FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

CATHLEEN PARRA, 

Plaintiff-Appellant, No. 04-57046

v. D.C. No.

MICHAEL J. ASTRUE,*  CV-04-03604-CT

Commissioner of the Social OPINION Security Administration,

Defendant-Appellee. 

Appeal from the United States District Court

for the Central District of California

Carolyn Turchin, Magistrate Judge, Presiding

Submitted February 5, 2007**

Pasadena, California

Filed March 23, 2007

Before: Cynthia Holcomb Hall, Diarmuid F. O’Scannlain,

and Consuelo M. Callahan, Circuit Judges.

Opinion by Judge Hall

*Michael J. Astrue, Commissioner of the Social Security Administration, is substituted for his predecessor. Fed. R. App. P. 43(c)(2). 

**This panel unanimously finds this case suitable for decision without

oral argument. See Fed. R. App. P. 34(a)(2). 

3433
COUNSEL

Andrew Koenig, Ventura, California, for the appellant. 

Liz Noteware, Assistant Regional Counsel, Social Security

Administration, San Francisco, California, for the appellee.

3436 PARRA v. ASTRUE
OPINION

HALL, Senior Circuit Judge: 

In 1996, Congress amended the Social Security Act to preclude an award of disability benefits if drug or alcohol abuse

is “a contributing factor material to the Commissioner’s determination that the individual is disabled.” 42 U.S.C.

§ 423(d)(2)(C). In this appeal, we confront an issue explicitly

left open by our prior opinions, namely which party bears the

burden of proof on this substance abuse issue. Consistent with

other circuits that have considered this question, we hold that

when evidence exists of a claimant’s drug or alcohol abuse,

the claimant bears the burden of proving that his substance

abuse is not a material contributing factor to his disability.

Because this claimant failed to carry that burden, we affirm

the Commissioner’s denial of benefits.

I. Background

On April 15, 1994, Joseph Parra (“Parra”) applied for Disability and Supplemental Security Income benefits under

Titles II and XVI of the Social Security Act. Parra alleged disability since November 1, 1992 due to alcoholism and bursitis. Following a hearing, an Administrative Law Judge

(“ALJ”) denied Parra’s application. The ALJ found that

Parra’s testimony regarding his physical ailments was neither

credible nor medically supported. He also found that 42

U.S.C. § 423(d)(2)(C) barred Parra from receiving benefits

because Parra’s alcoholism was a material contributing factor

to his disability. Parra appealed this decision to the district

court, which remanded the case to the ALJ under 42 U.S.C.

§ 405(g) with instructions to consider a medical examination

performed upon Parra following the ALJ’s decision. 

Parra died on September 8, 2000 from cardiovascular collapse, hepatorenal syndrome, hepatocellular carcinoma, and

liver cirrhosis. Parra’s daughter, Cathleen, was substituted as

PARRA v. ASTRUE 3437
plaintiff and testified at a hearing the following month. Subsequently, the ALJ issued a decision finding that Parra’s alcoholism was a material contributing factor to any disability

incurred before July 1, 1999. Because Parra’s disability insurance coverage lapsed on December 31, 1995, he was entitled

to no relief.1 Cathleen again sought review by the district

court, and the parties stipulated to a second 42 U.S.C.

§ 405(g) remand to reconsider her testimony and the weight

it should be given. 

A third hearing was held before a different ALJ on January

3, 2003. At the hearing, Cathleen testified that, during his

insured period, her father experienced pain in his hands and

knees and also suffered from hearing difficulties, confusion,

and paranoia. She also testified that he drank to the point of

intoxication “occasionally” and that his alcohol use was not

“excessive,” although when pressed for details she explained

that he often consumed twenty-four beers in a three-day

period and became intoxicated at least weekly. The ALJ also

heard testimony from Dr. Jerome Marmorstein, a medical

expert who reviewed Parra’s medical history. Dr. Marmorstein testified that Parra’s medical records showed severe

complications due to cirrhosis from July 1999 forward,

although the disease had undoubtedly “come on over many

years” and could have been “moderately well advanced” or

“moderately severe” before Parra’s insurance lapsed in 1995.

Following Dr. Marmorstein’s testimony, the ALJ stated orally

that the evidence clearly indicated that Parra was disabled due

to alcohol-induced cirrhosis by 1995, and that the operative

question was whether the disease would have resolved itself

had he quit drinking before his insurance lapsed. 

The ALJ issued his final decision on April 4, 2003. He

rejected Parra’s bursitis claim because the medical evidence

1The ALJ found Parra disabled from July 1, 1999 until his death, but

because he died without a surviving spouse, the ALJ dismissed the claim

for SSI benefits. See 20 C.F.R. §§ 416.1457(c)(4), 416.542(b). 

3438 PARRA v. ASTRUE
failed to show a severe physical impairment prior to December 31, 1995. Turning to the substance abuse claim, the ALJ

found that “by the summer of 1994 the claimant was disabled

primarily due to heavy alcohol consumption and intoxication”

and also had “moderately severe but curable cirrhosis of the

liver.” But he further found that prior to July 1999, it was

likely that Parra would have recovered had he quit drinking.

Therefore Parra’s cirrhosis was irreversible only after that

date. The ALJ also explicitly ruled that the claimant bore the

burden of proving that his alcoholism was not a contributing

factor material to his disability. Because his disability likely

would have resolved had Parra ceased using alcohol during

his insured period, the ALJ found him ineligible for disability

benefits under 42 U.S.C. § 423(d)(2)(C). The district court

affirmed this ruling. 

II. Standards of Review

We review de novo a district court’s affirmance of an

ALJ’s decision. Tackett v. Apfel, 180 F.3d 1094, 1097 (9th

Cir. 1999). We may set aside the ALJ’s denial of benefits

only “when the ALJ’s findings are based on legal error or are

not supported by substantial evidence in the record as a

whole.” Id. Substantial evidence is such relevant evidence as

a reasonable mind might accept as adequate to support a conclusion. Flaten v. Sec’y of Health & Human Servs., 44 F.3d

1453, 1457 (9th Cir. 1995). Where the evidence can reasonably support either affirming or reversing the decision, we

may not substitute our judgment for that of the Commissioner.

Id. 

III. Discussion

Cathleen Parra appeals the ALJ’s 2003 decision on three

grounds. She alleges that (1) the ALJ erred by failing to perform the full five-step analysis to determine Parra’s disability,

(2) the ALJ erred in finding that alcoholism was material to

Parra’s disability, and (3) the ALJ improperly discredited

PARRA v. ASTRUE 3439
Joseph and Cathleen Parra’s testimony. We address each

claim in turn. 

A. The Five-Step Analysis 

[1] A claimant is disabled under Title II of the Social

Security Act if he is unable “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 . . . can be expected to last for a continuous

period of not less than 12 months.” 42 U.S.C. § 423(d)(1)(A).

To determine whether a claimant meets this definition, the

ALJ conducts a five-step sequential evaluation that asks (1)

whether the claimant is presently engaging in substantially

gainful activity; (2) whether the claimant has a severe impairment; (3) whether the impairment is listed, or equivalent to an

impairment listed, in Appendix I of the regulations; (4)

whether the impairment prevents the claimant from doing past

relevant work; and (5) whether the impairment prevents the

claimant from performing any other substantially gainful

activity. 20 C.F.R. § 404.1520(a)(4). The claimant bears the

burden of proving steps one through four, consistent with the

general rule that “[a]t all times, the burden is on the claimant

to establish [his] entitlement to disability insurance benefits.”

Tidwell v. Apfel, 161 F.3d 599, 601 (9th Cir. 1998). Once this

prima facie case is established, the burden shifts to the Commissioner at the fifth step to show that the claimant may perform other gainful activity. See Tackett, 180 F.3d at 1098. 

[2] “A finding of ‘disabled’ under the five-step inquiry

does not automatically qualify a claimant for disability benefits.” Bustamante v. Massanari, 262 F.3d 949, 954 (9th Cir.

2001). Under 42 U.S.C. § 423(d)(2)(C), a claimant cannot

receive disability benefits “if alcoholism or drug addiction

would . . . be a contributing factor material to the Commissioner’s determination that the individual is disabled.” Congress adopted this amendment in 1996 as part of the Contract

with America Advancement Act (“CAAA”), Public Law 104-

3440 PARRA v. ASTRUE
121. As we have previously explained, the purpose of the

CAAA was “to discourage alcohol and drug abuse, or at least

not to encourage it with a permanent government subsidy.”

Ball v. Massanari, 254 F.3d 817, 824 (9th Cir. 2001). Under

the implementing regulations, the ALJ must conduct a drug

abuse and alcoholism analysis (“DAA Analysis”) by determining which of the claimant’s disabling limitations would

remain if the claimant stopped using drugs or alcohol. 20

C.F.R. § 404.1535(b). If the remaining limitations would still

be disabling, then the claimant’s drug addiction or alcoholism

is not a contributing factor material to his disability. If the

remaining limitations would not be disabling, then the claimant’s substance abuse is material and benefits must be denied.

Id.

Appellant asserts that the ALJ erred by failing to conduct

the full five-step analysis to determine that Parra’s cirrhosis

was disabling before conducting the DAA Analysis to determine if Parra’s alcoholism was material. See Bustamante, 262

F.3d at 955 (holding ALJ must identify disability under fivestep procedure before conducting DAA Analysis to determine

whether substance abuse was material to disability). We agree

with appellant that the ALJ’s findings regarding Parra’s cirrhosis are ambiguous. In his decision, the ALJ initially states

that “the claimant did not have a severe physical impairment

prior to the date last insured of December 31, 1995.” Later,

however, the ALJ finds that “by the summer of 1994 the

claimant was disabled primarily due to heavy alcohol consumption and intoxication” and also had “moderately severe

but curable cirrhosis of the liver.” After engaging in the DAA

Analysis to examine the effects of Parra’s alcoholism on his

cirrhosis, the ALJ concludes that “[s]ince July 1, 1999, the

medical evidence establishes the claimant had hepatitis, cirrhosis of the liver, hepatocellular carcinoma and alcoholism.

He did not have an impairment or combination of impairments listed in or medically equal to one listed in Appendix

1, Subpart P, Regulations No. 4. Prior to July 1, 1999 the

claimant’s primary impairment was alcoholism.” 

PARRA v. ASTRUE 3441
[3] Nonetheless, while the ALJ’s five-step analysis is not

completely clear, we find any error in this regard to be harmless. See Curry v. Sullivan, 925 F.2d 1127, 1131 (9th Cir.

1990) (finding ALJ error harmless because it did not affect

the result). Although the decision does not explicitly label

Parra’s cirrhosis as disabling, the ALJ gave Parra the benefit

of the doubt: the DAA Analysis assumed that Parra’s cirrhosis

was disabling and focused correctly upon whether abstinence

would have cured this disability before his insurance lapsed.2

Because the DAA Analysis assumed Parra’s cirrhosis was disabling, any error in arriving at that initial conclusion would

not affect the ALJ’s ultimate decision that Parra’s alcoholism

was material to his cirrhosis. We therefore reject this proffered ground for reversal. 

B. The DAA Analysis 

Appellant next argues that the ALJ erred in finding Parra

ineligible for benefits because his alcoholism was a contributing factor material to his disability under 42 U.S.C.

§ 423(d)(2)(C). Once medical evidence of Parra’s alcoholism

surfaced, the ALJ placed the burden of proof upon the claimant to establish that Parra’s alcoholism was not a contributing

factor material to his disability, by showing he would have

remained disabled had he stopped drinking in 1995. Appellant

asserts that this holding was erroneous. Once a claimant satisfies the five-step analysis, she argues, the Commissioner

should bear the burden of proving that benefits should be

denied. Appellant analogizes to cases involving termination of

benefits, wherein the Commissioner must prove that a claimant previously adjudged disabled has recovered sufficiently to

2The finding that Parra had no “severe physical impairment” prior to

December 31, 1995 appears in the section of the decision addressing his

bursitis claim, before the ALJ discusses the effects of his alcoholism. In

context, this statement is better understood as merely a recognition that

Parra’s non-alcohol-related impairments did not constitute a disability—a

finding supported by the record and seemingly not challenged on appeal.

3442 PARRA v. ASTRUE
return to work. See, e.g., Bellamy v. Sec’y of Health & Human

Servs., 755 F.2d 1380, 1381 (9th Cir. 1985). 

[4] Our prior opinions have explicitly left open the issue of

which party bears the burden of proof under 42 U.S.C.

§ 423(d)(2)(C). We placed the burden upon the claimant in

Ball, 254 F.3d at 821, although a later opinion correctly

described this language as dicta. See Bustamante, 262 F.3d at

955 n.1. We note that each circuit to have considered the issue

has placed the burden squarely upon the claimant. See, e.g.,

Doughty v. Apfel, 245 F.3d 1274, 1276 (11th Cir. 2001); Mittlestedt v. Apfel, 204 F.3d 847, 852 (8th Cir. 2000); Brown v.

Apfel, 192 F.3d 492, 498 (5th Cir. 1999). Our own case law

has suggested the same. See Sousa v. Callahan, 143 F.3d

1240, 1245 (9th Cir. 1998) (remanding to allow claimant “an

opportunity to present evidence as to whether claimant’s disability would have continued if she stopped using drugs or

alcohol”). This approach is consistent with the general rule

that “[a]t all times, the burden is on the claimant to establish

[his] entitlement to disability insurance benefits.” Tidwell,

161 F.3d at 601. Moreover, placing the burden on the claimant is practical because the claimant “is the party best suited

to demonstrate whether [he] would still be disabled in the

absence of drug or alcohol addiction.” Brown, 192 F.3d at

498. 

[5] Appellant’s reliance on cases involving the termination

of benefits is misplaced. As Bellamy makes clear, the Commissioner’s burden in termination cases stems from the notion

that “[o]nce a claimant has been found to be disabled [ ] a

presumption of continuing disability arises in [his] favor.”

Bellamy, 755 F.2d at 1381 (emphasis added). But the CAAA

amended the definition of “disability” under the Social Security Act, such that an individual “shall not be considered disabled” if drug or alcohol use is material to his disability. In

other words, the presumption driving Bellamy has not yet

attached when the DAA Analysis is performed because the

agency has yet to determine whether the claimant is disabled.

PARRA v. ASTRUE 3443
“Unquestionably, proving disability is [claimant’s] burden,

and any amendment to the definition of disability logically

impacts [his] burden.” Brown, 192 F.3d at 498; see also Bellamy, 755 F.2d at 1381 (“Social Security disability benefits

claimants have the burden of proving disability.”). We thus

make explicit what was intimated by our earlier cases, that the

claimant bears the burden of proving that drug or alcohol

addiction is not a contributing factor material to his disability.

[6] Appellant failed to carry this burden. The record offers

no evidence supporting the notion that the disabling effects of

Parra’s cirrhosis would have remained had he stopped drinking before December 31, 1995. Dr. Marmorstein testified that

cirrhosis, caused by alcohol abuse, is generally reversible and

that the medical records support a finding that Parra’s cirrhosis was irreversible only after July 1, 1999. Dr. Marmorstein

explained that he had no reason to believe that Parra’s condition would not have improved had Parra quit drinking in

1995. When pressed by Parra’s counsel, he reiterated several

times that “there is no way for me to know” whether Parra’s

cirrhosis was irreversible in 1994 or 1995 because the record

was insufficient to support a conclusion either way.3

Appellant argues that Dr. Marmorstein’s testimony was

inconclusive on this point, and that inconclusive testimony is

sufficient to satisfy the claimant’s burden of proof under the

3The ALJ also cited the 1994 report of psychologist Dr. Nancy McCarthy. Dr. McCarthy documented many of the mental impairments later cited

by Parra and his daughter at the disability hearings. Without discussing

Parra’s liver damage, Dr. McCarthy wrote that these mental impairments

were likely caused by excessive alcohol consumption and intimated that

they would resolve if Parra stopped drinking. As appellant notes, Dr.

McCarthy’s report does not state that Parra’s cirrhosis would have

resolved with abstinence. But it does constitute substantial evidence to

support a finding that his disabling mental limitations, which Dr. Marmorstein testified may have been caused by cirrhosis, would have resolved

with abstinence. See Tackett, 180 F.3d at 1097 (court reviews whether

ALJ’s conclusions are “supported by substantial evidence in the record as

a whole” (emphasis added)). 

3444 PARRA v. ASTRUE
statute. To support this claim, she relies upon two internal

agency documents, HALLEX I-5-3-14A4 and Emergency

Teletype No. EM-96-94.5 These documents, she argues, preclude a finding of materiality unless the medical evidence

affirmatively shows that a disability will resolve with abstinence. We reject this argument, which effectively shifts the

burden to the Commissioner to prove materiality. Assuming

without deciding that the HALLEX and Teletype provisions

apply to this situation, we have previously explained that

internal agency documents such as these do not carry the

force of law and are not binding upon the agency. See, e.g.,

Lowry v. Barnhart, 329 F.3d 1019, 1023 (9th Cir. 2003);

Moore v. Apfel, 216 F.3d 864, 868-69 (9th Cir. 2000). Therefore, they do not create judicially enforceable duties, and we

will not review allegations of noncompliance with their provisions. See Moore, 216 F.3d at 869. 

At most, these sources may represent the agency’s unpromulgated interpretation of the statute’s phrase “contributing

factor material to the determination of disability.” Such an

interpretation is “ ‘entitled to respect’ ” but only to the extent

that it has the “ ‘power to persuade.’ ” Christensen v. Harris

County, 529 U.S. 576, 587 (2000) (quoting Skidmore v. Swift

4HALLEX is the Hearing, Appeals, and Litigation Law Manual, an

internal agency guidebook. HALLEX I-5-3-14A states that a finding that

DAA is material is appropriate “only when . . . there is sufficient and

appropriate medical evidence to establish . . . the individual would not be

considered to be disabled if he/she stopped using drugs and/or alcohol.”

5On August 30, 1996, the SSA’s Office of Disability sent this teletype

to all hearing offices, responding to initial questions posed by the adoption

of the CAAA. The relevant portion of the teletype explains that “a finding

that DAA is material will be made only when the evidence establishes that

the individual would not be disabled if he/she stopped using drugs/

alcohol.” Therefore in “cases in which the evidence demonstrates multiple

impairments, especially cases involving multiple mental impairments,

where the MC/PC cannot project what limitations would remain if the

individuals stopped using drugs/alcohol,” the MC/PC “should record his/

her findings to that effect” and “the DE will find that DAA is not a contributing material factor to the determination of disability.” 

PARRA v. ASTRUE 3445
& Co., 323 U.S. 134, 140 (1944)). In this case, such an interpretation is unpersuasive because it contradicts the purpose of

the statute. As noted above, Congress sought through the

CAAA “to discourage alcohol and drug abuse, or at least not

to encourage it with a permanent government subsidy.” Ball,

254 F.3d at 824.6 Appellant’s proposed rule provides the

opposite incentive. An alcoholic claimant who presents inconclusive evidence of materiality has no incentive to stop drinking, because abstinence may resolve his disabling limitations

and cause his claim to be rejected or his benefits terminated.

His claim would be guaranteed only as long as his substance

abuse continues—a scheme that effectively subsidizes substance abuse in contravention of the statute’s purpose.7

[7] In sum, we find that Parra bore the burden of proving

that his alcoholism was not a contributing factor material to

his cirrhosis-related disability. Dr. Marmorstein testified that

abstinence generally ameliorates the effects of cirrhosis and

that the record fails to show that Parra’s cirrhosis was irreversible when his disability insurance lapsed. Therefore we

conclude that the ALJ’s denial of benefits under 42 U.S.C.

§ 423(d)(2)(C) was supported by substantial evidence and free

of material error. 

C. Credibility Determinations 

Finally, appellant asserts that the ALJ erred in finding that

the testimony of Parra and his daughter lacked credibility.

6

See also H.R. Rep. No. 104-379, at 17 (1995) (explaining that the

amendment eliminates “a perverse incentive that affronts working taxpayers and fails to serve the interests of addicts and alcoholics, many of whom

use their disability checks to purchase drugs and alcohol, thereby maintaining their addictions”). 

7The teletype elsewhere explains that a period of abstinence of one

month or more is useful to test whether a claimant’s substance abuse is

material to his disability. Under appellant’s interpretation of the teletype,

the claimant has no incentive to undergo this period of abstinence, as

doing so would only jeopardize his claim. 

3446 PARRA v. ASTRUE
Generally, “questions of credibility and resolution of conflicts

in the testimony are functions solely” for the agency. Sample

v. Schweiker, 694 F.2d 639, 642 (9th Cir. 1982) (internal quotation marks omitted). The ALJ must provide “clear and convincing” reasons to reject a claimant’s subjective testimony,

by specifically identifying “what testimony is not credible and

what evidence undermines the claimant’s complaints.” Lester

v. Chater, 81 F.3d 821, 834 (9th Cir. 1995). The ALJ may

reject a third party’s testimony upon giving a reason germane

to that witness. Crane v. Shalala, 76 F.3d 251, 254 (9th Cir.

1996). 

[8] Contrary to appellant’s contentions, the ALJ did not

find that Parra lacked credibility. The ALJ found that Parra

was “generally credible with respect to his condition since

July 1999” and stated more generally that he “concur[red]

with the finding of the prior Administrative Law Judge” that

prior to July 1999 Parra’s primary impairment was alcoholism, but that he was disabled from July 1999 onward. The

ALJ discounted some of Parra’s subjective testimony regarding his bursitis pain. But to the extent that this constitutes a

rejection of Parra’s testimony, the ALJ provides clear and

convincing reasons for doing so. The decision pointed to specific evidence in the record, including numerous medical

reports, establishing that Parra’s ailments were not severe

impairments. For example, his subjective complaint of

bursitis-related knee pain was contradicted by numerous Veterans Administration laboratory tests showing knee function

within normal limits during Parra’s insured period. These

inconsistencies constitute significant and substantial reasons

to find Parra’s testimony less than completely credible. See

Morgan v. Comm’r of Soc. Sec. Admin., 169 F.3d 595, 600

(9th Cir. 1999). The ALJ also noted that Parra’s physical ailments were treated with an over-the-counter pain medication.

We have previously indicated that evidence of “conservative

treatment” is sufficient to discount a claimant’s testimony

regarding severity of an impairment. Johnson v. Shalala, 60

F.3d 1428, 1434 (9th Cir. 1995). We therefore find no error.

PARRA v. ASTRUE 3447
[9] Similarly, the ALJ did not err in his assessment of Cathleen’s testimony. The ALJ found Cathleen’s testimony was

“colored by bias” because she repeatedly attempted to “discount the alcoholism of the claimant” despite her own testimony as to the frequency and effects of his drinking. The

incongruity between Cathleen’s objective descriptions of her

father’s drinking habits and her subjective characterization of

these habits as “occasional” and not “excessive” constitutes a

“germane” reason why her testimony was not completely persuasive. See Dodrill v. Shalala, 12 F.3d 915, 919 (9th Cir.

1993). Moreover, we note that the ALJ did not completely

discredit Cathleen’s testimony. He cited her testimony to support his finding that Parra was disabled from 1994 onward

due to the effects of his alcoholism. Therefore, we hold that

the ALJ did not err in finding Cathleen only partially credible,

and weighing her testimony accordingly.

IV. Conclusion

We AFFIRM the district court’s ruling that the Commissioner did not err in denying Parra’s claim. 

3448 PARRA v. ASTRUE