Marasco & Nesselbush, LLP v. Collins

• Decision Date: 12 March 2020
• Docket Number: C.A. No. 17-317-JJM-LDA
• Parties: MARASCO & NESSELBUSH, LLP, Plaintiff, v. Tara COLLINS, in her official capacity as Supervisory Attorney of the Office of Disability Adjudication and Review; Carolyn Tedino, in her official capacity as Regional Management Officer for Boston Social Security Administration; Social Security Administration, by and through Andrew Saul, in his official capacity as Commissioner of the Social Security Administration, Defendants.
• Court: U.S. District Court — District of Rhode Island

444 F.Supp.3d 317

MARASCO & NESSELBUSH, LLP, Plaintiff,

v.Tara COLLINS, in her official capacity as Supervisory Attorney of the Office of Disability Adjudication and Review; Carolyn Tedino, in her official capacity as Regional Management Officer for Boston Social Security Administration; Social Security Administration, by and through Andrew Saul,¹ in his official capacity as Commissioner of the Social Security Administration, Defendants.

C.A. No. 17-317-JJM-LDA

United States District Court, D. Rhode Island.

Signed March 12, 2020

Caroline R. Thibeault, Whelan, Corrente, Flanders, Kinder & Siket LLP, Timothy K. Baldwin, Robert Clark Corrente, Whelan Corrente & Flanders LLP, Providence, RI, for Plaintiff.

Amy Retsinas Romero, United States Attorney's Office District of Rhode Island, Providence, RI, for Defendants.

MEMORANDUM AND ORDER

JOHN J. MCCONNELL, JR., Chief Judge United States District Court

Marasco & Nesselbush, LLP ("M&N") sues the Social Security Administration and employees Tara Collins and Carolyn Tedino, each in their official capacity (collectively, the "SSA"), alleging that the SSA has violated M&N's constitutional rights through its arbitrary and irrational conduct regarding the payment of attorney's fees in Social Security disability cases. M&N moves for summary judgment on Counts V, VI, and VII of its First Amended Complaint. ECF No. 43. The SSA opposes M&N's motion for summary judgment and files its own motion for summary judgment. ECF No. 45.

I. BACKGROUND & FACTS

Three counts remain from M&N's First Amended Complaint—Counts V, VI, and VII—each alleging a constitutional violation for which M&N is seeking declaratory judgment. ECF No. 19 at 43-48, ¶¶152-76. The Court will briefly review the facts relevant to these motions.

M&N, a Rhode Island law firm² practicing Social Security disability law, employs salaried associate attorneys. ECF No. 44 at 1, ¶¶1, 5-6. Pursuant to the terms of their employment, M&N's associates have no right to the attorney's fees that the SSA pays them, and their salaries do not depend on the amount of fees generated by the disability cases they represent. Id. at 2, ¶¶6-7. To effectuate this, each M&N associate must, sign a Limited Power of Attorney (the "Power of Attorney") that acknowledges that any attorney's fees are M&N's property. Id. at 3, ¶¶15-17. The Power of Attorney states, in relevant part:

I acknowledge that I am a salaried employee of Marasco & Nesselbush, and I warrant that I do not represent any Social Security clients outside of the employ of Marasco & Nesselbush. In the event of my separation from the law firm of Marasco & Nesselbush, I hereby waive payment of any attorney fees relative to any disability claim in which I entered an Appointment of Representative form (1696) while employed by Marasco & Nesselbush through the date of separation. I acknowledge that any and all fees owed to me by the SSA are, in fact, the property of Marasco & Nesselbush.

Id. at ¶16.

The SSA has full regulatory control over representation in Social Security disability cases and the payment of fees to a representative.

See 20 C.F.R. §§ 404.1700 - 404.1799. Under its regulations, the SSA provides that only a "representative" may charge and collect attorney's fees. Id. § 404.1703, 404.1720. Consistent with the statutory grant provided to the SSA, a "representative" may be an attorney or a non-attorney. See 42 U.S.C. § 406(a) ; 20 C.F.R. § 404.1703. A representative is defined as "an attorney ... or a person other than an attorney ... whom [the claimant] appoint[s] to represent [him or her] in dealings with [SSA]." 20 C.F.R. § 404.1703. As noted in the SSA's internal operating instructions, "only individual persons may be appointed and act as representatives before SSA," and "an entity such as a firm, partnership, legal corporation, or other organization is not an individual person; therefore, the claimant may not appoint an entity to act as his or her representative." Program Operations Manual System ("POMS") General ("GN") 03910.020(B)(3).³ The SSA may refuse to recognize the individual a claimant chooses to appoint as representative if the person does not meet the requirements set out in its regulations. 20 C.F.R. § 404.1705(c). Once appointed, a representative, on behalf of the claimant, may obtain information about the claim, submit evidence, make statements about the claim, and make requests regarding the proceedings. Id. § 404.1710(a). The representative will also receive from the SSA notices, copies of administrative actions, determinations or decisions, and requests for information or evidence. Id. § 404.1715. The SSA allows a claimant to appoint several representatives. POMS GN 03910.040 (D). The SSA requires representatives from the same firm who are working on the same case to sign a single fee agreement. Hearings, Appeals, and Litigation Law Manual ("HALLEX") I-1-2-3(B).⁴ If a representative does not sign the fee agreement, the SSA will treat the representative as having waived his or her right to charge and collect a fee. Id.

Because law firms are not recognized as "representatives" under the SSA's rules and thus may not charge or collect fees, attorney fee payments are made only to individual attorneys. See 20 C.F.R. § 404.1720. Individual attorneys can only collect fees if the SSA approves of the fee and an unauthorized fee collection can lead to criminal prosecution under 42 U.S.C. § 406(a)(5). Additionally, the attorney can lose his or her right to practice before the SSA under 20 C.F.R. §§ 404.1740(c)(2) and 404.1745(b), (c).

The SSA provides two alternative processes for attorneys to seek authorizations of attorney's fees—(i) the fee agreement process and (ii) the fee petition process. POMS GN 03920.001. Under the fee agreement process, the representative may file a fee agreement with the SSA before the SSA decides the claim. Id. Such fee agreement may not provide for a fee greater than 25% of the past-due benefits awarded to the claimant, and the fee may not be more than the statutory maximum, currently $6,000. POMS GN 03940.003 (B)(3). Under the fee petition process, the representative petitions for a fee after the representation has ended, submitting a fee petition, time records, and a description of the work performed on behalf of the claimant.

POMS GN 03930.020. The SSA reviews the fee petition and supporting materials and, at its discretion, may authorizes a fee. 20 C.F.R. § 404.1725. Upon authorization of a fee, the SSA deposits the authorized fee into a bank account in the name of the individual representative. POMS GN 03920.017 (C). To facilitate this payment, M&N establishes joint bank accounts with each of its associates. ECF No. 44 at 4, ¶ 19. After the SSA deposits the fees generated by M&N's associates into these accounts, M&N transfers the fees into its own operating account pursuant to the Power of Attorney. Id. at ¶ 20. If an associate leaves M&N and withdraws the Power of Attorney, M&N cannot submit a fee petition in that associate's name or transfer the fees from that associate's account under the threat of criminal prosecution. Id. at 6-7, ¶¶ 37-40. In such scenario, M&N must contact the former associate to obtain the appropriate authorization. Id.

Under the SSA rules, attorneys who leave a law firm to work for the government must waive any fees not authorized before their government employment. See ECF No. 44 at 7-8, ¶¶ 54-55; ECF No. 19-9 at 2-4. This means that any fee request filed, but not adjudicated, before an attorney's government employment will not be paid. ECF No. 19-9 at 2-4. M&N experienced this when three of its associate attorneys—Joseph Wilson, Paul Dorsey, and Kyle Posey—left to work for the SSA. ECF No. 44 at 6-7, 10-14, ¶¶ 41-53, 65-83. Messrs. Wilson, Dorsey, and Posey needed to withdraw and waive all attorney's fees in cases before the SSA pending as of their employment with the SSA. Id. at 7-8, ¶¶ 54-55. Following these withdrawals, M&N sought payment for work performed by these individuals but was denied. ECF No. 43 at 15. In denying these fee requests, the SSA informed M&N that, unless the fee was authorized before its former associates' government service, the SSA could not authorize the collection of the waived fees. ECF No. 44 at 10, ¶ 64. M&N experienced similar denials after two additional associates, Jennifer Belanger and Valerie Diaz, were both hired by the SSA in July 2018. ECF No. 44 at 14-17, ¶¶ 84-86, 92-102.

M&N has submitted testimony from attorneys at two other Rhode Island law firms, Green & Greenberg and the Law Office of Attorney Richard Bruce Feinstein, stating that the SSA has paid attorney's fees under circumstances similar to what M&N experienced. Id. at 17-18, ¶¶ 104, 108; ECF Nos. 44-16, 44-17. Like M&N, these firms employ salaried associates to work on Social Security disability cases, some of whom left and entered government service. ECF No. 44 at 17-18, ¶¶ 105, 109-111. But, unlike M&N, these attorneys claim to have had no difficulty receiving payment from the SSA for work performed by such associates prior to their government employment. Id. at ¶¶ 106-107, 112.

II. STANDARD OF REVIEW

When ruling on a motion for summary judgment, the court must look to the record and view all the facts and inferences therefrom in the light most favorable to the nonmoving party. Continental Cas. Co. v. Canadian Univ. Ins. Co. , 924 F.2d 370, 373 (1st Cir. 1991). Once this is done, Fed. R. Civ. P. 56(c) requires that summary judgment be granted if there is no issue as to any material fact and the moving party is entitled to judgment as a matter of law. Id. The parties have both filed motions for summary judgment, but "[t]he presence of cross-motions for summary judgment neither dilutes nor distorts this standard of review." Mandel v. Boston Phoenix, Inc. , 456 F.3d 198, 205 (1st Cir. 2006). In evaluating cross-motions, the court must determine whether either party is entitled to judgment as a matter of law based on the...