Opinion
5:22-CV-00514-D-BM
02-06-2024
SANDRA LEONARD, Plaintiff, v. MARTIN O'MALLEY Commissioner of Social Security, Defendant.
MEMORANDUM AND RECOMMENDATION
Brian S. Meyers, United States Magistrate Judge
Plaintiff Sandra Leonard (“Plaintiff” or, in context, “Claimant”) filed this action pursuant to 42 U.S.C. §§ 405(g) and 1383(c)(3) seeking judicial review of the denial of her application for a period of disability and disability insurance benefits (“DIB”). This matter is before the court on Plaintiff's brief [DE-8] seeking judgment in her favor, Defendant's responsive brief [DE-10] in opposition, and Plaintiff's reply brief [DE-11]. The parties have fully briefed this matter pursuant to the Supplemental Rules for Social Security Actions under 42 U.S.C. § 405(g), and this case is ripe for adjudication. The briefs were referred to the undersigned magistrate judge for a memorandum and recommendation pursuant to 28 U.S.C. § 636(b)(1). Having carefully reviewed the administrative record and the parties' filings, it is recommended that the court GRANT Plaintiff's request for relief [DE-8], DENY Defendant's request for relief [DE-10], and remand the case to the Commissioner for further proceedings consistent with the Memorandum and Recommendation.
I. STATEMENT OF THE CASE
Plaintiff protectively filed an application for a period of disability and DIB on November 18, 2020, alleging disability beginning October 17, 2020. Transcript of Proceedings (“Tr.”) 53, 59, 175-76. Her claim was denied initially. Tr. 59, 67-71. Plaintiff filed a request for reconsideration (Tr. 72-75), and was denied upon reconsideration on September 2, 2021 (Tr. 6066, 76-80). On November 1, 2021, Plaintiff requested a hearing before an Administrative Law Judge (“ALJ”). Tr. 81-83. A hearing before the ALJ was held on March 7, 2022, at which Plaintiff, represented by counsel, and a vocational expert (“VE”) appeared and testified. Tr. 25-52. On March 22, 2022, the ALJ issued a decision denying Plaintiff's request for benefits. Tr. 13-24.
On May 25, 2022, Plaintiff requested a review of the ALJ's decision by the Appeals Council. Tr. 169-71. On October 11, 2022, the Appeals Council denied Plaintiff's request for review. Tr. 1-7. Plaintiff then filed a complaint in this court seeking review of the now-final administrative decision.
II. STANDARD OF REVIEW
The scope of judicial review of a final agency decision regarding disability benefits under the Social Security Act (“Act”), 42 U.S.C. § 301 et seq., is limited to determining whether substantial evidence supports the Commissioner's factual findings and whether the decision was reached through the application of the correct legal standards. See Coffman v. Bowen, 829 F.2d 514, 517 (4th Cir. 1987). “The findings of the Commissioner . . . as to any fact, if supported by substantial evidence, shall be conclusive ....” 42 U.S.C. § 405(g). Substantial evidence is “evidence which a reasoning mind would accept as sufficient to support a particular conclusion.” Laws v. Celebrezze, 368 F.2d 640, 642 (4th Cir. 1966). While substantial evidence is not a “large or considerable amount of evidence,” Pierce v. Underwood, 487 U.S. 552, 565 (1988), it is “more than a mere scintilla . . . and somewhat less than a preponderance.” Laws, 368 F.2d at 642. “In reviewing for substantial evidence, [the court should not] undertake to re-weigh conflicting evidence, make credibility determinations, or substitute [its] judgment for that of the [Commissioner].” Mastro v. Apfel, 270 F.3d 171, 176 (4th Cir. 2001) (quoting Craig v. Chater, 76 F.3d 585, 589 (4th Cir. 1996), superseded by regulation on other grounds, 20 C.F.R. § 416.927(d)(2)). Rather, in conducting the “substantial evidence” inquiry, the court's review is limited to whether the ALJ analyzed the relevant evidence and sufficiently explained his or her findings and rationale in crediting the evidence. Sterling Smokeless Coal Co. v. Akers, 131 F.3d 438, 439-40 (4th Cir. 1997). “Judicial review of an administrative decision is impossible without an adequate explanation of that decision by the administrator.” DeLoatche v. Heckler, 715 F.2d 148, 150 (4th Cir. 1983).
III. DISABILITY EVALUATION PROCESS
The disability determination is based on a five-step sequential evaluation process (“SEP”) as set forth in 20 C.F.R. § 404.1520 under which the ALJ is to evaluate a claim:
The claimant (1) must not be engaged in “substantial gainful activity [“SGA”],” i.e., currently working; and (2) must have a “severe” impairment that (3) meets or exceeds [in severity] the “listings” of specified impairments, or is otherwise incapacitating to the extent that the claimant does not possess the residual functional capacity [“RFC”] to (4) perform . . . past work or (5) any other work.Albright v. Comm'r of the Soc. Sec. Admin., 174 F.3d 473, 475 n.2 (4th Cir. 1999). “If an applicant's claim fails at any step of the process, the ALJ need not advance to the subsequent steps.” Pass v. Chater, 65 F.3d 1200, 1203 (4th Cir. 1995) (citation omitted). The burden of proof and production during the first four steps of the inquiry rests on the claimant. Id. At the fifth step, the burden shifts to the ALJ to show that other work exists in the national economy which the claimant can perform. Id.
When assessing the severity of mental impairments, the ALJ must do so in accordance with the “special technique” described in 20 C.F.R. §§ 404.1520a(b)-(c). This regulatory scheme identifies four broad functional areas in which the ALJ rates the degree of functional limitation resulting from a claimant's mental impairment(s): understanding, remembering, or applying information; interacting with others; concentrating, persisting, or maintaining pace; and adapting or managing oneself. Id. § 404.1520a(c)(3). The ALJ is required to incorporate into his written decision pertinent findings and conclusions based on the “special technique.” Id. § 404.1520a(e)(4).
IV. ALJ'S FINDINGS
Applying the above-described sequential evaluation process, the ALJ found Plaintiff “not disabled” as defined in the Act. Tr. 20. At step one, the ALJ determined Plaintiff had engaged in SGA during the period from January 2021 to November 2021. Tr. 18. The ALJ further found that there had been “no continuous 12-month period during which [Plaintiff] [had] not engaged in [SGA].” Tr. 20. Accordingly, the ALJ concluded that Plaintiff had “not been under a disability, as defined in the Social Security Act, from October 17, 2020, [the alleged onset date,] through the date of [her] decision[, March 22, 2022].” Tr. 20 (citing 20 C.F.R. § 404.1520(b)). Given this conclusion, the ALJ did not proceed to any subsequent steps in the sequential evaluation process.
V. OVERVIEW OF PLAINTIFF'S CONTENTIONS
In this case, Plaintiff alleges the ALJ erred by: (1) failing to follow the five-step SEP and failing to consider the severity of Plaintiff's medically determinable impairments; (2) improperly characterizing Plaintiff's self-employment after October 2020 as SGA; and (3) erroneously rejecting Plaintiff's uncontradicted statements. Pl.'s Brief [DE-8] at 5. Each is discussed below.
Except for citations to the Transcript of Proceedings (“Tr.”), all citations to documents using the docket entry number [DE-] provided in the court's docket will specify the page number automatically assigned by the CM/ECF system, rather than the page number, if any, specified in the original document.
VI. DISCUSSION
A. ALJ's finding of no continuous 12-month period during which Plaintiff had not engaged in SGA
Plaintiff contends that the ALJ erred by failing to follow the five-step SEP and failed to consider the severity of Plaintiff's medically determinable impairments. Pl.'s Brief [DE-8] at 1. Specifically, at issue is whether the ALJ erred by denying Plaintiff's application based on her finding that “there had not been 12 continuous months of disability before issuance of the decision.” Id. (citing Tr. 20). For the reasons discussed below, the undersigned recommends remand on this issue.
“Disability” means an “inability to engage in any [SGA] 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.” Hall v. Harris, 658 F.2d 260, 264 (4th Cir. 1981) (quoting 42 U.S.C. § 423(d)(1)(A)) (emphasis added). The regulations provide that “[i]f [a claimant is] working and the work [she is] doing is [SGA], [the SSA] will find that [she is] not disabled regardless of [her] medical condition or [her] age, education, and work experience.” 20 C.F.R. § 404.1520(b).
While nowhere expressly cited by the ALJ, the agency guidance in Social Security Ruling 82-52 (“S.S.R. 82-52”), Titles II and XVI: Duration of the Impairment, S.S.R. 82-52, 1982 WL 31376 (Jan. 1, 1982), appears to provide the underlying regulatory rationale for the ALJ's determination of non-disability based on her finding that “[t]here has been no continuous 12-month period during which the claimant has not engaged in [SGA]” (Tr. 20). S.S.R. 82-52 provides in relevant part that “[w]hen the return to work demonstrating ability to engage in SGA occurs before approval of the award and prior to the lapse of the 12-month period after onset, the claim must be denied.” S.S.R. 82-52, 1982 WL 31376, at *2. This S.S.R. would appear to support a determination of the type the ALJ made.
However, in cases where a claimant has not been found to be engaging in SGA at the time of the decision, including the instant case, a finding of non-disability at step one of the SEP based on S.S.R. 82-52 is not supported by the plain meaning of the applicable regulations. The regulations prescribe a present, not historic, analysis of a claimant's engagement in SGA. 20 C.F.R. § 404.1520(b) provides that “[i]f [a claimant is] working and the work [she is] doing is [SGA], [the SSA] will find that [she is] not disabled ....” (emphasis added).
Whatever approach the S.S.R. appears to allow, here, the undersigned must follow in the first instance the plain meaning of the applicable regulation. See Myers v. Apfel, 238 F.3d 617, 620 (5th Cir. 2001) (“The Social Security Administration's rulings are not binding on this court . . .” (citing B.B. ex. rel. A.L.B. v. Schweiker, 643 F.2d 1069, 1071 (5th Cir.1981))). While S.S.R. 8252 was the relevant ruling for the ALJ to apply at the time of her decision, the undersigned notes that after the ALJ's decision, S.S.R. 82-52 was rescinded and replaced on November 7, 2023, by S.S.R. 23-1p, Titles II and XVI: Duration Requirement for Disability, S.S.R. 23-1p, 2023 WL 8236247 (Nov. 7, 2023). S.S.R. 23-1p notes in its preamble that in the four decades after S.S.R. 82-52 was published, the SSA “revised several rules and issued policy guidance that leave the original ruling misaligned with current regulatory authority and policy guidance.” S.S.R. 23-1p, 2023 WL 8236247, at *1 (citing, inter alia, 20 C.F.R. § 404.1520).
“But under the Administration's instruction, the court will analyze this issue using the [Social Security Rulings] in effect at the time of the ALJ's determination.” Ott v. Saul, No. 7:18-CV-00072-D, 2019 WL 3728307, at *8 (E.D. N.C. July 16, 2019), report and recommendation adopted, No. 7:18-CV-72-D, 2019 WL 3729722 (E.D. N.C. Aug. 7, 2019).
While S.S.R. 23-1p was not the applicable S.S.R. at the time of the ALJ's decision, for the purposes of the present inquiry it is instructive to note that S.S.R. 23-1p appears to follow the regulatory language more closely, as discussed herein, with respect to claimants who were not engaged in SGA at the time of the ALJ's decision. S.S.R. 23-1p, 2023 WL 8236247, at *4 (“[I]f the claimant is not currently performing SGA, . . . the duration requirement could be met . . . and the [SEP] would proceed to step two.”).
Courts in other districts have also adopted a plain meaning approach to this analysis. See James v. Comm'r of Soc. Sec., No. 1:18-CV-1238-JLT, 2019 WL 5290880, at *5 (E.D. Cal. Oct. 18, 2019) (“Significantly, courts have consistently indicated a claimant satisfies her burden at step one where she is not presently engaged in [SGA].”) (collecting cases); McDaniel v. Bowen, 800 F.2d 1026, 1030 (11th Cir. 2006) (finding it was “clear from the record that [the claimant] met step one by proving that she is presently unemployed”). While the Fourth Circuit has not expressly opined on this issue, Albright appears to suggest a present as opposed to historic review of SGA at step one of the SEP. Albright v. Comm'r of the Soc. Sec. Admin., 174 F.3d 473, 475 n.2 (4th Cir. 1999) (“The claimant (1) must not be engaged in [SGA], i.e., currently working”) (emphasis added).
20 C.F.R. § 404.1571 does provide that “[t]he work . . . that [the claimant did] during any period in which [she] believe[d] [she was] disabled may show that [she is] able to work at the [SGA] level.” 20 C.F.R. § 404.1571. However, while any such SGA may indeed provide strong evidence against a finding of disability, the plain meaning of this regulation does not dictate a finding of non-disability at step one of the SEP simply based on a finding that the claimant engaged in SGA after the alleged onset date. Inasmuch as the ALJ here could have referenced her findings regarding Plaintiff's SGA during the period from January 2021 to November 2021 to support findings at step four or five of the SEP that Plaintiff is able to perform her past work or any other work at the SGA level, the ALJ did not reach these steps of the SEP. See 20 C.F.R. § 404.1520.
The Commissioner contends in his brief that implicit in the ALJ's finding that “Plaintiff was not under a disability from October 17, 2020 through the date of the decision, i.e. through March 22, 2022 . . . is that Plaintiff continued to be able to work through the date of the decision.” Def.'s Brief [DE-10] at 6 (also noting that Plaintiff testified that she was still, at least as of the date of the ALJ hearing, working 10 to 15 hours per week). However, the ALJ expressly finds that Plaintiff “engaged in [SGA] during the following periods: January 2021 to November 2021.” Tr. 18. Implicit in this finding is that Plaintiff was not engaged in SGA at the time of the ALJ's decision, or even at the time of the ALJ hearing. Moreover, while the ALJ notes Plaintiff's testimony that at the time of her hearing she worked an average of 10 to 15 hours a week, the ALJ makes no findings on what implications, if any, this has for any SGA findings after November 2021.
While the ALJ's decision supports a finding that Plaintiff did not have any medically determinable impairment which lasted for a continuous period of not less than 12 months and caused an inability to engage in any SGA, the ALJ's decision does not explain whether Plaintiff had any medically determinable impairment which can be expected to last for a continuous period of not less than 12 months and causes an inability to engage in any SGA. Cf. Hall, 658 F.2d at 264; 42 U.S.C. § 423(d)(1)(A)). Without further explanation in the ALJ's written decision, the court is left to guess about how the ALJ arrived at her apparent conclusion that Plaintiff did not have a medically determinable impairment which can be expected to last for a continuous period of not less than 12 months.
Accordingly, the undersigned RECOMMENDS that this case be remanded to the Commissioner for further proceedings. On remand, the Commissioner should explain how the evidence leads to each conclusion in the written decision consistent with the plain meaning of the statutes and regulations, including any findings regarding whether Plaintiff is engaged in SGA at the time of the ALJ's decision, so that meaningful judicial review would be permitted, if necessary. See 20 C.F.R. § 404.1520. To be clear, the undersigned expresses no opinion as to (i) whether Plaintiff did or did not engage in SGA for any particular period of time, including at the time of the ALJ's decision, or (ii) whether Plaintiff had a medically determinable impairment which can be expected to last for a continuous period of not less than 12 months. It will be incumbent on the ALJ to consider all of the evidence before her, to explain her findings accordingly, and to determine whether additional steps of the SEP set forth in 20 C.F.R. § 404.1520 are necessary to determine whether Plaintiff has been under a disability, as defined in the Social Security Act.
B. Characterization of Plaintiff's self-employment after October 2020 as SGA and Plaintiff's subjective statements on her business activities
Plaintiff's last two arguments overlap significantly and will, therefore, be discussed together. Plaintiff contends that the ALJ improperly characterized Plaintiff's self-employment as a real estate agent after October 2020 as SGA and erroneously rejected Plaintiff's uncontradicted statements. Pl.'s Brief [DE-8] at 1.
Specifically, Plaintiff alleges that the ALJ improperly found that she performed SGA from January 2021 through November 2021. Plaintiff reasons that although she was paid during this period, the payments were made at the real estate closings, and that Plaintiff performed the majority of the work on the associated real estate transactions prior to her accident in October 2020. Id. at 7-8. Plaintiff argues that the ALJ should not have rejected Plaintiff's testimony due to a lack of “objective evidence,” but should have assessed and assigned weight to the testimony on its own merits. Id. at 8. Plaintiff contends that the “ALJ [did not] cite[] evidence to justify discounting Plaintiff's statements that most of the work that she performed on real estate transactions was performed long before she received her commission.” Id. at 10. Plaintiff alleges that requiring objective evidence to support her testimony represents the “imposition of an impermissible evidentiary burden not found in the law or regulations.” Id. at 8. The Commissioner responds in his brief that “[c]ontrary to Plaintiff's claim, the ALJ said nothing about requiring ‘objective evidence' to support her statements, and the ALJ explained her reasoning for not fully accepting Plaintiff's statements.” Def.'s Brief [DE-10] at 9.
At step one of the five-step SEP analysis, the ALJ considers if the claimant was engaged in SGA. “Substantial work activity is work activity that involves doing significant physical or mental activities.” 20 C.F.R. § 404.1572(a). “Gainful work activity” is work done for “pay or profit,” even if no profit is realized. Id. § 404.1572(b). For self-employed individuals, Social Security Ruling 83-34 provides that:
in determining whether a self-employed individual is engaging in SGA, consideration must be given to the individual's activities and their value to his or her business. Self-employment income alone is not a reliable factor in determining SGA . . . SGA determinations for self-employed persons are based on three tests, all of which must be considered before it can be established that the self-employed person is not or was not engaged in SGA.S.S.R. 83-34; see also 20 C.F.R. § 404.1575.
The tests are as follows:
(i) Test One: You have engaged in [SGA] if you render services that are significant to the operation of the business and receive a substantial income from the business . . .
(ii) Test Two: You have engaged in [SGA] if your work activity, in terms of factors such as hours, skills, energy output, efficiency, duties, and responsibilities, is comparable to that of unimpaired individuals in your community who are in the same or similar businesses as their means of livelihood.
(iii) Test Three: You have engaged in [SGA] if your work activity, although not comparable to that of unimpaired individuals, is clearly worth the amount shown in § 404.1574(b)(2) when considered in terms of its value to the business, or when compared to the salary that an owner would pay to an employee to do the work you are doing.20 C.F.R. § 404.1575(a)(2)(i)-(iii).
Under Test One, the ALJ considered Plaintiff's claims that her 2021 earnings of $17,848.89 from four identified properties, which closed between January 19, 2021, and July 12, 2021, should be reduced by 90%, based on Plaintiff's claims that she completed most of the work for those sales before her injury. Tr. 19. The ALJ found that no information, with the exception of Plaintiff's self-report, supports such claims. Id. The ALJ specifically notes that based upon the documentary evidence provided, three of the four home listings had contract dates in February or May 2021, and closing dates in 2021. Id. The ALJ additionally notes that while Plaintiff also discounted the $23,799.98 in commissions that she received from four other properties that closed between July 23, 2021, and November 24, 2021, by 90%, Plaintiff did not contend that the commissions she received for these other properties reflect work performed before her alleged onset date. Tr. 19. Ultimately, the ALJ found that the net earnings of $17,796 reported on Plaintiff's 2021 tax return represented substantial income as they represented higher average monthly income than the 2021 monthly threshold of $1,310 under POMS DI 10501.015. Id.
The ALJ also found that Plaintiff rendered services significant to the operation of her business as a self-employed real estate agent. Id. Specifically, the ALJ found that although Plaintiff testified that she hired colleagues to handle closings or work on contracts for four closings in 2021, the evidence supports a finding that Plaintiff “performed all other work related to the sales and all other work of the business, which would constitute more than half the total time required for management of the business.” Id. (citing POMS DI 10510.015).
Accordingly, the ALJ found that Plaintiff engaged in SGA during the period from January to November 2021, based on her findings that Plaintiff received substantial income and performed significant services during this period. Tr. 19-20. The ALJ additionally found that Plaintiff's work in 2021 did not qualify as a trial work period because it occurred within the 12-month period after 11 her alleged onset (citing 20 C.F.R. § 404.1592) and was not an unsuccessful work attempt, as it lasted longer than six months. Tr. 20.
In light of the above recommendation that this case be remanded for further proceedings and explanation regarding whether Plaintiff engaged in SGA at the time of the ALJ decision, the undersigned does not make a recommendation regarding Plaintiff's remaining two arguments, as the ALJ's findings on remand may be substantially different. On remand, however, the Commissioner should consider Plaintiff's argument here, and ensure that Plaintiff's testimony is evaluated in accordance with the relevant law and regulations, and that the findings are fully explained, so as to permit meaningful review by the court if necessary. It is, of course, up to the Commissioner to determine what weight to give all evidence.
VII. CONCLUSION
For the reasons stated above, it is RECOMMENDED that the court GRANT Plaintiff's request for relief [DE-8], DENY Defendant's request for relief [DE-10], and REMAND the case to the Commissioner for further proceedings consistent with the Memorandum and Recommendation.
IT IS DIRECTED that a copy of this Memorandum and Recommendation be served on each of the parties or, if represented, their counsel. Each party shall have until February 20, 2024, to file written objections to this Memorandum and Recommendation. The presiding district judge must conduct his own review (that is, make a de novo determination) of those portions of the Memorandum and Recommendation to which objection is properly made and may accept, reject, or modify the determinations in the Memorandum and Recommendation; receive further evidence; or return the matter to the magistrate judge with instructions. See, e.g., 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b)(3); Local Civ. R. 1.1 (permitting modification of deadlines specified in local 12 rules), 72.4(b), E.D. N.C. Any response to objections shall be filed by the earlier of 14 days from the filing of the objections or March 4, 2024.
If a party does not file written objections to the Memorandum and Recommendation by the foregoing deadline, the party will be giving up the right to review of the Memorandum and Recommendation by the presiding district judge as described above, and the presiding district judge may enter an order or judgment based on the Memorandum and Recommendation without such review. In addition, the party's failure to file written objections by the foregoing deadline will bar the party from appealing to the Court of Appeals from an order or judgment of the presiding district judge based on the Memorandum and Recommendation. See Wright v. Collins, 766 F.2d 841, 846-47 (4th Cir. 1985).