Dalmida v. Commissioner of Social Security

Background

Eugene Dalmida applied for disability insurance benefits and supplemental security income, alleging disability beginning January 3, 2019. The Social Security Administration initially denied his application. After hearings and review by the Appeals Council, an administrative law judge issued a partially favorable decision. Dalmida then sought judicial review under 42 U.S.C. § 405(g), arguing that the decision was erroneous, unsupported by substantial evidence, or contrary to law.

The parties agreed to remand the case to the Commissioner for further proceedings under sentence four of § 405(g). The court entered judgment in Dalmida’s favor and ordered the remand. The court later approved a stipulation awarding Dalmida’s counsel $5,664.71 in fees under the Equal Access to Justice Act and $402.00 in costs.

After remand, an administrative law judge issued a fully favorable decision finding Dalmida disabled and entitled to benefits. The Social Security Administration issued a notice stating that it had withheld $18,436.18—25% of Dalmida’s past-due benefits—to pay fees to his representatives or counsel. The notice was sent to the attorneys who represented Dalmida before the Administration, rather than directly to Daniel A. Osborn, who represented Dalmida in federal court. Osborn’s firm received the notice on August 20, 2024, and filed the fee motion fourteen days later. The Commissioner did not oppose the requested fee or challenge its timeliness.

Legal Standard

Under § 406(b) of the Social Security Act, a court may approve a reasonable fee for an attorney’s representation in federal court after a favorable judgment, up to 25% of the claimant’s past-due benefits resulting from that judgment. The fee is paid from the claimant’s past-due benefits rather than through fee shifting against the Commissioner.

The court first considered timeliness. Federal Rule of Civil Procedure 54(d) generally requires a fee application within fourteen days after judgment. In Social Security cases involving a remand followed by an award of benefits, however, the deadline is equitably extended until fourteen days after counsel receives notice of the benefits calculation. The court applied that rule and found Osborn’s motion timely because it was filed fourteen days after his firm received the notice.

The court then considered reasonableness. It examined whether the fee percentage was within the 25% statutory limit, whether there was fraud or overreaching in the fee agreement, and whether the requested amount would be a windfall. It also considered the nature and results of the representation, the time spent, counsel’s expertise and efficiency, the professional relationship with the claimant, the claimant’s satisfaction, and the uncertainty and effort involved in obtaining benefits.

Ruling

The court found that the requested fee was reasonable. The 25% contingency percentage complied with the statutory cap, and the court found no evidence of fraud or overreaching. Counsel reported spending 20.4 hours of attorney time and 5.1 hours of paralegal time on the federal appeal. The requested fee produced an effective hourly rate of $903.73, which the court found within the range previously approved by courts in the Second Circuit. The court also recognized the risks associated with contingent-fee representation in Social Security cases.

The court granted Dalmida’s motion for attorney’s fees under § 406(b) in the amount of $18,436.18, with the award payable to his counsel. Because counsel had already received the smaller $5,664.71 Equal Access to Justice Act award, the court directed counsel to refund that amount to Dalmida upon receiving the § 406(b) fee award.

Disposition

The motion for attorney’s fees was granted in the amount of $18,436.18. Counsel was ordered to refund $5,664.71 in previously awarded Equal Access to Justice Act fees to Dalmida upon receipt of the § 406(b) award.