Layne v. SSA
Filing
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MEMORANDUM OPINION & ORDER: GRANTING IN PART & DENYING IN PART pla's 22 MOTION for Attorney Fees; an atty fee award in the amt of $3,525.75 is APPROVED.. Signed by Judge Danny C. Reeves on 9/2/15.(KJR)cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION
(at Lexington)
EDITH MAE LAYNE,
Plaintiff,
V.
CAROLYN W. COLVIN,
Acting Commissioner of Social Security,
Defendant.
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Civil Action No. 5: 13-363-DCR
MEMORANDUM OPINION
AND ORDER
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This matter is pending for consideration of the plaintiff’s motion for attorney’s fees
under 42 U.S.C. § 406(b). [Record No. 22] Section 406(b) provides for the direct payment
of attorney’s fees from a claimant’s past due benefits, limiting the fees to twenty-five percent
of those benefits. For the reasons described below, the motion will be granted, in part, and
denied, in part.
I.
On October 25, 2013, Plaintiff Edith Layne sought review of the Social Security
Administration’s (“SSA”) denial of her application for a period of disability and disability
insurance benefits. [Record No. 1] On May 9, 2014, under 42 U.S.C. § 405(g), the Court
remanded the case for further administrative proceedings and development of the record.
[Record No. 14]
Thereafter, on April 3, 2015, the SSA sent notice to Layne that
Administrative Law Judge (“ALJ”) Bonnie Kittinger had reviewed the case and had issued a
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decision favorable to Layne. [Record No. 15-1] Lane’s counsel, Wolodymyr Cybriwsky,
now requests an award of attorney’s fees under 42 U.S.C. § 406(b)(1) for services provided
in connection with Lane’s initial appeal. [Record No. 26]
II.
Under 42 U.S.C. § 406(b)(1)(A), “[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.” For calculating attorney’s fees, 20 C.F.R. § 404.1703 provides that past due
benefits are the “total amount of benefits payable . . .” (emphasis added). In other words, the
Commissioner does not use the gross amount of past due benefits for the calculation of
attorney’s fees. Detson v. Schweiker, 788 F.2d 372, 375 (6th Cir. 1986). Instead, she uses
the net amount of past due benefits, which is found by applying certain deductions to the
gross amount. Id. (holding that past due benefits subject to withholding for attorney’s fees
must be reduced by Social Security Income); see also Cloyd v. Weinberger, 527 F.2d 1167,
1168 (6th Cir. 1975) (involving offset for worker’s compensation).
The Court has the authority to award related fees under the statute even where the
award of benefits was made by the Commissioner upon remand. See Horenstein v. Sec’y of
Health & Human Servs., 35 F.3d 261, 262 (6th Cir. 1994). In circumstances where the
amount of fees sought is within the twenty-five percent cap, the attorney must still
demonstrate that the fee requested is reasonable for the services rendered, and “[i]f the
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benefits are large in comparison to the amount of time spent by counsel of the case, a
downward adjustment [may be] in order.” Gisbrecht v. Barnhart, 535 U.S. 789, 798–808
(2002).
In determining reasonableness, the Court should consider: (i) the character of the
representation; (ii) the results achieved; (iii) whether the attorney was responsible for any
delay; (iv) the amount of time spent on the case; and (v) the attorney’s normal hourly billing
rate for non-contingent fee cases. Id. However, deductions in fee requests are permissible
under only two circumstances: “‘(1) those occasioned by improper conduct or ineffectiveness
of counsel; and (2) situations in which counsel would otherwise enjoy a windfall because of
either an inordinately large benefit award or from minimal effort expended.’” Hayes v. Sec’y
of Health & Human Servs., 923 F.2d 418, 420–21 (6th Cir. 1990) (quoting Rodriguez v.
Bowen, 865 F.2d 739, 746 (6th Cir. 1989)).
Under § 406(b), a fee award is not improper solely because it results in an elevated
hourly rate. Royzer v. Sec’y of Health & Human Servs., 900 F.2d 981, 981–82 (6th Cir.
1990). As the United States Court of Appeals for the Sixth Circuit has determined:
It is not at all unusual for contingent fees to translate into large hourly rates if
the rate is computed as the trial judge has computed it here [by dividing the
hours worked into the amount of the requested fee]. In assessing the
reasonableness of a contingent fee award, we cannot ignore the fact that the
attorney will not prevail every time. The hourly rate in the next contingent fee
case will be zero, unless benefits are awarded. Contingent fees generally
overcompensate in some cases and undercompensate in others. It is the nature
of the beast.
Id.
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Further, the Court notes that, “a hypothetical hourly rate that is less than twice the standard
rate is per se reasonable, and a hypothetical hourly rate that is equal to or greater than twice
the standard rate may well be reasonable.” Hayes, 923 F.2d at 422 (citing Rodriguez, 865
F.2d at 744). In assessing the standard rate, the Court looks to 28 U.S.C. § 2412(d)(2), which
permits attorney fee awards up to $125 per hour prior to any adjustments for cost of living or
special factors.
When the SSA fails to withhold attorney fees, instead releasing them with the past
due benefits to the plaintiff, the United States government has no liability for their payment.
Ruckelshaus v. Sierra Club, 463 U.S. 680, 685 (1983) (reasoning that § 406(b) cannot be
construed as a waiver of sovereign immunity). Rather, the attorney’s remedy is to contact
the plaintiff directly to arrange for payment of the fee. PROGRAM OPERATIONS MANUAL
SYSTEM GN 03920.055(D) (2014).1 Should that action fail, then the administration will
institute overpayment proceedings against the plaintiff. Watkins v. Astrue, No. 08-163-JBC,
2012 WL 4748826, at *3 (E.D. Ky. Oct. 4, 2012).
III.
A.
Fee Agreement
The fee agreement between Plaintiff Layne and Attorney Cybriwsky states that the
plaintiff agrees to pay a sum equal to “twenty-five (25) percent of past due benefits awarded
1
While POMS GM 03820.055(E) states that the SSA is authorized to pay the attorney the
maximum amount SSA should have made in direct payment from the past due benefits, the Court cannot
order such payment because administrative regulations cannot waive sovereign immunity. United States
v. Mitchell, 463 U.S. 206, 21516 (1983).
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to me and my family in the event the case is won. . . . No attorney fee will be charged if we
do not win this case.” [Record No. 16-2] Because the fee term in this agreement does not
exceed twenty-five percent of the total amount of past due benefits, it is proper under 42
U.S.C. § 406(a)(2)(A).2 Regardless of the existence of a fee agreement, the Court may only
award attorney’s fees in the amount of twenty-five percent of the past due benefits to which
the claimant is entitled. 42 U.S.C. § 406(b)(1)(A).
B.
Proper Attorney’s Fees Calculation
Cybriwsky claims that the plaintiff was awarded total past due benefits of $15,798.10.
[Record No. 22, p. 1] As a result, he requests attorney’s fees of $3,949.53, which constitute
twenty-five percent of that figure. [Id.] Cybriwsky appears to implicitly assert that the
attorney’s fee calculation should be based on the gross amount of past due benefits owed to
the plaintiff.3 In response, the Commissioner contends that attorney’s fees are calculated
from the amount payable to the plaintiff in the Notice of Award, which states that $14,103.00
in past due benefits were payable to the plaintiff and that $3,525.75 of this award constituted
attorney’s fees. [Record No. 26, p. 2; Record No. 24-1, p. 2]
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42 U.S.C. § 406(a)(2)(A)(ii)(II) also requires that the fee not exceed $4,000. Attorney Cybriwsky
requests less than $4,000, so that provision is not at issue in this case.
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Attorney Cybriwsky asserts that past due benefits amounted to $15,800.00, pointing to the
monthly benefit amounts on the Notice of Award. [Record No. 18-2, p. 9; Record No. 24-1, p. 1]
However, the Notice states that these monthly amounts are subject to deductions for Medicare, worker’s
compensation, and other benefits. [Record No. 24-1, p. 1] They are further reduced by the effects of
rounding to the nearest dollar. [Id.]
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The latter position is the correct one. Detson v. Schweiker, 788 F.2d 372, 375 (6th
Cir. 1986); Cloyd v. Weinberger, 527 F.2d 1167, 1168 (6th Cir. 1975). Even if Cybriwsky
and the plaintiff intended in their agreement to calculate attorney’s fees from the gross
amount of past due benefits, the Court cannot award fees in excess of the proscription in 42
U.S.C. § 406(b)(1). See, e.g., Pappas v. Bowen, 863 F.2d 227, 228 (2nd Cir. 1988). Thus,
Attorney Cybriwsky is entitled to no more than $3,525.75 in attorney’s fees.
C.
Reasonableness of the Award
The Court also considers whether an award of $3,525.75 is reasonable for the services
rendered. Here, Attorney Cybriwsky obtained a favorable decision for his client, spending
31.50 hours on her case. An award of $3,525.75 translates to an hourly fee of $112.02. This
Court has found higher awards to be reasonable. See Miller v. Colvin, Civil Action No. 2:
13-113-DCR (E.D. Ky. May 13, 2015) (resulting in hourly rate of $700.00 per hour under §
406(b)); Lockridge v. Astrue, Civil Action No. 04-499-JBC, 2009 WL 127668 (E.D. Ky. Jan.
16, 2009) (finding an hourly rate of $702.13 to be reasonable). Moreover, hourly rates less
than twice the standard hourly rate are per se reasonable. Hayes v. Sec’y of Health & Human
Servs., 923 F.2d 418, 422 (6th Cir. 1990). Further, the Commissioner has not offered any
reason for a deduction due to improper conduct or a windfall. Hayes, 923 F.2d at 420421.
Therefore, the Court concludes that attorney’s fees of $3,525.75 are reasonable compensation
for services rendered in this matter.
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D.
Social Security Administration’s Liability for the Award
The SSA released the portion of past due benefits withheld for attorney fees to the
plaintiff. [Record No. 26, p. 3] Because the United States government has not waived its
sovereign immunity, the agency is not liable to Cybriwsky for the fee award. Ruckelshaus v.
Sierra Club, 463 U.S. 680, 685 (1983). Under P.O.M.S. GN 03920.055(D), the attorney
should contact the plaintiff to collect his fee. If he is unsuccessful, he should pursue
administrative remedies. Watkins v. Astrue, No. 09-163-JBC, 2012 WL 4748826, at *3 (E.D.
Ky. Oct. 4, 2012).
IV.
Cybriwsky will be awarded $3,525.75 in fees under 42 U.S.C. § 406(b)(1)(A).
However, the Court cannot order a direct payment from the Social Security Administration.
As a result, Cybriwsky must attempt to collect these fees from the plaintiff. Accordingly, it
is hereby
ORDERED that Plaintiff Edith Mae Layne’s motion for fees and costs [Record No.
22] is GRANTED, in part, and DENIED, in part. An attorney fee award in the amount of
$3,525.75 is APPROVED herein.
This 2nd day of September, 2015.
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