Axtman v. Colvin

Filing 14

ORDER re 3 Complaint - by Judge J Richard Creatura. The Court ORDERS that this matter be AFFIRMED pursuant to sentence four of 42 U.S.C. § 405(g). Nancy A. Berryhill (Acting Commissioner of Social Security) added. Carolyn W. Colvin (Acting Commissioner of Social Security ) terminated. (SH)

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT TACOMA

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CALVIN AXTMAN,

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Plaintiff,

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CASE NO. 3:16-cv-05780 JRC
ORDER ON PLAINTIFF’S
COMPLAINT

v.
NANCY A. BERRYHILL, Acting
Commissioner of the Social Security
Administration, 1

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Defendant.
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This Court has jurisdiction pursuant to 28 U.S.C. § 636(c), Fed. R. Civ. P. 73 and

18 Local Magistrate Judge Rule MJR 13 (see also Notice of Initial Assignment to a U.S.
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Nancy A. Berryhill is now the Acting Commissioner of Social Security. Pursuant to
Rule 25(d) of the Federal Rules of Civil Procedure, Nancy A. Berryhill is substituted for Acting
23 Commissioner Carolyn W. Colvin as the defendant in this suit. No further action needs to be
taken, pursuant to the last sentence of section 205(g) of the Social Security Act, 42 U.S.C. §
24 405(g).
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ORDER ON PLAINTIFF’S COMPLAINT - 1

1 Magistrate Judge and Consent Form, Dkt. 5; Consent to Proceed Before a United States
2 Magistrate Judge, Dkt. 7). This matter has been fully briefed. See Dkt. 11, 12, 13.
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Plaintiff was awarded Supplement Security Income (“SSI”) benefits after a finding
that he was disabled as of September 28, 2012. AR. 13, 29. That finding was not
disturbed by the ALJ in this matter. AR. 13. The only question presented in this matter is

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whether he also is eligible for Disability Insurance Benefits (“DIB”) under Title II, for
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which he needs to establish that he became disabled while he was insured for those
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benefits. Id. The ALJ found that plaintiff “last met the insured status requirement of the
Social Security Act on September 30, 2002.” AR. 15.
Plaintiff argues herein that such date is incorrect because the ALJ failed to develop

12 the record on plaintiff’s other earnings not present in the Commissioner’s earnings
13 records. However, the Commissioner’s earnings records are conclusive regarding earned
14 coverage of disability insurance, absent timely filed tax returns, and plaintiff only
15 corrected four years of returns, with only two of them being timely filed, at most. Even
16 adding in the most possible, eight additional quarters for those two years of timely
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updated tax returns, plaintiff still has not established an earlier date last insured for
disability insurance.

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Therefore, after considering and reviewing the record, the Court concludes that the
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ALJ properly derived plaintiff’s date last insured and did not err by failing to develop the
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record. The ALJ therefore also properly found that plaintiff has not established disability
prior to his date last insured. Hence, this matter is affirmed pursuant to sentence four of

24 42 U.S.C. § 405(g).

ORDER ON PLAINTIFF’S COMPLAINT - 2

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BACKGROUND

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Plaintiff, CALVIN AXTMAN, was born in 1959 and was 43 years old on the

3 alleged date of disability onset of September 1, 2002. See AR. 153-59. Plaintiff graduated
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from high school and completed a four-year apprenticeship for carpentry. AR. 33-34 He
worked as a union carpenter and then opened his own business. AR. 34. The testimony

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from the hearing suggests that plaintiff worked as a carpenter contractor from 2003 until
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2007, when his back started to give him problems with his work. See AR. 34.
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According to the ALJ, “through the date last insured, there were no medical signs
or laboratory findings to substantiate the existence of a medically determinable

11 impairment (20 CFR 404.1520(c))” for the plaintiff. AR. 16.
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At the time of the hearing, plaintiff was living in a single-wide trailer. AR. 38.
PROCEDURAL HISTORY
Plaintiff’s application for Supplemental Security Income (“SSI”) benefits pursuant

15 to 42 U.S.C. § 1382(a) (Title XVI) of the Social Security Act was granted, with a
16 disability onset date of September 28, 2012. AR. 13. Plaintiff’s application for disability
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insurance benefits (“DIB”) pursuant to 42 U.S.C. § 423 (Title II) of the Social Security
Act was denied initially and following reconsideration. See AR. 55, 60. Plaintiff’s

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requested hearing was held before Administrative Law Judge Gordon W. Griggs (“the
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ALJ”) on September 30, 2014. See AR. 24-54. On October 27, 2014, the ALJ issued a
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written decision in which the ALJ concluded that plaintiff was not disabled pursuant to
the Social Security Act prior to his date last insured for DIB. See AR. 10-23.

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ORDER ON PLAINTIFF’S COMPLAINT - 3

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In plaintiff’s Opening Brief, plaintiff raises the following issue: Whether or not

2 the Commissioner erred in failing to develop the record regarding plaintiff’s date last
3 insured. See Dkt. 11, p. 1.
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STANDARD OF REVIEW
Pursuant to 42 U.S.C. § 405(g), this Court may set aside the Commissioner's

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denial of social security benefits if the ALJ's findings are based on legal error or not
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supported by substantial evidence in the record as a whole. Bayliss v. Barnhart, 427 F.3d
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1211, 1214 n.1 (9th Cir. 2005) (citing Tidwell v. Apfel, 161 F.3d 599, 601 (9th Cir.
1999)).
DISCUSSION

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Did the Commissioner err in failing to develop the record regarding
plaintiff’s date last insured?

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A determination of a claimant’s date last insured is relevant only for DIB, and not
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for SSI. It requires an evaluation of a claimant’s earnings over time. One way for a
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claimant to demonstrate insured status “for purposes of establishing a period of disability
or becoming entitled to disability insurance benefits [‘DIB’]” is by satisfying Rule I:
Rule I--You must meet the 20/40 requirement. You are insured in
a quarter for purposes of establishing a period of disability or becoming
entitled to disability insurance benefits if in that quarter--(1) You are
fully insured; and
(2) You have at least 20 QCs in the 40-quarter period (see
paragraph (f) of this section) ending with that quarter.

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20 C.F.R. § 404.130(b).
“QCs” or “quarters of coverage” require a certain amount of wages per year,

24 allowing for up to four QCs to be earned per year. See

ORDER ON PLAINTIFF’S COMPLAINT - 4

1 https://www.ssa.gov/oact/cola/QC.html (last visited April 6, 2017). For example,
2 earnings of $890 or more in the year of 2003 will afford an individual one QC for 2003 -3 twice that will earn two QCs. See id.
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In addition, regarding earnings per year, according to the Social Security Act:
the absence of an entry in the Commissioner's records as to the selfemployment income alleged to have been derived by an individual in
such year shall be conclusive for the purposes of this title [42 USCS §§
401 et seq.] that no such alleged self-employment income was derived
by such individual in such year unless it is shown that he filed a tax
return of his self-employment income for such year before the
expiration of the time limitation following such year, in which case
the Commissioner of Social Security shall include in the Commissioner's
records the self-employment income of such individual for such year.

42 U.S.C. § 405(c)(4)(C) (emphases added). As noted by the Ninth Circuit, “Congress
provided in § 405(c)(4)(C) that the Commissioner’s records of self-employment income

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become conclusive after expiration of the time limitation unless the claimant filed an
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income tax return.” Chapman v. Apfel, 236 F.3d 480, 485 (9th Cir. 2000).
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In Chapman, the court was presented with a case in which the ALJ had found that
the claimant had worked for years “as an independent contractor, but did not pay Social

18 Security taxes.” Id. at 481. The ALJ had found that the claimant could not receive any
19 additional credit with wages or quarters of coverage, and that he therefore was not
20 entitled to disability insurance benefits. Id. The Ninth Circuit affirmed, relying on the
21 language of the statute and noting that the Commissioner’s records as to a claimant’s
22 Social Security earnings record are conclusive as to the amounts and timeframe of wages
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earned, id. at 482, unless a tax return of self-employment income is filed before the time

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ORDER ON PLAINTIFF’S COMPLAINT - 5

1 limit expired, id. at 483 (citing § 405(c)(4)(C)). The court affirmed the denial of DIB,
2 relying on its conclusion that “a timely filed tax return of self-employment income, not
3 just 1099 forms, is required to overcome the otherwise conclusive presumption that the
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absence of an entry of self-employment earnings means that there were no such
earnings.” Id. at 486.

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Similarly, here, plaintiff acknowledges that his reported earnings from 2003
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through 2007 allowed him to gain only three quarters of coverage of the required twenty.
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Dkt. 11, p. 4 (citing AR. 167); see also Dkt. 11, p. 3 (citing
http://www.ssa.gov/oact/cola/QC.html). Plaintiff’s work history report includes reported

11 income of $290 in 2003; $200 in 2004; $100 in 2005; nothing in 2006; and $400 in 2007.
12 AR. 176; see also AR. 172. In a subsequent work history report, plaintiff indicated that
13 he also completed some work after 2007, through at least 2010, noting that the “dates are
14 estimations.” AR. 199. These work history reports are distinct from the Commissioner’s
15 official earning records.
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Plaintiff argues that this evidence of work history reports, combined with his
testimony at the hearing, triggered the ALJ’s duty to develop the record regarding
plaintiff’s date last insured. Dkt. 11, p. 4. At his hearing, plaintiff testified that he had

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been working until he was injured in 2007, and since that time only had been able to
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work in bits and pieces, not earning enough to pay his bills. Id. (citing AR. 37-38).
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Although plaintiff contends that the ALJ erred by failing to consider the impact of
plaintiff’s income after 2003, plaintiff fails to acknowledge that the Commissioner's

24 earnings records regarding a claimant’s earnings are conclusive, and here, plaintiff’s

ORDER ON PLAINTIFF’S COMPLAINT - 6

1 official earnings records reveal earnings in 2003 ($3522), 2004 ($507), 2005 ($615), and
2 2007 ($1200), but do not reveal any earnings in 2006 or any of the years between 2008
3 and 2013. AR. 172. This gives plaintiff four out of the required twenty quarters to have
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coverage for disability insurance (three for 2003 and one for 2007, as the remaining years
do not demonstrate sufficient earnings to earn a quarter of coverage) 2. Although plaintiff

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suggests in his brief that he may have earned more money between 2003 and 2007 than
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was demonstrated in his earnings record, plaintiff does not argue that he timely submitted
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any tax returns to correct this error; thus, the Commissioner’s earnings record is
conclusive for these years – and are still insufficient. See 42 U.S.C. § 405(c)(4)(C). The

11 ALJ did not err by relying on the absence of entries in the Commissioner’s records as
12 conclusive evidence that there was no self-employment income during these periods of
13 time for which there were no entries of income. See 42 U.S.C. § 405(c)(4)(C).
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The ALJ “has an independent ‘duty to fully and fairly develop the record and to

15 assure that the claimant’s interests are considered.’” Tonapetyan v. Halter, 242 F.3d
16 1144, 1150 (9th Cir. 2001) (quoting Smolen v. Chater, 80 F.3d 1273, 1288 (9th Cir.
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1996) (quoting Brown v. Heckler, 713 F.2d 411, 443 (9th Cir. 1983) (per curiam))).
However, the ALJ's duty to supplement the record is triggered only if there is ambiguous

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evidence or if the record is inadequate to allow for proper evaluation of the evidence.
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For example, as noted previously, earnings of $890 or more in the year of 2003
will afford an individual one QC for 2003, twice that will earn two QCs, up to a
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maximum of four QCs per year. See https://www.ssa.gov/oact/cola/QC.html (last visited
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ORDER ON PLAINTIFF’S COMPLAINT - 7

1 Mayes v. Massanari, 276 F.3d 453, 459-60 (9th Cir. 2001); Tonapetyan v. Halter, 242
2 F.3d 1144, 1150 (9th Cir. 2001) (citing Smolen, supra, 80 F.3d at 1288 (other citation
3 omitted)).
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Here, the evidence was not ambiguous and the record was adequate to allow for
proper evaluation of the evidence by the ALJ. See Mayes, 276 F.3d at 459-60. Although

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it was not entirely clear how much income plaintiff actually earned after 2007, plaintiff’s
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own testimony indicated that he only had been able to work in bits and pieces and had not
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earned enough to pay his bills. See AR. 38. In addition, because the Commissioner's
records are conclusive, and they are not ambiguous, but instead demonstrate that plaintiff

11 did not have a sufficient amount of quarters of coverage earned to be eligible for
12 disability insurance beyond 2002, the record was adequate to allow for proper evaluation
13 of plaintiff’s date last insured by the ALJ. The Commissioner’s records demonstrate that
14 plaintiff did not have twenty quarters of coverage earned after 2002 to have a date last
15 insured beyond that point.
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Plaintiff also argues that the Court should rule in his favor based on the
information plaintiff submitted while his request for review was pending before the
Appeals Council. See Dkt. 11, p. 1-2. In 2014, plaintiff filed income tax returns for 2008

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through 2011, see AR. 252, but it does not appear that plaintiff’s tax returns are in the
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record. However, his statement referencing this evidence is part of the record.
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Nevertheless, this is new evidence that must be reviewed by the Court when making the
determination as to whether or not the ALJ’s decision was supported by substantial

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ORDER ON PLAINTIFF’S COMPLAINT - 8

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The Court may review new evidence presented first to the Appeals Council when

2 determining whether or not “in light of the record as a whole, the ALJ’s decision was
3 supported by substantial evidence and was free of legal error.” Taylor v. Comm’r of SSA,
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659 F.3d 1228, 1232 (9th Cir. 2011) (citing Ramirez v. Shalala, 8 F.3d 1449, 1451-54
(9th Cir. 1993)). The Ninth Circuit did not require a finding that plaintiff had good cause

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for failing to produce the new evidence earlier. See Ramirez, supra, 8 F.3d at 1451-54;
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see also Taylor, supra, 659 F.3d at 1232.
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The Ninth Circuit held that “when a claimant submits evidence for the first time to
the Appeals Council, which considers that evidence in denying review of the ALJ’s

11 decision, the new evidence is part of the administrative record, which the district court
12 must consider in determining whether [or not] the Commissioner’s decision is supported
13 by substantial evidence.” Brewes v. Comm’r of SSA, 682 F.3d 1157, 1159-60 (9th Cir.
14 2012) (emphasis added).
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Here, the new evidence consists of three pages discussing plaintiff’s tax returns for

16 the years 2008 through 2011. See Dkt. 12, p. 5 (citing AR. 4, 250-52). Plaintiff included a
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personal statement indicating that he filed his tax returns with the IRS on December 18,
2014 for 2008 through 2011. See AR. 250. Plaintiff appears to have submitted the tax

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returns to the Administration's Silverdale, Washington field office, but not to the Appeals
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Council, which is why they are not in the Administrative Record. However, defendant
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argues that “even if these tax returns showed additional self-employment income not
contained in the Commissioner's records, the new tax returns could not change the ALJ’s

24 determination about the date last insured.” Dkt. 12, p. 6. This argument is persuasive.

ORDER ON PLAINTIFF’S COMPLAINT - 9

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Defendant notes that the individual may correct his earnings record only if “the tax

2 return was filed before the three-year, three month, 15 day time limit ended.” Id. (citing
3 20 C.F.R. §§ 404.802, 404.822(b)(2)(i)). Therefore, defendant argues that if plaintiff filed
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his tax returns on December 18, 2014, as indicated in the record, only the 2011 tax return
was filed before the time limit ended. Id. (citing AR. 250). Even if plaintiff filed his tax

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returns in February, 2014, as indicated in his brief, there still would only be the 2010 and
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2011 tax returns that could be utilized in order to overcome the conclusive nature of the
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Commissioner's earnings records. That would provide plaintiff with, at most, eight
additional quarters of coverage earned, which, when combined with the four previous

11 quarters earned for the period between 2003 and 2007, still leaves plaintiff well shy of the
12 20 quarters of coverage required in the 10 year, 40 quarter period between 2002 and the
13 2012. See 20 C.F.R. §§ 404.802, 404.822(b)(2)(i).
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Therefore, even giving plaintiff every benefit of the doubt, and considering the

15 relevant new evidence referenced, plaintiff still did not overcome the conclusive nature of
16 the Commissioner's records regarding plaintiff’s earnings. The ALJ’s finding that
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plaintiff’s date last insured was in 2002 is based on substantial evidence in the record as a
whole. Thus, the ALJ’s finding that plaintiff is not entitled to disability insurance benefits

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based on his disability date in 2012 also is based on substantial evidence in the record as
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a whole.
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Even if the Court were to conclude that the ALJ erred by failing to develop the
record more thoroughly on this issue of plaintiff’s date last insured, any error would be

24 harmless.

ORDER ON PLAINTIFF’S COMPLAINT - 10

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The Ninth Circuit has “recognized that harmless error principles apply in the

2 Social Security Act context.” Molina v. Astrue, 674 F.3d 1104, 1115 (9th Cir. 2012)
3 (citing Stout v. Commissioner, Social Security Administration, 454 F.3d 1050, 1054 (9th
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Cir. 2006) (collecting cases)). Recently the Ninth Circuit reaffirmed the explanation in
Stout that “ALJ errors in social security are harmless if they are ‘inconsequential to the

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ultimate nondisability determination’ and that ‘a reviewing court cannot consider [an]
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error harmless unless it can confidently conclude that no reasonable ALJ, when fully
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crediting the testimony, could have reached a different disability determination.’” Marsh
v. Colvin, 792 F.3d 1170, 1173 (9th Cir. 2015) (citing Stout, 454 F.3d at 1055-56).
The Commissioner's earnings records are conclusive and demonstrate that plaintiff

12 earned at most four quarters of coverage between 2002 and 2007. Plaintiff does not
13 contend that he timely filed any tax returns necessitating any change in the amount of
14 quarters earned between 2002 and 2007. As noted by the Ninth Circuit, “no amount of
15 self-employment income may be included in the Commissioner’s records if a return or
16 statement is filed after the time limit.” Chapman, 236 F.3d at 483 (citing 42 U.S.C. §
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405(c)(5)(F)(i)).
Regarding the time period after 2007, plaintiff alleges that in 2014 he filed tax

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returns for 2008 through 2011, however, at most, only the 2010 and 2011 returns could
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have been filed within the three-year, three month, and 15 day time period to be
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considered timely filed. See 20 C.F.R. § 404.802. Therefore, at most, plaintiff could have
earned eight additional quarters for 2010 and 2011, to add to his five quarters earned

24 between 2002 and 2007. Therefore, even if the ALJ had developed the record further,

ORDER ON PLAINTIFF’S COMPLAINT - 11

1 plaintiff still could not have demonstrated that he earned 20 quarters between 2002 and
2 2012. No “reasonable ALJ, when fully crediting [this evidence] could have reached a
3 different disability determination.’” Marsh, 792 F.3d at 1173 (citing Stout, 454 F.3d at
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1055-56).
The Court concludes that the ALJ did not err, and that even if he did, any error is

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harmless.
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CONCLUSION
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Based on the stated reasons and the relevant record, the Court ORDERS that this
matter be AFFIRMED pursuant to sentence four of 42 U.S.C. § 405(g).

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JUDGMENT should be for defendant the case should be closed.

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Dated this 12th day of April, 2017.

A

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J. Richard Creatura
United States Magistrate Judge

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