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Stead v. Berryhill

United States District Court, W.D. Arkansas, Fayetteville Division

February 14, 2018

NANCY A. BERRYHILL, Commissioner Social Security Administration DEFENDANT



         Before the Court is counsel's request for approval of attorney's fees in the amount of $21, 009.50, pursuant to 42 U.S.C. § 406(b). (Doc. 26). Plaintiffs counsel requests 25% of her past-due benefits based upon a contingency-fee agreement. (Doc. 14, p. 19). Defendant does not object to the award in this case, but suggests that the fee request may be unreasonable. (Doc. 28).

         Plaintiff Cheryl Ann Collins Stead appealed the Commissioner's denial of benefits to this Court for the second time on August 13, 2015.[1]On March 15, 2016, this Court granted Defendant's motion to remand and entered judgment remanding Plaintiffs case to the Commissioner pursuant to sentence four of 42 U.S.C. § 405(g) for further proceedings. (Doc. 21). Plaintiffs counsel moved for an award of fees under 28 U.S.C. § 2412, the Equal Access to Justice Act (EAJA). (Doc. 22). Counsel's request was granted on September 6, 2016, awarding fees and costs under the EAJA in the amount of $4, 381.10, to be paid in addition to, and not out of, any past-due benefits which Plaintiff may be awarded in the future. (Doc. 25). Following remand, Plaintiff was found to be entitled to benefits beginning in July of 2007. (Doc. 27, p. 22).

         Statutory provision for the award of attorney's fees is found in 42 U.S.C. § 406(b)(1). The relevant portion of that statute reads, "the court may determine and allow as part of its judgment a reasonable fee not in excess of 25 percent of the ... past-due benefits to which the claimant is entitled by reason of such judgment." This fee is payable out of and not in addition to, the amount of claimant's past-due benefits.

         In 1980, Congress enacted the Equal Access to Justice Act, providing for fees payable by the United States. These fees are determined not by a percentage of the amount recovered, but by the time expended and the attorney's hourly rate. 28 U.S.C. § 2412(d)(1)(B). Unlike fees under § 406(b), these fees are paid in addition to, and not out of, the amount withheld from claimant's past-due benefits for the payment of attorney's fees.

         Recovery of an attorney's fee under both EAJA and 42 U.S.C. § 406(b)(1) was specifically allowed when Congress amended the EAJA in 1985. See Equal Access to Justice Act, Extension and Amendment, P.L. No. 99-80, 99 Stat. 183 (1985).

To permit a fee award under the EAJA assuming of course, that the necessary standard is met, in addition to that allowed by the district court out of claimant's past-due benefits does no more than reimburse the claimant for his or her expenses and results in no windfall to the attorney.

Meyers v. Heckler, 625F.Supp. 228, 231 (S.D.Ohio 1985).

         Furthermore, awarding fees under both Acts facilitates the purposes of the EAJA which is to shift to the United States the prevailing party's litigation expenses incurred while contesting unreasonable Government action. Id. See also Cornelia v. Schweiker, 728 F.2d 978 (8th Cir. 1984). However, claimant's attorney must refund to the claimant the amount of the smaller fee. Gisbrecht v. Barnhart, 535 U.S. 789, 796 (2002). "Thus, 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." Id.

         Additionally, the district court may only award fees for work done before it; it may not approve fees for work done before the Commissioner. Gowen v. Bowen, 855 F.2d 613 (8th Cir. 1988); Fenix v. Finch, 436 F.2d 831 (8th Cir. 1971).

         The Court will now consider whether the contingent fee agreement of twenty-five percent of Plaintiff s past-due benefits held by the Commissioner, for work performed before this Court, is reasonable.

         Section 406(b) "calls for court review of such arrangements as an independent check, to assure that they yield reasonable results in particular cases." Gisbrecht at 807. In Gisbrecht, the Supreme Court also recognized the primacy of lawful attorney-client fee agreements in determining reasonable attorney fees in cases where claimants prevail in federal court. The Court held that § 406(b) does not displace contingent-fee agreements within the statutory ceiling; instead, § 406(b) instructs courts to review for reasonableness fees yielded by those agreements." Id. at 808-809.

         First, the Court must look to see whether the contingent-fee agreement is within the twenty-five percent boundary. In the present case, Plaintiff entered into a contingent-fee agreement dated October 24, 2008. (Doc. 27, p. 19). This Court finds that the written fee agreement in this case falls within the statutory guidelines of not exceeding twenty-five percent of the past-due benefits.

         The Court must now determine whether Plaintiffs attorney's requested fee is reasonable compensation for his time spent for work before this Court. "When considering a fee award, the Court must balance two important policy concerns. On one hand, fee awards should be substantial enough to encourage attorneys to accept Social Security cases-particularly when the attorney faces a risk of nonpayment." Wallace v. Barnhart, 2004 WL 883447, at *3 (N.D. Iowa, 2004). "If remuneration is insufficient, then deserving claimants will be unable to find counsel." Id., quoting McDonald v. Apfel, 2000 WL 744115, at * 1 (W.D. Mo. June 8, 2000). On the other hand, attorneys representing disabled claimants have a duty to protect the claimant's disability award. Attorney fees awarded under ยง 406(b) are deducted from the claimant's disability award. The duty of attorneys to protect the interests of their clients remains throughout all of the ...

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