2. May a Representative Charge for Time After the Favorable Decision in Social Security Cases?

This is Part II of a series on fee petitions in Social Security cases.  We previously addressed fee petitions as including travel time.  To recap:

When the fee agreement process does not apply, a representative can charge and receive a fee only upon authorization of the Commissioner. Before 1991, the fee petition process was the norm. Now the fee petition process is the exception to the rule. 42 U.S.C. § 406(a)(1) describes the exception to the rule. The fee petition process applies whenever the fee agreement process does not with limited exceptions. HALLEX I-1-2-51. The fee petition process is set out in the regulations. See, 20 C.F.R. §§ 404.1720 and 416.1520. Subsections (b) and (c) of those two sections both provide for the petition, decision, and review process. This raises the question of the parameters of agency discretion in setting fees.

May a Representative Charge for Time After the Favorable Decision?

A claimant generally contracts for the pursuit of benefits.  A period of disability or a finding of disability does not pay the bills or put food, clothing, or shelter in the possession of the claimant for benefits.  The regulatory factor – the purpose of the program – obligates a retained representative to complete the representation process to make sure that the claimant receives all of the benefits awarded by a favorable decision or determination of the agency.          

The model fee agreement language obligates the representative to secure past-due benefits to the claimant.[i]  The model fee agreement brings the interests of the claimant and the representative into harmony after the issuance of a favorable decision or determination.  Both the claimant and the representative have a pecuniary interest in maximizing the past due benefits payable to the claimant to increase the recovery of the claimant and the representative share of that recovery.

To preclude a representative from fulfilling the implied term of the model fee language would frustrate the reasonable expectations of the claimant and provide a financial disincentive to the representative to complete the work on the case.  While it may behoove a non-party to the agreement not to burden the agency with getting the math right, such a path would constitute an ethical breach of the fiduciary obligations of the retained representative and deprive the claimant of the benefit of the social contract – the disability benefits promised by the Act.

The constraints on the time and scope of the fee agreement are a matter of contract.  ABA Formal Opinion 93-379.  If the claimant and representative desired to terminate the work of the professional on the day that the agency issues a favorable decision or determination, then that critical term would need to be included in the fee agreement.  At least for lawyers, it would constitute an unethical act to detach representation only yards from the finish line. 

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[i] See https://www.ssa.gov/representation/model_fee_agreement_language.htm. 

Remand for Further Proceedings in Esparza v. Colvin

The little trinkets of gold filter down in unpublished opinions.  Esparza v. Colvin provides insight into the court's thinking and assumptions that will prove dangerous.

Esparza remands for further proceedings because the ALJ did not give good reasons for rejecting the claimant's testimony or the opinions of the treating physician.  Pretty pedestrian stuff, the issues that permeate Social Security cases on a daily basis.  The federal courts decide those issues every day.

But a battle wages on in the Ninth Circuit over the remand versus pay issue.  The agency lawyers and the court have yet to address the elephant in the room -- the statute clearly permits the courts to find that the claimant deserves to be paid without a remand for further proceedings.  42 USC sec. 405(g) and (i).  More on that another day.

Esparza remands for further proceedings as a useful exercise to further develop the record.  Fair enough, the court has discretion under the statute and the cases tip the hat in that direction without giving fair account to the statute.  The next sentence has a bomb waiting to explode:

If she deems it appropriate, the ALJ should reopen the hearing to receive additional evidence.  

Whoa Nellie.  We just spent six pages analyzing how the ALJ abused her discretion in weighing evidence and now the court wants to inject another round of unfettered discretion into the process.  Bad politics.

 The closed remand also violates agency policy.  When the ALJ makes a decision on remand by the court,

The ALJ will generally decide the remanded issues through the date of the new hearing  decision, or in title II cases involving an expired date last insured, through the date of last insured status.

HALLEX I-2-8-18.  How will the ALJ adjudicate through the date of the new decision without taking new evidence of recent education, recent work attempts/activity, and medical treatment.

When the ALJ makes an unfavorable decision, the Appeals Council will get around to the request for review in about 18 months.  The district court will take at least another year to decide the case at that leve.  And the court of appeals, Betty hold the door because that level of review will take two years.  We know that because the Ninth Circuit case number is 13-16522.  The "13" -- that means the appellant filed a notice of appeal in 2013.  The District Court case number is 2:12-cv-00733-SPL.  The "12" -- that means that the claimant for benefits filed a complaint in that court in 2012.

The case is likely five years stale from the date of original ALJ decision.  Discretion to receive additional evidence is misguided if not simply wrong.  It is only palatable if the ALJ will just award benefits to a claimant that probably applied for disability in 2008 (my guess).  Thomas Alvarez Esparza has endured a probable seven-year wait and won't get a decision from SSA until mid- to late-2016.