Wаllis D. Cornelia appeals from the district court’s denial of his application for attorneys’ fees under the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412; 5 U.S.C. § 504 (Supp.1982). The district court denied the application because (1) the Social Security Administration was “substantially justified” in denying Cornelia disability benefits and, in the alternative, (2) Cornelia did not “incur” any attorneys’ fees within the meaning of the EAJA since he was represented by a pro bono organization. We reverse the judgment of the district court.
Cornelia initially applied for disability benefits on November 11, 1977 due to severe problems with his back and hearing. After a hearing held in November of 1978, the Administrative Law Judge (ALJ # 1) denied Cornelia’s claim. After the Appeals Council upheld this ruling, Cornelia sought review in federal district court.
The district court remanded for further development of the record. A second hearing was held before a different Administrative Law Judge (ALJ # 2) on October 9, 1980. On March 27, 1981 ALJ # 2 recommended a partial denial of Cornelia’s claim. The Appeals Council modified this decision but nonetheless still partially denied Cornelia’s claim for disability benefits. Cornelia again sought review in the district court. The court, in a lengthy memorandum opinion,
see Cornella
v.
Schweiker,
I. BACKGROUND
In order to view the parties’ contentions in proper perspective, we will summarize *980 the extensive factual record. 1 Cornelia was born on February 19, 1929 and has an eleventh grade education. He has been primarily employed as a truck driver and heavy equipment operator throughout his life. Cornelia has a long history of medical problems. When he was a teenager he fell out of a moving car and broke his back. Cornelia broke his back again in 1956 when a tree fell on him while he was operating a bulldozer. In 1972 he reinjured his back while unloading a truck. As a result of severe muscle spasms in his lower back, he was hospitalized and underwent surgery. 2 From 1972 to 1975 Cornelia was unable to work and received workmen’s compensation benefits. Despite increasing difficulty from physical limitations and accompanying pain, Cornelia did engage in his truck driving job from 1975 until August 13, 1977. On that date he experienced severe muscle spasms in his lower back while attempting to chain down a truckload of logs. Cornelia did not work from August 13, 1977 to March, 1978. Between March and September of 1978, Cornelia did attempt some truck driving activity, although it appears this activity was sporadic. 3 After September of 1978 Cornelia’s work activity was negligible.
Cornelia’s first administrative hearing was held on November 28, 1978 and he was not represented by counsel. Cornelia testified that he could lift nothing, including tarps and chains on trucks. Constant back pain interfered with his sleeping and his normal activities. Even walking was painful. Cornelia stated that he suffered from chronic heаdaches, increasing in severity since 1972. He further testified that he wore a back brace constantly, even when he was asleep, and took two-hour naps during the day. He attended his first hearing on crutches and was using a cervical traction kit to stretch his neck muscles. At the time of the first hearing Cornelia was taking many different kinds of prescribed medications including Valium, Darvon, Motrin, Ascriptin, Napersin, and Tylenol # 3 (with Codeine). Cornelia was treated at the Fort Meade Veterans Administration Hospital, both inpatient and outpatient, from March of 1977 through the date of his first hearing. He was a hospital patient from November 5, 1977 to December 5, 1977.
ALJ # 1 found that Cornelia’s complaints of pain were not credible, that Cornelia had the residual functional capacity to engage in “light” truck driving activity and therefore found he could return to his former work. ALJ # 1 thus ruled Cornelia was not disabled. 4 The Appeals Council affirmed and Cornelia sought judicial review. The district court remanded for further development of the record, indicating *981 the apparent lack of support in the record for ALJ # l’s findings.
In accordance with the remand order, a second administrative hearing was held on October 9, 1980, at which Cornelia was represented by counsel. In addition to attempting to clarify his work activity from March to September of 1978, Cornelia again emphasized his constant low back pain. He could stand only thirty minutes before hаving to get off his feet. He could no longer walk more than a couple of blocks. He stated he does not even try to bend over, that it bothers him to sit for very long, and that he cannot sleep well. He testified that both of his legs were numb and asleep at the hearing. Cornelia’s complaints of disabling pain were corroborated by testimony and depositions from his wife, daughters, mother, brother, a neighbor and his local minister.
In addition to the testimony given at the two administrative hearings, extensive medical evidence was submitted. In fact, it appears Cornelia underwent numerous medical and psychiatric examinations by at least seven doctors. No attempt to detail this evidence will be made hеre. We observe only that we agree with the district court that the medical evidence as a whole supports Cornelia’s complaints of severe pain.
5
Cornella,
ALJ # 2 ruled that Cornelia was disabled but that his disability onset date was June 30, 1979. Cornelia objected to this date contending that he has been disabled since August 13, 1977. The Appeals Council modified ALJ # 2’s decision by setting his disability onset date at February 19, 1979. This date was arrived at by the Appeals Council through its application of the Medical-Vocational (M-V) Guidelines in Appendix 2 of the Secretary’s Regulations. 20 C.F.R. §§ 404.1501 et seq. Cornelia again sought judicial review in district court. The court held that the Secretary’s decision partially denying Cornelia’s claim was not supported by substantial evidence and that the Secretary’s application of the M-V Guidelines was erroneous since the Guidelines are not to be mechanically applied to a claimant, such as Cornelia, who suffers from non-exertional impairments. The court thus reversed and ordered the Secretary to pay Cornelia full benefits. Only the subsequent denial of Cornelia’s application for attorneys’ fees is at issue here.
II. ANALYSIS
Under federal law, attorneys’ fees may be awarded against the United States only if such an award is specifically provided by statute.
Alyeska Pipeline Service Co.
v.
Wilderness Society,
Under the EAJA a prevailing party may obtain attorneys’ fees only where the position of the United States was not “substantially justified.”
6
The test of whether
*982
the position of the government is substantially justified is essentially one of reasonableness in law and in fact and the United States has the burden of showing the substantial justification of its position. H.R. Rep. No. 1418, 96th Cong., 2d Sess. 10-11,
reprinted in
1980 U.S.Code Cong. & Ad. News 4989;
Foley,
There has been much discussion in the opinions construing the EAJA about which government position must be substantially justified, the government’s litigation position or the agency action which made it necessary for a party to file suit.
8
The legislative history of the EAJA is inconclusive on which position is to be examined.
Spencer,
We believe that such is the situation here. The government’s litigation position is that the underlying agency position is legally justifiable, i.e., the Secrеtary’s decisions denying Cornelia disability benefits were correct. Therefore we must examine the evidence and law surrounding the Secretary’s decisions to deny Cornelia disability benefits in order to decide whether the government’s defense of that denial was substantially justified.
SUBSTANTIAL JUSTIFICATION
Since Cornelia is a prevailing party under the Act, the government has the burden to show that its cause had a reasonable basis both in law and fact.
Foley,
The only evidence supporting Cornelia s RFC to work stems from Cornelia’s work activity from March to September of 1978. There is no dispute that Cornelia did not engage in any work activity of consequence at any other time after August 13, 1977. Upon close examination of the record as a whole, we do not believe that this evidence satisfies the government’s burden of showing its position was reasonable in fact. The record does show Cornelia averaged apprоximately fifteen to eighteen hours of work a week in August and September of 1978, and that from March to December of 1978 he put in a total of about six hundred hours of work. However, this activity provides little, if any, support for ALJ # l’s denial of benefits. Work activity is considered substantial gainful activity if a claimant has spent time “comparable to time customarily spent by individuals without impairment in similar work activities as a regular means of livelihood.” 20 C.F.R. § 404.1533. Even a person working only half time would have put in approximately seven hundred sixty hours (38 weeks X 20 hours). Moreover, this sporadic work activity does not support ALJ # l’s finding that Cornelia had the RFC to return to his former work. There was no evidence or discussion in the record as to the criteria of light or sedentary work, nor was there any discussion of how Cornelia fit those criteria. Apparently, ALJ # 1 simply presumed Cornelia could .return to his former work because of his work activity between March and September of 1978. This was not a reasonable presumption. “Adequate proof [of RFC to do sedentary work] cannot be based on mere theoretical ability to perform some kind of work.”
*984
Cole v. Harris,
Similar reasoning also applies to the Secretary’s partial denial of disability benefits following the district court’s remand order and the government’s defense of that denial. His unsuccessful work attempt between March and September of 1978 was not a reasonable basis in fact for ALJ # 2’s finding that Cornelia had engaged in substantial gainful activity. 10 Nor was it a reasonable basis for the Secretary’s conclusion that, prior to February 19, 1979, Cornelia had the ability to engage in substantial gainful activity of a sedentary nature. Apart from that work attempt, there was no evidence which contradicted Cornelia’s subjective complaints of disabling pain. His complaints of pain and description of his physical activities indicated a continuing disability from August of 1977 through February of 1979. He had difficulty sleeping, he had headaches and sharp shooting pains in his arms as well as in his lower back, he used crutches, he had to rest during the day, he could not lift much, and it hurt him to walk, stand, bend, sit and do virtually anything. The medical reports of both the treating and consulting physicians corroborated the existence of disabling pain. In addition, many witnesses at the second hearing corroborated Cornella’s physical impairments. ALJ # 2 determined, however, that these opinions were not based on personal knowledge. There is no reasonable basis for this determination since each witness specifically indicated personal knowledge and there was no evidence that the testimony was based on anything other than the witnesses’ own observations.
In short, there was no reasonable basis for determining that Cornelia malingered between August of 1977 and his fiftieth birthday, February 19, 1979. Cornelia’s claim of disability was more than adequately established. Yet the Secretаry has continually attempted to justify the government’s actions by focusing on a single element, his failed work attempt, when all the rest of the evidence pointed to a finding of disability. We do not believe the government has met its burden of showing substantial justification in fact.
The government must also show that its position was substantially justified in law. The government attempts to meet its burden by stating that its use and application of the M-V Guidelines was reasonable.
The Secretary found that Plaintiff’s age, education, work experience and residual functional capacity to perform sedentary work fit the requirements of the M-V Guidelines. The Secretary based these findings in part on a lack of objective clinical findings showing рhysical damage to Plaintiffs back . .. and the aforementioned evidence concerning Plaintiff’s work activity.
Cornelia,
It has been clearly established that the M-V Guidelines are not controlling and
*985
cannot be mechanically applied where there is evidence of non-exertional impairments.
McDonald v. Schweiker,
The government also relied on the testimony of a vocational expert called to testify at the second hearing. But the question asked of the expert was framed in a way which assumed Cornelia had the residual functional capacity to engage in sedentary work and did not include reference to his non-exertional impairments. This was error. We have consistently held that hypothetical questions that assume away disabilities and physical limitations are not propеr.
12
See, e.g., Stone v. Harris,
In sum, we hold that the government has failed to meet its burden of showing its position was substantially justified in law. Due to lengthy delays and continual adverse administrative decisions, it took Cornelia approximately three and one-half years from the time he first sought judicial review to the date he finally received a favorable decision. Congress indicated that the government must make a “strong showing” where a claimant is forced into lengthy administrative proceedings. H.R.Rep., supra, at 18, reprinted in 1980 U.S.Code Cong. & Ad.News 4997. The government has not made a strong showing here. Since the government has failed to show a reasonable basis in fact and law for its position, and since there are no “special circumstances” that would make an award of attorneys’ fees unjust, we conclude that an award of attorneys’ fees under the EAJA is required.
ATTORNEYS’ FEES AWARDS TO LEGAL SERVICES ORGANIZATIONS
The district court held that, alternatively, even if the Secretary’s position was
*986
not substantially justified, Cornelia did not “incur” any attorneys’ fees within the meaning of the EAJA since he was represented by a
pro bono
legal organization, Black Hills Legal Services. The court, relying heavily on
Kinne
v.
Schweiker,
No. 80-81, slip op. (D.Vt. June 30, 1982)
(Kinne II),
reasoned that since Cornelia was represented by
pro bono
counsel, “he was not economically deterred from vindicating his rights.”
Cornella,
Although the district court’s rationale hаs some logical appeal, we believe that Congress did not intend such a result for several reasons. First, the legislative history of the EAJA lends support to the conclusion that pro bono awards were contemplated:
In general, consistent with the above limitations, the computation of attorney fees should be based on prevailing market rates without reference to the fee arrangements between the attorney and client. The fact that attorneys may be providing services at salaries or hourly rates below the standard commercial rates which attorneys might normally receive for services rendered is not relevant to the computation of compensation under the Act. In short, the award of fees is to be dеtermined according to general professional standards.
H.R.Rep., supra, at 15, reprinted in 1980 U.S.Code Cong. & Ad.News 4994 (emphasis added). Once the actual fee arrangements between the attorney and client are excluded from computation of the award, there is no logical distinction which can be drawn between cases in which fees have been incurred and those in which they have not. Kinne v. Schweiker, No. 80-81, slip op. at 5 (D.Vt. Dec. 29, 1982) (Kinne III).
Thus, if an attorney charged a client forty dollars per hour, the EAJA would permit payment of a fee calculated at seventy-five dollars per hour [if that was the prevailing market rate], even though the client never legally “incurred” liability for the additional thirty-five dollars per hour. The Court can discern no reason why this logic is not compelling, whеther an attorney charges forty dollars per hour, ten dollars per hour or represents the plaintiff on a pro bono basis.
Hornal v. Schweiker,
Moreover, we note that awards of attorneys’ fees to legal services organizations have been upheld under fee shifting statutes similar to the EAJA.
See New York Gaslight Club, Inc.
v.
Carey,
Thirdly, allowing fee awards to
pro bono
counsel under the EAJA “serves to insure that legal services groups, and other
pro bono
counsel, have a strong incentive to represent indigent social security claimants.”
Ceglia v. Schweiker,
Finally, although our research has disclosed no circuit court rulings on the issue, the district courts have allowed
pro bono
awards under the EAJA with virtual unanimity.
See, e.g., Kinne III, supra; Ceglia,
OTHER ISSUES
The Secretary alleges several other grounds for denying Cornelia’s application for attorneys’ fees. 14 The district court did not reach these issues since it held an award of fees was precluded on other grounds. Because they involve purely questions of law, we will address the Secretary’s contentions without remanding the issues for determination by the district court.
The Secretary contends that the EAJA does not apрly to claims filed pursuant to Title II of the Social Security Act. She relies on the language of the statute that attorneys’ fees are allowed “[ejxcept as otherwise provided by statute.. . . ” 28 U.S.C. § 2412(d)(1)(A). The Secretary claims that since the Social Security Act specifically provides for the payment of fees and states that “no other fee may be payable,” 42 U.S.C. § 406(b)(1), an award of fees pursuant to the EAJA would contravene the very terms of the two Congressional Acts involved.
We disagree with the contention that the EAJA does not apply to Social Security Act cases. What the Secretary’s argument ignores is that the Social Security Act does not permit a claimant to recover fеes against the government; it only allows a representative of the claimant to take attorneys’ fees from the claimant’s award of benefits. As the Fourth Circuit recently noted:
The legislative history [of the EAJA] indicates the conditional language applies only to existing fee-shifting statutes where awards against the government are authorized. Because 42 U.S.C. § 406(b)(1) is not a fee-shifting statute and does not provide for the award of attorney’s fees against the government, the conditional language of the EAJA does not foreclose its application to Social Security Act cases.
Guthrie v. Schweiker,
Moreover, the legislative history of the EAJA indicates that Congress intendеd the Act to cover civil actions to review decisions of the Secretary. A House Report provides that “[t]here was much discussion whether the United States should be liable when it is a named party and represented in a civil action under the Social Security Act. The Committee decided that civil actions should be covered.” H.R.Rep., supra, at 12, reprinted in 1980 U.S.Code Cong. & Ad.News 4991. We, therefore, hold that the EAJA applies to Social Security Act cases. 15
*988 The Secretary next contends that no fees should be awarded for work that was performed prior to October 1, 1981, the effective date of the EAJA. The EAJA applies to any civil action that “is pending on, or commenced on or after” October 1, 1981. Section 208, 28 U.S.C. § 2412 (Supp.1982).
We agree with the vast majority of courts confronting the issue that attorneys’ fees may be awarded for work performed prior to October 1, 1981 so long as the case was “pending” as of that date.
16
The plain language of the statute conclusively answers the Secretary’s contention.
Berman,
The Secretary’s final contention gives us more trouble. Cornelia’s application for attorneys’ fees includes approximately forty hours of work performed in administrative proceedings after the district court’s remand. The Secretary contends that any fees incurred at the second administrative hearing are not compensable under the EAJA. After a careful review of the EAJA, its legislative history, and the cases which have addressed the issue, we conclude that fees incurred at the administrative level in Social Security cases are not compen-sable under the EAJA.
First, at the agency level, the EAJA covers only an “adversary adjudication.” 5 U.S.C. § 504(a)(1). An “adversary adjudication” is defined as one which is “determined on the record after an opportunity for an agency hearing,” 5 U.S.C. § 554, where “the position of the United States is represented by counsel.” 5 U.S.C. § 504(b)(1)(C). In the remand proceedings at the agency level, the United States was not represented by counsel and therefore an adversary adjudication was not conducted within the language of the statute.
The legislative history of the EAJA supports this сonclusion. In assessing the cost of the EAJA, Congress clearly indicated its intent to eliminate administrative proceedings where the United States is not represented by counsel. “[T]he Committee has eliminated non-adversary adjudications (including administrative proceedings under the Social Security Act) from the coverage of .. . this bill, and believes that this is a significant factor in reducing the cost.” H.R.Rep., supra, at 20, reprinted in 1980 U.S.Code Cong. & Ad.News 4999. “Social Security Administration (SSA) cases account for more than 91 percent of all administrative adjudication cases. SSA cases *989 are not adversarial, as defined by the bill . . . .” Id. at 22, reprinted in 1980 U.S. Code Cong. & Ad.News 5001.
The Seventh and Fourth Circuits have recognized this limitation.
The legislative history of the EAJA clearly indicates that [the claimant] is precluded from obtaining attorneys’ fees for work done during the administrative stage of the case. This reflects Congress’ deliberate attempt to tailor eligibility for attorneys’ fees so as to minimize the cost of the EAJA.
Berman,
CONCLUSION
In sum, we conclude that the government has failed to meet its burden of showing its position was substantially justified. We also conclude that the mere fact that Cornelia was represented without charge does not precludе an award of fees pursuant to the EAJA. We hold that the EAJA applies to Social Security Act cases and that Cornelia may recover fees for work performed prior to October 1,1981 since his claim was pending as of that date. Cornelia may only recover attorneys’ fees, however, for services rendered in connection with the judicial proceedings. We, therefore, reverse the district court’s decision and remand for a determination of the appropriate fee to be awarded.
Notes
. For a more detailed recitation of the record in this case, see
Cornella v. Schweiker,
. Cornelia underwent a decompressive lami-nectоmy, but due to his low blood pressure at the time no lumbar fusion was performed.
. Cornelia also engaged in some volunteer activities. He did minor electrical repairs for friends and family on approximately four occasions over a three-year period. He also helped friends and family with a small amount of plumbing work. He helped his mother on occasion by driving for the senior citizens’ meals-on-wheels program when the roads were too icy for his eighty-one year old mother to drive.
. In
McCoy v. Schweiker,
First, a determination is made whether a disability claimant is currently engaged in substantial gainful activity; if so, he must be found nоt disabled. If the claimant is not engaged in substantial gainful activity, the next question is whether he is suffering from a severe impairment, defined as one that significantly limits the ability to perform basic work-related functions. If a severe impairment is not found, the claimant must be found not disabled. If there is a severe impairment, and it is one listed in Appendix 1 to Subpart P, the claimant is found disabled on the medical evidence alone. If the impairment is not listed in Appendix 1, the next inquiry is whether the claimant can perform relevant past work. If he can, a finding of no disability is required. Finally, if the claimant cannot perform relevant past work, the question then becomes whether he can nevertheless do other jobs that exist in the national economy... .
. For example, Cornelia’s attending and treating physician, Dr. Stephen Maks, examined Cornelia many times over the last six years and concluded in reports dated December 16, 1977 and June, 1978 that Cornelia was unemployable because of low back distress and orthopedic problems.
. 28 U.S.C. § 2412(d)(1)(A) (Supp.1982) provides:
Except as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses, in addition to any costs awarded pursuant to subsection (a), incurred by that party in any civil action (other than cases sounding in tort) brought by or against the United States in any court having jurisdiction of that action, unless the court finds that the position of the United States was *982 substantially justified or that special circumstances make an award unjust.
. The legislative history of the EAJA provides:
The test of whether or not a Government action is substantially justified is essentially one of reasonableness. Where the Government can show that its case had a reasonable basis both in law and fact, no award will be made... .
Certain types of case dispositions may indicate that the Government action was not substantially justified. A court should look closely at cases, for example, where there has been a judgment on the pleadings or where there is a directed verdict or where a prior suit on the same claim had been dismissed. Such cases clearly raise the possibility that the Gоvernment was unreasonable in pursuing the litigation.
The standard, however, should not be read to raise a presumption that the Government position was not substantially justified, simply because it lost the case. Nor, in fact, does the standard require the Government to establish that its decision to litigate was based on a substantial probability of prevailing.
H.R.Rep., supra, at 10-11, reprinted in 1980 U.S.Code Cong. & Ad.News 4989.
.
Natural Resources Defense Council,
. The district court relied on this evidence in finding the Secretary’s position to be substantially justified in fact. The court was led to this conclusion by distinguishing the instant case from
Wolverton v. Schweiker,
To the extent that the district court’s opinion and the court’s opinion in Wolverton can be read as stating that the substantial justification standard is met whenever the government shows its position was based on some evidence as opposed to no evidence, their reasoning is unacceptable. Clearly a “no evidence” standard is not what Congress intended in enacting the EAJA.
. ALJ # 1 apparently did not consider the work activity substantial gainful activity since he wеnt past step 1 of the sequential analysis and moved on to inquire whether Cornelia had a severe impairment and whether he could perform past relevant work. See note 4,
supra,
and accompanying text. Even the Appeals Council apparently recognized that Cornelia had not engaged in substantial gainful activity since the Council utilized the M-V Guidelines following ALJ # 2’s decision. “By using the Guidelines, the Council effectively found that plaintiff was
not
engaged in substantial gainful activity in order to reach the stage . . . where age, education, work experience and RFC become relevant.”
Cornella,
. The current Secretary of Health and Human Services is Margaret M. Heckler.
. There were other mistakes of law as well. For example, ALJ # 1 failed in his duty to fully develop the record at the first hearing, see
Landess v. Weinberger,
. Two weeks after the district court issued its opinion in the instant case, the Vermont court reversed itself and held attorneys’ fees could be awarded to pro bono counsel under the EAJA. Kinne v. Schweiker, No. 80-81, slip op. (D.Vt. Dec. 29, 1982) (Kinne III). The Kinne court recognized that its “initial analysis was too narrow in its focus.” Id. at 2.
. Cornelia argues that the Secretary is precluded from urging these grounds based on principles of collateral estoppel. He contends that the Secretary should not be allowed to relitigate legal issues decided against the government by other federal courts in other circuits.
See
cases cited in notes 15, 16
infra.
However, the Supreme Court recеntly held that the United States may not be collaterally es-topped on an issue adjudicated against it in an earlier lawsuit brought by a different party.
See United States v.
Mendoza, — U.S. —,
.
Accord Guthrie, supra; Berman v. Schweiker,
.
See, e.g., Berman,