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Petersen v. Commissioner Social Security Administration

United States District Court, D. Oregon

September 17, 2018



          Honorable Paul Papak, United States Magistrate Judge.

         Plaintiff Vicki Gail Petersen filed this action against defendant Commissioner of the Social Security Administration on March 20, 2014, seeking judicial review of the Commissioner's decision finding her not disabled for purposes of entitlement to disability insurance benefits ("DIB") under Title II of the Social Security Act (the "Act"). On January 16, 2015, 1 reversed the Commissioner's decision and remanded this matter for further proceedings. Petersen moved unopposed for an award of attorney fees pursuant to the Equal Access to Justice Act (the "EAJA") on April 16, 2015, and I granted the motion on April 30, 2015, authorizing award of fees to Petersen's counsel pursuant to the EAJA in the amount of $1, 767.55. Effective July 20, 2017, the Commissioner determined that Petersen was disabled for purposes of DIB entitlement, and awarded Petersen retroactive benefits in the amount of $87, 336.00.

         Now before the court is Petersen's unopposed motion (#27), filed pursuant to 42 U.S.C. § 406(b), for approval of payment to her counsel out of her retroactive benefits award of $87, 336.00 the amount of $15, 834.00, [1] less an administrative deduction of $6, 000 already assessed by the Commissioner pursuant to 42 U.S.C. § 406(d) and less the $1, 767.55[2] EAJA fees already received by counsel, or $8, 066.45. I have considered the motion and all of the evidence in the record. For the reasons set forth below, the motion is granted as discussed below, and payment to Petersen's counsel of attorney fees in the amount of $8, 066.45 is approved.


         Pursuant to 42 U.S.C. § 406(b), Petersen's counsel seeks the court's approval of payment to her of attorney fees out of Petersen's retroactive benefits award in the amount of $8, 066.45.[3] This amount, as noted above, is less than the amount of the 25% contingency fee to which Petersen's counsel is entitled pursuant to her fee agreement with Petersen (which fee counsel has not yet received), and reflects deduction of an administrative fee of $6, 000 from the contingency amount pursuant to 42 U.S.C. § 406(d) as well as payment to counsel of EAJA fees in the amount of $1, 767.55.

         Section 406(b) provides, in relevant part, as follows:

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.. . .

42 U.S.C. § 406(b)(1)(A). By contrast with fees awarded pursuant to the EAJA, a fee-shifting statute, Section 406(b) fees are paid out of the retroactive benefits awarded to the successful Social Security claimant. See Id. Counsel representing Social Security claimants may not seek compensation from their clients for trial litigation other than through a Section 406(b) fee. See id. In the event that both an EAJA fee is awarded and a Section 406(b) fee payment is approved, the claimant's counsel must refund to the claimant the amount of the smaller of the two payments. See Gisbrecht v. Barnhart, 535 U.S. 789, 796 (2002). Any Section 406(b) fee must be approved by the court following analysis of its reasonableness before it may be paid. See 42 U.S.C. § 406(b)(1)(A).

         In Gisbrecht, the Supreme Court established that the reasonableness of a Section 406(b) contingency fee is not to be determined primarily by reference to the lodestar method which generally governs fee-shifting disputes. See Gisbrecht, 535 U.S. at 801-802. Instead, to the extent contingency fee agreements do not provide for fees exceeding 25% of claimants' retroactive benefits, their terms are fully enforceable subject only to the court's review "to assure that they yield reasonable results in particular cases." Id. at 807. It is the claimant's counsel's burden to establish the reasonableness of the calculated fee. See id.

         In assessing the reasonableness of a Section 406(b) fee, courts look first to the contingency fee agreement itself, and then may reduce the resulting award "based on the character of the representation and the results the representative achieved." Id. at 808. The claimant's counsel bears the burden to establish the reasonableness of a Section 406(b) fee. See Id. at 807.

         The Gisbrecht court provided, as examples of circumstances that could justify a downward reduction, situations in which the attorney was responsible for delay or in which "the benefits are large in comparison to the amount of time counsel spent on the case." Id. The court specified that "the court may require the claimant's attorney to submit, not as a basis for satellite litigation, but as an aid to the court's assessment of the reasonableness of the fee yielded by the fee agreement, a record of the hours spent representing the claimant and a statement of the lawyer's normal hourly billing charge for noncontingent-fee cases." Id., citing Rodriquez v. Bowen, 865 F.2d 739, 741 (6th Cir. 1989) (en banc).

         The Ninth Circuit's en banc decision in Crawford v. Astnte, 586 F.3d 1142 (9th Cir. 2009), applied the Gisbrecht reasonableness analysis. The Crawford court affirmed Gisbrecht's holding that it is error to determine the reasonableness of a Section 406(b) fee by the metric of the lodestar method. See Crawford, 586 F.3d at 1150.

         Here, Petersen entered into a contingency fee agreement with her counsel providing for payment of 25% of her retroactive benefits to her attorney in the event of a favorable outcome following federal litigation. It therefore now falls to the court to assess whether $15, 834.00 constitutes reasonable compensation for Petersen's counsel in light of the factors discussed in Gisbrecht and Crawford.

         I. Timeliness of ...

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