Wanda Mills v. Kenneth S. Apfel, Commissioner of Social Security

United States Court of Appeals
For the First Circuit
No. 00-1446
WANDA MILLS,
Plaintiff, Appellant,
v.
KENNETH S. APFEL,
COMMISSIONER OF SOCIAL SECURITY,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. D. Brock Hornby, U.S. District Judge]
Before
Boudin, Stahl and Lynch,
Circuit Judges.
Francis M. Jackson with whom Jackson & MacNichol was on
brief for appellant.
Richard Fox, Assistant Regional Counsel, Office of the Chief
Counsel, Region I, Social Security Administration, with whom Jay
P. McCloskey, United States Attorney, James M. Moore, Assistant
United States Attorney, and Robert J. Triba, Chief Counsel,
Region I, were on brief for appellee.

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March 22, 2001

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1Part 404 of Title 20 regulates Disability Insurance, which
is available to those who have paid social security taxes for
the required period; Part 416 regulates Supplemental Security
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BOUDIN, Circuit Judge. This is an appeal from a denial
of social security benefits for disability and presents an issue
on which the circuits are divided, namely, the treatment of
proffers of new evidence on administrative review after the
initial administrative decision. The claimant is Wanda Mills.
Her present application for benefits was filed on December 23,
1996, and ultimately a hearing before an administrative law
judge ("ALJ") was held on November 17, 1997, at which Mills was
represented by counsel.
At the hearing, the controlling question was whether
Mills was subject to a "disability," which had lasted or could
be expected to last at least 12 months and which created an
"inability to engage in any substantial gainful activity by
reason of any medically determinable physical or mental
impairment." 42 U.S.C. § 423(d)(1)(A) (1994). Complex
regulations, administered by the Commissioner of Social Security
(the "Commissioner"), prescribe substantive standards and a
five-step protocol for making a disability decision. Goodermote
v. Sec'y of Health & Human Servs., 690 F.2d 5, 6-7 (1st Cir.
1982); 20 C.F.R. §§ 404.1520, 416.920 (physical impairments);
404.1520(a), 416.920(a) (mental impairments) (2000).1

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Income, which applies if a claimant has not paid the requisite
taxes. The regulations here pertinent mirror one another so we
refer only to Part 416. See Reagan v. Sec'y of Health & Human
Servs., 877 F.2d 123, 124 (1st Cir. 1989) (per curiam).
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On April 7, 1998, the ALJ issued his decision rejecting
Mills' claim. He found that Mills, born in 1955, had a high
school equivalency diploma (her formal education ended in 9th
grade). Her work history included brief stints as an assembly
line worker making small medicine bottles, and as a laundry
worker and chambermaid in a motel, but she had not worked since
late 1993. She had previous bouts of alcoholism and of
treatment for it, but had not used alcohol since November 1996.
The ALJ then discussed the physical and mental health evidence
on which Mills principally relied to show her disability.
On the physical side, she claimed right knee pain based
on a 1979 injury to the patella and said that the knee sometimes
gave out. But the medical examination showed no tenderness and
good stability, save for some unsteadiness in arising. The
examining doctor found that there was no objective evidence of
injury but that Mills "may have <mild' arthritis of her right
knee." The ALJ did not consider this a severe impairment
whether considered alone or in conjunction with other symptoms.
He also rejected Mills' claims of lower back pain as unsupported
by any objective medical evidence.

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As to mental health, Mills said that she was subject
to panic disorder but a consulting psychologist said that her
symptoms did not amount to panic disorder and the ALJ said that
this claim was not established by objective evidence. The ALJ
agreed that the evidence did show that Mills suffered from "a
dysthymic disorder," a form of depression that is less than
major; but the ALJ said that Mills was able to care for her
personal needs and to manage her funds and do ordinary household
tasks. He concluded that nothing prevented her from returning
to a prior unskilled job as an assembly line worker or as a
laundry worker in a motel.
Mills requested review by the Appeals Council, 20
C.F.R. § 416.1467, and submitted two new pieces of evidence.
One was an October 8, 1998, "progress note" by Dr. Garnett; this
physician confirmed the diagnosis of dysthymia, said that Mills
was subject to panic disorder with agoraphobia, and prescribed
an antidepressant. The other evidence was the report of a
social worker, Ms. Joy, who saw Mills on November 30, 1998;
Joy's assessment was that Mills was oriented and attentive but
had poor memory and uncertain judgment. Joy recommended a
psychiatric evaluation.
On January 21, 1999, the Appeals Council denied review,
stating that the ALJ's decision stands "as the final decision"

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of the Commissioner of Social Security. 20 C.F.R. § 416.1481.
The denial was signed by an administrative appeals judge who, on
March 24, 1999, wrote Mills' lawyer a separate letter discussing
the Garnett and Joy reports. The letter said that the findings
in the reports were "consistent" with those in the record before
the ALJ and "thus" did not provide a basis for disturbing the
ALJ's decision. The letter said that the additional evidence
would "be made part of the transcript in this case."
Mills filed a statutory review action in the district
court, 42 U.S.C. § 405(g), where the matter was referred to a
magistrate judge. In a recommended order on November 24, 1999,
the magistrate judge urged that the Commissioner's decision be
vacated and remanded for further proceedings. This
recommendation rested primarily on the magistrate judge's view
that the Garnett evidence created a conflict with the ALJ's view
that Mills did not have a serious panic disorder and that a
remand was needed to determine whether the panic disorder was
present and, if so, whether its symptoms impaired Mills'
capacity for work.
Alternatively, the magistrate judge said that the ALJ
had erred in rejecting, without medical evidence, the earlier
assessment of an examining physician consultant (Dr. Doane),
that Mills "may" have knee problems sufficient to prevent

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standing for more than several hours at a time or walking more
than a block without stopping; while the magistrate judge agreed
that the condition was not shown to be severe, he deemed it
relevant. Finally, the magistrate judge found that Mills had
waived a claim that her prior work history was too sporadic to
be used as a baseline in determining whether work was available
to her.
On review of the Commissioner's objections, the
district court rejected the magistrate judge's recommendation of
a remand. Mills v. Apfel, 84 F. Supp. 2d 146, 148-49 (D. Me.
2000). In its decision, the district court said that the new
evidence submitted to the Appeals Council could not be
considered because that body's refusal to grant review left the
ALJ's decision as the only one before the court and it had to be
judged on the evidence before the ALJ. Id. at 148. As for the
knee problem, the district court said that the Doane assessment
was qualified ("may") and conflicted with the report of two non-
examining doctors and, in any event, the ALJ could draw a
common-sense inference that the condition was mild. Id. at 149.
The court agreed with the magistrate judge that the claim of
sporadic work history had been waived. Id. at 150.
On this appeal, Mills' counsel ably builds arguments
around each of the three issues touched on by the district

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2Compare Matthews v. Apfel, 239 F.3d 589, 593-94 (3d Cir.
2001) (only considering evidence presented to the ALJ), Falge v.
Apfel, 150 F.3d 1320, 1323 (11th Cir. 1998), cert. denied, 525
U.S. 1124 (1999), Cotton v. Sullivan, 2 F.3d 692, 696 (6th Cir.
1993), and Eads v. Sec'y of the Dep’t of Health & Human Servs.,
983 F.2d 815, 817 (7th Cir. 1993), with Perez v. Chater, 77 F.3d
41, 45 (2d Cir. 1996) (considering new evidence submitted to the
Appeals Council after the ALJ’s decision), O’Dell v. Shalala, 44
F.3d 855, 859 (10th Cir. 1994), Riley v. Shalala, 18 F.3d 619,
622 (8th Cir. 1994), Ramirez v. Shalala, 8 F.3d 1449, 1454 (9th
Cir. 1993), and Wilkins v. Sec'y Dep’t of Health & Human Servs.,
953 F.2d 93, 96 (4th Cir. 1991) (en banc).
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court. We begin with the most difficult, which concerns the
evidence tendered to the Appeals Board after the ALJ decision.
Because the Appeals Board "denied review" (at least nominally),
the Commissioner says that we may review only the ALJ decision,
judging it solely on the evidence presented to the ALJ. Four
circuits have taken this position, at least in part; by
contrast, five circuits say that judicial review tests all
evidence submitted to the ALJ and to the Appeals Council, even
if the latter declines to review the ALJ decision.2
For us, neither legal position, if treated as absolute,
is entirely satisfactory. To weigh the new evidence as if it
were before the ALJ would be, as one court fairly observed, a
very "peculiar" enterprise, Riley, 18 F.3d at 622, and (to us)
one that distorts analysis. The ALJ can hardly be expected to
evaluate or account for the evidence that he never saw. At
best, the reviewing court ends up asking and answering some

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other question without properly articulating it--which is a
recipe for confusion (e.g., how likely is it that this evidence
would alter the result if it had been before the ALJ).
The Commissioner has muddled the matter by directing
that material new evidence may be provided to the Appeals
Council and that such evidence becomes part of the record. 20
C.F.R. § 416.1470(b). Several circuits have relied on this
regulation (or its counterpart in Part 404) to justify court
review of the ALJ's decision based on the new evidence. E.g.,
O’Dell, 44 F.3d at 859. But this conflates the question whether
the documents are part of "the record" with the question
whether--if Appeals Council review is declined--they are part of
the evidence against which the ALJ's decision should be tested
in court. See Eads, 983 F.2d at 817. We doubt that the
regulation was intended to resolve the latter issue.
Nor do we think that Mills' "review all the evidence"
position is helped by Sims v. Apfel, 120 S. Ct. 2080 (2000).
The Court there rejected a waiver claim and allowed a social
security applicant to raise in court an issue not raised at the
Appeals Council stage. Id. at 2086. But that is entirely
different from failing to offer evidence in the first instance
to the ALJ, which is far more disruptive of the review function.
In any event, Justice O'Connor's "swing vote" in Sims rested on

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the distinct and narrow ground that the regulations there in
question might have misled applicants as to the duty to raise
issues in the Appeals Council. Id. at 2086-87 (O'Connor, J.,
concurring in part and concurring in the judgment). Thus, we
agree with the Commissioner's view that we may review the ALJ
decision solely on the evidence presented to the ALJ.
Yet we reject the other half of the Commissioner's
position, namely, that we may not review the Appeals Council
even where it has given a mistaken reason for refusing further
review. The statute permits review of "the final decision of
the Commissioner" without specifying components, 42 U.S.C. §
405(g); the Commissioner relies heavily on his regulation saying
that, where review is denied, the ALJ's decision becomes that of
the Commissioner. 20 C.F.R. § 416.1481. It is very doubtful
that this regulation was intended to do more than define the end
of the administrative process, and we decline to read it as
determining which administrative determinations made along the
way are subject to judicial review.
It is quite true that an Appeals Council decision
refusing review has all the hallmarks of a discretionary
decision: the Appeals Council need not and often does not give
reasons, and the regulations appear to provide the Appeals
Council with a great deal of latitude in deciding which cases

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3Compare Riley, 18 F.3d at 622 (recognizing the
appropriateness of remand if the Appeals Council refuses to
consider new evidence in the mistaken belief that it is not
"new" and "material") (M. Arnold, J.), with Eads, 983 F.2d at
817 (allowing judicial review of the Council's refusal to review
an ALJ's decision when the "refusal rests on a mistake of law")
(Posner, J.). But see Matthews, 239 F.3d at 594 ("No statutory
authority . . . authorizes the court to review the Appeals
Council decision to deny review.").
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should be reviewed. See 20 C.F.R. § 416.1470. But since
Service v. Dulles, 354 U.S. 363 (1957), it has been well
established that a discretionary decision may be reviewable to
the extent that it rests on an explicit mistake of law or other
egregious error. The denial of judicial review in such an
instance is very much the exception. See N.A.A.C.P. v. Sec'y of
Hous. & Urban Dev., 817 F.2d 149, 157-58 (1st Cir. 1987)
(Breyer, J.).
The impulse to preserve some role for the courts, where
the administrative decision rests on an articulated but severely
mistaken view, is borne out by the cases. Two of the leading
circuit decisions on the social security scheme--opposed to each
other on the question whether the ALJ should be reviewed based
on new evidence--assume that an Appeals Council denial of review
is itself reviewable to some degree and in some limited
circumstances.3 We join these circuits in holding that an
Appeals Council refusal to review the ALJ may be reviewable
where it gives an egregiously mistaken ground for this action.

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This position makes practical sense as well. For the
most part, the review problem with which we are concerned arises
in social security cases where new evidence is tendered after
the ALJ decision. In most other situations, a mistake by the
ALJ that is otherwise correctable by a court can be addressed on
judicial review regardless of any denial of review by the
Appeals Council. The ALJ has not "made a mistake" in ignoring
new evidence that was never presented to him. However, the
Appeals Council may have "made a mistake" in refusing to
consider new evidence presented to it, depending on the ground
it gave. The question is whether or not such a mistake can be
corrected where it can be readily discerned and no other means
of relief exists.
The courts already have the statutory authority to
remand for further proceedings where new evidence is presented
after the ALJ decision if the evidence is material and good
cause is shown for the failure to present it on a timely basis.
42 U.S.C. § 405(g). The problem is with the "and": under the
Commissioner's regulations, the Appeals Council is free to
consider new material evidence regardless of whether there was
good cause for not producing it earlier; the court is not free
to order a remand absent such good cause. This is Mills' very

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situation since she has never shown good cause for failing to
offer the Garnett evidence or its like to the ALJ.
In such a situation, if the Appeals Council mistakenly
rejected the new evidence on the ground that it was not
material, we think that a court ought to be able to correct that
mistake on the Service v. Dulles principle. This is so even
though we assume that the Appeals Council's refusal to review
would be effectively unreviewable if no reason were given for
the refusal. This is not a serious anomaly: there is reason
enough to correct an articulated mistake even though one cannot
plumb the thousands of simple "review denied" decisions that the
Appeals Council must issue every year.
The Appeals Council in this case did not say that the
new evidence was immaterial but rather that it was "consistent"
with the existing record and "thus" did not justify disturbing
the ALJ decision. We owe such assessments great deference, see
Dugan v. Ramsay, 727 F.2d 192, 195 (1st Cir. 1984), but they are
ordinarily not beyond review in extreme cases. A serious
mistake by the Appeals Council in denying review on such a
ground should itself be reviewable in court (again, only where
articulated). However, on the present facts, our conclusion is
that the Appeals Council slightly overstated the case in

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describing the new evidence as "consistent," but not in a way
that undermines its refusal to alter the ALJ's conclusion.
In the record compiled in the ALJ proceeding, two
different reports noted that Mills had alleged panic attacks;
but both made a diagnosis of less than major depression, and
neither of the reports deemed Mills subject to panic attacks
sufficiently severe to be listed as an anxiety disorder.
Garnett's report, by contrast, describes Mills as "still
complain[ing] of anxiety symptoms which indeed do have a strong
Agoraphobic quality to them in that she feels very uncomfortable
and <fearful' when she is around other people" as well as in
episodes at home. Garnett's own final assessment listed not
only dysthymia but also "panic disorder with Agoraphobia."
Still, panic disorders may range widely, from slight
to disabling, American Psychiatric Ass'n, Diagnostic &
Statistical Manual of Mental Disorders 397-98 (4th ed. 1994),
and Garnett made no assessment of severity. Indeed, one of the
reports before the ALJ (although not the one on which he relied)
had seemingly deemed the panic risk real but limited,
recommending only that Mills work in small group settings rather
than "with the public." So viewed, Garnett's assessment differs
from the earlier evidence only by degree, and it is hard to say

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4A listed condition means an automatic disability finding.
See 20 C.F.R. § 416.920(d); see also 20 C.F.R. § 404, Subpt. P,
App. 1, § 12.00. For anxiety conditions, this requires that
various sets of symptoms be proved and that those symptoms have
adverse consequences on daily activities. For example, an
individual would have a listed condition if they had recurrent
(at least once a week) severe panic attacks manifested by a
sudden onset of fear and such symptoms led to a "frequent
failure to complete tasks in a timely manner." Id.
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without more from Garnett that the difference is very
substantial.
What is worse for Mills is that nothing in Garnett's
assessment suggests that the panic level meets the fairly stiff
and precise criteria to be a "listed" condition4 or its
equivalent or that, although not in this category, it has the
practical effect of preventing Mills from engaging in her past
employment. And, by explicit regulation, it was Mills' burden
to produce evidence showing one or the other. 20 C.F.R. §
416.912; see also Santiago v. Sec'y of Health & Human Servs.,
944 F.2d 1, 5 (1st Cir. 1991) (per curiam).
Thus, in brushing aside the new evidence as not
"inconsistent," the Appeals Council may well have meant that
similar allegations and a more modest finding were before the
ALJ. At the very least, it surely meant that panic attacks
without more do not conflict with the finding of the ALJ that
Mills had not proved herself disabled. Indeed, absent some
indication of the severity of the panic attacks, Garnett's

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report as it stands would not undercut the ALJ decision even if-
-contrary to our holding--we simply treated the report as part
of the evidence before the ALJ, as many other circuits would do.
The Appeals Council must review a case only if the
ALJ's decision is "contrary to the weight of the evidence
currently of record." 20 C.F.R. § 416.1470(b). Yes, the
Garnett report was material and thus the Appeals Council was
required to consider it initially in deciding whether to grant
review. Id.. But no one could run an administrative regime
that handles more than 100,000 cases a year, see Sims, 120 S.
Ct. 2088-89 (Breyer, J., dissenting), without judging whether
new material evidence warranted a new hearing. Here, the
Appeals Council's action is entirely reasonable, even if its
language was not perfectly apt.
Less needs to be said about Mills' other two claims of
error. The more concrete stems from Mills' claim that she
suffered severe pain in her right knee compromising her ability
to walk or stand for long periods. The ALJ saw little objective
evidence of such a condition; the examining doctor found no
evidence of tenderness and said that Mills had good stability in
all directions. If this were all, it would be the end of the
matter. The regulations place much weight on objective evidence
and the ALJ may disregard subjective claims of pain if they are

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unsubstantiated and he does not credit them. 20 C.F.R. §
416.929; accord Rodriguez-Pagan v. Sec'y of Health & Human
Servs., 819 F.2d 1, 3 (1st Cir. 1987) (per curiam), cert.
denied, 484 U.S. 1012 (1988).
However, as the magistrate judge noted, the examining
doctor ended by saying that Mills "may" have difficulty standing
"for more than several hours at a time" or "walking more than a
block without stopping." The magistrate judge said that this
medical opinion could not be disregarded by the ALJ, a mere
layman, without medical evidence on the other side, and he said
that such limitations were inconsistent with the ALJ decision
that Mills could return to prior work as an assembly line worker
or laundry worker at a motel.
Just what weight should be given to a "may" diagnosis
is itself a difficult question whose answer may depend very much
on context. Nor is it clear how far the limitations, if they
existed, would prevent assembly line work or laundry work; it
might well depend on the nature of the particular jobs and on
having more information about the limitations. It is
unnecessary to pursue these issues, however, because read as a
whole the impressively nuanced report of Dr. Doane makes it
quite clear that he did not think that the knee pain disabled
Mills.

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On the contrary, after reporting the claim of back and
knee pain, Doane concluded, "I find she likely has only mild
disability regarding low back syndrome and right knee pain."
Then, after mentioning the possible limitations on standing and
walking already discussed, he said that there was "no impairment
in lifting, carrying, bending, [or] handling objects" and that
Mills' "deconditioned" physical state would improve "with a
gradual re-introduction to the work place." It is evident that
Doane did not regard Mills as disabled from working and expected
her to return to work.
In an extreme case one might accept the doctor's
medical findings but reject his conclusion as to its
significance for capacity to work. But with knee pain,
frequency and degree are likely to be controlling in relation to
low skill jobs (Mills was not a race car driver); and we are
left with the doctor's judgment that Mills' condition was "mild"
and a return to work expected. Thus even if we treated the
doctor's medical opinion as binding on the ALJ, it is hard to
see it as inconsistent with the ALJ's conclusion, whether taken
alone or in relation to her mental state.
Mills' last claim may on its face appear to have the
most merit. It turns out that Mills' earlier employment was
extremely brief--a month on the assembly line, a week in the

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motel laundry, and a week as a chambermaid. This is of concern
because the regulations provide that prior employment is to be
disregarded by the Commissioner where it is merely sporadic,
which Mills says is the proper way to view her situation. 20
C.F.R. § 416.965(a). Thus, according to Mills, the ALJ should
not have considered whether Mills could return to her prior
jobs, but should have instead required the Commissioner to show
that there were other jobs reasonably available to Mills that
she could perform. See 20 C.F.R. § 416.920(f); Ortiz v. Sec'y
of Health & Human Servs., 890 F.2d 520, 524 (1st Cir. 1989) (per
curiam).
The magistrate judge and the district judge rejected
this claim not on the merits but because they deemed it waived,
no mention of it having been made to the ALJ or the Appeals
Council. On appeal to this court, Mills says that she was given
insufficient opportunity to debate the waiver issue in the
district court--which is wrong--and that the waiver conclusion
is wrong on the merits: first, because it is inconsistent with
Sims and second, because it was the ALJ's independent obligation
to get the matter right.
Until the Commissioner amends his regulations, as Sims
suggested he could, failing to raise an issue at the Appeals
Council level probably does not debar a claim that the ALJ

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erred. But we have no intention of extending this rule, if it
is one (only four members of the Court endorsed it), to the
failure of an applicant to raise an issue at the ALJ level. Cf.
Sims, 120 S. Ct. at 2089 (Breyer, J., dissenting). The impact
of a no-waiver approach at the Appeals Council level is
relatively mild; at the ALJ level it could cause havoc, severely
undermining the administrative process.
This case is a perfect illustration. If the ALJ had
heard the objection now made and agreed with it, he could easily
have considered and expressly found that there were other jobs
in the economy available to Mills. Here, the ALJ stopped at
step four of the five-step process when he found that Mills
could return to her old jobs; but if the prior jobs had been
removed from the picture he would have proceeded to step five to
consider whether there were other jobs in the economy available
to her.
As it happens, the result would be no different in this
case even if we disregarded the waiver and assumed that Mills'
past employment should be disregarded. In some situations, the
conclusion that an impairment blocks the applicant from
returning to a prior job raises a serious issue whether there is
any other job available in the economy for that person. This
may easily be so where the prior job involved special skills or

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capabilities and the impairment flatly precludes a return to
that job while creating doubts that anything else will be
available.
But in this case it made no difference whether Mills
had a prior job on an assembly line or as a motel laundress. So
long as she had the capability to perform these jobs, which is
what the ALJ found, such jobs (or substantially similar ones)
clearly exist in the economy. Thus, Mills would not have
benefitted had the ALJ ignored her past work experience in favor
of considering her ability to obtain alternative employment.
This is a distressing case. Mills obviously suffers
from some impairments, physical and mental; has had a hard life;
has few resources to meet the demands of the work-a-day world;
and may not be too far from the line, especially vague where
mental conditions are at the fore, that separates multiple
handicaps from full disability. While Mills appears to be
outside the time period for reopening based on new evidence,
there is nothing that prevents a new application directed to the
future, assuming she can muster the medical support to show the
severity of her conditions.
Affirmed.

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