Parrish v. Commissioner of Social Security Administration , 698 F.3d 1215 ( 2012 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
SHERRY PARRISH , No. 11-35332
Plaintiff-Appellant,
D.C. No.
v. 3:08-cv-00969-HU
COMMISSIONER OF SOCIAL
SECURITY ADMINISTRATION , OPINION
Defendant-Appellee.
Appeal from the United States District Court
for the District of Oregon
Dennis James Hubel, Magistrate Judge, Presiding
Submitted May 8, 2012*
Portland, Oregon
Filed November 5, 2012
Before: A. Wallace Tashima, Richard C. Tallman, and
Sandra S. Ikuta, Circuit Judges.
Opinion by Judge Ikuta
*
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
2 PARRISH V . COMMISSIONER SSA
SUMMARY**
Social Security / Attorneys’ Fees
The panel affirmed the district court’s order reducing the
amount of attorneys’ fees for representing a claimant in a
Social Security benefits claim. The panel held that if a district
court awards attorneys’ fees under § 2412(d) of the Equal
Access to Justice Act (“EAJA”) for the representation of a
Social Security claimant on an action for past due benefits,
and also awards attorneys’ fees under § 406(b)(1) of the
Social Security Act for representation of the same claimant in
connection with the same claim, the claimant’s attorney
“receives fees for the same work” under both § 2412(d) and
§ 406(b)(1) for purposes of the EAJA savings provision. In
this case involving more than one attorney, the panel
concluded that the district court correctly apportioned fees
under § 406(b)(1), and properly applied an offset to the
attorney who received both § 406(b)(1) and EAJA awards.
COUNSEL
Tim Wilborn, Wilborn Law Office, P.C., Oregon City, OR, for
plaintiff-appellant Sherry Parrish.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
PARRISH V . COMMISSIONER SSA 3
Dwight C. Holton, United States Attorney; Kelly A. Zusman,
Assistant United States Attorney; David Morado, Regional
Chief Counsel, Seattle Region X; L. Jamala Edwards,
Assistant Regional Counsel, Social Security Administration,
Office of the General Counsel; for defendant-appellee Michael
J. Astrue, Commissioner of Social Security.
OPINION
IKUTA, Circuit Judge:
Tim Wilborn appeals the reduction of attorneys’ fees he
earned while representing Sherry Parrish in a Social Security
benefits claim.1 Because the Social Security Act (SSA) and
the Equal Access to Justice Act (EAJA) both allow attorneys
to receive fees for successful Social Security representations,
Congress enacted a savings provision to prevent attorneys
from receiving fees twice for the “same work” on behalf of a
claimant. Pub. L. No. 99-80, § 3, 99 Stat. 183, 186 (1985)
(adding “Savings Provision” to 28 U.S.C. § 2412 notes).2
1
Although Parrish is the named appellant, the real party in interest
here is Wilborn, who seeks to obtain a further payment of attorneys’ fees.
Similarly, the Commissioner of Social Security, the named appellee, has
no direct financial interest in the outcome of this case, but instead serves
as a de facto trustee for Parrish. See Gisbrecht v. Barnhart, 535 U.S.
789, 798 n.6 (2002).
2
The savings provision provides, in relevant part:
Section 206(b) of the Social Security Act (42 U.S.C. 406(b)(1))
shall not prevent an award of fees and other expenses under
section 2412(d) of title 28, United States Code. Section
206(b)(2) of the Social Security Act [§ 406(b)(2)] shall not
4 PARRISH V . COMMISSIONER SSA
This case requires us to determine whether Wilborn
“receive[d] fees for the same work” under the EAJA and SSA
for the two appeals he undertook for Parrish.
I
We begin with the relevant statutory background. In
1965, Congress added an attorneys’ fee provision to the SSA,
42 U.S.C. § 406(b), in order “to protect claimants against
‘inordinately large fees’ and also to ensure that attorneys
representing successful claimants would not risk ‘nonpayment
of [appropriate] fees.’” Gisbrecht v. Barnhart, 535 U.S. 789,
805 (2002) (quoting Department of Health and Human
Services, Social Security Administration, Office of Hearings
and Appeals, Report to Congress: Attorney Fees Under Title
II of the Social Security Act 15, 66, 70 (July 1988) (“SSA
Report”) (alteration in original). The statute provided
separate procedures for compensating representatives during
the administrative and judicial review stages of a Social
Security claim. See § 406(a) (permitting fee awards for
representatives in administrative proceedings); § 406(b)
(permitting fee awards for representatives in court); see also
Gisbrecht, 535 U.S. at 794.
For judicial proceedings, § 406(b)(1) provides that a
federal court that “renders a judgment favorable to a claimant
. . . who was represented before the court by an attorney” may
apply with respect to any such award but only if, where the
claimant’s attorney receives fees for the same work under both
section 206(b) of that Act and section 2412(d) of title 28, United
States Code, the claimant’s attorney refunds to the claimant the
amount of the smaller fee.
PARRISH V . COMMISSIONER SSA 5
grant the attorney “a reasonable fee for such representation,
not in excess of 25 percent of the total of the past-due benefits
to which the claimant is entitled by reason of such judgment.”3
Any such award is paid directly out of the claimant’s benefits.
§ 406(b)(1)(A). Further, § 406(b) precludes an attorney from
recovering (or even requesting) any additional fees. Under
§ 406(b)(2), “[a]ny attorney who charges, demands, receives,
or collects for services rendered in connection with
proceedings before a court to which [§ 406(b)(1)] is
applicable any amount in excess of that allowed by the court
thereunder shall be guilty of a misdemeanor.”4 According to
3
42 U.S.C. § 406(b)(1)(A) states in full:
Whenever a court renders a judgment favorable to a claimant
under this subchapter 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 of the total of the past-due benefits to which the
claimant is entitled by reason of such judgment, and the
Commissioner of Social Security may, notwithstanding the
provisions of section 405(i) of this title, but subject to subsection
(d) of this section, certify the amount of such fee for payment to
such attorney out of, and not in addition to, the amount of such
past-due benefits. In case of any such judgment, no other fee
may be payable or certified for payment for such representation
except as provided in this paragraph.
4
42 U.S.C. § 406(b)(2) states in full:
Any attorney who charges, demands, receives, or collects for
services rendered in connection with proceedings before a court
to which paragraph (1) of this subsection is applicable any
amount in excess of that allowed by the court thereunder shall
be guilty of a misdemeanor and upon conviction thereof shall be
6 PARRISH V . COMMISSIONER SSA
the Commissioner, this section prohibits a lawyer from
charging fees unless the claimant has been awarded past-due
benefits. Gisbrecht, 535 U.S. at 795. Section 406(b) is the
“exclusive regime” by which an attorney may obtain fees
directly from a Social Security claimant. See id. at 795–96.
But another avenue for recovering attorneys’ fees in Social
Security cases opened in 1980, when Congress passed the
EAJA, 28 U.S.C. § 2412, “to eliminate for the average person
the financial disincentive to challenge unreasonable
governmental actions” in a broad range of circumstances.
Comm’r, INS v. Jean, 496 U.S. 154, 163 (1990). As relevant
here, the EAJA requires the government to pay the fees and
expenses of a “prevailing party” unless the government’s
position was “substantially justified.” § 2412(d)(1)(A).5
Unlike § 406(b) awards, EAJA fee awards “are determined
not by a percent of the amount recovered, but by the ‘time
expended’ and the attorney’s ‘[hourly] rate,’” subject to a
specified cap, and are paid by the government, not the
subject to a fine of not more than $500, or imprisonment for not
more than one year, or both.
5
28 U.S.C. § 2412(d)(1)(A) 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), including proceedings
for judicial review of agency action, 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
substantially justified or that special circumstances make an
award unjust.
PARRISH V . COMMISSIONER SSA 7
claimant. Gisbrecht, 535 U.S. at 796 (quoting
§ 2412(d)(1)–(2)). If a claimant qualifies as a “prevailing
party” at any intermediate stage in a Social Security case, a
court may deem the claimant to be a prevailing party for
purposes of § 2412(d). See Corbin v. Apfel, 149 F.3d 1051,
1053 (9th Cir. 1998).
Because attorneys who accepted an award under
§ 2412(d) in excess of the § 406(b)(1) cap could be subject to
criminal sanctions under § 406(b)(2), Congress amended the
EAJA in 1985 to add a savings provision that allows attorneys
to receive fees under both § 406(b) and § 2412. However, in
order to maximize the award of past-due benefits to claimants
and to avoid giving double compensation to attorneys, the
savings provision requires a lawyer to offset any fees received
under § 406(b) with any award that the attorney receives
under § 2412 if the two were for the “same work.” See
Gisbrecht, 535 U.S. at 796. That provision states: “where
the claimant’s attorney receives fees for the same work under
both [42 U.S.C. § 406(b)] and [28 U.S.C. § 2412], the
claimant’s attorney [must refund] to the claimant the amount
of the smaller fee.” Pub. L. No. 99-80, § 3, 99 Stat. 183
(1985) (uncodified).
II
An administrative law judge (“ALJ”) rejected Parrish’s
first application for disability benefits, concluding that Parrish
could perform jobs that exist in significant numbers in the
national economy and therefore was not disabled. The
Appeals Council denied Parrish’s request for further review.
8 PARRISH V . COMMISSIONER SSA
Wilborn represented Parrish in her appeal to the district
court. After the completion of briefing in the district court,
the parties agreed that the case should be remanded to the
agency to re-evaluate the existing medical evidence and obtain
supplemental evidence from a vocational expert. In light of
this agreement, the district court entered judgment remanding
the case for a rehearing. Also by agreement of the parties, the
district court awarded Parrish $5,000 in attorneys’ fees
pursuant to the EAJA.
A different attorney represented Parrish before the ALJ on
remand. After a hearing, the ALJ again determined that
Parrish was capable of performing jobs that existed in
significant numbers in the national economy and was therefore
not disabled and not entitled to disability benefits.
Wilborn again represented Parrish on her appeal of this
second unfavorable agency decision to the district court. The
district court determined the ALJ erred by finding some of the
medical evidence not credible, and held that Parrish was
entitled to disability benefits. The district court again entered
judgment, remanding the case to the agency with instructions
to calculate and award past-due benefits. Parrish then filed an
unopposed motion for a second EAJA fee award for
Wilborn’s work on the second appeal. The court awarded
Parrish an additional $6,575, bringing the total award to
$11,575 in EAJA fees.
After the second remand and award of past-due benefits,
Wilborn filed an unopposed motion with the district court
seeking $9,059.89 in attorneys’ fees, equating to the statutory
maximum of 25 percent of the past-due benefit award under
§ 406(b)(1)(A). Wilborn conceded that the savings provision
PARRISH V . COMMISSIONER SSA 9
required the court to deduct the second EAJA award of
$6,575 from his § 406(b) fees and thus sought payment of
only $2,484.89.
But the district court went further in reducing attorneys’
fees by adopting the rule stated in Kopulos v. Barnhart that
“all EAJA awards granted for work performed on a claim
must off-set the SSA fees awarded for work performed on the
same claim.” 318 F. Supp. 2d 657, 667–68 (N.D. Ill. 2004).
The court held that the savings provision required it to deduct
the first EAJA award of $5,000, as well as the second award
of $6,575, from the § 406(b) fees. Because the EAJA award
of $11,575 was greater than the § 406(b) award of $9,059.89,
the court declined to make any further award to Wilborn.
III
On appeal, Wilborn contends that the district court erred
in deducting the first $5,000 EAJA award from the § 406(b)
award of $9,059.89 because he did not receive those awards
for the “same work.” We review fee awards under § 406(b)
for abuse of discretion, Clark v. Astrue, 529 F.3d 1211, 1213
(9th Cir. 2008) (en banc), and review questions of law de
novo. Id. at 1214.
As noted above, the EAJA savings provision requires an
attorney who receives a fee award under § 2412(d) of the
EAJA in addition to a fee award under § 406(b) for the “same
work” to refund to the Social Security claimant the smaller
award. Pub. L. No. 99-80, § 3, 99 Stat. 183 (1985) (adding
“Savings Provision” to 28 U.S.C. § 2412 notes). We must
therefore determine whether the $5,000 EAJA award to
Wilborn for his representation of Parrish during her first
10 PARRISH V . COMMISSIONER SSA
appeal is for the “same work” as that which earned Wilborn
$9,059.89 from Parrish’s past-due benefits under § 406(b).
We have no difficulty in identifying the work for which an
attorney may receive fees under the EAJA. The award covers
the time an attorney spent representing a claimant in federal
court, so long as the claimant is the “prevailing party” at that
stage of the proceedings and the court finds that the
government’s position was not “substantially justified.”
§ 2412(d); see also Corbin, 149 F.3d at 1053.
By comparison, identifying the work for which an attorney
may receive fees under § 406(b) requires deeper analysis. A
§ 406(b) award is akin to a contingency fee: an attorney gets
nothing unless a court renders a “favorable judgment” and a
claimant is awarded past-due benefits “by reason of” that
judgment. Those criteria must be met before a court may
award attorneys’ fees of up to 25 percent of the past-due
benefits. § 406(b)(1)(A). Because § 406(b) provides for a
contingency-type reimbursement rather than an hourly fee, the
statute does not clearly identify the “work” for which an
attorney is receiving the § 406(b) award.
Wilborn argues that an attorney may receive fees under
§ 406(b) only for work on the final appeal in a Social Security
case. He reasons as follows: each Social Security appeal to
a federal court results in a separate judgment, and each
remand to the agency terminates the prior civil case. Under
§ 406(b), a court can award attorneys’ fees only for a
representation by an attorney that resulted in “a judgment
favorable to a claimant” if past-due benefits were awarded to
the claimant “by reason of such judgment.” Therefore,
Wilborn asserts, a court can award attorneys’ fees only for
PARRISH V . COMMISSIONER SSA 11
representation during proceedings resulting in a judgment that
directly led to past-due benefits, and only the final appeal
meets this criterion. This reading of the statute, Wilborn
argues, is confirmed by § 406(b)’s reference to “judgment” as
a singular noun, which indicates that a court cannot award
attorneys’ fees for multiple judgments, and therefore cannot
make an award for any representation in a prior appeal that
resulted in a judgment that did not lead directly to past-due
benefits.
We disagree. Wilborn mistakes a condition precedent to
a fee award (that the court render a favorable judgment to the
claimant) for a limitation on the sort of work that is
compensable (that is, Wilborn claims only the representation
by an attorney in connection with that final favorable judgment
is compensable). But the statutory language imposes only one
limitation on the sort of work that is compensable: it must be
representation of the claimant before the federal court. See
§ 406(b)(1)(A) (where a claimant “was represented before the
court by an attorney” the attorney may receive “a reasonable
fee for such representation” provided the conditions precedent
are met. (emphasis added)). Under the statute’s plain
language, a federal court may consider an attorney’s
representation of the client throughout the case in determining
whether a fee award is reasonable.
Furthermore, Wilborn’s limiting construction of § 406(b)
is inconsistent with the overall statutory scheme. If
§ 406(b)(1) applied only to the final appeal that is successful
on remand, an attorney could charge a client for work on an
earlier appeal without facing criminal penalties, because
§ 406(b)(2) applies only to those proceedings for which the
attorney can obtain a fee award under § 406(b)(1). As a
12 PARRISH V . COMMISSIONER SSA
result, a claimant could end up paying more than 25 percent of
past-due benefits in federal court attorneys’ fees, a result that
would thwart the obvious and repeatedly expressed intent of
Congress to prevent attorneys “[c]ollecting or even
demanding from the client anything more than the authorized
allocation [25 percent] of past-due benefits,” Gisbrecht, 535
U.S. at 795.
Thus, an award under § 406(b) compensates an attorney
for all the attorney’s work before a federal court on behalf of
the Social Security claimant in connection with the action that
resulted in past-due benefits. This interpretation is the most
natural reading of the statutory language, and most congruent
with the nature of the fee award itself. If § 406(b) is the
“exclusive regime for obtaining fees” from a Social Security
claimant, Gisbrecht, 535 U.S. at 795, then the § 406(b) award
must compensate the claimant’s attorney for all the work that
led to the favorable result. This would include work on a
prior appeal that did not result in the award of past-due
benefits, because an attorney who secures a remand for a
claimant plays an important role in achieving the ultimate
award, regardless whether a different attorney represented the
claimant during subsequent remands. Cf. Shalala v. Schaefer,
509 U.S. 292, 302 (1993) (a remand constitutes “succe[ss] on
[a] significant issue in litigation” and “achieve[s] some of the
benefit . . . sought in bringing suit.”) (quoting Tx. St. Teachers
Ass’n v. Garland Ind. Sch. Dist., 489 U.S. 782,
791–92(1989)) (internal quotation marks omitted) (ellipsis in
original); see also Harvey L. McCormick, 2 SOCIAL SECURITY
CLAIMS AND PROCEDURES § 16:22 (6th ed.). Accordingly,
our interpretation is most consistent with Congress’s goal of
ensuring that “attorneys representing successful claimants” do
“not risk ‘nonpayment of [appropriate] fees.’” See Gisbrecht,
PARRISH V . COMMISSIONER SSA 13
535 U.S. at 805 (quoting SSA Report 66) (internal quotation
marks omitted). Finally, our interpretation is in line with the
interpretations of our sister circuits, which have read § 406(b)
broadly to include all “substantial work done before the court”
even when the attorney’s work results only in a remand to the
agency, McGraw v. Barnhart, 450 F.3d 493, 502 (10th Cir.
2006) (quoting Conner v. Gardner, 381 F.2d 497, 500 (4th
Cir. 1967)), so long as the “claimant eventually [is] awarded
past-due benefits, whether at the agency level or during
further judicial proceedings.” McGraw, 450 F.3d at 503; see
also Fenix v. Finch, 436 F.2d 831, 835 (8th Cir. 1971).
We therefore hold that if a court awards attorney fees
under § 2412(d) for the representation of a Social Security
claimant on an action for past-due benefits, and also awards
attorney fees under § 406(b)(1) for representation of the same
claimant in connection with the same claim, the claimant’s
attorney “receives fees for the same work” under both
§ 2412(d) and § 406(b)(1) for purposes of the EAJA savings
provision. The district court is well positioned to implement
§ 406(b)’s requirements. Where the same attorney
represented a claimant at each stage of judicial review, the
court need merely offset all EAJA awards against the § 406(b)
award. But even in circumstances where a claimant has more
than one attorney at different appeals, district courts would
have ample discretion to apportion fees equitably under
§ 406(b)(1), and apply the offset as appropriate to those
attorneys who received both § 406(b)(1) and EAJA awards.
IV
We now apply these principles here. Wilborn represented
Parrish in all proceedings before the district court in
14 PARRISH V . COMMISSIONER SSA
connection with her claim, and the district court awarded
Wilborn 25 percent of Parrish’s past-due benefits award as a
reasonable fee for that representation. Wilborn received the
$5,000 award under § 2412(d)(2) for his representation of
Parrish on her first appeal. Accordingly, the $5,000 award
under EAJA was for the “same work” as the work for which
Wilborn received the § 406(b)(1) award, and therefore the
district court correctly offset the $5,000 from the 25 percent
award.
AFFIRMED.