48 F.4th 632
6th Cir.2022Background
- SSA awards Title II (disability) and Title XVI (SSI) benefits; Title II retroactive (past‑due) payments reduce concurrent Title XVI via a statutorily required "windfall offset."
- When representatives’ fees are withheld from past‑due Title II awards, claimants’ income can decrease, so SSA must perform a subsequent windfall recalculation (the "Subtraction Recalculation") to restore any additional Title XVI owed.
- The SSA failed systemically to perform Subtraction Recalculations for a class of claimants; Class Counsel sued and recovered over $106 million in additional past‑due benefits after the district court ordered the recalculations.
- The district court awarded Class Counsel $15.9 million in attorney fees under 42 U.S.C. § 406(b); SSA appealed, arguing the district court lacked authority under § 405(g) to order recalculations and thus § 406(b) did not apply.
- The Sixth Circuit (Moore, J.) affirmed: SSA had Article III standing; § 405(g) authorized judicial review of the recalculations because they are tethered to final, post‑hearing benefits decisions; § 406(b) permits fees “by reason of” that judgment; the district court’s 15% fee was reasonable.
- Judge Kethledge dissented: he argued the injunction compelled an omission (agency nonaction) not a "final decision made after a hearing," so § 405(g)/§ 406(b) did not authorize the fee award and EAJA would have been the proper fee vehicle.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| SSA has Article III standing to challenge fee award | SSA still protects claimants' interests and may contest distribution of benefits withheld for fees | SSA lacks a pecuniary stake because fees come from claimants' benefits | Court: SSA has standing based on statutory/beneficiary interest and precedents; jurisdiction proper |
| District court had jurisdiction under 42 U.S.C. § 405(g) to order Subtraction Recalculations | Recalculations are tied to and modify final, post‑hearing benefits awards and thus are reviewable under § 405(g) | Recalculation is post‑decisional ministerial action or discretionary agency ‘‘grace,’’ not a § 405(g) final decision | Court: § 405(g) applies—recalculations are tethered to original final decisions and are statutory obligations, so district court could modify them |
| § 406(b) authorizes attorney fees for benefits obtained by the district court’s judgment | Fees are recoverable because claimants obtained additional past‑due benefits "by reason of" the district court’s judgment | Entitlement to benefits stems from SSA’s original award; § 406(b) should not cover post‑award recalculations | Court: § 406(b) applies—"total of past‑due benefits" refers to amounts awarded by the court and fees may be taken from those amounts |
| Reasonableness of the 15% fee award under § 406(b) | Counsel secured large class relief, overcame systemic SSA error, and award stayed below the 25% cap | Amount disproportionate to hours; potential double recovery concerns | Court: Deferential review; district court properly applied Gisbrecht factors and the 15% award was reasonable |
Key Cases Cited
- Smith v. Berryhill, 139 S. Ct. 1765 (2019) (final‑decision ‘‘tethering’’ test for § 405(g) jurisdiction)
- Gisbrecht v. Barnhart, 535 U.S. 789 (2002) (standards for § 406(b) fee awards; deference to district court reasonableness determinations)
- Heckler v. Ringer, 466 U.S. 602 (1984) (presentment to agency satisfies § 405(g) requirements in analogous contexts)
- Califano v. Yamasaki, 442 U.S. 682 (1979) (district courts may fashion equitable relief and injunctions to implement § 405(g) modifications)
- Califano v. Sanders, 430 U.S. 99 (1977) (denial of petition to reopen not reviewable under § 405(g); contrasts discretionary agency grace vs. statutory rights)
- Mathews v. Eldridge, 424 U.S. 319 (1976) (§ 405(g) has presentment and exhaustion elements; jurisdictional framework)
- Culbertson v. Berryhill, 139 S. Ct. 517 (2019) (distinguishing administrative § 406(a) fees from judicial § 406(b) fees)