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Chavez v. Commissioner, Social Security Administration

United States District Court, D. Oregon, Portland Division

May 8, 2018

DAVID CHAVEZ, Plaintiff,
COMMISSIONER, Social Security Administration, Defendant.




         Before the court is an unopposed Motion and Memorandum for Approval of Attorney Fees Pursuant to 42 U.S.C. § 406(b) (“Section 406(b)”) filed by plaintiff David Chavez (“Chavez”) . Although Chavez is the claimant in this case, the real party in interest to this motion is his attorney, Drew L. Johnson, P.C. (“Johnson, P.C.”), and 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 Johnson, P.C. is entitled to fees under Section 406(b) in the amount of $9, 000.50.

         Procedural Background

         Chavez filed his applications for Disability Insurance and Supplemental Security Income benefits on February 20, 2010, originally alleging an onset date of January 1, 1987, and then amending the onset date to January 1, 1998. His applications were denied initially and on reconsideration. On June 26, 2012, an Administrative Law Judge (“ALJ”) issued an opinion in which he found Chavez disabled as of the amended onset date. The Appeals Council, on its own motion, set aside the favorable decision on March 2, 2013, and remanded the action for a second hearing with directions to, among other things, update the medical evidence with a comprehensive medical examination.

         On June 12, 2014, a second ALJ issued an opinion in which he found Chavez not disabled and, therefore, not entitled to benefits. The ALJ found Chavez: (1) suffered from the severe impairments of ADHD, depressive disorder, generalized anxiety disorder, and methamphetamine abuse; (2) retained the residual functional capacity to perform a full range of work at all exertional levels but was limited to simple, repetitive, routine tasks requiring no more than occasional interaction with supervisors and co-workers, and no interaction or contact with the general public; (3) was unable to perform any past relevant work; and (4) was unable to perform any jobs in the national economy while engaging in substance abuse, but would be able to perform jobs such as cleaner, sorter, and marker if he discontinued his substance abuse. In light of finding Chavez's substance use was a contributing factor material to the determination of disability, the ALJ found Chavez not disabled between his alleged onset date of January 1, 1998, and the date of the decision, or June 12, 2014. That decision became the final decision of the Commissioner on August 3, 2015, when the Appeals Council denied Chavez's request for review.

         Chavez sought review of the Commissioner's decision by filing a complaint in this court on September 15, 2015. In his opening brief filed March 31, 2016, Chavez alleged the ALJ erred in three respects: (1) mischaracterizing the findings of Dr. Northway; (2) failing to comply with Social Security Ruling 83-20; and (3) failing to obtain a comprehensive mental status examination as directed by the Appeals Council. On August 4, 2016, the parties filed a Stipulated Motion for Remand. The following day, the court entered an Order of Remand (the “Order”) directing the ALJ to: (1) update medical records with a psychodiagnostic evaluation that includes objective testing pursuant to the Appeals Council remand order; (2) reevaluate the medical evidence of record, especially the opinion of Dr. Northway; (3) obtain medical expert testimony at the hearing to establish an onset date for any disabling impairments, pursuant to the Appeals Counsel remand order and Social Security Ruling 83-20; (4) reevaluate the intensity, persistence, and limiting effects of Chavez's symptoms, consistent with Social Security Ruling 16-3p and Chavez's residual functional capacity; (5) perform new steps four and five analyses, obtaining additional vocational expert testimony, if necessary; and (6) reevaluate the materiality of Chavez's substance abuse in accordance with 20 C.F.R. §§ 404.1535 and 416.935, and Social Security Ruling 13-2p. Additionally, the Order recommended the ALJ use a different medical expert, if possible, and allow the medical expert to address materiality.

         On November 17, 2016, Chavez filed a Settlement and Stipulated Motion for Entry of Order Awarding Attorney's Fees Pursuant to EAJA (the “EAJA Motion”). In the EAJA Motion, Sherwood J. Reese, an attorney employed by Johnson, P.C. (“Reese”), represented Chavez's legal counsel spent 47.4 hours on this matter. The parties agreed reducing the billed hours by twenty percent, to 37.9 hours, at the 2016 CPI-U rate of $191.70, for a total of $7, 265.43, represented a reasonable settlement of attorney fees under the EAJA. The court granted the EAJA Motion the following day. Chavez filed the instant Motion and Memorandum for Approval of Attorney Fees Pursuant to 42 U.S.C. § 406(b) requesting attorney fees in the amount of $11, 256.44 on March 26, 2018. The Commissioner does not oppose the motion.

         Legal Standard

         After entering a judgment in favor of a Social Security claimant represented by counsel, a 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.” 42 U.S.C. § 406(b)(1)(A) (2018). 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, 535 U.S. at 807 n.17). A Section 406(b) fee award 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. Accordingly, when a court approves both an EAJA fee and a Section 406(b) fee payment, the claimant's attorney must refund to the claimant the amount of the smaller of the two payments. Gisbrecht, 535 U.S. at 796.


         The parties do not dispute Chavez is the prevailing party in this matter. Additionally, the Commissioner does not challenge the amount Johnson, P.C. requests as attorney fees. Nonetheless, because the Commissioner does not have a direct stake in the allocation of Chavez's attorney fees, the court must ensure the calculation of fees is reasonable to prevent Johnson, P.C. from potentially receiving a windfall. See Gisbrecht, 535 U.S. at 798 n.6 (“We also note that the Commissioner of Social Security . . . has no direct financial stake in the answer to the § 406(b) question.”).

         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. Chavez and Johnson, P.C. executed a retainer agreement, which provided: “I agree that my attorney shall charge and receive as a fee for his work at the federal level an amount equal to twenty-five percent (25%) of the past-due benefits that are awarded me and my family in the event my case is won.” (Pl.'s Mot. and Mem. for Approval of Attorney Fees ...

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