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SCOTUS Rules for Separate Fee Awards in Social Security Benefit Cases

January 8, 2019 | Posted in : Contingency Fees / POF, Fee Award, Fee Calculation Method, Fee Cap / Fee Limits, Fee Entitlement, Fee Issues on Appeal, Fee Statute

A recent Law 360 story by Emily Brill, “High Court Grants Win to Social Security Atty in Fee Row,” reports that the U.S. Supreme Court ruled 9-0 that the Social Security Act allows disability benefit recipients’ attorneys to receive entirely separate fee awards for their work before the Social Security Administration and their work in court.   The high court reversed the Eleventh Circuit, which held that Social Security disability attorneys should receive smaller awards for litigating cases if they’ve already been paid for their agency-level work.

In an opinion delivered by Justice Clarence Thomas, the court held that the wording of Social Security Act sections 406(a) and 406(b) entitles attorneys to separate fee awards for their work at each level of the disability claim dispute process.  The court also pointed out that 406(a) and 406(b) put forth different methods for calculating fees, so it didn’t make sense for the Eleventh, Fourth and Fifth circuits to hold that 406(b)’s cap on court-stage fees should apply to agency fees, which are calculated under 406(a). 

“Subsections (a) and (b) address different stages of the representation and use different methods for calculating fees.  Given this statutory structure, applying §406(b)’s 25 [percent] cap on court-stage fees to §406(a) agency-stage fees, or the aggregate of §§406(a) and (b) fees, would make little sense,” the court wrote.  “Had Congress wanted agency-stage fees to be capped at 25%, it presumably would have said so directly.”

The high court’s decision affirmed the line of thinking adopted by the Sixth, Ninth and Tenth circuits, which all held that Section 406(b)'s language capping court fees at 25 percent of the total disability benefit award does not apply to fees for agency-level work, which are capped at 25 percent of total benefits or $4,000, whichever is less. 

The case arose from a dispute between Richard Culbertson, a Florida Social Security benefits attorney, and a Florida federal judge over the amount of fees owed to Culbertson after he prevailed in four cases involving Social Security claimants.  Culbertson represented his four clients before both the Social Security Administration and a Florida federal judge. In each case, the Social Security commissioner denied his client benefits, and the judge reversed that decision.

Culbertson said he was entitled to two sets of fees — one set for representing his client before the SSA, as allowed for in 42 USC 406(a), and the other for representing his client before the court, as allowed for in 42 USC 406(b).  In each of the four cases, the judge denied his request.

When the case went to the Eleventh Circuit, the appellate court referred to its own precedent when deciding which fees to give Culbertson.  The Eleventh Circuit, like the Fourth and Fifth Circuits, had held that because both Section 406(a) and Section 406(b) limit the fees that can be taken from a claimant’s benefit award to 25 percent of the total award, attorneys are limited to just one set of fees totaling no more than 25 percent of the benefits awarded.

Culbertson argued that Section 406 limits only the amount of fees that can be taken from a client's benefit award; it does not limit the amount of fees that can be authorized, he said.  He said that the Equal Access to Justice Act provides another method for Social Security attorneys to receive fees — from the government — so fees do not need to be limited only to what a client can provide.  Therefore, when an attorney represents a client before both the SSA and a court, federal statutes authorize fees for each type of work done and it is improper to lump both fees together and apply a single cap, Culbertson argued.  The high court agreed with Culbertson, writing that the statutory language of Section 406 supported his argument.

“Section 406(b) provides that a court rendering a favorable judgment to a claimant ‘represented before the court by an attorney’ may award ‘a reasonable fee for such representation, not in excess of 25 percent’ of past-due benefits.  Here, the adjective ‘such’ … refers to the only form of representation ‘already described’ in §406(b) — i.e., ‘represent[ation] before the court.’  Thus, the 25% cap applies only to fees for representation before the court, not the agency,” Justice Thomas wrote for the unanimous court.

Culbertson himself was pleased with the outcome of the suit, telling Law360 that he thinks it will have a positive impact on Social Security claimants' ability to obtain legal representation.  "Right now, it’s difficult for people who’ve been denied disability to find attorneys that will take their case to federal court.  There’s very few of us in central Florida.  This will help those people to be able to find attorneys willing to take their cases and be paid a reasonable fee for that service," Culbertson said. 

The case is Richard Allen Culbertson, Petitioner v. Nancy A. Berryhill, Acting Commissioner of Social Security, case number 17-773, in the U.S. Supreme Court.