REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

CHARLES F. EICK, Magistrate Judge

This Report and Recommendation is submitted to the Honorable J. Spencer Letts, United States District Judge, pursuant to 28 U.S.C. section 636 and General Order 05-07 of the United States District Court for the Central District of California.

PROCEEDINGS

Plaintiff filed a complaint on August 22, 2013, seeking review of the Commissioner's denial of benefits. Plaintiff filed a motion for summary judgment on January 29, 2014. Defendant filed a motion for summary judgment on February 27, 2014. The Court has taken both motions under submission without oral argument. See L.R. 7-15; "Order," filed August 28, 2013.

BACKGROUND AND SUMMARY OF ADMINISTRATIVE DECISION

Plaintiff filed applications for disability insurance benefits and supplemental security income, asserting disability since March 3, 2009, based on "slipped discs in both hips" and an "undiagnosed mental condition." See Administrative Record ("A.R.") 115-119, 139. An Administrative Law Judge ("ALJ") found Plaintiff not disabled (A.R. 13-26). The ALJ determined that Plaintiff suffers from severe "history of pinning of both hips ten years ago with no significant degenerative joint disease and mood disorder (possible schizophrenia/anxiety disorders),"1 but retains the residual functional capacity to perform a limited range of light work (A.R. 15, 18).2 The ALJ found that, with this capacity, Plaintiff could perform jobs as an assembler of small products, electronics worker, and addresser, jobs existing in significant numbers in the national economy (A.R. 25-26 (adopting vocational expert testimony at A.R. 43-45)). In finding Plaintiff not disabled, the ALJ rejected Plaintiff's credibility and the credibility of Plaintiff's caregiver(s) (A.R. 18-20). The Appeals Council denied review (A.R. 1-3).

STANDARD OF REVIEW

Under 42 U.S.C. section 405(g), this Court reviews the Administration's decision to determine if: (1) the Administration's findings are supported by substantial evidence; and (2) the Administration used proper legal standards. See Carmickle v. Commissioner, 533 F.3d 1155, 1159 (9th Cir. 2008); Hoopai v. Astrue, 499 F.3d 1071, 1074 (9th Cir. 2007). Substantial evidence is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Richardson v. Perales, 402 U.S. 389, 401 (1971) (citation and quotations omitted); Widmark v. Barnhart, 454 F.3d 1063, 1067 (9th Cir. 2006).

DISCUSSION

Plaintiff contends, inter alia, that the ALJ erred in assessing the credibility of Plaintiff and Plaintiff's caregiver(s). See Plaintiff's Motion, pp. 7-9. As discussed below, the Court agrees.

A. Summary of Medical Evidence of Plaintiff's Mental Condition

The record contains psychiatric clinic notes from a walk-in crisis center for the period from November 2009 through October 2011 (A.R. 210-18, 257-71). Plaintiff initially reported he was scared, had a fear of being shot again, and experienced flashbacks (A.R. 215). Mental status examination showed that Plaintiff avoided eye contact, was restless, had slowed speech, showed signs of depression and anxiety, had labile affect, had suffered hallucinations, and was confused, with impaired insight, judgment, and impulse control (A.R. 215). Dr. Aubrey King diagnosed Plaintiff with post-traumatic stress disorder, and depressive disorder, not otherwise specified, and assigned a Global Assessment of Functioning ("GAF") score of 30-35 (A.R. 215).3 Dr. King prescribed Prozac and Seroquel (A.R. 215).

At the next recorded visit with Dr. King on April 9, 2010, Plaintiff reportedly had been out of medication for days and presented as "selectively mute," anxious and fearful (A.R. 216). Mental status examination yielded findings consistent with the prior record (A.R. 216). Dr. King continued Plaintiff's medications and assigned Plaintiff a GAF of 35 (A.R. 216).

Plaintiff returned to Dr. King on April 15, 2010 (A.R. 217). Plaintiff was "sad" but wanted to talk, draw and write (A.R. 217). Plaintiff's sleep had improved, and his insight, judgment, and impulse control had increased (A.R. 217). Dr. King increased Plaintiff's Prozac and assigned Plaintiff a GAF of 35 (A.R. 217).

In a clinic note dated July 24, 2010, Dr. King stated that Plaintiff had less auditory hallucinations, less anxiety, and minor insomnia (A.R. 210). Dr. King then diagnosed Plaintiff with schizoaffective disorder and assigned a GAF of 40 (A.R. 210).

Plaintiff returned to Dr. King on August 27, 2010 (A.R. 211). Dr. King observed that Plaintiff had failed a "day treatment" program because Plaintiff was very anxious and had a hard time following directions (A.R. 211). Plaintiff reportedly was having auditory hallucinations at night, anxiety and sleep issues (A.R. 211). Mental status examination revealed both auditory and visual hallucinations, paucity of speech, and obsessions (A.R. 211). Dr. King diagnosed paranoid schizophrenia and post-traumatic stress disorder, noted "MR/DD" (mental retardation/developmental delay), and assigned a GAF of 35 (A.R. 211). Dr. King prescribed Seroquel, Lexapro, and Geodon (A.R. 211).

The next record from the crisis center is from a November 28, 2010 visit to another doctor, Dr. Mayed Estafan (A.R. 212). Mental status examination revealed muted speech, hallucinations, delusions, paranoia, and decreased insight and judgment (A.R. 212). Dr. Estafan gave the same diagnosis as the diagnosis made during Plaintiff's last visit with Dr. King (A.R. 212). Dr. Estafan also noted "MR", and assigned a GAF of 20-25 (A.R. 212). Dr. Estafan increased Plaintiff's Geodon and Prozac (A.R. 212).

Dr. Estafan later completed a Mental Impairment Questionnaire dated October 21, 2011 (A.R. 257-62). Dr. Estafan stated that Plaintiff comes in once or twice a month (A.R. 257). Dr. Estafan gave diagnoses codes for schizophrenia, post-traumatic stress disorder, unspecified mental disorder (nonpsychotic), and pain in a limb (A.R. 257). See www.icd9data.com (listing codes) (last visited March 6, 2014). Dr. Estafan stated that Plaintiff has delusions, confusion, hallucinations, is mute, and suffers from paranoia (A.R. 257). Dr. Estafan's prognosis was that Plaintiff "suffers from long term [mental] disability" (A.R. 257). Dr. Estafan indicated that Plaintiff would be unable to meet competitive standards for work-related abilities, explaining: "Patient is mute. Patient gets confused very easy [sic]. Patient suffers from delusions, hallucinations, and paranoia. Patient can't follow basic instructions and patient has lack of focus and low attention span." (A.R. 259-60). Dr. Estafan also indicated that Plaintiff does not work well with others and does not know how to find his way home (A.R. 260). Dr. Estafan opined that Plaintiff has reduced intellectual functioning, explaining that Plaintiff does not know how to read or write and has an IQ between 30 and 50 (A.R. 260). Dr. Estafan indicated Plaintiff has "marked to extreme" functional limitations and suffered episodes of decompensation on March 6, 2011, May 2, 2011, and August 13, 2011 (A.R. 261). Dr. Estafan indicated that Plaintiff would be absent from work more than four days per month (A.R. 262).4

In contrast, Plaintiff underwent a consultative evaluation by Dr. Ernest Bagner III, who signed a report dated March 27, 2011 (A.R. 237-40). Dr. Bagner reported that Plaintiff had completed the 11th grade (A.R. 238; but see A.R. 42 (ALJ stating that Plaintiff has a ninth grade education); A.R. 144 (Plaintiff reporting a ninth grade education)). Dr. Bagner did not perform any intelligence testing, but opined that Plaintiff appeared to have "average" intelligence (A.R. 239). Plaintiff reportedly could not name the current president of the United States, but could name one of the two preceding presidents, could register one of three objects after five minutes, could do serial threes but not serial sevens, knew that apples and bananas were both fruits, said he would look for the source of smoke if he were alone in a house and smelled smoke, and appeared to have normal reality contact during the interview in that there reportedly was no evidence of hallucinations or paranoia (A.R. 239). Dr. Bagner diagnosed Plaintiff with a mood disorder, not otherwise specified, and assigned Plaintiff a GAF of 58 (A.R. 239).5 Dr. Bagner opined that Plaintiff would have only mild to moderate limitations interacting with supervisors, peers and the public, handling normal stresses at work, maintaining concentration and attention, and completing simple tasks. Plaintiff would have moderate limitations completing complex tasks and completing a normal workweek without interruption (A.R. 240).

Non-examining state agency review physician, Dr. A. Schrift, filled out a Mental Residual Functional Capacity Assessment form (A.R. 252-56). This form indicates Plaintiff would have marked limitations in the ability to understand and remember and carry out detailed instructions and to interact appropriately with the general public (id.). Nonetheless, Dr. Schrift opined that Plaintiff would be able to sustain nonpublic simple repetitive tasks, relate to coworkers and supervisors, and adapt (A.R. 254; see also A.R. 255-56 (Case Analysis presented to Dr. Schrift including summary of Dr. Bagner's evaluation)).6

B. Lay Witness Evidence

Plaintiff's caregiver, Tamesha [phonetic] Johnson, testified on Plaintiff's behalf (A.R. 33-41). She did so, at least in part because, as Plaintiff's counsel put it at the hearing, Plaintiff "actually is not speaking today" (A.R. 33-41).7 Ms. Johnson had lived with Plaintiff for three years and said she does all the shopping and cooking for Plaintiff, dresses Plaintiff, feeds him, cleans up after him, and sometimes brushes Plaintiff's teeth for him (A.R. 36). Ms. Johnson had witnessed Plaintiff suffering from delusions in that Plaintiff appeared to be talking to others when Plaintiff was alone (A.R. 36-37). She said that Plaintiff is mute the majority of the time (A.R. 37).

In a Function Report — Adult form dated November 12, 2010, Plaintiff's caregiver, Kamisha Bridges,8 reported that she bathes Plaintiff, helps him dress, prepares his meals, takes him to appointments and handles his money (A.R. 168-75). Ms. Bridges reported that Plaintiff spends his days eating, drawing or coloring, watching television, napping, and listening to music (A.R. 168). She also reported that Plaintiff was paranoid to drive, because he feared he might get shot (A.R. 171). Ms. Bridges reported that Plaintiff cannot read (A.R. 171, 173).

C. The ALJ's Credibility Findings Are Insufficient.

In determining Plaintiff's residual functional capacity, the ALJ found the allegations of both Plaintiff and Plaintiff's caregiver(s) not to be credible (A.R. 18-20). Where, as here, an ALJ finds that a claimant's medically determinable impairments reasonably could be expected to cause the symptoms alleged (see A.R. 20), the ALJ may not discount the claimant's testimony regarding the severity of the symptoms without making "specific, cogent" findings, supported in the record, to justify discounting such testimony. See Lester v. Chater, 81 F.3d 821, 834 (9th Cir. 1995); see also Berry v. Astrue, 622 F.3d 1228, 1234 (9th Cir. 2010); Rashad v. Sullivan, 903 F.2d 1229, 1231 (9th Cir. 1990); Varney v. Secretary, 846 F.2d 581, 584 (9th Cir. 1988).9 Generalized, conclusory findings do not suffice. See Moisa v. Barnhart, 367 F.3d 882, 885 (9th Cir. 2004) (the ALJ's credibility findings "must be sufficiently specific to allow a reviewing court to conclude the ALJ rejected the claimant's testimony on permissible grounds and did not arbitrarily discredit the claimant's testimony") (internal citations and quotations omitted); Holohan v. Massanari, 246 F.3d 1195, 1208 (9th Cir. 2001) (the ALJ must "specifically identify the testimony [the ALJ] finds not to be credible and must explain what evidence undermines the testimony"); Smolen v. Chater, 80 F.3d 1273, 1284 (9th Cir. 1996) ("The ALJ must state specifically which symptom testimony is not credible and what facts in the record lead to that conclusion."); see also Social Security Ruling 96-7p.

Although Plaintiff did not testify at the hearing, the ALJ appears to have found Plaintiff's reported allegations not credible for two reasons. First, the ALJ stated that Plaintiff claimed at the hearing to be mute, although there allegedly was "no evidence of the claimant's inability to talk or communicate in the treatment records" (A.R. 18). The ALJ's statement somewhat mischaracterizes the record, for it overlooks the clinical observations by Dr. King and Dr. Estafan that Plaintiff has paucity of speech, slowed speech, muted speech, is "selectively mute," and is "mute." See A.R. 211-12, 215-16, 257. It is also worth noting that, in a November 11, 2009 field office interview (long before any medical records were provided), an interviewer observed that Plaintiff "acted like he could not answer any questions and would take forever to respond to anything" (A.R. 136; see A.R. 209).

The second reason stated by the ALJ for rejecting Plaintiff's credibility is that the "objective evidence of record" assertedly indicated that Plaintiff received "routine conservative treatment" with "positive objective" clinical findings since the alleged onset date (A.R. 20). A lack of objective medical evidence to support the claimed severity of a claimant's symptomatology "can be a factor" in rejecting a claimant's credibility, but cannot "form the sole basis." See Burch v. Barnhart, 400 F.3d 676, 681 (9th Cir. 2005). Moreover, and contrary to the ALJ's assertion, the psychiatric treatment record does not reflect any significant improvement in Plaintiff's condition since the alleged onset date. Plaintiff's GAF scores assessed by his treating physicians never exceeded 40, and actually decreased to 20-25 despite treatment. Plaintiff's treating doctors prescribed escalating doses of psychotropic medications, without significant resulting improvement. See A.R. 210-12, 215-17.

A conservative course of treatment sometimes can justify the rejection of a claimant's credibility, at least where the treatment relates to physical problems. See, e.g., Tommasetti v. Astrue, 533 F.3d 1035, 1040 (9th Cir. 2008); Meanel v. Apfel, 172 F.3d 1111, 1114 (9th Cir. 1999). In the present case, however, the ALJ's description of Plaintiff's mental health treatment as "routine conservative" mischaracterizes the treatment. As summarized above, Plaintiff has been prescribed psychotropic medications for his mental problems. As another Magistrate Judge of this Court recently stated:

Matthews v. Astrue, 2012 WL 1144423, at *9 (C.D. Cal. April 4, 2012); see Mason v. Colvin, 2013 WL 5278932, at *6 (E.D. Cal. Sept. 18, 2013) (treatment not "conservative" where claimant took prescription antidepressants and anti-psychotic medication for almost two years to treat depression, anxiety, and hallucinations, and, though not hospitalized during this time, received mental health treatment by a psychiatrist and a psychiatric social worker for a 14 month period); Gutierrez v. Astrue, 2010 WL 729007, at *2-*3, *10 (E.D. Cal. March 1, 2010) (where plaintiff took psychotropic medication prescribed by a family practitioner (i.e., Zoloft and Prozac), the fact that the claimant was "not being followed by a psychologist or a psychiatrist" failed to support the ALJ's rejection of the claimant's credibility; "[I]t is questionable whether Plaintiff's treatment for depression and anxiety, which consistently spanned almost three years, is rendered conservative or out of balance with her subjective complaints simply because the treatment was provided by a family practitioner.").

Here, Plaintiff's prescription medications have included Geodon, Prozac, Seroquel, and Lexapro (A.R. 211-12, 215-17). Courts specifically have recognized that the prescription of Geodon and Seroquel connotes mental health treatment which is not "conservative," within the meaning of social security jurisprudence. See, e.g., Mason v. Colvin, 2013 WL 5278932, at *3-6 (Geodon and Seroquel); Armstrong v. Colvin, 2013 WL 3381352, at *4-5 (C.D. Cal. July 8, 2013) (Seroquel). For this reason as well, the ALJ's decision does not permit the Court to determine that the ALJ's credibility determination is based on permissible grounds.

With respect to Plaintiff's caregiver(s), an ALJ must consider a lay witness' reported observations of a claimant, and can reject those observations only by giving "reasons germane" to the witness. See Stout v. Commissioner, 454 F.3d 1050, 1053 (9th Cir. 2006); Regennitter v. Commissioner of Social Sec. Admin., 166 F.3d at 1298; Nguyen v. Chater, 100 F.3d 1462, 1467 (9th Cir. 1996); Smolen v. Chater, 80 F.3d at 1288; see also SSR 96-7p; 20 C.F.R. § 404.1513(d)(4) (observations by "nonmedical sources" such as "spouses, parents and other caregivers" may be used to "show the severity of your impairment(s) and how it affects your ability to work"). The ALJ rejected the observations of the caregiver(s) because, inter alia, those observations assertedly were inconsistent with, or not supported by, the objective medical evidence, and because the testifying caregiver, who is not paid, "may well" have a financial interest in seeing that Plaintiff receives benefits (A.R. 19-21).

The medical record's inconsistency with the testimony of a lay witness sometimes can be a sufficient "reason germane" to reject the testimony. See Bayliss v. Barnhart, 427 F.3d 1211, 1218 (9th Cir. 2005); Lewis v. Apfel, 236 F.3d 503, 511 (9th Cir. 2001); see also Hootman v. Commissioner of Social Sec., 499 Fed. App'x 673, 675 (9th Cir. 2012) (reaffirming same). A lay witness' possible financial interest, however, is not an appropriate reason for rejecting lay testimony. The Ninth Circuit consistently has held that bias cannot be presumed from a familial or personal relationship. See, e.g., Regennitter v. Commissioner, 166 F.3d at 1298. A personal relationship often is a necessary predicate for the lay witness' testimony, since such testimony must come from persons "in a position to observe a claimant's symptoms and daily activities." Dodrill v. Shalala, 12 F.3d 915, 918 (9th Cir. 1993). Nor can bias be presumed from a lay witness's potential economic interest. See Valentine v. Commissioner, 574 F.3d at 694 (rejecting lay witness observations because the witness is an "interested party" runs afoul of Ninth Circuit precedent: "Such a broad rationale for rejection contradicts our insistence that, regardless of whether they are interested parties, `friends and family members in a position to observe a claimant's symptoms and daily activities are competent to testify to [his or] her condition.'") (quoting Dodrill, 12 F.3d at 918-19).

Where, as here, one or more of an ALJ's reasons supporting an adverse credibility finding are invalid, the Court applies a harmless error standard. See Carmickle v. Commissioner, 533 F.3d 1155, 1162 (9th Cir. 2008) (citing Batson v. Commissioner, 359 F.3d 1190, 1195-97 (9th Cir. 2004)). On the current record, the Court is unable to find that the ALJ's errors were harmless. For one example, in summarizing and discussing the caregiver(s)' hearing testimony and third party report, the ALJ failed to mention the caregiver's observation that Plaintiff could not read or write (an observation receiving some support in the medical record). See A.R. 18-19 (ALJ's reasoning); see also A.R. 171, 173 (caregiver observations), 260 (Dr. Estafan's report). The ALJ found that Plaintiff could work as a small products assembler, electronics worker, or addresser (A.R. 25). Each of these jobs requires an ability to read. See Dictionary of Occupational Titles, §§ 706.684-022, 726.687-010, 209.587-010 and Appendix C (including in the definition trailer for these positions a level one or level two reading requirement, which requires the ability to read at least 95 words per minute), available online at www.occupationalinfo.org (last visited March 10, 2014).

Because the circumstances of this case suggest that further administrative review could remedy the ALJ's errors, remand is appropriate. See McLeod v. Astrue, 640 F.3d 881, 888 (9th Cir. 2011); see also INS v. Ventura, 537 U.S. 12, 16 (2002) (When a court reverses an administrative determination, "the proper course, except in rare circumstances, is to remand to the agency for additional investigation or explanation.") (citations and quotations omitted).10

RECOMMENDATION

For all of the foregoing reasons,11 IT IS RECOMMENDED that the Court issue an Order: (1) accepting and adopting this Report and Recommendation; (2) denying Plaintiff's and Defendant's motions for summary judgment; and (3) directing that Judgment be entered reversing in part the decision of the Commissioner and remanding the matter for further administrative action consistent with this Report and Recommendation.