Oscar Potts v. Michael J. Astrue, No. 2:2010cv02781 - Document 18 (C.D. Cal. 2011)

Court Description: MEMORANDUM OPINION AND ORDER REVERSING DECISION OF THE COMMISSIONER OF SOCIAL SECURITY AND REMANDING FOR FURTHER PROCEEDINGS by Magistrate Judge John E. McDermott. IT IS HEREBY ORDERED that Decision of the Commissioner of Social Security is reversed and remanded for further proceedings in accordance with law and with this Memorandum and Order. LET JUDGMENT BE ENTERED ACCORDINGLY. [See attached order for further details.) (es)

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Oscar Potts v. Michael J. Astrue Doc. 18 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA 9 10 11 OSCAR POTTS, 12 Plaintiff, 13 v. 14 MICHAEL J. ASTRUE, 15 Commissioner of Social Security, Defendant. 16 ) ) ) ) ) ) ) ) ) ) ) ) Case No. CV 10-2781-JEM MEMORANDUM OPINION AND ORDER REVERSING DECISION OF THE COMMISSIONER OF SOCIAL SECURITY AND REMANDING FOR FURTHER PROCEEDINGS 17 PROCEEDINGS 18 19 On April 19, 2010, Oscar Potts ( Plaintiff or Claimant or Potts ) filed a complaint 20 seeking review of the decision of the Commissioner of Social Security ( Commissioner ) 21 denying Plaintiff s application for Supplemental Security Income ( SSI ) benefits. The 22 Commissioner filed an Answer on November 3, 2010. The parties filed a Joint Stipulation 23 ( JS ) on March 8, 2011. The matter is now ready for decision. 24 Pursuant to 28 U.S.C. § 636(c), both parties consented to proceed before this 25 Magistrate Judge. After reviewing the pleadings, transcripts, and administrative record 26 ( AR ), the Court concludes that the Commissioner s decision should be reversed and 27 remanded for further proceedings in accordance with law and with this Memorandum and 28 Opinion. Dockets.Justia.com BACKGROUND 1 2 Plaintiff is a 52 year old male who alleged disability beginning May 15, 1991, due to 3 back problems (AR 13) and mental difficulties. (AR 128.) Plaintiff s claim was denied initially 4 on December 27, 2005, and on reconsideration on May 3, 2006. (AR 13.) He filed a timely 5 request for hearing, which was held before Administrative Law Judge ( ALJ ) Jeffrey Hatfield 6 on May 22, 2008, in Long Beach, California. (AR 13-19.) Claimant appeared and testified. 7 (AR 13.) Vocational expert ( VE ) Aida Y. Worthington also testified. (AR 13.) Claimant was 8 not represented by counsel. (AR 13.) 9 The ALJ issued an unfavorable decision on June 5, 2008. (AR 13-19.) The Appeals 10 Council denied review on March 15, 2010. (AR 1-4.) DISPUTED ISSUES 11 12 As reflected in the Joint Stipulation, the only disputed issue that Plaintiff is raising as a 13 ground for reversal and remand is as follows: 14 1. Whether the ALJ erred in failing to obtain a sufficient waiver from Oscar Potts of 15 his right to counsel. 16 17 STANDARD OF REVIEW Under 42 U.S.C. § 405(g), this Court reviews the ALJ s decision to determine whether 18 the ALJ s findings are supported by substantial evidence and free of legal error. Smolen v. 19 Chater, 80 F.3d 1273, 1279 (9th Cir. 1996); see also DeLorme v. Sullivan, 924 F.2d 841, 846 20 (9th Cir. 1991) (ALJ s disability determination must be supported by substantial evidence and 21 based on the proper legal standards). 22 Substantial evidence means more than a mere scintilla . . . but less than a 23 preponderance. Saelee v. Chater, 94 F.3d 520, 521-22 (9th Cir. 1996) (quoting Richardson 24 v. Perales, 402 U.S. 389, 401 (1971)). Substantial evidence is such relevant evidence as a 25 reasonable mind might accept as adequate to support a conclusion. Richardson, 402 U.S. 26 at 401 (internal quotations and citation omitted). 27 This Court must review the record as a whole and consider adverse as well as 28 supporting evidence. Robbins v. Soc. Sec. Admin., 466 F.3d 880, 882 (9th Cir. 2006). 2 1 Where evidence is susceptible to more than one rational interpretation, the ALJ s decision 2 must be upheld. Morgan v. Comm r, 169 F.3d 595, 599 (9th Cir. 1999). However, a 3 reviewing court must consider the entire record as a whole and may not affirm simply by 4 isolating a specific quantum of supporting evidence. Robbins, 466 F.3d at 882 (quoting 5 Hammock v. Bowen, 879 F.2d 498, 501 (9th Cir. 1989)); see also Orn v. Astrue, 495 F.3d 6 625, 630 (9th Cir. 2007). 7 8 SEQUENTIAL EVALUATION The Social Security Act defines disability as the inability to engage in any substantial 9 gainful activity by reason of any medically determinable physical or mental impairment which 10 can be expected to result in death or . . . can be expected to last for a continuous period of 11 not less than 12 months. 42 U.S.C. §§ 423(d)(1)(A), 1382c(a)(3)(A). The Commissioner 12 has established a five-step sequential process to determine whether a claimant is disabled. 13 20 C.F.R. §§ 404.1520, 416.920. 14 The first step is to determine whether the claimant is presently engaging in substantial 15 gainful activity. Parra v. Astrue, 481 F.3d 742, 746 (9th Cir. 2007). If the claimant is 16 engaging in substantial gainful activity, disability benefits will be denied. Bowen v. Yuckert, 17 482 U.S. 137, 140 (1987). Second, the ALJ must determine whether the claimant has a 18 severe impairment or combination of impairments. Parra, 481 F.3d at 746. An impairment is 19 not severe if it does not significantly limit the claimant s ability to work. Smolen v. Chater, 80 20 F.3d 1273, 1290 (9th Cir. 1996). Third, the ALJ must determine whether the impairment is 21 listed, or equivalent to an impairment listed, in Appendix I of the regulations. Id. If the 22 impediment meets or equals one of the listed impairments, the claimant is presumptively 23 disabled. Bowen v. Yuckert, 482 U.S. at 141. Fourth, the ALJ must determine whether the 24 impairment prevents the claimant from doing past relevant work. Pinto v. Massanari, 249 25 F.3d 840, 844-45 (9th Cir. 2001). Before making the step four determination, the ALJ first 26 27 28 3 1 must determine the claimant s residual functional capacity ( RFC ).1 20 C.F.R. § 416.920(e). 2 The RFC must consider all of the claimant s impairments, including those that are not 3 severe. 20 C.F.R. §§ 416.920(e), 416.945(a)(2); Social Security Ruling ( SSR ) 96-8p. If the 4 claimant cannot perform his or her past relevant work or has no past relevant work, the ALJ 5 proceeds to the fifth step and must determine whether the impairment prevents the claimant 6 from performing any other substantial gainful activity. Moore v. Apfel, 216 F.3d 864, 869 (9th 7 Cir. 2000). The claimant bears the burden of proving steps one through four, consistent with the 8 9 general rule that at all times the burden is on the claimant to establish his or her entitlement 10 to benefits. Parra, 481 F.3d at 746. Once this prima facie case is established by the 11 claimant, the burden shifts to the Commissioner to show that the claimant may perform other 12 gainful activity. Lounsburry v. Barnhart, 468 F.3d 1111, 1114 (9th Cir. 2006). To support a 13 finding that a claimant is not disabled at step five, the Commissioner must provide evidence 14 demonstrating that other work exists in significant numbers in the national economy that the 15 claimant can do, given his or her RFC, age, education, and work experience. 20 C.F.R. 16 § 416.912(g). If the Commissioner cannot meet this burden, then the claimant is disabled 17 and entitled to benefits. Id. THE ALJ DECISION 18 In this case, the ALJ determined at step one of the sequential evaluation that Plaintiff 19 20 has not engaged in substantial gainful activity since May 25, 2005, the application date. (AR 21 15.) 22 At step two, the ALJ determined that Plaintiff has the severe medical impairment of 23 multilevel disc disease of the lumber spine. (AR 15.) 24 At step three, the ALJ found that Plaintiff does not have an impairment or combination 25 of impairments that meets or medically equals one of the listed impairments. (AR 15.) 26 27 28 1 Residual functional capacity ( RFC ) is what one can still do despite [his or her] limitations and represents an assessment based on all the relevant evidence. 20 C.F.R. §§ 404.1545(a)(1), 416.945(a)(1). 4 1 The ALJ found that Claimant had the residual functional capacity to lift and carry 50 2 pounds occasionally and 25 pounds frequently, stand/walk 6 hours in an 8 hour workday, no 3 ladder/rope/scaffold climbing, and avoidance of working around hazardous machinery, at 4 unprotected heights or driving as an occupational requirement. (AR 15.) In assessing 5 Claimant s RFC, the ALJ determined that there was no evidence of any medically 6 determinable mental impairment and also made an adverse credibility finding (AR 17), but 7 this finding related only to Potts back pain allegations which are not in issue on this appeal. 8 At step four, the ALJ found that the Claimant has no past relevant work. (AR 17.) 9 At step five, with the aid of vocational expert testimony, the ALJ determined that there 10 were jobs that exist in significant numbers in the national economy that Claimant can 11 perform. (AR 18.) 12 Hence, the ALJ concluded that Plaintiff was not disabled within the meaning of the 13 Social Security Act. (AR 18.) DISCUSSION 14 15 The ALJ decision must be reversed. The lay witness evidence of Plaintiff s 16 comprehension difficulties triggered the ALJ s duty to develop the record further. 17 Notwithstanding this evidence, the ALJ failed to conduct a sufficient inquiry to determine if 18 Plaintiff s waiver of counsel was knowing and voluntary. The lack of counsel resulted in 19 prejudice and unfairness in the administrative process. The ALJ committed error by not 20 developing the record further and by not discussing the lay witness evidence. That evidence 21 undermines the ALJ s RFC and the ALJ s step five conclusion that Potts could perform jobs 22 in the national economy. The ALJ decision must be reversed and remanded to obtain a 23 consulting examiner s assessment of Plaintiff s mental capacity. 24 A. Factual And Procedural Background 25 A Social Security claimant has a statutory right to be represented by counsel at an 26 administrative hearing. 42 U.S.C. § 406; Saelee v. Astrue, 2011 WL 794922, *2 (E.D. Cal. 27 2011); Duns v. Heckler, 586 F. Supp. 359, 364 (N. D. Cal. 1984). At the administrative 28 5 1 hearing here, the ALJ obtained a signed waiver of counsel from Potts. (AR 26-27, 75.) 2 Plaintiff, however, asserts that the ALJ did not obtain a sufficient, knowing waiver of his right 3 to counsel, and seeks reversal and remand on that basis. 4 In response to the Written Questions To Claimant form dated May 19, 2008, Potts 5 alleged diminished mental capacity. (AR 128.) He stated he forgets easily, is not able to 6 understand or remember complex instructions, is confused at times, and needs more 7 direction or information to finish task, and is distracted easily, has to be redirected. (AR 8 128.) 9 A Social Security interviewer by the name of A. Jackson confirmed Plaintiff s 10 allegation. In a June 10, 2005, Disability Report (AR 79-82), the interviewer indicated Potts 11 has difficulty with understanding, coherency, concentrating, and answering. (AR 80-81.) 12 Potts rambled and drifted off on topics I didn t ask him about several times. (AR 81.) He 13 started talking to himself and the interviewer had to rephrase several questions in order for 14 him to grasp what was being said. (AR 81.) 15 Potts niece Brenda Fay gave similar testimony at the hearing. (AR 39-41.) She 16 stated that he don t comprehend too well (AR 27) and he don t comprehend so when you 17 ask him questions, you have to continue to ask him. (AR 29.) She also stated that Potts 18 does not comprehend very well and there s a lot of stuff you have to keep repeating. (AR 19 39.) Ms Fay had the following colloquy with the ALJ: 20 A. Well, when you kept saying prepare, do you prepare your own 21 sandwich or something like that, I don t think he understood what 22 prepare means. And you said fix - - 23 Q. Well - - 24 A. So I don t know if he, you know what I m saying, certain words he may not understand - - 25 26 Q. All right. Okay. 27 A. - - until you break it down to his, you know - - 28 6 1 Q. All right. 2 A. - - - level of thinking. 3 Q. All right. 4 ALJ: We re going to go to the vocational expert. All right. 5 (AR 40-41.) 6 Despite these allegations and facts, the ALJ dismissed Plaintiff s mental difficulties 7 and assessed no RFC mental limitations: The Claimant alleges mental problems (Exhibit I0E), but the record 8 9 does not show subjective mental complaints, abnormal psychiatric signs 10 or symptoms, psychiatric diagnosis or psychiatric work-up or treatment. 11 The undersigned finds no evidence of a medically determinable mental 12 impairment. 13 (AR 17.) 14 B. Applicable Federal Law 15 In Social Security cases, the ALJ has a special, independent duty to develop the 16 record fully and fairly and to assure that the claimant s interests are considered. Tonapetyan 17 v. Halter, 242 F.3d 1144, 1150 (9th Cir. 2001); Smolen, 80 F.3d 1273, 1288 (9th Cir. 1996); 18 Brown v. Heckler, 713 F.2d 441, 443 (9th Cir. 1983). The ALJ has a basic duty to inform 19 himself about facts relevant to his decision. Heckler v. Campbell, 461 U.S. 458, 471 n.1 20 (1983) (Brennan, Jr., concurring). When the claimant is unrepresented, the ALJ must be 21 especially diligent in exploring for all relevant facts. Tonapetyan, 242 F.3d at 1150. The 22 ALJ s duty to develop the record fully is also heightened when the claimant may be 23 mentally ill and unable to protect his or her interests. Id. Ambiguous evidence or the ALJ s 24 own finding that the record is inadequate to allow for proper evaluation of the evidence 25 triggers the ALJ s duty to conduct an appropriate inquiry. Id. 26 Plaintiff can knowingly and intelligently waive his statutory right to counsel. Duns, 586 27 F. Supp. at 364; Perez v. Astrue, 2009 WL 3170041, *3 (C.D. Cal. 2009). Even if the waiver 28 7 1 is deficient, plaintiff must demonstrate prejudice or unfairness in the proceedings to obtain a 2 remand. Hall v. Sec y of Health, Educ. & Welfare, 602 F.2d 1372, 1378 (9th Cir. 1979). The 3 real issue, however, is not whether the waiver was knowing or intelligent, but whether, 4 without the representation, the ALJ met his heightened duty to consciously and scrupulously 5 probe into, inquire of, an explore for all relevant facts to protect plaintiff s interests. Cox v. 6 Califano, 587 F.2d 988, 991 (9th Cir. 1978); see also Vidal v. Harris, 637 F.2d 710, 713 (9th 7 Cir. 1981); Key v. Heckler, 754 F.2d 1545, 1551 (9th Cir. 1985). This duty includes diligently 8 ensuring that both favorable and unfavorable facts and circumstances are elicited at the 9 administrative hearing. Cox, 587 F.2d at 991; Vidal, 637 F.2d at 713; Key, 754 F.2d at 1551. 10 Only if plaintiff can demonstrate prejudice or unfairness in the administrative proceeding, as 11 a result of not having counsel present, is remand warranted. Vidal, 637 F.2d at 713. 12 C. The ALJ Failed To Develop The Record Properly Which Resulted In Prejudice And Unfairness In The Hearing 13 The ALJ was presented with substantial unrebutted evidence from Claimant, his niece 14 and a Social Security interviewer that Plaintiff had potential mental limitations that obliged the 15 ALJ to conduct an appropriate inquiry into Potts waiver of his right to counsel. Claimant s 16 niece repeatedly told the ALJ at the hearing that Potts did not comprehend too well. The 17 ALJ, however, only asked Claimant if he was prepared to proceed without a lawyer (AR 26) 18 and then gave two long orations about the proceedings, which the Court doubts Claimant 19 understood. (AR 27-28, 29-30.) The orations had nothing to do with representation or 20 Claimant s ability to waive it knowingly. There was never any meaningful inquiry of Claimant 21 to determine whether he understood what he was waiving. In the absence of an appropriate 22 inquiry, there is no way to know whether Potts waiver of his right to counsel was knowing 23 and intelligent. The Court concludes that Potts was motivated principally by a desire to 24 proceed to get benefits, without any true understanding of the consequences of proceeding 25 without counsel. 26 Even if the waiver was deficient, Plaintiff must demonstrate that the lack of counsel 27 resulted in prejudice and unfairness in the administrative process and hearing. Vidal, 637 28 8 1 F.2d at 713. The ALJ made numerous errors that establish prejudice and unfairness and 2 require remand. 3 First, the ALJ failed to develop the record fully and fairly as Tonapetyan commands. 4 Tonapetyan, 242 F.3d at 1150. The lay witness evidence triggered the ALJ s heightened 5 duty to develop the facts to protect Plaintiff s interests, in view of his lack of representation 6 and possible mental limitations. The ALJ decision asserts that the record does not show 7 subjective mental complaints. (AR 17.) This finding is not supported by substantial 8 evidence. The ALJ had before him the substantial unrebutted evidence of Pott s mental 9 limitations from Claimant, his niece and the Social Security interviewer. The ALJ never 10 mentions this evidence or attempts to discount it in his decision. The evidence of 11 comprehension difficulties from Claimant, his niece and the Social Security interviewer was 12 enough to trigger the ALJ s duty to develop the record further on Potts mental limitations. 13 On this record, the ALJ should have ordered a mental assessment before proceeding further 14 or kept the hearing open to accept such evidence. The Appeals Council should have 15 ordered a mental assessment. These are the kind of efforts contemplated by case authority 16 requiring the ALJ to be especially diligent in exploring for all the relevant facts as to 17 unrepresented claimants. Tonapetyan, 242 F.3d at 1150. 18 Second, the ALJ s failure to develop the record resulted in a prejudicial finding of no 19 mental impairment. The ALJ decision asserts that there is no record of abnormal psychiatric 20 sign or symptoms, psychiatric diagnosis or psychiatric work-up or treatment. (AR 17.) As a 21 result, the ALJ found no evidence of a medically determinable mental impairment. (AR 17.) 22 Although the ALJ is correct that the record contains no medical evidence of mental 23 impairment, the reason is that the ALJ failed to develop the record by ordering a mental 24 assessment. The ALJ s determination of no mental impairment must be set aside as it is the 25 product of the ALJ s failure to develop the record properly. 26 Third, the ALJ erred by not even discussing the lay witness testimony of Claimant, his 27 niece and the Social Security interviewer about Claimant s comprehension difficulties. Lay 28 9 1 witness testimony regarding a claimant s symptoms is competent evidence that an ALJ must 2 take account, unless he or she expressly determines to disregard such testimony and gives 3 reasons germane to each witness for doing so. Lewis v. Apfel, 236 F.3d 503, 511 (9th Cir. 4 2001). Lay witness testimony cannot be disregarded without comment. Stout v. Comm r, 5 454 F.3d 1050, 1053 (9th Cir. 2006). The Commissioner dismisses the lay witness 6 observations because they are not medical or psychiatric evidence. The Commissioner s 7 attempt to dismiss the lay witness evidence must fail because the ALJ never discussed that 8 evidence in his decision. Connett v. Barnhart, 340 F.3d 871, 874 (9th Cir. 2003). In any 9 event, the Commissioner s assertion, though true, is irrelevant, fails to appreciate the value 10 of lay witness evidence and confuses proof of mental impairment with the ALJ s duty to 11 develop the record. The lay witness evidence may not establish mental impairment but it 12 triggered the ALJ s duty to inquire further. The failure to do so was error. 13 Fourth, the lay witness testimony undermines the ALJ s RFC. Had the ALJ developed 14 the record further and obtained a mental assessment, the ALJ may have had to recognize 15 additional limitations in his RFC. The ALJ s failure to address the lay witness evidence in his 16 RFC was obvious error. 17 Fifth, the lay witness testimony undermines the ALJ s step five determination that 18 there are jobs in significant numbers in the national economy that Potts could perform. The 19 vocational expert identified three jobs: dryer attendant (DICOT 581.686.018), hand packager 20 (DICOT 920.587-018), and linen room attendant (DICOT 222.387-030.) The last of these 21 jobs has a reasoning level of 3 and the middle one a reasoning level of 2. If mental 22 limitations were added to Plaintiff s RFC, these jobs might be precluded. The dryer attendant 23 job has a reasoning level of 1 but only 1,691 local jobs. The Court takes no position on 24 whether Plaintiff is precluded from all work, but that determination cannot be made on this 25 record, which is not fully and fairly developed. 26 Sixth, the Commissioner suggests that Plaintiff s comprehension difficulties might be 27 the result of Plaintiff s hearing problem. (AR 128.) Again, the ALJ did not mention this 28 argument in his decision. The Commissioner s argument, moreover, is an admission of 10 1 ambiguous record evidence that would trigger the ALJ s duty to conduct an appropriate 2 inquiry. Tonapetyan, 242 F.3d at 1150. 3 The Commissioner makes a series of arguments in support of the affirmance of the 4 ALJ s decision but most of these arguments nowhere appear in the ALJ decision and cannot 5 be considered here. Connett, 340 F.3d at 874. Some of these arguments already have 6 been addressed. The others lack merit or are insufficient to establish harmless error. 7 The Commissioner, for example, observed that Plaintiff never attended special 8 education classes, he reads the newspaper, and the physician who performed the physical 9 examination did not mention that Potts had any comprehension difficulties. None of these 10 facts is any substitute for a mental assessment or excuses the ALJ s failure to develop the 11 record fully and fairly. 12 The most disturbing argument that the Commissioner advances is that Plaintiff cannot 13 demonstrate prejudice from the lack of representation because he did not present evidence 14 of a disabling mental impairment to the Appeals Council when he did retain counsel, and has 15 not presented any new evidence to this Court, citing Hall, 602 F.2d at 1377-78. The 16 Commissioner, however, reads Hall too broadly, which is also distinguishable. In Hall, the 17 claimant presented new evidence in the form of a psychiatric evaluation that did not establish 18 mental impairment and thus the Court held that no prejudice occurred from the lack of 19 representation. Here, of course, no new evidence has been presented yet because the ALJ 20 failed in his duty to develop the record. Hall does not stand for the general proposition that a 21 claimant is obliged to present new evidence proving disability to establish prejudice from lack 22 of representation. The Commissioner s assertion confuses Plaintiff s burden of proof with the 23 ALJ s independent special duty to develop the record and would inappropriately turn his duty 24 to develop the record back on Plaintiff. The legal standard is prejudice and unfairness in the 25 administrative hearing. That standard is more than met here by the ALJ s errors in not 26 developing the record in view of the lay witness evidence and in failing to discuss that 27 evidence in assessing Plaintiff s RFC, thereby undermining both the ALJ s RFC and his step 28 five determination of what jobs in the national economy Plaintiff could perform. 11 1 The ALJ decision is reversed and remanded for further proceedings with the 2 instruction that an appropriate consulting examiner (such as a psychologist) be retained to 3 conduct a mental assessment and determine whether Plaintiff s RFC should be modified to 4 incorporate mental limitations. ORDER 5 6 IT IS HEREBY ORDERED that Decision of the Commissioner of Social Security is 7 reversed and remanded for further proceedings in accordance with law and with this 8 Memorandum and Order. 9 LET JUDGMENT BE ENTERED ACCORDINGLY. 10 11 DATED: March 17, 2011 12 /s/ John E. McDermott JOHN E. MCDERMOTT UNITED STATES MAGISTRATE JUDGE 13 14 15 16 17 18 19 20 21 22 23 24 25 26 12 27 28

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