Court: Court of Appeals for the Seventh Circuit; July 31, 2015; Federal Appellate Court
Sheila Stepp, suffering from degenerative disc disease and other impairments, applied for disability insurance benefits under Title II of the Social Security Act, claiming her disability began on November 18, 2009. An Administrative Law Judge (ALJ) denied her claim, asserting that despite Stepp's chronic pain, her condition had improved due to surgery, medication, and therapy, allowing her to perform sedentary work. Stepp appealed to the Social Security Administration's Appeals Council, providing additional medical records from pain management specialist Dr. Allan MacKay, which indicated that her condition had not improved as the ALJ concluded. The Appeals Council declined to review the ALJ's decision and did not acknowledge Dr. MacKay’s notes. The United States District Court for the Southern District of Indiana upheld the ALJ's decision. Stepp appealed, arguing that the ALJ’s decision lacked substantial evidence and that the new evidence warranted a remand. The appellate court found that the ALJ had considered conflicting evidence adequately; however, it agreed with Stepp regarding the Appeals Council's error in not recognizing Dr. MacKay’s notes as new and material evidence. Consequently, the case was remanded for the agency to reassess Stepp’s condition based on this information. Stepp, a former correctional officer, had begun treatment for chronic neck pain in 2008, leading to multiple MRIs that revealed significant degenerative changes. After surgery in April 2009, she initially reported total pain relief but was advised by her surgeon to refrain from work until her recovery progressed.
Stepp initially sought physical therapy for pain management but discontinued it in September 2009 due to severe lower back pain exacerbated by movement. She returned to work in early November but reported worsening back and chest pain during a consultation with Dr. McCormick on November 18, 2009. An MRI ordered by Dr. McCormick revealed severe degenerative disc disease, arthritis, and significant spinal canal stenosis with potential myelomalacia. In early December, Dr. Ritter noted that Stepp was severely incapacitated by pain and administered a selective thoracic nerve root block and epidural injection in late 2009 and early 2010. By January 18, 2010, Stepp felt improved but was advised by Dr. Ritter to delay returning to work due to ongoing pain.
After further complaints, Stepp underwent a discectomy and fusion in March 2010, and by April 15, she reported significant improvement and relief from previously experienced lower extremity dysfunction. A psychological evaluation by Dr. J. Mark Dobbs, requested by the state agency, indicated that Stepp had post-traumatic stress disorder and dysthymia, assigning her a GAF score of 59, which denotes moderate symptoms. In contrast, state agency psychologist Dr. B. Randal Horton found her mental impairments did not affect her work capability.
Dr. Mohamad Mokadem's examination noted Stepp's improvement post-surgery but still indicated limitations in movement and persistent pain, though he categorized her pain as causing only mild distress. He observed normal gait, muscle strength, and reflexes. In May 2010, Dr. A. Dobson's Residual Functional Capacity assessment determined Stepp could perform light work with specific limitations on movements. By July 2010, Dr. Ritter cleared Stepp to resume work, and she reported significant improvement in her back pain, having stopped using oxycodone. However, on July 26, Dr. McCormick, after over a year of treatment, assessed Stepp's RFC and concluded that she could sit, stand, and walk for less than two hours in an eight-hour workday, contradicting Dr. Ritter's assessment and precluding her from working.
Dr. McCormick anticipated that Stepp's condition would improve following medication adjustments during hospitalization, noting her primary limitation was pain. Treatment notes from Dr. Bruce Durell indicated that Stepp reported good pain control and sleep after medication changes, despite ongoing major depression. In October 2010, Dr. Durell prescribed Cymbalta and Flexeril due to Stepp's chronic spinal pain, advising her to remain off work. Subsequent visits showed improvement in her pain levels, and she was responding well to therapy.
In June 2011, a new primary care physician, Dr. Meredith Lulich, diagnosed Stepp with moderate left carpal tunnel syndrome. During a hearing on August 24, 2011, Stepp testified about her gradual impairments since November 2009 and described her pain management regimen, which included medications, a TENS unit, and stretching. She noted variability in her physical abilities, with some days being better than others. A vocational expert testified that Stepp could perform sedentary work with certain limitations, although these would prevent her from returning to past jobs.
On November 21, 2011, Administrative Law Judge JoAnn L. Anderson denied Stepp’s benefits request, concluding that she failed to prove an inability to engage in substantial gainful activity due to a medically determinable impairment lasting at least 12 months. The ALJ found in Stepp's favor for the first two steps of the five-step disability analysis, determining she had not engaged in substantial gainful activity since the alleged onset date and had multiple severe impairments. However, at step three, the ALJ concluded that none of Stepp's impairments met the severity required to be considered conclusively disabling.
The ALJ assessed Stepp’s Residual Functional Capacity (RFC) at step four, determining her ability to perform past relevant work. The ALJ agreed with the vocational expert that Stepp could engage in sedentary work with specific limitations, such as avoiding ladders. The ALJ noted Stepp's impairments restricted her from walking more than one to two blocks before needing to rest, and she experienced constant spinal pain. Conflicting medical opinions were addressed; while Dr. Ritter cleared Stepp for work post-surgery, Dr. McCormick provided a work-restrictive opinion but was given 'little weight' due to her expectation of Stepp's improvement. The ALJ referenced an October 2010 note from Dr. McCormick indicating symptom improvement with a TENS unit and a June 2011 note where Stepp reported feeling well with minor complaints. The ALJ concluded that Stepp had improved through medication, surgery, and therapy during the adjudicative period from November 18, 2009, to November 21, 2011. Although Stepp could not return to her past work due to physical limitations, the ALJ found there were significant alternative jobs available in the national economy, leading to the conclusion that Stepp was not disabled.
On the same day as the decision, Stepp submitted additional evidence to the Appeals Council, including treatment notes from Dr. MacKay, which indicated ongoing severe pain and recent nerve block injections, along with MRI results showing further degenerative changes. A cervical fusion was scheduled for December 1, 2011. Later submissions were largely irrelevant as they pertained to post-decision symptoms. The Appeals Council denied Stepp's request for review on March 19, 2013, stating the additional evidence did not warrant changing the ALJ’s decision. The Council acknowledged Dr. MacKay’s notes but did not reference them in their notice. Stepp subsequently filed a civil action in the U.S. District Court for the Southern District of Indiana, challenging the ALJ’s decision and the Appeals Council's denial. The district court upheld the ALJ’s findings as supported by substantial evidence under 42 U.S.C. 405(g).
The district court ordered a remand under sentence six of 42 U.S.C. § 405(g) for the review of Dr. MacKay’s medical records, which were deemed new evidence pertinent to Stepp’s disability claim. The court noted that these records clarified the extent of Stepp’s pain at the end of the adjudicative period and indicated no improvement in her condition, contrary to the expectations of her other physicians. The court found that the Appeals Council had not adequately addressed these records. In response, the Commissioner of Social Security sought to amend the judgment, asserting that the Appeals Council had reviewed Dr. MacKay’s records and provided sufficient reasoning for its decision. The district court accepted that the records were listed as exhibits and concluded that the Council's brief explanation was adequate, despite criticizing the Council’s decision as 'woefully deficient' and lacking in clarity. Ultimately, the court affirmed the ALJ's decision, leading Stepp to appeal.
On appeal, Stepp raised two main issues: the lack of substantial evidence supporting the ALJ's decision and the need for additional consideration of Dr. MacKay’s treatment notes submitted after the ALJ's ruling. The review of the ALJ’s decision is limited to whether it is supported by substantial evidence, defined as evidence a reasonable mind could accept as adequate. Stepp contested several aspects of the ALJ’s assessment of her Residual Functional Capacity, including the handling of Dr. McCormick’s opinion, Dr. Ritter’s assessments, evidence of manipulative impairments, her obesity, and the credibility determination of her testimony. The ALJ assigned 'little weight' to Dr. McCormick’s evaluation, arguing it anticipated improvement in Stepp’s condition, which is consistent with the standard for evaluating treating physician assessments.
Dr. McCormick noted that shortly after Stepp's surgery, her pain severely limited her ability to sit, stand, or walk for more than two hours daily, although changes to her pain medication were imminent. While Dr. McCormick expressed hope for functional improvement post-hospitalization, she refrained from commenting on Stepp’s potential pain-related limitations after the medication adjustments. According to 20 C.F.R. 404.1527(c)(2), a treating physician's opinion can be given controlling weight if well-supported and consistent with the overall evidence. However, Dr. McCormick's opinion, which completely precluded work, contradicted other physicians’ assessments (Dr. Dobson and Dr. Ritter) and was inconsistent with her own expectation of improvement, leading the ALJ to rightfully assign it little weight.
Stepp argued that the ALJ failed to adequately address Dr. Ritter's June 2009 assessment indicating a temporary inability to work, predicting a return without restrictions by mid-September. Since this assessment predates Stepp’s alleged disability onset date (November 18, 2009), it was deemed less relevant, especially as Stepp briefly returned to work in early November, suggesting the assessment was no longer applicable. Additionally, while Stepp raised concerns about the ALJ not discussing Dr. Ritter's January 2010 recommendation to delay work for a few weeks, any oversight was deemed harmless as Dr. Ritter's assessment indicated a short-term inability to work, conflicting with the requirement for a long-term disability lasting at least twelve months under 42 U.S.C. 423(d)(1)(A).
Finally, Stepp claimed the ALJ overlooked evidence regarding her manipulative impairment due to moderate left carpal tunnel syndrome. The ALJ acknowledged this condition but determined it was not severe, noting the absence of evidence showing limitations lasting or expected to last for twelve consecutive months.
The ALJ's determination that Stepp did not suffer from a significant manipulative impairment was supported by substantial evidence, including physician opinions. Dr. Ritter and Dr. Mokadem reported normal grip strength, while Dr. Lulich noted only slightly diminished strength. Although the ALJ found Stepp's manipulative impairment not severe, she imposed some limitations for sedentary work based on Dr. Ritter's findings of upper extremity weakness. Stepp, who is classified as obese with a BMI of 38.2, did not demonstrate how her obesity impacted her ability to work, rendering any oversight by the ALJ regarding her obesity as harmless. The ALJ's assessment of Stepp's credibility was also upheld; while she found Stepp's testimony partially credible, she discounted certain physician opinions that understated her condition. Specifically, the ALJ assigned little weight to Dr. Dobson's assessment that Stepp could perform light work, concluding instead that she was more limited and could only perform sedentary work with additional restrictions. Although the ALJ recognized Stepp's chronic pain, she noted improvements following treatment and ultimately concluded that such pain did not constitute a disability. The overall conclusion regarding Stepp's credibility was not deemed patently wrong.
Stepp's case involves fluctuating medical conditions due to several surgical procedures and medication changes, leading to varying assessments from different physicians regarding her impairments. The Administrative Law Judge (ALJ) competently evaluated this conflicting evidence and provided valid reasons for favoring certain pieces, ultimately concluding that Stepp was not disabled and could perform sedentary work, thus denying her benefits request based on substantial evidence.
Stepp argues for a remand to consider "new and material" evidence that the Appeals Council allegedly did not review. After the ALJ's decision, she submitted additional treatment notes from pain management specialist Dr. Allan MacKay, which she claims demonstrate that her back and neck pain did not improve. The Appeals Council denied her application for review, stating that the additional evidence did not warrant changing the ALJ's decision.
Under 20 C.F.R. 404.970(b), the Appeals Council will evaluate new and material evidence from before the ALJ's decision date, incorporating it into the record if it qualifies. The Council may only grant de novo review if it finds the ALJ's conclusions contrary to the weight of the evidence. The court may review the Appeals Council's decision for legal errors, such as misclassifying evidence as non-material. If the Council found the evidence new and material but deemed the ALJ's decision supported by the weight of the evidence, its decision not to conduct plenary review is discretionary and unreviewable.
Stepp asserts that the Appeals Council considered Dr. MacKay's notes non-qualifying, noting the Council's denial notice did not reference these notes. The Commissioner contends that the Council accepted this evidence but concluded it was insufficient to prompt plenary review of the ALJ's decision.
The district court reluctantly agreed with the Commissioner, determining that the denial notice implied the Appeals Council reviewed Dr. MacKay’s notes, although the evidence was minimal. The court referenced prior cases where claimants contested the Appeals Council's rejection of newly submitted evidence. In *Perkins v. Chater*, the Council explicitly evaluated additional evidence from Dr. Reich, leading to the conclusion that it was considered 'new and material,' making the Council's unfavorable decision discretionary and unreviewable. Conversely, in *Farrell v. Astrue*, the Council denied review despite receiving new evidence confirming Farrell's fibromyalgia diagnosis, using boilerplate language that left ambiguity regarding the acceptance of the evidence. The court interpreted this language as suggesting the Council deemed the evidence non-qualifying. The current case's denial notice mirrored the ambiguity found in *Farrell*, as it failed to specifically reference Dr. MacKay's records. Although it mentioned other records that were deemed irrelevant due to their timing, this did not clarify whether they were considered new and material, nor did it address the status of the unmentioned records, including Dr. MacKay’s notes.
Dr. MacKay’s notes, created between September 20 and October 25, 2011, were determined to be time-relevant by the Appeals Council, but whether they were classified as new and material remains uncertain. The Commissioner argues that their inclusion in the Order of Appeals Council as Exhibit 26F indicates they were deemed new and material. However, similar evidence in the Farrell case was also listed but not accepted as such, suggesting that listing alone is insufficient to establish the evidence's status. The Commissioner further asserts that the denial notice's language indicates the Council evaluated the evidence for its sufficiency to warrant a de novo review of the ALJ’s decision. The court disagrees, viewing the language as boilerplate and not more informative than that used in Farrell, which did not confirm acceptance of new evidence. Ultimately, the court concludes that the Appeals Council's minimal information in Stepp's case resembles the Farrell case more closely, interpreting the decision as a rejection of Dr. MacKay’s notes as non-qualifying. This led to a de novo review of the Appeals Council's determination, concluding it was a legal error, as the treatment notes were indeed new because they were not available during the administrative proceeding.
Dr. MacKay's treatment records, submitted shortly before the ALJ's unfavorable decision on November 21, 2011, are deemed "new" and "material" under the relevant regulations. The minor delay in submission is justified, as obtaining medical records involves a process that cannot occur instantaneously. The ALJ's decision heavily relied on the conclusion that Stepp's condition had improved, but Dr. MacKay's notes contradict this assertion, indicating ongoing severe pain and the need for further invasive treatments. Specifically, the notes reveal that Stepp's condition was deteriorating, as evidenced by an October 2011 MRI showing degenerative changes and disc issues. This new evidence creates a reasonable probability that the Commissioner would have reached a different conclusion. Consequently, the case is remanded to the ALJ for reevaluation of Stepp's Residual Functional Capacity (RFC) based on Dr. MacKay’s findings. The district court's decision is affirmed in part, reversed in part, and further proceedings are mandated with respect to the new evidence.
Evidence deemed new and material by the Appeals Council but insufficient for ALJ decision reversal must be excluded from the district court's review. The ALJ is not responsible for weighing evidence not presented to them, as established in Eads and supported by other circuit cases. The determination of whether Dr. MacKay's records were considered "new and material" is crucial for Stepp's ability to seek review. Some circuits allow such evidence to be included in the administrative record, giving claimants further review opportunities. The requirements for evidence to be both new and timely may coexist if the evidence was created shortly before the ALJ's decision or was previously unavailable. In the case of Farrell, only medical evidence submitted with the review request was listed, with no indication of additional new evidence. The Commissioner argues that the inclusion of Dr. MacKay's notes in the exhibit list implies acceptance as new and material per the Social Security Administration’s HALLEX procedures. However, HALLEX also requires specific identification of new and material evidence in denial notices, which must include details about the evidence.
The denial notice fails to adequately specify the "additional evidence" referenced, lacking details such as source, date range, and page numbers, which does not comply with HALLEX procedures regarding new and material evidence. The Appeals Council's ability to deny review without explaining its reasoning does not negate the requirement to clearly identify the evidence considered in its decision. Emphasizing fairness to appellants, the Council should articulate its reasoning to reduce confusion regarding the evidence evaluated. Additionally, Stepp argues for a remand under sentence six of 42 U.S.C. 405(g) due to new and material evidence. However, prior rulings indicate that evidence previously submitted and rejected by the Appeals Council cannot be considered "new" under this statute. The audiometric report cited by the Commissioner as new evidence had already been presented to the Appeals Council, thus failing to meet the criteria for new evidence.
