                           In the
 United States Court of Appeals
              For the Seventh Circuit
                        ____________

No. 02-4297
MICHAEL D. WYATT,
                                           Plaintiff-Appellant,
                              v.


JO ANNE B. BARNHART,
Commissioner of Social Security,
                                          Defendant-Appellee.
                        ____________
          Appeal from the United States District Court
               for the Southern District of Illinois.
          No. 00-cv-4260-JPG—J. Phil Gilbert, Judge.
                        ____________
        ARGUED JULY 8, 2003—NOVEMBER 18, 2003
                     ____________


  Before KANNE, ROVNER, and WILLIAMS, Circuit Judges.
  ROVNER, Circuit Judge. Michael Wyatt contends that the
favorable decision in his disability benefits case was
improperly reopened, leading to a revised decision that
denied him benefits. Because the ALJ’s decision to reopen
the case is unsupported, we remand the case to the Social
Security Administration for reinstatement of the original
favorable decision.
  Wyatt’s case has a complex procedural history, beginning
with the initial denial of his application for disability in-
surance benefits and supplemental security income in June
2                                                No. 02-4297

1992. A hearing was held at Wyatt’s request in July 1993,
and three months later the ALJ issued a decision finding
Wyatt disabled due to chronic pain syndrome and degenera-
tive disc disease. More than a year later, in November 1994,
the ALJ notified Wyatt by letter that he had decided to
reopen his case. The ALJ then held a second hearing and
issued a revised decision, this time holding that Wyatt was
not disabled and denying him benefits. That decision was
later vacated and remanded by the Appeals Council, but on
remand the ALJ again found Wyatt not disabled, and the
Appeals Council denied review. The district court affirmed
the ALJ’s final decision, and Wyatt appeals.
  Because Wyatt argues only that his case was improperly
reopened, our review is limited: we need not decide the
propriety of the ALJ’s final disability determination, only
whether the earlier decision to reopen Wyatt’s case was
proper. The discretion to reopen a case lies solely with the
ALJ, and so we can affirm the decision to reopen only on
the basis of the ALJ’s stated reasons. See Amax Coal Co. v.
Franklin, 957 F.2d 355, 356-58 (7th Cir. 1992) (where ALJ’s
stated basis for reopening black lung benefits case was
unfounded, decision could not be affirmed even though
evidence ALJ cited might have justified reopening on
another ground); accord Cole ex rel. Cole v. Barnhart, 288
F.3d 149, 151 (5th Cir. 2002) (court may affirm decision to
reopen disability claim only on decisionmaker’s stated
grounds).
  Our job would be easy if the ALJ’s letter notifying
Wyatt of the reopening cited the regulatory basis for the
decision, but it does not. Instead it states only that the case
is being reopened “[p]ursuant to 20 CFR 404.988 and 20
CFR 416.1488” [sic]. These references are unhelpful because
the cited provisions list or cross-reference all of the more
than twenty grounds on which SSI and DIB cases may be
reopened. See 20 C.F.R. §§ 404.988 (listing eighteen
grounds for reopening DIB determinations and cross-
No. 02-4297                                                3

referencing § 404.989), 404.989 (listing three grounds for
reopening DIB determinations), 416.1488 (listing three
grounds for reopening SSI determinations and cross-refer-
encing § 416.1489), 416.1489 (listing three grounds for
reopening SSI determinations). The letter thus falls far
short of the statement of “specific rationale” for reopening
a case that the agency’s internal operating procedures re-
quire. See Social Security Administration Program Opera-
tions Manual System (POMS) § GN 04001.080 (“The mere
mention on the form that reopening does or does not apply
is not sufficient rationale.”). Although there may have been
good reason to reopen Wyatt’s case, the ALJ’s letter pro-
vides us with no plausible basis for affirming that decision.
  The Commissioner does not defend the decision to reopen
on the basis of any evidence that was before the ALJ when
he issued the letter. Instead, the Commissioner argues that
facts that later came to light demonstrate that Wyatt
engaged in fraud or “similar fault” that, in hindsight,
justifies the reopening of his case. See 20 C.F.R.
§§ 404.988(c)(1) (permitting reopening of DIB claims at any
time based on fraud or similar fault), 416.1488(c) (same
with respect to SSI claims). Specifically, the Commissioner
notes that Wyatt returned to work shortly after the July
1993 hearing where he testified that he was not working
and that his impairments prevented him from doing so.
Rather than immediately informing the Social Security
Administration that he had begun working, Wyatt did so
only upon learning, in early November 1993, that the ALJ
had determined that he was eligible to receive benefits. But
we could not affirm the decision to reopen on the basis of
fraud or “similar fault”—even if it were the ground on
which the ALJ actually relied—because there simply is no
evidence that Wyatt did anything wrong. He neither lied to
the ALJ nor attempted to simultaneously receive benefits
and earn wages without the agency’s knowledge. And
although the Commissioner suggests that Wyatt can be
4                                                No. 02-4297

faulted for failing to inform the ALJ at the 1993 hearing
that he was contemplating returning to work and for failing
to immediately report having done so, the Commissioner
points to no authority for these propositions. The Commis-
sioner thus cannot establish that Wyatt’s conduct amounts
to “similar fault.” See, e.g., Barone v. Bowen, 869 F.2d 49, 51
(2d Cir. 1989) (similar fault requires showing by preponder-
ance of evidence that claimant knowingly did something
wrong).
  Moreover, the circumstances surrounding Wyatt’s return
to work could not have factored into the ALJ’s decision to
reopen the case at all because the work was irrelevant to
disability under our decision in McDonald v. Bowen, which
governed disability determinations for claimants within this
circuit at the time Wyatt’s case was reopened. See McDon-
ald v. Bowen, 818 F.2d 559 (7th Cir. 1987), overruled by
Barnhart v. Walton, 535 U.S. 212 (2002). In McDonald, we
noted that although the Social Security Act generally
defines “disability” as an inability to work, it also provides
that disabled claimants may return to work on a “trial”
basis for up to nine months without losing their disability
benefits. See id. at 562-63. Compare 42 U.S.C. §§ 423(d) &
1382c (defining “disability” as inability to engage in sub-
stantial gainful activity), with §§ 422(c) & 423(a) (permit-
ting disabled claimants to return to work on “trial” basis
while continuing to receive disability benefits). To insure
that claimants who participated in “trial work” would not be
penalized—that is, that the agency would not point to the
claimant’s trial work as evidence that he was indeed able to
work, and thus was not disabled—we barred any consider-
ation of trial work in disability determinations. See McDon-
ald, 818 F.2d at 563-64 (trial work “is not in itself any
evidence that [a claimant’s] disability has ended”). Here,
there is no dispute that the agency treated Wyatt’s job as
trial work: when Wyatt reported that he was working, an
agency representative encouraged him to keep the job as
No. 02-4297                                                 5

trial work, and the agency paid Wyatt disability benefits for
nine months while he held the job. (Wyatt’s impairments
forced him to resign two months later.) The Commissioner
observes that McDonald’s interpretation of the trial work
provision no longer controls and that, under the current
interpretation, Wyatt would not have been entitled to
participate in trial work because he returned to work before
receiving a formal determination of disability, see Walton,
535 U.S. at 212, but that is irrelevant. McDonald controlled
at the time Wyatt’s case was reopened, and the agency was
bound to follow it. See 20 C.F.R. § 404.985; Social Security
Acquiescence Ruling 88-3(7). Thus, the circumstances of
Wyatt’s return to work could not have affected either the
determination of his disability or the decision to reopen that
determination, whether under the theory that they demon-
strate similar fault or any other theory. Accord Cole, 288
F.3d at 152-53 (claimant’s return to work prior to disability
determination did not make disability determination
erroneous on the face of the evidence and thus did not
permit reopening on that ground); Salamalekis v. Comm’r
of Soc. Sec., 221 F.3d 828, 832-33 (6th Cir. 2000) (fact that
claimant returned to work while awaiting disability deter-
mination without notifying agency did not mean determina-
tion was rendered on incomplete evidence; work qualified as
trial work and so could not be considered in disability
determination at all); Barone, 869 F.2d at 49 (claimant’s
return to work while benefits claim was pending did not
establish similar fault to justify reopening).
  As we have observed before, “the grounds for reopening
must be narrowly applied when the [agency] proceeds
against a claimant. Because errors can cause considerable
hardship, the regulations should be liberally applied in
favor of beneficiaries.” Dugan v. Sullivan, 957 F.2d 1384,
1389 (7th Cir. 1992). Here, the ALJ’s stated reasons—as
well as the alternative grounds the Commissioner pro-
6                                             No. 02-4297

poses—fail to satisfy those regulations. Accordingly, we
REVERSE the judgment of the district court and REMAND the
case to the Social Security Administration with instructions
to reinstate the ALJ’s original favorable decision granting
Wyatt benefits. See Cole, 288 F.3d at 153.

A true Copy:
      Teste:

                        ________________________________
                        Clerk of the United States Court of
                          Appeals for the Seventh Circuit




                  USCA-02-C-0072—11-18-03
