Stephens ex rel. R.E. v. Astrue
| Citation | 565 F.3d 131 |
| Decision Date | 07 May 2009 |
| Docket Number | No. 08-1533.,No. 08-1596.,No. 08-1584.,No. 08-1583.,No. 08-1532.,No. 08-1582.,No. 08-1531.,No. 08-1586.,No. 08-1590.,No. 08-1580.,No. 08-1587.,No. 08-1566.,No. 08-1565.,No. 08-1588.,No. 08-1577.,No. 08-1593.,No. 08-1530.,No. 08-1581.,No. 08-1595.,No. 08-1589.,No. 08-1529.,No. 08-1527.,08-1527.,08-1529.,08-1530.,08-1531.,08-1532.,08-1533.,08-1565.,08-1566.,08-1577.,08-1580.,08-1581.,08-1582.,08-1583.,08-1584.,08-1586.,08-1587.,08-1588.,08-1589.,08-1590.,08-1593.,08-1595.,08-1596. |
| Parties | Natalie J. STEPHENS, on behalf of R.E., Plaintiff-Appellee, v. Michael J. ASTRUE, Commissioner of Social Security, Defendant-Appellant. Donna Wright, on behalf of B.W., Plaintiff-Appellee, v. Michael J. Astrue, Commissioner of Social Security, Defendant-Appellant. David Anderson, Plaintiff-Appellee, v. Michael J. Astrue, Commissioner of Social Security, Defendant-Appellant. Henry Allison, Plaintiff-Appellee, v. Michael J. Astrue, Commissioner of Social Security, Defendant-Appellant. Karl Sharp, Plaintiff-Appellee, v. Michael J. Astrue, Commissioner of Social Security, Defendant-Appellant. Virgil Evans, Plaintiff-Appellee, v. Michael J. Astrue, Commissioner of Social Security, Defendant-Appellant. Maria Cordova, Plaintiff-Appellee, v. Michael J. Astrue, Commissioner of Social Security, Defendant-Appellant. Kimberly Carter, Plaintiff-Appellee, v. Michael J. Astrue, Commissioner of Social Security, Defendant-Appellant. Dorothy Morales, Plaintiff-Appellee, v. Michael J. Astrue, Commissioner of Social Security, Defendant-Appellant. Paul Ward, Plaintiff-Appellee, v. Michael J. Astrue, Commissioner of Social Security, Defendant-Appellant. Christine A. Latham, Plaintiff-Appellee, v. Michael J. Astrue, Commissioner of Social Security, Defendant-Appellant. Marsha Woodland, Plaintiff-Appellee, v. Michael J. Astrue, Commissioner of Social Security, Defendant-Appellant. Kim Douglas, Plaintiff-Appellee, v. Michael J. Astrue, Commissioner of Social Security, Defendant-Appellant. Suzanne Ruben-Popkin, Plaintiff-Appellee, v. Michael J. Astrue, Commissioner of Social Security, Defendant-Appellant. Cheryl Birdow, Plaintiff-Appellee, v. Michael J. Astrue, Commissioner of Social Security, Defendant-Appellant. John Gagel, Plaintiff-Appellee, v. Michael J. Astrue, Commissioner of Social Security, Defendant-Appellant. Deborah Laquay, Plaintiff-Appellee, v. Michael J. Astrue, Commissioner of Social Security, Defendant-Appellant. Crystal Lundy, Plaintiff-Appellee, v. Michael J. Astrue, Commissioner of Social Security, Defendant-Appellant. Hope Parker, Plaintiff-Appellee, v. Michael J. Astrue, Commissioner of Social Security, Defendant-Appellant. Llewellyn Pratt, Plaintiff-Appellee, v. Michael J. Astrue, Commissioner of Social Security, Defendant-Appellant. Elaine Obee Johnson, Plaintiff-Appellee, v. Michael J. Astrue, Commissioner of Social Security, Defendant-Appellant. Christina J. Watts, Plaintiff-Appellee, v. Michael J. Astrue, Commissioner of Social Security, Defendant-Appellant. |
| Court | United States Courts of Appeals. United States Court of Appeals (4th Circuit) |
ARGUED: Michael Eugene Robinson, United States Department of Justice, Washington, D.C., for Appellant. Stephen F. Shea, Elkind & Shea, Silver Spring, Maryland, for Appellees. ON BRIEF: Gregory G. Katsas, Assistant Attorney General, William Kanter, United States Department of Justice, Washington, D.C., Rod J. Rosenstein, United States Attorney, Baltimore, Maryland, for Appellant.
Before WILLIAMS, Chief Judge, TRAXLER, Circuit Judge, and ROBERT J. CONRAD, JR., Chief United States District Judge for the Western District of North Carolina, sitting by designation.
Vacated and remanded by published opinion. Chief Judge WILLIAMS wrote the opinion, in which Judge TRAXLER and Judge CONRAD joined.
Thirty-four prevailing Social Security benefits claimants petitioned for attorney's fees pursuant to the Equal Access to Justice Act, 28 U.S.C.A. § 2412 (West 2006) ("EAJA"). In response, the Social Security Commissioner, Michael J. Astrue, ("the Commissioner"), agreed that a fee award was proper but argued that the fees should be paid to the claimants themselves and not their attorneys. After consolidating the thirty-four petitions, a federal magistrate judge concluded that attorney's fees awarded to a "prevailing party" under the EAJA are directly payable to the corresponding attorney and gave an additional award of fees to the lead plaintiff for litigating the issue. The Commissioner appeals, and—guided by the plain language of the EAJA—we conclude that attorney's fees are payable directly to each claimant and reverse the magistrate judge's contrary conclusion.
Two sources provide for attorney's fees for claimants seeking Social Security benefits. First, the Social Security Act itself provides that "[w]henever a court renders a judgment favorable to a claimant ... who was represented before the court by an attorney, the court may determine and allow as part of its judgment a reasonable fee for such representation, not in excess of 25 percent of the total of the past-due benefits to which the claimant is entitled by reason of such judgment...." 42 U.S.C.A. § 406(b)(1)(A) (West 2003 & Supp.2008). Further, the Commissioner may "certify the amount of such fee for payment to such attorney out of, and not in addition to, the amount of such past-due benefits." Id. (emphasis added).
Second, Social Security benefits claimants can receive a fee award under the EAJA. Congress enacted the EAJA in 1980 in response to concerns that individuals would be deterred from seeking relief from unreasonable government action because of the expenses incurred in pursuing such relief. See S.Rep. No. 96-253, at 7 (1979). The EAJA provides as follows:
Except as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses ... incurred by that party in any civil action (other than cases sounding in tort), including proceedings for judicial review of agency action, brought by or against the United States in any court having jurisdiction of that action....
28 U.S.C.A. § 2412(d)(1)(A).
Before awarding attorney's fees, the EAJA requires the "party seeking an award of fees" to "submit to the court an application," which must include "an itemized statement from any attorney ... stating the actual time expended and the rate at which fees and other expenses were computed." Id. § 2412(d)(1)(B). The EAJA defines "party," as relevant here, as "an individual whose net worth did not exceed $2,000,000 at the time the civil action was filed." Id. § 2412(d)(2)(B).
In 1985, "Congress harmonized fees payable by the Government under EAJA with fees payable under § 406(b) out of the claimant's past-due Social Security benefits" by enacting a Savings Provision. Gisbrecht v. Barnhart, 535 U.S. 789, 796, 122 S.Ct. 1817, 152 L.Ed.2d 996 (2002). The Savings Provision provides:
Section 206(b) of the Social Security Act ... shall not prevent an award of fees and other expenses under section 2412(d) of title 28, United States Code.... Section 206(b)(2) of the Social Security Act ... shall not apply with respect to any such award but only if, where the claimant's attorney receives fees for the same work under both section 206(b) of that Act ... and section 2412(d) of title 28, United States Code ..., the claimant's attorney refunds to the claimant the amount of the smaller fee.
28 U.S.C.A. § 2412 note (Savings Provisons). Accordingly, while attorney's fees may be awarded under both the EAJA and § 406(b), the Savings Provision clarifies that the attorney must refund to the claimant the smaller fee. "Thus, an EAJA award offsets an award under Section 406(b), so that the amount of the total past-due benefits the claimant actually receives will be increased by the EAJA award up to the point the claimant receives 100 percent of the past-due benefits." Gisbrecht, 535 U.S. at 796, 122 S.Ct. 1817 (internal quotation marks, citations, and alterations omitted).
Since the enactment of the EAJA in 1980, the Commissioner has consistently paid attorney's fees directly to the attorneys, not the claimants. In fact, the Commissioner created a direct deposit system for attorneys and issued I.R.S. 1099 forms directly to the attorneys who received awards, noting the awards as taxable attorney income.
Recently, however, the Commissioner altered this practice and took the position that attorney's fees under the EAJA were the property of prevailing claimants and not their attorneys. This change was driven, in part, by the Debt Collection Improvement Act of 1996. Under 31 U.S.C.A. § 3716(c)(6) (West 2003), the federal government collects debts through the means of administrative offset, thus:
Any Federal agency that is owed by a person a past due, legally enforceable nontax debt that is over 180 days delinquent ... shall notify the Secretary of the Treasury of all such nontax debts for purposes of administrative offset under this subsection.
The Debt Collection Improvement Act required the Department of the Treasury, through its Financial Management Service bureau, to create a centralized program for withholding and reducing federal payments pursuant to this administrative offset provision. The program, called the Treasury Offset Program ("TOP"), provides for collection of past-due obligations including child support, state income taxes, and various non-tax federal debts. In 2005, the Financial Management Service began the collection of what the Commissioner terms "`miscellaneous' payments, which include payments for attorney's fees pursuant to the EAJA." (Appellant's Br. at 6.) These payments are "eligible for offset" under 31 C.F.R. § 285.5(e)(1), which provides:
[A]ll Federal payments are eligible for offset under this section. Eligible Federal payments include, but are not limited to, Federal wage, salary, and retirement payments, vendor and expense reimbursement payments, certain benefit payments, travel advances and reimbursements, grants, fees, refunds, judgments ..., tax refunds, and other payments made by Federal...
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