Thomas v. Commissioner of Social Security

Background

Michael Anthony J. Thomas filed this Social Security case seeking review of the Commissioner’s denial of his application for disability benefits. Before the parties briefed the merits, they agreed to send the case back to the agency. On remand, the Commissioner found Thomas disabled and awarded him $45,006.70 in past-due benefits.

Thomas and his attorney, Daniel Osborn, had signed a contingency-fee agreement permitting Osborn to seek up to 25% of the past-due benefits. The Commissioner withheld $11,251.68, representing 25%, for possible attorney’s fees. Osborn spent 2.7 hours on the federal case: 2.4 hours drafting the complaint and 0.3 hours reviewing and signing the remand stipulation. He asked the court for $5,400, which would equal $2,000 per hour based on that time. The Commissioner neither supported nor opposed the request.

Legal standard

Under 42 U.S.C. § 406(b), a court may approve a reasonable fee for an attorney who represented a successful Social Security claimant in court, but the fee cannot exceed 25% of the claimant’s past-due benefits. A contingency-fee agreement does not automatically establish that the requested fee is reasonable. The court must consider the quality and result of the representation, whether counsel caused delay, whether the agreement involved fraud or overreaching, and whether the fee would be an improper windfall—that is, a fee clearly unearned in relation to the work performed and result achieved.

Analysis

The Report and Recommendation found that the representation produced the result Thomas sought and did so promptly: Thomas received past-due benefits four months after filing the federal complaint. Counsel did not delay the case, and the fee agreement plainly stated that the court would determine the amount, subject to the 25% limit. There was no evidence of fraud or overreaching.

The windfall factors pointed in different directions. Osborn had experience representing Social Security claimants and efficiently handled a record spanning 817 pages. On the other hand, the federal representation was brief, there was no information about Thomas’s satisfaction with counsel, and counsel did not claim that obtaining the remand required unusual effort or involved substantial uncertainty. The magistrate judge nevertheless concluded that the requested $2,000 hourly equivalent was not so large compared with the work performed that it required reduction. The recommendation also considered that Osborn had voluntarily requested less than half the amount allowed by the contingency agreement and that contingency-fee awards help account for the risk attorneys take in accepting Social Security cases.

The court also noted that counsel had previously received $1,445.40 under the Equal Access to Justice Act, a federal fee statute. When fees are awarded under both that statute and Section 406(b), counsel must return the smaller fee to the claimant. Accordingly, Osborn was required to return the $1,445.40 to Thomas.

Recommended disposition and objections

Magistrate Judge Gabriel W. Gorenstein recommended that counsel’s motion for $5,400 be granted and that counsel be ordered to return $1,445.40 to Thomas. This was a Report and Recommendation rather than a final ruling by the district judge. The parties had 14 days after service to file objections, and the opinion stated that requests for extensions should be directed to Judge Lewis Liman.