Medearis v. O'Malley

[6] 7 UNITED STATES DISTRICT COURT 8 NORTHERN DISTRICT OF CALIFORNIA [9] 10 A.M., Case No. 23-cv-04889-NC 11 Plaintiff, ORDER REVERSING 12 v. ADMINISTRATIVE LAW JUDGE DECISION AND REMANDING FOR 13 MARTIN J. O'MALLEY, AWARD OF BENEFITS 14 Defendant. Re: ECF 22, 26, 29 [15] 16 Claimant A.M. appeals an Administrative Law Judge’s denial of disability benefits 17 for the period beginning May 1, 2016, and seeks reversal and remand for an immediate 18 award of benefits. A.M.’s central argument is that the ALJ erred in finding A.M.’s 19 substance abuse material to the disability determination. In addition, A.M. argues the ALJ 20 improperly weighed and credited medical opinions, substituted his own opinion in place of 21 medical opinions, and relied on past relevant work and education findings unsupported by 22 substantial evidence. The Commissioner of Social Security agrees reversal of the ALJ’s 23 decision and remand are appropriate, but does not concede any specific reversible errors by 24 the ALJ. Rather, the Commissioner argues the Court should remand for further 25 proceedings and not for the award of benefits. As discussed below, the Court REVERSES 26 the ALJ’s decision and REMANDS for the award of benefits because the ALJ erred in 27 finding A.M.’s substance abuse material to the disability determination. 1 I. BACKGROUND 2 A. Procedural History 3 On July 1, 2020, A.M. filed an application for Title XVI disability benefits for the 4 period beginning May 1, 2016. AR 20, 198. The Commissioner denied the claim initially 5 and upon reconsideration. AR 20. A.M. requested a hearing, which occurred before an 6 ALJ on May 24, 2022. AR 20. The ALJ issued an unfavorable decision on July 27, 2022, 7 and the Appeals Council denied review. AR 1, 17. 8 A.M. appealed the ALJ’s decision to the Court on September 5, 2023. ECF 1. 9 A.M. filed a brief in support of reversal and remand pursuant to 42 U.S.C. § 405 (g). ECF 10 22 (Mot.). The Commissioner opposed and filed a cross-motion for voluntary remand. 11 ECF 26 (Opp’n). A.M. replied. ECF 29 (Reply). All parties have consented to magistrate 12 judge jurisdiction. ECF 4, 13. 13 B. ALJ Decision 14 The Court highlights the parts of the ALJ’s decision most relevant to this appeal. 15 The ALJ followed the five-step sequential analysis under 20 CFR 416.920(a) to determine 16 whether A.M. has been disabled since May 1, 2016. AR 21. At the first three steps, the 17 ALJ concluded: (1) A.M. had not engaged in substantial gainful activity since his alleged 18 disability onset date of May 1, 2016; (2) A.M. has severe impairments including 19 generalized anxiety disorder, major depressive disorder, PTSD, opioid use disorder, 20 alcoholism, and right-sided inguinal hernia; and (3) A.M.’s impairments, including his 21 substance abuse, meet the paragraph A and B criteria for listing 12.15, trauma- and 22 stressor-related disorders. AR 23–24. In making these findings, the ALJ relied on the 23 medical opinions of Drs. Arnold and Wiebe, which he found persuasive based on the tests 24 conducted by both doctors and other evidence in the record. AR 25. The ALJ found the 25 opinion of Dr. Catlin less persuasive, and her evaluation of A.M.’s limitations supported 26 only when A.M. used substances. AR 25. The ALJ also found Dr. Khoi’s opinion less 27 persuasive because it was unsupported by the results of tests and evaluations he conducted 1 Because the ALJ concluded A.M.’s medically determinable impairments include 2 alcohol and opioid abuse, he conducted a second five-step sequential analysis pursuant to 3 Social Security Ruling 13-2p to determine whether A.M.’s substance use is material to the 4 disability determination. AR 26. At step two of the materiality analysis, the ALJ 5 determined that A.M. still had a severe impairment or combination of impairments absent 6 substance use. AR 26. At step three, the ALJ determined A.M.’s impairments would not 7 meet a listing absent substance use. AR 26. The ALJ relied on jail records, Dr. Catlin’s 8 opinion, and treatment notes from Dr. Arnold. AR 26–28. The ALJ continued through the 9 second sequential analysis to find A.M.’s substance use material to the disability 10 determination because he would not be disabled absent substance use. AR 29–32. 11 II. LEGAL STANDARD 12 A district court has the “power to enter, upon the pleadings and transcript of the 13 record, a judgment affirming, modifying, or reversing the decision of the Commissioner of 14 Social Security, with or without remanding the case for a rehearing.” 42 U.S.C. § 405 (g). 15 The decision of the Commissioner should only be disturbed if it is not supported by 16 substantial evidence or if it is based on legal error. Burch v. Barnhart, 400 F.3d 676 , 679 17 (9th Cir. 2005). Substantial evidence is evidence that a reasonable mind would accept as 18 adequate to support the conclusion. Bayliss v. Barnhart, 427 F.3d 1211 , 1214 n.1 (9th Cir. 19 2005) (“[It] is more than a mere scintilla but less than a preponderance”). Even when the 20 ALJ commits legal error, the decision must be upheld if the error is harmless. Treichler v. 21 Comm’r of Soc. Sec. Admin., 775 F.3d 1090, 1099 (9th Cir. 2014). However, “[a] 22 reviewing court may not make independent findings based on the evidence before the ALJ 23 to conclude that the ALJ’s error was harmless.” Brown-Hunter v. Colvin, 806 F.3d 487 , 24 492 (9th Cir. 2015) (citing Stout v. Comm’r, Soc. Sec. Admin., 454 F.3d 1050, 1054 (9th 25 Cir. 2006)). Where evidence is susceptible to more than one rational interpretation, the 26 ALJ’s decision should be upheld. Andrews v. Shalala, 53 F.3d 1035 , 1039–40 (9th Cir. 27 1995). 1 III. DISCUSSION 2 The parties do not dispute the ALJ’s first sequential analysis finding A.M. disabled 3 at step three when including substance use. The key dispute occurs at step three of the 4 second sequential analysis finding A.M.’s impairments would no longer meet listing 12.15 5 absent substance use, effectively rendering his substance use material. 6 If an ALJ determines that a claimant is disabled based on all their medically 7 determinable impairments, one of which is drug addiction and alcoholism (DAA), the ALJ 8 must determine whether the DAA is a contributing factor material to the disability 9 determination. SSR 13-2p(a).1 To do so, the ALJ conducts a second five-step sequential 10 analysis to determine whether the claimant would still be disabled if they stopped using 11 drugs or alcohol. SSR 13-2p(a). DAA is material “if the claimant’s other impairment(s) 12 would improve to the point that the claimant would not be disabled in the absence of 13 DAA.” SSR 13-2p ¶ 5(f)(iii). DAA is not material “if the claimant’s other impairment(s) 14 would not improve to the point that the claimant would not be disabled in the absence of 15 DAA.” SSR 13-2p ¶ 5(f)(iii). The ALJ must deny the claim if DAA is material. SSR 1316 2p ¶ 5(f)(iii). 17 To find that DAA is material when a claimant has co-occurring mental disorders, 18 the ALJ “must have evidence in the case record that establishes that a claimant with a co19 occurring mental disorder(s) would not be disabled in the absence of DAA.” SSR 13-2p 20 ¶ 7(b). The ALJ cannot rely only “on medical expertise and the nature of a claimant’s 21 mental disorder,” or seek “medical opinions that project the nature, severity, and functional 22 effects if the claimant were to stop using drugs or alcohol.” SSR 13-2p ¶ 7(b) & n.19. 23 A. The ALJ Committed Legal Error by Concluding A.M.’s Substance Use is Material [24] 25 The ALJ committed reversible error at step three of the materiality analysis. First, [27] 1 Although Social Security Rulings “do not have the force of law,” courts give them 1 the ALJ appears to require a heightened burden of proof from claimant that is unsupported 2 by SSR 13-2p. Second, the ALJ’s conclusion that A.M. no longer meets paragraph B of 3 listing 12.15 absent substance use is not supported by substantial evidence. 4 The ALJ is correct that the claimant bears the burden of proof at step three, 5 including to prove disability during the materiality analysis. See AR 26; SSR 13-2p ¶ 5(a). 6 However, the ALJ also states: The claimant, who was represented by an attorney, did not 7 provide any evidence to suggest that his impairments, either singly or in combination, met or medically equaled the 8 requirements of a listed impairment when the substance abuse stopped. There is no substantial evidence present in the record 9 to indicate that the claimant’s impairments, either singly or in combination, met or medically equaled the requirements of a 10 listed impairment as described at 20 CFR Part 404, Subpart P, Appendix 1 when he was sober or decreased his substance 11 abuse. 12 AR 26. A claimant need not present, as the ALJ suggests, affirmative “evidence from a 13 period of abstinence for the claimant to meet his or her burden of proving disability.” SSR 14 13-2p ¶ 5(a). Nor does a claimant need to present separate, additional evidence for the 15 materiality analysis. The correct standard for determining DAA materiality is in fact the 16 inverse: “We will find that DAA is not material to the determination of disability and 17 allow the claim if the record is fully developed and the evidence does not establish that the 18 claimant’s co-occurring mental disorder(s) would improve to the point of nondisability in 19 the absence of DAA.” SSR 13-2p ¶ 7(d) (emphasis added); see also SSR 13-2p ¶ 9(b) 20 (“To find that DAA is material, we must have evidence in the case record demonstrating 21 that any remaining limitations were not disabling during the period.”). Affirmative 22 evidence is only required to establish materiality, not the absence of it. 23 Applying the correct standard here, there is not substantial evidence in the record 24 demonstrating A.M.’s mental health issues would improve absent substance use such that 25 they are not disabling. The ALJ therefore erred in finding materiality. 26 The ALJ made two factual conclusions when assessing materiality at step three that 27 led him to determine A.M. would no longer meet the paragraph B criteria for listing 12.15 1 absent substance use.2 Specifically, the ALJ found that absent substance use, A.M. has a 2 moderate, rather than marked, limitation in his ability to concentrate, persist, or maintain 3 pace, and a moderate, rather than marked, limitation in his ability to manage oneself. AR 4 27–28. The ALJ supports these findings by pointing to A.M.’s jail records, the medical 5 opinion of Dr. Catlin, and excerpts of treatment notes from Dr. Arnold, none of which 6 constitute substantial evidence. See AR 25–28. 7 1. Jail Records 8 First, the ALJ refers to A.M.’s jail records as originating “presumedly during a 9 period of sobriety or minimal substance abuse.” AR 26. He states that the jail records 10 reveal “relatively normal mental status findings with the claimant receiving minimal 11 treatment,” which do “not support more than mild or moderate mental limitations.” AR 12 25, 27. Yet the jail records themselves demonstrate that they are not a reliable indicator of 13 A.M.’s mental health status absent substance use. Medical forms completed during A.M.’s 14 jail intakes and transfers almost all note that A.M. was under the influence and/or reported 15 recent substance use or addiction. AR 705, 707, 710, 711 (August 2018, December 2018, 16 July 2020, and March 2021 intake forms indicating arrestee under the influence and 17 addicted); AR 709 (May 2019 intake form indicating arrestee under the influence); AR 712 [18] 2 One way to meet the 12.15 listing for trauma- and stressor-related disorders is to satisfy [19] paragraphs A and B, which require: [20] A. Medical documentation of all of the following: 1. Exposure to actual or threatened death, serious injury, or violence; [21] 2. Subsequent involuntary re-experiencing of the traumatic event (for example, intrusive memories, dreams, or flashbacks); [22] 3. Avoidance of external reminders of the event; 4. Disturbance in mood and behavior; and [23] 5. Increases in arousal and reactivity (for example, exaggerated startle response, sleep disturbance). [24] AND [25] B. Extreme limitation of one, or marked limitation of two, of the following areas of [26] mental functioning (see 12.00F): 1. Understand, remember, or apply information (see 12.00E1). [27] 2. Interact with others (see 12.00E2). 1 (December 2018 opioid withdrawal form indicating last used drugs that day, and years of 2 daily heroin and cocaine use); AR 716 (August 2018 alcohol withdrawal form indicating 3 last consumed hard liquor ten hours earlier); AR 720 (July 2020 transfer form indicating 4 chronic heroin use); AR 728 (December 2018 discharge prescription for Narcan). 5 The many pages of time-stamped health logs that follow, and are cited by the ALJ, are 6 from medical intake or COWS (clinical opiate withdrawal score) screenings conducted 7 every few hours in the days immediately after A.M.’s arrival at the jail. See AR 730–943. 8 As a result, these records do not provide substantial evidence for A.M.’s mental 9 state absent substance use because he was either actively or very recently under the 10 influence of drugs and/or alcohol. SSR 13-2p ¶ 9(a)–(b) explains that “the acute and toxic 11 effects of substance use or abuse may subside in a matter of weeks, while in others it may 12 take months or even longer to subside” and, especially in the case of co-occurring mental 13 disorders, “the claimant should be abstinent long enough to allow the acute effects of drug 14 or alcohol use to abate” before assessing their materiality. 15 What’s more, the jail records do not appear to be reliable indicators of A.M.’s 16 mental health status at all, with or without substance use. To the extent the health logs 17 suggest A.M. was not experiencing anxiety, hallucinations, or other mental health 18 symptoms, these medical check-ins appear designed only to measure A.M.’s withdrawal 19 symptoms and acute risk for a couple-days period, rather than his comprehensive mental 20 health. See, e.g., AR 714, 718.3 A.M. also frequently declined the health screenings, 21 leading jail personnel to seemingly complete the questions based only on what they 22 witnessed. See, e.g., AR 191 (“Patient verbally refused COWS monitoring and vital signs. 23 ROR witnessed and signed by Deputy and RN.”) A.M. also provided responses that were 24 inaccurate, as evidenced by the record and the ALJ’s findings, further undermining the 25 reliability of these records. See, e.g., AR 772, 781 (denying any mental health problems in 26 July 2020 and responding “no” to current or past mental health diagnosis in March 2021). [27] 1 2. Dr. Catlin Opinion 2 Second, Dr. Catlin’s opinion does not constitute substantial evidence of A.M.’s 3 mental health issues absent substance use, and the ALJ’s treatment of Dr. Catlin’s opinion 4 is inconsistent. The ALJ states that “[b]ased on the record . . . the claimant was sober from 5 2019, his last drug treatment program through April 2021 when the claimant underwent 6 evaluation conducted by Dr. Catlin.” AR 27. Although Dr. Catlin’s opinion states A.M. 7 had been sober since 2019, as self-reported by A.M., AR 948, 951, the record indicates 8 otherwise. As noted above, jail intake records from May 2019, July 2020, and March 2021 9 note A.M. was under the influence at the time of most of his arrests. Additional health 10 records show that on December 6, 2019, A.M. tested positive for cocaine and opiates in his 11 urine and had used marijuana, meth, and cocaine “up to the day of admission” at the health 12 facility. AR 1015, 1021. A.M. also testified that the “longest I was probably [] sober after 13 the [treatment] program [was] like two, three months.” AR 59. Therefore, Dr. Catlin’s 14 opinion may not reflect A.M.’s mental health symptoms absent substance use, and A.M.’s 15 failure to disclose his substance use since 2019 calls into the question the supportability of 16 the opinion. See SSR 13-2p ¶ 9(a)–(b). 17 In addition, the Court notes that the ALJ erred by finding Dr. Catlin’s opinion “less 18 persuasive” because her objective evaluations of A.M. did not support her conclusions, yet 19 still relied heavily on her opinion during the materiality analysis over the opinions of 20 doctors to which the ALJ afforded more weight. See AR 25–28; 20 C.F.R. § 404 .1520c(a), 21 (b)(2) (instructing that an ALJ must explain how they “considered the supportability and 22 consistency factors for a medical source’s medical opinions,” as these are the “most 23 important factors” when determining the persuasiveness of a medical opinion). 24 3. Dr. Arnold’s Treatment Notes 25 Finally, the excerpts from Dr. Arnold’s treatment notes selectively highlighted by 26 the ALJ are not substantial evidence demonstrating A.M. experienced “improved signs and 27 symptoms” while undergoing substance abuse treatment. AR 28. For example, although 1 intact with unremarkable thought content and process” and that A.M. “was a low risk of 2 harming himself or others,” AR 27, the ALJ omits that the notes also state A.M. reported 3 feeling strange, his medication for attention and concentration was not working, he still 4 had nightmares, and he had limited insight and impaired judgment. AR 1306. The ALJ 5 also points to March 7, 2022, treatment notes that A.M.’s sleep improved and nightmares 6 decreased, but ignores that A.M. was self-isolating, shutting down, experiencing sadness, 7 reckless/self-destructive behaviors, difficulty experiencing positive emotions, and limited 8 insight and impaired judgment, and was still using marijuana and cocaine. AR 1276–79. 9 By cherry-picking from Dr. Arnold’s notes, the ALJ impermissibly substituted his 10 own judgment for that of Dr. Arnold’s medical opinion. See Tacket v. Apfel, 180 F.3d 11 1094 , 1102–03 (9th Cir. 1999); Banks v. Barnhart, 434 F.Supp.2d 800, 805 (C.D. Cal. 12 2006) (noting an ALJ “cannot arbitrarily substitute his or her own judgment for competent 13 medical opinion,” and must not “succumb to the temptation to play doctor and make [his 14 or her] own independent medical findings”); cf. Day v. Weinberger, 522 F.2d 1154 , 1156 15 (9th Cir. 1975) (“We cannot affirm the examiner’s conclusion simply by isolating a 16 specific quantum of supporting evidence.”). He effectively ignored Dr. Arnold’s written 17 medical opinion, which was based on the totality of her contacts with A.M. every two to 18 four weeks, see AR 1047, and which he already found persuasive when finding A.M. 19 disabled at step three in the initial sequential analysis. AR 25. 20 In sum, the ALJ erred at step three of the materiality analysis, and ultimately in 21 finding A.M.’s substance use material, because he applied the wrong standard and his 22 conclusion that A.M. no longer met the paragraph B criteria of listing 12.15 is unsupported 23 by substantial evidence. The ALJ’s decision is therefore reversed. 24 B. Remand for Calculation and Award of Payments is Appropriate 25 Although courts typically remand upon reversal for further proceedings, courts have 26 discretion to remand for the immediate award of benefits if: “(1) the record has been fully 27 developed and further administrative proceedings would serve no useful purpose; (2) the 1 claimant testimony or medical opinion; and (3) if the improperly discredited evidence were 2 credited as true, the ALJ would be required to find the claimant disabled on remand.” 3 Burrell v. Colvin, 775 F.3d 1133, 1141 (9th Cir. 2014) (quoting Garrison v. Colvin, 759 4 F.3d 995 , 1020–21 (9th Cir. 2014)); Young v. Comm’r Soc. Sec. Admin., 214 F. Supp. 3d 5 987, 999 (D. Or. 2016). 6 The parties largely dispute the first requirement of whether there is a fully 7 developed record “free from conflicts and ambiguities, and [whether] ‘all essential factual 8 issues have been resolved.’” See Dominguez v. Colvin, 808 F.3d 403, 407 (9th Cir. 2015) 9 (citation omitted); Opp’n 2. The Commissioner does not appear to argue the record is not 10 fully developed, but rather that there are “inconsistencies between [the claimant’s] 11 testimony and the medical evidence in the record,” and that evidence overlooked by the 12 ALJ “‘casts into serious doubt’ the claimant’s claim to be disabled.” See Dominguez, 808 13 F.3d at 407; Opp’n 2. Specifically, the Commissioner urges there “is an open question as 14 to whether Plaintiff’s substance abuse was material” based on the jail records, a medical 15 opinion from Dr. Khoi, and treatment notes from Dr. Arnold. Opp’n 4–6. 16 As discussed above, the jail records do not constitute substantial evidence for the 17 materiality analysis. Next, the Commissioner notes that Dr. Khoi “opined that Plaintiff 18 had mild or no limitations in performing simple tasks” in contrast to “three medical 19 opinions that Plaintiff has multiple marked limitations.” Opp’n 5. But the Commissioner 20 also states that A.M. “exhibited poor effort during the examination” such that “Dr. Khoi 21 was unable to assess Plaintiff’s abilit[ies].” Opp’n 5. Thus, the Commissioner incidentally 22 argues Dr. Khoi’s opinion cannot constitute substantial evidence because it lacks 23 supportability. See Woods v. Kijakazi, 32 F.4th 785 , 791–92 (9th Cir. 2022) 24 (“Supportability means the extent to which a medical source supports the medical opinion 25 by explaining the ‘relevant . . . objective medical evidence.’”). Finally, the Commissioner 26 pulls excerpts from Dr. Arnold’s treatment notes to support his argument, but does not 27 actually challenge the persuasiveness of Dr. Arnold’s medical opinion. See Opp’n 5–6. 1 || conducted by Dr. Arnold, call into question the overall persuasiveness of her medical 2 || opinion, or raise a factual issue requiring further consideration. 3 As to the second requirement, the Commissioner hardly disputes that the ALJ 4 || committed reversible error, and the Court has already found as much. See Dominguez, 808 5 || F.3d at 407 (“The district court must first determine that the ALJ made a legal error, such 6 || as failing to provide legally sufficient reasons for rejecting evidence.”); Opp’n 1 (“[T]he 7 || Commissioner believes that remand pursuant to sentence four of 42 U.S.C. § 405 (g) is 8 || appropriate ... because the ALJ allegedly erred.”). 9 As to the third element, because “the ALJ found that [A.M.] would be disabled 10 |} under the Social Security Act when considering [his] substance use” and “the materiality 11 || finding was in error, the ALJ would be required to find [A.M.] disabled on remand.” See 12 || Kathryn L.M. v. Comm of Soc. Sec., No. 19-cv-07687-KAW, 2021 WL 4932727 , at *3 13 |} (N.D. Cal. Mar. 29, 2021) (deciding “an award of benefits is proper”). Such a finding 14 |} would not impermissibly rest only on “medical opinions that project the nature, severity, 15 || and functional effects if the claimant were to stop using drugs or alcohol.” See SSR 13-2p 16 |} 9 7(b) & n.19. Dr. Arnold’s opinion states A.M. “has periods of sobriety where his mental 5 17 health disorder was [sic] still debilitating.” And A.M. testified that his mental health 5 18 |} symptoms worsened during his two- or three-month period of sobriety after leaving a 19 || treatment program. AR 59. Because there is no evidence in the record that A.M.’s mental 20 || impairments would improve to the point of nondisability absent substance use, A.M.’s 21 || substance use is not material. See SSR 13-2p. 22 || IV. CONCLUSION 23 The Court REVERSES the ALJ’s decision and REMANDS the matter pursuant to 24 sentence four of 42 U.S.C. § 405 (g) for the immediate calculation and award of benefits 25 IT IS SO ORDERED. [26] 27 Dated: January 27, 2025 h-_———— _ NATHANAEL M. COUSINS 28 United States Magistrate Judge