Opinion
20-CV-5598 (GBD) (BCM)
12-26-2023
JECCA JECCA, Plaintiff, v. COMMISSIONER OF SOCIAL SECURITY, Defendant.
THE HONORABLE GEORGE B. DANIELS
REPORT AND RECOMMENDATION
BARBARA MOSES, UNITED STATES MAGISTRATE JUDGE.
By motion dated August 14, 2023 (Pl. Mot.) (Dkt. 39), plaintiff Jecca Jecca seeks an order pursuant to § 206(b) of the Social Security Act, 42 U.S.C. § 406(b), approving an award of $13,732.30 to her attorney, which, when combined with the award already made to counsel pursuant to the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412, would amount to 25% of the past due benefits payable to Jecca by the Social Security Administration (SSA) after remand in this action. As counsel explains, the award now sought represents "the total amount defendant has set aside to pay representative fees - $18,884.48 - minus $5152.50 in EAJA fees already paid to [counsel] in December 2022." Pl. Mot. ¶ 6.
In the written retainer agreement between plaintiff and the Law Office of Robert C. Buckley, Esq., plaintiff agreed that if this Court remanded plaintiff's case to the SSA (which it did) and if, on remand, plaintiff secured an "award of past due disability benefits" (which she has), plaintiff would pay her counsel "a sum equivalent to 25% of all past due disability benefits at the time of the award as compensation or the legal services provided in successfully representing me in federal district court." Retainer Ag. (Dkt. 39-3) at 1-2.
The District Judge referred the case to me on March 31, 2021, before it was remanded. (Dkt. 8.) Accordingly, the fee motion is now before me for report and recommendation. For the reasons set forth below, I respectfully recommend that the motion be GRANTED, but that the Court decline to approve a "net" award as requested by plaintiff. Rather, counsel should be awarded the sum of $18,884.48 (25% of plaintiff's past due benefits), and should be required, on receipt of those funds, to remit to Ms. Jecca all fees previously awarded under EAJA.
I. BACKGROUND
The facts underlying this action are described in detail in Jecca v. Kijakazi, 2022 WL 6562699 (S.D.N.Y. Aug. 23, 2022), report and recommendation adopted sub nom. Jecca v. Comm'r of Soc. Sec., 2022 WL 4298706 (S.D.N.Y. Sept. 19, 2022), familiarity with which is assumed. In brief: plaintiff Jecca suffered from an array of medical conditions. She applied to the SSA for disability benefits, but her application was denied on May 31, 2018, for insufficient evidence. Jecca, 2022 WL 6562699, at *1. While before the agency, plaintiff put herself at a disadvantage by refusing to permit the SSA to contact any of her medical providers or obtain any of the medical records necessary to support her claim. Instead, plaintiff endeavored to submit all required records herself, but did so slowly and erratically, sending in scattered notes and reports from a fraction of the many medical providers that she listed as having treated her for her impairments, supplemented by her own notes and marginal annotations. Id. at *1, 2-5, 11. Additionally, plaintiff waived her right to a hearing before an administrative law judge (ALJ), opting instead to have her case decided on the "written merits." Id. at *3, 11. On May 8, 2019, the ALJ again denied her benefits application, finding that the scanty medical record before the agency did not even establish that plaintiff's impairments were "severe." Id. at *5. Plaintiff sought review by the Appeals Council, and attempted to provide additional evidence to that body, but on November 6, 2018, the Appeals Council denied review, ruling that plaintiff's new evidence was "not new," or did not relate to the period at issue, or - even if new and relevant - would not have changed the outcome of her application. Id. at *7.
Plaintiff filed her Complaint in this Court, pro se, on July 20, 2020. (Dkt. 1.) The Commissioner filed the administrative record on July 13, 2021 (Dkt. 16), and moved for judgment on the pleadings on November 12, 2021. (Dkt. 19.) Plaintiff then requested and received two extensions of her time to respond and cross-move (Dkts. 23, 27), before finally retaining attorney Buckley and executing the Retainer Agreement on March 1, 2022. Counsel appeared in this Court that day (Dkt. 30), and then, on March 10, 2022, filed a cross-motion seeking a judicial determination of disability or, in the alternative, a remand to the SSA for additional proceedings. (Dkt. 31.) The Commissioner filed a short reply brief on March 31, 2022. (Dkt. 32.)
On August 23, 2022, I recommended that the Commissioner's motion be denied, that plaintiff's motion be granted, and that the case be remanded for further proceedings. Jecca, 2022 WL 6562699, at *14. I reasoned that at least some of the evidence plaintiff submitted to the Appeals Council should have been considered and exhibited pursuant to 20 C.F.R. § 404.970(a)(5) and (b), and that the Appeals Council's error, in failing to recognize their significance, was not harmless. Id. at *12-14. After the District Judge adopted my report and recommendation, the case was remanded, on September 19, 2022, for further administrative proceedings. (Dkt. 34.)
On December 7, 2022, the District Judge so-ordered a stipulation granting plaintiff $5,152.50 in EAJA fees, and $400 in costs, payable to counsel. (Dkt. 37.)
On June 12, 2023, an ALJ "issued a fully favorable decision." Pl. Mot. ¶ 1. On August 10, 2023, the SSA sent plaintiff a Notice of Award entitling her to benefits since September 2017. Id. Ex. A. Four days later, on August 14, 2023, attorney Buckley timely moved for fees under § 406(b). Although the Notice of Award does not state the amount of plaintiff's past due benefits, Buckley points to a memo to the Regional Chief Administrative Law Judge Chief, dated August 9, 2023, stating that the agency is "withholding $18,884.48 of the claimant's past-due benefits for direct payment to the representative." Pl. Mot. ¶ 4 & Ex. B. Because "it is standard practice of the [SSA] to set aside 25% of a claimant's back pay as a potential legal fee," counsel "can deduce that Ms. Jecca's gross back-pay is $75,537.92." Id. ¶ 5.
"Once a successful claimant receives notice of the Commissioner's award on remand," she has "the fourteen days afforded by Rule 54(d)(2)(B) to file a § 406(b) motion for attorney's fees." Sinkler v. Berryhill, 932 F.3d 83, 89 n. 5 (2d Cir. 2019).
The Second Circuit has recognized this practice, noting that the withheld funds are intended to cover both awards under § 406(b), for legal work performed in the district court, and awards under 42 U.S.C. § 406(a), issued by the Commissioner for legal work performed before the agency itself. See Sinkler v. Berryhill, 932 F.3d 83, 86 n. 4 (2d Cir. 2019) ("In practice, the SSA 'withholds a single pool of 25% of past-due benefits for direct payment of agency and court fees.'") (quoting Culbertson v. Berryhill, --- U.S. ---, 139 S.Ct. 517, 523 (2019)); see also SSA, Program Operations Manual System, GN 03930.091 ("[The SSA] will withhold that percentage of benefits until the court decides any pending motion for attorney's fees.").
As noted above, counsel seeks a "net" award of $13,732.30, representing the set-aside amount less the EAJA award already received. Id. ¶ 6. The Commissioner "neither supports nor opposes" the fee motion, but notes - and I agree - that the difference between $18,884.48 and $5,152.50 is actually $13,731.98. (Dkt. 42.)
II. DISCUSSION
The Social Security Act provides:
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.42 U.S.C. § 406(b)(1)(A).
A. Netting
As the statute makes clear, fees under § 406(b) "are paid by the litigant to the attorney from the past due benefits awarded." Wells v. Bowen, 855 F.2d 37, 41 (2d Cir. 1988). EAJA fees, on the other hand, "are paid by the government to the litigant to defray the cost of legal services," from general funds rather than from monies set aside from the litigant's own award. Id. Consequently, where attorney fees are awarded under both EAJA and § 406(b), it has long been the rule that "the claimant's attorney must 'refun[d] to the claimant the amount of the smaller fee.'" Janes v. Berryhill, 498 F.Supp.3d 540, 542 (S.D.N.Y. 2020) (quoting Gisbrecht v. Barnhart, 535 U.S. 789, 796 (2002)) (internal quotation marks and citation omitted). Although it would be more convenient (from counsel's standpoint) simply to request a "net" award under § 406(b), this approach is "disfavored," because it contradicts "controlling authority and well-established precedent" requiring the claimant's attorney - not the Commissioner - to refund to the claimant an EAJA fee award where fees are subsequently awarded under § 406(b). Johnson v. Kijakazi, 2022 WL 17718336, at *6 (S.D.N.Y. Dec. 15, 2022) (noting that netting "ignores the express statutory directive that, 'where the claimant's attorney receives fees for the same work under both [§ 406(b)] and [EAJA], the claimant's attorney refunds to the claimant the amount of the smaller fee.'") (quoting Pub. L. No. 99-80, § 3, 99 Stat. 186). Consequently, in considering the reasonableness of the requested award, I begin with the aggregate amount of the award sought, which is $18,884.48. Id.
B. Reasonableness
Section 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." Gisbrecht, 535 U.S. at 807. Rather, it "calls for court review of such arrangements as an independent check, to assure that they yield reasonable results in particular cases." Id. "Factors to be considered when determining whether an award is reasonable include: (a)whether the contingency fee is within the twenty-five percent limit; (b) whether the retainer was the result of fraud or overreaching by the attorney; and (c) whether the attorney would enjoy a windfall relative to the services provided." Pelaez v. Berryhill, 2017 WL 6389162, at *1 (S.D.N.Y. Dec. 14, 2017) (internal citations and quotation marks omitted), report and recommendation adopted, 2018 WL 318478 (S.D.N.Y. Jan. 3, 2018); accord Wells v. Sullivan, 907 F.2d 367, 372 (2d Cir. 1990).
These factors all weigh in favor of the fee award sought here. The contingency fee is within the 25% statutory limit. 42 U.S.C. § 406(b)(1)(A). It is also consistent with plaintiff's Retainer Agreement, in which she agreed to pay her counsel "25% of all past due disability benefits at the time of the award," for his work in this Court. Retainer Ag. at 1-2. There is no evidence in the record that the Retainer Agreement was the result of fraud or overreach. The only remaining question, therefore, is whether a fee award of $18,884.48 "is so large as to be a windfall." Wells, 907 F.2d at 372.
Counsel's timesheets reflect that he spent 23.4 hours working on this action (Dkt. 39-4), which, when divided into the $18,884.48 sought, implies a de facto hourly rate of $807. Although such a rate would be "difficult to justify" in a social security case "as part of a traditional 'lodestar' analysis, a 'lodestar' analysis does not apply." Baron v. Astrue, 311 F.Supp.3d 633, 637 (S.D.N.Y. 2018). "[E]ven a relatively high hourly rate may be perfectly reasonable, and not a windfall, in the context of any given case." Fields v. Kijakazi, 24 F.4th 845, 854 (2d Cir. 2022). Thus, before reducing a fee award on "windfall" grounds, our Circuit requires that the court consider:
(i) the "ability and expertise of the lawyers and whether they were particularly efficient, accomplishing in a relatively short amount of time what less specialized or less well-trained lawyers might take far longer to do";
(ii) "the nature and length of the professional relationship with the claimant -including any representation at the agency level";
(iii) "the satisfaction of the disabled claimant"; and
(iv) "how uncertain it was that the case would result in an award of benefits and the effort it took to achieve that result."Id. at 854-56.
Here, attorney Buckley was effective and efficient. His billing records indicate that he held an initial client meeting with plaintiff on February 27, 2022, and then, in the course of the following twelve days, digested the 402-page administrative record and researched, drafted, and revised what turned out to be a successful opposition and cross motion, which led to a remand. See Pl. Mot. Ex. D (Dkt. 39-4) (timesheet). Attorney Buckley recorded half of his total hours in the three days up to and including the date that cross-motion was filed, id., indicating he familiarized himself with the case quickly and obtained a good result in a short period of time. Consequently, the factor concerning the "ability and expertise of the lawyers" furnishes no basis for reducing his fee.
The "nature and length of the professional relationship" factor is mixed. On the one hand, attorney Buckley only represented plaintiff at the end of her federal court action (and, thereafter, before the agency on remand). See Pl. Mot. ¶ 8. On the other hand, because he did not initially represent plaintiff at the administrative level, he was required to digest and work with an unfamiliar record - in this case, a spotty record, made up largely of the documents and notes that plaintiff herself compiled and submitted to the SSA. While the Court has not received (and does not expect) a testimonial from plaintiff Jecca, the fact that she retained Buckley on the eve of her (already extended) motion filing deadline, and thereafter worked with him for almost two years, until she was awarded prospective benefits and a past due sum of $75,537.92, indicates that neither the nature and length of the professional relationship, nor the satisfaction of the claimant, would raise grounds for reducing attorney Buckley's fee award.
Finally, with regard to the "uncertainty" factor, there is never any guarantee that a contingency case will be successful. "Lawyers who operate on contingency - even the very best ones - lose a significant number of their cases and receive no compensation when they do." Fields, 24 F.4th at 855; see also Wells, 907 F.2d at 371 ("[P]ayment for an attorney in a social security case is inevitably uncertain, and any reasonable fee award must take account of that risk."); Nieves v. Colon, 2017 WL 6596613, at *2 (S.D.N.Y. Dec. 26, 2017) (payment is "inevitably uncertain, and any reasonable fee award must take account of that risk"). Here, in light of plaintiff's struggles to build a record at the administrative level, and the fact that he came in at a relatively late hour, attorney Buckley faced an uncertain outcome. Although he succeeded relatively quickly, "that does not signify that this case was inherently less risky than others like it when counsel were engaged." See Gondola v. Kijakazi, 2022 WL 4227966, at *6 (S.D.N.Y. July 22, 2022) ("Nor, of course, should this Court penalize counsel at the fee application stage for achieving a good result in a short period of time."), report and recommendation adopted sub nom. Gondola v. Berryhill, 2022 WL 3334695 (S.D.N.Y. Aug. 12, 2022).
For these reasons, I conclude that the $18,884.48 now requested does not constitute a windfall to plaintiff's counsel. I further conclude, for the reasons set forth above, that the entire $18,884.48 should be awarded under § 406(b), making counsel responsible for refunding the prior EAJA award to his client. Gisbrecht, 535 U.S. at 789.
III. CONCLUSION
For the reasons set forth above, I recommend, respectfully, that plaintiff's unopposed motion be GRANTED and that plaintiff be awarded the sum of $18,884.48 in attorneys' fees pursuant to 42 U.S.C. § 406(b), to be paid from the monies retained by the Commissioner for that purpose. Attorney Buckley should be directed, in turn, to refund to Ms. Jecca the $5,152.50 in fees that he was previously awarded under EAJA.
NOTICE OF PROCEDURE FOR FILING OF OBJECTIONS TO THIS REPORT AND RECOMMENDATION
The parties shall have fourteen days from the service of this report and recommendation to file written objections pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure. See also Fed.R.Civ.P. 6(a), (d). A party may respond to another party's objections within fourteen days after being served with a copy. Fed.R.Civ.P. 72(b)(2). Any such objections shall be filed with the Clerk of the Court, with courtesy copies delivered to the Hon. George B. Daniels at the Daniel Patrick Moynihan United States Courthouse 500 Pearl Street, New York, New York 10007, and to the chambers of the undersigned Magistrate Judge. Any request for an extension of time to file objections must be directed to Judge Schofield. Failure to file timely objections will preclude appellate review. See Thomas v. Arn, 474 U.S. 140, 155 (1985); Frydman v. Experian Info. Sols., Inc., 743 Fed.Appx. 486, 487 (2d Cir. Nov. 27, 2018); Wagner & Wagner, LLP v. Atkinson, Haskins, Nellis, Brittingham, Gladd & Carwile, P.C., 596 F.3d 84, 92 (2d Cir. 2010).