Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_07-cv-02041/USCOURTS-azd-2_07-cv-02041-0/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 (DIWW)

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Effective December 1, 2008, this Court’s local rules now provide that social security

cases are to be briefed in accordance with traditional appellate procedure, and not through

motions and cross-motions for summary judgment. See LRCiv 16.1. Because briefing in this

case began before those changes took effect, the Court will decide the case under the prior

procedural rules. The Court notes that the substance of this decision is unaffected by the

changes to the local rules.

WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

SHERRY K. WALRAVEN, 

Plaintiff, 

vs.

MICHAEL J. ASTRUE, Commissioner of

Social Security, 

Defendant. 

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No. CV07-02041-PHX-GMS

ORDER

Pending before the Court is the Motion for Summary Judgment of Plaintiff Sherry K.

Walraven. (Dkt. # 16.) Defendant Michael J. Astrue, Commissioner of Social Security,

responded to that motion (Dkt. # 21), but he did not style his response as a cross-motion for

summary judgment, which was the usual procedure at the time Plaintiff’s motion was filed.1

However, Defendant’s response does request that the Court “issue judgment affirming the

Commissioner’s final decision” (id. at 8), and thus the Court will treat Defendant’s response

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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) and 20 C.F.R. § 416.920 (governing supplemental

security income 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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as a cross-motion for summary judgment. For the reasons set forth below, the Court grants

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

BACKGROUND

On January 16, 2004, Plaintiff applied for both disability insurance benefits and

supplemental security income, alleging a disability onset date of October 13, 2003. (R. at

55-66.) Plaintiff’s claim was denied both initially and upon reconsideration. (R. at 51, 540;

R. at 45.) Plaintiff then appealed to an Administrative Law Judge (“ALJ”). (R. at 538.) The

ALJ conducted a hearing on the matter on November 27, 2006. (R. at 551-89.)

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

sequential evaluation for determining disability.2

 (R. at 12-22.) At step one, the ALJ

determined that Plaintiff had not engaged in substantial gainful activity. (R. at 17.) At step

two, the ALJ determined that Plaintiff suffered from the severe impairments of “an affective

disorder and generalized arthralgias.” (Id.) At step three, the ALJ determined that none of

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RFC is the most a claimant can do despite the limitations caused by his impairments.

See SSR 96-8p.

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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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these impairments, either alone or in combination, met or equaled any of the Social Security

Administration’s listed impairments. (Id.)

At step four, the ALJ made a determination of Plaintiff’s residual functional capacity

(“RFC”),3

 concluding that Plaintiff has the capability of performing a general range of work,

with the ability to lift and carry fifty pounds occasionally and twenty-five pounds frequently,

to stand and/or walk for six hours in an eight-hour workday, and to sit for six hours with

alternated sitting and standing. (Id.) The ALJ found “mainly mild mental limitations, with

mild limitations in restriction of activities of daily living, difficulties in maintaining social

functioning and difficulties in maintaining concentration, persistence or pace and no episodes

of decompensation.” (R. at 18.) The ALJ thus determined that Plaintiff retained the RFC

to perform her past relevant work as a waitress, telemarketer, and counter worker. (R. at 21.)

The ALJ also reached step five, determining that Plaintiff could perform a significant number

of other jobs in the national economy that met her RFC limitations. (R. at 21-22.) Therefore,

the ALJ concluded that Plaintiff was not disabled. (R. at 22.)

The Appeals Council declined to review the decision. (R. at 4-7.) Plaintiff filed the

complaint underlying this action on October 19, 2007, seeking this Court’s review of the

ALJ’s denial of benefits.4

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

August 14, 2008. (Dkt. # 16.) Defendant filed his response, which the Court interprets as

a cross-motion for summary judgment, on September 15, 2008. (Dkt. # 21.)

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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

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 five ways: (A) by finding that Plaintiff suffers

from the severe impairment of affective disorder, rather than major depressive disorder and

bipolar disorder (Dkt. # 18 at 2-3 n.1); (B) by failing to adequately explain why he found that

Plaintiff’s impairments did not meet or equal a listed impairment (id. at 3 n.2); (C) by

disregarding the opinion of Dr. Honory, a treating physician (id. at 7-11); (D) by disregarding

Plaintiff’s subjective complaint testimony (id. at 11-13); and (E) by failing to consider a

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Evidently to comply with the page limitations of the local rules, Plaintiff presents the

first and second of these arguments in small-font footnotes. (Dkt. # 18 at 2-3 nn.1-2.) In

seeking to satisfy one local rule, Plaintiff has violated another, for these footnotes fail to

comply with the Court’s font limitations. See LRCiv 7.1(b)(1). The Court also points out

that these footnotes undermine the spirit of the local rules – substantive arguments are to be

presented in the text of a motion, not in footnotes, for otherwise the Court’s page limitations

and double-spacing requirements are rendered meaningless. The Court would be well within

its discretion to strike these arguments, if not Plaintiff’s entire pleading, given this lack of

conformity to the local rules. See LRCiv 7.1(d)(5). However, because Defendant does not

object to Plaintiff’s first two arguments, and responds to them at length, the Court will

address those arguments.

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function report completed by a lay witness (id. at 13-14). The Court will address each

argument in turn.5

A. Severity Determination

Plaintiff argues that the ALJ erred by finding that she suffers from the severe

impairments of an affective disorder, as opposed to major depressive disorder and bipolar

disorder, asserting that these impairments “must be considered at step two of the sequential

evaluation process.” (Dkt. # 18 at 2-3 n.1.) “[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].” SSA 85-28. Put simply, “the 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)).

Here, the ALJ did not dispose of Plaintiff’s claim and did not rule out any impairment

as being not severe – he merely characterized the impairment he found severe as an affective

disorder, rather than bipolar disorder and depressive disorder. (R. at 17.) As Defendant

points out, depression and bipolar disorder are affective disorders. See Listing 12.04(A)(1)

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The Listing of Impairments is found in Title 20 of the Code of Federal Regulations,

Chapter III, Part 404, Subpart P, Appendix 1. For ease of citation, a listed impairment will

be cited as a “Listing.”

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(“Depressive syndrome”); Listing 12.04(A)(3) (“Bipolar syndrome”).6

 Thus, these

impairments were considered, and included, in the ALJ’s determination at step two.

Moreover, even if the ALJ’s framing of Plaintiff’s conditions did constitute error, such

error would be harmless because it did not affect his ultimate decision. See Batson, 359 F.3d

at 1197 (finding an ALJ’s error was harmless because the court determined that the error did

not affect the ALJ’s ultimate conclusion). Here, the ALJ considered the relevant evidence

of Plaintiff’s bipolar and depressive symptoms throughout the rest of the sequential

evaluation. (See R. at 20-21.) Indeed, the ALJ explicitly agreed that Plaintiff suffered from

an “episodic bipolar condition” and “situational depression.” (R. at 20.) Thus, any error in

characterizing Plaintiff’s severe impairments as affective disorder, as opposed to depression

and bipolar disorder, would be harmless.

For these reasons, the ALJ did not commit reversible error at step two.

B. Equivalence Determination

Plaintiff argues that the ALJ erred by failing to adequately explain his finding at step

three of the sequential evaluation that none of Plaintiff’s impairments meet or equal a listed

impairment. (Dkt. # 18 at 3 n. 2.) “An ALJ must evaluate the relevant evidence before

concluding that a claimant’s impairments do not meet or equal a listed impairment. A

boilerplate finding is insufficient to support a conclusion that a claimant’s impairment does

not do so.” Lewis, 236 F.3d at 512 (emphasis added). Here, the ALJ agreed that Plaintiff

suffered from the severe impairment of affective disorder. (R. at 17.) Affective disorder is

a listed impairment. See Listing 12.04. Yet the ALJ did not explain why Plaintiff’s severelyimpairing affective disorder did not meet the requirements of the analogous listing. Rather,

the ALJ offered only the following conclusory statement for its step three analysis: “The

claimant does not have an impairment or combination of impairments that meets or medically

equals one of the listed impairments in [the regulations].” (R. at 17.) This statement is

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precisely the kind of “boilerplate finding” the Ninth Circuit has found insufficient at step

three. See Lewis, 236 F.3d at 512. Thus, the ALJ erred at step three.

Defendant argues that this is not error because the ALJ determined, at step four of the

sequential evaluation, that Plaintiff had the RFC to perform her past relevant work. (Dkt. #

21 at 2-3.) Defendant is mistaken. The sequential evaluation must be applied as a sequence,

so that, if a claimant is found disabled at any step, a finding of disability is mandated and the

evaluator should not proceed to further steps. 20 C.F.R. § 404.1520(a)(4) (“The sequential

evaluation process is a series of five ‘steps’ that we follow in a set order. If we can find that

you are disabled or not disabled at a step, we make our determination or decision and we do

not go on to the next step.”); 20 C.F.R. § 416.920(a)(4) (same). If the claimant is found to

meet a listed impairment at step three, a finding of disability is mandated. 20 C.F.R. §

404.1520(a)(4)(iii); 20 C.F.R. § 416.920(a)(4)(iii). Thus, the ALJ’s later finding at step four

could not retroactively account for a defect at step three.

Nor are the step three and step four analyses synonymous. Thus, a finding on one

cannot serve as a finding on another. Step three focuses on a claimant’s medical condition;

the evaluator must determine whether that condition meets or equals the specific criteria of

a listed medical impairment. See 20 C.F.R. § 404.1520(a)(4)(iii); 20 C.F.R. §

416.920(a)(4)(iii). Step four focuses on a claimant’s work capacity; the evaluator must

determine the most the claimant can do given her impairments (her RFC) and, in light of that

RFC, whether she can perform her past work. See 20 C.F.R. § 404.1520(a)(4)(iv); 20 C.F.R.

§ 416.920(a)(4)(iv). Because these inquiries are distinct, the ALJ’s finding at step four does

not obviate the need for a step-three finding. As explained above, that finding must be

explained and supported. See Lewis, 236 F.3d at 512. Because it was not in this case, the

ALJ committed error.

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Plaintiff notes that Dr. Honory’s opinion was consistent with the opinion of another

physician, Dr. Allen (see Dkt. # 18 at 8), whose opinion the ALJ also rejected (see R. at 20-

21). Plaintiff, however, does not argue that the ALJ erred in discounting Dr. Allen’s opinion.

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C. Treating Physician Testimony

Plaintiff argues that the ALJ erred in disregarding the opinion of Dr. Honory, her

treating physician.7

 (Dkt. # 18 at 7-11.) “The medical opinion of a claimant’s treating

physician is entitled to ‘special weight.’” Rodriguez v. Bowen, 876 F.2d 759, 761 (9th Cir.

1989) (quoting Embrey v. Bowen, 849 F.2d 418, 421 (9th Cir. 1988)). If a treating doctor’s

opinion is not contradicted by another doctor, that opinion may be rejected only for “clear

and convincing reasons” supported by substantial evidence. Reddick v. Chater, 157 F.3d

715, 725 (9th Cir. 1998). Clear and convincing reasons are also required to reject a treating

physician’s subjective judgments and ultimate conclusions. Lester v. Chater, 81 F.3d 821,

830 (9th Cir. 1996); Embrey, 849 F.2d at 422 (“The subjective judgments of treating

physicians are important, and properly play a part in their medical evaluations. Accordingly,

the ultimate conclusions of those physicians must be given substantial weight; they cannot

be disregarded unless clear and convincing reasons for doing so exist and are set forth in

proper detail.”). If the treating doctor’s opinion is contradicted by another doctor, the ALJ

can reject the opinion only by providing “specific and legitimate reasons” supported by

substantial evidence. Reddick, 157 F.3d at 725. “The ALJ can meet this burden by setting

out a detailed and thorough summary of the facts and conflicting clinical evidence, stating

his interpretation thereof, and making findings.” Embrey, 849 F.2d at 421 (quotation

omitted). Mere conclusions are insufficient; the ALJ must “set forth his own interpretations

and explain why they, rather than the doctors’, are correct.” Reddick, 157 F.3d at 725.

Here, Dr. Honory offered the opinion that Plaintiff was “markedly limited” (i.e., that

“[p]erformance of the designated work-related mental function is totally precluded on a

sustained basis”) in thirteen categories of mental functioning. (See R. at 462-66.) Dr.

Honory further opined that Plaintiff was “moderately limited” (i.e., that “[p]erformance of

the designated work-related mental function is not totally precluded, but it is substantially

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impaired”) in five categories of mental functioning. (See id.) Dr. Honory thereafter stated

that Plaintiff’s mental impairments would prevent her from completing a workday more than

three or four times per month. (R. at 465.)

The ALJ rejected Dr. Honory’s opinion for a number of reasons. (R. at 20-21.) The

ALJ pointed out that three evaluating physicians offered the opinion that Plaintiff’s

limitations were only mild to moderate, and did not meet the criteria for functional

limitations. (R. at 192, 218-19; R. at 206; R. at 230-21.) For example, one of those

physicians opined that Plaintiff “can understand, remember and carry out simple work

instructions,” that her “persistence, pace, attention and concentration is adequate for []

routine, low skill level work situations,” and that there were “[n]o problems noted in

[Plaintiff’s] ability to adapt to changes in work and living situations.” (R. at 220.) 

The ALJ further assessed Plaintiff’s treatment notes at Mohave Mental Health Clinic

(“MMHC”), concluding that they indicated a bipolar condition that was episodic, depression

that was under control, especially through medication, and symptoms that were generally

improving over time. (See R. at 243-92, 350-458.) The ALJ took particular notice of those

treatment notes authored by Dr. Honory himself that were inconsistent with a sustained and

continual inability to work. For example, on October 21, 2004, Dr. Honory reported that

“overall since she started taking [her medication] she has been doing better.” (R. at 245.)

In that note, Plaintiff reported that the medicine “level[ed] her out” and made her moods

“more tolerable.” (Id.) Dr. Honory further reported that the result of his mental status exam

was that Plaintiff was alert and fully oriented, with normal speech and psychomotor activity.

(Id.) “Her stated mood was ‘better’ with bright and euthymic affect. . . . Her thought process

was goal oriented and goal directed and her insight and judgment were fair.” (Id.) Dr.

Honory concluded Plaintiff’s medications had reduced her symptoms and “it is quite evident

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The GAF scale ranges from 1 to 100 and reflects a person’s overall psychological,

social, and occupational functioning. See Diagnostic and Statistical Manual of Mental

Disorders 32-34 (4th ed. 2000) (hereinafter “DSM-IV”). Scores between 51 and 60 indicate

“moderate symptoms” or “moderate difficulty in social, occupational, or school functioning.”

Id. at 34. For context, the grouping of scores above this range (61-70) indicates mild

symptoms and only some difficulty in functioning, while the grouping of scores below (41-

50) indicates serious symptoms or impairment, including that the individual is “unable to

keep a job.” Id.

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that her mood swings have decreased in intensity.” (Id.) He assessed Plaintiff’s global

assessment of functioning (“GAF”) at 55-60.8

 (Id.)

This note is consistent with many others in the record. Another progress note, from

April 6, 2004, likewise indicates that Plaintiff does better on medication, including that she

“does not seem to hold grudges,” “does not get upset and hurt as much and as easily,” and

“seems to be able to handle difficult situations better.” (R. at 251.) Plaintiff’s mental status

exam was also similar to that described above, as was her GAF score. (R. at 252.) A

progress note from February 12, 2004, again indicated that Plaintiff’s depression improved

with medication. (R. at 257.) Yet another progress note, on August 5, 2004, provided that

the medication was helpful. (R. at 427.)

In fact, numerous progress notes throughout the treatment period contain mental status

evaluations with generally similar results (appropriate appearance, mood, and affect,

cooperative behavior, coherent speech, normal perception, and logical thought processes),

as well as similar GAF scores (55-60). (R. at 256, 258, 266, 353, 355, 361, 375, 376, 381,

386, 427, 430, 450.) An October 17, 2005, progress note provides that Plaintiff herself

reported “making a lot of progress.” (R. at 361.) Moreover, there are many progress notes

that report that Plaintiff was “doing ok.” (R. at 250, 254, 354, 360, 365.) The ALJ also

pointed out that even Dr. Allen, on May 20, 2004, assessed Plaintiff’s GAF at 65 (R. at 241),

which puts her in the middle of the “mild symptoms” range, indicating that she was

“generally functioning pretty well.” DSM-IV, supra, at 34.

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Thus, the ALJ’s conclusion – that Dr. Honory’s opinion was inconsistent with the

opinions of other doctors, inconsistent with his own treatment notes, and inconsistent with

many of Plaintiff’s medical records – is supported by substantial evidence. These are all

legally proper factors on which an ALJ may rely in rejecting a physician’s opinion. See

Connett v. Barnhart, 340 F.3d 871, 875 (9th Cir. 2003) (holding that it is appropriate to reject

the opinion of a treating physician if it is inconsistent with other doctors’ opinions, other

evidence in the record, and his own treatment notes). Therefore, the ALJ did not commit

legal error and his findings are supported by substantial evidence.

Plaintiff’s arguments to the contrary are unavailing. Plaintiff argues that “the ALJ

does not identify the conflict nor does he cite to the specific treatment records which

support[] the allegation.” (Dkt. # 18 at 9.) To the contrary, the ALJ does cite to specific

treatment notes in discussing Plaintiff’s mental impairments, sometimes by date, sometimes

by exhibit and page number, and he explicitly spelled out the nature of the conflicts upon

which he relied (specifically, that other assessments “indicated some moderate limitations,

but did not prevent sustained work activities,” that Plaintiff’s condition was “episodic” and

“improved with medication,” that her mental status exams, including some of those authored

by Dr. Honory, were often normal, and that Plaintiff’s GAF scores were generally in the

moderate or better range). (See R. at 20-21.)

Plaintiff also argues that the ALJ’s reliance on GAF scores as evidence of nondisability was inappropriate because GAF scores do not directly correlate to the severity

requirements in the Listing of Impairments. (Dkt. # 18 at 10.) The Ninth Circuit, however,

has explicitly relied on GAF scores as part of its disability analysis. See, e.g., Schneider v.

Comm’r of Soc. Sec. Admin., 223 F.3d 968, 973-74 (9th Cir. 2000). Here, there is no

evidence that the ALJ treated the GAF scores as dispositive or otherwise accorded them

improper weight; rather, they were simply one piece of evidence upon which the ALJ relied

in making the disability determination. (See R. at 20-21.) Thus, the ALJ did not err in this

regard.

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Finally, Plaintiff points out that some of the MMHC records indicate that Plaintiff was

described as being tearful and/or depressed, which is consistent with Dr. Honory’s opinion.

(Dkt. # 18 at 11 (citing R. at 251-53, 260, 267, 282-91, 434, 435).) This argument goes to

the interpretation and weight of the evidence, which is not a question for this Court. “The

[ALJ] and not the reviewing court must resolve conflicts in evidence, and if the evidence can

support either outcome, the court may not substitute its judgment for that of the ALJ.”

Matney, 981 F.2d at 1019 (citations omitted). Here, the evidence could rationally be

interpreted as supporting a finding of non-disability, and thus the Court will not disturb that

interpretation. See Andrews, 53 F.3d at 1039; Batson, 359 F.3d at 1198.

D. Subjective Complaint Testimony

Plaintiff argues that the ALJ erred in rejecting her subjective complaint testimony.

(Dkt. # 18 at 11-13.) “Pain of sufficient severity caused by a medically diagnosed

‘anatomical, physiological, or psychological abnormality’ may provide the basis for

determining that a claimant is disabled.” Light v. Soc. Sec. Admin., 119 F.3d 789, 792 (9th

Cir. 1997) (quoting 42 U.S.C. § 423(d)(5)(A) (2006)). “Once a claimant produces objective

medical evidence of an underlying impairment, an ALJ may not reject a claimant’s subjective

complaints based solely on [the] lack of objective medical evidence to fully corroborate the

alleged severity of [those symptoms].” Moisa v. Barnhart, 367 F.3d 882, 885 (9th Cir.

2004). “[U]nless an ALJ makes a finding of malingering based on affirmative evidence

thereof, he or she may only find [the claimant] not credible by making specific findings as

to credibility and stating clear and convincing reasons for each.” Robbins v. Soc. Sec.

Admin., 466 F.3d 880, 883 (9th Cir. 2006). Specifically:

The ALJ may consider at least the following factors when

weighing the claimant’s credibility: [the] claimant’s reputation

for truthfulness, inconsistencies either in [the] claimant’s

testimony or between her testimony and her conduct, [the]

claimant’s daily activities, her work record, and testimony from

physicians and third parties concerning the nature, severity, and

effect of the symptoms of which [the] claimant complains.

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Thomas, 278 F.3d at 958-59 (internal quotations omitted). The ALJ’s findings must be

“sufficiently specific to permit the court to conclude that the ALJ did not arbitrarily discredit

[the] claimant’s testimony.” Id. at 958.

Plaintiff has reported numerous subjective complaints, both physical and mental,

throughout her treatment history, including panic, anxiety, depression, general pain, and

fatigue. (See, e.g., R. at 243-92, 350-458.) The ALJ agreed that Plaintiff’s impairments

could reasonably be expected to produce the symptoms of which Plaintiff complained, but

nonetheless concluded that “the claimant’s statements concerning the intensity, persistence

and limiting effects of these symptoms are not entirely credible.” (R. at 21.) The ALJ laid

out Plaintiff’s subjective complaints in the following way:

The claimant testified that her hip bothered her after long

periods of sitting and she experienced depression and crowds

bothered her and she sometimes panicked. She indicated she

had isolated herself and a classroom was stressful for her and

she had memory problems. The claimant further testified that

she had periods of high energy and then has a depressive period.

She was currently in a down mood.

(R. at 21.) Then, the ALJ discounted those complaints under the following reasoning:

“This was not substantiated by the record. There was no significant evidence of side-effects

from medication.” (Id.)

The ALJ’s rationale is legally insufficient. The ALJ’s statement that Plaintiff’s

subjective complaints are not substantiated by the record is, at most, an invocation of the

“insufficient objective evidence” reasoning that has been rejected by the Ninth Circuit.

Moisa, 367 F.3d at 885 (“[A]n ALJ may not reject a claimant’s subjective complaints based

solely on [the] lack of objective medical evidence to fully corroborate the alleged severity

of [symptoms].”). Furthermore, the ALJ made no finding of malingering, and thus was

required to make “specific findings as to credibility and stat[e] clear and convincing reasons

for each.” Robbins, 466 F.3d at 883. The ALJ’s analysis here includes neither specific

findings nor any reasons for discounting Plaintiff’s subjective complaints – other than the

notation about side-effects, which is perplexing given that Plaintiff’s subjective complaints

are not alleged to result from the side-effects of medication. In sum, the ALJ’s findings are

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not “sufficiently specific to permit the court to conclude that the ALJ did not arbitrarily

discredit [the] claimant’s testimony.” Thomas, 278 F.3d at 958. The ALJ therefore

committed reversible error.

E. Lay Witness Testimony

Plaintiff argues that the ALJ erred because he failed to consider a function report

offered by a lay witness. (Dkt. # 18 at 13-14.) “In determining whether a claimant is

disabled, an ALJ must consider lay witness testimony concerning a claimant’s ability to

work.” Stout v. Comm’r, Soc. Sec. Admin., 454 F.3d 1050, 1053 (9th Cir. 2006) (internal

citations and quotations omitted). “Indeed, lay testimony as to a claimant’s symptoms or

how an impairment affects ability to work is competent evidence and therefore cannot be

disregarded without comment. Consequently, if the ALJ wishes to discount the testimony

of lay witnesses, he must give reasons that are germane to each witness.” Id.

Here, the record contains a third-party function report that was completed by

Plaintiff’s neighbor/friend. (R. at 153-62.) The report provides that Plaintiff is “depressed

all the time” (R. at 157), that she “can’t remember when she does things and where things

are,” “forgets instructions,” and “disagrees with everyone” (R. at 158), and that she can pay

attention for “not long – maybe 5 min[utes]” (id.). The report also provides that Plaintiff

does not follow instructions well, does not get along with authority figures (including

bosses), and reacts to stress by getting “angry,” “frustrated,” and “depressed,” and thus

“won’t talk.” (R. at 158-59.) The report further states that Plaintiff “is always fearful of

things [and] always affraid [sic] of making decisions or mistakes” (R. at 159), and that she

is “always negative and depressed” and “flys [sic] off the handle unexpectedly” (R. at 160).

The ALJ failed to discuss this function report at all (see R. at 12-22), and it is clear

that the ALJ did not credit the report given the ALJ’s hypotheticals and his finding of only

mild mental limitations on work (see R. at 585 (“I’d like for you to consider the following

limitations, if you would. Assume a person has an unlimited ability to follow work rules, use

judgment, function independently and maintain attention and concentration. . . . [and] a good

ability – or very good ability, to understand, remember and carry out complex job

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9

Defendant essentially concedes that the ALJ erred in failing to address this evidence,

but argues that the error was harmless because this evidence “would have to be consistent

with the weighted medical evidence.” (Dkt. # 21 at 6) Defendant contends that it is not

because the ALJ found only mild mental limitations. (Id. (citing Dkt. # 21 Att. 1 ¶ 40).)

Thus, Defendant is arguing that the ALJ did not err in failing to consider evidence of mental

limitations because, by failing to consider that evidence, he found no mental limitations.

That reasoning is entirely circular and is unsupported by any caselaw. Therefore, the Court

cannot find that the error was harmless.

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instructions . . . .”); R. at 20). Thus, the ALJ committed reversible error. See Stout, 454 F.3d

at 1053.9

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.

In this case, the error at step three stemmed from the ALJ’s failure to explain his

finding that Plaintiff’s impairment did not meet or equal a listed impairment. Although the

ALJ found that Plaintiff’s affective disorder is a severe impairment, that step-two

determination does not resolve the step-three question of whether Plaintiff’s affective

disorder meets Listing 12.04. That Listing requires the presence of both “A” criteria and “B”

criteria, or the independent satisfaction of the “C” criteria, in order to be met. See Listing

12.04. The “A” criteria are composed of the medically-documented persistence, either

continuous or intermittent, of depressive syndrome (characterized by at least four of nine

symptoms), manic syndrome (characterized by at least three of eight symptoms), or bipolar

syndrome with a history of episodic periods manifested by the full symptomatic picture of

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both manic and depressive syndromes (and currently characterized by either or both

syndromes). See Listing 12.04(A). The “B” criteria require that the “A” criteria result in at

least two of four functional limitations (marked restriction of activities of daily living;

marked difficulties in maintaining social functioning; marked difficulties in maintaining

concentration, persistence, or pace; and repeated episodes of decompensation, each of

extended duration). See Listing 12.04(B). The “C” criteria provide that a listing is met if the

claimant has a medically-documented history of a chronic affective disorder lasting at least

two years that has caused more than a minimal limitation of the ability to perform basic work

activities, “with symptoms or signs currently attenuated by medication or psychosocial

support,” in concert with one of three other factors (repeated episodes of decompensation,

each of extended duration; a residual disease process resulting in only marginal adjustment

such that even a minimal increase in mental demands or environmental change would be

predicted to cause decompensation; or a history of an inability to function outside of a highly

supportive living arrangement for one or more years, with an indication of a continued need

for such an arrangement ). See Listing 12.04(C).

Here, it is unclear whether the ALJ disregarded any or all of the underlying evidence

regarding one or more of these factors or if he accepted the evidence but decided that the

evidence did not meet the Listing’s requirements. Thus, the Court cannot definitively

conclude from the record that Plaintiff’s impairments do or do not meet or equal a listed

impairment. If the Court found error in the ALJ’s decision to disregard Dr. Honory’s

opinion, then a remand for an award of benefits might be required – but because the Court

has concluded that there was no such error, a remand for further proceedings is the

appropriate course of action. See Lester, 81 F.3d at 830 (stating that if legal error at step

three “were the only error committed by the Commissioner, we would be required to remand

for [further proceedings],” but instead remanding for an award of benefits because the ALJ

also erred in rejecting treating physician testimony that established that the claimant was

disabled).

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10Plaintiff states in his remedy section that the ALJ “failed to address functional

limitations to be considered at steps four and five,” including “the ability to use judgment,

respond appropriately to supervisors, respond appropriately to co-workers, and respond to

usual work situations.” (Dkt. # 18 at 15.) Plaintiff’s argument is not entirely clear, and

Plaintiff offers no caselaw to assist the Court’s review. As best the Court can determine,

Plaintiff is merely making a general summation of why Plaintiff’s previous arguments require

an award of benefits. Because the Court has concluded that several of Plaintiff’s assertions

of error lack merit, much of Plaintiff’s remedy section is inapposite. Thus, these statements

would require no further exposition.

To the extent Plaintiff is attempting to assert independent error by these statements,

the Court finds none. Plaintiff’s only citation is to 20 C.F.R. § 404.1521, which outlines

examples of the abilities necessary to perform basic work activities. However, it is clear

from the Court’s review that the ALJ considered the evidence in light of all of the examples

set out in 20 C.F.R. § 404.1521. See Magallanes v. Bowen, 881 F.2d 747, 755 (9th Cir.

1989) (“As a reviewing court, we are not deprived of our faculties for drawing specific and

legitimate inferences from the ALJs opinion.”). Thus, even if Plaintiff is asserting

independent error in her remedy section, the Court concludes that there is no such error.

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With respect to Plaintiff’s subjective complaints and the lay witness testimony, the

vocational expert did not testify that Plaintiff would be unable to work if either such evidence

were credited. Rather, the vocational expert only testified that Plaintiff would be disabled

if Dr. Honory’s opinion were credited (R. at 585-86), and, for the reasons discussed above,

the ALJ did not err in rejecting Dr. Honory’s opinion. Thus, it is not “clear from the record

that the ALJ would be required to find the claimant disabled were such evidence credited,”

and there remain “outstanding issues that must be resolved before a determination of

disability can be made.” Smolen, 80 F.3d at 1292. Under these circumstances, the Court will

remand for further proceedings.10

CONCLUSION

The ALJ erred at step three of the sequential evaluation by failing to explain why

Plaintiff’s severe impairments did not meet or equal a listed impairment. The ALJ also erred

at steps four and five by disregarding Plaintiff’s subjective complaint testimony without

sufficient explanation and by disregarding the testimony of a lay witness without comment.

Because there remain outstanding issues yet to be resolved and it is not clear that the ALJ

would be required to award benefits, a remand for further proceedings is appropriate.

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

(Dkt. # 16) is GRANTED.

IT IS FURTHER ORDERED that Defendant’s response, which the Court interprets

as a cross-motion for summary judgment (Dkt. # 21), is DENIED.

IT IS FURTHER ORDERED that this case is REMANDED for further

proceedings.

DATED this 31st day of December, 2008.

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