F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
June 13, 2006
UNITED STATES CO URT O F APPEALS Elisabeth A. Shumaker
Clerk of Court
TENTH CIRCUIT
RANDY L. M CGRAW ,
Plaintiff-Appellant,
v. No. 05-5079
JO A NN E B. BA RN HA RT,
Commissioner, Social Security
Administration,
Defendant-Appellee.
A PPE AL FR OM T HE UNITED STATES DISTRICT COURT
FO R TH E NO RTH ERN DISTRICT O F O K LAH O M A
(D.C. No. 02-CV-00055-K(J))
Submitted on the briefs:
Timothy M . W hite, Richmond Brownson, Tulsa, Oklahoma, for A ppellant.
David E. O’M eilia, United States Attorney, Tina M . W addell, Regional Chief
Counsel, Amy J. M itchell, Special Assistant United States Attorney, Office of the
General Counsel, Region VI, Social Security Administration, Dallas, Texas, for
Appellee.
Before L UC ER O, EBEL, and M U RPH Y, Circuit Judges.
EBEL, Circuit Judge.
This appeal presents a question of first impression in this court: whether
the Social Security Act (SSA), 42 U.S.C. § 406(b)(1), allows the district court to
aw ard attorney’s fees to claimant’s counsel when the court remands a Title II
Social Security disability case for further proceedings and the Commissioner
ultimately determines that the claimant is entitled to an award of past-due
benefits. W e conclude that § 406(b)(1) does permit an award of counsel fees
under these circumstances, and therefore we REVERSE the district court’s denial
of fees, see M cGraw v. Barnhart, 370 F. Supp. 2d 1141 (N.D. Okla. 2005), and
REM AND for further proceedings. *
I. Background and D istrict Court Proceedings
In April 1998, Randy L. M cGraw applied for Title II Social Security
disability benefits. He and his counsel entered into a contingent-fee agreement in
which he agreed to pay counsel twenty-five percent (25% ) of any past-due
benefits recovered.
M r. M cGraw’s application for benefits was denied at the agency level by
both the administrative law judge (ALJ) and the Appeals Council, and he filed a
complaint in the district court. Upon the Commissioner’s motion, on M ay 28,
2002, the magistrate judge, presiding by consent of the parties under 28 U.S.C.
*
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument.
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§ 636(c), remanded the case to the Commissioner for further proceedings under
sentence six of 42 U.S.C. § 405(g). 1 The court also administratively closed the
case and ordered the C ommissioner to file a status report within 120 days. On
August 29, the C ommissioner duly filed a status report, which informed the court
that the agency had determined that the tape of M r. M cGraw’s original benefits
hearing was defective and a complete record of the administrative proceedings
could not be prepared. Thus, the Appeals Council had vacated the
Commissioner’s final decision and remanded the case to the ALJ for further
proceedings consistent with the district court’s order of remand.
In light of the status report, the district court remanded the case for a
de novo hearing under sentence four of 42 U.S.C. § 405(g), and it entered
judgment in favor of M r. M cGraw. After the district court’s judgment became
final and non-appealable, M r. M cG raw filed a motion for an aw ard of attorney’s
1
“[T]he exclusive methods by which district courts may remand to the
Secretary are set forth in sentence four and sentence six of [42 U.S.C.] § 405(g).”
Shalala v. Schaefer, 509 U.S. 292, 296 (1993). “Under sentence four, a district
court may remand in conjunction with a judgment affirming, modifying, or
reversing the Secretary’s decision. Under sentence six, the district court may
remand in light of additional evidence without making any substantive ruling as
to the correctness of the Secretary’s decision . . . .” M elkonyan v. Sullivan,
501 U.S. 89, 99-100 (1991). A sentence-four remand requires the district court to
enter a final judgment at the time of remand, while with a sentence-six remand, a
final judgment is not entered until the remand proceedings are completed and the
matter returns to the court. See Schaefer, 509 U.S. at 297; M elkonyan, 501 U.S.
at 102. A sentence-four remand “terminates the litigation with victory for the
plaintiff,” while a sentence-six remand does not. Schaefer, 509 U.S. at 301.
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fees under the Equal A ccess to Justice Act, 28 U.S.C. § 2412(d) (EAJA). On
December 12, 2002, the court awarded an EAJA fee of $445.40.
On February 19, 2004, counsel filed a motion for a fee award under
§ 206(b)(1) of the SSA , 42 U.S.C. § 406(b)(1). Referring to the agency’s Notice
of Award dated December 16, 2002, he advised the court that M r. M cGraw had
received a fully favorable ALJ decision on remand, and that the Commissioner
had determined that M r. M cGraw was entitled to past-due benefits in the amount
of $46,505.00. Counsel calculated that twenty-five percent of the past-due
benefits totaled $11,626.25. Deducting from that amount the SSA fee that the
Commissioner had aw arded for work before the agency ($5,300) and the EAJA
fee the court had awarded ($445.40), as well as an additional amount to avoid a
windfall to counsel, he requested an additional SSA fee award of $1,847.80 for
his w ork before the court. 2
The district court denied the SSA fee request, holding that § 406(b)(1) did
not allow a fee award when “the Commissioner, not the Court, determined that the
Plaintiff was entitled to past-due benefits, and the Commissioner’s action, not the
2
This circuit has long recognized that counsel who receives fee awards
under both EAJA and the SSA must pay the smaller amount to the client. See
Weakley v. Bowen, 803 F.2d 575, 580 (10th Cir. 1986); see also Gisbrecht v.
Barnhart, 535 U.S. 789, 796 (2002). M r. M cGraw’s counsel recognized this
obligation and sought to fulfill it by deducting the amount of his EAJA fee from
his SSA fee request, so that the Commissioner would simply make a larger refund
to M r. M cGraw. The district court disapproved of this practice in this case.
Similarly, we believe that it is more appropriate for counsel to make the required
refund to his client, rather than to delegate that duty to the Commissioner.
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Court’s judgment, awarded the benefits.” M cGraw, 370 F. Supp. 2d at 1143.
M r. M cGraw (or, more precisely, his counsel) appealed directly to this court in
accordance with 28 U.S.C. § 636(c)(3) and the terms of the parties’ consent to
proceed before the magistrate judge.
II. Analysis
The issue presented is a question of statutory interpretation and therefore a
question of law. As such, it is reviewed de novo. See Grimsley v. M acKay,
93 F.3d 676, 679 (10th Cir. 1996).
A. Fees in Social Security Cases
Attorneys handling Social Security proceedings in court may seek fees for
their w ork under both the EA JA and the SSA. “EAJA fees and fees available
under § 406 are two different kinds of fees that must be separately awarded.”
Frazier v. Apfel, 240 F.3d 1284, 1286 (10th Cir. 2001). There are several
differences between the two types of fees. For example, EAJA fees are awarded
based on a statutory maximum hourly rate, while SSA fees are based on
reasonableness, with a maximum of twenty-five percent of claimant’s past-due
benefits. See id.; 28 U.S.C. § 2412(d)(2)(A); 42 U.S.C. § 406(b)(1). Also,
“[f]ees under § 406(b) satisfy a client’s obligation to counsel and, therefore, are
paid out of the plaintiff’s social security benefits, while fees under the EAJA
penalize the [Commissioner] for assuming an unjustified legal position and,
accordingly, are paid out of agency funds.” Orner v. Shalala, 30 F.3d 1307, 1309
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(10th Cir. 1994). In that vein, an EA JA award is to the claimant, while counsel
receives an SSA award. See 28 U.S.C. § 2412(d)(1)(A) (making award to “a
prevailing party”); 42 U.S.C. § 406(b)(1) (providing for attorney’s payment of
approved fee out of past-due benefits). Finally, EAJA fee awards are allowed
only if the government’s position was not “substantially justified” or there are no
special circumstances that “make an award unjust.” 28 U.S.C. § 2412(d)(1)(A).
SSA funds are not so conditioned. 42 U.S.C. § 406(b)(1). If counsel is awarded
fees under both the EA JA and the SSA , counsel must refund the smaller amount
to the claimant. See G isbrecht v. Barnhart, 535 U.S. 789, 796 (2002); Weakley v.
Bowen, 803 F.2d 575, 580 (10th Cir. 1986).
In addition to providing for fees for work before the court, the SSA also
provides for fees for work done at the administrative level. “The statute deals
with the administrative and judicial review stages discretely: § 406(a) governs
fees for representation in administrative proceedings; § 406(b) controls fees for
representation in court.” Gisbrecht, 535 U.S. at 794. Under the SSA scheme,
each authority sets fees for the work done before it; thus, the court does not make
fee awards for work at the agency level, and the Commissioner does not make fee
awards for w ork done before the court. See 20 C.F.R. §§ 404.1720, 404.1728;
Harris v. Sec’y of Health & Hum an Servs., 836 F.2d 496, 497 (10th Cir. 1987),
abrogated on other grounds by Frazier, 240 F.3d at 1286. The agency’s and the
court’s determinations on SSA fees bind counsel: “[t]he prescriptions set out in
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§§ 406(a) and (b) establish the exclusive regime for obtaining fees for successful
representation of Social Security benefits claimants. Collecting or even
demanding from the client anything more than the authorized allocation of
past-due benefits is a criminal offense.” Gisbrecht, 535 U.S. at 795-96; see also
42 U.S.C. § 406(b)(2).
W ith regard to work before the courts, Ҥ 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. Rather,
§ 406(b) calls for court review of such arrangements as an independent check, to
assure that they yield reasonable results in particular cases.” Gisbrecht, 535 U.S.
at 807. One of the primary benefits of § 406 and its accompanying regulation,
from counsel’s perspective, is that they authorize the Commissioner to deduct the
approved fees from the claimant’s past-due benefits and pay them directly to
counsel. 42 U.S.C. § 406(b)(1)(A); 20 C.F.R. § 404.1730.
B. Statutory Analysis
1. Text
“Our primary task in construing statutes is to ‘determine congressional
intent, using traditional tools of statutory interpretation.’” N.M . Cattle Growers
Ass’n v. U.S. Fish & Wildlife Serv., 248 F.3d 1277, 1281 (10th Cir. 2001)
(quoting NLRB v. United Food & Commercial Workers Union, 484 U.S. 112, 123
(1987)) (further quotation omitted). “W hen interpreting the language of a statute,
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the starting point is always the language of the statute itself. If the language is
clear and unambiguous, the plain meaning of the statute controls. A statute is
ambiguous when it is capable of being understood by reasonably well-informed
persons in two or more different senses.” United States v. Quarrell, 310 F.3d
664, 669 (10th Cir. 2002) (quotation omitted).
In relevant part, the statute at issue states:
W henever a court renders a judgment favorable to a claimant under
this subchapter [Title II] 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 . . . . 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). The district court read this statute in the narrow est
sense. It particularly focused on the phrases “by reason of” the court’s judgment,
M cGraw, 370 F. Supp. 2d at 1143, and “allow as part of its judgment,” id. at
1144.
W hen discussing “by reason of” the court’s judgment, the district court
stated, “[a] judgment which merely remands the action for further proceedings by
the Social Security Administration does not equate to a claimant being entitled to
past due benefits ‘by reason of’ the Court’s judgment. . . . [The] award of benefits
is too attenuated from the original order of the Court to be considered an award of
benefits by reason of this Court’s judgment.” Id. The court also noted that
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“Plaintiff was not, at the time that the judgment was entered, entitled to Social
Security benefits, and the judgment contains no statement with respect to
attorneys fees. . . . The Court cannot include, as part of its judgment and order of
remand, a finding of a reasonable attorneys fee when the judgment merely
remands the action for additional proceedings . . . .” Id.
As the parties argue on appeal, however, in a broader sense, it easily can be
said that an aw ard of benefits made after a court-ordered remand is an aw ard
made “by reason of” the court’s judgment; after all, if it were not for the order of
remand continuing the proceedings, there would be no benefits award.
Essentially, “[w]ithout the assistance of counsel in resorting to the court below
claimant would have been deprived of the benefits which had been denied
repeatedly by the [Commissioner].” Conner v. Gardner, 381 F.2d 497, 500
(4th Cir. 1967).
Further, w e note that the Supreme Court has read § 406(b)(1) broadly.
In Hopkins v. Cohen, 390 U.S. 530, 535 (1968), it held that attorney fees w ere
properly calculated based on past-due benefits received by the claimant’s entire
family, rather than claimant alone. Rejecting a strict construction of the phrase
“the past-due benefits to which the claimant is entitled,” it stated, “[t]hat seems
to us to be too technical a construction of the Act which we need not adopt.”
Id. at 533-34; see also Smith v. Bowen, 815 F.2d 1152, 1155 (7th Cir. 1987)
(per curiam) (“Reading the statute as a whole, we do not believe Congress meant
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that the only time at which fees could be awarded is the time of judgment. By
authorizing the attorney to be paid directly out of the claimant’s past-due
benefits, Congress intended to make it easier, not harder for attorneys to collect
their fees. A more appropriate reading of § 406(b)(1) is that a judgment favorable
to the claimant is merely a prerequisite to a fee aw ard under the statute.”).
B ecause § 406(b)(1) reasonably can be read either narrowly or broadly, we
find it appropriate to employ other tools of statutory interpretation in deciding the
question before us.
2. Legislative H istory and Purpose
“If [a statutory] ambiguity is found, a court may seek guidance from
Congress’s intent, a task aided by reviewing the legislative history. A court can
also resolve ambiguities by looking at the purpose behind the statute.” Quarrell,
310 F.3d at 669 (quotation omitted).
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The legislative history of § 406(b) is brief. 3 It tends to indicate that
Congress had two concerns in enacting § 406(b)(1): first, that attorneys’ shares
of ultimate recoveries were becoming excessive, and second, that attorneys be
able to collect their reasonable fees. Smith, 815 F.2d at 1155; Dawson v. Finch,
425 F.2d 1192, 1194-95 (5th Cir. 1970); see also Pappas v. Bowen, 863 F.2d 227,
3
The legislative history states, in its entirety:
It has come to the attention of the committee that attorneys
have upon occasion charged what appear to be inordinately large fees
for representing claimants in Federal district court actions arising
under the social security program. Usually, these large fees result
from a contingent-fee arrangement under w hich the attorney is
entitled to a percentage (frequently one-third to one-half) of the
accrued benefits. Since litigation necessarily involves a considerable
lapse of time, in many cases large amounts of accrued benefits, and
consequently large legal fees, are payable if the claimant wins his
case.
The committee bill would provide that whenever a court
renders a judgment favorable to a claimant, it would have express
authority to allow as part of its judgment a reasonable fee, not in
excess of 25 percent of accrued benefits, for services rendered in
connection with the claim; no other fee would be payable. Any
violation would be made subject to the same penalties as are
provided in the law for charging more than the maximum fee
prescribed in regulations for services rendered in connection with
proceedings before the Secretary–up to $500, or a year’s
imprisonment, or both. In order to assure the payment of the fee
allowed by the court, the Secretary would be permitted to certify the
amount of the fee to the attorney out of the amount of the accrued
benefits.
1965 U.S.C.C.A.N. 1943, 2062.
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230-31 (2d Cir. 1988) (characterizing the second reason as to “encourage legal
representation of Social Security claimants”).
Neither of these purposes directly addresses the question before us. It is
apparent, though, that Congress desired to encourage attorneys to represent Social
Security claimants. This concern tends to indicate that the broader reading of
§ 406(b)(1) is the more appropriate reading. See Bergen v. Comm’r of Soc. Sec.,
__ F.3d __, 2006 W L 851664, at *2 (11th Cir. Apr. 4, 2006); see also Hopkins,
390 U.S. at 535 (concluding that legislative history did not preclude broad
reading of § 406(b)(1) that increased amount of benefits to be considered in
awarding fees); Smith, 815 F.2d at 1155 (concluding that legislative history
supported broad reading of § 406(b)(1) that allowed attorneys to delay fee
petition until after agency action).
C. Agency Policy
On appeal, the Commissioner notes that when § 406(b) was enacted, the
agency took the position that fee awards were not available in court cases that
resulted in remands for further proceedings. Finding that circuit courts were not
particularly amenable to that viewpoint, see Conner, 381 F.2d at 499-500, the
agency eventually abandoned that position. According to the Commissioner, “the
Agency currently does not oppose an award of reasonable attorney’s fees under
§ 406(b) where, as here, the court remands a case, and the Commissioner awards
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past-due benefits. For more than twenty years, the Agency has not opposed
§ 406(b) fees under these circumstances.” Aplee. Br. at 12 (footnote omitted).
The first question is what deference is due to the agency’s position.
“Normally, when the agency decision at issue involves interpretations of federal
statutes, we owe deference to that decision as set forth in Chevron, U.S.A., Inc. v.
Natural Resources Def. Council, Inc., 467 U.S. 837, 842-43 . . . (1984).” N.M .
Cattle Growers Ass’n, 248 F.3d at 1281. But where “the statutory interpretation
. . . has never undergone the formal rulemaking process, it remains an informal
interpretation not entitled to deference.” Id. The Supreme Court has held that
“[i]nterpretations such as those in opinion letters–like interpretations contained in
policy statements, agency manuals, and enforcement guidelines, all of which lack
the force of law –do not warrant Chevron-style deference.” Christensen v. Harris
County, 529 U.S. 576, 587 (2000). Instead, such informal interpretations “are
entitled to respect under our decision in Skidmore v. Swift & Co., 323 U.S. 134,
140 . . . (1944), but only to the extent that those interpretations have the power to
persuade.” Id. (quotations omitted). “Chevron did nothing to eliminate
Skidmore’s holding that an agency’s interpretation may merit some deference
whatever its form, given the specialized experience and broader investigations
and information available to the agency and given the value of uniformity in its
administrative and judicial understandings of what a national law requires.”
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United States v. M ead Corp., 533 U.S. 218, 234 (2001) (quotation and citation
omitted).
Here, the relevant regulation closely tracks the language of § 406(b)(1); it
does not distinguish between a remand for benefits and a remand for further
proceedings. See 20 C.F.R. § 404.1728(b). Thus, it appears that the
Commissioner’s practice essentially is a gloss on the text of the regulation and
statute. W e cannot say that the Commissioner’s policy, at least as to this specific
issue, has ever undergone the formal rulemaking process. In these circumstances,
the Commissioner’s interpretation is deserving only of Skidmore deference.
W ith Skidmore deference, the weight to be given the agency’s practice in
particular circumstances depends upon “the thoroughness evident in its
consideration, the validity of its reasoning, its consistency with earlier and later
pronouncements, and all those factors which give it power to persuade . . . .”
Skidmore, 323 U.S. at 140. “U nder Skidmore, the degree of deference given
informal agency interpretations will ‘vary with circumstances, and courts have
looked to the degree of the agency’s care, its consistency, formality, and relative
expertness, and to the persuasiveness of the agency’s position.’” S. Utah
W ilderness Alliance v. Bureau of Land M gmt., 425 F.3d 735, 759 (10th Cir. 2005)
(quoting M ead Corp., 533 U.S. at 228).
For several reasons, in this instance we find the agency’s position
persuasive. First, the agency’s position is not just its litigating position; it
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reflects the agency’s consistent practice over a number of years. In these
circumstances, consistency is a virtue. See Good Samaritan Hosp. v. Shalala,
508 U.S. 402, 417 (1993) (“[T]he consistency of an agency’s position is a factor
in assessing the weight that position is due.”); cf. S. Utah Wilderness Alliance,
425 F.3d at 760 (holding that “the agency’s interpretation lacks the ‘consistency’
that is required to warrant strong Skidmore deference”). Second, the agency’s
position appears thoroughly considered and expresses valid reasoning. Third, as
discussed below, the agency’s position is consistent with (indeed, apparently it
stems from) the w eight of circuit court authority on this issue. Thus, the agency’s
position also weighs tow ard adopting the broader reading of § 406(b)(1).
D. Case Law
Few circuit courts have specifically addressed the question before the court.
As the district court noted, many courts that have awarded fees in similar
proceedings have done so under an assumption that § 406(b)(1) applied, rather
than after examining the statute. See McGraw, 370 F. Supp. 2d at 1145. Our
sister circuits that have addressed the issue, however, have concluded that
§ 406(b)(1) allow s an aw ard of fees in these circumstances.
The Fourth Circuit’s Conner decision appears to be one of the leading
circuit cases on this issue. There, the district court had remanded a case for a
hearing on new evidence. 381 F.2d at 497. After the hearing, the agency made
an award of past-due benefits, and both the agency and the district court awarded
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fees to claimant’s counsel. Id. at 498. On appeal, the Secretary argued that the
statute set three conditions: “(1) there must be a judgment, (2) which is favorable
to the claimant, and (3) which awards him benefits.” Id. at 499. The Secretary
then argued, “[a]pplying this construction of the amendment to the instant case it
is argued that while a remand for a purpose of taking new evidence is a judgment
favorable to the claimant, the court did not award benefits and, therefore, had no
authority to award a counsel fee.” Id. In response, the Fourth Circuit stated:
Should the Secretary prevail in this case there would be a serious
hiatus in the Social Security law which would work to the ultimate
detriment of those seeking disability benefits. The Secretary’s
authority to award counsel fees extends only to services rendered at
the administrative stage. No appeal from his decision may be taken.
The Secretary, in turn, is powerless to award fees for services
rendered in court. In the face of these facts the Secretary would have
us limit the court’s power to award fees to those situations in which
the District Court entered a judgment specifically awarding benefits.
Under this view, an attorney, such as counsel in this case, who
renders substantial service before the court and is successful in
obtaining a remand which ultimately leads to an award of benefits
would be compensated only for work done at the administrative
level; his labors in court, no matter how effective and productive as
in the instant case, would go unrewarded. This might tend to
discourage attorneys from undertaking to represent claimants in such
cases. . . . It would further appear that counsel seeking judicial
review of the Secretary’s denial of benefits would be loath to request
a remand–no matter how appropriate–especially where there
appeared to be a strong possibility that the Secretary’s decision
would be reversed by the court.
W e are of the view that the court may award a fee for
substantial work done before the court although the court enters no
judgment for specific benefits but, instead, orders a remand to the
Secretary who ultimately honors the claim for benefits. W hile the
1965 amendment is not concerned with the specific situation before
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us, we conclude that the intent of Congress was broad enough to
encompass it. The purpose of this amendment was to provide, within
reasonable limits, fees for attorneys rendering services in the District
Court. To permit counsel to receive a reasonable fee for such
services w ill not defeat such purpose, but will serve to advance it.
Id. at 500 (citations omitted). The court reiterated its position in Brown v.
Gardner, 387 F.2d 345, 346 (4th Cir. 1967), and M orris v. Social Security
Administration, 689 F.2d 495, 497 (4th Cir. 1982).
Shortly after the Fourth Circuit’s 1967 decisions, the Sixth Circuit adopted
the Fourth Circuit’s position without additional analysis. See Philpott v. Gardner,
403 F.2d 774, 775 (6th Cir. 1968). In a later case, that court further stated,
“42 U.S.C. § 406(b) authorizes the District Court to award attorneys’ fees in
compensation for services rendered before it. . . . The tenor of § 406(b) is
permissive rather than mandatory. It says that the court may make such an award,
not that such an award shall be made.” Whitehead v. Richardson, 446 F.2d 126,
128 (6th Cir. 1971).
The Eighth Circuit also adopted the Fourth Circuit’s reasoning. In Fenix v.
Finch, 436 F.2d 831, 835 (8th Cir. 1971), it addressed whether to enforce a fee
agreement that exceeded the new statutory maximum in a case in which the 1965
amendments did not apply. As part of its analysis, it favorably quoted the Conner
discussion set forth above. See id. In later cases, the court cited Fenix, without
additional analysis, for the proposition that the district court could award fees
under § 406(b)(1) when a claimant received an award of benefits after a remand.
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See Rohrich v. Bowen, 796 F.2d 1030, 1031 (8th Cir. 1986); Burnett v. Heckler,
756 F.2d 621, 624 (8th Cir. 1985).
The most recent circuit to address the issue is the Eleventh Circuit. Its
review of the statutory language, legislative history, and case law also led it to
conclude that attorney’s fees are available in the case of a remand for further
proceedings. Bergen, 2006 W L 851664, at *4.
E. Section 406(b)(1) Allow s Fee Aw ard
W e conclude that § 406(b)(1) allow s a district court to aw ard attorneys’
fees in conjunction with a remand for further proceedings; it is not required, as a
predicate to a § 406(b)(1) fee award, that the district court remand for an award of
benefits. Of course, a predicate to a § 406(b)(1) fee award is that the claimant
eventually be awarded past-due benefits, whether at the agency level or during
further judicial proceedings.
W hile the magistrate judge is to be commended for his thorough analysis,
in these circumstances confining § 406(b)(1)’s terms to their narrowest meaning
“seems to us to be too technical a construction of the Act which we need not
adopt.” Hopkins, 390 U.S. at 534. As discussed above, the broader reading of
§ 406(b)(1) also is supported by its legislative history, long-standing agency
policy and practice, and the persuasive opinions of our sister circuits.
Additionally, as other circuits have discussed, implementing a categorical
denial of SSA fees in cases of remands for further proceedings could negatively
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impact Social Security proceedings. EAJA fees are not always available, and
even if they are, the award is to the claimant, who may or may not tender that
award to counsel, regardless of their agreement. Thus, counsel may prove less
willing to provide representation at the district court level if they have little hope
of SSA fees in many cases in which they actually do succeed before the district
court. See Bergen, 2006 W L 851664, at *3; Conner, 381 F.2d at 500. M oreover,
if their fees depend on the distinction between remands for awards of benefits and
remands for further proceedings, attorneys might be encouraged, even if only
subconsciously, to focus on securing the former rather than the latter. See
Bergen, 2006 W L 851664, at *3; Conner, 381 F.2d at 500.
Because we hold that § 406(b)(1) allows the district court to award fees in
conjunction with a remand for further proceedings, we reverse the district court’s
decision that fees are not available as a matter of law. And in light of the need
for additional proceedings in this and other cases, 4 we briefly address procedures
for asserting § 406(b)(1) fee requests.
III. Procedural Issues
Section 406(b) itself does not contain a time limit for fee requests. See
Bergen, 2006 W L 851664, at *4; Smith, 815 F.2d at 1156. Federal Rule of Civil
4
As noted in M cGraw, 370 F. Supp. 2d at 1142, the district court also had
pending a number of other cases, involving other claimants, in which
M r. M cGraw’s counsel requested fee awards. Those cases are also on appeal, and
we are vacating those judgments and remanding the cases in separate orders and
judgments.
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Procedure 54(d)(2)(B), on the other hand, requires that fee motions be filed “no
later than 14 days after entry of judgment.” But a sentence-four remand requires
entry of judgment at the time of the remand, see Shalala v. Schaefer, 509 U.S.
292, 297 (1993), and an SSA fee award will only rarely be calculable before the
end of that fourteen-day period, see Smith, 815 F.2d at 1156. How, then, can
counsel seek, and the district court order in appropriate cases, a § 406(b)(1) fee
award in compliance with the Federal Rules of Civil Procedure?
One possibility would be to hold that Rule 54(d)(2) does not apply literally
to § 406(b)(1) fee requests. This is the approach recently adopted by the Eleventh
Circuit, which stated, “Although the rules are necessary for the efficient
administration of justice, their strict application in the present instance conflicts
with congressional intent in enacting § 406(b) and is impractical in light of the
exigencies particular to post-judgment proceedings in Social Security cases.”
Bergen, 2006 W L 851664, at *4. That court held that Rule 54(d)(2)(B)’s
fourteen-day period should begin to run “from the day that the [C ommissioner’s]
award notice is issued.” Id. This approach, however, seems contrary to the plain
language of that rule, which states that “the motion must be filed no later than 14
days after entry of judgment.” (emphasis added). It appears that the term
“judgment” refers to the judgment of the district court. Cf. M elkonyan v.
Sullivan, 501 U.S. 89, 96 (1991); Quigley v. Rosenthal, 427 F.3d 1232, 1236
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(10th Cir. 2005). Because this procedure fits aw kwardly with Rule 54(d)(2)(B),
we are uncomfortable w ith adopting it.
Another approach would be for the district court to issue a conditional
ruling. In Outlaw v. Chater, 921 F. Supp. 13, 18 (D.D.C. 1996), the court made a
contingent award, “direct[ing] the defendant, in the event past-due benefits are
aw arded to the plaintiff, to settle a judgment of attorney’s fees for [plaintiff’s
attorney] for the lesser of (1) 109.4 hours of work at a reasonable rate, or (2) 25
percent of the past-due benefits.” This procedure also is flaw ed, though, as it
requires issuing a decision on a hypothetical issue, which federal courts do not
have the power to do. See Cardtoons, L.C. v. M ajor League Baseball Players
Ass’n, 95 F.3d 959, 965 (10th Cir. 1996) (“Federal courts may only decide cases
or controversies . . . . In order to satisfy this threshold requirement, there must be
‘a real and substantial controversy admitting of specific relief through a decree of
a conclusive character, as distinguished from an opinion advising what the law
would be upon a hypothetical state of facts.’”) (quoting Aetna Life Ins. Co. v.
Haworth, 300 U.S. 227, 241 (1937)). Also, as handled in Outlaw, the first
alternative seems to delegate to the Commissioner the court’s authority to
determine a “reasonable rate” for services before the court, which would
contravene our decision in Harris, 836 F.2d at 497-98, that each forum allocates
fees for work before it. And the second alternative appears to abrogate the
court’s statutory responsibility to ensure that the amount of fees awarded, even
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though within the statutory maximum of twenty-five percent, still is reasonable in
the circumstances of the particular case. See Gisbrecht, 535 U.S. at 807. Neither
of these outcomes is acceptable.
W e believe that the best option in these circumstances is for counsel to
employ Federal Rule of Civil Procedure 60(b)(6) in seeking a § 406(b)(1) fee
award. See Reyes v. Sec’y of Health & H um an Servs., 807 F. Supp. 293, 295
(S.D.N.Y. 1992). “Rule 60(b)(6) has been referred to as a ‘grand reservoir of
equitable power to do justice in a particular case.’” Pelican Prod. Co. v. M arino,
893 F.2d 1143, 1147 (10th Cir. 1990) (quoting Pierce v. Cook & Co., 518 F.2d
720, 722 (10th Cir. 1975) (en banc)) (further quotation omitted). W e recognize
that relief under Rule 60(b)(6) is extraordinary and reserved for exceptional
circumstances. See, e.g., Cashner v. Freedom Stores, Inc., 98 F.3d 572, 580
(10th Cir. 1996). But we have also stated that “the rule should be liberally
construed when substantial justice will thus be served.” Pierce, 518 F.2d at 722
(quotation omitted). Substantial justice will be served by allowing counsel to
seek § 406(b)(1) fees under the authority of Rule 60(b)(6).
A motion for an award of fees under § 406(b)(1) should be filed within a
reasonable time of the Commissioner’s decision awarding benefits. See Smith,
815 F.2d at 1156. Of course, decisions on Rule 60(b)(6) motions for § 406(b)(1)
fees, like Rule 60(b)(6) motions on other grounds, are committed to the district
court’s sound discretion. See Pelican Prod. Corp., 893 F.2d at 1145-46.
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IV. Conclusion
M r. M cGraw’s motion to file an addendum of recent citations is
GRANTED and the Clerk is directed to accept the addendum for filing as of the
date of original receipt.
Because § 406(b)(1) allows for an attorney’s fee award when a district
court remands a Title II Social Security disability benefits case and the
C om missioner subsequently aw ards past-due benefits to the claimant, we
REVERSE and REM AND to the district court for further proceedings. W e
express no opinion on the reasonableness of counsel’s requested fees or the
timeliness of his fee motion in this case, leaving those questions to the district
court’s consideration in the first instance.
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McGraw v. Barnhart
Court: Court of Appeals for the Tenth Circuit
Date filed: 2006-06-13
Citations: 450 F.3d 493
Copy Citations