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February 11, 1982


The opinion of the court was delivered by: GERRY

 Claimant, Salvatore Lizzio, seeks review under § 205(g) of the Social Security Act (the Act), 42 U.S.C. § 405(g) (1974), of a final decision by the Secretary of Health and Human Services, which denied claimant's application for a period of disability and disability insurance benefits. The Secretary found that claimant was performing substantial gainful activity and thus was not disabled within the meaning of the Act.

 An administrative decision to deny benefits will be upheld on review if supported by "substantial evidence." 42 U.S.C. § 405(g); Dobrowolsky v. Califano, 606 F.2d 403, 406 (3d Cir. 1979). Substantial evidence has been defined as "more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Richardson v. Perales, 402 U.S. 389, 401, 28 L. Ed. 2d 842, 91 S. Ct. 1420 (1971). See also Lewis v. Califano, 616 F.2d 73, 76 (3d Cir. 1980). The conclusive effect of the substantial evidence rule applies not only with respect to the Secretary's findings as to basic evidentiary facts, but also to inferences and conclusions drawn therefrom. Jolley v. Weinberger, 537 F.2d 1179, 1181 (4th Cir. 1976); Reyes v. Secretary of HEW, 155 U.S. App. D.C. 154, 476 F.2d 910, 914 (D.C. Cir. 1973). Despite the deference to administrative decisions required by these standards, a reviewing court "retains a responsibility to scrutinize the entire record and to reverse or remand if the Secretary's decision is not supported by substantial evidence." Smith v. Califano, 637 F.2d 968 (3d Cir. 1981); Baerga v. Richardson, 500 F.2d 309, 313 (3d Cir. 1974), cert. denied, 420 U.S. 931, 95 S. Ct. 1133, 43 L. Ed. 2d 403 (1975). Further, even if the Secretary's factual findings are supported by substantial evidence, this court may review whether the administrative determination was made upon correct legal standards. Strickland v. Harris, 615 F.2d 1103, 1108 (5th Cir. 1980); McCarty v. Richardson, 459 F.2d 3, 4 (5th Cir. 1972).

 The term disability means inability to engage in any substantial gainful activity by reason of a physical or mental impairment that can be expected to result in death or that has lasted or can be expected to last for a continuous period of at least 12 months. 42 U.S.C. § 423(d)(1)(A). The existence of such impairment must be demonstrable by medically acceptable clinical and laboratory diagnostic techniques. 42 U.S.C. § 423(d)(3). Where a finding of disability cannot be made based on medical evidence alone, other evidence must be considered.

 A determination of whether an impairment constitutes a disability within the meaning of the Act rests on two prongs: (1) determination of the extent of impairment, and (2) determination that the impairment precludes engaging in substantial gainful activity. Rossi v. Califano, 602 F.2d 55 (3d Cir. 1979). In this regard, four types of proof are considered:

(1) objective medical facts and clinical findings;
(2) diagnoses and medical opinions of examining physicians;
(3) subjective evidence of pain and disability as testified to by the plaintiff and corroborated by others who have observed him; and
(4) the plaintiff's age, educational background and work history.

 All of these elements of proof must be considered together and in combination with each other. Barats v. Weinberger, 383 F. Supp. 276 (E.D. Pa. 1974). If plaintiff meets his initial burden of establishing that he has an impairment, physical or mental, which prevents his return to his customary occupation, the burden shifts to the Secretary to show the claimant's capacity to engage in specific existing jobs. Rossi v. Califano, supra.

 Plaintiff filed an application for a period of disability and for disability insurance benefits on February 26, 1980. Plaintiff's application was denied initially and on reconsideration. Claimant requested a hearing which was held on March 9, 1981. The Administrative Law Judge (ALJ) considered the case de novo and on April 28, 1981, found that plaintiff was not under a disability. The ALJ's decision was approved by the Appeals Council on June 19, 1981, making it the final decision of the Secretary.

 The sole basis for the ALJ's rejection of plaintiff's claim was that investigation by agents of defendant and interviews with plaintiff indicated that plaintiff continued to perform "substantial gainful activity."

 The record reveals that, from 1950 on, plaintiff operated a hardware store. In February 1980, plaintiff filed a claim for disability, at which time an employee of defendant interviewed plaintiff regarding his work activities. Plaintiff signed the reports of these activities. The reports indicate that plaintiff informed defendant that he no longer worked, that he either laid around or sat in the store. Plaintiff stated that his wife took care of all the ordering, waiting on customers, stocking shelves and ordering merchandise. Plaintiff admitted that he continued to sign checks and to advise his wife as to when to reorder.

 In reviewing the document entitled Disability Report (Tr. 101), the ALJ expressed doubts about plaintiff's termination of substantial gainful activity because the reports state that plaintiff waited on customers, stocked shelves and swept floors but performed no writing or supervisory activities in the store. It appears that the ALJ interpreted this statement to mean that plaintiff was performing those activities at the time he filed his application for disability. However, a review of the question preceding the statement of plaintiff's activities reveals that it requires plaintiff to state the type of work he engaged in before becoming disabled. Thus, plaintiff's statement that he had previously waited on customers, stocked shelves and swept floors before becoming disabled cannot be a basis, as the ALJ apparently concluded it was, for a finding that plaintiff was engaging in substantial gainful activity. Moreover, the reports do not indicate that plaintiff performed no writing in connection with operating his store but ...

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