ORDER
DAVID E. PEEBLES, Magistrate Judge.
Currently pending before the court in this action, in which plaintiff seeks judicial review of an adverse administrative determination by the Commissioner, pursuant to 42 U.S.C. §§ 405(g) and 1383(c), are cross-motions for judgment on the pleadings.1 Oral argument was conducted in connection with those motions on June 30, 2016, during a telephone conference held on the record. At the close of argument I issued a bench decision in which, after applying the requisite deferential review standard, I found that the Commissioner's determination did not result from the application of proper legal principles and is not supported by substantial evidence, providing further detail regarding my reasoning and addressing the specific issues raised by the plaintiff in this appeal.
After due deliberation, and based upon the court's oral bench decision, a transcript of which is attached and incorporated herein by reference, it is hereby
ORDERED, as follows:
1) Plaintiff's motion for judgment on the pleadings is GRANTED.
2) The Commissioner's determination that plaintiff was not disabled at the relevant times, and thus is not entitled to benefits under the Social Security Act, is VACATED.
3) The matter is hereby REMANDED to the Commissioner, without a directed finding of disability, for further proceedings consistent with this determination.
4) The clerk is respectfully directed to enter judgment, based upon this determination, remanding the matter to the Commissioner pursuant to sentence four of 42 U.S.C. § 405(g) and closing this case.
Transcript of DECISION held on June 30, 2016, at the James Hanley U.S. Courthouse, 100 South Clinton Street, Syracuse, New York, the HONORABLE DAVID E. PEEBLES, Presiding.
(In chambers, via telephone:)
THE COURT: So, I have a request for judicial review under Sections 405(g) and 1383(c) of Title 42, United States Code.
The background briefly is as follows.
The plaintiff was born in December of 1969. Is currently 46 years old. He was 42 at the alleged onset of his disability.
He has an IEP or Individualized Educational Program diploma from high school. He attended special education classes including at BOCES.
He lives in Syracuse in an apartment nearby his mother. He drives, although somewhat limited.
He is not currently treating with a psychiatrist but he, clearly, has some mental impairments. IQ testing showed a verbal IQ at various times between 65 and 68 and full scale IQ scores of 71 to 76. At 18, it was noted in educational records that he, mentally, he was the equivalent of a 10-year-old.
Dr. Jeanne Shapiro, consultative examiner, placed the plaintiff in the borderline intellectual functioning range. That's at 339. It appears fairly clear that plaintiff needs considerable help from his mother and stepfather on a daily basis.
He works as a dishwasher at Uno Chicago Grill in Destiny U.S.A. in Syracuse where he has been a dishwasher since 2004. Prior to that time, he lived with his grandmother who died. The plaintiff works primarily the 5 o'clock to 12:30 shift, 5 p.m. to 12:30 a.m. His hours, though, have been on the decline. That's at 264 and 326 of the administrative transcript.
Procedurally, plaintiff applied for Title II and Title XVI benefits on November 5, 2012, alleging an onset date of January 2, 2012.
A hearing was conducted by Administrative Law Judge Jennifer Gale Smith on May 1, 2014. The ALJ issued a decision on June 9, 2014, finding that, at Step 1, that plaintiff had engaged in substantial gainful activity and, therefore, did not proceed through to the balance of the 5-step sequential test for determining disability; but, instead, concluded that plaintiff did not qualify for benefits.
The Social Security Administration Appeals Council denied review on February 27, 2015; thereby, making the determination of the ALJ a final decision of the Commissioner.
Obviously, my task is limited and my role is to determine whether correct legal principles were applied and whether the determination is supported by substantial evidence.
The first step in the test is, obviously, to determine whether the plaintiff engaged in substantial gainful activity, which is defined as work that is substantial and gainful.
The primary consideration, of course, is on work earnings and, if they are above the established threshold, then a rebuttal presumption exists that the plaintiff is not under a disability.
The Guidelines and the regulations, including 20 CFR Section 404.1574, provide indication of how and evaluating substantial gainful activity and those regulations provide, in pertinent part: We will first determine whether the person received a subsidy; that is, we will determine whether the person was being paid more than the reasonable value of the actual services performed. We will then subtract the value of the subsidy from the person's gross earnings to determine the earnings we will use to determine if he or she has done substantial gainful activity.
The Social Security Ruling 83-33 provides considerable guidance. When addressing subsidies, it states an employer may, because of a benevolent attitude toward a handicap individual, subsidize the employee's earnings by paying more in wages than the reasonable value of the actual services performed. When this occurs, the excess will be regarded as a subsidy, rather than earnings.
In most instances, the amount of the subsidy can be ascertained by comparing the time, energy, skills, and responsibility involved in the individual's services with the same elements involved in the performance of the same or similar work by unimpaired individuals in the community and estimating the proportionate value of the individual's services according to the prevailing pay scale for such work.
In this case, the ALJ, admittedly, cites and heavily relies on the statement at 299 of the administrative transcript that talks about the shifts going to those who work the hardest and complete tasks fully.
But the ALJ ignores the work activity questionnaire, which very clearly demonstrates that plaintiff works at a lower production standard and lower quality standards than comparable employees.
And in response to the question: On average, does the employee complete his/her work in the same amount of time as the employees of similar positions? The answer is no.
On Page 308, the question is asked: Are you paying the employee more per hour than you would another employee in a similar position? The answer is no.
So, there is some equivocation, but at 308 it indicates that the plaintiff is working at 70 percent of other employees' productivity.
So, this case is extremely similar to one cited by the plaintiff that I found to be very persuasive, Horsewood v. Astrue. It is from the district of Idaho. It is unreported but it is found at 2012 WL 3583344. It is from August 2012. Very similar factual circumstance where the plaintiff was allowed to perform at a lower standard of productivity or efficiency than other employees.
And, so, based on that — and in that case, the plaintiff worked at Target. He was given frequent breaks and reduced hours and worked at 75 percent of the capacity of other employees. The Court found that it was error not to consider the subsidy. I also distinguish mala testa because the evidence in that case clearly shows that the plaintiff was expected to perform at the same level as other employees.
So, in my view, there was a subsidy, by the employer, the benevolent employer, based on plaintiff's disability and mental impairment. A 30 percent discount to account for that subsidy should have been recognized by the administrative law judge and, if it had been, then he would fall below the rebuttable presumption threshold for substantial gainful activity.
So, I will award judgment on the pleadings to the plaintiff. I find that the determination of the agency is not supported by substantial evidence. And I will remand the matter for further proceedings.
Appreciate excellent presentations, as I said at the outset. I hope you both have a good summer.
MR. WICKLUND: Thank you, your Honor.
MS. REISS: You too.
(Proceedings adjourned, 3:15 p.m.)
