Matthews v. Apfel

Opinions of the United
2001 Decisions States Court of Appeals
for the Third Circuit

2-8-2001

Matthews v. Apfel
Precedential or Non-Precedential:

Docket 00-1151

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Filed February 8, 2001

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 00-1151

SHARON BINGHAM MATTHEWS,
Appellant

v.

KENNETH S. APFEL, Commissioner of Social Security

On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 98-cv-01125)
District Judge: Hon. Louis Charles Bechtle

Argued September 13, 2000

Before: SLOVITER, SCIRICA and ALITO, Cir cuit Judges

(Filed February 8, 2001)

Kenneth M. Kapner
Law Offices of Kenneth M. Kapner
Philadelphia, PA 19l07

Thomas D. Sutton (Argued)
Leventhal & Sutton
Langhorne, PA 19047

Attorneys for Appellant
 James A. Winn
Regional Chief Counsel
David F. Chermol (Argued)
Assistant Regional Counsel
Office of the General Counsel
Social Security Administration
Philadelphia, PA 19l0l

Michael R. Stiles
United States Attorney
Joan Garner
Assistant United States Attorney
Eastern District of Pennsylvania
Philadelphia, PA 19l06

Attorneys for Appellee

OPINION OF THE COURT

SLOVITER, Circuit Judge.

Sharon Matthews appeals from the District Court's order
affirming the denial by the Commissioner of Social Security
of Matthews' application for disability insurance benefits
(DIB) under Title II of the Social Security Act.1 This case
raises the important issue of the treatment to be given by
the district court of evidence submitted by the claimant for
the first time to the Appeals Council, which has then
denied review. This is an issue on which the Courts of
Appeals are divided. Some courts hold that such evidence
should be considered by the district court in its review of
the final decision of the Commissioner, see Perez v. Chater,
77 F.3d 41, 45 (2d Cir. 1996); O'Dell v. Shalala, 44 F.3d
855, 859 (10th Cir. 1994); Ramirez v. Shalala, 8 F.3d 1449,
1452 (9th Cir. 1993); Nelson v. Sullivan , 966 F.2d 363, 366
(8th Cir. 1992); Wilkins v. Sec'y of DHHS, 953 F.2d 93, 96
(4th Cir. 1991) (en banc), whereas others hold that evidence
_________________________________________________________________

1. Matthews also applied for supplemental security income (SSI) under
Title XVI of the Social Security Act. Because the relevant regulations and
statutory provisions of SSI track those of DIB, we will refer only to the
former in the text.

2
not presented to the Administrative Law Judge (ALJ) should
not be reviewed by the district court nor be the basis of a
remand to the Commissioner unless the evidence is new
and material and there is good cause for not having
produced the evidence earlier, see Falge v. Apfel, 150 F.3d
1320, 1322-23 (11th Cir. 1998), cert. denied, 525 U.S. 1124
(1999); Cotton v. Sullivan, 2 F.3d 692, 695-96 (6th Cir.
1993); Eads v. Sec'y of DHHS, 983 F.2d 815, 817-18 (7th
Cir. 1993). In this case, the District Court held that a
claimant must demonstrate good cause for not having
submitted new and material evidence to the ALJ. Appellant
argues that the District Court erred as a matter of law in
imposing the good cause requirement. The issue is one of
first impression for this court.

I.

Matthews applied for disability benefits on October 15,
1992, alleging disability since December 9, 1991. She
claimed hearing loss, arthritis, and right foot dr op
stemming from an old Achilles tendon ruptur e. Her claim
was denied initially and again on reconsideration. Matthews
requested a hearing before an ALJ, which was held on
September 21, 1994. The ALJ found that Matthews was not
disabled and denied her claim. The Appeals Council
granted Matthews' request for review. On r eview, it vacated
the ALJ's decision and remanded for a new hearing. It
directed the ALJ to give further consideration to Matthews'
residual functional capacity during the entir e period at
issue and to "[o]btain supplemental evidence from a
vocational expert to clarify the effect of the assessed
limitations on the claimant's occupational base." Tr. at 363.

A different ALJ held a second hearing on July 11, 1996.
At this hearing, Matthews testified, inter alia, of pain in her
right foot, ankle, and knee, and she submitted medical
reports in connection with these impair ments as well as of
her hearing loss. Diana Simms, an impartial vocational
expert, also testified at the hearing and stated there were a
significant number of sedentary and unskilled jobs, such as
cashier, that an individual with Matthews' impairments,
age, educational background, and employment history
could perform. Notably, the ALJ held the record open to

3
allow Matthews to include the final report of her treating
physician before issuing the decision.

The ALJ issued a decision on April 21, 1997, concluding
that Matthews was not disabled. In the decision, the ALJ
noted that none of Matthews' treating and examining
physicians opined that she could not perfor m sedentary
work. The ALJ found that medical evidence established that
the claimant has severe residuals of an injury to her right
leg and significant hearing loss, that these impairments do
not meet or equal the criteria of the listed impair ments,
that Matthews' testimony on the severity of her
impairments was not credible inasmuch as she could use
public transportation and engage in social activities without
much difficulty, that Matthews is unable to per form any of
her past relevant work as a teacher's aide or hospital
worker, but that although she is unable to perform the full
range of sedentary work, there are a significant number of
jobs in the national economy that she can per form. The
ALJ gave examples of sedentary, unskilled jobs in a low-
noise environment that Matthews could per form, including
work as a cashier in a small office.

Matthews filed a request for review to the Appeals
Council on June 23, 1997. On December 8, 1997, mor e
than eight months after the ALJ's decision, Matthews
submitted to the Appeals Council a two-page letter and
accompanying documents from Richard Baine, a vocational
expert, who stated that Matthews lacked the r equisite
arithmetic and reading skills to work as a cashier. Baine
also stated that Matthews' exertional and nonexertional
impairments would preclude her fr om performing any other
gainful work activities in the national economy. T r. at 386-
87.

On January 7, 1998, the Appeals Council denied
Matthews' request for review. The Appeals Council noted
that Social Security Administration regulations"provide
that where new and material evidence is submitted with the
request for review, the entire r ecord will be evaluated and
review will be granted where the Appeals Council finds that
the Administrative Law Judge's actions, findings, or
conclusion is contrary to the weight of the evidence
currently of record," App. at 34, citing 20 C.F.R. SS 404.970

4
and 416.1470. The Council's action stated that "the
Administrative Law Judge's decision stands as thefinal
decision of the Commissioner of Social Security." App. at
34. The Appeals Council then incorporated Baine's r eport
into the administrative record.

Matthews filed suit in the United States District Court for
the Eastern District of Pennsylvania, r equesting judicial
review of the Commissioner's final decision. The parties
filed cross-motions for summary judgment. On September
14, 1999, the Magistrate Judge to whom the District Court
referred the matter recommended that the Commissioner's
motion for summary judgment be granted because the
ALJ's decision was supported by substantial evidence. The
Magistrate Judge determined that Baine's r eport was new
and material but should not be considered on judicial
review because Matthews had failed to demonstrate good
cause for failing to present the evidence to the ALJ. The
District Court agreed that Matthews had not shown good
cause for failure to present Baine's r eport to the ALJ,
adopted the Magistrate Judge's recommendation, and,
following a discursive opinion discussing the evidence and
the legal issues, granted summary judgment for the
Commissioner.

Matthews appealed to this court. She argues that the
District Court erred in refusing to consider new evidence
"which was presented to and consider ed by the
Commissioner's Appeals Council as part of the
administrative record under review" and that the court
erred in applying a good cause requir ement "which does not
exist in the regulations to new evidence which was
submitted to and considered by the Commissioner's
Appeals Council, which made it a part of the administrative
record under review." Br. of Appellant at 1. Our standard of
review over the legal question presented is plenary. See
Tubari Ltd., Inc. v. NLRB, 959 F.2d 451, 453 (3d Cir. 1992).

II.

The question of law before us is whether the claimant
must demonstrate good cause for failure to pr esent to the
ALJ new and material evidence presented for thefirst time

5
to the Appeals Council which, after consideration, denies
the review.

The administrative review process is gover ned by Social
Security Administration regulations. If a claimant's
disability application is denied, s/he may r equest a
reconsideration by the Social Security Administration. See
20 C.F.R. S 404.900. If the claimant is dissatisfied with the
reconsideration determination, s/he may r equest a hearing
before an administrative law judge, wher e the claimant can
present evidence of impairments. See id. If the claimant is
dissatisfied with the ALJ's decision, s/he may r equest the
Appeals Council to review the decision. See id. The
regulations permit the claimant to submit to the Appeals
Council "new and material" evidence that r elates to the
period on or before the date of the ALJ's hearing decision.
See 20 C.F.R. S 404.970(b).2 The Appeals Council then must
"evaluate the entire record including the new and material
evidence submitted." Id. However, the submission of the
new and material evidence does not requir e the Appeals
Council to grant review. On the contrary, the r egulations
provide that the Appeals Council will grant r eview only if it
finds that the ALJ's decision "is contrary to the weight of
the evidence currently of record." Id.

Unlike the administrative process, which is governed by
the regulations, the standards for judicial review are
governed by the Social Security Act. A claimant who was
unsuccessful in the administrative process may seek
judicial review once there is a final decision by the
_________________________________________________________________

2. The applicable subsection of the regulation provides in full:

(b) If new and material evidence is submitted, the Appeals Council
shall consider the additional evidence only wher e it relates to
the
period on or before the date of the administrative law judge
hearing
decision. The Appeals Council shall evaluate the entire record
including the new and material evidence submitted if it relates to
the period on or before the date of the administrative law judge
hearing decision. It will then review the case if it finds that the
administrative law judge's action, findings, or conclusion is
contrary
to the weight of the evidence currently of r ecord.

20 C.F.R. S 404.970(b). The applicable section of the SSI regulation is
substantially the same. See 20 C.F.R.S 416.1470(b).

6
Commissioner of Social Security. See 42 U.S.C. S 405(g);
see also Mathews v. Eldridge, 424 U.S. 319, 328 (1976). If
the Appeals Council denies the request for r eview, the ALJ's
decision is the Commissioner's final decision. See Sims v.
Apfel, 530 U.S. 103, 120 S. Ct. 2080, 2083 (2000).

The Act provides that "[t]he findings of the Commissioner
of Social Security as to any fact, if supported by substantial
evidence, shall be conclusive." 42 U.S.C.S 405(g) (emphasis
added). Sentence Four of S 405(g) provides that "[t]he court
shall have power to enter, upon the pleadings and transcript
of the record, a judgment affir ming, modifying, or reversing
the decision of the Commissioner of Social Security, with or
without remanding the cause for a rehearing." Id.
(emphasis added).

If the claimant proffers evidence in the district court that
was not previously presented to the ALJ, then the district
court may remand to the Commissioner but that
disposition is governed by Sentence Six ofS 405(g). That
sentence provides,

The court may, on motion of the Commissioner of
Social Security made for good cause shown befor e the
Commissioner files the Commissioner's answer ,
remand the case to the Commissioner of Social
Security for further action by the Commissioner of
Social Security, and it may at any time or der additional
evidence to be taken before the Commissioner of Social
Security, but only upon a showing that there is 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; and the Commissioner of
Social Security shall, after the case is remanded, and
after hearing such additional evidence if so or dered,
modify or affirm the Commissioner's findings of fact or
the Commissioner's decision, or both, and shallfile
with the court any such additional and modified
findings of fact and decision, and a transcript of the
additional record and testimony upon which the
Commissioner's action in modifying or affir ming was
based.

Id. (emphasis added). Thus, we have r ecognized that
evidence first presented to the district court must not only

7
be new and material but also be supported by a
demonstration by claimant of "good cause for not having
incorporated the new evidence into the administrative
record." Szubak v. Sec'y of HHS, 745 F.2d 831, 833 (3d Cir.
1984).

To summarize the options open to the district court,
when the Appeals Council has denied review the district
court may affirm, modify, or reverse the Commissioner's
decision, with or without a remand based on the record
that was made before the ALJ (Sentence Four r eview).
However, when the claimant seeks to r ely on evidence that
was not before the ALJ, the district court may remand to
the Commissioner but only if the evidence is new and
material and if there was good cause why it was not
previously presented to the ALJ (Sentence Six review). See
Keeton v. DHHS, 21 F.3d 1064, 1067 (11th Cir. 1994);
Newhouse v. Heckler, 753 F.2d 283, 286 (3d Cir. 1985).

Other courts of appeals agree with our analysis of the
appropriate treatment on judicial r eview of evidence that
was not presented to the ALJ. The fullest discussion of this
issue appears in the Seventh Circuit's decision in Eads,
where the court explained that although evidence
considered by the Appeals Council is part of the
administrative record on appeal, it cannot be considered by
the District Court in making its substantial evidence review
once the Appeals Council has denied review. As the Eads
court stated,

It might seem . . . that the district judge and we would
be free to consider the new evidence that was before
the Appeals Council in deciding whether the decision
denying benefits was supported by the recor d as a
whole. And of course this is right when the Council has
accepted the case for review and made a decision on
the merits, based on all the evidence before it, which
then becomes the decision reviewed in the courts. It is
wrong when the Council has refused to r eview the
case. For then the decision reviewed in the courts is
the decision of the administrative law judge. The
correctness of that decision depends on the evidence
that was before him. He cannot be faulted for having
failed to weigh evidence never presented to him. . . .

8
Eads, 983 F.2d at 817 (citations omitted).

The Eads decision was followed by the Eleventh Circuit's
decision in Falge, 150 F.3d at 1323 ("when the [Appeals
Council] has denied review, we will look only to the
evidence actually presented to the ALJ in deter mining
whether the ALJ's decision is supported by substantial
evidence."). It was also followed by the Sixth Circuit in
Cotton, 2 F.3d at 692, a case that was in a different posture
than the usual appeal by a claimant from the affirmance of
the denial of disability benefits. Cotton was an appeal by
the Secretary from the district court's r eversal of the denial
of benefits and direction that Cotton be awar ded benefits.
The district court had based its judgment on new evidence
that Cotton had presented to the Appeals Council, which
denied review. In reversing the district court, the Sixth
Circuit, following Eads, concluded"that the district court
improperly considered Cotton's new evidence because the
claimant failed to demonstrate good cause justifying a
remand for administrative consideration of the new
evidence." Cotton, 2 F.3d at 696.

We are not persuaded by the courts of appeals that hold
to the contrary. Thus, for example, the Second Cir cuit in
Perez held that evidence first pr esented to the Appeals
Council is part of the administrative recor d to be
considered by the district court on judicial r eview even
though the Appeals Council denied review. 77 F .3d at 45.
The decision in Perez and that on which it relies, the Tenth
Circuit's decision in O'Dell, ar e based on the regulation that
requires the Appeals Council to "evaluate the entire record
including the new and material evidence submitted" in
determining whether to review the case. 20 C.F.R.
S 404.970(b). These decisions opine that the purpose of this
regulation would be undermined if the new evidence
submitted to the Appeals Council was ignored by the
district court. See, e.g., Perez , 77 F.3d at 45.

We believe the purpose of that regulation is to give the
claimant an opportunity to present additional evidence, if it
is new and material, for consideration by the Appeals
Council in deciding whether to grant review of the ALJ's
decision. This is consistent with the policy of giving the
claimant ample opportunity to prove his or her disability.

9
Counsel for the Social Security Administration advised us
at oral argument that the Appeals Council grants review
and remands approximately 25% of its cases to the ALJ,
thereby using the new and material evidence on claimants'
behalf.

However, it is the Social Security Act and not the
regulations that governs the standar ds for judicial review.
We have previously held that evidence that was not before
the ALJ cannot be used to argue that the ALJ's decision
was not supported by substantial evidence. See Jones v.
Sullivan, 954 F.2d 125, 128 (3d Cir . 1991) (citing United
States v. Carlo Bianchi & Co., 373 U.S. 709 (1963)). No
statutory authority (the source of the district court's review)
authorizes the court to review the Appeals Council decision
to deny review. No statutory provision authorizes the
district court to make a decision on the substantial
evidence standard based on the new and material evidence
never presented to the ALJ. Instead, the Act gives the
district court authority to remand the case to the
Commissioner, but only if the claimant has shown good
cause why such new and material evidence was not
presented to the ALJ.

To construe the statute otherwise, as Matthews would do,
would be to set up a conflict between the r egulations and
the statute on whether good cause need be shown.
Matthews seeks to support her position by noting that there
is no requirement in the regulations that the claimant must
show good cause to the Appeals Council befor e it can
consider the new and material evidence. However , the
regulation only concerns the recor d for purposes of
administrative decisionmaking, i.e., what the Appeals
Council may consider. For purposes of judicial review, the
"record" is "the evidence upon which the findings and
decision complained of are based." 42 U.S.C.S 405(g)
(Sentence Three). That is the information that was before
the ALJ, the final administrative decisionmaker when the
Appeals Council denies review. The new and material
evidence is transmitted with the record so that the district
court will have before it the evidence that will be the
subject of the remand if the claimant can show good cause
why such new and material evidence was not submitted to
the ALJ.

10
Our holding is consistent with this court's prior opinions.
In Szubak, the claimant argued that she was entitled to a
remand for further consideration in light offive medical
reports compiled after the Secretary's determination that
claimant submitted for the first time to the district court.
We held that a claimant must satisfy all thr ee requirements
of Sentence Six (new, material and good cause) in or der to
justify a remand. See Szubak, 745 F .2d at 833. Szubak was
entitled to a remand because she had shown good cause.3
Significantly, we did not direct the district court to consider
the effect of the new evidence on the substantiality of the
evidence previously presented to the ALJ. Instead, we
directed remand for such a determination to be made by
the forum which is entrusted by the statutory scheme for
determining disability vel non. In our subsequent opinion in
Jones, we made this explicit when we stated that evidence
not presented to the ALJ "cannot be used to argue the
ALJ's decision was not supported by substantial evidence."
954 F.2d at 128 (quotation omitted).

Our holding is also in accord with sound public policy.
We should encourage disability claimants to present to the
ALJ all relevant evidence concerning the claimant's
impairments. If we were to order r emand for each item of
new and material evidence, we would open the door for
claimants to withhold evidence from the ALJ in order to
preserve a reason for remand. See Szubak, 745 F.2d at 834
("A claimant might be tempted to withhold medical reports,
or refrain from introducing all r elevant evidence, with the
idea of obtaining another bite of the apple if the Secretary
decides that the claimant is not disabled.") (quotation
_________________________________________________________________

3. Both parties refer to our subsequent decision in Frankenfield v.
Bowen, 861 F.2d 405 (3d Cir. 1988), a decision that adds little to the
issue under consideration here. There, we remanded the case to the
Secretary because the ALJ's decision rejecting disability was not
supported by the medical evidence. We held it was impermissible for the
ALJ to ignore without explanation the physician's reports and instead
base the decision solely on the ALJ's "observation of the claimant at the
hearing." Id. at 408. In the course of our opinion, we referred to a
subsequent supporting physician's report pr esented to the Appeals
Council and we cited Szubak but we did not discuss the good cause
requirement.

11
omitted); Wilkins, 953 F.2d at 97 (Chapman, J., dissenting)
("By allowing the proceedings to be r eopened and remanded
for additional evidence, . . . the majority is encouraging
attorneys to hold back evidence and then seek remand for
consideration of evidence that was available at the time of
the ALJ hearing."). Instead, we believe that it is a much
sounder policy to require claimants to pr esent all material
evidence to the ALJ and prohibit judicial r eview of new
evidence unless there is good reason for not having brought
it before the ALJ. Such a holding is instrumental to the
speedy and orderly disposition of Social Security claims.

III.

The procedure followed by the District Court in this case
was consistent with the framework outlined above. The
Magistrate Judge declined to review or r emand for
consideration of the additional evidence that Matthews had
submitted to the Appeals Council because the Magistrate
Judge concluded that Matthews had failed to show good
cause for not presenting the evidence to the ALJ. Although
the Magistrate Judge believed that the evaluation pr epared
by Baine was new and material evidence, an issue not
reached by the District Court, the Magistrate Judge noted
that Matthews had not explained why she did not attempt
to obtain Baine's evaluation at a time when it could be
considered by the ALJ. The District Court agr eed that the
claimant had the burden of showing good cause and failed
to satisfy it, thereby adopting the Magistrate Judge's report.4

Matthews argues that she did not realize the importance
of obtaining a vocational evaluation of her arithmetic skills
early in the proceedings. But Matthews should have known
that her ability to work was an issue at the ALJ hearing
that was held after remand by the Appeals Council. Indeed,
a vocational expert had testified on July 11, 1996 (at the
second ALJ hearing) that Matthews could perfor m cashier
_________________________________________________________________

4. Matthews argues in passing that once the Appeals Council reviewed
the evidence, it was introduced into the r ecord in a prior proceeding and
she has automatically satisfied the good cause r equirement. There is no
precedent to support such an interpretation of the statutory language
and we reject it as implausible.

12
and similar types of jobs. Tr. at 169-79. By then, it should
have been clear to Matthews that her arithmetic and
reading skills were relevant. The ALJ even kept the
administrative record open in order to allow Matthews to
submit additional evidence. Yet Matthews did not submit
Baine's report until more than eight months after the ALJ's
adverse decision. Therefore, we agr ee with the District
Court that Matthews has not shown any good cause why
she did not obtain this evidence for the ALJ pr oceeding.

In the case before us, the Magistrate Judge r eviewed the
evidence that was before the ALJ and deter mined that there
was substantial evidence to support the Commissioner's
decision based on the record befor e it. The District Court
agreed. Matthews has not put into issue the substantiality
of the evidence before the ALJ,5 and we have no basis to
disagree with the District Court's conclusion that the ALJ's
decision was supported by substantial evidence on the
record.

IV.

For the reasons set forth, we will affir m the order of the
District Court granting summary judgment for the
Commissioner.

A True Copy:
Teste:

Clerk of the United States Court of Appeals
for the Third Circuit
_________________________________________________________________

5. We will not consider the substantiality of the evidence before the ALJ,
although Matthews, at the conclusion of her brief, r equests that we
reverse the decision of the District Court with directions to award her
the disability benefits she was denied. Our rules make clear that an
appellant is limited to the issues listed in the statement of issues, see
Fed. R. App. P. 28(a)(5); L.A.R. 28(1)(a), and this issue is not so
included.

13