United States District Court, Northern District of Illinois, E.D
September 10, 1984
JOHN HANEY, PLAINTIFF,
MARGARET HECKLER, SECRETARY OF HEALTH AND HUMAN SERVICES, DEFENDANT.
The opinion of the court was delivered by: Getzendanner, District Judge.
MEMORANDUM OPINION AND ORDER
This action was brought under 42 U.S.C. § 405(g) for review of the
termination of plaintiff's Social Security Disability Benefits. On
January 26, 1984, this court remanded the case to the Secretary of the
Department of Health and Human Services for further consideration of
whether plaintiff's mental retardation, coupled with his other
impairments, renders him incapable of engaging in substantial gainful
activity, despite demonstrated improvements in his physical condition
since the initial disability determination in 1973. The case is now
before the court on plaintiff's motion for attorney's fees under the
Equal Access to Justice Act, 28 U.S.C. § 2412(d)(1)(A) ("EAJA").
Section 2412(d)(1)(A) is applicable to this case, as its repeal affects
only those cases filed after October 1, 1984.
Under this provision, a "prevailing party" may recover fees and
expenses in a civil action brought by or against the United States unless
the court finds that the position of the United States was substantially
justified or that other special circumstances would make a fee award
unjust. Plaintiff claims that because his federal action resulted in a
remand to the Secretary, he is a "prevailing party" under the EAJA.
Further, plaintiff claims that the position of the Secretary in this case
was not substantially justified, as she ignored one of her own policy
statements regarding mental retardation. Finally, plaintiff claims that
no special circumstances render the award unjust in this case.
As is required under the EAJA, plaintiff has submitted an itemized
statement of the time expended in this case, the rate at which fees were
computed, and the total fee requested. Plaintiff has correctly demanded
fees only for the time spent representing plaintiff in the district
court. Berman v. Schweiker 713 F.2d 1290, 1293 (7th Cir. 1983); Cornella
v. Schweiker 728 F.2d 978,
988 (8th Cir. 1984). Plaintiff's attorney, Robert Hodge, requests a total
fee of $1,650.00.
The Secretary's response, filed almost three months after the petition
was filed, contains numerous objections to plaintiff's petition. The
court will now consider these objections.
EAJA's Applicability to Fees in § 405(a) Cases
The Secretary argues that:
When attorneys' fees are specifically provided for by
the Social Security Act, the EAJA cannot operate as an
additional or alternative source of attorney fee
awards. Section 206(b)(1) of the Social Security Act
provides for attorneys' fees where, as here, a
plaintiff has prevailed in a claim for past-due
(Memorandum in Opposition to Fee Petition p. 2.) Observing that §
406(b)(1) provides that where the court awards attorney's fees, "no other
fees may be payable," and that the EAJA provides for fee awards "[e]xcept
as otherwise specifically provided by statute," the Secretary concludes
that fees under the EAJA are inappropriate in this case.
In Berman v. Schweiker, 531 F. Supp. 1149, 1151 (N.D.Ill. 1982), aff'd
on other grounds, 713 F.2d 1290 (7th Cir. 1983), a court in this district
squarely rejected this argument. (The Secretary declined to appeal the
issue of whether the EAJA applied to Social Security disability cases.
713 F.2d at 1294 n. 12.) The Eighth Circuit has recently joined the
Fourth, Ninth, and the Second Circuits in finding that the EAJA applies
to Social Security Act cases. Cornella v. Schweiker, 728 F.2d 978, 987
(8th Cir. 1984); Wolverton v. Heckler, 726 F.2d 580 (9th Cir. 1984);
Guthrie v. Schweiker, 718 F.2d 104, 107-08 (4th Cir. 1983); McGill v.
Secretary, 712 F.2d 28, 30 (2d Cir. 1983), cert. denied, ___ U.S. ___,
104 S.Ct. 1420, 79 L.Ed.2d 745 (1984). A clear reading of the two
statutes demonstrates that this conclusion is incontestable. Section
§ 406(b) does not shift fees to the government, but regulates the
private fee arrangements of the claimant and his or her attorney. The
legislative history of the EAJA reveals that the Act's conditional
language addresses other fee-shifting statutes. That no other fee is
payable further regulates these private arrangements, ensuring that the
claimant's attorney does not ask for fees additional to the statutory
maximum. (Indeed, criminal sanctions are prescribed for violations of
this provision. 42 U.S.C. § 406(b)(2).) The court concludes,
therefore, that the EAJA is applicable to cases brought under §
Timeliness of Plaintiff's Petition
The Secretary argues that plaintiff's fee petition was not filed
"within thirty days of final judgment," as is required under §
2412(d)(1)(B). This court's memorandum opinion and order was dated
January 26, 1984, and the fee petition filed on March 13, 1984. The court
agrees with plaintiff that in this case, "final judgment" was upon the
expiration of the government's time to appeal, which in this case is 60
days after the district court decision. Fed.R.App.P. 4(a)(1). The
petition is therefore timely.
The holding of and strong language in McDonald v. Schweiker, 726 F.2d 311
(7th Cir. 1983), renders almost frivolous the Secretary's position on the
timeliness issue in this case. In McDonald, the claimant filed a fee
petition within 30 days of a voluntary dismissal of the Secretary's
appeal. The Court held that the "final decision" under the EAJA meant the
completion of appellate proceedings. 726 F.2d at 315. Where no appeal is
filed, the completion of appellate proceedings is simply the expiration
of the time in which to appeal.
The Secretary distinguishes this case with that in McDonald, in effect
arguing that claimants must be forced to guess whether the Secretary will
appeal or not. However, no principled distinction can be made between the
case in McDonald and that before the court, allowing a petition in the
former after the disposition of an appeal, but rejecting a petition in
the latter before expiration of the time in which an appeal must be filed
where no appeal was subsequently taken. Such a result in the
latter case would equally "deliver into the hands of the government a
potent, acknowledged, and from the standpoint of the policy of the Equal
Access to Justice Act perverse weapon for discouraging meritorious fee
applications." McDonald, 726 F.2d at 315. According to the Seventh
Circuit, an "exquisite dilemma" is presented when the attorney must
determine whether to file a petition that would render more likely an
appeal before the Secretary's appeal time has expired. That Court clearly
held that the EAJA was not meant to create such a dilemma, and this court
is unaware of any reason why claimants should be forced to confront it in
the case where the government chooses not to appeal.
Plaintiff as Prevailing Party
In order to recover fees, plaintiff must demonstrate that he is a
"prevailing party" under the EAJA. The Secretary argues that plaintiff is
not a prevailing party (although, the court notes, plaintiff is described
as such on page 2 of its responding memorandum.) The cases on this issue
are split. The Second Circuit has held that a district court's remand to
the Secretary to take more evidence did not render the claimant a
prevailing party. McGill v. Secretary, 712 F.2d 28 (2d Cir. 1983). There,
as here, the court found that the Secretary did not consider all of the
evidence pertinent to its determination that the claimant was not
entitled to benefits. In so ruling, the McGill Court found that:
Regardless of the wording of the complaint or the
actual relief sought in the district court, generally
speaking, a social security claimant prevails when it
is determined that she is entitled to benefits. Unlike
a plaintiff who files a lawsuit alleging violations of
a procedural due process right and seeks compensation
for that deprivation, [citations omitted], the
ultimate relief to which a social security claimant is
normally entitled is not vindication of procedural
rights but an award of benefits for a claimed
disability. While it is true that a favorable ruling
on plaintiff's procedural claim that the ALJ should
have conducted a more thorough hearing may ultimately
affect the outcome on the merits of plaintiff's
disability claim, nevertheless, her procedural claim
is not a matter on which plaintiff can be said to
prevail for the purpose of shifting counsel fees.
The Court relied on the Supreme Court's decision in Hanrahan v. Hampton,
446 U.S. 754, 100 S.Ct. 1987, 64 L.Ed.2d 670 (1980)(per curiam),
reversing the granting of fees under the Civil Rights Act of 1976,
42 U.S.C. § 1988, to parties who had prevailed on appeal in obtaining
reversal of the district court's directed verdict for defendants and two
unfavorable discovery rulings. There, the Supreme Court found that while
a person may be a § 1988 prevailing party short of final judgment on
the merits, fee awards are appropriate only where "a party . . . has
established his entitlement to some relief on the merits of his claims."
Id. at 756-57, 100 S.Ct. at 1988-89. Since the jury may ultimately decide
some or all of the issues in favor of defendants, "it could not seriously
be contended that the respondents had prevailed." Id. at 760, 100 S.Ct.
at 1990. See also Roman v. Schweiker, 559 F. Supp. 304 (E.D.N.Y.
1983)(EAJA claim; remand for further evidence); Miller v. Schweiker,
560 F. Supp. 838, 840 (M.D.Ala. 1983)(same).
Most of the cases cited by plaintiff for the proposition that he is a
prevailing party resulted in findings that plaintiffs were entitled to
past or future benefits. of those that resulted simply in a remand for the
taking of further evidence, many did not address the issue of whether the
claimant was a prevailing party. See Ocasio v. Schweiker, 540 F. Supp. 1320
(S.D.N Y 1982); Vega v. Schweiker, 558 F. Supp. 52 (S.D.N.Y. 1983). The
two cases explicitly holding that a claimant obtaining a remand is a
prevailing party under the EAJA did not discuss the Supreme Court's
Hanrahan decision or other analogous § 1988 cases. See Ceglia v.
Schweiker, 566 F. Supp. 118 (E.D.N.Y. 1983); Gross v. Schweiker,
563 F. Supp. 260 (N.D.Ind. 1983).
The court must therefore decide the applicability of the Hanrahan
decision to the facts presented in this case. There, the district court's
directed verdicts for the defendants were reversed and the case
remanded. Costs and attorney's fees were awarded the plaintiffs for their
efforts in successfully prosecuting the appeal. The Supreme Court
conceded that § 1988 contemplated fee awards pendente lite, but found
that congressional intent was to allow such an award "only to a party who
has established his entitlement to some relief on the merits of his
claims, either in the trial court or on appeal." 446 U.S. at 757, 100
S.Ct. 1989. As an example, the Court noted two cases in which liability
had been established, although, remedial orders had not yet been,
entered. The legislative history of § 1988 allows that awards
pendente lite are especially appropriate where a party has prevailed on
an important matter in the litigation, although he or she may not
ultimately prevail on all issues. Id. Explaining that the Hanrahan
plaintiffs were in no better position than if they had defeated
defendants' motion for a directed verdict, the Court concluded that they
were not § 1988 prevailing parties.
Smith v. University of North Carolina, 632 F.2d 316, 346-47 (4th Cir.
1980), is analogous to Hanrahan, although there, the plaintiff lost her
claims of sex discrimination. The district court, however, awarded her
costs and attorney's fees for her prevailing on a preliminary
injunction, preserving her employment until the conclusion of the
litigation. The Fourth Circuit reversed, noting that to prevail, a party
must demonstrate in an "enduring way" her entitlement to some right or
relief. See also Grubbs v. Butz, 548 F.2d 973 (D.C.Cir.
1976)(discrimination plaintiff not entitled to fees for prevailing on
issue of exhaustion of administrative remedies).
The court is persuaded, however, that these cases are inapplicable to
the present case. Here, the plaintiff's claims were originally presented
to an executive agency, with an appeal to the district court through the
filing of a new and separate civil action. The civil action starts in the
district court and is not simply a continuation of the executive action.
Indeed, the executive action is deemed to be non-adversarial under the
EAJA, Cornella, 728 F.2d at 988, and the district courts are limited to
granting fees only for representation in the district court, and not in
the Secretary's proceedings, Berman, 713 F.2d at 1296; Cornella, 728 F.2d
at 988. By the time the claimant files the district court action, the
Secretary has made a final decision on her or his case, the executive
action is completed, and a new, civil suit is started. Similarly, in
remanding for further proceedings, instead of reversing outright, the
district court still finally decides the issues in its action. Often
remand is all that is requested in § 405(g) suits; moreover, where
substantive relief is requested, often the state of the administrative
record makes impossible any relief other than remand.
In this case, the plaintiff claimed that the ALJ's decision was not
based on substantial evidence, and requested a reversal or modification
of the decision or, in the alternative, a remand for further
proceedings. (Complaint ¶ 5.) The court has granted most of the
relief requested by finding on the present record that the Secretary may
not terminate plaintiff's benefits, and by remanding the case. Hence,
plaintiff has prevailed in this civil action in a way that the plaintiffs
in Hanrahan and Smith, whose civil complaints requested damages and
equitable relief, did not.
Another court in this circuit, in holding that a claimant achieving a
remand to the Secretary was an EAJA prevailing party, similarly found
that "[t]he plaintiff obtained substantially the relief requested and
under the facts of this case, the extent of relief this court had the
authority to render." Gross, 563 F. Supp. at 262. See also Ceglia, 566
F. Supp. at 121-22 (governed by McGill). There, as here, reversal was not
possible as the factual record was incompletely developed in the executive
proceedings. The court in Gross noted:
One of the purposes of the EAJA was to encourage the
vindication of rights and
correction of unlawful activities by agencies of the
United States. To deny attorney fees to plaintiffs who
cannot obtain the award of benefits sought under the
Social Security Act from the court because of the
administrative agency's failure to fulfill its duties
imposed by law is certainly inconsistent with that
purpose. Thus, a remand in such a situation is the
only relief available to the plaintiff.
Id. The court adds the reminder that the EAJA allows fees to prevailing
parties not only where the United States' position was wrong, but wrong
without substantial justification.
The court therefore concludes that Hanrahan and its progeny are not
applicable to this case.*fn1 Having obtained a ruling that the
administrative decision was not supported by substantial evidence and
having obtained part of the relief sought, plaintiff has achieved "some
of the benefit [he] sought in bringing suit." Hensley v. Eckerhart,
461 U.S. 424, 103 S.Ct. 1933, 1939, 76 L.Ed.2d 40 (1983)(citing Nadeau
v. Helgemoe, 581 F.2d 275, 278 (1st Cir. 1978)). Hence, he is a
prevailing party under the EAJA.
To prevent an award of fees to plaintiff in this case, the Secretary
must prove that she was substantially justified in her "position" in this
case or that special circumstances otherwise would render an award of
fees unjust. Cornella, 728 F.2d at 983. The Secretary makes no argument
with respect to the latter defense to fees, and hence this has not been
shown. The court will therefore address whether the government has met
its burden of proof with respect to the former.
The Seventh Circuit has described the standard of "substantial
justification" as follows:
"[S]ubstantially justified" does not mean
"nonfrivolous"; that is the standard the government
urged, and Congress rejected. [Citation omitted.] It
means that the government must have a solid though not
necessarily correct basis in fact and law for the
position that it took in this action.
McDonald v. Schweiker, 726 F.2d at 316. The court has found that the
position of the government in this action clearly did not have a correct
basis in law, and further finds that neither did it have a solid basis.
The plaintiff in this case was found disabled as of December 31, 1970,
due to "very unstable juvenile diabetes mellitus; spinal bifida deformity
of the first sacral segment of the spine; [and] borderline range of
intellectual functioning." See Report and Recommendation, No. 82 C 7714,
slip op. at 1 (Magistrate Balog, Dec. 16, 1983). In terminating
plaintiff's benefits, the ALJ took evidence on physical improvements, but
did not mention plaintiff's mental functioning. According to the
Secretary's own policy statements, the evidence before the ALJ,
indicating that plaintiff's I.Q. score was 71 in March 1973, suggests
that the plaintiff may have a severe mental impairment. SSR 82-54 & 55
(I.Q. of 80 or more is not considered severe). Under these policy
statements, the ALJ should have examined this low score, and determined
whether it was incompatible with plaintiff's current behavior. The court
notes that in this case, the ALJ should have been especially aware of the
importance of this score, since plaintiff had experienced repeated
hypoglycemia which necessitated emergency room treatment. In most of
these cases, the plaintiff had failed to eat properly or take insulin as
prescribed by his physician. Hence, the mental impairment, in addition to
limiting the range of intellectual work the plaintiff could handle,
apparently has an adverse impact on his ability to comply with prescribed
treatment and thereby control his physical impairments.
The ALJ's ignoring of the I.Q. score was therefore not substantially
justified. The administrative record omits consideration of an important
aspect of plaintiff's impairment and the initial determination plus facts
in the record (the I.Q. score and the several episodes of plaintiff's
inability to care for himself) clearly demonstrate that the failure to
note and examine this point was without justification. As the underlying
action was legally unjustifiable, the court concludes that the
Secretary's litigation position was without substantial justification as
well. See Foley Construction Co. v. US Army Corps of Engineers,
716 F.2d 1202, 1204 (8th Cir. 1983)(no functional difference between
administrative position and litigation position).
Amount of Fees
The final issue to be determined is the amount of fees to be awarded.
The Secretary has not attacked the time expended or the rate charged by
plaintiff's attorney. The petition indicates that plaintiff's attorney
Richard Hodge spent 20 hours prosecuting this case and 2 hours preparing
the fee petition. These hours are reasonable, as is Hodge's rate of
$75.00 an hour. The court will follow Ocasio v. Schweiker, 540 F. Supp.
at 1323, and allow compensation for the preparation of the fee petition,
but at the lower rate of $50.00 an hour. Plaintiff does not request the
court, or argue that the court has the authority, to pay fees directly to
his attorney. The court therefore orders the Secretary to pay $1,600.00
to plaintiff for his attorney's fees in this district court action.
It is so ordered.