* Pursuant to Fed. R. App. P. 43(c), Kenneth S. Apfel is substituted for

John J. Callahan, former Acting Commissioner of Soc ial Security, as the defendant in this action.

** This order and judgment is not binding precedent, e xcept under the doctrines of law of the case, res judicata, and col lateral estoppel. The court generally disfavors the citation of orders and judg ments; nevertheless, an order and judgment may be cited under the terms and condi tions of 10th Cir. R. 36.3.

1 After examining the briefs and appellate record, th is panel has determined (continued...) 

## F I L E D United States Court of Appeals Tenth Circuit 

### APR 8 1998 

### PATRICK FISHER Clerk UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

FRANCES SHERMAN,

Plaintiff-Appellant,

v. KENNETH S. APFEL, Commissioner, Social Security Administration, *

Defendant-Appellee. No. 97-7085 (D.C. No. 96-CV-217) (E.D. Okla.)

ORDER AND JUDGMENT **

Before ANDERSON , McKAY , and LUCERO , Circuit Judges.

Plaintiff appeals from a district court order affir ming the Commissioner’s decision to deny her applications for disability in surance benefits and supplemental security income. 1 In what became the final decision of the1 (...continued)

unanimously to grant the parties’ request for a dec ision on the briefs without oral argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1.9. The c ase is therefore ordered submitted without oral argument.

-2- Commissioner, the administrative law judge (ALJ) fo und that plaintiff’s chronic hepatitis C, depression, and substance addiction co nstituted severe impairments. The ALJ further found, however, that plaintiff’s impairments only restricted her to light work involving simple tasks. Therefore, the ALJ concluded that plaintiff retained the residual functional capacity (RFC) to perform four of her past jobs, which involved light or sedentary, unskilled work. We review the Commissioner’s decision to determine whether it “is supported by substantial evidence and adheres to ap plicable legal standards.” Berna v. Chater , 101 F.3d 631, 632 (10th Cir. 1996). “Because [s] ubstantiality of evidence must be based upon the record taken as a w hole, we must meticulously examine the record to determine whether the evidenc e in support of the [Commissioner’s] decision is substantial and take i nto account whatever in the record fairly detracts from its weight.” Washingto n v. Shalala , 37 F.3d 1437, 1439 (10th Cir. 1994) (quotations and citations omi tted). We reverse and remand for further proceedings in light of cumulative erro rs undermining the ALJ’s analysis of plaintiff’s impairments.2 Interferon is an antiviral agent used in the treatm ent of certain kinds of

hepatitis. It is “given by . . . injection, is exp ensive, and produces bothersome flu-like side effects in almost all patients.” The Merck Manual of Diagnosis & Therapy906 (Robert Berkow & Andrew J. Fletcher eds., 16thed. 1992). -3- I. The Evidence In June 1991, plaintiff began seeking treatment fro m Dr. Pena, a family practitioner, for headaches, fatigue, and depressio n. In September 1992, blood tests established that plaintiff, an admitted intravenous drug user, had hepatitis. She later started having abdominal pain and diarrhe a, for which she also sought treatment, and ultimately stopped working in Decemb er 1992. Plaintiff said that she had been falling asleep at work for days before she left. In January 1993, plaintiff was still complaining of fatigue and Dr. Pena referred her to Dr. Burdick, a gastroenterologist, who had a long discussion with her about the potential for treatment with Interfer on. 2 Dr. Burdick reported that plaintiff’s chronic fatigue was probably secondary to her hepatitis, noting that “fatigue does not differentiate between patients wi th mild or severe liver disease.” Appellant’s App., Vol. II, at 197. After plaintiff’s longtime boyfriend died of hepati tis in March 1993, she became even more depressed. Plaintiff moved to Cal ifornia, where she slipped back into using drugs. She continued to suffer occ asional bouts of diarrhea, frequent headaches, fatigue, and peripheral swellin g, and sought treatment from3 Chronic active hepatitis, sometimes called chronic aggressive hepatitis is a

“ serious disorder [which] often results in liver failure an d/or cirrhosis. . . . Nonspecific malaise, anorexia, and fatigue often do minate the clinical picture, sometimes with low-grade fever and nondescript uppe r abdominal discomfort. Jaundice is variable and is not always present.” T he Merck Manual of Diagnosis & Therapy , at 905. “Prognosis is highly variable. . . . Ca ses associated with [hepatitis B virus] or [hepatitis C virus] tend to progress and . . . are usually resistant to therapy.” Id. at 906. -4- Dr. Allen, an internist. Dr. Allen referred plaint iff to Dr. Olson, a gastroenterologist, who performed a liver biopsy. The biopsy established that plaintiff had chronic active hepatitis C, 3 and Dr. Olson recommended treatment with Interferon. Because depression can be a side effect of Interferon, Dr. Olson advised that the treatment be delayed three months, to see if plaintiff’s depression resolved. In August 1993, Dr. Allen wrote a letterto the Social Security Administration discussing Dr. Olson’s intention of beginning Interferon treatment once plaintiff’s depression resolved. Dr. Allen st ated that he believed plaintiff was presently disabled, but that her future course might improve--presumably with Interferon treatment--to the point that she wo uld no longer be disabled. In July 1993, plaintiff saw Dr. Kerwin for a secondopinion. Plaintiff complained of fatigue, forgetfulness, blackouts, an d swelling. Dr. Kerwin noted that most of plaintiff’s symptoms were related to h er hepatitis and depression. Plaintiff saw Dr. Kerwin numerous times over the ne xt eight months, complaining of fatigue and depression, for which she was prescr ibed antidepressants and-5-

antianxiety medication. In November 1993, Dr. Kerw in filled out a form for plaintiff’s lender on which he stated that plaintif f had been temporarily totally disabled since December 1992, and that her anticipated recovery date was “indefinite.” Id. at 281. At the beginning of May 1994, plaintiff moved to Ok lahoma so that she could be treated at the Choctaw Nation Hospital. P laintiff was first seen there on May 3 and was still being treated there at the time of the hearing before the ALJ in December 1994. Liver tests performed in May andJune 1994 showed an upward trend in certain liver enzymes, and hospital records showed continued complaints of headaches, diarrhea, abdominal pain, decreased energy, depression and anxiety. Plaintiff was prescribed antidepressants and antianxiety medications, but was advised to avoid Tylenol and other medicati ons that are detoxified by the liver. At her request, plaintiff also was referred to Dr. Golla, a gastroenterologist. Although plaintiff testified at the administrative hearing that Dr. Golla was treating her, the record does not contain any of hi s treatment notes or other medical records. On December 14, 1994, Dr. Deese, plaintiff’s treati ng physician at the Choctaw Nation Hospital, opined that plaintiff’s he patitis resulted in a “[s]evere limitation of functional capacity,” making her “inc apable” of sedentary activity. Id. at 285. Dr. Deese also opined that plaintiff’s de pression resulted in a-6-

“[m]oderate limitation” of functional capacity, mak ing her “able to engage in only limited stress situations and engage in only limite d interpersonal relations.” Id. He further stated that plaintiff was “depressed fro m her chronic disease which has not been treated and is mentally debilitating.” Id

. at 286. At the administrative hearing in December 1994, pla intiff said that her primary concern since December 1992 had been to gettreatment before her liver became so bad that it could not be treated. She sa id she had not yet been able to receive Interferon treatment because she could not afford it. She explained that she could not qualify for Medicaid without a findin g of disability, and the Choctaw Nation Hospital told her it did not have th e funds to pay for the treatment. Plaintiff said that her only source of income were the welfare payments she received for her teenage daughter who lived with her. Plaintiff testified to very limited daily activitie s. She felt that her chronic fatigue was the most limiting of her symptoms. Pla intiff also testified that she suffered almost daily headaches, which could last a s long as four or five hours. She said she did not take Tylenol or pain relievers because of her liver and was able to obtain relief only by lying down, sometimes with ice packs on her head. Plaintiff said she continued to be depressed and wa s easily upset. Plaintiff also described difficulties with bouts of diarrhea, stom ach pains, and nausea. She felt that her condition had gotten worse since December 1992.-7-

At the conclusion of plaintiff’s testimony, a vocat ional expert (VE) was called to testify. In response to the ALJ’s questi on, the VE testified that if plaintiff’s only limitations were that she could li ft no more than twenty pounds and frequently lift or carry no more than ten pound s, then she would be able to perform all of the jobs comprising her past relevant work, except those that were performed at the medium exertional level. If he to ok into account all the limitations to which plaintiff testified, however, then the VE did not think that plaintiff would be employable. The VE explained th at plaintiff’s daily headaches, which she said were relieved only by lying down, wo uld eliminate even sedentary work. He also identified her fatigue and depressio n as problematic, saying: “I really feel that the cumulative effects of all thes e things, her lack of energy as she’s demonstrated today even in her manner today, I feel that she just wouldn’t have enough energy to sit eight hours a day and do sedentary work.” Id. at 104. In February 1995, the Commissioner arranged for pla intiff to be examined by Dr. Inbody, a psychiatrist, who was also given w hat he described as “a rather extensive medical record” to review. Id. at 288. Dr. Inbody diagnosed plaintiff with moderate depression and ongoing polysubstance abuse. He reported that plaintiff had severe psychosocial stressors and gav e her a “global assessment of functioning” (GAF) score of forty-five, id. at 290, which meant that she had “[s]erious symptoms (e.g., suicidal ideation, sever e obsessional rituals, frequent-8-

shoplifting) OR any serious impairment in social, o ccupational or school functioning (e.g., no friends, unable to keep a job ),” American Psychiatric Association, Diagnostic and Statistical Manual of M ental Disorders 32 (4th ed. 1994). Dr. Inbody’s report consisted of a narrative portio n and an attached mental RFC form, provided by the Commissioner. On the latter, Dr. Inbody reported that plaintiff had limited but satisfactory abilities to : (1) follow work rules; (2) understand, remember and carry out simple, detailed , and complex job instructions; and (3) maintain her personal appearance. He also reported that plaintiff was seriously limited in her abilities to : (1) relate to co-workers; (2) deal with the public; (3) use judgment with the pub lic; (4) interact with supervisors; (5) deal with work stresses; (6) funct ion independently; (7) maintain attention and concentration; (8) behave in an emoti onally stable manner; (9) relate predictably in social situations; and (10) demonstr ate reliability. See Appellant’s App. Vol. II, at 291-92.

II. Recent Statutory Amendments Before considering plaintiff’s challenges to the AL J’s decision, we must first address the Commissioner’s argument on appeal that we should affirm the denial of benefits based on recent changes to the S ocial Security Act. On-9-

March 29, 1996, Congress amended provisions of bothTitle II (disability insurance benefits) and Title XVI (supplemental sec urity income) to provide that “[a]n individual shall not be considered to be disabled for purposes of this title if alcoholism or drug addiction would (but for this su bparagraph) be a contributing factor material to the Commissioner’s determinationthat the individual is disabled.” Contract With America Advancement Act o f 1996, Pub. L. 104-121, § 105(a)(1), (b)(1), 110 Stat. 847, 852, 853 (codif ied as amended at 42 U.S.C. §§ 423(d)(2)(C), 1382c(a)(3)(J) (1997)). The Commi ssioner contends that these amendments apply to all Title II and Title XVI case s still pending before either the agency or the courts on March 26, 1996, includi ng this one. We need not decide whether these amendments apply t o the present case because they do not affect our review at this stage of the proceedings. The implementing regulations make clear that a finding of disability by the Commissioner is a condition precedent to an application of the amendatory language: “If [the Commissioner] find[s] you are d isabled and ha[s] medical evidence of your drug addiction or alcoholism, [the Commissioner] must determine whether your drug addiction or alcoholismis a contributing factor material to the determination of disability.” 20 C .F.R. §§ 404.1535(a), 416.935(a). To make this determination, the Commis sioner must decide whether the claimant would still be found disabled if the c laimant stopped using drugs.-10-

See id. §§ 404.1535(b)(1), 416.935(b)(1). If so, then the drug addiction is nota contributing factor material to the finding of disa bility. See id. §§ 404.1535(b)(2)(ii), 416.935(b)(2)(ii). If, howe ver, the claimant’s remaining impairments would not be disabling without the drug addiction, then the drug addiction is a contributing factor material to the finding of d isability. See id. §§ 404.1535(b)(2)(I), 416.935(b)(2)(I). For us to attempt to apply the amendments, when the Commissioner has made no finding of disability, would be to put the proverbial cart before the horse. Contrary to the Commissioner’s suggestion, we may not substitute our judgment for his by deciding whether plaintiff’s drug use constitutes an addiction that would be a contributing factor material to a f inding of disability were the Commissioner to make such a finding. Whether plaintiff is disabled and what role her drug use plays in any disability are quest ions for the Commissioner to address on remand. For now, we consider only wheth er the Commissioner correctly determined that plaintiff was not disable d, based on the record as a whole.

III. Plaintiff’s Challenges to The ALJ’s Decision The ALJ found that plaintiff’s hepatitis, depressio n, and substance abuse constituted severe impairments that restricted her to light or sedentary jobs-11-

requiring only the ability to understand, remember, and carry out simple instructions. In reaching this conclusion, the ALJ rejected most of plaintiff’s allegations about her nonexertional limitations, an d also rejected the opinions of plaintiff’s treating and examining physicians abouther ability to work. Plaintiff challenges the ALJ’s decision on three gr ounds: (1) the ALJ did not properly consider medical source opinions; (2) the ALJ did not properly evaluate the credibility of her subjective complain ts; and (3) the ALJ’s determination that she retained the residual functi onal capacity to perform sustained light and sedentary work was not supporte d by substantial evidence. Plaintiff’s arguments highlight several interrelate d errors that undermine the ALJ’s entire decision. The first error was the ALJ’s mischaracterization o f the level of plaintiff’s daily activities. This error relates to plaintiff’ s first and second challenges to the ALJ’ decision. In the spring of 1993, plaintiff fi lled out three forms containing questions about her daily activities and the effectof her impairments on those activities. Her mother, Mrs. Camp, also completed a form asking similar questions in September 1993. According to the ALJ, these forms showed that, despite her impairments, plaintiff still got up in the morning, took a shower and did dishes or laundry. Further, plaintiff was able to do her own household chores,-12-

such as preparing meals and grocery shopping, as we ll as maintain her hobbies, watch television, read a significant amount, and dr ive. In so describing plaintiff’s activities, the ALJ ig nored other statements on the same forms that evidenced limitations on plaint iff’s activities. For instance, in concluding that plaintiff did a significant amou nt of reading, the ALJ apparently focused on Mrs. Camp’s recitation of the wide variety of materials plaintiff read, while ignoring plaintiff’s statemen t that she fell asleep whenever she watched television or read. Likewise, the ALJ mentioned only that plaintiff per formed some household chores, while ignoring her statements that househol d chores were the most difficult activity and that she had to stop and sta rt because she tired easily while doing them. Also, Mrs. Camp said she did not thinkplaintiff would do well completing household chores if she were under time demands. She reported that plaintiff tended to get side-tracked because she wo uld start a task, then have to stop due to fatigue or pain, and would forget to co mplete the task before turning to another one. Until she moved in with her parent s for a brief period in mid-1993, plaintiff reported that she sometimes wai ted several days to do her dishes. Even after plaintiff left her parents’ hom e and moved in with her cousin, Mrs. Camp reported that she continued to do plainti ff’s laundry for her.-13-

Additionally, while the ALJ was correct in noting that plaintiff said she usually got up, showered, and did “what really stan ds out to be done,” he overlooked the remainder of her statement that she would then lie down on the couch. Id. at 170. Similarly, while plaintiff did list “deco rating & dressing teddy bears in peacock chairs” and silk flower arrangements as hobbies, she reported that she could not work for a long time on a projec t. Id. at 172. The ALJ also failed to mention that plaintiff’s meal preparation consisted primarily of microwave dinners, sandwiches, and cold cereal, andthat even grocery shopping was tiring for plaintiff. By mentioning only parts of plaintiff’s and her mother’s statements, while leaving out other important parts, the ALJ engaged in the kind of selective and misleading evidentiary review that this and other c ourts have rejected. See, e.g. , Sisco v. United States Dep’t of Health & Human Serv s. , 10 F.3d 739, 743 (10th Cir. 1993); Teter v. Heckler , 775 F.2d 1104, 1106 (10th Cir. 1985); Binion ex r el. Binion v. Chater , 108 F.3d 780, 788 (7th Cir. 1997); Fiorello v. He ckler , 725 F.2d 174, 175-76 (2d Cir. 1983). The ALJ then used his mischaracterization of the level of plaintiff’s daily activities to discount h er subjective allegations of disabling nonexertional limitations and to discredi t the RFC assessment of Dr. Deese, plaintiff’s treating physician at the Ch octaw Nation Hospital. The ALJ also used plaintiff’s statements from 1993 to discr edit her testimony about the-14-

level of her activities in December 1994, without c onsidering her testimony that her condition had worsened over time. In evaluating whether plaintiff’s nonexertional lim itations were disabling, the ALJ said he followed the familiar framework setforth in Luna v. Bowen , 834 F.2d 161, 163-165 (10th Cir. 1987). The Lunaanalysis proceeds as follows: (1) if the objective medical evidence establishes that the claimant has a physical or mental impairment capable of producing the nonexert ional limitation at issue; and (2) accepting all the claimant’s allegations as tru e, there is a loose nexus between the impairment and the nonexertional limitation all eged; then (3) the ALJ must consider all of the evidence--objective and subject ive--to determine whether the nonexertional limitation is disabling. Id. at 163. The ALJ apparently concluded that there was a loose nexus between plaintiff’s subjective symptoms and her mental and physical impairments, and the record bears this out. Nonetheless, the ALJ discou nted the severity of plaintiff’s complaints at the third step of the Lunaanalysis for the following reasons: (1) “the documentary medical evidence shows the claimant’s hepatitis is not of such severity as to be productive of severe, disabling s ymptomatology,” id. at 39-40; (2) although plaintiff complained of diarrhea, vomi ting, and abdominal pain, she showed “no significant weight loss,” id. at 40; and (3) although plaintiff’s hearing testimony “show[ed] restricted daily activi ties,” prior statements by-15-

plaintiff and her mother showed less restricted act ivities, id. The ALJ also stated that plaintiff’s “level of functioning appears to b e affected primarily by her depression and renewed use of drugs,” but then wenton to say that “[r]ecords show the claimant’s use of drugs is voluntary, and that her depression is ‘situational.’” Id. Turning to the first reason articulated by the ALJ, we note that an ALJ may consider the lack of an objective medical basis to support the degree of limitation alleged as a factor in evaluating a claimant’s cred ibility, but the ALJ may not use the lack of corroborating objective medical evidenc e to disregard the claimant’s allegations. See Luna , 834 F.2d at 165. In any event, the medical evide nce concerning the effect of plaintiff’s hepatitis on h er ability to work generally contradicts the ALJ’s conclusion. Dr. Burdick, the first gastroenterologist to whom plaintiff was referred, stated that “fatigue d oes not differentiate between patients with mild or severe liver disease.” Id. at 197. Further, those of plaintiff’s physicians who expressed an opinion con sistently concluded that plaintiff’s hepatitis severely impacted her abilityto work. Thus, the medical evidence concerning the severity of plaintiff’s hep atitis does not provide a basis for rejecting plaintiff’s complaints of chronic fat igue and other hepatitis-related symptoms.-16-

Although the second reason articulated by the ALJ m ay provide a basis for discounting the severity of plaintiff’s abdominal p ain, diarrhea, and nausea, it does not undermine her complaints of other nonexert ional limitations, such as frequent headaches or fatigue, which plaintiff desc ribed as her most limiting symptom. The ALJ’s third reason for discounting pl aintiff’s subjective complaints is based on his mischaracterization of h er level of daily activities, which we previously discuss and reject. The ALJ’s conclusion that plaintiff’s renewed drug use is one of the primary factors affecting her ability to function i s not supported by the record. In fact, except for plaintiff’s hearing testimony, the record is essentially devoid of evidence about the effects of plaintiff’s drug use. The only evidence directly addressing the effects of plaintiff’s drug use is h er testimony that she started using heroin again when she moved to California bec ause it helped her escape her feelings and made it easier to cope with her physic al symptoms, that smoking marijuana made her headaches better, and that using crank, which she had done five or six times since moving to Oklahoma, ultimat ely made her feel worse. This testimony does not provide substantial evidence in support of the ALJ’s conclusion about the effects of plaintiff’s drug us e on her ability to function. Nor is there record support for the ALJ’s suggesti on that the effects of plaintiff’s depression could be discounted because her depression was merely-17-

“situational.” Dr. Olson, the gastroenterologist w ho treated plaintiff shortly after her boyfriend died, did state in his notes that pla intiff’s “problems with depression . . . apparently are situational,” id. at 247, and he hoped her depression would resolve sufficiently in three months’ time to begin Interferon treatment, id. at 243. The medical record, however, is filled wit h treatment notes dating back as far as September 1992 that mention plaintiff’s depr ession and reflect treatment with antidepressants. Moreover, Dr. Inbody’s diagn osis of moderate depression as late as February 1995 belies Dr. Olson’s suggest ion in June 1993 that plaintiff’s depression was merely “situational.” The ALJ also erred by selectively crediting and rej ecting portions of Dr. Inbody’s report. The ALJ essentially credited all Dr. Inbody’s findings and conclusions in the narrative portion of the report about plaintiff’s mental status, but then rejected all his conclusions on the attach ed form about how plaintiff’s mental status affected her ability to work. The AL J explained that he did not find plaintiff’s hearing testimony credible and, therefo re, “[i]n view of Dr. Inbody’s reliance on the claimant’s complaints, the Administ rative Law Judge gives little evidentiary weight to the medical opinion of Dr. In body.” Id. at 38-39. The ALJ also stated that Dr. Inbody’s opinions were inconsi stent with his objective findings.-18-

A physician’s medical opinion includes not only his clinical findings and test interpretations, but also his subjective judgm ents. Cf. Lester v. Chater , 81 F.3d 821, 832 (9th Cir. 1995). Generally, an ALJ m ay not rely on some portions of a physician’s medical report, while disregarding others. See Switzer v. Heckler , 742 F.2d 382, 385-86 (7th Cir. 1984) (“[T]he Secr etary’s attempt to use only the portions [of a doctor’s report] favorable to her position, while ignoring other parts, is improper.”). Moreover, the reasons the ALJ recited for rejecting a portion of Dr. Inbody’s opinion cannot withstand sc rutiny. First, contrary to the ALJ’s assumption, it is not clear that the opinions Dr. Inbody expressed about plaintiff’s ability to work were based on her subje ctive complaints, rather than on Dr. Inbody’s own medical judgment based on his exam ination. In any event, as we discuss above, the ALJ’s analysis of plaintiff’s subjective complaints was severely flawed and, therefore, cannot provide a pr oper basis for discrediting Dr. Inbody’s opinions. Further, while a conflict b etween Dr. Inbody’s findings and his conclusions might justify rejecting the latter, the ALJ did not explain how Dr. Inbody’s conclusions were inconsistent with his findings. The only conflict that we see is between Dr. Inbody’s statement in th e narrative portion of his report that plaintiff “showed no disturbances in attention and concentration,” Appellant’s App., Vol. II, at 289, and his indicati on on the attached form concerning work-related abilities that plaintiff’s ability to “[m]aintain-19-

attention/concentration” was “seriously limited, but not precluded,” id. at 291. Otherwise, Dr. Inbody’s statements in the narrative portion of his report do not appear to conflict with his opinions on the form ab out plaintiff’s ability to work. The ALJ also erred in rejecting the RFC assessment of Dr. Deese on the grounds that it was not supported by either Dr. Inb ody’s mental status findings, the clinical findings, or the level of plaintiff’s daily activities. Again, the ALJ did not explain what conflict existed between Dr. I nbody’s mental status findings and Dr. Deese’s conclusions, and we see no conflictbetween the two. Dr. Deese’s conclusion that plaintiff’s depression imposed moderate limitations on her ability to work, enabling her “to engage in only limited stress situations and [to] engage in only limited interpersonal relat ions,” id. at 285, was entirely consistent with Dr. Inbody’s conclusions about plai ntiff’s abilities to handle stress and to relate to other people. The second reason the ALJ gave for rejecting Dr. De ese’s opinion appears to relate to his assessment of how plaintiff’s hepatitis, rather than her depression, affected her ability to work. The ALJ simply state d that the clinical findings did not support Dr. Deese’s opinion, without providing any further explanation. Our review of the record shows that the medical evidenc e consistently established the existence of plaintiff’s chronic fatigue, as well a s other symptoms related to her hepatitis. We see no objective medical evidence su ggesting that the severity of-20-

plaintiff’s hepatitis was not sufficient to produce symptoms as severe as those of which plaintiff consistently complained. We turn, then, to the final reason the ALJ gave forrejecting Dr. Deese’s opinion: that it was not supported by the level of plaintiff’s daily activities. The ALJ’s distorted assessment of plaintiff’s daily act ivities was not supported by the record, however, so it could not provide a proper b asis for discounting Dr. Deese’s opinion. Having discussed the ALJ’s errors in considering me dical source opinions and assessing plaintiff’s subjective allegations of nonexertional limitations, we turn to plaintiff’s final challenge to the ALJ’s de cision. Plaintiff contends that the evidence does not support the ALJ’s conclusion that she retains the RFC for sustained work at the light or sedentary exertional levels. “In order to engage in gainful activity, a person must be capable of perfo rming on a reasonably regular basis.” Byron v. Heckler , 742 F.2d 1232, 1235 (10th Cir. 1984); see also Washington , 37 F.3d at 1442. The record is replete with evidence that plaintiff suffers from chronic fatigue. Plaintiff stated that before she stopped working, she had been falling asleep at work and that her boss had caught her asl eep at a machine. Plaintiff also said that she had to stop and start household chores and that she would have to go out to the car and lie down after shopping fo r thirty minutes. She testified-21-

that it took her three months to complete twenty-se ven days of community service she was ordered to perform in early 1994, because s he was never physically able to work past noon. Even the VE commented that he d id not think plaintiff would have the stamina to do even sedentary work for eight hours a day, based upon his observation of her at the hearing. Despite this ev idence, the ALJ’s assessment of plaintiff’s RFC does not take into account the effe cts of her chronic fatigue. The ALJ either ignored or discredited, without a valid explanation, the evidence supporting plaintiff’s contention that she cannot w ork on a sustained basis.

IV. Conclusion In light of the numerous errors made by the ALJ, we cannot say that the Commissioner’s decision denying social security ben efits is supported by substantial evidence or adheres to applicable legal standards. Therefore, we must reverse the denial of benefits and remand for furth er proceedings. If, on remand, the Commissioner finds plaintiff disabled, then he must consider whether she has a drug addiction that is a contributing factor mate rial to the determination of disability and otherwise comply with the 1996 congr essional amendments to Titles II and XVI.-22-

The judgment is REVERSED, and the case is REMANDED to the district court with directions to remand to the Commissionerfor further proceedings.

ENTERED FOR THE COURT

Carlos F. Lucero Circuit Judge