                                                             FILED
                                                  United States Court of Appeals
                                                          Tenth Circuit
                     UNITED STATES CO URT O F APPEALS
                                                               September 12, 2007
                            FO R TH E TENTH CIRCUIT
                                                              Elisabeth A. Shumaker
                                                                  Clerk of Court

    JAM ES L. KANELA KOS,

             Plaintiff-Appellant,

      v.                                                No. 06-6123
                                                 (D.C. No. 04-CV-1579-M )
    M ICH AEL J. ASTRU E, *                            (W .D. Okla.)
    Commissioner of the Social Security
    Administration,

             Defendant-Appellee.



                            OR D ER AND JUDGM ENT **


Before O’BRIEN, Circuit Judge, BROR BY, Senior Circuit Judge, and
BRO W N, *** District Judge.




*
     Pursuant to Fed. R. App. P. 43(c)(2), M ichael J. Astrue is substituted for
Jo Anne B. Barnhart as appellee in this action.
**
       After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and
collateral estoppel. It may be cited, however, for its persuasive value consistent
with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
***
       The H onorable W esley E. Brown, Senior District Judge, District of K ansas,
sitting by designation.
       Plaintiff-appellant James Kanelakos applied for disability insurance

benefits alleging numerous mental and physical impairments. After initial

denials, M r. Kanelakos and his representative appeared at a hearing on June 10,

2004, before an administrative law judge (A LJ). The A LJ determined that M r.

Kanelakos was not disabled within the meaning of the Social Security Act, in that

he was physically capable of performing his past relevant work of probation

officer and computer sales representative. The Appeals Council denied review

and plaintiff appealed to the district court, which affirmed the decision of the

Commissioner.

       M r. Kanelakos now appeals to this court. W e have jurisdiction under

42 U .S.C . § 405(g) and 28 U .S.C. § 1291. In reviewing the ALJ’s decision, we

“determine whether the factual findings are supported by substantial evidence in

the record and whether the correct legal standards were applied.” Doyal v.

Barnhart, 331 F.3d 758, 760 (10th Cir. 2003). W e reverse and remand with

instructions to remand to the Commissioner.

                               M ental Impairments

      Three of M r. Kanelakos’ appellate arguments relate primarily to the ALJ’s

evaluation of his mental impairments. M r. Kanelakos, a 60-year-old V ietnam-era

veteran, was diagnosed with depression in October 2000. In the following months

and years, he received treatment (including multiple psychotropic medications) for

depression, post-traumatic stress syndrome, panic attacks, and anxiety disorder,

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often from mental-health providers at a medical center operated by the Department

of V eterans Affairs (VA). A physicians’ assistant at the V A medical center

monitored M r. Kanelakos’ mental health using the Global Assessment of

Functioning (GAF) numeric scale. In December 2002, she rated his GAF score at

47-50, indicating “serious impairment in social, occupational, or school

functioning (e.g., no friends, unable to keep a job).” Diagnostic and Statistical

M anual of Mental Disorders 30 (Text Revision 4th ed. 2000) (emphasis omitted).

      M r. Kanelakos applied for disability compensation from the VA benefits

administration on M arch 6, 2002. In October of that year, the VA determined that

he had a 70% disability attributable to the mental impairment of post-traumatic

stress disorder with depression and a 100% combined rating when his physical

impairments and unemployability were taken into consideration. This evaluation

was reached after a review of M r. Kanelakos’ medical records. One month later,

M r. K anelakos officially left his employment as a juvenile probation officer.

      From December 2002 through M arch 2003, the medical records depict

M r. Kanelakos as stable with few complaints about his social or mental

functioning. The V A physicians’ assistant continued assessing M r. Kanelakos’

GAF. In December 2003, she noted that his GAF score had increased to 60,

suggesting “[m]oderate symptoms (e.g., flat affect and circumstantial speech,

occasional panic attacks) or moderate difficulty in social, occupational, or school

functioning (e.g., few friends, conflicts with peers or co-workers).” Id. (emphasis

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omitted). By M arch 2004, the physicians’ assistant determined that

M r. Kanelakos’ GAF score had improved to 65, indicative of “mild symptoms” or

“some difficulty in social, occupational, or school functioning (but generally

functioning pretty well).” Id. (emphasis omitted).

      M eanw hile, M r. K anelakos’ social security case was proceeding. Two

non-examining psychologists performed a review of the medical record. The first

psychologist completed a psychiatric review technique form (PRT) categorizing

M r. Kanelakos’ mental impairment as nonsevere, situational depression as of

February 2003. A second psychologist concurred in June 2003. The ALJ held a

hearing on June 10, 2004, at which M r. Kanelakos testified to depression, anxiety,

intense mood sw ings, apprehension in crowds, and difficulties w ith authority

figures (particularly his former supervisor in the probation department).

      In the decision denying benefits, the A LJ acknowledged M r. Kanelakos’

entitlement to VA disability benefits, but noted only that “[t]he VA disability

program differs from the Social Security Administration’s standard of review and

determination for disability determination purposes.” Aplt. A pp., Vol. II at 18.

The ALJ also briefly discussed some of the evidence concerning mental

impairments, and found that M r. Kanelakos’ depression, post-traumatic stress

syndrome, and anxiety were controlled with medication, as evidenced by the 2004

GAF score of 65. In the ALJ’s view , M r. Kanalekos’ testimony concerning his

difficulty in social functioning was not fully consistent or credible. At step two of

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the sequential process, the ALJ determined that M r. Kanalekos had shown some

severe physical impairments, but not a severe mental impairment.

      On appeal, M r. Kanalekos disputes this aspect of the ALJ’s decision. He

argues that the A LJ erred in (1) failing to give appropriate consideration to the V A

disability rating; (2) deciding that his mental impairments were not severe; and

(3) failing to develop the record on his mental impairments. M r. Kanalekos’

arguments are legitimate.

      W ith regard to the VA’s disability determination, the general rule is that it

is not binding on the Social Security Administration (SSA). 20 C.F.R. § 404.1504.

Nevertheless, “it is evidence that the ALJ must consider and explain why he did

not find it persuasive.” Grogan v. Barnhart, 399 F.3d 1257, 1262 (10th Cir.

2005). In his decision, the ALJ mentioned the VA rating and appropriately stated

that the SSA and VA standards differ. But he completely “fail[ed] to discuss the

significance of the VA’s disability evaluation.” Id. at 1263. This is a clear

violation of the Grogan holding and compels a remand to allow the ALJ to explain

his reasons for rejecting the VA’s view of the medical evidence.

      This fundamental Grogan error is compounded by the ALJ’s determination

that M r. Kanelakos had not shown that his diagnosed mental impairments were

severe at step two of the evaluation process. At step two, a claimant bears the

burden of making “a threshold showing that his medically determinable

impairment or combination of impairments significantly limits his ability to do

                                          -5-
basic work activities.” Williams v. Bowen, 844 F.2d 748, 751 (10th Cir. 1988).

“[T]his is a de minimus showing.” Grogan, 399 F.3d at 1263 (quotation omitted).

Here, as in Grogan, “the ALJ’s failure to discuss the significance of the V A’s

disability evaluation in concluding that [claimant] had not met the ‘de minimus’

required showing of a severe impairment at step two was reversible error.” Id.

      M r. Kanelakos also contends that the ALJ should have ordered a

consultative mental examination to supply a medical opinion on the specific issue

of whether his mental impairments affect his functional capacities. Such an

examination is necessary when the “evidence in the record establishes a reasonable

possibility of the existence of a disability and the result of the consultative exam

could reasonably be expected to be of material assistance in resolving the issue of

disability.” Hawkins v. Chater, 113 F.3d 1162, 1169 (10th Cir. 1997). W e leave

the decision whether to order a consultative exam up to the ALJ on remand.

Compare Hawkins, 113 F.3d at 1166 (“[T]he Secretary has broad latitude in

ordering consultative examinations.”); with 20 C.F.R. § 404.1519a(b) (situations

requiring a consultative examination). 1




1
      M r. Kanelakos also asserts error in that reports of two examinations
conducted in connection with the VA disability decision (one specifically
psychiatric in nature) are missing from the social-security record. W e do not
consider this argument, which was made for the first time on appeal. See Jantzen
v. Hawkins, 188 F.3d 1247, 1257 (10th Cir. 1999). On remand, however, the ALJ
may wish to obtain these records to fully develop the record. See Carter v.
Chater, 73 F.3d 1019, 1022 (10th Cir. 1996).

                                           -6-
                                Physical Impairments

      M r. Kanelakos asserts error in the ALJ’s consideration of his physical

impairments. In 1997, M r. Kanelakos underwent a surgical repair of a right wrist

fracture; in 2000, he had a discectomy and fusion to relieve cervical spondylotic

radiculopathy. Post-surgery, he reported symptom relief and returned to w ork. In

April 2002, after a job transfer required a 70-mile commute, he again began

complaining of neck soreness, spasms, and stiffness. M r. Kanelakos has been

treated for sleep apnea, restless leg syndrome, non-insulin dependent diabetes

mellitus, chronic sinusitis, tendonitis or rotator cuff injury to the right shoulder,

peripheral neuropathy, and chronic pulmonary obstructive disease.

      Against this medical background, the VA rated M r. Kanelakos’ physical

disability as 20% for type-two diabetes, 20% for diabetic neuropathy in his upper

extremities, 10% for diabetic neuropathy in his lower extremities, and 20% for

urinary frequency. Similarly, the ALJ found that many of these physical

impairments were severe at step two of the evaluation process. The ALJ

determined at step four, however, that M r. Kanelakos was not disabled because he

retained the residual functional capacity (RFC) to perform a wide range of light

work, including his past relevant work of computer sales representative and

probation officer.

      M r. Kanelakos contends that the ALJ should have provided a full discussion




                                           -7-
of the V A disability rating in the context of his physical impairments. In

connection with M r. Kanelakos’ mental impairments, we have already decided the

ALJ’s treatment of the VA determination was inadequate. W e see no reason to

depart from that conclusion. Any change in the step-two determination on mental

impairments would inevitably result in a combination of impairments altering the

ALJ’s step-four analysis. See Grogan, 399 F.3d at 1261 (“[A]t step four,” the

claimant must show “that the impairment or combination of impairm ents prevents

him from performing his past work.”) (emphasis added, quotation omitted). The

physical impairment issue must also be remanded for the ALJ’s further

consideration.

                                     Conclusion

      The ALJ’s summary treatment of the VA rating decision is inadequate under

the standard announced in Grogan v. Barnhart, 399 F.3d at 1262-63. This failure

to comply with our case law affected the disability analysis as a whole. As a

consequence, we do not address the other issues M r. Kanelakos raises on appeal

and we reach no conclusions on the evidentiary merits of his case. The decision of

the district court is REVERSED and the case is REM ANDED with instructions to

remand the case to the Commissioner for further proceedings.

                                                    Entered for the Court


                                                    Terrence L. O’Brien
                                                    Circuit Judge

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