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. e du/thir dc ir c uit_1999/168Filed June 25, 1999

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 98-5463

LISA SCHAUDECK, Appellant

v.

COMMISSIONER OF SOCIAL SECURITY ADMINISTRATION

APPEAL FROM THE

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

(D.C. No. 97-cv-02718) District Judge: The Honorable Jerome B. Simandle

ARGUED March 9, 1999

BEFORE: MANSMANN, SCIRICA, and NYGAARD, Circuit Judges.

(Filed June 25, 1999)

Glenn B. Carey, Esq. (Argued) Agnes S. Wladyka, Esq. Abromson & Carey
10 Park Place Newark, NJ 07102 Attorneys for Appellant

Peter G. O'Malley, Esq. (Argued) Office of United States Attorney

970 Broad Street

Room 700 Newark, NJ 07102 Attorney for AppelleeOPINION OF THE COURT

NYGAARD, Circuit Judge.

An Administrative Law Judge held that Lisa Schaudec k did not prove that she was disabled for a continuou s twelve-month period by Hodgkin's Disease, and the D istrict Court affirmed this decision. See Schaudeck v. Apfe l, No. Civ.A.97-2718 (D.N.J. Aug. 3, 1998). Schaudeck argu es that the ALJ improperly determined that her impairm ent did not meet the criteria of an impairment listed i n Appendix 1 to 20 C.F.R. Part 404, Subpart P, of the regulations and failed to properly consider the eff ects of her chemotherapy treatments and her substantive testimo ny. We will reverse and remand the cause for a rehearin g.

I.

Schaudeck was first diagnosed with Hodgkin's Diseas e in
1990. She was treated and the disease went into rem ission. Her symptoms recurred in 1993, and in early 1994, s he began a year-long course of chemotherapy. She alleg es that, on February 7, 1994, she became disabled by t he
disease and treatment and thereafter met the insure d status requirements of the Social Security Act unti l June 30, 1998. Although she worked as a hairdresser from 1981
until 1992 and as a waitress for three to five mont hs in 1993, Schaudeck has not worked since.

At her hearing before the ALJ, Schaudeck testified to significant problems resulting from her chemotherap y treatments. She testified that, among other things, they caused fatigue, sickness and nausea. App. at 162. S he also
testified to residual effects that continued after the chemotherapy, such as having very little energy, ti ring easily, and having to take regular naps. App. at 15 0, 153, 155, 164. In addition, she stated that she had freq uent stomach, leg and chest cramps and that the bottom o f one leg was numb. App. at 151-52.

The ALJ found that Schaudeck had been disabled from February 7, 1994, until approximately August 31, 19 94,

2but that she was not disabled thereafter. In reachi ng this

conclusion, the ALJ relied on a consulting doctor's report indicating that Schaudeck's Hodgkin's Disease was "responding to" the chemotherapy treatments. The AL J thus denied her claim, holding that she had not sho wn a period of disability continuing for more than twelv e months. The Appeals Council denied her request for review, and the
District Court affirmed the ALJ's decision.

Schaudeck alleges that the ALJ erred by: (1) holdin g that her impairment did not meet or equal a listed impai rment in 20 C.F.R. Part 404, Subpart P, Appendix 1; (2) f ailing to properly evaluate the medical evidence and her subj ective complaints of pain; and (3) failing to consider her nonexertional impairments. We have plenary review of a ll legal issues, see Krysztoforski v. Chater, 55 F.3d 857, 8 58 (3d Cir. 1995), and review the ALJ's findings of fact t o determine whether they are supported by substantial evidence. See 42 U.S.C. S 405(g). Overall, the subs tantial
evidence standard is deferential and includes defer ence to inferences drawn from the facts if they, in turn, a re supported by substantial evidence. See Monsour Med. Ctr. v. Heckler, 806 F.2d 1185, 1190-91 (3d Cir. 1986). To determine whether a finding is supported by substan tial evidence, we must review the record as a whole. See 5
U.S.C. S 706.

II.

A social security insurance benefits claimant must demonstrate an "inability to engage in any substant ial gainful activity by reason of any medically determi nable physical or mental impairment which . . . has laste d or can be expected to last for a continuous period of not less than 12 months." 42 U.S.C. S 423(d)(2)(A). The Commissio ner evaluates each case according to a five-step proces s until a finding of "disabled" or "not disabled" is made. Se e 20 C.F.R. S 404.1520(a). The sequence is essentially a s follows: (1) if the claimant is currently engaged in substan tial gainful employment, she will be found not disabled; (2) if the claimant does not suffer from a "severe impairm ent," she will be found not disabled; (3) if a severe imp airment meets or equals a listed impairment in 20 C.F.R. Pa rt 404,

3Subpart P, Appendix 1 and has lasted or is expected to last

continually for at least twelve months, then the cl aimant will be found disabled; (4) if the severe impairmen t does not meet prong (3), the Commissioner considers the clai mant's residual functional capacity ("RFC") to determine w hether she can perform work she has done in the past despi te the severe impairment - if she can, she will be found n ot disabled; and (5) if the claimant cannot perform he r past work, the Commissioner will consider the claimant's RFC, age, education, and past work experience to determi ne whether she can perform other work which exists in the national economy. See id. S 404.1520(b)-(f).

Schaudeck was not engaged in substantial gainful employment. At the second step, the ALJ determined that
Schaudeck had established the existence of a "sever e impairment" related to the Hodgkin's Disease and it s "residual effects." At the third step, however, the ALJ found that the impairment did not meet or equal in severi ty any of those listed in Appendix 1 to Subpart P of Regul ation 404. At step four, the ALJ considered Schaudeck's R FC and found that she could perform her past work of haird ressing and waitressing. ALJ's Decision at 3-4; app. at 127 -28. Thus the ALJ did not reach step five.

A. The listed impairments in 20 C.F.R. Part 404, Su bpart P, Appendix 1

Schaudeck alleges that the ALJ erred when he found that her Hodgkin's Disease did not meet or equal in seve rity any of the impairments listed in Appendix 1 to Subpart P of Part 404 of the regulations. The list includes "Hod gkin's Disease . . . not controlled by prescribed therapy. " 20 C.F.R. Pt. 404, Subpt. P, App. 1, S 13.06A (emphasis added ).1 The

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1. The full definition in the regulations is:"Hodgk in's Disease or nonHodgkin's lymphoma with progressive disease not con trolled by prescribed therapy." 20 C.F.R., Pt. 404, Subpt. P, App. 1, S 13.06A. We read the clause "with progressive disease" as descr ibing "non-Hodgkin's lymphoma" because Hodgkin's Disease is by definitio n the "progressive enlargement of the lymph nodes, spleen, and general lymphoid tissue." Dorland's Illustrated Medical Dictionary 487 (27th ed. 1988). Thus, for our purposes, the relevant term is "Hodgkin's Disea se . . . not controlled by prescribed therapy."

4ALJ apparently relied on the report of Dr. Wilchfor t, a

nontreating physician, who wrote that Schaudeck see med to be "responding to" her treatment. From this stat ement, the ALJ found that the Hodgkin's Disease was "contr olled by" the chemotherapy.2 The issue is whether the ALJ erred by concluding that the term "responding to" was equ ivalent to "controlled by."

We conclude that the terms are not synonymous and t hat Schaudeck's disease was not "controlled by" her chemotherapy simply because it was "responding to" the treatment. We hold that "control," as used here, me ans that
the treatment has been so successful that the disea se can be considered effectively neutralized. Webster's Di ctionary supports our holding. It defines "to control" as: " to exercise restraining or directing influence over . . . to ha ve power over . . . to reduce the incidence or severity of e specially to innocuous levels." Webster's Ninth New Collegiate Dictionary 285 (1988) (emphasis added).

In addition, the context in which the phrase "contr olled by" appears in the Appendix is further reinforcemen t for our conclusion that the phrase should signify somet hing more than that a treatment is merely affecting the disease. Indeed, section 13.06C of the CFR Appendix, which l ists the various impairments, also lists "[e]pidermoid c arcinoma in a lymph node in the neck not responding to presc ribed therapy," 20 C.F.R. Pt. 404, Subpt. P, App. 1,S 13. 06C (emphasis added), thus distinguishing between disea ses that are "responding to" treatment and those "contr olled by" it. Each term clearly means something different. Th us, simply because Schaudeck's cancer was responding to the chemotherapy does not mean that the disease was controlled by the treatment.

Because the ALJ considered only evidence indicating that Schaudeck's disease was "responding to" treatment, we will remand the cause to give the ALJ an opportunity, us ing this definition, to reassess whether Schaudeck's Ho dgkin's Disease meets or equals in severity the listed impa irment of

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2. This finding was not explicit in the ALJ's Decis ion but can be inferred from the ALJ's finding at step three of the evaluat ive process.

5"Hodgkin's Disease . . . not controlled by prescrib ed

therapy." 20 C.F.R. Pt. 404, Subpt. P, App. 1,S 13. 06A.

B. Evaluating the medical evidence

On remand, should the ALJ again find that Schaudeck 's Hodgkin's Disease did not meet or equal a listed impairment, the ALJ will need to reassess his determination that Schaudeck was capable of doing h er past relevant work despite her severe impairment an d make more explicit the reasoning behind his conclusion.

An ALJ must give great weight to a claimant's subje ctive testimony of the inability to perform even light or sedentary work when this testimony is supported by competent medical evidence. See Dobrowolsky v. Califiano, 606 F.2d 403, 409 (3d Cir. 1979). Although the ALJ can rejec t such claims if he does not find them credible, see Baerg a v. Richardson, 500 F.2d 309, 312 (3d Cir. 1974), when assessing a claimant's credibility:

[i]n instances in which the adjudicator has observed the individual, the adjudicator is not free to accept or reject that individual's complaints solely o n the basis of such personal observations. Rather, in all c ases in which pain or other symptoms are alleged, th e determination or decision rationale must con tain a thorough discussion and analysis of the obje ctive medical and the other evidence, including th e individual's complaints of pain or other sym ptoms and the adjudicator's personal observations. The rationale must include a resolution of any inconsisten cies in the evidence as a whole and set forth a logical explanation of the individual's ability to work.

Social Security Ruling ("S.S.R.") 95-5P, 1995 WL 67 0415, at *2 (emphasis added).

We have reemphasized the need for such specificity, holding that the ALJ must indicate in his decision which evidence he has rejected and which he is relying on as the basis for his finding. See Cotter v. Harris, 642 F. 2d 700, 705-06 (3d Cir. 1981); see also S.S.R. 96-7P, 1996 WL 374186, at *4 ("The reasons for the credibility fin ding must be grounded in the evidence and articulated in the

6determination or decision."). This explanation prov ides us

with a basis on which to assess whether "significan t probative evidence was not credited or [was] simply ignored." Cotter, 642 F.2d at 705. Here, the need f or specificity and articulation is strong because Scha udeck's history of chemotherapy supports her subjective cla ims.

In particular, two flaws in the ALJ's analysis of t he evidence require reconsideration on remand. First, the ALJ failed to consider the support for Schaudeck's test imony provided by the numerous medical reports detailing her chemotherapy regimen. In the section of the Decisio n titled "The Evidence," the ALJ noted that on December 29, 1994, February 9 and March 9, 1995, Schaudeck told her do ctors that she was "feeling fine" and had no problems. Ap p. at 126. In addition, the ALJ cited Dr. Wilchfort's rep ort stating that Schaudeck was "responding to" the treatment. T his, however, was the extent of the ALJ's discussion of the
medical evidence.

The ALJ's complete discussion of Schaudeck's compla ints

was as follows:

The claimant's subjective complaints of dis abling pain and other symptoms and limitation precl uding all significant work activity are not credible o r consistent with Social Security Ruling 95-5p and Regula tions 20 CFR 404.1529 and 416.929. Such complaints, b eyond a limited period of acute distress at the on set of the disease, cannot reasonably be accepted as co nsistent with the laboratory findings, medical report s, and daily
activities. The above-summarized medical evi dence reveals objective findings that, in my opini on, could not reasonably produce the subjective complaints after an acute period of distress lasting six to seve n months.

ALJ's Decision at 3 (emphasis added). Of course, th e "above-summarized medical evidence" consisted solel y of the two findings noted above and included no discus sion
whatsoever of Schaudeck's medications or their side effects.

It is undisputed that Schaudeck suffered from Hodgk in's
Disease and that the medications used to treat the disease can have numerous side effects. When considering th e side effects of treatment, the regulations instruct:

7Effects of therapy. Significant posttherapeu tic

residuals, not specifically included in the category of impairments for malignant neoplasms, should be evaluated according to the affected body sys tem.

Where the impairment is not listed in the L isting of Impairments and is not medically equivalent to a listed impairment, the impact of any residual impai rment including that caused by therapy must be con sidered. The therapeutic regimen and consequent adver se response to therapy may vary widely; therefo re, each
case must be considered on an individual bas is. It is essential to obtain a specific description o f the therapeutic regimen, including the drugs giv en, dosage, frequency of drug administration, and plans for continued drug administration. It is necessa ry to obtain a description of the complications or any ot her adverse response to therapy such as nausea, vomiting , diarrhea, weakness, dermatologic disorders, or reactiv e mental
disorders.

20 C.F.R. Pt. 404, Subpt. P, App. 1, S 13.00D (emph asis
added).

The record demonstrates that Schaudeck's chemothera py regimen consisted of several drugs, including, Mechlorethamine (also known as Mustard), Oncovin (o r Vincristine), Procarbazine, Prednisone, Kytril, Ati van, Decadron, Compazine, and G-CSF (granulocyte colony stimulating factor). App. 239, 280-99. The known si de effects of these drugs are severe,3 thus Schaudeck' s treatment coincided with the pain and weakness to w hich
she testified.

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3. Among the numerous common side effects for these drugs are: for mechlorethamine, severe nausea, bone marrow depress ion and gastrointestinal symptoms; for Oncovin, neuritic pa in (due to nerve inflammation) and muscle wasting; for Ativan, somno lence (unnatural drowsiness); for Decadron, muscle weakness and loss of muscle mass; for Compazine, drowsiness; for G-CSF, bone pain. Se e Dorland's Illustrated Medical Dictionary 535 (Neupogen, a G-C SF), 990 (mechlorethamine) (1988); Physician's Desk Referenc e 1625 (Oncovin), 1771 (Decadron), 3038 (Compazine), 3269 (Ativan), ( 53d ed. 1999).

8Schaudeck was taking the numerous drugs that made u p

her chemotherapy regimen well after the date on whi ch the ALJ found her no longer disabled. Yet, the ALJ did not indicate why he believed that Schaudeck's condition could have improved when she was continuing to take the s ame debilitating drugs.4

Second, the ALJ failed to explain why he would rely on the post-August 31, 1994 doctors' reports that Scha udeck was feeling fine, see ALJ's Decision at 2, when sim ilar statements appeared in doctors' reports throughout her treatment, including during the period that the ALJ found Schaudeck was suffering from a severe impairment. T here is no obvious logical reason to differentiate betwe en these similar statements that appear throughout her medic al treatment, and the ALJ offered none.

The ALJ's failure in this regard is particularly tr oubling in light of the fact that Schaudeck testified that she always told the doctors that she was feeling fine because "everybody [at the clinic] knows what the problems are. . . . They know being sick is just normal . . . Those pro blems are all normal in that situation. Everybody is sick like that. That's the normal thing. . . . [W]hen you say okay, it's just okay for what you're going through." App. at 165-66

. Although we normally defer to the ALJ's decision no t to credit a claimant, here, that decision is logically unsound. There was no reason for the ALJ to accept some of Schaudeck's statements as proof that she was not di sabled while ignoring identical statements made during the time period that the ALJ determined that she was disable d.

Where competent evidence supports a claimant's clai ms, the ALJ must explicitly weigh the evidence, see

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4. Schaudeck also asserts that the ALJ's finding th at she had sought "only limited modalities of treatment for the alleg ed pain and limitation, and does not take medication for the impairment," a pp. 127, was erroneous. Here, the ALJ may have been referring to Schaudeck's decision not to seek treatment beyond the chemother apy, but he did not explain this. It is clear that Schaudeck declined t o seek certain treatment after her chemotherapy ended. However, th is is another
instance in which the ALJ did not make clear what e vidence he was relying on to form his conclusion.

9Dobrowolski, 606 F.2d at 407, and explain a rejecti on of the

evidence. See Benton ex rel. Benton v. Bowen, 820 F .2d 85, 88 (3d Cir. 1987). By failing to consider the drugs that Schaudeck was taking throughout her chemotherapy treatment and make "a thorough discussion and analy sis of the objective medical . . . evidence" S.S.R. 95-5P, 1995 WL 670415, at *2, the ALJ erred. On remand, the ALJ mu st give a clear and logical statement of the facts sup porting
his conclusions.5

III.

We conclude that the ALJ applied an erroneous defin ition of "controlled by" and that he erred by failing to properly consider the evidence of record and adequately expl ain his decision. As a result, we will reverse the District Court's
order and remand the cause to the District Court wi th
instructions to remand to the Commissioner of Socia l Security, for further proceedings not inconsistent with this opinion.

A True Copy:

Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

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5. Schaudeck also asserts that the ALJ erred by fai ling to consider her non-exertional impairments. These are impairments t hat do not affect a claimant's physical strength but may nevertheless p revent them from engaging in gainful employment. See, e.g., Stunkard v. Secretary of Health & Human Servs., 841 F.2d 57, 60 (3d Cir. 198 8). Because we are remanding the cause for the reasons discussed, we n eed not reach this
issue.

10