Detson v. Schweiker, 85-1275

Citation788 F.2d 372
Decision Date17 April 1986
Docket NumberNo. 85-1275,85-1275
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.
CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)

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 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 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 determination or decision, up to but not including the month the determination or decision is made." 20 C.F.R. Sec. 404.1703 (emphasis added). The Secretary observes that the disability benefits "payable" to a claimant are the net benefits derived after deduction of the windfall offset amount pursuant to 42 U.S.C. Sec. 1320a-6. The Secretary asserts that the amount of past-due benefits used for calculating the 25 percent withholding amount under Sec. 406(b)(1) should be the same net amount of disability benefits payable to the claimant.

As further support, the Secretary refers to the Preamble to the regulations implementing Sec. 1320a-6, the SSI windfall offset provision. The Preamble states:

As for attorney's fees, the amount of retroactive benefits that is subject to withholding for payment of an attorney's fee is the total amount of retroactive Social Security benefits payable to the beneficiary (see [20 C.F.R.] Sec. 404.1703). The amount payable is the amount of retroactive benefits less the amount of any deductions, reductions, or overpayments applicable to the retroactive period. Thus, the amount of retroactive benefits payable for purposes of withholding an attorney's fee is the amount of retroactive Social Security benefits reduced by the amount of any SSI payments received in the retroactive period.

Preamble, 47 Fed.Reg. 4985, 4986 (emphasis in original). 4 Thus, the Secretary clearly has consistently maintained the view that only the net amount of past-due disability benefits, the total retroactive benefits reduced by the SSI windfall offset, are subject to the withholding provision of Sec. 406(b)(1).

In analyzing this case, we first note that the Secretary's implementation of Sec. 406(b)(1) and interpretation of "past-due benefits" is accorded great deference. "Because Congress has entrusted the primary responsibility of interpreting a statutory term to the Secretary rather than to the courts, [the Secretary's] definition is entitled to ' "legislative effect." ' " Herweg v. Ray, 455 U.S. 265, 275, 102 S.Ct. 1059, 1066, 71 L.Ed.2d 137 (1982), citing Schweiker v. Gray Panthers, 453 U.S. 34, 44, 101 S.Ct. 2633, 2640, 69 L.Ed.2d 460 (1981); Batterton v. Francis, 432 U.S. 416, 426, 97 S.Ct. 2399, 2406, 53 L.Ed.2d 448 (1977). Our review of the Secretary's regulation defining "past-due benefits" is thus limited to determining whether it "exceeded the Secretary's statutory authority and whether [it is] arbitrary and capricious." Heckler v. Campbell, 461 U.S. 458, 466, 103 S.Ct. 1952, 1957, 76 L.Ed.2d 66 (1983). We conclude that the Secretary's definition of "past-due benefits" as the net amount of disability benefits, or the amount payable to the claimant, is not arbitrary and capricious and does not exceed the Secretary's statutory authority.

Having upheld the Secretary's regulation, we turn to the Secretary's contention based on that regulation that the amount of Title II past-due benefits subject to the withholding provision of 42 U.S.C. Sec. 406(b)(1) must be reduced by the SSI windfall offset, even in a case where Title II and SSI benefits are concurrently adjudicated and the SSI benefits are paid retroactively. We believe this is the correct approach and therefore conclude that the district court erred in awarding Detson's attorney's fee based on the gross amount of past-due benefits.

In reaching this conclusion, we find the analysis and holding of Burnett v. Heckler, 756 F.2d 621 (8th Cir.1985), to be persuasive. Burnett...

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