SSR 94-1c: SECTIONS 1611 AND 1614(a) OF THE SOCIAL SECURITY ACT (42 U.S.C. 1382 and 1382c(a)) SUPPLEMENTAL SECURITY INCOME -- DISABILITY -- ILLEGAL ACTIVITY AS SUBSTANTIAL GAINFUL ACTIVITY

SSR 94-1c

EFFECTIVE/PUBLICATION DATE: 01/12/94

20 CFR 416.910, 416.920(a)-(b), 416.971, 416.972(a)-(c),

416.973(a)-(b), 416.974(a)(1), (b)(2)(vii) and (b)(3)(vii), and

416.976

Dotson v. Shalala , 1 F.3d 571 (7th Cir. 1993)

ENGEL, Senior Circuit

Judge: [*]

Harold Wayne Dotson, a Supplemental Security Income claimant, appeals the

district court's grant of summary judgment in favor of Donna E. Shalala,

Secretary of the Department of Health and Human Services. In granting

summary judgment, the district court upheld an administrative law judge's

finding that Dotson was engaging in substantial gainful activity by

supporting a $200- to $300-per-day heroin and cocaine habit through

illegal means. See Dotson v, Sullivan , 813 F. Supp. 651 (C.D. Ill.

1992). Because we agree that illegal activity can constitute substantial

gainful activity, we affirm.

I. BACKGROUND

Dotson applied for Supplemental Security Income benefits on September 25,

1989, alleging disability since 1968 due to asthma, multiple allergies,

and past drug abuse. The Social Security Administration denied his

application on January 10, 1990, and again upon reconsideration on May 21,

1990. Dotson then requested and received a hearing before an

administrative law judge ("ALJ"). At the administrative hearing, Dotson

testified that he uses $200 to $300 worth of heroin and cocaine each day.

Additionally, he testified that he supports his drug habit by hustling.

When asked to define hustling, Dotson replied: "steal, beg, whatever, you

know."

With regard to his begging, Dotson stated that he usually panhandles at

the Warner Homes, which are located in a poor neighborhood in Peoria,

Illinois. As to Dotson's thievery, the following colloquy occurred during

the administrative hearing:

nally, he testified that he supports his drug habit by hustling.

When asked to define hustling, Dotson replied: "steal, beg, whatever, you

know."

With regard to his begging, Dotson stated that he usually panhandles at

the Warner Homes, which are located in a poor neighborhood in Peoria,

Illinois. As to Dotson's thievery, the following colloquy occurred during

the administrative hearing:

Based on Dotson's testimony, the ALJ found that Dotson's stealing and

panhandling constituted substantial gainful activity ("SGA") worth an

average of approximately $5,600 per month and, accordingly, denied his

claim for SSI benefits. Specifically, the ALJ found that, due to the poor

area in which Dotson panhandles, the bulk of his income must come from

illegal means. As to the nature of Dotson's criminal endeavors, the ALJ

concluded:

On July 9, 1991, the Appeals Council declined to review the ALJ's

decision. Dotson then filed the instant action against the Secretary of

the Department of Health and Human Services ("Secretary") in federal

court. On July 1, 1992, with cross-motions for summary judgment before it,

the district court granted the Secretary's motion for summary affirmance

and entered a separate judgment against Dotson and in favor of the

Secretary. See Dotson v. Sullivan , 813 F. Supp. 651 (C.D. Ill.

1992). This appeal followed.

II. DISCUSSION

Dotson essentially raises four arguments. First, he believes that illegal

activities undertaken solely to satisfy a drug addiction cannot constitute

SGA. Second, assuming that illegal activity can constitute SGA, Dotson

claims that the ALJ's finding of SGA in his case is unsupported by

substantial evidence. Third, Dotson contends that if illegal activity

undertaken to support a drug habit can constitute SGA, then the Secretary

is required to deduct the cost of the narcotics from the claimant's income

as an impairment-related work expense

Second, assuming that illegal activity can constitute SGA, Dotson

claims that the ALJ's finding of SGA in his case is unsupported by

substantial evidence. Third, Dotson contends that if illegal activity

undertaken to support a drug habit can constitute SGA, then the Secretary

is required to deduct the cost of the narcotics from the claimant's income

as an impairment-related work expense. Fourth and finally, Dotson believes

that using illegal activities to furnish the basis for finding SGA denies

him due process and equal protection of the laws under the United States

Constitution.

A. OVERVIEW.

The Social Security Act ("Act"), as amended, 42 U.S.C. § 301 et

seq ., provides for the payment of benefits to disabled persons. Title

II of the Act governs the payment of Old-Age, Survivors, and Disability

Insurance ("OASDI") benefits to disabled persons who have contributed to

the Social Security program. 42 U.S.C. § 401 et seq . Title XVI of

the Act, the title under which Dotson filed his application for benefits,

provides for the payment of Supplemental Security Income ("SSI") benefits

to disabled persons who are indigent. 42 U.S.C. § 1382 et seq .; see generally Bowen v. Yuckert , 482 U.S. 137, 140 (1987). Both

Titles II and XVI define disability as an "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 twelve months ...." 42 U.S.C. §§ 423(d)(1)(A),

1382c(a)(3)(A).

Pursuant to statutory authority, the Secretary has promulgated

regulations establishing a five-step sequential analysis for determining

whether an SSI claimant is disabled. See 20 C.F.R. § 416.920; Sullivan v. Zebley , 493 U.S. 521, 525

or

which has lasted or can be expected to last for a continuous period of not

less than twelve months ...." 42 U.S.C. §§ 423(d)(1)(A),

1382c(a)(3)(A).

Pursuant to statutory authority, the Secretary has promulgated

regulations establishing a five-step sequential analysis for determining

whether an SSI claimant is disabled. See 20 C.F.R. § 416.920; Sullivan v. Zebley , 493 U.S. 521, 525

(1990). [1] The first step of the

process, and the only one relevant for purposes of this appeal, requires

the Secretary to determine whether the claimant is engaging in SGA. See 20 C.F.R. § 416.920(a). A finding of SGA means that the

claimant is ineligible for SSI benefits. Id . at § 416.920(b); Yuckert , 482 U.S. at 140. In this case, because the ALJ found that

Dotson's stealing and panhandling constituted SGA, he denied Dotson's

claim for benefits without moving to the next step in the sequential

analysis. [2]

B. ILLEGAL ACTIVITY AS SGA.

Our research reveals that we are the first appellate court to address the

issue of whether illegal activity can support a finding of SGA. The

handful of federal trial courts faced with this question, including the

district court below, have answered unanimously in the

affirmative. [3] Because the ALJ

and district court's determination that illegal activity can constitute

SGA is a construction of the Secretary's regulations, we review this

decision of law de novo . See Johnson v. Sullivan , 922 F.2d

346, 356 (7th Cir. 1990).

handful of federal trial courts faced with this question, including the

district court below, have answered unanimously in the

affirmative. [3] Because the ALJ

and district court's determination that illegal activity can constitute

SGA is a construction of the Secretary's regulations, we review this

decision of law de novo . See Johnson v. Sullivan , 922 F.2d

346, 356 (7th Cir. 1990).

As the definition of disability quoted above indicates, the inability to

engage in SGA is a statutory prerequisite to obtaining either SSI or OASDI

benefits. Nonetheless, Congress delegated to the Secretary the

responsibility for defining SGA. 42 U.S.C. § 1382c(a)(3)(D) (Title XVI).

In response to the Act's mandate, and as the components of the term

suggest, the Secretary has defined SGA as "work activity that is both

substantial and gainful." See 20 C.F.R. § 416.972. Work activity is

substantial if it "involves doing significant physical or mental

activities." Id . at § 416.972(a). Work activity is gainful if it is

"the kind of work usually done for pay or profit, whether or not a profit

is realized." Id . at § 416.972(b); see generally Callaghan v.

Shalala , 992 F.2d 692 (7th Cir. 1993) (discussing elements of

SGA). [4] Activities such as

taking care of one's self, performing household tasks, engaging in hobbies

or therapy, and attending school, clubs, or social programs generally do

not constitute SGA. 20 C.F.R. § 416.972(c).

or pay or profit, whether or not a profit

is realized." Id . at § 416.972(b); see generally Callaghan v.

Shalala , 992 F.2d 692 (7th Cir. 1993) (discussing elements of

SGA). [4] Activities such as

taking care of one's self, performing household tasks, engaging in hobbies

or therapy, and attending school, clubs, or social programs generally do

not constitute SGA. 20 C.F.R. § 416.972(c).

The foregoing framework underscores the dual nature of an ALJ's inquiry

into whether a claimant is engaging in SGA. Under the substantiality prong

of the analysis, an ALJ considers the nature of the undertakings

comprising the claimant's work activity. Thus, the degree to which a

claimant's work requires the use of "expertise, skills, supervision and

responsibilities" becomes relevant in determining whether that work

constitutes SGA. See 20 C.F.R. § 416.973(a). Additionally, an ALJ

will consider how well a claimant performs his or her work activities:

Id. at § 416.973(b).

In evaluating the gainfulness of a claimant's work, an ALJ's inquiry is

more circumscribed. Here, as noted above, the claimant's undertakings need

be only of the type that normally result in pay or profit. In other words,

a claimant can be found to be engaging in SGA without earning any income. See Callaghan , 992 F.2d at 695-96 (unprofitable business owner was

engaging in SGA). [5] This is not

to say that a claimant's earnings are irrelevant for purposes of

determining whether he or she is engaging in SGA. See, e.g., 20 C.F.R.

§ 416.974(a)(1) . To the contrary, a claimant who earns on average less

than $300 per month is presumed not to be engaging in SGA, while a

claimant who makes more than an average of $500 per month is presumptively

ineligible for SSI benefits. Id . at §§ 416.974(b)(3)(vii),

t's earnings are irrelevant for purposes of

determining whether he or she is engaging in SGA. See, e.g., 20 C.F.R.

§ 416.974(a)(1) . To the contrary, a claimant who earns on average less

than $300 per month is presumed not to be engaging in SGA, while a

claimant who makes more than an average of $500 per month is presumptively

ineligible for SSI benefits. Id . at §§ 416.974(b)(3)(vii),

(b)(2)(vii). [6] As with most

legal presumptions, however, these income guidelines are rebuttable and

"do not relieve an ALJ of the duty to develop the record fully and

fairly." Dugan v. Sullivan , 957 F.2d 1384, 1390 (7th Cir. 1992)

(citations and internal quotations omitted).

Against this background, Dotson concedes -- as he must -- that in at

least some instances illegal activity can be substantial gainful activity.

Dotson continues, however, that the context in which his thievery occurs

precludes its use in determining whether he has been engaging in SGA. In

his own words:

Aplnt's. Br. at 18. Considering Dotson's claim under the scheme set forth

above, we conclude that he forwards a distinction without a difference.

Admittedly, even a cursory examination of the regulations reveals that

the Secretary envisioned their application within a traditional employment

context. Importantly, however, nothing in the Act or its regulations

specifically requires SGA to be lawful. This silence, we believe, suggests

that illegal activities can constitute SGA. The inference is strengthened,

moreover, when considering that the relevant considerations noted above

apply with almost equal ease irrespective of the legality of the

activities involved. Thus, one can envision a number of illegal activities

that might not rise to the level of

SGA. [7] Whether legally or

illegally employed, the regulations direct an ALJ to focus on whether the

claimant is performing significant physical or mental activities, and

doing so with the intent of earning money or making a profit.

al ease irrespective of the legality of the

activities involved. Thus, one can envision a number of illegal activities

that might not rise to the level of

SGA. [7] Whether legally or

illegally employed, the regulations direct an ALJ to focus on whether the

claimant is performing significant physical or mental activities, and

doing so with the intent of earning money or making a profit.

Moreover, it must be remembered that an ALJ performs the SGA analysis as

one of five steps used to determine whether a person is disabled and,

consequently, unable to function within our economy. A claimant who can

manage through illegal means is just as undeserving of benefits as a

claimant who can survive without violating the law. For this reason, there

is no difference between the addict who spends all of his lawfully derived

earnings on narcotics and the one who illegally obtains, and then

exhausts, her income. Both are fueled, to quote Dotson, by the "cravings

of unquenchable drug addiction." The only real distinction between the two

-- the lawfulness of their income -- finds no cognizance under the Act and

its interpretive

regulations. [8]

Finally, our conclusion that illegal activity can constitute SGA derives

substantial support from the well-established tax principle that unlawful

earnings come within the meaning of the term "gross income" and are thus

taxable. See, e.g., James v. United States , 366 U.S. 213, 218

he lawfulness of their income -- finds no cognizance under the Act and

its interpretive

regulations. [8]

Finally, our conclusion that illegal activity can constitute SGA derives

substantial support from the well-established tax principle that unlawful

earnings come within the meaning of the term "gross income" and are thus

taxable. See, e.g., James v. United States , 366 U.S. 213, 218

(1961) (plurality opinion of Warren, C.J.), overruling Commissioner v.

Wilcox , 327 U.S. 404 (1946); United States v. Sullivan , 274

U.S. 259, 263 (1927). Notably, the Act has adopted the tax code's

definition of gross income for purposes of determining whether a SSI

claimant's income is sufficiently high so as to render him or her

ineligible for benefits. 42 U.S.C. § 1382(d); see also 20 C.F.R. §

416.1110(b). [9] Indeed, one of

the concerns motivating the plurality in James , "to remove the

incongruity of having the gains of the honest laborer taxed and the gains

of the dishonest immune," 366 U.S. at 218, provides the crux of our

reasoning in this case.

C. SUFFICIENCY OF THE EVIDENCE.

Having concluded that illegal activity can constitute SGA, we must next

determine whether the ALJ properly applied the legal standard in Dotson's

case. Our inquiry is a limited one. We will not decide facts anew, reweigh

evidence, or substitute our judgment for the Secretary's. Schroeter v.

Sullivan , 977 F.2d 391, 394 (7th Cir. 1992). Rather, we look to see

whether "substantial evidence" supports the ALJ's findings. See 42

U.S.C. § 1383(c)(3) (citing 42 U.S.C. § 405(g)). Substantial evidence is

"such relevant evidence as a reasonable mind might accept as adequate to

support a conclusion." Richardson v. Perales , 402 U.S. 389, 402

udgment for the Secretary's. Schroeter v.

Sullivan , 977 F.2d 391, 394 (7th Cir. 1992). Rather, we look to see

whether "substantial evidence" supports the ALJ's findings. See 42

U.S.C. § 1383(c)(3) (citing 42 U.S.C. § 405(g)). Substantial evidence is

"such relevant evidence as a reasonable mind might accept as adequate to

support a conclusion." Richardson v. Perales , 402 U.S. 389, 402

(1977).

Dotson first contends that the ALJ had before him no evidence of specific

illegal acts which could support a finding of SGA. Secondly, he believes

the ALJ erroneously assumed that he paid full street-value for the

narcotics he used and, thus, overestimated the amount of income needed to

support his drug habit. We address each claim in

order. [10]

Dotson's first claim, that the record lacks any evidence of illegal

activities, is belied by his own testimony and by the reasonable

inferences drawn therefrom by the ALJ. For example, when the ALJ asked

Dotson to describe what types of items he had stolen in the month during

which the administrative hearing was held, Dotson replied: "I try to

concentrate on saws .... You know, the chainsaws, the little bitty

chainsaws." Dotson then went on to explain, in some detail, how he would

sell the stolen items. Additionally, the ALJ made at least one specific

inquiry into the substantiality of Dotson's activities, asking him how

long it takes him to find a place to steal.

the administrative hearing was held, Dotson replied: "I try to

concentrate on saws .... You know, the chainsaws, the little bitty

chainsaws." Dotson then went on to explain, in some detail, how he would

sell the stolen items. Additionally, the ALJ made at least one specific

inquiry into the substantiality of Dotson's activities, asking him how

long it takes him to find a place to steal.

We grant to Dotson his point that the record contains no evidence

concerning any specific act of thievery. Also, we agree with him that the

ALJ could have more fully developed the record as to the nature of his

criminal undertakings. Nevertheless, we cannot say that the record before

us contains less than substantial evidence that Dotson's thievery required

the significant use of his physical and mental skills, and that those

skills were applied within a context designed to produce pay or profit. See 20 C.F.R. §§ 416.972(a), (b). In short, Dotson's testimony

allowed the ALJ to reasonably conclude that the effort required to steal

the chainsaws with regularity constituted SGA, and we therefore uphold

this aspect of the ALJ's decision. A more exacting inquiry, while

desirable, was not required.

Dotson's second argument, that the ALJ overestimated the cost of the

narcotics, is also unpersuasive. As an initial matter, this claim suffers

from the same weakness that proved fatal to his first argument, that is,

Dotson testified without contradiction to using $200 to $300 worth of

heroin and cocaine daily. [11] If Dotson actually paid less for his narcotics, one would have expected

him to testify accordingly. Furthermore, this case is unlike Curtis v.

Sullivan , 764 F. Supp. 119 (N.D. Ill. 1991), where the ALJ simply

imputed to the claimant an income sufficient to satisfy his addiction. In

that case, the ALJ concluded, in the absence of evidence as to legal or

illegal employment, that the claimant had to be engaging in SGA in order

to support his expensive drug habit

m to testify accordingly. Furthermore, this case is unlike Curtis v.

Sullivan , 764 F. Supp. 119 (N.D. Ill. 1991), where the ALJ simply

imputed to the claimant an income sufficient to satisfy his addiction. In

that case, the ALJ concluded, in the absence of evidence as to legal or

illegal employment, that the claimant had to be engaging in SGA in order

to support his expensive drug habit. Here, on the other hand, Dotson's

testimony as to his thievery filled the gap. From this, the ALJ was

justified in finding that Dotson's earnings surpassed $500 per month,

thereby rendering him presumptively ineligible for SSI benefits. See 20 C.F.R. § 416.974(b)(2)(vii).

We agree with the court in Curtis that simply because a claimant

has a severe and expensive drug habit does not mean that the person is

engaging in SGA to support it. 764 F. Supp. at 120-21. The record must

contain substantial evidence, of the type outlined in Section II(B), supra , that the claimant is engaging in legal or illegal activities

that are substantial and gainful. Because we have held that the ALJ's

decision in this case comports with those requirements, we reject Dotson's

challenge to the evidence supporting the Secretary's decision.

D. NARCOTICS AS AN IMPAIRMENT-RELATED WORK EXPENSE.

Dotson next raises the interesting yet ultimately unavailing argument

that, if illegal activities undertaken to maintain a drug habit can

constitute SGA, then the cost of the narcotics must be deducted from

income as an impairment-related work expense ("IRWE") under 42 U.S.C. §

1382a(b)(4)(B)(ii) and its interpretive regulations, 20 C.F.R. § 416.976.

As we discuss below, Dotson misapprehends the nature of IRWEs.

42 U.S.C. § 1382a(b)(4)(B)(ii), enacted as part of the Social Security

Disability Amendments of 1980, Pub. L. No. 96-265, 94 Stat. 441 (1980),

provides:

otics must be deducted from

income as an impairment-related work expense ("IRWE") under 42 U.S.C. §

1382a(b)(4)(B)(ii) and its interpretive regulations, 20 C.F.R. § 416.976.

As we discuss below, Dotson misapprehends the nature of IRWEs.

42 U.S.C. § 1382a(b)(4)(B)(ii), enacted as part of the Social Security

Disability Amendments of 1980, Pub. L. No. 96-265, 94 Stat. 441 (1980),

provides:

See also 42 U.S.C. § 1382c(a)(3)(D) (restating same). In 1983, the

Department of Health and Human Services promulgated 20 C.F.R. § 416.976. See 48 Fed. Reg. 21940 (1983). These regulations established a

five-part test for determining the deductibility of an IRWE:

20 C.F.R. § 416.976(b). With respect to the deductibility of drugs as an

IRWE, the regulations provide:

* * * *

Dotson argues that, due to the severity of his drug addiction, he needs

the cocaine and heroin in order for him to steal and panhandle. (Of

course, he steals and panhandles so that he can purchase more cocaine and

heroin, so that he can continue to steal and panhandle -- and thus the

cycle of addiction continues.) Because he needs the narcotics in order to

engage in SGA, Dotson continues, he believes that the cost of the cocaine

and heroin should be deducted from his earnings as an IRWE.

Sadly, we have no reason to disbelieve Dotson's self-characterization.

Unfortunately for him, however, the regulations comprehend more than mere

addiction to a substance before the cost of that substance will be

considered an IRWE. As the statute and regulations reveal, a number of

obstacles lie in the path of Dotson's argument. We content ourselves,

however, to focus upon the requirement that in order to be an IRWE a drug

must "reduce or eliminate" the symptoms of a claimant's impairment, or

"slow down its progression." 20 C.F.R. § 416.976(c)(5)(i)

ance before the cost of that substance will be

considered an IRWE. As the statute and regulations reveal, a number of

obstacles lie in the path of Dotson's argument. We content ourselves,

however, to focus upon the requirement that in order to be an IRWE a drug

must "reduce or eliminate" the symptoms of a claimant's impairment, or

"slow down its progression." 20 C.F.R. § 416.976(c)(5)(i). In the face of

Dotson's claim that his disability stems from drug abuse, he cannot hope

to maintain the argument that his continued use of heroin and cocaine

reduces or eliminates the symptoms of his impairment. Rather, Dotson's use

of drugs serves as the basis of his alleged disability. And far from

slowing Dotson's dependency upon narcotics, his continued use of heroin

and cocaine only exacerbates his disability. With these considerations in

mind, we must reject Dotson's claim for an IRWE.

E. THE CONSTITUTIONAL CLAIMS.

Dotson lastly argues that using illegal activity to constitute SGA

violates his rights to due process and equal protection of the laws under

the United States Constitution, although he has encountered some

difficulty in articulating the precise nature of his constitutional

complaints. It would seem that his due process argument -- one which might

be more properly construed as an administrative challenge to the

regulations -- reduces to the theory that the ALJ's decision in this case

attempts to override Congress' intent to provide SSI benefits to substance

abusers and, therefore, is void for want of a rational basis. His equal

protection claim, on the other hand, appears based on the assertion that,

under the Secretary's position, rich drug addicts will be treated

preferentially to the disadvantage of poor ones. We briefly address each

of his arguments.

1. Due Process.

mpts to override Congress' intent to provide SSI benefits to substance

abusers and, therefore, is void for want of a rational basis. His equal

protection claim, on the other hand, appears based on the assertion that,

under the Secretary's position, rich drug addicts will be treated

preferentially to the disadvantage of poor ones. We briefly address each

of his arguments.

1. Due Process.

To establish a due process violation, Dotson faces the well-settled and

formidable burden of proving that the Secretary's regulations, as we have

interpreted them, lack a rational basis. See, e.g., Weinberger v.

Salfi , 422 U.S. 749, 768 (1975) ("the Due Process Clause can be

thought to interpose a bar only if the statute [or, as here, a regulation]

manifests a patently arbitrary classification, utterly lacking in rational

justification [citation omitted]"). Moreover, that rational basis need not

be expressed explicitly by Congress or the administrative agency; "any

state of facts reasonably may be conceived to justify it." Dandridge v.

Williams , 397 U.S. 471, 485 (1970) (citation omitted).

Initially, we note that interpreting the Secretary's regulations as

allowing illegal activity to constitute SGA does not interfere with

Congress' intent, assuming there is one, to provide disability benefits to

substance abusers. [12] Rather,

such an interpretation prevents only those substance abusers who are

engaging in SGA, whether legally or illegally employed, from receiving SSI

benefits reserved for disabled persons who are also poor. See Bowen v.

Yuckert , 482 U.S. 137, 140 (1987) ("Title XVI of the Act provides for

the payment of disability benefits to indigent persons ...."

[Emphasis added.]) Thus, the Secretary's regulations coincide with the SSI

program's underlying purpose.

o are

engaging in SGA, whether legally or illegally employed, from receiving SSI

benefits reserved for disabled persons who are also poor. See Bowen v.

Yuckert , 482 U.S. 137, 140 (1987) ("Title XVI of the Act provides for

the payment of disability benefits to indigent persons ...."

[Emphasis added.]) Thus, the Secretary's regulations coincide with the SSI

program's underlying purpose.

Moving to the next level, Dotson's myopic view of Congress' intent in the

statutory context serves to highlight the flaw in his constitutional

argument. Simply put, we cannot say that regulations which preclude the

disbursement of federal disability benefits to persons who are engaging in

substantial and gainful activity, regardless of the activity's legality,

constitutes a "patently arbitrary classification" warranting judicial

intervention. To the contrary, working within a system where the limited

supply of federal funds will never satisfy the deserving demand, we are

hard pressed to think of a better dividing line than the one drawn by the

Secretary. Having said this much, we must reject Dotson's due process

claim.

2. Equal Protection.

Dotson faces an equally difficult burden when arguing to this court that

the Secretary's regulations violate the equal protection component of the

Fifth Amendment. Because a statute's or regulation's differential impact

upon the poor versus the wealthy, by itself, does not subject that

distinction to strict judicial scrutiny, see, e.g., Kadrmas v.

Dickinson Public Schools , 487 U.S. 450, 458 (1988), Dotson must prove

that the classification drawn by the Secretary's regulations fails to

rationally further a legitimate interest, Zobel v. Williams , 457

U.S. 55, 60 (1982). Under such a standard, Dotson's constitutional claim

again must fail.

tself, does not subject that

distinction to strict judicial scrutiny, see, e.g., Kadrmas v.

Dickinson Public Schools , 487 U.S. 450, 458 (1988), Dotson must prove

that the classification drawn by the Secretary's regulations fails to

rationally further a legitimate interest, Zobel v. Williams , 457

U.S. 55, 60 (1982). Under such a standard, Dotson's constitutional claim

again must fail.

Dotson argues that the Secretary's position, if implemented, will hurt

only poor drug abusers because rich ones, who presumably will have paid

into the Social Security system, will be eligible to receive OASDI

benefits under Title II of the Act. This argument misses the mark for the

simple reason that OASDI claimants, just like SSI claimants, must navigate

the same five-step administrative process, the first of which requires

that the claimant not be engaging in SGA. Compare 42 U.S.C. §

423(d)(1)(A) and 20 C.F.R. § 404.1520(a) (Title II) with 42 U.S.C.

§ 1382c(a)(3)(A) and 20 C.F.R. § 416.920(a) (Title

XVI). [13] Even if Dotson could

maintain such an argument, we would be inclined to reject it because the

Secretary's classification seems rationally to further the legitimate

interest of rewarding those persons with a prior attachment to the work

force who have contributed to the Social Security system.

The judgment of the district court is AFFIRMED.

[*] Sitting by designation.

[1] For other, more generalized,

SSI eligibility requirements, see 20 C.F.R. § 416.202.

[2] The parties have devoted

some attention to the issue of whether panhandling, or the income

therefrom, can cause a person to become ineligible for SSI benefits. We

decline to reach this issue. As noted above, the ALJ determined that, due

to the poor area in which Dotson panhandles, the bulk of his income comes

from illegal activities. We believe the ALJ's finding to be supported by

substantial evidence and, therefore, leave the panhandling issue to a

court with the question properly before it.

ause a person to become ineligible for SSI benefits. We

decline to reach this issue. As noted above, the ALJ determined that, due

to the poor area in which Dotson panhandles, the bulk of his income comes

from illegal activities. We believe the ALJ's finding to be supported by

substantial evidence and, therefore, leave the panhandling issue to a

court with the question properly before it.

[3] See Bell v. Sullivan ,

817 F. Supp. 719 (N.D. Ill. 1993) (Marovich, J.); Jones v.

Sullivan , 804 F. Supp. 1045 (N.D. Ill. 1992) (Holderman, J.); Curtis v. Sullivan , 764 F. Supp. 119 (N.D. Ill. 1991) (Bua, J.); Moore v. Sullivan , No. 91 C 20369, 1992 WL 199257 (N.D. Ill. Aug.

4, 1992) (Reinhard, J.; unpublished); Love v. Sullivan , No. 91 C

7863, 1992 WL 86193 (N.D. Ill. Apr. 22, 1992) (Conlon, J.; unpublished); Dugan v. Bowen , No. 87-3713, 1989 WL 281911 (S.D. Ill. Nov. 8,

1989) (unpublished), rev'd on other grounds sub nom. Dugan v.

Sullivan , 957 F.2d 1384 (7th Cir. 1992); Hart v. Sullivan , ___

F. Supp. ___, No. C-92-1172 SBA, 1992 WL 496646 (N.D. Cal. Dec. 30, 1992). Cf. Hammonds v. Celebrezze , 260 F. Supp. 992 (N.D. Ala. 1965)

(claimant's illegal manufacture of whiskey not conclusive evidence of SGA

absent evidence of earnings).

[4] For a reconstituted

formulation of the above definition, see 20 C.F.R. § 416.910, which

provides: "Substantial gainful activity means work that -- (a) Involves

doing significant and productive physical or mental duties; and (b) Is

done (or intended) for pay or profit."

[5] Accordingly, substantial but

non-remunerative volunteer work would fall short of SGA because people

normally do not volunteer their services for pay or profit. See SOCIAL SECURITY LAW AND PRACTICE § 37:4 at 8 (Timothy E. Travers et al.

eds., 1987). Evidence of such volunteer work, however, could be used to

deny a claimant benefits at a later stage in the sequential evaluation

process. See 20 C.F.R. § 416.971.

al but

non-remunerative volunteer work would fall short of SGA because people

normally do not volunteer their services for pay or profit. See SOCIAL SECURITY LAW AND PRACTICE § 37:4 at 8 (Timothy E. Travers et al.

eds., 1987). Evidence of such volunteer work, however, could be used to

deny a claimant benefits at a later stage in the sequential evaluation

process. See 20 C.F.R. § 416.971.

[6] In contrast to the OASDI

provisions of the Act, the SSI program is particularly concerned with a

claimant's financial situation:

20 C.F.R. § 416.110 (emphasis added); see also id . at § 416.1100

("the amount of income you have is a major factor in deciding whether you

are eligible for SSI benefits"). Thus, a claimant not engaging in SGA and

otherwise eligible for the SSI program will be denied benefits if he or

she has too much income or too many resources. See 42 U.S.C. §

1382(a); generally 20 C.F.R. Subpts. K, § 416.1100 se seq .

(income) and L, § 416.1201 et seq . (resources).

[7] For example, acting as a

lookout at a drug house might constitute a gainful yet insubstantial

activity, whereas someone who chronically engages in acts of vandalism may

be substantially, but not gainfully, occupied.

[8] Indeed, were we to hold

otherwise, the court would be creating the perverse incentive -- although

admittedly only at the margins -- for both SSI claimants and recipients to

engage in illegal activity because the income therefrom would be

ignored.

[9] Again, however, the

resources and income analysis implicated here and discussed at note 6, supra , is different from the ALJ's responsibility to determine

whether a claimant is engaging in SGA.

[10] Dotson also argues that

the ALJ erred by underestimating the amount of money he earned through

panhandling. As we discussed at note 2, supra , the ALJ's decision

to discount Dotson's panhandling income -- because of the poor area in

which he begs -- is supported by substantial evidence.

, is different from the ALJ's responsibility to determine

whether a claimant is engaging in SGA.

[10] Dotson also argues that

the ALJ erred by underestimating the amount of money he earned through

panhandling. As we discussed at note 2, supra , the ALJ's decision

to discount Dotson's panhandling income -- because of the poor area in

which he begs -- is supported by substantial evidence.

[11] Moreover, this is not an

instance where the claimant's testimony was of such dubious veracity that

the ALJ should have discredited it. Dotson's claim to spending $200 to

$300 per day on heroin and cocaine, while on the high side, is certainly

within the realm of possibility. See, e.g., Hart v. Sullivan , ____

F. Supp. ____, No. C-92-1172 SBA, 1992 WL 496646 (N.D. Cal. Dec. 30, 1992)

(claimant "presently consumes seven or eight twenty-dollar bags of heroin

daily ..., uses crack every night ..., and drinks approximately eight

half-pints of hard liquor daily").

[12] We are inclined to agree

with Dotson that Congress has envisioned the application of the Act to

substance abusers. See, e.g. , 42 U.S.C. § 1382(e)(3)(A) (requiring

SSI recipients who are alcoholics or drug addicts to undergo treatment as

a condition of receiving disability benefits); 42 U.S.C. §

1383(a)(2)(A)(ii) (providing for payment of SSI benefits to alcoholics and

drug addicts through representative payees).

[13] Dotson's argument would

become relevant in two situations, the first of which is beyond the

court's powers generally and the second of which is not implicated in this

appeal. The first scenario involves a wealthy addict who is able to

satisfy his or her addiction without resort to the welfare system. Such a

person, of course, is better off than Dotson, but this disparity yields

him no cause of action. In the second scenario, a wealthy addict who is

not engaging in SGA, but who has paid into the Social Security system,

applies for and receives OASDI benefits

. The first scenario involves a wealthy addict who is able to

satisfy his or her addiction without resort to the welfare system. Such a

person, of course, is better off than Dotson, but this disparity yields

him no cause of action. In the second scenario, a wealthy addict who is

not engaging in SGA, but who has paid into the Social Security system,

applies for and receives OASDI benefits. This person, again undoubtedly

better off than Dotson, presumably would be ineligible for SSI benefits

due to an excess of resources and income. See generally note 6, supra . Importantly, however, Dotson is not in a position to make

this argument because the ALJ below did not deny him benefits based on his

income or resources, but rather based on the fact that Dotson was engaging

in SGA.