The opinion of the court was delivered by: BECKER
This is an action brought under Section 205(g) of the Social Security Act, as amended, 42 U.S.C.A. § 405(g), seeking review of a final decision of the Secretary of Health and Human Services denying disability benefits to the plaintiff, Robert P. Cox. The action is before us on cross-motions for summary judgment and, alternatively, on plaintiff's motion to remand to the Administrative Law Judge ("ALJ") for further findings.
Cox is afflicted with amyotrophic lateral sclerosis, an ailment best known as "Lou Gehrig's disease" because it is the illness that prematurely ended the career of that baseball immortal. The disease afflicts the central nervous system and is characterized by a hardening of the lateral columns of the spinal cord with muscular atrophy. It may also invade the oblongata and affect the ventral columns. Cox's application, filed November 10, 1977, sought benefits from October 1976, the date of the onset of the active phase of the disease.
Cox was not represented by counsel at the March 2, 1979, hearing before the ALJ, following which the ALJ found that Cox was engaged in substantial gainful activity and was therefore not disabled within the constraints of the statutory scheme regulating disability insurance benefits, sections 223 and 216(i) of the Social Security Act, 42 U.S.C. §§ 423, 416(i).
At the hearing before us, Cox was represented by counsel who argued forcefully that numerous facts or factual areas had not been sufficiently developed in the record before the ALJ, and that, had they been more fully developed, the ALJ's decision would have been favorable to the claimant. That argument forms the basis for plaintiff's motion for remand, which we take up together with the cross-motions for summary judgment.
Prior to contracting the disease, Cox was a self-employed manufacturer's representative, dealing in desks and other school equipment, primarily for newly constructed schools. After being awarded a contract, usually following a bidding process, Cox faced a delay of as long as three years before he had to deliver on the contract, for his duty to perform arose only upon completion of the construction of the school for which the equipment was purchased. Cox's sales commission was not due from the manufacturer until he had performed on the contract. Moreover, because he kept his books on a cash rather than an accrual basis, income received on contracts was not reportable until the taxable year in which the payment was received, regardless of when the contract was awarded or performance completed.
At the hearing before the ALJ, Cox offered no medical evidence pertaining to his physical condition, and as a result, the medical record in the case is virtually nil. The ALJ accepted Cox's representations concerning the nature of his condition, but did not seek to develop the medical record in terms of Cox's ability to work during the critical time periods before him. Rather, the ALJ concentrated upon Cox's tax returns and upon the written work activity statements covering the period until December 1977 which Cox had forwarded to the Social Security Administration. As will be seen and the point is important the ALJ did not consider Cox's testimony as to work activity after January 1, 1978.
The record also contained, however, a work activity report signed by Cox stating that he had been working as many as twenty hours per week until December 1977. Whatever Cox's physical condition may have been during 1976 and 1977, that work activity report gives us no alternative but to find that the ALJ's conclusion that Cox was able to engage in substantial gainful employment is supported by substantial evidence as it concerns the period before January 1, 1978. Accordingly, we must first consider whether we may divide the benefit claims period before the ALJ for purposes of review. We find, under the applicable regulations, that we can.
Under 20 C.F.R. § 404.316(a):
(Claimants) are entitled to disability benefits beginning with the first month covered by (a claimant's) application in which (the claimant) meet(s) all the other requirements for entitlement....
A period of disability begins on the day the claimant's disability begins if the claimant is insured for disability on that day, 20 C.F.R. § 404.321. As we read these regulations, under § 404.316 the ALJ's focus may not be limited to the date of the application or the initial claimed disability, for later onset of disability may be the basis for entitlement. In determining the claimant's eligibility for disability benefits, the ALJ has to make findings as to the date on which the claimant's physical condition had deteriorated to the extent that he was entitled to disability benefits. Thus, the record in cases of this kind should be scrutinized to assure that the Secretary and the ALJ did not view the record as an "all or nothing" proposition, but rather considered the possibility of an interim date on which disability might have commenced.
Given our conclusion that substantial evidence supports the ALJ's conclusion that Cox was able to engage in substantial gainful employment until January 1, 1978, we must grant the Secretary's motion for that time period. We turn then to the remaining time period before the ALJ that commencing on January 1, 1978, and continuing until the hearing before him on March 2, 1979.
The evidence showed that Cox earned commissions of $ 1700 in 1978. The 1978 tax return for Edward Cox and Co., Inc. showed gross receipts of $ 29,083 and a net loss of $ 4,200. Listed as expenses for tax year 1978 were nearly $ 2,000 for office expenses, $ 831 for telephone expenses, $ 1,000 for auto expenses, and $ 2,840 for salary expenses. The salary item appears to be the total paid the claimant ($ 1,700) and his wife ($ 1,140) for their services that year.
Cox did not recall the date of the sale which formed the basis for his 1978 commissions. He insisted that the commissions he received in 1978 were not for work performed or business procured that year.
Moreover, he testified that after the beginning of 1978, he spent less than one hour daily on the business; most days, in fact, he spent no time on the business. He further testified that after that time his condition was deteriorating to the point that he could ...