Fowler v. Bowen

• Decision Date: 06 June 1989
• Docket Number: No. 86-2677,86-2677
• Citation: 876 F.2d 1451
• Parties: , Unempl.Ins.Rep. CCH 14679A Herbert C. FOWLER, Plaintiff-Appellant, v. Otis R. BOWEN, Secretary of Health and Human Services, Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1451

876 F.2d 1451

26 Soc.Sec.Rep.Ser. 47, Unempl.Ins.Rep. CCH 14679A

Herbert C. FOWLER, Plaintiff-Appellant, v. Otis R. BOWEN, Secretary of Health and Human Services,

Defendant-Appellee.

No. 86-2677.

United States Court of Appeals, Tenth Circuit.

June 6, 1989.

Paul F. McTighe, Jr., Tulsa, Okl., for plaintiff-appellant.

Deana Ertl-Brackett, Asst. Regional Counsel, Dept. of Health and Human Services, Denver, Colo. (Richard K. Willard, Asst. Atty. Gen., Layn R. Phillips, U.S. Atty., Peter Bernhardt, Asst. U.S. Atty., Tulsa, Okl., Donald A. Gonya, Chief Counsel for Social Security, Randolph W. Gaines, Deputy Chief Counsel for Social Security Litigation, A. George Lowe, Chief, Disability Litigation Branch, Russell Shultis, Attys. for the Office of General Counsel, Dept. of Health and Human Services, Baltimore, Md., on the brief), for defendant-appellee.

Before MOORE, BARRETT and ALARCON, ^* Circuit Judges.

PER CURIAM.

Plaintiff appeals from an order of the district court affirming the Secretary's determination that plaintiff received an overpayment of Social Security Disability Insurance benefits and, because he was not without fault in causing the overpayment, the overpayment could not be waived.

In 1972, plaintiff applied for and was awarded disability benefits based on a finding that he was totally disabled and unable to engage in substantial gainful activity due to chronic glomerulonephritis. In 1980, following a hearing before an Administrative Law Judge (ALJ), the earlier finding of disability was reversed.

There was no dispute that plaintiff had a medically disabling condition. ¹ However, the ALJ found that at no time had plaintiff been unable to work for a period of at least twelve months but instead he had engaged in substantial gainful activity during the time he was receiving disability benefits. See 42 U.S.C. Sec. 423(d)(1); 20 C.F.R. Sec. 404.1520(b). Plaintiff appealed to the district court which remanded to develop the record further on the issues of whether fraud or similar fault was involved in plaintiff's initial application for benefits ² and, if not, when plaintiff had returned to work, and whether the Secretary should waive the overpayment. 20 C.F.R. Sec. 404.506.

Following a hearing on these issues, the ALJ determined that fraud was involved in plaintiff's application for benefits. Therefore, the reopening was proper and the overpayment could not be waived. The Appeals Council adopted the ALJ's recommended decision, thus becoming the final decision of the Secretary. Plaintiff appealed and the district court subsequently affirmed.

On appeal to this court, plaintiff argues that the Secretary's determination was not based on substantial evidence. Plaintiff argues that his testimony showed that he stopped working in April, 1972, and did not return to work at any time either prior to the time he formed his corporation in 1974 or thereafter. Plaintiff argues that he did not perform any work or duties for or receive income from the corporation. He argues that he claimed personal automobile and travel expenses as business expenses because of "an honest mistake" and that none of the checks he received represented payment for work done for the corporation.

We review a final decision of the Secretary only to determine whether the decision is supported by substantial evidence. Brown v. Bowen, 801 F.2d 361, 362 (10th Cir.1986). We may not weigh the evidence nor substitute our discretion for that of the agency. Id. Substantial evidence " 'means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.' " Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 1427, 28 L.Ed.2d 842, 852 (1971) (quoting Consolidated Edison Co. v. National Labor Relations Bd., 305 U.S. 197, 229, 59 S.Ct. 206, 217, 83 L.Ed. 126, 140 (1938)).

If plaintiff actually engaged in substantial gainful activity, he could not be found disabled, regardless of the severity of his impairments. 20 C.F.R. Sec. 404.1520(b).

Substantial gainful activity is defined as

work activity that is both substantial and gainful.... Substantial work activity is work activity that involves doing significant physical or mental activities.... [W]ork may be substantial even if it is done on a part-time basis or if you do less, get paid less, or have less responsibility than when you worked before. Gainful work activity is work activity that you do for pay or profit. Work activity is gainful if it is the kind of work usually done for pay or profit, whether or not a profit is realized.

20 C.F.R. Sec. 404.1572(a),(b).

Additional considerations apply in evaluating whether a self-employed person is engaged in substantial gainful activity.

(a) We will consider your activities and their value to your business.... We will not consider your income alone.... We consider that you have engaged in substantial gainful activity if--

(1) Your work activity, in terms of factors such as hours, skills, energy output, efficiency, duties, and responsibilities, is comparable to that of unimpaired individuals in your community who are in the same or similar businesses as their means of livelihood;

(2) Your work activity, although not comparable to that of unimpaired individuals, is clearly worth the amount shown in Sec. 404.1574(b)(2) when considered in terms of its value to the business, or when compared to the salary that an owner would pay to an employee to do the work you are doing; or

(3) You render services that are significant to the operation of the business and receive a substantial income from the business.

20 C.F.R. Sec. 404.1575. ³

Fraud or similar fault will be found if the facts show that the initial determination of disability or the overpayment was based upon

(a) An incorrect statement made by the individual which he knew or should have known to be incorrect; or

(b) Failure to furnish information which he knew or should have known to be material; or

(c) With respect to the overpaid individual only, acceptance of a payment which he either knew or should have been expected to know was incorrect.

20 C.F.R. Sec. 404.507. The ALJ must also "consider all pertinent circumstances, including [claimant's] age, intelligence, education, and physical and mental condition." Id.

Plaintiff had had a general agent's contract with Minnesota Mutual Life Insurance Company (Minnesota Mutual) since 1965. He had also had a general agent's contract with Old Line Life Insurance (Old Line Life) since 1970. In his initial application for benefits, dated June 22, 1972, plaintiff stated that he was self-employed and had been unable to work since March 1, 1972. He had been placed on disabled status by Old Line Life in January, 1972. However, plaintiff did not reveal that on May 31, 1972, he had entered into a new agent's contract with Minnesota Mutual. As an agent, his duties continued to include the sale of policies and receipt of commissions on those sales and on renewals. However, taxes on commissions were withheld by the company. Plaintiff testified that his general agent's contract was cancelled because he could no longer perform all of the duties of a general agent which included the recruiting and hiring of other agents.

Minnesota Mutual's records show that plaintiff earned commissions amounting to $11,599.00 in 1972. Plaintiff testified that this amount represented renewals on previously sold policies, not new sales and, therefore, was attributed to work performed prior to 1972. Plaintiff did not submit any documentation to support his testimony.

Minnesota Mutual's records also show that plaintiff earned commissions amounting to $14,794.00 in 1973 and $12,228.00 in 1974. Plaintiff testified that these amounts represented only renewals and new policies written by other agents "who were doing work for me." Plaintiff testified that these agents would turn their work in in his name because he was the general agent for the company. Plaintiff submitted no records to support this testimony.

Plaintiff incorporated his business in 1974. He testified that he performed no work for the corporation. However, at the initial hearing before the ALJ, plaintiff was questioned regarding an earlier statement that his services to the corporation were worth $300.00 or $400.00 a month. Plaintiff responded: "Well, that was services that had I not had somebody to do the work, or the corporation would have been worth $300.00 or $400.00 a month, but I didn't have somebody to do the work."

The...