Kender v. Social Security Administration

CourtDistrict Court, E.D. Arkansas
DecidedMarch 26, 2020
Docket3:16-cv-00126
StatusUnknown

This text of Kender v. Social Security Administration (Kender v. Social Security Administration) is published on Counsel Stack Legal Research, covering District Court, E.D. Arkansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kender v. Social Security Administration, (E.D. Ark. 2020).

Opinion

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF ARKANSAS NORTHERN DIVISION SHANNON KENDER PLAINTIFF

V. NO. 3:16-CV-00126-JTR

ANDREW SAUL, Commissioner of the Social Security Administration DEFENDANT

MEMORANDUM ORDER Pending before the Court is a Motion for Attorney’s Fees, pursuant to 42

U.S.C. § 406(b), filed by Howard D. Olinsky (“Mr. Olinsky”), one of the attorneys for the claimant, Shannon Kender (“Kender”). Doc. 20. Because Mr. Olinsky seeks a contingent fee award of attorney’s fees, from the aggregate amount of past-due disability insurance benefits (“DIB”) awarded to Kender and his three minor

children, he is the real party in interest for purposes of that Motion. See Gisbrecht v. Barnhart, 535 U.S. 789, 798, n. 6 (2002). Defendant Commissioner of the Social Security Administration (“the

Commissioner”) has filed a Response that raises the important issue of whether Mr. 1 Olinsky filed his Motion for Attorney’s Fees “within a reasonable time.”1 Doc. 21 at 1-2. Before resolving that issue, it is important to understand the procedural

history of this case. I. Background In September of 2014, Kender retained Jay Scholtens (“Mr. Scholtens”) to

represent him in administrative proceedings before the Commissioner to recover DIB based on a disability onset date of January 24, 2014. Docs. 10-4 at 6-7; 13 at 1. After conducting an administrative hearing, an Administrative Law Judge (“ALJ”) entered a decision, dated December 22, 2015, denying Kender’s claim for

DIB. Doc. 2-1 at 2; Doc. 10-2 at 7-21. On March 8, 2016, the Appeals Council affirmed the ALJ’s decision and it became the final decision of the Commissioner. Doc. 10-2 at 2-3.

1 Even without the Commissioner raising the issue of the timeliness of Mr. Olinsky’s Motion, the Court may, sua sponte, raise that issue. See Garland v. Astrue, 492 F.Supp.2d 216 (E.D. NY 2007) (denying § 406(b) motion as untimely even though Commissioner and plaintiff did not object and recognizing the need for courts to exercise “independent judgment” and “judicial discretion” to reject fee applications as untimely even absent an objection); Rice v. Astrue, 831 F.Supp.2d 971, 977, 982 (N.D. Tex. 2011) (sua sponte raising issue of the timeliness of § 406(b) fee petition and finding request was untimely). 2 Rather than using Mr. Scholtens, Kender hired Mr. Olinsky to handle his appeal of the Commissioner’s adverse decision. In their written fee agreement,

Kender agreed that Mr. Olinsky could recover: (1) an attorney’s fee award under the Equal Access to Justice Act (“EAJA”); (2) an attorney’s award fee of 25% of Kender’s past-due disability insurance benefits (“406(b) fees”); or (3) both. Fee

Agreement, Doc. 20-1, at p. 2. However, the contract specifically provided that “if the court awards my federal court attorney [Mr. Olinsky] a fee out of my past-due benefits and also awards an EAJA fee for that same work, my attorney must refund the smaller amount to me [Kender].” Id.

On May 12, 2016, Olinsky initiated this action by filing a Complaint that alleged the ALJ committed reversable error in denying Kender’s claim for DIB. Doc. 2.

On May 18, 2017, I entered an Order and Judgment reversing the Commissioner=s decision and remanding Kender’s case for further administrative proceedings pursuant to sentence four of 42 U.S.C. § 405(g).2 Docs. 13-14.

2 See Shalala v. Schaefer, 509 U.S. 292, 300-301 (1993) (a sentence four remand “terminates the litigation with victory for the plaintiff,” and a claimant, who obtains a sentence four judgment remanding the case, is a prevailing party regardless of whether he “prevails” before the agency on remand). 3 On August 14, 2017, Mr. Olinsky filed a Motion for Fees and Expenses under the EAJA. He requested a fee of $6,526.61 and expenses of $55.18. Doc. 15. On

August 28, 2017, I granted Mr. Olinsky’s Motion and awarded him $5,886.61 for 29.9 hours of attorney time at an hourly rate of $191.86; 1.5 hours of paralegal time at an hourly rate of $100; and $55.18 in expenses.3 Doc. 18.

After remand, Mr. Scholtens resumed his representation of Kender in the administrative proceedings.4 If Kender prevailed on his claim for DIB, each of his three minor children, as a matter of law, would be entitled to auxiliary benefits, which would be payable to Kender, as their representative payee. Thus, while

Kender was the real party in interest, his minor children also had a stake in the outcome of his claim.

3 I made a reduction in the amount Mr. Olinsky requested for paralegal time because several matters were billed by the paralegal that could have been performed by a secretary or clerk. 4 In 2014, Mr. Scholtens and Kender signed a fee agreement which specified that, in the event of a favorable decision, Mr. Scholtens would receive “a fee equal to the lesser of 25% of the past-due benefits resulting from my claim(s) or $6,000, “the maximum dollar amount allowed pursuant to” the Social Security Act [42 U.S.C. § 406(a)]. The Commissioner later approved this written fee agreement. Docs. 10-4 at 6; 20-2 at p. 4. 4 Mr. Scholtens and Mr. Olinsky both knew that, to the extent there was an award of past-due DIB to Kender and related auxiliary payments to his children, a

portion of Kender’s and his children’s benefits would be withheld by the Commissioner pending a decision by Mr. Olinsky on whether to seek an award of § 406(b) attorney’s fees, in lieu of the $5,886.61 in attorney’s fees and costs he had

already been paid under the EAJA. Thus, as early as the date I entered my Order of remand, May 18, 2017, Mr. Olinsky knew (or certainly should have known), if Kender prevailed on his DIB claim: (1) the Commissioner would award Kender past-due DIB and his minor children auxiliary past-due benefits; (2) 25% of those

benefits would be withheld and used to pay Mr. Scholtens up to $6,000 for his legal work in the administrative proceeding; and (3) the remaining balance would be potentially available to pay Mr. Olinsky if he elected to seek § 406(b) attorney’s fees

in lieu of the amount he had already received under the EAJA. On August 22, 2018, the Commissioner issued a Notice of Award finding that Kender was disabled and entitled to monthly DIB beginning July 2014.5 This meant

5 The Commissioner applies a five-month waiting period between the established onset date of disability and the date monthly DIB begin. This explains the disparity in the disability onset date of January 24, 2014 and the start of benefits on July 2014. See https://secure.ssa.gov/poms.NSF/lnx/0425501300. 5 Kender was entitled to past-due DIB starting July 2014 through August 21, 2018. The Commissioner’s Notice of Award calculated the past-due DIB payable to

Kender as $45,403.00. Exh. B, Notice of Award to Kender, Doc. 20-2. The Notice of Award specifically stated that 25% of the $45,403.00, or $11,350.75, was being “withheld” as the “maximum payable under the fee

agreement to pay an approved representative’s fee.” Id. at 5. From this $11,350.75 sum, the Commissioner awarded Mr. Scholtens $6,000 for his legal work on behalf of Kender and his children in the remanded administrative proceeding. Docs. 10-4 at 6; 20-2 at p. 4. The Notice of Award also specifically stated that the

Commissioner was continuing to hold the balance of $5,350.75, “in case your [Kender’s] . . . lawyer [Mr. Olinsky] asks the Federal Court to approve a fee for work that was done before the court,” as permitted by § 406(b). Id.

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