MEMORANDUM OPINION AND ORDER

SHERI PYM, Magistrate Judge.

I.

INTRODUCTION

On May 7, 2013, plaintiff David E. Snell filed a complaint against defendant, the Commissioner of the Social Security Administration ("Commissioner"), seeking a review of a denial of supplemental security income ("SSI") and disability insurance benefits ("DIB"). Both plaintiff and defendant have consented to proceed for all purposes before the assigned Magistrate Judge pursuant to 28 U.S.C. § 636(c). The court deems the matter suitable for adjudication without oral argument.

Plaintiff presents one issue for decision: whether the Administrative Law Judge ("ALJ") properly determined that plaintiff did not have a severe mental impairment at step two. Memorandum in Support of Plaintiff's Complaint ("P. Mem.") at 2-4; Memorandum in Support of Defendant's Answer at 3-8.

Having carefully studied, inter alia, the parties's moving papers, the Administrative Record ("AR"), and the decision of the ALJ, the court concludes that, as detailed herein, the ALJ erred at step two. Therefore, the court remands this matter to the Commissioner in accordance with the principles and instructions enunciated in this Memorandum Opinion and Order.

II.

FACTUAL AND PROCEDURAL BACKGROUND

Plaintiff, who was forty-one years old on his alleged disability onset date, has a high school education. AR at 101, 114. On March 2 and 7, 2011, plaintiff filed applications for SSI and DIB, alleging an onset date of July 8, 2006 due to depression, back disorder, cracked discs, panic attacks, anxiety, neck pain, and difficulty walking. Id at 34-35, 101, 113. The Commissioner denied plaintiff's application initially, after which he filed a request for a hearing. Id. at 40-44, 46.

On January 13, 2012, plaintiff, represented by counsel, appeared and testified at a hearing before the ALJ. Id. at 19-33. The ALJ also heard testimony from David Peterson, a medical expert. Id. at 28-32. On January 25, 2012, the ALJ denied plaintiff's claim for benefits. Id. at 10-15.

Applying the well-known five-step sequential evaluation process, the ALJ found, at step one, that plaintiff had not engaged in substantial gainful activity since July 8, 2006, the alleged onset date. Id. at 12.

At step two, the ALJ found that plaintiff did not suffer from any severe impairment. Id. at 12-14.

Consequently, the ALJ concluded that plaintiff did not suffer from a disability as defined by the Social Security Act ("SSA"). Id. at 14.

Plaintiff filed a timely request for review of the ALJ's decision, which was denied by the Appeals Council. Id. at 1-3. The ALJ's decision stands as the final decision of the Commissioner.

III.

STANDARD OF REVIEW

This court is empowered to review decisions by the Commissioner to deny benefits. 42 U.S.C. § 405(g). The findings and decision of the Social Security Administration must be upheld if they are free of legal error and supported by substantial evidence. Mayes v. Massanari, 276 F.3d 453, 458-59 (9th Cir. 2001) (as amended). But if the court determines that the ALJ's findings are based on legal error or are not supported by substantial evidence in the record, the court may reject the findings and set aside the decision to deny benefits. Aukland v. Massanari, 257 F.3d 1033, 1035 (9th Cir. 2001); Tonapetyan v. Halter, 242 F.3d 1144, 1147 (9th Cir. 2001).

"Substantial evidence is more than a mere scintilla, but less than a preponderance." Aukland, 257 F.3d at 1035. Substantial evidence is such "relevant evidence which a reasonable person might accept as adequate to support a conclusion." Reddick v. Chater, 157 F.3d 715, 720 (9th Cir. 1998); Mayes, 276 F.3d at 459. To determine whether substantial evidence supports the ALJ's finding, the reviewing court must review the administrative record as a whole, "weighing both the evidence that supports and the evidence that detracts from the ALJ's conclusion." Mayes, 276 F.3d at 459. The ALJ's decision "`cannot be affirmed simply by isolating a specific quantum of supporting evidence.'" Aukland, 257 F.3d at 1035 (quoting Sousa v. Callahan, 143 F.3d 1240, 1243 (9th Cir. 1998)). If the evidence can reasonably support either affirming or reversing the ALJ's decision, the reviewing court "`may not substitute its judgment for that of the ALJ.'" Id. (quoting Matney v. Sullivan, 981 F.2d 1016, 1018 (9th Cir. 1992)).

IV.

DISCUSSION

Plaintiff argues that the ALJ erred in failing to determine that he has a severe mental impairment at step two. P. Mem. at 2-4. Specifically, plaintiff contends that the medical evidence and medical expert support a finding of a severe mental impairment. Id. The court agrees.

At step two, the Commissioner considers the severity of the claimant's impairment. 20 C.F.R. § 416.920 (a)(4)(ii). "[T]he step-two inquiry is a de minimis screening device to dispose of groundless claims." Smolen v. Chater, 80 F.3d 1273, 1290 (9th Cir. 1996). The purpose is to identify "at an early stage those claimants whose medical impairments are so slight that it is unlikely they would be disabled even if their age, education, and experience were taken into account." Bowen v. Yuckert, 482 U.S. 137, 153, 107 S.Ct. 2287, 96 L. Ed. 2d 119 (1987).

An impairment is "not severe" when the impairment would have no more than a minimal effect on a claimant's ability to work.1 Webb v. Barnhart, 433 F.3d 683, 686-87 (9th Cir. 2005) ("[A]n ALJ may find that a claimant lacks a medically severe impairment or combination of impairments only when his conclusion is `clearly established by medical evidence.'"); Social Security Ruling ("SSR")2 85-28. "[A]pplying our normal standard of review to the requirements of step two, we must determine whether the ALJ had substantial evidence to find that the medical evidence clearly established that [the claimant] did not have a medically severe impairment or combination of impairments." Webb, 433 F.3d at 687. In addition, "`if an adjudicator is unable to determine clearly the effect of an impairment or combination of impairments on the individual's ability to do basic work activities, the sequential evaluation should not end with the not severe evaluation step.'" Id. (quoting SSR 85-28) (brackets omitted).

Here, the ALJ determined that plaintiff did not have a severe mental impairment. In reaching this decision, the ALJ relied on plaintiff's medical records and the testimony of the medical expert, Dr. David Peterson. The ALJ acknowledged that plaintiff had been treated for depression and anxiety, but determined that his medical records consisted of initial consultations as opposed to longitudinal treatment. AR at 14. Although the ALJ was correct in noting the record did not reflect extensive long-term treatment, the record nonetheless contained evidence sufficient to meet the de minimis threshold of step two.

The records show that plaintiff was being treated with medication as early as 2009.3 See id. at 193-97. During his initial assessment by the South Bay Mental Health Clinic of the Los Angeles County Department of Mental Health, the evaluator noted that plaintiff was cooperative and had unimpaired speech, intellectual functioning, and memory. Id. at 194. But the evaluator also observed that plaintiff had a sad affect, was dysphoric, had fragmented concentration, and had been prescribed Wellbutrin, Trazodone, and Depakote. Id. at 194, 196. Plaintiff reported to the South Bay Mental Health Clinic for follow up medication visits on a regular basis between September 2009 and August 2011 and briefly attended group therapy. See, e.g., id. at 205-13, 257-65. Although far from overwhelming, there was not a "total absence of objective evidence of severe medical impairment." See Webb, 433 F3d at 688.

In addition, other evidence to support a finding of a severe impairment at step two included plaintiff's testimony and the opinions of the State Agency physician and medical expert. Plaintiff testified that he was often confused and anxious and could not concentrate, which was the reason he missed his recent appointments.4 AR at 25. The State Agency psychiatrist, Dr. Alvin Smith, noted that the record indicated that plaintiff suffered from depression but there was insufficient evidence to opine functional limitations. Id. at 221, 226, 228. Although Dr. Smith did not offer a dispositive opinion, his comments suggested that further assessment was necessary before reaching a definitive severity assessment. See, e.g., Peterson v. Astrue, No. 07-1819, 2009 WL 2390607, at *9 (Aug. 3, 2009) (finding that the State Agency physician's conclusion that there was insufficient evidence to determine severity "certainly suggests that additional information may have been necessary and demonstrates a hesitancy to declare [plaintiff's] impairments non-severe"). And although Dr. Peterson, the medical expert, did not offer a specific diagnosis, found no objective evidence of limitations in concentration, persistence and pace, and opined that whatever impairment plaintiff had could be improved with treatment, he also opined that plaintiff was capable of performing simple, repetitive tasks, should have no public contact, and should have only occasional contact with coworkers and supervisors. Id. at 28-29. Dr. Peterson's opinion suggests at least a moderate limitation in social functioning.

Taken together, plaintiff's treatment history, diagnosis, and testimony were "`sufficient to pass the de minimis threshold of step two." See Kent v. Astrue, 335 Fed. Appx. 673, 674 (9th Cir. 2009) (quoting Webb, 433 F.3d at 687).

Moreover, although a claimant bears the burden at step two, "the ALJ [has] an affirmative duty to supplement [a claimant's] medical record, to the extent that it was incomplete, before rejecting [a claimant's] petition at so early a stage in the analysis." Webb, 433 F.3d at 687. Here, plaintiff's record was sufficiently incomplete and ambiguous to warrant supplementation. See Tonapetyan, 242 F.3d at 1150 ("Ambiguous evidence . . . triggers the ALJ's duty to conduct an appropriate inquiry.") (internal quotation and citation omitted). The record reflects that prior to 2009, plaintiff had been treated by the Santa Clarita Clinic. See AR at 197. Yet the ALJ made no attempt to obtain medical records from the Santa Clarita Clinic. Dr. Smith, the State Agency psychiatrist, did not opine that plaintiff did not have limitations, but instead noted that there was insufficient evidence to make a determination, thereby suggesting that with more information, he might reach the opinion that plaintiff had functional limitations. See id. at 226, 228.

In sum, the ALJ erred at step two because the evidence did not clearly establish the absence of a severe mental impairment. Because there was not substantial evidence to show that plaintiff's claim was groundless, the ALJ should have sought to supplement the record and continued the five-step sequential analysis beyond step two to determine whether plaintiff suffered from a disability. See Webb, 433 F.3d at 688.

V.

REMAND IS APPROPRIATE

The decision whether to remand for further proceedings or reverse and award benefits is within the discretion of the district court. McAllister v. Sullivan, 888 F.2d 599, 603 (9th Cir. 1989). Where no useful purpose would be served by further proceedings, or where the record has been fully developed, it is appropriate to exercise this discretion to direct an immediate award of benefits. See Benecke v. Barnhart, 379 F.3d 587, 595-96 (9th Cir. 2004); Harman v. Apfel, 211 F.3d 1172, 1179-80 (9th Cir. 2000) (decision whether to remand for further proceedings turns upon their likely utility). But where there are outstanding issues that must be resolved before a determination can be made, and it is not clear from the record that the ALJ would be required to find a plaintiff disabled if all the evidence were properly evaluated, remand is appropriate. See Benecke, 379 F.3d at 595-96; Harman, 211 F.3d at 1179-80.

Here, as set out above, remand is required because the ALJ erred in failing to find that plaintiff had a severe mental impairment at step two. On remand, the ALJ shall supplement the record and proceed with the five-step sequential analysis to determine what work, if any, plaintiff is capable of performing.

VI.

CONCLUSION

IT IS THEREFORE ORDERED that Judgment shall be entered REVERSING the decision of the Commissioner denying benefits, and REMANDING the matter to the Commissioner for further administrative action consistent with this decision.