Brown v. Secretary of Health and Human Services of U.S., 84-5076

CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)
Citation747 F.2d 878
Docket NumberNo. 84-5076,84-5076
Parties, 7 Soc.Sec.Rep.Ser. 211, Unempl.Ins.Rep. CCH 16,287 Edward BROWN, Appellant, v. SECRETARY OF HEALTH AND HUMAN SERVICES OF the UNITED STATES.
Decision Date23 November 1984

Community Health Law Project, East Orange, N.J., for appellant; David J. Popiel, East Orange, N.J. (Argued), of counsel and on the brief.

W. Hunt Dumont, U.S. Atty., Newark, N.J., for appellee; Vincent E. Gentile, Asst. U.S. Atty. (Argued), Newark, N.J., on the brief.

Before ADAMS and BECKER, Circuit Judges, and O'NEILL, District Judge. *


ADAMS, Circuit Judge.

This is an appeal from a denial by the district court of a petition for attorney's fees pursuant to the Equal Access to Justice Act (EAJA), 28 U.S.C. Sec. 2412(d)(1)(A) (1982). 1 The appeal presents a question of statutory construction complicated by the factual context as well as by the procedural posture of the case. We conclude that the district court did not err in refusing to award attorney's fees since at the time the petition was filed the plaintiff was not yet a "prevailing party" as required by the EAJA.


The plaintiff, Edward Brown, applied for Supplemental Security Income benefits in 1981. In a decision affirmed by the Appeals Council, the Administrative Law Judge (ALJ) found that Brown was not disabled and therefore not eligible for SSI benefits. The plaintiff challenged this administrative determination in the district court pursuant to 42 U.S.C. Sec. 405(g) (1982), insisting that the decision was not based on substantial evidence. See Smith v. Califano, 637 F.2d 968, 970 (3d Cir.1981). The district court agreed, vacated the final decision of the Secretary, and remanded the matter to the Social Security Office of Hearings and Appeals for a new hearing and the taking of further evidence. App. at 16.

Shortly thereafter, Brown petitioned the district court for an award of $2,013.75 in attorney's fees under the EAJA. Brown alleged that the favorable remand decision made him a "prevailing party" under the terms of the Act and that the government's position was not "substantially justified." See 28 U.S.C. Sec. 2412(d)(1)(B) (1982). Specifically, the plaintiff challenged as not substantially justified the government's use of the Medical-Vocational Guidelines (Grids), the ALJ's taking administrative notice by the ALJ of a matter that is not common knowledge, the government's failure to develop fully the record as required by Livingston v. Califano, 614 F.2d 342 (3d Cir.1980), and the ALJ's reliance upon a lay observation that Brown had not appeared to be in obvious discomfort at the administrative hearing--the "sit and squirm" test.

Brown's request for fees was denied by the district court because it determined that Brown was not a "prevailing party" within the meaning of the EAJA. Although the plaintiff's claim for benefits had been remanded to the Secretary for reconsideration, his entitlement to benefits had yet to be established. The district court therefore denied Brown's fee request without prejudice "with leave to reapply at such time when plaintiff may be deemed to have prevailed in his claim for benefits." App. at 20. 2


The EAJA provides that "a court shall award to a prevailing party other than the United States" reasonable attorney's fees and expenses, in addition to costs, "incurred by that party in any civil action ... brought by or against the United States in any court having jurisdiction of that action, unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust." 28 U.S.C. Sec. 2412(d)(1)(A) (1982).

In enacting the EAJA, Congress sought to remove the financial barrier faced by individuals litigating valid claims against the government. The award of attorney's fees to prevailing parties was intended to overcome the harsh reality that in many cases it was "more practical to endure an injustice than to contest it." H.R.Rep. No. 1418, 96th Cong., 2d Sess. 9, reprinted in 1980 U.S.Code Cong. & Ad.News, 4953, 4984, 4988. The legislation rested "on the premise that a party who chooses to litigate an issue against the Government is not only representing his or her own vested interest," id. at 10, reprinted in 1980 U.S.Code Cong. & Ad.News at 4988, but is also "serving a public purpose." Id., reprinted in 1980 U.S.Code Cong. & Ad.News at 4989. The EAJA was also designed to encourage government agencies to act in an equitable manner towards citizens and not be unreasonable in creating the necessity for, and in conducting, litigation. The Act thus "helps assure that administrative decisions reflect informed deliberation." Id. at 12, reprinted in 1980 U.S.Code Cong. & Ad.News at 4991.

On its face the Act applies only to proceedings in "court" and therefore proceedings in an administrative agency are excluded from its coverage. The statute is applicable, however, to judicial review actions brought pursuant to the Social Security Act, 42 U.S.C. Sec. 405(g) (1982). See Guthrie v. Schweiker, 718 F.2d 104, 107 (4th Cir.1983); McGill v. Secretary of Health & Human Services, 712 F.2d 28, 30 (2d Cir.1983), cert. denied, --- U.S. ----, 104 S.Ct. 1420, 79 L.Ed.2d 745 (1984); see also H.R.Rep. No. 1418, 96th Cong., 2d Sess. 12, reprinted in 1980 U.S.Code Cong. & Ad.News at 4991.

The EAJA sets forth two critical prerequisites to any award of attorney's fees. First, the court must determine that the claimant was a "prevailing party." Second, after the claimant has "prevailed," the court must then make the further finding that the position of the government was not "substantially justified" and that no "special circumstances" make an award of fees unjust. In the present case the district court denied fees to the plaintiff on the basis of the first factor, and did not reach the second inquiry.


This Court has not yet directly addressed the narrow question whether a Social Security claimant who obtains a remand in the district court for a further administrative hearing is a "prevailing party" entitled to fees. Partly because the EAJA does not define that central phrase, courts have split on whether an award of fees upon remand is authorized by the statute. Compare McGill v. Secretary of Health and Human Services, 712 F.2d 28, 32 (2d Cir.1983), cert. denied, --- U.S. ----, 104 S.Ct. 1420, 79 L.Ed.2d 745 (1984) (no award of fees); Miller v. Schweiker, 560 F.Supp. 838, 840 (M.D.Ala.1983) (no award); Roman v. Schweiker, 559 F.Supp. 304, 305 (E.D.N.Y.1983) (no award); with Knox v. Schweiker, 567 F.Supp. 959, 964 (D.Del.1983) (fees awarded); Ceglia v. Schweiker, 566 F.Supp. 118, 121 (E.D.N.Y.1983) (fees awarded); Gross v. Schweiker, 563 F.Supp. 260, 262 (N.D.Ind.1983) (fees awarded); Ocasio v. Schweiker, 540 F.Supp. 1320 (S.D.N.Y.1982) (fees awarded); cf. McDonald v. Schweiker, 553 F.Supp. 536 (E.D.N.Y.1982) (award under particular circumstances).

Those courts that have awarded attorney's fees when a claimant achieves a remand have relied heavily on the general maxim of statutory interpretation that in applying a statute it is appropriate for the court to consider the purpose of its enactment and the problem to be eradicated, and to recognize a construction that would best effectuate those goals. See, e.g., Gartner v. Soloner, 384 F.2d 348, 355 (3d Cir.1967), cert. denied, 390 U.S. 1040, 88 S.Ct. 1633, 20 L.Ed.2d 302 (1968). For example, in Ocasio, 540 F.Supp. at 1323, the district court emphasized that the "Agency's error forced the plaintiff and her attorneys into this court, and their persistance resulted in correction of the error. Denial of fees to her attorneys for their services is inconsistent with the purposes of the Social Security Act and the EAJA." See also Ceglia, 566 F.Supp. at 122. Similarly, in Gross, 563 F.Supp. at 262, the court reasoned that to "deny attorney fees to plaintiffs who cannot obtain the award of benefits sought under the Social Security Act from the court because of the administrative agency's failure to fulfill its duties imposed by law is certainly inconsistent" with the purposes of the EAJA to encourage reasonableness by government agencies.

Brown, endorsing the rationale of those courts, argues that a finding that he was indeed a prevailing party will best effectuate the purposes of the EAJA. Given the serious errors allegedly made by the ALJ during the course of the first proceeding, the plaintiff asserts that an award of fees is necessary to "warn the Social Security Administration that defense of improper standards can be costly."

We recently expressed concern over the very same considerations that the courts awarding fees have relied on. In Wier v. Heckler, 734 F.2d 955, 957 (3d Cir.1984), the Court alluded to the recent increase of Social Security disability cases and decried the consequent burden imposed on already taxed federal judicial resources. 3 More troublesome to the panel was "the fact that the Secretary so often appears to have wrongfully withheld benefits or to have processed a claim so that it is impossible to tell" whether benefits were denied correctly. 4 Id.

Nevertheless, the difficulty with Brown's emphasis on the invalidity of the Secretary's actions is that it subsumes two distinct issues under one general heading. In construing a statute, a court is obliged to give effect to each of the words that Congress used. United States v. DiSantillo, 615 F.2d 128, 133 (3d Cir.1980). Our reading of the EAJA makes clear that in order to recover attorney's fees, a party must meet both the "prevailing party" and "substantially justified" portions of the statutorily mandated test. Brown's argument concerning the Secretary's position is most properly viewed under the latter prong. We resist the temptation to allow the potential weightiness of a party's position on the second factor to...

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