Derby v. Bowen

• Decision Date: 10 June 1986
• Docket Number: No. C-84-155 RJM.,C-84-155 RJM.
• Citation: 636 F. Supp. 803
• Court: U.S. District Court — District of Washington
• Parties: Richard Don DERBY, Plaintiff, v. Otis R. BOWEN, Secretary of Health and Human Services, Defendant.

636 F. Supp. 803

Richard Don DERBY, Plaintiff, v. Otis R. BOWEN, Secretary of Health and Human Services, Defendant.

No. C-84-155 RJM.

United States District Court, E.D. Washington.

June 10, 1986.

Michael E. deGrasse, Walla Walla, Wash., for plaintiff.

James B. Crum, Asst. U.S. Atty., Kathryn A. Warma, Asst. Regional Counsel, Dept. of Health and Human Services, Spokane, Wash., for defendant.

MEMORANDUM OPINION

ROBERT J. McNICHOLS, Chief Judge.

By order entered May 24, 1985 this matter was remanded to the Secretary for further administrative proceedings on the alternative bases that: (1) plaintiff appeared to be a member of the Smith class and thereby entitled to reconsideration of his claim without application of the "non-severity" rule found at 20 C.F.R. § 404.1520(c);¹ and (2) the Secretary accorded too much weight to the testimony of several "long distance" experts who had never seen claimant, and too little weight to the conclusion of one of the agency's own experts who did examine Mr. Derby.²

Plaintiff then sought an award of attorney fees under the Equal Access to Justice Act EAJA, and by order entered July 29, 1985 that motion was denied on the basis that the order of remand was not a "final judgment" within the meaning of 28 U.S.C. § 2412(d)(1)(B).³

At the conclusion of supplemental administrative proceedings, the Appeals Council affirmed the ALJ's recommended decision that Mr. Derby be found disabled. Plaintiff thereafter renewed his request for attorney fees. By order entered March 4, 1986 the Court requested additional briefing in light of the 1985 Amendments to the EAJA; P.L. 99-80.⁴ That order also directed defendant to file any additional decisions or supplemental transcripts which may have developed during the course of the administrative process on remand.⁵ The matter is now fully briefed and is ripe for disposition.

The threshold inquiry is whether the Court has authority to enter a final judgment when a previously-remanded action has resulted in a litigant obtaining all of the relief sought at the administrative level. The government argues that if a final order is to be entered at all, it should be an order dismissing the action as moot. In light of the extensive legislative history accompanying the 1985 Amendments to the EAJA, however, it would appear that plaintiff has the better position:

The court will usually decline to make an award upon the remand decision because the remand order did not yet make the applicant a "prevailing party" and therefore eligible under the EAJA. But see, MacDonald v. Schweiker, 553 F.Supp. 536 (E.D.N.Y.1982). In Guthrie v. Schweiker, 718 F.2d 104 (4th Cir.1983), the Court pointed to the provision of 42 U.S.C. 405(g) providing that after the HHS review upon remand the agency must file its findings with the reviewing court. Thus the remand decision is not a "final judgment," nor is the agency decision after remand. Instead, the District Court should enter an order affirming, modifying, or reversing the final HHS decision, and this will usually be the final judgment that starts the thirty days running. See also, Brown v. Secretary of Health and Human Services, 747 F.2d 878 (3rd Cir.1984). In addition, as the Brown court points out, the remanding courts are vested with full equity powers and need not simply wait for the agency to act if that would be inappropriate. Brown at 885.

H. Rep. No. 99-120, Part I at 19-20, reprinted in, 1985 U.S.Code Cong. & Ad. News 132, 148;⁶ see also, Taylor v. Heckler, 778 F.2d 674, 678 n. 4 (11th Cir.1985).

As plaintiff succinctly framed the issue in briefing, any other construction would "permit governmental agencies to err once, but always once." Thus, the Court concludes that it has authority to affirm the decision of the Secretary and judgment will be entered accordingly.⁷

That brings us to the merits of the instant motion. Plaintiff argues alternatively that: (1) application of the nonseverity regulation coupled with defendant's failure to apprise plaintiff of his membership in Smith rendered the government's position not substantially justified; and/or (2) improper balancing of expert testimony was likewise not substantially justified.

During the initial administrative proceedings, the ALJ's decision issued on December 27, 1983 and became the final decision of the Secretary upon affirmance by the Appeals Council on February 15, 1984. Smith was not decided until June 6, 1984. It is true that there were a smattering of published decisions containing veiled criticism of the non-severity rule prior thereto. See, e.g., Delgado v. Heckler, 722 F.2d 570, 574 (9th Cir.1983), but the Court is unable to conclude that the Secretary was on fair notice that § 1520(c) was in serious trouble as of February 15, 1984 when the administrative decision became final. Accordingly, it cannot be said that reliance on the subject regulation was unreasonable.

Defendant's failure to timely advise plaintiff of his membership in Smith is unfortunate, but the worst that can be said is that his ultimate success was delayed for a period of a few months. The Court cannot conclude that this delay so infected the entire process as to render the overall position of the government unjustified.

Finally, there is the question of improper balancing. Standing as a formidable hurdle to plaintiff's position is Albrecht v. Heckler, 765 F.2d 914 (9th Cir.1985):

When the ALJ is reversed for a failure to weigh conflicting medical evidence properly, an award of fees is inappropriate.

Id. at 916.

It is argued by plaintiff that the legislative history developed in conjunction with the 1985 Amendments nullifies the Albrecht rationale:

Another problem which has developed in the implementation of the Act has been the fact that courts have been divided on the meaning of "substantial justification." Several courts have held correctly that "substantial justification" means more than merely reasonable. Because in 1980 Congress rejected a standard of "reasonably justified," the test must be more than mere reasonableness.

Especially puzzling, however, have been statements by some courts that an administrative decision may be substantially justified under the Act even if it must be reversed because it was arbitrary and capricious or was not supported by substantial evidence. Agency action found to be arbitrary and capricious or unsupported by substantial evidence is virtually certain not to have been substantially justified under the Act. Only the most extraordinary special circumstances could permit such an action to be found to be substantially justified under the Act.

H.Rep. No. 99-120, Part I at 9-10 (footnotes omitted), reprinted in, 1985 U.S. Code Cong. & Ad.News 132, 138.

Trial courts should tread lightly in concluding that circuit precedent is no longer good law. Hasbrouck v. Texaco, Inc., 663 F.2d 930, 933 (9th Cir.1981), cert. denied, 459 U.S. 828, 103 S.Ct. 63, 74 L.Ed.2d 65 (1982). This, however, is not a case such as Hasbrouck where the trial court attempted to resolve an inter-circuit conflict. Rather, this is a situation in which an intervening congressional pronouncement has displaced what prior hereto would unquestionably have been mandatory precedent.⁸ This distinction would appear to be all the more pointed in view of the observation that prior to the 1985 Amendments, only the D.C. Circuit embraced the "more-than-mere-reasonableness" standard. Grace v. Burger, 763 F.2d 457, 458 (D.C. Cir.), cert. denied, ___ U.S. ___, 106 S.Ct. 583, 88 L.Ed.2d 565 (1985). All other circuits which had addressed the issue opted for an analysis similar to that posited in Albrecht. See United States v. Yoffe, 775 F.2d 447, 449 (1st Cir.1985). Thus, Congress's specific and unambiguous language, coupled with its announced intention of "informing judicial construction of pre-1985 provisions,"⁹ leaves very little room for any conclusion other than the one reached here; viz., Congress intended to displace the judicial construction of the term "substantial justification" as defined by every circuit in the country save for the D.C.Circuit.

Is the end result now that whenever the Secretary loses, fee-shifting becomes automatic? No, but pretty close. As the government accurately notes in brief, the merits of a given case and the issue of awarding attorney fees are two discrete and independent inquiries and disposition of one does not necessarily resolve the other. Nonetheless, it is impossible to ignore or explain away the crystalline language chosen by the drafters of the House Report in proclaiming that if an administrative decision is not supported by substantial evidence, then it "is virtually certain not to have been substantially justified."¹⁰

In the final analysis, it is Congress which controls the purse-strings to the public fisc, and if Congress chooses on the one hand to enact Gramm/Rudd/Hollings, and on the other to open wide the floodgates to claims for attorney fees in social security cases, then the courts can only assume that Congress had its reasons. In the instant case, the ALJ's failure to present any analysis at all in rejecting Dr. Stevenson's conclusions ran afoul of longsettled precedent requiring specificity of findings. See note 2, supra. As such, the ALJ's decision was not supported by substantial evidence and the Secretary's affirmance thereof was not substantially justified.

The only remaining issues, then, are quantification of the fees to be approved, and the proportionate share to be borne by the claimant and the government. The instant motion is grounded on both 42 U.S.C. § 406(b)(1), which allows the Court to establish reasonable remuneration for work performed before it, and 28 U.S.C. § 2412(d). Counsel urges that he is entitled to the benefit of his contingency agreement with his client which provides for fees equaling 25% of the recovery, or a total of $6,629.25. As $3,000 has already been awarded pursuant to 42 U.S.C. § 406(a) for...