Panas v. Social Security Administration

Filing 48

REPORT AND RECOMMENDATIONS re 44 MOTION for Attorney Fees Under Equal Access to Justice Act, filed by Irene D. Panas by Magistrate Judge Jerry H. Ritter. Objections to R&R due by 8/10/2020. Add 3 days to the deadline if service is by mailing it to the person's last known address (or means described in Fed. R. Civ. P. 5(b)(2)(D) and (F)); if service is by electronic means, no additional days are added. (Fed. R. Civ. P. 6(d); Fed. R. Crim. P. 45(c).) (mlt)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
IRENE PANAS, on behalf of
M.E.M., a minor,
Plaintiff,
v.

CIV 17-0364 WJ/JHR

ANDREW SAUL,
Commissioner of Social Security,
Defendant.

PROPOSED FINDINGS AND RECOMMENDED DISPOSITION
This matter comes before the Court on Plaintiff Irene Panas’ Motion for Attorney Fees
Pursuant to the Equal Access to Justice Act, with Supporting Memorandum [Doc. 44], filed
October 18, 2019 and fully briefed on November 5, 2019. [See Doc. 45 (Commissioner’s
Response); Doc. 46 (Ms. Panas’ Reply)]. In her Motion Ms. Panas seeks an award of attorney fees
in the amount of $20,736.30 for work performed on her behalf before this Court and before the
Tenth Circuit Court of Appeals. [See Doc. 44-1, pp. 1-4]. Pursuant to 28 U.S.C. § 636(b), this
social security appeal was referred to me, a United States Magistrate Judge, by presiding Chief
District Judge Johnson to recommend an ultimate disposition of the case. [See Doc. 24]. As is
detailed below, this case is before the Court on remand from the Tenth Circuit Court of Appeals
which reversed the Judgement and Memorandum Opinion and Order of Chief Judge Johnson,
which adopted my Recommendation that Ms. Panas’ Motion to Remand be denied. [See Doc. 22
(Motion to Remand); Doc. 30 (Report and Recommendation); Doc. 33 (Memorandum Opinion
and Order); Doc. 34 (Final Judgment); Doc. 41 (Mandate)]. The merits of Ms. Panas’ case are no
longer before the Court because the Tenth Circuit reversed the Commissioner’s Final Decision and

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remanded M.E.M.’s claim to the Administration for further proceedings. [See Doc. 41 (Mandate);
Doc. 42 (Final Order Remanding for Proceedings Consistent with the Mandate)]. What remains
undecided is whether Ms. Panas is entitled to attorney fees for services rendered in prosecuting
her case in federal court pursuant to the Equal Access to Justice Act (“EAJA”). Having reviewed
the parties’ thoughtful and articulate submissions, the relevant law, and the entire case docket, the
undersigned finds and recommends that Ms. Panas’ Motion should be granted.
I.

INTRODUCTION
“[T]he Commissioner respectfully submits that, in light of the facts of this case and

controlling Tenth Circuit precedent, a reasonable person could—and, in fact did—believe that the
[Administrative Law Judge’s (“ALJ’s”)] decision was sufficiently specific and supported by
substantial evidence.” [Doc. 45, p. 10]. This argument is tempting to accept given this Court’s own
prior findings before the Tenth Circuit’s remand. [See Doc. 30 (Recommendation); Doc. 33 (Order
Adopting Recommendation)]. However, after careful consideration of the Tenth Circuit’s rationale
as set forth in the Order and Judgment attached to its Mandate, I find that Ms. Panas’ position is
the better one. [See generally Doc. 46]. As Ms. Panas points out, a district court’s affirmance of
an ALJ’s decision is not, by itself, grounds to find the Commissioner’s position to be substantially
justified in the face of an appellate remand. [Id., p. 2]. More importantly, she shows that the ALJ’s
errors in this case, as found by the Tenth Circuit, were ones of clearly established law - not of fact.
[Id., pp. 3-8]. Having reviewed the relevant legal standards against the Tenth Circuit’s Mandate,
the Court is compelled to agree with Ms. Panas that its prior holding that the ALJ’s decision was
factually supported by substantial evidence matters little in the face of the Tenth Circuit’s
declaration of clear legal violations. Therefore, because the Commissioner’s position cannot be

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substantially justified for the purposes of the EAJA under the law of this circuit, Ms. Panas’ Motion
for her attorney fees should be granted.
II.

RELEVANT LAW
A. Determining Disability (as defined by the Social Security Act) in Children
An individual under the age of eighteen (a child) is disabled for the purposes of receiving

Supplemental Security Income benefits under the Social Security Act if she has “a medically
determinable physical or mental impairment, which results in marked and severe functional
limitations, and which can be expected to result in death or which has lasted or can be expected to
last for a continuous period of not less than 12 months[,]” 42 U.S.C. § 1382c(a)(3)(C)(i); and she
is not engaged in “substantial gainful activity.” 1 42 U.S.C. § 1382c(a)(3)(C)(ii); see also 20 C.F.R.
§ 416.906 (basic definition of disability for children). The Commissioner uses a three-step
sequential evaluation process to determine whether a child is disabled. See 20 C.F.R. § 416.924(a);
see also Briggs ex rel. Briggs v. Massanari, 248 F.3d 1235, 1237 (10th Cir. 2001). At the first step,
the assigned ALJ must ensure that the child is not engaged in substantial gainful activity. Id. At
the second, the ALJ examines whether “the child has an impairment or combination of
impairments that is severe.” Briggs, 248 F.3d at 1237. If there are no severe impairments, the child
is not disabled. 20 C.F.R. § 416.924(c). Finally, at the final step the ALJ determines whether the
child’s impairment(s) “meets or equals an impairment listed in Appendix 1, Subpart P of 20 C.F.R.
Pt. 404.” Briggs, 248 F.3d at 1237; 20 C.F.R. § 416.924(d).
“In making the third determination—whether a child’s impairment meets or equals a listed
impairment—the ALJ must consider whether the impairment, alone or in combination with another

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“Substantial gainful activity means work that— (a) Involves doing significant and productive physical or mental
duties; and (b) [i]s done (or intended) for pay or profit.” 20 C.F.R. § 416.910; see also 20 C.F.R. § 416.972 (defining
substantial work activity and gainful work activity).

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impairments, ‘medically equals, or functionally equals the listings.’” Briggs, 248 F.3d at 1237
(citing 20 C.F.R. § 416.924(a)). If a child’s impairments do not “medically” equal the listings, see
20 C. F. R. § 416.926, they may still “functionally” equal a listing. See 20 C.F.R. § 416.926a. To
“functionally equal the listings” a child’s “impairment(s) must be of listing-level severity; i.e., it
must result in ‘marked’ limitations in two domains of functioning or an ‘extreme’ limitation in one
domain[.]” 20 C.F.R. § 416.926a. “Domains are broad areas of functioning intended to capture all
of what a child can or cannot do.” SSR 09-1P, 2009 WL 396031 at *1. The six applicable domains
of functioning are:
(i) Acquiring and using information;
(ii) Attending and completing tasks;
(iii) Interacting and relating with others;
(iv) Moving about and manipulating objects;
(v) Caring for yourself; and,
(vi) Health and physical well-being.
20 C.F.R. § 416.926a(b)(1)(i)-(vi).
When the Administration considers whether a child has “marked” or “extreme” limitations
in any domain, it examines “all the information [it has] in [the child’s] case record about how [the
child’s] functioning is limited because of [her] impairment(s), and [it] compare[s] [the child’s]
functioning to the typical functioning of children [her] age who do not have impairments.” 20
C.F.R. § 416.926a(f)(1).
B. Determining Whether to Award Fees Under the Equal Access to Justice Act
“Under EAJA, a fee award is required if: (1) plaintiff is a ‘prevailing party’; (2) the position
of the United States is not ‘substantially justified’; and (3) there are no special circumstances that

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make an award of fees unjust.” Hackett v. Barnhart, 475 F.3d 1166, 1172 (10th Cir. 2007) (citing
28 U.S.C. § 2412(d)(1)(A)). Clearly, the first factor is met, as Ms. Panas successfully obtained a
reversal and remand to the Administration. See Hackett, 475 F.3d at 1168. The Court further finds
that there are no special circumstances that makes an award of fees unjust in this case. The issue
the case turns on is whether the Commissioner’s position, both before the Administration and
before the federal courts, was substantially justified.
The government (here the Commissioner) bears the burden of establishing that its position
was substantially justified. Hackett, 475 F.3d at 1172. The “position of the United States” as
defined by the EAJA, means not only the position taken in the federal civil action, but also, “the
action or failure to act by the agency upon which the civil action is based.” Hackett, 475 F.3d at
1172 (quoting 28 U.S.C. § 2412(d)(2)(D)). “Consequently, in opposing the EAJA motion, the
Commissioner must show not only that his litigation position in defending the ALJ’s legal error
was substantially justified, but also that the initial legal error by the agency was substantially
justified.” Chester v. Apfel, 1 F. App’x 792, 794 (10th Cir. 2001) (unpublished). Thus, “fees
generally should be awarded where the government’s underlying action was unreasonable even if
the government advanced a reasonable litigation position.” Hackett, 475 F.3d at 1174 (quoting
United States v. Marolf, 277 F.3d 1156, 1159 (9th Cir. 2002)).
“The test for substantial justification in this circuit is one of reasonableness in law and
fact.” Gilbert v. Shalala, 45 F.3d 1391, 1394 (10th Cir. 1995) (citing Gutierrez v. Sullivan, 953
F.2d 579, 585 (10th Cir. 1992), cert. denied sub nom. Shalala v. Gutierrez, 509 U.S. 933 (1993)).
“The reasonableness test breaks down into three parts: the government must show ‘that there is a
reasonable basis for the facts alleged; that there exists a reasonable basis in law for the theory it
propounds; and that the facts will reasonably support the legal theory advanced.” Gutierrez, 953

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F.2d at 585 (internal quotations omitted). In sum, “the government’s position must be ‘justified to
a degree that could satisfy a reasonable person.’” Hackett, 475 F.3d at 1172 (quoting Pierce v.
Underwood, 487 U.S. 552, 565 (1988)).
“The government’s ‘position can be justified even though it is not correct[,]’” id. (quoting
Pierce, 487 U.S. at 566 n.2), but it is more likely to meet [the “substantially justified”] standard
when the legal principle on which it relied is ‘unclear or in flux.’” Evans v. Colvin, 640 F. App’x
731, 733 (10th Cir. 2016) (unpublished) (quoting Martinez v. Sec'y of Health & Human Servs.,
815 F.2d 1381, 1383 (10th Cir. 1987)). Importantly, “the fact that one other court agreed with the
Commissioner, standing alone, does not establish that his position was substantially justified.”
Chester, 1 F. App’x at 794. Likewise, where the Tenth Circuit has remanded due to a clear legal
error committed by the Administration, fees should only be denied to the plaintiff where the record
reveals both a reasonable basis for the ALJ’s legal error and the Commissioner’s litigation position
in defending it. See, e.g., Chester, 1 F. App’x at 795 (“This was a glaring legal error, and the record
reveals no reasonable legal basis for the ALJ’s failure…. As a result, the Commissioner can not
show that his position was substantially justified, either in making the initial legal error or in
arguing in the ensuing litigation that there was no error.”).
III.

PROCEDURAL HISTORY
Ms. Panas applied for supplemental security income benefits under the Social Security Act

on M.E.M.’s behalf on August 9, 2013 (with a protective filing date of August 5, 2013). AR at 136145. 2 The Administration denied the application initially and upon reconsideration, and Ms. Panas
requested a de novo hearing before an ALJ. AR at 54-98. ALJ Barry O’Melinn (“the ALJ”) held

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[Document 17-1 comprises the sealed Certified Administrative Record (“AR”). The Court cites the Record’s internal
pagination, rather than the CM/ECF document number and page].

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an evidentiary hearing on December 4, 2015. AR at 33-53. On March 4, 2016, he issued an
unfavorable decision, finding that M.E.M. is not disabled as defined in the Social Security Act. AR
at 10-32. Ms. Panas filed a Request for Review with the Appeals Council, which the Council
denied on January 26, 2017. AR at 1-8. As such, the ALJ’s decision became the final decision of
the Commissioner. See Doyal v. Barnhart, 331 F.3d 758, 759 (10th Cir. 2003).
Ms. Panas appealed the ALJ’s decision to this Court via a Complaint filed March 23, 2017.
[See Doc. 1]. 3 After full briefing and the statutory objections period, presiding Chief District Judge
Johnson adopted my recommendation that the Commissioner’s Final Decision be affirmed. [See
Doc. 30 (Report and Recommendations); Doc. 33 (Order Adopting Recommendations)]. Ms.
Panas appealed this Court’s Judgement, and successfully convinced the Tenth Circuit to reverse
the Commissioner’s Final Decision and remand M.E.M.’s case for further administrative
proceedings. [See Doc. 41]. The Tenth Circuit’s Order and Judgment was issued August 5, 2019,
and its Mandate was filed on September 27, 2019. [Id.]. Chief Judge Johnson entered a Final
Judgment remanding the case to the Commissioner on October 2, 2019. [Doc. 42]. Ms. Panas filed
her Motion for EAJA fees shortly thereafter. [See Doc. 44].
IV.

THE COMMISSIONER’S FINAL DECISION DENYING M.E.M. BENEFITS
AND THE TENTH CIRCUIT’S MANDATE REVERSING THAT DECISION
At the first step of the sequential evaluation process applicable to child claims, the ALJ

found that M.E.M. has not engaged in substantial gainful activity since her application date. AR at
16. At the second, he determined that M.E.M. has the following severe impairments: “Anxiety,
Affective Disorder, Learning Disorder, Obesity, and Speech and Language.” AR at 16. At the third
step, the ALJ concluded that M.E.M. “does not have an impairment or combination of impairments

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This Court had jurisdiction to review the Commissioner’s Final Decision pursuant to 42 U.S.C. § 405(g) and 20
C.F.R. §§ 416.1481, 422.210(a).

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that meets or medically equals the severity of the listed impairments[.]” AR at 16-17. The ALJ also
found that M.E.M.’s impairments do not functionally equal the severity of the listings because she
“does not have an impairment of combination of impairments that result in either ‘marked’
limitations in two domains of functioning or ‘extreme’ limitation in one domain of functioning.”
AR at 18-27. As such, the ALJ determined that M.E.M. is not disabled as defined by the Act and
denied her claim for supplemental security income benefits. AR at 27.
On appeal to the Tenth Circuit, Ms. Panas successfully argued that the ALJ erred as a
matter of law by: (1) failing to compare M.E.M. to non-disabled children; (2) failing to adequately
assess three domains of functioning; and, (3) improperly assessing the credibility of M.E.M., Ms.
Panas, and M.E.M.’s father. [See Doc. 41-1, p. 2]. As the Tenth Circuit explained, it viewed the
ALJ’s comparison of M.E.M. to non-disabled children as mostly a boilerplate recitation of the
factors he was to consider devoid of substantive analysis explaining why M.E.M.’s “limitations in
each domain as compared to her peers were less than ‘marked.’” [Doc. 41-1, pp. 4-6]. The court
then explained why it found the ALJ’s analysis of the domain of Acquiring and Using Information
to be “inadequate” - mostly because the ALJ failed to provide “legally sufficient” reasons for
ascribing less evidence to an examining doctor’s opinion as compared with those of “agency
physicians who based their opinions solely on their review of M.E.M.’s records.” [Doc. 41-1, pp.
6-11]. The court further admonished the ALJ for picking and choosing among medical reports and
“using portions of evidence favorable to his position while ignoring other evidence.” [Id., p. 9
(quoted authority omitted)]. In sum, the court felt the ALJ should have more fully “assess[ed] and
explain[ed] M.E.M.’s limitations in this domain in accordance with the governing legal standards.”
[Id., p. 11].

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The Tenth Circuit’s discussion of the two other domains - attending and completing tasks,
and health and physical well-being - likewise criticized the ALJ’s failure to explain why nonexamining agency physicians’ opinions were elevated above those of examining doctors and why
he ignored (or failed to provide legally sound reasons for rejecting) unfavorable evidence. [Id., pp.
11-15]. Finally, the court concluded that the ALJ’s negative credibility inferences were
unsupported by legally adequate analysis, primarily because it found that the ALJ’s credibility
findings were mostly boilerplate statements of the relevant factors without substance, but also
because the ALJ relied on legally improper factors (such as financial motive and family loyalty)
when discounting M.E.M.’s father’s statements concerning her abilities. [Doc. 41-1, pp. 15-17].
V.

ANALYSIS
The Commissioner’s best argument in response to Ms. Panas’ Motion for EAJA fees is that

this Court found no legal error by the Administration and determined that “the ALJ’s decision was
sufficiently specific for judicial review and supported by substantial evidence.” [Doc. 45, p. 1].
The Commissioner then submits “that he had a reasonable basis in both law and fact for arguing
that the ALJ’s decision was supported by substantial evidence and free from harmful legal error.”
[Id., p. 3]. However, as Ms. Panas points out in her Reply, the Commissioner fails to explain how
the legal errors the Tenth Circuit found were harmless. [See Doc. 46, pp. 2-9]. Thus, the
Commissioner’s demonstration that there was evidence supporting the ALJ’s legally flawed
analysis is neither helpful nor convincing: the Court agrees with Ms. Panas that the Tenth Circuit’s
focus in reversing the Commissioner’s Final Decision here was the ALJ’s failure to correctly apply
relevant law.
As Ms. Panas points out, the Tenth Circuit found the ALJ’s comparison of M.E.M. with
other children to be not merely legally insufficient, but absent. [Compare Doc. 41-1, pp. 4-5 with

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Doc. 46, p. 3]. This is a legal error, not one of substantial evidence. Likewise, Ms. Panas highlights
the Tenth Circuit’s distaste for the ALJ’s abbreviated analysis when discussing the domains of
function at issue, finding the ALJ’s previous discussion of the evidence and apparent incorporation
of that discussion into one-sentence analyses to be legally insufficient. [Compare Doc. 41-1, pp.
7, 11-12, 13 with Doc. 46, pp. 4, 6, 7]. Finally, Ms. Panas correctly points out that the Tenth Circuit
reversed the ALJ’s credibility findings, not merely because they were unsupported by substantial
evidence, but because they consisted primarily of boilerplate assertions without any specific
reference to the evidence (contrary to established law) and relied on legally inappropriate reasons
for discounting the witness’ credibility (also contrary to existing law). [Compare Doc. 41-1, pp.
15-17 with Doc. 46, p. 8].
The Commissioner does not argue, and the Court does not find, that any of the legal
principles the Tenth Circuit relied on when reversing the Final Decision in this case were unclear
or in flux. This should come as no surprise, as the Order and Judgment in this case was
unpublished. [See Doc. 41-1, p. 1 n.1 (citing Fed. R. App. P. 32.1; 10th Cir. R. 32.1)]. As such, the
Court is compelled to agree with Ms. Panas that the Commissioner’s position for the purposes of
her EAJA application was not substantially justified.
VI.

RECOMMENDATION
Wherefore, for the foregoing reasons, IT IS HEREBY RECOMMENDED that Ms.

Panas’ Motion for Attorney Fees Pursuant to Equal Access to Justice Act, with Supporting
Memorandum [Doc. 44], be granted and that she be awarded attorney fees in the amount of
$20,736.30 as permitted by 28 U.S.C. § 2412, payable to Ms. Panas but mailed to her attorney, see
Astrue v. Ratliff, 560 U.S. 586 (2010), because Ms. Panas is the prevailing party to this social

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security appeal, the Commissioner has failed to show that the government’s position was
substantially justified, and no other circumstance makes an award of fees unjust.
IT IS FURTHER RECOMMENDED THAT, if Ms. Panas’ counsel receives attorney
fees under both the EAJA and 42 U.S.C. § 406(b) of the Social Security Act, counsel shall refund
the smaller award to Ms. Panas pursuant to Weakley v. Bowen, 803 F. 2d 575, 580 (10th Cir. 1986).

__________________________________
JERRY H. RITTER
U. S. MAGISTRATE JUDGE

THE PARTIES ARE FURTHER NOTIFIED THAT WITHIN 14 DAYS OF SERVICE of
a copy of these Proposed Findings and Recommended Disposition, they may file written
objections with the Clerk of the District Court pursuant to 28 U.S.C. § 636(b)(1).
A party must file any objections with the Clerk of the District Court within the fourteenday period if that party wants to have appellate review of the proposed findings and
recommended disposition. If no objections are filed, no appellate review will be allowed.

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