Bennie Lay, Jr. v. Comm of Social Security
Filing
OPINION filed: AFFIRMED, decision not for publication. Eugene E. Siler, Jr., Circuit Judge; Deborah L. Cook (authoring), Circuit Judge and Raymond M. Kethledge, Circuit Judge.
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NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 16a0008n.06
FILED
Case No. 15-5664
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
BENNIE R. LAY, JR.,
Plaintiff-Appellant,
v.
COMMISSIONER OF SOCIAL SECURITY,
Defendant-Appellee.
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Jan 06, 2016
DEBORAH S. HUNT, Clerk
ON APPEAL FROM THE UNITED
STATES DISTRICT COURT FOR
THE EASTERN DISTRICT OF
KENTUCKY
BEFORE: SILER, COOK, and KETHLEDGE, Circuit Judges.
COOK, Circuit Judge.
This appeal considers whether the district court abused its
discretion in granting the Commissioner of Social Security’s motion for relief from judgment
reducing the attorney’s-fee award to Wolodymyr Cybriwsky for his work on behalf of Bennie R.
Lay, Jr. Cybriwsky’s representation of Lay resulted in the Social Security Administration (SSA)
finding Lay disabled from June 28, 2000, to January 3, 2012. Realizing that the original amount
of past-due benefits used to calculate Cybriwsky’s attorney’s fees included benefits from a
previous period of disability in which Lay had counsel other than Cybriwsky, the Commissioner
moved under Federal Rule of Civil Procedure 60(b)(1) to reduce the attorney’s fees award. The
district court granted that motion, and Cybriwsky filed a motion to reconsider under Federal Rule
of Civil Procedure 59(e), which the district court denied. Cybriwsky appeals both decisions, and
we AFFIRM.
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Case No. 15-5664, Lay v. Commissioner
I.
This case involves two separate findings of disability in Lay’s favor. The first followed
various administrative proceedings and covered a closed period from July 1, 1997, to June 27,
2000 (Disability Decision 1). Disability Decision 1 resulted in SSA’s paying Lay $21,220 and
his then attorney, Walter Olin, $4,000—for a total payout of $25,220.
Lay’s second favorable disability finding followed protracted administrative review. As
relevant here, that decision came on the heels of a remand to SSA after Lay filed a complaint in
the district court. Upon remand, an Administrative Law Judge (ALJ) considered whether Lay’s
disability continued after June 27, 2000, and found that it did, giving him a second finding of
disability covering June 28, 2000, to January 3, 2012 (Disability Decision 2). The district court
entered judgment in favor of Lay upon the Commissioner’s request following Disability
Decision 2.
The parties initially agreed that Lay’s past-due benefits under Disability Decision 2
totaled $160,326.30. Cybriwsky moved for attorney’s fees under 42 U.S.C. § 406(b)(1)(A), and
the district court awarded him the statutory maximum of 25%—$40,081.57. Later, the district
court awarded Cybriwsky another $13,986.25 in attorney’s fees for the benefits he procured for
Lay’s children stemming from Disability Decision 2.
To date, SSA has paid Cybriwsky
$49,627.25 in attorney’s fees to satisfy these awards
Later, SSA realized that it included benefits for periods not covered by Disability
Decision 2 when it calculated Lay’s past-due benefits owed under that decision.
The
Commissioner moved under Rule 60(b)(1) for relief from the judgment awarding Cybriwsky
attorney’s fees for his representation resulting in Disability Decision 2, explaining that SSA
erroneously included benefits already paid to Lay under Disability Decision 1 and that the court
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should recalculate attorney’s fees using the corrected past-due benefit amount. Accepting the
Commissioner’s explanation of the SSA’s error, the district court granted the motion, reasoning
that allowing the current fee award to stand would give Cybriwsky both a windfall from Lay’s
double recovery and pay him fees for work he had not performed. Using the corrected past-due
benefit calculation to determine attorney’s fees, the district court ordered that “no further sums
are due” because SSA had already paid Cybriwsky $49,627.25—more than the corrected
$45,627.25 it owed him.
Cybriwsky moved for reconsideration under Rule 59(e) arguing that the original past-due
benefit calculation properly included the past-due benefits awarded pursuant to Disability
Decision 1. The district court denied that motion relying on the same grounds it used to alter the
judgment and also found that the ALJ left Disability Decision 1 undisturbed in making Disability
Decision 2. Cybriwsky appeals the orders granting the Commissioner’s motion to modify and
denying his motion to reconsider.
II.
A. Subject-Matter Jurisdiction
Cybriwsky argues that the district court lacked subject-matter jurisdiction to modify its
attorney’s-fee award stemming from Disability Decision 2 because modifying that award
recalculated Lay’s past-due benefits without SSA’s exhausting the administrative process.
He relies on Pohlmeyer v. Secretary of Health & Human Services, 939 F.2d 318 (6th Cir. 1991),
to show that a district court lacks jurisdiction to order the Secretary of Health and Human
Services to adjust a benefit award when a claimant fails to exhaust administrative remedies. We
review questions of subject-matter jurisdiction de novo. Gaye v. Lynch, 788 F.3d 519, 525
(6th Cir. 2015).
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As the Commissioner correctly observes, in granting the motion to modify, the district
court merely corrected an error in the amount of past-due benefits used to calculate Cybriwsky’s
attorney’s-fee award. The district court made no change to the past-due benefits awarded Lay.
Moreover, Social Security regulations make clear that “[d]etermining the fee that may be
charged or received” by an attorney is not an initial determination subject to exhaustion
requirements. See 20 C.F.R. § 404.903(f). Because the district court altered only its order
regarding attorney’s fees—it ordered no recalculation of Lay’s past-due benefits—it had subjectmatter jurisdiction, and we thus consider the merits of this appeal.
B. The Order Reducing Attorney’s Fees
We review orders granting relief under Rule 60(b) for abuse of discretion, Ford Motor
Co. v. Mustangs Unlimited, Inc., 487 F.3d 465, 468 (6th Cir. 2007) (citation omitted), and
reverse only if we have a “definite and firm conviction that the trial court committed a clear error
of judgment,” id. (quoting Blue Diamond Coal Co. v. Trs. of UMWA Combined Benefit Fund,
249 F.3d 519, 524 (6th Cir. 2001)). We also review denials under Rule 59(e) for abuse of
discretion.
Betts v. Costco Wholesale Corp., 558 F.3d 461, 467 (6th Cir. 2009) (citation
omitted).
In support of reversal Cybriwsky argues that he is, in fact, entitled to fees from the period
covered by Disability Decision 1 because when the district court remanded the case for further
administrative review, that order reopened Disability Decision 1 thereby entitling him to fees
upon the favorable finding. He cites the ALJ’s decision stating “[Lay] has been disabled . . .
since July 1, 1997” to support his contention that Disability Decision 2 included the period
covered by Disability Decision 1.
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Case No. 15-5664, Lay v. Commissioner
But review of the ALJ’s decision issued after remand demonstrates that that decision
covers only the period after Disability Decision 1. First, the decision frames the issue presented
as “whether [Lay’s] disability ended . . . or continued,” and found that “[Lay] continues to be
disabled through the date of this decision.” This framing suggests that the ALJ considered only
whether Lay’s disability continued, not whether Disability Decision 1 correctly found him
disabled. Second, the ALJ found that “[t]he medical evidence supports a finding that, since June
28, 2000,” the severity of Lay’s disability has not decreased. The analysis following that
conclusion considers medical evidence from after, but not before, June 28, 2000, confirming that
the ALJ limited her review to the period after Disability Decision 1. Finally, nothing in the
ALJ’s decision states that it reopened Disability Decision 1, despite Social Security regulations
requiring specific conditions in order to reopen a previous determination after four or more
years. See 20 C.F.R. § 404.988(c).
Cybriwsky fails to persuade us toward a definite and firm conviction that the district
court abused its discretion by determining that Disability Decision 2 excluded the period of
disability covered by Disability Decision 1. And because 42 U.S.C. § 406(b)(1)(A) entitles
Cybriwsky to fees for past-due benefits awarded by reason of a judgment in which he
represented Lay, no abuse of discretion prompted the reduction in Cybriwsky’s fee to exclude
past-due benefits from a previous decision in which Lay had counsel other than Cybriwsky.
C. The Fee Calculation
We briefly consider the reduced fee to which the district court found Cybriwsky entitled.
Cybriwsky can collect up to 25% of past-due benefits awarded for claims in which he
represented Lay. See 42 U.S.C. § 406(b)(1)(A). The district court accepted SSA’s corrected
past-due benefit calculation owed by reason of Disability Decision 2 as $126,564—of which
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Case No. 15-5664, Lay v. Commissioner
25% is $31,641. An affidavit submitted by SSA supports this amount, as does Cybriwsky’s
calculation. The parties agree that past-due benefits awarded to Lay’s children entitle Cybriwsky
to $13,986.25.
By using $126,564 as the past-due benefit award, the district court found
$45,627.25 ($31,641 + $13,986.25) as the correct amount of attorney’s fees, less than the
$49,627.25, that SSA has already paid Cybriwsky. The district court thus ordered that SSA need
pay no more.
In its order granting SSA’s motion to modify, however, the district court reduced
Cybriwsky’s attorney’s-fee award by the amount previously paid Lay pursuant to Disability
Decision 1—$25,220. Subtracting $25,220 from $160,326.30, however, leaves $135,106.30 or
$8,542.30 more than the $126,564 past-due benefit amount that the district court used to
recalculate Cybriwsky’s attorney’s fees.1
This discrepancy matters not because even if
$135,106.30 amounts to the correct total from which to calculate attorney’s fees, SSA has still
paid Cybriwsky more than it owes him.
Using $135,106.30 as the past-due benefits for
Disability Decision 2 yields a fee of $47,762.83,2 less than the $49,627.25 that SSA has already
paid Cybriwsky—thus SSA owes Cybriwsky no outstanding attorney’s fees.
III.
Determining that the district court committed no abuse of discretion, we AFFIRM.
1
It appears this extra $8,542.30 derives largely from including eight extra months after
the benefits period in the past-due-benefit calculation for Disability Decision 2.
2
25% of $135,106.30 is $33,776.58; $33,776.58 plus $13,986.25 yields $47,762.83.
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