The EAJA Offset and 406(b) Fees

The Equal Access to Justice Act permits an attorney to obtain a fee outside of the confines of the Social Security Act.  The savings provision (Section 206 of Pub. L. 96–481, as amended by Pub. L. 99–80, §3, Aug. 5, 1985, 99 Stat. 186) provides in relevant part that:

Section 206(b) of the Social Security Act (42 U.S.C. 406(b)(1)) shall not prevent an award of fees and other expenses under section 2412(d) of title 28, United States Code. Section 206(b)(2) of the Social Security Act 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 and section 2412(d) of title 28, United States Code, the claimant's attorney refunds to the claimant the amount of the smaller fee.

 Parish v. Comm'r of Soc. Sec. Admin. reads the same work provision broadly, to include all civil actions on the application.  Morales v. Colvin applied the offset to EAJA fees paid for the work before the agency after remand under sentence six pursuant to Sullivan v. Hudson.

Enter the fray and apply Clark v. Astrue.  Clark holds that the plain text of 42 USC § 406(b) limited the dollar amount of fees awarded for cart work, not the combined fees for administrative work under §406(a) and (b).  The District Court held that it should reduce the amount of withholding by the administrative fee and by the EAJA fee.  The footnote in Clark explains the math:

The district court arrived at this figure as follows: $18,017 (25% of Clark's past-due benefits) minus $5,300 (amount awarded to Ms. Cook under § 406(a)) minus $6,058.68 (amount previously awarded to Mr. Halpern under the Equal Access to Justice Act ("EAJA"), 28 U.S.C. § 2412, for his representation of Clark in this matter). The district court's $6,058.68 deduction for the prior EAJA award is not at issue in this appeal.

Clark answered the question of whether the court could award $18,017 or whether it could only award $14,717, the amount of the withholding less the administrative fee.  The real question is whether it matters.

The agency will only withhold $18,017 under the facts of Clark.  The Commissioner certifies to the treasury the payment of the administrative fee of $5300.  The Commissioner continues to withhold $14,717.  Once the award exceeds $14,717, the most that the Commissioner will ever pay is $14,717.  The only time in which Clark makes sense is if the motion seeks in the order sets out a payment of $18,017 to the attorneys representing the plaintiff in the civil action for review by the District Court net of the EAJA fees already paid.  If the motion for fees seeks a "net" payment $11,958.32 on the premise that the net payment reimburses the client for the amount of the EAJA fees, all the while ignoring the administrative fee of $5300, and the proposition that the net fee award $758.68 in fee relief, then the savings provision of the EAJA has been satisfied.  In the real world, the most that the Commissioner would ever certify from the withholding is $14,717.  The Commissioner already certified $5300 to the administrative representative.  If the court ordered the fee of $18,017 and the attorney representing the claimant in court received $14,717, the savings provision requiring reimbursement of the smaller of the two fees for the same work would apply, resulting in a reimbursement to the claimant of $6058.68.

The question would then be whether the attorney could engage in self-help to make up the difference in the field awarded by the court ($18,017) in the amount actually certified by the Commissioner and paid by Treasury ($14,717) to the tune of $5300, and then reimbursing the client $758.68 and satisfy the statute.  To be sure, Clark is correct that the court fees and the administrative fees are separately calculated.  But that does not mean that when the available withholding is reduced by an administrative fee award and the residual was paid over to the court attorneys that those attorneys can then invade the reimbursement provisions of the savings award.

The court should never award a "net" fee under 42 USC § 406(b).  The 11th circuit got it wrong, completely wrong in Jackson v. Comm'r of Soc. Sec. Permitting the net fee award simply allows the attorney to evade the reimbursement.  Why else would the attorney have appealed the order in Jackson.   To keep the $3,371.93 in the EAJA fee.  Appealing for an accounting problem -- please.