Garmendiz v. Berryhill

Background

Edward Garmendiz sought judicial review of a Social Security disability decision. In 2018, the court granted Garmendiz’s motion for judgment on the pleadings, vacated the Commissioner’s final administrative decision, and remanded the case for further administrative proceedings. The parties then agreed, and the court ordered, that Garmendiz receive $6,500 in attorney’s fees under the Equal Access to Justice Act for 35.2 hours of work performed between 2016 and 2018.

On remand, the Commissioner issued a favorable decision finding Garmendiz disabled as of his initial alleged onset date and awarding $203,676 in past-due benefits. Under a contingency-fee agreement, Garmendiz agreed to pay his counsel 25 percent of any past-due benefits as attorney’s fees.

Fee Request

Garmendiz’s counsel moved for $50,919 in fees under Section 406(b) of the Social Security Act. Counsel also asked the court to subtract the previously paid $6,500 in Equal Access to Justice Act fees from the Section 406(b) award, seeking a net award of $44,419.

Section 406(b) allows a court to award a reasonable fee after a judgment favorable to a Social Security claimant, subject to a cap of 25 percent of the claimant’s past-due benefits. Courts first consider the contingency-fee agreement and then test the requested fee for reasonableness. The court considered whether the agreement stayed within the 25-percent cap, whether there was fraud or overreaching, and whether the requested fee would create an unreasonable windfall.

Court’s Analysis

The court found that the requested fee was within the 25-percent cap and that there was no evidence of fraud or overreaching. It also found that 35.2 hours was a reasonable amount of time, that counsel had not unreasonably delayed the case, and that counsel had competently represented Garmendiz.

The court nevertheless found that the requested fee would produce an effective hourly rate of $1,446.56 and would be an unjustified windfall. It found no special circumstances supporting that rate. The court determined that an effective hourly rate of $500 was appropriate to compensate counsel for the work and the risk of the contingency-fee arrangement. Based on 35.2 hours, the court awarded $17,600.

Disposition

The court granted in part the motion for attorney’s fees and awarded $17,600 under Section 406(b). It denied counsel’s request to offset the $6,500 Equal Access to Justice Act award. The Commissioner was directed to pay the $17,600 to counsel, and counsel was ordered to refund the previously paid $6,500 directly to Garmendiz upon receiving the new award. The Clerk was directed to close the fee-motion docket entry.