Tyler v. Commissioner Social Security Administration

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

DANIEL T.1, Case No. 3:22-cv-1479-SI

Plaintiff, OPINION AND ORDER

v.

MARTIN O’MALLEY, Commissioner

of Social Security,

Defendant.

Betsy R. Shepherd, ATTORNEY AT LAW, 425 Riverwalk Manor Drive, Dallas, GA 30132.

Of Attorneys for Plaintiff.

Natalie K. Wight, United States Attorney, and Kevin Danielson, Civil Division Chief, UNITED

STATES ATTORNEY’S OFFICE, 1000 SW Third Avenue, Suite 600, Portland, OR 97204; and

Julie A.K. Cummings, Special Assistant United States Attorney, OFFICE OF GENERAL COUNSEL,

Social Security Administration, 701 Fifth Avenue, Suite 2900 M/S 221A, Seattle, WA 98104.

Of Attorneys for Defendant.

Michael H. Simon, District Judge.

Plaintiff Daniel T. seeks review of the final decision of the Commissioner of the Social

Security Administration (Commissioner) denying Plaintiff’s application for Disability Insurance

1 In the interest of privacy, this Opinion and Order uses only the first name and the initial

of the last name of the non-governmental party in this case. When applicable, this Opinion and

Order uses the same designation for a non-governmental party’s immediate family member.

Benefits (DIB) and Supplemental Security Income (SSI) under the Social Security Act (Act). For

the following reasons, the Court reverses the Commissioner’s decision and remands this case for

further proceedings.

STANDARD OF REVIEW

The decision of the administrative law judge (ALJ) is the final decision of the

Commissioner in this case. The district court must affirm the ALJ’s decision if it is based on the

proper legal standards and the findings are supported by substantial evidence. 42 U.S.C.

§ 405(g); see also Hammock v. Bowen, 879 F.2d 498, 501 (9th Cir. 1989). “Substantial

evidence” means “more than a mere scintilla but less than a preponderance.” Bray v. Comm’r of

Soc. Sec. Admin., 554 F.3d 1219, 1222 (9th Cir. 2009) (quoting Andrews v. Shalala, 53

F.3d 1035, 1039 (9th Cir. 1995)). It means “such relevant evidence as a reasonable mind might

accept as adequate to support a conclusion.” Id. (quoting Andrews, 53 F.3d at 1039).

When the evidence is susceptible to more than one rational interpretation, the Court must

uphold the ALJ’s conclusion. Burch v. Barnhart, 400 F.3d 676, 679 (9th Cir. 2005). Variable

interpretations of the evidence are insignificant if the ALJ’s interpretation is a rational reading of

the record, and this Court may not substitute its judgment for that of the ALJ. See Batson v.

Comm’r of Soc. Sec. Admin., 359 F.3d 1190, 1193, 1196 (9th Cir. 2004). “[A] reviewing court

must consider the entire record as a whole and may not affirm simply by isolating a specific

quantum of supporting evidence.” Orn v. Astrue, 495 F.3d 625, 630 (9th Cir. 2007) (quoting

Robbins v. Soc. Sec. Admin., 466 F.3d 880, 882 (9th Cir. 2006) (quotation marks omitted)). A

reviewing court, however, may not affirm the ALJ on a ground upon which the ALJ did not rely.

Id.; see also Bray, 554 F.3d at 1226.

BACKGROUND

A. Plaintiff’s Application

Plaintiff applied for DIB and SSI on September 18, 2019, initially alleging disability

beginning April 15, 2015. AR 286, 288.2 Plaintiff’s date of birth is August 11, 1984, and he

was 30 years old on the alleged onset date (AOD) of disability. AR 286, 288. The agency

initially denied Plaintiff’s application on March 6, 2020, and again on reconsideration on

August 11, 2020. AR 151, 152, 153, 155. Plaintiff then requested a hearing before an ALJ, which

was held on February 24, 2021. AR 34, 222. During the hearing, Plaintiff amended his AOD to

August 31, 2017, meaning Plaintiff was 33 years old as of his amended AOD.3 AR 40-41. On

June 25, 2021, the ALJ issued a decision denying Plaintiff’s claim for benefits. AR 17-28.

Accordingly, the ALJ’s decision became the final decision of the agency from which Plaintiff

now seeks review.

B. The Sequential Analysis

A claimant is disabled if he or she is unable to “engage in any substantial gainful activity

by reason of any medically determinable physical or mental impairment which . . . has lasted or

can be expected to last for a continuous period of not less than 12 months.” 42 U.S.C.

§ 423(d)(1)(A). “Social Security Regulations set out a five-step sequential process for

2 Plaintiff’s application for DIB, AR 286, states that he applied for DIB on September 20,

2019. The ALJ’s opinion and other agency disability determinations in the record, however, state

that Plaintiff applied for both DIB and SSI on September 18, 2019, and any discrepancy in the

record is immaterial to the Court’s determination.

3 Plaintiff previously had applied for benefits on July 14, 2015, and was found to be not

disabled by a different ALJ in a decision dated August 30, 2017. AR 97. The ALJ in the present

case declined to apply the presumption of nondisability arising from the conclusion of the prior

ALJ, finding the presumption had been rebutted. AR 17. Therefore, no res judicata effect applied

to the period between the last ALJ decision and the present ALJ decision. Id.

determining whether an applicant is disabled within the meaning of the Social Security Act.”

Keyser v. Comm’r Soc. Sec. Admin., 648 F.3d 721, 724 (9th Cir. 2011). Those five steps are:

(1) Is the claimant presently working in a substantially gainful

activity? (2) Is the claimant’s impairment severe? (3) Does the

impairment meet or equal one of a list of specific impairments

described in the regulations? (4) Is the claimant able to perform

any work that he or she has done in the past? and (5) Are there

significant numbers of jobs in the national economy that the

claimant can perform?

Keyser, 648 F.3d at 724-25. Each step is potentially dispositive. 20 C.F.R. §§ 404.1520(a)(4),

416.920(a)(4). If the analysis continues beyond step three, the ALJ must evaluate medical and

other relevant evidence to assess and determine the claimant’s “residual functional capacity”

(RFC).

The claimant bears the burden of proof at steps one through four. Bustamante v.

Massanari, 262 F.3d 949, 953 (9th Cir. 2001); see also Tackett v. Apfel, 180 F.3d 1094, 1098

(9th Cir. 1999). The Commissioner bears the burden of proof at step five. Tackett, 180 F.3d

at 1100. At step five, the Commissioner must show that the claimant can perform other work that

exists in significant numbers in the national economy, “taking into consideration the claimant’s

residual functional capacity, age, education, and work experience.” Id.; see also 20 C.F.R.

§§ 404.1566, 416.966 (describing “work which exists in the national economy”). If the

Commissioner fails to meet this burden, the claimant is disabled. 20 C.F.R. §§ 404.1520(a)(4)(v),

416.920(a)(4)(v). If, however, the Commissioner proves that the claimant is able to perform

other work existing in significant numbers in the national economy, the claimant is not disabled.

Tackett, 180 F.3d at 1099; see Bustamante, 262 F.3d at 954.

C. The ALJ’s Decision

As a preliminary matter for Plaintiff’s DIB claim, the ALJ found that Plaintiff met the

insurance requirements of the Social Security Act through December 31, 2020. AR 20. Thus, for

his DIB claim, Plaintiff needed to establish disability—for a period of twelve months or longer—

on or before that date. The ALJ then engaged in the sequential analysis.

At step one of the analysis the ALJ determined that Plaintiff had not engaged in

substantial gainful activity after the AOD of August 31, 2017. Id. At step two, the ALJ found

that Plaintiff had the following medically severe impairments: dermographism and

schizoaffective disorder (depressive type). Id. At step three, the ALJ determined that none of

these impairments met or equaled the severity of any impairment listed in 20 C.F.R part 404,

subpart P, Appendix 1. AR 21. Next, the ALJ determined Plaintiff’s RFC and found that he

could perform the full range of work at all exertional levels, but with the following nonexertional

limitations:

[He] can perform simple, routine tasks that can be learned in three

to six months; [he] can have occasional, brief, and specific4 contact

with coworkers; and, [he] should have no exposure to direct

sunlight and extreme heat.

AR 22.

Comparing Plaintiff’s RFC to his past work, at step four, the ALJ found that Plaintiff

could perform his past relevant work as a warehouse worker. AR 26. The ALJ then made an

alternative step five finding that other jobs exist in the national economy that Plaintiff could

perform, including industrial cleaner, hand packager, production assembly, cannery worker, and

warehouse checker. AR 27. Thus, the ALJ determined Plaintiff was not under a disability, as

defined by the Act, at any time from August 31, 2017, through the date of the decision. AR 28.

4 The Commissioner noted that “specific” appears to be a scrivener’s error for

“superficial.” The Court agrees, and finds that this scrivener’s error is harmless, as it is

inconsequential to the disability determination.

DISCUSSION

Plaintiff contends the ALJ erred by: (A) improperly rejecting Plaintiff’s symptom

testimony; (B) improperly rejecting the lay witness testimony of Plaintiff’s mother; and

(C) failing to set out all limitations in the hypothetical to the vocational expert (VE).

A. Symptom Testimony

1. Applicable Law

A claimant “may make statements about the intensity, persistence, and limiting effects of

his or her symptoms.” SSR 16-3p, 2017 WL 5180304, at *6 (Oct. 25 2017).5 There is a two-step

process for evaluating a claimant’s testimony about the severity and limiting effect of the

claimant’s symptoms. Vasquez v. Astrue, 572 F.3d 586, 591 (9th Cir. 2009). “First, the ALJ must

determine whether the claimant has presented objective medical evidence of an underlying

impairment ‘which could reasonably be expected to produce the pain or other symptoms

alleged.’” Lingenfelter v. Astrue, 504 F.3d 1028, 1036 (9th Cir. 2007) (quoting Bunnell v.

Sullivan, 947 F.2d 341, 344 (9th Cir. 1991) (en banc)). When doing so, “the claimant need not

show that her impairment could reasonably be expected to cause the severity of the symptom she

has alleged; she need only show that it could reasonably have caused some degree of the

symptom.” Smolen v. Chater, 80 F.3d 1273, 1282 (9th Cir. 1996).

“Second, if the claimant meets this first test, and there is no evidence of malingering, ‘the

ALJ can reject the claimant’s testimony about the severity of her symptoms only by offering

specific, clear and convincing reasons for doing so.’” Lingenfelter, 504 F.3d at 1036 (quoting

5 Effective March 28, 2016, Social Security Ruling (SSR) 96-7p was superseded by

SSR 16-3p, which eliminates the term “credibility” from the agency’s sub-regulatory policy.

SSR 16-3p; Titles II and XVI: Evaluation of Symptoms in Disability Claims, 81 Fed. Reg. 14166

(Mar. 16, 2016). Because, however, case law references the term “credibility,” it may be used in

this Opinion and Order.

Smolen, 80 F.3d at 1281). It is “not sufficient for the ALJ to make only general findings; he must

state which pain testimony is not credible and what evidence suggests the complaints are not

credible.” Dodrill v. Shalala, 12 F.3d 915, 918 (9th Cir. 1993). Those reasons must be

“sufficiently specific to permit the reviewing court to conclude that the ALJ did not arbitrarily

discredit the claimant’s testimony.” Orteza v. Shalala, 50 F.3d 748, 750 (9th Cir. 1995) (citing

Bunnell, 947 F.2d at 345-46).

Consideration of subjective symptom testimony “is not an examination of an individual’s

character,” and requires the ALJ to consider all of the evidence in an individual’s record when

evaluating the intensity and persistence of symptoms. SSR 16-3p, available at 2016

WL 1119029, at *1-2. The Commissioner recommends that the ALJ examine “the entire case

record, including the objective medical evidence; an individual’s statements about the intensity,

persistence, and limiting effects of symptoms; statements and other information provided by

medical sources and other persons; and any other relevant evidence in the individual’s case

record.” Id. at *4. The Commissioner further recommends assessing: (1) the claimant’s

statements made to the Commissioner, medical providers, and others regarding the claimant’s

location, frequency and duration of symptoms, the impact of the symptoms on daily living

activities, factors that precipitate and aggravate symptoms, medications and treatments used, and

other methods used to alleviate symptoms; (2) medical source opinions, statements, and medical

reports regarding the claimant’s history, treatment, responses to treatment, prior work record,

efforts to work, daily activities, and other information concerning the intensity, persistence, and

limiting effects of an individual’s symptoms; and (3) non-medical source statements, considering

how consistent those statements are with the claimant’s statements about his or her symptoms

and other evidence in the file. See id. at *6-7.

The ALJ’s decision relating to a claimant’s subjective testimony may be upheld overall

even if not all the ALJ’s reasons for discounting the claimant’s testimony are upheld. See

Batson, 359 F.3d at 1197. The ALJ may not, however, discount testimony “solely because” the

claimant’s symptom testimony “is not substantiated affirmatively by objective medical

evidence.” Robbins, 466 F.3d at 883.

2. Analysis

Plaintiff testified that severe, ongoing mental health issues, and side effects from mental

health medications prevent him from working. AR 43-44. At his hearing, Plaintiff stated that he

has anxiety, anger, and “a lot of paranoia.” AR 44. Auditory hallucinations, a symptom of

Plaintiff’s schizoaffective disorder, are triggered by stress. AR 51. Consequently, Plaintiff stated

that he avoids stressful situations by “stay[ing] home as much as possible.” AR 52. Plaintiff

testified that his medications cause fatigue, anxiety, and weight gain. Id. Plaintiff testified that he

has gained around 200 pounds since leaving his last job in 2015, and that excessive weight gain

causes shortness of breath with any level of physical exertion. AR 53.

The ALJ stated that Plaintiff’s allegations of debilitating symptoms are “not entirely

consistent with the evidence.” AR 25. Specifically, the ALJ discounted Plaintiff’s symptom

testimony because (1) his activities of daily living were not limited to the extent expected;

(2) treatment had been generally successful in controlling symptoms; and (3) physical and

mental status exams were generally normal. Id.

a. Activities of Daily Living

Daily living activities may provide a basis for discounting subjective symptoms if the

plaintiff’s activities either contradict his or her testimony or meet the threshold for transferable

work skills. See Molina v. Astrue, 674 F.3d 1104, 1112-13 (9th Cir. 2012); Orn, 495 F.3d at 639.

“Engaging in daily activities that are incompatible with the severity of symptoms alleged can

support an adverse credibility determination.” Ghanim v. Colvin, 763 F.3d 1154, 1165 (9th

Cir. 2014). A claimant, however, need not be utterly incapacitated to receive disability benefits,

and completion of certain routine activities is insufficient to discount subjective symptom

testimony. See Molina, 674 F.3d at 1112-13 (noting that a “claimant need not vegetate in a dark

room in order to be eligible for benefits” (quotation marks omitted)); Benecke v. Barnhart, 379

F.3d 587, 594 (9th Cir. 2004) (“One does not need to be ‘utterly incapacitated’ in order to be

disabled.”). The Ninth Circuit “has repeatedly asserted that the mere fact that a plaintiff has

carried on certain daily activities, such as grocery shopping, driving a car, or limited walking for

exercise, does not in any way detract from her credibility as to her overall disability.” Vertigan v.

Halter, 260 F.3d 1044, 1050 (9th Cir. 2001); see also Reddick v. Chater, 157 F.3d 715, 722 (9th

Cir. 1998) (requiring the level of activity be inconsistent with the plaintiff’s claimed limitations

to be relevant to his or her credibility and noting that “disability claimants should not be

penalized for attempting to lead normal lives in the face of their limitations”). Moreover,

particularly with certain conditions, cycles of improvement may be a common occurrence, and it

is error for an ALJ to pick out a few isolated instances of improvement over a period of months

or years and to treat them as a basis for concluding that a plaintiff is capable of working. See

Garrison v. Colvin, 759 F.3d 995, 1017 (9th Cir. 2014).

The ALJ discounted Plaintiff’s symptoms because his “daily activities were not limited to

the extent one would expect, given the complaints of disabling symptoms and limitations.”

AR 25. Specifically, the ALJ noted that Plaintiff can “perform most of his activities of daily

living without significant difficulty including making videos,6 playing computer games with

6 The Court assumes the ALJ’s reference to “making videos” is a scrivener’s error for

“watching videos.” Plaintiff testified to watching television and researching online but did not

testify as to making videos. AR 46.

friends, cooking, shopping, completing chores, driving his mother to the grocery store, and

spending time online daily.” AR 24 (footnote added). The Ninth Circuit repeatedly has warned

that these types of minimal activities alone are not enough generally to discount a plaintiff’s

testimony. They may, however, discount a plaintiff’s testimony if they are inconsistent with a

specific aspect of a plaintiff’s claimed limitations, such as playing video games for hours while

claiming an inability to concentrate for more than 30 minutes. The ALJ, however, must

“identif[y] which testimony she found not credible,” and “explain[] which evidence contradicted

that testimony.” See Lambert v. Saul, 980 F.3d 1266, 1277 (9th Cir. 2020) (emphases in

original). The ALJ never connected those dots, and thus erred. See, e.g., Munoz v.

O’Malley, 2024 WL 1218541, at *10 (E.D. Cal. Mar. 21, 2024) (“Because the ALJ merely

summarized Plaintiff’s activities, but failed to link them to any specific testimony, this is not a

specific, clear and convincing reason to discount Plaintiff’s subjective complaints.”); Blount v.

Kijakazi, 2023 WL 4852331, at *7 (S.D. Cal. July 27, 2023) (rejecting daily living activities as a

reason to discount a plaintiff’s testimony because “[t]he ALJ did not identify the specific

subjective symptom testimony that these activities undermine nor explain how the ability to

perform the activities contradict the specific testimony”).

The Court is left to guess as to what limitations or testimony conflict with Plaintiff’s

identified activities. Ninth Circuit decisions, however, “make clear” that courts “may not take a

general finding [of] an unspecified conflict” and then “comb the administrative record to find

specific conflicts.” See Brown-Hunter, 806 F.3d at 494.

Additionally, Plaintiff testified that stress exacerbates his symptoms, and he goes out of

his way to avoid stressful situations, including staying home as much as possible. AR 52.

Plaintiff also testified that, at most, he spends an hour a week on household errands and chores.

AR 47-48. The rest of his time is spent at home, online “researching or watching [videos].”

AR 46. Further, Plaintiff’s records indicate he avoids people and believes that people are “out to

get him.” AR 850. That Plaintiff can complete basic household chores, play video games, and

use the computer does not mean Plaintiff could successfully transition those activities into full-

time employment. Thus, without more, the ALJ’s reliance on these activities to discount

Plaintiff’s symptom testimony is not a clear and convincing reason to reject Plaintiff’s symptom

testimony. See Garrison, 759 F.3d at 1016 (daily activities that are consistent with statements

about impairments do not satisfy the clear and convincing reasons to discredit a Plaintiff’s

symptom testimony); see also id. at 1017 (stating that a court must also consider “that improved

functioning while being treated and while limiting environmental stressors does not always mean

that a claimant can function effectively in the workplace”).

The ALJ further discounted Plaintiff’s testimony for having discontinued Vocational

Rehabilitation (VR) services because “he was no longer interested in working, as his mother’s

income was enough to sustain him, and he wanted to focus on his mental health.” AR 24 (citing

AR 4037). The ALJ does not explain how Plaintiff’s failure to engage with VR services is

inconsistent with his testimony. Indeed, Plaintiff’s statement that he does not believe he is ready

to work at this time and would like to only focus on his mental health is entirely consistent with

the record. AR 403. According to the record, Plaintiff never meaningfully engaged with VR

services as there are only three files in Plaintiff’s VR record: (1) the application dated June 15,

7 The ALJ cited exhibits B13F/14 and B16F/14. Exhibit B16F/14 (AR 1264) appears to

be a scrivener’s error for B16E/14 (AR 403). Exhibit B13F/14 (AR 1191), however, does not

support the ALJ’s contention or even address this subject. It appears to be an erroneous citation.

In the previous citation the ALJ miscited B13F exhibits when meaning to cite B12F exhibits

relating to Plaintiff’s mental status examinations. But B12F/14 also does not relate to Plaintiff’s

experience at Vocational Rehabilitation services. The Court could not reasonably discern the

ALJ’s intended second support for this contention. Thus, the Court considers only AR 403.

2017 (AR 390-96); (2) the eligibility determination, dated August 11, 2017 (AR 397-401); and

(3) the file closure, showing Plaintiff chose to discontinue services on January 24, 2019

(AR 402-04). The lack of engagement with VR services in consistent with Plaintiff’s testimony

that he rarely leaves his house and limits his exposure to potential stressors. Without further

explanation, the Court cannot conclude that Plaintiff’s decision to withdraw from VR services is

a clear and convincing reason to discount his testimony.

b. Effective Treatment

A claimant’s improvement with treatment is “an important indicator of the intensity and

persistence of . . . symptoms.” 20 C.F.R. §§ 404.1529(c)(3), 416.929(c)(3). “[E]vidence of

medical treatment successfully relieving symptoms can undermine a claim of disability.”

Wellington v. Berryhill, 878 F.3d 867, 876 (9th Cir. 2017); see also Warre v. Comm’r of Soc.

Sec. Admin., 439 F.3d 1001, 1006 (9th Cir. 2006) (“Impairments that can be controlled

effectively with medication are not disabling for the purpose of determining eligibility for SSI

benefits.”). “Reports of ‘improvement’ in the context of mental health issues must be interpreted

with an understanding of the patient’s overall well-being and the nature of her symptoms.

Garrison, 759 F.3d at 1017. “The fact that a person suffering from depression makes some

improvement does not mean that the person’s impairment no longer seriously affects his ability

to function in a workplace.” Ghanim v. Colvin, 763 F.3d 1154, 1162 (9th Cir. 2014) (cleaned

up).

As the Ninth Circuit explained in Garrison,

It is error to reject a claimant’s testimony merely because

symptoms wax and wane in the course of treatment. Cycles of

improvement and debilitating symptoms are a common occurrence,

and in such circumstances it is error for an ALJ to pick out a few

isolated instances of improvement over a period of months or years

and to treat them as a basis for concluding a claimant is capable of

working.

Garrison, 759 F.3d at 1017.

The ALJ stated that treatment of Plaintiff’s allegedly disabling symptoms had been

“generally successful in controlling those symptoms.” AR 25. The ALJ pointed out that medical

records show that Plaintiff “reported a good response to medications.” AR 24. For example,

during a January 9, 2018 psychological assessment, Plaintiff reported an increase in auditory

hallucinations “only at night,” and attributed the change to an increase in stress, due to having to

care for his mother after she broke her leg. AR 434. Plaintiff, however, told his provider that his

“mood is good” and his medications were “beneficial.” Id. Plaintiff requested his medication

regimen remain unchanged at that time. Id. In October 2019, Plaintiff again reported that his

current medications were helping his schizophrenia, although he reported experiencing

significant depression, and he requested no changes to his medication at that time. AR 701-02. In

November 2020, Plaintiff reported that his auditory hallucinations were “no longer a problem”

but suggested that depression was his biggest stressor. AR 1259.

The ALJ, however, failed to consider the degree to which Plaintiff’s limited exposure to

environmental stressors precipitated his symptom improvements, and whether those

improvements would thus translate into Plaintiff’s ability function in the workplace.

Ghanim, 763 F.3d at 1162; see also Garrison, 759 F.3d at 1017 (stating that reports of

improvement must be interpreted with an awareness that improved functioning while being

treated and while limiting environmental stressors does not always mean that a claimant can

function effectively in a workplace). Notably, Plaintiff reported that he stays home “as much as

possible” to avoid stressful situations, and only goes out one to two times a week. AR 52, 368.

The ALJ did not consider how Plaintiff’s limited environment contributed to his symptom

improvements, nor did the ALJ consider how a transition to the workplace might affect those

improvements. The ALJ must, therefore, consider how Plaintiff’s improved symptoms would

translate into full-time work, given the limited environment he has functioned within during

treatment.

c. Objective Medical Evidence

An ALJ may consider the lack of corroborating objective medical evidence as a “relevant

factor in determining the severity of the claimant’s” alleged symptoms. Rollins v.

Massanari, 261 F.3d 853, 857 (9th Cir. 2001). The ALJ may not, however, “discredit the

claimant’s testimony as to subjective symptoms merely because they are unsupported by

objective evidence.” Berry v. Astrue, 622 F.3d 1228, 1234 (9th Cir. 2010) (quoting Lester v.

Chater, 81 F.3d 821, 834 (9th Cir. 1995)); see also Robbins, 466 F.3d at 883; 20 C.F.R.

§§ 404.1529(c)(2), 416.929(c)(2) (noting that the Commissioner “will not reject your statements

about the intensity and persistence of your pain or other symptoms or about the effect your

symptoms have on your ability to work solely because the available objective medical evidence

does not substantiate your statements”).

The ALJ rejected Plaintiff’s symptom testimony because “the medical evidence of record

does not support” that he is unable to work due to his mental health. AR 24. The ALJ stated that

Plaintiff generally presented as “alert and cooperative, with normal mood and affect, proper

orientation, normal speech, and fair insight and judgment suggesting that treatment was at least

somewhat effective in stabilizing mood.” Id. In support of this conclusion, the ALJ cited

AR 449-50, 1021, 1026, 1143,8 1148, 1158, 1163, 1168, 1173.9

The cited records show mixed results. A September 2017 appointment for schizophrenia

medication management lists Plaintiff as alert and oriented to person, place, and time, with

normal mood and affect, and normal behavior, but that he exhibited nervous/anxious behavior.

AR 1020-21. A July 2018 appointment for “lab work requested by psych” records Plaintiff as

alert and oriented to person, place, and time, with normal mood and affect, and normal behavior.

AR 1026. A mental status exam from April 2019 indicates that Plaintiff had normal speech, fair

general knowledge, insight, and judgment, and orientation within normal limits, but also

describes that Plaintiff exhibited anxious mood, blunted affect, poor self-image, auditory

hallucinations, and remote memory impairment. AR 449-50. Of the six cited mental status exams

from Clatsop Behavioral Healthcare, Plaintiff’s mood is reported as down, better, good (twice),

and anxious (twice). AR 1143, 1148, 1158, 1163, 1168, 1173. In every report his fund of

knowledge is below average, his is listed as having poor self-image, his judgment and insight is

only fair, and he is reported as having some auditory hallucinations. Id. His affect was congruent

and blunted sometimes and congruent, open, and cooperative other times. Id. He was

consistently listed with logical coherence, clear and normal speech, good memory, linear and

8 The ALJ cited exhibits B13F/31, 36, 46, 51, 56, 61. As previously noted, however, the

ALJ erroneously cited B13F exhibits instead of B12F exhibits for this particular contention.

Because the Court can reasonably discern the ALJ’s path in identifying the supporting

documents, the Court considers the cited B13F exhibits as cited to B12F. “Even when an agency

explains its decision with less than ideal clarity, [the reviewing court] must uphold it if the

agency’s path may reasonably be discerned.” Cf. Molina v. Astrue, 674 F.3d 1104, 1121 (9th

Cir. 2012) (quotation marks omitted).

9 The ALJ also cited exhibits B2F 29-30 (AR 756-57), but these are duplicates of

B1F/38-39 (AR 449-50). Accordingly, the Court disregards the citations to exhibit B2F.

goal directed thought processes, and good attention and concentration. Id. These were the best

records, cited by the ALJ, to support the ALJ’s contention that Plaintiff had normal mental status

exams and that the objective medical evidence did not support Plaintiff’s claimed limitations.

During Plaintiff’s visits to Clatsop Behavioral Healthcare, however, Plaintiff also

reported problems. For example, in his October 1, 2019 visit, he first reported depression, at a

level of seven out of 10, causing him to lose interest in even movies and video games. AR 1141.

He was reluctant to try an antidepressant medication because of side effects he had seen with

other people. AR 1142. At his next follow up he reported continued depression at a level seven

and agreed to try Prozac. AR 1146, 1148. At his next visit, on December 18, 2019, he reported

stopping Prozac due to side effects, and that he would not try another antidepressant because of

side effects. AR 1151. He reported depression with effects of “low mood, [decreased] appetite,

low energy, loss of interest in movies and video games, feeling distracted, mind wanders,

psychomotor retardation).” Id. In his June 18, 2020 visit, he reported ongoing depression, and

that his auditory hallucinations included the gunshot from his past trauma, plus eye twitching,

rocking back and forth, moving his feet a lot and “shuffling,” and uncontrollably moving his

tongue around his mouth. AR 1162. At his October 14, 2020 appointment, he reported

depression, continued auditory hallucinations, anhedonia, insomnia, and indecisiveness.

AR 1166-67.

That Plaintiff had some normal objective characteristics at some medical appointments

does not negate his testimony of experiencing increased anxiety, paranoia, and hallucinations

during periods of elevated stress. Moreover, normal objective findings alone are insufficient on

their own to discredit Plaintiff’s testimony.

B. Lay Witness Testimony

1. Standards

“In determining whether a claimant is disabled, an ALJ must consider lay witness

testimony concerning a claimant’s ability to work.” Stout v. Comm’r, 454 F.3d 1050, 1053

(9th Cir. 2006). Lay witness testimony regarding a claimant’s symptoms or how an impairment

affects her ability to work is competent evidence. Id. Thus, an ALJ may not reject such testimony

without comment and “must give reasons that are germane to each witness.” Id. (quoting

Dodrill, 12 F.3d at 919). In rejecting lay testimony, however, the ALJ need not “discuss every

witness’s testimony on an individualized, witness-by-witness basis. Rather, if the ALJ gives

germane reasons for rejecting testimony by one witness, the ALJ need only point to those

reasons when rejecting similar testimony by a different witness.” Molina, 674 F.3d at 1114.

An ALJ errs by failing to “explain her reasons for disregarding . . . lay witness testimony,

either individually or in the aggregate.” Molina, 674 F.3d at 1115 (quoting Nguyen v.

Chater, 100 F.3d 1462, 1467 (9th Cir. 1996)). Such an error may be harmless, and a court must

determine whether the error is “‘inconsequential to the ultimate nondisability determination’ in

the context of the record as a whole.” Id. at 1122 (quoting Carmickle v. Comm’r, Soc. Sec.

Admin., 533 F.3d 1155, 1162-63 (9th Cir. 2008)). The error is harmless, for example, “[w]here

lay witness testimony does not describe any limitations not already described by the claimant,

and the ALJ’s well-supported reasons for rejecting the claimant’s testimony apply equally well

to the lay witness testimony.” Id. at 1117.

The Commissioner argues that under new regulations governing the evaluation of

medical evidence, an ALJ need not provide any reason for rejecting lay witness statements.

Subsection (d) of the new regulations provides: “We are not required to articulate how we

considered evidence from nonmedical sources using the requirements in paragraphs (a)-(c) in

this section.” 20 C.F.R. § 404.1520c(d). Subsections (a) through (c) lay out the new standards for

evaluating medical opinion evidence. Id. § 404.1520c(a)-(c). Thus, under the new regulations,

the ALJ is not required to use the standards for evaluating medical opinion evidence when

evaluating lay witness testimony.

The Ninth Circuit has not yet decided whether the new regulations affect the requirement

in the Ninth Circuit that an ALJ must give germane reasons for rejecting lay witness testimony.

Some courts have concluded that the new regulations may dispense with an ALJ’s obligation

specifically to address lay witness testimony, including any obligation to articulate germane

reasons for disregarding lay testimony. See, e.g., Evans v. Comm’r of Soc. Sec., 2023

WL 3570083, at *9 (E.D. Cal. May 19, 2023) (“Under the new regulations regarding nonmedical

statements, the Commissioner is no longer required to articulate ‘germane’ reasons for

discounting a lay witness’s testimony.”). The majority of district courts in this circuit, however,

conclude that the new regulations have not eliminated an ALJ’s obligation to consider and

address lay witness testimony. See, e.g., Christopher M. v. Comm’r, Soc. Sec. Admin., 2023

WL 8827678, at *10 (D. Or. Dec. 21, 2023); Jerald H. v. Comm’r of Soc. Sec., 2023

WL 6533477, at *4 (W.D. Wash. Oct. 6, 2023); Gardner v. Comm’r of Soc. Sec. Admin., 2023

WL 6173220, at *6 (D. Ariz. Sept. 21, 2023); Joseph L. S. v. Kijakazi, 2023 WL 5611408, at *5

(C.D. Cal. Aug. 30, 2023); Sharon W. v. Kijakazi, 2023 WL 246391, at *8 (D. Idaho Jan. 18,

2023).

On the Court’s reading, the new regulations do not eliminate an ALJ’s obligation to

consider and address lay witness testimony. The revised regulations describe how to evaluate

medical opinion testimony. The fact that the regulations state that nonmedical opinion testimony

is not held to the same standard as medical opinion testimony says nothing about the standard to

which nonmedical opinion testimony is held. Thus, the new regulations are not “clearly

irreconcilable” with existing caselaw and are insufficient to overrule binding Ninth Circuit

precedent that an ALJ must comment on lay witness testimony and provide germane reasons to

discount it. See Woods v. Kijakazi, 32 F.4th 785, 790 (9th Cir. 2022) (“[Ninth Circuit] precedent

controls unless its reasoning or theory is clearly irreconcilable with the reasoning or theory of

intervening higher authority, which in this case is the agency’s updated regulations.” (cleaned

up)). Further, “[t]he requirement that an ALJ consider lay witness testimony comes from other

regulations, regulations that remain intact after the 2017 amendment.” Joseph L.S., 2023

WL 5611408, at *5. (citing 20 C.F.R. §§ 416.913(a), 416.929(a)).10 The Ninth Circuit’s

requirement from the line of cases described above that an ALJ must provide germane reasons to

discount lay witness testimony finds support in this regulatory requirement, which still remains.

See, e.g., Dodrill, 12 F.3d at 919 (“Disregard of [lay witness testimony] violates the Secretary’s

regulation that he will consider observations by non-medical sources as to how an impairment

affects a claimant’s ability to work. 20 C.F.R. § 404.1513(e)(2).” (quoting Sprague v.

Bowen, 812 F.2d 1226, 1232 (9th Cir. 1987)).11 Thus, the contention “[t]hat an ALJ can

disregard or reject relevant lay evidence for no reason is inconsistent with the Commissioner’s

obligation to consider such evidence[] and the rule [that] the ALJ must provide some rationale in

order for the Court to meaningfully determine whether the ALJ’s conclusions are free of legal

10 The court in Joseph L.S. cited the regulatory provisions applicable to Title XVI

claims—the same regulatory provisions applicable to Title II claims are in 20 C.F.R.

§§ 404.1513, 404.1529.

11 The requirement that the Commissioner consider nonmedical evidence in adjudicating

Title II claims is now in 20 C.F.R. § 404.1513(a)(4).

error and supported by substantial evidence.” Gary J.D. v. Comm’r of Soc. Sec., 2023

WL 5346621, at *14 (W.D. Wash. Aug. 21, 2023).

2. Analysis

The ALJ discounted a lay witness statement from Plaintiff’s mother because she “does

not have the medical training necessary to make exacting observations as to dates, frequencies,

types, and degrees of medical signs and symptoms or the frequency and intensity of unusual

moods or mannerisms.” AR 25. According to the ALJ, “by virtue of her relationship with

[Plaintiff],” Plaintiff’s mother cannot be considered “a disinterested third party witness whose

statements would not tend to be colored by affection for the [Plaintiff] and a natural tendency to

agree with the symptoms and limitations the Plaintiff alleges.” Id.

These reasons are neither germane, nor legally sufficient to reject a lay witness’s

testimony, nor does the Commissioner defend these reasons.12 The Commissioner instead

provides two arguments. First, that under the new regulations the ALJ need not provide any

reason to discount Plaintiff’s mother’s statement. As discussed above, the Court rejects this

contention. Second, that the ALJ found Plaintiff’s mother’s testimony similar to Plaintiff’s own

validly rejected testimony. The ALJ, however, did not make such a finding. The Court construes

this argument as that if the ALJ erred, such error is harmless because Plaintiff’s mother’s

statement does not provide any materially different limitations than does Plaintiff’s testimony,

and it thus may be discounted for the same reasons as the ALJ validly discounted Plaintiff’s

12 The Commissioner has waived any contention that those reasons by the ALJ are legally

sufficient by not defending those reasons. See, e.g., Jeffrey C. v. Kijakazi, 2023 WL 4760603, at

*3 (D. Or. July 26, 2023) (“The Government’s failure to defend Plaintiff’s allegations of error,

however, is a concession of those alleged errors.”); cf. Megan S. v. Berryhill, 2019 WL 1919169,

at *5 (D. Or. Apr. 30, 2019) (finding that the Commissioner “has waived any argument that the

ALJ provided a clear and convincing reason other than Plaintiff’s purported improvement” by

failing to respond to Plaintiff’s arguments other than generally to assert “harmless error”).

testimony. See Molina, 674 F.3d at 1117. This argument, however, fails because the Court has

rejected the reasons provided by the ALJ for discounting Plaintiff’s testimony.

C. Step Five Error

Plaintiff argues that the ALJ’s step five finding is erroneous because the dispositive

hypothetical question posed to the VE did not account for all of Plaintiff’s limitations. This

argument is well taken. Because the ALJ failed properly to evaluate Plaintiff’s symptom

testimony and the lay witness testimony, the RFC and hypothetical posed to the VE may not

have incorporated all of Plaintiff’s limitations. A hypothetical posed to the VE must be complete

and “include all of the claimant’s functional limitations, both physical and mental.” Flores v.

Shalala, 49 F.3d 562, 570 (9th Cir. 1995); see also Matthews v. Shalala, 10 F.3d 678, 681 (9th

Cir. 1993) (“If a vocational expert’s hypothetical does not reflect all the claimant’s limitations,

then the testimony has no evidentiary value to support a finding that the claimant can perform

jobs in the national economy.” (quotation marks omitted). Thus, the ALJ erred in relying on the

VE testimony that there were significant jobs in the economy that Plaintiff could perform.

D. Remand for Further Proceedings

Within the Court’s discretion under 42 U.S.C. § 405(g) is the “decision whether to

remand for further proceedings or for an award of benefits.” Holohan, 246 F.3d at 1210 (citation

omitted). Although a court should generally remand to the agency for additional investigation or

explanation, a court has discretion to remand for immediate payment of benefits. Treichler v.

Comm’r of Soc. Sec. Admin., 775 F.3d 1090, 1099-100 (9th Cir. 2014). The issue turns on the

utility of further proceedings. A court may not award benefits punitively and must conduct a

“credit-as-true” analysis on evidence that has been improperly rejected by the ALJ to determine

if a claimant is disabled under the Social Security Act. Strauss v. Comm’r of the Soc. Sec.

Admin., 635 F.3d 1135, 1138 (9th Cir. 2011).

In the Ninth Circuit, the “credit-as-true” doctrine is “settled” and binding on this

Court. Garrison, 759 F.3d at 999. The court first determines whether the ALJ made a legal error

and then reviews the record as a whole to determine whether the record is fully developed, the

record is free from conflicts and ambiguities, and there is any useful purpose in further

proceedings. Dominguez v. Colvin, 808 F.3d 403, 407 (9th Cir. 2015). Only if the record has

been fully developed and there are no outstanding issues left to be resolved does the district court

consider whether the ALJ would be required to find the claimant disabled on remand if the

improperly discredited evidence were credited as true. Id. If so, the district court can exercise its

discretion to remand for an award of benefits. Id. The district court retains flexibility, however,

and is not required to credit statements as true merely because the ALJ made a legal error. Id.

at 408.

The ALJ committed harmful error by failing to provide specific, clear, and convincing

reasons to reject Plaintiff’s symptom testimony and a germane reason to reject the lay witness

testimony. After reviewing the record, however, conflicts and ambiguities remain between the

improperly rejected testimony and the evidence regarding the severity and limiting effects of

Plaintiff’s mental health impairments. The Court therefore remands for further proceedings.

CONCLUSION

The Court REVERSES the Commissioner’s decision that Plaintiff was not disabled and

REMANDS for further proceedings consistent with this Opinion and Order.

IT IS SO ORDERED.

DATED this 16th day of April, 2024.

/s/ Michael H. Simon

Michael H. Simon

United States District Judge