Detson v. Schweiker, No. 85-1275

• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)
• Writing for the Court: Before ENGEL, KENNEDY and CONTIE; CONTIE
• Citation: 788 F.2d 372
• Parties: , 13 Soc.Sec.Rep.Ser. 246, Unempl.Ins.Rep. CCH 16,793 William J. DETSON, Plaintiff-Appellee, v. Richard SCHWEIKER, Secretary of Health and Human Services, Defendant-Appellant.
• Docket Number: No. 85-1275
• Decision Date: 17 April 1986

Page 372

788 F.2d 372 54 USLW 2544, 13 Soc.Sec.Rep.Ser. 246,
Unempl.Ins.Rep. CCH 16,793 William J. DETSON, Plaintiff-Appellee,
v.
Richard SCHWEIKER, Secretary of Health and Human Services,
Defendant-Appellant. No. 85-1275. United States Court of Appeals,
Sixth Circuit. Argued March 3, 1986.
Decided April 17, 1986.

Patricia G. Reeves, Asst. U.S. Atty., Detroit, Mich., and Larry K. Banks, argued, Office of Gen. Counsel, Dept. of Health & Human Svcs., Social Sec. Admin., Baltimore, Md., for defendant-appellant.

Lisa Wenger, argued, Detroit, Mich., for plaintiff-appellee.

Before ENGEL, KENNEDY and CONTIE, Circuit Judges.

CONTIE, Circuit Judge.

The Secretary of Health and Human Services (Secretary) appeals from a district court judgment awarding attorney's fees pursuant to 42 U.S.C. Sec. 406(b)(1) to the attorney who successfully represented a claimant seeking retroactive Title II disability benefits and Title XVI Supplemental Security Income (SSI) benefits. The Secretary claims that the district court erred in computing the amount of attorney's fees by failing to apply the SSI windfall offset provided by 42 U.S.C. Sec. 1320a-6. For the reasons that follow, we reverse the judgment of the district court.

I.

On March 28, 1980, William Detson filed claims for disability insurance benefits under Title II of the Social Security Act (Act), 42 U.S.C. Sec. 401 et seq., and for SSI benefits pursuant to Title XVI of the Act, 42 U.S.C. Sec. 1381 et seq. The Secretary denied those claims, finding that Detson was not disabled. Detson sought review before the district court and on September 20, 1983,

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the court found that Detson was disabled, thereby reversing the Secretary's decision. ¹ Detson was awarded disability benefits beginning in April, 1980 and SSI benefits from April, 1980 through February, 1984.

On September 23, 1984, the Secretary notified Detson by letter that his gross retroactive benefits had to be reduced by $14,171.50. Pursuant to the SSI windfall offset provision, 42 U.S.C. Sec. 1320a-6, ² the Secretary could reduce retroactively payable disability benefits by the amount of SSI benefits which had been paid to the claimant but which the claimant would not have received if the Title II disability benefits had been paid when they were due rather than retroactively. The Secretary also informed Detson that 25 percent of his net past-due benefits, or $166.17, was being withheld to cover an award of attorney's fees. The Secretary cited section 206(a) of the Act, 42 U.S.C. Sec. 406(a), as authorizing the withholding.

Based on the information provided in the Secretary's letter, Detson's counsel believed Detson's gross retroactive benefits totaled $14,942.80. ³ Detson's counsel requested 25 percent of that amount, $3,735.70, in a petition for award of attorney's fees filed with the district court pursuant to 42 U.S.C. Sec. 406(b)(1).

On January 28, 1985, the district court awarded to Detson's counsel the requested fee of $3,735.70. The court stated that the fee was "the maximum amount allowable as it is twenty-five percent (25%) of the total past-due benefits payable to the claimant." The Secretary filed its timely appeal from that decision on March 28, 1985.

On June 7, 1985, the Secretary filed a motion with the district court for an indicative ruling and for relief from the court's judgment. The Secretary asserted that the attorney's fee should have been based on Detson's net past-due benefits and argued that the district court had relied upon Burnett v. Secretary of Health & Human Services, 563 F.Supp. 789 (W.D.Ark.1983), which was subsequently reversed, Burnett v. Heckler, 756 F.2d 621 (8th Cir.1985). The court denied the motion on July 29,

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1985, on the ground that it lacked subject matter jurisdiction. The court also was of the opinion that an indicative ruling was unwarranted. The court recognized that the Eighth Circuit had adopted the Secretary's approach, but also observed that there was support within this Circuit for the district court's holding, namely Carlisi v. Secretary of Health and Human Services, 583 F.Supp. 135 (E.D.Mich.1984). The decision whether or not to deviate from Carlisi, the district court concluded, could only be made by this Circuit in the appeal from the district court's award of attorney's fees.

II.

Before we address the merits of the Secretary's claim, we note that the Secretary has discovered an error was made in calculating Detson's past-due benefits. The Secretary calculated those benefits on the assumption that all of the SSI benefits owed to Detson were paid to him. However, due to an administrative error, the Secretary did not pay the full amount of SSI retroactive benefits. Accordingly, the windfall offset deduction of $14,171.50 was too high; the Secretary should have only deducted a windfall offset of $7,235.90. As a result of this error, the Secretary has recalculated the attorney's fees withholding amount to be $1,483.97, which is 25 percent of the past-due benefits reduced by the adjusted SSI windfall offset. In accordance with the above recalculations, the Secretary urges this court to find that an attorney's fee of $1,483.97 is proper.

The Secretary argues that the district court did not comply with 42 U.S.C. Sec. 406(b)(1) and the regulation defining "past-due benefits" in awarding the attorney's fee in this case. Pursuant to Sec. 406(b)(1), a court may award attorney's fees. That statute provides:

Whenever a court renders a judgment favorable to a claimant under the 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 twenty-five 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.

42 U.S.C. Sec. 406(b)(1) (emphasis added). A regulation promulgated by the Secretary defines "past-due benefits" 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...