Opinion ID: 510634
Heading Depth: 3
Heading Rank: 1

Heading: The Relationship of the Two Statutes

Text: 9 An attorney who has represented a successful claimant before the district court in a matter arising under Title II of the SSA may apply to the court for a reasonable fee ..., not in excess of 25 percent of the total of the past-due benefits to which the claimant is entitled by reason of [the court's] judgment. See 42 U.S.C. Sec. 406(b); see also Bowen v. Galbreath, --- U.S. ----, ----, 108 S.Ct. 892, 893-95, 99 L.Ed.2d 68 (1988). The effect of the provision, which was originally passed in 1965, is threefold. It fix[es] a maximum percentage for contingent fees; [it] permit[s] recovery of such fees only out of past due benefits; and [it] require[s] court approval for whatever amount of such fees should be paid. Coup v. Heckler, 834 F.2d 313, 321 (3d Cir.1987). See also Ocasio v. Schweiker, 540 F.Supp. 1320, 1321-22 (S.D.N.Y.1982) (Weinfeld, J.) (indicating that section 406(b) incorporates, but places limits on, the practice of employing contingent-fee arrangements in certain social security litigation). The principal test to be employed by the district court in setting any such fee is its reasonableness. See Kemp v. Bowen, 822 F.2d 966, 968 (10th Cir.1987). 10 Under the EAJA, prevailing parties in litigation against the United States government may recover attorney's fees at statutory rates unless the government's position in the litigation was substantially justified. See 28 U.S.C. Sec. 2412(d)(1)(A). See also Environmental Defense Fund, 722 F.2d at 1083. The statute specifically provides that fees shall not be awarded [at a rate] in excess of $75 per hour unless the [district] 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. Sec. 2412(d)(2)(A)(ii). See also Pierce v. Underwood, --- U.S. ----, ---- - ----, 108 S.Ct. 2541, 2553, 101 L.Ed.2d 490 (1988). Unlike the SSA, which leaves the district court with the discretion to award a reasonable fee with a cap on the amount, the EAJA imposes a cap on the hourly rate at which fees may be awarded in most cases. See id. at ----, 108 S.Ct. at 2553-54. 11 The principal difference between the SSA fee provision and the EAJA is that EAJA fees are paid by the government to the litigant to defray the cost of legal services whereas the SSA fees are paid by the litigant to the attorney from the past-due benefits awarded. See Watford v. Heckler, 65 F.2d 1562, 1566 (11th Cir.1985); O'Grady v. Secretary of the U.S. Dep't of Health and Human Services, 661 F.Supp. 1030, 1036-38 (E.D.N.Y.1987). See also Coup, 834 F.2d at 324. Thus, while the award of EAJA fees is based on a waiver of the normal principles of sovereign immunity, see, e.g., Long Island Radio Co. v. NLRB, 841 F.2d 474, 477 (2d Cir.1988); Coup, 834 F.2d at 324, the SSA fee provision is simply a statutory interference with the attorney client contractual relationship[,] which would otherwise be determined by the marketplace for legal services, id. at 324. 12 Congress clearly intended that the EAJA fee-shifting statute should only augment, not supplant, other pre-existing fee provisions such as that in the SSA. See Act of August 5, 1985, Pub.L. No. 99-80, Sec. 3, 99 Stat. 183, 186 (1985) (codified as savings provision at 28 U.S.C. Sec. 2412 (Supp. IV 1986)); H.R.Rep. No. 120, 99th Cong., 1st Sess. 19-20, reprinted in 1985 U.S.Code Cong. & Admin.News 132, 148-49. See also H.R.Rep. No. 1418, 96th Cong., 2nd Sess. 15, reprinted in 1980 U.S.Code Cong. & Admin.News 4953, 4994 (the EAJA is not intended to affect or limit the computation of reasonable attorney['s] fees under any other provision of law authorizing an award of fees under a particular statute ... designed to promote private enforcement of that [a]ct). Recognizing that fact, most courts have held that parties in proper cases may seek fees under both provisions, as long as the attorney, if successful, gives the smaller of the two awards to his or her client. See, e.g., Kemp, 822 F.2d at 968; Weakley v. Bowen, 803 F.2d 575, 580 (10th Cir.1986); Watford, 765 F.2d at 1566 & n. 5; Guthrie v. Schweiker, 718 F.2d 104, 107-08 & n. 11 (4th Cir.1983). We have never ruled on the proper treatment of dual fee applications under the EAJA and the SSA, however, and district courts in this Circuit have adopted different approaches to the question. Compare Barriger v. Bowen, 673 F.Supp. 1167, 1170 (N.D.N.Y.1987) (allowing dual application), and O'Grady, 661 F.Supp. at 1036-38 (same), with Allen v. Heckler, 588 F.Supp. 1247, 1250-51 (W.D.N.Y.1984) (suggesting that the EAJA and the SSA provisions are mutually exclusive). 13 We believe that Congress clearly intended the two statutes to work in conjunction and that dual fee applications are not improper as long as the lesser of any two amounts awarded goes to the attorney's client. See Pub.L. No. 99-80, Sec. 3, 99 Stat. at 186. Indeed, whenever a credible argument can be made that the government's position in opposing certain social security benefits was not substantially justified, the attorney working under a contingent-fee agreement can best defray the client's cost of legal services by seeking both EAJA and SSA fees. See Taylor v. Heckler, 608 F.Supp. 1255, 1256-57, 1259-61 (D.N.J.1985). We therefore hold that district courts must entertain dual fee applications under the SSA and the EAJA in appropriate cases.