Brown v. Sullivan

• Decision Date: 14 March 1990
• Docket Number: No. 89-15008,89-15008
• Citation: 916 F.2d 492
• Parties: , Unempl.Ins.Rep. CCH 15572A Leola BROWN, Plaintiff-Appellant, v. Louis W. SULLIVAN, * Secretary of Department of Health and Human Services, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 492

916 F.2d 492

31 Soc.Sec.Rep.Ser. 296, Unempl.Ins.Rep. CCH 15572A

Leola BROWN, Plaintiff-Appellant, v. Louis W. SULLIVAN, ^* Secretary of Department of Health and Human Services, Defendant-Appellee No. 89-15008.

United States Court of Appeals Ninth Circuit.

Submitted March 14, 1990. ^**

Decided July 3, 1990.

As Amended Oct. 11, 1990.

Jeffrey J. Preefer, Cupertino, Cal., for plaintiff-appellant.

Dennis J. Mulshine, Asst. Regional Counsel, Dept. of Health and Human Services, San Francisco, Cal., for defendant-appellee.

Appeal from the United States District Court for the Northern District of California.

Before FLETCHER, PREGERSON and NELSON, Circuit Judges.

PREGERSON, Circuit Judge:

This case concerns attorney fee awards following a reversal of the Secretary of Health and Human Services' denial of Supplemental Security Income disability benefits to appellant Leola Brown. The district court granted attorney fees at $75 per hour under 28 U.S.C. Sec. 2412(d), but denied fees at reasonable market rates under 28 U.S.C. Sec. 2412(b). Brown appeals that portion of the district court's order denying attorney fees at market rates under 28 U.S.C. Sec. 2412(b). Brown also seeks interest on an earlier appeal of a previous district court order granting fees at market rates. ¹ Finally, Brown seeks additional fees for bringing and appealing the present fees motion. We reverse and remand this matter to the district court.

BACKGROUND

On July 29, 1980, claimant-appellant Leola Brown filed an application for Supplemental Security Income (SSI) disability benefits as of April 9, 1980, the alleged onset date of her disability. After a hearing on June 23, 1981, and a review by the Appeals Council, the Secretary of the Department of Health and Human Services (Secretary) denied the SSI disability benefits on September 16, 1981. Brown appealed this ruling in district court. While that proceeding was pending, Brown filed another application for SSI benefits on October 6, 1981, alleging the same disability onset date of April 9, 1980.

Upon hearing this second application and examining additional medical evidence, the Administrative Law Judge (ALJ) awarded benefits as of the originally claimed onset date, April 9, 1980. However, the ALJ's ruling was appealed under an "own-motion" review program employed by the Social Security Administration called the "Bellmon Review Program." ² The Appeals Council affirmed the ALJ's finding of disability as of October 6, 1981, the date of Brown's second application, but reversed as to the period from April 9, 1980 to October 6, 1981. Brown then appealed to the district court the denial of benefits from April 9, 1980 to October 6, 1981.

In January 1984, the district court consolidated the two appeals and remanded the matter to the Secretary for further administrative proceedings. The district court found that the Appeals Council erred by revising the second ALJ's decision without reviewing the complete record, including a transcript or audio tape recording of the administrative hearing.

On remand, the Appeals Council initially asserted that the tape of the hearing was inaudible, but Brown's attorney insisted that the tape was in fact audible and pressed for a transcript of the tape. This transcript was prepared only after the district court, on June 29, 1984, ordered the defendant to produce and transcribe the tape in response to a motion filed by Brown. ³ On February 11, 1985, the Appeals Council affirmed its earlier denial of disability benefits for the period between April 9, 1980, and October 6, 1981.

Brown then appealed that decision to the district court, and both parties moved for summary judgment. In May, 1985, Brown filed a Request for Production of Documents, having been unsuccessful in her attempts to receive documents related to the Bellmon Review Program under the Freedom of Information Act. Brown alleges that as a result of delays in the production of these documents, she was forced three times to continue her motions for summary judgment. The Request for Production of Documents was eventually denied by a magistrate in November, 1985, in part because discovery is not ordinarily available in social security matters. However, the Secretary had informed the magistrate in his brief, and apparently also in court, that he intended to release the requested documents under the Freedom of Information Act, and eventually did so in December, 1985.

In its Memorandum Decision dated May 5, 1986, the district court found that the Secretary's use of the Bellmon Review Program, which allowed for a systematic review of decisions of Administrative Law Judges according to a ratio of benefits allowed to benefits denied, was a violation of Brown's due process rights. The court remanded the case to the Secretary for the purpose of holding a new hearing at the ALJ level in order to determine whether Brown was disabled during the period from April 9, 1980, to October 6, 1981. Brown then moved for an order amending or altering the district court's Memorandum Decision of May 5, 1986, requesting that the court rule on the merits rather than remand for another ALJ hearing. The Secretary similarly requested a ruling on the merits.

In a Memorandum Decision dated August 27, 1986, the district court made a full review of the record to determine whether the ALJ's decision finding Brown disabled as of April 9, 1980, was supported by substantial evidence. The court found that it was and granted Brown summary judgment. The district court reversed the Appeals Council's decision of February 11, 1985, and remanded the case to the Secretary with instructions to pay benefits to Brown for the period of April 9, 1980 through October 6, 1981. Brown then sought recovery of attorney fees pursuant to the Equal Access to Justice Act (EAJA), 28 U.S.C. Sec. 2412.

In an Order dated December 9, 1986, the district court held that the Secretary's use of the unconstitutional Bellmon Review Program amounted to prima facie evidence of bad faith for purposes of 28 U.S.C. Sec. 2412(b), which permits an award of reasonable attorney fees in excess of the $75 per hour ceiling of 28 U.S.C. Sec. 2412(d)(2)(A). The district court also stated, without making specific findings of fact, that the Secretary's alleged acts or failures to act in several ways strengthened appellant's case for finding bad faith. These acts or omissions included the Appeals Council's reviewing the ALJ decision without a transcript from the hearing, failing to disclose to the district court or Brown's counsel that an audio tape recording of the hearing existed, and delaying the production of documents necessary to determine whether Brown's due process rights were violated under the Bellmon Review Program. In light of this finding of bad faith, the district court awarded appellant attorney fees at the market rate of $125 per hour.

The Secretary appealed this award and on April 4, 1988, this court vacated the district court's order and remanded for reconsideration in light of Barry v. Bowen, 825 F.2d 1324 (9th Cir.1987). In Barry, we held that use of the unconstitutional Bellmon Review Program did not in and of itself constitute bad faith for the purposes of awarding attorney fees under 28 U.S.C. Sec. 2412(b). 825 F.2d at 1334.

On remand, the district court, without a written opinion, denied attorney fees for "bad faith" under 28 U.S.C. Sec. 2412(b) but granted fees at the EAJA rate of $75 under 28 U.S.C. Sec. 2412(d) in an order dated December 14, 1988.

Brown appeals this order, maintaining that the Secretary's behavior in this case (the Bellmon Review notwithstanding) demonstrated "bad faith," thus permitting an award of attorney fees at reasonable rates under 28 U.S.C. Sec. 2412(b).

STANDARD OF REVIEW

A district court's decision regarding the amount of attorney fees awarded under the EAJA is reviewed for abuse of discretion. Pierce v. Underwood, 487 U.S. 552, 562, 108 S.Ct. 2541, 2548, 101 L.Ed.2d 490 (1988); accord Barry v. Bowen, 825 F.2d at 1331. A district court's finding regarding a party's bad faith is reviewed under the clearly erroneous standard. Beaudry Motor Co. v. Abko Properties, Inc., 780 F.2d 751, 756 (9th Cir.), cert. denied, 479 U.S. 825, 107 S.Ct. 100, 93 L.Ed.2d 51 (1986). Issues concerning the proper interpretation of the EAJA are reviewed de novo. Barry, 825 F.2d at 1331 (citing LaDuke v. Nelson, 762 F.2d 1318, 1333 (9th Cir.1985), modified, 796 F.2d 309 (9th Cir.1986)).

DISCUSSION

I. Bad Faith

The Equal Access to Justice Act, 28 U.S.C. Sec. 2412 provides, inter alia, for an award of "fees and other expenses" to a prevailing party (other than the United States) in a judicial review of an agency 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). The statute sets a limit on the amount of attorney fees:

[A]ttorney fees shall not be awarded in excess of $75 per hour unless the court determines that an increase in the cost of living or a special factor ... justifies a higher fee.

28 U.S.C. Sec. 2412(d)(2)(A)(ii).

Under certain conditions, however, the EAJA allows for an award of attorney fees at a reasonable market rate. 28 U.S.C. Sec. 2412(b) states in pertinent part:

[A] court may award reasonable fees and expenses of attorneys ... to the prevailing party in any civil action brought by or against the United States or any agency ... of the United States.... The United States shall be liable for such fees and expenses to the same extent that any other party would be liable under the common law....

28 U.S.C. Sec. 2412(b) (emphasis added). This "liable under the common law" provision has been used to allow awards of attorney fees at market rates in cases involving "bad faith" by the United States or an agency of the United States. See Barry v. Bowen, 825 F.2d at 1333. Section 2412(b) codifies the bad...