Pechatsko v. Commissioner of Social Security

• Decision Date: 30 July 2004
• Docket Number: No. 1:01 CV 112.,1:01 CV 112.
• Citation: 369 F.Supp.2d 909
• Parties: Patricia PECHATSKO, Plaintiff, v. COMMISSIONER OF SOCIAL SECURITY, Defendant.
• Court: U.S. District Court — Northern District of Ohio

369 F.Supp.2d 909

Patricia PECHATSKO, Plaintiff, v. COMMISSIONER OF SOCIAL SECURITY, Defendant.

No. 1:01 CV 112.

United States District Court, N.D. Ohio, Eastern Division.

July 30, 2004.

Paulette F. Balin, Mentor, OH, for Plaintiff.

Michael A. Johnson, Cleveland, OH, for Defendant.

MEMORANDUM OPINION AND ORDER

BAUGHMAN, United States Magistrate Judge.

I.

This matter comes before the Court on plaintiff Patricia Pechatsko's motion to amend or alter judgment.¹ The defendant Commissioner of Social Security has opposed that motion.² The parties have consented to the jurisdiction of the Magistrate Judge.³

The judgment placed at issue by Pechatsko's motion affirmed the denial of her application for disability insurance benefits.⁴ In denying the application, the Commissioner adopted an administrative law judge's finding that Pechatsko had a residual functional capacity that permitted her to perform her past relevant work. The Court found that the administrative law judge's residual functional capacity finding did not have the support of substantial evidence in the administrative record. It, nevertheless, affirmed the no disability decision because Pechatsko conceded that substantial evidence existed in support of a residual functional capacity that permitted her to perform a substantial number of jobs in the local and national economies.

Pechatsko asks this Court to reconsider its decision on the ground that the Court erroneously adopted and applied a harmless error rule contrary to Supreme Court authority. The Court concludes, however, that Supreme Court precedent does not preclude a harmless error rule, and it properly applied that rule on the facts of this case. The Court must, therefore, deny Pechatsko's motion to amend or alter judgment.

II.

The Administrative Law Judge ("ALJ"), whose decision became the final decision of the Commissioner, denied Pechatsko's application for disability insurance benefits at step four of the sequential evaluation process. He found that Pechatsko had a residual functional capacity that permitted her to perform her past relevant work.

On appeal, this Court agreed with Pechatsko that the ALJ's residual functional capacity finding did not have the support of substantial evidence in the administrative record. It, nevertheless, held this error harmless. The Court pointed out that the record contained a hypothetical question posed by the ALJ to the vocational expert incorporating a residual functional capacity more restrictive than that adopted by the ALJ in his findings. In response to that hypothetical, the vocational expert identified a significant number of jobs available nationally and locally that Pechatsko could perform. Counsel for Pechatsko conceded that substantial evidence in the record supported the residual functional capacity set out in this alternative hypothetical. She did not challenge the vocational expert's response to that hypothetical question.

Reasoning that substantial evidence in the administrative record supported a no disability finding at step five of the sequential evaluation process, the Court affirmed the Commissioner's denial of the application. As counsel for the Commissioner accurately points out in the opposition to amend or alter judgment,⁵ this affirmance is consistent with the harmless error rule approved by the Sixth Circuit panel in Berryhill v. Shalala.⁶

III.

A.

A motion to amend or alter judgment under Federal Rule of Civil Procedure 59(e) calls upon the Court to reconsider its decision after the entry of final judgment.⁷ The motion does not present the unhappy litigant with the opportunity to reargue the case.⁸ The motion is not a substitute for appeal or a vehicle for the presentation of arguments omitted before judgment.⁹

Three major situations justify reconsideration of a final decision: "(1) an intervening change in controlling law; (2) the availability of new evidence; and (3) the need to correct clear error in order to prevent manifest injustice."¹⁰ The motion must demonstrate why the court should reconsider its decision and set forth strongly convincing facts or law that mandate reversal of the prior decision.¹¹

B.

Pechatsko moves to amend or alter the judgment to correct clear error or prevent manifest injustice allegedly caused by the Court's application of the harmless error rule recognized by the Sixth Circuit's decision in Berryhill.¹² She argues that such a rule flies in the face of the Supreme Court's decision in S.E.C. v. Chenery Corp.¹³ She maintains that Chenery precludes a harmless error rule in a case of judicial review of agency action because, "... the reviewing court ... must judge the propriety of such (agency) actions solely by the grounds invoked by the agency."¹⁴

Berryhill involved an appeal from the Secretary of Health and Human Services's decision to reduce the amount of supplemental security income benefits. The United States Attorney, who represented the Secretary in the case, argued that the Secretary's decision was correct. He conceded however, that the rationale given by the Secretary for the decision was not supported by substantial evidence. He, nevertheless, urged that other evidence in the record supported the Secretary's ultimate decision.

The Sixth Circuit expressly recognized the rule from Chenery, upon which Pechatsko relies.¹⁵ The court went on to state, however, that the Secretary's decision could be upheld if the reason given by the Secretary constituted harmless error.¹⁶ The Berryhill panel found persuasive the First Circuit's articulation of the harmless error rule in Kurzon v. United States Postal Service.¹⁷

While agency decisions must be sustained, if at all, on their own reasoning, ... this principle "does not mechanically compel reversal `when a mistake of the administrative body is one that clearly had no bearing on the procedure used or the substance of [the] decision reached.'" Where a subsidiary finding is unfounded, the court will remand the case to the agency for further consideration only if "the court is in substantial doubt whether the administrative agency would have made the same ultimate finding with the erroneous finding removed from the picture...."¹⁸

Despite Berryhill's clear articulation of a harmless error rule, Pechatsko argues that the Court should not apply such a rule in this case. As noted above, she urges that Berryhill is bad law because it flat out contradicts the directive of the Supreme Court in Chenery and its progeny. Further, she points out that Berryhill is an unpublished decision of the Sixth Circuit that does not constitute binding precedent on this Court.

Pechatsko's challenge calls upon the Court to address three questions.

(1) Do Supreme Court precedents foreclose a harmless error rule in review of agency action cases?

(2) If not, should this Court recognize such a harmless error rule in the absence of binding Sixth Circuit precedent?

(3) If so, does that rule support the Court's judgment on the record here?

C.

Pechatsko relies on the Supreme Court's second opinion in S.E.C. v. Chenery issued in 1947.¹⁹ The Court's first decision came four years earlier in 1943.²⁰ The Chenery II language cited by Pechatsko²¹ is a summary of the law announced in Chenery I.

In Chenery I, the Court remanded the case to the SEC after finding that the agency's order could not be sustained on the principles of equity expressly relied on by the agency.²² Although the attorneys for the SEC cited other possible considerations in support of the order, the Court refused to affirm based on such considerations.²³ The Court expressed grave concern that to do so would usurp judgment exclusively delegated to the agency by Congress.

In confining our review to a judgment upon the validity of the grounds upon which the Commission itself based its action, we do not disturb the settled rule that, in reviewing the decision of a lower court, it must be affirmed if the result is correct "although the lower court relied upon a wrong ground or gave a wrong reason." The reason for this rule is obvious. It would be wasteful to send a case back to a lower court to reinstate a decision which it had already made but which the appellate court concluded should properly be based on another ground within the power of the appellate court to formulate. But it is also familiar appellate procedure that where the correctness of the lower court's decision depends upon a determination of fact which only a jury could make but which has not been made, the appellate court cannot take the place of the jury. Like considerations govern review of administrative orders. If an order is valid only as a determination of policy or judgment which the agency alone is authorized to make and which it has not made, a judicial judgment cannot be made to do service for an administrative judgment. For purposes of affirming no less than reversing its orders, an appellate court cannot intrude upon the domain which Congress has exclusively entrusted to an administrative agency.²⁴

The courts should interpret and apply the Chenery rule consistent with the underlying concern that the Supreme Court addressed by adopting it. The rule is not a blanket prohibition against a court's affirming the ultimate decision of an agency based on a rationale other than that stated by the agency. Rather, the rule prohibits a court from making determinations exclusively reserved to an agency by Congress.

As succinctly summarized by the Court in Chenery II, the rule applies to "... a determination or judgment which an administrative agency alone is authorized to make."²⁵ The threshold inquiry, therefore, is whether the statutory scheme for judicial review reserves exclusively to the agency the decision that a court would need to make to affirm the agency's action on other grounds.

In the Social Security disability context, Congress has given the courts some latitude on judicial review. 42 U.S.C. § 405(g) expressly empowers the...