Cutajar v. Commissioner of Social Security

Background

Micky Cutajar sought Disability Insurance Benefits and Supplemental Security Income. After an Administrative Law Judge denied the applications and the Social Security Administration’s Appeals Council declined review, Cutajar filed this federal case. The parties stipulated to a remand under sentence four of 42 U.S.C. § 405(g), and judgment was entered on December 30, 2019.

After the remand, Cutajar received $143,610 in Disability Insurance Benefits for April 2016 through December 2020. The Social Security Administration withheld 25% of the past-due benefits, or $35,902.50, for possible attorney’s fees. Cutajar’s attorney, Howard D. Olinsky of the Olinsky Law Group, had previously received $7,323.44 under the Equal Access to Justice Act.

Fee request and legal standard

Olinsky moved for $35,902.50 under 42 U.S.C. § 406(b)(1), the provision allowing a court to approve a reasonable fee for representation in federal court in a successful Social Security case. The requested fee could not exceed 25% of the past-due benefits. The court explained that it had to review the contingency-fee agreement independently and could reduce the requested amount if it was unreasonable.

The court considered whether the fee was within the statutory limit, whether the agreement resulted from fraud or overreaching, whether counsel delayed the case, whether the fee was out of proportion to the representation and results, and whether it would be a windfall compared with the time spent. A lawyer may receive awards under both the Equal Access to Justice Act and Section 406(b), but must refund the smaller fee to the claimant.

Court’s analysis

The court found that the requested amount matched the contingency-fee agreement, and that there was no evidence of fraud or overreaching. It also found no unreasonable delay. The court considered Olinsky experienced in Social Security cases and found the written submissions specific and well supported.

Olinsky reported 39.5 hours of work, including 32.2 attorney hours and 7.3 paralegal hours. The court found the number of hours reasonable. But, after accounting for the paralegal time at $100 per hour, the effective attorney rate would have been $1,092.31. The court found that rate would constitute a windfall. It concluded that $18,000 adequately compensated counsel for the time spent, the risks of the contingency representation, and the successful result.

The court also denied counsel’s request to place the previously awarded Equal Access to Justice Act fees in escrow for the hearing representative. It found no authority for that procedure and stated that controlling law required counsel to refund the smaller fee to Cutajar.

Disposition

Judge Stewart D. Aaron’s order states that counsel’s motion for attorney’s fees was GRANTED IN PART and DENIED IN PART. Counsel was awarded $18,000. Upon receiving that amount, counsel was ordered to refund the previously awarded Equal Access to Justice Act fees of $7,323.44 directly to Cutajar.