Ringel v. Comm'r of Soc. Sec., 295 F. Supp. 3d 816

Plaintiff Charles Ringel applied for Social Security benefits in 2008, ultimately obtaining a favorable Notice of Award in 2017 awarding $130,943 in past-due benefits dating back to March 2007 after long administrative and post-remand proceedings.
Counsel (Ms. Pehowic) had a contingency agreement (up to 25%) and requested fees under 42 U.S.C. § 406(b): $26,735.75 for 19.5 hours of federal-court work (effective ~$1,371/hr); she had previously received $3,315 under EAJA and $6,000 for administrative-level work.
The Commissioner opposed, arguing the requested fee would be a windfall to counsel and urged reduction to an effective rate of $400/hr; counsel offered in reply to accept $750/hr.
The Magistrate Judge applied Gisbrecht and Sixth Circuit guideposts (notably Hayes and Lasley), using the previously awarded EAJA rate as the Hayes “standard rate” proxy, and considered delay, hours, case complexity, counsel’s partial compromise, and Commissioner opposition.
Magistrate recommended reducing the § 406(b) award to $11,700 (effective $600/hr), with an additional § 406(b) payment to counsel of $8,385 after offsetting the $3,315 EAJA award; District Judge adopted the R&R and granted the motion in part.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the contingency fee authorized by contract (25%) is reasonable under § 406(b)	Pehowic: contract presumptively reasonable; contingent risk justifies high multiplier (proposed $750/hr compromise)	Commissioner: fee constitutes windfall given long delay and small hours; reduce to ~$400/hr	Court: Contract starts inquiry but is rebuttable; reduced fee to $11,700 (effective $600/hr) to avoid windfall
Proper benchmark for Hayes “standard rate”	Pehowic: market/state-bar rates reflect higher standard hourly rates	Commissioner: use EAJA-derived rate as standard proxy	Court: EAJA rate previously awarded ($170/hr here) is appropriate proxy for Hayes test
Effect of administrative/judicial delay on fee reasonableness	Pehowic: delay not counsel’s fault; work meritorious	Commissioner: long delay produced inordinately large past-due benefits; claimant should not subsidize delay	Court: significant delay (over a decade) supports reduction; temporal guidepost warrants close review
Whether hours outside federal-court work are compensable in § 406(b) calculation	Pehowic: administrative efforts justify higher fee overall	Commissioner: § 406(b) limited to work in federal court	Court: Only hours expended in federal court (19.5) are compensable for § 406(b) fee; administrative time not considered in § 406(b) calculation

Gisbrecht v. Barnhart, 535 U.S. 789 (2002) (courts must review contingency agreements and reduce § 406(b) fees that yield unreasonable windfalls)
Hayes v. Sec’y of Health & Human Servs., 923 F.2d 418 (6th Cir. 1990) (Hayes test: effective hourly rate less than twice the standard rate is presumptively reasonable)
Lasley v. Comm’r of Soc. Sec., 771 F.3d 308 (6th Cir. 2014) (affirming Hayes framework and reviewing district-court reductions for windfall)
Rodriguez v. Bowen, 865 F.2d 739 (6th Cir. 1989) (contingency agreements are starting point; courts may reduce fees for windfall or minimal effort)
Jeter v. Astrue, 622 F.3d 371 (5th Cir. 2010) (permitted use of lodestar/effective hourly rate in windfall analysis so long as contingency agreement remains central)
Webb v. Richardson, 472 F.2d 529 (6th Cir. 1972) (temporal formula limiting fees when delay inflates past-due benefits)
Dearing v. Sec’y of Health & Human Servs., 815 F.2d 1082 (6th Cir. 1987) (reiterating limits on awarding fees inflated by delays not chargeable to counsel)
Horenstein v. Sec’y of Health & Human Servs., 35 F.3d 261 (6th Cir. 1994) (discussing § 406(b) limits and relationship to agency § 406(a) fees)
Royzer v. Sec’y of Health & Human Servs., 900 F.2d 981 (6th Cir. 1990) (warning courts to ensure fees do not unduly erode claimants’ benefits)