SABO v. United States, 1:08-cv-00899

Background

Seven named plaintiffs and a class of ~2,175 former service members were medically separated for PTSD with PEB-assigned disability ratings under 50%; they sued the United States seeking application of VA Schedule for Rating Disabilities (VASRD) § 4.129 (six‑month minimum 50% PTSD rating) and attendant benefits.
Pre-2008 DoD/military practice treated § 4.129 as inapplicable (Army memoranda) or as a convalescent-type rule; Congress enacted the 2008 NDAA (including 10 U.S.C. § 1216a) directing use of VA ratings to the extent feasible and created the PDBR to review low-rated separations.
Parties negotiated administrative processes and ultimately reached a court‑approved settlement (Dec. 22, 2011) requiring corrections to class members’ military records to reflect a 50% PTSD rating for six months and other remedial adjustments; the court retained jurisdiction to ensure implementation.
Implementation delays and disputes led plaintiffs to file enforcement motions; the parties then dismissed most class claims as records were corrected; only one class member remained outstanding at opinion date.
Plaintiffs sought EAJA fees and expenses for counsel (Morgan Lewis and NVLSP) for work through Jan. 15, 2015; the government opposed on timeliness, Antiassignment Act, substantial‑justification, and reasonableness grounds.
The Court held plaintiffs were EAJA‑eligible prevailing parties, the government’s overall position was not substantially justified, no special circumstances prevented an award, and awarded $3,862,924.53 in fees and expenses.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Does the Antiassignment Act bar plaintiffs’ EAJA fee application/assignments to counsel?	Plaintiffs assigned proceeds to counsel; assignments do not transfer substantive claim and government acquiesced in the class notice; any offsets remain available against awards paid to plaintiffs.	Assignments amount to prohibited pre‑allowance transfer of claim interest; EAJA fees belong to prevailing party, not attorneys.	Antiassignment Act does not bar application; government waived objection by acquiescence and assignments here do not implicate Act’s purposes.
Are plaintiffs eligible for EAJA fees (net worth requirement)?	Named plaintiffs attest net worth < $2,000,000 at filing.	Government does not dispute eligibility.	Eligibility satisfied.
Are plaintiffs prevailing parties for EAJA?	Court approval of settlement, incorporation of settlement into court orders, and retained jurisdiction mean the approval functioned as a consent‑decree equivalent.	Relief was voluntary government action / administrative and did not produce a judicial imprimatur.	Plaintiffs are prevailing parties: settlement approval + retention of jurisdiction created requisite judicial imprimatur.
Was the government’s position substantially justified?	Plaintiffs: military was required by statute to apply VASRD § 4.129 pre‑2008; DoD/military characterization of § 4.129 as convalescent/internal was unreasonable.	Government: prior DoD/department rules, Army memoranda, and authority to adapt VASRD made its prelitigation position reasonable; settlement pursuit and remedial steps were justified.	Overall government position not substantially justified: military’s refusal to apply § 4.129 was inconsistent with statutory mandate and unreasonable, outweighing later justified settlement conduct.

Key Cases Cited

Buckhannon Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Human Res., 532 U.S. 598 (holding that a ‘‘prevailing party’’ must obtain court‑ordered relief or its equivalent)
Astrue v. Ratliff, 560 U.S. 586 (EAJA fees are awarded to the prevailing party; discusses assignment/payment to attorneys and government offset)
Hensley v. Eckerhart, 461 U.S. 424 (lodestar method—reasonable hours × reasonable rate—and reduction for excessive or unrelated hours)
Comm’r, INS v. Jean, 496 U.S. 154 (EAJA substantial‑justification analysis considers entirety of government conduct)
Nutt v. Knut, 200 U.S. 12 (Antiassignment Act prohibits pre‑allowance assignment of claim interest; distinguishes permissible fee arrangements)
Phillips v. Gen. Servs. Admin., 924 F.2d 1577 (Fed. Cir.) (fee arrangement construed as obligating prevailing claimant to pay counsel from awarded fees—does not violate Antiassignment Act)
Chevron U.S.A., Inc. v. Nat. Res. Def. Council, 467 U.S. 837 (agency interpretations must yield to plain statutory meaning)
McHenry v. United States, 367 F.3d 1370 (Fed. Cir.) (statutory requirement to use VASRD for military disability ratings)