WEST v. COLVIN
ORDER - ADOPTING REPORT AND RECOMMENDATIONS ; Plaintiff's objections 66 are OVERRULED. We adopt the recommendations set forth in the Magistrate Judge's Report and Recommendation and award to counsel for Mr. West the amount of $8,113.50 pursuant to 42 U.S.C. § 406(b), and direct Mr. West's counsel to refund the EAJA award of $7,500 to Mr. West. Signed by Judge Sarah Evans Barker on 6/20/2017.(CKM)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
JOSEPH M. WEST,
NANCY A. BERRYHILL,
ORDER AFFIRMING THE MAGISTRATE JUDGE’S REPORT AND
RECOMMENDATION ON PLAINTFF’S REQUEST FOR ATTORNEY’S FEES
UNDER 42 U.S.C. § 406(b)
This case is before the court on a motion by counsel for Plaintiff Joseph West for
approval of attorney’s fees pursuant to 42 U.S.C. § 406(b). On May 26, 2016, counsel’s
request was referred to Magistrate Judge Baker for issuance of a recommended decision.
On August 8, 2016, Magistrate Judge Baker issued a Report and Recommendation that
Mr. West’s counsel be awarded $8,113.50 in attorney’s fees under 42 U.S.C. § 406(b),
and that he refund the fees separately awarded under the Equal Access to Justice Act
(“EAJA”) to Mr. West. 2 We now address the objections by Mr. West’s counsel to the
Magistrate Judge’s Report and Recommendation.
Ms. Berryhill, who succeed Carolyn W. Colvin, is automatically substituted as
Defendant in this case. Fed. R. Civ. Pro. 25(d).
Magistrate Judge Baker issued an order to this effect on August 5, 2016 [Docket No.
64], but the entry was amended on August 8, 2016, to reflect that the initial award of fees
Factual and Procedural Background 3
Mr. West initially brought this action to contest the denial of Social Security and
disability insurance benefits by Defendant, the Commissioner of Social Security. Mr. West,
by counsel, appealed his Social Security case to this court and, on July 29, 2014, Magistrate
Judge Baker issued a Report and Recommendation that the case be reversed and remanded
to the Administrative Law Judge for further proceedings; we adopted that Report and
Recommendation. Docket Nos. 38 and 39. On remand, the ALJ found in favor of Mr. West
and awarded him $62, 454.50 in past-due benefits for the relevant period. 4 Docket No. 53
at p. 1. Mr. West’s counsel was awarded $6,000 under 42 U.S.C. § 406(a) for his
representation of Mr. West before the Social Security Administration. Docket No. 60 at 1.
On November 13, 2014, counsel for Mr. West moved for fees under the EAJA, and,
after the Commissioner stipulated to the award of $7,500, this court granted the request on
January 22, 2015. Docket Nos. 42, 49, 50. On May 26, 2016, Mr. West’s counsel moved
for attorney’s fees under 42 U.S.C. § 406(b). The Magistrate Judge’s Report and
Recommendation and Plaintiff’s counsel’s objection to the findings in that report followed.
The Commissioner has not responded.
was properly considered a Report and Recommendation because the parties had not
consented to the Magistrate Judge in this case. See Docket No. 65.
The facts articulated herein are adopted from the Magistrate Judge’s Report and
Recommendation [Docket No. 64], which have not been disputed or objected to by the
As discussed more fully below, under 42 U.S.C. § 406 , there is a cap on an attorney’s
fee award of twenty-five percent of a Social Security claimant’s past-due benefits.
Twenty-five percent of Mr. West’s award is $15, 613.50.
Applicable Law and Standard of Review
When a party raises specific objections to elements of a magistrate judge’s report
and recommendation, the district court reviews those elements de novo, determining for
itself whether the Commissioner’s decision as to those issues is supported by substantial
evidence or was the result of an error of law. Fed. R. Civ. Pro. 72(b). The district court
“makes the ultimate decision to adopt, reject, or modify” the report and recommendation,
and it need not accept any portion as binding; the court may, however, defer to those
conclusions of the report and recommendation to which timely objections have not been
raised by a party. See Schur v. L.A. Weight Loss Ctrs., Inc., 577 F.3d 752, 759–761 (7th
An attorney may be awarded fees for representing a prevailing social security
claimant, both before the agency and in federal court, and such fees are governed by 42
U.S.C. § 406. See Gisbrecht v. Barnhart, 535 U.S. 789, 793, 795-96 (2002). Section
406(a) controls fees for representation in administrative proceedings, and fees under
section 406(b) are tied to representation in federal court. Id. Relevant here, under section
406(b)(2), the combination of those fees may not exceed twenty-five percent of a
claimant’s award of benefits. See id. Fees awarded under section 406 are charged against
the claimant, not the government, and the fee is payable “out of, and not in addition to,
the amount of past-due benefits.” Id.
The EAJA permits a “prevailing party” to receive attorney’s fees for work
performed in a judicial proceeding challenging an administrative denial of social security
benefits, “unless the court finds that the position of the United States was substantially
justified or that special circumstances make an award unjust” (circumstances not
presented here). 28 U.S.C. § 2412(d)(1)(A). Congress has provided authority allowing
counsel to be awarded fees under both section 406 and the EAJA for the same work in
successful representation of a social security claimant. See Gisbrecht, 534 U.S. 796
(explaining that “an EAJA award offsets an award under Section 406(b)”); see also
Kopulos v. Barnhart, 318 F.Supp.2d 657, 660 (N.D. Ill. 2004) (conducting a statutory
analysis and a thorough discussion on the awarding of attorneys’ fees under the Social
Security Act and under the EAJA, including its amendments). If a court awards attorney
fees under both provisions, however, the smaller fee must be refunded to the attorney’s
client, the claimant. Matthews-Sheets v. Astrue, 653 F.3d 560, 562 (7th Cir. 2011).
As the Magistrate Judge noted here, there is a split among the judicial circuits on
the issue of whether the twenty-five percent cap applies to the combination of fees under
section 406(a) and (b) or whether fees under each subsection may not exceed that
amount. Docket No. 64 at 3. Further, Mr. West’s counsel asserts that the Seventh Circuit
has not issued controlling precedent on the issue. However, district courts within the
Seventh Circuit have consistently held that fees under sections 406(a) and (b) combined
may not exceed twenty-five percent of a party’s past-due Social Security and disability
benefits. The Social Security Act requires courts to ensure that an award of fees is
reasonable under the circumstances. Gisbrecht, 535 U.S. at 807.
In his Report and Recommendation, Magistrate Judge Baker granted the request
by counsel for Mr. West for $8,113.50 in attorney’s fees under 42 U.S.C. § 406(b) and
ordered that counsel refund the $7,500 EAJA award to Mr. West. Docket No. 64 at 3-4.
The Magistrate Judge rejected the argument by Mr. West’s counsel that the twenty-five
percent statutory cap applied to sections 406(a) and (b) individually as opposed to
cumulatively, and explained that courts in our judicial circuits consistently hold that the
combination of fees under section 406 cannot exceed twenty-five percent of the past-due
award. Id. at 2-3.
The Magistrate Judge then addressed the parties’ arguments concerning the
interplay between counsel’s section 406 fees and the EAJA award. Noting that counsel
for Mr. West agreed to give the $7,500 EAJA fee to Mr. West if counsel were awarded
$8,133.50 in section 406(b) fees, the Magistrate Judge rejected the Commissioner’s
assertion that the $7,500 EAJA award should offset the $8,113.50 section 406(b) fee
award because the amount the government pays to an attorney under sections 406(a) and
(b) and the EAJA cannot exceed twenty-five percent. Id. at 3. Although the Magistrate
Judge “recognizes the Commissioner’s logic” that the Commissioner serves in a trustee
like role for West’s past-due benefits and that the best way to ensure payment of the
EAJA fees to Mr. West is to deduct them from the section 406(b) fee award, the
Magistrate Judge concluded that it is proper to order counsel to refund the EAJA fee (the
lesser amount) to Mr. West. Id. at 3 (citing Gisbrecht, 535 U.S. at 796; Vickery v. Colvin,
2016 WL 1394255 at *1 (S.D. Ill. April 8, 2016); Wyatt v. Colvin, 2014 WL 50194 (S.D.
Ind., Jan. 6, 2014)). Accordingly, the Magistrate Judge awarded counsel for Mr. West
$8,113.50 in section 406(b) fees because this was consistent with the twenty-five percent
statutory cap, and he declined to factor the EAJA fee award into the 406(b) award,
instead ordering counsel to refund the $7,500 EAJA award to Mr. West. Docket No. 64 at
Mr. West’s counsel objects to the Magistrate Judge’s recommendation. Docket
No. 66 at 2 (“West objects to the Amended Entry of the Honorable Magistrate Tim A.
Baker”). Counsel agrees that it is appropriate to give his client the $7,500 EAJA award,
which counsel has placed in his trust account, but argues that counsel should then receive
$15,613.50 in section 406(b) fees. Counsel’s arguments, however, appear to be based on
a misunderstanding of the applicable law as well as the Report and Recommendation. Id.
at 2—4. Specifically, counsel appears to interpret the Magistrate Judge’s
recommendation to award him $613.50 ($8,113.50 minus the $7,500 EAJA award).
Docket No. 66. But the Magistrate Judge explicitly declined to include the EAJA fees
received by counsel into the section 406(b) award. Docket No. 64 at 3.
That counsel may not, in fact, totally object to the Report and Recommendation is
disclosed at several points in his “opposition”, including his agreement that an award of
$8,113.50 under section 406(b) (the Magistrate Judge’s recommendation) is appropriate.
Id. at 1, 3. Counsel does object, however, to the Magistrate Judge’s Report and
Recommendation, in arguing that the twenty-five percent statutory cap does not apply to
the combination of fees received under section 406(a) and (b) together—claiming instead
arguing that the cap applies only to 406(b) fees. For this, he relies on Clark v. Astrue, 529
F.3d 1211 (9th Cir. 2008), which holds that the twenty-five percent cap does not apply to
406(a) fees. We are not persuaded by counsel’s arguments. To begin with, the Clark case
is non-precedential authority in the case before us. As the Magistrate Judge correctly
found, courts within the Seventh Circuit consistently have held that the statutory cap on
past-due benefits applies to 406(a) and (b) fees combined, and it is impermissible to
demand or collect from a social security claimant more than the statutorily authorized
allocation of past-due benefits. See 42 U.S.C. §§ 406(a)(5), (b)(2); see also Kopulos, 318
F.Supp. 2d at 659.
Accordingly, we affirm the Magistrate Judge’s Report and Recommendation that
counsel for Mr. West is entitled to an award of $8,113.50 in attorney fees under section
406(b), and that counsel must refund the lesser EAJA fee—the $7500 held in his trust
account—to Mr. West. The Magistrate Judge properly determined, consistent with
decisions by other district courts within the Seventh Circuit, that an award of $8,113.50
comports with the statutory cap and that the EAJA award should not offset the section
406(b) award. See, e.g., Caldwell v. Berryhill, 2017 WL 2181142 (S.D. Ind., May 18,
Plaintiff’s objections are OVERRULED. We adopt the recommendations set forth
in the Magistrate Judge’s Report and Recommendation and award to counsel for Mr.
West the amount of $8,113.50 pursuant to 42 U.S.C. § 406(b), and direct Mr. West’s
counsel to refund the EAJA award of $7,500 to Mr. West.
IT IS SO ORDERED.
SARAH EVANS BARKER, JUDGE
United States District Court
Southern District of Indiana
C. David Little
Kathryn E. Olivier
UNITED STATES ATTORNEY’S OFFICE
Gina M. Shields
UNITED STATES ATTORNEY’S OFFICE
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