The opinion of the court was delivered by: Karen E. Schreier Chief Judge
ORDER REVERSING AND REMANDING DECISION OF COMMISSIONER
Plaintiff, Bruce D. Smeester (Smeester), moves the court for reversal of the Commissioner of Social Security's (Commissioner) decision denying his application for disability insurance benefits and supplemental security income under Titles II and XVI of the Social Security Act. The Commissioner opposes the motion. The court reverses and remands.
On November 28, 2005, Smeester filed applications for disability insurance benefits and supplemental security income alleging disability since October 1, 2003. AR 80-82, 719-22. Smeester's applications were denied initially and on reconsideration. AR 56-57, 59-61. Upon Smeester's request, Administrative Law Judge James W. Olson (the ALJ) held a hearing on September 11, 2007. AR 26. On September 25, 2007, he issued a decision finding that Smeester was not disabled within the meaning of the Social Security Act. AR 10-24. The Appeals Council denied Smeester's request for review on June 30, 2008. AR 5-8. This appeal followed.
Smeester was born on October 3, 1958, making him 45 years old at the alleged onset date and 48 years old at the time of the ALJ's decision. AR 741. Smeester dropped out of school in 12th grade, but attained his GED in 1983. AR 117. Smeester served in the armed forces from 1978 to 1981 and from 1983 to 1986. AR 391. His work experience includes cleaning and making coffee at an air force base, inserting ads in a newspaper, and truck driving. AR 753-54. Smeester has been homeless for most of his adult life. AR 390. At the time of the ALJ's decision, Smeester was living in a residential dormitory operated by Behavior Management Systems (BMS) in Rapid City, South Dakota. AR 740-41.
Smeester's medical records document a history of hip and back pain, depression, and alcohol dependency. Smeester had back surgery at L5-S1 in 2000. AR 546. He also underwent in-patient alcohol treatment at the Tomah Veteran's Administration (VA) Medical Center in Tomah, Wisconsin, from May 17, 2002, through September 8, 2002. AR 222. Smeester was again hospitalized at the Tomah VA hospital from December 12, 2003, through December 15, 2003. AR 220-21. He admitted to drinking at least a 12-pack of beer and some vodka daily and was placed in the acute psychiatry ward for alcohol detoxification. AR 220. Upon physical examination, Smeester was found to have good range of motion of his upper and lower extremities. AR 220-21. Smeester was discharged on December 15, 2003, and referred to the Substance Abuse Program. AR 221. Smeester completed the Substance Abuse Program on January 16, 2004, and moved into the Veterans Assistance Center. AR 196, 218. He left the Veterans Assistance Center on July 5, 2004, in order to move to South Dakota because he believed he could enter the compensated work therapy (CWT) program at the VA Black Hills Health Care System--Hot Springs Campus. AR 196, 394. When Smeester arrived at the Hot Springs Campus, he was admitted into an inpatient substance abuse treatment program on August 18, 2004. AR 318.
On August 19, 2004, Smeester saw orthopedic surgeon Dr. Gerald R. Herrin for a consultation. AR 546. Smeester reported right hip pain that began about three or four months before the appointment. AR 546. Dr. Herrin observed that Smeester walked with a limp, had no localized tenderness about the hip, but had pain with internal rotation and abduction. AR 546.
Dr. Herrin found that Smeester's x-rays were not normal:
His changes are fairly subtle, but there is early joint space narrowing superiorly. There is an irregularity in the femoral head just at the acetabular margin. It is not sharp like an osteochondral fracture that one might see in aseptic necrosis, but it may indeed be related to that. He has several subchondral cysts and he has a marginal femoral head osteophyte.
AR 546. Dr. Herrin believed that Smeester had aseptic necrosis or osteoarthritis, but believed the latter was more likely. AR 546.
On September 3, 2004, Smeester saw PA-C Susan M. Wassenhove. AR 511--11A. He complained of significant trouble walking and severe pain in his hip and knee on the right side. AR 511A. PA-C Wassenhove noted that an MRI had been performed on August 23, 2004, which showed bilateral avascular necrosis of the femoral heads, with the condition more advanced in the right side than the left side. AR 511A.
On September 9, 2004, Smeester saw Dr. Herrin again. AR 505.
Dr. Herrin reviewed the MRI and found that it was consistent with aseptic necrosis, with more involvement on the right than on the left. AR 505. Because his x-rays were virtually normal, Smeester was at Ficat 1 stage of aseptic necrosis. AR 505. Dr. Herrin observed that Smeester was "very symptomatic" and walked with a pronounced antalgic gait on the right. AR 505. Dr. Herrin referred Smeester to the VA hospital in Minneapolis, Minnesota, to pursue surgical opinions, stating "[i]n spite of his youth, I don't think he is going to be able to tolerate this until he reaches an ideal age for hip arthroplasty. AR 505.
Smeester was fitted with axillary crutches for assistive ambulation on September 14, 2004. AR 502. He told the kinesiotherapist that he was having terrible right hip pain. AR 502.
On September 22, 2004, PA-C Wassenhove approved Smeester to participate in CWT. AR 492. PA-C Wassenhove indicated that Smeester was capable of lifting 50 pounds, standing for two hours, working for eight hours, operating hand tools or equipment, and negotiating stairs. AR 492. She also found that Smeester was mentally and physically capable of operating woodshop power tools. AR 492.
On November 4, 2004, Smeester saw PA-C Wassenhove, complaining that his pain medications were not controlling his pain. AR 457. He reported that his pain had been gradually increasing for several weeks and was making it difficult for him to walk and sleep. AR 457. PA-C Wassenhove increased Smeester's dosage of morphine. AR 458.
Smeester completed substance abuse treatment at the Hot Springs Campus in November 2004. AR 318. On November 18, 2004, his treatment team requested that he be transferred to the medical team for residential treatment under their care because Smeester was medically unable to participate in CWT and required medical care for severe problems with his right hip and right leg. AR 445. He was not accepted by the medical team. AR 445. Shortly thereafter, Smeester missed his curfew and left the hospital without proper clearance. AR 319, 394. He was discharged irregularly on November 24, 2004. AR 319. Smeester moved to the Cornerstone Rescue Mission in Rapid City. AR 430, 436. At some point, Smeester got into an altercation with his roommate and left the Cornerstone Rescue Mission and stayed in his car. AR 398.
Meanwhile, Smeester went to the Minneapolis VA Medical Center in Minneapolis, Minnesota, for an orthopedic consultation with Dr. David C. Fey on November 30, 2004. AR 266-67. Smeester complained of right anterolateral groin pain, right buttock pain, and right distral lateral thigh pain. AR 266. Smeester reported that he had increased pain with walking and could walk about two blocks without assistance before he had to stop. AR 266. Smeester was taking oral morphine and using crutches. AR 266. Dr. Fey observed that Smeester was in obvious distress due to his right hip and had difficulty bearing any weight on the right hip due to pain. AR 266. Upon examination, Dr. Fey found that Smeester had full extension, flexion to 110 degrees with anterolateral groin pain, 25 degrees of external rotation, and 10 degrees of internal rotation with significant anterolateral groin pain. AR 266. Dr. Fey reviewed Smeester's x-rays and found some mild osteophytic spurring about the acetabulum. AR 266. He also saw some osteophytic spurring along the lateral femoral head and a "subtle, but obvious[,] area of collapse in the weightbearing portion of his femoral head." AR 266. Dr. Fey reported very subtle sclerosis in the superior femoral head. AR 266. Dr. Fey diagnosed Smeester with right hip avascular necrosis with some collapse and early degenerative changes. AR 266.
Dr. Fey characterized Smeester's condition as a "complex, difficult situation." AR 266. He reported, "[h]e is in quite severe pain at this time. He is quite young, and we would like to avoid doing a hip replacement at a young age due to likeliness of having to have a revision or multiple revision hip replacements in the future." AR 266-67. Dr. Fey planned to have a right intraarticular hip injection performed under fluoroscopy in order to buy time and to help Smeester understand the amount of relief he would get with a hip replacement. AR 267. He planned to see Smeester again in four months for a reevaluation. AR 267.*fn1 He concluded, "it is quite likely that he will have to have a hip replacement at an early age based on his current symptomology." AR 267.
On December 8, 2004, Smeester presented to an urgent care clinic complaining of hip pain and requesting pain medication. AR 436. He reported that his pain was a six out of ten. AR 437. CNP Mardi Hulm prescribed propoxyphene. AR 437. Smeester also obtained a single point cane with the plan of using a more supportive assistive device if the cane did not relieve sufficient weight from his right leg. AR 435.
In early 2005, Smeester attempted to enroll in the CWT-Transitional Residence (TR) program at the VA Black Hills Health Care System--Fort Meade Campus. As part of the program screening process, Smeester met with vocational rehabilitation counselor Jason Chipman on January 14, 2005. AR 417-29. Chipman found that Smeester's "past work experiences and current vocational interests are in conflict with his current physical abilities." AR 424. After reviewing Smeester's strengths, interests, social and family history, and medical complaints, Chipman concluded that Smeester "appears unemployable or marginally employable at this point. He has no income and is residing at the [Cornerstone Rescue Mission]. [He] appears to have a limited ability to develop and maintain interpersonal relationships." AR 427.
On February 2, 2005, Smeester began working as an escort through the Fort Meade Campus's incentive therapy program. AR 416. He worked about twenty hours per week and was paid $1 per hour for the two weeks he participated in the program. AR 162.
Smeester saw psychologists John M. Matthias and Christopher J. Elia for an individual assessment and feedback session on February 18, 2005. AR 410-13. Drs. Matthias and Elia administered a Beck Depression Inventory, which indicated moderate to severe depression with a propensity toward severity, an SCL-90-R, which indicated serious symptomatology and possibly severe psychopathology across numerous areas of functioning, an FIRO-B, which indicated that Smeester was uncomfortable with social interactions and exhibited a propensity toward isolation, and an MMPI-2, which raised some doubts about the validity of Smeester's profile. AR 411-12. Overall, Drs. Matthias and Elia found, [Smeester] exhibits severe psychopathology that includes depression, feelings of worthlessness and inadequacy, hostility, and social isolation and distance. Although there is some indication that he may have exaggerated his pathology, his aggregate test scores are consistent and suggest serious problems, particularly with interpersonal relationships and an inability to express himself appropriately without becoming belligerent or aggressive. [Smeester] also tends to see himself critically and negatively and likely harbors intense feelings of inadequacy and self-doubt that exacerbate his constellation of symptoms and mental health problems.
AR 412-13. Drs. Matthias and Elia found that Smeester was a poor candidate for CWT-TR because of his severe psychopathology and extreme difficulties with interpersonal relationships, but recommended group psychotherapy and continued incentive therapy. AR 413.
On February 22, 2005, Smeester was found wandering around the grounds of the Fort Meade Campus. AR 408. He reported that he drank a pint of vodka and took several Tylenol and propoxyphene pills. AR 409. He was hospitalized for close observation and detoxification due to suicidal ideation and polysubstance abuse. AR 407. On February 23, 2005, Dr. Myron K. Meinhardt, staff psychiatrist, saw Smeester and assigned a global assessment of functioning (GAF) of 50. AR 399. Smeester was discharged from the psychiatric unit on March 2, 2005, and transferred to the Living Skills in Action (LSIA) in-patient cognitive behavioral therapy program. AR 374.
On March 8, 2005, Dr. Herrin referred Smeester to Dr. Steven K. Goff for an intra-articular cortisone injection. AR 363. Smeester saw Dr. Goff on March 9, 2005. AR 362. Dr. Goff observed that Smeester had a fairly antalgic gait and limited and painful motion of the right hip. AR 362. Dr. Goff also noted that Smeester's physicians were trying to delay any total hip surgery. AR 362. He administered a right intra-articular hip injection. AR 362.
On March 22, 2005, Smeester left the Fort Meade Campus and drove into Sturgis, South Dakota. AR 351. He consumed alcohol and then returned to the Fort Meade Campus. AR 351. He encountered VA police, and when they spoke to him, he became assaultive. AR 351. Smeester was arrested and taken to the Meade County Jail. AR 350. As a result, he was dismissed from the LSIA program. AR 351. Smeester was sentenced to eight ...