Kimberly Gardner v. Nancy Berryhill , 856 F.3d 652 ( 2017 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
KIMBERLEY A. GARDNER, No. 14-35164
Plaintiff-Appellant,
D.C. No.
v. 6:12-cv-00755-JE
NANCY A. BERRYHILL, Acting
Commissioner of Social Security, OPINION
Defendant-Appellee.
Appeal from the United States District Court
for the District of Oregon
Michael W. Mosman, Chief Judge, Presiding
Argued and Submitted October 3, 2016
Portland, Oregon
Filed May 9, 2017
Before: Richard R. Clifton, Mary H. Murguia,
and Jacqueline H. Nguyen, Circuit Judges.
Opinion by Judge Nguyen
2 GARDNER V. BERRYHILL
SUMMARY *
Equal Access to Justice Act / Attorney Fees
The panel reversed the district court’s denial of
plaintiff’s application for attorney’s fees pursuant to the
Equal Access to Justice Act (“EAJA”) because the
Commissioner of Social Security’s litigation position was
not substantially justified; and remanded for the district court
to determine the appropriate amount of fees to award.
After losing her claim for social security disability
benefits before the Administrative Law Judge (“ALJ”),
plaintiff presented new evidence – a final report by
plaintiff’s treating doctor – to the Appeals Council, and in
light of this new evidence in the administrative record, the
district court remanded for further consideration. In denying
plaintiff’s request for attorney’s fees, the district court
concluded that the Commissioner was substantially justified
in arguing that the new evidence did not undermine the
ALJ’s denial of benefits.
The panel held that the issue before the district court on
the original merits appeal of the ALJ’s denial of benefits was
not whether there was other evidence that could support a
denial of benefits to plaintiff, or whether the
Commissioner’s denial of benefits might ultimately be
sustained, but rather whether the actual decision that was
made by the ALJ could be affirmed at that time by the district
court in light on the new evidence in the record. The panel
*
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
GARDNER V. BERRYHILL 3
further held that it should have been plain that the ALJ’s
decision could not have been affirmed, because the ALJ
failed to provide a reason that was still viable for giving the
treating doctor’s opinion little weight. The panel held that
the treating doctor’s final report, if credited, would have
undermined the ALJ’s original finding that plaintiff was not
disabled. The panel concluded that the Commissioner did
not have a legitimate basis to oppose remand and to argue
that the district court should affirm the existing ALJ opinion;
and the district court, by applying the wrong legal standard
to evaluate the Commissioner’s litigation position, abused
its discretion.
COUNSEL
Alan Stuart Graf (argued), Alan Stuart Graf PC, Floyd,
Virginia, for Plaintiff-Appellant.
Gerald Hill (argued), Assistant Regional Counsel; David
Morado, Regional Chief Counsel, Seattle Region X; Office
of the General Counsel, Social Security Administration,
Seattle, Washington; Ronald K. Silver, Assistant United
States Attorney; Kelly A. Zusman, Appellate Chief; United
States Attorney’s Office, Seattle, Washington; for
Defendant-Appellee.
4 GARDNER V. BERRYHILL
OPINION
NGUYEN, Circuit Judge:
Kimberley Gardner appeals the district court’s denial of
her application for attorney’s fees pursuant to the Equal
Access to Justice Act (“EAJA”), 28 U.S.C. § 2412(d)(1)(A).
We reverse and remand.
After losing her claim for social security disability
benefits before the Administrative Law Judge (“ALJ”),
Gardner presented new evidence—a final report by her
treating doctor, Dr. Rory Richardson—to the Appeals
Council. In light of this new evidence in the administrative
record before the Appeals Council, the district court
remanded for further consideration. The Commissioner did
not appeal this decision. But the district court denied
Gardner’s request for attorney’s fees, concluding that the
Commissioner was substantially justified in arguing that the
new evidence did not undermine the ALJ’s denial of
benefits. Implicit in the Commissioner’s litigation position,
however, was an assumption that the ALJ on remand either
would reject or give little weight to the treating doctor’s
opinion. There is simply no support for this assumption.
The ALJ had not previously considered the merits of Dr.
Richardson’s opinion and, if credited, that opinion would
undoubtedly bolster Gardner’s claim that she is disabled. On
this record, the Commissioner was not substantially justified
in arguing otherwise.
I.
Gardner applied for disability insurance benefits and
supplemental security income based on her adult attention
deficit hyperactivity disorder (“ADHD”) and anxiety. The
GARDNER V. BERRYHILL 5
Commissioner denied her claims initially and upon
reconsideration.
At the next level of review, the ALJ considered evidence
including (1) Gardner’s testimony regarding her symptoms
and inability to work; (2) the interim opinion of then-
examining physician Rory Richardson that Gardner had
depressive disorder with concomitant obsessive-compulsive
disorder and ADHD that was “likely to prevent her from
being able to maintain attention span, complete tasks, and
function in a gainful employment setting” despite
medications and treatment; (3) the opinion of examining
physician James Bryan that Gardner exaggerated her
symptoms and suffered from no condition that would
significantly impede her employability; and (4) the opinion
of nonexamining psychological consultant Paul Rethinger
that Gardner’s mental impairments limit her to work
involving simple, unrushed tasks and requiring little social
interaction, but that Gardner’s limitations did not render her
disabled.
The ALJ, performing the Social Security
Administration’s usual five-step evaluation process, 1
1
The ALJ performs a “sequential evaluation process” which ends
when the ALJ finds that the claimant is or is not disabled. 20 C.F.R.
§ 416.920(a)(4). At the first step, a claimant “doing substantial gainful
[work] activity” is not disabled. Id. § 416.920(a)(4)(i). At the second
step, a claimant is not disabled unless she has a “medically determinable
physical or mental impairment” or combination of impairments that is
severe and either lasts at least a year or results in death. Id.
§ 416.920(a)(4)(ii). At the third step, a claimant is disabled if the
severity of her impairments meets or equals one of various impairments
listed by the Commissioner, 20 C.F.R. pt. 404, subpt. P, app. 1. Id.
§ 416.920(a)(4)(iii). At the fourth step, a claimant is not disabled if her
residual functional capacity (“RFC”) allows her to perform her past
relevant work. Id. § 416.920(a)(4)(iv). At the fifth and final step, a
6 GARDNER V. BERRYHILL
concluded that Gardner was not disabled. He found at steps
two and three that she had severe impairments of ADHD,
somatoform disorder, borderline personality features, and
chondromalacia patella, but that these conditions did not
meet or equal a listed impairment. The ALJ found at steps
four and five that Gardner was able to perform both her past
relevant work as a personal attendant and other jobs that
exist in the national economy such as retail/wholesale
marker and garment sorter.
In reaching these findings, the ALJ found Gardner
“credible to the extent she suffers from some type of
impairment” but found that her “statements concerning the
intensity, persistence[,] and limiting effects of these
symptoms [were] not credible.” He found that her
“treatment records . . . demonstrate these symptoms are well
maintained when [she] takes her medications as directed by
her treatment providers.” The ALJ gave “little weight” to
Dr. Richardson’s interim report, explaining that “it is only
an interim report and [Dr. Richardson has] not completed a
full assessment, indicating a degree of speculation in
reaching his conclusions.” The ALJ found Dr. Bryan’s
assessment “persuasive” and gave it “significant weight.”
The ALJ assigned Dr. Rethinger’s opinion “great weight”
because he concluded that it was generally consistent with
the record.
Gardner sought review of the ALJ’s decision by the
Appeals Council. When subsequent reports by now-treating
physician Dr. Richardson (collectively, the “final report”)
claimant is disabled if she cannot make an adjustment to other work that
“exists in significant numbers in the national economy,” id.
§ 416.960(c)(2), given her RFC, age, education, and work experience,
id. § 416.920(a)(4)(v).
GARDNER V. BERRYHILL 7
became available after he had treated her on several
occasions, Gardner submitted them to the Appeals Council
for consideration. As before, Dr. Richardson concluded that
“[d]espite medications and treatment, she continues to have
impairment of function which is likely to prevent her from
being able to maintain attention span, complete tasks, and
function in a gainful employment setting.” This time,
however, Dr. Richardson did not qualify his opinion as
“interim.” He also opined that Gardner “is plagued by
Obsessive Compulsive patterns which severely delay her
ability to leave the house and frequently [is] unable to do so
without the assistance of her partner.” The Appeals Council
included Dr. Richardson’s final report in the administrative
record but denied review.
Gardner then filed this action in the district court. She
argued that the case should be remanded to the ALJ for an
award of benefits because substantial evidence supported her
disability in light of Dr. Richardson’s final report. The
Commissioner argued that even with this additional
evidence in the record, the ALJ’s decision remained
supported by substantial evidence and should be affirmed.
In findings and recommendations adopted in whole by
the district court, the magistrate judge opined that the ALJ
properly rejected Dr. Richardson’s opinion based on the
record as it stood at the time of the ALJ’s decision, i.e., the
interim report. The magistrate judge reasoned that Dr.
Richardson was at the time of the interim report only an
examining physician and the ALJ provided a specific and
legitimate reason for rejecting his opinion—its preliminary
nature—that was supported by the record.
The magistrate judge concluded that the Commissioner’s
decision should be reversed, however, because “further
administrative proceedings are generally appropriate if the
8 GARDNER V. BERRYHILL
ALJ has not had the opportunity to consider significant
additional evidence.” Pointing to Dr. Richardson’s opinion
in the final report “that [Gardner’s] impairments would
likely prevent her from functioning in a competitive
employment setting,” the magistrate judge had “little doubt
that a finding of disability would be required if [Dr.
Richardson’s] opinion were fully credited.”
The district court entered judgment remanding the case
to the ALJ to address Dr. Richardson’s final report as
Gardner’s treating physician. The Commissioner did not
appeal the decision. Gardner moved for attorney’s fees
pursuant to EAJA, which the Commissioner opposed. The
magistrate judge recommended awarding $6,713.06 in fees.
The district court rejected this recommendation and denied
EAJA fees, finding that the Commissioner’s litigation
position was substantially justified. Gardner appeals this
ruling.
II.
The district court had jurisdiction pursuant to 42 U.S.C.
§ 405(g). We have jurisdiction pursuant to 42 U.S.C.
§ 405(g) and 28 U.S.C. § 1291. See Tobeler v. Colvin,
749 F.3d 830, 832 (9th Cir. 2014). We review the district
court’s order denying EAJA fees for abuse of discretion. Id.EAJA provides that “a court shall award to a prevailing
party other than the United States fees and other expenses
. . . unless the court finds that the position of the United
States was substantially justified or that special
circumstances make an award unjust.” 28 U.S.C.
§ 2412(d)(1)(A). The government has the burden of
showing that its position was substantially justified. Meier
v. Colvin, 727 F.3d 867, 870 (9th Cir. 2013) (citing Gutierrez
v. Barnhart, 274 F.3d 1255, 1258 (9th Cir. 2001)).
GARDNER V. BERRYHILL 9
“Substantial justification means ‘justified in substance or
in the main—that is, justified to a degree that could satisfy a
reasonable person.’” Id. (quoting Pierce v. Underwood,
487 U.S. 552, 565 (1988)). “Put differently, the
government’s position must have a ‘reasonable basis both in
law and fact.’” Id. (quoting Pierce, 487 U.S. at 565). The
“position of the United States” includes both “the position
taken by the United States in the civil action” as well as the
agency’s action or inaction “upon which the civil action is
based.” 28 U.S.C. § 2412(d)(2)(D).
III.
The ALJ gave “specific and legitimate reasons supported
by substantial evidence,” for rejecting Dr. Richardson’s
original opinion as an examining physician. Burrell v.
Colvin, 775 F.3d 1133, 1141 (9th Cir. 2014). As the district
court observed, the interim nature of Dr. Richardson’s
opinion was a legitimate reason for the ALJ to discredit it.
But the district court recognized that this observation was
ultimately irrelevant to its analysis, because it had to
determine whether the ALJ’s finding of nondisability was
supported by substantial evidence in the entire record—
including any new evidence in the administrative record that
the Appeals Council considered—not just the evidence
before the ALJ. Brewes v. Comm’r of Soc. Sec. Admin.,
682 F.3d 1157, 1163 (9th Cir. 2012).
The Commissioner’s position before the district court
was that Dr. Bryan’s opinion and other record evidence that
the ALJ considered provided substantial evidence that
Gardner was not disabled and that Dr. Richardson’s final
report as a treating physician “does not render the ALJ’s
decision unsupported by substantial evidence.” The
Commissioner has not identified the right question,
however. In determining whether a party is eligible for fees
10 GARDNER V. BERRYHILL
under EAJA, the district court must determine whether the
government’s position regarding the specific issue on which
the district court based its remand was “substantially
justified”—not whether the ALJ would ultimately deny
disability benefits. See Corbin v. Apfel, 149 F.3d 1051, 1053
(9th Cir. 1998) (stating that, after Shalala v. Schaefer,
509 U.S. 292 (1993), there was “a logical shift in focus
within the circuit . . . from considering only the ultimate
issue of disability to considering the justification of the
government’s position at the discrete stage in question”); see
also Lewis v. Barnhart, 281 F.3d 1081, 1083 (9th Cir. 2002)
(“Under the Act, attorneys’ fees are to be awarded to a party
winning a . . . remand unless the Commissioner shows that
his position with respect to the issue on which the district
court based its remand was ‘substantially justified.’”
(quoting Flores v. Shalala, 49 F.3d 562, 569 (9th Cir.
1995))).
Here, the issue that was before the district court on the
original merits appeal of the ALJ’s denial of benefits was not
whether there was other evidence that could support a denial
of benefits to Gardner, or whether the Commissioner’s
denial of benefits might ultimately be sustained. It was
whether the actual decision that was made by the ALJ could
be affirmed at that time by the district court in light of the
new evidence in the record. As we explain below, it should
have been plain that it could not have been affirmed, because
the ALJ’s decision failed to provide a reason that was still
viable for giving the opinion of Dr. Richardson little weight.
Dr. Richardson’s final report, if credited, would have
undermined the ALJ’s original finding that Gardner was not
disabled.
Implicit in the Commissioner’s argument is an
assumption that the ALJ would not fully credit Dr.
GARDNER V. BERRYHILL 11
Richardson’s final report. The district court did not, in fact,
adopt that assumption to affirm the denial of benefits. 2
Instead, the district court properly remanded the merits case
back to the agency, so that the ALJ could decide in the first
instance what impact Dr. Richardson’s final report should
have.
By later concluding, in denying the fee application, that
the Commissioner’s position had been substantially
justified, however, the district court appeared to accept the
Commissioner’s mischaracterization of the relevant legal
question. Even if the Commissioner might have had a
legitimate basis for opposing Gardner’s claim, she did not
have a basis to oppose remand and to argue that the district
court should affirm the existing ALJ opinion. The district
court, by applying the wrong legal standard to evaluate the
Commissioner’s litigation position, abused its discretion.
See United States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir.
2009) (en banc).
Once Dr. Richardson’s opinion was “final,” it could no
longer be given little weight by the ALJ on the ground that
it was merely “interim.” Indeed, under the Ninth Circuit’s
“treating physician” rule, the ALJ was required to give the
opinion of a treating physician like Dr. Richardson its
“greatest weight.” Tonapetyan v. Halter, 242 F.3d 1144,
1148 (9th Cir. 2001). The ALJ therefore could have rejected
Dr. Richardson’s opinion only by providing “specific and
legitimate reasons . . . supported by substantial evidence” in
the record. Bayliss v. Barnhart, 427 F.3d 1211, 1216 (9th
Cir. 2005). But apart from the interim nature of Dr.
Richardson’s opinion, the ALJ gave no other “specific and
2
Nor could it have adopted such an assumption, which would
contravene our holding in Brewes by ignoring the new evidence.
12 GARDNER V. BERRYHILL
legitimate” reason for disregarding it. Id. The rejection of
Dr. Richardson’s opinion solely on that basis could not stand
once Dr. Richardson’s final report became part of the record.
As a general rule, where the “critical portions” of a
treating physician’s discredited opinion were presented for
the first time to the Appeals Council, “[t]he appropriate
remedy . . . is to remand th[e] case to the ALJ” to consider
the additional evidence. Harman v. Apfel, 211 F.3d 1172,
1180 (9th Cir. 2000). That is what the district court did here,
and, as we have explained, that is the only result it could
properly have reached as the case was presented to it at that
point in time. Dr. Richardson’s final report as a treating
physician was critical because the ALJ discredited the
original report solely due to its preliminary nature, and the
final report, if credited, would undermine the ALJ’s initial
decision. Remand was a foregone conclusion, so the
Commissioner’s opposition to remand was therefore
unreasonable.
The Commissioner contends that Harman is
distinguishable because the ALJ there erred—by rejecting
without explanation a treating physician’s opinion, see id. at
1174—whereas the ALJ here did not. Harman did not turn
on the ALJ’s error. The issue was whether the ALJ’s failure
to consider relevant evidence obligated the district court
“simply to credit the opinion as true” and remand for
immediate payment of benefits or whether the district court
correctly entered an order remanding for further
development of the administrative record. 3 Id. at 1178. We
3
If the ALJ does not give specific and legitimate reasons for
rejecting a treating physician’s assessment, the district court has two
options. It can reverse and remand for an award of benefits where
“(1) the record has been fully developed and further administrative
GARDNER V. BERRYHILL 13
concluded that remand for further proceedings, as opposed
to remand for an immediate award of benefits, was the
appropriate course of action based on “the present state of
the record,” not the ALJ’s error. Id. at 1180 (stating that we
could not conclusively determine from the record as a whole
that the claimant was, in fact, disabled within the meaning of
the Social Security Act).
The Commissioner cites several unpublished decisions
that she asserts “serve as objective indicia that [she] was
substantially justified in interpreting Brewes” to not require
remand “even though the claimants submitted new evidence
to the Appeals Council in support of their claims.” These
cases do not support the proposition that remand is optional
so long as there is some evidence in the record before the
ALJ to support the ALJ’s decision. And indeed, this is not
the standard that has been applied by our court. Rather, we
have affirmed district court denials of remand
notwithstanding the existence of new evidence only when
there would be substantial evidence supporting the ALJ’s
denial of disability benefits even if the new evidence were
credited and interpreted as argued by the claimant. See
Wilder v. Comm’r of Soc. Sec. Admin., 545 F. App’x 638,
640 (9th Cir. 2013) (finding new medical opinion “does not
merit remand” because it was based on “[o]bjectively
proceedings would serve no useful purpose; (2) the ALJ has failed to
provide legally sufficient reasons for rejecting evidence . . . ; and (3) if
the improperly discredited evidence were credited as true, the ALJ would
be required to find the claimant disabled on remand.” Garrison v.
Colvin, 759 F.3d 995, 1020 (9th Cir. 2014) (footnote omitted) (citations
omitted). Alternatively, the district court can “remand on an open record
for further proceedings ‘when the record as a whole creates serious doubt
as to whether the claimant is, in fact, disabled within the meaning of the
Social Security Act.’” Burrell, 775 F.3d at 1141 (quoting Garrison,
759 F.3d at 1021).
14 GARDNER V. BERRYHILL
verifiable results . . . [that] belie [the] suggestion that [the
claimant] has a serious ‘impairment . . .’” and “subjective
reporting” by claimant whom “the ALJ found . . . not
credible”); Boyd v. Colvin, 524 F. App’x 334, 336 (9th Cir.
2013) (finding immaterial new evidence that “does not cover
the period in question”); Coleman v. Colvin, 524 F. App’x
325, 326 (9th Cir. 2013) (“The [new evidence] does not
establish any medically determinable mental impairment
because it is not an acceptable medical source.”); Denham v.
Astrue, 494 F. App’x 813, 815–16 (9th Cir. 2012)
(examining “both the evidence before the ALJ and the
additional evidence submitted only to the Appeals Council”
and finding claimant “did not present medical evidence
indicating functional limitations more severe than the RFC
found by the ALJ”).
Here, there is no basis to assume that on remand the ALJ
would discredit the new evidence rather than rely on it to
reach a different conclusion. The only reason given by the
ALJ for discrediting the interim report was that Dr.
Richardson had “not completed a full assessment.” Had the
ALJ considered the final report, which confirmed the interim
report’s conclusions, the ALJ may well have credited Dr.
Richardson’s assessment over Dr. Bryan’s or Dr.
Rethinger’s. By the time Dr. Richardson issued his final
report, he had treated Gardner several times. In contrast, Dr.
Bryan assessed Gardner based on a single examination and
Dr. Rethinger never examined Gardner. In general, “the
opinions of [nonexamining physicians and] examining non-
treating physicians are afforded less weight than those of
treating physicians.” Orn v. Astrue, 495 F.3d 625, 631 (9th
Cir. 2007) (citing 20 C.F.R. § 404.1527(d)(1)–(2)).
* * *
GARDNER V. BERRYHILL 15
We reverse the district court’s decision to deny EAJA
fees and remand to the district court to determine the
appropriate amount of fees to award.
REVERSED and REMANDED.