author: DORSEY, District Judge.

text:
    John HYLAND v. NEW HAVEN RADIOLOGY ASSOCIATES.
    Civ. No. N-82-300 (PCD).
    United States District Court, D. Connecticut.
    April 16, 1985.

      Joseph D. Garrison, New Haven, Conn., for plaintiff.
    David R. Schaefer, Robert J. Lofgren, Brenner, Saltzman, Wallman & Goldman, New Haven, Conn., and James A. Wade, Robinson & Cole, Hartford, Conn., for defendant.
   RULING ON DEPENDANT’S MOTION FOR SUMMARY JUDGMENT

DORSEY, District Judge.

Defendant, New Haven Radiology Associates (Radiology), has moved for summary judgment as to the complaint’s sole remaining count, on grounds that the Age Discrimination in Employment Act, 29 U.S.C. §§ 621, et seq. (ADEA), does not reach decisions as to employment of shareholders of a professional corporation inter se. Facts

Plaintiff, John Hyland, M.D. (Hyland), was a founding member of defendant, a Connecticut professional service corporation, formed in 1972 for the exclusive provision of radiological services to the Hospital of St. Raphael in New Haven, Connecticut.

Each of the five founding radiologists (members) capitalized Radiology by the same amount; received the same amount of stock; was an officer and director of Radiology and executed identical employment and stockholders agreements. Each member received compensation of $60,000 per year and shared equally in any profits or losses. The stockholders agreement provided that stock could only be held by a member. A withdrawing member must sell, and the remaining members must purchase, the withdrawing member's stock.

Radiology employed physicians who were not members. After such a physician had worked for a number of years, the members decided whether to offer him or her membership. If admitted, the physician purchased enough stock to equalize the number of shares held by all members. He or she received the same salary and benefits as each of the founding members and had the same right to share in the profits and management of Radiology.

On July 22, 1980, Hyland was expelled from Radiology by its other members. He was fifty-one years old at the time. Hyland entered into a Memorandum of Agreement with Radiology setting forth the terms of his employment termination, one of which was that the remaining members of Radiology would purchase his stock within ninety days of his termination. Hyland alleges that Radiology obstructed and delayed this purchase by refusing to meet with him and by improperly valuing Radiology’s net worth. Hyland brought this action seeking money damages and equitable relief for alleged age discrimination in violation of ADEA, as well as breach of contract, wrongful discharge and intentional infliction of mental distress. By rulings on February 2, 1983, and January 24, 1984, this court dismissed all but the ADEA claim and dismissed the latter as to the individual members of Radiology.

Discussion

I.

Radiology moves for summary judgment on grounds that Radiology is not an “employer” and that Hyland is not an “employee” as defined by the ADEA.

Since a professional corporation meets the ADEA definition of “employer,” cf. EEOC v. Dowd & Dowd, Ltd., 736 F.2d 1177 (7th Cir.1984), the claim that Radiology is not an employer is unfounded. The ADEA defines “employer” as “a person engaged in an industry affecting commerce who has twenty or more employees____” 29 U.S.C. § 630(b). “Person” is defined as “one or more individuals, partnerships, associations, labor organizations, corporations, business trusts, legal representatives, or any organized group of persons,” 29 U.S.C. § 630(a). The parties do not dispute that Radiology engages in an industry affecting commerce with twenty or more employees, excluding the members.

II.

Defendant’s second claim is that Hyland cannot be considered an “employee” under ADEA and thus does not fall under its protection. The ADEA offers little guidance, defining employee as “an individual employed by any employer____” 29 U.S.C. § 630(f). The ADEA, Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e, et seq. (Title VII), and the Fair Labor Standards Act, 29 U.S.C. §§ 201, et seq. (FLSA), have similar definitions of employee and employer. Because the purpose of all these anti-discrimination acts is similar, cases interpreting one act are given substantial weight when interpreting the other acts. Lorillard v. Pons, 434 U.S. 575, 584, 98 S.Ct. 866, 55 L.Ed.2d 40 (1978); Getter v. Markham, 635 F.2d 1027, 1032 (2d Cir.1980).

The legislative history of Title VII shows that “employee” was “intended to have its common dictionary meaning, except as expressly qualified by the Act.” 110 Cong. Rec. 7216 (Remarks of Senator Clark, April 8,1964). A subsequent amendment to Title VII that would have made the Act inapplicable to physicians employed by a hospital was defeated. During debate on this measure, Senator Javits stated that “this amendment would go back beyond decades of struggle and of injustice ... and thus lock in and fortify the idea that being a doctor or surgeon is just too good for members of a minority, and that they have to be subject to discrimination in respect of it, and the Federal law will not protect them.” 118 Cong.Rec. 1463-64 (1972). However, this remark does not speak to the issue in this case, whether the anti-discrimination statutes were meant to protect professionals who have an ownership and management status inseparably intertwined with more traditional employee status.

Plaintiff argues that Radiology should be deemed a corporation. If so, its members as well as staff would be employees of the corporation and thus protected by ADEA. Plaintiff stresses that defendant has adopted corporate status under Connecticut law; is treated for tax purposes as a corporation; and has referred to Hyland as well as other members of Radiology as “employees” during the course of this action. Plaintiff contends that since Radiology considers itself a corporation for tax and liability purposes, consistency demands that it be treated as a corporation for all purposes. Hishon v. King & Spalding, 678 F.2d 1022 (11th Cir.1982), rev’d on other grounds, — U.S. -, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984). However, the general rule is that an entity’s legal status should be ignored when necessary to avoid exalting form over substance. Case law under the Internal Revenue Code has long recognized such a rule. See, e.g., Gregory v. Helvering, 293 U.S. 465, 55 S.Ct. 266, 79 L.Ed. 596 (1935). Treasury regulations interpreting the Code’s definition of “corporation” ignore the state law status of an entity and make its tax treatment entirely dependent on the practical realities of how its business is conducted. 26 C.F.R. § 301.-7701-l(c).

Plaintiff also argues that since Radiology, as an entity separate from its members, controls its members’ performance and compensation, its members, conceptually, must be deemed employees. This separate entity theory has been adopted by the Supreme Court on one occasion. Beilis v. United States, 417 U.S. 85, 94 S.Ct. 2179, 40 L.Ed.2d 678 (1974). There, a partner in a three member law firm tried to claim a fifth amendment privilege for subpoenaed partnership financial records. The Court held that the individual partner’s fifth amendment privilege did not extend to the partnership’s records because the partnership was an entity with a separate existence. The Court noted that many private partnerships are closer in size, structure and impersonality to corporations than to voluntary associations. Id. 417 U.S. at 93-94, 94 S.Ct. at 2185-86. Beilis, however, is distinguishable, as it dealt with a factual and legal situation completely different from the present case. The purpose and policy reasons for refusing to shield partnership records from production have nothing to do with the remedial purpose of the anti-discrimination acts.

Most courts, in determining whether a plaintiff has employee status under one of the anti-discrimination acts, have adopted an “economic realities” test, first propounded by the Supreme Court in NLRB v. Hearst Publications, 322 U.S. 111, 64 S.Ct. 851, 88 L.Ed. 1170 (1944). Under this test, courts look to the economic realities of the plaintiff’s employment situation, especially the plaintiff's ownership and management interest in the employing entity. Burke v. Friedman, 556 F.2d 867 (7th Cir.1977). The Burke court held that a partner could not be considered an employee under Title VII. Since partners manage and control the business and share in profits and losses, Burke reasoned that they must be employers and thus could not be employees as well. Id. at 869. The Equal Employment Opportunity Commission has recently embraced the economic realities test, holding in Decision No. 85-4, 3/18/85, reported in 53 U.S.L.W. 2492 (4/9/85), that an individual’s ability to control and manage the business is determinative as to whether a “partner” is a partner in fact or an “employee” for Title VII purposes.

The same test has been applied to deny employee status to shareholders of a law firm operating as a professional corporation. EEOC v. Dowd & Dowd, 736 F.2d 1177 (7th Cir.1984). The Dowd court found that “the role of a shareholder in a professional corporation is far more analogous to a partner in a partnership than it is to the shareholder of a general corporation.” The Court of Appeals for the Eleventh Circuit, deciding an issue that was not later reached by the Supreme Court, has also adopted Burke’s economic realities test and held that partners in a law firm are not “employees” under Title VII. Hishon, 678 F.2d at 1027. No other authority bearing on this issue has been found in the circuit courts.

The Supreme Court has yet to face the issue. It has applied an economic realities test to a knitting cooperative and held that individual owner-knitters were nevertheless employees under FLSA. Goldberg v. Whitaker House Cooperative, Inc., 366 U.S. 28, 81 S.Ct. 933, 6 L.Ed.2d 100 (1961). In Hishon, — U.S. -, 104 S.Ct. 2229, 81 L.Ed.2d 59, the Court was presented with the issue but did not decide it, ruling instead that partnership consideration was one of the “terms, conditions or privileges of employment” protected from discriminatory application by Title VII. Justice Powell concurred in order to make clear his

understanding that the Court’s opinion should not be read as extending Title VII to the management of a law firm by its partners. The reasoning of the Court’s opinion does not require that the relationship among partners be characterized as an ‘employment’ relationship to which Title VII would apply. The relationship among law partners differs markedly from that between employer and employee ____ The judgmental and sensitive decisions that must be made among the ‘partners embrace a wide range of subjects. The essence of the law partnership is the common conduct of a shared enterprise. The relationship among law partners contemplates that decisions important to the partnership normally will be made by common agreement____

Id. 104 S.Ct. at 2236 (footnotes omitted).

III.

Applying the economic realities test to the present case, Radiology amounts to a partnership in all but name. The structure of defendant’s business is an equal division of ownership and management, and the equal sharing of profits and losses among the members, all hallmarks of partnership status. EEOC v. Dowd & Dowd, 736 F.2d at 1178; Burke, 556 F.2d at 869. Radiology scrupulously observed this equality principle even to the extent of reducing present members’ stock holdings to give new members an equal share of stock. Radiology’s purpose in incorporating was to gain advantageous tax and civil liability treatment. In reality, Radiology was operated and managed as a partnership. As a member of this common enterprise, Hyland cannot separate himself from his management and ownership participation in order to be considered as an “employee.” Since there are no material facts in dispute, and plaintiff is not an “employee” under ADEA, defendant’s motion for summary judgment is granted.

IV.

Plaintiff’s reply brief to defendant’s motion for summary judgment seeks the imposition of sanctions against defendant under Rule 11, Fed.R.Civ.P. Plaintiff complains that defendant’s motion is dilatory because defendant must have believed there was a material fact in dispute (i.e. whether Radiology was essentially a partnership or a corporation) and thus it knew it could never prevail on its motion. This argument confuses factual and legal issues. The facts in the present case are virtually undisputed. The issue is one of law: whether the facts of Radiology’s operation and plaintiff’s role as one of its members confers “employee” status on plaintiff under the ADEA.

Plaintiff’s second claim for sanctions is that defendant’s motion should be filed with the Internal Revenue Service so that it can review defendant’s tax status. As discussed above, it is entirely appropriate to claim that an entity is a corporation for tax purposes and a partnership for other purposes.

Plaintiff’s motion for sanctions is denied.

SO ORDERED.

      . The only exception was Dr. Robert Shapiro, one of the founding members, who received an additional $500 per month, paid into a deferred compensation account. This additional payment was authorized by the members at one of their regular meetings.

      . Title VII defines "employer" as “a person engaged in an industry affecting commerce who has fifteen or more employees____” 42 U.S.C. § 2000e(b). It defines "employee” as "an individual employed by an employer____” 42 U.S.C. § 2000e(f).
      The FLSA defines "employer” as "any person acting directly or indirectly in the interest of an employer in relation to an employee____” 29 U.S.C. § 203(d). It defines “employee” as "any individual employed by an employer.” 29 U.S.C. § 203(e)(1).

      . A joint venturer who capitalized a company with other partners; shared in the profits and losses; and took advances from the company was held not to be an employee under FLSA in Alberstein v. Irwin B. Foster & Sons Sportswear Co., 193 F.Supp. 161 (E.D.Pa.1961).

        Lucido v. Cravath, Swaine & Moore, 425 F.Supp. 123, 128 (S.D.N.Y.1977), mentions that this is an unresolved issue and assumes, in dicta, that partners are not employees under Title VII.

      . Plaintiff agrees with much of defendant’s statement of material undisputed facts and only generally denies its other statements. When a summary judgment motion is supported by affidavits, the non-moving party "must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him.” Rule 56(e), Fed.R.Civ.P.; Beal v. Lindsay, 468 F.2d 287, 291 (2d Cir.1972).


source: Caselaw Access Project

author: CALDWELL, District Judge.

license: Public Domain

text:
    Robert E. LOVELL, Plaintiff, v. Margaret HECKLER, Secretary of Health and Human Services, Defendant.
    Civ. A. No. 82-0457.
    United States District Court, M.D. Pennsylvania.
    April 16, 1985.

      Jonathan E. Butterfield, Liebert, Short, Fitzpatrick & Lavin, Williamsport, Pa., for plaintiff.
    Gordon A.D. Zubrod, Barbara Kosik, Asst. U.S. Attys., Scranton, Pa., for defendant.
   MEMORANDUM

CALDWELL, District Judge.

I. Introduction

Plaintiff, a prevailing party in the above-captioned Social Security disability matter, has filed a motion for attorney fees and expenses pursuant to the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412(d). Plaintiff requests the fee award amount to 25% of plaintiff’s past due benefits or $75.00 per hour, the statutory maximum, for 62 hours of time expended in connection with federal court consideration of this matter. At the statutory rate the fee requested would be $4650. Alternatively, plaintiff asks for an award under 42 U.S.C. § 406(b), which permits an attorney fee award of up to 25% of plaintiff’s past due benefits. The Secretary may certify payment out of these benefits. We have examined the motion and supporting data and will award an attorney fee as delineated hereinafter.

II. EAJA Considerations

Plaintiff’s reasons for filing his motion for alternative relief hardly need elaboration. ' To receive a fee award under the EAJA, one must be a prevailing party. The Secretary must show that her position was not substantially justified, and furthermore, no special circumstances must exist which would make a fee award unjust. Under the Social Security statute, one need only be a successful claimant for fees to be awarded. The justification for the stance taken by the Secretary plays no role nor should it since fees under this statute come out of the Social Security claimant’s past due benefits. In the present case, plaintiff entered into a contingent fee agreement to compensate his counsel at the rate of 25% of past due benefits recovered. It is, however, in the interest of the claimant to receive an EAJA award in connection with federal court proceedings because his benefits are not used therefor.

The major controversy regarding the propriety of an EAJA award in this case is whether the Secretary’s position was substantially justified. This court on several occasions has expounded on the substantial justification issue, perhaps most notably in Kauffman v. Schweiker, 559 F.Supp. 372 (M.D.Pa.1983) and also in Renshaw v. Heckler, 580 F.Supp. 836 (M.D.Pa.1983). As we stated in Kauffman,

Guidance for determining whether the position of the government was “substantially justified” is found in the legislative history of the EAJA as well as in case law. One of the most thorough analyses is found in Berman v. Schweiker, 531 F.Supp. 1149 (N.D.Ill.1982) wherein attorney fees for plaintiffs privately-retained counsel were approved. In examining the standard for an attorney fee award, the court noted that when a non-governmental party prevails, the government has the burden of demonstrating that its position was “substantially justified” even though it lost the case, Id. at 1153, and that “[t]he standard falls in between the common law ‘bad faith’ exception and an automatic award of attorney’s fees to prevailing parties.” Id. at 1154. The House Report described the test as “essentially one of reasonableness” and cautions courts not to conclude that the government’s position was not “substantially justified” simply because the government was not the prevailing party or because it cannot show that “its decision to litigate was based on a substantial probability of prevailing.” H.Rep. No. 96-1418, supra, at 4989-90. See also S.Rep. No. 96-253, supra, at 7.

559 F.Supp. at 375.

We- have examined the entire record in this case and will briefly review some matters of significance. After finding its way into federal court when plaintiff filed his complaint on April 9, 1982, this case was remanded to the Secretary on January 3, 1983, pursuant to the recommendation of the United States Magistrate to whom it was assigned. The remand was ordered because the Secretary’s decision that plaintiff retained the residual functional capacity to perform sedentary work was not supported by substantial evidence. Following the remand, the Appeals Council, on May 15, 1984, adopted the decision of an administrative law judge and ruled that plaintiff was disabled under Title XVI of the Social Security Act and entitled to benefits as of April 13, 1983. On that date in 1983 a CAT scan had revealed a bony spur formation on the left posterior aspect of cervical vertebrae 5 and 6. Psychiatric evidence also supported a finding of disability.

Plaintiff, however, persisted in his allegations that he became disabled as of February 1, 1980. A supplemental transcript was filed, as was plaintiff’s motion for summary judgment and brief in support thereof. Plaintiff’s motion was unopposed by the Secretary; nevertheless the Magistrate thoroughly considered the conflicting medical opinions on the interpretation of the significance of a myelogram performed in August, 1980. The testimony of a medical advisor who did not examine plaintiff was heavily relied upon by the Secretary, and evidence from two of plaintiff’s treating physicians was essentially rejected.

In Kauffman, supra, we considered the substantial justification issue as it related to contradictory medical evidence from a doctor who performed a one-time examination of plaintiff in contrast to information provided by a family physician and a treating surgeon. In Kauffman we concluded that the government’s position was not substantially justified, and we found persuasive a similar analysis in Hornal v. Schweiker, 551 F.Supp. 612 (M.D.Tenn. 1982). In the present case the medical advisor’s conclusions were based on documentary evidence and should similarly be rejected in the face of the opinions of plaintiff’s treating physicians, as well as psychiatric evidence of record.

We might find the Secretary’s arguments more convincing in her brief opposing attorney fees had she had opposed plaintiff’s second motion for summary judgment. It seems somewhat anticlimactic at this point to argue about the propriety of the Magistrate’s conclusions that plaintiff’s disability commenced in February, 1980, particularly when the Secretary filed no exceptions to the Magistrate’s Report. Nevertheless, we have thoroughly considered the Secretary’s position but conclude that a fee award should be made.

III. Amount of Fees

The Secretary has elected not to challenge the hours claimed by plaintiff’s attorney nor the statutory maximum rate of $75 per hour. In some respects, the present matter resembles the attorney fee considerations addressed in Campbell v. Heckler, 603 F.Supp. 1388 (M.D.Pa.1985). In Campbell the court held that because counsel was awarded fees under the EAJA a further award under 42 U.S.C. § 406(b) for district court services was not justified. We feel that position is a sound one. Plaintiff, however, may petition the Secretary to certify further attorney fees out of plaintiff’s past due benefits. Plaintiff entered into a contingent fee agreement, as we have noted, and he submitted an affidavit with the fee motion reaffirming that agreement.

We have reviewed the hours claimed by counsel in connection with proceedings before this court and conclude that fifty (50) hours rather than the sixty-two (62) claimed would be reasonable. Accordingly, we shall award attorney fees under the EAJA in the amount of $3,750.00 and expenses of $262.14. No further fees pursuant to 42 U.S.C. § 406(b) shall be awarded in connection with representation of plaintiff in federal court.

      . Although the EAJA expired on October 1, 1984, the current motion is properly filed because the Act continues to be applicable "through final disposition of any action before the date of repeal.” Pub.L. 98^481, Section 204(c).

      . The complete citations for the House and Senate Reports are H.R.Rep. No. 1418, 96th Cong., 2d Sess. 18, reprinted in 1980 U.S.Code Cong. & Ad.News 4953, 4994 and S.Rep. No. 96-253, 1st Sess. 1 (1979).


author: WARREN, District Judge.

text:
    Yolanda TENUTA, Plaintiff, v. Margaret HECKLER, Secretary of Health and Human Services, Defendant.
    No. 83-C-1607.
    United States District Court, E.D. Wisconsin.
    April 16, 1985.
    See also, D.C., 102 F.R.D. 583.
    Paul Gagliardi, Madrigrano, Gagliardi & Zievers, Kenosha, Wis., for plaintiff.

      Melvin K. Washington, Asst. U.S. Atty., Milwaukee, Wis., for defendant.
   ORDER

WARREN, District Judge.

In his Recommendation of January 29, 1985, in this matter, Magistrate Robert L. Bittner considered the decision of the Secretary of Health and Human Services, denying the plaintiffs applications for disability insurance benefits and supplemental security income under the Social Security Act. Based on his review of the record before him, the Magistrate concluded principally that there is substantial evidence to support the Appeals Council’s determination that the plaintiff has no impairments that significantly limit her ability to perform basic work-related functions and that she is thus not disabled with a severe impairment.

As a threshold matter, the Magistrate accurately noted that the Appeals Council had reversed the disability finding of the Administrative Law Judge on the basis that the plaintiff’s claims of headaches and neck pains were substantially unsupported by clinical findings, laboratory tests, or other established methods of confirming medical impairment. Acknowledging the Secretary’s role as fact-finder and, in particular, the authority of the Appeals Council to reject the Administrative Law Judge’s credibility findings when its rejection is based on reasonable considerations expressly articulated, the Magistrate found substantial evidence to support the administrative decision, as follows:

The Appeals Council articulated a number of reasons for overturning the AU’s determination. The Appeals Council pointed out there is nothing in the record which established medical evidence to account for the plaintiff’s headaches. There is no evidence of loss of muscle power or coordination, no evidence of atrophy, no medically established finding of muscle spasm, and no finding of sensory loss. Thus, the record provides no adequate basis for functional restrictions of the severity alleged by the plaintiff. The Appeals Council further pointed out that the plaintiff was able to work full-time on her job as a cook, for approximately a year after she recovered from the automobile accident until the business closed in October 1981. Although the plaintiff alleged in her application for benefits that there was a sudden worsening of her condition then, it is not substantiated by any evidence in the record that her symptoms were any worse after that date than they were before. This Court finds the reasons articulated by the Appeals Council for rejection of the AU’s credibility determination to constitute substantial evidence.

Magistrate’s Recommendation at 9-10 (January 29, 1985).

In further support of his conclusion, the Magistrate, principally on the basis of the nature of the medical symptoms presented by this case, distinguished the authority offered by the plaintiff in support of her position that her medical impairment need not be substantiated by objective clinical findings. See Culver v. Califano, 502 F.Supp. 661 (W.D.N.Y.1980); Walston v. Gardner, 381 F.2d 580 (6th Cir.1967). Specifically, the Magistrate cited this Court’s holding in Brown v. Secretary, 403 F.Supp. 938, 942 (E.D.Wis.1975), for the proposition that “the lack of a need for objective clinical data and laboratory findings goes to the issue of whether a claimant’s pain is of a psychological origin rather than organic and does not abrogate the requirement that pain must result from a medically determinable impairment.”

In the end, the Magistrate found that the plaintiff’s failure to establish the existence of some medically determinable impairment causing her pain, when coupled with the Appeals Council’s treatment of both her claim to degenerative cervical arthritis and her thermography report of April 11, 1983, support the Secretary’s determination that the plaintiff is not so disabled as to prevent her from performing basic work-related functions. Based on this conclusion, the Magistrate recommended that the Court affirm the administrative decision below.

Pursuant to 28 U.S.C. § 636(b)(1)(B) & (C), Rule 72(b) of the Federal Rules of Civil Procedure, and Local Rule 13.03, the parties were afforded ten days after service of the Magistrate’s Recommendation in which to serve and file specific, written objections with this Court. Under cover of his letter of February 5, 1985, requesting de novo review of his client’s case, plaintiff’s counsel submitted a memorandum articulating such specific objections to the Magistrate’s Recommendation of January 29, 1985.

In his memorandum of objections, plaintiff’s counsel directs the Court’s attention to several portions of the administrative record that arguably establish the existence of some medically verifiable basis for the plaintiff’s symptoms. Specifically, the plaintiff contends that the reports submitted by Dr. Jose Kanshepolsky with respect to the plaintiff’s restricted neck motion, occipital nerve blocks, and occipital neuralgia all show that she is suffering from a medically determinable impairment — a conclusion likewise arguably supported by the results of the thermography performed by Dr. Kanshepolsky on or about April 11, 1983.

Furthermore, the plaintiff maintains that the findings of Dr. Sanford J. Larson with respect to her limited range of neck motion and of Dr. Jose E. Reyes with respect to the condition of her upper right extremity effectively refute the determination of the Appeals Council that there is no medical evidence to account for her reported symptoms. Finally, the plaintiff finds support for her position in the report submitted by Vocational Expert Gayle Dickten-Stangle, who concluded that she is permanently and totally disabled from engaging in some form of gainful employment. Based on these specific objections and the entire administrative record in this matter, the plaintiff urges this Court to reverse the Secretary’s determination on the basis that the plaintiff is no longer able to perform basic work-related functions.

Pursuant to Rule 72(b) of the Federal Rules of Civil Procedure and Local Rule 13.03, the Secretary has been afforded ten days from service of the plaintiff’s objections in which to respond. To date, the Secretary has filed no such response. At the same time, counsel for the plaintiff has recently supplemented his client’s earlier memorandum of objections with a published article discussing, among other things, the extent to which subjectively-felt pain should be considered in making benefit-eligibility determinations. By providing the Court with a copy of this article, the plaintiff clearly seeks to add additional support to her contention that the medical evidence described in her summary judgment motion and outlined again in her recent objections, even if subjective in nature, should be viewed as conclusive on the issue of disability.

As required under Rule 72(b) and Local Rule 13.03(c), the Court has conducted its de novo review of the plaintiff’s claims based on the administrative record, the pleadings of the parties, the memoranda of law submitted in support of and in opposition to the plaintiff’s motion for summary judgment, and the plaintiff’s objections to the Magistrate’s Recommendation, including the recently-filed article on the use of subjective evidence in identifying medically determinable impairments. Based on this review, the Court concludes, for the reasons set forth herein, that the plaintiff’s motion for summary judgment must be granted and the Secretary’s finding of non-disability reversed.

As both parties to this action acknowledge, those types of medical findings routinely recognized by the Secretary are defined in 20 C.F.R. § 404.1528, as follows:

(a) Symptoms are your own description of your physical or mental impairment. Your statements alone are not enough to establish that there is a physical or mental impairment.
(b) Signs are anatomical, physiological, or psychological abnormalities which can be observed, apart from your statements (symptoms). Signs must be shown by medically acceptable clinical diagnostic techniques. Psychiatric signs are medieally demonstrable phenomena which indicate specific abnormalities of behavior, affect, thought, memory, orientation and contact with reality. They must also be shown by observable facts that can be medically described and evaluated.
(c) Laboratory findings are anatomical, physiological, or psychological phenomena which can be shown by the use of medically acceptable laboratory diagnostic techniques. Some of these diagnostic techniques include chemical tests, electrophysiological studies (electrocardiogram, electroencephalogram, etc.), roentgenological studies (X-rays), and psychological tests (emphasis supplied).

The Secretary’s standards for evaluating symptoms, including pain, are set forth in 20 C.F.R. § 404.1529, as follows:

If you have a physical or mental impairment, you may have symptoms (like pain, shortness of breath, weakness or nervousness). We consider all your symptoms, including pain, and the extent to which signs and laboratory findings confirm these symptoms. The effects of all symptoms, including severe and prolonged pain, must be evaluated on the basis of a medically determinable impairment which can be shown to be the cause of the symptom. We will never find that you are disabled based on your symptoms, including pain, unless medical signs or findings show that there is a medical condition that could be reasonably expected to produce those symptoms (emphasis supplied).

See also Social Security Ruling 82-58 (C.E. 1982) (“clinical and laboratory data and well-documented medical history must establish findings which may reasonably account for the symptom in a particular impairment”).

Having reviewed carefully each of the medical reports submitted by Drs. Kanshepolsky, Larson, and Reyes, the Court notes at the outset that the principal issue raised by the parties’ motion papers — that is whether there exists a demonstrable causal link between the plaintiff’s symptoms and some medically determinable impairment— is not susceptible of simple resolution. As the Magistrate accurately observed in his Recommendation of January 29, 1985, there is some support for the position that the plaintiff is not so disabled as to prevent her from performing basic work-related functions; principal among that evidence are Dr. Kanshepolsky’s findings that both skull and cervical spine x-rays and an electroencephalogram proved normal and that the plaintiff suffers from no neurological deficits, along with Dr. Reyes’ companion conclusions that the plaintiff’s hand grip is strong and equal, that she suffers from no weakness or paralysis, that the electromyogram of the plaintiff’s upper extremity is normal, and that rheumatoid screen tests proved negative. See Transcript at 102-106, 118, & 138.

Notwithstanding these contrary medical indications, the Court finds that the record, when reviewed and considered as a whole, supports the conclusion that the plaintiff’s symptoms of headaches and neck pains are, indeed, the result of a medically determinable impairment. In addition to his general diagnosis that the plaintiff suffers under severe restrictions of flexion, extension, and rotation in neck motion, Dr. Kanshepolsky concludes that the plaintiff sustained some injury to her occipital nerves as a result of the automobile accident in which she was involved in December of 1979 and, in this context, that a bilateral occipital neurectormy might substantially improve her chronic headache condition. See Transcript at 103, 105, & 110-111. Significantly, Dr. Kanshepolsky also finds, to “a reasonable degree of medical certainty, [that the plaintiff] continues to suffer from bilateral occipital neuralgia and referred pain to the posteria cervical and shoulder area, muscular in nature,” and that her headaches were improved following occipital nerve blocks. See Transcript at 133-134.

The Court further notes that Dr. Kanshepolsky’s diagnosis is supported, to some extent, by the medical findings offered by Dr. Larson regarding the nature of the plaintiff’s pain and the range of motion in her head and neck. See Transcript at 132. These findings are, in turn, substantiated by Dr. Reyes’ observations that the plaintiff continues to suffer from “severe occipital headaches, pain and stiffness in the neck, pareshesia of the right upper extremity, and weakness of the right upper extremity, headaches, and dizziness”; based on this analysis, he concludes that the plaintiff is permanently disabled and unable to secure gainful employment. See Transcript at 118 & 155-157.

Most significantly, however, the Court rejects the Appeals Council’s apparent conclusion that the results of the liquid crystal thermography may not be characterized as medically acceptable evidence of the plaintiff’s symptoms. Dr. Kanshepolsky summarized these tests results as follows:

There is a hot uptake over the left occipital area when compared with the right. There is a difference in the temperature in both shoulder areas with the right side being colder than the left.

Transcript at 160. Admittedly, the import of Dr. Kanshepolsky’s description is properly understood only with reference to the purposes for which thermograms are used; yet the articles on the techniques and methodology of the thermographic procedure, incorporated in the administrative record at 161-173, demonstrate plainly that these test results are increasingly acknowledged in the medical community as objective, credible evidence of the existence or nonexistence of chronic pain.

In the present case, the lack of thermographic symmetry in the plaintiff’s shoulder areas, as confirmed by Dr. Kanshepolsky’s report of April 11, 1983, provides substantial medical support for the plaintiff’s claims to soft tissue and permanent neurological disability. When coupled with the apparently uncontested fact that the plaintiff suffers from degenerative cervical arthritis, the results of the thermogram plainly establish the existence of some medically determinable impairment, as required by 20 C.F.R. §§ 404.1528 & 404.-1529, see supra at 626-627.

Finally, the Court notes with interest that Vocational Expert Dickten-Stangle, upon a thorough review of the medical record, concluded that the plaintiff’s “headaches prevent her from gainful full-time employment” and, accordingly, that she is “permanently and totally disabled from gainful employment.” Transcript at 117. As Ms. Dickten-Stangle suggests in her report, this applicant is clearly not an individual resigned to the limitations imposed upon her by her severe pain; rather, she is a highly motivated, tenacious applicant who, the Court surmises, would prefer to return to her employment as a clerk rather than to retire upon the disability insurance benefits and supplemental security income she now seeks. The mere fact that, in the Court’s view, the severe, albeit somewhat subjective, nature of her pain now prevents her from returning to her former employment does not justify a denial of her present application.

Based on the complete record compiled to date, the Court fails to find substantial evidence to support the Secretary’s determination that this plaintiff does not suffer from a severe impairment preventing her from performing basic employment-related functions. Instead, the Court concludes that her impairments are sufficiently severe to prevent her from performing her previous work or any other in the national economy and that she is thus disabled within the meaning of the Social Security Act.

CONCLUSION

For the reasons articulated above, the Court hereby GRANTS the plaintiff’s motion for summary reversal of the administrative decision denying her applications for disability insurance benefits and supplemental security income. The defendant’s opposing motion for summary judgment is accordingly DENIED.

      . While not critical to its ruling today, the scholarly article on proving disabling pain, submitted by the plaintiff in supplemental support of her position, does suggest that so-called “subjective medical evidence” of pain need not be given the short shrift apparently afforded the evidence at the administrative level, as follows:
      Within these limitations, however, the status of what has been termed “subjective medical evidence" is now securely established, as far as the reviewing courts are concerned. Although the Social Security Act requires proof of a medically determinable impairment, this does not mean that symptoms or subjective complaints associated with such an impairment may be ignored when not substantiated by objective medical evidence. As one district court has suggested, to the extent the Social Security Regulations enact such rules, they are "of dubious legality." It is submitted that, in addition, such a rule would also be inconsistent with the practicalities of proving a disabling impairment. Not only is "subjective medical evidence” likely to be highly reliable and probative, but to exclude it would make the rejection of meritorious disability claims simply too easy, and too likely. For these reasons, the judicially imposed rule which admits such evidence is not only consistent with the Social Security Act’s definition of "disability,” it is also absolutely necessary to the fair administration of the Act.
      G. Zaiser, "Proving Disabling Pain: SSA Policy and Circuit Law in Conflict,” Social Security Form, Vol. 6, No. 6 (June, 1984) (footnotes omitted).


author: TELESCA, District Judge.

text:
    Brian J. BURROUGHS, Plaintiff, v. The HOLIDAY INN, Rochester, New York; The City of Rochester, New York; Strong Memorial Hospital; and The Rochester Psychiatric Center, Defendants.
    No. CIV-85-333T.
    United States District Court, W.D. New York.
    April 17, 1985.
    Brian J. Burroughs, Rochester, N.Y., pro se.
    Nixon, Hargrave, Devans & Doyle, Rochester, N.Y., for Holiday Inn; Mary Ann Rogers, of counsel.
    Louis N. Kash, Corp. Counsel, Rochester, N.Y., for City of Rochester; Michael J. Looby, Deputy Corp. Counsel, of counsel.
    Osborn, Considine, Reed, Van De Yate & Burke, Rochester, N.Y., for Strong Memorial Hosp.; Jeffrey M. Wilkens, of counsel.
    Robert Abrams, N.Y.S. Atty. Gen., Rochester, N.Y., for Rochester Psychiatric Center; Carlos Rodriguez, Ass’t. Atty. Gen., of counsel.
   DECISION and ORDER

TELESCA, District Judge.

Defendant, the City of Rochester, moves to dismiss portions of plaintiff’s complaint on the grounds that plaintiff failed to meet the notice of claim requirement which is a condition precedent to maintenance of an action against the City under New York General Municipal Law Sections 50-e and 50 — i. Plaintiff, Brian Burroughs, argues that compliance with those requirements should not be required in a Federal civil rights action brought pursuant to 42 U.S.C. Section 1983.

The City of Rochester does not dispute that “there is considerable federal authority in this Circuit for the proposition that notice of claim requirements simply do not apply to actions brought under the federal civil rights statutes because such conditions unfairly infringe upon the assertion of federally created rights”. Paschall v. Mayone, 454 F.Supp. 1289, 1298 (S.D.N.Y.1978). The last time the question was squarely decided by the Court of Appeals from this Circuit, it held that notice of claim requirements under New York State law are not applicable to Federal civil rights actions. Brandon v. Board of Education of Guilderland Central School District, 635 F.2d 971, 973-4 fn. 2 (2d Cir.1980), cert. denied, 454 U.S. 1123, 102 S.Ct. 970, 71 L.Ed.2d 109 (1981).

The rationale underlying the Court’s decision in Brandon was more recently reaffirmed by the Court in the related context of selecting a statute of limitations for Section 1983 actions. The Court repeated its “concern that a relatively short limitations period would not be consistent with the broad remedial purposes of Section 1983”. Pauk v. Board of Trustees of City University of New York, 654 F.2d 856, 862 (2d Cir.1981), cert. denied, 455 U.S. 1000, 102 S.Ct. 1631, 71 L.Ed.2d 866 (1982). The Court refused “to apply a state policy restricting remedies against public officials to a federal statute that is designed to augment remedies against those officials, especially a federal statute that affords remedies for the protection of constitutional rights”. Id. That conclusion was subsequently quoted with approval by the Supreme Court in Burnett v. Grattan, — U.S. -, 104 S.Ct. 2924, 2932 fn. 18, 82 L.Ed.2d 36 (1984).

Despite the unambiguous and controlling decision of the Second Circuit Court of Appeals on this question, the City of Rochester urges this Court to reach a contrary conclusion on the basis of two recent decisions, Mills v. County of Monroe, 59 N.Y.2d 307, 464 N.Y.S.2d 709, 451 N.E.2d 456 (1983) and Cardo v. Lakeland Central School District, 592 F.Supp. 765 (S.D.N.Y.1984). Of course, neither of those cases could possibly have the effect of overruling the Second Circuit’s decision in Brandon; nor did either rely upon any doctrinal developments subsequent to that decision. That fact alone is sufficient to require the rejection of defendant’s position. The courts in Mills and Cardo simply disagreed with the Second Circuit Court of Appeals in their judgment as to whether the burden of complying with New York’s notice of claim requirements would be inconsistent with the broad remedial purposes of Federal civil rights law. Until the Second Circuit sees fit to revise its judgment on that matter, however, this Court is compelled to adopt that position.

Finally, even if this Court were free to second-guess the wisdom of the court’s holding in Brandon, I would not agree with defendant that the contrary result subsequently reached by two lower courts is more “persuasive”. In Mills and Cardo, the courts concluded that New York’s notice of claim requirements should be applicable to Section 1983 actions because those provisions of state law are not “inconsistent” with federal law. But that reasoning puts the cart before the horse, because federal courts are required to observe state procedural rules (to the extent consistent with federal law) only where there is “a void ... in federal statutory law”, Board of Regents of the University of the State of New York v. Tomanio, 446 U.S. 478, 483, 100 S.Ct. 1790, 1794, 64 L.Ed.2d 440 (1980), rendering federal law “unsuitable or inadequate”. Chardon v. Soto, 462 U.S. 650, 103 S.Ct. 2611, 2615, 77 L.Ed.2d 74 (1983). Yet neither Mills nor Cardo offers any explanation as to how the absence of a notice of claim requirement in Section 1983 creates the sort of void which renders the statute incomplete or deficient without resorting to state law. Surely not every area in which the statute is silent represents a flaw or gap to be filled by consistent state laws.

Accordingly, the City of Rochester’s motion to dismiss the complaint, on the grounds that plaintiff failed to file a proper or timely notice of claim, is denied. The balance of defendant’s motions shall be decided separately.

ALL OF THE ABOVE IS SO ORDERED.

      . In the alternative, plaintiff also argues that he did file a timely notice of claim which satisfied the requirements of the General Municipal Law. Because of my disposition of the question of law presented here, I need not reach that issue.

      . 42 U.S.C. Section 1988 directs District Courts to rely on federal law in civil rights actions “so far as such laws are suitable to carry the same into effect”, and to resort to state rules of law in those cases where federal laws "are not adapted to the object, or are deficient in the provisions necessary to furnish suitable remedies and punish offenses against law”.

      . In Tomanio, supra, in concluding that Section 1983 was governed by a state’s statute of limitations and tolling provisions, the Supreme Court did not rely on the mere fact that federal law was “silent" in this area. Rather, the court reasoned that Congress, by its mere silence, could not be presumed to have intended to create a cause of action which would not be subject to such fundamental statutory provisions as a period of limitations and tolling rules. 446 U.S. at 488, 100 S.Ct. at 1797. Clearly, no similar conclusion can be drawn from Congress’ failure to require a notice of claim prior to commencement of an action under Section 1983.


author: NEAHER, District Judge.

text:
    FEDERAL DEPOSIT INSURANCE CORP., Plaintiff, v. Frances PAPPADIO, Michael Pappadio, Jr., Michael Pappadio and Ideal Trucking Co., Defendants.
    No. CV-83-3478(ERN).
    United States District Court, E.D. New York.
    April 17, 1985.
    Ira L. Hyams, P.C., Jericho, N.Y., for Plaintiff.
    Simon, Uncyk & Borenkind by Marc L. Zoldessy, New York City, for defendants Michael Pappadio, Jr. and Frances Pappadio.
   MEMORANDUM AND ORDER

NEAHER, District Judge.

Plaintiff requests leave of court to interpose an amended complaint, which alleges several fraudulent conveyances made by defendant Michael Pappadio that were discovered after the inception of this suit. Defendants Michael Pappadio Jr. and Frances Pappadio oppose the motion only in part. First, they contend that the proposed additional causes of action should not relate back to the date of plaintiffs complaint under Fed.R.Civ.P. 15(c), since the claims are wholly unrelated causes of action alleging entirely distinct conduct, transactions or occurrences.

The first new claim (fourth cause of action in the proposed complaint) alleges that on May 20, 1977 defendant Michael Pappadio conveyed a house located in Queens to Nicolo and Carmella Amone who executed and delivered a $50,000 bond and mortgage to Frances, Michael’s wife. In turn, on August 2, 1982 Frances transferred the mortgage to PMMJ Associates, a partnership consisting of Michael’s four children and listing its office at Michael’s residence. The second new claim (fifth cause of action in the proposed complaint) alleges Michael’s assignment to Crosby Realty Corp. of rights to purchase two parcels of realty located in the Bronx. The seller conveyed the properties to Crosby Realty, which in turn, on July 1, 1977 conveyed them to PMMJ Associates. On June 18, 1984 PMMJ sold them to Filippo Cangialosi and Vincent Dilluvio for a $125,000 purchase money mortgage. The third new claim (sixth cause of action in the proposed complaint) recites that Frances used funds obtained from Michael without consideration to purchase realty located in Manhattan, out of which Ideal Trucking Co. had conducted its business. Michael’s conveyance of his interest in the Ideal Trucking Co., a partnership, is the subject of the original complaint. The fifth new claim (seventh cause of action in the proposed complaint) mirrors the fourth. Allegedly, on September 30,1977 Michael sold a house located in Queens to Andrew C. and Margaret C. Bos, who delivered a purchase money bond or note and mortgage to Frances in the sum of $44,900. The sixth new claim (eighth cause of action in the proposed complaint) alleges that on September 6, 1974 Michael sold another house located in Queens to Michael and Lillian Mangialino for a mortgage in the amount of $40,000 and thereafter, assigned this mortgage to Frances on August 31, 1977.

A claim to set aside a fraudulent conveyance is governed by the six year statute of limitations of NYCPLR § 213 subd. 1. See Schwonke v. Banister, 83 A.D.2d 752, 443 N.Y.S.2d 513, 515 (4th Dept.1981) (memorandum) (citing Hearn 45 St. Corp. v. Jano, 283 N.Y. 139, 27 N.E.2d 814 (1940)). This case, which asserted three causes of action concerning alleged fraudulent conveyances related to Michael’s interest in Ideal Trucking Co., a partnership, was commenced with the filing of the complaint on August 5, 1983. The original complaint recites that plaintiff commenced an action in 1976, as successor in interest to the insolvent Franklin National Bank, to recover loans made to Miss Normee Ltd. and Nu-Style Fashions, Inc. Michael had guaranteed these loans. The suit ripened into a judgment of $571,830.01 on November 28, 1979, of which $479,-726.35 plus interest from October 13, 1982 remains unpaid.

In light of the above facts, even if the Court were to rule that the proposed fourth and fifth causes of action relate back to the date of the complaint under Fed.R.Civ.P. 15(c), they would still be time barred as to Michael Pappadio because they would have been commenced on August 5, 1983, more than six years after the respectively pled conveyance dates of May 20, 1977 (fourth cause of action) and May 20,1974 or July 1, 1977 (fifth cause of action) depending on the accrual date. See Domestic & Foreign Discount Corp. v. Beuerlein, 54 N.Y.S.2d 548, 550 (Sup.Ct. Monroe Co.1944) (citing Werbelovsky v. Rosen, 260 A.D. 222, 21 N.Y.S.2d 88, 91 (2d Dept.1940)). Concerning the fourth cause of action, although Frances transferred the mortgage on August 2, 1982 to PMMJ Associates, of which Michael Jr. is alleged to be a partner along with his siblings, the proposed complaint does not allege that Frances is or was a debtor of plaintiff rendered insolvent by this transaction. Similarly, concerning the fifth cause of action, although PMMJ conveyed the property there at issue on June 13, 1984, the proposed complaint does not allege that PMMJ or its constituent partner, Michael Jr., is or was a debtor of plaintiff rendered insolvent by the transfer.

Nevertheless, although the conveyances by Frances and PMMJ may not give rise to causes of action pursuant to N.Y. Debt. & Cred.Law § 273, the proposed complaint’s allegations charge Michael, Frances, and Michael Jr. with a scheme to defraud the FDIC. Specifically, II14, which is part of the original complaint, and which is realleged in support of each of the causes of action, states,

“14. Upon information and belief, the transfer described herein was made with the intent and purpose to hinder, delay and defraud the creditors of the defendant Michael Pappadio and with particular intent to defraud FDIC; that upon information and belief such conveyance was made without fair consideration and was accepted by the transferees with knowledge of the wrongful and fraudulent intent and purpose and with like intent and purpose.”

See Nasaba Corp. v. Harfred Realty Corp., 287 N.Y. 290, 39 N.E.2d 243 (1942); cf. Mariner Harbor Nat. Bank v. Imperial Beverage Corp., 264 A.D. 785, 34 N.Y.S.2d 847, 848 (2d Dept.1942) (memorandum). As pointed out in Erbe v. Lincoln Rochester Trust Co., 3 N.Y.2d 321, 165 N.Y.S.2d 107, 144 N.E.2d 78 (1957), plaintiff’s failure to demand specifically relief in the nature of damages for this fraud is immaterial.

“That the relief requested is not consistent with these allegations is of no moment. A prayer for relief may be resorted to as an aid in determining the nature of a cause of action. However, it is not controlling and may even be disregarded if inappropriate. The complaint being susceptible of such construction it may not be dismissed on motion. As we declared in Nasaba Corp. v. Harfred Realty Corp. (287 N.Y. 290, 296 [39 N.E.2d 243]): ‘At least, where the complaint may be so construed as to state causes of action the prosecution of which is not barred by any statute of limitations, speculation as to what other cause of action may be sufficiently alleged to warrant recovery thereunder which may be barred by some statute of limitations should not be indulged in the absence of facts appearing upon the trial after the defenses upon which defendants rely have been presented by proper pleading and proof (Schenck v. State Line Telephone Co., 238 N.Y. 308 [144 N.E. 592], Clark v. Kirby, 243 N.Y. 295 [153 N.E. 79]).’”

Id. at 325-26, 165 N.Y.S.2d 107, 144 N.E.2d 78 (citations omitted). Consequently, the statute of limitations applicable to plaintiff’s allegations is contained in NYCPLR § 213 subd. 8, six years from “the time the plaintiff ... discovered the fraud, or could with reasonable diligence have discovered it.” Cf. Scola v. Morgan, 66 A.D.2d 228, 412 N.Y.S.2d 893 (1st Dept.1979) (where, after trial, the trial court’s findings of fact supported a conclusion of actual fraud as opposed to constructive fraud, the appellate court applied CPLR § 213 subd. 8 to hold that plaintiff’s time to sue ran from the discovery of the fraudulent conveyances); Ehrlich v. Mindel, 9 F.R.D. 308 (E.D.N.Y.1949).

In an affidavit accompanying the proposed complaint, plaintiff’s attorney avers that the FDIC discovered the additional conveyances after the inception of this suit. Defendants’ papers do not contest this fact nor raise any issue concerning § 213 subd. 8. If such an issue exists, defendants may respond to the proposed complaint with a motion to dismiss the claims as time barred. See Fleischmann Lumber Corp. v. Resources Corp. International, 34 Del.Ch. 509, 106 A.2d 205, 206 (1954) (opinion by then Chancellor and now United States Circuit Judge Seitz). In light of the intrafamilial nature of the conveyances, the existence of an issue concerning plaintiff’s diligence in discovering the conveyances is doubtful. See American Agr. Chemical Co. v. Jankowski, 19 F.Supp. 509, 510 (E.D.N.Y.1937). Nevertheless, as the record now stands, regardless of the doctrine of relation back of amendments, the newly asserted claims are not time barred; therefore, defendants’ first objection lacks merit.

Defendants’ second objection is founded upon the fear that in response to being added as defendants to this action, the Arnones, mortgagors of the property in the fourth cause of action, and the Boses, mortgagors of the property in the seventh cause of action, “may out of intimidation or excess concern, cease making payments under each of the respective mortgages to Defendant Frances Pappadio, notwithstanding that there has been no adjudication on the merits [of] Plaintiff’s claims.” Affirmation of Marc Zoldessy 118. To remedy this highly speculative and contingent event, defendants ask that this Court’s “Order contain a provision that the rights of Frances Pappadio as mortgagee under each of the respective mortgages shall in no way be impaired or the payments due thereunder should not be affected absent a final determination of the merits of Plaintiff’s claims.” Id. at ¶ 9. This request is premature. Plaintiff’s motion papers seek only leave to amend the complaint and to issue the necessary summonses to the new defendants. Plaintiff has not requested a preliminary injunction directing that the Amones or the Boses make their payments on these mortgages to the FDIC. As a result, this objection also lacks merit.

Accordingly, plaintiff’s motion to amend the complaint and to issue additional summonses is granted.

SO ORDERED.


author: ROSENBLATT, District Judge.

text:
    Joseph A. FELIX, Harlon H. Rogers, Plaintiffs, v. ARIZONA DEPARTMENT OF HEALTH SERVICES, GOODS, VITAL RECORDS SECTION, Lloyd F. Novick, M.D., M.P.H. Director, Original Birth Certificate, Defendants.
    No. CIV 85-202 PHX PGR.
    United States District Court, D. Arizona, Fourth Division.
    April 17, 1985.

      Joseph A. Felix, in pro. per.
    Harlon H. Rogers, in pro. per.
    Jonathan H. Schwartz, Asst. Chief Counsel, Atty. Gen., Civ. Div., Phoenix, Ariz., for defendants.
   OPINION AND ORDER

ROSENBLATT, District Judge.

Before the Court is the defendants’ motion to dismiss the amended complaint herein pursuant to Fed.R.Civ.P. 12(b)(6). The Court does not reach the issue of whether the amended complaint fails to state a claim upon which relief may be granted inasmuch as the Court finds that it lacks subject matter jurisdiction over this action and therefore dismisses it pursuant to Fed.R.Civ.P. 12(h)(3). The Court further finds that dismissal of this action is appropriate pursuant to Rule 11(h) of the Local Rules of the District of Arizona, in that the plaintiffs have failed to respond in a timely fashion to the defendants’ motion to dismiss and are therefore deemed to have consented to the granting of the motion.

The plaintiffs have designated their amended complaint as one in rem for the return of goods, the goods in question being their original birth certificates on file with the Arizona Department of Health Services, Bureau of Vital Statistics. The plaintiffs allege that their birth certificates are original bills of lading evidencing original voluntary grants of authority and that they are the consignees of the birth certificates with legal right of recovery. In their amended complaint, the plaintiffs request that the Court issue a writ of seizure for the arrest of the birth certificates and enter a judgment in their favor returning their original birth certificates to them. The plaintiffs allege that the Court has the authority to accomplish these requests pursuant to the Court’s admiralty and maritime jurisdiction.

It is a fundamental principle of law that because federal courts are courts of limited jurisdiction, the constitutionally and statutorily-imposed limits upon federal jurisdiction are to be neither disregarded nor evaded. Owen Equipment & Erection Co. v. Kroger, 437 U.S. 365, 374, 98 S.Ct. 2396, 2403, 57 L.Ed.2d 274 (1978). Thus, federal courts are presumed to lack jurisdiction in a particular action unless the contrary affirmatively appears, General Atomic Co. v. United Nuclear Corp., 655 F.2d 968, 968-969 (9th Cir.1981), cert. denied, 455 U.S. 948, 102 S.Ct. 1449, 71 L.Ed.2d 662 (1982), and must eschew substantive adjudication unless and until jurisdiction is found. United States v. 40.60 Acres of Land, etc., 483 F.2d 927, 928 (9th Cir.1973). The Court finds that the plaintiffs’ complaint fails to affirmatively demonstrate that this Court has subject matter jurisdiction over the instant action. The plaintiffs’ contention that their complaint falls within the Court’s admiralty and maritime jurisdiction is totally baseless. The plaintiffs’ claim that they are entitled to the return of their original birth certificates held by the State of Arizona does not even arguably have a significant relationship to traditional maritime activity, which relationship is the touchstone in determining whether admiralty jurisdiction exists. Perkins v. Marine Terminals Corp., 673 F.2d 1097, 1101 (9th Cir.1982). Any contention on the plaintiffs’ part that the Admiralty Extension Act, 46 U.S.C. § 740, provides the Court with subject matter jurisdiction over this action is unavailing since that statute neither created new causes of action, Louisville 7 N.R. Co. v. M/V Bayou LaCombe, 597 F.2d 469, 472 (5th Cir.1979), nor expanded the traditional maritime activities which give rise to an admiralty claim. Heim v. City of New York, 442 F.Supp. 35, 37 (E.D.N.Y.1977). In short, the allegation in the amended complaint that this action comes within the Court’s admiralty and maritime jurisdiction is insufficient to invoke Fed.R.Civ.P. 9(h) and thus designate the action as one in admiralty, Smith v. Pinell, 597 F.2d 994, 996-997 n. 2 (5th Cir.1979), and since the complaint fails to plead any facts from which subject matter jurisdiction may otherwise be clearly inferred, subject matter jurisdiction is therefore lacking and dismissal is the appropriate disposition. Demarest v. United States, 718 F.2d 964, 965 (9th Cir.1983).

The defendants have requested that they be awarded their reasonable attorney’s fees pursuant to Fed.R.Civ.P. 11. An award of attorney’s fees is appropriate under Rule 11 in this case inasmuch as there is nothing in the allegations of the amended complaint to show that the complaint is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification or reversal of existing law. Indeed, the allegations in the amended complaint which purport to establish this action as one in admiralty are so entirely frivolous and patently groundless as to evince an improper purpose on the part of the plaintiffs in making them. Therefore;

IT IS ORDERED that this action is dismissed for lack of subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(h)(3).

IT IS FURTHER ORDERED that the plaintiffs shall pay to the defendants the amount of the reasonable expenses incurred by them as a result of the filing of the amended complaint, including a reasonable attorney’s fee. The defendants shall have thirty (30) days from the date of this Order in which to submit time records and affidavits in support of their request for attorney’s fees.

IT IS FURTHER ORDERED that the hearing set in this matter on April 29,1985, at 11:00 a.m. is vacated.


author: CURTIN, Chief Judge.

text:
    Carol A. ROTH, as Executor of the Estate of Floyd W. Striffler, Plaintiff, v. SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant.
    No. CIV-83-1007C.
    United States District Court, W.D. New York.
    April 17, 1985.

      Denis A. Kitchen, Jr., Clarence, N.Y., for plaintiff.'
    Salvatore R. Martoche, U.S. Atty., Buffalo, N.Y. (Sonia C. Jaipaul, Asst. U.S. Atty., Buffalo, N.Y., of counsel), for defendant.
   CURTIN, Chief Judge.

This is an appeal from a final decision by the Secretary of Health and Human Services denying payment of extended care benefits for care received by the decedent while he was in a skilled nursing facility. Jurisdiction is based upon section 1869(b) of the Social Security Act, 42 U.S.C. § 1395ff(b). Both parties have moved for judgment on the pleadings.

I.

Floyd Striffler was transferred from Lockport Memorial Hospital to the Briody Nursing Home on December 9,1981. Briody is a skilled nursing care facility. On the same day, Striffler’s daughter was notified that the services to be furnished to her father did not meet the requirements for coverage under Medicare. This finding was affirmed by the Medicare intermediary and upon reconsideration. A hearing before an Administrative Law Judge [ALJ] was held in September 1982. The ALJ issued his decision on October 7 and concluded that Mr. Striffler did not require or receive skilled nursing care or other skilled rehabilitative services on a daily basis at any time on or after December 9, 1981. The AU’s decision became the final decision of the Secretary on April 14, 1983, when the Appeals Council denied review. This appeal followed.

II.

On November 10, 1981, at age 78, Mr. Striffler was admitted to Lockport Memorial Hospital with a fractured left hip and atherosclerotic myocardial disease. Surgery was performed on his hip on the date of admission. A long-stemmed prosthesis was inserted while Mr. Striffler was under a spinal anesthesia.

Mr. Striffler also suffered from confusion during his hospital stay. Haldol was prescribed to address this problem, and dosages were reduced over time. A transurethral resection of the prostate was performed on December 1, 1981. Mr. Striffler experienced some trouble urinating and required catheterization. He was discharged from Lockport Memorial on December 9, 1981.

Mr. Striffler entered Briody Nursing Home on December 9. His treatment program included gait training, a bland diet, and bladder training, but it is not clear that he ever received bladder training. He could walk with the assistance of a walkerette (Tr. at 95). The record also indicated that he was given haldol for “restlessness” and “agitation” from January 7-15, 1982. This prescription was effective. During the same period, motrin was prescribed for arthritis. Mr. Striffler had also been given haldol from December 21 through December 25, 1981. Tr. at 85. Clots were found in his urine on December 28. No clots were noted thereafter. Id.

On the forms reflecting Mr. Striffler’s transfer to Briody, it was noted that his condition was unstable, so that a registered nurse needed to evaluate the need for medication and treatment on a daily basis. It was also noted that there was a “high probability that complications would arise in caring for the patient without skilled nursing supervision of the treatment program on a daily basis.” Tr. at 101. Moreover, Mr. Striffler was said to need “complex skilled nursing supervision” seven days a week and skilled physical therapy a minimum of five days a week. Tr. at 101-02. The record contains a sumamry of his physical therapy. The summary consists of reports by physical therapists indicating some progress but continued problems with rapid foot movements. Tr. at 92-96.

A report dated January 6,1982, was filed by Dr. C.R. Gona. Dr. Gona was the physician who performed the transurethral resection upon Mr. Striffler. He noted that Mr. Striffler was blind, had very poor hearing, and was prone to confusion. He concluded that the patient had “multiple problems” and that he needed “skilled nursing care and rehabilitation.” Tr. at 106. However, Dr. Gona’s report listed Mr. Striffler’s age as 89, when he was actually 78. Another physician, Dr. Carl Conrad, also stated that Mr. Striffler required a skilled nursing facility due to severe osteoarthritis. Tr. at 108.

Curiously, the forms indicating the need for skilled care and close supervision were prepared by the same registered nurse who prepared the notice sent to Mr. Striffler’s daughter indicating non-coverage under Medicare. Compare Tr. pp. 50, 101-02. The notice of non-coverage was the only statement in the record from a professional indicating that Mr. Striffler did not need skilled care. The AU stated in his opinion that forms prepared by hospital personnel “clearly stated” that Mr. Striffler needed “custodial care.” The AU did not refer to any particular report. The Secretary’s brief echoes the AU’s remark. The Secretary also does not cite a hospital report. Instead, she cites the AU’s unannotated statement. The court’s review of the record found no “clear statement” to this effect from hospital personnel.

III.

The Social Security Act provides that benefits shall be paid to eligible persons who receive “post-hospital extended care services.” 42 U.S.C. § 1395d(a)(2). Post-hospital extended care services are services given in a skilled nursing facility after a period of hospitalization of at least three days. 42 U.S.C. § 1395x(i). Extended care services include nursing care provided under the supervision of a registered nurse, physical therapy, medication, and other services provided by skilled nursing facilities. 42 U.S.C. § 1395x(h). However, benefits are not paid for “custodial care.” 42 U.S.C. § 1395y(a)(9).

Custodial care is not defined in the Social Security Act. Courts generally define it as care which can be provided by non-professionals and which does not require the continued attention of trained personnel. Kuebler v. Secretary of Health and Human Services, 579 F.Supp. 1436, 1438 (E.D.N.Y.1984); Hayner v. Weinberger, 382 F.Supp. 762, 766 (E.D.N.Y.1974); Samuels v. Weinberger, 379 F.Supp. 120, 123 (S.D.Ohio 1973).

The Secretary’s regulations provide that post-hospital skilled nursing care is covered only if the services are 1) ordered by a physician, and 2) require skills of persons such as physical therapists. 42 C.F.R. §§ 409.30, 409.31(a). A skilled service is one which is “so inherently complex that it can be safely and effectively performed only by, or under the supervision of, professional or technical personnel.” 42 C.F.R. § 409.32(a). Services which are not normally “skilled” are covered if the patient has complications requiring the attention of a professional. 42 C.F.R. § 409.-32(b).

The issue in this case is whether or not Mr. Striffler required and received skilled nursing care. The court must take into consideration the claimant’s physical condition as a whole and the record of the services provided. Kuebler v. Secretary of Health and Human Services, 579 F.Supp. at 1438. The findings of the Secretary cannot be upset unless they are unsupported by substantial evidence. 42 U.S.C. §§ 1395ff(b)(1), 405(g). Substantial evidence is evidence which a reasonable mind accepts as adequate to support a conclusion. Richardson v. Perales, 402 U.S. 389, 401, 91 S.Ct. 1420, 1427, 28 L.Ed.2d 842 (1971). Opinions of treating physicians are not binding upon the Secretary, but they are entitled to substantial weight. Failure to accord such evidence such consideration undermines the Secretary’s conclusion. Kuebler v. Secretary of Health and Human Services, 479 F.Supp. at 1438.

The Secretary’s conclusion in this case was based upon her determination that the services such as gait training and assistance with such things as grooming, bathing, etc., were custodial. Tr. at 10. The court concludes that this determination is not supported by substantial evidence.

The only statement from a health care professional indicating that Mr. Striffler did not receive covered services is the notice mailed to his daughter. Tr. at 50. This statement is contradicted on forms completed the next day by the same person who mailed the notice. Tr. at 101-02. The latter forms specify in clear language the need for professional supervision.

The record also contains the reports concerning the claimant’s physical therapy. Many sessions of therapy were administered, all under the supervision of a physical therapist. Moreover, there is the opinion of Dr. Gona that the patient needed professional care. The patient also needed medication for arthritis and agitation.

The Secretary’s finding appears to be based upon a sense that the care provided Mr. Striffler could have been supplied by a lay person. However, the Secretary did not give adequate weight to the opinions of Dr. Gona and Dr. Conrad or to Mr. Striffler’s condition as a whole as reflected by the combination of his ailments.

The court does not lightly reject the Secretary’s conclusion. However, in a close case such as this one, the beneficient and remedial purposes of the Social Security Act indicate that the question of coverage should be resolved in the claimant’s favor. This result is also suggested by an example provided in the regulations. A patient who has surgery for the insertion of a hip prosthesis may need continuous monitoring by skilled personnel to detect postoperative complications. Persons with psychological problems in addition to physical ailments present difficult treatment problems after requiring skilled care. See, 42 C.F.R. § 409.33(a)(2).

IV.

The decision of the Secretary is reversed. The case is remanded to the Secretary solely for the purpose of computing benefits.

So ordered.


author: WEBER, District Judge.

text:
    Ray E. VINTILLA, et al., Plaintiffs, v. The UNITED STATES STEEL CORPORATION PLAN FOR EMPLOYEE PENSION BENEFITS, Defendant.
    Civ. A. No. 83-1034.
    United States District Court, W.D. Pennsylvania.
    April 18, 1985.
    Francis X. Cook, John R. Vintilla, Cleveland, Ohio, Gerard F. Wrabley, Pittsburgh, Pa., for plaintiffs.
    James P. Carney, Patrick Ritchey, Reed Smith Shaw & McClay, Pittsburgh, Pa., for defendant.
   OPINION

WEBER, District Judge.

Plaintiffs have brought an action under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001 et seq. to recover pension benefits they claim defendant is wrongfully withholding. Defendant admits withholding the full amounts in question, but responds that ERISA does not prohibit its actions. Both sides have moved for summary judgment. At the outset, we find this case well-suited for summary judgment. The parties have agreed to the relevant facts by stipulation, which presents us with one question: whether defendant’s refusal to pay these pension benefits constitutes a “forfeiture' tion of ERISA. in viola-

I. FACTS.

Plaintiffs are 25 former management employees of U.S. Steel Corporation who worked for various lengths of time in the company’s Venezuelan mining subsidiary, Orinoco Mining Company (“Orinoco”). The evidence indicates that those employees received salaries and benefits similar to those of their counterparts in other foreign counties and the United States. In addition, according to Venezuelan law, all workers in Venezuela are entitled to certain benefits in excess of what might be considered typical compensation in the United States. Two such benefits are payments for “cesantía” and “antigüedades.” Roughly translated, the terms mean “unemployment aid” and “payment for years of service,” respectively (referred to collectively as “severance benefits”). These severance benefits consisted of a month’s salary multiplied by total years of service, paid in lump sum to all employees upon separation from the company. See Defendant’s Appendix to Motion for Summary Judgment, Exhibit F. U.S. Steel Corporation was the sole contributor to the trust from which payments were drawn. The company ultimately paid about $4,000,000 in severance benefits to its Orinoco employees pursuant to Venezuelan law. Several plaintiffs received lump sum payments of more than $200,000. See Plaintiffs’ Appendix to Motion for Summary Judgment at 17 and 20.

In 1974, Venezuela took steps to nationalize Orinoco Mining Company. U.S. Steel agreed to provide technical assistance to the new state-owned company during the transition. Following this transition, U.S. Steel would have no part in ownership or management of the new company. Anticipating the resulting transfer or retirement of all employees in Venezuela, U.S. Steel offered them a plan providing for various options in receiving severance benefits. See id. at 21-24. The choice of lump sum payments — the choice made by plaintiffs— triggered a provision in the company’s pension plan that lies at the heart of this dispute. Section 3.9(a) of the plan provided that severance benefits would be deducted, or set off, from the non-contributory pension U.S. Steel employees normally would receive. Some plaintiffs who ■ received large severance payments complain that defendant’s recovery by setoff will preclude them from collecting any non-contributory benefits until the mid-1990’s.

The parties do not dispute the existence or the effect of the pension plan provision authorizing defendant to set off severance benefits against pension payments. Copies of the 1976 and 1977 U.S. Steel pension plan filed with the court both provide in section 3.9(a) that:

If any participant is or shall become entitled to or shall be paid any discharge, liquidation or dismissal or severance allowance or payment of similar kind ... under any policy of any of the Employing Companies ... or by reason of any law, then the total amount of such severance allowance paid or payable to him shall be deducted from or charged against the amount determined in accordance with paragraphs 3.3(b), (c) and (d) and paragraphs 3.4 and 3.5 [these paragraphs contain the Plan’s formula for calculating the amount of pension payments.]

The parties have stipulated that section 3.9(a) applied at all relevant times and that “plaintiffs were aware that any pension ultimately received from the Plan would be calculated including a deduction for any antigüedades and cesantía received from [Orinoco] in accordance with the published policies of [Orinoco] and the Non-Contributory Pension Rules of the Plan.” Stipulation, paragraphs 10 and 12. The remaining question is whether this deduction is permissible under ERISA.

II. THE SUPREME COURT’S CONSTRUCTION OF 29 U.S.C. § 1053.

Plaintiffs bring their action under 29 U.S.C. § 1132(a) which authorizes civil enforcement of claims for pension benefits. They contend that defendant’s refusal to pay their vested benefits constitutes a forfeiture in violation of 29 U.S.C. § 1053. Section 1053 states simply that “Each pension plan shall provide that an employee’s right to his normal retirement benefit is nonforfeitable upon the attainment of normal retirement age.”

The United States Supreme Court faced this issue in Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504, 101 S.Ct. 1895, 68 L.Ed.2d 402 (1981), which we have no doubt controls our decision in this case. The chief difference between Alessi and the case at bar is the type of income set off against pension benefits. In Alessi, the set off involved workers’ compensation. We must determine by the same analysis whether ERISA prohibits this setoff which stems from Venezuelan labor law.

The plaintiffs in Alessi were retired employees who had obtained workers’ compensation awards. The administrators of their pension plan reduced their retirement benefits by the amount of this compensation. The retirees argued that they were being denied vested benefits in violation of 29 U.S.C. § 1053. In defining the issue at stake, the Court made a fundamental distinction which we believe controls the case at bar. Section 1053 unmistakably protects an employee’s right to his vested pension benefits. On the other hand, ERISA exerts little control over the content of the benefits themselves. The parties to the pension plan are responsible for deciding the actual benefits available under the plan. As the Court stated in Alessi:

The statutory definition of “nonforfeitable” assures that an employee’s claim to the protected benefit is legally enforceable, but it does not guarantee a particular amount or a method for calculating the benefit. As we explained last Term, “it is the claim to the benefit, rather than the benefit itself, that must be ‘unconditional’ and ‘legally enforceable against the plan.’ ”

451 U.S. at 512, 101 S.Ct. at 1900 (quoting Nachman Cory. v. Pension Benefit Guaranty Cory., 446 U.S. 359, 372-73, 100 S.Ct. 1723, 1731-32, 64 L.Ed.2d 354 (1980)). The Court thus held that it is permissible under ERISA for a pension plan to set off workers’ compensation against expected retirement benefits. In so doing, the Court established that section 1053 is not a sweeping assurance against all setoffs to pension benefits.

III. PERMISSIBILITY OF INTEGRATION.

The general practice of setoffs against pension payments is known as “integration”, “a calculation practice under which benefit levels are determined by combining pension funds with other income streams available to the retired employee.” Alessi, 451 U.S. at 514, 101 S.Ct. at 1901. Integration is a method of stretching pension funds while insuring that a recipient’s overall income is not reduced. Individual employees’ retirement income will be less when integration is applied, as plaintiffs here object. The group of pension recipients under the plan, however, gains an advantage: the more outside income available to plan beneficiaries, the more pension money may be saved by setoff, within limits. This savings would permit the fund to pay a higher average pension.

The Treasury and Congress have consistently upheld integration. The Internal Revenue Service issued Revenue Rulings prior to enactment of ERISA approving setoff of worker’s compensation against pension payments. See, e.g. Rev.Rul. 69-421, 1969-2 C.B. 72; Rev.Rul. 68-243, 1968-1 C.B. 157. In addition, the Treasury promulgated a regulation that interprets 26 U.S.C. § 411, the Internal Revenue Code’s parallel to 29 U.S.C. § 1053(a), ERISA’s nonforfeiture provision. The regulation endorses integration in stating that:

[N]onforfeitable rights are not considered to be forfeitable by reason of the fact that they may be reduced to take into account benefits which are provided under the Social Security Act or under any other Federal or State law and which are taken into account in determining plan benefits.

26 C.F.R. § 1.411(a)-4(a) (1983).

Furthermore, in enacting ERISA, Congress considered, but did not prohibit, integration. On the contrary, Congress expressly permitted integration of social security and railroad retirement benefits. 29 U.S.C. §§ 1054(b)(l)(B)(iv), 1054(b)(1)(C), and 1054(b)(1)(G); 42 U.S.C. § 401 et seq. and 45 U.S.C. § 231 et seq. Finally, we are also bound by the rulings made by the Supreme Court in Alessi, which considered all the evidence above.

Plaintiffs argue that the claim made in Alessi is distinguishable from theirs because their non-contributory pension payments are being withheld entirely. In Alessi the setoff amounted to only a portion of the retirees’ benefit payments; the retirees simply received a reduced amount. Plaintiffs assert that when a setoff is entire, rather than partial, it is transformed into a forfeiture. This argument carries little weight. The amount of setoff is merely a function of the amount to be recouped and the length of time necessary to recoup, both of which will vary from case to case. These facts have little bearing on the legal issue of permissible setoffs under ERISA.

We hold that the Plan did not violate ERISA in setting off plaintiffs’ severance benefits against their non-contributory pension payments. Under Alessi, we must reject plaintiffs’ only argument of substance, that this setoff is a forfeiture under 1053(a). The Alessi holding itself leads us to conclude that section 1053(a) does not operate as a general bar to set-offs. Furthermore, we believe that policy reasons expressed by the court in Alessi, as well as those brought into play under the facts of our case, justify defendant’s actions.

First, as described above, the group of beneficiaries under plaintiffs’ pension plan benefits from any savings in fund outlays. Integration is a practical method of extending fund resources while maintaining a consistent or increasing level of payments among recipients. Second, we must acknowledge that U.S. Steel was the sole contributor to both the pension fund and the fund from which severance payments were drawn. In this setoff of severance payments, we thus find an example of an employer regulating access to retirement benefits using a formula recognized by both parties — section 3.9(a) of the pension plan.

As the Alessi opinion makes clear, Congress did not expressly restrict all set-offs of pension benefits under ERISA. 451 U.S. at 511-12, 101 S.Ct. at 1900-01. Instead, the Court recognized that Congress gave parties to pension plans wide latitude in choosing the content of their retirement benefits. An option to these plans might be setoff of other income. From plaintiffs’ perspective, they are losing benefits which have already been calculated and are now due. They overlook the fact, however, that deduction of their severance benefits is itself part of the formula for determining the amount of their pension payments. That is, under the terms of the plan, the amount of pension to which plaintiffs are entitled is not fixed until the setoff is made.

This case appears to fall within the scope of actions that an employer would take in defining the contents of a benefit plan, on which ERISA has little bearing. Plaintiffs argue that their severance benefits have nothing to do with their pension; the severance payments actually were compensation for the hardships of working in Venezuela. We do not question the difficulties of working in foreign countries. This argument is contradicted, however, by plaintiffs’ stipulation that they knew their severance benefits would be deducted from their pension payments. Stipulation at 4. The setoff was not capricious. It is easily seen as part of the internal design of the plan itself. Ultimately, we find it persuasive that the employer made all the contributions to both the pension trust and the trust for severance benefits. We consider this adjustment between strictly employer-funded benefits less infringing than that of a pension fund setting off unrelated outside income such as social security benefits or worker’s compensation.

Having decided that defendant’s actions are not outside the law, we are also satisfied that the setoff formula is intended to protect legitimate interests. In this case of a multinational corporation, integration is necessary to insure fairness to all employees in the administration of pension funds, few of whom receive such generous protection from foreign labor laws. Integration also helps control the cost of pension plans. We recognize that its application has limits. Nevertheless, it is a useful tool for encouraging private plans, making them more widely available, and for stabilizing or improving present plans.

CONCLUSION

We have little direct guidance for determining the permissibility of setoffs under ERISA. But plaintiff’s suit relies solely on § 1053, which itself is ambiguous as a basis for their cause of action. When we combine congressional and administrative understanding of setoffs with the Supreme Court’s construction of section 1053 in the critical Alessi opinion, we find that ERISA does not prohibit this setoff. We will issue an order consistent with the foregoing opinion.

      . Plaintiffs originally filed their complaint in the United States District Court for the Northern District of Ohio. The complaint named both the present defendant and United States Steel Corporation as defendants. In an opinion filed May 4, 1983, Judge Krenzler dismissed U.S. Steel Corporation from the suit and transferred it to this court.

      . Section 1132(a) states that "A civil action may be brought — (1) by a participant or beneficiary —... (B) to recover benefits due to him under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan.”

      . ERISA's definitional section, 29 U.S.C. § 1002(19) provides that:
      The term "nonforfeitable" when used with respect to a pension benefit or right means a claim obtained by a participant or his beneficiary to that part of an immediate or deferred benefit under a pension plan which arises from the participant's service, which is unconditional, and which is legally enforceable against the plan. For purposes of this paragraph, a right to an accrued benefit derived from employer contributions shall not be treated as forfeitable merely because the plan contains a provision described in section 1053(a)(3) of this title.
      Section 1053(a)(3)(A) through (D) expressly permits four types of setoffs. It is not a forfeiture when setoffs: (1) are contingent upon the employee's death; (2) occur when the employee accepts the job under certain circumstances; (3) are due to some retroactive amendments to a pension plan; or (4) result from withdrawals of benefits obtained through mandatory contributions.
      None of these exceptions applies here.