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Nature of Suit Code: 863
Nature of Suit: Social Security - DIWC/DIWW (405(g))
Cause of Action: 

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United States Court of Appeals 

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 9, 2008 Decided June 24, 2008 

No. 07-5130 

ANTONIA ROSSELLO,

ON BEHALF OF JOAQUIN ROSSELLO AND CRISTINA ROSSELLO, 

APPELLANT

v. 

MICHAEL J. ASTRUE, COMMISSIONER OF SOCIAL SECURITY, 

APPELLEE

Appeal from the United States District Court 

for the District of Columbia 

(No. 01cv02694) 

Jennifer Arnett argued the cause for appellant. With her 

on the briefs was James Bernard. 

Fred E. Haynes, Assistant U.S. Attorney, argued the 

cause for appellee. With him on the brief were Jeffrey A. 

Taylor, U.S. Attorney, and R. Craig Lawrence, Assistant U.S. 

Attorney. 

Before: GINSBURG, BROWN, and KAVANAUGH, Circuit 

Judges. 

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Opinion for the Court filed by Circuit Judge

KAVANAUGH. 

KAVANAUGH, Circuit Judge: Cristina Rossello has a 

history of serious mental illness. In 1993, her father, Joaquin 

Rossello, applied for Social Security “childhood disability” 

benefits on behalf of Cristina. He asserted that Cristina has 

been continuously disabled since before age 22, which is the 

relevant statutory trigger for those benefits. In 1995, the 

Social Security Administration initially denied the Rossellos’ 

claim. The Rossellos then unsuccessfully pursued five years 

of administrative appeals until the agency issued its final 

decision denying their claim. In 2000, the Rossellos sought 

judicial review of the agency’s final decision. In 2007, the 

District Court ultimately affirmed the agency’s decision 

denying Cristina benefits. 

We conclude that the Social Security Administration’s 

denial of benefits was not supported by substantial evidence. 

We therefore reverse the District Court’s judgment and direct 

the District Court to remand the case to the Social Security 

Administration. Given the amount of time that has passed 

since the Rossellos’ initial 1993 application for benefits, we 

anticipate that the District Court will quickly issue an order 

remanding the case and that the Social Security 

Administration then will prioritize the matter and promptly 

determine Cristina’s entitlement to disability benefits. 

I 

The Rossello family’s journey through the Social 

Security Administration’s hearing process began more than 

15 years ago. To appreciate the Rossellos’ story, one must 

begin with an understanding of the Social Security disabilitybenefits scheme. 

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One way for disabled adults to obtain government 

benefits is to qualify based on their parents’ status in the 

Social Security system. Under Title II of the Social Security 

Act, a disabled adult like Cristina whose parent is entitled to 

Social Security retirement benefits may herself receive Social 

Security childhood disability benefits if she has been 

continuously disabled since before the age of 22 and is 

dependent on her parent. 42 U.S.C. § 402(d)(1)(B). 

The key issue before the Social Security Administration 

was whether Cristina Rossello has been continuously 

“disabled” since before the age of 22 – that is, whether she 

has been unable since turning 22 “to engage in any substantial 

gainful activity by reason of any medically determinable 

physical or mental impairment.” § 423(d)(1)(A). To 

determine whether an individual has been continuously 

disabled, the Social Security Administration first considers 

whether the individual’s work activity since turning 22, if 

any, constitutes “substantial gainful activity”; if so, that 

disqualifies the claimant from benefits. 20 C.F.R. 

§ 404.1520(a)(4)(i); see also § 404.1571 (“If you are able to 

engage in substantial gainful activity, we will find that you 

are not disabled.”). The Social Security Administration then 

considers the medical severity of the individual’s impairment 

and whether the claimant has suffered from that impairment 

since before turning 22, among other factors. 

§ 404.1520(a)(4)(ii)-(v); see also § 404.1520a (relating to 

mental impairments). 

The Rossellos’ odyssey began in February 1993 when 

Joaquin Rossello applied for Social Security retirement 

benefits. At the same time, Joaquin also sought childhood 

disability benefits on behalf of his daughter Cristina, who was 

then 28 years old and had a history of debilitating mental 

illness. Joaquin submitted extensive medical evidence 

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showing that Cristina had been diagnosed with chronic mental 

illness and had been hospitalized multiple times. 

In 1995, the Social Security Administration denied 

Cristina’s claim for benefits because the Rossellos had not 

submitted medical evidence establishing that Cristina’s 

condition began before she turned 22 in 1986, as required by 

law. 

The Rossellos appealed the denial to an administrative 

law judge and submitted additional medical evidence, 

including a doctor’s certification that Cristina had been 

diagnosed with and treated for mental disorders from 1980 to 

1983 (when she was 16 to 19 years old) and that she had been 

institutionalized for part of that time. The ALJ nonetheless 

denied Cristina’s claim. The ALJ ruled that the record did not 

support Cristina’s claim that she was disabled before turning 

22 because the medical certificate describing her treatment 

from 1980 to 1983 did not constitute medical evidence of 

Cristina’s condition during that time. 

The Rossellos sought relief from the Social Security 

Administration’s Appeals Council, which exercises 

discretionary review of ALJ decisions. 20 C.F.R. §§ 404.968, 

404.970. The Appeals Council granted review but explained 

that Cristina’s earnings in 1986 and 1987 (when she was 22 

and 23 years old) suggested she had performed substantial 

gainful activity since turning 22 – meaning she could not meet 

the statutory requirement that a claimant be continuously 

disabled since before the age of 22. The Appeals Council 

noted that Cristina earned an average of $334.42 per month in 

1986 and $587.04 per month in 1987. Under the Social 

Security regulations, average monthly earnings of more than 

$300 in 1986 or 1987 create a presumption that an individual 

“engaged in substantial gainful activity.” § 404.1574(b)(2)(i) 

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& tbl.1. Average monthly earnings below $190 create a 

presumption that an individual did not engage in substantial 

gainful activity. See SSR 83-33, Titles II and XVI: 

Determining Whether Work is Substantial Gainful Activity–

Employees, 1983 WL 31255, at *2 (Soc. Sec. Admin. Nov. 

30, 1982). As a result of Cristina’s monthly earnings in 1986 

and 1987, it appeared to the Appeals Council that Cristina 

was not continuously disabled since before the age of 22 and 

therefore did not qualify for childhood disability benefits. See

20 C.F.R. § 404.1520(a)(4)(i). 

Before making a final ruling, the Appeals Council 

allowed the Rossellos to submit rebuttal evidence to show that 

Cristina’s earnings in 1986 and 1987 were “subsidized” – 

meaning that the work was done under special conditions 

because of Cristina’s impairment and that her earnings 

exceeded the reasonable value of her work. § 404.1574(a)(2). 

Any portion of wages that is considered a subsidy does not 

count as “earnings” in determining whether an individual 

performed substantial gainful activity. See id. If Cristina’s 

earnings in 1986 and 1987 were subsidized and her average 

monthly unsubsidized earnings fell below the $300 threshold 

in the Social Security regulations, then the presumption that 

she had engaged in substantial gainful activity would drop 

out. 

Under the Social Security regulations, subsidization 

occurs, for example, “when a person with a serious 

impairment does simple tasks under close and continuous 

supervision.” Id. Circumstances indicating a “strong 

possibility” that earnings are subsidized include that “the 

employee receives unusual help from others in doing the 

work,” that there “appears to be a marked discrepancy 

between the amount of pay and the value of the services,” or 

that “[m]ental impairment is involved.” SSR 83-33, 1983 WL 

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31255, at *4. As the Social Security Administration has 

explained, “An employer may, because of a benevolent 

attitude toward a handicapped individual, subsidize the 

employee’s earnings by paying more in wages than the 

reasonable value of the actual services performed. When this 

occurs, the excess will be regarded as a subsidy rather than 

earnings.” Id. at *3. 

The Rossellos produced significant, uncontested evidence 

that Cristina’s earnings were subsidized. They submitted 

multiple affidavits describing Cristina’s jobs in 1986 and 

1987 as provided “by the generosity and compassion of 

family or acquaintances that would not have hired her 

otherwise because of her serious mental limitations.” 

Affidavit of Maria Antonia Rossello (July 19, 2000), Joint 

Appendix (“J.A.”) 153. According to the Rossellos, 

Cristina’s primary job in 1986 and 1987 consisted of working 

in an office for her uncle (with whom she was living at the 

time). Cristina’s uncle stated that Cristina was “not 

productive and performed only basic tasks like stuffing 

envelopes and elementary clerical work.” Affidavit of Jorge 

Rossello (June 16, 2000), J.A. 158; see also id. (“had she not 

been my niece, we would not have hired her”). Cristina’s 

uncle offered her the job because he “could provide her with a 

sheltered environment where she could be supervised all the 

time.” Id.

In its final ruling, the Appeals Council nonetheless 

denied the Rossellos’ appeal. Relying on 20 C.F.R. 

§ 404.1574(b), the Appeals Council ruled that Cristina’s 

average monthly earnings of more than $300 in 1986 and 

1987 indicated that she had performed substantial gainful 

activity since turning 22. The Appeals Council never 

expressly mentioned subsidization or analyzed Cristina’s 

earnings under the relevant regulations; instead, it simply 

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stated that “there is no evidence to indicate that any of 

[Cristina’s] work activity was performed in a . . . special 

environment.” Appeals Council Decision (Sept. 21, 2000), 

J.A. 32. The Appeals Council held that because Cristina had 

performed substantial gainful activity since turning 22, she 

therefore was not disabled under the Act and was ineligible 

for childhood disability benefits. Having so concluded, the 

Appeals Council had no occasion to reach the ALJ’s 

determination that Cristina’s impairment did not begin before 

she turned 22. See 20 C.F.R. § 404.1520(a)(4) (specifying 

steps for determining whether claimant is “disabled”). 

Under the Social Security Administration’s regulations, 

the Appeals Council decision represented the agency’s final 

decision on Cristina’s claim. See § 404.981 (“The Appeals 

Council’s decision . . . is binding unless you or another party 

file an action in Federal district court . . . .”). 

The Rossellos sought review of the Social Security 

Administration’s decision in U.S. District Court under 42 

U.S.C. § 405(g). The Rossellos and the agency filed crossmotions for summary reversal and affirmance of the decision. 

The District Court ultimately affirmed the agency’s decision. 

Rossello v. Barnhart, 473 F. Supp. 2d 72 (D.D.C. 2007). The 

District Court found “substantial evidence to support” the 

Appeals Council’s conclusion that Cristina had engaged in 

substantial gainful activity, that the contrary evidence 

submitted by the Rossellos “was limited in nature,” and that 

“nothing indicated that Ms. Rossello’s earnings were 

subsidized or that her work conditions were particularly 

unique.” Id. at 75. 

The Rossellos appealed to this Court. We have 

jurisdiction under 28 U.S.C. § 1291; we review the District 

Court’s judgment de novo and consider whether the Social 

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Security Administration’s final decision is “based on 

substantial evidence in the record and correctly applies the 

relevant legal standards.” Butler v. Barnhart, 353 F.3d 992, 

999 (D.C. Cir. 2004); see also 42 U.S.C. § 405(g). 

II 

The Rossellos argue that the record does not contain 

substantial evidence to justify the Appeals Council’s 

conclusion that Cristina engaged in substantial gainful activity 

in 1986 and 1987. We agree with the Rossellos. 

Substantial-evidence review is highly deferential to the 

agency fact-finder, requiring only “such relevant evidence as 

a reasonable mind might accept as adequate to support a 

conclusion.” Pierce v. Underwood, 487 U.S. 552, 565 (1988) 

(internal quotation marks omitted). Reversal of an agency 

decision under that standard is rare. But this is one of those 

rare cases. Even under the deferential, “substantial-evidence” 

standard of review, the Appeals Council’s decision does not 

pass muster. 

The Appeals Council initially informed the Rossellos that 

it had obtained Cristina’s earnings record and was prepared to 

rule that she had not been continuously disabled since turning 

22 because her average monthly earnings in 1986 and 1987 

were greater than $300, thereby triggering a presumption that 

she had engaged in substantial gainful activity. See 20 C.F.R. 

§ 404.1574(b)(2)(i) & tbl.1 (monthly earnings above $300 

“show that you engaged in substantial gainful activity”). In 

response, the Rossellos submitted a letter and affidavits 

describing Cristina’s work activity in 1986 and 1987. They 

submitted this evidence to demonstrate that Cristina’s average 

monthly earnings of $334.42 in 1986 and $587.04 in 1987 

were “subsidized” and that her unsubsidized earnings did not 

indicate substantial gainful activity. 

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The Social Security Administration’s regulations provide 

that earnings are subsidized if the “true value” of the work, 

“when compared with the same or similar work done by 

unimpaired persons, is less than the actual amount of 

earnings.” § 404.1574(a)(2); see also id. (“For example, 

when a person with a serious impairment does simple tasks 

under close and continuous supervision, our determination of 

whether that person has done substantial gainful activity will 

not be based only on the amount of the wages paid.”). 

Several circumstances “indicate the strong possibility of a 

subsidy,” including when “[m]ental impairment is involved,” 

when “the employee receives unusual help from others in 

doing the work,” or when there “appears to be a marked 

discrepancy between the amount of pay and the value of the 

services.” SSR 83-33, Titles II and XVI: Determining 

Whether Work is Substantial Gainful Activity–Employees, 

1983 WL 31255, at *4 (Soc. Sec. Admin. Nov. 30, 1982). 

Contrary to the conclusion of the Appeals Council that 

there was “no evidence” of a subsidy, the evidence 

indisputably establishes that Cristina’s work for her uncle in 

1986 and 1987 – which accounts for 82 percent of her 

earnings during those years – was subsidized under the Social 

Security Administration’s regulations. Cristina’s work 

involved simple tasks performed under close supervision by 

her family. See Affidavit of Jorge Rossello (June 16, 2000), 

J.A. 158 (“she was not productive and performed only basic 

tasks,” such as “stuffing envelopes,” in “a sheltered 

environment where she could be supervised all the time”). 

The evidence also shows that Cristina obtained the job 

through the kindness of her family and not based on merit. 

See id. (“had she not been my niece, we would not have hired 

her because of [her] mental disability”); see also Letter from 

Joaquin Rossello to Social Security Administration (July 18, 

2000), J.A. 161 (Cristina’s work “provided her with a 

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sheltered environment”). And Cristina’s uncle was 

“President,” “part owner,” and “closely involved in [the] 

management” of the employer that accounted for 61 percent 

of Cristina’s $334 monthly earnings in 1986 and 94 percent of 

her $587 monthly earnings in 1987. Affidavit of Jorge 

Rossello (June 16, 2000), J.A. 157. 

The Appeals Council cited no evidence to undermine the 

only conclusion that the record permits – namely, that 

Cristina’s earnings were subsidized. 

If, as required by Social Security regulations, the Appeals 

Council had subtracted the amount of the subsidy from 

Cristina’s earnings in those years, it presumably would have 

concluded that her average monthly earnings fell below the 

$300 threshold that triggers a presumption of substantial 

gainful activity. Indeed, because almost all of Cristina’s 

earnings appear to have been subsidized to some degree, the 

Appeals Council presumably would have concluded that 

Cristina’s unsubsidized earnings fell below the $190 threshold 

and thus triggered a presumption that she did not engage in 

substantial gainful activity. See SSR 83-33, 1983 WL 31255, 

at *2.1

 1

 The remainder of Cristina’s earnings in 1986 came from her 

work at a hotel where her sister Marta was employed. The 

evidence suggests that Cristina’s earnings there may also have been 

subsidized. Marta obtained the job for Cristina; Cristina’s sole, 

“very simple” duty was to distribute pool towels to hotel guests; 

and Marta “was able to directly and personally supervise” her 

sister. Affidavit of Marta Rossello (July 12, 2000), J.A. 155. The 

remainder of Cristina’s earnings in 1987 came from work for a 

temporary placement agency. 

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We therefore agree with the Rossellos that the Social 

Security Administration’s decision is not supported by 

substantial evidence. 

The remaining question is whether, as the Rossellos 

contend, we should reverse the decision outright and hold, 

based on the record before us, that Cristina is entitled to 

childhood disability benefits. Section 405 of Title 42 

expressly provides that a district court may reverse the Social 

Security Administration’s decision rather than remand it for 

further proceedings. See § 405(g) (“The court shall have 

power to enter, upon the pleadings and transcript of the 

record, a judgment affirming, modifying, or reversing the 

decision of the Commissioner of Social Security, with or 

without remanding the cause for a rehearing.”). 

But § 405(g) also provides that judicial review is limited 

to the “final decision of the Commissioner.” Id. (emphasis 

added). In this case, that “final decision” is the Appeals 

Council decision. See 20 C.F.R. §§ 404.981, 404.955(a). 

And the Appeals Council rested the denial of benefits on a 

single ground: its conclusion that Cristina engaged in 

substantial gainful activity since turning 22. We have 

concluded the Appeals Council erred, but that is not the end 

of the case. At a minimum, the Appeals Council still has to 

consider the Rossellos’ appeal from the ALJ’s conclusion that 

there was insufficient evidence of Cristina’s mental 

impairment before age 22. See SL Communications, Inc. v. 

FCC, 168 F.3d 1354, 1357 (D.C. Cir. 1999) (court has “no 

authority to consider” intermediate, ALJ finding that was not 

necessary to agency’s final decision); cf. SEC v. Chenery 

Corp., 332 U.S. 194, 196 (1947) (“[A] reviewing court . . . 

must judge the propriety of [agency] action solely by the 

grounds invoked by the agency.”); Vance v. Heckler, 757 F.2d 

1324, 1325 (D.C. Cir. 1985) (reversing and directing that 

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Social Security benefits be awarded where agency decision on 

“sole issue in the case” was not supported by substantial 

evidence). 

* * * 

As a result of bureaucratic delays, the Rossellos’ case has 

dragged through the Social Security Administration and the 

courts for more than 15 years. We reverse the District Court’s 

judgment and direct it to promptly remand the case to the 

Social Security Administration for the agency to 

expeditiously resolve the Rossellos’ claim for childhood 

disability benefits on behalf of Cristina. 

So ordered. 

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