Hardisty v. Astrue-- EAJA and Unreached Issues

 One of the frequent issues that comes up in the practice of law when fee shifting to the losing side becomes an issue concerns the question of recoverability of fees.  Many cases involve more than one issue and the prevailing party sometimes wins on all, some, or just one issue.  Sometimes the court reaches all the issues up or down, but with some degree of regularity does not decide all the issues.  The Ninth Circuit decisin in Hardisty v. Astrue decided in January 2010.  This post explores my opinions and observations on the case in particular and the subject in general. 

1.      Hardisty v. Astrue, the Boundaries of the Decision

Hardisty v. Astrue, 592 F.3d 1072 (9th Cir. 2010) cert. denied ___ U.S. ___ (2010) stands for the proposition that the Court should not consider issues it did not decide in determining substantial justification.  The Court’s reasoning is that fee litigation should not create satellite litigation and that determining substantial justification on unreached issues would necessarily require deciding those issues on the merits first.  In a case where the plaintiff prevailed, the Court decides whether the Commissioner was substantially justified administratively and in Court on the issues that the Court actually reached.  

In Casey v. Astrue, 2010 WL 2925094, *2 (E.D. Cal. 2010), the District Court did reduce the time paid by 6 hours for issues not reached, relying on Hardisty. The Court reasoned that it should not pay for time expended on issues not reached.  That constitutes an over-reading of Hardisty.  The Ninth Circuit held that issues not reached cannot form part of the calculus of whether to pay fees under the substantial justification analysis.  The issue of whether the Court should pay for such time became moot once the Court reached the issue before it in the negative.  Any reading of Hardisty for the proposition that the Court can or should deny fees for issues not reached or issues decided adversely to the plaintiff violates the law of the circuit.  See Natural Resources Defense Council, Inc. v. Winter, 543 F.3d 1152, 1162 (9th Cir. 2008) citing Hensley v. Eckerhart, 461 U.S. 424, 440, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983); Sorenson v. Mink, 239 F.3d 1140, 1147 (9th Cir. 2001).  Even in the event of limited success, the prevailing plaintiff recovers a full fee absent some special circumstance under the Equal Access to Justice Act.  For instance, raising a frivolous issue might satisfy the special circumstance question. 

Even if Hardisty wrote on a blank slate, a reading foreclosing compensation for some issues would not constitute the law of the circuit.  United States v. Johnson, 256 F.3d 895, 914 (9th Cir. 2001) (en banc) (opinion of Kozinski,.J.) (plurality) holds that:

where a panel confronts an issue germane to the eventual resolution of the case, and resolves it after reasoned consideration in a published opinion, that ruling becomes the law of the circuit, regardless of whether doing so is necessary in some strict logical sense.

The question of what could be paid in Hardisty was never germane to the question of whether Hardisty could overcome the Commissioner’s affirmative defense of substantial justification on the issue reached by the District Court in that case.  It would constitute an anomalous state indeed where a plaintiff could recover for an issue on which he lost under Winter and Sorenson but not recover on an issue that the Court did not reach.  The Court should reject the Casey extension of Hardisty as unwarranted and not justified by any part of the Hardisty opinion germane to the resolution of the issue before the Ninth Circuit in that case.

2.     Reasonableness of Time Expended

The crux of the Commissioner’s position is that plaintiffs should not recover fees for time not reasonably expended.  Certainly the Commissioner cannot press on the plaintiffs’ bar the prescience to know which issues the Court will decide first or place upon them the Hobbesian choice of waiving certain issues on the belief that another issue will win the day.  In the case of limited success, the Court should use the same paradigm whether the plaintiff lost outright on an issue or the Court chose not to decide an issue:  was the plaintiff reasonable in briefing that issue?  The failure to prevail raises a threshold question but does not resolve the issue.  The failure to reach an issue does not cut either way. 

The Court should use an ad hoc analysis to determine reasonableness of time expended.  The issue is fact dependent.  Time spent testing the sufficiency of an articulation may frequently be reasonable.  The case of Hardisty provides an illustrative analysis.  Assuming arguendo that the Court had decided that the Commissioner lacked substantial justification, the question that would arise is whether the plaintiff reasonably expended time addressing the treating and other physician testimony.  The two issues have clear commonality.  Whether the ALJ articulated specific and legitimate or clear and convincing reasons for rejecting that testimony would necessarily require consideration of the medical baseline, i.e. by how much does the plaintiff’s complaints of limitation exceed the objectively based limitations?  In Hardisty, a reasonable plaintiff’s lawyer would either have to include a full discussion of the medical evidence inside of the excess pain analysis or segregate that discussion into an issue of the treatment of the opinion evidence.  Briefing or not briefing the opinion evidence would save little time and potentially provide a more confusing or convoluted presentation.  Similarly, the plaintiff that prevails on a treating physician opinion must prove up that the boilerplate allegation that the physician merely regurgitated the subjective complaints requires a full consideration of the plaintiff’s testimony. 

The majority of the Social Security docket come before the Court at step 4 of the sequential evaluation process.  Did the ALJ properly consider and determine the plaintiff’s residual functional capacity?  That is the issue.  The knife that cuts through that issue comes in two basic serrations:  expert opinion evidence and lay evidence.  Within those two broad classifications, there are at least seven forms of evidentiary distinction.  Because those issues blend together under Reddickv. Chater, 157 F.3d 715, 725 (9th Cir. 1998) (rejecting the quantum of evidence approach), the circumstance where the government lacked substantial justification on one of the seven variations of residual functional capacity evidence and the plaintiff was unreasonable in briefing together or separately one or more of the other six variations should prove rare. 

More likely candidates for reasonableness analysis exist in the step 4 or 5 analysis of the ability to perform past relevant work or other work.  These two issues rely on the completeness of the hypothetical question or the variation of the vocational testimony from the DOT.  These issues always assume the adequacy of the ALJ’s determination of residual functional capacity.  When the plaintiff prevails on the ability to engage in substantial gainful activity question, it is more likely that the plaintiff may have unreasonably briefed the residual functional capacity issue on the first half of the step 4 analysis. 

The same kind of analysis holds true in the briefing of a step 2 medically determinable severe impairments question or a step 3 listings question.  Those issues have common facts but completely different legal principles than does a residual functional capacity issue.  Prevailing on step 2 medically determinable severe impairments question or a step 3 listings question would rarely if ever result in a finding that the plaintiff was unreasonable in questioning the residual functional capacity assessment at step 4.  Failing to prevail at step 2 medically determinable severe impairments question or a step 3 listings question but prevailing on the residual functional capacity question would leave open a question of reasonableness for case-by-case determination. 

3.     A Rough Application of Hardisty and Reasonableness

When a plaintiff prevails at a lower step of the sequential evaluation process, it would present a rare case that the plaintiff unreasonably briefed issues at a higher step of the sequential evaluation process.  Prevailing at steps 2 or 3 of the sequential evaluation process implies error at steps 4 or 5 of the sequential evaluation process as based on a legally or factually infirm foundation.  Although the burden of proof of reasonableness remains with the plaintiff, the burden of persuasion would shift to the Commissioner. 

When the Court is convinced that the classification of an impairment as either not medically determinable or non-severe at step 2 of the sequential evaluation process constitutes a material error in the adjudication of the claim, the Court should rarely proceed to consider the remaining steps of the sequential evaluation process unless the Court intends to order the payment of benefits on one or more of those issues. 

When the plaintiff prevails at a higher step of the sequential evaluation process and loses at the lower steps of the sequential evaluation process, the burden of proof and the burden of persuasion on the question of reasonableness would still remain with the plaintiff. 

Where the Court is convinced that the independent step 5 analysis resulted in a finding of ability to engage in substantial gainful activity arose out of legal error, the Court should never ignore the step 4 residual functional capacity question unless it is clearly frivolous or the Court is ordering the payment of benefits. 

The Eastern District of California - Fresno Division

The Law Offices of Lawrence D. Rohlfing has long had a presence in the Eastern Disrrict of California.  The representation of Social Security disability claimants stretches back about 20 years.  The office has never had a strong presence at the adminstrative level, just handling court cases for other attorneys and representatives whose clients have suffered a denial of benefits.  These cases get to the District Court after administrative hearings in Fresno and Bakersfield, all handled by the Fresno Office of Disability Adjudication and Review.

The problems start at the ODAR level.  For the fiscal year ending September 2011, the hearing office had an average allowance of 49.9%.  One very experienced judge pays 29.7% of the cases that he hears; another experience ALJ pays 38.1% of the cases that he hears.  Compare these numbers to the average allowance rate for every ALJ in the Social Security system of 62.4% and the problems begin to crystallize.  The Fresno ODAR is almost one standard deviation from the mean not as a rogue ALJ but as an office.  There are worse offices in the nation but Fresno ODAR is a bad place to have a Social Security disabiliity claim heard.  A claim has a 20% lower chance of getting paid in Fresno than in a hypothetical average ODAR. 

These cases that get denied end up at the Appeals Council.  The AC grants review in about 25% of the cases that it hears.  Some of the 75% that the AC denies end up in federal court.  The United States District Court for the Eastern District of California, Fresno Division, hears the cases that the Fresno ODAR and the AC deny. 

I do not have any statistics but my experience informs me that the Fresno District Court changed in the last 10 years.  It has become more apt to affirm bad decisions of the Commissioner of Social Security.  Perhaps this arises from a cultural shift, perhaps from an incredible case overload in cases of all types, or some other reason that escapes by narrow view.  The message in the past 5 years form the Fresno Division has been clear, it is not a claimant friendly forum. 

So how do we can we possiby detect a shift in the decisions of the Fresno District Court, principally by the Magistrate Judges in Fresno?  The Ninth Circuit Court of Appeals reviews the decisions of the District Court.  The Ninth Circuit "publishes" all of its opinions, those certified for publication in the official reports and deemed precedential and those that get classified as memorandum dispositions that lack the force of precedence.  The cases decided after November 10, 2009, are searchable by court of origin and parties.  The Ninth Circuit calls the Fresno Division the "Fresno District Court."  The Fresno District Court classifies Social Security cases as suing the Commissioner of Social Security with the abbreviation of either CSS or CSSA. 

In the last 2 years, the Ninth Circuit decided 11 cases coming out of the Fresno District Court.  It reversed in 6 and affirmed in 5.  One of the 5 affirmances was a pro per.  So in attorney represented cases, the Fresno District Court has found itself reversed in 60% of the cases.  The average reversal rate for any District Court group of decision is less than 20%.  The reversal rate over a two year period forms the basis for a real concern.  Not all deserving cases get appealed for legal, logistical, or business reasons.  If the Fresno District Court gets reversed 6 out of 10 times in attorney represented cases, experience teaches that there are other cases that suffered "affirmance of the Commissioner's decision" that did not get appealed to the Ninth Circuit. 

The system needs to work.  The public needs to have confidence that the system works.  The Social Security disability program already has the appearance of a lottery with benefits dependent on the identity of the decision-maker rather than the facts of the cases.  When an ODAR gets well below average in allowances in a program that is based on the presenced of jobs in the economy in a region bereft of jobs, then the District Court must provide real and meaningful review that holds the feet of the administration to the fire.  Administrative discretion cannot replace the public expectation of evenhanded administration of justice. 

Your mileage may vary. 

Taylor v. Commissioner of SSA

The Ninth Circuit published an important decision the end of October, Taylor v. Commissioner.  Taylor affirms the principal of Ramirez v. Shalala, 8 F.3d 1449, 1451-54 (9th Cir. 1993) that when the Appeals Council denies a request for review that included new and material evidence, the court will review the sufficiency of the decision in light of that evidence.  That isn't new but there was a battle brewing in the Ninth Circuit over whether Ramirez was good law or an anomaly where the government did not contest the issue.  Pamela Rymer had pressed the AC-evidence issue but never got any traction.  Her death in September leaves a question whether any other judge of the court will lean on that claim.  Taylor signals strongly that the battle is over. 

Taylor extends the treating physician rule to its logical step.  The Commissioner may not toss aside opinions of nurse practictioners or physcian's assistants without a germane articulation beyond the lack of "MD" status.  This makes sense.  In the world of scarce resources, many people including most particularly the poor cannot afford first class medical care.  Many see the NP or PA in the office and rarely see the MD.  Most conditions don't require the MD anyway, especially the chronically ill or injured on a maintenance program.  The decision in Taylor conforms with the Commissioner's views expressed in SSR 06-03p. 

People need access to care.  Whether the condition manifests itself as back pain, diabetes, depression, or some other manifestation of ill health, people need access.  Telling those that access care through NPs and PAs that they will lack the capacity to prove the nature and extent of their limitations before the SSA forces those individuals into a catch-22 that harms the public interest.  Without access to Medicare or Medi-Cal/Medicaid because of the receipt of care through expensive means translates later into a lack of care at all.  The vicious circle that wedding the disability program to the exclusive province of MDs and PhDs would end in less care for everyone.  Medical care is a scarce resource.  As a society, we need to marshall those resources in an intelligent and insightful manner that maximizes the good of individuals and society. 

Taylor pushes the envelope.  It should push the envelope.  The only loser from this decision are the minority of Administrative Law Judges that look for reasons to deny rather than looking for evidence of eligibility under the statutory and regulatory standards. 

Carrillo Yeras v. Astrue

Carrillo-Yeras v. Astrue is an important win for claimants seeking the disability benefits found in the Social Security Act.  Ms. Carrillo applied for benefits and received a denial by Administrative Law Judge decision.  She excercised her rights under the regulations to both file a request for review to the Appeals Council and to file a new claim for benefits with SSA.  As of this year, the agency has withdrawn that dual track process as an option for claimants denied by an ALJ.  Social Security Ruling 11-1p.  The dual track appeal and refile remains a viable option for claimants once they receive a denial of review by the Appeals Council -- they may proceed to the District Court and file a new claim.  This case will have continued ramifications even under current agency policy. 

The case is simple.  Ms. Carrillo re-filed in 2003 after the ALJ denied her first case.  The agency decided that she met the requirements for disability.  The Appeals Council granted the request for reivew of the first case and reopened the second case, sending them both back to the same ALJ for a new consolidated decision.  It is clear that the only reason that the Appeals Council granted the request for review of the first decision was to provide a vehicle to reopen the second case and allow the ALJ to make one decision applicable to both.  SSA calls this a "substitution of judgment."  Any system based on discretion must reject the substitution of judgment of one fact finder by another.  The regulations permit an out for this basic principle in reopening and revision.  20 C.F.R. §§ 404.988 and 416.1488. 

I assume good faith unless bad faith reaches up and slaps me in the face.  I entertain that the Appeals Council had a legitimate reason for reopening the grant of benefits on the subsequent claim that would permit the substitution of judgment.  The Ninth Circuit decision describes a process that took 23 months from the date that the Appeals Council stated that it would reopen to the date that the ALJ told Ms. Carrillo that he found that she was never entitlted to the benefits paid to her and her family. 

As an exception to the prohibition of a substitution of judgment, the regulations narrowly prescribe the circumstances that SSA can engage in a reopening and revision that constitutes a "take away."  The agency must complete the investigation within 6 months or diligently under the circumstances.  20 C.F.R. §§ 404.991a, 416.1491.  If the agency takes longer than 6 months and has not acted diligently under the circumstances, any change to the reopened decision must find in the claimant's favor, i.e. not a take away. 

This maes sense.  The reopening puts the claimant on the edge of the precipice.  For the next 6 months or during a period of diligent investigation to the point of decision, that person's finances and health insurance hang in the balance.  If the agency does not complete the investigation, it should not have the ability to claw back the properly paid benefits and cease the ongoing benefits.  The agency can always conduct a continuing disability review to remove the person from the disability rolls later by showing improvement or that the first decision rested on error.  SSA has its remedies.  Restricting the reopening and revision process levels the playig field and removes the punitive component of taking away granted benefits to individuals acting in good faith for those claims on the cusp.

But did you notice the name of the lawyer representing Carrillo-Yeras?  I enjoyed working on and arguing that case.  The win is just sweet. 

Aarestad v. Commissioner

I know, unpublished opinions are not precedent and don't matter much.  Unless of course you are one of the litigants in an unpublished opinion.  Aarestad v. Commissioner is a bad decision.

Aarestad applied for widow's benefits.  The Court held that she "worked only sporadically before the alleged onset of disability (which suggests that her decision not to work was not based on disability) ..."  Did I mention that Aarestad applied for widow's benefits?  Of course she worked sporadically.  She and her deceased husband made a socio-economic decision that she not work because not everyone has abandoned the one-income household model.  Some couples don't have to send both people back to work.

There are clear advantages to a single income household.  Not only the obvious with raising children but also in the mundane day-to-day of living.  If both people work, the chores of cooking, cleaning, and laundry mean that one or both members of the family are working not 40 hours per week but more like 60 hours per week.  That usually defaults to the wife, which is why married men live longer than their bachelor friends and married women don't live as long as their single friends.  Life expectancy is how we make plans.

There is a discrete difference between a lifetime of sloth and a legitimate sociological choice that is in the cultural norm.  A history of sloth can form a legitimate basis for discounting a claim of disability.  A legitimate choice to live on the wages of one partner in the marriage while the other stays home is not a history of sloth or a legitimate basis for discounting the surviving spouse's testimony.

A rule of law is based on the assumptions that under-gird that rule.  Failing to recognize the nuances of the rationale behind a rule of law is dangerous not only to the person involved but to future cases.  The infection starts in misapplication in unpublished opinions, spreads into published opinions, and pretty soon the law becomes absurd.  Charging the stay-at-home partner for a life decision that finds solid cultural and sociological underpinnings is an attack on the social fabric and the family.  The Court needs to divorce itself from the dangerous path that Aarestad takes.  Whether she otherwise deserved to win is a different story but piling on bad reasons is the kind of hyperbole and exaggeration that we all find "not credible."  

Social Security Ruling 11-1p

Effective July 28, 2011, the Social Security Administration (SSA) reverted back to an old policy that forbade claimants from filing new applications while they appealed an Administrative Law Judge (ALJ) decision to the Appeals Council (AC).  The policy change is found in Social Security Ruling 11-1p.  Claimants for benefits enjoyed the option of filing a new claim for benefits while pursuing an older claim before the Appeals Council when the agency changed its policy in 1999.

It wasn't just largesse that that pushed SSA to allow the new claim filing in 1999.  It was then taking the AC about 3 years to decide whether to grant or deny review of an ALJ decision.  The wait for 3 years and then another 2 years to get to an ALJ on a second claim for benefits put a staggering toll on claimants whose cases teetered on the cusp.  For the chronically ill, the absence of access to medical care for 5 years or dependency on the public healthcare system was sometimes a death knell.  The 1999 policy allowed those new claims to progress through the initial and reconsideration stages during that 3 year spell at the AC.  Many of those people received benefits on the new application, a few on reconsideration, and others got in line at the hearing office to see an ALJ on that subsequent claim.  The hearing office was not supposed to decide those cases pending at the AC, although it did happen from time to time.

Under Joanne Barnhart, SSA began to take a hard look at those egregious wait times for hearings and before the AC.  When Michael Astrue took over as the new Commissioner of Social Security, that concern took concrete form.  Commissioner Astrue mandated that the hearing offices decide all cases pending more than 1000 days old and gradually reduced that "aged" case mandate to 750 days.  Average processing times have been reduced to between 186 and 504 days.  The wait at the AC has been reduced from 3 years to about 1 year.

With quicker processing times both at the hearing level and at the AC, the need for the new application policy dissipated.  Many claimants still filed new claims and got granted on those cases while old cases meandered through the administrative process.  Since the AC continued to deny review of unfavorable ALJ decision 70-75% of the time, getting that new application in early did make a big difference.

The downside for claimants filing new applications rested in the nasty tendency of the AC to take the grant of the new application with the ALJ denial of the old claim, fold them together, and send both back to the denying ALJ for a second look.  It doesn't take a rocket scientist to figure out what a lot of ALJs did with those now combined claims.  It presented a situation fraught with peril as the disabled claimant had to decide with the ALJ's permission whether to dismiss the request for hearing on the old claim to keep the new claim or roll the dice and proceed to have both cases adjudicated.  Some of these cases had explicit reopening of the second claim by the AC, others implicitly giving the ALJ permission, and some giving no hint at what the AC intended at all.  Once in a while, a claimant would receive a remand on the old case from the AC with an express affirmation of the subsequent grant.  The varied scenarios that a subsequent grant created with cases pending at the AC probably played a big part in rescission of the policy to allow the subsequent application.

As a proponent of not putting all of my client's eggs in one basket, I routinely advised my clients to reapply for benefits after filing a request for review or District Court action.  That advice as to the latter stage will continue to constitute the modus operandi of responsible representatives absent circumstances such as an expired insured status for Title II (SSDIB) benefits and no eligibility for Title XVI (SSI).  I have seen far too many times the absence of that subsequent application hurt the claimant that changed age categories or suffered medical deterioration come back and bite the claimant in the pocketbook.  That general presumption to re-file at the AC level of review now requires finesse and lawyering.

The AC will treat the submission of new evidence that does not relate to the period of time adjudicated by the ALJ to represent a protected filing date of a new application.  In practical terms, this means that representatives must submit new evidence to the AC throughout the process arguing both that the new evidence undermines the ALJ decision and that if the evidence is dated after the date of the ALJ decision that it constitutes a protected new filing date on a new claim should the AC not grant the request for review. Representatives that do not refresh the medical records before the AC or remind the AC that the claimant has now entered a new age category "and this is a protected filing of a new application" will commit material error on behalf of their clients.  The word for that error is "malpractice."  Just as attorneys and non-attorney representatives that did not advise on the filing of a new application in the past have hurt their clients, I fear that the non-diligent representatives will fail to take advantage of the rules that now require us to make the protected filing date pitch.

Electronic Folders ... the New SSA

We now live in two worlds.  In one world, people we live in the communication age with electronics dominating our activities.  In the other world, we live in the world of paper, real paper with edges and paper cuts.  Practicing law is no different, not even with the Social Security Adminstration. 

When I started this journey in 1985, files were all paper.  Attorneys or their designated employee or copy service traveled to the Office of Hearings and Appeals to make copies of paper files.  This laborious task required disassembling the files, removing staples, and running the exhibits through a copy machine.  So high tech services scanned the pages, only to print them out later.  The person making the copies had to reassemble all the exhibits into the folder.  The paper folders got transferred from the field offices to the disability determination services, back again ... twice usually.  Then the file would wind its way to the OHA hearing offices.  If the case went onto review to the Appeals Council, the file got shipped off to Falls Church, Virgina.  Extraordinary delays as paper got pushed back and forth through the system. 

Enter the age of electronics and the digitization of files.  The OHA became the Office of Disability Adjudication and Review.  ODAR started sending and giving out discs with the claim files on them.  This created security issues.  To protect privacy, ODAR started encrypting discs that it mailed to the appointed representatives or to the unreprented claimants.  But now the process has turned up another notch. 

In the current age of file transmissions, representatives must sign up for the Electronics Records Epxress.  The ERE requires the erstwhile representative to log in through 3 layers of seurity to get to the client's file.  Viewing the TIF files as a photo is cumbersome and inefficient.  Reviewing the files in PDF requires a download and conversion or download as a PDF file.  The whole idea of securing the personal identifying information is a great idea but the keys for encryption on the representative end no longer comes automatically with possession of a password encrypted disc.  It requires the representative to install and operate encryption software on the end user computers. 

The whole process becomes cumbersome and costly.  Another barrier to the entry into the marketplace of representing the disabled in their pursuit of benefits denied by the federal bureaucracy.  As the federal government raises the cost of representing human beings, the federal government discourages representation.  The loser in the final analysis is the person that finds it more and more difficult to find quality representation by attorneys with new and fresh ideas.  That leaves the old guard in place with less competition from upstarts.  Having been an upstart and having been in the business long enough to be considered old guard, I like to see young people getting into the business and forcing competition. 

And that is the real problem.  Technology puts us all at risk for identity theft.  The winners in the battle agaist identity theft are the new parasitic industries that do not produce but only secure.  While we need security, the cost of security dampens the market and squeezes marginally profit businesses out.  Not a good result for the consumer ... not a good result at all.