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Kaipo Vahey v. Saul

United States District Court, D. Hawaii

August 9, 2019

ANDREW SAUL, Commissioner of Social Security Defendant.



         For the reasons discussed below, the Court REVERSES the decision of the Commissioner and REMANDS to the ALJ for further administrative proceedings consistent with this Order.


         On January 6, 2015, Plaintiff Patrick Michael Kaipo Vahey (“Plaintiff”) protectively filed an application for supplemental security income (“SSI”), alleging disability beginning on September 27, 2010. Administrative R. (“AR”) 377-387. The application was denied initially and then upon reconsideration. AR 313-16, 319-21. Plaintiff then requested a hearing before an administrative law judge (“ALJ”), which was held on August 10, 2017, and at which Plaintiff appeared and testified. AR 252-77.

         On October 16, 2017, the ALJ issued his written decision finding that Plaintiff is not disabled. AR 8-27. Plaintiff sought review by the Appeals Council and submitted for the first time with his request for review his treatment notes dated between January 2016 and September 2017, as well as an opinion report by a treating doctor, dated December 28, 2017. See AR 33-108, 109-251. The Appeals Council denied Plaintiff's request for review and adopted the ALJ's decision as the final decision of the Commissioner on July 24, 2018. AR 1-7.

         Plaintiff filed a complaint on September 17, 2018, seeking review of the denial of his application for SSI benefits. ECF No. 1. He filed his opening brief (“Opening Brief”), ECF No. 15, on April 30, 2019, and Defendant Nancy A. Berryhill, the Acting Commissioner of Social Security (the “Commissioner”), [1] filed the answering brief (“Response Brief”), ECF No. 16, on May 31, 2019. Plaintiff then filed a reply brief (“Reply”), ECF No. 19, on June 15, 2019. The Court held a hearing on August 6, 2019. ECF No. 20.


         A district court has jurisdiction pursuant to 42 U.S.C. § 405(g) to review final decisions of the Commissioner of Social Security.[2]

         A final decision by the Commissioner denying Social Security disability benefits will not be disturbed by the reviewing court if it is free of legal error and supported by substantial evidence. See 42 U.S.C. § 405(g); Dale v. Colvin, 823 F.3d 941, 943 (9th Cir. 2016). Even if a decision is supported by substantial evidence, it “will still be set aside if the ALJ did not apply proper legal standards.” See Gutierrez v. Comm'r of Soc. Sec., 740 F.3d 519, 523 (9th Cir. 2014).

         In determining the existence of substantial evidence, the administrative record must be considered as a whole, weighing the evidence that both supports and detracts from the Commissioner's factual conclusions. See id. “Substantial evidence means more than a scintilla but less than a preponderance; it is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Id. (internal quotation marks omitted). “If the evidence can reasonably support either affirming or reversing, the reviewing court may not substitute its judgment for that of the Commissioner.” Id. (internal quotation marks omitted). Rather, courts “leave it to the ALJ to determine credibility, resolve conflicts in the testimony, and resolve ambiguities in the record.” Treichler v. Comm'r of Soc. Sec. Admin., 775 F.3d 1090, 1098 (9th Cir. 2014).

         But reviewing courts must be cognizant of the “longstanding principles of administrative law [that] require us to review the ALJ's decision based on the reasoning and factual findings offered by the ALJ-not post hoc rationalizations that attempt to intuit what the adjudicator may have been thinking.” Bray v. Comm'r of Soc. Sec. Admin., 554 F.3d 1219, 1225-26 (9th Cir. 2009); see also S.E.C. v. Chenery Corp., 332 U.S. 194, 196 (1947) (“If th[e] grounds [invoked by the agency] are inadequate or improper, the court is powerless to affirm the administrative action by substituting what it considers to be a more adequate or proper basis”).


         “To establish a claimant's eligibility for disability benefits under the Social Security Act, it must be shown that: (a) the claimant suffers from a medically determinable 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 not less than twelve months; and (b) the impairment renders the claimant incapable of performing the work that the claimant previously performed and incapable of performing any other substantial gainful employment that exists in the national economy.” Tackett v. Apfel, 180 F.3d 1094, 1098 (9th Cir.1999); see also 42 U.S.C. § 1382c(a)(3)(B). A claimant must satisfy both requirements to qualify as “disabled” under the Social Security Act. Tackett, 180 F.3d at 1098.

         I. The Social Security Administration's Five-Step Process for Determining Disability

         The Social Security regulations set forth a five-step sequential process for determining whether a claimant is disabled. Dominguez v. Colvin, 808 F.3d 403, 405 (9th Cir. 2014); see also 20 C.F.R. § 416.920(a). “If a claimant is found to be ‘disabled' or ‘not disabled' at any step in the sequence, there is no need to consider subsequent steps.” Ukolov v. Barnhart, 420 F.3d 1002, 1003 (9th Cir. 2005) (citations omitted in original); see also 20 C.F.R. § 416.920(a)(4). The claimant bears the burden of proof as to steps one through four, whereas the burden shifts to the Commissioner for step five. Tackett, 180 F.3d at 1098; see also Valentine v. Comm'r of Soc. Sec. Admin., 574 F.3d 685, 689 (9th Cir. 2009) (noting that the burden shifts to the Commissioner at step five to show that the claimant can do other kinds of work).

         At step one, the ALJ will consider a claimant's work activity, if any. 20 C.F.R. § 416.920(a)(4)(i). If the ALJ finds the claimant is engaged in substantial gainful activity, the ALJ will determine that the claimant is not disabled, regardless of the claimant's medical condition, age, education, or work experience. Id. § 416.920(b). Substantial gainful activity is work that is defined as both substantial (work activity involving significant physical or mental activities) and gainful (work activity done for pay or profit). Id. § 416.972. If the ALJ finds that the claimant is not engaged in substantial gainful activity, the analysis proceeds to step two. Tackett, 180 F.3d at 1098.

         Under step two, the ALJ considers the medical severity of the claimant's impairments. 20 C.F.R. § 416.920(a)(4)(ii). Only if the claimant has an impairment or combination of impairments that “significantly limits [his] physical or mental ability to do basic work activities” will the analysis proceed to step three. Id. § 416.920(c). If not, the ALJ will find the claimant is not disabled and the analysis ends there. Id. § 416.920(a)(4)(ii).

         The ALJ also considers the severity of the claimant's impairments at step three. 20 C.F.R. § 416.920(a)(4)(iii). Here, the ALJ will determine whether the claimant's impairments meet or equal the criteria of an impairment described in the regulations. Id.; see also id. § 416.925; id., Part 404, Subpart P, App. 1. If the impairments meet or equal these criteria, the claimant is deemed disabled and the analysis ends. 20 C.F.R. § 416.920(a)(4)(iii). If not, the analysis proceeds to step four. Id. § 416.920(e).

         Step four first requires the ALJ to determine the claimant's residual functional capacity (“RFC”). Id. RFC is defined as the most the claimant can do in a work setting despite his physical or mental limitations. Id. § 416.945(a)(1). In assessing a claimant's RFC, the ALJ will consider all of the relevant evidence in the claimant's case record for both severe and non-severe impairments. Id. The ALJ then uses this assessment to determine whether the claimant can still perform his past relevant work. Id. § 416.920(e). Past relevant work is defined as “work that [the claimant has] done within the past 15 years, that was substantial gainful activity, and that lasted long enough for [the claimant] to learn to do it.” 20 C.F.R. § 416.960(b)(1). The ALJ will find that the claimant is not disabled if he can still perform his past relevant work, at which point the analysis will end. Otherwise, the ALJ moves on to step five.

         In the fifth and final step, the ALJ will again consider the claimant's RFC-as well as his age, education, and work experience-to determine whether the claimant can perform other work. 20 C.F.R. § 416.920(a)(4)(v). Here, the Commissioner is responsible for providing “evidence that demonstrates that other work exists in significant numbers in the national economy that [the claimant] can do.” Id. § 416.960(c)(2); see also id. § 416.920(g). If the claimant is unable to perform other work, he is deemed disabled. 20 C.F.R. § 416.920(g). If he can make an adjustment to other available work, he is considered not disabled. Id.

         II. The ALJ's Analysis

         The ALJ found at step one that Plaintiff had not engaged in substantial gainful activity since January 6, 2015, the application date, and at step two that he suffers from the following severe impairments: schizoaffective disorder, type II; substance abuse, in probable remission; hypertension; degenerative changes of the lumbar spine, with lower lumbar facet arthropathy and radiculopathy. AR 13. At the third step, the ALJ found that Plaintiff does not have an impairment or a combination of impairments that meet or medically equal the severity of an impairment listed in 20 C.F.R. Part 404, Subpart P, Appendix 1. AR 13-15.

         Moving to step four, the ALJ determined that Plaintiff has the RFC to

perform light work as defined in 20 CFR 416.967(b), except he could lift, carry, push or pull 20 pounds occasionally and 10 pounds frequently; he could stand/walk for six hours out of eight, with normal breaks; he could perform occasional postural activities, such as climbing, stooping, kneeling, crouching, and crawling; he could perform frequent balancing; he could frequently reach in all directions, including overhead; he must avoid hazardous machinery and unprotected heights, to include no ladders, ropes, or scaffolds; he does not require the use of an assistive device; he is limited to simple and routine tasks; he is limited to a non-public environment; he cannot perform fast-paced work, such as work on a conveyor belt; he is limited to non-intense interaction with coworkers and supervisors; he cannot perform work requiring hypervigilance.

AR 15. Using this RFC, the ALJ determined at step four that Plaintiff is unable to perform past relevant work. AR 21.

         Finally, turning to step five, the ALJ determined that a finding of “not disabled” was appropriate because Plaintiff is capable of engaging in a type of substantial gainful activity that exists in significant numbers in the national economy. AR 21-22. Specifically, the ALJ relied on the vocational expert's testimony that Plaintiff would be able to perform certain representative occupations, including “1) Cleaner, DOT #323.687-014, light, SVP 2, and with approximately 127, 000 positions in the U.S.; 2) Hand Packer, DOT 920.687-018, light, SVP 1, and with approximately 10, 000 positions in the U.S.; 3) Office Helper, DOT #239.567-010, light, SVP 2, and with approximately 40, 000 positions in the U.S. AR 22.

         III. Plaintiff's Challenge on Appeal

         Plaintiff does not appear to challenge any of the findings the ALJ made at the first three steps. See gen. Opening Br. Plaintiff instead challenges the ALJ's determination at step five (which was mostly based on factual findings made at step four), that jobs exist in significant numbers in the national economy that Plaintiff can perform. See id.; see also AR 15-22. He argues that the ALJ's findings and conclusions are not supported by “substantial evidence” in the record (including evidence submitted for the first time to the Appeals Council), that the ALJ improperly weighed or rejected the testimony of certain medical professionals, and that the ALJ erred in his analysis of Plaintiff's credibility.

         IV. Whether the New Medical Evidence Submitted to the Appeals Council is Properly Part of the Record

         The Court first addresses the scope of the Administrative Record reviewable by this Court. At issue is nearly 200 pages of evidence submitted by Plaintiff to the Appeals Council after the ALJ issued his decision. The parties' briefs oversimplify the relevant rules for deciding whether newly-submitted evidence is part of the record. Of particular note is a recent change to the SSA regulations requiring that the claimant show “good cause” for the failure to timely submit evidence to the ALJ before such evidence may be “considered” by the Appeals Council. See 20 C.F.R. § 416.1470(b). The Court raised these issues at the hearing in this appeal, apparently much to the surprise of both parties. They ultimately seemed to agree that good cause was “not an issue, ” and counsel for the Commissioner conceded that the newly-submitted evidence is properly in the Administrative Record, regardless of good cause. Despite counsel's unequivocal statement at the hearing that the Commissioner does not challenge good cause, the Court will briefly address the regulatory overlay given that it defines the record before this Court.

         A. Legal and Regulatory Standards

         The scope of the record before the reviewing district court is dependent on what evidence the Appeals Council considered or should have considered. “When the Appeals Council considers new evidence in deciding whether to review a decision of the ALJ, that evidence becomes part of the administrative record, which the district court must consider when reviewing the Commissioner's final decision for substantial evidence.” Brewes v. Comm'r of Soc. Sec. Admin, 682 F.3d 1157, 1163 (9th Cir. 2012). But if the Appeals Council does not consider evidence submitted to it, such evidence does not become part of the administrative record before the reviewing court. See Bales v. Berryhill, 688 Fed.Appx. 495, 496 (9th Cir. 2017); see also Knipe v. Colvin, No. 3:14-CV-01533-SI, 2015 WL 9480026, at *5 (D. Or. Dec. 29, 2015) (collecting district court cases to this effect). In this analysis, “consider” is a term of art. West v. Berryhill, No. 18-cv-00092-DKW-RT, 2019 WL 362259, at *5 (D. Haw. Jan. 29, 2019) (“[L]ooking at additional evidence is not the same thing as considering it.”).

         The Social Security regulations permit a claimant to submit new and material evidence to the Appeals Council and “require the Council to consider that evidence in determining whether to review the ALJ's decision, so long as the evidence relates to the period on or before the ALJ's decision. Brewes, 682 F.3d at 1162 (citing 20 C.F.R. § 404.970(b) (effective to Jan. 16, 2017)).[3] Effective January 17, 2017, the SSI regulation allows a claimant to submit “additional evidence that is new, material, and relates to the period on or before the date of the hearing decision, and there is a reasonable probability that the additional evidence would change the outcome of the decision.” 20 C.F.R. § 416.1470(a)(5).

         Unlike the prior version, the recently-enacted regulation provides that “the Appeals Council will only consider additional evidence . . . if [the claimant] show[s] good cause for not informing [SSA] about or submitting the evidence as described in § 416.1435 . . . .” 20 C.F.R. § 416.1470(b); see also Reyes v. Comm'r of Soc. Sec. Admin., No. CV-17-08192-PCT-SMB, 2019 WL 2098755, at *2 (D. Ariz. May 14, 2019) (“After the new rule went into effect, a claimant must show ‘good cause' for not submitting the evidence at least five days prior to his ALJ hearing.”). The new regulation was effective January 17, 2017, but compliance became mandatory on May 1, 2017, following a brief grace period. See Ensuring Program Uniformity at the Hearing and Appeals Council Levels of the Administrative Review Process, 81 FR 90987-01, 2016 WL 7242991 (Dec. 16, 2016).

         Two questions follow from the above framework where, as here, a claimant submitted new evidence to the Appeals Council: whether the Appeals Council “considered” or should have considered the new evidence and whether remand is appropriate for the ALJ's consideration of the new evidence.[4]

         B. Additional Evidence Submitted by Plaintiff

         The evidence Plaintiff submitted to the Appeals Council can be divided into two categories: (1) treatment notes and records from Waianae Coast Comprehensive Health Center Behavioral Health Center (the “Health Center”), dated between December 2015 and September 2017, AR 36-107, 116-251 (“Pre- Decision Records”); and (2) treatment notes and records from the Health Center, dated November 1, 2017, through November 30, 2017, AR 108-115, as well as a medical source statement by treating Dr. Sherry Sutherland Choy, dated December 28, 2017, AR 33-35 (“Post-Decision Records”). The former category involves treatment notes made before the ALJ's October 16, 2017 decision and during the relevant time period, while the latter category involves treatment notes and a report of a treating psychologist made after the ALJ's decision.

         C. The Appeals Council's Decision

         In its letter to Plaintiff denying his request for review, the Appeals Council separately addressed the Pre- and Post-Decision Records. First, the Appeals Council stated the following of the Pre-Decision Records:

We find this evidence does not show a reasonable probability that it would change the outcome of the decision. We did not exhibit this evidence.

AR 2. As for the Post-Decision Records, the Appeals Council stated that the evidence does not relate to the time period at issue and advised Plaintiff to reapply for a later period:

The Administrative Law Judge decided your case through October 16, 2017. This additional evidence does not relate to the period at issue. Therefore, it does not affect the decision about whether you were disabled beginning on or before October 16, 2017.
If you want us to consider whether you were disabled after October 16, 2017, you need to apply again. If you file a new claim for supplemental security income within 60 days after you receive this letter, we can use October 26, 2017, the date of your request for review, as the date of your new claim. The date you file a new claim can make a difference in the amount of benefits we can pay.

AR 2.

         Nowhere in its denial letter did the Appeals Council address the late submission of the evidence, including whether Plaintiff offered “good cause” for the delay.

         D. Analysis

         i. The Good Cause Requirement

         The Appeals Council denied review on July 25, 2018, so it should have applied the new version of the regulation with the good cause requirement.[5] The Court is puzzled by the parties' apparent unawareness of the applicability of the new regulation. Likewise, it is even hard to say how (or whether) the Appeals Council applied the SSA's own regulation, given that the denial letter is devoid of any good cause discussion. See AR 1-4. Nonetheless, the Court appreciates that the parties do not make much of the “good cause” issue, and counsel conceded- explicitly at the hearing and implicitly in the Response Brief- that the Commissioner does not challenge consideration of the evidence for good cause. That being the case, the court will focus its analysis on whether, notwithstanding good cause, the Appeals Council “considered” evidence such that it is part of the Administrative Record.

         Before getting to that analysis, the Court takes this opportunity to reiterate that new evidence can only be part of the record if the Appeals Council “considered” it. And, under the new regulation, the Appeals Council could only “consider” evidence upon a showing of good cause. See Norbert S. v. Berryhill, No. 18-cv-00218-AC, 2019 WL 2437457, at *10 (D. Or. June 11, 2019). Two possible implications then arise. Either the Appeals Council implicitly found good cause when it “considered” the evidence, or the Appeals Council was not permitted to “consider” the evidence in the first place.[6]

         Had the Appeals Council-or the parties, for that matter-addressed this issue by stating that Plaintiff did or did not have good cause, the Court may have been in a better position to accept or reject the additional evidence and to include or exclude it from the record. See, e.g., Knowlton v. Berryhill, No. CIV 18-0194-KBM, 2019 WL 1299669, at *5 (D.N.M. Mar. 21, 2019) (endorsing the Appeals Council's determination that claimant did not show good cause and excluding from record). Instead, the Court can only speculate.

         Though the Court is not convinced that Plaintiff had good cause for belatedly submitting the Pre- and Post-Decision Records, neither can it ignore the possible significance of treatment notes and a report of a treating specialist, at least some of which is relevant to the period in question. In light of these concerns and the parties' agreement that a lack of good cause does not preclude consideration of the Pre- and Post-Decision Records, the Court concludes that remand would be appropriate to allow for further administrative proceedings. See Harman v. Apfel, 211 F.3d 1172, 1176-78 (9th Cir. 2000) (recognizing court's discretion whether to remand for further proceedings); see also Parvon v. Colvin, No. 15-00110 ACK-BMK, 2016 WL 1047992, at *17 (D. Haw. Mar. 11, 2016) (finding remand to be appropriate because it was unclear how ALJ would have treated new evidence).

         As discussed infra, several other factors also convince this Court that remand to the SSA for reconsideration is necessary under these circumstances.

         ii. Consideration of the Pre- and Post-Decisions Records

         The Court will now put aside the “good cause” issue and turn to whether the Appeals Council otherwise “considered” the new evidence such that it is part of the record. Because the Appeals Council addressed the Pre- and Post-Decision Records separately, the Court will do the same.

         1. Pre-Decision Records

         Both parties assume that the Pre-Decision Records are part of the Administrative Record. See Opening Br. 28-29 (explaining that the ALJ decision must be supported by “substantial evidence, ” including the Pre-Decision Records); Resp. Br. 21 (“These [Pre-Decision] notes are a part of the record before this Court.”).[7] In addressing the Pre-Decision Records, the Appeals Council stated, “We find this evidence does not show a reasonable probability that it would change the outcome of the decision. We did not exhibit this evidence.” AR 2.

         Several courts in this circuit have analyzed similar language: Some have read it to mean that the Appeals Council necessarily “considered” the newly-submitted evidence, and others have concluded that the Council's express statement that it did not “consider” or “exhibit” evidence means it only “looked at” the evidence.[8] Compare Ramirez v. Shalala, 8 F.3d 1449, 1452 (9th Cir. 1993) (holding that the Appeals Council declined to review by “considering the case on the merits; examining the entire record, including the additional material; and concluding that the ALJ's decision was proper and that the additional material failed to ‘provide a basis for changing the hearing decision'”), and Reyes, 2019 WL 2098755 at *3 (holding that the Appeals Council's statement that the evidence does not show a reasonable probability of changing the ALJ decision- despite its statement that it did not “consider and exhibit th[e] evidence”-meant that it “made a finding about the merits of the additional evidence” and the evidence was “part of the record”), with de Orozco, 2019 WL 2641490 at *11 (“Here, the Appeal's Counsel [sic] only looked at the evidence and determined that there was no reasonable probability that the newly-submitted evidence would change the outcome of the decision. Therefore, the new evidence was not considered or exhibited. As the new evidence did not become part of the record, this Court may not review it.” (citations to record omitted)). See also Norbert S., 2019 WL 2437457 at *10 (discussing “a series of decisions that distinguished evidence the Appeals Council formally ‘considered' and made part of the administrative record, and therefore subject to judicial review”).

         Presumably, to decide that the Pre-Decision Records would not change the outcome of the decision, the Appeals Council would have needed to “consider” those records. But there is the added confusion here of the Appeals Council's statement that it would not “exhibit” the evidence.[9] AR 2; see also Linnehan v. Berryhill, No. 17-cv-04146-JSC, 2018 WL 6267846, at *8 (N.D. Cal. July 31, 2018) (“The Appeals Council cannot consider the evidence to conclude that it ‘does not show a reasonable probability that it would change the outcome of the ...

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