Encinas v. Astrue

Filing 24

ORDER granting 21 Motion for Attorney Fees. Signed by Judge David G Campbell on 10/20/2015.(DGC, nvo)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Jesus Encinas, Jr.

No. CV11-1063 PHX DGC
Plaintiff,

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v.

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ORDER

Carolyn W. Colvin, Commissioner of the
Social Security Administration,

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Defendant.

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Plaintiff’s counsel, Mr. Slepian, has filed a motion for an award of attorney fees

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under 42 U.S.C. § 406(b). Doc. 21. The Commissioner does not oppose the motion.

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Doc. 23. The Court will grant the motion and award $5,000.00 in fees.

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I.

Background.

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On April 30, 2012, the Court granted judgment in Plaintiff=s favor and remanded

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the case for an award of benefits. Doc. 19. On remand, Plaintiff received $56,969.40 in

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past-due benefits. Doc. 21 at 2. Mr. Slepian has now filed a motion for attorneys’ fees

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under 42 U.S.C. § 406(b), requesting $5,000 for 34.7 hours of work performed. Doc. 21-

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1 at 7.

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The fee agreement between Plaintiff and Mr. Slepian provides that Mr. Slepian

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shall receive 25 percent of the past-due benefits award. Doc. 21-1 at 3. Under § 406(b),

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Mr. Slepian typically would be entitled to this contingent fee if found reasonable by the

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Court, and it would come from Plaintiff’s recovery. A 25% fee in this case would equal

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$14,242.50. Mr. Slepian would also normally have been entitled to seek fees under the

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Equal Access to Justice Act (“EAJA”), and estimates that his recovery under the statute

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would have been approximately $6,650 for the 34.7 hours he devoted to this case. This

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amount would have been paid by Defendant, not taken from Plaintiff’s recovery.

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28 U.S.C. § 2412(d)(1)(A). To prevent Mr. Slepian from receiving a double recovery

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from these two sources – § 406(b) and the EAJA – Congress requires that Mr. Slepian

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refund to Plaintiff the lower amount of these two fees. Gisbrecht v. Barnhart, 535 U.S.

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789, 796 (2002). Thus, assuming Mr. Slepian had received the 25% contingency fee of

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$14,242.50 and an EAJA fee of $6,650, he would have refunded to Plaintiff the $6,650

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EAJA fee and kept the $14,242.50 contingency fee.

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Unfortunately, Mr. Slepian failed to seek fees under the EAJA. Doc. 21 at 2. His

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only remaining source of recovery, therefore, is § 406(b). Rather than seeking the full

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25% contingency fee when he cannot offset it with the EAJA fees he could have obtained

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from the government, Mr. Slepian asks the Court to award him $5,000 in § 406(b) fees.

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This money would come from Plaintiff’s past-due benefits of $56,969.40, but would be

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considerably less than the $14,242.50 Mr. Slepian would have received under the

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contingency fee agreement and § 406(b) in normal circumstances, and less than the net

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amount Plaintiff would pay if Mr. Slepian had received the $14,242.50 contingency fee

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from Plaintiff and remitted to Plaintiff the $6,650 in EAJA fees as required by law. In

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such a scenario, Plaintiff would be out $7,592.35 (the difference between $14,242.50 and

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$6,650), whereas, under Mr. Slepain’s proposal, Plaintiff will be out only $5,000. In

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effect, Mr. Slepian is proposing that he receive considerably less than the $14,242.50 his

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fee agreement calls for, and that Plaintiff incur an expense of $5,000 which is less than he

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would have incurred had Mr. Slepian filed a timely EAJA application. In short, Mr.

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Slepian is proposing that he, not Plaintiff, bear the consequences of his error.

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II.

Legal Standard

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Section 406 establishes Athe exclusive regime for obtaining fees for successful

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representation of Social Security benefits claimants.@ Gisbrecht, 535 U.S. at 795-96.

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Section 406(b) provides that

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[w]henever 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 of the past-due benefits to which the
claimant is entitled by reason of such judgment[.]

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42 U.S.C. ' 406(b)(1)(A).

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In Gisbrecht, the Supreme Court discussed the meaning of the term Areasonable

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fee@ in § 406(b). The Court concluded that A§ 406(b) does not displace contingent-fee

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agreements as the primary means by which fees are set for successfully representing

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Social Security benefits claimants in court.” 535 U.S. at 807. “Rather, § 406(b) calls for

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court review of such arrangements as an independent check, to assure that they yield

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reasonable results in particular cases.@ Id. The Court noted that ACongress has provided

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one boundary line: Agreements are unenforceable to the extent that they provide for fees

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exceeding 25 percent of the past-due benefits.@ Id. Gisbrecht also recognized, as noted

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above, that a claimant’s attorney who has received fees under the EAJA and § 406(b)

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must refund to the claimant the smaller fee award. Id. at 796; see Yarnevic v. Apfel, 359

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F. Supp. 2d 1363, 1366 (N.D. Ga. 2005).

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III.

Analysis.

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Mr. Slepian’s fee calculation makes a few assumptions. The first is that the Court

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would find that 25% is a reasonable § 406(b) fee. If Mr. Slepian were to receive the full

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25% of past-due benefits as provided in his fee agreement with Plaintiff, he would

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receive a fee equivalent to $410 per hour ($14,242 divided by 34.7 hours). The Court

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concludes that this is a reasonable rate given the inherent risk of contingent fee

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agreements. See Grunseich v. Barnhart, 439 F. Supp. 2d 1032, 1035 (C.D. Cal. 2006)

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(awarding hourly rate of $600); Yarnevic, 359 F. Supp. 2d at 1365-67 (awarding hourly

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rate of $643); Claypool v. Barnhart, 294 F. Supp. 2d 829, 833-34 (S.D. W. Va. 2003)

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(awarding fee equivalent to $1,433 hourly rate); Brown v. Barnhart, 270 F. Supp. 2d 769,

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772-73 (W.D. Va. 2003) (awarding fee equivalent to $977 hourly rate). Under normal

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circumstances, the Court would award Mr. Slepian $14,242.35 for his representation of

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Plaintiff before the Court. Therefore, the Court accepts Mr. Slepian’s assumption that he

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would have been awarded 25% under the fee agreement.

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Mr. Slepian’s second assumption is an above-normal EAJA fee award of

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$9,242.35 that would offset the $14,242.35 contingent fee. This high assumed recovery

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works to the benefit of Plaintiff, who would receive a refund of the EAJA fees and would

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incur a net outlay of $5,000. It also means that Mr. Slepian will receive only $5,000,

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which equates to an hourly rate of $144/hour. Without much analysis, the Court can

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conclude that this is a reasonable fee. See § 406(b) (setting 25% of the award as a

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maximum contingent fee). Mr. Slepian achieved a good result for his client, and should

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receive some compensation for his work.

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EAJA awards are not automatic, and operate to the benefit of the claimant by

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offsetting some of the fees due the attorney under the contingent fee agreement. Id. Mr.

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Slepian failed to request EAJA fees, but his proposed § 406(b) fee and assumptions

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operate to make up for that failure to the benefit of his client. Mr. Slepian has failed to

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cite any case where the attorney failed to request EAJA fees and was allowed to assume

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an EAJA award in order to request the remaining § 406(b) fees. The Court has also failed

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to find any such case. Because Mr. Slepian’s proposal does not penalize Plaintiff,

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however, and in fact results in a more favorable result for Plaintiff than if Mr. Slepian had

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sought an EAJA award, the Court grants his request to award $5,000 in attorney’s fees

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under § 406(b).

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IT IS ORDERED that the motion for award of attorney fees (Doc. 21) is granted

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pursuant to 42 U.S.C. ' 406(b). Mr. Slepian is awarded $5,000 in attorney fees, to be

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paid out of the sums withheld by Defendant from Plaintiff=s past-due benefits.

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Dated this 20th day of October, 2015.

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