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Walters v. Commissioner of Social Security

United States District Court, S.D. Ohio, Western Division

November 9, 2017



          Karen L. Litkovitz, United States Magistrate Judge.

         This matter is before the Court on plaintiffs motion for attorney fees under the Social Security Act, 42 U.S.C. § 406(b)(1). (Doc. 37). The Commissioner does not oppose plaintiffs request for fees. (Doc. 38).

         Following the District Court's reversal and remand of this case pursuant to Sentence Four of 42 U.S.C. § 405(g) (Doc. 35), the Commissioner awarded plaintiff disability benefits. (See Notice of Award, Doc. 37-3). Acting pursuant to § 406(b)(1)(A), the Commissioner withheld 25 percent of past due benefits, or $40, 540.75, as potential fees to be awarded to plaintiffs counsel, Mark Naegel, who represented plaintiff at both the administrative hearing level and on appeal before this Court. (See Doc. 37-2, Doc. 37-3 at 3). The Commissioner notified plaintiff that counsel could charge no more than $6, 000.00 under the parties' fee agreement for work performed at the administrative level and that the agency would continue to withhold the remaining balance of $34, 540.75 for work counsel performed before the federal court. (Doc. 37-3 at 3). From that amount, plaintiffs counsel seeks an award of $20, 540.75 in attorney fees under § 406(b)(1) for 131 hours of work performed before this Court and the United States Court of Appeals for the Sixth Circuit.

         Pursuant to 42 U.S.C. § 406(b)(1)(A), a court may award a prevailing claimant's attorney a reasonable fee not in excess of 25 percent of past due benefits recovered by the claimant for work done in a judicial proceeding. 42 U.S.C, § 406(b)(1)(A). See Horenstein v. Sec'y of HHS, 35 F.3d 261, 262 (6th Cir. 1994) (en banc) (court may award fees only for work performed before the court, and not before the Social Security Administration (SSA)). Fees are awarded from past due benefits withheld from the claimant by the Commissioner and may not exceed 25 percent of the total past due benefits. Gisbrecht v. Bamhart, 535 U.S. 789, 792 (2002).

         In determining the reasonableness of fees under § 406(b), the starting point is the contingency fee agreement between the claimant and counsel. Id. at 807. When a claimant has entered into a contingency fee agreement entitling counsel to 25 percent of past due benefits awarded, the Court presumes, subject to rebuttal, that the contract is reasonable, Rodriquez v. Bowen, 865 F.2d 739, 746 (6th Cir. 1989) (en banc). Within the 25 percent boundary, the attorney for the claimant must show that the fee sought is reasonable for the services rendered. Gisbrecht, 535 U.S. at 807. The Court should consider factors such as the character of the representation, the results achieved, the amount of time spent on the case, whether the attorney was responsible for any delay, and the attorney's normal hourly billing rate for non-contingent fee cases. Id. at 808. See also Rodriquez, 865 F.2d at 746. Additionally, the Court should consider instances of improper conduct or ineffectiveness of counsel; whether counsel would enjoy a windfall because of either an inordinately large award or due to minimal effort expended; and the degree of difficulty of the case. Hayes v. Sec 'y of HHS, 923 F.2d 418, 420, 422 (6th Cir. 1990); Rodriquez, 865 F.2d at 746, An award of 25 percent of past due benefits may be appropriate where counsel has overcome legal and factual obstacles to enhance the benefits awarded to the client; in contrast, such an award may not be warranted in a case submitted on boilerplate pleadings with no apparent legal research. Rodriguez, 865 F.2d at 747.

         An award of fees under § 406(b) is not improper merely because it results in an above-average hourly rate. Royzer v. Sec'y of HHS, 900 F.2d 981, 981-82 (6th Cir. 1990). As the Sixth Circuit determined:

It is not at all unusual for contingent fees to translate into large hourly rates if the rate is computed as the trial judge has computed it here [by dividing the hours worked into the amount of the requested fee]. In assessing the reasonableness of a contingent fee award, we cannot ignore the fact that the attorney will not prevail every time. The hourly rate in the next contingent fee case will be zero, unless benefits are awarded. Contingent fees generally overcompensate in some cases and undercompensate in others. It is the nature of the beast.

Id. at 981. "[A] hypothetical hourly rate that is less than twice the standard rate is per se reasonable, and a hypothetical hourly rate that is equal to or greater than twice the standard rate may well be reasonable." Hayes, 923 F.2d at 422.

         Here, the fee of $20, 540.75 requested by plaintiff falls within the 25 percent boundary. Thus, the issue is whether the requested fee is reasonable. Gisbrecht, 535 U.S. at 807. Plaintiff asserts the requested fee is reasonable given her attorney's background and experience, the contingency fee agreement, and counsel's success in achieving a favorable result on remand before the Commissioner. (Doc. 37). Plaintiff has submitted counsel's statement in which counsel asserts he has represented social security claimants since 1980 both during the administrative claims process and in appeals to the federal district and appellate courts. (Doc. 37-6). Plaintiff has also submitted a copy of the contingency fee agreement she entered into with counsel under which she agreed to pay counsel a contingency fee of 25 percent of past due benefits. (Doc. 37-4). In addition, plaintiff has attached itemized billing sheets demonstrating that her attorney performed a total of 131 hours of work on the case in the District Court and on appeal to the Sixth Circuit Court of Appeals. (Doc. 37-6). Plaintiff requests that the Court award a total of $20, 540.75 in attorney fees from the 25 percent in past due benefits - $40, 540.75 - which the SSA withheld for the payment of such fees. (Doc. 37-3). As stated above, the Commissioner has no objection to the fee request. (Doc. 38).

         Dividing the requested fee of $20, 540.75 by the 131 hours counsel worked on the case before the federal courts produces a hypothetical hourly rate of $156.80. In determining whether counsel "would enjoy a windfall because of either an inordinately large benefit or from minimal effort expended, " Hayes, 923 F.2d at 422, the Court notes that "a windfall can never occur when, in a case where a contingent fee contract exists, the hypothetical hourly rate determined by dividing the number of hours worked for the claimant into the amount of the fee permitted under the contract is less than twice the standard rate for such work in the relevant market." Id. As the Sixth Circuit explained in Hayes:

[A] multiplier of 2 is appropriate as a floor in light of indications that social security attorneys are successful in approximately 50% of the cases they file in the courts. Without a multiplier, a strict hourly rate limitation would insure that social security attorneys would not, averaged over many cases, be compensated adequately.
A calculation of a hypothetical hourly rate that is twice the standard rate is a starting point for conducting the Rodriquez analysis. It provides a floor, below which a district court has no basis for questioning, under the second part of Rodriquez's windfall rule for "minimal effort expended, " the reasonableness of the fee.


         Plaintiffs counsel has not provided his hourly rate for non-contingency fee cases. Although the Court will ordinarily adopt the hourly rate approved by the Court in connection with a fee petition under the EAJA, see, e.g., Edwards v. Comm 'r of Soc. Sec, No. 1:08-cv-815, 2011 WL 1002186, at *1 (S.D. Ohio Mar. 16, 2011), plaintiff did not submit an EAJA fee petition in this case. However, judges in this Court have approved significantly higher effective hourly rates in contemporaneous and comparable disability appeals than the $156.80 hourly rate requested by plaintiff here. See, e.g., Jodrey v. Comm'r of Soc. Sec, No. 1:12-cv-725, 2015 WL 799770, at *3-4 (S.D. Ohio Feb. 25, 2015) (Report and Recommendation) (Litkovitz, M.J.), adopted, 2015 WL 1285890 (S.D. Ohio Mar. 19, 2015) (Barrett, J.) (approving effective hourly rate of $700.00); Havens v. Comm'r of Soc. Sec, No. 2:12-cv-637, 2014 WL 5308595, at *2 (S.D. Ohio Oct. 16, 2014) (Report and Recommendation) (Kemp, M.J.), adopted, 2014 WL 6606342 (S.D. Ohio Nov. 20, 2014) (Smith, J.) (approving effective hourly rate of $750.00); Metz v. Comm'r, Soc. Sec. Admin., No. 3:11-cv-391, 2014 WL 1908512, at * 1-2 (S.D. Ohio May 12, 2014) (approving effective hourly rate of $780.25); Smith v. Comm'r of Soc. Sec, No. 2:10- cv-701, ...

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