ORDER GRANTING PETITIONER HARVEY SACKETT’S MOTION FOR ATTORNEY’S FEES PURSUANT TO 42 U.S.C. § 406
I. Introduction
Bеfore the court is Plaintiffs counsel’s petition for attorney fees in which counsel requests $25,132.50 pursuant to 42 U.S.C. § 406(b), the law allowing federal courts to award attorney’s fees out of past-due disability benefits owed to claimants under Title II of the Social Security Act. The Social Security Commissioner states that the overall fee request appears reasonable, but notes that the de facto $450 per hour rate may warrant a moderate reduction in the overall sum. For the reasons еxplained below, Petitioner Harvey Sackett is awarded a fee of $25,132.50.
II. Background
In November 1997, Plaintiff Robert E. Hearn applied for disability insurance benefits under Title II of the Social Security Act, alleging that he became disabled on
On May 28, 1999, an administrative law judge rendered a partially favorable decision finding Plaintiff disabled for a closed period beginning May 28, 1996 and ending July 31, 1997. This becamе the final decision of the Commissioner when the Appeals Council denied review. Dissatisfied with this result, Plaintiff filed a complaint in federal district court, and thereafter filed a motion for summary judgment. On October 3, 2001, concluding that defects existed in the оriginal administrative proceeding, this court set aside the Commissioner’s decision and remanded the case for further proceedings. Based on his success on appeal in district court, Plaintiff filed a timely application for attorney’s fees under the Equal Access to Justice Act (“EAJA”), 28 U.S.C. § 2412(d), and on May 2, 2002 this court awarded him $8,725.99.
On remand, the Commissioner ruled that Plaintiff was entitled to monthly disability benefits beginning in September 1994. The January 29, 2003 Notice of Award informed Petitioner that he was awarded a tоtal of $137,850.68 of past due benefits, and that 25 percent of that sum, or $34,462.67, was being withheld from those past benefits due in case attorney’s fees were payable to Mr. Sackett under the Social Security Act. Petitioner’s Memorandum of Points and Authоrities (“Mem. P’s and A’s”), Exh. A.
III. Applicable Law
Sections 406(a) and (b) of Title II of the Social Security Act governs attorney fees for representation of disability claimants in front of the Commissioner and in federal court. Section 406(a) governs fees for representation in administrative proceedings before the Commissioner. 42 U.S.C. § 406(a). Section 406(b), on the other hand, controls fees for representation in the federal courts, and provides in relevant part:
Whenever a court renders a judgment favorable to a claimant ... who was represented before the court by an attorney, the court may determine and allow as part of its judgment a reasonable fee for such representation, not in excess of 25 percent оf the total past-due benefits to which the claimant is entitled by reason of such judgment.
42 U.S.C. § 406(b)(1)(A). The fee is payable “out of, and not in addition to, the amount of [the] past-due benefits.” Id. The attorney’s fees are payable from funds withheld from a claimant’s past-due disability benefits by the Social Security Administration for work performed by claimant’s counsel before the district court on his or her claim for Title II disability benefits under the Social Security Act. An attorney may not charge any fees where representation does not result in an award of back benefits.
Last year, the Supreme Court resolved a split in the circuits in favor of recognizing the primacy of lawful attorney-client fee agreements and against a lodеstar approach to determining reasonable attorney fees in cases where claimants prevail in federal court.
Gisbrecht v. Barnhart,
Congress ... sought to protect claimants against “inordinately large fees” and also to ensure that attorneys representing successful claimants would not risk “nonpayment of [appropriate] fees.” (Citation.) But nothing in the text or history of § 406(b) reveals a “desig[n] to prohibit or discourage attorneys and claimаnts from entering into contingent fee agreements.” (Citation.)
Id.,
Section 406(b) “calls for court review of such arrangements as an independent check, to assure that they yield reasonable results in particular cases.” Id. at 1828. A court may еxercise its discretion to reduce an attorney’s contractual recovery based on the character of the representation and the result achieved. Id. For example, if an attorney is responsible for delay, a reduction may be in order to prevent the attorney from profiting from the accumulation of benefits during the case’s pendency. Id. In addition, “[i]f the benefits are large in comparison to the amount of time counsel spent on the case, a downward adjustment is similarly in order.” Id. To prevent windfalls for attorneys and assist the reviewing court' in making a reasonableness determination, the court may require the attorney to submit a record of the hours spent on the case and a statement of the normal hourly rates charged. Id.
The Equal Access to Justice Act effectively increases the portion of past-due benefits a successful claimant can pocket. Id. An EAJA award offsets an award under seсtion 406(b) so that the amount of total past-due benefits actually received by the claimant will be increased by the EAJA award up to the point where the claimant could potentially obtain 100 percent of past-due benefits. Id.
IV. Discussion
Pursuant to the holding of
Gis-brecht,
the сourt has conducted an independent check to assure the reasonableness of the fee request in light of the particular circumstances of this case.
First, Petitioner does not seek the full 25 percent maximum contingency fee allowed by law at this time. Therefore, the request is within the statutory and contract-based maximum of 25% of past-due benefits. Mr. Hearn was awarded the substantial sum of $137,850.68 of past due benefits. The attorney fee sought, $25,132.50, is equivalent to аbout 18.2 percent of the past-due benefits owed.
Second, as Mr. Sackett points out, a substantial risk of loss jeopardized Mr. Hearn’s case from the beginning. Plaintiff alleged a variety of ailments
1
many of which were not susceptible to clear and straightforward forms of proof, and some of which involved .lengthy and complicated medical histories, particularly with respect to the carpal tunnel and pronator terres
Third, any reliance on a non-contingent rate without taking into account the contingent nature оf this 42 U.S.C. § 406(b) fee could undereompensate Mr. Sackett. As
Gisbrecht
makes clear, § 406(b) fees are, by law, contingent fees. A Title II plaintiffs attorney like Mr. Sackett may only collect fees from plaintiffs who ultimately receive benefits. Petitioner has shown that an attorney with his experience in the San Francisco bay area earns approximately $300 per hour on a non-contingent basis for legal services. In addition, Mr. Sackett has practiced law for more than 26 years. Since 1980, he has exclusively practiced in the area of Social Security law and has earned a reputation for expertise on the subject. Because attorneys like Mr. Sackett contend with a substantial risk of loss in Title II cases, an effective hourly rate of only $450 in successful cases does not provide a basis for this court to lower the fee to avoid a “windfall.”
See Gisbrecht,
Since
Gisbrecht
was handed down by the Supreme Court, the district courts generally have been deferential to the terms of contingency fee contracts in § 406(b) cases, accepting that the resulting
de facto
hourly rates may exceed those for non contingency-fee arrangements.
See, e.g., Dodson,
Fourth, the value of this case to Plaintiff is substantially more than the past-due benefits on whiсh the fee is based. Based on the judgment, Mr. Hearn will receive not only past-due benefits, but also ongoing Title II benefits until he dies, reaches retirement age, or becomes no longer disabled. Nor, in computing the section 406(b) fee, is the valuе of health care benefits included.
Fifth, Mr. Sackett devoted considerable time and careful attention to Mr. Hearn’s case. This court has already ruled that the more than 55 hours expended in the action was reasonable.
See
Order Granting Plaintiffs Motion for Attorney’s Fees
Finally, Mr. Hearn has submitted a declaration stating that he concurs with the fee request and аsks the court to approve it in its entirety. There is no basis for the court to question the sincerity of this declaration.
For the reasons set forth above, the Court awards Plaintiffs attorney, Harvey Sackett, the sum of $25,132.50 in fees under 42 U.S.C. § 406(b) which represеnts about 18.2,% of Plaintiffs past due benefits. The parties do not dispute that this § 406(b) award must be offset by the $8,725.99 of attorney’s fees already granted under the EAJA, resulting in a net § 406(b) fee of $16,406.51.
See
Mem. P’s and A’s at 2:17-23; 28 U.S.C. § 2412;
Gis-breekt,
ORDER
Petitioner’s motion for attorney’s fees is GRANTED. Petitioner Harvey Sackett is herеby awarded $25,132.50 in attorney’s fees to be paid out of the sums withheld by the Commissioner from Mr. Hearn’s benefits. Mr. Sackett shall reimburse Plaintiff in the amount of $8,725.99, previously paid by the Government under the EAJA.
IT IS SO ORDERED.
Notes
. Plaintiff alleged he became disabled in March 1994 due to "(1) knee injuty, (2) heаd injury, conductive aphasia, et al., (3) learning disabilities, (4) hearing loss, ringing in ears, (5) color blindness, (6) allergies, (7) sleep apnea, and (8) carpal tunnel and pronator terres.” Order Setting Aside Commissioner's Decision and Remanding Case at 2:22-26 (October 3, 2001).