Rosario Gutierrez appeals the district court’s denial of attorney fees under the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412(d), after she prevailed in her appeal in this court reversing the Social Security Administration’s (SSA) denial of disability benefits.
See Gutierrez v. Apfel,
I.
In any action brought by or against the United States, the EAJA requires that “a court shall award to a prevailing party other than the United States fees and other expenses ... unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.” 28 U.S.C. § 2412(d)(1)(A). An applicant for disability benefits becomes a prevailing party for the purposes of the EAJA if the denial of her benefits is reversed and remanded regardless of whether disability benefits ultimately are awarded.
Shalala v. Schaefer,
In Gutierrez I, we reversed the ALJ’s denial of disability benefits because the ALJ failed to follow SSA regulations regarding the evaluation of mental impairments. When evaluating the severity of mental impairments, the ALJ must follow a special procedure to “[ijdentify the need for additional evidence to determine impairment severity,” “[consider and evaluate functional consequences of the mental disorder(s) relevant to [the applicant’s] ability to work” and “[organize and present our findings in a clear, concise, and consistent manner.” 20 C.F.R. § 404.1520a(a). Social Security regulation 20 C.F.R. § 404.1520a(d), at the time of the ALJ’s decision, stated:
A standard document outlining the steps of this procedure must be completed by us in each case at the initial, reconsideration, administrative law judge hearing, and Appeals Council levels (when the Appeals Council issues a decision).... For all cases involving mental disorders at the administrative law judge hearing or Appeals Council levels, the standard document will be appended to the decision.
This form is referred to as a psychiatric review technique form (PRTF).
*1258 Gutierrez’s application for disability benefits presented a colorable claim of mental impairment, including a report from her treating psychiatrist diagnosing her with “major depression with psychotic features ... which have been present for some time,” apparently “due to a sexual assault last year by her physician.” The ALJ, relying upon the opinion of a nonexamin-ing physician, found that Gutierrez had a severe mental disorder from March 1995 but it had not lasted, nor would it continue to last, for 12 continuous months. 1 He did not fill out and attach a PRTF as required by the SSA’s regulations.
We reversed the ALJ’s decision and held that the failure to fill out and attach the PRTF required remand to the SSA “for proper evaluation and documentation of the claimant’s mental impairments.”
Gutierrez
I,
II.
The decision whether to award fees under the EAJA, including the district court’s conclusion that the government’s position was substantially justified, is reviewed for abuse of discretion.
Pierce v. Underwood,
A. Substantially justified.
“Substantially justified” means “ ‘justified in substance or in the main’— that is, justified to a degree that could satisfy a reasonable person.”
Pierce,
The district court denied Gutierrez attorney fees under the EAJA because it found that “the government’s decision to litigate cannot be found to be unreasonable” in light of the fact that “[t]he materiality of completing a PRTF form, at the time, was one of first impression in the Ninth Circuit.” But we consider whether “the position of the government was, as
a
*1259
whole, substantially justified." United States v. Rubin,
The plain language of the EAJA states that the "`position of the United States' means, in addition to the position taken by the United States in the civil action, the action or failure to act by the agency upon which the civil action is based." 28 U.S.C. § 2412(d)(2)(D); Jean,
The district court erred in not addressing the reasonableness of the underlying conduct and basing its denial of fees solely on the government's litigation position. See Wilderness Society v. Babbitt,
1. Underlying agency condnct.
The underlying conduct in this case was a failure of the AU to follow SSA regulations requiring a PRTF to be completed and appended to the decision in cases requiring the evaluation of mental impairments. "[F]inding that an agency's position was substantially justified when the agency's position was based on violations of ... the agency's own regulations, constitutes an abuse of discretion." Mendenhall v. NTSB,
To support its argument that 20 C.F.R. § 404.1520a(d) was not clear, the government tries to find support in the SSA's decision, after Gutierrez I was decided, to amend the regulation no longer to require a PRTF as long as the required steps are carried out in the hearing. See Revised Medical Criteria for Evaluating Mental Disorders and Traumatic Brain Injury, 65 Fed.Reg. 50,746 (Aug. 21, 2000). This evidence is wholly irrelevant, however, because we are concerned with "the underlying government conduct at issue and the totality of circumstances present before and during litigation." Barry v. Bowen,
2. Litigation position.
The government argues that an award of fees is nevertheless inappropriate because the district court was correct in finding that its litigation position was substantially justified. It states that given the lack of Ninth Circuit precedent on the effect of not following the regulations prior to Gutierrez I, "the Commissioner reasonably chose to litigate to clarify the law, relying on a persuasive Eighth Circuit case for guidance." The "persuasive" Eighth Circuit decision on which the government predicated its litigation position is Fountain v. R.R. Ret. Bd.,
To begin with, Fountain was not a Social Security case. The Railroad Retirement Board operates under the strictures of the Railroad Retirement Act (RRA). The court in Fountain expressly noted that the RRA is "analogous to the disability provisions of the Social Security Act," id. at 530, except that "the Board is not technically mandated to complete the [PRTF]," id. at 532 n. 5. See also id. at 531 (`Where there is evidence of a medically determinable mental impairment, a hearing officer ... is urged to complete a Psychiatric Review Technique Form.") (emphasis added). Although Fountain is distinguishable on other grounds, that it did not involve an explicit regulatory requirement provides another reason why the government's reliance on Fountain was misplaced. SSA regulations explicitly mandated that the PRTF be completed, as the court in Fountain itself recognized.
Even more significantly, the court in Fountain held that the failure to fill out a PRTF was harmless because, although Fountain mentioned being depressed at the hearing, his application for benefits was based only on physical impairments. The court stated that "there is no credible evidence that Fountain suffers from a medically determinable mental impairment" and "Fountain did not include any allegation of a mental impairment in his original application." Id. at 532. The record here shows, and this court in Gutierrez I held, that Gutierrez presented credible evidence displaying a severe mental impairment and "her claim of severe depression was central to her application for disability benefits." Gutierrez I,
Indeed, in Gutier'rez I we distinguished Fountain on that basis, stating that "[ojur decision is consistent with cases that have held that the failure to fill out the PRTF does not require reversal in situations where there is no viable claim of mental impairment." Id. (citing Fountain). We thus followed the holdings of at least three other circuits, including the Eighth, "recognizing that where there is a color-able claim of mental impairment, 20 C.F.R. § 404.1520a requires the evaluation form to be completed and appended to the decision, and the failure to do so requires remand to the Social Security Administration." Id. (citing Stambaugh v. Sullivan,
Because we conclude that both the government’s underlying conduct and its litigation position lacked a reasonable basis in fact and law, we hold that the government’s position as a whole was not substantially justified. We turn, then, to the question of whether any special circumstances make the award of fees in this matter unjust.
B. Special circumstances.
Where the position of the government as a whole is not substantially justified, an award of attorney fees to the prevailing party is required unless “special circumstances make an award unjust.” 28 U.S.C. § 2412(d)(1)(A). Ultimately, the government “urges that every case of first impression must constitute special circumstances” justifying a refusal to award costs under the EAJA. We disagree.
First, the government raises this issue under the wrong stage of analysis. Whether a litigated issue is one of first impression is properly considered as one factor in determining whether the government’s litigation position is substantially justified, not as a special circumstance justifying the refusal of an award of fees.
See Kali,
More importantly, there is no per se rule that EAJA fees cannot be awarded where the government’s litigation position contains an issue of first impression. In several cases, we have held that the government’s litigation position was substantially justified when the rules under which it was operating were ambiguous and it pursued a
reasonable
interpretation on which we had not previously ruled.
See TKB Int’l, Inc. v. United States,
The matter of first impression before this court in G'u,tierrez I did not involve contested interpretations of an ambiguous legal rule. The only issue of first impression we were required to resolve was the impact of a failure to follow a clear rule contained in the SSA's regulations. Thus the government's argument means that whenever it violates its own regulations, or assumably any clear legal rule, for the first time, the private party who succeeds in forcing government compliance nonetheless must be deprived of fees because the government gets an automatic "first impression" free pass. This position contravenes the purpose of the BAJA, a "clearly stated objective of [which] is' to eliminate financial disincentives for those who would defend against unjustified governmental action and thereby to deter the unreasonable exercise of Government authority." Ardestani v. INS,
CONCLUSION
The district court abused its discretion in finding that the government's position, on the whole, was substantially justified. We reverse and remand for an award of attorney fees.
REVERSED and REMANDED.
Notes
. The Social Security Act defines "disability” as the "inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which ... has lasted or can be expected to last for a continuous period of not less than 12 months.” 42 U.S.C. § 423(d)(1)(A).
. We held that the failure to fill out the PRTF was not harmless because her treating psychiatrist "does not express any opinion that the claimant’s position will materially improve within twelve months” and the opinion of the nonexamining physician was "not entitled to as much weight as the opinion of a treating physician.” Id. at 1050.
. In both Stebco and TKB, fees were being requested for tax litigation under 26 U.S.C. § 7430. That statute authorizes "reasonable litigation costs” unless the government can establish "the position of the United States in the proceeding was substantially justified.” Id. § 7430(c)(4)(B)(i) (emphasis added). Even if there were a per se rule in that context that litigation involving any issue of first impression was substantially justified, it *1262 could not be applied uniformly to the EAJA context where the court must also examine the reasonableness of the underlying government conduct.