AR 98-1 (8): Newton v. Chater, 92 F.3d 688 (8th Cir. 1996) — Entitlement to Trial Work Period Before Approval of an Award for Benefits and Before Twelve Months Have Elapsed Since Onset of Disability — Titles II and XVI of the Social Security Act.

Issue:

Whether a person's return to substantial gainful activity (SGA) within 12 months of the onset date of his or her disability, and prior to an award of benefits, precludes an award of benefits and entitlement to a trial work period.

Statute/Regulation/Ruling Citation:

Sections 222(c), 223, 1614(a)(3) and (4) and 1619 of the Social Security Act (42 U.S.C. 422(c), 423, 1382c(a)(3) and (4) and 1382h); 20 CFR 404.1505, 404.1520(b), 404.1592, 416.262, 416.905, 416.906, 416.920(b), 416.924(b); Social Security Ruling (SSR) 82-52.

Circuit:

Eighth (Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, South Dakota).

Newton v. Chater, 92 F.3d 688 (8th Cir. 1996).

Applicability of Ruling:

This Ruling applies to determinations or decisions at all administrative levels (i.e., initial, reconsideration, Administrative Law Judge (ALJ) hearing and Appeals Council review).

Description of Case:

Donald A. Newton applied for disability insurance benefits and Supplemental Security Income (SSI) on April 22, 1993, alleging disability since October 30, 1992, based on illiteracy, memory lapses, alcoholism and hypertension. The applications were denied initially and on reconsideration. From June to September 1994, Mr. Newton worked in a foundry as a grinder and a metal beater for at least 40 hours per week and earned between $6.50 and $7.26 per hour. In October 1994, he worked for one week at a wood products firm. In November 1994, a hearing was held before an ALJ who issued a decision in February 1995 denying disability benefits.

The ALJ found that Mr. Newton was not disabled under step one of the five-step sequential evaluation process due to his performance of substantial gainful activity from June to September 1994. The ALJ also cited this 1994 work activity as evidence that Mr. Newton's alleged impairments did not prevent him from performing his past relevant work. The Appeals Council denied Mr. Newton's request for review in May 1995 and the district court affirmed the ALJ's decision in December 1995. On his appeal to the United States Court of Appeals for the Eighth Circuit, Mr. Newton argued, among other things, that he was entitled to a trial work period for the work he performed in 1994 and that the evidence supported a finding of disability.

Holding:

The Eighth Circuit reversed the judgment of the district court and directed that the case be remanded to the Social Security Administration (SSA) for further administrative proceedings. The court of appeals determined that the ALJ erred in considering Mr. Newton's work from June to September 1994 as evidence of substantial gainful activity to support a finding of no disability without first determining whether he was entitled to a trial work period during those months.^[1] The court stated that under the Social Security Act (the Act) and SSA's regulations,

: . . . a trial work period starts in the month that entitlement to disability benefits begins, which is the month following five consecutive months of being under a disability that has lasted or is expected to last a total of twelve continuous months. (Emphasis in original.)^[2]

The court found that the provision of SSR 82-52 which precludes a finding of disability where a claimant returns to substantial gainful activity before an award of benefits and before 12 months have elapsed since the date of onset of an impairment which prevented substantial gainful activity "is inconsistent with the statutory provisions governing the start of a trial work period." The Eighth Circuit held:

: The language in the statutes and regulations does not require that a trial work period be conditioned on a prior receipt of benefits and/or the lapse of a twelve month period of disability.

In support of its holding, the Eighth Circuit cited two other court of appeals decisions in which the courts reached a similar conclusion on this issue — Walker v. Secretary of Health and Human Services, 943 F.2d 1257 (10th Cir. 1991), for which SSA published Acquiescence Ruling (AR) 92-6(10), and McDonald v. Bowen, 818 F.2d 559 (7th Cir. 1987), for which SSA published AR 88-3(7).

Statement As To How Newton Differs From Social Security Policy

SSR 82-52 contains a clear statement of SSA policy on this issue^[3] as follows:

: When the [individual's] 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.

The Eighth Circuit held that, under the Act and regulations, entitlement to a trial work period is not conditioned upon a prior award of benefits and/or the lapse of a 12-month period of disability. This raises the possibility that, on remand of the case to SSA, should Mr. Newton establish the onset of an impairment that could otherwise be the basis for a finding of disability, Mr. Newton may receive a benefit award and a trial work period even if he returned to work demonstrating an ability to engage in substantial gainful activity before the lapse of the 12-month period after the onset date of such impairment and before a decision by SSA to award benefits.

Explanation of How SSA Will Apply The Newton Decision Within The Circuit

This Ruling applies only to cases in which the claimant resides in Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota or South Dakota at the time of the determination or decision at any administrative level, i.e., initial, reconsideration, ALJ hearing or Appeals Council review.

This Ruling applies to claims for title II benefits based on disability. It also applies to claims for title XVI benefits based on disability as explained below.

A claim for title II disability insurance benefits, widow(er)'s insurance benefits based on disability or child's insurance benefits based on disability in which the claimant returns to work within 12 months of the established onset date of an impairment which could otherwise be the basis for a finding of disability should be allowed and the claimant granted a trial work period if the following conditions are met: (1) the claimant establishes that, at the time he or she returned to work and thereafter, the impairment was still expected to last for at least 12 consecutive months from the date of onset; (2) the claimant returns to work after the waiting period (if a waiting period is applicable) and after the established onset date (but within the 12-month period following such onset date); and (3) the return to work demonstrating an ability to engage in substantial gainful activity occurs either before or after approval of the award.

A claim for title XVI benefits based on disability in which the claimant returns to work within 12 months of the established onset date of an impairment which could otherwise be the basis for a finding of disability should be allowed and the claimant granted section 1619 status^[4] if the following conditions are met: (1) the claimant establishes that, at the time he or she returned to work and thereafter, the impairment was still expected to last for at least 12 consecutive months from the date of onset; (2) the claimant returns to work in a month subsequent to the month of established onset (but within the 12-month period following such onset date); (3) the claimant is eligible for "regular" SSI benefits under section 1611 of the Act (or a federally administered State supplementary payment) based on the impairment (disregarding the effect that the claimant's return to work within 12 months after onset would otherwise have on eligibility for such benefits or payment) for at least one month in the period preceding the month in which he or she returns to work; (4) the claimant meets all other nondisability requirements for section 1619 status; and (5) the return to work demonstrating an ability to engage in substantial gainful activity occurs either before or after approval of the award.

^[1] Section 222(c)(2) of the Act provides that "any services rendered by an individual during a period of trial work shall be deemed not to have been rendered by such individual in determining whether disability has ceased in a month during such period."

^[2] Section 222(c)(3) of the Act provides, in pertinent part, that "[a] period of trial work for any individual shall begin with the month in which he becomes entitled to disability insurance benefits . . . ." Under section 222(c)(4) of the Act, a trial work period ends with the ninth month, in any period of 60 consecutive months, in which the individual renders services (whether or not the nine months are consecutive), or, if earlier, with the month in which disability ceases.

^[3] SSR 91-7c superseded SSR 82-52, but only to the extent that SSR 82-52 discussed former procedures used to determine disability in children. The issue in this AR does not relate to those former procedures and the cited policy statement in SSR 82-52 remains in effect.

^[4] Pursuant to statutory amendments made by Public Law 99-643, effective July 1, 1987, the trial work period provisions no longer apply to title XVI disability claims. Beginning July 1, 1987, a disabled individual, who was eligible to receive "regular" SSI benefits under section 1611 of the Act (or a federally administered State supplementary payment) for a month and subsequently has earnings ordinarily considered to represent substantial gainful activity, will move directly to section 1619 status rather than be accorded a trial work period. This Ruling extends to such individuals, i.e., a claim for title XVI benefits based on disability should be allowed and the claimant granted section 1619 status if the claimant would otherwise be eligible for section 1619 status and the same conditions set out above for title II claims based on disability are met.

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