United States District Court, Northern District of Illinois, Eastern Division
March 29, 2001
CLIDE R. CROSBY, PLAINTIFF,
WILLIAM A. HALTER, COMMISSIONER OF SOCIAL SECURITY, DEFENDANT.
The opinion of the court was delivered by: Morton Denlow, U.S. Magistrate Judge
MEMORANDUM OPINION AND ORDER
This case is before the Court on Plaintiff's application for attorney's
fees pursuant to the Equal Access to Justice Act ("EAJA"),
28 U.S.C. § 2412. The Seventh Circuit Court of Appeals reversed and
remanded for further consideration this Court's decision which had
affirmed the Administrative Law Judge's decision denying disability
benefits to Plaintiff. The principal issue presented is whether the
Commissioner was substantially justified in its legal and factual
positions. The Court grants Plaintiff's application in the amount of
$24,827.86, because the Court
finds the Commissioner's position was not substantially justified and
because Plaintiff's application for attorney's fees is reasonable.
I. BACKGROUND FACTS
On January 26, 1995, Plaintiff filed concurrent applications for Social
Security Disability Insurance Benefits and Supplemental Security Income
under Titles II and XVI of the Social Security Act, 42 U.S.C. § 416(i),
423, and 1381a. Plaintiff claimed he was disabled because he suffered
from back and shoulder pain that prevented him from working. Plaintiff
alleged the onset of his disability on January 21, 1994. An
Administrative Law Judge ("ALJ") found the Plaintiff was not disabled and
denied his claims. Plaintiff requested a review of the ALJ's decision,
which the Appeals Council denied.
Plaintiff sought judicial review. This Court granted the
Commissioner's motion for summary judgment and affirmed the ALJ's
decision. Crosby v. Apfel, 76 F. Supp.2d 928 (N.D.Ill. 1999). Plaintiff
appealed to the Seventh Circuit. On appeal, Plaintiff argued the ALJ
applied an incorrect legal standard and that the decision was not
supported by substantial evidence. Specifically, Plaintiff claimed the
ALJ applied an incorrect legal standard, improperly rejected the
Plaintiff's testimony regarding his disability, did not consider
significant evidence which conflicted with the decision, did not offer
sufficient explanations supporting his conclusions, made independent
medical determinations, and improperly relied upon Plaintiff's testimony
describing his daily activities to support a finding that he was not
disabled. In agreeing with Plaintiff, the Seventh Circuit reversed and
remanded for further administrative proceedings holding the ALJ's
decision was not supported by substantial evidence. Crosby v. Apfel,
2000 WL 1909641 (7th Cir. Dec. 29, 2000).
Plaintiff submitted an EAJA fee application in the amount of
$9,226.79, for the work performed by his attorney, Frederick J. Daley and
his associates, at the district court level; and $15,601.17, for the
services of Barry A. Schultz, who represented Plaintiff before the
Seventh Circuit Court of Appeals. These fee applications also
included time spent on their fee applications and cost
reimbursements. The Commissioner has challenged Plaintiff's entitlement
to fees and, alternatively, the reasonableness of the requested fees.
Plaintiff has assigned his EAJA fees to counsel.
II. STANDARD FOR FEE AWARD UNDER THE EAJA
This Court has recently dealt with similar issues under EAJA. Smith
v. Apfel, 2001 WL 199505 (N.D.Ill., Feb. 27, 2001). The EAJA directs a
court to award attorney's fees and other expenses to private parties
who prevail in litigation against the United States if, among other
conditions, the Government's position was not "substantially justified."
28 U.S.C. § 2412(d)(1)(A) and (B). The position of the United States
includes both its position during litigation and its position during the
administrative proceedings. 28 U.S.C. § 2412(d)(2)(D). The
substantial justification standard requires the government to show its
position was grounded in "(1) a reasonable basis in truth for the facts
alleged; (2) a reasonable basis in law for the theory propounded; and (3)
a reasonable connection between the facts alleged and the legal theory
advanced." United States v. Hallmark, 200 F.3d 1076, 1080 (7th Cir.
2000). This Court is required to examine the government's position in
both the prelitigation and litigation contexts. Id. When errors are
made by the ALJ, the Commissioner
is held accountable. Cummings v. Sullivan, 950 F.2d 492, 496
(7th Cir. 1991).
The standard of "substantially justified" is satisfied if there is a
genuine dispute or if reasonable people could differ as to the
appropriateness of the contested action. Pierce v. Underwood, 487 U.S. 552,
565, 108 S.Ct. 2541, 2550 (1988). "While the parties' postures on
individual matters may be more or less justified, the EAJA — like
other fee-shifting statutes — favors treating a case as an
inclusive whole, rather than as atomized line items." Commissioner, INS
v. Jean, 496 U.S. 154, 161-162, 110 S.Ct. 2316, 2320-2321 (1990). This
Court is required to make a global assessment to determine whether the
government was substantially justified in continuing to push forward at
each stage. Hallmark, 200 F.3d at 1081.
The Government's success on the merits is relevant to the "substantial
justification" determination. In Pierce, the Supreme Court observed:
"Conceivably, the Government could take a position that is not
substantially justified, yet win; even more likely, it could take a
position that is substantially justified, yet lose. Nevertheless, a string
of losses can be indicative; and even more so a string of successes."
Pierce, 487 U.S. at 568, 108 S.Ct. at 2551. When considering the issue
of EAJA fees, this Court must reexamine the factual and legal
circumstances of the case from a different perspective than used at any
other stage of the proceeding. Hallmark, 200 F.3d at 1080.
III. THE COMMISSIONER HAS NOT MET ITS BURDEN OF PROOF THAT ITS
POSITION WAS SUBSTANTIALLY JUSTIFIED
A. Substantial Evidence vs. Substantial Justification
Two different standards apply at the merits stage and the EAJA stage.
During the merits portion of a case, the court's determination must be
supported by "substantial evidence" in the record "which is evidence a
reasonable mind might accept as adequate to support a conclusion." Smith
v. Apfel, 231 F.3d 433, 437 (7th Cir. 2000). At the EAJA stage, fees are
to be awarded unless the government's position was substantially
justified. The position of the Commissioner is "substantially justified"
if it is "justified to a degree that could satisfy a reasonable person"
and have a "reasonable basis in law and fact." Pierce, 487 U.S. at 565,
108 S.Ct. at 2550. Although the language defining the substantial
evidence standard is strikingly similar to the standard for substantial
justification, the two are not the same. However, an examination of the
decision on the merits is important in the EAJA determination. For
example, a finding that the government's position on the merits was
"arbitrary and capricious" may be at odds with a later conclusion that
the government's position was "substantially justified." Hallmark, 200
F.3d at 1081 (remanding case for re-examination of previous denial of
attorney's fees). This Court must give due deference to the ultimate
decision on the merits in deciding the EAJA application while recognizing
"the outcome of a case is not conclusive evidence of the justification
for the government's position." Hallmark, 200 F.3d at 1079.
B. A String of Successes Does Not Constitute Substantial Justification
"Obviously, the fact that one other court agreed or disagreed with the
Government does not establish whether its position was substantially
justified." Pierce, 478 U.S. at 569, 108 S.Ct. at 2552. In United States
v. Paisley, 957 F.2d 1161, 1166 (4th Cir. 1992), the government prevailed
at every level of the litigation until the Supreme Court reversed and
finally decided against the government. Although the Fourth Circuit
found the government's position was substantially justified, the court,
citing Pierce, discussed "the fact that the claim survived through the
court of appeals . . . points generally in the direction of strength, it
obviously could not suffice, standing alone, to command a finding of
substantial justification. Completely unfounded claims sometimes for a
variety of reasons, survive beyond their just desserts." Id. While such
objective indicia may be considered when they are relevant, the Seventh
Circuit has cautioned "that these objective factors are rarely
conclusive. It is more important for the district court to examine the
actual merits of the Government's litigating position." Hallmark
Constr. Co., 200 F.3d at 1080.
C. Analysis of Commissioner's Position
The Seventh Circuit strongly disapproved of the Commissioner's
position. Specifically, the Seventh Circuit criticized the ALJ for
applying an incorrect legal standard, for ignoring significant evidence
contrary to his decision, for failing to provide adequate explanations
for his findings, and for making independent medical determinations.
Crosby, 2000 WL 1909641, at *6, 7. The Seventh Circuit decision strongly
suggests the Commissioner's prelitigation and litigation positions were
not substantially justified because these problems were present
throughout the administrative and litigation phases of this case.
Despite the contrary views expressed by the ALJ and this Court, the
Seventh Circuit makes clear the record developed was simply not adequate
to deny disability benefits to Plaintiff.
First, the Seventh Circuit concluded "the ALJ is obliged to examine and
weigh all the evidence including observations by treating and examining
physicians, third-party testimony, the claimant's testimony and daily
activities, functional restrictions, pain medication taken, and
aggravating or precipitating factors to evaluate how much the claimant's
impairment affects his ability to work." Crosby, 2000 WL 1909641, at *4
(citing Herron v. Shalala, 19 F.3d 329, 334 (7th Cir. 1994)). The Seventh
Circuit held the ALJ erred in finding the Plaintiff's testimony was not
credible as to the existence of a disability. Id. The ALJ's finding
rested on the absence of objective medical evidence to corroborate the
Plaintiff's testimony. The ALJ's reasoning conflicted with Seventh
Circuit precedent, in which they "will not reject the statements of the
individual . . . solely because the available medical evidence does not
substantiate [Plaintiff's] statements." Pope v. Shalala, 998 F.2d 473,
482 (7th Cir. 1993), overruled on other grounds by Johnson v. Apfel,
189 F.3d 561 (7th Cir. 1999).
Second, the ALJ failed to consider and discuss significant evidence
contrary to his ruling, such as Plaintiff's ability to lift weight and to
sit or stand during the course of a work day. Crosby, 2000 WL 1909641,
at *5. It was contrary to established law for the ALJ not to consider
and discuss all the significant evidence, including evidence which
conflicts with the ALJ's decision. Lauer v. Bowen, 169 F.3d 489, 493
(7th Cir. 1999) (citing Diaz v. Chater, 55 F.3d 300, 308 (7th Cir.
1995)). As a result, the ALJ's decision did not have a reasonable basis
Third, faced with conflicting accounts from the same physician
regarding Plaintiff's ability to lift weight, the ALJ failed to seek
clarification from the physician. Crosby, 2000 WL 1909641, at *5. If
the evidence is inadequate to determine whether the Plaintiff is
disabled, the ALJ is required to seek additional information.
20 C.F.R. § 404.1512(e). Furthermore, the ALJ offered no explanation
for his ultimate conclusion regarding Plaintiff's lifting ability. "The
requirement that the ALJ articulate his consideration of the evidence is
deliberately flexible." Stein v. Sullivan, 966 F.2d 317, 319 (7th Cir.
1992). However, the ALJ "must articulate at some minimal level his
analysis of the evidence in cases in which considerable evidence is
presented." Burnett v. Bowen, 830 F.2d 731, 735 (7th Cir. 1987). In this
case, the Seventh Circuit concluded the ALJ failed to adequately discuss
the evidence supporting his decision. Crosby, 2000 WL 1909641, at *7.
Finally, the Seventh Circuit held the ALJ essentially made his own
medical determination in his discussion of Plaintiff's pain medication.
Crosby, 2000 WL 1909641, at *7. The Seventh Circuit held the ALJ's
determination that Plaintiff's pain medication evidenced "that the pain
was not sufficiently severe to be disabling" was improper because it
"represented a medical opinion by the ALJ." Id. At the time the ALJ
made his decision, the law was established that an ALJ may not make his
own independent medical determinations about the claimant. Rousey v.
Heckler, 771 F.2d 1065, 1069 (7th Cir. 1985).
The Seventh Circuit followed existing and established law in deciding
in favor of the Plaintiff. The ALJ failed to apply correct legal
standards, failed to consider substantial evidence contrary to his
decision, failed to offer adequate explanation for his findings, and made
an independent medical determination. In sum, the ALJ failed to conform
his findings with existing principles. The fact this Court affirmed the
ALJ does not change the result.
Under these circumstances, this Court finds that in reviewing the entire
action, the Commissioner has not met the burden to establish his position
was grounded in a reasonable basis in truth for the facts alleged, a
reasonable basis in law for the theory propounded, and a reasonable
connection between the facts alleged and the legal theory advanced.
Hallmark, 200 F.3d at 1080. Having reviewed the entire record, the Court
concludes Plaintiff is entitled to EAJA fees. This is not a case in which
the only problem was one of a failure to articulate. The Seventh Circuit
noted substantial legal and factual errors.
D. Public Policy Considerations of the EAJA also Support the Award of Fees
One of Congress' expectations in enacting the EAJA was to attract
private counsel to represent meritorious disability claimants. Congress
was concerned that persons "may be deterred from seeking review of, or
defending against, unreasonable governmental action because of the
expense involved." Sullivan v. Hudson, 490 U.S. 877, 883, 109 S.Ct.
2248, 2253 (1989). Denying the ultimately prevailing party EAJA fees
simply because the Government prevailed at one stage of the proceedings
would discourage attorneys from representing these individuals past the
district court stage, if at all. "When the cost of contesting a
Government order, for example, exceeds the amount at stake, a party has
no realistic choice and no effective remedy." Id.
The EAJA was designed to rectify this situation by providing for an
award of reasonable attorney's fees. In addition, the EAJA encourages
government agencies to investigate, prepare and proceed with litigation
in a professional and appropriate manner. Likewise, the potential for
recovering fees encourages private counsel to assist in improving
government efficiency. Hallmark, 200 F.3d at 1080. Absent
the availability of EAJA fees, it is unlikely Plaintiff would have been
able to pursue an appeal from the ALJ's and this Court's decisions.
Therefore, the award of EAJA fees in this case also furthers the strong
public policy the EAJA statute was designed to promote.
IV. PLAINTIFF IS ENTITLED TO $24,827.86 IN FEES AND COSTS
The Commissioner argues the fees requested by Plaintiff's attorneys are
excessive. The Court has reviewed Plaintiff's fee petitions, pleadings,
briefs, docket sheets and finds that the time spent was reasonable, the
hourly rate proper, and the work product professional. Both Mr. Daley
and Mr. Schultz are experienced social security attorneys who prosecuted
this case diligently and efficiently. This Court has seen their work
product on many occasions and their work in this case reflects their
careful preparation. Unlike experienced attorneys in other fields who are
compensated at higher rates for their expertise, these attorneys are
limited by statute to a relatively low fee of approximately $140 per hour
despite their many years of expertise. 28 U.S.C. § 2412(d)(2)(A).
The objections by the Commissioner represent nit picking. In oral
argument, the Commissioner could point to no more than one hour of time
to be challenged. While this Court is mindful that EAJA fees constitute
public moneys, Plaintiff's counsel has demonstrated care for the public
purse by their efficient prosecution of this litigation.
In addition, the time spent by counsel in pursuing their fee
application is also reasonable. Supplemental fees for the work
performed in preparing EAJA briefs are appropriate. Commissioner, INS v.
Jean, 496 U.S. 154, 162, 110 S.Ct. 2316, 2321 (1990). The Court finds
the time spent, at both the district court and the appellate level, was
reasonable. Without the expertise of Plaintiff's counsel and the
availability of the EAJA fees, Plaintiff would not have had the ability
or financial resources to enter this courthouse and to seek review of
both the ALJ's decision and this Court's decision by the Seventh
Plaintiff's application for fees and costs is granted. The Clerk of
the Court is directed to enter a judgment in favor of Frederick J.
Daley, as assignee of Plaintiff Clide R. Crosby, and against Defendant
William A. Halter, Acting Commissioner of Social Security, in the
amount of $24,827.86, for attorney's fees and court costs pursuant to
the Equal Access to Justice Act.
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