Gutierrez v. Barnhart

• Decision Date: 20 December 2001
• Docket Number: PLAINTIFF-APPELLANT,DEFENDANT-APPELLEE,No. 00-17216,00-17216
• Citation: 274 F.3d 1255
• Parties: (9th Cir. 2001) ROSARIO GUTIERREZ,, v. JO ANNE BARNHART, <A HREF="#fr1-*" name="fn1-*">* COMMISSIONER, SOCIAL SECURITY ADMINISTRATION,
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1255

274 F.3d 1255 (9th Cir. 2001)

ROSARIO GUTIERREZ, PLAINTIFF-APPELLANT, v. JO ANNE BARNHART,^* COMMISSIONER, SOCIAL SECURITY ADMINISTRATION, DEFENDANT-APPELLEE.

No. 00-17216

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted September 12, 2001

Filed Dec. 20, 2001

Harvey P. Sackett, San Jose, California, and Geri N. Kahn, San Francisco, California, for the plaintiff-appellant.

R. Linda Cosme and Jeffrey H. Baird, Assistant Regional Counsel, Social Security Administration, San Francisco, California, for the defendant-appellee.

Appeal from the United States District Court for the Northern District of California D. Lowell Jensen, District Judge, Presiding D.C. No. CV-97-00531-DLJ

Before: Henry A. Politz,^** William A. Fletcher and Raymond C. Fisher, Circuit Judges.

FISHER, Circuit Judge:

Rosario Gutierrez appeals the district court's denial of attorney fees under the Equal Access to Justice Act (EAJA), 28 U.S.C. §§ 2412(d), after she prevailed in her appeal in this court reversing the Social Security Administration's (SSA) denial of disability benefits. See Gutierrez v. Apfel, 199 F.3d 1048 (2000) (Gutierrez I). We hold that the district court abused its discretion in denying fees because (1) the government's underlying conduct, failing to follow its own regulations, was not substantially justified, and (2) the government's litigation position was not substantially justified even though the effect of noncompliance with the SSA's regulations was an issue of first impression in this Circuit.

I.

In any action brought by or against the United States, the EAJA requires that "a court shall award to a prevailing party other than the United States fees and other expenses. . . unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust." 28 U.S.C. §§ 2412(d)(1)(A). An applicant for disability benefits becomes a prevailing party for the purposes of the EAJA if the denial of her benefits is reversed and remanded regardless of whether disability benefits ultimately are awarded. Shalala v. Schaefer, 509 U.S. 292, 300-02 (1993); Corbin v. Apfel, 149 F.3d 1051, 1053 (9th Cir. 1998) ("[A] party is eligible for fees under the EAJA if [she] wins at any intermediate stage in the proceedings -for instance, by obtaining a remand from the appeals court.").

In Gutierrez I, we reversed the ALJ's denial of disability benefits because the ALJ failed to follow SSA regulations regarding the evaluation of mental impairments. When evaluating the severity of mental impairments, the ALJ must follow a special procedure to "[i]dentify the need for additional evidence to determine impairment severity," "[c]onsider and evaluate functional consequences of the mental disorder(s) relevant to [the applicant's] ability to work " and "[o]rganize and present our findings in a clear, concise, and consistent manner." 20 C.F.R. §§ 404.1520a(a). Social Security regulation 20 C.F.R. §§ 404.1520a(d), at the time of the ALJ's decision, stated:

A standard document outlining the steps of this procedure must be completed by us in each case at the initial, reconsideration, administrative law judge hearing, and Appeals Council levels (when the Appeals Council issues a decision). . . . For all cases involving mental disorders at the administrative law judge hearing or Appeals Council levels, the standard document will be appended to the decision.

This form is referred to as a psychiatric review technique form (PRTF).

Gutierrez's application for disability benefits presented a colorable claim of mental impairment, including a report from her treating psychiatrist diagnosing her with "major depression with psychotic features . . . which have been present for some time," apparently "due to a sexual assault last year by her physician." The ALJ, relying upon the opinion of a nonexamining physician, found that Gutierrez had a severe mental disorder from March 1995 but it had not lasted, nor would it continue to last, for 12 continuous months.¹ He did not fill out and attach a PRTF as required by the SSA's regulations.

We reversed the ALJ's decision and held that the failure to fill out and attach the PRTF required remand to the SSA "for proper evaluation and documentation of the claimant's mental impairments." Gutierrez I, 199 F.3d at 1051.² This decision made Gutierrez a prevailing party for the purposes of the EAJA and she accordingly moved for attorney fees and costs under that statute. The district court denied the motion, finding that the government was substantially justified in defending the failure to fill out the PRTF because the Ninth Circuit had not ruled on the legal implications of such a failure.

II.

The decision whether to award fees under the EAJA, including the district court's conclusion that the government's position was substantially justified, is reviewed for abuse of discretion. Pierce v. Underwood, 487 U.S. 552, 559 (1988); Corbin, 149 F.3d at 1052. It is the government's burden to show that its position was substantially justified or that special circumstances exist to make an award unjust. Meinhold v. U.S. Dep't of Defense, 123 F.3d 1275, 1277 (9th Cir.), amended by 131 F.3d 842 (9th Cir. 1997); Love v. Realty, 924 F.2d 1492, 1495 (9th Cir. 1991).

A. Substantially justified.

"Substantially justified" means " `justified in substance or in the main' -that is, justified to a degree that could satisfy a reasonable person." Pierce, 487 U.S. at 565 (quoting Webster's New International Dictionary 2514 (2d ed. 1945)). A substantially justified position must have a reasonable basis both in law and fact. Id.; Flores v. Shalala, 49 F.3d 562, 569 (9th Cir. 1995) ("In this circuit, we apply a reasonableness standard in determining whether the government's position was substantially justified for purposes of the EAJA.").

The district court denied Gutierrez attorney fees under the EAJA because it found that "the government's decision to litigate cannot be found to be unreasonable" in light of the fact that "[t]he materiality of completing a PRTF form, at the time, was one of first impression in the Ninth Circuit." But we consider whether "the position of the government was, as a whole, substantially justified." United States v. Rubin, 97 F.3d 373, 376 (9th Cir. 1996) (emphasis added); Comm'r, INS v. Jean, 496 U.S. 154, 161-62 (1990) ("While the parties' postures on individual matters may be more or less justified, the EAJA . . . favors treating a case as an inclusive whole, rather than as atomized line-items.").

The plain language of the EAJA states that the " `position of the United States' means, in addition to the position taken by the United States in the civil action, the action or failure to act by the agency upon which the civil action is based." 28 U.S.C. §§ 2412(d)(2)(D); Jean , 496 U.S. at 159 (explaining that the "position" relevant to the inquiry "may encompass both the agency's prelitigation conduct and the [agency's] subsequent litigation positions"). Thus we "must focus on two questions: first, whether the government was substantially justified in taking its original action; and, second, whether the government was substantially justified in defending the validity of the action in court." Kali v. Bowen, 854 F.2d 329, 332 (9th Cir. 1988).

The district court erred in not addressing the reasonableness of the underlying conduct and basing its denial of fees solely on the government's litigation position. See Wilderness Society v. Babbitt, 5 F.3d 383, 388 (9th Cir. 1993) (holding that although "[t]he court was correct in finding that the [agency's] procedural litigation defense was substantially justified," it "erred . . . in ending its analysis at this point"). In order to prevail here, the government must establish that it was substantially justified on the whole, considering, first, the underlying conduct of the ALJ in failing to fill out and attach a PRTF to his findings and, second, its litigation position defending the ALJ's error.

1. Underlying agency conduct.

The underlying conduct in this case was a failure of the ALJ to follow SSA regulations requiring a PRTF to be completed and appended to the decision in cases requiring the evaluation of mental impairments. "[F]inding that an agency's position was substantially justified when the agency's position was based on violations of . . . the agency's own regulations, constitutes an abuse of discretion." Mendenhall v. NTSB, 92 F.3d 871, 874 (9th Cir. 1996) (holding that NTSB abused its discretion by finding FAA position substantially justified where it had violated its own policy orders). The government argues that the failure of the ALJ to fill out and attach the PRTF was substantially justified because the regulation requiring that form was unclear. We do not agree.

To support its argument that 20 C.F.R. §§ 404.1520a(d) was not clear, the government tries to find support in the SSA's decision, after Gutierrez I was decided, to amend the regulation no longer to require a PRTF as long as the required steps are carried out in the hearing. See Revised Medical Criteria for Evaluating Mental Disorders and Traumatic Brain Injury, 65 Fed. Reg. 50,746 (Aug. 21, 2000). This evidence is wholly irrelevant, however, because we are concerned with "the underlying government conduct at issue and the totality of circumstances present before and during litigation." Barry v. Bowen, 825 F.2d 1324, 1330 (9th Cir. 1987) (emphasis added). The regulation in force before and during litigation stated that a PRTF "must be completed" and"will be appended to the decision." There was nothing ambiguous about this requirement. The ALJ's failure to follow SSA regulations requiring a PRTF to be completed and appended to its decision was not substantially justified.

2. Litigation position.

The government argues that an award of fees is nevertheless inappropriate because the district court was...