                   United States Court of Appeals,

                             Fifth Circuit.

                                No. 94-10284

                            Summary Calendar.

                Glenn G. LATHAM, Plaintiff-Appellant,

                                     v.

     Donna E. SHALALA, Secretary Department of Health & Human
Services, Defendant-Appellee.

                              Nov. 2, 1994.

Appeal from the United States District Court for the Northern
District of Texas.

Before REAVLEY, HIGGINBOTHAM and EMILIO M. GARZA, Circuit Judges.

      REAVLEY, Circuit Judge:

      Glenn G. Latham appeals the district court's grant of summary

judgment in favor of the Secretary of Health and Human Services

(the "Secretary"), affirming the denial of his application for

social security disability benefits and refusing to remand to the

Secretary for consideration of new evidence.               We vacate and order

remand to the Secretary.

                                 BACKGROUND

      Latham   suffers   from     multiple     health      problems    including

osteoarthritis,   degenerative      disc     and   joint    disease,   migraine

headaches, and mental and emotional disorders.              On March 11, 1991,

he   filed   applications   for    disability      insurance     benefits   and

supplemental security income.       Benefits were denied.

      Latham sought judicial review of the denial of benefits.               He

also provided additional evidence to the district court in the form


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of a Department of Veterans Affairs Rating Decision ("VA rating")

which   concluded    that     he   was       eligible     for   Veterans    Affairs

disability benefits.     He made a motion to remand to the Secretary

for consideration of this evidence.                The district court, adopting

the findings and recommendations of a magistrate, denied Latham's

motion to remand and granted the Secretary's motion for summary

judgment on the benefits determination.

                                   DISCUSSION

        This    court   may    remand         to    the   Secretary   and    order

consideration of additional evidence "upon a showing that there is

new evidence which is material and that there is good cause for the

failure to incorporate such evidence into the record in a prior

proceeding."     42 U.S.C.A. § 405(g) (1991 & Supp.1994).                   The VA

rating meets the statutory requirements, and we remand.

     The VA rating is certainly new, since it was not issued until

after the Secretary's determination. Latham can also meet the good

cause requirement, since the rating decision was not previously

available.     Latham had applied for VA disability benefits and was

awaiting the rating decision during the social security benefits

application process.     He did not receive the VA rating until late

1993, after the Secretary's final decision.

        For new evidence to be material, there must exist the

"reasonable possibility that it would have changed the outcome of

the Secretary's determination." Chaney v. Schweiker, 659 F.2d 676,

679 (5th Cir.1981).         The magistrate's findings, adopted by the

district court, erroneously applied a different standard, requiring


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that the evidence would "likely" have changed the Secretary's

decision.    In Chaney, the Fifth Circuit specifically rejected that

more stringent standard.       659 F.2d at 679 n. 4;         see also Dorsey v.

Heckler, 702 F.2d 597, 604-05 (5th Cir.1983) (using the "reasonable

possibility" standard); Johnson v. Heckler, 767 F.2d 180, 183 (5th

Cir.1985) (same).1

     There exists a reasonable possibility that the VA rating would

have changed the Secretary's determination.                  The ALJ based its

decision to deny benefits partly on the fact that none of Latham's

physicians had pronounced him disabled. The VA rating specifically

makes    a   disabled   finding      and,   like    a     physician's   finding,

constitutes evidence "entitled to great weight."                  Rodriguez v.

Schweiker, 640 F.2d 682, 686 (5th Cir.1981).               Nor is this evidence

merely cumulative of other evidence, since no previous report had

made a direct finding of disability.          The VA rating also concludes

that Latham suffers from "irritability, sleep disturbance, and

memory problems."        The   ALJ    did   not    find    sufficient   evidence

supporting Latham's complaints in these areas.                  The additional

evidence might well change that decision.

     The VA rating also meets the timing element of materiality,

since it "relate[s] to the time period for which benefits were


     1
      In one case, Pierre v. Sullivan, 884 F.2d 799, 803 (5th
Cir.1989), a Fifth Circuit panel cited Chaney but apparently
mistakenly used the "likely" language. Where decisions conflict,
the earlier decision should be followed. Johnson v. Moral, 843
F.2d 846, 847 (5th Cir.1988), rev'd on other grounds, 876 F.2d
477 (5th Cir.1989) (on rehearing). So, the "reasonable
possibility" standard for materiality continues to apply in the
Fifth Circuit.

                                        3
denied."    Johnson v. Heckler, 767 F.2d 180, 183 (5th Cir.1985).2

The VA rating was based partly on medical records and physical

examinations which postdated the September 4, 1992 decision of the

ALJ. However, the rating decision also is based on hospitalization

records    from   1990,    records   which   tracked   Latham's   outpatient

treatment for more than a year before the ALJ decision, and

Latham's overall medical history.

     Latham has raised possible problems with the ALJ's application

of legal standards in determining disability, which the Secretary

should also consider when this case is remanded for consideration

of additional evidence.          First, the ALJ did not consider the

possibility that Latham's pain and other symptoms might result from

his mental condition.        When medical findings do not substantiate

the existence of physical impairments capable of producing alleged

pain and other symptoms, the ALJ must investigate the possibility

that a mental impairment is the basis of the symptoms.             20 C.F.R.

§ 404.1529(b).

     The ALJ dismissed many of Latham's complaints of pain and

severe discomfort when he decided that Latham's physical ailments

were not serious.         The ALJ noted that Latham had been diagnosed


     2
      Johnson controls on this issue, so the evidence which
Latham presents must meet this requirement. Ferguson v.
Schweiker, 641 F.2d 243, 250 n. 9 (5th Cir.1981) holds that
evidence of injuries incurred after the administrative hearing
must be considered if a case is remanded to the Secretary but
specifically declines to address the issue of whether such
evidence could itself justify a remand. Recent Fifth Circuit
cases have all required that additional evidence meet this
timeframe requirement. See, e.g., Haywood v. Sullivan, 888 F.2d
1463, 1471 (5th Cir.1989).

                                       4
with a possible somatization disorder.                  The basic feature of

somatoform disorders is the presence of physical symptoms for which

there are no demonstrable organic findings.                20 C.F.R. subpt. P,

app. 1, § 12.07 (1994).          Yet, the ALJ did not investigate the

possibility that Latham's pain and symptoms existed as a result of

the disorder.

      Second, when making a finding that an applicant can return to

his prior work, the ALJ must directly compare the applicant's

remaining    functional   capacities      with    the    physical   and   mental

demands of his previous work.       20 C.F.R. § 404.1520(e) (1994).           He

must make clear factual findings on that issue.                See Abshire v.

Bowen, 848 F.2d 638, 641 (5th Cir.1988).            The ALJ may not rely on

generic     classifications   of    previous       jobs.      SSR   No.    82-61

(C.E.1982), 1982 WL 31387, 1982 SSR LEXIS 31.

     Here, the ALJ found that Latham had a residual functional

capacity for light and medium work and decided that he therefore

could perform his past employment as sales manager and sales

person,   since   those   jobs     required      light   to   medium   exertion

capacity.     The categories of light and medium are generic.               They

also refer only to exertional capabilities and do not address

mental or emotional barriers to a return to previous employment.

The ALJ concluded that Latham suffers from anxiety, depression and

deficiencies in concentration and social functioning.               Yet, he did

not explain how these impairments do not prevent Latham from

returning to his previous people-oriented employment.

     The judgment of the district court is vacated and the case is


                                      5
remanded with directions to remand to the Secretary for further

proceedings.

     VACATED AND REMANDED.




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