Koroma v. Commissioner of Social Security Administration ( 2021 )

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Tamara Koroma, No. CV-19-04459-PHX-DWL 10 Plaintiff, ORDER 11 v. 12 Commissioner of Social Security Administration, 13 Defendant. 14 15 Pending before the Court is the motion for an award of attorneys’ fees under 42 16 U.S.C. § 406(b), (Doc. 20), submitted by Plaintiff’s counsel and real-party-in-interest, 17 Jason Scott Rodman (“Counsel”). 18 “Under 42 U.S.C. § 406(b) . . . , a prevailing [Social Security benefits] claimant’s 19 fees are payable only out of the benefits recovered; in amount, such fees may not exceed 20 25 percent of past-due benefits.” Gisbrecht v. Barnhart, 535 U.S. 789, 792-93 (2002). 21 “In many cases, as in the instant case, the Equal Access to Justice Act (EAJA), enacted in 22 1980, effectively increases the portion of past-due benefits the successful Social Security 23 claimant may pocket.” Id. at 796. “Congress harmonized fees payable by the 24 Government under EAJA with fees payable under § 406(b) out of the claimant’s past-due 25 Social Security benefits in this manner: Fee awards may be made under both 26 prescriptions, but the claimant’s attorney must ‘refund to the claimant the amount of the 27 smaller fee.’” Id. “Thus, an EAJA award offsets an award under Section 406(b), so that 28 the amount of the total past-due benefits the claimant actually receives will be increased 1 by the EAJA award up to the point the claimant receives 100 percent of the past-due 2 benefits.” Id. 3 Here, Counsel seeks $9,050.50 in § 406(b) fees, “as a net award that already has 4 subtracted the EAJA amount.” (Id. at 2.) In other words, Counsel seeks a § 406(b) 5 award of $12,519.231 minus the $3,468.72 EAJA award he already received2 (id.), to save 6 himself the hassle of refunding to Plaintiff the amount of the EAJA award—and perhaps 7 to avoid “intercept[ion] to satisfy a federal debt.” (Id. at 2 ¶ 5.) Under Counsel’s 8 proposed “net award” plan, the Commissioner would retain a portion of the funds that it 9 has been withholding to pay § 406(b) fees, and therefore the burden would shift to the 10 Commissioner to refund the $3,468.72 balance to Plaintiff. 11 The Commissioner normally “has no direct financial stake in the answer to the 12 § 406(b) question” because the award, if granted, will be taken out of Plaintiff’s past-due 13 benefits, and therefore the Commissioner’s role “resembl[es] that of a trustee for the 14 claimants.” Gisbrecht v. Barnhart, 535 U.S. 789, 798 n.6 (2002). Here, however, the 15 Social Security Administration would be affected to some extent by Counsel’s proposed 16 “net award” plan, and the Commissioner objects—not to the amount of fees requested, 17 but to the “net award” method of awarding them. (Doc. 22 at 4-5.) 18 In his reply, Counsel does not address the Commissioner’s opposition to the “net 19 award” method, instead cabining his short reply to defending the reasonableness of the 20 fees requested (Doc. 23 at 1-2)—which the Commissioner did not challenge. 21 Moreover, the only authority Counsel provided in the motion for using the “net 22 award” method is an out-of-circuit case that does not support the use of this method. 23 Counsel stated that “[t]he Seventh Circuit has determined that ‘the netting method is 24 permissible,’” quoting O’Donnell v. Saul, 983 F.3d 950, 957 (7th Cir. 2020). (Doc. 20 at 25 2 ¶ 1.) This quotation was taken out of context. The Seventh Circuit stated that “even if 26 the netting method is permissible under § 406(b)(1), it is ‘disfavored’ in light of the 27 1 This is 25% of Plaintiff’s past-due benefits, which are $50,076.91. (Doc. 20-5 at 2.) 28 2 Pursuant to the Court’s October 30, 2020 order, the EAJA award was paid to Counsel, rather than to Plaintiff. (Doc. 19 at 2.) 1 [statutory] language that anticipates an attorney-to-claimant refund.” O’Donnell, 983 2 F.3d at 957. The Seventh Circuit found “no statutory requirement that the court order 3 netting in any or all circumstances” and found instead that the statute “contemplates a 4 refund by the attorney.” Id. 5 Assuming arguendo that the “net award” method is permissible, see, e.g., Parrish 6 v. Comm’r of Soc. Sec. Admin., 698 F.3d 1215, 1221 (9th Cir. 2012), it remains within 7 the Court’s discretion to award fees in the usual way—the way that is expressly 8 contemplated by the statute. Particularly in light of Counsel’s failure to defend the “net 9 award” method in his reply, the Court will not employ this atypical method. 10 All that remains, then, is the Court’s standard analysis upon receipt of a § 406(b) 11 motion. Here, as usual, the client-attorney fee agreement provides for a contingency 12 fee—Plaintiff agreed that the attorneys’ fee would be 25% of all past-due benefits 13 awarded to her. (Doc. 20-1 at a.) These 25% contingency fee agreements are nearly 14 ubiquitous in the context of social security appeals. Gisbrecht, 535 U.S. at 802-04. 15 Section 406(b) “calls for court review” of contingency fee agreements. Id. at 807- 16 08. “Congress has provided one boundary line: Agreements are unenforceable to the 17 extent that they provide for fees exceeding 25 percent of the past-due benefits.” Id. 18 “Within the 25 percent boundary, as petitioners in this case acknowledge, the attorney for 19 the successful claimant must show that the fee sought is reasonable for the services 20 rendered.” Id. 21 The Court must determine whether it is appropriate to reduce Counsel’s recovery 22 “based on the character of the representation and the results the representative achieved” 23 by assessing, for example, whether Counsel is “responsible for delay” or whether “the 24 benefits are large in comparison to the amount of time counsel spent on the case.”3 Id. at 25 3 This determination does not equate to use of the lodestar method. Crawford v. 26 Astrue, 586 F.3d 1142, 1149 (9th Cir. 2009) (“The lodestar method under-compensates attorneys for the risk they assume in representing SSDI claimants and ordinarily produces 27 remarkably smaller fees than would be produced by starting with the contingent-fee agreement. A district court’s use of the lodestar to determine a reasonable fee thus 28 ultimately works to the disadvantage of SSDI claimants who need counsel to recover any past-due benefits at all.”). 808. 2 Counsel included a record of the hours he spent representing Plaintiff. (Doc. 20-2 at 1.) Having reviewed the timesheet, the Court finds no cause to reduce Counsel’s recovery. 5 Accordingly, 6 IT IS ORDERED that Counsel’s Motion for an Award of Attorney Fees under 42 7\| U.S.C. § 406(b) (Doc. 20) is granted in the amount of $12,519.23. 8 IT IS FURTHER ORDERED that Plaintiffs counsel must refund the 9|| EAJA fee award to Plaintiff. 10 Dated this 28th day of July, 2021. 11 12 om ee 13 } ——— Dominic W. Lanza 14 United States District Judge 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -4-