The opinion of the court was delivered by: Gerard E. Lynch, District Judge
Plaintiff Bennie McCall brings this action pursuant to 42 U.S.C. § 405(g), seeking review of a final decision of the Commissioner of Social Security ("the Commissioner"). Unlike most such appeals, there is no dispute in this case that plaintiff is in fact disabled, and has been at least since the time he filed an application for supplemental security income benefits in 1986. The Commissioner, however, has determined that plaintiff is not eligible for disability insurance benefits because he did not engage in sufficient covered employment prior to becoming disabled to meet the disability insured status requirements set forth in Title II of the Social Security Act. Pursuant to Federal Rule of Civil Procedure 12(c), both parties now move for judgment on the pleadings. For the following reasons, plaintiff's motion will be granted, and the Commissioner's motion will be denied.
I. The Social Security Program
The United States Government provides benefits to disabled persons through two distinct programs administered by the Social Security Administration ("SSA"). The Social Security Disability Insurance Program ("SSD"),*fn1 established by Title II of the Social Security Act, 49 Stat. 622, as amended, 42 U.S.C. § 401 et seq., provides for the payment of disability benefits only to those who have previously contributed to the program and who suffer from a mental or physical disability. See Bowen v. City of New York, 476 U.S. 467, 470 (1986); State of N.Y. v. Sullivan, 906 F.2d 910, 913 (2d Cir. 1990). By contrast, the Supplemental Security Income Program ("SSI"), established by Title XVI of the Social Security Act, 86 Stat. 1465, as amended, 42 U.S.C. § 1381 et seq., provides for the payment of disability benefits based solely on an individual's indigent status and is therefore a need-based program available to claimants independent of their prior social security contributions. See Bowen, 476 U.S. at 470; Sullivan, 906 F.2d at 913. When applying for benefits, a claimant may file concurrently under Title II and Title XVI. While "Title II payments are considered income and can reduce, if not completely eliminate, Title XVI awards[,] Title XVI [awards] . . . do not affect Title II eligibility." Pappas v. Bowen, 863 F.2d 227, 228 (2d Cir. 1988).
Pursuant to statutorily conferred authority, the Secretary of Health and Human Services ("Secretary") has promulgated a complex regulatory scheme governing eligibility for SSD and SSI awards. See Bowen, 476 U.S. at 470. The governing statutes for both programs require a claimant to show that he is legally disabled, and define disability as the "[inability] to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months." 42 U.S.C. § 423(d)(1)(A); see also id. § 1382c(3)(A). A claimant who establishes that he is disabled and that he meets the requirements for indigency set forth in § 1382 and related provisions will be eligible for Title XVI SSI benefits. See 42 U.S.C. § 1381a.
Establishing eligibility for Title II benefits, however, is more difficult. Not only must a Title II claimant establish that he is disabled, but he must also establish that he is insured for disability benefits and that he became disabled prior to the expiration of his disability insured status. See id. §§ 423(a)(1)(A), 423(a)(1)(D), 423(c); see also Arnone v. Bowen, 882 F.2d 34, 37 (2d Cir. 1989); Serrano v. Astrue, No. 05 Civ. 1356, 2008 WL 2622927, at *4 (E.D.N.Y. July 1, 2008). Generally, a claimant is disability insured when he has accrued 20 quarters*fn2 of coverage during the 40-quarter (10-year) period preceding his onset date of disability.*fn3 See 20 C.F.R. § 404.130; see also Butts v. Sec'y of Health and Human Servs., 706 F.2d 107, 107 (2d Cir. 1983). A quarter of coverage is the basic unit of social security coverage used to determine a worker's insured status. See 20 C.F.R. § 404.140(a). Such quarters are credited based on an employee's earnings from covered- or self-employment. See 20 C.F.R. § 404.140. According to the Act and its implementing regulations, such earnings are called wages. The SSA, which is required to maintain earnings records for all individuals, consults its records to determine the amount of wages a claimant has been paid. See 42 U.S.C. §§ 405(c)(2)(A), (c)(3); 20 C.F.R. §§ 404.803(a), 404.1001(a)(1). Because the amount of wages required to credit a claimant with a quarter of coverage varies according to the year in which the wages were paid, see, e.g., Crichlow v. Shalala, No. 92 Civ. 7602, 1994 WL 132155, at *4 (S.D.N.Y. Apr. 12, 1994), the SSA calculates a claimant's quarters of coverage by referencing the yearly wage requirement and the amount of wages its own records show a claimant has been paid. Because the beginning and end of the relevant 40-quarter perioddepend on the onset date of disability, and because a claimant can have disability insured status for one 10-year period but lack it for another, the date a claimant first became disabled is often critically important.
As a general rule, state agencies acting under the authority and supervision of the Secretary make the initial determination of a claimant's compliance with the above requirements. See Bowen v. Yuckert, 482 U.S. 137, 142 (1987). In New York, this function is performed by the Office of Disability Determinations ("ODD") of the New York State Department of Social Services. See Sullivan, 906 F.2d at 913. Where the ODD denies a claimant's application for benefits, the claimant may seek federal administrative review by the SSA. See id. This review proceeds in three stages. See Bowen, 482 U.S. at 142. "First, the determination is reconsidered de novo by the state agency. Second, the claimant is entitled to a hearing before an administrative law judge (ALJ) within the Bureau of Hearings and Appeals of the Social Security Administration. Third, the claimant may seek review by the Appeals Council." Id. (citations omitted). Once a claimant has exhausted these administrative remedies, he may seek judicial review in federal district court. See 42 U.S.C. § 405(g).
II. McCall's Employment and Earnings History
Plaintiff Bennie McCall was born on June 21, 1941. (R. 38.) He has a high school education and a 25-year history of semi-skilled employment that includes work as a maintenance man, groundskeeper, and corrections officer. (R. 59, 447.) From December 1, 1980, until his termination on August 8, 1986, McCall worked as a manual laborer, maintenance man, and truck driver for the Department of Parks and Recreation of the City of New York ("DP&R"). (R. 149, 446.) DP&R pay stubs and McCall's W-2s indicate that Federal Insurance Contributions Act ("FICA") taxes*fn4 were withheld from his pay in 1980 and 1981. (R. 51, 124, 146.) However, no such taxes were withheld from 1982 to 1986. (R. 43-44, 50, 52, 109, 170.) This lack of withholding was the result of a change in McCall's employment status while working at the DP&R. When McCall joined the DP&R in 1980, he was a CETA employee*fn5 and social security taxes were automatically withheld from his wages, but on September 30, 1981, he became a provisional parks services worker, for whom social security deductions were mandatory only if he elected to join the New York City Retirement System. (R. 43, 53.) Because McCall did not join the retirement system, social security taxes were not deducted from his wages from 1982 to 1986.
(R. 43.) FICA taxes were deducted, however, from short-term disability payments that he received from his union when he was unable to work in September and October 1983. (R. 477-80, 557-60.)
In administering payroll, DP&R paid employees bi-weekly on Fridays, but routinely made paychecks available on the Thursday afternoon immediately preceding payday. (R. 125-26, 186-87, 447-48, 460-61, 482-83.) Where the Thursday immediately preceding payday fell on a city holiday, paychecks were instead made available on the Wednesday preceding payday. (R. 448, 482-83.) Given that McCall would have been paid for his work during the last two weeks of December 1980 on Friday, January 2, 1981, his paycheck ordinarily would have been made available on Thursday, January 1, 1981. However, because this date fell on New Year's Day, McCall's paycheck was made available on Wednesday, December 31, 1980. (R. 483.)
A Detailed Earnings Record produced by the SSA shows that McCall earned four quarters of coverage per year from 1976 through 1979; one quarter of coverage in 1980; four quarters of coverage in 1981; and no quarters of coverage from 1982 through 1986.*fn6 (R. 47, 106, 167.) To qualify for SSD benefits, McCall must have accrued 20 quarters of coverage during the 10 years preceding his onset date of disability.
III. McCall's Medical History
McCall's medical problems began as early as 1974, when he suffered a mental breakdown and seizure. (R. 446.) In 1975, he was diagnosed with hypertension and bursitis.
(R. 446.) A few years later, in 1978, he was evaluated by Dimitrios Fournarakis, M.D., at Montefiore Hospital Medical Center in the Bronx, New York, for a sleep disorder. (R. 446, 452-54.) According to an April 1, 1978, letter from Dr. Fournarakis, McCall was then being treated for narcolepsy.*fn7 (R. 452.) Subsequent letters, from June and September 1978, indicate that his evaluation could be completed only after further visits.*fn8 (R. 453-54.) In February 1983, McCall fell into a diabetic coma and was hospitalized for nearly two weeks. (R. 73, 446.) Following this episode, his health deteriorated further, and he suffered from sleep deprivation, severe neck-and headaches, diabetes, and hypertension. (R. 447.) According to McCall, all of these ailments interfered with the performance of his work duties. (Id.) However, the neck- and headaches, which he affirms he experienced regularly for at least six months prior to his termination from DP&R, were particularly debilitating, often requiring him to stop mid-route while driving DP&R trucks. (Id.) McCall also suffered from obesity, bipolar disorder, personality disorder, and affective disorder, although these conditions were not diagnosed until after his termination from DP&R. (Id.)
In or about August 1986, McCall petitioned the New York State Department of Labor ("NYDOL") for state benefits.*fn9 (R. 456.) This application was denied on August 9, 1986. (Id.) However, on October 14, 1986, a state Administrative Law Judge ("ALJ") overruled this initial determination and found that McCall had lost his job due to disabling medical conditions, concluding that although McCall "was terminated because of excessive lateness and absences," his "last absence [on July 28, 1986] . . . , and his prior latenesses and absences, were caused by his medical problems."*fn10 (Id.) The ALJ's finding of disability was further supported by a doctor's report deeming McCall unable to work.*fn11
Two years later, in December 1988, McCall was evaluated by Dr. Ellen Weinberg, a psychiatrist, who opined that although he "was suffering from confusion . . . and from an overly-vague thought process (or means of expression)[,] . . . [h]e d[id] not have an acute psychotic nor affective disorder." (R. 465-66.) Dr. Weinberg also noted that "cognitive testing shows normal concentration short term recall, although [McCall] is overly concrete with difficulty abstracting ideas. These features can contribute to his difficulty obtaining and functioning in employment."
McCall, a 67 year-old man in poor health, has been seeking to resolve his claim for social security benefits on and off for some 22 years. About thirteen years after his initial petition for disability insurance benefits, McCall renewed his efforts and -- reinvigorated by the assistance he has received from pro bono counsel since at least 2002 -- has contested the denial of benefits ever since. McCall's counsel, who has proven to be an extremely effective and able advocate, has made a heroic effort, investing substantial amounts of time and energy to develop old facts and recover what little of McCall's original file remained. At present, no one disputes that McCall is disabled, or that he has a 25-year work history during which he dutifully paid social security taxes on some $160,000 of wages. (R. 71, 167.) His 22-year battle has proven unfruitful solely because of the SSA's calculation of his quarters of coverage. Ironically, while the SSA contends that McCall is two quarters short of disability insured status, it reaches that conclusion in part by rejecting quarters during which social security taxes were actually withheld from McCall's pay, based on technicalities concerning the propriety and timing of those withholdings, neither of which was within McCall's control.
On September 29, 1986, McCall applied for both Title XVI SSI and Title II SSD benefits. (R. 42, 45, 192, 217-18, 535.) Because the SSA subsequently lost his file and only partially reconstructed it (R. 191), the SSA cannot determine what became of the Title II portion of McCall's application. The Title XVI application was initially denied, but the Appeals Council concluded in an April 19, 1989, decision that McCall was disabled as of September 29, 1986, the date of his application, and he then began to receive SSI benefits.*fn12 (R. 42, 57-68, 172-83, 192, 194.) In support of its determination, the Appeals Council noted:
The record, including additional evidence which was submitted in connection with the request for review, contains statements from the claimant's treating physicians, to the effect that he is unable to work, can do less than a full range of sedentary work because of his severe hypertension, diabetes, and obesity, and is unable to maintain adequate social functioning on account of his mental impairment, as described on the form appended to this decision (Exhibits 29, AC-3 and AC-4).*fn13 These opinions are not contradicted by substantial evidence, and are essentially corroborated by findings made at consultative evaluations performed in December 1986, July 1987, and August 1987 (Exhibits 15, 17, 21 and 22). In accordance with the Commissioner's ruling in the Schisler class action, they are binding.*fn14
In 1999, McCall filed a second application for Title II disability insurance benefits. (R. 16.) This application was never processed, and he filed a third application on August 18, 2000, which was awarded a protective filing date of July 19, 2000. (R. 16, 38-40, 192, 372.) McCall initially alleged a disability onset date of July 1, 1986. (R. 38.) However, he later amended this date to August 8, 1986, the date on which his employment ended. (R. 38, 149, 530.)
In connection with his application for disability benefits, McCall stated that his conditions first bothered him on April 8, 1975, but that he did not become unable to work until August 8, 1986. (R. 70.) When asked to describe the nature and effect of his ailments, he asserted that his ability to work was limited by "[e]nlarged prostate, diabetic coma, high blood pressure, weight, gallbladder removed[,] taking an array of medications and mental illness," which "usually [left him] mentally and physically drained." (R. 70.) McCall stated: "Due to my illnesses, injuries and conditions, I was forced to work less and take time off from my job." (R. 70.) In addition to providing information about his ailments, he listed the names and contact information of his treating physicians, and identified Ms. Imogene Robinson, a social worker, as someone other than a doctor whom the SSA could contact for further information about his health. (R. 69, 72-73.)
The SSA denied McCall's application initially and on reconsideration,*fn15 concluding that as of August 8, 1986, he had only eighteen of the twenty quarters of coverage required to prove disability insured status under Title II of the Act. (R. 24-25, 46-47, 192.) Following denial of his application, McCall requested a hearing before an ALJ. (R. 26.) On July 18, 2002, he appeared with his attorney before ALJ Hazel C. Strauss, who heard testimony and argument. (R. 16-17, 189-228.) After de novo review of McCall's case, the ALJ issued a decision on January 27, 2003, concluding that McCall was not entitled to disability benefits because as of August 8, 1986, he had not satisfied the disability insured status requirements of Title II. (R. 16-23.) While she specifically acknowledged that McCall had been adjudged disabled as of September 29, 1986, on account of hypertension, diabetes mellitus, obesity, and an inability to maintain "adequate social functioning because of mental impairments" (R. 19), she found that he was not disabled prior to his date last insured of March 31, 1986.*fn16 (R. 19, 22.) On December 9, 2004, the Appeals Council denied McCall's request for review of this decision, making it the final decision of the Commissioner. (R. 3.)
Plaintiff commenced the present action on February 14, 2005. On May 22, 2006, he moved for judgment on the pleadings, arguing that he was entitled to additional quarters of coverage for calendar years 1976, 1980, and 1983. (R. 303-12, 315.) By Order dated October 13, 2006, this Court remanded the case to the Commissioner pursuant to the sixth sentence of 42 U.S.C. § 405(g) for consideration of new evidence, and identified the relevant question as "[w]hether new evidence shows that claimant should be credited with the two additional quarters of coverage to qualify him for disability insurance benefits." (R. 565-67.) In particular, the Court noted that McCall had introduced evidence apparently showing FICA deductions from short-term disability payments he received in 1983.*fn17 (R. 566.)
In light of this Court's Order, the Appeals Council remanded the case to an ALJ on October 26, 2006, and instructed the ALJ to take any action needed to resolve the discrepancy between pay stubs suggesting that McCall's short-term disability earnings were covered earnings within the meaning of the Act and the SSA's detailed earnings records indicating that no such earnings had been reported. (R. 561-64.) The Appeals Council also instructed the ALJ to consider whether sick payments made within six months of the termination of employment are "wages" pursuant to 20 C.F.R. § 404.1051 and give rise to additional quarters of coverage when the payments are made by a union, but -- pursuant to 20 C.F.R. § 404.1020 -- the underlying employment is non-covered employment. (R. 564.)
On January 22, 2007, McCall appeared with his attorney before ALJ Newton Greenberg.
(R. 528-38.) The ALJ heard argument on the issues, and limited testimony was taken.*fn18 (Id.) Having reviewed McCall's case de novo, the ALJ issued a decision on March 23, 2007, concluding that McCall still had not met the disability insured status requirements of Title II. (R. 373, 379-80.) In particular, he found that McCall was not disabled prior to August 8, 1986, because McCall engaged in substantial gainful activity up until that date,*fn19 and, relying on the rationale adopted by ALJ Strauss and the Appeals Council, that McCall could not be credited with an additional quarter of coverage for 1980. (R. 376, 380.)
After reviewing the March 2007 decision, the Appeals Council again remanded the case to ALJ Greenberg, finding that he had failed to address whether McCall's employment by a "non-covered" employer would preclude the SSA from treating sick pay made by a covered union as earnings under 20 C.F.R. § 404.1051, and that he neither verified the contents of the four newly introduced pay stubs nor addressed the apparent discrepancy in the evidence that they created. (R. 332-35.)
In response to this remand, on September 25, 2007, the ALJ submitted a questionnaire regarding the four pay stubs to James B. Barhold, Manager of the Disability Unit at District 37.
(R. 552-56.) The questionnaire requested verification of the short-term disability payments awarded to McCall and information as to whether the FICA taxes withheld from those payments were actually paid to the Internal Revenue Service or, if not, whether District 37 had any knowledge regarding the payment of any such taxes by McCall's employer. (R. 554-56.) District 37 did not respond. (R. 325.)
On October 3, 2007, McCall again appeared with his attorney before ALJ Greenberg. While the ALJ heard argument, no testimony was taken.*fn20 (R. 539-50.) In a November 30, 2007, decision reviewing McCall's case de novo, ALJ Greenberg again concluded that McCall was not entitled to benefits because he had not met the applicable disability insured status requirements. (R. 316-27.) In support of this conclusion, the ALJ reasoned that McCall was engaged in "non-covered" employment from September 30, 1981, through August 8, 1986, and that McCall's "receipt of 'covered' wages during the period [in] which he was engaged in 'non-covered' employment [did] not [prove] that the SSA's records [were] incorrect." (R. 327.) Consequently, pay stubs showing deduction of FICA taxes from McCall's short-term disability payments provided no basis for crediting him with the additional quarters of coverage ...