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September 19, 1991


The opinion of the court was delivered by: Sifton, District Judge.


This is a motion to review a final determination of the Secretary of Health and Human Services ordering cessation of Social Security benefits to the plaintiff. The record before the administrative agency establishes the following.

Plaintiff, Dennis Wonica, was found to be eligible for social security benefits due to a herniated lumbar disc as of October 1982. However, based on information received thereafter that the plaintiff had been receiving income in excess of $300 per month as a result of his work as a real estate sales agent, the Secretary ordered plaintiff's benefits terminated. At plaintiff's request, a hearing was held with respect to the termination before an administrative law judge at which plaintiff testified to the circumstances surrounding his "employment."

Plaintiff stated that his efforts on behalf of the real estate agency owned by his brother consisted of working one or two hours weekly on the telephone from his home taking listings from clients. Plaintiff testified that he did not solicit business or "show" houses for sale. When a home he listed was sold through the efforts of another agent, the plaintiff would share in the commission. In 1985 and 1986, plaintiff testified, he earned $7,635 and $30,646, the exact amount being somewhat unclear on this record. In any event, no one disputes that the commissions averaged more than $300 per month.

The ALJ determined the facts and resolved certain legal issues which I will deal with later in the opinion. The ALJ found, inter alia, that the plaintiff's testimony "lacked credibility at several points, with clear contradictions in facts and obviously self-serving statements, plus a general lack of candor beyond the elementary facts." Tr. p. 12. The ALJ held that, notwithstanding a lack of improvement in plaintiff's medical condition, "the claimant's work activity as a licensed real estate person with commissions from listings averaging over $300.00 a month constituted substantial gainful activity." Tr. p. 13. Plaintiff's benefits were accordingly terminated.

On April 4, 1990, the appeals council denied review of the ALJ's decision, thereby making the opinion a final determination. This action ensued.


The plaintiff raises three issues in this action, the first relating to the Secretary's factual findings; the second involves the defendant's alleged failure to follow its own regulations on reinstating benefits; and the third concerns the effect of administrative res judicata as establishing a right to uninterrupted benefits. I will deal with these issues separately.

Plaintiff's principal contention is that the ALJ's determination that benefits should cease in light of plaintiff's substantial gainful activity as a real estate agent was not supported by substantial evidence. Of course, a district court must accept the findings of the Secretary as "conclusive" unless they are not supported by "substantial evidence." 42 U.S.C. § 405(g). In Richardson v. Perales, 402 U.S. 389, 91 S.Ct. 1420, 28 L.Ed.2d 842 (1971), the Supreme Court held that "substantial evidence" means "`more than a mere scintilla . . . [i.e.] such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.'" Id. at 401, 91 S.Ct. at 1427 (citations omitted). Thus, the standard of review of the ALJ's factual findings is quite deferential.

As a general matter, a person's benefits may be discontinued where the Secretary determines the person no longer disabled. 20 C.F.R. § 404.1520(b). This determination may rest on a finding that the claimant has performed "substantial gainful activity," 42 U.S.C. § 423(d)(4), as that phrase is defined by the Secretary. Under the regulation covering the years 1979-1989, where a claimant earns in excess of $300 per month, 20 C.F.R. § 404.1574(b)(2)(vi), a rebuttable presumption arises that the claimant is no longer "disabled" for the purpose of obtaining benefits.

Plaintiff argues that the Secretary's decision was not supported by "substantial evidence" because the presumption raised by the amount of money plaintiff earned was rebutted by evidence that plaintiff's medical condition had not changed since he was initially awarded benefits. In short, plaintiff contends that a person can rebut the presumption of "substantial gainful activity" by demonstrating an ongoing and severe medical condition. Plaintiff relies on Hanes v. Celebrezze, 337 F.2d 209 (4th Cir. 1964).

Plaintiff's reliance on Hanes is misplaced. In Hedge v. Richardson, 458 F.2d 1065, 1067 (10th Cir. 1972), the court held that "[o]ne of the purposes of the 1967 amendments [to the Social Security Act] was to overcome the effect of decisions like Hanes . . . and to give the Secretary definite authority to specifically provide the amount of earnings which will amount to substantial gainful activity." The regulations promulgated by the Secretary pursuant to the 1967 amendments make clear that an ongoing medical condition is not regarded as an appropriate counterbalance to the presumption. In evaluating a disability, the regulations state that "if the work [the claimant is] doing is substantial gainful activity, we will find that [the claimant is] not disabled regardless of [his/her] medical condition." 20 C.F.R. § 404.1520(b). What evidence of income demonstrates, absent appropriate rebuttal, is the lack of disabling effects of the illness, not that the illness or medical condition has itself altered.

Although the mere existence of a continuing and severe medical condition cannot rebut the presumption that a person earning more than the specified amount is performing "substantial gainful activity," the social security regulations do contemplate the Secretary considering "how well" a claimant does his or her work in determining whether or not "substantial gainful activity" has been performed. 20 C.F.R. § 404.1573(b). In particular, the regulation provides:

  "If you are unable, because of your impairments,
  to do ordinary or simple tasks satisfactorily
  without more supervision or assistance than is
  usually given other people doing similar work,
  this may show that you are ...

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