Mills v. Social Security

United States Court of Appeals

For the First Circuit

No. 00-1446

WANDA MILLS,

Plaintiff, Appellant,

v.

KENNETH S. APFEL,

COMMISSIONER OF SOCIAL SECURITY,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MAINE

[Hon. D. Brock Hornby, U.S. District Judge]

Before

Boudin, Stahl and Lynch,

Circuit Judges.

Francis M. Jackson with whom Jackson & MacNichol was on

brief for appellant.

Richard Fox, Assistant Regional Counsel, Office of the Chief

Counsel, Region I, Social Security Administration, with whom Jay

P. McCloskey, United States Attorney, James M. Moore, Assistant

United States Attorney, and Robert J. Triba, Chief Counsel,

Region I, were on brief for appellee.

March 22, 2001

BOUDIN, Circuit Judge. This is an appeal from a denial

of social security benefits for disability and presents an issue

on which the circuits are divided, namely, the treatment of

proffers of new evidence on administrative review after the

initial administrative decision. The claimant is Wanda Mills.

Her present application for benefits was filed on December 23,

1996, and ultimately a hearing before an administrative law

judge ("ALJ") was held on November 17, 1997, at which Mills was

represented by counsel.

At the hearing, the controlling question was whether

Mills was subject to a "disability," which had lasted or could

be expected to last at least 12 months and which created an

"inability to engage in any substantial gainful activity by

reason of any medically determinable physical or mental

impairment." 42 U.S.C. § 423(d)(1)(A) (1994). Complex

regulations, administered by the Commissioner of Social Security

(the "Commissioner"), prescribe substantive standards and a

five-step protocol for making a disability decision. Goodermote

v. Sec'y of Health & Human Servs., 690 F.2d 5, 6-7 (1st Cir.

1982); 20 C.F.R. §§ 404.1520, 416.920 (physical impairments);

404.1520(a), 416.920(a) (mental impairments) (2000).1

1Part 404 of Title 20 regulates Disability Insurance, which

is available to those who have paid social security taxes for

the required period; Part 416 regulates Supplemental Security

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On April 7, 1998, the ALJ issued his decision rejecting

Mills' claim. He found that Mills, born in 1955, had a high

school equivalency diploma (her formal education ended in 9th

grade). Her work history included brief stints as an assembly

line worker making small medicine bottles, and as a laundry

worker and chambermaid in a motel, but she had not worked since

late 1993. She had previous bouts of alcoholism and of

treatment for it, but had not used alcohol since November 1996.

The ALJ then discussed the physical and mental health evidence

on which Mills principally relied to show her disability.

On the physical side, she claimed right knee pain based

on a 1979 injury to the patella and said that the knee sometimes

gave out. But the medical examination showed no tenderness and

good stability, save for some unsteadiness in arising. The

examining doctor found that there was no objective evidence of

injury but that Mills "may have <mild' arthritis of her right

knee." The ALJ did not consider this a severe impairment

whether considered alone or in conjunction with other symptoms.

He also rejected Mills' claims of lower back pain as unsupported

by any objective medical evidence.

Income, which applies if a claimant has not paid the requisite

taxes. The regulations here pertinent mirror one another so we

refer only to Part 416. See Reagan v. Sec'y of Health & Human

Servs., 877 F.2d 123, 124 (1st Cir. 1989) (per curiam).

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As to mental health, Mills said that she was subject

to panic disorder but a consulting psychologist said that her

symptoms did not amount to panic disorder and the ALJ said that

this claim was not established by objective evidence. The ALJ

agreed that the evidence did show that Mills suffered from "a

dysthymic disorder," a form of depression that is less than

major; but the ALJ said that Mills was able to care for her

personal needs and to manage her funds and do ordinary household

tasks. He concluded that nothing prevented her from returning

to a prior unskilled job as an assembly line worker or as a

laundry worker in a motel.

Mills requested review by the Appeals Council, 20

C.F.R. § 416.1467, and submitted two new pieces of evidence.

One was an October 8, 1998, "progress note" by Dr. Garnett; this

physician confirmed the diagnosis of dysthymia, said that Mills

was subject to panic disorder with agoraphobia, and prescribed

an antidepressant. The other evidence was the report of a

social worker, Ms. Joy, who saw Mills on November 30, 1998;

Joy's assessment was that Mills was oriented and attentive but

had poor memory and uncertain judgment. Joy recommended a

psychiatric evaluation.

On January 21, 1999, the Appeals Council denied review,

stating that the ALJ's decision stands "as the final decision"

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of the Commissioner of Social Security. 20 C.F.R. § 416.1481.

The denial was signed by an administrative appeals judge who, on

March 24, 1999, wrote Mills' lawyer a separate letter discussing

the Garnett and Joy reports. The letter said that the findings

in the reports were "consistent" with those in the record before

the ALJ and "thus" did not provide a basis for disturbing the

ALJ's decision. The letter said that the additional evidence

would "be made part of the transcript in this case."

Mills filed a statutory review action in the district

court, 42 U.S.C. § 405(g), where the matter was referred to a

magistrate judge. In a recommended order on November 24, 1999,

the magistrate judge urged that the Commissioner's decision be

vacated and remanded for further proceedings. This

recommendation rested primarily on the magistrate judge's view

that the Garnett evidence created a conflict with the ALJ's view

that Mills did not have a serious panic disorder and that a

remand was needed to determine whether the panic disorder was

present and, if so, whether its symptoms impaired Mills'

capacity for work.

Alternatively, the magistrate judge said that the ALJ

had erred in rejecting, without medical evidence, the earlier

assessment of an examining physician consultant (Dr. Doane),

that Mills "may" have knee problems sufficient to prevent

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standing for more than several hours at a time or walking more

than a block without stopping; while the magistrate judge agreed

that the condition was not shown to be severe, he deemed it

relevant. Finally, the magistrate judge found that Mills had

waived a claim that her prior work history was too sporadic to

be used as a baseline in determining whether work was available

to her.

On review of the Commissioner's objections, the

district court rejected the magistrate judge's recommendation of

a remand. Mills v. Apfel, 84 F. Supp. 2d 146, 148-49 (D. Me.

2000). In its decision, the district court said that the new

evidence submitted to the Appeals Council could not be

considered because that body's refusal to grant review left the

ALJ's decision as the only one before the court and it had to be

judged on the evidence before the ALJ. Id. at 148. As for the

knee problem, the district court said that the Doane assessment

was qualified ("may") and conflicted with the report of two non-

examining doctors and, in any event, the ALJ could draw a

common-sense inference that the condition was mild. Id. at 149.

The court agreed with the magistrate judge that the claim of

sporadic work history had been waived. Id. at 150.

On this appeal, Mills' counsel ably builds arguments

around each of the three issues touched on by the district

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court. We begin with the most difficult, which concerns the

evidence tendered to the Appeals Board after the ALJ decision.

Because the Appeals Board "denied review" (at least nominally),

the Commissioner says that we may review only the ALJ decision,

judging it solely on the evidence presented to the ALJ. Four

circuits have taken this position, at least in part; by

contrast, five circuits say that judicial review tests all

evidence submitted to the ALJ and to the Appeals Council, even

if the latter declines to review the ALJ decision.2

For us, neither legal position, if treated as absolute,

is entirely satisfactory. To weigh the new evidence as if it

were before the ALJ would be, as one court fairly observed, a

very "peculiar" enterprise, Riley, 18 F.3d at 622, and (to us)

one that distorts analysis. The ALJ can hardly be expected to

evaluate or account for the evidence that he never saw. At

best, the reviewing court ends up asking and answering some

2 Compare Matthews v. Apfel, 239 F.3d 589, 593-94 (3d Cir.

2001) (only considering evidence presented to the ALJ), Falge v.

Apfel, 150 F.3d 1320, 1323 (11th Cir. 1998), cert. denied, 525

U.S. 1124 (1999), Cotton v. Sullivan, 2 F.3d 692, 696 (6th Cir.

1993), and Eads v. Sec'y of the Dep’t of Health & Human Servs.,

983 F.2d 815, 817 (7th Cir. 1993), with Perez v. Chater, 77 F.3d

41, 45 (2d Cir. 1996) (considering new evidence submitted to the

Appeals Council after the ALJ’s decision), O’Dell v. Shalala, 44

F.3d 855, 859 (10th Cir. 1994), Riley v. Shalala, 18 F.3d 619,

622 (8th Cir. 1994), Ramirez v. Shalala, 8 F.3d 1449, 1454 (9th

Cir. 1993), and Wilkins v. Sec'y Dep’t of Health & Human Servs.,

953 F.2d 93, 96 (4th Cir. 1991) (en banc).

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other question without properly articulating it--which is a

recipe for confusion (e.g., how likely is it that this evidence

would alter the result if it had been before the ALJ).

The Commissioner has muddled the matter by directing

that material new evidence may be provided to the Appeals

Council and that such evidence becomes part of the record. 20

C.F.R. § 416.1470(b). Several circuits have relied on this

regulation (or its counterpart in Part 404) to justify court

review of the ALJ's decision based on the new evidence. E.g.,

O’Dell, 44 F.3d at 859. But this conflates the question whether

the documents are part of "the record" with the question

whether--if Appeals Council review is declined--they are part of

the evidence against which the ALJ's decision should be tested

in court. See Eads, 983 F.2d at 817. We doubt that the

regulation was intended to resolve the latter issue.

Nor do we think that Mills' "review all the evidence"

position is helped by Sims v. Apfel, 120 S. Ct. 2080 (2000).

The Court there rejected a waiver claim and allowed a social

security applicant to raise in court an issue not raised at the

Appeals Council stage. Id. at 2086. But that is entirely

different from failing to offer evidence in the first instance

to the ALJ, which is far more disruptive of the review function.

In any event, Justice O'Connor's "swing vote" in Sims rested on

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the distinct and narrow ground that the regulations there in

question might have misled applicants as to the duty to raise

issues in the Appeals Council. Id. at 2086-87 (O'Connor, J.,

concurring in part and concurring in the judgment). Thus, we

agree with the Commissioner's view that we may review the ALJ

decision solely on the evidence presented to the ALJ.

Yet we reject the other half of the Commissioner's

position, namely, that we may not review the Appeals Council

even where it has given a mistaken reason for refusing further

review. The statute permits review of "the final decision of

the Commissioner" without specifying components, 42 U.S.C. §

405(g); the Commissioner relies heavily on his regulation saying

that, where review is denied, the ALJ's decision becomes that of

the Commissioner. 20 C.F.R. § 416.1481. It is very doubtful

that this regulation was intended to do more than define the end

of the administrative process, and we decline to read it as

determining which administrative determinations made along the

way are subject to judicial review.

It is quite true that an Appeals Council decision

refusing review has all the hallmarks of a discretionary

decision: the Appeals Council need not and often does not give

reasons, and the regulations appear to provide the Appeals

Council with a great deal of latitude in deciding which cases

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should be reviewed. See 20 C.F.R. § 416.1470. But since

Service v. Dulles, 354 U.S. 363 (1957), it has been well

established that a discretionary decision may be reviewable to

the extent that it rests on an explicit mistake of law or other

egregious error. The denial of judicial review in such an

instance is very much the exception. See N.A.A.C.P. v. Sec'y of

Hous. & Urban Dev., 817 F.2d 149, 157-58 (1st Cir. 1987)

(Breyer, J.).

The impulse to preserve some role for the courts, where

the administrative decision rests on an articulated but severely

mistaken view, is borne out by the cases. Two of the leading

circuit decisions on the social security scheme--opposed to each

other on the question whether the ALJ should be reviewed based

on new evidence--assume that an Appeals Council denial of review

is itself reviewable to some degree and in some limited

circumstances.3 We join these circuits in holding that an

Appeals Council refusal to review the ALJ may be reviewable

where it gives an egregiously mistaken ground for this action.

3

Compare Riley, 18 F.3d at 622 (recognizing the

appropriateness of remand if the Appeals Council refuses to

consider new evidence in the mistaken belief that it is not

"new" and "material") (M. Arnold, J.), with Eads, 983 F.2d at

817 (allowing judicial review of the Council's refusal to review

an ALJ's decision when the "refusal rests on a mistake of law")

(Posner, J.). But see Matthews, 239 F.3d at 594 ("No statutory

authority . . . authorizes the court to review the Appeals

Council decision to deny review.").

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This position makes practical sense as well. For the

most part, the review problem with which we are concerned arises

in social security cases where new evidence is tendered after

the ALJ decision. In most other situations, a mistake by the

ALJ that is otherwise correctable by a court can be addressed on

judicial review regardless of any denial of review by the

Appeals Council. The ALJ has not "made a mistake" in ignoring

new evidence that was never presented to him. However, the

Appeals Council may have "made a mistake" in refusing to

consider new evidence presented to it, depending on the ground

it gave. The question is whether or not such a mistake can be

corrected where it can be readily discerned and no other means

of relief exists.

The courts already have the statutory authority to

remand for further proceedings where new evidence is presented

after the ALJ decision if the evidence is material and good

cause is shown for the failure to present it on a timely basis.

42 U.S.C. § 405(g). The problem is with the "and": under the

Commissioner's regulations, the Appeals Council is free to

consider new material evidence regardless of whether there was

good cause for not producing it earlier; the court is not free

to order a remand absent such good cause. This is Mills' very

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situation since she has never shown good cause for failing to

offer the Garnett evidence or its like to the ALJ.

In such a situation, if the Appeals Council mistakenly

rejected the new evidence on the ground that it was not

material, we think that a court ought to be able to correct that

mistake on the Service v. Dulles principle. This is so even

though we assume that the Appeals Council's refusal to review

would be effectively unreviewable if no reason were given for

the refusal. This is not a serious anomaly: there is reason

enough to correct an articulated mistake even though one cannot

plumb the thousands of simple "review denied" decisions that the

Appeals Council must issue every year.

The Appeals Council in this case did not say that the

new evidence was immaterial but rather that it was "consistent"

with the existing record and "thus" did not justify disturbing

the ALJ decision. We owe such assessments great deference, see

Dugan v. Ramsay, 727 F.2d 192, 195 (1st Cir. 1984), but they are

ordinarily not beyond review in extreme cases. A serious

mistake by the Appeals Council in denying review on such a

ground should itself be reviewable in court (again, only where

articulated). However, on the present facts, our conclusion is

that the Appeals Council slightly overstated the case in

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describing the new evidence as "consistent," but not in a way

that undermines its refusal to alter the ALJ's conclusion.

In the record compiled in the ALJ proceeding, two

different reports noted that Mills had alleged panic attacks;

but both made a diagnosis of less than major depression, and

neither of the reports deemed Mills subject to panic attacks

sufficiently severe to be listed as an anxiety disorder.

Garnett's report, by contrast, describes Mills as "still

complain[ing] of anxiety symptoms which indeed do have a strong

Agoraphobic quality to them in that she feels very uncomfortable

and <fearful' when she is around other people" as well as in

episodes at home. Garnett's own final assessment listed not

only dysthymia but also "panic disorder with Agoraphobia."

Still, panic disorders may range widely, from slight

to disabling, American Psychiatric Ass'n, Diagnostic &

Statistical Manual of Mental Disorders 397-98 (4th ed. 1994),

and Garnett made no assessment of severity. Indeed, one of the

reports before the ALJ (although not the one on which he relied)

had seemingly deemed the panic risk real but limited,

recommending only that Mills work in small group settings rather

than "with the public." So viewed, Garnett's assessment differs

from the earlier evidence only by degree, and it is hard to say

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without more from Garnett that the difference is very

substantial.

What is worse for Mills is that nothing in Garnett's

assessment suggests that the panic level meets the fairly stiff

and precise criteria to be a "listed" condition 4 or its

equivalent or that, although not in this category, it has the

practical effect of preventing Mills from engaging in her past

employment. And, by explicit regulation, it was Mills' burden

to produce evidence showing one or the other. 20 C.F.R. §

416.912; see also Santiago v. Sec'y of Health & Human Servs.,

944 F.2d 1, 5 (1st Cir. 1991) (per curiam).

Thus, in brushing aside the new evidence as not

"inconsistent," the Appeals Council may well have meant that

similar allegations and a more modest finding were before the

ALJ. At the very least, it surely meant that panic attacks

without more do not conflict with the finding of the ALJ that

Mills had not proved herself disabled. Indeed, absent some

indication of the severity of the panic attacks, Garnett's

4

A listed condition means an automatic disability finding.

See 20 C.F.R. § 416.920(d); see also 20 C.F.R. § 404, Subpt. P,

App. 1, § 12.00. For anxiety conditions, this requires that

various sets of symptoms be proved and that those symptoms have

adverse consequences on daily activities. For example, an

individual would have a listed condition if they had recurrent

(at least once a week) severe panic attacks manifested by a

sudden onset of fear and such symptoms led to a "frequent

failure to complete tasks in a timely manner." Id.

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report as it stands would not undercut the ALJ decision even if-

-contrary to our holding--we simply treated the report as part

of the evidence before the ALJ, as many other circuits would do.

The Appeals Council must review a case only if the

ALJ's decision is "contrary to the weight of the evidence

currently of record." 20 C.F.R. § 416.1470(b). Yes, the

Garnett report was material and thus the Appeals Council was

required to consider it initially in deciding whether to grant

review. Id.. But no one could run an administrative regime

that handles more than 100,000 cases a year, see Sims, 120 S.

Ct. 2088-89 (Breyer, J., dissenting), without judging whether

new material evidence warranted a new hearing. Here, the

Appeals Council's action is entirely reasonable, even if its

language was not perfectly apt.

Less needs to be said about Mills' other two claims of

error. The more concrete stems from Mills' claim that she

suffered severe pain in her right knee compromising her ability

to walk or stand for long periods. The ALJ saw little objective

evidence of such a condition; the examining doctor found no

evidence of tenderness and said that Mills had good stability in

all directions. If this were all, it would be the end of the

matter. The regulations place much weight on objective evidence

and the ALJ may disregard subjective claims of pain if they are

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unsubstantiated and he does not credit them. 20 C.F.R. §

416.929; accord Rodriguez-Pagan v. Sec'y of Health & Human

Servs., 819 F.2d 1, 3 (1st Cir. 1987) (per curiam), cert.

denied, 484 U.S. 1012 (1988).

However, as the magistrate judge noted, the examining

doctor ended by saying that Mills "may" have difficulty standing

"for more than several hours at a time" or "walking more than a

block without stopping." The magistrate judge said that this

medical opinion could not be disregarded by the ALJ, a mere

layman, without medical evidence on the other side, and he said

that such limitations were inconsistent with the ALJ decision

that Mills could return to prior work as an assembly line worker

or laundry worker at a motel.

Just what weight should be given to a "may" diagnosis

is itself a difficult question whose answer may depend very much

on context. Nor is it clear how far the limitations, if they

existed, would prevent assembly line work or laundry work; it

might well depend on the nature of the particular jobs and on

having more information about the limitations. It is

unnecessary to pursue these issues, however, because read as a

whole the impressively nuanced report of Dr. Doane makes it

quite clear that he did not think that the knee pain disabled

Mills.

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On the contrary, after reporting the claim of back and

knee pain, Doane concluded, "I find she likely has only mild

disability regarding low back syndrome and right knee pain."

Then, after mentioning the possible limitations on standing and

walking already discussed, he said that there was "no impairment

in lifting, carrying, bending, [or] handling objects" and that

Mills' "deconditioned" physical state would improve "with a

gradual re-introduction to the work place." It is evident that

Doane did not regard Mills as disabled from working and expected

her to return to work.

In an extreme case one might accept the doctor's

medical findings but reject his conclusion as to its

significance for capacity to work. But with knee pain,

frequency and degree are likely to be controlling in relation to

low skill jobs (Mills was not a race car driver); and we are

left with the doctor's judgment that Mills' condition was "mild"

and a return to work expected. Thus even if we treated the

doctor's medical opinion as binding on the ALJ, it is hard to

see it as inconsistent with the ALJ's conclusion, whether taken

alone or in relation to her mental state.

Mills' last claim may on its face appear to have the

most merit. It turns out that Mills' earlier employment was

extremely brief--a month on the assembly line, a week in the

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motel laundry, and a week as a chambermaid. This is of concern

because the regulations provide that prior employment is to be

disregarded by the Commissioner where it is merely sporadic,

which Mills says is the proper way to view her situation. 20

C.F.R. § 416.965(a). Thus, according to Mills, the ALJ should

not have considered whether Mills could return to her prior

jobs, but should have instead required the Commissioner to show

that there were other jobs reasonably available to Mills that

she could perform. See 20 C.F.R. § 416.920(f); Ortiz v. Sec'y

of Health & Human Servs., 890 F.2d 520, 524 (1st Cir. 1989) (per

curiam).

The magistrate judge and the district judge rejected

this claim not on the merits but because they deemed it waived,

no mention of it having been made to the ALJ or the Appeals

Council. On appeal to this court, Mills says that she was given

insufficient opportunity to debate the waiver issue in the

district court--which is wrong--and that the waiver conclusion

is wrong on the merits: first, because it is inconsistent with

Sims and second, because it was the ALJ's independent obligation

to get the matter right.

Until the Commissioner amends his regulations, as Sims

suggested he could, failing to raise an issue at the Appeals

Council level probably does not debar a claim that the ALJ

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erred. But we have no intention of extending this rule, if it

is one (only four members of the Court endorsed it), to the

failure of an applicant to raise an issue at the ALJ level. Cf.

Sims, 120 S. Ct. at 2089 (Breyer, J., dissenting). The impact

of a no-waiver approach at the Appeals Council level is

relatively mild; at the ALJ level it could cause havoc, severely

undermining the administrative process.

This case is a perfect illustration. If the ALJ had

heard the objection now made and agreed with it, he could easily

have considered and expressly found that there were other jobs

in the economy available to Mills. Here, the ALJ stopped at

step four of the five-step process when he found that Mills

could return to her old jobs; but if the prior jobs had been

removed from the picture he would have proceeded to step five to

consider whether there were other jobs in the economy available

to her.

As it happens, the result would be no different in this

case even if we disregarded the waiver and assumed that Mills'

past employment should be disregarded. In some situations, the

conclusion that an impairment blocks the applicant from

returning to a prior job raises a serious issue whether there is

any other job available in the economy for that person. This

may easily be so where the prior job involved special skills or

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capabilities and the impairment flatly precludes a return to

that job while creating doubts that anything else will be

available.

But in this case it made no difference whether Mills

had a prior job on an assembly line or as a motel laundress. So

long as she had the capability to perform these jobs, which is

what the ALJ found, such jobs (or substantially similar ones)

clearly exist in the economy. Thus, Mills would not have

benefitted had the ALJ ignored her past work experience in favor

of considering her ability to obtain alternative employment.

This is a distressing case. Mills obviously suffers

from some impairments, physical and mental; has had a hard life;

has few resources to meet the demands of the work-a-day world;

and may not be too far from the line, especially vague where

mental conditions are at the fore, that separates multiple

handicaps from full disability. While Mills appears to be

outside the time period for reopening based on new evidence,

there is nothing that prevents a new application directed to the

future, assuming she can muster the medical support to show the

severity of her conditions.

Affirmed.

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