# Petition for Writ of Certiorari — Shalala v. Schaefer

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1993
- **Citation:** 509 U.S. 292

## Text

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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)

Il

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)

IV

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)

2

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

3

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

i

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

f)

(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.

7

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

9

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

11

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.

12

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”).

13

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

4

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.”

15

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-

16

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,

17

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.

18

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).

ae
io
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
v.

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)

2a

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.

3a

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
v.

Louis \W. SULLIVAN, M.D., Secretary of Health and
Hurinn Services of the United States, APPELLEE

FRED G. LINT, APPELLANT
v.

Louis W. SULLIVAN, Secretary of Health and
Human Services of the United States, APPELLEE

da
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

va

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:

ba

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,

Ta

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

Sa
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.

Ga
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.

pe

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
v.

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.

ba
APPENDIX E

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
THIRD DIVISION

Civil No, 3-88-71
TICHARD H. SCHAEFER, PLAINTIFF
v.

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
v.

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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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385013_0342%3A02. Public record. Not legal advice.