Opinion
1-21-CV-00814-RP
02-28-2024
PETRA S MORENO, Plaintiff v. KILOLO KIJAKAZI, ACTING COMMISSIONER OF SOCIAL SECURITY Defendant
TO: THE HONORABLE ROBERT PITMAN UNITED STATES DISTRICT JUDGE
REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
DUSTIN M. HOWELL, UNITED STATES MAGISTRATE JUDGE
Before the Court is Plaintiff Petra Moreno's Counsel's Petition to Obtain Approval of a Fee for Representing a Social Security Claimant, Dkt. 21; and all related briefing. Based on the relevant filings and applicable law, the undersigned recommends the motion be granted.
I. BACKGROUND
On March 10, 2022, the Court remanded this case to the Commissioner of the Social Security Administration for further administrative proceedings on Plaintiff's claim of disability, pursuant to sentence four of 42 U.S.C. § 405(g). Dkt. 16. As a result of this remand, Plaintiff became the prevailing party for purposes of attorney's fees under the Equal Access to Justice Act (“EAJAâ€), 28 U.S.C. § 2412(d). See Shalala v. Schaefer, 509 U.S. 292, 301-02 (1993) (holding that a party who obtains a remand pursuant to the fourth sentence of 42 U.S.C. § 405(g) qualifies as a prevailing party for purposes of attorney's fees under the EAJA).
Plaintiff's counsel, Ronald D. Honig, moved for attorney's fees in the amount of $4,803.82 under § 2412(d) of the EAJA. Dkt. 18, at 9. The Commissioner did not oppose the award of attorney's fees. Dkt. 19. The District Court found that the amount was reasonable and appropriate and granted Honig's motion. Dkt. 20, at 1. Defendant Kilolo Kijakazi, Acting Commissioner of the Social Security Administration, was ordered to pay Honig the amount of $4,803.82 in attorney's fees. Id. at 1-2.
Honig now moves for fees under 42 U.S.C. § 406(b) in the amount of $18,576.25 in accordance with the Honig's contingency fee agreement with Moreno and reflecting the amount of past-due benefits that have been withheld by the Social Security administration for payment of authorized attorney's fees. Dkt. 21, at 3. Commissioner Kijakazi neither supports nor opposes Honig's request, recognizing that it is for the Court to decide whether the fee is reasonable. Dkt. 22, at 1-2. Rather, the Commissioner requests that the Court either decline to include language directing that the Commissioner “pay†the award, or alternatively, order that any award of fees is to be paid out of Plaintiff's past-due benefits in accordance with agency policy. Id. at 2.The Commissioner also notes that Honig should reimburse to Moreno fees he previously received under the EAJA. Id.
Honig's proposed order granting his motion for fees includes language stating “The Court hereby Orders the Defendant Commissioner of Social Security to pay the Petitioner, as an attorney fee under 42 U.S.C. § 406(b), the amount of $18,576.25 from the Plaintiff's past-due benefits.†Dkt. 21-6, at 1. This language is compatible with the Commissioner's request that the fees are paid out of Plaintiff's past-due benefits.
II. LEGAL STANDARD
“Sections 406(a) and 406(b) of the Social Security Act provide for the discretionary award of attorney's fees out of the past-due benefits recovered by a successful claimant in a Social Security action.†Murkeldove v. Astrue, 635 F.3d 784, 787 (5th Cir. 2011). While § 406(a) governs the award of attorney's fees for representing a claimant in administrative proceedings, § 406(b) governs the award of attorney's fees for representing a claimant in court. Gisbrecht v. Barnhart, 535 U.S. 789, 794 (2002). Section 406(b) provides in relevant part that “[w]henever 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....†42 U.S.C. § 406(b)(1)(A). While § 406(b) “does not displace contingent-fee agreements as the primary means by which fees are set for successfully representing Social Security benefits claimants in court,†agreements that provide for fees exceeding 25 percent of past-due benefits are unenforceable. Gisbrecht, 535 U.S. at 807. Even when contingency fee agreements are within the statutory ceiling, however, “§ 406(b) calls for court review of such arrangements as an independent check, to assure that they yield reasonable results in particular cases.†Id.
The reasonableness of attorney's fees awarded under a fee-shifting statute is generally determined by using the lodestar method. Jeter v. Astrue, 622 F.3d 371, 378 n.1 (5th Cir. 2010) (citing Gisbrecht, 535 U.S. at 801). Noting that § 406(b) is not a fee-shifting statute, however, the Supreme Court has explicitly rejected the use of the lodestar method as the starting point in determining the reasonableness of a fee under this statute. See Gisbrecht, 535 U.S. at 801. Instead, “lower courts [are] to give the contingency fee agreement ‘primacy,'†although this will “in some instances result in an excessively high fee award.†Jeter, 622 F.3d at 379. “If the benefits are large in comparison to the amount of time counsel spent on the case, a downward adjustment is ... in order [to disallow windfalls for lawyers].†Id. at 808 (citations and quotations omitted). Courts may still employ the lodestar method in determining whether a contingency fee constitutes a windfall, but only if they “articulate additional factors demonstrating that the excessively high fee would result in an unearned advantage.†Jeter, 622 F.3d at 380. For instance, a court may consider a reasonable hourly rate in its “windfall†assessment, “so long as this mathematical calculation is accompanied by consideration of whether an attorney's success is attributable to his own work or instead to some unearned advantage for which it would not be reasonable to compensate him.†Id.
The Fifth Circuit has not prescribed an exhaustive list of factors to consider in determining whether a fee award is unearned. Jeter, 622 F.3d at 381. It has noted with approval several factors considered by lower courts, including “risk of loss in the representation, experience of the attorney, percentage of the past-due benefits the fee constitutes, value of the case to a claimant, degree of difficulty, and whether the client consents to the requested fee.†Id. at 382 (citing Brannen v. Barnhart, No. 1:99-CV-325, 2004 WL 1737443, at *5 (E.D. Tex. July 22, 2004)). The claimant's attorney bears the burden of persuasion on the reasonableness of the fees sought. See Gisbrecht, 535 U.S. at 807 n.17. The award under § 406(b) will be offset by any EAJA fees awarded. Id. at 796; accord Jackson v. Astrue, 705 F.3d 527, 529 (5th Cir. 2013) (“Attorneys who successfully represent social-security-benefits claimants in court may receive fees under both the EAJA and § 406(b), but ... must refun[d] to the claimant the amount of the smaller fee.â€) (citations and internal quotation marks omitted).
III. DISCUSSION
A. Reasonableness
As to the first factor recognized in Jeter, courts have consistently noted that “there is a substantial risk of loss in civil actions for social security disability benefits.†Charlton v. Astrue, No. 3:10-CV-056-O-BH, 2011 WL 6325905, at *4 (N.D. Tex. Nov. 22, 2011) (noting that on average, only 35 percent of claimants who appealed their case to federal court received benefits), report and recommendation adopted, 2011 WL 6288029 (N.D. Tex. Dec. 14, 2011); see also Hartz v. Astrue, No. 084566, 2012 WL 4471846, at *6 (E.D. La. Sept. 12, 2012) (collecting cases), report and recommendation adopted, 2012 WL 4471813 (E.D. La. Sept. 27, 2012). Here, counsel faced a substantial risk of loss, as Moreno had lost at all levels of the administrative proceedings. Dkt. 6, at 2.
With regard to the third factor, i.e., the percentage of the past-due benefits, the requested fee of $18,576.25 constitutes approximately 22 percent of the past-due benefits that were awarded on remand. Dkt. 21-3, at 2, 4. (Notice of Award stating Moreno's first check representing past due benefits through July 2023 will be for $65,886.65 and stating that $18,576.25 of past due benefits has been withheld for attorney's fees). This does not exceed the maximum allowable under § 406(b). See Gisbrecht, 535 U.S. at 807.
The fourth factor focuses on the value of the case to the claimant. Here, the value is significant to Plaintiff because on remand, the Commissioner determined that she became disabled beginning in June 2018. Id. at 2. She was awarded past-due benefits of $84,472.90 (including the amount that was withheld for fees) and will continue to receive benefits moving forward. Id. at 2-3; see Guillen v. Berryhill, No. 3:16-CV-1397-D-BT, 2018 WL 6840880, at *2 (N.D. Tex. Dec. 14, 2018), report and recommendation adopted, No. 3:16-CV-1397-D, 2018 WL 6840088 (N.D. Tex. Dec. 31, 2018) (finding that “the value of the case to [the] [p]laintiff was significant as the Commissioner†determined that she had been under a disability and was entailed to past-due benefits).
The last factor is whether the client consents to the requested fee. While certainly not determinative, the existence of a contingency fee agreement indicates that Moreno consented to the payment of a 25 percent fee in this case. Dkt. 21-4, at 2; see Jeter, 622 F.3d at 381-82; see also Brannen, 2004 WL 1737443, at *6 (“When, as here, the agreement calls for a fee of twenty-five percent of past-due benefits—the same percentage allowed by statute—the fee contemplated by the agreement, if not presumptively reasonable, is at least a forceful starting point and solid benchmark.†(emphasis in original)).
Finally, dividing the fee sought ($18,576.25) by the 21.05 hours of attorney work devoted to the appeal of this case results in an effective hourly rate of $882.48 per billed hour. Dkt. 21, at 12. The resulting hourly rate falls within the range of fees that have been approved by courts as reasonable. See, e.g., Doskocil v. Comm'r of Soc. Sec., No. 3:17-CV-2434-L-BK, 2020 WL 4195955, at *2 (N.D. Tex. June 11, 2020) (finding that the resulting hourly rate of $676.05 was reasonable and “well within the range previously approved in other social security casesâ€); Jovita F. v. Saul, No. 3:17-CV-00945-L-BT, 2020 WL 3406195, at *2 (N.D. Tex. Mar. 30, 2020) (finding that in light of factors the resulting hourly fee of $650.00 was reasonable); Richardson v. Colvin, No. 4:15-CV-0879-BL, 2018 WL 1324951, at *2 (N.D. Tex. Mar. 3, 2018) (finding the resulting hourly rate of $937.50 to be reasonable in light of the risks associated with continency agreements). The resulting hourly rate requested here, therefore, is reasonable.
After weighing the relevant factors, the undersigned finds that Honig's request for a contingency fee award in the amount of $18,576.25 is reasonable and should be granted.
B. EAJA Fees
Acting Commissioner Kijakazi contends that if Honig's motion under § 406(b) is granted, Honig must refund to Moreno the $4,803.82 in EAJA fees he received. Dkt. 22, at 2. As noted, Plaintiff's counsel was previously awarded EAJA fees. Dkt. 20, at 2. “A claimant's attorney may either reduce a § 406(b) claim by the amount of EAJA fees, or may receive both fees, but must then refund the smaller of the two fees to the plaintiff.†Bradford v. Comm'r of Soc. Sec., No. 3:18-CV-123-DAS, 2020 WL 5995690, at *3 (N.D. Miss. Oct. 9, 2020) (citing Jackson v. Comm'r of Soc. Sec., 601 F.3d 1268, 2173 (11th Cir. 2010) (“Regardless of whether the attorney writes a refund check to his client or deducts the amount of the EAJA award from his § 406(b) fee request, the purpose of the Savings Provision is fulfilled—the attorney does not get a double recovery.â€)); see also Gisbrecht, 535 U.S. at 796 (when both EAJA fees and § 406(b) fees are awarded, counsel is required to “refund to the [plaintiff] the amount of the smaller feeâ€).
Here, Plaintiffs counsel represents that he will properly refund the $4,803.82 that he received under EAJA. Dkt. 21, at 9. Because Plaintiff's fee request of $18,576.25 under § 406(b) is reasonable and should be awarded, counsel should return to Plaintiff the smaller fee of $4,803.82 awarded under the EAJA. See Panos v. Berryhill, No. EP-17-CV-00220-ATB, 2019 WL 2368684, at *5 (W.D. Tex. June 5, 2019) (finding that because the fee request under § 406(b) was reasonable and should be awarded, the plaintiff's counsel must refund to her the smaller fee awarded under EAJA); see also Tate v. Colvin, No. 3:13cv904-DPJ-FKB, 2016 WL 744474, at *4 (S.D.Miss. Feb. 23, 2016) (granting the plaintiffs motion for attorney's fees under § 406(b) and requiring that the plaintiffs counsel refund the $4,738.09 in EAJA fees to the plaintiff).
IV. RECOMMENDATION
In accordance with the foregoing discussion, the undersigned RECOMMENDS that the District Court GRANT Plaintiff's Petition to Obtain Approval of a Fee for Representing a Social Security Claimant, Dkt. 21. Plaintiff's Counsel Ronald D. Honig should be awarded $18,576.25 in attorney's fees out of Plaintiff's past-due benefits under 42 U.S.C. § 406(b). The award of attorney's fees in this case should be made payable directly to Honig and mailed to him. Honig should also be ordered to return to Plaintiff the smaller fee of $4,803.82 awarded under the EAJA.
V. WARNINGS
The parties may file objections to this Report and Recommendation. A party filing objections must specifically identify those findings or recommendations to which objections are being made. The District Court need not consider frivolous, conclusive, or general objections. See Battle v. United States Parole Comm'n, 834 F.2d 419, 421 (5th Cir. 1987). A party's failure to file written objections to the proposed findings and recommendations contained in this Report within fourteen days after the party is served with a copy of the Report shall bar that party from de novo review by the District Court of the proposed findings and recommendations in the Report and, except upon grounds of plain error, shall bar the party from appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the District Court. See 28 U.S.C. § 636(b)(1)(C); Thomas v. Arn, 474 U.S. 140, 150-53 (1985); Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc).