Opinion
SA-19-CV-868-FB (HJB)
03-01-2023
JANICE KAY HALLER Plaintiff, v. KILOLO KIJAKAZI, Acting Commissioner of Social Security, Defendant.
Fred Biery Honorable United States District Judge
REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
HENRY J. BEMPORAD UNITED STATES MAGISTRATE JUDGE
This Report and Recommendation concerns the Motion and Brief for Attorney Fees Pursuant to 42 U.S.C. § 406(b) filed by David F. Chermol, counsel for Plaintiff Janice K. Haller. (Docket Entry 16.) This motion was referred to the undersigned for disposition. (Docket Entry 18.) After considering the briefing, the applicable case authority, the relevant statutory and regulatory provisions, and the entire record in this matter, I recommend that the motion be GRANTED IN PART, and that counsel (1) receive an award in the amount of $11,614.50, and (2) be ordered to return to Plaintiff directly the $6,194.00 in fees he previously received.
I. Jurisdiction.
This Court has jurisdiction to review the Agency's decision pursuant to 42 U.S.C. §§ 405(g), 1383(c)(3). I have authority to issue this Report and Recommendation pursuant to 28 U.S.C. § 636(b) and Federal Rule of Civil Procedure 54(d)(2)(D).
II. Background.
Plaintiff initiated this action on July 21, 2019, seeking to overturn the Commissioner's decision denying her application for disability insurance benefits under Title II of the Social Security Act. (Docket Entry 1.) On December 6, 2019, Plaintiff filed her brief setting forth her basis for relief. (Docket Entry 10.) The Commissioner did not file a responsive brief but instead requested that the Court reverse the Agency's final decision and remand the case for further administrative proceedings. (Docket Entry 11.) The District Court granted the motion and reversed and remanded for further proceedings. (Docket Entry 13.) Plaintiff, through her attorney, moved for an award of $6,194.00 in attorneys' fees pursuant to the Equal Access to Justice Act (“EAJA”). (Docket Entry 14.) The District Court granted the motion and ordered the Commissioner to pay Plaintiff a total of $6,194.00 in EAJA fees. (Docket Entry 15.)
Plaintiff later prevailed on remand and the Agency awarded past-due benefits to Plaintiff in the amount of $46,458.00. (See Docket Entry 16-1, at 1.) Now, Plaintiff's attorney seeks either a net award of $5,420.50, or alternatively, a full award of $11,614.50 from Plaintiff's past-due benefits pursuant to 42 U.S.C. § 406(b). (Docket Entry 16, at 2.) The Commissioner does not agree to a net award, but she “declines to assert a position on the reasonableness” of the fee as she “has no direct financial stake” in the issue but rather “plays a part in the fee determination resembling that of a trustee for the claimants.” (Docket Entry 17, at 1, 4.)
III. Analysis.
Two statutes govern attorney's fees for representation of a social security claimant in court: the EAJA, 28 U.S.C. § 2414, and 42 U.S.C. § 406(b). Successful litigants generally petition for fees under the EAJA first, which provides for an award of reasonable court costs and attorneys' fees to the “prevailing party” in a case seeking judicial review of agency action, unless the position of the United States was “substantially justified” or “special circumstances” make an award unjust. See 28 U.S.C. § 2412(d)(1)(A). Subsequently, if an attorney obtains a favorable decision on remand, under § 406(b) “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 the reason of such judgment.” 42 U.S.C. § 406(b)(1)(A); Jackson v. Astrue, 705 F.3d 527, 531 (5th Cir. 2013). The 25 percent cap is computed based on the benefits received by the claimant as well as any past-due amounts paid to the claimant's dependent family members by virtue of the claimant's' disability. See Hopkins v. Cohen, 390 U.S. 530, 535 (1968). Although courts may award fees under both the EAJA and § 406(b), the claimant's attorney must refund to the claimant the amount of the smaller fee. See Gisbrecht v. Barnhart, 535 U.S. 796 (2002). Further, unlike attorneys' fees awarded pursuant to the EAJA-which are against and payable by the Social Security Administration-fees awarded under § 406(b) come out of a claimant's past-due benefits.
See King v. Comm's of Soc. Sec., No. 3:14-CV-253-DAS, 2017 WL 2602992, at *1 (N.D. Miss. Jun. 15, 2017).
Here, the contingency agreement executed by Plaintiff expressly authorizes an award of 25 percent of her past-due disability benefits, which amounts to $11,614.50. (Docket Entry 16-2, at 1.) Counsel requests an award of $5,420.50, which is the net amount of the $11,614.50 and the previously awarded $6,194.00 in EAJA fees. (Docket Entry 16, at 2.) Or, alternatively, counsel requests an award of the full $11,614.50, from which he would return the previously awarded $6,194.00 in EAJA fees to Plaintiff. (Id. at n.1.) Because EAJA fees and § 406(b) fees are paid from separate sources, the Commissioner does not agree to a net fee award. (Docket Entry 17, at 4.)
Although “§ 406(b) does not displace contingent-fee arrangements as the primary means by which fees are set for successfully representing Social Security benefits claimants in court[, it] calls for court review of such arrangements as an independent check, to assure that they yield reasonable results in particular cases.” Gisbrecht, 353 U.S. at 808-09. Contingency fee agreements are unenforceable if they provide fees exceeding 25 percent of the past-due benefits. See id. Even within the 25 percent boundary, an attorney for a successful claimant must show that the fee sought is reasonable given the services rendered. See id.
Because § 406(b) is not a fee-shifting statute, exclusive reliance on the lodestar method is not appropriate when determining a fee's reasonableness. Jeter v. Astrue, 622 F.3d 371, 378 (5th Cir. 2010). Rather, courts typically consider the following non-exhaustive factors in determining the reasonableness of the fee: “risk of loss in representation, experience of the attorney, percentage of the past-due benefits the fee constitutes, value of the case to a claimant, degree of difficulty, and whether the client consents to the requested fee.” Little v. Saul, No. 3:17-CV-328, 2019 WL 3935211, at *2 (S.D. Tex. Aug. 20, 2019) (quoting Jeter, 622 F.3d at 382), report and recommendation adopted, 2019 WL 4222490 (S.D. Tex. Sept. 5, 2019). “If the benefits resulting from the contingency fee are large in comparison to the amount of time counsel spent on the case, a downward adjustment is [appropriate] in order to disallow windfalls for lawyers.” Jeter, 622 F.3d at 379 (alterations omitted).
An analysis of the above factors reveals that counsel has met his burden to show the fees requested here are reasonable. See Gisbrecht, 535 U.S. at 807.
First, the contingency agreement between Plaintiff and her attorney sets the compensation at 25 percent of past-due benefits, which “if not presumptively unreasonable, is at least a forceful starting point and solid benchmark.” Brannen v. Barnhart, No. 1:99-CV-325, 2004 WL 1737443, at *6 (E.D. Tex. Jul. 22, 2004).
Next, Plaintiff's counsel faced a substantial risk of loss. Not only had Plaintiff lost at all levels of the administrative process prior to seeking judicial review, but there is a “high risk of loss inherent in Social Security appeals.” Hartz v. Astrue, No. 08-4566, 2012 WL 4471846, at *6 (E.D. La. Sept. 12, 2012) (collecting cases). Simply put, claimants' attorneys are often not compensated when they undertake social security appeals. See id. Despite the risk, counsel accepted the representation and, in doing so, expended a considerable amount of time drafting Plaintiff's opening brief and representing Plaintiff in this litigation. Accordingly, this factor weighs heavily in favor of approving the requested fee. See Prude v. U.S. Comm's Soc. Sec. Admin, No. 11-CV-1266, 2014 WL 249033, at *2 (W.D. La. Jan. 22, 2014) (“the lack of compensation in the many unsuccessful cases” weighs in favor of awarding fees to successful claimant's attorneys).
Plaintiff's attorney is also a specialized Social Security attorney with nearly 25 years of experience in the field. (Docket Entry 16, at 4; see Docket Entry 16-3 (outlining counsel's experience)). Further, in addition to securing past-due benefits, counsel's efforts will also ensure that Plaintiff will receive continuing benefits. (Docket Entry 16-1, at 1.) The administrative record in this case is over 4,500 pages, and Plaintiff's counsel expended 32.6 hours in the course of this litigation. (Docket Entry 16-3, at 2-3.) In this limited amount of time, counsel was able to craft an opening brief and achieve a favorable result for Plaintiff. Plaintiff's counsel provided effective and efficient representation in this case and should be compensated for his efforts.
Under the circumstances in this case, it appears that the fee requested is reasonable and would not serve as an improper “windfall” for counsel. See Jeter, 622 F.3d at 381 (“Gisbrecht's ‘windfall' does not preclude attorneys from recovering that may mathematically seem like a high fee award if the attorney's success on appeal is of his own making.”) Nor is there any evidence in the record to suggest that counsel was responsible for a delay in the proceedings that increased the award, so as to merit a downward adjustment. Cf. Gisbrecht, 535 U.S. at 808 (“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.”).
For all the foregoing reasons, the requested fee is reasonable and should be awarded. Consistent with Supreme Court precedent, however, counsel should not receive a net fee award. See Gisbrecht, 535 U.S. at 796. Instead, counsel should be awarded the full amount of $11,614.50 as 25 percent of Plaintiff's past-due benefits and be ordered to refund to Plaintiff directly the $6,194.00 in EAJA fees he previously received.
IV. Conclusion and Recommendation.
Based on the foregoing, I recommend that counsel's Motion and Brief for Attorney Fees Pursuant to 42 U.S.C. § 406(b) (Docket Entry 16) be GRANTED IN PART such that counsel should receive an award in the amount of $11,614.50 and counsel should be ordered to return to Plaintiff directly the $6,194.00 in EAJA fees he previously received.
V. Instructions for Service and Notice of Right to Object.
The United States District Clerk shall serve a copy of this Report and Recommendation on all parties by either (1) electronic transmittal to all parties represented by attorneys registered as a “filing user” with the clerk of court, or (2) by mailing a copy to those not registered by certified mail, return receipt requested.
Written objections to this Report and Recommendation must be filed within fourteen (14) days after being served with a copy of same, unless this time period is modified by the district court. 28 U.S.C. § 636(b)(1); FED. R. CIV. P. 72(b).
The party shall file the objections with the clerk of the court and serve the objections on all other parties. Absent leave of Court, objections are limited to twenty (20) pages in length. A party filing objections must specifically identify those findings, conclusions or recommendations to which objections are being made and the basis for such objections; the district court need not consider frivolous, conclusory, or general objections.
A party's failure to file written objections to the proposed findings, conclusions and recommendations contained in this report shall bar the party from a de novo determination by the district court. Thomas v. Arn, 474 U.S. 140, 149-52 (1985); Acuna v. Brown & Root, Inc., 200 F.3d 335, 340 (5th Cir. 2000). Additionally, failure to file timely written objections to the proposed findings, conclusions and recommendations contained in this Report and Recommendation shall bar the aggrieved party, except upon grounds of plain error, from attacking on appeal the unobjected-to proposed factual findings and legal conclusions accepted by the district court. Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc).