Kenneth Morgan, Jr. v. Carolyn Colvin, Acting Cmsn, 803 F.3d 773

Kenneth Morgan applied for Social Security disability benefits after workplace injuries (back, left shoulder, left leg) and alleged disabling pain preventing work.
Administrative hearing was held before ALJ Elizabeth Palacios; Morgan testified and was represented by counsel.
Hearing Office Chief ALJ Michael Hertzig issued the final decision in place of ALJ Palacios, stating he reviewed the record and saw no need for a supplemental hearing.
ALJ Hertzig found Morgan had severe impairments but retained RFC for medium work and could perform jobs in the national economy; he discredited Morgan’s testimony about the severity of pain, citing drug-seeking indicators in the record.
Morgan appealed administrative denial through the Appeals Council, then the district court (which affirmed), and appealed to the Fifth Circuit arguing, inter alia, that the ALJ’s credibility finding violated HALLEX because the deciding ALJ did not hear the testimony.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether ALJ who did not conduct hearing may make credibility findings without a supplemental hearing under HALLEX	Morgan: HALLEX requires reassignment ALJ to hold another hearing when credibility/demeanor is significant; here credibility was dispositive, so failure prejudiced him	Commissioner: Replacement ALJ reviewed the record and properly exercised discretion to forgo supplemental hearing	Held: Fifth Circuit reverses and remands — HALLEX requires follow-through; because credibility was essential and ALJ never heard testimony, violation prejudiced Morgan and remand is required

Newton v. Apfel, 209 F.3d 448 (5th Cir. 2000) (agency must follow its own procedures; HALLEX violations require remand if prejudicial)
Kane v. Heckler, 731 F.2d 1216 (5th Cir. 1984) (remedy of remand where internal procedure violation prejudices claimant)
Moore v. Apfel, 216 F.3d 864 (9th Cir. 2000) (discussing HALLEX’s nonbinding status on Commissioner)
Spellman v. Shalala, 1 F.3d 357 (5th Cir. 1993) (standard of appellate review for district court summary judgment in SSA appeals)
Greenspan v. Shalala, 38 F.3d 232 (5th Cir. 1994) (two-part review under 42 U.S.C. § 405(g): substantial evidence and legal standards)