MEMORANDUM OPINION AND ORDER

I. INTRODUCTION AND SUMMARY

On February 23, 2010, plaintiff Patricia Packer ("Plaintiff") filed a complaint against defendant Michael J. Astrue ("Defendant"), the Commissioner of the Social Security Administration, seeking review of a denial of disability insurance benefits ("DIB") and supplemental security income benefits ("SSI"). [Docket No. 3.]

On November 17, 2010, Defendant filed his answer, along with a certified copy of the administrative record. [Docket Nos. 22, 23, 24.]

In sum, having carefully studied, inter alia, the parties' joint stipulation and the administrative record, the Court concludes that, as detailed below, there is substantial evidence in the record, taken as a whole, to support the decision of the Administrative Law Judge ("ALJ"). Thus, the Court affirms the Commissioner's decision denying benefits.

II. PERTINENT FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff, who was 51 years old on the date of her most recent administrative hearing, has completed high school and paramedics training. ( See Administrative Record ("AR") at 100, 399, 675.)

On December 3, 2004, Plaintiff filed for DIB and SSI, alleging that she has been disabled since October 23, 2004 due to chest pain, headaches, depression, bipolar disorder, anxiety, asthma, arthritis, carpal tunnel, muscle spasms, acid reflux and a hernia. ( See AR at 12, 53, 65, 94-95, 350.)

On October 23, 2009, Plaintiff, represented by counsel, appeared and testified at a hearing before an ALJ. ( See AR at 675-705.) The ALJ also heard testimony from Troy Scott, a vocational expert ("VE"). ( Id.)

On December 11, 2009, the ALJ issued a partially favorable decision, finding Plaintiff disabled as of June 1, 2009. (AR at 12-23.) Applying the well-known five-step sequential evaluation process, the ALJ found, at step one, that Plaintiff has not engaged in substantial gainful activity since her alleged onset date. ( Id. at 14.)

At step two, the ALJ found that Plaintiff suffers from severe impairments consisting of "morbid obesity; disorder of the lumbar spine; obstructive sleep apnea; asthma; inguinal hernia repair, status post surgical repair, wound infection, and cellulitis; mood disorder, not otherwise specified; and anxiety disorder, not otherwise specified." (AR at 14 (emphasis omitted).)

At step three, the ALJ determined that the evidence did not demonstrate that Plaintiff's impairments, either individually or in combination, met or medically equaled the severity of any listing set forth in the Social Security regulations. (AR at 15.)

The ALJ then assessed Plaintiff's residual functional capacity ("RFC") and determined that, prior to June 1, 2009, she could perform light work. (AR at 15.) Specifically, the ALJ found that Plaintiff could

lift and/or carry 20 pounds occasionally and 10 pounds frequently; stand and/or walk 6 hours in an 8-hour workday with normal breaks; sit 6 hours in an 8-hour workday with normal breaks; occasional climbing ramps or stairs; no climbing ladders, ropes or scaffold; and frequent postural activities including balancing, bending, stooping, crouching, and kneeling. Mentally, [Plaintiff] could not perform high-quota, production-rate pace (ie, rapid assembly line work); no safety operations or responsibility for the safety of others; no jobs requiring hypervigilence; and no work around dangerous machinery or unprotected heights.

( Id. (emphasis omitted).)

The ALJ further found that "[b]eginning on June 1, 2009, [Plaintiff's RFC] had declined to the point that she could stand/walk less than 2 hours and sit less than 6 hours per day. Because she would not be able to work an 8-hour workday, she could perform less than sedentary work." (AR at 21 (emphasis omitted).)

The ALJ found, at step four, that Plaintiff lacks the ability to perform her past relevant work. (AR at 21.)

At step five, based on Plaintiff's RFC and the VE's testimony, the ALJ found that, prior to June 1, 2009, "there were jobs that existed in significant numbers in the national economy that [Plaintiff] could have performed," such as cafeteria worker, food preparation worker, and maid. (AR at 21-22 (emphasis omitted).) The ALJ further found that "[b]eginning on June 1, 2009, . . . there are no jobs that exist in significant numbers in the national economy that [Plaintiff] can perform." ( Id.)

Thus, the ALJ concluded that, prior to June 1, 2009, Plaintiff was not suffering from a disability as defined by the Act. (AR at 13, 23.)

Plaintiff did not file a request for review by the Appeals Council of the ALJ's partially-favorable decision. (Joint Stip. at 3.) The ALJ's decision stands as the final decision of the Commissioner.

III. STANDARD OF REVIEW

This Court is empowered to review decisions by the Commissioner to deny benefits. 42 U.S.C. § 405(g). The findings and decision of the Social Security Administration must be upheld if they are free of legal error and supported by substantial evidence. Mayes v. Massanari, 276 F.3d 453, 458-59 (9th Cir. 2001, as amended Dec. 21, 2001). If the court, however, determines that the ALJ's findings are based on legal error or are not supported by substantial evidence in the record, the court may reject the findings and set aside the decision to deny benefits. Aukland v. Massanari, 257 F.3d 1033, 1035 (9th Cir. 2001); Tonapetyan v. Halter, 242 F.3d 1144, 1147 (9th Cir. 2001).

"Substantial evidence is more than a mere scintilla, but less than a preponderance." Aukland, 257 F.3d at 1035. Substantial evidence is such "relevant evidence which a reasonable person might accept as adequate to support a conclusion." Reddick v. Chater, 157 F.3d 715, 720 (9th Cir. 1998); Mayes, 276 F.3d at 459. To determine whether substantial evidence supports the ALJ's finding, the reviewing court must review the administrative record as a whole, "weighing both the evidence that supports and the evidence that detracts from the ALJ's conclusion." Mayes, 276 F.3d at 459. The ALJ's decision "`cannot be affirmed simply by isolating a specific quantum of supporting evidence.'" Aukland, 257 F.3d at 1035 (quoting Sousa v. Callahan, 143 F.3d 1240, 1243 (9th Cir. 1998)). If the evidence can reasonably support either affirming or reversing the ALJ's decision, the reviewing court "`may not substitute its judgment for that of the ALJ.'" Id. (quoting Matney ex rel. Matney v. Sullivan, 981 F.2d 1016, 1018 (9th Cir. 1992)).

IV. ISSUES PRESENTED

Two disputed issues are presented for decision here:

1. whether the ALJ properly discounted the lay witness testimony, ( see Joint Stip. at 12-16, 18); and

2. whether the ALJ properly considered Plaintiff's obesity. ( Id. at 3-8, 12.)

The Court addresses each argument in turn.

V. DISCUSSION AND ANALYSIS

A. Lay Witness Statements

Plaintiff contends that the ALJ failed to properly consider the lay witness statements of Runell Packer ("Ms. Packer"), Plaintiff's sister. (Joint Stip. at 12.) Plaintiff maintains that "[a]lthough the ALJ mentions that plaintiff's sister completed the [Adult Function Report], reiterated some of her statements she made regarding plaintiff's condition, and found this evidence not fully credible, he specifically failed to indicate which parts of statements that he found not fully credible" and "failed to provide germane reasons for rejecting plaintiff's sister's significant and credible statements." ( Id. at 15.)

1. The ALJ Must Provide Reasons Germane to Lay Witness to Discount Such Statements

"[L]ay testimony as to a claimant's symptoms or how an impairment affects ability to work is competent evidence and therefore cannot be disregarded without comment." Stout v. Commissioner, 454 F.3d 1050, 1053 (9th Cir. 2006) (internal quotation marks, ellipses and citation omitted) (italics in original); see Smolen v. Chater, 80 F.3d 1273, 1288 (9th Cir. 1996); see also 20 C.F.R. §§ 404.1513(d)(4) (explaining that Commissioner will consider evidence from "non-medical sources[,]" including "spouses, parents and other caregivers, siblings, other relatives, friends, neighbors, and clergy[,]" in determining how a claimant's impairments affect his or her ability to work) 416.913(d)(4) (same).

The ALJ may only discount the testimony of lay witnesses if he provides specific "reasons that are germane to each witness." Dodrill v. Shalala, 12 F.3d 915, 919 (9th Cir. 1993); accord Lewis v. Apfel, 236 F.3d 503, 511 (9th Cir. 2001) ("Lay testimony as to a claimant's symptoms is competent evidence that an ALJ must take into account, unless he or she expressly determines to disregard such testimony and gives reasons germane to each witness for doing so.").

Finally, "where the ALJ's error lies in a failure to properly discuss competent lay testimony favorable to the claimant, a reviewing court cannot consider the error harmless unless it can confidently conclude that no reasonable ALJ, when fully crediting the testimony, could have reached a different disability determination." Stout, 454 F.3d at 1056.

2. The ALJ Did Not Err in Rejecting the Third Party Report

The Court finds that the ALJ correctly discounted Ms. Packer's statements. The Court's decision is based on three reasons.

First, the ALJ rejected Ms. Packer's statements because Plaintiff's daily activities reported by Ms. Packer include "driv[ing] a car and go[ing] out daily[,] . . . shopping in stores and on the phone." (AR at 18-19.) The ALJ concluded that Ms. Packer's "responses to [the Third Party Function Report] are exaggerated and inconsistent with the admitted activities." ( Id. at 19; see also id. at 475-82 (Third Party Function Report completed by Ms. Packer and dated February 14, 2008).) Inconsistencies in a lay witness's statements regarding the claimant's level of functioning are a germane reason for giving the lay witness testimony limited weight. See Bayliss v. Barnhart, 427 F.3d 1211, 1218 (9th Cir. 2005); Ditto v. Comm'r of Soc. Sec. Admin., 401 Fed.Appx. 192, 193-94 ("inconsistencies in [plaintiff's] husband's statements regarding his wife's level of functioning" is germane reason).

Second, the ALJ properly rejected Ms. Packer's statements based on the fact that they were inconsistent with Plaintiff's treatment, work activity, and the objective medical evidence of record. (AR at 19 ("evidence is inconsistent with . . . other evidence in the records").) "One [germane] reason for which an ALJ may discount lay witness testimony is that it conflicts with medical evidence." Lewis, 236 F.3d at 511. The ALJ's finding is supported by the record. ( See, e.g., AR at 18 (ALJ finding Plaintiff inconsistent with treatment and medication compliance), 679 80 (Plaintiff's testimony that she was working part-time in a school cafeteria in 2009).)

Third, the ALJ rejected Ms. Packer's third-party report because "the evidence is colored by kinship [and] the person's expenses may be reduced, depending on the outcome of the hearing." (AR at 19.) If supported by substantial evidence, bias and financial motive may serve as legitimate reasons to discredit the testimony of a third party. See, e.g., Greger v. Barnhart, 464 F.3d 968, 972 (9th Cir. 2006); Buckner v. Apfel, 213 F.3d 1006, 1013 (8th Cir. 2000). Here, Plaintiff lives in a house with Ms. Packer and their cousin. ( See AR at 560.) Ms. Packer and Plaintiff both stated that Ms. Packer assists Plaintiff with various daily tasks. ( See id. at 475 (Ms. Packer's statement that she takes Plaintiff to the doctor), 477, 485, 487.) Accordingly, substantial evidence supports the ALJ's discounting of Ms. Packer's testimony based on bias and financial motive.

Thus, the Court finds that the ALJ provided sufficient reasons germane to Ms. Packer for giving her statements less weight.

B. Evaluation of Plaintiff's Obesity

Plaintiff argues that "the ALJ held that since the alleged onset date, plaintiff's morbid obesity was a severe impairment." (Joint Stip. at 4-5.) Plaintiff contends that "Plaintiff's obesity is compounded by chronic back pain, leg pains, thigh pain, knee pain, asthma, and obstructive sleep apnea. . . . [Nevertheless,] the ALJ's decision is devoid of a factual analysis assessing the impact of Plaintiff's obesity at the various stages of the disability determination process." ( Id. at 8.)

1. The ALJ Must Determine the Effects of Obesity at Various Points of the Sequential Evaluation Based on Evidence in the Record

Although the Commissioner delisted obesity from the Listing of Impairments in October 1999, he issued a Social Security Ruling ("SSR") in 2002 that instructed ALJs of the continued role of obesity in disability evaluations. See SSR 02-01p, 2000 WL 628049, at *1. SSR 02-01p recognizes "that the combined effects of obesity with other impairments may be greater than the effects of each of the impairments considered separately[]" and that adjudicators must consider obesity under all steps of the disability analysis, "including when assessing an individual's residual functional capacity." Id.; see also Celaya v. Halter, 332 F.3d 1177, 1182-83 (9th Cir. 2003) (ALJ has responsibility to consider "interactive effect" of obesity on claimant's conditions; responsibility triggered when obesity is implicitly raised by claimant's symptoms, a review of the record demonstrates claimant's obesity is close to listing criterion, and claimant is pro se).

Because there is no listing for obesity, "an individual with obesity `meets' the requirements of a listing if he or she has another impairment that, by itself, meets the requirements of a listing." SSR 02-01p, 2000 WL 628049, at *5. Equivalence is also found "if an individual has multiple impairments, including obesity, no one of which meets or equals the requirements of a listing, but the combination of impairments is equivalent in severity to a listed impairment." Id.

However, the claimant "bears the burden of proving that she has an impairment that meets or equals the criteria of [a listed] impairment[.]" Burch v. Barnhart, 400 F.3d 676, 683 (9th Cir. 2005) (internal quotation marks, citation, and ellipses omitted). Further, an "ALJ will not make assumptions about the severity or functional effects of obesity combined with other impairments. Obesity in combination with another impairment may or may not increase the severity or functional limitations of the other impairment. The ALJ [must] evaluate each case based on the information in the case record." Id. at 682 (citing SSR 02-01p) (brackets and emphasis omitted).

2. The ALJ Properly Evaluated Plaintiff's Obesity

The Court is persuaded that the ALJ did not commit reversible error in his evaluation of Plaintiff's obesity. Three reasons guide this determination.

First, although the ALJ did not provide a discussion regarding the effects of Plaintiff's obesity in combination with her other impairments in subsequent steps of the five-step sequential evaluation process, the ALJ did find that Plaintiff's "morbid obesity" constituted a severe impairment at step two. Thus, it is not clear that the ALJ failed to consider Plaintiff's obesity in making his step three and step four findings. See Hamilton v. Astrue, 2010 WL 3748744, at *8-11 (C.D. Cal. 2010) (finding no reversible error where ALJ found plaintiff's obesity to be severe impairment at step two but did not otherwise discuss the combined effect of obesity with her other impairments in subsequent steps).

However, assuming arguendo the ALJ failed to do so, Plaintiff cites to no evidence that any physician or other medical provider indicated that her obesity exacerbated her impairments or resulted in any functional limitation, as is her burden. ( See generally Joint Stip. at 3-9, 12.) A review of the record indicates that, apart from a single passing reference to obesity possibly causing Plaintiff's back pain, ( see AR at 143), Plaintiff's physicians, treating or otherwise, did not opine that Plaintiff's obesity contributes to her limitations. ( See generally id. at 138-282, 497-674); see Morphew v. Astrue, 2009 WL 2590193, at *15 (E.D. Cal. Aug. 20, 2009) (apart from "single passing reference to obesity possibly causing [plaintiff's] back pain," record did not indicate that plaintiff's obesity exacerbated her other impairments).

Accordingly, given Plaintiff's failure to present evidence in an effort to establish equivalence or demonstrate that her obesity was the cause of her limitations, the ALJ was not required to compare her impairments to any listing in an equivalency determination or conduct a multiple impairment analysis including obesity in his RFC determination. See Burch, 400 F.3d at 684 ("Burch has not set forth, and there is no evidence in the record, of any functional limitations as a result of her obesity that the ALJ failed to consider."); Lewis, 236 F.3d at 514 (ALJ not required to discuss combined effects of a claimant's impairments or compare them to any listing in an equivalency determination unless the claimant presents evidence in an effort to establish equivalence).

Second, while Plaintiff did provide testimony that her obesity contributes to her back, leg, and thigh pain and difficulty standing, ( see AR at 689), the ALJ properly discounted Plaintiff's credibility, which Plaintiff does not dispute here. In his credibility determination, the ALJ noted that Plaintiff worked part-time in 2007 "performing in-home support services" and in 2008 and 2009 at an "unspecified after-school program" and at a "school cafeteria job." ( Id. at 17.) The ALJ also found that Plaintiff was "non-compliant with regard to her medication" and she exaggerated her symptoms. ( Id. at 18.) Accordingly, the ALJ properly relied on the medical evidence as a whole and found that prior to June 1, 2009, Plaintiff retained the RFC to perform light work. ( Id. at 15); see Collins v. Astrue, 2009 WL 3112402, at *19 (E.D. Cal. Sept. 23, 2009) (although plaintiff's physicians noted she was morbidly obese, ALJ properly found plaintiff retained RFC to perform work, including stand and walk up to six hours in an eight-hour workday, based on record as a whole).

Third, although Plaintiff cites to Celaya, 332 F.3d at 1182, in support of her proposition that the "ALJ erred by not considering the impact of her obesity on her other impairments," (Joint Stip. at 4, 7), unlike the claimant in Celaya, Plaintiff was represented by counsel. See Celaya, 332 F.3d at 1182; Burch, 400 F.3d at 682. Yet, Plaintiff has failed to point to any medical evidence of her obesity causing functional limitations.

The Court concludes that the ALJ did not commit reversible error in connection with his consideration of Plaintiff's obesity.

Based on the foregoing, IT IS ORDERED THAT judgment shall be entered AFFIRMING the decision of the Commissioner denying benefits.