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December 15, 1992

LOUIS W. SULLIVAN, M.D., Secretary of Health and Human Services, Defendant.

The opinion of the court was delivered by: CHARLES R. NORGLE



 This matter comes before the court on review of the decision of defendant Louis W. Sullivan, Secretary of Health and Human Services ("Secretary"), denying plaintiff Jose Olivares's ("Olivares") application for Social Security benefits. For the following reasons, the court reverses the decision of the Secretary and remands the case for further consideration.


 Olivares brings this action pursuant to 42 U.S.C. § 405(g) for judicial review of the Secretary's final decision denying Olivares's application for Supplemental Security Income ("SSI") under the Social Security Act, 42 U.S.C. § 1381 et. seq. An administrative law judge ("ALJ") denied Olivares's September 17, 1990 application for SSI by decision dated November 22, 1991. The ALJ's decision became the final decision of the Secretary when the Appeals Council of the Social Security Administration declined to review the decision on March 25, 1992. The Secretary approved Olivares's second application for SSI disability benefits on August 13, 1992. Consequently, the present claim covers the period of September 1990, the date of his first application, to June 1992, the date of his second application.

 Olivares, born in Mexico, moved to the United States and worked as a farm and factory laborer. He held his last job with the Atlantic Container Company, but ceased working for that company on November 7, 1988 due to a job-related back injury. His duties with the Atlantic Container Company included stacking corrugated boxes weighing twenty to twenty-five pounds. Olivares subsequently underwent treatment aid hospitalization for his injuries. While in the hospital, he was placed in pelvic traction. Upon discharge from the hospital, Olivares's condition was diagnosed as "acute lumbosacral strain and left sciatica," Administrative Record, at 186 (hereinafter, "R. at "), and later diagnosis revealed "myofascial pain syndrome of lower back involving quadratus lumboratum." R. at 165. The initial prognosis was "undetermined" and later was "guarded." R. at 221.

 Olivares applied for SSI and a hearing was held before an ALJ. Olivares provided the sole testimony at the hearing. All other evidence in the administrative record consists of documentation from the various doctors who treated Olivares, examined him, or were consulted. Olivares testified, and there is evidence to support him, that he could not bend without experiencing pain and could not sit, stand, or walk for long periods of time without experiencing back pain. During his treatment it was recommended that he not return to work.

 The ALJ found Olivares was not disabled because he possessed the residual functional capacity to engage in medium work, 20 C.F.R. §§ 416.945, 416.967(c) (1992), and thus could perform his past relevant employment. Specifically, the ALJ found that Olivares could perform exertional functions except Olivares could not lift or carry more than fifty pounds at a time, or frequently lift or carry more than twenty-five pounds at a time; the ALJ found no non-exertional limitations. Olivares claims the ALJ's findings that Olivares can occasionally lift or carry fifty pounds, can frequently lift or carry twenty-five pounds, and can perform his past relevant employment are not supported by substantial evidence. Olivares thus filed the present motion for summary reversal of the Secretary's decision.


 The Secretary's decision will be reversed only if it is not supported by substantial evidence or if it is based on an erroneous interpretation of the law. Scivally v. Sullivan, 966 F.2d 1070, 1075 (7th Cir. 1992). Substantial evidence means relevant evidence which a reasonable person might accept as adequate to support the result. Id. The reviewing court is not authorized to make new factual determinations, reweigh evidence, or substitute its judgment for that of the Secretary. Id. The court considers the entire record, including evidence that undermines as well as supports the Secretary's findings, Schroeter v. Sullivan, 977 F.2d 391, slip op. at 5-6 (7th Cir. 1992), but does not resolve any conflicts in medical evidence. Hayes v. Railroad Retirement Bd., 966 F.2d 298, 302 (7th Cir. 1992).

 As an initial matter, the court finds that the ALJ properly addressed the five-step inquiry outlined in the social security regulations. See 20 C.F.R. § 416.920(a)-(f) (1992); Schroeter, slip op. at 3. Nevertheless, the court finds that the ALJ's decision is not supported by substantial evidence for two reasons. First, the record shows that the ALJ did not state his reasons for rejecting contradictory medical evidence and thus appears not to have considered it. See Schroeter, slip op. at 7-9. The ALJ did not merely resolve conflicts in medical evidence against Olivares, but actually concluded erroneously that no contradictory evidence of disability existed. Second, the ALJ erroneously made an independent evaluation of Olivares's condition based on test results and his observation of Olivares. Though credibility determinations by the ALJ are proper, where there is objective medical evidence supporting a claimant's complaint of pain, the ALJ must provide a medical reason why the claimant's testimony or disposition is incompatible with his claims. See Hayes, 966 F.2d at 303.

 First, despite the medical data in the record, the ALJ avouched that he found no objective findings incompatible with his assessment that Olivares retains the residual exertional functional capacity for the full range of medium work. It is true that substantial evidence does not mean the court compares the volume of evidence on which the ALJ relied to find no disability against the evidence tending to show disability, and the ALJ need not discuss every bit of evidence contained in the record. See, e.g., Stephens v. Heckler, 766 F.2d 284 (7th Cir. 1985) (court reviews only quality of the evidence to be assured ALJ considered the important evidence). But the ALJ must, at a minimum, articulate reasons for rejecting evidence of disability. Scivally, 966 F.2d at 1076. The record demonstrates that there existed much reliable evidence of disability which the ALJ did not articulate a reason for rejecting; instead, the ALJ chose (without stating a reason) to favor the evidence from the one doctor adverse to Olivares's disability claim -- Dr. Milgram -- over other treating physicians who observed Olivares over a longer period of time than Dr. Milgram. See Stephens, 766 F.2d at 288 [Seventh Circuit insists that ALJ acknowledge potentially dispositive evidence).

 For instance, the ALJ placed primary (and nearly exclusive) reliance on Dr. Milgram, a doctor in the hire of Olivares's employer's workmen's compensation carrier at a time when Olivares's workmen's compensation claim was pending. Dr. Milgram examined Olivares three times between February 1989 and October 1990. The ALJ accepted Dr. Milgram's report stating that Olivares could return to work contrary to Olivares's other doctors' recommendation that Olivares not work. See R. at 118, 122, 187-93, 195.

 On the other hand, the ALJ failed to acknowledge Dr. Lara, Olivares's initial treating physician. Dr. Lara began treating Olivares in November 1988 and continued until September 1989. Dr. Lara's physical examination and x-ray findings indicated paralumbar muscle spasms "with marked limitation of lumbar sacral spine . . . ." R. at 185. Dr. Lara further noted the existence of "some contrast material which has escaped into the subdural and epidural ...

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