Foley v. Commissioner of Social Security

Background

The Social Security Administration denied Toniann Foley’s disability-benefits claim, and an administrative law judge later denied it after a hearing. The Appeals Council denied further review. Foley then filed this federal case and retained Howard Olinsky as her lawyer.

The parties agreed to send the case back to the Social Security Administration for further proceedings. The agency later determined that Foley became disabled on February 15, 2015, and awarded her $103,809 in past-due benefits. Under Foley’s contingency-fee agreement, she agreed to pay Olinsky 25% of those past-due benefits. The Social Security Administration withheld $25,972.50 for attorney’s fees.

Foley’s lawyer moved for approval of that $25,972.50 fee under Section 406(b) of the Social Security Act. He also asked to place a previously awarded $5,960 Equal Access to Justice Act fee in escrow to cover any part of the Section 406(b) fee that the agency might not pay.

Attorney’s-Fee Analysis

The court explained that Section 406(b) permits a court to approve a reasonable fee for a lawyer’s federal-court representation, subject to a 25% limit on the claimant’s past-due benefits. The court must independently review a contingency-fee agreement, including whether it stays within the limit and whether fraud or improper pressure affected the agreement.

The requested fee equaled the 25% agreed upon by Foley and Olinsky. The Commissioner did not identify evidence of fraud or improper pressure. The court also found the fee reasonable because Olinsky reviewed a more-than-1,000-page administrative record, successfully obtained a remand, and ultimately secured past-due benefits for Foley. The court found no unreasonable delay.

The court also considered whether the fee would be an improper financial windfall. It noted the size of Foley’s benefits award, Olinsky’s effective hourly rate of $964.22, his experience handling Social Security cases, the efficient resolution of the federal case, and the risk that a contingency-fee lawyer might not be paid. The court concluded that the requested fee was reasonable.

Equal Access to Justice Act Fee

The court stated that a lawyer may receive awards under both the Equal Access to Justice Act and Section 406(b) for the same work, but must refund the smaller award to the claimant. The court rejected the escrow request because it found no authority allowing counsel to hold the Equal Access to Justice Act award for possible use toward the Section 406(b) fee. It also found that the request was based on speculation that the agency might not have enough funds to pay the Section 406(b) award.

Disposition

The court granted in part and denied in part the motion for attorney’s fees. It awarded Foley’s counsel $25,972.50. Upon receiving that amount, counsel was directed to refund the previously awarded $5,960 Equal Access to Justice Act fee to Foley. The request to hold that fee in escrow was denied.