## Facts

- Kris E. Udd developed serious psychiatric symptoms during military service in 1973, was treated at a VA hospital, and was diagnosed with schizophrenia.
- The VA paid Udd service-connected disability benefits for schizophrenia continuously from the early 1970s onward.
- In March 1976, the SSA found Udd disabled (onset May 3, 1974) and began paying disability benefits.
- The SSA terminated Udd’s benefits effective October 31, 1976; the termination basis could not be determined because the SSA destroyed the 1976 file under its record-retention policy.
- Udd had no attorney or legal guardian responsible for pursuing review of the 1976 termination.
- In 1994, Udd filed a new application alleging disability beginning November 1, 1976; the SSA ultimately found him disabled from that date forward but limited retroactive benefits to the 12 months before the 1994 filing.
- Udd sought reopening of the 1976 termination, asserting that his mental condition in 1976 prevented him from understanding the termination notice and review procedures.
- The ALJ found Udd’s impairment prevented work but did not eliminate capacity to understand review procedures, relying on evidence that he lived alone, had relationships, and performed babysitting in December 1976; the ALJ refused to reopen.
- The Appeals Council denied review, the district court affirmed, and Udd appealed.

## Issues

1. Whether due process and SSA policy require tolling or reopening when a claimant’s mental incapacity prevented timely pursuit of administrative review of an adverse benefits decision.
2. Whether substantial evidence supported the ALJ’s finding that Udd had sufficient mental capacity in 1976 to understand and pursue SSA review procedures, particularly given the destruction of the contemporaneous SSA file.

## Decision

- The Ninth Circuit reversed the district court’s judgment.
- The court held the ALJ’s finding that Udd did not lack mental capacity in 1976 was not supported by substantial evidence.
- The court concluded that, under due process principles as reflected in SSA policy for mentally incapacitated claimants, the refusal to reopen (or to treat the challenge as timely) could not stand.
- The case was remanded for further proceedings consistent with the opinion, including reopening or equivalent relief regarding the 1976 termination to permit pursuit of retroactive benefits.

## Legal Principles

- Judicial review sustains the Commissioner’s findings only if supported by substantial evidence; an ALJ may not rest a capacity determination on weak inferences that do not reasonably address the cognitive demands of understanding and pursuing administrative review.
- Due process concerns arise when mental incapacity prevents a claimant from understanding notice and appeal rights; in such circumstances, SSA must provide an extension, tolling, or reopening consistent with its policy on mental incapacity.
- Limited daily functioning (e.g., living alone, brief caregiving) does not necessarily establish capacity to comprehend and act on formal SSA review procedures.
- When the agency’s record-retention practices destroy the contemporaneous file for an earlier adverse decision, the resulting evidentiary gap heightens the need for careful justification before drawing conclusions against the claimant.

## Conclusion

The Ninth Circuit set aside the Commissioner’s refusal to reopen the 1976 termination because the ALJ’s finding that Udd could understand and pursue review in 1976 lacked substantial evidentiary support, and due process as applied through SSA policy required relief for a mentally incapacitated claimant facing strict finality rules without the original agency file.


Udd v. Massanari, 245 F.3d 1096 (9th Cir. 2001)