AR 87-4(8): Iamarino v. Heckler, 795 F.2d 59 (8th Cir. 1986) Positive Presumption of Substantial Gainful Activity (SGA) for Sheltered Work

AR 87-4(8) (Rescinded 8/10/2000)

EFFECTIVE DATE: 8/31/87

ISSUE:

Whether there is a positive presumption of SGA for average nonthly

earnings from sheltered work of more than $300 which is different from the

positive presumption of SGA for similar earnings from competitive work.

STATUTE/REGULATION/RULING CITATION:

Sections 223(d)(4) and 1614(a)(3)(D) of the Social Security Act (42 U.S.C.

423(d)(4) and 1382c(a)(3)(D)); 20 C.F.R. Sections 404.1574(b)(2);

404).1574(b)(3); 404.1574(b)(4); 404.1574(b)(6); 416.974(b)(2);

416.974(b)(3); 416.974(b)(4); 416.974(b)(6)

CIRCUIT:

EIGHTH (ARKANSAS, IOWA, MINNESOTA, MISSOURI, NEBRASKA, NORTH DAKOTA, SOUTH

DAKOTA)

Iamarino v. Heckler , 795 F.2d 59 (8th Cir. 1986)

APPLICABILITY OF RULING:

DESCRIPTION OF CASE:

In August 1981 Joseph A. Iamarino entered the Goodwill Industries Work

Adjustment Program, a program designed to help individuals acquire the

work habits, attitudes and behaviors needed to obtain and maintain a job

in the community. He stayed in this program until April 1982, when he

transferred into the Goodwill Industries Client Employment Program. In

October 1982, he was placed in a competitive job from which he was

terminated after a week.

Mr. Iamarino filed for disability benefits on November 23, 1982, alleging

an onset date of October 29, 1982. His application was denied initially

and on reconsideration. Subsequent to his hearing before the

administrative law judge (ALJ), but before a decision was rendered, Mr.

Iamarino notified the ALJ that the onset date of his disability was

actually prior to June 23, 1981. The ALJ allowed Mr. Iamarino's claim but

determined that October 29, 1982, was the onset date, reasoning that Mr.

Iamarino had been engaged in SGA up to that date. On July 27, 1984, the

Appeals Council denied Mr. Iamarino's request for review, establishing the

decision of the ALJ as the Secretary's final decision. The district court

affirmed. Mr

ity was

actually prior to June 23, 1981. The ALJ allowed Mr. Iamarino's claim but

determined that October 29, 1982, was the onset date, reasoning that Mr.

Iamarino had been engaged in SGA up to that date. On July 27, 1984, the

Appeals Council denied Mr. Iamarino's request for review, establishing the

decision of the ALJ as the Secretary's final decision. The district court

affirmed. Mr. Iamarino then appealed to the United States Court of Appeals

for the Eighth Circuit.

HOLDING:

The court of appeals found that Mr. Iamarino's earnings from his

sheltered work at Goodwill Industries for the period between August 1981,

and April 14, 1982, did not constitute substantial gainful activity. This

conclusion arose from the court's compari- son of rules concerning SGA in

competitive employment with the rules concerning SGA in sheltered

employment. For competitive employment, the court pointed out that the

Secretary's regulations contain both a negative and a positive

presumption. The negative presumption for competitive employment is

contained in 20 C.F.R. Section 404.1574(b)(3) and states that ordinarily

average monthly earnings below $190.00 in calendar years after 1979 will

not constitute SGA. [1] The

positive presumption for competitive employment is contained in 20 C.F.R.

Section 404.1574(b)(2) and states that average monthly earnings over

$300.00 in calendar years after 1979 will ordinarily constitute SGA. As to

average monthly earnings from competitive employment between the above

amounts, no presumption applies and there must be comparisons of the work

at issue with working the community. The court pointed out that 20 C.F.R.

Section 404.1574(b)(4) contains a negative presumption for sheltered work,

namely that average monthly earnings of $300 or less will not ordinarily

constitute SGA. It then concluded that 20 C.F.R

from competitive employment between the above

amounts, no presumption applies and there must be comparisons of the work

at issue with working the community. The court pointed out that 20 C.F.R.

Section 404.1574(b)(4) contains a negative presumption for sheltered work,

namely that average monthly earnings of $300 or less will not ordinarily

constitute SGA. It then concluded that 20 C.F.R. Section 404.1574(b)(6),

while not specifically addressing sheltered work, dictates an

interpretation that there must be a middle ground where no presumption,

positive or negative applies, just as there is for competitive

employment.

STATEMENT AS TO HOW IAMARINO DIFFERS FROM SOCIAL SECURITY

POLICY:

Under SSA's interpretation of 20 C.F.R. Section 404.1574(b)(6) and

416.974(b)(6), (which explains that where average monthly earnings are

between $190.00 and $300.00, informa- tion in addition to earnings must be

considered in determining whether SGA has been performed) the middle

ground addressed by the court where no presumption is applied does not

exist for sheltered work. SSA's policy is that sheltered work producing

$300 or less in average monthly earnings is ordinarily no SGA and that

sheltered work producing $300.01 in average monthly earnings is ordinarily

SGA. (Both these amounts represent actual earnings after deductions of

subsidies, impairment-related work expenses, etc.)

The court of appeals rejected SSA's interpretation stating that:

EXPLANATION OF HOW SSA WILL APPLY THE DECISION WITHIN THE CIRCUIT:

This ruling applies only to cases in which the claimant resides in

Arkansas, Minnesota, Missouri, Nebraska, North Dakota or South Dakota at

the time of the determination or decision at any level of administrative

review, i.e., initial, reconsideration, administrative law judge hearing

and Appeals Council review where a person is working in sheltered

employment and earning on the average more than $300 monthly.

y to cases in which the claimant resides in

Arkansas, Minnesota, Missouri, Nebraska, North Dakota or South Dakota at

the time of the determination or decision at any level of administrative

review, i.e., initial, reconsideration, administrative law judge hearing

and Appeals Council review where a person is working in sheltered

employment and earning on the average more than $300 monthly.

There is a middle ground between the $300 average monthly amount from

sheltered work which ordinarily presumed to be not SGA and an unspecified

upper limit. [2] If average

monthly earnings from sheltered work fall in this middle ground, SSA must

generally compare the time, energy, skill, responsibility and pay of the

sheltered work and work in the community to determine whether earnings

show that a person had engaged in substantial gainful activity. Earnings

in this middle ground may not be presumed to be SGA.

EFFECTIVE DATE:

Date of Publication 8/31/87

[1] Since Mr. Iamarino's claim

was for title II disability benefits, the court discussed only the

applicable provisions of Regulation No. 4 of 20 C.F.R., and not those of

Regulation No. 16. however, since the provisions are the same, the courts

ruling would apply to title XVI cases, as well as title II cases.

[2] Since the court did not

specify an upper limit, all cases involving earnings from sheltered work

averaging in excess of $300 a month after all appropriate deductions will

require individualized adjudication. No presumption of SGA may be

applied.