Maloney v. Commissioner of Social Security
Filing
18
OPINION and ORDER - This case is REMANDED for further proceedings consistent with this opinion. IT IS SO ORDERED. DATED this 5th day of August, 2014, by United States Magistrate Judge John V. Acosta. (peg)
UNITED STATES DISTRICT COURT
DISTRICT OF OREGON
PORTLAND DIVISION
Case No.: 6:13-CV-00821-AC
SEAN T. MALONEY,
OPINION AND
ORDER
Plaintiff,
v.
COMMISSIONER of Social Security,
Defendant.
ACOSTA, Magistrate Judge:
Introduction
Plaintiff Sean T. Maloney ("Maloney") filed this action under section 205(g) of the Social
Security Act (the "Act") as amended, 42 U.S.C. § 405(g), to review the final decision of the
Commissioner of Social Security (the "Commissioner") who denied him: 1) social security disability
and disability insurance benefits, as well as 2) supplemental security income. For the reasons set
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forth below, the court remands the decision of the Commissioner for further consideration.
Procedural Background
On September 28, 2009, Maloney filed the two aforementioned separate applications for
benefits. In both, Maloney alleged an onset date ofJanuary 3, 2007, on the basis of bipolar disorder.
The application was denied initially, on reconsideration, and by Administrative Law Judge Laura
Valente ("ALJ"), after a hearing. The Appeals Council received additional evidence in the form of
a brief from Maloney's attorney, a psychological report from Gerald Fleisher, Ph.D., and progress
notes from J. Wayne Mathews, M.D., but denied review, making the ALJ's decision the final
decision of the Commissioner.
Factual Background
Maloney is thirty-seven years old and earned a college degree in business. His past relevant
work experience includes fast food worker, dishwasher, cashier, and retail sales clerk. Maloney has
not been involved in a successful work attempt since Janumy 3, 2007. Maloney last met the insured
status requirements entitling him to benefits on March 31, 2011.
Standard ofReview
The Social Security Act provides for payment of disability insurance benefits to people who
have contributed to the Social Security program and who suffer from a physical or mental disability.
42 U.S.C. § 423(a)(l). The burden of proof to establish a disability rests upon the claimant. Gomez
v. Chater, 74 F.3d 967, 970 (9th Cir. 1996), cert. denied, 519 U.S. 881 (1996). To meet this burden,
the claimant must demonstrate an inability to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment which can be expected to cause death or
to last for a continuous period of at least twelve months. 42 U.S.C. § 423(d)(l)(A). An individual
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will be dete1mined to be disabled only ifthere are physical or mental impairments of such severity
that the individual is not only unable to do previous work but cannot, considering his or her age,
education, and work experience, engage in any other kind of substantial gainful work which exists
in the national economy. 42 U.S.C. § 423(d)(2)(A).
The Commissioner has established a five-step sequential evaluation process for dete1mining
if a person is disabled. 20 C.F.R. § 404.1520; Lester v. Chafer, 81F.3d821, 828 n.5 (9th Cir. 1995).
First, the Commissioner determines whether the claimant is engaged in "substantial gainful activity."
If the claimant is engaged in such activity, benefits are denied. Otherwise, the Commissioner
proceeds to step two and determines whether the claimant has a medically severe impairment or
combination ofimpairments. A severe impairment is one "which significantly limits [the claimant's]
physical or mental ability to do basic work activities." 20 C.F.R. § 404.1520(c). If the claimant does
not have a severe impairment or combination of impai1ments, benefits are denied.
Ifthe impahment is severe, the Commissioner proceeds to the third step to determine whether
the impahment is equivalent to one of a number of listed impairments that the Commissioner
acknowledges are so severe as to preclude substantial gainful activity. 20 C.F.R. § 404.1520(d). If
the impairment meets or equals one of the listed impahments, the claimant is conclusively presumed
to be disabled. If the impairment is not one that is presumed to be disabling, the Commissioner
proceeds to the fourth step to determine whether the impai1ment prevents the claimant from
performing past-relevant work. If the claimant is able to perform work which he or she has
performed in the past, a finding of "not disabled" is made and benefits are denied. 20 C.F.R.
§ 404.1520(e).
If the claimant is unable to do work performed in the past, the Commissioner proceeds to the
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fifth and final step to determine if the claimant can perform other work in the national economy in
light ofhis or her age, education, and work experience. The burden then shifts to the Commissioner
to show what gainful work activities are within the claimant's capabilities. Distasio v. Shalala, 47
F.3d 348, 349 (9th Cir. 1995). The claimant is entitled to benefits only ifhe or she is not able to
perform other work. 20 C.F.R. § 404.1520(±).
The reviewing court must affirm the Commissioner's decision if the Commissioner applied
proper legal standards and the findings are supp01ied by substantial evidence in the record. 42
U.S.C. § 405(g) (2006); Batson v. Comm 'r of the Soc. Sec. Admin., 359 F.3d 1190, 1193 (9th Cir.
2004). "Substantial evidence" means "more than a mere scintilla, but less than a preponderance."
Robbins v. Soc. Sec. Admin., 466 F.3d 880, 882 (9th Cir. 2006). It is "such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion." Tylitzki v. Shalala, 999 F.2d
1411, 1413 (9th Cir. 1993).
The reviewing court may not substitute its judgment for that of the Commissioner. Robbins,
466 F.3d at 882; Edlund v. }vfassanari, 253 F.3d 1152, 1156 (9th Cir. 2001). Thus, where the
evidence is susceptible to more than one rational interpretation, the ALJ' s conclusion must be
upheld, even where the evidence can suppo1i either affirming or reversing the ALJ' s conclusion.
Burch v. Barnhart, 400 F.3d 676, 679 (9th Cir. 2005). The ALJ is responsible for dete1mining
credibility, resolving conflicts in medical testimony, and resolving ambiguities. Andrews v. Shala/a,
53 F.3d 1035, 1039 (9th Cir. 1995). In determining a claimant's residual functioning capacity, an
ALJ must consider all relevant evidence in the record, including, inter alia, medical records, lay
evidence, and "the effects of symptoms, including pain, that are reasonably attributed to a medically
determinable impairment." Robbins, 466 F.3d at 883 (citing Social Security Ruling ("SSR") 96-8p,
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1996 WL 374184, at *5; 20 C.F.R. §§ 404.1545(a)(3),41 6.945(a)(3); Smolen v. Chafer, 80 F.3d
1273, 1281 (9th Cir. 1996)). However, the reviewing court must consider the entire record as a
whole, weighing both the evidence that supports and detracts from the Commissioner's conclusion,
and may not affirm simply by isolating a specific quantum of supporting evidence. Lingenfelter v.
Astrue, 504 F.3d 1028, 1035 (9th Cir. 2007).
Summmy of the ALJ's Decision
At step one, the ALJ found that Maloney had not engaged in substantial gainful activity since
January 3, 2007.
(Admin. R. at 15.) At step two, the ALJ found Maloney to have severe
impahments of mood disorder and substance addiction disorder. (Admin. R. at 15.) She further
found the record established the impairments were medically determinable and that they caused more
than minimal functional limitations in the performance of basic work activities. (Admin. R. at 15.)
At step three, the ALJ found these impairments did not meet or equal a listed impahment. (Admin.
R. at 16.) Next 1, the ALJ made a residual functional capacity ("RFC") determination, considering
Maloney to be capable of performing a full range of work at all exe1iional levels, but also outlining
non-exertional limitations on that capability. (Admin. R. at 17.) The Social Security Administration
defines RFC as, "[A]n administrative assessment of the extent to which an individual's medically
determinable impairment(s), including any related symptoms, such as pain, may cause physical or
mental limitations or restrictions that may affect his or her capacity to do work-related physical and
mental activities." SSR 96-8p, at *5. The non-exe1iional limitations identified by the ALJ were:
... the claimant has sufficient concentration to understand, remember, and carry-out
The court approximates which step in the five-step sequential analysis the ALJ took at each
part of her decision, but because the ALJ's findings are numbered to seven, the ALJ's precise
method is not clear.
1
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simple routine tasks of the kind found in unskilled work with SVPs up to 2; has
sufficient persistence and pace work superficially with general public (superficial is
defined as not having to respond to the demands/requests of the public but can refer
those demands/requests to others to respond while working in the same room or
vicinity of the general public; greetings are superficial); has sufficient persistence and
pace to work in coordination with a small group of coworkers ( 1 to 3 people); and
has sufficient persistence and pace to make simple workplace decisions and to handle
a few workplace changes.
(Admin. R. at 17.) Between the third and fourth steps, the ALJ found:
After careful consideration of the evidence, the undersigned finds that the claimant's
medically detenninable impahments could reasonably be expected to cause the
alleged symptoms; however, the claimant's statements concerning the intensity,
persistence and limiting effects of these symptoms are not credible for the reasons
discussed below.
(Admin. R. at 19.)
The ALJ then discussed five reasons for finding Maloney not credible. First, the ALJ
determined that Maloney' s mental symptoms and limitations were not substantiated by the medical
record to the degree Maloney had alleged. (Admin. R. at 19.) Here, the ALJ pointed out those
occasions Maloney' s medical records confirmed he is a chronic user of methamphetamine, including
Maloney' s admissions to substance use and abuse; Maloney testing positive for drng use; healthcare
provider suspicion related to Maloney' s substance use and abuse; and the likelihood of connections
between Maloney's symptoms and his substance use and abuse. (Admin. R. at 19-23.) The ALJ also
attempted to identify times during which Maloney's condition was stable, and to distinguish them
from the times he was using drngs. (Admin. R. at 19-23.)
Second, the ALJ determined the record evidenced that Maloney had engaged in activities
showing a greater degree of mental functioning than he had alleged. (Admin. R. at 23.) As
examples, the ALJ cited evidence of Maloney 's social abilities, and his ability to function
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independently at home, financially, and in commuting. (Admin. R. at 23.)
Third, the ALJ determined that Maloney made inconsistent disclosures regarding his
substance abuse, which further undermined his credibility. (Admin. R. at 23.) Here, the ALJ
highlighted evidence of Maloney' s drug use throughout the medical record to suppo1t her credibility
finding. (Admin. R. at 23-25.) The ALJ concluded her reasoning stating:
Given the evidence of ongoing drug and alcohol abuse throughout the relevant period
without clear periods of sobriety, and given the lack of understanding of the hue
extent of the abuse due to the inconsistent repo1ting by the claimant, the undersigned
finds the ongoing substance abuse clouds the diagnostic picture of the claimant's
mental impairment and unde1mines the credibility of his alleged mental symptoms
and limitations.
(Admin. R. at 25.)
Fourth, the ALJ determined that Maloney had made inconsistent statements regarding his
alleged mental impairments and limitations. (Admin. R. at 25.) Here, the ALJ reasoned, in part,
"[Maloney] had admitted to recent methamphetamines use while continuing to use alcohol
occasionally during the evaluation with Dr. Dees" and "admitted that his problems with sustaining
employment in the past were due to his drug use." (Admin. R. at 26.)
Fifth, the ALJ determined that Maloney may have been motivated by secondary gain for
disability benefits. (Admin. R. at 26.) Here, the ALJ noted, "Dr. Dees indicated the claimant
appeared to be at risk for dive1ting funds to purchase drugs based on his past behavior." (Adm in.
R. at 26.)
In considering the medical opinion evidence, the ALJ accorded significant weight to the
opinion of state agency psychological consultant Dr. Kent Reade ("Dr. Reade"). (Admin. R. at 26.)
Dr. Reade had conducted a mental assessment of Maloney. (Admin. R. at 26.) In Dr. Reade's
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opinion, Maloney could carry out routine work of less than one-to-three steps and maintain a
schedule and complete normal work weeks, but could not deal with the stress associated with direct
customer service. (Admin. R. at 26.) Also, Dr. Reade opined that Maloney required a predictable
work setting. (Admin. R. at 26.) Finally, the ALJ noted Dr. Reade's assessment that Maloney
"tended to be vague and guarded" when talking about his substance abuse. (Admin. R. at 27.)
The ALJ also accorded significant weight to Dr. Wayne Dees's ("Dr. Dees") opinion.
(Admin. R. at 27 .) Dr. Dees conducted a consultative psychological evaluation of Maloney in
February 2010. (Admin. R. at 27.) Dr. Dees opined that Maloney did not have any significant
cognitive functioning limits, had the ability to complete simple instructions, and to keep normal pace
and persistence. (Admin. R. at 27.) Fmiher, in Dr. Dees's opinion, Maloney was moderately
impaired in his ability to learn, but this was adequately accommodated in Maloney's residual
functioning capacity. (Admin. R. at 27.) The ALJ also recognized Dr. Dees's opinion that
Maloney's "consistent methamphetamine abuse without stable period of sobriety made
differentiation of diagnoses difficult .... " (Admin. R. at 27 .) Finally, the ALJ accorded Dr. Dees's
opinion on Maloney's judgment and insight being poor, and Maloney's Global Assessment of
Functioning Scale ("GAF Scale") score of 45-50 little weight because those aspects were
"inconsistent with the totality of evidence in the record." (Admin. R. at 27.) The GAF Scale is a
numeric scale mental health clinicians and physicians use to subjectively rate a patient's social,
occupational, and psychological functioning. According to the ALJ, that "totality of evidence"
included:
. . . the contemporaneous evidence of ongoing stabilization of symptoms with
medication, generally mild clinical findings in the [Seattle Mental Health] treatment
notes, the claimant engaging in activities showing greater mental functioning ability,
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and the lack of clarity on the extent of the claimant's substance abuse due to
misreporting as all discussed earlier.
(Admin. R. at 27 .) The ALJ also considered the medical opinions of Dr. Cassandra Clark, who
conducted a "one-time check-box" Depatiment of Social and Health Services mental evaluation.
(Admin. R. at 27.) In Dr. Clark's opinion, Maloney was markedly impaired in his ability to perfotm
routine tasks without undue supervision, and severely impaired in his ability to communicate and
perfo1m effectively with limited public contacts and maintain appropriate behavior in a work setting.
(Admin. R. at 27.) The ALJ accorded little weight to Dr. Clark's opinions because they were
inconsistent with the totality of the evidence in the record, including:
... problems with treatment compliance, stabilization of symptoms when compliant
with medication, lack of chemical dependency treatment despite extensive substance
abuse, evidence of ability to engage in activities showing greater mental functioning
ability, and the lack of clarity on the extent of the claimant's substance abuse given
his inconsistent reporting as all detailed earlier.
(Admin. R. at 27.) The ALJ's other reasons for according little weight to Dr. Clark's opinions
included that the ALJ believed the doctor had relied on Maloney's subjective complaints as well as
other statements he had made which were unsubstantiated by and inconsistent with the record.
(Admin. R. at 27.) Dr. Clark also believed Maloney's symptoms were more consistent with
schizophrenia than an amphetamine psychosis, which led her to a dual diagnosis. (Admin. R. at 27 .)
The ALJ accorded this dual diagnosis little weight:
[T]he lack of clear periods of sobriety in the record and the claimant's misrepmting
of his substance abuse ... results in lack of understanding of the full extent of the
substance abuse and clouds the diagnostic picture, as well as in turn, undermines Dr.
Clark's opinion.
(Admin. R. at 27-28.) Inste<1d, the ALJ favored Dr. Dees's opinion that Maloney's consistent
methamphetamine abuse without a stable period of sobriety made differentiation of diagnoses
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with the record as a
difficult. (Admin. R. at 28.) She found Dr. Dees's opinion more consistent
whole. (Admii1. R. at 28.)
e examining
Additionally, the ALJ accorded little weight to the assessments of multipl
2009. (Admin. R. at
psychiatrists who treated Maloney in emergency room settings from 2007 to
28.) The ALJ discounted the opinions of these psychiatrists:
were
. . . because they were given while the claimant was using drugs that
the
contributing to the claima nt's symptoms, and because they are inconsistent with
claimant engaging in
evidence of stabilization with medical compliance and the
activities showing greater mental functioning than alleged as discussed earlier.
not
Moreover, these were one-time assessments where the examining psychiatrist did
have the benefit of reviewing the claima nt's longitudinal treatment record.
(Admin. R. at 28.)
Upon consideration of opinions offered by "other sources", the ALJ discounted
the opinion
"very clear that even
ofMalo ney's case manager, John-Paul Sharp. In Mr. Sharp's opinion, it was
condition that
without the ingestion of substances, Mr. Maloney suffer[ed] from a severe mental
riately." Mr. Sharp
impair[ed] his ability to interface with reality effectively or socialize approp
exhibit[ed] extremes
fmiher opined that even when Maloney abstained from drugs, he "frequently
. R. at 28.) The
of paranoia and delusions that [we]re debilitating to his daily functioning." (Admin
inconsistent with the
ALJ again accorded little weight to these opinions because she saw them as
dependency" and
totality of the evidence, including aspects relating to Malone y's "chemical
Dr. Dees's opinion.
"substance abuse." (Admin. R. at 28.) The ALJ againreiterated that she favored
on similar ground
(Admin. R. at 29.) The ALJ then discounted testimony from Malone y's father
s.
(Admin. R. at 29.)
Thus, at step four, the ALJ found Maloney' s functional limitations were adequa
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by the established residual functional capacity assessment and found that Maloney was capable of
performing his past relevant work as a dishwasher. (Admin. R. at 29.) At step five, the ALJ
concluded that Maloney was capable of "making a successful adjustment to other work that exists
in significant numbers in the national economy." (Admin. R. at 31.) Ultimately, the ALJ decided
Maloney was "not disabled under [s]ection 1614(a)(3)(A) of the Social Security Act." (Admin. R.
at 31.)
Discussion
Maloney asse1is the ALJ erred by: 1) failing to evaluate the severity and functional impact
of all ofMaloney's impairments before factoring out the limitations arising from his substance use;
2) ignoring the impact ofMaloney's impairments on his functioning in dete1mining his credibility;
and 3) improperly assessing witness' credibility in light oflater-submitted evidence. Maloney asks
the court to remand this action to the Commissioner for fuiiher proceedings so the ALJ can "reevaluate the medical evidence and [Maloney' s] credibility without considering the impact of his drug
use." (Pl.' s Brief at 17.) The Commissioner admits the ALJ erred in considering the claimant's drug
and alcohol abuse in the initial sequential analysis, but contends any error related thereto was
harmless. The Commissioner also argues that the ALJ otherwise considered the evidence presented
to her in accordance with the terms of the Act and the related regulations, and that her decision
should be affirmed.
I. Drug Abuse and Alcoholism Analysis
Maloney argues, and the Commissioner agrees, that the ALJ improperly considered the
effects ofMaloney's drug and alcohol abuse without first determining Maloney was disabled under
the five-step inquiry. See Bustamante v. i\Iassanari, 262 F.3d 949 (9th Cir. 2001). Maloney argues
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this was haimful error in that it resulted in the ALJ rejecting "the opinions of Dr. Clark and Mr.
Sharp, who had opined that Plaintiffs impahments would be disabling, notwithstanding his drug
use." (Pl. 's Reply at 4.) The Commissioner argues this was harmless error because the ALJ
assumed Maloney' s bipolar disorder was disabling in determining that substance abuse was material
to Maloney's "more serious symptoms." (Def.'s Memo at 4.) See Parra v. Astrue, 481 F.3d 742
(9th Cir. 2007).
The Contract with America Advancement Act of 1996 amended the Social Security Act and
provides that "an individual shall not be considered to be disabled ... if alcoholism or drug addiction
would ... be a contributing factor material to the Commissioner's determination that the individual
is disabled." 42 U.S.C. § 423(d)(2)(C). Under the Commissioner's regulations implemented to
govern disability claims involving substance abuse, the ALJ must conduct a specific drng abuse and
alcoholism analysis ("DAA Analysis"). 20 C.F.R. §§ 404.1535, 416.935. The ALJ must first
conduct the standard five-step sequential evaluation without separating out the impact of drug
addiction or alcoholism in order to determine whether a claimant is disabled. Bustamante, 262 F.3d
at 955. If the ALJ finds the claimant is not disabled under the five-step inquiry, then the claimant
is not entitled to benefits and there is no need to proceed with a second analysis under 20 C.F.R. §§
404.1535 or 416.935. Id. If the ALJ finds the claimant is disabled, the ALJ must perform the
sequential evaluation process a second time, conducting the DAA Analysis. Id. In the DAA
Analysis, the ALJ separates the impact of plaintiffs drug abuse or alcoholism to dete1mine if the
claimant would still be found disabled if he or she stopped using drugs or alcohol. Id.; 20 C.F.R.
§ 416.935(b). If the remaining limitations would not be disabling, the claimant's substance abuse
is material and benefits must be denied. Parra, 481 F.3d at 747-48.
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The ALJ should have completed the five-step inquhy without attempting to determine the
impact of Maloney' s substance abuse on his other impairments, because an ALJ cannot consider the
effects of substance abuse unless he or she finds a claimant disabled upon completing the initial
five-step inquiry. As Maloney argues, the ALJ improperly rejected and accepted medical opinions
and evidence from other sources referencing in each instance Maloney's substance abuse. (Pl.'s
Brief at 10.) For example, the ALJ listed "consistent with the record as a whole" or "inconsistent
with the totality of the record" as her justification for according significant or little weight to medical
opinions and other evidence. As examples of what the "record as a whole" or the "totality of the
record" included, the ALJ offered: 1) "the lack of clarity on the extent of the claimant's substance
abuse due to misreporting"; and 2) the "lack of chemical dependency treatment despite extensive
substance abuse." (Admin. R. at 27 .)
Further, the ALJ gave little weight to a diagnosis by Dr. Cassandra Clark that Maloney's
symptoms were more consistent with schizophrenia rather than amphetamine psychosis, stating:
[G]iven the lack of clear periods of sobriety in the record and the claimant's
misreporting of his substance abuse as discussed above, which results in lack of
understanding of the full extent of the substance abuse and clouds the diagnostic
picture, as well as in turn, undennines Dr. Clark's assessment. Greater weight is
accorded to Dr. Dees' opinion that the claimant's consistent methamphetamine abuse
without stable period of sobriety made differentiation of diagnoses difficult, which
is more consistent with the record as a whole.
(Admin. R. at 28). The ALJ also, based in part on Maloney's substance use, accorded little weight
to various GAF Scale scores assessed by examining psychiatrists during Maloney' s visits to hospital
emergency rooms.
The ALJ wrote that she, "accord[ed] little weight to all these one-time
assessments because they were given while the claimant was using drugs that were contributing to
the claimant's symptoms, and because they are inconsistent with the evidence .... " (Admin. R. at
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28.)
Additionally, the ALJ accorded little weight to the opinions of healthcare providers who do
not qualify as "medical sources" under C.F.R. § 404.1513 on improper grounds. (Admin. R. at 2829.) In addition to finding the opinions of John-Paul Sharp, "inconsistent with the totality of the
evidence in the record" including substance abuse-related aspects, the ALJ again favored Dr. Dees's
opinion.
(Admin. R. at 29.) ("[T]he claimant's consistent methamphetamine abuse and lack of
stable period of sobriety made differentiation of diagnoses difficult, which is more consistent with
the record as a whole.") In discounting Mr. Sharp's opinion, the ALJ noted Mr. Sharp believed it
was "ve1y clear that even without the ingestion of substances, Mr. Maloney suffer[ed] from a severe
mental condition that impair[ ed] his ability to interface with reality effectively or socialize
appropriately" and, even during periods of sobriety, "frequently exhibit[ed] extremes of paranoia and
delusions that [we]re debilitating to his daily functioning." (Admin. R. at 28.)
Thus, the ALJ' s decision demonstrates that she e1Toneously examined the effects of
Maloney' s substance abuse in the initial five-step sequential evaluation. In so ening, the ALJ failed
to apply the Commissioner's regulations and the proper legal standards of the Ninth Circuit. See
20 C.F.R. §§ 404.1535(a), 416.935(a). See also Bustamante, 262 F.3d at 955.
The pmties do not dispute that substance abuse is implicated in this disability proceeding,
and that the ALJ failed to follow the dictates of the Commissioner's regulations and Bustamante.
However, the two sides disagree as to the applicability of Parra to the instant facts and whether or
not the ALJ' s error was harmful. The Commissioner's hmmless error argument fails for two
reasons. First, it relies on Parra, which does not support that argument. Second, the Commissioner
relies on the same type of substance-abuse-related evidence the ALJ was precluded by law from
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considering in the initial sequential analysis.
The Commissioner argues that Parra renders the ALJ's failure in this case harmless e1rnr,
while Maloney distinguishes Parra from these facts. (Def. 's Brief at 4; PL 's Reply at 3.) In Parra,
a claimant sought judicial review of an ALJ' s decision denying a claim for social security disability
benefits and supplemental security income benefits. 481 F.3d at 745. The claimant had alleged
disability due to alcoholism and bursitis. Id. The ALJ rejected the bursitis claim. Id. On the
substance abuse claim, the ALJ found the claimant "disabled primarily due to heavy alcohol
consumption and intoxication," and also that the claimant could have recovered from the
"moderately severe but curable cinhosis of the liver" if the claimant had quit drinking prior to 1999.
Id. at 745-746. The ALJ also explicitly ruled the claimant must cany the burden of proving that his
alcoholism was not a "contributing factor material to his disability." Id. at 746. Ultimately, the ALJ
found the claimant ineligible for disability benefits because his disability would have resolved had
the claimant quit drinking. Id. The ALJ's decision contained findings that were ambiguous and
unclear as to whether he had properly conducted the full five-step analysis to dete1mine whether a
disability existed before conducting the DAA Analysis. Id. at 747. The Ninth Circuit found any
error committed by the ALJ to be harmless because the ALJ "assumed that Parra's cirrhosis was
disabling" in deciding his alcoholism was material to his cinhosis. Id. at 7 47.
The analysis and outcome in Parra are distinguishable from the instant case. In Parra, the
claimant's only "severe" impairment recognized by the ALJ was alcohol-related. Here, the ALJ
recognized Maloney suffered from a "mood disorder" as well as "substance abuse disorder". Also,
the ALJ in Parra used the DAA Analysis to explicitly find that the alcohol was a contributing factor
material to his disability. The ALJ in the instant case did not make a similar explicit finding at any
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point, instead finding that: "the ongoing substance abuse clouds the diagnosis picture of the
claimant's mental impairment and unde1mines the credibility of his alleged mental symptoms and
limitations." (Admin. R. at 25.)
Further, while the ALJ did not clearly follow the required initial five-step analysis in
outlining his findings in Parra, be instead assumed a disability and continued on with a DAA
analysis. This assumption, key to the Ninth Circuit's haimless elTor dete1mination in Parra, did not
occur in this case. In Parra the court held that, "[b]ecause the DAA Analysis assumed Farra's
ci!Thosis was disabling, any error in alTiving at that initial conclusion would not affect the ALJ' s
ultimate decision thatParra's alcoholism was material to his cirrhosis." Parra, 481 F.3d at 747. The
ALJ here did not assume that Maloney' s bipolar was disabling. Instead, she found Maloney' s mental
symptoms and limitations "not substantiated to the degree alleged" in discussing Maloney's
credibility before she improperly considered his substance abuse during the initial sequential analysis
and prior to any finding of disability. (Admin. R. at 19.) Thus, Parra does not support the
Commissioner's harmless error argument.
Nor is there a basis to find the elTor haimless here. The Ninth Circuit has outlined "different
formulations of the harmless error rule depending on the facts of the case and the e!Tor at issue", but
has "adhered to the general principle that an ALJ's elTor is haimless where it is 'inconsequential to
the ultimate nondisability determination.'" lViolina v. Astrue, 674 F.3d 1104, 1115 (9th Cir. 2012)
(citing Carmickle v. Comm 'r, Soc. Sec. Admin., 533 F.3d 1155, 1162 (9th Cir. 2008)). "In other
words, in each case [the co mi) look[ s) at the record as a whole to determine whether the error alters
the outcome of the case." }vfo/ina, 674 F.3d at 1115. The court cannot say the instant error was
harmless, because the ALJ considered the same type of substance-abuse-related evidence which, by
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law, she was precluded from considering in the initial sequential analysis.
In effect, the
Commissioner asks the comt to apply the two different sequential analyses and weigh the evidence
accordingly. The ALJ should have performed this function below and the comt cannot do it on
review. The United States Supreme Comt has established that if an administrative agency commits
an en-or of law and decides a case using an improper legal standard, the comt cannot affirm the
decision by applying the proper legal standard:
[W]e emphasize[] a simple but fundamental rule of administrative law. That rule is
to the effect that a reviewing comt, in dealing with a dete1mination or judgment
which an administrative agency alone is authorized to make, must judge the propriety
of such action solely by the grounds invoked by the agency. If those grounds are
inadequate or improper, the court is powerless to affirm the administrative action by
substituting what it considers to be a more adequate or proper basis. To do so would
propel the comt into the domain which Congress has set aside exclusively for the
administrative agency ..
Sec. & Exch. Comm 'n v. Chene1y Corp., 332 U.S. 194, 196 (1947).
The rule particularly applies here, because the record shows that Maloney' s substance abuse,
when not separately analyzed, confused the nature and origin of his mental disorders. The ALJ
repeatedly recognized that the disability dete1mination was "cloud[ed]" or "difficult." (Admin. R.
at 21, 25, 27, 28, 29.) She found that Maloney's consistent drug and alcohol abuse without "clear
periods of sobriety ... cloud[ed] the diagnostic picture of the claimant's mental impairment .... "
( Admin. R. at 25.) The medical evidence disclosed that Maloney' s condition and symptoms
unavoidably implicated his drug use.
Thus, in the event that Maloney' s cumulative severe
impairments are properly assessed and do constitute a disability, the disability determination could
be decided in Maloney' s favor.
Because Parra is distinguishable from the instant facts, and because Maloney's substance
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abuse improperly factored into the ALJ' s consideration of the evidence in rendering her decision,
the court cannot say that the ALJ' s error was harmless. For the reasons set forth below in section
IV of this opinion, the court remands the decision of the Commissioner for further consideration.
II. Credibility Dete1minations
Maloney argues that the ALJ improperly found him not credible because the ALJ: 1)
"improperly accepted or rejected reporting based on the perceived impact of Plaintiff's drug use";
2) "isolated testimony and reports to his providers in evaluating the nature of Plaintiff's
impairments"; 3) improperly "discounted ... testimony as inconsistent with the longitudinal record
... ";and 4) "erred in rejecting this evidence without considering Plaintiff's underlying paranoia and
delusions (existing independent of his drug use) and how these behaviors would impact Plaintiff's
ability to sustain work." (PL 's Brief at 14, 16.) Maloney argues that the "ALJ's credibility finding
ignores significant evidence in the record and was not based on clear and convincing reasons." (Pl.' s
Brief at 16.) The Commissioner responds, "[i]f the ALJ's credibility finding is suppmted by
substantial evidence in the record, [the reviewing court] may not engage in second-guessing."
Thomas v. Barnhart, 278 FJd 947, 959 (9th Cir. 2002).
When a medical impairment has been established, the ALJ must provide "specific, cogent
reasons" to discredit a claimant's testimony. i'vforgan v. Comm 'r ofSoc. Sec. Adm in., 169 F.3d 595,
599 (9th Cir. 1999) (quoting Lester, 81 F.3d at 834). The ALJ must then "cit[e] the reasons why the
[claimant's] testimony is unpersuasive." Id Where the ALJ did not find "affirmative evidence" the
claimant was a malingerer, the "reasons for rejecting the claimant's testimony must be clear and
convincing." Id
The comt need not rule on the validity of the ALJ's credibility finding because it has
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remanded the case for further proceedings. See James v. Apfel, 174 F. Supp. 2d 1125, 1130 (W.D.
Wash. 2001) ("Plaintiff contends that the ALJ committed additional errors in failing to properly
evaluate the credibility of plaintiff. . . . In view of the recommendation to remand this case for
further proceedings it is not necessary to decide these issues at this time. On remand the ALJ is to
re-evaluate all of the issues and the evidence and make legally sufficient findings.") On remand, the
ALJ may again consider the effects of drug abuse and alcoholism in detennining Maloney's
credibility. See Wake v. Comm 'r ofSoc. Sec., 461 F. App'x 608, 609 (9th Cir. 201 l)("The ALJ did
not err by considering inconsistent statements about Wake's drinking histo1y when assessing her
credibility.") (citing Verduzco v. Apfel, 188 F.3d 1087, 1090 (9th Cir. 1999); Thomas, 278 F.3d at
959.)
III. Evidence Submitted to the Appeals Council
Maloney submitted additional evidence to the Appeals Council with his Request for Review
of the ALJ's decision.
(Admin. R. at 590-638.)
Maloney argues that a comi-mandated
psychological evaluation from 2003 by Dr. Gerald Fleischer "undermines the evidentiaiy basis for
the ALJ' s decision" and that the evidence therein "clarifies ... the issues the ALJ relied on in finding
Plaintiff not credible and in rejecting other evidence favorable to Plaintiffs claim." (Pl.'s Brief at
13.) More specifically, Maloney argues that Dr. Fleischer's opinion bolsters that of Mr. Sharp and
reinforces Maloney' s credibility in such a way that, when considered "in conjunction with the other
evidence in the record ... " requires the court to remand the claim. (Pl. 's Brief at 12.) The
Commissioner, in response, points to Ninth Circuit case law deeming "[m ]edical opinions that
predate the alleged onset of disability ... of limited relevance." Carmickle, 533 F.3d at 1165.
The Ninth Circuit has held "when a claimant submits evidence for the first time to the
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Appeals Council which considers that evidence in denying review of the ALJ's decision, the new
evidence is pmi of the administrative record ... " Brewes v. Comm 'r, Soc. Sec. Admin., 682 F.3d
1157, 1163 (9th Cir. 2012). Because the court has remanded the case for fmiher ptoceedings, the
ALJ must consider the record as a whole, including the 2003 evaluation from Dr. Fleischer. Gardner
v. Colvin, 6:12-CV-00755-JE, 2013 WL 3229955 (D. Or. June 24, 2013), adopted by, Gardner v.
Colvin, 2013 WL 3229955 (D. Or. June 24, 2013) ("Under the guidance of Brewes and related
decisions, I conclude that this action should be remanded to the Agency so that an ALJ can
determine whether Dr. Richardson's now final assessment, considered with the other evidence in the
record as a whole, establishes that Plaintiff is disabled.")
IV. Remand
Because the comi concludes the ALJ's decision must be remanded, it must next determine
whether the matter should be remanded for further proceedings or for an award of benefits. The
decision to remand for further proceedings or for immediate payment of benefits is within the
discretion of the comi. Harman v. Apfel, 211 F.3d 1172, 1178 (9th Cir. 2000), cert. denied, 531 U.S.
103 8 (2000). The court's decision turns on the likely utility of further proceedings. Id at 1179. A
remand for an award of benefits is appropriate when no useful purpose would be served by further
administrative proceedings or when the record has been fully developed and the evidence is not
sufficient to support the Commissioner's decision. Rodriguez v. Bowen, 876 F.2d 759, 763 (9th Cir.
1989). "If additional proceedings can remedy defects in the original administrative proceeding, a
social security case should be remanded." Lewin v. Schweiker, 654 F.2d 631, 635 (9th Cir. 1981).
Finally,"[w]here the Secretary is in a better position than this court to evaluate the evidence, remand
is appropriate." }vfarcia v. Sullivan, 900 F.2d 172, 176 (9th Cir. 1990).
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Persuasive authority within the Ninth Circuit directs that when an ALJ errs in the manner the
ALJ did in the instant case, the matter should be remanded to the Commissioner for fu1iher
proceedings. See lvfonan v. Astrue, 377 Fed. Appx. 629 (9th Cir. 2010) (mem.) ("Even assuming
that a finding of 'disabled' were clear based on the opinions of Dr. Belmont and Dr. Tromp, a
remand would still be necessmy in this case because the ALJ did not perfonn a proper drug and
alcohol analysis .... ") See also Wiggins v. Colvin, Cl3-657-TSZ, 2013 WL 5913384, *3 (W.D.
Wash. Nov. 4, 2013) (citing Bustamante, 262 F.3d at 955) ("The matter thus should be remanded
with direction that the ALJ complete the initial five-step sequential evaluation without separating
out the impact of substance abuse.")
Thus, the court remands Maloney' s case so that the ALJ may complete the entire initial fivestep sequential evaluation, in accordance with the Commissioner's Regulations and Ninth Circuit
precedent. If the ALJ finds Maloney disabled, only then should she evaluate whether Maloney
would still be disabled when discounting the effects of his substance abuse. Accordingly, the co mt
remands this matter for fu1iher proceedings.
Conclusion
For the foregoing reasons, this case is REMANDED for further proceedings consistent with
this opinion.
IT IS SO ORDERED.
DATED this 5th day of August, 2014.
Unite States Magistrate Judge
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