Shepard v. Sullivan, 88-3024

• Decision Date: 02 April 1990
• Docket Number: No. 88-3024,88-3024
• Citation: 898 F.2d 1267
• Parties: , Unempl.Ins.Rep. CCH 15315A Harold SHEPARD, Plaintiff-Appellant, v. Louis W. SULLIVAN, M.D., * Secretary of the Department of Health and Human Services of the United States of America, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1267

898 F.2d 1267

29 Soc.Sec.Rep.Ser. 165, Unempl.Ins.Rep. CCH 15315A

Harold SHEPARD, Plaintiff-Appellant, v. Louis W. SULLIVAN, M.D., ^* Secretary of the Department of Health and Human Services of the United States of America, Defendant-Appellee No. 88-3024.

United States Court of Appeals Seventh Circuit.

Argued Nov. 2, 1989.

Decided April 2, 1990.

Thomas M. Henry, Peoria, Ill., for plaintiff-appellant.

Donald T. McDougall, Felisia A. Wesson, Dept. of Health and Human Services, Region V, Office of Gen. Counsel, Chicago, Ill., Bradley W. Murphy, Asst. U.S. Atty., Office of U.S. Atty., Peoria, Ill., for defendant-appellee.

Before CUDAHY, POSNER and MANION, Circuit Judges.

MANION, Circuit Judge.

Plaintiff Harold Shepard appeals the district court's denial of attorney's fees under the Equal Access to Justice Act (EAJA), 28 U.S.C. Sec. 2412(d)(1)(A). Because Shepard was not a "prevailing party" within the EAJA's meaning, we affirm.

I. FACTS

Harold Shepard filed concurrent applications for disability insurance benefits and supplemental security income on December 23, 1982 with the Department of Health and Human Services. He alleged disability due to a breathing impairment and partial removal of his colon. At a subsequent administrative hearing, Shepard testified that he used prescribed medications for his breathing impairment. He was hospitalized in August 1982 for a fungal infection of his lungs at which time doctors removed the upper left lobe of his lung. At the same time, Shepard had an appendectomy and surgery for resection of his colon. Shepard testified that he had a stomach ulcer and occasionally took laxatives but no prescribed medications. He had been drinking a six-pack of beer per day for thirteen years, and he continued to drink. The medical evidence indicated that Shepard had a history of alcoholism. Shepard's brother testified that Shepard spent a good deal of money on alcohol, but had always maintained a living and was unlikely to squander all his funds on drinking.

The ALJ determined that Shepard's alleged impairments, including severe alcoholism, chronic obstructive and restrictive lung disease, mitral valve prolapse, cor pulmonale, and the residuals of a partial colectomy and resection of the terminal ileum, considered singly and in combination, did not meet or equal any condition listed in 20 C.F.R. Sec. 404, Subpt. P, App. 1 ("the Listings"), in effect at that time. The ALJ further determined that Shepard had a very limited capacity for sedentary work. After consulting the Medical-Vocational Guidelines, 20 C.F.R. Part 404, Subp. P, App. 2 ("the Grid"), the ALJ found that Shepard was not disabled. On March 30, 1984, the Appeals Council declined Shepard's request to review the ALJ's adverse findings.

Shepard filed a civil action in federal district court on May 7, 1984, seeking judicial review under Sec. 205(g) of the Social Security Act, 42 U.S.C. Sec. 405(g). Shepard requested relief on the grounds that the ALJ's decision was unsupported by substantial evidence and that the ALJ had failed to apply the correct rule of law. Shepard claimed the ALJ had not sufficiently articulated why Shepard's impairments did not meet the appropriate section of the Listings, and he specifically contended that he met or equaled Listings Secs. 2.09 (organic loss of speech), 3.02 (chronic obstructive airway disease), 3.09 (mycotic infection of the lung), 3.11 (cor pulmonale), 4.02(D) (congestive heart failure with cor pulmonale), and 12.04 (functional nonpsychotic disorders; psychophysiologic, neurotic and personality disorders; addictive dependence on alcohol or drugs). Shepard also argued that the ALJ failed to articulate a rationale for rejecting the claim that the combined effect of Shepard's impairments rendered him disabled. Finally, Shepard objected to the ALJ's application of the Grid to direct a finding of not disabled in view of evidence of alcoholism. Shepard did not argue that he met the Listing for organic mental disorders, Sec. 12.02, but that was the Listing, as revised in August 1985, under which he ultimately was awarded benefits.

The district court rejected all of Shepard's claims except as to Listing Sec. 12.04(A)(1) and (B). The court held that some of the evidence could indicate that Shepard's chronic alcoholism had resulted in a marked restriction of his activities, deterioration of personal habits, and an impaired ability to relate to others. The court held that because the ALJ had not explained his rationale for finding that Shepard's alcoholism did not meet (A)(1) and (B) of Listing Sec. 12.04, the court was unable to hold that this finding was supported by substantial evidence. In addition, the court held that the ALJ's failure to consider Shepard's various impairments in combination and the incorrect application of the Grid also warranted remand. On July 15, 1985, in conformity with the district court's order, the Appeals Council vacated its denial of Shepard's request for review and remanded the case to an ALJ for further proceedings consistent with the court's opinion.

The ALJ issued a recommended decision on August 6, 1985, concluding that Shepard had not demonstrated that his various breathing impairments and alcoholism met or equaled any condition set forth in the Secretary's Listings of impairments. The ALJ recommended finding that Shepard was unable to work due to disabling shortness of breath and other vocational factors. Shepard urged the Appeals Council to adopt the ALJ's proposed decision insofar as it found him disabled, or alternatively to give Shepard an administrative hearing.

In the meantime, on September 19, 1984, Congress passed the Social Security Disability Benefits Reform Act of 1984, Pub.L. No. 98-460, 98 Stat. 1801, which became effective on October 9, 1984. The Act required new mental impairment Listings to be developed and published, and those revised mental impairment Listings were published in final form on August 28, 1985, while the ALJ's recommended decision was pending before the Appeals Council. The Reform Act did not preclude new decisions utilizing the prior Listings, but required the Secretary to review any initial determination of non-disability made subsequent to the date of enactment and before codification of the new mental impairment Listings in cases where the evidence suggested the existence of a mental impairment. The Act provided that claimants who submitted evidence of a mental impairment should be evaluated under the revised Listings and in combination with the assessments of mental health and vocational specialists concerning the claimant's residual functional capacity and ability to function competitively in the workplace. 1984 Reform Act, Sec. 5(a) and (c).

After reviewing the record, the Appeals Council found that the evidence then in the record did not support the recommended conclusion that Shepard was disabled because "the evidence does not support a finding that the claimant is limited to sedentary work, or that his history of alcoholism severely affects his ability to perform work-related activities." However, the Appeals Council found that Shepard qualified for redetermination under the 1984 Reform Act, and therefore remanded the case to the ALJ for reconsideration under the newly revised mental impairment Listings. The ALJ was ordered to obtain psychiatric examinations, psychological testing, and a medical assessment of Shepard's ability to reason and make occupational, personal, or social adjustments. The Appeals Council instructed the ALJ to secure the services of a medical advisor to assist in establishing Shepard's residual functional capacity and to ascertain what, if any, nonexertional restrictions Shepard had as a result of his impairments. The Appeals Council also directed the ALJ to consider Shepard's impairments both singly and in combination, and, if appropriate, to elicit testimony from a vocational expert concerning Shepard's prospects for employment.

After the second remand from the Appeals Council, the ALJ conducted a supplemental hearing on September 15, 1986. Dr. Sam Decker, a board-certified psychiatrist, acted as a medical advisor at the hearing. The ALJ also ordered consultative examinations by a clinical psychologist, Dr. Alexander Boeringa, and a psychiatrist, Dr. Robert E. Chapman. Based on his examination, Dr. Boeringa reported that in addition to chronic alcoholism, Shepard exhibited depressive symptomatology, swelling and psychomotor retardation, and possible mild dementia associated with prolonged heavy ingestion of alcohol. Dr. Boeringa stated that this "organic difficulty seems to interfere with [Shepard's] social and occupational functioning, memory impairment, difficulty in abstract thinking, and concrete interpretation of proverbs and impaired judgment in the absence of either delirium or acute intoxication." Dr. Boeringa diagnosed "alcohol dependence and presumptive mild dementia associated with alcoholism [,] mild depression secondary to chronic alcoholism" and "organic impairment secondary to chronic alcoholism."

Dr. Chapman, a psychiatrist and neurologist, examined Shepard after reviewing Dr. Boeringa's report and other medical evidence regarding Shepard. He reported that Shepard appeared chronically mentally ill. He stated that Shepard had symptoms of depression, exercised poor judgment, and had a "paucity of thought processes" as evidenced by his limited daily activities. Dr. Chapman assessed Shepard's mental ability to perform work activities as generally poor and stated that Shepard could not manage benefits in his own best interest.

Dr. Decker, the medical advisor at the administrative hearing, evaluated the medical evidence, including the reports of Drs. Boeringa and Chapman, and concluded that Shepard had an organic personality disorder with alcohol dependence and a dependent personality disorder that met the criteria of the revised Listing Sec. 12.02. The ALJ...