Terry Lee Trautloff v. Commissioner Social Security Administration

Filing 18

MEMORANDUM OPINION AND ORDER OF REMAND by Magistrate Judge Jacqueline Chooljian. The decision of the Commissioner of Social Security is reversed in part, and this matter is remanded for further administrative action consistent with this Opinion. See Memorandum for details. (dml)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 TERRY LEE TRAUTLOFF, 12 Plaintiff, 13 14 15 v. Case No. SACV 16-1564 JC MEMORANDUM OPINION AND ORDER OF REMAND COMMISSIONER OF SOCIAL SECURITY ADMINISTRATION, 16 Defendant. 17 18 I. 19 SUMMARY On August 24, 2016, Terry Lee Trautloff (“plaintiff”) filed a Complaint 20 seeking review of the Commissioner of Social Security’s denial of plaintiff’s 21 application for benefits. The parties have consented to proceed before the 22 undersigned United States Magistrate Judge. 23 This matter is before the Court on the parties’ cross motions for summary 24 judgment, respectively (“Plaintiff’s Motion”) and (“Defendant’s Motion”). The 25 Court has taken both motions under submission without oral argument. See Fed. 26 R. Civ. P. 78; L.R. 7-15; August 26, 2016 Case Management Order ¶ 5. 27 /// 28 /// 1 Based on the record as a whole and the applicable law, the decision of the 2 Commissioner is REVERSED AND REMANDED for further proceedings 3 consistent with this Memorandum Opinion and Order of Remand. 4 II. BACKGROUND AND SUMMARY OF ADMINISTRATIVE 5 DECISION 6 On March 25, 2013, plaintiff filed an application for Disability Insurance 7 Benefits alleging disability beginning on November 1, 2012, due to back spasms, 8 back injury, pain, degenerative disc disease, loss of range of motion, arthritis, 9 hypertension, and chronic right knee pain. (Administrative Record (“AR”) 51, 10 246, 266-67). The Administrative Law Judge (“ALJ”) examined the medical 11 record and heard testimony from plaintiff (who was represented by counsel), 12 plaintiff’s spouse, and a vocational expert on December 15, 2014. (AR 64-92). 13 On January 16, 2015, the ALJ determined that plaintiff was not disabled 14 through the date of the decision. (AR 51-59). Specifically, the ALJ found: 15 (1) plaintiff suffered from the following severe impairments: degenerative disc 16 disease of the lumbar spine, L5 par fracture, myofascial low back pain, right knee 17 pain, left knee degenerative joint disease and medial meniscus tear, and left 18 shoulder pain (status post SLAP repair of left shoulder) (AR 53); (2) plaintiff’s 19 impairments, considered singly or in combination, did not meet or medically equal 20 a listed impairment (AR 54); (3) plaintiff retained the residual functional capacity 21 to perform medium work (20 C.F.R. § 404.1567(c)) with additional limitations1 22 (AR 54); (4) plaintiff was capable of performing past relevant work as a ski 23 binding fitter and repairer (AR 58); and (5) plaintiff’s statements regarding the 24 intensity, persistence, and limiting effects of subjective symptoms were not 25 entirely credible (AR 55). 26 27 28 1 The ALJ determined that plaintiff could (i) lift and/or carry no more than 50 pounds occasionally and 25 pounds frequently; (ii) stand and/or walk for six hours out of an eight-hour workday with normal breaks; (iii) sit without restrictions; and (iv) walk on uneven terrain, use ladders, and work at heights on a frequent basis. (AR 54). 2 1 On August 2, 2016, the Appeals Council denied plaintiff’s application for 2 review. (AR 1). 3 III. APPLICABLE LEGAL STANDARDS 4 A. 5 To qualify for disability benefits, a claimant must show that the claimant is Sequential Evaluation Process 6 unable “to engage in any substantial gainful activity by reason of any medically 7 determinable physical or mental impairment which can be expected to result in 8 death or which has lasted or can be expected to last for a continuous period of not 9 less than 12 months.” Molina v. Astrue, 674 F.3d 1104, 1110 (9th Cir. 2012) 10 (quoting 42 U.S.C. § 423(d)(1)(A)) (internal quotation marks omitted). The 11 impairment must render the claimant incapable of performing the work the 12 claimant previously performed and incapable of performing any other substantial 13 gainful employment that exists in the national economy. Tackett v. Apfel, 180 14 F.3d 1094, 1098 (9th Cir. 1999) (citing 42 U.S.C. § 423(d)(2)(A)). 15 In assessing whether a claimant is disabled, an ALJ is required to use the 16 following five-step sequential evaluation process: 17 (1) 18 19 Is the claimant presently engaged in substantial gainful activity? If so, the claimant is not disabled. If not, proceed to step two. (2) Is the claimant’s alleged impairment sufficiently severe to limit 20 the claimant’s ability to work? If not, the claimant is not 21 disabled. If so, proceed to step three. 22 (3) Does the claimant’s impairment, or combination of 23 impairments, meet or equal an impairment listed in 20 C.F.R. 24 Part 404, Subpart P, Appendix 1? If so, the claimant is 25 disabled. If not, proceed to step four. 26 /// 27 /// 28 /// 3 1 (4) Does the claimant possess the residual functional capacity to 2 perform claimant’s past relevant work? If so, the claimant is 3 not disabled. If not, proceed to step five.2 4 (5) Does the claimant’s residual functional capacity, when 5 considered with the claimant’s age, education, and work 6 experience, allow the claimant to adjust to other work that 7 exists in significant numbers in the national economy? If so, 8 the claimant is not disabled. If not, the claimant is disabled. 9 Stout v. Commissioner, Social Security Administration, 454 F.3d 1050, 1052 (9th 10 Cir. 2006) (citations omitted); see also 20 C.F.R. § 404.1520(a)(4) (explaining 11 five-step sequential evaluation process). 12 The claimant has the burden of proof at steps one through four, and the 13 Commissioner has the burden of proof at step five. Burch v. Barnhart, 400 F.3d 14 676, 679 (9th Cir. 2005) (citation omitted). 15 B. 16 Pursuant to 42 U.S.C. section 405(g), a court may set aside a denial of Standard of Review 17 benefits only if it is not supported by substantial evidence or if it is based on legal 18 error. Robbins v. Social Security Administration, 466 F.3d 880, 882 (9th Cir. 19 2006) (citing Flaten v. Secretary of Health & Human Services, 44 F.3d 1453, 1457 20 (9th Cir. 1995)). Substantial evidence is “such relevant evidence as a reasonable 21 mind might accept as adequate to support a conclusion.” Richardson v. Perales, 22 402 U.S. 389, 401 (1971) (citations and quotations omitted). 23 While an ALJ’s decision need not discuss every piece of evidence or be 24 drafted with “ideal clarity,” at a minimum it must explain the ALJ’s reasoning 25 26 27 28 2 Under the “[e]xpedited process,” review of an application for benefits “may proceed [directly] to the fifth step of the sequential evaluation process” in cases where the record lacks sufficient evidence about a claimant’s past relevant work to make a finding at step four. 20 C.F.R. § 404.1520(h). 4 1 with sufficient specificity and clarity to “allow[] for meaningful review.” Brown2 Hunter v. Colvin, 806 F.3d 487, 492 (9th Cir. 2015) (citations and internal 3 quotation marks omitted); Howard v. Barnhart, 341 F.3d 1006, 1012 (9th Cir. 4 2003) (citations omitted); see generally 42 U.S.C. § 405(b)(1) (“ALJ’s unfavorable 5 decision must, among other things, “set[] forth a discussion of the evidence” and 6 state “the reason or reasons upon which it is based”); Securities and Exchange 7 Commission v. Chenery Corp., 332 U.S. 194, 196-97 (1947) (administrative 8 agency’s determination must be set forth with sufficient clarity and specificity). 9 An ALJ’s decision to deny benefits must be upheld if the evidence could 10 reasonably support either affirming or reversing the decision. Robbins, 466 F.3d 11 at 882 (citing Flaten, 44 F.3d at 1457). Even when an ALJ’s decision contains 12 error, it must be affirmed if the error was harmless. Treichler v. Commissioner of 13 Social Security Administration, 775 F.3d 1090, 1099 (9th Cir. 2014). An ALJ’s 14 error is harmless if (1) it was inconsequential to the ultimate nondisability 15 determination; or (2) despite the error, the ALJ’s path may reasonably be 16 discerned, even if the ALJ’s decision was drafted with less than ideal clarity. Id. 17 (citation and quotation marks omitted). 18 A reviewing court, however, may not conclude that an error was harmless 19 based on independent findings gleaned from the administrative record. 20 Brown-Hunter, 806 F.3d at 492 (citations omitted). When a court cannot 21 confidently conclude that an error was harmless, remand for additional 22 investigation or explanation is generally appropriate. See Marsh v. Colvin, 792 23 F.3d 1170, 1173 (9th Cir. 2015) (citations omitted). 24 IV. DISCUSSION 25 Plaintiff contends that the ALJ erred at step four by determining that 26 plaintiff’s past relevant work included “ski binding fitter and repairer.” 27 (Plaintiff’s Motion at 1-2). The Court agrees. As the Court cannot find that the 28 ALJ’s error was harmless, a remand is warranted. 5 1 A. 2 At step four, claimants have the burden to show that they are no longer able Pertinent Law 3 to perform their past relevant work. Pinto v. Massanari, 249 F.3d 840, 844 (9th 4 Cir. 2001) (citations omitted); 20 C.F.R. § 404.1520(e). The Commissioner may 5 deny benefits at step four if the claimant has the residual functional capacity to 6 perform either a particular past relevant job as “actually performed,” or the same 7 kind of work as “generally” performed in the national economy. Pinto, 249 F.3d 8 at 844-45 (citing Social Security Ruling (“SSR”) 82-61); SSR 82-62 at *3. 9 Social Security regulations define past relevant work as “work that [a 10 claimant has] done within the past 15 years, that was substantial gainful activity, 11 and that lasted long enough for [the claimant] to learn it.” 20 C.F.R. 12 §§ 404.1560(b)(1), 404.1565(a). “Substantial gainful activity is work done for pay 13 or profit that involves significant mental or physical activities.” Lewis v. Apfel, 14 236 F.3d 503, 515 (9th Cir. 2001) (citing, in part, 20 C.F.R. 15 §§ 404.1571-404.1572). Social Security regulations provide overlapping, but 16 separate procedures for determining whether particular work involves substantial 17 gainful activity (“SGA”) which depend on whether or not the individual 18 performing the work was self-employed. See Le v. Astrue, 540 F. Supp. 2d 1144, 19 1149 (C.D. Cal. 2008) (citing, in part, 20 C.F.R. §§ 404.1574, 404.1575). 20 When a claimant is self-employed, whether work involves SGA is 21 determined by evaluating the work activities the claimant performed and their 22 value to the particular business using three tests set forth in Social Security 23 regulations – namely, “Test One,” “Test Two,” and “Test Three.” 20 C.F.R. 24 § 404.1575(a)(2); SSR 83-34, 1983 WL 31256, at *2-*9. If work is deemed SGA 25 under Test One, the ALJ need not proceed to Tests Two and Three. Le, 540 26 F. Supp. 2d at 1150 (citation omitted). Conversely, if it is “clearly established” 27 under Test One that a claimant was not engaged in SGA, both the second and third 28 /// 6 1 SGA tests must be considered. 20 C.F.R. § 404.1575(a)(2); SSR 83-34, 1983 WL 2 31256, at *9. 3 Under Test One, work activity is considered SGA when the claimant 4 (i) “renders services that are significant to the operation of the business”; and 5 (ii) “receives a substantial income from the business.” 20 C.F.R. 6 § 404.1575(a)(2)(i); SSR 83-34, 1983 WL 31256, at *2.; Le, 540 F. Supp. 2d at 7 1149 (citations omitted). The services of an individual who operates a business on 8 his or her own are necessarily considered “significant.” 20 C.F.R. 9 § 404.1575(b)(1); SSR 83-34, 1983 WL 31256, at *3; Le, 540 F. Supp. 2d at 1149 10 n.5 (citations omitted). Under the second part of Test One, income is generally 11 considered “substantial” if the average monthly “countable income” (as defined in 12 Social Security regulations) from a claimant’s business is more than the amount 13 shown for the particular calendar year in the Commissioner’s SGA Earnings 14 Guidelines in 20 C.F.R. § 404.1574(b) (“SGA Earnings Guidelines”). 20 C.F.R. 15 § 404.1575(c)(2)(i); SSR 83-34, 1983 WL 31256, at *4. A claimant may still have 16 “substantial income,” however, even if his or her countable income does not 17 average more than the amount shown in the SGA Earnings Guidelines. 20 C.F.R. 18 § 404.1575(c)(2)(ii); SSR 83-34, 1983 WL 31256, at *4. For instance, countable 19 income amounts below SGA Earnings Guidelines levels may be deemed 20 substantial when the “livelihood” a claimant derives from his or her business is 21 either (a) “comparable to what it was before [the claimant] became seriously 22 impaired” (i.e., the “personal standard”), or (b) “comparable to that of unimpaired 23 self-employed persons in [the] community who are in the same or a similar 24 business as their means of livelihood” (i.e., the “community standard”). 20 C.F.R. 25 § 404.1575(c)(2)(ii); SSR 83-34, 1983 WL 31256, at *4. It may be most 26 appropriate to use the community standard in cases where, like here, “chronic 27 illness or other special circumstances existing for some time prior to the 28 individual’s becoming disabled [] indicate that his or her financial situation in that 7 1 period should not be considered an indication of the individual’s standard of 2 livelihood.” SSR 83-34, 1983 WL 31256, at *8. 3 Under Test Two, a self-employed claimant engages in SGA “if [his or her] 4 work activity, in terms of factors such as hours, skills, energy output, efficiency, 5 duties, and responsibilities, is comparable to that of unimpaired individuals in 6 [the] community who are in the same or similar businesses as their means of 7 livelihood.” 20 C.F.R. § 404.1575(a)(2)(ii); SSR 83-34, 1983 WL 31256, at *9; 8 Le, 540 F. Supp. 2d at 1149 (citations omitted). 9 Under Test Three, a claimant engages in SGA “if [his or her] work activity, 10 although not comparable to that of unimpaired individuals, is clearly worth the 11 amount shown in [the SGA Earnings Guidelines] when considered in terms of its 12 value to the business, or when compared to the salary that an owner would pay to 13 an employee to do the [same] work. . . .” 20 C.F.R. § 404.1575(a)(2)(iii); SSR 14 83-34, 1983 WL 31256, at *9; Le, 540 F. Supp. 2d at 1149-50 (citations omitted). 15 While claimants have the burden to prove an inability to perform past 16 relevant work, an ALJ is required “to make specific findings on the record at each 17 phase of the step four analysis [which] provide[] for meaningful judicial review.” 18 Pinto, 249 F.3d at 847 (citation and quotation marks omitted). Accordingly, 19 development of the “[c]omparability” factors used in Tests Two and Three “must 20 be specific.” SSR 83-34, 1983 WL 31256, at *9. “If only a general description is 21 possible or available, any doubt as to the comparability of the factors should be 22 resolved in favor of the impaired individual.” Id. Hence, “[t]he lack of conclusive 23 evidence as to the comparability of the required factors will result in a finding that 24 work performed is not SGA.” Id. (emphasis added). 25 B. 26 Here, as defendant correctly suggests, whether prior work involved SGA is Analysis 27 determined somewhat differently when a claimant is self-employed. (Defendant’s 28 Motion at 2). Nonetheless, it does not appear that the ALJ considered any of the 8 1 applicable tests for evaluating the work activity of self-employed claimants, even 2 though it is uncontroverted that plaintiff was self-employed during the pertinent 3 15-year period. (AR 53-59, 68, 251, 268, 279). To the contrary, at step four, the 4 ALJ concluded that plaintiff’s past work was performed “at the level of substantial 5 gainful activity” without any further explanation.3 (AR 59). Such boilerplate 6 finding was not specific enough to allow for meaningful review of the ALJ’s non7 disability determination at step four. Cf., e.g., Treichler, 775 F.3d at 1103 (ALJ’s 8 “boilerplate statement” regarding credibility of claimant’s testimony “was error” 9 because it “[fell] short of meeting the ALJ’s responsibility to provide ‘a discussion 10 of the evidence’ and ‘the reason or reasons upon which’ his adverse determination 11 is based”) (quoting 42 U.S.C. § 405(b)(1)); Montoya v. Colvin, 649 Fed. Appx. 12 429, 430-31 (9th Cir. 2016) (ALJ erred at step four in finding claimant could 13 perform past relevant work where record was “unclear” whether claimant’s 14 earnings met amount specified in the SGA Earnings Guidelines, and ALJ stated 15 that claimant’s prior jobs were “past relevant work . . . without addressing the 16 substantial gainful activity issue or developing the record on it”) (citing, in part, 17 Smolen v. Chater, 80 F.3d 1273, 1288 (9th Cir. 1996) (noting ALJ’s duty fully to 18 develop the administrative record)). 19 The Court cannot confidently conclude that the ALJ’s error was harmless. 20 The Commissioner’s “path” cannot reasonably be discerned from any of the ALJ’s 21 boilerplate findings at step four. Moreover, it is not at all clear that the error was 22 23 24 25 26 27 3 The ALJ’s finding that plaintiff’s job as a ski binding fitter and repairer was past relevant work reads, in full: Based on the evidence of record, the undersigned finds the abovedescribed work is past relevant work because the claimant performed it within 15 years of the date of this decision, for a sufficient length of time to learn and provide average performance, and at the level of substantial gainful activity. 28 (AR 59). 9 1 inconsequential to the ALJ’s step four nondisability determination. For example, 2 at both the initial and reconsideration levels of review, the Commissioner 3 affirmatively skipped step four entirely, and instead evaluated plaintiff’s 4 application for benefits at step five pursuant to the expedited process expressly 5 because the record lacked “sufficient vocational information to determine whether 6 [plaintiff could] perform any of [his] past relevant work.” (AR 99-101, 110-11). 7 Moreover, there is not substantial evidence in the record that would support 8 finding plaintiff’s work as a ski binding fitter and repairer to be substantial gainful 9 activity under the pertinent regulatory tests. For example, under Test One, while 10 plaintiff (a sole proprietor) necessarily rendered “significant” services to the 11 operation of his business, the record does not support a finding that plaintiff 12 received “substantial income” under the circumstances. As plaintiff notes 13 (Plaintiff’s Motion at 1), earning records reflect that plaintiff’s average total 14 monthly income for 2007 (i.e., the pertinent year with the highest total “earnings”) 15 was approximately $676.92 (based on $8,123.00 annual earnings). (AR 68, 251). 16 Defendant does not dispute that such average monthly income falls well below the 17 average amount listed in the SGA Earnings Guidelines for 2007 (i.e., $900 per 18 month). See 20 C.F.R. § 404.1574(b)(2)(ii); POMS § DI 10501.015(B); see 19 Defendant’s Motion at 1-2. In addition, defendant points to no persuasive 20 evidence in the record that would otherwise support the ALJ’s finding that 21 plaintiff worked at an SGA level under any other theory. Cf., e.g., Pinto, 249 F.3d 22 at 846 (remand warranted where ALJ found claimant not disabled at step four 23 based “largely” on inadequate vocational expert testimony and ALJ otherwise 24 “made very few findings”). Furthermore, the ALJ did not expressly find (nor is it 25 sufficiently clear from the record that a reasonable ALJ could find) plaintiff not 26 disabled at step five. To the contrary, the vocational expert testified, in pertinent 27 part, that a hypothetical claimant with the same characteristics and limitations as 28 /// 10 1 alleged by plaintiff would not be able to engage in other jobs that exist in the 2 national economy. (AR 77-86). 3 V. CONCLUSION4 4 For the foregoing reasons, the decision of the Commissioner of Social 5 Security is reversed in part, and this matter is remanded for further administrative 6 action consistent with this Opinion.5 7 LET JUDGMENT BE ENTERED ACCORDINGLY. 8 DATED: March 22, 2017 9 ______________/s/___________________ Honorable Jacqueline Chooljian UNITED STATES MAGISTRATE JUDGE 10 11 12 13 14 15 16 17 18 19 20 21 22 4 The Court need not, and has not adjudicated plaintiff’s other challenges to the ALJ’s 23 decision, except insofar as to determine that a reversal and remand for immediate payment of 24 benefits would not be appropriate. 25 26 27 28 5 When a court reverses an administrative determination, “the proper course, except in rare circumstances, is to remand to the agency for additional investigation or explanation.” Immigration & Naturalization Service v. Ventura, 537 U.S. 12, 16 (2002) (citations and quotations omitted). Remand is proper where, as here, “additional proceedings can remedy defects in the original administrative proceeding. . . .” Garrison v. Colvin, 759 F.3d 995, 1019 (9th Cir. 2014) (citation and internal quotation marks omitted). 11

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