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)

853 F.
2d 858
22 Soc.Sec.Rep.Ser. 563, Unempl.Ins.Rep. CCH 14123A

Mary E. SHOEMAKER, Plaintiff-Appellee,
v.
Otis R. BOWEN, Secretary of Health and Human Services,
Defendant-Appellant.
No. 87-7696
Non-Argument Calendar.
United States Court of Appeals,

Eleventh Circuit.
Aug. 30, 1988.
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.
Appellee's attorney subsequently filed a petition in federal district court

requesting an award of attorney's fees pursuant to 42 U.S.C. Sec. 406(b).2 He
requested a fee of $2,015.75 for services rendered before the court. The
attorney stated that the request did not exceed twenty five percent of "past-due
benefits payable or paid" to appellee, and suggested that the funds withheld
from the past-due benefits by the Secretary and the $726.13 the attorney
withheld from appellee's interim benefits and placed in a trust account be used
for payment of the award.
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
Section 406(b) authorizes attorney's fees "not in excess of 25 percent of the

total past-due benefits to which the claimant is entitled," and provides that the
Secretary may certify such an amount "out of, and not in addition to, the
amount of such past-due benefits." 42 U.S.C. Sec. 406(b). Under an earlier
statutory scheme, past-due benefits represented the amount of benefits that
accrue during a claimant's appeal of the termination of benefits.4 Due to the
financial burden on claimants during the appeal process, Congress recently
enacted section 423(g), which permits claimants to continue receiving disability
payments during the redetermination of their entitlement to benefits.5 See
Schweiker v. Chilicky, --- U.S. ----, ---- n. 3, 108 S.Ct. 2460, 2474 n. 3, 101
L.Ed.2d 370 (1988) (Brennan, J., dissenting).
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.
We believe that the Secretary's interpretation of section 406(b) fails to promote

the goals of Congress in enacting the provision. While one of the purposes of
section 406 is to limit attorney's fees, Congress also intended "to encourage
effective legal representation" by ensuring that attorneys will receive a fee for
their representation. Dawson v. Finch, 425 F.2d 1192, 1195 (5th Cir.), cert.
denied, 400 U.S. 830, 91 S.Ct. 60, 27 L.Ed.2d 60 (1970); see Watford v.
Heckler, 765 F.2d 1562, 1566 (11th Cir.1985) (citing S.Rep. No. 404, 89th
Cong., 1st Sess. 422 (1965), reprinted in 1965 U.S.Code Cong. & Admin.News
1943, 2062). Under the Secretary's interpretation, claimants who do not elect to
receive interim benefits have a greater amount of money available for a
reasonable attorney fee than those who elect the interim benefits. This would
place claimants who elect the interim benefits at a disadvantage in obtaining
effective legal representation. 6
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.
42 U.S.C. Sec. 423(g) provides in part:

(g) Continued payment of disability benefits during appeal
(1) In any case where-(A) an individual is a recipient of disability insurance benefits, or of child's,
widow's, or widower's insurance benefits based on disability,
(B) the physical or mental impairment on the basis of which such benefits are
payable is found to have ceased, not to have existed, or to no longer be
disabling, and as a consequence such individual is determined not to be entitled
to such benefits, and
(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
Congress provided in 42 U.S.C. Sec. 406(b)(1) that:

Whenever a court renders a judgment favorable to a claimant under this
subchapter who was represented before the court by an attorney, the court may
determine and allow as part of its judgment a reasonable fee for such
representation, not in excess of 25 percent of the total of the past-due benefits to
which the claimant is entitled by reason of such judgment, and the Secretary
may, notwithstanding the provisions of section 405(i) of this title, certify the
amount of such fee for payment to such attorney out of, and not in addition to,
the amount of such past-due benefits. In case of any such judgment, no other
fee may be payable or certified for payment for such representation except as
provided in this paragraph.
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
month the determination or decision is made.

20
C.F.R. Sec. 404.1703
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)
Congress recognized that the repayment of interim benefits after an unfavorable

ruling may make individuals reluctant to make this election. The legislative
history reflects an intent to lessen this impact by allowing the Secretary to
consider waiving repayment or providing for an extended repayment plan. See
H.R.Rep. No. 618, 98th Cong., 2d Sess. 18 (1984), reprinted in 1984 U.S.Code
Cong. & Admin.News 3038, 3055; see also Soper v. Heckler, 754 F.2d 222,
225 (7th Cir.1985) ("repayment may be waived if the appeal was taken in good
faith")
We are not persuaded by appellant's additional argument that a proposed 1987

amendment to section 406 evidences a congressional understanding that a court
may not consider interim benefits in determining a reasonable attorney's fee.
Appellant asserts that this proposed amendment would have provided a specific
formula for determining attorney's fees upon decisions made with respect to
section 423(g) interim benefits. See H.R. 3545, 100th Cong., 1st Sess., 133
Cong.Rec. H9185, H9276 (1987). Appellant notes that this provision did not
survive the conference process and thus section 406 was not amended. We
believe that Congress simply could have decided that the amendment was
unnecessary

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)

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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)

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853 F.

22 Soc.Sec.Rep.Ser. 563, Unempl.Ins.Rep. CCH 14123A

United States Court of Appeals,

Appellee's attorney subsequently filed a petition in federal district court

Section 406(b) authorizes attorney's fees "not in excess of 25 percent of the

We believe that the Secretary's interpretation of section 406(b) fails to promote

42 U.S.C. Sec. 423(g) provides in part:

Congress provided in 42 U.S.C. Sec. 406(b)(1) that:

month the determination or decision is made.

C.F.R. Sec. 404.1703

Congress recognized that the repayment of interim benefits after an unfavorable

We are not persuaded by appellant's additional argument that a proposed 1987

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