Dominguez v. Colvin -- the CAT and Award of Benefits

Ninth Circuit decided Dominguez v. Colvin on December 15, 2015.  This is the latest development in the Credit-as-True (CAT) jurisprudence in the Social Security cases decided within the circuit.  The CAT has fermented within the circuit since at least 1988.

In Varney v. Secretary of HHS, the Court clarified the scope of judicial power under the Social Security Act as including the power to credit the testimony is true and to remand for the payment of benefits.  Varney establishes a three-part test for a remand for the payment of benefits.  First, the record was fully developed and further administrative proceedings would serve no useful purpose.  Second, the ALJ failed to provide legally sufficient reasons for rejecting the evidence, whether a medical opinion or the claimant's testimony.  Third, if the improperly discredited evidence were credited as true, the ALJ would be acquired to find the claimant disabled on remand, then the court would reverse an award benefits.  Judge Stephen Reinhardt is the author of Varney.

Judge Reinhardt turned up the heat in Garrison v. Colvin, decided in July 2014.  Garrison made the three-part test sound mandatory with one caveat.  Garrison allows for the remand if the record as a whole creates serious doubt that the claimant does in fact suffer from a disability.

Burrell v. Colvin pulled back on the reins.  Burrell rejected the government's position that the court can never credit evidence as true and remand for the payment of benefits.  Burrell rejected the claimant's position that Garrison established a requirement to remand for the award of benefits.  In a decision authored by Judge Susan Graber, the court held that even if the facts met the Garrison elements, the court retains the flexibility in determining the appropriate remedy.  Burrell found serious doubt and remanded.  Judge Mary Schroeder dissented and would have applied Garrison to award benefits.

Judge Sandra Ikuta entered the fray in Treichler v. Comm'r of SSA.  Treichler resurrected the discretionary component of the CAT, pointed to the review of a District Court decision to remand rather than award benefits as falling under the abuse of discretion standard, and other cases describing the power to award benefits as used in rare circumstances.  Treichler stands for the proposition that in assessing the exercise of the power to award benefits as opposed to a remand for further proceedings, that the court reviews the record as a whole including evidence and theories never espoused by the ALJ as a basis for rejecting the claim for disability benefits.  Judge Wallace Tashima dissented and would have applied Garrison to award benefits.

Judge Ikuta uses Dominguez as the platform to swing the pendulum back to the other side.  While Garrison made the credit-as-true doctrine as appearing mandatory in many circumstances, Dominguez makes the CAT appear exceedingly rare.  Dominguez holds that the District Court must find that administrative proceedings would serve no useful purpose.

And therein lies the rub.  The no useful purpose element of the CAT requires a tempered consideration of not only the fairness of additional administrative proceedings to the claimant but also the preservation of scarce resources.  Where the result is obvious, the court should reverse an award benefits.  It isn't so much that additional administrative proceedings would serve no useful purpose, but more that the utility gained from a remand are unlikely to provide a basis for a different result other than the payment of benefits.

The representatives that handle claims will complain among themselves about vindictive ALJs that will change factual findings on remand to avoid the payment of benefits. That arises because the ALJ corps sees its function not as adjudicating the eligibility for benefits and whether a claimant meets specific legal requirements to obtain relief promised by the Social Security Act, but instead to determine whether an individual claimant deserves to receive disability benefits.  Some ALJs look for legal and proper bases to award benefits.  Some ALJs look for legal and proper bases to deny benefits.  That is why we have a decisional scatter where some ALJs pay 85% of the claims and other ALJs pay 15% of the claims.  This creates a nightmare for claimants and their representatives.  We can accurately predict the results in only 30% of all claims.  We know that in 15% of the cases, no ALJ will pay the case; we know that in 15% of the cases, every ALJ will pay the case.  That leaves 70% of the cases in the middle where no one can tell whether a claimant will receive a favorable or unfavorable decision until we know one the irrelevant fact — the identity of the ALJ.  That lottery-affect represents a horrible way to dispense administrative justice in the largest adjudicative body in the world.

The courts play an important role in evening out the dispensation of administrative justice.  When the court pays benefits on a fact pattern, the soft precedential effect of that decision permeates through the system and creates a floor to push up the bottom towards the middle.  When the court denies relief on a fact pattern, that soft precedential effect pushes the top down towards the middle.  Political pressure and bad press on disability claimants in general serve to push all of the decision-makers down, driving up the incidence of denied benefits for people who truly cannot work and to also meet the strict legal requirements of the Social Security Act.  When the pendulum swings from Varney to Garrison to Burrell to Treichler and now to Dominguez, the lack of stability and percolation of the issues within the circuit does something that the law should never do — add a layer of and certainty and doubt.

The panels in Burrell and Treichler asked the parties to comment on whether the Ninth Circuit should hear the CAT en banc with an 11 judge panel.  The government declined the invitation, probably because SSA got what it wanted in the form of a remand to preserve its jurisdictional turf to make decisions.  The claimants in Burrell and Treichler declined, satisfied that they got some relief.  In the near future, the court will need to take the CAT en banc and resolve the tension of the Varney legacy and to provide some formulaic consistency to the question of when a district court should reverse an award benefits and when the district court should remand for further proceedings.

JMHO, YMMV.

What Happens When Allowance Rates Drop ... to the Public Fisc

Ask any ALJ or any representative that handles Social Security disability claims -- allowance rates have dropped for the good judges, the bad judges, and those in between.  According to the ALJ disposition data figures, the allowance rate of all dispositions in FY 2010  was 46%.  The allowance rate for all decisions was 67%.  The allowance rate for all dispositions in FY 2015 was 37%.  The allowance rate for all decision was 53%. 

The allowance rates dropped by 9% for all disposition and 14% of all ALJ decisions.  Good for the public fisc, right?  The answer is counter intuitive and  the dilution of allowance rates just hurts those that cannot fend for themselves -- the disabled.  But it also hurts the public fisc. 

President Reagan advocated and signed into law the Equal Access to Justice Act to to give common people the ability to fight unreasonable government action.   28 USC sec. 2412.  As long as the person or organization meets the financial ceiling test, that person or organization can shift part of the fees to the United States for acting unreasonably.  The rate is $125 per hour adjusted potentially for inflation. 

In FY 2010, SSA paid $19 million in EAJA fees for making or defending flawed decisions denying human beings disability benefits.  In FY 2015, SSA paid $38 million in EAJA fees.  What happens when the ALJ corps succumbs to political pressure to deny benefits?  The corps does it badly.  Does it benefit the public fisc?  Not in terms of EAJA fees, the government doubled its EAJA outlay in five short years. 

Remand for Further Proceedings in Esparza v. Colvin

The little trinkets of gold filter down in unpublished opinions.  Esparza v. Colvin provides insight into the court's thinking and assumptions that will prove dangerous.

Esparza remands for further proceedings because the ALJ did not give good reasons for rejecting the claimant's testimony or the opinions of the treating physician.  Pretty pedestrian stuff, the issues that permeate Social Security cases on a daily basis.  The federal courts decide those issues every day.

But a battle wages on in the Ninth Circuit over the remand versus pay issue.  The agency lawyers and the court have yet to address the elephant in the room -- the statute clearly permits the courts to find that the claimant deserves to be paid without a remand for further proceedings.  42 USC sec. 405(g) and (i).  More on that another day.

Esparza remands for further proceedings as a useful exercise to further develop the record.  Fair enough, the court has discretion under the statute and the cases tip the hat in that direction without giving fair account to the statute.  The next sentence has a bomb waiting to explode:

If she deems it appropriate, the ALJ should reopen the hearing to receive additional evidence.  

Whoa Nellie.  We just spent six pages analyzing how the ALJ abused her discretion in weighing evidence and now the court wants to inject another round of unfettered discretion into the process.  Bad politics.

 The closed remand also violates agency policy.  When the ALJ makes a decision on remand by the court,

The ALJ will generally decide the remanded issues through the date of the new hearing  decision, or in title II cases involving an expired date last insured, through the date of last insured status.

HALLEX I-2-8-18.  How will the ALJ adjudicate through the date of the new decision without taking new evidence of recent education, recent work attempts/activity, and medical treatment.

When the ALJ makes an unfavorable decision, the Appeals Council will get around to the request for review in about 18 months.  The district court will take at least another year to decide the case at that leve.  And the court of appeals, Betty hold the door because that level of review will take two years.  We know that because the Ninth Circuit case number is 13-16522.  The "13" -- that means the appellant filed a notice of appeal in 2013.  The District Court case number is 2:12-cv-00733-SPL.  The "12" -- that means that the claimant for benefits filed a complaint in that court in 2012.

The case is likely five years stale from the date of original ALJ decision.  Discretion to receive additional evidence is misguided if not simply wrong.  It is only palatable if the ALJ will just award benefits to a claimant that probably applied for disability in 2008 (my guess).  Thomas Alvarez Esparza has endured a probable seven-year wait and won't get a decision from SSA until mid- to late-2016.

Sheridan v. Colvin ... another unpublished opinion

The Ninth Circuit reversed and remanded by a 2-1 vote on November 17, 2015.  Judges Fletcher and Berzon found that the ALJ did not give clear and convincing reasons to reject the testimony of Sheridan about her migraine headaches.  Judge Bea disagreed.

The majority found pedestrian errors.  Sheridan qualified the statement about activities with statements that she did so when she had a good day or depending on how she felt.  The Ninth Circuit needs to adopt a confrontation requirement so that the ALJ cannot just lurk with a perceived inconsistency and spring it at the time of decision.  The hearings do not last long enough to permit responsible representatives to ask about everything in the record.  The ALJ has a duty to develop the record.  Soto-Olate v. Holder imposes that obligation in the immigration context.

The court faults the ALJ for comparing statements in 2007 to 2008 as different.  The court finds it plausible that different times might have different symptoms and responses.  That is called commonsense.  The ALJ never asked.  See Soto-Olarte.

The court found insubstantial the comparison of onset in 2008 to the cessation of work in 2008.  Again, just a silly statement by an ALJ.  Life is progressive and erosive.  I was fine five years ago does not mean that I am fine today.  The ALJ never asked.  See Soto-Olarte.

The court found that the ALJ engage in conflation for simple migraines with migraines with aura.  If the ALJ does not understand the distinction, the ALJ has a solution, ask.  The ALJ never asked.  See Soto-Olarte.

Now the reason for writing.  The dissent would excuse bad decision-making and leave it to the ALJ to just speculate wildly about perceived inconsistencies without ever asking.  Judge Bea writes that doing laundrm, cooking dinner, cleaing the yard, shopping once or twice a week, caring for two pet dogs, .going to the track to watch her son race, and entertaining visitors would take hours of sitting, standing, and walking.  The italics - those are the judge's.  Sure they do, if Sheridan did them all consecutively or all in the same day.  But the ALJ didn't say that and Judge Bea doesn't report that.  The ALJ just combined them and said, well if you can accumulate hours of activity in a week, then you must be able to work.  The ALJ could have asked about the number of hours of activity in any particular day.  The ALJ never asked.  See Soto-Olarte.

Judge Bea implies in footnote 2 that Sheridan's response to physical therapy changed in June 2008 because she applied for benefits in March and alleged disability in February 2008.  The dust of slander is that Sheridan decided to exaggerate her disability in March and lied in June. The other alternative is that Sheridan got worse after July 2007, couldn't handle work by February, and told her doctors that therapy aggravated the headaches in June.  The ALJ never asked.  See Soto-Olarte.

I have a secret to tell the ALJs and the reviewing Article III judges.  Life is not static.  Disability is not static.  Symptoms vary for any number of reasons.  If you want to find disabled people, go to public places -- the ball game, high school gyms, the store -- go live a little life and get out the sequestered notion that the disabled live a secluded existence getting spoon fed their meals.  Just silly, no naive and puerile.

EM-13024 And Fees to Representatives that Waive Direct Payment

The Social Security Administration regulates fees that representatives can charge and receive.  The Program Operations Manual System (POMS) confirms agency policy.  The regulations carve out an exception when SSA will not involve itself in the authorization of when a representative can charge and receive a fee.  20 C.F.R. sec. 404.1720(e).  That exception concerns payment an entity or government agency will pay the representative.  The exception has two elements:  (1) the claimant will not have liability to pay fees or expenses to the representative or someone else; and (2) the representative tells SSA that he/she is waiving the fee from the claimant.  The form is SSA-1696 - the appointment of representative form.  The portion of the form provides:

I certify that my fee will be paid by a third-part entity [...] that the claimant [is] free of all liability [...]  to pay any fee or expenses to me or anyone as a result of their claim(s) or asserted rights(s).  [...] Do not check this box if a third-party individual will pay the fee.)

Now for the fun stuff.   On July 15, 2013, SSA published an Emergency Message.  EM-13024 provides guidance on what to expect when a claimant has multiple representatives and SSA approves the fee agreement (the expedited fee process).  The first and third examples reflect the waiver fees benefiting the claimant and not the representatives.  If the waving representative is a member of the firm that will receive a fee, the fee is reduced.  If the waiving representative is not a member of the firm that will receive a fee, the fee is not reduced.  I am not sure how that differentiation squares with HALLEX I-1-2-18.  When a representative waives, the other representatives should receive a percentage of the fee regardless of whether the waiving representative was a member of the firm.

The EM represents a concession that permits claimants to change representatives and permit the new representative to receive a full fee.  Many representatives won't take a claim if they can't get the fee agreement approved.  No one likes fee petitions and SSA sees a way to accommodate the interests of the claimants and the representatives as long as the waiving representative comes from a different firm from the other representative(s).

Now the hard part -- example two is wrong.  Examples one and three represent an accommodation and a sub-regulatory address of a bare bones statutory scheme.  But the second example contradicts the regulation.

The regulation permits a representative to get paid by a third party if and only if the claimant has no liability to any representative for the fees or expenses associated with the claim.  The appointment of representative form tracks the regulation.  But example two allows the representatives from firm A to receive the fees while the solo practitioner gets paid by a third-party entity. We can ignore the withdrawing representative from firm B so the redacted example is this:

The claimant appointed two representatives from Firm A, [...] and one representative who is a sole practitioner. [...] The sole practitioner waived charging and collecting a fee from the claimant or any auxiliary beneficiaries because a third party entity will be paying his or her fee. The two representatives from Firm A have an approved fee agreement that each of them signed, and SSA determines a fee of $6000. The representatives from Firm A will receive $3000 each.

The claimant in the example has a liability to the representatives from firm A.  SSA pays the fees but that payment comes from the past due benefits -- making the liability or payment indirect.

If the sole practitioner gets paid by firm A, then the representatives are paying the solo to represent the claimant without SSA authorization over the fee.  While that fits with fee splitting rules under the Rules of Professional Conduct and the Model Rules, it doesn't fit with the expedited fee process and the regulations stating that SSA will authorize not only the fees to the representatives from firm A and the payment to the solo.

If the sole practitioner gets paid by someone else (an insurance carrier or a governmental entity), then a real question exists about the value of the services provided by the members of firm A or the solo or both.  If the claimant ends up with the representatives from firm A, the only reason to permit the solo to get paid by the third-party entity is a time saving device and the assumption that the third-party entity can protect its own interests.  If the claimant ends up with the solo and the paying entity is firm A, then SSA is encouraging a business model that violates the regulation and defeats the interest of the claimant.

The claimant hires firm A.  The claimant appoints one or more representatives from firm A to represent the claimant at the hearing.  SSA sets the claim for hearing.  Firm A hires the solo to appear at the hearing.  The claimant finds out about the solo the day of the hearing or some time shortly before the hearing.  The claimant does not get the continuity of representation, the representative most familiar with the claim, or someone responsible for the claim at the firm.  The arrangement violates the regulation and removes the financial supervision of the representation by the solo by SSA.

EM-13024 will sunset on January 15, 2016.  SSA should delete example 2.  It violates the regulation.

Shapiro v. Social Security Administration -- ALJ firing upheld

The Federal Circuit upheld the firing of an Administrative Law Judge for failing to meet productivity requirements.  The case is important because it documents the expectation of the Social Security Administration and the constraints that this puts on claimants seeking benefits.

In 2007, the Chief ALJ told the ALJ corps that the agency expected between 500 and 700 legally sufficient decisions each year.  So let's do the math.  An ALJ has to review the file, conduct the hearing, and give instructions to someone else to write the decision.  The ALJ has to review the decision and sign it.  We can assume that an ALJ takes about five weeks vacation per year and actually sits on the bench only every other week.  We also have holidays to address as well.  That brings us down to perhaps 23 weeks of hearings per year.

If the ALJ hears 20 cases per week, that ALJ will fall short of the productivity goal of 500 dispositions per year.  If the ALJ hears 30 cases per week, the ALJ will almost meet the upper edge of the disposition expectation announced in October 2007.  Assuming 24 hearings in a week and having hearings on four of the five weekdays, the ALJ must have six hearings per day.  That's at best an hour per hearing four days a week, 23 weeks per year to get into the range.

Some cases have relatively simple dispositions.  The ALJ calls a medical expert who testifies that the claimant meets or equals a listed impairment or has a residual functional capacity that calls for application of a favorable grid rule and the case is over in about 15 minutes.  But this does not address the cases on the bubble.

The case on the bubble requires full examination of any medical expert called by the ALJ, full examination of the claimant for benefits including a document by document explanation of any conflict that the ALJ might have perceived in terms of activities of daily living, adequacy of medical treatment, and other reasons that the ALJ might articulate later in an unfavorable decision.  The ALJ will likely have called a vocational expert to testify at the hearing.  That witness will lack any degree or training in statistical analysis and therefore have to make up numbers about the incidence of jobs in the national economy.

Realistically, a full-blown hearing for a case in the bubble where the person has an arguable disability would require a four hour process.  No consistency exists from vocational expert to vocational expert and little consistency exists from ALJ to ALJ.  Can an ALJ have that lengthy of a hearing for any one single case?  In firing ALJ Shapiro, SSA has responded that an ALJ that regularly permits a full due process hearing will likely end up on the short end of the stick.  The agency expects the ALJ to manage the docket and dispose of the cases in the same period of time as the rest of the corps.  An ALJ that wants to provide due process in an administrative hearing on a regular and continuing basis for the half of cases that require that degree of inquiry will never meet the productivity expectations of the agency and find themselves in a disciplinary proceeding.

Harshaw v. Colvin

The Ninth Circuit affirmed in an unpublished memorandum the claim for disability in Harshaw v. Colvin.  The non-precedential memo deserves note because it marks a dangerous and wrong trend.  The court imposed issue exhaustion from the ALJ level.

Harshaw relies on Meanel v. Apfel and Silveira v. Apfel to get to the point of exhaustion and the absence of waiver of the exhaustion rule.  I know a little about those cases -- I was counsel in both. . Meanel has pedestrian pedigree.  She sought to attack vocational expert testimony based on evidence from a private vendor about job numbers; evidence never presented to the agency.  Meanel says "too late."  The claimant had counsel and court is too late.

Silveira had a companion case, Vargas.  Both raised the legal issue of application of the grids to individuals with semi-skilled backgrounds, no transferable skills, and illiterate in English.  Vargas did not raise the issue in the District Court.  Silveira did.  The court found that the legal issue was not waived and reversed in Vargas.

What do either of these cases have to do with Harshaw?  Not much.  Harshaw presented evidence to the ALJ that he suffered from pes planus, PTSD, and a personality disorder.  The record contained the evidence.  In Meanel, the record did not contain the job numbers evidence.  Sound different?  It is.  Expanding Meanel to include not only that the claimant present the evidence but also make a specific argument about the application of that evidence asks too much.  The evidence raises the issues and the ALJ is the inquisitor, not an adversary.  Meanel just doesn't apply, at all.

The district court had the first bite at the apple in Harshaw.  The court relied on two other USDC decisions:

Cisneros v. Colvin,No. 12-cv-0931-BAM, 2013 WL 5375490 at * 9 (E.D. Cal., Sept. 24, 2013) (finding waiver when plaintiff failed to raise the issue of improper past relevant work determination during administrative proceedings); Shaw v. Comm'r of SSA, 2008 U.S. Dist. LEXIS 30170, *20 (N.D. Cal. 2008) (Claimant waived argument challenging past relevant work when he failed to raise that objection at the hearing);

In a typical hearing, the ALJ will ask the vocational expert to characterize the claimant's past relevant work.  The VE's get it wrong because the witness does not have access to the earnings record.  The VE will miss earnings that do not qualify as substantial gainful activity or occurred too long ago to count.  But the claimant has the burden of establishing that s/he cannot perform the past relevant work.  In cases where the VE mischaracterizes the past work and the represented claimant does nothing, then Houston, we have a problem.  That isn't waiver; that is a decision that rests on substantial evidence before the agency at the time of the decision.  Coming up with new evidence or arguments about the true nature of the past work might be too late.

But those aren't the facts of Harshaw.  The claimant alleged that the ALJ missed the other impairments and that those impairments made a difference in the outcome of the case.  Waiver -- no, the evidence was there and the claimant never has a burden to argue the case, just the burden to present the evidence that supports the claim.

The Ninth Circuit memorandum ends with the caveat that the missed impairments did not cause other limitations.  Well, if that is the case, then the waiver discussion is irrelevant.  The court should have issued a one paragraph memorandum, the last paragraph.