Martinez v. Berryhill
699 F. App'x 775
| 10th Cir. | 2017Background
- Martinez hired Rocky Mountain Disability Law Group on a contingent-fee basis: up to 25% of past-due Social Security benefits (capped at $6,000 for administrative work).
- The firm won a remand in federal district court; obtained $4,750 in EAJA fees for district-court work; Commissioner later awarded Martinez $62,192 in past-due benefits and withheld $15,548 (25%) as potential fees.
- §406(a) approval granted the firm $6,000 from the withheld amount for administrative-level fees; the firm sought $4,798 under §406(b) (court work) rather than the full $9,548 it could have sought, effectively asking the Commissioner to effect the $4,750 EAJA refund.
- The district court granted $4,798 under §406(b) but ordered the firm itself to refund $4,750 EAJA fees to Martinez; on reconsideration the court denied relief, citing an apparent effective hourly rate of nearly $500/hr (using $15,548 as the base) and concluding a prohibited windfall under Gisbrecht.
- The firm appealed; the Tenth Circuit held the appeal timely only as to the district court’s denials of the reconsideration motions (not timely as to the initial June 15 order), and found the district court abused its discretion by failing to conduct a proper §406(b) reasonableness analysis using the correct figures (i.e., $9,548 as the §406(b) base and the firm’s actual hours).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the district court properly ordered refund of EAJA fees without accounting for the firm’s deduction of EAJA from its §406(b) request | Firm: it already deducted EAJA from its §406(b) request and asked the Commissioner to make the refund | Commissioner: no objection to this administrative method but court must ensure reasonableness | Court: district court abused discretion by not properly analyzing §406(b) reasonableness after accounting for the deduction |
| Whether the district court used correct base for effective hourly rate calculation | Firm: §406(b) base is $15,548 minus $6,000 §406(a) = $9,548 (and firm spent ~26.9 hours) | Court: used $15,548 as base leading to near $500/hr rate and found potential windfall | Court: district court erred in using $15,548; should have used $9,548 and analyzed reasonableness accordingly |
| Whether the appeal is timely as to the district court orders | Firm: appeal challenges denials of reconsideration; timely as to July 20 and Oct 5 denials | Commissioner: appeal timely only as to Oct 5 order | Court: appeal untimely as to June 15 order but timely as to denials of reconsideration; jurisdiction limited to latter orders |
| Whether the district court properly applied Gisbrecht factors in reviewing §406(b) fee reasonableness | Firm: district court failed to apply Gisbrecht factors and correct lodestar/contingent-fee primacy | Court: applied lodestar-like reasoning and concluded windfall | Court: abused discretion by failing to perform required §406(b) reasonableness review (quality, results, delay, time vs benefits) using correct figures |
Key Cases Cited
- Gisbrecht v. Barnhart, 535 U.S. 789 (2002) (§406(b) requires court review of contingent-fee agreements to ensure reasonableness)
- McGraw v. Barnhart, 450 F.3d 493 (10th Cir. 2006) (attorney may deduct EAJA award from §406(b) request so Commissioner can refund claimant)
- Ysais v. Richardson, 603 F.3d 1175 (10th Cir. 2010) (successive post-judgment motions do not toll appeal time from underlying judgment; but a second reconsideration can toll the appeal period from denial of the first)
- Servants of the Paraclete v. Does, 204 F.3d 1005 (10th Cir. 2000) (grounds warranting Rule 59(e) motions)
- Phelps v. Hamilton, 122 F.3d 1309 (10th Cir. 1997) (abuse-of-discretion standard for reviewing denial of Rule 59(e) motions)
- Jennings v. Rivers, 394 F.3d 850 (10th Cir. 2005) (abuse-of-discretion includes review for legal error)