Opinion ID: 170687
Heading Depth: 1
Heading Rank: 2

Heading: fees for representation

Text: Congress prescribed specific limitations on the amount of fees which may be awarded for representation of Social Security claims. See 42 U.S.C. § 406. Section 406 deals with the administrative and judicial review stages discretely: § 406(a) governs fees for representation in administrative proceedings; § 406(b) controls fees for representation in court. Gisbrecht v. Barnhart, 535 U.S. 789, 794, 122 S.Ct. 1817, 152 L.Ed.2d 996 (2002).
A claimant may be represented during administrative proceedings by an approved representative or attorney. See 42 U.S.C. § 406(a)(1). In many instances, when a claimant is successfully represented by an attorney before the agency, the attorney submits a fee petition to the Commissioner of Social Security. The Commissioner fixes a reasonable fee in accordance with its regulations to compensate the attorney for services performed in connection with the claim. Id. Fee petitions may be authorized even if the claimant was unsuccessful. See 20 C.F.R. § 404.1725(b)(2). As an alternative to fee petitions, Congress amended § 406(a) in 1990 to include contingent-fee agreements for representation before the Commissioner when asserting an entitlement to past-due benefits. See Omnibus Budget Reconciliation Act of 1990, Pub.L. No. 101-508, § 5106(a), 104 Stat. 1388 (1990) (codified as amended at 42 U.S.C. § 406(a)(2)). The nature of these agreements makes the award of a fee contingent on the claimant being successful and are the most common fee arrangement between attorneys and Social Security claimants. Gisbrecht, 535 U.S. at 800, 122 S.Ct. 1817. The contingent-fee agreement must be submitted to the Commissioner for approval in advance of a ruling. See 42 U.S.C. § 406(a)(2)(A). As long as the fee does not exceed the lesser of 25% of past due benefits or $4,000 [1] and the claimant is successful, the Commissioner will approve the agreement at the time of the favorable determination. Id. The amount approved is the maximum fee the representative or attorney may collect for such representation. See 42 U.S.C. § 406(a)(2)(A) and (a)(3)(5).
Fees for court representation often arise when the claimant appeals from an adverse decision by the agency. Under 42 U.S.C. § 406(b), whenever a court finds in favor of a claimant who was represented by an attorney, it may determine a reasonable fee for court representation, not in excess of 25% of the past-due benefits awarded by reason of the judgment. 42 U.S.C. § 406(b)(1)(A). Section 406(b) also allows a district court to award attorneys' fees in conjunction with a remand for further proceedings; it is not required, as a predicate to a § 406(b)(1) fee award, that the district court remand for an award of benefits. McGraw v. Barnhart, 450 F.3d 493, 503 (10th Cir.2006). The only requirement is the claimant eventually be awarded past-due benefits, whether at the agency level or during further judicial proceedings. Id. No other fee may be withheld or paid for court representation except as determined by the court. 42 U.S.C. § 406(b)(1)(A) and (b)(2). In order to protect an attorney from non-payment at the agency and/or court level, the Commissioner may withhold up to 25% of the past-due benefits awarded to pay directly to the attorney. See 42 U.S.C. § 406(a)(4) and (b)(1)(A). If the amount withheld by the Commissioner is insufficient to satisfy the amount of fees determined reasonable by the court, the attorney must look to the claimant, not the past-due benefits, to recover the difference. At that point the attorney stands on the same level as other judgment creditors in attempting to collect. See generally Tom v. First Am. Credit Union, 151 F.3d 1289, 1291-93 (10th Cir.1998) (Congress chose to protect Social Security beneficiaries from creditors who utilized the judicial system and creditors who devised their own extra-judicial methods of collecting debts); 42 U.S.C. § 407(a) (disability insurance benefits are not transferable or assignable nor are they subject to execution, levy, attachment, garnishment or other legal process).
Apart from fees which may be awarded to an attorney for court representation, a claimant may seek to defray the cost of appealing from an agency decision to a court under the Equal Access to Justice Act (EAJA) fee shifting statute. See 28 U.S.C. 2412. EAJA fees are assessed against the United States when its actions were not substantially justified. See 28 U.S.C. § 2412(d)(1)(A). In the Social Security context, EAJA fees are awarded to the prevailing party in addition to and separate from fees awarded for representation before the court under 42 U.S.C. § 406(b)(1)(A). See Frazier v. Apfel, 240 F.3d 1284, 1286 (10th Cir.2001); McGraw, 450 F.3d at 497 ([A]n EAJA award is to the claimant, while counsel receives [the § 406(b)] award.). If both are awarded, attorneys are required to refund the lesser of the EAJA or § 406(b) fees to the client, they cannot keep both. See McGraw, 450 F.3d at 497. In many cases EAJA fees effectively increase[] the portion of past-due benefits the successful Social Security claimant may pocket. Gisbrecht, 535 U.S. at 796, 122 S.Ct. 1817. 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. Id.