Salazar v. Commissioner of Social Security Administration

• Court: District Court, D. Arizona
• Decided: July 10, 2024
• Docket: 2:21-cv-00743
• Status: Unknown

Opinion

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Silvia Gomez Salazar, No. CV-21-00743-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. 24), submitted by Plaintiff’s attorney, Nicole J. Franco 17 (“Counsel”).1 For the following reasons, the motion is granted. 18 BACKGROUND 19 On April 28, 2021, Plaintiff filed the complaint seeking review of a decision of the 20 Commissioner of Social Security denying Plaintiff’s application for Social Security 21 Disability Insurance benefits for lack of disability. (Doc. 1.) A summons (Doc. 2) and 22 scheduling order (Doc. 4) issued that same day. 23 On July 19, 2021, Plaintiff filed proof of service, indicating that the Commissioner 24 was served via mailing on July 13, 2021. (Doc. 6.) 25 Due to various pandemic-related extension requests (Docs. 8, 13, 16), the matter did 26 not become fully briefed until July 13, 2022. (Doc. 19.)

27 1 On January 26, 2022, Plaintiff filed a notice substituting Franco, who is “Of Counsel to Olinsky Law Group” in place of previous counsel Dustin Paul Vidrine, who was also 28 “Of Counsel to Olinsky Law Group,” pursuant to LRCiv 83.3(b)(4). Thus, although Vidrine remains listed as a lead attorney on the docket, his representation ended long ago. 1 On March 7, 2023, the Court issued an order reversing the decision of the 2 Administrative Law Judge and remanding the case for further proceedings. (Doc. 20.) 3 On June 2, 2023, the parties filed a stipulation for attorneys’ fees pursuant to the 4 Equal Access to Justice Act (“EAJA”). (Doc. 22.) The Court granted the stipulation and 5 awarded Plaintiff $7,889.12 in attorneys’ fees and $402.00 in costs, to be paid to Counsel, 6 assuming no debt was owed under the Treasury Offset Program. (Doc. 23.) 7 On March 13, 2024, Counsel filed the pending motion for an award of attorneys’ 8 fees under 42 U.S.C. § 406(b). (Doc. 24.) 9 On March 26, 2024, the Commissioner filed a response that indicates that “because 10 the Commissioner has no direct financial stake in the request and acts in a role resembling 11 that of a trustee for the claimants, the Commissioner neither supports nor opposes 12 Counsel’s request for attorney’s fees under 42 U.S.C. § 406(b).” (Doc. 25 at 3.) 13 DISCUSSION 14 Counsel attached to her motion a client-attorney fee agreement that provides for a 15 contingency fee—Plaintiff agreed that the attorneys’ fee could be up to 25% of all past- 16 due benefits awarded to her. (Doc. 24-2 at 2.) This is unsurprising, as 25% contingency 17 fee agreements are nearly ubiquitous in the context of social security appeals. Gisbrecht 18 v. Barnhart, 535 U.S. 789, 802-04 (2002). 19 Section 406(b) “calls for court review” of contingency fee agreements. Id. at 807- 20 08. “Congress has provided one boundary line: Agreements are unenforceable to the extent 21 that they provide for fees exceeding 25 percent of the past-due benefits.” Id. “Within the 22 25 percent boundary, as petitioners in this case acknowledge, the attorney for the successful 23 claimant must show that the fee sought is reasonable for the services rendered.” Id. 24 Counsel seeks $14,505.93 in § 406(b) fees. (Doc. 24-1 ¶ 7.) Counsel states that 25 “[t]otal past-due benefits for Plaintiff were $86,823.70 based on the February 6, 2024 SSD 26 Notice of Award for December 2016 through December 2023,” that “[o]ne-fourth of the 27 past-due benefits is $21,705.93,” and that “[t]he hearing level representative’s fee 28 agreement was approved in the amount of $7,200.00.” (Id. ¶¶ 4-6.) Although Counsel 1 does not explicitly state why she seeks $14,505.93, the Court notes that the amount she 2 seeks is one-fourth of the past-due benefits minus the amount of the hearing level 3 representative’s fee. 4 As stated in the motion, the Notice of Award (“NOA”) states that Plaintiff’s “past- 5 due benefits are $86,823.70 for December 2016 through December 2023.” (Doc. 24-3 at 6 5.) However, the NOA goes on to state that “[u]nder the fee agreement, the representative 7 cannot charge you more than $7,200.00 for his or her work.” (Id.) Although the Court 8 does not have a copy of the fee agreement, the Court suspects that this statement in the 9 NOA could be better understood with some additional context. 10 “As presently written, the Social Security Act discretely addresses attorney’s fees 11 for the administrative and judicial-review stages: § 406(a) governs fees for representation 12 in administrative proceedings; § 406(b) controls fees for representation in court.” 13 Culbertson v. Berryhill, 586 U.S. 53, 55 (2019) (cleaned up). 14 Under § 406(a)(1), “[t]he Commissioner of Social Security may, by rule and 15 regulation, prescribe the maximum fees which may be charged for services performed in 16 connection with any claim before the Commissioner of Social Security under this 17 subchapter, and any agreement in violation of such rules and regulations shall be void. 18 Attorneys who represent Social Security claimants in administrative proceedings may be 19 compensated in one of two ways pursuant to this statute. First, [pursuant to § 406(a)(1)], 20 an attorney who represents a successful claimant may petition the Commissioner to fix ‘a 21 reasonable fee to compensate such attorney for the services performed by him in 22 connection with such claim.’ The statute does not cap the fees available by petition.” 23 Lowry v. Comm’r, Soc. Sec. Admin., 231 F. Supp. 2d 981, 982-83 (D. Or. 2001) (cleaned 24 up). See also Culbertson, 586 U.S. at 59 (“If there is no fee agreement, the agency may set 25 any fee, including a fee greater than 25% of past-due benefits, so long as the fee is 26 ‘reasonable.’”). “Second, [pursuant to § 406(a)(2)], under certain circumstances, an 27 attorney may enter into a fee agreement with a client who claims past-due benefits.” 28 Lowry, 231 F. Supp. 2d at 983. The fees available under such a fee agreement are capped 1 at “the lesser of” 25% of the past due benefits or “$4,000,” although the Commissioner 2 “may from time to time increase the dollar amount.” 42 U.S.C. § 406(a)(2)(A). The current 3 cap is $7,200.00. Social Security Administration, Maximum Dollar Limit in the Fee 4 Agreement Process, 87 Fed. Reg. 39157-01 (June 30, 2022) at *39157 (“Effective 5 November 30, 2022, we may approve fee agreements up to the new dollar limit, provided 6 that the fee agreement otherwise meets the statutory conditions of the agreement process.”). 7 The statute specifies that “the fee specified in the agreement shall be the maximum fee.” 8 42 U.S.C. § 406(a)(2)(A). 9 This “maximum fee,” however, is applicable only to fees for representation before 10 the Commissioner, governed by § 406(a). Fees for representation before the Court, 11 governed by § 406(b), are separate and not subject to the $7,200.00 cap. 12 “Subsection (a)(4) requires the agency to withhold up to 25% of past-due benefits 13 for direct payment of any fee for representation before the agency: ‘[I]f the claimant is 14 determined to be entitled to past-due benefits under this subchapter and the person 15 representing the claimant is an attorney, the Commissioner of Social Security shall . . . . 16 certify for payment out of such past-due benefits . . . to such attorney an amount equal to 17 so much of the maximum fee as does not exceed 25 percent of such past-due benefits.’” 18 Culbertson, 586 U.S. at 56 (citation omitted). A similar provision appears in subsection 19 (b)(1)(A), permitting (but not requiring) the agency to withhold up to 25% of past-due 20 benefits for direct payment of any fee for representation before the court, but not subject 21 to any “maximum fee.” Id. at 61. 22 The statutory text of § 406 “differentiates between agency representation in § 406(a) 23 and court representation in § 406(b), contains separate caps on fees for each type of 24 representation, and authorizes two pools of withheld benefits,” such that “the 25% cap in 25 § 406(b)(1)(A) applies only to fees for court representation, and not to the aggregate fees 26 awarded under §§ 406(a) and (b).” Culbertson, 586 U.S. at 61-62. Although “presently 27 the agency withholds a single pool of 25% of past-due benefits for direct payment of 28 agency and court fees,” “the amount of past-due benefits that the agency can withhold for 1 direct payment does not delimit the amount of fees that can be approved for representation 2 before the agency or the court.” Id. 3 In light of the above discussion, the NOA’s assertion that “[u]nder the fee 4 agreement, the representative cannot charge you more than $7,200.00 for his or her work” 5 (Doc. 24-3 at 5) is incomplete. Although Plaintiff’s representative before the 6 Commissioner (who may or may not have been Counsel) could not charge more than 7 $7,200.00 for work done before the Commissioner, Plaintiff’s representative before the 8 Court was not subject to this cap. 9 Also incomplete is the NOA’s assertion that the agency “will still withhold the rest, 10 $14,505.93, in case your lawyer asks the Federal Court to approve a fee for work that was 11 done before the Court.” The NOA did not explain that the agency was, in accordance with 12 the agency’s discretionary “choice to withhold only one pool of 25% of past-due benefits,” 13 Culbertson, 586 U.S. at 61, withholding the amount required under § 406(a)—$7,200.00— 14 and some but not all of the amount permitted under § 406(b)—an additional 25% of the 15 past-due benefits, or $21,705.93. 16 At any rate, even without the benefit of viewing the fee agreement referenced in the 17 NOA, the Court is satisfied that the assertion in the NOA that the representative cannot 18 charge more than $7,200.00 could not have been meant to apply to Counsel’s recovery of 19 § 406(b) fees. This conclusion appears to be supported by the Commissioner’s non- 20 opposition to Counsel’s fee application. 21 Finally, under § 406(b), the Court must determine whether it is appropriate to reduce 22 the requested sum of $14,505.93 “based on the character of the representation and the 23 results the representative achieved” by assessing, for example, whether Counsel is 24 “responsible for delay” or whether “the benefits are large in comparison to the amount of 25 time counsel spent on the case.”2 Id. at 808. Counsel included a record of the hours spent

26 2 This determination does not equate to use of the lodestar method. Crawford v. Astrue, 586 F.3d 1142, 1149 (9th Cir. 2009) (“The lodestar method under-compensates 27 attorneys for the risk they assume in representing SSDI claimants and ordinarily produces remarkably smaller fees than would be produced by starting with the contingent-fee 28 agreement. A district court’s use of the lodestar to determine a reasonable fee thus ultimately works to the disadvantage of SSDI claimants who need counsel to recover any representing Plaintiff. (Doc. 24-4.) Having reviewed the timesheet, the Court notes that || Counsel exercised judgment and restraint by billing “zero” for certain compensable tasks. 3 || Furthermore, the Court finds no fault with the character of the representation or the results Counsel achieved. Although there were some lengthy delays early in the case, the Court || is satisfied that they were not excessive, particularly given that they arose during the 6|| pandemic. Finally, as discussed above, Counsel seeks $7,200 less than what she could 7\|| seek under the federal court fee agreement (Doc. 24-2) and Culbertson, which the federal 8 || court fee agreement references. This restraint may be responsive to Culbertson’s closing 9|| remark: “Any concerns about a shortage of withheld benefits for direct payment and the || consequences of such a shortage are best addressed to the agency, Congress, or the 11 || attorney’s good judgment.” 586 U.S. at 62. 12 Accordingly, 13 IT IS ORDERED that the motion for an award of attorneys’ fees (Doc. 24) is granted. Counsel is entitled to $14,505.93 in attorneys’ fees. Upon receipt of payment, 15} Plaintiff's counsel shall refund the EAJA fee received in this matter to Plaintiff. 16 Dated this 10th day of July, 2024. 17 18 Lom ee” 19 f _o—— Dominic W. Lanza 20 United States District Judge 21 22 23 24 25 26 27 28 past-due benefits at all.”).

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