Summary
The Eleventh Circuit adopts the Sixth Circuit’s three-factor test for piercing fictitious family salary arrangements in Social Security retirement cases: (1) whether the claimant continues to provide substantial services; (2) whether the family member’s duties increased commensurate with their salary; and (3) whether the family member’s income supports the claimant. The court holds that the Secretary may examine substance over form and that a claimant bears the burden of rebutting the statutory presumption of excess earnings. Applying this test, the court affirms the denial of benefits because the claimant, a bandleader, retained control of his closely held corporation, his wife’s clerical duties did not change despite her salary increase, and her income supported the family. This case establishes the standard for the Eleventh Circuit when an individual arranges business affairs to qualify for Social Security benefits while continuing to work.
Holdings
- Martin was not retired; his arrangement was a fictitious family salary arrangement designed to circumvent the retirement test, and he is not entitled to Social Security benefits.
Questions Presented
- Whether Ted Martin was retired within the meaning of the Social Security Act as of January 1, 1985.
- What standards apply to piercing the veil of fictitious family salary arrangements for Social Security purposes.
Disposition
affirmed
Cases Cited (23)
- Graham v. Bowen, 790 F.2d 1572, 1574-75 (11th Cir. 1986)(cited)
- Bloodsworth v. Heckler, 703 F.2d 1233, 1239 (11th Cir. 1983)(cited)
- Powell ex rel. Powell v. Heckler, 773 F.2d 1572, 1575 (11th Cir. 1985) (per curiam)(cited)
- Richardson v. Perales, 402 U.S. 389, 401, 91 S. Ct. 1420, 1427, 28 L. Ed. 2d 842 (1971)(cited)
- McRoberts v. Bowen, 841 F.2d 1077, 1080 (11th Cir. 1988)(cited)
- Hillsman v. Bowen, 841 F.2d 1179, 1180-81 (11th Cir. 1986) (per curiam)(cited)
- Walden v. Schweiker, 672 F.2d 835, 838-39 (11th Cir. 1982)(cited)
- Sewell v. Bowen, 792 F.2d 1065, 1067 (11th Cir. 1986)(cited)
- MacGregor v. Bowen, 786 F.2d 1050, 1053 (11th Cir. 1986)(cited)
- Smith v. Heckler, 707 F.2d 1284, 1285 (11th Cir. 1983)(cited)
Showing top 10 of 23.
Cited In (2)
- Ted Martin v. Louis W. Sullivan, Secretary of the Department of Health and Human Services, Martin v. Sullivan, 894 F.2d 1520, 1529 (11th Cir. 1990)(followed)
- Ted Martin v. Louis W. Sullivan, Secretary of the Department of Health and Human Services, Martin v. Sullivan, 894 F.2d 1520, 1529 (11th Cir. 1990)(followed)