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Kishbaugh v. Saul

United States District Court, W.D. Kentucky, Owensboro Division

July 31, 2019

SCOTT KISHBAUGH PLAINTIFF
v.
ANDREW SAUL, COMMISSIONER SOCIAL SECURITY ADMINISTRATION[1] DEFENDANT

          MEMORANDUM OPINION AND ORDER

          H. Brent Brennenstuhl United States Magistrate Judge.

         BACKGROUND

         Plaintiff's counsel, Sara Martin Diaz, moves the Court, pursuant to 42 U.S.C. § 406(b), for authorization of attorney fees in the total amount of $7, 427.00 for her representation of Plaintiff before the Court (DN 22). Her representation resulted in a remand of the case to the Commissioner for further administrative proceedings and ultimately a fully Plaintiff-favorable decision (Id.). Defendant, Andrew Saul, Commissioner of Social Security (“Commissioner”), suggests that a reduction in the requested fee is warranted to avoid counsel receiving an unreasonable windfall (DN 23). At the Court's direction (DN 24)[2], the parties have submitted supplemental memoranda addressing whether the amount sought constitutes an inappropriate windfall (DN 25, 26). For the reasons that follow, the motion will be granted, in part, and denied, in part.

         FINDINGS OF FACT

         On August 21, 2017, Plaintiff filed a complaint seeking judicial review of the final decision of the Commissioner pursuant to 42 U.S.C. § 405(g) (DN 1). The Commissioner filed an answer and a copy of the administrative record (DN 9, 10). Plaintiff filed a Fact and Law Summary setting forth his challenges to the final decision of the Commissioner (DN 15). Thereafter, the Commissioner filed a joint stipulation that the matter should be remanded to the Commissioner pursuant to sentence four of 42 U.S.C. § 405(g) (DN 19). The Court issued an order remanding the case to the Commissioner pursuant to sentence four of 42 U.S.C. § 405(g) (DN 20). The judgment was entered on May 1, 2018 (DN 21).

         In a Plaintiff-favorable decision dated March 13, 2019, an Administrative Law Judge awarded Social Security Disability benefits as of April 15, 2019 (Affidavit of Counsel DN 22-1 PageID # 1509). The Notice of Award dated April 15, 2019, announced that a total of $53, 708.00 in past-due benefits had been awarded to Plaintiff for December 2011 through March 2019 (DN 22-1 PageID # 1510, 1518).

         Of the past-due benefits awarded, the Social Security Administration (SSA) withheld $13, 427.00 (25%) for direct payment of attorney fees pursuant to the terms of the contingency fee agreement between Plaintiff and his counsel (Id.). The SSA has already authorized and counsel has received $6, 000.00 for her representation of Plaintiff before the Commissioner (DN 22-1 PageID # 1510, 1519). Counsel now seeks an award of $7, 427.00 for her representation of Plaintiff before the Court.

         CONCLUSIONS OF LAW

         Plaintiff argues the Court should approve her request for $7, 427.00 (DN 22, 22-1). This amount constitutes what remains of the 25% of past-due benefits withheld by the SSA for direct payment of attorney fees under the terms of the contingency fee agreement (DN 22, 22-1). The Commissioner, representing the interests of Plaintiff whose back benefits pay for the fees, opposes this sum because counsel will receive a “windfall” considering her limited number of hours worked in the Court. See Gisbrecht v. Barnhart, 535 U.S. 789, 798 n. 6 (2002) (recognizing the Commissioner acts much like a trustee for the claimant in the fee determination).

         When a district court renders a judgment favorable to a claimant seeking Social Security Disability Insurance Benefits, 42 U.S.C. § 406(b) permits it to award “a reasonable [attorney's] 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, ” payable out of the claimant's past-due benefits.[3] 42 U.S.C. § 406(b)(1)(A); Lasley v. Comm'r of Soc. Sec., 771 F.3d 308, 309 (6th Cir. 2014); Allan v. Commissioner, No. 10-11651, 2014 WL 1818110, at *1 (E.D. Mich. May 7, 2014). A judgment issued by a federal court either awarding benefits or remanding the matter to the Commissioner may be considered “favorable” within the meaning of the statute, so long as the claimant is awarded benefits “by reason of” the judgment. Nolan v. Comm'r of Soc. Sec., No. 4:11-CV-5, 2013 WL 5937908, at *1 (E.D. Tenn. Nov. 5, 2013) (citing Bergen v. Comm'r of Soc. Sec., 454 F.3d 1273, 1277 (11th Cir. 2006)).

         Here, the Court rendered a judgment favorable to Plaintiff because: (1) it remanded his case to the Commissioner (DN 20, 21); and (2) he was awarded Social Security Disability Benefits by reason of the judgment (DN 22-1 PageID # 1509). Having determined the prerequisite satisfied, the Court will address counsel's request for a fee payable out of Plaintiff's past-due benefits.

         Notably, 42 U.S.C. § 406(b)(1)(A) imposes a 25% cap on past due benefits and a requirement that courts determine the “reasonableness” of the fee up to that ceiling. Lasley, 771 F.3d at 309; Rodriquez v. Bowen, 865 F.2d 739, 746 (6th Cir. 1989). While the 25% cap serves as a starting point for the Court's evaluation, it should not be considered per se reasonable. See Lasley, 771 F.3d at 309; Rodriquez, 865 F.2d at 746.

         As mentioned above, Plaintiff and counsel executed a fee agreement (DN 22-1 PageID # 1514). Due deference should be given to their expressed intentions in the agreement. See Rodriquez, 865 F.2d at 746. But the Court is not bound by the fee agreement, see Rodriquez, 865 F.2d at 746 (citations omitted), because it is tasked with assuring the fee authorized is reasonable for the services rendered. See Gisbrecht, 535 U.S. at 807[4].

         If a court decides not give effect to the terms of the fee agreement, it should identify the deductions being made and articulate the reasons for doing so. See Lasley, 771 F.3d at 309-10 (citing Gisbrecht, 535 U.S. at 808); Rodriquez, 865 F.2d at 746. Generally, deductions for large fees fall into two categories: (1) those caused by counsel's improper conduct or ineffectiveness; and (2) ‚Äúsituations in which counsel would otherwise enjoy a windfall because of either an inordinately large benefit award or from minimal effort ...


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