M.F. v. Kijakazi

Background

M.F. applied for disability benefits under the Social Security Act in August 2015. An administrative law judge found that she was not disabled in February 2020, and the Appeals Council denied further administrative review. M.F. then sought judicial review. In 2021, the court granted M.F.’s motion for summary judgment, entered judgment and a remand in her favor, and later awarded attorney Steven Bruce $17,466.72 in Equal Access to Justice Act (EAJA) fees and $400 in costs. The Social Security Administration paid those amounts to Bruce.

Bruce, who practiced under the name People With Disabilities Foundation (PWDF), represented M.F. in federal court under a November 2020 agreement. That agreement assigned any court-awarded EAJA fees to the attorneys and required M.F. to pay reasonable expenses, including certain attorney fees on an hourly basis, if the case succeeded. It did not state that M.F. would personally owe additional fees under 42 U.S.C. § 406(b).

After the case returned to the agency, M.F. and Bruce signed a 2022 agreement for representation before the Social Security Administration. That agreement limited the administrative fee to the lesser of $6,000 or 25 percent of past-due benefits. A provision after the signatures stated that PWDF reserved the right to petition for fees above $6,000 but below 25 percent of past-due benefits, and to keep fees received from a third party. The agreement did not state that those additional fees would be sought from M.F. personally.

M.F. later prevailed before the agency and received an award of $183,414 in past-due benefits. At Bruce’s request, she paid him $12,987 in November 2023. In January 2024, Bruce moved for fees under Section 406(b), which permits a court to award a reasonable fee for successful representation in judicial proceedings, subject to a cap of 25 percent of the past-due benefits. His motion did not initially include the fee agreements and was not served on M.F. After the court requested the agreements and ordered service, Bruce also moved to withdraw as counsel and moved to strike a declaration filed by M.F. He separately sought leave to file a sur-reply.

Analysis

The court explained that Social Security cases can involve three types of attorney fees: Section 406(a) fees for administrative proceedings, EAJA fees generally paid by the government after a claimant prevails in court, and Section 406(b) fees for successful representation in court, which are paid by the claimant from past-due benefits. An attorney may receive both EAJA and Section 406(b) fees, but must refund the claimant the amount of the smaller fee; a Section 406(b) award must therefore be reduced by EAJA fees already paid.

The court presumed that a Section 406(b) motion could be filed in the district court after a successful remand to the agency. It nevertheless denied Bruce’s request because the 2020 agreement did not support seeking additional fees from M.F. The agreement expressly addressed EAJA fees and expenses but did not say that M.F. would personally pay further fees under Section 406(b) or another provision.

The court also found that the 2022 agreement could reasonably have led M.F. to understand that her maximum personal fee obligation would be $6,000. The provision reserving the right to seek fees above $6,000 could have referred to fees sought from the government rather than from M.F., and it did not say that the additional fees would be sought from her personally. The court further found that M.F. had done most of the work on remand and that the $12,987 already paid was reasonable compensation for the work Bruce performed on remand.

The court noted concerns about Bruce’s handling of the matter, including the lack of initial notice to M.F. that he was seeking money from her, his failure to provide the relevant agreement with his motion, and issues involving exhibits filed with the court. Based on the record and M.F.’s statements, the court found that Bruce had already been sufficiently compensated through the EAJA fees and denied his Section 406(b) fee motion.

Rulings

The court granted Bruce’s motion to withdraw as counsel because of the conflict of interest created by his request for additional fees from M.F. It denied the motion to strike M.F.’s declaration because she should have an opportunity to be heard while Bruce was seeking fees from her. It denied Bruce’s motion for leave to file a sur-reply because he did not attach the proposed sur-reply. The court ordered Bruce to provide a copy of the order to each member of PWDF’s board of directors.