AR 95-1(6): AR 95-1 (6): Preslar v. Secretary of Health and Human Services , 14 F.3d 1107 (6th Cir. 1994)--Definition of Highly Marketable Skills for Individuals Close to Retirement Age--Titles II and XVI of the Social Security Act.

AR 95-1 (6) (Rescinded 5/8/2000)

EFFECTIVE/PUBLICATION DATE: 05/04/95

Acquiescence Ruling 95-1(6)

Issue:

Whether, in order to find that the skills of a claimant who is close to

retirement age (age 60-64) are "highly marketable" within the meaning of

the Secretary's regulations, the Social Security Administration (SSA) must

first establish that the claimant's skills are sufficiently specialized

and coveted by employers as to make the claimant's age irrelevant in the

hiring process and enable the claimant to obtain employment with little

difficulty.

Statute/Regulation/Ruling Citation:

Sections 223(d)(2)(A) and 1614(a)(3)(B) of the Social Security Act (42

U.S.C. 423(d)(2)(A) and 1382c(a)(3)(B)); 20 CFR 404.1520(f)(1),

404.1563(d), 404.1566(c), 416.920(f)(1), 416.963(d), 416.966(c); 20

CFR Part 404, Subpart P, Appendix 2, sections 201.00(f) and 202.00(f); Social Security Ruling

82-41 .

Circuit:

Sixth (Kentucky, Michigan, Ohio, Tennessee) Preslar v. Secretary

of Health and Human Services , 14 F.3d 1107 (6th Cir. 1994).

Applicability of Ruling:

This Ruling applies to determinations or decisions at all administrative

levels (i.e., initial, reconsideration, Administrative Law Judge (ALJ)

hearing or Appeals Council).

Description of Case:

In April 1989, the plaintiff, Walter Preslar, who was 61 years of age and

had an eleventh grade education, applied for Social Security disability

insurance benefits and Supplemental Security Income benefits based on

disability. Mr. Preslar alleged that he was disabled due to pain resulting

from hip and back injuries, osteoarthritis and the late effects of

musculoskeletal and connective tissue injuries. Following denial of his

claims at both the initial and reconsideration levels of the

administrative review process, the plaintiff requested and received a

hearing before an ALJ. The evidence provided at the hearing included the

testimony of a vocational expert who testified that Mr

p and back injuries, osteoarthritis and the late effects of

musculoskeletal and connective tissue injuries. Following denial of his

claims at both the initial and reconsideration levels of the

administrative review process, the plaintiff requested and received a

hearing before an ALJ. The evidence provided at the hearing included the

testimony of a vocational expert who testified that Mr. Preslar could not

perform any of his past relevant work, which included food truck driving,

custodial work, and bartending. The vocational expert also testified,

however, that Mr. Preslar possessed truck driving skills and that there

were a significant number of skilled light trucking jobs in the regional

economy that he could perform with no significant vocational adjustment.

The ALJ found that Mr. Preslar could not perform his past relevant work,

but that he retained the capacity to do a full range of light work with

only minor limitations. The ALJ also found, based upon testimony by the

vocational expert, that Mr. Preslar had "highly marketable work skills,"

including truck driving, the ability to use hand and power tools, and the

ability to use a cash register. Based on these findings, the ALJ concluded

that Mr. Preslar was not disabled. The Appeals Council denied Mr.

Preslar's request for review, and the ALJ's decision became the final

decision of the Secretary. This decision was reviewed by a district court

which upheld the Secretary's denial of disability benefits, and the

plaintiff appealed to the Court of Appeals for the Sixth Circuit.

Holding:

on these findings, the ALJ concluded

that Mr. Preslar was not disabled. The Appeals Council denied Mr.

Preslar's request for review, and the ALJ's decision became the final

decision of the Secretary. This decision was reviewed by a district court

which upheld the Secretary's denial of disability benefits, and the

plaintiff appealed to the Court of Appeals for the Sixth Circuit.

Holding:

The Sixth Circuit reversed the decision of the district court. The court

of appeals noted that at the fourth and fifth steps of the five-step

sequential evaluation process for determining disability prescribed in the

Secretary's regulations, once a claimant establishes that he or she can no

longer perform his or her past relevant work because of a severe

impairment (step four), the burden shifts to the Secretary to show whether

the claimant can perform other work which exists in the national economy,

considering the claimant's residual functional capacity, age, education

and work experience (step five). The court observed that for purposes of

step five, a claimant's age is to be evaluated under the four-tiered

structure of section 404.1563 of the Secretary's

regulations. [1] Among other

things, section 404.1563(d) provides that if a claimant is of advanced age

(55 or over), has a severe impairment, and cannot do medium work, such

claimant may not be able to work unless he or she has skills that can be

transferred to less demanding jobs which exist in significant numbers in

the national economy. The court noted that, in addition, section

404.1563(d) states that, "[i]f you are close to retirement age (60-64) and

have a severe impairment, we will not consider you able to adjust to

sedentary or light work unless you have skills which are highly

marketable."

or she has skills that can be

transferred to less demanding jobs which exist in significant numbers in

the national economy. The court noted that, in addition, section

404.1563(d) states that, "[i]f you are close to retirement age (60-64) and

have a severe impairment, we will not consider you able to adjust to

sedentary or light work unless you have skills which are highly

marketable."

The Sixth Circuit observed that the term "highly marketable" skills was

not expressly defined in the statutes, regulations or case law. The court

stated, however, that it was evident from the regulations that "highly

marketable" skills denoted something more than "transferable" skills.

Specifically, the court noted that, under section 404.1563(d) of the

regulations, claimants age 55 or over, including those close to retirement

age, must possess skills easily transferable to other occupations; the

"highly marketable" requirement, on the other hand, only applies to those

age 60-64. In addition, the court indicated that section 404.1563(a) of

the regulations also sheds light on how the Secretary is required to

evaluate a claimant's age, noting that the section states, in part:

Although the Sixth Circuit noted that, under section 223(d)(2)(A) of the

Act (42 U.S.C. 423(d)(2)(A)), vocational factors usually are to be viewed

in terms of their effect on the ability to perform jobs rather than obtain

them, the court nevertheless found that section 404.1563 of the

regulations "recognizes a direct relationship between age and the

likelihood of employment" and that, as age increases, the four-tiered

structure of the regulation places an increasingly heavy burden on the

Secretary to demonstrate that a claimant is "easily employable." The court

concluded that the regulations and other judicial interpretations of

"highly marketable" skills imply that such skills are those "which are

sufficiently coveted by employers and sufficiently specialized or unique

so as to offset the disadvantage of a

ure of the regulation places an increasingly heavy burden on the

Secretary to demonstrate that a claimant is "easily employable." The court

concluded that the regulations and other judicial interpretations of

"highly marketable" skills imply that such skills are those "which are

sufficiently coveted by employers and sufficiently specialized or unique

so as to offset the disadvantage of advancing age" and enable a claimant

to obtain employment with little difficulty. The court indicated that the

possession of such skills may be shown by establishing that a claimant's

skills were acquired through specialized or extensive education, training

or experience and that they give the claimant a significant advantage or

edge over other, younger, potential employees competing for jobs requiring

the skills, giving consideration to the number of such jobs available and

the number of individuals competing for such jobs.

The court applied its interpretation of "highly marketable" skills to Mr.

Preslar's case and concluded that the Secretary had not assessed whether

Mr. Preslar's skills were in some way specialized or coveted by employers;

had not determined the amount of training, education or experience

required of the plaintiff to attain his skills; and had not assessed

whether the plaintiff enjoyed a competitive edge over younger, potential

employees with whom he would compete for truck driving jobs. Accordingly,

the court remanded the case to the Secretary for reevaluation of whether

the plaintiff possessed "highly marketable" skills in accordance with the

court's interpretation of that term in section 404.1563(d) of the

regulations.

Statement as to How Preslar Differs From Social Security Policy

e over younger, potential

employees with whom he would compete for truck driving jobs. Accordingly,

the court remanded the case to the Secretary for reevaluation of whether

the plaintiff possessed "highly marketable" skills in accordance with the

court's interpretation of that term in section 404.1563(d) of the

regulations.

Statement as to How Preslar Differs From Social Security Policy

At step five of the sequential evaluation, SSA considers a claimant's

chronological age in conjunction with residual functional capacity,

education and work experience to determine whether a claimant can do work

other than past relevant work. SSA weighs the effect of increasing age by

the extent it erodes a claimant's ability to adapt to new work situations

and to work in competition with others.

To this end, SSA's regulations provide that in order to find that a

claimant whose sustained work capability is limited to light work or less

and who is close to retirement age (60 - 64) possesses skills that can be

used in (transferred to) other work, "there must be very little, if any,

vocational adjustment required in terms of tools, work processes, work

settings, or the industry." 20 CFR Part 404, Subpart P, Appendix 2,

section 202.00(f). SSA's regulations provide the same rule for a claimant

whose sustained work capability is limited to sedentary work and who is of

advanced age (55 or over). 20 CFR Part 404, Subpart P, Appendix 2, section

201.00(f). If the claimant's skills are transferable to other work under

this standard, SSA will consider such skills "highly marketable" under 20

CFR 404.1563(d) and 416.963(d).

00(f). SSA's regulations provide the same rule for a claimant

whose sustained work capability is limited to sedentary work and who is of

advanced age (55 or over). 20 CFR Part 404, Subpart P, Appendix 2, section

201.00(f). If the claimant's skills are transferable to other work under

this standard, SSA will consider such skills "highly marketable" under 20

CFR 404.1563(d) and 416.963(d).

SSA's regulations do not require a finding that a claimant's skills are

specialized and coveted so as to offset the disadvantage that advancing

age may present in obtaining employment. Instead, SSA's regulations

require that a claimant (of any age) be found not disabled if his or her

residual functional capacity and vocational abilities enable him or her to

work, but he or she remains unemployed because of the hiring practices of

employers. The evaluation of disability is based on the ability to perform

jobs in the national economy and not the ability to obtain them, 20 CFR

404.1566(c) and 416.966(c).

The Sixth Circuit's interpretation of "highly marketable" imposes

requirements in contravention of the Secretary's regulations regarding the

vocational relevance of a claimant's age. Specifically, the court has

interpreted "highly marketable" skills in 20 CFR 404.1563(d) to mean those

skills which are sufficiently specialized and coveted by employers so as

to make a claimant's age irrelevant in the hiring process and enable the

claimant to obtain employment with little difficulty.

Explanation of How SSA Will Apply The Preslar Decision Within the

Circuit

This ruling applies only where the claimant resides in Kentucky, Michigan,

Ohio or Tennessee at the time of the determination or decision at any

level of administrative review, i.e., initial, reconsideration, ALJ

hearing or Appeals Council review.

d enable the

claimant to obtain employment with little difficulty.

Explanation of How SSA Will Apply The Preslar Decision Within the

Circuit

This ruling applies only where the claimant resides in Kentucky, Michigan,

Ohio or Tennessee at the time of the determination or decision at any

level of administrative review, i.e., initial, reconsideration, ALJ

hearing or Appeals Council review.

In the case of a claimant whose sustained work capability is limited to

sedentary or light work as a result of a severe impairment, who is closely

approaching retirement age (age 60-64), and who has skills, an adjudicator

will consider the claimant's skills to be "highly marketable" only if the

skills are sufficiently specialized and coveted by employers as to make

the claimant's age irrelevant in the hiring process and enable the

claimant to obtain employment with little difficulty. In determining

whether a claimant's skills meet this definition of "highly marketable,"

an adjudicator will consider: (1) whether the skills were acquired through

specialized or extensive education, training or experience; and (2)

whether the skills give the claimant a competitive edge over other,

younger, potential employees with whom the claimant would compete for jobs

requiring those skills, giving consideration to the number of such jobs

available and the number of individuals competing for such jobs.

SSA intends to clarify the regulations at issue in this case, 20 CFR

404.1563 and 416.963, through the rule making process and may rescind this

Ruling once such clarification is made.

ger, potential employees with whom the claimant would compete for jobs

requiring those skills, giving consideration to the number of such jobs

available and the number of individuals competing for such jobs.

SSA intends to clarify the regulations at issue in this case, 20 CFR

404.1563 and 416.963, through the rule making process and may rescind this

Ruling once such clarification is made.

[1] Although the court of

appeals only cited the title II regulation concerning the evaluation of

age, section 404.1563, the corresponding title XVI regulation, section

416.963, also was relevant in Mr. Preslar's case. These sections, entitled

"Your age as a vocational factor," are virtually identical. Sections

404.1563(b)-(d) and 416.963(b)-(d) specify three age categories: "Younger

person" (under age 50); "Person approaching advanced age" (age 50-54); and

"Person of advanced age" (age 55 or over). The latter includes a

subcategory--a person close to retirement age (age 60-64).