JOHN C. NIVISON, Magistrate Judge.
On Plaintiff Robert R.'s application for disability insurance benefits under Title II of the Social Security Act, Defendant, the Social Security Administration Commissioner, found Plaintiff not disabled at step 1 of the sequential evaluation process. In denying Plaintiff's application, the ALJ found that in each year after Plaintiff's alleged onset date, Plaintiff's engaged in substantial gainful activity. Plaintiff filed this action to obtain judicial review of Defendant's final administrative decision pursuant to 42 U.S.C. § 405(g).
Following a review of the record, and after consideration of the parties' arguments, I recommend the Court affirm the administrative decision.
The Commissioner's final decision is the September 26, 2017, decision of the Administrative Law Judge. (ALJ Decision, ECF No. 9-2.)
Pursuant to Defendant's regulations, a claimant will be found not disabled at step 1 of the sequential evaluation process if the record establishes that the claimant has engaged in substantial gainful activity. 20 C.F.R. § 404.1520(a)(4)(i). Claimants are advised: "If you are working and the work you are doing is substantial gainful activity, we will find that you are not disabled regardless of your medical condition or your age, education, and work experience." Id. § 404.1520(b). The regulations define "substantial" activity as "work activity that involves doing significant physical or mental activities." Id. § 404.1572(a). Work "may be substantial even if it is done on a part-time basis."
The regulations distinguish between self-employed work activity and work for wages. Compare id. § 404.1574 and 404.1575. If a claimant is self-employed, such as Plaintiff, Defendant "will consider [the claimant's] activities and their value to [the] business to decide whether [the claimant has] engaged in substantial gainful activity." 20 C.F.R. § 404.1575(a)(2). The relevant regulation provides that Defendant "will not consider . . . income alone because the amount of income . . . may depend on a number of factors," i.e., factors other than substantial activity. Id. The regulations contemplate a three-test assessment, provided, however, that two of the tests are unnecessary if the first test resolves the issue. Id.
The tests are as follows:
Id. Paragraphs (b) and (c), referred to in the first test, explain that if the claimant is not a "farm landlord" and "operate[s] a business by [him]self, any services that [he] render[s] are significant to the business." Id. 404.1575(b)(1). Additionally, net income less certain special expenses (not applicable in this case) is substantial for social security purposes if, when averaged, it exceeds an amount determined in the regulations. Id. § 404.1575(c) (referring to §§ 404.1574a, 404.1574(b)).
A court must affirm the administrative decision provided the decision is based on the correct legal standards and is supported by substantial evidence, even if the record contains evidence capable of supporting an alternative outcome. Manso-Pizarro v. Sec'y of HHS, 76 F.3d 15, 16 (1st Cir. 1996) (per curiam); Rodriguez Pagan v. Sec'y of HHS, 819 F.2d 1, 3 (1st Cir. 1987). Substantial evidence is evidence that a reasonable mind might accept as adequate to support a finding. Richardson v. Perales, 402 U.S. 389, 401 (1971); Rodriguez v. Sec'y of HHS, 647 F.2d 218, 222 (1st Cir. 1981). "The ALJ's findings of fact are conclusive when supported by substantial evidence, but they are not conclusive when derived by ignoring evidence, misapplying the law, or judging matters entrusted to experts." Nguyen v. Chater, 172 F.3d 31, 35 (1st Cir. 1999).
The record establishes that for March, April and May Plaintiff's income exceeded the regulatory threshold for substantial gainful activity. In addition, because Plaintiff performed the necessary work himself, his activity was "significant to the operation of the business" and, therefore, is presumptively "substantial" pursuant to 20 C.F.R. § 404.1575(a)(2)(i).
Plaintiff argues that his work activity was not in fact "substantial." Plaintiff contends that fishing for 16.8 pounds of elvers does not require "significant mental and physical activities" because all he did was dip a net in the water and retrieve elvers. (Statement of Errors at 5, citing 20 C.F.R. § 404.1572). Plaintiff argues his income is merely a consequence of his license; that the revenue is generated by his license and market conditions more than his effort. (Id.) Plaintiff contends his income is generated similar to the way income is derived from passive investment in equipment or stock. (Id. at 8.) Plaintiff thus argues the ALJ erred because she "failed to analyze whether the income received represented the value of the Plaintiff's efforts" and, in particular, should have appreciated that "[t]he money paid for elvers has nothing to do with the effort required to catch them." (Id. at 7.)
Social Security Ruling 83-34 (S.S.A. 1983), entitled, Titles II and XVI: Determining Whether Work is Substantial Gainful Activity-Self-Employed Persons, advises that "[s]elfemployment income alone is not a reliable factor in determining SGA, since it is influenced not only by the individual's services but also by such things as market conditions, capital investments, the services of other people, and agreements on distribution of profits." Id., 1983 WL 31256, at *1. "Hence, it is necessary to consider economic value of the individual's services, regardless of whether an immediate income results from such services." Id. On the specific topic of "test one," Ruling 83-34 explains that an individual in a "one-person business operation[]" necessarily performs "significant" services. Id. at *2. Under the Ruling, as with the regulations, Plaintiff would be considered a person who performs substantial services.
Plaintiff, however, argues the ALJ erred because she did not engage in the analysis required by the Eleventh Circuit in Johnson v. Sullivan, 929 F.2d 596 (11th Cir. 1991) (per curiam). In Johnson, the claimant worked as a registered land surveyor before experiencing certain complications of vascular disease, including the loss of a leg. Although the resulting limitations prevented the claimant from performing the full range of activities necessary to his self-employed occupation, the claimant's wife and son assumed many of the duties he could not perform, and he "was relegated to drawing maps and signing plats made by his son." Id. at 597. The Eleventh Circuit held that the claimant had not rebutted the presumption that his income (residual profits that exceeded the regulatory threshold) reflected his performance of substantial gainful activity. Id. at 598. After considering a number of factors, the court concluded: "Claimant's credentials as a licensed surveyor were required by law for the operation of the company and thus his presence was essential to the business." Id. Plaintiff contends the ALJ erred because she did not consider the significance of the license, which Plaintiff maintains is essential to the business rather than any skill or particular expertise he contributes.
In this case, as the ALJ in Johnson did, the ALJ assessed the relevant factors and did not simply rely on the income level in determining whether Plaintiff had engaged in substantial gainful activity for the years 2015, 2016, and 2017. The record establishes that Plaintiff had been elver fishing since 1989 (R. 46), and that the process and mechanics of elver fishing require a certain level of effort, knowledge and experience. The ALJ's determination is supported by substantial evidence on the record, and Plaintiff'contention that the income is merely the product of his good fortune to secure an elver fishing license is unpersuasive.
Based on the foregoing analysis, I recommend the Court affirm the administrative decision.