Lorenzi v. Commissioner of Social Security

Filing 31

ORDER OF MAGISTRATE JUDGE HUGH B. SCOTTORDER granting 24 Motion for Attorney FeesPlaintiff's Motion for fees under 42 U.S.C. § 406(b) in return for refund of Equal Access to Justice Act fee award is granted.So Ordered. Signed by Hon. Hugh B. Scott on 10/1/2019. (DRH)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK

JACQUELINE LORENZI,
Plaintiff,
Hon. Hugh B. Scott
17CV1273
v.
Order

ANDREW SAUL, Commissioner,
Defendant.

Before the Court is plaintiff’s counsel’s application for attorney’s fees pursuant to
42 U.S.C. § 406(b) (Docket No. 24). Plaintiff seeks to recover $21,358.50 from her awarded
benefits and, upon receipt, plaintiff will refund to the Government the $6,900.00 in attorney’s
fees paid under the Equal Access to Justice Act (“EAJA”) (id.; see Docket No. 22, Stipulation
for Attorney’s Fees, so ordered, Docket No. 23). Initially, responses to this motion were due by
September 17, 2019, with any reply due by September 24, 2019 (Docket No. 25). Defendant
moved (with consent) for extension of time to response (Docket No. 27), which was granted
(Docket No. 28); responses were due by September 24, 2019, and reply by October 1, 2019
(Docket No. 29). Commissioner Andrew Saul’s counsel submitted a memorandum response
(Docket No. 29), and plaintiff replied (Docket No. 30). The application is deemed submitted
(without oral argument) on September 19, 2019.

BACKGROUND
Plaintiff applied for disability insurance and Supplemental Security Income benefits, was
denied by the defendant Commissioner, and sought judicial review (see Docket No. 24, Pl.
Memo. at 1). This Court reversed the defendant Commissioner’s decision and remanded on
April 17, 2019 (Docket No. 18 (Order); see Docket No. 19 (Judgment, entered April 18, 2019);
see also Docket No. 24, Pl. Memo. at 1). On July 17, 2019, plaintiff moved for attorney’s fees
under the EAJA (Docket No. 20) and the parties stipulated, defendant agreeing to pay plaintiff
$6,900.00 in EAJA attorney’s fees (Docket No. 22; see Docket No. 23, Order adopting
Stipulation; Docket No. 24, Pl. Memo. at 2).
Upon remand, on July 30, 2019, the ALJ granted plaintiff’s applications finding her
disabled (Docket No. 24, Pl. Memo. at 1). The Social Security Administration issued a Notice of
Award to plaintiff on her Title II (disability) application, finding that she is entitled to
$85,434.00 in past due benefits (id. at 2). That Notice also stated the agency withheld 25% of
those benefits, or $21,358.50, to pay attorney’s fees (id.).
Plaintiff now moves to award her counsel $21,358.50 pursuant to 42 U.S.C. § 406(b) and
will refund the EAJA fee of $6,900.00 received (id.). She claims that her motion is timely (id. at
2-3). Applying the Gisbrecht v. Barnhart, 535 U.S. 789 (2002), standard, plaintiff argues that
she is entitled to recover (id. at 3-8). As for the avoidance of a windfall to the attorney element,
plaintiff argues that the parties are not to argue over details of time expended or should have
been expended by her counsel as well as the non-contingent hourly rate (id. at 5). She contends
that “Gisbrecht directs a court not to countenance litigation over hours and hourly rates relevant
to the lodestar method” (id.). She then factored in the contingent nature of her recovery and
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concludes that the rate charged is reasonable (id. at 6-7). Plaintiff claims an hourly rate of
$1,000 and cites to cases in this District accepting that contingent fee in similar case (id.).
While declaring that defendant Commissioner had no financial stake in the
Section 406(b) fee award but merely acts as a fiduciary (Docket No. 29, Def. Memo. at 1),
Gisbrecht, supra, 535 U.S. at 798 n.6, defendant “has no objection to [plaintiff’s] counsel’s
request, but points out that it approaches a windfall” (id.). Defendant notes that plaintiff seeks
$21,358.50 for 34.9 hours expended during judicial review, calculated to a de facto hourly rate of
$611.99 (id. at 3-4). Defendant argues that recent Second Circuit cases have held $611 per hour
rate as a windfall (id. at 4-5 (citing Eastern District of New York cases)). Those cases reduced
the reasonable hourly rate to $500 per hour (id.).
In reply, plaintiff argues that no deficiency in representing plaintiff was cited to consider
the claim a windfall (Docket No. 30, Pl. Reply at 1). Citing Chief Judge Geraci’s decision in
McDonald v. Commissioner, No. 16CV926, 2019 U.S. Dist. 195141 (W.D.N.Y. Mar. 27, 2019),
plaintiff contends that fees are reduced as a windfall “in light of the work performed,” id. at *6,
such as obtaining a stipulation rather than an Order following full briefing and argument, see id.
(id. at 1-2). The Court there approved an hourly rate of $1,051.64, id. at *5-7 (id.). Plaintiff
cited other decisions in this Court that accepted hourly rates around the amount sought here (id.
(citing Post v. Saul, No. 15CV257, 2019 U.S. Dist. LEXIS 111465, 2019 WL 2867166
(W.D.N.Y. July 3, 2019) (Telesca, J.); Starzynski v. Berryhill, No.15CV940, 2018 U.S. Dist.
LEXIS 175298, 2018 WL 4926856 (W.D.N.Y. Oct. 11, 2018) (Telesca, J.)).

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DISCUSSION
I.

Standard Under Section 406
The Social Security Act allows an attorney for a claimant to petition this Court for “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,” 42 U.S.C. § 406(b), Fodor
v. Berryhill, No. 13CV784, Docket No. 25, at 2 (W.D.N.Y. July 3, 2018) (Arcara, J.). This
Court then conducts a review of the contingent fee arrangements “as an independent check to
assure that they yield reasonable results in particular cases,” Gisbrecht, supra, 535 U.S. at 807.
The Supreme Court in Gisbrecht provided standards for determining the reasonableness of
claimant’s counsel’s fee application up to the 25% of past due benefits boundary, id. at 807-08.
Last January, the unanimous Court held that § 406 has separate caps for fees for
representation before a court, § 406(b), and before the agency, § 406(a), and that the 25% pastdue benefits cap does not apply to aggregate fees, Culbertson v. Berryhill, 586 U.S. ____,
139 S. Ct. 517, 519, 522 (2019). Recognizing that § 406’s text provides for two pools of money
for direct payment of fees, despite the agency withholding from a single pool of 25% of the pastdue benefits to pay these fees, id. at 523. Section 406(a)(4) requires agency withholding while
§ 406(b)(1)(A) gives the agency discretion to certify past-due benefits for payment of court
representation fees, id. The agency exercises its discretion in withholding from the same 25% of
benefits for court and agency fees, id. “The amount of past-due benefits that the agency can
withhold for direct payment does not delimit the amount of fees that can be approved for
representation before the agency or the court,” id.

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II.

Application—Is Fee Windfall?
This application boils down to whether plaintiff’s counsel will enjoy a windfall if the

withheld amount is awarded to plaintiff. A windfall is when the “benefits awarded are large in
comparison to the amount of time counsel spent on the case,” Joslyn v. Barnhart, 389F. Supp. 2d
454, 456 (W.D.N.Y. 2005) (Larimer, J.) (quoting Gisbrecht, supra, 535 U.S. at 808); Post, supra,
2019 U.S. Dist. LEXIS 111465, at *4.
Accepting this Court’s precedents regarding reasonableness of claimant’s fees,
McDonald, supra, 2019 U.S. Dist. 195141, at *5-7 (approving $1,051.64 hourly rate as
reasonable); Post, supra, 2019 U.S. Dist. LEXIS 111465, at *6 (finding hourly fee of $677.21,
for fee award of $21,873.75 reasonable); Starzynski, supra, 2018 U.S. Dist. LEXIS 175298, at
*6-8 (finding hourly rate of $862.27 for fee of $35,789.50 to be reasonable) (Docket No. 30, Pl.
Reply at 2), rather than precedents from other districts in this Circuit, plaintiff’s counsel’s
effective hourly rate of over $611 and the resulting claim to the entire withheld amount of
$21,358.50 is reasonable. Plaintiff had to brief and argue for award of benefits. Defendant has
not pointed out that the time expended was excessive, unreasonable, or not warranted given the
ultimate results achieved. Plaintiff’s motion (Docket No. 24) for award of that withheld fee
(with refund of EAJA fees) is granted.

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CONCLUSION
For the reasons stated above, plaintiff’s motion (Docket No. 24) to recover attorney’s
fees under 42 U.S.C. § 406(b) in return for refund of paid Equal Access to Justice Act fees is
granted.
So Ordered.

/s/ Hugh B. Scott
Hon. Hugh B. Scott
United States Magistrate Judge

Dated: Buffalo, New York
September 30, 2019

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