Unpublished Disposition, 862 F.2d 875 (9th Cir. 1988)

MEMORANDUM^* 

Charles Williams appeals the district court's affirmance of the Secretary of Health and Human Services' (the Secretary) denial of his claim for social security disability benefits. We reverse and remand for reconsideration of his exertional capacity and, if necessary, for vocational expert testimony regarding the availability of light or sedentary work to someone with Williams's nonexertional impairments.

BACKGROUND AND PROCEEDINGS BELOW

Charles Williams, age 44, has not worked since July 23, 1981 when an on-the-job injury to his right leg resulted in amputation below the knee. He also claims to have the following nonexertional impairments: lower leg and back pain, frequent headaches, hypertension, mental retardation, problems with alcohol abuse, chronic undifferentiated schizophrenia, personality disorder, anxiety, and depression.

Williams filed applications for disability benefits and supplemental security income on July 10, 1984 and July 23, 1984, respectively. On February 15, 1986 the ALJ denied the instant applications, finding that while Williams could not perform his past relevant work as a truck driver, he could perform a wide range of light work. The Appeals Council upheld the ALJ's decision on April 15, 1986, and on September 19, 1987 the district court adopted a magistrate's recommendation affirming the denial of benefits. This appeal followed.

DISCUSSION

This court reviews a final decision by the Secretary using the same standard the district court employs in its review: we set aside a denial of benefits only if the Secretary's decision is based upon legal error or his findings are not supported by substantial evidence in the record as a whole. Kail v. Heckler, 722 F.2d 1496, 1497 (9th Cir. 1984).

I. Res Judicata Effect of the Prior Denial of Benefits.

The applications for benefits before us allege the same date for onset of disability--July 23, 1981--as did Williams's first benefits application, which was filed on April 21, 1982, denied on January 30, 1984, and was not appealed.

Res judicata ordinarily precludes subsequent claims covering the period before the date of a prior unappealed denial. The Secretary will not reconsider an unappealed denial of benefits absent a showing of "good cause", 20 C.F.R. Secs. 404.987, 404.988(b), a determination that is ordinarily not subject to judicial review. Califano v. Sanders, 430 U.S. 99 (1977); Taylor v. Heckler, 765 F.2d 872, 877 (9th Cir. 1985). Williams contends, however, that his constitutional due process rights were violated because, at the time he should have appealed the earlier denial, he was suffering from a mental disability that precluded him from understanding and exercising his right to appeal; thus, he failed to receive meaningful notice and an opportunity to be heard. This argument lacks merit. Williams was able to file his applications and to proceed through all the administrative appeals and he was represented by counsel. Additionally, the most significant evidence of mental impairments post-dates the first denial.

A claimant whose first application has been denied for nondisability must overcome a presumption of nondisability in any subsequent application. Taylor v. Heckler, 765 F.2d 872, 875 (9th Cir. 1985). Thus, to establish disability, Williams must show evidence of changed circumstances. Green v. Heckler, 803 F.2d 528, 530 (9th Cir. 1986). The record contains sufficient evidence of changed circumstances to defeat the presumption. Williams's mental problems have exacerbated, as shown by his psychiatric hospitalization for two months in 1985 (prompted by his violent assault upon his wife) and by recurring outpatient treatments. Accordingly, although benefits would not be available for the period covered by the prior denial of benefits, Williams's claims should be considered unencumbered by a presumption of nondisability.

Williams argues that the Secretary should have found his impairments severe enough to qualify him as disabled under two of the listed medical impairments in Appendix 1:12.05 (mental retardation) or 1.10(C) (lower extremity amputation).

To qualify as disabled under 12.05(C), a claimant must present a "valid verbal, performance, or full scale IQ of 60 to 69 inclusive and a physical or other mental impairment imposing additional and significant work-related limitation of function." 20 C.F.R. Part 404, Subpt. P, Appendix 1, Sec. 12.05(C) (1987).

Williams fails to satisfy the first prong. His lowest IQ score is a 72 performance rating, three points above the upper cutoff of 69. The criteria of the listing of impairments must be met with specificity in order to establish presumptive disability based on medical factors alone. See 20 C.F.R. Secs. 404.1525(c) & (d). Instead, Williams's mild mental retardation is a nonexertional impairment to be considered when assessing his residual capacity for work using the Appendix 2 guidelines.

Williams's argument that he should be found disabled under Section 1.10 C, 20 C.F.R. Sec. 404, Subpt. P, App. 1, Sec. 1.10(C) (3), was not raised until appeal and will not be considered.

III. Consideration of Pain Testimony in Finding a Residual Functional Capacity for Light Work.

In denying Williams's first benefits application, an ALJ found him capable of performing only sedentary work. The second ALJ found that Williams could now perform light work, since he had acquired a new prosthesis which was expected to reduce the pain Williams alleged prevented him from sitting or standing for more than an hour at a time, or walking more than a block without getting lightheaded. Williams argues that the district court erred in discounting the severity of his pain and mental anguish and in failing to give reasons for finding the testimony incredible. This argument has some merit.

A claimant alleging severe pain as a disabling factor must submit objective medical findings establishing medical impairments that "could reasonably be expected to produce the pain." 421 U.S.C. § 404.1529 (1987); Gamer v. Secretary of Health and Human Servs., 815 F.2d 1275, 1279 (9th Cir. 1987). Excess pain testimony may not be discredited simply because the medical evidence does not fully establish the magnitude alleged. Id. However, the Secretary may disbelieve a claimant's pain testimony so long as the decision is justified by specific findings. Cotton v. Bowen, 799 F.2d 1403, 1407 (9th Cir. 1986).

It is unclear just how much credit the ALJ gave Williams's pain testimony, which was corroborated by his physical condition (leg amputation) and his medical records' frequent references to complaints of back and leg pain. The ALJ "credited" the excess pain testimony by finding Williams limited to no more than light work,¹  but failed to make specific findings explaining why he assessed Williams's limitations less severely than the claimant did, other than to predict that the new prosthesis would alleviate much of the back and leg pain. This is an acknowledgment that Williams can no longer lift the 50 lb. weights he handled in his last job (which was "medium work"), but falls short of acceptance of Williams's contention that pain prevents him from lifting more than a 5 lb. bag of groceries (which would limit Williams to "sedentary work", since "light work" requires occasional lifting of 20 lbs. and frequent lifting of 10 lbs.). See 20 C.F.R. Sec. 404.1567(b). Without making specific findings of noncredibility, the ALJ appears to have accepted the Veterans' Administration's attribution of Williams's back pain to his old, poorly fitting prosthesis. There is other evidence in the record to support such a determination. The most recent internal medical consultation, performed by Dr. Lucille Ridgill on May 31, 1985, revealed no point tenderness or muscle spasm of the back, and found Williams capable of a full range of motion in his musculoskeletal system. Dr. Ridgill described the back pain as "not significant on examination." Id.

" [The] ALJ's assessment of pain level is entitled to great weight," Green v. Heckler, 803 F.2d 528, 532 (9th Cir. 1986), but he should be explicit in the reasons for discrediting the claimant's testimony where the pain is caused by physical causes clinically observable. Cotton v. Bowen, 799 F.2d at 1407. Interestingly, the ALJ did not discredit Williams's testimony of earlier pain levels; instead, he predicted that Williams's future pain levels would be much lower. Since Williams acquired the new prosthesis in April 1985, only a month before the hearing, and the record's most recent medical evidence was obtained shortly thereafter, we cannot know whether such an assumption has been borne out. Therefore, we remand for the ALJ's reconsideration of the "light work" determination, and for new findings regarding how well the new prosthesis has alleviated Williams's alleged leg and lower back pain.

IV. Effect of Nonexertional Impairments on Disability Determinations using the Appendix 2 "Grids"

Williams argues that the ALJ erred as a matter of law in making this disability determination because he mechanically applied the Appendix 2 grids without considering Williams's nonexertional impairments.

The mere existence of nonexertional impairments will not prevent the use of the grids where a claimant's exertional capabilities are not significantly limited by nonexertional factors. Odle v. Heckler, 707 F.2d 439, 440 (9th Cir. 1983). However, if the Appendix 2 grids are " 'not fully applicable' and are at best a 'framework' for reaching a decision" because of a claimant's nonexertional impairments, the Secretary bears the burden of showing the availability of specific jobs within the claimant's capabilities. Kail v. Heckler, 722 F.2d 1496, 1498 (9th Cir. 1984). Here, although the ALJ used a "framework" analysis, and considered the effect of some of Williams's nonexertional impairments on the determination suggested by the grids as is required by the regulations, 20 C.F.R. Sec. 404, Appendix 2, Subpt. P, Rule 200.00(e) (2),²  his ultimate determination that Williams's impairments would not significantly limit his capacity for a wide range of light work is not supported in the record.

Someone able to perform light work, and with Williams's limited education, "younger" age, and nontransferable skills from his past work, but without significant nonexertional impairments, is not disabled according to Appendix 2, Rule 201.18. The ALJ found, first, that Williams possessed the exertional capacity for light work despite his leg amputation. The ALJ then evaluated the severity of Williams's alcohol abuse, his "periodic inability to concentrate on a sustained basis", and his hypertension, but came to the conclusion the impairments were not severe enough to render Williams disabled:

The claimant's capacity for the full range of light work has not been significantly compromised by his additional nonexertional limitations. Accordingly, using the above-cited rule [202.18] as a framework for decisionmaking, the claimant is not disabled.

Finding No. 12, RT at 17; see also RT at 15-16.

The ALJ's finding that Williams was not disabled because he retained the functional capacity to perform light work appears contradicted by the ALJ's other findings indicating that Williams falls short of the capacity to perform the full range of light work. See Findings Nos. 5, 7;³  and the ALJ's observation that "claimant has the maximum exertional capacity for light work and he is further limited by periodic limitations of concentration, persistence and pace." RT at 15-17.

To be sure, a claimant still capable of performing a wide range of light work (as opposed to a full range) is probably not disabled. See 20 C.F.R. Sec. 404, Subpt. P, Appendix 2, Rule 202.00(b).⁴  However, the ALJ gave no explanation for why Williams's array of limitations only slightly reduced the range of available work (he appeared to ignore some of them), nor did he meet his burden of showing the availability of specific jobs within Williams's capabilities. To the contrary, substantial evidence that would support the finding that Williams was capable of a wide range of light work is lacking.

Mental illness ignored. The ALJ should have considered Williams's mental illness as a non-exertional impairment in his framework analysis. Williams has been hospitalized twice, once in 1982 at his request because of his "nerves", and again in February, 1985, after assaulting his wife. He was undergoing outpatient psychological counseling around the time of the ALJ's decision. While Williams's decompensation episodes and his " [d]eficiencies of concentration, persistence or pace" are not frequent enough to render him presumptively disabled under Appendix 1, Sec. 12.02, they nevertheless are nonexertional impairments that could impair his ability to perform certain jobs. Similarly, his poor memory, depression and anxiety are impairments that should be considered.

Borderline intellectual functioning ignored. A psychological consultation performed by James Andrews, Ph.D. in September 1985 revealed that Williams functioned within the borderline level of intellectual functioning. His IQ scores were verbal, 78, performance, 72, and full scale, 74. Another psychologist observed that Williams's 10th grade education greatly overstated his abilities.

The ALJ appears to have considered this impairment only in the context of its severity for Appendix 1 listings, which it does not meet. However, because of its effect on learning new skills, low mental acuity definitely should be considered a nonexertional impairment. The regulations themselves cite "mild mental retardation (IQ of 78)" as a nonexertional impairment that restricts the range of unskilled sedentary work enough to render an illiterate 41 year old claimant disabled. Sec. 404, Subpt. P, App. 2 201.00(h). Because the category of light work includes sedentary work as a subset within it, Williams's low IQ and lack of transferable skills are likely to limit the range of both light work and sedentary work available to him.

The regulations advise use of a vocational expert " [i]f the issue in determining whether you are disabled is whether your work skills can be used in other work and the specific occupations in which they can be used, or there is a similarly complex issue." 20 C.F.R. Sec. 404.1566(e). The impact of nonexertional impairments on a claimant's residual capacity can be such a complex issue. The ALJ, who acknowledged that Williams's nonexertional impairments limit somewhat his capacity for light work, but whose discounting of the impairments' effect is not supported in the record, should have used vocational expert testimony to establish the availability of light work for someone with Williams's limitations.

CONCLUSION

We reverse and remand for additional findings regarding the level of pain Williams suffers, and, if the residual capacity for light work is established, for vocational expert testimony on the extent to which Williams's retardation and mental illness, as well as his other impairments, could limit his capacity for light work. If, however, Williams is capable of sedentary work only, a finding of disability, in light of his combined impairments, may be possible without recourse to a vocational expert.

REVERSED AND REMANDED.

O'SCANNLAIN, Circuit Judge, concurring and dissenting:

I concur in the conclusion that a remand is appropriate. Specifically, the ALJ improperly used the appendix 2 grids as a framework in the determination of Williams's disability status. When a claimant's non-exertional limitations are severe enough to significantly limit the range of work permitted by the claimants exertional limitations, the grids are inapplicable. Burkhart v. Bowen, No. 87-3930, slip op. at 10,869 (9th Cir. Sept. 7, 1988). In such cases, the testimony of a vocational expert is required, id., and specific jobs within the claimant's abilities must be identified. Kail v. Heckler, 722 F.2d 1496, 1498 (9th Cir. 1984).

In this case, Williams could not return to work as a truck driver. The grids were not applicable because Williams had severe non-exertional limitations. The government failed to present the testimony of a vocational expert and specify jobs within Williams's abilities. For these reasons, a remand is necessary.

I respectfully dissent, however, from the majority's disposition of the pain issue in paragraph III. The ALJ found that Williams's use of a new prosthesis would alleviate much of the pain which had been interfering with Williams's ability to work. Citing the fact that Williams acquired the new prosthesis only one month before the hearing, the majority concludes that new findings are required to determine "whether such an assumption has been borne out." I disagree.

While acknowledging that the ALJ's assessment of pain level is entitled to great weight, Green v. Heckler, 803 F.2d 528, 532 (9th Cir. 1986), the majority seems to impose a new standard--that the ALJ "should be explicit in the reasons for discrediting the claimant's testimony." First, I do not read Cotton v. Bowen, 799 F.2d at 1403, which the majority cited for such standard, so broadly. Second, there is no indication that the ALJ in fact discredited claimant's testimony. The ALJ accepted his post-pain testimony and properly concluded that the prosthesis was helping to solve the pain problem.

I submit that this deferential standard requires that the ALJ's finding on the pain issue be affirmed. The ALJ reviewed the evidence of Williams's pain, including Williams's own testimony. There was sufficient evidence to support the ALJ's finding that the new prosthesis was alleviating much of Williams's pain. The Secretary's denial of benefits should be set aside only if based upon legal error or findings not supported by substantial evidence in the record as a whole. Kail, 722 F.2d at 1497. In my view, there was adequate support for the ALJ's finding on the pain issue in this record.