United States District Court, D. Kansas
VICKI J. HAY, Plaintiff,
CAROLYN W. COLVIN, Acting Commissioner of Social Security Defendant.
MEMORANDUM AND ORDER
J. THOMAS MARTEN, Chief District Judge.
Plaintiff Vicki J. Hay seeks review of a final decision by defendant, the Commissioner of Social Security, reversing her previously favorable award of benefits after it was determined that plaintiff had engaged in substantial gainful activity during the time that she was receiving disability benefits. Plaintiff denies this allegation and argues that her level of work was insufficient to deny benefits. Plaintiff more adamantly argues that the Commissioner failed to explain her decision, thereby warranting a reversal and immediate award of benefits, or, in the alternative, remand to the Commissioner. Upon review, the court finds that the Commissioner's decision is not supported by substantial evidence contained in the record. As such, the decision of the Commissioner is reversed and remanded for further proceedings.
I. Factual and Procedural Background
Plaintiff filed an application for Disability Insurance Benefits ("DIB") on March 15, 2007, alleging disability beginning January 1, 2007. She was awarded disability benefits beginning in June 2007. On March 24, 2011, plaintiff received a Notice of Proposed Decision stating that there was evidence to suggest that she had performed substantial gainful work since her alleged onset date thereby indicating that an award of benefits was inappropriate. On May 23, 2011, the Commissioner issued a "Final Notice - Reversal to a Denial" and plaintiff's benefits ceased. Plaintiff filed a request for a hearing, which was held on September 18, 2012, before Administrative Law Judge Alison K. Brookins. Plaintiff appeared and testified, although she was not represented by counsel. Her husband, Thomas Hay, also appeared and testified.
Plaintiff and her husband are self-employed and jointly own Hay Construction, a Limited Liability Company. Initial tax filings from 2007 and 2008 show that plaintiff earned $11, 233 and $19, 655, respectively, plus additional wages of $2, 400 in 2008. Dkt. 4-1, at 247, 263, 273. After being informed by her accountant that she was earning too much money (or at least listing too much earned income on her tax returns) to maintain her disability benefits, plaintiff amended her 2008 tax return. Dkt. 4-1, at 115.
During the hearing, the ALJ asked plaintiff if, at any time since she was found to be disabled, she had done any work for Hay Construction, to which plaintiff testified as follows:
Yes, now, in I think it was '08, I was approached by Kansas, to do the Working Healthy program. And through the Working Healthy program, I was able to, basically they were going to help me find a job or do something within my means at that time, my disability. But the people who were helping me said, well if my company would pay me to do the paperwork that I already did, that would qualify me for helping with the Working Healthy program. So that's how we did it. And so I got paid like $200 gross every two weeks to do the Working Healthy program. I believed that was in '08 that I started that program and was approached with that, the ticket to work program. And, so I, and I'm still doing that.
Dkt. 4-1, at 333. When asked to further elaborate as to the specifics of what she did, plaintiff stated:
Well, when I became disabled in '07, I was in and out of the hospital all the time. But I still kept up with the paperwork, as far as doing the 941s, the quarterlies, writing out the, our employees at the time, making sure the withholding your taxes and stuff. I basically just sat there and just put it in the computer. And occasionally I would maybe have to run an errand here or there... It wasn't, I could do, run to town and pick up paper if they forgot it or something like that. Or bring something from home that Tom would have forgot from the job site, you know.
Dkt. 4-1, at 334-35. Plaintiff testified that she worked five to ten hours per week. Dkt. 4-1, at 334. She also indicated that if the company was to pay someone for what she was doing, it would likely be at a rate of $10 per hour. Dkt. 4-1, at 336.
Plaintiff's husband, Tom Hay, also testified. Mr. Hay stated that when he made Hay Construction a limited liability company, he listed his wife as a partner in the event that something happened to him. Dkt. 4-1, at 339. He testified that plaintiff came in at least once a week to do payroll and taxes and also did the quarterly reports and ran errands. Dkt. 4-1, at 341. In 2008, Mr. Hay was notified by his accountant that plaintiff was making too much money to maintain her disability benefits. Dkt. 4-1, at 340. Mr. Hay stated that he and his wife filed amended returns for 2008 but were unable to do so for 2007 because the deadline had passed. Dkt. 4-1, at 340.
The ALJ rendered her decision on February 7, 2013, and found that plaintiff's severe medical impairments, based on the hearing testimony and the submitted tax returns, did not prevent her from performing substantial gainful work for a period of twelve (12) months. Dkt. 4-1, at 37-40. As such, plaintiff did not meet the definition of disability under the Social Security Act. Dkt. 4-1, at 37-40. The decision of the ALJ became the final decision of the Commissioner on September 4, 2014, when the Appeals Council denied plaintiff's request for review. Dkt. 4-1, at 6-9.
II. Legal Standard
Judicial review of the Commissioner's decision is guided by the Social Security Act (the "Act") which provides, in part, that the "findings of the Commissioner as to any fact, if supported by substantial evidence, shall be conclusive." 42 U.S.C. § 405(g). The court must therefore determine whether the factual findings of the Commissioner are supported by substantial evidence in the record and whether the ALJ applied the correct legal standard. Lax v. Astrue, 489 F.3d 1080, 1084 (10th Cir. 2007). "Substantial evidence is more than a scintilla, but less than a preponderance; in short, it is such evidence as a reasonable mind might accept to support the conclusion." Barkley v. Astrue, 2010 U.S. Dist. LEXIS 76220, at *3 (D. Kan. July 28, 2010) (citing Castellano v. Sec'y of Health & Human Servs., 26 F.3d 1027, 1028 (10th Cir. 1994)). The court may "neither reweigh ...