Palafox v. Saul

Background

Josephine Palafox brought an action under 42 U.S.C. § 405(g) seeking judicial review of the Commissioner of Social Security’s denial of her disability-benefits application. The court found in her favor and remanded the case for further proceedings. The parties later received a $7,500 attorney-fee award under the Equal Access to Justice Act.

On remand, the Commissioner approved Palafox’s application and awarded disability benefits, Medicare insurance, and $122,750.72 in past-due benefits. Palafox’s contingency-fee agreement allowed her lawyer, Katherine Siegfried, to receive up to 25% of past-due benefits. The Social Security Administration’s notice of award set aside $30,687.68—25% of the past-due benefits—for attorney fees.

Legal standard

Under 42 U.S.C. § 406(b), a court may award a reasonable fee to an attorney who represented a claimant in federal court, but the fee may not exceed 25% of the claimant’s past-due benefits resulting from the favorable judgment. The court must independently check whether the requested fee is reasonable, considering the contingency-fee agreement, the quality of the representation, the result achieved, the time spent, and whether the fee should be reduced because of delay, poor performance, or an unreasonable relationship between the fee and the work performed.

When a claimant’s attorney receives fees under both § 406(b) and the Equal Access to Justice Act, the attorney must refund the smaller fee to the claimant, up to the point at which the claimant receives all of the past-due benefits.

Court’s analysis

The court found that Siegfried met her burden of showing that the requested fee was reasonable. The fee matched the 25% contingency-fee agreement, and counsel’s representation resulted in Palafox receiving $122,750.72 in past-due benefits. Siegfried reported spending 48.7 hours on the case, producing an effective hourly rate of $630.14. The court also considered the substantial risk of loss associated with representing a Social Security claimant on a contingency basis and found no reason to reduce the requested amount.

Because the court found the § 406(b) fee reasonable, it required Siegfried to refund Palafox the $7,500 previously awarded under the Equal Access to Justice Act.

Disposition

The court granted counsel’s motion for attorney fees. It directed the Commissioner to certify $30,687.68 under 42 U.S.C. § 406(b), payable to Katherine Siegfried. The fees are to be paid from Palafox’s past-due benefits in accordance with agency policy, to the extent those benefits remain available and were not used to pay an attorney fee under 42 U.S.C. § 406(a). Siegfried was ordered to reimburse Palafox $7,500 to offset the § 406(b) payment.