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Carol Luther v. Nancy Berryhill ( 2018 )


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  •                      FOR PUBLICATION
    UNITED STATES COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    CAROL ANN LUTHER,                                  No. 16-55987
    Plaintiff-Appellant,
    D.C. No.
    v.                           2:15-cv-03356-
    JLS-JEM
    NANCY BERRYHILL, Acting
    Commissioner of Social Security,
    Defendant-Appellee.                    OPINION
    Appeal from the United States District Court
    For the Central District of California
    Josephine L. Staton, District Judge, Presiding
    Argued and Submitted February 15, 2018
    Pasadena, California
    Filed June 4, 2018
    Before: Marsha S. Berzon and Jay S. Bybee, Circuit
    Judges, and Sharon L. Gleason,* District Judge.
    Opinion by Judge Gleason
    *
    The Honorable Sharon L. Gleason, United States District Judge for
    the District of Alaska, sitting by designation.
    2                      LUTHER V. BERRYHILL
    SUMMARY**
    Social Security
    The panel reversed the district court’s judgment that
    affirmed the administrative law judge’s denial of a claimant’s
    application for disability insurance benefits under Title II of
    the Social Security Act and supplemental security income
    under Title XVI of the Act.
    As an initial matter, the panel held that the Appeals
    Council’s reasoning for denying review is not considered on
    subsequent judicial review, and turned to the reasoning
    provided by the ALJ in her decision.
    The panel held that the ALJ erred in not adequately
    addressing claimant’s 100% Veterans Affairs (“VA”)
    disability rating in her decision. The panel held that although
    the ALJ noted claimant’s VA disability rating at the hearing
    and in her written decision, she did not address how she had
    considered and weighed the VA’s rating or articulate any
    reasons for rejecting it. The panel held that remand for
    further proceedings was appropriate where it was unclear
    from the record whether the ALJ would be required to find
    claimant disabled after evaluating the VA disability rating.
    **
    This summary constitutes no part of the opinion of the court. It has
    been prepared by court staff for the convenience of the reader.
    LUTHER V. BERRYHILL                      3
    COUNSEL
    Erika Bailey Drake (argued) and Roger D. Drake, Drake &
    Drake P.C., Calabasas, California, for Plaintiff-Appellant.
    Tina L. Naicker (argued), Special Assistant United States
    Attorney; Deborah L. Stachel, Acting Regional Chief
    Counsel, Region IX; Sandra R. Brown, Acting United States
    Attorney; Social Security Administration, San Francisco,
    California; for Defendant-Appellee.
    OPINION
    GLEASON, District Judge:
    Carol Ann Luther appeals the district court’s judgment
    affirming the administrative law judge (“ALJ”)’s denial of
    her application for disability insurance benefits (“DIB”)
    under Title II of the Social Security Act (“Act”) and
    supplemental security income (“SSI”) under Title XVI of the
    Act. We hold that the ALJ erred in not adequately addressing
    Luther’s 100% Veterans Affairs (“VA”) disability rating in
    her decision. We reverse and remand for further proceedings
    consistent with this opinion.
    BACKGROUND
    On February 27, 2013, Luther filed an application for DIB
    and SSI. She sought these benefits due to her post-traumatic
    stress disorder (“PTSD”) and degenerative disc disease. At
    that time, she claimed a disability onset date of December 28,
    2012. In December 2013, the VA concluded that Luther was
    100 percent disabled for PTSD, 30 percent disabled for
    4                  LUTHER V. BERRYHILL
    urinary tract infection, and 10 percent disabled for
    degenerative disc disease of the lumbar spine, for an overall
    rating of 100% disabled, effective December 6, 2012. Luther
    provided only the first two pages of the total five pages of the
    VA’s rating decision to the ALJ.
    On October 27, 2014, the ALJ conducted a hearing. At the
    beginning of the hearing, the parties briefly discussed the VA
    disability rating. Luther amended her social security disability
    onset date to correspond with the December 6, 2012 effective
    date of her VA rating. The ALJ then stated, “One hundred
    percent disability VA has no bearing. It’s something we
    consider—.”
    In a decision dated December 3, 2014, the ALJ found that
    Luther was not disabled. The decision contained only two
    limited references to the VA rating. First, under the
    “Jurisdiction and Procedural History” section it states, “The
    claimant was awarded 100% VA disability commencing
    December 6, 2012. At the hearing, the claimant amended her
    onset date to December 6, 2012 to correspond with the onset
    of her VA disability award.” The second reference, later in
    the decision, states, “At the hearing, the claimant amended
    her onset date to December 6, 2012, which is the date she was
    awarded VA disability.”
    Luther requested the Appeals Council review the ALJ’s
    decision. There, she argued that the ALJ erred by failing to
    provide a “specific, valid, record-based rationale to not give
    the VA ratings great weight.”
    On March 10, 2015, the Appeals Council denied Luther’s
    request for review. The Council found “[t]he record that was
    before the Administrative Law Judge was sufficient to
    LUTHER V. BERRYHILL                        5
    evaluate [Luther’s] disability status under the Social Security
    Regulations.” The Council observed that the ALJ had the
    benefit of extensive medical records, including records that
    had not been provided to the VA. The Appeals Council also
    stated that the VA disability rating was based on the same
    symptoms “appropriately considered by the [ALJ] . . . under
    applicable Social Security Regulations.” The Council found
    that “[e]ven if the ‘Evidence’ and ‘Reasons For Decision’
    identified [by the VA] . . . were sufficient to support a VA
    service connected disability rating of 100% due to PTSD,
    they were/are not sufficient to support a finding of disability
    under Social Security Regulations.”
    Shortly after receiving the Appeals Council decision,
    Luther asked the Council to reopen her case. She submitted
    “an entire copy of the [VA’s] rating decision” to the Appeals
    Council, which included three additional pages of the VA’s
    analysis that had not been previously provided to the ALJ or
    to the Appeals Council. The record does not contain any
    response by the Appeals Council. Nor does the administrative
    record contain these additional pages.
    On May 5, 2015, Ms. Luther appealed to the Central
    District of California. The district court adopted the
    magistrate judge’s findings and recommendations, affirming
    the agency’s decision. On appeal to this court, Luther asserts
    that the ALJ erred in not giving great weight to the VA
    disability rating, rejecting the opinions from Luther’s treating
    physicians, and discrediting Luther’s subjective complaints.
    She seeks a remand for the calculation of benefits or
    alternatively a remand for further proceedings. Because we
    reverse and remand as to the VA disability rating, we do not
    address Luther’s other arguments.
    6                   LUTHER V. BERRYHILL
    STANDARD OF REVIEW
    A district court’s order affirming an ALJ’s denial of
    benefits is reviewed de novo. Brown-Hunter v. Colvin,
    
    806 F.3d 487
    , 492 (9th Cir. 2015). A decision by the
    Commissioner to deny disability benefits will not be
    overturned unless it is either not supported by substantial
    evidence or is based upon legal error. Matney ex rel. Matney
    v. Sullivan, 
    981 F.2d 1016
    , 1019 (9th Cir. 1992) (citing
    Gonzalez v. Sullivan, 
    914 F.2d 1197
    , 1200 (9th Cir. 1990)).
    “Substantial evidence is ‘more than a mere scintilla,’ but less
    than a preponderance.” Saelee v. Chater, 
    94 F.3d 520
    , 522
    (9th Cir. 1996) (citation omitted) (quoting Richardson v.
    Perales, 
    402 U.S. 389
    , 401 (1971)). In reviewing the
    agency’s determination, a reviewing court considers the
    evidence in its entirety, weighing both the evidence that
    supports and that detracts from the ALJ’s conclusion. Jones
    v. Heckler, 
    760 F.2d 993
    , 995 (9th Cir. 1985). “Where
    evidence is susceptible to more than one rational
    interpretation, it is the ALJ’s conclusion that must be
    upheld.” Burch v. Barnhart, 
    400 F.3d 676
    , 679 (9th Cir.
    2005). A reviewing court may only consider the reasons
    provided by the ALJ in the disability determination and “may
    not affirm the ALJ on a ground upon which he did not rely.”
    Garrison v. Colvin, 
    759 F.3d 995
    , 1010 (9th Cir. 2014).
    DISCUSSION
    I.
    Luther asserts that the district court erred in relying on the
    Appeals Council’s discussion of the VA rating because the
    Appeals Council denied Luther’s request for review. The
    magistrate judge acknowledged “[t]his Court has no
    LUTHER V. BERRYHILL                      7
    jurisdiction to review the decision of the Appeals Council
    denying review.” But the magistrate judge nonetheless
    discussed the Council’s reasoning in denying review and
    relied on that analysis in his decision. Luther maintains that
    when undertaking judicial review of a Social Security
    disability determination, a reviewing court cannot rely on the
    reasons that the Appeals Council set forth when it denied
    review.
    The Commissioner maintains that a reviewing court
    “must look to the Appeals Council’s explanation of its refusal
    to grant Claimant’s request.” For that proposition, the
    Commissioner relies on Ramirez v. Shalala, 
    8 F.3d 1449
    (9th
    Cir. 1993). In Ramirez, additional medical evidence was
    submitted to the Appeals Council that had not been provided
    to the ALJ. 
    Id. at 1451.
    The Appeals Council then denied
    review. 
    Id. On appeal,
    we held the additional evidence should
    be considered by a reviewing court:
    [A]lthough the Appeals Council “declined to
    review” the decision of the ALJ, it reached its
    ruling after considering the case on the merits;
    examining the entire record, including the
    additional material; and concluding that the
    ALJ’s decision was proper and that the
    additional material failed to “provide a basis
    for changing the hearing decision.” For these
    reasons we consider on appeal both the ALJ’s
    decision and the additional material submitted
    to the Appeals Council.
    
    Id. at 1452;
    see also Taylor v. Comm’r of Soc. Sec. Admin.,
    
    659 F.3d 1228
    , 1231–32 (9th Cir. 2011) (holding that a
    reviewing court may review additional evidence submitted to
    8                  LUTHER V. BERRYHILL
    and rejected by the Appeals Council, but may not review an
    Appeals Council decision denying a request for review);
    Harman v. Apfel, 
    211 F.3d 1172
    , 1179–80 (9th Cir. 2000).
    Ramirez did not address whether the reasoning of the
    Appeals Council in denying review should be considered by
    a reviewing court. Instead, we focused on whether the
    additional evidence submitted to the Appeals Council was
    included in the record to the reviewing court. In Luther’s
    case, no additional evidence was added to the administrative
    record by the Appeals Council; therefore, Ramirez does not
    apply.
    Here, the Appeals Council denied Luther’s request for
    review, making the ALJ’s decision the final decision of the
    Commissioner. See Sims v. Apfel, 
    530 U.S. 103
    , 106–07
    (2000) (“SSA regulations provide that, if the Appeals Council
    grants review of a claim, then the decision that the Council
    issues is the Commissioner’s final decision. But if . . . the
    Council denies the request for review, the ALJ’s opinion
    becomes the final decision.”); Brewes v. Comm’r of Soc. Sec.
    Admin., 
    682 F.3d 1157
    , 1161–62 (9th Cir. 2012) (“When the
    Appeals Council declines review, the ALJ’s decision
    becomes the final decision of the Commissioner, and the
    district court reviews that decision for substantial evidence,
    based on the record as a whole. . . .”) (citations and internal
    quotation marks omitted)); 
    Taylor, 659 F.3d at 1231
    (“When
    the Appeals Council denies a request for review, it is a non-
    final agency action not subject to judicial review because the
    ALJ’s decision becomes the final decision of the
    Commissioner.”). Therefore, the Appeals Council’s reasoning
    for denying review is not considered on subsequent judicial
    LUTHER V. BERRYHILL                              9
    review.1 We turn to the reasoning provided by the ALJ in her
    decision.
    II.
    Luther asserts “[t]he ALJ erred by not providing
    persuasive, valid, and specific reasons for discounting Ms.
    Luther’s VA rating.” The Commissioner responds that the
    ALJ “specifically acknowledged that the VA found Claimant
    100% disabled.”
    “[T]he ALJ must consider the VA’s finding in reaching
    his decision and the ALJ must ordinarily give great weight to
    a VA determination of disability.” McLeod v. Astrue,
    
    640 F.3d 881
    , 886 (9th Cir. 2011) (internal quotation marks
    omitted) (quoting 
    McCartey, 298 F.3d at 1076
    ). We have
    found great weight to be ordinarily warranted “because of the
    marked similarity between these two federal disability
    programs.” 
    McCartey, 298 F.3d at 1076
    . However, a VA
    rating is not conclusive and “does not necessarily compel the
    SSA to reach an identical result.” 
    McLeod, 640 F.3d at 886
    .
    An ALJ may give less weight to a VA rating “if he gives
    persuasive, specific, valid reasons for doing so that are
    supported by the record.” Valentine v. Comm’r Soc. Sec.
    Admin., 
    574 F.3d 685
    , 695 (9th Cir. 2009) (quoting
    
    McCartey, 298 F.3d at 1076
    ).
    1
    The Appeals Council decision would not alter our reasoning in this
    case even if it was properly a subject of our review. The Appeals Council
    did not explain why the evidence supporting the VA disability rating was
    insufficient for an award under Social Security Regulations, much less
    consider the “great weight” ordinarily accorded VA ratings. McCartey v.
    Massanari, 
    298 F.3d 1072
    , 1076 (9th Cir. 2002).
    10                  LUTHER V. BERRYHILL
    In McCartey, the VA determined that McCartey was
    80 percent disabled due to his depression and lower back
    
    injury. 298 F.3d at 1076
    . The ALJ “did not mention [the VA
    rating] in his opinion.” 
    Id. We held
    “that the ALJ erred in
    disregarding McCartey’s VA disability rating, and
    accordingly, the Commissioner’s decision must be reversed
    and remanded.” Id.; see also Hiler v. Astrue, 
    687 F.3d 1208
    ,
    1212 (9th Cir. 2012) (reversing ALJ who relied solely on
    VA’s 2001 proposed rating changes and disregarded VA’s
    1998 decision and 2002 decision that rejected 2001 proposed
    changes).
    In Valentine, the claimant had an initial VA disability
    rating of 30 
    percent. 574 F.3d at 688
    . While his case was
    pending before the ALJ, the VA increased his disability rating
    to 100 percent. 
    Id. at 689.
    The ALJ discussed the revised VA
    rating in her decision and provided two reasons for rejecting
    that rating. 
    Id. at 695.
    First, the ALJ stated that “[w]hile the
    VA unemployability rating resembles the Social Security
    disability standard in some respects, the non-critical decision
    made by the VA Decision Review Officer . . . was not an
    unemployability assessment.” 
    Id. Second, the
    ALJ stated that
    the VA rating “was not based on a comprehensive evaluation
    of the evidence available to the undersigned [ALJ].” 
    Id. On appeal,
    we found the first reason for rejecting the VA rating
    invalid under McCartey, noting that an ALJ must consider a
    VA rating due to “the marked similarity” between both
    programs. 
    Id. But as
    to the second reason, we held that the
    ALJ was “justified in rejecting the VA’s disability rating on
    the basis that [the ALJ] had evidence the VA did not, which
    undermined the evidence the VA did have.” 
    Id. In this
    case, although the ALJ noted Luther’s VA
    disability rating at the hearing and in her written decision, she
    LUTHER V. BERRYHILL                               11
    did not address how she had considered and weighed the
    VA’s rating or articulate any reasons for rejecting it. To the
    contrary, the ALJ stated, “It doesn’t matter. It’s
    100 percent. . . . One hundred percent disability VA has no
    bearing. It’s something we consider—.” The ALJ did not
    discuss the rating in her evaluation of the medical evidence
    and instead merely acknowledged it in two short portions of
    her decision.2 Simply mentioning the existence of a VA rating
    in the ALJ’s decision is not enough. The ALJ erred because
    she did not give great weight to the VA disability rating and
    did not provide any persuasive, specific, and valid reasons for
    rejecting it.
    III.
    “Remand for further proceedings is appropriate where
    there are outstanding issues that must be resolved before a
    disability determination can be made, and it is not clear from
    the record that the ALJ would be required to find the claimant
    disabled if all the evidence were properly evaluated.” 
    Taylor, 659 F.3d at 1235
    (citing Vazquez v. Astrue, 
    572 F.3d 586
    , 593
    (9th Cir. 2009)). In this case, the ALJ failed to explain the
    consideration she gave to the VA disability rating, if any. And
    it is unclear from the record whether the ALJ would be
    required to find Luther disabled after evaluating the VA
    disability rating. “We note that, on remand, the ALJ is not
    2
    The ALJ also did not discuss the VA’s conclusion that Luther’s
    urinary tract infection and degenerative disc disease were service-
    connected disabilities and failed to develop the record by asking Luther
    questions pertaining to these other conditions. Luther had listed
    degenerative disc disease as a disability on her Social Security application.
    See Widmark v. Barnhart, 
    454 F.3d 1063
    , 1068 (9th Cir. 2006) (“[T]he
    ALJ has a special duty to fully and fairly develop the record and to assure
    that the claimant’s interests are considered.”).
    12                LUTHER V. BERRYHILL
    compelled to adopt the conclusions of the VA’s decisions
    wholesale, but if she deviates from final VA decisions, she
    may do so based only on contrary evidence that is
    ‘persuasive, specific, valid’ and supported by the record.”
    
    Hiler, 687 F.3d at 1212
    (quoting 
    McCartey, 298 F.3d at 1076
    ).
    CONCLUSION
    For the foregoing reasons, we REVERSE the district
    court’s decision affirming the Commissioner’s decision and
    REMAND with instructions to the district court to remand
    this case to the Commissioner for further proceedings
    consistent with this opinion.