Garcia v. Commissioner, Social Security Administration

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 25-cv-00855-STV
T.J.G.,1
Plaintiff,
v.
COMMISSIONER OF SOCIAL SECURITY,
Defendant.
______________________________________________________________________
ORDER
______________________________________________________________________
Chief Magistrate Judge Scott T. Varholak
This matter is before the Court on Plaintiff T.J.G.’s Complaint seeking review of
the Commissioner of Social Security’s decision denying Plaintiff’s application for disability
insurance benefits (“DIB”) under Title II of the Social Security Act (“SSA”), 42 U.S.C. § 401
et seq. [#1] The parties have consented to proceed before this Court for all proceedings,
including the entry of final judgment, pursuant to 28 U.S.C. 636(c) and D.C.COLO.LCivR
72.2. [#8] The Court has jurisdiction to review the Commissioner’s final decision pursuant
to 42 U.S.C. § 405(g). This Court has carefully considered the Complaint [#1], the Social
Security Administrative Record [#7], the parties’ briefing [##9, 10, 13], and the applicable
case law, and has determined that oral argument would not materially assist in the
disposition of this appeal. 	For the following reasons, the Court REVERSES the
1 Pursuant to D.C.COLO.LAPR 5.2(b), “[a]n order resolving a social security appeal on
the merits shall identify the plaintiff by initials only.”
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Commissioner’s decision and REMANDS this matter for further proceedings consistent
with this Order.
I. 	LEGAL STANDARD
A. 	Five-Step Process for Determining Disability
“To 	qualify 	for 	DIB, 	a 	claimant 	must 	establish 	that 	he 	met 	the 	statutory
requirements for disability on or before his date last insured.” 	Romero v. Saul, No. CV
20-256 JFR, 2021 WL 1873468, at *1 n.6 (D.N.M. May 10, 2021) (citing 42 U.S.C.
§§ 416(i)(3), 423(c)(1)); see also Wilson v. Astrue, 602 F.3d 1136, 1139 (10th Cir. 2010)
(finding that claimant “had the burden of proving that she was totally disabled on [the]
date [last insured] or before”). 	The SSA defines disability as the “inability 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.”2 	42 U.S.C.
§ 423(d)(1)(A); Lax v. Astrue, 489 F.3d 1080, 1084 (10th Cir. 2007). “This twelve-month
duration requirement applies to the claimant’s inability to engage in any substantial gainful
activity, and not just his underlying impairment.” Lax, 489 F.3d at 1084. “In determining
whether an individual’s physical or mental impairment or impairments are of a sufficient
medical severity that such impairment or impairments could be the basis of eligibility . . .,
the Commissioner . . . shall consider the combined effect of all of the individual’s
impairments without regard to whether any such impairment, if considered separately,
would be of such severity.” 42 U.S.C. § 423(d)(2)(B).
2 “Substantial gainful activity” is defined in the regulations as “work that (a) [i]nvolves doing
significant and productive physical or mental duties; and (b) [i]s done (or intended) for pay
or profit.” 20 C.F.R. § 404.1510; see also 20 C.F.R. § 404.1572.
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“The Commissioner is required to follow a five-step sequential evaluation process
to determine whether a claimant is disabled.” Hackett v. Barnhart, 395 F.3d 1168, 1171
(10th Cir. 2005). The five-step inquiry is as follows:
1. 	The Commissioner first determines whether the claimant’s work activity, if any,
constitutes substantial gainful activity;
2. 	If not, the Commissioner then considers the medical severity of the claimant’s
mental and physical impairments to determine whether any impairment or
combination of impairments is “severe;”3
3. 	If so, the Commissioner then must consider whether any of the severe
impairment(s) meet or exceed a listed impairment in the appendix of the
regulations;
4. 	If not, the Commissioner next must determine whether the claimant’s residual
functional capacity (“RFC”)—i.e., the functional capacity the claimant retains
despite his impairments—is sufficient to allow the claimant to perform his past
relevant work, if any;
5. 	If not, the Commissioner finally must determine whether the claimant’s RFC,
age, education and work experience are sufficient to permit the claimant to
perform other work in the national economy.
See 20 C.F.R. § 404.1520(a)(4); Grogan v. Barnhart, 399 F.3d 1257, 1261 (10th Cir.
2005); Bailey v. Berryhill, 250 F. Supp. 3d 782, 784 (D. Colo. 2017). “The claimant bears
the burden of establishing a prima facie case of disability at steps one through four,” after
which the burden shifts to the Commissioner at step five to show that the claimant retains
the ability to perform work in the national economy. Wells v. Colvin, 727 F.3d 1061, 1064
n.1 (10th Cir. 2013); Lax, 489 F.3d at 1084. “A finding that the claimant is disabled or not
disabled at any point in the five-step review is conclusive and terminates the analysis.”
3 The regulations define severe impairment as “any impairment or combination of
impairments which significantly limits [the claimant’s] physical or mental ability to do basic
work activities.” 20 C.F.R. § 404.1520(c).
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Ryan v. Colvin, 214 F. Supp. 3d 1015, 1018 (D. Colo. 2016) (citing Casias v. Sec’y of
Health & Human Servs., 933 F.2d 799, 801 (10th Cir. 1991)).
B. 	Standard of Review
In reviewing the Commissioner’s decision, the Court’s review is limited to a
determination of “whether the Commissioner applied the correct legal standards and
whether her factual findings are supported by substantial evidence.” Vallejo v. Berryhill,
849 F.3d 951, 954 (10th Cir. 2017) (citing Nguyen v. Shalala, 43 F.3d 1400, 1402 (10th
Cir. 	1994)). 	“With 	regard 	to 	the 	law, 	reversal 	may 	be 	appropriate 	when 	[the
Commissioner] either applies an incorrect legal standard or fails to demonstrate reliance
on the correct legal standards.” Bailey, 250 F. Supp. 3d at 785 (citing Winfrey v. Chater,
92 F.3d 1017, 1019 (10th Cir. 1996)).
“Under 	the 	substantial-evidence 	standard, 	a 	court 	looks 	to 	an 	existing
administrative record and asks whether it contains sufficien[t] evidence to support the
agency’s factual determinations.” 	Biestek v. Berryhill, 139 S. Ct. 1148, 1154 (2019)
(quotation omitted). 	“[W]hatever the meaning of ‘substantial’ in other contexts, the
threshold for such evidentiary sufficiency is not high.” Id. Substantial evidence “means—
and means only—such relevant evidence as a reasonable mind might accept as
adequate to support a conclusion.” 	Id. (quotation omitted). 	“It requires more than a
scintilla, but less than a preponderance.” Wall v. Astrue, 561 F.3d 1048, 1052 (10th Cir.
2009) (quoting Lax, 489 F.3d at 1084). “Evidence is not substantial if it is overwhelmed
by other evidence in the record or constitutes mere conclusion.” 	Grogan, 399 F.3d at
1261-62 (quoting Musgrave v. Sullivan, 966 F.2d 1371, 1374 (10th Cir. 1992)). The Court
must “meticulously examine the record as a whole, including anything that may undercut
or detract from the [Commissioner’s] findings in order to determine if the substantiality
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test has been met.’” Flaherty v. Astrue, 515 F.3d 1067, 1070 (10th Cir. 2007) (quotation
omitted). The Court, however, “will not reweigh the evidence or substitute [its] judgment
for the Commissioner’s.” Hackett, 395 F.3d at 1172.
II. 	BACKGROUND4
Plaintiff was born in 1971. 	[AR 196]5 	Plaintiff speaks and understands English.
[AR 198] Plaintiff completed the ninth grade. [AR 200] On May 21, 2021, Plaintiff filed
an application for DIB. [AR 196-97] Plaintiff claimed a disability onset date of December
31, 2020, and thus Plaintiff was 48 years old at the time of the alleged onset. [AR 196]
In her application, Plaintiff claimed disability based upon arthritis, fibromyalgia, post-
traumatic stress disorder (“PTSD”), left shoulder pain, a bulging disc, degenerative disc
disease, sciatica, anxiety, and depression. 	[AR 199] 	Plaintiff previously worked as a
caregiver and a cashier. [AR 200-01]
Plaintiff’s application for DIB was initially denied on March 14, 2022. 	[AR 83]
Plaintiff filed a request for reconsideration which was denied on January 11, 2023. [AR
84] On February 17, 2023, Plaintiff completed a request for a hearing before an ALJ. [AR
119-20] 	A hearing was conducted before ALJ Kathleen Eiler on August 21, 2023. 	[AR
39-60] Plaintiff was represented at the hearing by attorney Mary Kinas. [AR 39] Plaintiff
and Vocational Expert (“VE”) Pat Pauline testified at the hearing. [AR 39-60]
On September 26, 2023, the ALJ issued her decision. [AR 21-34] After evaluating
the evidence pursuant to the five-step sequential evaluation process, the ALJ denied
4 	Because 	Plaintiff 	raises 	a 	single 	issue 	concerning 	the 	determination 	by 	the
Administrative Law Judge (“ALJ”) that Plaintiff had performed work that constituted
substantial gainful activity (“SGA”), the Court does not detail Plaintiff’s medical history in
this Order.
5 All references to “AR” refer to the sequentially numbered Social Security Administrative
Record filed in this case. [#7]
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Plaintiff’s application for DIB. 	[Id.] 	At step one, under the heading “[Plaintiff] has not
engaged in substantial gainful activity since December 31, 2020, the alleged onset date,”
the ALJ nonetheless concluded that Plaintiff had, indeed, earned $21,963.28 in self-
employment in 2022, and thus had “work[ed] at disqualifying SGA level in 2022 when
performing work with Uber Eats.” [AR 24] Nonetheless, because that conclusion did “not
determine the entire period at issue,” the ALJ continued with the five-step evaluation
process. [Id.]
At step two, the ALJ found that Plaintiff had the following severe impairments:
osteoarthritis 	of 	the 	right 	hand, 	degenerative 	disc 	disease 	of 	the 	lumbar 	spine,
tendinopathy of the left hip, rotator cuff tear of the left shoulder, medial epicondylitis,
obesity, benign positional paroxysmal vertigo, generalized anxiety disorder, and PTSD.
[AR 24-25] At step three, the ALJ concluded that Plaintiff did not have an impairment or
combination of impairments that met or medically equaled the severity of one of the listed
impairments in the appendix of the regulations. [AR 25-26]
Following step three, the ALJ determined that Plaintiff retained the RFC to perform
light work6 with the following limitations:
[Plaintiff] can never climb ladders, ropes, and scaffolds and occasionally
climb ramps or stairs, balance, stoop, kneel, crouch, or crawl. 	She can
occasional[ly] reach overhead with the left upper extremity and frequently
handle and finger with the right upper extremity. 	She must avoid all
exposure to unprotected heights or moving machinery. She can engage in
occasional interaction with coworkers, supervisors, and the general public.
She can handle no more than occasional changes in a routine work setting.
She cannot perform production rate pace work (meaning no one waiting
6 Light work is defined to include work that “involves lifting no more than 20 pounds at a
time with frequent lifting or carrying of objects weighing up to 10 pounds” and that
“requires a good deal of walking or standing, or . . . sitting most of the time with some
pushing and pulling of arm or leg controls.” 20 C.F.R. §§ 404.1567(b), 416.967(b).
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down a line for this person to complete her tasks before the coworker can
complete their own tasks).
[AR 27] The ALJ provided a narrative setting forth the evidence considered in determining
the RFC and explaining the ALJ’s consideration of the medical opinions in the record.
[AR 27-32]
At step four, the ALJ found that Plaintiff was unable to perform any past relevant
work.7 	[AR 32] 	At step five, the ALJ determined that there were jobs that existed in
significant numbers in the national economy that Plaintiff could perform, including jobs
such as merchandise marker, cleaner/housekeeper, and collator operator. 	[AR 33-34]
Based on this, the ALJ determined that Plaintiff had not been under a disability from
December 31, 2020, the alleged onset date, through September 26, 2023, the date of the
ALJ’s decision. [AR 34]
Plaintiff timely requested a review of the ALJ’s decision by the Appeals Council,
and on April 5, 2024, the Appeals Council denied Plaintiff’s request for review. [AR 5-10]
After seeking several extensions of time to file a civil action [AR 1-4], on March 16, 2025,
Plaintiff timely filed her appeal with this Court [#1].
III. 	ANALYSIS
On appeal, Plaintiff raises a single argument. Specifically, Plaintiff argues that the
ALJ misapplied the law regarding self-employment income and relied upon those
erroneous findings throughout the sequential evaluation process. [#9 at 3-9] Defendant
7 At step four, a claimant will be determined to be “not disabled” when it is determined
that the claimant retains the RFC to perform either: (1) the actual functional demands and
job duties of a particular past relevant job as performed by the claimant, or (2) the
functional demands and job duties of that job as generally required by employers
throughout the national economy. 	See Social Security Ruling 82-61, 1982 WL 31387
(1982); Andrade v. Sec’y of Health & Human Servs., 985 F.2d 1045, 1050 (10th Cir.
1993).
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appears to concede that the ALJ erred in her analysis of Plaintiff’s self-employment
income, but nonetheless maintains that any error was harmless. 	[#10 at 2 (“The
Commissioner acknowledges that to foreclose Plaintiff’s technical argument, the ALJ
could have provided additional discussion, but any error was harmless given the context
here where the ALJ’s findings were based on Plaintiff’s testimony and unchallenged net
income.”). 	The Court agrees with the parties that the ALJ erred in her treatment of
Plaintiff’s self-employment income and agrees with Plaintiff that the error was not
harmless.
For self-employed individuals, the regulations provide that the Commissioner “will
consider [the claimant’s] activities and their value to [the claimant’s] business to decide
whether [the claimant has] engaged in substantial gainful activity.” 	20 C.F.R. §
404.1575(a)(2). The Commissioner is not supposed to “consider [the claimant’s] income
alone because the amount of income [the claimant] actually receive[s] may depend on a
number of different factors, such as capital investment and profit-sharing agreements.”
Id. 	The Commissioner determines whether a self-employed individual has engaged in
SGA by applying three tests. Id. If the self-employed claimant has not engaged in SGA
under test one, then the Commissioner considers tests two and three. Id.
Pursuant to test one, the claimant has “engaged in substantial gainful activity if
[they] render services that are significant to the operation of the business and receive a
substantial income from the business. Id. at § 404.1575(a)(2)(i). If the claimant is not a
farm landlord and operates the business entirely by themselves, any services rendered
are considered significant to the business. Id. at § 404.1575(b). If the business involves
the services of more than one person, the Commissioner considers the claimant “to be
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rendering significant services if [they] contribute more than half the total time required for
the management of the business, or [they] render management services for more than
45 hours a month regardless of the total management time required by the business.” Id.
In 	determining 	substantial 	income, 	the 	Commissioner 	must 	first 	determine
countable 	income. 	Id. 	at 	§ 	404.1575(c). 	In 	determining 	countable 	income, 	the
Commissioner deducts normal business expenses from the claimant’s gross income to
determine net income. 	Id. at § 404.1575(c)(1). 	Once net income is determined, the
Commissioner deducts the reasonable value of any significant amount of unpaid help by
the claimant’s spouse, children, or others. 	Id. 	Countable income is considered
substantial if: (1) it averages more than the amounts described in Section 404.1574(b)(2);
or (2) it averages less than the amounts described in Section 404.1574(b)(2) but it is
either (a) comparable to what it was before the claimant became seriously impaired if the
Commissioner had not considered the claimant’s earnings, or (b) is comparable to that of
unimpaired self-employed persons in the claimant’s community who are in the same or a
similar business as their means of livelihood. Id. at § 404.1575(c)(2). Under the agency’s
guidelines, for the year 2022, countable income of a self-employed individual is SGA if it
averages more than $1,350 per month. 	Program Operations Manual System, DI
10501.015 Tables of SGA Earnings Guidelines and Effective Dates Based on Year of
Work 	Activity, 	Policy 	— 	Table 	2 	— 	Nonblind 	Individuals 	Only, 	available 	at
https://secure.ssa.gov/apps10/poms.nsf/lnx/0410501015 (last visited October 28, 2025).
Here, the ALJ appears to have applied the first test and concluded that Plaintiff
had engaged in SGA because she had self-employment income of $21,963.28. [AR 24]
This number, which actually reflects both self-employment income and income from
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Plaintiff’s 	brief 	stint 	working 	at 	Michael’s 	Stores, 	appears 	to 	have 	come 	from
administrative earnings records. 	[AR 193] 	These records reflect that Plaintiff had self-
employment earnings of $21,543 in 2022. [Id.]
By relying upon this number alone, the ALJ appears to have done what the
Commissioner cannot do—consider Plaintiff’s income alone. It is far from clear from the
face of the agency records that the self-employment total reflects net income, as opposed
to gross income. [AR 193] And, certainly, if Plaintiff utilized her vehicle while delivering
for Uber Eats, she would have incurred fuel expenses that would have reduced the gross
income. 	Nor does the record reflect whether Plaintiff had a family member or anybody
else assist her while she delivered for Uber Eats, the reasonable value of which would
have needed to be deducted from the $21,543 figure. 20 C.F.R. § 404.1575(c)(1). The
ALJ simply did not develop the record sufficiently to conclude that Plaintiff’s self-
employment work constituted SGA.
The Commissioner nonetheless argues that this error was harmless. “To deem an
error harmless in the social-security context, [the Court] must be able to say with
confidence that no reasonable administrative factfinder, following the correct analysis,
could have resolved the matter in any other way.” 	Jones v. Berryhill, 720 F. App’x 457,
459 (10th Cir. 2017); D.M.M. v. Bisignano, No. 24-cv-02293-TPO, 2025 WL 2793063, at
* 4 (D. Colo. Sept. 25, 2025) (“This court may apply harmless error in the social security
context where, based on material the ALJ did at least consider (just not properly), [this
court] could confidently say that no reasonable administrative factfinder, following the
correct analysis, could have resolved the factual matter in any other way.” (quotation
omitted)). 	Nonetheless, “to the extent a harmless-error determination rests on legal or
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evidentiary matters not considered by the ALJ, it risks violating the general rule against
post hoc justification of administrative action.” 	Allen v. Barnhart, 357 F.3d 1140, 1145
(10th Cir. 2004).
Here, the Commissioner first points to Plaintiff’s counsel’s question to Plaintiff that
she made $21,500 from working for Uber Eats and that she thus was “making pretty good
money.” [#10 at 10 (citing AR 46-47)] According to the Commissioner, this demonstrates
that the agency’s records were accurate and, presumably, proves that Plaintiff had
countable income exceeding $1,350 per month. 	[Id.] 	But nothing in that question
suggested that Plaintiff’s counsel was making a concession that the $21,500 figure
reflected countable income. 	And Plaintiff was not asked any questions about her
expenses or whether anybody was assisting her while she worked for Uber Eats. 	[AR
46-47] 	Thus, this question does not reveal Plaintiff’s countable income and the Court
cannot confidently say that no reasonable factfinder could conclude that Plaintiff’s self-
employment income did not constitute SGA.
The Commissioner also argues that the error was harmless because the ALJ
proceeded to the remaining four steps of the sequential evaluation process. [#10 at 11-
13] But the ALJ’s conclusion that Plaintiff had done work which qualified as SGA clearly
impacted the rest of the ALJ’s analysis. 	For example, the ALJ reasoned that Plaintiff’s
“ability to work at SGA as recently as late 2022 supports the finding that she can perform
light exertion.” [AR 31] Similarly, the ALJ rejected the handling and fingering limitations
opined by a medical examiner whom the ALJ otherwise found persuasive, in part,
because Plaintiff had performed work in 2022 at the SGA level. [Id.] And the ALJ found
Plaintiff’s statements about the intensity, persistence, and limiting effects of her symptoms
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unsupported, in part, because she has been able to perform SGA. [AR 30] Without the
ALJ’s faulty—or at least insufficiently supported—conclusion that Plaintiff had performed
SGA in 2022, the Court cannot confidently say that the ALJ would have reached the same
conclusion as to Plaintiff’s RFC or Plaintiff’s disability status. And the fact that there was
other evidence in the record to support the ALJ’s RFC determination [#10 at 12-13], or
that the ALJ did not rely exclusively on her conclusion that Plaintiff had performed SGA
[id. at 12], does not render the ALJ’s error harmless. 	It would be an improper post hoc
justification for this Court to review the evidence and say that the ALJ could have reached
the same conclusion had she not relied upon the improper finding that Plaintiff had been
able to perform SGA. Thus, because the Court cannot confidently conclude that this ALJ
(let alone any reasonable administrative factfinder), following the correct analysis, could
not have concluded that Plaintiff was disabled, the Court cannot find harmless error.
IV. 	CONCLUSION
Accordingly, for the foregoing reasons, the Court REVERSES the Commissioner’s
decision that Plaintiff was not under a disability within the meaning of the SSA from
December 31, 2020 through September 26, 2023 and REMANDS this matter to the
Commissioner for rehearing and reconsideration consistent with this Order.
DATED: October 28, 2025 	BY THE COURT:
s/Scott T. Varholak
Chief United States Magistrate Judge
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