20 C.F.R. § 416.924(a). First, the ALJ looks to see whether the child is engaged in "substantial gainful activity." 20 C.F.R. § 416.924(b). If so, the child is ineligible for benefits. Next, the ALJ assesses whether the child has a severe impairment, which is defined as an impairment that causes more than a minimal functional limitation. 20 C.F.R. § 416.924(c). Third, if the ALJ finds a severe impairment, he then must consider whether the impairment meets or is medically or functionally equal to a disability listed in the regulatory "Listing of Impairments." 20 C.F.R. § 416.924(c); 20 C.F.R.Pt. 404, Subpt. P, App. 1 (the "Listing").
a. Functional Equivalence under the Interim Rules
The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (the "Act") created a new set of standards for assessing childhood disability and specifically, for determining whether a child's impairment was "functionally equivalent" to a listed disability. The Social Security Administration first implemented these standards on February 11, 1997, when it published the Interim Final Rules ("Interim Rules"). Under the Interim Rules, if a child's impairment or combination of impairments did not match a listed impairment, the ALJ was to consider all of the child's "functional limitations"-namely, what the child could not do because of his or her impairment-to determine whether the impairment was functionally equivalent to a listed impairment. 20 C.F.R. § 416.926(a) (1997). Such assessments could take place in four different ways, looking to see whether the functional limitations manifested themselves as: (1) an "extreme limitation of one specific function such as walking or talking"; (2) marked or severe limitations in broad areas of development such as cognition/communication, social functioning, or motor functioning; (3) episodic, chronic illnesses or attacks; or (4) marked or severe effects from medications. Id.
Under the second (and the most frequently utilized)*fn5 method, an ALJ was to evaluate the effects of the child's impairments in five broad areas of development or functioning: (1) cognitive/communicative development, (2) motor development, (3) social development, (4) personal development, and (5) concentration, persistence, or pace. 20 C.F.R. § 416.926a(c)(5)(iii) (1998). A finding of extreme or severe limitation in one area or a marked limitation*fn6 in two areas resulted in a determination of functional equivalence and thus, eligibility for benefits. 20 C.F.R. § 416.926a(b)(2).
b. Amended Rules for Determining Functional Equivalence
Responding to numerous public criticisms of the Interim Rules, the Social Security Administration published amended Final Rules for childhood disability determination ("Final Rules") on September 11, 2000. Supplemental Security Income; Determining Disability for a Child Under Age 18, 65 Fed. Reg. 54747 (Sept. 11, 2000) (to be codified at 20 C.F.R. § 404, 416 (2001)). The Final Rules, which went into effect on January 2, 2001, are materially different from the Interim Rules on several fronts, reflecting the SSA's desire to simply and clarify the rules for both adjudicators and the public. 65 Fed. Reg. at 54,755-6. To begin, three out of the four methods for evaluating functional equivalence have been eliminated, leaving only the second method of evaluating a child's functional limitations in broad areas of functioning. 65 Fed. Reg. at 54755. Next, the SSA has "delinked" the assessment of functional equivalence from the Listings, removing the requirement that an ALJ refer to specific listings when evaluating a child's functional impairments and permitting a finding of functional equivalence on the basis of self-contained criteria listed in the rules. Id. Additionally, the SSA offers more guidance as to how to evaluate the cumulative effect of multiple impairments, clarification on the appropriate use of test results, a new procedure for resolving material inconsistencies between a child's test scores and the other information in the case record, and a clarification that assessment of a child's impairments should consider not only what the child "cannot do" but also what a child "[has] difficulty doing, need[s] help doing, or [is] restricted from doing" because of her impairment. 65 Fed. Reg. at 54755-58.
Most notably, however, while the SSA continues to require a finding of one severe limitation or two marked limitations to establish functional equivalence, instead of requiring an assessment of the child's impairments in "five broad areas of functioning," the Final Rules require an evaluation of the child's impairments in "six domains." 20 C.F.R. § 416.926a(a) (2001). These six domains are: (1) the child's ability to acquire and use information, (2) to attend and complete tasks, (3) to interact and relate with others, (4) to move about and manipulate objects, (5) to care for oneself, and (6) health and physical well-being. 20 C.F.R. § 416.926a(b)(1).
This shift represents both superficial and substantive changes. On the one hand, the name change from "broad areas of functioning" to "domains" and for each of the domains themselves is arguably cosmetic, since the SSA simply wanted to make clear that the domains for determining functional equivalence are not the same as the domains in the childhood mental disorders listings, which had unfortunately shared the same headings under the Interim Rules. 65 Fed. Reg. at 54755. However, the name change also reflects some substantive differences. First, a new category was created-the domain, "Health and physical well-being," incorporating aspects of the prior methods of determining functional equivalence through "episodic impairments" and "limitations related to treatment or medication effects." 65 Fed. Reg. at 54759.
Second, and more pertinent to our case, elements from the former "cognition/communication" category are now split between two domains: "acquiring and using information" and "interacting and relating." As the report accompanying the Final Rules explains:
In response to public comments . . . these Final
Rules recognize that "communication" comprises speech
and language, and that language is used both for
learning and for interacting and relating. Therefore,
we address the three components of communication
(speech, language used for learning, and language
used for interacting and relating) in the domains
that are appropriate to the function. 65 Fed. Reg. at
Hence, a child's problems with speech and language now need to be assessed in both the "acquiring and using information" domain as well as the "interacting and relating with others" domain, rather than simply in the "cognition/communication" area of functioning. In this case, as is apparent, this change may be significant.
The Final Rules also feature needed clarification of the criteria within each of the domains. The domain, "Attending and completing tasks," for example, a successor to the former area, "Concentration, Persistence, or Pace," includes a new definition of "attention" as "level of alertness, concentration, and the initiating, sustaining, and changing of focus needed to perform tasks." 65 Fed. Reg. at 54759. The Final Rules also further detail "the role of attention in physical and mental effort, in allaying impulsive thinking and acting, and in performing tasks at an appropriate pace, within appropriate timeframes." Id. In the "Interacting and relating with others" domain, the Final Rules include new explanations of how "interacting and relating entail responding to a variety of emotional and behavioral cues, speaking intelligibly, following social rules for conversation and interaction, and responding appropriately to others." Id.
Overall, the SSA explains, the domains are meant to make adjudicating childhood disability an easier task for ALJs. As the report states,
We believe that the revised domains will be easier
for our adjudicators to apply and for the public to
understand. We believe that the new approach,
together with the changes in final §§ 416.924a,
provides a clearer, more comprehensive way to assess
the effects of a child's impairment or combination of
impairments on his or her functioning. 65 Fed. Reg. at
c. Application of the Interim Rules versus the Final Rules
The preamble to the Final Rules also contains explicit instructions on when the Final Rules are to go into effect. As it states, "These Final Rules will be effective on January 2, 2001." 65 Fed. Reg. at 54750. The Final Rules are to be applied not only to new applications after that date, but also to "the entire period at issue for claims that are pending at any stage of our administrative review process, including claims that are pending administrative review after remand from a Federal court." Id. Thus, even if an ALJ had ruled under the Interim Rules, any further administrative review (e.g., review by the Appeals Council) that took place after January 2, 2001, would be governed by the Final Rules.
The preamble draws a distinction, however, for final decisions by the Commissioner that are being reviewed by Federal courts. As it states, "[W]e expect that the court's review of the Commissioner's final decision would be made in accordance with the rules in effect at the time of the final decision." Id. Namely, if a Commissioner's decision was made under the Interim Rules, a reviewing Federal court would be constrained to evaluate the decision under the Interim Rule regime, even if the review were taking place after January 2, 2001. However, the preamble also made clear that if after January 2, 2001, the reviewing court found that the Commissioner's decision was not supported by substantial evidence under the Interim Rules, on remand, the Commissioner would apply the Final Rules to the entire period at issue in the claim. Id.
Plaintiff moves for a reversal or remand on four separate grounds: 1) that the ALJ did not grant a full and fair hearing, 2) that the ALJ did not adequately develop the record, 3) that the Appeals Council erred in failing to address the new evidence submitted by the plaintiff, and 4) that the Appeals Council erred in failing to consider the new evidence in light of the amended Final Rules on functional limitations. We consider the last ground first, and because we find a need to remand on this basis, we do not reach the remaining three grounds.
1. Whether the Appeals Council Erred in Failing to Address
New Evidence in Light of the Amended Regulations
Under the law articulated above, the Appeals Council was bound to apply the Final Rules in assessing plaintiff's request for review. Although the ALJ's decision on June 9, 2000 was rendered under the Interim Rule regime, the Appeals Council decision on June 15, 2001 was made after January 2, 2001, the effective date of the Final Rules. Hence the Final Rules, utilizing the six domains instead of the five broad areas of functioning, ought to have been the metric by which the Appeals Council assessed the sufficiency of the ALJ's decision.
It is not clear, however, from the Appeals Council's letter whether it in fact applied the Final Rules. Although the letter states in passing that "in reaching this conclusion, the Appeals Council has considered the applicable statutes, regulations, and rulings in effect as of the date of this action" (Tr. 5), nothing else in the letter suggests that an assessment of Finess' case in light of the new regulations took place. The letter makes no mention of the change in rules governing disability determinations, of the shift from the five broad areas of functioning to the six domains, or of any difference in the ultimate outcome this regime change might make.
The Commissioner argues in its brief that it is immaterial which rules the Appeals Council applied because "the basic standard for determining functional equivalence remains unchanged from the Interim Final Rules: a child must have a medically determinable impairment or combination thereof that results in marked limitations in two domains or an extreme limitation in one domain." Reply Brief at 6. This Court disagrees-the difference between the Interim Rules and the Final Rules is material. Indeed, the Final Rules make several regulatory changes that might have brought about a finding of disability for Finess had they been applied.
First, the bulk of Finess' impairments involve her communicative function-indeed, her main impairments are in the speech and language arena for which she has received years of therapy. This is the very arena, however, that was revised so that speech and language would be considered in two domains-"acquiring and using information" and "interacting and relating with others"-rather than merely in one area as under the Interim Rules. Moreover, contrary to the ALJ's finding of a "less than marked" limitation, Finess' cognitive / communicative function was the one arena in which both SSA consultative examiners found a "marked" limitation. Tr. 279, 283. Therefore, had her case been assessed under the Final Rules rather than the Interim Rules, the Appeals Council may-and perhaps should-have found Finess to have a marked limitation in both the "acquiring and using information" and the "interacting and relating with others" domains, thus qualifying her for benefits.
Other changes in the Final Rules may have made a difference for Finess. To begin, the Final Rules include new instructions on how an ALJ should resolve material inconsistencies between a child's test scores and the other information in the case record. The new rules explain that while an ALJ could resolve the inconsistency by looking at other information in the case record, questioning other individuals who could provide additional information about a child's day-to-day functioning, or ordering a consultative exam, "the interpretation of a test is primarily the responsibility of the professional who administered the test." 65 Fed. Reg. at 54758. As the regulations suggest, "If necessary, [the ALJ] may recontact the individual who administered the test for further clarification."
The ALJ discounted the test results of the SSA consultative examiner, Dr. Rosen, who found Finess to have mild mental retardation and an IQ of 65, well within the marked range (Tr. 218, 27).*fn7 The ALJ rejected Dr. Rosen's conclusion as being "based upon non-verbal testing" and criticized Dr. Rosen for "not provid[ing] specific sub-test result scores." Tr. 27. The ALJ stated that Dr. Rosen's test results were inconsistent with Finess' school records indicating that she had only mild speech delays and the absence in the record of any other evidence suggesting that Finess was mentally retarded.
The Final Rules, however, call for deference to Dr. Rosen in the interpretation of the test results and invite further questioning of other individuals regarding Finess' day-to-day functioning, or recontacting Dr. Rosen to seek a clarification of his findings. Proper deference to Dr. Rosen's opinion also may have led to a disability finding for Finess.
The Final Rules also provide that a child should be evaluated not only in what she "cannot do," but also in what she has "difficulty doing, needs help doing, or is restricted from doing" because of her impairments. 65 Fed. Reg. at 54756. This new instruction might have affected the assessment of Finess, whose impairments do not so much prevent her from undertaking any activities as they restrict and limit her. Lastly, the more detailed guidance and examples given with each of the six domains, particularly for the acquiring and using information, interacting and relating with others, and attending to and completing tasks domains, may affect the determination in Finess' case. 65 Fed. Reg. at 54756. Indeed, the new definition of "attention" in the "attending to and completing tasks" domain describes "levels of alertness, concentration, and the initiating, sustaining, and changing of focus" as well as "performing tasks at an appropriate pace, within appropriate timeframes," all areas in which Finess has been documented to have longstanding problems. 65 Fed. Reg. at 54759. Hence, an application of the Final Rules by the Appeals Council to the ALJ's decision should have included at least some mention of these potential differences in outcome raised by the rule change. Since the Appeals Council letter is silent regarding these material differences, meaningful review by this Court is not possible. Hence, a remand to the Commissioner to ensure the application of the Final Rules is justified.
A remand is furthermore necessary because it is unclear to this Court how exactly it should engage in a substantial evidence review. Indeed, under the language of the preamble to the final regulations, this Court is bound to review the Commissioner's determination utilizing the law that was in place at the time the Commissioner's final decision was made. 65 Fed. Reg. at 54750. In this case, the Commissioner's final decision was made on June 15, 2001, the date the Appeals Council denied the plaintiff review. Thus, this Court should utilize the Final Rules to evaluate whether the Commissioner's determination is supported by substantial evidence.
However, to attempt to review the Commissioner's decision for substantial evidence utilizing the Final Rules is a bit like comparing apples and oranges, since the ALJ's decision was made under a completely different rule regime-namely, the Interim Rules. It is not clear how exactly this Court should engage in this inquiry-should it assess whether the ALJ had substantial evidence to support his decision had it been made under the Final Rules, even though he made it under the Interim Rules? Should it assess the sufficiency of the evidence utilizing the five broad areas or the six domains? The fairest course is to remand this case to the Commissioner for a complete readjudication under the Final Rules. That way, it is clear that the claimant is getting the proper review under the correct set of applicable rules.
Since it is not clear from the record that the Appeals Council applied the Final Rules rather than the Interim Rules to its review of plaintiff's case, and because changes in the rules may affect the outcome of plaintiff's case, a remand to the Commissioner for re-adjudication by an ALJ under the Final Rules is appropriate. The Clerk of the Court is ordered to close the case.