AR 88-3(7): McDonald v. Bowen, 800 F.2d 153 (7th Cir. 1986), amended on reh'g, 818 F.2d 559 (7th Cir. 1987) Entitlement to Benefits Where a Person Returns to Work Less Than 12 Months After Onset of Disability

ISSUE:

Does 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, preclude an award of benefits and entitlement to a trial work period?

STATUTE/REGULATION/RULING CITATION:

Sections 223, 222(c) and 1614(a)(3) and (4) of the Social Security Act (42 U.S.C. Section 423, 422(c) and 1382c(a)(3) and (4)); 20 C.F.R. Sections 404.1505, 404.1592, 416.905, 416.992; SSR 82-52

CIRCUIT:

SEVENTH (ILLINOIS, INDIANA, WISCONSIN)

McDonald v. Bowen, 800 F.2d 153 (7th Cir. 1986), amended on reh'g, 818 F.2d 559 (7th Cir. 1987)

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:

Ida McDonald, a 52-year old woman with an eleventh grade education, worked, since 1962, as a feeder inserting paper into a machine that binds magazines and catalogs. In 1980, she began to require hospitalization for back problems.

Ms. McDonald stopped working on October 25, 1982, because she was unable to bend as required by her job as a feeder. She filed an application for disability insurance benefits on February 28, 1983. This claim was denied on April 28, 1983, on the basis that Ms. McDonald could return to her past work as a feeder. She then requested reconsideration and the denial of her claim was upheld on August 5, 1983, on the grounds of insufficient evidence. She requested a hearing before an Administrative Law Judge (ALJ) on August 10, 1983. A hearing was held on December 15, 1983. At the hearing Ms. McDonald testified that she returned to her job as a feeder on May 16, 1983. She worked 3 weeks but then was unable to work for another 6 weeks due to back pain. She returned to work but soon was disabled again for approximately 2 weeks due to back pain. At the time of the December 1983 hearing, plaintiff was back at the bindery working as a feeder earning $9.29 per hour.

The ALJ first considered, under the five step sequential evaluation process, whether Ms. McDonald was working and engaging in substantial gainful activity. The ALJ found that "[e]ven though the claimant is presently working and has engaged in some work activity on a scale modified from her usual past work . . . such work has not been substantial gainful work activity pursuant to Regulation Section 404.1572 and is considered part of the 9- month trial work period which Regulation Section 404.1592 allows." The ALJ then considered the medical evidence under steps 2 and 3 of the sequential evaluation process and found that Ms. McDonald was suffering from a severe impairment listed in Appendix 1, Subpart P, Regulation No. 4. The ALJ concluded that Ms. McDonald had been disabled within the meaning of the Social Security Act since October 25, 1982. Further, Ms. McDonald was entitled to a trial work period.

On its own motion, the Appeals Council reviewed the ALJ's decision and found that the ALJ erroneously concluded under step 1 that Ms. McDonald had not engaged in substantial gainful activity for a continuous period of 12 months. Although the Appeals Council noted that the claimant had a severe back impairment commencing October 25, 1982, it found that the impairment had not precluded her from engaging in substantial gainful activity for 12 continuous months as required for a finding of disability. The Council further found that she had been engaging in substantial gainful activity since September, 1983, when she had returned to work full-time. In reversing the ALJ's decision, the Appeals Council did not consider whether Ms. McDonald was entitled to a trial work period.

Ms. McDonald sought review in the district court. The district court granted the Secretary's motion for summary judgment, holding that the Secretary's decision that Ms. McDonald was engaging in substantial gainful activity as of September 1983, was supported by substantial evidence. The court reasoned that "a finding of substantial gainful employment precludes a finding of disability whether a person is involved in a trial work period or not." Ms. McDonald then appealed to the U.S. Court of Appeals for the Seventh Circuit.

HOLDING:

The United States Court of Appeals for the Seventh Circuit held that

: . . . under the Act's definition of disability, one need not actually be impaired for twelve months to be entitled to benefits. An applicant may be entitled to benefits if he or she suffers from an impairment which is expected to last for a minimum of twelve consecutive months. Whether an individual is actually disabled for twelve months as originally anticipated is not controlling with respect to the determination of disability. The Act requires only a prediction that the disability will continue for at least twelve consecutive months after the onset of the disability. The requirement is therefore forward-looking and is not to be nullified by hindsight. Sierakowski v. Weinberger, 504 F.2d 831, 834-35 (6th Cir. 1974). When an individual has been disabled for five consecutive months and suffers from an impairment which can be expected to last for a continuous period of twelve months, that person is entitled to disability benefits. And, even after qualifying for such an entitlement, one may engage in a trial work period. 42 U.S.C. Section 422(c)(3).

The court noted in an order amending its opinion on rehearing that an individual who returns to work more than 5, but less than 12, months after his or her onset of disability "must be prepared to show that, at the time [he or] she returns to work and thereafter [his or] her disability is still expected to last at least twelve continuous months from its alleged onset date; otherwise [he or] she will not receive benefits."

STATEMENT AS TO HOW McDONALD DIFFERS FROM SOCIAL SECURITY POLICY:

SSR 82-52 contains a clear statement of Social Security policy on this subject:

: When an individual whose entitlement is established on the basis of expected duration returns to work which demonstrates ability to engage in SGA after an award of benefits but within the 12-month period after onset, benefits should be terminated (subject to the possible entitlement of the individual to a trial work period). The prior award should not be reopened and reversed.
: When the 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. When an individual returns to SGA during the waiting period and such work continues, the claim for benefits must be denied if the award has not been approved. If the award was previously approved, the claim must be reopened and revised to a denial.

The holding in McDonald is inconsistent with this policy in that it would permit a benefit award and give a trial work period to a person who returned to substantial gainful activity within 12 months of the onset of his or her disability and before an award of benefits is made.

EXPLANATION OF HOW SSA WILL APPLY THE DECISION WITHIN THE CIRCUIT:

This ruling applies only to cases in which the claimant resides in Illinois, Indiana or Wisconsin at the time of the determination or decision at any level of administrative review, i.e., initial, reconsideration, administrative law judge hearing or Appeals Council review.

A claimant for title II disability insurance benefits or child's insurance benefits based on disability should be allowed and granted a trial work period if the following conditions are met:

The claimant establishes that, at the time he/she returned to work and thereafter, the disability was still expected to last for at least 12 consecutive months from the date of onset;
the person returns to work more than 5 months after the onset date (but within the 12-month period following the onset date); and
the return to work demonstrating ability to engage in substantial gainful activity occurs before approval of the award.

A claimant for title XVI benefits based on disability should be allowed and granted a trial work period if the following conditions are met:^[1]

The claimant establishes that, at the time he/she returned to work and thereafter, the disability was still expected to last at least 12 consecutive months from the date of onset;
the person returns to work after the onset date (but within the 12-month period following the onset date); and
the return to work demonstrating ability to engage in substantial gainful activity occurs before approval of the award.

EFFECTIVE DATE:

Date of Publication 3/1/88

^[1] Pursuant to statutory amendments made by Public Law 99-643, effective July 1, 1987, the trial work period provisions are no longer applicable to title XVI disability claims. Beginning July 1, 1987, a disabled individual, who was eligible to receive "regular" SSI benefits (section 1611) 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. claimants for title XVI benefits based on disability should be allowed and granted section 1619 status if the return to work is on or after July 1, 1987, and the same conditions are met.

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