Velez v. Commissioner of Social Security

Background

Jackeline Velez applied for disability insurance benefits and supplemental security income. An administrative law judge found that she was not entitled to benefits, and the Social Security Administration’s Appeals Council declined to review that decision. Velez then retained Daniel A. Osborn of Osborn Law, P.C. to represent her in federal court.

The parties later submitted an agreed order sending the case back to the Social Security Administration for further proceedings. After a second hearing, an administrative law judge found Velez disabled and entitled to benefits. The Social Security Administration issued a notice of award stating that it had withheld 25 percent of Velez’s past-due benefits, or $6,806.70, to pay fees to an authorized representative.

Velez’s agreement with Osborn provided that he would receive the greater of 25 percent of past-due benefits or an amount obtained under the Equal Access to Justice Act, subject to the applicable rules. The agreement also required Osborn to refund the smaller fee if he later received fees under 42 U.S.C. § 406(b). Osborn had already received $836.40 in fees under the Equal Access to Justice Act.

Timeliness

Section 406(b) allows a court to award a reasonable fee for an attorney’s representation of a Social Security claimant in federal court, subject to a limit of 25 percent of the claimant’s past-due benefits. Under the applicable federal rule, a fee request generally must be filed within 14 days after judgment. The Second Circuit has held that this period is extended until the claimant receives notice of the benefits award because the award amount is needed to calculate the maximum possible fee. The court also recognized that district courts may extend the filing period when circumstances warrant.

The benefits notice was dated May 18, 2020, and was presumed to have been received by Velez on May 21. Osborn did not receive it until June 17 because he was not Velez’s attorney during the administrative proceedings and the Social Security Administration sent the notice to the firm that represented her there. Osborn filed his fee motion on the same day he received the notice.

The court did not decide whether the filing period began when Velez received the notice or when Osborn received it. Instead, it extended the filing period because Osborn lacked the information needed to calculate the fee until he received the notice and acted immediately afterward. The court therefore deemed the motion timely.

Reasonableness of the Fee

The court next considered whether the requested $3,400 fee was reasonable. Osborn sought payment for 4.1 hours of work, and the requested amount was less than half of the contingency percentage allowed by his agreement with Velez. The court found no evidence of fraud or overreaching in the agreement.

The court also found that the fee was not a windfall. Osborn’s work contributed to the Commissioner’s decision to agree to a remand before briefing began, and there was no indication that he delayed the case to increase the past-due benefits or his fee. The requested amount produced an effective hourly rate of $829.27. Although that rate was at the high end of the range for similar cases, the court noted that other courts had approved similar or higher rates, including for Osborn. The court also considered the risk that contingency-fee counsel may receive no payment.

Ruling

Judge Andrew E. Krause granted the motion for attorney’s fees under Section 406(b) and awarded Osborn $3,400. The Commissioner was instructed to pay that amount to Daniel A. Osborn of Osborn Law, P.C. After receiving the award, Osborn must promptly refund Velez the $836.40 he had already received under the Equal Access to Justice Act.