Opinion ID: 510727
Heading Depth: 2
Heading Rank: 3

Heading: Fees from the Interim Benefits

Text: 22 Finally, Gowen and Pittman contend that the district court erred in denying attorney's fees in the amount of one-fourth of the interim benefits they received while their cases were pending administrative decision on remand. We agree. 23 Title II of the Social Security Act provides for the payment of attorney's fees by withholding a portion of the successful claimant's past due benefits: 24 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 Secretary may, notwithstanding the provisions of section 405(i) of this title, 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. 25 42 U.S.C. Sec. 406(b)(1). Although the statute fails to define past due benefits, the Secretary has defined the term as follows: 26 the total amount of benefits payable under title II of the Act to all beneficiaries that has accumulated because of a favorable administrative or judicial determination or decision, up to but not including the month the determination or decision is made. 27 20 C.F.R. Sec. 404.1703 (1987). This definition leaves open the question of whether interim benefits should be included as part of past due benefits for the purpose of calculating attorney's fees. 28 The Secretary contends that interim benefits cannot be considered past due benefits because they were paid to the claimant while his claim was pending reconsideration and are therefore no longer 'benefits payable under Title II of the Act.'  Appellee's brief at 19. The Secretary apparently views interim benefits as grants made by the agency to help alleviate some of the difficulties faced by persons terminated from the Social Security rolls. Id. at 19-20. 29 We believe the Secretary's interpretation is incorrect. Interim benefits were created through the Reform Act of 1984 and intended to provide continued payment to social security disability claimants of benefits pending appeal of the determination that their entitlement to benefits had ended. Condon v. Bowen, 853 F.2d 66, at 69 (2d Cir.1988). In essence, interim benefits are loans made by the Secretary to claimants whose entitlement to disability has been terminated. The claimant may accept or refuse the loan. 42 U.S.C. Sec. 423(g)(1). If the claimant accepts the interim payments but does not eventually succeed in the reinstatement of the entitlement to dis bility benefits, the interim benefits are viewed as overpayment and are subject to recoupment. Id. at Sec. 423(g)(2)(A). However, if the claimant is successful on appeal, the obligation to repay the interim benefits is extinguished at the time the Secretary makes a final determination reinstating claimant's entitlement to disability benefits. Condon, at 70. In this sense, interim benefits are the same as withheld or accrued benefits. We therefore conclude that both of these types of benefits must be viewed as past due benefits. 30 To rule otherwise would be contrary to the spirit of Sec. 406 which is intended to promote the adequate representation of potentially disabled individuals through a reasonable attorney's fee while at the same time preventing too great a reduction in a claimant's already inadequate stipend in the event he is declared disabled. Santos Rivera v. Secretary of Health & Human Servs., 674 F.Supp. 963, 965 (D.P.R.1987) (citing Dawson v. Finch, 425 F.2d 1192, 1195 (5th Cir.), cert. denied, 400 U.S. 830, 91 S.Ct. 60, 27 L.Ed.2d 60 (1970)). Under the Secretary's view, the attorney for a claimant that chooses to receive interim benefits will stand to gain much less than the attorney for a claimant who refuses interim benefits even though both attorneys perform the same work. This would obviously create a disincentive for attorneys in representing claimants who accept interim benefits. Consequently, claimants would be compelled to forego the relief intended by Congress to retain competent legal representation. Santos Rivera, 674 F.Supp. at 965. 31 We can ascertain no reason why Congress would place those who elect the continued receipt of benefits in a less favorable position than those who do not. We therefore conclude that to eliminate interim benefits from the attorney's fee formula would both deprive potential claimants of their rights and defeat the purposes of both the Reform Act of 1984 and section 406.