jurisdiction of the civil action and contemplates entering a final judgment following the completion of administrative proceedings, a claimant may collect EAJA fees for work done at the administrative level." Melkonyan at . . . , 111 S. Ct. at 2162, 115 L. Ed. 2d at 91. Furthermore, although the Court did not explicitly state under which sentence the case in Hudson was remanded it was most likely not a sentence six remand, and thus the Hudson remand, by the process of elimination, must have been a sentence four remand. See Melkonyan at . . . , 111 S. Ct. at 2164, 115 L. Ed. 2d at 93. Thus, the Supreme Court, by indicating it did not intend to overturn Hudson seemed to recognize that in certain sentence four remands, the district court may retain jurisdiction to enter a "final judgment" after administrative proceedings have been completed.
Given that the Supreme Court explicitly stated that its decision in Hudson "was not to the contrary" of its holding in Melkonyan,. . . U.S. at . . ., 111 S. Ct. at 2162, 115 L. Ed. 2d at 91, lower courts have struggled to apply Melkonyan, which states that sentence four remands under § 405(g) are final upon the order of remand, to Hudson-type situations, in which the District Court retains jurisdiction, and in which there is not yet a prevailing party, making the judgment final only after the administrative proceedings are terminated.
Lower courts have taken several approaches to this problem. Many courts have reasoned that since, at the time of the sentence four remand, the court intended to retain jurisdiction, notwithstanding the Supreme Court's decision in Melkonyan, a "final judgment" for EAJA purposes had not yet been entered. In taking this position, the courts often cited the dilemma faced by the non-prevailing plaintiff at the time of remand. See e.g. Van Tassel v. Sullivan, 789 F. Supp. 1108, 1109 (D.Colo. 1992); Linkins v. Sullivan, 779 F. Supp. 1324, 1326 (M.D.Fla. 1991); Boronat v. Sullivan, 788 F. Supp. 557, 561 (S.D.Fla. 1992).
Another court felt obligated to apply Melkonyan literally, although it noted the "procedural impossibility" Melkonyan presented, and invited the Supreme Court to revisit its decision. See Fergason v. Sullivan, 771 F. Supp. 1008, 1012-1013 (W.D.Mo. 1991). One court denied that any "procedural impossibility" existed, stating that Melkonyan had changed the definition of "prevailing party". Audette v. Secretary of Health and Human Services, 776 F. Supp. 84, 91 (D.R.I. 1991) The Court asserted that the reconsideration of the case on remand itself was sufficient benefit to the plaintiff to say that he had attained "prevailing party" status. Id.
In Spurlock v. Sullivan, 783 F. Supp. 474, 477 (N.D.Cal. 1992), the Court, finding that its earlier stipulated order of remand had not complied with Melkonyan, vacated that order, as well as the order awarding attorney's fees. The court then remanded the case again, pursuant to the requirements of Melkonyan for sentence four remands, and invited the plaintiff to re-apply for attorney's fees after the period for appeal for the new order of remand had run. Spurlock, at 482.
Thus, courts have taken many approaches to dealing with the tension which exists when attempting to apply the Melkonyan rule to the Hudson-type of case. Crucial, of course to the resolution of such cases, is determining under which sentence the remand occurred. Given that the requirements under sentence six are somewhat stringent, most courts have concluded that the remands they are considering occurred under sentence four.
1. The Gutierrez Approach
The Tenth Circuit, addressing this very issue, came to the conclusion that the remand in Hudson was a sentence four remand. Gutierrez v. Sullivan, 953 F.2d 579, 584 (10th Cir. 1992). It construed the Supreme Court's opinions in Hudson and Melkonyan as "recognizing a subcategory of cases in which the district court makes a fourth sentence remand but intends to retain jurisdiction over the action pending further administrative proceedings and enter a final judgment after those proceedings are completed." Gutierrez, at 584, accord Welter v. Sullivan, 941 F.2d 674, 675 (8th Cir. 1991) (holding that where the district court remand concludes that the Secretary committed legal and factual errors, it is not a "final judgment" because the court retained jurisdiction and planned to enter final judgment pursuant to sentence four after the Secretary had reevaluated the claim); see also Damato v. Sullivan, 945 F.2d 982, 987 (holding that a remand which neither "affirmed, modified nor reversed" the Secretary's decision was not a sentence four remand nor a sentence six remand and does not constitute a "final judgment" pursuant to the EAJA statute); but see Luna v. United States Dept't of Health & Human Servs., 948 F.2d 169, 171-172 (5th Cir. 1991) (holding that even where the district court purported to retain jurisdiction when it remanded, it "ceded that jurisdiction when it remanded. That order of remand was a 'final judgment' for purposes of the EAJA and section 405(g). . . .").
In Gutierrez, the Court was faced with the dilemma of how to apply Melkonyan retroactively to a case which, like the case currently before this Court, was remanded to the Secretary for "further review" prior to the Melkonyan decision. Gutierrez, 953 U.S. at 581. The Secretary, upon review, reversed his initial decision. Plaintiff, as the prevailing party, applied for EAJA fees and entry of final judgement to the District Court. Plaintiff argued that the judgement was final when the Secretary reversed his original decision. Defendant argued that the fee application was untimely, as the date the judgement was final was the date of the remand. The District Court denied the fees application, stating that the Secretary's position was "substantially justified". Plaintiff appealed.
In the interim, the Melkonyan decision was issued, which essentially nullified plaintiff's original position that the final judgement for EAJA purposes was the date of the Secretary's favorable position, since the Supreme Court stated in Melkonyan that a final judgement may only be entered by a court, not an agency. Melkonyan at . . . , 111 S. Ct. at 2162, 115 L. Ed. 2d at 91. On appeal, plaintiff argued that the remand was a sentence six remand, in which the Court retained jurisdiction, thus making the fees application timely. The Court rejected that argument, noting that in order for the remand to have been a sentence six remand, new, previously unavailable evidence would have to have been presented. The District Court in Gutierrez had remanded the case for additional fact finding, not because new, previously unavailable evidence had become available. Defendant argued that the remand was a sentence four remand, making plaintiff's application for fees untimely. The Appellate Court agreed that it was a sentence four remand, but did not agree that plaintiff's fee application was not timely. Instead, it recognized a "subcategory" of cases in which the court remands under sentence four, but intends to retain jurisdiction pending further administrative proceedings to enter a final judgment after those proceedings are completed. Gutierrez at 584. The Court ruled that such a remand was not a "final judgment" for EAJA purposes, citing Hudson as the basis for its holding. Gutierrez, at 584.
This Court finds the reasoning of Gutierrez persuasive and applicable to the instant case. The remand in the instant case was similar to that of Hudson and Gutierrez in that the case was remanded for further fact finding, after which it was intended that the Court would final judgment after the completion of administrative proceedings. Indeed, this Court requested plaintiff to move for entry of final judgment, indicating that this Court intended to retain jurisdiction.
Defendant argues, and this Court agrees, that since there was no showing that the evidence was "new", it could not be a sentence six remand. Defendant also argues that the joint agreement to remand the case to the Secretary constituted a voluntary dismissal under Fed. Rule Civ. Pro. 41(a). This would preclude plaintiff from recovering any attorney's fees as there would be no "prevailing party" if the parties had agreed to a voluntary dismissal. Plaintiff argues that the parties never signed a stipulation for dismissal, they signed a stipulation for remand. This Court is unpersuaded that, given the subsequent motion for entry of judgment in this case,
the parties intended to agree to a dismissal. Defendant's supplemental citations, Francine Davis v. Sullivan, No. CV-87-7587-JMI(GMK)(C.D. Cal. 1992), and Harold Perkins v. Secretary of HHS, No. 5:91-CV-0637 (N.D. Ohio 1992) are not on point, as in each of those cases the district court did not intend to retain jurisdiction as this Court did. Thus, defendant's argument that the remand was tantamount to a voluntary dismissal must be rejected.
The only remaining alternative is that the remand was a sentence four remand. However, this does not necessarily dictate that the remand order was a "final judgment" for EAJA purposes. Plaintiff, at the time of the remand, was not the "prevailing party" and would have been ineligible for attorney's fees had he applied for them at the time of remand. In fact, plaintiffs in cases such as this would never be able to collect attorney's fees, as the administrative process at the agency level which would confer "prevailing party" status on plaintiff can take months to complete, forever closing the "window of opportunity" to apply for fees. This result certainly could not have been intended by Congress when it enacted the EAJA, the purpose of which was "to diminish the deterrent effect of seeking review of or defending against, governmental action." Hudson, 490 U.S. at 890 (citing 94 Stat 2325).
Given that this Court intended to retain jurisdiction over the case in order to enter final judgment, following the administrative proceeding, and that plaintiff at the time of remand could not have applied for attorney's fees as he was not the "prevailing party" until this Court entered that judgement affirming the Secretary's revised position, this Court concludes that plaintiff's application for fees at the time this Court ordered judgment entered is timely for EAJA purposes.
2. Equitable Tolling
Another approach taken by courts which are faced with similar cases but have rejected the reasoning of Gutierrez is awarding plaintiffs fees on equitable grounds. See e.g Luna v. U.S. Dept. of Health and Human Services, 948 F.2d at 173 ("In its remand order . . . the District Court purported to retain jurisdiction, thus unwittingly misleading Luna to think no final judgment was being entered. The fact that the order did operate as a final judgment . . . equitably should not bar Luna from pursuing his EAJA fees.")(footnote omitted); Misciagno v. Secretary of DHHS, 786 F. Supp. 1120, 1126 (E.D.N.Y. 1992) ("Plaintiff should be relieved form the April 16 judgment because of surprise, inadvertence, or excusable neglect."). Even if the Order of Remand in this case were treated as a "final judgment" for EAJA purposes, this Court would give plaintiff the benefit of equitable tolling, applicable to claims under § 405(g). See Bowen v. City of New York, 476 U.S. 467, 480, 90 L. Ed. 2d 462, 106 S. Ct. 2022 (1986)(Application of the principle of equitable tolling to § 405(g) is "fully consistent with the overall congressional purpose" in enacting the EAJA.). Plaintiff in this case was not on notice that the remand order was a "final judgment". Thus, this Court, giving plaintiff the benefit of equitable tolling, would deem the application for attorney's fees to be timely on such equitable grounds if the remand were deemed to be a final judgment for EAJA purposes.
Thus, this Court finds plaintiff's application for fees timely on two alternative bases. First, the application is timely since this Court did not intend to enter final judgment on remand to the Secretary, instead, it intended to retain jurisdiction to enter final judgment after the completion of the administrative proceedings. Alternatively, if this Court's remand is deemed to have been a final judgment for EAJA purposes, this Court would give plaintiff the benefit of equitable tolling, and deem the application for fees to be timely on equitable grounds.
II. The Secretary's Position Was Not Substantially Justified
Under the EAJA, the district court is required to award fees to the prevailing plaintiff unless the position of the government was substantially justified. A position is "substantially justified" when it has a reasonable basis in both law and fact. H.R.Rep. No. 1428, 96th Cong., 2d Sess. 10 reprinted in 1980 U.S.Code Cong. & Ad.News at 4989. See also Pierce v. Underwood, 487 U.S. 552, 101 L. Ed. 2d 490, 108 S. Ct. 2541 (1988); League of Women Voters of California v. FCC, 798 F.2d 1255 (9th Cir.1986). It is the government's burden to prove its position was substantially justified. Barry v. Bowen, 825 F.2d 1324, 1330 (9th Cir. 1987).
Plaintiff claims that the government's position in this case was not substantially justified as it ignored the law of this circuit regarding the weight to be given a treating doctor's opinion. Defendant contends that the fact that the Appeals Council "weighed" the evidence differently does not show that the ALJ's decision on remand was unreasonable.
The law regarding the weight to be given the opinions of treating physicians is clear. "'A report of a non-examining, non-treating physician should be discounted and is not substantial evidence when contradicted by all other evidence in the record.'" Gallant v. Heckler, 753 F.2d 1450, 1454 (9th Cir. 1984), quoting Millner v. Schweiker, 725 F.2d 243, 245 (4th Cir. 1984). If the treating physician's opinion is contradicted by another physician, the ALJ may only disregard the treating physician's opinion if he sets forth "specific, legitimate reasons for doing so that are based on substantial evidence in the record." McAllister v. Sullivan, 888 F.2d 599, 602 (9th Cir. 1989), quoting Murray v. Heckler, 722 F.2d 499, 502 (9th Cir.1983).
In this case, Dr. Patt Denning was the plaintiff's treating physician beginning in February, 1989, when she began personally observing plaintiff. She was also the supervisor of "trainees" who treated the plaintiff from February 1988 to February 1989. During the period of February 1988 to February 1989 she made the diagnoses and evaluated the severity of the plaintiff's impairments. The ALJ found that while plaintiff's mental impairments were sufficient beginning January 19, 1989 to award benefits, he found that prior to that date plaintiff was not sufficiently impaired to warrant a finding of disability. The Appeals Council rejected the latter finding, applying the ALJ's findings for the period of beginning January 19, 1989, to the period beginning September 1, 1987. The Appeals Council noted that:
The evidence shows in February 1988 that the claimant had difficulty holding jobs and relating to others with feelings of paranoia and loosening of thought processes. (citations omitted) Findings in May 1988 show him to be inappropriate, paranoid and probably unable to work. (citations omitted) Based on these findings and the opinion of his treating psychologist the Appeals Council concludes that the requirements of section 12.08 of the Listing of Impairments were met as of September 1, 1987.
Appeals Council Decision, Plaintiff's Brief, Exhibit C, p. 2 (emphasis added). The ALJ failed to recognize Dr. Denning as a treating physician during the period of February 1988 and February 1989, instead relying on the opinion of Dr. Thomas Singer, a psychiatrist whose testimony regarding plaintiff's case was based only on his review of the record. Dr. Singer, based only on his review of the record, determined that plaintiff did not have sufficient mental disorder to be deemed disabled.
The ALJ's reason for rejecting the opinion of Dr. Denning as a "treating physician" in favor of Dr. Singer's opinion was not a "legitimate reason" under McAllister, 888 F.2d at 602. While Dr. Denning may not have been personally involved with plaintiff during the relevant period as his personal physician, she was involved in his diagnoses and evaluation as the supervisor of those who personally treated plaintiff. Her opinion for the relevant period was improperly disregarded by the ALJ in favor of the opinion of an expert witness who had no personal contact with plaintiff at all. The Appeals Council, in fact, relied on Dr. Denning's testimony as a "treating physician" to award benefits beginning in September 1987.
In addition, the ALJ's decision to disregard Dr. Denning's report was not based on "substantial evidence in the record." McAllister, 888 F.2d at 602. The Appeals Council found that the evidence on the record was sufficient to meet the requirements for deeming plaintiff disabled as of September 1987, a finding completely contrary to that of Dr. Singer. Thus, given that the ALJ incorrectly gave dispositive weight to Dr. Singer's report, rejecting Dr. Denning's report, and the fact that there was substantial evidence to conclude that plaintiff was disabled for the period beginning September 1987, the ALJ's decision was based on an error of law, and thus, this Court finds that the government's position was not substantially justified, and fees under the EAJA must be awarded.
III. Plaintiff's Petition For Fees May Be Awarded For Post-Remand Representation and For Time Spent Obtaining Fees Under the EAJA
As discussed above, this Court intended to retain jurisdiction over this matter in order to enter final judgment after the completion of agency proceedings. As such, plaintiff is allowed to be compensated for services rendered on remand under Hudson. Furthermore, plaintiff argues and this Court agrees that under the EAJA, time spent obtaining EAJA fees may also be compensated. See Trichilo v. Secretary of Health and Human Services, 823 F.2d 702, 707-708 (2nd Cir. 1987).
Plaintiff is seeking an amount of $ 2,387.96 in fees under the EAJA. Defendant argues that plaintiff, by refusing to accept the government's offer of $ 1000 for fees, unreasonably protracted the litigation, and thus, his petition for fees should be dismissed. However, this Court notes that defendant is open to a similar charge in that defendant rejected plaintiff's offer to accept an award of $ 1500. This Court declines to find that either party unreasonably protracted the litigation.
Defendant argues that plaintiff's fee petition was excessive. This Court, in its discretion, does not find that the charges cited by the government (15 minutes to prepare a motion for extension to file summary judgment/remand motion, 30 minutes to redraft the EAJA memo) are excessive. However, defendant argues, and plaintiff concurs, that plaintiff, in his original application for fees, incorrectly computed the current attorney rate. The correct rate, which is reflected in plaintiff's revised fee request, is $ 108.94 per hour. Thus, plaintiff should be awarded $ 2387.96 under the EAJA for services provided litigating his case.
Therefore, it is hereby ordered that:
1) Plaintiff's petition for fees under the Equal Access to Justice Act be deemed timely filed.
2) Plaintiff's petition for fees is GRANTED, and he is awarded $ 2387.96 under the Equal Access to Justice Act.
3. Defendant's motion to vacate judgment is DENIED with prejudice.
IT IS SO ORDERED.
Dated: August 26, 1992
Robert F. Peckham
United States District Judge