MEMORANDUM OPINION AND ORDER

RALPH ZAREFSKY, Magistrate Judge.

Plaintiff Brent Joseph Rizkallah contends that the Social Security Commissioner wrongly denied his claim for disability benefits. Plaintiff argues that the Administrative Law Judge ("ALJ") erred in rejecting the opinions of two treating physicians and in discounting Plaintiff's and a third party witness's credibility. The Court agrees, as explained below.

Plaintiff first argues that the ALJ erred in rejecting the opinion of two treating physicians, Drs. Sutjita and Larsen. Dr. Sutjita opined, among other things, that Plaintiff could sit for two hours or less; suffered from fatigue, memory loss, anxiety and reduced cognitive function; experienced constant neuropathic pain; would require five unscheduled breaks to rest during an average workday; and was "[s]eriously limited" from completing a normal workday or performing routine repetitive work at a consistent pace. (AR 289-90, and suffered from fatigue, neuropathy, and marked restrictions in performing activities of daily living and "completing tasks in a timely manner due to deficiencies in [c]oncentration, [p]ersistence, or [p]ace." (AR 493-98.)

An ALJ may discredit a treating physician's opinion by providing specific and legitimate reasons for doing so. Batson v. Commissioner, 359 F.3d 1190, 1194-95 (9th Cir. 2004). Here, the ALJ provided no such reasons for rejecting Drs. Sutjita's and Larsen's opinions. The ALJ stated he gave "limited weight" to Dr. Sutjita's opinions because "his assessments are not consistent with or supported by the very detailed treatment records from Riverside County Regional Medical Center." The ALJ also explained that he discounted Dr. Sutjita's statement that Plaintiff "could not work 8 hours a day due to cognitive function reduction" because the opinion was "not consistent with the 3 consultative psychiatrist evaluations and [Plaintiff's] appearance at the hearing." (AR 131.) These reasons fail to reach the level of specificity required for rejecting a treating physician's opinion. See Embrey v. Bowen, 849 F.2d 418, 421-22 (9th Cir. 1988) ("To say that medical opinions are not supported by sufficient objective findings or are contrary to the preponderant conclusions mandated by the objective findings does not achieve the level of specificity our prior cases have required. ... The ALJ must do more than offer his conclusions. He must set forth his own interpretations and explain why they, rather than the doctors', are correct."). The ALJ gave a similarly conclusory reason for rejecting Dr. Larsen's opinion, finding that "the record shows that [Plaintiff] improved during the referenced time and thus this report was incorrect." (AR 131.) See McAllister v. Sullivan, 888 F.2d 599, 602 (9th Cir. 1989) (finding that ALJ's rejection of physician's opinion on the ground that it was contrary to clinical findings in the record was "broad and vague, failing to specify why the ALJ felt the treating physician's opinion was flawed"). Remand is warranted for the ALJ to properly evaluate the treating physicians' opinions.

Plaintiff also argues that the ALJ erred in assessing the statements of a lay witness, David Madrid. Mr. Madrid completed a third party function report that stated, among other things, that Plaintiff suffers from anxiety, forgetfulness, and poor comprehension; does not finish what he starts; and takes several naps per day. (AR 277-84.) An ALJ may discredit lay witness statements by providing "reasons that are germane to each witness." Dodrill v. Shalala, 12 F.3d 915, 919 (9th Cir. 1993). The ALJ's three reasons for discounting Mr. Madrid's statements do not meet this standard. First, the ALJ observed that Mr. Madrid "is obviously concerned about [Plaintiff's] well-being." Relatedly, the ALJ claimed that Mr. Madrid "has a financial interest in seeing that [Plaintiff] receives disability benefits" because they "live[] in the same household." (AR 14.) Without pointing to any specific evidence that Mr. Madrid was biased, these reasons do not qualify as germane to Mr. Madrid, because they would undermine the testimony of any lay witness who lives with or cares about a claimant. See Smolen v. Chater, 80 F.3d 1273, 1289 (9th Cir. 1996) (holding that ALJ's rejection of claimant's family members' testimony because they were "`understandably advocates, and biased' ... amounted to a wholesale dismissal of the testimony of all the witnesses as a group and therefore does not qualify as a reason germane to each individual who testified"). Finally, the ALJ noted that Mr. Madrid "is not a medical professional or otherwise qualified to diagnose severe impairments or to assess their effect on [Plaintiff's] ability to perform work-related activities." (AR 14.) Lay witnesses, by definition, are not medical professionals, yet the Commissioner recognizes they can provide valuable evidence. "Disregard of this evidence violates the Secretary's regulation that he will consider observations by non-medical sources as to how an impairment affects a claimant's ability to work." Dodrill, 12 F.3d at 919 (internal quotation marks and citation omitted). The Court cannot find that the ALJ's rejection of Mr. Madrid's statements was harmless, as the Commissioner urges. Had the ALJ accepted Mr. Madrid's statements, he would have found that Plaintiff had a more restrictive residual functional capacity.

Plaintiff also claims that the ALJ wrongly discredited his credibility. Because of the other errors assessed here, it is not necessary to address potential errors in the credibility evaluation. On remand, however, the ALJ may wish to reconsider his evaluation.

In accordance with the foregoing, the decision is reversed. The matter is remanded to the Commissioner, who shall proceed in a manner consistent with this Memorandum Opinion.

IT IS SO ORDERED.