Unpublished Disposition, 928 F.2d 408 (9th Cir. 1985)

MEMORANDUM^* 

Jessie James appeals the denial of disability insurance benefits. We find the decision of the Administrative Law Judge ("ALJ") and Social Security Administration Appeals Council ("Appeals Council") not supported by substantial evidence, and we remand for an award of benefits.

* James has been unemployed for the past seven years. Prior to his unemployment, he worked for three years as a janitor for a shopping mall, his only period of significant, continuous employment. He was fired when the shopping mall was sold.

James subsequently participated in a work training program, where he was initially assessed as "unable to compete in the open market for any type of job." At the program's conclusion, even after training, James was unable to meet industry standards for productivity.

During the hearing before the ALJ, James testified to his inability to work due to his illiteracy, depression, anxiety attacks, hearing loss, medication side effects, difficulty lifting heavy objects, and poor concentration. Over the past decade, James has been treated or evaluated by David N. Sweet, Ph.D., Richard J. Mead, M.D., Eugene Minard, M.D., Matthew Gruber, M.D., Hiren Rana, M.D., and Eugene Yamaguchi, M.D., his treating physician, all of whom noted James's poor intellectual functioning, and depression. Drs. Minard and Rana suspected serious depression and brain damage.

James filed a claim for disability insurance benefits and supplemental security income on March 6, 1985. The ALJ denied the claim, finding James capable of returning to janitorial work. When the Appeals Council declined to review the ALJ's decision, James submitted a letter from his treating physician, Dr. Yamaguchi, which stated that James was unemployable, had no chance of improvement in the next year, was chronically depressed, and had made no improvement in spite of medication and counseling. The Appeals Council disregarded the letter, finding Dr. Yamaguchi's opinion not supported by his treatment records, and affirmed the denial of benefits. This became the final decision of the Secretary of Health and Human Services ("Secretary").

The district court affirmed the Secretary's decision, finding substantial evidence supported the determination that James was only moderately impaired. The court considered evaluations prepared by two psychologists retained by the Secretary, Drs. Le Bray and Sullivan, neither of whom ever interviewed James personally, and found them adequate to support the conclusion that James was not disabled within the meaning of the Social Security Act.

II

We review de novo the judgment of the district court. Bunnell v. Sullivan, 912 F.2d 1149, 1151 (9th Cir. 1990). We review the Secretary's denial of benefits to determine whether it is supported by substantial evidence or based on legal error. Id. In reviewing the record, we consider "both evidence that supports and evidence that detracts from the ALJ's conclusion; [we will] not affirm simply by isolating a specific quantum of supporting evidence." Fife v. Heckler, 767 F.2d 1427, 1429 (9th Cir. 1985).

III

James argues we should reverse the district court because the Secretary erred in (1) discounting the treating physician's assessment; (2) finding James capable of working and hence ineligible for benefits; (3) failing to consider the combined effect of James's impairments; (4) discounting James's testimony regarding his work limitations.

a. Treating Physician's Opinion.

The Appeals Council flatly rejected Dr. Yamaguchi's opinion that James was unemployable because of his chronic depression and impaired intellectual functioning, finding this opinion not supported by treatment records. The Appeals Council discounted Dr. Yamaguchi's opinion because his letter stated James had not improved "despite ongoing medical therapy and counseling," and the Appeals Council found there was no record of counseling other than a onetime visit.

The medical opinion of a claimant's treating physician is entitled to special weight, Embrey v. Bowen, 849 F.2d 418, 421 (9th Cir. 1988), and if it is disregarded, the Appeals Council or ALJ "must set forth specific, legitimate reasons for doing so, and this decision must itself be based on substantial evidence." Id. (citation omitted).

The only reason offered by the Appeals Council for disregarding Dr. Yamaguchi's unequivocal assertion that James was unable to work was that the record did not show James had received counseling. In fact, Dr. Yamaguchi's treatment records, an evaluation letter from Karen Keller, a counselor at the West Salem Clinic, and the report by Dr. Le Bray, all noted that James was in counseling with Dick Lutz at the West Salem Clinic. Since the Appeals Council failed to consider this evidence establishing James had received counseling, it did not have the "substantial evidence" necessary to disregard Dr. Yamaguchi's opinion. We hold the Appeals Council erred in discounting Dr. Yamaguchi's opinion without "setting forth specific, legitimate reasons for doing so." Fife, 767 F.2d at 1431.

b. Extent of James's Impairments.

The ALJ found James's contention that he cannot work "not supported by clinical or laboratory findings establishing impairment which, when considered in light of all the evidence, could reasonably be expected to cause pain or physical or mental limitations that would preclude past work as a janitor/custodian." To establish a sufficient degree of impairment, James must meet the two part test of Listing 12.02 of the Secretary's medical listings. All parties agree James meets Part A of Listing 12.02, which requires " [d]emonstration of a loss of specific cognitive abilities or affective changes," and medical documentation of at least one of a listed group of functional disabilities. 20 C.F.R. Part 404, Subpart P, Appendix 1, Section 12.02A. However, the Secretary found James did not meet Part B, which requires the functional disability of Part A to result in at least two of the following:

1. Marked restriction of activities of daily living; or

2. Marked difficulties in maintaining social functioning; or

3. Deficiencies of concentration, persistence or pace resulting in frequent failure to complete tasks in a timely manner (in work settings or elsewhere); or

4. Repeated episodes of deterioration or decompensation in work or work-like settings which cause the individual to withdraw from that situation or to experience exacerbation of signs and symptoms (which may include deterioration of adaptive behaviors).

20 C.F.R. Part 404, Subpart P, Appendix 1, Section 12.02B. We find the Secretary's determination that James did not meet Part B of Listing 12.02 was not supported by substantial evidence.

Drs. Sweet, Mead, Minard, Gruber, Rana, and Yamaguchi all at least suspected James was depressed and noted his limited mental capability. Dr. Minard suspected "significant depression" and recommended further testing. Dr. Gruber found James depressed and unable to work until the depression improved. Dr. Rana noted numerous signs of depression and deficiencies in concentration, attention and memory. Dr. Yamaguchi flatly stated James was unable to work and his depression was unaffected by medication. The treating and evaluating physicians were unanimous in finding James impaired by his depression. See Hammock v. Bowen, 879 F.2d 498, 502 (9th Cir. 1989) (evidence not contradictory where physicians differ only as to the degree of impairment).

Additional evidence of James's impairment was supplied by the counselors at the vocational training program, who concluded James could not meet industry standards for productivity. Finally, James offered uncontroverted testimony of his difficulty in past jobs, fear of groups, illiteracy, panic attacks, inability to do simple math, fear of elevators, and inability to find his way around small areas.

Drs. Le Bray and Sullivan, retained by the Social Security Administration, were the only two psychologists or physicians who found James to be only slightly impaired. Their opinions were based solely on the medical records of the other treating physicians and psychologists, and hence do not constitute substantial evidence. See Sprague v. Bowen, 812 F.2d 1226, 1231 (9th Cir. 1987) (physician's cursory observation of claimant's mental condition not substantial evidence, where physician had inadequate basis for opinion).

The other evidence supporting the ALJ's and the Appeals Council's decision consists of comments by a few of the evaluating physicians who found James not unemployable. However, every one of these comments was coupled with concern about the extent of his depression. Many of the doctors recommended further testing to determine other mental deficiencies. Given the context of these comments regarding James's employability, they also do not constitute substantial evidence of James's fitness for employment. See Gregory v. Bowen, 844 F.2d 664, 667 (9th Cir. 1988) (reversing denial of benefits where several doctors noted it would be very difficult for claimant to work, but no doctor declared claimant totally unemployable).

c. Cumulative Effect of Impairments.

James argues the Secretary failed to consider the gross effect of his impairments, and totally failed to consider his panic attacks and the drowsiness he experiences as a side effect of the medication he takes to combat his depression.

" 'A claimant's illnesses must be considered in combination and must not be fragmentized in evaluating their effects.' " Beecher v. Heckler, 756 F.2d 693, 694 (9th Cir. 1985) (quoting Dressel v. Califano, 558 F.2d 504, 508 (8th Cir. 1977). The ALJ considered only James's low intellectual functioning and illiteracy in determining his ability to work, disregarding James's depression because he believed it to be controlled by medication. The ALJ erred in not considering the combined impact of all James's impairments: his depression, hearing loss, anxiety attacks, medication side effects, as well as his low I.Q. and illiteracy.

d. James's Testimony.

James testified to past employment difficulties because of his inability to do many things necessary to almost any job, such as finding his way around a building, working consistently, interacting with other people, simple math, and reading. Without offering any reason, the ALJ found James's contentions about his difficulties with past employment and inability to do future work to be unsupported.

If the Secretary chooses to disregard evidence of the effect of a claimant's impairments, the Secretary must make specific findings to justify that decision. Swenson v. Sullivan, 876 F.2d 683, 687 (9th Cir. 1989). "That a claimant testifies that his symptom is more disabling than would normally be expected gives no valid reason to discount his testimony." Id. James's borderline intelligence and depression established a basis for some disabling symptoms. The ALJ had no basis to reject James's testimony about the limitations he suffered due to these two disabling conditions. It was error for the Secretary to disregard this testimony without articulating specific, legitimate reasons for doing so.

IV

Because we are convinced the Secretary's decision is unsupported by substantial evidence, see Sprague, 812 F.2d at 1232, we REVERSE and REMAND for an award of benefits.