Flowers v. Social Security Administration
MEMORANDUM AND ORDER - The motion for attorney fees pursuant to 42 U.S.C. § 406(b) (filing 43 ) is granted as follows: Flowers' attorney is entitled to an attorney fee of $23,237.00 from Flowers' past-due benefits. Flowers' attorney may collect $23,237.00 from the funds Flowers deposited in his trust account to pay the attorney fee. However, Flowers' counsel shall immediately refund to Flowers $6,113.25, which is the full amount of attorney's fees p reviously awarded under the EAJA, and any additional funds from the trust account belonging to Flowers. Flowers and Flowers' attorney shall provide Defendant with documentation showing that the attorney's fee has been paid. In all other respects, the motion is denied. Judgment shall be entered by separate document. Ordered by Judge Richard G. Kopf. (TEL)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
KATHY M. FLOWERS,
On January 19, 2005, this court reversed and remanded this matter to the
Commissioner pursuant to sentence four of 42 U.S.C. § 405(g). (Filings 24 and 25.)
Now, following the entry of a favorable decision by the administrative law judge on
remand, and the computation of past-due benefits, plaintiff’s attorney has filed a
motion for an award of attorney fees under 42 U.S.C. § 406(b),1 in the amount of
$29,237.00. (Filing 43.) The Commissioner argues the requested fee is unreasonable.
Upon careful consideration of the record, the court will award plaintiff’s attorney a
fee of $23,237.00 under § 406(b), to be paid out of past-due benefits, and will direct
Section 406(b) provides in part:
(1)(A) 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, but subject
to subsection (d) of this section, 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. In case of any such judgment, no other fee may
be payable or certified for payment for such representation except as
provided in this paragraph.
him to refund to plaintiff the sum of $6,113.25 that was previously awarded under the
Equal Access to Justice Act, 28 U.S.C. § 2412 (“EAJA”).
Plaintiff Kathy M. Flowers (“Flowers”) applied for disability insurance benefits
and supplemental security income benefits on October 18, 1999, claiming that she
had become disabled on January 26, 1999, due to a back injury, depression, panic
attacks, migraine headaches and a rapid heart beat. An administrative law judge
(“ALJ”) denied Flowers’ claim on August 29, 2001, and Flowers appealed. On July
9, 2002, the Appeals Council of the Social Security Administration remanded the case
to the ALJ to resolve several issues. On remand, the ALJ denied Flowers’ claim
again, relying heavily on the fact that Flowers had worked as a truck driver in 2002.
On January 14, 2004, Flowers executed a fee agreement with an attorney to
appeal her claims to the United States District Court for the District of Nebraska.
(Filing 45 at CM/ECF pp 3-5.) As part of the agreement, Flowers understood that if
the court reversed the ALJ’s decision and ordered the Social Security Administration
(“SSA”) to pay her past-due benefits, her attorney could ask the court to award an
attorney fee equal to 25 percent of her past-due benefits. (Id. at CM/ECF pp. 3-4.)
On July 19, 2005, this court reversed the ALJ’s decision and remanded
the case to the Commissioner to reconsider whether Flowers was entitled to a “trial
work period” for her work as a truck driver. (Filing 24 at CM/ECF p. 13.) On May
23, 2005, Flowers filed a motion for attorney’s fees under the Equal Access to Justice
Act, 28 U.S.C. § 2412 (“EAJA”). (Filing 35.) The court granted this motion, in part,
on August, 25, 2005, and awarded attorney fees of $6,113.25. (Filing 42 at CM/ECF
pp. 2-5.) This amount represented $5,337.50 for 35 hours of work by plaintiff’s
attorney, at an average hourly rate of $152.50,2 and $775.75 for work performed by
paralegals, law clerks and an assistant. (Id.)
Following a hearing on remand, the ALJ issued a favorable decision,
concluding that Flowers was disabled from January 26, 1999, through July 31, 2006,
and from June 1, 2008, through the date of the ALJ’s decision. (Filing 45-2 at
CM/ECF p. 26.) On May 23, 2011, Flowers filed a motion for attorney fees in this
court along with brief and an index of evidence in support. (Filings 43, 44 and 45.)
As part of the index, Flowers has filed a notice of award that states in part, “Your
past-due Social Security benefits are $115,761.40 for July 1999 through February
2011. We usually withhold 25 percent of past due benefits to pay a lawyer’s fee. We
withheld $6,000.00 from the past-due benefits to pay your lawyer. We are deducting
this amount from the $116,948.00 in benefits due for July 1999 through March 2011.”
(Filing 45-3 at CM/ECF p. 1.) Flowers’ attorney requests an attorney’s fee award
under 42 U.S.C. § 406(b), in the amount of $23,237.00. (Filings 43 and 48.) The
Commissioner has responded, arguing that a fee of this size is unreasonable and
results in a windfall for Flowers’ attorney. (Filing 47.)
Section 406(b) of the Social Security Act “controls fees for representation [of
Social Security claimants] in court.” Gisbrecht v. Barnhart, 535 U.S. 789, 794 (2002)
(citing 20 C.F.R. § 404.1728(a)). Under § 406(b), “a court may allow ‘a reasonable
fee . . . not in excess of 25 percent of the . . . past-due benefits’ awarded to the
claimant.” Id. at 795 (quoting 42 U.S.C. § 406(b)(1)(A)). Section 406(b) expressly
requires any attorney’s fees awarded under that section to be payable “out of, and not
in addition to, the amount of [the] past due benefits.” 42 U.S.C. § 406(b)(1)(A). In
This average hourly rate equaled the statutory maximum of $125.00, adjusted
on a monthly basis to account for inflation since March 1996.
Gisbrecht, the Supreme Court concluded § 406(b) “does not displace contingent-fee
agreements as the primary means by which fees are set for successfully representing
Social Security benefits claimants in court.” Id. at 807. Section 406(b), however,
requires the court to assess the reasonableness of attorneys’ fees requested under
contingent-fee agreements. Id. at 809. The Supreme Court explained:
Congress has provided one boundary line: Agreements are
unenforceable to the extent that they provide for fees exceeding 25
percent of the past-due benefits. Within the 25 percent boundary, . . . the
attorney for the successful claimant must show that the fee sought is
reasonable for the services rendered. Courts that approach fee
determinations by looking first to the contingent-fee agreement, then
testing it for reasonableness, have appropriately reduced the attorney’s
recovery based on the character of the representation and the results the
representative achieved. If the attorney is responsible for delay, for
example, a reduction is in order so that the attorney will not profit from
the accumulation of benefits during the pendency of the case in court.
If the benefits are large in comparison to the amount of time counsel
spent on the case, a downward adjustment is similarly in order.
Id. at 807-08 (citations and footnote omitted). In assessing the reasonableness of a 25
percent contingent fee under § 406(b), it is appropriate to consider the de facto hourly
rate. See id. at 808 (noting that “the court may require the claimant’s attorney to
submit, . . . as an aid to the court’s assessment of the reasonableness of the fee yielded
by the fee agreement, a record of the hours spent representing the claimant and a
statement of the lawyer’s normal hourly billing charge”).
Here, Flowers’ attorney asks that the court to authorize attorney’s fees of
$23,237.00, pursuant to the contingent-fee agreement. (Filing 43.) In calculating the
requested fee, Flowers’ attorney starts with $29,237.00, an amount equal to 25
percent of Flowers’ $116,948.00 past-due benefits award.3 (Filing 45-3 at CM/ECF
p. 6.) Flowers’ attorney then reduces $29,237.00 by $6,000, the amount the
Commissioner withheld to pay him for his services at the administrative level under
42 U.S.C. § 406(a).4 (Filing 45-3 at CM/ECF p. 6.)
To generate a non-contingent fee of $23,237.00 for 35 hours of work, Flowers’
attorney would need to charge $663.91 per hour. However, when an attorney
proceeds on a contingency basis, an attorney fee that might otherwise appear
unreasonable is perfectly appropriate. See, e.g., Bear v. Astrue, 544 F. Supp. 2d 881,
883 (D. Neb. 2008) (awarding $10,288.50 under section 406(b) for 29.4 hours of
work); Watterson v. Astrue, No. 3:06-cv369-J-HTS, 2008 WL 783634 (M.D. Fla.
Mar. 21, 2008) (awarding $28,767.10 under section 406(b) for 26.4 hours of work).
Considering the factors discussed in Giesbrecht, the court concludes that
Flowers’ attorney has requested a reasonable fee under 42 U.S.C. § 406(b). He did
not request more than the statutory limit of 25 percent of total past-due benefits. In
addition, he has substantial experience litigating Social Security cases in this court
and provides competent and good quality work for his clients. In this case, for
example, he was able to identify and brief a “trial work period” issue which ultimately
resulted in a favorable decision for Flowers. (See Filings 15, 24 and 45-2.) This
favorable result would not have occurred without counsel’s assistance. It is also
significant that Flowers has signed an affidavit stating that she does not object to the
25 percent contingent fee. (Filing 49 at CM/ECF pp. 3-4.)
The parties agree that $116,948.00 is the proper past-due benefit award
amount. (Filing 47 at CM/ECF p. 2; Filing 45-3 at CM/ECF p. 6.)
Section 406(b) is supplemented by § 406(a), which provides that the
Commissioner may award attorney’s fees to a successful claimant’s counsel for work
performed before the SSA. See 42 U.S.C. § 406(a).
Accordingly, the court will grant the motion for attorney’s fees pursuant to 42
U.S.C. § 406(b) in the amount of $23,237.00, and will order Flowers’ attorney to
refund to Flowers the $6,113.25 in attorney fees previously awarded under the
EAJA.5 See Dubsky v. Astrue, No. 4:08CV3057, 2010 WL 1780009 (D. Neb. April
30, 2010) (ordering counsel to refund the full EAJA award, which included payment
for attorney, law clerk and paralegal work, after receiving § 406(b) fees); see also
Dubsky v. Astrue, No. 4:8:06CV446, 2009 WL 1606058 (D. Neb. June 8, 2009).
IT IS ORDERED:
The motion for attorney fees pursuant to 42 U.S.C. § 406(b) (filing 43)
is granted as follows:
Flowers’ attorney is entitled to an attorney fee of $23,237.00 from
Flowers’ past-due benefits.
Flowers’ attorney may collect $23,237.00 from the funds Flowers
deposited in his trust account to pay the attorney fee. However, Flowers’
counsel shall immediately refund to Flowers $6,113.25, which is the full
amount of attorney’s fees previously awarded under the EAJA, and any
additional funds from the trust account belonging to Flowers.
Flowers and Flowers’ attorney shall provide Defendant with
documentation showing that the attorney’s fee has been paid.
The court notes that the SSA failed to withhold sufficient funds to pay
Flowers’ attorney. Flowers has deposited funds in her attorney’s trust account and
authorized use of the funds to pay any unpaid attorney’s fees. (Filing 49 at CM/ECF
p. 4.) Flowers’ attorney asks the court to authorize payment of his attorney’s fee from
funds currently held in the trust account. (Filing 48 at CM/ECF p. 19.)
In all other respects, the motion is denied.
Judgment shall be entered by separate document.
DATED this 5th day of July, 2011.
BY THE COURT:
s/Richard G. Kopf
United States District Judge
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