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Heyer v. Commissioner of Social Security

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

August 15, 2019

JOHN HEYER, Plaintiff,



         This matter is presently before the Court on the motion of plaintiff's attorney, Wesley Lamey, for fees pursuant to 42 U.S.C. § 406(b) [docket entry 21]. Defendant has filed a response in opposition, and plaintiff's attorney has replied. Pursuant to E.D. Mich. LR 7.1(f)(2), the Court shall decide this motion without a hearing.

         Plaintiff commenced this action in September 2017 under 42 U.S.C. § 405(g) to challenge defendant's decision denying his applications for Social Security disability insurance benefits and Supplemental Security Income. He claimed to be disabled since May 2013 due to bipolar disorder and anxiety disorder, among other impairments. In December 2017, defendant answered the complaint and filed the administrative record. In January 2018, plaintiff filed a motion for summary judgment and an eleven-page brief that made a single argument over three and one-half pages that the Administrative Law Judge (“ALJ”) failed to explain adequately why, in denying his applications, she rejected the opinions of his treating physician. Defendant did not respond to this motion or file a summary judgment motion of his own. Rather, in February 2018 the Court entered a stipulated order remanding the case for further proceedings, and requiring the ALJ to offer plaintiff the opportunity for another hearing, to reevalute the opinions of his treating physician, and to explain her reasons if she again decided to reject those opinions.

         The Court remanded the matter pursuant to sentence four of § 405(g), which entitled plaintiff to seek attorney fees under the Equal Access to Justice Act (“EAJA”), 28 U.S.C. § 2412(d). In March 2018, the Court entered a stipulated order awarding plaintiff's attorney EAJA fees in the amount of $3, 281.25. As he claims to have spent 18.75 hours working on this case from August 2017 to February 2018, see Pl.'s Mot. for Att'y Fees, Ex. E, this fee award was based on an hourly rate of $175.

         On remand, the ALJ issued a fully favorable decision in January 2019, finding that plaintiff has been disabled since May 2013 due to bipolar disorder, generalized anxiety disorder, and a developmental disorder. See id., Ex. A. Based largely on the opinions of plaintiff's treating physician, the ALJ found, without holding another hearing, that plaintiff is per se disabled under Listing 12.04 (“Depressive, bipolar and related disorders”). In July 2019, defendant issued a “notice of award” in which it indicated, as is customary, that he was withholding “25 percent of past due benefits in order to pay the approved representative's fee.” Id., Ex. B at 4. In this case, defendant has withheld $33, 421.75. Id.

         In the instant motion, plaintiff's attorney asks that the Court award him these withheld funds - every penny of the $33, 421.75 - to compensate him for the 18.75 hours he has spent working on this case before this Court. Surprisingly, attorney Lamey claims that this fee would be “reasonable under the circumstances” due to “the specialized nature of disability claims, the favorable result acquired, and hours expended.” Id. at 5. If the Court were to grant this motion in the requested amount, the fee would translate to an hourly rate of $1, 782.

         Plaintiff signed a fee agreement with his attorney's firm, Stu Johnson & Associates, P.C., in Warren, Michigan, which states in relevant part that “[i]f the claimant is awarded benefits . . . following an Order of Remand issued by the Appeals Council or Federal Court, the fee shall be 25% of the total past due benefits to the Claimant and/or the Claimant's family.” Id., Ex. C. However, as plaintiff's attorney concedes, the Court is not bound to award a fee in this amount. Instead, the Social Security Act “calls for court review of such arrangements as an independent check, to assure that they yield reasonable results in particular cases.” Gisbrecht v. Barnhart, 535 U.S. 789, 807 (2002). Under § 406(b), the Court may award “a reasonable fee” to a prevailing claimant, “not in excess of 25 percent of the total of the past-due benefits to which the claimant is entitled by reason of [a favorable] judgment.” As the Supreme Court noted in Gisbrecht, “[c]ourts . . . have appropriately reduced the attorney's recovery based on the character of the representation and the results the representative achieved.” Id. at 808. Further, “[i]f the benefits are large in comparison to the amount of time counsel spent on the case, a downward adjustment is similarly in order.” Id. (citing Rodriguez v. Bowen, 865 F.2d 739, 747 (6th Cir. 1989) (en banc)). It is plaintiff's attorney's burden to “show that the fee sought is reasonable for the services rendered.” Id. at 807.

         In Rodriguez, at the page the Supreme Court cited with approval, the Sixth Circuit stated:

[A] deduction should be made by the court if the award of benefits is so high as to cause attorney's fees to constitute a “windfall.” Many courts and Congress have discussed the need to prevent windfalls for lawyers. See, e.g., Coulter v. State of Tennessee, supra, 805 F.2d at 149. . . .
Although we recognize that there are cases where the lawyer's unusual skill or diligence wins the case, typically the number of hours that are required to prosecute an appeal from the Secretary's determination will not vary greatly and will bear little if any relationship to the results achieved. Where a case has been submitted on boilerplate pleadings, in which no issues of material fact are present and where no legal research is apparent, the benchmark twenty-five percent of awards fee would obviously be inappropriate. The reviewing courts should not hesitate to make reductions in such situations, and at the other end of the spectrum should only allow maximum fees for extensive effort on the part of counsel who have overcome legal and factual obstacles to the enhancement of the benefits awarded to his client.

Rodriquez, 865 F.2d at 747 (footnote omitted).

         Subsequently, in Hayes v. Sec'y of Health & Human Servs., 923 F.2d 418, 422 (6th Cir. 1990) (citation and footnotes omitted), the Sixth Circuit stated:

We believe that, under Rodriquez, 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. We believe that 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. Such a result would thwart Congress's intention to assure social security claimants of good representation. See Rodriquez, 865 F.2d at 744 (“[t]he fee approval provision is also designed to assure adequate compensation to the claimant's attorney and as a consequence to encourage attorney representation”).
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. In other words, a hypothetical hourly rate that is less than twice the standard rate is per se reasonable, ...

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