1 * 2 ; 4 . 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 | KENNETH V.,! Case No. 5:18-cv-00822-MAA Plaintiff, 13 MEMORANDUM DECISION AND v. ORDER REVERSING DECISION OF 14 THE COMMISSIONER AND

REMANDING FOR FURTHER

15 || ANDREW M. SAUL. ADMINISTRATIVE PROCEEDINGS Commissioner of Social Security, 1 Defendant. 17 18 On April 20, 2018, Plaintiff filed a Complaint seeking review of the 19 || Commissioner’s final decision denying his applications for disability insurance 20 || benefits and supplemental security income pursuant to Titles II and XVI of the 21 || Social Security Act. This matter is fully briefed and ready for decision. For the 22 || reasons discussed below, the Commissioner’s final decision is reversed, and this 23 || matter is remanded for further administrative proceedings. 24 | ——— | Plaintiff's name is partially redacted in accordance with Federal Rule of Civil 25 || Procedure 5 2(o)(2)( ) and the recommendation of the Committee on Court Administration and Case Management of the Judicial Conference of the United tates. 27 |? The Commissioner of Social Security is substituted as the Defendant pursuant to 38 Federal Rule of Civil Procedure 25(d).

1 ADMINISTRATIVE BACKGROUND 2 On December 24, 2013, Plaintiff protectively filed applications for disability 3 || insurance benefits and supplemental security income, alleging disability beginning 4 || on January 24, 2011. (Administrative Record [AR] 29, 1981, 1994.) Plaintiff 5 || alleged disability because of a torn rotator cuff in his right shoulder, high blood 6 || pressure, torn ligaments, an inability to lift, and severe headaches. (AR 1981, 7 || 1994.) After the applications were denied initially and on reconsideration, Plaintiff 8 || requested a hearing before an Administrative Law Judge (“ALJ”). (AR 29, 2027- 9 || 28.) Ata hearing held on February 4, 2016, at which Plaintiff appeared with 10 || counsel, the ALJ heard testimony from Plaintiff, a medical expert, and a vocational 11 || expert. (AR 1930-78.) 12 In a decision issued on April 28, 2016, the ALJ denied Plaintiff's claim after 13 || making the following findings pursuant to the Commissioner’s five-step evaluation. 14 || (AR 29-41.) Plaintiff had not engaged in substantial gainful activity since his 15 || alleged onset date of January 24, 2011. (AR 31.) He had the following severe 16 || impairments: “right shoulder tear/impingement; left shoulder pain; lumbar strain; 17 || organic brain disorder (possible stroke or withdraw seizures); mood 18 || disorder/depression as per [the Department of Veterans Affairs (“VA”)]; and 19 || personality disorder and substance abuse in remission as per [Plaintiffs] 20 || testimony.” (Ud.) He did not have an impairment or combination of impairments 21 || that met or medically equaled the requirements of one of the impairments from the 22 || Commissioner’s Listing of Impairments. (AR 32.) He had a residual functional 23 || capacity to perform less than the full range of light work. (AR 33.) Based on this 24 || residual functional capacity, Plaintiff would be unable to perform his past relevant 25 || work as an electrician/journeyman. (AR 39.) However, he could perform other 26 || work in the national economy, specifically, the occupations of garment sorter and 27 || assembler of small products. (AR 40.) Accordingly, the ALJ concluded that 28 || Plaintiff was not disabled as defined by the Social Security Act. (AR 41.)

1 When he requested review by the Appeals Council, Plaintiff submitted 2 || several pages of additional evidence. (AR 46-1978.) On March 8, 2018, the 3 || Appeals Council denied Plaintiff's request for review. (AR 1-8.) Thus, the ALJ’s 4 || decision became the final decision of the Commissioner. 5 6 DISPUTED ISSUE 7 The parties raise the following disputed issue: whether the ALJ properly 8 || considered the report of a vocational rehabilitation counselor from the VA. (ECF 9 || No. 31, Parties’ Joint Stipulation [“Joint Stip.”] at 4.) 10 11 STANDARD OF REVIEW 12 Under 42 U.S.C. § 405(g), the Court reviews the Commissioner’s final 13 || decision to determine whether the Commissioner’s findings are supported by 14 || substantial evidence and whether the proper legal standards were applied. See 15 || Treichler v. Commissioner of Social Sec. Admin., 775 F.3d 1090, 1098 (9th Cir. 16 || 2014). Substantial evidence means “more than a mere scintilla” but less than a 17 || preponderance. See Richardson v. Perales, 402 U.S. 389, 401 (1971); Lingenfelter 18 || v. Astrue, 504 F.3d 1028, 1035 (9th Cir. 2007). Substantial evidence is “such 19 || relevant evidence as a reasonable mind might accept as adequate to support a 20 || conclusion.” Richardson, 402 U.S. at 401. The Court must review the record as a 21 || whole, weighing both the evidence that supports and the evidence that detracts from 22 || the Commissioner’s conclusion. Lingenfelter, 504 F.3d at 1035. Where evidence is 23 || susceptible of more than one rational interpretation, the Commissioner’s 24 || interpretation must be upheld. See Orn v. Astrue, 495 F.3d 625, 630 (9th Cir. 25 || 2007). 26 /// 27 28 || ///

1 DISCUSSION || A. Lay Witness’s Statement. 3 1. Legal Standard. 4 Plaintiff challenges the ALJ’s consideration of a report written by Stephen 5 || Long, a vocational rehabilitation counselor at the VA. (Joint Stip. at 6; see also AR 6 || 1579-80, 2430.) According to the regulations in effect when Plaintiff filed his 7 || applications, a vocational rehabilitation counselor is not classified as an acceptable 8 || medical source, but rather is classified as an “other” source within a class of lay 9 || witnesses that includes counselors, developmental center workers, social workers, 10 || and relatives, among others. See 20 C.F.R. §§ 404.1513(d) (2013), 416.913(d) 11 | (2013). 12 “In determining whether a claimant is disabled, an ALJ must consider lay 13 || witness testimony concerning a claimant’s ability to work.” Bruce v. Astrue, 557 14 F.3d 1113, 1115 (th Cir. 2009) (quoting Stout v. Commissioner, Social Sec. 15 |) Admin., 454 F.3d 1050, 1053 (9th Cir. 2006)) (internal quotation marks omitted). 16 || Indeed, an ALJ is “required to consider and comment upon competent lay 17 || testimony, as it concerned how [a claimant’s] impairments impact his ability to 18 || work.” Bruce, 557 F.3d at 1115. Such testimony “cannot be disregarded without 19 || comment.” Jd. (quoting Nguyen v. Chater, 100 F.3d 1462, 1467 (9th Cir. 1996) 20 || Gnternal quotation marks omitted)). See also Taylor v. Comm’r of Social Sec. 21 || Admin., 659 F.3d 1228, 1234 (9th Cir. 2011) (recognizing that an ALJ must 22 || “provide specific, germane reasons for discounting lay witness testimony”). 23 However, an ALJ’s failure to provide germane reasons to reject a lay 24 || witness’s statement may be harmless error. See Molina v. Astrue, 674 F.3d 1104, 25 | 1122 (9th Cir. 2012). An ALJ’s failure to state any reasons at all to reject a lay 26 || witness’ statement may be harmless error where the lay witness “does not describe 27 || any limitations not already described by the claimant, and the ALJ’s well-supported 28 || reasons for rejecting the claimant’s testimony apply equally well to the lay witness

1 || testimony.” See id. at 1117. Similarly, an ALJ’s statement of reasons that are 2 || legally insufficient to reject a lay witness’s statement may be harmless error if the 3 | lay witness’s statement is similar to the claimant’s testimony, which the ALJ 4 || properly discredited. See, e.g., Sievers v. Berryhill, 734 F. App’x 467, 470 (9th Cir. 5 || 2018); Watkins v. Commissioner of Social Sec. Admin., 611 F. App’x 903, 904 (9th 6 || Cir. 2015). 7 8 2. Background. 9 In January 2011, while he was working as an electrician, Plaintiff injured his 10 right shoulder, right arm, upper back, and neck when he tried to pick up a 200- 11 || pound transformer. (AR 2295.) In December 2012, Plaintiff had surgery on his 12 || right shoulder. (AR 2266.) 13 In December 2013, Plaintiff was hospitalized for two weeks for alcohol 14 || withdrawal and “significant deconditioning.” (AR 2339.) In June 2014, a 15 || neuropsychological evaluation revealed that Plaintiff had a “Mild Neurocognitive 16 || Disorder due to multiple etiologies,” which VA physicians interpreted to mean that 17 || his “ability to learn and retain new information over time is within the impaired 18 || range of functioning.” (AR 2431; see also AR 2432.) Plaintiff also has a VA 19 || disability rating of 50 percent based on a mood disorder. (AR 2439.) 20 In July 2014, Mr. Long, the vocational rehabilitation counselor at the VA, 21 || submitted a statement about Plaintiff's medical history and employment prospects. 22 || (AR 1579-80, 2430.) In pertinent part, Mr. Long wrote that Plaintiff's physical 23 || impairments, relating to his 2011 workplace accident, resulted in limited function of 24 || the shoulder that prevents overhead work. (AR 1579.) Mr. Long also wrote that 25 || Plaintiffs psychological impairments included depression and substance abuse 26 || disorders in remission, which had side effects such as chronic headaches and loss of 27 || short-term and long-term memory. (/d.) With respect to Plaintiff's ability to work, 28 || Mr. Long wrote the following:

1 [Plaintiffs] [history of traumatic brain injury] and difficulty as a 2 historian in addition to his lack of experience outside of electrical and 3 air conditioning fields suggest his access to the labor market is very 4 limited. His chronic [headaches] which affect concentration also 5 compromise his ability to [return to work]. [Plaintiff] has current, 6 marketable skills, . . . but his physical limitations from [the right] 7 shoulder restrict [him] from returning to his career as an electrician. 8 While his memory-concentration issues secondary to [a traumatic 9 brain injury] and [headaches] impact his ability to pursue alternative 10 career paths. [Plaintiff] is not considered a candidate for formal 11 vocational rehabilitation counseling at this time or capable of returning 12 to competitive employment. He may be a candidate for avocational 13 activities at the medical center to occupy his time with more health 14 enhancing activity. 15 || (AR 1580, 2430.) 16 Thus, Mr. Long recommended that Plaintiff eventually be considered for 17 || vocational rehabilitation therapy activities such as gardening, lapidary work, and 18 || computer clinics. Ud.) In January 2015, Plaintiff began vocational rehabilitation 19 || therapy activities at the VA by enrolling in a woodworking clinic. (AR 1260, 20 || 1273.) Plaintiffs performance in the woodworking clinic consistently was rated as 21 || “good.” (AR 816, 825, 852, 920, 939, 957, 974, 1003, 1024, 1058, 1079, 1102, 22 || 1161, 1194, 1247.) 23 In his decision, the ALJ described and assessed Mr. Long’s statement as 24 || follows: 25 The next opinion considered is from Steve Long, M.S., 26 vocational rehab counselor. In a partial report signed in July 2014, Mr. 27 Long concluded that [Plaintiffs] limitations from right shoulder 28 restrict [Plaintiff] from returning to his career as an electrician.

1 Furthermore, [Plaintiffs] memory, concentration, issues secondary to 2 [traumatic brain injury] and headaches affect his ability to pursue 3 alternative career paths. He is not considered capable of returning to 4 competitive employment. [AR 2430.] The undersigned gives the 5 opinion of [Mr.] Long [sic], as the opinion is not from an acceptable 6 medical source. (20 C.F.R. 404.1513(a)(e) and 416.913(a)(e)). 7 | (AR 38.) 8 The ALJ characterized Mr. Long’s statement as “a partial report” (AR 38) 9 || because Plaintiff had submitted only one page of it to the ALJ (AR 2430). Plaintiff 10 || later submitted the complete report, consisting of two pages, for the first time to the 11 || Appeals Council. (AR 1579-80.) The Appeals Council’s order in response was 12 || somewhat ambiguous about whether Mr. Long’s complete report was incorporated 13 || into the record, because the order stated both that the new evidence “does not show 14 || areasonable probability that it would change the outcome of the decision” but also 15 || that the Appeals Council “did not consider and exhibit this evidence.” (AR 2.) 16 || However, the Court concurs with the decisions of other district courts in the Ninth 17 || Circuit that the most plausible interpretation of the Appeals Council’s language is 18 || that the new evidence was incorporated into the record. See, e.g., McLaughlin v. 19 || Saul, 2019 WL 3202806, at *5 (E.D. Cal. July 16, 2019) (collecting cases). 20 || Because the Appeals Council incorporated the complete report into the record, the 21 || Court considers it in reviewing the ALJ’s decision for substantial evidence. See 22 || Brewes v. Commissioner of Social Sec. Admin., 682 F.3d 1157, 1163 (9th Cir. 23 || 2012). 24 25 3. Analysis. 26 The ALJ stated that he “gives the opinion of [Mr.] Long, as the opinion is not 27 || from an acceptable medical source.” (AR 38.) The ALJ’s assessment is missing a 28 || critical phrase and thus omits the ALJ’s finding as to how much weight he afforded

1 || to the lay witness’s statement. However, even assuming that the ALJ intended to 2 |) state that he had given Mr. Long’s opinion “no weight” or “little weight,” the ALJ’s 3 || reason for doing so was not legally sufficient. 4 The only reason the ALJ stated to reject Mr. Long’s statement was that it “is 5 || not from a medical source.” (AR 38.) But a lay witness’s status as a non-medical 6 || source is an improper ground to disqualify him from offering a statement about a 7 || claimant’s ability to work. See Bruce, 557 F.3d at 1116 (“A lay person, .. . though 8 || not a vocational or medical expert, was not disqualified from rendering an opinion 9 || as to how [the claimant’s] condition affects his ability to perform basic work 10 || activities.”); Haagenson v. Colvin, 656 F. App’x 800, 802 (9th Cir. 2016) (“The 11 || only reason the ALJ offered for rejecting their [lay] opinions is that they are not 12 || ‘acceptable medical sources’ within the meaning of the federal regulation. 13 || However, the regulation already presumes that nurses and counselors are non- 14 |) acceptable medical sources, yet still requires the ALJ to consider them as ‘other 15 || sources.””); see also Hayes v. Berryhill, 721 F. App’x 648, 651 (9th Cir. 2018) 16 || (finding erroneous an ALJ’s rejection of a vocational counselor’s report because he 17 || was not an acceptable medical source, but also concluding that the error was 18 || harmless). Thus, this was not a germane reason to reject Mr. Long’s statement. 19 || Although the Commissioner states other possible reasons for rejecting Mr. Long’s 20 |) statement (Joint Stip. at 10-12), the Court may not consider them because the ALJ 21 || did not state those reasons. See Connett vy. Barnhart, 340 F.3d 871, 874 (9th Cir. 22 || 2003) (“We are constrained to review the reasons the ALJ asserts.”). 23 The failure to state a germane reason to reject Mr. Long’s lay witness 24 || statement was not harmless error. See Molina, 674 F.3d at 1115. Mr. Long’s 25 || statement was not substantively similar to Plaintiff's testimony, but rather was 26 || broader. Thus, the ALJ’s reasons for rejecting Plaintiff's testimony (assuming they 27 || were clear and convincing) would not have applied as well to Mr. Long’s statement. 28 || For example, Mr. Long’s conclusion that Plaintiff's employment prospects were

1 || “very limited” (AR 1580) was based on his specialized knowledge of vocational 2 || rehabilitation and the labor market, a foundation that Plaintiff lacked. Moreover, 3 | Mr. Long clearly linked Plaintiffs limited employment prospects, particularly from 4 || amental standpoint, to Plaintiffs difficulties as a historian, his deficits in 5 || concentration and memory, and his chronic headaches. (AR 1580.) In comparison, 6 || Plaintiffs testimony was vague: he was unfamiliar with the medical evidence and 7 || had difficulty articulating clearly what his limitations, particularly his mental 8 || limitations, were and why they rendered him incapable of any work. (AR 1953- 9 |) 60.) 10 Because Mr. Long’s statement was qualitatively dissimilar from Plaintiffs 11 || testimony, and because the ALJ’s reasons for rejecting Plaintiffs testimony were 12 || not responsive to the grounds for Mr. Long’s statement, the error in the assessment 13 || of Mr. Long’s statement was not rendered harmless by the ALJ’s findings on the 14 | whole. See Burns v. Berryhill, 731 F. App’x 609, 613 (9th Cir. 2018) (finding an 15 || ALJ’s error in assessing lay testimony was not harmless where the lay witness 16 |) attested to a number of limitations beyond those reported by the claimant himself); 17 || see also Nowling v. Colvin, 813 F.3d 1110, 1122 (8th Cir. 2016) (declining to find 18 || harmless an ALJ’s failure to consider lay evidence where it “is neither redundant 19 || with [the claimant’s] testimony, nor is it discredited by the same evidence that 20 || purportedly discredits [the claimant’s] testimony”). Thus, reversal is warranted. 21 22 | B. Remand for further administrative proceedings. 23 Ninth Circuit case law “precludes a district court from remanding a case for 24 || an award of benefits unless certain prerequisites are met.” Dominguez v. Colvin, 25 | 808 F.3d 403, 407 (9th Cir. 2015) (citations omitted). “The district court must first 26 || determine that the ALJ made a legal error, such as failing to provide legally 27 || sufficient reasons for rejecting evidence.” Jd. “If the court finds such an error, it 28 || must next review the record as a whole and determine whether it is fully developed,

1 || is free from conflicts and ambiguities, and all essential factual issues have been 2 || resolved.” Jd. (citation and internal quotation marks omitted). 3 Although the Court has found an absence of germane reasons to discredit the 4 || lay witness’s statement that was not harmless error, the record on the whole is not 5 || fully developed, and essential factual issues remain outstanding. The discredited 6 || evidence raises factual conflicts about Plaintiff’s level of functioning that “should 7 || be resolved through further proceedings on an open record before a proper 8 || disability determination can be made by the ALJ in the first instance.” See Brown- 9 || Hunter, 806 F.3d at 496; see also Treichler, 775 F.3d at 1101 (stating that remand 10 || for an award of benefits is inappropriate where “there is conflicting evidence, and 11 || not all essential factual issues have been resolved”) (citation omitted); Strauss v. 12 || Commissioner of the Social Sec. Admin., 635 F.3d 1135, 1138 (9th Cir. 2011) 13 || (same where the existing record does not clearly demonstrate that the claimant is 14 || disabled within the meaning of the Social Security Act). 15 Therefore, based on its review and consideration of the entire record, the 16 || Court has concluded on balance that a remand for further administrative 17 || proceedings pursuant to sentence four of 42 U.S.C. § 405(g) is warranted here. It is 18 || not the Court’s intent to limit the scope of the remand. 19 20 ORDER 21 It is ordered that Judgment be entered reversing the decision of the 22 || Commissioner of Social Security and remanding this matter for further 23 || administrative proceedings. 24 25 || DATED: August |4 , 2019 26 /

MARIA

on UNITED ES MAGISTRATE JUDGE

10