Black v. Colvin
| Decision Date | 02 November 2015 |
| Docket Number | CIVIL ACTION NO. 13-6522 |
| Parties | Eric Stanton Black v. Carolyn W. Colvin, Acting Commissioner of Social Security |
| Court | U.S. District Court — Eastern District of Pennsylvania |
F. Michael Friedman, Law Offices of F. Michael Friedman, Drexel Hill, PA, for Eric Stanton Black.
Andrew C. Lynch, M. Jared Littman, Social Security Admin, Philadelphia, PA, for Carolyn W. Colvin.
The issue presented in this Social Security case is whether the total award of attorneys' fees to the attorney who represented the claimant at the administrative level and to another attorney who represented him on judicial review may exceed 25 percent of the claimant's past-due benefits. It is an issue that has divided the circuit courts of appeals, and one the Third Circuit has yet to decide.
Counsel who successfully represented the plaintiff on judicial review has moved for approval of $18,631.25 in attorney's fees under § 406(b) of the Social Security Act ("Act"). When combined with the $12,687.50 that counsel who had represented the claimant before the agency has requested under § 406(a), the total requested attorney's fees exceeds 25 percent of the claimant's past-due benefits by $6,941.65. We conclude that the 25 percent cap applies only to fees awarded under § 406(b) and does not apply to the aggregate amount of attorney's fees awarded under both §§ 406(a) and (b).
F. Michael Friedman was appointed to represent Eric Black in his first appeal from a denial of benefits on July 21, 2010.1 On December 13, 2010, as a result of Friedman's efforts, Judge Reed of this court remanded the case. On remand before the Social Security Administration, Black was represented by another attorney, Walter Walkenhorst.2 On November 2, 2013, after Black's claim was again denied by the Appeals Council, Friedman replaced Walkenhorst as Black's counsel before the district court.3
On November 13, 2013, Black filed a complaint appealing the final decision of the Social Security Appeals Council denying his claim for disability benefits.4 After discovering that certain exhibits were missing from the administrative record, Friedman convinced counsel for the Commissioner to file an uncontested motion for voluntary remand pursuant to 42 U.S.C. § 405(g).5 The Commissioner's uncontested motion for remand was granted because the ALJ had failed to consolidate Black's 2007, 2009 and 2010 claims.6
On remand, the ALJ issued a favorable decision, awarding Black past-due benefits of $97,508.50. The Social Security Administration withheld a total of $24,377.10 from the past-due benefits for counsel fees.7
Friedman filed a motion for attorney's fees under § 406(b) of the Social Security Act.8 In his motion, Friedman seeks approval of $18,631.25 in fees under § 406(b), of which $7450.00 that Friedman was already paid as EAJA fees will be refunded to Black.9 Walkenhorst filed a petition with the ALJ for fees totaling $12,687.50 under § 406(a) of the Social Security Act.10 On March 25, 2015, the ALJ authorized Walkenhorst's full fee.11 Black's past-due benefits total $97,508.50. Hence, the combined total of the attorneys' fees requested is about 32 percent of the past-due benefits.12
The Commissioner contends that Friedman's request must be reduced by $6,941.65 to keep the total attorneys' fees under the 25 percent cap on the past-due benefits. Conversely, Friedman maintains that the Social Security Act's limit of 25 percent applies only to fees for work done on judicial review and does not limit the total amount of fees that may be awarded under the statute for successfully representing a claimant at both the administrative and judicial levels.
An attorney for a successful claimant may be awarded attorney's fees under either the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412(D)(2)(A), or the Social Security Act ("SSA"), 42 U.S.C. § 406. A fee award under the EAJA is paid by the government. An award under the SSA is paid from the claimant's past-due benefits. Consequently, any amount awarded under the EAJA reduces the amount of attorney's fees that may be deducted from the claimant's past-due benefits under the Social Security Act. Gisbrecht v. Barnhart , 535 U.S. 789, 796, 122 S.Ct. 1817, 152 L.Ed.2d 996 (2002) (citing Act of Aug. 5, 1985, Pub. L. No. 99–80, § 3, 99 Stat. 183, 186).
Under this scheme, it is obviously beneficial to the claimant when his or her attorney seeks and is paid fees under the EAJA. However, an award under the EAJA is not always an option. Proceeding under the EAJA, the prevailing claimant can collect an attorney's fees award only if the Commissioner is unable to prove that his position was "substantially justified." 28 U.S.C. § 2412(d)(1)(A) ; Scarborough v. Principi , 541 U.S. 401, 414–15, 124 S.Ct. 1856, 158 L.Ed.2d 674 (2004) (citations omitted). Under the SSA, the claimant need only have received a favorable result, which includes a remand, to trigger an award of attorney's fees. 42 U.S.C. § 406. In other words, under the Social Security Act, the attorney need not demonstrate that the Commissioner's position was unjustified.
Fees under the EAJA are determined by the lodestar method, multiplying the total number of hours reasonably expended by the attorney's hourly rate, not to exceed $125 per hour. 28 U.S.C. § 2412(d)(2)(A). Under the SSA, the attorney may be awarded up to 25 percent of the claimant's past-due benefits pursuant to a contingent fee agreement, provided the fee is reasonable under the circumstances. Gisbrecht , 535 U.S. at 799, 804–05, 807, 122 S.Ct. 1817.
Section 406(a) obligates the Commissioner to fix the attorney's fee for services performed at the administrative level. Under § 406(b), the court determines the fee for work done at the judicial level.
Section 406(a)(1) provides that where the claimant prevailed at the administrative level, the Secretary may award a reasonable fee. It reads:
[W]henever the Commissioner of Social Security, in any claim before the Commissioner for benefits under this subchapter, 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.
Section 406(b)(1) provides for fees for work done in a judicial proceeding. It provides that a court may award a prevailing claimant's attorney a reasonable fee not in excess of 25 percent of past-due benefits recovered by the claimant . It states:
Whenever a court renders a judgment favorable to the claimant under this subchapter 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....
The issue presented in this case is whether the 25 percent cap on attorney's fees in § 406(b)(1) applies to the total amount of fees awarded under §§ 406(a) and (b) for services performed at both the administrative and the judicial levels of review. Stated differently, can the aggregate amount of attorney's fees awarded for work done at both levels exceed 25 percent of the claimant's past-due benefits?
The circuit courts of appeals are split on the issue. The Sixth, Ninth and Tenth Circuits have held that the 25 percent cap applies only to fees awarded under the judicial review provision of § 406(b) and not to fees awarded by the Commissioner under § 406(a) for work performed at the administrative level. Horenstein v. Sec'y of Health & Human Servs. , 35 F.3d 261, 262 (6th Cir.1994) ; Clark v. Astrue , 529 F.3d 1211, 1214–15 (9th Cir.2008) ; Wrenn v. Astrue , 525 F.3d 931, 936 (10th Cir.2008). The Fourth and Fifth Circuits apply the 25 percent limit to the aggregate total fees awarded under both §§ 406(a) and (b). Morris v. Soc. Sec. Admin. , 689 F.2d 495, 497–98 (4th Cir.1982) ; Dawson v. Finch , 425 F.2d 1192, 1195 (5th Cir.1970).
Although the Third Circuit has not specifically held either way, it has cited approvingly, in passing, the holdings of the Fourth and Fifth Circuits. Guido v. Schweiker , 775 F.2d 107 (3d Cir.1985). In Guido, it wrote that "[t]he total amount awarded by both the court and the Secretary may not exceed 25 percent of the claimant's recovery of past due benefits." 775 F.2d at 108 (citing 42 U.S.C. § 406 ; Morris , 689 F.2d at 497 (4th Cir.1982) ; Webb v. Richardson , 472 F.2d 529, 536 (6th Cir.1972) ; Dawson , 425 F.2d at 1195 (5th Cir.1970) ).13
The majority view is that the cap applies only to fees awarded under § 406(b). Courts in the majority, relying on statutory rules of construction, have concluded that the language of § 406 is clear and unambiguous. See Horenstein , 35 F.3d 261 ; Clark , 529 F.3d 1211 ; Wrenn , 525 F.3d 931. Consequently, they ended the interpretive inquiry and found no need to resort to legislative history to discern Congressional intent.
Courts subscribing to the minority view that the cap applies to the aggregate amount of fees awarded under both § 406(a) and § 406(b) reason that their interpretation reflects Congressional intent to limit excessive attorney's fees. Without first finding any ambiguity in the statutory language, they looked to the legislative history of the 1965 amendments. Referring to this legislative history, the courts of the minority view read the 25 percent limitation in § 406(b) into fees awarded under both §§ 406(a) and (b). They emphasize that when it amended § 406, Congress intended to protect claimants from "inordinately large" attorney's fees and to "establish a ceiling...". Morris , 689 F.2d at 497. Thus, they conclude that an aggregate cap was contemplated by Congress to accomplish its goal of limiting fees.
Here, the Commissioner...
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