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Schulz v. Berryhill

United States District Court, W.D. Washington, Seattle

July 13, 2018

JODI SCHULZ, Plaintiff,
NANCY A. BERRYHILL, Acting Commissioner of Social Security Defendant.



         Plaintiff, Jodi Schulz, appeals the ALJ's decision finding her not disabled. The ALJ found post-traumatic stress disorder, panic disorder with agoraphobia, attention deficit disorder, anxiolytic dependence, iatrogenic opioid dependence, history of alcohol abuse, back impairment associated with low back pain and history of headaches without clear etiology, history of scabies, and recurrent dermatitis are severe impairments; the impairments do not meet the Listings; plaintiff retains the RFC to perform less than the full range of light work subject to additional postural, environmental, and mental limitations; and plaintiff is not disabled because she can perform past relevant work, and other jobs in the national economy. Tr. 19-28. The ALJ's decision is the Commissioner's final decision. Tr. 1.

         Plaintiff contends the ALJ (1) improperly relied upon substance abuse to reject medical and testimonial evidence; (2) improperly rejected her testimony, the lay testimony, and the opinions of Carl Epp, Ph.D., Phyllis Sanchez, Ph.D., Marnie Levinson, M.A.; and (3) erred at step three by failing to properly evaluate dermatitis. The Court REVERSES the Commissioner's final decision and REMANDS the matter for further proceedings under sentence four of 42 U.S.C. § 405(g).


         A. The ALJ Harmfully Erred at Step Three

         The ALJ found recurrent dermatitis is a severe impairment but failed to mention the impairment at step three. Tr. 20. Citing to Gonzalez v. Sullivan, 914 F.2d 1197, 1200-01 (9th Cir. 1990), the Commissioner argues this failure is of no moment because an ALJ need not state why a claimant fails to satisfy every different section of the listing of impairments. Dkt, 11 at 8. The argument fails. First, the decision itself acknowledges, at step three, the ALJ “must determine whether the claimant's impairment or combination of impairment is of a severity to meet or medically equal the criteria of an impairment listed in 20 CFR Part 404, Subpart P, Appendix 1.” Tr. 18. The ALJ failed to make this determination.

         Second, Gonzalez v. Sullivan, does not support the Commissioner's argument. The Gonzalez Court focused on whether the ALJ made sufficient findings upon which a “reviewing court may know the basis for the decision.” Gonzalez at 1200. The Gonzalez Court found the ALJ's five page summary of the medical record and the ALJ's findings regarding the claimant's complaints were sufficient, i.e., they provided an “adequate statement of the ‘foundations on which the ultimate factual conclusions are based.” Id. But the Gonzalez Court did not hold the ALJ may disregard a severe impairment, make no findings, and provide no discussion regarding the impairment. But that is what the ALJ erroneously did here. See also Santiago v. Barnhart, No. 278 F.Supp.2d 1049, 1058 (N.D. Cal. 2003) (Rejecting Commissioner's reliance on Gonzalez v. Sullivan, and finding “the Court simply cannot determine from the ALJ's opinion how he came to the conclusion that Santiago's “severe” impairments did not equal sections 1.03 and 1.13.”). Consistent with Santiago and Gonzalez, the Court concludes the ALJ harmfully erred by failing to discuss recurrent dermatitis at step three, or at any subsequent step of the sequential disability evaluation process.

         The Commissioner suggests the ALJ's failure to address recurrent dermatitis is harmless because plaintiff does not meet the requirements of Listing 8.05 which governs dermatitis. Dkt. 11 at 8-9. Plaintiff contends otherwise arguing she meets the Listing's requirements. Dkt. 10 at 16-18. These arguments require the court to weigh the evidence, and thus invites the court to impermissibly play ALJ in the first instance. The court reviews the reasons the ALJ asserts in support of her decision. Connett v. Barnhart, 340 F.3d 871, 874 (9th Cir.2003). If the ALJ fails to make findings regarding a severe impairment, the court cannot simply substitute its own findings and conclusions. Treichler v. Commissioner of Social Security, 775 F.3d 1090, 1103 (9th Cir. 2014).

         Additionally, remand is appropriate even if recurrent dermatitis does not meet the Listings. In determining a claimant's RFC, an ALJ must assess all the relevant evidence, including medical reports and witnesses' descriptions of limitation, to determine what capacity the claimant has for work. See 20 C.F.R. § 416.945(a). That did not occur here. Hence if the ALJ on remand finds dermatitis does not meet the Listings, the ALJ must nonetheless continue with the five step disability process and determine what impact the severe impairment has on plaintiff's RFC. In sum, the ALJ harmfully erred by failing to mention or discuss recurrent dermatitis, a severe impairment, at step three or at any subsequent step of the disability evaluation process.

         B. The ALJ's Assessment of Medical and Other Source Opinions

         1. Carl Epp, Ph.D.

         The ALJ rejected Dr. Epp's opinion that plaintiff is markedly and severely limited in her ability to understand, remember, complete a normal work day, and persist. Tr. 24. The ALJ rejected Dr. Epp's opinion on the ground plaintiff “inaccurately reported her history of substance abuse” to the doctor. Id. Substantial evidence does not support the ALJ's reasoning. Dr. Epp knew plaintiff's statements about substance abuse did not stack up, noting the discrepancy between plaintiff's denial of substance abuse and her admission that she had used clonazepam for 22 years. Tr. 321. The doctor thus recognized plaintiff was not accurately reporting her substance use. Based on this discrepancy, the doctor indicated he could not make a complete diagnoses and recommended further evaluation for drug addiction. Id. If anything, Dr. Epp's recommendation required the ALJ to further develop the record regarding the impact of plaintiff's drug addiction, not simply reject it.

         The ALJ also discounted Dr. Epp's opinion on the grounds it was “contradicted” by plaintiff's daily activities. Tr. 24. The Commissioner does not defend this conclusory reason. In any event plaintiff's activities―leaving her home and visiting a son; getting along with health care providers, or buying groceries at a “familiar store” do not contradict Dr. Epps' opinion.

         2. Phyllis ...

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