Moriarty v. Colvin

United States Court of Appeals
For the First Circuit

No. 15-1165

MARSHALL T. MORIARTY, ESQ., individually
and on behalf of all others similarly situated,

Plaintiff, Appellant,

v.

CAROLYN W. COLVIN,

Acting Commissioner, Social Security Administration,

Defendant, Appellee.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Kenneth P. Neiman, Magistrate Judge]

Before

Howard, Chief Judge,
Lynch and Lipez, Circuit Judges.

Richard I. Greenberg for appellant.
Karen L. Goodwin, Assistant United States Attorney, with whom
Carmen M. Ortiz, United States Attorney, and Hugh Dun Rappaport,
Assistant Regional Counsel, Social Security Administration, were
on brief, for appellee.

November 20, 2015
 LYNCH, Circuit Judge. As an incentive to attorneys to

bring Supplemental Security Income (SSI) claims, the Commissioner

of the Social Security Administration (SSA), for more than a

decade, has paid directly to qualified attorneys a fee of no more

than twenty-five percent of the successful recovery of past-due

benefits to clients. See 42 U.S.C. § 1383(d)(2)(B). When the

federal government administers state supplementary payments for

the state, that amount of state payments is included in "past-due

benefits." See 20 C.F.R. § 416.1503. But when the state chooses

to administer its own payments, the state amounts are not included

as "past-due benefits" for the purpose of attorney compensation.

See id.

So when Massachusetts chose in 2012 to administer its

own benefits, rather than rely on federal administration of its

supplementary payments as it had done in the past, that had the

effect of reducing the fees paid to attorneys representing

Massachusetts SSI claimants. The attorney here argues that the

Commissioner cannot exclude state-administered state supplementary

payments from the amount included in "past-due benefits." Giving

deference to the agency, as we must, we conclude the Commissioner

can do so.

We may and do make the assumption that we have federal

appellate jurisdiction. We affirm the district court's order

granting summary judgment to the Commissioner.

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 I.

Attorney Marshall Moriarty represented a client in a

claim for SSI benefits before the SSA in 2012. Moriarty and his

client had entered into an agreement in June 2012, providing that,

subject to the SSA's approval, "if SSA favorably decides the

claim(s)," Moriarty would receive "a fee equal to the lesser of

25% or the maximum allowable fee that, as of the date of this

agreement, is $6000.00."

In 2013, Moriarty's client received a partially

favorable decision, in which the SSA granted him $16,699.02 in

federal and federally-administered state back payments. This

amount included federal SSI payments the client was owed from

November 2010 through April 2013 as well as Massachusetts state

supplementary payments from November 2010 through March 2012 --

the time period during which Massachusetts's state supplementary

payments1 were federally administered. However, in April 2012,

Massachusetts changed its practice and began administering its own

program of supplementary payments. At that point, such payments

were no longer included in the SSA's calculation of back payments

for purposes of payments to attorneys.

1 We refer to the state program of supplementary payments
as "supplementary payments" to align with the language in 42 U.S.C.
§ 1382e.

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 Upon learning that the SSA attorney's fee award did not

include twenty-five percent of the Massachusetts state-

administered state supplementary payments, Moriarty wrote a letter

to the SSA seeking $324.85 in additional fees. The SSA Office of

the Regional Counsel e-mailed Moriarty informing him that "past-

due benefits are calculated only [on] the basis of federally

administered benefits and do not include state supplementation

unless federally administered."

The Commissioner's position is that Moriarty's

attorney's fee award can be based only on the $16,699.02 granted

by the SSA, and so it cannot include a percentage of the

Massachusetts state-administered state supplementary payments from

April 2012 through April 2013. If Massachusetts had continued its

prior practice of having the federal government administer the

program, then Moriarty would have gotten twenty-five percent of

the total state and federal payments. Because Massachusetts

changed its practice, the Commissioner says that not only will

Moriarty not receive the same amount of attorney's fees but he is

also forbidden to seek the shortfall.

In August 2013, Moriarty filed a Complaint for

Declaratory Relief and Petition for Writ of Mandamus in the federal

district court. The parties cross-moved for summary judgment. On

December 31, 2014, the district court entered judgment in favor of

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the Commissioner. Moriarty v. Colvin, 76 F. Supp. 3d 261, 268 (D.

Mass. 2014). This appeal followed.

II.

Under Title XVI of the Social Security Act, 42 U.S.C.

§§ 1381–1383f, the SSA administers SSI to eligible "individuals

who have attained age 65 or are blind or disabled." Id. §§ 1381,

1381a. States may choose to supplement federal SSI benefits with

optional state supplementary payments. See Bouchard v. Sec'y of

Health & Human Servs., 583 F. Supp. 944, 947 (D. Mass. 1984)

(citing 42 U.S.C. § 1382e); 20 C.F.R. § 416.2001. Massachusetts

has chosen to do so. States providing these supplementary payments

can administer the payments on their own or enter into an agreement

with the Commissioner under which the Commissioner makes

supplementary payments on the state's behalf. See 42 U.S.C.

§ 1382e(a)–(b). States that administer their own supplementary

payments "may establish [their] own criteria for determining

eligibility requirements as well as the amounts." 20 C.F.R.

§ 416.2005(c).

When states choose to have the federal government

administer the state supplementary payments, the federal

government "assume[s] complete control" over the administration of

the payments. Bouchard, 583 F. Supp. at 947. These states then

reimburse the federal government for the state portion of the

payments disbursed and pay an administrative fee. See 42 U.S.C.

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§ 1382e(d)(1). To be clear, the states do not hold separate

hearings whether or not they use the federal government to

administer their supplementary payments. See 106 Mass. Code Regs.

§ 327.120. The Commissioner's determination of eligibility for

SSI benefits automatically qualifies the claimant for the state

supplement. See id. The majority of states administer their own

supplementary payments.2 Some states do not provide supplementary

payments at all.

As originally enacted, the SSI program did not authorize

the withholding of SSI benefits from the claimant's award to pay

the claimant's attorney his or her fees in successful

adjudications. See Bowen v. Galbreath, 485 U.S. 74, 79 (1988).

However, in 2004, the Social Security Protection Act added a

subparagraph to 42 U.S.C. § 1383(d)(2), providing that when a

claimant is awarded past-due benefits, "the Commissioner of Social

Security shall pay out of such past-due benefits to such attorney"

the attorney's fees, subject to certain limitations. Pub. L. No.

108-203, § 302(a)(4), 118 Stat. 493, 520 (2004); see 42 U.S.C.

§§ 406(a)(2), 1383(d)(2)(B). Since 2007, the Commissioner has

2 There are reasons a state may choose to administer its
own supplementary payments. For example, those states that enter
into agreements with the SSA must pay a fee of more than $10 to
the SSA for each payment the SSA administers. See Social Security
Handbook § 2106.2 (2011). In addition, states with federally-
administered payments "los[e] all administrative control over the
operation of those benefits." H.R. Rep. No. 92-231, at 5186
(1971); see also 42 U.S.C. § 1382e(b)(2).

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interpreted "past-due benefits" under the SSI program as

"including any Federally administered State payments," but not

including supplementary payments administered by the state.

Temporary Extension of Attorney Fee Payment System to Title XVI,

72 Fed. Reg. 16,720, 16,725 (Apr. 5, 2007) (codified at 20 C.F.R.

§ 416.1503); see also SSA Program Operations Manual System

GN 03920.031(B)(1) (2012) ("In a title XVI only claim, 'past-due

benefits' are the total amount of Federal and Federally

administered State payments accumulated to the claimant and his or

her spouse . . . because of a decision favorable to the

claimant . . . ."). Accordingly, a percentage of state

supplementary payments is not included as part of the attorney's

fees the SSA awards in states that administer their own

supplementary payments. It is this percentage of the Massachusetts

state-administered state supplementary payments that Moriarty

seeks.

III.

We address the Commissioner's argument that we lack

subject matter jurisdiction to decide this case.3 Under 28 U.S.C.

3 "Under 28 U.S.C. § 1291, we have jurisdiction over
appeals from final decisions and orders of the district courts
within this circuit." Royal Siam Corp. v. Chertoff, 484 F.3d 139,
142 (1st Cir. 2007). Because the case before us appeals a final
decision of the district court, we have jurisdiction over the
appeal. Id. However, "[t]hat is not the end of the jurisdictional
issue." Id. "[I]t normally is incumbent upon an appellate court
to satisfy itself both of its own subject-matter jurisdiction and

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§ 1331, federal courts have jurisdiction to review agency action.

See Califano v. Sanders, 430 U.S. 99, 105 (1977). However, two

statutes may potentially withdraw jurisdiction: (1) 42 U.S.C.

§ 405(h), which provides: "No action against the United States,

the Commissioner of Social Security, or any officer or employee

thereof shall be brought under section 1331 or 1346 of title 28 to

recover on any claim arising under this subchapter."; and (2) 42

U.S.C. § 406(a)(3)(C), which provides: "The decision of the

administrative law judge or other person conducting the review [of

the amount which would otherwise be the maximum attorney's fee]

shall not be subject to further review."

The answer to the jurisdictional question is not clear.

However, resolving this case on the merits by affirming the grant

of summary judgment has the same consequences as concluding that

we do not have jurisdiction. Because the jurisdictional question

is a question of statutory jurisdiction, not Article III

jurisdiction, see Parella v. Ret. Bd. of R.I. Emps.' Ret. Sys.,

173 F.3d 46, 54 (1st Cir. 1999), "we believe that this is a case

in which we may -- and should -- bypass the jurisdictional

question." Royal Siam Corp. v. Chertoff, 484 F.3d 139, 143 (1st

Cir. 2007); see also Global NAPs, Inc. v. Verizon New England,

of the subject-matter jurisdiction of the trial court before
proceeding further." Id. The Commissioner filed a motion to
dismiss below based on lack of subject matter jurisdiction, which
the district court denied.

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Inc., 706 F.3d 8, 12–13 (1st Cir. 2013) (explaining that "[w]hen

confronted with non-constitutional challenges to jurisdiction,"

id. at 12–13, and the "case readily can be resolved in favor of

[the party challenging jurisdiction,] . . . we may 'decline to

decide the jurisdictional issues . . . ,'" id. at 13 (quoting

Restoration Pres. Masonry, Inc. v. Grove Eur. Ltd., 325 F.3d 54,

59 (1st Cir. 2003))). The Commissioner agrees we have the

authority to do so.

IV.

"We review an appeal from a grant of summary judgment de

novo." FDIC v. Estrada-Rivera, 722 F.3d 50, 52 (1st Cir. 2013).

Because we are reviewing an agency's interpretation of

its governing statute, we apply the principles of Chevron, U.S.A.,

Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837

(1984). Under Chevron, we first ask "whether Congress has directly

spoken to the precise question at issue." Id. at 842. If we

determine that "Congress has not directly addressed the precise

question at issue," we then ask whether the agency's interpretation

is a "reasonable" one. Id. at 843–44.4

4 To the extent Moriarty suggests we should not apply the
Chevron framework, he is wrong. See Splude v. Apfel, 165 F.3d 85,
90 (1st Cir. 1999) ("[T]he Social Security Administration is
normally accorded the deference due to an agency plausibly
interpreting its own governing statutes."); see also Barnhart v.
Thomas, 540 U.S. 20, 26–30 (2003); Barnhart v. Walton, 535 U.S.
212, 217–22 (2002).

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 Congress has not "directly spoken to the precise

question at issue." Id. at 842. Under 42 U.S.C. § 1383(d)(2)(B),

"if the claimant is determined to be entitled to past-due benefits

under this subchapter and the person representing the claimant is

an attorney, the Commissioner of Social Security shall pay out of

such past-due benefits" the lesser of "the maximum fee as does not

exceed 25 percent of such past-due benefits" or "the amount of

past-due benefits available after any applicable reductions." 42

U.S.C. § 1383(d)(2)(B).5

Whether "past-due benefits under this subchapter"

includes state-administered state supplementary payments is not

self-evident. Section 1382e discusses state supplementary

payments and provides that "[a]ny cash payments which are made by

a State . . . on a regular basis to individuals who are receiving

benefits under this subchapter . . . shall be excluded under

section 1382a(b)(6) of this title in determining the income of

such individuals for purposes of this subchapter." Id. § 1382e(a).

It then explains that "the Commissioner of Social Security and

such State may enter into an agreement which satisfies subsection

5 The term "past-due benefits" appears more than ten times
throughout § 1383 and almost twenty times throughout 42 U.S.C.
§ 406, which has largely been incorporated into Title XVI of the
Social Security Act. See 42 U.S.C. § 1383(d)(2)(A). In his brief,
Moriarty also discusses § 406(a), which provides that "[i]n the
case of a claim of entitlement to past-due benefits under this
subchapter," the Commissioner shall approve fee agreements subject
to certain conditions. See id. § 406(a)(2)(A).

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(b) of this section under which the Commissioner of Social Security

will, on behalf of such State . . . make such supplementary

payments to all such individuals." Id.6 Thus, while the subchapter

unambiguously discusses state supplementary payments, it is

unclear whether this subsection presupposes the existence of state

supplementary payments or whether state supplementary payments

should be considered as "past-due benefits under this subchapter."

The legislative history is of little assistance in

resolving this question. Originally, Congress did not provide for

the withholding of past-due benefits for attorney's fees in SSI

cases. See Bowen, 485 U.S. at 77 (concluding that this omission

was "intentional" and that "it is fair to assume that this omission

6 The sub-section in full states:

Any cash payments which are made by a State (or
political subdivision thereof) on a regular
basis to individuals who are receiving benefits
under this subchapter or who would but for
their income be eligible to receive benefits
under this subchapter, as assistance based on
need in supplementation of such benefits (as
determined by the Commissioner of Social
Security), shall be excluded under section
1382a(b)(6) of this title in determining the
income of such individuals for purposes of this
subchapter and the Commissioner of Social
Security and such State may enter into an
agreement which satisfies subsection (b) of
this section under which the Commissioner of
Social Security will, on behalf of such State
(or subdivision) make such supplementary
payments to all such individuals.

42 U.S.C. § 1382e(a).

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also reflected Congress' view that withholding past-due SSI

benefits would be inconsistent with the purpose of the

program . . . [g]iven the extreme financial need of SSI

beneficiaries"). When Congress did authorize the withholding of

past-due benefits in 2004, it did so with the purpose of

"improv[ing] SSI applicants' access to representation, as more

attorneys would be willing to represent claimants if they are

guaranteed payment." H.R. Rep. No. 108-46, at 43 (2003). The

report does not discuss whether state supplementary payments would

be included in "past-due benefits." Id.7 Given the ambiguity of

the language and the inconclusive legislative history, we move to

the second step of the Chevron inquiry and ask whether the

Commissioner's interpretation "is based on a permissible

construction of the statute." Chevron, 467 U.S. at 843.

We conclude that the Commissioner's interpretation is

reasonable. The statute provides that the Commissioner "shall

pay" attorney's fees "out of such past-due benefits," 42 U.S.C.

§ 1383(d)(2)(B), and the Commissioner explains in her brief that

7 With regard to the states' involvement with the
administration of attorney's fees, the report explains only that
"in cases where the States would be reimbursed for interim
assistance they had provided to a beneficiary awaiting a decision
on a claim for SSI benefits, the State would be paid first, and
the attorney would be paid second out of the past-due benefit
amount" so that "States providing interim assistance to
individuals would not receive less reimbursement." H.R. Rep. No.
108-46, at 43.

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she can make payments only out of funds over which the SSA has

control -- "the federal SSI payments and the funds provided by

states for federally administered state payments." As the district

court found, the SSA "would have no power to withhold 25% of the

total retroactive amount payable to the claimant." Moriarty, 76

F. Supp. 3d at 266. Moreover, unlike with federally-administered

state payments, there is no mechanism for reimbursement when states

administer their own supplementary payments. See 42 U.S.C.

§ 1382e(d)(1). "At the least, the [Commissioner]'s interpretation

has administrative simplicity to recommend it." Scialabba v.

Cuellar de Osorio, 134 S. Ct. 2191, 2212 (2014).8

We recognize that the Commissioner's interpretation

leads to a situation where an attorney cannot collect twenty-five

percent of state-administered state supplementary benefits as

fees. The Commissioner acknowledges that because under her

regulations, "past-due benefits do not include state-administered

8 The Commissioner also represents that when states
administer their own payments, "the Commissioner often does not
know the precise amount of the payments to an individual SSI
recipient," and the SSA is therefore "not in a position to
calculate a fee based on a percentage of such payments." Moriarty
contests this representation and argues that the Commissioner can
access information regarding state-administered state
supplementary payments. We need not wade into this factual
dispute. Whether or not the Commissioner can ultimately determine
the amount of state-administered supplementary payments through
publicly available information, as the district court explained,
she does not have control over the administration of these
payments. Moriarty, 76 F. Supp. 3d at 266.

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supplements . . . [she] cannot approve a fee that includes a

percentage of the state-administered supplement." And if Moriarty

charges or attempts to collect a fee above that which has been set

by the Commissioner, he would violate the Social Security Act and

"shall be deemed guilty of a misdemeanor," 42 U.S.C. § 406(a)(5).

Yet we cannot conclude that this outcome renders the

Commissioner's interpretation unreasonable. Whether or not the

attorney receives a portion of the state-administered state

supplementary payments, by receiving a percentage of the federal

payments, the attorney still has received an incentive to represent

claimants. Cf. Detson v. Schweiker, 788 F.2d 372, 376 (6th Cir.

1986) ("[T]he primary financial incentive provided by § 406 is not

the amount of attorney's fees but is the direct payment of

fees. . . . [T]his financial incentive is unaffected by the

Secretary's method of calculating the withholding amount." (citing

Burnett v. Heckler, 756 F.2d 621, 626 (8th Cir. 1985))). There

are competing concerns when determining attorney's fees: "There is

a danger that too much of the benefits go to the lawyers rather

than the claimants. There is also the danger that if the lawyers

have no assured compensation the claimants will not be

represented. . . . Congress has dealt with [this problem] and

delegated to the [Commissioner] the authority to spell out what

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Congress has intended." Rodriguez v. Sec'y of Health & Human

Servs., 856 F.2d 338, 340 (1st Cir. 1988).9

V.

For the reasons stated above, the district court's order

is affirmed.

9 In determining that the Commissioner's interpretation is
reasonable, "we are not unmindful that the fees of attorneys
representing [clients in states without federally-administered
supplementary payments] will be reduced." Detson, 788 F.2d at
376. "However, dissatisfaction with this result" is for Congress
and the Commissioner -- not this court -- to address. Id. at 376–
77.

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