The syllabus of today’s unanimous Supreme Court opinion in Culbertson v. Berryhill:
The Social Security Act regulates the fees that attorneys may charge claimants seeking Title II benefits for representation both before the Social Security Administration and in federal court. For representa- tion in administrative proceedings, the Act provides two ways to de- termine fees. If a fee agreement exists, fees are capped at the lesser of 25% of past-due benefits or a set dollar amount—currently $6,000. 42 U. S. C. §406(a)(2)(A). Absent an agreement, the agency may set any “reasonable” fee. §406(a)(1). In either case, the agency is re- quired to withhold up to 25% of past-due benefits for direct payment of any fee. §406(a)(4). For representation in court proceedings, fees are capped at 25% of past-due benefits, and the agency has authority to withhold such benefits to pay these fees. §406(b)(1)(A).
Petitioner Culbertson represented Katrina Wood in Social Security disability benefit proceedings before the agency and in District Court. The agency ultimately awarded Wood past-due benefits, withheld 25% of those benefits to pay any attorney’s fees, and awarded Culbertson fees under §406(a) for representation before the agency. Cul- bertson then moved for a separate fee award under §406(b) for the court proceedings, requesting a full 25% of past-due benefits. The District Court granted the request, but only in part, because Culbertson did not subtract the amount he had already received under §406(a) for his agency-level representation. The Eleventh Circuit af- firmed, holding that the 25% limit under §406(b) applies to the total fees awarded under both §§406(a) and (b).
Held: Section 406(b)(1)(A)’s 25% cap applies only to fees for court representation and not to the aggregate fees awarded under §§406(a) and (b). Pp. 5–9.
(a) Section 406(b) provides that a court rendering a favorable judgment to a claimant “represented before the court by an attorney” may award “a reasonable fee for such representation, not in excess of 25 percent” of past-due benefits. Here, the adjective “such,” which means “[o]f the kind or degree already described or implied,” refers to the only form of representation “already described” in §406(b)—i.e., “represent[ation] before the court.” Thus, the 25% cap applies only to fees for representation before the court, not the agency.
Subsections (a) and (b) address different stages of the representa- tion and use different methods for calculating fees. Given this statutory structure, applying §406(b)’s 25% cap on court-stage fees to §406(a) agency-stage fees, or the aggregate of §§406(a) and (b) fees, would make little sense. For example, such a reading would subject §406(a)(1)’s reasonableness limitation to §406(b)’s 25% cap—a limitation not included in the relevant provision of the statute. Had Congress wanted agency-stage fees to be capped at 25%, it presumably would have said so directly in subsection (a). Pp. 5–7.
(b) The fact that the agency presently withholds a single pool of 25% of past-due benefits for direct payment of agency and court fees does not support an aggregate reading. The statutory text provides for two pools of money for direct payment of fees. See §§406(a)(4), (b)(1)(A). The agency’s choice to withhold only one pool of 25% of past-due benefits does not alter this text. More fundamentally, the amount of past-due benefits that the agency can withhold for direct payment does not delimit the amount of fees that can be approved for representation before the agency or the court. Pp. 7–9.
861 F. 3d 1197, reversed and remanded.
Am I understanding this correctly? Let's say claimant has 100k in back pay. Attorney can get 25%/capped at 6k from SSA (6k) and also get 25% w/NO cap from federal court (25k)...for a total of 31k?
ReplyDelete@12:57 - Actually, it would be 25% for administrative work before the Agency which would be $25,000 because there wouldn't be a cap of $6,000 in the event of an appeal ($6k cap only applies to decisions through the 1st administrative hearing if you're using a two tiered fee agreement). And then you get 25% for the federal court work (another $25,000) minus the EAJA award which you have to refund.
ReplyDeleteSo, $50,000 fee minus the EAJA award of about $4,000. Or about $46,000.
I am actually surprised that the court allowed what amounts to a 50% fee. I'm also surprised there are attorneys out there asking for it. To me, that seems pretty excessive. That said, the language in the statute is pretty clear and it does look like SCOTUS got it right as far as statutory interpretation. I would expect to see Congress perhaps change the language to account for this though.
Keep in mind however that the Court notes that SSA is only required to withhold the 25% under 406(a). They won't withhold the whole 50% so you'll get the 25% (which you have to petition and wait for) and then you'll need to recover the other 25% from the claimant him/herself. My guess is that the odds of actually recovering that additional money from the claimant in full are slim and none.
Yup!
ReplyDelete@3:08PM
ReplyDeleteI agree that this is the Court's holding. I also got the impression that the Court agreed with the Appellee in the sense that the aggregate cap was what Congress was trying to do, but could not go beyond the plain wording of the statute. I think they made it fairly clear that they were inviting Congress to correct this fairly quickly.
Does anyone know how to find a link to the fee Contract, which the Court had before it?
ReplyDeleteI don't see why attorneys who hang onto a case for 4-10 years shouldn't be entitled to 50% of the fee. The attorney has all the risk on a SSDI/SSI case. If the rules are easy to deal with then the claimants can go at it alone. The market pays what the market will bear.
ReplyDelete@3:08
ReplyDeleteThe Court didn't grant a 50% fee, they remanded the matter, instructing the 11th Circuit and District Court that there is not a cumulative cap. Now either the Circuit Court or District Court will determine the reasonableness of the requested fee, consistent with the statute.
@4:58
I'm curious what the intent you are referring to is. If a cumulative cap were established, it would block representation in most cases. That seems contrary to the intent of Congress, given claimants have the right to judicial review.
@5:03
No, but POMS GN 03940.003 outlines the prerequisites of a valid fee agreement. You could review that and get a general sense of it.
@5:06
Risk is a factor that supports the reasonableness of a fee, as are the services rendered. But the attorney does not bare "all the risk." Claimants spend years of their lives paying for medical treatment and it is pretty rare if at the end of the claim a claimant is not in exceptionally worse financial status than at the start of the process. On the other hand, the attorney is not limited to 50%. Under the petition process, it is a "reasonable" fee under 406(a), and a "reasonable" fee limited to 25 percent under 406(b). That means, in theory, fees awarded under the two statutes could exceed 50 percent.
I love how it goes from one extreme to the other here. "Poor Claimants are losing everything, destitute, foreclosed, it is an outrage!!!! GIVE ME MY 50% YEaaahhhh Baby!!!!!
ReplyDeleteIt is truly all about the Claimant isn't it!!!! hahahahahahaha
@9:14
ReplyDeleteI'm not getting that sense at all from the comments above. I'd be curious to know where you are getting that sentiment. As a Claimant attorney myself, I would never look to take half of my client's benefits as payment of a fee. To me, that is excessive and borderline unconscionable. Moreover, I think it would be a tough sell to tell my client that I'm taking half (or more than half) of their back pay as my fee. There's been times when my clients don't even feel happy paying the $6,000 cap when they're getting $50,000 in back pay. How quickly they forget how much work you did when the money finally comes in. I can't imagine the words that would come out of my client's mouth if I told them that I was taking half of their back pay or how I could even justify it to that person after they stop cussing at me and ripping me a new one.
And good luck getting a positive review or referrals after. If there's one thing I've noticed in this business it's that claimants tend to seek out each other and it's a close knit community of sorts. Especially in rural areas like where I practice. They know what each other is going through and how difficult it can be to be disabled, live in pain, and be rejected by SSA. They offer moral support to each other quite often. Many even end up living together and a few even get married. As a result, you can be damn sure they talk to each other about the representatives they have or had before the agency. I've found that more than any other area of law, keeping disability claimants happy is both difficult and vitally important if you expect to do this kind of work for a long time.
I don't think it's a coincidence that after a client expresses extreme joy and satisfaction with my work, I get several new client calls the following day or two afterwards. I imagine that the reverse is also true if you really piss one off and asking for half of their benefits would probably do it.
Commenters do not understand the most basic thing. (a) fee petition fees can be in any amount, including for all the money in the universe. Thus, under the law, the agency can award a trillion dollars under (a) and a court can award at most 25% of PDB under (b). But it does not matter. The agency only withholds 25% for (a) and (b). Cannot get blood from a stone. Most reps are utterly ignorant about fees. Culbertson himself is a shady actor. His contract does not allow him to collect more than 25% (a) and (b) together. Culberson must take nothing more under his contract. Culbertson used the 11th Cir. net fee method to avoid collecting from his client more than 25% of PDB.
ReplyDeleteI tell my attorneys that if you want to get rich then probably SSD/SSI advocacy is not the way to go.
ReplyDelete"The market pays what the market will bear.
5:06 PM, January 08, 2019."
Exactly. I like the legal term fair market value (FMV). Most attorneys (and doctors) would agree probably everybody is overpaid. But it is what the market will bear.
What troubles me is simple - Where do all these numbers and percentages come from?
For example, California workers comp attorneys get 15% max (but no $6000 cap). SSD reps get 25% (but $6000 cap max before the AC). As a former math nerd, I just simply don't understand where these insurance companies come up with these numbers or percentages.
Like anon 5:06 stated. I would not pay a SSD attorney more than say 30-40 percent because it really is not entirely hard. But if a claimant wants to hire an attorney at over 50 percent then why would the SSA object?
The 25% and $6000 cap is simply a design to discourage claimants from getting attorneys. And these dumb recent rules like the 5-day rule is to make an attorneys job harder.
The SSA is slick but not that slick.
Some reps do it this way, foregoing the two-tier 25% 406(a) approach:
ReplyDelete"There are not “two pools of 25%.” There is just 25% withheld, but this ruling is most useful where EAJA fees exceed 406(a) fees, such as the following example:
25% of backpay withheld = $8000 ($32,000 total back-pay)
EAJA fees = $7000
406(a) fees (statutory limit) = $6000
SSA pays $7000 EAJA. We request $8000 in 406(b) less the $7000 already paid in EAJA = $1000 net from withholding. SSA pays us the $1000 in 406(b) fees out of the $8000 withheld (EAJA fees are paid by SSA, not from Client’s withholding), which leaves $7000 in withholding out of which to pay the $6000 406(a) fee. The remaining $1000 in withholding ($8000 - $1000 - $6000 = $1000) is returned to the Client.
Thus, we receive more than 25% ($7000 EAJA + $1000 406b + $6000 406a), but the Client pays less than 25% ($6000 406a + $1000 406b = $7000) and is returned the other $1000 withheld. The difference is that SSA, not the Client, pays EAJA fees.
Problems arise where 406(a) fees exceed EAJA, or where EAJA fees are confiscated under Ratliff, in which case we don’t subtract them from 406(b). In those situations we explain to Clients that we’ve been awarded fees in excess of what was withheld. Some clients, particularly if they’ve received a large backpay, don’t mind paying it. If they can’t or don’t pay it, we don’t push them.
SSA is supposed to withhold 25% and usually the amount is indicated in the Notice of Award. We’ve had a number of cases, however, where, after paying from withholding either 406(a) ($6000) or 406(b) fees ($1000 in the above example) SSA returns the balance of withholding to the Client without realizing that in our circuit the 25% withheld is subject to both 406(a) and 406(b). In those situations SSA considers it a “mistake” and will withhold from future monthly benefits. I’m hoping the Culbertson decision will clarify and streamline fee payments because it should now be the same in all circuits."
@1:31 Exactly. None of us that do Federal Court are interested in collecting from the client any money beyond the 25% withheld. For us this ruling will just be a way to reduce some of the EAJA fee offsetting.
ReplyDeleteAs I understand it, there is not, in the real world, a 50% fee.
ReplyDeleteWhat can happen is that a case is remanded and attorney then seeks an EAJA fee, say $5,000, which is paid.
After remand, the case is won and the back award is, lets just say, $100,000. Rep then first seeks an Administrative fee of $25,000 out of the amount withheld for just the Administrative time. If granted, itself a big if, Rep ends up with $31,000 total, 25 form Administrative and $6,000 EAJA. This is more than 25% but client only pays 25%, the balance from the Government.
I have never seen, or tried to collect, a fee where I sought 25% from he back award for Administrative Fees and a separate 25% from he Court, regardless of EAJA, for the simple reason that my fee agreement contract with my client limits me to $25 % of back benefits plus possible EAJA fees if for a different period.
Now, could I agree AHEAD OF TIME with my client that my fee was 25% of back benefits for Administrative time plus 25% of back benefits in addition for time spent in Court. Under Culbertson, I think I could but I don't think anyone ever wood. In any event, if they did, the Agency still only withholds 25% and you would have to look to the client to directly pay the balance. Finally, the Agency and the Court still have to decide on the reasonableness of the fee which might not permit that much payment.