MEMORANDUM OPINION & ORDER
CYNTHIA M. RUFE, District Judge.
Plaintiff Carl McNeil brings this action under 42 U.S.C. § 405(g), seeking judicial review of the final decision of the Acting Commissioner of the Social Security Administration, Carolyn W. Colvin ("Commissioner"), which denied his application for supplemental security income ("SSI") under Title XVI of the Social Security Act. Specifically, Plaintiff requests that the Court remand the case for reward of benefits, or, in the alternative, remand for de nova administrative adjudication. Defendant argues that the administrative law judge's determination was supported by substantial evidence and should be upheld. This Court referred the matter to Magistrate Judge Linda Caracappa for a Report and Recommendation ("R & R"). In an R & R submitted on May 30, 2013, Magistrate Judge Caracappa recommended that the Court remand the case for further review. Defendant timely objected, and the matter is now ready for decision. For the reasons that follow, and after careful review of the entire record, the parties' submissions, and the applicable law, the Court will approve and adopt the R & R in substantial part and remand the case for further adjudication.
I. FACTUAL AND PROCEDURAL HISTORY
The Court adopts and approves the factual and procedural history set forth in the R & R, and will not recount it herein except as necessary to advance the discussion.
Plaintiff first sought treatment for psychiatric symptoms in November 2009. At that time, he was evaluated by psychiatrist George H. N. Adams, M.D., and diagnosed with major depression with psychotic features. Dr. Adam's November 20, 2009 evaluation notes that Plaintiff suffers from cycling depression, panic, insomnia, anxiety, and episodic hallucinations. At the time of the evaluation, Plaintiff's Global Assessment of Functioning ("GAF") was 35, which, the ALJ noted, indicates "some impairment in reality testing or communication (e.g., speech is at times illogical, obscure, or irrelevant) or major impairment in several areas, such as work or school, family relations, judgment, thinking or mood...." He was prescribed antidepressant medication and began outpatient therapy. In December 2009, his treatment team noted that his mood was unstable and his psychiatrist added a second antidepressant, as well as Abilify, an antipsychotic.
In a medical source statement prepared on January 19, 2010, Plaintiff's treatment providers opined that he had seriously impaired, poor, or no ability to remember work-like procedures, understand or carry out very short, simple instructions, maintain attention and concentration for extended periods, maintain regular attendance and arrive punctually at work, sustain an ordinary routine without special supervision, work in proximity to others without being unduly distracted, complete a normal workday and workweek without interruptions from psychologically based symptoms, set realistic goals independently, ask questions and accept instructions, respond appropriately to criticism, and perform at a consistent pace. The medical source statement also indicated that Plaintiff had only fair ability to interact appropriately with the public, get along with co-workers, maintain socially appropriate behavior, and adhere to basic standards of neatness and cleanliness.
In late April and early May 2010, Plaintiff had an episode of decompensation, involving hallucinations, suicidal ideation, and suicidal efforts, and on May 4, 2010, he reported to an emergency room in crisis and was admitted to an inpatient mental health unit. At that time, a mental status examination was performed. That evaluation noted that Plaintiff's GAF was 20, his thought process was disturbed and marked by poor reality testing, poor insight and judgment, and decreased concentration, his mood and affect were depressed, he was experiencing hallucinations, and he had suicidal ideation. After six days, Plaintiff was discharged to outpatient treatment but continued to experience depression and auditory hallucinations.
II. STANDARD OF REVIEW
A court reviewing a Social Security case must base its decision on the record of the administrative proceedings and the pleadings of the parties. The court's review oflegal issues is plenary, but its factual review is limited. The court must determine whether the record contains substantial evidence to support the administrative law judge's ("ALJ") factual findings, and whether the Commissioner applied the proper legal standards in making its decision. For these purposes, "substantial evidence" means "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." It is more than a mere scintilla, but requires less than a preponderance of the evidence. If the ALJ's factual findings were determined according to the correct legal standards and are supported by substantial evidence, the court is bound by them, "even if [it] would have decided the factual inquiry differently."
A district court must review de novo those portions of a magistrate judge's R & R to which a party has objected. A court may in its discretion "accept, reject or modify, in whole or in part, the findings or recommendations made by the magistrate judge."
A. Determining Disability
In order to qualify for SSI benefits, a person must be found to have a "disability." Under the relevant provisions of the Social Security Act, disability is defined as an "inability to engage in any substantial gainful activity by reason of any medically detenninable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months." An ALJ reviewing an application for disability benefits must employ the five-step process established in the Social Security Regulations ("the Regulations") to determine whether a disability exists. At step one, the ALJ must determine whether the applicant is engaged in "substantial gainful activity"; if he is, the claim is denied. If the applicant is not engaged in substantial gainful activity, the ALJ must determine at step two whether the applicant suffers from a severe, medically determinable impairment which significantly limits his ability to work. If the applicant has such an impairment, the ALJ must determine at step three whether the impairment found meets the criteria for any of the impairments conclusively presumed to be disabilities, which are listed in Part 404, Subpart P, Appendix 1 ("the Listings"),  or has an equivalently debilitating medical condition. If the claimant's condition meets or equals a listing, he is found disabled at step three and the ALJ need not reach steps four and five.
If the applicant has a severe impairment that does not meet or equal an impairment in the Listings, the ALJ must determine at step four whether the applicant has the Residual Functioning Capacity ("RFC") to perform his prior relevant work. If the applicant does not have the RFC to perform her previous work, the Commissioner must establish at step five that the applicant has the RFC to perform other work that exists in the national economy, considering her age, education and work experience. At this fifth step, if the ...