Jackson v. Heckler

• Decision Date: 21 February 1986
• Docket Number: No. 84 Civ. 8981 (RWS).,84 Civ. 8981 (RWS).
• Citation: 629 F. Supp. 398
• Parties: Lorraine JACKSON, Plaintiff, v. Margaret HECKLER, Secretary of the Department of Health & Human Services, Defendant.
• Court: U.S. District Court — Southern District of New York

629 F. Supp. 398

Lorraine JACKSON, Plaintiff, v. Margaret HECKLER, Secretary of the Department of Health & Human Services, Defendant.

No. 84 Civ. 8981 (RWS).

United States District Court, S.D. New York.

February 21, 1986.

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The Legal Aid Soc., New York City, for plaintiff; Douglass J. Seidman, Bebe J. Anderson, of counsel.

Rudolph W. Giuliani, U.S. Atty. for the S.D.N.Y., New York City, for defendant; Rosemarie E. Matera, Sp. Asst. U.S. Atty., Annette H. Blum, Reg. Atty.—Region II, Tomasina Digrigoli, Asst. Reg. Atty., Office of Gen. Counsel, Dept. of Health and Human Services, of counsel.

SWEET, District Judge.

Plaintiff Lorraine Jackson ("Jackson") brings this motion for an award of attorney's fees pursuant to the Equal Access to Justice Act, (hereinafter "EAJA"), 28 U.S.C. § 2412 awarding reasonable fees and costs to her counsel in this action. For the reasons set forth below, Jackson's motion is granted.

Facts

Jackson is a mentally disabled person who has been receiving Social Security disability benefits since approximately 1974. According to the Social Security Administration, (the "SSA") Jackson received an overpayment of Social Security benefits from January 1974 to September, 1975. While Jackson attempted to repay these overpayments for approximately one year, she requested a waiver of this repayment in December, 1983, informing the SSA that she could not afford the monthly deductions from her benefits and that the strain associated with the existence of the debt was aggravating her mental condition. In April, 1984, defendant Margaret Heckler, Secretary of Health and Human Services (the "Secretary") reduced Jackson's installment payments from $40.00 per month to $25.00 per month in response to Jackson's expressed difficulty in repaying the additional benefits.

However, the Secretary denied Jackson's request for a waiver of such overpayments. A waiver of repayment of erroneously distributed benefits may be granted if the recipient shows that (1) he was without fault in connection with the overpayment, and (2) recovery would defeat the purpose of the SSI program, be inequitable, or impede efficient or effective administration of Title XVI due to the small amount involved. Harrison v. Heckler, 746 F.2d 480, 482 (9th Cir.1984); 42 U.S.C.A. § 1383(b)(1); 20 C.F.R. § 416.550.

Jackson appeared pro se before an Administrative Law Judge ("ALJ") on June 24, 1984 and submitted a medical report from her treating psychiatrist which stated that she could not be accountable for the overpayment and that the pressure caused by the deductions from her benefits and concern over the debt was harming her mental condition. Jackson provided documentation of her living expenses and debts, and stated that she believed the SSA was sending her the correct amount of benefits at the time of the overpayment. Relying on the report of Jackson's treating psychiatrist, the ALJ found that she was without fault in accepting the overpayment, but declined to waive repayment because it would not defeat the purpose of Title XVI of the Act, be against equity and good conscience, or impede the efficient or effective administration of Title XVI. Valente v. Secretary of Health and Human Services, 733 F.2d 1037, 1042 (2d Cir.1984).

Jackson, still without representation of counsel, requested a review of the ALJ's decision by the Appeals Council of the SSA, and submitted additional documentation of her expenses to refute some of the ALJ's contentions to support the application for review. By letter of October 31, 1984, Jackson's request for Appeals Council review was denied, rendering the ALJ's decision final. Jackson then obtained the assistance of counsel and filed this action on December 14, 1984, seeking a reversal, or in the alternative a remand of the denial of an overpayment waiver. On January 17, 1985, Jackson's counsel agreed to extend the Secretary's time to answer or move with respect to the complaint until April 19, 1985. The Secretary's answer denied Jackson's allegations that the decision was not supported by substantial evidence, was based on erroneous legal standards and that Jackson was denied a fair hearing. The Secretary also asserted that Jackson had not shown good cause for a remand.

On June 20, 1985 counsel for both parties had a telephone discussion regarding the submission of motion papers, wherein counsel for the Secretary informed Jackson's counsel that she had not yet determined what posture she would take in the litigation but that she would determine her approach after reading the papers being drafted to support Jackson's motion for judgment on the pleadings filed July 22, 1985. Approximately three months later the parties filed a consent order, signed by this court on October 23, 1985, remanding this case to the Secretary "for the sole purpose of the Secretary issuing a decision waiving the overpayment at issue in this action." Jackson then filed her motion for attorney's fees on November 27, 1985.

Discussion

Jackson bases her request for reasonable attorney's fees and costs on two provisions of the EAJA. Section 2412(b), the "bad faith" section, provides that a court may award attorney's fees, expenses and costs to the prevailing party in an action brought against an agency or official of the United States if the defendant acted in "bad faith, vexatiously, wantonly, or for oppressive reasons." 28 U.S.C. 2412(b). Alternatively, Jackson seeks attorney's fees under section 2412(d) of the EAJA because the Secretary cannot demonstrate that her position in the litigation was "substantially justified." 28 U.S.C. § 2412(d)(1)(A).

Section 2412(b)

28 U.S.C. Section 2412(b) provides that the United States shall be liable for attorney's fees to the same extent as any other party would be liable under common law or statute:

(b) Unless expressly prohibited by statute, a court may award reasonable fees and expenses of attorneys, in addition to the costs which may be awarded pursuant to subsection (a), to the prevailing party in any civil action brought by or against the United States or any agency or any official of the United States acting in his or her official capacity in any court having jurisdiction of such action. The United States shall be liable for such fees and expenses to the same extent that any other party would be liable under the common law or under the terms of any statute which specifically provides for such an award.

In the Second Circuit, this EAJA exception to the general rule against the awarding of attorney's fees is made when the losing party's claims are "entirely without color" and have been asserted "wantonly for purposes of harassment or delay or for other improper reasons." Browning Debenture Holders' Committee v. DASA Corp., 560 F.2d 1078, 1088 (2d Cir.1977). While actions leading to the lawsuit as well as conduct during litigation can establish the bad faith of the losing party, Lauritzen v. Lehman, 736 F.2d 550, 559 (9th Cir. 1984), an award of fees under this section is a punitive measure and can be imposed "only in exceptional cases and for dominating reasons of justice." United States v. Standard Oil Co. of California, 603 F.2d 100, 103 (9th Cir.1979); Cordeco Development Co. v. Vasquez, 539 F.2d 256, 263 (1st Cir.1976), cert. denied, 429 U.S. 978, 97 S.Ct. 488, 50 L.Ed.2d 586 (1976).

Jackson contends that the Secretary acted in bad faith at both the administrative and judicial levels of this controversy. According to Jackson, the ALJ failed to develop scrupulously and conscientiously the record by ignoring relevant evidence, misstating the contents of other evidence and making conclusory assumptions about the claimant's expenses. Jackson also asserts that the Appeals Council ignored the applicable law and regulations by failing to review the ALJ's decision in light of the new evidence submitted by Jackson. Finally, the Secretary's pretrial defense of an administrative record rife with error, according to Jackson, was an extension of administrative-level bad faith into the courthouse.

However, the administrative record and the prior proceedings before this court do not warrant a finding of bad faith. While Jackson contests the validity of the ALJ's application of the relevant statutes and evaluation of the evidence before him, there is no indication that the ALJ's conclusions were undertaken vexatiously or to harass Jackson in the exercise of her rights. The record reveals that the SSA was responsive to Jackson's difficulties in meeting the repayment schedule and reduced her monthly deductions from $40.00 to $25.00. Even if we assume that the ALJ's weighing of the evidence in light of the applicable regulations was erroneous, the record shows that the ALJ was responsive to Jackson's documentary psychiatric evidence. As the ALJ's conclusions on the second prong of the overpayment waiver test are inherently discretionary, Valente v. Secretary of Health and Human Services, supra, 733 F.2d at 1041, the denial of the waiver is not evidence of bad faith absent an indication of improper motive.

Jackson claims that the Appeals Councils' denial of review of the ALJ's conclusions despite her submission of new evidence further demonstrates the Secretary's bad faith. The applicable regulations governing Appeals Council review provide:

(a) The Appeals Council will review a case if—

(1) There appears to be an abuse of discretion by the administrative law judge;

(2) There is an error or law; or

(3) The actions, findings or conclusions of the administrative law judge are not supported by substantial evidence; ...

(b) If new and material evidence is submitted with the request for review, the Appeals Council shall evaluate the entire record. It will then review the case if it finds that the administrative law judge's action, findings or conclusion is contrary to the weight of the evidence currently in the record.

20 C.F.R. Section 416.1470(b). The award of...