NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

REGINA C. SHAW, 

Plaintiff-Appellant, 

 v. 

Kilolo Kijakazi, Acting Commissioner of 

Social Security, 

Defendant-Appellee.

No. 18-35274 

D.C. No. 6:16-cv-01976-BR 

MEMORANDUM*

Appeal from the United States District Court

for the District of Oregon

Anna J. Brown, District Judge, Presiding

Submitted January 31, 2022**

Before: D. NELSON, BERZON, and CHRISTEN, Circuit Judges.

Regina C. Shaw appeals the district court’s judgment affirming the 

Commissioner of Social Security’s denial of her application for disability 

insurance benefits and disabled widow’s benefits under Title II of the Social 

* This disposition is not appropriate for publication and is not precedent 

except as provided by Ninth Circuit Rule 36-3.

** The panel unanimously concludes this case is suitable for decision 

without oral argument. See Fed. R. App. P. 34(a)(2).

FILED

JAN 31 2022

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS
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Security Act. We have jurisdiction under 28 U.S.C. § 1291. We review de novo 

the district court’s judgment affirming the Administrative Law Judge’s (“ALJ”) 

denial of social security benefits, “and will disturb the denial of benefits only if the 

decision ‘contains legal error or is not supported by substantial evidence.’” Ford v. 

Saul, 950 F.3d 1141, 1153–54 (9th Cir. 2020) (citation omitted). We will not 

reverse an ALJ’s decision for harmless error, which exists “when it is clear from 

the record that the ALJ’s error was ‘inconsequential to the ultimate nondisability 

determination.’” Tommasetti v. Astrue, 533 F.3d 1035, 1038 (9th Cir. 2008) 

(citation and internal quotation marks omitted).

1. At step two of the five-step evaluation to determine disability, the ALJ erred 

in failing to include Dercum’s disease among Shaw’s severe impairments. 

Substantial evidence does not support the ALJ’s rejection of Dr. Homertgen’s 

diagnosis of Dercum’s disease. The visit summary provided by Dr. Purnell’s 

office identifies Dercum’s disease as Shaw’s primary visit diagnosis. And, 

contrary to the ALJ’s determination, the record overwhelmingly documents 

Shaw’s associated symptoms throughout the relevant period. The ALJ’s error is 

not harmless, as it resulted in a failure to account for the severity and limitations of 

Dercum’s disease and its associated symptoms in the residual functional capacity 

determination. See id. Furthermore, the ALJ’s erroneous rejection of Shaw’s 

diagnosis informed his adverse credibility finding, his rejection of Dr. 
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Homertgen’s medical opinion, and Thompson’s lay witness statements. 

2. The ALJ did not err in failing to account for mental limitations in the 

residual functional capacity finding and the hypothetical question to the vocational 

expert. The ALJ properly interpreted Dr. Scott’s report as not establishing that 

Shaw had “specific limitations attributable to her mental condition.” See Molina v. 

Astrue, 674 F.3d 1104, 1111 (9th Cir. 2012) (the court “must uphold the ALJ’s 

findings if they are supported by inferences reasonably drawn from the record”). 

3. The ALJ’s decision to discount Shaw’s subjective symptom testimony is not 

supported by substantial evidence and resulted in harmful error. The record 

documents the diagnoses of Dercum’s disease and fibromyalgia and amply 

demonstrates that Shaw reported persistent symptoms associated with those 

impairments. Shaw’s activities of supervising her “self-sufficient” grandchildren, 

crocheting up to two hours per day, updating Facebook pages and websites on a 

personal schedule that accommodates her symptoms, and vending home-made 

crafts made in small batches once per week are not inconsistent with her 

allegations of disabling symptoms and limitations. The ALJ has thus failed to 

provide convincing reasons for discounting Shaw’s symptom testimony. 

4. The ALJ erred in discounting the opinion of Dr. Homertgen, a treating 

physician. First, although the ALJ expressed concerns that Shaw did not report her 

activity level to Dr. Homertgen, the ALJ did not identify any of Shaw’s past 
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activities that conflict with those she reported to Dr. Homertgen, or that 

contradicted Dr. Homertgen’s medical opinion. Second, Dr. Homertgen’s opinion 

was consistent with the overall medical record, which documented a progression of 

Shaw’s symptoms and corroborated Shaw’s manifestations and diagnosis of 

Dercum’s disease. This failure resulted in harmful error. 

5. The ALJ did not give “germane” reasons to discount the testimony of lay 

witness Cheryl Ann Thompson. See Valentine v. Comm’r Soc. Sec. Admin., 574 

F.3d 685, 694 (9th Cir. 2009). The ALJ appears to have discounted Thompson’s 

testimony for the same reasons that he discounted Shaw’s testimony, which are not 

supported by substantial evidence. The ALJ’s discounting of Thompson’s 

testimony resulted in harmful error because he failed to account for it in the 

residual functional capacity determination.

We reverse and remand to the district court with instructions to remand to 

the agency for further proceedings. On remand, the ALJ must find that Shaw’s 

Dercum’s disease qualifies as a medically determinable impairment and must reevaluate Shaw’s subjective symptom testimony, Dr. Homertgen’s opinion, and 

Thompson’s lay witness testimony in accordance with this disposition. 

REVERSED AND REMANDED.