Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_06-cv-00113/USCOURTS-azd-4_06-cv-00113-0/pdf.json

Nature of Suit Code: 863
Nature of Suit: Social Security - DIWC/DIWW (405(g))
Cause of Action: 42:405 Review of HHS Decision (DIWC)

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1

 Michael J. Astrue is substituted for his predecessor, Jo Anne B, Barnhart, as

Commissioner of the Social Security Administration. 42 U.S.C. § 405(g); Fed.R.Civ.P. 25(d)(1).

1

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Irene M. Watson, )

) NO. CV06-113-TUC-FRZ (JM)

Plaintiff, )

) REPORT AND RECOMMENDATION

v. )

)

)

Michael J. Astrue,1 )

Commissioner of Social Security, )

) 

Defendant. ) )

Pursuant to 42 U.S.C. § 405(g), Plaintiff Irene M. Watson (“Watson”) seeks judicial

review of a final decision by the Commissioner of Social Security ("Commissioner") denying

her benefits. This Social Security Appeal has been referred to the United States Magistrate

Judge pursuant to Local Rule – Civil 72.2(a)(10) of the Rules of Practice of this Court.

Based on the pleadings of the parties and the record submitted to the Court, the Magistrate

Judge recommends that the District Court, after its independent review, grant in part

Plaintiff's Motion for Summary Judgment [Doc. No. 15] and deny Defendant's Cross-Motion

for Summary Judgment [Doc. No. 17].

I. Procedural Background 

Watson applied for Disability Insurance Benefits on January 15, 2003, claiming

disability with an onset date of January 4, 2002, due to mycobacterium avium intracellular

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(“MAI”), arthritis, bronchiectasis, asthma, Hashimoto's thyroiditis, recurrent pneumonias,

adrenal insufficiency, chronic rhinitis, recurrent esophagitis, and osteopenia. (Tr. 14, 83-85

& 110). The application was denied initially and upon reconsideration. (Tr. 66-69 & 71-75).

Watson then requested a hearing before an ALJ. (Tr. 57-58). The hearing was held on May

18, 2004, in San Jose, California, and her claims were denied by the ALJ in a decision dated

July 30, 2004. (Tr. 13-21). Watson requested review of the hearing decision by the Appeals

Council. (Tr. 9). The decision became the final decision of the Commissioner when the

Appeals Council did not grant Watson's request for review. (Tr. 5-7). On August 3, 2005,

Watson commenced this action pursuant to 42 U.S.C. § 405(g) seeking judicial review of the

ALJ's decision.

II. Record on Appeal

A. Watson's Testimony

Watson was born on November 7, 1941. (Tr. 372). Until January 2002, she was a

self-employed consultant doing computer engineering. (Tr. 372). Her work involved the

analysis of engineering issues and computer software engineering. (Tr. 372). She usually

worked at a computer while in a sitting position. (Tr. 372-73). 

At the time she stopped working, she was experiencing a pinched nerve in her neck

which caused pain to radiate down her arm which increased when she was working at the

computer. (Tr. 373). She was also experiencing fatigue and using stimulants "to try to raise

the level of [her] thinking . . . ." (Tr. 373). However, the stimulants caused her to develop

respiratory infections and caused pneumonia requiring hospitalization shortly after she

stopped working. (Tr. 374). She also has asthma. (Tr. 374). During work she was

experiencing fatigue, coughing, and pain symptoms. (Tr. 375). It was necessary for her to

take a break every few minutes or so, and sometimes she would need to take a nap. (Tr. 376-

77). 

Her treating physician was Dr. Andrew Newman, a pulmonologist. (Tr. 377). She

sees Dr. Newman every four to six weeks. (Tr. 378). Watson indicates that Dr. Newman

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explained that her pneumonia was scarring her lungs and was reducing her oxygen intake.

(Tr. 377). She explains her symptoms as morning mucous that causes coughing episodes and

sometimes has asthma attacks with "very intense coughing and gasping for breath." (Tr.

379). 

Watson also sees Lynn Gorodski, Ph.D., for her depression. (Tr. 383). She explains

that she used to be "a high energy person," but is distressed about having an illness for which

there is no cure. (Tr. 383). 

Watson walks to the grocery store which is about five blocks from her home. (Tr.

381). Lifting or carrying a package of any appreciable size causes pain in her right arm and

leg. (Tr. 387). She can use a knife and fork with her right hand, but her neck and right arm

are bothered by the use of a keyboard or computer. (Tr. 387). 

B. Medical Expert Testimony

Dr. Franks, who is board certified in internal medicine, testified at the hearing. Under

questioning from Watson’s attorney, Dr. Franks stated that he was not a pulmonologist, but

that he “had a great deal of experience in the diagnosis and treatment of lung diseases.” (Tr.

389). Upon questioning by the ALJ, Dr. Franks provided a summary of Watson’s medical

history. (Tr. 389-393). Based on his review of her medical records, Dr. Franks opined that

Watson would be limited to performing sedentary type work. (Tr. 393). 

In follow-up questioning, Watson’s counsel asked Dr. Frank if he had reviewed a six

page coronary impairment medical source statement prepared by Dr. Newman. (Tr. 394-

395). Dr. Franks indicated that he did not have a copy of the statement and counsel therefore

requested a supplemental hearing to allow Dr. Franks to review it. The ALJ did not rule on

the request, but repeatedly asked counsel if he had any questions for the doctor. Watson’s

counsel then inquired about Dr. Franks opinion that Watson was able to do sedentary work

and specifically asked if he believed she was capable of doing sedentary work “eight hours

a day, five days a week, 52 weeks a year.” Dr. Franks responded, “Look, she’s very

borderline and there may be more information that I should have available before arriving

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at the at definitely, but from what I have here, yes, I do think she is capable of doing that.”

(Tr. 397). Counsel then asked if this was his opinion to a medical certainty and the doctor

stated, “Look, don’t ask me for medical certainty. I am in no position to express medical

certainty under these circumstances,” and then stated, “As best that I can tell, she’s capable

of doing sedentary work.” (Tr. 397). After being prevented from asking Dr. Frank about his

income from testifying as a medical advisor, Watson’s counsel established that Dr. Franks

had not reviewed any reports from Watson’s psychologist and that he did not therefore

consider those conditions in reaching his opinion. (Tr. 400-401). 

C. Vocational Expert Testimony

Upon questioning by the ALJ, the VE was able to characterize the nature of Watson’s

past work as skilled and sedentary. (Tr. 402). However, the VE did not offer an opinion on

whether Watson’s previous work required repetitive use of her right arm in either fingering

keys or other occasional tasks; rather he left that decision to the ALJ. (Tr. 402-403). The

VE did not believe that her skills were transferrable to any jobs that would involve any less

fingering, handling or reaching. (Tr. 403). 

Upon questioning by Watson’s counsel, the VE indicated that Ms. Watson would be

unable to perform her past relevant work if she was found to have a marked limitation in

maintaining concentration, persistence or pace. (Tr. 403). The VE also believed that a

marked limitation in her social functioning would “substantially erode her employment.”

(Tr. 404). Finally, the VE was asked to assume that Watson’s testimony regarding her level

of fatigue was true, and what the impact would be on her ability to perform full-time work.

The VE indicated that based on Watson’s testimony, there would be no jobs she could

perform. (Tr. 404). 

D. Medical Records

1. Physical Health Records

On March 3, 2002, Watson presented at the Stanford Hospital complaining of

breathing difficulties. (Tr. 198). Upper respiratory infection and bronchitis were the listed

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impression. (Tr. 200). X-rays disclosed “multiple bilateral, diffused subcentimeter

parenchymal opacities.” Diagnosis possibilities included atypical infection or metastatic

fossae, and the radiologist recommended comparison with old films, if available. (Tr. 197).

Two days later, on March 5, 2002, Watson was admitted to the Stanford Hospital with

an admission diagnosis of cough, fever and chills. (Tr. 185). Watson was complaining of

chest pain and “abnormal labs” were noted. (Tr. 193). Chest x-rays showed “multiple 1-2

cm pulmonary nodules scattered throughout the lung parenchyma bilaterally,” including

several that were new since the prior examination. (Tr. 191). There was also a “patch

bilateral pattern of alveolar opacification” that had appeared to have progressed from the

prior examination. The impression was that the nodules were likely infectious in nature,

given Watson’s history of MAI and aspergillosis. (Id.). She was discharged on March 11,

2002, with a diagnosis of pneumonia, history of MAI, history of Hashimoto’s thyroiditis,

adrenal insufficiency secondary to chronic prednisone use, reactive airway disease,

degenerative joint disease, and acute bronchopulmonary aspergillosis. (Tr. 185). On

discharge, her medications included Lavaquin, Flovent, Advair, Nasacort, Synthroid,

Progesterone cream, Climara patch, Ambien, and Ativan, and she was directed to follow-up

with her treating physician, Andrew Newman, M.D., a pulmonologist. (Tr. 186-87). 

A chest x-ray from March 22, 2002, showed “interval improvement in the bilateral

pulmonary nodules and alveolar opacities with faint areas of persistent, primarily in the upper

lobes. The findings are most suggestive of resolving infectious process.” (Tr. 182). 

In April and May, Watson saw Dr. Newman regularly for follow-up and he noted that

she was “generally doing quite well,” and noted that she was to follow-up “after her

upcoming trip to France.” (Tr. 266). 

On May 5, 2002, Watson was admitted to the Stanford Hospital with a diagnosis of

cough, fever and chills. (Tr. 185). While in the hospital, she was found to have “multiple

bilateral sub centimeter atypical infiltrates consistent with infection.” She was given

antibiotics and vicodin for reported chest pain. Her symptom gradually improved and at

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discharge she was “waling around the hospital wards without difficulty or shortness or

breath.” Her oxygen saturation was consistently normal during her admission. (Tr. 185-86).

During her stay, she was also found to have a slightly elevated rheumatoid factor. Dr.

Newman noted her history of Hashimoto’s thyroiditis and stated that she might have an

“underlying rheumotologic disorder.” (Tr. 186). Her discharge diagnoses, on May 11, 2002,

included pneumonia, history of MAI, history of Hashimoto’s thyroiditis, adrenal

insufficiency, reactive airway disease, degenerative joint disease and acute

broncholpulmonary aspergillosis. (Tr. 185). 

On May 7, 2002, during her hospitalization, Watson was referred by Dr. Newman to

see R. Elaine Lambert, M.D., a rheumatologist. (Tr. 180-81). Dr. Lambert reviewed her

treatment of her MAI from her hospitalization and found that she had an “excellent response

to [the] triple combination of antibiotics, of Zosyn, Levaquin, and Zithromax.” She noted

the underlying Hashimoto’s and asthma, but found Watson looked “quite well.” (Tr. 180).

Her lung examination was described as “remarkably clear.” (Id.). Dr. Lambert’s impression

was that Watson’s “dramatically elevated sedimentation rate was indeed due to her MAI

pneumonitis and is fortunately improving with her clinical response.” (Id.). 

In late May and early June 2002, Watson was seen for knee pain and an MRI

disclosed chronic ACL tear with medial compartment arthritis. (Tr. 169-79). The plan was

to try to rehabilitate the legs in physical therapy. (Id.). Also in June 2002, Dr. Newman saw

Watson for leg edema that he attributed to a “probable drug reactions.” (Tr. 262-263). 

In July 2002, Watson was seen a number of times at the Stanford Hospital and Clinics.

On July 3, she was seen in relation to leg swelling and doppler imaging revealed no evidence

of deep venous thrombosis. (Tr. 167). On July 5, she underwent a CT scan of the chest,

abdomen and pelvis. (Tr. 161-165). “Multiple clustered, ill-defined nodular and groundglass opacities” were found involving the lungs bilaterally and were described as worsened

in the upper lobes and improved in the lower lobes when compared to a prior study. (Id.).

These findings were described as “non-specific” but “at least compatible with MAI

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infection.” (Id.). Also found were “very mild cylindrical bronchiectasis,” “incidental renal

cysts,” and “very heterogeneous uterine myometrium, most consistent with a fibroid uterus.”

(Id.). On July 11, a stress echocardiography report was performed based on complaints of

chest pain. (Tr. 159). The report reflects that Watson experienced dyspnea during exercise

and that the exercise was stopped due to fatigue. (Id.). 

On August 28, 2002, Watson was seen by Loretta Chou, M.D., for a right elbow

strain. (Tr. 156). Dr. Chou noted mild joint-space narrowing and mild degenerative joint

disease, with no evidence of fracture. (Tr. 156). The doctor’s impression was that Watson

was experiencing “[r]ight elbow olecranon bursitis.” (Tr. 157). Her treatment plan was to

use an ACE bandage along with elevation, ice and gentle stretching exercises. (Tr. 157).

A November 4, 2002, visit to Dr. Newman reported past medial history of MAI,

Hashimoto’s thyroiditis, adrenal gland, reactive airway disease, degenerative joint disease,

and a history of secondary adrenal insufficiency following prednisone use. (Tr. 148). The

doctor found suppressed TSH and that Watson had lost 9 pounds since her last visit. (Tr.

148). 

From December 2002 through February 2003, Watson underwent a course of physical

therapy at the Orthopedic Sports & Spine Rehabilitation Center in Palo Alto, California. (Tr.

204-214). The goals of treatment were described as pain relief, increased range of motion,

increased strength, improved posture/body mechanics, decreased neurological signs and

exercise instruction. (Tr. 208). At the completion of the treatment course, Watson was

described as having made “significant progress” in each of these areas. (Tr. 204). 

On January 3, 2003, Watson was seen by Dr. Newman, M.D., who indicated a

suppressed thyroid-stimulating hormone (“TSH”) and recommended reduction of Watson’s

synthroid dose. The doctor noted that Watson was concerned that her energy level would be

poor on a lower dosage. (Tr. 146). Dr. Newman also noted that her osteopenia was stable

on a Climara patch and progesterone cream and that her adrenal insufficiency “appears to

have resolved.” (Id.). A bone density summary report from the same day found Watson’s

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AP spine and left hip to be osteopenic. (Tr. 147). 

On January 6, 2003, Watson was seen by Mark Genovese, M.D., in relation to a

history of neck, shoulder and right elbow pain that was previously evaluated in December

2002. (Tr. 152). Dr. Genovese’s assessment was that “there does not appear to be any

significant evidence to support an inflammatory cause for her discomfort.” He thought it

was more likely that the neck and shoulder pain resulted from a mechanical process and

recommended compression, stretching exercises, and the avoidance of strenuous activity with

the right arm. (Tr. 154). 

On January 21, 2004, Watson was seen by Rosa Dell’Oca, M.D., regarding several

masses in her hands. (Tr. 302). The doctor noted a nodule in the palm of her right hand and

tightness in the sole of her foot. (Id.). She scheduled Watson for a return appointment in 6

months. (Tr. 303). 

On March 8, 2004, Watson was again admitted to the hospital with an admission

diagnosis of “possible pneumonia.” (Tr. 325). After treatment with Avelox, nebulizers and

Singulair, she was released on March 9, 2004, with a discharge diagnosis that included

possible pneumonia, bronchiectasis, history of chronic MAI, Hashimoto’s thyroiditis, and

osteopenia. (Tr. 325-326). She was instructed to follow-up with Dr. Newman within one

week. (Tr. 327). 

2. Physical Therapy Records

Beginning in December 1999, Watson received physical therapy from the Orthopedic

Sports & Spine Rehabilitation Center in Palo Alto, California. The initial

diagnosis/impression was cervical pain, a disc protrusion at the C5-C6 level, and right knee

pain. (Tr. 226). It was noted that Watson’s pain symptoms increased when she was working

on the computer. (Id.). Watson’s goals were described and “pain management and relief,”

and her pain level was described as a 4 on a scale of 1 to 10. (Tr. 225). 

By January 2000, significant progress was reported in relation to pain relief, range of

motion, strength, body mechanics, neurological signs and exercise instruction. (Tr. 222).

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Subjective reports included decreased pain, to 2 or 3 out of 10, but also reflected that Watson

was working 20 hours per week and that her symptoms would increase after working about

3 hours. (Id.). It was also noted that she would benefit from continued therapy. (Id.). 

In March and April 2000, Watson was noted to be making significant progress. (Tr.

215). Her pain ratings for her neck were reported at 3 and 4. (Tr. 215-216). In April, the

therapist noted that she had “improved in all areas and is ready to attempt an independent

home program.” (Tr. 215). Treatment notes show that Watson continued with the therapy

though April 4, 2000, and attended a total of 26 appointments. (Tr. 229). 

The records then reflect a gap in treatment until December 2002, when Watson

presented for an additional seven appointments seeking reduction of neck and knee pain,

which she rated as a 6 of 10, and increased range of motion. (Tr. 208-213 & 228). During

this course, significant progress was reported, but Watson continued to report pain levels in

her neck, shoulder and arm ranging from 3 to 6. (Tr. 206). By February 24, 2003, progress

was again indicated, but the pain levels remained in essentially the same range. (Tr. 204).

Watson also continued to report an increase in symptoms when working on the computer.

(Id.). Watson had 14 therapy sessions during this course of treatment. (Tr. 227-228). 

3. Psychiatric Records

On April 28, 2003, Pearl Peskin, M.D., completed a Psychiatric Review Technique.

(Tr. 239). Dr. Peskin found no medically determinable psychiatric impairment, but noted

that “Coexisting Nonmental Impairment(s) that Requires Referral to Another Medical

Specialty.” (Id.). 

On August 25, 2003, Lynn Gorodsky, M.D., Watson’s treating psychiatrist, competed

another Psychiatric Review Technique. (Tr. 283). Dr. Gorodsky’s assessment was that

Watson suffered from “affective disorders,” and a “depressive syndrome” characterized by

loss of interest in activities, appetite and sleep disturbance, psychomotor agitation, decreased

energy, feelings of worthlessness, difficulty concentrating and thoughts of suicide. (Tr. 290).

Also reported were marked limitations of activities of daily living, social functioning, and

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concentration, persistence and pace, with one or two episodes of decompensation. (Tr. 291).

Accompanying the assessment was a letter from Dr. Gorodsky opining that Watson was not

able to work due to stress induced by work and her failing health. (Tr. 292-293). 

On March 26, 2004, Dr. Gorodsky reported that Watson’s physical health continued

to deteriorate and that she was experiencing “mounting anxiety with regard to her capacity

to support herself and her son and this continues to lead to depression.” (Tr. 323). She

believed that Watson’s capacity to work was “severely impaired.” (Id.).

4. RFC Assessment

A Physical Residual Functional Capacity Assessment was competed on April 25,

2003, and reflects that Watson could occasionally lift 20 pounds, frequently lift 10 pounds,

could stand and sit for 6 hours, and push or pull without limits. (Tr. 241). Watson was also

evaluated as being able to climb, balance, stoop, kneel, crouch, and crawl “frequently.” (Tr.

242). No visual, manipulative, communicative or environmental limitations were found. (Tr.

243-244). The evaluating physician concluded that Watson’s symptoms were attributable

to a medically determinable impairment. (Tr. 245). 

III. ALJ's Decision

In the decision dated July 30, 2004, the ALJ found that the record established that

Watson's “degenerative joint disease with arthritis in the knees, Hashimoto’s thyroiditis, a

history of MAI (mycobacterium avium infection) pneumonitis, asthma, chronic obstructive

airway disease, and reflux disease with recurrent esophagitis, are considered ‘severe’ based

on the requirement in the Regulations 20 C.F.R. § 404.1520(c).” However, she found that

these medically determinable impairments “do not meet or medically equal one of the listed

impairments in Appendix 1, Subpart P, Regulation No. 4.” (Tr. 20). 

 The ALJ next found that Watson was not totally credible because her allegations

regarding her limitations “exceed what could reasonably be expected based on the medical

evidence of record.” (Tr. 21). 

The ALJ then concluded that Watson had the residual functional capacity to perform

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sedentary work and that her past relevant work as a software engineer “did not require the

performance of work-related activities precluded by her residual functional capacity.” (Tr.

21). Thus, Watson was found able to perform her past relevant work and, therefore, was not

under a disability as defined in the Social Security Act. (Tr. 21).

IV. Legal Standards

A district court's review of a disability determination is limited, and a final

administrative decision can be revised "only if it is based on legal error or if the fact findings

are not supported by substantial evidence." Sprague v. Bowen, 812 F.2d 1226, 1229 (9th Cir.

1987). “Substantial evidence means such relevant evidence as a reasonable mind might

accept as adequate to support a conclusion.” Morgan v. Commissioner of the Soc. Sec.

Admin., 169 F.3d 595, 599 (9th Cir. 1999); Vertigan v. Halter, 260 F.3d 1044, 1049 (9th Cir.

2001). It consists of "more than a mere scintilla but less than a preponderance." Tidwell v.

Apfel, 161 F.3d 599, 601 (9th Cir. 1999); Young v. Sullivan, 911 F.2d 181, 183 (9th Cir. 1990).

“In determining whether the Commissioner’s findings are supported by substantial

evidence, [the Magistrate Judge] must review the administrative record as a whole, weighing

both the evidence that supports and the evidence that detracts from the Commissioner’s

conclusion.” Reddick v. Chater, 157 F.3d 715, 720 (9th Cir. 1998); see also Aukland v.

Massanari, 257 F.2d 1033, 1035 (9th Cir. 2001). However, the ALJ's decision must be

upheld if the evidence is reasonably susceptible to more than one rational interpretation,

Allen v. Secretary of Health and Human Services, 726 F.2d 1470, 1473 (9th Cir. 1984), and

the court cannot substitute its judgment for that of the Commissioner. Reddick, 157 F.3d at

720-21.

The claimant is "disabled" for the purpose of receiving benefits under the Act if she

is unable to engage in any substantial gainful activity due to an impairment which has lasted,

or is expected to last, for a continuous period of at least twelve months. 42 U.S.C. §

423(d)(1)(A); 20 C.F.R. § 404.1505(a). "The claimant bears the burden of establishing a

prima facie case of disability." Roberts v. Shalala, 66 F.3d 179, 182 (9th Cir. 1995), cert.

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denied, 517 U.S. 1122 (1996); Smolen v. Chater, 80 F.3d 1273, 1289 (9th Cir. 1996).

Regulations promulgated by the Commissioner establish a five-step sequential

evaluation process to be followed by the ALJ in a disability case. See 20 C.F.R. § 404.1520.

At step one of the process, the ALJ must determine whether the claimant is currently engaged

in substantial gainful activity; if so, a finding of non-disability is made and the claim is

denied. 20 C.F.R. § 404.1520(b). When the claimant is not currently engaged in substantial

gainful activity, the ALJ, in step two, must determine whether the claimant has a severe

impairment or combination of impairments significantly limiting her from performing basic

work activities; if not, a finding of non-disability is made and the claim is denied. 20 C.F.R.

§ 404.1520(c). A severe impairment or combination of impairments exists when there is

more than a minimal effect on an individual's ability to do basic work activities. 20 C.F.R.

§ 404.1521(a); Smolen, 80 F.3d at 1290. Basic work activities are "the abilities and aptitudes

necessary to do most jobs," including physical functions such as walking, standing, sitting,

lifting, pushing, pulling, reaching, carrying or handling, as well as the capacity for seeing,

hearing and speaking, understanding, remembering and carrying out simple instructions, use

of judgment, responding appropriately to supervision, co-workers and usual work situations,

and dealing with changes in a routine work setting. 20 C.F.R. § 404.1521(b).

At the third step, the ALJ must compare the claimant's impairment to those in the

Listing of Impairments, 20 C.F.R. § 404, Subpart P, App. 1; if the impairment meets or

equals an impairment in the Listing, disability is conclusively presumed and benefits

awarded. 20 C.F.R. § 404.1520(d). When the claimant's impairment does not meet or equal

an impairment in the Listing, in the fourth step, the ALJ must determine whether the claimant

has sufficient "residual functional capacity" despite the impairment or various limitations to

perform his past work; if so, a finding of non-disability is made and the claim is denied. 20

C.F.R. § 404.1520(e). When the claimant shows an inability to perform past relevant work,

a prima facie case of disability is established and, in step five, "the burden shifts to the

Commissioner to show that the claimant can perform some other work that exists in

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'significant numbers' in the national economy, taking into consideration the claimant's

residual functional capacity, age, education, and work experience." 20 C.F.R. § 404.1520(f).

In this case, the ALJ's determination of non-disability was made at step four of the

inquiry process, finding Watson retained the residual functional capacity to perform her past

relevant work.

IV. Discussion

A. Did the ALJ improperly disregard the opinions of Watson’s

treating physician? 

Watson’s initial argument is that the ALJ improperly disregarded the opinion of her

treating physician, Dr. Newman. In evaluating the opinions of treating physicians, the

opinions should be given great deference, but they are "not necessarily conclusive as to either

the [claimant's] physical condition or the ultimate issue of disability." Morgan v.

Commissioner of Social Sec. Admin., 169 F.3d 595, 600 (9th Cir. 1999). While not bound by

the opinions of the claimant's treating physicians on the ultimate issue of disability, the ALJ

cannot reject the uncontroverted opinion of a claimant's treating physician on the ultimate

issue of disability "'without presenting clear and convincing reasons for doing so.'" Reddick,

157 F.3d at 725 (quoting Matthews v. Shalala, 10 F.3d 678, 680 (9th Cir. 1993)). However,

when the opinion of another doctor contradicts the treating physician's opinion, "the

Secretary can disregard the latter only by setting forth specific, legitimate reasons for doing

so that are based on substantial evidence in the record." Ramirez v. Shalala, 8 F.3d 1449,

1453 (9th Cir. 1993) (quoting Baxter v. Sullivan, 923 F.2d 1391, 1396 (9th Cir. 1991))

(internal quotations omitted). In making this determination, it is the Court's duty to "review

the administrative record as a whole, weighing both the evidence that supports and the

evidence that detracts from the Commissioner’s conclusion." Reddick, 157 F.3d at 720; see

also Aukland v. Massanari, 257 F.3d 1033, 1035 (9th Cir. 2001). Here, the Magistrate Judge

finds that under either standard of review, the ALJ's determination cannot be upheld.

As a threshold matter, there is no dispute that the ALJ appropriately accorded great

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weight to the opinions of Dr. Newman, as Watson's treating physician. (Tr. 19) ("The

undersigned accords considerable, but not controlling weight, to Dr. Newman’s opinion.”).

When rejecting such opinions, an ALJ can satisfy the burden of providing specific and

legitimate reasons "by setting out a detailed and thorough summary of the facts and

conflicting clinical evidence, stating his interpretation thereof, and making findings."

Magallanes v. Bowen, 881 F.2d 747, 751 (9th Cir.1989) (quoting Cotton v. Bowen, 799 F.2d

1403, 1408 (9th Cir.1986) (internal quotation marks omitted)). Although the ALJ detailed

and summarized Dr. Newman's findings, his interpretation of those findings, and his rejection

of Dr. Newman's opinions, is not supported by legitimate reasons. 

Dr. Newman believed that Watson “could not work at all.” (Tr. 331). In support of

this opinion, he provided the following specifics:

The bronchiectasis and MAI and aspergillus and recurrent

bacterial exacerbations make her feverish, fatigued and with

serious weakness and malaise and inability to concentrate. She

was recently hospitalized for this at Stanford.

The presence of mucus in her airways is a constant trigger for

her asthma which frequently flairs necessitating much more

inhaler or inhaled steroid use and difficulty with shortness of

breath and wheezing.

The combination of Adrenal Insufficiency and Hashimoto’s

thyroiditis gives her an overall underlying level of weakness and

discomfort. Her adrenal glands will never return to normal

because of her previous steroid use and because of her other

immunological problems and the presence of chronic untreatable

infection. 

Her Reflux esophigitis causes chest pain and also results in acid

going into her chest which worsens her bronchiectasis and cause

worse airway spasm.

The chronicity of her infections and bronchiectatic problems

have resulted in both restrictive and obstructive lung disease on

top of her asthma which will worsen with time and for which

there is no cure (there is not even a good palliative therapy).

Her degenerative diseases in her spine results in frequent chest

pain as well.

(Tr. 332-333). 

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The ALJ rejected Dr. Newman’s opinion by relying on the testimony of the testifying

medical expert, Dr. Franks. However, the ALJ ignored Dr. Franks’ testimony that he had not

reviewed Dr. Newman’s six-page statement describing Watson’s treatment history, diagnoses

and prognosis. (Tr. 328-333). When Watson’s counsel discovered that Dr. Franks had not

reviewed the statement from Dr. Newman, he requested a supplemental hearing to ensure that

Dr. Franks had reviewed all the relevant medical information and had that information at his

disposal for reference during questioning. (Tr. 395). The ALJ responded to counsel’s

request by stating that “You may want whatever you want. I can’t do anything about it, it’s

not a perfect world.” (Tr. 395). The ALJ’s animus toward counsel was further established

when, after counsel indicated he would not waive the right to a supplemental hearing, the

ALJ responded “You haven’t waived a thing . . . your entire life.” (Tr. 396). After this

exchange, Dr. Franks testified that Watson was “very borderline and there may be more

information that I should have available before arriving [at the opinion that she capable of

engaging in sedentary work on a full-time basis].” (Tr. 396-397). 

There are several problems raised in relation to Dr. Franks opinion. It is the ALJ’s

obligation to fully and fairly develop the record even when the claimant is represented by

counsel. Celaya v. Halter, 332 F.3d 1177, 1183 (9th Cir. 2003). This duty is particularly

important where “the record is inadequate to allow for proper evaluation of the evidence.”

Mayes v. Massanari, 276 F.3d 453, 459, 460 (9th Cir. 2001); Tonapetyan v. Halter, 242 F.3d

1144, 1150 (9th Cir. 2001). In adopting Dr. Franks opinion, the ALJ failed to satisfy her

obligation to first develop the record. Dr. Franks did not have access to the complete opinion

of Watson’s treating physician, Dr. Newman. When he learned that he did not have some

of the information from Watson’s file, Dr. Franks quite reasonably qualified his opinion.

Given the qualified nature of the opinion, it does not constitute the “clear and convincing”

evidence or “specific and legitimate reasons” for rejecting Dr. Newman’s opinion.

. . . .

. . . .

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B. Did the ALJ error improperly conclude that Watson’s mental

impairment was non-severe?

Watson did not submit any progress or treatment notes related to her psychiatric care.

The ALJ accorded no weight to Dr. Gorodsky’s opinion because it was “not supported by

any longitudinal record of treatment.” (Tr. 19). This is a legitimate basis for rejecting this

portion of Watson’s claim. A denial of benefits may be set aside only if it is not supported

by substantial evidence or it is based on legal error. Meanel v. Apfel, 172 F.3d 1111, 1113

(9th Cir. 1999). “Substantial evidence is relevant evidence which, considering the record as

a whole, a reasonable person might accept as adequate to support a conclusion.” Flaten v.

Secy of Health & Human Servs., 44 F.3d 1453, 1457 (9th Cir. 1995). Here, the ALJ’s opinion

with regard to Watson psychiatric condition cannot be set aside because a reasonable person,

given the dearth of supporting evidence, need not have accepted the opinions of Dr.

Gorodsky because they were at least arguably conclusory, and were certainly inadequately

supported by clinical findings. See Thomas v. Barnhart, 278 F.3d 947, 957 (9th Cir.2002).

C. Did the ALJ err by finding that Watson could return to her past

relevant work?

Watson’s next assertion is that the ALJ erroneously concluded that she could return

to her past work as an computer engineering consultant despite a finding that she was limited

in repetitive use of her right arm. Specifically, Watson contends that the ALJ failed to fully

compare her residual functional capacity with the demands of her past relevant work. The

Court agrees.

Pursuant to SSR 96-8p, once the ALJ makes a finding as to the claimant’s RFC, it

must me determined whether the claimant 

can still do past relevant work as he or she actually performed

it because individual jobs within an occupational category as

performed for particular employers may not entail all of the

requirements of the exertional level indicated for that category

in the Dictionary of Occupational Titles and its related volumes.

SSR 96-8p. In her decision, the ALJ stated that “the impartial vocational expert testified that

based upon the clamant’s residual functional capacity, the claimant could return to her past

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relevant work as [a] computer software engineer as previously performed and as generally

performed in the national economy.” (Tr. 20). However, the testimony of the VE on this

point was not as clear as described.

As a preliminary matter, the Secretary contends that the ALJ did not expressly accept

Dr. Franks’ opinion that Plaintiff was limited in her ability to engage in repetitive use of her

right arm. That is true, but considering that she relied on Dr. Franks’ opinion in other regards

and certainly did not expressly reject his opinion about the limitations in the use of her right

arm, it is reasonable to assume that the ALJ did adopt that opinion. This interpretation of the

record is certainly bolstered by the fact that the ALJ questioned the VE regarding whether

Watson’s previous work required the repetitive use of her right arm. (Tr. 402). 

Returning to the question of whether the ALJ satisfied SSR 96-8p, it is clear from the

record that the VE, upon questioning by the ALJ, was equivocal as to whether Watson’s past

work required the repetitive use of her right arm:

Well, Your Honor, it does require frequent fingering, so when

operating computer keyboard clearly requires frequent fingering.

Actual handling and reaching are only occasional, so whether,

Your Honor, you feel that frequent fingering and occasional

handling and reaching equate to the doctor’s indication of no

repetitive use of the right arm, that would be the main factor

there. To get clearly the position as you perform the sedentary,

there was frequent fingering used there was occasional handling,

and whether no repetitive use of the right arm would meet that

standard, Your Honor, I defer to your [INAUDIBLE].

(Tr. 402-403). This testimony cannot reasonably be characterized as an opinion that Watson

could return to her past relevant work as a computer software engineer “as previously

performed and as generally performed in the national economy.” In fact, the VE expressly,

albeit inappropriately, left that determination to the ALJ. The VE should have been

questioned regarding the requirements of Watson’s previous work and the ALJ should have

explored the nature of that work as it was performed by Watson and as it is typically

performed in the national economy. As the record exists, there is no sufficient basis for the

ALJ determination that Watson was capable of performing her past work.

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D. Did the ALJ improperly conclude that Watson was not credible?

Watson’s final assertion is that the ALJ erroneously determined that she was “not

totally credible.” (Tr. 21). To support such a finding, the ALJ must provide clear and

convincing reasons for rejecting the claimant’s excess pain or symptom testimony, such as

conflicts between the claimant’s testimony and conduct, or internal contradictions in the

claimant’s testimony. Dodrill v. Shalala, 12 F.3d 915, 918 (9th Cir 1993); Light v. Social

Security Admin., 119 F.3d 789, 792 (9th Cir. 1997). In determining whether a claimant’s

testimony regarding the severity of symptoms is credible, the ALJ may consider: “(1)

ordinary techniques of credibility evaluation, such as the claimant’s reputation for lying,

prior inconsistent statements concerning the symptoms, and other testimony by the claimant

that appears less than candid; (2) unexplained or inadequately explained failure to seek

treatment or to follow a prescribed course of treatment; and (3) the claimant’s daily

activities.” Smolen v. Chater, 80 F.3d 1273, 1284 (9th Cir. 1996). 

Here, the Secretary contends that the ALJ cited the required evidence. First, the ALJ

noted that Watson traveled to France shortly after her March 2002 hospitalization for

pneumonia, that she stabilized and her condition resolved in one day after her March 2004

hospitalization, and that there was no evidence that her progressive lung disease caused a

marked loss in her pulmonary functioning. In light of the consistency of Watson’s testimony

with that of her treating physicians, the Court does not find these reasons to be clear and

convincing. The ALJ never inquired of Watson about her planned travel to France. In fact,

the Court has not found evidence that the trip actually took place. The only mention of it in

the record is in a note by Dr. Newman. (Tr. 266). Watson was not questioned regarding the

nature of the trip or the reasons. The Secretary additionally asserts that Watson’s activities

of daily living support the adverse credibility determination. However, insofar as the Court

can discern, when questioned about her activities, Watson described them as limited and

belabored. Without a more complete exploration of the nature of Watson’s activities, the

evidence supporting an adverse credibility determination is not clear and the reliance on that

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evidence is unconvincing.

V. Recommendation

The Magistrate Judge recommends that the District Court, after its independent review

of the record, enter an Order granting in part Plaintiff's Motion for Summary Judgment

[Doc. No. 15], denying Defendant's Cross-Motion for Summary Judgment [Doc. No. 17] and

remanding this matter pursuant to sentence four of 42 U.S.C. § 405(g) for further

consideration consistent with this report and recommendation. It is further recommended

that the matter be assigned to a new ALJ.

This Recommendation is not an order that is immediately appealable to the Ninth

Circuit Court of Appeals. Any notice of appeal pursuant to Rule 4(a)(1), Federal Rules of

Appellate Procedure, should not be filed until entry of the District Court's judgment. 

However, the parties shall have ten (10) days from the date of service of a copy of this

recommendation within which to file specific written objections with the District Court. See

28 U.S.C. § 636(b)(1) and Rules 72(b), 6(a) and 6(e) of the Federal Rules of Civil Procedure.

Thereafter, the parties have ten (10) days within which to file a response to the objections.

If any objections are filed, this action should be designated case number: CV 06-0113-TUCFRZ. Failure to timely file objections to any factual or legal determination of the Magistrate

Judge may be considered a waiver of a party's right to de novo consideration of the issues.

See United States v. Reyna-Tapia 328 F.3d 1114, 1121 (9th Cir. 2003) (en banc).

DATED this 21st day of September, 2007.

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