United States District Court, D. Hawaii
ORDER REVERSING THE DECISION OF THE COMMISSIONER OF
SOCIAL SECURITY AND REMANDING FOR FURTHER
C. KAY SR. UNITED STATES DISTRICT JUDGE
reasons discussed below, the Court REVERSES the decision of
the Commissioner and REMANDS to the ALJ for further
administrative proceedings consistent with this Order.
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.
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.
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”),  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.
district court has jurisdiction pursuant to 42 U.S.C. §
405(g) to review final decisions of the Commissioner of
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.
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).
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”).
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.
The Social Security Administration's Five-Step Process
for Determining Disability
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).
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
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).
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).
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.
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.
The ALJ's Analysis
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.
to step four, the ALJ determined that Plaintiff has the RFC
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
AR 15. Using this RFC, the ALJ determined at step four that
Plaintiff is unable to perform past relevant work. AR 21.
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.
Plaintiff's Challenge on Appeal
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.
Whether the New Medical Evidence Submitted to the Appeals
Council is Properly Part of the Record
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.
Legal and Regulatory Standards
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
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)). 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. §
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).
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
Additional Evidence Submitted by Plaintiff
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.
The Appeals Council's Decision
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.
in its denial letter did the Appeals Council address the late
submission of the evidence, including whether Plaintiff
offered “good cause” for the delay.
The Good Cause Requirement
Appeals Council denied review on July 25, 2018, so it should
have applied the new version of the regulation with the good
cause requirement. 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.
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
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
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
discussed infra, several other factors also convince
this Court that remand to the SSA for reconsideration is
necessary under these circumstances.
Consideration of the Pre- and Post-Decisions Records
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
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.”). 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.
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. 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
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. 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 ...