Nasser v. Secretary of Health, Education & Welfare

• Decision Date: 29 January 1975
• Docket Number: No. 73 C 1451.,73 C 1451.
• Citation: 388 F. Supp. 58
• Parties: Albert M. NASSER, Plaintiff, v. SECRETARY OF HEALTH, EDUCATION AND WELFARE, Defendant.
• Court: U.S. District Court — Eastern District of New York

388 F. Supp. 58

Albert M. NASSER, Plaintiff, v. SECRETARY OF HEALTH, EDUCATION AND WELFARE, Defendant.

No. 73 C 1451.

United States District Court, E. D. New York.

January 29, 1975.

Carman, Callahan & Carman by Gregory W Carman, Farmingdale, N. Y., for plaintiff.

David G. Trager, U. S. Atty., E.D.N. Y., by George H. Weller, Asst. U. S. Atty., Brooklyn, N. Y., for defendant.

MEMORANDUM OF DECISION AND ORDER

NEAHER, District Judge.

This is a timely action to review a final decision of the defendant Secretary of Health, Education and Welfare ("Secretary"), denying plaintiff the monthly Social Security retirement insurance payments to which he would otherwise be entitled as a retired person. 42 U.S. C. § 405(g). Defendant has moved for judgment on the pleadings dismissing the action, contending that plaintiff's post-retirement activity and receipt of fees as an elected water commissioner in the Town of Oyster Bay, Nassau County, made him ineligible for such benefits.

The factual context is undisputed and may be concisely stated. Plaintiff was employed by Grumman Aircraft Corporation ("Grumman"), Bethpage, Long Island, from June 11, 1941 until his retirement on June 11, 1971, at the age of 62. Prior to retirement plaintiff had attained the position of assistant plant manager in charge of production for Grumman, although his formal education included but one year of high school. In addition to that employment, plaintiff had also served for approximately the last 20 years as one of three elected water commissioners of the South Farmingdale Water District in his home community on Long Island. As a water commissioner, plaintiff received a fee, presently $40, for each meeting he attended. These meetings are held during the evenings, average two per week and last from one-half hour to three and one-half hours per meeting.

Following his retirement, plaintiff continued to serve his current term as a water commissioner and received meeting fees in that capacity totalling $5,040 in 1971 and $6,520 in 1972.¹ There is no question that the amount of time plaintiff devoted to such meetings was in excess of 15 hours per month but substantially less than 45 hours.

After he had retired from Grumman, plaintiff filed an application for retirement insurance compensation with the local office of the Social Security Administration. On November 23, 1971, a Certificate of Award was issued informing plaintiff that although his monthly compensation payment was fixed at the sum of $170.50, he was not entitled to such benefits in 1971 and probably would continue to be ineligible throughout 1972 because of his continued income from fees earned as a water commissioner (Tr. 70). This decision was adhered to on reconsideration on June 13, 1972. On March 28, 1973, a hearing was conducted before an administrative law judge, who held that, except for the months of February and March of 1972 (when plaintiff attended no water district meetings), plaintiff was not entitled to any retirement benefits (Tr. 6). The Appeals Council upheld that decision on August 15, 1973, thus making it the final decision of the Secretary (Tr. 3).

I.

In denying payment of benefits in this case, the Secretary adopted findings of the administrative law judge that plaintiff was "an engineer" who performed "highly skilled" services as a water commissioner.² On that basis the conclusion was reached that plaintiff's benefits were subject to work deductions under the Secretary's regulations because "substantial services" were rendered for 15 or more hours a month (Tr. 19).

Section 203 of the Social Security Act (Act), 42 U.S.C. § 403, provides for reductions in retirement insurance benefits if a claimant has earnings from wages or self-employment above a designated minimum. A principal purpose of the Act in requiring such reductions is to encourage actual retirement. Ludeking v. Finch, 421 F.2d 499, 503 (8 Cir. 1970). Under the statute

"an individual will be presumed . . . to have been engaged in self-employment . . . until it is shown to the satisfaction of the Secretary that such individual rendered no substantial services in such month with respect to any trade or business . . .. The Secretary shall by regulations prescribe the methods and criteria for determining whether or not an individual has rendered substantial services with respect to any trade or business." 42 U.S.C. § 403(f)(4)(A).

The Secretary's relevant regulations, 20 C.F.R. §§ 404.446-404.447, recognize that not all compensable activity must cease in order for a person to be considered retired and eligible for retirement benefits.

"Even though an individual performs some services in a trade or business in a month, such services are not substantial where the evidence establishes to the satisfaction of the Administration that the individual may reasonably be considered retired in that month." § 404.446(a).

Seven factors are specified in § 404.446 as criteria for determining whether a retiree has or has not performed "substantial services" which subject his benefits to reductions.³ The evaluation of those factors is spelled out in some detail in § 404.447, pertinent portions of which are noted in the margin.⁴ In neither regulation is the amount or rate of compensation a factor in determining the substantiality of services rendered. Indeed, the amount of money earned has been held irrelevant. Price v. Fleming, 280 F.2d 956, 959 (3 Cir. 1960).

The principal objective criterion is the amount of time devoted to the compensated activity. Services of any nature of less than 15 hours in any month are not "substantial" under § 404.447(a)(1), n. 4 supra. And services performed for as much as 45 hours per month are not substantial unless of such a "highly skilled and valuable" nature that a claimant "could not reasonably be considered retired", § 404.447(b), n. 4 supra. As exemplified in the regulation, services of that exceptional nature would be "managing a sizeable business or engaging in a highly skilled occupation." § 404.447(a) (1) and (b), n. 4 supra.

Although questions exist as to the factual basis for the Secretary's findings, the real question in the case is whether plaintiff's admitted activities as a water commissioner were properly found to be "skilled services of a managerial or technical nature" under § 404.447(b) so as to constitute "substantial services" within the meaning of the Act, 42 U.S.C. § 403. In its reviewing role, this court may not retry the case de novo. Covo v. Gardner, 314 F.Supp. 894 (S.D.N.Y.1970). The Secretary's findings as to any fact, whether evidentiary or ultimate, are conclusive if supported by substantial evidence. Section 205(g), 42 U.S.C. § 405(g); Weir v. Richardson, 343 F.Supp. 353, 355 (S.D.Iowa 1972); Young v. Gardner, 259 F.Supp. 528, 531 (S.D.N.Y.1966). 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, 28 L.Ed.2d 842 (1971); Consolo v. Federal Maritime Comm'n, 383 U.S. 607, 619-620, 86 S.Ct. 1018, 16 L.Ed.2d 131 (1956); Universal Camera Corp. v. NLRB, 340 U.S. 474, 477-487, 71 S.Ct. 456, 95 L.Ed. 456 (1951); NLRB v. Columbian Enameling & Stamping Co., 306 U.S. 292, 300, 59 S.Ct. 501, 83 L.Ed. 660 (1939).

Nevertheless, even if the Secretary's factual findings are supported by substantial evidence, his ultimate decision may not stand if an improper legal standard was applied. McCarty v. Richardson, 459 F.2d 3 (5 Cir. 1972); Knox v. Finch, 427 F.2d 919, 920 (5 Cir. 1970); Allen v. Richardson, 366 F.Supp. 516, 519 (E.D.Mich.1973). As the Supreme Court has instructed:

"Reviewing courts are not obliged to stand aside and rubber-stamp their affirmance of administrative decisions that they deem inconsistent with a statutory mandate or that frustrate the congressional policy underlying a statute. Such review is always properly within the judicial province, and courts would abdicate their responsibility if they did not fully review such administrative decisions." National Labor Relations Board v. Brown, 380 U.S. 278, 291-292, 85 S.Ct. 980, 988, 13 L.Ed.2d 839 (1965).

II.

Here, the Secretary has found that plaintiff is an engineer, that he is engaged in a highly skilled enterprise as a water commissioner, that he works 20 hours per month, and that consequently he fits within the disqualifying language of 20 C.F.R. § 404.447(a)(1), n. 4 supra.

The finding that plaintiff is an "engineer" must fall for lack of any supporting evidence, let alone substantial evidence. The determination that plaintiff's services as water commissioner are of a "highly skilled" nature results from too narrow an interpretation of the statute in direct violation of the principle that social security legislation is to be liberally construed in favor of coverage. Herbst v. Finch, 473 F.2d 771, 774-775 (2 Cir. 1972);⁵ Steele v. Richardson, 472 F.2d 49, 53 (2 Cir. 1972); Gold v. Secretary of Health, Education and Welfare, 463 F.2d 38, 41 (2 Cir. 1972); Haberman v. Finch, 418 F.2d 664, 666 (2 Cir. 1969).

There is certainly no proof in the record that plaintiff studied engineering or is skilled in the application of any of its techniques.⁶ The evidence indicates at most that when plaintiff worked at Grumman, he had only peripheral contact with engineers.

"When I retired I was . . . assistant flight sic⁷ manager and in charge of all production in that plant . . . which . . . at one time had 2700 people. They did not come directly under me, all of them. The engineers and so on. But they did answer to us. They were of service to us." (Tr. 43; emphasis supplied.)

Although plaintiff had risen to a position where he was responsible for production in one of Grumman's plants, his position is not shown to have involved technical engineering skills. Nor is there any proof that plaintiff's activities as a water commissioner require familiarity with engineering. In fact, his...