Wheeler v. Heckler, 85-5435
| Decision Date | 27 March 1986 |
| Docket Number | No. 85-5435,85-5435 |
| Citation | 787 F.2d 101 |
| Parties | , 13 Soc.Sec.Rep.Ser. 197, Unempl.Ins.Rep. CCH 16,699 Creola WHEELER v. Margaret HECKLER, Secretary of Health and Human Services. Appeal of Margaret M. HECKLER, Sec. of Health and Human Services. |
| Court | U.S. Court of Appeals — Third Circuit |
J. Paul McGrath, Asst. Atty. Gen., Washington, D.C., W. Hunt Dumont, U.S. Atty., Newark, N.J., Donald A. Gonya, Randolph W. Gaines, John B. Watson, Gwenda Jones Kelley (argued), Baltimore, Md., for defendant-appellant.
Jeffrey G. Paster, Sheryl Gandel Mazur, West Orange, N.J., (argued), for plaintiff-appellee.
Before ALDISERT, Chief Judge, and SEITZ and ADAMS, Circuit Judges.
This case presents a labyrinthine question concerning the calculation of attorney fees for representation of a Social Security disability insurance claimant. The district court concluded that the method employed by the Social Security Administration (SSA) for determining the attorney fee in this proceeding was not consistent with the relevant statute, 42 U.S.C. Sec. 406(b)(1) (1982), and ordered a different calculation. Because we believe that SSA's resolution of the problem is within its discretion, we will reverse the judgment of the district court.
A disabled American may qualify for either or both of two federal benefits programs as a result of his or her disability. Title II of the Social Security Act provides for disability insurance (SSDI), under a program funded by worker and employer contributions. The Supplemental Security Income (SSI) arrangement, Title XVI of the Act, does not depend on a claimant's insured status, but instead provides a minimum income for the aged, blind and disabled who meet its requirements.
Creola T. Wheeler, a New Jersey resident and the claimant in this case, applied for SSDI benefits in June 1982. In December of that year, she retained an attorney, Jeffrey G. Paster, Esquire, to assist her in demonstrating her eligibility, and agreed to pay him the greater of $100 per hour or 25% of retroactive benefits awarded, so long as benefits were obtained. The agency denied the requested benefits, and Wheeler and her attorney pursued an appeal in the district court. There they prevailed, and the district court ordered in January 1984 that benefits be awarded. The district court later issued an order concerning the attorney fee; it is only that ruling which has been appealed by the Secretary of Health and Human Services.
While the SSDI application was pending, Wheeler's financial condition worsened, and she applied for an SSI stipend in addition to SSDI benefits. This second application was not at issue in the district court proceedings, but because the same disability standard governs both SSDI and SSI eligibility determinations the district court's decision that Wheeler was entitled to SSDI payments compelled the conclusion that she was also eligible for SSI. Accordingly, the Secretary soon approved a retroactive SSI award. This SSI determination had a significant impact on the attorney fee calculation.
The Secretary found that Wheeler was entitled to $5,207 in retroactive SSDI benefits, for the period from November 1982 through December 1983. Normally, Wheeler's attorney would be entitled to have withheld 25% of these past-due benefits as compensation for his representation in the district court. 42 U.S.C. Sec. 406(b)(1) (1982). But another statute, 42 U.S.C. Sec. 1320a-6 (1982), requires that when retroactive SSDI benefits are awarded the sum owed must be reduced by the amount of SSI benefits received for the same period that would not have been collected if the SSDI income had been timely received. SSA applied this offset provision here, calculating the retroactive SSI amount as $1,995.04, and thereby reducing the SSDI award from $5,207 to $3,211.96.
These computations apparently had no direct impact on Wheeler; she remained entitled to a total award of $5,207. But they did adversely affect attorney Paster. Because Sec. 406(b)(1) permits a 25% retainer only on retroactive SSDI awards, the Secretary withheld as an attorney fee 25% of $3,211.96 ($802.99), rather than 25% of $5,207 ($1,301.75).
Paster filed a motion in the district court to compel calculation of the attorney fee based on the gross SSDI award before the SSI offset; he represented that his client had refused to honor the retainer agreement. 1 1] The district court granted the motion and ordered SSA to pay a fee larger than the amount the agency had withheld. 607 F.Supp. 646 (D.N.J.1985). 2
The present appeal requires that we review the propriety of the Secretary's practice of determining the SSDI-based attorney fee following the SSI offset. This question has divided the federal courts that have considered it. The only court of appeals to address the issue upheld the administrative procedure. Burnett v. Heckler, 756 F.2d 621 (8th Cir.1985). Several district courts, in contrast, have rejected the Secretary's interpretation. See, e.g., Kovar v. Heckler, 622 F.Supp. 967 (N.D.Ohio 1985); Sepulveda v. Secretary of Department of Health and Human Services, No. 83 Civ. 4382 (E.D.N.Y. Oct. 18, 1985); Motley v. Heckler, 605 F.Supp. 88 (W.D.Va.1985); Carlisi v. Secretary of Health and Human Services, 583 F.Supp. 135 (E.D.Mich.1984); Booe v. Heckler, [1984 Transfer Binder] Unempl.Ins.Rep. (CCH) p 15,352 (S.D.Ind. Jan. 23, 1984). 3 As this is a case of statutory interpretation, the scope of our review of the district court's decision is plenary. Chrysler Credit Corp. v. First National Bank and Trust Co., 746 F.2d 200, 202 (3d Cir.1984) (per curiam).
Our task of statutory construction begins with the attorney fee provision itself. Section 406(b)(1), applicable to SSDI applications, states:
Whenever a court renders a judgment favorable to a claimant under this subchapter who was represented before the court by an attorney, 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 Secretary's position is that the phrase, "the total of the past-due benefits," refers to the retroactive SSDI amount actually paid to the beneficiary, following offsets and other deductions applicable to the retroactive period. 47 Fed.Reg. 4985, 4986 (1982). Opponents, including attorney Paster here, insist that the total includes all benefits to which a claimant is entitled, even though, as a result of liens, offsets, and other deductions, he or she may not receive all monies. See, e.g., Kovar, 622 F.Supp. at 671.
As the Supreme Court and this Court have emphasized frequently, our role is not to impose upon SSA our own interpretation of the Social Security legislation. Rather, because Congress has delegated to the Secretary the responsibility for administering the complex programs, we must defer to her construction, as long as it is reasonable and not arbitrary and capricious. See, e.g., Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984); Lugo v. Schweiker, 776 F.2d 1143, 1146-47 (3d Cir.1985).
In this case, we must first determine whether the Secretary acted permissibly in applying the SSI offset provision. If she did, it must then be decided whether the Secretary's position that the offset should affect the calculation of attorney fees under Sec. 406(b)(1) is reasonable.
The offset provision states that where a person is found eligible for retroactive SSDI benefits, and SSI benefits "were paid ... for one or more months" during the retroactive period, the SSDI award is to be reduced by the amount of SSI monies disbursed. 42 U.S.C. Sec. 1320a-6 (1982). 4 This procedure is designed to eliminate a potential windfall to the claimant, where a claimant receives SSI, for example, in 1985, and then in 1986 obtains a retroactive SSDI award for 1985. Had the beneficiary collected SSDI at the appropriate time in 1985 his or her entitlement to SSI, based on need, would have been reduced and possibly eliminated.
Attorney Paster's first contention is that Congress authorized the offset calculation only where SSI benefits were actually paid during the period for which SSDI benefits are later paid retroactively, and not where both the SSDI and SSI awards are made concurrently and retroactively, as here. He emphasizes the statutory requirement that SSI benefits "were paid " for the earlier months, and maintains that this statutory language excludes the situation where the SSI grant, as well as the SSDI award, is retroactive. The Secretary, in contrast, stresses the reference to benefits paid "for one or more months," arguing that the SSI benefits need be applicable only to, and not actually paid in, the retroactive SSDI period. 5
Under the interpretation urged by Paster, a claimant would receive a full SSI award and a full SSDI award for a period in which she was not entitled to all of both. It is unlikely that Congress intended such a result. Indeed, the Secretary's interpretation of Sec. 1320a-6 promotes the Congressional purpose to avoid windfalls by applying the offset even to concurrent, retroactive awards. See Cuthbert v. Secretary, Department of Health and Human Services, 784 F.2d 1157 (4th Cir. Nov. 29, 1985) ( analogous provision for attorney fees for representation before the agency). Inasmuch as the Secretary's interpretation as to the application of the offset provision to retroactive SSI awards is reasonable and not inconsistent with the Act, it must be upheld.
Paster's next argument, which was adopted by the district court, appears to have more force. Even assuming that it is appropriate to apply an offset in the present context, he states, it unfairly penalizes the attorney when the agency calculates the...
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