Maricela Olea v. Carolyn W. Colvin, No. 2:2013cv00768 - Document 19 (C.D. Cal. 2013)
Court Description: MEMORANDUM OPINION AND ORDER OF REMAND by Magistrate Judge Charles F. Eick. Plaintiff's and Defendant's motions for summary judgment are denied and this matter is remanded for further administrative action consistent with this Opinion. (sp)
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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 12 13 14 15 16 MARICELA OLEA, ) ) Plaintiff, ) ) v. ) ) CAROLYN W. COLVIN, ACTING ) COMMISSIONER OF SOCIAL SECURITY,1 ) ) Defendant. ) ___________________________________) NO. CV 13-768-E MEMORANDUM OPINION AND ORDER OF REMAND 17 18 Pursuant to sentence four of 42 U.S.C. section 405(g), IT IS 19 HEREBY ORDERED that Plaintiff s and Defendant s motions for summary 20 judgment are denied and this matter is remanded for further 21 administrative action consistent with this Opinion. 22 /// 23 /// 24 /// 25 /// 26 27 1 28 Carolyn W. Colvin, who became Acting Commissioner of Social Security as of February 14, 2013, is hereby substituted as Defendant in this matter. See Fed. R. Civ. P. 25(d)(1); 42 U.S.C. § 405(g). 1 PROCEEDINGS 2 3 Plaintiff filed a complaint on February 8, 2013, seeking review of 4 the Commissioner s denial of disability benefits. 5 consent to proceed before a United States Magistrate Judge on 6 March 21, 2013. 7 July 31, 2013. 8 September 30, 2013. 9 without oral argument. 10 The parties filed a Plaintiff filed a motion for summary judgment on Defendant filed a motion for summary judgment on The Court has taken the motions under submission See L.R. 7-15; Order, filed February 19, 2013. 11 12 BACKGROUND AND SUMMARY OF ADMINISTRATIVE DECISION 13 14 Plaintiff alleges disability since January 1, 2009, based 15 primarily on rheumatoid arthritis (Administrative Record ( A.R. ) 62- 16 63, 71-73, 145-52, 191). 17 Plaintiff intermittently performed part-time, self-employment work, 18 selling jewelry out of her home (A.R. 69-71, 157-58, 192, 199). 19 Reportedly, Plaintiff received (on average) less than $700 per month 20 from this work (A.R. 69-71, 157-58). For eight years prior to January 1, 2009, 21 22 In the midst of questioning Plaintiff at the administrative hearing 23 regarding the revenue Plaintiff received from selling jewelry, the 24 Administrative Law Judge ( ALJ ) said, Well, all I can tell is it was 25 probably SGA [substantial gainful activity] (A.R. 70). 26 same hearing, Plaintiff s counsel questioned the vocational expert 27 regarding the nature and extent of the jewelry sales work Plaintiff 28 actually performed (A.R. 75-76). Later in the During this questioning, the ALJ 2 1 interjected, Well, that s more of a legal definition in looking at 2 whether it s SGA and the self-employment issues, so that s a different 3 issues [sic]. 4 (emphasis added). That s not really a vocational question (A.R. 76) 5 6 On August 10, 2011, two days after the administrative hearing, 7 counsel for Plaintiff reportedly faxed a letter to the ALJ (A.R. 229, 8 233-34). This letter states in pertinent part: 9 10 The claimant contends that her work activity as a jewelry 11 seller does not constitute past relevant work and that even 12 if the claimant could perform such work it would not preclude 13 a finding of disability. 14 $7,850 per year performing this work as a self employed 15 individual. 16 month[,] well below the amounts for substantial gainful 17 activity (SGA). The claimant never earned more than On a prorated basis this is approximately $650 a 18 19 Under the Regulations when self employment is performed at a 20 level below SGA[,] additional assessment is required. 21 three part test2 involves an inquiry into whether the 22 claimant performed the work at the level of SGA, in a way 23 similar to others in the community, and if the claimant was 24 manipulating the work activity for income purposes. 25 claimant contends that the work activity as a jewelry seller The The 26 27 28 2 [Regulations, as well as a Social Security Ruling, set forth the particulars of this three-part test. See 20 C.F.R. § 404.1575; 20 C.F.R. 416.975; Social Security Ruling 83-34.] 3 1 was not past relevant work because the amount earned does not 2 rise to the level of SGA and because the activity when 3 assessed under the three part test does not meet the 4 requirements of being SGA (A.R. 234). 5 6 The ALJ reportedly refused to make this letter a part of the 7 Administrative Record (A.R. 229). 8 9 On August 12, 2011, the ALJ issued a decision finding Plaintiff 10 not disabled (A.R. 25-32). According to the ALJ, Plaintiff has severe 11 rheumatoid arthritis, but retains the residual functional capacity to 12 perform the jewelry sales work as Plaintiff actually performed the work 13 (A.R. 27-32). 14 as Plaintiff s past relevant work (A.R. 31-32). 15 contains no explanation regarding this characterization and no 16 discussion regarding the three part test for substantial gainful 17 activity referenced in the August 10, 2011 letter submitted by 18 Plaintiff s counsel (A.R. 25-32). The ALJ s decision characterizes the jewelry sales work The decision 19 20 In seeking review from the Appeals Council, counsel for Plaintiff 21 argued, inter alia, that the ALJ erred in characterizing Plaintiff s 22 jewelry selling as past relevant work in the absence of any 23 demonstrated analysis of whether the work constituted substantial 24 gainful activity (A.R. 228-29). 25 May 25, 2012 letter to the Appeals Council (A.R. 227-31). 26 appended a copy of counsel s August 10, 2011 letter to the ALJ (A.R. 27 229, 233-34). 28 review, stating that the Administrative Law Judge s decision is the Counsel made this argument in a This letter The Appeals Council considered both letters but denied 4 1 final decision of the Commissioner of Social Security in your case 2 (A.R. 5-9). 3 4 STANDARD OF REVIEW 5 6 Under 42 U.S.C. section 405(g), this Court reviews the 7 Administration s decision to determine if: (1) the Administration s 8 findings are supported by substantial evidence; and (2) the 9 Administration used proper legal standards. See Carmickle v. 10 Commissioner, 533 F.3d 1155, 1159 (9th Cir. 2008); Hoopai v. Astrue, 11 499 F.3d 1071, 1074 (9th Cir. 2007). 12 relevant evidence as a reasonable mind might accept as adequate to 13 support a conclusion. 14 (citation and quotations omitted); Widmark v. Barnhart, 454 F.3d 1063, 15 1067 (9th Cir. 2006). Substantial evidence is such Richardson v. Perales, 402 U.S. 389, 401 (1971) 16 17 Where, as here, the Appeals Council considered additional 18 material but denied review, the additional material becomes part of 19 the Administrative Record for purposes of the Court s analysis. 20 Brewes v. Commissioner, 682 F.3d 1157, 1163 (9th Cir. 2012) ( [W]hen 21 the Appeals Council considers new evidence in deciding whether to 22 review a decision of the ALJ, that evidence becomes part of the 23 administrative record, which the district court must consider when 24 reviewing the Commissioner s final decision for substantial evidence. ; 25 expressly adopting Ramirez v. Shalala, 8 F.3d 1449, 1452 (9th Cir. 26 1993)); Taylor v. Commissioner, 659 F.3d 1228, 1231 (2011) (courts may 27 consider evidence presented for the first time to the Appeals Council 28 to determine whether, in light of the record as a whole, the ALJ s 5 See 1 decision was supported by substantial evidence and was free of legal 2 error ); Penny v. Sullivan, 2 F.3d 953, 957 n.7 (9th Cir. 1993) ( the 3 Appeals Council considered this information and it became part of the 4 record we are required to review as a whole ); see generally 20 C.F.R. 5 §§ 404.970(b), 416.1470(b). 6 7 DISCUSSION 8 9 Unless a claimant s prior work constituted substantial gainful 10 activity, the work cannot qualify as past relevant work. See 20 11 C.F.R. § 404.1560(b)(1); 20 C.F.R. § 416.960(b)(1); Vertigan v. Halter, 12 260 F.3d 1044, 1051 (9th Cir. 2001). 13 the claimant s prior work was self-employment, the Administration 14 must consider three tests to determine whether the self-employment 15 constituted substantial gainful activity. 16 ( SSR ) 83-34;3 see 20 C.F.R. § 404.1575;4 20 C.F.R. § 416.975; Weber 17 v. Astrue, 2012 WL 274707, at *3-7 (E.D. Wash. Jan. 31, 2012); Le v. 18 Astrue, 540 F. Supp. 2d 1144, 1149-50 (C.D. Cal. 2008). 19 substantial gainful activity under Test One, the claimant s services 20 must have been significant to the operation of the business and the 21 claimant must have received a substantial income from the business. 22 SSR 83-34. 23 /// Where, as in the present case, Social Security Ruling To qualify as 24 25 3 26 27 28 SSRs are binding on ALJs. F.2d 1273, 1275 n.1 (9th Cir. 1990). 4 Terry v. Sullivan, 903 Plaintiff s motion fails to cite 20 C.F.R. section 404.1575, instead citing 20 C.F.R. section 404.1574, a regulation that concerns the evaluation of work done as an employee. 6 1 If it is clearly established that this self-employed person 2 is not engaging in SGA on the basis of significant services 3 and substantial income [i.e. Test One ], both the second and 4 third SGA test concerning comparability and worth of work 5 must be considered. 6 will be engaged in SGA if the evidence clearly demonstrates 7 that: 8 relevant factors such as hours, skills, energy output, 9 efficiency, duties, and responsibilities is comparable to According to these tests, the individual a. The individual s work activity in terms of all 10 that of unimpaired individuals in the same community engaged 11 in the same or similar businesses as their means of 12 livelihood; or b. The individual s work activity, although 13 not comparable to that of unimpaired individuals as indicated 14 above, is, nevertheless, clearly worth more than the amount 15 shown for the particular calendar year in the SGA Earnings 16 Guidelines when considered in terms of its value to the 17 business, or when compared to the salary an owner would pay 18 to an employee for such duties in that business setting. 19 . 20 level comparable to that of unimpaired individuals in the 21 community who make their livelihood from the same or similar 22 kind of business, there can be a finding of SGA by the 23 impaired person. 24 activity, it is necessary to show that the disabled person is 25 performing at a level comparable to that of unimpaired 26 persons, considering the following factors: hours, skills, 27 energy output, efficiency, duties and responsibilities. 28 lack of conclusive evidence as to the comparability of the . . When the impaired individual operates a business at a To establish comparability of work 7 The 1 required factors will result in a finding that work performed 2 is not SGA. SSR 83-34. 3 4 In the present case, the Administration erred by characterizing 5 Plaintiff s prior self-employment as past relevant work, without 6 discussing whether the self-employment constituted substantial gainful 7 activity under the applicable tests. 8 2012 WL 5512348, at *3 (C.D. Cal. Nov. 14, 2012) ( The ALJ found that 9 Plaintiff s past work as a caterer and as a companion qualified as 10 past relevant work without discussing or rebutting the earnings 11 presumption or making any specific findings as to whether those jobs 12 meet the Commissioner s definition of substantial gainful activity. 13 This was legal error. ); see also Pinto v. Massanari, 249 F.3d 840, 844 14 (9th Cir. 2001) ( Although the burden of proof lies with the claimant 15 at step four,5 the ALJ still has a duty to make the requisite factual 16 findings to support his conclusion. ); Lewin v. Schweiker, 654 F.2d 17 631, 634-35 (9th Cir. 1981) (ALJ s decision should include a statement 18 of the subordinate factual foundations on which the ALJ s ultimate 19 factual conclusions are based, so that a reviewing court may know the 20 basis for the decision). See id.; McGlothin v. Astrue, 21 22 This error may have been material. Plaintiff s supposedly 23 continuing capacity to perform her past work as a jewelry seller 24 represented the sole basis on which the Administration denied benefits 25 26 5 27 28 As stated in the ALJ s decision, step four in the sequential analysis of disability examines, inter alia, whether the claimant s past work was substantial gainful activity (A.R. 27). 8 1 (A.R. 5-8, 25-32). This supposed capacity would not support a denial 2 of benefits unless Plaintiff s past work as a jewelry seller 3 constituted substantial gainful activity. 4 did not receive a substantial income from her past work, within the 5 meaning of Test One. 6 have substantial income from a business if countable income [roughly 7 net profits] from the business averages more per month than the amount 8 shown for the particular calendar year in the SGA Earnings Guidelines6 9 . . . [or] if the livelihood which he or she derives from the business 10 is comparable to that which he or she had before becoming disabled,7 or 11 is comparable to that of unimpaired self-employed individuals in his or 12 her community engaged in the same or similar businesses as their means 13 of livelihood ) (emphasis added). 14 /// 15 /// 16 /// 17 /// 18 /// 19 /// It appears that Plaintiff See SSR 83-34 ( A self-employed individual will Fuller development of 20 21 6 22 23 24 25 26 27 28 The amount shown in the SGA Earnings Guidelines for the calendar year 2000 is $700. See 20 C.F.R. § 404.1574(b)(2); 20 C.F.R. § 416.974(b)(2). Subsequent calendar years have threshold amounts equal to or greater than $700. See id. Reportedly, Plaintiff s average monthly revenue from selling jewelry was less than $700 (A.R. 69-71, 157-58). 7 Defendant s motion emphasizes the underlined portion of Test One. This portion of Test One appears to address the situation (not present here) in which an allegedly disabled individual currently is engaging in self-employment work that may constitute substantial gainful activity disentitling the claimant from receiving further benefits. 9 1 the record8 may have to precede the required analyses under Test Two 2 and Test Three, but it appears that Plaintiff s past work may well fail 3 to qualify as substantial gainful activity under these alternate tests. 4 5 6 Because the circumstances of this case suggest that further 7 administrative review could remedy the Administration s errors, remand 8 is appropriate. 9 see generally INS v. Ventura, 537 U.S. 12, 16 (2002) (upon reversal of McLeod v. Astrue, 640 F.3d 881, 888 (9th Cir. 2011); 10 an administrative determination, the proper course is remand for 11 additional agency investigation or explanation, except in rare 12 circumstances). 13 /// 14 /// 15 /// 16 /// 17 /// 18 /// 19 /// 20 /// 21 /// 22 /// 23 8 24 25 26 27 28 See generally Brown v. Heckler, 713 F.2d 441, 443 (9th Cir. 1983) ( [t]he ALJ has a special duty to fully and fairly develop the record and to assure that the claimant s interests are considered. This duty exists even when the claimant is represented by counsel. ); see also Sims v. Apfel, 530 U.S. 103, 110-11 (2000) ( Social Security proceedings are inquisitorial rather than adversarial. It is the ALJ s duty to investigate the facts and develop the arguments both for and against granting benefits. . . . ). 10 1 CONCLUSION 2 3 For all of the foregoing reasons,9 Plaintiff s and Defendant s 4 motions for summary judgment are denied and this matter is remanded for 5 further administrative action consistent with this Opinion. 6 7 LET JUDGMENT BE ENTERED ACCORDINGLY. 8 9 DATED: October 8, 2013. 10 11 12 ________________/S/___________________ CHARLES F. EICK UNITED STATES MAGISTRATE JUDGE 13 14 15 16 17 18 19 20 21 22 23 24 25 26 9 27 28 The Court has not reached any other issue raised by Plaintiff except insofar as to determine that reversal with a directive for the immediate payment of benefits would not be appropriate at this time. 11
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