SC Administrative Law Court Decisions

Shawn P. Phelps (Phelps) filed an application on July 24, 2001 with the South Carolina Department of Health and Human Services (DHHS) seeking benefits under the "Aged, Blind, and Disabled" (ABD) eligibility category for medicaid benefits. The application was referred to the Disability Determination Division of the South Carolina Department of Vocational Rehabilitation (VR) for a disability determination.

On January 16, 2002, VR determined that Phelps was not disabled. While VR concluded that Phelps' conditions might place some limitations on his ability to work, VR believed that Phelps could perform the basic requirements of an unskilled worker and thereby allow him the ability to return to his past employment. As a result of VRs determination, DHHS denied Phelps' application for medicaid benefits.

Phelps filed this appeal challenging the denial of benefits with the appeal being referred to the Division of Appeals and Hearings at DHHS. An April 24, 2002 hearing resulted in a May 20, 2002 Administrative Decision that concluded Phelps did not have a "severe impairment" and that agreed with VRs conclusion that Phelps was not disabled. Accordingly, Phelps was denied medicaid benefits.

On appeal, Phelps essentially argues the decision below should be reversed since the conclusion reached is inconsistent with the evidence presented. Rather, from Phelps' point of view, the evidence warrants the granting of medicaid benefits.

An appeal before an ALJ triggers the review criteria of S.C. Code Ann. § 1- 23-380(A)(6) (Supp. 2001). See S.C. Code Ann. § 1-23-380(B) (Supp. 2001) (where an ALJ is directed to conduct a review "in the same manner prescribed in [§ 1-23-380](A)."). Section 1-23-380(A)(6) establishes the following:

The court may reverse or modify the decision if substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions or decisions are:
(a) in violation of constitutional or statutory provisions;
(b) in excess of the statutory authority of the agency;
(c) made upon unlawful procedure;
(d) affected by other error of law;
(e) clearly erroneous in view of the reliable, probative and substantial evidence on the whole record; or
(f) arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.

Here, Phelps essentially argues that the decision below is clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record.

1. Controlling Law of Substantial Evidence

An ALJ "will not substitute [the ALJ's] judgment for that of the [Hearing Officer] as to the weight of the evidence on questions of fact." S.C. Code Ann. § 1-23-380(A)(6) (Supp. 2001). Thus, once a factual determination is made by the Hearing Officer, the ALJ cannot re-weigh the evidence in an attempt to come to an independent conclusion on the factual dispute. Rather, the ALJ will rely upon the Hearing Officer's factual determinations unless those determinations are "clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record." S.C. Code Ann. § 1-23- 380(A)(6)(e) (Supp. 2001). Finally, in determining if substantial evidence supports the Hearing Officer's factual determinations, the ALJ does not look for "a mere scintilla of evidence nor evidence viewed blindly from one side, but [rather looks for] evidence which, when considering the record as a whole, would allow reasonable minds to reach the conclusion that the agency reached." Palmetto Alliance, Inc. v. South Carolina Pub. Serv. Comm'n, 282 S.C. 430, 432, 319 S.E.2d 695, 696 (1984). Accordingly, if such evidence is present, the factual determinations will not be overturned.

2. Substantial Evidence Applied to a Disability Determination

The medicaid program is a joint venture between the states and the federal government to provide medical assistance to individuals meeting financial as well as other criteria. While the federal government provides the majority of funding for Medicaid, the states provide "matching funds" as well as provide the primary administrative oversight. Each state has a degree of flexibility in designing a program that best meets the needs of its residents. However, in all states, the federal government requires that certain groups of individuals be covered by medicaid, and requires that a designated group of core services be offered.

The ABD coverage provided by South Carolina requires that an individual meet express financial criteria of assets and monthly income as well as meeting "aged" (over 65), "blind" (according to the Social Security Administrations definition of blindness) or "disabled" criteria. In the instant case, Phelps application was made on the basis of disability, not blindness or age 65.

Regulations of the Social Security Administration determine whether an applicant is disabled. See 20 C.F.R. 416.901 through .976. The determination is made via a "sequential step evaluation." See 20 C.F.R. 4 16.920. The first step determines whether at the time of the application the applicant is engaged in "substantial gainful activity." That step essentially asks whether the applicant is currently working. If no, the second step is a review of the medical evidence to determine whether the applicant suffers from a medically determinable "severe impairment" that may reasonably be expected to last for more than one year or to result in death. If no, the analysis ends and the claim of disability is denied since the applicant is not disabled. ⁽¹⁾

Since Phelps was not engaged in "substantial gainful activity" (i.e., he was not working full time) at the time of his application, VR proceeded to the second step of the sequential evaluation process and evaluated his medical condition to determine whether a "severe impairment" existed In conducting the evaluation, VR considered not only the conditions identified by Phelps in his application but also all relevant medical records. VR concluded Phelps medical impairments were not severe enough to prevent him from performing all work but instead Phelps could return to his past work as a convenience store worker.

At the hearing below, the Hearing Officer heard testimony from an employee of VR to the effect that the medical evidence showed that Phelps physical problems had been resolved within a period of time less than twelve months from the date of an accident which accident was the alleged precipitator of the problems being experienced by Phelps. In addition, the testimony below explained that the psychiatrist's records showed that within the applicable twelve-month period, Phelps was stable on his medication and was "doing well." Further medical testimony explained that Phelps was "minimally, if at all, impaired." Finally, the record shows that Phelps testified that he no longer has problems with his foot and that he likes to "[g]o fishing, hunting, go to the movies, [and] concerts" with his friends.

Based on the record made below, substantial evidence exists in this case such that reasonable minds could have reached the conclusion of "no disability" reached by DHHS. See Palmetto Alliance, Inc. v. South Carolina Pub. Serv. Comm'n, 282 S.C. 430, 432, 319 S.E.2d 695, 696 (1984). Accordingly, since such evidence is present, the DHHS determinations will not be overturned, and the order below is AFFIRMED.

AND IT IS SO ORDERED.

__________________________________

RAY N. STEVENS

Administrative Law Judge

Dated: January 7, 2003

Columbia, South Carolina

1. Here, Phelps reached the second step but was found not to have a "severe impairment." However, if an applicant were found to have a "severe impairment," the analysis would continue to step three in which the applicants impairment (or combination of impairments) would be compared to a "listing" of impairments that are considered to result in disability. If the applicants impairment meets or equals one of these listings, the applicant is considered to be disabled at step three. Further, if an applicants impairment did not meet or equal one of the "listings," then the applicants age, education and work experience would be considered to determine whether there is any "substantial gainful activity" (i.e., work) existing in the national economy in which the applicant could engage. This step is an evaluation of an individuals "residual functional capacity" which essentially seeks to evaluate what the individual can do in light of the impairment, age, education, and work experience. In conducting this evaluation, previous work done by the individual is considered. If the individual is deemed to be able to return to his/her past work, he/she is found to be not disabled. If the individual is deemed unable to engage in his/her previous work, then a determination is made as to whether any other work opportunities exist in the national economy that would be suitable for the applicant, taking into account his/her impairment, age, education, and work experience. Again, Phelps reached only the second step, thereby precluding any further analysis.