Appeal from the United States District Court for the District of Arizona D.C. No. 2:07-cv-00719-MHB Michelle H. Burns, Magistrate Judge, Presiding.
The opinion of the court was delivered by: Clifton, Circuit Judge
Argued and Submitted January 12, 2010 -- San Francisco, California
Before: Alex Kozinski, Chief Judge, J. Clifford Wallace and Richard R. Clifton, Circuit Judges.
Carmen C. Luna applied for disability insurance benefits and supplemental security income in October 2003, and her application was denied after an administrative law judge ("ALJ") found that she was not disabled. That decision is the subject of this appeal. Luna subsequently filed a second application for disability benefits, which was successful. The Commissioner identified Luna's disability onset date as the day after her first application was denied. The district court ordered the matter remanded to the agency for further administrative proceedings to reconcile the Commissioner's initial denial of benefits on the first application with the Commissioner's later award of benefits. Luna argues that the proper remedy is a remand with an order requiring the payment of benefits for the time period relevant to her first benefits application based on the Commissioner's subsequent disability finding. We disagree and affirm the district court's judgment.
Luna applied for disability insurance benefits, under 42 U.S.C. §§ 401-34, and supplemental security income, under 42 U.S.C. §§ 1381-83f. She alleged a disability onset date of November 30, 2002. After her application was denied, Luna requested a hearing before an ALJ and amended her alleged disability onset date to March 26, 2003. The ALJ denied Luna's claims on January 27, 2006, determining that Luna's impairments - multiple injuries due to a car accident, bilateral osteoarthritis of her knees with pain and limited range of motion, morbid obesity, fluid retention, anxiety with stress, depression, right ulnar neuropathy, and personality disorder - were not severe enough to meet or medically equal those listed in 20 C.F.R. Part 404, Subpart P, Appendix 1. While Luna had not performed substantial gainful activity during the relevant period, the ALJ determined that Luna had the resid- ual functional capacity to perform sedentary exertional work with restrictions. The ALJ also determined that Luna was limited to unskilled work that merely required simple reading, writing and mathematical tasks. The ALJ then concluded that Luna could return to her past relevant work as a screw sorter. The Appeals Council denied Luna's request for review. Luna then filed a complaint in district court.
While Luna's first application was pending on appeal, Luna filed a second application for disability insurance benefits and supplemental security income, which was granted by the Commissioner on August 20, 2007. The Notice of Award indicates that the Commissioner found Luna disabled as of January 28, 2006, which is one day after the date Luna was found not to be disabled based on her first application. Luna did not provide any further information about the second, successful application.
Before the district court the parties agreed that the case should be remanded to the agency to reconcile the denial of benefits based on Luna's first application with the grant of benefits based on her second application, but they did not agree on the terms of the remand. Luna argued that the Commissioner's grant of benefits in response to her second application clearly indicated that she was disabled for the earlier time period covered by her first application as well, so the proper remedy would be a remand ordering that benefits be paid for that earlier time period. The district court instead granted the Commissioner's motion and remanded for further administrative proceedings to reconsider whether Luna was actually disabled during the period of time relevant to her first application. Luna appealed.
 The district court remanded for resolution of factual issues pursuant to 42 U.S.C. § 405(g), which states, "[t]he court may, on motion of the Commissioner of Social Security made for good cause shown . . . at any time order additional evidence to be taken before the Commissioner of Social Security, but only upon a showing that there is new evidence which is material and that there is good cause for the failure to incorporate such evidence into the record in a prior proceeding." New evidence is material when it " 'bear[s] directly and substantially on the matter in dispute,' and if there is a 'reasonabl[e] possibility that the new evidence would have changed the outcome of the . . . determination.' " Bruton v. Massanari, 268 F.3d 824, 827 (9th Cir. 2001) (alterations and omission in original) (quoting Booz v. Sec'y of Health & Human Servs., 734 F.2d 1378, 1380 (9th Cir. 1984)).
 The district court held that the finding of disability based on Luna's second benefits application was new and material evidence warranting remand for further factual consideration because it commenced at or near the time Luna was found not disabled based on the first application. The court cited a district court decision holding that an ALJ's award of benefits less than a week after the ALJ denied a claimant's first benefits application constituted "new and material evidence." See Reichard v. Barnhart, 285 F. Supp. 2d 728, 734 (S.D. W. Va. 2003). That case stands for the proposition that, "in certain circumstances, an award based on an onset date coming in immediate proximity to an earlier denial of benefits is worthy of further administrative scrutiny to determine whether the favorable event should ...