Vallejo v. Berryhill

FILED
United States Court of Appeals
PUBLISH Tenth Circuit
UNITED STATES COURT OF APPEALS February 28, 2017
Elisabeth A. Shumaker
FOR THE TENTH CIRCUIT Clerk of Court
_________________________________
MARLA VALLEJO,
Plaintiff - Appellee,
v. No. 15-1283
NANCY A. BERRYHILL, Acting
Commissioner of Social Security,
Defendant - Appellant.
_________________________________
Appeal from the United States District Court
for the District of Colorado
(D.C. No. 1:13-CV-01196-MSK)
_________________________________
Submitted on the briefs:**
Benjamin C. Mizer, Principal Deputy Assistant Attorney General, John F. Walsh, United
States Attorney, Alisa B. Klein, Appellate Attorney, Civil Division, and Gerard Sinzdak,
Appellate Attorney, Civil Division, U.S. Department of Justice, Washington, D.C., for
Defendant-Appellant.
Michael W. Seckar, Michael W. Seckar, P.C., Pueblo, Colorado, for Plaintiff-Appellee.
_________________________________
Before MATHESON, BACHARACH, and MORITZ, Circuit Judges.

Nancy A. Berryhill became the Acting Commissioner of the United States
Social Security Administration on January 20, 2017, and is substituted for Carolyn
W. Colvin as the Defendant-Appellant in this case. See Fed. R. App. P. 43(c)(2).
**
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument wouldn’t materially assist in the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument.
_________________________________
MORITZ, Circuit Judge.
_________________________________
The Acting Commissioner appeals the district court’s order reversing her
decision to deny Marla Vallejo’s application for supplemental security income
benefits and remanding the case for further administrative proceedings. Because the
district court’s order rests on a misapplication of controlling law, we reverse and
remand to the district court for further proceedings.
BACKGROUND
Vallejo applied for supplemental security income benefits in April 2010,
alleging she had been disabled since November 2009. After the agency
administratively denied her claim, she received a hearing with an administrative law
judge (ALJ). The ALJ evaluated Vallejo’s testimony and the medical opinions of a
consulting physician, a state-agency physician, an examining psychologist, and a
state-agency psychologist. Although the record contained no medical opinions from
treating physicians, Vallejo informed the ALJ at the hearing that her treating
physician, Dr. Jerald Ratner, was preparing a mental health opinion. The ALJ agreed
to consider the opinion if she received it before issuing her decision. One week later,
the ALJ issued a decision adverse to Vallejo.
The next day, Ratner completed his opinion, titled “Residual Functional
Capacity Evaluation (Mental).” App. 206. Ratner opined that Vallejo had bipolar
disorder, and he rated her level of impairment as “extreme” in 13 of 20 functional
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areas. Id. at 206-07. He further advised that Vallejo wouldn’t be able to “work at any
job 8 hours per day, 5 days per week,” because her impairment would cause her to be
“off task” one hundred percent of the time. Id. at 208.
Vallejo requested that the Appeals Council review the ALJ’s decision and
submitted Ratner’s opinion with her request. The Appeals Council denied review,
stating that it “considered” Ratner’s opinion, along with other additional evidence,
but found that evidence didn’t “provide a basis for changing the [ALJ’s] decision.”
Id. at 51-52. The Appeals Council’s denial of Vallejo’s request for review rendered
the ALJ’s decision the Commissioner’s final decision. See 20 C.F.R. § 416.1481.
Vallejo then sought judicial review of the Commissioner’s final decision.
Ruling from the bench, the district court found one of Vallejo’s five arguments
dispositive: that the Appeals Council erred “in not properly articulating its
assessment” of Ratner’s opinion in denying Vallejo’s request for review. App. 215.
Based on Ratner’s status as a treating physician, the court reasoned that the Appeals
Council was required to “follow the same rules” as the ALJ by evaluating Ratner’s
opinion and either assigning it controlling weight or articulating reasons for assigning
it a lesser weight. Id. at 217. See 20 C.F.R. § 416.927(c) (requiring agency factfinder
to evaluate all medical opinions and give controlling weight to opinions from treating
sources or explain why lesser weight is given).
Because neither the ALJ nor the Appeals Council expressly evaluated Ratner’s
opinion, the district court reversed the Commissioner’s decision and remanded for
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the Appeals Council to either (1) determine what weight, if any, to give Ratner’s
opinion or (2) remand to an ALJ with directions to make that determination.
DISCUSSION
I
Preliminarily, we must consider whether we have jurisdiction to consider the
Commissioner’s appeal. Because the district court remanded the case for further
administrative proceedings, we directed the Commissioner to clarify whether the
remand was a sentence-four remand or sentence-six remand. See Pettyjohn v.
Shalala, 23 F.3d 1572, 1573-74 (10th Cir. 1994) (noting that district court may
remand case to Commissioner under either sentence four or sentence six of 42 U.S.C.
§ 405(g), and explaining that “whether a final judgment has been entered depends on
what kind of remand is made”).
Under sentence four, “[t]he court may remand the case after passing on its
merits and issuing a judgment affirming, reversing, or modifying the
[Commissioner’s] decision.” Nguyen v. Shalala, 43 F.3d 1400, 1403 (10th Cir. 1994).
Sentence six authorizes remand only when (1) the Commissioner requests a remand
for good cause before filing an answer, or (2) “new and material evidence comes to
light, and there is good cause for failing to incorporate such evidence in the earlier
[administrative] proceeding.” Id.
Sentence-four remands are final and appealable because the court rules on the
merits of the Commissioner’s decision and issues a final judgment before remanding
the case. Sullivan v. Finkelstein, 496 U.S. 617, 629 (1990). Sentence-six remands are
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interlocutory and non-appealable because the district court retains jurisdiction and
remands solely for consideration of new evidence that wasn’t before the
Commissioner, and the parties must then return to court to obtain a final judgment.
Melkonyan v. Sullivan, 501 U.S. 89, 102 (1991).
For two reasons, we agree with the Commissioner that the district court
ordered a sentence-four remand here. First, this case presents neither of the
circumstances required for a sentence-six remand: the Commissioner didn’t request
the remand, and Vallejo presented no evidence to the district court that wasn’t before
the Commissioner. True, the Appeals Council didn’t expressly evaluate Ratner’s
opinion. But it did incorporate the opinion into the agency record.1
Second, the remand in this case bears the hallmarks of a sentence-four remand:
the court reversed the Commissioner’s final decision, immediately entered judgment
against the Commissioner, and later granted attorney’s fees to Vallejo. See Shalala v.
Schaefer, 509 U.S. 292, 297 (1993) (noting that “[i]mmediate entry of judgment . . .
is in fact the principal feature that distinguishes a sentence-four remand from a
sentence-six remand”). Because the district court issued a sentence-four remand, we
exercise jurisdiction and proceed to the merits.
1
When a claimant submits new evidence to the Appeals Council and the
Council accepts that evidence, it becomes part of the administrative record for the
district court to consider in performing its substantial-evidence review. O’Dell v.
Shalala, 44 F.3d 855, 858-59 (10th Cir. 1994).
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II
We review a district court’s ruling reversing the Commissioner’s final decision
de novo, applying the same standards as the district court. Thus, we ask whether the
Commissioner applied the correct legal standards and whether her factual findings
are supported by substantial evidence. Nguyen, 43 F.3d at 1402.
Here, the district court reversed the Commissioner’s decision based solely on
the court’s determination that the Appeals Council failed to apply the correct legal
standards. Specifically, the district court concluded that the Appeals Council erred in
denying Vallejo’s request for review without first expressly evaluating Ratner’s
medical opinion.
The Commissioner disagrees. According to the Commissioner, the district
court’s decision to remand this case based on the Appeals Council’s failure to explain
its assessment of Ratner’s opinion conflicts with our decision in Martinez v.
Barnhart, 444 F.3d 1201 (10th Cir. 2006), and rests on a misunderstanding of the
relevant regulations.
In Martinez, as here, the Appeals Council denied review of an ALJ’s
determination that the claimant wasn’t entitled to benefits. After the district court
affirmed the ALJ’s decision, the claimant appealed. The claimant argued, in part, that
the Appeals Council erred in “fail[ing] to articulate an analysis showing the opinions
of [the claimant’s] treating physician, Dr. Olivares, were not supported by his
treatment records.” Id. at 1204. In rejecting that argument, we recognized that “an
express analysis of the Appeals Council’s determination would [be] helpful for
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purposes of judicial review.” Id. at 1207-08. But we concluded that “nothing in the
statutes or regulations . . . require[s] such an analysis where new evidence is
submitted and the Appeals Council denies review.” Id. at 1208. Rather, the Appeals
Council is required only to “consider” the new evidence—and a conclusory statement
that it has done so is sufficient. Id. at 1207.
Vallejo acknowledges Martinez’ holding but urges us to apply an exception to
Martinez when, as here, (1) a claimant submits a treating-physician’s opinion to the
Appeals Council that (2) wasn’t provided to the ALJ, that (3) undermines the ALJ’s
decision, and that (4) is the only treating-physician’s opinion in the administrative
record. Vallejo also suggests than an exception to Martinez would resolve the
“tension,” Aplee. Br. 17, between two principles of social security law: (1) an agency
fact-finder must “give good reasons” for its allocation of weight to the opinion of a
treating physician, 20 C.F.R. § 416.927(c)(2);2 yet (2) when a claimant submits new
evidence to the Appeals Council for review, and the Council denies the request for
review, it’s not required to “specifically discuss the effect of [the evidence] . . . in
light of the record as a whole,” Martinez, 444 F.3d at 1207.
While these two principles may well be in tension, that tension doesn’t permit
us to ignore the relevant regulations governing administrative review, which appear
to specifically anticipate the outcome in this case.
2
Our cases have clarified this “good reasons” requirement: The explanation
“must be sufficiently specific to make clear to any subsequent reviewers the weight
the adjudicator gave to the treating source’s medical opinion and the reasons for that
weight.” Watkins v. Barnhart, 350 F.3d 1297, 1300 (10th Cir. 2003) (quoting Social
Security Ruling 96-2p, 1996 WL 374188 (July 2, 1996), at *5).
7
Most notably, the regulation Vallejo relies upon, by its very terms, doesn’t
apply to the Appeals Council when it denies review. Instead, it requires the agency
fact-finder—ordinarily the ALJ—to thoroughly evaluate treating-physician opinions
and “give good reasons” for the weight given to each when issuing a “notice of
determination or decision.” § 416.927(c)(2). But it does not require the Appeals
Council to do so when denying review of the ALJ’s decision. Instead, it requires the
Appeals Council to evaluate treating-physician opinions in the same manner as the
ALJ only when the Appeals Council grants review and “makes a decision.”
§ 416.927(e)(3) (“When the Appeals Council makes a decision, it will follow the
same rules for considering opinion evidence as administrative law judges follow.”);
see also § 416.1481 (“The Appeals Council may deny a party’s request for review or
it may decide to review a case and make a decision.”) (emphases added). Here, the
Appeals Council did not “make[] a decision.” § 416.927(e)(3). Instead, it simply
denied review. Thus, it was not required to follow the same rules for considering
opinion evidence as the ALJ followed, and the district court erred in concluding
otherwise and in reversing and remanding on that basis.3
3
In support for her argument to the contrary, Vallejo relies on Harper v.
Astrue, 428 F. App’x 823 (10th Cir. 2011) (unpublished). In Harper, we remanded
for further proceedings based, in part, on what we characterized as the Appeals
Council’s failure to “properly evaluate the opinion of [the claimant’s] treating
physician.” 428 F. App’x at 826. But in addition to Harper’s unpublished and non-
precedential status, we decline to rely on it here for two reasons: (1) Harper doesn’t
cite Martinez, let alone attempt to square its decision with our holding in that case;
and (2) Harper doesn’t address the Appeals Council’s limited requirement to
“consider” new evidence under § 416.1470.
8
Finally, we reject Vallejo’s alternative argument that the district court’s
“ultimate decision to remand the case to the Commissioner was the appropriate
remedy” even if the district court erred in concluding that the Appeals Council had a
duty to explain its assessment of Ratner’s opinion. Aplee. Br. 22. Vallejo argues the
district court “determined that a remand for a fact-finder’s weighing of the new
evidence was necessary” because without the fact-finder’s evaluation of Ratner’s
opinion, the court simply couldn’t determine whether substantial evidence supports
the Commissioner’s decision. Id. at 23.
But Martinez also precludes this argument. We recognized in Martinez that an
express analysis from the Appeals Council would be helpful to judicial review. 444
F.3d at 1207-08. But, as we said there—and reiterate here—“nothing in the statutes
or regulations” requires the Appeals Council to provide that analysis. Id. at 1208.
Remanding the case to the Appeals Council for further fact-finding when the Appeals
Council did all it was required to do under the regulations wasn’t an option for the
district court. The district court’s only option was to conduct a substantial-evidence
review by assessing the entire agency record, including Ratner’s never-before
assessed opinion. See O’Dell, 44 F.3d at 858-59 (noting that when claimant submits
new evidence to Appeals Council and Appeals Council accepts it, that evidence
becomes part of the record to be considered by court in performing substantial-
evidence review).
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Consequently, we reverse the district court’s order reversing the
Commissioner’s final decision and remanding to the Appeals Council for an express
evaluation of Ratner’s opinion. We remand to the district court with directions to
address Vallejo’s remaining arguments and determine if the Commissioner applied
the correct legal standards and if substantial evidence in the administrative record—
which now includes Ratner’s opinion—supports the Commissioner’s final decision.
10