The opinion of the court was delivered by: NORGLE
On June 16, 1986, an Administrative Law Judge ("A.L.J.") in the Department of Health and Human Services ("H.H.S."), denied plaintiff's application for Disability Insurance Benefits and Supplemental Security Income. The Appeals Council, an appellate division of the H.H.S., upheld the decision, thereby making this judgment the decision of the defendant, the Secretary of H.H.S.
Plaintiff sought review in the United States District Court. On March 30, 1988, this court issued an order finding that plaintiff had presented to this court substantial new and material evidence and that she had demonstrated good cause for failing to present this evidence to the A.L.J. at an earlier date. Woods v. Sullivan, No 87 C 222, slip op. at 11 (N.D. Ill. March 30, 1988). The court also stated that the A.L.J. had inadequately developed the record concerning plaintiff's impairments, erred in making certain medical findings, and failed to justify his decision to discredit certain evidence. Id. at 7-11. The court concluded, pursuant to 42 U.S.C § 405(g), that the matter should be remanded to the Secretary so that he could receive and consider the additional evidence not previously presented. Id. at 12.
The case was sent to the same A.L.J. who, after hearing the new evidence, rendered a decision for the plaintiff on November 30, 1989. On August 7, 1990, the Appeals Council amended the A.L.J.'s decision, concluding that plaintiff was disabled from the date she alleged, July 24, 1984, for all reasons she claimed. Nothing more with regard to that decision has occurred.
Plaintiff's attorney then petitioned for fees and expenses under 28 U.S.C. § 2412, claiming her client was the prevailing party and that the Secretary's position was not substantially justified. The Secretary had little objection to the granting of fees and expenses to Budlow for her representation of the plaintiff. That is, until June 10, 1991, when the Supreme Court decided the case of Melkonyan v. Sullivan, 115 L. Ed. 2d 78, 111 S. Ct. 2157 (1991). The Secretary moved on July 1, 1991, to dismiss Budlow's fee application as untimely under Melkonyan.
Because the parties contest application of the Supreme Court's discussion in Melkonyan, the court must first determine whether that case was intended to have retroactive effect.
A. Retroactivity of Melkonyan
Zakhar Melkonyan filed an action in United States District Court seeking review of the Secretary of the Department of Health and Human Services's denial of disability benefits under 42 U.S.C. § 405(g). Shortly before he filed his complaint in that action, he filed a second application for benefits with certain new evidence. Three months later petitioner's second application was approved. He then sought summary judgment in his case before the federal court which was based on the first application. Instead the matter was remanded and, eventually the petition was approved in full. More than a year later, his attorney sought fees for his representation of Melkonyan. The principal issue before the Supreme Court on appeal was the meaning of the terms "final judgment" in 28 U.S.C. § 2412 for if final judgment included the decisions of administrative agencies, petitioner's application was stale. As will be explored in greater detail below, the Court held that a final judgment is one rendered by a court of law, not an administrative body. Melkonyan, 111 S. Ct. at 2162. The question initially presented to this court is whether the Melkonyan decision should be applied retroactively to this case.
Initially, the court notes that the opinion itself does not address the question of retroactivity. Moreover, there is no binding precedent on the issue of Melkonyan's retroactive effect.
Thus, this court must make its determination based on existing Supreme Court precedent concerning retroactive application of cases.
The leading case on retroactive application of caselaw is Chevron Oil Co. v. Huson, 404 U.S. 97, 30 L. Ed. 2d 296 , 92 S. Ct. 349 (1971). In reviewing its decisions resolving the retroactive application question, the Court stated:
First, the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which the litigants may have relied, or by deciding an issue of first impression whose resolution was not clearly foreshadowed. Second, it must be stressed that "we must . . . weigh the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective operation will further or retard its operation." Finally, we have weighed the inequity imposed by retroactive application, for "where a decision of this Court could produce ...