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MONLEONE v. SULLIVAN

April 19, 1990

JULES MONLEONE, Plaintiff,
v.
LOUIS W. SULLIVAN, M.D., Secretary of Health and Human Services, Defendant



The opinion of the court was delivered by: REVERCOMB

 GEORGE H. REVERCOMB, UNITED STATES DISTRICT JUDGE

 The plaintiff seeks review of the Secretary's decision that plaintiff is only entitled to a monthly retirement benefit of $ 348 under Title II of the Social Security Act. This matter is before the Court pursuant to plaintiff's motion for judgment of reversal *fn1" and the defendant's motion for judgment of affirmance.

 I. Record Review

 The ALJ's decision is the final reviewable decision in this case and must be affirmed if supported by substantial evidence. 42 U.S.C. § 405(g); Richardson v. Perales, 402 U.S. 389, 401, 28 L. Ed. 2d 842, 91 S. Ct. 1420 (1971).

 Plaintiff worked as a stockbroker. His Social Security earnings record provides that he was credited with earnings in 1944, 1946, 1947, 1950 to 1961, and 1964. In the years 1952 to 1961 and 1964 plaintiff was credited with the maximum earnings allowable under the Social Security Act for those years. Based on the credits for these years the Secretary awarded plaintiff a monthly benefit of $ 348. The plaintiff contends that the Secretary should credit him for earnings he received from employment during the period of 1965 to 1985 and increase his monthly benefits accordingly. The record provides substantial evidence to support the Secretary's decision that the plaintiff did not have earnings from employment in the period of 1965 to 1985.

 First, the Secretary's records have no entries that plaintiff received earnings for employment from 1965 to 1985. The absence of such entries is presumptive evidence that wages were not paid for employment in those years. See 42 U.S.C. § 405(c)(3), (c)(4)(B). Moreover, plaintiff presented no evidence that he received "wages" from "employment" within the meaning of 42 U.S.C. § 410(a). Although the plaintiff worked overseas for a Swiss brokerage firm from 1965 to 1972 and subsequently worked in Europe for foreign affiliates of American brokerage firms until 1985, this work does not constitute "employment" under the Social Security program for which earnings will be credited. Under the statutory scheme, the Secretary will only credit an individual for wages received from employment performed by an individual within the United States, outside the United States as an employee of an American employer, or outside the United States as an employee of a foreign affiliate of an American employer during any period for which there was in effect an agreement entered into by the affiliate under section 3121(l) of the Internal Revenue Code. *fn2"

 Plaintiff correctly notes that the overseas work he performed for the Swiss brokerage firm is not within the definition of "employment" under the Act. *fn3" As to the work that plaintiff performed in Europe for the foreign affiliates of American brokerage firms, the plaintiff does not contend that an agreement was in effect under section 3121(l) of the IRC. *fn4" Rather, plaintiff claims that these foreign affiliates should be deemed as American employers on the ground that the foreign affiliates were wholly owned subsidiaries of the American companies and accordingly under their control. However, plaintiff failed to present to the Secretary evidence warranting the piercing of the corporate veil of these foreign affiliates which would support a finding that plaintiff in fact worked for American companies rather than for the foreign affiliates of these companies.

 Accordingly, this Court finds that substantial evidence exists on the record to support the Secretary's finding that plaintiff did not have "wages" from "employment" during the years 1965 to 1985 within the meaning of section 410(a).

 II. Equal Protection

 The plaintiff contends that section 410(a) of the Act, which defines "employment," is unconstitutional because it treats American citizens working in the United States or overseas for American employers different from American citizens working overseas for the foreign affiliates of American companies. The plaintiff argues that under the equal protection clause section 410(a) must include work performed overseas for the foreign affiliates of American companies as "employment" under the coverage of the Social Security system.

 The constitutionality of Social Security legislation is tested under a "rational basis" standard. Weinberger v. Salfi, 422 U.S. 749, 768-70, 45 L. Ed. 2d 522, 95 S. Ct. 2457 (1975); see also Tyson v. Heckler, 727 F.2d 1029 (11th Cir. 1984) (applying "rational basis" standard to section 410(a)). A rational reason clearly supports the Congressional decision not to include overseas work for foreign affiliates of American companies within the definition of "employment" where, as recognized by Congress at the time it drafted and passed the legislation, the United States has no legal power to "levy the employer tax of the old-age and survivors insurance program upon foreign subsidiaries of American employers." S. Rep. No. 1987, 83d Cong., 2d Sess., reprinted in 1954 U.S. Code Cong. & Ad. News 3710, 3719. Accordingly, recognizing the limitation, Congress enacted section 3121(l) of the IRC in order to close this gap in the insurance program as best it could within the scope of its legislative reach.

 III. Entrapment

 The plaintiff contends that the Secretary should credit his wages since 1964 and raise his monthly retirement benefits accordingly where, in response to plaintiff's 1968 inquiry concerning his retirement benefits, the Secretary allegedly "entrapped" him into believing that the earnings that plaintiff received ...


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