The opinion of the court was delivered by: Kendall J. Newman United States Magistrate Judge
Plaintiff seeks judicial review of a final decision of the Commissioner of Social Security ("Commissioner") denying plaintiff's application for Disability Insurance Benefits ("DIB") and Child Insurance Benefits under Title II of the Social Security Act ("Act"), and Supplemental Security Income ("SSI") under Title XVI of the Act.*fn1 (Pl.'s Mot. for Summ. J., Dkt. No. 23.) Plaintiff contends that the Administrative Law Judge's ("ALJ") and Appeals Council's decisions are not supported by substantial evidence or are based on legal error, and that the ALJ and/or the Appeals Council specifically erred by: (1) failing to accurately characterize, or omitting discussion of, evidence in the record and opinions offered by physicians and psychologists in this case, including Deborah Von Bolschwing, Ph. D. ("Dr. Von Bolschwing"), Madelaine Aquino, M.D. ("Dr. Aquino"), Robert L. Morgan, Ph. D. ("Dr. Morgan"), William Egelston, M.D. ("Dr. Egelston"), and Norman A. Davis, P.S.C. ("Dr. Davis"); (2) erroneously concluding that plaintiff's mental impairment did not meet or equal a medical listing at step three of the sequential analysis; (3) improperly rejecting plaintiff's testimony as less than credible; (4) improperly rejecting lay witness testimony regarding plaintiff's functional limitations; (5) failing to evaluate the impact of plaintiff's obesity under Social Security Ruling ("SSR") 02-1p, 67 Fed. Reg. 57859-02 (Sept. 12, 2002); and (6) failing to properly assess plaintiff's residual functional capacity, which resulted in the ALJ posing legally inadequate hypothetical questions to the vocational expert ("VE"). The Commissioner filed a written opposition to plaintiff's motion.*fn2 (Dkt. No. 27.) For the reasons stated below, the court will grant plaintiff's motion for summary judgment in part and remand this matter for further proceedings.
Plaintiff was born on June 26, 1983, completed high school and some community college courses, although he had been placed in special education classes since childhood. (See Administrative Transcript ("AT") 39, 44, 70.) Plaintiff claims to be afflicted with Asperger's Syndrome,*fn4 a social phobia, obsessive tendencies, and other mental and behavioral problems.
(AT 45, 52.) He also allegedly suffers from an alleged congenital defect involving the bones in his left foot, for which he has undergone multiple surgeries. (AT 45-46, 322.)
On May 19, 2004, plaintiff filed applications for DIB, child insurance benefits,*fn5 and SSI benefits, alleging an onset date of June 26, 1983, plaintiff's date of birth. (See AT 128-31, 342-43.) The Social Security Administration denied plaintiff's application initially and upon reconsideration. (AT 81-84, 96-100, 102-07.) Plaintiff requested a hearing before an ALJ, and the ALJ conducted an initial hearing regarding plaintiff's applications on January 20, 2006. (AT 34-62, 108.) In a decision dated March 24, 2006, the ALJ found that plaintiff was not disabled within the meaning of the Act. (See AT 88-95.)
Plaintiff requested that the Appeals Council review the ALJ's decision on the basis of new evidence, and the Appeals Council granted plaintiff's request and accepted that additional evidence. (AT 118, 122-23.) On November 29, 2006, the Appeals Council remanded the matter to the ALJ for a supplemental hearing and expansion of the record. (AT 125-26.) Of particular relevance to plaintiff's claims of error before this court, the Appeals Council's order specifically noted that although the record indicated that plaintiff was obese, the ALJ's decision did not include an "evaluation of obesity consistent with SSR 02-1p." (AT 125.)
The ALJ conducted a supplemental hearing at which plaintiff and the VE testified. (AT 63-80.) In a decision dated November 27, 2007, the ALJ concluded that plaintiff was not disabled within the meaning of the Act because, based on the VE's testimony, plaintiff could perform jobs that existed in significant numbers in the national economy.*fn6 (See AT 15-24.)
The ALJ's decision became the final decision of the Commissioner when the Appeals Council denied plaintiff's request for review. (AT 7-9.) Plaintiff had requested review of the ALJ's November 2007 decision on the grounds that the ALJ failed to comply with the Appeals Council's remand order and committed several other errors, and on the basis of new medical evidence in the form of a medical opinion issued by Dr. Davis, a licensed psychologist. (See AT 10, 11, 344-51.) The Appeals Council's denial of review stated, in relevant part: "We found no reason under our rules to review the [ALJ's] decision. Therefore, we have denied your request for review." (AT 7.) It did not address in detail any of the claimed errors and did not specifically reject any portion of Dr. Davis's opinion. The decision did state that the Appeals Council considered the additional evidence submitted by plaintiff, but that it did "not provide a basis for changing the [ALJ's] decision." (AT 7-8.)
Plaintiff subsequently filed this action.
B. Summary of the ALJ's Findings
The ALJ conducted the five-step, sequential evaluation and concluded that plaintiff was not disabled within the meaning of the Act. At step one, found that plaintiff had not engaged in substantial gainful employment activity since June 26, 1983, the alleged date of onset. (AT 17.) At step two, the ALJ concluded that suffered from the following "severe" impairments: "pervasive developmental delay, status post left ankle surgery and obesity." (AT 17.)
At step three, the ALJ determined that plaintiff's impairments, whether alone or in combination, did not meet or medically equal any impairment listed in the applicable regulations, 20 C.F.R. Part 404, Subpart P, Appendix 1, Parts A & B. (AT 19.) Relevant here, the ALJ concluded that plaintiff's mental impairment did not meet or medically equal Listing 12.10, which addresses "Autistic disorder and other pervasive developmental disorders."*fn7 In doing so, he rejected Dr. Morgan's treating opinion that plaintiff met the criteria of Listing 12.10. (AT 22, 311.)
The ALJ further determined that plaintiff had the residual functional capacity ("RFC") to "perform sedentary work except he should not be required to operate foot controls with the left lower extremity. The claimant retains the ability to understand, remember and carry out simple job instructions." (AT 20.)
The ALJ found at step four that plaintiff had no past relevant work. (AT 22.) At step five, the ALJ concluded, in reliance on plaintiff's RFC and the VE's testimony, that plaintiff was not "disabled" within the meaning of the Act because plaintiff was able to perform the following jobs in significant numbers in the national economy: office helper, agricultural sorter, and small parts assembler. (AT 22-23.)
The court reviews the Commissioner's decision to determine whether it is (1) free of legal error, and (2) supported substantial evidence in the record as a whole. Bruce v. Astrue, 557 F.3d 1113, 1115 (9th Cir. 2009). This standard of review has been described as "highly deferential." Valentine v. Comm'r of Soc. Sec. Admin., 574 F.3d 685, 690 (9th Cir. 2009). "'Substantial evidence means more than a mere scintilla but less than a preponderance; it is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.'" Bray v. Comm'r of Soc. Sec. Admin., 554 F.3d 1219, 1222 (9th Cir. 2009) (quoting Andrews v. Shalala, 53 F.3d 1035, 1039 (9th Cir. 1995)). "The ALJ is responsible for determining credibility, resolving conflicts in medical testimony, and for resolving ambiguities." Andrews, 53 F.3d at 1039; see also Tommasetti v. Astrue, 533 F.3d 1035, 1041 (9th Cir. 2008) ("[T]he ALJ is the final arbiter with respect to resolving ambiguities in the medical evidence."). Findings of fact that are supported by substantial evidence are conclusive. 42 U.S.C. § 405(g); see also McCarthy v. Apfel, 221 F.3d 1119, 1125 (9th Cir. 2000). "Where the evidence as a whole can support either a grant or a denial, [the court] may not substitute [its] judgment for the ALJ's." Bray, 554 F.3d at 1222 (citing Massachi v. Astrue, 486 F.3d 1149, 1152 (9th Cir. 2007)); see also Ryan v. Comm'r of Soc. Sec., 528 F.3d 1194, 1198 (9th Cir. 2008) ("'Where evidence is susceptible to more than one rational interpretation,' the ALJ's decision should be upheld.") (quoting Burch v. Barnhart, 400 F.3d 676, 679 (9th Cir. 2005)). However, the court "must consider the entire record as a whole and may not affirm simply by isolating a 'specific quantum of supporting evidence.'" Ryan, 528 F.3d at 1198 (quoting Robbins v. Soc. Sec. Admin., 466 F.3d 880, 882 (9th Cir. 2006)).
A. Whether the ALJ Impermissibly Failed To Characterize Evidence in the Record
Plaintiff claims that the ALJ erred by omitting from his "summary of the medical evidence" several pieces of evidence and/or functional limitations assessed by plaintiff's treating, examining, or non-examining physicians. (See Pl.'s Mot. for Summ. J. at 21-25.) Each piece of evidence and opinion will be addressed in turn below.
1. The 2004 Report and 2006 Letter from United Cerebral Palsy Plaintiff contends that the ALJ erred by omitting certain materials from United Cerebral Palsy ("UCP") in his summary of medical evidence. UCP had performed a nine-day assessment of plaintiff's work abilities in July 2004, and plaintiff later attempted to find suitable work through UCP. Specifically, plaintiff argues that the ALJ failed to discuss: (1) portions of a "Performance and Observations" report completed by a job coach with UCP in 2004; and (2) a letter from UCP, dated January 10, 2006. (Pl.'s Mot. for Summ. J. at 21-22; AT 284-85, 293.)
Although an ALJ is required to develop the record and interpret medical evidence, and cannot selectively analyze the evidence, he or she "does not need to discuss every piece of evidence" in order to demonstrate that such evidence was considered and credited. See Howard ex. rel. Wolff v. Barnhart, 341 F.3d 1006, 1012 (9th Cir. 2003). "However, if the ALJ rejects significant probative evidence, he [or she] must explain why." Lusardi v. ...