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.

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. 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:

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."

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:

Age refers to how old you are (your chronological age) and the extent to which your age affects your ability to adapt to a new work situation and to do work in competition with others.

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 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

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).

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.

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.

^[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).

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