Sherry Parrish v. Commissioner Social Security ( 2012 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
SHERRY PARRISH , No. 11-35332
Plaintiff-Appellant,
D.C. No.
v. 3:08-cv-00969-HU
COMMISSIONER OF SOCIAL
SECURITY ADMINISTRATION , OPINION
Defendant-Appellee.
Appeal from the United States District Court
for the District of Oregon
Dennis James Hubel, Magistrate Judge, Presiding
Submitted May 8, 2012*
Portland, Oregon
Filed November 5, 2012
Before: A. Wallace Tashima, Richard C. Tallman, and
Sandra S. Ikuta, Circuit Judges.
Opinion by Judge Ikuta
*
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
2 PARRISH V . COMMISSIONER SSA
SUMMARY**
Social Security / Attorneys’ Fees
The panel affirmed the district court’s order reducing the
amount of attorneys’ fees for representing a claimant in a
Social Security benefits claim. First, the panel concluded that
a fee award under § 406(b)(1) of the Social Security Act
compensates an attorney for all the attorney’s work before a
federal court on behalf of a claimant in connection with an
action that results in past-due benefits. The panel then held
that if a district court awards attorneys’ fees under § 2412(d)
of the Equal Access to Justice Act (“EAJA”) for the
representation of a Social Security claimant in an action for
past-due benefits, and also awards attorneys’ fees under
§ 406(b)(1) for representation of the same claimant in
connection with the same claim, the claimant’s attorney
“receives fees for the same work” under both § 2412(d) and
§ 406(b)(1) for purposes of the EAJA savings provision.
When applicable, the savings provision requires a claimant’s
attorney to refund the smaller fee award to the claimant. In
this case, a single attorney received two EAJA awards for his
representation of the claimant: one for securing a remand
order during the claimant’s first appeal to federal court, and
the other for securing an order of past-due benefits during the
claimant’s second appeal to federal court. He also moved for
an award of attorneys’ fees under § 406(b)(1) for securing
past-due benefits. Because both EAJA awards were for the
“same work” as the attorney’s claimed § 406(b)(1) award, and
the combined amount of the EAJA awards exceeded his
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
PARRISH V . COMMISSIONER SSA 3
potential fees under § 406(b)(1), the district court properly
held that the savings provision prevented the attorney from
recovering any fees beyond the two EAJA awards.
COUNSEL
Tim Wilborn, Wilborn Law Office, P.C., Oregon City, OR,
for plaintiff-appellant Sherry Parrish.
Dwight C. Holton, United States Attorney; Kelly A. Zusman,
Assistant United States Attorney; David Morado, Regional
Chief Counsel, Seattle Region X; L. Jamala Edwards,
Assistant Regional Counsel, Social Security Administration,
Office of the General Counsel; for defendant-appellee
Michael J. Astrue, Commissioner of Social Security.
OPINION
IKUTA, Circuit Judge:
Tim Wilborn appeals the reduction of attorneys’ fees he
earned while representing Sherry Parrish in a Social Security
benefits claim.1 Because the Social Security Act (SSA) and
the Equal Access to Justice Act (EAJA) both allow attorneys
to receive fees for successful Social Security representations,
Congress enacted a savings provision to prevent attorneys
1
Although Parrish is the named appellant, the real party in interest here
is W ilborn, who seeks to obtain a further payment of attorneys’ fees.
Similarly, the Commissioner of Social Security, the named appellee, has
no direct financial interest in the outcome of this case, but instead serves
as a de facto trustee for Parrish. See Gisbrecht v. Barnhart, 535 U.S. 789,
798 n.6 (2002).
4 PARRISH V . COMMISSIONER SSA
from receiving fees twice for the “same work” on behalf of a
claimant. Pub. L. No. 99-80, § 3, 99 Stat. 183, 186 (1985)
(adding “Savings Provision” to 28 U.S.C. § 2412 notes).2
This case requires us to determine whether Wilborn
“receive[d] fees for the same work” under the EAJA and SSA
for the two appeals he undertook for Parrish.
I
We begin with the relevant statutory background. In
1965, Congress added an attorneys’ fee provision to the SSA,
42 U.S.C. § 406(b), in order “to protect claimants against
‘inordinately large fees’ and also to ensure that attorneys
representing successful claimants would not risk ‘nonpayment
of [appropriate] fees.’” Gisbrecht v. Barnhart, 535 U.S. 789,
805 (2002) (quoting Department of Health and Human
Services, Social Security Administration, Office of Hearings
and Appeals, Report to Congress: Attorney Fees Under Title
II of the Social Security Act 15, 66, 70 (July 1988) (“SSA
Report”) (alteration in original). The statute provided
separate procedures for compensating representatives during
the administrative and judicial review stages of a Social
2
The savings provision provides, in relevant part:
Section 206(b) of the Social Security Act (42 U.S.C. 406(b)(1))
shall not prevent an award of fees and other expenses under
section 2412(d) of title 28, United States Code. Section
206(b)(2) of the Social Security Act [§ 406(b)(2)] shall not apply
with respect to any such award but only if, where the claimant’s
attorney receives fees for the same work under both section
206(b) of that Act and section 2412(d) of title 28, United States
Code, the claimant’s attorney refunds to the claimant the amount
of the smaller fee.
PARRISH V . COMMISSIONER SSA 5
Security claim. See § 406(a) (permitting fee awards for
representatives in administrative proceedings); § 406(b)
(permitting fee awards for representatives in court); see also
Gisbrecht, 535 U.S. at 794.
For judicial proceedings, § 406(b)(1) provides that a
federal court that “renders a judgment favorable to a claimant
. . . who was represented before the court by an attorney” may
grant the attorney “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.”3 Any such award is paid directly out of the
claimant’s benefits. § 406(b)(1)(A). Further, § 406(b)
precludes an attorney from recovering (or even requesting)
any additional fees. Under § 406(b)(2), “[a]ny attorney who
charges, demands, receives, or collects for services rendered
in connection with proceedings before a court to which
[§ 406(b)(1)] is applicable any amount in excess of that
allowed by the court thereunder shall be guilty of a
3
42 U.S.C. § 406(b)(1)(A) states in full:
W henever 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.
6 PARRISH V . COMMISSIONER SSA
misdemeanor.”4 According to the Commissioner, this section
prohibits a lawyer from charging fees unless the claimant has
been awarded past-due benefits. Gisbrecht, 535 U.S. at 795.
Section 406(b) is the “exclusive regime” by which an attorney
may obtain fees directly from a Social Security claimant. See
id. at 795–96.
But another avenue for recovering attorneys’ fees in
Social Security cases opened in 1980, when Congress passed
the EAJA, 28 U.S.C. § 2412, “to eliminate for the average
person the financial disincentive to challenge unreasonable
governmental actions” in a broad range of circumstances.
Comm’r, INS v. Jean, 496 U.S. 154, 163 (1990). As relevant
here, the EAJA requires the government to pay the fees and
expenses of a “prevailing party” unless the government’s
position was “substantially justified.” § 2412(d)(1)(A).5
4
42 U.S.C. § 406(b)(2) states in full:
Any attorney who charges, demands, receives, or collects for
services rendered in connection with proceedings before a court
to which paragraph (1) of this subsection is applicable any
amount in excess of that allowed by the court thereunder shall be
guilty of a misdemeanor and upon conviction thereof shall be
subject to a fine of not more than $500, or imprisonment for not
more than one year, or both.
5
28 U.S.C. § 2412(d)(1)(A) provides:
Except as otherwise specifically provided by statute, a court shall
award to a prevailing party other than the United States fees and
other expenses, in addition to any costs awarded pursuant to
subsection (a), incurred by that party in any civil action (other
than cases sounding in tort), including proceedings for judicial
review of agency action, brought by or against the United States
PARRISH V . COMMISSIONER SSA 7
Unlike § 406(b) awards, EAJA fee awards “are determined
not by a percent of the amount recovered, but by the ‘time
expended’ and the attorney’s ‘[hourly] rate,’” subject to a
specified cap, and are paid by the government, not the
claimant. Gisbrecht, 535 U.S. at 796 (quoting
§ 2412(d)(1)–(2)). If a claimant qualifies as a “prevailing
party” at any intermediate stage in a Social Security case, a
court may deem the claimant to be a prevailing party for
purposes of § 2412(d). See Corbin v. Apfel, 149 F.3d 1051,
1053 (9th Cir. 1998).
Because attorneys who accepted an award under
§ 2412(d) in excess of the § 406(b)(1) cap could be subject to
criminal sanctions under § 406(b)(2), Congress amended the
EAJA in 1985 to add a savings provision that allows attorneys
to receive fees under both § 406(b) and § 2412. However, in
order to maximize the award of past-due benefits to claimants
and to avoid giving double compensation to attorneys, the
savings provision requires a lawyer to offset any fees received
under § 406(b) with any award that the attorney receives
under § 2412 if the two were for the “same work.” See
Gisbrecht, 535 U.S. at 796. That provision states: “where the
claimant’s attorney receives fees for the same work under
both [42 U.S.C. § 406(b)] and [28 U.S.C. § 2412], the
claimant’s attorney [must refund] to the claimant the amount
of the smaller fee.” Pub. L. No. 99-80, § 3, 99 Stat. 183(1985) (uncodified).
in any court having jurisdiction of that action, unless the court
finds that the position of the United States was substantially
justified or that special circumstances make an award unjust.
8 PARRISH V . COMMISSIONER SSA
II
An administrative law judge (“ALJ”) rejected Parrish’s
first application for disability benefits, concluding that Parrish
could perform jobs that exist in significant numbers in the
national economy and therefore was not disabled. The
Appeals Council denied Parrish’s request for further review.
Wilborn represented Parrish in her appeal to the district
court. After the completion of briefing in the district court,
the parties agreed that the case should be remanded to the
agency to re-evaluate the existing medical evidence and
obtain supplemental evidence from a vocational expert. In
light of this agreement, the district court entered judgment
remanding the case for a rehearing. Also by agreement of the
parties, the district court awarded Parrish $5,000 in attorneys’
fees pursuant to the EAJA.
A different attorney represented Parrish before the ALJ on
remand. After a hearing, the ALJ again determined that
Parrish was capable of performing jobs that existed in
significant numbers in the national economy and was
therefore not disabled and not entitled to disability benefits.
Wilborn again represented Parrish on her appeal of this
second unfavorable agency decision to the district court. The
district court determined the ALJ erred by finding some of the
medical evidence not credible, and held that Parrish was
entitled to disability benefits. The district court again entered
judgment, remanding the case to the agency with instructions
to calculate and award past-due benefits. Parrish then filed an
unopposed motion for a second EAJA fee award for
Wilborn’s work on the second appeal. The court awarded
PARRISH V . COMMISSIONER SSA 9
Parrish an additional $6,575, bringing the total award to
$11,575 in EAJA fees.
After the second remand and award of past-due benefits,
Wilborn filed an unopposed motion with the district court
seeking $9,059.89 in attorneys’ fees, equating to the statutory
maximum of 25 percent of the past-due benefit award under
§ 406(b)(1)(A). Wilborn conceded that the savings provision
required the court to deduct the second EAJA award of
$6,575 from his § 406(b) fees and thus sought payment of
only $2,484.89.
But the district court went further in reducing attorneys’
fees by adopting the rule stated in Kopulos v. Barnhart that
“all EAJA awards granted for work performed on a claim
must off-set the SSA fees awarded for work performed on the
same claim.” 318 F. Supp. 2d 657, 667–68 (N.D. Ill. 2004).
The court held that the savings provision required it to deduct
the first EAJA award of $5,000, as well as the second award
of $6,575, from the § 406(b) fees. Because the EAJA award
of $11,575 was greater than the § 406(b) award of $9,059.89,
the court declined to make any further award to Wilborn.
III
On appeal, Wilborn contends that the district court erred
in deducting the first $5,000 EAJA award from the § 406(b)
award of $9,059.89 because he did not receive those awards
for the “same work.” We review fee awards under § 406(b)
for abuse of discretion, Clark v. Astrue, 529 F.3d 1211, 1213
(9th Cir. 2008) (en banc), and review questions of law de
novo. Id. at 1214.
10 PARRISH V . COMMISSIONER SSA
As noted above, the EAJA savings provision requires an
attorney who receives a fee award under § 2412(d) of the
EAJA in addition to a fee award under § 406(b) for the “same
work” to refund to the Social Security claimant the smaller
award. Pub. L. No. 99-80, § 3, 99 Stat. 183 (1985) (adding
“Savings Provision” to 28 U.S.C. § 2412 notes). We must
therefore determine whether the $5,000 EAJA award to
Wilborn for his representation of Parrish during her first
appeal is for the “same work” as that which earned Wilborn
$9,059.89 from Parrish’s past-due benefits under § 406(b).
We have no difficulty in identifying the work for which an
attorney may receive fees under the EAJA. The award covers
the time an attorney spent representing a claimant in federal
court, so long as the claimant is the “prevailing party” at that
stage of the proceedings and the court finds that the
government’s position was not “substantially justified.”
§ 2412(d); see also Corbin, 149 F.3d at 1053.
By comparison, identifying the work for which an
attorney may receive fees under § 406(b) requires deeper
analysis. A § 406(b) award is akin to a contingency fee: an
attorney gets nothing unless a court renders a “favorable
judgment” and a claimant is awarded past-due benefits “by
reason of” that judgment. Those criteria must be met before
a court may award attorneys’ fees of up to 25 percent of the
past-due benefits. § 406(b)(1)(A). Because § 406(b) provides
for a contingency-type reimbursement rather than an hourly
fee, the statute does not clearly identify the “work” for which
an attorney is receiving the § 406(b) award.
Wilborn argues that an attorney may receive fees under
§ 406(b) only for work on the final appeal in a Social Security
PARRISH V . COMMISSIONER SSA 11
case. He reasons as follows: each Social Security appeal to
a federal court results in a separate judgment, and each
remand to the agency terminates the prior civil case. Under
§ 406(b), a court can award attorneys’ fees only for a
representation by an attorney that resulted in “a judgment
favorable to a claimant” if past-due benefits were awarded to
the claimant “by reason of such judgment.” Therefore,
Wilborn asserts, a court can award attorneys’ fees only for
representation during proceedings resulting in a judgment that
directly led to past-due benefits, and only the final appeal
meets this criterion. This reading of the statute, Wilborn
argues, is confirmed by § 406(b)’s reference to “judgment” as
a singular noun, which indicates that a court cannot award
attorneys’ fees for multiple judgments, and therefore cannot
make an award for any representation in a prior appeal that
resulted in a judgment that did not lead directly to past-due
benefits.
We disagree. Wilborn mistakes a condition precedent to
a fee award (that the court render a favorable judgment to the
claimant) for a limitation on the sort of work that is
compensable (that is, Wilborn claims only the representation
by an attorney in connection with that final favorable
judgment is compensable). But the statutory language
imposes only one limitation on the sort of work that is
compensable: it must be representation of the claimant before
the federal court. See § 406(b)(1)(A) (where a claimant “was
represented before the court by an attorney” the attorney may
receive “a reasonable fee for such representation” provided
the conditions precedent are met. (emphasis added)). Under
the statute’s plain language, a federal court may consider an
attorney’s representation of the client throughout the case in
determining whether a fee award is reasonable.
12 PARRISH V . COMMISSIONER SSA
Furthermore, Wilborn’s limiting construction of § 406(b)
is inconsistent with the overall statutory scheme. If
§ 406(b)(1) applied only to the final appeal that is successful
on remand, an attorney could charge a client for work on an
earlier appeal without facing criminal penalties, because
§ 406(b)(2) applies only to those proceedings for which the
attorney can obtain a fee award under § 406(b)(1). As a
result, a claimant could end up paying more than 25 percent
of past-due benefits in federal court attorneys’ fees, a result
that would thwart the obvious and repeatedly expressed intent
of Congress to prevent attorneys “[c]ollecting or even
demanding from the client anything more than the authorized
allocation [25 percent] of past-due benefits,” Gisbrecht, 535
U.S. at 795.
Thus, an award under § 406(b) compensates an attorney
for all the attorney’s work before a federal court on behalf of
the Social Security claimant in connection with the action that
resulted in past-due benefits. This interpretation is the most
natural reading of the statutory language, and most congruent
with the nature of the fee award itself. If § 406(b) is the
“exclusive regime for obtaining fees” from a Social Security
claimant, Gisbrecht, 535 U.S. at 795, then the § 406(b) award
must compensate the claimant’s attorney for all the work that
led to the favorable result. This would include work on a
prior appeal that did not result in the award of past-due
benefits, because an attorney who secures a remand for a
claimant plays an important role in achieving the ultimate
award, regardless whether a different attorney represented the
claimant during subsequent remands. Cf. Shalala v. Schaefer,
509 U.S. 292, 302 (1993) (a remand constitutes “succe[ss] on
[a] significant issue in litigation” and “achieve[s] some of the
benefit . . . sought in bringing suit.”) (quoting Tx. St. Teachers
PARRISH V . COMMISSIONER SSA 13
Ass’n v. Garland Ind. Sch. Dist., 489 U.S. 782,
791–92(1989)) (internal quotation marks omitted) (ellipsis in
original); see also Harvey L. McCormick, 2 SOCIAL SECURITY
CLAIMS AND PROCEDURES § 16:22 (6th ed.). Accordingly,
our interpretation is most consistent with Congress’s goal of
ensuring that “attorneys representing successful claimants” do
“not risk ‘nonpayment of [appropriate] fees.’” See Gisbrecht,
535 U.S. at 805 (quoting SSA Report 66) (internal quotation
marks omitted). Finally, our interpretation is in line with the
interpretations of our sister circuits, which have read § 406(b)
broadly to include all “substantial work done before the
court” even when the attorney’s work results only in a remand
to the agency, McGraw v. Barnhart, 450 F.3d 493, 502 (10th
Cir. 2006) (quoting Conner v. Gardner, 381 F.2d 497, 500
(4th Cir. 1967)), so long as the “claimant eventually [is]
awarded past-due benefits, whether at the agency level or
during further judicial proceedings.” McGraw, 450 F.3d at
503; see also Fenix v. Finch, 436 F.2d 831, 835 (8th Cir.
1971).
We therefore hold that if a court awards attorney fees
under § 2412(d) for the representation of a Social Security
claimant on an action for past-due benefits, and also awards
attorney fees under § 406(b)(1) for representation of the same
claimant in connection with the same claim, the claimant’s
attorney “receives fees for the same work” under both
§ 2412(d) and § 406(b)(1) for purposes of the EAJA savings
provision. The district court is well positioned to implement
§ 406(b)’s requirements. Where the same attorney
represented a claimant at each stage of judicial review, the
court need merely offset all EAJA awards against the § 406(b)
award. But even in circumstances where a claimant has more
than one attorney at different appeals, district courts would
14 PARRISH V . COMMISSIONER SSA
have ample discretion to apportion fees equitably under
§ 406(b)(1), and apply the offset as appropriate to those
attorneys who received both § 406(b)(1) and EAJA awards.
IV
We now apply these principles here. Wilborn represented
Parrish in all proceedings before the district court in
connection with her claim, and the district court awarded
Wilborn 25 percent of Parrish’s past-due benefits award as a
reasonable fee for that representation. Wilborn received the
$5,000 award under § 2412(d)(2) for his representation of
Parrish on her first appeal. Accordingly, the $5,000 award
under EAJA was for the “same work” as the work for which
Wilborn received the § 406(b)(1) award, and therefore the
district court correctly offset the $5,000 from the 25 percent
award.
AFFIRMED.