United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
March 31, 2005
FOR THE FIFTH CIRCUIT
_____________________ Charles R. Fulbruge III
Clerk
No. 04-10197
_____________________
CHARLES D. HIGGINBOTHAM,
Plaintiff - Appellant,
versus
JO ANNE B. BARNHART, COMMISSIONER
OF SOCIAL SECURITY,
Defendant - Appellee.
__________________________________________________________________
Appeal from the United States District Court
for the Northern District of Texas
_________________________________________________________________
Before JOLLY, DAVIS, and CLEMENT, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
Today we decide a question of only narrow interest but of
significance to some Social Security appeals: Whether, in
reviewing the denial of supplemental security income (“SSI”)
benefits, the courts should consider evidence that the claimant did
not present to the Administrative Law Judge (“ALJ”), but submitted
for the first time to the Appeals Council, which accepted and
considered the evidence but denied review of the ALJ decision. The
Commissioner of Social Security argues that it should not be
considered because it is not part of the Commissioner’s “final
decision.”
Specifically, Charles D. Higginbotham, the claimant and
appellant, argues, however, that the district court, in affirming
the Commissioner’s denial of benefits, erred in failing to consider
a statement made by his treating physician, which he presented for
the first time before the Appeals Council. To answer this
question, we must determine what constitutes the Social Security
Commissioner’s “final decision.” This is a close and confusing
question to resolve because neither the statute nor the regulations
are clear. After our study of the relevant statutory provisions
and regulations, however, we conclude that the Commissioner’s
“final decision” includes the Appeals Council’s denial of
Higginbotham’s request for review. We therefore remand to the
district court for consideration of the entire record on appeal,
including the new evidence submitted by Higginbotham for the first
time to the Appeals Council.
I
Higginbotham applied for SSI benefits in 1999, claiming that
he had most recently worked in 1994 and that mixed bipolar disorder
rendered him totally disabled. In 2000, the Social Security
Administration denied Higginbotham’s application. Higginbotham
then requested, and was granted, a hearing before an Administrative
Law Judge (“ALJ”). The ALJ denied Higginbotham’s claim for
benefits because Higginbotham could not sustain a claim of total
disability. Specifically, the ALJ held that Higginbotham had no
“exertional limitations,” but that he did have “non-exertional
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limitations” that restricted him to jobs requiring only short,
simple instructions and limited interaction with other people.
Higginbotham timely filed a request for review by the Appeals
Council. While his request was pending, Higginbotham, in
accordance with applicable regulations, submitted a medical source
statement completed by Chandrakant Patel, M.D. (“Dr. Patel”), his
treating physician. That statement included Dr. Patel’s evaluation
of Higginbotham’s “mental abilities critical for performing
unskilled work.” Dr. Patel concluded that Higginbotham suffered
from a complete loss of ability to perform regular employment
activity. In a letter dated August 30, 2001, the Appeals Council
denied Higginbotham’s request for review, noting that although it
had considered Dr. Patel’s statement, the additional evidence did
not provide a basis for reversing the ALJ’s decision.
Next, Higginbotham filed a complaint in the United States
District Court for the Northern District of Texas, seeking review
of the Commissioner’s denial of SSI benefits. Then, in October
2003, the magistrate judge recommended that the Commissioner’s
decision be reversed. Judge McBryde, however, rejected the
magistrate judge’s recommendation, specifically declining to
consider the new evidence submitted to the Appeals Council, and
affirmed the Commissioner’s denial of SSI benefits. Higginbotham
then filed this appeal.
II
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Our review of the Commissioner’s denial of SSI benefits is
limited to considering whether the decision is supported by
substantial evidence in the record and whether the proper legal
standards were applied.1 See Villa v. Sullivan, 895 F.2d 1019,
1022 (5th Cir. 1990). A reviewing court may not, however, examine
only the evidence favorable to the Commissioner; it must also
examine contrary evidence. See Randall v. Sullivan, 956 F.2d 105,
109 (5th Cir. 1992).
The precise issue raised by this appeal is whether the
district court should have reviewed and considered the evidence
that Higginbotham submitted to the Appeals Council but failed to
present to the ALJ. The Social Security Act provides that courts
may review the “final decision” of the Commissioner. 42 U.S.C. §
405(g). The Act does not expressly define the term “final
decision”; instead, it leaves that question to be answered by
regulations. Sims v. Apfel, 530 U.S. 103, 105 (2000). In this
respect, however, the regulations are anything but clear. They
provide only that “[t]he Appeals Council’s decision, or the
decision of the administrative law judge if the request for review
is denied, is binding unless [the claimant] file[s] an action in
1
Higginbotham also argues that the Appeals Council failed to
apply proper legal standards when it failed to explain its weighing
of Dr. Patel’s statement, pursuant to the factors set forth in 20
C.F.R. § 416.927(d)(2). It appears that the requirement of a
detailed discussion of additional evidence was suspended by a
memorandum from the Executive Director of Appellate Operations
dated July 20, 1995.
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Federal district court.” 20 C.F.R. §§ 404.981, 416.1481. In
interpreting these regulations, some courts have held that the ALJ
decision alone is the final decision of the Commissioner, and other
courts have held that the final decision includes the Appeals
Council’s denial of a request for review.
Thus, in interpreting the Social Security Act and the
applicable regulations, if we determine that the final decision
encompasses the Appeals Council’s denial of review, then we must
conclude that the district court erred in failing to consider the
new evidence. If we determine that a final decision does not
include the denial of the request for review, then we must hold
that the district court did not err in declining to consider and
address Dr. Patel’s statement.
III
The question whether the denial of review by the Appeals
Council constitutes part of the Commissioner’s “final decision,”
and consequently whether the new evidence should be considered by
the district court on appeal, has split the circuits. Until today
we had not decided this question. See Masterson v. Barnhart, 309
F.3d 267, 274 n.3 (5th Cir. 2002). The Commissioner advocates the
position adopted by the Third, Sixth, Seventh, and Eleventh
Circuits, which have decided that when the Appeals Council denies
a claimant’s request for review, the “final decision” to be
reviewed by a district court on appeal is only the actual decision
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of the ALJ.2 They conclude that because the Commissioner’s “final
decision” is that of the ALJ, the propriety of that decision
depends only on the record that was actually before the ALJ.
On the other hand, Higginbotham urges us to adopt the position
taken by the Second, Fourth, Eighth, Ninth, and Tenth Circuits, all
of which have held that evidence submitted for the first time
before the Appeals Council should be considered by the district
court because the Appeals Council’s denial of the request for
review is part of the “final decision.”3
These courts based their decisions on the following reasons.
First, 20 C.F.R. § 404.970(b) permits, if not invites, the claimant
to submit new evidence to the Appeals Council. Excluding such
evidence on review might undermine the purpose of this regulation,
which provides a claimant a final chance to demonstrate disability
before the Commissioner’s decision is final. O’Dell v. Shalala, 44
F.3d 855, 859 (10th Cir. 1994). Second, these courts interpret the
regulations’ requirement that the Appeals Council “evaluate the
entire record including the new and material evidence submitted” to
mean that the new evidence is made part of the record even if the
2
See Matthews v. Apfel, 239 F.3d 589, 593-94 (3d Cir. 2001);
Falge v. Apfel, 150 F.3d 1320, 1323 (11th Cir. 1998); Cotton v.
Sullivan, 2 F.3d 692, 696 (6th Cir. 1993); Eads v. Sec’y of Dep’t
of Health & Human Servs., 983 F.2d 815, 817-18 (7th Cir. 1993).
3
See Perez v. Chater, 77 F.3d 41, 44-45 (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, Dept. of Health
Human Servs., 953 F.2d 93, 96 (4th Cir. 1991) (en banc).
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Appeals Council denies the request for review. Id. (quoting 20
C.F.R. § 404.970(b)). Third, these courts have reasoned that the
final decision includes the denial of the request for review
because the Commissioner’s final decision, whether it is the ALJ’s
ruling or that of the Appeals Council on review, is not final until
the Appeals Council either denies review or issues its own ruling.
Id. “Therefore, when the Appeals Council denies review after
considering new evidence, the [Commissioner’s] final decision
‘necessarily includes the Appeals Council’s conclusion that the
ALJ’s findings remained correct despite the new evidence.’” Perez
v. Chater, 77 F.3d 41, 45 (2d Cir. 1996) (quoting O’Dell, 44 F.3d
at 859).
IV
When we weigh the competing arguments interpreting the
applicable regulations, we are persuaded that the Commissioner’s
final decision includes the Appeals Council’s denial of a request
for review.
It is true that the courts generally agree that when the
Appeals Council denies a request for review, the ALJ’s decision
becomes the Commissioner’s final decision. See Sims, 530 U.S. at
107 (citing 20 C.F.R. §§ 404.900(a)(4)-(5), 404.955, 404.981, and
422.210(a)). This conclusion, however, does not resolve the
questions of what is encompassed within the “final decision” and
what record is reviewable on appeal. We note, for example, that
the regulations provide little clear guidance as to the substance
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of the record to be reviewed by the district court and as to
whether the final decision incorporates the Appeals Council’s
denial of a request for review. The applicable regulations, 20
C.F.R. §§ 404.981 and 404.955(a)-(b), only state that the ALJ’s
decision becomes “binding” when the Appeals Council denies review
and the claimant fails to seek judicial review. These provisions
do not expressly state that the ALJ’s decision alone is the “final
decision”. Nor do they state that reviewing courts must consider
only evidence that was before the ALJ.
Furthermore, 20 C.F.R. § 416.1400 makes it clear that the
Commissioner’s decision does not become final until after the
Appeals Council makes its decision denying the claimant’s request
for review. 20 C.F.R. § 416.1400(a)(5) advises claimants that
“[w]hen you have completed the steps of the administrative review
process ... we will have made our final decision. If you are
dissatisfied with our final decision, you may request judicial
review by filing an action in a Federal district court.” (Emphasis
supplied.) The steps of the administrative review process include
the initial determination, reconsideration, the hearing before an
ALJ, and a request for review by the Appeals Council. Id. at
(a)(1)-(a)(4) (emphasis supplied). Thus, the regulations plainly,
if implicitly, include the denial of review by the Appeals Council
as part of the Commissioner’s final decision. Furthermore, the
regulations require a claimant to request review by the Appeals
Council before seeking judicial review in district court. This is
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another reason for including the Appeals Council’s denial of a
request for review as a component of the Commissioner’s final
decision. Therefore, we think that under the Commissioner’s own
regulations, the Commissioner’s final decision necessarily includes
an Appeals Council’s denial of a claimant’s request for review.
It follows that the record before the Appeals Council
constitutes part of the record upon which the final decision is
based. The statute itself speaks to this point: When a claimant
seeks court review of the Commissioner’s decision, the Commissioner
“shall file a certified copy of the transcript of the record
including the evidence upon which the findings and decision
complained of are based.” 42 U.S.C. § 405(g). Higginbotham
complains of the Commissioner’s denial of benefits. That denial,
as we have said above, includes the Appeals Council’s denial of his
request for review and was based in part on the new evidence
Higginbotham submitted to the Appeals Council. The regulations
further clarify that the new evidence before the Appeals Council
was such evidence upon which the denial of benefits was based by
requiring the Appeals Council to “evaluate the entire record
including the new and material evidence submitted[.]” 20 C.F.R. §
404.970(b). Still further, in this case, the Appeals Council noted
in its letter denying Higginbotham’s request for review that it had
considered Dr. Patel’s statement, in denying review of his claim.
V
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In sum, the statute provides that a claimant may obtain review
of “any final decision of the Commissioner of Social Security.” 42
U.S.C. § 405(g). Because the statute does not define “final
decision of the Commissioner of Social Security”, we must look to
the regulations. The regulations do not explicitly define the
term. We extrapolate from the words of the regulation, however,
that “final decision of the Commissioner of Social Security”
includes the Appeals Council’s denial of a request for review
because the regulations provide that the Commissioner’s decision
does not become final until after the Appeals Council makes its
decision denying the claimant’s request for review. We further
conclude that the evidence submitted for the first time to the
Appeals Council is part of the record on appeal because the statute
itself provides that such record includes the “evidence upon which
the findings and decision complained of are based.” Id. Because
the Appeals Council considered and evaluated such evidence, that
evidence constitutes “evidence upon which the decision complained
of is based.” Id. Accordingly, the district court should have
considered and addressed the new evidence that Higginbotham
submitted to the Appeals Council. The judgment of the district
court is therefore vacated, and the case is remanded for further
consideration not inconsistent with this opinion.
VACATED and REMANDED.
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