Major 9th Circuit Decision On Attorney Fees

The Ninth Circuit Court of Appeals has issued an important opinion in Crawford v. Astrue, holding that:

We read Gisbrecht not to prohibit a district court from making lodestar-type calculations, but only from relying exclusively on such calculations and refusing to consider the contingent-fee agreement. Here, the district court noted that Gisbrecht controls, and considered the contingent-fee agreements. The district court, however, concluded that substantial reductions in the fees under those agreements were necessary for the fees to meet the statutory standard of reasonableness. Those rulings complied with the requirements of Gisbrecht.

Unlike the dissent, we do not read the Supreme Court’s Gisbrecht opinion as mandating any particular procedure or format that the district courts must follow in determining a reasonable attorney fee in social security cases. The Court did not, as the dissent apparently concludes, prescribe that in every case the district court mechanically must begin its analysis with the twenty-five percent contingent fee and then make any reduction in that amount that appears appropriate in the particular case.

As we have noted above, what Gisbrecht held was that “§ 406(b) does not displace contingent-fee agreements within the statutory ceiling; instead, § 406(b) instructs courts to review for reasonableness fees yielded by those agreements.” 535 U.S. at 808. The methodology by which a district makes such reasonableness determinations is for that court to select in the exercise of its sound discretion. In making these determinations, it would be preferable for a district court to begin with the contingency-fee agreement and decrease from there, rather than increase from a lodestar calculation. It does not seem to be an abuse of discretion, however, to use the latter approach as long as the court takes the necessary factors into consideration.

I am not going to the trouble of explaining this. If you do not understand it, you probably would not care anyway.

Employment Levels At Social Security

The Office of Personnel Management has released figures showing the number of employees at federal agencies as of June 2008. Below is the June 2008 figure for Social Security with the numbers from earlier dates for comparison. Note that the number of employees at Social Security went up by 5.2% between March and June of this year and are back to the same level they were when Democrats became the majority party in Congress.

• June 2008 63,622
  
• March 2008 60,465
  
• December 2007 61,822
• September 2007 62,407
• June 2007 62,530
• March 2007 61,867
• December 2006 63,410
• September 2006 63,647
• September 2005 66,147
• September 2004 65,258
• September 2003 64,903
• September 2002 64,648
• September 2001 65,377
• September 2000 64,521
• September 1999 63,957
• September 1998 65,629

Continuing Funding Bill Passes House Of Representatives

The House of Representatives has passed a Continuing Resolution (CR) to keep the government operating until appropriations bills can be passed. This will allow government agencies to spend money at the same rate as under the 2008 appropriations acts, which expire on September 30. until March 6, 2009. There had been hope that Social Security would be allowed to spend money at a higher rate than that, but, as best I can tell, Social Security did not receive such a dispensation from the House of Representatives.

My Thoughts About NPRM On Representation -- Part II, Mandatory Direct Deposit

I am still wading through Social Security's Notice of Proposed Rule-Making (NPRM) on the representation of claimants. I see many problems. Here is my second installment on this subject.

The proposal would make direct deposit of fees for representing claimants mandatory. Most attorneys I know would be delighted to receive their fees by direct deposit, except for one problem. How would they know which direct deposit goes with which client? The Department of the Treasury is not sending enough information with direct deposits to allow identification of the client involved. This is already a pain when we deal with payments under the Equal Access to Justice Act (EAJA), but we receive far fewer of those checks. The current maximum fee, after deduction of the user fee is $5,221. If I receive a direct deposit for $5,221 I have no idea what client the fee is for. Social Security's response to this question to this point seems to have been "Uh, uh, uh, why don't you ask Treasury?" I find that attitude unhelpful.

Treasury is not the one proposing this regulation. I am not sure how much clout Social Security will have in getting Treasury to resolve this problem, but I am pretty sure that it is more clout than I and others who represent Social Security claimants will have with Treasury. Social Security needs to get this resolved before they make direct deposit of fees for representing claimants mandatory.

You may comment on this proposal online and I encourage you to do so. This is a major proposal. Everyone who represents Social Security claimants needs to be studying it carefully and submitting comments.

Totalization Agreement With Denmark To Go Into Effect

Social Security is publishing a notice in the Federal Register tomorrow that a totalization agreement with Denmark goes into effect on October 1, 2008.

Update. It has not been published in the Federal Register.

Social Security And Voter Registration

Social Security is planning to take its Social Security number database offline for routine maintenance from October 10 to 13. This is a matter of concern to the California Secretary of State because California is using the database to verify voter registration. Apparently, eleven other states would be similarly affected. Senator Feinstein has written to the Commissioner of Social Security to ask that the maintenance be delayed until after voter registration closes.

UNUM Trial To Begin

From a press release:

Trial begins today in federal district court in Boston against insurance giant Unum Group (NYSE: UNM - News) on whether Unum is dumping tens of thousands of disability claims onto the overburdened Social Security system, costing the government millions of dollars.

The court is hearing a "qui tam" lawsuit brought by a whistleblower on behalf of the federal government involving Unum's alleged practice of requiring claimants to file first for Social Security Disability Insurance benefits even when they clearly didn't qualify. If they didn't apply to Social Security, Unum would cut their benefits.

Social Security has much stricter criteria for disability benefits than private insurers. To qualify for disability payments from private insurers, people must be unable to perform their current job; to qualify for Social Security benefits, a claimant needs to be unable to work at all.

"Our lawsuit exposes a practice that creates additional burden on an already overwhelmed Social Security program and also hurts taxpayers," said Colette G. Matzzie, a Washington, D.C., attorney with Phillips & Cohen LLP, which represents the whistleblower. "We're confident that the court will find merit in our case."

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Strategic Plan Released

The Social Security Administration has released its new strategic plan for fiscal years 2008 to 2013. The document shows that the agency's workload will increase significantly in coming years. I see some laudable goals for improved customer service. However, I see no plan that has any hope of coping with the current workload, much less an increased workload. On the whole, this is not a plan. It is hardly a fig leaf to cover the lack of a plan.

The plan does indicate that Social Security plans to spend money to encourage people to save. That is another laudable goal, but such a program could also be used to scare people about the future of Social Security, which, probably, is the reason for the program.

NPRM On Representation -- Part I

I keep trying to wade through Social Security's Notice of Proposed Rule-Making (NPRM) on the representation of claimants. The proposal seem problematic in many respects. I will lay out the problems I see in several posts.

The most serious concerns I have relate to the following language in the proposed regulations (emphasis added):

Direct payment to entities. We will only make direct payment to an entity that provides the following attestations in its request for direct payment of fees:

(1) The entity must attest that it is in possession of a signed statement from each attorney or non-attorney who has performed any representational services for the claim in question that includes the following:

(i) The attorney or non-attorney has performed all representational services on behalf of the entity,

(ii) Any fees paid pursuant to the services the attorney or non-attorney have provided should be paid directly to the entity, and

(iii) The attorney or non-attorney representative receives compensation for the services provided directly from the entity.

(2) The entity must attest that all individuals who have provided representational services on the claim in question are individuals who qualify for direct payment under the Act or the direct payment demonstration project, as defined in § 404.1717.

First, this talks about a signed statement from "each attorney or non-attorney representative" and about "all individuals who have provided representational services" which I would take to mean that Social Security recognizes that at a law firm or other entity representing Social Security claimants more than one person may be working on a client's case. So how does one explain the part that says that there must be an attestation that "The attorney or non-attorney has performed all representational services on behalf of the entity"? This would mean that only one person at a firm must do all the "representational services" on the case or the firm would be ineligible for fee withholding. This is contradictory. I cannot figure out what Social Security means.

Second, what does this "representational services" language mean? The proposed regulations include a list of definitions of terms used. I will talk about those confusing definitions later but "representational services" was not given any kind of definition, even a confusing one. This is a key term. Without knowing what Social Security means by "representational services", I do not know what they mean by this proposal. If a legal assistant who works for me calls Social Security about a payment issue, is that a "representational service"? If so, my firm is not eligible for direct payment of a fee unless that legal assistant qualifies under the ongoing experiment in non-attorney withholding. What if I were to send that legal assistant to the hearing? (I would not do this, but others have.) Would that be a "representational service"? Where exactly is the dividing line here? I wonder if Social Security failed to define "representational service" because they did not know how.

Third, what does the "in possession of a signed statement" language mean if one of my firm's employees leaves to take a job with another firm and gives that firm a "signed statement"? Does the departure of an employee who has worked on a case automatically mean that my firm no longer has that person's signed statement. Can an employee withdraw his or her signed statement? Does each employee who has worked on a case have the ability to prevent my firm from receiving a fee after he or she leaves? Employees who quit or get fired can sometimes be spiteful. That sounds scary to me.

You may comment on this proposal online.