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Bailey v. Colvin

United States District Court, N.D. Indiana, Fort Wayne Division

February 25, 2014

LARRY J. BAILEY, Plaintiff,
v.
CAROLYN W. COLVIN, [1] Acting Commissioner of Social Security, Defendant.

OPINION AND ORDER

ROGER B. COSBEY, Magistrate Judge.

Plaintiff Larry Bailey brought this suit to contest a denial of disability benefits by Defendant Commissioner of Social Security ("Commissioner"). (Docket # 1.) On March 26, 2012, pursuant to a stipulation by the parties (Docket # 22), this Court entered an order that reversed the Commissioner's denial of benefits and remanded the case to the Commissioner for further proceedings (Docket # 23).

Bailey's attorney, Joseph Shull, now moves pursuant to 42 U.S.C. § 406(b) for the Court's authorization of attorney fees in the amount of $12, 829.00 for his representation of Bailey in federal court. (Docket # 29.) For the reasons set forth herein, Shull's motion for authorization of attorney fees will be GRANTED.

A. Relevant Factual and Procedural Background

On June 21, 2011, Shull and Bailey entered into a contingent-fee agreement for Shull's representation of Bailey in federal court.[2] (Mem. in Supp. of Pl.'s Attorney's Mot. for an Award of Att'y Fees Under 42 U.S.C. § 406(b) ("Pl.'s Supp. Mem.") Ex. B.) Under the agreement, Bailey agreed that Shull would "charge and receive as his fee an amount equal to twenty-five percent (25%) of the past-due benefits which are awarded to [his] family and [him] in the event [his] case is won." (Pl.'s Supp. Mem. Ex. B.)

On March 26, 2012, after a stipulation by the parties (Docket # 22), Bailey received a favorable judgment from this Court, and his case was remanded to the Commissioner for further proceedings (Docket # 23, 24). Shull then filed for attorney fees under the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412, seeking payment for the 18.3 hours he spent advocating Bailey's claim in federal court. (Docket # 25-27.) The Court awarded Shull $3, 330.60 in EAJA fees. (Docket # 28.) Shull also requested $6, 000 in attorney fees from the Social Security Administration pursuant to 42 U.S.C. § 406(a) for his representation of Bailey at the administrative level, but that request is still pending before the Commissioner. (Pl.'s Mem. in Supp. 2.)

The Commissioner ultimately awarded disability benefits to Bailey, causing him to receive $75, 316.00 in back benefits. (Pl.'s Supp. Mem. Ex. A.) On February 12, 2014, Shull filed the instant motion, seeking the Court's authorization of a payment of $12, 829.00 in attorney fees from Bailey to Shull pursuant to the contingent-fee agreement. (Docket # 29-30.) The Commissioner filed a response on February 24, 2014, indicating that she has no objection to Bailey's motion for fees under § 406(b). (Docket # 31.)

B. Legal Standard

Fees for representing social security claimants, both administratively and in federal court, are governed by 42 U.S.C. § 406. Gisbrecht, 535 U.S. at 793, 795-96. Section 406(a) controls fees for representation in administrative proceedings and § 406(b) controls attorney fees for representation in court. Id. at 796. Unlike fees obtained under the EAJA, [3] the fees awarded under § 406 are charged against the claimant, not the government. Id.

Under § 406(a), an attorney who has represented a claimant may file a fee petition or fee agreement with the Commissioner to receive fees for his representation at the administrative level. 42 U.S.C. § 406(a); 20 C.F.R. § 404.1725(b); Gisbrecht, 535 U.S. at 794-95. There are, however, limits on the amount that the Commissioner can award pursuant to § 406(a). Gisbrecht, 535 U.S. at 794-95.

In addition to the fee award available pursuant to § 406(a), under § 406(b) an attorney who has successfully represented a claimant in federal court may receive "a reasonable fee for such representation, not in excess of 25 percent of the total past-due benefits to which the claimant is entitled by reason of such judgment...."[4] 42 U.S.C. § 406(b)(1)(A); Gisbrecht, 535 U.S. at 795. The combination of fees awarded under § 406(a) and § 406(b), however, can never exceed 25% of the past-due benefits awarded to the claimant. Kopulos v. Barnhart, 318 F.Supp.2d 657, 661 (N.D. Ill. 2004); Bartrom v. Barnhart, No. 1:99-CV-44, 2003 WL 21919181, at *2-3 (N.D. Ind. Feb. 26, 2003). Moreover, § 406(b) has been harmonized with the EAJA; although fee awards may be made under both the EAJA and § 406(b), a claimant's attorney must refund to the claimant the amount of the smaller fee. Gisbrecht, 535 U.S. at 796 (explaining that "an EAJA award offsets an award under Section 406(b)").

Unlike the award by the Commissioner under § 406(a), the court is required under § 406(b) to review for reasonableness the attorney fees yielded by contingent fee agreements. Id. at 809. The Supreme Court has explained:

Congress has provided one boundary line: Agreements are unenforceable to the extent that they provide for fees exceeding 25 percent of the past-due benefits. Within the 25 percent boundary, ... the attorney for the successful claimant must show that the fee sought is reasonable for the services rendered. Courts that approach fee determinations by looking first to the contingent-fee agreement, then testing it for reasonableness, have appropriately reduced the attorney's recovery based on the character of the representation and the results the representative achieved. If the attorney is responsible for delay, for example, a reduction is in order so that the attorney will not profit from the accumulation of ...

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