Leonard R. GREGER, Plaintiff-Appellant, v. Jo Anne B. BARNHART, Commissioner of Social Security, Defendant-Appellee, 464 F.3d 968

BOLTON, District Judge: Leonard R. Greger appeals the district court’s order affirming the Commissioner of Social Security’s (“Commissioner”) denial of social security disability insurance benefits under Title II of the Social Security Act, 42 U.S.C. §§ 401-33. We have jurisdiction pursuant to 28 U.S.C. § 1291, and we affirm. FACTS AND PROCEDURAL HISTORY Greger applied for social security disability insurance benefits on January 30, 2001. He alleged that he became disabled on June 25, 1998 due to triple bypass surgery, high blood pressure, a defective aorta, fibromyalgia, bad knees, and stomach problems.

Greger’s disability insurance lapsed on December 31, 1998, and so he must establish that he was disabled and unable to work from the alleged onset date, June 25, 1998, to December 31, 1998 (the “relevant period”). Greger was 49 years old, with a ninth-grade education, when his insured status expired. At his hearing on October 8, 2002, Greger testified that he worked as a truck driver until 1993 and was self-employed after that, doing miscellaneous carpentry-type jobs until shortly before he had open heart surgery in June 1998.

Greger also had surgery in July 1998 to remove a perianal abscess with followup surgery in November 1998. Greger testified that, during the relevant period, he experienced pain when sitting or standing for more than 30 minutes at a time, or walking more than half a block, shortness of breath with activity such as walking, and fatigue and shortness of breath caused by his heart medication, Atenolol. He said that he had suffered from carpal tunnel syndrome for five years.

He also testified that the Veterans Administration (“VA”) diagnosed him with post traumatic stress disorder (“PTSD”) in August 1998, with a disability rating of 30%. Also, stomach surgery in 1976 left him with “dumping syndrome,” a difficulty in controlling one’s bowels. The administrative law judge (“ALJ”) went through the five-step sequential evaluation process as required by 20 C.F.R. § 404.1520.2 At step one, the ALJ determined that Greger was not performing substantial gainful activity.

At steps two and three, the ALJ found that Greger suffered from severe cardiac, gastrointestinal and musculoskeletal impairments, as well as gout and hypertension, but that his condition did not meet or equal a listed impairment. The ALJ also found that Greger’s PTSD and other psychological problems did not meet the criteria for a severe mental impairment during the relevant period.

At steps four and five, the ALJ found that Greger’s problems prevented him from doing his past relevant work as a truck driver and carpenter, but that he retained the residual functional capacity (“RFC”) during the relevant period to perform other work at a light level of exertion. Accordingly, the ALJ found that Greger was not disabled. Greger appealed the ALJ’s decision to the district court, and the magistrate judge entered judgment for the Commissioner.

On appeal to this court, Greger advances the same issues he raised in the court below: that substantial evidence does not support the ALJ’s findings that Greger and his former girlfriend, Lois Shields, are not credible and that the ALJ’s RFC analysis was erroneous because it did not include all of Greger’s claimed limitations.

Greger also raises two new issues that he did not raise in the district court: that the ALJ erred (1) by concluding that his psychological problems were not severe when the VA had rated him with a 30% mental disability; and (2) by not ordering a consultative psychological exam in order to fully develop the record. STANDARD OF REVIEW We review de novo a district court’s order upholding a denial of social security disability benefits. Flaten v. Sec’y of Health & Human Servs., 44 F.3d 1453, 1457 (9th Cir.1995).

This review is limited, however, and “we may set aside a denial of benefits only if it is not supported by substantial evidence or if it is based on legal error.” Id. (citation omitted). DISCUSSION I. Greger argues that the ALJ erred in finding him not credible and rejecting his testimony regarding his limitations. To reject Greger’s subjective complaints, the ALJ “must provide ‘specific, cogent reasons for the disbelief.’ ” Lester, 81 F.3d at 834 (quoting Rashad v. Sullivan, 903 F.2d 1229, 1231 (9th Cir.1990)).

In the absence of evidence that Greger is malingering, the ALJ’s reasons for rejecting his testimony “must be clear and convincing.” Swenson v. Sullivan, 876 F.2d 683, 687 (9th Cir.1989). When an ALJ “finds that a claimant’s testimony relating to the intensity of his pain and other limitations is unreliable, the ALJ must make a credibility determination citing the reasons why the testimony is unpersuasive.” Morgan v. Comm’r of Soc. Sec. Admin., 169 F.3d 595, 599 (9th Cir.1999) (citing Bunnell v. Sullivan, 947 F.2d 341 (9th Cir.1991)).

In making a credibility determination, the ALJ “must specifically identify what testimony is credible and what testimony undermines the claimant’s complaints!.] In this regard, questions of credibility and resolutions of conflicts in the testimony are functions solely of the Secretary.” Id. (citations omitted). The ALJ provided clear and convincing reasons for rejecting Greger’s testimony and gave a detailed written opinion summarizing the specific statements by Greger that were not credible and the evidence that undermined Greger’s complaints.

During the relevant six-month period and into 1999, Greger failed to report any shortness of breath or chest pain; there was no evidence that Greger participated in a planned cardiac rehabilitation program; and he never reported problems related to carpal tunnel syndrome. Moreover, Greger told the VA in 2000 that he did carpentry work “under the table” through 1999, well after his date last insured. The ALJ noted evidence that after his surgery Greger was “active with yard work, work around the house, and that he was able to continue his past work activities as a contractor.” II.

Likewise, the ALJ did not find Shields credible and so disregarded her affidavit which attested to Greger’s fatigue and shortness of breath following his surgery and to pain and numbness in his hands. While an ALJ must take into account lay witness testimony about a claimant’s symptoms, the ALJ may discount that testimony by providing “reasons that are germane to each witness.” Dodrill v. Shalala, 12 F.3d 915, 919 (9th Cir.1993).

The ALJ found that Shields’ “statements are inconsistent with [Greger’s] presentation to treating physicians during the period at issue, and with [Greger’s] failure to participate in cardiac rehabilitation.” The ALJ also considered Shields’ “close relationship” with Greger, and that she was possibly “influenced by her desire to help [him].” The ALJ’s reasons for doubting Shields’ credibility are germane to her; accordingly, it was not error for the ALJ to disregard her testimony. Greger also argues that this matter must be remanded so that the ALJ can examine Shields and properly assess her credibility.

At the hearing, however, Gre-ger’s attorney agreed to have Ms. Shields submit an affidavit in lieu of testifying due to the lack of time that day. Accordingly, there is no error. III. Greger argues that the ALJ erred in assessing his RFC because the hypothetical posed to the vocational expert at Greger’s hearing did not specifically include Greger’s claim that the Atenolol produced the side effect of fatigue. The ALJ, though, “is free to accept or reject restrictions in a hypothetical question that are not supported by substantial evidence.” Osenbrock v. Apfel, 240 F.3d 1157, 1164-65 (9th Cir.2001).

Because Greger did not report any fatigue to his doctors during the relevant period, the ALJ properly limited the hypothetical to the medical assumptions supported by substantial evidence in the record. IV. Greger argues for the first time on appeal that the ALJ erred in finding his psychological problems not severe when the VA had rated him 30% disabled due to PTSD and that the ALJ failed to develop the record by not ordering a consultative psychological evaluation. Greger has waived these issues because he did not raise them before the district court.

The Ninth Circuit recognizes three exceptions to the general rule that the court will not consider an issue raised for the first time on appeal: “in the ‘exceptional’ case in which review is necessary to prevent a miscarriage of justice or to preserve the integrity of the judicial process, when a new issue arises while appeal is pending because of a change in the law, or when the issue presented is purely one of law and either does not depend on the factual record developed below, or the pertinent record has been fully developed.” Bolker v. C.I.R., 760 F.2d 1039, 1042 (9th Cir.1985) (citations omitted).

The court “will only excuse a failure to comply with this rule when necessary to avoid a manifest injustice.” Meanel v. Apfel, 172 F.3d 1111, 1115 (9th Cir.1999). Greger argues that the ALJ made legal errors and that it would be an injustice to not remand for consideration of the PTSD issue. We do not believe the ALJ erred in this case or that this is the exceptional case in which review is needed to prevent a miscarriage of justice. Greger never raised the issue of PTSD as a basis for finding him disabled before either the Social Security Administration or the district court.

His disability claim prior to this appeal related only to his physical problems. PTSD was only brought up when the ALJ was questioning Greger as to why he had problems getting along with his former supervisor and left his truck-driving job in 1992. It was the ALJ who first raised whether Greger had a rating from the VA for PTSD, and the ALJ specifically inquired about the VA’s percentage rating for PTSD and when Greger first received that rating. Nonetheless, Greger, who was represented by counsel at all times, failed to claim PTSD as a basis for his disability. Therefore, the issue is waived.

The dissent suggests that the court should consider these newly-raised issues because they involve a pure question of law, i.e., that the ALJ erred by not referencing the VA’s disability rating, as required by McCartey v. Massanari, 298 F.3d 1072 (9th Cir.2002). The claimant in McCartey, though, had asserted from the outset that his primary disability was the same impairment for which the VA had rated him 80% disabled, but the ALJ’s decision never mentioned the VA’s disability rating. Greger never raised the issue of PTSD or his 30% VA disability rating until this appeal.

Greger asserts that this is his only opportunity to establish his eligibility for disability benefits, as he cannot file a new claim after this. Greger, however, has had several opportunities over the past few years to raise the issue of his PTSD. His initial claim never mentioned his PTSD or any mental health problems. He was represented by counsel at his hearing before the ALJ and never claimed at that time that he suffered from disabling PTSD; it was the ALJ who inquired about Greger’s PTSD rating from the VA. Greger had an opportunity to brief the PTSD issue before the Appeals Council, but did not.

In his appeal to the district court, Greger’s new lawyers, in their recitation of the facts, summarized Greger’s testimony before the ALJ, including the discussion of Greger’s PTSD and 30% disability rating from the VA, but they never suggested that PTSD was a basis for finding Greger was disabled. Only when Greger obtained new counsel for this appeal and it appeared that his claim of physical disabilities would fail did he ever suggest that he was disabled due to PTSD. In sum, our independent review of the record does not reveal any miscarriage of justice or error of law in the administrative proceedings.

Accordingly, the district court’s judgment is AFFIRMED. . A May 1, 2000, VA compensation and pension exam report recognized that Greger was "currently 30% service-connected for PTSD and 20% service-connected for postoperative stomach injury.” The May 2000 report referenced Greger's previous compensation and pension exam, conducted in September of 1998, although the earlier report is not in the record. . The Ninth Circuit outlined this five-step process in Lester v. Chater, 81 F.3d 821, 828 n. 5 (9th Cir.1995): Step one: Is the claimant engaging in substantial gainful activity?

If so, the claimant is found not disabled. If not, proceed to step two. Step two: Does the claimant have a ‘severe’ impairment? If so, proceed to step three. If not, then a finding of not disabled is appropriate. Step three: Does the claimant’s impairment or combination of impairments meet or equal an impairment listed in 20 C.F.R., Pt. 404, Subpt. P, App. 1? If so, the claimant is automatically determined disabled. If not, proceed to step four. Step four: Is the claimant capable of performing his past work? If so, the claimant is not disabled. If not, proceed to step five.

Step five: Does the claimant have the residual functional capacity to perform any other work? If so, the claimant is not disabled. If not, the claimant is disabled.