United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 9, 2008 Decided June 24, 2008
No. 07-5130
ANTONIA ROSSELLO,
ON BEHALF OF JOAQUIN ROSSELLO AND CRISTINA ROSSELLO,
APPELLANT
v.
MICHAEL J. ASTRUE, COMMISSIONER OF SOCIAL SECURITY,
APPELLEE
Appeal from the United States District Court
for the District of Columbia
(No. 01cv02694)
Jennifer Arnett argued the cause for appellant. With her
on the briefs was James Bernard.
Fred E. Haynes, Assistant U.S. Attorney, argued the
cause for appellee. With him on the brief were Jeffrey A.
Taylor, U.S. Attorney, and R. Craig Lawrence, Assistant U.S.
Attorney.
Before: GINSBURG, BROWN, and KAVANAUGH, Circuit
Judges.
2
Opinion for the Court filed by Circuit Judge
KAVANAUGH.
KAVANAUGH, Circuit Judge: Cristina Rossello has a
history of serious mental illness. In 1993, her father, Joaquin
Rossello, applied for Social Security “childhood disability”
benefits on behalf of Cristina. He asserted that Cristina has
been continuously disabled since before age 22, which is the
relevant statutory trigger for those benefits. In 1995, the
Social Security Administration initially denied the Rossellos’
claim. The Rossellos then unsuccessfully pursued five years
of administrative appeals until the agency issued its final
decision denying their claim. In 2000, the Rossellos sought
judicial review of the agency’s final decision. In 2007, the
District Court ultimately affirmed the agency’s decision
denying Cristina benefits.
We conclude that the Social Security Administration’s
denial of benefits was not supported by substantial evidence.
We therefore reverse the District Court’s judgment and direct
the District Court to remand the case to the Social Security
Administration. Given the amount of time that has passed
since the Rossellos’ initial 1993 application for benefits, we
anticipate that the District Court will quickly issue an order
remanding the case and that the Social Security
Administration then will prioritize the matter and promptly
determine Cristina’s entitlement to disability benefits.
I
The Rossello family’s journey through the Social
Security Administration’s hearing process began more than
15 years ago. To appreciate the Rossellos’ story, one must
begin with an understanding of the Social Security disability-
benefits scheme.
3
One way for disabled adults to obtain government
benefits is to qualify based on their parents’ status in the
Social Security system. Under Title II of the Social Security
Act, a disabled adult like Cristina whose parent is entitled to
Social Security retirement benefits may herself receive Social
Security childhood disability benefits if she has been
continuously disabled since before the age of 22 and is
dependent on her parent. 42 U.S.C. § 402(d)(1)(B).
The key issue before the Social Security Administration
was whether Cristina Rossello has been continuously
“disabled” since before the age of 22 – that is, whether she
has been unable since turning 22 “to engage in any substantial
gainful activity by reason of any medically determinable
physical or mental impairment.” § 423(d)(1)(A). To
determine whether an individual has been continuously
disabled, the Social Security Administration first considers
whether the individual’s work activity since turning 22, if
any, constitutes “substantial gainful activity”; if so, that
disqualifies the claimant from benefits. 20 C.F.R.
§ 404.1520(a)(4)(i); see also § 404.1571 (“If you are able to
engage in substantial gainful activity, we will find that you
are not disabled.”). The Social Security Administration then
considers the medical severity of the individual’s impairment
and whether the claimant has suffered from that impairment
since before turning 22, among other factors.
§ 404.1520(a)(4)(ii)-(v); see also § 404.1520a (relating to
mental impairments).
The Rossellos’ odyssey began in February 1993 when
Joaquin Rossello applied for Social Security retirement
benefits. At the same time, Joaquin also sought childhood
disability benefits on behalf of his daughter Cristina, who was
then 28 years old and had a history of debilitating mental
illness. Joaquin submitted extensive medical evidence
4
showing that Cristina had been diagnosed with chronic mental
illness and had been hospitalized multiple times.
In 1995, the Social Security Administration denied
Cristina’s claim for benefits because the Rossellos had not
submitted medical evidence establishing that Cristina’s
condition began before she turned 22 in 1986, as required by
law.
The Rossellos appealed the denial to an administrative
law judge and submitted additional medical evidence,
including a doctor’s certification that Cristina had been
diagnosed with and treated for mental disorders from 1980 to
1983 (when she was 16 to 19 years old) and that she had been
institutionalized for part of that time. The ALJ nonetheless
denied Cristina’s claim. The ALJ ruled that the record did not
support Cristina’s claim that she was disabled before turning
22 because the medical certificate describing her treatment
from 1980 to 1983 did not constitute medical evidence of
Cristina’s condition during that time.
The Rossellos sought relief from the Social Security
Administration’s Appeals Council, which exercises
discretionary review of ALJ decisions. 20 C.F.R. §§ 404.968,
404.970. The Appeals Council granted review but explained
that Cristina’s earnings in 1986 and 1987 (when she was 22
and 23 years old) suggested she had performed substantial
gainful activity since turning 22 – meaning she could not meet
the statutory requirement that a claimant be continuously
disabled since before the age of 22. The Appeals Council
noted that Cristina earned an average of $334.42 per month in
1986 and $587.04 per month in 1987. Under the Social
Security regulations, average monthly earnings of more than
$300 in 1986 or 1987 create a presumption that an individual
“engaged in substantial gainful activity.” § 404.1574(b)(2)(i)
5
& tbl.1. Average monthly earnings below $190 create a
presumption that an individual did not engage in substantial
gainful activity. See SSR 83-33, Titles II and XVI:
Determining Whether Work is Substantial Gainful Activity–
Employees, 1983 WL 31255, at *2 (Soc. Sec. Admin. Nov.
30, 1982). As a result of Cristina’s monthly earnings in 1986
and 1987, it appeared to the Appeals Council that Cristina
was not continuously disabled since before the age of 22 and
therefore did not qualify for childhood disability benefits. See
20 C.F.R. § 404.1520(a)(4)(i).
Before making a final ruling, the Appeals Council
allowed the Rossellos to submit rebuttal evidence to show that
Cristina’s earnings in 1986 and 1987 were “subsidized” –
meaning that the work was done under special conditions
because of Cristina’s impairment and that her earnings
exceeded the reasonable value of her work. § 404.1574(a)(2).
Any portion of wages that is considered a subsidy does not
count as “earnings” in determining whether an individual
performed substantial gainful activity. See id. If Cristina’s
earnings in 1986 and 1987 were subsidized and her average
monthly unsubsidized earnings fell below the $300 threshold
in the Social Security regulations, then the presumption that
she had engaged in substantial gainful activity would drop
out.
Under the Social Security regulations, subsidization
occurs, for example, “when a person with a serious
impairment does simple tasks under close and continuous
supervision.” Id. Circumstances indicating a “strong
possibility” that earnings are subsidized include that “the
employee receives unusual help from others in doing the
work,” that there “appears to be a marked discrepancy
between the amount of pay and the value of the services,” or
that “[m]ental impairment is involved.” SSR 83-33, 1983 WL
6
31255, at *4. As the Social Security Administration has
explained, “An employer may, because of a benevolent
attitude toward a handicapped 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.” Id. at *3.
The Rossellos produced significant, uncontested evidence
that Cristina’s earnings were subsidized. They submitted
multiple affidavits describing Cristina’s jobs in 1986 and
1987 as provided “by the generosity and compassion of
family or acquaintances that would not have hired her
otherwise because of her serious mental limitations.”
Affidavit of Maria Antonia Rossello (July 19, 2000), Joint
Appendix (“J.A.”) 153. According to the Rossellos,
Cristina’s primary job in 1986 and 1987 consisted of working
in an office for her uncle (with whom she was living at the
time). Cristina’s uncle stated that Cristina was “not
productive and performed only basic tasks like stuffing
envelopes and elementary clerical work.” Affidavit of Jorge
Rossello (June 16, 2000), J.A. 158; see also id. (“had she not
been my niece, we would not have hired her”). Cristina’s
uncle offered her the job because he “could provide her with a
sheltered environment where she could be supervised all the
time.” Id.
In its final ruling, the Appeals Council nonetheless
denied the Rossellos’ appeal. Relying on 20 C.F.R.
§ 404.1574(b), the Appeals Council ruled that Cristina’s
average monthly earnings of more than $300 in 1986 and
1987 indicated that she had performed substantial gainful
activity since turning 22. The Appeals Council never
expressly mentioned subsidization or analyzed Cristina’s
earnings under the relevant regulations; instead, it simply
7
stated that “there is no evidence to indicate that any of
[Cristina’s] work activity was performed in a . . . special
environment.” Appeals Council Decision (Sept. 21, 2000),
J.A. 32. The Appeals Council held that because Cristina had
performed substantial gainful activity since turning 22, she
therefore was not disabled under the Act and was ineligible
for childhood disability benefits. Having so concluded, the
Appeals Council had no occasion to reach the ALJ’s
determination that Cristina’s impairment did not begin before
she turned 22. See 20 C.F.R. § 404.1520(a)(4) (specifying
steps for determining whether claimant is “disabled”).
Under the Social Security Administration’s regulations,
the Appeals Council decision represented the agency’s final
decision on Cristina’s claim. See § 404.981 (“The Appeals
Council’s decision . . . is binding unless you or another party
file an action in Federal district court . . . .”).
The Rossellos sought review of the Social Security
Administration’s decision in U.S. District Court under 42
U.S.C. § 405(g). The Rossellos and the agency filed cross-
motions for summary reversal and affirmance of the decision.
The District Court ultimately affirmed the agency’s decision.
Rossello v. Barnhart, 473 F. Supp. 2d 72 (D.D.C. 2007). The
District Court found “substantial evidence to support” the
Appeals Council’s conclusion that Cristina had engaged in
substantial gainful activity, that the contrary evidence
submitted by the Rossellos “was limited in nature,” and that
“nothing indicated that Ms. Rossello’s earnings were
subsidized or that her work conditions were particularly
unique.” Id. at 75.
The Rossellos appealed to this Court. We have
jurisdiction under 28 U.S.C. § 1291; we review the District
Court’s judgment de novo and consider whether the Social
8
Security Administration’s final decision is “based on
substantial evidence in the record and correctly applies the
relevant legal standards.” Butler v. Barnhart, 353 F.3d 992,
999 (D.C. Cir. 2004); see also 42 U.S.C. § 405(g).
II
The Rossellos argue that the record does not contain
substantial evidence to justify the Appeals Council’s
conclusion that Cristina engaged in substantial gainful activity
in 1986 and 1987. We agree with the Rossellos.
Substantial-evidence review is highly deferential to the
agency fact-finder, requiring only “such relevant evidence as
a reasonable mind might accept as adequate to support a
conclusion.” Pierce v. Underwood, 487 U.S. 552, 565 (1988)
(internal quotation marks omitted). Reversal of an agency
decision under that standard is rare. But this is one of those
rare cases. Even under the deferential, “substantial-evidence”
standard of review, the Appeals Council’s decision does not
pass muster.
The Appeals Council initially informed the Rossellos that
it had obtained Cristina’s earnings record and was prepared to
rule that she had not been continuously disabled since turning
22 because her average monthly earnings in 1986 and 1987
were greater than $300, thereby triggering a presumption that
she had engaged in substantial gainful activity. See 20 C.F.R.
§ 404.1574(b)(2)(i) & tbl.1 (monthly earnings above $300
“show that you engaged in substantial gainful activity”). In
response, the Rossellos submitted a letter and affidavits
describing Cristina’s work activity in 1986 and 1987. They
submitted this evidence to demonstrate that Cristina’s average
monthly earnings of $334.42 in 1986 and $587.04 in 1987
were “subsidized” and that her unsubsidized earnings did not
indicate substantial gainful activity.
9
The Social Security Administration’s regulations provide
that earnings are subsidized if the “true value” of the work,
“when compared with the same or similar work done by
unimpaired persons, is less than the actual amount of
earnings.” § 404.1574(a)(2); see also id. (“For example,
when a person with a serious impairment does simple tasks
under close and continuous supervision, our determination of
whether that person has done substantial gainful activity will
not be based only on the amount of the wages paid.”).
Several circumstances “indicate the strong possibility of a
subsidy,” including when “[m]ental impairment is involved,”
when “the employee receives unusual help from others in
doing the work,” or when there “appears to be a marked
discrepancy between the amount of pay and the value of the
services.” SSR 83-33, Titles II and XVI: Determining
Whether Work is Substantial Gainful Activity–Employees,
1983 WL 31255, at *4 (Soc. Sec. Admin. Nov. 30, 1982).
Contrary to the conclusion of the Appeals Council that
there was “no evidence” of a subsidy, the evidence
indisputably establishes that Cristina’s work for her uncle in
1986 and 1987 – which accounts for 82 percent of her
earnings during those years – was subsidized under the Social
Security Administration’s regulations. Cristina’s work
involved simple tasks performed under close supervision by
her family. See Affidavit of Jorge Rossello (June 16, 2000),
J.A. 158 (“she was not productive and performed only basic
tasks,” such as “stuffing envelopes,” in “a sheltered
environment where she could be supervised all the time”).
The evidence also shows that Cristina obtained the job
through the kindness of her family and not based on merit.
See id. (“had she not been my niece, we would not have hired
her because of [her] mental disability”); see also Letter from
Joaquin Rossello to Social Security Administration (July 18,
2000), J.A. 161 (Cristina’s work “provided her with a
10
sheltered environment”). And Cristina’s uncle was
“President,” “part owner,” and “closely involved in [the]
management” of the employer that accounted for 61 percent
of Cristina’s $334 monthly earnings in 1986 and 94 percent of
her $587 monthly earnings in 1987. Affidavit of Jorge
Rossello (June 16, 2000), J.A. 157.
The Appeals Council cited no evidence to undermine the
only conclusion that the record permits – namely, that
Cristina’s earnings were subsidized.
If, as required by Social Security regulations, the Appeals
Council had subtracted the amount of the subsidy from
Cristina’s earnings in those years, it presumably would have
concluded that her average monthly earnings fell below the
$300 threshold that triggers a presumption of substantial
gainful activity. Indeed, because almost all of Cristina’s
earnings appear to have been subsidized to some degree, the
Appeals Council presumably would have concluded that
Cristina’s unsubsidized earnings fell below the $190 threshold
and thus triggered a presumption that she did not engage in
substantial gainful activity. See SSR 83-33, 1983 WL 31255,
at *2.1
1
The remainder of Cristina’s earnings in 1986 came from her
work at a hotel where her sister Marta was employed. The
evidence suggests that Cristina’s earnings there may also have been
subsidized. Marta obtained the job for Cristina; Cristina’s sole,
“very simple” duty was to distribute pool towels to hotel guests;
and Marta “was able to directly and personally supervise” her
sister. Affidavit of Marta Rossello (July 12, 2000), J.A. 155. The
remainder of Cristina’s earnings in 1987 came from work for a
temporary placement agency.
11
We therefore agree with the Rossellos that the Social
Security Administration’s decision is not supported by
substantial evidence.
The remaining question is whether, as the Rossellos
contend, we should reverse the decision outright and hold,
based on the record before us, that Cristina is entitled to
childhood disability benefits. Section 405 of Title 42
expressly provides that a district court may reverse the Social
Security Administration’s decision rather than remand it for
further proceedings. See § 405(g) (“The court shall have
power to enter, upon the pleadings and transcript of the
record, a judgment affirming, modifying, or reversing the
decision of the Commissioner of Social Security, with or
without remanding the cause for a rehearing.”).
But § 405(g) also provides that judicial review is limited
to the “final decision of the Commissioner.” Id. (emphasis
added). In this case, that “final decision” is the Appeals
Council decision. See 20 C.F.R. §§ 404.981, 404.955(a).
And the Appeals Council rested the denial of benefits on a
single ground: its conclusion that Cristina engaged in
substantial gainful activity since turning 22. We have
concluded the Appeals Council erred, but that is not the end
of the case. At a minimum, the Appeals Council still has to
consider the Rossellos’ appeal from the ALJ’s conclusion that
there was insufficient evidence of Cristina’s mental
impairment before age 22. See SL Communications, Inc. v.
FCC, 168 F.3d 1354, 1357 (D.C. Cir. 1999) (court has “no
authority to consider” intermediate, ALJ finding that was not
necessary to agency’s final decision); cf. SEC v. Chenery
Corp., 332 U.S. 194, 196 (1947) (“[A] reviewing court . . .
must judge the propriety of [agency] action solely by the
grounds invoked by the agency.”); Vance v. Heckler, 757 F.2d
1324, 1325 (D.C. Cir. 1985) (reversing and directing that
12
Social Security benefits be awarded where agency decision on
“sole issue in the case” was not supported by substantial
evidence).
* * *
As a result of bureaucratic delays, the Rossellos’ case has
dragged through the Social Security Administration and the
courts for more than 15 years. We reverse the District Court’s
judgment and direct it to promptly remand the case to the
Social Security Administration for the agency to
expeditiously resolve the Rossellos’ claim for childhood
disability benefits on behalf of Cristina.
So ordered.