22 Soc - Sec.rep - Ser. 563, Unempl - Ins.rep. CCH 14123a Mary E. Shoemaker v. Otis R. Bowen, Secretary of Health and Human Services, 853 F.2d 858, 11th Cir. (1988)
22 Soc - Sec.rep - Ser. 563, Unempl - Ins.rep. CCH 14123a Mary E. Shoemaker v. Otis R. Bowen, Secretary of Health and Human Services, 853 F.2d 858, 11th Cir. (1988)
2d 858
Frank W. Donaldson, U.S. Atty., Jenny L. Smith, Marvin Neil Smith, Jr.,
Asst. U.S. Attys., Birmingham, Ala., Russell Shultis, Office of General
Counsel, Dept. of Health and Human Services, Baltimore, Md., for
defendant-appellant.
R. Michael Booker, Shores & Booker, Birmingham, Ala., for plaintiffappellee.
Appeal from the United States District Court for the Northern District of
Alabama.
Before TJOFLAT, VANCE and COX, Circuit Judges.
VANCE, Circuit Judge:
The sole issue in this appeal is whether a district court may consider interim
benefits received by a social security claimant pursuant to 42 U.S.C. Sec.
423(g) in computing an award of reasonable attorney's fees under 42 U.S.C.
Sec. 406(b). Because we find that the consideration of interim benefits for
attorney's fee awards is not prohibited by the language of the statutes and the
legislative history, and that absent an election by a claimant the interim benefits
would be payable as past-due benefits, we affirm the district court's decision.
On March 12, 1979 appellee applied for social security disability benefits. The
On March 12, 1979 appellee applied for social security disability benefits. The
Secretary subsequently determined her to be disabled and awarded benefits. On
August 13, 1982 the Social Security Administration determined that her
disability had ceased as of July 1982. After a requested hearing, the decision
was upheld by an administrative law judge. When the Appeals Council
affirmed the ALJ's decision, appellee sought judicial review in federal district
court. Finding that the ALJ failed to apply the proper legal standard, the district
court remanded the case to the Secretary for further review. On remand the
Secretary determined that appellee continued to be disabled and awarded her
benefits.
During the pendency of the case on remand, appellee elected to receive "interim
benefits" pursuant to 42 U.S.C. Sec. 423(g). 1 As a result she received monthly
benefits from December 1984 until December 21, 1986 when she was placed
back on continuing pay status. Due to the favorable administrative decision,
appellee received a lump-sum award of $4,768.88. This sum represented pastdue benefits for the period from October 1982, when her payments ceased,
until November 1984, when she elected interim benefits.
The Secretary opposed the request on the ground that under section 406,
attorney's fee awards may not exceed twentyfive percent of a claimant's pastdue benefits. The Secretary maintained that interim benefits, because they have
already been paid, are not past-due benefits. The Secretary noted that $1,589.62
was withheld from the claimant's past-due benefits for attorney's fees. Because
$300 was awarded to the attorney for his administrative services,3 the Secretary
argued that only $1,289.62 was available for a fee award for the attorney's
services before the court.
The district court awarded attorney's fees in the amount of $1,642.50. The
district court rejected the Secretary's argument that attorney's fees could not be
granted out of the interim benefits. Recognizing that the purpose of section 406
was "to limit the amount attorneys may collect" and reasoning that section
423(g)'s policy of eliminating hardship on claimants may not be achieved if the
statute affected attorney's fees, the district court concluded that "Congress did
not intend to limit further attorney's fees by its enactment of Section 423(g)."
7
Because Congress did not specifically refer to attorney's fee awards when it
enacted section 423(g), the Secretary draws a distinction between "interim
benefits" and "past-due benefits." The Secretary contends that neither the
statutory language nor the legislative history indicates that an attorney's fee
award under section 406(b) may be based in part on section 423(g) interim
payments. According to the Secretary this demonstrates that Congress did not
intend to increase the funds available for attorney's fee awards.
10
The Secretary's interpretation is also illogical. The Secretary argues that the
interim benefits received by appellee resulted not from the actions of her
counsel, but as a result of legislation. The Secretary adds that because interim
benefits are paid prior to the reinstatement of benefits they are not "past-due
benefits." We disagree. Section 423(g) provides that a claimant may receive the
interim benefits pending a final decision by the Secretary, but if the decision is
unfavorable the interim benefits are considered "overpayments" and must be
repaid. 42 U.S.C. Sec. 423(g)(2)(A).7 The claimant, therefore, is not entitled to
the benefits until the Secretary renders a favorable decision. We note also that
after the Secretary determines that the claimant is entitled to continuing
benefits, the claimant receives past-due benefits only for the period from the
cessation of benefits until the time of the election. Absent an election by the
claimant, the interim benefits accumulate and are reimbursed as "past-due
benefits."
11
We recognize that where Congress has not directly addressed the question at
issue, the agency's interpretation of the statute should be accorded considerable
weight. Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467
U.S. 837, 843-44, 104 S.Ct. 2778, 2782, 81 L.Ed.2d 694 (1984); Southern
Motors Carriers Rate Conference v. United States, 773 F.2d 1561, 1567 (11th
Cir.1985). Courts, however, need not accept an agency's interpretation that
frustrates the underlying congressional policy. See Bureau of Alcohol, Tobacco
& Firearms v. Federal Labor Relations Auth., 464 U.S. 89, 97, 104 S.Ct. 439,
444, 78 L.Ed.2d 195 (1983); see also Frank Diehl Farms v. Secretary of Labor,
696 F.2d 1325, 1331 (11th Cir.1983) ("[t]he court remains the final authority
on issues of statutory construction"). Because the Secretary's interpretation is
unreasonable and not consistent with the purposes of the statute and the
legislative history, we are not required to accept it.8 We therefore hold that
interim benefits received pursuant to 42 U.S.C. Sec. 423(g) may be considered
by a district court in awarding attorney's fees under 42 U.S.C. Sec. 406(b).
12
AFFIRMED.
(C) a timely request for a hearing under section 421(d) of this title, or for an
administrative review prior to such hearing, is pending with respect to the
determination that is not so entitled,
such individual may elect (in such manner and form and within such time as the
Secretary shall by regulations prescribe) to have the payment of such benefits ...
continued for an additional period beginning with the first month beginning
after January 12, 1983, for which (under such determination) such benefits are
no longer otherwise payable, and ending with the earlier of (i) the month
preceding the month in which a decision is made after such a hearing, (ii) the
month preceding the month in which no such request for a hearing or an
administrative review is pending, or (iii) June 1989.
2
On June 30, 1987 the Secretary authorized appellee's attorney to receive a $300
fee for his administrative services. Because the attorney was holding $726.13 in
a trust account, the Secretary authorized him to take the money from this
account
The district court also has awarded attorney's fees of $487.50 under the Equal
Access to Justice Act ("EAJA"), 28 U.S.C. Sec. 2412. Attorney's fee awards
under EAJA are not subject to the statutory maximum in 42 U.S.C. Sec. 406(b).
Watford v. Heckler, 765 F.2d 1562, 1567 (11th Cir.1985). Because the EAJA
and section 406 awards represent compensation for the same work, however,
the district court ordered that the smaller fee be refunded to the client.
Past-due benefits are not defined in the statute, but the Secretary's regulations
provide:
"Past-due benefits" means the total amount of benefits payable under title II of
the Act to all beneficiaries that has accumulated because of a favorable
administrative or judicial determination or decision, up to but not including the
One of the primary purposes of the interim benefits provision was to "ease the
severe financial and emotional hardships that would otherwise be suffered by
disabled persons." H.R.Rep. No. 618, 98th Cong., 2d Sess. 18 (1984); reprinted
in 1984 U.S.Code Cong. & Admin.News 3038, 3055; see also Heckler v. Day,
467 U.S. 104, 126-28 n. 8, 104 S.Ct. 2249, 2261-62 n. 8, 81 L.Ed.2d 88
(Marshall, J., dissenting) (Senate Committee Report explained that emergency
relief was warranted for claimants who had had their benefits terminated and
then reinstated after appeal)
See Santos Rivera v. Secretary of Health & Human Servs., 674 F.Supp. 963,
965 (D.P.R.1987)