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HEARN v. BARNHART

April 30, 2003

ROBERT E. HEARN, PLAINTIFF,
v.
JO ANNE B. BARNHART, COMMISSIONER OF SOCIAL SECURITY, DEFENDANT.



The opinion of the court was delivered by: Edward Infante, Magistrate Judge.

ORDER GRANTING PETITIONER HARVEY SACKETT'S MOTION FOR ATTORNEY'S FEES PURSUANT TO 42 U.S.C. § 406

I. Introduction

Before the court is Plaintiff's counsel's petition for attorney fees in which counsel requests $25,132.50 pursuant to 42 U.S.C. § 406(b), the law allowing federal courts to award attorney's fees out of past-due disability benefits owed to claimants under Title II of the Social Security Act. The Social Security Commissioner states that the overall fee request appears reasonable, but notes that the de facto $450 per hour rate may warrant a moderate reduction in the overall sum. For the reasons explained below, Petitioner Harvey Sackett is awarded a fee of $25,132.50.

II. Background

On May 28, 1999, an administrative law judge rendered a partially favorable decision finding Plaintiff disabled for a closed period beginning May 28, 1996 and ending July 31, 1997. This became the final decision of the Commissioner when the Appeals Council denied review. Dissatisfied with this result, Plaintiff filed a complaint in federal district court, and thereafter filed a motion for summary judgment. On October 3, 2001, concluding that defects existed in the original administrative proceeding, this court set aside the Commissioner's decision and remanded the case for further proceedings. Based on his success on appeal in district court, Plaintiff filed a timely application for attorney's fees under the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412(d), and on May 2, 2002 this court awarded him $8,725.99.

On remand, the Commissioner ruled that Plaintiff was entitled to monthly disability benefits beginning in September 1994. The January 29, 2003 Notice of Award informed Petitioner that he was awarded a total of $137,850.68 of past due benefits, and that 25 percent of that sum, or $34,462.67, was being withheld from those past benefits due in case attorney's fees were payable to Mr. Sackett under the Social Security Act. Petitioner's Memorandum of Points and Authorities ("Mem. P's and A's"), Exh. A.

III. Applicable Law

Sections 406(a) and (b) of Title II of the Social Security Act governs attorney fees for representation of disability claimants in front of the Commissioner and in federal court. Section 406(a) governs fees for representation in administrative proceedings before the Commissioner. 42 U.S.C. § 406(a). Section 406(b), on the other hand, controls fees for representation in the federal courts, and provides in relevant part:

Whenever a court renders a judgment favorable to a claimant . . . 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 past-due benefits to which the claimant is entitled by reason of such judgment.
42 U.S.C. § 406(b)(1)(A). The fee is payable "out of, and not in addition to, the amount of [the] past-due benefits." Id. The attorney's fees are payable from funds withheld from a claimant's past-due disability benefits by the Social Security Administration for work performed by claimant's counsel before the district court on his or her claim for Title II disability benefits under the Social Security Act. An attorney may not charge any fees where representation does not result in an award of back benefits.

Last year, the Supreme Court resolved a split in the circuits in favor of recognizing the primacy of lawful attorney-client fee agreements and against a lodestar approach to determining reasonable attorney fees in cases where claimants prevail in federal court. Gisbrecht v. Barnhart, 535 U.S. 789, 122 S.Ct. 1817, 1820, 152 L.Ed.2d 996 (2002). The Court concluded that the provision limiting attorney fees to 25 percent of past-due benefits was designed to control, and not to displace, contingent-fee agreements that are within the statutory ceiling. The Court stated that by enacting the 25% fee cap,

Congress . . . sought to protect claimants against "inordinately large fees" and also to ensure that attorneys representing successful claimants would not risk "nonpayment of [appropriate] fees." (Citation.) But nothing in the text or history of § 406(b) reveals a "desig[n] to prohibit or discourage attorneys and claimants from entering into contingent fee agreements." (Citation.)
Id., 122 S.Ct. at 1827.

Section 406(b) "calls for court review of such arrangements as an independent check, to assure that they yield reasonable results in particular cases." Id. at 1828. A court may exercise its discretion to reduce an attorney's contractual recovery based on the character of the representation and the result achieved. Id. For example, if an attorney is responsible for delay, a reduction may be in order to prevent the attorney from profiting from the accumulation of benefits during the case's pendency. Id. In addition, "[i]f the benefits are large in comparison to the amount of time counsel spent on the case, a downward adjustment is similarly in order." Id. To prevent windfalls for attorneys and assist the reviewing court in making a reasonableness determination, the court may require the attorney to submit a record of the hours spent on the case and a statement of the normal hourly rates charged. Id.

The Equal Access to Justice Act effectively increases the portion of pastdue benefits a successful claimant can pocket. Id. An EAJA award offsets an award under section 406(b) so that the amount of total past-due benefits actually received by the claimant will be increased by the EAJA award up to the point ...


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