Luther D. Mullen v. Otis Bowen, Secretary of Health and Human Services, Richard G. Shepherd v. Otis Bowen, Secretary of Health and Human Services

800 F.2d 535, 90 A.L.R. Fed. 237

• Court: Court of Appeals for the Sixth Circuit
• Decided: September 2, 1986
• Docket: 84-1455, 84-5352
• Status: Published

Opinions

ENGEL, Circuit Judge.

We granted en banc rehearing in these consolidated social security disability appeals to resolve an inconsistency between two decisions by different panels of our court relating to the role of the Appeals Council in the scheme of review of disability determinations. Compare Newsome v. Secretary of Health and Human Services, 753 F.2d 44 (6th Cir.1985), with Beavers v. Secretary of Health, Education & Welfare, 577 F.2d 383 (6th Cir.1978). We are also necessarily required to consider what standard of review should be applied by the district courts and our circuit where the Appeals Council has disagreed with an administrative law judge’s determination of disability and hence denied an award of benefits. We further consider whether, because of the Secretary’s regulations, any different standard should govern our consideration depending upon how the issues were presented to the Appeals Council in the first place. To put these issues into their proper perspective, it is helpful at the outset to provide a brief overview of the relationship between the Secretary and the Appeals Council under the Social Security Act and regulations promulgated thereunder.

I.

The Secretary of Health and Human Services is entrusted with the responsibility of administering disability benefits under Title II of the Social Security Act (Act). Thus, section 205(b)(1) directs the Secretary “to make findings of fact, and decisions as to the rights of any individual applying” for disability benefits. 42 U.S.C. § 405(b)(1). That section further authorizes the Secretary, “on his own motion, to hold such hearings and to conduct such investigations and other proceedings as he may deem necessary or proper for the administration” of benefits under the Act.¹ In addition, section 205(h) provides that “[t]he findings and decision of the Secretary after a hearing shall be binding upon all individuals who were parties to such hearing.” 42 U.S.C. § 405(h). Finally, section 205(g) provides that, for purposes of judicial review in a federal district court, “[t]he findings of the Secretary as to any fact, if supported by substantial evidence, shall be conclusive____” 42 U.S.C. § 405(g).

Under this scheme, the Secretary’s responsibilities are broad indeed. Yet given the number of cases handled by the Social Security Administration, it is obvious that the Secretary himself cannot participate in every disability determination. As the Supreme Court observed: “The system’s administrative structure and procedures, with essential determinations numbering into the millions, are of a size and extent difficult to comprehend.” Richardson v. Pe-rales, 402 U.S. 389, 399, 91 S.Ct. 1420, 1426, 28 L.Ed.2d 842 (1971). Congress has therefore authorized the Secretary “to make rules and regulations and to establish procedures ... which are necessary or appropriate to carry out ...” his responsibilities under the Act. 42 U.S.C. § 405(a).

Pursuant to these rulemaking powers, the Secretary has created and delegated to the Appeals Council all duties, powers and functions relating to the review of hearing decisions under Title II of the Act. See 20 C.F.R. §§ 404.900-.996 (1985). See also 20 C.F.R. § 422.205 (1985). Significantly, the Appeals Council has possessed this authority since at least 1946.²

Under the Secretary’s regulations, claims for social security benefits can come before the Appeals Council in a variety of ways. First, a disappointed wage earner, whose claims for coverage have been rejected by an administrative law judge (AU), may request review by the Appeals Council. 20 C.F.R. § 404.967. In addition, the Secretary’s regulations confer general review powers on the Council, a power commonly called “own-motion” review. 20 C.F.R. § 404.969. The Appeals Council can also review a recommended decision that has been sent to it by an AU. 20 C.F.R. § 404.977. The Appeals Council also has jurisdiction over a social security claim where a case has been remanded by a federal district court, 20 C.F.R. § 404.983, and where the Appeals Council itself assumes the responsibility for conducting a hearing. 20 C.F.R. § 404.956. The Secretary’s regulations further provide that the Appeals Council will review a case if an AU commits an abuse of discretion, there is an error of law, the findings of the AU are not supported by substantial evidence, or there is an important policy issue that may affect the public interest. 20 C.F.R. § 404.970(a). Finally, under the Secretary’s regulations, the decision of the Appeals Council is binding upon the parties unless an action is commenced in a federal district court. See 20 C.F.R. §§ 404.981, 422.210.

Thus, although purely a creature of administrative law, the Appeals Council, and its role in the overall scheme of the Act, is pervasive and longstanding. Moreover, because the Secretary has delegated to the Appeals Council his “duties, powers and functions relating to the holding of hearings” under the Act, it is well settled that final action by the Appeals Council becomes indeed the final determination of the Secretary for purposes of judicial review under section 205(g), 42 U.S.C. § 405(g). See, e.g., Hall v. Celebrezze, 340 F.2d 608, (6th Cir.1965); Cody v. Ribicoff, 289 F.2d 394, 395 (8th Cir.1961); Goldman v. Folsom, 246 F.2d 776, 778 (3d Cir.1957); cf. Weinberger v. Salfi, 422 U.S. 749, 765, 95 S.Ct. 2457, 2466, 45 L.Ed.2d 522 (1975).

II.

Each of these appeals involves a disability determination by an AU favorable to the wage-earner but which was subsequently reversed by the Appeals Council. The issue then becomes whether the statutorily-mandated deference to findings of fact under 42 U.S.C. § 405(g) runs in favor of the Appeals Council or in favor of the AU. In answering this question, we must also determine whether the exercise of the Appeals Council’s power of review is limited by 20 C.F.R. § 404.970(a). The difficulties presented by these issues are well illustrated by the two claims before us in these appeals.

Appeal No. 84-1455: Luther Mullen

Luther Mullen applied for disability benefits on June 22, 1981. After his application was initially denied, Mullen sought a hearing before an AU. The AU found that Mullen was suffering from two severe impairments and that, because of these impairments, Mullen could only perform sedentary work. After applying the medical-vocational grids, the AU concluded that, considering his age, education, and work experience, Mullen was disabled. The Appeals Council, however, on its own motion, reversed the AU's determination of disability. Upon reviewing the medical evidence, the Appeals Council concluded that Mullen was capable of doing light work and was therefore not disabled. The district court affirmed, finding substantial evidence to support the Secretary’s decision as expressed by the Appeals Council.

Relying upon Newsome v. Secretary of Health and Human Services, 753 F.2d 44 (6th Cir.1985), a panel of our court initially noted that, “if the administrative law judge’s decision was supported by substantial evidence, the Appeals Council had no authority to review the case and would have committed an error of law if it had done so.” Mullen v. Secretary of Health and Human Services, 762 F.2d 509, 510 (6th Cir.1985). Because the court found that the AU’s determination of disability was supported by substantial evidence, the court remanded the case to the district court and then to the Secretary for the purpose of awarding benefits. Thereafter, the Secretary filed a petition for rehearing en banc, challenging the correctness of the Newsome decision. That petition was granted on August 19, 1985.

Appeal No. 84-5352: Richard Shephard

Richard Shepherd initially filed an application for disability on August 30, 1974. The AU and the Appeals Council each initially denied benefits, but the district court remanded the case to the Appeals Council because the court could not determine whether there was substantial evidence for that denial. The district court further instructed the Appeals Council to develop medical and vocational evidence and to include a psychological evaluation. Thereafter, the Appeals Council remanded to the AU who took additional evidence and concluded that Shepherd was disabled. The Appeals Council, however, upon reviewing the case, remanded again to the AU with instructions to gather more information, including a psychiatric evaluation. After this evaluation was performed, the AU again determined that Shepherd was disabled, but the Appeals Council refused to adopt the AU’s conclusion and therefore denied benefits. This action became the Secretary’s final decision for purposes of judicial review.

On appeal, our court reversed the district court’s order affirming the denial of disability benefits because it found that the Appeals Council had failed adequately to articulate the reasons for rejecting the grant of disability benefits. The court therefore remanded the case for further findings on Shepherd’s alleged disability. See Shepherd v. Secretary of Health and Human Services, 698 F.2d 1223 (6th Cir.1982). On this later remand, a different AU also concluded that Shepherd was disabled and recommended an award of benefits. Once again, however, the Appeals Council refused to adopt the AU’s recommendation and therefore denied benefits. After the district court affirmed the Secretary’s denial, Shepherd once more appealed to the Sixth Circuit.

Relying on Newsome, a panel of our court noted that, “[i]f there was substantial evidence for the AU’s determination of disability, then we must reverse the Appeals Council’s denial of benefits.” Shepherd v. Secretary of Health and Human Services, 758 F.2d 196, 198 (6th Cir.1985). The court also noted that, “[a]lthough such a principle appears to be a departure from this Court’s previously articulated scope of review, see Beavers v. Secretary of Health, Education & Welfare, 577 F.2d 383, 386-87 (6th Cir.1978), a panel of this Court clearly announced the principle and we should apply it.” 758 F.2d at 198. Accordingly, because the court found that there was substantial evidence to support the AU’s decision, the court reversed the judgment of the district court affirming the Secretary’s denial of benefits.

Thereafter, the Secretary sought rehearing en banc, challenging both the application of Newsome to that case and the correctness of the Newsome decision itself. The Secretary’s petition for en banc rehearing was granted on July 1, 1985. This petition was then consolidated with the petition in Mullen for purposes of briefing and oral argument.

III.

A common characteristic of the separate appeals is our conclusion that the outcome depends upon who enjoys the benefit of the statutorily-mandated deference to findings of fact, for it appears that a judicial review limited by statute to the application of the substantial evidence standard could well support a finding either in favor of or against the claimant. It can therefore be seen that the basic difference in result between the decision of the AU and the decision of the Appeals Council when it rejects the findings of the AU will often depend upon what weight is attached to particular evidence in the record and upon what credibility is attached to the testimony of witnesses and to the other proof.

A split in the circuits³ concerning the problems reflected by these appeals has been reflected by the decisions within our own court. In Beavers v. Secretary of Health, Education & Welfare, 577 F.2d 383 (6th Cir.1978), a panel of our court noted that “[i]t is beyond dispute that the Appeals Council, and the Secretary, have the power to conclude that testimony, even if uncontradicted in the record, is not credible, since the Secretary is entrusted with the duty of making all findings of fact.” Id. at 386. (Emphasis in original). See also McCann v. Califano, 621 F.2d 829, 831-32 (6th Cir.1980). Although we concluded in Beavers that the Secretary’s final decision was unsupported by substantial evidence, we nevertheless emphasized that “[t]he Secretary has the ultimate responsibility for factual determinations.” 577 F.2d at 387. Beavers thus recognized that because the Secretary is charged with the ultimate responsibility of administering the Act, “the statutorily-mandated deference to findings of fact runs in favor of the Secretary, not the administrative law judge____” Id. at 386. However, in Newsome v. Secretary of Health and Human Services, 753 F.2d at 44 (6th Cir.1985), another panel of our court believed that the Secretary had limited the power of the Appeals Council to review, and hence reverse, an ALJ’s determination of disability to specified circumstances. Specifically, Newsome concluded that 20 C.F.R. § 404.970(a)(3)⁴ “indicates that the Appeals Council may review a decision only if the decision is in fact unsupported by substantial evidence.” Id. at 46. Therefore, according to Newsome, because the Secretary had limited the power of the Appeals Council to review an ALJ’s factual decisions, the statutorily-mandated deference to findings of fact now ran in favor of those of the administrative law judge.

It is apparent that Newsome’s interpretation of 20 C.F.R. § 404.970(a) imposes a significant limitation on the Secretary’s authority to review an ALJ’s factual decision and thus threatens to undermine the Secretary’s responsibility to administer the dispensation of benefits fairly and consistently. Indeed, in many cases the effect of Newsome will be to vest final decision-making authority in the AU rather than the Secretary. We believe, however, that such a result is fundamentally at odds with the statutory command that makes conclusive “the findings of the Secretary as to any fact, if supported by substantial evidence....” 42 U.S.C. § 405(g).

A.

Initially, we note that there are good reasons in public policy and sound administration that caution against concluding too quickly that the Secretary has limited his power through the Appeals Council to review final determinations of an administrative law judge. The Department of Health and Human Services is unquestionably one of the largest quasi-judicial administrative agencies in the federal government, and it provides one of the most important sources of benefits to the aged and needy. The administrative law judge no doubt plays a significant role in the dispensation of these benefits.⁵ As of 1975 there were twenty-five agencies with a total of 780 ALJ’s of whom 438 were in the Social Security Administration. By 1980, there were 1,134 ALJ’s in twenty-nine agencies and 670 of these were in the Social Security Administration.⁶ These numbers reflect not only the importance of the ALJ’s role, but perhaps more importantly the burgeoning caseload being experienced in the administration of the Social Security Act. At the same time, in specifically entrusting the Secretary with the responsibility of administering the Act the Congress necessarily imposed a duty to strive for consistency and uniformity in the dispensation of social security benefits. This policy is implicit in the statutory command that “the findings of the Secretary as to any fact, if supported by substantial evidence, shall be conclusive____” 42 U.S.C. § 405(g). Therefore, if the Secretary is to carry out this policy effectively, any purported limitation on the Secretary’s authority to review disability determinations by so large a body of individual judges should not be lightly inferred.

We acknowledge that the Secretary may, like any other agency, limit his original discretion in a matter by appropriate rule or regulation.⁷ Thus, under appropriate circumstances, one might very well conclude that, although an agency had the power to decide de novo all questions appealed from an ALJ, the agency has nevertheless limited the issues to be decided on appeal by rule or regulation.⁸ According to Newsome, this is precisely what the Secretary has done by promulgating 20 C.F.R. § 404.970(a). In Universal Camera Corp. v. N.L.R.B., 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1971), the Supreme Court found itself confronted with a similar question with respect to a purported limitation on the power of the National Labor Relations Board to review the findings of a hearing examiner. There, the Court replied:

The Court of Appeals deemed itself bound by the Board’s rejection of the examiner’s findings because the court considered these findings not “as unassailable as a master’s.” 179 F.2d [749 (2d Cir.1950)] at 752. They are not. Section 10(c) of the Labor Management Relations Act provides that “If upon the preponderance of the testimony taken the Board shall be of the opinion that any person named in the complaint has engaged in or is engaging in any such unfair labor practice, then the Board shall state its findings of fact____” 61 Stat. 147, 29 U.S.C. (Supp. III) § 160 (c). The responsibility for decision thus placed on the Board is wholly inconsistent with the notion that it has power to reverse an examiner’s findings only when they are “clearly erroneous.” Such a limitation would make so drastic a departure from prior administrative practice that explicitness would be required (Emphasis added). (Footnote omitted).

340 U.S. at 492, 71 S.Ct. at 466.

While Universal Camera may have been intended primarily to remove uncertainty in the scope of judicial review by the courts, the cited language makes it clear that within the agency, the ultimate responsibility for findings of fact rested with the National Labor Relations Board by statute, as we believe it rests with the Secretary of Health and Human Services here, and for the same reasons. Since we are likewise unable to find the kind of explicitness in the cited regulation, which is necessary to impose such a significant limitation on the Secretary’s authority to review ALJ disability determinations, we must conclude that Newsome was wrongly decided.

B.

In Newsome, a panel of our court initially concluded that unless one of the four grounds listed under 20 C.F.R. § 404.970(a) is present, “the Appeals Council has no authority to review the decision of the administrative law judge.” 753 F.2d at 46.⁹ In relevant part, section 404.970(a) states:

(a) The Appeals Council will review a case if—

(1) There appears to be an abuse of discretion by the administrative law judge;

(2) There is an error of law;

(3) The action, findings or conclusions of the administrative law judge are not supported by substantial evidence; or

(4) There is a broad policy or procedural issue that may affect the general public interest.

If one were to simply read the plain language of this provision, it is not at all clear that the Secretary has promulgated section 404.970(a) in order to limit the Appeals Council’s authority to review an AU’s decision. Indeed, it is only if one reads the quoted provision as stating that “the Appeals Council will review a case only if” one of the four circumstances is found to exist, that one can reach such a conclusion. Moreover, from a consideration of the four listed grounds of review under section 404.970(a), it would appear that the Secretary was concerned with ensuring consistency and uniformity in the decisions of numerous administrative law judges, rather than with mandating an exclusive set of criteria under which the Appeals Council would be permitted to review an AU’s decision.

We also believe that an interpretation of section 404.970(a) which would limit the Appeals Council’s authority to review AU decisions ignores the language of 20 C.F.R. § 404.969. This section states:

Anytime within 60 days after the date of a hearing decision or dismissal, the Appeals Council itself may decide to review the action that was taken. If the Appeals Council does review the hearing decision or dismissal, notice of the action will be mailed to all parties at their last known address. (Emphasis added).

On its face, this provision would seem to permit the Appeals Council to review on its own motion any action that was taken by an AU. Certainly there is nothing in this provision that suggests any limitation on the Appeals Council’s power of own motion review. In our view, therefore, the most natural and common sense reading of section 404.969 in conjunction with section 404.970(a) is that the Appeals Council may review any AU decision on its own motion and for any reason, if it deems it necessary, except that the Appeals Council must review a decision if it appears that the AU has committed one of the four transgressions listed under section 404.970(a). Stated differently, section 404.970(a) is designed to ensure that the Appeals Council reviews certain kinds of cases which the Council might otherwise decide not to review. In this sense, therefore, one could say that section 404.970(a) does limit the Appeals Council’s discretion in that the Appeals Council does not have the unrestrained power to decide what not to review. This interpretation certainly comports with the plain language of these provisions and is consistent with a broad policy objective that encourages consistency and uniformity in the administration of benefits under the Act.

The foregoing interpretation of sections 404.969 and 404.970(a) finds further support in the regulatory history of those provisions. It is well established that “the weight of an administrative interpretation will depend, among other things, upon ‘its consistency with earlier and later pronouncements’ of an agency.” Morton v. Ruiz, 415 U.S. 199, 237, 94 S.Ct. 1055, 1075, 39 L.Ed.2d 270 (1974) (quoting Skidmore v. Swift and Co., 323 U.S. 134, 140, 65 S.Ct. 161, 164, 89 L.Ed. 124 (1944)). Indeed, when an agency’s interpretation of a regulation is consistent and long standing, the court is obliged to give great deference to that interpretation. See E.I. DuPont de Nemours Co. v. Collins, 432 U.S. 46, 54-55, 97 S.Ct. 2229, 2234, 53 L.Ed.2d 100 (1977); Griggs v. Duke Power Co., 401 U.S. 424, 433-34, 91 S.Ct. 849, 854-55, 28 L.Ed.2d 158 (1971).

From February 26, 1960, to November 23, 1976, Appeals Council review of AU decisions was governed by 20 C.F.R. § 404.947 (1976), which was the predecessor of 20 C.F.R. § 404.969. Section 404.947 provided:

The Appeals Council may dismiss (see § 404.952) or, in its discretion, deny or grant a party’s request for review of a presiding officer’s decision, or may, on its own motion, within 60 days after the date of the notice of such decision, reopen such decision for review or for the purpose of dismissing the party’s request for hearing for any reason for which it could have been dismissed by the presiding officer (see §§ 404.935 though 494.-937). Notice of the action by the Appeals Council shall be mailed to the party at his last known address. (Emphasis added).

During the period that this provision was in effect, there was no predecessor regulation to 20 C.F.R. § 404.970(a). As a result, there could be no distinction between de novo or limited review of AU decisions. Section 404.947 simply provided the Appeals Council with the authority to review, in its discretion, any AU decision and apparently for any reason.¹⁰

In 1976, the Secretary added a new section, 20 C.F.R. § 404.947(a), which was the predecessor of section 404.970(a). See 41 Fed.Reg. 51585, 51588 (1976). Section 404.-947(a) provided:

§ 404.947(a) Basis for review of the presiding officer’s decision or dismissal by Appeals Council.

(a) The Appeals Council, on its own motion or on request for review, will review a hearing decision or dismissal where:

(1) There appears to be an abuse of discretion by the presiding officer;

(2) There is an error of law;

(3) The presiding officer’s action, findings, or conclusions are not supported by substantial evidence; or

(4) There is a broad policy or procedural issue which may affect the general public interest.

At the time this provision became effective and during the period that it remained in effect, section 404.947 was left unchanged. Since section 404.947 already gave the Appeals Council the authority in its discretion to review (or not to review) any AU decision, a common sense interpretation of section 404.947(a) would indicate that this section was intended to specify those decisions which the Appeals Council would be required to review. Otherwise, if section 404.947(a) had been intended to limit the Appeals Council’s review authority, a conflict would have resulted between the two provisions, thus necessitating a repeal of section 404.947.

In 1980, sections 404.947 and 404.947(a) were recodified at 20 C.F.R. §§ 404.969 and 404.970(a). See 45 Fed.Reg. 52078, 52088 (1980). There is nothing in the preamble to indicate that this recodification was intended to effect any substantive change in these regulations.

Most recently, the Secretary issued Social Security Ruling 82-13,¹¹ implementing the Bellmon Amendment which directs the Secretary to institute a program for the Appeals Council to review AU decisions on its own motion.¹² Significantly, SSR 82-13 notes that the Bellmon Amendment is

the result of Congressional concern about what is considered a high overall percentage of claims for disability benefits allowed at the hearing level and the wide variance in allowance rates among individual administrative law judges. It also reflects Congressional intent that there should be a review program that incorporates the same adjudicative principles that bind the administrative law judges and provides for uniformity of decisionmaking at all adjudicatory levels.¹³

Although SSR 82-13 notes that the Appeals Council’s ongoing review “will be implemented primarily on the basis of the categories” listed under section 404.970(a), the ruling also emphasizes that section 404.969 “provide[s] the Appeals Council the discretionary authority to review any decision or dismissal action for any reason. This is not a newly acquired authority but has existed for many years.” (Emphasis added).

In light of this regulatory history and administrative interpretation of section 404.969, we believe that section 404.970(a) was not intended to limit the Appeals Council’s discretionary own motion review of ALJ decisions. Rather, we find ourselves in agreement with the Eighth Circuit and conclude that section 404.970(a) “merely sets out those categories of cases which the Appeals Council ‘will review.’ ” Baker v. Heckler, 730 F.2d 1147, 1149 (8th Cir.1984). We also believe that this interpretation is reasonable and consistent with the language of the regulations and the purposes of the statute and is therefore entitled to deference.

C.

From what has been said, it necessarily follows that our review, and review by the district courts, is to be governed by the substantial evidence standard in terms of the Secretary’s final decision as expressed by the final action of the Appeals Council. This is so because the statute, by its terms, makes conclusive “[t]he findings of the Secretary as to any fact, if supported by substantial evidence,____” As Circuit Judge Richard S. Arnold succinctly noted in Baker, supra:

The Secretary has chosen to act through the Appeals Council, and therefore it is the Council’s decision that must be deferred to by the courts if substantial evidence exists to support it, whatever the result might have been if the courts were reviewing the ALJ’s decision directly. The substantial-evidence standard allows considerable latitude to administrative decision makers. It presupposes that there is a zone of choice within which the decisionmakers can go either way, without interference by the courts. An administrative decision is not subject to reversal merely because substantial evidence would have supported an opposite decision. (Citations omitted).

730 F.2d at 1150.

We recognize that the foregoing language does not require a reviewing district or circuit court to follow the Appeals Council’s decision blindly. As we stated in Beavers, supra, “this court still has the responsibility of determining whether there is substantial evidence to support the Appeals Council’s decision, and when the administrative law judge has concluded that a witness’ testimony is credible, that is an important factor to consider.” 577 F.2d at 386-87. Indeed, “[t]he opportunity to observe the demeanor of a witness, evaluating what is said in the light of how it is said, and considering how it fits with the rest of the evidence gathered before the person who is conducting the hearing, is invaluable, and should not be discarded lightly.” Id. at 387. Any judicial determination of whether the Appeals Council’s decision is supported by substantial evidence must necessarily take into consideration “the record as a whole,” including “whatever in the record fairly detracts from its weight.” Universal Camera Corp., 340 U.S. at 488, 71 S.Ct. at 464. This is not to suggest, however, that the Appeals Council must offer any special justification for its contrary findings other than that which has always been required in this kind of proceedings. The point is simply this: the issue for judicial review is whether the Appeals Council’s findings, and not those of the administrative law judge, are supported by substantial evidence when those findings conflict.

IV.

Having resolved the issues which brought about review, it is still necessary to address the merits of the claim of each of the plaintiffs in the light of their individual facts.

Luther D. Mullen was born August 22, 1929, and ceased working on his fiftieth birthday, August 22, 1979. On June 22, 1981, he applied for disability benefits retroactive to the date of his retirement.

Mullen was described as moderately obese weighing 205 to 250 pounds and being approximately 6'1" tall. Mullen had only achieved a fourth grade education and admitted to very limited reading capabilities. He was described as pleasant, fairly healthy in appearance although at the same time appearing to some as older than his actual age. He had worked for at least nineteen years as a foundry laborer and had been engaged in a wide variety of activities as such, all of which were classified as heavy labor. The record does not reflect that Mullen was ever married, and he had lived for many years in a private home of friends sharing expenses and some responsibilities for its upkeep. He has a car and drives some, but basically appears to live a quiet and sedentary life.

In a one page opinion, the administrative law judge awarded Mullen benefits, finding that he was suffering from two severe impairments, esophagitis and spondylolis-thesis at L5, conditions which the AU characterized as not extremely serious but “serious enough to impose substantial limitations on claimant’s ability to work.” Relying on the opinion of Lars Anderson, D.O., one of Mullen’s treating physicians, the AU discounted that doctor’s certification of his total inability to work but nonetheless concluded that his maximum sustained work capacity was limited to sedentary employment. In the light of Mullen’s closely approaching advanced age, his limited education and his history of unskilled work, the AU held that a finding of total disability was dictated by Rule 201.01 of Table 1 to Appendix 2 of Subpart P to Regulation No. 4.

The Appeals Council, in an “own motion” review, considered all of the evidence which was before the administrative law judge, as well as two additional medical reports from James M. Bullock, M.D., which had been submitted by claimant’s representative after review was ordered. In contrast to the administrative law judge’s one page opinion, the Appeals Council devoted five full pages to an in-depth study of the evidence and made eleven express findings, the conclusion of which was that, while claimant did suffer the same impairments as were noted by the administrative law judge, his allegations of pain and significant functional restrictions to the extent of an inability to perform at least light work were not credible. While finding that Mullen was unable to perform his past relevant work as a foundry worker, the Appeals Council concluded from the evidence that Mullen still retained the “residual functional capacity” for at least light work as defined in section 404.1567, 20 C.F.R. § 404.1567 (1985). It agreed that at fifty-three years of age, claimant was closely approaching advanced age and recognized that he had a marginal education.

The point of difference, therefore, appears to be focused on an evaluation of Mullen’s complaints of pain and upon the Council’s express finding that the evidence concerning their severity was not credible. The Council considered but rejected Dr. Anderson’s opinion that Mullen’s back pain was supported by objective evidence and found it inconsistent with other medical opinions of record. Its specific review of the record is repeated verbatim:

Sections 404.1528 and 404.1529 of Social Security Administration Regulations No. 4, as pertinent herein, clearly provide that an individual will not be found disabled based on symptoms, including pain, unless medical signs or findings show that there is a medical condition that could reasonably be expected to produce those symptoms. In this case, there is little doubt that the claimant does experience some pain; however, the record does not establish that the claimant’s pain is constantly severe, unremitting and unreponsive to treatment. It is note worthy [sic] that the claimant sees his physician only once a month and essentially receives only renewals of his prescriptions. He is apparently not interested in undergoing further definitive treatment for his back problems. It is also note worthy [sic] that the claimant has little motivation to undergo such treatment since he is receiving a retirement pension and workmen’s compensation benefits. The record shows that the claimant is able to take care of his needs, drive his car, do his own grocery shopping and participate in his hobby. The medical evidence shows that he does have spondylolisthesis at L5 as well as degenerative arthritis and osteoarthritis. Those impairments are certainly capable of producing pain. However, the X-ray films show that there has been little change in the claimant’s back condition since 1977. Moreover, Dr. Wessinger released the claimant to return to work in May 1980 with limitations only with respect to lifting over 35 pounds or excessive bending. Dr. Anderson has stated that the claimant is unable to work due to his back pain but his opinion is apparently based on the claimant’s symptoms rather than objective evidence. Dr. Bullock stated that the claimant could do sedentary work but might have difficulty performing light work without some pain and discomfort. However, Dr. Bullock also stated that the claimant’s reported symptomatology is greater than what he would normally expect for someone with his condition. After careful consideration of all those factors, the Appeals Council is of the opinion that the claimant’s testimony regarding the frequency, severity and duration of pain and the limitations caused by such pain is not credible. The Appeals Council believes that the claimant does experience mild to moderate pain and perhaps even occasional severe pain as a result of his back condition and his esophagitis. The Appeals Council believes that the claimant’s impairments prevent him from performing his usual heavy work in the cleaning department at a foundry. However, the Appeals Council is of the opinion that the claimant, in spite of his pain, has the maximum sustained capacity to perform light work with no excessive bending. The medical record does not reveal the existence of neurological deficits that would prevent the claimant from walking and Dr. Wessinger released him to return to work in May 1980. Dr. Bullock stated that the claimant might have difficulty performing light work due to pain and discomfort but he provided no reason, from an objective standpoint, why the claimant would be unable to perform light work. The Appeals Council believes that the claimant’s pain is intermittent and responds adequately to the medications prescribed for him.

The foregoing findings are supported by our own examination of the record. The record further shows that Mullen quit work precisely on his fiftieth birthday when he was entitled to retirement benefits on the basis of nineteen years employment with the company. This, with the $164 per week he is receiving in workmen’s compensation, and the limited nature of his lifestyle, he being single and living in a home with friends, may have left him with little incentive to return to work. In addition to the inconsistencies pointed out in the cited findings of the Council, the medical evidence itself, while consistently showing the existence of the spondylolisthesis at L5, at the same time shows a consistent absence of many of the findings in connection with neurological examinations which normally occasion complaints of severe pain. There was no muscle spasm or atrophy evident nor reflex abnormality nor loss of sensation, as found by Dr. Gilbert and also by Dr. Anderson and by Dr. Bullock. Dr. Bullock had difficulty reconciling inconsistent complaints with the condition found. While it was appropriate to consider the complaints arising from both the spondylo-listhesis and the esophagitis, it is apparent that the Council did not consider the latter condition to be a severe impairment at all. Substantial evidence clearly supports this finding. The evidence was that, while Mullen suffered from this condition, at the same time the condition has responded very well to treatment. As Chief United States District Judge Wendell A. Miles observed in his district court opinion upholding the Appeals Council’s denial of benefits, while Mullen experienced difficulty in 1979 which occasioned his hospitalization, his recovery was dramatic and with treatment he was completely relieved of any symptomology within three days. Dr. R. Martins, M.D., who treated him for this condition concluded that it was fairly well managed at that time and since that time his treating physician, A.J. DeVore, D.O., reported in July of 1981, that Mullen had not been given any treatment except for an occasional prescription for medication. As Chief Judge Miles observed, the condition was one with which he had been afflicted for many years and which he had in the past managed to tolerate notwithstanding his work. Chief Judge Miles also noted, as did the Appeals Council, that Dr. Anderson’s final conclusion that Mullen had been disabled, had not been earlier supported by specific findings and was contradicted by the analysis of Dr. Wessinger and, finally, Dr. Bullock.

In conclusion, we hold that substantial evidence supports the findings of the Appeals Council. We do not consider our opinion in this regard at odds with the original panel view which limited its review to the opinion of the administrative law judge and found that that was supported by substantial evidence. It would appear to us that this was a rather classic case in which the different applications of the two rules bring different results and also that it may well be the type of case in which, as Judge Arnold observed in Baker v. Heckler, supra, the statutory scheme “presupposes that there is a zone of choice within which the decisionmakers can go either way, without interference by the courts.” ¹⁴

Appeal No. 84-5352: Richard Shepherd

Richard G. Shepherd was born February 14, 1942, and ceased working shortly after he injured his back while lifting a barrel at work on January 14, 1974. He first applied for Social Security disability insurance benefits on August 30, 1974, alleging total disability because of a ruptured disc and pinched nerve. The tortured procedural history of his exceptionally prolonged litigation is spelled out in the reported decision of the original panel of our court to which this appeal was assigned. See Shepherd v. Secretary, 758 F.2d 196 (6th Cir.1985).

Shepherd was described as weighing between 184 and 200 pounds and as approximately 6'1%* tall. He is married and has one child. His wife works. Shepherd was first hospitalized at the University Hospital of the University of Kentucky from March 16 to March 23, 1974, after having been referred by Dr. Milo Schosser of the Lynch Medical Services in Lynch, Kentucky. While there, he was attended by Alfred B. Young, M.D., a neurosurgeon. Dr. Young’s extensive reports cover perhaps the most thorough record of Shepherd’s extensive medical history and will be described in some detail later. Suffice it to say, however, that the administrative record here contains the reports of the following physicians and other specialists:

Milo Schosser, M.D.;

M. Frank Turney, M.D., a neurosurgeon;

Curwood R. Hunter, M.D., a neurosurgeon;

K. Armand Fischer, M.D., an orthopaedic surgeon;

William H. Brooks, M.D., a neurosurgeon;

William C. Madauss, M.D., a resident in neurosurgery;

A. Julian Ahler, M.D., a radiologist;

Kerwin A. Fischer, M.D., an orthopaedic surgeon;

Carol Flynn, M.A., a clinical psychologist;

Ralph J. Angelucci, M.D., a neurosurgeon;

W.R. Dill, M.D., a psychiatrist.

Of the foregoing, Drs. Young, Ahler, Schosser, and Turney were either attending physicians or involved in Shepherd’s care as a patient. The other witnesses were primarily engaged for the purposes of reporting in connection with the Kentucky workmen’s compensation claim or with the Social Security claim, or both. Dr. Hunter, Dr. Fischer, Dr. Fischer, and Dr. Brooks examined and made reports either written or by deposition on behalf of Shepherd. Rita Dixon was employed by the State of Kentucky and testified concerning availability of employment on behalf of Shepherd. Clinical psychologist Carol Flynn, Dr. Angelucci, and Dr. Dill were all engaged and called by the Social Security Administration in connection with the development of additional information in the two remands which took place. It would be difficult to find a record in which there is a wider and stronger difference of opinion concerning Shepherd’s condition. We conclude that this difference exists not because of the particular time at which the examination or report was given, but because of a fundamental difference in evaluation of the medical evidence and of the symptomatology as reported by Shepherd, and as well in an assessment of his credibility and of the extent of his pain.

The most extensive testimony and the most continuing supervision of Shepherd’s case came from Dr. Young to whom Shepherd was first referred for treatment at the time of his original hospitalization in March 1974. Dr. Young’s initial although tentative diagnosis was that Shepherd was suffering from a suspected herniated nucleus pulposus, L-5-7-1. However, in the course of his continuing supervision and observation of Shepherd, Dr. Young, while convinced that Shepherd did indeed suffer from what he finally diagnosed as mechanical back pain, concluded in 1975 that there was not any objective evidence of nerve injury and that all of the tests and examinations at that time were within normal limits. At the same time, he counseled Shepherd against extensive lifting, bending, crawling and stooping and believed that he was “unable to engage in arduous labor.” In the meantime, Shepherd had also been referred for further examination to Dr. M.F. Turney who gave him an extensive physical examination in August and September of 1974, during the course of a further hospitalization. While Turney originally believed that Shepherd might have lumbar spinal nerve compression lesions, he found the X-rays to be normal as far as he could tell with no asymmetry and all modalities of sensation were also found to be normal. Shepherd walked normally and had a free range of back motions and, finally, on September 23, 1974, Dr. Turney reported to Dr. Wier of the Lynch Medical Services, who was apparently Shepherd’s regular doctor in his home town, that:

On examination when not specifically tested, the patient had free range of back motion. The reflexes were present, equal, and active. There was no swelling or tenderness of his right knee. In fact the neurological examination was normal.

This patient’s symptomatology now does not fit into any spinal nerve compression lesion with which I am familiar.

Maybe he needs to be worked up to see whether he has arthritis or some such thing as that. I certainly cannot recognize any neurosurgical lesion on him at this time.

In an earlier letter to Dr. Wier on August 23, 1974, Dr. Turney noted considerable skepticism concerning the symptomatic history which Shepherd was relating. He commented:

On examination he [Shepherd] had so much functional overlay that it was difficult to evaluate the patient. He had varying degrees of limitation of back motion. On standing, he could barely move his back. However, when sitting on the examining table, he had an extreme arch in a leaning over position.

Dr. Turney then commented further:

This patient may have a lumbar spinal nerve compression lesion, but he has developed considerable iatrogenic difficulty and a severe functional overlay as indicated by his statements or interpretations of what doctors have told him above.

Dr. Turney of course later concluded that there was no neurosurgical lesion indicated.

In his report following further hospitalization at University Hospital in July, 1974, Dr. Young noted that “the patient had a MMPI [Minnesota Multiphasic Personality Inventory] performed which concluded that the patient was more likely a hysterical personality.” This finding and similar findings were to be generally reflected throughout the record thereafter as indicating that, consciously or unconsciously, Shepherd was consistently exaggerating both his symptoms and the pain he believed he suffered from them.

With respect to the other neurological evidence, it is fair to say that there is a very wide spread of opinion among the several neurosurgeons who examined Shepherd whether for treatment or for testimony. Dr. Turney obviously shared some of the skeptism of Dr. Young concerning the medical basis for Shepherd’s back problem. Drs. Hunter, Fischer and Brooks, all of whom examined Shepherd for the purpose of testifying on his behalf at the several hearings, tended to one degree or another to support a medical basis for the claim although Dr. Brooks did find an absence of any arthritis or degenerative disc disease. Those doctors did find limitation in the motion of the left leg, tenderness in the area of the lumbar spine, and concluded that Shepherd was totally disabled, although Dr. Fischer opined that it was a “100% temporary partial disability.” Much of the cross-examination of those doctors went to the rather persistent absence of any positive findings of negative tendon reflexes, a test which all agreed would be probably the least subject to subjective manipulation on the part of the patient. Dr. Young, meanwhile, continued to adhere to his final conclusion that, neurologically, Shepherd had no scoliosis, no motor or sensory deficit, and no equal and bilateral tendon reflexes. “We felt that the patient’s symptoms, the normal cystometrogram and the normal electromyelogram pretty well ruled out a diagnosis of a disc problem and there was no indication for myelography or need for surgery.” Dr. Young discharged Shepherd on January 14, 1975, without prescribing any medication or recommending any further appointments.

Subsequently, a neurosurgeon engaged by the Social Security Administration, R.J. Angelucci, who was engaged solely for the purpose of reporting, reported on March 23, 1978, in a very caustic manner, that Shepherd was “a tall, well developed and nourished, moaning and groaning, thirty-six year old white male.” He found all signs, including X-rays, were entirely normal. Dr. Angelucci concluded his report with the comment, “This man had a normal neurological examination. Because of that I see no reason to complete the attached physical capacities evaluation since I see no disability present on this patient for return to work.”

As noted earlier in the published opinion of the original panel, the United States district judge who heard Shepherd’s appeal from the initial denial of benefits by the Secretary remanded the case because he concluded he could not determine whether there was substantial evidence to support a denial of benefits. The district court, in an order dated April 27, 1977, instructed that vocational evidence be produced including a psychological evaluation. On remand to the AU, the testimony of a vocational expert was taken, a psychological evaluation was completed and the medical reports were again evaluated. The AU found the claimant to be disabled, but the Appeals Council on its own motion remanded again to the AU with instructions to gather more information, including a psychiatric evaluation. This remand produced the evaluation by Dr. Dill. Once again the AU found Shepherd to be disabled. This time, however, the Appeals Council refused to accept the AU’s conclusion and denied benefits. In doing so it pointed to the discrepancy between the medical report of Dr. Dill and the evaluation sheet which he filled out to accompany it. This court found, however, that:

[T]he Appeals Council failed to articulate the basis for adopting the favorable part of Dr. Dill’s assessment of plaintiff’s condition and rejecting the unfavorable part. Such an articulation is required here in order to find substantial evidence to support the Secretary’s determination. If the Appeals Council rejected disability benefits because it believed plaintiff lacked credibility, once again it must indicate the reasons for coming to that con-clusion____ Consequently, we must remand this case for further findings specifically on plaintiff’s alleged mental impairments and credibility.

See Richard G. Shepherd v. Secretary, 698 F.2d 1223 (6th Cir.1982) (quoted in Shepherd, 758 F.2d at 197).

On remand, the disagreement between the AU and the Appeals Council was, if anything, even more marked than upon the previous remand. The administrative law judge’s display of some petulance was at least understandable, for the Council remanded the case in turn to him without original comment and without itself making comments on Shepherd’s “alleged mental impairments and credibility.” The administrative law judge observed, quite correctly, that this was a finding that he was not empowered to make on behalf of the Council which would have to speak for itself. At the same time, he reaffirmed the findings of the earlier administrative law judge stating:

[T]he great preponderance of the evidence is that the claimant’s impairments are disabling and there is no substantial evidence in the record supporting a finding that the claimant is able to perform substantial gainful activity. After all, by long-established judicial fiat, the Act is to be liberally construed in favor of a claimant and all doubt resolved in his favor except where substantial evidence might exist to the contrary____ The claimant was last insured in 1978, so it would be of no value to have him examined again or to hear further testimony. This matter has gone on long enough, administrative proceedings must come to an end within a reasonable time or else gross inequity is done.

The ALJ then found by a preponderance of the evidence that the claimant was insured, that the medically documented and orally proven physical and mental impairments were severe and significantly limited claimant’s ability to perform some basic work-related functions. He further held that these impairments have been severe since 1974 and that claimant did not have the residual functional capacity to perform physical and mental demands of past relevant work. He further found that:

[T]he claimant does have an impairment restricting his ability to relate with coworkers and withstand the customary work pressures.

Considering age, work experience, education and impairment, the claimant cannot engage in other kinds of substantial gainful work which exists in the national economy in significant numbers because the claimant cannot perform the requirements of engaging in sedentary or light work (see exhibits for the regulatory definition of the exertional requirements for various levels of work). The nonexer-tional impairments of the claimant limit the ability to perform these requirements.

Thereafter, the Appeals Council filed what was to be its final ruling in a decision dated September 20, 1982. The original panel in this appeal described the latest Appeals Council decision as follows:

The Appeals Council again refused to adopt the AU’s recommendation and denied benefits. The Appeals Council relied heavily on the fact that Shepherd's claim of disability exceeds what the Council interpreted as the medically determinable levels of severity. The Appeals Council further stated specifically that claimant’s sincerity with respect to his physical difficulties as he perceives them.” The Council dismissed Shepherd’s sincere claims regarding his physical limitations and stated that “much of the claimant’s inactivity results from his own conviction that he cannot work.” Finally, in order to comply with the Sixth Circuit’s mandate concerning the Secretary’s use of Dr. Dill’s report, the Appeals Council explained why it relied on only the unfavorable part of the psychiatric evaluation by stating that the psychiatric evaluation was internally inconsistent. The District Court affirmed the Secretary’s denial, and this appeal ensued.

758 F.2d at 197.

The original panel, believing that it was not entitled to evaluate whether the Appeals Council's decision was itself based upon substantial evidence, awarded benefits on the basis that the record did at least clearly reflect substantial evidence for the decisions of the administrative law judge. We are therefore left to determine whether, as in Mullen, this was the type of case in which substantial evidence could have supported either conclusion and, if so, whether our rejection of Newsome requires us to uphold the decision of the Appeals Council. We conclude that substantial evidence does exist to support the Council’s decision.

While the administrative law judge seemed to believe that the overwhelming weight of evidence supported a medical and physical impairment entirely apart from any mental or psychological condition, we can only observe from the evidence which we have reviewed, that there is substantial evidence in support of each view. The medical analysis of the Appeals Council noted that the administrative law judge had concluded that Shepherd’s testimony “had been consistent and was, therefore, credible. In this regard, the Appeals Council emphatically does not question the claimant’s sincerity with respect to his physical difficulties as he perceives them. However, the medical evidence does not contain findings supportive of the degree of severity that the claimant contends. Therefore, the Appeals Council is not persuaded that the claimant’s impairments restrict his work-related capabilities to the extent alleged.” In this respect, the record provides substantial evidence for this determination by the Appeals Council, which then continued:

To the contrary, the record shows that much of the claimant’s inactivity results from his own conviction that he cannot work. This is supported by a depositen from A. Byron Young, M.D., a Board Certified neurosurgeon who examined and treated the claimant in 1974 (Exhibit 23). Similarly, a psychological evaluation in July 1977, indicated that there was no suggestion of neurological impairment, and that the claimant had a tendency to over react [sic] to minor physical dysfunction. He had excessive bodily concern and resisted any intepre-tation that his symptoms may have an emotional basis. The psychologist noted that the claimant stated he enjoyed people and did not have any interpersonal difficulties (Exhibit 26).

In order to more accurately assess the claimant’s mental state, a consultative psychiatric examination was performed by W.R. Dill, M.D. on April 9, 1978, and his report has been specifically mentioned by the court. On mental status examination, Dr. Dill noted that the claimant appeared to be depressed; however, he denied feelings of worthlessness, but did admit to worrying about the the [sic] future. The claimant was spontaneously productive of relevant material and his main theme of thought was his injury; however, there were no psychotic trends noted. The claimant denied compulsions, obsessions, or phobias, and was well oriented as to time, place, and person. His memory was good for both recent and remote events, and his judgment was considered to be good. The psychiatric diagnosis was “Hysterical Neurosis, conversion type with Anxiety and Psychophysiological Symptoms in a person with a Passive Dependent Personality.” On a supplemental questionaire, Dr. Dill estimated the degree of impairment of the claimant’s ability to perform certain functions. Of particular relevance herein, Dr. Dill indicated that there was no impairment of the claimant’s ability to relate to other people; however, there was a moderately severe limitation in his ability to perform work requiring frequent or minimal contact with others. The Appeals Council recognized this inconsistency and addressed it in the decision dated January 8, 1979. However, the court has directed that a more comprehensive rationale be given in resolving this inconsistency.

The reason for Dr. Dill’s assessment that the claimant would be limited in his ability to work with others is not stated nor is it apparent from his report. To the contrary, this assessment is inconsistent with the rest of Dr. Dill’s report and particularly his assessment that there was no impairment of the claimant’s ability to relate to other people. Moreover, the assessment in question is inconsistent with other evidence of record including the psychologist’s report in July 1977 which indicated that the claimant enjoyed people and had no interpersonal difficulties. Dr. Dill’s assessment that there was no limitation on the claimant’s ability to comprehend and follow instructions and only mild limitation in performing simple tasks is consistent with his narrative report and the other evidence of record including the psychological report referred to above. The overall medical findings, together with the fact that the claimant had no psychotic trends and was well oriented with good memory and good judgment, demonstrate that the claimant does not have a severe psychiatric impairment. In view of the above facts, the Appeals Council rejects Dr. Dill’s assessment that the claimant would be limited to a moderately severe degree in his ability to work with others. The evidence relative to the claimant’s back impairment has been fully evaluated in the previous decisions. Briefly stated, the claimant’s attending physician indicated that based on his symptoms, normal cystometrogram and normal elec-tromyogram [sic], a disc problem was pretty well ruled out. Moreover, his back injury responded to symptomatic therapy during his hospitalization.

On the basis of the entire record as summarized in the previous decisions and supplemented herein, the Appeals Council finds that the claimant had the residual functional capacity to engage in work at a sedentary exertional level, and that his psychiatric impairment did not diminish his capability for a full range of sedentary work at any time on or prior to December 31, 1978, when he last met the special earnings requirments for disability purposes. The Appeals Council further finds that the claimant is a younger individual (currently 40 years of age) with a high school education, and that the issue of transferability of skills is not material herein. Accordingly, Rule 201.-27 of Table No. 1 in Appendix 2 of the regulations directs the conclusion that the claimant is not disabled. Therefore, the Appeals Council does not adopt the recommended decision dated May 28, 1982.

We have carefully reviewed the entire record and believe that, while the problem of analysis is difficult and frustrating, the Appeals Council has now properly fulfilled the directions contained in the earlier remand from our court, and with considerably more detail than was contained in the report of the administrative law judge. Under our ruling the decision of the Appeals Council is by law the decision of the Secretary and that decision is conclusive if supported by substantial evidence. The decision of the Appeals Council is so supported and it therefore is not our function or the function of the judicial branch of the government to interpose an independent or contrary view.

V.

In conclusion, we hold that the statutorily mandated deference to findings of fact under section 205(g), 42 U.S.C. § 405(g), runs in favor of the Appeals Council even though its findings may conflict with those of the AU. We believe this conclusion is compelled by the recognition that the Appeals Council has long been delegated the authority to act on behalf of the Secretary so that final action by the Council becomes the Secretary’s final decision for purposes of judicial review. We further hold that because the Secretary had not limited the Appeals Council’s power to review favorable AU disability determinations, at least with the kind of explicitness we think is necessary here, Newsome v. Secretary of Health and Human Services was wrongly decided and is hereby overruled. Accordingly, because we conclude that the decision of the Appeals Council is supported by substantial evidence in each of the individual cases, the judgment of the district court in each appeal is AFFIRMED.

1 . Hearings under section 205(b), 42 U.S.C. § 405(b), must also conform to the requirements of the Administrative Procedure Act, 5 U.S.C. §§ 556-557. See 3 K. Davis, Administrative Law Treatise 319-22 (2d ed. 1980). Cf. Richardson v. Perales, 402 U.S. 389, 408-09, 91 S.Ct. 1420, 1430-31, 28 L.Ed.2d 842 (1971).

2 . See 11 Fed.Reg. 7943 (July 23, 1946), which states in part:

d. All duties, powers, and functions relating to the holding of hearings, the rendition of decisions, and the review of decisions in connection with administrative appeals from determinations made under Title II of the Social Security Act, as amended, and affecting benefits, lump sum or wage records, including the administration of oaths and affirmations, the issuance of subpoenas, the examination of witnesses and the receipt of evidence and all other duties, powers, and functions relating to judicial review of decisions made upon appeal, which were transferred from the Social Security Board by Reorganization Plan No. 2 of 1946 are assigned to the Office of Appeals Council in the Social Security Administration and shall be exercised by the Appeals Council, the members and referees in accordance with applicable rules as from time to time amended by the Commissioner with the approval of the Administrator____

Id. at 7943.

It has been noted that intermediate review boards, such as the Appeals Council, may provide a number of advantages to an agency. Such a board may relieve an agency of time-consuming work which might otherwise be devoted to reviewing a large caseload of routine type cases. In addition, such a board is frequently in a better position to assure uniform results consistent with established policies. See Berkemeyer, Agency Review by Intermediate Boards, 26 Ad.L.Rev. 61, 65 (1974).

3 . The First, Fourth, Eighth, Tenth and Eleventh Circuits have rejected the Newsome standard and have held that, notwithstanding 20 C.F.R. § 404.970(a), the statutorily-mandated deference to findings of fact runs in favor of the Appeals Council even when it rejects an ALJ’s favorable determination. See Kellough v. Heckler, 785 F.2d 1147 (4th Cir.1986); Taylor v. Heckler, 765 F.2d 872, 875 (9th Cir.1985); Lopez-Cardona v. Heckler, 747 F.2d 1081, 1083 (1st Cir.1984); Baker v. Heckler, 730 F.2d 1147, 1149-50 (8th Cir. 1984); White v. Schweiker, 725 F.2d 91, 93-94 (10th Cir.1984). The Eleventh Circuit initially adopted the standard of New-some, but then reversed itself in a unanimous en banc opinion, and adopted the standard that we adopt here. Parker v. Bowen, 788 F.2d 1512 (11th Cir.1986) (en banc), rev’g, Parker v. Heckler, 763 F.2d 1363 (11th Cir.1985). The Third and Seventh Circuits are contra. See Powell v. Heckler, 783 F.2d 396 (3d Cir.1986); Scott v. Heckler, 768 F.2d 172, 178 (7th Cir.1985).

4 . 20 C.F.R. § 404.970(a)(3) provides:

(a) The Appeals Council will review a case if—

******

(3) the action, findings or conclusions of the administrative law judge are not supported by substantial evidence____

5 . The role of the administrative law judge under the Social Security Act, like that of the Appeals Council, is longstanding. Unlike the Appeals Council, however, the AU’s position is not a creature of administrative law; rather, it is a direct creation of Congress under the Administrative Procedure Act (APA), 5 U.S.C. § 551 et seq. Under the APA, AU’s are also provided with a certain degree of “decisional independence” from the agency within which they operate. Nash v. Califano, 613 F.2d 10, 15 (2nd Cir.1980). Indeed, under § 11 of the APA, “Congress intended to make hearing examiners 'a special class of semi-independent subordinate hearing officers’ by vesting control of their compensation, promotion and tenure in the Civil Service Commission to a much greater extent than in the case of other federal employees.” Ramspeck v. Federal Trial Examiners Conference, 345 U.S. 128, 132, 73 S.Ct. 570, 573, 97 L.Ed. 872 (1953). Moreover, although the position of an AU is not “constitutionally protected,” 345 U.S. at 133, 73 S.Ct. at 573, it is, in many respects, "functionally comparable” to that of a federal district judge. Butz v. Economou, 438 U.S. 478, 513, 98 S.Ct. 2894, 2914, 57 L.Ed.2d 895 (1978). Thus, under the Secretary’s regulations, the AU serves as the initial fact finder and decision maker when an individual requests a hearing on his or her claim for benefits under Title II of the Act. See 20 C.F.R. §§ 404.900.965 (1985). Moreover, the conduct of these hearings generally rests in the AU’s sound discretion. Richardson v. Perales, 402 U.S. 389, 400, 91 S.Ct. 1420, 1426, 28 L.Ed.2d 842 (1971).

In contrast to the Appeals Council, therefore, AU’s in the SSA are functionally more independent of the agency within which they adjudicate social security claims. There are, however, definite limits on the extent to which AU’s may exercise their decisional independence. Indeed, were it otherwise it might be difficult for the agency to implement its policies or, in the case of the SSA, to administer benefits in a fair and consistent manner. Administrative law judges therefore remain entirely subject to the agency on matters of law and policy. See Association of Administrative Law Judges, Inc. v. Heckler, 594 F.Supp. 1132, 1141 (D.D.C.1984); see also Scalia, The ALJ Fiasco-A Reprise, 47 U.Chi.L. Rev. 57, 62 (1979). Moreover, an agency can always reverse an ALJ on matters of fact even when it disagrees with the ALJ’s credibility determination. See FCC v. Allentown Broadcasting Corp., 349 U.S. 358, 364-65, 75 S.Ct. 855, 859, 99 L.Ed. 1147 (1955); Universal Camera Corp. v. N.L.R.B., 340 U.S. 474, 492-97, 71 S.Ct. 456, 466-69, 95 L.Ed. 456 (1951). In reviewing an ALJ’s decision, the agency also retains "all the powers which it would have in making the initial decision." 5 U.S.C. § 557(b). In addition, under both the APA and the Secretary’s regulations, the agency itself, or the Appeals Council, may decide to assume the responsibility for conducting a hearing. 5 U.S.C. § 556(b); 20 C.F.R. § 404.956 (1985).

6 . See 3 K. Davis, Administrative Law Treatise 317 (2d ed. 1980) and K. Davis, Administrative Law of the Seventies 27-28 (Supp.1980). According to the SSA’s Office of Hearings and Appeals, as of January 1986, there were approximately 687 ALJ’s involved in the administration of benefits under the Social Security Act.

7 . 42 U.S.C. § 405(a) provides;

The Secretary shall have full power and authority to make rules and regulations and to establish procedures, not inconsistent with the provisions of this subchapter, which are necessary or appropriate to carry out such provisions, and shall adopt reasonable and proper rules and regulations to regulate and provide for the nature and extent of the proofs in evidence and the method of taking and furnishing the same in order to establish the right to benefits hereunder.

8 . See section 557(b) of the Administrative Procedure Act, which provides in part:

When the presiding employee makes an initial decision, that decision then becomes the decision of the agency without further proceedings unless there is an appeal to, or review on motion of, the agency within time provided by rule. On appeal from or review of the initial decision, the agency has all the powers which it would have in making the initial decision except as it may limit the issues on notice or by rule.

5 U.S.C. § 557(b). (Emphasis added). Under this provision, Professor Davis notes "the agency has power to decide all questions de novo, but the agency may limit the issues it decides on notice or by rule. Agencies usually do not so limit the issues they decide." 3 K. Davis, Administrative Law Treatise 90-93 (2d ed. 1980) (emphasis added). See, e.g., 47 C.F.R. §§ 0.361, 1.276(b) (1985) (Regulations of F.C.C. which provide that the F.C.C.’s Review Board is authorized to perform all the review functions of the Commission and which further place no limitations on the Commission’s review powers) (discussed in Freedman, Review Boards in the Administrative Process, 117 U.Pa.L.Rev. 546 (1969)); 16 C.F.R. § 3.54(a) (1986) (Regulations of FTC which state: “Upon appeal from or review of an initial decision, the Commission ... will, to the extent necessary or desirable, exercise all the powers which it could have exercised if it had made the initial decision.”); 8 C.F.R. § 3.1(d) (1985) (Regulations of INS which provide that in reviewing the decisions of ALJ’s, the Board of Immigration Appeals “shall exercise such discretion and authority conferred upon the Attorney General by law as is appropriate and necessary for the disposition of the case.”) (construed in Noverola-Bolaina v. INS, 395 F.2d 131, 134-35 (9th Cir.1968)); 43 C.F.R. §§ 4.320, 4.340 (1985) (Regulations of the Secretary of Interior which provide that the Board of Indian Appeals “shall not be limited in its scope of review" in certain matters); 17 C.F.R. § 10.104 (1985) (Regulations of Commodity Futures Trading Commission which provide that, in reviewing ALJ decisions, the Commission may "make any findings or conclusions which in its judgment are proper based on the record in the proceeding").

Some agencies have limited their scope of review. When they have done so, however, they have been quite explicit. See, e.g., 20 C.F.R. § 802.301 (1985) (Regulations of Secretary of Labor under the Longshoremens' and Harbor Workers' Compensation Act which state that the "Benefits Review Board is not empowered to engage in a de novo proceeding or unrestricted review of a case brought before it.”)

9 . In reaching this conclusion, the Newsome court relied on Parris v. Heckler, 733 F.2d 324, 325 (4th Cir.1984), where the Fourth Circuit stated: "the Appeals Council does not have unbridled discretion to overturn an ALJ’s decision with which it disagrees, but may only do so if one of these four grounds is present.” Characterizing this language as dicta, the Fourth Circuit subsequently held that, although 20 C.F.R. § 404.970(a) "may impose some judicially enforceable limits on Appeals Council own-motion review,” there can be no question that "judicial review of a final decision of the Secretary which is at odds in its factual findings with that of an ALJ focuses upon the Secretary’s decision rather than the AU's____ If the Secretary’s dispositive factual findings are supported by substantial evidence, they must be affirmed, even in cases where contrary findings of an ALJ might also be supported.” Kellough v. Heckler, 785 F.2d 1147 (4th Cir.1986); see also Gross v. Heckler, 785 F.2d 1163 (4th Cir.1986).

10 . According to the Tenth Circuit, 20 C.F.R. § 404.947 "gave the Appeals Council full power to substitute its judgment for that of the ALT, with or without further proceedings.” White v. Schweiker, 725 F.2d 91, 93 (10th Cir.1984). Commenting upon this section the court further noted that, ”[t]he courts have accepted the proposition that an agency hearing officer’s authority to render initial decisions does not relegate the reviewing counsel within the agency to the role of an appellate court.” Id. at 94 (citing with approval Beavers v. Secretary of Health, Education & Welfare, 577 F.2d 383, 386 (6th Cir.1978)).

11 . Program for Ongoing Review of Hearing Decisions Pursuant to Section 304(g) of Public Law (P.L.) 96-265 Appeals Council’s Review Authority, SSR 82-13 (1982).

12 . The Bellmon Amendment states: "The Secretary ... shall implement a program of reviewing, on his own motion, decisions rendered by administrative law judges as a result of hearings under section 221(d) of the Social Security Act____” The Bellmon Amendment was enacted into law on June 9, 1980. Pub.L. No. 96-265, § 304(g), 94 Stat. 441 (1980). Certain aspects of the "Bellmon Review Program" were subsequently challenged by the Association of Administrative Law Judges. See Association of Administrative Law Judges, Inc. v. Heckler, 594 F.Supp. 1132 (D.D.C.1984).

13 . See also H.R.Rep. No. 944, 96th Cong., 2d Sess. 57, reprinted in 1980 U.S. Code Cong. & Ad. News 1392, 1405; S.Rep. No 408, 96th Cong., 2d Sess. 53, reprinted in 1980 U.S. Code Cong. & Ad. News 1277, 1331.

14 . Although agreeing with our “general analysis of the statutory and regulatory provisions governing the Appeals Council’s standard of review,” Judge Merritt, in his dissenting opinion, nevertheless disagrees with the application of this analysis to the facts of Mullen. According to Judge Merritt, "[t]he Appeals Council set out for itself in this case a ‘substantial evidence’ standard of review, and it should be held to that standard in this case even though it could have employed the broader standard described in Judge Engel’s opinion." Post, at 557, citing S.E.C. v. Chenery Corp., 318 U.S. 80, 87, 63 S.Ct. 454, 459, 87 L.Ed. 626 (1943); S.E.C. v. Chenery Corp., 332 U.S. 194, 196, 67 S.Ct. 1575, 1577, 91 L.Ed. 1995 (1947). In Judge Merritt’s view, therefore, since the Appeals Council purported to apply the "substantial evidence” standard to this particular case when it decided to review the ALJ’s decision on its own motion, the AU’s decision must be upheld if it is in fact supported by substantial evidence.

This conclusion follows, however, only if one accepts the proposition that the four categories listed under 20 C.F.R. § 404.970(a), including the "substantial evidence" category, operate as a constraint on the Appeals Council’s power of own motion review. As we have explained, however, and as Judge Merritt apparently agrees, these categories simply prescribe those situations in which the Appeals Council will initiate review; that is, these categories are designed to ensure that certain kinds of decisions are reviewed. Once review is initiated, however, we do not think that there is anything in the regulations or in the principles announced in the Chenery decisions which preclude the Appeals Council from reaching an independent decision. Stated differently, the issue of what is sufficient to trigger review and the issue of scope of review once such review is triggered are two entirely different questions.

Finally, we believe that Judge Arnold’s comments in Baker, 730 F.2d at 1150, reveal the practical difficulties with the dissent’s approach;

[It] overlooks the fact that the decision by the Appeals Council to single out a given case for own-motion review necessarily occurs at the beginning of the Appeals Council process. The Council may believe, for example, that the case fits one of the four categories listed in the regulation, but it may turn out, after full examination, that this initial impression was mistaken. We do not believe that the Council is then required to abandon its own review and to allow the AU’s decision to stand, even when it has a definite and firm conviction that the ALJ was mistaken. The question of power to review, must, as a practical matter, be addressed and decided at a preliminary stage, not after the review is completed, at a time when a negative answer to the question would render the whole review process nugatory.