Heise, Carl v. Colvin, Carolyn

Filing 35

ORDER granting in part 32 Motion for Attorney Fees. Plaintiff's counsel awarded attorney fees pursuant to § 406(b) in the amount of $11,305.50. Signed by District Judge James D. Peterson on 12/15/2016. (kwf)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN

CARL HEISE,
Plaintiff,
v.

ORDER

CAROLYN W. COLVIN,
Acting Commissioner of Social Security,

14-cv-739-jdp

Defendant.
Based on the parties’ joint motion, Dkt. 21, this court reversed the Commissioner’s
decision denying plaintiff Carl Heise’s application for disability benefits and remanded the
case for further proceedings. Dkt. 22. The court then awarded plaintiff’s attorney, Dana
Duncan, fees in the amount of $4,600 under the Equal Access to Justice Act (EAJA), 28
U.S.C. § 2412. Dkt. 30. On remand, the Office of Disability Adjudication and Review
awarded plaintiff $127,244 in past-due benefits.
Now Duncan petitions the court for a representative fee award in the amount of
$31,811, pursuant to 42 U.S.C. § 406(b), which is the 25 percent contingency fee to which
Heise agreed in writing. Dkt. 32-2, at 1. The Commissioner has indicated that she does not
oppose the award. But the circumstances of this case, viewed in light of the law governing fee
recovery in social security cases, require that I reduce the award. I do so even though Duncan
is an experienced disability rights attorney who achieved a very good result for his client.
Under 42 U.S.C. § 406(b), the court may award a claimant’s attorney a representative
fee for his or her work before the court. This section of the Social Security Act provides that
“a prevailing claimant’s fees are payable only out of the benefits recovered; in amount, such
fees may not exceed 25 percent of past-due benefits.” Gisbrecht v. Barnhart, 535 U.S. 789, 792

(2002). The requested fee is within the cap, but I must nevertheless review it to ensure that it
is reasonable. Id. at 807, 809; see also McGuire v. Sullivan, 873 F.2d 974, 980 (7th Cir. 1989)
(“A court may award a fee up to that provided in the contract so long as the court has
reviewed its reasonableness.”).
When evaluating a representative fee for reasonableness, “the court may consider the
character of the representation and the results obtained, reducing an award if . . . the fee is so
large in comparison to the amount of time counsel spent on the case such that the fee would
constitute a windfall to the attorney.” Koester v. Astrue, 482 F. Supp. 2d 1078, 1081 (E.D.
Wis. 2007) (citing Gisbrecht, 535 U.S. at 808). “In determining what is a reasonable fee, the
court should consider: the time and labor required; the skill required; whether the fee was
contingent or fixed; the amount involved and the result attained; the attorney’s experience,
reputation, and ability; and awards in similar cases.” Hodges-Williams v. Barnhart, 400 F.
Supp. 2d 1093, 1099 (N.D. Ill. 2005) (citing McGuire, 873 F.2d at 979, 983).
Contingent fee agreements often produce fees that reflect large hourly rates which are
not per se unreasonable. Contingent fee arrangements account for the attorney’s risk of nonrecovery, and awarding a fee consistent with the parties’ agreement motivates attorneys to
represent social security claimants who could not otherwise afford counsel. “If courts
regularly invalidated reasonable contingency agreements in favor of a lodestar fee, then
attorneys would no longer enter into such agreements.” McGuire, 873 F.2d at 980. Following
this principle, district courts across the country have awarded representative fees that reflect
varying hourly rates, including $446, $625, $636, and even as high as $1,500. Koester, 482 F.
Supp. 2d at 1083 (collecting cases). But when the contingent fee agreement would yield an
unreasonable windfall, courts have reduced the award under § 406(b) to an appropriate rate

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above the lodestar rate. See, e.g., Schimpf v. Astrue, No. 06-cv-18, 2008 WL 4614658 (N.D.
Ind. Oct. 16, 2008) (awarding a fee at a reduced hourly rate of $583.50); Hodges-Williams,
400 F. Supp. 2d at 1099-100 (awarding a fee at a reduced hourly rate of $350).
Viewing Duncan’s representation of Heise from beginning to end, I do not think that
a fee of just over $30,000 is unreasonable. If I consider all of the Duncan’s time, the
equivalent attorney compensation rate is approximately $771 ($31,811 for 41.25 hours of
work), which is on the generous side of the reasonable scale. But if I consider only Duncan’s
work before this court, where Duncan spent a smaller proportion of his time, it would
produce an hourly rate of approximately $2,217 ($31,811 for 14.35 hours). That amounts to
an hourly rate that I would consider to be an unreasonable windfall.
Section 406, which provides for attorney fees for successful representation of
disability claimants, is bifurcated: Ҥ 406(a) governs fees for representation in administrative
proceedings; § 406(b) controls fees for representation in court.” Grisbrecht, 535 U.S. at 794.
The payment schemes under the two subsections are different: § 406(a) provides that the
Commissioner shall award “a reasonable fee” for representation in connection with the “claim
before the Commissioner,” but limits the fee to the lesser of 25 percent of past-due benefits
awarded or $6,000. § 406(a); Maximum Dollar Limit in the Fee Agreement Process, 74 Fed.
Reg. 6080 (Feb. 4, 2009). Section 406(b), on the other hand, provides that a court may
award for representation “before the court . . . a reasonable fee . . . not in excess of 25
percent” of past-due benefits awarded.
It appears that I cannot consider the Duncan’s work for Heise from beginning to end.
The circuits to have considered the question hold that under § 406 “each tribunal may award
fees only for the work done before it.” See Horenstein v. Sec’y of Health & Human Servs., 35

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F.3d 261, 262 (6th Cir. 1994). The bifurcated fee-fixing procedure may be “inefficient, slow,
and troublesome,” 2 Harvey L. McCormick, Social Security Claims and Procedures § 16:69 (6th
ed. 2009), but it makes at least arguable sense for each tribunal to evaluate the value of the
work before it, under the compensation standards appropriate to that forum. So I will limit
my reasonableness evaluation to Duncan’s work before this court, and he can pursue the rest
of his contingency fee from the Commissioner. See Horenstein, 35 F.3d at 262.
Duncan argues that his contingency fee is really equivalent to much lower hourly
compensation, either $207, $232, or $500. He arrives at these rates by including various
combinations of attorney, paralegal, and administrative time for work performed during the
administrative proceedings, and also by excluding the previously awarded $4,600 EAJA fee
award. The court will not consider hours spent in administrative proceedings, and the EAJA
fee award must be included in the total fee. See Schimpf, 2008 WL 4614658 at *3. Although
it is unclear whether administrative and paralegal work can be compensated under § 406(b),
see Thompson v. Colvin, No. 13-cv-3570, 2016 WL 6585606, at *1 (D.S.C. Oct. 19, 2016)
(collecting cases and discussing the issue without deciding the question), it has been this
court’s practice to consider only attorney work when determining the compensation rate.
But in setting a reasonable fee, I recognize the special circumstances of this case.
Duncan expended most of his work at the administrative level, and then achieved a very
efficient resolution of the appeal with a good summary judgment brief, which prompted the
Commissioner to join a motion to remand the case. Both sides are to be applauded, and I do
not want to discourage efficiency and cooperation.
Accordingly, I will cut the contingency fee in half, to $15,905.50. This results in an
effective hourly rate of just over $1,100, appropriately high to reflect the risk of non-recovery

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in social security cases, Duncan’s special efficiency in this case, and, indirectly, the
contribution of his paralegal to his work in this court. As Duncan recognizes, this amount
must be offset by $4,600, the amount of the EAJA fees that he already recovered. Gisbrecht,
535 U.S. at 796. This results in a fee award of $11,305.50.

ORDER
IT IS ORDERED that plaintiff’s attorney’s unopposed petition for attorney fees
pursuant to § 406(b), Dkt. 19, is GRANTED in part. The court approves a representative fee
award of $11,305.50, which reflects an offset for the prior award of EAJA fees.
Entered December 15, 2016.
BY THE COURT:
/s/
________________________________________
JAMES D. PETERSON
District Judge

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