Social Security/Representation by Lawyers and Others

From Wiki Law School does not provide legal advice. For educational purposes only.
< Social Security

Social Security
Table of Contents
Social Security Guide
Background Material on Social Security Law
Relationship of Past Earnings to Benefits Received
Benefit Adjustments, Reductions, Deductions, and Suspensions
Spouse Benefits
Child Benefits
Benefits Based on Disability
Administrative Claims Adjudication Process
Judicial Review of Agency Decisions
Representation by Lawyers and Others

Overview[edit | edit source]

The Social Security Act (the Act) allows those seeking benefits to designate others to represent them in their dealings with the Social Security Administration (the Agency). Such representation can be provided by a broad range of qualified persons; they need not be attorneys. However, no fee may be charged for representation without Agency approval. That is true whether or not funds are withheld to cover the fee and whether or not the decision is favorable to the claimant. The regulations do not, however, require Agency approval when the fee will be paid by an insurance company, nonprofit organization, or government agency with the claimant having no liability for any part of it. They also exempt fees sought by legal guardians or court-appointed representatives previously authorized by a court.

In federal court proceedings reviewing a Social Security Administration determination, claimants can proceed on their own, but any representation must be by an attorney. Fees for that service are subject to approval by the court. In most situations fees that either Agency or a court approves for payment to an attorney or a qualifying non-attorney representative are withheld from and paid from any resulting payment of past-due benefits, subject to a cap of 25%.

Since 2012 representatives who want direct payment of their fees out of past due benefits for work before the Agency have been required to use its electronic system for exchanging information and documents.

The Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412(d), which provides for award of attorney fees in actions against the United States, can also apply to benefit claims brought in federal court under the Social Security Act. Not all successful Social Security appeals qualify, but with those that do, an EAJA fee award can be advantageous to both claimant and the attorney.

Agency Regulation of Representation[edit | edit source]

Representation of those seeking benefits is subject to Social Security Administration oversight and regulation. The Agency has promulgated rules of conduct and standards of responsibility that apply to attorney and non-attorney representatives participating in its proceedings and has the authority to refuse to recognize, disqualify, or suspend a representative for failure to adhere to them. See generally 20 C.F.R. §§ 404.1740, 404.1745. These rules and standards were the subject of significant revision in 2018. See 83 Fed. Reg. 30849 (July 2, 2018). Agency exercise of that authority is not subject to judicial review. See Harry v. Colvin, 819 F. 3d 112 (5th Cir. 2016).

Additional rules apply to non-attorneys who seek the same treatment as attorneys in having their fees withheld from and paid out of awarded past-due benefits. See 20 C.F.R. § 404.1717. While no specific requirements apply to other non-attorneys that an individual might choose to appoint as representative, the Agency can override a claimant’s choice if it determines that the person selected is not capable of providing "valuable help" with the claim or is not of "good character and reputation." See 20 C.F.R. § 404.1705.

The designation of a representative must be reflected in a written statement, signed by the claimant and filed with the Agency. If the representative is a non-attorney, he or she must also sign that statement, accepting the responsibility. The Agency has a form (SSA - 1696) for accomplishing this but its use is not mandatory.

Fees Charged for Representation in Agency Proceedings[edit | edit source]

[edit | edit source]

Most cases of representation involve claims that, if successful, will result not only in the payment of future benefits but also yield an award of all past benefits that should have been paid. A fee agreement contingent on such success, promising the representative a percentage of those past-due benefits not to exceed 25% and subject to a cap (currently set at $6,000), that is filed with the Agency prior to the date of a favorable decision on the claim will, in most cases, be approved. While the Agency provides a model agreement, no specific form is required.

Approved through the Fee Petition Process[edit | edit source]

The lack of a qualifying fee agreement, the involvement of multiple representatives, or a failure to file a fee agreement in time does not preclude Agency approval of a fee. In situations where relief other than payment of benefits is sought or the fixed dollar cap is too low or the fee agreement fails in some other respect to meet the statutory requirements, the representative can still petition the Agency for approval of a "reasonable fee." Usually, the petition should be filed with the Agency after all services have been rendered. There is a standard form for such petitions (SSA-1560); however, a written statement in some other form that contains all the information required by the Agency will suffice.

Direct Payment to the Representative[edit | edit source]

If the representative is an attorney or a qualified non-attorney and the claim ultimately yields an award of past-due benefits, the Agency is authorized to withhold 25% of those benefits and make payment of approved fees directly to the representative. With a timely filed and approved fee agreement this should occur as a matter of course. For a fee approved through the petition process to qualify, the petition must be filed within 60 days following the notice of the decision awarding the claimant's benefits. Prior to 2004, this authority for direct payment was limited to attorneys and did not extend to Supplemental Security Income (SSI) benefits. In 2004, Congress established a 5-year test that broadened that authority to include both certain qualifying non-attorney representatives and also SSI claims. In 2010 those two extensions were made permanent.

All fees paid by the Agency out of past due benefits are reduced by a 6.3% assessment to cover administrative costs. That assessment was capped by the 2004 amendments at $75, but it is subject to subsequent automatic annual adjustment. The figure for 2018 is $93; for 2017 it was $91. 82 Fed. Reg. 50211 (Oct. 30, 2017).

In 2011, the Agency laid the foundation for requiring representatives who want direct payment of their fees out of past-due benefits to use its electronic services for exchanging information and documents. A rule now states that a representative must "conduct business with [the Agency] electronically at the times and in the manner which [it] prescribe[s] on matters for which the representative requests direct fee payment." See 76 Fed. Reg. 56,107 (Sept. 12, 2011) (codified at 20 C.F.R. § 404.1713). In 2012, the Agency followed up with a requirement that as of March 16, 2012, in disability cases all representatives requesting direct fee payment must file requests for reconsideration or for an ALJ hearing using its web portal. See 77 Fed. Reg. 4654 (Jan. 31, 2012); 77 Fed. Reg. 13,968 (March 8, 2012).

During 2017, the Agency made direct fee payments of over $1.2 billion for representation in over 380,000 Social Security cases (an average of over $3,000 per case).

Fees for Representation in Federal Court Awarded under the Social Security Act[edit | edit source]

Whenever a court renders a judgment favorable to a claimant under Title II (OASDI) or Title XVI (SSI) of the Social Security Act and the claimant was represented before the court by an attorney, the court may allow as part of its judgment a reasonable attorney's fee. That fee may not exceed 25% of the total past-due benefits resulting from the judgment and is paid out of those benefits. U.S. Court of Appeals circuits are split over whether this 25% limit applies only to fees awarded for federal court work or whether it limits all fees for representing a claimant, including those for representation before the Agency. Compare Morris v. Soc. Sec. Admin., 689 F.2d 495 (4th Cir. 1982); Dawson v. Finch, 425 F.2d 1192 (5th Cir. 1970); Wood v. Comm'r of Soc. Sec., 861 F.3d 1197 (11th Cir. 2017) (holding that the limit applies to administrative and court fees combined) with Clark v. Astrue, 529 F.3d 1211 (9th Cir. 2008); Wrenn ex rel. Wrenn v. Astrue, 525 F.3d 931 (10th Cir. 2008); Horenstein v. Sec’y of Health & Human Servs., 35 F.3d 261 (6th Cir. 1994) (en banc) (holding that it applies to court-awarded fees without regard to those awarded by the Agency). On May 21 2018, the U.S. Supreme Court granted certiorari in a case, Culbertson v. Berryhill, No. 17-773, that will enable it to resolve that circuit split. The Solicitor General urged the Court to do so, agreeing with the petitioner's position that the statutory cap on court-awarded fees does not impose a limit on aggregate fees for representation before court and the Agency.

There is agreement that the Agency and a reviewing court cannot award fees for representation before the other body. See Gardner v. Menendez, 373 F.2d 488 (1st Cir. 1967); Guido v. Schweiker, 775 F.2d 107 (3d Cir. 1985); Morris v. Social Sec. Admin., 689 F.2d 495 (4th Cir. 1982); Brown v. Sullivan, 917 F.2d 189 (5th Cir. 1990); Gowen v. Bowen, 855 F.2d 613 (8th Cir. 1988); MacDonald v. Weinberger, 512 F.2d 144 (9th Cir. 1975); Harris v. Sec. of Health and Human Services, 836 F.2d 496 (10th Cir. 1987). Nonetheless, courts do consider the Agency's award for administrative proceedings work before determining the reasonableness of the fee sought for representation before them.

In Hopkins v. Cohen, 390 U.S. 530 (1968), the Supreme Court construed the Act's 25% ceiling on attorney's fees, as encompassing not only to the benefits payable to the primary benefit claimant, but including, in addition, benefits payable as a consequence to other family members.

Since most court decisions favorable to the claimant produce a remand to the Agency rather than an outright reversal, the amount of the ultimate award and, indeed, whether there will be one remain uncertain until the Agency has completed its action. Only at that later point will a petition for fees under 42 U.S.C. § 406(b) be timely. Several circuit courts have held that the fee petition must be filed within a reasonable period of time after the attorney learns of the administrative award. See Walker v. Astrue, 593 F.3d 274 (3d Cir. 2010); Jackson v. Astrue, 705 F.3d 527 (5th Cir. 2013); McGraw v. Barnhart, 450 F.3d 493 (10th Cir.2006); Bergen v. Commissioner of Soc. Sec., 454 F.3d 1273 (11th Cir. 2006).

In Gisbrecht v. Barnhart, 535 U.S. 789 (2002), the Supreme Court resolved a prior split among the U.S. Court of Appeals circuits over the proper approach to determining the reasonableness of attorney's fees claimed under the Act for representation in court. Gisbrecht rejected the approach of a majority of the U.S. Court of Appeals circuits. Under a "lodestar" approach, those circuits had focused almost exclusively on the reasonable hourly rate for work of this type and the number of hours required for the representation. The courts that followed this approach gave little or no explicit recognition to the contingent fee agreement the claimant had signed, under which there would be no fee without the award of benefits. Under Gisbrecht the reasonableness determination begins with the contingent fee agreement rather than a baseline hourly rate. See Keller v. Comm'r of Soc. Sec., 759 F.3d 1282 (11th Cir. 2014). Nonetheless, the decision requires that the attorney demonstrate the reasonableness of that fee. Factors warranting a reduction include poor quality representation or a fee that is excessive in relation to the time spent on the case.

Difficult issues concern allocation of responsibility between the court and the Agency when success in pursuing a claim has involved both. This is true when an attorney has represented a claimant in earlier administrative stages prior to judicial review and also when the court remands a case to the Agency for further proceedings, and the attorney's representation in that subsequent administrative proceeding is the issue. Allocation issues also arise when different attorneys have been involved at different stages.

Prior to the 2004 amendments extending direct payment of attorney fees to SSI, the offset rules (under which SSI benefits received while an OASDI case is pending are subtracted from OASDI benefits subsequently awarded) reduced the amount of attorney fees payable in concurrent SSI and OASDI cases. See Burnett v. Heckler, 756 F.2d 621 (8th Cir. 1985). The Act now directs that fees for OASDI representation be calculated on past-due benefits prior to application of the SSI offset.

When the federal government administers supplementary SSI payments for a state, they are included in "past-due benefits." See 20 C.F.R. § 416.1503. But when the state chooses to administer its own payments, the state amounts are not included as "past-due benefits" for the purpose of calculating the fee. See Moriarty v. Colvin, 806 F.3d 664 (1st Cir. 2015).

Fees Awarded by the Court under the Equal Access to Justice Act[edit | edit source]

Overview[edit | edit source]

The Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412(d), which provides for award of attorney fees in actions against the United States, applies to actions brought in federal court under the Social Security Act. For a Social Security appeal to qualify four conditions must be met: (1) the plaintiff must be a prevailing party; (2) the government's position must be without substantial justification; (3) there must be no special circumstance warranting denial of fees; and (4) the petition for fees must be filed promptly. During both FY2016 and FY2017 the Social Security Administration paid out slightly more than $40 million per year in fees under the act.

Unlike fees awarded under the Social Security Act, those available under the Equal Access to Justice Act are not deducted from the claimant's recovery. In addition they are available directly following a court remand for further proceedings, further proceedings that may or may not yield benefits for the claimant. If and when the remand does yield benefits, the award of fees under the Social Security Act (usually a larger amount) will not be in addition to EAJA fees. Instead, the attorney will be required to pay the smaller of the two awards over to the claimant. See Parrish v. Comm'r of Soc. Sec., 698 F.3d 1215 (9th Cir. 2012).

Prior to Ratliff v. Astrue, 560 U.S. 586 (2010) courts were divided over whether fees awarded under the Act were payable to the attorney or the client. In Ratliff, the issue was whether the fee award was subject to a statutory offset to satisfy a client's pre-existing debt to the U.S. government. The Supreme Court held that the EAJA's plain language compelled a conclusion that the payment belonged to the client and was, therefore, subject to the offset.

Nothing in Ratliff itself cast doubt on the standard practice of attorneys' having their clients assign them future rights to an EAJA fee award. However, the Anti-Assignment Act ("AAA"), 31 U.S.C. § 3727, poses a problem. Several lower court decisions, including one in 2017 by the 6th Circuit, Kerr v. Comm'r of Soc. Sec., 874 F.3d 926 (6th Circ. 2017), have held that, unless the defense is waived by the Agency, the AAA renders such assignments invalid. In Kerr, and generally it seems, the Agency will waive this defense allowing payment of the EAJA fee pursuant to an assignment to the extent that the claimant has no outstanding debts owed the U.S. government. Some district courts have adopted the practice of directing that the EAJA award check be made out to the claimant, but mailed to the attorney to whom it has been assigned. See, e.g., Morris v. Berryhill, No. 4:16CV00830 JLH-BD (D. Ark. Oct. 26, 2017).

Core Requirements[edit | edit source]

The Agency's Action Must Not Be Substantially Justified[edit | edit source]

An award of attorney fees under the Equal Access to Justice Act (EAJA) is not authorized if the court finds that the position of the Agency was "substantially justified." A position that is later reversed by a court may, nonetheless, be "substantially justified." In Pierce v. Underwood, 487 U.S. 552 (1988), the Supreme Court held that the test is, in essence, one of reasonableness. The Court also held that an appellate court reviewing a district court's decision on this issue should employ an abuse-of-discretion standard.

The Claimant Must Be a Prevailing Party[edit | edit source]

Only a prevailing party is entitled to a fee award under the Equal Access to Justice Act (EAJA). When a court effectively reverses an Agency decision that denied benefits the prevailing party test is met. But many court orders that decline to affirm the Agency decision do not represent a clear victory for the claimant. Decisions that the Agency determination is not supported by the record or is in error on a point of law generally produce a remand to the Agency for further proceedings. Prior to the Supreme Court's decision in Shalala v. Schaefer, 509 U.S. 292 (1993), it was unclear whether a remand pursuant to sentence four of 42 U.S.C. § 405(g), qualified for an EAJA award until the results of that remand became clear. Shalala v. Schaefer held, in effect, that EAJA fees can be obtained for work done prior to a sentence four remand even if the claimant does not ultimately receive benefits.

Of course, when the change in outcome is, in part, a consequence of a change in the Act or regulations or some other shift in circumstance, EAJA requirements may not be met.

The EAJA does impose a wealth test on the prevailing party (assets under $2 million), but it has scant relevance to Social Security cases. See Sosebee v. Astrue, 494 F.3d 583 (7th Cir. 2007).

The Fee Application Must Be Promptly Filed[edit | edit source]

The Equal Access to Justice Act (EAJA) places a rigid time limit on attorney fee applications. They must be filed "within thirty days of final judgment in the action." That time limit is held to be jurisdictional. Its most troublesome element has proven to be how to interpret the phrase "final judgment."

A definition added to the Act in 1985 makes it clear that a judgment is final only after the time to appeal has expired. Prior to two Supreme Court decisions the lower federal courts had divided over how to interpret the phrase "final judgment" when judicial remand led to a subsequent favorable Agency decision. Some of these remand issues were resolved by the Supreme Court in Melkonyan v. Sullivan, 501 U.S. 89 (1991). In Melkonyan, the Court rejected the Agency's position that an administrative adjudication following remand could constitute the "final judgment" starting the thirty day limit. It held that the "final judgment" was that entered by a district court "affirming, modifying, or reversing" the Agency determination. However, in cases of remand upon the Agency's request to allow consideration of new evidence, the "final judgment" occurs only after the Agency has returned to court. The decision noted that in sentence six of 42 U.S.C. § 405(g) the Act requires the Agency to return to court following such "new evidence" remands. Consequently, with "sentence six" remands, the final judgment occurs only after the court has entered a judgment upon the Agency's return, and the time to appeal has expired. Subsequently, in Shalala v. Schaefer, 509 U.S. 292 (1993), the Supreme Court clarified the timing for an EAJA fee claim in connection with a remand pursuant to sentence four of 42 U.S.C. § 405(g). With a "sentence four" remand, the time begins to run with the expiration of the time for filing an appeal.

Given this sharp difference in the timing for a fee application, distinguishing between "sentence four" and "sentence six" remands is critical. In Jackson v. Chater, 99 F.3d 1086 (11th Cir. 1996), the Eleventh Circuit did hold, however, that it is possible for a remand to have a "dual basis" – that is, for it to be based, in part, on both "sentence four" and "sentence six" – and that in such a case where success on remand is not based solely upon "sentence four" reasons, the EAJA application may be filed after the judgment is entered following the remand proceedings.

A fee award under the Equal Access to Justice Act (EAJA) is the product of a statutory rate ($125 per hour, with a potential adjustment to reflect cost of living increases or other special factors) and the amount of time spent on the matter. See Sprinkle v. Colvin, 777 F.3d 421 (7th Cir. 2015). The fee is set by the court, and the reasonableness of the number of hours claimed by the attorney is subject to review. Any requested adjustments of the statutory rate may be a subject of dispute. Generally rejected as a special factor warranting upward adjustment is knowledge of Social Security law itself. Enhancement on the ground of special skills or expertise requires more than command of a specialized area of the law.

The EAJA permits fees at a higher market rate in cases where the government has acted in bad faith. The "bad faith" standard requires far more egregious conduct than is called for by the basic EAJA threshold of lacking "substantial justification."

The EAJA Award Amount[edit | edit source]

Can the EAJA Fee Cover Work before the Agency?[edit | edit source]

Only prevailing parties qualify for a fee award under the Equal Access to Justice Act (EAJA). But since a remand to the Agency is often the means by which a Social Security claimant prevails, the issue of whether it is appropriate for the ultimate fee award to include representation in that subsequent administrative proceeding has arisen.

In Sullivan v. Hudson, 490 U.S. 877 (1987), the Supreme Court held that an EAJA fee award could include such representation even though the government was not itself represented by counsel in the administrative proceeding. The proceedings were, the Court held, "adversarial" nonetheless, and being "adversarial" were within the scope of an EAJA fee award. Prior to that decision some lower federal courts had taken the contrary position.

Subsequently, in Shalala v. Schaefer, 509 U.S. 292 (1993), the Supreme Court largely eliminated the prospect for fees for administrative representation following a remand pursuant to sentence four of 42 U.S.C. § 405(g). Even though Sullivan v. Hudson had involved a sentence four remand, Shalala v. Schaefer held that in sentence four remands the district court should normally divest itself of jurisdiction upon ordering the remand. The filing for EAJA fees should occur at that point and cannot, as a consequence, include fees for representation upon remand. At least in theory, fees for administrative representation following remands pursuant to sentence six of 42 U.S.C. § 405(g) remain available following Shalala v. Schaefer.

Relationship to Fees Awarded under the Social Security Act[edit | edit source]

The same representation of a Social Security claimant can be the subject of an attorney fee award under the Equal Access to Justice Act (EAJA) and an award pursuant to the Social Security Act. Double recovery is barred. Beyond that simple principle, affirmative coordination is generally sought by the courts. Due to its limits the EAJA does not cover every successful Social Security appeal in federal court. Because of the different rates, when both the EAJA and Social Security Act do apply one may yield a larger award than the other. Since fee awards under the Social Security Act reduce benefits while EAJA awards do not, attorneys are encouraged by courts to apply for both. When fees under both acts are allowed, the smaller of the two is paid over to the claimant. See Parrish v. Comm'r of Soc. Sec., 698 F.3d 1215 (9th Cir. 2012). In these cases the EAJA is seen as augmenting rather than supplanting the fee provisions of the Social Security Act.

Additional Reimbursable Expenses[edit | edit source]

In addition to authorizing an award of attorney's fees, the Equal Access to Justice Act (EAJA) authorizes a court to award other reasonable expenses of the litigation. The EAJA lists some expense items (such as expert witnesses and studies). Courts have divided over whether that list is exhaustive or illustrative. Costs not listed by the EAJA that some courts will allow include photocopying, telephone, postage, and travel. The argument for awarding such expenses in addition to an attorney fee is strengthened when they are of a type normally charged to clients on top of the fee in the region where the matter is tried. See Vaughn v. Heckler, 860 F.2d 295 (8th Cir. 1988).

Applicability to Class Actions[edit | edit source]

Class actions often focus on prospective or injunctive relief. For that reason, they may present little basis for a fee award under the Social Security Act. Nothing in Its provision for an award of up to 25% of past due benefits resulting from successful representation, however, prevents an award in class actions yielding such relief. Because of the awkward fit of the Act's fee provisions to many class actions, the Equal Access to Justice Act (EAJA) is especially important to attorneys involved in such litigation. Applying the EAJA's "prevailing party" provisions and determining a reasonable fee can, of course, pose difficulty. See Hensley v. Eckerhart, 461 U.S. 424 (1983); Sorenson v. Mink, 239 F.3d 1140 (9th Cir. 2001); McDonald v. Sec’y of HHS, 884 F.2d 1468 (1st Cir. 1989).

Supporting and Elaborating References[edit | edit source]

Social Security Act:[edit | edit source]

Equal Access to Justice Act:[edit | edit source]

Anti-Assignment Act:[edit | edit source]

Regulations:[edit | edit source]

Social Security Rulings:[edit | edit source]

POMS:[edit | edit source]

Hallex:[edit | edit source]

Agency Guidance:[edit | edit source]

Selected Cases:[edit | edit source]

Social Security Act Fees[edit | edit source]

Equal Access to Justice Act Fees[edit | edit source]

Articles and Notes:[edit | edit source]

Social Security Act[edit | edit source]

  • Robert E. Rains, Professional Responsibility and Social Security Representation: The Myth of the State-Bar Bar to Compliance with Federal Rules on Production of Adverse Evidence, 92 Cornell L. Rev. 363 (2007)
  • Matthew Albanese, Essay: Reasonably Untimely: The Difficulty of Knowing When to File a Claim for Attorney's Fees in Social Security Disability Cases, and an Administrative Solution, 78 Geo. Wash. L. Rev. 1014 (2010)
  • Ann C. Chalstrom, Note, Collecting Attorney's Fees in Social Security Disputes: Procedures, Analysis, and Retroactive Application of Equal Access to Justice Act Timing Requirements, 5 Elder L.J. 117 (1997)
  • M. Wade Baughman, Note, Reasonable Attorney's Fees Under the Social Security Act: The Case for Contingency Agreements, 1997 U. Ill. L. Rev. 253

Equal Access to Justice Act[edit | edit source]

  • Lowell E. Baier, Reforming the Equal Access to Justice Act, 38 J. Legis. 1 (2012)
  • Ann C. Chalstrom, Note, Collecting Attorney's Fees in Social Security Disputes: Procedures, Analysis, and Retroactive Application of Equal Access to Justice Act Timing Requirements, 5 Elder L.J. 117 (1997)
  • Gregory C. Sisk, The Essentials of the Equal Access to Justice Act: Court Awards of Attorney's Fees for Unreasonable Government Conduct (Part One), 55 La. L. Rev. 217 (1994)
  • Dawn C. Bradshaw, Note, EAJA: An Analysis of the Final Judgment Requirement as Applied to Social Security Disability Cases, 58 Fordham L. Rev. 1269 (1990)
  • Comment, Institutionalizing an Experiment: The Extension of the Equal Access to Justice Act--Questions Resolved, Questions Remaining, 14 Fla. St. U.L. Rev. 925 (1987)