Opinion ID: 801003
Heading Depth: 3
Heading Rank: 2

Heading: Plaintiffs Have Incurred Fees Under the EAJA

Text: We review the district court's interpretation of the EAJA de novo. See Bryant, 578 F.3d at 445. Case law from multiple circuits establishes that the plain meaning of incurred does not require the plaintiff to have paid counsel or to have a legal obligation to pay counsel. Interpreting the EAJA, the Fifth Circuit recently held that a plaintiff's contractual obligation to pay over fees to his counsel satisfied the requirement to incur EAJA fees upon a sentence-four remand. See Murkeldove v. Astrue, 635 F.3d 784, 791 (5th Cir.2011). The Federal, Eighth, and Ninth Circuits likewise have determined that the EAJA and other statutes awarding incurred fees turn on the claimant's obligation to pay over any fee award to his attorney, and not on the existence of personal legal debt. See Gotro v. R & B Realty Grp., 69 F.3d 1485, 1487-88 (9th Cir.1995) (awarding incurred fees upon remand to state court, without any award of damages, where plaintiff was represented under a contingency fee agreement); Phillips v. Gen. Servs. Admin., 924 F.2d 1577, 1583-84 (Fed.Cir.1991) (per curiam) (awarding incurred fees where plaintiff was obliged to pay over any fee award to her attorney, regardless of the plaintiff's extant debt to her attorney); Cornella v. Schweiker, 728 F.2d 978, 987 (8th Cir.1984) (awarding EAJA fees incurred by pro bono counsel). Indeed, it is well-settled that the existence of an unsatisfied contingency or pro bono representation agreement does not preclude a fee award, even where the statute limits fees to those incurred by the plaintiff in that action. See Ed A. Wilson, Inc. v. Gen. Serv. Admin., 126 F.3d 1406, 1409 (Fed.Cir.1997) (It is well-settled that an award of attorney fees is not necessarily contingent upon an obligation to pay counsel.); Watford v. Heckler, 765 F.2d 1562, 1567 n. 6 (11th Cir. 1985) ([I]t is well-settled that . . . plaintiffs who are represented without charge are not generally precluded from an award of attorneys' fees under the EAJA.). This uniformity in precedent creates the clear and unambiguous meaning of incurred necessary to find a waiver of sovereign immunity that includes contingency-fee actions. See Richlin Sec. Serv. Co. v. Chertoff, 553 U.S. 571, 580-81, 128 S.Ct. 2007, 170 L.Ed.2d 960 (2008) (case law interpreting attorney's fee provision of 42 U.S.C. § 1988, which does not implicate sovereign immunity, sufficient to create unambiguous meaning of the EAJA attorney's fee provision); Pierce v. Underwood, 487 U.S. 552, 564-66, 108 S.Ct. 2541, 101 L.Ed.2d 490 (1988) (case law interpreting term substantially justified in statutes not involving sovereign immunity sufficient to create unambiguous meaning of substantially justified in the EAJA). Allowing fee awards for sentence-four remands also furthers the EAJA's purpose of eliminat[ing] for the average person the financial disincentive to challenge unreasonable governmental actions through fee-shifting. Comm'r, I.N.S. v. Jean, 496 U.S. 154, 163, 110 S.Ct. 2316, 110 L.Ed.2d 134 (1990). Ninety percent of favorable district court judgments in favor of claimantssome 5,500 cases per yearare remand orders, not benefits awards. Social Security Advisory Board, Disability Decision Making: Data and Materials 91 (2006). Interpreting the EAJA to require a benefits award as a pre-condition for awarding fees to contingency-fee attorneys would prevent these attorneys from receiving EAJA fee awards except in the highly unlikely case that the agency awarded fees on remand within the time-frame for filing a motion for an EAJA fee award. See Murkeldove, 635 F.3d at 793. Because the marketplace for Social Security representation operates largely on a contingency fee basis, Gisbrecht, 535 U.S. at 804, 122 S.Ct. 1817, such an interpretation would effectively preclude EAJA fee awards for work at the district-court level, and the financial deterrent that the EAJA aims to eliminate would be resurrected, Jean, 496 U.S. at 164, 110 S.Ct. 2316. By contrast, permitting fee awards upon sentence-four remands supports claimants who validly protest government error during their original administrative hearing. Contrary to the conclusion of the Turner court, our interpretation of incurred does not create a windfall for litigants. First, the requirement that a litigant have a legal obligation to pay over any fee award to his attorney prevents litigants from pocketing these awards, because litigants with no obligation to pay over fees do not incur them. Litigants may retain fee awards only if the assignment provision becomes void, usually because the government requests that the court void the provision under the AAA. See Murkeldove, 635 F.3d at 794 ([The AAA] serves as a defense that the Government can raise against a claim and not . . . an ex ante bar to forming a contingency-fee agreement.); Delmarva Power & Light Co. v. United States, 542 F.3d 889, 894 (Fed.Cir.2008). With the assignment provision voided, the fee award is paid directly to the litigant and becomes subject to an administrative offset if the litigant owes a debt to the federal government. Bryant, 578 F.3d at 446. Thus, regardless of whether the fee award is paid directly to the litigant or is assigned to his attorney, awarding fees upon sentence-four remands does not create a windfall for litigants. For these reasons, litigants incur fees under the EAJA when they have an express or implied legal obligation to pay over such an award to their legal representatives, regardless of whether the court subsequently voids the assignment provision under the AAA. Because the representation agreements for Turner, Campbell, and Corns each contain such a provision, they have each incurred attorney's fees, entitling them to an award of fees under the EAJA.