Key v. Sullivan

• Citation: 925 F.2d 1056
• Decision Date: 26 February 1991
• Docket Number: No. 89-3792,89-3792
• Parties: , Unempl.Ins.Rep. CCH 15922A Ernestine KEY, Plaintiff-Appellee, v. Louis W. SULLIVAN, M.D., Secretary of Health and Human Services, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1056

925 F.2d 1056

32 Soc.Sec.Rep.Ser. 403, Unempl.Ins.Rep. CCH 15922A

Ernestine KEY, Plaintiff-Appellee, v. Louis W. SULLIVAN, M.D., Secretary of Health and Human Services, Defendant-Appellant.

No. 89-3792.

United States Court of Appeals Seventh Circuit.

Argued Jan. 16, 1991.

Decided Feb. 26, 1991.

Hannah C. Dugan, Legal Action of Wisconsin, Milwaukee, Wis., for plaintiff-appellee.

John E. Fryatt, U.S. Atty., Stephen J. Liccione, Asst. U.S. Atty., Milwaukee, Wis., Donna Morros Weinstein, Gary A. Sultz, Dept. of Health and Human Services, Region V, Office of the General Counsel, Chicago, Ill., for defendant-appellant.

Before BAUER, Chief Judge, WOOD, Jr., and CUDAHY, Circuit Judges.

BAUER, Chief Judge.

For the past seven years, Ernestine Key's disability claim case has inched its way through hearings and appeals, and back again. She has yet to receive any money. Key has held several types of jobs during her life. She was a grocery store cashier from 1967 to 1972, and between 1976 and 1978, she worked as an audit clerk and as an assembler in the manufacturing industry. Since April 14, 1980, Key has been treated for various ailments in her neck, left arm, back, and knees. On February 15, 1984, she filed an application for Supplemental Security Income ("SSI") alleging that she had become disabled in August 1983, due to scoliosis and arthritis. The Social Security Act ("Act") defines "disability" as the "inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months...." 42 U.S.C. Sec. 423(d)(1)(A). The Secretary of Health and Human Services ("Secretary") uses a five-step sequential inquiry to determine whether a person is disabled and therefore entitled to benefits. Step four of the inquiry states that "[i]f an individual is capable of performing work he or she has done in the past, a finding of 'not disabled' must be made." 20 C.F.R. 416.920(e).

After Key's application and subsequent request for reconsideration were denied, she requested and received an evidentiary hearing before Administrative Law Judge ("ALJ") Gerald V. Kortsch in July 1984. In a recommended decision issued November 13, 1984, Kortsch concluded that Key was not disabled within the meaning of the Act. He found that she had the capacity to do her "past relevant" work of assembler. In Social Security jargon, the ability to engage in physical activity despite limitations is known as "residual functional capacity." "Past relevant work" is "work performed within the past fifteen years, which lasted long enough for the claimant to learn how to do it, and which was substantial gainful employment." 20 C.F.R. Sec. 416.965(a). Among Kortsch's findings was that Key had the residual functional capacity of performing only sedentary work, and that "net work as an assembler did not require the performance of work related activities which were other than sedentary." Record [hereinafter "R."] at 12. The Social Security Appeals Council denied Key's request for review, and the ALJ's recommended decision became the Secretary's final decision. Key appealed in federal court.

On September 16, 1986, a federal magistrate issued a decision and order. The magistrate reviewed the ALJ's conclusion that Key could perform no more than sedentary work and characterized the statement that assembler work was sedentary as "conclusory." Key v. Sullivan, No. 85-C-0699, slip op. at 8 (E.D.Wis. Sept. 16, 1986). According to the magistrate, "the ALJ failed to define the physical exertion required of an assembler" and make a finding as to the physical and mental demands of Key's past job and a comparison with her present capabilities. Id. The ALJ's recommended decision was flawed in another aspect as well. Without articulating why, the ALJ credited a medical report regarding the source of Key's pain over objective x-ray evidence of cervical and lumbosacral spine problems and knee abnormalities. Also, with her motion for summary judgment in the district court Key had submitted new evidence that could shed further light on the requirements of her past relevant work and the nature of her impairment. Accordingly, the district court held in abeyance the parties' motions for summary judgment, and remanded the matter to the Secretary to remedy the deficiencies in the ALJ's recommended decision and to consider Key's new evidence.

On remand, the case again was assigned to ALJ Kortsch, who conducted a supplemental hearing on June 11, 1987. This time, Kortsch concluded that the medical evidence indicated that Key had been disabled since July 5, 1983, and that her medical problems precluded even sedentary work. His July 24, 1987, recommended decision was based on findings that Key suffered from degenerative joint disease, cervical radiculopathy, mechanical low back pain, and significant anxiety. R. at 295. The Appeals Council did not adopt this recommended decision as the final decision of the Secretary. In an October 15, 1987, order, it stated that it found "no evidentiary support for the Administrative Law Judge's conclusion that the claimant's combination of exertional and non-exertional impairments precluded the performance of all work activity." R. at 298. The Council, therefore, withheld its final decision and remanded the claim for yet another proceeding in which the ALJ was directed to obtain a consultative psychiatric examination and a medical assessment.

A new ALJ, Ronald G. Bernoski, conducted a third hearing, during which he received a mental status evaluation from a psychologist that indicated that Key had a moderate restriction of her daily activities and social functioning. The ALJ posed hypothetical questions to a vocational expert to determine whether Key could perform gainful work within each of her various physical limitations. The expert offered his opinion that Key could perform gainful work within each limitation, and that these limitations would not prevent Key from doing the audit clerk, cashier, or light assembly jobs she had performed in the past. Based in large part upon this testimony, Bernoski concluded in his June 22, 1988, recommended decision that Key was not disabled. Specifically, he found that "the claimant is able to perform the parts of her past work which include sedentary to light cashier work," and that she is capable of other, semi-skilled sedentary jobs using skills from her past cashier work. R. at 150-51. On December 29, 1988, the Appeals Council adopted ALJ Bernoski's recommended decision as the final decision of the Secretary.

Key again sought judicial review. On August 16, 1989, the district court entered a magistrate's memorandum and order granting Key's motion for summary judgment of reversal and ordering entry of judgment finding Key disabled as of July 5, 1983. Key v. Sullivan, No. 85-C-0699, slip op. at 8 (E.D.Wis. Aug. 16, 1989). The court indicated that ALJ Bernoski's conclusion that Key could perform certain light work, including parts of her past light cashier work, contradicted the Secretary's earlier decision that Key was limited to performing only certain sedentary tasks. Moreover, the remand order had limited the Secretary to a determination of whether Key's past assembler job was sedentary in nature. Instead, the ALJ on remand found that Key could perform certain light work tasks, including her past job as cashier. Thus, the court concluded, "The Secretary's prior determination that the plaintiff's past relevant work was that of bench assembly was one which was implicitly affirmed upon judicial review by this court and, therefore, under the 'law of the case' doctrine was not subject to redetermination." Id. at 6. Deciding that the Secretary had "improperly redefined" Key's past relevant work and that there had been no finding that her skills from bench assembly work would transfer to other tasks, the court reversed the Secretary's final decision and found Key disabled. Id. at 8. It is from this judgment that the Secretary now appeals.

As a threshold matter, Key raises for the first time in this appeal a potential jurisdictional defect with respect to the Appeals Council's assumption of jurisdiction pursuant to the district court remand order of September 16, 1986. A regulation governing SSI cases states:

Anytime within 60 days after the date of a hearing decision or dismissal, the Appeals Council itself may decide to review the action that was taken. If the Appeals Council does review the hearing decision or dismissal, notice of the action will be mailed to all parties at their last known address.

20 C.F.R. Sec. 416.1469. Key posits that because the Council assumed jurisdiction eighty-three days after ALJ Kortsch's July 24, 1987, recommended decision, its assumption of jurisdiction was untimely. Therefore, she argues, the July 24, 1987, recommended decision was the final decision of the Secretary for purposes of this appeal.

Key's argument does not take account of the fact that the ALJ made only a recommended decision. The regulations provide that "if a federal district court remands a case to the Appeals Council, and the Appeals Council remands the case to an [ALJ], the case must be returned to the Appeals Council with a recommended decision." 20 C.F.R. Sec. 416.1453(c). Section 416.1477(a) of 20 C.F.R. states that "[t]he Appeals Council may remand a case to an administrative law judge so that he or she may hold a hearing and issue a decision or a recommended decision." Similarly, 20 C.F.R. Sec. 416.1479 says, "The Appeals Council may affirm, modify or reverse the hearing decision or it may adopt, modify or reject a recommended decision." Under these regulations, the ultimate authority for issuing a final decision rests with the Appeals Council. A recommended decision never becomes final and binding unless...