Case: 15-30322 Document: 00513241147 Page: 1 Date Filed: 10/21/2015
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 15-30322 FILED
Summary Calendar October 21, 2015
Lyle W. Cayce
Clerk
KENNETH L. MORGAN, JR.,
Plaintiff–Appellant,
v.
CAROLYN W. COLVIN, ACTING COMMISSIONER OF SOCIAL
SECURITY,
Defendant–Appellee.
Appeal from the United States District Court
for the Eastern District of Louisiana
Before HIGGINBOTHAM, ELROD and SOUTHWICK, Circuit Judges.
JENNIFER WALKER ELROD, Circuit Judge:
The acting Commissioner of Social Security (Commissioner) denied
Appellant Kenneth Morgan’s claim for disability benefits under Title II of the
Social Security Act, 42 U.S.C. § 423, and Morgan challenged the decision in
federal district court. The district court affirmed the acting Commissioner’s
decision and Morgan now appeals. Because the ALJ based his decision on a
credibility assessment of Morgan’s testimony without holding an additional
hearing as required by HALLEX, we hold that Appellant was prejudiced by the
HALLEX violation and accordingly REVERSE the judgment of the district
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No. 15-30322
court and REMAND with instructions that the case be remanded to the
Commissioner for further proceedings consistent with this opinion.
I.
Morgan applied to the Social Security Administration to receive
disability insurance and supplemental income benefits following injuries he
sustained when he fell off an 18-wheeler while working as an auto-glass
technician. He claimed he suffered injuries to his back, his left shoulder and
his left leg, and that these injuries, along with the resultant pain, prevented
him from maintaining gainful employment. After the Commissioner denied
his application, Morgan requested an administrative hearing, which was held
in front of Administrative Law Judge (“ALJ”) Elizabeth Palacios. Morgan
testified at this hearing and was represented by counsel.
Hearing Office Chief ALJ Michael Hertzig issued the final decision in
place of ALJ Palacios. The record is silent as to why ALJ Palacios was
unavailable. The decision ends with a single paragraph asserting that ALJ
Hertzig replaced ALJ Palacios with her authorization and in accordance with
the applicable regulation, and states that ALJ Hertzig did so after he “reviewed
all the evidence of record as well as the prior hearings” and found there was
“no need to conduct a supplemental hearing.”
In the decision, ALJ Hertzig made a series of findings, including that
Morgan had not engaged in gainful activity since his declared date of injury;
that Morgan suffered from disorders of the back, substance addiction disorder
and affective disorder; and that Morgan would be unable to work as an auto-
glass technician. The ALJ also found that because Morgan’s “residual
functional capacity” (his ability to work) allowed him to perform jobs that were
available in the national economy (such as industrial cleaner, dining room
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attendant, and cafeteria attendant), Morgan was not disabled within the
meaning of the Social Security Act.
Morgan first requested review of the Commissioner’s decision through
the Social Security Appeals Council, but was denied. He filed his complaint in
federal district court seeking judicial review pursuant to 42 U.S.C. § 405(g),
and the parties filed cross-motions for summary judgment. After the district
court denied Morgan’s motion and granted the Commissioner’s motion,
Morgan timely appealed to this court.
II.
Appellant makes six arguments to challenge the Commissioner’s ruling
on appeal. Because we conclude that a remand is required under Morgan’s
second argument regarding the ALJ’s credibility assessment, we need not
reach Morgan’s other arguments.
We review de novo the district court’s grant of summary judgment,
applying the same standard that the district court applied. Spellman v.
Shalala, 1 F.3d 357, 360 (5th Cir. 1993). Our review of the Commissioner's
decision, like the district court’s review, is limited under 42 U.S.C. § 405(g) to
two inquiries: (1) whether substantial evidence of record supports the decision;
and (2) whether the decision comports with proper legal standards. Greenspan
v. Shalala, 38 F.3d 232, 236 (5th Cir. 1994).
A claimant is “disabled” as defined in the Social Security Act if the
claimant is unable “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. § 423(d)(1)(A). The
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Commissioner uses a sequential, five-step approach 1 to determine whether a
claimant is so disabled: (1) whether the claimant is presently performing
substantial gainful activity; (2) whether the claimant has a severe impairment;
(3) whether the impairment meets or equals a listed impairment; (4) whether
the impairment prevents the claimant from doing past relevant work; and (5)
whether the impairment prevents the claimant from performing any other
substantial gainful activity. 20 C.F.R. §§ 404.1520(a)(4), 416.920(a)(4). Under
this five-step approach, if the Commissioner determines at a prior step that
the applicant is or is not disabled, the evaluation process stops, and the
Commissioner does not go on to the next step. 20 C.F.R. § 404.1520(a)(4). 2
At step five, the ALJ determined that Morgan was not disabled because
Morgan has the residual functional capacity to perform medium work, and,
upon consideration of Morgan’s age, education, work experience, and residual
functional capacity, there are jobs that exist in significant numbers in the
national economy that Morgan can perform. The ALJ found that Morgan’s
level of pain did not prevent Morgan from engaging in other substantial gainful
activity, in contradiction to Morgan’s, and his doctor’s, assertions that
Morgan’s pain was completely disabling. 3 The ALJ based this finding largely
1 The burden of proof is on the claimant at the first four steps. Leggett, 67 F.3d at
564. The burden of proof shifts to the Commissioner at the fifth step to establish the
existence of other available substantial gainful employment that a claimant can perform.
Fraga v. Bowen, 810 F.2d 1296, 1301–02 (5th Cir. 1987). If the Commissioner identifies
such employment, the burden shifts back to the claimant to prove that she could not
perform the alternative work identified. Id. at 1302.
2 “The sequential evaluation process is a series of five ‘steps’ that we follow in a set
order. . . . If we can find that you are disabled or not disabled at a step, we make our
determination or decision and we do not go on to the next step. If we cannot find that you
are disabled or not disabled at a step, we go on to the next step. Before we go from step
three to step four, we assess your residual functional capacity. . . . We use this residual
functional capacity assessment at both step four and step five when we evaluate your claim
at these steps.” 20 C.F.R. § 404.1520(a)(4).
3 One of Morgan’s doctors, Dr. Thomas, opined that Morgan could not work because
of his severe back pain.
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on Morgan’s drug-seeking behavior, as evidenced in Morgan’s medical records, 4
as well as the fact that Morgan’s testimony was “inconsistent with the . . .
residual functional capacity assessment.”
Morgan challenges the ALJ’s credibility assessment for, among other
reasons, the fact that the ALJ who made the credibility assessment was not
the same ALJ who conducted the hearing at which Morgan testified.
Under our binding precedent, Social Security administrative hearings
must follow their own policies. See Newton v. Apfel, 209 F.3d 448, 459 (5th Cir.
2000). Such hearings are governed by the policies set forth in an internal
manual called the Hearings, Appeals, and Litigation Law Manual (HALLEX).
While other courts have held HALLEX not binding on the Commissioner, 5 the
Fifth Circuit utilizes the following stringent standard: “while HALLEX does
not carry the authority of law, . . . ‘where the rights of individuals are affected,
an agency must follow its own procedures, even where the internal procedures
are more rigorous than otherwise would be required,’” and “[i]f prejudice
results from a violation, the result cannot stand.” Newton, 209 F.3d at 459.
HALLEX § I-2-8-40 provides ALJs with applicable procedures to follow
when an ALJ who conducts a hearing is unable to issue a decision. The manual
instructs that the case may be reassigned to a different ALJ, and the ALJ to
whom the case is reassigned will review the record and determine whether
another hearing is required. The manual gives examples of when such a
hearing would be required, including: “[A]nother hearing would be necessary
if . . . the claimant alleges disabling pain, and the ALJ believes the claimant’s
credibility and demeanor could be a significant factor in deciding the case.”
4 The ALJ concluded that Morgan claimed to suffer from severe pain merely in order
to acquire prescription medications and, for that reason, Morgan’s testimony as to the
severity of his pain was not credible.
5 See, e.g., Moore v. Apfel, 216 F.3d 864, 868 (9th Cir. 2000) (holding that because
HALLEX does not have the force and effect of law, it is not binding on the Commissioner).
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HALLEX, § I-2-8-40 (2008), http://www.social security.gov/OP_Home/hallex/I-
02/I-2-8-40.html.
Here, Morgan’s credibility was not only a significant factor in deciding
his case, it was essential to the decision. The ALJ acknowledged in the decision
that “whenever statements about the intensity, persistence, or functionally
limiting effects of pain or other symptoms are not substantiated by objective
medical evidence, the [ALJ] must make a finding on the credibility of the
statements based on a consideration of the entire case record.” The ALJ
concluded:
After careful consideration of the evidence, the undersigned finds
that the claimant’s medically determinable impairments could
reasonably be expected to cause the alleged symptoms; however,
the claimant’s statements concerning the intensity, persistence
and limiting effects of these symptoms are not credible to the
extent they are inconsistent with the above residual functional
capacity assessment.
Morgan’s credibility regarding his level of pain thus went directly to whether
Morgan could perform any other substantial gainful activity, and this step was
the step upon which the Commissioner denied Morgan’s claim.
A finding that Morgan’s testimony regarding pain was not credible may
very well have been supported by substantial evidence—had the ALJ actually
heard the testimony. But ALJ Hertzig forwent an additional hearing and
assumed that an examination of the record was sufficient. Without hearing
Morgan’s testimony, or having seen Morgan in person, the ALJ violated
HALLEX by concluding that Morgan’s testimony was not credible. In this
circuit, “‘where the rights of individuals are affected, an agency must follow its
own procedures, even where the internal procedures are more rigorous than
otherwise would be required,’” and “[i]f prejudice results from a violation, the
result cannot stand.” Newton, 209 F.3d at 459. Here, Morgan’s rights were
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affected by the Commissioner’s denial of his claim, and the discrediting of
Morgan’s testimony by the ALJ prejudiced his claim, as it directly resulted in
the denial of Morgan’s claim. Because the ALJ’s violation of HALLEX
prejudiced Morgan, a remand for rehearing before an ALJ is warranted. See,
e.g., Kane v. Heckler, 731 F.2d 1216, 1220 (5th Cir. 1984) (providing the remedy
of a remand when HALLEX was violated and prejudiced the claimant).
III.
Because the ALJ violated HALLEX such that Morgan’s rights were
affected and Morgan was prejudiced by the violation, we REVERSE the
judgment of the district court and REMAND the case with instructions that it
be remanded to the Commissioner for further proceedings consistent with this
opinion.
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