SC Administrative Law Court Decisions

This case is before the Administrative Law Judge Division (ALJD) as an appeal of a decision rendered by a Hearing Officer of the Department of Health and Human Services (DHHS). Ms. DeHart appealed a determination by the Disability Determination Division of the South Carolina Department of Vocational Rehabilitation (VR) that she was not "disabled" and therefore not entitled to Medicaid benefits. The denial of eligibility was based on the conclusion by VR that Ms. DeHart has the residual functional capacity to perform unskilled, non-complex, sedentary work that is available in the national economy.

A fair hearing was held by DHHS on December 3, 1997. Ms. DeHart was not represented by counsel at this hearing, but did appear with her mother. On January 15, 1998, the DHHS Hearing Officer (Kimberly B. Burrell) issued an Administrative Decision affirming the denial of eligibility. Ms. DeHart appealed that decision to the ALJD and subsequently retained counsel. A hearing was held before the Administrative Law Judge Division May 20, 1998.

This case is before the ALJD as an appeal of an agency action. As such, the ALJD sits in an appellate capacity under the Administrative Procedures Act (APA), rather than as an independent finder of fact. In South Carolina, the provisions of the Administrative Procedures Act -- specifically S.C. Code Ann. §1-23-380(A)(6) -- govern the reasons an appellate body may reverse or modify an agency decision. Section 1-23-380(A)(6) sets forth that:

The court may reverse or modify the decision if substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions or decisions are:

(a) in violation of constitutional or statutory authority;

(b) in excess of the statutory authority of the agency;

(c) made upon unlawful procedure;

(d) affected by other error of law;

(e) clearly erroneous in view of the reliable, probative and

substantial evidence on the whole record; or

(f) arbitrary or capricious or characterized by abuse of discretion

or clearly unwarranted exercise of discretion.

S.C. Code Ann. § 1-23-380(A)(6)(Supp. 1998).

A decision is supported by "substantial evidence" when the record as a whole allows reasonable minds to reach the same conclusion reached by the agency. Bilton v. Best Western Royal Motor Lodge, 282 S.C. 634, 321 S.E.2d 63 (Ct. App. 1984). The well-settled case law in this state has also interpreted the rule to mean that a decision will not be set aside simply because reasonable minds may differ on the judgment. Lark v. Bi-Lo, 276 S.C. 130, 276 S.E.2d 304 (1981). The fact that the record, when considered as a whole, presents the possibility of drawing two inconsistent conclusions from the evidence does not prevent the agency's finding from being supported by substantial evidence. Waters v. South Carolina Land Resources Conservation Comm'n, 321 S.C. 219, 467 S.E.2d 913 (1996); Grant v. South Carolina Coastal Council, 319 S.C. 348, 461 S.E.2d 388 (1995); Palmetto Alliance, Inc. v. South Carolina Public Service Comm'n, 282 S.C. 430, 319 S.E.2d 695 (1984).

In applying the substantial evidence rule, the factual findings of the administrative agency are presumed to be correct. Rodney v. Michelin Tire Co., 320 S.C. 515, 466 S.E.2d 357 (1996), citing Kearse v. State Health and Human Services Finance Comm'n, 318 S.C. 198, 456 S.E.2d 892 (1995). Furthermore, the reviewing court is prohibited from substituting its judgment for that of the agency as to the weight of the evidence on questions of fact. Grant v. South Carolina Coastal Council, 319 S.C. 348, 461 S.E.2d 388 (1995), citing Gibson v. Florence Country Club, 282 S.C. 384, 318 S.E.2d 365 (1984). Finally, the party challenging an agency action has the burden of proving convincingly that the agency's decision is unsupported by substantial evidence. Waters v. South Carolina Land Resources Conservation Comm'n, 321 S.C. 219, 467 S.E.2d 913 (1996), citing Hamm v. AT&T, 302 S.C. 210, 394 S.E.2d 842 (1994).

Federal criteria contained in regulations issued by the Social Security Administration are used to determine whether an applicant is "disabled." These criteria are the same as those used by the Social Security Administration in determining whether an individual qualifies for certain Social Security benefit programs (e.g., cash assistance payments of the Supplemental Security Income [SSI] Program).

The federal regulations governing the disability determination process establish a "sequential step evaluation" to determine whether an individual is disabled. See 20 C.F.R. 416.920. VR first determines whether the applicant is engaged in "substantial gainful activity" at the time of the application. In other words, "is the applicant currently working?" If the applicant is not currently working, the process proceeds to the second step, in which the Department decides whether the applicant suffers from a medically determinable "severe impairment" that may reasonably be expected to last for more than one year or to result in death. If the applicant does suffer from a "severe impairment," that impairment (or combination of impairments) is compared to the regulatory listing of impairments that are considered to result in disability. If the applicant's impairment meets or equals one of these listings, the applicant is considered to be disabled. If the applicant's impairment does not meet or equal one of those "listings," then the applicant's age, education and work experience are considered to determine whether there is any "substantial gainful activity" (i.e., work) existing in the national economy in which the applicant could engage. This step is known as the evaluation of an individual's "residual functional capacity" -- which essentially means evaluating what the individual can still do in light of his/her impairment, age, education, and work experience. In conducting this evaluation, the previous work history of the individual is considered. If the individual is deemed unable to engage in his/her previous work, then a determination is made, taking into account his/her impairment, age, education, and work experience, as to whether any other work opportunities exist in the national economy that would be suitable for the applicant.

Ms. DeHart applied for Medicaid benefits on January 24, 1997, under the "Aged, Blind, and Disabled" ("ABD") eligibility category. Her application was referred to the Disability Determination Division of the South Carolina Department of Vocational Rehabilitation ("VR") for an independent disability determination. Ms. DeHart's application for Medicaid was denied September 23, 1997 because she was determined not to be "disabled."

In Ms. DeHart's case, she was not engaged in "substantial gainful activity" (i.e., was not working) at the time of her application. Therefore, VR evaluated her medical condition to determine whether she suffered from a "severe impairment." In conducting this evaluation, VR considered not only the conditions identified by Ms. DeHart in her application, ⁽¹⁾ but also considered other medical conditions identified during a review of Ms. DeHart's medical records.⁽²⁾ In addition, VR arranged for an independent medical consultant to examine Ms. DeHart.

Although some aspects of Ms. DeHart's condition were determined by VR to be less than severe, her combination of impairments was determined to be severe enough for the determination process to proceed to the next step. Furthermore, the DHHS Hearing Officer specifically found the combination of Ms. DeHart's impairments to be severe. However, Ms. DeHart's impairments did not meet or equal any of the "listings" that would have deemed her to be disabled based solely on her medical condition. Therefore, an evaluation of her "residual functional capacity" was undertaken as the next step of the sequential evaluation process in order to ascertain the impact her condition could be expected to have upon her ability to work (i.e., "engage in substantial gainful activity").

In reviewing Ms. DeHart's "residual functional capacity," VR determined that she could not return to her past work. Therefore, VR evaluated whether she is capable of performing any work that is available in the national economy. Based on the available information, VR concluded that Ms. DeHart was capable of performing work that does not involve detailed or complex instructions, and that such work does exist in the national economy. The Hearing Officer also made a specific finding that Ms. DeHart retains the capacity to perform unskilled, non-complex, sedentary work available in the national economy. As a result of her residual functional capacity, the Hearing Officer concluded that Ms. DeHart did not meet the definition of "disabled."

More than two months elapsed between VR's denial and the fair hearing before the DHHS Hearing Officer. At both hearings, Ms. DeHart asserted that her medical condition, which is apparently degenerative in nature, had further deteriorated. Indeed, at the time of the fair hearing, Ms. DeHart was reportedly scheduled for additional surgery. Although VR's representative at the fair hearing did attempt to address the impact of Ms. DeHart's future deterioration, his ability to do so without access to relevant medical records is quite constrained. To the contrary, both Ms. DeHart and her mother testified about her worsening condition. With all due respect to Mr. Bost, he is apparently not a medical doctor. Therefore, his qualifications to address the seriousness of Ms. DeHart's medical condition are limited by his education and training. The difficulty faced by Mr. Bost was further compounded by his lack of access, due to no fault of his own, to the appropriate records at the time. Unfortunately, because this issue was not fully explored, the record before me contains insufficient information to allow me to render a decision as to whether the alleged deterioration in Ms. DeHart's condition would have been dispositive of the disability determination. Additionally, I am also faced with the same quandary that confronted the DHHS Hearing Officer in that Ms. DeHart's condition has reportedly worsened even more in the interim.

Within the federal system, reviewing courts have generally declined to remand disability claims for reevaluation in light of medical evidence of a deteriorated condition. Sizemore v. Secretary of Health and Human Serv., 865 F.2d 709, 712, (6th Cir. 1988), citing Oliver v. Secretary of Health and Human Serv., 804 F.2d 964 (6th Cir. 1986). In doing so, the courts have often ruled that the appropriate remedy for a seriously degenerated condition is to initiate a new claim for benefits as of the date that the condition aggravated to the point of constituting a disabling impairment. Id.; see also, Godsey v. Bowen, 832 F.2d 443 (7th Cir. 1987) and Ward v. Schweiker, 659 F.2d 762 (9th Cir 1982).

However, this prohibition is not absolute. Courts have remanded cases on the basis of "new evidence" -- often involving an alleged deterioration of the claimant's condition -- in circumstances meeting the following criteria: (1) the evidence must be relevant to the determination of disability at the time the application was first filed; (2) the evidence may not be merely cumulative; (3) the evidence must be material to the extent that the disability decision might reasonably have been different had the new evidence been considered in the original determination; and (4) there must be good cause for the claimant's failure to submit the evidence during the initial determination. Borders v. Heckler, 777 F.2d 954 (4th Cir. 1985). This four-part test was subsequently incorporated by Congress into the federal statute governing judicial review of disability cases. Under that statute, a reviewing court is allowed to remand a case for additional evidence "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." 42 U.S.C. §405(g). See also, Young v. Harris, 507 F. Supp. 907 (D.S.C. 1981) (applying an amended federal statute and holding that court may remand a denial of disability benefits for additional administrative consideration; good cause for such a remand may consist of new evidence obtained after the hearing which suggests a different result).

The decision as to when a deterioration of condition warrants a remand versus when the filing of a fresh application is the appropriate remedy is a difficult one that must balance the competing interests of the parties. In providing for remands, Congress' intent has been explained by one district court as follows:

Congress has expressed a desire that disability claims should be disposed of quickly, so that truly needy claimants may have their cases proceed without the backlogs caused by needless remands for "new evidence."...In order to facilitate the speedy disposition of meritorious claims, "new evidence" remands [under section 405(g)] should be narrowly circumscribed.

Brown v. Schweiker, 557 F. Supp. 190, 193-94 (M.D. Fla. 1983), as quoted in Wilkins at 774. However, this understandable and laudable goal of a speedy disposition of meritorious claims should not be achieved at the expense of creating a system that does not adequately address valid medical conditions of applicants whose claims may ultimately prove to be meritorious.

Both the state and federal determinations of disability are made by VR, using the same criteria. In fact, in most cases a determination made through the federal process is binding on the state. Although the federal judicial review process is governed by different laws than those which set forth this court's obligations in reviewing this matter, the state and federal disability determination processes -- including appeals and judicial reviews -- should afford some measure of consistency of results. A claimant proceeding through the federal avenue should not have an easier time (nor a more difficult one) than a claimant pursuing an appeal through the state process. Therefore, although I do not necessarily consider the federal court decisions cited herein to be binding upon the ALJD operating under South Carolina's Administrative Procedures Act, I do find the reasoning in these cases to be persuasive in many respects.

In Ms. DeHart's case, evidence of a worsening of her condition can hardly be described as cumulative to the information previously available to VR, since a deterioration is by its very nature a change in condition that would be new or different. Courts have tended to view such changing circumstances as meeting the "good cause" requirement for ordering a remand. If a person's medical condition is undergoing change, then evidence of that change is obviously not available until the change occurs. Thus, the "new" information may not have been available at the time of the initial hearing. See, Burkett v. Callahan, 978 F. Supp. 1428 (D. Kan. 1997). In this case, there is credible evidence that some change allegedly occurred prior to the fair hearing, and also some change occurred between the time of the fair hearing and the hearing before the ALJD. Obviously, at least some of the information was not available at the time of the fair hearing. This situation, coupled with the fact that Ms. DeHart has only an eighth grade education, satisfies the "good cause" component of the decision to remand.

A serious medical condition that impacts an individual's ability to engage in physical activity is certainly "material" to a disability determination. If true, the alleged change in Ms. DeHart's condition would present a "reasonable possibility" (not "probability") of a different outcome. Therefore, Ms. DeHart's alleged deterioration meets the "materiality" test. Finally, like the Burkett court, I have difficulty concluding that the reported deterioration developed in a very short span of time. I think it is quite possible that the change occurred over a broader period of time that could extend back far enough to impact the onset of a disabling condition relative to Ms. DeHart's original application.

Therefore, under the unique circumstances presented in this case, I find it appropriate to remand this matter back to DHHS for additional findings concerning the "new evidence" of the deterioration of Ms. DeHart's condition and the relevance (if any) of that evidence to the potential onset of her disability in connection with her original application date. The impact (if any) of that evidence upon whether her condition meets or equals a disability "listing" should also be evaluated.⁽³⁾

In addition, because VR found Ms. DeHart's severe impairment to exist in the form of her depression, its residual functional capacity assessment focused primarily on the restrictions this mental condition would place on her ability to engage in substantial gainful activity. VR's assessment apparently did not focus on physical limitations, since VR did not consider her to have a severe physical impairment. Upon remand, if Ms. DeHart's deterioration is found to be relevant to the onset of a disability in connection with her original application date, then the effect of that physical deterioration upon the assessment of her residual functional capacity should be developed.

For the reasons discussed above, this matter is remanded to the Division of Appeals and Hearings of the Department of Health and Human Services for additional findings concerning the "new evidence" of the deterioration of Ms. DeHart's condition, the relevance (if any) of that evidence to the potential onset of her disability in connection with her original application date, the impact (if any) of that evidence upon whether her condition meets or equals a disability "listing," and the impact (if any) of that evidence upon her residual functional capacity.

AND IT IS SO ORDERED.

Ralph King Anderson, III.

Administrative Law Judge

September 14, 1998

Columbia, South Carolina

1. Ms. DeHart's application alleged disability as the result of a neurological tumor.

2. VR specifically evaluated Ms. DeHart's psychiatric condition as the result of information that was discovered in the review of her records. Ms. DeHart's pain was also considered.

3. In ordering that this case be remanded, I am fully aware of the difficulty of the task facing the DHHS Hearing Officer, both initially and upon remand, in evaluating the extent to which allegations of interim deterioration should impact the final determination of disability. Unfortunately, this is an issue that has no simple solution. She (or he) will simply have to make a concerted effort to develop all of the potentially material facts and then make an informed decision based upon all available relevant information.