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Ransom v. Bowen

decided: April 26, 1988.


Appeal from the United States District Court for the Eastern District of Wisconsin, No. 84-C-1286, Robert W. Warren, Judge.

Coffey, Ripple and Manion, Circuit Judges.

Author: Coffey

COFFEY, Circuit Judge.

Plaintiff-appellant Loren Ransom appeals the district court's order upholding a final decision of the Secretary of Health and Human Services that his disability insurance benefits were properly calculated. We affirm in part, reverse in part, and remand to the Secretary.


A. Background

Mr. Ransom has suffered from paranoid schizophrenia since childhood. For most of his life, Ransom's mental illness has prevented him from being gainfully employed, and his earnings from his birth in November of 1923 through 1970 were only $6,189.04, with the majority of this income reflected during an eight-year period from the years 1957 through 1964. During the 12-year period from 1945 to 1957, Ransom was confined in a state mental institution. Thereafter, Ransom was employed on an irregular basis until 1965, when he suffered an exacerbation of his mental illness, thereby preventing him from continuing work. In mid-1971, Ransom's mental problems were in remission and thus allowed him to return to work and be gainfully employed alternatively as a maintenance man, fireman, and watchman. From the date of his initial employment to August of 1982, his reported accumulated earnings were $158,058.37. At this time, in August of 1982, his serious mental problems returned, and he was unable to work. He has remained unemployable since that date.

B. Ransom's First Application for Disability Insurance Benefits

In 1965, at the age of 42, Ransom applied for child's disability benefits based on his father's employment record pursuant to § 202 of the Social Security Act, 42 U.S.C. § 402(d), claiming that he was disabled as a result of mental illness. The SSA denied his claim for benefits on the ground that he was not "under a disability which began before he [or she] attained the age of eighteen."*fn1 42 U.S.C. § 402(d)(1). Ransom sought review of this ruling, arguing that for a number of years his claim was held up in the administrative process until its ultimate denial by the Secretary. After the Secretary's denial of his claim, Ransom sought district court review of the Secretary's determination. In 1972, Judge Gordon of the Eastern District of Wisconsin, after reviewing the administrative record, issued an order reversing the Secretary's benefit denial, finding that Ransom was eligible to receive child disability benefits for the period 1941 through mid-1971 based on his father's earnings record.

C. Ransom's Second Application

In August of 1982, Ransom's paranoid schizophrenic condition became debilitating to such a degree that he was unable to continue gainful employment. He once again applied for disability insurance benefits, this time based on his own personal work record (rather than his father's earnings record). The SSA determined that: (1) Ransom was disabled as a result of paranoid schizophrenia as of July 10, 1982; and (2) he was eligible to receive disability insurance benefits based on his personal work record pursuant to § 223 of the Social Security Act, 42 U.S.C. § 423 (1982).

Ransom's disability benefits commenced in March of 1983 with payments of $371 per month. Ransom thereafter wrote to the SSA protesting the calculations of his benefits, stating that he believed the SSA's benefit calculations failed to include his 1982 wages earned to the date of his illness. On July 6, 1983, the SSA replied, noting that his 1982 wages had been included in the original computation of benefits. After receiving this information, Ransom sent another letter formally protesting the calculations and requesting reconsideration of the SSA's determination of the amount of benefits due.

The SSA responded with a detailed recitation of his benefit award, explaining that the benefits payable to a disability benefit claimant are premised on the individual's past average monthly earnings between 1951 (the key date for all SSA claimants) and the year of disability. See infra note 4. The SSA further explained that because the SSA had included all the years from 1951 through 1982 (including the time period Ransom had been adjudicated disabled) in computing Ransom's average monthly earnings, his benefits were low in comparison to those received by most other Social Security recipients (who had income during those years). Disagreeing with this letter of explanation, Ransom requested, and was granted, an administrative hearing before an Administrative Law Judge (ALJ).*fn2

D. The ALJ's Decision

At Ransom's hearing, after the ALJ determined that Ransom's challenge went to the calculation of his disability benefits, he asked Ransom whether he disagreed with the computations used to calculate his benefits, as reflected in the SSA documents. Initially, Ransom replied "yes," but qualified his answer by stating that "I'm not a mathematician," and finally stated, "I don't believe that they're correct." The ALJ then explained that the SSA's reduction in Ransom's benefits was the result of his poor work record prior to 1972. Attempting to question this explanation, Mr. Ransom stated that he felt his benefits should be based:

"on the quarters that were available for computations, not something that where a person, supposing I walked in, I was even, I'd been in court, but I had been declared disabled before 1982.

I've been, in 1970 or '71 I had been declared disabled, but all those years prior to that, I had been determined disabled.

So, when I got out of the hospital on parole in 1971, and I went to work and I thought maybe I could help myself and maybe, you know, and stay out of these institutions, they told me then, they said, 'Well, if you feel that you can't work anymore.' I went right down to the Social Security Office and told them, I said, 'Forget my, forget sending me anymore money because I'm going to, I've got a job.' They said, 'Okay, if you feel that you're disabled again, all you'll need is a doctor's statement and we'll put you back on disability.' Well, that isn't what happened.

But, anyway I worked all those years and but, I had, you, you say I don't have a record, a work record or anything like that, but, according to, according to the court, I was disabled all those years, which there's very good factual basis for making such a statement."

(Emphasis added). In spite of this direct testimony by Ransom that he had: (1) "been in court . . . and declared disabled [by a district judge] before 1982" and (2) been "determined disabled [by Judge Gordon] in 1970 or '71," the ALJ made no inquiries into Ransom's extended period of disability (from 1941 to 1971). Rather than exploring the facts underlying Ransom's prior judicial disability determination, the ALJ merely questioned whether his hospitalization prior to 1972 prevented him from performing gainful employment. Ransom answered that his mental problems prevented him from holding a job before 1972.

Later in the hearing, the ALJ questioned Ted Marlier, branch manager of the Milwaukee, Wisconsin, Social Security office, who explained that the amount of monthly benefits awardable to a disabled individual is equal to a percentage of the person's average monthly earnings from 1951 (the key date for all claimants) to the year of disability (indexed to compensate for inflation), excluding the five years when the claimant's income was the lowest. See infra note 4. Marlier also testified that he had examined the calculation of Ransom's benefits and concluded that the "arithmetic" contained in those computations was correct.

After Marlier completed his testimony, Ransom once more repeated his disagreement with the SSA's inclusion of the years before 1972 in the benefit calculations, stating:

"in 1970, I was found to be mentally disabled, even prior to the year, the years of 18, I mean the age of 18, okay, so if that were the case, then you gotta be in error and kinda figure ...

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