Tuesday, August 14, 2012

McLeod or Chaudhry -- the Duty to Develop

In the space of 9 months, I note that the Ninth Circuit has widened the gap in the panel determinations on the duty to develop the record on the question of a VA determination of disability. 

McLeod v. Astrue went through three iterations before becoming law of the Circuit.  The final decision sets out the facts of McCleod professing ignorance of whether he had a VA disability determination.  He had a lay representative before SSA, an attorney before the District Court, and Paul Eaglin in the Court of Appeals.  The Cour considered the presence of a lay representative the same as unrepresented in triggering a heightened duty to be "especially diligent" in developing the record.  In the final analysis, the ALJ had to do more to get the VA disability rating because of its probative impact on the SSA disability determination. 

Chaudhry v. Astrue found its way into the books on August 10, 2012.  Jeffrey Baird handled the case on appeal but not before the SSA.  Chaudhry testified that he received a 100% disaiblity rating from the VA.  The attorney reprenting Chaudhry argued to the ALJ that the claimant did in fact have a 100% disaiblity rating.  What the record did contain is a 30% headackes, 30% neck impairment, 20% back impairment, 30% depression, and 20% narcolepsy.  The VA increased the rating for depression to 50% as of 2006, well before the case went to hearing.  Don't add the numbers together, that isn't how the process works.  Suffice it to say that the ALJ added the numbers together using his understanding of the VA methodology instead of the correct methodology that would have added up to 100%.  Chaudhry argued through counsel that the ALJ should have gotten the final rating from the VA himself since the attorney at the hearing was wrong about the presence of the 100% finding in the file.  Two problems -- the final rating did not wind its way into the record and the person making the representation was an attorney. 

And that is the problem.  Everyone in the room knows that the ALJ blew it.  He added the numbers wrong and the rating really is 100%.  The question is whether the Court will place its stamp of approval on a decision that the public knows is palpably and unmistakeably wrong.  When the Court rushes in to affirm the wrong decision because what the ALJ did falls within the range of wrong but reasonable, the Court degrades the public confidence in both the SSA and the Court. 

This is not a situation where reasonable minds could differ.  This case raises the specter of an easily verifiable concrete fact that is either right or wrong.  Discretion permits an ALJ to have his own conclusions, but not his own facts on which no reasonable person could differ.  In Chaudhry, we have a young man that served the United States, after leaving his native Pakistan, honorably in the military only to have an ALJ's silent speed torpedo his entitlement to disability benefits.  Certainly Chaudhry got his VA benefits and if still insured for disability benefits can get SSDI for future periods.  But that isn't the promise that we as a nation made to our young men and women that served in the armed forces especially an immigrant that probably served against the cultural norm from which he emerged.  What we promised was that if he sustained injury during the course of his military service that he would receive a VA benefit for any compensable disability and if the disability precluded substantial gainful activity that he would receive SSDI to permit him some semblance of a standard of living. 

The Court should get out of the business of excusing bad decisions by the SSA under the guise of permitting a wide range of discretion.  The Court should get into the business of narrowing the range of discretion so that claimants like Chaudhry have their cases determined based on the facts of the case instead of the lottery of the identity of the individual ALJ.  Someone pass a note to the Court -- "there are administrative law judges that make mistakes and the Court is the last protection against gross error."  This case involves the grotesque error of harming our servicemen and women. 

Thursday, May 17, 2012

Beltran v. Astrue

On May 2, 2012, the Ninth Circuit decided Beltran v. Astrue.  Attorneys that handle Social Security disability cases consider the issue of signficant number of jobs (SNOJ) in the economy to constitute the Holy Grail.  Pursued and promised but never quite attained.  This case is a baby step closer to that Holy Grail. 

As the third attorney on the case, I had some reluctance to pursue the SNOJ issue.  This nuanced issue typically requires finesse and a perfect record.  The record had some traps but overall a tip in favor of pursuit.  The ALJ in the case denied Beltran disability insurance benefits as of her date last insured.  The ALJ reasoned that the ability to perform 135 jobs in a single sedentary occupation represented a large enough occupational base to expect the vocational adjustment.  The ALJ granted Beltran SSI benefits ... beginning 6 days after the expiration of her date last insured for SSDIB benefits. 

SSI carries with it a benefit tied to financial status of income and resources and grants the beneficiary Medi-Cal coverage.  Medi-Cal grants access to emergency rooms and public clinics and hospitals.  The private medical providers do not treat Medi-Cal recipients. 

SSDIB carries with it a benefit that does not depend on household income and resources and grants the beneficiary Medicare coverage after 2 years of pay status.  Medicare grants access to doctors and hospitials.  The private medical providers do treat Medicare recipients.  For Beltran, pursuing the case had real importance to her in terms of monthly benefit and access to medical care. 

The case did have a couple of problems.  Had I represented Beltran at the District Court level, I would have included a borderline age situation.  Lockwood v. Astrue had not been decided and that decision would have mired the presentation of Beltran to a crawl.  Serendipity saved me from pressing an issue that probably would have won at the District Court level but provided Beltran with no additional past due benefits.  What I perceived as an error turned out to bring good fortune to the case. 

And the real reason to blog about this case ... the strident dissent from Judge Ikuta.  In April, the Ninth Circuit issued a decision in Molina v. Astrue.  That decision broadened the use of the harmless error doctrine.  The author of that opinion, Judge Ikuta.  The majority opinion in Molina and the dissent in Beltran paints Judge Ikuta into the corner of apologist for bad decisions from the Social Security Administration.  Harmless error means that the ALJ decision contains error.  Excusing error as harmless and expanding the use of that doctrine means that the adadge "close enough for government work" continues to have vitality. 

Judge Ikuta complains that the Court usurps the perogative of the agency to make fact findings based on the slimmest of evidence.  Healthcare Employees Union v. NLRB rejected the "rational basis" test that the NLRB sought in review of agency decisions.  The Ninth Circuit, like all courts, reviews decisions of agencies on the record as a whole.  During the expansion of agency power in the last 80 years, the courts have never abdicated the role of making sure that any agency decision make sense.  In other words, the fact that there exists a rational discernable basis for a decision has never and should never rescue the decision from the probing eye of the court. 

In footnote 1 of the dissent, Judge Ikuta complains that alcohol abuse caused some of the problems and limitations found by the ALJ to afflict Beltran.  Judge Ikuta states that problems caused by a history of alcohol abuse don't count in the disability analysis.  First, the ALJ already backed out ethanol from the equation in finding Beltran eligible for benefits 6 days later.  Second, the statute and the regulations remove benefit eligibility if the disabling limitations would evaporate with abstinence.  The footnote represents a misstatement of law and fact. 

The statute requires that Beltran and other claimants for benefits have the capacity to perform a signficant number of jobs in the region in which they live or several regions of the country in light of the residucal capacity for work and in consideration of age, education, and work experience.  While it is true that employment practices and openings don't count, that truism pales when the statute requires consideration of age.  The Commissioner's regulations call this the ability to adjust to other work.  For someone aged 50 or over, the ability to perform every single unskilled sedentary job in the nation does not provide a significant enough occupational base.  For a person aged 55 or over, the ability to perform every single unskilled sedentary and light job in the nation does not provide a significant enough occupational base.  Beltran was 49 years, 11 months, and 3 weeks old at the time that her insured status expired.  The ALJ granted SSI benefits a week later and found that 1 occupation representing at most 135 jobs represented a signficant number.  That kind of sophist analysis deserves the searching scrutiny of the court to second guess the decisions of an ALJ.

Public confidence in a system of administrative adjudication demands better and the majority got it right in holding SSA's feet to the fire. 

Sunday, January 22, 2012

EAJA Offset

The recurring question of the reduction of fee awards under 42 U.S.C. §§ 406(a); 1382(d)(2) (hereafter referred to generically as “406(a)”) by the amounts awarded under 28 U.S.C. § 2412.  The question arises where counsel has submitted a fee petition or the Social Security Administration reviews the reasonableness of the fees on a review under the expedited fee process on request by the claimant, counsel, or own timely own motion.  The result is the same regardless of the scenario under which counsel seeks fees under sec. 406(a) after having first received fees under sec. 2412. 
 The uncodified portion of the EAJA provides the short answer to the question.  The Savings Provisions of Section 206 of Pub.L. 96-481, as amended by Pub.L. 99-80, § 3, Aug. 5, 1985, 99 Stat. 186, provide that:

“(b) Section 206(b) of the Social Security Act (42 U.S.C. 406(b)(1)) [section 406(b) of Title 42, The Public Health and Welfare] shall not prevent an award of fees and other expenses under section 2412(d) of title 28, United States Code [subsec. (d) of this section].  Section 206(b)(2) of the Social Security Act [section 406(b)(2) of Title 42] shall not apply with respect to any such award but only if, where the claimant's attorney receives fees for the same work under both section 206(b) of that Act [section 406(b) of Title 42] and section 2412(d) of title 28, United States Code [subsec. (d) of this section], the claimant's attorney refunds to the claimant the amount of the smaller fee.”

 (Emphasis added); see also HALLEX I-1-2-91(A).[i]  This uncodified provision articulates the intent of Congress that counsel not receive and keep both EAJA and fees under 42 U.S.C. § 406(b) “for the same work” and if counsel receives both fees then counsel shall refund the smaller fee to the claimant. 

In a case remanded under 42 U.S.C. § 405(g)(sentence 4), the court enters judgment and counsel seeks EAJA fees immediately.  The court does not retain jurisdiction and the time invested on remand is not part of the court case.  See generally Shalala v. Schaefer, 509 U.S. 292, 113 S.Ct. 2625, 125 L.Ed.2d 239 (1993).  Time invested by counsel either before the first exhaustion of administrative remedies or after the remand from the court are not part of the court case and are not “the same work.”  See also HALLEX I-1-2-91(B)(1). 

There are times when the EAJA fee can and should offset a fee payable under 42 U.S.C. § 406(a).  Those circumstances occur when the fee is “for the same work.”  The court retains jurisdiction and work performed on remand is part and parcel of the court case when the court remands pursuant to 42 U.S.C. § 405(g)(sentence 6).  Sullivanv. Hudson, 490 U.S. 877, 109 S.Ct. 2248, 104 L.Ed.2d 941 (1989); Melkonyan v. Sullivan, 501 U.S. 89, 111 S.Ct. 2157, 2162-63, 115 L.Ed.2d 78 (1991); Shalala v. Schaefer, 509 U.S. 292, 113 S.Ct. 2625, 125 L.Ed.2d 239 (1993).  If and only if the court has retained jurisdiction over the proceedings on remand and awards fees pursuant to the EAJA for that time does the offset of the EAJA fee award from the fees payable for that time expended before the Social Security Administration arise.[ii] 

The policy concerns are appropriate.  The Congressional purpose in enacting the EAJA is patent.  Congress sought to offset the costs of litigating against the government where the United States could not prove that its position was substantially justified.  Scarboroughv. Principi, 541 U.S. 401, 124 S.Ct. 1856, 1861, 158 L.Ed.2d 674 (2004) citing H.R.Rep. No. 99-120, p. 4; see also POMS GN 03990.001.  In some circumstances, the EAJA fee may be the entire fee that counsel can receive.  See e.g. McGraw v. Barnhart, 370 F.Supp.2d 1141 (N.D. Okla. 2005) rev’d on other grounds 450 F.3d 493 (10th Cir. 2006).  The district court in McGraw illustrates the proposition that in many cases the EAJA fee is the only fee for the court work.  This can arise in small benefit level cases (e.g. SSI with income by a non-eligible spouse), closed period (including cases where the back benefit pool is cut off by the claimant getting benefits on a subsequent application with or without the encouragement or assistance of counsel), or other circumstances.  Reducing the fee payable for time spent before the Social Security Administration by the amount of the fee received by counsel before the courts defeats the intent of Congress that counsel only get paid once for each hour of work.  Reducing the administrative award by the court fees means one set of hours did not get paid, at all. 

It is a true observation that the claimant gets no true fee relief by the presence of the EAJA award not offsetting an administrative fee.  Where the administrative fee exhausts the 25% withheld for that purpose, the question raised is whether counsel can keep the entire EAJA fee for court work and the entire 25% for the administrative work.  The claimant has received some fee relief insofar as counsel had any incentive to take a case to the district court.  If it were not for the presence of EAJA fees, many cases would become unviable.  This would violate the intent of Congress that people have the resources to litigate against government action that is not substantially justified.  Therefore, allowing counsel to retain an EAJA fee and receive fully reasonable compensation for different hours expended before the Social Security Administration is correct.

Finally, any practice by an ALJ, ODAR, Region, or SSA generally to reduce the amount of the sec. 406(a) fees by the amount of the EAJA fees for different time means that counsel that seeks fees both before the Social Security Administration and before the courts for representation of a claimant will have the amount of the EAJA fees offset twice.  The courts will offset the amount of a fee payable under 42 U.S.C. § 406(b) by the amount of the EAJA fee.  Scarborough, 124 S.Ct. at 1862 fn. 2.  It is the court that is obligated not to offset the EAJA fee against the sec. 406(b) fee but to order counsel to reimburse the smaller of the two fees for time paid for twice. 

In light of the uncodified portion of the EAJA, the intent of Congress, and the possibility that in many cases the court will order the reimbursement against a fee payable under sec. 406(b), it is not appropriate to reduce, credit, offset, or otherwise take into account the amount of a prior EAJA award in setting the fees payable under sec. 406(a). 

[i] This section “provides that when a representative received fees for the same work under both section 206(b) of the Social Security Act and EAJA, the representative must refund to the claimant the amount of the smaller fee.”  The “NOTE” in the following paragraph ignores the operative phrase “for the same work.”  POMS GN 03990.040 clarifies the “for the same work” requirement for offset.  See also POMS SI 00830.100(B)(5). 

[ii] A fair question, beyond the pale of this position paper, is whether time expended by counsel after remand from the court under sentence 6 should be the focus of fees under sec. 406(a) or 406(b). 

Tuesday, January 3, 2012

Wall Street Journal and Binder & Binder

Beginning on December 21, 2011, the Wall Street Journal began a series of articles assailing the disability system and those that work in that system. The first article focuses on Binder & Binder.  Damian Paletta and Dionne Searcey has taken the task with relish to assault the system that functions as a safety net, claiming that unemployment fuels the uptick in disability applications.

The assault on representatives and on the system as a whole constitutes a pincer attack with the apparent intent to call for a dismantling of the current structure and placing in it something different.  What Paletta and Searcey appear to have missing from the quiver is a basic understanding of the disability program and how Congress intended it to function ab initio.

The basic structure of the Act calls for disability benefits to individuals that suffer from "severe" impairments that can no longer perform not only their past work but any other work that exists in significant numbers either in the region in which the person lives or in several other regions of the country.  42 USC §§ 423(d)(2)(A)1382c(a)(3)(B).    So if a person cannot perform his past work and because of those impairments cannot perform any other work that actually exists in the economy, that person suffers from a disability.  Throw in the other statutory factors to consider age, education, and work experience and the pool of people that meet the statutory test expands.

We have several factors that implicate an increasing number of disability applicants.  Yes Damian and Dionne, the demographics of the United States are aging.  With the baby boomers aging and the average age creeping to over 36, the incidence of disability claims in a statutory construct will increase as a matter of design.  Second, the United States witnessed the exportation of unskilled labor to countries with cheaper sources of labor and more lenient laws about workplace and pay.  Without getting into an international economics discussion of whether the presence of jobs in Mexico, Malaysia, China, or Nigeria, everyone can agree that the numbers of unskilled labor jobs in the United States has dwindled.  If a statute places benefit entitlement on the ability to perform a significant number of jobs in the economy and a whole class of work no longer exists in the economy, then the incidence of disability claims in a statutory construct will increase as a matter of design. Third, the United States economy slid headfirst into a recession beginning in 2008 and although the government would like us to believe that the recession is over we can all take notice that the true unemployment rate, including those that have given up looking for work, remains high.  The number of people not in the labor force rose by almost 2 million in just 12 months.  Because the statute places benefit entitlement on the ability to perform a significant number of jobs in the economy and a work no longer exists in the economy, then the incidence of disability claims in a statutory construct will increase as a matter of design.

So I agree with Paletta and Searcey, the number of disability claims has risen and that rise is due in part to economic conditions.  The Modest Proposal then stands quite starkly in the wind.  We can tell people with severe impairments that although they can no longer perform their past work and there is nothing else for them to do in terms of work in the economy that they must whither on the vine or we can fulfill the intent of Congress and extend the lifeline to them.  Instead of calling for an overhaul of the disability system, Paletta and Searcey ought be calling on the agency to take a closer look at the world and ask the agency to make reasonable decisions based on the workplace as it exists.

Which takes this conversation back to where it started, Binder & Binder.  We have an aging population that lives longer and survives catastrophic illness and injury because of advances in modern medicine that does not necessarily return those people to function.  Binder & Binder see clearly an economic opportunity to give significant help to a class of people that the government frequently steamrolls.  We can label those people the "arguably disabled."  Binder & Binder also seek to help those that chose not to deal with the federal bureaucracy because companies make a living preparing short form tax returns.  The government across agencies has gotten so complex that many want a professional to handle the matter.  We can label those people the "bureaucracy challenged."  Enter Binder & Binder with a business model to address both.

Paletta and Searcey report that Charles Binder received over $22 million in fees in 2010.  If we assume an average fee for a successful case of $2,000, then the report in the WSJ means that Charles Binder successfully represented 11,000 people.  The agency processed 2.5 million claims in 2005.  Report of the SSAB, chart 69.  Quadruple the number of people represented by Binder & Binder just for giggles.  Assuming that Binder & Binder represented 50,000 people successfully, that is still less than 5% of all the claims handled by SSA in any fiscal year of recent report.

And that is the untold story.  Disability claims are rising because of demographics and economics, factors built into the statute.  People with impairments are more likely to use professional representation because their cases are difficult or nuanced, or they just don't want to deal with the government while trying to deal with life.   What Paletta and Searcey see and report is of no consequence.  The sky is not falling.  The nation needs economic reforms that will take decades to play out.  In the interim, we must take care of those that suffer from severe impairments that have robbed them not only of the ability to perform their past work but also of any other work that exists in the economy.