Rodriquez v. Bowen, s. 86-1444

• Decision Date: 11 January 1989
• Docket Number: 86-1623 and 86-3108,Nos. 86-1444,s. 86-1444
• Parties: , 24 Soc.Sec.Rep.Ser. 267, Unempl.Ins.Rep. CCH 14469A Alberto RODRIQUEZ (86-1444), Plaintiff-Appellee, Harley Hubbs (86-1623), Plaintiff-Appellant, Richard M. Colasurd and Donald M. Colasurd, (86-3108), Appellants, Charles Hayes (86-3108), Plaintiff, v. Otis R. BOWEN, M.D., Secretary of Health and Human Services, Defendant- Appellant, (86-1444), Defendant-Appellee, (86-1623, 3108). . Re
• Court: U.S. Court of Appeals — Sixth Circuit

Page 739

865 F.2d 739

57 USLW 2432, 24 Soc.Sec.Rep.Ser. 267,

Unempl.Ins.Rep. CCH 14469A

Alberto RODRIQUEZ (86-1444), Plaintiff-Appellee, Harley Hubbs (86-1623), Plaintiff-Appellant, Richard M. Colasurd and Donald M. Colasurd, (86-3108), Appellants, Charles Hayes (86-3108), Plaintiff, v. Otis R. BOWEN, M.D., Secretary of Health and Human Services,

Defendant- Appellant, (86-1444),

Defendant-Appellee, (86-1623, 3108).

Nos. 86-1444, 86-1623 and 86-3108.

United States Court of Appeals, Sixth Circuit.

Reargued March 30, 1988.

Decided Jan. 11, 1989.

Patricia G. Blake, Asst. U.S. Atty., Detroit, Mich., Peter Krynski, Asst. General Counsel, S.S. Div., Dept. of Health and Human Services, Baltimore, Md., Carlotta P. Wells, for defendant-appellant in No. 86-1444.

William Michael White (argued), Mt. Clemens, Mich., for plaintiff-appellee in No. 86-1444.

Newton B. Bernstein, Bernstein & Bernstein, P.C., Southfield, Mich., Michael J. Cantor (argued), for plaintiff-appellant in No. 86-1623.

Carolyn Bell Harbin, Asst. U.S. Atty., Detroit, Mich., Mary Beth McNamara, Office of the General Counsel, Dept. of Health and Human Services, Baltimore, Md., Carlotta P. Wells, for defendant-appellee in No. 86-1623.

Richard M. Colasurd, Toledo, Ohio, Donald M. Colasurd, Columbus, Ohio, Michael D. Colasurd, James Roy Williams, Cincinnati, Ohio, for appellants in No. 86-3108.

Carolyn Watts Allen, Cleveland, Ohio, Carla D. Moore, Asst. U.S. Atty., Bruce G. Forrest (argued), William Kanter, Civil Div., Dept. of Justice, Washington, D.C., for defendant-appellee in No. 86-3108.

Before ENGEL, Chief Judge ^*, KEITH, MERRITT, KENNEDY, MARTIN, JONES, KRUPANSKY, WELLFORD, MILBURN, GUY, NELSON, RYAN, BOGGS and NORRIS, Circuit Judges, and PECK, BROWN and LIVELY, ^** Senior Circuit Judges.

JOHN W. PECK, Senior Circuit Judge.

In the above cases consolidated for a rehearing en banc, three district courts rendered judgments favorable to claimants, reversing the Social Security Administration's denials of their disability claims. These three appeals are not concerned with the merits of those denials, but petition this court to adjust attorney's fees awarded by the district courts under 42 U.S.C. Sec. 406(b)(1). ¹

In Rodriquez v. Secretary of Health & Human Services, claimant Rodriquez and his attorney had entered into a "fee agreement" under which the latter was to receive a fee in the amount of twenty-five percent of the past due benefits approved for payment. After the district court awarded benefits, Rodriquez's attorney filed a petition for attorney fees asking for $7,004.30, which was twenty-five percent of the benefits award. In his petition, Rodriquez's attorney included an itemized record of the hours spent representing the claimant, indicating his normal hourly billing charges for noncontingent fee cases and noting that a fee agreement had been entered into. Rodriquez's counsel stated that he had spent a total of 32.75 hours in representing the plaintiff. He stated that his normal billing rate for matters not involving contingent fee contracts was from $75.00 to $120.00 per hour.

The Secretary filed objections to the requested fee and argued to the district court that the fee should be reduced because an award of twenty-five percent of the past due benefits would result in an unreasonably high hourly rate, one that would be twice his usual rate and higher than the normal hourly rate for similar work performed by attorneys in the relevant geographic area. The district court denied the Secretary's objections primarily on the basis of the "contingent nature" of the case. The Secretary then appealed to this court asking that the fee be reduced. The Secretary urged that the court did not consider the difficulty of the case nor the quality or quantity of the work performed.

Because this court decided to hear this case en banc, an opinion was not filed.

In Hubbs v. Secretary of Health & Human Services the claimant was finally awarded benefits after over five years of administrative hearings and appeals to various tribunals. Claimant Hubbs' attorney requested $9,511.55 (twenty-five percent of Hubbs' accrued benefits), which had been agreed upon in a contingent fee contract. Hubbs' attorney has pointed out that the accrued benefits of Hubbs' dependents were not included in the category of past-due benefits, to which he would have been entitled. The district court subsequently reduced the requested fee substantially. Hubbs' attorney complains, on appeal, that the district court arbitrarily reduced the fee and did not give proper consideration to the existence of the contingent fee contract executed by Hubbs and his attorney.

A panel decision in this case was not filed but was reserved for consolidation and en banc determination.

Hayes v. Secretary of Health & Human Services also involved a successful claimant whose attorney attempted to enforce a contingency fee agreement of twenty-five percent of the past-due benefits. The Magistrate found that a reasonable fee was an amount less than that requested. The Magistrate based his determination on the usual hourly fee for handling Social Security cases in that district, the "complexity of the case, the expertise of the attorney, and other factors." On appeal, counsel for claimant Hayes asked that this court reverse the Magistrate's order and find that his original request for twenty-five percent of the past-due benefits is reasonable in this case, arguing that his diligence and competency in this matter were of the highest order.

A panel decision of this court, which has now been vacated by the grant of en banc review, held that the contingency fee contract did not "by itself" entitle Hayes' counsel to a fee of twenty-five percent of the past-due benefits and that the Magistrate did not abuse his discretion in setting the reduced fee. The Magistrate considered various factors in arriving at the fee award, although he did not specifically address the fee contract in his order. A dissent to that opinion stated that the case should be remanded "with instructions to address the fee agreement explicitly."

The above three cases were consolidated for a sua sponte en banc review in order to determine an appropriate method for setting the attorney's fee of a successful Social Security claimant, and to consider what factors may or must be included in that calculation.

The payment of attorneys' fees to counsel representing Social Security claimants is an issue of mounting interest in the legal community. As a result, Congress has in fact ordered that a study be completed concerning the longterm reform of the entire fee authorization and payment process. Section 9021 of Pub.L. No. 100-203 requires the Secretary of HHS to conduct a study of the attorney fee payment process under Title II of the Social Security Act. Specifically, the law requires that the study shall:

. Assess levels of reimbursement to attorneys taking into account the contingent nature of most agreements between claimants and their legal representatives;

. Propose alternative methods for establishing fees which take into account the nature of these contingent agreements; and

. Suggest changes which simplify and streamline the fee payment process.

In addition, the law directs consultation with individuals who represent the views both of attorneys and of claimants, and requires the Secretary to report the findings together with any recommendations to Congress, by July 1, 1988. The Social Security Administration Office of Hearings and Appeals published a notice in the Federal Register, asking for public comment on certain areas including: the weight that should be given to contingent fee arrangements; whether there should be a dollar limitation on fees or a sliding percentage fee schedule; whether a lodestar hourly amount should be utilized; whether a change in the review procedure should be effected. 53 Fed.Reg. 9818 (1988).

As of the date of the filing of this opinion, the report has not been submitted to Congress.

Black lung disability cases are obviously closer than most to social security disability cases; in fact, 42 U.S.C. Sec. 406(b)(1) is applied in black lung cases through 30 U.S.C. Sec. 923(b). See, e.g., Blankenship v. Schweiker, 676 F.2d 116 (4th Cir.1982) (a black lung disability case utilizing social security cases as guidance in reviewing an award of attorney's fees). However, the area of black lung disability is similarly filled with inconsistent methods in considering fee requests and is therefore not helpful in fashioning a single approach.

Comparisons can also be made between Social Security cases and workers' compensation cases but the states vary significantly in this approach. Twenty-one states have statutes which set a maximum fee ranging from ten to thirty percent, some with a specific maximum dollar amount. Some allow a certain percentage up to a stated dollar amount and with a reducing percentage as the dollar amount of the recovery increases. See, e.g., Norsworthy v. Georgia-Pacific Corp., 249 Ark. 159, 458 S.W.2d 401 (1970) (explaining Arkansas' sliding scale for attorney's fees).

In determining a reasonable fee in workers' compensation cases, a large number of factors are utilized and vary considerably from jurisdiction to jurisdiction, and may be set out by statute, board rule, or judicial decision. See 3 Larson's Workmen's Comp.L. (MB) Sec. 83.13(c) (1988) for an exhaustive list of different approaches found in various states. States also differ in the amount of discretion given the tribunal reviewing the fee request. In Montana, for example, "the administrator shall consider the time the attorney was required to spend on the case, the complexity of the case, and any other relevant matter the administrator may consider appropriate." Mont.Code Ann. Sec. 39-71-611 (1981). In Florida, the deputy commissioner has a list of eight factors that he "shall consider." Fla.Stat.Ann. Sec. 440.34(1) (West 1979).

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