FINDINGS AND RECOMMENDATION
JANICE M. STEWART, Magistrate Judge.
Plaintiff, Thuy Trang Thi Nguyen, ("Nguyen"), seeks judicial review of the final decision by the Social Security Commissioner ("Commissioner") denying her applications for Disability Insurance Benefits ("DIB") under Title II of the Social Security Act ("SSA"), 42 USC § § 401-433, and Supplemental Security Income ("SSI") under Title XVI of the SSA, 42 USC § § 1381-1383f. This court has jurisdiction to review the Commissioner's decision pursuant to 42 USC § 405(g) and § 1383(c)(3). For the reasons set forth below, that decision should be reversed and remanded for further proceedings.
Nguyen protectively filed for DIB on June 10, 2009, and SSI on January 6, 2010, alleging a disability onset date of March 7, 2008. Tr. 150-56. Her applications were denied initially and on reconsideration. Tr. 63-70. On May 23, 2011, a hearing was held before Administrative Law Judge ("ALJ") Steve Lynch. Tr. 30-61. The ALJ issued a decision on June 13, 2011, finding Nguyen not disabled. Tr. 12-29. After receiving additional evidence, the Appeals Council denied a request for review on October 2, 2012. Tr. 1-6. Therefore, the ALJ's decision is the Commissioner's final decision subject to review by this court. 20 CFR § 410.670a.
Born in 1975, Nguyen was age 35 at the time of the hearing before the ALJ. Tr. 33. She is a high school graduate with some college and has past relevant work experience for 16 years as a Department of Human Services case-worker for the State of Oregon and in production/assembly work. Tr. 290-91, 310. Nguyen alleges that she is unable to work due to the combined impairments of chronic pain, fibromyalgia, depression, anxiety and panic attacks, insomnia, headaches, acid reflux, irritable bowel syndrome, post traumatic stress disorder, "syosascial syndrome, " and hypertension. Tr. 289.
I. Medical Records
On May 25, 2007, Nguyen was evaluated by Wai L. Lee, M.D., a rheumatologist, following a two-year history of "pain all over" which started after she delivered a child and was admitted for a severe uterine infection. Tr. 979-81. Dr. Lee diagnosed fibromyalgia based upon Nguyen's complaints of "generalized severe pain associated with insomnia and fatigue and also findings of 18/18 tender points." Tr. 980. Dr. Lee evaluated Nguyen again on July 30, 2007, and noted "she continued to be diffusely tender at 18/18 tender points for fibromyalgia." Tr. 977-78.
On March 3, 2008, Marylou Constante, M.D., examined Nguyen. Tr. 440-44. Noting that Nguyen complained of "[b]ack and muscle pains consistent with fibromyalgia, " Dr. Constante assessed Nguyen with fibromyalgia, history of abnormal Pap, and irritable bowel syndrome, and suggested a plan to "[f]ollow-up in two to 3 months for fibromyalgia symptoms[.]" Tr. 443-44.
On January 21, 2010, F. Chester North, M.D., performed a physical examination and assessed Nguyen with fibromyalgia, stating:
The patient has complained of widespread pain. Basically she has full body pain on examination. I do not find evidence of erythema, swelling, or heat. There is no evidence of infection of inflammatory disease. This appears to be a significant exacerbation of her fibromyalgia pain.
On May 6, 2010, Nguyen went to urgent care complaining of cluster headaches over the prior five days, and irritable bowel syndrome and constipation over the prior seven days. Tr. 944. Philip Buckley, M.D. examined Nguyen and ordered oxygen therapy for the headaches. Id.
A week later, Nguyen saw Dr. North for complaints of pain in her left hip, sometimes so much that she could not walk, three to four times per week. Tr. 937. Dr. North ordered x-rays, which indicated moderate degenerative changes along the pubic symphysis. Tr. 940.
On June 4, 2010, Dr. North examined Nguyen for multiple complaints of bilateral hip pain, difficulty walking upon waking due to foot cramps, and difficulty with hand cramping. Tr. 934. Nguyen also complained her current pain medications were insufficient. Id. Dr. North declined to prescribe additional narcotics. Tr. 936. In addition to fibromyalgia and hip pain, Dr. North diagnosed Nguyen with depression, but noted that she refused a prescription for Fluoxetine because she stated she needed narcotics and was "going to check myself in' for depression." Tr. 936.
On September 1, 2010, Nguyen again saw Dr. North for complaints of hip and shoulder pain. Tr. 928. Dr. North stated the bilateral shoulder, hip, and back pain "appears to be associated with fibromyalgia" and prescribed physical therapy as he did not think "increasing narcotics is the best approach for treating her pain." Tr. 930. During that visit, Nguyen also complained of headaches and numbness in her left leg. Tr. 928. Dr. North increased her Fluoxetine prescription for the headaches and diagnosed meralgia paresthetics due to pinching of the lateral femoral cutaneous nerve. Tr. 931.
On September 16, 2010, Nguyen commenced physical therapy. Tr. 926. Molly Bredenberg, a physical therapist, noted that Nguyen presented "with whole body pain due to fibromyalgia, with likely lumbar derangement causing referred pain into the legs" and also demonstrated "decreased range of motion and strength." Id.
On September 17, 2010, Carmen Morales, a Physician Assistant, examined Nguyen. Tr. 923. Morales noted Nguyen's history of fibromyalgia and that she was on chronic pain medications morphine and oxycodone and in physical therapy. Tr. 924. Nguyen also complained of sleep apnea and lower extremity edema. Id. Morales referred Nguyen for a sleep study. Tr. 925.
On October 13, 2010, Nguyen was discharged after completing four physical therapy sessions. Tr. 918. Bredenberg noted Nguyen met her functional goal of no more than two episodes of falling in a month, though pain was still a "significant problem." Id.
Two days later, Dr. North saw Nguyen as a follow-up to a sleep study. Tr. 914-17. Nguyen complained of bilateral shoulder pain and back and hip pain. Tr. 916. Dr. North also diagnosed Nguyen with mild sleep apnea. Id. Current medications listed for Nguyen included Ventolin, Protonix, Imitrex, Cyclobenzaprine, Naproxen, Oxycodone, Promethazine, Morphine, Lidocaine, and Fluoxetine. Tr. 915-16.
On October 19, 2010, Heather Penny, M.D., examined Nguyen. Tr. 912-13. Nguyen complained of low back pain, and Dr. Penny noted tenderness in Nguyen's low back with "notable muscle spasm bilateral lumbar paraspinous muscles." Id. Dr. Penny concluded the pain was likely an exacerbation of the fibromyalgia and continued the various pain medications. Tr. 913.
On December 1, 2010, Dr. North performed another physical examination and assessed Nguyen with pregnancy, dyspnea, night sweats, headache, fibromyalgia, asthma, and tobacco abuse. Tr. 897-99. Dr. North suggested Nguyen discontinue use of narcotics for her fibromyalgia because of concerns about her pregnancy. Tr. 899.
On December 13, 2010, Nguyen was examined by Maxine Bauer, M.D., an obstetrician. Tr. 965-69. Dr. Bauer noted Nguyen's long history of fibromyalgia and use of pain medications. Tr. 965. Dr. Bauer assessed Nguyen with depressive disorder, obesity, and a high risk pregnancy due to her narcotic use for chronic pain. Tr. 969.
On April 19, 2011, Nguyen's new treating physician, James Kern, M.D.. performed a physical examination, noted that Nguyen's fibromyalgia had previously not responded to trials of Gabapentin and Lyrica, and continued treatment with narcotic analgesics. Tr. 894-96. Dr. Kern also noted a plan to taper and discontinue narcotic analgesics due to Nguyen's pregnancy. Tr. 894.
On April 28, 2011, Dr. Bauer noted the following problems with Nguyen's high risk pregnancy: chronic pain due to fibromyalgia, depression, obesity, flank pain, and anemia. Tr. 962. Dr. Bauer noted Nguyen had been on a pain contract with her primary care physician which he continued. Id. Nguyen had been taking Oxycodone, Morphine, Flexeril, and Carbidopa (for restless leg syndrome), but by that date had weaned herself from everything except Oxycodone. Id.
B. Mental Health
On December 4, 2008, David Gostnell, Ph.D., a clinical psychologist-neuropsychologist, performed a psychodiagnostic examination of Nguyen. Tr. 659-65. Dr. Gostnell noted Nguyen appeared "somewhat fatigued and lethargic throughout the exam." Tr. 663. Her affect was "moderately restricted, stable, and slightly dysthymic, " and her "thought processing was logical, coherent, and goal-directed." Id. Nguyen reported limitations in her daily living activities that "reflect pain, fatigue, and problems with her mood that are intertwined in a chronic pain syndrome." Tr. 664. She also complained of cognitive impairments which Dr. Gostnell noted "are not unusual in patients with fibromyalgia, " but her brief mental status exam was inconclusive. Id. Dr. Gostnell diagnosed Nguyen with Pain Syndrome Associated with Psychological Factors and General Medical Condition; Major Depressive Disorder, Recurrent, Chronic; and Alcohol Abuse, by History. Tr. 665.
On February 10, 2010, Kay L. Stradinger, Psy.D., examined Nguyen. Tr. 843-49. She noted that Nguyen's mood appeared slightly dysphoric and anxious, that her affect was blunted, and that she had some difficulty with concentrating. Tr. 847-48. Dr. Stradinger diagnosed Nguyen with Major Depressive Disorder, recurrent, moderate to severe; Posttraumatic Stress disorder, chronic; Cannabis abuse in a controlled environment; and history of alcohol abuse. Tr. 848. For a functional assessment, Dr. Stradinger opined that Nguyen would be "capable cognitively of performing simple and repetitive work type tasks, " but "likely would have a difficult time interacting appropriately and effectively on a daily basis with supervisors, coworkers, and the public." Tr. 849. Dr. Stradinger further opined Nguyen "would have a difficult time handling the usual stresses in the workplace given her mood, anxiety, and limited coping skills" and that she "might need extra time and support or reinforcement to learn new job duties and concentrate on multi-step commands, given her depression and anxiety, and difficulties in concentration and attention." Id.
A. Sally Clayton, Ph.D.
Sally Clayton, Ph.D., a psychologist, testified at the hearing. Tr. 42-52. Based on her review of the medical records, she opined that Nguyen would meet the DSM-IV criteria for major depressive disorder, recurrent and moderate, an anxiety disorder, and a pain disorder associated with both psychological factors and a general medical condition. Tr. 44. Dr. Clayton also opined that Nguyen was mildly impaired in the activities of daily living, and moderately impaired in her social functioning, concentration, persistence, and pace. Tr. 47-48.
At the hearing, Nguyen testified that she had chronic pain, "around 8, 9" on a scale from 1 to 10, that her hip and knee will sometimes "give up" and cause her to fall to the ground, that she has problems with her hands with pain and cannot hold things without dropping them. Tr. 38-40. Nguyen also testified that she had problems with memory and concentration. Tr. 41.
C. Vocational Expert
At the hearing, the ALJ presented a Vocational Expert ("VE") with the following hypothetical:
If we have an individual with the claimant's age, education and work experience who was capable of performing work at the light duty level, would be lifting 20 pounds occasionally and 10 pounds frequently, the standing, walking, and sitting requirements were consistent with the full range of light work. This person should not perform work at unprotected heights and should avoid hazardous machinery, except she is permitted to drive. She would be restricted to the simple entry level work, not more than occasional interaction with the public. Is there any of the past work that you identified that could be performed?
The VE testified the hypothetical would be consistent with Nguyen's past work of assembly of small products. Tr. 57. When the ALJ added the restriction that the individual had lapses from time to time with concentration, but could make 90-95% of her production goals, the VE testified she did not think that would negatively impact employment in that occupation. Tr. 57. However, a marked difficulty in concentration, ...