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Evans v. Colvin

United States District Court, D. Oregon

December 11, 2017

DAVID GUY EVANS, Plaintiff,
v.
CAROLYN W. COLVIN, Commissioner of Social Security, Defendant.

          OPINION AND ORDER

          STACIE F. BECKERMAN, UNITED STATES MAGISTRATE JUDGE.

         This matter comes before the Court on David Guy Evans' (“Plaintiff”) application pursuant to the Equal Access to Justice Act (“EAJA”), 28 U.S.C. § 2412(d), for reimbursement of attorney's fees he incurred in litigating his case. The Commissioner of the Social Security Administration (“Commissioner”) opposes Plaintiff's application on the ground that her litigation position was “substantially justified, ” a finding which would preclude a fee award under the EAJA. See Decker v. Berryhill, 856 F.3d 659, 661 (9th Cir. 2017); 28 U.S.C. § 2412(d)(1)(A). For the reasons that follow, the Court grants Plaintiff's application for EAJA fees.

         BACKGROUND

         For many years, Plaintiff received disability insurance benefits under Title II of the Social Security Act, because the Social Security Administration (“SSA”) found that Plaintiff met the criteria for blindness. In October 2013, the SSA determined that Plaintiff's eligibility for disability benefits “ceased effective October 1, 2004, which was the first month in which [Plaintiff] performed substantial gainful activity . . . after the completion of [a] trial work period.” (Tr. 8.) In February 2014, Plaintiff applied for reinstatement of his disability insurance benefits and informed the SSA that he was no longer engaged in substantial gainful activity. (Tr. 8, 257.)

         In August 2014, the SSA sent Plaintiff a letter explaining that he was not entitled to reinstatement of his disability insurance benefits because he owned, and oversaw the operation of, a medical marijuana dispensary, and because Plaintiff's “work worth” (i.e., how much an employer would pay Plaintiff for performing the same type of managerial activities on behalf of a different business) exceeded the substantial gainful activity threshold for blind individuals. (Tr. 144-45.)

         In August 2015, an Administrative Law Judge (“ALJ”) issued a decision that addressed Plaintiff's application for reinstatement of his disability benefits (hereinafter, “the reinstatement decision”). (Tr. 257-59.) In his reinstatement decision, the ALJ addressed whether Plaintiff was engaging in substantial gainful activity and whether his request for reinstatement was filed within five years “from the month benefits stopped.” (Tr. 258.) The ALJ found that Plaintiff was engaged in substantial gainful activity on February 24, 2014, the day he filed a request for reinstatement; Plaintiff executed an agreement to sell his medical marijuana business on March 24, 2015, and thus was no longer engaged in substantial gainful activity as of that date; and Plaintiff brought his request for reinstatement within five years of the “agency's [October 2013] decision to stop benefits.” (Tr. 259.) Accordingly, the ALJ determined that Plaintiff became eligible for reinstatement on March 24, 2015, the day he stopped engaging in substantial gainful activity.

         In July 2016, the Social Security Appeals Council issued a decision declining to adopt the ALJ's reinstatement decision. The Appeals Council concluded that the ALJ erred in finding that Plaintiff was eligible for reinstatement as of March 24, 2015, because 20 C.F.R. § 404.1592d(d)(1) provides that a request for reinstatement “must be filed within the consecutive [sixty]-month period that begins with the month in which entitlement is terminated due to the performance of [substantial gainful activity].” (Tr. 9.) The Appeals Council went on to explain that: (1) January 2010 was “the last month” in which Plaintiff could have requested reinstatement under 20 C.F.R. § 404.1592d(d)(1), even though the SSA did not terminate Plaintiff's disability insurance benefits until October 2013; (2) Plaintiff's request was filed on February 24, 2014, several years after the January 2010 cut-off date; (3) the ALJ should have used January 2010 instead of October 2013 as “the controlling date” for assessing whether Plaintiff's request for reinstatement was filed within the sixty-month period; and (4) Plaintiff was not eligible for reinstatement of his disability insurance benefits in February 2014, because he was engaged in substantial activity at that time (i.e., since Plaintiff's “countable worth of work operating his business was over the [substantial gainful activity] threshold amounts”) and, therefore, good cause did not exist to excuse Plaintiff's untimely request for reinstatement of his benefits. (Tr. 8-9.)

         In August 2016, Plaintiff filed suit in federal court challenging the Appeals Council's decision.

         In July 2017, the Court determined that the denial of Plaintiff's request for reinstatement was based on harmful legal error. In so concluding, the Court observed that the Commissioner acknowledged that she can excuse the untimely filing of an application of reinstatement based on a finding of good cause, and that in finding an absence of good cause, the Appeals Council relied on the fact that Plaintiff's “countable worth of work operating his business was over the [substantial gainful activity] threshold amounts.” Evans v. Berryhill, No. 6:16-cv-01692-SB, 2017 WL 3238236, at *5-6 (D. Or. July 31, 2017). The Court also observed that the “worth of work” test is one of three tests used to determine whether a self-employed claimant has engaged in substantial activity; however, Social Security Ruling (“SSR”) 83-34 makes clear that “[t]he self-employment activity of blind persons in 1978 or later . . . should not be evaluated in terms of the test[] of . . . worth of work[.]” Id. at *6 (quoting SSR 83-84, 1983 WL 31256, at *10). The Court went on to note that the Commissioner did not dispute Plaintiff's claim that the Appeals Council erred by relying on the “worth of work” test in finding an absence of good cause; rather, the Commissioner argued that the error was harmless because the Appeals Council would have reached the same result based on the use of the permissive terms “can” and “may” in 20 C.F.R §§ 404.911(b) and 404.1592d(d)(1) and the SSA's Program Operations Manual System (“POMS”). Id.; see also 20 C.F.R. § 404.911(b) (setting forth a nonexclusive list of “examples of circumstances where good cause may exist”); 20 C.F.R. § 404.1592d(d)(1) (“If we receive your request after the 60-month period we can grant you an extension if we determine you had good cause under the standards explained in § 404.911 for not filing the request timely.”); POMS DI 13050.010A.2, available at https://secure.ssa.gov/apps10/poms.nsf/lnx/0413050010 (last visited Dec. 11, 2017) (stating that “[i]f the reason(s) shows that the individual has good cause . . ., then an extension of time for requesting [reinstatement] can be given, ” and providing an example of good cause that appears applicable here).

         Ultimately, the Court rejected the Commissioner's argument that the Appeals Council's error was harmless, noting, among other things, that (1) “[n]owhere in its decision did the Appeals Council state that it was denying [Plaintiff's] request for reinstatement simply because it could, ” (2) “in reviewing an agency action, this Court is constrained to review only the reasons the agency gave for its decision, not the post hoc justifications advanced on appeal, ” and (3) “[a]bsent a more persuasive argument to the contrary, the Court finds that the Commissioner committed legal error in denying [Plaintiff's] request for reinstatement, because SSR 83-84 states that the self-employment activity of a blind individual should not be evaluated under the worth of work test.” Evans, 2017 WL 3238236, at *6. The Court also noted that Plaintiff appeared to advance facially legitimate reasons for failing timely to file his request for reinstatement of his benefits, but the Appeals Council never reached the merits of those reasons because it erroneously relied on the worth of work test in denying benefits to a blind individual. Id. at *6-7; cf. Dexter v. Colvin, 731 F.3d 977, 981-82 (9th Cir. 2013) (“[I]f a claimant provides a facially legitimate reason that constitutes ‘good cause' under the Commissioner's regulations, see 20 C.F.R. § 404.911(b), then due process requires that the [agency] address it.”) (footnote omitted).

         The Court entered judgment on July 31, 2017, remanding for further proceedings. The Commissioner did not appeal the decision. Plaintiff then moved for EAJA attorney's fees, which the Commissioner opposed.

         ANALYSIS

         I. ...


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