## Facts

- Rudolfo A. Banegas, a former bakery route salesman, suffered a serious back injury in a 1978 automobile accident and later underwent multiple back surgeries, including a lumbar fusion.
- He applied for Social Security disability insurance benefits in February 1980; the agency denied the claim initially.
- After a January 1981 hearing, the Administrative Law Judge (ALJ) denied benefits, and the Appeals Council affirmed, making the denial final.
- The administrative record contained extensive medical evidence indicating chronic, severe back pain and inability to perform substantial gainful activity.
- The agency’s medical adviser reviewed the record and testified that Banegas experienced severe pain (rated 7–8/10) and that the pain had an organic, not psychological, basis.
- After the hearing, the ALJ followed Banegas and his attorney outside the courthouse and observed Banegas walking briskly without a cane and getting into a car without apparent difficulty.
- The ALJ relied heavily on this undisclosed, extra-record observation to discount Banegas’s claimed limitations and to deny benefits, without giving Banegas notice or an opportunity to respond.

## Issues

1. Whether the denial of disability benefits was supported by substantial evidence given the extensive medical record and the medical adviser’s testimony.
2. Whether an ALJ may rely on undisclosed, post-hearing personal surveillance or observations outside the administrative record without notice and an opportunity for the claimant to rebut.

## Decision

- The district court granted relief under 42 U.S.C. § 405(g) by remanding the case to the Secretary for reconsideration.
- The court found the administrative decision was compromised by the ALJ’s reliance on extra-record, post-hearing surveillance not disclosed to the claimant.
- The court indicated that, once the improper observation was set aside, the record did not provide adequate support for the denial in light of the strong medical evidence.
- On remand, the agency was directed to reevaluate the claim based on proper, record-based evidence and procedures.

## Legal Principles

- Judicial review under 42 U.S.C. § 405(g) requires that disability findings be supported by substantial evidence in the administrative record.
- Administrative adjudication must be procedurally fair; evidence used against a claimant must be disclosed with a meaningful opportunity to explain or rebut.
- An ALJ may not substitute undisclosed personal surveillance or lay impressions outside the hearing record for medical evidence, especially when used to override substantial medical proof of disability.

## Conclusion

The court remanded because the ALJ’s undisclosed post-hearing surveillance and reliance on extra-record observations undermined fair procedure and prevented a sustainable substantial-evidence determination based on the record.


Banegas v. Heckler, 587 F. Supp. 549 (W.D. Tex. 1984)