McQueen v. Apfel

• Court: Court of Appeals for the Fifth Circuit
• Decided: March 5, 1999
• Docket: 97-30697
• Status: Published

Opinion

Revised March 4, 1999

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

________________________________

No. 97-30697

ORIE W. McQUEEN, Plaintiff-Appellant,

versus

KENNETH S. APFEL, Commissioner of Social Security, Defendant-Appellee.

_________________________________________________________________

Appeal from the United States District Court for the Western District of Louisiana _________________________________________________________________ February 17, 1999

Before EMILIO M. GARZA, BENAVIDES and DENNIS, Circuit Judges.

BENAVIDES, Circuit Judge:

Orie W. McQueen appeals the district court’s affirming the

denial of his application for Social Security disability

benefits. We reverse and remand.

I

McQueen, a former traveling insurance salesman now 64 years

old, filed an application for Social Security disability

benefits, claiming that he had not worked since he suffered an

injury on September 10, 1992. After his application was twice

denied, McQueen requested a hearing before an administrative law judge (“ALJ”), which took place on July 11, 1994. The ALJ denied

McQueen’s benefits request. The ALJ found that although McQueen’s

impairment is severe and prevents him from doing the traveling

insurance sales work he did in the past, his work skills are

“readily transferable to jobs within his vocational profile.”

McQueen appealed to the Social Security Administration’s Appeals

Council, which concluded that it had no basis to grant McQueen’s

request for a review. McQueen filed a complaint in federal

district court, contending that (1) “readily transferable” was

not the correct legal standard to apply to a determination of

whether he is disabled; (2) the Appeals Council should have

considered new evidence that would have shown that McQueen’s

problems are more severe than the ALJ concluded; and (3) the

ALJ’s findings as to McQueen’s residual functioning capacity

(“RFC”) were not supported by substantial evidence.1 The case was

referred to a magistrate judge. The magistrate found that the

district court had no jurisdiction to consider whether the ALJ

applied the wrong legal standard. As to McQueen’s other

contentions, the magistrate recommended upholding the ALJ’s

findings. The district court adopted the magistrate’s

recommendations, and McQueen timely appealed.

II

A claimant is not entitled to disability benefits unless he

1. Because we reverse on the first ground, we do not consider McQueen’s remaining points of error.

2 establishes that he is unable “‘to engage in any substantial

gainful activity by reason of [a] medically determinable physical

or mental impairment . . . which has lasted or can be expected to

last for a continuous period of not less than 12 months.’”

Bowling v. Shalala, 36 F.3d 431, 435 (5th Cir. 1994) (quoting 42

U.S.C. §§ 416(i), 423(d)(1)(a)). In making this determination,

the Social Security Commission applies a five-step sequential

evaluation process:

(1) Regardless of the medical findings, a claimant who is

working, engaging in a substantial gainful activity,

will not be found to be disabled.

(2) A claimant will not be found to be disabled unless he

has a “severe impairment.”

(3) A claimant whose impairment meets or is equivalent to a

listed impairment will be deemed disabled without the

need to consider vocational factors.

(4) A claimant who is capable of performing work that he

has done in the past must be found “not disabled.”

(5) If the claimant is unable to perform his previous work

as a result of his impairment, then factors such as his

age, education, past work experience, and RFC must be

considered to determine whether he can do other work.

See Bowling, 36 F.3d at 435. The claimant bears the burden of

proof for the first four steps; for the fifth step, the burden

3 shifts to the Commissioner to show that the claimant can perform

other work. Regarding fifth-step determinations, 20 C.F.R.

§ 404.1563(d) provides:

We consider that advanced age (55 or over) is the point

where age significantly affects a person’s ability to

do substantial gainful activity. If you are severely

impaired and of advanced age and you cannot do medium

work (see § 404.1567(c)), you may not be able to work

unless you have skills that can be used in (transferred

to) less demanding jobs which exist in significant

numbers in the national economy. If you are close to

retirement age (60-64) and have a severe impairment, we

will not consider you able to adjust to sedentary or

light work unless you have skills which are highly

marketable.

McQueen’s hearing before the ALJ took place on July 11, 1994, and

the ALJ rendered his decision on April 24, 1995. Between those

two dates, on September 29, 1994, McQueen turned 60 years old.

The ALJ denied benefits to McQueen at the fifth step of the

disability analysis, writing, “The claimant has work skills

which are readily transferable to jobs within his vocational

profile; therefore, he must be found not disabled.” In reaching

his decision, the ALJ relied in part on a vocational expert’s

testimony that McQueen’s skills could be transferred to an in-

office insurance job. The ALJ posed hypotheticals to the

4 vocational expert, both at the July 11 hearing and in writing in

December 1994. In the final December hypothetical, the ALJ

mistakenly asked the vocational expert whether his opinions would

change when McQueen turned 50 years old. In contrast, none of the

interrogatories asked the vocational expert whether McQueen could

still be expected to find work at age 60. Nothing indicates that

the vocational expert, on whose testimony the ALJ relied,

considered § 404.1653(d)’s standards for claimants close to

retirement age. McQueen argues that the ALJ treated his claim as

that of a person younger than 60 years old and consequently

applied the wrong standard under § 404.1563(d). The ALJ, McQueen

contends, was required to find that he had skills that were

“highly marketable”--and not just “readily transferable”--before

denying him disability benefits.

III

The magistrate found, and the district court agreed, that

McQueen had not raised the issue of the proper standard to the

Social Security Administration Appeals Council. Therefore, the

magistrate found, McQueen could not complain before a court that

the ALJ applied the wrong legal standard for a 60-year-old’s

benefits claim. A court should not review the Commissioner’s

final decision unless the claimant has exhausted his

administrative remedies. See Paul v. Shalala, 29 F.3d 208, 210

(5th Cir. 1994). A claimant fails to exhaust his administrative

5 remedies if does not raise a claim of error to the Appeals

Council before filing suit on that basis. That said, a court may

review the decision if the claim of error is “an expansion of the

general rationale proffered in support of the appeal” to the

Appeals Council. Id. Before the Appeals Council, McQueen raised

the issue of the age mismatch in the hypothetical that the ALJ

posed to the vocational expert. McQueen’s counsel argued:

[I]nterrogatories propounded to the vocational expert

concerning sedentary jobs which Mr. McQueen could

perform may have been based upon erroneous information.

In one of the questions, the Administrative Law Judge

asked the vocation expert to determine if there would

be any change once Mr. McQueen became 50 years old.

Obviously, this is an error on the part of the

vocational expert, because Mr. McQueen was 60 years old

at the time the interrogatories were propounded.

Therefore, the information is invalid insofar as it

relates to Mr. McQueen’s ability to perform work.

The district court cited Paul for the proposition that it had no

jurisdiction. We find that, under Paul’s “expansion of the

general rationale” language, McQueen did raise the issue before

the Appeals Council. The above-quoted passage should have

suggested to the Appeals Council that the ALJ either was mistaken

as to McQueen’s age or applied the wrong standard. Although

6 counsel did not specifically mention 20 C.F.R. § 404.1563(d) at

that time, he did argue that 60-year-old claimants cannot be

expected to find and perform work as easily as younger

individuals with similar impairments. The age-related issue that

McQueen argued before the district court--i.e., the defective

hypothetical in conjunction with a misapplication of 20 C.F.R.

§ 404.1563(d)--was an extension of the claim he offered the

Appeals Council. Pursuant to the rule set forth in Paul, the

district court had jurisdiction to decide McQueen’s claim.

Because McQueen properly raised the issue before the district

court, we consider it now.

IV

The Fifth Circuit has not yet addressed whether the

Commission must specifically find that a 60- to 64-year-old

claimant has “highly marketable” skills in order to deny him

disability benefits. A number of our sister circuits and district

courts have found that the failure to make a specific finding on

high marketability renders the Commission’s decision unsupported

by substantial evidence. See, e.g., Preslar v. Commissioner, 14

F.3d 1107, 1113 (6th Cir. 1994); Emory v. Sullivan, 936 F.2d

1092, 1094-95 (10th Cir. 1991); Pineault v. Commissioner, 848

F.2d 9, 11 (1st Cir. 1988); Renner v. Heckler, 786 F.2d 1421,

1424-25 (9th Cir. 1986); Tom v. Heckler, 779 F.2d 1250, 1256-57

(7th Cir. 1985); Smith v. Sullivan, 799 F. Supp. 659, 664-65

7 (N.D. Tex. 1992). We agree. As of September 29, 1994, McQueen was

“close to retirement age” for purposes of 20 C.F.R.

§ 404.1563(d). With respect to disability benefits denied McQueen

after that date, the ALJ’s decision cannot stand because it

includes no finding that McQueen possessed highly marketable

skills.

V

The ALJ’s decision, which the Commission adopted, failed to

treat McQueen as “close to retirement age” and denied McQueen’s

disability benefits without a finding that he possessed “highly

marketable” skills. Thus, as to the time after McQueen’s 60th

birthday, the Commission’s determination was not supported by

substantial evidence. In fact, nothing in the record would

support a finding that McQueen possessed highly marketable

skills. The district court had the power, based upon the

pleadings and transcript, to reverse the Commissioner’s judgment.

See 42 U.S.C. § 405(g). A court may “at any time order additional

evidence to be taken before the Commissioner of Social Security,

but only upon a showing that there is new evidence which is

material and that there is good cause for the failure to

incorporate such evidence into the record in a prior proceeding.”

Id.; see Balsamo v. Chater, 142 F.3d 75, 82 (2d Cir. 1998) (where

the ALJ mistakenly substituted his own expertise for that of

physicians and failed to introduce other evidence, vacating the

8 judgment of the district court and remanding for calculation of

benefits due unless the Commission could show to the district

court new, material evidence and good cause for the failure to

incorporate it). The Commission’s disregard for its own standards

concerning McQueen’s advanced age does not constitute good cause

for the failure to incorporate necessary evidence. Nor does the

record evince any other good cause for that failure. Owing to the

Commission’s error, McQueen has been without disability benefits

for years while his case wound its way to this Court. We now

REVERSE the judgment of the district court and REMAND the case

with instructions for the Commission to grant McQueen’s

application and to calculate the disability benefits due him

pursuant to this opinion. Cf. Emory, 936 F.2d at 1095 (refusing

to remand for further proceedings where the Commission failed to

consider high marketability and probably could not sustain its

burden of showing high marketability); Western v. Harris, 633

F.2d 1204, 1207 (5th Cir. Unit A 1982) (reversing the judgment of

the district court where no substantial evidence in the record

supported the ALJ’s conclusion).

9 EMILIO M. GARZA, Circuit Judge, concurring in part and dissenting

in part.

I concur with the majority that the district court erred in

dismissing for lack of jurisdiction. McQueen exhausted his claim

that, by virtue of being between ages 60 and 64, he is eligible

for disability benefits unless his skills are found to be highly

marketable. In a letter to the Appeals Council, his attorney

contended:

Furthermore, Interrogatories propounded to the vocational expert concerning sedentary jobs which Mr. McQueen could perform may have been based on erroneous information. In one of the questions, the Administrative Law Judge asked the vocational expert to determine if there would be any change once Mr. McQueen became fifty (50) years old. Obviously, this is an error on the part of the vocational expert, because Mr. McQueen was sixty (60) years old at the time the Interrogatories were propounded. Therefore, the information is invalid insofar as it relates to Mr. McQueen’s ability to perform work.

This argument clearly was inspired by 20 C.F.R. § 404.1563(d)

(1998), which states, in part, “If you are close to retirement

age (60-64) and have a severe impairment, we will not consider

you able to adjust to sedentary or light work unless you have

skills which are highly marketable.” In overruling the objection

to the Administrative Law Judge’s interrogatory, the Appeals

Council also effectively rejected the position implicit in the

objection that McQueen was entitled to disability benefits based

on this portion of § 404.1563(d). McQueen, therefore, exhausted

his claim that he cannot be denied disability benefits without a finding that he possesses highly marketable skills.2 The

district court was mistaken in reaching the contrary conclusion

and dismissing for lack of jurisdiction.

I also agree that, having found jurisdiction, we should

proceed to address McQueen’s challenge to the denial of his

application for disability benefits, which the district court

never reached. We usually “remand a case where the lower court

has not considered a pertinent issue.” In re Hronek, 563 F.2d

296, 298 (6th Cir. 1978). We depart from this practice when

sound judicial administration calls for doing so. See Grosso v.

United States, 390 U.S. 62, 70-72, 88 S. Ct. 709, 715, 19 L. Ed.

2d 206, ___ (1968); Levin v. Mississippi River Fuel Corp., 386

U.S. 162, 169-170, 87 S. Ct. 927, 932, 17 L. Ed. 2d 834, ___

(1967). This appeal, as it now stands, presents such an

instance. Whether or not the Commissioner was required to find

that McQueen’s skills are highly marketable before denying

disability benefits is a question of law. Because we stand in as

good a position as the district court to decide this issue, we do

so rather than remand. See Morel v. Sabine Towing & Transp. Co.,

669 F.2d 345, 346 (5th Cir. 1982) (addressing question raised for

2. A claimant exhausts when the Commissioner of Social Security (“Commissioner”) makes a final decision on his claim. See 42 U.S.C. § 405(g). The Commissioner identifies the Appeals Council’s decision as an event that constitutes his final decision. See 20 C.F.R. § 404.981 (1998) (providing that the Appeals Council’s decision triggers the period for the claimant to seek judicial review).

-11- 11 first time on appeal because it “is a matter of law and a remand

solely for its consideration is neither in the interest of

justice nor judicial economy”); see also Grosso, 390 U.S. at 70-

72, 88 S. Ct. at 715, 19 L. Ed. 2d at ___ (disposing of issue

petitioner had failed to raise because holdings in the case and

in another one dictated the outcome).

Like the majority, I conclude that the Commissioner’s final

decision was reversible error.3 The Commissioner was obliged to

find that McQueen’s skills are highly marketable before denying

disability benefits for the period starting on September 29,

1994,4 when McQueen turned age sixty.5 As he did not, part of

3. We review “whether (1) the [final] decision is supported by substantial evidence and (2) proper legal standards were used to evaluate the evidence.” Martinez v. Chater, 64 F.3d 172, 173 (5th Cir. 1995) (per curiam). Substantial evidence is “more than a mere scintilla. It means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Richardson v. Perales, 402 U.S. 389, 401, 91 S. Ct. 1420, 1427, 28 L. Ed. 2d 842, ___ (1971) (quoting Consolidated Edison Co. of N.Y. v. National Labor Relations Bd., 305 U.S. 197, 229, 59 S. Ct. 206, 217, 83 L. Ed. 126, ___ (1938)).

4. McQueen claims that he was entitled to disability benefits beginning on September 10, 1992.

5. The Commissioner uses a five-step sequential process to decide if a claimant qualifies for disability benefits. See 20 C.F.R. § 404.1520(b)-(f) (1998). At the last stage))the one at issue here))he must grant benefits unless he proves that the claimant is unable to do any work done in the past because of a severe impairment and cannot perform other work. See id. § 404.1520(f); Bowling v. Shalala, 36 F.3d 431, 435 (5th Cir. 1994). His success at showing the ability to do other jobs turns on the claimant’s age, education, past work experience and residual functional capacity. See 20 C.F.R. § 404.1520(f) (1998).

-12- 12 his final decision was not supported by substantial evidence. See

Kerns v. Apfel, 160 F.3d 464, 466-69 (8th Cir. 1998); Emory v.

Sullivan, 936 F.2d 1092, 1094-95 (10th Cir. 1991); Pineault v.

Secretary of Health & Human Servs., 848 F.2d 9, 10-11 (1st Cir.

1988) (per curiam); Varley v. Secretary of Health & Human Servs.,

820 F.2d 777, 781-82 (6th Cir. 1987); Renner v. Heckler, 786 F.2d

1421, 1424-25 (9th Cir. 1986) (per curiam); Tom v. Heckler, 779

F.2d 1250, 1256-57 (7th Cir. 1985). This shortcoming dictates

reversal of his rejection of McQueen’s application.

I, however, disagree with the majority’s award of disability

benefits to McQueen. When the evidence is not substantial, we

remand with the instruction to make an award if the record

enables us to determine definitively that the claimant is

entitled to benefits. See Ferguson v. Schweiker, 641 F.2d 243,

250 n.8 (5th Cir. Unit A Mar. 1981) (citing Johnson v. Harris,

612 F.2d 993, 998 (5th Cir. 1980) (per curiam)); see also Rini v.

Harris, 615 F.2d 625, 627 (5th Cir. 1980) (reversing and

remanding with direction to enter judgment where the evidence was

not substantial and the record clearly showed the claimant’s

right to benefits). We otherwise remand to the Commissioner to

take additional evidence. See Ferguson, 641 F.2d at 250 n.8

(citing Johnson).

We should not grant disability benefits to McQueen. We

cannot make a definitive determination on his application now

-13- 13 because none of the findings go to whether or not his skills are

highly marketable.6 In light of this circumstance, we should

remand to the Commissioner to take additional evidence.7 See

Kerns, 160 F.3d at 469; Pineault, 848 F.2d at 11; Varley, 820

F.2d at 782; Tom, 779 F.2d at 1257.

Accordingly, I concur in part and dissent in part.

6. I agree with the definition of highly marketable skills given in Preslar v. Secretary of Health and Human Services, 14 F.3d 1107, 1112-13 & n.2 (6th Cir. 1994).

7. I appreciate that allowing the Commissioner to take additional evidence would prolong a dispute that has lasted more than five years. To counteract this situation, I would urge the Commissioner to expedite his consideration, giving final resolution of McQueen’s application highest priority. See Parks v. Harris, 614 F.2d 83, 84-85 (5th Cir. 1980).

-14- 14