Wilkinson v. Social Security Administration

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NORTH DAKOTA
Randy Wilkinson, 	)
)
Plaintiff, 	) 	ORDER REQUIRING NOTICE
) 	TO PLAINTIFF Of § 406(b)(1)
vs. 	) 	APPLICATION FOR ATTORNEY
) 	FEES
Andrew Saul, Commissioner 	)
of the Social Security Administration 	) 	Case No. 1-17-cv-147
)
Defendant. 	)
Before the court is a motion by plaintiff for an award of attorney fees pursuant to 42 U.S.C.
§ 406(b)(1). On July 9, 2020, the court held a telephonic conference with plaintiff’s attorney and
the attorney for the United States (herein the “government”) to discuss the governing law and the
undersigned’s concern there should be some showing that plaintiff is aware of the fee request as well
as his right to have his views heard by the court if they should differ from his counsel.
For purposes of distinguishing between the interests of plaintiff and those of counsel,
plaintiff’s attorney will be referred to as “petitioner.” In addition, Commissioner Andrew Saul has
been substituted for previous Acting Commissioner Nancy A. Berryhill as the party defendant.
I. 	BACKGROUND
Plaintiff filed his complaint in this action on July 19, 2017, seeking judicial review of the
denial of his application for Social Security disability benefits. 	Petitioner argued on plaintiff’s
behalf that the Social Security Administration’s (“SSA”) ALJ had erred in (1) failing to treat as
severe at step two of the five-step sequential analysis employed to several of his claimed
impairments, and (2) made several errors in the determination of plaintiff’s residual functional
capacity.
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On November 15, 2018, the court issued its decision agreeing with almost all of the
arguments advanced by petitioner. The court ordered that plaintiff’s application for benefits be
remanded to the SSA for further proceedings. Wilkinson v. Berryhill, No. 1-17-cv-147, 2018 WL
6004656 (D.N.D. Nov. 15, 2018). 	The court also approved an Equal Access to Justice Act
(“EAJA”) fee award to plaintiff as a successful litigant in the amount of $6,161.05 which was paid
by the government and has been received by petitioner. The EAJA fee award was calculated by
multiplying the 30.35 hours of work expended by petitioner on the judicial proceedings before this
court times the EAJA attorney-fee (as adjusted for cost-of-living) of $203 per hour.
After further administrative proceedings following the court’s remand, the SSA made two
awards of benefits. The first was to plaintiff on May 2, 2020, for future and past-due disability
benefits for the period of September 2015 through the end of April 2020. 	While the record is
unclear with respect to the exact amount of past-due benefits, the SSA’s practice is to withhold 25%
of the amount of the award as a contingency in the event it is required to pay petitioner’s attorney
fees. In this case, the SSA is presently withholding $26,756.25. If this in fact represents 25% of
the past-due benefits, then the past due-benefits as of the time of the award are $107,0250.1
1 Inexplicably, the SSA’s award notices do not set forth the total amount of past-due benefits. See, e.g.,
Barcenas v. Paul, No. CV-16-01311, 2019 WL 6736900 at *1 n.2 (C.D. Cal. Aug. 20, 2019) (making the same
observation and similarly back-calculating what may be the correct number based upon amounts withheld to pay
attorney fees). Rather, it sets forth the monthly amounts that are payable over the period in question as the amounts are
adjusted for increases in benefits but leaves some uncertainty as to the exact beginning date as well as whether the first
or last months in the schedule of payments are counted, all or in part. Petitioner in his motion states the amount of the
past due award is slightly higher, $109,098.60, but does not explain how he arrived at his calculation. The undersigned
attempted to make his own calculation from the schedule in the notice of award and came up with yet a different amount
that was slightly higher than that calculated by the petitioner. In short, it is not possible to tell from the information in
the award notice whether the SSA has properly calculated the past-due benefits, under withheld for potential attorney
fees, or both. Since the SSA obviously made a calculation and given the fact the statute governing fees makes the
calculation material, one wonders whether it is being deliberately obtuse in not providing the exact number. If the lack
of information becomes material to resolution of the pending motion, the court will likely order the Commissioner to
promptly provide its calculation.
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The second award of future and past-due benefits was made to plaintiff on behalf of a
dependent child. As part of the award, the SSA similarly determined past-due benefits were owed
for the period beginning September 2015 through the end of April 2020. Again, the exact amount
of past-due benefits is unclear. The SSA is presently withholding from this award $6,683.00 for
attorney fees in the event it is required to pay attorney fees. If this amount represents 25% of the
past-due benefits, then the amount of past-due benefits is $26,732. Utilizing the figures set forth
above, the total of the two awards for past-due benefits is $133,757.
Petitioner has a contingency fee agreement with plaintiff in which plaintiff agreed petitioner
would be entitled to 25% of past-due benefits awarded to plaintiff as well as family members in the
event of a successful award. 	However, if no award was made, plaintiff would owe nothing for
petitioner’s efforts.
The use of contingency fee agreements has long been a common practice in SSA cases.
Initially, the agreements were not regulated and agreements providing for recovery of one-third to
one-half of the award were common. 	Gisbrecht v. Barnhart, 535 U.S. 789, 804 (2002)
(“Gisbrecht”). Out of concerns that considerable lapses of time may result in large amounts of
accrued benefits (and, consequently, large legal fees) and that percentages of one-third and higher
were excessive, Congress in 1965 imposed several limits on contingency agreements in 42 U.S.C.
§ 406(b)(1). First, the percentage of recovery is limited to 25%. Second, only past due benefits may
be considered in calculating the recoverable amount. Third, there is not an automatic entitlement
to recovery based on the percentage specified in the contingency agreement—even if it is 25% or
less. Rather, Congress also imposed a “reasonableness limit” in the language of § 406(b)(1) that
limits an attorney to recovery of “a reasonable fee . . . not in excess of 25% of . . . past-due
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benefits[.]” See id. at 799–807; see also Hopkins v. Cohen, 390 U.S. 530, 534 & n.6 (1968).
With respect to the reasonableness limitation, the Supreme Court in Gisbrecht construed the
relevant statutory language as requiring the reviewing court to start with the contingency fee
agreement and then test the resulting amount for reasonableness with the burden of demonstrating
reasonableness being upon the attorney requesting the fees. Factors the Court identified as being
relevant in determining reasonableness (in addition to the contingency fee agreement being primary)
include: (1) the character of the representation; (2) the results achieved; (3) whether the attorney
engaged in dilatory conduct for the purpose of increasing past-due benefits and thereby the size of
the potential award; (4) whether the benefits are large in comparison to the time counsel spent on
the case (i.e., whether the counsel will receive a “windfall”); and (5) the hours worked by the
attorney together with his or her hourly rate for non-contingent fee cases. Id. at 807–08.
In this case, petitioner asks the court to award the full amounts being withheld by the SSA
for payment of attorney fees, which is $33,439.25. As noted above, this amount is (or is very close
to) 25% of the total of the amounts of past-due benefits awarded plaintiff and his dependent.
Petitioner argues that an award of this amount is reasonable given plaintiff’s agreement to an award
based upon 25% of the past-due benefits as well as the other Gisbrecht factors.2
Petitioner acknowledges he cannot keep both the EAJA fees paid by the government and fees
2 As noted above, one of the factors identified in Gisbrecht is the number of hours worked by the attorney
together with his or her hourly rate in non-contingent fee cases. In this case, petitioner states that his hourly rate in non-
contingent cases is $250 per hour. An award of the full amount requested of $33,439.25 equates on an hourly basis for
the 30.35 hours expended to $1,101.79 per hour. Petitioner states that the difference between these hourly rates is not
unreasonable given: (1) the nature of the contingency fee agreement, including that it funded the risk of representing
the plaintiff (who could not afford to pay the hourly rate whether successful or not) as well as the risk of representing
similarly situated claimants; and (2) there being no reason to reduce the amount when considering the other Gisbrecht
factors, including that he was not the cause of any delay. Also, as discussed next, petitioner points to the fact the EAJA
fee award will be returned to plaintiff and his promise not to seek further fees at the administrative level, which, if
awarded, would come out of the benefit awards.
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that are payable by the SSA pursuant to § 406(b)(1) from amounts withheld from the two benefit
awards. See Gisbrecht, 535 U. S. at 796. To prevent a double recovery, petitioner states he will pay
the lesser amount of EAJA fees to plaintiff upon receipt of the fees payable pursuant to § 406(b)(1).
This allows plaintiff to continue to realize the benefit of the award of fees made pursuant to the
EAJA and that were paid by the government.3
Petitioner also states he will not seek an award of attorney fees pursuant to § 406(a) for work
performed before the SSA following the court’s remand if the court awards the fee amount requested
now. 4 While currently there is a limit of $6,000 on any additional fee award under § 406(a),5 the
3 Petitioner states that, if you subtract the $6,161.05 in EAJA fees to be repaid plaintiff from a full award of
$33,439.25, the difference is $27,278.20. Petitioner notes this is 20% of the past-due benefits of $133,757. One court
has suggested that the amount of the EAJA fees to be returned should not be considered in evaluating the reasonableness
of a fee award under § 406(b)(1) (at least in terms of it being a positive consideration), stating that the return of the EAJA
fee merely prevents a double recovery and is a wash. Ringel v. Commissioner of Social Security, 295 F. Supp. 3d 816,
839–40 & n.39 (S.D. Ohio 2018). Also, from another perspective, if one adds the $6,161.05 EAJA fee award to plaintiff
in this case to the past-due benefits, the total amount flowing to plaintiff and his dependent, collectively, is $139,918.05
and the requested fees of $33,439.25 is approximately 24% of that amount. That being said, the EAJA award to plaintiff
is for attorney fees and is additional money for the plaintiff that reduces the amount of fees plaintiff has to pay from his
own pocket or, correspondingly, as the Supreme Court noted in Gisbrecht, has the effect of increasing the “amount of
total past-due benefits the claimant actually receives . . . .” 535 U.S. at 796. In that sense, the fact petitioner sought
payment of fees from the government for plaintiff’s benefit and was successful does speak to the character of petitioner’s
representation and the results he obtained for the plaintiff. In fact, a number of courts have held that the failure to pursue
an EAJA fee award is a negative and requires a downward adjustment in any fee award pursuant to § 406(b)(1). See,
e.e., Abreu v. Saul, No. CV-16-853, 2020 WL 1159082, at **2-3 (D.N.M. Feb. 19, 2020); Harlow v. Astrue, 610 F.
Supp. 2d 1032, 1034–35 (D. Neb. 2009); see generally 4 Soc. Sec. Law & Prac. § 49:65 (June 2020 update).
4 Petitioner has not made a formal record here of what happened upon remand other than ultimately there was
the two benefit awards. During the telephonic conference with petitioner and the attorney for the government, the court
asked what happened upon remand and it appears that petitioner’s efforts were more than de minimus and involved
additional filings and another hearing. The telephonic conference was not recorded, however.
It appears the court is limited by § 406(b)(1) to awarding fees for work performed before court. At this point,
the court makes no ruling with respect to whether it can take into consideration a promise by counsel not to seek
additional fees for work performed before the agency as a factor bearing upon the reasonableness of the fee, which
arguably may be different. Petitioner may, if he so chooses, brief this issue as well as provide additional information with
respect to what happened upon remand.
5 Section 406(a) imposes a fixed-dollar a limit on attorney fees that can be recovered for work performed
before the agency, which the SSA is authorized to increase from time-to-time. It appears the maximum amount currently
is $6,000. 74 Fed. Reg. 6080-02 (Feb. 4, 2009) (increasing maximum award to $6,000); see Lathrop v. Berryhill, No.
4:18-cv-04025, 2020 WL 1703857, at *5 (D.S.D. April 8, 2020).
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total amount plaintiff might be responsible for pursuant to §§ 406(a) and 406(b)(1)—either by
having the fees withheld from past-due benefits or having to pay petitioner directly if the amount
withheld is not enough—could potentially exceed the fee amount currently being requested. See
Culbertson v. Berryhill, __ U.S.__, 139 S. Ct. 517 (2019) (holding that the 25% limit upon attorney
fees in § 406(b)(1) applies only to fees for court representation and not the aggregate of fees under
§§ 406(a) and 406(b)(1)). Under certain scenarios, this might be true, even if the court reduced the
fee award requested by the present motion.6
The Government has filed a response to the motion for fee approval in which it outlines the
law that governs fee awards. 	However, it takes no position whether petitioner’s fee request is
reasonable.
Finally, since the fee request has been made by motion brought in plaintiff’s name, the only
guarantee the court has that plaintiff is aware (1) of the motion, (2) his right to express his opinion
on whether the amount being requested is reasonable notwithstanding the fee agreement, and (3) the
mechanism by which he can weigh in and the time for doing so is reliance upon petitioner having
fully advised plaintiff of these matters.
II. 	DISCUSSION
Two points about awards of fees pursuant to §406(b)(1) are in order. First, a Social Security
claimant has an obvious interest in an award of fees pursuant to § 406(b)(1)—not just formally as
a named party but also substantively—given that the fees are payable from claimant’s benefit
6 For example, if the court reduced the fee award requested here by $5,000 and the SSA awarded the full
$6,000 for work performed before the SSA upon remand, then the total amount of attorney fees plaintiff ultimately would
be responsible for would be $1,000 more than the current request. On the other hand, if the court reduced the fee award
being requested under the present motion by $10,000 and the SSA awarded an additional $4,000 (less than the
maximum), then the total amount of attorney fees coming out of the two benefit awards would be $6,000 less than the
current request.
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award.7 Further, given that an award of fees is limited as a matter of law to what is reasonable and
the nature
of the Social Security program, the court would be loathe to conclude that a claimant can waive his
or her right as an interested party to be heard with respect to whether the fee request is
reasonable—even with more legalese in the contingent fee agreement than is present in this case.8
Second, what is also obvious is that the interests of the Social Security claimant and the
claimant’s attorney may be in some instances be divergent when it comes to fee requests pursuant
to § 406(b)(1). That is, an attorney can seek an award of fees pursuant to § 406(b)(1) even if that
amount is higher than what the client might deem reasonable after having been fully advised with
respect to the law governing the award of attorney fees.9 And, while the best practice in that
situation may be for the attorney to separately petition the court for the award of fees and serve his
or her client with a copy of the petition, the undersigned is skeptical this will be done in all
instances.
In recognition of the potential for divergence of interests between the claimant and his or her
attorney when it comes to fees that are payable from the claimant’s benefit award, the SSA requires
7 In Gisbrecht, the Supreme Court stated in a footnote that the real parties in interest in the three cases before
it were the attorneys. However, as made clear by the text of the Court’s opinion to which the footnote was appended,
the persons appealing were the three attorneys whose fee requests were denied or limited with no indication that the
claimants in those cases were in disagreement with the positions of their attorneys. 535 U.S. at 798 n.6. Hence, the
undersigned does not read this offhand remark as the Supreme Court having concluded that a claimant has no interest
in a § 406(b)(1) request being made by the attorney to the district court in the claimant’s name.
8 Also, in some cases, the disability is diminished mental capacity.
9 The claimant might believe that the amount is unreasonable based on the amount or quality of the work
performed relative to the amount of past-due benefits award. Also, as noted in a prior footnote, the claimant may also
object if counsel failed to file a motion for EAJA fees, which, as a practical matter, offsets some of the fee burden if
awarded.
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an attorney to serve a copy of a 406(a) fee request for services performed at the agency level upon
the claimant. 20 C.F.R. §§ 404.1725(a)(7), 416.152(a)(7). However, there is nothing in § 406(b)(1)
or the SSA’s regulations which requires proof that a claimant has been given notice of a motion
made to the court for approval of fees pursuant to § 406(b)(1). See generally C. Kubitschek & J.
Dubin, Social Security Disability Law & Procedure in Federal Court § 10:26 (Jan. 2020 update)
(“SSA Law & Procedure”). The same is true for the Federal Rules of Civil Procedure, which, as a
general matter, do not require proof that a party represented by an attorney has been furnished copies
of court filings made on his or her behalf.
Nevertheless, a number of courts have required proof that claimants have been provided
notice of motions for approval of § 406(b)(1) fee requests. See, e.g., Joshua v. Saul, No 15-1192,
2019 WL 4238892, *1 (C.D. Cal. June 17, 2019); Holder v. Astrue, Civ. No. 05-3521, 2009 WL
1363538, **3–4 (D. Ariz. May, 7, 2009); Taylor v. Heckler, 608 F. Supp. 1255, 1260–61 (D.N.J.
1985); Robinson v. Secretary of HEW, 456 F. Supp. 876, 878 (E.D. Mich. 1978); see generally SSA
Law & Procedure, supra. In some of the cases, due process is cited as a concern. See id.
Also, at least one court has gone further and required an “enhanced notice” that affirmatively
advises the claimant of the right to object to the fee request and the procedure to be followed to do
so. See, e.g., Taylor v. Heckler, 608 F. Supp. at 1260–61. In addition, there are other courts that
have accomplished the same thing by either itself giving notice to the claimant of the pending
motion, thereby inviting a response if there is an objection (see, e.g., Robinson v. Secretary of HEW,
456 F. Supp. at 878)), or issuing an order setting forth a deadline for responding and requiring proof
that the motion and order were served upon the claimant (see, e.g., Lovejoy v. Commissioner, No.
1:15-cv-00360, 2018 WL 3629922, at *1 (E.D. Cal. 2018)).
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While not concerned about the professionalism of plaintiff’s counsel in this case, the
undersigned agrees with those courts which have held that fairness (if not also due process)
necessitates something more than a motion filed in the plaintiff claimant’s name and nothing else.
Hence, pursuant to the court’s inherent powers, the undersigned will require that the procedure set
forth below be followed in this case, given its present posture, before ruling on the pending motion. 10
By so ordering, the court is not expressing any opinion at this point with respect to whether
the requested fees are reasonable or unreasonable.
III. 	ORDER
Pursuant to the foregoing, it is hereby ORDERED as follows:
1. 	Petitioner shall promptly forward by mail to plaintiff: (1) a copy of this order; (2) a
copy of the affidavit (or unsworn declaration under penalty of perjury) required
below; and (3) copies of the pending motion for fees, the government’s response, and
the reply to the government’s response if, for some reason, these documents have not
previously been forwarded to plaintiff.
2. 	Petitioner shall file with the court an affidavit (or unsworn declaration under penalty
of perjury) stating that petitioner has provided plaintiff copies of the documents
required to be furnished to plaintiff as set forth above.
3. 	Plaintiff (i.e., Mr. Wilkinson) shall have 14 days from the date of the affidavit (or
unsworn declaration under penalty of perjury) to advise the court of objections he
may have (if any) to petitioner’s request for fees as set forth in the pending motion.
10 In the absence of a local rule or district-wide established practice, the undersigned in future cases would
endeavor to enter an order at the time of the filing of the motion that would: (1) set forth the time period for claimant’s
response and the means for doing so; (2) require that counsel serve the order upon the claimant; and (3) require that
counsel file proof of service of the order and motion.
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Plaintiff may do so by a formal filing or by letter addressed as follows:
Chambers of Magistrate Judge Miller
PO Box 670
Bismarck, ND 58502-0670
Dated this 24th day of July 2020.
/s/ Charles S. Miller, Jr.
Charles S. Miller, Jr., Magistrate Judge
United States District Court
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