# Petition for Writ of Certiorari — Barnhart v. Walton

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 2002
- **Citation:** 535 U.S. 212

## Text

(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

II

(IIT)

IV

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

V

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

U.
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)

2

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

3

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

4

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).

5

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.

6

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

7

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

8

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.

9

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

10

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.

11

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-

12

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.,

13

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.”

14

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-

15

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

16

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

17

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

18

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.

19

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.

20

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

21

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

22

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.

23

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

24

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.

25

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.

26

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

27

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

V.

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)

2a

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

3a

I.

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).

4a

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.

5a

$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.

6a

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.

7a

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.

A.

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

8a

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

9a

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.
B.

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

V.

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

V.

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
V.

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

U.

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 Ap

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0473%3A02. Public record. Not legal advice.