Gordon v. Commissioner of Social Security

• Court: District Court, W.D. Washington
• Decided: March 23, 2023
• Docket: 2:22-cv-00382
• Status: Unknown

Opinion

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6 7 8 9 10 UNITED STATES DISTRICT COURT 11 WESTERN DISTRICT OF WASHINGTON AT SEATTLE 12 LORI G., 13 Plaintiff, CASE NO. 2:22-cv-0382 TL 14 v. ORDER REVERSING AND 15 REMANDING FOR AN AWARD OF COMMISSIONER OF SOCIAL SECURITY, BENEFITS 16 Defendant. 17

18 Plaintiff Lori G. seeks review of the denial of her applications by Defendant, the 19 Commissioner of Social Security, for Disability Insurance Benefits (“DIB”) under Title II and 20 Supplemental Security Income (“SSI”) under Title XVI of the Social Security Act. Both parties 21 agree the Administrative Law Judge (“ALJ”) committed legal errors and the matter should be 22 remanded but disagree to as to the scope of the remand. As discussed below, the Court REVERSES 23 the Commissioner’s final decision and REMANDS the matter for an immediate award of benefits. 1 I. PROCEDURAL HISTORY 2 Plaintiff protectively filed an application for DIB in August 2015 and filed an application 3 for SSI in March 2016. Dkt. No. 11 at 101, 129, 138, 150, 255, 299. After her DIB application 4 was denied upon initial review and on reconsideration by the Social Security Administration, 5 Plaintiff requested a hearing before an ALJ in March 2016. Id. at 135, 145, 150, 176, 184–89. In 6 August 2017, ALJ Tom Morris held a hearing for Plaintiff’s claims, and issued a decision in 7 December 2017, finding Plaintiff not disabled. Id. at 43–96, 147–64. Plaintiff requested review 8 of ALJ Morris’s decision to the Appeals Council, and her case was remanded back to the ALJ for 9 further proceedings in July 2019. Id. at 165–69. On remand, the ALJ was directed to, inter alia, 10 (1) “[g]ive further consideration to the claimant's maximum residual functional capacity and

11 provide appropriate rationale with specific references to evidence of record in support of the 12 assessed limitations,” and (2) “[o]btain supplemental evidence from a vocational expert to 13 determine whether the claimant has acquired any skills that are transferable with very little, if 14 any, vocational adjustment to other occupations.” Id. at 168. 15 ALJ Richard Hlaudy held a hearing on remand in August 2021 and issued a decision in 16 September 2021 finding Plaintiff, by then 63 years old, not disabled. Id. at 22–42, 97–127. 17 Plaintiff again requested review of the ALJ’s decision, but the Appeals Council denied Plaintiff’s 18 request on February 8, 2022. Id. at 6–10. Plaintiff now seeks this Court’s review of the ALJ’s 19 September 2021 decision.

20 II. LEGAL STANDARD 21 A. Standard of Review 22 This Court may set aside the Commissioner’s denial of Social Security benefits only if 23 the ALJ’s decision is based on legal error or not supported by substantial evidence in the record. 1 Ford v. Saul, 950 F.3d 1141, 1154 (9th Cir. 2020); see also Havens v. Kijakazi, No. 21-35022, 2 2022 WL 2115109, at *1 (9th Cir. June 13, 2022) (applying the standard and reversing ALJ’s 3 decision). The ALJ is responsible for evaluating evidence, in part by resolving conflicts in 4 medical testimony and resolving any other ambiguities that might exist. Ford, 950 F.3d at 1149 5 (quoting Andrews v. Shalala, 53 F.3d 1035, 1039 (9th Cir. 1995)). When the evidence is 6 susceptible to more than one interpretation, the ALJ’s interpretation must be upheld if rational. 7 Ford, 950 F.3d at 1154. The Court “must consider the entire record as a whole and may not 8 affirm [the ALJ’s decision] simply by isolating a specific quantum of supporting evidence.” 9 Ghanim v. Colvin, 763 F.3d 1154, 1160 (9th Cir. 2014) (quoting Hill v. Astrue, 698 F.3d 1153, 10 1159 (9th Cir. 2012)) (internal quotations omitted). Finally, this Court “may not reverse an

11 ALJ’s decision on account of a harmless error.” Buck v. Berryhill, 869 F.3d 1040, 1048 (9th Cir. 12 2017) (citing Molina v. Astrue, 674 F.3d 1104, 1111 (9th Cir. 2012)). 13 B. The “Disabled” Determination 14 Under the Social Security Act, a claimant is considered “disabled” if: (1) the claimant is 15 “unable to engage in any substantial gainful activity by reason of any medically determinable 16 physical or mental impairment which can be expected to result in death or which has lasted or 17 can be expected to last for a continuous period of not less than twelve months,” 42 U.S.C. 18 § 1382c(a)(3)(A), and (2) the claimant’s physical or mental impairment or impairments are of 19 such severity that [the claimant] is not only unable to do [the person’s] previous work but cannot,

20 considering [the claimant’s] age, education, and work experience, engage in any other kind of 21 substantial gainful work which exists in the national economy,” 42 U.S.C. § 1382c(a)(3)(B). 22 To determine whether a claimant is disabled within the meaning of the Social Security 23 Act (and, therefore, eligible for benefits), an ALJ follows a five-step sequential evaluation 1 pursuant to 20 C.F.R. § 404.1520(a): (1) the claimant must not be engaged in “substantial gainful 2 activity”; (2) the claimant’s impairment or combination of impairments must be severe enough to 3 significantly limit the claimant’s “physical or mental ability to do basic work activities”; (3) the 4 claimant’s impairment(s) must meet or equal the criteria of an impairment in the “Listing of 5 Impairments” (“Listings”); (4) the claimant’s residual functional capacity (RFC) is assessed and 6 the claimant must not be able to perform their “past relevant work”; and (5) the claimant must 7 not be able to make an adjustment to other work. See Ford, 950 F.3d at 1148–49 (same). If the 8 claimant fails to make the required showing at any of these steps, the ALJ’s inquiry ends, and the 9 claimant is found to not have a disability under the Social Security Act. The burden of proof is 10 on the claimant at steps one through four but shifts to the agency at the fifth step to prove that

11 “the claimant can perform a significant number of other jobs in the national economy.” Id. at 12 1149 (citation omitted). 13 III. DISCUSSION 14 In this case, the ALJ determined that: (1) Plaintiff has not engaged in substantial gainful 15 activity; (2) Plaintiff’s lumbar degenerative disc disease and cervical degenerative disc disease 16 are severe enough to significantly limit the claimant’s “physical or mental ability to do basic 17 work activities”; (3) Plaintiff’s impairments do not meet or equal the criteria of an impairment in 18 the Listings; (4) Plaintiff has the RFC to perform light work but cannot perform her past work; 19 and (5) Plaintiff has transferable skills from her past relevant work and can adjust to working as

20 a customer service presentative or a telephone sales representative. Dkt. No. 11 at 33–36. 21 Therefore, the ALJ concluded that Plaintiff is not disabled. Id. at 36. 22 Plaintiff challenges the ALJ’s findings at steps two, four, and five of the sequential 23 evaluation process and the ALJ’s failure to evaluate lay witness evidence. Plaintiff also requests 1 that this Court remand for an award of benefits. The Commissioner concedes that the ALJ’s 2 “September 2021 decision contained legal errors”—without specifying what those errors are 3 beyond step five—but argues that the proper remedy is to remand for further proceedings. See 4 Dkt. No. 14 at 2. After reviewing the record, the Court finds that: (1) the ALJ erred at steps two, 5 four, and five; (2) the error at step five is dispositive, and (3) the cumulative errors warrant a 6 remand for an award of benefits. 7 A. Step Two 8 At step two of the sequential evaluation process, the claimant has the burden to show that 9 he or she has a medically determinable impairment that is severe. See Bustamante v. Massanari, 10 262 F.3d 949, 953–54 (9th Cir. 2001). Absence of objective medical evidence of a severe

11 impairment may justify an adverse step two determination. See Ukolov v. Barnhart, 420 F.3d 12 1002, 1006 (9th Cir. 2005). But an ALJ errs when medical evidence shows “more than a minimal 13 effect on an individual’s ability to work.” See Morsea v. Berryhill, 725 F. App’x 463, 466 (9th 14 Cir. 2018). 15 Here, the ALJ found at step two that Plaintiff’s lumbar degenerative disc disease and 16 cervical degenerative disc disease are severe but discussed no other possible severe impairments. 17 See Dkt. No. 11 at 28. Plaintiff takes issue with this determination, arguing that she also suffers 18 from severe chronic pain, depression, and anxiety. See Dkt. No. 13 at 5–6. The evidence Plaintiff 19 points to shows that she was diagnosed with chronic neck pain and had anxiety and insomnia as

20 related co-morbidities. See id.; Dkt. No. 11 at 586–87, 828, 847, 1128–29, 1256–57, 1237–38. 21 The record also shows Plaintiff was being treated for major depressive disorder and generalized 22 disorder. See id. at 925. The ALJ failed to discuss any of these treatment records. The ALJ “may 23 not reject significant probative evidence without explanation.” Flores v. Shalala, 49 F.3d 562, 1 570-71 (9th Cir. 1995) (internal quotations omitted). As the cited treatment records show, 2 Plaintiff had additional diagnoses as well as mental impairments that could reasonably affect her 3 ability to perform basic work activities, therefore the ALJ erred in failing to consider them at 4 step two. 5 Further, when making the determination of severity at step two as to whether a claimant 6 “has a medically determinable mental impairment” and “rat[ing] the degree of functional 7 limitation,” the ALJ is required “to follow a special psychiatric review technique.” See Keyser v. 8 Comm’r SSA, 648 F.3d 721, 726 (9th Cir. 2011). Specifically, the reviewer must: (1) determine 9 whether an applicant has a medically determinable mental impairment, (2) rate the degree of 10 functional limitation for four functional areas, (3) determine the severity of the mental

11 impairment (in part based on the degree of functional limitation), and (4) then, if the impairment 12 is severe, proceed to step three of the disability analysis to determine if the impairment meets or 13 equals a specific listed mental disorder. Id. at 725. The ALJ must either complete a Psychiatric 14 Review Technique Form and append it to the decision or incorporate its mode of analysis into 15 the ALJ’s findings and conclusions. Id. at 726. The ALJ did neither in this case. An ALJ’s failure 16 to do so if the claimant has a “colorable claim of mental impairment” is not harmless. See id. 17 (citing Gutierrez v. Apfel, 199 F.3d 1048, 1051 (9th Cir. 2000)). Thus, the ALJ’s failure to 18 consider these records at step two results in a decision unsupported by substantial evidence in the 19 record.

20 B. Step Four 21 Additionally, Plaintiff contends that because the ALJ failed to find her mental 22 impairments severe at step two, the ALJ further erred by failing to include any mental limitations 23 into her RFC at step four. See Dkt. No. 13 at 8. An ALJ’s assessment at step two is different 1 from an ALJ’s RFC assessment; while the ALJ considers the severity of a medically 2 determinable impairment at step two, in determining a claimant’s RFC, the ALJ considers the 3 most work a claimant can do despite the limitations caused by the impairments and engages a 4 more detailed assessment. See Social Security Ruling (“SSR”) 96-8p. Step two serves as a de 5 minimis screening device to filter out weak or groundless claims. Smolen v. Chater, 80 F.3d 6 1273, 1290 (9th Cir. 1996) (citing Bowen v. Yuckart, 482 U.S. 137, 153-54 (1987)). But it does 7 not serve to identify the impairments to be considered in assessing a claimant’s RFC. Buck, 869 8 F.3d at 1048-49. In determining a claimant’s RFC, an ALJ must consider all of a claimant’s 9 impairments, severe or non-severe. Id. at 1049 (citing SSR 96-8p). 10 Though the ALJ provided a detailed, five-page analysis of Plaintiff’s residual functional

11 capacity, the entire analysis focused on Plaintiff’s physical capacity with only two, brief passing 12 references to Plaintiff’s mental impairments. Dkt. No. 11 at 29–34. With regard to Plaintiff’s 13 mental impairments, the ALJ only included two sentences that discussed the treatment notes 14 from Plaintiff’s treating physician and referenced Plaintiff’s counseling notes. Id. at 30 and 32. 15 Plaintiff also contends the ALJ erred by ignoring the testimony of Barbara Ruch, ARNP, 16 regarding her mental health. Dkt. No. 11 at 780, 800–06; Dkt. No. 13 at 9–12. The Court agrees. 17 Plaintiff filed her applications before March 27, 2017.1 See Dkt. No. 11 at 129, 138, 150, 255. 18 Under the medical evidence rules applicable at the time of her applications, in determining 19

20 1 For applications filed before March 27, 2017, the ALJ weighs (1) medical opinion evidence based on the claimant’s treating relationship with his or her medical source and (2) whether the medical opinion was provided by an “acceptable medical source” (“AMS”) or a non AMS, such as a nurse practitioner. See Woods v. Kijakazi, 32 21 F.4th 785, 789 n.2 (9th Cir. 2022); Turner v. Comm’r of Soc. Sec., 613 F.3d 1217, 1223–24 (9th Cir. 2010). On January 18, 2017, the agency revised the medical evidence rules, so that for applications filed on or after March 27, 22 2017, medical opinion evidence from all medical sources would be weighed according to the factors set forth in 20 C.F.R. §§ 404.1520c, 416.920c, whether or not the medical source is an AMS. See Revisions to Rules Regarding the Evaluation of Medical Evidence, 82 Fed. Reg. 5844, 5844 (Jan. 18, 2017). Because Plaintiff filed her applications 23 prior to March 27, 2017, the Court applies the pre-March 2017 medical evidence rules. 1 disability, “‘an ALJ must consider lay witness testimony concerning a claimant’s ability to 2 work.’” Bruce v. Astrue, 557 F.3d 1113, 1115 (9th Cir. 2009) (quoting Stout v. Comm’r SSA., 3 454 F.3d 1050, 1053 (9th Cir. 2006)). Lay witness statements regarding a claimant’s symptoms 4 “is competent evidence that an ALJ must take into account,” unless the ALJ “expressly 5 determines to disregard such testimony and gives reasons germane to each witness for doing so.” 6 Lewis v. Apfel, 236 F.3d 503, 511 (9th Cir. 2001). The ALJ cannot disregard competent lay 7 witness evidence without comment. Rounds v. Comm’r SSA, 807 F.3d 996, 1007 (9th Cir. 2015). 8 The ALJ in this case did not address Ms. Ruch’s testimony at all, let alone provide a germane 9 reason to discount it. See Dkt. No. 11 at 25–29. Thus, in disregarding Ms. Ruch’s testimony 10 “without comment,” the ALJ erred. See Rounds, 807 F.3d at 1007. This error was compounded

11 by the error at Step Two, see supra Section III.A, resulting in a decision unsupported by 12 substantial evidence in the record. 13 C. Step Five 14 At step five of the sequential evaluation process, the ALJ has the burden of determining 15 whether “the claimant can perform a significant number of other jobs in the national economy.” 16 See Ford, 950 F.3d at 1149. If the claimant is not able to do so, the ALJ must find the claimant 17 disabled. Id. The ALJ meets the burden of showing that there is other work in “significant 18 numbers” in the national economy by utilizing (1) the testimony of a vocational expert (“VE”), 19 or (2) by referring to the Medical-Vocational Guidelines (“the Grids”) at 20 C.F.R. pt. 404,

20 subpt. P, app. 2. See Lounsburry v. Barnhart, 468 F.3d 1111, 1114 (9th Cir. 2006). Referring to 21 the Grids is “a short-hand method” for determining whether a claimant is disabled. See id. The 22 Grids consist of three separate tables: the first table applies to claimants who are limited to 23 sedentary work, the second table to claimants who are limited to light work, and the third table to 1 claimants who are limited to medium work. 20 C.F.R. § 404, subpt. P, app. 2. Each table then 2 consists of various factors relevant to the claimant: age, education, and previous work 3 experience. See id. Based on the combinations of these factors, the Grids direct a finding of 4 either “disabled” or “not disabled.” See id. 5 “For purposes of applying the [G]rids, there are three age categories: younger person 6 (under age 50), person closely approaching advanced age (age 50–54), and person of advanced 7 age (age 55 or older).” Lockwood v. Comm’r SSA, 616 F.3d 1068, 1071-72 (9th Cir. 2010) (citing 8 20 C.F.R. § 404.1563(c)–(e)). For SSI applications, the age of a claimant at the time of the ALJ’s 9 decision governs. See Little v. Berryhill, 690 F. App’x 915, 917 (9th Cir. 2017) (“A claimant’s 10 age should be considered at the time of the ALJ’s decision.”). For DIB applications, the age of

11 the claimant at their date last insured governs. See 20 C.F.R. 404.1563(b) (“We will use . . . the 12 age categor[y] that applies to you during the period for which we must determine if you are 13 disabled.”); see also Schiel v. Comm’r SSA, 267 F. App’x 660, 661 (9th Cir. 2008) (using 14 claimant’s age on their date last insured to determine age category in the Grids). At the time of 15 ALJ’s decision, Plaintiff was 63 years old, and on Plaintiff’s date last insured of December 31, 16 2016, Plaintiff was 58 years old. See Dkt. No. 11 at 28. Therefore, Plaintiff is considered a 17 “person of advanced age” for both applications. Plaintiff had at least a high school education, her 18 previous work were at least semi-skilled, and the VE testified that Plaintiff had transferable 19 skills. Dkt. No. 11 at 34–36, 118–24; 20 C.F.R. §§ 404.1568(b)–(c), 416.968(b)–(c).

20 Based on these factors and the ALJ’s finding that Plaintiff had the RFC to perform light 21 work, the ALJ found that Plaintiff’s case is governed by Rule 202.07, found in the second table, 22 which generally directs a finding of “not disabled.” Id. at 24; see also 20 C.F.R. pt. 404, subpt. P, 23 app. 2 (Rule 202.07). Plaintiff, however, argues that her case is governed by Rule 202.06, which 1 directs a finding of “disabled.” See id. (Rule 202.06). The Grids are reproduced here in relevant 2 part: 3 Rule Age Education Previous work Decision experience 4 202.06 Advanced age High school Skilled or Disabled. graduate or semiskilled – skills 5 more – does not are not transferable provide for 6 direct entry into skilled work 7 202.07 Advanced age High school Skilled or Not disabled. graduate or semiskilled – skills 8 more – does not are transferable provide for 9 direct entry into skilled work 10 11 The difference between the two Rules is solely based on the transferability of a 12 claimant’s previous work skills. Therefore, whether the Court finds Rule 202.06 or Rule 202.07 13 governs depends on whether the ALJ’s finding on the transferability of Plaintiff’s work skill is 14 supported by substantial evidence. 15 Plaintiff’s urges the Court to find that Rule 202.06 applies because the VE’s testimony 16 that she has transferable skills is undermined by the VE’s own testimony that the jobs Plaintiff 17 can perform have undergone “significant” changes. See Dkt. No. 11 at 125. According to 18 Plaintiff, the ALJ must find her disabled on remand and thus requests that this Court remand for 19 an immediate award of benefits. See Dkt. No. 13 at 18–19; Dkt. No. 15 at 7–10. 20 The Court is persuaded by Plaintiff’s arguments. The ALJ must consider “special rules 21 for persons of advanced age and for persons in this category who are closely approaching 22 retirement age (age 60 or older)” when determining whether a claimant is able to adjust to other 23 work. See 20 C.F.R. §§ 404.1564(e), 416.963(e). The regulations state that in order to find a 1 claimant such as Plaintiff (i.e., 60 years or older with severe impairments limiting them to no 2 more than light work) with transferable skills, the light work the ALJ believes the claimant is 3 able to adjust to must be “so similar to [the claimant’s] previous work that [the claimant] would 4 need to make very little, if any, vocational adjustment in terms of tools, work, processes, work 5 settings, or the industry.” See 20 C.F.R. §§ 404.1568(d)(4), 416.968(d)(4). “In order to establish 6 transferability of skills for such individuals, the semiskilled or skilled job duties of their past 7 work must be so closely related to other jobs which they can perform that they could be expected 8 to perform these other identified jobs at a high degree of proficiency with a minimal amount of 9 job orientation.” SSR 82-41. 10 Here, during the hearing, the ALJ inquired whether vocational adjustment would be

11 needed for the four jobs the VE had identified. See Dkt. No. 11 at 122. The VE replied that no 12 vocational adjustment would be required because Plaintiff’s skills—namely working with 13 customers and answering questions—would transfer to the jobs he had identified. See id. 14 However, when asked by Plaintiff’s counsel how technology has impacted the jobs he had 15 identified, the VE replied: 16 I guess the biggest change would be the use of computers and the things that computers can do even in the last ten years, the speed of 17 which computers operate and the programming, that has evolved[,] I guess you could say. I’m not sure how long ago that she did that 18 customer service work, but if it’s been more than ten years, there could be some changes in those technical skills that might be 19 significant . . . If we’re going back ten years . . . there would be some differences in terms of the technical skills, that’s correct. 20 See id. at 125. It is common sense that there will be “differences in terms of technical skills” 21 needed for a person that has been out of the workforce for the last decade given how rapidly 22 technology has advanced. Given this testimony and that Plaintiff’s most recent work was in 23 2007—well over 10 years ago—the Court cannot say there is substantial evidence showing that 1 Plaintiff could perform any of the jobs the VE identified “at a high degree of proficiency with a 2 minimal amount of job orientation.” See SSR 82–41. See also Bray v. Comm’r SSA, 554 F.3d 3 1219, 1224, n.5 (9th Cir. 2009) (finding that the ALJ erred by failing to make a finding whether 4 any skills the claimant acquired from being “‘exposed to computers’” 15 years prior to the 5 hearing “were still current, much less that they were transferable”); Renner v. Heckler, 786 F.2d 6 1421, 1424 (9th Cir. 1986) (finding an ALJ’s finding of transferable skills erroneous when the 7 jobs the VE testified to appeared “to require some adjustment to new industries and work 8 settings”). 9 Moreover, throughout the five-step evaluation, the ALJ “is responsible for determining 10 credibility, resolving conflicts in medical testimony, and for resolving ambiguities.” Ford, 950

11 F.3d at 1149. The ALJ here failed to properly resolve the VE’s conflicting statements regarding 12 the transferability of Plaintiff’s skills. See Dkt. No. 11 at 35–36. The ALJ noted that Plaintiff had 13 acquired the following skills from her previous work: taking customers’ orders, investigating 14 customers’ complaints about merchandise, explaining billing issues and problem solving. Id. at 15 35. But the ALJ did not rule on whether Plaintiff had transferable computer skills. See id. 16 The Court finds that the ALJ’s finding that Plaintiff’s skills from her past work are 17 transferable is not supported by substantial evidence, and therefore, Rule 202.06 governs. 18 Accordingly, the Court finds the ALJ erred at step five and a finding of disability according to 19 the Grids is warranted in this case.

20 D. Whether to Remand for Further Proceedings or An Award of Benefits 21 The Court has found that Rule 202.06 applies here and that this warrants a finding of 22 disability under the Grids. See 20 C.F.R. pt. 404, subpt. P, app. 2 (Rule 202.06). “Where the 23 grids dictate a finding of disability, the claimant is eligible for benefits . . .” Cooper v. Sullivan, 1 880 F.2d 1152, 1155 (9th Cir. 1989). “[A] finding of disability [under the Grids] ... must be 2 accepted by the [Commissioner] ....” Barnes v. Berryhill, 895 F.3d 702, 707 (9th Cir. 2018) 3 (citing Lounsburry, 468 F.3d at 1116). Furthermore, Plaintiff first applied for benefits over seven 4 and one-half years ago. See Dkt. No. 11 at 129, 138, 150, 255. She is now 64 years old and at the 5 upper number to be considered close to retirement age. See 20 C.F.R. §§ 404.1563(e), 6 416.963(e); Dkt. No. 11 at 124, 133. Given that the Commissioner concedes that the ALJ 7 committed errors at Step 5 (Dkt. No 14 at 1), and that the original decision had already been 8 remanded for further analysis on the same issue (Dkt. No. 11 at 168), the Court cannot find that 9 remanding yet again and further delaying Plaintiff’s application for further administrative 10 proceedings would serve a “useful purpose.” Benecke v. Barnart, 379 F.3d 587, 595 (9th Cir.

11 2004) (“Allowing the Commissioner to decide the issue again would create an unfair ‘heads we 12 win; tails, let’s play again’ system of disability benefits adjudication.”). Accordingly, the Court 13 reverses the ALJ’s decision and remands for an award of benefits. 14 IV. CONCLUSION 15 For the foregoing reasons, the Commissioner’s final decision is REVERSED and this case is 16 REMANDED for an award of benefits under 42 U.S.C. § 405(g). 17 Dated this 23rd day of March 2023. 18 19 A Tana Lin 20 United States District Judge

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