The opinion of the court was delivered by: Hon. Gerald E. Rosen
Magistrate Judge Charles E. Binder
OPINION AND ORDER REGARDING MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION
At a session of said Court, held in the U.S. Courthouse, Detroit, Michigan on April 2, 2010
In this case, Plaintiff Maria C. Whittaker, proceeding pro se, challenges the decision of the Defendant Commissioner of Social Security that her disability ceased in June of 2000 as a result of her having engaged in "substantial gainful activity" ("SGA") within the meaning of the Social Security Act and its corresponding regulations. Specifically, Plaintiff contends that Defendant's decision was erroneously based solely upon the income she earned in June of 2000 alone, without regard for the law and regulations that, in Plaintiff's view, require the averaging of her income over a several- month span.
In a Report and Recommendation ("R & R") dated December 16, 2009, Magistrate Judge Charles E. Binder recommends that the Court deny Plaintiff's motion for summary judgment and grant Defendant's summary judgment motion. In support of this recommendation, the Magistrate Judge concludes that it was appropriate on two separate grounds for Defendant not to average Plaintiff's June 2000 income with her income for the surrounding months in determining whether she had engaged in SGA. On January 6, 2010, Plaintiff filed objections to the R & R,*fn1 and Defendant filed a response to these objections on January 20, 2010. For the reasons stated below, the Court finds an insufficient basis, in the record or the law, for Defendant's failure to consider Plaintiff's average earnings in determining whether she had engaged in SGA, and the Court therefore remands this matter for further administrative proceedings on this question.
As recognized in the R & R, and as Plaintiff confirms in her objections, the sole point of contention in this case is whether the Defendant Commissioner properly considered Plaintiff's June 2000 earnings in isolation in concluding that she had engaged in SGA that month. As a result of this determination, Defendant found that Plaintiff's disability ceased in June of 2000, and her eligibility for disability benefits during the remainder of her so-called "reentitlement period" depended upon a month-by-month determination of her earnings without any averaging. (See Appeals Council's Decision at 2, Admin. Record at 9 (citing 20 C.F.R. § 404.1592a(a)(1)-(2)).) If, however, Plaintiff's June 2000 earnings had been averaged with those of the surrounding months, these average monthly earnings would not have exceeded the amount - at the time, $700 - necessary to qualify as SGA, and Plaintiff's disability would not have been deemed to have ceased in June of 2000. Accordingly, the key question here is whether Plaintiff's June 2000 earnings should have been averaged with her earnings from the surrounding months in determining whether she had engaged in SGA.
The Magistrate Judge has identified two reasons why Defendant did not err in failing to perform this averaging, (see R & R at 9-10), but the Court finds neither of these reasons persuasive, at least under the present record. First, the Magistrate Judge cites a regulation providing that a claimant's earnings will not be averaged for any months after the month in which "her disability has been determined to have ceased because of the performance of substantial gainful activity." (R & R at 9-10 (citing 20 C.F.R. § 404.1574a(d)).) Because Defendant found that Plaintiff's disability ceased in June of 2000 by virtue of her earnings that month in excess of the SGA level, the Magistrate Judge reasons that there was no error in Defendant's decision not to average Plaintiff's June 2000 earnings with those of the following months, after her disability was deemed to have ceased.
This analysis, however, begs the central question presented by Plaintiff in this case. Plaintiff presumably would concede that if her disability was properly deemed to have ceased in June of 2000 because of her earnings in that month alone, then it would be inappropriate under the pertinent regulations to average her earnings over the following months to determine her eligibility for additional benefit payments during the remainder of her reentitlement period. Her claim here, however, is that Defendant erred on this antecedent question, by failing to average her earnings in June of 2000 and the surrounding months in order to determine, as a threshold matter, whether she engaged in SGA in June of 2000. The regulation cited by the Magistrate Judge, 20 C.F.R. § 404.1574a(d), applies by its terms only during the period "after the month disability has been determined to have ceased because of the performance of substantial gainful activity." Thus, it cannot answer, and does not apply to, the question posed in this case - whether Defendant properly determined that Plaintiff's disability ceased in June of 2000 based on her earnings in that month alone, or whether Defendant instead should have averaged her earnings over the surrounding months in making this determination.
There is no question that averaging is potentially available in determining whether a claimant's disability has ceased because of her performance of SGA during her reentitlement period. See 20 C.F.R. § 404.1592a(a)(1). Indeed, the Appeals Council expressly recognized as much in the decision now on appeal:
According to 20 C.F.R. 404.1592a[(a)(1)], the first time an individual works after the end of the nine-month trial work period and performs substantial gainful activity, disability ceases. In order to make this determination, all relevant provisions including averaging earnings, unsuccessful work attempts and deducting impairment-related work expenses are applied. (Appeals Council's Decision at 2, Admin. Record at 9 (emphasis added).)*fn2 Accordingly, the Court cannot concur in the Magistrate Judge's suggestion that § 404.1574a(d) obviated the need for Defendant to average Plaintiff's earnings in order to decide whether she had engaged in SGA.
Next, the Magistrate Judge suggests that Defendant's failure to average Plaintiff's June 2000 earnings with her earnings from the surrounding months can be justified under the terms of the regulation that explains when and how such averaging will be performed.
(See R & R at 10 (citing 20 C.F.R. § 404.1574a).) In particular, the Magistrate Judge cites the portion of this regulation that applies where "there is a significant change in your work pattern or earnings during the period of work requiring evaluation." 20 C.F.R. § 404.1574a(c). In the event of such a "significant change," the regulation requires that a claimant's earnings be separately averaged for each distinct period featuring a different "work pattern or earnings" - i.e., for the periods before and after the "significant change." 20 C.F.R. § 404.1574a(c). The Magistrate Judge suggests that Plaintiff's varied earnings in June of 2000 and the surrounding months could be ...