Schmidt v. Barnhart, 04-1433.

• Decision Date: 14 January 2005
• Docket Number: No. 04-1433.,04-1433.
• Citation: 395 F.3d 737
• Parties: Robert E. SCHMIDT, Plaintiff-Appellant, v. Jo Anne B. BARNHART, Commissioner of Social Security, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

395 F.3d 737

Robert E. SCHMIDT, Plaintiff-Appellant, v. Jo Anne B. BARNHART, Commissioner of Social Security, Defendant-Appellee.

No. 04-1433.

United States Court of Appeals, Seventh Circuit.

Argued September 22, 2004.

Decided January 14, 2005.

COPYRIGHT MATERIAL OMITTED

Dana W. Duncan (argued), Schmidt, Grace & Duncan, Wisconsin Rapids, WI, for Plaintiff-Appellant.

Kathryn A. Beverly (argued), Social Security Administration, Office of the General Counsel, Chicago, IL, for Defendant-Appellee.

Before COFFEY, WILLIAMS, and SYKES, Circuit Judges.

SYKES, Circuit Judge.

Appellant Robert Schmidt suffers from an anxiety disorder, irritable bowel syndrome (IBS), and pain in his back and shoulder. In 1999 Schmidt applied for Social Security Disability Insurance benefits and Supplemental Security Income. Following a hearing before an Administrative Law Judge (ALJ), Schmidt's application for benefits was denied on the grounds that he possessed the residual functional capacity to perform his past relevant work as either a group home manager or a data entry clerk. The denial of benefits was subsequently upheld by both the Social Security Appeals Council and the district court.

In this appeal Schmidt contends that he was denied the opportunity to be represented by counsel before the Appeals Council, that he was denied the opportunity to present evidence to the Appeals Council, that the ALJ's decision was not supported by substantial evidence, and that new evidence, unheard by the ALJ, requires remand for a new hearing. We find no merit to any of Schmidt's requested grounds for relief and affirm the decision of the district court.

I. Background

Schmidt was born in 1950 and has a college degree in psychology. His work history includes stints as a group home manager, a data entry clerk, and a department store salesperson. His longest continuous period of employment lasted from October 1993 to July 1995, during which time he worked as a sales associate for a department store. Between April and June of 1998, Schmidt worked as a "disability facilitator" in a group home. The onset of medical conditions culminating in Schmidt's alleged disability began in earnest approximately four months after he left the position at the group home. In October 1998 he began to experience panic attacks — a condition that Schmidt had apparently encountered in the past but that had only recently returned. These attacks, caused by generalized feeling of anxiety, lasted anywhere from several seconds to five minutes and manifested themselves in the form of chest pain, hyperventilation, rapid heartbeat, and dizziness. Schmidt's primary care physician prescribed Xanax as needed to control his feelings of anxiety.

In February 1999 Schmidt presented himself at a hospital emergency room complaining of abdominal pain and was diagnosed as suffering from IBS, in the form of chronic diarrhea, and generalized anxiety. In March 1999 Schmidt again went to the emergency room complaining of hyperventilation, chest pain, and anxiety. An EKG revealed no cardiac abnormalities, and Schmidt was advised to continue taking Xanax as needed to control his feelings of anxiousness.

On May 7, 1999, Schmidt filed his application for Social Security benefits, alleging that he had been disabled since December 23, 1998 as a result of his anxiety disorder, IBS, and back pain related to a slipped disc.

In May 1999 Schmidt was evaluated by a psychiatrist, Dr. Root, who diagnosed him as suffering from panic disorder with moderate symptoms. This doctor prescribed Lorazepam (in preference to Xanax) for controlling the symptoms of a panic attack. At a follow-up visit with Dr. Root in June 1999, Schmidt reported that Lorazepam had been largely successful in controlling the symptoms of his panic attacks and that he had begun taking an herbal medication that had been helpful in controlling his anxiety.

On August 4, 1999, Schmidt was examined by Dr. Bahri O. Gungor at the request of the Social Security Administration. Schmidt complained of back pain secondary to a disc problem, IBS, and a history of "three major panic attacks" since October 1998. Dr. Gungor's examination revealed few physical abnormalities. He noted that Schmidt essentially had full range of motion, albeit with some back discomfort accompanying certain movements. A spinal x-ray demonstrated "undue prominence of the transverse process of L3," but Dr. Gungor found the significance of this condition to be "questionable." The physician's report concluded that Schmidt suffered from recurrent panic attacks with hyperventilation, chronic lower back pain, and occasional bouts of severe diarrhea.

On August 17, 1999, two physicians consulting with the Social Security Administration reviewed Schmidt's medical history and rendered their opinions. A psychiatrist, Dr. Warrior, concluded that Schmidt suffered from a non-severe anxiety disorder that only slightly restricted his daily activities and that had never caused any episodes of deterioration in a working environment. Another physician completed a Residual Functional Capacity Assessment and concluded that although Schmidt had spondylolisthesis and IBS, he was physically capable of performing a full range of light work, including lifting up to twenty pounds and sitting, standing, or walking for up to six hours of an eight-hour workday.

Schmidt saw his psychiatrist, Dr. Root, in October 1999 and reported that he had experienced only one panic attack in the preceding six-week period and had been successfully controlling his attacks through the use of Lorazepam combined with meditation.

Five days after this psychiatric appointment, Schmidt took a job as a "mail order clerk" doing data entry for a gift supply company. He had worked for this company in the past. He continued in this job until he was laid off in February 2000. Schmidt then applied for and received unemployment compensation benefits from the State of Wisconsin.

The hearing before the ALJ took place on September 20, 2000. Schmidt testified that he was not currently receiving any treatment for his back pain and that he had not seen a mental health professional in the eight-month period immediately preceding the hearing. He stated that he had to spend quite a bit of time in the bathroom due to his IBS and that this condition had made it difficult for him to maintain his recent employer's minimum production requirements. Schmidt was unsure whether the employer intended to rehire him. He informed the ALJ that he had been hospitalized twice in the preceding six weeks for panic attacks. At the conclusion of the hearing, the ALJ informed Schmidt's counsel that the record would be held open for thirty days to allow him to obtain and submit records of these hospitalizations. However, when the records were submitted, they demonstrated only that Schmidt had been seen at the hospital for complaints of abdominal pain related to irritable bowel syndrome and a kidney stone. The records made no mention of panic attacks or their related symptoms.

The ALJ rendered his decision on December 12, 2000. The ALJ found that Schmidt was not disabled for purposes of disability insurance benefits or supplemental security income because he was physically capable of performing his past relevant work as a group home worker or data entry clerk. After comparing the physical requirements of Schmidt's past work to his residual functional capacity for a full range of light work, the ALJ concluded that neither of Schmidt's two most recent jobs would require him to perform any tasks that exceeded his residual functional capacity.

Schmidt's attorney then petitioned the Social Security Appeals Council for review of the ALJ's decision. In a letter dated January 23, 2001, counsel stated his intent to submit additional evidence to support Schmidt's claim before the Appeals Council. The Appeals Council responded with notice to Schmidt's attorney that it would hold the record open for an additional twenty-five days for the purpose of allowing the submission of additional evidence or argument. The notice stated that if nothing was received from Schmidt within the twenty-five-day window, "the Council will proceed with its action on this case based upon the present record," and that the Council "will not grant you another extension of time to submit evidence and/or legal arguments in the absence of extraordinary circumstances."

At 4:00 p.m. Eastern Time on the day the extension expired, a different attorney faxed a letter to the Appeals Council stating that Schmidt's original counsel "has informed [Schmidt] that he can no longer represent him due to a conflict of interest." This correspondence stated that the new attorney was assuming representation in the case and requested an additional sixty-day extension to "obtain new medical information and to prepare the brief in this matter." No information was provided as to the nature of the supposed conflict of interest, when it arose, when its existence was communicated to Schmidt, or when the newly retained attorney had been asked to assume representation.

The Appeals Council never acknowledged the new attorney's letter or the request for a second extension of time and on March 21, 2003, issued a decision denying review. The denial of review converted the ALJ's decision into the decision of the Social Security Commissioner for purposes of judicial review. Blakes v. Barnhart, 331 F.3d 565, 568 (7th Cir.2003); 20 C.F.R. § 404.981.

II. Discussion

A. New Evidence

Schmidt asked the district court, and he asks this court on appeal, to remand his case back to the Social Security Commissioner for consideration of additional evidence. A reviewing court may order additional evidence to be taken before the Commissioner upon a showing that there exists "new evidence which is material and that there is good cause for the failure to incorporate such evidence into the record in a prior proceeding." 42 U.S.C. § 405...