Argument preview: Justices consider cap on attorney’s fees for
successful representation of Social Security disability claimants
(Corrected)
Attorney Richard Culbertson successfully represented several Social
Security disability claimants both before the Social Security
Administration and in federal court. Prior to his representation, he
entered into fee agreements that provided that the clients would pay him
attorney’s fees equal to 25 percent of past-due benefits for successful
representation before the court as well as separate attorney’s fees for
successful representation before the agency. Following longstanding
precedent of the U.S. Court of Appeals for the 5th Circuit, adopted by
the U.S. Court of Appeals for the 11th Circuit, the court below capped
his attorney’s fees at 25 percent of past-due benefits for
representation before both the Social Security Administration and the
court.
In granting certiorari, the Supreme Court agreed to resolve a split
among the federal courts of appeals as to whether the Social Security
Act imposes an aggregate cap on attorney’s fees of 25 percent of
past-due benefits for representation before both the court and the
Social Security Administration, or instead the 25 percent cap applies
separately to representation before the court.
The Social Security Act regulates the amount and manner in which an
attorney may collect fees from a disability claimant for successful
representation before the agency and the court. 42 USC § 406(a) governs
attorney’s fees for successful representation before the agency, while
42 USC § 406(b) governs attorney’s fees for successful representation
before the court. The Equal Access to Justice Act also authorizes a
court to order recovery of “reasonable attorney’s fees” from the
government in certain cases in which the claimant is successful and the
government’s position was not “substantially justified.” If attorney’s
fees are awarded under the EAJA and under Section 406(b), the attorney
must refund the lesser fee to the claimant. The Social Security
Administration withholds a single pool of 25 percent of past-due
benefits from which to certify for payment any and all attorney’s fees
awarded under Section 406(a) and/or 406(b).
Section 406(a) authorizes two avenues for recovery of attorney’s fees
from a claimant for successful representation before the agency. Under
Section 406(a)(1), an attorney may file a “fee petition” with the Social
Security Administration. Alternatively, under a more recent and more
commonly used, streamlined process, an attorney may seek approval of a
“fee agreement” with a claimant under Section 406(a)(2). No cap is
imposed under Section 406(a)(1). Section 406(a)(2) limits attorney’s
fees to the lesser of 25 percent of past-due benefits or a specified
dollar amount, currently set at $6,000.
For successful representation before a court, Section 406(b)(1)(A) provides in relevant part:
Whenever a court renders a judgment favorable to a
claimant under [Title II] 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.
Section 406(b)(1)(A) further provides that “no other fee may be
payable or certified for payment for such representation except as
provided in this paragraph.”
Focusing on the “plain meaning” of Section 406(b), Culbertson argues
that the term “such representation” in Section 406(b)(1)(A) clearly
refers to the antecedent phrase “represented before the court,” and thus
under the plain meaning of Section 406(b), the 25 percent cap applies
to representation “before the court by an attorney” and does not include
representation before the agency. Culbertson also argues that a
separate cap on attorney’s fees for representation before the court is
consistent with the structure of Section 406 as well as the purpose of
the statute and its legislative history.
Almost 40 years ago, in the first circuit-court decision to address this issue,
Dawson v. Finch,
the 5th Circuit held that Section 406(b) imposes an aggregate cap on
attorney’s fees for representation in the administrative proceedings as
well as before the court. In reaching this result, the 5th Circuit
looked to the legislative history of the provision in order to discern
Congress’ intent. Specifically, the court focused on the fact that
Congress added Section 406(b) to address two goals. First, Congress
sought to encourage effective legal representation by “insuring lawyers
that they will receive reasonable fees directly through certification by
the Secretary.” Second, Congress sought to protect claimants against
excessive attorneys’ fees, which in the past had reached one-third to
one-half of claimants’ past-due benefits, by imposing the 25 percent cap
on fees. In 1982, the U.S. Court of Appeals for the 4th Circuit also
looked to this legislative history to hold in
Morris v. Social Security Administration that Section 406(b) imposes a cumulative 25 percent cap on attorney’s fees.
More recently, the U.S. Courts of Appeals for the 6th, 9th and 10th
Circuits have focused on the text of section 406(b) to hold that the 25
percent cap only applies to representation before a court. See
Horenstein v. Secretary of Health and Human Services;
Clark v. Astrue; and
Wrenn v. Astrue, respectively.
The commissioner’s position on this issue has flipflopped over the
years. Almost 40 years ago, the commissioner sided with the 5th Circuit
in interpreting Section 406(b) to impose an aggregate cap and opposed
the grant of certiorari in
Dawson. Then about 15 years later, the commissioner sought and obtained 6th Circuit en banc review of the panel’s decision in
Horenstein v. Secretary of Health and Human Services
based on arguments that were logically inconsistent with an aggregate
25 percent cap. Almost 15 years after that, the commissioner argued in
briefs before the 9th and 10th Circuits that an aggregate cap honors
congressional intent and it would be inappropriate to permit attorneys
to potentially collect up to 25 percent of a disability claimant’s
past-due benefits at both the agency and court levels.
In this case, the acting commissioner initially supported the 11th
Circuit’s rule imposing an aggregate cap. Then, after requesting four
extensions to file a response, the acting commissioner filed a response
siding with Culbertson and arguing that the text of Section 406(b)
unambiguously applies the 25 percent cap only to attorney’s fees for
representation before a court. The acting commissioner further argues
that a 25 percent cap would be inconsistent with other provisions of
Section 406(a) and that the absence of an aggregate cap does not mean
that the agency and courts should approve fees that in the aggregate are
equal to or greater than 50 percent of a claimant’s past-due benefits.
Because the acting commissioner agrees with Culbertson, the Supreme
Court appointed Amy Levin Weil, an experienced 11th Circuit appellate
litigator, to serve as amicus curiae in support of the 11th Circuit’s
decision. Weil argues that the statute itself does not specifically
state whether combined attorney’s fees may exceed 25 percent, and that
the text of Section 406(a) and Section 406(b), read together, supports
the aggregate rule. She also points to the legislative history on which
the 4th and 5th Circuits relied in support of an aggregate 25 percent
cap. She contends that permitting attorney’s fees to exceed 25 percent
in the aggregate could lead to attorneys suing their clients to collect
fees out of their present or future Social Security benefits contrary to
the Social Security Act’s purpose of ensuring beneficiaries a protected
source of income. She also argues that rejecting the 25 percent
aggregate rule would lead to absurd results, with fees of up to 75
percent of past-due benefits if a favorable district court opinion is
appealed and the applicant is successful in the court of appeals. She
contends that the aggregate cap allows a logical division of agency and
court fees from the 25-percent-of-accrued-benefit pool in a manner that
recognizes that a portion of the accrued benefits is attributable to the
time that the case was pending before the agency while the other
portion is attributable to the time the case was pending before the
court.
The National Organization of Social Security Claimants’ Representatives filed an
amicus brief
in the case. The NOSSCR does not address the plain meaning of the
statute. Instead, it contends that Section 406(b) cannot impose an
aggregate 25 percent cap on attorney’s fees for representation before a
court and the agency because Section 406(a)(1) does not impose a cap on
fees before the agency. NOSSCR further argues that a court has no
discretion to impose an aggregate cap. NOSSCR informs the court that in
circuits without an aggregate cap, the prevailing market rate includes a
cumulative cap either by contract or in practice.
Weil faces an uphill battle in convincing the Supreme Court to uphold
the 11th Circuit’s decision. The plain-meaning approach to statutory
interpretation currently favored by the court supports Culbertson’s
position. Moreover, amici curiae appointed by the Supreme Court
typically only win about 25 percent of their cases.
If, however, Weil can convince the court to look beyond the text of
the Section 406(b) in isolation, it may, like Chief Judge Geoffrey
Crawford of the District of Vermont, find that “it would be strange
indeed to believe that Congress would in 1965 denounce 50% contingency
fees as excessive and enact a statute to stop them, and then, in 1968,
pass a law with the effect of permitting 50% contingency fees.”
A previous version of this post inadvertently implied that NOSSCR advocated a particular method for EAJA offsets.
Posted Wed, October 31st, 2018 11:04 am
Email Kathryn
CULBERTSON vs BERRYHILL
On January 8, 2019, the Supreme Court of the United States decided
Culbertson v. Berryhill,
No. 17-773, holding that the Social Security Act permits an attorney
fee award greater than 25 percent of the claimant’s past-due benefits
for representation before both the Social Security Administration and a
reviewing federal court.
The Social Security Act, 42 U.S.C. § 406
et seq., addresses
attorney’s fees in two discrete phases: ‘“§406(a) governs fees for
representation in administrative proceedings; §406(b) controls fees for
representation in court.’” (quoting Gisbrecht v. Barnhart, 535 U. S.
789, 794 (2002)). Section 406(a) gives the agency discretion to award a
reasonable fee to an attorney who obtains a favorable agency
determination in the absence of a fee arrangement with the claimant,
but, if there is a fee arrangement, section 406(a) “caps fees at the
lesser of 25 [percent] of past-due benefits or a set dollar
amount—currently $6,000.” Section 406(b), titled “Fees for
representation before court,” allows a court to award “a reasonable fee
for such representation, not in excess of 25 [percent] of the total of
the past-due benefits” if “a court renders a judgment favorable to a
claimant.”
Id. § 406(b)(1)(A).
Attorney Richard Culbertson represented a Social Security claimant
before the Social Security Administration as well as before a federal
district court. The agency denied the claimant’s benefits, and
Culbertson sought review of that decision before the District Court. The
District Court ruled in favor of the claimant, reversing the agency’s
denial of benefits and remanding the case to the agency to determine the
benefits due the claimant. On remand, the agency awarded the claimant
past-due benefits and also awarded Culbertson fees under section 406(a)
for representing the claimant before the agency. Culbertson subsequently
moved the District Court for a separate fee award under section 406(b)
based on his representation of the claimant there. “The court granted
Culbertson’s request only in part because he did not subtract the amount
he had already received under §406(a) for his agency-level
representation.” The Eleventh Circuit affirmed based on its precedent at
the time which dictated that ‘“the 25 [percent] limit from §406(b)
applies to total fees awarded under both §406(a) and (b), precluding the
aggregate allowance of attorney’s fees greater than [25] percent of the
past due benefits received by the claimant.’” (quoting
Wood v. Commissioner of Social Security, 861 F. 3d 1197, 1205 (11th Cir. 2017) (internal quotations omitted)).
The Supreme Court began and ended its inquiry with the language of the
statute because ‘“the statute’s language is plain.’” The Court observed
that § 406(b) specifically addresses representation in court and allows a
court to award ‘“a reasonable fee for
such representation.’”
(quoting 42 U.S.C. § 406(b)(1)(A)). The Court held that the phrase “such
representation” in section 406(b) demonstrated that section 406(b)’s
“25 [percent] cap applies only to fees for representation before the
court, not the agency.” The Court explained that “the adjective ‘such’
means ‘[o]f the kind or degree already described or implied,’” (quoting
H. Fowler & F. Fowler, Concise Oxford Dictionary of Current English
1289 (5th ed. 1964)), and that “the only form of representation ‘already
described’ in §406(b) is ‘represent[ation] before the court by an
attorney.’”
The Court went on to explain that the structure of the statute
confirmed the Court’s interpretation. First, “subsections (a) and (b)
address different stages of the representation,” and it makes sense
“that the statute contemplates separate fees for each stage of
representation.” And, second, the subsections calculate the attorney’s
fees differently. Were the Eleventh Circuit’s interpretation correct,
section 406(b)’s calculation of fees would limit section 406(a)’s
calculation, which “would make little sense” given that “[m]any
claimants will never litigate in court.”
The Court rejected the argument advanced by amicus curiae that, reading
the statute as a whole, Congress intended a cumulative 25 percent cap
on attorney’s fees for successful representation before the agency and
the court. Acknowledging the Commissioner’s current policy to withhold
only 25 percent of past-due benefits for direct payment of agency and
court fees, the Court nonetheless noted that the statute provides “two
pools of money for direct payment of fees” and further that “[a]ny
shortage of withheld benefits for direct payment of fees is thus due to
agency policy.” The Court also observed that the amount of past-due
benefits withheld for direct payment did not limit the amount of fees
that could be charged, observing that the statute historically did not
have a direct payment mechanism.
Justice Thomas delivered the decision for a unanimous Court.
