Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-4_11-cv-00784/USCOURTS-azd-4_11-cv-00784-0/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 (SSID)

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UNITED STATES DISTRICT COURT 

DISTRICT OF ARIZONA 

Michael Alan McKenzie, 

 Plaintiff, 

vs. 

Michael J. Astrue, Commissioner of the

Social Security Administration, 

 Defendant. 

CV 11-0784-TUC-FRZ (JR) 

REPORT AND 

RECOMMENDATION 

 

 Plaintiff Michael Alan McKenzie brought this action pursuant to 42 U.S.C. § 

405(g) seeking judicial review of a final decision by the Commissioner of Social 

Security denying his claim for disability insurance benefits (“DIB”) under Title II of 

the Social Security Act, 42 U.S.C. §§ 401-433. Plaintiff presents four issues on 

appeal: (1) whether the Administrative Law Judge (“ALJ”) properly evaluated 

examining physician Dr. Rothbaum’s opinions; (2) whether the ALJ properly 

evaluated examining psychologist Dr. Rau’s opinions; (3) whether the ALJ properly 

relied on Social Security Ruling 85-15 in lieu of obtaining testimony from a 

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vocational expert; and (4) whether the ALJ properly evaluated lay witness 

statements. Pending before the court is an Opening Brief filed by Plaintiff (Doc. 14), 

the Commissioner’s Opposition (Doc. 15), and Plaintiff’s Reply Brief (Doc. 16). 

Based on the pleadings and the administrative record submitted to the Court, the 

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

remand this case for further proceedings. 

I. PROCEDURAL HISTORY 

 Plaintiff filed an application for disability insurance benefits in May 2009. 

(Administrative Record (AR) 109-32.) The Social Security Administration denied 

Plaintiff’s application for DIB initially and upon reconsideration. (AR 102, 103.) 

Plaintiff requested a hearing before an ALJ. (AR 55-56.) An initial hearing was held 

on January 27, 2011, after which the ALJ determined there was insufficient medical 

evidence to decide the claim and therefore postponed the hearing and order mental 

and physical consultative examinations of the Plaintiff. (AR 88-101.) A second 

hearing was then conducted on June 7, 2011. (AR 60-87.) In a decision issued on 

June 17, 2011, the ALJ concluded that Plaintiff was not disabled within the meaning 

of the SSA. (AR 20-28.) The Appeals Council denied Plaintiff’s request for review 

of the ALJ’s decision. (AR 1-4.) This appeal followed. 

II. FACTUAL HISTORY 

 A. Plaintiff’s Background 

Plaintiff was 52 years old at the time of the hearing and had attended some 

college, but had not obtained a degree. (AR 27, 338.) His past relevant work was in 

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construction and he last worked as a laborer for a water department, but he was 

terminated for “excessive absenteeism” in August of 2008 because he missed too 

much work due primarily to caregiver obligations for his mother and also due to his 

own neck and back problems. (AR 66-67, 163, 191.) Plaintiff alleges disability 

since May 2001 due to depression and back problems. (AR 163.) 

B. Medical Records 

 1. Physical Impairment 

 On September 27 or 28, 2002, Plaintiff was in an automobile accident and was 

subsequently seen by Family Practitioner Jorge O’Leary, M.D., complaining of neck 

and mid-back pain. (AR 284, 285.) Dr. O’Leary ordered x-rays and physical 

therapy. (AR 283.) Plaintiff was seen by a physical therapist on February 12, 2003. 

His care plan prepared by the physical therapist consisted of exercise, manual 

therapy, postural education, and heat and ice as needed. (AR 271.) In a January 

2005 letter to Plaintiff’s lawyer, Dr. O’Leary reported a diagnosis of a whiplash 

injury and noted that Plaintiff continued to have discomfort with neck and shoulder 

movement. (AR 279-80.) Dr. O’Leary also noted that the Plaintiff had been 

discharged from care and was prescribed Naprosyn and advised to expect some 

residual pain. (AR 280.) 

 An x-ray examination from July 30, 2004, revealed mild degenerative changes 

and small anterior hypertrophic osteophyte formation in the mid-thoracic spine; a 

slight anterior subluxation of L4 on L5 with mild to moderate disc space narrowing 

in the lumbar spine. (AR 277.) 

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 Plaintiff was then referred by his lawyer to Orthopedic Surgeon Mark Frankel, 

M.D., who saw Plaintiff on October 21, 2005. (AR 285.) Dr. Frankel reported 

Plaintiff was complaining of neck pain, dizziness, mid-back pain, and headaches 

related to the weather. (AR 286.) Upon examination, Dr. Frankel found Plaintiff 

suffered a limited range of motion in his neck and full range of motion in his back. 

(AR 288.) After reviewing other medical records, Dr. Frankel recommended that 

Plaintiff do range of motion exercises at home and noted that intermittent physical 

therapy might be necessary. He stated that Plaintiff’s Tylenol and Ibuprofen 

medications were appropriate, and found that surgery was not warranted at that time, 

but might become appropriate in the future. (AR 289.) 

 In March 2011, Jerome Rothbaum, M.D., performed a consultative 

examination of the Plaintiff at the request of the ALJ. (AR 337-46.) Dr. Rothbaum 

noted Plaintiff’s auto accident history and his occupational background. (AR 337-

38.) He noted that Plaintiff appeared “profoundly depressed,” crying and apathetic in 

appearance. (AR 338.) After examination, Dr. Rothbaum’s impression was that 

Plaintiff’s most significant impairment was depression, and that he suffered from 

myofascial cervicalgia and low back pain. (AR 339.) 

 Dr. Rothbaum also completed a medical source statement of Plaintiff’s ability 

to do physical work-related activities. (AR 340-46.) The doctor indicated that 

Plaintiff could lift and/or carry 21-50 pounds frequently; sit four hours at a time for 

up to eight hours in a workday; stand and/or walk for two hours at a time and for six 

hours per workday; and frequently (one-third to two-thirds of the time) reach in all 

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directions, handle, finger, feel, push, and pull, operate foot controls, climb, balance, 

stoop, kneel, crouch, crawl, and be exposed to various environmental conditions. 

(AR 341-344.) He reported also that Plaintiff could shop, travel without a 

companion, ambulate without assistance, climb steps, prepare meals, sort and use 

paper files, and take care of his own personal hygiene. (AR 345.) 

 2. Mental Impairment 

 Plaintiff presented to the La Frontera Center for therapy six times beginning in 

February of 2010 after his probation officer referred him for his depression. (AR 

300-23.) He was diagnosed with a major depressive order and cannabis abuse. (AR 

302.) He reported two prior suicide attempts, in 1997 and in 2009. (AR 314.) 

Plaintiff was prescribed medication for his depression. (AR 303.) 

 In February 2011, Plaintiff saw James Rau, Ph.D., for psychological 

evaluation at the request of the ALJ. (AR 324-31.) The examination and testing 

lasted three hours. (AR 329.) Dr. Rau observed that Plaintiff had a constricted 

affect; was tearful, nervous, anxious, stressed out, and worried, and had episodic 

suicidal ideation, but that his though process and content, orientation, insight, 

judgment, expressive and receptive language abilities, cooperation, and effort were 

all unremarkable. (AR 324-31.) Addressing Plaintiff’s functional status, Dr. Rau 

noted that Plaintiff managed his activities of daily living without much difficulty, 

including grooming, household chores, shopping, cooking, babysitting his 

grandchild, managing money, driving, and playing guitar for pleasure. (AR 327-30.) 

Intelligence testing showed a Full Scale IQ of 99, which was in the “average range.” 

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(AR 328.) Dr. Rau opined that Plaintiff had a normal memory, processing speed, 

reasoning ability, and knowledge, but that he had some “inefficiency” with his 

memory “across the board.” (AR 330.) Dr. Rau also believed that Plaintiff’s 

prognosis for near term improvement was “quite guarded,” and noted he was not then 

in treatment. (AR 330.) 

 Dr. Rau also completed a psychological medical source statement. (AR 332-

34.) Dr. Rau indicated that Plaintiff’s understanding and memory were moderately 

limited, finding he could understand basic instructions and could register information 

if it was well-organized for him, but had “a bit of inefficiency and . . . is very 

deficient with his registration of any visual-spatial type of information.” (AR 332.) 

His concentration and persistence were also moderately limited because, although he 

could follow instructions, he episodically would be pulled off task due to anxiety and 

depression. (AR 332.) His social interaction was also described as moderately 

limited because he would have difficulty dealing with criticism. (AR 332.) His 

adaption and ability to get around on his own were described as not significantly 

limited. (Id.) Dr. Rau felt that the limitations would persist for more than 12 

months. (AR 332.) 

 Dr. Rau also completed a medical source statement in relation to Plaintiff’s 

mental ability to do work related activities. (AR 334-36.) In that statement, Dr. Rau 

indicated that Plaintiff, due to his memory problems, high anxiety, and depression, 

was mildly limited in his ability to understand and remember simple instructions; 

moderately limited in his ability to carry out those instructions; mildly limited in the 

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ability to make simple work-related judgments; moderately to markedly limited in 

the ability to understand, remember and carry out complex instructions; and 

moderately limited in the ability to make complex work-related judgments. (AR 

334.) Dr. Rau also found Plaintiff moderately limited in the ability to interact with 

the public, supervisors, co-workers, and to work situations and changes in his work 

routine. (AR 335.) 

C. Hearing Testimony 

 1. Plaintiff’s Testimony

 At the June 7, 2011, hearing, Plaintiff was represented by counsel and testified 

that he was not then working, but had previously worked for the City of Tucson in 

construction for the water department. (AR 66.) He said he was discharged for 

excessive absenteeism, about a day or two a month, due to him being obligated to be 

a caregiver to his mother and grandmother and due to his neck and back pain. (AR 

67, 74.) When asked if physical problems prevented him from doing his job, the 

Plaintiff stated that the jobs he could get “can’t pay anything, and I couldn’t find a 

good job and that I’m not going to have the benefits I had or promotions or be able to 

make the money that I had . . .” (AR 71-72.) 

 He explained that depression had overwhelmed him and that he had several 

interviews, but did not get called back. (AR 72.) He did find some work installing 

water lines and fire hydrants in new subdivisions, but found that his depression and 

back pain prevented him from doing the work which he described as more 

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demanding than what he had done for the City of Tucson water department. (AR 

76.) 

 He told the ALJ that he had been taking anti-depressants, but that he had 

permission to “try not taking no more, go without them for a little while.” (AR 72.) 

He stated that he first attempted suicide at the age to 13 or 14 and has had frequent 

thoughts of suicide since then. (AR 80-81.) The most recent instance was when his 

dogs were accused of something that he believed they did not due and were taken 

away by animal control. (AR 81-82.) Plaintiff described that he spent his time 

babysitting, playing guitar, cooking and cleaning. (AR 73-74.) 

 2. Vocational Expert Testimony

 The ALJ asked Vocation Expert (“VE”) Kathleen McAlpine whether there 

would be any jobs for an individual of Plaintiff’s age (55) and education (high school 

and some college), with Plaintiff’s work experience (patient technician), with the 

following limitations: 

• lift/carry 21 to 50 pounds frequently; 

• sitting continuously for four hours, and eight total; 

• standing continuously for two hours, six hours total; and 

• walking continuously for two hours; six hours total. 

(AR 63-64.) The VE testified that such an individual had the residual functional 

capacity (“RFC”) to perform light work, particularly due to the sitting and walking 

limitations. (AR 64.) 

 The ALJ then added the following mental limitations: 

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• moderate limitations in understanding and memory; 

• moderate limitations with sustained concentration and 

 persistence; 

• able to carry out simple instructions and make simple work-

 related decisions; 

• great difficulty staying focused for an extended period of time; 

• moderately limited in social interaction; and 

• not significantly limited in adaptation. 

(AR 64.) The ALJ then added: 

How the doctor marked it was understand and carry out simple – or 

understand and remember simple instructions: mild. Carry them out: 

moderate. Make judgment, limitations are mild. Understand and 

remember complex and carry out complex are both marked moderate to 

marked. It’s apparently one of those deals where if you asked for an 

answer to the three or four, you’d get a 3.2 from the doctor. Ability to 

make judgments on complex, related matters: moderate. Some 

memory problems, anxiety. Okay. All moderate: interact publicly, 

with supervisors, co-workers, and react appropriately to usual work 

situations and routines. 

(AR 64.) 

 The ALJ then asked the VE how the limitations he listed affected the 

Plaintiff’s RFC for light work. (AR 64-65.) The VE responded that “all those 

moderates combined would limit somebody from maintaining work.” (AR 65.) 

D. Witness Statements 

Plaintiff also submitted statements from his former attorneys, step father, wife 

and children describing Plaintiff’s limited activities due to his physical and mental 

condition. (AR 226-234.) 

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 E. ALJ’s Decision 

 The ALJ found that Plaintiff had the following severe impairments: 

myofascial pain syndrome and depression. (AR 22.) The ALJ found that the 

Plaintiff could not return to his past relevant work, but concluded that Plaintiff had 

the RFC to perform light work, limited to simple and unskilled jobs. (AR 24, 27.) 

The ALJ then found that “considering the [Plaintiff’s] age, education, work 

experience, and residual functional capacity, there were jobs that existed in 

significant numbers in the national economy that the [Plaintiff] could have 

performed.” (AR 27.) The ALJ therefore concluded that the Plaintiff was not 

disabled. (AR 28.) 

III. STANDARD OF REVIEW 

 For purposes of Social Security benefits determinations, a disability is defined 

as: 

The inability to do any substantial gainful activity by reason of any 

medically determinable physical or mental impairment which can be 

expected to result in death or which has lasted or can be expected to 

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

20 C.F.R. § 404.1505. 

 Whether a claimant is disabled is determined using a five-step evaluation 

process. It is claimant’s burden to show (1) he has not worked since the alleged 

disability onset date, (2) he has a severe physical or mental impairment, and (3) the 

impairment meets or equals a listed impairment or (4) his residual functional capacity 

(“RFC”) precludes him from doing his past work. If at any step the Commission 

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determines that a claimant is or is not disabled, the inquiry ends. If the claimant 

satisfies his burden though step four, the burden shifts to the Commissioner to show 

at step five that the claimant has the RFC to perform other work that exists in 

substantial numbers in the national economy. See 20 C.F.R. § 404.1520(a)(4)(i)-(v). 

 In this case, Plaintiff was denied at step five of the evaluation process. The 

step five determination is made on the basis of four factors: the claimant’s RFC, age, 

education, and work experience. Hoopai v. Astrue, 499 F.3d 1071, 1074 (9th

Cir.2007). The Commissioner can meet his burden at Step Five “through the 

testimony of a vocational expert or by reference to the Medical Vocation 

Guidelines.” Thomas v. Barnhart, 278 F.3d 947, 955 (9th Cir.2002); 20 C.F.R. pt. 

404, subpt. P, app.2 (the “grids”). 

 The ALJ’s decision to deny disability benefits will be vacated “only if it is not 

supported by substantial evidence or is based on legal error.” Robbins v. Soc. Sec. 

Admin., 466 F.3d 880, 882 (9th Cir.2006). “’Substantial evidence’ means more than a 

mere scintilla, but less than a preponderance, i.e., such relevant evidence as a 

reasonable mind might accept as adequate to support a conclusion.” Id. Substantial 

evidence is “such relevant evidence as a reasonable mind might accept as adequate to 

support a conclusion.” Sandgathe v. Chater, 108 F.3d 978, 980 (9th Cir.1997). In 

evaluating whether the decision is supported by substantial evidence, the Court must 

consider the record as a whole, weighing both the evidence that supports the decision 

and the evidence that detracts from it. Reddick v. Chater, 157 F.3d 715, 720 (9th

Cir.1998); see 42 U.S.C. § 405(g) (“findings of the Commissioner of Social Security 

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as to any fact, if supported by substantial evidence, shall be conclusive”). If there is 

sufficient evidence to support the Commissioner’s determination, the Court cannot 

substitute its own determination. See Young v. Sullivan, 911 F.2d 180, 184 (9th

Cir.1990). 

IV. DISCUSSION 

 Plaintiff argues that the Commissioner’s denial of benefits is not supported by 

substantial evidence. Plaintiff’s Opening Brief (Doc. 14), pp. 6-19. He contends that 

the ALJ failed to accord the proper weight to the testimony of his examining 

physicians, improperly relied on Social Security Ruling 85-15 instead of the VE’s 

testimony, and failed to properly evaluate the lay witness statements. Id. The 

Commissioner responds that the ALJ properly considered and evaluated the medical 

source opinions, properly relied of SSR 85-15, and properly evaluated the lay witness 

statements. Defendant’s Opposition to Opening Brief (Doc. 15), pp. 9-20. 

A. Evaluation of Medical Opinions 

 “The ALJ must consider all medical opinion evidence.” Tommasetti v. Astrue, 

533 F.3d 1035, 1041 (9th Cri.2008); see 20 C.F.R. § 404.1527(d); SSR 96-5p, 1996 

WL 374183, at *2 (July 2, 1996). “[T]he ALJ may only reject a treating or 

examining physician’s uncontradicted medical opinion based on ‘clear and 

convincing’ reasons.” Carmickle v. Comm’r Soc. Sec. Admin., 533 F.3d 1155, 1164 

(9th Cir.2008) (citing Lester v. Chater, 81 F.3d 821, 830-31 (9th Cir.1995)). “In order 

to reject an examining physician’s opinion, ‘the ALJ has to give clear and convincing 

reasons . . . . Even if contradicted by another doctor, the opinion of an examining 

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doctor can be rejected only for specific and legitimate reasons that are supported by 

substantial evidence in the record.’” Hill v. Astrue, 698 F.3d 1153 (9th Cir. 2012) 

(quoting Regennitter v. Comm’r. of Soc. Sec. Admin., 166 F.3d 1294, 1298-99 (9th

Cir. 1999). 

 1. Dr. Rothbaum’s Opinion. 

 After examining Plaintiff in March 2011, Dr. Rothbaum opined that Plaintiff 

suffered from myofascial cervical and low back pain, and that depression was “by all 

odds the most significant impairment . . . .” (AR 339.) As part of his evaluation, Dr. 

Rothbaum checked boxes that indicated Plaintiff could frequently, as opposed to 

constantly or occasionally, reach, handle and finger. (AR 342.) Similarly, Dr. 

Rothbaum checked boxes that indicated Plaintiff could only have “frequent” 

exposure to various environmental conditions. (AR 345.) Plaintiff seizes on the fact 

that the ALJ did not address this portion of the Dr. Rothbaum’s opinion in 

determining Plaintiff’s RFC to argue that “Dr. Rothbaum opined that [Plaintiff] was 

significantly more limited, in part, than the ALJ ultimately found.” Opening Brief, p. 

7. 

 As the Commissioner argues, however, Plaintiff cites no evidence in the 

record to support the conclusion that Plaintiff’s condition limited him in any of these 

functional areas. More important, though, is that even if he could point to such 

evidence, it would not support the rejection of the ALJ’s RFC determination, as the 

ALJ found the Plaintiff capable of performing only “light work,” which was a lower 

level of work than that suggested by Dr. Rothbaum’s finding that Plaintiff could 

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frequently lift and carry up to 50 pounds. Thus, if the ALJ can be said to have 

rejected Dr. Rothbaum’s opinion at all, it was rejected in favor of a more restrictive 

RFC than that supported by Dr. Rothbaum’s examination and report. As such, the 

ALJ was not required to cite clear and convincing reasons for rejecting the opinion, 

because it was not rejected. 

 2. Dr. Rau’s Opinion

 Addressing Plaintiff’s mental ability to perform work related activities, Dr. 

Rau opined that Plaintiff had a major depressive order and, due to his memory 

problems, high anxiety, and depression, was mildly limited in his ability to 

understand and remember simple instructions; moderately limited in his ability to 

carry out those instructions; mildly limited in the ability to make simple work-related 

judgments; moderately to markedly limited in the ability to understand, remember 

and carry out complex instructions; and moderately limited in the ability to make 

complex work-related judgments. (AR 334.) Dr. Rau also found Plaintiff 

moderately limited in the ability to interact with the public, supervisors, co-workers, 

and to work situations and changes in his work routine. (AR 335.) 

 In evaluating Dr. Rau’s opinion, the ALJ found that the “record shows, at 

most, the claimant has some limitations in concentration and persistence,” but that he 

had an average to impaired ability to retain novel information. (AR 27.) The ALJ 

then stated that “there is no evidence to support finding that the claimant has 

moderate limitations in social interaction,” and noted that the Plaintiff had not sought 

mental health treatment since the date last insured. (AR 27.) In reaching this 

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conclusion, the ALJ did not address Dr. Rau’s belief that Plaintiff “will have great 

difficulty dealing with criticism. I think his quite prominent nervousness and anxiety 

may be easily noticed by others and make them ill at ease around him.” (AR 332.) 

 On its face, this statement appears to support the finding that Plaintiff has 

moderate limitations in social interaction. The Commissioner argues that the ALJ 

appropriately discounted the opinion by relying on the record as a whole and because 

the opinion was “brief, conclusory, and inadequately supported by clinical findings.” 

Opposition Brief, pp. 11-12. However, the ALJ was obligated to cite clear and 

convincing reasons for declining to adopt Dr. Rau’s uncontroverted opinion. 

Carmickle, 533 F.3d at 1164. If, despite Dr. Rau’s statement that Plaintiff would 

have difficulty dealing with criticism and that others would be ill at ease around him, 

the ALJ believes that Plaintiff has no limitations in social interaction, he need not 

discuss all the evidence presented, but must explain why “significant probative 

evidence has been rejected.” Vincent v. Heckler, 739 F.2d 1393, 1394-95 (9th Cir. 

1984). 

B. The ALJ Reliance on SSR 85-15 

 Plaintiff contends that the ALJ erred by relying on SSR 85-15, instead of 

relying on the testimony of the VE, as the basis for his step-five determination of 

non-disability. Opening Brief, pp. 16-17. As the Plaintiff points out, the Ninth 

Circuit has held that SSR 85-15 does not apply to cases in which both “exertional” 

and “non-exertional” impairments are at issue. Roberts v. Shalala, 66 F.3d 179 (9th

Cir. 1995); Sandgathe v. Chater, 108 F.3d 978, 980-81 (9th Cir. 1997). In countering 

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this argument, the Commissioner argues that the ALJ did not adopt Dr. Rothbaum’s 

non-exertional reaching, handling and fingering limitations and Dr. Rau’s opinion 

that Plaintiff had moderate limitations in social interaction and, therefore, under 

Hoopai v. Astrue, 499 F.3d 1071, 1077 (9th Cir. 2007), Plaintiff’s non-exertional 

limitations did not prohibit reliance on SSR 85-15. 

 The Court agrees with Plaintiff that the ALJ failed to meet his burden at step 

five. As discussed above, the ALJ’s determination of Plaintiff’s RFC was flawed by 

the unjustified rejection of Dr. Rau’s opinion about Plaintiff’s limitations in social 

interaction. As illustrated by the testimony of the VE at the hearing, if those 

limitations are included in the RFC, they would “limit somebody from maintaining 

work.” (AR 65.) Thus, it is apparent that when the non-exertional limitations cited 

by Dr. Rau are included in the RFC, they may affect the range of work otherwise 

available. In such circumstances, reliance on SSR 85-15 in lieu of vocational 

testimony was error. 

 The inclusion of Dr. Rau’s non-exertional limitation opinions also takes this 

case outside of Hoopai. In Hoopai, the plaintiff’s depression did not result in any 

significant limitations which had to be included in the ALJ’s RFC finding or 

presented to the VE. 499 F.3d at 1077. Here, however, if Dr. Rau’s non-exertional 

limitations are not rejected, they will constitute significant limitations that likely will 

alter the RFC assessment. If on remand the ALJ does not reject the limitations 

described in Plaintiff’s social interaction, VE testimony will be required. 

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C. Lay Witness Statements

 In addition to medical sources, the ALJ may consider statements from family, 

friends and others regarding the severity of a plaintiff’s impairments and how the 

impairments impact his ability to work. 20 C.F.R. §§ 404.1513(d)(4), 416.913(d)(4). 

“In considering evidence from ‘non-medical sources’ who have not seen the 

individual in a professional capacity in connection with their impairments, such as 

spouses, parents, friends, and neighbors, it would be appropriate to consider such 

factors as the nature and extent of the relationship, whether the evidence is consistent 

with other evidence, and any other factors that tend to support or refute the 

evidence.” SSR 06-3p, 2006 WL 2329939 at *5. Lay witness evidence is competent 

evidence and cannot be disregarded without providing specific reasons germane to 

each witness. Bruce v. Astrue, 557 F.3d 1113, 1115 (9th Cir. 2009). 

 In this case, Plaintiff submitted statements from his former attorneys, step 

father, wife and children describing his limitations due to his physical and mental 

condition. (AR 226-234.) Addressing these statements, the ALJ stated: 

With respect to statement by the claimant’s family, the reports cannot 

necessarily be considered disinterested third party witness statements. 

Because of their relationship with the claimant, their testimony would 

tend to show a bias in his favor and, therefore, they would tend to show 

agreement in supporting the claimant’s alleged symptoms and 

limitations, despite contrary evidence. Regarding the attorney 

statements, neither individuals are [sic] qualified to render an opinion 

regarding the claimant’s impairment, and given the nature of the 

attorney-client relationship, their contacts with the claimant were 

limited to times when he was obviously stressed and required 

assistance with a legal matter. 

 

(AR 27.) 

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 Addressing the attorney statements, the ALJ did provide a reason germane to 

those two witnesses for rejecting their testimony. While both attorneys described the 

Plaintiff as suffering from emotional or psychiatric difficulties (AR 226-228), it is 

inarguably germane to attorney witnesses that those who have contacted them may be 

in a heightened emotional state. Thus, given the standard applicable to lay witness 

testimony, the reason cited by the ALJ were sufficient for rejecting these opinions. 

 Turning to the statements of the family members, the reasons for rejecting the 

testimony are not sufficient. The ALJ relied on the fact that the family members 

were biased based solely on their relationship with the Plaintiff. However, the mere 

fact that a witness may have a close relationship with the Plaintiff is not alone a 

sufficient basis for rejecting the lay witness testimony. See Bruce v. Astrue, 557 F.3d 

1113, 1116 (9th Cir.2009) (finding ALJ erred in rejecting lay witness testimony on 

basis of that witness's close relationship with claimant); see also Valentine v. 

Commissioner of Social Security, 574 F.3d 685 (9th Cir.2009) (stating evidence of 

specific secondary gain motive, in addition to being in a close relationship with the 

plaintiff, could suffice to reject testimony of plaintiff's spouse). These standards 

require that the ALJ cite germane reasons for rejecting the statements of family 

members that go beyond the mere relationship between the witness and the Plaintiff. 

D. Remedy 

 The decision whether to remand a matter pursuant to sentence four of 42 

U.S.C. § 405(g) or to order an immediate award of benefits is within the discretion of 

the district court. Harman v. Apfel, 211 F.3d 1172, 1178 (9th Cir. 2000). Ordinarily, 

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when a court reverses an administrative agency determination, the proper course is to 

remand to the agency for additional proceedings. Moisa v. Barnhart, 367 F.3d 882, 

886 (9th Cir. 2004). Generally, an award of benefits is appropriate only when: 

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

rejecting such evidence, (2) there are no outstanding issues that must be 

resolved before the 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 v. Chater, 80 F.3d at 1292. An award of benefits is appropriate where no 

useful purpose would be served by further administrative proceedings, or where the 

record has been fully developed. Varney v. Sec’y of Health & Human Servs., 859 

F.2d 1396, 1399 (9th Cir. 1988). 

 Here, there are outstanding issues to be resolved. On remand, the ALJ must 

reevaluate Dr. Rau’s non-exertional limitations and, in light of that reevaluation, 

determine whether the testimony of a VE is required. Additionally, if the ALJ rejects 

the lay witness statements of Plaintiff’s family members, he must provide proper and 

germane reasons for doing so. As such, the Court recommends that this matter be 

remanded to allow the ALJ to resolve these outstanding issues. 

V. RECOMMENDATION

 For the foregoing reasons, the Magistrate Judge recommends the District 

Court, after its independent review, enter an order remanding the case to the ALJ for 

further proceedings consistent with this Report and Recommendation. 

 Pursuant to Federal Rule of Civil Procedure 72(b)(2), any party may serve and 

file written objections within fourteen days of being served with a copy of the Report 

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and Recommendation. A party may respond to the other party's objections within 

fourteen days. No reply brief shall be filed on objections unless leave is granted by 

the district court. If objections are not timely filed, they may be deemed waived. If 

objections are filed, the parties should use the following case number: CV 11–784–

TUC–FRZ. 

 Dated this 25th day of July, 2013. 

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