Coulter v. Commissioner of Social Security, 673 F.Supp.3d 365

Plaintiff Rudolph Jay Coulter (b. 1954) applied for DIB and SSI alleging disability from July 1, 2014; claimants stopped working due to age/physical labor issues.
Initial ALJ (2018) found no severe impairments; Appeals Council vacated and remanded for further development in 2020.
On remand, ALJ held a hearing (2020), found severe physical impairments (bilateral knee DJD, left shoulder) but mental impairments (anxiety, opioid use disorder) were non-severe with "mild" limitations in two Paragraph B areas.
ALJ formulated an RFC for medium work with a right-hand cane and no overhead reaching with left arm, but the RFC contained no explicit mental limitations; ALJ concluded Coulter could perform past work as a resident supervisor.
Coulter challenged the decision, arguing (1) the ALJ failed to reconcile conflicting VE testimony from the vacated 2018 hearing and the 2020 hearing, and (2) the ALJ failed to incorporate or explain omission of the "mild" mental limitations in the RFC.
Court held the ALJ did not err regarding VE testimony (no actual conflict because different hypotheticals were posed) but erred by failing to explain why step-two "mild" mental limitations were not reflected or addressed in the RFC; remand granted and judgment for Plaintiff.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether ALJ erred by not reconciling VE testimony from the vacated 2018 hearing with VE testimony at the 2020 remand hearing	Coulter: VE testimonies conflicted and were outcome-determinative; ALJ should have reconciled them	Commissioner: Remand allowed ALJ to develop record; different hypotheticals were posed so no reconciliation required; no authority requires ALJ to rely on testimony from a vacated hearing	Held: No error — hypotheticals were materially different, so no conflict to reconcile and ALJ need not rely on vacated-hearing VE testimony
Whether ALJ erred by failing to account for "mild" mental limitations found at step two in the RFC and to explain omission	Coulter: ALJ found mild limitations in interacting with others and concentration/pace at step two but omitted any mental restrictions from the RFC and gave no rationale	Commissioner: Mild Paragraph B findings do not automatically translate into RFC limits; ALJ noted distinction between step-two and RFC and stated RFC reflects Paragraph B findings	Held: Error — ALJ must consider non-severe mental impairments when formulating RFC and explain why mild step-two limits do not produce RFC restrictions; failure to do so requires remand (not harmless where past work is skilled and VE testified such mental limits would preclude that work)

Butts v. Barnhart, 388 F.3d 377 (2d Cir. 2004) (articulates standard of review for ALJ legal errors and substantial-evidence inquiry)
Brault v. Social Security Admin., Commissioner, 683 F.3d 443 (2d Cir. 2012) (explains substantial-evidence review and deference to ALJ factfinding)
Schaal v. Apfel, 134 F.3d 496 (2d Cir. 1998) (defines substantial evidence as more than a mere scintilla)
Zabala v. Astrue, 595 F.3d 402 (2d Cir. 2010) (ALJ may not ignore or mischaracterize evidence when assessing disability)
Genier v. Astrue, 606 F.3d 46 (2d Cir. 2010) (court may not substitute its judgment for ALJ where record supports ALJ's conclusion)
Rutherford v. Schweiker, 685 F.2d 60 (2d Cir. 1982) (where evidence permits more than one rational interpretation, ALJ's conclusion must be upheld)
Parker-Grose v. Astrue, [citation="462 F. App'x 16"] (2d Cir. 2012) (remand required where ALJ failed to account for limitations in RFC analysis)
Salmini v. Commissioner of Social Security, [citation="371 F. App'x 109"] (2d Cir. 2010) (courts may sometimes rely on other parts of the record to uphold ALJ, but adequate explanation is required)