The opinion of the court was delivered by: FOSCHIO
This case was referred to the undersigned for report and recommendation, by the honorable Richard J. Arcara on October 27, 1995, pursuant to 28 U.S.C. § 636(b)(1)(B), and is presently before the court on Defendant's motion for judgment on the pleadings, filed March 22, 1996, and Plaintiffs cross-motion for judgment on the pleadings and to vacate the Appeals Council decision and remand this matter for reconsideration, filed June 28, 1996.
Plaintiff, David J. Nazzaro, seeks review of the Defendant's decision denying him Supplemental Security Income under Title XVI of the Social Security Act, 42 U.S.C. §§ 1381-1385 (1995), which provides supplemental security income ("SSI") benefits to individuals who have attained the age of sixty-five or are blind or disabled. In denying Nazzaro's application for benefits, Defendant determined that Nazzaro was engaged in substantial gainful activity ("SGA"), (R. 17-18), and that Nazzaro possessed the residual functional capacity to perform work-related activities except for work involving tolerance of undue stress and was, therefore, not disabled as defined by the Social Security Act. (R. 18).
Nazzaro argues that the ALJ erred in failing to consider whether his earnings were subsidized and whether the special employment conditions created by the job coach services provided to Nazzaro by the Western New York Association for the Learning Disabled establish that Nazzaro is not engaged in SGA.
Nazzaro initially filed for disability benefits on April 14, 1993. (R. 44-46). That application was denied on May 14, 1993, (R. 47-51), and a request for reconsideration was filed on July 5, 1993. (R. 52). Nazzaro's claim for benefits was again denied on October 1, 1993, (R. 53-56), and Nazzaro appealed that determination.
On February 10, 1994 a hearing was held in Buffalo, New York before an administrative law judge ("ALJ"), Office of Hearings and Appeals of the Social Security Administration, Department of Health and Human Services, regarding the denial of disability benefits. (R. 33-43). On September 2, 1994, the ALJ rendered his decision, denying Nazzaro disability benefits. (R. 14-19). Nazzaro then, on November 4, 1994, requested a review of the hearing decision by the Secretary. (R. 5-13). On May 15, 1995, the Appeals Council concluded that there was no basis for granting the request for review, and that the decision of the ALJ was the final decision of the Social Security Administration. (R. 3-4).
Thereafter, on July 7, 1995, Nazzaro filed this action seeking review of the administrative decision. The matter was referred to the undersigned on October 27, 1995. On March 22, 1996 Defendant filed a motion for judgment on the pleadings and a memorandum of law in support of that motion. On June 28, 1996, Nazzaro filed a cross motion for judgment on the pleadings with an accompanying memorandum of law. On August 13, 1996, Defendant filed a supplemental memorandum of law in support of Defendant's motion for judgment on the pleadings. No oral argument was deemed necessary.
For the reasons as set forth below, the Defendant's motion for judgment on the pleadings (Doc. # 6) should be DENIED; Plaintiff's cross motion for judgment on the pleadings (Doc. # 9) should be DENIED in part and GRANTED in part and REMANDED for reconsideration.
David Nazzaro, has been severely learning disabled since birth. (R. 82). According to Nazzaro's West Seneca Central School District Psychological Reevaluation, dated November 27, 1985, Nazzaro was determined to be on the borderline of intellectual functioning. Although Nazzaro graduated high school in 1986 with a local diploma, his reading skills were determined to be at the 7th and 8th grade level, and his high school curriculum was modified and permitted use of a calculator, extended test-taking time, and individualized test-taking situations. (R. 114).
Nazzaro has deficiencies in processing information, including extracting relevant from extraneous information. Nazzaro's home life was described as unstable, his parents were divorced, and his father has spent time in the Buffalo Psychiatric Center in an effort to regain stability in his own life. Nazzaro's older brother was clearly favored by his father and worked for the father in the family business, although it was not expected that Nazzaro would join them, and Nazzaro was often made the scapegoat of family problems. Most of Nazzaro's support came from his stepmother who was more willing to engage him in conversations and attended Nazzaro's parent-teacher conferences. Nazzaro's stepmother, teachers, and the school psychologist all describe Nazzaro as having a vulnerable personality, manifested in his being socially withdrawn, lacking in confidence and having low self-esteem. These traits were attributed in part to his lack of early maternal bonding. At that time, it was recommended that Nazzaro receive psychological counseling and support and that he be encouraged to develop skills which would prepare him for employment after high school. It was further noted that with proper support Nazzaro may be able continue his education at the associate degree level. (R. 114-117). No other psychological evaluation of Nazzaro is in the record.
As of February 10, 1994, the date of the hearing before the ALJ, Nazzaro was twenty-seven years old and, although still considered as severely learning disabled, was attending Erie Community College in pursuit of a culinary arts degree. (R. 36, 44, 86). Nazzaro lived with a roommate in Kenmore, New York in a "supportive apartment" run by the Western New York Association for the Learning Disabled ("WNYALD"). (R. 36). The supportive apartment program was established to help learning impaired individuals acquire independent living skills. (R. 87).
Nazzaro first became involved with the WNYALD Supported Employment Program in September 1986. (R. 93). The Supported Employment Program provides on-site support to learning disabled adults to aid then in obtaining and maintaining employment. (R. 93). The WNYALD conducted a vocational evaluation of Nazzaro which revealed severe deficits in the areas of reasoning, perceptual speed and memory, signaling difficulty processing and integrating new information. (R. 93). Nazzaro's ability to conceptualize, organize, manipulate information and abstract thinking were also severely impaired, and were coupled with perceptual problems, demonstrating the need for sequential task repetition in learning new skills. (R. 93). Additionally, Nazzaro was found to have emotional difficulties including high levels of anxiety, need to control, insecurity and very low self esteem, and was socially and emotionally isolated. (R. 93).
Since graduating from high school in 1986 Nazzaro had held three regular jobs as of the date of the ALJ hearing. (R. 36, 37, 60-62). He worked as a dishwasher at the Saturn Club, a local private club, during 1987 and 1988. (R. 37, 60, 62). Nazzaro next worked as a baker at a Bells Market grocery store, during 1988 and 1989. (60-61, 62). Nazzaro started his most recent job in the bakery at TOPS Friendly Markets ("TOPS"), a supermarket located on Delaware Avenue in Buffalo, in May 1989. (R. 61, 62). All three of these jobs were obtained through the WNYALD's supported employment program. (R. 64). In connection with that program. Nazzaro was provided with a job coach, paid by WNYALD, who assisted Nazzaro in adapting to his jobs, including learning new job duties and safety aspects of the job, and acting as a intermediary between Nazzaro and his boss whenever Nazzaro experienced coping difficulties in the work setting. (R. 40-41, 64).
Nazzaro has received job coaching services from the WNYALD since he began working in 1986. When Nazzaro began working part time in the bakery department at TOPS, he received constant job coaching during the workday for the first three months to train him on all job duties until he could remember those duties in sequence and perform them independently, to teach him how to handle frustration and anxiety on the job, to assist him in increasing his job performance speed, increasing his self confidence, and to interact effectively and appropriately with supervisors and co-workers. (R. 94).
According to Nazzaro, without the assistance of a job coach, he would be unable to maintain any employment, (Plaintiff's Memorandum of Law, pp. 21-22), although when asked at the administrative hearing whether he though he could perform his job without the job coach, Nazzaro replied, "I think so." (R. 41). Nazzaro later explained that he told the ALJ that he thought he could handle his job without the job coach's assistance because that is what he thought the ALJ wanted to hear, and submitted letters from his case manager and the Vocational Services Program Director at the WNYALD in support of Nazzaro's continued need for job coach assistance to maintain any level of employment. (R. 138-140; Plaintiff's Memorandum of Law, at p. 7). Nazzaro's job coach did not attend the hearing. (R. 139).
According to the information submitted by Nazzaro's employer, TOPS, Nazzaro's gross earnings were $ 8,411.01 in 1990, $ 7,775.90 in 1991, $ 6,451.59 in 1992 and $ 2,058.02 for the first four months on 1993. (R. 70-71). Additionally, Nazzaro earned $ 4,230.54 at the Saturn Club in 1988. (R. 72-73).
In the employee Work Activity Report Nazzaro completed in connection with the application for disability benefits, described his job duties in the TOPS bakery department as including measuring ingredients into and running dough mixing machines, operating ovens and doughnut fryers, cleaning the equipment and surrounding areas, and making muffins and dinner rolls. He stated that he did not regularly incur any special expenses related to his disability for work. (R. 62-65).
Nazzaro claimed April 1, 1988 as the date of the onset of his disability. (R. 44). This date coincides with the date that Nazzaro first became eligible for disability benefits based on his own work record.
On May 10, 1993, Nazzaro's manager at TOPS, Paula Huber, completed the SSA's Employer's Work Activity Questionnaire, on which she indicated that Nazzaro's work was fully worth the amount paid. (R. 66-67). On May 14, 1993, Nazzaro's claim for disability benefits was denied by SSA based on Nazzaro's income and the fact that Nazzaro's manager had indicated that she considered Nazzaro's work to be fully worth the amount paid. (R. 47-51). Nothing in the record indicates that any determination as to whether Nazzaro's wages were subsidized was made when the SSA first determined that Nazzaro was engaged in SGA. On July 5, 1993 Nazzaro filed a request for reconsideration of the denial. (R. 52). On July 8, 1993, the SSA was advised that Nazzaro's employment was supported employment and that Nazzaro received assistance from a job coach supplied by WNYALD. Nazzaro's SSA case worker contacted Denise Lucas-Newton at the WNYALD, who provided information as to Nazzaro's annual earnings. In a Report of Contact dated September 17, 1993, Nazzaro's SSA case worker indicated that based on the information provided by the WNYALD, Nazzaro's income level was in excess of the monthly SGA limit of $ 500. Additionally, the SSA case worker reported that even if Nazzaro's earnings were subsidized at the rate of $ 100 per month, his earnings would still be well in excess of the SGA limit. No explanation for the $ 100 figure was provided. (R. 90-92).
Nazzaro's application was again denied following reconsideration on October 1, 1993. (R. 53-56). Upon reconsideration, however, the SSA did determine that Nazzaro's wages were subsidized, but that Nazzaro was, notwithstanding, engaged in SGA. (R. 54).
By letter dated July 23, 1993, the WNYALD advised the SSA advised the SSA of the severity of Nazzaro's learning disability and described the services provided to Nazzaro by the job coach. According to the letter, Nazzaro requires extensive reinforcement from the job coach to assist him in appropriate interaction with co-workers and supervisors, and learning his job duties. At that time the WNYALD anticipated that Nazzaro would require on-going support services from the program indefinitely and that without such support Nazzaro would not be currently employed. (R. 93-95).
On September 13, 1993 the WNYALD provided the SSA with a monthly breakdown of the number of hours for which Nazzaro's work was supported by the job coach since Nazzaro first became employed in 1986. According to this data, Nazzaro's need for job coach assistance ranged from a low of two hours per month to a high of ...