Debbra Hill v. Michael Astrue

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

DEBBRA J. HILL,  No. 10-35879

Plaintiff-Appellant,

D.C. No.

v.

 1:09-cv-00136-RFC

MICHAEL J. ASTRUE, Commissioner

ORDER AND

of Social Security,

OPINION

Defendant-Appellee.



Appeal from the United States District Court

for the District of Montana

Richard F. Cebull, Chief District Judge, Presiding

Argued and Submitted

July 12, 2011—Portland, Oregon

Filed October 26, 2012

Before: Alfred T. Goodwin, Harry Pregerson, and

Milan D. Smith, Jr., Circuit Judges.

Opinion by Judge Pregerson

12935

12938 HILL v. ASTRUE

COUNSEL

John E. Seidlitz, Jr., Seidlitz Law Office, Great Falls, Mon-

tana for the plaintiff-appellant.

David I. Blower, Social Security Administration, Office of the

General Counsel, Denver, Colorado for the defendant-

appellee.

ORDER

The opinion filed August 7, 2012 is withdrawn. A super-

seding opinion is being filed concurrently with this order. In

the opinion, Part I of the Discussion, paragraph six, penulti-

mate sentence, starting with “Dr. Johnson’s statement” and

ending with “Hill faces” shall be amended in full to read as

follows:

Dr. Johnson’s statement that Hill would be “unlike-

ly” to work full time was not a conclusory statement

like those described in 20 C.F.R. § 404.1527(d)(1),

but instead an assessment, based on objective medi-

cal evidence, of Hill’s likelihood of being able to

sustain full time employment given the many medi-

cal and mental impairments Hill faces and her inabil-

ity to afford treatment for those conditions.

HILL v. ASTRUE 12939

Thus, the Defendant-Appellee’s Petition for Panel Rehear-

ing is denied as moot.

OPINION

PREGERSON, Circuit Judge:

On December 7, 2006, Debbra Jo Hill (“Hill”) filed for dis-

ability insurance benefits and supplemental security income

under Title II and Title XVI of the Social Security Act. Hill

alleged disability beginning April 4, 2004. Hill claims that she

is disabled due to unstable diabetes, eyesight problems, bi-

polar disorder, anxiety, depression, a back injury, a right

shoulder injury, a history of two small strokes, attention defi-

cit hyperactivity disorder, a seizure disorder, and unpredict-

able euphoria.

The Social Security Administration denied Hill’s applica-

tion, and denied it again after reconsideration. On September

24, 2008, Administrative Law Judge (“ALJ”) Lloyd E. Hart-

ford held a video hearing. Hill was represented by counsel

and testified at the hearing, along with Dr. Monty Kuka,

Ph.D., a non-examining medical expert, and James Fortune, a

vocational expert. The ALJ issued a written decision denying

Hill’s application on April 6, 2009. The Appeals Council

denied Hill’s request for review, thereby making the ALJ’s

decision the final decision subject to judicial review. Hill then

filed a complaint with the district court. The district court

adopted the findings and recommendation of a magistrate

judge, granted summary judgment in favor of the Commis-

sioner, and affirmed the ALJ’s decision. Hill appeals the dis-

trict court’s decision.

On appeal, Hill argues that the ALJ’s decision denying all

benefits was not supported by substantial evidence. Specifi-

cally, Hill argues that: (1) the ALJ ignored or failed to con-

12940 HILL v. ASTRUE

sider evidence favorable to Hill, including the medical

opinions of Hill’s counselors, therapists, and treating physi-

cians; and, (2) the hypothetical question the ALJ posed to the

vocational expert improperly excluded evidence of Hill’s lim-

itations. As discussed below, we agree with Hill that the ALJ

failed to consider evidence favorable to Hill and posed an

improper hypothetical to the vocational expert.1 Accordingly,

we reverse the district court’s grant of summary judgment in

favor of the Commissioner.

BACKGROUND

A. Hill’s Background

Debbra Jo Hill is currently 54 years old. Hill did not gradu-

ate from high school, but she earned her GED. She worked as

a certified nurse’s assistant (“CNA”) from 2000 until 2004

when she suffered a shoulder injury on the job. She had previ-

ously worked at a fast food restaurant, as a housekeeper, and

as a telemarketer and bill collector for short periods of time.

Hill was intermittently homeless and living out of her car or

with friends in 2005 and 2006. At the time of the hearing

before the ALJ, Hill lived by herself and worked part-time,

approximately 15 to 20 hours a week, as a cashier/stocker at

the Dollar Tree store in Great Falls, Montana, earning $7.21

an hour.

Hill was diagnosed with diabetes mellitus (type II) in 2002.

Her diabetes was poorly controlled, in part because Hill could

not afford to buy insulin and often relied on samples from

clinics. She was also living out of her car for a time, and her

doctors worried that she would not be able to properly moni-

tor her blood sugar levels.

1

Hill also argues that the ALJ erred in finding that Hill’s subjective tes-

timony about her limitations was not credible. Because we resolve this

case on alternative grounds, we do not address Hill’s argument that the

ALJ’s adverse credibility finding was improper.

HILL v. ASTRUE 12941

Hill injured her right shoulder and hand in 2004 and under-

went two surgeries. She was limited to lifting no more than

ten pounds, and has trouble reaching above her head. Hill was

referred to physical therapy, but attended only 7 out of 23

scheduled sessions. Later, Hill had “fair compliance” with her

attendance and “overall was improving.”

Hill was diagnosed with bipolar disorder around 1998. She

was last hospitalized for her bi-polar condition in July 2007,

under the care of Dr. Mark Mozer, a psychiatrist. She was

also diagnosed with borderline intellectual functioning by Dr.

Lynn Johnson, a psychologist, after tests revealed that Hill’s

full scale IQ was 76, in the 5th percentile.

In 2000, Dr. Mary Ann Evans diagnosed Hill with panic

disorder with agoraphobia, major depressive disorder, bipolar

disorder, polysubstance dependence in resolution, cognitive

disorder, chronic pain from her work injury, Hepatitis B and

C, and other ailments. In 2001, Dr. Evans witnessed Hill hav-

ing two limited symptom panic attacks. She was also diag-

nosed with diabetes, hypertension, hyperlipidemia, and

chronic anxiety and panic syndrome by Dr. Steven Chrza-

nowski at Benefis Healthcare in 2006. While working at the

Dollar Tree, Hill had panic attacks so severe that she had to

go to the back room and collapsed. These attacks were wit-

nessed by Hill’s case manager and job coach, Patty Mills.

Hill’s most recent panic attack occurred at work on March

7, 2008. Hill’s manager at the Dollar Tree called Hill’s job

coach, Patty Mills, to intervene because Hill had been acting

strangely. Ms. Mills later submitted a letter that states, in rele-

vant part,

As the Employment Specialist at the Center for Men-

tal Health, I would never have placed [Hill] at the

Dollar Tree. I have had to intervene with scheduling

problems. I have witnessed her in a manic phase in

which she was edgy at work, rocking back and forth

12942 HILL v. ASTRUE

while trying to stack, and people were staring at her.

I was called to come and get her since they thought

that she was on drugs. I have [ ] good communica-

tion[ ] with the manager so I was able to help them

learn about bipolar.

I think [Hill] needs assistance. She does not handle

stress well. I have had a lot of talks with [Hill] on

being positive. She has problems with co-workers. It

becomes a “he said, she said” relationship which

originally starts out good. She calls in sick [due to]

health problems so she is getting fewer hours.

After her panic attack, Hill “slept for about five days,” and

Ms. Mills advised her that her manager had requested a doc-

tor’s release before Hill could return to work. She obtained a

letter from her therapist, Tammi Coffey, which stated that

“there are no recognizable clinical reasons why Ms. Hill

would not be able to return back to work.” Hill returned to

work sometime after March 21, 2008, more than two weeks

after the panic attack.

B. The ALJ’s Decision

The ALJ performed the five-step sequential analysis

required under 20 C.F.R. § 404.1520(a)(4)(i)-(v). See also

Tackett v. Apfel, 180 F.3d 1094, 1098 (9th Cir. 1999).

First, the ALJ found that Hill “ha[d] not engaged in sub-

stantial gainful activity since April 4, 2004, the alleged onset

date.” While noting that Hill had worked after her alleged dis-

ability onset date, the ALJ found that “this work did not rise

to the level of substantial gainful activity.” Since April 15,

2007, and at the time of the hearing, Hill had been working

part-time approximately 15 to 25 hours a week as a cashier at

the Dollar Tree, earning about $600 per month. But the ALJ

found that this work “has never risen to the level of substan-

tial gainful activity” because her earnings were less than the

HILL v. ASTRUE 12943

amounts prescribed by the earnings guidelines set forth by the

Social Security Administration.

At step two, the ALJ found that Hill has the following

severe impairments: “diabetes mellitus; status post right rota-

tor cuff repair times 2; bipolar disorder; mixed personality

disorder, not otherwise specified; anxiety; and borderline

intellectual functioning[.]”

At step three, the ALJ found that Hill “does not have an

impairment or combination of impairments that meets or med-

ically equals” one of those on the Listing of Impairments.2

At step four, the ALJ determined that Hill’s residual func-

tional capacity was the ability to

perform light work as defined in 20 C.F.R.

404.1567(b) and 416.967(b)[3] except she can lift

and/or carry 20 pounds occasionally and 10 pounds

frequently. She can stand and/or walk (with normal

breaks) for a total of about 6 hours in an 8-hour

workday. She can sit (with normal breaks) for a total

of about 6 hours in an 8-hour workday. She can push

and/or pull on a frequent basis with her right upper

extremity. She can climb ramps/stairs, balance,

stoop, kneel, crouch, and crawl frequently. She can

climb ladders, ropes, or scaffolds occasionally. She

can reach overhead occasionally with her right arm.

She should avoid concentrated exposure to hazards

2

The Listing of Impairments is found at 20 C.F.R. Part 404, Subpart P,

Appendix 1, and described at 20 C.F.R. §§ 404.1525, 404.1526, 416.925,

416.926.

3

“Light work involves lifting no more than 20 pounds at a time with fre-

quent lifting or carrying of objects weighing up to 10 pounds. Even though

the weight lifted may be very little, a job is in this category when it

requires a good deal of walking or standing, or when it involves sitting

most of the time with some pushing and pulling of arm or leg controls.”

20 C.F.R. § 404.1567(b); 20 C.F.R. § 416.967(b) (same).

12944 HILL v. ASTRUE

such as moving machinery and unprotected heights.

She should perform work that requires only occa-

sional interaction with the public and co-workers and

that interaction should be on a brief, superficial

basis. She can ask simple questions or request assis-

tance, and accept instructions and respond appropri-

ately to criticism from supervisors. She can

understand, remember, and carry out very short and

simple work instructions. She can remember loca-

tions and work-like procedures. She can maintain

attention and concentration for extended periods to

perform simple work tasks. She can perform activi-

ties within a schedule, maintain regular attendance,

and be punctual within customary tolerances. She

can sustain an ordinary routine without special

supervision. She can make simple work-related deci-

sion[s]. She can complete a normal workday and

workweek without interruptions from psychologi-

cally based symptoms, and she can perform at a con-

sistent pace without an unreasonable number and

length of rest periods. She can respond appropriately

to changes in the work setting. She can travel in

unfamiliar places or use public transportation. She

can set realistic goals or make plans independently

of others.

The ALJ noted that he had reduced Hill’s residual functional

capacity to accommodate limitations due to Hill’s shoulder

pain and “difficulty maintaining concentration, persistence,

and pace to perform complex or detailed tasks[,]” and to

incorporate limitations from Hill’s mental impairments.

At step five, the ALJ found that Hill could perform jobs

that exist in significant numbers in the national economy in

light of her age, education, and residual functional capacity.

The ALJ noted that Hill was 46 years old at the time of her

alleged disability onset date, which would put her in the

“younger individual age 18-49” category, but that she had

HILL v. ASTRUE 12945

subsequently changed to the “closely approaching advanced

age” category. The ALJ also found that Hill has “at least a

high school education and is able to communicate in English.”

The ALJ asked vocational expert Fortune whether jobs exist

in the national economy for an individual with Hill’s age,

education, work experience, and residual functional capacity.

Fortune offered representative occupations in the light,

unskilled category, including office machine operator (520

regional jobs and 290,000 national jobs), mail clerk (1000

regional jobs and 141,170 national jobs), and photograph pro-

cessor (800 regional and 63,500 national jobs), and masker

(475 regional jobs and 178,000 national jobs). Based on this

testimony, the ALJ found that Hill was not disabled.

STANDARDS OF REVIEW

We review a district court’s order affirming the Commis-

sioner’s denial of benefits de novo. Berry v. Astrue, 622 F.3d

1228, 1231 (9th Cir. 2010). The district court reviews the

Commissioner’s final decision for substantial evidence, and

the Commissioner’s decision will be disturbed only if it is not

supported by substantial evidence or is based on legal error.

See 42 U.S.C. § 405(g); Batson v. Comm’r of Soc. Sec.

Admin., 359 F.3d 1190, 1193 (9th Cir. 2004). Substantial evi-

dence is “more than a mere scintilla but less than a preponder-

ance; it is such relevant evidence as a reasonable mind might

accept as adequate to support a conclusion.” Sandgathe v.

Chater, 108 F.3d 978, 980 (9th Cir. 1997) (citation omitted).

“However, a reviewing court must consider the entire record

as a whole and may not affirm simply by isolating a ‘specific

quantum of supporting evidence.’ ” Robbins v. Soc. Sec.

Admin., 466 F.3d 880, 882 (9th Cir. 2006) (quoting Hammock

v. Bowen, 879 F.2d 498, 501 (9th Cir. 1989)).

DISCUSSION

A claimant is considered “disabled” under the Social Secur-

ity Act if: (1) “he is unable to engage in any substantial gain-

12946 HILL v. ASTRUE

ful activity by reason of any medically determinable physical

or mental impairment which can be expected to result in death

or which has lasted or can be expected to last for a continuous

period of not less than twelve months,” 42 U.S.C.

§ 1382c(a)(3)(A), and, (2) the impairment is “of such severity

that he is not only unable to do his previous work but cannot,

considering his age, education, and work experience, engage

in any other kind of substantial gainful work which exists in

the national economy.” 42 U.S.C. § 1382c(a)(3)(B); see also

Tackett v. Apfel, 180 F.3d 1094, 1098 (9th Cir. 1999). In order

to determine whether a claimant is disabled, the ALJ performs

the five-step sequential analysis required under 20 C.F.R.

§ 404.1520(a)(4)(i)-(v). See also Tackett v. Apfel, 180 F.3d at

1098; Lounsburry v. Barnhart, 468 F.3d 1111, 1114 (9th Cir.

2006).

In this case, the ALJ found that Hill (step 1) had not

engaged in substantial gainful activity since her alleged dis-

ability onset date, and (step 2) suffered from several severe

physical and mental impairments (step 3) that did not meet or

medically equal any of the listed impairments that automati-

cally qualify as disabilities under the Social Security Act, but

which limited (step 4) her residual functional capacity to per-

forming light work that required only occasional, brief, and

superficial interaction with the public and with co-workers.

Although these limitations prevented Hill from performing

any past relevant work, the ALJ found that Hill could (step 5)

perform jobs that exist in significant numbers in the economy,

and thus found Hill not disabled, as defined under the Social

Security Act. Neither party challenges the ALJ’s findings at

steps one through three. Hill, however, challenges the ALJ’s

determination of her residual functional capacity at step four,

and its use in the hypothetical question asked of the voca-

tional expert at step five.

I. The ALJ’s Consideration of the Evidence

[1] The ALJ found that Hill has the residual functional

capacity “to perform light work . . . . that requires only occa-

HILL v. ASTRUE 12947

sional interaction with the public and co-workers . . . .” Hill

argues that the ALJ ignored or failed to consider evidence

favorable to Hill when making the residual functional capac-

ity determination.

A. Dr. Lynn Johnson

[2] Hill argues that the ALJ’s residual functional capacity

determination failed to take into account an evaluation by Dr.

Lynn Johnson, a psychologist who examined Hill on May 25,

2007. In her evaluation, Dr. Johnson found that Hill’s “combi-

nation of mental and medical problems makes the likelihood

of sustained full time competitive employment unlikely.”

(emphasis added). Hill correctly notes that the ALJ’s decision

does not address this finding by Dr. Johnson.

[3] In order to reject an examining physician’s opinion,

“the ALJ has to give clear and convincing reasons. . . . Even

if contradicted by another doctor, the opinion of an examining

doctor can be rejected only for specific and legitimate reasons

that are supported by substantial evidence in the record.”

Regennitter v. Comm’r of Soc. Sec. Admin., 166 F.3d 1294,

1298-99 (9th Cir. 1999).

[4] Here, the ALJ failed to provide Dr. Johnson’s state-

ment any degree of review at all, and gave no reasons for

doing so, let alone any clear and convincing reasons. See Mat-

thews v. Shalala, 10 F.3d 678, 680 (9th Cir. 1993) (Although

the ALJ “is not bound by the uncontroverted opinions of the

claimant’s physicians on the ultimate issue of disability, . . .

he cannot reject them without presenting clear and convincing

reasons for doing so.” (internal quotation marks omitted)).

[5] The Commissioner concedes that the ALJ’s decision

does not address Dr. Johnson’s opinion that Hill’s “combina-

tion of mental and medical problems makes the likelihood of

sustained full time competitive employment unlikely.” Never-

theless, the Commissioner argues that the ALJ’s failure to

12948 HILL v. ASTRUE

consider Dr. Johnson’s opinion was harmless because an

opinion that an individual cannot work is an opinion on an

issue reserved to the Commissioner and, therefore, it is not

binding. See 20 C.F.R. § 404.1527(d)(1) (“A statement by a

medical source that you are ‘disabled’ or ‘unable to work’

does not mean that we will determine that you are disabled.”).

We disagree.

[6] Dr. Johnson’s statement that Hill would be “unlikely”

to work full time was not a conclusory statement like those

described in 20 C.F.R. § 404.1527(d)(1), but instead an

assessment, based on objective medical evidence, of Hill’s

likelihood of being able to sustain full time employment given

the many medical and mental impairments Hill faces and her

inability to afford treatment for those conditions. Thus, the

ALJ’s disregard for Dr. Johnson’s medical opinion was not

harmless error and Dr. Johnson’s opinion should have been

considered. See 20 C.F.R. § 404.1527(c) (“Regardless of its

source, we will evaluate every medical opinion we receive.”).

B. Dr. Kuka

Dr. Kuka, a non-treating, non-examining medical consul-

tant, testified at Hill’s hearing. Less weight is given to the

opinion of a non-examining source than to an examining

source. See Lester v. Chater, 81 F.3d 821, 830-31 (9th Cir.

1996). “The opinion of a nonexamining physician cannot by

itself constitute substantial evidence that justifies the rejection

of the opinion of either an examining physician or a treating

physician.” Id. at 831.

Hill argues that the ALJ ignored Dr. Kuka’s testimony that

Hill was “markedly limited” at times when she was suffering

panic attacks or manic episodes. But the ALJ clearly acknowl-

edged this testimony, and based his decision in part on Dr.

Kuka’s opinion that these severe panic attacks or manic epi-

sodes only occurred about two times a year for two or three

days.

HILL v. ASTRUE 12949

Nevertheless, Dr. Kuka failed to consider that Hill’s most

recent panic attack, which occurred at the Dollar Tree store on

March 7, 2008, kept Hill in bed for five days and out of work

for about two weeks. Thus, Dr. Kuka’s conclusion that Hill’s

most severe attacks lasted only two or three days was directly

contradicted by the record.

Dr. Kuka also noted that the medical records mention

numerous panic attacks, sometimes daily and sometimes sev-

eral times a week. When the ALJ asked if there was indepen-

dent verification of this, Dr. Kuka replied that Hill’s panic

attacks had been “observed on occasions but certainly not to

the frequency that they’re reported[,] but then that’s normal

too for therapist notes.” It makes sense that not every panic

attack would be observed by Hill’s physicians, therapists, or

counselors (or even family, friends, and co-workers), because

these attacks would not always occur in their presence. There

remains, however, a substantial amount of evidence in the

record that Hill complained of anxiety and panic attacks, and

some of those attacks were actually witnessed by Hill’s physi-

cians, therapists and counselors.

C. Panic Disorder

Where the ALJ has found a severe medically determinable

impairment at step two of the sequential analysis, “all medi-

cally determinable impairments must be considered in the

remaining steps of the sequential analysis.” Orn v. Astrue, 495

F.3d 625, 630 (9th Cir. 2007) (citing 42 U.S.C.

§ 423(d)(2)(B)). In this case, the ALJ found, based in part on

Dr. Kuka’s opinion, that Hill had severe mental impairments

that included bi-polar disorder, mixed personality disorder,

anxiety, and borderline intellectual functioning.

But Hill was also diagnosed with panic disorder. The symp-

toms of Panic Disorder include

sudden attacks of intense fear or anxiety, usually

associated with numerous physical symptoms such

12950 HILL v. ASTRUE

as heart palpitations, rapid breathing or shortness of

breath, blurred vision, dizziness, and racing

thoughts. Often these symptoms are thought to be a

heart attack by the individual, and many cases are

diagnosed in hospital emergency rooms . . . . Left

untreated . . . symptoms can worsen and Agorapho-

bia can develop. In these cases, the individual has

developed such an intense fear that leaving the safety

of home feels impossible.

Index of Psychiatric Disorders, Diagnostic and Statistical

Manual of Mental Disorders, Fourth Edition 2000),

§§ 300.21 & 300.01. Hill described symptoms just like these

when she testified before the ALJ. But the ALJ excluded the

panic disorder diagnosis and improperly limited the definition

of panic attack to only those attacks severe enough to collapse

someone to the ground.

[7] Because the ALJ excluded panic disorder from Hill’s

list of impairments and instead characterized her diagnosis as

anxiety alone, the residual functional capacity determination

was incomplete, flawed, and not supported by substantial evi-

dence in the record.

***

[8] For the foregoing reasons, we find that the ALJ

improperly ignored or discounted significant and probative

evidence in the record favorable to Hill’s position—including

the opinion of Dr. Johnson and substantial evidence that con-

tradicts Dr. Kuka’s opinion—and thereby provided an incom-

plete residual functional capacity determination.

II. The ALJ’s Hypothetical Question to the Vocational

Expert

[9] At the fifth step of the sequential analysis, the burden

shifts to the Commissioner to demonstrate that the claimant is

HILL v. ASTRUE 12951

not disabled and can engage in work that exists in significant

numbers in the national economy. 20 C.F.R.

§ 404.1520(a)(4)(v); Lockwood v. Comm’r of Soc. Sec.

Admin., 616 F.3d 1068, 1071 (9th cir. 2010). The ALJ may

meet his burden at step five by asking a vocational expert a

hypothetical question based on medical assumptions sup-

ported by substantial evidence in the record and reflecting all

the claimant’s limitations, both physical and mental, sup-

ported by the record. See Valentine v. Comm’r of Soc. Sec.

Admin., 574 F.3d 685, 690 (9th Cir. 2009); Thomas v. Barn-

hart, 278 F.3d 947, 956 (9th Cir. 2002); Desrosiers v. Sec’y

of Health & Human Servs., 846 F.2d 573, 578 (9th Cir. 1988)

(Pregerson, J., concurring) (“The ALJ’s depiction of the

claimant’s disability must be accurate, detailed, and supported

by the medical record.”). “If a vocational expert’s hypotheti-

cal does not reflect all the claimant’s limitations, then the

expert’s testimony has no evidentiary value to support a find-

ing that the claimant can perform jobs in the national econo-

my.” Matthews v. Shalala, 10 F.3d 678, 681 (9th Cir. 1993)

(internal quotation marks and citation omitted).

[10] As discussed earlier, the ALJ failed to include all of

Hill’s impairments in determining Hill’s residual functional

capacity, and therefore, the ALJ asked an incomplete hypo-

thetical question of Mr. Fortune, the vocational expert. The

hypothetical did not take account of Hill’s limitations because

of her frequent anxiety and panic attacks, and thereby

included incorrect assumptions. Specifically, the hypotheti-

cal’s assumption concerning Hill’s residual functional capac-

ity that she can complete a normal workday and workweek

without interruptions from psychologically-based symptoms,

and that she can maintain regular attendance, are not sup-

ported by the record. “Because neither the hypothetical nor

the answer properly set forth all of [Hill’s] impairments, the

vocational expert’s testimony cannot constitute substantial

evidence to support the ALJ’s findings.” Gallant v. Heckler,

753 F.2d 1450, 1456 (9th Cir. 1984).

12952 HILL v. ASTRUE

Accordingly, we hold that the ALJ’s hypothetical question

to the vocational expert was incomplete and therefore the

ALJ’s reliance on the vocational expert’s answers was

improper.

III. Remedy

When an ALJ’s denial of benefits is not supported by the

record, “the proper course, except in rare circumstances, is to

remand to the agency for additional investigation or explana-

tion.” Benecke v. Barnhart, 379 F.3d 587, 595 (9th Cir. 2004)

(internal quotation marks omitted). We may exercise our dis-

cretion and direct an award of benefits “where no useful pur-

pose would be served by further administrative proceedings

and the record has been thoroughly developed.” Swenson v.

Sullivan, 876 F.2d 683, 689 (9th Cir. 1989). Remand for fur-

ther proceedings is appropriate where there are outstanding

issues that must be resolved before a determination can be

made, and it is not clear from the record that the ALJ would

be required to find the claimant disabled if all the evidence

were properly evaluated. See Vasquez v. Astrue, 572 F.3d 586,

593 (9th Cir. 2009); cf. Reddick v. Chater, 157 F.3d 715, 729

(9th Cir. 1998) (“We do not remand this case for further pro-

ceedings because it is clear from the administrative record

that Claimant is entitled to benefits.”).

In this case, the ALJ’s residual functional capacity determi-

nation was flawed and the hypothetical question was incom-

plete and included incorrect assumptions. When Hill’s

attorney asked Mr. Fortune, the vocational rehabilitation

expert, on cross-examination whether there would be any jobs

for a person who had weekly panic attacks and missed work

two to four days a month, Mr. Fortune admitted that it would

not be possible to engage in substantial gainful activity with

absences of that frequency. Because the overall record shows

these additional assumptions should have been incorporated

into the ALJ’s hypothetical, remand is appropriate. Harman

v. Apfel, 211 F.3d 1172, 1180 (9th Cir. 2000) (“In cases where

HILL v. ASTRUE 12953

the testimony of the vocational expert has failed to address a

claimant’s limitations as established by improperly discred-

ited evidence, we consistently have remanded for further pro-

ceedings rather than payment of benefits.”).

CONCLUSION

[11] Substantial evidence does not support the ALJ’s

determination that Hill is not disabled under the Social Secur-

ity Act. Accordingly, we REVERSE the district court’s grant

of summary judgment in favor of the Commissioner. On

remand, the district court shall refer this case to the ALJ for

reconsideration of Hill’s application for benefits.

REVERSED and REMANDED.