Pais v. Kijakazi

• Docket Number: 21-1948
• Decision Date: 01 November 2022
• Citation: 52 F.4th 486
• Parties: Jose PAIS, Plaintiff, Appellant, v. Kilolo KIJAKAZI, Acting Commissioner, Social Security Administration, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

52 F.4th 486

Jose PAIS, Plaintiff, Appellant,

v.Kilolo KIJAKAZI, Acting Commissioner, Social Security Administration, Defendant, Appellee.

No. 21-1948

United States Court of Appeals, First Circuit.

November 1, 2022

David Spunzo, with whom Green & Greenberg was on brief, for appellant.

Timothy Sean Bolen, with whom Zachary A. Cunha, United States Attorney, Michael J. Pelgro, Regional Chief Counsel, Social Security Administration, and Ronald W. Makawa, Special United States Attorney, Social Security Administration, were on brief, for appellee.

Before Kayatta, Lipez, and Thompson, Circuit Judges.

THOMPSON, Circuit Judge.

Today's case brings to mind a particularly useful adage: He who hesitates is lost. Counsel for Jose Pais appeals from the district court's denial of his motion for attorneys' fees, which he filed over two years after successfully representing Pais before both the Social Security Administration (SSA) and the district court. For the reasons stated below, we affirm the district court's denial of the motion as untimely.

I. BACKGROUND

Back in 2014, Pais unsuccessfully applied for disability insurance benefits with the SSA. Nearly three years later, seeking a reversal of the agency's decision, he entered into a fee agreement that provided for contingent attorneys' fees -- to be collected out of retroactive benefits awarded as a result of the representation, should it be successful. With the assistance of counsel, it was: In 2018, the district court ruled for Pais and remanded the case to the agency for further proceedings, which ultimately found Pais to be a person with a disability and thus entitled to benefits.

It was at this point that Pais and his counsel received a Notice of Award (NOA) from the SSA. On June 16, 2019, the SSA issued an NOA notifying Pais that he was entitled to past-due benefits, and that 25 percent of his benefits ($29,159.13) was being withheld for potential attorneys' fees collectable under 42 U.S.C. § 406.¹ Soon after, Pais's counsel submitted timesheets requesting legal fees collectable under § 406(a) -- that is, fees for work done in administrative proceedings before the SSA. On November 19, 2019, the agency approved an award of $7,091.03 for such fees.

Pais's counsel was far slower to petition for the fees he was entitled to for his work before the district court. Nearly a year after issuing the NOA, on May 24, 2020, the SSA sent a letter to Pais's attorney noting that the agency continued to withhold the remaining $22,068.10 collectable under § 406(b) for such work. On October 26, 2020, the agency sent another letter regarding the withheld funds, with additional language stating that the agency "will certify for payment to the claimant all withheld benefits unless [his attorney] file[s] a petition for approval of a fee within 20 days from the date of this letter, or a written request for an extension of time." The agency subsequently received a letter from Pais's attorney, dated November 3, 2020, advising of his "intention to file a motion with the District Court for approval [of] 406(b) fees," requesting "an extension of time" to do so, and stating that he expected to file it "shortly." No immediate action followed, but the agency nonetheless sent two more notices on April 25, 2021, and August 11, 2021, identifying the withheld funds and threatening distribution to the claimant unless counsel filed a petition or moved for an extension.

On August 13, 2021, two days after receiving the last letter and more than two years after receiving the NOA outlining Pais's past-due benefits award and the funds withheld for attorneys' fees, Pais's attorney at long last filed a motion in the district court requesting the § 406(b) fees. In the motion, Pais's attorney observed that the statute does not contain a fixed time for filing a § 406(b) petition and pointed out that the filing was made within the 20-day deadline included in the SSA's latest letter. In response, the agency cried foul and objected to the motion as untimely filed. Pais's counsel then objected to the objection and cited "clerical and logistical difficulties (including moving office[s] and the [COVID-19] pandemic)" as reasons for the filing delay.

Unmoved by the excuses offered by Pais's attorney, the district court denied the fee request as untimely. In a September 23, 2021 decision, the court specifically acknowledged Pais's attorney's argument that § 406(b) does not contain a time limit for filing fee applications, and referenced the lack of guidance from the First Circuit on the appropriate deadline for filing a § 406(b) fee petition. But after reviewing the varying approaches taken by our sister circuits, it concluded that such a motion must be filed within a reasonable time of the agency's decision awarding benefits, and that what amounts to a reasonable delay in filing depends on the particular circumstances of each case, including any explanation for the delay. After rejecting Pais's counsel's explanation for the two-year gap between the NOA and his § 406(b) petition, the court put the kibosh on the fee request. Pais's attorney timely appealed and here we are.

II. ANALYSIS

The district court's "discretion in respect to fee awards is extremely broad" and our review of such decisions is highly deferential. Lipsett v. Blanco, 975 F.2d 934, 937 (1st Cir. 1992). When reviewing an award of attorneys' fees, "the role of an appellate court is to review for errors of law or abuse of discretion." Furtado v. Bishop, 635 F.2d 915, 920 (1st Cir. 1980). Therefore, we review the district court's interpretation of § 406(b) and subsequent adoption of the "reasonable time" standard for errors of law, and review the district court's application of the standard for abuse of discretion.

A. Attorneys' Fees in Social Security Cases: An Overview

We begin with a quick overview of 42 U.S.C. § 406, which provides the statutory framework for attorneys to seek fees for their representation of claimants in actions for past-due Social Security benefits. "The statute deals with the administrative and judicial review stages discretely: § 406(a) governs fees for representation in administrative proceedings; § 406(b) controls fees for representation in court." Gisbrecht v. Barnhart, 535 U.S. 789, 794, 122 S.Ct. 1817, 152 L.Ed.2d 996 (2002). For fees under § 406(a), attorneys may petition the agency directly, and awards are based on several factors. See 20 CFR § 404.1725(b).

In contrast, § 406(b) authorizes courts to grant fees for work performed before them that results in a favorable outcome for the claimant. Specifically, § 406(b)(1)(A) states: "Whenever a court renders a judgment favorable to a claimant ... 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[.]" The statute authorizes the SSA to withhold 25 percent of the claimant's past-due benefits for such fees and sets this amount as the limit a court may award.² Id. ("[T]he Commissioner of Social Security may ... 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[.]").

The Supreme Court has also held that § 406(b) works in tandem with representative fee arrangements, stating: "[ Section] 406(b) does not displace contingent-fee agreements as the primary means by which fees are set for successfully representing Social Security benefits claimants in court. Rather, § 406(b) calls for court review of such arrangements as an independent check, to assure that they yield reasonable results in particular cases."³ Gisbrecht, 535 U.S. at 807, 122 S.Ct. 1817.

B. The Proper Standard for § 406(b) Timeliness

With this statutory scheme in mind, we proceed to the issue of first impression in this circuit presented by this case: What is the appropriate timeliness standard for fee petitions brought under § 406(b) ? As discussed below, we believe that the "reasonable time" standard applied to Federal Rule of Civil Procedure 60(b) motions should also govern the timeliness of § 406(b) petitions.

1. The Circuit Split

To begin and as previously noted, § 406(b) does not contain a time limit for fee requests. Federal Rule of Civil Procedure 54(d)(2)(B)(i), however, states that "[u]nless a statute or a court order provides otherwise, [a motion for attorneys' fees] must ... be filed no later than 14 days after the entry of judgment[.]" This timeline presents a significant issue for attorneys seeking to collect § 406(b) fees: Following a remand from the district court, an agency's determination will rarely, if ever, be completed within 14 days. Pais's attorney emphasizes this point, highlighting the unworkability of a 14-day deadline for district court fees contingent upon agency determinations made on an entirely separate timeline. He urges us then to eschew this rule in favor of the flexibility afforded by the "reasonable time" standard applied to motions filed under Rule 60(b)(6).⁴ For its part, the SSA has taken an agnostic stance on this issue and declined to suggest a specific rule for this court to adopt. As the SSA sees it, the fee petition here was untimely regardless of the standard applied.

The minority of our sister circuits to address this question have adopted the "reasonable time" standard. In McGraw v. Barnhart, the Tenth Circuit followed this course, ruling that "[a] motion for an award of fees under § 406(b)(1) should be filed within a reasonable time of the Commissioner's decision awarding benefits." 450 F.3d 493, 505 (10th Cir. 2006). Highlighting Rule 60(b) as the "grand reservoir of equitable power to do justice in a particular case," the circuit court held that substantial justice would be served by allowing counsel to seek § 406(b) fees under that...