ORDER GRANTING IN PART RESPONDENT'S MOTION FOR SUMMARY JUDGMENT AND REMANDING IN PART

WILLIAM HASKELL ALSUP, District Judge

INTRODUCTION

In this appeal from the denial of disability benefits under Titles II and XVI of the Social Security Act, 42 U.S.C. § 400 et seq., this order GRANTS in part respondent's motion for summary judgment and REMANDS this case in part for further proceedings by the Commissioner of Social Security.

STATEMENT

Petitioner Patricia Shoate was born on October 22, 1939 (AR 96). She completed two years of college (AR 35). She worked as a licensed vocational nurse for approximately 13 years from 1985 to 1998 (AR 36).

On October 2, 1998, Shoate was examined for joint pain. Her pain was attributed to arthritis or patello-femoral syndrome (AR 138). Shoate's initial treatment plan consisted of physical therapy, weight loss, x-rays, and pain medication (AR 138). The initial x-rays of Shoate's right and left knees and right wrist were interpreted as normal, "with no changes of arthritis identified" (AR 153).

Shoate stopped working on October 2, 1998, and filed an application for Social Security disability benefits on November 18, 1998. The application was denied on February 24, 1999 (AR 59), and then denied again on reconsideration on June 15, 1999 (AR 66). Shoate filed a timely request for hearing by an administrative law judge (ALJ) on August 10, 1999 (AR 70). The ALJ convened one hearing. Shoate and a medical expert testified at that hearing. The ALJ stopped the hearing during the medical expert's testimony and ordered additional orthopedic evidence to be obtained. Shoate filed an application for Supplemental Security Income disability benefits on January 12, 2000 and her two claims were consolidated.

On December 7, 2000, the ALJ issued his decision. He determined that Shoate was not entitled to benefits. The ALJ concluded that petitioner had not shown that she had a medically-determinable "severe" impairment, as required under Step Two of the Social Security disability analysis (AR 31).

The record contains evidence of Shoate's medical care from 1998 to 2000. Shoate complained of wrist, finger, knee, hip, and back pain. She had physical therapy and acupuncture treatment and was examined by various doctors. Shoate's medical records show diagnoses of osteoarthrosis, obesity, and depression (AR 56, 159, 200). Four sets of x-rays were taken over this period. Shoate's right knee was x-rayed twice. The first results showed "very minimal degenerative changes . . . in the medial compartment" (AR 158), the second results "appear[ed] negative" (AR 170). Shoate's left knee had "minimal tri-compartmental degenerative changes" that were more pronounced than those initially observed in her right knee (AR 158). Shoate's right wrist was "normal" with "no evidence of arthritis" (AR 175) and her right hip contained "right buttock calcifications [that] are presumed secondary to prior injections with a minimum of osteoarthritic spurring suspected from the right acetabulum" (AR 170). An x-ray of Shoate's lumbosacral spine showed "chronic degenerative disc disease at L5-S1" (AR 183). No x-rays were taken of her fingers.

Five physicians conducted evaluations of Shoate's condition. In January 1999, Dr. Robert Satchler, an orthopaedic surgeon, performed a consultative evaluation of Shoate. Dr. Satchler conducted a physical examination of Shoate but did not review her existing x-rays. He found Shoate had full right hip motion "although there is some pain at the extremes of flexion" (AR 156). There were no deformities in her wrists or fingers (ibid.). Dr. Satchler noted Shoate's subjective complaints of pain but found no objective physical findings in support. He recommended further x-rays to rule out arthritis.

Dr. Lyle Yates reviewed Shoate's medical records in February 1999 and completed an SSA Disability Determination and Transmittal form. Based on the x-rays and records of "several essentially normal physical exams," he determined that "the predominance of the evidence support a nonsevere physical condition" (AR 159). Specifically, Dr. Yates diagnosed Shoate with mild arthritis and obesity (ibid.).

Dr. Thomas Schmitz was retained by the SSA as a medical expert and he reviewed a portion of Shoate's medical records and testified at Shoate's February 17, 2000 Social Security Administration hearing. Dr. Schmitz offered a preliminary diagnosis of treatable hypertension, mild hypercholesterolemia, and minimal arthritis in both knees (AR 49). Dr. Schmitz stated that more evidence was needed to indicate an objective foundation for Shoate's complaints. It was at this point that the ALJ stopped the hearing until additional medical evidence could be gathered (AR 54).

In April 2000, Dr. Charles Miller was retained by the SSA. Dr. Miller conducted a physical examination of Shoate and reviewed her available medical records. He concluded that Shoate had "no objective evidence of any orthopedic abnormality" and that she had "no restrictions or limitations on functional capacity" (AR 181-82). Dr. Miller's conclusions directly contradicted those later reported by Dr. Geneve Allison, Shoate's treating physician. Dr. Allison completed a "Residual Functional Capacity Questionnaire" (RFC) on May 23, 2000, in which she diagnosed Shoate with degenerative joint disease and depression. In a memo dated October 24, 2000, Dr. Allison clarified that the RFC was based on Shoate's description of her own symptoms. Dr. Allison further stated that the blood tests and x-rays of Shoate's hands, knees, and hips that Dr. Allison obtained after May 2000 were "all negative for arthritis," though one x-ray film was "suggestive of possible mild arthritis" (AR 223).

Shoate requested an Appeals Council review of the ALJ's decision and submitted additional evidence. On March 13, 2002, the Appeals Council declined to review the decision of the ALJ, which then became the final decision of the Commissioner for purposes of judicial review. The parties filed cross-motions for summary judgment. The matter was deemed submitted on the papers.

ANALYSIS

When a district court reviews the denial of Social Security benefits, "[t]he [Commissioner's] decision to deny benefits will be disturbed only if it is not supported by substantial evidence or is based on legal error." Andrews v. Shalala, 53 F.3d 1035, 1039 (9th Cir. 1995). Claims of disability are evaluated under a five-step sequential procedure. Osenbrock v. Apfel, 240 F.3d 1157, 1162 (9th Cir. 2001). Step One of the procedure inquires whether the claimant is engaged in "substantial gainful activity." The ALJ found that Shoate had not performed work at a substantial gainful activity level since October 2, 1998 (AR 29). That finding is undisturbed by this order. Step Two is at issue in this case. In Step Two, the ALJ must determine whether the claimant suffers from a severe impairment or combination of impairments which has lasted or is expected to last twelve months or end in death. An impairment or combination of impairments is "severe" if it significantly limits the physical or mental ability to do basic work activities. 20 C.F.R. § 404.1520(c), 404.1521 (2002).

Petitioner makes several challenges to the ALJ's finding that Shoate did not provide evidence of a "severe" impairment. Shoate claims that the ALJ: (i) improperly failed to evaluate petitioner's subjective complaints; (ii) improperly failed to consider Shoate's depression or fully develop the record on that impairment; and (iii) improperly failed to allow petitioner cross-examination of a medical expert.

1. FAILURE TO EVALUATE PETITIONER'S SUBJECTIVE COMPLAINTS.

Shoate first argues that the ALJ improperly discounted Shoate's subjective complaints. In deciding whether to accept a claimant's subjective complaints, the ALJ must assess whether: (1) the claimant produced objective medical evidence of impairments and (2) such impairments could reasonably be expected to produce some degree of symptom. Smolen v. Chater, 80 F.3d 1273, 1281-82 (9th Cir. 1996) (emphasis in original). The claimant need not produce objective medical evidence of the pain itself, or the severity of it. Id. at 1282. If the claimant produces objective medical evidence and there is no evidence of malingering, the ALJ can reject claimant's testimony about the severity of her symptoms only by offering specific, clear, and convincing reasons for doing so. Id. at 1281. The ALJ may not reject subjective symptom testimony simply because there is no showing that the impairment can reasonably produce the degree of symptom alleged by the claimant. Ibid.

There is no evidence on the record that Shoate was malingering. The ALJ admitted, "I do not doubt that the claimant has pain" but rejected Shoate's claim because her subjective complaints were "not supported by the medical evidence" (AR 30). A review of the record as a whole revealed no objective evidence supporting Shoate's claims of wrist and finger pain (AR 175). The record does contain objective medical evidence supporting Shoate's underlying impairments of knee (AR 158), hip (AR 170), and back pain (AR 183). The ALJ failed to recognize this evidence of Shoate's knee, hip, and back pain in his decision.

In evaluating the objective medical evidence, the ALJ discounted the diagnoses offered by Dr. Schmidt at the hearing on February 17, 2000, on the ground that his examination was "unsupported by any physical findings" (AR 30). Instead, the ALJ cited the diagnosis made by Dr. Robert Satchler on January 23, 1999, which was "[r]ight hip and bilateral knee pain and wrist pain. Rule out arthritis" (AR 157). Dr. Satchler did not review any of Shoate's records in making his diagnosis and noted "[x]-rays which have been taken should be obtained, and if those are not available, additional films should be taken to rule out arthritis" (ibid.). Most of the x-ray evidence contained in the record was obtained after Dr. Satchler's report. The ALJ recognized that the tests conducted on Shoate's hip and back indicated some abnormality but qualified the findings as "indicat[ing] only minimal severity" (AR 30). He cited Dr. Geneve Allison's statement that all blood tests and x-rays of Shoate's hands, knees, and hips were negative for arthritis (AR 30), but failed to include Dr. Allison's added recognition that an x-ray taken on October 20, 2000, was suggestive of possible arthritis (AR 223). The x-ray referenced by Dr. Allison was interpreted by a radiology expert as showing "chronic degenerative disc disease at L5-S1" (AR 183).

The ALJ also did not consider evidence of Shoate's obesity in his decision. Under Step Two of the disability analysis, the ALJ must determine whether claimant suffers from a severe impairment or combination of impairments. 20 C.F.R. § 404.1520(c) (emphasis added). The ALJ must consider the combined effect of all of the claimant's impairments on her ability to function, without regard to whether each alone was sufficiently severe. Smolen, 80 F.3d at 1290. The Social Security Administration delisted obesity from the Listing of Impairments in October 1999 but added language to the regulation that instructed ALJs of the continued role of obesity in disability evaluations. 20 C.F.R. § 404, Subpart P, Appendix 1. The SSA passed Social Security Ruling 00-3p to supplement that language. The SSA recognized "that the combined effects of obesity with other impairments can 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. Shoate was diagnosed as obese in three separate medical reports (AR 56, 58, 159). Her medical records contained a diet plan as part of her treatment regime (AR 138). Shoate qualified as "obese" under the criteria established by the National Institutes of Health in its "Clinical Guidelines on the Identification, Evaluation, and Treatment of Overweight and Obesity in Adults." NIH Pub. No. 98-4083, Sept. 1998. Even if Shoate's obesity did not constitute a "severe impairment" by itself, the objective medical evidence of obesity in combination with the evidence of arthritis in her weight-bearing joints could "reasonably be expected to . . . produce some degree of symptom." Smolen, 80 F.3d at 1282 (emphasis omitted). In short, there was sufficient objective medical evidence under the Smolen standard to require the ALJ to consider Shoate's subjective testimony in relation to her knee, hip, and back pain.

Because the record contains no objective evidence supporting Shoate's claims of wrist and finger pain, the ALJ's refusal to consider Shoate's subjective evidence related to those claims did not constitute legal error. This order holds, however, that Shoate met her burden of producing sufficient objective medical evidence related to her knee, hip, and back pain claims to require the ALJ to consider her subjective testimony in determining whether those impairments are severe, as explained above. This order does not decide the question of whether Shoate is entitled to disability benefits, nor whether Shoate's combination of impairments (including obesity) is, in fact, severe. Because this order finds remand necessary on the ground that the ALJ committed legal error in failing to consider Shoate's subjective testimony, it does not reach Shoate's additional contentions.

CONCLUSION

The respondent's motion for summary judgment in relation to Shoate's wrist and finger claims is GRANTED. The respondent's motion for summary judgment in relation to petitioner's claims of knee, hip, and back pain are DENIED. Petitioner's knee, hip, and back claims are REMANDED with directions to the ALJ to complete Steps Two through Five of the disability analysis with consideration of Shoate's subjective evidence and obesity.

IT IS SO ORDERED.