United States District Court, W.D. Kentucky, Louisville Division
LINDA S. TERRY, PLAINTIFF
NANCY A. BERRYHILL, ACTING COMMISSIONER, SOCIAL SECURITY ADMINISTRATION DEFENDANT
MEMORANDUM OPINION AND ORDER
B. Russell, United States District Court Senior Judge
case is before the Court on the Objection of Plaintiff, Linda
S. Terry, [R. 27], to the Report and Recommendation of United
States Magistrate Judge Colin Lindsay, [R.26]. In the Report
and Recommendation, Magistrate Judge Lindsay recommended that
Terry's Motion for Attorney Fees under the Equal Access
to Justice Act (EAJA), [R. 23], be granted and that
Terry's existing assignment of EAJA fees, [R. 23-3], be
declared void. [R. 26]. Terry filed an Objection to the
Report and Recommendation. [R. 27]. The Commissioner of
Social Security (the Commissioner) did not respond. The
Objection is now ripe for decision by the Court. Having
reviewed the record, the Court agrees that the Motion for
Attorney's Fees, [R. 23], should be granted and that the
award shall be payable directly to Terry. However, the Court
leaves it to the Commissioner's discretion to determine
whether to waive the Anti-Assignment Act (AAA) and make the
fee payable to Terry's counsel, Greg Marks. Accordingly,
the Court ADOPTS the Magistrate Judge's
Report and Recommendation, [R. 26], and
OVERRULES Terry's Objection, [R. 27].
Terry's request for oral argument, [See R. 27 at
2], is consequently DENIED AS MOOT.
parties agree that the proposed fee award of $3, 218.75 in
attorney's fees and $24.00 in costs is appropriate.
Therefore, following a de novo review, as required
by 28 U.S.C. § 636(b)(1) and Federal Rules of Civil
Procedure 72(b), the Court adopts the Magistrate Judge's
recommendation that Terry's Motion for Attorney Fees
Under the EAJA, [R. 23], be granted in the amount of $3,
218.75 in attorney's fees and $24.00 in costs. This
leaves the sole dispute as to whom the award should be
payable. The Magistrate Judge determined that the EAJA and
the AAA require the award to be payable directly to Terry.
[R. 26 at 4]. Terry argues that the Magistrate Judge was
incorrect in this recommendation due to an incorrect
interpretation of the AAA and requests this Court to direct
payment of the award to her counsel, Greg Marks. [R. 27 at
The EAJA and the AAA
EAJA states that the Court “shall award to a prevailing
party . . . fees and other expenses . . . incurred by that
party.” 28 U.S.C. § 2412(d)(1)(a). The Supreme
Court held in Comm'r of Soc. Sec. v. Ratliff
that an award of fees and costs under § 2412(d) should
be paid directly to a litigant instead of his or her
attorney. 560 U.S. 586, 589 (2010) (“[A] § 2412(d)
fees award is payable to the litigant and is
therefore subject to Government offset to satisfy a
preexisting debt that the litigant owes the United
States.”). Furthermore, under the AAA, “[a]n
assignment [of a claim against the United States government]
may be made only after a claim is allowed, the amount of the
claim is decided, and a warrant for payment of the claim has
been issued.” 31 U.S.C. § 3727(b). Therefore,
“an assignment of a claim against the United States
that is executed before the claim is allowed, before the
amount of the claim is decided, and before a warrant for
payment has been issued, is void.” Kerr v.
Comm'r of Soc. Sec., No. 3:15-CV-313-CHL, 2016 WL
1733480, at *2 (W.D. Ky. 2016) (Lindsay, J.) (citation
omitted) (quoting Cox v. Comm'r of Soc. Sec.,
917 F.Supp.2d 659, 662 (E.D. Ky. 2013) (citing 31 U.S.C.
§ 3727(b)). In the case at hand, Terry argues that a
judicial fee award under the EAJA is not a claim that is
subject to the AAA, therefore her assignment of
attorney's fees to Marks is not void. [R. 27 at 2-10.]
The Court disagrees.
is simply too much case law weighing against Terry's
argument to rule in her favor. First, the Sixth Circuit, as
well as this Court, held that “[Congress] did not
intend attorney fees under the EAJA to be payable directly to
the party's attorney.” Bryant v. Comm'r of
Soc. Sec., 578 F.3d 443, 449 (6th Cir. 2009); see
also Johnson v. Comm'r of Soc. Sec., No.
5:09-CV-108-R, 2012 WL 1014993, at *3-4 (W.D. Ky. 2012)
(Russell, J.) (“Ratliff holds that any award
of fees and costs under 28 U.S.C. § 2412(d) should be
paid directly to a litigant instead of his attorney.”)
(citing Ratliff, 560 U.S. at 589). Secondly, this
district and many others in the Sixth Circuit have held that
the AAA applies to EAJA fee awards. Therefore, an assignment
of an EAJA award that occurred before the award was
distributed is void, with the exception that the Commissioner
may waive the AAA and allow the assignment after it is
determined that the plaintiff owes no federal debt. See,
e.g., Kerr, 2016 WL 1733480, at *1-3 (holding that
“the assignment predates the award of fees pursuant to
the EAJA” and, therefore, “‘is voidable at
the United States' discretion.'”) (quoting
Brown v. Comm'r of Soc. Sec., No.
5:12-CV-00145-LLK, 2013 WL 3243527, at *3 (W.D. Ky. 2013)
(King, J.)); Cox, 917 F.Supp.2d at 661-62
(collecting cases supporting the notion that the AAA applies
to EAJA fee awards); Cox v. Comm'r of Soc. Sec.,
No. 1:11-CV-00317, 2013 WL 4679804, at *1-2 (E.D. Tenn. 2013)
(“Because the assignment of the EAJA award predated the
award, I conclude payment should be made to
Plaintiff.”); Lay v. Comm'r of Soc. Sec.,
No. 10-346-DLB, 2012 WL 5988822, at *9 (E.D. Ky. 2012)
(collecting cases supporting the notion that the AAA applies
to EAJA fee awards); Steele-Malocu v. Comm'r of Soc.
Sec., No. 3:09-CV-383, 2011 WL 1743457, at *1 (S.D. Ohio
2011) (same); Cooper v. Comm'r of Soc. Sec., No.
1:09-CV-40, 2011 WL 3269446, at *3-4 (W.D. Mich. 2011)
(“Plaintiff's assignment fails to meet the
requirements of § 3727(b), because it was executed
before the court allowed an award against the government
pursuant to the EAJA and it was not attested to by two
witnesses.”). Terry assigned her EAJA fee award to her
attorney in an affidavit on December 19, 2016, which was
before any fees were actually awarded to her. [R. 23-3
(Plaintiff's Affidavit and Assignment of EAJA Fee).]
Therefore, Terry's assignment was invalid under the AAA.
However, the Commissioner may waive this application of the
AAA, and allow the assignment, if the Commissioner verifies
that Terry owes no pre-existing debt to the United States
an abundance of caution, the Court will briefly address
Terry's arguments against this Court's application of
the AAA to her EAJA fee award. First, Terry interprets the
Supreme Court's statements in Hobbs v. McLean to
mean that the only claims that the AAA was meant to address
were those “that could be presented to the executive
branch for payment or pursued in the Court of Claims.”
[R. 27 at 3-4 (citing Hobbs v. McLean, 117 U.S. 567,
575 (1886).] It is an interesting analysis; however, Terry
provides no examples of a court actually applying
Hobbs in this manner in a case involving the EAJA.
Instead, Terry cites to a case involving claims under the
Financial Institutions Reform, Recovery, and Enforcement Act
of 1989. She also cites to several federal
appellate court cases clarifying that the AAA is meant to
protect the United States government from being harassed by
multiple claimants and that the AAA only involves claims
against the government, not private parties.
Terry argues that the Magistrate Judge mistakenly relied on
instruction from the Ninth Circuit in the case of United
States v. Kim. [R. 27 at 6-10.] The Court considered
Terry's arguments but agrees with the Ninth Circuit's
application of the AAA to a fee award over Terry's theory
under her interpretation of Hobbs.
final argument is that even if the Court considers EAJA fee
awards to be “claims, ” this claim is eligible
for two different exceptions to enforcement of the AAA: (1)
assignments by operation of law and (2) assignments for the
benefit of creditors. [R. 27 at 10.] Under the
“assignments by operation of law” exception,
Terry argues that the present case is analogous to insurers
being able to sue the United States on claims by which the
insurer has become subrogated by payment to an insured. [R.
27 at 10-11 (citing United States v. Aetna Casualty &
Surety Co., 338 U.S. 373, 375 (1949).] The Court is
unable to find any case law applying this analogy to an EAJA
fee award. Thus, the Court is unpersuaded. Terry also cites a
Second Circuit case to support the argument that this case is
analogous to statutory attorney's liens, which are not
forbidden by the AAA. [R. 27 at 13 (citing Brooks v.
Mandel-Witte Co., 54 F.2d 992 (2d Cir. 1932)).] Beyond
the fact that the case cited does not involve the EAJA, the
Court finds that this notion is debatable. See Pierce v.
Brown, 7 Vet.App. 357, 358 (Ct. Vet.App. 1995)
(“At this Court, attorney's fees are governed by
the provisions of the Equal Access to Justice Act, 28 U.S.C.
§ 2412, and 38 U.S.C. § 5904, neither of which
provide for recovery of attorney's fees by means of an
attorney's lien filed under a state statute.”).
Thus, the Court is unpersuaded.
the second exception, “assignments for the benefits of
creditors, ” Terry essentially argues that an attorney
in this situation is a type of creditor. [R. 27 at 13-14.]
There are two cases which possibly support this notion. In
the first case, Treadway v. Commissioner of Social
Security, the Eastern District of California implied
that lawyers are creditors, but it ultimately ruled against
allowing payment of the EAJA fee award directly to the
plaintiff's attorney. See Treadway v. Comm'r of
Soc. Sec., No. 1:13-CV-01248-SAB, 2014 WL 6901869, at *7
(E.D. Cal. 2014). In the second case, Quade v.
Barnhart, the District of Arizona held that attorneys
could be paid the award of fees directly. 570 F.Supp.2d 1164,
1175-76 (D. Ariz. 2008). However, in support of this holding,
the court cited to an unpublished opinion of the Sixth
Circuit, King v. Commissioner of Social Security,
that was subsequently rejected as dicta by the Sixth Circuit.
See Bryant, 578 F.3d at 446-47 (rejecting
King as dicta and holding that Congress “did
not intend attorney fees under the EAJA to be payable
directly to the party's attorney.”). Thus, the
Court is unpersuaded that this second exception to the AAA
applies to the case at hand.
the Court considered Terry's arguments supporting her
Objection; however, the Court refuses to overturn this rich
history of precedent in order to rule in her favor.
Therefore, the Court agrees with the Magistrate Judge's
Report and Recommendation in holding that the EAJA and the
AAA require the award to be payable directly to Terry, but
the Commissioner may waive application of the ...