Raymond v. SSA CV-01-039-JD 05/23/02 P UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Cheryl Raymond

v. Civil No. 01-03 9-JD Opinion No.

Jo Anne B. Barnhart, Commissioner, Social Security Administration

O R D E R

Cheryl Raymond brings this action pursuant to

0 5 (g) seeking judicial review of the decision by the

Commissioner of the Social Security Administration ("SSA") that

her Social Security Disability Income ("SSDI") benefits under

Title II of the Social Security Act have not been underpaid.

Raymond contends that her benefits during her second period of

disability have been underpaid because the Commissioner in

calculating her benefits improperly excluded her earnings from

her first period of disability. The Commissioner moves to affirm

the decision.

Background

Cheryl Raymond was born in 1956. She was first determined

to be disabled, due to bilateral deafness and poor speech

discrimination, for purposes of SSDI on January 1, 1981, when she

was twenty-five years old. Raymond had earnings from work in 1984 and 1985. She returned to work in February of 1987, which

ended her first period of disability. Her second period of

disability began in December of 1987 when she stopped working.

She has remained disabled since that time.

Raymond's eligibility and benefits were calculated

differently for each period of disability.1 During her first

period of disability, from 1981 until 1987, she received coverage

under special social security rules for younger individuals who

become disabled before reaching age thirty-one, and she received

a minimum monthly benefit. Raymond was found to be eligible for

her second period of disability beginning in July of 1991, after

she reached the age of thirty-one. In 1993, the SSA terminated

Raymond's benefits temporarily. When her benefits were

reinstated, the amount had been reduced by $171.70 per month.

The Commissioner determined that Raymond's benefit level had been

erroneously calculated by including earnings she received during

her first disability period in 1984 and 1985. The reduction

occurred when Raymond's benefits were recalculated using the

SSA's Program Operations Manual System (POMS) which excludes

earnings from a first period of disability established under

1Since Raymond's receipt of benefits while she was working and her contact with the SSA in 1988 are not relevant to the issue presented here, those circumstances are omitted from the background information.

2 special status requirements from the benefits calculation for a

second period of disability.

Raymond sought reconsideration of the decision, which was

denied. A hearing before an Administrative Law Judge ("ALJ") was

held on October 20, 1998. She argued that her benefits had been

underpaid because she contacted the Social Security Administra­

tion ("SSA") in 1988 and that contact should have been deemed to

be a protective filing date, making her eligible for benefits

before July of 1991. The ALJ concluded that the 1988 contact

with the SSA did not change Raymond's application date because

she was not given misinformation at that time. The Appeals

Council denied review on December 4, 2000.

Discussion

The parties agree that the only issue for review is

"whether, with respect to a 'younger' individual, such as

plaintiff, who has two periods of disability, the first of which

commenced prior to age 31, and the second commenced on or after

age 31, earnings from the first period of disability can be

combined with earnings from the second period of disability to

result in a higher benefit level for the individual." Joint

Statement 5 20. Since that issue was not presented to the ALJ or

the Appeals Council, but instead was raised for the first time in

3 this proceeding, no underlying decision on the issue exists for

review. See Sims v. Apfel,

(2000) (issue

exhaustion not a prerequisite for judicial review pursuant to §

4 05(g)).

The parties also agree that no statute or regulation

directly controls whether or not earnings from a first period of

disability, before age thirty-one, may be considered for

determining the level of benefits in a second period of

disability, after age thirty-one. The parties do not provide any

detailed explanation as to how Raymond's benefits were

calculated. Thus, while the issue may be simply stated, its

resolution requires a foray into the labyrinth of social security

laws and regulations in which clarity is noticeably absent.

The statutes and regulations provide two alternative means

for establishing coverage. The "normal" rule is based on the

number of covered quarters within forty quarters prior to the

onset of disability. See

(c) (1) (B) (i);

(b). The "special" rule, applicable to

claimants, like Raymond, who are less than thirty-one years old

during their first period of disability and more than thirty-one

at the onset of their second period of disability, computes

covered quarters under a different analysis. See

(d). The Commissioner does not count any quarter that is

4 part of a prior period of disability for determining insured

status unless "by doing so [the claimant] would be entitled to

benefits or the amount of the benefit would be larger." §

404.130(f).

The Commissioner computes a claimant's primary insurance

amount as the first step in calculating the monthly benefit. See

. The primary insurance amount is computed

under one of two major methods or under a special method, which

are set out in the regulations. See

. In

general, the Commissioner uses earnings within prior periods of

disability in the calculation only if the "primary insurance

amount would be higher by using the disability years."

(a) (2); see also

(c) (4) & 404.252.

In addition, if the special minimum primary insurance amounts are

higher that those calculated under the rules, the Commissioner

uses the special amounts. See

.

In Raymond's case, the Commissioner relied on POMS sections

RS 00301.147 and RS 00605.220 to support her decision to exclude

Raymond's earnings during her first period of disability from the

calculation of her benefits for her second period of disability.

The Commissioner contends that the POMS sections are entitled to

deference. Raymond argues that no deference is due and that the

POMS sections are contrary to the savings statute,

420, and the social security regulation for determining

disability insured status,

(f).

The POMS is not a regulation enacted pursuant to formal

rulemaking procedures and therefore does not have binding legal

force. Schweiker v. Hansen,

(1981) . The

Social Security Administration's less formal interpretation of a

social security statute or its own regulation may be entitled to

deference, pursuant to Chevron U.S.A, Inc. v. Natural Res. Def.

Council, Inc.,

(1984), in appropriate

circumstances. Barnhart v. Walton, 122 S. C t . 1265, 1271-72

(2 0 02); see also Auer v. Robbins,

, 461 (1997).

Factors pertinent to determining whether Chevron deference may

apply include "the interstitial nature of the legal question, the

related expertise of the Agency, the importance of the question

to administration of the statute, the complexity of that

administration, and the careful consideration the Agency has

given the question over a long period of time." Id. at 1272.

As noted above, the parties agree that the social security

statutes and regulations do not address the issue presented here.

The cited POMS sections are used to fill a gap in the statutory

and regulatory framework for the complex process of determining

eligibility for and the amount of benefits. The sections

interpret 1983 amendments to the Social Security Act, and

6 therefore appear to be longstanding. Although the parties have

not addressed the applicable factors, the circumstances suggest

that the POMS sections are subject to the Chevron analysis. See

also McNamar v. Apfel,

(loth Cir. 1999)

(holding different POMS sections entitled to controlling weight

unless arbitrary or capricious); Bubnis v. Apfel,

(2d Cir. 1998) (holding different POMS sections entitled to

substantial deference); Wilson v. Apfel,

(W.D. V a . 2000) (same).

Under a deferential analysis, if "the statute 'is silent or

ambiguous with respect to the specific issue, ' we must sustain

the Agency's interpretation if it is 'based on a permissible

construction' of the Act." Walton. 122 S. C t . at 1269 (quoting

Chevron.

). A permissible construction is one

that is fully consistent with the plain meaning of the applicable

statutes and legislative history. See Griffiths v. I.N.S.,

(1st Cir. 2001). Therefore, courts "must defer to

reasonable agency interpretation and implementation" of the legal

framework. Becker v. Fed. Election Comm'n,

(1st Cir. 2000).

POMS RS 00301.147 and RS 00605.220, relied on by the

Commissioner to support the calculation of Raymond's benefits,

provide that time within a period of disability before the age of

7 thirty-one is not counted to determine insured status for a

second period of disability after age thirty-one and that base

years for "DIB PIA'S" do not include years within a period of

disability.2 The Commissioner contends that the POMS policy to

disregard earnings from a prior period of disability established

under special insured status requirements, which is not provided

in any statute or regulation, is an implementation of the SSA's

longstanding interpretation of the savings statute. The savings

statute,

, provides as follows:

None of the provisions of this subchapter relating to periods of disability shall apply in any case in which their application would result in the denial of monthly benefits or a lump-sum death payment which would otherwise be payable under this subchapter; nor shall they apply in the case of any monthly benefit or lump­ sum death payment under this subchapter if such benefit or payment would be greater without their application.

The Commissioner emphasizes the word "None" in the statute.

Based on "None," the Commissioner interprets the statute in an

"all or nothing fashion," meaning that if a provision requires

that a period of disability be disregarded for any purpose, then

that period must also be disregarded for all other purposes

including calculating benefit levels.

The cited POMS sections make the "all or nothing" policy

2"DIB PIA" is not defined or explained by the parties. Taken in context, it is understood to mean: disability insurance benefits primary insurance amount. explicit by directing that periods of disability established

before age thirty-one for claimants who met only the special

status requirements be disregarded both for determining eligible

status in subsequent periods of disability and the level of

benefits. When the cited POMS sections are applied to Raymond's

case, her earnings during her first period of disability, before

she was thirty-one, are not counted in calculating the level of

her benefits for her second period of disability, which began

after she was thirty-one.

Both parties cite Jernigan v. Chater,

(D.

Md. 1997) .3 In that case, the computation of Jernigan's primary

insurance amount under the AMW method provided by

required that earnings during his prior period of disability

be excluded.

. The parties agreed that the savings

clause,

, prevented the exclusion of Jernigan's

previous earnings in computing his benefits.

However, in

order to be entitled to benefits calculated under the AMW method

at all, Jernigan had to exclude the time within his prior period

of disability in the calculation of his insured status.

The Commissioner asserted the "all or nothing" rule to

3Jernigan is the only case found by the parties and the court which addresses the "all or nothing" interpretation of § 420 .

9 require that Jernigan's period of disability must either be

included for all purposes or excluded for all purposes under §

420. Id. at 537. The court held that the "all or nothing"

interpretation of § 420 was appropriate in that case, but that it

also operated in reverse so that any provision that did not

relate to a period of disability was not affected. Id. The

court further held that because

(1) (1), which

qualified Jernigan to receive benefits under the AMW method,

merely defined the term "disability," that provision did not

relate to a period of disability as referenced in § 420. Id. at

538. As a result, the court held that both the definitional

section, excluding a prior period of disability for purposes of

determining eligibility, and the benefits section, including

earnings during a prior period of disability, could be applied

simultaneously without violating the "all or nothing" rule. Id.

Unlike the circumstances in Jernigan, here the parties agree

that no regulatory or statutory provision in the social security

framework addresses the question of whether earnings from

Raymond's prior period of disability may be used in calculating

her benefits for her second period of disability. The savings

statute, by its own terms, controls only the application of

provisions of the social security subchapter. Since the issue

presented here is not whether a provision should be applied, or

10 not, relating to a period of disability, the savings statute does

apply.

Instead, the question presented in this case is whether the

cited POMS sections are a reasonable interpretation and

implementation of the social security statutes and regulations

and are therefore entitled to deference. Raymond argues that the

"all or nothing" rule of the POMS sections violates the intent of

the Social Security Act to provide the highest possible level of

benefits as demonstrated by the savings statute, § 420, and

(f). Although the Commissioner interprets § 420,

in an "all or nothing fashion," the plain intent of the statute

is to avoid provisions that would unnecessarily reduce an

applicant's monthly benefit.

Section 404.130(f) states that the SSA "will count all the

quarters in the prior period of disability established for [the

claimant] if by doing so [the claimant] would be entitled to

benefits or the amount of the benefit would be larger." The

Commissioner contends that the plain meaning of § 404.130(f) must

be read in the context of the "all or nothing" rule imposed by §

420. The Commissioner cites no authority for her reasoning,

however. Contrary to the Commissioner's interpretation, it

appears that § 404.130(f) was intended to permit combining

11 earnings to achieve a higher benefit level.4

Therefore, based on the minimal record and argumentation

presented in this case, the social security framework appears to

favor combining earnings from prior periods of disability in the

benefits calculation, regardless of whether that time was also

considered for other purposes, if that will result in higher

benefits. The Commissioner's contrary interpretation is not

persuasive.

Since the POMS sections, which prevent combining Raymond's

earnings in both periods of disability, are contrary to the

purpose and intent of the social security framework, they are not

entitled to deference and lack the force of law. Absent the POMS

sections, the parties agree that no statute or regulation

requires that the prior earnings be disregarded, and therefore,

there is no legal basis for the Commissioner's calculation of

Raymond's benefits. The Commissioner must recalculate Raymond's

benefits, applying appropriate statutes and regulations without

reference to POMS sections RS 00301.147 and RS 00605.220.

4In addition, while

(b)(2)(B)(ii) and (iii) exclude years entirely included in a period of disability from benefit computation years,

(a)(2), in defining "computation base years," states that years within prior periods of disability will be included if that would make the primary insurance amount higher. Nothing in § 404.211 suggests an "all or nothing" rule limits its application.

12 Conclusion

For the foregoing reasons, the claimant's motion to reverse

(document no. 12) is granted, and the Commissioner's motion to

affirm (document no. 15) is denied.

The clerk of court shall enter judgment accordingly and

close the case.

SO ORDERED.

Joseph A. DiClerico, Jr. United States District Judge

May 23, 2 002

cc: Alan Linder, Esquire David L. Broderick, Esquire

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