Today we hold that when a district court remands a disability benefits case to the Social Security Administration pursuant to sentence four of 42 U.S.C. § 405(g), its decisión whether such a remand is for further proceedings or for an immediate payment of benefits is reviewable for abuse of discretion rather than de novo. Applying that standard to the facts presented by this appeal, we conclude the district court did not abuse its discretion by remanding Appellant’s disability claim to the Social Security Administration for further proceedings rather, than for immеdiate payment of benefits, and we affirm the judgment of the district court.
I
A. Procedural History
Appellant applied for Title II Social Security disability insurance benefits and Title XVI Supplemental Security Income on April 20, 1994. After the denial of his initial application and denial upon reconsideration, Appellant was granted a hearing before an administrative law judge (the “ALJ”) on February 28, 1996. On June 25, 1996, the ALJ issued a Notice of Decision (“ALJ Decision”)' which found that Appellant was severely impaired but not disabled, and thereby not entitled to benefits, because he retained sufficient residual functional capacity to guard the gate “at a mill or plant” or assemble small products.
B. Appellant’s Disability
Appellant was born November 20, 1948. At the hearing before the ALJ, vocational expert Jenipher Gaffney classified Appellant’s past work experience as being that of a “carpenter, which is ... medium skilled work.” Appellant’s most recent employment, according to his own testimony at the hearing, was a job building “clean rooms” in an “еlectronic plant” in the spring of 1991. The job lasted about one month and terminated because the project was completed. Appellant claims that he has been disabled since March 1, 1991, a date which roughly coincides with the termination of his most recent employment.
Appellant’s impairment is described in the ALJ Decision as “a somatoform disorder, fibromyalgia and nocturnal myoclo-nus.” The ALJ goes on to note that “Mr. Harman’s impairments impose limitations on his ability to perform work-related functions and are ‘severe.’ ” According to Appellant, his impairments manifest themselves through a wide range of inconveniences which are difficult to forecast from one day to the next but which include the following: inability to achieve deep sleep due to the myoclonus (leg twitching); inability to sit in one place more than twenty minutes without suffering back pain and a “splitting headache”; inability to stand still for twenty minutes without incurring a “fair chance [of] fall[ing] upon trying to move”; inability to locomote without a cane or other suppоrt; and difficulty lifting, grasping and stooping. Appellant claims that about fifty percent of his days are “bad,” and that on bad days he “considers] it a significant accomplishment to make it from [his] bed to the toilet and back.”
II
Although it is settled law that a district court’s decision to affirm, reverse or modify a determination of the Social Security Administration is reviewed de novo on appeal, Ramirez v. Shalala,
“[W]hen ... the trial court determination is one for which neither a clear statutory prescription nor a historical tradition
We preface our analysis with the simple observation that “decisions by judges are traditionally divided into three categories, denominated questions of law (reviewable de novo), questions of fact (reviewable for cleаr error), and matters of discretion (reviewable for ‘abuse of discretion’).” Pierce,
A. The Distinction Between De Novo Review and Review for Abuse of Discretion
In their treatise on federal standards of review, Childress and Davis suggest that the “abuse of discretion” label appears to “describef ] a range of appellate responses with varying degrees of deference handed down.” 1 Childress and Davis, Federal Standards of Review (hereinafter “Childress”) § 4.01, 4-13 (2d ed.1992). Normally, the decision of a trial court is reversed under the abuse of discretion standаrd only when the appellate court is convinced firmly that the reviewed decision lies beyond the pale of reasonable justification under the circumstances. Valley Engineers v. Electric Engineering Co.,
While the distinction between these standards seems clear enough in the abstract, in practice the distinction often begins to blur as a body of appellate case law begins to develop with respect to issues which frequently are the subject of appeals. Under either standard of review, the case law eventually creates a template which may be placed over trial court decisions to determine whether those decisions as a matter of law fall inside or outside the guidelines of permissibility.
In such situations, perhaps the most important difference between the two standards has to do with which court’s judgment is paramount. In the context of de novo review, a trial court’s error, or lack thereof, is defined by the appellate court’s exercise of judgment. With abuse of discretion review, error is defined by the appellate court’s tolerance for the trial court’s judgment. In determining the proper standard of review in this case and others like it, we must decide whether the task of reviewing a decision to remand a cause for further proceedings rather than for immediate payment of benefits tests our facility for judgment or our capacity for tolerance.
We must choose between the de novo and abuse of discretion standards by balancing the “peculiar[ ] need of a full appellate review,” (Farley,
In Pierce, the Court reviewed a determination concerning whether a party’s underlying legal position was substantially justified for the purpose of awarding attorney’s fees under the Equal Access to Justice Act. The Court indicated that if such EAJA determinations likely would yield “substantial amount[s] of ... liability,” it might have required “more intensivef ]” review than was appropriate under abuse of discretion test it ultimately prescribed. Id. at 563,
Pierce also placed great emphasis on which tribunal was “better positioned” to make the decision. Here, that factor is largely neutrаl because the district court, like this Court, must make its decision on the basis of the administrative record alone. See 42 U.S.C. § 405(g); Parks v. Harris,
The third Pierce factor, however, weighs overwhelmingly in favor of viewing the district court’s decision as discretionary. The remand decision is not “susceptible, for the time being at least, of useful generalization.” Pierce,
Moreover, there are sound practical reasons why we have viewed our own decisions in this area as discretionary.
Finally, although as noted previously § 405(g) does not address explicitly the standard of review in this context, the internal logic of the statute itself suggests that Congress intended that district courts have discretion with respect to the conditions of a sentence four remand. As in other administrative law contexts, judicial review in cases under the Social Security Act is limited to a review of the administrative record for a determination of whether the Commissioner’s decision is supported by substantial evidence in the record. See 42 U.S.C. § 405(g). The determinations of the district court thus appropriately are reviewed de novo on appeal. Ramirez v. Skalala,
Ill
A. Determining the Correct Test
Appellant contends that as a result of the ALJ’s improper rejection of Dr. Fox’s opinion, the district court in this case was obligated simply to credit the opinion as true in order to determine whether there was any need of further proceedings. The Commissioner disputes whether our precedents require us to construe the record so generously in Appellant’s favor. According to the Commissioner, the necessity for
Appellant supports his argument that Dr. Fox’s testimony should be credited by citation to Lester v. Chater,
(1) the ALJ has failed to provide legally sufficient reasons for rejecting such evidence, (2) there are no outstanding issues that must be resolved before a determination of disability can be made, and (3) it is clear from the record that the ALJ would be required to find the claimant disabled were such evidence credited.
Smolen,
The Commissioner attacks Appellant’s reliance on Lester by arguing that the record in that case contained no evidence capable of supporting the rejection of the medical opinions, while here, according to the Commissioner, there is such evidence.
Requiring the ALJs to specify any faсtors discrediting a claimant at the first opportunity helps to improve the performance of the ALJs by discouraging them from reaching] a conclusion first, and then attempting] to justify it by ignoring competent evidence.... [¶ And] the rule [of crediting such testimony] ensures that deserving claimants will receive benefits as soon as possible....
... Certainly there may exist valid grounds on which to discredit a claimant’s pain testimony.... But if grounds for such a finding exist, it is both reasonable and desirable to require the ALJ to articulate them in the original decision.
Id. at 1398-99. (Emphasis added; internal quotes and citation omitted).
Our reliance on Varney II to justify the current application of Smolen does not obscure the more general rule that the decision of whether to remand for further proceedings turns upon the likely utility of such proceedings. See Lewin v. Schweiker,
B. Applying the Test
Not surprisingly, the parties disagree as to whether the Smolen test is met here. Specifically, they disagree as to whether crediting Dr. Fоx’s opinion mandates a finding of disability.
Appellant consulted with Dr. Fox on several occasions between mid-1995 and mid-1997. Dr. Fox’s notes from Appellant’s June 21, 1995 visit indicate that the doctor “found [Appellant] totally disabled,” and that “he became disabled 4 years ago due to pain and weakness in his lower extremities and back.” Dr. Fox also noted that “[a] diagnosis of fibromyalgia [had been] made 4 months [earlier] by Dr. Philip Mon Pere and Dr. Robert Bennett in Portland.”
The notes contain the following support for Dr. Fox’s conclusion that Appellant is “totally disabled”:
Extremities all have subjective muscle pain worse in the lower extremity to active and passive motion and rotation. There is 1+ peripheral edema in both legs and decreased deep tendon reflexes on the left. I am convinced the gentleman has a diagnosis consistent with fi-bromyalgia.
The notes from Appellant’s June 21, 1995 visit with Dr. Fox constitute the only indication of the doctor’s opinion which was available to the ALJ before the ALJ determined that Appellant had residual functional cаpacity which would enable him to work as an “assembler of small products,” or “a gate guard at a mill or plant” and that therefore he was not disabled. However, Appellant submitted additional materials to the Appeals Council in conjunction with his request that they review the ALJ Decision. These materials included treatment records from July 19, 1996 and notes from October 24, 1996 and July 1, 1997. We properly may consider the additional materials because the Appeals Council addressed them in the context of denying Appellаnt’s request for review. Ramirez v. Shalala,
The additional materials are consistent with the quoted June 21 notes and contain occasional added detail such as that “[Appellant] requires at least one cane for ambulation,” and “[o]n bad days, minimal ambulation about his house is all he can tolerate due to pain and severe fatigue .... He has used most of the currently available medications for fibromyal-gia with minimal success.... ” Appellant also submitted a questionnaire to the Appeals Council, (apparently providеd to Dr. Fox by Appellant’s counsel) in which the doctor opines that Appellant is not able to work “on a regular sustained basis, 8 hours a day, 40 hours a week,” at any exertional level.
However, even giving the additional materials the consideration to which they are entitled, there are at least two reasons why it would be inappropriate to conclude on the present state of the record that Appellant is entitled to benefits as a matter of law. First, Dr. Fox’s conclusion that Appellant is totally disаbled is a medical
Second, critical portions of Dr. Fox’s testimony, in particular the finding that Appellant could not work “on a regular sustained basis, 8 hours a day, 40 hours a week” were not before the ALJ at all but were presented only to the Appeals Council. While we properly may consider the additional evidence presented to the Appeals Council in determining whether the Commissioner’s denial of benefits is supported by substantial evidence, it is another matter to hold on the basis of evidence that the ALJ has had no opportunity to evaluate that Appellant is entitled to benefits as a matter of law. The appropriate remedy in this situation is to remand this case to the ALJ; the ALJ may then consider, the Commissioner then may seek to rebut and the VE then may answer questions with respect to the additional evidence.
C. Other Issues
Appellant also attributes a multitude of other errors to the district court. For example, Appellant notes that the district court found fault with the ALJ’s rejection of Appellant’s own testimony and the testimony of lay witness Avis Cook as well as with the ALJ’s assertion of an incomplete hypothetical to the vocational expert. Appellant argues that these findings constitute a separate basis for remanding Appellant’s case for immediate payment of benefits. Appellant also assigns error because the district court decision does not address the ALJ’s rejection of the opinion of Dr. Lewis, an examining physician.
Whatever the merits of these arguments, we conclude that there are sufficient unanswered questions in the record that the district court’s determination to remand the case for further proceedings was not an abuse of discretion. For example, there is evidence that Appellant may abuse alcohol, a fact which might disqualify him from receiving benefits, see 42 U.S.C. § 423(d)(21)(C), and that Appellant’s intellectual abilities are less limited than Appellant claims. Because neither the ALJ nor the vocational expert had the full picture before them, remand for further proceedings is particularly appropriate.
AFFIRMED.
Notes
. The determination as to whether a claimant has a disability involves a five step inquiry. 20 CFR § 404.1520. The answer at any stage of the analysis may be conclusive as to the lack of disability, in which case the inquiry terminates at that point. Id. The final step in the analysis is to assess the claimant’s Residual functional 'capacity, with the burden being upon the Commissioner to show that the claimant can still perform work available in the national economy. Smolen v. Chater,
. The district court noted that “Dr. Fox was either claimant’s treating physician (if he had one), or an examining physician.” For purposes of this appeal, we need not distinguish between these two categorizations.
. Prior to Forney v. Apfel,
. Sentence six of § 405(g) concerns remands for consideration of new evidence and it seems likely that the standard of review applicable to sentence-six remands also would be appropriate here. Unfortunately, different panels of this Court have come down on opposite sides of the de novo versus abuse of discretion debate with regard to sentence-six remands and it is improper for us to rely upon either position until the split is resolved an banc. Compare Clem v. Sullivan,
There are instances of courts in other circuits reviewing sentence-four remands for further proceedings, however, these cases tend to deal only with the legal issue of whether it was proper in the first instance to reverse the denial of benefits. E.g. Nguyen v. Shalala,
. Nothing we say here impairs or could impair the power of this Court, recognized in Reddick,
. Of course, Smolen’s three-part test really constitutes a two part inquiry, wherein the third prong is a subcategory of the second: if the ALJ were not “required to find the claimant disabled” upon crediting the evidence, then this certainly would constitute an “outstanding issue[ ] that must be resolved before a determination of disability [could] be made."
. Presumably, by attempting to distinguish Lester, the Commissioner intends also to say something about the applicability of the Smo-len test.
. No other aspect of the Smolen inquiry is at issue. The Commissioner has not appealed and therefore the district court’s finding that the ALJ inadequately rejected Fox’s testimony is not in question. But cf. Nguyen,
