Laracuente v. Colvin

Background

Michelle Laracuente moved for approval of attorney fees under Section 406(b) of the Social Security Act. Her written contingency-fee agreement with the Law Offices of Charles E. Binder and Harry J. Binder, LLP, allowed the firm to seek a fee of up to 25% of the past-due benefits awarded to Laracuente and her family if the federal court remanded her case and she obtained benefits afterward.

The federal court had remanded Laracuente’s case to the Social Security Administration, which later found that she was disabled and entitled to benefits. The Social Security Administration withheld $16,742 from her past-due benefits for legal fees. The Binder Firm asked the court to approve payment of that amount. The Commissioner did not object, but noted that the firm had already received $6,000 under the Equal Access to Justice Act, a statute that can provide attorney fees when the government’s position was not substantially justified. Laracuente’s motion acknowledged that the firm would have to refund the $6,000 if the Section 406(b) request was granted.

Legal standard

Section 406(b) permits a court to approve a reasonable attorney fee for successful representation in court, subject to a limit of 25% of the claimant’s past-due benefits. The court independently reviews a contingency-fee agreement to ensure that it produces a reasonable result. The relevant considerations include whether the fee exceeds the 25% limit, whether the agreement resulted from fraud or overreaching, and whether the fee would be an improper windfall to the attorney.

Court’s analysis

The court concluded that all three considerations supported approval. The requested fee was within the 25% statutory limit. The record contained no evidence that the agreement resulted from fraud or overreaching. The court also found that the fee was not a windfall because the Binder Firm spent 30.70 hours on the matter, including preparing legal memoranda and researching a 1,424-page administrative record. The representation produced a favorable result: a remand followed by a Social Security finding that Laracuente was disabled and entitled to benefits.

The court also applied the rule requiring an attorney who receives fees under both Section 406(b) and the Equal Access to Justice Act to refund the smaller fee to the claimant, up to the point that the claimant receives all of the past-due benefits.

Disposition

The court granted Laracuente’s unopposed motion. It directed the Social Security Administration to approve payment of $16,742 to the Binder Firm and ordered the firm to promptly refund $6,000 to Laracuente upon receiving that payment.