Ferris v. Commissioner of Social Security

Filing 36

MEMORANDUM OPINION AND ORDER Signed by Magistrate Judge Regina S. Edwards on 9/8/2020. The final decision of the Commissioner is AFFIRMED. Plaintiff's Motion for Summary Judgment (DN 20 ) is DENIED. This is a final and appealable Order and there is no just cause for delay. cc: Counsel (SMJ)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF KENTUCKY
LOUISVILLE DIVISION
CIVIL ACTION NO. 3:18-CV-00769-RSE
MARK FERRIS

PLAINTIFF

VS.

COMMISSIONER OF SOCIAL SECURITY
Andrew Saul1

DEFENDANT

MEMORANDUM OPINION AND ORDER
Plaintiff, Mark Ferris (“Ferris”), seeks judicial review under 42 U.S.C. § 405(g) of a final
adverse decision by Defendant, Commissioner of Social Security (“Commissioner”), to reduce the
amount of his retirement insurance benefit in accordance with Section 215 of the Social Security
Act, otherwise known as the “Windfall Elimination Provision.” See generally (DN 1); see also
(DN 20). Both Ferris (DN 20-2) and the Commissioner (DN 23) filed a Fact and Law Summary.
Fully briefed, this matter is ripe for adjudication.
Pursuant to 28 U.S.C. § 636(c) and Fed. R. Civ. P. 73, the parties voluntarily consented to
the undersigned United States Magistrate Judge conducting all further proceedings in this case,
including issuance of a memorandum opinion and entry of judgment, with direct review by the
Sixth Circuit Court of Appeals in the event an appeal is filed. (DN 18). For the reasons set forth
herein, the final decision of the Commissioner is AFFIRMED, and Ferris’ Motion for Summary
Judgment (DN 20) is DENIED.

1

Andrew Saul is now the Commissioner of Social Security and is substituted as the defendant pursuant to Rule
25(d) of the Federal Rules of Civil Procedure.

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I. BACKGROUND
a. Statement of Facts
Ferris was employed as a dual status technician with the Kentucky Air National Guard
from March 2, 1975 until April 12, 2007. Tr. 76. As a dual status technician, Ferris was required
to retain membership in the National Guard. Id. If Ferris separated from the National Guard, he
would have lost his position as a dual status technician. Id. Ferris served as a member in the
National Guard from 1978 to 2007. Tr. 28.
Congress created the position of dual status technician under the National Guard
Technician Act of 1968. Pub. L. No. 90-486, § 2(1), 82 Stat. 755, 755-56 (codified at 32 U.S.C. §
709). By statute, a National Guard dual status technician “is a Federal civilian employee” who “is
assigned to a civilian position as a technician” while maintaining membership in the National
Guard. 10 U.S.C. § 10216(a)(1); see also 32 U.S.C. § 709(e) (providing that National Guard dual
status technicians are employees of both the United States and either the Department of the Army
or the Department of the Air Force). These technicians are responsible for “the organizing,
administering, instructing, or training of the National Guard” or “the maintenance and repair of
supplies issued to the National Guard or the armed forces.” 32 U.S.C. § 709(a)(1)–(2); accord 10
U.S.C. § 10216(a)(1)(C). The job also requires that dual status technicians satisfy various militaryservice requirements, including participating in inactive-duty training, wearing a uniform,
complying with military standards of conduct, meeting physical requirements, and they must be
available for active deployment. See Perpich v. Department of Defense, 496 U.S. 334, 348 (1990)
(explaining that all National Guard members effectively “must keep three hats in their closets—a
civilian hat, a state militia hat, and an army hat—only one of which is worn at any particular
time.”).

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Dual status technicians hired before 1984 do not pay Social Security taxes on wages they
earn as a dual status technician. See Petersen v. Astrue, 633 F.3d 633, 634 (8th Cir. 2011).
Additionally, dual status technicians hired before 1984 qualify for a civil service pension under
the Civil Service Retirement System (“CSRS”). Id. The CSRS pension is based upon civil service
wages that were exempt from Social Security taxes. Id.
In June 2008, Ferris started receiving a pension from the Office of Personnel Management
(“OPM”) under the CSRS. Tr. 32; see also (DN 20-1 at p. 5). He also receives another pension
from the Defense Financing and Accounting Service related to his National Guard membership.
(Id.).
b. Procedural History
In August 2014, Ferris applied for and subsequently received retirement insurance benefits
under Title II of the Social Security Act. Tr. 15-17. In January 2015, however, after learning from
the OPM that Ferris was also receiving a pension under the CSRS, the Commissioner recalculated
Ferris’ benefit payment applying the “Windfall Elimination Provision” (“WEP”). Tr. 20-21. The
Commissioner determined that Ferris was overpaid $1,547.00 prior to its knowledge of his Civil
Service annuity, and Ferris’ monthly Social Security retirement benefit payment was reduced from
$820.00 to $468.90. Tr. 17, 24-25.
Ferris filed a Request for Reconsideration on April 8, 2015. Tr. 29-30. On April 27, 2015,
the Commissioner denied Ferris’ request and affirmed its initial determination to apply the WEP
to his benefit calculation. Tr. 31-33. Ferris then requested a hearing before an Administrative Law
Judge (“ALJ”). Tr. 34. ALJ Daniel A. Traver conducted a hearing on September 19, 2016. Tr. 92104. On January 31, 2017, the ALJ issued a decision upholding the Commissioner’s calculation
and declining to apply the uniformed services exception to the WEP. Tr. 12-14. In his decision,

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the ALJ concluded that he could not grant Ferris the relief he sought because the ALJ was bound
by AR 12-1(8), and Ferris did not qualify for an exception to the WEP under that ruling because
he resided in Kentucky, outside the Eighth Circuit. Tr. 14.
Ferris requested the Appeals Council review the ALJ’s decision. Tr. 7-8. On September
28, 2018, the Appeals Council denied Ferris’ request to review the ALJ decision, making the ALJ
decision the final decision of the Commissioner subject to judicial review under 42 U.S.C. §
405(g). Tr. 3.
On November 20, 2018, Ferris filed his Complaint and initiated the instant action for
judicial review. (DN 1). The Commissioner subsequently filed its Fact and Law Summary, (DN
23), as well as a Motion to hold this case in abeyance and stay all proceedings pending the Sixth
Circuit’s decision in David Babcock v. Commissioner of Social Security, Case No. 19-1687. See
(DN 24). In support of its Motion, the Commissioner explained that the issue in Babcock, whether
Plaintiff-Appellant’s service as a dual status military technician constitutes “service as a member
of a uniformed service” for purposes of the Windfall Elimination Provision Exception in 42 U.S.C.
§415, was akin to Ferris’ claim to the extent that the forthcoming decision in Babcock could
effectively decide the merits of this case. (Id.); see also ECF No. 8 (“Civil Appeal Statement of
Parties and Issues”), Babcock v. Commissioner of Social Security, Case No. 19-1687 (6th Cir.).
Because the Sixth Circuit’s decision in Babcock had the potential to be completely dispositive of
this action, the undersigned determined that judicial economy favored a limited delay in awaiting
the Babcock decision. (DN 26). The Court stayed this matter pending a written opinion on the
merits in Babcock v. Commissioner of Social Security, Case No. 19-1687.
On May 11, 2020, the Sixth Circuit issued an opinion in Babcock. Babcock v. Soc. Sec.
Comm'r, 959 F.3d 210 (6th Cir. 2020). The Sixth Circuit affirmed the decision from the Western

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District of Michigan, and held that retirement benefits associated with work as a dual status
technician for the National Guard did not constitute “payment based wholly on service as a
member of a uniformed service.” Id. It held “that the uniformed services exception does not apply
to Babcock’s CSRS pension,” and thus his CSRS pension payment was subject to the Windfall
Elimination Provision. Id.
II. APPLICABLE LAW AND REGULATIONS
a. The Windfall Elimination Provision
The “Windfall Elimination Provision” (“WEP”) reduces the benefits received by certain
individuals who also receive pensions for work that did not require them to pay social security
taxes. See 42 U.S.C. § 415(a)(7); Petersen, 633 F.3d at 634. “‘The WEP was enacted in 1983 to
eliminate the unintended benefits windfall that occurs when workers who split their career between
covered employment (required to pay Social Security taxes) and non-covered employment
(exempt from Social Security taxes).’” Parker v. Colvin, 640 Fed. App’x 726, 728 (10th Cir. 2016)
(quoting Petersen, 633 F.3d at 634); see also Holmes v. Commissioner, No. 96-4088, 1997 WL
570398, at *2 (6th Cir. Sept. 11, 1997) (“[T]he WEP was enacted to eliminate a windfall to
individuals, such as [plaintiff], who are eligible to receive pensions based on both covered and
noncovered employment, and the provision has been upheld against challenges under the Fourth
and Fifth Amendments because it is rationally related to the achievement of that legitimate goal.”).
The WEP directed the Social Security Administration to apply a modified formula for
determining an individual’s Social Security retirement benefit, when the individual received a
pension based upon non-covered employment. 42 U.S.C. § 415(a)(7)(A). The modified formula
would operate to reduce the Social Security retirement benefit of a person who received a pension
based upon non-covered employment. 42 U.S.C. § 415(a)(7)(B).
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b. The Uniformed Services Exception
There are several exceptions to the WEP. One such exception, the uniformed services
exception set forth at 42 U.S.C. § 415(a)(7)(A)(III), is relevant here. The uniformed services
exception states that pension payments derived from non-covered employment are not subject to
the WEP if the payments are “based wholly on service as a member of a uniformed service (as
defined in [42 U.S.C. § 410(m)]).” 42 U.S.C. § 415(a)(7)(A)(III). Section 410(m) provides that a
“[m]ember of a uniformed service” includes, among others, “any person appointed, enlisted, or
inducted in a component of the . . . Army . . . (including a reserve component as defined in [38
U.S.C. § 101(27)]).” And “reserve component” is defined to include the “Army National Guard of
the United States.” 38 U.S.C. § 101(27)(F).
III. STANDARD OF REVIEW
The function of this court is to determine whether the Commissioner’s final decision is
supported by substantial evidence and whether the Commissioner correctly applied the law. See
Elam ex rel. Golay v. Commissioner, 348 F.3d 124, 125 (6th Cir. 2003); Buxton v. Halter, 246
F.3d 762, 772 (6th Cir. 2001). Substantial evidence exists “when a reasonable mind could accept
the evidence as adequate to support the challenged conclusion, even if that evidence could support
a decision the other way.” Cotton v. Sullivan, 2 F.3d 692, 695 (6th Cir. 1993). The Court reviews
the Commissioner’s legal conclusions de novo. See Grand Trunk W. R.R. Co. v. United States
Dep't of Labor, 875 F.3d 821, 824 (6th Cir. 2017).
IV. ANALYSIS
The single issue in this case is whether Ferris earned his dual status technician pension
“based wholly on service as a member of a uniformed service.” 42 U.S.C. § 415(a)(7)(A). Ferris
contends the dual status technician position is “so irreducibly military in nature” that the uniformed
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services exception applies to insulate his Social Security retirement benefits from the WEP
reduction. (DN 20-1 at p. 6-15). By this, Ferris means that his civil service pension is based wholly
on his service in the National Guard because, among other things, his civilian position was
inseparable from his military duties. (Id.). The Commissioner claims that Ferris’ work as a
National Guard dual status technician was not subject to Social Security taxes, and the civil service
annuity he receives for that work is not a “payment based wholly on service as a member of a
uniformed service” under 42 U.S.C. § 415(a)(7)(A)(ii)(III). (DN 23). Therefore, the Commissioner
maintains that the uniformed services exception to the WEP does not apply and its final decision
upholding the reduction of Ferris’ Social Security retirement benefit amount should be affirmed.
(Id. at p. 11-21).
At the time Ferris filed his Complaint, two Courts of Appeals had addressed the question
of whether the WEP applies to dual status technicians, and reached opposite conclusions. In
Peterson v. Astrue, 633 F.3d 633 (8th Cir. 2011), the Eighth Circuit held that the uniformed
services exception applied unambiguously to a civil service pension paid to a dual status
technician. Petersen, 633 F.3d at 637. The Eighth Circuit reached this conclusion based upon its
finding that Petersen’s work as a dual status technician was essentially military in nature. Id. The
court reasoned that because a dual status technician must maintain his or her membership in the
National Guard and the military grade for his or her position and is required by statute to wear the
grade-appropriate uniform while on duty, a dual status technician performs work “as a member of
a uniformed service.” Id.
After the Eighth Circuit issued its opinion in Peterson, the Social Security Administration
(“SSA”) issued Acquiescence Ruling (“AR”) 12-1(8) to explain how it would apply the WEP and
the uniformed services exception for claimants residing within the Eighth Circuit. See 77 Fed. Reg.

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51,842 (Aug. 27, 2012). AR 12-1(8) further explains that for all applicants outside of the Eighth
Circuit, the SSA will adhere to its policy that the WEP applies to persons who were employed in
a noncovered civilian capacity as a National Guard dual status technician.
In Martin v. Social Security Administration, Commissioner, 903 F.3d 1154 (11th Cir.
2018), the Eleventh Circuit disagreed with Peterson. Focusing on the word “wholly” in the
uniformed services exception, the Eleventh Circuit observed that dual status technicians perform
much of their work as Federal civilian employees. Id. a 1165. The Court thus held that National
Guard dual status technicians are not covered by the exception but rather are subject to the WEP
reduction.
In Babcock, the Sixth Circuit agreed with the outcome reached by the Eleventh Circuit, but
on different grounds. See Babcock v. Soc. Sec. Comm'r, 959 F.3d 210 (6th Cir. 2020). The Court
explained that the uniformed services exception, “by its plain text,” is “cabined to payments that
are based exclusively on employment in the capacity or role of a uniformed-services member.” Id.
at 216. Because dual status technicians receive payments not “based exclusively on employment”
performed in a military capacity, the Court held that the exception did not apply. Id. at 217. The
Tenth Circuit agreed with the reasoning and outcome reached by the Sixth. See Kientz v. Comm'r,
SSA, 954 F.3d 1277, 1285–86 (10th Cir. 2020).
The Sixth Circuit’s decision in Babcock is binding on this Court. Ferris’ work as a National
Guard dual status technician was not subject to Social Security taxes, and the civil service annuity
he receives for that work is not a “payment based wholly on service as a member of a uniformed
service” under 42 U.S.C. § 415(a)(7)(A)(ii)(III). Therefore, Ferris’ dual status technician
employment is not wholly “service as a member of a uniformed service” under the uniformed
services exception. See 42 U.S.C. § 415(a)(7)(A)(III); see also Martin, 903 F.3d at 1166 (“[E]ven

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if dual status technician employment is essentially military, it is not subject to the uniformed
services exception if it is not wholly military in nature.”) (emphasis in original). Accordingly, the
undersigned finds that the WEP applies to Ferris’ monthly Social Security retirement benefit
payment, and he is not subject to the uniformed services exception.
V. ORDER
For the above-stated reasons, and the Court being otherwise sufficiently advised, the Court
finds the Commissioner’s decision is supported by substantial evidence in the record and complies
with the applicable regulations. IT IS THEREFORE ORDERED that the final decision of the
Commissioner is AFFIRMED.
IT IS FURTHER ORDERED that Plaintiff’s Motion for Summary Judgment (DN 20) is
DENIED.
This is a final and appealable Order and there is no just cause for delay.

September 8, 2020

Copies:

Counsel of Record

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