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UNITED STATES DISTRICT COURT

WESTERN DISTRICT OF WASHINGTON

AT SEATTLE

RICHARD K. MCDONALD, )

)

Plaintiff, ) CASE NO. C05-1827-RSM-MJB

)

v. ) REPORT AND 

) RECOMMENDATION

JO ANNE B. BARNHART, )

Commissioner of Social Security, )

)

Defendant. )

_________________________________ )

Plaintiff Richard McDonald (“Plaintiff”) appeals to the District Court from a final

decision of the Commissioner of the Social Security Administration (the

“Commissioner”) denying his application for Disability Insurance Benefits (“DIB”) and

Supplemental Security Income (“SSI”) disability benefits under Titles II and Title XVI

of the Social Security Act. 42 U.S.C. §§ 401-33 (2003); 42 U.S.C. §§ 1381-83(f). For

the reasons set forth below, it is recommended that the Commissioner's decision be

REVERSED and REMANDED for further administrative proceedings.

I. PROCEDURAL HISTORY

Plaintiff filed his application for DIB and SSI on October 17, 2001, claiming that

he became disabled by May 31, 1999 (Tr. 119-21) because of injuries to his neck, knee,

and back, and because of his bipolar disorder (Tr. 147). Plaintiff’s application was

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denied initially (Tr. 44) and on reconsideration (Tr. 37-39). Plaintiff requested a hearing

with an Administrative Law Judge (“ALJ”) (Tr. 53), and on July 17, 2004, Plaintiff

testified and was represented by counsel in an administrative hearing before ALJ Nichols

(Tr. 594-628). A vocational expert (“VE”), Olof R. Elofson, also testified. (Tr. 620-26.) 

The ALJ issued his decision finding Plaintiff not disabled on September 10, 2004. (Tr.

23-34.) The Appeals Council declined to review the ALJ’s decision on September 10,

2005 (Tr. 11-12), and the ALJ’s decision became the final decision of the

Commissioner. 20 C.F.R. § 404.984(b)(2). On November 3, 2005, Plaintiff filed his

appeal for review by this Court.

II. THE PARTIES’ POSITIONS

Plaintiff requests that the Court reverse the ALJ’s finding that Plaintiff is not

disabled and order payment of benefits or remand this case for further administrative

proceedings. Plaintiff argues that the ALJ erred in making his Residual Functional

Capacity (“RFC”) determination by improperly evaluating medical evidence, finding

Plaintiff not entirely credible, and rejecting statements from Plaintiff’s friend Ralinda

Morris. Plaintiff further contends that the ALJ erred in finding Plaintiff not disabled at

step five of the sequential evaluation process. 

The Commissioner argues that the ALJ applied correct legal standards and cited

substantial evidence, and his finding that Plaintiff is not disabled should therefore be

affirmed.

III. STANDARD OF REVIEW

This Court may set aside the Commissioner’s denial of disability benefits when

an ALJ’s findings are based on legal error or are not supported by substantial evidence in

the record as a whole. Penny v. Sullivan, 2 F.3d 953, 956 (9th Cir. 1993). Substantial

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evidence is defined as more than a mere scintilla but less than a preponderance; it is such

relevant evidence as a reasonable mind might accept as adequate to support a conclusion. 

Magallanes v. Bowen, 881 F.2d 747, 750 (9th Cir. 1989). The ALJ is responsible for

determining credibility, resolving conflicts in medical testimony, and for resolving

ambiguities. Andrews v. Shalala, 53 F.3d 1035, 1039 (9th Cir. 1995). Rather than

affirming the Commissioner’s decision by isolating a specific quantum of supporting

evidence, the Court must consider the record as a whole and weigh evidence that

supports and evidence that detracts from the Commissioner’s conclusion. Tackett v.

Apfel, 180 F.3d 1094, 1098 (9th Cir. 1999). Where the evidence is susceptible to more

than one rational interpretation, it is the Commissioner’s conclusion which must be

upheld. Sample v. Schweiker, 694 F.2d 639, 642 (9th Cir. 1982).

IV. EVALUATING DISABILITY

Claimants bear the burden of proving that they are disabled. Meanel v. Apfel, 172

F.3d 1111, 1113 (9th Cir. 1999). Disability is defined as the inability to engage in 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 twelve months. 42 U.S.C. § 423

(d)(1)(A).

The Social Security regulations set out a five-step sequential evaluation process

for determining whether claimants are disabled within the meaning of the Social Security

Act. See 20 C.F.R. § 416.920. At step one, a claimant must establish that he or she is

not engaging in any substantial gainful activity. 20 C.F.R. §§ 404.1520(b), 416.920(b). 

At step two, a claimant must establish that he or she has one or more medically severe

impairments or combination of impairments. If a claimant does not have a “severe”

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1

 There is no insured status requirement for Title XVI benefits.

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impairment, he or she is not disabled. Id. at § (c). At step three, the Commissioner will

determine whether the claimant’s impairment meets or equals any of the listed

impairments described in the regulations. A claimant who meets one of the listings is

disabled. See Id. at § (d). If a claimant’s impairments do not meet or equal a listing, the

Commissioner proceeds to step four.

At step four, the Commissioner evaluates the claimant’s RFC and the physical

and mental demands of the claimant’s past relevant work to determine whether the

claimant is able to perform his or her past relevant work. Id. at § (e). If a claimant is not

able to perform his or her past relevant work, the burden shifts to the Commissioner at

step five to show that the claimant can perform some other job that exists in significant

numbers in the national economy, taking into consideration the claimant’s RFC, age,

education, and work experience. Id. at § (f); Tackett, 180 F.3d at 1100. If the

Commissioner finds that the claimant is unable to perform other work, then the claimant

is disabled.

V. SUMMARY OF THE RECORD EVIDENCE

Plaintiff was insured for disability under Title II of the Social Security Act

through May 31, 1999, the onset date of his alleged disability.1

 (Tr. 119.) Born in

November of 1970 (Id.), Plaintiff was 28 years old at the onset of his alleged disability

and 33 years when the ALJ issued his decision (Tr. 34). Plaintiff has a general

equivalency diploma (“GED”) (Tr. 53) and has past relevant work as a telemarketer, a

construction laborer, a warehouse worker, and as a temporary laborer (Tr. 148).

Because the parties have adequately summarized the record in their briefing, and

because much of the record evidence is not relevant given the scope of the issues, the

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Court will not summarize the record here. Relevant evidence will be referenced in the

discussion as necessary.

VI. THE ALJ’S DECISION

At step one, the ALJ found the Plaintiff was not engaged in substantial gainful

activity. (Tr. 33, Finding No. 2.) At step two, the ALJ found that Plaintiff’s bipolar

disorder, history of alcohol dependency, personality disorder, and his injuries to both

knees and his back were severe impairments. (Id., Finding No. 3.) At step three, the

ALJ found that Plaintiff’s impairments did not meet or equal a listed impairment. See 20

C.F.R. Pt. 404, Subpt. P, App. 1; (Tr. 33, Finding No. 4). The ALJ determined that

Plaintiff retains an RFC that allows him to lift and carry 20 pounds occasionally and 10

pounds frequently, stand and sit for about six hours, walk for up to 30 minutes for about

four hours in an 8-hour workday. (Id., Finding No. 6.) Additionally, the ALJ found that

Plaintiff’s RFC restricts him from using foot controls, walking on rough ground, and

stooping frequently but that Plaintiff can occasionally climb, balance, kneel, crouch, and

crawl. (Id.) The ALJ found that Plaintiff was further limited in his ability to perform

repetitive pushing and pulling activities with his right arm; that he is limited to fairly

repetitive, structured work; and that his bipolar and personality impairments restricted

him to working alone without close proximity to coworkers or the public. (Id.) Finally,

the ALJ concluded that Plaintiff’s RFC allowed him to perform a significant range of

light work. (Tr. 34, Finding No. 11); 20 C.F.R. §§ 404.1567 and 416.967. 

At step four, the ALJ found that Plaintiff was unable to perform any of his past

relevant work (Tr. 34, Finding No. 7) and that he has no transferable skills from any past

relevant work or that transferability of skills is not an issue in this case. (Id., Finding

No. 10). At step five, the ALJ found that Plaintiff could perform a significant number of

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jobs in the national economy, specifically: table worker, laundry worker, and night

watchman. (Id., Finding No. 12.)

VII. DISCUSSION

Plaintiff argues that because the ALJ improperly rejected medical and testimonial

evidence, the ALJ omitted significant limitations from his RFC finding. Specifically,

Plaintiff argues that the ALJ erred in evaluating the medical evidence, in dismissing

some of Plaintiff’s alleged limitations by finding Plaintiff not entirely credible, and in

dismissing statements from his friend Ralinda Morris. The Commissioner responds that

the ALJ applied correct legal standards and cited substantial evidence in evaluating

medical evidence, Plaintiff’s credibility, and lay testimony, and that the limitations

detailed in Plaintiff’s RFC are therefore complete and accurate.

A. The ALJ’s Rejection of Medical Evidence

Plaintiff argues that the ALJ improperly rejected some medical opinions and

evidence while erroneously relying on other opinions and evidence. The Commissioner

responds that the ALJ stated clear and convincing reasons supported by substantial

evidence in the record for rejecting some opinions and accepting others, or alternatively,

that if the ALJ erred his error was harmless. 

Opinions from treating and examining physicians, if not contradicted by another

doctor, may be rejected only for “clear and convincing” reasons supported by substantial

evidence in the record. See Lester v. Chater, 81 F.3d 821, 830 (9th Cir. 1995). If

contradicted by another doctor, the opinions of treating and examining physicians “can

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

evidence.” (Id. at 831.)

1. Dr. McConnell

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Plaintiff argues that the ALJ should have accepted the opinion of Dr. Robert

McConnell, an examining orthopedic surgeon, that Plaintiff’s knee impairments limited

him to sedentary work. (Tr. 346-47.) Plaintiff asserts that Dr. McConnell’s opinion

deserves more weight because he is a specialist. 20 C.F.R. §§ 404.1527(d)(5),

416.927(d)(5); Smolen v. Chater, 80 F.3d 1273, 1285 (9th Cir. 1996). Instead, Plaintiff

argues that the ALJ did not address Dr. McConnell’s opinion. 

The Commissioner argues that the ALJ’s oversight amounts to harmless error

because the table worker position cited by the ALJ at step five is a sedentary job. The

Commissioner also points out that the reviewing court must consider all of the record

evidence to determine whether it contains substantial evidence supporting the ALJ’s

findings. Jones v. Heckler, 760 F.2d 993, 995 (9th Cir. 1985). No “magic words” are

required from the ALJ to reject a doctor’s opinion; rather, this Court can infer the ALJ’s

reasons for rejecting a doctor’s opinion. Magallanes v. Bowen, 881 F.2d at 755.

The ALJ acknowledged Dr. McConnell’s opinion (Tr. 27), but did not reject it

explicitly. However, a rejection of the notion that Plaintiff is limited to sedentary work

is implied in the ALJ’s finding that Plaintiff can perform light work. (Tr. 34, Finding

No. 11.) The Court finds that the ALJ relied on substantial evidence in the record to

determine that Plaintiff could perform light work. The ALJ discussed Plaintiff’s

physical limitations at length. (Tr. 30-31.) He noted that medical consultants from the

State Agency determined that Plaintiff was capable of performing light work. (Tr. 358.) 

He also noted that examining orthopedic physician Dr. Alexis Falicov thought that

Plaintiff’s arthritis and scarring may have given some stability to his left knee and that

the doctor did not recommend any type of reconstruction for that knee. (Tr. 460.)

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2

 Plaintiff testified that he no longer rides a bike; however, he did ride a bike for a few

months in 2001, after the onset of his alleged disability. (Id.)

REPORT AND RECOMMENDATION

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Finally, the ALJ noted that Plaintiff walked, hiked (Tr. 464), and rode a bike (Tr. 619).2 

The above evidence constitutes clear and convincing reasons cited by the ALJ to reject

Dr. McConnell’s isolated finding that Plaintiff is limited to sedentary work. The Court

can infer that the ALJ found the above evidence more compelling without requiring the

ALJ to specifically state as much. Therefore, the ALJ did not err in rejecting Dr.

McConnell’s opinion. 

2. Dr. Bernardez-Fu

Plaintiff argues that the ALJ should have considered the opinion of Dr. Robert

Bernardez-Fu, a State Agency consultant, that Plaintiff should avoid concentrated

exposure to hazards such as machinery and heights. (Tr. 360.) Plaintiff asserts that the

ALJ should have considered this non-examining source as “other” opinion evidence as

required by 20 C.F.R. §§ 404.1527(f) and 416.927(f) because this limitation could affect

Plaintiff’s ability to perform as a table worker. The Commissioner’s brief does not

address this argument. 

The record shows that the ALJ acknowledged Dr. Bernardez-Fu’s assessment that

Plaintiff could perform light work subject to some postural limitations, but did not

address the doctor’s finding that Plaintiff should avoid concentrated exposure to hazards. 

(Tr. 27, 30, 358). The Commissioner is not required to discuss all evidence presented to

her. See Vincent v. Heckler, 739 F.2d 1393, 1394 (9th Cir. 1984) (citing Lewin v.

Schweiker, 654 F.2d 631, 634 (9th Cir. 1981). However, Plaintiff has asserted that he is

unable to perform two of the three jobs identified by the ALJ and that the remaining

table worker job may require exposure to hazardous conditions. The undersigned

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concludes that further administrative proceedings are warranted to determine whether

avoidance of concentrated exposure to hazards should be incorporated into Plaintiff’s

RFC, and if so, whether such a limitation would impinge on his ability to perform as a

table worker.

3. State Agency Medical Consultants

Plaintiff next argues that the ALJ improperly dismissed the opinions of Dr.

Robert Parker and Dr. Carla Hellekson, state agency medical consultants. The

Commissioner responds that the ALJ analyzed the doctors’ opinions and found that the

examiners relied mostly on Plaintiff’s subjective reports rather than objective medical

findings, and therefore accorded them little weight. (Tr. 30.)

Dr. Parker completed an assessment of Plaintiff in February of 2002 and

diagnosed Plaintiff as depressed with psychotic features and suffering from bipolar

disorder, personality disorder, and marijuana and alcohol dependence in fragile

remission. (Tr. 353.) Dr. Hellekson diagnosed Plaintiff with ADHD, bipolar disorder,

and antisocial personality disorder. (Tr. 488-92.) She also found that Plaintiff suffered

from moderate to severe limitations in cognitive and social functioning and from alcohol

abuse. (Tr. 500-03.)

The ALJ accepted the diagnoses of bipolar disorder, a history of substance abuse,

and personality disorder (Tr. 29), all of which he listed among Plaintiff’s severe

impairments (Tr. 33, Finding No. 3). However, in evaluating Plaintiff’s RFC, he

rejected findings from “some examining medical sources,” presumably including Dr.

Parker and Dr. Hellekson, that Plaintiff was markedly limited in some factors of

cognitive and social functioning. (Tr. 30.) In so doing, the ALJ reasoned that these

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sources relied on Plaintiff’s “own reports that he was not abusing any substances.” (Id.)

The ALJ’s reasoning implies that these findings were not reliable because Plaintiff was

abusing drugs and alcohol. The ALJ went on to state that he accepted the opinion of

state agency consultant Dr. Reade, an opinion corroborated by Dr. Alexander Fisher,

that Plaintiff’s ability to understand and remember is within the average range unless

impeded by the effects of drugs and alcohol. (Id.; Tr. 362-65.) The ALJ therefore

rejected medical opinions which he believed did not factor out alleged drug and alcohol

abuse (“DAA”), and accepted medical opinions which he believed did factor out DAA.

The Social Security Administration does not award disability benefits when DAA

is a contributing factor material to the determination of disability. 42 USC §§

423(d)(2)(c), 1382c(a)(3)(J); Sousa v. Callahan, 143 F.3d 1240, 1245 (9th Cir. 1998). 

However, for the ALJ to rely on DAA to reject medical opinions is problematic because

DAA may only be factored out after a claimant has been found disabled. Bustamante v.

Masannari, 262 F.3d 949, 955 (9th Cir. 2001). “[A]n ALJ must first conduct the

five-step inquiry without separating out the impact of alcoholism or drug addiction.” Id.

If an ALJ finds a claimant disabled, the ALJ should repeat the five-step sequential

evaluation process, discounting the effects of DAA, to determine whether the claimant

would still be found disabled absent DAA. Id.; 20 C.F.R. §§ 404.1535 and 416.935.

Here, the ALJ rejected Dr. Hellekson and Dr. Parker’s opinions and accepted Dr.

Reade and Dr. Fisher’s opinions based on his premature factoring-out of DAA rather

than on clear and convincing reasons supported by substantial evidence in the record. 

Matthews v. Shalala, 10 F.3d 678, 680 (9th Cir. 1993); Winans v. Bowen, 853 F.2d 643,

647 (9th Cir. 1987). Therefore, the undersigned concludes that the ALJ erred in

assessing Dr. Hellekson and Dr. Parker’s opinions.

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// // //

4. Nurse Martin

Plaintiff asserts that the ALJ did not properly evaluate the opinion of Nurse

Nancy Martin, who evaluated Plaintiff. (Tr. 492-99.) The Commissioner responds that

the ALJ properly considered Nurse Martin’s opinion but accorded it no significant

weight because it was not an acceptable medical source. (Tr. 32.) 

Nurses are not acceptable medical sources under 20 C.F.R. §§ 404.1513(a) and

416.913(a), but evidence from other sources, including nurses, may be used to show the

severity of a claimant’s impairments and how they affect a claimant’s ability to work. 

20 C.F.R. §§ 404.1513(d); 416.913(d). A nurse’s opinion may be given less weight than

that of an acceptable medical source. Gomez v. Chater, 74 F.3d 967, 970-71 (9th Cir.

1996). An ALJ is free to reject or give less weight to an “other” source, but must give

reasons for doing so that are germane to the particular source. See Dodrill v. Shalala, 12

F.3d 915, 919 (9th Cir. 1993).

In May of 2004, Nurse Martin diagnosed Plaintiff with bipolar disorder,

polysubstance abuse in early full remission, traits of antisocial personality disorder, and

chronic pain due to arthritis of the bilateral knees. (Tr. 505.) In June of 2004, she filled

in a check-box form indicating that Plaintiff’s mental impairments caused moderate to

severe limitations in several factors of cognitive and social functioning. (Tr. 494.) 

As noted in Subsection A(3), the ALJ accepted Plaintiff’s diagnoses of bipolar

disorder, a history of substance abuse, and personality disorder. (Tr. 29.) The ALJ need

not state reasons germane to Nurse Martin for rejecting portions of her opinion that are

duplicative of opinions from acceptable medical sources. The undersigned concludes,

however, that to the extent that Nurse Martin’s opinion is unique, the ALJ has failed to

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state reasons germane to Nurse Martin for rejecting it.

5. GAF Scores

 Plaintiff argues that the ALJ improperly rejected his Global Assessment of

Functioning (“GAF”) scores, which ranged from 20 (Tr. 380) to 35 (Tr. 505) and 40 (Tr.

538). The Commissioner did not respond to this argument. Nonetheless, the ALJ need

not have addressed Plaintiff’s GAF scores separately from the treatment providers who

assigned them because GAF scores are not directly correlated with disability listings. 

See 65 Fed. Reg. 50764-50765 (Aug. 21, 2000); Vincent ex rel. v. Heckler, 739 F.2d at

1394-95.

B. The ALJ’s Assessment of Plaintiff’s Credibility

The ALJ is responsible for determining credibility. Andrews, 53 F.3d at 1039. 

An ALJ’s credibility determination must be based on clear and convincing reasons that

are supported by substantial evidence in the record. See Morgan v. Comm’r of Social

Sec. Admin., 169 F.3d 595, 599-600 (9th Cir. 1999). In making a credibility

determination, the ALJ may consider at least the following factors: “[claimant’s]

reputation for truthfulness, inconsistencies either in [his] testimony or between [his]

testimony and [his] conduct, [claimaint’s] daily activities, [his] work record, and

testimony from physicians and third parties concerning the nature, severity, and effect of

the symptoms of which [he] complains.” Thomas v. Barnhart, 278 F.3d 947, 958-59

(9th Cir. 2002) (internal quotations omitted). 

1. Physical Limitations

Plaintiff asserts that the ALJ failed to provide specific reasons for rejecting

Plaintiff’s testimony that he is unable to: get out of bed two days each week because of

knee pain (Tr. 601), push or pull things without some pain (Tr. 606), and sit for longer

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3

 The Court does not address Plaintiff’s argument that the ALJ rejected Plaintiff’s

testimony that he is unable to work effectively with coworkers and supervisors because the ALJ

provided for this limitation in Plaintiff's RFC. (Tr. 31.) It is of note that Plaintiff’s problems with

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than 45 minutes without stretching his legs or for more than 30 minutes without

changing position (Tr. 604-05). The Commissioner responds that the ALJ was entitled

to find Plaintiff not credible based on his surly disposition in the administrative hearing

and on his activities. (Tr. 30-31.)

 Contrary to Plaintiff’s assertions, the ALJ found that Plaintiff’s allegations

regarding his physical limitations were generally credible. (Tr. 30.) The ALJ

acknowledged Plaintiff’s inability to walk for prolonged periods, his knee range of

motion difficulties, and limitations in pushing and pulling with his upper right arm. Id.

With regard to physical limitations which Plaintiff claims the ALJ did not specifically

address, for example, Plaintiff’s alleged inability to get out of bed two days each week

on account of his knee pain, the ALJ cited Plaintiff’s activities as suggesting that he was

not as limited as he alleged. The record reflects that Plaintiff went hiking and walking

(Tr. 464), although Plaintiff defined hiking as a half-hour walk (Tr. 615-16). Plaintiff

also biked. (Tr. 619-20.) Plaintiff quit biking after a few months, which he attributed to

his bike being stolen and to his being “kind of dangerous on a bike.” (Tr. 619.) There is

no evidence that his hazardous riding was caused by his alleged disability. The activities

cited by the ALJ constitute substantial evidence supporting his finding that Plaintiff’s

claims of more extreme physical limitations were not credible.

2. Mental Limitations

Plaintiff asserts that the ALJ did not provide adequate reasons for rejecting his

testimony that his mind raced and his memory was poor during manic phases (Tr. 611)

and that he had poor concentration (Tr. 616).3

 The Commissioner responds that the ALJ

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his colleagues did not begin until 2000, after his alleged disability onset date. (Tr. 609.)

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was entitled to find Plaintiff not credible based on his non-compliance with prescribed

medical treatment and his inconsistent statements regarding his drug and alcohol abuse. 

(Tr. 30-31.) 

In evaluating the credibility of a claimant’s testimony regarding his impairments,

an ALJ may consider “unexplained or inadequately explained failure to seek treatment or

to follow a prescribed course of treatment.” Smolen, 80 F.3d at 1284 (emphasis added). 

The record indicates that Plaintiff was difficult to engage and behaved inappropriately

during therapeutic efforts. (Tr. 287.) At one time he stopped taking medications or

going to his mental health clinic. (Tr. 428.) 

Plaintiff argues that he stopped his medications because he was poor, homeless,

and depressed, and felt the medications were not helping him. He further asserts that his

medical noncompliance was consistent with behavior expected of a person suffering

from bipolar disorder. The record supports Plaintiff’s arguments. He was homeless and

living in a tent in the woods during the period of alleged noncompliance. (Id.)

Additionally, Plaintiff’s failure to follow prescribed treatment or engage in therapeutic

efforts are isolated points in the record, the bulk of which documents Plaintiff’s visits to

care providers and following their treatment. The Court finds that Plaintiff has

adequately explained why he failed to follow medical treatment on occasion. 

The Commissioner next argues that the ALJ found Plaintiff not credible based on

inconsistent statements regarding his drug and alcohol abuse. The record supports the

Commissioner’s argument to a certain extent: for example, Plaintiff claimed to be clean

and sober to one doctor while at the same time reporting that he used marijuana

occasionally. (Tr. 489, 379.) However, in his opinion, the ALJ did not rely on

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inconsistent statements regarding DAA to find Plaintiff not credible. Rather, the ALJ

found Plaintiff not credible because DAA “plays a much larger role in (Plaintiff’s)

alleged limitations than he is willing to admit.” (Tr. 30.) In sum, the ALJ reasoned that

because he attributes many of Plaintiff’s alleged limitations to DAA, Plaintiff’s claimed

limitations are not credible (Id.) This reasoning again amounts to premature

factoring-out of the effects of DAA to find Plaintiff not as limited as he claims, and

perhaps as a consequence, not disabled. As discussed in Subsection (A)(3), an ALJ may

not factor out the effects of DAA unless he or she has first gone through the sequential

evaluation process and found a claimant disabled, after he or she repeats the sequential

evaluation process with the effects of DAA factored out. Bustamante, 262 F.3d at 955. 

The ALJ’s credibility finding as to Plaintiff’s mental limitations was erroneous

because Plaintiff adequately explained his medical noncompliance and because the ALJ

prematurely factored DAA effects to dismiss some of Plaintiff’s limitations. 

C. The ALJ’s Evaluation of Ralinda Morris’s Statements

Plaintiff argues that the ALJ did not provide germane or legitimate reasons for

rejecting the statements of Ralinda Morris, a friend of Plaintiff’s who filled out a

questionnaire indicating that Plaintiff is easily angered and frustrated, does not finish

projects he starts, and is forgetful. (Tr. 168-72.) The Commissioner responds that,

despite not providing reasons specific to Ms. Morris for rejecting her statements, the

Court can infer that the ALJ rejected Ms. Morris’s statements for the same reasons he

rejected Plaintiff’s statements because their statements were similar. 

The Commissioner’s argument is not persuasive in light of the Court’s

determination that the ALJ failed to state clear and convincing reasons to reject

Plaintiff’s testimony. “[F]riends and family members in a position to observe a

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claimant’s symptoms and daily activities are competent to testify as to (the claimant’s)

condition...If the ALJ wishes to discount the testimony of the lay witnesses, he must give

reasons that are germane to each witness.” Dodrill, 12 F.3d at 918-19. Under Dodrill,

this Court concludes that the ALJ erred in failing to give germane reasons for rejecting

lay witness testimony.

D. Step Five Analysis

Plaintiff argues that because the ALJ’s RFC finding was erroneous, the

hypothetical he posed to the VE did not accurately reflect Plaintiff’s limitations, and the

ALJ therefore did meet his burden at step five of showing that Plaintiff could work. 

Osenbrock v. Apfel, 240 F.3d 1157, 1162 (9th Cir. 2001). The Commissioner responds

that the ALJ’s RFC finding was accurate and that he properly relied on a VE’s testimony

to find Plaintiff not disabled. (Tr. 32.)

This Court need not evaluate this claim because Plaintiff’s RFC may be adjusted

on remand, requiring the ALJ to engage in a step five analysis afresh. 

VIII. CONCLUSION

The Commissioner’s determination to deny Plaintiff benefits is not free of legal

error, nor is it supported by substantial evidence. Based on the record evidence, the

undersigned recommends that the Commissioner’s decision be REVERSED and

REMANDED for further administrative proceedings. A proposed Order accompanies

this Report and Recommendation.

DATED this 27th day of October, 2006.

AMONICA J. BENTON

United States Magistrate Judge

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