Sovey v. Comm'r of Soc. Sec., Case Number 16-11962

Decision Date19 February 2019
Docket NumberCase Number 16-11962
PartiesROBERT P. SOVEY, Plaintiff, v. COMMISSIONER OF SOCIAL SECURITY, Defendant.
CourtU.S. District Court — Eastern District of Michigan

Honorable David M. Lawson

ORDER GRANTING PETITION FOR ATTORNEY FEE

This matter is before the Court on a petition for an award of $11,253 in attorney fees for recovery of past-due benefits, under the authority of 42 U.S.C. § 406(b)(1). The Court previously authorized an award of $7,500 in attorney fees for plaintiff's counsel under the Equal Access to Justice Act, 28 U.S.C. § 2412, but counsel represents in his present petition that the entirety of that award was confiscated to offset other debts that the plaintiff owed to the government, so plaintiff's counsel never received any of that amount.

The plaintiff filed his complaint on May 31, 2016 seeking review of the Commissioner's decision denying the plaintiff's claims for disability insurance and supplemental security income benefits under Title II and Title XVI of the Social Security Act. The case was referred to United States Magistrate Judge Stephanie Dawkins Davis pursuant to 28 U.S.C. § 636(b)(1)(B) and E.D. Mich. LR 72.1(b)(3). Thereafter, the plaintiff filed a motion for summary judgement to reverse the decision of the Commissioner and remand the case for further consideration by the administrative law judge. The defendant filed a motion for summary judgment requesting affirmance of the decision of the Commissioner. Magistrate Judge Davis filed a report on July 11, 2017 recommending that the plaintiff's motion for summary judgment be granted, the defendant's motion for summary judgment be denied, and the case be remanded to the Commissioner for further proceedings. The defendant filed timely objections to the recommendation, to which the plaintiff responded. After a thorough review of the record and consideration of all the issues raised by the parties, the Court concluded that the ALJ's determination of residual functional capacity was not supported by substantial evidence in the record, and the case was remanded to the Commissioner for further proceedings. After the case was remanded, the plaintiff prevailed at a new hearing before the ALJ, and he was awarded $69,012 in past-due benefits.

Counsel for the plaintiff subsequently filed a petition for payment of $11,253 in attorney fees, representing a subset of the amount nominally called for under a contingent fee agreement executed by the plaintiff, which provided for payment to counsel of 25% of any past-due benefits recovered. Soc. Sec. Contingent Fee Contract dated May 13, 2016, ECF No. 33-2, PageID.716. The Commissioner took no position on the fee request. However, the plaintiff submitted to the Court a handwritten letter in which he asserts that he "believe[s] [that] the $6,000 . . . paid to my attorney is [a] sufficient amount," and that "that was the agreed amount from the beginning." Letter dated Jan. 10, 2019, ECF No. 34, PageID.728. The plaintiff also asserts that he thinks that the $11,253 fee request is "unreasonable [because] I have been in Limbo for years." Ibid. The assertion that counsel previously was paid $6,000 evidently refers to the amount awarded for representation in the course of the administrative proceedings, which was authorized under 42 U.S.C. § 406(a). Plaintiff's counsel contends, however, that he never has been paid any fee for the 44.79 hours of work that was done on the case before this Court, first because the plaintiff was represented by a different firm during the initial administrative proceeding, and second because the entire EAJA award was confiscated by the government to offset other obligations that the plaintiff owed to the government.

"A claimant's application for Title II benefits can result in payments of past-due benefits — i.e., benefits that accrued before a favorable decision, 20 C.F.R. § 404.1703 — as well as ongoing monthly benefits, see 42 U.S.C. § 423(a)." Culbertson v. Berryhill, 139 S. Ct. 517, 520 (2019). "A claimant who has been denied benefits 'in whole or in part' by the Social Security Administration may seek administrative review of the initial agency determination, § 405(b), and may then seek judicial review of the resulting final agency decision, § 405(g)." Ibid. "[T]he Social Security Act 'discretely' addresses attorney's fees for the administrative and judicial-review stages: '§ 406(a) governs fees for representation in administrative proceedings; § 406(b) controls fees for representation in court.'" Ibid. (quoting Gisbrecht v. Barnhart, 535 U.S. 789, 794 (2002)). Section 406(b) imposes a cap on the fees received under that section, which may comprise no more than 25% of the past-due benefits awarded. However, "[t]he 25% cap in § 406(b)(1)(A) applies only to fees for court representation, and not to the aggregate fees awarded under §§ 406(a) and (b)." Culbertson, 139 S. Ct. at 523. Section 406(a) imposes a separately calculated upper bound on fees awarded for representation at the administrative level, equal to "the lesser of 25% of past-due benefits or a set dollar amount — currently $6,000. § 406(a)(2)(A)." Id. at 520. "Social Security claimants pay section 406(b) fees out of their benefits — benefit payments that would otherwise go into their own pockets — whereas the government must pay EAJA fees independent of the benefits award." Minor v. Comm'r of Soc. Sec., 826 F.3d 878, 881 (6th Cir. 2016). But "an EAJA award offsets an award under Section 406(b), so that the amount of the total past-due benefits the claimant actually receives will be increased by the EAJA award up to the point the claimant receives 100 percent of the past-due benefits." Gisbrecht 535 U.S. at 796 (citations and quotations omitted).

Before approving any fee award under section 406(b), the Court must scrutinize the fee request to ensure that it represents reasonable compensation for the work performed. "When a district court renders a favorable judgment to a social security claimant, § 406(b) permits a district court to award 'a reasonable [attorneys'] fee . . . not in excess of 25 percent,' payable 'out of . . . [the claimant's] past-due benefits.'" Lasley v. Comm'r of Soc. Sec., 771 F.3d 308, 309 (6th Cir. 2014) (quoting 42 U.S.C. § 406(b)(1)(A)). "In Gisbrecht v. Barnhart, the Supreme Court concluded that the statute's allowance of 'a reasonable fee' permits contingency fees, but 'calls for court review of such arrangements as an independent check, to assure that they yield reasonable results in particular cases.'" Ibid. (quoting 535 U.S. at 807). "'Within the 25 percent boundary,' prevailing counsel bears the burden of 'show[ing] that the fee sought is reasonable for the services rendered.'" Ibid. The Sixth Circuit "accords a rebuttable presumption of reasonableness to contingency-fee agreements that comply with § 406(b)'s 25-percent cap," and it also has recognized a "'floor' for court review of contingency fees: 'a hypothetical hourly rate that is less than twice the standard rate is per se reasonable.'" Ibid. (quoting Hayes v. Sec'y of Health & Human Servs., 923 F.2d 418, 422 (6th Cir. 1990) ("[A] windfall can never occur when, in a case where a contingent fee contract exists, the hypothetical hourly rate determined by dividing the number of hours worked for the claimant into the amount of the fee permitted under the contract is less than twice the standard rate for such work in the relevant market.")).

"The Sixth Circuit, however, never has endorsed any particular nominal figure or ideal multiplier for the 'standard hourly rate' applicable to the litigation of civil actions under the Social Security Act." Sykes v. Comm'r of Soc. Sec., 144 F. Supp. 3d 919, 924 (E.D. Mich. 2015). However, "[c]ourts in this circuit have variously adopted 'standard rates' ranging from $165 [to] $500 per hour." Ibid. (citing Lasley, 771 F.3d at 310; Drenning v. Comm'r of Soc. Sec., No. 12- 13470, 2014 WL 4705113, at *1 (E.D. Mich. Sept. 21, 2014)); see also Miller v. Comm'r of Soc. Sec., 346 F. Supp. 3d 1018, 2018 WL 4926325 (E.D. Mich. 2018), report and recommendation adopted, No. 13-11748, 2018 WL 4922207 (E.D. Mich. Oct. 10, 2018) (adopting EAJA statutory rate of $125 per hour as "standard rate" for reasonableness review, where plaintiff's counsel had not suggested any...

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