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Sindell v. Commissioner of Social Security

United States District Court, W.D. Michigan, Southern Division

April 23, 2019

IAN SINDELL, Plaintiff,
v.
COMMISSIONER OF SOCIAL SECURITY, Defendant.

          Hon. Janet T. Neff Judge.

          REPORT AND RECOMMENDATION

          RAY KENT United States Magistrate Judge.

         This matter is before the Court on plaintiff's motion for an award of attorney fees pursuant to 42 U.S.C. § 406(b). (ECF No. 24). Defendant opposes the motion. For the reasons discussed below, the motion should be granted in part.

         I. Background

         The claimant and original plaintiff, Michelle Lyn Sindell, filed this action appealing the Commissioner's decision denying her benefits. See Compl. (ECF No. 1). Ms. Sindell passed away during the pendency of this action and her husband, Ian Sindell, was substituted in as plaintiff. See Order (ECF No. 26). Attorney Gennel Laluna-Shaeffer (“Schaeffer”)[1] represented both Ms. Sindell and Mr. Sindell as plaintiff in the federal court action. On August 8, 2017, the Court reversed and remanded the Commissioner's decision pursuant to sentence four of 42 U.S.C. § 405(g). See Opinion and Judgment (ECF Nos. 27 and 28). Plaintiff's counsel did not apply for an attorney's fee under the Equal Access to Justice Act, 28 U.S.C. § 2412 (“EAJA”).

         On remand, attorney Steven T. Parkman represented the plaintiff, Ian Sindell (on behalf of (“O/B/O”) Michelle Sindell) in the administrative proceedings. See Parkman Aff. (ECF No. 32-4). Ultimately, the Social Security Administration (SSA) awarded benefits to Ian Sindell O/B/O Michelle Sindell. On August 1, 2018, Ian Sindell received a letter from the SSA entitled “Important Information” (ECF No. 32-2), which the parties have treated as the “Notice of Award” (“Notice”). The Notice awarded Ian Sindell $39, 300.00 for past due benefits. Id. at PageID.884. The Notice stated that “[u]nder the fee agreement, the lawyer cannot charge you more than $6, 000.00 for his or her work” and advised Ian Sindell that:

Based on the law, we must withhold part of past-due benefits to pay an appointed representative. We cannot withhold more than 25 percent of the past-due benefits to pay an authorized fee. We withheld $6, 000.00 from Michell [sic] Sindell's past-due benefits to pay her representative [Attorney Parkman].

Id. at PageID.884-885. Finally, the Notice stated that Ian Sindell would soon receive a payment of $33, 264.00 “because we owed money to Michelle Sindell.” Id. at PageID.886.[2]

         In a letter to the SSA dated August 8, 2018, Attorney Parkman objected to the attorney fee withheld, stating that while $6, 000.00 was withheld for Section 406(a) fees for work performed in the administrative proceedings, “nothing was held for Section 406(b) fees” for work performed in the federal court. Parkman Letter (ECF No. 32-3). Attorney Parkman also stated that based on the past due benefits award of $39, 300.00, “$9, 825.00 should have been withheld pending order of the Court.” Id. at PageID.888.

         Attorney Schaeffer had a contingent fee agreement which set forth a fee of 25% of the past-due benefits, which in this case would be $9, 825.00. See Laluna-Schaeffer Aff. (ECF No. 32-6). In the “Federal Court Fee Contract, ” which was dated December 8, 2016, Michelle Sindell agreed in pertinent part that:

I understand that the Social Security Administration is supposed to hold out 25% of the past-due benefits and pay the approved fee to my attorney. If for any reason the SSA fails to withhold money from my past-due benefits for direct payment of the fee to my attorney, I promise to pay my attorney from the past-due benefits I receive.

Contract (ECF No.32-5, PageID.893). However, the contract also limited the total attorney fee award for work done before both tribunals (i.e., the SSA and the federal court) at 25%:

In no case will the fee that comes out of the back benefits paid on my account be greater than 25% of back benefits (including the fee paid for work on my case before the Social Security Administration).

Id. In other words, the total fee of all attorneys working for Ms. Sindell could not exceed 25% of the past-due ...


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