Moriarty v. Colvin , 806 F.3d 664 ( 2015 )

United States Court of Appeals
For the First Circuit
No. 15-1165
MARSHALL T. MORIARTY, ESQ., individually
and on behalf of all others similarly situated,
Plaintiff, Appellant,
v.
CAROLYN W. COLVIN,
Acting Commissioner, Social Security Administration,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Kenneth P. Neiman, Magistrate Judge]
Before
Howard, Chief Judge,
Lynch and Lipez, Circuit Judges.
Richard I. Greenberg for appellant.
Karen L. Goodwin, Assistant United States Attorney, with whom
Carmen M. Ortiz, United States Attorney, and Hugh Dun Rappaport,
Assistant Regional Counsel, Social Security Administration, were
on brief, for appellee.
November 20, 2015
LYNCH, Circuit Judge. As an incentive to attorneys to
bring Supplemental Security Income (SSI) claims, the Commissioner
of the Social Security Administration (SSA), for more than a
decade, has paid directly to qualified attorneys a fee of no more
than twenty-five percent of the successful recovery of past-due
benefits to clients. See 42 U.S.C. § 1383(d)(2)(B). When the
federal government administers state supplementary payments for
the state, that amount of state payments is included in "past-due
benefits." See 20 C.F.R. § 416.1503. But when the state chooses
to administer its own payments, the state amounts are not included
as "past-due benefits" for the purpose of attorney compensation.
See id.So when Massachusetts chose in 2012 to administer its
own benefits, rather than rely on federal administration of its
supplementary payments as it had done in the past, that had the
effect of reducing the fees paid to attorneys representing
Massachusetts SSI claimants. The attorney here argues that the
Commissioner cannot exclude state-administered state supplementary
payments from the amount included in "past-due benefits." Giving
deference to the agency, as we must, we conclude the Commissioner
can do so.
We may and do make the assumption that we have federal
appellate jurisdiction. We affirm the district court's order
granting summary judgment to the Commissioner.
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I.
Attorney Marshall Moriarty represented a client in a
claim for SSI benefits before the SSA in 2012. Moriarty and his
client had entered into an agreement in June 2012, providing that,
subject to the SSA's approval, "if SSA favorably decides the
claim(s)," Moriarty would receive "a fee equal to the lesser of
25% or the maximum allowable fee that, as of the date of this
agreement, is $6000.00."
In 2013, Moriarty's client received a partially
favorable decision, in which the SSA granted him $16,699.02 in
federal and federally-administered state back payments. This
amount included federal SSI payments the client was owed from
November 2010 through April 2013 as well as Massachusetts state
supplementary payments from November 2010 through March 2012 --
the time period during which Massachusetts's state supplementary
payments1 were federally administered. However, in April 2012,
Massachusetts changed its practice and began administering its own
program of supplementary payments. At that point, such payments
were no longer included in the SSA's calculation of back payments
for purposes of payments to attorneys.
1 We refer to the state program of supplementary payments
as "supplementary payments" to align with the language in 42 U.S.C.
§ 1382e.
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Upon learning that the SSA attorney's fee award did not
include twenty-five percent of the Massachusetts state-
administered state supplementary payments, Moriarty wrote a letter
to the SSA seeking $324.85 in additional fees. The SSA Office of
the Regional Counsel e-mailed Moriarty informing him that "past-
due benefits are calculated only [on] the basis of federally
administered benefits and do not include state supplementation
unless federally administered."
The Commissioner's position is that Moriarty's
attorney's fee award can be based only on the $16,699.02 granted
by the SSA, and so it cannot include a percentage of the
Massachusetts state-administered state supplementary payments from
April 2012 through April 2013. If Massachusetts had continued its
prior practice of having the federal government administer the
program, then Moriarty would have gotten twenty-five percent of
the total state and federal payments. Because Massachusetts
changed its practice, the Commissioner says that not only will
Moriarty not receive the same amount of attorney's fees but he is
also forbidden to seek the shortfall.
In August 2013, Moriarty filed a Complaint for
Declaratory Relief and Petition for Writ of Mandamus in the federal
district court. The parties cross-moved for summary judgment. On
December 31, 2014, the district court entered judgment in favor of
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the Commissioner. Moriarty v. Colvin, 76 F. Supp. 3d 261, 268 (D.
Mass. 2014). This appeal followed.
II.
Under Title XVI of the Social Security Act, 42 U.S.C.
§§ 1381–1383f, the SSA administers SSI to eligible "individuals
who have attained age 65 or are blind or disabled." Id. §§ 1381,
1381a. States may choose to supplement federal SSI benefits with
optional state supplementary payments. See Bouchard v. Sec'y of
Health & Human Servs., 583 F. Supp. 944, 947 (D. Mass. 1984)
(citing 42 U.S.C. § 1382e); 20 C.F.R. § 416.2001. Massachusetts
has chosen to do so. States providing these supplementary payments
can administer the payments on their own or enter into an agreement
with the Commissioner under which the Commissioner makes
supplementary payments on the state's behalf. See 42 U.S.C.
§ 1382e(a)–(b). States that administer their own supplementary
payments "may establish [their] own criteria for determining
eligibility requirements as well as the amounts." 20 C.F.R.
§ 416.2005(c).
When states choose to have the federal government
administer the state supplementary payments, the federal
government "assume[s] complete control" over the administration of
the payments. Bouchard, 583 F. Supp. at 947. These states then
reimburse the federal government for the state portion of the
payments disbursed and pay an administrative fee. See 42 U.S.C.
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§ 1382e(d)(1). To be clear, the states do not hold separate
hearings whether or not they use the federal government to
administer their supplementary payments. See 106 Mass. Code Regs.
§ 327.120. The Commissioner's determination of eligibility for
SSI benefits automatically qualifies the claimant for the state
supplement. See id. The majority of states administer their own
supplementary payments.2 Some states do not provide supplementary
payments at all.
As originally enacted, the SSI program did not authorize
the withholding of SSI benefits from the claimant's award to pay
the claimant's attorney his or her fees in successful
adjudications. See Bowen v. Galbreath, 485 U.S. 74, 79 (1988).
However, in 2004, the Social Security Protection Act added a
subparagraph to 42 U.S.C. § 1383(d)(2), providing that when a
claimant is awarded past-due benefits, "the Commissioner of Social
Security shall pay out of such past-due benefits to such attorney"
the attorney's fees, subject to certain limitations. Pub. L. No.
108-203, § 302(a)(4), 118 Stat. 493, 520 (2004); see 42 U.S.C.
§§ 406(a)(2), 1383(d)(2)(B). Since 2007, the Commissioner has
2 There are reasons a state may choose to administer its
own supplementary payments. For example, those states that enter
into agreements with the SSA must pay a fee of more than $10 to
the SSA for each payment the SSA administers. See Social Security
Handbook § 2106.2 (2011). In addition, states with federally-
administered payments "los[e] all administrative control over the
operation of those benefits." H.R. Rep. No. 92-231, at 5186
(1971); see also 42 U.S.C. § 1382e(b)(2).
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interpreted "past-due benefits" under the SSI program as
"including any Federally administered State payments," but not
including supplementary payments administered by the state.
Temporary Extension of Attorney Fee Payment System to Title XVI,
72 Fed. Reg. 16,720, 16,725 (Apr. 5, 2007) (codified at 20 C.F.R.
§ 416.1503); see also SSA Program Operations Manual System
GN 03920.031(B)(1) (2012) ("In a title XVI only claim, 'past-due
benefits' are the total amount of Federal and Federally
administered State payments accumulated to the claimant and his or
her spouse . . . because of a decision favorable to the
claimant . . . ."). Accordingly, a percentage of state
supplementary payments is not included as part of the attorney's
fees the SSA awards in states that administer their own
supplementary payments. It is this percentage of the Massachusetts
state-administered state supplementary payments that Moriarty
seeks.
III.
We address the Commissioner's argument that we lack
subject matter jurisdiction to decide this case.3 Under 28 U.S.C.
3 "Under 28 U.S.C. § 1291, we have jurisdiction over
appeals from final decisions and orders of the district courts
within this circuit." Royal Siam Corp. v. Chertoff, 484 F.3d 139,
142 (1st Cir. 2007). Because the case before us appeals a final
decision of the district court, we have jurisdiction over the
appeal. Id. However, "[t]hat is not the end of the jurisdictional
issue." Id. "[I]t normally is incumbent upon an appellate court
to satisfy itself both of its own subject-matter jurisdiction and
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§ 1331, federal courts have jurisdiction to review agency action.
See Califano v. Sanders, 430 U.S. 99, 105 (1977). However, two
statutes may potentially withdraw jurisdiction: (1) 42 U.S.C.
§ 405(h), which provides: "No action against the United States,
the Commissioner of Social Security, or any officer or employee
thereof shall be brought under section 1331 or 1346 of title 28 to
recover on any claim arising under this subchapter."; and (2) 42
U.S.C. § 406(a)(3)(C), which provides: "The decision of the
administrative law judge or other person conducting the review [of
the amount which would otherwise be the maximum attorney's fee]
shall not be subject to further review."
The answer to the jurisdictional question is not clear.
However, resolving this case on the merits by affirming the grant
of summary judgment has the same consequences as concluding that
we do not have jurisdiction. Because the jurisdictional question
is a question of statutory jurisdiction, not Article III
jurisdiction, see Parella v. Ret. Bd. of R.I. Emps.' Ret. Sys.,
173 F.3d 46, 54 (1st Cir. 1999), "we believe that this is a case
in which we may -- and should -- bypass the jurisdictional
question." Royal Siam Corp. v. Chertoff, 484 F.3d 139, 143 (1st
Cir. 2007); see also Global NAPs, Inc. v. Verizon New England,
of the subject-matter jurisdiction of the trial court before
proceeding further." Id. The Commissioner filed a motion to
dismiss below based on lack of subject matter jurisdiction, which
the district court denied.
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Inc., 706 F.3d 8, 12–13 (1st Cir. 2013) (explaining that "[w]hen
confronted with non-constitutional challenges to jurisdiction,"
id. at 12–13, and the "case readily can be resolved in favor of
[the party challenging jurisdiction,] . . . we may 'decline to
decide the jurisdictional issues . . . ,'" id. at 13 (quoting
Restoration Pres. Masonry, Inc. v. Grove Eur. Ltd., 325 F.3d 54,
59 (1st Cir. 2003))). The Commissioner agrees we have the
authority to do so.
IV.
"We review an appeal from a grant of summary judgment de
novo." FDIC v. Estrada-Rivera, 722 F.3d 50, 52 (1st Cir. 2013).
Because we are reviewing an agency's interpretation of
its governing statute, we apply the principles of Chevron, U.S.A.,
Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837(1984). Under Chevron, we first ask "whether Congress has directly
spoken to the precise question at issue." Id. at 842. If we
determine that "Congress has not directly addressed the precise
question at issue," we then ask whether the agency's interpretation
is a "reasonable" one. Id. at 843–44.4
4 To the extent Moriarty suggests we should not apply the
Chevron framework, he is wrong. See Splude v. Apfel, 165 F.3d 85,
90 (1st Cir. 1999) ("[T]he Social Security Administration is
normally accorded the deference due to an agency plausibly
interpreting its own governing statutes."); see also Barnhart v.
Thomas, 540 U.S. 20, 26–30 (2003); Barnhart v. Walton, 535 U.S.
212, 217–22 (2002).
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Congress has not "directly spoken to the precise
question at issue." Id. at 842. Under 42 U.S.C. § 1383(d)(2)(B),
"if the claimant is determined to be entitled to past-due benefits
under this subchapter and the person representing the claimant is
an attorney, the Commissioner of Social Security shall pay out of
such past-due benefits" the lesser of "the maximum fee as does not
exceed 25 percent of such past-due benefits" or "the amount of
past-due benefits available after any applicable reductions." 42
U.S.C. § 1383(d)(2)(B).5
Whether "past-due benefits under this subchapter"
includes state-administered state supplementary payments is not
self-evident. Section 1382e discusses state supplementary
payments and provides that "[a]ny cash payments which are made by
a State . . . on a regular basis to individuals who are receiving
benefits under this subchapter . . . shall be excluded under
section 1382a(b)(6) of this title in determining the income of
such individuals for purposes of this subchapter." Id. § 1382e(a).
It then explains that "the Commissioner of Social Security and
such State may enter into an agreement which satisfies subsection
5 The term "past-due benefits" appears more than ten times
throughout § 1383 and almost twenty times throughout 42 U.S.C.
§ 406, which has largely been incorporated into Title XVI of the
Social Security Act. See 42 U.S.C. § 1383(d)(2)(A). In his brief,
Moriarty also discusses § 406(a), which provides that "[i]n the
case of a claim of entitlement to past-due benefits under this
subchapter," the Commissioner shall approve fee agreements subject
to certain conditions. See id. § 406(a)(2)(A).
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(b) of this section under which the Commissioner of Social Security
will, on behalf of such State . . . make such supplementary
payments to all such individuals." Id.6 Thus, while the subchapter
unambiguously discusses state supplementary payments, it is
unclear whether this subsection presupposes the existence of state
supplementary payments or whether state supplementary payments
should be considered as "past-due benefits under this subchapter."
The legislative history is of little assistance in
resolving this question. Originally, Congress did not provide for
the withholding of past-due benefits for attorney's fees in SSI
cases. See Bowen, 485 U.S. at 77 (concluding that this omission
was "intentional" and that "it is fair to assume that this omission
6 The sub-section in full states:
Any cash payments which are made by a State (or
political subdivision thereof) on a regular
basis to individuals who are receiving benefits
under this subchapter or who would but for
their income be eligible to receive benefits
under this subchapter, as assistance based on
need in supplementation of such benefits (as
determined by the Commissioner of Social
Security), shall be excluded under section
1382a(b)(6) of this title in determining the
income of such individuals for purposes of this
subchapter and the Commissioner of Social
Security and such State may enter into an
agreement which satisfies subsection (b) of
this section under which the Commissioner of
Social Security will, on behalf of such State
(or subdivision) make such supplementary
payments to all such individuals.
42 U.S.C. § 1382e(a).
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also reflected Congress' view that withholding past-due SSI
benefits would be inconsistent with the purpose of the
program . . . [g]iven the extreme financial need of SSI
beneficiaries"). When Congress did authorize the withholding of
past-due benefits in 2004, it did so with the purpose of
"improv[ing] SSI applicants' access to representation, as more
attorneys would be willing to represent claimants if they are
guaranteed payment." H.R. Rep. No. 108-46, at 43 (2003). The
report does not discuss whether state supplementary payments would
be included in "past-due benefits." Id.7 Given the ambiguity of
the language and the inconclusive legislative history, we move to
the second step of the Chevron inquiry and ask whether the
Commissioner's interpretation "is based on a permissible
construction of the statute." Chevron, 467 U.S. at 843.
We conclude that the Commissioner's interpretation is
reasonable. The statute provides that the Commissioner "shall
pay" attorney's fees "out of such past-due benefits," 42 U.S.C.
§ 1383(d)(2)(B), and the Commissioner explains in her brief that
7 With regard to the states' involvement with the
administration of attorney's fees, the report explains only that
"in cases where the States would be reimbursed for interim
assistance they had provided to a beneficiary awaiting a decision
on a claim for SSI benefits, the State would be paid first, and
the attorney would be paid second out of the past-due benefit
amount" so that "States providing interim assistance to
individuals would not receive less reimbursement." H.R. Rep. No.
108-46, at 43.
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she can make payments only out of funds over which the SSA has
control -- "the federal SSI payments and the funds provided by
states for federally administered state payments." As the district
court found, the SSA "would have no power to withhold 25% of the
total retroactive amount payable to the claimant." Moriarty, 76
F. Supp. 3d at 266. Moreover, unlike with federally-administered
state payments, there is no mechanism for reimbursement when states
administer their own supplementary payments. See 42 U.S.C.
§ 1382e(d)(1). "At the least, the [Commissioner]'s interpretation
has administrative simplicity to recommend it." Scialabba v.
Cuellar de Osorio, 134 S. Ct. 2191, 2212 (2014).8
We recognize that the Commissioner's interpretation
leads to a situation where an attorney cannot collect twenty-five
percent of state-administered state supplementary benefits as
fees. The Commissioner acknowledges that because under her
regulations, "past-due benefits do not include state-administered
8 The Commissioner also represents that when states
administer their own payments, "the Commissioner often does not
know the precise amount of the payments to an individual SSI
recipient," and the SSA is therefore "not in a position to
calculate a fee based on a percentage of such payments." Moriarty
contests this representation and argues that the Commissioner can
access information regarding state-administered state
supplementary payments. We need not wade into this factual
dispute. Whether or not the Commissioner can ultimately determine
the amount of state-administered supplementary payments through
publicly available information, as the district court explained,
she does not have control over the administration of these
payments. Moriarty, 76 F. Supp. 3d at 266.
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supplements . . . [she] cannot approve a fee that includes a
percentage of the state-administered supplement." And if Moriarty
charges or attempts to collect a fee above that which has been set
by the Commissioner, he would violate the Social Security Act and
"shall be deemed guilty of a misdemeanor," 42 U.S.C. § 406(a)(5).
Yet we cannot conclude that this outcome renders the
Commissioner's interpretation unreasonable. Whether or not the
attorney receives a portion of the state-administered state
supplementary payments, by receiving a percentage of the federal
payments, the attorney still has received an incentive to represent
claimants. Cf. Detson v. Schweiker, 788 F.2d 372, 376 (6th Cir.
1986) ("[T]he primary financial incentive provided by § 406 is not
the amount of attorney's fees but is the direct payment of
fees. . . . [T]his financial incentive is unaffected by the
Secretary's method of calculating the withholding amount." (citing
Burnett v. Heckler, 756 F.2d 621, 626 (8th Cir. 1985))). There
are competing concerns when determining attorney's fees: "There is
a danger that too much of the benefits go to the lawyers rather
than the claimants. There is also the danger that if the lawyers
have no assured compensation the claimants will not be
represented. . . . Congress has dealt with [this problem] and
delegated to the [Commissioner] the authority to spell out what
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Congress has intended." Rodriguez v. Sec'y of Health & Human
Servs., 856 F.2d 338, 340 (1st Cir. 1988).9
V.
For the reasons stated above, the district court's order
is affirmed.
9 In determining that the Commissioner's interpretation is
reasonable, "we are not unmindful that the fees of attorneys
representing [clients in states without federally-administered
supplementary payments] will be reduced." Detson, 788 F.2d at
376. "However, dissatisfaction with this result" is for Congress
and the Commissioner -- not this court -- to address. Id. at 376–
77.
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