STEPP v. COLVIN

Filing 42

ORDER granting 37 Motion to Alter the Judgment. The original findings are AMENDED to whatever extent they are inconsistent with Party III of this Entry. Further, a new judgment AFFIRMING the ALJ's decision is entered. Signed by Magistrate Judge William G. Hussmann, Jr., on 8/1/2014. (NRN)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
TERRE HAUTE DIVISION
SHEILA B. STEPP
(Social Security No. XXX-XX-7013),
Plaintiff,
v.
CAROLYN W. COLVIN,
Acting Commissioner of Social Security,
Defendant.

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2:13-cv-179-WGH-WTL

ENTRY ON DEFENDANT’S MOTION TO ALTER THE JUDGMENT
This matter is before me, William G. Hussmann, Jr., United States
Magistrate Judge, on the Commissioner’s Motion to Alter the Judgment (Filing
No. 37), the parties consent to magistrate judge jurisdiction (Filing No. 8; Filing
No. 12), and Judge Lawrence’s Order of Reference (Filing No. 16). The matter is
fully briefed. (Filing No. 37; Filing No. 39; Filing No. 41.) Being duly advised, I
find that I committed a manifest error of law in determining whether the
Appeals Council adequately reviewed certain medical records, and I therefore
GRANT the Commissioner’s motion.
I.

Background
Sheila B. Stepp came to this Court to appeal the Social Security

Administration’s denial of her application for disability insurance benefits,
raising six separate issues for remand. (Filing No. 21.) Following the parties’
oral argument on April 24, 2014, I ordered that Stepp’s application be

remanded to the Administration for further proceedings based on only one of
those issues: the Appeals Council’s review of medical records from Dr. Allan
MacKay. (Filing No. 35.)
The Commissioner conceded that Stepp submitted records from Dr.
MacKay and two other sources on November 21, 2011, the same day the
administrative law judge (ALJ) issued his decision denying Stepp’s application
for benefits. (Filing No. 27 at ECF pp. 11–12.) And the Commissioner
appeared to concede that Dr. MacKay’s records were “new and material” for
purposes of Appeals Council review. (Id. at ECF pp. 12–13.) Stepp argued that
the Council erred by failing to review Dr. MacKay’s records. (Filing No. 21 at
ECF pp. 35–36.) In response, the Commissioner argued that her decision
should be affirmed for two reasons: The Appeals Council properly reviewed the
records from Dr. MacKay, and—even if it did not—Stepp was not entitled to
have them reviewed because she had not articulated good cause for submitting
them after her hearing before the ALJ. (Filing No. 27 at ECF pp. 12–13.)
The Appeals Council did not explicitly address Dr. MacKay’s records in
the body of its decision, but it listed his records among others it received on the
“Exhibits List” it appended to its decision. (Filing No. 14-2 at ECF pp. 6–7.) In
the body of its decision, the Appeals Council stated that it considered the
evidence identified on the Exhibits List, found that the exhibits did not “provide
a basis for changing the Administrative Law Judge’s decision,” and “considered
whether the Administrative Law Judge’s action, findings, or conclusion is
contrary to the weight of evidence of record.” (Id. at ECF pp. 2–3.) The
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decision explicitly stated that the Appeals Council considered the other two
exhibits Stepp had submitted but found they were immaterial because they
concerned her condition following the ALJ’s decision. (Id. at ECF p. 3.)
I ordered remand for further consideration of Dr. MacKay’s records:
The Appeals Council declined to review the ALJ’s opinion on
the grounds that two other sets of records that were
submitted by Plaintiff addressed the period after the ALJ’s
decision. The Appeals Council did not address Dr. MacKay’s
records.
(Filing No. 35 at ¶ 7.) The Commissioner now asks the Court to alter that
judgment and affirm the ALJ’s decision denying Stepp’s application for
benefits.
II.

Legal Standard
Federal Rule of Civil Procedure 59(e) allows a court to reopen a matter on

which judgment has been entered, amend its findings, and enter a new
judgment. “To prevail on a Rule 59(e) motion, the moving party ‘must clearly
establish (1) that the court committed a manifest error of law or fact, or (2) that
newly discovered evidence precluded entry of judgment.’” Edgewood Manor
Apartment Homes, LLC v. RSUI Indem. Co., 733 F.3d 761, 770 (7th Cir. 2013)
(quoting Blue v. Hartford Life & Accident Ins. Co., 698 F.3d 587, 598 (7th Cir.
2012)). Rule 59(e) does not invite litigants to present arguments or evidence it
could and should have presented in the first instance. Miller v. Safeco Ins. Co.
of Am., 683 F.3d 805, 813 (7th Cir. 2012). Whether to reopen and amend a
judgment is a question for the trial judge’s discretion. E.g., Boyd v. Tornier,
656 F.3d 487, 492 (7th Cir. 2011).
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III.

Discussion
I originally remanded this matter because I found that the Appeals

Council erred by failing to sufficiently address Dr. MacKay’s records in its
order. (Filing No. 35 at ECF ¶ 7.) Upon reconsideration, however, I question
whether the Council was required to do anything more than it did.
A. The Appeals Council considered Dr. MacKay’s records.
As a starting point, I find that the Appeals Council considered Dr.
MacKay’s records. At the very least, I infer that Dr. MacKay’s records were
presented to the Council because they are listed as exhibits to its order. (Filing
No. 14-2 at ECF p. 6.) The Council’s statement that it “considered . . . the
additional evidence listed on the” Exhibits List suggests—however thinly—that
the Council reviewed that evidence. (Id. at ECF p. 2.) Moreover, the fact that
the Council explicitly declined to review Stepp’s other newly submitted evidence
gives weight to the Commissioner’s argument that the Appeals Council actually
considered Dr. MacKay’s records. (See Id. at ECF p. 3.)1
My original findings on this matter focused on the Appeals Council’s
failure to explicitly address Dr. MacKay’s records and explain why they did not
require review of the ALJ’s decision. In so doing, I lost sight of the key inquiry

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The Commissioner also asks the Court to find that the Appeals Council considered
Dr. MacKay’s records by assuming that it adhered to an internal policy (HALLEX I-4-154) forbidding the Council to list as exhibits evidence it has not considered. (See
Filing No. 37 at ECF p. 3.) I note that the Commissioner could have raised this new
argument in the original briefing on this matter. Nevertheless, I need not consider this
argument nor resolve whether HALLEX should carry any weight on judicial review to
resolve the Commissioner’s motion.

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in this matter: whether the ALJ was required to explicitly address Dr. MacKay’s
records and explain why they did not require review of the ALJ’s decision.
B. The Appeals Council adequately explained its decision to decline
full review of the ALJ’s determination.
The Appeals Council must undertake a three-step process when it
receives evidence that was not presented to the ALJ and that concerns the
period preceding the issuance of the ALJ’s opinion. 20 C.F.R. § 404.970(b).
First, the Council must determine whether the evidence is “new and material.”
If it is, the Council must proceed to the second step and determine whether the
ALJ’s decision is contrary to the weight of the entire record—including the new,
material evidence. If it is, the Council must proceed to the third step and
review the ALJ’s decision de novo. Perkins v. Chater, 107 F.3d 1290, 1294 (7th
Cir. 1997).
In Perkins, the Seventh Circuit held that the Appeals Council’s decision
to review the ALJ’s decision de novo is discretionary and unreviewable unless it
committed legal error at the first or second step. Id. There, the court found
that the Council properly determined that the evidence in question was new
and material, that the ALJ’s determination was not contrary to the weight of
the evidence, and that the Council’s decision to forego de novo review therefore
was unreviewable. Id. Unfortunately, the Seventh Circuit’s opinion does not
explain to what extent the Council specifically addressed the new evidence or
justified its decision.
It is not clear whether the Appeals Council carried its burden in this
case. The Commissioner concedes that Dr. MacKay’s records were new and
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material and argues that the Council properly declined de novo review after
determining that the ALJ’s decision was not contrary to the weight of all the
evidence. (Filing No. 37 at ECF p. 4.) But the Council never specifically
discussed the new evidence, and it announced it’s conclusion in a single,
unexplained sentence: “We found that this information does not provide a basis
for changing the Administrative Law Judge’s Decision.” (Filing No. 14-2 at ECF
p. 3.) This unsupported statement makes it nearly impossible for a reviewing
judge to evaluate the Council’s conclusion that the ALJ’s decision was not
contrary to the weight of the evidence.
Unfortunately for Stepp, neither party has offered—and I cannot find—
any authority requiring the Appeals Council to furnish a reasoned explanation
for its decision that new, material evidence does not warrant de novo review of
the ALJ’s decision. I therefore find that the Council’s failure to articulate any
reason for its decision was not a legal error. Consequently, I must concede
that I committed a manifest error of law in remanding this action.
To be clear, I do not suggest that the Appeals Council’s order in this
matter is exemplary. It does the absolute minimum to suggest that it even
learned of Dr. McKay’s records, and it wholly fails to explain why the ALJ’s
determination is not contrary to the weight of the evidence in light of those
records. But the Seventh Circuit stated in Perkins that the Council triggers
remand only by committing legal error, and I know of no precedent requiring
the Council to explicitly address evidence or explain its conclusions. If

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presented with any authority requiring the Council to do either to even the
slightest degree, I would find its order woefully deficient and order remand.
I am not intellectually satisfied by this decision (nor, I imagine, is Stepp),
but I find it compelled by the regulations and the present state of the case law
in our jurisdiction. After all, disability cases ordinarily hinge on whether the
decision-maker has articulated “reasoned grounds” for her decision2 and
whether the reviewer can “trace the path” of the decision-maker’s reasoning3.
Here, the Appeals Council articulated nothing and left me with no reasoning to
trace. Fortunately, Stepp is entitled to appeal to a higher authority whose
guidance on this issue would facilitate surer resolution of similar claims.
IV.

Conclusion
For the foregoing reasons, I GRANT the Commissioner’s Motion to Alter

the Judgment. I AMEND my original findings in this matter to whatever extent
they are inconsistent with Part III of this Entry. Further, I direct entry of a new
judgment AFFIRMING the ALJ’s decision.
SO ORDERED this 1st day of August, 2014.

__________________________
William G. Hussmann, Jr.
United States Magistrate Judge
Southern District of Indiana

Served electronically on all ECF-registered counsel of record.

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Spiva v. Astrue, 628 F.3d 346, 353 (7th Cir. 2010).
E.g., Clifford v. Apfel, 227 F.3d 863, 874 (7th Cir. 2000).

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