SSR 70-20c: SECTIONS 210(a)(9) and 223(c)(1)(B). -- DISABILITY INSURANCE BENEFITS -- INSURED STATUS -- CREDITING OF RAILROAD SERVICE

20 C.F.R. 404.120, 404.1401 et. seq.

SSR 70-20c

TAYLOR v. FINCH, U.S.D.C., W.D.Mo., No. 16553-2 (10-23-68), affirmed (418 F.2d 1232 (8th Cir., 1969))

Appellant filed application for a period of disability and for disability insurance benefits under sections 216(i) and 223, respectively, of the Social Security Act. He stated he had worked for a railroad for more than 10 years. Appellant could not meet the earnings requirements of section 223 of the Act unless his years of railroad service could be credited to this earnings record. Under the provisions of the Act and regulations, railroad compensation may be credited to an individual for the purpose of establishing a period of disability under section 216(i), but may be used to meet the earnings requirements for disability benefits in section 223 only where the individual has less than 10 years of railroad service. The court held, the Secretary's findings that the appellant was entitled to a period of disability but did not meet the earnings requirement for entitlement to disability insurance benefits were correct.

Collinson, District Judge: This case arises under Title II of the Social Security Act, 42 U.S.C.A. § 401 et seq. Plaintiff Thomas H. Taylor seeks judicial review of a final decision of the Secretary of Health, Education, and Welfare, which decision was adverse. Plaintiff is properly in this Court for such review.[1]

On February 18, 1966, plaintiff filed an application to establish a period of disability, as provided in § 416(i), Title 42, U.S.C.A., and to obtain monthly disability benefits. This application was denied throughout the administrative process, and after the Appeals Council of the Social Security Administration had denied a request for a formal review of the hearing examiner's decision, plaintiff Taylor sought judicial review. This Court remanded the case to the Secretary on September 25, 1967, "for the purpose of obtaining evidence which exists but has not been submitted, and, if then necessary, to arrange for additional medical examinations of plaintiff in order to obtain more complete evidence as to the severity of his alleged impairments."

The Appeals Council on February 26, 1968, decided:

(1) Beginning on February 1, 1962, and continuing on the date of this decision the claimant has been unable to engage in any substantial gainful activity by reason of a medically determinable impairment which can be expected to be of long continued and indefinite duration;
(2) The claimant meets the earnings requirement of the law for purposes of establishing a period of disability in the quarter in which the disability began; and
(3) The claimant does not meet the earnings requirement for purposes of entitlement to disability insurance benefits in the quarter in which his disability began or at any time prior or subsequent thereto.

The first two findings of the Appeals Council are favorable to the plaintiff, and need not be discussed further, except insofar as the "earnings requirement" referred to in the second and third findings above listed relate to each other.

To obtain monthly disability benefits under the Social Security program, as amended, three conditions must be met. First, plaintiff must have been determined to be "disabled" (as that term is defined in § 216(i) of the Social Security Act as it existed prior to the amendments of 1965). The Appeals Council has decided that he is so disabled.

Second, plaintiff must establish that he is entitled to a "period of disability" -- defined in 42 U.S.C.A. § 416(i) (2) as ". . . [A] continuous period . . . during which an individual was under a disability as defined in paragraph (1), but only if such period is of not less than six full calendar months' duration or . . . ." The Appeals Council has determined that plaintiff is so disabled, and such disability began on February 1, 1962, the date plaintiff last worked.

Finally, plaintiff must be in "insured status" in order to receive disability benefits. Title 42, U.S.C.A. § 423(c) sets forth the requirements necessary for insured status as follows:

For purposes of this section --
(1) an individual shall be insured for disability insurance benefits in any month if --
(A) . . . and
(B) he had not less than twenty quarters of coverage during the forty-quarter period ending with the quarter in which such first day occurred, not counting as part of such forty-quarter period any quarter any part of which was included in a period of disability (as defined in section 416(i) of this title) unless such quarter was a quarter of coverage." (Emphasis added)[2]

The only question to be resolved by this Court, then, is whether the Appeals Council of the Social Security Board ruled correctly in holding that the plaintiff does not meet the earnings requirement for purposes of entitlement to disability insurance benefits.

Plaintiff Taylor has worked at a variety of jobs during his career. Principally, he was employed by the Chicago, Burlington, and Quincy Railroad. He worked for the railroad for over 10 years, and terminated employment with them in mid-1957. Since that date, plaintiff ran a "junk" business for a short time, and in addition temporarily operated a service station until February 1, 1962, at which time plaintiff states that he became totally unable to do further work.

The Appeals Council set this date as the date of plaintiff's disability. Coverage requirements are figured on the basis of this date:

To be entitled to benefits under the Social Security Act for disability, one must meet the "coverage requirement" of the Act at the time he becomes disabled. This requirement is that the applicant must have had earnings upon which social security taxes were payable for at least twenty (20) quarters during the forty-quarter period which ends with the quarter in which the disability occurs. 210 F.Supp. 856 (1962).

Plaintiff does not meet the coverage requirements unless his years of railroad work may be credited to him for this purpose. The Railroad Retirement Act of 1937, as amended, generally has responsibility for administering pension, annuities, and disability benefits to persons in the railroad industry; for career railroad workers, in large measure, it takes the place of the Social Security Act. In other cases, employment in the Railroad industry may be credited as employment under the Social Security Act for certain specifically defined purposes. The two programs are interrelated to a degree:

The Railroad Retirement Act sets up a system of benefits for railroad employees, their dependents and survivors, and has in many respects been integrated with the Social Security Act to provide a coordinated system of retirement, survivor, dependent and disability benefits payable on the basis of an individual's work in the railroad industry and in employment and self-employment covered by the Social Security Act. With respect to the coordination of the two programs the Railroad Retirement Act distinguishes between "career" railroaders and those individuals who may be considered "casual" railroad workers, the line of demarcation being 10 years of service in the railroad industry, including service prior to 1937. It transfers to the old-age, survivors and disability insurance system individuals who at the time of retirement, onset of disability or death have less than 10 years of service in the railroad industry and meet certain other requirements. . . . Those with 10 or more years of railroad service remain under the Railroad Retirement Act, except that under certain circumstances survivors of such workers may be shifted to the old-age, survivors and disability insurance system. (Emphasis added) 20 C.F.R. 404.1401.

Thus plaintiff, who had admittedly worked more than 10 years in the railroad industry, would normally be prohibited from including such employment in the quarter of coverage requirement imposed by 42 U.S.C.A. 423(c)(1)(b) as a condition precedent to obtaining disability benefits.

Section 213(a) of the Social Security Act, 42 U.S.C.A. § 413(a), as pertinent to this case, defines a "quarter of coverage" as a calendar quarter "in which the individual has been paid $50 or more in wages." Section 409 defines "wages" as remuneration for "employment."

Section 410(a)(9) excludes from "employment" those "services performed by an individual as an employee . . . as defined in [section 3231 of the Internal Revenue Code of 1954]." Section 3231 of the Internal Revenue Code of 1954, 26 U.S.C.A. § 3231, provides as follows:

(a) EMPLOYER. -- For purposes of this chapter, the term "employer" means any carrier (as defined in subsection (g)). . . .
(b) EMPLOYEE. -- For the purposes of this chapter, the term "employee" means any individual in the service of one or more employers for compensation. . . .

* * * * * * *

(g) CARRIER. -- For purposes of this chapter, the term "carrier" means an express company, sleeping-car company, or carried by railroad, subject to part I of the Interstate Commerce Act (49 U.S.C., Chapter 1)."

Standing alone, § 410(a)(9) would preclude plaintiff from counting his railroad employment in order to meet the quarter of coverage requirement and thus attain insured status. However, § 410(a)(9) is modified by § 5(k) of the Railroad Retirement Act of 1937, as amended (45 U.S.C.A. § 228(e)(k), which provides:

For the purpose of determining (i) insurance benefits under subchapter II of Chapter 7 of Title 42 to an employee who will have completed less than 10 years of service. . . and for the purposes of . . . 416(i)(3) of Title 42, . . . § 410(a)(9) of Title 42 . . . shall not operate to exclude from "employment," under subchapter II of Chapter 7 of Title 42, service which would otherwise be included in such "employment" but for such sections. (Emphasis added.)

It can readily be seen that plaintiff's railroad service would count for him had he worked less than 10 years in the railroad industry. This view is reinforced by § 404.1402 of Regulations No. 4 of the Social Security Administration, 20 C.F.R. 404.1402, which provides, as pertinent:

Services performed by an individual in the railroad industry which would, but for the provisions of this section, be excepted from "employment" by reason of § 404.1407,[3] shall be considered to be "employment" . . . in the following situations:
(a) For the purpose of determining entitlement to or the amount f any monthly benefits or lump-sum death payment on the basis of the wages and self-employment income of an individual whose years of service in the railroad industry are less than 10; (Emphasis added.)
(b) For the purposes of determining entitlement to or the amount of any survivor monthly benefit or any lump-sum death payment on the basis of the wages and self-employment income of an individual whose years of service in the railroad industry at the time of death were 10 or more (see Section 404.1406 for circumstances under which no payment may be made even though services are in "employment");[4]
(c) For the purposes of determining entitlement to the establishment of a period of disability . . . on the basis of the wages and self-employment income of an individual; (Emphasis added.)
(d) For the purposes of applying the provisions of section 203 of the Act (see Subpart E of this part).[5]

Section (c), then, is the only section which assists plaintiff in this instance. It does allow him to count his railroad employment for purposes of establishing a "period of disability," but says nothing about allowing him to count that employment in order to meet the earnings requirement. The language at the beginning of § 404.1402 is limiting language: "Services . . . which would, . . . be excepted from 'employment' . . . shall be considered to be in 'employment' . . . in the following situations:" (Emphasis added.) Plaintiff is in one of the listed situations only for purposes of establishing a period of disability.

Plaintiff's railroad service, then, may not be counted in meeting the coverage requirements necessary for insured status.[6] Such a result may seem unduly harsh at first blush, but the Court is mindful of the admonition contained in 264 F.Supp. 610, at 614 (1967):

It must be kept in mind that a person's right to have quarters of coverage credited to him for Social Security purposes or to receive benefits under the Social Security Act is not a contractual right. It is a right dependent wholly upon the relevant statutes and regulations: . . .

Supporting the proposition that railroad service in excess of ten years may not be used to establish the earnings requirement of 42 U.S.C.A. § 416(i)(3), is 20 C.F.R. 404.120, which states:

For the purpose of meeting the disability insured status requirements for the establishment of a period of disability only, quarters of coverage may be granted for:
(a) Compensation for service after 1936 covered by the Railroad Retirement Act (see Subpart O of this part) even though such compensation may not be used for other purposes of Title II of the Social Security Act because the individual has 120 or more months of such service, or is receiving an annuity under the Railroad Retirement Act; and . . ." (Emphasis added.)

The United States Court of Appeals (6th Cir.), in a 1965 case very similar to the instant case, Banks v. Celebrezze, 341 F.2d 801 (1965), said at 803:

Generally the requirements for both disability benefits and disability freeze are the same. But his is not true where, as here, an individual has achieved an insured status for disability purposes under railroad employment.[7]

Addressing itself specifically to the question at hand, the Banks case held at 803:

It appears clear that the statute does not provide for such "borrowing" for the purposes of disability insurance benefits. 42 U.S.C.A. 410.(a)(9). A specific provision for borrowing from railroad service is provided for establishment of a period of disability, but it is limited to this purpose only. (Emphasis added.)

It is, therefore, held, that the findings of the Appeals Council of the Social Security Administration (promulgated on February 26, 1968) are correct, and are more than substantially supported by the evidence, and it if further

ORDERED that the defendant's motion for summary judgment be, and is hereby, sustained.

[1] Section 405(g) of Title 42 provides: "Any individual, after any final decision of the Secretary made after a hearing to which he was a party, irrespective of the amount in controversy, may obtain a review of such decision by a civil action. . . . Such action shall be brought in the direct court of the United States for the judicial district in which the plaintiff resides. . . .

[2] The statute quoted is the statute that was in effect in 1964, when plaintiff first filed, for such disability benefits with the Social Security Administration. The statute was amended in 1965, but such amendment applied only to claims filed in or after 1965. The new statute merely changes the language and adds another section; application of the 1965 amendment would not benefit the plaintiff.

[3] Section 404.1407 refers to the death of an insured individual and has no application here.

[4] Section 404.1406 again refers to death and survivor benefits. It is, obviously, not pertinent here.

[5] Section 203 is concerned with another subject entirely, that of deductions from benefits.

[6] "The plaintiff, in order to establish . . . a claim for insurance benefits . . . must also show that he has met the special 'insured status' required by Section 216(i)(3)." 190 F.Supp. 820 (1960).

[7] The court states, at 803: "A period of disability is, however, simply the freezing of an insured individual's benefit status so that his retirement benefit rights are preserved, even though he does not do any more work in an employment covered by Social Security."

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