### 2001 D e c i sion s O p inion s of the U nit e d

S t a t e s C our t of Appe al s for the Thir d C ir c uit

2-8-2001 

# M a tthew s v . Apfel

P r e c e de n t i al or N on-P r e c e de n t i al :

D ock e t 00-1151

F o l lo w thi s a nd a dd it ion al w ork s a t : h tt p://d i g it alc ommon s .l a w

. v i l l a no v a

. e du/thir dc ir c uit_2001

Thi s de c i sion i s br ou gh t t o y ou for f r e e a nd ope n a c c e s s b y the O p inion s of the U nit e d S t a t e s C our t of Appe al s for the Thir d C ir c uit a t V i l l a no v a

U niv e r sit y S choo l of L a

w Di g it al R e posit or y

. I t h as be e n a c c e pt e d for inclusion in 2001 D e c i sion s b y a n a uthor i z e d a dmini s tr a t or of V i l l a no v a

U niv e r sit y S choo l of L a

w Di g it al R e posit or y

. F or mor e infor m a t ion, p le as e c on t a ct Be n j a min

. C a rl s on@l a

w

. v i l l a no v a

. e du

. 

### R e c omme nde d C it a t ion

" M a tthe w s v

. Apfe l " (2001). 2001 D e cisio n s

. P a pe r 22.
h tt p://d i g it alc ommon s .l a

w

. v i l l a no v a

. e du/thir dc ir c uit_2001/22Filed February 8, 2001

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 00-1151

SHARON BINGHAM MATTHEWS, Appellant

v.

KENNETH S. APFEL, Commissioner of Social Security

On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. No. 98-cv-01125) District Judge: Hon. Louis Charles Bechtle

Argued September 13, 2000

Before: SLOVITER, SCIRICA and ALITO, Cir cuit Judge s

(Filed February 8, 2001)

Kenneth M. Kapner Law Offices of Kenneth M. Kapner Philadelphia, PA 19l07

Thomas D. Sutton (Argued)

Leventhal & Sutton Langhorne, PA 19047

Attorneys for AppellantJames A. Winn

Regional Chief Counsel David F. Chermol (Argued) Assistant Regional Counsel
Office of the General Counsel Social Security Administration Philadelphia, PA 19l0l

Michael R. Stiles United States Attorney

Joan Garner Assistant United States Attorney Eastern District of Pennsylvania Philadelphia, PA 19l06

Attorneys for Appellee

OPINION OF THE COURT

SLOVITER, Circuit Judge.

Sharon Matthews appeals from the District Court's o rder affirming the denial by the Commissioner of Social Security of Matthews' application for disability insurance b enefits (DIB) under Title II of the Social Security Act.1 T his case raises the important issue of the treatment to be g iven by the district court of evidence submitted by the cla imant for the first time to the Appeals Council, which has th en denied review. This is an issue on which the Courts of Appeals are divided. Some courts hold that such evi dence should be considered by the district court in its r eview of the final decision of the Commissioner, see Perez v . Chater, 77 F.3d 41, 45 (2d Cir. 1996); O'Dell v. Shalala, 4 4 F.3d 855, 859 (10th Cir. 1994); Ramirez v. Shalala, 8 F. 3d 1449, 1452 (9th Cir. 1993); Nelson v. Sullivan , 966 F.2d 363, 366 (8th Cir. 1992); Wilkins v. Sec'y of DHHS, 953 F.2d 93, 96 (4th Cir. 1991) (en banc), whereas others hold that evidence

___________________________________________________ ______________

1. Matthews also applied for supplemental security income (SSI) under Title XVI of the Social Security Act. Because the r elevant regulations and statutory provisions of SSI track those of DIB, we will refer only to the
former in the text.

2not presented to the Administrative Law Judge (ALJ) should

not be reviewed by the district court nor be the ba sis of a
remand to the Commissioner unless the evidence is n ew and material and there is good cause for not having produced the evidence earlier, see Falge v. Apfel, 150 F.3d 1320, 1322-23 (11th Cir. 1998), cert. denied, 525 U .S. 1124 (1999); Cotton v. Sullivan, 2 F.3d 692, 695-96 (6th Cir. 1993); Eads v. Sec'y of DHHS, 983 F.2d 815, 817-18 (7th Cir. 1993). In this case, the District Court held t hat a claimant must demonstrate good cause for not having submitted new and material evidence to the ALJ. App ellant argues that the District Court erred as a matter of law in imposing the good cause requirement. The issue is o ne of first impression for this court.

I.

Matthews applied for disability benefits on October 15, 1992, alleging disability since December 9, 1991. S he claimed hearing loss, arthritis, and right foot dr op stemming from an old Achilles tendon ruptur e. Her claim was denied initially and again on reconsideration. Matthews requested a hearing before an ALJ, which was held o n September 21, 1994. The ALJ found that Matthews was not disabled and denied her claim. The Appeals Council granted Matthews' request for review. On r eview, i t vacated the ALJ's decision and remanded for a new hearing. It directed the ALJ to give further consideration to M atthews' residual functional capacity during the entir e per iod at issue and to "[o]btain supplemental evidence from a vocational expert to clarify the effect of the asse ssed limitations on the claimant's occupational base." T r. at 363.

A different ALJ held a second hearing on July 11, 1 996. At this hearing, Matthews testified, inter alia, of pain in her right foot, ankle, and knee, and she submitted medi cal reports in connection with these impair ments as we ll as of her hearing loss. Diana Simms, an impartial vocatio nal expert, also testified at the hearing and stated th ere were a significant number of sedentary and unskilled jobs, such as cashier, that an individual with Matthews' impairme nts, age, educational background, and employment history could perform. Notably, the ALJ held the record ope n to

3allow Matthews to include the final report of her t reating

physician before issuing the decision.

The ALJ issued a decision on April 21, 1997, conclu ding that Matthews was not disabled. In the decision, th e ALJ noted that none of Matthews' treating and examining physicians opined that she could not perfor m seden tary
work. The ALJ found that medical evidence establish ed that the claimant has severe residuals of an injury to h er right leg and significant hearing loss, that these impair ments do not meet or equal the criteria of the listed impair ments, that Matthews' testimony on the severity of her impairments was not credible inasmuch as she could use public transportation and engage in social activiti es without much difficulty, that Matthews is unable to per for m any of her past relevant work as a teacher's aide or hospi tal worker, but that although she is unable to perform the full range of sedentary work, there are a significant nu mber of jobs in the national economy that she can per form. The ALJ gave examples of sedentary, unskilled jobs in a lownoise environment that Matthews could per form, inc luding
work as a cashier in a small office.

Matthews filed a request for review to the Appeals Council on June 23, 1997. On December 8, 1997, mor e than eight months after the ALJ's decision, Matthew s submitted to the Appeals Council a two-page letter and accompanying documents from Richard Baine, a vocati onal expert, who stated that Matthews lacked the r equis ite arithmetic and reading skills to work as a cashier. Baine
also stated that Matthews' exertional and nonexerti onal impairments would preclude her fr om performing any other gainful work activities in the national economy. T r. at 386-

87.

On January 7, 1998, the Appeals Council denied Matthews' request for review. The Appeals Council n oted that Social Security Administration regulations"pro vide
that where new and material evidence is submitted w ith the request for review, the entire r ecord will be eval uated and review will be granted where the Appeals Council fi nds that the Administrative Law Judge's actions, findings, o r conclusion is contrary to the weight of the evidenc e currently of record," App. at 34, citing 20 C.F.R. SS 404.970

4and 416.1470. The Council's action stated that "the

Administrative Law Judge's decision stands as thefi nal decision of the Commissioner of Social Security." A pp. at 34. The Appeals Council then incorporated Baine's r eport
into the administrative record.

Matthews filed suit in the United States District C ourt for the Eastern District of Pennsylvania, r equesting j udicial review of the Commissioner's final decision. The pa rties filed cross-motions for summary judgment. On Septem ber 14, 1999, the Magistrate Judge to whom the District Court
referred the matter recommended that the Commission er's motion for summary judgment be granted because the ALJ's decision was supported by substantial evidenc e. The Magistrate Judge determined that Baine's r eport wa s new and material but should not be considered on judici al review because Matthews had failed to demonstrate g ood cause for failing to present the evidence to the AL J. The District Court agreed that Matthews had not shown g ood cause for failure to present Baine's r eport to the ALJ, adopted the Magistrate Judge's recommendation, and, following a discursive opinion discussing the evide nce and the legal issues, granted summary judgment for the
Commissioner.

Matthews appealed to this court. She argues that th e District Court erred in refusing to consider new ev idence "which was presented to and consider ed by the Commissioner's Appeals Council as part of the
administrative record under review" and that the co urt erred in applying a good cause requir ement "which does not exist in the regulations to new evidence which was submitted to and considered by the Commissioner's Appeals Council, which made it a part of the admini strative record under review." Br. of Appellant at 1. Our st andard of review over the legal question presented is plenary . See Tubari Ltd., Inc. v. NLRB, 959 F.2d 451, 453 (3d Ci r. 1992).

II.

The question of law before us is whether the claima nt must demonstrate good cause for failure to pr esent to the ALJ new and material evidence presented for thefirs t time

5to the Appeals Council which, after consideration, denies

the review.

The administrative review process is gover ned by S ocial Security Administration regulations. If a claimant' s disability application is denied, s/he may r equest a reconsideration by the Social Security Administrati on. See
20 C.F.R. S 404.900. If the claimant is dissatisfie d with the reconsideration determination, s/he may r equest a hearing before an administrative law judge, wher e the clai mant can present evidence of impairments. See id. If the cla imant is dissatisfied with the ALJ's decision, s/he may r eq uest the Appeals Council to review the decision. See id. The regulations permit the claimant to submit to the Ap peals
Council "new and material" evidence that r elates t o the period on or before the date of the ALJ's hearing d ecision. See 20 C.F.R. S 404.970(b).2 The Appeals Council th en must "evaluate the entire record including the new and m aterial evidence submitted." Id. However, the submission of the new and material evidence does not requir e the App eals Council to grant review. On the contrary, the r egu lations provide that the Appeals Council will grant r eview only if it finds that the ALJ's decision "is contrary to the w eight of the evidence currently of record." Id.

Unlike the administrative process, which is governe d by the regulations, the standards for judicial review are governed by the Social Security Act. A claimant who was unsuccessful in the administrative process may seek judicial review once there is a final decision by t he

___________________________________________________ ______________

2. The applicable subsection of the regulation prov ides in full:

(b) If new and material evidence is submitt ed, the Appeals Council shall consider the additional evidence only wher e it relates to

the period on or before the date of the administ rative law judge hearing decision. The Appeals Council shall evaluate the entire record including the new and material evidence subm itted if it relates to the period on or before the date of the admi nistrative law judge hearing decision. It will then review the ca se if it finds that the administrative law judge's action, findings, or conclusion is
contrary to the weight of the evidence currently of r ecord.

20 C.F.R. S 404.970(b). The applicable section of t he SSI regulation is substantially the same. See 20 C.F.R.S 416.1470(b).

6Commissioner of Social Security. See 42 U.S.C. S 40 5(g);

see also Mathews v. Eldridge, 424 U.S. 319, 328 (19 76). If the Appeals Council denies the request for r eview, the ALJ's
decision is the Commissioner's final decision. See Sims v. Apfel, 530 U.S. 103, 120 S. Ct. 2080, 2083 (2000).

The Act provides that "[t]he findings of the Commis sioner of Social Security as to any fact, if supported by substantial evidence, shall be conclusive." 42 U.S.C.S 405(g) ( emphasis added). Sentence Four of S 405(g) provides that "[t ]he court shall have power to enter, upon the pleadings and t ranscript of the record, a judgment affir ming, modifying, or reversing the decision of the Commissioner of Social Security , with or without remanding the cause for a rehearing." Id. (emphasis added).

If the claimant proffers evidence in the district c ourt that was not previously presented to the ALJ, then the d istrict court may remand to the Commissioner but that disposition is governed by Sentence Six ofS 405(g). That sentence provides,

The court may, on motion of the Commissioner of Social Security made for good cause shown be for e the
Commissioner files the Commissioner's answer
, remand the case to the Commissioner of Socia l Security for further action by the Commissio ner of Social Security, and it may at any time or d er additional
evidence to be taken before the Commissioner of Social Security, but only upon a showing that there is new
evidence which is material and that there is good cause for the failure to incorporate such evidence into the record in a prior proceeding; and the Commis sioner of Social Security shall, after the case is rem anded, and after hearing such additional evidence if so or dered, modify or affirm the Commissioner's findings of fact or the Commissioner's decision, or both, and sh allfile with the court any such additional and modif ied findings of fact and decision, and a transcr ipt of the additional record and testimony upon which t he Commissioner's action in modifying or affir ming was

based.

Id. (emphasis added). Thus, we have r ecognized tha t evidence first presented to the district court must not only

7be new and material but also be supported by a

demonstration by claimant of "good cause for not ha ving incorporated the new evidence into the administrati ve record." Szubak v. Sec'y of HHS, 745 F.2d 831, 833 (3d Cir. 1984).

To summarize the options open to the district court
, when the Appeals Council has denied review the dist rict court may affirm, modify, or reverse the Commission er's decision, with or without a remand based on the rec ord that was made before the ALJ (Sentence Four r eview ). However, when the claimant seeks to r ely on eviden ce that was not before the ALJ, the district court may rema nd to the Commissioner but only if the evidence is new an d material and if there was good cause why it was not previously presented to the ALJ (Sentence Six revie w). See Keeton v. DHHS, 21 F.3d 1064, 1067 (11th Cir. 1994) ; Newhouse v. Heckler, 753 F.2d 283, 286 (3d Cir. 198 5).

Other courts of appeals agree with our analysis of the appropriate treatment on judicial r eview of eviden ce that was not presented to the ALJ. The fullest discussio n of this issue appears in the Seventh Circuit's decision in Eads, where the court explained that although evidence considered by the Appeals Council is part of the administrative record on appeal, it cannot be consi dered by the District Court in making its substantial eviden ce review once the Appeals Council has denied review. As the Eads court stated,

It might seem . . . that the district judge and we would
be free to consider the new evidence that wa s before the Appeals Council in deciding whether the decision denying benefits was supported by the recor d as a whole. And of course this is right when the Council has accepted the case for review and made a deci sion on the merits, based on all the evidence before it, which
then becomes the decision reviewed in the co urts. It is wrong when the Council has refused to r evie w the
case. For then the decision reviewed in the courts is the decision of the administrative law judge . The correctness of that decision depends on the evidence
that was before him. He cannot be faulted fo r having failed to weigh evidence never presented to him. . . .

8Eads, 983 F.2d at 817 (citations omitted).

The Eads decision was followed by the Eleventh Circ uit's decision in Falge, 150 F.3d at 1323 ("when the [App eals Council] has denied review, we will look only to th e evidence actually presented to the ALJ in deter min ing whether the ALJ's decision is supported by substant ial evidence."). It was also followed by the Sixth Circ uit in Cotton, 2 F.3d at 692, a case that was in a differe nt posture than the usual appeal by a claimant from the affirm ance of the denial of disability benefits. Cotton was an ap peal by the Secretary from the district court's r eversal o f the denial
of benefits and direction that Cotton be awar ded b enefits. The district court had based its judgment on new ev idence that Cotton had presented to the Appeals Council, w hich denied review. In reversing the district court, the Sixth Circuit, following Eads, concluded"that the distric t court improperly considered Cotton's new evidence because the claimant failed to demonstrate good cause justifyin g a remand for administrative consideration of the new evidence." Cotton, 2 F.3d at 696.

We are not persuaded by the courts of appeals that hold to the contrary. Thus, for example, the Second Cir cuit in Perez held that evidence first pr esented to the Ap peals Council is part of the administrative recor d to be considered by the district court on judicial r evie w even though the Appeals Council denied review. 77 F .3d at 45. The decision in Perez and that on which it relies, the Tenth Circuit's decision in O'Dell, ar e based on the reg ulation that requires the Appeals Council to "evaluate the entir e record including the new and material evidence submitted" in determining whether to review the case. 20 C.F.R. S 404.970(b). These decisions opine that the purpos e of this regulation would be undermined if the new evidence submitted to the Appeals Council was ignored by the district court. See, e.g., Perez , 77 F.3d at 45.

We believe the purpose of that regulation is to giv e the claimant an opportunity to present additional evide nce, if it is new and material, for consideration by the Appea ls Council in deciding whether to grant review of the ALJ's decision. This is consistent with the policy of giv ing the claimant ample opportunity to prove his or her disa bility.

9Counsel for the Social Security Administration advi sed us

at oral argument that the Appeals Council grants re view and remands approximately 25% of its cases to the A LJ, thereby using the new and material evidence on clai mants'

behalf.

However, it is the Social Security Act and not the regulations that governs the standar ds for judicia l review. We have previously held that evidence that was not before the ALJ cannot be used to argue that the ALJ's deci sion was not supported by substantial evidence. See Jone s v. Sullivan, 954 F.2d 125, 128 (3d Cir . 1991) (citing United States v. Carlo Bianchi & Co., 373 U.S. 709 (1963)) . No statutory authority (the source of the district cou rt's review) authorizes the court to review the Appeals Council decision to deny review. No statutory provision authorizes t he
district court to make a decision on the substantia l
evidence standard based on the new and material evi dence never presented to the ALJ. Instead, the Act gives the district court authority to remand the case to the Commissioner, but only if the claimant has shown go od cause why such new and material evidence was not presented to the ALJ.

To construe the statute otherwise, as Matthews woul d do, would be to set up a conflict between the r egulati ons and the statute on whether good cause need be shown. Matthews seeks to support her position by noting th at there is no requirement in the regulations that the claim ant must show good cause to the Appeals Council befor e it c an consider the new and material evidence. However , t he regulation only concerns the recor d for purposes o f administrative decisionmaking, i.e., what the Appea ls Council may consider. For purposes of judicial revi ew, the "record" is "the evidence upon which the findings a nd decision complained of are based." 42 U.S.C.S 405(g ) (Sentence Three). That is the information that was before the ALJ, the final administrative decisionmaker whe n the Appeals Council denies review. The new and material
evidence is transmitted with the record so that the district
court will have before it the evidence that will be the subject of the remand if the claimant can show good cause why such new and material evidence was not submitte d to

the ALJ.

10Our holding is consistent with this court's prior o pinions.

In Szubak, the claimant argued that she was entitle d to a remand for further consideration in light offive me dical reports compiled after the Secretary's determinatio n that
claimant submitted for the first time to the distri ct court. We held that a claimant must satisfy all thr ee req uirements of Sentence Six (new, material and good cause) in o r der to justify a remand. See Szubak, 745 F .2d at 833. Szu bak was entitled to a remand because she had shown good cau se.3 Significantly, we did not direct the district court to consider
the effect of the new evidence on the substantialit y of the evidence previously presented to the ALJ. Instead, we directed remand for such a determination to be made by the forum which is entrusted by the statutory schem e for determining disability vel non. In our subsequent o pinion in Jones, we made this explicit when we stated that ev idence not presented to the ALJ "cannot be used to argue t he ALJ's decision was not supported by substantial evi dence." 954 F.2d at 128 (quotation omitted).

Our holding is also in accord with sound public pol icy. We should encourage disability claimants to present to the ALJ all relevant evidence concerning the claimant's impairments. If we were to order r emand for each i tem of new and material evidence, we would open the door f or claimants to withhold evidence from the ALJ in orde r to preserve a reason for remand. See Szubak, 745 F.2d at 834 ("A claimant might be tempted to withhold medical r eports, or refrain from introducing all r elevant evidence, with the idea of obtaining another bite of the apple if the Secretary decides that the claimant is not disabled.") (quota tion

___________________________________________________ ______________

3. Both parties refer to our subsequent decision in Frankenfield v. Bowen, 861 F.2d 405 (3d Cir. 1988), a decision that adds little to the issue under consideration here. There, we remanded the case to the Secretary because the ALJ's decision rejecting disa bility was not supported by the medical evidence. We held it was i mpermissible for the ALJ to ignore without explanation the physician's r eports and instead base the decision solely on the ALJ's "observation of the claimant at the hearing." Id. at 408. In the course of our opinion, we referred to a subsequent supporting physician's report pr esented to the Appeals
Council and we cited Szubak but we did not discuss the good cause requirement.

11omitted); Wilkins, 953 F.2d at 97 (Chapman, J., dis senting)

("By allowing the proceedings to be r eopened and r emanded for additional evidence, . . . the majority is enco uraging attorneys to hold back evidence and then seek reman d for
consideration of evidence that was available at the time of the ALJ hearing."). Instead, we believe that it is a much sounder policy to require claimants to pr esent all material evidence to the ALJ and prohibit judicial r eview o f new evidence unless there is good reason for not having brought it before the ALJ. Such a holding is instrumental t o the speedy and orderly disposition of Social Security c laims.

III.

The procedure followed by the District Court in thi s case was consistent with the framework outlined above. T he Magistrate Judge declined to review or r emand for
consideration of the additional evidence that Matth ews had submitted to the Appeals Council because the Magist rate Judge concluded that Matthews had failed to show go od cause for not presenting the evidence to the ALJ. A lthough the Magistrate Judge believed that the evaluation p r epared by Baine was new and material evidence, an issue no t reached by the District Court, the Magistrate Judge noted that Matthews had not explained why she did not att empt
to obtain Baine's evaluation at a time when it coul d be considered by the ALJ. The District Court agr eed t hat the claimant had the burden of showing good cause and f ailed to satisfy it, thereby adopting the Magistrate Judg e's report.4

Matthews argues that she did not realize the import ance of obtaining a vocational evaluation of her arithme tic skills early in the proceedings. But Matthews should have known that her ability to work was an issue at the ALJ he aring that was held after remand by the Appeals Council. Indeed, a vocational expert had testified on July 11, 1996 (at the second ALJ hearing) that Matthews could perfor m ca shier

___________________________________________________ ______________

4. Matthews argues in passing that once the Appeals Council reviewed the evidence, it was introduced into the r ecord in a prior proceeding and she has automatically satisfied the good cause r eq uirement. There is no precedent to support such an interpretation of the statutory language and we reject it as implausible.

12and similar types of jobs. Tr. at 169-79. By then, it should

have been clear to Matthews that her arithmetic and reading skills were relevant. The ALJ even kept the administrative record open in order to allow Matthe ws to
submit additional evidence. Yet Matthews did not su bmit Baine's report until more than eight months after t he ALJ's adverse decision. Therefore, we agr ee with the Dis trict Court that Matthews has not shown any good cause wh y she did not obtain this evidence for the ALJ pr oce eding.

In the case before us, the Magistrate Judge r eview ed the
evidence that was before the ALJ and deter mined th at there was substantial evidence to support the Commissione r's
decision based on the record befor e it. The Distri ct Court agreed. Matthews has not put into issue the substan tiality of the evidence before the ALJ,5 and we have no bas is to disagree with the District Court's conclusion that the ALJ's decision was supported by substantial evidence on t he

record.

IV.

For the reasons set forth, we will affir m the orde r of the District Court granting summary judgment for the
Commissioner.

A True Copy:

Teste:

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

___________________________________________________ ______________

5. We will not consider the substantiality of the e vidence before the ALJ, although Matthews, at the conclusion of her brief, r equests that we
reverse the decision of the District Court with dir ections to award her the disability benefits she was denied. Our rules m ake clear that an appellant is limited to the issues listed in the st atement of issues, see Fed. R. App. P. 28(a)(5); L.A.R. 28(1)(a), and this issue is not so
included.

13