Unpublished Disposition, 878 F.2d 1438 (9th Cir. 1987)

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U.S. Court of Appeals for the Ninth Circuit - 878 F.2d 1438 (9th Cir. 1987)

Dee J. FRAISER, Plaintiff-Appellant,v.Richard SCHWEIKER, Defendant-Appellee,

No. 88-3697.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 7, 1989.Decided July 3, 1989.

Before SCHROEDER, BEEZER and BRUNETTI, Circuit Judges.


Dee Frasier appeals the district court's denial of his petition for attorney's fees under Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412(d). The issues before the panel are whether Frasier was a "prevailing party" and whether the government's position was "substantially justified." We hold that Frasier was a prevailing party, but nevertheless affirm because the government's position was substantially justified within the meaning of EAJA.

Frasier was born on March 1, 1949 and has a high school education. His work experience has been limited to semi-skilled or unskilled labor, most recently in the lumber industry. Beginning in the mid-1970's he was repeatedly admitted to various mental institutions on a voluntary or involuntary basis, and he has been diagnosed as suffering from paranoid schizophrenia. Since the onset on the claimed disability his work history has been sporadic, and at the time of his first disability hearing in 1981 he had not worked since 1979.

In October 1981 Frasier filed for benefits and supplemental security income pursuant to the Social Security Act, claiming disability based on undifferentiated schizophrenia, depression, and blindness in the left eye.1  The ALJ reviewed the record, including medical testimony that the claimant was "completely and totally disabled." Nevertheless, the ALJ concluded that the claimant was able to work productively during the periods when his illness was in remission, and that the principal exacerbations of Frasier's condition were brought on by his failure to take prescribed medications. The ALJ further noted that "the evidence fails to establish severe/persistent constriction of interests, or marked restriction of daily activities for a continuous period of 12 months."

The ALJ then made specific findings that " [t]he medically indicated health conditions are not convincingly shown to be or equal any presumed disabling impairment(s) listed in [the regulations]," and that " [t]he claimant's health conditions are not shown to significantly limit his physical or mental abilities to perform basic work related activities for a continuous, relevant period of 12 months." Accordingly, the application was denied on June 29, 1982.

This decision was affirmed on appeal to the Appeals Council on November 10, 1983. Frasier then appealed to the district court and, on October 2, 1984, the case was remanded based on the magistrate's recommendation and conclusion that the ALJ failed "to adequately explain his reasons for rejecting the uncontroverted evidence of mental impairment."

On remand new evidence was considered and new regulations mandated by the Social Security Disability Benefits Reform Act of 1984 ("Reform Act"), Pub. L. No. 98-460, 98 Stat. 1794, were applied. The ALJ again considered the medical evidence and this time concluded that the claimant was disabled from the period commencing February 28, 1977, stating " [w]hile the claimant may be maintained on his psychotrophic medications, this does not equate with an ability to engage in substantial gainful activity. The new evaluation of mental impairments recognizes this and it is reflected in the revised listing of mental impairments." A final judgment was entered by the district court in favor of the claimant on November 30, 1987.

Frasier then filed a petition for $1702.50 in attorney's fees under EAJA for work performed at the district court level. The district court made no findings but concluded that the Secretary's position was substantially justified and denied the petition. Frasier appeals.

The district court's decision to deny attorney's fees is reviewed for an abuse of discretion. Andrew v. Bowen, 837 F.2d 875, 877 (9th Cir. 1988). The district court abuses its discretion when its "decision is based on an erroneous conclusion of law or when the record contains no evidence on which [it] rationally could have based that decision." Petition of Hill, 775 F.2d 1037, 1040 (9th Cir. 1985). The determination that the Secretary's position was substantially justified is similarly reviewed for an abuse of discretion. Pierce v. Underwood, 108 S. Ct. 2541, 2546-47, 101 L. Ed. 2d 490 (1988).

The Equal Access to Justice Act provides that "a court shall award to a prevailing party other than the United States fees and other expenses ... unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust." 28 U.S.C. § 2412(d) (1988 Supp.). A party is considered to be a "prevailing party" if: (1) as a factual matter, the relief sought by the lawsuit was in fact obtained, and (2) there was a legal basis for the plaintiff's claim. Andrew, 837 F.2d at 877. Under the first step of this inquiry there must be a "clear causal relationship between the litigation brought and the practical outcome realized." Id. The government claims that Frasier fails to satisfy this requirement because benefits were awarded "primarily because of a change in the law concerning mental impairments."

In a similar, but distinguishable case, the Seventh Circuit denied a request for attorney's fees after determining that the claimant was not a prevailing party. In Hendricks v. Bowen, 847 F.2d 1255 (7th Cir. 1988), the claimant's benefits were terminated on a determination that the claimant was no longer disabled. While the case was pending the Reform Act was enacted, and it mandated that all actions seeking review of termination decisions based on medical improvement be remanded for reconsideration in accordance with the new standards. Hendricks is inapplicable because it involved a congressionally mandated remand and reconsideration, where in the present case the remand was based on the ALJ's failure to support his findings. The fact that a new standard was applicable in the second hearing does not defeat the fact that Frasier prevailed.

Frasier filed for benefits, there was a legal basis for his claim, and he received benefits. He therefore prevailed. See id. at 1259 (Easterbrook, J., concurring). See also Rhoten v. Bowen, 854 F.2d 667 (4th Cir. 1988) (claimants were prevailing parties where remand ordered before enactment of Reform Act but benefits reinstated under new standard).

Turning to the question of whether the government was substantially justified, in the first proceeding before the ALJ there was uncontroverted medical testimony that the claimant was unable to function in a competitive work environment. There was other evidence, however, including the claimant's own testimony, that indicated that the claimant's condition was exacerbated by his failure to take prescribed medications and his lack of motivation. The ALJ made two findings related to this evidence. First, he found that " [t]he medically indicated health conditions are not convincingly shown to be or equal any presumed disabling impairment(s) listed in [the Regulations]." This was error. There was no evidence to counter the opinions of the treating physicians that the claimant was disabled. The ALJ simply discredited these opinions and substituted his own judgment. The law was clear at the time that an ALJ must provide clear and convincing reasons for rejecting a physician's report. See Rhodes v. Schweiker, 660 F.2d 722, 723 (9th Cir. 1981). The Secretary, in adopting this position, was not substantially justified because the error was clear as a matter of law.

The ALJ's next finding, however, supports the Secretary's position. The ALJ found that " [t]he claimant's health conditions are not shown to significantly limit his physical or mental abilities to perform basic work related activities for a continuous, relevant period of 12 months." In other words, even if the treating physicians' opinions were credited, the claimant still would not be eligible for benefits because he failed to meet the durational requirement.

The evidence supported this finding, and the Secretary was substantially justified in adopting this position. Frasier had been in and out of mental institutions several times, but there were intervals that he was capable of gainful employment, particularly when he used his medication. The Reform Act made this factor less relevant because it made clear that short work attempts between periods of incapacity would not be considered "substantial gainful activity" under the regulations. See 20 C.F.R. Sec. 404.1574. The Secretary, however, adopted the ALJ's findings prior to the enactment of the Reform Act, and at the time it was not clear whether Frasier had met the twelve month durational requirement. The government was substantially justified in adopting this position.



This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by Circuit Rule 36-3


A subsequent examination revealed that the claimant's corrected vision was 20/40 on the right and 20/20 on the left, with no evidence of visual field problems