SSR 69-57c: SECTION 205(b). -- EVIDENCE -- BURDEN OF PROOF -- PRESUMPTION OF LACK OF WAGES IN ABSENCE OF STATEMENT OF EMPLOYER
LACKEY v. GARDNER, U.S.D.C., Ga., Civil No. 10666
(8-25-67) (CCH U.I.R. Fed. Par. 14,852)
- After being denied old-age benefits, a claimant alleged that she was employed 1 day a week in 1961 by her sister-in-law to do housework and ironing and was paid $5 each week in cash. No "statement of employer" was filed by the sister-in-law until 1965, nor were such wages reported or contributions paid until such time. Held, the absence of such reporting gives rise to the statutory presumption contained in 42 U.S.C.A. 405(c)(4)(B) that no wages were paid, and casts a heavy burden of proof on the claimant which she failed to carry. Held further, that the limited function of the district court does not include a review of the Secretary's decisions on credibility, unless a clear abuse is present, and where, as here, claimant failed to demonstrate such abuse, the court could not alter the Secretary's findings regarding the credibility of the witnesses testifying in connection with the employer-employee relationship.
SIDNEY O. SMITH, District Judge:
This is an action pursuant to § 205(g) of the Social Security Act, as amended (42 U.S.C.A. 405(g)), to obtain judicial review of the decision of the Secretary, denying plaintiff's claim for old-age insurance. The Secretary denied her claim because she did not have the 14 quarters of coverage required in her case to qualify as a "fully insured individual." The precise issue before the Court is whether or not there is substantial evidence in the record to support the final decision of the Secretary that a bona fide employer-employee relationship did not exist between the plaintiff and her sister-in-law.
Claimant's initial claim for old-age insurance benefits was denied on May 7, 1965. This decision was predicated upon a finding that the claimant had only 11 quarters of coverage rather than 14 quarters needed to qualify for these benefits. See § 214(a) of the Social Security Act (42 U.S.C.A. 414(a)). In October, 1965, claimant submitted evidence of additional earnings based on services allegedly rendered as a domestic in 1961. This showing was treated as a request for reconsideration. Again benefits were denied, a finding having been made that there was no factual basis for establishing that claimant actually performed these services. Claimant, with benefit of able counsel, has pursued without success her remedies throughout the long and tedious journey to this Court. As the decision in this case must focus upon the nature of the relationship between claimant and her sister-in-law, consideration must be given to the various facts upon which the parties make their contentions and to the interpretations given this evidence by the parties.
The record shows that claimant lived in a house directly behind the home of her sister-in-law Hattie M. Batchelor who is the alleged employer. Both of the above persons testified that Mrs. Batchelor employed claimant for one day a week, each Friday, from January 1, 1961, until the end of December, 1961, to do housework and ironing and that she was paid $5.00 cash each week for these services. Mrs. Batchelor testified that she was feeling badly during the latter part of 1960 and had been looking for someone to do some of the housework on a part time basis but had been unable to find a trustworthy person. Also her work had become more difficult at this time and her 19 year old son was still at home, therefore adding to the need for additional help. She approached her sister-in-law about taking on this work. Claimant accepted and this working arrangement began at the first of the year. It terminated at the end of that year because Mrs. Batchelor no longer needed this work and also because claimant's mother became very ill, thereby requiring claimant's presence at home where she could care for her mother. Claimant testified that she was dependent upon her son and needed spending money. She was fee to work in 1961 because her daughter-in-law, who lived in the house with claimant, did not work during that year and was able to care for claimant's mother. Mrs. Batchelor first paid social security taxes on June 2, 1965, after claimant's application for old-age benefits was turned down. She testified that she was aware that social security taxes were to be paid on domestic employees but had not realized at the time that claimant had been paid enough to be covered.
Claimant argues that all the basic ingredients for a contract of employment are amply shown in the record, i.e., (a) an offer to employ a person, (b) a specified wage, (c) a statement or determination of the work to be done, (d) a determination of the particular days on which the work is to be done and the hours to be worked, (e) the power of the employer to terminate the relationship, (f) the power to control. (Claimant contends that this element is satisfied by allegations that the work was performed in accordance with the desires and stipulations of the employer.) Claimant correctly asserts that all these factors should be viewed in the context of the type of employment and general mode of contractural (sic) relationship surrounding the hiring of domestic help. Claimant concedes that the question of credibility does exist and was a question to be resolved by the Secretary but argues that under these facts failure to resolve any credibility problem in favor of claimant amounts to an abuse of discretion.
What is the basis for the Secretary's finding that no employer-employee relationship existed? Broadly, the Secretary found that the alleged employment of the claimant by her sister- in-law had not been proven. The decision was based in part upon the finding "that the statements of the witnesses and their testimony at the hearing were inconsistent and lacked credibility and validity." The Secretary's brief in support of this motion argues two slightly distinguishable contentions: (1) Lack of evidence to establish a bona fide employment relationship. (2) Assuming arguendo that some relationship existed between claimant and her sister-in-law, claimant's proofs do not establish that this is an employer-employee relationship.
Due to the questionable validity of portions of this second argument and because defendant's brief reflects a conspicuous uncertainty as to the precise part the credibility factor played in the original decision, it is necessary to set forth rather fully the Hearing Examiner's evaluation of the evidence presented. (1) The Hearing Examiner viewed the close relationship between the claimant and Mrs. Batchelor as an element necessitating a closer than normal scrutiny of the facts. (2) Mrs. Batchelor never paid claimant by check even though she and her husband had a checking account. (3) No "statement of employer" was filed until 1965 after denial of benefits to claimant. (4) The reasons for hiring claimant seemed to raise suspicion. There was no mention of Mrs. Batchelor's health problem when the questionnaire was returned, although later at the hearing, she stated that her health problem was a factor in causing her to look for help. In spite of the health problem, she took on additional work at her place of employment at approximately the same time. (5) The reasons for releasing claimant were likewise deemed suspicious. Mrs. Batchelor said that because her son was no longer there, she no longer needed claimant's help, although her son didn't in fact leave until February, and on his return, no new help was sought or obtained. Also the allegations that she recovered from her illness so as to be able to do the work were suspicious in that the recovery "by coincidence occurred at the time her sister-in-law allegedly earned the necessary quarters of coverage."
The weakness in the testimony of various witnesses could have produced a number of different inferences. (1) The services were rendered and the wages were paid solely for the purpose of providing the necessary amount of coverage for claimant. This motive if accompanied by a bona fide arrangement does not render a party ineligible for benefits. See Holland v. Celebrezze, 223 F. Supp. 347 (D.C. Tenn. 1963); Brannon v. Ribicoff, 200 F. Supp. 697 (D.C. Mont. 1961). This inference was apparently not a part of the Secretary's decision. (2) The services were rendered and the money was paid, but the relationship between claimant and Mrs. Batchelor was not that of employer-employee. This didn't appear to be the position of the Hearing Examiner, but seemingly the Secretary now argues this position. The Secretary's position, if it indeed rested solely on this narrow ground would be weak. The essential requisites of an employer-employee relationship have been alleged. The Secretary correctly places primary emphasis upon the "right to control but seems incorrectly to equate this common law test of right or power to control with actual control. Even the cases cited by the Secretary on this ground, i.e., the close relationship" cases seem not so strongly analogous under these facts. Yet further inquiry into these questions is not necessary for the Hearing Examiner does not seem to be dependent upon this inference. Moreover, even if this inference had been relied upon, the next mentioned inference is sufficient in itself to dispose of this case. (3) Claimant did not actually render the services and/or claimant was not actually paid this much, i.e., the report of services and/or wages was merely fabricated to establish sufficient work to qualify. Clearly the Hearing Examiner relied upon this inference.
Overriding all the factors considered by the Secretary is the statutory presumption arising from Mrs. Batchelor's filing of the "statement of employer" at a time far beyond the statutory time limitation and conveniently at the precise time several additional quarters were needed. § 205(c)(4)(B) (42 U.S.C.A. 405(c)(4)(B)) provides that the absence of such a report during the statutory time limits is presumptive evidence that no wages were received during the period. See Martlew v. Celebrezze, 320 F.2d 887 (5th Cir. 1963); Williams v. Celebrezze, 243 F. Supp. 103 (E.D. Ark. 1965). The Secretary failed to find evidence which corroborated the testimony of claimant and Mrs. Batchelor. Moreover, the Secretary pointed to numerous suspicious factors which weakened the credibility of the witnesses, i.e., the inconsistencies in claimant's and Mrs. Batchelor's testimony, the fact that the days allegedly worked ran from January 1, 1961, to the last day in 1961, Mrs. Batchelor's earlier statement that she didn't realize that claimant had made as much as $50 a quarter. While the Court is not overly impressed with the government's reasoning as to these suspicious circumstances, it does agree with the Secretary's ultimate conclusion. The statutory presumption made necessary a clear showing of services rendered and wages paid by claimant. Were the appellate function of this Court in this matter not so firmly established and were the statutory presumption not present, this Court would be persuaded to rule differently. Yet these factors are undeniably present. The statutory presumption casts on claimant a heavy burden of proof, the evidence indicating a failure to carry this burden. Certainly had the relationship existed for that length of time, a nonrelated third party could have so testified. The limited function of this Court does not include a review of the Secretary's decisions on credibility, unless a clear abuse is present. All parties recognized the vital role of credibility in the decision of this case, yet claimant has failed to demonstrate such abuse as would allow this Court to alter the Secretary's findings on credibility.
Accordingly, defendant's motion for summary judgment is granted.