Buchanan v. Apfel

• Citation: 249 F.3d 485
• Decision Date: 16 March 2001
• Docket Number: No. 00-5053,00-5053
• Parties: (6th Cir. 2001) Dale Buchanan, Plaintiff-Appellant, v. Kenneth S. Apfel, Commissioner of Social Security, Defendant-Appellee. Argued:
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 485

249 F.3d 485 (6th Cir. 2001)

Dale Buchanan, Plaintiff-Appellant, v. Kenneth S. Apfel, Commissioner of Social Security, Defendant-Appellee.

No. 00-5053.

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Argued: March 16, 2001

Decided and Filed: April 27, 2001

Appeal from the United States District Court for the Eastern District of Tennessee at Chattanooga. Nos. 97-00584; 98-00180, R. Allan Edgar, Chief District Judge.

Eric L. Buchanan, DALE BUCHANAN & ASSOCIATES, Chattanooga, Tennessee, for Appellant.

Charlotte M. Connery-Aujla, OFFICE OF THE GENERAL COUNSEL, Baltimore, Maryland, for Appellee.

Before: COLE and GILMAN, Circuit

Judges; ALDRICH, District Judge^*.

RONALD LEE GILMAN, Circuit Judge.

OPINION

Dale Buchanan represented five individuals in successful claims for back benefits before the Commissioner of Social Security. When he sought approval of the attorney fees specified in the contracts with his clients, however, the Commissioner determined that Buchanan was limited to receiving sums equal to exactly 25 percent of the claimants' back benefits, rather than the alternate minimum fees agreed upon with his clients. Buchanan challenged, on statutory and constitutional grounds, the method used by the Commissioner to determine those fees, arguing that the Commissioner was improperly placing a flat cap on fee awards. The district court concluded that it had no subject-matter jurisdiction to review Buchanan's claims. For the reasons set forth below, we REVERSE the judgment of the district court and REMAND the case for further proceedings consistent with this opinion.

I. BACKGROUND

Three of the five clients in question (Christine Anderson, Samuel Hall, and Wanda Roach) entered into contingency fee contracts with Buchanan regarding their claims for Supplemental Security Income (SSI) and disability insurance benefits. Under these contracts, Buchanan was to receive either 25 percent of the claimants' back benefits or $1,500, whichever was greater, contingent on receiving favorable disability determinations from the Social Security Administration (SSA). He was to receive no fee if the claims were denied.

All three cases were successful, and the claimants were awarded the benefits that they sought, including back benefits. Because 25 percent of the back benefits in each case was less than $1,500, Buchanan subsequently submitted fee petitions to the Commissioner to request approval of the agreed-upon $1,500 in legal fees. The Commissioner denied these petitions. Instead, the Commissioner reduced the authorized fees to sums equal to exactly 25 percent of the claimants' back benefits. When Buchanan appealed the fee reductions, the Regional Chief Administrative Law Judge (ALJ) affirmed the Commissioner's decisions.

The other two clients (Marjorie Collins and Jean Skelf) were also represented by Buchanan before the Commissioner. Both clients had signed contingency fee contracts similar to those described above, with Collins agreeing to a minimum fee of $1,000 and Skelf to a minimum fee of $1,500. These two cases, like the others, were successful, but Buchanan's fees were again limited to exactly 25 percent of the claimants' back benefits.

Before the administrative appeals on the fee awards for the Collins and Skelf cases were finalized, Buchanan sued the Commissioner in the district court concerning all five awards. The ALJ amended the attorney fees awarded for the Collins and Skelf cases after Buchanan filed his complaint. These amended fee awards were slightly higher than the initial 25 percent figures, but still well below the amounts specified in Buchanan's contracts. In fact, even after the ALJ's adjustments, Buchanan's effective hourly rate in the five cases ranged from a low of $5.50 per hour to a high of $44.31 per hour.

Buchanan then sought judicial review of the attorney-fee determinations. He challenged, on statutory and constitutional grounds, the method used by the Commissioner to determine those fees. The crux of his complaint was that the Commissioner was limiting all attorney-fee awards to exactly 25 percent of the back pay awarded to the claimants, and that this flat limitation constituted a denial of due process of law, as well as a violation of the applicable federal statute and SSA regulations. Buchanan pointed out that there is no fixed limit on the fee that an attorney may charge under 42 U.S.C. § 406(a)(1), and that SSA regulation 20 C.F.R. §404.1725(b) and disability insurance regulation 20 C.F.R. §416.1525(b) require the Commissioner to weigh certain specified factors in calculating attorney-fee awards. These factors include the complexity of the case, the amount of time the attorney spent on the case, and the fee amount agreed upon between the attorney and the client. Buchanan also addressed the fee awards for Collins and Skelf, arguing that the ALJ changed the fee awards in these two cases by only a "token amount" in response to his initial complaint.

On February 11, 1999, the magistrate judge issued a Report and Recommendation, concluding that although the district court had no jurisdiction to review the reasonableness of the attorney fees, it did have jurisdiction to hear Buchanan's statutory and constitutional claims concerning the Commissioner's method of determining those fees. The magistrate judge also concluded that the district court had subject-matter jurisdiction over this case under the federal mandamus statute.

These conclusions, however, were rejected by the district court, which granted the Commissioner's motion to dismiss for lack of subject-matter jurisdiction. See Buchanan v. Apfel, 69 F. Supp. 2d 996 (E.D. Tenn. 1999). The district court specifically held that Buchanan had failed to present a constitutional claim because he was not entitled to anything more than the fees determined to be reasonable by the Commissioner. Alternatively, the court held that even if Buchanan had presented a colorable constitutional challenge, the applicable federal statute precluded judicial review of attorney fees awarded by the Commissioner for work completed at the administrative level. Finally, the district court held that mandamus jurisdiction was not available to Buchanan because the Commissioner had no clear, nondiscretionary duty to weigh certain factors before arriving at the fee awards.

Buchanan's motion to reconsider and amend the judgment, filed pursuant to Rule 59(e) of the Federal Rules of Civil Procedure, was denied on November 29, 1999. He timely filed his notice of appeal, challenging the district court's determination that it had no subject-matter jurisdiction over his claim.

II. ANALYSIS

A. Standard of review

"We review a district court's decision to grant a motion to dismiss for lack of subject matter jurisdiction de novo."Joelson v. United States, 86 F.3d 1413, 1416 (6th Cir. 1996). A motion to dismiss under Rule 12(b)(6) should not be granted "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). In considering the motion, we must accept all factual allegations in the complaint as true. See Gao v. Jenifer, 185 F.3d 548, 552 (6th Cir. 1999).

B. Federal-question jurisdiction

1. 42 U.S.C. § 405(h)

The Commissioner argues that 42 U.S.C. § 405(h) precludes federal-question jurisdiction over Buchanan's claim. Section 405(h) governs the "[f]inality of the Commissioner's decision" on claims arising under the Social Security Act, channeling them through the review procedures provided in § 405(g). Specifically, § 405(h) states:

The findings and decision of the Commissioner of Social Security after a hearing shall be binding upon all individuals who were parties to such hearing. No findings of fact or decision of the Commissioner of Social Security shall be reviewed by any person, tribunal, or governmental agency except as herein provided. No action against the United States, the Commissioner of Social Security, or any officer or employee thereof shall be brought under section 1331 or 1346 of Title 28 to recover on any claim arising under this subchapter.

In Heckler v. Ringer, 466 U.S. 602, 615 (1984), the Supreme Court held that the final sentence of § 405(h) provides that § 405(g), to the exclusion of the federal-question-jurisdiction statute, is the "sole avenue for judicial review for all claims arising under the Medicare Act." Ringer, 466 U.S. at 615 (holding that the district court did not have subject-matter jurisdiction under 28 U.S.C. § 1331 over a claim arising under the Social Security Act). Ringer did not purport to encompass all causes of action under the Act, but instead involved specific claims where administrative "exhaustion [wa]s in no sense futile" for the plaintiffs. Id. at 618.

The importance of the availability of judicial review was later emphasized in Bowen v. Michigan Academy of Family Physicians, 476 U.S. 667 (1986), superceded by statute on other grounds as recognized by Farkas v. Blue Cross & Blue Shield of Mich., 24 F.3d 853, 860 (6th Cir. 1994), where various doctors challenged the statutory and constitutional validity of certain regulations promulgated under Part B of the Medicare Act. At issue in Michigan Academy was whether 42 U.S.C. § 405(h) (which was made applicable to the Medicare Act by 42 U.S.C. § 1395ii) or 42 U.S.C. § 1395ff(b) (a then-existing provision in the Medicare Act that was similar to § 405(h)) precluded federal-question jurisdiction under 28 U.S.C. § 1331. The Court first stressed the "strong presumption" that judicial review is available for administrative actions.Id. at 670. It then found, after analyzing the finality provisions, that no clear and convincing evidence existed to establish any congressional intent to bar judicial review of challenges to regulations promulgated under Part B of the Medicare Act, despite the express preclusion of judicial review over the...