Paula A. v. O'Malley

Background

Paula A. moved for attorney fees under 42 U.S.C. § 406(b), based on a contingency-fee agreement with her counsel. The agreement provided that, if her claim was favorably decided after an appeal to the Appeals Council, counsel could seek 25% of her past-due benefits, along with fees through the statutory fee process and any Equal Access to Justice Act award.

Paula A. filed this case with counsel on September 26, 2022. On October 11, 2023, the court remanded the case to the Social Security Commissioner under sentence four of 42 U.S.C. § 405(g) for further administrative proceedings. In June 2024, the court recommended an Equal Access to Justice Act fee award of $7,250.40. After the remand, an administrative law judge found Paula A. disabled. Her notice of award stated that she was entitled to $107,482 in past-due benefits, with 25%, or $26,870.50, withheld for an approved attorney-fee payment.

Positions and legal standard

Counsel sought $26,870.50 under § 406(b), reduced by the earlier Equal Access to Justice Act award for purposes of the net payment. The Commissioner neither supported nor opposed the request but argued that the reasonableness review should consider the full $26,870.50 rather than only the $19,620.10 net amount.

Section 406(b) allows a court to approve a reasonable fee for successful representation in federal court, up to 25% of the claimant’s past-due benefits. The court must independently determine whether a contingent fee is reasonable. A fee may be reduced if the representation was substandard, counsel caused delay that increased the benefits fund, or the benefits were large compared with the time spent. When both Equal Access to Justice Act fees and § 406(b) fees are awarded, counsel must refund the smaller fee to the claimant.

Analysis

The court found the requested fee reasonable. The fee was exactly 25% of Paula A.’s past-due benefits, as provided in the fee agreement. The record did not show substandard work, undue delay, or disproportionate effort. Counsel documented 45.8 hours of work on the appeal, and the court found that amount appropriate given the full award of past-due benefits.

The court also noted that applying counsel’s stated non-contingent hourly rate of $595 to 45.8 hours would produce $27,251, which was $380 more than the requested § 406(b) fee. The court considered counsel’s experience, including more than 10 years with the Social Security Administration and service as a Special Assistant United States Attorney, as well as the risk of nonpayment under the contingency arrangement.

Recommendation and procedure

Judge Dulce J. Foster recommended that Paula A.’s fee motion be granted and that counsel be awarded $26,870.50 under § 406(b), paid from Paula A.’s past-due benefits. The recommendation also provided that the $26,870.50 be reduced by the previously recommended $7,250.40 Equal Access to Justice Act award, resulting in a net total fee of $19,620.10.

The document is a report and recommendation, not a district-court order or judgment, and therefore was not directly appealable to the Court of Appeals. The notice stated that a party could file specific written objections within 14 days after being served with the report and recommendation.