Frazier v. Sullivan

• Decision Date: 12 June 1991
• Docket Number: Civ. A. No. 83-T-169-N.
• Citation: 768 F. Supp. 1511
• Parties: Willie A. FRAZIER, Plaintiff, v. Louis W. SULLIVAN, Secretary of Health and Human Services, Defendant.
• Court: U.S. District Court — Middle District of Alabama

768 F. Supp. 1511

Willie A. FRAZIER, Plaintiff, v. Louis W. SULLIVAN, Secretary of Health and Human Services, Defendant.

Civ. A. No. 83-T-169-N.

United States District Court, M.D. Alabama, N.D.

June 12, 1991.

Charles Tyler Clark, R. Michael Booker, Birmingham, Ala., for plaintiff.

John C. Bell, U.S. Atty., Calvin C. Pryor, Montgomery, Ala., for defendant.

ORDER

MYRON H. THOMPSON, Chief Judge.

In November 1990, this court reversed a decision by defendant Secretary of Health and Human Services denying plaintiff Willie A. Frazier's application for disability insurance payments and supplemental security income under the Social Security Act, 42 U.S.C.A. § 301 et seq., and remanded the case to the Secretary for an award of benefits. The cause is now before the court on a petition by Frazier's counsel, R. Michael Booker, for attorney's fees in the amount of $16,792.92, to be paid from the $68,523.12 in past-due benefits to which the Secretary has calculated Frazier is now entitled. For the reasons that follow, the court concludes that Frazier's counsel should receive a fee of $8,400.00.

I.

Frazier's quest for social security benefits has a long and tangled history. He initially sought benefits in 1981, but his application was denied by the Secretary in September 1982. Accordingly, Frazier filed this action in March 1983, and in March 1984 the court remanded the case to the Secretary for further proceedings in light of Broz v. Heckler, 711 F.2d 957 (11th Cir.1983), which required individualized consideration of a claimant's age.¹ In September 1984, the Secretary ruled that Frazier was not entitled to benefits, and again in November 1985 the court remanded the case to the Secretary, this time for consideration of a new mental impairment regulation.² After the Secretary's Appeals Council overturned a subsequent hearing decision denying benefits and remanded Frazier's case for a new hearing, an administrative law judge (ALJ) — the fourth to hear his claim — again rejected Frazier's application and a motion was brought in this court in October 1988 to reopen the lawsuit. The court's November 1990 order directing the Secretary to award Frazier benefits grew out of this final series of judicial proceedings. Specifically, the court rejected the most recent ALJ's finding that Frazier's mentally retarded range I.Q. scores were not valid.³

In June 1983, Frazier retained attorney Booker to represent him in seeking social security benefits, and in March 1984 signed a written fee agreement promising to pay Booker 25% of all past-due benefits received by himself and his family.⁴ When the Secretary awarded Frazier $68,523.12, pursuant to the court's November 1990 order, he withheld, as the Secretary does in all cases, 25% of this figure, amounting to $16,792.92;⁵ Therefore, Frazier received a check for $51,730.28.⁶ Relying on the contingency agreement and on the Social Security Act, Booker now seeks to collect these set-aside funds as his attorney's fee.⁷ Frazier does not object to Booker's request for a fee of $16,792.92 to be paid from his past-due benefits. Nevertheless, the Secretary challenges the amount of Booker's fee request, arguing that he should receive a reasonable hourly rate or "lodestar" fee rather than 25% of Frazier's recovery, and that he should be compensated only for time spent on litigation, rather than also for hours devoted to administrative proceedings.⁸ Booker's itemized documentation reveals that he has expended 28 hours on litigating Frazier's case in this court, 28.5 hours on administrative proceedings before the Secretary, and 1.5 hours on his fee petition.⁹

II.

A.

In the Social Security Act, Congress provided that an attorney representing a claimant in a successful retroactive benefits lawsuit is entitled to "a reasonable fee for such representation, not in excess of 25 percent of the total of the past-due benefits" recovered. 42 U.S.C.A. § 406(b)(1).¹⁰ While it is clear that the statute intended for fees to be awarded "out of and not in addition to the past-due benefits recovered by a successful claimant," Watford v. Heckler, 765 F.2d 1562, 1566 (11th Cir. 1985), Congress offered no guidance to the courts regarding the method to be used in determining what fee is reasonable in a given case. Although constrained by the 25% ceiling, contingent fee agreements are not forbidden by the Act; however, the weight to be accorded such arrangements is left unspecified. Here, Frazier's counsel suggests that contingent fee contracts within the statutory limit should be afforded presumptive reasonableness. The Secretary, on the other hand, argues that the contingency agreement should be considered only as one factor among many in arriving at a reasonable hourly rate.¹¹

The proper framework for determining the reasonableness of a fee or the appropriate degree of deference to a contingent fee contract under § 406(b)(1) are not only issues of first impression in this circuit, but also ones as to which a number of the other courts of appeals are sharply divided.¹² This split mirrors the arguments advanced by opposing counsel: some courts have held that a district judge confronted with a fee petition under § 406(b)(1) should not engage intitally in an hourly rate analysis where the attorney and client have contracted as to an appropriate fee within the 25% ceiling, but rather should begin with a presumption in favor of the contingent figure and should reduce this amount only where and to the degree the figure is clearly excessive or the agreement is otherwise unreasonable — for example, in cases in which the attorney has engaged in purposeful delay or similarly improper conduct, or the client did not knowingly and voluntarily enter into the agreement. See Wells v. Sullivan, 907 F.2d 367, 371 (2nd Cir.1990); McGuire v. Sullivan, 873 F.2d 974, 980-81 (7th Cir. 1989); Rodriguez v. Bowen, 865 F.2d 739, 746-47 (6th Cir.1989) (en banc). However, other circuits have adopted a lodestar approach to setting fees in such cases, incorporating the existence of a preexisting contingent fee agreement only as one of a number of criteria in determining a fair level of compensation for the claimant's attorney. See Brown v. Sullivan, 917 F.2d 189, 191-93 (5th Cir.1990); Cotter v. Bowen, 879 F.2d 359, 363 (8th Cir.1989); Craig v. Sec'y, Dep't of Health and Human Services, 864 F.2d 324, 327-28 (4th Cir.1989); Starr v. Bowen, 831 F.2d 872, 874 (9th Cir.1987). See also Ramos Colon v. Sec'y of Health and Human Services, 850 F.2d 24, 26 (1st Cir.1988); Coup v. Heckler, 834 F.2d 313, 324 (3rd Cir.1987). After weighing carefully the views advanced by these and other courts, as well as independently considering the relevant legislative history and the purposes underlying § 406(b), the court is persuaded that the latter approach, rather than the former, should be employed in setting fees under this provision of the Social Security Act.

As an initial matter, the lodestar method is more consistent with the language and structure of the statute than is an approach that presumes the reasonableness of private fee arrangements. First, § 406(b) authorizes district courts to "determine" rather than simply to approve attorney's fees, emphasizing the requirement that a lawyer representing social security claimant receive only a "reasonable" fee,¹³ and including the 25% fee cap only in a subsequent, dependent clause.¹⁴ Second, § 406(b) makes no mention whatsoever of contingent-fee contracts. Clearly, this was not an oversight, given that Congress explicitly referred to fee agreements between claimants and their attorneys in enacting and later amending Section 406(a), which governs the rights of attorneys to collect fees for representing social security claimants in administrative proceedings before the Secretary. See 42 U.S.C.A. § 406(a) (West 1983 & Supp.1991). Third, strict reliance on contingent agreements — which, from the court's experience and its reading of reported decisions, appear almost always to adopt the maximum 25% figure allowed under the statute — would upset this statutorily authorized dual role the Secretary and the courts have in determining the fee to be paid to an attorney out of his client's benefits award. Section 406(b) gives courts the authority to award fees for only the time spent in connection with litigation in court, see Brown v. Sullivan, 917 F.2d 189, 191 & n. 5 (5th Cir.1990) (citing cases from six other circuits agreeing with this interpretation of § 406(b)); fees for work performed during administrative proceedings must be sought from the Secretary pursuant to § 406(a). However, because an attorney is entitled to collect only a total of 25% of his client's past-due benefits from the court, the Secretary, or both, Dawson v. Finch, 425 F.2d 1192, 1195 (5th Cir.1970), routine court approval of 25% contingent fees would normally preclude any further fee request directed to the Secretary. Such a result would run contrary to Congress's clear intention, in passing § 406(a), that the Secretary play a significant role in the area of attorney's fees in social security cases.¹⁵ Indeed, it might well render § 406(a) a virtual dead letter for those retroactive benefit cases that result in litigation.

To the extent that the lodestar method will in some cases result in somewhat lower attorney's fees — and, conversely, larger benefits awards to successful claimants — than adherence to the terms of contingent fee contracts, this result is also consistent with Congress's underlying goal in passing § 406(b). The brief legislative history of this provision makes clear that its principal purpose was to control the charging of excessive fees by claimants' attorneys.¹⁶ See Dawson v. Finch, 425 F.2d 1192, 1194-95 (5th Cir.), cert. denied, 400 U.S. 830, 91 S.Ct. 60, 27 L.Ed.2d 60 (1970); McGuire v. Sullivan, 873 F.2d at 980 n. 4; Rodriguez v. Bowen, 865 F.2d at 744. The Senate report specifically cited evidence of "inordinately...