Desrouchers v. Heckler, CV-R-84-151-ECR.

• Decision Date: 26 October 1988
• Docket Number: No. CV-R-84-151-ECR.,CV-R-84-151-ECR.
• Citation: 701 F. Supp. 753
• Parties: Marcel E. DESROUCHERS, Plaintiff, v. Margaret HECKLER, Secretary, Department of Health and Human Services, Defendant.
• Court: U.S. District Court — District of Nevada

701 F. Supp. 753

Marcel E. DESROUCHERS, Plaintiff, v. Margaret HECKLER, Secretary, Department of Health and Human Services, Defendant.

No. CV-R-84-151-ECR.

United States District Court, D. Nevada.

October 26, 1988.

Frazier, Dame & Doherty, a Professional Corporation, Oxnard, Cal., and Frederick Leeds, Reno, Nev., and Edmund Parent, Santa Barbara, Cal., for plaintiff.

Shirley Smith, Asst. U.S. Atty., Reno, Nev., for defendant.

ORDER

EDWARD C. REED, Jr., Chief Judge.

The matter before the Court is plaintiff's motion for costs and attorney's fees under the Equal Access to Justice Act, 28 U.S.C. § 2412(d). The litigation underlying this motion involved plaintiff's application for Social Security disability benefits. Plaintiff sought these benefits on the ground that his back injuries, which had necessitated two surgical operations, and the chronic pain accompanying these injuries left him unable to work.

On April 19, 1983, an administrative law judge for the Social Security Administration ("SSA") determined that plaintiff's injuries constituted a "severe impairment" under the existing regulations and granted him disability benefits. The SSA's Appeals Council reversed this decision on February 24, 1984. The Appeals Council ruled that the administrative law judge had erred in concluding that the plaintiff was unable to perform gainful employment. Although conceding that the plaintiff had suffered serious injuries which prevented him from repeated lifting or excessive bending, the Appeals Council concluded that the plaintiff had the "residual functional capacity" for "light work" or "sedentary work" as defined in 20 C.F.R. § 404.1567. Decision of Appeals Council of February 25, 1984, at 13 (hereinafter "AC").

While the factual basis for the Appeals Council's decision is somewhat unclear, it appears to have relied primarily on the reports of two doctors who had treated the plaintiff. The first physician, an orthopedic specialist, reported that although plaintiff could not stand for longer than thirty minutes at a time, "he can do any job sitting down that would require fine manipulation with his hands." AC 135. The second treating physician, a neurological consultant, concluded that plaintiff's injuries and pain "may stabilize and allow him to perform some gainful employment at a later date of a sedentary nature." AC 139. In addition, two "reviewing physicians" employed by the SSA reported that the claimant was not disabled because he was able to perform "unskilled light level work," such as operating a coding machine. AC 53-54, 64. These reviewing physicians apparently reached their conclusions by analyzing plaintiff's medical history and not by actually examining the plaintiff. Finally, the Appeals Council stated that the administrative law judge had placed undue weight on plaintiff's subjective description of his chronic pain and his employment-related limitations. AC 11. The Appeals Council ruled that the medical evidence did not support these subjective complaints of pain and that plaintiff's "nonexertional limitation pain does not significantly affect his residual functional capacity for light work." AC 13.

Plaintiff sought review of the adverse decision in this Court. The case was assigned to the United States Magistrate, who recommended that the matter be remanded to the Secretary of the Department of Health and Human Services (the "Secretary") for further review and the consideration of new medical evidence. The Magistrate reported that the record of the Appeals Council failed to disclose "substantial evidence" for its conclusions. The Magistrate found no substantial evidence that the plaintiff could perform "light work" because plaintiff's constant pain seemed to place severe limitations on his capacity to walk and stand. See Magistrate's Report and Recommendation of February 7, 1985, 19-24. This Court adopted the Magistrate's recommendation and remanded the case to the Secretary. Order of March 11, 1985. This remand ordered the Secretary to consider new medical evidence, including the report of another physician who examined the plaintiff and stated that plaintiff's "weight bearing activities completely remove him from the market place."

Upon remand, an administrative law judge concluded that the plaintiff was entitled to disability benefits and the Appeals Council affirmed this decision. See Decision of Appeals Council of March 5, 1986. Plaintiff and his dependents were granted over $38,000 in past-due benefits and continuing benefits of over $500 per month. Pursuant to the attorney's fees provisions of the Social Security Act, 42 U.S.C. § 406(b), plaintiff's attorney received $9,500 from plaintiff's past-due benefits award as compensation for his services. Minute Order of February 11, 1987. This $9,500 represented the maximum fee allowable under 42 U.S.C. § 406(b), which prohibits attorney's fees from exceeding 25% of the claimant's past-due benefits award. See 42 U.S.C. § 406(b)(2).

Plaintiff now petitions this Court to recover over $3,000 of his attorney's fees from the government under the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412(d). Unlike attorney's fees under 42 U.S.C. § 406(b), which are deducted from the disability claimant's past-due benefits award, attorney's fees awarded under the EAJA are assessed against the government. Consequently, where an attorney has already received the maximum fee permitted under 42 U.S.C. § 406(b), any additional fees collected pursuant to the EAJA are used to reimburse the client for the deduction in his past-due benefits award. See Watford v. Heckler, 765 F.2d 1562, 1566 and n. 5 (11th Cir.1985); Meyers v. Heckler, 625 F.Supp. 228, 231, 237 (S.D. Ohio 1985); cf. Wolverton v. Heckler, 726 F.2d 580, 582 (9th Cir.1984). Since plaintiff's attorney in the instant case has already received the entire fee allowed by 42 U.S.C. § 406(b), any fees collected in this action would be granted directly to the plaintiff himself.

The EAJA provides that "a court shall award to a prevailing party other than the United States fees and other expenses ... incurred by that party in any civil action ..., including proceedings for judicial review of agency action, brought by or against the United States ... unless the court finds that the position of the United States was substantially justified." 28 U.S.C. § 2412(d)(1)(A). The plaintiff prevailed on the substantive merits of this matter when the Appeals Council determined upon remand that he was entitled to disability benefits. Indeed, the Secretary concedes that the plaintiff is a "prevailing party" for purposes of seeking attorney's fees and costs under the EAJA. See Cook v. Heckler, 751 F.2d 240, 241 (8th Cir.1984) ("It is the receipt of those benefits that renders a typical Social Security claimant a prevailing party."); McGill v. Secretary of Health and Human Servs., 712 F.2d 28, 32 (2d Cir.1983) (party obtaining remand "will not become a prevailing party unless and until she is awarded benefits"), cert. denied, 465 U.S. 1068, 104 S.Ct. 1420, 79 L.Ed.2d 745 (1984); Hutchinson v. Heckler, 612 F.Supp. 264, 269 (E.D.Wis.1985) (after remand, "Secretary's decision ... that the claimant is entitled to disability insurance benefits under the Social Security Act makes clear the plaintiff in this action is the `prevailing party.'").

The issue, therefore, is whether the Secretary's position in this matter was "substantially justified." The Supreme Court recently settled a dispute among the Circuit Courts of Appeals regarding the meaning of the "substantially justified" standard. The Court held that to satisfy this standard, the government must show that its position in the underlying litigation had a "reasonable basis both in law and fact." Pierce v. Underwood, ___ U.S. ___, 108 S.Ct. 2541, 2550, 101 L.Ed.2d 490 (1988). The Court also stated that its "reasonable basis" test was "no different" from the reasonable basis test that the Ninth Circuit has applied for the past several years. Id.

In analyzing the Secretary's position in this matter, we must examine both the initial decision of the Appeals Council in denying plaintiff's disability claim and the Secretary's subsequent opposition to plaintiff's motion for remand in this Court. Barry v. Bowen, 825 F.2d 1324, 1331 (9th Cir.1987) ("we look not only to the underlying governmental action being defended in the litigation, but also to the positions taken by the government in the litigation itself."); Fincke v. Heckler, 596 F.Supp. 125, 128 (D.Nev.1984) ("both the underlying agency conduct before suit was commenced and the Government's position during the course of the litigation must be evaluated in determining whether the Government's position was substantially justified."). However, this Court's previous determination that the initial decision of the Appeals Council was not based on substantial evidence does not necessarily mean that the government's position was without "substantial justification." The reasonable basis test for substantial justification is a lesser standard than the test for substantial evidence. See Jackson v. Bowen, 807 F.2d 127, 128-29 (8th Cir.1986); Herron v. Bowen, 788 F.2d 1127, 1130 (5th Cir.1986); Oliveira v. Bowen, 664 F.Supp. 1320, 1322-23 (N.D.Cal.1986).

In adjudicating attorney's fees under the EAJA, the Ninth Circuit has held that the government is "substantially justified" in relying on the opinion of medical experts. The Circuit has refused to award EAJA attorney fees, therefore, where the Secretary's decision has been reversed for the improper weighing of conflicting medical testimony. For example, in Albrecht v. Heckler, 765 F.2d 914 (9th Cir.1985), an administrative law judge for the SSA had been confronted with the opinions of six different physicians. Of the four doctors who had personally examined and treated the disability claimant, three concluded that the claimant was completely disabled and the fourth offered no...