Harmless-Error Rule for Conclusory Paragraph C “Marginal Adjustment” Findings When Supported Elsewhere in the ALJ Decision

1. Introduction

Laird v. Bisignano (5th Cir. Jan. 8, 2026) is a Social Security disability appeal in which Plaintiff–Appellant Steven Michael Laird challenged the denial of benefits based primarily on anxiety and bipolar disorders. The key dispute was narrow but recurring in administrative review: whether an Administrative Law Judge (ALJ) commits reversible error at step three of the sequential evaluation when the ALJ’s discussion of “Paragraph C” is brief or conclusory—here, the element of “marginal adjustment” under the mental-disorder listings.

The district court agreed the ALJ’s Paragraph C discussion was “conclusory,” but affirmed on the ground that the ALJ analyzed materially relevant evidence elsewhere in the decision. The Fifth Circuit affirmed, emphasizing deferential review and harmless-error principles.

2. Summary of the Opinion

The Fifth Circuit affirmed the denial of benefits. Although the ALJ’s Paragraph C explanation (regarding “marginal adjustment”) was brief, the court held that the decision was supported by substantial evidence because the ALJ made determinative findings relevant to marginal adjustment in other parts of the opinion—particularly in the Paragraph B discussion and the residual functional capacity (RFC) assessment. Any failure to restate those findings in the Paragraph C subsection was, at most, harmless error, and Laird did not show the omission affected his substantial rights or the outcome.

3. Analysis

3.1 Precedents Cited

• Audler v. Astrue, 501 F.3d 446 (5th Cir. 2007)
  • Role in the opinion: Audler supplies the governing framework for step-three articulation errors: even if an ALJ errs by inadequately explaining a listing determination, the claimant must still show the error was harmful (i.e., affected “substantial rights”) to obtain remand.
  • How distinguished: The panel treated Audler as a high-water mark for harmful error—there, the ALJ totally failed to analyze a listing and the record contained uncontroverted evidence suggesting the claimant met the listing. In Laird, by contrast, the ALJ made findings elsewhere inconsistent with marginal adjustment and also relied on state agency psychological consultants who opined Laird did not demonstrate marginal adjustment.
• Taylor v. Astrue, 706 F.3d 600 (5th Cir. 2012) (per curiam)
  • Role in the opinion: Taylor provides the standard of review: the court asks only (1) whether substantial evidence supports the ALJ’s decision and (2) whether proper legal standards were applied—underscoring the “exceedingly deferential” posture toward administrative factfinding.
• Whitehead v. Colvin, 820 F.3d 776 (5th Cir. 2016) (per curiam)
  • Role in the opinion: Whitehead reinforces that reversal for lack of substantial evidence is reserved for cases where “no credible evidentiary choices or medical findings” support the decision—supporting affirmance when the record allows competing views and the ALJ chose one supported by evidence.
• Mays v. Bowen, 837 F.2d 1362 (5th Cir. 1988)
  • Role in the opinion: Mays anchors the principle that “procedural perfection in administrative proceedings is not required,” framing the ALJ’s step-three drafting issue as a matter of form rather than substance—so long as the claimant’s rights were not prejudiced.
• Vasquez v. O'Malley, No. 24-50233, 2024 WL 4381269 (5th Cir. Oct. 3, 2024) (per curiam) (unpublished)
  • Role in the opinion: Vasquez is used for basic step-three mechanics (meeting a listing ends the inquiry) and the definition of RFC, situating the dispute in the structure of SSA adjudication.
• Hurst v. Colvin, 639 F. App'x 1018 (5th Cir. 2016) (per curiam)
  • Role in the opinion: Hurst is the closest analogue: harmless error may exist when an ALJ fails to address a listing explicitly, but makes findings “elsewhere” tending to show the claimant did not meet it. The Laird panel invoked Hurst to rebut the “post-hoc rationalization” objection and to validate looking across the decision for the ALJ’s factfindings relevant to the challenged step.

3.2 Legal Reasoning

The panel’s reasoning proceeds in three moves:

1. Step-three deficiency does not equal automatic remand. Applying Audler v. Astrue, the court reiterated that an ALJ’s failure to provide a robust step-three explanation requires reversal only if the claimant shows harmful error—i.e., that the missing articulation could have mattered to the outcome.
2. The ALJ made “marginal adjustment” findings elsewhere. Even though the Paragraph C paragraph was brief, the ALJ’s decision contained concrete findings that bear directly on “marginal adjustment,” including:
   • In the Paragraph B analysis, a finding of only “moderate” limitation in “adapting and managing” oneself, supported by Laird’s reported ability to complete activities of daily living independently (e.g., dressing, bathing, medication management).
   • In the RFC discussion, findings that treatment notes showed Laird’s mental conditions responded to medication and were generally stable, and that he had never required emergency or inpatient psychological care—facts that cut against the regulation’s description of marginal adjustment as “fragile” adaptation with deterioration that may include episodes requiring hospitalization.
   The court treated these findings as effectively answering the Paragraph C question, even if not repeated verbatim in the Paragraph C subsection.
3. No prejudice shown; substantial evidence supports the denial. Under Taylor v. Astrue and Whitehead v. Colvin, the court asked whether substantial evidence supported the ALJ’s conclusion. It held that it did—particularly given the ALJ’s reliance on two state agency psychological consultants who opined Laird lacked marginal adjustment and was not disabled. Because the evidentiary basis existed and Laird did not demonstrate that a more detailed Paragraph C paragraph would change the result, any drafting shortfall was harmless.

3.3 Impact

Although unpublished, the opinion reinforces (and synthesizes) a practical rule for Fifth Circuit disability appeals:

• “Whole-decision” reading at step three: Courts may uphold a step-three listing determination even when the ALJ’s listing discussion is terse, so long as the ALJ’s findings elsewhere in the decision supply the missing rationale and demonstrate that substantial evidence supports the result.
• Heightened importance of prejudice: Claimants challenging conclusory listing analyses must do more than point out brevity; they must connect the omission to evidence showing they likely met the listing (or at least that the missing analysis plausibly could have produced a different outcome).
• Paragraph C litigation focus: For mental impairments, the decision illustrates what tends to defeat marginal adjustment arguments: independence in activities of daily living, stability/improvement with medication, absence of crisis care, and professional opinions denying marginal adjustment.

4. Complex Concepts Simplified

• Five-step process: A standardized sequence the SSA uses to decide disability. At step three, if an impairment meets a listed condition’s criteria, disability is established without further inquiry.
• Listings (Appendix 1): Medical “checklists” of severe impairments considered disabling when their strict criteria are satisfied.
• Paragraph B vs. Paragraph C (mental listings): Paragraph B looks to functional limitations in four domains (understanding/remembering/applying information; interacting with others; concentrating/persisting/maintaining pace; adapting/managing oneself). Paragraph C (as litigated here) focuses on marginal adjustment—a fragile ability to adapt such that changes or increased demands cause deterioration (often evidenced by serious decompensation and sometimes hospitalization).
• RFC (Residual Functional Capacity): The most a claimant can still do despite limitations; it is used at later steps to determine work capability.
• Substantial evidence: More than a scintilla; enough relevant evidence that a reasonable mind could accept it as adequate. It does not require the court to agree with the ALJ—only that the ALJ’s view is supported.
• Harmless error: A mistake that does not justify reversal because it likely did not affect the outcome or the claimant’s substantial rights.

5. Conclusion

Laird v. Bisignano underscores that, in the Fifth Circuit, a conclusory step-three Paragraph C statement is not automatically reversible. Where an ALJ’s decision—read as a whole—contains specific, supported findings that bear directly on “marginal adjustment,” and where the claimant cannot show prejudice, the omission of a fuller Paragraph C explanation will be treated as harmless error and the denial of benefits will be affirmed.