FILED
                                                 United States Court of Appeals
                  UNITED STATES COURT OF APPEALS         Tenth Circuit

                        FOR THE TENTH CIRCUIT                     February 29, 2016
                        _________________________________
                                                                  Elisabeth A. Shumaker
                                                                      Clerk of Court
GILBERT W. LOPEZ,

     Plaintiff-Appellant,

v.                                                       No. 15-1061
                                               (D.C. No. 1:14-CV-00476-MEH)
CAROLYN W. COLVIN, Acting                                 (D. Colo.)
Commissioner of Social Security,

     Defendant-Appellee.
                       _________________________________

                            ORDER AND JUDGMENT *
                            _________________________________

Before BACHARACH, O’BRIEN, and PHILLIPS, Circuit Judges.
                 _________________________________

       The Commissioner of the Social Security Administration denied Mr.

Gilbert Lopez’s application for benefits involving disability insurance and

supplemental security income. An administrative law judge (ALJ) agreed

with the denial, concluding that Mr. Lopez was not disabled. The district

court affirmed the denial and Mr. Lopez appeals, arguing that the ALJ had


*
      The parties have not requested oral argument, and we do not believe
it would materially aid our consideration of the appeal. See Fed. R. App. P.
34(a)(2); 10th Cir. R. 34.1(G). Thus, we have decided the appeal based on
the briefs.

      This order and judgment does not constitute binding precedent except
under the doctrines of law of the case, res judicata, and collateral estoppel.
But our order and judgment may be cited for its persuasive value under
Fed. R. App. P. 32.1(a) and 10th Cir. R. 32.1(A).
erroneously failed to account for opinions by a treating physician (Dr.

David Krause) and a consultative examiner (Dr. Justin Olswanger).

According to Mr. Lopez, the ALJ erred by

           improperly assessing, and then disregarding, Dr. Krause’s
            opinions on restrictions involving sitting and manipulation,

           inexplicably failing to account for Dr. Krause’s opinions
            limiting Mr. Lopez’s posture and ability to lift, carry, stand,
            walk, and change positions, and

           rejecting Dr. Olswanger’s sitting limitation without
            explanation.

      We agree with Mr. Lopez, concluding that the ALJ erred in analyzing

the opinions by Dr. Krause and Dr. Olswanger. Accordingly, we reverse

and remand with instructions for the district court to remand this matter to

the Social Security Administration for further proceedings.

I.    Standard of Review

      On appeal, we engage in de novo review, applying the same standard

that governed in district court. See Fischer-Ross v. Barnhart, 

, 731 (10th Cir. 2005) (de novo review); Nguyen v. Shalala, 

, 1402 (10th Cir. 1994) (same standard as in district court). Under that

standard, the district court had to determine whether the ALJ applied the

correct legal standards. Hamlin v. Barnhart, 

, 1214

(10th Cir. 2004). Reversal of the agency decision is necessary when ALJs

apply an incorrect legal standard or fail to show that they have applied the

correct standard. 

  The ALJ did not properly analyze Dr. Krause’s opinions.

      Dr. Krause treated Mr. Lopez for pain in his neck, lower back, and

knee. Based on this treatment, Dr. Krause opined that Mr. Lopez

           could not sit for more than four hours in an eight-hour
            workday,

           could engage in only occasional reaching, handling, and
            fingering of objects, and

           was otherwise limited in his posture and ability to lift, carry,
            stand, walk, and change position.

The ALJ improperly assessed these opinions.

      A.    When considering Mr. Lopez’s sitting and manipulative
            restrictions, the ALJ omitted the second step of the required
            two-part test.

      Because Dr. Krause was a treating physician, we give his opinion

more weight than the opinions of other physicians. 20 C.F.R.

§§ 404.1527(c)(2), 416.927(c)(2). Thus, we employ a two-step test to

evaluate the ALJ’s consideration of Dr. Krause’s medical opinions. See

Krauser v. Astrue, 

, 1330 (10th Cir. 2011). Each part of the

test is analytically distinct. 

ALJ must consider whether the opinion is entitled to

controlling weight because it is both “well-supported by medically

acceptable clinical or laboratory diagnostic techniques” and “[]consistent

with other substantial evidence in the record.” 

if the treating physician’s opinion is not entitled to

controlling weight, the ALJ must “make clear how much weight the

opinion is being given (including whether it is being rejected outright) and

give good reasons, tied to the factors specified in [20 C.F.R. §§ 404.1527

and 416.927] . . . for the weight assigned.” 

first step, the ALJ decided not to give controlling weight to

Dr. Krause’s opinions involving limitations in the ability to sit, reach,

handle, and finger. 1 But the ALJ did not complete the second step.

      The ALJ stated that he had given Dr. Krause’s opinions “[p]artial

weight.” R. at 26. But the ALJ never gave a reason for declining to heed

Dr. Krause’s opinions concerning Mr. Lopez’s limited ability to sit, reach,

handle, and finger.

      These limitations could have affected the outcome. For example, the

sitting limitation could have prevented Mr. Lopez from completing an

eight-hour workday. See Social Security Ruling 96-8p, 

,

at *1 (July 2, 1996) (stating that the assessment of residual functional

capacity measures a claimant’s ability to conduct work-related activities “8

hours a day, for 5 days a week, or an equivalent work schedule”).

Similarly, Dr. Krause’s stated limitations on manipulation, reaching,

handling, and fingering could have proven material: The vocational expert


1
      Mr. Lopez does not challenge the ALJ’s denial of controlling weight
to Dr. Krause’s opinion.
                                      4
testified that Mr. Lopez could perform the demands of a survey worker,

lens-block gauger, or small products assembler, and these jobs are said to

require

           significant manipulation or

           frequent reaching, handling, and fingering.

See Dict. of Occup. Titles 706.684-022, 

(small products

assembler: significant manipulation and frequent reaching, handling, and

fingering); 

(lens-block gauger:

significant handling and frequent reaching, handling, and fingering); 

(survey worker: frequent reaching,

handling, and fingering). In light of the potential for Dr. Krause’s stated

limitations to affect the outcome, the ALJ’s failure to complete the second

step of the analysis requires reversal and remand. See 

(reversing and remanding because the ALJ’s assessment of the

treating physician’s opinion was “patently inadequate for the distinct

reason that it ends halfway through the required two-step analysis”).

      B.    The ALJ determined that Dr. Krause’s other restrictions
            were well-supported and due partial weight, but then failed
            to account for these restrictions when assessing residual
            functional capacity.

      The ALJ found support in the record for Dr. Krause’s assessment of

limitations on Mr. Lopez’s posture and lifting, carrying, standing, walking,




                                      5
and changing position. Nonetheless, in four ways, the ALJ omitted these

restrictions when assessing Mr. Lopez’s residual functional capacity:

     1.    Dr. Krause concluded that Mr. Lopez could lift and carry
           twenty pounds for up to one-third of a workday. R. at 456-57.
           But the ALJ found that Mr. Lopez could perform light
           exertional work, which requires occasionally lifting and
           carrying up to twenty pounds and frequently lifting and
           carrying up to ten pounds. See 20 C.F.R. §§ 404.1567(b),
           416.967(b).

     2.    Dr. Krause determined that Mr. Lopez could stand and walk up
           to fifteen minutes at a time, for two hours total per day. R. at
           457. But the ALJ found that Mr. Lopez could “stand and walk
           for two to three hours” per day and “for 30 to 60 minutes at one
           time.” 

     3.    Dr. Krause concluded that Mr. Lopez could rarely stoop, squat,
           crawl, or kneel. 

But the ALJ found that Mr. Lopez
           could occasionally stoop, bend, and crouch. 

     4.    Dr. Krause concluded that Mr. Lopez should have the option to
           stand every 30 or more minutes. 

But the ALJ set that
           time frame at 30 to 60 minutes. 

     “The [residual functional capacity] assessment must always consider

and address medical source opinions. If the . . . assessment conflicts with

an opinion from a medical source, the adjudicator must explain why the

opinion was not adopted.” Social Security Ruling 96-8p, 

,

at *7 (July 2, 1996); see also Frantz v. Astrue, 

, 1302 (10th

Cir. 2007) (explaining that the ALJ “must discuss . . . significantly

probative evidence he rejects” (quoting Clifton v. Chater, 

,

1010 (10th Cir. 1996))).

     The ALJ failed to

                                      6
           apply the regulatory factors to Dr. Krause’s opinions, as
            required under the second step of the test and

           articulate a specific, legitimate reason for rejecting or
            discounting these opinions.

20 C.F.R. §§ 404.1527, 416.927. Thus, the ALJ did not “engag[e] in the

proper legal analysis” and we must reverse. Hamlin v. Barnhart, 

, 1219 (10th Cir. 2004); see Haga v. Astrue, 

, 1208

(10th Cir. 2007) (reversing and remanding because the ALJ should have

explained why he had rejected some of the consulting doctor’s restrictions

in the residual functional capacity “while appearing to adopt the others”).

       C.   We reverse and remand for further consideration of Dr.
            Krause’s recommended restrictions.

       We reverse and remand for the ALJ to

           apply the factors listed in 20 C.F.R. §§ 404.1527 and 416.927
            to Dr. Krause’s opinions and

           incorporate the restrictions discussed above into the assessment
            of the residual functional capacity or explain the decision not
            to do so.

III.   The ALJ erroneously omitted Dr. Olswanger’s sitting limitation.

       As the Commissioner instructed, Dr. Olswanger evaluated Mr. Lopez

for pain in his right knee, back, and neck. Dr. Olswanger’s report detailed

limitations in Mr. Lopez’s ability to

       1.   sit more than four hours in a normal eight-hour workday,

       2.   stand or walk more than about four hours in a normal eight-
            hour workday,

                                        7
      3.    lift or carry objects more than ten pounds, and

      4.    maintain his posture when engaging in activities requiring a
            range of motion in the spine.

      The ALJ adequately assessed Dr. Olswanger’s opinions regarding

standing, walking, lifting, carrying, and posture. 2 But the ALJ did not

address Mr. Lopez’s inability to sit for more than four hours. The ALJ

mentioned this inability, but did not say why he disagreed with Dr.

Olswanger regarding how long Mr. Lopez could sit. This omission

constituted error, for a four-hour sitting restriction could prevent Mr.

Lopez from completing an eight-hour workday. Thus, we reverse and

remand for the ALJ to

           address Dr. Olswanger’s four-hour sitting restriction and

           incorporate the restriction into the assessment of Mr. Lopez’s
            residual functional capacity or explain the decision not to do
            so.

IV.   The ALJ’s reliance on Dr. Frank Barnes’s opinion does not cure
      the errors in assessing Dr. Krause’s and Dr. Olswanger’s
      opinions.

      The Commissioner argues that the ALJ did not err in assessing Dr.

Krause’s and Dr. Olswanger’s opinions because the ALJ chose instead to

2
      The ALJ gave “[l]imited weight” to Dr. Olswanger’s opinions,
“insofar as [Dr. Olswanger] advises that the claimant remain on his feet for
only part of the workday and have some degree of postural limitations.” R.
at 25. The ALJ declared these recommendations to be “well-supported by
the repeated knee surgeries and the findings of reduced lumbar motion.”

ALJ rejected the recommendation for Mr. Lopez to avoid lifting
more than ten pounds, concluding that this recommendation conflicted with
the objective medical evidence.
                                      8
rely on the opinion of Dr. Frank Barnes, who was a nonexamining medical

expert. We reject this argument.

      Dr. Barnes recommended lesser restrictions than those suggested by

the diagnoses of Dr. Krause and Dr. Olswanger. For example, Dr. Barnes

opined that Mr. Lopez could

           stand or walk two to three hours a day,

           sit eight hours a day with intermittent postural changes,

           occasionally lift twenty pounds, frequently lift ten pounds, and
            occasionally kneel, squat, crawl, or climb ladders, stairs, or
            ramps, and

           engage in activities without any restriction on manipulative
            abilities.

      The ALJ assigned “great weight” to these opinions, concluding that

Dr. Barnes was “well qualified to render opinions,” “had the opportunity to

examine all of the evidence of record,” and rendered well-supported

opinions. R. at 27. Thus, the ALJ accepted Dr. Barnes’s opinions “in large

part” as the physical residual functional capacity. 

preference for Dr. Barnes’s opinion does not remedy the

failure to fully address the opinions of Dr. Krause and Dr. Olswanger.

Though the ALJ could assign great weight to Dr. Barnes’s opinion, the ALJ

still had to address the opinions of Dr. Krause and Dr. Olswanger. See

Robinson v. Barnhart, 

, 1084 (10th Cir. 2004) (holding that

the ALJ erred in rejecting a treating physician’s opinion in favor of a


                                      9
non-examining consulting-physician opinion “absent a legally sufficient

explanation for doing so” (citing 20 C.F.R. §§ 404.1527(d)(1), (2) and

416.927(1) and Social Security Ruling 96-6p, 

, at *2 (July

2, 1996))). In doing so, the ALJ had to explain his reasons for rejecting the

opinions of Dr. Krause and Dr. Olswanger. See Frantz v. Astrue, 

, 1302 (10th Cir. 2007).

V.    We decline to order an immediate award of benefits.

      Mr. Lopez asks us to exercise our discretion to order an immediate

award of benefits. In deciding whether this remedy is appropriate, we

consider

           how long the matter has been pending and

           whether remand for additional fact-finding would prove useful
            or simply delay the inevitable receipt of benefits.

Salazar v. Barnhart, 

, 626 (10th Cir. 2006) (quoting Harris v.

Sec’y of Health & Human Servs., 

, 545 (10th Cir. 1987)).

Although we recognize this matter has been pending over seven years, we

conclude that further administrative proceedings are appropriate.

Consequently, we deny Mr. Lopez’s request for an immediate award of

benefits.

VI.   Disposition

      The judgment of the district court is reversed. We remand to the

district court with instructions to remand to the Social Security


                                     10
Administration for further proceedings. But we deny Mr. Lopez’s request

for an immediate award of benefits.

                                  Entered for the Court



                                  Robert E. Bacharach
                                  Circuit Judge




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