Equitable Tolling Cannot Save Self-Employment Case

March 1, 2007

Author: Catherine M. Callery (Kate) | Louise M. Tarantino

Pursuant to 42 U.S.C.§405(c)(1)(B), (c)(4), a self employed individual must file tax returns showing income within a specified time period in order to be credited with quarters of coverage, which are needed to qualify for Social Security disability benefits.  If no tax returns are filed within the specified time periods, there is a conclusive presumption that no income was earned and no quarters of coverage will be assigned.  The Second Circuit recently issued a decision in which it held that the time periods set forth in the statute could not be equitably tolled due to mental illness.

In Acierno v. Barnhart, 475 F.3d 77 (2d Cir. January 24, 2007), a panel of the Second Circuit again agreed that the end result of their decision was harsh to a person who was clearly disabled, but that Congress, not they, had the power to determine when a statute was subject to equitable tolling.

Mr. Acierno was a self employed individual who failed to file income tax returns during several years when his mental impairments, side effects of the chemotherapy he was undergoing for testicular cancer, robbed him of the ability to perform these obligations of everyday life.  When he finally decided to apply for Social Security disability benefits, several years had passed since he had engaged in any employment, as had the statutory limit limits for submitting evidence of self employment pursuant to 42 U.S.C.§405(c)(1)(B), (c)(4).  The ALJ denied his claim because he did not meet the “20/40 test”; that is, 20 quarters of covered employment out of the past 40 quarters (five out of the last ten years).

Mr. Acierno was unrepresented on his District Court appeal and failed to file any responsive papers to the Social Security Administration’s motion for judgment on the pleadings.  The District Court decided that Mr. Acierno was a self-employed person, despite some testimony that he was a wage earner, and that the legislative history of the statute clearly indicated Congressional intent against allow equitable tolling.

Mr. Acierno appealed to the Second Circuit and was appointed counsel to represent him.  Mr. Acierno argued that the time limits contained in 42 U.S.C.§405(c) should have been equitably tolled due to his mental illness, citing the Court’s earlier decision in Canales v. Sullivan, 936 F.2d 755, 759 (2d Cir. 1991).  The Second Circuit disagreed, noting that in Canales, the statute that was tolled was 42 U.S.C. §405(g), in which Congress specifically allowed for indefinite tolling of the 60-day time periods.  To the contrary, the statute before the Court indicated Congressional intent to severely limit the time within which a claimant could seek judicial review except in exclusive situations that were not met in the instant case.

It is difficult to imagine how the Court wrote this disturbing decision with its hands tied, but maybe we should look to Congress for that answer as well.