20 CFR 404.1536 and 404.1539

SSR 69-46

Where a hospitalized individual performs work in a hospital project under the supervision of medical and administrative staff, and such work is done neither as a part of the individual's trade or business nor pursuant to a common law employer-employee relationship, but instead is primarily therapeutic (remuneration serving as an incentive) in that its purpose is to condition patients to return to gainful work in the community, held, the participation in the project by a patient entitled to disability insurance benefits, does not constitute services in a trial work period within the meaning of section 404.1536 of Regulations No. 4 (20 CFR 404.1536).

The claimant, a patient in the X Hospital, was entitled to disability insurance benefits because of a mental impairment. While being treated for his neuropsychiatric condition, he had a severe heart attack. Because anginal pain is precipitated on very little exertion he can do only sedentary work.

Upon discharge a bed patient, the claimant participated int eh rehabilitation project of the hospital for 1 year. during this period, he lived in a rented room outside of the hospital and received outpatient care and medication. He worked at the hospital in a room especially set up for the project averaging 6 hours a day, 27 hours a week, and received about $20 a week for his work. No special skills, knowledge, training, mental, or physical demands were required. At first the calmant's work consisted of placing pieces of metal in a machine; later, he assisted the head therapist in preparing work for about 30 to 40 other patients and instructing them.

The hospital furnished the following information concerning the project:

Cooperating companies in the community send work to the hospital which is performed by patients participating in the project. The work is carried on in the hospital and is under medical supervision. The primary purpose of the activity is treatment rather than employment. The company has not part for choice in the assignment of patients to the shop. The patient may be medically assigned for a few hours a week or for as many as 25 hours a week. The persons engaged in the activity vary from day, depending upon the mentality of the patient. Many patients have committed to the hospital and do not have the mental competence to make an employment contract on their own responsibility. The patient never comes in contact with a company, receives no instructions or directions from a company as to what is to be done or how it is to be accomplished. Most of the work that is performed is low level repetitive type of activity and is given to the hospital by cooperating firms primarily for the purpose of aiding in the rehabilitation by cooperating firms primarily for the purpose of aiding in the rehabilitation of patient.s It is not part of their normal workload and is work which might of patients. It is not part of their normal workload and is work which might not be otherwise carried on.

As a matter policy, it has been established that they shall be paid for work at approximately what would be the national minimum wage. These patients are not equal in ability to perform, but nevertheless, each patient will receive his proportionate share for the time spent on the project. The companies recognize certain patients will perform well below the average, However, the total output will be comparable to the average for any normal group of workers.

The companies make the hospital's estimate of the amount of time spent on a project and furnish it with an amount of money equal to the number of hours worked by all patients at the national minimum wages rate The money is sent in a lump sum, and the hospital apportions it to the patients in such a way as to achieve motivation and other psychological goals.

The work is performed within the hospital, under the supervision of the medical and administrative staff of the hospital, under supervision of the medical and administrative staff of the hospital, in quarters that are furnished by the hospital, and using utilities which are furnished by the hospital as an aid in physically and emotionally conditioning the patients for posthospitalization employment.

Sections 404.1536 and 404.1539 of Social Security Regulations No. 4 (20 CFR 404.1536 and 404.1539) are pertinent in this case.

Section 404.1536 provides, in pertinent part, regarding a period of trial work that:

PERIOD OF TRIAL WORK -- (a) General. -- Any services rendered by an individual entitled to disability insurance benefits . . . during a period of trial work shall nevertheless be deemed not to have been rendered for the purpose of determining whether such individual's disability ceased at any time after the expiration of such period of trial work.

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(c) Duration. -- A period of trial work for any individual shall begin with the month in which the individual becomes entitled to disability insurance benefits . . . Provided, that such period shall not begin earlier than October 1960, or before the month in which application is filed for such benefits, and shall end with the close of whichever of the following calendar months is the earlier:
(1) The 9th month (whether or not consecutive), beginning on or after the first day of such period, in which the individual renders any services, or
(2) the month in which the individual;s disability (as defined in section 404.1505 (a) ceases, as determined without regard to work performed during the period of trial work.
(d) Meaning of "Services." -- When used in this section"services" means any activity even though not substantial gainful activity, which is performed by an individual in employment during a period of trial work for remuneration or gain, or which is determined to be a type normally performed by remuneration or gain. Work performed without remuneration merely as a therapeutic measure or purely as a matter of training, or work usually performed in daily routine around the home or in self-care, is not considered "services."

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Section 404.1539 provides, in pertinent part, regarding cessation of disability that:

CESSATION OF DISABILITY -- Where it has been determined that an individual is under a disability as defined in section 404.1501, the "disability shall be found to have ceased;
(a) In the case of an individual entitled to disability insurance benefits . . . . in the earlier of the following:
(1) The month in which the impairment, as established by the medical or other evidence, is no longer of such severity as to prevent him from engaging in any substantial gainful activity . . ., or
(2) The month in which the individual has regained his ability to engage in substantial gainful activity . . . as demonstrated by work activity after application of the provisions in section 404.1536.

A question has been raised as to whether the claimant's activity in the project constitutes "services" in period of trial work within the meaning of section 404.1536 of Regulations No. 4 (20 CFR 404.1536) so as to require consideration in determining whether his disability period.

In applying the criteria of "services" set forth in section 404.1536(d) supra, to the services of the claimant in the project, it appears that his work activity does not fall under the exempted areas of "daily routine around the home" or "self-care." the work activity was not "training" in a true sense because the type of work performed was essentially of a very simple and repetitive nature. The work activity merely "a therapeutic measure" if no remuneration were involved. The remuneration was an incentive to sustain patients' work activities and to reward them in proportion to individual productivity.

It also appears that there was no employer-employee relationship with respect to the services performed as the companies furnishing the work had no right to control and direct the individuals performing the services. These companies had no contact whatsoever with the individuals performing the services or their amounts of remuneration. In view of these factors, it is concluded the "services" of the claimant were not performed in an employment relationship.

Further, it is apparent this work activity was not "of a type normally performed for remuneration or gain." The claimant was not free to select his work activity; it was selected for him by his doctor. The physical and mental conditions of the claimant and other participants were constantly being checked. patients could rest whenever they wanted to. These working conditions cannot be considered as normal working conditions.

Based on the foregoing it is determined that the work activities under the rehabilitation project do not constitute "services" in a period of trial work, within the meaning of section 404.1536 of Regulations No. 4 (20 CFR 404.1536).

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