Dennis v. Heckler, 84-1276

• Decision Date: 06 December 1984
• Docket Number: No. 84-1276,84-1276
• Citation: 756 F.2d 971
• Parties: , Unempl.Ins.Rep. CCH 15,897 Harrison DENNIS, Jr., Appellant, v. Margaret M. HECKLER, Secretary, United States Department of Health and Human Services, Appellee. . Submitted Under Third Circuit Rule 12(6)
• Court: U.S. Court of Appeals — Third Circuit

Page 971

756 F.2d 971

9 Soc.Sec.Rep.Ser. 85, Unempl.Ins.Rep. CCH 15,897

Harrison DENNIS, Jr., Appellant, v. Margaret M. HECKLER, Secretary, United States Department of Health and Human Services, Appellee.

No. 84-1276.

United States Court of Appeals Third Circuit.

Submitted Under Third Circuit

Rule 12(6) Dec. 6, 1984.

Decided March 6, 1985.

Stephen F. Gold, Jonathan Stein, Community Legal Services, Philadelphia, Pa., for appellant.

Edward S.G. Dennis, Jr., U.S. Atty., Stanley Weinberg, Edward T. Ellis, Asst. U.S. Attys., E.D. Pa., Beverly Dennis, III, Regional Atty., James S. Feight, Jr., Asst. Regional Atty., Dept. of Health and Human Services--Region III, Philadelphia, Pa., for appellee.

Before ALDISERT, Chief Judge, BECKER, Circuit Judge, and STERN, District Judge. ^*

OPINION OF THE COURT

BECKER, Circuit Judge.

This is an appeal by Harrison Dennis, Jr., a social security disability claimant who became a prevailing party against the United States within the meaning of the Equal Access to Justice Act ("EAJA"), 28 U.S.C. Sec. 2412(d) (repealed 1984), when, after the district court reversed an adverse decision of the Secretary of Health and Human Services and remanded for further consideration, the Social Security Administration ("SSA") Appeals Council ordered an award of benefits. ¹ Dennis was unsuccessful, however, in obtaining an award of counsel fees under the EAJA because the district court decided that the position taken by the Secretary both in the agency and in the district court was "substantially justified."

There are no disputed facts before us and the sole question for review is whether, on the administrative record, the Secretary has met her burden of showing substantial justification for her agency and litigation position.

In Washington v. Heckler, 756 F.2d 959, consolidated with this case for disposition and decided this day, we discuss the law applicable to the determination of entitlement to EAJA counsel fees, and the appropriate scope of review of a district court determination that the position of the government was substantially justified. We apply our conclusions here. In Washington our focus was on whether the Secretary's legal position was substantially justified; in this case we focus on her factual position. Because our review of the administrative record leads us to the conclusion that the position of the Secretary was not substantially justified, we reverse and remand for an award of fees.

I.

A.

Dennis is a forty-nine year old man with a sixth-grade education. He suffers from chronic paranoid schizophrenia. Between 1964 and 1973, Dennis was institutionalized seven times in mental hospitals. He was violent; he hallucinated; and he heard "voices from God." Even after his last release from Pennsylvania State Hospital in 1973, he continued to hear voices that urged him to commit suicide. See Appendix at 130A.

In 1975 Dennis came under the care of Lydia Schut, M.D., a psychiatrist. On September 2, 1980, Dr. Schut wrote that Dennis was a chronic paranoid schizophrenic, but had been in remission during the past year. ² Id. at 197A. However, Dr. Schut also pointed out that Dennis "does not tolerate stress well" (emphasis in original), was withdrawn and very passive, had a flattened affect, only partial judgment, a depressed mood and no social life. Id. The only other current psychiatric evidence before the ALJ was a June 10, 1981, letter--also from Dr. Schut. See id. at 209-10A. ³ In this letter, Dr. Schut describes Dennis as "suspicious, very passive, resistant to change, and asocial.... He has few friends, and under stress he becomes more withdrawn and suspicious." Id. at 209A. Dr. Schut concluded:

Mr. Dennis suffers from a residual schizophrenia with marked impairment of his functioning in terms of social relationships and is unable to work because of his withdrawal, inability to handle stress, distractability, and suspiciousness. When he is confronted with a need to change his routine, he resists as long as possible, becoming increasingly anxious. I believe that any job will prove too stressful and he could break down simply at the fact that he will have to go back to work in the future. The goal of therapy is to help him keep as much predictability and stability in his life as possible in hopes of preventing another breakdown.

Id. at 209-10A.

B.

The ALJ conducted a hearing at which he received the medical records and the testimony of Dennis and a vocational expert, Dr. Ephrain Royfe. At the hearing, Dennis testified that his life is extremely restricted. He rarely leaves his home and engages in few activities other than driving his mother to the supermarket and occasionally visiting a few friends. See id. at 89A, 96-97A. In order to avoid getting excited, he "tries to take it easy" and keep stress to a minimum. Id. at 105A. Dr. Royfe agreed that Dennis could not return to his former employment--heavy unskilled work. ⁴ Id. at 117A. Dr. Royfe believed, however, that Dennis could perform certain categories of light work--maintenance worker, sweeper in a factory or a plant, kitchen helper in varieties of cafeterias and lunchrooms, simple hand assembly, order filling, and watchman work. Id. ⁵ Indeed, Dr. Royfe expressed the view that such work would be rehabilitative in nature. Id. at 125A. He discounted the stress in the various jobs but conceded that if, because of his alleged condition, Dennis would not be able to attend or remain on a work site for a regular and sustained period, "there would be no employment he could then undertake." Id. at 85A.

C.

The ALJ, in his opinion, acknowledged that "[t]here is no doubt that [Dennis] has an underlying schizophrenia condition which in years past has required a number of hospitalizations." Id. at 61A. However, the ALJ added that "it is just as clear" that Dennis' condition "has been controlled with medication and has been in remission for eight years." Id. He noted Dennis' ability to drive a car and sit through the hearing, both of which the ALJ described as most stressful, id., and observed that Dennis evidenced no fear or suspicion during the hearing. Id. at 61-62A; see also id. at 120A. He rejected Dr. Schut's claim that Dennis was easily distracted and had impaired vision on the grounds that Dennis was able to drive and that Dr. Schut would have seen to it that Dennis did not have a driver's license and endanger himself and others if these conditions in fact existed. ⁶ Id. at 62A. The ALJ also found that Dennis was not easily distracted during the hearing. Id.

The ALJ did not directly reject Dr. Schut's findings. Rather he concluded that, notwithstanding the prior hospitalizations. Dennis was in the eighth year of remission, his condition was controlled by medication, and that his "life style, activities[,] appearance, presentation of himself verbally and otherwise at the hearing, are all factors which compel [the] conclusion that [his] disability ceased in September 1980." Id. at 63A. The ALJ agreed that Dennis should not be put into a "highly stressful atmosphere," but was persuaded that he could perform the less stressful jobs identified by the vocational expert. Id. He thereupon determined that Dennis' disability ceased in September 1980. Id.

Counsel for Dennis appealed to the SSA Appeals Council arguing that the ALJ erred in failing to apply the listing of impairments in 20 C.F.R. Sec. 404, Subpart P, Appendix 1. Counsel cited Livingstone v. Califano, 614 F.2d 342 (3d Cir.1980), and pointed out that Dennis had met the criteria in Sec. 12.03 of the listing of impairments which deals with "functional psychotic disorders." Id. at 43A. Counsel further argued that the ALJ had ignored the uncontroverted medical evidence of the treating psychiatrist that Dennis could not handle stress and therefore was unable to work. See id. at 47-48A. The Appeals Council nonetheless affirmed the decision of the ALJ. Id. at 38A.

D.

The United States Magistrate to whom the case was referred by the district court concluded that the ALJ did not give appropriate weight to the opinion of Dennis' treating psychiatrist, failed to support his findings by substantial evidence, and failed to take into consideration the listing of impairments. Id. at 33A. ⁷ The magistrate recommended that the case be remanded for further proceedings at which the ALJ would be required to make new findings but not adduce additional evidence. See id. at 33-34A. The district court adopted the Magistrate's report and recommendation with the modification that at the remand hearing new evidence could be presented. Id. at 21-22A.

On remand, and without requiring an administrative hearing, the Appeals Council awarded benefits. The Appeals Council concluded that:

the claimant's schizophrenia is a severe impairment ..., for there is ample evidence that his condition significantly affects his ability to respond appropriately to supervision, usual work situations, and co-workers; to appropriately deal with changes in a routine work setting; and, to exercise suitable judgment.

Id. at 8A. The Appeals Council also ruled that the listing of impairments must be applied, even though "[a]s ... noted by the magistrate ..., the administrative law judge did not address this issue [i.e., the listing] in his decision." Id. In applying the listing, the Council held that "during September 1980 and thereafter, the severity of the claimant's schizophrenia has equalled in severity the degree of impairment reflected in paragraph 12.03 A 6 and B of the Appendix." Id. Furthermore,

at all pertinent times, the record adequately shows the claimant's daily activities were markedly restricted, that his interests were similarly constricted, and that his ability to relate to other people has been persistently disturbed.... [A]lthough the claimant may no longer experience hallucinations and delusions, the evidence reveals that his underlying schizophrenia continues to produce suspiciousness,...