Petition for Writ of Certiorari — Shalala v. Schaefer

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9 il 31 1 AUG 1

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¢ 1982

In the Supreme Court of the United States

OCTOBER TERM, 1992

LovuIs W. SULLIVAN, SECRETARY OF HEALTH AND

HUMAN SERVICES, PETITIONER

RICHARD H. SCHAEFER

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

KENNETH W. STARR

Solicitor General

STUART M. GERSON

Assistant Attorney General

MAUREEN E. MAHONEY

Deputy Solicitor General

EDWIN S. KNEEDLER

Assistant to the Solicitor General

WILLIAM KANTER

MICHAEL E. ROBINSON

Attorneys

Department of Justice

Washington, D.C. 205230

(202) 514-2217

QUESTION PRESENTED

In this action for judicial review of the denial of

a claim for Social Security disability benefits, the

district court, in accordance with sentence four of

12 U.S.C. 405(2), reversed the Secretary’s decision

and remanded for further proceedings. The question

presented is:

Whether, in light of Sullivan vy. Finkelstein, 496

U.S. 617 (1990), and JMelkonyan vy. Sullivan, 113

S. Ct. 2157 (1991), the court of appeals correctly

held that the district court’s remand order was not a

‘tinal judgment” that triggered the 30-day period

for filing an application for attorney’s fees under the

Equal Access to Justice Act, 28 U.S.C. 2412(d).

(1)

PARTIES TO THE PROCEEDING

Petitioner, the defendant below, is Louis W.

Sullivan, the Secretary of Health and Human Serv-

ices. Respondent, the plaintiff below, is Richard H.

Schaefer.

TABLE OF CONTENTS

Page

EE ee i 1

Jurisdiction aa 2

Statutory provisions iaveived Re ions oe 2

Statement... 6k 3

Reasons for gating the petition . ‘es! on 9

Conclusion . 6 aie 19

Appendix A ~ we la

LES SS TD 3a

Appendix C hii . 9a

Appendix D ................ EN 13a

Appendix E a 26a

I. scsnmnnetsoroanccesosee 28a

TABLE OF AUTHORITIES

Cases:

Bowen V. Galbreath, 485 U.S. 74 (1988) x

Frizzell v. Sullivan, 937 F.2d 254 (5th Cir. 1991) 17

Gutierrez V. Sullivan, 953 F.2d 579 (10th Cir.

9 9,17

Hafner Vv. Sullivan, No. 91- 1634 (8th Cir. Aug. 11,

1992) iuaiactue 12

Hewitt v. Helms, 482 U.S. 155 (1987) 15

Luna Vv. Department of HHS, 948 F.2d 169 (5th

i. seeeensernencons a | FC

Melkonyan V. Sullivan, 111 S. Ct. 2157 (1991). 4, 6-7. 9.

10, 12, 13, 14, 18

Seanlon v. Sullivan, No. 91-55516 (9th Cir. July

24, 1992) 18

Sparling Vv. Sullivan, 785 F. Supp. 312 (N.D.N.Y.

1992) 17-18

Sullivan Vv. Finkelstein, 496 U. s. 617 (1990) 4, 5,9, 11,

13, 14, 15, 16

Sullivan Vv. Hudson, 490 U.S. 877 (1989) 15, 16

Texas State Teachers Ass’n Vv. Garland Indep.

School Dist., 489 U.S. 782 (1989) 15

Welter v. Sullivan, 941 F.2d 674 (8th Cir. 1991) 1,7

(111)

Statutes, regulations and rule: Page

Equal Access to Justice Act, Pub. L. No. 99-80,

§ 3, 99 Stat. 186 “

Equal Access to Justice Act, 28 U.S.C. 2412:

28 U.S.C. 2412 3

28 U.S.C. 2412(d) 3

28 U.S.C. 2412(d) (1) (A) 3

28 U.S.C. 2412(d) (1) (B) 3, 4, 6, 11

28 U.S.C. 2412(d) (2) (G) 3, 4, 11

Social Security Act, Tit. I], 42 U.S.C. 401 ¢f seq. 5

$ 205(2), 42 U.S.C. 405(g2) possim

$ 206(b) (1), 42 U.S.C. 406(b) (1) 8

28 U.S.C. 1291 4,5, 10

20 C.F.R. 404.984 (1991) 6

Fed. R. App. P. 4(a) (1) 6

Miscellaneous :

Social Security Administration, Annual Report to

the Congress (Apr. 1990) 18

Social Security Administration, Annual Report to

the Congress (May 1991) 18

Social Security Administration, Annval Report to

the Congress (Apr. 1992) 18

H.R. Rep. No. 120, 99th Cong., Ist Sess. (1985) 15

Iu the Sagrenw Cart af ue United States

OCTOBER TERM, 1992

No.

Lovis W. SULLIVAN, SECRETARY OF HEALTH AND

HUMAN SERVICES, PETITIONER

MICHARD H. SCHALFER

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

The Solicitor General, on behalf of the Secretary

of Health and Human Services, respectfully petitions

for a writ ef certiorari to review the judgment cof

the United States Court of Appeals for the Eighih

Circuit in this case.

OPINIONS BELOW

The opinion of the court of appeals (App., infra,

la-2a) is unpublished, but the decision is noted at

960 F.2d 1053 (Table). The prior opinion of the

court of appeals in Welter v. Sullivan (App., infre,

3a-Sa), on which the court relied in this case, is re-

ported at 941 F.2d 674. The opinions of the district

court and reports of the magistrate (App., infra,

Ya-l2a, l3a-25a, 26a-27a, 28a-4la) are not reported.

il)

JURISDICTION

The judgment of the court of appeals was entered

on April 17, 1992. On July 16, 1992, Justice Black-

mun extended the time within which to file a petition

for a writ of certiorari to and including August 15,

1992 (a Saturday). The jurisdiction of this Court

is invoked under 28 U.S.C. 1254(1).

STATUTORY PROVISIONS INVOLVED

1. Section 205(g) of the Social Security Act, 42

U.S.C. 405(g2), provides in relevant part:

Any individual, after any final decision of the

Secretary made after a hearing to which he was

a party, * © * may obtain a review of such deci-

sion by a civil action * * *. The [district] court

shall have power to enter, upon the pleadings

and transcript of the record, a judgment affirm-

ing, modifying, or reversing the decision of the

Secretary, with or without remanding the cause

for a rehearing. * * * The court may, on motion

of the Secretary made for good cause shown be-

fore he files his answer, remand the case to the

Secretary for further action by the Secretary,

and it may at any time order additional evidence

to be taken before the Secretary, but only upon

a showing that there is new evidence which is

material and that there is good cause for the fail-

ure to incorporate such evidence into the record

in a prior proceeding; and the Secretary shall,

after the case is remanded, and after hearing

such additional evidence if so ordered, modify

The Equal Access to Justice Act (EAJA), 28

U.S.C, 2412, provides in relevant part:

(d)(1)(A) Except as otherwise specifically

provided by statute, a court shall award to a

prevailing party other than the United States

fees and other expenses, in addition to any costs

awarded pursuant to subsection (a), incurred by

that party in any civil action * * * brought by

or against the United States in any court having

jurisdiction of that action, unless the court finds

that the position of the United States was sub-

stantially justified cr that special circumstances

make an award unjust.

(B) A party seeking an award of fees and

other expenses shall, within thirty days of final

judgment in the action, submit to the court an

application for fees and other expenses which

shows that the party is a prevailing party and

is eligible to receive an award under this subsec-

tion, and the amount sought * * *. The party

shall also allege that the position of the United

States was not substantially justified. * * *

* * * * «

(2) For purposes of this subsection—

” ” ad x

(G) “final judgement” means a judgment that

is final and not appealable, and includes an order

of settlement;

* * x Saal *

STATEMENT

or affirm his findings of fact or his decision, or

both, and shall file with the court any such addi-

tional and modified findings of fact and decision,

and a transcript of the additional record and

testimony upon which his action in modifying

or affirming was based.

This case involves the timeliness of an application

for attorney’s fees under the Equal Access to Justice

Act (EAJA), 28 U.S.C. 2412(d), in an action for

judicial review of the denial by the Secretary of

Health) and Human Services of a claim for Social

Security benefits. Specifically, it presents the ques-

Lion of when the 30-day period for filing an EAJA

fee application commences in a case in which the dis-

trict court reverses the Secretary’s decision and re-

mands the cause to the Secretary for further proceed-

ings pursuant to sentence four of 42 ULS.C, 405(¢).

This Court’s decisions in Melkonyan vy. Sullivan, 111

S. Ct. 2157 (1991), and Sullivan vy. Finkelstein, 496

U.S. 617 (1990), have already resolved that question:

because such an order is an appealable “final judg-

ment” under 28 U.S.C. 1291, the claimant must file

an EAJA application within 30 days of when the

time for taking an appeal of the remand order ex-

nires. The court of appeals in this case, however, (is-

regarded those rulings. It held that such a remand

order is vot a final judgment, and that respondent’s

AJA application—which was filed more than a year

later, after proceedings on remand were completed—

therefore was timely. Because Melkonyan and Finkel-

ste) dispose of the question presented, we believe that

summary reversal is warranted.

1. Under EAJA, a fee application must be filed

“within thirty days of final judgment in the action.”

28 U.S.C. 2412(d)(1)(B). The term “tinal judg-

ment” means “a judgment that is final and not ap-

vealable.”” 28 U.S.C. 2412(d)(2)(G).

In Velkonyau, 1118. Ct. at 2163-2165, and Finkel-

stein, 496 U.S. at 624-627, this Court recognized that

there are two (and only two) kinds of remand orders

in an action for judicial review under 42 U.S.C.

405(e). Sentence four provides that the district court

“shall have power to enter, upon the pleadings and

transeript of the record, a judgment affirming, mod-

ifyvine, or reversing the decision of the Secretary, with

or without remanding the cause for a rehearing.”

The Court held in Finielste’» that such an order is a

“final judgement” that is subject to immediate appeal

pursuant to 28 U.S.C. 1291, even when it is accom-

panied by a remand order. 496 U.S. at 625, 629.

A district court also has authority, in limited cir-

cumstances, to remand a case to the Secretary pur-

suant to sentence six of 42 U.S.C. 405(¢). Under

the first clause of sentence six, the court may (1)

remand the case to the Secretary for good cause be-

fore he files his answer, or (2) order, at any time,

that additional evidence be taken before the Secretary,

but only upon a showing that there is new and ma-

terial evidence and that there is good cause for the

failure to incorporate the evidence in the record in

the prior proceeding. Because the district court re-

iains jurisdiction during such a remand, the second

clause of sentence six requires the Secretary to file

With che court any additional or modified findings of

fact or decision he renders on remand (along with a

supplemental transcript), so that the district court

may then render a final judgment in the case. See

Finkelstein, 496 U.S. at 627-628. This case involves

a remand order entered pursuant to sentence four, not

sentence six, of 42 U.S.C. 405(g).

2. a. In June 1986, respondent filed an applica-

tion for disability insurance benefits under Title II

of the Social Security Act, 42 U.S.C, 401 et seq. His

application was denied at all levels of the administra-

ive appeals process, and he then sought judicial re-

view pursuant tu 42 U.S.C. 405(g¢). By order entered

Avril 5, 1989, the district court “reversed” the Sec-

retary’s decision and remanded the case to the Secre-

tary for further consideration in light of the court’s

order. App., fra, 26a-27a; see also id. at 28a-4la

(magistrate’s recommendation).' The Secretary did

not appeal that order. The docket sheet indicates that

the district court case Was then closed.

On remand to the Secretary, in a decision dated

January 51, 1990, the ALJ found respondent disabled.

That decision became final 60 days later, when the

time for review by the Appeals Council expired. App.,

infra, 10a; see 20 C.FLR. 404.984,

b. On July 18, 1990, respondent filed an applica-

tion in the district court for attorney’s fees under

MAJA. The Secretary argued that the “final judg-

ment” for purposes of EAJA was the district court’s

order of April 5, 1989, which reversed the Secretary’s

decision denying benefits and remanded to the Secre-

tary for further proceedings. That order became final

and not appealable on June 4, 1989, upon expiration

of the 60-day period allowed by Fed. R. App. P.

4ia)(1) for taking an appeal. Consequently, the Sec-

retary argued, respondent’s EAJA application was

untimely because it was filed more than a year later,

rather than within 30 days, as 28 U.S.C. 2412

(1) (1)(B) requires. The Secretary pointed out that

in .i/elkonyarv, the Court had stated that in cases

remanded to the Secretary pursuant to sentence four

of 42 U.S.C. 405(¢),. “the filing period begins after

the final judgement (‘affirming, modifying, or revers-

‘ The district court concluded that the administrative law

judge (ALJ) failed to evaluate respondent’s subjective com-

plaints of pain in accordance with Eighth Circuit precedent,

that the ALJ did not properly analyze respondent’s back in-

juries, and that the ALJ's assessment of respondent’s residual

functional capacity to engage in his past work was not sup-

ported by the medical evidence on the record as a whole. App.,

infra, 26a-27a.

* The district court’s opinion erroneously states that the

fee application was filed on July 17, 1990.

ing’) is entered by the court and the appeal period

has run, so that the judgment is no longer appeal-

adle.” 111 S. Ct. at 2165.

The district court rejected the Secretary’s argu-

ment and held that respondent's fee application was

‘umely. The district court found the timeliness issue

in this case to be controlled by the Eighth Circuit's

decision in Welter vy. Sullivan, 941 F.2d 674 (8th

Cir. 1991) (veproduced at App., iufra, 3a-8a), which

had been decided only 17 days earlier. Welter involved

consolidated cases in which the district court had

vrdere| remands to the Secretary pursuant to sen-

tence tour of 42 U.S.C. 405(g). After securing bene-

fis on remand, each claimant applied for attorney’s

fees under EAJA, well in excess of 90 days after the

remand orders were entered. Purporting to distin-

suish this Court’s decision in Melhkonyan, 111 S. Ct.

at 2165, the Eighth Circuit held in Welter that the

district court’s orders, though governed by sentence

four of 42 U.S.C. 405(¢), were not “final ‘judg-

mentis] .. . modifying or reversing the decision[s ]

of the Secretary’ within the meanirg of that sen-

tence. Instead, the court reasoned, “the district court

retatred jurisdiction of the claimants’ cases and

planned to enter dispositive sentence four jucements

after the Secretary reevaluated the claimants’ appli-

cations for benefits.” App., infra, 5a. “Because the

parties did not report to the district court after the

Secretary awarded benefits to the claimants on re-

mand,” the court coneluded, “no final judgments

halfd] been entered” and the EAJA applications were

still timely. /d. at 6a."

* Although the Eighth Circuit held that the fee applications

in Welter were timely, it affirmed the district court’s finding

in each case that the government’s position was substantially

justified. App., infra, 6a-8a. Because the court of appeals’

re)

The district court in the instant case determined

that, under Welter’s analysis, “no final judgment

ha{d] been entered” here as well, and that respondent’s

fee application therefore was still timely. App., infra,

12a. Proceeding to the merits of the application, the

district court found that the position of the United

States wus not substantially justified, and it awarded

respondent $1,372.50 in attorney’s fees and $120 in

costs under FAJA. Id. at Ya: see also id. at 17a-18a

(magistrate’s recommendation ).'

c. The Secretary filed a notice of appeal and re-

quested the court of appeals to consider the appeal

en bane hecause Welter constituted binding circuit

precedent on the timeliness issue. The court of ap-

peals denied that motion. Thereafter, the panel, con-

sidering itseif bound by Welter, held that respondent’s

fee application was timely, and it affirmed the dis-

trict court’s judgment in an unpublished per curiam

opinion dated April 17, 1992. App., infra, la-2a.°

judgments therefore were in favor of the Secretary, we did

not seek review of the timeliness issue in this Court.

' The district court also held that respondent’s counsel was

entitled under Section 206(b) (1) of the Social Security Act,

42 U.S.C. 406(b) (1), to an award of attorney’s fees out of

respondent's past-due benefits. See Bowen Vv. Galbreath, 485

U.S. 74, 76 (1988). The court awarded counsel $2,287.50 in

fees under that provision, subject to counsel’s refunding to

respondent the amount of fees awarded against the govern-

ment under EAJA ($1,372.50), as required by Section 3 of

the 1985 amendments to EAJA (Pub. L. No. 99-80, 99 Stat.

186, 42 U.S.C. 406(b)(1)). See App., infra, 9a; id. at

18a-24a (magistrate’s recommendation). No question is pre-

sented here concerning the award of fees to counsel under 42

U.S.C. 406(b) (1), which was paid by respondent (out of his

past-due benefits), not by the government.

* The Secretary did not challenge the district court’s finding

that the government’s position was not substantially justified

REASONS FOR GRANTING THE PETITION

The Eighth Circuit’s decision below (and in Weltev)

cannot be reconciled with this Court’s decisions in

Melleouyan vy. Sullivan, 111 S. Ct. 2157 (1991), and

Sullivan v. Finkelstein, 496 U.S. 617 (1990). Those

two decisions have clearly resolved the question of

when an KAJA application must be filed in a case

such as this. The Eighth Circuit’s ruling also squarely

conflicts with that of the Fifth Circuit in Lama v.

Department of HHS, 948 F.2d 169 (Sth Cir. 1991).

There, the Fifth Circuit correctly recognized that

Finkelstein and Melkonyan require a claimant to file

an EAJA application within 30 days of when a

sentence four remand order becomes final and not

appealable.

The issue presented by this circuit conflict is of

hroadly recurring importance in the federal courts,

since thousands of Social Security cases are remanded

to the Secretary each year. The Tenth Cirenit has

recently rendered a decision agreeing with the Eighth

Circuit in Welter, see Gutierrez vy. Sullivan, 953 F.2d

579 (10th Cir, 1992), and the same issue is pending

in four other courts of appeals. iteview by this Court

therefore is plainly warranted. Because Melkonyan

and Finkelstein dispose of the issue, however, we be-

lieve that plenary review is not necessary and that

summary reversal would be appropriate.

1. a. in Melkonyan, this Court observed that the

decision in Finkelstein identified two kinds of remands

under 42 U.S.C. 405(g): “(1) remands pursuant to

the fourth sentence, and (2) remands pursuant to

the sixth sentence.” Melkonyan, 111 S. Ct. at 2163

(citing Finkelstein, 496 U.S. at 624-627). Although

in Finkelstein the Court “did not state explicitly * * *

or the amount of the fees, and we likewise do not raise those

issues here.

10)

that these were the on/ kinds of remands permitted

under the statute,” it did so in Welkonyan. 1118. Ct.

at 2164. There, the Court held, in light of “Congress’

explicit. delineation in $405(g) regarding the cir-

cumstances under which remands are authorized,”

that Congress “intended to limit the district court's

authority to enter remand orders to these two types.”

Thid.

There enn be no contention here that the district

court’s 1989 order was entered pursuant to sentence

six of 42 U.S.C. 405(2): the district court neither

remanded for good cause on the Secretary’s motion

prior to filine his answer, nor directed the Secretary

to receive new and material evidence based on a

finding of good cause for the failure to include such

evidence in the record when the matter was pending

hefore the Secretary. Hence, the remand order could

only have been entered pursuant to sentence four of

42 U.S.C. 405(g).

Sentence four provides that the district court “shall

have power to enter, upon the pleadings and transcript

of the record, a judement affirming, modifying, or

reversing the decision of the Secretary, with or with-

out remanding the cause for a rehearing.” Thus, a

remand pursuant to sentence four must accompany

(and is sncillary to) a “judgment” affirming, modify-

ing, or reversing the Secretary's decision on the

merits. Sentence eight in turn provides that such a

judgment “shall be final except that it shall be sub-

ject to review in the same manner as a judgment in

other civil actions” (emphasis added). Based on this

explicit statutory text, the Court held in Finkelstein

that an order entered pursuant to sentence four of

412 U.S.C. 405(¢) is a “final judgment” and may be

appealed as such pursuant to 28 U.S.C. 1291, even

if it is accompanied by an order remanding the cause

to the Secretary for further proceedings. 496 U.S.

ut 625, 629. The Secretary’s decision on remand

would then be subject to judicial review in a “sepa-

rate piece of litigation” pursuant to 42 U.S.C. 405(¢).

Finkelstein, 496 U.S. at 624-625. Under Finkelstein,

then, the district court’s 1989 order was appealable

by the Secretary, even though the order (in addition

to reversing the Secretary’s decision) remanded the

cause to the Secretary for further proceedings.

Neither the district court nor the court of appeals

suggested otherwise."

Under FAJA, a fee application must be filed within

50 days of the “final judgment” In the civil action,

which is defined to mean a “judgment” that is “final

and not appealable.” 28 U.S.C. 2412(d)(1)(B) and

(2)(G). As we have just explained, under sentence

"This Court noted in Finkelstein that the order there was

unquestionably a “judgment,” because “it terminated the civil

action challenging the Secretary’s final determination that

respondent was not entitled to benefits, set aside that deter-

mination, and finally decided that the Secretary could not

follow his own regulations in considering the disability issue.”

496 U.S. at 625. Similarly here, the district court’s 1989

order terminated the civil action challenging the Secretary's

final decision denying respondent’s claim for benefits, “re-

versed” that decision, and finally decided that the ALJ had

not properly evaluated respondent’s allegations of pain or his

back injuries and that the ALJ’s assessment of respondent’s

ability to perform his past work was not supported by the

medical evidence in the record as a whole. App., infra, 26a-

27a.

It is irrelevant that the district court in this case did not

label its 1989 order a “final judgment.” “The label used by

the District Court of course cannot control the order’s appeal-

ability in this case, any more than it could when a district

court labeled a non-appealable interlocutory order as a ‘final

judgment.’ See Liberty Mutual Ins. Co. v. Wetzel, 424 U.S.

737 (1976).” Finkelstein, 496 U.S. at 628 n.7.

eight of 42 U.S.C. 405(g¢) and Finkelstein, the dis-

trict court’s April 5, 1989, order was a “final” judg-

ment. That order became “not appealable” 60 days

later, when the time for taking an appeal expired.

Under the plain terms of EAJA, respondent then had

30 more days—until July 4, 1989—within which to

file a fee application. The application he eventually

filed on July 17, 1990, was more than a year out of

time. J/elkonyan unambiguously confirms this con-

clusion, for it states that ‘“‘[i]n sentence four cases,

the filing period begins after the final judgment

(‘affirming, modifying, or reversing’) is entered by

the court and the appeal period has run, so that the

judgment is no longer appealable.” 111 S. Ct. at 2165.

b. The court of appeals in this case nevertheless

held—affirming the district court’s EAJA award on

the basis of We/ter—that the district court’s 1989

order was ofa final judgment. App., infra, 2a, 12a.

Instead, the court reasoned in Welter and this case

that the district court “retained jurisdiction” for

purposes of entering a final judgment after proceed-

ings on remand were completed.’ Because the parties

had not reported to the district court after the Secre-

tary awarded benefits on remand, the court further

reasoned that no final judgment had yet been entered

and that the fee application filed more than a year

later was therefore still timely. App., infra, 5a-6a,

12a. This reasoning not only circumvents Congress’s

decision to impose a 30-day filing requirement under

* The remand order in this case, like that in Welter, did

not expressly purport to retain jurisdiction. See App., infra,

27a. See also Hafner Vv. Sullivan, No. 91-1634 (8th Cir. Aug.

11, 1992), slip op. 5 (confirming that Welter applies even if

the sentence four remand order does not “evidence an intent

to retain jurisdiction”).

KAJA, it also conflicts with the text of 42 U.S.C.

405(g¢), Finkelstein, and Melkonyan.

There is no suggestion in 42 U.S.C. 405(g) that a

district court may “retain” jurisdiction in a case

governed by sentence four for purposes of entering

a “final judgment” after completion of proceedings

on remand—so as to defeat the appealability of the

order that remands the cause to the Secretary (and,

as a consequence, to prevent the running of the 30-day

EKAJA filing period). To the contrary, as the text

of 42 U.S.C. 405(¢) makes clear (and as Finke!steiy

and Melkonyan confirm), a remand under sentence

four must accompany a “judgment,” and sentence

eight deems such a judgment to be “final.” 496 U.S.

at 625, 629; 111 S. Ct. at 2164, 2165. The district

court accordingly has no authority to postpone entry

of a “final judgment” when it remands to the Secre-

tury in circumstances such as these. The Court made

that very point in Finkelstein, explaining (496 U.S.

at 629):

Rather, the fourth sentence directs the entry of

a final, appealable judgment even though that

judgment may be accompanied by a remand or-

der. The fourth sentence does not require the

district court to choose between entering a final

judement and remanding; to the contrary, it

specifically provides that a district court may en-

ter judgment “with or without remanding the

cause for a rehearing.”

Nor is there any provision in 42 U.S.C. 405(¢) for

the Secretary to “report” to the district court fol-

lowing completion of proceedings on a sentence four

remand, as the courts below contemplated. App..,

infra, Ga, 12a. In this respect, sentence four stands

in marked contrast to sentence six, which expressly

directs the Secretary to file the revised findings and

decision he renders om remand (together with a sup-

plementai transcript) with the district court, so that

the court may enter a final judgment after reviewing

the revised findings and decision, as provided by sen-

tence seven of 42 U.S.C. 405(¢). The Court made

clear in Finkelste’n that no such filing requirement is

imposed on the Secretary in sentence four cases. 496

ULS. at 625-626.

The Court in Finkelste’» also specifically rejected

the argument (which was essentially adopted by the

Fighth Circuit here and in We/fer) that in a sentence

four case, “the district court may enter an appealable

final judgment upon reviewing the Secretary's post-

remand ‘additional or modified findings of fact and

decision.” 496 U.S. at 626 (quoting sentence seven

of 42 U.S.C. 405(¢)). The Court explained that

“(t]he postremand review conducted by the District

Court under the seventh sentence refers to cases that

were previously remanded under the sixth sentence.”

496 U.S. at 626-627.

It was in light of this statutory scheme that the

Court held in Melkonyan that “[i]n sentence six

cases, the [EAJA] filing period does not begin until

after postremand proceedings are completed, the

Secretary returns to court, the court enters a final

judgement, and the appeal period runs.” 111 5. Ct. at

2165. By contrast, the Court made clear that in sen-

tence four cases, the filing period begins after the

order that includes the remand is entered by the

district court and the period for appealing that order

* Sentence seven provides that “[s]uch additional or modi-

fied findings of fact and decision shall be reviewable only to

the extent provided for review of the original findings of fact

and decision.”

has run, with no postponement for completion of the

administrative proceedings on remand. Jhid. The

court of appeals obliterates this carefully drawn dis-

tinction between sentence four and sentence six

remands,

ce. Contrary to the view of the panel in Welter, its

timeliness ruling was not justified by the fact that

“the claimants did not become prevailing parties

eligible for attorney’s fees until the Secretary reevalu-

ated their cases and awarded them benefits.” App.,

infra, 6a (citing Sullivan v. Hudson, 490 U.S. 877,

S87 (1989)). To be sure, the Court thought it “clear”

in Hudson that “a Social Security claimant would

not, as a general matter, be a prevailing party within

the meaning of the EAJA merely because a court had

remanded the action to the agency for further pro-

ceedings,” and noted that “the vast majority of the

Couits of Appeals have come to this conclusion.” 490

U.S. at 887: accord, Finkelstein, 496 U.S. at 630:

cee also H.R. Rep. No. 120, 99th Cong., Ist Sess. 19

(1985) (report on 1985 amendments to EAJA)

{noting that under EAJA case law, a claimant ordi-

narily had not been regarded as a prevailing party

solely hy virtue of obtaining a remand to the Seere-

tary). And even before Hudson, this Court had repeat-

edly held that to be considered a prevailing party, the

mlaintiff must point to a resolution of the dispute that

has changed the legal velationshin between himself

and the defendant. Texas State Teachers Ass'n vy.

Garand Irdep. School Dist., 489 U.S. 782, 792

(1989); Hewitt vy. Helms, 482 U.S. 755, 760-761

(1987): see Hudson, 490 U.S. at 886-887.

The panel in We/fer was wrong, however, in believ-

ine that, In order to give effect to this established

“preveiling party” jurisprudence, it was necessary

to hold that a district court remand order under sen-

tence four that contains a remand to the Secretary

is not a “final judgment.” App., infra, 6a. Rather,

in sentence four remand cases, the 30-day filing period

under EAJA begins to run alter the final judgment

of remand is entered and the appeal period has run,

although a detinitive determination of prevailing

party status must await completion of the proceed-

ings on remand. As a result, a claimant would be en-

titled to EAJA fees only if he files a fee application

within 30 days after the remand order is no longer

appealable, the Secretary awards benefits on remand,

and the district court then finds that the government’s

position was not substantially justified.

Pui another way, securing the reversal and remand

from the district court is a necessary, but not a suffi-

cient, condition for attaining prevailing perty status.

That element of prevailing party status must of course

he satisfied when the claimant files an EAJA appli-

cation. The remaining element (an award of bene-

fits) —which is, in essence, a condition subsequent—

may be satisfied later. This interpretation of the

statutory scheme is both reasonable and practicable:

it is fully consistent with both 42 U.S.C. 405(g) and

EAJA: and it properly gives effect to both Melkonyan

and Finkelste’n on the one hand and the prevailing

party jurisprudence endorsed in Hidson and Finkel-

stein on the other.

2. For 2 number of reasons, the Eighth Circuit's

decision in this case plainly warrants review by this

Court. First, it is flatly inconsistent with this Court’s

own decisions in Finkelstein and Melkonyan.

Second, the decisions in this case and Welter

squarely conflict with Luna v. Department of HHS,

948 F.2d 169 (5th Cir. 1991). There, the Fifth

Circuit held, relying on Finkelstein and Mell:onyan,

that “every fourth-sentence remand order is a ‘final

judgment’ * * * for purposes of the EAJA and sec-

tion 495(g), and the EAJA’s thirty-day time [be-

gins] running at the point at which that final judg-

ment [has] been entered and the period for appeal

thereof [has] run.” 948 F.2d at 171-172; see also

Frizzell y\. Sullivan, 937 F.2d 254, 256-257 (Sth Cir.

1991). The Fifth Cireuit therefore held in Luna

that the 30-day filing period began to run upon ex-

piration of the period for appealing the remand order,

even though the district court in that case (unlike

the district court here) did expressly purport to re-

tuin jurisdiction during the proceedings on remand

and directed the parties to file status reports with

the court. See 948 F.2d at 171."

Third, the timeliness issue is of recurring impor-

‘ance. The Tenth Circuit has already rendered a

decision agreeing with the Eighth Circuit in Welter,

see Gutiervez vy. Sullivan, 953 F.2d 579 (10th Cir.

1992),"" and cases presenting the same issue are pend-

* The Fifth Circuit went on to hold in Luna that the 30-day

filing period should be equitably tolled in the circumstances of

that case, because the district court’s remand order purported

to retain jurisdiction, “thus unwittingly misleading Luna to

think that no final judgment was being entered,” and the

Secretary had apparently acquiesced in the form of the re-

mand order. 948 F.2d at 173. The Fifth Circuit observed,

however, that “[p]rospective claimants, cognizant of Frizzel

and [Luna], presumably could not make the same equitable

claim.” 948 F.2d at 173 n.5. There is no comparable predicate

for an estoppel claim in this case either, even if we assume,

arquendo, that the 30-day filing period is subject to equitable

tolling.

' The Solicitor General has authorized the filing of a peti-

tion for a writ of certiorari in Gutierrez, which is now due on

August 26, 1992. See also Sperling v. Sullivan, 785 F. Supp.

inv in four other cirenits.'' Moreover, because thou-

sunds of Social Security cases are remanded to the

Secretary each year,” it is important to the sound

and efficient administration of both the Social Security

program and EKAJA that there be clear rules for

courts and litigants to follow regarding the filing of

MAJA applications,

>. The answer to the question presented is supplied

by the text of 42 ULS.C. 405(e) and EAJA and by

this Court’s own decisions in Finkelstein and Mel-

honvaey, Because that answer is, in our view, quite

clear—and because the Court has so recently and

thoroughly addressed the operation of 42 U.S.C.

1502) and VAJA in the context of remand orders—

we do not believe that it is necessary for the Court

‘to grant plenary review once again in this case. The

Court need only reiterate what it said in Melkonyan:

“In sentence four cases, the filing period begins after

the final judement (affirming, modifying, or revers-

ing’) is entered by the court and the appeal period

has run, so that the judgement is no longer appeal-

able.” T11 8. Ct. at 2165. Under that rule, respon-

dent’s EFAJA application, which was filed more than

312, 316 (N.D.N.Y. 1992); ef. Scanlon vy. Sullivan, No. 91-

55516 (9th Cir. July 24, 1992), slip op. 8846-8847.

'' See Labrie Vv. Sullivan, No. 92-1066 (1st Cir.) : Iker v.

Sullivan, No. 92-5233 (6th Cir.) : Engelbrite v. Secretary of

HHS, No. 91-16920 (9th Cir.) ; Newsome vy. Sullivan, No. 91-

8917 (11th Cir.).

‘In 1989, the Appeals Council processed 6,432 remands.

See Social Security Administration, Avnuval Report to the

Congress 29 (Apr. 1990). In 19990, it processed 4,343 remands,

Social Security Administration, Annval Report to the Con-

aress 34 (May 1991), and in 1991, it processed 2,526, Social

Security Administration, Annval Report to the Congress 38

(Apr. 1992).

one year after the district court's April 5, 1989, order

Was no longer appealable, was untimely. The judg-

ment of the court of appeals therefore should be sum-

marily reversed,

CONCLUSION

The petition for a writ of certiorari should be

granted, and the judgment of the court of appeals

should be summarily reversed.

lespectfully submitted.

KENNETH W. STARR

Solicitor General

STUART M. GERSON

Assistant Attorney General

MAUREEN E. MAHONEY

Deputy Solicitor General

EDWIN S. KNEEDLER

Assistant to the Solicitor General

WILLIAM KANTER

MICHAEL E. RoBINson

Attorneys

AUGUST 1992

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

No. 91-3494MN

RicHARD H. SCHAEFER, APPELLEE

Louis W. SULLIVAN, M.D., Secretary of Health

and Human Services, APPELLANT

Appeal from the United States District Court

for the District of Minnesota

Submitted: April 14, 1992

Filed: April 17, 1992

Before FAGG, Circuit Judge, HENLEY, Senior

Cireuit Judve, and WOLLMAN, Circuit Judge.

PER CURIAM.

The Secretary of Health and Human Services ap-

peals the district court’s order awarding attorney's

(la)

fees to claimant Richard H. Schaefer under the Equal

Aecess to Justice Act (EAJA), 28 U.S.C. § 2412(d)

(1988). We affirm.

After the Secretary denied Schaefer’s initial ap-

plication for disability benefits, Schaefer sougnt ju-

dicial review. Finding the Secretary's position Was

not supported by substantial evidence, the distric

court remanded the case to the Secretary on April 5,

1989 for further proceedings. On January 31, 1950,

the Secretary awarded Schaefer benefits. Neither

party returned to the district court until July 18,

1990, when Schaefer filed a motion for entry of judg-

ment and an application for attorney’s fees under

EAJA. The Secretary argued Schaefer's fee appli-

cation was untimely under JJelkonyan v. Sullivan,

111 S. Ct. 2157 (1991). See 28 U.S.C. $ 2412(d)

(1)(B) (1988) (fee claimant must file application

“within thirty days of final judgment in the action”).

telying on Weller v. Sullivan, 941 F.2d 674, 675-76

(Sth Cir. 1991), the district court concluded a final

judgment had not yet been entered and thus Schae-

fer’s fee application was timely.

On appeal, the Secretary concedes Welter conirols

this case but contends Welter was wrongly decided.

One panel of this court, however, cannot “disregard a

yrecedent handed down by another panel. Only the

[cJourt en bane can take [this] action.” Drake °.

Scott, 812 F.2d 395, 400 (8th Cir.), cert. denied,

484 U.S. 965 (1987). Based on the Secretary’s con-

cession that Welter controls, we affirm the district

court.

A true copy.

Attest:

Clerk, U.S. Court of Appeals, Eighth Circuit.

APPENDIX B

UNITED STATES COURT OF APPEALS

KiIGHTH CIRCUIT

Nos. 90-2559S81, 90-2725S1, 90-2836SI

EVELYN R. WELTER, APPELLANT

Louis W. SciiivaNn, M.D., Secretary of Health and

Human Services of the United States, APPELLEE

LEE D. BooroNn, APPELLANT

Louis \W. SULLIVAN, M.D., Secretary of Health and

Hurinn Services of the United States, APPELLEE

FRED G. LINT, APPELLANT

Louis W. SULLIVAN, Secretary of Health and

Human Services of the United States, APPELLEE

Submitted March 13, 1991

Decided Aug. 9, 1991

Rehearing and liehearing En Bane

Denied Oct. 25, 1991

FAGG, Circuit Judge.

Kvelyn R. Welter, Lee D. Booton, and Fred G.

Lint (the claimants) appeal separate district court

orders denvine their applications for attorney’s fees

under the Equal Access to Justice Act (EAJA), 28

U.S.C. § 2412(d) (1988). Because the three appeals

present common issues, we decide them in a singie

opinion. We affirm.

The claimants’ applications seek’ng attorney’s fees

under EAJA are based on the claimants’ successful

pursuit of social security disability benefits. Initially,

the Secretary of Health and Human Services denied

each claimant’s application for benefits. Following

their losses at the administrative level, the claimants

individually sought judicial review in the same dis-

trict court. The district court concluded the Adminis-

trative Law Judges (ALJs) who had reviewed the

claimants’ applications for benefits either failed to:

fully develop the veeord; include all of the claimants’

relevant impairments in the hypothetical questions

posed to the vocational experts; explore the possibility

of a psychological explanation for some of the claim-

ants’ impairments: or properly evaluate the evidence

presented. Based on these flaws in the AL.Js’ method-

ologies, the district court remanded the cases to the

Secretary for further proceedings, without suggest-

ing the Secretary’s positions were unreasonable. On

remand, the Secretary awarded benefits to each

claimant.

Before we can address the merits of the claimants’

appeals. we must decide whether we have subject mat-

‘er jurisdiction. A party seeking an award of attor-

nev’s fees under EAJA must file a fee application

“within thirty days of final judgment in the action.”

28 TUS.C. § 2412(d)(1)(B) (1988). We lack juris-

diction to consider the merits of fee applications filed

beyond this time limit. Olson v. Norman, 830 F.2d

S11, 821 (8th Cir. 1987). The parties agree that sen-

tence four of 42 U.S.C. $ 405(¢) governs their cases.

Thus, the Secretary argues the claimants’ appeals

are untimely because the claimants filed their fee

applications more than ninety days after the district

court remanded the claimants’ cases to the Secretary

for further proceedings. See Melkonyan v. Sullivan,

— US. , 111 S.Ct. 2157, 2165, 115 L.Ed.2d

78 (1991). We disagree.

Ve think the Secretary miseenstrues the district

court’s orders. Without dictating the claimants should

receive benefits, the district court returned the cases

to the Secretary for further administrative proceed-

ings because the Secretary committed legal and factual

errors in evaluating their claims. In our view, the

district court’s orders are not final “judement{s] ...

modifvine or reversing the decision[s] of the Secre-

tary.” 42 U.S.C. $405(@) (1988) (sentence four);

see Sullivan v. Hudson, 490 U.S. 877, 109 S.Ct. 2248,

2255, 104 L.Ed.2d 941 (1989). We believe the district

court retained jurisdiction of the claimants’ cases: and

planned to enter dispositive sentence four judgments

after the Secretary reevaluated the claimants’ applica-

tions for benefits. See Hudson, 109 S.Ct. at 2254-55:

Robertson uv. Sullivay, 925 F.2d 1124, 1125-26 (8th

Cir. l99l): Taulor vp Heckler, 778 F.2d 674, 677 n. 2

(11th Cir.1885). This view is supported by the fact

the claimants did not become prevailing parties eligi-

ble for atiorney’s fees until the Secretary reevaluated

their cases and awarded them benefits. Hudson, 109

S.Ct. at 2254-55. Because the parties did not report

to the district court after the Secretary awarded

benefits (o the claimants, no final judgments have been

entered. Nevertheless, the district court ruled on the

claimants’ fee applications. We see no useful purpose

in remanding the claimants’ cases to the district court

for entry of postremand judgments, and now turn to

the merits of the appeals before us. See Auke Bay

Concerned Citizen’s Advisory Council v. Marsh, 779

i.2d 1391, 1393 (9th Cir.1986) (fee applications filed

before fina! judgments are timely).

Under EFAJA, courts must award attorney’s fees to

a prevailing social security claimant unless the Secre-

tary’s position in denying benefits was substantially

justified. See 28 U.S.C. §$ 2412(d)(1)(A) (1988).

The Secretary bears the burden of proving the denial

of henefits was substantially justified. Jackson v.

Rowen, 807 F.2d 127, 128 (8th Cir.1986) (per

curiam). To establish substantial justification, the

Seeretary must show the denial had a reasonable basis

in law and fact. Pierce v. Underwood, 487 U.S. 552,

565-66, 108 S.Ct. 2541, 2550-51, 101 L.Fd.2d 490

(1988). This means the Secretary’s position need only

be “justified to a degree that could satisfy a reasen-

able person” to defeat a claimant’s application for

attorney’s fees. /d. at 565, 108 S.Ct. at 2550. We

review the district court’s decision that the Secretary’s

position was substantially justified for abuse of dis-

cretion. 7d. at 563, 108 S.Ct. at 2549,

The claimants contend they are entitled to attor-

ney’s fees based on the district court’s holding that

the Secretary’s decisions to deny their claims were

not supported by substantial evidence. Essentially,

the claimants equate the substantial evidence and sub-

stantial justification standards, making a fee award

automatic when a claimant wins a contested claim

for benefits. This contention is misplaced. Browwers

'. Bowen, 823 F.2d 273, 275 (8th Cir.1987) (per

curiam) ; Jackson, 807 F.2d at 128-29: see also Pullen

v. Bowen, 820 F.2d 105, 108 (4th Cir.1987).

The disirict court correctly recognized that “fees

are not be awarded just because the Secretary [loses

a] case.” Brouiwers, 825 F.2d at 275. The Secretary’s

position in denying benefits can be substantially justi-

fied even i, the denial is unsupported by subs‘antial

evidence on the record as a whole. See id.; Jacks,

SO7 F.2d at 128-29. This is so because the substan-

tial evidence and substantial justification standards

are different. Jackson, 807 F.2d at 128-29; Broussard

v. Bowen, 828 F.2d 310, 311-12 (5th Cir.1987):

Pullen, 820 F.2d at 108; Federal Election Comm’ n v.

Rose, 806 F.2d 1081, 1087 (D.C.Cir.1986): Couch v.

Secretary of Health & Human Servs., 749 F.2d 359,

360 (6th Cir.1984) (per curiam). Under the substan-

tial evidence standard, the district court must con-

sider evidence that both supports and detracts from

the Secretary’s position. Clarke v. Bowen, 843 F.2d

271, 272 (8th Cir.i988). In contrast, under the sub-

stantial justification standard the district court only

considers whether there is a reasonable basis in law

and fact for the position taken by the Secretary.

Pierce, 487 U.S. at 559, 108 S.Ct. at 2547: Broussard,

S28 I'.2d at 512. Because the standards are “neither

seman‘ic nov legal equivalents,” Broussard, 828 F.2d

at Sli, the Secretary can lose on the merits of the

disability question and win on the application for

attorney's fees, id. at 312.

Keeping these principles in mind, we turn to the

record to determine whether the district court abused

its discretion in holding the Secretary’s position was

substantially justified. If the Secretary was reason-

able in denying the claimants’ claims for benefits, the

Secretary's position was substantially justified and the

claimants are not entitled to attorney's fees. Having

reviewed the record in each of the claimant’s cases,

we believe “at least one permissible view of the ev!-

dence” shows a reasonable basis in law and fact for

the Secretary's position that the claimants were not

entitled to benefits. Jackson, 807 F.2d at 130. The

Secretary relied on opinions of treating physicians,

contradictory evidence of pain and limitations, and

inconsistent evidence of the claimants’ activities to

support the denial of benefits in the claimants’ cases.

Like the district court, we recognize the cases were

close. Closeness itself is evidence of substantial justi-

fication. /d. at 129-30 (citing Donovan v. Dial America

Mitg., luce.. T57 F.2d 1376, 1389 (3d Cir.), cert.

denied, ATA ULS. 919, 106 S.Ct. 246, 88 L.ked.2d 255

(1985)). Because the distriet court did not abuse

its discretion in holding the Secretary’s position was

su>stantially justified, the district court properly de-

nied the claimant’s applications for attorney’s fees

under FAJA.

Accordingly, we affirm.

APPENDIX C

UNITED STATES DISTRICT COURT

DISTRICT OF MINNESOTA

THIRD DIVISION

Civ. 3-88-71

RICHARD H. SCHAEFER, PLAINTIFF

Vv.

Louis W. SULLIVAN, M.D., Secretary of Health and

Human Services, DEFENDANT

[Filed Aug. 26, 1991]

ORDER AND MEMORANDUM

Before the Court are defendant’s objections to the

May 9, 1991 Report and Recommendation issued by

Magistrate Judge J. Ear] Cudd.

Based on the file, record and arguments of counsel,

IT IS HEREBY ORDERED that plaintiff’s counsel is

awarded SSA attorney fees of $2,287.50 pursuant to

42 U.S.C. £ 106(b)(1) and that plaintiff and his

counsel are awarded EAJA attorney fees of $1,372.50

pursuant to 28 U.S.C. § 2412, subject to counsel for

nlaintiff refunding to plaintiff the lesser of these two

fees, $1,372.50.

DATE: August 23, 1991

/s' Robert G. Renner

Ropert G. RENNER

United States District Judge

MEMORANDUM

In this Soeial Security disability case, the Court

issued an order on April 4, 1989 stating “that the

Seeretary’s deeision denying disability insurance ben

efits to plaintiff is reversed, that the parties’ cross

motions for summary judgement are denied, and that

the ense is remanded to the Secretary for further cor

sideration in light of this Order.” On January ot,

19900, an administrative haw jadge (ALA) issued a

decision in plaintiff's favor whieh beeame the final

decision 60 days later heeause it was not reviewed by

the Appeals Council. An award certificate was is

sued on June 12, 1990, Plaintitl filed his petition for

attorney's fees on July 17, 1990. ‘The Equal Access

to Justice Act, § 2412(d) (1) CB), states that a pre-

vailing party must file for attorney's fees “within

thirty days of final judement in’ the netion.” The

government argued that the petition should be denied

because it was not filed within thirty days of the date

on whieh it became final. The Magistrate Judge ree-

ommended that the Court award attorneys’ fees pur-

suant to BAJA. He concluded that a final judgment

had not been issued in the case and the petition wie

therefore timely.

In a recent opinion, MWelhonyan v. Sullivan, No, 90-

3538 (June 10, 1991), the United States Supreme

Court clearified whet constitutes such a “final judg-

ment” by stating that only the court, not the Secre-

tary or the Appeals Counsel, could enter a final judg-

ment for purposes of EAJA. In his objections to the

Report and Recommendation, the Secretary argues

that the EAJA fee petition is untimely because the

relevant decision by the court cas the remand order

of April t, 1989."

In Velhongen, the Supreme Court considered

whether any remand orders by a court could be con-

sidered final judements for purposes of FATAL

stated:

ve eonelude that in See, og) actions, remand

orders must either accompany a final judgment

affirming, modifying or reversing the adminis.

trative decision in accordance with sentence four

lef WULS AC. S (50) |. or conform with the ve-

quirements outlined by Congress in sentence six.

Construing remand orders in this manner har-

monizes the remand provisions of See, 45(g)

with the BAJA vemniverent that a “final judg-

ment” be entered in the civil action in order to

trigger the FAJA filing period. 28 ULS.C. § 2412

(dy (1)Bs. In sentence four cases, the filing pe-

riod begins ofter the final judgment (‘affirming,

modifying, or reversing’) is entered by the

court and the appeal period has run, se that the

jidement is no lonwer appealable. See See. 2412

(e)(2)0G). In sentence six cases, the filing pe-

riod does not begin until after the postremand

proceedings are completed, the Secretary returns

to court, and court enters fine! judgment, and

the appeal period runs.

The Secretary characterizes the remand at issue here

as a sentence four remand requiring filing by July 3.

1989, 30 days following the end of the appeal period

Plaintiff argues that since the remend included

denial of both parties’ motions for summary judg-

1The Secretary does not object to the award of fees pur-

suant to the Social Security Act.

ment, the April 1, 1989 order was not a final judg-

ment pursuant to sentence four, and that no final

judgment had yet been entered by the Court be sed on

the ALJ’s award of benefits.

The Eighth Circuit has recently considered similar

facts in Welter ». Sullivan, Nos. 90-2559SI, 90-

2725SI, 90-2836SI, 1991 WL 149701 (August 9,

1991). The pane! stated:

Without dictating the claimants should receive

benefits, the district court returned the cases to

the Secretary for further administrative pro-

ceedings because the Secretary committed legal

and factual errors in evaluating their claims. In

our view, the district court’s orders are not final

“judgment[s] . . . modifying or reversing the

decision[s] of the Secretary.” 42 U.S.C. § 405

(g) (1988) (sentence four); see Sullivan +.

Hudson, 109 S.Ct. 2248, 2255 (1989). We be-

lieve the district court retained jurisdiction of

the claimants’ cases and planned to enter disposi-

tive sentence four judgments after the Secretary

reevaluated the claimants’ applications for bene-

fits. [citations omitted]. This view is supported

by the fact that claimants did not become pre-

vailing parties eligible for attorney’s fees until

the Secretary reevaluated their cases and

awarded them benefits. Hudson, 109 S.Ct. at

2254-55. Because the parties did not report to

the district court after the Secretary awarded

benefits to the claimants, no final judgments have

been entered.

Id. The Court is of the opinion that Welter is dis-

positive of the case before it. Because no final judg-

ment has heen entered, plaintiff’s petition for attor-

neys’ fees pursuant to EAJA is timely.

l3a

APPENDIX D

UNITED STATES DISTRICT COURT

DISTRICT OF MINNESOTA

THIRD DIVISION

Civil 3-88-71

RICHARD SCHAEFER, PLAINTIFF

LOUIS SULLIVAN, M.D., Secretary of Health and

Human Services, DEFENDANT

[Filed May 9, 1991]

REPORT AND RECOMMENDATION

Before the Court are petitions for attorney fees

under the Equal Access to Justice Act (EAJA), 28

U.S.C, $2412, and Social Security Act (SSA), 42

U.S.C. £406. Both petitions request attorney fees

for services rendered in Plaintiff's successful appeal

to the District Court from the Secretary's denial of

Social Security disability benefits. This matter has

been referred to the undersigned United States Mag-

istrate Judge for Report and Recommendation in ac-

eordance with 28 U.S.C. $636 and Local Rule 72.1

(c). For the following reasons, the undersigned rec-

ommends that counsel for Plaintiffs be awarded

liu

$1,372.50 under the LAJA and $2,287.50 pursuant

to 42 U.S.C. § 1964h) (1), along with $120.00 for the

filing fee in this case.

BACKGROUND

Plaintiff filed his application fer Disability Insur-

ance Benefits (DIB) on June 27, 1986, due to a back

impairment, lung surgery and high blood pressure

commencing on February 2, 1985. His application

wus denied initially and upon reconsideration. An

administrative hearing was held on April 8, 1987,

before Administrative Luw Judge (ALJ) Morton J.

Goustin. On September 1&8, 1987, the ALJ issued his

decision finding Plaintiti not disabled and, therefore.

ineligible for benetits. The Appeals Council denied

Plaintitf’s request for review and the ALJ’s decision

became the final decision of the Secretary.

Plaintiff appealed this decision to this Court by

filing his complaint on February 9, 1988. See Com-

plaint, Docket No. 1. On March 8, 1988, Defendant

filed an answer and transcript. See Answer, Docket

No. 3. On May 9, 1988, Plaintiff filed a motion for

summary judgment. See Motion, Docket No. 4. De-

fendant filed a motion for summary judgment on May

9, 1988. See Motion, Docket No. 5.

In a Report and Recommendation dated October

19, 1988, the undersigned recommended that the Sec-

retary’s decision denying benefits be reversed; that

the cross-motions for summary judgment be denied;

and that the case be remanded to the Secretary for

further consideration. See Report, Docket No. 6. On

April 5, 1989, United States District Judge Robert

G. Renner adopted the undersigned’s Report and

Recommendation and ordered the same. See Order,

Docket No. 9.

15a

On July 18, 1990, Plaintiff filed petitions for at-

torney fees under the EAJA and SSA. See Motion,

Docket No. 10. Defendant filed an objection to

Plaintiff's SSA fee petition with this Court on Au-

gust 6, 1990. See Objection, Docket No. 13. Defend-

ant filed objections to Plaintiff's EAJA petition on

Aucust 20, 1990. See Objections, Docket No. 14.

DISCUSSION

EAJA Attorney Fees

The EAJA provides in pertinent part:

Except as otherwise specifically provided by

statute, a court shall award to a prevailing party

other than the United States fees and other ex-

penses, in addition to any costs awarded pursu-

ant to subsection (a), incurred by that party in

any civil action (other than cases sounding in

tort), including proceedings for judicial review of

agency action, brought by or against the United

States in any court having jurisdiction of that

action, unless the court finds that the position of

the United States was substantially justified or

that special circumstances makes an award un-

just.

28 U.S.C. § 2412(d)(1)(A). It is well established

that the EAJA applies to the Social Security Act. See

Cornella v. Schweiker, 728 F.2d 978, 987 (8th Cir.

1984). Under the EAJA, a prevailing party may be

awarded attorney fees only when the position of the

United States was not substantially justified. /d. at

981; Cook v. Heckler, 751 F.2d 240, 241 (8th Cir.

1984). The burden is on the government to prove

that its position was substantially justified. Cornella

v. Schweiker, 728 F.2d at 981-82; Foley Constr. Co.

l6a

v. United States Army Corps of Eng’r., 716 F.2d

1202, 1204 (&th Cir. 1983) (Citations omitted) ;

United States for Heydt v. Citizens State Bank, 668

F.2d 444 (8th Cir. 1982).

Furthermore, a petition under the EAJA must be

filed ‘“‘within thirty days of the final judgment in

the action.” 28 U.S.C. § 2412(d)(1)(B). Defend-

ant contends that Plaintiff's tee petition was not

timely filed as required under the statute and, there-

fore, this Court lacks jurisdiction to consider the

application. Defendant argues that the Appeal:

Counsel issued a final decision on January 31, 1999,

finding Plaintiff disabled. See Melkonyan v. Heckler,

895 F.2d 556, 558 (9th Cir. 1990); Jabaay v. Sulli-

van, 920 F.2d 472, 474-75 (7th Cir. 1990). This

Court finds, however, that the Appeal Council’s final

decision is not a final judgment under the EAJA.

See Sullivan v. Hudson, 109 8S. Ct. 2248, 2255 (1989)

(Remanding court continues to retain jurisdiction

over an action within the meaning of the EAJA, and

may exercise that jurisdiction to determine if its

legal instructions on remand have been followed bv

the Secretary.); Keasler v. United States, 766 F.2d

1227, 1229-31 (8th Cir. 1985) (EAJA 30 day period

to apply for attorney fees begins to run only upon

completion of all appellate proceedings or upon ex-

piratton of the time to appeal.). To date, a final

judgment has not been entered in this case. Plain-

tiff’s petition for attorney fees under the EAJA is

~—~therefore timely and this Court retains jurisdiction

to consider the application.

Plaintiff received an Award Certificate from the

Social Security Administration dated June 12, 1990.

Plaintiff is, therefore, entitled to recover reasonable

attorney fees under the EAJA if the wovernment’s

17a

position was not substantially justified. See Cornella

v. Schweiker, 728 F.2d at 981; Cook v. Heckler, 751

F.2d at 241. The ALJ failed to apply the Polaski cri-

teria to evaluate Plaintiff’s complaints of pain. Fur-

thermore, the ALJ’s credibility determinations were

not supported by substantial evidence on the record

as a whole. Finally, the ALJ’s finding that Plaintiff

was capable of returning to his past work was not

supported by substantial evidence on the record as a

whole. The Secretary’s position, therefore, was not

substantially justified. The Eighth Circuit in Kelly

v. Bowen, 862 F.2d 1333, 1334 (&th Cir. 1988) im-

pliedly found that when the government disregards

the esteblished law of the Circuit, there is no sub-

stantial justification for such action and an award

of attorney fees under the KAJA is appropriate.

Plaintiff is, therefore, entitled to recover reasonable

attorney fees under the EAJA.

The EAJA provides that:

... the amount of fees awarded under this sub-

section shal] be based upon the prevailing market

rates for the kind and quality of services fur-

nished, except that... (ii) attorney fees shall

not be awarded in excess of $75 per hour unless

the court determines that an increase in the

cost of living or a special factor, such as the

limited availability of qualified attorneys for the

proceedings involved, justifies a higher fee.

28 U.S.C. § 2412(d) (2) (A). In determining a rea-

sonable fee a court may also consider the factors set

forth in Johnson v. Georgia Highway Evpress, Ine.,

488 F.2d 714 (5th Cir. 1974) and adopted in the

Eighth Cireuit in Allen v. Amalgamated Transit

Union, Local 788, 554 F.2d 876 (8th Cir.), cert.

denied, 434 U.S. 891 (1977). This Court has exam-

ined Plaintiff’s motion and supporting documents in

18a

which Counsel states that he expended 18.30 hours

representing Plaintiff before this Court. This Court

finds the total number of hours claimed to be rea-

sonable.

In Kelly v. Brown, 862 F.2d 1333, 1336 (8th Cir.

1988), the Eighth Circuit Court of Appeals held

that upon proper proof, a court may increase the

$75.00 per hour rate for attorney fees authorized

by the EAJA to reflect the increase in the cost of

living since October 1, 1981. In his petition, Plain-

tiff’s Counsel requests $87.68 per hour for services

rendered. Plaintiff, however, has failed to provide

sufficient evidence to justify an increase in the fee.

Therefore, this Court finds that the proper rate for

Counsel’s services in this matter would be $75.00 per

hour. A reasonable award of attorney fees under the

EAJA for 18.30 hours of service would be $1,372.54.

Plaintiff also requests $120.00 in costs for filing

fees. See 28 U.S.C. § 2412(a). This Court finds

Plaintiff’s request to be reasonable and concludes such

costs should be granted. See Cotter v. Bowen, S79

F.2d 359, 361 (8th Cir. 1989).

SSA Attorney Fees

An attorney who successfully represents a Social

Security claimant in proceedings before the district

court may apply for reasonable attorney fees pursu-

ant to § 406(b)(1), which provides:

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 representa-

tion, 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

19a

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.

Such an award of fees is discretionary with the court.

See Cotter v. Bowen, 879 F.2d 359, 361 (8th Cir.

1989). The district court is in the best position to

evaluate counsel’s services and fee request as the

court had the opportunity to observe counsel’s repre-

sentation first-hand. Jd.

In evaluating an attorney’s request for fees in a

social security case, the Eighth Circuit in Cotter has

laid down an expansive three part procedure. First,

a court must calculate the lodestar rate. Cotter v.

Bowen, 879 F.2d at 364. This is done by reference

to the twelve factors enumerated in Johnson v. Geor-

gia Highway Express, Inc., 488 F.2d 714, 717-19

(5th Cir. 1974).' Jd. Second, a court must return

1 The twelve Johnson factors are:

(1) the time and labor required;

(2) the novelty and difficulty of the questions;

(3) the skill requisite to perform the legal service

properly ;

(4) the preclusion of employment by the attorney due

to acceptance of the case;

(5) the customary fee;

(6) whether the fee is fixed or contingent;

(7) time limitations imposed by the client or circum-

stances;

(8) the amount involved and the results obtained;

(9) the experience, reputation, and ability of the at-

torneys;

(10) the “undesirability” of the case;

(11) the nature and length of the professional relation-

ship with the client; and

(12) awards in similar cases.

20a

to the Johnson factors tu determine if an upward or

downward departure from the lodestar rate is war-

ranted by the particular case. /d. Third, a court

must balance the $ 406 gual of preventing “too great

a reduction in a claimant’s already inadequate sti-

pend” against the § 406 goal of promoting ‘adequate

representation of potentially disabled individuals

through a reasonable attorney’s fee.” Cotter v.

Bowen, 879 F.2d at 365. Finally, the Eighth Circuit

noted that “Specific findings should be made on the

weight being assigned in determining a ‘reasonable

hourly rate.’ /d.

Turning to the lodestar rate, “courts most often

turn first to the requesting attorney’s own hourly

rate in non-contingency fee cases or to the raies

charged in the community for similar services by

lawyers of reasonably comparable skill, experience,

and reputation.”’ Cotter v. Bowen, 879 F.2d at 364.

Counsel seeks $125 per hour. The rate usually sought

and allowed in the community is $125 per hour. See

Report and Recommendation, Arriola v. Sullivan, Civ.

No. 4-88-449 (D. Minn. 1990); Report and Recom-

mendation, JJiller v. Bowen, Civ. No. 4-87-1000 (D.

Minn. 1989); see generally Cotter v. Bowen, 879

F.2d 359 (8th Cir. 1989).

An examination of the Johnson factors supports a

lodestar rate of $125 per hour. Counsel expended

18.30 hours in representing Plaintiff. This Court

finds that the time and labor required were not

unusual.

This case involved Disability Insurance Benefits.

After reviewing the record, this Court finds that this

cuse Was neither novel nor exceptionally difficult.

Likewise, this case did not require extraordinary skill

to perform the legal service properly.

Zia

This Court notes that Counsel expended 18.30 hours

in representing Plaintiff. Such an expenditure of

time would not seem to have a significant preclusive

effect on other employment. Any expenditure of time

negates the possibility of otherwise utilizing that

same time period. The mere possibility that an at-

torney could have been otherwise occupied does not

merit a conclusion that they were precluded fron.

other employment absent specific proof.

Based upon other awards, the customary fee for

this type of representation is approximately $125 per

hour. See supra. Counsel did undertake some risk by

operating on a contingent fee basis, being paid out of

Plaintiff’s past-due benefits. However, the state of

the record indicates that the risk was minimal.

Plaintiff had a good case and Counsel brought it to a

successful conclusion. The case required the skill,

competence and diligence of any attorney in a similar

situation.

As discussed supra, the time involved in Counsel’s

representation was not preclusive of other employ-

ment. There appears to have been no time limitations

imposed by the client nor by the circumstances.

These factors are accordingly given little weight.

The amount involved was significant. Plaintiff re-

covered past-due benefits. From Plaintiff's perspec-

tive, Counsel obtained excellent results. This Cour!

notes that Counsel’s services were effective and ob-

tained a significant recovery for Plaintiff. Counsel

is an experienced practitioner. His reputation is a

good one and his ability is not questioned.

Compared to other types of cases, all social secu-

rity cases are undesirable due to the generally limited

recoveries and the limit on attorney fees. This Court

recognizes this and it forms a substantial element in

22a

this Court’s fee analysis. However, when Counsel uac-

cepts a social security case he or she does so in full

understanding of the nature and limits of the repre-

sentation. The inherent undesirable elements of

social security cases must be recognized but differ-

entiated from social security cases that are undesira-

ble for reasons that transcend the inherent nature of

al] such cases. Only the latter cases justify considera-

tion as undesirable. This Court finds that this case

was not undesirable.

This Court recognizes that Counsel has represented

Plaintiff for some time and that such representation

has involved substantial litigation. Counsel is to he

commended for his efforts on behalf of Plaintiff and

this Court accords this factor due weight.

The final Jo/imson factor to be considered conee: n=

awards in similar cases. This Court finds that an

award of $2,287.50 is generally consistent with

awards in similar cases. See supra. In, sum this

Court finds that a Jo/mson factor analysis support’s

a finding of $125 per hour. This Court accordingly

finds $125 per hour to be the appropriate lodestar

rate.

This Court next considers whether any upward or

downward departure from the lodestar rate is justi-

fied based upon the Johnson factors discussed supra.

This Court notes that “Plaintiff's counsel bears the

burden of showing the reasonable hourly rate thus

adopted must be furtuer enhanced to constitute a

‘reasonable fee.’ Cotter v. Bowen, S79 F.2d at 364

(Citing Blum v. Stenson, 465 U.S. 886, 898 (1984).

This Court finds that Counsel! has not meet [sic] his

burden to show that the lodestar should be enhanced

and that an analysis of the Johnson factors do not

justify such a departure.

23a

The time and labor involved in this case were not

unusual. The case was not novel, particularly diffi-

cult or undesirable. No extraordinary skill was

needed and the preclusive effect of accepting the rep-

resentation was minimal. There were no time limita-

tions imposed upon Counsel beyond those associated

with any case and the lodestar rate and awards in

similar cases are equivalent with customary norms.

See supra, These factors shape this Court’s decision.

This Court acknowledges Counsel's ability supra

and that he has undertaken to represent Plaintiff

over a substantial period of time with some risk.

Counsel has also proven effective in obtaining sub-

stantial relief for his client. However, the relatively

straightforward nature of this case leads this Court

to determine that no enhancement of the lodestar rate

is justified. “While the results achieved were very

good, ... this is not the ‘rare case’ where the results

were ‘exceptional’ and the service rendered surpassed

that which would be expected in light of the hourly

rate awarded.” Cotter v. Bowen, 879 F.2d at 364.

Balancing the joint purposes of § 406, does not

change this Court’s calculus. Counsel will receive a

fee comparable to that awarded for similar work and

one that should adequately renumerate him for his

time and provide an incentive for similar work in

the future. At the same time this Court’s award will

provide Plaintiff with the lion’s share of his recovery.

See Gowen v. Bowen, 855 F.2d 613, 619 (8th Cir.

1988). This Court’s award is thus fair and equitable

to both parties. This Court finds the lodestar rate

to be $125 per hour. As Counsel worked 18.30 hours

representing Plaintiff, this Court finds the reasonable

compensation due Counsel to be $2,287.50,

24a

Offset of SSA and RAJA Fees

Numerous federal courts have awarded both SSA

and EAJA attorney fees in Social Security cases.

See Guthrie v. Schweiker, 718 F.2d 104 (4th Cir.

1983); Meyers v. Heckler, 625 F. Supp. 228 (S.D.

Ohio 1985); Eustache v. Secretary of HHS, 601

F. Supp. 176 (E.D.N.Y. 1985). To avoid a double

recovery of fees by an attorney, courts have gen-

erally required counsel to reimburse their clients from

the EAJA award “up to the amount awarded under

42 U.S.C. § 406(b) (1)... .” Guthrie v. Schweiker,

718 F.2d at 108 n.11 (Cited with approval in Bris-

sette v. Heckler, 784 F.2d 864, 865 n.1 (8th Cir.

1986) ); see also Eustache v. Secretary of HHS, 601

F. Supp. at 178. Applying the award of the EAJA

fees payable to the Plaintiff’s past-due benefits will

increase the net benefits received by the Plaintiff.

This Court is persuaded that this offset method com-

ports with the purposes of both the EAJA and the

SSA.

RECOMMENDATION

IT IS HEREBY RECOMMENDED that based

upon the foregoing reasons Plaintiff’s counsel be

awarded SSA attorney fees of $2,287.50 pursuant to

42 U.S.C. §$ 406(b) (1); and that Plaintiff and his

counsel be awarded EAJA attorney fees of $1,372.50

pursuant to 28 U.S.C. $ 2412, subject to counsel for

Plaintiff refunding to Plaintiff the lesser of these

two fees, $1,372.50.

s Earl Cudd

Hon. J. EARL Cupp

United States Magistrate Judge

Dated: May 9, 1°91

25a

Pursuant to Local Rule 72.1(¢) any party may ob-

ject to this Report and Recommendation by filing

With the Clerk of the Court, and serving all parties

Within ten (10) days, a writing which specifically

identifies those portions of this Report to which ob-

jections are made and the basis of those objections.

Failure to comply with this procedure shail operate

as a forfeiture of the objecting party’s right to seek

review in the Court of Appeals.

APPENDIX E

UNITED STATES DISTRICT COURT

DISTRICT OF MINNESOTA

THIRD DIVISION

Civil No, 3-88-71

TICHARD H. SCHAEFER, PLAINTIFF

Otis R. BowEN, M.D., Secretary of Health and

Human Services, DEFENDANT

[Filed Apr. 4, 1989]

ORDER

Before the Court are defendant’s objections to the

eport and Recommendation of United States Macis-

trate J. Earl Cudd dated October 19, 1988. Magis-

trate Cudd recommended that the decision of the Ad-

ministrative Law Judge (“ALJ”) denying plaintiff

disability insurance benefits under the Social Secu-

rity Act, 42 U.S.C, sees. 416(i1) and 428, be reversed

and remanded for reevaluation by the Secretary of

Health and Human Services (“Secretary”).

The Mavistrate concluded that such a remand was

necessary for three reasons. First, the Mavistrate

found that the ALJ failed to evaluate plaintiff's sub-

27a

jective complaints of incapacitating pain in accord-

ance With Polaski v. Heckler, 751 F.2d 943, 948 (8th

Civ, 1984). Second, the Magistrate found that the

ALJ did not properly analyze plaintiff’s back injuries.

Third, the Magistrate coneleded that the ALJ’s re-

sidual functioning capacity assessment of plaintiff's

ability to engage in past relevant work was not sup-

ported on the record as a whole by the medical

evidence.

After a de novo review of the matter, and upon

consideration of the memorandum of the parties, and

the entire record of the case, the Court hereby adopts

the T’eport and Recommendation of Magistrate J.

Earl Cudd dated October 18, 1988. Accordingly, IT

IS HEREBY ORDERED that the Secretary’s deci-

sion denying disability insurance benefits to platctiff

is reversed, that the parties’ cross motions for sum-

mary judgment are denied, and that the case is

remanded to the Secretary for further consideration

in light of this Order.

DATED: April 4, 1989.

s Robert G. Renner

Ropert G. RENNER

United States District Judge

28a

APPENDIX F

UNITED STATES DISTRICT COURT

DISTRICT OF MINNESOTA

THIRD DIVISION

Civil No. 3-88-71

RICHARD H,. SCHAEFER, PLAINTIFF

Oris R. Bowen, Secretary of Health &

Human Services, DEFENDANT

[ Filed Oct. 19, 1988 ]

REPORT AND RECOMMENDATION

Plaintiff, Richard H. Schaefer, seeks judicial re-

view of the final decision of the Secretary of Health

‘acd Human Services (Secretary) denying his appli-

cation for disability insurance benefits under the So-

cial Security Act. 42 U.S.C. $§ 416(i) and 423. This

Court has jurisdiction to review the Secretary’s deci-

sion. Id. at § 405(g).

On June 27. 1986, plaintiff filed his application

alleging disability commencing February 2, 1985, due

to a back impairment, lung surgery and high blood

pressure. A hearing was held on April 8, 1987, before

Administrative Law Judge (ALJ) Morton Goustin

294

in Minneapolis, Minnesota. The ALJ issued his deci-

sion on September 1&8, 1987, finding plaintiff not dis-

abled, and accordingly ineligible for benefits. The

Appeals Council denied plaintiff’s request for review

and adopted the ALJ’s decision as the final decision

of the Secretary.

Before the Court are cross-motions for summary

judement. The issue on appeal is whether the Secre-

tary’s decision is supported by substantial evidence.

After reviewing the record in its entirety, the Court

finds the following errors preclude the existence of a

record that is fully and fairly developed: plaintiff’s

subjective complaints of disabling pain were errone-

ousiy discredited; plaintiff’s back condition was im-

properly analyzed; and the ALJ’s residual function-

ing capacity (RFC) assessment for plaintiff’s ability

to engage in past relevant work is not supported by

the medical evidence.

It is, therefore, recommended that the Secretary’s

decision be reversed and the case remanded for further

evaluation in accordance with this opinion.

BACKGROUND

The record overall shows plaintiff suffers from

chronic degenerative changes of the cervical and lum-

bar spine: post status cervical fusion at C-5, 6; a

prior lune surgery: high blood pressure; and dry eye

syndrome.

At the time of the hearing, plaintiff was 57 years

old, 5'9” and weighed approximately 190 pounds. (T.

30-1)' Plaintiff resided with his wife in Austin,

Minnesota. (T. 32) Formal education was completed

'“T ” followed by page number denotes reference to the

certified transcript of record.

304

through the eighth grade; however, plaintiff received

his G.E.D. (T. 33-4) Plaintiff did not pursue subse-

quent voeation training or college course work.

Plaintiff has not engaged in substantial gainful

activity since february 2, 1985. (T. 17; Finding No.

—2 > No subsequent work attempts are found. Prior

work experience includes employment as an elected

business agent for a union and meat cutter. (T. 56-7,

74) The ALJ found plaintiff had a RFC to perform

work activities, except those involving prolonged pe-

riods of maintaining one position and lifting over 20

pounds. (T. 16; Finding No. 5) Accordingly, plaintiff

was found capable of engaging in past relevant worl

as a business agent. (/d.; Finding No. 6)

Physical limitations of plaintiff include lifting no

more than 10 to 15 pounds infrequently; the need to

alternatively walk, stand and sit; sitting no longer

than *, hour continuously; limited ability to flex anc

extend the neck; decreased control of the right hand

due to numbness; reading or watching tv no longer

than 15 minutes at a time; no crawling, crouching or

pushing pulling. (T. 40, 43, 46, 80, 114, 137-8, 147-8)

Disturbed sleeping 3 to 4 nights a week was also

reiterated. (T. 46) Plaintiff stated he was unable to

work as a business agent because of his inability to

sit 80°. of the workday and the necessity of doing

paper work, which requires a great deal of reading

and writing. (T. 43) In order to alleviate back pain,

plaintiff lies down everyday in the afternoon for one

hour. (T. 41)

Activities engaged in by plaintiff include walking

on a daily basis with rests every |. mile: driving an

automobile, light cooking and household maintenance,

and socializing. (T. 32, 44, 48-9, 69) Plaintiff and

his wife took turns driving io the hearing. (T. 52)

3la

No activities questionnaires were completed by friends

or relatives.

The ALJ concluded that the medical evidence estab-

lished a mild degenerative disease of the cervical and

lumbar spine, and dry eyes. (T. 16; Finding No. 3)

However, no medically recognized impairment was

found. Plaintiff's past medical history includes an

anterior cervical spine fusion at the level of C-5, 6

‘in 1969 after an automobile accident. Treating phy-

sician Dr. Paul Arnesen stated plaintiff had no diffi-

culties post operatively until December 1984. (T. 118)

Plaintiff testified that he had injured his back at

work when he slipped and fell on ice in the parking

lot. (T. 34) This injury occurred on December 27,

1984, and caused immediate pain in plaintiff’s back

and neck. (T. 108)

Plaintiff's treating physician for his back and neck

problems is chiropractor Dr. David Mjoen, who has

seen plaintiff on an ongoing basis since December 28,

1984. Dr. Mjoen’s notes indicate plaintiff sought

medical treatment the day after his fall. (T. 111)

Chief complaints included back distress in the bi-

lateral and occipital regions, thoracic distress, pares-

thesia into the right arm and hand, as well as head-

aches. //. Improvement was noted on February 4,

1985; however, plaintiff continued to have pain ac-

companied by headaches 4 times a week. /d. In

March, left-sided cervical distress was also docu-

mented. (T. 110)

On April 26, 1985, plaintiff's diagnosis was an

acute moderate traumatic cervical, dorsal and lumbar

sprain with muscle spasm, myositis and radiculitis.

(T. 196) Plaintiff was seen 3 times weekly at the

‘'me’ treatment consisted of specific chiropractic ad-

jusiments. (T. 106-7) Plaintiff was released to return

32a

to work with restrictions; however, Dr. Mjoen stated,

“there is no apparent job that would fit the re-

striction placed upon him.” (T. 106) Activity restric-

tions included no crawling, reaching above shoulder

level, pushing or pulling, carrying or lifting over 50

pounds, (T. 113-4) Dr. Mjoen opined:

At this point in time his primary problem in-

volves sitting for a great length of time, fre-

rotating [sic] or flexing of the cervical spine

whieh in turn would cause considerable irritation

to the injured part of that area. His lifting and

carrying should be kept within the above restric-

tions. I would expect this individual to be able

to handle his job within these restrictions how-

ever at this point in time it is not advisable to

return him to work with no restrictions at all

for the simple reason that he is involved in too

much heavy lifting and a lot of flexing and rotat-

ine of the cervical spine.

(T. 114) Permanent partial disability of 19.5°. was

concluded by Dr. Mjoen on April 29, 1985. (T. 112)

In May 1985, plaintiff’s neck, mid vack and low

hack distress had improved. (T. 117) However, Dr.

Mjcen referred plaintiff to Dr. Paul Arneson for an

evaluation in September 1985. (T. 115-6) Constant

neck and lower back pain were plaintiff’s chief com-

plaints. (T. 118) No weakness in the upper extremi-

ties was found: minimal hyposthesia over the fourth

and fifth fingers was noted; sensation in lower ex-

tremities was normal. (T. 120-2) An AP and lateral

view of the dorsal spine revealed a straight dorsal

spine and moderste hypertrophic degenerative change=

33a

at all levels. (T. 12%) Additionally, significant de-

venerative changes were found in the facet at L-5, S-1

on the left side, while minimal changes were noted

on the right. /d. Dr. Arnesen’s final diagnosis was

solid bony fusion C5, 6; cervical dise syndrome; low

back strain; and myositis of the trapezius muscle on

the right. (T. 124) Recommended treatment included

cervieal traction, muscle relaxants, local heat and

analgesics. Id.

Plaintiff was hospitalized from October 4, 1985,

until October 9, 1985, for evaluation of his cervical

disc syndrome. (T. 125) Chest x-rays showed the

heart and great vessels to be normal, and the pulmo-

nary parenohyma was unremarkable. (T. 126) Sig-

nificant relief was obtained through physical therapy.

(T. 125)

A cervical CT scan in November 1985 demonstrated

mild degenerative narrowing of the C-4, 5 disc space;

no other significant abnormalities were noted. (T.

130,123, 135) In December 1985, Dr. Arneson’s diag-

nosis included radiculitis, cervical right accompanied

by instability of the cervical spine above the level of

the fusion. (T. 133) Evidence of nerve root irritation

and compression was present at level C-6, 7. (T. 134)

Dr. Arneson opined, “... he is not capable of carry-

ing out any type of effective work at the present

time.” (T. 133) A possible extension of plaintiff's

existing fusion was suggested; however, plaintiff did

not want surgical intervention at this time. (T. 124)

On January 31, 1986, Dr. Mjoen again reiterated

that plaintiff could return to work with the previously

mentioned restrictions. (T. 136) A poor prognosis for

complete recovery was provided along with the follow-

ing diacnosis:

34a

1. Chronie recurrent cervical radiculitis compli-

cated by recurrent fixations at the level of C-4,

C-5, C-6 and C-7;

2. Chronic recurrent dorsal-lumbar sprain with

associated raciculitis complicated by recurrent

spinal fixations at the level of T-12, L-1, L-2, L-5,

S-1.

/d. Furthermore, Dr. Mjoen concluded:

I do feel that he should be able to improve from

what he is now, however / do not feel that he will

ever be able to return to full time unrestricted

work or the type of work that he has been doing

in the past. (emphasis added)

(T. 136) A functional capacities evaluation completed

by Dr. Mjoen coutained various restrictions such as

no prolonged sitting; no bending, lifting or twisting

of the dorso-lumbar spine; no continual rotation of the

head up and down or from side to side; lifting and

carrying no more than 35 pounds on an occasional

basis. (T. 137-8)

The need for continual chiropractic treatment in

order to avoid symptomatology was deemed paramount

by Dr. Mjoen in May 1986. (T. 138) X-rays taken in

August 1986 revealed moderate dise degeneration be-.

‘ween C-4, 5, which restricted flexion and extension

in both directions: a left convex lumbar curvature with

narrowing of the dise spaces at level T-12, L-1 and

L-1, 2; mild anterior spurring on bodies of L-J, 2, 3;

and slight retrolesthesis of L-5, S-1. (T. 140)

Consulting orthopedic surgeon Dr. A. Lilly exam-

ined plaintiff on August 22, 1986. (T. 144-5) Plain-

tiff appeared anxious to procure some form of seden-

tary work. (T. 145) A poor prognosis for significant

35a

future improvement was given due to the chronic de-

venerative changes in the cervical and lumbar spine.

Id,

Dr. P. Gislason examined plaintiff in September

1986 on behalf of the Home Insurance Company. (T.

146-7) Plaintiff demonstrated good range of motion

of the upper extremities and cervical motion was

limited to 50°, of normal. Again, it was surmised

that plaintiff had reached maximum medical improve-

ment. (T. 147) Further, plaintiff’s pre-existing 1965

impairment was seen as an aggravating factor in his

present condition, /d.

Dr. Allan Hagen saw plaintiff in the early part of

1987 for recurrent burning and soreness in both eyes.

(T. 180) Reading, driving and watching TV con-

tinued to bother plaintiff. (T. 181-2) Dr. Hagen at-

tempted to place silicone plugs in plaintiff’s tear drain

system: however, the problem was not alleviated. /d.

An impression for dry eye syndrome was provided.

Dr. David Dines of the Mayo Clinie provided in-

formation concerning plaintiff’s operation for wedge

resection of the granuloma, which involved a thoraco-

‘omy that was performed by Dr. W. Payne on June 6,

1977. (T. 94) Plaintit® recovered well and no evidence

of malignancy was noted. (T. 96) Pulmonary testing

in September 1978 evidenced obstructive airways dis-

ease. (T. 104)

Vocational evaluations were completed by Dr. Frank

Lamp in April 1987. (T. 166-79) Plaintiff's past

histery for high blood pressure was noted, but. it

appears to currently be controlled with medication.

('T. 166) It is also significant to note that plaintiff

had previously worked with the Karr Rehabilitation

Services for three 90 day periods. /i/. No appropriate

jobs were found; placement potential was described

ova

as “e-tremely poor.” (T. 173) Plaintiff’s verbal apti-

tude and intelligence was in the highest third exclu-

sive of the top 10°. of the population. (T. 172) Dr.

Lamp concluded:

Mr. Schafer is unable to function in any posi-

tion related to a business agent for a union...

He is of advanced age (age 57) which makes it

extremely difficult to utilize the skills he has at-

tained to transfer to a new vocational area.

cad + *

It is therefore, my professional opinion . . . that

Mr. Schaefer is not employable at this time, nor

will he reach a level of becoming employable.

(T. 175)

RFC assessments were provided by nonexamining

consulting physicians Alan Suddard, James Henry

and Randall Norgard. (T. 88-94, 148-9) Dr. Sud-

dard concluded ability to engage in past relevant

work 2s a business agent; while Dr. Henry concluded

an RFC for medium \\ork modified for neck rotation

and extension. (T. 89, 92) Dr. Norgard also found

plaintiff capable of medium work with the before

mentioned modification, as well as the physical abil-

ity to frequently climb, crouch, crawl, kneel and

stoop: to sit for 6 hours during an 8 hour day: and

unlimited pushing and pulling. (T. 148)

DISCUSSION

The ALJ’s factual findings are conclusive if sup-

ported hy substantial evidence on the record as a

whole. Gavin v. Heckler, 811 F.2d 1195, 1199 (8th

Cir. 1987). The Court distinguishes between mere

substantial evidence and substantial evidence on the

oo »

todas

record as a whole, /d. A more scrutinizing analysis

is invoked by the latter. Smith v. Heckler, 735 F.2d

312, 315 (8th Cir. 1984). In reviewing an adminis-

trative decision, “{t]he substantiality of evidence

must take into account whatever in the record fairly

detracts from its weight.” Universal Camera Corp.

“. Natl Lehor Relations Bd., 340 U.S. 474, 488

(1951) (Frankfurter, J.); see also Brand v. Secre-

tary, 623 F.2d 523, 527 (sth Cir. 1980). Accordingly,

the Court must apply a balancing test to evidence

that is contradictory.

A number of errors transpired at the administra-

tive level in the instant case. First, plaintiff’s subjec-

tive complaints of incapacitating pain were improp-

erly discredited. The ALJ did not evaluate plaintiff's

complaints in accordance with Polaski v. Heckler, 751

F.2d 943, 948 (Sth Cir. 1984). Although plaintiffs’

medication, various activities and physical limitations

were addressed; the ALJ failed to consider aggravat-

ing circumstances such as 4 preexisting back condition

and spinal fusion; the opinions of treating physi-

cians; and the duration, frequency and intensity of

plaintiffs pain. The ALJ is entitled to discredit

plaintiff based on inconsistencies found in the rec-

ord; however, the opinions of treating physicians

\hich ave supported by medical evidence cannot be

ignored. Car, enier v. Heeller, 733 F.2d 591, 593

(8th Cir. 1984). Medical notes consistently state con-

stant neck and back pain due to degenerative changes.

Plaintiff's ability to do certain types of activities

does not preclude a finding of disability. See e..,

Nettles v. Schive’ker, 714 F.2d 833 (8th Cir. 1983)

(short walks, watching TV and driving a car are not

inconsistent with severe pain); Klug v. Weinberger,

514 F.2d 423 (8th Cir. 1975) (driving, walking

38a

ori distances, carrying packages and socializing

are not evidence that plaintiff. can work). Therefore,

the mere fact that plaintiff walks 7 days a week,

drives an automobile and socializes is insufficient to

diseredit plaintiff.

Recognized or acceptable medical evidence includes

evidence from other practitioners, which expressly

includes chiropracters. See 20 CPLR. S$ 494.1515 ¢e)

(3) (1988). The ALJ states that claimant did not

consult a medical doctor until several months after

his fall. (T. 12) Plaintiff saw chiropractor Dr. Mjoen

on December 28, 1984, or the day after he had fallen

on the ice. (T. 111) Moreover, plaintiff continued to

see Dr. Mjoen 3 times a week for several months.

(T. 106) Dr. Mjoen eventually referred plaintiff to

orthopedic surgeon Dr. Paul Arneson in September

1985 for consultation. (T. 115) As Dr. Arneson

pointed out, plaintiff’s condition may eventually ne-

cessitate surgical intervention should patient experi-

ence intractable pain that cannot be tolerated. (T.

134) Therefore, on remand the ALJ should consider

more closely plaintiff's chiropractic treatment imme-

diately after his accident.

Second, plaintiff's back pain was not given an indi-

vidualized evaluation.

\ hack condition may affect one individual in an

inconsequential way, whereas the same condition

may severely disable another person who has a

crenter sensitivity to pein cr whose physical con-

dition due to age, obesity, deformity, or general

physical well-being is generally deteriorated.

Simonsen v. Schweiker, 699 F.2d 426, 429 (sth Cir.

1983) (citations omitted). Plaintiff's advanced age

coupled svith his weight and moderate hypertrophic

39a

degerative changes at all levels, (T. 123, 143-5), war-

ranted a different analysis. Additionally, plaintiff

testified that he needs to lie down everyday in the

afternoon for one hour to alleviate his back pain. (T.

41)

Third, the ALJ’s finding that plaintiff possessed the

requisite RIC to engage in past relevant work as a

union business agent is not supported by substantial

evidence. See Vahr v. Heckler, 741 F.2d 177, 179

(Sth Cir. 1984) (Secretary must establish through

medical evidence a claimant’s FC). Treating physi-

cian Dr. Mjoen expressly opined, “. . . I do not feel

that he will ever be able to return to full time un-

restricted work or the type of work he has been doing

in the past.” (T. 136) Dr. Arneson also found plain-

tuff not capable of carrying out any type of effective

work. (T. 133) Moreover, the functional restrictions

imposed by Dr. Mjoen do not permit plaintiff to en-

gave in sedentary work which would require extensive

forward flexion of the neck as well as periods of »ro-

longed sitting. Further, plaintiff's dry eye syndrome

prevents him from performing work that requires

extensive reading and writing. The opinions pro-

vided by nonexamining consulting physicians Suddard,

Henry and Norgard do not provide sufficient evidence

ii support of the ALJ’s RFC assessment. See Turpin

v. Bowen, 813 F.2d 165, 171 (8th Cir. 1987) (the

opinions of consulting physicians cannot constitute

substantial evidence when contradicted by those of

‘vreating physicians).

Further, since pain was clearly at issue, plaintiff’s

ability to work should have been determined with the’

assistance of a vocational expert. WceCoy v. Schweiker,

6s) fd 1158, 1148 (8th Cir. 1982). The Secretary

has failed to prove that there are jobs in the national

40a

economy that realistically suit plaintiff’s actual capa-

bilities. See e.g., Lewis v. Heckler, 888 F.2d 1293

(Sth Cir. 1987); O'Leary v. Schweiker, 710 F.2d 1384,

1342 (8th Cir. 1983) (plaintiff should be able to per-

form the necessary acts of a workday as found in the

competitive conditions of the real world of work).

Finally, plaintiff's age, education and work experi-

ence become relevant in determining plaintiff’s RFC.

See 20 C.F.R. $§ 404.1560, 404.1563 and 404.1564.

Plaintiff is a person of advanced age, with marginal

education. 7d. Of significance is the following:

We consider that advanced age (55 or over) is

the point where age significantly affects a per-

son’s ability to do substantial gainful activity.

If you are severely impaired and of advanced

ave and you cannot do medium work... you

may not be able to do work unless you have skills

that can be used in (transferred to) less demand-

ing jobs which exist in significant members in the

national economy. (I:mphasis Added)

Id. at § 404.1563(d). The definition for medium work

includes lifting up to 50 pounds with frequent lifting

or carrying of objects weighing up to 25 pounds. 20

C.F.R. § 404.1567(c). Since plaintiff’s physical limi-

tations do not permit medium work, plaintiff’s ad-

vanced age does become relevant. Moreover, Dr.

lamp’s vocational evaluations evidence no transfer-

able skills from plaintiff’s past employment, as well as

plaintiff's extremely poor potential to seek employ-

ment. See (T. 166-79).

4la

RECOMMENDATION

Based on the foregoing, IT IS RECOMMENDED

THAT the Secretary's decision denying disability in-

surance benefits to plaintiff be REVERSED; that the

cross-motions for summary judgment be DENIED;

und the case be REMANDED to the Secretary for

further consideration,

Dated: Oct. 19, 1988

s J. Karl Cudd

J. EARL Cupp

United States Magistrate

U.S GOVERNMENT PRINTING OFFice 1992 312324 45507

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