Reyes v. Commissioner of Social Security

Filing 24

ORDER granting 21 Motion for Attorney Fees Pursuant to 42 U.S.C. § 406(b). Signed by Chief Judge Martin Reidinger on 5/10/2024. (slm)

THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
ASHEVILLE DIVISION
CIVIL CASE NO. 1:22-cv-00096-MR

KERRI LEE REYES,

)
)
Plaintiff,
)
)
vs.
)
)
MARTIN O’MALLEY,
)
Commissioner of Social Security,
)
)
Defendant.
)
_______________________________ )

ORDER

THIS MATTER is before this Court on the Plaintiff’s “Motion for
Attorney’s Fees under the Social Security Act 42 U.S.C. § 406(b)” [Doc. 21].
I.

PROCEDURAL BACKGROUND
On May 19, 2022, the Plaintiff initiated this action seeking judicial

review of the Commissioner’s decision denying her application for benefits
under the Social Security Act.

[Doc. 1].

On December 19, 2022, the

Commissioner filed a Consent Motion to Remand. [Doc. 12]. Thereafter, on
January 3, 2023, this Court entered an Order remanding the case to the
Commissioner pursuant to sentence four of 42 U.S.C. § 405(g). [Doc. 13].
On November 6, 2023, this Court awarded the Plaintiff attorney’s fees in the
amount of $6,980.76 in full satisfaction of any and all claims by the Plaintiff

pursuant to the Equal Access to Justice Act, 28 U.S.C. § 2412(d) (the
“EAJA”). [Doc. 20].
On March 26, 2024, the Commissioner issued a Notice of Award to the
Plaintiff explaining her past due benefits and stating that $20,839.25,
representing 25% of her back benefits, was being withheld from her award
to pay any award of attorney’s fees. [Doc. 22-1]. The Plaintiff and her
attorney had a contingency fee agreement pursuant to which any attorney’s
fee award could not exceed 25% of the past due benefits. [Doc. 22-2].
The Plaintiff’s counsel now seeks an award of $8,839.25 in fees
pursuant to 42 U.S.C. § 406(b)(1). [Doc. 21].
II.

DISCUSSION
There are two avenues by which a Social Security benefits claimant

may be awarded attorney’s fees. First, claimants may seek a fee award
under the EAJA, which provides that “a court shall award to a prevailing party
other than the United States fees and other expenses . . . incurred by that
party in any civil action (other than cases sounding in tort), including
proceedings for judicial review of agency action, brought by or against the
United States in any court having jurisdiction of that action . . . .” 28 U.S.C.
§ 2412(d)(1)(A). Second, a claimant may seek an award pursuant to 42
U.S.C. § 406(b), which provides that “[w]henever a court renders a judgment
2

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 . . . .” 42 U.S.C. § 406(b)(1)(A).
While attorney's fees may be awarded under both the EAJA and §
406(b), the Social Security Act requires that the attorney must refund to the
claimant the smaller fee. “Thus, an EAJA award offsets an award under
Section 406(b), so that the amount of the total past-due benefits the claimant
actually receives will be increased by the EAJA award up to the point the
claimant receives 100 percent of the past-due benefits.” Stephens ex rel.
R.E. v. Astrue, 565 F.3d 131, 134-35 (4th Cir. 2009) (quoting Gisbrecht v.
Barnhart, 535 U.S. 789, 796 (2002)).
Here, in making his fee request pursuant to § 406(b), the Plaintiff’s
counsel has simply offset the total amount of § 406(b) fees he seeks,
$15,820.01, by the amount he received under the EAJA, $6,980.76, rather
than stipulating to issuing the Plaintiff a refund of the EAJA fee award.
However, the plain language of the Social Security Act contemplates that
where a plaintiff’s counsel seeks fee awards under both statutes, counsel will
“refund” the smaller award to the plaintiff. The statute does not authorize the
3

Plaintiff’s counsel, nor this Court, to offset the awards in the manner
advocated by Plaintiff’s counsel. As such, § 406(b) fees will be awarded in
this matter in the typical manner and the Plaintiff’s counsel will be required
to refund the smaller fee award to the Plaintiff.1
Turning to the fees available to the Plaintiff’s counsel under § 406(b),
the Plaintiff and her counsel entered into a contingency fee agreement by
which the Plaintiff agreed to pay “no more than 25% of all back benefits”
awarded to her counsel. As the Fourth Circuit has recognized, Ҥ 406(b) was
designed to control, not to displace, fee agreements between Social Security
benefits claimants and their counsel. As long as the agreement does not call
for a fee above the statutory ceiling of twenty-five percent of awarded pastdue benefits, . . . § 406(b) simply instructs a court to review the agreement
for reasonableness.” Mudd v. Barnhart, 418 F.3d 424, 428 (4th Cir. 2005)
(citation and internal quotation marks omitted).

Some courts have recently signaled that awarding fees in the manner that the Plaintiff’s
counsel requests is permissible. See, e.g., Widmer v. Kijakazi, 668 F. Supp. 3d 446, 447
(E.D. Va. 2023). However, several of the courts that have awarded fees in this way have
specifically noted that it is a disfavored method and that a court does not abuse its
discretion by awarding fees in the traditional way. See O’Donnell v. Saul, 983 F.3d 950,
959 (7th Cir. 2020); McGraw v. Barnhart, 450 F.3d 493, 497 n.2 (10th Cir. 2006).
Additionally, many district courts have declined to award fees as Plaintiff’s counsel
requests. See, e.g., Chandler v. Kijakazi, No. 4:20-cv-517-ALM-KPJ, 2023 WL 3818390,
at *6 (E.D. Tex. May 19, 2023); Koroma v. Comm’r of Soc. Sec. Admin., No. CV-1904459-PHX-DWL, 2021 WL 3190727, at *1-*2 (D. Ariz. July 28, 2021). Therefore, even
assuming arguendo that it would be permissible to award the Plaintiff’s counsel fees in
the manner he requests, this Court would exercise its discretion and decline to do so.
1

4

This Court finds that the services rendered in this Court were
appropriate and reasonable to the relief sought, and that the contingency fee
agreement executed by the Plaintiff and her counsel is reasonable.
Additionally, the Court notes that although the Plaintiff’s counsel was entitled
to seek 25% of the Plaintiff’s back benefits as his fee in this matter, he has
sought less than 19% of said benefits. For these reasons, the Plaintiff’s
motion for attorney’s fees will be granted.
IT IS, THEREFORE, ORDERED that the Plaintiff’s “Motion for
Attorney’s Fees under the Social Security Act 42 U.S.C. § 406(b)” [Doc. 21]
is hereby GRANTED. An award of attorney’s fees in the amount of Fifteen
Thousand Eight Hundred Twenty Dollars and One Cent ($15,820.01)
pursuant to 42 U.S.C. § 406(b)(1)(A) is hereby APPROVED.
IT IS FURTHER ORDERED that upon receipt of the § 406(b) fees, the
Plaintiff’s counsel shall refund to the Plaintiff the sum of Six Thousand Nine
Hundred Eighty Dollars and Seventy-Six Cents ($6,980.76), representing the
fee that counsel previously received pursuant to the Equal Access to Justice
Act, 42 U.S.C. § 2412(d).
IT IS FURTHER ORDERED that a copy of this Order shall be provided
to the Social Security Administration in order to effectuate payment of the
award from past due benefits which have been withheld for such purpose.
5

IT IS SO ORDERED.

Signed: May 10, 2024

6