Carol Luther v. Nancy Berryhill

                     FOR PUBLICATION

    UNITED STATES COURT OF APPEALS
         FOR THE NINTH CIRCUIT


 CAROL ANN LUTHER,                                  No. 16-55987
               Plaintiff-Appellant,
                                                      D.C. No.
                      v.                           2:15-cv-03356-
                                                      JLS-JEM
 NANCY BERRYHILL, Acting
 Commissioner of Social Security,
               Defendant-Appellee.                    OPINION


        Appeal from the United States District Court
            For the Central District of California
        Josephine L. Staton, District Judge, Presiding

          Argued and Submitted February 15, 2018
                   Pasadena, California

                        Filed June 4, 2018

    Before: Marsha S. Berzon and Jay S. Bybee, Circuit
      Judges, and Sharon L. Gleason,* District Judge.

                   Opinion by Judge Gleason




    *
      The Honorable Sharon L. Gleason, United States District Judge for
the District of Alaska, sitting by designation.
2                      LUTHER V. BERRYHILL

                            SUMMARY**


                           Social Security

    The panel reversed the district court’s judgment that
affirmed the administrative law judge’s denial of a claimant’s
application for disability insurance benefits under Title II of
the Social Security Act and supplemental security income
under Title XVI of the Act.

   As an initial matter, the panel held that the Appeals
Council’s reasoning for denying review is not considered on
subsequent judicial review, and turned to the reasoning
provided by the ALJ in her decision.

    The panel held that the ALJ erred in not adequately
addressing claimant’s 100% Veterans Affairs (“VA”)
disability rating in her decision. The panel held that although
the ALJ noted claimant’s VA disability rating at the hearing
and in her written decision, she did not address how she had
considered and weighed the VA’s rating or articulate any
reasons for rejecting it. The panel held that remand for
further proceedings was appropriate where it was unclear
from the record whether the ALJ would be required to find
claimant disabled after evaluating the VA disability rating.




    **
       This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                   LUTHER V. BERRYHILL                      3

                        COUNSEL

Erika Bailey Drake (argued) and Roger D. Drake, Drake &
Drake P.C., Calabasas, California, for Plaintiff-Appellant.

Tina L. Naicker (argued), Special Assistant United States
Attorney; Deborah L. Stachel, Acting Regional Chief
Counsel, Region IX; Sandra R. Brown, Acting United States
Attorney; Social Security Administration, San Francisco,
California; for Defendant-Appellee.


                         OPINION

GLEASON, District Judge:

    Carol Ann Luther appeals the district court’s judgment
affirming the administrative law judge (“ALJ”)’s denial of
her application for disability insurance benefits (“DIB”)
under Title II of the Social Security Act (“Act”) and
supplemental security income (“SSI”) under Title XVI of the
Act. We hold that the ALJ erred in not adequately addressing
Luther’s 100% Veterans Affairs (“VA”) disability rating in
her decision. We reverse and remand for further proceedings
consistent with this opinion.

                     BACKGROUND

    On February 27, 2013, Luther filed an application for DIB
and SSI. She sought these benefits due to her post-traumatic
stress disorder (“PTSD”) and degenerative disc disease. At
that time, she claimed a disability onset date of December 28,
2012. In December 2013, the VA concluded that Luther was
100 percent disabled for PTSD, 30 percent disabled for
4                  LUTHER V. BERRYHILL

urinary tract infection, and 10 percent disabled for
degenerative disc disease of the lumbar spine, for an overall
rating of 100% disabled, effective December 6, 2012. Luther
provided only the first two pages of the total five pages of the
VA’s rating decision to the ALJ.

    On October 27, 2014, the ALJ conducted a hearing. At the
beginning of the hearing, the parties briefly discussed the VA
disability rating. Luther amended her social security disability
onset date to correspond with the December 6, 2012 effective
date of her VA rating. The ALJ then stated, “One hundred
percent disability VA has no bearing. It’s something we
consider—.”

    In a decision dated December 3, 2014, the ALJ found that
Luther was not disabled. The decision contained only two
limited references to the VA rating. First, under the
“Jurisdiction and Procedural History” section it states, “The
claimant was awarded 100% VA disability commencing
December 6, 2012. At the hearing, the claimant amended her
onset date to December 6, 2012 to correspond with the onset
of her VA disability award.” The second reference, later in
the decision, states, “At the hearing, the claimant amended
her onset date to December 6, 2012, which is the date she was
awarded VA disability.”

    Luther requested the Appeals Council review the ALJ’s
decision. There, she argued that the ALJ erred by failing to
provide a “specific, valid, record-based rationale to not give
the VA ratings great weight.”

   On March 10, 2015, the Appeals Council denied Luther’s
request for review. The Council found “[t]he record that was
before the Administrative Law Judge was sufficient to
                   LUTHER V. BERRYHILL                        5

evaluate [Luther’s] disability status under the Social Security
Regulations.” The Council observed that the ALJ had the
benefit of extensive medical records, including records that
had not been provided to the VA. The Appeals Council also
stated that the VA disability rating was based on the same
symptoms “appropriately considered by the [ALJ] . . . under
applicable Social Security Regulations.” The Council found
that “[e]ven if the ‘Evidence’ and ‘Reasons For Decision’
identified [by the VA] . . . were sufficient to support a VA
service connected disability rating of 100% due to PTSD,
they were/are not sufficient to support a finding of disability
under Social Security Regulations.”

    Shortly after receiving the Appeals Council decision,
Luther asked the Council to reopen her case. She submitted
“an entire copy of the [VA’s] rating decision” to the Appeals
Council, which included three additional pages of the VA’s
analysis that had not been previously provided to the ALJ or
to the Appeals Council. The record does not contain any
response by the Appeals Council. Nor does the administrative
record contain these additional pages.

    On May 5, 2015, Ms. Luther appealed to the Central
District of California. The district court adopted the
magistrate judge’s findings and recommendations, affirming
the agency’s decision. On appeal to this court, Luther asserts
that the ALJ erred in not giving great weight to the VA
disability rating, rejecting the opinions from Luther’s treating
physicians, and discrediting Luther’s subjective complaints.
She seeks a remand for the calculation of benefits or
alternatively a remand for further proceedings. Because we
reverse and remand as to the VA disability rating, we do not
address Luther’s other arguments.
6                   LUTHER V. BERRYHILL

                STANDARD OF REVIEW

    A district court’s order affirming an ALJ’s denial of
benefits is reviewed de novo. Brown-Hunter v. Colvin,

806 F.3d 487, 492

 (9th Cir. 2015). A decision by the
Commissioner to deny disability benefits will not be
overturned unless it is either not supported by substantial
evidence or is based upon legal error. Matney ex rel. Matney
v. Sullivan, 

981 F.2d 1016, 1019

 (9th Cir. 1992) (citing
Gonzalez v. Sullivan, 

914 F.2d 1197, 1200

 (9th Cir. 1990)).
“Substantial evidence is ‘more than a mere scintilla,’ but less
than a preponderance.” Saelee v. Chater, 

94 F.3d 520, 522

(9th Cir. 1996) (citation omitted) (quoting Richardson v.
Perales, 

402 U.S. 389, 401

 (1971)). In reviewing the
agency’s determination, a reviewing court considers the
evidence in its entirety, weighing both the evidence that
supports and that detracts from the ALJ’s conclusion. Jones
v. Heckler, 

760 F.2d 993, 995

 (9th Cir. 1985). “Where
evidence is susceptible to more than one rational
interpretation, it is the ALJ’s conclusion that must be
upheld.” Burch v. Barnhart, 

400 F.3d 676, 679

 (9th Cir.
2005). A reviewing court may only consider the reasons
provided by the ALJ in the disability determination and “may
not affirm the ALJ on a ground upon which he did not rely.”
Garrison v. Colvin, 

759 F.3d 995, 1010

 (9th Cir. 2014).

                        DISCUSSION

                               I.

   Luther asserts that the district court erred in relying on the
Appeals Council’s discussion of the VA rating because the
Appeals Council denied Luther’s request for review. The
magistrate judge acknowledged “[t]his Court has no
                   LUTHER V. BERRYHILL                      7

jurisdiction to review the decision of the Appeals Council
denying review.” But the magistrate judge nonetheless
discussed the Council’s reasoning in denying review and
relied on that analysis in his decision. Luther maintains that
when undertaking judicial review of a Social Security
disability determination, a reviewing court cannot rely on the
reasons that the Appeals Council set forth when it denied
review.

    The Commissioner maintains that a reviewing court
“must look to the Appeals Council’s explanation of its refusal
to grant Claimant’s request.” For that proposition, the
Commissioner relies on Ramirez v. Shalala, 

8 F.3d 1449

 (9th
Cir. 1993). In Ramirez, additional medical evidence was
submitted to the Appeals Council that had not been provided
to the ALJ. 

Id. at 1451

. The Appeals Council then denied
review. 

Id.

 On appeal, we held the additional evidence should
be considered by a reviewing court:

       [A]lthough the Appeals Council “declined to
       review” the decision of the ALJ, it reached its
       ruling after considering the case on the merits;
       examining the entire record, including the
       additional material; and concluding that the
       ALJ’s decision was proper and that the
       additional material failed to “provide a basis
       for changing the hearing decision.” For these
       reasons we consider on appeal both the ALJ’s
       decision and the additional material submitted
       to the Appeals Council.

Id. at 1452

; see also Taylor v. Comm’r of Soc. Sec. Admin.,

659 F.3d 1228

, 1231–32 (9th Cir. 2011) (holding that a
reviewing court may review additional evidence submitted to
8                  LUTHER V. BERRYHILL

and rejected by the Appeals Council, but may not review an
Appeals Council decision denying a request for review);
Harman v. Apfel, 

211 F.3d 1172

, 1179–80 (9th Cir. 2000).
Ramirez did not address whether the reasoning of the
Appeals Council in denying review should be considered by
a reviewing court. Instead, we focused on whether the
additional evidence submitted to the Appeals Council was
included in the record to the reviewing court. In Luther’s
case, no additional evidence was added to the administrative
record by the Appeals Council; therefore, Ramirez does not
apply.

    Here, the Appeals Council denied Luther’s request for
review, making the ALJ’s decision the final decision of the
Commissioner. See Sims v. Apfel, 

530 U.S. 103

, 106–07
(2000) (“SSA regulations provide that, if the Appeals Council
grants review of a claim, then the decision that the Council
issues is the Commissioner’s final decision. But if . . . the
Council denies the request for review, the ALJ’s opinion
becomes the final decision.”); Brewes v. Comm’r of Soc. Sec.
Admin., 

682 F.3d 1157

, 1161–62 (9th Cir. 2012) (“When the
Appeals Council declines review, the ALJ’s decision
becomes the final decision of the Commissioner, and the
district court reviews that decision for substantial evidence,
based on the record as a whole. . . .”) (citations and internal
quotation marks omitted)); Taylor, 

659 F.3d at 1231

 (“When
the Appeals Council denies a request for review, it is a non-
final agency action not subject to judicial review because the
ALJ’s decision becomes the final decision of the
Commissioner.”). Therefore, the Appeals Council’s reasoning
for denying review is not considered on subsequent judicial
                      LUTHER V. BERRYHILL                              9

review.1 We turn to the reasoning provided by the ALJ in her
decision.

                                   II.

    Luther asserts “[t]he ALJ erred by not providing
persuasive, valid, and specific reasons for discounting Ms.
Luther’s VA rating.” The Commissioner responds that the
ALJ “specifically acknowledged that the VA found Claimant
100% disabled.”

     “[T]he ALJ must consider the VA’s finding in reaching
his decision and the ALJ must ordinarily give great weight to
a VA determination of disability.” McLeod v. Astrue,

640 F.3d 881, 886

 (9th Cir. 2011) (internal quotation marks
omitted) (quoting McCartey, 298 F.3d at 1076). We have
found great weight to be ordinarily warranted “because of the
marked similarity between these two federal disability
programs.” McCartey, 298 F.3d at 1076. However, a VA
rating is not conclusive and “does not necessarily compel the
SSA to reach an identical result.” McLeod, 

640 F.3d at 886

.
An ALJ may give less weight to a VA rating “if he gives
persuasive, specific, valid reasons for doing so that are
supported by the record.” Valentine v. Comm’r Soc. Sec.
Admin., 

574 F.3d 685, 695

 (9th Cir. 2009) (quoting
McCartey, 298 F.3d at 1076).



    1
      The Appeals Council decision would not alter our reasoning in this
case even if it was properly a subject of our review. The Appeals Council
did not explain why the evidence supporting the VA disability rating was
insufficient for an award under Social Security Regulations, much less
consider the “great weight” ordinarily accorded VA ratings. McCartey v.
Massanari, 

298 F.3d 1072, 1076

 (9th Cir. 2002).
10                  LUTHER V. BERRYHILL

    In McCartey, the VA determined that McCartey was
80 percent disabled due to his depression and lower back
injury. 

298 F.3d at 1076

. The ALJ “did not mention [the VA
rating] in his opinion.” 

Id.

 We held “that the ALJ erred in
disregarding McCartey’s VA disability rating, and
accordingly, the Commissioner’s decision must be reversed
and remanded.” Id.; see also Hiler v. Astrue, 

687 F.3d 1208, 1212

 (9th Cir. 2012) (reversing ALJ who relied solely on
VA’s 2001 proposed rating changes and disregarded VA’s
1998 decision and 2002 decision that rejected 2001 proposed
changes).

    In Valentine, the claimant had an initial VA disability
rating of 30 percent. 

574 F.3d at 688

. While his case was
pending before the ALJ, the VA increased his disability rating
to 100 percent. 

Id. at 689

. The ALJ discussed the revised VA
rating in her decision and provided two reasons for rejecting
that rating. 

Id. at 695

. First, the ALJ stated that “[w]hile the
VA unemployability rating resembles the Social Security
disability standard in some respects, the non-critical decision
made by the VA Decision Review Officer . . . was not an
unemployability assessment.” 

Id.

 Second, the ALJ stated that
the VA rating “was not based on a comprehensive evaluation
of the evidence available to the undersigned [ALJ].” 

Id.

 On
appeal, we found the first reason for rejecting the VA rating
invalid under McCartey, noting that an ALJ must consider a
VA rating due to “the marked similarity” between both
programs. 

Id.

 But as to the second reason, we held that the
ALJ was “justified in rejecting the VA’s disability rating on
the basis that [the ALJ] had evidence the VA did not, which
undermined the evidence the VA did have.” 

Id.

    In this case, although the ALJ noted Luther’s VA
disability rating at the hearing and in her written decision, she
                       LUTHER V. BERRYHILL                               11

did not address how she had considered and weighed the
VA’s rating or articulate any reasons for rejecting it. To the
contrary, the ALJ stated, “It doesn’t matter. It’s
100 percent. . . . One hundred percent disability VA has no
bearing. It’s something we consider—.” The ALJ did not
discuss the rating in her evaluation of the medical evidence
and instead merely acknowledged it in two short portions of
her decision.2 Simply mentioning the existence of a VA rating
in the ALJ’s decision is not enough. The ALJ erred because
she did not give great weight to the VA disability rating and
did not provide any persuasive, specific, and valid reasons for
rejecting it.

                                    III.

     “Remand for further proceedings is appropriate where
there are outstanding issues that must be resolved before a
disability determination can be made, and it is not clear from
the record that the ALJ would be required to find the claimant
disabled if all the evidence were properly evaluated.” Taylor,

659 F.3d at 1235

 (citing Vazquez v. Astrue, 

572 F.3d 586, 593

(9th Cir. 2009)). In this case, the ALJ failed to explain the
consideration she gave to the VA disability rating, if any. And
it is unclear from the record whether the ALJ would be
required to find Luther disabled after evaluating the VA
disability rating. “We note that, on remand, the ALJ is not

    2
       The ALJ also did not discuss the VA’s conclusion that Luther’s
urinary tract infection and degenerative disc disease were service-
connected disabilities and failed to develop the record by asking Luther
questions pertaining to these other conditions. Luther had listed
degenerative disc disease as a disability on her Social Security application.
See Widmark v. Barnhart, 

454 F.3d 1063, 1068

 (9th Cir. 2006) (“[T]he
ALJ has a special duty to fully and fairly develop the record and to assure
that the claimant’s interests are considered.”).
12                LUTHER V. BERRYHILL

compelled to adopt the conclusions of the VA’s decisions
wholesale, but if she deviates from final VA decisions, she
may do so based only on contrary evidence that is
‘persuasive, specific, valid’ and supported by the record.”
Hiler, 

687 F.3d at 1212

 (quoting McCartey, 

298 F.3d at 1076

).

                     CONCLUSION

    For the foregoing reasons, we REVERSE the district
court’s decision affirming the Commissioner’s decision and
REMAND with instructions to the district court to remand
this case to the Commissioner for further proceedings
consistent with this opinion.