Wallace v. Colvin, 193 F. Supp. 3d 939

Background

Plaintiff applied for Social Security DIB and SSI in 2008 alleging bipolar disorder with severe mood cycling, anxiety, and functional impairment.
Treating psychiatrist Dr. Samar Mahmood treated plaintiff from 2009–2013 (≈16 visits), repeatedly diagnosing bipolar disorder and providing GAF scores ~40–50; she completed multiple impairment questionnaires concluding plaintiff could not sustain low‑stress work.
ALJ relied heavily on non‑treating medical expert Dr. Mark Oberlander, gave Dr. Mahmood little or no weight, and denied benefits in 2010; Judge Kim (N.D. Ill.) remanded in 2012 for failure to apply the treating‑physician rule.
On remand the ALJ again discounted Dr. Mahmood, relied on Dr. Oberlander, and issued a second denial in 2013 without adequately addressing Judge Kim’s criticisms or applying the two‑step treating‑physician analysis.
Magistrate Judge Johnston found the ALJ and SSA again failed to follow the court’s remand order and SSA regulations (including law‑of‑the‑case principles), granted plaintiff’s summary judgment, denied the government’s motion, and remanded for further proceedings (recommending a different ALJ and medical expert).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Did ALJ properly apply treating‑physician rule?	ALJ failed both step‑one (controlling‑weight) and step‑two (checklist factors); Dr. Mahmood’s long treatment relationship and records were not credited.	ALJ permissibly found Dr. Mahmood’s opinions extreme/not supported by objective evidence; checklist need not be explicit.	Remand: ALJ did not apply the two‑step test or meaningfully weigh checklist factors; error warrants remand.
Must ALJ follow prior district court remand and law‑of‑the‑case?	Remand required compliance with Judge Kim’s detailed order; plaintiff reasonably expected that errors would be corrected.	SSA contends its procedures and discretion permit reliance on medical expert; did not argue direct noncompliance.	Remand: ALJ failed to follow court’s remand directives; law‑of‑the‑case and remand instructions binding absent compelling reason.
Were credibility and medication/therapy inferences lawful?	ALJ improperly penalized plaintiff for imperfect treatment history, nonuse of certain medications, and lack of therapy without probing financial/access barriers.	ALJ and medical expert argued sparse/brief treatment and medication choices undercut credibility/diagnosis.	Remand: ALJ’s adverse inferences were insufficiently supported and ignored evidence (e.g., side effects, access issues); credibility/medication findings require reassessment.
Should late‑submitted Sarlo report and VE hypotheticals affect decision?	Sarlo report (bipolar, GAF 40) bolsters treating opinions and should be considered on remand; VE hypothetical may have omitted moderate concentration/pace limits.	Government notes Sarlo report post‑decision and not before ALJ; VE hypothetical adequate per ALJ.	Remand: Sarlo report may be considered on remand; vocational evidence and hypothetical limitations should be reassessed consistent with corrected RFC.

Key Cases Cited

United States v. Anderson, 772 F.3d 662 (11th Cir. 2014) (describing law‑of‑the‑case doctrine and its purpose)
Wilder v. Apfel, 153 F.3d 799 (7th Cir. 1998) (agency must conform to judicial decision on remand absent compelling reason)
Key v. Sullivan, 925 F.2d 1056 (7th Cir. 1991) (treating physician deference principles)
Richardson v. Perales, 402 U.S. 389 (U.S. 1971) (substantial‑evidence standard governs agency findings)
Moss v. Astrue, 555 F.3d 556 (7th Cir. 2009) (when treating opinion is not controlling, ALJ must weigh checklist factors)
Bauer v. Astrue, 532 F.3d 606 (7th Cir. 2008) (purpose of checklist factors to determine weight for treating source)
Kangail v. Barnhart, 454 F.3d 627 (7th Cir. 2006) (bipolar disorder is episodic; normal office behavior does not negate severity)
Moon v. Colvin, 763 F.3d 718 (7th Cir. 2014) (ALJ may not cherry‑pick evidence inconsistent with treating records)
Pierce v. Colvin, 739 F.3d 1046 (7th Cir. 2014) (ALJ must consider financial/insurance barriers in sparse treatment histories)