ALJ Improperly Rejected Treating Psychiatrist's Testimony

LARSON v. ASTRUE (August 3, 2010)

Lynn Larson has been suffering from anxiety and depression for years. Her already fragile condition worsened in early 2004 when she was raped and suffered several additional physical injuries. Her psychiatrist continued to describe and adjust dosages of several medications throughout this time. Larson applied for Social Security benefits in June of 2004. Her troubles continued -- she was drinking, she had a "nervous breakdown," the nephew she had been raising was taken from her home, and she was arrested for driving under the influence. Her application for benefits was denied in 2004, and again on reconsideration in 2005. Her psychiatrist submitted a new questionnaire with a diagnosis of "severe, recurrent depression." A hearing was held before an ALJ in 2007. Larson testified about her employment history -- that she quit her part-time job at a gas station because she had to hide in the bathroom, she was fired from her bus driver job after a breakdown, and that she worked two hours a week at a restaurant owned by a friend. A psychologist testified that Larson met the "A criteria" but not the "B criteria." Her psychiatrist testified that Larson met all criteria. The ALJ denied the claim. Larson appeals.

In their opinion, Judges Posner, Wood, and Hamilton reversed and remanded. The Court first addressed the ALJ's consideration of the treating psychiatrist's opinion. That opinion is entitled to controlling weight if it is well supported and an ALJ must give a good reason for not giving it such weight. The Court found that the ALJ ignored and mischaracterized certain evidence in rejecting the psychiatrist's opinion. The psychiatrist had treated Larson for several years and his opinion was consistent with the other evidence in the record. The Court concluded that the ALJ would have found Larson disabled at Step 3 had he given the psychiatrist's opinion appropriate weight. The Court found support for its conclusion in the ALJ's treatment of Larson's testimony itself. The ALJ’s adverse credibility ruling was patently wrong and could not stand.

Individuals with Disability Education Act Requires Actual, Not Hypothetical, Adverse Effect On Performance

MARSHALL JOINT SCHOOL DISTRICT v. C.D. (August 2, 2010)

Minor student C.D. was a kindergarten student when he was diagnosed with EDS, a genetic disease affecting the joints. He had poor upper body strength and stability accompanied by chronic pain. The school district evaluated him pursuant to the Individuals with Disability Education Act (“IDEA”) and began providing special education services to C.D. in his gym class. The district developed an Individualized Education Program ("IEP") pursuant to which C.D. received adaptive physical education, physical and occupational therapy, and other aids and programming modifications. The following year, the district developed a new IEP. Among other changes, the new IEP required regular consultation between his adaptive gym teacher and his regular gym teacher. When C.D. reached second grade, the district again reevaluated his entitlement to special education and determined that he no longer met the criteria -- that he had an ailment that adversely affects his educational performance and that he needs special education. The district concluded that he met neither criterion. C.D.'s parents sought administrative review. After a lengthy administrative hearing, the administrative law judge (ALJ) concluded that C.D. was still eligible for special education. Judge Crabb (W.D. Wis.) affirmed. The school district appeals.

In their opinion, Judges Cudahy (concurring), Manion, and Williams reversed and remanded. The Court first took some care in identifying the precise issue on appeal in what it viewed as a complicated case. The Court specifically noted that, notwithstanding significant discussion and attention to C.D.'s academic performance, the only issue was whether he was entitled to special education in his gym classes. In order to qualify as a "child with a disability" under the Act, C.D. must have a health condition that adversely affects his educational performance and thus requires special education. The Court found little evidence in the record addressing the first prong and indications that the ALJ misapplied the test. There was evidence in the record that C.D.'s health condition could affect his educational performance and the ALJ did conclude that C.D.'s health condition could affect his educational performance. But there was little probative evidence that it actually did affect his performance – which is what the Act requires. The Court thus concluded that C.D. was unable to satisfy the first prong of the Act's test. Alternatively, the Court addressed the second prong of the test -- whether C.D. needed special education. The Court reviewed in detail the evidence presented on that issue and concluded that the ALJ impermissibly discounted testimony of C.D.’s special education gym teacher and that the record lacked substantial evidence or a reasoned basis for the finding that C.D. needed special education in gym.

Judge Cudahy concurred. Although he joined in the majority's result, he expressed the need for caution in overruling findings of fact based on witness reliability and in balancing the weight to be given medical professionals versus education professionals.

Agency Cannot Divest District Court Of Jurisdiction By Unilaterally Reopening Its Proceedings

DOCTORS NURSING & REHABILITATION CENTER v. SEBELIUS (July 16, 2010)

Doctors Nursing & Rehabilitation Center (“DNRC”) is a nursing home located in Salem, Illinois. The Medicare program reimburses DNRC for certain procedures on a per procedure basis. DNRC has a dispute with the program regarding the proper rate at which it was reimbursed for pulse-oximetry tests. A pulse-oximetry test is a noninvasive procedure for measuring blood oxygen levels, usually by placing a sensor on a patient's fingertip. DNRC presented its claims through the proper administrative channels, first through a fiscal intermediary and then through a “Qualified Independent Contractor.” Both levels of review rejected DNRC's challenge. It brought suit for underpayment of benefits. Health and Human Services, the agency that administers the Medicare program, decided to reopen the administrative proceedings. In the district court, it moved to dismiss for lack of jurisdiction on the ground that there was no longer final agency action. Judge Scott (C.D. Ill.) granted the motion and dismissed the case. DNRC appeals.

In their opinion, Judges Posner, Manion, and Hamilton reversed and remanded. A party may seek judicial review of a "final decision" in any case that arises under the Medicare Act. Here, the dismissal by the Qualified Independent Contractor satisfies that final decision requirement. For several reasons, the Court concluded that an agency is not able to divest a court of its jurisdiction by simply reopening an administrative proceeding. First, it relied on the general rule that jurisdiction is analyzed at the time of filing. Second, it noted that the controlling statute contains a specific provision allowing an agency to request a court, before answering and for good cause, to remand the case to the agency. The provision would make no sense if an agency had that power on its own. Finally, the Court noted that an inferior tribunal generally transfers authority over a matter at the time of an appeal. The Court also rejected the agency's request to remand the case to the district court with instructions to remand the case to the agency. The Court left that decision to the district court in the first instance.

Treasury Department Acted Within Its Authority Adopting Two-Year Filing Deadline For Innocent Spouse Relief

LANTZ v. COMMISSIONER OF INTERNAL REVENUE (June 8, 2010)

Kathy Lantz was married to a dentist with whom she filed joint federal tax returns. Unfortunately, she was also married to a dentist who was convicted of Medicare fraud and who the IRS accused of understating their joint tax liability. When she received a notice of tax levy and information from the IRS regarding innocent spouse relief, she allowed her then estranged husband to respond. Although he requested a due process hearing and application for such relief, he died before taking any other action. In 2006, the tax obligation exceeded $1 million. The IRS applied Lantz’ 2005 income tax refund of $3200 to her tax liability. Unemployed and poor, she applied for innocent spouse relief. The IRS rejected her application because she had failed to apply within two years from the notice of intent to levy. The Tax Court invalidated the two-year deadline. The Commissioner appeals.

In their opinion, Judges Posner, Flaum, and Williams reversed and remanded. Section 6015 of the Internal Revenue Code provides several avenues of relief to innocent spouses. Subsection (b) relief requires that the spouse have had no reason to know of the understatement. Subsection (c) relief requires that the spouse no longer be married to the person with whom he or she filed. Both subsections (b) and (c) contain a statutory two-year limitations period. Subsection (f), under which Lantz applied, contains no statutory limitations period. It provides that the IRS may grant innocent spouse relief when it is not available under either subsection (b) or (c) and is otherwise equitable under all the facts and circumstances. The Treasury Department, by regulation, imposed a two-year deadline on subsection (f). The Court found nothing improper with the Department's action. First of all, the fact that Congress did not include a limitations period does not mean that it intended the statute not have one. The Court noted that borrowing a statute of limitations from another statute is a common judicial practice – so common, in fact, that Congress can be assumed to endorse it. Second, the subsection does not even require the IRS to grant relief. Since it can deny relief altogether, it can decide to deny relief to late claimants. Finally, the subsection itself begins with the phrase "under procedures prescribed" by the Treasury Department. That congressional delegation of authority to the Department certainly allows it to set a deadline for an application.

ALJ's Failure to Supplement Record With Unrepresented Claimant's Current Medical Records Leads to Reversal of Benefits Denial

NELMS V. ASTRUE (January 28, 2009)

Theodis Nelms was admitted to the hospital in May 2002. He was diagnosed with several health problems, including pneumonia, respiratory failure and inflammation of the heart. He had open-heart surgery and was released in June. Nelms applied for social security benefits. He listed as his impairments his recovery from surgery, asthma and pneumonia. The Social Security Administration twice denied him benefits. In late 2002 and again in early 2003, Nelms was seen by an agency physician. Each doctor concluded that Nelms could perform light duties. Nelms was granted a hearing on his request in 2005. Nelms did not have a lawyer. The hearing lasted twenty minutes. Nelms listed his impairments in order of severity – heart, back, legs and asthma. He described his conditions and his pain, specifically noting that his asthma strikes when he is exposed to dust, pollen, hot or cold. The ALJ concluded that Nelms was not disabled, concluding that he was able to do light work. He relied on his smooth recovery from surgery, his only sporadic pain, his slight asthma, and his capacity to do light work. The Appeals Council denied review and the district court affirmed. Nelms appeals.

In their opinion, Judges Ripple, Evans and Tinder reversed and remanded. The Court first addressed Nelms’ position that the ALJ did not adequately develop the record. Although a benefits claimant has the burden of proving disability, the ALJ has a duty, particularly when claimant is without counsel, to make sure there is a fully developed record. The ALJ must supplement the record, if necessary. The ALJ has quite a bit of leeway in a determination of the completeness of the record. Here, the Court noted, the record was almost silent on Nelms’ medical progress from 2003 – 2005. Nelms filed an appendix of medical records from those years which had not been before the ALJ. The documents describe a fairly serious deterioration of Nelms’ health in several respects. In the Court’s view, they support a conclusion that the ALJ would have found Nelms disabled had he seen the records. The absence of the records and the ALJ’s failure to probe Nelms about his more recent treatment led to the conclusion that the decision was not supported by substantial evidence. The Court rejected Nelms’ alternative arguments that the ALJ failed to consider the combined effect of his impairments and that the ALJ was required to enlist the aid of a vocational expert.

Treating Physician's Opinion is Given Controlling Weight in Disability Claim Only When It Is Well Supported and Consistent With Substantial Evidence in the Record

KETELBOETER v. ASTRUE (December 15, 2008)

Brian Ketelboeter was a truck driver. He claims that he was injured in 1995, although he continued working until 2003. During those eight years, he complained of several additional injuries and increasing pain. Many physicians examined Ketelboeter over those years. Most tests showed no physical problems, at least none consistent with the degree of pain Ketelboeter claimed to experience. Dr. Dickson began treating Ketelboeter in 2002. Dickson treated his pain with muscle relaxants and therapy. Dickson reported that Ketelboeter’s pain was not consistent with the objective physical findings. Ketelboeter stopped working in June of 2003 and applied for disability in September. A hearing was held in April of 2005. The record contained the medical conclusions of Dickson and a state medical expert who reviewed Ketelboeter’s records. A vocational expert opined that, although Ketelboeter could no longer perform his truck driving job, he could perform other jobs. The vocational expert relied on the testimony of the medical expert in reaching his conclusion. He admitted that Dickson’s testimony would support an opinion that Ketelboeter would not be able to perform any job. The ALJ denied Ketelboeter’s claim. The ALJ granted Ketelboeter a second hearing based on additional testimony from Dickson. Again, a state-agency expert testified. He testified that there was little objective evidence of Ketelboeter’s pain. The vocational expert identified several additional jobs that Ketelboeter could perform. Again, the ALJ denied Ketelboeter’s claim. The ALJ placed more weight on the testimony of non-treating experts than Ketelboeter’s treating physician. He did so because of the lack of objective evidence of pain and Dickson’s own conclusions that Ketelboeter’s reports of pain were not supported by physical findings. Ketelboeter appeals.

In their opinion, Judges Coffey, Ripple and Manion affirmed. The Court noted that a treating physician’s opinion is given controlling weight when it is well-supported by clinical and diagnostic techniques and consistent with substantial evidence in the record. The Court found substantial evidence in support of the district court’s decision to give greater weight to the state expert. There was very little objective evidence in the record supporting Ketelboeter’s claimed severity of pain and injury. Dickson’s conclusions were supported almost exclusively by Ketelboeter’s own statements. Even Dickson testified that Ketelboeter’s pain was out of proportion to any physical evidence. The district court did not err in accepting the consulting physician’s opinion over that of the treating physician.

Illinois Commerce Commission's Access Order Is Inconsistent With Federal Law

ILLINOIS BELL TELEPHONE CO. v. BOX  (November 26, 2008)

Illinois Bell Telephone Co. (“Illinois Bell”) is a provider of local telephone service. The Illinois Commerce Commission (“ICC”) ordered Illinois Bell to provide certain elements of service, including access to switching centers and splitting, to competing carriers at its cost. Illinois Bell brought suit against the Commission to be relieved of that obligation. The district court granted summary judgment to Illinois Bell. The ICC and intervenor Globalcom, Inc. appeal.

In their opinion, Judges Posner, Ripple, and Evans affirmed. The Court first noted the federal interest and approach to the telecommunication industry. Congress and the FCC have established certain requirements to promote competition in the industry. Section 251 of the Telecommunications Act of 1996 (“Act”) requires carriers like Illinois Bell to provide certain services to other carriers on an unbundled basis and at cost. The FCC determines which services are included, after considering whether access is necessary and whether denial of access would impair the requesting carrier’s ability to provide its service. If the FCC decides a service meets the section 251 criteria, a carrier can request the service from carriers like Illinois Bell at its cost. Section 271 of the Act also entitles carriers to gain access to other unbundled services from “Bell Operating Companies” such as Illinois Bell. Unlike section 251, however, section 271 does not require that access be provided at cost. The FCC allows a carrier to charge a market rate for section 271 services.

The Court found that the ICC’s order that Illinois Bell provide services at cost was inconsistent with Sections 251 and 271. The Court noted that the ICC was, in effect, overruling the FCC. The Court pointed out that the savings clause of section 251 allowed state orders that were consistent with and did not prevent implementation of the section. The Court concluded that the ICC’s orders were inconsistent with and did substantially prevent the implementation of the federal policy. The Act does not specifically forbid the requirement imposed by the ICC but to allow it would defeat the goals of the FCC. The Court concluded that only network services identified by the FCC under section 251 are required to be provided at cost. Other services, even if required to be provided, can be charged at a market price. 

Remand Required When ALJ Relied on Vocational Expert's Conclusion But Ignored Testimony Which Was Inconsistent with the Dictionary of Occupational Titles

OVERMAN v. ASTRUE  (October 7, 2008)

Gerald Overman is a 58-year old high school graduate. For years, he worked as an unskilled maintenance worker and repairman at a golf course. He was able to work, even though he suffered from diabetes, hypertension, and some fairly serious vision problems. He began to experience more serious problems. He became tired and overheated very easily and lost quite a bit of weight. He was diagnosed with Graves’ disease and anemia. Overman began radioactive iodine therapy for the Graves' disease. The treatment was somewhat successful but his physician had a difficult time finding the correct dosage.  Overman's vision was also worsening.  His physician's conclusion was that “any” visual task would be difficult for Overman and that his eyesight was continuing to deteriorate.  Overman applied for social security benefits.  An ALJ conducted a hearing in 2005. Overman testified regarding his condition and disabilities. He said he tired easily, could not see well, could not be in extreme temperatures, and could not lift much weight. The agency medical consultant testified that Overman could not perform work that required reading or fine visual determination, or that involved extreme temperatures or heavy lifting. A Vocational Expert (“VE”) also testified. He testified that Overman could not continue in his prior field of work, primarily because of the temperature extremes. He did testify, however, that he could perform two jobs: a material packaging job and a keg-filling job. The VE also testified that his testimony was consistent with the Dictionary of Occupational Titles (“DOT”). On cross-examination, the VE admitted that both jobs he said Overman could perform would be eliminated if Overman was not capable of fine visual discrimination or reading. The ALJ found that Overman could do either of the two jobs identified by the VE. He gave great weight to the VE’s testimony on direct. The ALJ believed the testimony on cross-examination merely confirmed the VE’s conclusion about other jobs he had eliminated. Overman sought review in the district court . The court upheld the ALJ’s decision. Overman appeals.

In their opinion, Judges Posner, Sykes, and Tinder (in a per curiam opinion) reversed. The Court observed that the VE’s testimony about the two available jobs did, in fact, conflict with the DOT. Both jobs require a degree of visual acuity and reading ability that Overman does not have. The Commissioner concedes as much but argues that remand is unnecessary. The Court pointed out that a Social Security Ruling requires the ALJ to confirm that the VE’s testimony is consistent with the DOT and further requires a ALJ to inquire further if an apparent conflict exists. Overman’s counsel did not bring the conflicts to the attention of the ALJ. Therefore, the Court stated, the conflicts must be obvious enough to cause the ALJ to notice them without assistance. The Court found that the conflicts with respect to vision and reading capabilities should have been apparent to the ALJ. The Court also held that the ALJ’s ruling was not supported by substantial evidence because of the flawed VE testimony.