Smith v. Commissioner of Social Security

Filing 15

REPORT AND RECOMMENDATIONS re 2 Complaint filed by Stephen Jason Smith: that the Commissioner's decision to deny SSI benefits be REVERSED and REMANDED and this case CLOSED. Objections to R&R due by 11/9/2012. Signed by Magistrate Judge Stephanie K. Bowman on 10/23/12. (jl1)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION

STEPHEN SMITH,

Case No. 1:11-cv-778

Plaintiff,

Dlott, J.
Bowman, M.J.

v.

MICHAEL J. ASTRUE,
COMMISSIONER OF SOCIAL SECURITY,
Defendant.

REPORT AND RECOMMENDATION
Plaintiff Stephen Smith filed this Social Security appeal in order to challenge the
Defendant’s finding that he is not disabled.

See 42 U.S.C.

§405(g).

Proceeding

through counsel, Plaintiff presents four claims of error for this Court’s review.

As

explained below, I conclude that the ALJ’s finding of non-disability should be
REVERSED and remanded for further development of the record.
I. Summary of Administrative Record
In April 2006, Plaintiff filed an application for Supplemental Security Income
(“SSI”), alleging disability beginning October 2003 due to both mental and physical
impairments. After Plaintiff’s claims were denied initially and upon reconsideration, he
requested a hearing de novo before an Administrative Law Judge (“ALJ”). In December
2009, an evidentiary hearing was held before ALJ Deborah Smith, at which Plaintiff was
represented by counsel. (Tr. 27-67). At the hearing, the ALJ heard testimony from

Plaintiff, and from a vocational expert. On February 24, 2010, the ALJ denied Plaintiff’s
application in a written decision. (Tr. 7-26).
The record on which the ALJ’s decision was based reflects that Plaintiff was 53
years old at the time of the evidentiary hearing. He is a convicted felon, with a history of
drug and alcohol abuse. Plaintiff has a GED, and has past relevant work as a janitor.
(Tr. 20).
Based upon the record and testimony presented, the ALJ found that Plaintiff had
the

following

severe

impairments:

“alcoholism

(primary

problem),

history

of

polysubstance abuse, personality disorder, and schizotypical affective disorder.” (Tr.
12).

When the substance abuse disorders were included, the ALJ concluded that

Plaintiff met the criteria for a listed impairment in 20 C.F.R. Part 404, Subp. P, Appendix
1, specifically referencing Listing 12.09, “while utilizing sections 12.08, and 12.03 in
arriving at this decision.” (Tr. 14). However, the ALJ further concluded that “[i]f the
claimant stopped the substance abuse, the claimant would not have an impairment or
combination of impairments that meets or medically equals” any listed impairment. (Tr.
15). In the absence of substance use, the ALJ determined that Plaintiff retains the
residual functional capacity (“RFC”) to perform a full range of work at all exertional
levels, restricted only by the following non-exertional limitations:
[T]he claimant can understand, remember, and carry out simple and some
multistep tasks. He could concentrate on simple tasks and make basic
work related decisions, sustain superficial or occasional interaction with
others, and work in a nonpublic setting with minimal social demands. He
could cope with common changes in a familiar work setting. Due to low
stress/frustration tolerance, mood lability, and somatic focus, the claimant
is limited to work settings that do not require meeting strict production
quotas or coping with a fast paced environment.
(Tr. 16).
2

Based upon the testimony from the vocational expert, and given Plaintiff’s age,
education, work experience, and RFC, the ALJ concluded that Plaintiff is capable of
performing his past relevant work as a janitor. (Tr. 20). In the alternative, the ALJ
determined that Plaintiff “could still perform other work existing in significant numbers in
the national economy.” (Id.). Therefore, the ALJ determined that Plaintiff was not under
a disability, as defined in the Social Security Regulations, and was not entitled to SSI.
(Id.).
The Appeals Council denied Plaintiff’s request for review. Therefore, the ALJ’s
decision stands as the Defendant’s final determination. As discussed below, the Court
finds legal error and therefore recommends that the Commissioner’s decision be
reversed.
II. Analysis
A. Judicial Standard of Review
To be eligible for benefits, a claimant must be under a “disability” within the
definition of the Social Security Act.

See 42 U.S.C. §1382c(a).

Narrowed to its

statutory meaning, a “disability” includes only physical or mental impairments that are
both “medically determinable” and severe enough to prevent the applicant from (1)
performing his or her past job and (2) engaging in “substantial gainful activity” that is
available in the regional or national economies. See Bowen v. City of New York, 476
U.S. 467, 469-70 (1986).
When a court is asked to review the Commissioner’s denial of benefits, the
court’s first inquiry is to determine whether the ALJ’s non-disability finding is supported
by substantial evidence. 42 U.S.C. § 405(g). Substantial evidence is “such relevant

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evidence as a reasonable mind might accept as adequate to support a conclusion.”
Richardson v. Perales, 402 U.S. 389, 401 (1971) (additional citation and internal
quotation omitted). In conducting this review, the court should consider the record as a
whole. Hephner v. Mathews, 574 F.2d 359, 362 (6th Cir. 1978). If substantial evidence
supports the ALJ’s denial of benefits, then that finding must be affirmed, even if
substantial evidence also exists in the record to support a finding of disability. Felisky v.
Bowen, 35 F.3d 1027, 1035 (6th Cir. 1994). As the Sixth Circuit has explained:
The Secretary’s findings are not subject to reversal merely because
substantial evidence exists in the record to support a different conclusion.
. .. The substantial evidence standard presupposes that there is a ‘zone of
choice’ within which the Secretary may proceed without interference from
the courts. If the Secretary’s decision is supported by substantial
evidence, a reviewing court must affirm.
Id. (citations omitted).
Whether the application is for supplemental security income or for disability
benefits, the Social Security Agency is guided by the following sequential benefits
analysis in review of a new application 1:

at Step 1, the Commissioner asks if the

claimant is still performing substantial gainful activity; at Step 2, the Commissioner
determines if one or more of the claimant’s impairments are “severe;” at Step 3, the
Commissioner analyzes whether the claimant’s impairments, singly or in combination,
meet or equal a Listing in the Listing of Impairments; at Step 4, the Commissioner
determines whether or not the claimant can still perform his or her past relevant work;
and finally, at Step 5, if it is established that claimant can no longer perform his past
relevant work, the burden of proof shifts to the agency to determine whether a

1

As discussed below, a different sequential analysis applies when a prior award of benefits is terminated
due to medical improvement.

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significant number of other jobs which the claimant can perform exist in the national
economy. See Combs v. Commissioner of Soc. Sec., 459 F.3d 640, 643 (6th Cir.
2006); 20 C.F.R. §§404.1520, 416.920.
B. Plaintiff’s Statement of Errors
Plaintiff contends that the ALJ erred: (1) by failing to recognize that Plaintiff’s SSI
benefits should have been automatically reinstated upon his release from imprisonment;
(2) by failing to fully develop the record concerning whether Plaintiff was required to file
a new application; (3) by improperly evaluating Plaintiff’s substance abuse; and (4) by
improperly concluding that Plaintiff suffers from no physical limitations. The first two
assertions of error, discussed together, are dispositive and require remand.
1. Plaintiff’s Prior Termination of Benefits/ New Application
In

his

first

and

second

assertions

of

error,

Plaintiff

challenges

the

Commissioner’s failure to reinstate Plaintiff’s benefits after Smith’s release from a period
of incarceration. The Commissioner does not dispute that Plaintiff has received SSI
benefits in the past.
Social Security regulations provide for the termination of benefits, and require the
claimant to submit a new application for benefits, whenever a claimant is incarcerated
for a period of 12 months or more. See 20 C.F.R. §416.1335. However, additional
regulations provide for the suspension (rather than termination) of benefits in cases
involving periods of incarceration of less than 12 months. See 20 C.F.R. §416.1325. In
the latter cases, the regulations state that benefits “will be resumed effective with the
earliest day of the month in which a recipient is no longer a resident of a public
institution.” 20 C.F.R. §416.1325(b).

5

In this case, Plaintiff alleges that the Commissioner improperly applied its own
regulations, and terminated his benefits even though he was incarcerated for a period of
less than 12 months. The record contains evidence that Plaintiff was incarcerated on or
about March 29, 2005 after pleading guilty to a charge of receiving stolen property, but
that he was released from a half-way house in fewer than 12 months, on February 15,
2006.

(Tr. 64).

Plaintiff’s attorney claims that unidentified office employees at the

Social Security Administration office originally informed Plaintiff that his benefits would
be reinstated because he was incarcerated for less than a year, but that the same office
later refused to reinstate the suspended benefits award, and instead insisted that
Plaintiff file a new application for benefits. (Tr. 63-64).
Plaintiff argues that the Commissioner improperly disregarded the regulation that
presumes continuing disability when a claimant seeks only to reinstate his benefits
within a 12 month period of suspension, see 20 C.F.R. §416.1325. By forcing him to file
a new application for benefits, rather than reinstating benefits under the operative
regulation, Plaintiff contends that the Commissioner improperly reversed the burdens of
proof.

Plaintiff urges this Court to issue an order directing the Commissioner to

reinstate his prior award of benefits based upon 20 C.F.R. §416.1325.
The Commissioner points out that, in general, benefits may be administratively
terminated after the lapse of twelve months if the claimant does not come forward with
evidence that he is no longer incarcerated. If a claimant believes that an administrative
termination has occurred in error, his recourse is to request a reopening or revision of
that action. See 20 C.F.R. §416.1487. However, the Commissioner points to no clear
evidence in this record as to when Plaintiff’s prior award of benefits was suspended or

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terminated, or on what grounds. 2 The Commissioner concedes that the record is silent
as to whether Plaintiff actually pursued any available administrative remedy, and if so,
what action was taken by the Social Security Administration concerning any such
request. As stated, Plaintiff maintains that he took action to reinstate his benefits, but
was rebuffed.
Despite the ambiguity in the record, the Commissioner argues that the only issue
before the ALJ was reconsideration of the decision denying Plaintiff’s April 2006
application for benefits. In turn, the Commissioner argues that this Court’s review is
limited to consideration of whether the denial of the new application should be affirmed,
without consideration of any past award or termination. However, Plaintiff asserts that
he presented the procedural issue in his pre-hearing memorandum, (Tr. 237), as well as
at the hearing, and in post-hearing correspondence, (Tr. 740), and that the ALJ agreed
to look into the matter.
The determination of the scope of this Court’s judicial review requires
consideration of two legal axioms. The first is that federal courts are not courts of
general jurisdiction. The second is that under the regulatory scheme of the Social
Security Act, an ALJ must develop a full and complete record.
First, Section 205(g) of the Social Security Act, 42 U.S.C. § 405(g), provides the
exclusive jurisdictional basis for judicial review of cases arising under the Social
Security Act.
Any individual, after any final decision of the Commissioner of Social
Security made after a hearing to which he was a party, irrespective of the
amount in controversy, may obtain a review of such decision by a civil
2

Indeed, the record contains some ambiguity as to when the prior award was made. (Tr. 460, referring to
a denial of benefits dated February 2006, but noting that the physician conducting the review found no
record of the earlier application; compare Tr.31, referring to “fully favorable” decision dated 3/21/00) .

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action commenced within sixty days after the mailing to him of notice of
such decision or within such further time as the Commissioner of Social
Security may allow.
Id. (Italics added).
Section 405(h) additionally provides:
No findings of fact or decision of the Commissioner of Social Security shall
be reviewed by any person, tribunal, or governmental agency except as
herein provided. No action against the United States, the Commissioner
of Social Security or any officer or employee thereof shall be brought
under section 1331 or 1346 of Title 28, United States Code, to recover on
any claim arising under this subchapter.
Id. Thus, pursuant to 42 U.S.C. § 405(h), Congress has made it abundantly clear that
§405(g) provides the only basis for judicial review of the Commissioner’s decisions.
While not specifically articulated as such, the essence of Defendant’s argument
is a jurisdictional one – that this Court may not review the prior termination of benefits
because there is no evidence that Plaintiff exhausted administrative remedies required
to obtain a judicially reviewable “final decision.” Consequently, the prior termination
arguably would not be reviewable under § 405(g), because that termination was not
made “after a hearing” and after the Appeals Council has either denied review, or
granted review and issued its own decision on the merits.
Of course, the obvious difficulty with that argument is the silent record, which
contains little evidence as to whether Plaintiff did or did not exhaust his administrative
remedies concerning the termination.

Nevertheless, Plaintiff has presented some

testimony and argument that he attempted to administratively challenge the refusal to
reinstate his prior award, and that he incorporated that challenge into his April 2006
application. In fact, the ALJ’s opinion briefly addresses the issue:

8

The undersigned has read [counsel’s] letters, in which he argues that the
claimant’s benefits should have been reinstated immediately after his
incarceration ended and that it is inappropriate to require him to reapply.
Everyone who receives disability benefits, even though they do not abuse
drugs or alcohol and who are not incarcerated, are potentially subject to a
continuing disability review. It is unclear why [counsel] believes the
claimant is exempt from proving his disability before he is granted
benefits. This argument is rejected.”
(Tr. 11). 3
2. Further Development of the Record Required
Plaintiff represents that the ALJ’s analysis falls short, because she promised to
look into the matter during the evidentiary hearing, but then failed to do so. He argues
that her failure to review this issue amounted to a failure to properly develop the
administrative record on a central issue. See, e.g., Sparks v. Bowen, 117 F.R.D. 604
(S.D. Ohio 1987)(ALJ’s failure to develop factual record fully and fairly required
remand).

In response, the Commissioner argues that Plaintiff uses the ALJ’s

statements out-of-context to support his claim that the ALJ promised to review this issue
in his present appeal. I disagree, and conclude that remand for further development of
the record is required.
The transcript of the evidentiary hearing bears witness to the ALJ’s initial concern
with the lack of documentation regarding Plaintiff’s prior award of SSI benefits. (See Tr.
30-32, colloquy between ALJ and counsel inquiring when Plaintiff received benefits in
the past, why he was found to be disabled in the past, on what kind of determination
3

To the extent that the ALJ’s comments refer to a “continuing disability review,” the ALJ’s analysis
is in error. The standard of review for continuing disability generally requires medical improvement, as
provided for in 20 C.F.R. §416.994, which involves an eight-step sequential analysis as opposed to the
five-step analysis applicable to initial claims. In such cases, the Commissioner bears the burden of proof
to show medical improvement. See, e.g., Casiano v. Heckler, 746 F.3d 1144 (6th Cir. 1984). Here, the
ALJ did not cite to the applicable regulation for medical improvement, or employ the different standard of
review that the regulation requires to review a continuing disability claim.

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(whether initial review or after evidentiary hearing), and the basis for a subsequent
“overpayment” determination).

Later in the hearing and in pre- and post-hearing

memoranda, Plaintiff’s counsel clearly articulated his argument that the prior award was
improperly terminated, and that Plaintiff was improperly forced to file a new application.
Seizing on counsel’s remark that “this might be something for the office to
consider outside this case,” (Tr. 64), the Commissioner suggests that Plaintiff did not
consider the issue part of his appeal. However, read in context, counsel’s statement
merely reflects a concern that the “local office” of the Social Security Administration is
repeatedly ignoring the regulatory scheme by terminating the benefits of other claimants
incarcerated for periods of less than a year. There is no indication that Plaintiff was
waiving his clearly articulated plea for the ALJ to consider Plaintiff’s individual claim
regarding this issue. (Id.).
When Plaintiff’s counsel pleaded his argument, the ALJ again questioned the
lack of documentation concerning Plaintiff’s prior award, noting that she did not even
have records proving that Plaintiff was in payment status when he entered jail. “I don’t
know that, I don’t know, because there’s this overpayment, there was a time when he
wasn’t even in benefit – he was found, but wasn’t in benefits. That’s why I’ve got to
look, I don’t understand exactly – ” (Tr. 63). However, Plaintiff testified that he was
receiving benefits at the time, and that he reported to the District Office when he was
released in less than a year, on or about February 15, 2006. (Tr. 64). In response to
counsel’s argument that claimant was initially promised that his benefits would be
reinstated, and then told otherwise, the ALJ stated: “Well, that’s what I need to figure
out.” (Tr. 64). The ALJ promised that she would “bring it up at the ALJ meeting and

10

look into it with his case and see why he was not – it’s a legal argument….but I’m – I bet
you there’s probably something if I run a query to find out ---.” (Tr. 65).
Given that: (1) Plaintiff consistently presented his legal argument; and (2) the ALJ
stated that she would obtain the necessary records and review Plaintiff’s argument but
apparently failed to do so, this Court must remand. Presented with nearly identical
scenarios, other courts have not hesitated to do the same. See, e.g., Bragg v. Comm’r
of Soc. Sec., 2011 WL 1374067 (E.D. Mich., March 22, 2011, R&R adopted April 12,
2011); Bonner v. Astrue, 725 F. Supp.2d 898 (C.D. Ca. 2010). However, given the
factual ambiguities that persist in this record, Plaintiff is not entitled to immediate
reinstatement of the prior award. Instead, remand is required to more clearly identify
and obtain records concerning: (1) when Plaintiff was awarded benefits; (2) whether
those benefits were terminated or suspended, on what date, and for what reasons; (3)
any relevant periods of residence in a “public institution” whether or not that institution
was jail, a half-way house, or some other public facility; and (4) any notices concerning
the termination of benefits and Plaintiff’s pursuit of available administrative remedies.
Having determined that remand is required, I find no cause to review Plaintiff’s
additional claims of error in any depth, because the record does not entitle Plaintiff to an
immediate award of benefits, and the additional alleged errors would not provide
Plaintiff with any greater relief. 4 Accord Bonner, 725 F. Supp.2d at 902 n.4. I pause
only to reflect that it appears the ALJ may have been influenced by factors such as
Plaintiff’s “inability to keep jobs [and] multiple incarcerations (Tr. 15), and the fact that
he has filed five separate applications for disability benefits, “some of which were

4

That said, I find no merit to Plaintiff’s claim that the ALJ committed legal error in her evaluation of
Plaintiff’s substance abuse.

11

denied because of incarceration or excess resources, or because the claimant was
fleeing to avoid prosecution.” (Tr. 17). The ALJ found that Plaintiff has “been evasive
and misleading about his drug abuse and alcohol use,” noting Plaintiff’s heroin use in
2005 as well as more recent drug and alcohol use, notwithstanding Plaintiff’s denials.
(Tr. 17-18). The ALJ also relied on Plaintiff’s “history of crimes involving deception,
including forgery, burglary, and theft, as well as crimes involving alcohol – numerous
DUIs and public intoxication.” (Tr. 18). She repeatedly pointed to evidence of Plaintiff’s
poor work history. “Plaintiff currently lives in HUD housing, gets welfare and food
stamps, and has a medical card. He still is not attempting to work.” (Tr. 18). Moreover,
the ALJ noted that the state agency flagged Plaintiff for investigation based upon his
“history of multiple filings, escalating allegations without any severe physical
impairments, and varied criminal history.”

5

(Tr. 18). In short, the ALJ provided ample

evidence to support her conclusion that “secondary gain issues…significantly
undermine claimant’s credibility.” (Tr. 19).
Plaintiff presents no direct challenge to the ALJ’s credibility findings, which
appear well-supported.

However, issues concerning Plaintiff’s credibility are only

marginally relevant (if at all) 6 to the purely legal issue of whether the Commissioner
correctly terminated Plaintiff’s prior award of benefits and/or refused to reinstate his
benefits following his release from imprisonment. The particular regulations at issue
take no notice of whether the applicant seeking benefits is a liar and a thief, or an
5

A Report of Investigation from the Cooperative Investigations Unit reflects March 28, 2007 surveillance of
Plaintiff. According to that surveillance report, Plaintiff had never been seen at his apartment using a
cane or wearing braces, contrary to his testimony that he had used a cane continuously for six years.
The report also includes a non-exhaustive list of Plaintiff’s substantial criminal history. (Tr. 76).

6

The Court recognizes that issues of credibility may become relevant on remand, to the extent that there
is any factual dispute concerning what notice was given to Plaintiff about the suspension/termination of
his prior award, his right to appeal that administrative decision, or the need to file a new application.

12

upstanding citizen and pillar of the community. The Commissioner and his agents are
legally required to apply those regulations without moral judgment, and solely on the
basis of whether a claimant’s benefit status has been suspended for more than or less
than twelve months, based upon his or her residence in a public institution.
III. Conclusion and Recommendation
For the reasons discussed above, I conclude that the ALJ committed reversible
error. Her finding of non-disability cannot be upheld based upon the failure of the ALJ
to develop the record on critical procedural issues. Therefore, IT IS RECOMMENDED
THAT the Commissioner’s decision to deny Plaintiff SSI benefits be REVERSED and
REMANDED for further development of the record consistent with this opinion, and that
this case be CLOSED.

s/ Stephanie K. Bowman
Stephanie K. Bowman
United States Magistrate Judge

13

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION

STEPHEN SMITH,

Case No. 1:11-cv-778

Plaintiff,

Dlott, J.
Bowman, M.J.

v.

MICHAEL J. ASTRUE,
COMMISSIONER OF SOCIAL SECURITY,
Defendant.

NOTICE
Pursuant to Fed. R. Civ. P 72(b), any party may serve and file specific, written
objections to this Report and Recommendation (“R&R”) within FOURTEEN (14) DAYS
of the filing date of this R&R. That period may be extended further by the Court on
timely motion by either side for an extension of time. All objections shall specify the
portion(s) of the R&R objected to, and shall be accompanied by a memorandum of law
in support of the objections. A party shall respond to an opponent’s objections within
FOURTEEN (14) DAYS after being served with a copy of those objections. Failure to
make objections in accordance with this procedure may forfeit rights on appeal. See
Thomas v. Arn, 474 U.S. 140 (1985); United States v. Walters, 638 F.2d 947 (6th Cir.
1981).

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