1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10

11 SHARON LYNETTE PAIGE JAMES, ) Case No.: 1:18-cv-1238 - JLT ) 12 Plaintiff, ) ORDER DENYING DEFENDANT’S MOTION ) FOR SUMMARY JUDGMENT 13 v. ) (Doc. 15) ) 14 COMMISSIONER OF SOCIAL SECURITY, ) ORDER REMANDING THE ACTION PURSUANT ) TO SENTENCE FOUR OF 42 U.S.C. § 405(g) AND 15 Defendant. ) DIRECTING ENTRY OF JUDGMENT IN FAVOR ) OF PLAINTIFF SHARON LYNETTE PAIGE 16 ) JAMES AND AGAINST DEFENDANT, THE ) COMMISSIONER OF SOCIAL SECURITY 17

18 Sharon Lynette Paige James asserts she is entitled to a period of disability and disability 19 insurance benefits under Title II of the Social Security Act. Plaintiff argues the administrative law 20 judge erred in terminating the analysis at step one of the sequential evaluation. Because the ALJ erred 21 at step one and failed to determine whether Plaintiff’s medically determinable impairments could be 22 expected to last twelve months, the matter is REMANDED for further proceedings pursuant to 23 sentence four of 42 U.S.C. § 405(g). 24 I. Procedural History 25 In January 2015, Plaintiff filed an application a period of disability and disability insurance 26 benefits, alleging disability due to anxiety disorder, Bipolar disorder, post-traumatic stress disorder, left 27 shoulder rotator cup pain, and Fuchs’ corneal dystrophy. (Doc. 9-4 at 80; Doc. 9-6 at 17) The Social 28 Security Administration denied her application at the initial level and upon reconsideration. (See Doc. 1 9-4 at 79-98; Doc. 9-3 at 12) Plaintiff requested a hearing and testified before an ALJ on April 25, 2 2017. (See Doc. 9-3 at 12, 26) The ALJ determined Plaintiff was not disabled because there was “no 3 continuous 12-month period during which the claimant [had] not engaged in substantial gainful 4 activity” and issued an order denying benefits on November 13, 2017. (Id. at 16) 5 Plaintiff requested review by the Appeals Council, asserting that the ALJ erred in his decision, 6 and stating she “not been able to work in well over 12 months.” (Doc. 9-5 at 69) On August 2, 2018, 7 the Appeals Council “denied Plaintiff’s request for review, finding “no reason under [the] rules to 8 review the Administrative Law Judge’s decision.” (Doc. 9-3 at 2-4) Thus, the ALJ’s determination 9 became the final decision of the Commissioner of Social Security. 10 II. Standard of Review 11 District courts have a limited scope of judicial review for disability claims after a decision by 12 the Commissioner to deny benefits under the Social Security Act. When reviewing findings of fact, 13 such as whether a claimant was disabled, the Court must determine whether the Commissioner’s 14 decision is supported by substantial evidence or is based on legal error. 42 U.S.C. § 405(g). The 15 ALJ’s determination that the claimant is not disabled must be upheld by the Court if the proper legal 16 standards were applied and the findings are supported by substantial evidence. See Sanchez v. Sec’y of 17 Health & Human Serv., 812 F.2d 509, 510 (9th Cir. 1987). 18 Substantial evidence is “more than a mere scintilla. It means such relevant evidence as a 19 reasonable mind might accept as adequate to support a conclusion.” Richardson v. Perales, 402 U.S. 20 389, 401 (1971) (quoting Consol. Edison Co. v. NLRB, 305 U.S. 197 (1938)). The record as a whole 21 must be considered, because “[t]he court must consider both evidence that supports and evidence that 22 detracts from the ALJ’s conclusion.” Jones v. Heckler, 760 F.2d 993, 995 (9th Cir. 1985). 23 III. Disability Benefits 24 To qualify for benefits under the Social Security Act, Plaintiff must establish she is unable to 25 engage in substantial gainful activity due to a medically determinable physical or mental impairment 26 that has lasted or can be expected to last for a continuous period of not less than 12 months. 42 U.S.C. 27 § 1382c(a)(3)(A). An individual shall be considered to have a disability only if: 28 his physical or mental impairment or impairments are of such severity that he is not only unable to do his previous work, but cannot, considering his age, education, and 1 work experience, engage in any other kind of substantial gainful work which exists in the national economy, regardless of whether such work exists in the immediate area in 2 which he lives, or whether a specific job vacancy exists for him, or whether he would be hired if he applied for work. 3

4 42 U.S.C. § 1382c(a)(3)(B). The burden of proof is on a claimant to establish disability. Terry v. 5 Sullivan, 903 F.2d 1273, 1275 (9th Cir. 1990). If a claimant establishes a prima facie case of disability, 6 the burden shifts to the Commissioner to prove the claimant is able to engage in other substantial 7 gainful employment. Maounis v. Heckler, 738 F.2d 1032, 1034 (9th Cir. 1984). 8 IV. Administrative Determinations 9 To achieve uniform decisions, the Commissioner established a sequential five-step process for 10 evaluating a claimant’s alleged disability. 20 C.F.R. §§ 404.1520, 416.920(a)-(f). The process requires 11 the ALJ to determine whether Plaintiff (1) engaged in substantial gainful activity during the period of 12 alleged disability, (2) had medically determinable severe impairments (3) that met or equaled one of the 13 listed impairments set forth in 20 C.F.R. § 404, Subpart P, Appendix 1; and whether Plaintiff (4) had 14 the residual functional capacity to perform to past relevant work or (5) the ability to perform other work 15 existing in significant numbers at the state and national level. Id. If the Commissioner concludes that 16 the claimant is not disabled at one of the steps, the Commissioner may terminate the analysis and not 17 proceed to the following step. Id. §§ 404.1520(a)(4), 416.920(a)(4). 18 V. Discussion and Analysis 19 Appealing the decision of the ALJ, Plaintiff asserts that the ALJ erred in terminating the 20 sequential disability evaluation at step one. (Doc. 13 at 2) The Commissioner contends, “The ALJ 21 properly found that Plaintiff was not disabled at step one because there was no continuous 12-month 22 period where Plaintiff did not perform [substantial gainful activity].” (Doc. 15 at 3) 23 A. Step One of the Sequential Evaluation 24 The regulations inform claimants: “At the first step, we will consider your work activity, if any. 25 If you are doing substantial gainful activity, we will find that you are not disabled.” 20 C.F.R. §§ 26 404.1520(a)(4)(i), 416.920(a)(4)(i). “Substantial gainful activity” is defined as “work activity that is 27 both substantial and gainful,” including “work activity that involves doing significant physical or 28 mental activities” and “work activity that [a claimant does] for pay or profit.” Id. §§ 404.1572(a)-(b), 1 416.972(a)-(b). “[T]here is a presumption of substantial gainful employment if the applicant earns over 2 [an] amount specified in the guidelines.” Keyes v. Sullivan, 894 F.2d 1053, 1056 (9th Cir. 1990); see 3 also 20 C.F.R. § 404.1574(a)(1) (“Your earnings may show you have done substantial gainful activity. 4 Generally, in evaluating your work activity for substantial gainful activity purposes, our primary 5 consideration will be the earnings you derive from the work activity.”). 6 The claimant has the burden to “establish at step one, that [she] is not engaged in ‘substantial 7 gainful activity.’” Zeytuntsyan v. Sullivan, 1992 U.S. App. LEXIS 18421 at *14 (9th Cir. July 27, 8 1992) (citing Bowen v. Yuckert, 482 U.S. 137, 140-42 (1987)). If a claimant fails to carry this burden 9 and is engaged in substantial gainful activity, “disability benefits are denied.” Yuckert, 482 U.S. at 140. 10 If the claimant is not engaged in substantial gainful activity, “the decisionmaker proceeds to step two.” 11 Id. Thus, courts have repeatedly interpreted the regulations to indicate an ALJ must consider whether a 12 claimant is presently engaged in substantial gainful activity at step one. See, e.g. Yuckert, 482 U.S. at 13 140; Stout v. Comm’r, Social Sec. Admin., 454 F.3d 1050, 1052 (9th Cir. 2006) (at step one, the ALJ 14 must consider: “Is the claimant presently engaged in substantial gainful activity?”); Burch v. Barnhart, 15 400 F.3d 676, 679 (9th Cir. 2005) (“[i]n step one, the ALJ determines whether a claimant is currently 16 engaged in substantial gainful activity”); Celaya v. Halter, 332 F.3d 1177 (9th Cir. 2003) (“[s]tep one 17 disqualifies claimants who are engaged in substantial gainful activity from being considered disabled”). 18 B. The ALJ’s Analysis 19 As an initial matter, the ALJ determined Plaintiff “meets the insured status requirements of the 20 Social Security Act through December 31, 2020.” (Doc. 9-3 at 14) Next, the ALJ proceeded to step 21 one of the sequential evaluation. Notably, the ALJ acknowledged that at step one, he “must determine 22 whether the claimant is engaging in substantial gainful activity” and “[i]f the individual is not 23 engaging in [substantial gainful activity], the analysis proceeds to the step two.” (Id. at 13, emphasis 24 added) The ALJ found Plaintiff “engaged in substantial gainful activity from her alleged onset date, 25 January 5, 2015, through November 14, 2016.” (Id. at 14) In issuing the decision on November 13, 26 2017, the ALJ found there “has been no continuous 12-month period during which the claimant has 27 not engaged in substantial gainful activity.” (Id. at 16) Thus, the ALJ terminated his analysis and 28 concluded Plaintiff “has not been under a disability, as defined in the Social Security Act, from 1 January 5, 2015, through the date of [the] decision.” (Id.) 2 Plaintiff argues the ALJ erred with his step one analysis because “the answer to this step one 3 inquiry, whether Plaintiff was presently engaging in substantial gainful activity at the time of the 4 hearing and decision, is quite clearly no, she was not.” (Doc. 13 at 4) Plaintiff notes that the ALJ 5 acknowledge she “stopped work on November 14, 2016, and she did not return to work after that date,” 6 and “[s]he was not working on November 13, 2017, the date of the Judge’s decision.” (Id.) Because 7 the ALJ did not continue to step two or address whether she had “an impairment or combination [of 8 impairments] that … is expected to last for a continuous period of at least 12 months,” Plaintiff 9 contends the disability determination was flawed. (Id., emphasis omitted) 10 The Commissioner argues termination at step one was proper because “there was no continuous 11 12-month period where Plaintiff did not perform [substantial gainful activity].” (Doc. 15 at 3, emphasis 12 omitted). According to the Commissioner, 13 As the adjudicator, the ALJ was required to determine if Plaintiff performed SGA at any point during the relevant time period – from her alleged onset date through the date of 14 the decision. The ALJ appropriately considered that Plaintiff engaged in SGA beginning with her alleged onset date, January 5, 2015, and continuing through November 14, 15 2016 because a claimant is not entitled to receive disability benefits during a time period that she performs SGA. 16 The ALJ then properly considered whether there was a continuous 12-month period during the relevant time frame that Plaintiff had not engaged in SGA. The 17 definition of disability is the “inability to engage in any substantial gainful activity ... which has lasted or can be expected to last for a continuous period of not less than 12 18 months.” 42 U.S.C. § 423(d)(1)(A). Because there was no continuous 12-month period that Plaintiff had not engaged in SGA, the ALJ correctly found that Plaintiff was not 19 disabled at step one.

20 (Doc. 15 at 4) The Commissioner asserts this “step one decision is consistent with the decisions of 21 courts within this circuit.” (Id., citing e.g., Beylin v. Astrue, 2010 WL 749868, at *1 (C.D. Cal. Feb. 26, 22 2010); Morgan v. Berryhill, 2019 WL 527442, at *4 (S.D. Cal. Feb. 11, 2019)). In addition, the 23 Commissioner argues the decision was “consistent with the decisions of other circuits.” (Id., citing 24 Nettles v. Sullivan, 956 F.2d 820 (8th Cir.1992); Barina v. Shalala, 35 F.3d 555 (4th Cir. 1994) 25 (unpub.) Kenney v. Barnhart, 125 F. App’x 83, 84 (8th Cir. 2005) (unpub.)). 26 In Beylin, Central District noted Beylin appeared to challenge the ALJ’s “finding that there is no 27 evidence that Plaintiff was unable to engage in substantial gainful activity for a continuous twelve 28 month period prior to June 30, 2005, the date that he was last insured for Title II purposes.” Id., 2010 1 WL 749868 at *1. The court observed that Beylin did “not actually dispute this finding directly.” Id. 2 However, Beylin reported “he had surgery in March 2005,” and appeared to argue the ALJ “should 3 consider the period from March 2005 to March 2006” as a twelve-month period he was unable to 4 engage in substantial gainful activity. Id. The court rejected this argument, finding Beylin “point[ed] 5 to no evidence of a continuous inability to engage in substantial gainful activity for a continuous 6 twelve-month period before the date last insured or, for that matter, beginning in March 2005 and 7 extending past the date last insured.” Id. 8 In Morgan v. Berryhill, the Southern District also determined the claimant did not meet the 12- 9 month duration requirement to receive his benefits. Id., 2019 WL 527442, at *4. The court observed 10 that Morgan had been granted benefits and “began receiving disability insurance benefits on January 11 26, 2018,” which he “collected on and off until late 2015.” Id. at *1. His benefits were terminated 12 retroactively when the Social Security Administration received information that Morgan “had earned 13 income starting in January 2008 and, thus, had returned to substantial gainful activity within one year 14 of his alleged disability onset date.” Id. His case was reopened, and the Commissioner found Morgan 15 “was not qualified for any disability insurance benefits because he had not had a continual period of 12 16 months during which he did not perform substantial gainful employment.” Id. The ALJ reviewed IRS 17 records and determined that the claimant had engaged in substantial gainful activity, rejecting the 18 claimant’s testimony disputing the earnings reported on the IRS documents. Id. at *7. The court found 19 the ALJ erred in the credibility analysis, which resulted in “error at the first step of the ALJ’s inquiry” 20 into whether the claimant performed substantial gainful activity, it and remanded the action for further 21 proceedings. Id. at *7-8. 22 Plaintiff contends the Commissioner errs in relying upon Beylin and Morgan “because these 23 cases quite clearly deal with individuals who had not, and were not expected to be, unable 24 to work for a continuous 12-month period.” (Doc. 16 at 2) Plaintiff argues the circumstances of Beylin 25 and Morgan “are not remotely analogous to the case at hand.” (Id. at 3) 26 As Plaintiff argues, the facts before the courts in Beylin and Morgan are not comparable to the 27 matter now pending before the Court. In Beylin, the claimant identified “no evidence of a continuous 28 inability to engage in substantial gainful activity for a continuous twelve-month period before the date 1 last insured or, … extending past the date last insured.” Id., 2010 WL 749868 at *1. In contrast, here, 2 Plaintiff stopped working on November 14, 2016 and remained unemployed nearly a year later when 3 the ALJ issued his decision, well before Plaintiff’s date last insured of December 31, 2020. (See Doc. 9- 4 3 at 14) The facts here are not analogous to Morgan, where there was a disputed issue regarding 5 whether the claimant engaged in substantial gainful activity within a twelve-month period resulting in 6 an overpayment of benefits. 7 Finally, the cases cited by the Commissioner from other circuits addressed by the other circuits 8 addressed different issues, including whether the claimants made unsuccessful work attempts that 9 should not be considered substantial gainful activity, or whether a claimant currently working at the 10 time of the administrative hearing was engaged in substantial gainful activity. See Nettles, 956 F.2d at 11 822- 824 (considering whether the claimant made an unsuccessful work attempt and finding the 12 claimant failed to show she was “unable to engage in substantial gainful activity for a period longer 13 than twelve months); Barina, 35 F.3d 555 (unpub.), 1994 U.S. App. LEXIS at *6-8 (4th Cir. Sept. 6, 14 1994) (rejecting the claimant’s argument that she was engaged in an unsuccessful work attempt and 15 upholding the ALJ’s decision that the claimant was not disabled where the she was “working as a 16 management employee” and engaged in substantial gainful activity at the time of the hearing); Kenney, 17 125 F. App’x at 84 (finding substantial evidence that the claimant “has not ceased to engage in 18 substantial gainful activity for any continuous 12-month period”). Further, these courts did not address 19 a situation in which the claimant asserted her impairments were expected to last for a continuous period 20 of more than twelve months. Given the different issues argued by the claimants and the lack of factual 21 similarities, the holdings in Nettles, Barina, and Kenney do not assist this Court with the determination 22 of whether the ALJ’s decision was proper. 23 Significantly, courts have consistently indicated a claimant satisfies her burden at step one 24 where she is not presently engaged in substantial gainful activity. See, e.g., Yuckert, 482 U.S. at 140; 25 Benton v. Barnhart, 331 F.3d 1030, 1034 (9th Cir. 2003) (“if a claimant cannot meet the burden of 26 showing she is currently not working, at step one, the process ends”); Grogan v. Barnhart, 399 F.3d 27 1257, 1260 (10th Cir. 2005) (“At step one, the claimant must show that he is not presently engaged in 28 substantial gainful activity”); McDaniel v. Bowen, 800 F.2d 1026, 1030 (11th Cir. 2006) (finding it was 1 “clear from the record that McDaniel met step one by proving that she is presently unemployed”); 2 Kushner v. Comm'r Soc. Sec., 765 Fed. Appx. 825, 827 (3rd Cir. 2019) (claimant’s burden at step one 3 is to show “he is not currently engaged in substantial gainful activity”). Because Plaintiff had stopped 4 working and was no longer engaged in substantial gainful activity at the time of the hearing—as the 5 ALJ acknowledged—she met her burden at step one. Thus, the ALJ should have continued the analysis 6 to step two and erred in terminating the sequential analysis prematurely. See Yuckert, 482 U.S. at 140 7 (stating that where the claimant is not engaged in substantial gainful activity, “the decisionmaker 8 proceeds to step two”). 9 Moreover, the ALJ did not make any finding as to whether Plaintiff satisfy the requirement to 10 identify “a medically determinable physical or mental impairment . . . which has lasted or can be 11 expected to last for a continuous period of not less than 12 months.” See 42 U.S.C. § 423(d)(1)(A) 12 (emphasis added). Instead, the ALJ focused upon the fact that Plaintiff engaged in substantial gainful 13 activity through November 14, 2016 and found there “has been no continuous 12-month period during 14 which the claimant has not engaged in substantial gainful activity.” (Doc. 9-3 at 16) However, it is 15 error for an ALJ “to focus … on the length of time [a claimant] was unemployed, rather than on 16 whether his ailments had lasted or could be expected to last for a continuous twelve months.” See 17 Gyurko v. Harris, 487 F. Supp. 1121, 1127 (D. Conn. 1980). Because the ALJ did not address whether 18 Plaintiff’s impairments could “be expected to last” only one more day, and thus satisfy the 12-month 19 requirement, the ALJ erred. 20 C. Remand is Appropriate 21 The decision whether to remand a matter pursuant to sentence four of 42 U.S.C. § 405(g) or to 22 order immediate payment of benefits is within the discretion of the district court. Harman v. Apfel, 23 211 F.3d 1172, 1178 (9th Cir. 2000). Except in rare instances, when a court reverses an administrative 24 agency determination, the proper course is to remand to the agency for additional investigation or 25 explanation. Moisa v. Barnhart, 367 F.3d 882, 886 (9th Cir. 2004) (citing INS v. Ventura, 537 U.S. 26 12, 16 (2002)). Generally, an award of benefits is directed when: 27 (1) the ALJ has failed to provide legally sufficient reasons for rejecting such evidence, (2) there are no outstanding issues that must be resolved before a determination of 28 disability can be made, and (3) it is clear from the record that the ALJ would be required to find the claimant disabled were such evidence credited. 1 Smolen v. Chater, 80 F.3d 1273, 1292 (9th Cir. 1996). In addition, an award of benefits is directed 2 where no useful purpose would be served by further administrative proceedings, or where the record is 3 fully developed. Varney v. Sec’y of Health & Human Serv., 859 F.2d 1396, 1399 (9th Cir. 1988). 4 The ALJ erred terminating the analysis at step one because Plaintiff had not engaged in 5 substantial gainful activity for nearly a year, and there was no finding that her impairments could not be 6 expected to last the remainder of the year, or one more day. Given the step at which the ALJ stopped 7 the analysis, there is no information regarding the severity of Plaintiff’s medically determinable 8 impairments, or the physical and mental limitations related thereto. Thus, the matter should be 9 remanded for the ALJ to re-evaluate the evidence, and make a finding regarding whether Plaintiff’s 10 impairments could be expected to last a continuous twelve-month period prior to her date last insured. 11 See Gyurko, 487 F. Supp. at 1127, 1130 (remanding the action, in part, for further proceedings where 12 the ALJ failed to determine whether the claimant’s impairments “had lasted or could be expected to last 13 for a continuous period of twelve months”). 14 CONCLUSION AND ORDER 15 For the reasons set forth above, the ALJ erred in his analysis and remand is appropriate. See 16 Sanchez, 812 F.2d at 510. Accordingly, the Court ORDERS: 17 1. The Commissioner’s motion for summary judgment (Doc. 15) is DENIED; 18 2. The matter is REMANDED pursuant to sentence four of 42 U.S.C. § 405(g) for further 19 proceedings consistent with this decision; and 20 3. The Clerk of Court is DIRECTED to enter judgment in favor of Plaintiff Sharon 21 Lynette Paige James, and against Defendant, Andrew Saul, the Commissioner of Social 22 Security. 23 24 IT IS SO ORDERED.

25 Dated: October 18, 2019 /s/ Jennifer L. Thurston 26 UNITED STATES MAGISTRATE JUDGE

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