Nelson, Linnie v. Apfel, Kenneth S. ( 2000 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 99-2390
Linnie Nelson,
Plaintiff-Appellant,
v.
Kenneth S. Apfel, Commissioner of
Social Security,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 98 C 2223--Paul E. Plunkett, Judge.
Argued January 10, 2000--Decided April 27, 2000
Before Flaum, Manion, and Evans, Circuit Judges.
Manion, Circuit Judge. Linnie Nelson applied for
Social Security disability benefits, but an
administrative law judge denied her application,
concluding that she was not disabled. Nelson
appealed to the district court to reverse the ALJ
and instruct it to award her disability benefits.
The Commissioner of Social Security moved for
remand, acknowledging factual conflicts in the
administrative record. The district court granted
the Commissioner’s motion and remanded Nelson’s
case for a rehearing. Nelson appeals, and we
affirm.
I.
Linnie Nelson applied for disability and
Supplemental Security Income benefits, alleging
that she suffers from heart disease, leg pains,
shortness of breath, and depression. The
Commissioner of Social Security denied her
application and she requested a rehearing. At the
time of her administrative hearing on November
11, 1996, Nelson was thirty-seven years old, and
her past employment was semi-skilled, involved
mild or moderate stress, and required light
exertion. Nelson alleged that she was disabled
from full-time work from March 22, 1995 to July
1996, and thus she seeks benefits for that
"closed" period.
Three experts testified at Nelson’s
administrative hearing. Dr. Abramson, a
cardiologist, testified that Nelson has a stress
limitation, but concluded that her physical
impairments "do not meet or equal in severity any
impairment described as disabling in the Listing
of Impairments." Dr. Johnson, a neurologist and
psychiatrist, testified that Nelson suffers from
no "form of severe nonexertional impairment," and
that her depression is "not severe" because it
does not affect her ability to function on the
job. At the conclusion of Dr. Johnson’s
testimony, the ALJ asked him whether he thought
it was necessary to report his findings on a
standard form called the Psychiatric Review
Technique (PRT) form. Dr. Johnson thought that
the form was unnecessary, but agreed to complete
it. On the PRT form, Dr. Johnson checked a box
indicating that Nelson "often" had deficiencies
in "concentration, persistence or pace." He also
checked the box under the heading "Medical
Summary" to conclude that Nelson’s impairment was
"Not Severe." Finally, Ms. Bose, a vocational
expert, testified that if Nelson "often"
experienced deficiencies in concentration,
persistence, or pace, she cannot perform
substantial gainful activity.
The ALJ accepted the experts’ opinions, and
concluded that there is no evidence that Nelson
suffers from "any form of severe impairment." He
also completed a PRT form according to Dr.
Johnson’s form, and specifically agreed with Dr.
Johnson that Nelson does not suffer from a severe
mental impairment, and is thus not eligible for
disability benefits. The Commissioner adopted the
ALJ’s decision after the Appeals Council denied
Nelson’s request for review.
Nelson appealed to the district court to reverse
the Commissioner’s decision with instructions to
award disability benefits. Nelson sought reversal
solely on her claim of severe depression, and did
not contest the ALJ’s conclusion that she has no
severe physical impairments. The Commissioner
filed a motion to remand, arguing that the ALJ
needs to resolve a factual conflict in Dr.
Johnson’s testimony. The district court found a
conflict in the record between the testimonies of
Dr. Johnson and Ms. Bose instead, and granted the
motion to remand the case to the ALJ for further
proceedings. Nelson appeals.
II.
On appeal, the parties initially dispute the
standard of review. This is an appeal pursuant to
the "judicial review" provision of the Social
Security Act, sentence four of 42 U.S.C. sec.
405(g), which requires us to determine whether
substantial evidence supports the ALJ’s decision.
Lauer v. Apfel, 169 F.3d 489, 492 (7th Cir.
1999). Nelson argues that since we have reviewed
appeals under this provision de novo, that
standard applies here. The Commissioner argues,
however, that this case is fundamentally
different because the district court merely
considered whether or not to remand the case to
clarify the record, and did not review the ALJ’s
decision for substantial evidence. Therefore, the
Commissioner cites the recent case of Harman v.
Apfel, 203 F.3d 1151 (9th Cir. 2000), to assert
that the abuse of discretion standard applies
here.
Since the Social Security Act does not
specifically address the standard of review that
applies in this context, Harman, 203 F.3d at
1154, and it appears to be an issue of first
impression in this circuit, there is no clear
statutory prescription or precedent to guide us
on the appropriate standard of review for this
case. See id. at 1156 n.5. Therefore, we will
determine this issue according to the factors
that the Harman court derived from Pierce v.
Underwood, 487 U.S. 552 (1988), in which the
Court reviewed a determination concerning whether
a party’s underlying legal position was
substantially justified to merit an award of
attorney’s fees under the Equal Access to Justice
Act (EAJA). After Pierce acknowledged that there
was "neither a clear statutory prescription nor a
historical tradition" to provide the standard of
review in that case, the Court employed
"significant relevant factors" to make that
determination. 487 U.S. at 559. First, the Court
stated that a case that involves "substantial
consequences" should be "reviewed more
intensely." Id. at 563. Here, we agree with
Harman that "the consequences of a remand for
further proceedings are somewhat less substantial
than those flowing from an outright denial of
benefits." Harman, 203 F.3d at 1156. The result
of a remand may actually be an award of benefits,
and, therefore, this factor supports a more
deferential standard. We also find Harman
persuasive that "there are sound practical
reasons" to support the abuse of discretion
standard in this case:
The decision whether to remand for further
development of the administrative record or to
direct an immediate award of benefits is a fact-
bound determination that arises in an infinite
variety of contexts. Narrow rules do not serve
well in such a situation; an exercise of
discretion, with review for abuse of discretion,
is far preferable as a means of achieving the
necessary flexibility. See Pierce, 487 U.S. at
562.
Harman, 203 F.3d at 1157. Lastly, Harman notes
that the Social Security Act empowers the
district courts to reverse or modify an ALJ’s
decision without remanding the case for further
proceedings, and that this suggests that "the
district court’s exercise of such authority was
intended to be discretionary and should be
reviewed for abuse of discretion." Id. That is a
reasonable inference, and Harman persuades us
that the applicable standard of review in this
case is abuse of discretion, which means that we
will affirm unless no reasonable person could
agree with the district court. Ladien v.
Astrachan, 128 F.3d 1051, 1056 (7th Cir.
1997)./1
We must therefore determine whether the district
court abused its discretion when it found that
the testimonies of Dr. Johnson and Ms. Bose
conflict, and thus "support both the conclusion
that Nelson suffers from a severe impairment (and
is therefore disabled) and the conclusion that
she does not." Nelson v. Apfel, No. 98 C 2223,
1999 WL 261740 at *4 (N.D. Ill. April 15, 1999).
Nelson argues that the record does not conflict,
but only supports a finding that she was disabled
for the period in question. According to Nelson,
since the ALJ adopted Dr. Johnson’s finding that
she "often" suffered from deficiencies in
concentration, persistence, or pace, and also
adopted Ms. Bose’s testimony that such a
functional loss would preclude her from working,
she is thus disabled and entitled to benefits.
Furthermore, Nelson argues that since the ALJ
adopted Dr. Johnson’s rating of Nelson’s
functional loss, the Social Security regulations
require the ALJ to find that she has a severe
mental impairment. The Commissioner contends,
however, that there are factual conflicts in the
record that the ALJ must resolve on remand.
An impairment is severe if it "significantly
limits your physical or mental ability to do
basic work activities," 20 C.F.R. sec.
404.1520(c), and thus an impairment is "not
severe" if "it does not significantly limit your
physical or mental ability to do basic work
activities." 20 C.F.R. sec. 404.1521(a). Here,
Dr. Johnson testified that Nelson’s depression is
not severe because it does not affect her ability
to work. But he also rated Nelson’s degree of
functional loss as "often" in the area of
concentration, persistence, or pace, which,
according to Ms. Bose, would preclude Nelson from
substantial gainful activity, and thus qualify
her depression as a severe impairment. It is
evident that Dr. Johnson’s meaning of "often"
conflicts with that of Ms. Bose, and thus we
conclude that the district court did not abuse
its discretion when it made that determination.
Alternatively, Nelson argues that the Social
Security regulations require the ALJ to find that
she has a severe mental impairment according to
Dr. Johnson’s rating of her functional loss. To
evaluate the severity of mental impairments, the
regulations require the ALJ to rate the degree of
functional loss resulting from the impairment
according to four areas that are essential to
work. 20 C.F.R. sec. 1520a(b)(3). "For the third
area (concentration, persistence, or pace) the
following five point scale must be used: never,
seldom, often, frequent, and constant." Id. If
there is a rating of "never" or "seldom" in the
third area, "we can generally conclude that the
impairment is not severe, unless the evidence
otherwise indicates there is significant
limitation of your mental ability to do basic
work activities (see sec.404.1521)." 20 C.F.R.
sec. 1520a(c)(1). Nelson argues that these
regulations require the ALJ to find that she has
a severe mental impairment because the degree of
her functional loss is "often," which is more
than "seldom" or "never." But that is not what
the regulations require because they in no way
equate the rating of "often" in the third area
with a severe impairment as defined by a
"significant limit" in one’s ability to do basic
work activities. Therefore, we agree with the
district court that Dr. Johnson’s rating of
Nelson’s functional loss "does not, by itself,
preclude the ultimate finding that Nelson’s
depression is not severe within the meaning of
the regulations." Nelson, 1999 WL 261740 at *4.
Finally, Nelson contends that Social Security
Ruling 96-3p requires the ALJ to find that her
impairment is severe. Social Security rulings
(SSRs) "are interpretive rules intended to offer
guidance to agency adjudicators. Lauer, 169 F.3d
at 492. "While they do not have the force of law
or properly promulgated notice and comment
regulations, the agency makes SSRs ’binding on
all components of the Social Security Administration.’"
Id.; see 20 C.F.R. sec. 402.35 (b)(1). SSR 96-3p
provides:
If the adjudicator finds that such symptoms
[functional loss] cause a limitation or
restriction having more than a minimal effect on
an individual’s ability to do basic work
activities, the adjudicator must find that the
impairment(s) is severe and proceed to the next
step in the process even if the objective
evidence would not in itself establish that the
impairment(s) is severe.
SSR 96-3p (1999). Nelson claims that this
provision requires the ALJ to find that she has a
severe impairment because her "often"
deficiencies in concentration, persistence, or
pace necessarily have "more than a minimal
effect" on her ability to do basic work
activities. But the ruling does not require the
ALJ to make that finding, nor does it preclude
the ALJ from concluding that Nelson’s functional
loss does not affect her ability to work "more
than minimally," and thus that she has no severe
impairment.
The bottom line is that we do not know what Dr.
Johnson meant by "often," and we conclude that
the district court did not abuse its discretion
when it remanded this case to the ALJ for further
proceedings to resolve factual conflicts in the
record. See Walker v. Bowen, 834 F.2d 635, 640
(7th Cir. 1987) ("Where conflicting evidence
allows reasonable minds to differ as to whether a
claimant is disabled, the responsibility for that
decision falls on the Secretary (or the
Secretary’s designate, the ALJ)."). Accordingly,
we AFFIRM.
/1 Nelson argues that the recent case of Williams v.
Apfel, 204 F.3d 48 (2d Cir. 2000), supports her
argument for the de novo standard. But Williams
provides us with no real guidance because it
involved the review of a district court’s
decision to reverse and award benefits based on
the pleadings rather than to merely remand to
clarify the record. 204 F.3d at 49.