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UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT TACOMA

JULIE A. WILLIAMS,

Plaintiff,

v.

JO ANNE B. BARNHART, Commissioner of

Social Security Administration,

Defendant.

CASE NO. C05-5622RBL

REPORT AND

RECOMMENDATION

Noted for April 7, 2006

This matter has been referred to Magistrate Judge J. Kelley Arnold pursuant to 28 U.S.C. §

636(b)(1)(B) and Local Magistrates Rule MJR 4(a)(4) and as authorized by Mathews, secretary of H.E.W.

v. Weber, 423 U.S. 261 (1976). This matter has been fully briefed. After carefully reviewing the record,

the undersigned recommends that the Court remand the matter for further proceedings.

FACTUAL BACKGROUND

Plaintiff, Julie Williams, was born in 1959. She completed the eleventh grade of high school, and

she has past releveant work experince as a general clerk and automobile parts salvager. Ms. Williams

testified that she worked with her ex-husband in a business recycling automobile parts. Apparently, they 

bought catalytic converters and radiators from wrecking yards, tore them down, cleaned them, and shipped

them to Alabama. The work also required her to spend one or two hours per month on paperwork,

keeping track of the money for their tax accountant. She did this work from 1989 to 1995, until she

started falling down and dropping things. She was told by Dr. Newell that she had arthritis and she was

referred her to Dr. Halpin for ankle instability. 

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PROCEDURAL HISTORY

Ms. Williams filed an application for Title XVI Supplemental Security Income (“SSI”) benefits on

February 12, 1999 (Tr. 131). Plaintiff alleged disability due to neck, hip, shoulder, hand and ankle pain,

and fatigue from arthritis and Hepatitis C (Tr. 50). Her claims were denied on initial review. After two

hearings, held on March 7, 2001 and June 5, 2001, the administrative law judge (“ALJ”) further denied her

claim in a decision dated October 1, 2001, finding that she could perform past relevant work as an

accounting clerk, despite arthritis which limited her fine and gross manipulation in her left hand and her

ability to lift and carry objects. (Tr. 47-56). Ms. Williams appealed to the Appeals Council, which

remanded the case to resolve issues relating to the vocational analysis. (Tr. 63-65).

A supplemental hearing was conducted by a different ALJ on September 15, 2003. The ALJ

denied plaintiff’s claims in a decision dated April 24, 2004, finding that there was nothing wrong with

her hands, but that she was limited to sedentary level work due to arthritis in her ankle and Hepatitis C.

(Tr. 25-42). The Appeals Council denied Williams’ request for review on August 6, 2005. (Tr. 11-13).

A timely Complaint was subsequently filed in this Court for judicial review of the final

administrative decision. In her Opening Brief, Ms. Williams argues the ALJ and the administration’s

decision is erroneous and argues the court should reverse the administrative decision and award benefits. 

Specifically, Ms. Williams argues the following errors: (i) the ALJ’s analysis of Ms. Williams’ hand

impairment is contrary to the overwhelming evidence of record and is legally erroneous under the step-two

standards; (ii) the ALJ’s rejection of the opinions of Dr. Cooper, the treating physician, was legal error;

(iii) the ALJ accepted Dr. Layton’s finding that Williams did not have rheumatoid arthritis, but then

improperly ignored this examining specialist’s diagnosis of nodal osteoarthritis; (iv) the ALJ’s analysis of

the lay evidence was contrary to Ninth Circuit law, as he rejected the observations of friends and family

members solely because of a perceived lack of objective medical evidence; (v) the ALJ erred by failing to

include handling and fingering limitations in his RFC finding, and by relying on VE testimony in response

to an incomplete hypothetical question; and (vi) the jobs identified by the VE were light level jobs, and do

not reflect the limitation to standing/walking only two hours in an eight hour day.

After reviewing the record, this court finds that the administrative decision should be remanded for

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further proceedings. 

 DISCUSSION

The Commissioner’s decision must be upheld if the ALJ applied the proper legal standard and the

decision is supported by substantial evidence in the record. Drouin v. Sullivan, 966 F.2d 1255, 1257 (9th

Cir. 1992); Hoffman v. Heckler, 785 F.2d 1423, 1425 (9th Cir. 1986). Substantial evidence is such relevant

evidence as a reasonable mind might accept as adequate to support a conclusion. Richardson v. Perales,

402 U.S. 389, 401 (1971); Fife v. Heckler, 767 F.2d 1427, 1429 (9th Cir. 1985). It is more than a scintilla

but less than a preponderance. Sorenson v. Weinberger, 514 F.2d 1112, 1119 n.10 (9th Cir. 1975); Carr v.

Sullivan, 772 F. Supp. 522, 525 (E.D. Wash. 1991). If the evidence admits of more than one rational

interpretation, this Court must uphold the Commissioner’s decision. Allen v. Heckler, 749 F.2d 577, 579

(9th Cir. 1984).

A. THE ALJ ERRED WHEN HE FAILED TO CONSIDER MS. WILLIAMS’ ARTHRITIS AS A

“SEVERE” IMPAIRMENT

Step-two of the administration’s evaluation process requires the ALJ to determine whether an

impairment is severe or not severe. 20 C.F.R. §§ 404.1520, 416.920 (1996). An impairment is "not severe"

if it does not "significantly limit" the ability to do basic work activities. 20 C.F.R. §§ 404.1521(a),

416.921(a). The Social Security Regulations and Rulings, as well as case law applying them, discuss the

step-two severity determination in terms of what is "not severe." According to the Commissioner's

regulations, "an impairment is not severe if it does not significantly limit [the claimant's] physical ability to

do basic work activities," 20 C.F.R. §§ 404.1520(c), 404.1521(a)(1991). Basic work activities are

"abilities and aptitudes necessary to do most jobs, including, for example, walking, standing, sitting, lifting,

pushing, pulling, reaching, carrying or handling." 20 C.F.R. § 140.1521(b); Social Security Ruling 85- 28

("SSR 85-28"). An impairment or combination of impairments can be found "not severe" only if the

evidence establishes a slight abnormality that has "no more than a minimal effect on an individuals ability to

work." See SSR 85-28; Yuckert v. Bowen, 841 F.2d 303, 306 (9th Cir. 1998) (adopting SSR

85-28)(emphasis added).

Plaintiff alleges she is unable to work due, in large part, to her inability to effectively use her hands

to grip and hold onto items. For instance, she has problems gripping the steering wheel with her hands, and

only drives short distances. (Tr. 519). Her ability to use her hands had gotten worse during the 21⁄2 years

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since the first hearing, and it hurt just to sign her name and turn pages in a book. She can wash dishes, but

not glasses because she drops and breaks them. (Tr. 520). She also drops items such as her wallet and food.

(Tr. 521). She also testified that her right hand has gotten worse over time, and she has to soak it in hot

water in the mornings. She testified that she could write for up to 10 minutes before her hand cramped up

and started hurting. (Tr. 471). She would then soak it in hot water and rest it for a couple of hours before

writing more. She stated that it took her several days to complete the SSI questionnaires. (Tr. 474-475).

She cannot pick up small items such as needles because she cannot feel them. (Tr. 471). She has to use

big-handled utensils, and does not use knives at all anymore because she cut herself when she tried. (Tr.

472).

In his decision dated April 24, 2004, ALJ Batiste stated, “I find that the claimant has no medically

determinable impairment that could cause her alleged limitations in handling and fingering.” (Tr. 38). In

making this decision, the ALJ critically analyzed the opinion and treatment of Dr. Cooper (see discussion

below), concluding that Ms. Williams did not suffer from rheumatoid arthritis. The ALJ did not assign any

limitations or consider any limitations of the use of her hands in his analysis of the other impairments that

were found to be severe.

A review of the medical record reflects sufficient evidence was presented by Plaintiff to support her

allegations of limited use of her hands, including the following cited by plaintiff in her Reply Brief:

• 3/25/99 Nurse Oliver reviewed a lab study that reflected a positive RA (Tr. 220);

• An 4/10/99 lab report indicated a positive ANA screen (Tr. 209);

• 6/14/99 Dr. Thompson noted decreased range of motion in the left wrist (Tr. 243);

• An 8/17/00 x-ray of the left wrist showed changes consistent with arthritis (Tr. 274);

• 8/17/00 Dr. Cooper reported swelling in the PIP, DIP and MCP joints of the fingers2, with

decreased grip strength (Tr. 256);

• 10/13/00 Dr. Cooper noted definite decreased grip strength bilaterally (Tr. 255);

• 4/10/01 Dr. Kirkpatrick saw enlargement of the DIP joints (Tr. 308);

• 3/14/01 Dr. Cooper noted considerable erythema3 over 2/3s of her hands (Tr. 317);

• On 7/17/01 Dr. Layton reported Heberden’s nodes4 (Tr. 322);

• 8/16/01 Dr. Cooper observed deformities of MCP & DIP joints of both hands (Tr. 386);

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• On 9/27/01 Dr. Cooper noted erythema and warmth around her MCP joints with decreased grip

strength (Tr. 382);

• 10/19/01 Dr. Cooper commented on a positive ANA titer with obvious swelling at the MCP joints

and decreased grip strength (Tr. 379);

• On 11/7/01 Dr. Layton reported Heberden’s nodes (Tr. 321);

• 7/11/02 Dr. Cooper observed swelling of MCP joints of the second digit bilaterally with slow and

limited range of motion of the hands. She could not make a tight fist and flexion was limited. Wrist ROM

was limited, particularly in dorsi flexion and ulnar deviation. Very limited ability to pronate. (Tr. 361);

• 3/18/03 Dr. Cooper noted enlargement and erythema of several MCP and DIP joints (Tr. 431);

and

• 6/6/03 Dr. Cooper reported limited strength in the hands (Tr. 426).

Further supporting a finding that Ms. Williams has properly supported an impairment related to the use of

her hands is the administration’s earlier decision by ALJ Denny Allen, dated October 1, 2001. Judge Allen

reviewed the same medical evidence, and he found that her arthritis in her hands was a “severe” impairment

(Tr. 53), and he opined that she has “limited fine and gross manipulation of the left hand” (Tr. 54).

In sum, the court should find that the administration’s analysis of Ms. Williams’ hand impairment(s)

was erroneous given the medical evidence of record supporting Ms. Willams’ allegations of limited us of

her hands. 

B. THE ALJ FAILED TO PROPERLY CONSIDER THE MEDICAL EVIDENCE

The ALJ is entitled to resolve conflicts in the medical evidence. Sprague v. Bowen, 812 F.2d 1226,

1230 (9th Cir. 1987). He may not, however, substitute his own opinion for that of qualified medical

experts. Walden v. Schweiker, 672 F.2d 835, 839 (11th Cir. 1982). If a treating doctor’s opinion is

contradicted by another doctor, the Commissioner may not reject this opinion without providing “specific

and legitimate reasons” supported by substantial evidence in the record for doing so. Murray v. Heckler,

722 F.2d 499, 502 (9th Cir. 1983). “ The opinion of a nonexamining physician cannot by itself constitute

substantial evidence that justifies the rejection of the opinion of either an examining physician or a treating

physician.” Lester v. Chater, 81 F.3d 821, 831 (9th Cir. 1996).

Here, Plaintiff argues the ALJ improperly rejected the opinion of Dr. Cooper. Plaintiff testified that

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her treating physician is Dr. Cooper, and that he prescribes hydrocodone and methotrexate for her arthritis

and pain, which help her function, but also make her fuzzy-headed. (Tr. 466). Dr. Cooper saw her for

treatment at least 54 times over the 31⁄2 year period. Dr. Cooper consistently reported that Ms. Williams

had severe limitations in the ability to use her hands for repetitive and fine motions, and is further limited

due to the arthritis in her hip and ankle. (Tr. 256, 292-293, 317-318, 347-348, 361, 367, 380, 381, 396-397

and 431).

The ALJ noted Dr. Cooper’s examinations and medical reports at various points in his opinion with

respect to Plaintiff’s various medical conditions. Thus it is not clear that the ALJ necessarily rejected all of

Dr. Cooper’s assessments. However, when discussing Plaintiff’s hand limitations, the ALJ did not accept

Dr. Cooper’s opinion. He stated:

The claimant’s treating physician has stated that the claimant has objective signs of problems

with her hands including swelling in various joints in her hands. No other doctor, including

specialists in the field, has noted swelling in any pattern other than the mild Heberden’s

nodes. The majority of tests for rheumatoid arthritis have been negative and her most recent

sedimentation rate was zero, suggesting no inflammatory process. Dr. Cooper referred the

claimant to Dr. Layton to clarify the claimant’s diagnosis, but he has ignored Dr. Layton’s

specific findings that she did not have rheumatoid arthritis and that she should not be on

methotrexate. Dr. Cooper clearly accepted that Dr. Layton was an appropriate expert to

determine the claimant’s diagnosis, and I will give Dr. Layton’s opinion as a specialist

greater weight tn Dr. Cooper’s opinion. Particularly, as the pattern of the claimant’s hand

limitations have varied greatly, and other doctors and medical professionals have also been

unable to duplicate Dr. Cooper’s findings on examination. The claimant does have early

Heberden’s nodes, but these would not be expected to cause the claimant any significant

limitations in her hand functioning at this early stage.

[Omitted]

Dr. Cooper has apparently accepted the claimant’s reports of pain as true. He notes that she

has pain even when he finds no objective findings. He has also continued to treat her for

rheumatoid arthritis despite the recommendations of Dr. Layton that the claimant not be

treated for this. There is little evidence in the record that the claimant has responded to

methotrexate, a form of chemotherapy, but has been prescribing this for years, even though

this medication is only to be used for severe rheumatoid arthritis unresponsive to

conventional therapy. As the claimant probably does not even have rheumatoid arthritis,

and has a sedimentation rate of zero, it seems fair to conclude that her “rheumatoid

arthritis” is not severe.

(Tr. 38-39).

After reviewing the record, this court finds the ALJ’s analysis of the medical evidence improper. As

noted by Plaintiff in her the briefing, the ALJ unfairly characterized Dr. Cooper continued treatment with

methotrexate. Dr. Cooper prescribed that medication because it helped Williams’ pain. When she

discontinued using the medication, both in February 2000 due to vaginal bleeding, and in July 2001 upon

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the advice of Dr. Layton, her pain got worse. (Tr. 258, 386).

More importantly, the ALJ analysis and preference to Dr. Layton’s opinion fails to acknowledge the

existence of any problem whatsoever related to the pain and limited use of plaintiff’s hands. As noted

above the ALJ was very critical of a diagnosis of rheumatoid arthritis offered by Dr. Cooper, but that does

not negate the fact plaintiff has presented competent medical evidence to explain the allegations of pain and

limited use of her hands, including the opinion of Dr. Layton. Dr. Layton, diagnosed Williams with nodal

osteoarthritis in her hands. (Tr. 322). Osteoarthritis causes pain as alleged by Ms. Williams, and this

diagnosis was confirmed by the medical expert, Dr. Bigley, who testified that major pain and stiffness are

symptoms of osteoarthritis. (Tr. 501). In sum, the ALJ simply failed to acknowledge any of the medical

evidence which supports Plaintiff’s allegations on pain and limited use of her hands.

Having found that the ALJ failed to properly consider Ms. Williams hand impairment and the

medical evidence supporting limited use of her hands, it follows that the ALJ also erred: (i) in his

assessment of Plaintiff’s residual functional capacity (the ALJ’s RFC failed to include any limitation related

to the limited use of her hands), (ii) in his rejection of the lay testimony (it was based on his finding of “not

objective basis for her hand limitations”) and (iii) in is reliance on the Vocational Expert’s testimony (it was

based on an incomplete hypothetical that did not include any limitations related to the pain and limited use

of plaintiff’s hands). Based on the errors described above the matter should be remanded to the

administration. 

C. THE COURT SHOULD REMAND THE MATTER FOR FURTHER PROCEEDINGS

The decision whether to remand a case for additional evidence or simply to award benefits is within

the discretion of the court. Swenson v. Sullivan, 876 F.2d 683, 689 (9th Cir.1989) (citing Varney v.

Secretary of HHS, 859 F.2d 1396, 1399 (9th Cir., 1988). In Varney, the Ninth Circuit held that in cases

where the record is fully developed, a remand for further proceedings is unnecessary. Varney, 859 F.2d at

1401. See also Reddick v. Chater, 157 F.3d 715, 728-730 (9th Cir. 1998)(case not remanded for further

proceedings because it was clear from the record claimant was entitled to benefits); Swenson, 876 F.2d at

689 (directing an award of benefits where no useful purpose would be served by further proceedings);

Rodriguez v. Bowen, 876 F.2d 759, 763 (9th Cir.1989) (same); Winans v. Bowen, 853 F.2d 643, 647 (9th

Cir.1987) (accepting uncontradicted testimony as true and awarding benefits where the ALJ failed to

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provide clear and convincing reasons for discounting the opinion of claimant's treating physician).

It is clear from the record that the medical evidence supports a limitation related to Ms. Williams

allegations of pain and loss of strength in her hands. However, the level or degree of severity and the exact

date of impairment is unresolved. As plaintiff testified, the pain in her hands has increased since her

original administrative hearing with ALJ Allen. Accordingly, the matter must be remanded to provide the

administration the opportunity to properly consider the medical evidence related to Ms. Williams’ hands

and to consider whether this additional impairment would render her disabled, as defined by the Social

Security Act and regulations. 

CONCLUSION

Based on the foregoing discussion, the administrative decision should remanded for further

proceedings. Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure,

the parties shall have ten (10) days from service of this Report to file written objections. See also

Fed.R.Civ.P. 6. Failure to file objections will result in a waiver of those objections for purposes of appeal. 

Thomas v. Arn, 474 U.S. 140 (1985). Accommodating the time limit imposed by Rule 72(b), the clerk is

directed to set the matter for consideration on April 7, 2006, as noted in the caption.

DATED this 15th day of March, 2006.

 /s/ J. Kelley Arnold 

J. Kelley Arnold

U.S. Magistrate Judge

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