Dereke G. v. O'Malley

Background

Dereke G. sought judicial review of an administrative law judge’s decision finding that he was not disabled under Title II of the Social Security Act. The Social Security Administration’s Appeals Council declined to review that decision, making it the agency’s final decision for purposes of district-court review.

The record described depression, anxiety, post-traumatic stress disorder, cannabis use disorder, and polysubstance use disorder in remission. Dereke G. also reported physical problems, including pain and nerve damage related to a gunshot injury, headaches, and an elbow injury. The administrative law judge found the mental-health and substance-use conditions severe, but found the physical conditions non-severe or not medically determinable. The judge determined that Dereke G. could perform work at all physical exertion levels, subject to limits to simple, routine tasks and occasional interaction with supervisors, coworkers, and the public. Based on vocational-expert testimony, the judge concluded that he could work as a dishwasher, laboratory equipment cleaner, or machine package sealer.

Court’s analysis

The court explained that it could set aside the denial only if it was unsupported by substantial evidence or based on legal error. For testimony about subjective symptoms, the administrative law judge had to identify the testimony being rejected and explain what evidence undermined it.

The court concluded that the administrative law judge did not analyze Dereke G.’s testimony in enough detail. The judge adequately discounted some physical-symptom testimony by pointing to normal physical examinations and evidence that Dereke G. lifted weights and used exercise equipment. But the decision did not explain why the judge rejected testimony that criticism from a supervisor would cause Dereke G. to leave the workplace, even though the vocational expert testified that this would prevent competitive employment. The decision also did not adequately address testimony about debilitating headaches. The court said the judge’s reference to the lack of documented head-injury symptoms did not specifically explain why the headaches were rejected and conflicted with the finding that the medically determinable impairments could reasonably cause the alleged symptoms.

The court determined that this error could affect the analysis at multiple stages. Dereke G.’s testimony could support the asserted personality and neurocognitive disorders at Step 2, affect the listing analysis at Step 3, and affect the work determination at Step 5. Because one alleged symptom could preclude employment under the vocational expert’s testimony, the error was not harmless.

Additional instructions on remand

The court also addressed Dereke G.’s argument concerning the personality and neurocognitive disorders. The administrative law judge had relied on medical-expert testimony that those disorders could not be reliably diagnosed without a sustained period of remission from marijuana use. The court noted that the judge had listed cannabis use disorder as a severe impairment and instructed the judge on remand to reevaluate the asserted disorders as reflected in the record. If Dereke G. is determined to be disabled, the judge must then account for the effect of cannabis use disorder on the severity or existence of those disorders.

The court rejected the separate argument that the administrative law judge could not rely on observations made during the hearing. An administrative law judge may consider such observations when assessing testimony, so long as they are not the sole basis for rejecting it.

Disposition

The court reversed the administrative law judge’s decision and remanded the case for further proceedings. It declined to remand for an immediate award of benefits because the record contained possible contradictions that required further determinations about whether the testimony should be credited. The order was dated March 17, 2025, and signed by United States Magistrate Judge Robert M. Illman.