REPORT AND RECOMMENDATION
LEONARD T. STRAND UNITED STATES MAGISTRATE JUDGE
Plaintiff Tracy Ann Hattig seeks judicial review of a final decision of the Commissioner of Social Security (the “Commissioner”) denying her application for Supplemental Security Income benefits (“SSI”) under Title XVI of the Social Security Act, 42 U.S.C. § 401 et seq. (“Act”). Hattig contends that the administrative record (“AR”) does not contain substantial evidence to support the Commissioner’s decision that she was not disabled. For the reasons that follow, I recommend that the Commissioner’s decision be reversed and remanded for further proceedings.
Hattig was born in 1970 and was 39 years old on her alleged onset date of October 20, 2009. AR 15, 129. She has no past relevant work. AR 27. She protectively filed her application for SSI on October 20, 2009. AR 15. The application was denied initially and on reconsideration. AR 65-69, 75-83. Hattig then requested a hearing, which was conducted August 9, 2011, by Administrative Law Judge (“ALJ”) Jan E. Dutton. AR 15. During the hearing, Hattig testified, as did a vocational expert (“VE”). AR 33-57. The ALJ issued a decision denying Hattig’s application on September 7, 2011. AR 15-28. On September 19, 2012, the Appeals Council denied Hattig’s request for review. AR 1-5. As such, the ALJ’s decision is the final decision of the Commissioner. AR 1; see also 20 C.F.R. § 416.1481.
On October 18, 2012, Hattig commenced an action in this court seeking review of the ALJ’s decision. This matter has been referred to me pursuant to 28 U.S.C. § 636(b)(1)(B) for the filing of a report and recommended disposition of the case. The parties have briefed the issues and the matter is now fully submitted.
Summary of ALJ’s Decision
The ALJ made the following findings:
(1) The claimant has not engaged in substantial gainful activity since October 20, 2009, the application date (20 CFR 416.971 et seq.).
(2) The claimant has the following severe impairments: major depressive disorder and generalized anxiety disorder (20 CFR 416.920(c)).
(3) The claimant does not have an impairment or combination of impairments that meets or medically equals one of the listed impairments in 20 CFR Part 404, Subpart P, Appendix 1 (20 CFR 416.920(d), 416.925 and 416.926).
(4) After careful consideration of the entire record, the undersigned finds that the claimant has the residual functional capacity to perform a full range of work at all exertional levels but with the following nonexertional limitations: will need to consider only unskilled work with an SVP 1 or 2. Consider work that does not require extended concentration or attention. Social interaction should not be intense or frequent, but could be occasional with the general public, co-workers and supervisors.
(5) Step 4 –The claimant has no past relevant work (20 CFR 416.965).
(6) The claimant was born on May 12, 1970 and was 39 years old, which is defined as a younger individual age 18-49, on the date the application was filed (20 CFR 416.963).
(7) The claimant has at least a high school education and is able to communicate in English (20 CFR 416.964).
(8) Transferability of job skills is not an issue because the claimant does not have past relevant work. (20 CFR 416.968).
(9) Step 5 – Considering the claimant's age, education, work experience, and residual functional capacity, there are jobs that exist in significant numbers in the national economy that the claimant can perform (20 CFR 416.969 and 416.969(a)).
(10) The claimant has not been under a disability, as defined in the Social Security Act, since October 20, 2009, the date the application was filed (20 CFR 416.920(g)).
AR 15-28. In determining that certain other impairments (low back pain, hypertension and obesity) were not severe, the ALJ found that they “do not interfere more than minimally with the claimant’s ability to perform basic work related activities.” AR 18. Hattig does not challenge this finding. As such, the impairments at issue in this case are mental impairments – major depressive disorder and generalized anxiety disorder. AR 17.
Next, the ALJ found that none of Hattig’s impairments, individually or in combination, met or equaled one of the listed impairments in 20 CFR Part 404, Subpart P, Appendix 1. AR 18-19. The “paragraph B” criteria for the relevant listed impairments require that the impairments cause at least two “marked” limitations or one “marked” limitation and “repeated” episodes of decompensation. AR 18. A “marked” limitation is one that is more than moderate but less than extreme. Id. The ALJ found that Hattig had mild difficulties in activities of daily living and social functioning, with moderate difficulties in concentration, persistence or pace. AR 18-19. The ALJ also found that Hattig had experienced no episodes of decompensation. AR 19. Therefore, the ALJ found the paragraph B criteria were not satisfied. Id. She also stated that she had considered the “paragraph C” criteria for the relevant listing and that the evidence failed to establish those criteria, as well. Id. Hattig does not challenge these findings.
The ALJ then provided a residual functional capacity (“RFC”) assessment and found that Hattig had the RFC to perform a full range of work at all exertional levels but with the following non-exertional limitations: (a) unskilled work with a SVP 1 or 2, (b) work that does not require extended concentration or attention and (c) work that does not require intense or frequent social interaction, but may include occasional interaction with the general public, co-workers, and or supervisors. AR 19. In explaining this determination, the ALJ first stated that the state agency consultants found that Hattig is not so severely impaired as to be prevented from working. AR 20. The ALJ then discussed Hattig’s testimony and other subjective allegations but found they were not fully credible. AR 21.
In making this finding, the ALJ summarized the objective medical evidence and found that Hattig’s impairments do not affect the quality of Hattig’s daily functioning to the extent Hattig alleges. AR 21-25. Instead, according to the ALJ, Hattig has been able to independently sustain activities and interests over time and to maintain normal daily activities, including babysitting her grandchildren, transporting children to and from school, cooking, cleaning and doing the laundry. Id. The ALJ also noted that Hattig has never had inpatient treatment for her ...