Burnett v. Heckler, 83-1992

• Citation: 756 F.2d 621
• Decision Date: 04 March 1985
• Docket Number: No. 83-1992,83-1992
• Parties: , Unempl.Ins.Rep. CCH 15,899 Martha M. BURNETT, Appellee, v. Margaret HECKLER, Secretary of Health and Human Services, Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

Page 621

756 F.2d 621

9 Soc.Sec.Rep.Ser. 43, Unempl.Ins.Rep. CCH 15,899

Martha M. BURNETT, Appellee, v. Margaret HECKLER, Secretary of Health and Human Services, Appellant.

No. 83-1992.

United States Court of Appeals,

Eighth Circuit.

Submitted Sept. 12, 1984.

Decided March 4, 1985.

John B. Watson, Baltimore, Md., argued, Mark W. Webb, Fort Smith, Ark. and Larry K. Banks, Baltimore, Md., for appellant.

Anthony W. Bartels, Jonesboro, Ark., for appellee.

Before LAY, Chief Judge, FLOYD R. GIBSON, Senior Circuit Judge, and McMILLIAN, Circuit Judge.

McMILLIAN, Circuit Judge.

The Secretary of the Department of Health and Human Services (the Secretary) appeals from a final judgment entered in the District Court for the Western District of Arkansas awarding attorney's fees, pursuant to 42 U.S.C. Sec. 406(b)(1) (1982), plus interest, to the attorney who represented a Social Security claimant who was awarded Title II disability and Supplemental Security Income (SSI) benefits retroactively. Burnett v. Heckler, 563 F.Supp. 789 (W.D.Ark.1983). For reversal the Secretary argues that the district court erred in computing the amount of the attorney's fee and in awarding interest. For the reasons discussed below, we reverse the judgment of the district court.

The underlying facts are not in dispute. For a more detailed statement of the administrative and judicial history, see 563 F.Supp. at 790-91. This case involves neither the claimant's entitlement to disability benefits nor SSI benefits nor the amount of those benefits. Nor does it involve the application of the so-called SSI windfall offset, 42 U.S.C. Sec. 1320a-6 (1982), ¹ amended by Sec. 2615(a) of the Deficit Reduction Act of 1984, 98 Stat. 1132 (to be codified at 42 U.S.C.A. Sec. 1320a-6 (West Supp.1984)), ² to reduce the claimant's past-due disability benefits. This case involves only the computation of attorney's fees.

Claimant Martha Burnett filed a claim for disability insurance benefits under Title II of the Social Security Act (the Act), 42 U.S.C. Sec. 401 et seq., on January 18, 1979. On December 17, 1980, she filed a claim for SSI benefits based on disability under Title XVI of the Act, id. Sec. 1381 et seq. ³ The Secretary determined that Burnett was not disabled and denied these claims. In two separate appeals the district court remanded the case to the Secretary for further proceedings. On August 9, 1982, following additional vocational expert testimony, the Secretary determined that Burnett was in fact disabled and entitled to disability benefits beginning in September 1978 and to SSI benefits from December 1980 through March 1982.

The Secretary determined that Burnett was entitled to gross retroactive disability benefits in the amount of $8,079.10. Pursuant to the SSI windfall offset, id. Sec. 1320a-6, the Secretary then reduced the $8,079.10 by $2,426.29, the amount of retroactive SSI benefits Burnett would not have received if she had received the disability benefits when they were due instead of retroactively. Thus, after application of the SSI windfall offset, Burnett was entitled to $5,652.81 in retroactive disability benefits. Pursuant to the attorney's fee award provision, id. Sec. 406, the Secretary withheld 25% of this reduced amount to cover an award of attorney's fees and paid the balance of $4,239.60 to Burnett.

A court may award attorney's fees pursuant to 42 U.S.C. Sec. 406(b)(1) where the claimant receives a favorable administrative decision following a remand of the case to the Secretary for further consideration. See, e.g., Fenix v. Finch, 436 F.2d 831, 834-35 (8th Cir.1971), citing Ray v. Gardner, 387 F.2d 162, 165 (4th Cir.1967). In his motion for an award of attorney's fees before the district court, the attorney argued that, pursuant to Sec. 406(b)(1), he was entitled to a reasonable attorney's fee of up to 25% of "the total of the past-due benefits" and that the attorney's fee should be computed as a percentage of the gross retroactive disability benefits due the claimant, unreduced by the application of the SSI windfall offset. The district court agreed and held that

in cases where Title II [disability] and Title XVI [SSI] benefits are concurrently adjudicated and computed for retroactive periods, the [Secretary] is obligated to compute and pay Title II disability insurance benefits before computation and payment of Title XVI SSI benefits.... [and] that, for purposes of computing the [claimant's] attorney's fee only, the [Secretary] has improperly deducted $2,426.29 from past-due benefits as an SSI offset. The total past-due benefits on which an attorney's fee award should be based is $8,079.10.... [and] the claimant's attorney is entitled to a reasonable attorney's fee in the amount of 25 per cent. of these past-due benefits or $2,019.75.

563 F.Supp. at 793. Relying upon the statutory language in Sec. 1320a-6, the district court determined that Congress intended the SSI windfall offset to apply only when SSI benefits had actually been received during the period for which retroactive disability benefits were due: " 'Section [1320a-6] speaks of cases in which a claimant for Title II benefits is subsequently determined to be entitled to those benefits and "was" an individual to whom [SSI] benefits "were paid" for one or more months "during" the retroactive period.' " Id. at 792 (citation omitted, emphasis in original), citing unidentified administrative decision reported in 5 Soc. Security F. 1, 8-9 (1983).

The district court also noted that because application of the SSI windfall offset reduced the amount of "past-due" disability benefits from which the Secretary withholds 25% for direct payment of attorney's fees or from which the court may award up to 25% for attorney's fees, the SSI windfall offset operated as a disincentive to lawyers to represent disability claimants, a result which was contrary to Congressional intent. 563 F.Supp. at 792-93; see Dawson v. Finch, 425 F.2d 1192, 1195 (5th Cir.), cert. denied, 400 U.S. 830, 91 S.Ct. 60, 27 L.Ed.2d 60 (1970). This appeal followed.

As a preliminary matter, we note that the Secretary is entitled to participate in attorney's fee matters to protect the claimant's interest. See, e.g., MacDonald v. Weinberger, 512 F.2d 144, 146-47 (9th Cir.1975). "In view of the humanitarian policy of the Social Security program to benefit the disabled, ... the Secretary 'retains an interest in the fair distribution of monies withheld for attorney's fees.' " Lewis v. Secretary of HHS, 707 F.2d 246, 248 (6th Cir.1983), citing Moore v. Califano, 471 F.Supp. 146, 149 (S.D.W.Va.1979), appeal dismissed mem., 622 F.2d 585 (4th Cir.1980).

The Secretary argues that the district court's computation of the amount of past-due benefits is inconsistent with Sec. 406(b)(1) and the regulations defining the term "past-due benefits," improperly requires payment by the Secretary of an attorney's fee award "in addition to" the amount of past-due benefits, and erroneously applies the SSI windfall offset.

The Secretary first argues that the district court's award is inconsistent with Sec. 406(b)(1) and the regulations defining the term "past-due benefits." Title 42 U.S.C. Sec. 406(b)(1) (emphasis added) provides:

Whenever a court renders a judgment favorable to a claimant under this subchapter [referring to Subchapter II] who was represented before the court by an attorney, the court may determine and award 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, and the Secretary may, notwithstanding the provisions of section 405(i) of this title, 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. In case of any such judgment, no other fee may be payable or certified for payment for such representation except as provided in this paragraph.

The Secretary has defined "past-due benefits" by regulation as "the total amount of benefits payable under Title II of the Act to all beneficiaries that has accumulated because of a favorable administrative or judicial determination or decision, up to but not including the month the determination or decision is made." 20 C.F.R. Sec. 404.1703 (1984) (emphasis added). Thus, the Secretary argues that any adjustments required by the Act which affect the amount of benefits the claimant is entitled to receive, including the reduction required by the SSI windfall offset, must be made in order to determine the "total amount of benefits payable" to a disability claimant. For this reason, the Secretary argues that "past-due benefits" in Sec. 406(b)(1) refers to the "net" amount of disability benefits payable to the claimant.

Where Congress has entrusted the Secretary with the responsibility for implementing a statutory provision by regulation, the Secretary has the primary responsibility for interpreting statutory terms. See, e.g., Batterton v. Francis, 432 U.S. 416, 425-26, 97 S.Ct. 2399, 2405-06, 53 L.Ed.2d 448 (1977). "[O]ur review is limited to determining whether the regulations promulgated exceeded the Secretary's statutory authority and whether they are arbitrary and capricious." Heckler v. Campbell, 461 U.S. 458, 466, 103 S.Ct. 1952, 1957, 76 L.Ed.2d 66 (1983). Judicial deference to administrative interpretation is particularly appropriate in cases involving disputed terms in the Social Security Act. See, e.g., Burkhalter v. Schweiker, 711 F.2d 841, 844 (8th Cir.1983). Here, Congress has authorized the Secretary to pay authorized attorney's fees out of past-due benefits directly to attorneys who represent disability claimants and has entrusted implementation of the provision by rule or regulation to the Secretary. 42 U.S.C. Sec. 406(a) (administrative award), (b) (judicial award). We cannot conclude that the Secretary's interpretation of "past-due...