AR 87-4(8) (Rescinded 8/10/2000)
EFFECTIVE DATE: 8/31/87
AR 87-4(8): Iamarino v. Heckler, 795 F.2d 59 (8th Cir. 1986) Positive Presumption of Substantial Gainful Activity (SGA) for Sheltered Work
ISSUE:
Whether there is a positive presumption of SGA for average nonthly earnings from sheltered work of more than $300 which is different from the positive presumption of SGA for similar earnings from competitive work.
STATUTE/REGULATION/RULING CITATION:
Sections 223(d)(4) and 1614(a)(3)(D) of the Social Security Act (42 U.S.C. 423(d)(4) and 1382c(a)(3)(D)); 20 C.F.R. Sections 404.1574(b)(2); 404).1574(b)(3); 404.1574(b)(4); 404.1574(b)(6); 416.974(b)(2); 416.974(b)(3); 416.974(b)(4); 416.974(b)(6)
CIRCUIT:
EIGHTH (ARKANSAS, IOWA, MINNESOTA, MISSOURI, NEBRASKA, NORTH DAKOTA, SOUTH DAKOTA)
Iamarino v. Heckler, 795 F.2d 59 (8th Cir. 1986)
APPLICABILITY OF RULING:
- This ruling applies to determinations or decisions at all administrative levels (i.e., initial, reconsideration, administrative law judge hearing and Appeals Council).
DESCRIPTION OF CASE:
In August 1981 Joseph A. Iamarino entered the Goodwill Industries Work Adjustment Program, a program designed to help individuals acquire the work habits, attitudes and behaviors needed to obtain and maintain a job in the community. He stayed in this program until April 1982, when he transferred into the Goodwill Industries Client Employment Program. In October 1982, he was placed in a competitive job from which he was terminated after a week.
Mr. Iamarino filed for disability benefits on November 23, 1982, alleging an onset date of October 29, 1982. His application was denied initially and on reconsideration. Subsequent to his hearing before the administrative law judge (ALJ), but before a decision was rendered, Mr. Iamarino notified the ALJ that the onset date of his disability was actually prior to June 23, 1981. The ALJ allowed Mr. Iamarino's claim but determined that October 29, 1982, was the onset date, reasoning that Mr. Iamarino had been engaged in SGA up to that date. On July 27, 1984, the Appeals Council denied Mr. Iamarino's request for review, establishing the decision of the ALJ as the Secretary's final decision. The district court affirmed. Mr. Iamarino then appealed to the United States Court of Appeals for the Eighth Circuit.
HOLDING:
The court of appeals found that Mr. Iamarino's earnings from his sheltered work at Goodwill Industries for the period between August 1981, and April 14, 1982, did not constitute substantial gainful activity. This conclusion arose from the court's compari- son of rules concerning SGA in competitive employment with the rules concerning SGA in sheltered employment. For competitive employment, the court pointed out that the Secretary's regulations contain both a negative and a positive presumption. The negative presumption for competitive employment is contained in 20 C.F.R. Section 404.1574(b)(3) and states that ordinarily average monthly earnings below $190.00 in calendar years after 1979 will not constitute SGA.[1] The positive presumption for competitive employment is contained in 20 C.F.R. Section 404.1574(b)(2) and states that average monthly earnings over $300.00 in calendar years after 1979 will ordinarily constitute SGA. As to average monthly earnings from competitive employment between the above amounts, no presumption applies and there must be comparisons of the work at issue with working the community. The court pointed out that 20 C.F.R. Section 404.1574(b)(4) contains a negative presumption for sheltered work, namely that average monthly earnings of $300 or less will not ordinarily constitute SGA. It then concluded that 20 C.F.R. Section 404.1574(b)(6), while not specifically addressing sheltered work, dictates an interpretation that there must be a middle ground where no presumption, positive or negative applies, just as there is for competitive employment.
STATEMENT AS TO HOW IAMARINO DIFFERS FROM SOCIAL SECURITY POLICY:
Under SSA's interpretation of 20 C.F.R. Section 404.1574(b)(6) and 416.974(b)(6), (which explains that where average monthly earnings are between $190.00 and $300.00, informa- tion in addition to earnings must be considered in determining whether SGA has been performed) the middle ground addressed by the court where no presumption is applied does not exist for sheltered work. SSA's policy is that sheltered work producing $300 or less in average monthly earnings is ordinarily no SGA and that sheltered work producing $300.01 in average monthly earnings is ordinarily SGA. (Both these amounts represent actual earnings after deductions of subsidies, impairment-related work expenses, etc.)
The court of appeals rejected SSA's interpretation stating that:
- Logic, as well as the language of the regulation, dictates this interpretation [by the court that there is no positive presumption of SGA for sheltered employment]. If the positive presumption of subsection (b)(2) applied to sheltered employment, a claimant being paid $300 a month would presumptively not be capable of SGA, while a claimant being paid $300.01 would presumptively be capable of SGA. Subsection (b)(6) recognizes the necessity of establishing a middle ground where any presumption would in inappropriate
EXPLANATION OF HOW SSA WILL APPLY THE DECISION WITHIN THE CIRCUIT:
This ruling applies only to cases in which the claimant resides in Arkansas, Minnesota, Missouri, Nebraska, North Dakota or South Dakota at the time of the determination or decision at any level of administrative review, i.e., initial, reconsideration, administrative law judge hearing and Appeals Council review where a person is working in sheltered employment and earning on the average more than $300 monthly.
There is a middle ground between the $300 average monthly amount from sheltered work which ordinarily presumed to be not SGA and an unspecified upper limit.[2] If average monthly earnings from sheltered work fall in this middle ground, SSA must generally compare the time, energy, skill, responsibility and pay of the sheltered work and work in the community to determine whether earnings show that a person had engaged in substantial gainful activity. Earnings in this middle ground may not be presumed to be SGA.
EFFECTIVE DATE:
Date of Publication 8/31/87
[1] Since Mr. Iamarino's claim was for title II disability benefits, the court discussed only the applicable provisions of Regulation No. 4 of 20 C.F.R., and not those of Regulation No. 16. however, since the provisions are the same, the courts ruling would apply to title XVI cases, as well as title II cases.
[2] Since the court did not specify an upper limit, all cases involving earnings from sheltered work averaging in excess of $300 a month after all appropriate deductions will require individualized adjudication. No presumption of SGA may be applied.