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Vasquez v. Berryhill

United States District Court, D. New Mexico

September 28, 2018




         THIS MATTER comes before the Court on the Martone Law Firm, P.A.'s Motion for Order Authorizing Attorney Fees Pursuant to 42 U.S.C. § 406(B) and Supporting Memorandum (“Motion”), filed August 27, 2018. (Doc. 32.) No. response was filed, [1] although the Motion indicated that the Commissioner declined to concur in or oppose the Motion because the Commissioner is not the real party in interest regarding the 42 U.S.C. § 406(b) fees. See Gisbrecht v. Barnhart, 535 U.S. 789, 798 n.6 (2002) (the Commissioner “has no direct financial stake in the answer to the § 406(b) question; instead, [she] plays a part in the fee determination resembling that of a trustee for the claimants”). The Court considered the Motion and concluded that it required supplemental briefing to address the Court's concerns regarding the timeliness of Plaintiff's counsel's § 406(b) motion. The Court entered an Order for Supplemental Briefing on September 18, 2018, and gave the parties until September 21, 2018, to do so. (Doc. 33.) Defendant submitted supplemental briefing on September 21, 2018. (Doc. 34.) Plaintiff's counsel did not respond.


         On July 22, 2015, Sandra Catherin Vasquez instituted an action in this Court seeking judicial review of her denied claim for disability benefits. (Doc. 1.) After filing her Motion to Remand (Doc. 21), but before the Commissioner filed its Response, the Commissioner moved to remand for further proceedings (Doc. 27), which the Court granted (Doc. 28). The parties subsequently filed a stipulated motion for attorneys' fees under the Equal Access to Justice Act (“EAJA”), and Ms. Vasquez was awarded $1, 579.20 in attorney fees. (Doc. 30.)

         On remand, the ALJ issued a fully favorable decision dated December 21, 2016, finding that Ms. Vazquez has been disabled since March 5, 2011. (Doc. 32-1 at 15.) A document titled “Important Information, ” dated July 22, 2017, explained to Ms. Vasquez that the SSA had withheld $14, 203.75 to pay her legal expenses. (Doc. 32-2 at 1.) The document also indicated that the Administration already approved and paid Ms. Vasquez's legal representative $10, 000 for the work done on her claim, and was withholding the balance of $4, 203.75. (Id.) The Martone Law Firm, having entered into a contingency fee contract with Ms. Vasquez for legal services in the United States District Court, now seeks an order authorizing fees pursuant to 42 U.S.C. § 406(b) in the amount of $4, 203.75 for the work they performed on Ms. Vasquez's behalf before this Court (Id.)


         Attorneys' fees may be deducted from a successful social security claimant's award of past-due benefits. Separate subsections of 42 U.S.C. § 406 authorize fee awards for representation before the SSA and in court, allowing attorneys to receive fees for their work in both settings. See 42 U.S.C. § 406(a), (b).

         For representation before the SSA, the statute permits an attorney to file a fee petition or a fee agreement with the agency “whenever the Commissioner . . . makes a determination favorable to the claimant . . . .” 42 U.S.C. § 406(a). There is no express limit to the fees an attorney may seek and receive in a petition; the Commissioner must only “fix . . . a reasonable fee, ” id., while considering several factors. See 20 C.F.R. § 404.1725(b) (2015) (outlining the factors); see also Gisbrecht, 535 U.S. at 794 (explaining the fee petition process). For fees received pursuant to a fee agreement for work before the SSA, attorneys may currently receive a maximum award of the lesser of $6, 000 or 25% of the past-due benefits. 42 U.S.C. § 406(a)(2)(A).[2]

         For representation in court, courts may award fees under § 406(b) when, as in this case, “the court remands a . . . case for further proceedings and the Commissioner ultimately determines that the claimant is entitled to an award of past-due benefits.” McGraw v. Barnhart, 450 F.3d 493, 496 (10th Cir. 2006). The statute limits a fee award for representation before a court to 25% of the claimant's past-due benefits. 42 U.S.C. § 406(a)(1)(A). Separate awards of attorney fees for representation before the SSA and in court - for example, fees pursuant to the EAJA and § 406(b) - are not limited to an aggregate of 25% of past-due benefits. Wrenn v. Astrue, 525 F.3d 931, 936-38 (10th Cir. 2008). However, if fees are awarded under both EAJA and § 406(b), the attorney must refund the lesser award to the claimant. McGraw, 450 F.3d at 497 N.2 (10th Cir. 2006).

         While § 406(b) permits contingency fee agreements, it requires the reviewing court to act as “an independent check” to ensure that fees awarded pursuant to such agreements are reasonable. Gisbrecht, 535 U.S. at 807. Fee agreements are flatly unenforceable to the extent that they provide for fees exceeding 25% of past-due benefits, but fees may be unreasonable even if they fall below this number, and there is no presumption that fees equating to 25% of past-due benefits are reasonable. Id. at 807 n.17. The attorney seeking fees bears the burden of demonstrating the reasonableness of the fee. Id. at 807.

         The reasonableness determination is “based on the character of the representation and the results the representative achieved.” Id. at 808. If the attorney is responsible for delay, the fee may be reduced so that the attorney does not profit from the accumulation of benefits while the case was pending in court. Id. Such a reduction also protects the claimant, as fees paid under § 406(b) are taken from, and not in addition to, the total of past-due benefits. 42 U.S.C. § 406(b)(1)(A). The fee may also be reduced if the benefits are large in comparison to the amount of time spent on the case. Gisbrecht, 535 U.S. at 808. A court may require the claimant's attorney to submit a record of the hours spent representing the claimant and a statement of the lawyer's normal hourly billing rate for noncontingent-fee cases. Id.

         The statute does not contain a time limit for fee requests. However, the Tenth Circuit has held that a request “should be filed within a reasonable time of the Commissioner's decision awarding benefits.” McGraw, 450 F.3d at 505 (citation omitted).


         A motion for award of fees under § 406(b)(1) should be filed within a “reasonable time” of the Commissioner's decision awarding benefits. Id. The ALJ's favorable decision in this matter was issued on December 21, 2016. (Doc. 32-1.) The “Important Information” document, dated July 22, 2017, attached to the Motion provides an explanation related to the Administration's payment of Ms. Vasquez's legal expenses. (Doc. 32-2.) Counsel represented in its Motion, without more, that it “has not received a notice stating the total back benefits awarded as a result of the favorable ALJ decision.” (Doc. 32 at 2.) The Motion was filed on August 27, 2018, one year and eight months after counsel received notice of the ALJ's favorable decision (Doc. 32-1), or thirteen months after their receipt of the “Important Information” document. (Doc. 32-2.) The question, therefore, before the Court is whether the Motion was filed within a reasonable time. See Early v. Astrue, 295 Fed.Appx. 916 (10th Cir. 2008) (finding that the district court did not abuse its discretion in finding 406(b) motion untimely where it was filed more than ...

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