entitled to deference. See

Chevron U.S.A. Inc. v. Natural Res. Defense Council,

Inc., 467 U.S. 837, 842-843 (1984). As a matter of

, the court of appeals was correct in concluding

that Section 423(d) expressly requires the impairment

to last at least 12 months, as does Section

1382¢c(a)(3)(A), which governs the SSI program. But

the court of appeals was incorrect to assert that the Act

thereby unambiguously precludes the Commissioner

from requiring that the disability—the inability to

engage in substantial gainful activity by reason of the

impairment—last 12 months as well. T..c Act nowhere

expressly declares that there is no minimum duration

requirement for the disability itself, and requiring the

disability to be co-extensive with the underlying

impairment for the qualifying 12-month period is the

most sensible construction of the Act. Titles II and

XVI of the Act are designed to provide disability

benefits to those who cannot engage in substantial

gainful activity, not to provide impairment benefits to

7 Jt is no answer to note that disability insurance benefits are

not paid until after a five-month waiting period. As the legislative

history discussed in the text makes clear, Congress considered

even a six-month disability to be too short or temporary in nature

to warrant the payment of benefits under Title II. Moreover,

there is no waiting period for SSI benefits, which means that an

SSI claimant apparently would be entitled to receive benefits

under the court of appeals’ decision for a disability of any duration,

so long as the underlying impairment lasts or is expected to last 12

months or more.

those who can. By contrast, the court of appeals offered

no plausible reason why Congress would have insisted

that the underlying impairment last for 12 months but

at the same time insisted that the claimant’s inability to

work have no minimum duration.

4. The court of appeals’ invalidation of the Commis-

sioner’s regulations governing the availability of trial

work periods under 42 U.S.C. 422(c) also warrants this

Court’s review. Indeed, the court’s ruling that respon-

dent was entitled to a trial work period appears to

stand or fall with its resolution of the question of

whether respondent was entitled to disability benefits

notwithstanding his return to substantial gainful activ-

ity within 12 months of the onset of his inability to

work. The court of appeals concluded that respondent’s

claim to a trial work period was “conclusively settled”

in his favor by the court’s earlier conclusion that he was

entitled to disability benefits. App., infra, ga.

. The court of appeals, moreover, gave the Commis-

sioner’s construction of the Act inappropriately short

shrift. The Commissioner has consistently construed

bs The court of appeals does not appear to have construed the

trial work period provision independently of its interpretation of

the duration requirement. To the extent the court of appeals’

decision could be read as holding that respondent was entitled to a

trial work period notwithstanding the 12-month duration require-

ment because his inability to work was, at some point after onset,

“expected to last” 12 months—even though he had resumed

substantial gainful activity before the expiration of that 12-month

period—such a holding would not affect the need for plenary

review. That holding would itself conflict with the decision by the

Fifth Circuit in Cieutat v. Bowen, 824 F.2d 348, 358-859 (1987). As

that court correctly held, the trial work provision precludes the

ee ne 7 — considering work done after disability

mmences y for purposes of determining whe

disability has ceased.” Ibid. 5 si

Section 422 as making a trial work period available only

where the impairment has precluded substantial gainful

activity for 12 continuous months, or where there has

been a determination that it can be expected to do so.

See S.S.R. 82-52 (Cum. Ed. 1981-1985); 65 Fed. Reg.

42,787 (2000) (to be codified at 20 C. F. R. 404.1592(d)(2)

(2001)) (“You are not entitled to a trial work period” if

“you perform work demonstrating the ability to engage

in substantial gainful activity within 12 months of the

onset of the impairment(s) that prevented you from

performing substantial gainful activity and before the

date of any notice of determination or decision finding

that you are disabled.”). The Commissioner explained:

Because section [422(c)] provides that a trial work

period shall begin with the month in which a person

becomes entitled to title II disability benefits, a

claimant who does not become entitled to disability

benefits cannot receive a trial work period. Under

our interpretation of the duration requirement, a

person cannot be found to be under a disability if he

or she performs work demonstrating the ability to

perform substantial gainful activity within 12

months after onset and before we have issued any

notice of determination or decision finding disability.

* * * On the other hand, if a claimant returns to

work before we have made a determination or de-

cision finding disability, but more than 12 months

from onset, the duration requirement may be

satisfied * * *, the claimant may become entitled to

benefits, and the work may be protected by the trial

work period even though the work began prior to a

finding of disability.

65 Fed. Reg. at 42,774.

The court of appeals expressed concern that the

Commissioner’s construction of the Act has the po-

tential to yield different results based on when the

disability determination is made. App., infra, 13a

(“under the Commissioner’s interpretation, a finding of

disability, or entitlement to benefits or a trial work

period, would be determined, in part, by when the

Commissioner adjudicated a claim”). The court rea-

soned that, if the disability determination is made with-

in 12 months of onset, and at that point the disability

was “expected to last” 12 months, an individual could be

entitled to a trial work period even though he or she

later returns to work before 12 months lapse. If the

disability determination were made after the claimant

has already returned to work, however, the individual

would be found not disabled. Ibid.

The court of appeals’ reasoning is unsupported. As

the Commissioner explained, Congress permitted the

agency to find a disability “based on an impairment

which ‘can be expected to last’ 12 months“ rather than

limiting the agency to finding disability where the

impairment had already lasted 12 months—in order “to

provide a means for [the agency] to adjudicate dis-

ability claims without having to wait 12 months from

onset, rather than to permit claims to be allowed in the

face of specific evidence that the claimant’s impairment

did not, in fact, prevent him or her from engaging in

substantial gainful activity for 12 continuous months.”

65 Fed. Reg. at 42,774. The court of appeals nowhere

offered an alternative explanation for the “expected to

last” language in the definition of disability. Moreover,

although the Commissioner’s construction might cause

disability determinations to depend, in a few cases, on

when the determination is made, Congress was aware

of that possibility and specifically chose to permit it.

S. Rep. No. 404, supra, at 99 (“[WJhere disability has

existed for 12 calendar months or more, no prognosis

would be required. Where a worker has been under a

disability which has lasted for less than 12 months, the

bill would require only a prediction that the worker’s

disability will continue for a total of at least 12 calendar

months after onset of the disability.) The Commis-

sioner’s interpretation, which is consistent with

Congress’s intent as well as the text of the Act, is at the

very least reasonable and therefore should be sus-

tained.

® The court of appeals’ other reasons for rejecting the Com-

missioner’s interpretation of the expectancy provision also lack

merit. First, the court rejected that interpretation because the Act

does not explicitly mention adjudication as a prerequisite to a

finding of disability. App., infra, 18a. But the Act does permit a

finding of disability when the inability to perform substantial

gainful activity “can be expected” to last 12 months. The Com-

missioner reasonably concluded that the relevant expectation is

that found by the adjudicator at the time of the disability deter-

mination. Second, the court observed that no other part of the Act

“differentiates between claims adjudicated within twelve months,

and claims adjudicated after twelve months.” Ibid. But no other

part of the Act contains similar statutory language.

10 In this particular error, the Fourth Circuit has considerable

company. The Sixth, Seventh, Eighth, and Tenth Circuits have all

misapplied the trial work provisions. See App., infra, 13a n.10.

Under those cases, joined by the Fourth Circuit here, a claimant is

entitled to a trial work period if at some point the claimant’s

inability to work can be expected to last 12 months even if, at the

time the claim is adjudicated, 12 months have passed and the

claimant has returned to work during that period. See Sala-

malekis v. Commissioner of Soc. Sec., 221 F.3d 828, 834 (6th Cir.

2000); Walker v. Secretary of Health and Human Servs., 943 F. 2d

1257, 1260 (10th Cir. 1991); McDonald v. Bowen, 818 F.2d 559, 564

th Cir. 1986); Newton v. Chater, 92 F.3d 688, 694 (8th Cir. 1996).

As explained above, the 12-month duration requirement applies to

CONCLUSION

The petition for a writ of certiorari should be

granted.

Respectfully submitted.

JUNE 2001

the disability—both the impairment and the resulting inability to

work. — vesten of Go Gach duation peated eh

cause the Court to decide whether the trial work provisions apply

to a claimant who returns to work less than 12 months after the

onset of his disability.

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 00-1016

CLEVELAND B. WALTON, PLAINTIFF-APPELLANT

KENNETH S. APFEL, COMMISSIONER OF

SOCIAL SECURITY, DEFENDANT-APPELLEE

Argued: Oct. 30, 2000

Decided: Dec. 18, 2000

Before: NIEMEYER and LUTTIG, Circuit Judges, and

WILLIAMS, United States District Judge for the Dis-

trict of Maryland, sitting by designation.

Affirmed in part, reversed in part, and remanded by

published opinion. Judge LUTTIG wrote the opinion, in

which Judge NIEMEYER and Judge WILLIAMS joined.

OPINION

LUTTIG, Circuit Judge:

Cleveland B. Walton appeals the district court’s

grant of summary judgment affirming the decision by

the Commissioner of the Social Security Administration

(la)

that Walton was not entitled to disability insurance

benefits and supplemental security income under the

Social Security Act. The Commissioner’s denial of

benefits, and the district court’s affirmance of that

decision, were pursuant to a regulatory interpretation

of the Social Security Act by the Social Security

Administration, which interpretation provides that 1

return to work prior to the lapse of a 12 month period

after onset of disability and prior to the adjudication of

disability precludes a finding that a claimant is disabled

and does not allow the award of a trial work period.

We hold that the agency interpretation upon which

the district court and the Commissioner relied

clearly contravenes the relevant, and unambiguous,

provisions of the Social Security Act. See 42 U.S.C.

§§ 423(d)(1)(A); 422(c)(3). Accordingly, we reverse the

judgment of the district court granting summary

judgment to the Commissioner and denying summary

judgment to Walton, except with regard to the district

court’s conclusion that Walton began “substantial

gainful activity” (“SGA”)' in October 1995, when his

earnings exceeded $500, which latter holding we affirm.

1 Substantial gainful activity is “work activity that is both sub-

stantial and gainful,” and that involves “doing significant physical

or mental activities.” 20 C.F.R. §§ 404.1572, 416.972. According to

the statutory guidelines, earnings between $300 and $500 per

month may be deemed SGA, while earnings in excess of $500 per

month create a rebuttable presumption of SGA. 20 C.F.R.

§§ 404.1574(b)(2)(vii), 416.974(bX2)(vii); see also Payne v. Sullivan,

946 F.2d 1081, 1083 (4th Cir. 1991). Moreover, the Commissioner

considered the nature of appellant’s work and his ability to do that

work, in addition to his earnings. In this case, the regulations

defining substantial gainful activity are reasonable, 42 US.C.

§ 405(a), the decision that appellant's October 1995 earnings were

Cleveland B. Walton (“Walton”), a college graduate

in his mid-thirties with a history of psychological

problems, was diagnosed with schizophrenia after a six-

day period of hospitalization in March 1995. He applied

for disability insurance benefits (“DIB”) and supple-

mental security income (“SSI”) under the Social Secu-

rity Act (“Act”) on April 12, 1995, based on his claimed

mental impairment—schizophrenic disorder with asso-

ciated depression. His application was denied initially

and upon reconsideration.

After an evidentiary hearing on July 10, 1996, an

Administrative Law Judge (“ALJ”) concluded that

Walton was disabled by his mental impairment; at the

request of the ALJ, Dr. Elliott J. Spanier, a board-

certified psychiatrist, reviewed appellant’s medical

records and opined that Walton suffered from schizo-

phrenic disorder with psychotic features, that the

impairment met the criteria of a listed impairment,’

and that the impairment had lasted 12 months.

Prior to his hearing before the ALJ, Walton advised

the ALJ that he had worked at Food Lion from May

1995 until December 10, 1995, for five or six hours a

day, and that he had begun working full-time at the

same job on December 10, 1995. Based on this infor-

SGA was supported by substantial evidence, and we affirm this

part of the district court’s judgment.

2 A listed impairment is an impairment “considered severe

enough to prevent a person from doing any gainful activity.” 20

C. F. R. § 404.1525(a).

mation, the ALJ denied Walton a trial work period

because Walton had demonstrated the capacity for

sustained work since May 1995, and because his

disability ceased when he began working full time.

Instead, the ALJ held that Walton was entitled to

benefits pursuant to a period of disability that com-

menced on the amended onset date of his impairment,

October 31, 1994—the date his employment as an in-

school suspension teacher was terminated—and ended

on December 10, 1995—the date Walton started to

work full-time at Food Lion.

Subsequently, the Social Security Administration

(SSA) determined that Walton may have begun SGA

within twelve months of his onset date. Based on

agency policy, Walton was not disabled, and was not

entitled to benefits, if he had returned to work that

constituted SGA within twelve months of his disability

onset date and prior to adjudication of his claim, even if

his impairment had lasted or was expected to last for a

continuous period of not less than 12 months. Con-

sequently, the case was remanded to the ALJ to assess

when Walton began SGA.

Substantial evidence that Walton remained mentally

impaired was presented at the second hearing. How-

ever, the ALJ did not reach the issue of impairment

because he concluded that Walton returned to SGA in

October 1995, when his earnings from his part-time

work as a grocery store cashier and stocker exceeded

3 A trial work period permits qualified claimants to test their

ability to work for up to nine months and still be considered dis-

abled. See 42 U.S.C. § 422(c); 20 C. F. R. § 404.1592.

$500." And, because Walton was not unable to engage

in SGA for a continuous period of at least twelve

months from his disability onset date, the ALJ deter-

mined that he was not disabled and not entitled to a

trial work period, and therefore denied him benefits.

Walton sought review of the ALJ’s decision, which

stands as the final decision of the Commissioner of the

Social Security Administration (“Commissioner”). The

= * adopted the proposed memorandum

opinion of the magistrate judge and ted summary

judgment to the Commissioner, holding that the

Commissioner’s decision that Walton engaged in SGA

in October 1995 and was not disabled and entitled to

benefits, was supported by substantial evidence, and

that Walton was not entitled to a trial work period

absent a finding of disability and entitlement to

benefits. This appeal followed.

II.

Walton does not deny that he worked in October

1995. Rather, he claims, inter alia, that his work in

October 1995 did not constitute SGA‘ and that, even if

the work did constitute SGA, the district court improp-

erly relied upon it because that SGA was part of a trial

work period and, as such, could not be used as evidence

under the Act’s sequential evaluation isabili

* é process, the disability

inquiry will end at the first step, and the claimant will be found not

disabled, irrespective of impairment, if he has engaged in SGA.

20 CFR. 88 404. 152005), 416.920(b). As discussed infra at [10a],

SGA during a trial work period is ignored, and will not end the

evaluation process. 42 U.S.C. § 422(c)\(2).

® We affirm that portion of the district court’s opinion. See

supra n. 1.

that he was not disabled. The Commissioner does not

dispute that Walton suffered from a mental *mnair-

ment, nor does he dispute that the impairment lasted

for a continuous period of at least 12 months. Instead,

the Commissioner asserts that the district court

properly upheld the denial of benefits because,

pursuant to the Act and agency policy, Walton was not

under a disability when he engaged in SGA during

October 1995, prior to the lapse of twelve months from

his disability onset date and prior to adjudication of his

claim. Further, the Commissioner claims that because

Walton was not disabled, he was not entitled to a trial

work period.

The Commissioner insists that his position is based

on the plain language of the statute and that, even if the

language of the Act were susceptible to another inter-

pretation, deference is owed to the agency's interpre-

tation of the Act. Appellee’s Br. at 24. This interpre-

tation is expressed in Social Security Ruling (SSR)

82-52 and Notice of Proposed Rule-making, 60 Fed.

Reg. 12166 (March 6, 1995) (“NPRM”).

While we recognize Chevron deference where such

deference is due, see generally Chevron U.S.A., Inc. v.

Natural Resources Defense Council, Inc., 467 U.S. 887,

104 S. Ct. 2778, 81 L.Ed.2d 694 (1984), we nonetheless

reject the Commissioner’s judgment in this case. In the

first place, agency interpretation of the Act is not

appropriate because the language of the statute is clear

and unambiguous. Moreover, en if interpretation

were required, the Commissiouer’s interpretation

6 This proposed regulation (which reflects the position of SSR

82-52) became effective on August 10, 2000, and does not apply

retroactively to Walton’s case.

which assumes either a duration period or adjudi-

cation requirement and does violence to the grammati-

cal structure of the statute—conflicts with the very

statute it purports to elucidate. We are bound to reject

such constructions. Jd. at 843 & n. 9, 104 S. Ct. 2778.

Consequently, the district court’s holding that

Walton was not under a disability when he engaged in

SGA prior to the lapse of twelve months from his onset

date and prior to adjudication of his claim, and its

holding that Walton was not entitled to a trial work

period, are reversed.

Beyond question, the statutory language speaks

clearly to the issue of whether an individual can be

under a “disability,” even though he engaged in SGA

prior to the expiration of a twelve-month period from

his disability onset date and prior to the adjudication of

his disability and an award of benefits. The statutory

_ language is unambiguous, requires no agency interpre-

tation, and leaves no doubt that neither a duration

requirement for the inability to engage in substantial

gainful activity nor a requirement that the benefits

have been “awarded” or adjudicated, exists. Rather,

the relevant provision, 42 U.S.C. § 423(d)(1)(A), defines

“disability” simply as the inability to engage in any

substantial gainful activity by reason of any medically

determinable physical or mental impairment which can

be expected to result in death or which has lasted or

can be expected to last for a continuous period of not

less than 12 months.

In addition to the facial clarity of the language, the

grammatical structure and logic of the statute further

the conclusion that the clause, “which can be

— to result in death or which has lasted or =

be expected to last for a continuous period of not —

than 12 months,“ refers to the impairment, not — e

inability to engage in SGA; the clause manifest'y oes

not modify “substantial gainful activity.

e first place, based solely on grammar and sen-

— the clause modifies the —

phrase “by reason of any medically determinable p =

cal or mental impairment.” Additionally, a —

referent for the entire adjectival phrase must * .

Thus, as a matter of pure logic, it is clear that t —

duration elause must modify impairment, Ar

impairment, because to hold otherwise would 1 —

the absurd construction dictated by the Commissione 8

interpretation, that Adlisability is the inability —

engage in substantial gainful activity . . - which can

expected to result in death or which has lasted or —

be expected to last for a continuous period of not =

than 12 months.” Obviously it is the impairment, an

not the SGA, that Congress believed could ny 1

death, and it is thus the impairment, and not the „

which is subject to the not less than twelve mon

requirement. We deeline to construe it otherwise.

rdingly, we hold that a claimant whose impair-

755 2 to result in death,“ or Which

“lasted” or “was expected to last” for a continuous

period of not less than twelve months may be disabled,

even if the inability to engage in substantial .

activity does not cause death or actually persist for

twelve months. 42 U.S.C. § 423(d)(1)(A). Moreover,

such individual becomes entitled to disability oo mag

benefits, if under a disability, for each month after

five-month waiting period imposed by section 423(c)(2)’

if the individual (1) is insured for disability benefits;

(2) is below retirement age; and (3) has filed an

application for benefits. 42 U.S.C. § 423(a).

In this case, the ALJ found in the first hearing that

Walton was disabled and had an impairment that had

lasted for twelve months from the disability onset date

in October 1994. It is further undisputed that Walton

did not engage in a successful work attempt until May

1995, two months after the five-month waiting period,

and did not engage in SGA until October 1995, well

after the five-month waiting period had elapsed. Con-

sequently, Walton met the statutory prerequisites for

entitlement to disability insurance benefits.

Walton’s claim that he was entitled to a trial work

period is likewise affirmed by the statutory language.

For, whether Walton is entitled to a trial work period,

in light of his return to part-time work in May 1995 and

SGA in October 1995, is conclusively settled by the

determination that Walton was disabled and entitled to

disability benefits after the five-month waiting period,

i. e., beginning in April 1995.

Contrary to the Commissioner’s position, the statute

allows a trial work period to begin prior to twelve

months from the disability onset date, and before bene-

fits are granted. Unambiguously, the statute provides

that a period of trial work . . . shall begin with the

There is no entitlement to receive benefits until after this

waiting period, which refers to the earliest period of five consecu-

tive calendar months “throughout which the individual with

respect to such application is filed has been under a disability.”

42 U.S.C. § 422(c\(2); see also 42 U.S.C. § 423(a).

10a

in which [the claimant] becomes entitled to dis-

— — benefits.” 42 U.S.C. § 422(c)(3) (emp-

hasis added). And, as discussed supra, Walton met the

requirements of 42 U.S.C. § 423(a) and was entitled to

disability insurance benefits as of April 1995.

nder the statute, “any services rendered by an

— during a period of trial work will be deemed

not to have been rendered by such individual in

determining whether his disability has ceased in a

month during such period.” 42 U.S.C. § 422(c)(2).

Thus, given that Walton’s trial work period precludes

consideration of the October 1995 SGA, Walton meets

even the Commissioner’s extra-statutory requirements

for a finding of disability, because no SGA during the

period of twelve months from his disability onset date,

October 31, 1994, could have been considered.

onsequently, in light of our holdings that Walton

* — a “disability,” “entitled to disability bene-

fits,” and “entitled to a trial work period,” we must also

hold that the district court’s consideration of the

October 1995 SGA as evidence that Walton had en-

in SGA prior to the expiration of twelve months

from his disability onset date was in contravention of

the Act.

Even if the statute we interpret herein were ambigu-

ous, and thus susceptible to interpretation, we would

nonetheless reject as unreasonable the Commissioner’s

8 Once the trial work period is over, the agency can consider

the work done during the work period in determining whether the

disability has ended after the work period. 20 C.F.R. § 404.1592(a).

lla

contrary interpretation, which rests on the premise

that it is the “inability to engage in any substantial

gainful activity” which must “last” or “be expected to

last for a continuous period of not less than 12 months.”

And, it is based on this supposition that the Commis-

sioner concludes that the definition of disability—and a

prerequisite for entitlement to a trial work period—

includes the requirement that either the impairment

must have prevented SGA for a period of no less than

twelve months or the claim must have been adjudicated

and benefits awarded. See 60 Fed. Reg. 12166, 12168;

SSR 82-52. It is clear, however, that the Commis-

sioner’s position is directly belied by the language,

structure, and grammar of 42 U.S.C. § 423(d)(1)(A).

For, to obtain the outcome the Commissioner desires,

one is required in the first instance to separate a single

adjectival clause in section 423(d)(1)(A)— “which can be

expected to result in death or has lasted or is expected

to last in excess of twelve months”—so that “which can

be expected to result in death” modifies only “impair-

ment,” while “which has lasted or can be expected to

last” modifies both impairment and “inability to engage

in substantial gainful activity.” There is no mode of

statutory construction which allows such. As discussed

supra at [Sa], parts of a single adjectival phrase cannot

modify different antecedents. The only logical referent

for both constituents parts of the clause is “impair-

ment.”

We further conclude that the agency’s interpretation

is contrary to the clear statutory language in other

respects. For example, while the Commissioner accepts

“an award of benefits” as an alternate requirement to

being unable to engage in SGA for a period of twelve

12a

months, “an award of benefits” is nowhere to be found

in the statutes that define “disability” and outline the

parameters of “trial work period.” Additionally, though

the Commissioner seeks to make the trial work period,

as well as a finding of disability, contingent upon either

the duration of SGA or adjudication,’ see 60 Fed. Reg.

12166, 12168; SSR 82-52, the “shall begin language in

42 U.S.C. § 422(c)(3) is conditioned only on being “eligi-

ble to receive benefits,” as determined under section

423(a)(1). The conflict between the statute and the

agency interpretation is both apparent and significant.

The Commissioner seeks to reconcile this apparent

tension by reference to the use of different verb tenses

within 42 U.S.C. § 423(d)(1(A). We are told that the

Congress included the “expected to last language in

section 423(d)(1)(A) so that the SSA can “adjudicate

disability claims without having to wait 12 months from

the alleged onset of disability, rather than to permit

claims to be allowed in the face of evidence that the

claimant’s impairment did not prevent substantial gain-

ful activity for 12 continuous months.” b 60 Fed. Reg.

12166, 12168. In support of this position, appellee

points to the fact that in its “definition of disability,

Congress used two different verb tenses to provide for

the fact that the Agency would decide claims at two

different times relative to the onset of a claimant's

disability.” Appellee’s Br. at 14.

an award of benefits.” J.A. 97.

13a

If for no other reason, juxtaposition of this “verb

tense” analysis with the timing of agency adjudication

exposes its weakness, and makes the argument unper-

suasive as a statutory matter. As an initial matter

—and significantly—neither section 423(a)(1) nor sec-

tion 423(d)(1)(A) even mentions adjudication as a

prerequisite to “disability” or “entitlement to disability

benefits.” Second, no part of the Act of which we are

aware differentiates between claims adjudicated within

twelve months, and claims adjudicated after twelve

months, a distinction upon which the Commissioner’s

verb tense analysis rests. Lastly, under the Commis-

sioner’s interpretation, a finding of disability, or entitle-

ment to benefits or a trial work period, would be deter-

mined, in part, by when the Commissioner adjudicated

a claim; we decline to make findings and entitlements of

such nature turn upon the vagaries of agency efficiency.

In sum, the Commissioner’s position, grounded in

SSR 82-52 and the NPRM, is both in actual conflict with

the statutory language and unreasonable, and our duty

is therefore clear—we must reject the agency interpre-

tation and apply the statute as enacted.”

We join no fewer than four other circuit courts of appeal in

the assessment that the agency’s position contradicts the plain lan-

guage of the governing statute. See Salamalekis v. Commissioner

of Social Security, 221 F.3d 828, 882 (6th Cir. 2000) (agency

position and SSR 82-52 an invalid interpretation of the Act):

Newton v. Chater, 92 F.3d 688, 698-94 (8th Cir. 1996) (trial work

period starts in the month that disability entitlement begins, i e.,

after five-month waiting period; agency ruling is inconsistent with

the statutory provisions); Walker v. Secretary of Health and

Human Services, 943 F 2d 1257, 1259-60 (10th Cir. 1991) (same);

McDonald v. Bowen, 818 F 2d 559, 564 (7th Cir. 1987) (same).

14a

For the above reasons, those portions of the judg-

ment of the district court affirming the Commissioner’s

conclusions that Walton is not disabled based on his

return to SGA within twelve months of his onset date

and is not entitled to a trial work period are reversed.

However, that portion of the district court's judgment

affirming the Commissioner's conclusion that appel-

lant’s work in October 1995 was SGA is affirmed. The

case is remanded for further proceedings consistent

with this opinion.

AFFIRMED IN PART, REVERSED

IN PART, AND REMANDED

15a

APPENDIX B

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

Richmond Division

Civil Action No. 3:98CV339

CLEVELAND B. WALTON, PLAINTIFF

KENNETH S. APFEL, COMMISSIONER OF SOCIAL

SECURITY, DEFENDANT

Filed: Oct. 20, 1999]

MEMORANDUM OPINION

Cleveland B. Walton appeals the final decision of the

Commissioner of the Social Security Administration

(“Commissioner”) denying Walton’s claim for disability

insurance benefits (“DIB”) and supplemental security

income benefits (“SSI”). For the reasons which follow,

the Commissioner’s decision at issue is supported by

substantial evidence, the Proposed Memorandum Opi-

nion of the Magistrate Judge denying Walton’s motion

for summary judgment and granting the Commis-

sioner’s motion for summary judgment is approved.

PROCEDURAL BACKGROUND AND STATEMENT

OF FACTS

Walton was first hospitalized for depression with

psychotic features in October 1990. Upon his release

16a

five days later, Walton was treated with medication as

an — until he re-entered the hospital in May

1994, for depression. He was released ten days later

and continued to receive medication and treatment as

an outpatient until March 1995 when he was diagnosed

with schizophrenia and hospitalized for approximately

six days. Once again, Walton’s condition stabilized and

he was released and treated with medication as an out-

patient. The record shows that Walton’s mental health

continued in that posture until April 12, 1995, when he

filed his claims for SSI and DIB with the Social Secu-

rity Administration.’ 1

From 1992 through October 1994, Walton work as

an in-school suspension teacher which entailed super-

vision of students who were suspended from attending

regular classes. After that employment was termi-

nated, Walton worked for several different employers.

These jobs, which the administrative law judge.

(“ALJ”) found were unsuccessful work attempts and

therefore were not considered in determining whether

Walton was able to perform substantial gainful activity,

included: a salesman for a clothing store; a stocker ata

department store; an unidentified position with the

Post Office; an unidentified position with a survey ser-

vice; and a stocker at a grocery store.

In May 1995, approximately three months after hav-

ing 72 with schizophrenia, Walton began

working part-time at a grocery store as a cashier and

stocker. By October 1995, Walton was earning more

than $500 per month. On December 10, 1995, Walton

1 Walton’s mother filed a protective application for disability

insurance benefits and supplemental security income on his behalf

on March 14, 1995.

17a

became a full-time employee and his hourly rate

increased from $5.50 per hour to $6.50 per hour.

On April 12, 1995, Walten filed an application for DIB

and SSI, alleging that he had been disabled since

February 20, 1995, due to psychiatric impairments, 1. e.,

a schizophrenic disorder with associated depression.

The Commission determined that Walton’s condition

was not severe enough to prevent him from working

because it was well controlled with medication. Thus,

Walton’s application was denied initially and upon

reconsideration. An ALJ conducted a de novo review

based on an evidentiary hearing on July 10, 1996, at

which Walton was represented by counsel. At the hear-

ing, Walton amended the date of the onset of condition

from February 20, 1995 to October 31, 1994. Walton’s

mother, Joyce Walton, and vocational expert, Dr.

Andrew V. Beale, also testified at the hearing.

On August 30, 1996, the ALJ issued a decision con-

cluding that Walton was entitled to a period of disa-

bility commencing October 31, 1994, the alleged onset

date of Walton’s disability due to psychiatric impair-

ments, and ending December 10, 1995, when Walton

started to work full-time at the convenience store. The

ALJ held that Walton was entitled to receive DIB and

SSI benefits from October 31, 1994 until February 29,

1996, two months after the month in which his disability

ceased, but that he was not entitled to a trial work

period.? On December 11, 1996, the Commissioner’s

2 Walton’s attorney argued that a trial work period was war-

ranted in this case. A trial work period would allow Walton to

have worked an additional nine months while receiving benefits.

Thus, a trial work period is an opportunity for an applicant to “test

his ability to work and still be considered disabled.” 20 C. F. R.

18a

Appeals Council vacated and remanded the ALJ ’s deci-

sion based on additional evidence which showed that

Walton had engaged in substantial gainful activity prior

to the lapse of the twelve months after the onset date of

his disability on October 31, 1994.

On August 15, 1997, after a second hearing, the ALJ

held that, beginning in October 1995, when his earnings

consistently were in excess of $500 per month, Walton's

work activity as a grocery store cashier and stocker

constituted substantial gainful activity. For that, rea-

son, the ALJ determined that Walton was not entitled

to a period of disability or DIB under sections 2160) and

223 of the Social Security Act, and was not eligible for

SSI under sections 1602 and 1614(a)(3)(A) of the Social

Security Act.

DISCUSSION

A. Standard of Review

The task of judicial review is to determine whether

there is substantial evidence to support the final deci-

sion of the Commissioner that Walton is not entitled to

404.1592(a). A trial work period begins with the month in which

a claimant becomes entitled to DIB and ends with the close of the

ninth month in which the claimant has performed services (“any

activity, even though it is not substantial gainful activity, which is

done by a person in employment or self-employment for pay or

profit, or is the kind normally done for pay or profit. 20 CF. R.

404.1592(b)) or with the close of the month in which new evidence,

other than evidence relating to work done during the trial work

period, shows that the claimant is not disabled. See 20 C. F. R.

§ 404.1592(e)(1), (2). The ALJ found that, a trial work period was

not warranted because Walton had demonstrated the capacity for

sustained work since May 1995. Further, if Walton is not entitled

to DIB or SSI, he is not entitled to a trial work period.

19a

DIB or SSI benefits. See 42 U.S.C. § 405(g). Sub-

stantial evidence is defined as “relevant evidence a

reasonable mind might accept as adequate to support a

conclusion. It consists of more than a mere scintilla of

evidence but may be somewhat less than a pre-

ponderance.” Laws v. Celebrezze, 368 F.2d 640, 642 (4th

Cir. 1966). Consequently, a reviewing court should not

substitute its judgment for that of the Commissioner.

See id.; see also Hays v. Sullivan, 907 F.2d 1453, 1456

(4th Cir. 1990). “[TJhe language of § 205(g) precludes a

de novo judicial proceeding and requires that the court

uphold the Secretary’s decision even should the court

disagree with such decision as long as it is supported by

‘substantial evidence.” Blalock v. Richardson, 483

F. 2d 773, 775 (4th Cir. 1972). Thus, it is the duty of the

court to determine whether there was substantial

evidence to justify the Commissioner’s decision.

B. Analysis

To qualify for DIB or SSI under the Social Security

Act, a claimant must be disabled and must meet the

earnings requirement as defined by the Act. “Dis-

ability” is defined as the “inability to engage in any sub-

stantial gainful activity by reason of any medically de-

terminable physical or mental impairment which can be

expected to result in death or which has lasted or can

be expected to last for a continuous period of not

less than 12 months.” 42 U.S.C. §§ 416(i)(1)(A),

423(d)(1)(A), 1382¢(a)(3)(A); see e.g., Stewart v. Apfel,

182 F.3d 909 (4th Cir. 1999); Pass v. Chater, 65 F.3d

1200 (4th Cir. 1995); Mullins v. Chater, 53 F.3d 328 (4th

Cir. 1995); Rosa v. Callahan, 168 F.3d 72 (2d Cir. 1999).

20a

In addition, a claimant will be found to be under a

disability:

only if his physical or mental impairment or im-

pairments are of such severity that he is not only

unable to do his previous work but cannot, consider-

ing his age, education, and work experience, engage

in any other kind of substantial gainful work which

exists in the national economy, regardless of

whether such work exists in the immediate area in

which he lives, or whether a specific job vacancy

exists for him, or whether he would be hired if he

applied for work.

42 U.S.C. $§ 423(d)(2)(A), 1882¢(a)(3)(B); see e. 9. Pass

v. Chater, 65 F.3d 1200 (4th Cir. 1995); English v.

Shalala, 10 F.3d 1080 (9th Cir. 1993); Bush v. Shalala,

94 F.3d 40, 45 n.3 (2d Cir. 1996).

1. Substantial Gainful Activity

According to the Act, a claimant will be considered

disabled “if he is unable to engage in any substantial

gainful activity by reason of any medically determin-

able physical or mental impairment which can be

expected to result in death or which has lasted or can

be expected to last for a continuous period of not less

than twelve months.” 42 U.S.C. Myer ny weg

Substantial gainful activity is “work activity is

both substantial and gainful.” 20 C. F. R. 88 404.1572,

426.972. Substantial work activity involves doing

significant physical or mental activities.” 20 C. F. R.

§§ 404.157 2(a), 916.972(a). Work may be substantial

even if it is part time. See id. Gainful work activity is

work that is done for pay or profit. 20 C.F.R.

§§ 404.1572(b), 416.972(b). The ALJ concluded that,

beginning in October 1995, Walton's work as a cashier

21a

and stocker at the grocery store was both substantial

and gainful. The date elaimed as the onset of disability

was October 31, 1994, less than twelve months before

he performed substantial gainful activity. For that

reason, the ALJ held that Walton did not satisfy the

durational requirement of 20 C.F.R. §§ 404.1505,

416.905.

The Commissioner has promulgated a five-step

process to determine whether a claimant is disabled.

See 20 C. F. R. §§ 404.1520, 416.920. Under the regula-

tions, the ALJ must consider whether the claimant

(1) is working and the work he is doing is substantial

gainful activity; (2) has a severe impairment; (3) has an

impairment that meets or equals the requirements of a

listed impairment; (4) has an impairment that prevents

him from doing past relevant work; and (5) whether his

impairment prevents him from performing other work.

See 20 C. F. R. §§ 404.1520, 416.920; see also, Hunter v.

Sullivan, 993 F.2d 31 (4th Cir. 1992) (discussing five

step process). The claimant bears the burden of pro-

duction and proof in the first four steps of the inquiry.

See Hunter v. Sullivan, 993 F.2d 31, 35 (4th Cir. 1992).

If the claimant discharges that obligation, the burden

then shifts to the Secretary to show, in the fifth step,

that other jobs exist in the national economy that the

claimant can perform reconsidering his age, education,

and work experience. See id.

If, at any point in the analysis, the ALJ finds that the

claimant has not satisfied any step of the process,

review does not proceed to the next step. See 20 C.F.R.

88 404.1520, 416.920; see also Hunter, 993 F.2d at 35.

Thus, if the ALJ determines that the claimant is work-

ing and the work he is doing is substantial gainful

22a

activity, the Commissioner will find that he is not

disabled without regard to his medical condition,

age, education or work experience. See 20 C. F. R.

§§ 404. 1520(b), 416.920 (b), see also Pass v. Chater, 65

F.3d 1200 (4th Cir. 1995).

Applying these principles, Walton was found to be

7. substantial gainful activity and, therefore,

he was not disabled within the meaning of the Act.

Thus, the analysis ended at that step of the process and

his claim was denied. There was substantial evidence in

the record upon which the ALJ could reach that deci-

sion. Thus, even though Walton’s condition met the re-

quirements of a listed impairment (step three) the anal-

ysis never reached that stage.

Walton attacks the ALJ’s findings and insists that he

was not engaged in substantial gainful activity before

the lapse of the twelve month duration requirement.

Walton argues that the ALJ allegedly failed to properly

average Walton’s earnings and deduct impairment-

related work expenses. For the reasons set forth be-

low, Walton’s arguments lack merit.

a. Walton’s Earnings Create a Rebuttable

Presumption of Substantial Gainful Activity.

According to the statutory guidelines, earnings in

excess of $500 per month, for work done between

January 1990 and June 1999, create a rebuttable pre-

sumption of substantial gainful activity. See 20 C. F. R.

§§ 404.1574 (b)(2) (vii), 416.9740b)(2) (vii); see also Payne

v. Sullivan, 946 F.2d 1081, 1083 (4th Cir. 1991); Garnett

v. Sullivan, 905 F.2d 778, 780 n.1 (4th Cir. 1990); Jones

v. Shalala, 21 F.3d 191, 192 (7th Cir. 1994). Beginning

in October 1995, Walton’s earnings were consistently in

excess of $500 per month. Hence, the ALJ correctly

23a

held that there was a rebuttable presumption that

Walton was engaging in substantial gainful activity

within twelve months of his alleged onset date.

Walton’s argument that his out-of-pocket expenses

for high blood pressure medication should be deducted

from his total earnings to reduce his average monthly

earnings is flawed. Although impairment-related work

expenses may be deducted from earnings when

deciding if the claimant has performed substantial

gainful activity, only certain expenses qualify for the

deduction. See 20 C. F. R. 88 404. 1576( ec), 416.976(c).

Examples of deduetible drugs and medical services are

anti-convulsant drugs to control epilepsy, anti-depress-

ant medication for mental disorders, and radiation

treatment or chemotherapy for cancer patients. The

ALJ correctly held that blood pressure medication did

not qualify as a deductible drug under the regulations

because to be deductible, the drugs or services must be

directly related to the claimant’s impairment. See 20

C. F. R. §§ 404.1576(c)(5)(iii), 416.976(c)(5)(iii). The

medication taken by Walton for his mental disorder was

provided to him by a mental health ageney and did not,

therefore, represent an out-of-pocket expense. Thus,

Walton’s earnings should not have been reduced by any

impairment-related expenses.

b. Walton Failed to Rebut the Presumption of

Substantial Gainful Activity.

Walton sought to rebut the presumption of sub-

stantial gainful activity by arguing that, when his earn-

ings are averaged over the entire period of time that he

worked, his average earnings fall below $500 per month

until December 1995. Thus, Walton argues that the

24a

period in which he engaged in substantial gainful acti-

vity began in December 1995.

The ALJ relied on Social Security Ruling 83-35 in

rejecting Walton’s argument. Social Security Ruling

83-35 provides that [when there is significant change

in work patterns or earnings during the period of work

requiring evaluation, earnings are not averaged over

the entire period of work involved. . . . the earnings

must be averaged over each separate period of work

involved to determine if either effort was SGA.” SSR

83-35. The ALJ found that there was a “significant

change in the claimant’s ability to function and in his

earnings (since he consistently earned in excess of $500

a month for months after October 1995, as compared to

earnings averaging only $350 from June to September

1995).” Tr. at 15. Thus, the ALJ averaged earnings

after October 1995 and found that Walton consistently

earned in excess of $500 beginning in October 1995.

Walton also argues that, even if he did engage in

substantial gainful activity within twelve months of the

onset of his disability, he is nevertheless entitled to

DIB because his impairment was expected to last more

than twelve months. The ALJ pointed out that “the

duration requirement provides that [the claimant] must

be prevented from performing substantial gainful acti-

vity for a 12-month period even if his impairment lasted

or was expected to last for 12 months.” Tr. at 13. See

20 C.F.R. §§ 404.1520(b), 416.920(b) (“If you are work-

ing and the work you are doing is substantial gainful

activity, we will find that you are not disabled regard-

less of your medical condition . . .”).

25a

. Even if Walton’s Earnings Averaged Slightly

Less Than $500 per Month, He Was Still

Engaged in Substantial Gainful Activity.

The regulations provide “that the amount of a clai-

mant’s earnings may show that he engaged in sub-

stantial gainful activity. See 20 C. F. R. §§ 404.1574,

416.974 (emphasis added). However, the regulations

also provide that “the fact that [a claimant’s] earnings

are not substantial will not necessarily show that [he] is

not able to do substantial gainful activity.” 20 C.F.R.

$§ 404.1574(a), 416.974(a).

If a claimant’s monthly income averages between

$300 and $500 per month, the Commissioner will con-

sider other factors to determine whether his work

constitutes substantial gainful activity. See 20 C. F. R.

$§ 404.1574(b)(6), 416.974 (b)(6); Payne v. Sullivan, 946

F.2d 1081, 1083 (4th Cir. 1991). For example, if

Walton’s work was comparable to that of unimpaired

people in the community who have the same or similar

occupations, that can serve as additional evidence that

his work constituted substantial gainful activity. See 20

C.F.R. §§ 404.1574(b)(6)(i), 416.974(b)(6)(i).

In this case, even if Walton’s monthly income

averaged slightly less than $500 per month, other fac-

tors suggest that his work constituted substantial

gainful activity. As the Magistrate Judge pointed out,

Itlhere was no evidence that plaintiff was being subsi-

dized or that he was provided any special considera-

tions to continue his employment. In fact, Walton

denied any such special consideration. There is no

evidence that Walton was working in a sheltered or

special environment or that he was not actually earning

his pay.” Mag. Proposed Mem. Op. at 4. Thus, there is

26a

additional evidence that Walton’s work constituted

substantial gainful activity.“

CONCLUSION

The Commissioner’s decision that Walton was not

entitled to DIB or SSI was supported by substantial

evidence. Therefore, Walton’s objections to the Pro-

posed Memorandum Opinion are overruled. The Pro-

posed Memorandum Opinion is affirmed and, as approv-

ed herein, shall constitute the final decision of this

Court.

The Clerk is directed to send a copy of this Memoran-

dum opinion to all counsel of record.

It is so ORDERED.

/s/ ROBERT E. PAYNE

United States District Judge

Richmond, Virginia

Date: October 26, 1999

3 Walton also argues that the ALJ erred by giving deference to

the Commissioner’s explanation of its policy despite the fact that

the Commissioner relied on a non-final Social Security Ruling set

forth in a Notice of Proposed Rulemaking. Given the resolution of

the other arguments, it is unnecessary to address that one.

27a

APPENDIX C

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

Richmond Division

Civil Action No. 3:98CV339

CLEVELAND B. WALTON, PLAINTIFF

KENNETH S. APFEL, COMMISSIONER OF SOCIAL

SECURITY, DEFENDANT

For the reasons set forth in the accompanying memo-

randum Opinion, it is hereby ORDERED that the

Proposed Memorandum Opinion is affirmed and, as

approved, shall constitute the final decision of this

Court.

The Clerk is directed to send a copy of this Order to

all counsel of record.

It is so ORDERED.

4 ROBERT E. PAYNE

United States District Judge

Richmond, Virginia

Date: October 26, 1999

28a

APPENDIX D

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

Richmond Division

Civil Action No. 3:98C V339

CLEVELAND B. WALTON, PLAINTIFF

KENNETH S. APFEL, COMMISSIONER OF SOCIAL

SECURITY, DEFENDANT

Filed: Apr. 14, 1999]

Pursuant to Title 28 U.S.C. 636(b)(1)(c), it is

ORDERED that the attached proposed memorandum

opinion be, and the same hereby is, FILED. All parties

are advised that they may file objections to the pro-

posed memorandum opinion within twelve (12) days of

the date hereof. Failure to object in writing setting

forth with specificity the objection, may result in the

Court’s adopting the proposed memorandum and the

entry of an order in accordance therewith.

Let the Clerk send a copy of this order, and a copy of

the attached memorandum, to counsel for the plaintiff

29a

and counsel for the defendant.

4/ ILLEGIBLE

Date: April 14, 1999

UNITED STATES MAGISTRATE

JUDGE

30a

APPENDIX E

UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF VIRGINIA

Richmond Division

Civil Action No. 3:98CV339

CLEVELAND B. WALTON, PLAINTIFF

KENNETH S. APFEL, COMMISSIONER OF SOCIAL

SECURITY, DEFENDANT

Filed: Apr. 14, 1999]

PROPOSED MEMORANDUM OPINION

Cleveland B. Walton, the plaintiff, brings this action

for review of the final decision of the Commissioner of

Social Security denying his claim for disability insu-

rance benefits and supplemental security income under

the Social Security Act. Jurisdiction is appropriate

pursuant to 42 U.S.C. 405(g).

laintiff testified at an initial hearing before an

— law judge (ALI) on July 10, 1996, that

he was 32 years old and had a BS degree in music edu-

cation. He worked from November, 1992 to October,

1994 as a teacher. In November, 1994, he was em-

ployed in sales at a retail clothing store and in Decem-

ber, 1994, he worked in a grocery store. In May, 1995,

31a

plaintiff worked parttime in the grocery store and

became a full time employee on December 10, 1995. He

said he became disabled in October, 1994, due to a

psychiatric impairment. Joyce Walton, plaintiff's

mother, testified that Walton had his first psychiatric in

1990 and was hospitalized in March, 1995. She said that

his breakdowns occur when he forgets to take his

prescribed medications. She did not believe that he

could continue working without some support.

On August 30, 1996, the ALJ found that Walton had

not worked from October 31, 1994 through December

10, 1995; that he had severe paranoid schizophrenia

with depression and anxiety; that his impairment met

listing 12.03 A, B and C; that he was disabled since

Oetober 31, 1994; and that his disability terminated on

December 10, 1995, when he returned to full-time work.

The Appeals Council found that Walton's work

record since October 31, 1994, showed that he engaged

in substantial gainful activity and remanded this matter

to the ALJ to evaluate his work record since October

31, 1994.

On remand, a hearing was conducted by the ALJ on

June 3, 1997, and plaintiff testified that he went back to

work for Food Lion in June, 1995 and earned $354.00 a

month through December, 1995, when he began earning

$1,140.00 a month. He was suspended in March, 1996.

Plaintiffs mother, Joyce Walton, testified that she has

to remind him to take his medicine and she did not

believe he would take them if he lived alone. She said

her son was fired at Food Lion due to his failure to pay

for food he had eaten.

32a

On August 15, 1997, the ALJ found that Walton’s

monthly earnings averaged in excess of $500.00 in

October, 1995 and since he has not been unable to en-

gage in substantial activity for a continuous period of at

least twelve months, he is not disabled.

The Appeals Council denied plaintiff 's request for a

review on April 3, 1998, and plaintiff appeals that final

decision.

The medical evidence of record begins with a hospital

record where plaintiff was hospitalized for major

depression in October, 1990.

Plaintiff underwent a psychological evaluation in

May, 1994, which resulted in a diagnosis of Major

Depression with psychotic features.

On Janu 3, 1996, Dr. William A. Shepard com-

pleted a Medical Assessment of plaintiff’s ability to

perform work-related activities. He reported that

“with medication management [Walton] carries out

reasonable conversation and duties at a minimal scale”.

He concluded that Walton’s lack of touch with reality

even though maintained on medications still leaves him

with defects that are possibly permanent.

On June 30, 1996, Dr. Elliott J. Spanier, a psychiatrist

and medical advisor, opined that Walton’s impairments

met listing 12.08, that they have lasted or would be

expected to last for a continuous period of not less than

12 months, and that his thought disorders, halluci-

nations, and paranoid thinking made it unlikely that he

could engage in sustained work activity.

33a

The issue is whether the final decision of the Com-

missioner is supported by substantial evidence. Bla-

lock v. Richardson, 483 F.2d 773 (4th Cir. 1976).

The scope of judicial review in disability cases is

narrow, and is limited to a determination of whether

the final decision of the Commissioner is supported by

substantial evidence in the record as a whole. Richard-

son v. Prates, 402 U.S. 389, 91 S. Ct. 1420 (1971). The

Commissioner’s factual findings are conclusive if they

are supported by substantial evidence. “Substantial

evidence” has been defined as being more than a mere

scintilla, but something less than a preponderance.

Laws v. Celebrezze, 368 F.2d 640 (4th Cir. 1966).

20 CFR 404.1571 proyides, in part, “if you are able to

engage in substantial gainful activity, we will find that

you are not disabled.” Section 404.1574(2)(vii) provides

“We will consider that your earnings from your work

activities as an employee show that you have engaged

in substantial gainful activity if your earnings averaged

more than $500 a month in calendar years after 1989”.

The Regulations define “Disability” as the inability to

do any substantial gainful activity by reason of any

medically determinable physical or mental impairment

which can be expected to result in death or which has

lasted or can be expected to last for a continuous period

of not less than 12 months.

This case is unusual in that the medical evidence

indicates that the plaintiff meets the requirements of a

listed impairment during the period in question and

would otherwise be found to be “disabled” except for

the fact that the evidence shows that during this period

of time the plaintiff was actually engaged in SGA.

There was no evidence that plaintiff was being subsi-

34a

dized or that he was provided special considerations to

continue in his employment. In fact, piaintiff denied

any such special consideration. There is no evidence

that Walton was working in a sheltered or special

environment or that he was not actually earning his

pay. The ALJ correctly made an evaluation pursuant

to Section 404.1520(a) and (b), which provides “If you

are working and the work you are doing is substantial

gainful activity, we will find that you are not disabled

regardless of your medical condition or your age, educa-

tion, and work experience.”

Plaintiff argues that the ALJ erred in not finding him

disabled based on the fact that his impairment was

“expected” to last for a continuous period of not less

than 12 months. The ALJ, in reviewing plaintiff’s work

record during the relevant period, did not have to

consider prospectively the expectations of the duration

of his impairment because the ALJ had the benefit of

knowing the actual amounts plaintiff did earn during

the period. The ALJ averaged Walton’s actual earnings

and found that in October, 1995, he earned $523.77, in

November, 1995, $640.26, and $1,140.33 in December,

1995. His earnings were consistently in excess of $500

per month beginning in October, 1995. Plaintiff's em-

ployment during the relevant period did not fulfill the

requirements of being classified as “trial work periods”

as defined in Section 404.1592.

The Commissioner’s decision is supported by sub-

stantial evidence and was based upon a correct applica-

tion of the law. It should, therefore, be affirmed.

Plaintiff’s motion for summary judgment will be

denied and defendant’s motion for summary judgment

will be granted.

35a

An appropriate order shall issue.

‘Y ILLEGIBLE

Date: April 14, 1999

UNITED STATES MAGISTRATE

JUDGE

36a

APPENDIX F

[seal omitted]

Refer to: TAHB9 Office of Hearings and Appeals

Social Security 5107 Leesburg Pike

Number omitted] Falls Church, VA 22041-3255

ACTION OF APPEALS COUNCIL ON REQUEST

FOR REVIEW

Mr. Cleveland B. Walton

5 Shoal Ct.

Portsmouth, VA 23703

Dear Mr. Walton:

The Appeals Council has considered the request for

review of the Administrative Law Judge’s decision

issued on August 15, 1997.

Social Security Administration regulations provide that

the Appeals Council will grant a request for review

where: (1) there appears to be an abuse of discretion by

the Administrative Law Judge; (2) there is an error of

law; (3) the Administrative Law Judge’s action, find-

ings, or conclusions are not supported by substantial

evidence; or (4) there is a broad policy or procedural

issue which may affect the general public interest. The

regulations also provide that where new and material

evidence is submitted with the request for review, the

court record will be evaluated and review will be

granted where the Appeals Council finds that the Ad-

ministrative Law Judge’s actions, findings, or conclu-

sion is contrary to the weight of the evidence currently

of record (20 CFR 404.970 and 416.1470).

37a

The Appeals Council has concluded that there is no

basis under the above regulations for granting your

request for review. Accordingly, your request is denied

and the Administrative Law Judge’s decision stands as

the final decision of the Commissioner of Social Security

in your case. In reaching this conclusion, the Appeals

Council has considered the applicable statutes, regu-

lations, and rulings in effect as of the date of this action.

The Appeals Council has also considered the conten-

tions raised in the material identified on the attached

Order of Appeals Council, but concluded that these con-

tentions do not provide a basis for changing the Ad-

ministrative Law Judge’s decision.

If you desire 2 court review of the Administrative Law

Judge’s decision, you may commence a civil action by

filing a complaint in the United States District Court

for the judicial district in which you reside within sixty

(60) days from the date of the receipt of this letter. It

will be presumed that this letter is received within five

(5) days after the date shown above unless a reasonable

showing to the contrary is made. The complaint should

name the Commissioner of Social Security as the defen-

dant and should include the Social Security number(s)

shown at the top of this notice. The right to court

review is provided for in sections 205(g) and 1631(c)(3)

of the Social Security Act, as amended (42 U.S.C. 405(g)

and 1383(c)(3)).

If you cannot file your complaint within 60 days, you

may ask the Appeals Council to extend the time in

which you may begin a civil action. However, the

Council will only extend the time if you provide a good

reason for not meeting the deadline. Your reason(s)

must be set forth clearly in your request.

38a

If a civil action is commenced, the Commissioner must

be served by sending a copy of the summons and

complaint by registered or certified mail to the General

Counsel, Social Security Administration, Room 611,

Altmeyer Building, 6401 Security Boulevard, Balti-

more, MD 21235. (See rules 4(c) and (i) of the Federal

Rules of Civil Procedure). In addition, you must serve

the United States Attorney for the district in which you

file your complaint and the Attorney General of the

United States, as provided in the Federal Rules of Civil

Procedure.

Sincerely yours,

original signed by

David O. Phillips

Administrative Appeals Judge

ce:

Kathryn L. Prior

39a

APPENDIX G

SOCIAL SECURITY ADMINISTRATION

Office of Hearings and Appeals

DECISION

INTHECASEOF Caro

Period of Disability,

Disability Insurance Benefits, and

(Claimant)

lomitted) __

(Wage Earner) (Social Security Number)

PROCEDURAL HISTORY

The claimant filed concurrent applications for a peri

of disability, disability insurance benefits, and —

mental security income on April 12, 1995, with a

protective filing on March 14, 1995. After two admin-

istrative denials, the claimant requested a hearing on

October 12, 1995. A hearing was held on July 10, 1996

and on August 30, 1996 the undersigned Administrative

Law J udge issued a decision finding that the claimant

was entitled to a closed period of disability from Octo-

ber 31, 1994 to December 10, 1995 when, according to

his testimony at the hearing, he returned to substantial

gainful activity.

The Administration subsequently determined that the

claimant’s earnings beginning in October 1995 exceeded

$500 per month (indicating an ability to engage in sub-

stantial gainful activity under sections 404.1574 and

40a

416.974 of Regulation Nos. 4 and 16), and on March 12,

1997 the Appeals Council remanded the case to the un-

dersigned to determine whether the claimant is, in fact,

entitled to a cash benefit.

At both the original hearing and the supplemental

hearing held in Richmond, Virginia, on June 3, 1997, the

claimant was represented by Kathryn L. Pryor, Attor-

ney at Law.

The general issues are whether the claimant is entitled

to a period of disability and disability insurance benefits

under sections 216(i) and 223, respectively, of the Social

Security Act, as amended; and whether he is disabled

under section 1614(a)(3)(A) of the Act.

EVALUATION OF THE EVIDENCE

Sections 404.1505 and 416.905 of the Regulations pro-

vide the basic definition of disability—the inability to

do any substantial gainful activity by reason of any me-

dically determinable physical or mental impairment

which can be expected to result in death or which has

lasted, or can be expected to for a continuance period of

not less than 12 months. Thus, the claimant must prove

that he has a medically determinable impairment which

prevents him from performing substantial gainful acti-

vity.

Social Security Ruling 82-52 provides that when an

— to werk demonstrating the ability to

engage in substantial gainful activity before approval of

the award and prior to the lapse of the 12-month period

after onset, the claim must be denied. While the under-

signed concluded in the decision of August 30, 1996 that

4la

Mr. Walton had an impairment meeting the require-

ments of section 12.03 of Appendix 1 to Subpart P of

Regulations No. 4, the duration requirement provides

that he must be prevented from performing substantial

gainful activity for a 12-month period even if his impair-

ment lasted or was expected to last for 12 months. The

undersigned must determine whether the claimant en-

gaged in substantial gainful activity as defined in the

Regulations prior to October 31, 1995, 12 months after

the alleged onset of disability.

At the initial hearing, the claimant testified that he had

begun working as a general laborer and cashier at a

grocery in May 1995. He testified that he worked on a

part-time basis between May and December 10, 1995,

five to six hours a day, three days a week, earning $5.50

an hour. Beginning December 10, 1995, he began work-

ing 40 hours a week on a full-time basis, earning $6.50

an hour.

When the Social Security District office began process-

ing the claim for payment of supplemental security

income, it obtained pay stubs from the claimant and

earnings information directly from the personnel

department of the grocery store for which the claimant

worked. The records showed that the claimant

earned $354.39 in June 1995, $519.43 in July 1995,

$335.67 in August 1995, $392.94 in September 1995,

$523.77 in October 1995, $640.26 in November 1995, and

$1,140.33 in December 1995 (Exhibit 40). The Admin-

istration maintains that the claimant returned to sub-

stantial gainful activity in October 1995, when his earn-

ings consistently were in excess of $500 a month.

Counsel argues that the above-described earnings

should be averaged over the entire period of time that

42a

the claimant worked, which would equal $461.07 “a

month from June through November 1995 and, with

actual December 1995 earnings, would increase to an

average of $566.68 a month (Exhibit 53).

Sections 404.1574 and 416.974 of the Regulations pro-

vide several guidelines to determine whether an indivi-

dual is engaging in substantial gainful activity. See-

tions 404. 157400) and 416.9740) provide that the erite-

ria in paragraph (a) of those sections, and sections

404.1576 and 416.976 be considered before looking at

actual earnings.

Sections 404.1574(a) and 416.974(a) provide that earn-

ings amounts may not necessarily show that an indi-

vidual has the ability or inability to engage in sub-

stantial gainful activity. Only the amounts earned (and

no subsidized earnings) will be considered, and work in

a sheltered or special environment could be viewed

differently than similar work in the civilian work force.

The evidence in the case at hand does not show that the

claimant’s earnings were subsidized, or that he worked

in a sheltered or special environment.

Sections 404.1576 and 416.976 provide that impairment

related work expenses may be deducted from earnings

to reduce the monthly wage amount. Included in those

sections is payment for certain prescribed drugs and

medical services. Counsel has maintained that the

claimant’s out-of-pocket expenses for high blood pres-

sure medication should be deducted from his total

earnings in October 1995. She indicated that his earn-

ings of $523.77 should be offset by a payment of $24.38

for high blood pressure medicine made on October 17,

1995 (Exhibit 44). Sections 404.1576(c)(5) and

416.976(c)(5) provide that if an individual uses drugs or

43a

medical services to control an impairment, the pay-

ments for them may be deducted. Examples of

deductible drugs and medical services listed are anti-

convulsant drugs to control epilepsy and anti-depres-

sant medication for mental disorders. While the

claimant in this case has a mental disorder and has

taken medication for it, that medication was provided

for the claimant by a mental health agency and did not

represent an out-of-pocket expense. While the claimant

apparently requires blood pressure medication, the

undersigned finds that that medication would not be

considered a deductible drug as intended by the

Regulations.

Sections 404.1574 (b) and 416.974 (b) provide monetary

guidelines for earnings that will ordinarily show that an

individual has engaged in substantial gainful activity.

For calendar years after 1989, there is a rebuttable pre-

sumption that earnings averaging more than $500 a

month will ordinarily show that an individual is

engaging in substantial gainful activity. As previously

noted, the claimant earned $523.77 in October 1995,

$640.26 in November 1995, and $2,140.33 in December

1995 (Exhibit 40). Although counsel argues that the

entire period (from when the claimant returned to wor

in May 1995 until he began consistently earning in

excess of $500 a month) should be considered when

averaging earnings, SSR 83-35 provides that when

there is a significant change in work patterns or earn-

ings during the period of work requiring evaluation,

earnings are not averaged over the entire period of

work involved. It is noted that the claimant testified

that he worked on a part-time basis until he was able to

return to full-time work despite his impairment. There

was a significant change in the claimant's ability to

44a

function and in his earnings (since he consistently

earned in excess of $500 a month for months after

October 1995 as compared to earnings averaging only

$350 from June to September 1995). The undersigned

will average earnings after October 1995, and the

record clearly demonstrates that the claimant

consistently earned in excess of $500 beginning in

October 1995.

There was evidence submitted by a former employer

indicating that the claimant’s performance was not

ranked among the top as compared to other employees.

As a matter of fact, the claimant ranked last in per-

formance in March 1996 (Exhibit 51). While it is admir-

able that the claimant has continued to work despite his

psychiatric impairment, the undersigned is bound by

the law and regulations which indicate that the

claimant returned to substantial gainful activity

beginning October 1995.

Counsel argued that the claimant should be entitled to a

trial work period beginning May 1995, when he re-

turned to part-time work. Sections 404.1592(e) and

416.992(e) provide specifically that a trial work period

will begin with the month in which an individual

becomes entitled to a cash benefit. In this case, since

the undersigned must find that the claimant returned

to substantial gainful activity beginning in October

1995, he can not be found to be under a “disability”

because he was not prevented from working for any

continuous period of 12 months. Since he is not under a

“disability,” he is not entitled to a cash beneut or to a

trial work period under the Regulations. The under-

signed therefore concludes that the claimant is no:

entitled to a period of disability, disability insurance

45a

benefits, or supplemental security income based on the

applications filed protectively on March 14, 1995.

As previously indicated, the undersigned admires the

claimant for his attempts to continue to work despite a

Listing-level impairment, and if he should be prevented

from engaging in substantial gainful for a period of 12

months or longer in the future, he is encouraged to file

new applications for benefits.

After careful consideration of the entire record, the

Administrative Law Judge makes the following finding:

1. The claimant met the earnings requirements

of the Social Security Act on October 31, 1994,

the date that he alleges he became disabled,

and continues to meet them through Decem-

ber 31, 2000.

2. The claimant began working with earnings

averaging in excess of $500 a month in Octo-

ber 1995.

3. The claimant’s work activity involved signi-

—_ — for pay, and constitutes sub-

8 activity within the of

— ä meaning

4. The claimant has not been unable to engage in

substantial gainful activity for any continuous

period of at least 12 months.

5. The claimant was not under a disability“ as

defined in the Social Security Act at any time

through the date of this decision.

46a

DECISION

It is the decision of the Administrative Law Judge that,

based on the applications filed protectively on March

14, 1995, the claimant is not entitled to a period of dis-

ability or disability insurance benefits under sections

216(i) and 223, respectively, of the Social Securi y Act,

and is not eligible for supplemental security income un-

der sections 1602 and 1614(a)(3)(A) of the Act.

/s/) DAVID S. ANTROBUS

DAVID S. ANTROBUS

Administrative Law Judge

Main Street Centre, Rm 1720

600 East Main Street

Richmond, VA 23219-2406

AUG 15, 1997

Date

47a

APPENDIX H

SOCIAL SECURITY ADMINISTRATION

OFFICE OF HEARINGS AND APPEALS

ORDER OF APPEALS COUNCIL

REMANDING CASE TO ADMINISTRATIVE LAW JUDGE

In the case of Claim for

Period of Disability

Ww —

(Claimant)

[omitted]

(Wage Earner)(Leave (Social Security Number)

blank if same as above)

Notice of own motion review was previously sent on

December 11, 1996, advising of the Appeals Council’s

intention to review the Administrative Law Judge’s de-

cision issued on August 30, 1996, pursuant to 20 CFR

404.969, because there was an error of law and the ac-

tion, findings or conclusions were not supported by sub-

stantial evidence (20 CFR 404.970). In that notice the

Council also advised of its intention to remand this case

for further proceedings and offered an opportunity for

comment on that proposed action. Comments were re-

ceived and were considered.

Under the authority of 20 CFR 404.977, the Appeals

Council vacates the hearing decision and remands this

case to an Administrative Law Judge for resolution of

the following issue:

o The Administrative Law Judge found that the

claimant was disabled beginning October 31,

48a

1994 and that his disability benefits ceased on

December 19, 1995, when he returned to full-

time employment; however, the additional evi-

dence suggests that the claimant returned to

work demonstrating ability to engage in sub-

stantial gainful activity which occurred before

the approval of the award and prior to the lapse

of the 12-month period after onset. If this is so,

in accordance with Social Security Ruling 82-52,

the claimant’s claim must be denied. A further

evaluation of the claimant’s work activity since

October 31, 1994 is warranted.

Upon remand, the Administrative Law Judge will:

o Further consider the issues in this case, includ-

ing the information regarding the claimant’s

work activity and evaluate his work activity

since the established onset date of October 31,

1994.

In compliance with the above, the Administrative Law

Judge will offer the claimant an opportunity for a hear-

ing, take any further action needed to complete the

administrative record and issue a new decision.

Section 8001 of Public Law 100-647 requires payment of

interim benefits in cases where an Administrative Law

Judge issues a favorable disability decision and no final

decision is issued within 110 days after the date of the

Administrative Law Judge’s decision. Because the Ap-

peals Council has exercised its own motion review au-

thority in this case, interim benefits may be payable if a

final decision is not issued within 110 days after the

date of the Administrative Law Judge’s decision.

Those interim benefits will continue until a final deci-

49a

sion is issued. Another Social Security Administration

office will notify the claimant at the appropriate time as

to the amount and the effective date of any interim

payments.

APPEALS COUNCIL

/s/

DAVID O. PHILLIPS

Administrative Appeals Judge

/s/

RICHARD F. WHITE

Administrative Appeals Judge

Date: MAR. 4, 1997

50a 5la

APPENDIX I If you have any questions you may contact your local

[seal omitted] „

This notice and enelosed order of

SOCIAL SECURITY ADMINISTRATION _ remand mailed MAR. 4, 1997

Refer to: TAHB9 Office of Hearings and Appeals ce:

[Social Security 5107 Leesburg Pike ‘ :

Number omitted] Falls Church, VA 22041-3255 mee 1 R

Mr. Cleveland B. Walton

13606 Lucky Debonaire Ln. ae — Esq.

Mic.othian, VA 23112 Richmond, VA 23241

NOTICE OF ORDER OF APPEALS COUNCIL

REMANDING CASE TO ADMINISTRATIVE

LAW JUDGE

What This Order Means

We have sent your case back to an Administrative

Law Judge. In the enclosed order, we explain why

we did this and what actions the Administrative Law

Judge will take on your claim.

In addition to what we directed the Administrative

Law Judge to do, the Administrative Law Judge may

also take any other action necessary to complete

your claim.

The Next Acti Your Clai

An Administrative Law Judge will contact you to tell

you what you need to do.

52a

APPENDIX J

SOCIAL SECURITY ADMINISTRATION

Office of Hearings and Appeals

DECISION

INTHECASEOF $$ CLAIMFOR

Period of Disability,

Disability Insurance Benefits, and

Cleveland B. Walton

(Claimant)

[omitted]}

(Wage Earner) (Social Security Number)

PROCEDURAL HISTORY

Cleveland B. Walton filed applications for disability

insurance benefits and supplementary security income

on March 14, 1995. They were denied initially on May

18, 1995, and upon reconsideration on August 16, 1995.

He filed a timely request for hearing on October 12,

1995, and this case is now properly before this Adminis-

trative Law Judge for a decision pursuant to sections

404.930 and 416.1430 of Regulations Nos. 4 and 16. Mr.

Walton meets the special earnings requirements for

disability insured status under the Social Security Act

through December 31, 1999.

At a hearing before this Administrative Law Judge on

July 10, 1996 in Richmond, Virginia, Mr. Walton was

represented by Attorney Kathryn L. Pryor. Also pres-

ent and testifying were the claimant’s mother, Joyce

Walton, and vocational expert Dr. Andrew V. Beale.

53a

Mr. Walton initially alleged disability commencing

February 29, 1995, but at his hearing he amended that

onset date to October 31, 1994, the date on which he

was fired from a job as a substitute teacher (Exhibit

34).

The general issues are whether the elaimant is entitled

to a period of disability and disability insurance benefits

under sections 216(i) and 223, respectively, of the Social

Security Act, as amended; and whether he is disabled

under section 1614(a)(3)(A) of the Act. The Social

Security Act defines “disability” as the inability to

engage in any substantial gainful activity due to

physical or mental impairments which can be expected

to either result in death or last for a period of not less

than 12 months.

EVALUATION OF THE EVIDENCE

The claimant alleges disability since his amended onset

date of October 31, 1994 due to psychiatric impair-

ments, i.e., a schizophrenic disorder with associated de-

pression. Subsequent to the alleged onset date, he

worked briefly in November of 1994 as a suit salesman

and processor in department and clothing stores, and in

December of 1994 as a grocery store stocker. He also

work briefly in February of 1994 as a night stocker for a

grocery store (Exhibit 14). These episodes of employ-

ment reportedly ended due to his psychiatric impair-

ments and as such, it is concluded by this Adminis-

trative Law Judge that they constituted unsuccessful

work attempts.

It was further determined at the claimant’s hearing

that since May of 1995, he [hlas been employed at a gro-

cery store as a general worker and cashier. He ini-

54a

tially was employed on a part time basis between May

and December 10, 1995, working five to six hours a day,

three days a week, earning $5.50 per hour. Beginning

December 10, 1995, he began working 40 hours per

week on a full-time basis, earning $6.50 per hour.

Earnings prior to December 10, 1995 averaged $396 per

month. Since these earnings averaged less than $500

per month, he was not engaged in substantial gainful

activity. However, beginning December 10, 1995 when

he began working full time, his earnings have averaged

$1,040 per month, clearly reflecting substantial gainful

activity. Other than being placed on a night shift, he

advised he received no special considerations in this

job. The undersigned therefore concludes, based upon

all above-described information, that the claimant was

not engaged in substantial gainful activity from October

31, 1994 to December 10, 1995, but was engaged in

substantial gainful activity subsequent to that date.

The claimant remarked that he works on the night shift

for this grocery store because he did not “scan” fast

enough as a checker or scanner. He indicated for the

record that I] since being hospitalized for paranoid

schizophrenia, he has had difficulty focusing on job

duties. He undergoes outpatient psychiatric care and

takes the medications Haldol, Cogentin, Ativan, and

Calan.

He relies upon his mother to give him these medi-

cations. He is able to prepare simple meals for himself,

care for his personal needs, and perform simple house-

hold chores. He requires assistance with handling his

finances. He has few social activities or interactions

other than attending church where he plays music. He

has limited interaction with people other than family

55a

members. He reported medication side effects of an

occasional dry mouth, weight gain, and arm tremor

(Exhibits 15 and 16). The claimant’s mother, Joyce

Walton, generally corroborated these statements. She

noted that he has required hospitalizations for his

psychiatric impairments and that since his last ]

hospitalization she brought him home to live with her in

Richmond. She noted that she must remind him to take

his medication and she wakes him up to go to work.

She was not sure he could live independently since he

depends so much on her presently. These remarks

were consistent with her statements in Exhibit 17.

The undersigned evaluated this testimony pursuant to

DJ 20 CFR sections 404.1529, 416.929, 404.1569a and

416.969a (SSR 96-7p), and found it to be fully credible

and consistent with written statements for the record

describing the claimant’s impairment and restrictions.

Medical records in this case document the claimant’s

history of psychiatric treatment dating from 1990, when

he was hospitalized in October of that year for major

depression with psychotic features characterized by

_ hallucinations, agitation, and difficulty eating and sleep-

ing (Exhibit 18). He reportedly was treated on an

outpatient basis and taking Haldol but experienced a

deterioration warranting hospitalization on May 22,

1994. At that time he had become anxious and de-

pressed about losing his job. He then became suspi-

cious and paranoid and for several days was mute most

of the time. He exhibited difficulty thinking and

remembering, and his cognitive style was marked by

obsessive-ness and rumination. Major depression with

melancholia and psychotic features was again diagnosed

(Exhibits 19 and 20). Further deterioration of his

56a

condition occurred in March of 1995, at which time he

was experiencing visual hallucinations, anxiety and

agitation (Exhibit 21). Paranoid schizophrenia was

diagnosed and he was hospitalized from March 5 to

March 11, 1995. During this admission he exhibited

evidence of catatonic schizophrenia. His condition

gradually stabilized with prescribed medications. He

was discharged to be followed on an outpatient basis

(Exhibits 22 and 23).

The record confirms that Mr. Walton is under the

outpatient psychiatric care with Dr. R. Neil Johnston.

His records note ongoing prescription of medications,

but that the claimant is generally isolated with activi-

ties confined to his home. He exhibits a flattened affect.

It was noted that he had been dismissed from eight jobs

in a year due to a decline in his productivity level,

concentration problems, and difficulty following instruc-

tions (Exhibits 24-27). Dr. William A. Shepard, another

treating psychiatrist, obeserved [sic] that even with

medication management, the claimant carries out

reasonable conversation and duties on only a minimal

scale. His isolation and paranoia have decreased his

cognitive abilities and social boundaries. He opined

that the claimant lacked the ability to understand,

remember and carry out complex job instructions and

that he had only a fair ability to handle simpler

instructions (Exhibit 28).

The medical evidence in this case was transmitted to

board-certified psychiatrist and medical expert Dr.

Elliot J. Spanier with the request that he review the

evidence and respond to interrogatories posed by this

Administrative Law Judge (Exhibit 31). Dr. Speanier

[sic] advised in Exhibit 33 that the claimant clearly had

57a

a schizophrenic disorder meeting the requirements of

section 12.03 of Appendix 1 of Subpart P of Regulation

No. 4. He noted that the record revealed objective

signs of schizophrenia meeting the “A” criteria of that

section: delusions and hallucinations, catatonic beha-

vior, incoherence, loosening of associations and illogical

thinking with a flattened affect, and emotional with-

drawal and isolation. In addition, he observed that the

claimant had significant functional limitations (the “B”

criteria of section 12.03). Specifically, the record

demonstrates a moderate restriction of activities [olf

daily living given his reliance upon his mother to assist

with a good deal of the household structure, marked

difficulty mailnqtaining social functioning given his

isolation and withdrawal, constant deficiencies of

concentration, and continual episodes of deterioration in

a work setting demonstrated by his multiple job losses.

The undersigned further reviewed the record and noted

that the claimant has a condition meeting section 12.03

in that he has a medically documented history of one or

more episodes of acute symptoms and signs of paranoid

schizophrenia although they are currently attenuated

by medication or psychosocial support. He has demon-

strated repeated episodes of deterioration in work set-

tings causing him to withdraw from the situation or to

experience an excerbation of his symptoms, and has a

documented history of the inability to function outside

of a highly supportive living situation, which is re-

flected in his current situation in which he lives with his

mother.

Since the record in this case clearly establishes an

impairment meeting the requirements of section

12.03A, B, and C, the undersigned concludes that Mr.

Walton was “disabled” commencing October 31, 1994.

58a

However, as noted previously herein, he returned to

full time employment on December 10, 1995 and has

engaged in substantial gainful activity demonstrated by

earnings averaging $1,040 per month. While counsel for

the claimant argued that the award of a trial work

period is warranted in this case, (i.e., an opportunity to

work an additional nine months and receive benefits

during those months), the undersigned does not concur.

Mr. Walton has demonstrated a capacity for sustained

work since at least May of 1995 in view of his part time

work activity. Even though that was not substantial

gainful activity in terms of his earnings, that continuous

employment since May of 1995 through the present

date persuades the undersigned that an additional trial

period is unnecessary. The claimant has clearly estab-

lished an ability to return to full time employment

despite his psychiatric impairment.

Accordingly, Mr. Walton is entitled [] to [a] period of

disability commencing October 31, 1994, and to disabil-

ity insurance benefits and supplementary security

income pursuant to the applications filed protectively

on March 14, 1995. It is further concluded that since his

disability ceased on December 10, 1995 due to his re-

turn to substantial gainful activity, his entitlement to

benefits ended February 29, 1996, the second month

after the month in which his disability ceased.

59a

After careful consideration of the entire record, the

Administrative Law Judge makes the following find-

ings:

1. The claimant met the disability insured status

requirements of the Act on October 31, 1994, the

date the claimant stated he became unable to

work, and continues to meet them through

December 31, 1999.

2. The claimant was not engaged in substantial

gainful activity from October 31, 1994 until his

return to full time employment on December 10,

1995, earning an average of $1,040 per month

since that date.

3. The medical evidence establishes that the claim-

ant has severe paranoid schizophrenia with

underlying depression and anxiety.

4. The severity of the claimant’s impairment meets

the requirements of section 12.03A, B, and C,

Appendix 1, Subpart P, Regulations No. 4 and

has precluded him from working for at least 12

continuous months.

5. The claimant was under a “disability,” as defined

in the Social Security Act, beginning October 31,

1994 (20 CPR 404.1520(d) and 416.920(d)).

6. Beginning December 10, 1995, the claimant re-

turned to work as a general worker and cashier —

for a grocery store, working 40 hours per week,

earning an average of $6.50 per hour or $1,040

per month.

60a

7. The claimant’s work activity involves significant

physical or mental activities for pay or profit and

constitutes substantial gainful activity within the

meaning of the regulations (20 CFR 44.532 and

416.972).

8. In view of his return to substantial gainful activ-

ity, the claimant’s disability ceased on December

10, 1995.

9. In view of the claimant’s part-time and full-time

work since May of 1995, the further award of a

trial work period is not warranted.

DECISION

It is the decision of the Administrative Law judge that,

based on the application filed on March 14, 1995, the

claimant is entitled to a period of disability commencing

on October 31, 1994 and to disability insurance benefits

under sections 216(i) and 223, respectively, of the Social

Security Act.

It is the further decision of the Administrative Law

Judge that, based on the application filed on March 14,

1995, the claimant has been disabled since October 31,

1994 under 1614(a)(3)(A) of the Social Security Act.

It is the further decision of the Administrative Law

Judge that based on the finding that disability ceased

on December 10, 1995, entitlement to a period of dis-

ability and disability insurance benefits, and eligibility

for supplemental security income, ended effective

February 29, 1996, the end of the second calendar

month after the month in which the disability ceased.

6la

The component of the Social Security Administration

responsible for authorizing supplemental security in-

come payments will advise the claimant regarding the

nondisability requirements for these payments, and if

eligible, the amount and the month(s) for which pay-

ment will be made.

Y DAVID S. ANTROBUS

DAVID S. ANTROBUS

Administrative Law Judge

Main Street Centre, Rm 1720

600 East Main Street

Richmond, VA 23219-2406

AUG, 30, 1996

Date

62a

APPENDIX K

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

CLEVELAND B. WALTON, PLAINTIFF-APPELLANT

KENNETH S. APFEL, COMMISSIONER OF SOCIAL

SECURITY, DEFENDANT-APPELLEE

FILED: February 27, 2001

On Petition for Rehearing and Rehearing En Banc

The appellee’s petition for rehearing and rehearing en

bane was submitted to this Court. As no member of

this Court or the panel requested a poll on the petition

for rehearing en banc, and

As the panel considered the petition for rehearing and

is of the opinion that it should be denied,

IT IS ORDERED that the petition for rehearing and

rehearing en banc is denied.

For the Court,

/s/_ PATRICIAS, CONNOR

CLERK

63a

APPENDIX L

1. 42 U.S.C. 422(c) states as follows:

(1) The term “period of trial work”, with respect to

an individual entitled to benefits under section 423,

402(d), 402(e), or 402(f) of this title, means a period of

months beginning and ending as provided in para-

graphs (3) and (4).

(2) For purposes of sections 416(i) and 423 of this

title, any services rendered by an individual during a

period of trial work shall be deemed not to have been

rendered by such individual in determining whether his

disability has ceased in a month during such period.

For purposes of this subsection the term “services”

means activity (whether legal or illegal) which is

performed for remuneration or gain or is determined by

the Commissioner of Social Security to be of a type

normally performed for remuneration or gain.

(3) A period of trial work for any individual shall

begin with the month in which he becomes entitled to

disability insurance benefits, or, in the case of an

individual entitled to benefits under section 402(d) of

this title who has attained the age of eighteen, with the

month in which he becomes entitled to such benefits or

the month in which he attains the age of eighteen,

whichever is later, or, in the case of an individual enti-

tled to widow’s or widower’s insurance benefits under

section 402(e) or (f) of this title who became entitled to

such benefits prior to attaining age 60, with the month

in which such individual becomes so entitled. Notwith-

standing the preceding sentence, no period of trial work

64a

may begin for any individual prior to the beginning of

the month following September 1960; and no such

period may begin for an individual in a period of

disability of such individual in which he had a previous

period of trial work. |

(4) A period of trial work for any individual shall

end with the close of whichever of the following months

is the earlier:

(A) the ninth month, in any period of 60

consecutive months, in which the individual renders

services (whether or not such nine months are

consecutive); or

(B) the month in which his disability (as defined

in section 423(d) of this title) ceases (as determined

after application of paragraph (2) of this subsection).

2. 42 U.S.C. 423 states as follows:

§ 423. Disability insurance benefit payments

(a) Disability insurance benefits

(1) Every individual who

(A) is insured for disability insurance benefits (as

determined under subsection (c)(1) of this section),

(B) has not attained retirement age (as defined in

section 41600 of this title),

benefits, and

65a

(D) is under a disability (as defined in subsection

(d) of this section)

shall be entitled to a disability insurance benefit (i) for

each month beginning with the first month after his

waiting period (as defined in subsection (c)(2) of this

section) in which he becomes so entitled to such

insurance benefits, or (ii) for each month beginning with

the first month during all of which he is under a

disability and in which he becomes so entitled to such

insurance benefits, but only if he was entitled to

disability insurance benefits which terminated, or had a

period of disability (as defined in section 416(i) of this

title) which ceased, within the 60-month period pre-

ceding the first month in which he is under such

disability, and ending with the month preceding which-

ever of the following months is the earliest: the month

in which he dies, the month in which he attains

retirement age (as defined in section 4160) of this title),

or, subject to subsection (e) of this section, the termina-

tion month. For purposes of the preceding sentence,

the termination month for any individual shall be the

third month following the month in which his disability

ceases; except that, in the case of an individual who has

a period of trial work which ends as determined by

application of section 422(c)(4)(A) of this title, the

termination month shall be the earlier of (I) the third

month following the earliest month after the end of

such period of trial work with respect to which such

individual is determined to no longer be suffering from

a disabling physical or mental impairment, or (II) the

third month following the earliest month in which such

individual engages or is determined able to engage in

substantial gainful activity, but in no event earlier than

the first month occurring after the 36 months following

66a

such period of trial work in which he engages or is

determined able to engage in substantial gainful

activity. No payment under this paragraph may be

made to an individual who would not meet the defini-

tion of disability in subsection (d) of this section except

for paragraph (1)(B) thereof for any month in which he

engages in substantial gainful activity, and no payment

may be made for such month under subsection (b), (e),

or (d) of seetion 402 of this title to any person on the

basis of the wages and self-employment income of such

individual. In the case of a deceased individual, the

requirement of subparagraph (C) may be satisfied by an

application for benefits filed with respect to such

individual within 3 months after the month in which he

died.

(2) Except as provided in section 402(q) of this title

and section 415(b)(2)(A (ii) of this title, such individual’s

disability insurance benefit for any month shall be equal

to his primary insurance amount for such month

determined under section 415 of this title as though he

had attained age 62 in—

(A) the first month of his waiting period, or

(B) in any case in which clause (ii) of paragraph

(1) of this subsection is applicable, the first month for

which he becomes entitled to such disability

insurance benefits,

and as though he had become entitled to old-age

insurance benefits in the month in which the application

for disability insurance benefits was filed and he was

entitled to an old-age insurance benefit for each month

for which (pursuant to subsection (b) of this section) he

was entitled to a disability insurance benefit. For the

67a

purposes of the preceding sentence, in the case of an

individual who attained age 62 in or before the first

month referred to in subparagraph (A) or (B) of such

sentence, as the case may be, the elapsed years

referred to in section 415(b)(3) of this title shall not

include the year in which he attained age 62, or any

year thereafter.

(b) Filing application

An application for disability insurance benefits filed

before the first month in which the applicant satisfies

the requirements for such benefits (as prescribed in

subsection (a)(1) of this section) shall be deemed a valid

application (and shall be deemed to have been filed in

such first month) only if the applicant satisfies the

requirements for such benefits before the Commis-

sioner of Social Security makes a final decision on the

application and no request under section 405(b) of this

title for notice and opportunity for a hearing thereon is

made, or if such a request is made, before a decision

based upon the evidence adduced at the hearing is

made (regardless of whether such decision becomes the

final decision of the Commissioner of Social Security).

An individual who would have been entitled to a

disability insurance benefit for any month had he filed

application therefor before the end of such month shall

be entitled to such benefit for such month if such

application is filed before the end of the 12th month

immediately succeeding such month.

(e) Definitions; insured status; waiting period

For purposes of this section—

68a

(1) An individual shall be insured for disability

insurance benefits in any month if—

(A) he would have been a fully insured individual

(as defined in section 414 of this title) had he attained

age 62 and filed application for benefits under section

402(a) of this title on the first day of such month, and

(B)(i) he had not less than 20 quarters of coverage

during the 40-quarter period which ends with the

quarter in which such month occurred, or

(ii) if such month ends before the quarter in which

he attains (or would attain) age 31, not less than one-

half (and not less than 6) of the quarters during the

period ending with the quarter in which such month

occurred and beginning after he attained the age of

21 were quarters of coverage, or (if the number of

quarters in such period is less than 12) not less than 6

of the quarters in the 12-quarter period ending with

such quarter were quarters of coverage, or

(iii) in the case of an individual (not otherwise

insured under clause (i)) who, by reason of section

416(i)(3)(B)(ii) of this title, had a prior period of

disability that began during a period before the

quarter in which he or she attained age 31, not less

than one-half of the quarters beginning after such

individual attained age 21 and ending with the

quarter in which such month occurs are quarters of

coverage, or (if the number of quarters in such period

is less than 12) not less than 6 of the quarters in the

12-quarter period ending with such quarter are

quarters of coverage;

69a

except that the provisions of subparagraph (B) of this

paragraph shall not apply in the case of an individual

who is blind (within the meaning of “blindness” as

defined in section 416(i)(1) of this title). For purposes

of subparagraph (B) of this paragraph, when the

number of quarters in any period is an odd number,

such number shall be reduced by one, and a quarter

shall not be counted as part of any period if any part of

such quarter was included in a period of disability

unless such quarter was a quarter of coverage.

(2) The term “waiting period” means, in the case of

any application for disability insurance benefits, the

earliest period of five consecutive calendar months—

(A) throughout which the individual with respect

to whom such application is filed has been under a

disability, and

(B)Gi) which begins not earlier than with the first

day of the seventeenth month before the month in

which such application is filed if such individual is

insured for disability insurance benefits in such

seventeenth month, or (ii) if he is not so insured in

such month, which begins not earlier than with the

first day of the first month after such seventeenth

month in which he is so insured.

Notwithstanding the preceding provisions of this

paragraph, no waiting period may begin for any individ-

ual before January 1, 1957.

(d) “Disability” defined

(1) The term “disability” means—

70a

(A) inability to engage in any substantial gainful

activity by reason of any medically determinable

physical or mental impairment which can be ex-

pected to result in death or which has lasted or can

be expected to last for a continuous period of not less

than 12 months; or

(B) in the case of an individual who has attained

the age of 55 and is blind (within the meaning of

“blindness” as defined in section 416(i)(1) of this

title), inability by reason of such blindness to engage

in substantial gainful activity requiring skills or

abilities comparable to those of any gainful activity in

which he has previously engaged with some

regularity and over a substantial period of time.

(2) For purposes of paragraph (1)(A)—

(A) An individual shall be determined to be

under a disability only if his physical or mental

impairment or impairments are of such severity that

he is not only unable to do his previous work but

cannot, considering his age, education, and work

experience, engage in any other kind of substantial

gainful work which exists in the national economy,

regardless of whether such work exists in the

immediate area in which he lives, or whether a

specific job vacancy exists for him, or whether he

would be hired if he applied for work. For purposes

of the preceding sentence (with respect to any

individual), “work which exists in the national

economy” means work which exists in significant

numbers either in the region where such individual

lives or in several regions of the country.

71a

(B) In determining whether an individual's

physical or mental impairment or impairments are of

a sufficient medical severity that such impairment or

impairments could be the basis of eligibility under

this section, the Commissioner of Social Security

shall consider the combined effect of all of the

individual’s impairments without regard to whether

any such impairment, if considered separately, would

be of such severity. If the Commissioner of Social

Security does find a medically severe combination of

impairments, the combined impact of the impair-

ments shall be considered throughout the disability

determination process.

disabled for purposes of this subchapter if alcoholism

or drug addiction would (but for this subparagraph)

be a contributing factor material to the Commis-

sioner’s determination that the individual is disabled.

(3) For purposes of this subsection, a “physical or

mental impairment” is an impairment that results from

anatomical, physiological, or psychological abnormali-

ties which are demonstrable by medically acceptable

clinical and laboratory diagnostic techniques.

(4)(A) The Commissioner of Social Security shall by

regulations prescribe the criteria for determining when

services performed or earnings derived from services

demonstrate an individual’s ability to engage in

substantial gainful activity. No individual who is blind

shall be regarded as having demonstrated an ability to

engage in substantial gainful activity on the basis of

earnings that do not exceed an amount equal to the

exempt amount which would be applicable under

section 403(f)(8) of this title, to individuals described in

72a

subparagraph (D) thereof, if seetion 102 of the Senior

Citizens’ Right to Work Act of 1996 had not been en-

acted. Notwithstanding the provisions of paragraph

(2), an individual whose services or earnings meet such

criteria shall, except for purposes of section 422(c) of

this title, be found not to be disabled. In determining

whether an individual is able to engage in substantial

gainful activity by reason of his earnings, where his

disability is sufficiently severe to result in a functional

limitation requiring assistance in order for him to work,

there shall be excluded from such earnings an amount

equal to the cost (to such individual) of any attendant

care services, medical devices, equipment, prostheses,

and similar items and services (not including routine

drugs or routine medical services unless such drugs or

services are necessary for the control of the disabling

condition) which are necessary (as determined by the

Commissioner of Social Security in regulations) for that

purpose, whether or not such assistance is also needed

to enable him to carry out his normal daily functions;

except that the amounts to be excluded shall be subject

to such reasonable limits as the Commissioner of Social

Security may prescribe.

(B) In determining under subparagraph (A) when

services performed or earnings derived from services

demonstrate an individual's ability to engage ins

stantial gainful activity, the Commissioner of Social

Security shall apply the criteria described in sub-

paragraph (A) with respect to services performed by

any individual without regard to the legality of such

services.

(5)(A) An individual shall not be considered to be

under a disability unless he furnishes such medical and

73a

other evidence of the existence thereof as the Com-

missioner of Social Security may require. An indivi-

dual’s statement as to pain or other symptoms shall not

alone be conclusive evidence of disability as defined in

this section; there must be medical signs and findings,

established by medically acceptable clinical or labora-

tory diagnostic techniques, which show the existence of

a medical impairment that results from anatomical,

physiological, or psychological abnormalities which

could reasonably be expected to produce the pain or

other symptoms alleged and which, when considered

with all evidence required to be furnished under this

paragraph (including statements of the individual or his

physician as to the intensity and persistence of such

pain or other symptoms which may reasonably be

accepted as consistent with the medical signs and

findings), would lead to a conclusion that the individual

is under a disability. Objective medical evidence of

pain or other symptoms established by medically

acceptable clinical or laboratory techniques (for

example, deteriorating nerve or muscle tissue) must be

considered in reaching a conclusion as to whether the

individual is under a disability. Any non-Federal

hospital, clinic, laboratory, or other provider of medical

services, or physician not in the employ of the Federal

Government, which supplies medical evidence required

and requested by the Commissioner of Social Security

under this paragraph shall be entitled to payment from

the Commissioner of Social Security for the reasonable

cost of providing such evidence.

(B) In making any determination with respect to

whether an individual is under a disability or continues

to be under a disability, the Commissioner of Social

Security shall consider all evidence available in such

74a

individual’s case record, and shall develop a complete

medical history of at least the preceding twelve months

for any case in which a determination is made that the

individual is not under a disability. In making any

determination the Commissioner of Social Security

shall make every reasonable effort to obtain from the

individual’s treating physician (or other treating health

care provider) all medical evidence, including diagnostic

tests, necessary in order to properly make such deter-

mination, prior to evaluating medical evidence obtained

from any other source on a consultative basis.

(6)(A) Notwithstanding any other provision of this

subchapter, any physical or mental impairment which

arises in connection with the commission by an

individual (after October 19, 1980) of an offense which

constitutes a felony under applicable law and for which

such individual is subsequently convicted, or which is

aggravated in connection with such an offense (but only

to the extent so aggravated), shall not be considered in

determining whether an individual is under a disability.

(B) Notwithstanding any other provision of this

subchapter, any physical or mental impairment which

arises in connection with an individual’s confinement in

a jail, prison, or other penal institution or correctional

facility pursuant to such individual’s conviction of an

offense (committed after October 19, 1980) constituting

a felony under applicable law, or which is aggravated in

connection with such a confinement (but only to the

extent so aggravated), shall not be considered in deter-

mining whether such individual is under a disability for

purposes of benefits payable for any month during

which such individual is so confined.

(e) Engaging in substantial gainful activity

75a

(1) No benefit shall be payable under subsection

(d)(1)(B)(ii), (d)(6)(A)Gi), (d)(6)(B), (e)(1)(B)(ii), or

(f)(1)(B){ii) of section 402 of this title or under sub-

section (a)(1) of this section to an individual for any

month, after the third month, in which he engages in

substantial gainful activity during the 36-month period

following the end of his trial work period determined by

application of section 422(c)(4)(A) of this title.

(2) No benefit shall be payable under section 402 of

this title on the basis of the wages and self-employment

income of an individual entitled to a benefit under

subsection (a)(1) of this section for any month for which

the benefit of such individual under subsection (a)(1) of

this section is not payable under paragraph (1).

(f) Standard of review for termination of disability

benefits

A recipient of benefits under this subchapter or sub-

chapter XVIII of this chapter based on the disability of

any individual may be determined not to be entitled to

such benefits on the basis of a finding that the physical

or mental impairment on the basis of which such

benefits are provided has ceased, does not exist, or is

not disabling only if such finding is supported by—

(1) substantial evidence which demonstrates that—

(A) there has been any medical improvement in

the individual’s impairment or combination of

impairments (other than medical improvement which

is not related to the individual’s ability to work), and

(B) the individual is now able to engage in

substantial gainful activity; or

76a

(2) substantial evidence which—

(A) consists of new medical evidence and a new

assessment of the individual’s residual functional

capacity, and demonstrates that—

(i) although the individual has not improved

medically, he or she is nonetheless a beneficiary of

advances in medical or vocational therapy or

technology (related to the individual’s ability to

work), and

(ii) the individual is now able to engage in

substantial gainful activity, or

(B) demonstrates that—

(i) although the individual has not improved

medically, he or she has undergone vocational

therapy (related to the individual’s ability to

work), and

(ii) the individual is now able to engage in

substantial gainful activity; or

(3) substantial evidence which demonstrates that, as

determined on the basis of new or improved diagnostic

techniques or evaluations, the individual's impairment

or combination of impairments is not as disabling as it

was considered to be at the time of the most recent

prior decision that he or she was under a disability or

continued to be under a disability, and that therefore

the individual is able to e

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