Richard P. Hill, Plaintiff-appellant, v. Shirley S. Chater, Commissioner of Social Security,* Defendant-appellee, 99 F.3d 1149 (10th Cir. 1996)

Before BRISCOE and MURPHY, Circuit Judges, and VAN BEBBER,^***  District Judge.

After examining the briefs and appellate record, this panel has determined unanimously to grant the parties' request for a decision on the briefs without oral argument. See Fed. R. App. P. 34(f) and 10th Cir. R. 34.1.9. The case is therefore ordered submitted without oral argument.

Richard P. Hill appeals from an order of the district court affirming the Secretary's decision denying his application for social security disability benefits and Supplemental Security Income (SSI). Mr. Hill filed for disability benefits and SSI on May 11, 1992. He alleged disability due to problems with his left ankle, his right shoulder, and two vertebrae in his back; a heart attack; and a nervous breakdown. His requests were denied initially and on reconsideration. Following a de novo hearing on March 3, 1993, an administrative law judge (ALJ) determined that he was not disabled within the meaning of the Social Security Act. Mr. Hill presented additional evidence before the Appeals Council, which denied review. He then filed suit in district court. The district court affirmed the Secretary's decision, and he appealed to this court.

We review the Secretary's decision to determine whether the factual findings are supported by substantial evidence in the record viewed as a whole and whether the correct legal standards were applied. Andrade v. Secretary of Health & Human Servs., 985 F.2d 1045, 1047 (10th Cir. 1993). Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Fowler v. Bowen, 876 F.2d 1451, 1453 (10th Cir. 1989) (quotation omitted).

The Secretary has established a five-step evaluation process for determining whether a claimant is disabled within the meaning of the Social Security Act. See Williams v. Bowen, 844 F.2d 748, 750-52 (10th Cir. 1988) (discussing five-step disability test). Mr. Hill argues here that the Secretary erred in finding, at step two, that he had no severe mental impairment. The Secretary analyzes this case at step five, arguing that the ALJ properly found that Mr. Hill's mental impairments did not preclude him from performing sedentary work. We are thus faced with the threshold question of which step the Secretary reached in evaluating Mr. Hill's mental impairments.

The ALJ discussed Mr. Hill's mental impairments in that section of his decision devoted to residual functional capacity (RFC). There, he stated the following:

Despite his testimony at the hearing that he feels anxious and depressed, there is no evidence of any of the types of nonexertional limitations on employment as set out in Section 12.00 et seq., Subpart P, Appendix 1.

....

I find nothing in the documentary record to indicate a significantly limiting psychiatric disorder from a functional standpoint.

....

[T]here is no finding, sign, or medical diagnosis of the existence of any psychiatric problem which is significantly tangible to warrant further development.

Appellant's App. at 79-81.

The ALJ stated that he found no "significantly limiting" mental disorder "from a functional standpoint." Id. at 80. This is step two language. See 20 C.F.R. §§ 404.1520(c); 404.1520a(b) (3) and (c) (1); 416.920(c). Moreover, the ALJ completed a psychiatric review technique (PRT) form, in which he concluded the alleged mental impairment was "not severe." Appellant's App. at 84. Although the ALJ reached step five in his evaluation of Mr. Hill's physical impairments, we conclude that he rejected his claim of mental impairment at step two.¹ 

At step two, a claimant need only make a "de minimus" showing of medical severity. See Williams, 844 F.2d at 751. An impairment is not severe only if it "would have no more than a minimal effect on an individual's ability to work, even if the individual's age, education, or work experience were specifically considered." SSR 85-28, 1985 WL 56856, at * 3.

The ALJ had before him a relatively recent mental status examination prepared by Dr. Balcazar, a consulting physician. Dr. Balcazar concluded that Mr. Hill was "not showing any well-defined psychiatric problem at the present." Appellant's App. at 205. Dr. Balcazar further stated that if Mr. Hill had a handicap, it was of a physical nature. Id. at 206. The record before the ALJ, including Dr. Balcazar's report, thus supports his finding at step two of no severe mental impairment.

However, this is not the end of our inquiry. In making our substantial evidence determination we must also review the additional evidence presented to the appeals council. See O'Dell v. Shalala, 44 F.3d 855, 859 (10th Cir. 1994). Mr. Hill presented the appeals council with a report by Dr. Bradshaw, dated August 28, 1993, in which he diagnosed Mr. Hill with dysthymia, possible bi-polar disorder, "occupational problem," and borderline personality disorder. Id. at 62. Dr. Bradshaw stated that people with

this type of personality pattern are usually very unstable with regards to their moods. They do have interpersonal relationship problems, and they have self-image problems. They are typically extremely impulsive and show a lack of emotional control, especially when it comes to displaying anger. Certainly these types of problems make it difficult for an individual to get along with others in a job setting.

Id. Dr. Bradshaw also completed a "Medical Assessment of Ability to do Work-Related Activities (Mental)" form, in which he rated Mr. Hill's ability to relate to coworkers, deal with public, interact with supervisors, deal with work stresses, understand, remember and carry out complex job instructions, maintain personal appearance, behave in an emotionally stable manner, relate predictably in social situations, and demonstrate reliability, as either "fair" or "poor." Id. at 64-65. Use of term "fair" (or "poor") on this form is evidence of disability. See Cruse v. United States Dep't of Health & Human Servs., 49 F.3d 614, 618 (10th Cir. 1995).

Dr. Bradshaw's evidence, which was neither rejected nor refuted by the appeals council, meets Mr. Hill's burden at step two. We must therefore remand for further proceedings in sequential analysis in light of Dr. Bradshaw's findings. The judgment of the United States District Court for the District of New Mexico is REVERSED, and this case is REMANDED to the district court with instructions to remand it to the Secretary for further proceedings.