Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_08-cv-00164/USCOURTS-azd-2_08-cv-00164-0/pdf.json

Nature of Suit Code: 864
Nature of Suit: Social Security - SSID Title XVI
Cause of Action: 42:405 Review of HHS Decision (DIWC)

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

KATHLEEN A. BAUMANN, 

Plaintiff, 

vs.

MICHAEL J. ASTRUE, Commissioner of

Social Security, 

Defendant. 

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No. CV 08-0164-PHX-GMS

ORDER

Pending before the Court are the Motion for Summary Judgment of Plaintiff Kathleen

A. Baumann (Dkt. # 14) and the Cross-Motion for Summary Judgment of Defendant Michael

J. Astrue, Commissioner of Social Security (Dkt. # 20). For the reasons set forth below, the

Court grants Plaintiff’s motion and denies Defendant’s cross-motion.

BACKGROUND

On February 16, 2005, Plaintiff applied for disability insurance benefits, alleging a

disability onset date of June 2, 1998. (R. at 25; see R. at 63.) Plaintiff’s date last insured

(“DLI”) for disability insurance benefits, and thus the date on or before which she must have

been disabled, was December 31, 2003. (R. at 25.) Plaintiff’s claim was denied both initially

and upon reconsideration. (R. at 54; R. at 50.) Plaintiff then appealed to an Administrative

Law Judge (“ALJ”). (R. at 48.) The ALJ conducted a hearing on the matter on November

29, 2006. (R. at 547-70.)

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The five-step sequential evaluation of disability is set out in 20 C.F.R. § 404.1520

(governing disability insurance benefits). Under the test:

A claimant must be found disabled if she proves: (1) that she is

not presently engaged in a substantial gainful activity[,] (2) that

her disability is severe, and (3) that her impairment meets or

equals one of the specific impairments described in the

regulations. If the impairment does not meet or equal one of the

specific impairments described in the regulations, the claimant

can still establish a prima facie case of disability by proving at

step four that in addition to the first two requirements, she is not

able to perform any work that she has done in the past. Once the

claimant establishes a prima facie case, the burden of proof

shifts to the agency at step five to demonstrate that the claimant

can perform a significant number of other jobs in the national

economy. This step-five determination is made on the basis of

four factors: the claimant’s residual functional capacity, age,

work experience and education.

Hoopai v. Astrue, 499 F.3d 1071, 1074-75 (9th Cir. 2007) (internal citations and quotations

omitted).

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In evaluating whether Plaintiff was disabled, the ALJ undertook the five-step

sequential evaluation for determining disability.1

 (R. at 25-28.) At step one, the ALJ

determined that Plaintiff had not engaged in substantial gainful activity. (R. at 27.) At step

two, the ALJ determined that Plaintiff suffered from no severe impairments. (R. at 27-28.)

The ALJ first noted Plaintiff’s testimony that she “experiences lack of memory, rage,

hopelessness, lack of concentration, attendance problems and despair,” “forgets to take care

of her personal needs such as showering and brushing her [teeth],” and “experiences visual

hallucinations and sleep impairment.” (R. at 27.) The ALJ then stated that “[t]he medical

expert testified that the medical records in evidence date back to October 29, 2004[,] with

the first mental health note by Dr. Bernzott. He noted [Plaintiff’s] military discharge but

found no evaluation in the records.” (R. at 28.) The ALJ then concluded:

Based on the medical expert’s testimony and the lack of medical

evidence establishing disability prior to the date last insured, the

undersigned finds that the objective medical evidence contained

in the record does not establish the existence of a medically

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Plaintiff was authorized to file this action by 42 U.S.C. § 405(g) (2004) (“Any

individual, after any final decision of the Commissioner of Social Security made after a

hearing to which he was a party . . . may obtain a review of such decision by a civil action

. . . .”).

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determinable impairment through the date last insured that could

have reasonably been expected to produce [Plaintiff’s]

symptoms.

(Id.) Thus, the ALJ held that Plaintiff was not disabled. (Id.)

The Appeals Council declined to review the decision. (R. at 3-6.) Plaintiff filed the

complaint underlying this action on January 25, 2008, seeking this Court’s review of the

ALJ’s denial of benefits.2

 (Dkt. # 1.) Plaintiff filed her Motion for Summary Judgment on

September 3, 2008. (Dkt. # 14.) Defendant filed his Cross-Motion for Summary Judgment

on November 6, 2008. (Dkt. # 20.)

DISCUSSION

I. Standard of Review

A reviewing federal court will only address the issues raised by the claimant in the

appeal from the ALJ’s decision. See Lewis v. Apfel, 236 F.3d 503, 517 n.13 (9th Cir. 2001).

A federal court may set aside a denial of disability benefits only if that denial is either

unsupported by substantial evidence or based on legal error. Thomas v. Barnhart, 278 F.3d

947, 954 (9th Cir. 2002). Substantial evidence is “more than a scintilla but less than a

preponderance.” Id. (quotation omitted). “Substantial evidence is relevant evidence which,

considering the record as a whole, a reasonable person might accept as adequate to support

a conclusion.” Id. (quotation omitted).

However, the ALJ is responsible for resolving conflicts in testimony, determining

credibility, and resolving ambiguities. See Andrews v. Shalala, 53 F.3d 1035, 1039 (9th Cir.

1995). “When the evidence before the ALJ is subject to more than one rational

interpretation, we must defer to the ALJ’s conclusion.” Batson v. Comm’r of Soc. Sec.

Admin., 359 F.3d 1190, 1198 (9th Cir. 2004). This is so because “[t]he [ALJ] and not the

reviewing court must resolve conflicts in evidence, and if the evidence can support either

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outcome, the court may not substitute its judgment for that of the ALJ.” Matney v. Sullivan,

981 F.2d 1016, 1019 (9th Cir. 1992) (citations omitted).

II. Analysis

Plaintiff argues that the ALJ erred in denying Plaintiff’s application for benefits at

step two of the sequential evaluation process. (Dkt. # 16 at 4-14.) “[A]t the second step of

[the] sequential evaluation it must be determined whether medical evidence establishes an

impairment or combination of impairments ‘of such severity’ as to be the basis of a finding

of inability to engage in any [substantial gainful employment].” S.S.R. 85-28. A “severe”

impairment is “any impairment or combination of impairments which significantly limits [a

claimant’s] physical or mental ability to do basic work activities.” 20 C.F.R. § 404.1520(c).

The “ability to do basic work activities,” in turn, is defined as “the abilities and aptitudes

necessary to do most jobs.” 20 C.F.R. § 404.1521(b). “An impairment is not severe if it is

merely ‘a slight abnormality (or combination of slight abnormalities) that has no more than

a minimal effect on the ability to do basic work activities.” Webb v. Barnhart, 433 F.3d 683,

686 (9th Cir. 2005) (quoting S.S.R. 96-3p).

“[T]he step-two inquiry is a de minimis screening device to dispose of groundless

claims,” Smolen v. Chater, 80 F.3d 1273, 1290 (9th Cir. 1996) (citing Bowen v. Yuckert, 482

U.S. 137, 153-54 (1987)), and “is to do no more than allow the [Social Security

Administration] to deny benefits summarily to those applicants with impairments of a

minimal nature which could never prevent a person from working,” S.S.R. 85-28 (internal

quotation omitted). Therefore, “an ALJ may find that a claimant lacks a medically severe

impairment or combination of impairments only when his conclusion is ‘clearly established

by medical evidence.’” Webb, 433 F.3d at 687 (quoting S.S.R. 85-28). “‘[I]f an adjudicator

is unable to determine clearly the effect of an impairment or combination of impairments on

the individual’s ability to do basic work activities, the sequential evaluation should not end

with the not severe evaluation step.’” Id. (quoting S.S.R. 85-28). Thus, the Court’s task in

reviewing a denial of benefits at step two is to “determine whether the ALJ had substantial

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evidence to find that the medical evidence clearly established that [the claimant] did not have

a medically severe impairment or combination of impairments.” Id.

In this case, the ALJ predicated his step-two determination on “the medical expert’s

testimony” and “the lack of medical evidence establishing disability prior to the date last

insured.” (R. at 28.) Thus, in order to uphold the ALJ’s denial at step two, the Court must

conclude that either or both of these factors “clearly establish[] that [Plaintiff] did not have

a medically severe impairment or combination of impairments.” Webb, 433 F.3d at 687.

Upon review, the Court cannot do so.

First, the medical expert’s testimony does not “clearly establish” that Plaintiff’s

impairments were not severe (in other words, that they did not significantly limit Plaintiff’s

ability to do basic work activities). In fact, the medical expert explicitly admitted the

possibility that Plaintiff could have experienced a disabling bipolar condition before the DLI.

The medical expert was asked: “Would the psychological impairments cause a difficult time

in sustaining an eight hour work day, five days a week, on a regular and continuing basis in

December of ‘03?” (R. at 557.) He replied: “It could, yes.” (Id.) During examination by

Plaintiff’s counsel, the medical expert even agreed that Plaintiff’s bipolar symptoms must

have predated their date of first diagnosis: “[Y]ou can assume that the symptoms didn’t just

pop up[;] . . . moderate symptoms . . . aren’t something that were just going to come up

overnight.” (R. at 556.) The medical expert also pointed out that bipolar disorder can often

be improperly diagnosed as depressive disorder (R. at 553), and the medical expert agreed

that Plaintiff has a “long history” of depressive disorder that predates any direct diagnoses

in the treatment notes (R. at 558). The medical expert further stated, in response to a

question about whether Plaintiff was disabled prior to the earliest treatment notes, that “it’s

possible with these notes that they support going back some.” (Id.) The medical expert then

explained that he had “a difficult time putting a number on” how long it took for the

symptomatology to surface, and he refused to speculate about any date before the earliest

treatment notes. (R. at 556-57.)

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Plaintiff served in the United States Navy from 1976-77. (R. at 59.)

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Thus, the medical expert’s opinion was that Plaintiff’s disabling bipolar disorder could

have existed before the DLI – he simply was not able to definitively say so one way or the

other. Because the medical expert refused to offer an opinion on this point, his testimony

does not “clearly establish[] that [Plaintiff] did not have a medically severe impairment or

combination of impairments.” Webb, 433 F.3d at 687.

The ALJ’s second factor (“the lack of medical evidence establishing disability prior

to the date last insured”) also does not “clearly establish[] that [Plaintiff] did not have a

medically severe impairment or combination of impairments.” Id. The ALJ apparently

reasoned, as Defendant argues to this Court, that there is no evidence of disability prior to

the DLI because all the treatment notes in the record were made after the DLI. However, the

fact that all the medical records post-date the DLI does not mean that all the medical

evidence in the records post-dates the DLI.

To the contrary, the medical records contain evidence that could be read to indicate

that Plaintiff suffered from a disabling bipolar disorder prior to December 31, 2003 (the

DLI). On June 18, 2005, Dr. Alikhan stated that Plaintiff “has a long past history of bipolar

disorder[,] which started in 1976 . . . .” (R. at 157.) Dr. Alikhan further noted that Plaintiff

was “hospitalized twice for depression and suicide attempts” while she was in the Navy,3

 and

that she “received [an] honorable medical discharge due to bipolar disorder.” (R. at 158.)

Dr. Alikhan then diagnosed her as currently suffering from bipolar disorder. (R. at 159.)

The Department of Veterans Affairs, in finding Plaintiff totally impaired by her bipolar

disorder (R. at 83-85), agreed that Plaintiff’s “currently diagnosed bipolar disorder was more

likely than not manifested during the veteran’s active duty military period of service” (R. at

84). In fact, one of the physicians evaluating Plaintiff for the Department of Veterans

Affairs, Dr. Wandry, explicitly found that Plaintiff’s current bipolar condition has persisted

since her time in the Navy in the 1970s: “[I]t is clear that the bipolar dis[order] seen today

had its origins in [the] bipolar disorder seen and treated while she was in the service.” (R.

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at 298.) Another physician, Dr. Tyler, made a similar observation. (R. at 302.) Dr. Tyler

also concluded that Plaintiff’s bipolar symptoms “have interfered in many aspects of her life

including . . . . occupationally.” (Id.) Dr. Tyler then stated that “[i]t is not likely that

[Plaintiff] will be able to obtain and hold gainful employment until she receives intensive

appropriate outpatient therapy.” (Id.) These aspects of the post-DLI medical records provide

at least some evidence that Plaintiff’s bipolar condition has persisted for over thirty years and

has interfered with her occupational capabilities.

That inference is reinforced by the near-constant diagnoses of bipolar disorder that

permeate the treatment notes that are in the record. Plaintiff was assessed as having bipolar

disorder on June 19, 2006 (R. at 288, 306), October 3, 2005 (R. at 301), September 19, 2005

(R. at 296), August 11, 2005 (R. at 331), June 20, 2005 (R. at 347), May 24, 2005 (R. at

351), March 23, 2005 (R. at 374, 387), March 1, 2005 (R. at 388), February 8, 2005 (R. at

214), January 28, 2005 (R. at 270), January 1, 2005 (R. at 393), December 21, 2004 (R. at

223), December 7-8, 2004 (R. at 224, 267), November 18-19, 2004 (R. at 402-03), November

9, 2004 (R. at 226), November 1, 2004 (R. at 406), and throughout September and October

of 2004 (R. at 229, 232, 239-40, 268, 407-16, 420-26). Bipolar disorder was repeatedly

characterized as being among Plaintiff’s “active problems.” (R. at 202, 207, 215, 219, 368;

see also R. at 206, 212, 303.) The fact that Plaintiff has a history of bipolar disorder is also

explained in the progress notes. (See, e.g., R. at 169, 198.) Thus, the Court cannot say that

the medical records “clearly establish[] that [Plaintiff] did not have a medically severe

impairment or combination of impairments” prior to the DLI. Webb, 433 F.3d at 687.

Although the evidence about Plaintiff’s condition prior to the DLI certainly does not

mandate a finding of disability, or even a finding of bipolar disorder, there is some

circumstantial evidence to support Plaintiff’s application in this regard. Because step two

requires only a “de minimis” showing, see Smolen, 80 F.3d at 1290, the ALJ erred in denying

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Plaintiff makes a number of arguments in her motion that are more properly directed

at later steps in the sequential evaluation process. The step-two severity determination, the

Court reiterates, “is to do no more than allow the Secretary to deny benefits summarily to

those applicants with impairments of a minimal nature which could never prevent a person

from working.” S.S.R. 85-28 (internal quotation omitted). Since the ALJ did not reach the

later steps in the sequential evaluation process at which Plaintiff’s other arguments are

aimed, the Court will not reach those arguments.

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Plaintiff’s application at this step.4 See Webb, 433 F.3d at 687 (“Although the medical record

paints an incomplete picture of [the claimant’s] overall health during the relevant period, it

includes evidence of problems sufficient to pass the de minimis threshold of step two.”).

III. Remedy

Having decided to vacate the ALJ’s decision, the Court has the discretion to remand

the case either for further proceedings or for an award of benefits. See Reddick, 157 F.3d at

728. The rule in this Circuit is that the Court should:

credit[] evidence and remand[] for an award of benefits where

(1) the ALJ has failed to provide legally sufficient reasons for

rejecting [certain] evidence, (2) there are no outstanding issues

that must be resolved before a determination of disability can be

made, and (3) it is clear from the record that the ALJ would be

required to find the claimant disabled were such evidence

credited.

Smolen, 80 F.3d at 1292. Here, there is insufficient evidence or analysis beyond step two to

permit the Court to award benefits. Specifically, the ALJ has yet to evaluate whether the

evidence in the record about Plaintiff’s condition before the DLI is sufficient to establish an

impairment that met or equaled a listed impairment as of that time. Thus, there are

“outstanding issues that must be resolved before a determination of disability can be made.”

Id. The Court will therefore remand for further proceedings. See Webb, 433 F.3d at 688

(finding that there was sufficient evidence of a severe impairment to pass step two and yet

remanding for further proceedings so that the ALJ could continue the sequential evaluation).

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CONCLUSION

The ALJ erred in denying Plaintiff’s application for benefits at step two, and further

proceedings are required in order to determine if Plaintiff is entitled to those benefits.

IT IS THEREFORE ORDERED that Plaintiff’s Motion for Summary Judgment

(Dkt. # 14) is GRANTED.

IT IS FURTHER ORDERED that Defendant’s Cross-Motion for Summary

Judgment (Dkt. # 20) is DENIED.

IT IS FURTHER ORDERED that this case is REMANDED for further

proceedings.

DATED this 20th day of January, 2009.

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