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). 

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[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).