Madigan v. Berryhill

Background

Robert P. Madigan applied for disability insurance benefits in May 2012, alleging disability beginning December 13, 2011. An administrative law judge initially found that he was not entitled to benefits. After an earlier federal lawsuit and additional administrative proceedings, another administrative law judge again denied benefits in 2017.

Madigan filed this action in 2019. He asked the court to award benefits, while the Commissioner asked for another remand for further administrative proceedings. On March 29, 2022, the court granted the Commissioner’s motion to remand and denied Madigan’s motion for judgment on the pleadings. After the remand and additional hearings, an administrative law judge issued a fully favorable decision on March 28, 2023, awarding Madigan benefits.

The Social Security Administration’s April 25, 2023 notice of award stated that Madigan would receive $110,321.05 in past-due benefits and $2,658 per month going forward. The agency withheld 25 percent of the past-due benefits, totaling $38,942.25, for attorney fees. Victor Fusco then moved under 42 U.S.C. § 406(b) for $27,000 for his federal-court work in this action. The Commissioner did not take a specific position on the amount and left the reasonableness decision to the court.

Legal standard

Section 406(b) allows a court to approve a reasonable fee for an attorney’s representation in federal court when the claimant receives a favorable judgment. The fee cannot exceed 25 percent of the claimant’s past-due benefits. The court must begin with the contingency-fee agreement but may reduce the requested amount if it is unreasonable.

The court considered whether the fee was within the statutory cap, whether fraud or overreaching affected the agreement, the quality and results of the representation, any attorney-caused delay, and whether the award would be an improper windfall. A windfall is an excessive fee that is disproportionate to the work and risk involved.

Court’s analysis

The court found the motion timely because counsel filed it nine days after asserting that he received the notice of award. The requested $27,000 was below 25 percent of Madigan’s past-due benefits, and the court found no evidence of fraud or overreaching.

The court concluded that counsel achieved a successful result because the federal action led to a remand, followed by a fully favorable administrative decision. The court also found that the delay in the case was not intended to increase the fee and was associated with the COVID-19 pandemic and counsel’s substantial health problems. The decision to continue litigating after the Commissioner offered a stipulated remand caused some delay in Madigan’s receipt of benefits, but the court did not find that counsel acted to increase his fee.

The court found that counsel’s reported 85.5 hours of work was substantially above the 20-to-40-hour range generally approved for Social Security disability cases. It concluded that the case’s lengthy administrative record and more complicated procedural history justified about 40 hours, and perhaps slightly more, but not 85.5 hours. Still, the court found that the requested $27,000 was not an improper windfall because Madigan received substantial benefits, the outcome was uncertain until after briefing, and counsel had significant experience in Social Security disability cases. The court calculated that even 40 hours at the requested fee would produce a $675 effective hourly rate, which it found within the range approved in the circuit.

The court separately considered counsel’s failure to apply for fees under the Equal Access to Justice Act, a federal law that can require the government to pay a prevailing party’s reasonable fees when the government’s position was not substantially justified. Because the court had remanded the case after briefing, Madigan was a prevailing party for purposes of that law, even though the court did not award him benefits directly. The court concluded that counsel likely could have obtained up to $8,496 for about 40 hours of work performed before the Commissioner offered a stipulated remand on October 1, 2020, using the applicable 2020 hourly rate of $212.40.

Disposition

Judge Andrew E. Krause held that the full $27,000 Section 406(b) request was not reasonable because counsel’s failure to seek potentially available Equal Access to Justice Act fees harmed Madigan. The court reduced the request by $8,496 and found $18,504 to be reasonable. It therefore granted in part Madigan’s motion for attorney’s fees and awarded Fusco $18,504. The opinion does not state the disposition of the separate Section 406(b) motion filed in the earlier related proceeding.