Finally, IT Is FURTHER ORDERED that the Clerk enter a Rule 58 judgment nunc pro tunc,
thereby terminating this case in favor of Mr. Raffin, pursuant to the Court’s December 6, 2001 Order
remanding this case to the Commissioner pursuant to sentence four of 42 U.S.C. § 405(g).

ENTER:

YC FAL

SIDNEY I. SCHENKIER
United States Magistrate Judge

Dated: May 31, 2005

14


28 U.S.C. § 2412(b). And,

A party seeking an award of fees and other expenses shall, within 30 days of final
judgment in the action, submit to the Court an application for fees and other expenses
which shows that the party is a prevailing party and is eligible to receive an award
under that subsection, and the amount sought, including an itemized statement from
any attorney or expert witness representing or appearing in behalf of the party stating
the actual time expended and the rate at which fees and other expenses were
computed. The party shall also allege that the position of the United States was no
substantially justified. Whether or not the position of the United States was
substantially justified shall be determined on the basis of the record (including the
record .. . by the agency upon which the civil action is based) which is made in the
civil action for which fees and other expenses are sought.

28 U.S.C. § 2412(d)(1)(B). Additionally, EAJA awards are limited by the following provision,
which states:

attorneys fees shall not be awarded in excess of $125 per hour unless the court

determines that an increase in the cost of living or a special factor, such as the limited

availability of qualified attorneys for the proceedings involved justifies a higher fee.
28 U.S.C. § 2412(d)(1)(D)(2)(A)Gi); see also Gisbrecht, 535 U.S. at 796 (2002).
Cc.

Section 406(a), Section 406(b), and EAJA all combine to affect the total amount of attorneys’
fees that may be awarded, and the sources of their payment.

First, “the combination of § 406(a) and § 406(b) can never exceed 25 percent of the
retroactive benefits” due to a claimant. Kopulos v. Barnhart, 318 F. Supp.2d 657, 660 (N.D. lll.
2004). Second, any awards under EAJA must serve as an offset against the Section 406(b) award
for the same work, namely, work performed in federal court. Gisbrecht, 535 U.S. at 796. See also
Kopulos, 318 F.Supp. at 663. The Supreme Court has explained the interplay between EAJA and

Section 406 like this:


an attorney with Mr. Bryant’s experience in his field (P1.’s Reply, Ex. B (Nationwide Billing Rates
from NATIONAL LAW JOURNAL)). Thus, using lodestar, we multiply that number by the 21.9 hours
submitted by Mr. Bryantas the statement of his federal court time. This calculation yields an amount
of $8,760.00. The Government does not challenge either Mr. Bryant’s hours or his hourly rate.

The question for us is whether we use a multiplier to enhance this award based on the
favorable results Mr. Bryant obtained for Mr. Raffin. We think a multiplier of two times the lodestar
is reasonable. In cases where a fee must be determined, courts “consider the time and labor required,
the skill required, whether the fee is fixed or contingent, the amount involved and the result obtained,
the experience, reputation and ability of the attorney, awards in similar cases, and the risk of loss.”
Hussar-Nelson v. Barnhart, No. 99 C 0987, 2002 WL 31664488 (N.D.IIl., Nov. 22, 2002) (citing
McGuire v. Sullivan, 873 F.2d 974, 983 (7 Cir. 1989)). See also Gisbrecht, 535 U.S. at 798-99
(citing Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9" Cir. 1975) and discussing, inter alia,
these factors as traditional lodestar for method considerations). These factors inform our judgment
about whether enhancing the lodestar amount is reasonable, and in this case, all of these factors point
toward enhancement that doubles the award Mr. Bryant would normally receive for non-contingent
work.

Our rationale for multiplying the lodestar fee by a factor of two is based primarily on our
recognition that Mr. Bryant persevered for nearly a decade to obtain for Mr. Raffin a very large
award of past due benefits. This work was completely contingent in nature, and thus the time spent
on this case could have yielded nothing. Moreover, although over 90 hours was spent in the agency,
we know that Mr. Bryant’s maximum fee award for that work is limited by statute to $5,300.00.

Although we cannot award fees for agency work, the work done in this Court was an important link

10


approval from the Social Security Administration to charge a fee of more than $4,000.00 so long as
it [did] not exceed 25% of the total retroactive benefits. .. .” (Pl.’s Mem., Ex. A). The Agreement
further stated that if Mr. Raffin “want[ed] to go above [the] administrative level with [his] attorney’s
help and have a court review the action of the Social Security Administration, a new supplemental
agreement [would] have to be negotiated” (/d. at 2).

Mr. Bryant has offered no evidence of a supplemental fee agreement that would apply to
work done in federal court. Without evidence of a controlling fee agreement, the following facts are
relevant and material to our determination of Mr. Bryant’s Section 406(b) fee using the lodestar as
a starting point”

A.

Mr. Bryant has represented Mr. Raffin at the court and administrative levels since
Mr. Raffin’s first applications for Disability Insurance Benefits (“DIB”), pursuant to Title II of the
Social Security Act, 42 U.S.C. § 406(b)(1), were filed in 1990 and 1991. Those applications were
denied, and Mr. Raffin did not pursue appeals.

In 1995, Mr. Raffin filed a new application alleging disability since October 13, 1989. After

initial level denials, Mr. Raffin appealed the denials to the SSA Appeals Council. The Appeals

2We note on this point that Mr. Bryant has submitted an affidavit by Mr. Raffin indicating that: (1) Mr. Raffin
entered into a contingency fee agreement with Mr. Bryant for representation “in my application for disability benefits”;
and (2) he agreed to pay Mr. Bryant 25 percent of his past-due benefits; (3) he has sent Mr. Bryant 25 percent of his past-
due benefits; and (4) he “support[s]” Mr. Bryant’s “application for his 25% fee.” (PI.’s Reply, Ex. A), The Court finds
that this affidavit does not have the power to change the simple fact that there was no agreement between Mr. Raffin and
Mr. Bryant for court work prior to the performance of that work. Just as Mr. Raffin’s disapproval of Mr. Bryant’s work
after-the-fact could not prevent an agreed upon fee award if there had been such a contractual agreement, so, too, Mr.
Raffin’s “support” of Mr. Bryant’s “application for his 25% fee” does not persuade the Court that there is a governing,
contingency fee agreement here.

For this reason the supplemental authority cited by Mr. Bryant, Schulenburg v. Barnhart, 01 C 5396 (N.D. Ill
May 18, 2005) (Minute Order), is inapposite, as that ruling involved a situation where there was a contingency fee
agreement.


Congress harmonized fees payable by the Government under EAJA with fees payable

under § 406(b) out of the claimant’s past-due Social Security benefits in this manner:

Fee awards may be made under both prescriptions, but the claimant’s attorney must

“tefun[d] to the claimant the amount of the smaller fee.” Thus, an EAJA award

offsets an award under Section 406(b), so that the [amount of the total past-due

benefits the claimant actually receives] will be increased by the... EAJA award up

to the point the claimant receives 100 percent of the past-due benefits.

Gisbrecht, 535 U.S. at 796.

What this means is that where an attorney is awarded fees under EAJA and Section 406(b)
for the same work, the amount that the claimant has to pay the attorney out of the past-due benefits
is reduced by the amount of the EAJA award. The practical effect of the EAJA offset and the 25
percent cap of past-due benefits under Section 406 (which combines awards under Section 406(a)
and (b) to reach the cap) is an intentional limitation on the amount of fees an attorney can collect
directly from a claimant out of past-due benefits. See Cora-Silva v. Secretary of HHS, 642 F.Supp.
931 (D. Mass. 1986) (practice of SSA in offsetting award of past-due benefits by the amount of other
benefits received by the claimant before awarding a percentage of net figure as attorney’s fees is in
accordance with congressional policy of ensuring that claimant retains largest share of award . . . .).

IL.

Having outlined the applicable legal framework, we will now briefly summarize the relevant
facts and procedural history. However, at the threshold, we point out that there is no evidence ofa
written contingency fee agreement between Mr. Bryant and Mr. Raffin that governs the award of fees
for representation in federal court, under Section 406(b). Rather, the contingency fee agreement
submitted by the plaintiff (Pl.’s Mem., Ex. A, 03/17/97 Fee Agreement at 1), only governed

representation by Mr. Bryant during the administrative proceedings. This agreement specifically

stated, in connection with the administrative proceedings, that Mr. Raffin’s attorney could “request


HI.

Mr. Bryant now “seeks a fee authorization in the amount of $28,262.65, . . . since counsel
has already received a fee of $5,300.00 for over 94 hours of work before the Agency” pursuant to
Section 406(b) (P1.’s Mem. at 6, 4 10). Mr. Bryant also requests an EAJA award of $3,435.00,
which he recognizes must be “offset from this amount [$28,262.65].”

The Government does not contest the number of hours Mr. Bryant proposes was spent on
federal court work (21.9). Nor does the Government quarrel with the hourly rate Mr. Bryant claims,
or total amount Mr. Bryant seeks under EAJA ($3,435.00) — even though simple division reveals that
Mr. Bryant is seeking approximately $156.85 per hour, which is above the statutory maximum of
$125.00. Neither party addresses special factors warranting this increase. In addition, the
Government does not argue that the Commissioner’s position in the agency was “substantially
justified” so as to preclude an EAJA fee.

Given this background, we now turn to an analysis of the award of fees the Court determines
is “reasonable” under Section 406(b). We will begin with the Section 406(b) award.

A.

Section 406(b) permits a court to award up to a maximum of 25 percent of a claimant’s past
due benefits as reasonable attorney’s fees for work in federal court. Using the stipulated total past
due benefit amount of $139,550.60, 25 percent of that amount equals $34,887.65. This is the
maximum amount of fees Mr. Bryant can receive under Section 406 and EAJA for the same work.

Given the absence of a contingency fee agreement, we begin by calculating the lodestar. Mr.
Bryant has submitted that his non-contingent billing rate, the rate he uses when he is not assuming

any risk of loss, is $ 400.00. The Court finds this to be a reasonable rate by Chicago standards for


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
MICHAEL T. RAFFIN, )
)
Plaintiff, )
) Case No. 01-C-6081
) Magistrate Judge Sidney I. Schenkier
vs. )
)
JO ANNE B. BARNHART, )
Commissioner of Social Security, )
)
)
Defendant. )

MEMORANDUM OPINION AND ORDER

David A. Bryant, counsel for plaintiff, Michael T. Raffin, has filed a petition for an award
of attorney’s fees pursuant to the Social Security Act, 42 U.S.C. § 406(b)(1). In the same motion,
Mr. Bryant seeks an award of fees, on behalf of Mr. Raffin, under the Equal Access to Justice Act
(“EAJA”), 28 U.S.C. § 2412, as well as a Rule 58 final judgment (doc. # 14).

After careful review of the parties’ submissions, the Court grants Mr. Bryant’s petition for
fees, pursuant to Section 406(b)(1), in the amount of $ 17,520.00; awards EAJA fees to plaintiff in
the amount of $ 3,435.00; and directs the entry of a Rule 58 judgment.

I.

We begin with a brief overview of the controlling legal principles. There are two sources for
obtaining attorneys’ fees in cases where a claimant obtains past-due benefits as a result of a favorable
decision by the Commissioner of Social Security. The primary source for obtaining fees is
Section 406, which allows a claimant’s attorney to collect up to 25 percent of the award of past-due

benefits obtained by aclaimant. Those fees are paid out of the claimant’s award of past-due benefits.


spent in the district court; we are not permitted to award fees for time spent before the Social
Security Administration. See 42 U.S.C. § 406(a). See also Brown v. Barnhart, 270 F Supp.2d 769,
771 (W.D.Va. 2003). Given the disparity between the large number yielded by 25 percent of Mr.
Raffin’s past due benefits ($34,887.65) and the number of hours Mr. Bryant spent in federal court
(21.9), we are left with the firm impression that the percentage of past-due benefits that Mr. Raffin
must surrender to Mr. Bryant from his own pocket must be reduced to be reasonable (despite Mr.
Raffin’s apparent willingness in his affidavit to give Mr. Bryant this sum).
B.

Next we turn to the EAJA award. As indicated above, the Government does not contest the
requested sum of $3,435.00, which represents an hourly rate of $156.85 for 21.9 hours of federal
court work. Although an analysis of “special factors” must be done to justify an increase, in light
of the lack of contest by the Government together with the excellent results Mr. Bryant achieved —
namely, a voluntary remand that saved the Court and the parties time and money — we think such a
modest increase in the hourly fee is justified, especially given prevailing market rates in Chicago.

Cc.

Accordingly, the calculation we use to arrive at Mr. Bryant’s fee award is as follows. First,
we start with the lodestar amount of $8,760.00 ($400 x 21.9 hrs.); we then we multiply that amount
by two to reach $17,520.00 as the Section 406(b) award. Second, we check this number against the

past-due benefits award, to make sure that the sum of the total award under Sections 406(a) and (b)

We note that even had there been in place a contingency fee agreement, we would have reduced Mr. Bryant’s
attorneys’ fees for his work in this Court to an amount substantially below the 25 percent cap amount. “If the benefits
are large in comparison to the amount of time counsel spent on the case, a downward adjustment is . . . in order.”
Gisbrecht, 535 U.S. at 808.

12


to the successful results obtained in the agency. Thus, we think it is reasonable to enhance the fees
available in federal court under Section 406(b) to compensate Mr. Bryant for the total success of his
case, especially since the amount of fees available under Section 406(a) is relatively low compared
to the number of hours he spent there. Put differently, because Section 406 operates as a continuous
whole (despite its two parts) for purposes of capping fees at 25 percent, we think that some
enhancement of the Section 406(b) award is justified given the important role the sentence four
remand played in obtaining the favorable result in the SSA.

Mr. Bryant seeks a recovery of a greater amount, the full 25 percent of the past-due benefits
award. We find that an award of that amount is inappropriate here for several reasons.

First, Mr. Bryant only spent, by his own estimates, 21.9 hours in federal court, as compared
to over 90 in administrative proceedings. Most of this time was spent drafting a summary judgment
motion. And, although this motion was successful in persuading the government to voluntarily
agree to a sentence four remand, that stipulated judgment had the effect of reducing the number of
hours Mr. Bryant spent in federal court to obtain the remand order (i.e., Mr. Bryant did not need to
charge Mr. Raffin for a reply memorandum).

Second, the result Mr. Bryant obtained was so “excellent” that the amount of past due
benefits in this case is extremely large. Thus, an award of 25 percent of past due benefits in this
case would result in an extremely large fee award ($34,887.65) in proportion to the amount of time
spent in federal court (21.9 hours). Although the amount of time Mr. Bryant spent in administrative
proceedings over the last decade is fairly large (over 94 hours), and the cap on fees under Section
406(a) ($5,300.00) makes his fee for that time relatively small in comparison to that time

commitment, the governing statute only gives this Court authority to award attorneys’ fees for time

11


Council remanded the case to the Administrative Law Judge (“ALJ”) with an order to send Mr.
Raffin to a consultative examination. This was not done and Mr. Raffin’s claim was again denied,
after a hearing, and then appealed to the Appeals Council, which denied review. That decision
became the final decision of the Commissioner.

Mr. Raffin then filed a complaint, appealing this decision, in this court on August 8, 2001.
Mr. Bryant, representing Mr. Raffin, filed a motion for summary judgment with a supporting
memorandum in support of this appeal. Without submitting a written response, the Government
entered into a voluntary stipulation with Mr. Raffin, agreeing that this Court should remand the case
to the Commissioner for further proceedings before the ALJ. This Court agreed to enter a sentence
four remand pursuant to that stipulation, and we ordered the Clerk of the Court to terminate the case.
However, a Rule 58 judgment was never entered.

In the meantime, the parties agreed that Mr. Raffin was entitled to file a petition for
attorney’s fees under the EAJA for $3,435.00, representing 21.9 hours of legal services in this court
between August 8, 2001 and the date of remand, December 6, 2001. The Government has not
challenged this request. The EAJA motion, however, has not yet been ruled on.

A remand hearing was held before an ALJ on September 18, 2003, and a favorable decision
was issued on January 30, 2004. Mr. Raffin was found disabled as of October 1, 1989, based on his
original 1991 application. The parties agree that the amount of past due benefits awarded to Mr.
Raffin was $139,550.60. A fee request was submitted to the ALJ under 42 U.S.C. § 406(a)(3), and
the Commissioner awarded Mr. Bryant the amount of $5,300.00 for his representation of Mr. Raffin

during administrative proceedings, the maximum fee available under Section 406(a)(1).


In the absence of a contingency fee agreement, courts typically use a “lodestar” approach,
multiplying the reasonable amount of attorney time devoted to the case by the attorney’s normal
hourly billing rate, and then applying various factors to decide whether to enhance or reduce that
amount. Meade v. Barnhart, 218 F.Supp. 2d 811, 812-13 (W.D. Va. 2002) (where, as here, a
contingency fee agreement between parties was limited to agency procedures, the court resorted to
lodestar method for determining a reasonable fee under § 406(b)).

Where there is a contingency agreement in place that provides for attorneys’ fees not to
exceed 25 percent of the past-due benefits award, the contingency fee agreement is the starting point
of the fee analysis. But, courts then must test the fee amount that would be generated by the
contingency fee agreement for reasonableness, to decide if it must be reduced “based in the character
of the representation and the results the representative achieved.” Gisbrecht, 535 U.S. at 808. The
hours spent by the attorney and his/her normal hourly rate may be considered “as an aid to the court’s
assessment of the reasonableness of the fee yielded by the fee agreement.” Jd."

B.

Awards under EAJA are governed by the following provisions, which state:

A court may award reasonable fees and expenses of attorneys .. . to the prevailing

party in any civil action brought by or against the United States or any agency or any

official of the United States acting in his or her official capacity in any court having

jurisdiction of such action. The United States shall be liable for such fees and
expenses... .

‘Prior to Gisbrecht, a number of courts applied the lodestar analysis even in the presence of a contingency fee
agreement. See Gisbrecht, 535 U.S. at 799. The Supreme Court rejected that approach in Gisbrecht, holding that
Section 406(b)(1) “does not displace contingency-fee agreements” within the 25 percent statutory ceiling, but “instructs
courts to review for reasonableness fees yielded by those agreements.” /d. at 808-09. Gisbrecht addressed only the
situation where the attorney and claimant have entered into a contingency fee agreement; thus, Gisbrecht does not affect
the manner in which courts determine a reasonable fee in the absence of such an agreement. See Meade, 218 F.Supp.
2d at 812-13; Thomas v. Barnhart, 1:02 CV 00198, 2005 WL 894886, *1-2 (W.D. Va. Apr. 18, 2005).

4


(ii) the fee specified in the agreement does not exceed the lesser of —
(I) 25 percent of the total amount of such past-due benefits . . .,
(Il) $5,300, and

(iii) the determination is favorable to the claimant, then the Commissioner of
Social Security shall approve that agreement at the time of the favorable
determination, and . . .the fee specified in the agreement shall be the
maximum fee.

42 U.S.C. § 406(a)(2)(A) (2004).

Thus, irrespective of whether there is a contingency agreement, Section 406(a) imposes a cap
on attorneys’ fees that an attorney may be paid for work performed in the administrative process.
Inno event may the attorney be awarded the lesser of $5,300.00, or 25 percent of the award of past-
due benefits.

2.

Section 406(b) governs payment out of a claimant’s past-due benefits for attorneys’ fees
incurred based on an attorney’s work in federal court. Section 406(b) states in relevant part:

(1)(A) 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,

. .. 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.

42 U.S.C. § 406(b)(1)(A). Like Section 406(a)(1), Section 406(b)(1)(A) provides that no attorneys’
fee award may exceed 25 percent of a claimant’s past due benefits; the statute leaves it to courts to
determine what constitutes a “reasonable fee” within that 25 percent cap.

The method for determining what constitutes a reasonable fee under Section 406(b)(1)

depends on whether the claimant and the attorney have entered into a contingency fee agreement.


The second source for obtaining fees is EAJA, which permits a federal court to award attorneys’ fees
to a prevailing party, such as a claimant who wins a favorable decision from the SSA. Unlike fees
under Section 406, EAJA fees are payable from the public fisc, rather than the claimant’s own
pocket. See Gisbrecht v. Barnhart, 535 U.S. 789, 796 (2002). We will begin our review of these
sources for fees with Section 406.
A

Section 406 has a two-part structure. For work performed in the Social Security
Administration, Section 406(a) governs the award of fees. For work performed in federal court,
Section 406(b). We discuss each of those provisions below.

1

Section 406(a)(1) provides that where the Commissioner of Social Security

makes a determination favorable to the claimant, the Commissioner shall, if the

claimant was represented by an attorney in connection with such a claim, fix (in

accordance with the regulations prescribed pursuant to [$406(a)(2)(A)] a reasonable

fee to compensate such attorney for the services performed by him in connection with

such claim.
42 U.S.C. § 406(a)(1). Section 406(a)(1) controls when there is no contingency fee agreement and
the Commissioner must determine a “reasonable fee” without the benefit of the parties’ prior
agreement on fees. Section 406(a)(2)(A) controls when there is a contingency fee agreement. It
states in relevant part:

In the case of a claim of entitlement to past-due benefits under this sub chapter, if —

(60) an agreement between the claimant and another person regarding any fee to

be recovered by such person to compensate such person for services with
respect to the claim is presented in writing to the Commissioner of Social

Security prior to the time of the Commissioner’s determination regarding the
claim,


does not exceed the 25 percent cap of $34,887.65. These combined awards fall within that cap
($17,520.00 + 5,300.00 = $22,820.00 is less than $34,887.65). Third, we offset the Section 406(b)
award of $17,520.00 by the $3,435.00 EAJA award, which is payable by the Government out of the
public fisc, not from Mr. Raffin’s pocket.

Accordingly, we award a total of $17,520.00 pursuant to Section 406(b). However, only
$14,085.00 is payable by Mr. Raffin to Mr. Bryant from his past-due benefits. The remaining
$3,435.00 is payable by the Government pursuant to the EAJA.

CONCLUSION

IT IS ORDERED that the Clerk of Court grant Mr. Bryant’s Section 406(b) motion for
attorneys fees, EAJA fees and a Rule 58 order (doc. #14), and enter an order awarding attorneys fees
to Mr. David A. Bryant, pursuant to 42 U.S.C. § 406(b) in the amount of $17,520.00, payable from
the past-due benefits due and owing to Mr. Raffin. Concomitantly, the Clerk is directed to enter an
order awarding attorneys fees and costs to Mr. Raffin, as the prevailing party in this civil action,
under the EAJA, 28 U.S.C. § 2412 in the amount of $3,435.00. These EAJA fees are payable by the
Government to Mr. Raffin and should be used as an offset to the Section 406 award of $17,520.00.
Any escrows containing funds from Mr. Raffin’s past-due benefits which were established pending
resolution of this motion should be dissolved; the difference between the Section 406(b) award — as
reduced by the EAJA award — and those sums in escrow should therefore be refunded to Mr. Raffin

immediately.

13