Cheryl J. Schwandt v. Nancy A. Berryhill ( 2019 )

United States Court of Appeals
For the Eighth Circuit
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No. 17-3406
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Cheryl J. Schwandt,
lllllllllllllllllllllPlaintiff - Appellant,
v.
Nancy A. Berryhill, Acting Commissioner of Social Security,
lllllllllllllllllllllDefendant - Appellee.
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Appeal from United States District Court
for the District of Minnesota - Minneapolis
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Submitted: November 15, 2018
Filed: June 14, 2019
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Before COLLOTON, SHEPHERD, and STRAS, Circuit Judges.
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COLLOTON, Circuit Judge.
Cheryl Schwandt appeals a judgment of the district court1 upholding the denial
of her application for disability insurance benefits. We affirm.
1
The Honorable Wilhelmina M. Wright, United States District Judge for the
District of Minnesota, adopting the report and recommendation of the Honorable
Hildy Bowbeer, United States Magistrate Judge for the District of Minnesota.
I.
In February 2012, Cheryl Schwandt applied for disability insurance benefits
under 42 U.S.C. § 423, claiming a disability onset date of January 1, 2012. Schwandt
alleged that avascular necrosis of the knees, a full knee replacement, and chronic pain
syndrome limited her ability to work as a dental hygienist. The Social Security
Administration granted Schwandt’s application in July 2012.
As it happened, however, the Administration mistakenly recorded an onset date
of January 1, 2001. Under the correct onset date of January 1, 2012, benefit payments
should have started in June 2012, because a claimant generally must be disabled for
a full five months before benefits can be paid. See 42 U.S.C. § 423(a)(1), (c)(2). The
erroneous onset date resulted in benefit payments dating back to February 2011,
twelve months before the application date. See id. § 423(b). The agency’s error thus
resulted in Schwandt receiving undeserved payments for the months from February
2011 to May 2012. When the agency discovered the mistake, it sought to recover the
overpayments, and declined to grant Schwandt a waiver that would allow her to keep
the money.
Around this time, an agency employee learned that Schwandt’s earnings had
been “subsidized” since 2010, meaning that Schwandt was paid more than the
reasonable value of the actual services she performed. See 20 C.F.R.
§ 404.1574(a)(2). As a result, the employee thought that Schwandt had not engaged
in substantial gainful activity after 2009, and recommended using an amended
disability onset date of December 31, 2009, to calculate Schwandt’s benefits. The
earlier onset date would have allowed Schwandt to keep the overpayments that she
received from the government. Acting on this recommendation, an agency disability
examiner reopened Schwandt’s claim in September 2013 to investigate the matter.
After conducting a full review, however, the agency concluded that Schwandt’s
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impairments had not been disabling before 2012, and that the correct onset date was
still January 1, 2012.
In an effort to establish an earlier onset date of December 31, 2009, Schwandt
requested a hearing before an administrative law judge. The ALJ informed Schwandt
before the hearing that she would evaluate Schwandt’s disability status from
“December 31, 2009 through the present.” Schwandt responded with a letter
objecting to any reconsideration of her disability status from 2012 onward, but she
did not attempt to withdraw her request for a hearing.
The ALJ began the hearing by overruling Schwandt’s objection to the scope
of the hearing. Applying the familiar sequential process, the ALJ then concluded that
Schwandt had not been disabled since December 31, 2009. See Bowen v. Yuckert,
482 U.S. 137, 140 (1987); 20 C.F.R. § 404.1520(a)(4). The ALJ determined at step
one that Schwandt had been engaged in substantial gainful activity from December
31, 2009, to December 31, 2011, so she was not disabled during that period.
Schwandt had not been engaged in substantial gainful activity since January 1, 2012,
but the ALJ concluded that Schwandt could perform past relevant work and therefore
was not disabled from 2012 onward. As a result, Schwandt was not entitled to any
disability insurance benefits. See 42 U.S.C. § 423(a)(1)(E), (d).
After the Appeals Council denied review of the ALJ’s decision, Schwandt
sought review in district court under 42 U.S.C. § 405(g). The district court affirmed
the Commissioner’s disability determination, but remanded to the Administration for
further consideration of the overpayment waiver issue. Schwandt appeals the portion
of the district court’s order affirming the disability determination, and we have
jurisdiction despite the pendency of the waiver issue before the agency. See Forney
v. Apfel, 524 U.S. 266, 269, 271-72 (1998).
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We review the district court’s judgment de novo and will affirm if substantial
evidence supports the Commissioner’s decision. Vance v. Berryhill, 860 F.3d 1114,
1117 (8th Cir. 2017). Substantial evidence is less than a preponderance, but enough
that a reasonable mind would find it adequate to support the Commissioner’s
decision. Id. “We consider evidence that supports the Commissioner’s conclusion,
as well as evidence that detracts from it, and we review any legal conclusions de
novo.” Julin v. Colvin, 826 F.3d 1082, 1086 (8th Cir. 2016).
II.
Schwandt first asserts that there were defects in the process that culminated in
the ALJ’s decision that Schwandt was not disabled. Schwandt argues that the
Commissioner improperly reopened the favorable July 2012 determination at two
separate times: first, when a disability examiner reopened to decide whether the onset
date should be December 31, 2009, instead of January 1, 2012, and second, when the
ALJ chose to reconsider the 2012 onset date. Schwandt faults both the disability
examiner and the ALJ for failing to articulate that they were reopening based on
“good cause” and for making no findings to support a “good cause” determination.
See 20 C.F.R. §§ 404.987-.989.
The disability examiner’s decision to reopen was governed by regulations that
say the agency has authority to reopen determinations on its “own initiative,” id.
§ 404.987(b), for “good cause.” See id. §§ 404.905, .987, .988(b). The agency has
“good cause” where “[n]ew and material evidence is furnished,” “[a] clerical error in
the computation or recomputation of benefits was made,” or “[t]he evidence that was
considered in making the determination or decision clearly shows on its face that an
error was made.” Id. § 404.989(a)(1)-(3).
The examiner reopened the benefits determination after an agency employee
recommended changing the disability onset date in Schwandt’s favor, to December
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31, 2009, based on “new and material information regarding [Schwandt’s] income.”
Specifically, based on information received from Schwandt’s employer, the agency
employee thought that Schwandt’s pay since 2010 amounted to a “60% subsidy,”
meaning that the reasonable value of the work that she performed amounted to only
40% of her income. See id. § 404.1574(a)(2). If Schwandt had been earning only
40% of her income since 2010, then the last time that Schwandt performed substantial
gainful activity would have been December 2009. Although the examiner did not use
the words “good cause” in explaining the reopening, she cited “new and material
information” regarding the 60% pay subsidy, and that was in substance a
determination of good cause. See id. § 404.989(a)(1).
Although an earlier onset date would only have helped Schwandt to receive
more benefits, she now contends that the examiner was not justified in citing “new
and material information.” Whether a determination of “new and material evidence”
is considered a finding of fact that is reviewed for substantial evidence, see 42 U.S.C.
§ 405(g); Higginbotham v. Heckler, 767 F.2d 408, 410-11 (8th Cir. 1985), or a legal
question reviewed de novo, see Cole ex rel. Cole v. Barnhart, 288 F.3d 149, 152 (5th
Cir. 2002), we conclude that the agency was justified in reopening.
The information from Schwandt’s employer was “new,” because the agency
first received it in July 2013, well after it had made the July 2012 determination. See
Marshall v. Chater, 75 F.3d 1421, 1426 (10th Cir. 1996). The information was also
“material,” because there was a reasonable probability that it would have changed the
outcome if the agency had considered it initially. See Cieutat v. Bowen, 824 F.2d
348, 358 (5th Cir. 1987). Schwandt’s employer provided information about her pay
and work duties that suggested a 60% subsidy had been in place since 2010. If a
complete review had verified that degree of subsidy, then Schwandt would not have
engaged in substantial gainful activity during 2010 and 2011, and her onset date
could have changed to December 31, 2009. See 20 C.F.R. § 404.1520(a)(4)(i)-(v).
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This earlier onset date would have allowed Schwandt to retain all benefits previously
paid by the agency.
Further investigation was required, and an agency examiner eventually
determined in light of a more complete record that Schwandt was not disabled before
2012. But the information available to the agency at the time of reopening was
sufficient to justify that action. And the reopening, originally undertaken because it
could have increased Schwandt’s benefits, ultimately did not change the status quo.
We therefore reject Schwandt’s claim that she is entitled to relief based on an
improper reopening by the agency examiner.
Schwandt herself then requested a hearing before an ALJ, and she now
complains that the ALJ improperly “reopened” the agency’s July 2012 benefits
determination. The ALJ’s action in this case, however, was not governed by the same
regulation on reopening that applied to the agency examiner. See Highfill v. Bowen,
832 F.2d 112, 113-15 (8th Cir. 1987); 20 C.F.R. §§ 404.921(a), .946(a). Schwandt
requested review of the “reconsideration” determination that the agency issued in the
wake of the examiner’s reopening. This determination included a finding that
Schwandt was disabled as of January 1, 2012.
When a claimant seeks review before an ALJ, the issues before the ALJ
“include all the issues brought out in the initial, reconsidered or revised determination
that were not decided entirely in [the claimant’s] favor.” 20 C.F.R. § 404.946(a). But
the regulations further provide that “if evidence presented before or during the
hearing causes the administrative law judge to question a fully favorable
determination, he or she will notify you and will consider it an issue at the hearing.”
Id. (emphasis added). Where, as here, the ALJ ends up questioning and reversing a
favorable determination under § 404.946(a), we review that final decision under the
substantial evidence standard, as discussed in Part III below. See Highfill, 832 F.2d
at 115.
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The ALJ did not give her reasons for reconsidering the favorable determination
until she issued her written decision. Schwandt claims that the ALJ’s failure to give
these reasons before the hearing was a violation of due process. Due process requires
that notice be “reasonably calculated, under all the circumstances, to apprise
interested parties of the pendency of the action and afford them an opportunity to
present their objections.” Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306,
314 (1950). After Schwandt submitted a brief focusing on the overpayment issue, the
ALJ notified Schwandt that the only issue at the hearing would be Schwandt’s
disability status from “December 31, 2009 through the present.” The ALJ even
postponed the hearing to give Schwandt adequate time to prepare on the disability
issue. The ALJ’s notice prompted Schwandt to send a letter objecting to the hearing’s
scope. At the beginning of the hearing, the ALJ twice stated that she was overruling
Schwandt’s objection, and Schwandt confirmed that she understood the proceedings
could result in a determination that she was not disabled at all, even since January 1,
2012. Under these circumstances, there was adequate notice to Schwandt and no due
process violation.
Schwandt argues that res judicata barred the Commissioner from reversing the
favorable determination finding her disabled. But res judicata does not bar the
Commissioner from revising a determination when the agency properly reconsiders
that determination under 20 C.F.R. § 404.946(a) or 20 C.F.R. §§ 404.987-.989. See
Highfill, 832 F.2d at 115; Dugan v. Sullivan, 957 F.2d 1384, 1387-89 (7th Cir. 1992);
Draper v. Sullivan, 899 F.2d 1127, 1130 (11th Cir. 1990) (per curiam). The ALJ
properly reconsidered the favorable determination under § 404.946(a), so res judicata
did not bar the ALJ’s reversal of that determination. Schwandt’s heavy reliance on
Dugan is unavailing, because the Seventh Circuit there concluded that the agency’s
attempted reopening did not comport with the applicable regulations. See 957 F.2d
at 1388-91.
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Schwandt also contends that the “clean hands” doctrine warrants judgment in
her favor because the Commissioner acted in bad faith. See Precision Instrument
Mfg. Co. v. Auto. Maint. Mach. Co., 324 U.S. 806, 814-15 (1945). Schwandt argues
that the Commissioner used the erroneous onset date as a pretext to terminate her
benefits retroactively. Assuming without deciding that the “clean hands” doctrine is
applicable in this context, Schwandt’s claims of bad faith have no support in the
record. The Commissioner acknowledged that the agency’s use of an erroneous onset
date was not Schwandt’s fault and advised Schwandt of her rights with respect to the
overpayment. After the agency reconsidered whether Schwandt was entitled to an
earlier onset date that would have allowed her to keep the overpayments, it was
Schwandt who decided to seek a hearing before the ALJ rather than settle for the
status quo with an onset date of January 1, 2012. Once Schwandt requested the
hearing, the ALJ properly considered both the potential onset date in 2009 and
Schwandt’s status from 2012 onward. There was no bad faith by the agency.
III.
Schwandt raises several arguments challenging the ALJ’s conclusion that she
was not disabled from 2012 onward. Schwandt first complains that the ALJ did not
give enough weight to the opinions of her treating physician, Dr. Berglund. “A
treating physician’s opinion is entitled to controlling weight when it is supported by
medically acceptable techniques and is not inconsistent with substantial evidence in
the record.” Julin, 826 F.3d at 1088; see 20 C.F.R. § 404.1527(c)(2). Even if not
entitled to controlling weight, such opinions “typically are entitled to at least
substantial weight, but may be given limited weight if they are conclusory or
inconsistent with the record.” Julin, 826 F.3d at 1088.
Dr. Berglund provided three opinions at issue here: (1) that Schwandt could
not be on her feet for six hours in an eight-hour workday; (2) that Schwandt could lift
only five to ten pounds; and (3) that Schwandt could perform only sedentary work.
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The ALJ incorporated the first opinion into Schwandt’s residual functional capacity.
Dr. Berglund’s third opinion was an ultimate determination reserved to the
Commissioner, so the ALJ properly declined to weigh it. See House v. Astrue, 500
F.3d 741, 744-45 (8th Cir. 2007); 20 C.F.R. § 404.1527(d)(2).
The ALJ partially rejected Dr. Berglund’s second opinion, concluding that
Schwandt could lift up to ten pounds frequently and up to twenty pounds
occasionally. The results of a claimant’s medical examinations and the claimant’s
reported daily activities can undermine a treating physician’s opinion. See Fentress
v. Berryhill, 854 F.3d 1016, 1020-21 (8th Cir. 2017). While Dr. Berglund and other
treating physicians consistently documented Schwandt’s chronic pain between 2009
and 2014, several examinations from that period found that Schwandt had normal
motor strength in the upper and lower extremities. Schwandt’s reported daily
activities as of February 2012 and July 2013 included cleaning her home, doing
laundry, preparing meals, ironing, sweeping, and buying groceries. Schwandt
reported in 2012 that she exercised by walking or lifting weights twelve times per
month, and that she went to the gym regularly to keep up her muscle strength.
Substantial evidence thus supports the ALJ’s decision not to assign controlling
weight to Dr. Berglund’s recommended lifting restriction.
Schwandt next contends that the ALJ improperly discounted her credibility.
When evaluating a claimant’s subjective complaints of pain, the ALJ must consider
objective medical evidence, the claimant’s work history, and other evidence relating
to (1) the claimant’s daily activities; (2) the duration, frequency, and intensity of the
pain; (3) precipitating and aggravating factors; (4) the dosage, effectiveness, and side
effects of medication; and (5) the claimant’s functional restrictions. See Polaski v.
Heckler, 739 F.2d 1320, 1322 (8th Cir. 1984); see also 20 C.F.R. § 404.1529(c).
Schwandt complains that the ALJ did not adequately consider the Polaski factors.
But an ALJ need not explicitly discuss each factor, Buckner v. Astrue, 646 F.3d 549,
558 (8th Cir. 2011), and we will defer to credibility determinations that are supported
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by good reasons and substantial evidence. Julin, 826 F.3d at 1086. “An ALJ may
decline to credit a claimant’s subjective complaints ‘if the evidence as a whole is
inconsistent with the claimant’s testimony.’” Id. (quoting Cox v. Barnhart, 471 F.3d
902, 907 (8th Cir. 2006)).
As the ALJ recounted, Schwandt testified that she experiences severe, disabling
pain in her thighs and feet and that her pain averages a ‘7’ on a scale between ‘1’ and
‘10,’ even with pain medication. She described this pain as causing low energy and
as severely limiting her ability to stand, walk, and lift objects. The ALJ found
Schwandt’s testimony “not entirely credible.”
The objective medical evidence undermines Schwandt’s testimony. As noted,
multiple physical examinations found Schwandt to have normal motor strength in her
upper and lower extremities. Examinations also consistently found that Schwandt
had full extension, a normal range of motion, and good stability in her knees.
Between 2011 and 2012, Schwandt generally reported her pain to be either ‘3’ or ‘4’
on a scale between ‘0’ and ‘10.’ Schwandt did consistently complain of pain over the
course of multiple visits with physicians between 2009 and 2014, but the ALJ was
entitled to consider the full scope of the medical evidence.
Schwandt contends that the ALJ failed to account for her medications and their
side effects. Schwandt and her physicians reported several times that medications
were helping to relieve her symptoms, and the ALJ pointed to evidence undermining
Schwandt’s reports of significant cognitive side effects. Schwandt testified that her
medications also have debilitating physical side effects, but Schwandt’s medical
records and reported daily activities cast doubt on this claim. Viewing the record as
a whole, good reasons and substantial evidence support the ALJ’s decision to
discount Schwandt’s credibility.
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Schwandt also complains that the ALJ gave only “some weight” to twelve lay
witnesses who submitted written statements on her behalf. But an ALJ properly may
give less than controlling weight to lay-witness statements that are inconsistent with
the record. Schwandt points to statements from witnesses who explained that she
does not get out of bed until mid-afternoon on days she does not work, that she has
trouble concentrating during conversations, and that she takes naps every few hours.
These statements, however, are inconsistent with Schwandt’s reported daily activities
and psychologists’ observations that Schwandt was capable of normal, organized
thought processes.
Schwandt next presents several objections to the ALJ’s step-four determination
that she could perform her past relevant work as a dental hygienist. She first
complains that while the ALJ found at step one that Schwandt needed to work many
more hours to reach substantial gainful activity levels from 2012 onward, her physical
limitations made it impossible for her to work the additional hours. The step-four
inquiry, however, was simply whether Schwandt could still perform her past relevant
work as a dental hygienist. See 20 C.F.R. § 404.1520(a)(4)(iv). Her “past relevant
work” was her pre-2012 work as a dental hygienist, because Schwandt had performed
that work at substantial gainful activity levels. See id. § 404.1560(b)(1). The step-
four inquiry thus did not require the ALJ to assess Schwandt’s ability to work
additional hours to reach substantial gainful activity levels from 2012 onward.
Citing Carter v. Sullivan, 909 F.2d 1201 (8th Cir. 1990) (per curiam),
Schwandt next argues that her two-hour standing restriction precluded a finding that
she could perform her past “light work” as a dental hygienist. In Carter, we held that
the claimant’s inability to walk or stand off and on for six hours in an eight-hour
workday precluded a finding that the claimant could perform his past “light” job as
generally performed in the national economy. See id. at 1202. The standing
restriction was dispositive because the job at issue required “a good deal of walking
or standing.” See id. (quoting 20 C.F.R. § 404.1567(b)).
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Here, a vocational expert testified that the work of a dental hygienist is “light”
because it requires constant use of hands and arms. This testimony was consistent
with Schwandt’s own report that her job mainly involved handling small objects and
required walking for no more than two hours in an eight-hour workday. A two-hour
standing restriction is not an absolute bar to performing “light work.” See Fenton v.
Apfel, 149 F.3d 907, 911 (8th Cir. 1998). The vocational expert answered
affirmatively when the ALJ asked him whether someone with Schwandt’s
limitations—including the two-hour standing restriction—could perform Schwandt’s
past work as she actually performed it and as generally performed. The expert’s
answer supplied substantial evidence to support a determination that Schwandt could
perform her past relevant work. See Depover v. Barnhart, 349 F.3d 563, 568 (8th Cir.
2003).
Schwandt urges that the ALJ’s statement of her residual functional capacity to
the vocational expert was incomplete. She suggests that the ALJ should have
incorporated her claimed need for a recovery day after each work shift and the special
work accommodations that she received starting in 2012. Schwandt’s work
accommodations included help from other employees in preparing her room and
reviewing charts, assignments to “regular” patients, and reduced hours. The alleged
need for a recovery day after each shift was based on Schwandt’s testimony and a
written statement from her husband. But Schwandt’s medical records, her reported
daily activities, her overall employment history, and the apparent effectiveness of her
medications undermine the need for such accommodations. Substantial evidence
supports the omission of these limitations from Schwandt’s residual functional
capacity.
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The judgment of the district court is affirmed.
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