John G. BALLARD, Plaintiff-Appellee, v. Louis W. SULLIVAN, M.D., Secretary of Health and Human Services, Defendant-Appellant

The Secretary of Health and Human Services appeals the district court order granting Ballard retirement benefits based on his net earnings for the years 1984 and 1985. We reverse.

Ballard was receiving social security retirement benefits when he began working as a traveling salesman for LSI Cuckler. His retirement benefits depended in part on current income. Retirement benefits are reduced by a percentage of each dollar earned in excess of an “exempt amount.” 42 U.S.C. §§ 403 (b)(1), (f)(3). In calculating his retirement benefits, Ballard subtracted his business and travel expenses from his gross earnings. The Secretary paid Ballard in accordance with Ballard’s calculations, but later notified him of an overpayment. Upon administrative review, the Secretary ruled that the reimbursement for expenses was not deductible because Ballard’s employer had failed to separate wages from expenses on Ballard’s paycheck as required by 20 C.F.R. § 404.1045 . The district court reversed the Secretary’s ruling on the ground that section 404.1045 was invalid, particularly as applied to traveling salesmen. The Secretary appeals.

Our review is limited to determining whether the regulation exceeds…