Kellough v. Heckler

Citation785 F.2d 1147
Decision Date27 February 1986
Docket NumberA,No. 84-2140,No. 220-24-5129,220-24-5129,84-2140
Parties, Unempl.Ins.Rep. CCH 16,685 Iris L. KELLOUGH, S.S.ppellant, v. Margaret M. HECKLER, Secretary of Health and Human Services, Appellee.
CourtU.S. Court of Appeals — Fourth Circuit

Alan Hilliard Legum (Alan Hilliard Legum, P.A., Annapolis, Md., on brief), for appellant.

Joseph F. Freidman (Richard K. Willard, Asst. Atty. Gen., Washington, D.C., J. Frederick Motz, U.S. Atty., Donald A. Gonya, Asst. Gen. Counsel, Randolph W. Gaines, Deputy Asst. Gen. Counsel, A. George Lowe, Chief, Disability Litigation Branch, Baltimore, Md., on brief), for appellee.

Before PHILLIPS, CHAPMAN and SNEEDEN, Circuit Judges.

JAMES DICKSON PHILLIPS, Circuit Judge:

Iris Kellough appeals a grant of summary judgment upholding the Secretary's denial of her claim for disability insurance benefits. Specifically, she challenges the Appeals Council's, hence the Secretary's, decision reversing that of an ALJ, that her cardiac condition did not meet the listed impairment criteria and that she was capable of performing her past relevant work, hence was not disabled. We conclude that the Secretary's determination that her condition did not meet the listed impairment criteria was supported by substantial evidence, but that the further determination that she could perform her past relevant work was not so supported. Accordingly, we vacate the district court judgment and remand to that court to remand for further agency proceedings.

I

Kellough was admitted to the University of Maryland Hospital in December 1975 complaining of shortness of breath on exertion. An X-ray examination revealed an enlargement of the heart due to mitral stenosis, a stricture of the mitral valve. Cardiac catheterization indicated an occlusion of the right external iliac and femoral arteries. Kellough underwent open-heart surgery in January 1976 to enlarge the mitral opening and underwent emergency surgery to remove a blood clot from her leg. She was discharged with a diagnosis of rheumatic heart disease, which affects the heart valves, and iliac and femoral embolus.

Kellough had a second cardiac catheterization in March 1980 that indicated a worsening of her rheumatic heart disease. In April 1980 doctors at the University of Maryland hospital replaced her mitral valve with an artificial valve and repaired the tricuspid valve. Evidence introduced at the hearing before the ALJ revealed that the tricuspid repair was unsuccessful, resulting in a severe leak in the valve.

Kellough's treating physician, Dr. Magram, in a report dated October 15, 1982, stated that Kellough suffers congestive heart failure and has an enlarged heart with poor contractility. A test of the left ventricle made on March 25, 1982, produced a ventricular ejection fraction of 20%, indicating a very weak heart muscle.

Kellough filed an application for disability benefits in March 1982 and alleged that she had been disabled since December 1975. All parties agree that Kellough last met the special earnings requirement of the Act on December 31, 1977, so that she would not be eligible for benefits if she became disabled after that date. After a hearing in November 1982, the ALJ rendered a decision that Kellough's cardiac condition met the "listed impairment" criteria of 20 C.F.R. Part 404, appendix 1, and that she was therefore disabled and entitled to benefits commencing December 28, 1975. The Appeals Council reviewed the case sua sponte pursuant to 20 C.F.R. Sec. 404.970(a) and concluded that the ALJ's decision was not supported by substantial evidence. Specifically, the Appeals Council found that Kellough failed to show that she suffered an impairment meeting or equalling the severity requirements of the Listings of Impairments set out in 20 C.F.R. Part 404, appendix 1. The Council further found that Kellough's past employment as a substitute teacher and as a self-employed ceramics shop owner was light in nature and that she retained the residual capacity to perform that work as of December 31, 1977.

Kellough sought review of the Appeals Council's decision in the United States District Court for the District of Maryland pursuant to 42 U.S.C. Sec. 405(g). The district court entered summary judgment for the Secretary upon a conclusion that the Secretary's dispositive findings leading to denial of benefits were supported by substantial evidence.

This appeal followed.

II

Kellough contends at the outset that judicial review of the Secretary's final decision should be limited to determining whether, as a matter of law, the Appeals Council observed the constraints upon its review powers which she argues are imposed by 20 C.F.R. Sec. 404.970(a). 1 On that basis, she contends, since the Appeals Council's decision effectively rejected factual findings of the ALJ favorable to her, the Appeals Council's review powers were improperly exercised unless, per 20 C.F.R. Sec. 404.970(a)(3), the ALJ decision was not supported by substantial evidence. To determine, in judicial review, whether the Secretary's decision on this basis was legally erroneous therefore, she contends, requires application of the same standard of review to the ALJ's factual findings as was applied by the Appeals Council. That standard is whether the ALJ's dispositive findings were supported by substantial evidence. If they were so supported, the Appeals Council erred, and the district court should be reversed; if they were not so supported, the Appeals Council did not err and the district court should be affirmed. In short, her contention is that judicial review of the Secretary's dispositive factual findings at odds with those of an ALJ should be directed not at whether the Secretary's findings are supported by substantial evidence, but at whether the ALJ's contrary findings are so supported. Kellough then, of course, contends that, applying this standard, we should find the ALJ's favorable findings so supported and reverse the district court's judgment upholding the Secretary's decision to the contrary.

In Parris v. Heckler, 733 F.2d 324 (4th Cir.1984), we rejected the position urged here by Kellough. We held instead that judicial review of a final decision of the Secretary which is at odds in its factual findings with that of an ALJ focuses upon the Secretary's decision rather than the ALJ's. Id. at 326. If the Secretary's dispositive factual findings are supported by substantial evidence, they must be affirmed, even in cases where contrary findings of an ALJ might also be so supported. Id. 2

This critical holding in Parris was rested upon the general principle, as announced in Universal Camera Corp. v. NLRB, 340 U.S. 474, 71 S.Ct. 456, 95 L.Ed. 456 (1951), that ordinarily 3 governs judicial review of final agency decisions reached on appeal or review of an initial decision (now typically that of an ALJ) where the final agency decision rejects factual findings upon which the initial decision was based. As explained in Universal Camera, judicial review under the general "substantial evidence" standard of the Administrative Procedure Act, 5 U.S.C. Sec. 706(2)(E), 4 contemplates that in such circumstances judicial review is properly focused upon the final agency decision and its component factfindings; the judicial inquiry is whether those findings are supported by substantial evidence. In making this assessment, conflicting factual findings by the initial decision-maker are not, however, to be ignored; they are a part of the "record as a whole" before the reviewing court. They are therefore properly considered in determining whether substantial evidence on the record as a whole supports the final agency decision; and where credibility and witness demeanor are critical, they may properly be accorded particular weight for this limited purpose. Universal Camera, 340 U.S. at 492-97, 71 S.Ct. at 466-69; see Parris, 733 F.2d at 326. Nevertheless, because Congress has laid the ultimate responsibility and authority for adjudicating social security claims--necessarily in both their factual and legal components--upon the Secretary, see 42 U.S.C. Sec. 405(b)(1), it is the Secretary's final decision rather than that of any initial decisionmaker that should be the direct object of judicial review. Parris, 733 F.2d at 326; accord Taylor v. Heckler, 765 F.2d 872 (9th Cir.1985); Lopez-Cardona v. Secretary, 747 F.2d 1081 (1st Cir.1984); Baker v. Heckler, 730 F.2d 1147 (8th Cir.1984); contra, Newsome v. Secretary, 753 F.2d 44 (6th Cir.1985); Scott v. Heckler, 768 F.2d 172 (7th Cir.1985); Parker v. Heckler, 763 F.2d 1363 (11th Cir.1985) (split panel decision).

On the direct authority of Parris, we therefore reject Kellough's contention that we should review the district court judgment by assessing whether the ALJ's favorable decision was supported by substantial evidence. 5 We apply instead the Parris standard--whether the Secretary's unfavorable decision was so supported; and to that we now turn.

III
A

We first hold that substantial evidence supports the Secretary's conclusion that Kellough's impairment did not meet or equal the Listings of Impairment on December 31, 1977. The ALJ had relied heavily on Dr. Magram's October 1982 report to find that Kellough's cardiac impairment met or equalled the listing. The critical evidence contained in that report was the result of the heart scanning test on March 25, 1982, which revealed a left ventricular ejection factor of 20%. The Listings provide that cardiac impairment meets the disability level of severity when a ventricular ejection factor is less than 30%. The ALJ also found that Kellough suffered from serious heart disease--mitral valve insufficiency--as of December 1975.

What the record fails to show, however, is that the mitral valve insufficiency caused a less than 30% ejection factor as of December 1977. The medical evidence establishes that Kellough's basic impairment,...

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