United States District Court, D. Oregon, Portland Division
OPINION AND ORDER
JOHN V. ACOSTA, Magistrate Judge.
Claimant David Buzz Free ("Free") moves for attorney fees pursuant to 42 U.S.C. § 406(b), which permits a court to award attorney fees to the attorney of a successful Social Security claimant, so long as such award is "a reasonable fee for such representation" and "not in excess of 25 percent of the total of the past-due benefits to which the claimant is entitled...." 42 U.S.C. § 496(b)(1)(A). Although Free is the claimant in this case, the real party in interest to this motion is his attorney Arthur W. Stevens III ("Stevens"). The Commissioner does not oppose the motion, but merely acts in a manner similar to a "trustee for the claimant." Gisbrecht v. Barnhart, 535 U.S. 789, 798 (2002). Having reviewed the proceedings below and the amount of fees sought, the court concludes that Stevens is entitled to seventy percent of fees under section 406(b) which amount to $13, 634.95.
Free filed for Disability Insurance Benefits ("DIB") and Social Security Income Benefits ("SSI") on November 14, 2007, alleging a disability onset date of January 5, 2006, from scoliosis, degenerative disc disease, and heart diseases. The claim was denied initially and upon reconsideration. An Administrative Law Judge held a hearing on November 10, 2009, and issued a decision on November 20, 2009, finding Free not disabled, Free requested review of this decision on January 15, 2010. The Appeals Council denied this request, making the ALJ's decision the Commissioner's final decision. Free filed for review of the final decision in this court on April 5, 2012.
Free, challenged the ALJ's ruling on five grounds: (1) improperly rejecting of the treating physicians' opinion; (2) substituting his own opinion for that of a treating physician; (3) rejecting Free's testimony as not credible; (4) failing to consider the record as a whole; and (5) giving the vocational expert incomplete hypotheticals and relying selectively on the vocational expert's testimony. The Commissioner opposed these challenges and contended that the ALJ's decision should be affirmed.
The court found that the ALJ failed to justify the rejection of the treating physician's opinion, erroneously rejected Frees' credibility, and mischaracterized Frees' limitations, Accordingly, the court reversed the Commissioner's decision and remanded for an award of benefits.
After entering a judgment in favor of a Social Security claimant represented by counsel, the court "may determine and allow as part of its judgment a reasonable fee for such representation, not in excess of twenty-five percent of the total of the past-due benefits to which the claimant is entitled by reason of such judgment" 42 U.S.C. § 406(b)(1)(A). A "twenty-five percent contingent-fee award is not automatic or even presumed; the statute does not create any presumption in favor of the agreed upon amount.'" Dunnigan v. Astrue, No. CV 07-1645-AC, 2009 WL 6067058, at *7 (D. Or. Dec. 23, 2009), adopted 2010 WL 1029809 (March 17, 2010) (quoting Gisbrecht v. Barnhart, 535 U.S. 789, 807 n.17 (2002)). A fee award under section 406(b) is paid from the claimant's retroactive benefits, and an attorney receiving such an award may not seek any other compensation from the claimant. Dunnigan, 2009 WL 6067058, at *7.
I. Fee Agreement
Under the Supreme Court's decision in Gisbrecht, the court first examines the contingent fee agreement to determine whether it is within the statutory twenty-five percent cap. On November 19, 2008, Free and Stevens executed a contingent-fee agreement providing that if it became necessary to appeal Free's case to federal court and Stevens obtained payment, Free would pay Stevens either twenty-five percent of Free's past-due benefits or whatever amount Stevens was able to obtain under the Equal Access to Justice Act ("EAJA"), whichever was greater. In the motion for attorney fees, Stevens requests the court award $19, 478.50, which is twenty-five percent of Free's past-due benefits award. Stevens previously received a $4, 666.49 attorney fee award under the EAJA, which will offset part of the $19, 478.50 award if the court rules in his favor. Thus, Stevens requests a total award of $14, 812.01.
II. Reasonableness Factors
An award of benefits should not be viewed in isolation, nor can it be presumed always to require a fee award of twenty-five percent of a claimant's retroactive benefits award. Dunnigan, 2009 WL 6067058, at *12. If obtaining benefits always supported awarding fees for the maximum amount provided by statute, the other Gisbrecht factors and the trial courts' assigned task of "making reasonableness determination in a wide variety of contexts" would be unnecessary. Id. (quoting Gisbrecht, 535 U.S. at 808) (internal quotation marks omitted).
Counsel bears the burden to establish the reasonableness of the requested fee. Gisbrecht, 535 U.S. at 807. While the court must acknowledge the "primacy of lawful attorney-client fee agreements, " contingent fee agreements that fail to "yield reasonable results in particular cases" may be rejected. Id. at 793, 807. The court must ensure a disabled claimant is protected from surrendering the retroactive disability benefits in a disproportionate payment to counsel. Crawford v. Astrue, 586 F.3d 1142, 1151 (9th Cir. 2009) ( en banc ) (citing Gisbrecht, 535 U.S. at 808). The four factors to be considered when evaluating the requested fee's reasonableness have been identified by the Ninth Circuit as derived from the Court's analysis in Gisbrecht: (1) the character of the representation, specifically, whether the representation was substandard, (2) the results the representative achieved, (3) any delay attributable to the attorney seeking the fee, and (4) whether the benefits obtained were "not in proportion to the time spent on the case and raise the specter that the attorney would receive an unwarranted windfall." Crawford, 586 F.3d at 1151-53 (citations omitted).
In Crawford, the Ninth Circuit identified the risk inherent in representation on a contingency basis as an appropriate factor to consider in determining a section 406(b) award. The court focused the risk inquiry, however, stating "the district court should look at the complexity and risk involved in the specific case at ...