The opinion of the court was delivered by: Gregory G. Hollows United States Magistrate Judge
Counsel's motion for attorneys' fees, filed October 6, 2008, is pending before the court. The Commissioner filed on November 5, 2008 a response taking no position, but submitting points for the court's assistance. Counsel requests attorneys' fees pursuant to 42 U.S.C. § 406(b) in the amount of $17,505. The case is before the undersigned pursuant to 28 U.S.C. § 636(c) (consent to proceed before a magistrate judge).
The point made by the Commissioner to which the undersigned will respond is the Commissioner's observation that plaintiff's counsel is attempting to "double bill" for EAJA fees already received. The Commissioner is 100% correct in this observation. For the reasons that follow, plaintiff's attorney is ultimately entitled to $9, 505.00 in § 406(b) fees. Because of the interplay involving § 406 fees and EAJA fees in Social Security case, the undersigned will order the Commissioner to pay plaintiff's counsel $13, 505 with an order for plaintiff's counsel to then reimburse her client $4,000.
As plaintiff ultimately prevailed in this litigation after remand of his case, quite a bit of time elapsed from the time of application to the date benefits were first received. A large back benefits award was payable. As is commonly done, the Commissioner withheld from the back payment award an amount equal to 25% of the total back payment in order that plaintiff's attorney could be paid from that amount. The amount ultimately withheld was $20, 355.00. Plaintiff's counsel was awarded $6,850 in § 406(a) attorneys' fees for work performed in the administrative proceedings.*fn1 A new withholding letter for § 406(b) attorneys' fees for work performed in federal court was issued on September 15, 2008 providing that the amount now withheld after the $6850 award was $13, 505.00.
The process thus far is simple enough-- assuming no EAJA fees, plaintiff's counsel would be entitled to a maximum $13, 505.00 in § 406(b) fees, potentially subject to reduction on account of unreasonableness. However, counsel sought and received via a settlement $4,000 in EAJA fees. Counsel does not attribute or subtract from her present § 406(b) request any attorney hours represented by the EAJA settlement, and there is no way for the court to precisely know what hours should be considered subtracted from her present request.*fn2
Counsel seeks a total award order of § 406(b) fees of $17, 505. She calculates this figure by curiously adding back in the EAJA award to the amount withheld so that it can later be refunded to the client leaving counsel with the withheld $13,505 to be awarded. All parties agree that the EAJA sum awarded should ultimately be refunded to plaintiff as the law requires such.*fn3
However, plaintiff's counsel initial addition of the EAJA award and subsequent subtraction has the effect of washing out any refund. That is, plaintiff's counsel ultimately seeks the same maximum $13, 505 which would be available to her from withheld monies regardless of whether any EAJA fees had ever been awarded. This simply cannot be. To emphasize the point by repetition, had there been no EAJA award, counsel would be seeking the $13,505; however, she received a $4,000 EAJA award, and is still ultimately seeking the $13,505.
By common sense and simple arithmetic, the $4,000 should be deducted from the $13,505, assuming the court were to initially order the maximum possible § 406(b) recovery. Even if the entire § 406(b) withheld amount is not initially ordered, the $4,000 must be subtracted from any amount the court does find initially reasonable. The undersigned turns to that issue now.
Attorneys are entitled to fees for cases in which they successfully have represented social security claimants:
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, and the Commissioner of Social Security may, notwithstanding the provisions of section 405(i) of this title, certify the amount of such fee for payment to such attorney out of, and not in addition to, the amount of such past-due benefits.
Rather than being paid by the government, fees under the Social Security Act are awarded out of the claimant's disability benefits. Russell v. Sullivan, 930 F.2d 1443, 1446 (9th Cir. 1991). The Commissioner has standing to challenge the fee award. Craig v. Secretary, Dept. of Health & Human Serv., 864 F.2d 324, 328 (4th Cir. 1989). The goal is to provide adequate incentive for representing claimants while ensuring that the usually ...