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Bumpus v. Saul

United States District Court, M.D. Tennessee, Nashville Division

August 26, 2019

ANDREW M. SAUL Commissioner of Social Security



         This action is before the undersigned for all further proceedings pursuant to the consent of the parties and referral from the District Judge in accordance with 28 U.S.C. § 636(c). See Docket Entry (“DE”) 22. Currently pending is counsel for Plaintiff's petition0F[1] for an award of attorney's fees pursuant to 42 U.S.C. § 406(b), in which counsel requests an award of $14, 296.50. DE 29 at 1. Defendant has indicated that it neither supports nor opposes this request. DE 35 at 1. For the reasons that follow, Plaintiff's petition (DE 29) is DENIED.1F[2]

         I. BACKGROUND

         On March 27, 2017, the Court entered an order and accompanying memorandum opinion granting Plaintiff Phillip Bumpus' motion for judgment on the administrative record, which reversed the decision of the Social Security Administration denying Plaintiff Disability Insurance Benefits (“DIB”) and Supplemental Security Income (“SSI”) and remanded the case to the Commissioner for further proceedings. See DE 23, 24. Following entry of that order, counsel for Plaintiff, David C. Downard, filed a motion for attorney's fees in the amount of $2, 574.50 under the Equal Access to Justice Act (“EAJA”), which was granted. See DE 26, 28.

         Unfortunately, Mr. Downard passed away in the interim between the EAJA award and the current motion. On May 2, 2019, Joseph Dalton, Jr., who purports to be the “managing attorney for Downard & Associates” (DE 29 at 1), filed the instant motion for attorney's fees pursuant to 42 U.S.C. § 406(b). Counsel attaches to his motion exhibits indicating that on March 2, 2018, following remand to the Commissioner, Plaintiff received a fully favorable decision and was awarded $87, 492.00 in past-due benefits. See DE 29-8. The Commissioner has withheld $16, 871.00 from that award, which is described as “the balance of 25 percent of the past due benefits payable to Phillip Bumpus” for purposes of paying attorney's fees resulting from this favorable decision (DE 29-4), as contemplated by 42 U.S.C. § 406(b)(1)(A).


         A brief discussion of the methods by which attorney's fees are awarded is warranted in this case. There are three statutory provisions that address payment of fees to attorneys who represent claimants in social security appeals. The first is the EAJA, 28 U.S.C. § 2412(d), which authorizes district courts to require the United States to pay an award of attorney's fees to a “prevailing party” in a civil action against the United States or one of its agencies, such as the Social Security Administration. See 28 U.S.C. § 2412(d)(1)(A). A claimant who wins a remand at the federal level is deemed a “prevailing party” regardless of whether the claimant ultimately receives benefits from the Commissioner, and an EAJA award does not impact the amount in past-due benefits received by the claimant since the cost of the award is borne by the Social Security Administration.

         The second provision is found in 42 U.S.C. § 406(a), which covers work performed by the claimant's representative at the administrative level. Unlike EAJA fees, an award under § 406(a) allows an attorney to recover a portion of any past-due benefits awarded to a claimant following a favorable decision by an administrative law judge (“ALJ”). See 42 U.S.C. § 406(a)(2)(A). This provision authorizes the Commissioner, and not the district court, to award fees that generally total no more than $6, 000.00. See Tibbetts v. Comm'r of Soc. Sec., No. 1:12-cv-894, 2015 WL 1637414, at *2-3 (S.D. Ohio Apr. 13, 2015).2F[3]

         The last provision involving attorney's fees and the one relevant to the instant motion is contained in 42 U.S.C. § 406(b), which allows a claimant's representative to recover attorney's fees of up to 25 percent of past-due benefits for work performed in federal court as part of a social security appeal. Such an award is only available to counsel when a claimant receives a favorable decision from an ALJ following remand from federal court. Id. § 406(b)(1)(A). Because the award reduces the amount of past-due benefits recovered by the claimant, it generally must be memorialized by a fee agreement, usually one of a contingency nature, entered into by both the claimant and the attorney. Tibbetts, 2015 WL 1637414, at *2. Moreover, counsel may apply for fees under both the EAJA and 42 U.S.C. § 406(b) but must refund to the claimant whichever of the two amounts is smaller. Gisbrecht v. Barnhart, 535 U.S. 789, 796 (2002).

         This Court is required to examine the “reasonableness” of the fee requested under § 406(b) even if not opposed by the Commissioner. Gisbrecht, 535 U.S. at 807. This is especially important since the Commissioner does not have a “direct financial stake” in the disbursement of any funds under § 406(b), and instead plays a trustee-like role in the process. Id. at 798, n.6. Any contingency fee agreement existing between the requesting attorney and the claimant that calls for the attorney to receive 25 percent of a claimant's past-due benefits award is “given the weight ordinarily accorded a rebuttable presumption.” Hayes v. Sec'y of Health & Human Servs., 923 F.2d 418, 421 (6th Cir. 1990). However, it remains this Court's role to review any such fee arrangement “as an independent check[] to assure that [it] yields reasonable results, ” Gisbrecht, 535 U.S. at 807, which can result in reduction of the award based on “improper conduct or ineffectiveness of counsel” or in situations where the attorney would “enjoy a windfall because of either an inordinately large benefit award or from minimal effort expended.” Rodriquez v. Bowen, 865 F.2d 739, 746 (6th Cir. 1989). Other factors in considering the reasonableness of a fee agreement include the effective hourly rate, the timeliness of the motion requesting attorney's fees, the Commissioner's opposition or lack thereof, and the “brevity” and/or “relative simplicity” of the representation provided by counsel. Lasley v. Comm'r of Soc. Sec., 771 F.3d 308, 310 (6th Cir. 2014).

         Bearing these principles in mind, the Court notes several problems with Mr. Dalton's petition. First, the request is clearly untimely. The Local Rule pertaining to attorney's fees in social security cases, which is more lenient than Fed.R.Civ.P. 54(d)(2)'s general mandate that motions for attorney's fees be filed within 14 days after entry of judgment, requires that any request for fees under § 406(b) be filed within 30 days after counsel “has received all of the Notices of Award that are necessary to calculate the total amount of retroactive benefits payable.” LR 54.01(b)(3)(B). The Notice of Award following remand in this matter, which contained the amount in past-due benefits owed to Plaintiff, was issued on May 23, 2018, almost one year prior to counsel's filing of the current motion on May 2, 2019. See DE 29-3. The Commissioner later advised counsel's office that 25 percent of Plaintiff's past due benefits, $16, 871.00, was being withheld specifically for § 406(b) purposes on February 25, 2019, which is still 66 days before the current motion was filed. DE 29-4 at 2. Such a delay is not necessarily fatal to Mr. Dalton's petition, particularly in light of Mr. Downard's passing, 3F[4] based on the Local Rule's provision that untimely motions may be considered “only upon a showing of good cause for the delay.” LR 54.01(b)(3)(B). Mr. Dalton's brief, however, contains no such showing.4F[5]

         Second, Mr. Dalton attaches as an exhibit to his brief a fee agreement in place when Mr. Downard was retained to represent Plaintiff in this case, which is labeled “Agreement for Representation Before the Social Security Administration.” See DE 29-5. Conspicuously absent from this agreement is any reference to fees derived from representation for legal work performed in federal court under 42 U.S.C. § 406(b).

         The arrangement instead contemplates fees related to 42 U.S.C. § 406(a) only, stating that “fees being paid by the Client to Downard & Associates will be subject to approval by the Social Security Administration” and shall represent the lesser of 25 percent of the total past-due benefits award or “the dollar amount as provided by 42 U.S.C. § 406(a)(2)(A).” DE 29-5 at 2 (emphasis added). As discussed above, this Court is without any authority to award attorney's fees for proceedings before the Social Security Administration pursuant to 42 U.S.C. § 406(a). Cf. Booth v. Comm'r of Soc. Sec., 645 Fed.Appx. 455, 458 (6th Cir. 2016) (noting that § 406(b) permits recovery of fees for court representation). See also Horenstein v. Sec'y of Health & Human Servs., 35 F.3d 261, 262 (6th Cir. 1994) (“[E]ach tribunal may award fees only for the work done before it.”). At best, this presents an obstacle to any consideration by the Court of the “reasonableness” of any fee agreement involving counsel's work before this Court. Bluer v. Comm'r of Soc. Sec., No. 1:13-cv-22, 2015 WL 7106935, at *2 (W.D. Mich. Nov. 13, 2015) (“In determining the reasonableness of fees under § 406(b), the starting point is the contingency fee agreement between the claimant and counsel.”) (citing Gisbrecht, 535 U.S. at 807). At worst, the lack of an appropriate fee agreement precludes recovery of fees under § 406(b). Rodriquez, 865 F.2d at 746 (noting that when evaluating a petition for fees under § 406(b), the court “should [] look to whether a fee agreement has been executed by the claimant and the claimant's attorney”).

         Finally, Mr. Dalton holds himself out as the “managing attorney for Downard & Associates, ” yet requests fees “on behalf of the estate of David Downard based on the fees due to David Downard[.]” DE 29 at 1. As noted in Defendant's response, there is no indication in Mr. Dalton's filing that he in fact represents the executor of Mr. Downard's estate.5F[6] This is not insignificant given the Commissioner's policy that in the event of a claimant's representative's death prior to receipt of payment for services to which the claimant is entitled, the Commissioner will “certify direct payment ... only to the executor or other person the State recognizes as the representative of the deceased representative's estate.” Program Operations Manual GN 03940.009(B), available at (last visited August 21, 2019). Mr. Dalton makes no such proffer and instead, confusingly, relies on a document entitled “Affidavit of David C. Downard” that merely recites Mr. Downard's experience representing social security applicants but is electronically signed by ...

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