Mary F. Reeves v. CAROLYN W. COLVIN, Commissioner of Social Security

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
MARY F. REEVES,
Plaintiff - Appellant,
v.
CAROLYN W. COLVIN, Commissioner
of Social Security,
Defendant - Appellee.
No. 11-56930
D.C. No. 2:10-cv-00259-PJW
MEMORANDUM*
Appeal from the United States District Court
for the Central District of California
Patrick J. Walsh, Magistrate Judge, Presiding
Submitted August 29, 2013 **
Pasadena, California
Before: GOULD and RAWLINSON, Circuit Judges, and HUCK, District Judge. ***
FILED
NOV 15 2013
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
* This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
** The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
*** The Honorable Paul C. Huck, District Judge for the U.S. District
Court for the Southern District of Florida, sitting by designation.

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Appellant Mary Reeves (Reeves) challenges the denial of her claim for
disability insurance benefits. She argues that the Social Security Administration
(the Agency) erred in concluding that her work at the Veterans Affairs Hospital
(VA) from 1991-1997 constituted substantial gainful activity (SGA) despite her
receipt of special accommodations. We vacate and remand.
1. If a claimant engaged in SGA during “any period” in which the
claimant alleges disability, the Agency will find that she is “not disabled.” 20
C.F.R. § 404.1571. The Agency’s “primary consideration” when evaluating
whether work constitutes SGA is “the earnings you derive from the work activity.”
20 C.F.R. § 404.1574(a)(1). Generally, if a claimant “worked for substantial
earnings,” the Agency will find her capable of SGA. Id. Because Reeves’ average
earnings from 1991-1997 exceeded the $500 average monthly threshold, see id.
404.1574(b) & Table 1, she is subject to the presumption that she engaged in SGA.
2. The presumption that Reeves engaged in SGA may be rebutted by
excluding “any income that is not directly related to [her] productivity.” Id. at §
404.1574(a)(2). Accordingly, when a claimant’s “earnings exceed the reasonable
value of the work” actually performed, the agency only considers “that part of [the
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claimant’s] pay which [was] actually earn[ed].” Id. To the extent wages are
increased by a subsidy, the amount of the subsidy is deducted from wages. See id.
Special work conditions may constitute “[n]on-specific subsidies,” which can
include, among other things, modified job duties and “unusual assistance or
supervision.” Soc. Sec. Ruling 83-33, 1983 WL 31255, at *4-5 (1983). The
critical inquiry is whether the special conditions have some significant impact on
the value of work performed, such that a portion of the earnings should not be
“counted.” 20 C.F.R. § 404.1574(a)(1)-(2).
3. In the first federal action, the district court affirmed the Agency’s conclusion
that Reeves’ pay was “commensurate with her work” and thus her work was not
subsidized. Based on this language, the ALJ assumed that he was precluded from
reconsidering the subsidy issue. The district court did not, however, rule on
whether any special work conditions constituted a non-specific subsidy. Indeed,
the court noted that “[w]ork performed under special conditions may, regardless of
the stated level of earnings, indicate that the employee is not working at the
substantial gainful activity level.” (citation and alterations omitted). Ultimately,
the district court remanded the case to the agency for a determination of whether
Reeves was employed in a sheltered workshop. On remand, the ALJ considered an
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assessment from a vocational expert who opined that Reeves’ reduced value to the
VA could have been “substantial” in light of “various costs including: consulting
and contracting to make workstation accommodations; manpower to fulfill balance
of job tasks and cover her desk during her absences; financial outlay for physical
workstation accommodations; costs of lost work time and insurance premium
increases.” The district court’s prior ruling did not preclude consideration of
whether these costs constituted non-specific subsidies. See Soc. Sec. Ruling 83-33,
1983 WL 31255, at *4-5; see also 20 C.F.R. § 404.1573(c).
4. Substantial evidence supports the ALJ’s determination that Reeves’
work at the VA was not in a sheltered workshop environment. A sheltered
workshop is an institution designed to prepare impaired individuals for entry into
the general workforce. See Program Operations Manual System (POMS), RS
02101.270. Whether an individual is considered an “employee” in a sheltered
workshop depends on numerous factors, including whether the services have
commercial value and whether wages bear some relationship to the work. See id.
Even in a sheltered workshop, however, a claimant may engage in SGA in light of
“the reasonable worth of the work” performed. 20 C.F.R. § 404.1574(a)(3).
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The ALJ reasonably concluded that Reeves’ job was not performed in a
sheltered workshop in light of her long tenure, the nature of the work, and the
value of the work to her employer. The ALJ acknowledged that Reeves’ work was
performed under special conditions, but believed that he was precluded from
determining whether those conditions constituted a subsidy. However, because the
district court did not completely resolve the subsidy issue, the ALJ was not
precluded from making that determination. Accordingly, we vacate the judgment
and remand this case to the district court. The district court is instructed to remand
this case to the agency to determine whether the special conditions of Reeves’
workplace constituted a non-specific subsidy. We express no view on the merits of
this inquiry.
AFFIRMED in part, VACATED and REMANDED in part. Each party
is to bear its costs on appeal.
The panel retains jurisdiction over this appeal.
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