Binder & Binder, P.C. v. Colvin

• Decision Date: 21 March 2016
• Docket Number: 14–4457–cv.,Docket Nos. 14–4141–cv
• Citation: 818 F.3d 66
• Parties: BINDER & BINDER, P.C., Plaintiff–Appellant, v. Carolyn W. COLVIN, Acting Commissioner of the Social Security Administration, Defendant–Appellee.
• Court: U.S. Court of Appeals — Second Circuit

818 F.3d 66

BINDER & BINDER, P.C., Plaintiff–Appellant,

v.Carolyn W. COLVIN, Acting Commissioner of the Social Security Administration, Defendant–Appellee.

Docket Nos. 14–4141–cv

14–4457–cv.

United States Court of Appeals, Second Circuit.

Argued: Dec. 9, 2015.

Decided: March 21, 2016.

Jeffrey L. Herzberg, Zinker & Herzberg LLP, Smithtown, NY, for Plaintiff–Appellant.

Vincent Lipari (Varuni Nelson and Arthur Swerdloff, on the brief), Assistant United States Attorneys, for Robert L. Capers, United States Attorney for the Eastern District of New York, New York, NY, for Defendant–Appellee.

Before: CALABRESI, POOLER, and LYNCH, Circuit Judges.

CALABRESI

, Circuit Judge:

The Social Security Act provides for successful representatives to be compensated for their services through deductions from payments that their clients are entitled to receive. The instant cases both concern the Social Security Administration's alleged failure to disburse attorney's fees pursuant to this fee provision, 42 U.S.C. § 406(a)

.

Plaintiff–Appellant Binder & Binder ("Binder"), a law firm that represents claimants before the Social Security Administration ("SSA"), appeals from summary judgment in two related cases. In both cases, Binder seeks past attorney's fees pertaining to its successful representation of claimants who later declared bankruptcy and had their debts, including those to Binder, discharged by the bankruptcy courts. When Binder sought to hold the SSA liable for the fees, the district courts below granted summary judgment to the SSA on the basis of sovereign immunity. Binder & Binder, P.C. v. Colvin, 55 F.Supp.3d 439, 446 (E.D.N.Y.2014)

; Binder & Binder, P.C. v. Colvin, No. 13 CV 432 DRH, 2014 WL 6632713, at *6 (E.D.N.Y. Nov. 21, 2014). Both courts followed two circuit courts of appeals that have explicitly held that 42 U.S.C. § 406(a) does not constitute a waiver of the SSA's sovereign immunity, which, if not waived, precludes such lawsuits. In re Handel, 570 F.3d 140, 145 (3d Cir.2009) ; Pittman v. Sullivan, 911 F.2d 42, 46 (8th Cir.1990). The decisions below conflict with an earlier decision, also from the Eastern District of New York, which found, instead, that 42 U.S.C. § 406(a) of the Social Security Act does waive sovereign immunity. Binder & Binder, P.C. v. Astrue, 848 F.Supp.2d 230, 240–45 (E.D.N.Y.2012).¹ Our court has not previously addressed this issue.

We now affirm the conclusion of the two district courts in the instant cases and hold that, regardless of the SSA's statutory duties to withhold attorney's fees from payments to successful claimants, there is no waiver of sovereign immunity in 42 U.S.C. § 406(a)

that would permit Binder's lawsuits for money damages.

BACKGROUND

Statutory Scheme

To improve access to civil counsel, the Social Security Act grants, and regulates, attorney's fees to representatives of successful claimants. The relevant fee provision, 42 U.S.C. § 406

, parallels other statutory schemes regulating the fees of lawyers. See Judith Resnik, Money Matters: Judicial Market Interventions Creating Subsidies and Awarding Fees and Costs in Individual and Aggregate Litigation, 148 U. PA. L. REV. 2119, 2143 (2000).

The instant appeals arise from two cases involving the SSA's alleged failure to disburse statutorily approved attorney's fees to Binder. In both cases, Binder successfully represented claimants before the SSA who were found to be eligible for past-due benefits. It was, therefore, entitled to receive compensation pursuant to 42 U.S.C. § 406(a)

, which states:

[W]henever the Commissioner of Social Security ... makes a determination favorable to the claimant, the Commissioner shall, if the claimant was represented by an attorney in connection with such claim, fix ... a reasonable fee to compensate such attorney for the services performed by him in connection with such claim.

42 U.S.C. § 406(a)(1)

.

Moreover, when a claimant is found to be entitled to past-due benefits, and a fee agreement with the claimant's representative satisfies certain statutory criteria—as occurred in the instant cases—"the Commissioner of Social Security shall approve that agreement at the time of the favorable determination," 42 U.S.C. § 406(a)(2)(A)(iii)

, and "shall ... certify ... payment out of such past-due benefits ... to such attorney," 42 U.S.C. § 406(a)(4).

Facts

Binder & Binder's Representation of Jay Scott Lerner

Binder successfully assisted Jay Scott Lerner in obtaining disability insurance benefits from the SSA.² Lerner applied to the SSA for disability in May 2012, and in June of 2012, retained Binder to represent him and executed a fee agreement. Shortly thereafter, Lerner's application for disability was approved. He then got a lump sum representing past-due benefits, and started receiving prospective monthly payments. Despite the statutory language, no deduction was made and nothing was given to Binder.

In October of 2013, Lerner filed a voluntary petition for relief under Chapter 7 of the Bankruptcy Code. And, in January of 2014, the bankruptcy court ordered a discharge of Lerner's debts—including his debt to Binder for representation fees. After the discharge and after the SSA had (incorrectly it would seem) initially informed Binder that it was not entitled to collect a fee for its representation of Lerner, the SSA approved the fee agreement. Because the lump sum of past-due benefits had already been disbursed to Lerner, the SSA notified Lerner in April of 2014 that it had "inadvertently released" to him all past-due benefits. App. 111, No. 14–4141 (emphasis added).

Thus, although the SSA was required to withhold $6,000 (Binder's fee) from Lerner's past-due benefits, the SSA acknowledged both its failure to do so and that Lerner owed Binder $6,000.³ But the bankruptcy court's discharge of Lerner's debts precluded Binder from recovering the $6,000 from Lerner.⁴

In May of 2014, Binder both moved to reopen Lerner's proceeding in bankruptcy court to challenge the debt discharge and began an action in district court seeking a judgment against the SSA for $6,000. The bankruptcy court denied Binder's motion to reopen Lerner's proceeding in August of 2014. And, after cross-motions for summary judgment, the district judge granted summary judgment to the SSA, concluding "that 42 U.S.C. § 406(a)

does not waive the sovereign immunity of the SSA" "such that an attorney may sue the SSA to recover the amount of a certified fee from the SSA." Binder & Binder, 55 F.Supp.3d at 443.

Binder & Binder's Representation of David Walton

In the second underlying case, David Walton, a Michigan resident, entered into a similar fee agreement with Binder in 2007. After an only partially favorable decision by the ALJ, the Appeals Council remanded the case to the ALJ, and in May of 2010, Walton received a fully favorable decision. Following multiple requests by Binder, the ALJ authorized Binder to charge and collect its fees in October 2012. Binder & Binder, 2014 WL 6632713, at *2

.

In November of 2012, Walton notified the SSA that he was entitled to the full amount of his benefits, without any fees withheld pursuant to Binder's representation, because Walton had filed for bankruptcy in June and had listed Binder as an unsecured creditor. Walton's bankruptcy attorneys also sent the SSA a copy of Walton's Notice of Bankruptcy Filing. Id. In January of 2013, the bankruptcy court granted Walton a discharge of the debt, which Binder did not oppose. Shortly thereafter, the SSA disbursed just under $15,000 to Walton and notified both Walton and Binder of the payment. The $15,000 included Binder's fees.

Binder then began a lawsuit against the SSA in district court, seeking the amount of its fee, and the SSA sent a letter to Walton stating that it would not take further action on the issue of Binder's fees, which was for Binder, Walton, and the bankruptcy court to resolve. Id.

On the SSA's motion for summary judgment, the district court noted the disagreement on the issue of sovereign immunity between the district court in Binder & Binder v. Astrue, 848 F.Supp.2d 230, 240–45 (E.D.N.Y.2012)

, and the district court in Binder & Binder, P.C. v. Colvin, 55 F.Supp.3d 439 (E.D.N.Y.2014) —the Binder/Lerner case now also before us. Ultimately, the district court agreed "with the decision reached in Binder & Binder, P.C. v. Colvin, that 42 U.S.C. § 406 lacks an unequivocally expressed waiver of sovereign immunity, and, consequently, conclude[d] that Plaintiff's action for money damages against the SSA [was] barred." Binder & Binder, 2014 WL 6632713, at *6

.

DISCUSSION

We review a district court's grant of summary judgment de novo to determine whether the district court properly concluded that there was no genuine dispute as to any material fact. See Miller v. Wolpoff & Abramson, L.L.P., 321 F.3d 292, 300 (2d Cir.2003)

.

I

We hold that the Social Security Act's fee provision, 42 U.S.C. § 406(a)

, does not waive sovereign immunity and that Binder's lawsuits for money damages are therefore barred.

"Absent a waiver, sovereign immunity shields the Federal Government and its agencies from suit." F.D.I.C. v. Meyer, 510 U.S. 471, 475, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994)

; see also Adeleke v. United States, 355 F.3d 144, 150 (2d Cir.2004) ("It is, of course, axiomatic under the principle of sovereign immunity that the United States may not be sued without its consent and that the existence of consent is a prerequisite for jurisdiction.") (internal quotation marks omitted). Moreover, "waivers of sovereign immunity must be ‘unequivocally expressed’ in statutory text, and cannot simply be implied." Id. (quoting United States v. Nordic Village, Inc., 503 U.S. 30, 33, 112 S.Ct. 1011, 117 L.Ed.2d 181 (1992) ).

Binder contends that sovereign immunity is waived by the statutory instruction that "the Commissioner of Social Security shall ... certify for payment out of such past-due benefits ... to such attorney an amount equal to so much of the maximum fee as does not exceed 25 percent of such...