Hornal v. Schweiker, 81-3832.

• Decision Date: 30 November 1982
• Docket Number: No. 81-3832.,81-3832.
• Citation: 551 F. Supp. 612
• Parties: Paul D. HORNAL, Plaintiff, v. Richard S. SCHWEIKER, Secretary of Health and Human Services, Defendant.
• Court: U.S. District Court — Middle District of Tennessee

551 F. Supp. 612

Paul D. HORNAL, Plaintiff, v. Richard S. SCHWEIKER, Secretary of Health and Human Services, Defendant.

No. 81-3832.

United States District Court, M.D. Tennessee, Nashville Division.

November 30, 1982.

Frank S. Bloch, Vanderbilt Legal Clinic, Nashville, Tenn., for plaintiff.

Robert J. Washko, Asst. U.S. Atty., Nashville, Tenn., for defendant.

MEMORANDUM

WISEMAN, District Judge.

The matter before the Court is a claim by plaintiff for allowance of attorney fees pursuant to the Equal Access to Justice Act EAJA. Enacted as Title II (§§ 201-208) of the Small Business Export Expansion Act of 1980, Pub.L. 96-391, 94 Stat. 2325, codified as 28 U.S.C. § 2412. Plaintiff seeks a fee award for an action in which he successfully sought reversal of a decision by defendant, Richard S. Schweiker, Secretary of Health and Human Services the government. This Court, by order of May 25, 1982, awarded plaintiff summary judgment and remanded his claims to the government for the purpose of establishing a period of disability and payment of benefits pursuant to Title II of the Social Security Act, as amended, and payment of benefits as allowed by Title XVI of the same Act. 42 U.S.C. §§ 416(i), 423(d) and 1382c(a)(3). There is no dispute that plaintiff is a prevailing party within the meaning of the EAJA. The government resists any attorney fee award on three grounds. First, the EAJA does not apply because the attorney fee provision of the Social Security Act provides the exclusive remedy in social security cases.¹ Second, plaintiff's counsel, Vanderbilt Legal Clinic, is not entitled to recovery of fees because no fees were "incurred." Third, there was substantial justification for the government's position in plaintiff's original suit.

The three relevant statutory provisions state:

28 U.S.C. § 2412(d)(1)(A)

Except as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses, in addition to any costs awarded pursuant to subsection (a), incurred by that party in any civil action ... brought by or against the United States in any court having jurisdiction of that action, unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.

Section 206 of the EAJA, 94 Stat. 2330 Nothing in section 2412(d) ... alters, modifies, repeals, invalidates, or supersedes any other provision of Federal law which authorizes an award of such fees and other expenses to any party other than the United States that prevails in any civil action brought by or against the United States.

42 U.S.C. § 406(b)(1)

Whenever a court renders a judgment favorable to a claimant under this subchapter who was represented before the court by an attorney, the court may determine and allow as part of its judgment a reasonable fee for such representation, not in excess of 25 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.

Applicability of EAJA to Social Security Proceeding

The government argues that the initial clause of 28 U.S.C. § 2412(d)(1)(A) read in conjunction with section 206 of the EAJA and 42 U.S.C. § 406(b)(1) prohibits application of the EAJA to the present case. Insofar as section 406(b)(1) contains a specific provision for the source and amount of attorney fees, the government believes the EAJA, by its express terms, cannot supersede the provisions of the Social Security Act. The Court disagrees. The mere fact that section 406(b)(1) contains an attorney fee provision does not place it within the statutory exclusion of the EAJA. The legislative history surrounding the EAJA makes clear the type of attorney fee provisions the EAJA can and cannot supersede:

Moreover, this section is not intended to replace or supercede any existing fee shifting statutes such as the Freedom of Information Act, the Civil Rights Acts, and the Voting Rights Act in which Congress has indicated a specific intent to encourage vigorous enforcement, or to alter the standards or the case law governing those Acts. It is intended to apply only to cases (other than tort cases) where fee awards against the government are not already authorized.

H.R.Rep. No. 1418, 96th Cong., 2d Sess. 18, reprinted in 1980 U.S.Code Cong. & Ad. News 4953, 4997. (emphasis added) Section 406(b)(1) in no way authorizes fee awards against the government.

Section 406(b)(1) differs from fee shifting statutes in both purpose and effect. As noted in the legislative history above, the purpose of fee shifting statutes is to provide incentives to individuals to pursue enforcement of their rights. This is also the purpose of the EAJA, a fee shifting statute.

The bill rests on the premise that certain individuals ... may be deterred from seeking review of, or defending against unreasonable governmental action because of the expense involved in securing the vindication of their rights. The economic deterrents to contesting governmental action are magnified in these cases by the disparity between the resources and expertise of these individuals and their government. The purpose of the bill is to reduce the deterrents and disparity by entitling certain prevailing parties to recover an award of attorney fees, expert witness fees and other expenses against the United States, unless the Government action was substantially justified. Additionally, the bill ensures that the United States will be subject to the common law and statutory exceptions to the American rule regarding attorney fees. This change will allow a court in its discretion to award fees against the United States to the same extent it may presently award such fees against other parties.

Id. at 4984. Congress enacted section 406(b)(1) for two purposes quite different from those of the EAJA: (1) to control the charging of "inordinately large fees" by claimant's attorneys and (2) to give assurance to attorneys that they would receive appropriate fees for their representation. See S.Rep. No. 404, 89th Cong. 1st Sess., reprinted in 1965 U.S.Code Cong. and Ad. News 1943, 2062. The effect of fee shifting statutes differs from section 406(b)(1) as to who must ultimately pay attorney fees and other expenses. Under fee shifting statutes, the government must pay. Under section 406(b)(1), however, it is always the claimant who pays; the only question being whether the attorney is paid directly from the judgment. Thus, the provisions of section 406(b)(1) do not "otherwise specifically provide" for fees to be awarded against the government.

Finally, the legislative history of the EAJA evidences Congress' intent that the EAJA does cover civil actions to review decisions of the Social Security Administration. The House Report acknowledges: "There was much discussion whether the United States should be liable when it is a named party and represented in a civil action under the Social Security Act. The Committee decided that civil actions should be covered." H.R.Rep. No. 1418, supra, at 4991. It would be ironic, at the very least, for Congress to expressly state its intention that the EAJA apply to social security cases if it also intended for section 406(b)(1) to preempt the fundamental fee shifting provisions of the EAJA in these same cases. Such a position is untenable. Thus, the Court follows the holding of Chief Judge L. Clure Morton in Scruggs v. Schweiker, No. 80-3041 (M.D.Tenn. October 28, 1982), that the provisions of 28 U.S.C. § 2412(d) may indeed apply to claims arising under Title II of the Social Security Act.²

Necessity that Plaintiff has "Incurred" Liability for Attorney Fees

Section 2412(d)(1)(A) of the EAJA authorizes awards to a prevailing party, of attorney fees and expenses "incurred" by that party in any civil action brought against the United States. The government argues that insofar as plaintiff is represented by the Vanderbilt Legal Clinic, he is not responsible for compensating counsel for their efforts and thus, he has not "incurred" any liability for fees. The government relies solely on Kinne v. Schweiker, Civ. No. 80-81 (D.Vt. June 30, 1982) (currently pending on a Motion to Alter or Amend Judgment). Any such reliance is unpersuasive. The Kinne court based its holding on the belief that:

Plaintiff's request for attorney fees can be granted only if an examination of the EAJA's legislative history reveals that Congress intended to imbue "incurred" with new meaning. We glean no such intention. Neither the House, nor Senate, nor House Conference Reports define the term or indicate whether Congress contemplated fee awards to parties represented by public interest lawyers.

Id. at 4.

The House and Senate reports may not define "incurred," however, they make abundantly clear Congress' intent that "incurred" not be limited to mean only the money actually owed to attorneys. The House Report states:

In general, consistent with the above limitations, the computation of attorney's fees should be based on prevailing market rates without reference to the fee arrangements between the attorney and client. The fact that attorneys may be providing services at salaries or hourly rates below the standard commercial rates which attorneys might normally receive for services rendered is not relevant to the computation of compensation under the Act. In short, the award of fees is to be determined according to general professional standards.

H.R.Rep. No. 96-1418, supra, at 4994. See also S.Rep. No. 96-253, 96th Cong., 1st Sess. 1 (1979) at 16-17. Accordingly, the EAJA specifies...