Petition for Writ of Certiorari — Pittman v. Sullivan

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| IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1990

LOUIE V. PITTMAN, PETITIONER

LOUIS W. SULLIVAN, SECRETARY

OF HEALTH AND HUMAN SERVICES

WAYNE ZIEGENHORN, PETITIONER

Vv.

LOUIS W. SULLIVAN, SECRETARY

OF HEALTH AND HUMAN SERVICES

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT

OF APPEALS FOR THE EIGHTH CIRCUIT

ANTHONY W. BARTELS

P.O. Box 1640

Jonesboro, Arkansas 72401

(501) 972-5000

ATTORNEY FOR PETITIONER

QUESTION PRESENTED

The question presented is two-fold:

First, shouldn't the Secretary of Health

‘and Human Services take responsibility for

the Agency's failure to comply with the

administrative fee withholding provisions

of 42 U.S.C. § 406? And, secondly, should

the Eighth Circuit's ruling in Gowen v.

Bowen be given retroactive application?

TABLE OF CONTENTS

OPINIONS BELOW

JURISDICTION

STATUTES INVOLVED

STATEMENT

REASONS FOR GRANTING THE PETITION

CONCLUSION .

APPENDIX

TABLE OF AUTHORITIES

Cases Page

Alexander v. Hill, 707 F.2d 780

464 U.S. 874 (1983) a ae ee ee 30

Berger v. Heckler, 771 F.2d 1556

[oe Gas Beee? «6» «+ & ee 6 es ow Oe

owen v b , 485 U.S.

74 (1988) a ae oe ae ae oe ee ee a

Brand v. Sullivan, No. 89-2912EA

(6th Car.) (em) . «© «© «© «© «© @ «QF

Condon v. Bowen, 853 F.2d 66

(2G Gets Beer « «© ee ee 14, 19

EX pa obinson, 86 U.S.

(19 Wall.) 505 (1874), quoted in

11 C. Wright & A Miller,

Federal Practice and

Procedure § 2960

at 581-82 (2d ed. 1973) .... 28

Fenix v. Finch, 436 F.2d 831

(8th Cir. 1971) oe tere Ve -@ tes 23

Garcia v. Neagle, 660 F.2d 983

(4th Cir. 1981) “a a 20, @h, @2

Gardner v. Mendez, 373 F.2d 488

(iat Gis. 2007) «+ % «sass

Gowen v. Bowen, 855 F.2d

613 (8th Cir.

1988) .. . 12, 14, 27, 28 passim

wh ton

TABLE OF AUTHORITIES (CONT'D)

Cases Page

Guido v. Schweiker, 775 F.2d 107

<< Eo lee |

J in Vv ullivan, No. 89-2913EA

(Gum Cae.) (O6MO) .« « 6 © wo o@ @ 4

McDonald v. Weinberger, 512 F.2d 144

[Sem Cis. Bye) «swe ee el el CU

McGuire v. Sullivan, 873 F.2d 974

(7th Cir. 1989) ttevs Btn -e we 23

Morton v. Ruiz, 415 U.S. 199

[Berean & © ee © 8 ee he el zO, 25

Motley v. Heckler, 605 F. Supp. 88

(W.D. Va. 1985), rev'd on other

grounds, 800 F.2d 1253 (4th Cir.

1986) lr ae Or ae ee ee

Oden v. Sullivan, No. 89-2911EA

(eum Gees COOP 6 6 6 8 e os

Perrin v. Sullivan, No. 89-2914EA

(8th Cir.) (case presently

pending before the

maeem Gamemaey) « «© « 6 « & we A?

Pittman v. Sullivan, No. 89-2180EA . 10

° Vv wej , 655 F. Supp.

3306 (BD. Bek. 2967) . « « « » « 2

-iii-

TABLE OF AUTHORITIES (CONT'D)

Cases Page

Russell v. Sullivan, 887 F.2d 170

(8th Cir.), rehearing denied

(1989), cert. denied, 110

SB. Ce 2673 C29PO) « @ « Av, £22, 26

Smith v. Bonds, 813 F.2d 1299

(4th Cir.), cert. denied,

488 U.S. 868 (1987) : «6 @ @ «& 30

Southeastern Community College v.

Davis, 442 U.S. 397 (1979) s 6 « oe

Strickland v. Bowen, 669 F. Supp. 1086

(M.D. Ga. 1987) eee x,

Thomason v. Schweiker, 692 F.2d

333 (40h Cif. 1982) . “4-4 6 * 21

Trekas v. Bowen, No. 88-2101EA

(8th Cir. May 12, 1989),

rehearing denied

(8th Cir. June 9, 1989),

cert. denied, 58 U.S.L.W.

3214 (U.S. Oct. 2, 1989)

(NG. 86802069) ....24+242e2e 16

Webb v. Richardson, 472 F.2d 529

(6th Cir. 1972) ....%s. 22, 24

Whitt v. Califano, 601 F.2d 160

(4th Cir. 1979) : & ef aoe. 8 8 23

Ziegenhorn v. Department of Health

& Human Services,

No. 89-2552EA (8th Cir.

Aug. 1, 1990) ea oe ee ee sG, a7

alive

TABLE OF AUTHORITIES (CONT'D)

Statutes Page

Re. SS) ae eee

20 C.F.R. § 404.501 (1990) ° 8 e 12, 18

42 U.S.C. § 404 . «© © © © © © © «@ 12, 18

42 U.S.C. § 406 . . 11, 13, 14, 16 passim

42 U.S.C. § 407 « «© © © © © 0 © © © 15

Other

Hearings on H.R. 6675 Before the Senate

inance Co , 89th Cong., list Sess.

512-13 (1965) 14

POMS § GN 03940.220 . . « «© « « «© « « Le

POMS § GN 03940.300 ....6 ++... « Lil

-V=—

IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1990

LOUIE V. PITTMAN, PETITIONER

Vv.

LOUIS W. SULLIVAN, SECRETARY

OF HEALTH AND HUMAN SERVICES

WAYNE ZIEGENHORN, PETITIONER

Vv.

LOUIS W. SULLIVAN, SECRETARY

OF HEALTH AND HUMAN SERVICES

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT

OF APPEALS FOR THE EIGHTH CIRCUIT

The Petitioner, Anthony W. Bartels,

petitions for a writ of certiorari to re-

view the judgment of the United States

Court of Appeals for the Eighth Circuit

in this case.

=-2-

OPINIONS BELOW

The opinion of the Court of Appeals

is reported as Pittman v. Sullivan, 91l F.

2d 42 (8th Cir. 1990), but is also

attached hereto as Appendix A. The

opinion of the District Court in Pittman

v. Secretary of HHS is unreported, but is

attached hereto as Appendix B. The

opinion of the District Court in

Ziegenhorn v. Bowen is unreported but is

attached as Appendix C. The Order Denying

Petition for Rehearing and Suggestion for

Rehearing En Banc of the Court of Appeals

is attached hereto as Appendix D.

JURISDICTION

The judgment of the Court of Appeals

(App. A) was entered on August l, 1990.

The jurisdiction of this Court is invoked

under 28 U.S.C. § 1254 (1).

STATUTES INVOLVED

The relevant provisions of Title II

of the Social: Security Act, 42 U.S.C. §

406, 20 C.F.R. § 404.1720(b) (4), 20

C.F.R. § 404.1730(b), and 20 C.F.R. §

404.501(a) (8), are set forth in Appendix

STATEMENT

This case concerns 42 U.S.C. § 406

and 20 C.F.R. §§ 404.1720 and 404.1730,

which involve fees for a representative's

services on a Title II claim. Ina Title ~-

II claim, the Social Security Administra-

tion is to withhold and pay the attor-

ney's fee directly to the attorney from a

claimant's past-due benefits. The case

also concerns 20 C.F.R. § 404.501(a) (8),

which provides for adjustment in cases

where, through error, a payment of past-

due benefits is made to an individual and

such payment has not been reduced by the

amount of attorney's fees payable direct-

ly to an attorney under § 206 of the Act,

42 U.S.C. § 406.

1. Pittman: Anthony Bartels, at-

torney, represented Pittman on a claim

appealing cessation of his disability

benefits. Pittman drew interim benefits

while his claim was pending. In October

of 1986 his benefits were reinstated by

the Secretary.

As an attorney's fee, Bartels peti-

tioned for one-fourth of retroactive ani

interim benefits. In June 1987, the Dis-

trict Court awarded Bartels a fee of

$1,782.16, or 25% of past-due benefits,

whichever was less. The order expressly

held that past-due benefits did not in-

clude interim benefits. In July 1987,

the Secretary released $1,046.82 to Bar-

tels, which amount represented 25% of

—

Pittman's retroactive benefits, not in-

cluding interim benefits. Bartels

appealed the Court's June 1987 order to

the Eighth Circuit Court of Appeals. In

Gowen v. Bowen, 855 F.2d 613, 614, 619

(8th Cir. 1988) the Court vacated the

order insofar as it denied attorney's

fees from interim benefits and remanded,

after holding that interim benefits must

be treated as past-due benefits. In Feb-

ruary 1989, the Secretary authorized Bar-

tels to charge a fee of $1,254.16 for

representing Pittman at the administra-

tive level. The Secretary advised Bar-

tels to look to Pittman for payment,

Since no benefits had been withheld be-

yond the $1,046.82 released earlier to

Bartels.

Bartels responded by filing a motion

in the District Court to hold the Secre-

tary in contempt for failure to withhold

the proper amount for attorney's fees, as

Pittman was unable and unwilling to pay

the balance of the fees he owed. The

District Court denied the contempt motion

but ordered the Secretary to pay Bartels

the balance owing on the court-ordered

fee ($735.34), as well as the administra-

tive fee authorized by the Secretary.

The Court further directed the Secretary

to pursue recoupment of these amounts

from Pittman's future disability bene-

fits.

The Secretary appealed the District

Court's decision, and the Eighth Circuit

agreed with the District Court's deter-

mination that under the decision in Gowen

v. Bowen, supra, the Secretary erroneous-

ly paid Pittman benefits that should have

been withheld for payment of attorney's

fees to Bartels, which resulted _.: an

overpayment to Pittman. However, the

Court affirmed the District Court's order

in Pittman only insofar as it directed

the Secretary to pursue recoupment of the

balance remaining on its fee award; that

unless waiver of recoupment was required,

the Secretary must attempt to recoup the

amount to the extent the award did not

exceed 25% of past-due benefits as de-

fined by Gowen v. Bowen, supra; and any

funds recouped were to be paid over to

Bartels. The Court held that it was

without authority to order payment of the

administrative fee.

2. Ziegenhorn: Anthony Bartels,

attorney, represented Ziegenhorn on a

claim appealing cessation of his dis-

ability benefits. Ziegenhorn drew inter-

im benefits while his claim was pending.

In October 1986 his benefits were rein-

stated by the Secretary.

As an attorney's fee, Bartels pe-

titioned for one-fourth of retroactive

and interim benefits. In April 1987, the

District Court awarded Bartels a fee of

$1,015.00, or 25% of past-due benefits,

whichever was less. Bartels did not ap-

peal this Order.

In July 1987, the Secretary au-

thorized Bartels to charge $1,618.17 in

attorney's fees for work done at the ad-

ministrative level. Shortly thereafter,

the Secretary released to Bartels the

$989.67 which was withheld from Ziegen-

horn's retroactive benefits, and advised

Bartels to look to Ziegenhorn for payment

of the balance of his fee.

In December 1988, after attempting

without success to collect the remainder

of the fee from Ziegenhorn, Bartels filed

a motion in District Court to hold the

Secretary in contempt for failure to com-

‘Pe

ply with the Court's April 1987 order,

claiming that the Secretary had disobeyed

the Order by not including interim bene-

fits as part of past-due benefits. The

Court denied the contempt motion, stating

that its April 1987 order did not re-

quire the Secretary to include interim

benefits as part of past-due benefits.

However, the Court went on to find that

Gowen v. Bowen, supra, applied retroac-

tively, and ordered the Secretary to pay

Bartels the administrative fee authorized

by the Secretary plus the balance remain-

25% of past-due benefits as defined by

Gowen v. Bowen, supra, whichever was

less.

The Secretary appealed to the Eighth

Circuit Court of Appeals, which held that

the District Court did not abuse its dis-

ing on the court-ordered fee ($25.33), or

cretion in denying Bartels's motion to

hold the Secretary in contempt, but that

the District Court erred when it went on

to grant Bartels the relief he sought on

the ground that Gowen v. Bowen, supra,

applied retroactively, because Bartels's

effort to obtain retroactive application

of Gowen through a contempt preceding

constituted an impermissibJe collateral

attack on the Court's April 1987 Order,

which had long since become final and un-

appealable. The District Court's Order

in Ziegenhorn was reversed.

ONS FOR GRANT THE P ION

I. THE APPELLATE COURT ERRED IN

REFUSING TO ORDER THE SECRETARY

OF HEALTH AND HUMAN SERVICES TO

TAKE RESPONSIBILITY FOR THE

AGENCY'S FAILURE TO COMPLY WITH

THE ADMINISTRATIVE FEE WITH-

HOLDING PROVISIONS OF 42 U. :

§ 406.

In the consolidated cases of Pittman

v. Sullivan, No. 89-2180EA, and Ziegen-

Vv th & Hum

i i a

-ll-

Services, No. 89-2552EA (8th Cir. Aug. l,

1990), the Eighth Circuit held that it

was without authority to direct the Sec-

retary of Health and Human Services to

pay the petitioner, Anthony Bartels, a

duly authorized administrative fee for

representing a Title II social security

disability claimant at the administrative

level (App. A). 42 U.S.C. § 406(a) pro-

vides for the award of administrative

fees but does not prescribe the mode of

payment. Case authority and Department

of Health and Human Services internal

regulations indicate, however, that the

Secretary is to award administrative fees

from past-due benefits withheld from the

Claimant pending a final determination,

POMS § GN 03940.220, or, in those cases

where the claimant elects to receive in-

terim benefits, award such fees from in-

terim benefits withheld from the claim-

-12-

ant. owen Vv. wen, 855 F.2d 613, 618-

19 (8th Cir. 1988) (holding that interim

benefits must be treated as past-due ben-

efits for attorney's fee purposes).

In this case, the Secretary author-

ized administrative fee awards but failed

to withhold the fees to which the peti-

tioner is entitled from interim benefits

payments. The claimant has since spent

all interim benefits payments and is un-

willing to voluntarily pay the petition-

er. Where administrative errors in with-

holding occur in the context of past-due

benefits cases and the attorney cannot

recoup the funds, the Social Security Ad-

ministration pays the fee directly to the

attorney and charges an overpayment to

the claimant. 42 U.S.C. § 404; 20 C.F.R.

§ 404.501(a) (8) (1990) (See App. E); POMS

§ GN 03940.300(A), (C). The Secretary

refuses to recoup the funds from the

-13-

claimant in this interim benefits case by

those means uniquely at the Secretary's

disposal, however, leaving the petitioner

with no remedy.

It is beyond dispute that pursuant

to 42 U.S.C. § 406(a) the petitioner is

entitled to the fee authorized by the

Secretary; the only question is whether

the Department of Health and Human Serv-

vices is outside the reach of the federal

courts when it refuses to pay such bene-

fits due to its own alleged "error." Be-

cause there is much confusion among the

circuits regarding the proper role of the

federal courts on this particular ques-

tion and with regard to social security

attorney fee questions generally, and be-

cause important federal questions are

here at issue, the petitioner seeks the

Supreme Court's guidance by way of this

petition for a writ of certiorari.

42 U.S.C. § 406 was enacted to en-

courage attorney representation of those

disabled individuals claiming Title II

benefits by assuring that attorneys tak-

ing such cases would be paid adequately.

Gowen v. Bowen, supra, 855 F.2d at 619;

Condon v. Bowen, 853 F.2d 66, 70-71 (2d

Cir. 1988); see also Hearings on H.R.

6675 Before the Senate Finance Comn.,

89th Cong., lst Sess. 512-13 (1965). The

statute at the same time protects claim-

ants by placing a ceiling on the amount

of attorney's fees recoverable for repre-

sentation at both the administrative and

court levels. 42 U.S.C. § 406(a),

(b) (1); Gowen v. Bowen, supra, 855 F.2d

at 619.

As noted above, the Secretary has

the internal mechanisms of overpayment

and recoupment for withholding attorney's

fees and ultimately paying such fees to

-15-

attorneys who have received a fee award.

The individual attorney, on the other

hand, is severely limited in collection

efforts by 42 U.S.C. § 407, which pro-

vides:

[NJone of the moneys paid or

payable or rights existing

under this subchapter shall be

subject to execution, levy, at-

tachment, garnishment, or other

legal process, or to the opera-

tion of any bankruptcy or in-

solvency law.

Thus where, as here, the claimant no

longer has the funds earmarked for attor-

ney's fees but mistakenly paid to the

Claimant by the Secretary, and is no

longer willing to reimburse his attorney,

the petitioner has virtually no method of

recovery directly against the claimant.

Only the Secretary has authority to renm-

edy this situation created by the Social

Security Administration's own error.

To adopt the Secretary's argument

that the federal courts cannot order the

-16-

Secretary to pay the petitioner his duly

authorized administrative fees in the

face of the Secretary's inaction would

fly in the face of the legislative intent

underlying the attorney's fee provisions

of 42 U.S.C. § 406. As noted above, the

overriding goal behind § 406 is to pro-

mote adequate legal representation of

disabled persons by assuring attorney's

fees. The Secretary argues here that his

failure to withhold attorney's fees was

an alleged "error". This contention is

hard to believe in light of the long line

of similar cases in which the Secretary

"erroneously" failed to withhold attor-

ney's fees for this petitioner. These

cases indicate a pattern or policy of re-

fusing to withhold administrative fees

rather than an isolated error. See,

e.g., Trekas v. Bowen, No. 88-2101EA (8th

Cir. May 12, 1989), rehearing denied (8th

Cir. June 9, 1989), cert. denied, 58

U.S.L.W. 3214 (U.S. Oct. 2, 1989) (No.

8802069) ; e 4 ivan, 887 F.2d

170 (8th Cir.), rehearing denied (1989),

cert. denied, 110 S. Ct. 1473 (19960);

Vv. ivan, No. 89-2914EA (8th

Cir.) (case presently pending before the

Eighth Circuit); Jennings v. Sullivan,

No. 89-2913EA (8th Cir.) (same); Oden v.

Sullivan, No. 89-2911EA (8th Cir.)

(same); Brand v. Sullivan, No. 89-2912EA

(8th Cir.) (same). This policy of fail-

ing to withhold attorney's fees is not

confined to cases arising in the Eighth

Circuit. See, e.g., Roberts v. Schwei-

ker, 655 F. Supp. 1105 (D. Del. 1987)

(re: Secretary's violation of regulations

in failing to retain a percentage of ben-

efits for attorney's fees); Strickland v.

Bowen, 669 F. Supp. 1086 (M.D. Ga. 1987)

(same).

——V—eEE

-18-

Even if the Secretary's oversight in

this case was an honest error, such an

error should not relieve the Secretary of

his obligation under 42 U.S.C. § 406 and

implementing regulations, particularly in

light of the purpose of the statute. To

do so would clearly discourage represen-

tation of disability claimants in future

interim benefits cases. Ordering the

Secretary to pay the petitioner his ad-

ministrative fees would create no par-

ticular hardship for the Administration.

The Secretary already collects such fees

in cases of past-due benefits, then re-

coups the overpayment to the claimant

pursuant to 42 U.S.C. § 404 and 20 C.F.R.

§ 404.501(a)(8) (See App. E). The mech-

anism is therefore in place within the

Administration to remedy the petitioner's

situation; the Secretary is simply being

asked to use that mechanism. The same

concerns which lead the courts to treat

interim benefits as past-due benefits for

purposes of setting an attorney's fee

award should likewise guide the proce-

dures for payment of those fees. Other-

wise, the law establishing an attorney's

right to such fees would be rendered

meaningless.

The Secretary's position that he is

not required to pay the petitioner and

that he cannot be ordered by the federal

court to do so must not only be rejected

for those equitable reasons noted above.

The law also provides judicial oversight

in those cases where the Secretary ex-

ceeds his discretion and violates the

law. As noted in Condon v. Bowen, supra,

853 F.2d at 72, quoting Southeastern Com-

munity College v. Davis, 442 U.S. 397,

411 (1979), the deference generally ac-

corded the Secretary "'is constrained by

[the court's] obligation to honor the

clear meaning of a statute, as revealed

by its language, purpose, and history.'

It is for the courts, not the ad-

ministrative agen.7, to decide con-

Clusively questions of statutory con-

struction." Thus, to the extent that the

Secretary's failure to provide payment in

this case is based on his erroneous read-

ing of the law, the federal courts must

become involved.

Furthermore, as this Court noted in

Morton v. Ruiz, 415 U.S. 199, 232 (1974),

[the] agency power to make

rules that affect substantial

individual rights and obliga-

tions carries with it the re-

sponsibility not only to remain

consistent with the governing

legislation, .. . but also to

employ procedures that ennere

to the law.

(Citations omitted.) As similarly ex-

plained in Garcia v. Neagle, 660 F.2d

983, 988 (4th Cir. 1981), cert. denied,

454 U.S. 1153 (1982),

even where action is committed

to absolute agency discretion

by law, courts have assumed the

power to review allegations

that an agency exceeded its

legal authority, acted uncon-

stitutionally, or failed to

follow its own regulations.

. »« Where the controlling

statute indicates that par-

ticular agency action ic com-

mitted to agency discretion, a

court may review the action if

there is a claim that the

agency has violated constitu-

tional, statutory, regulatory

or other restrictions, but may

not review agency action where

the challenge is only to the

decision itself.

See also Thomason v. Schweiker, 692

F.2d 333, 336 (4th Cir. 1982) (following

Garcia v. Neagle, supra).

In light of these authorities, the

Secretary's contention that 42 U.S.C. §

406(a) gives the Administration absolute

discretion and sole authority over ad-

ministrative fee decisions, and thus re-

moves such decisions from federal court

scrutiny is without merit. The amount of

-22-

the Secretary's award is not being chal-

lenged here. Rather, the petitioner

seeks an order demanding that the Secre-

tary comply with the letter and spirit of

the attorney fee provisions of the stat-

ute, regulations, and internal operating

procedures, and actually pay him the

award which has been duly authorized for

his representation of the disability

Claimants identified above.

The question of the respective roles

of the Social Security Administration and

the federal courts in carrying out the

attorney fee provisions of Title II on

these and similar facts is the subject of

much dispute among the circuits. In Webb

v. Richardson, 472 F.2d 529 (6th Cir.

1972), for example, the court held that

it was completely appropriate for the

court not only to award attorney's fees

for representation before the court on

-23-

behalf of a social security claimant, but

to set an administrative award as weil.

The court adopted this approach for the

sake of clarity and more adequately to

carry out the purpose of the 25% statu-

tory cap on all fees, both judicial and

administrative, among other reasons. Id.

at 536-37.

Other circuits, including the Eighth

Circuit in the consolidated cases at bar,

have applied the statute in a mechanistic

fashion to reach a contrary result. See,

e.g., McGuire v. Sullivan, 873 F.2d 974

(7th Cir. 1989) (court without jurisdic-

tion to award fee for services at admin-

istrative level); Guido v. Schweiker, 775

F.2d 107, 109 (3d Cir. 1985) (same);

Whitt v. Califano, 601 F.2d 160, 161-62

(4th Cir. 1979) (same); McDonald v. Wein-

berger, 512 F.2d 144, 146 (9th Cir. 1975)

(same); Fenix v. Finch, 436 F.2d 831, 838

-24-

(8th Cir. 1971) (same); Gardner v. Men-

dez, 373 F.2d 488, 490 (lst Cir. 1967)

(same).

Unlike those cases noted above, the

Secretary has already set an administra-

tive award for the petitioner in this

case; the only question is whether the

federal court should be allowed to order

the actual payment of that award where

the Secretary is refusing payment due to

the Administration's error in failing to

withhold those funds from the claimant.

Nonetheless, the larger issue of the ap-

propriate role of the federal courts in

deciding issues related to administrative

fees is once again presented by the facts

of this case, similarly to the foregoing

authorities. If the circuits were to

follow the common-sense approach re-~

flected by the Sixth Circuit's decision

in Webb v. Richardson, supra, there would

-25-

be no question that the court could be-

come involved in this dispute.

The question of the courts' role in

administrative fee disputes has also

arisen on facts more closely akin to this

case. In Russel] v. Sullivan, supra, the

Eighth Circuit declined to order payment

of an attorney's administrative fee by

the Secretary on the basis that because

the court is without jurisdiction to re-

view the Secretary's fee awards, it like-

wise has no authority to enforce an award

issued by the Secretary. 887 F.2d at

171. Russell contradicts Morton v. Ruiz,

supra, and Garcia v. Neagle, supra, both

of which support judicial review not of

the amount of an administrative award it-

self, but of the procedures used to carry

out that award where the Secretary fails

to comply with the law. Russel] is also

in conflict with Motley v. Heckler, 605

EE —————

-26-

F. Supp. 88 (W.D. Va. 1985), rev'd on

other grounds, 800 F.2d 1253 (4th Cir.

1986), in which the court upheld the

Social Security Administration's practice

of paying a fee directly to an attorney

where it failed to withhold the proper

amount from the claimant, and then charg-

ing the fee to the claimant as an over-

payment against the claimant's benefits,

in the context of a Title XVI case.

In Bowen v. Galbreath, 485 U.S. 74

(1988), this Court held that the federal

courts have no authority to order the

Secretary to withhold attorney's fees

from past-due benefits in Title XVI

cases. However, the Court's clear dis-

tinction between Title XVI and Title II

implied that such orders are completely

appropriate in Title II cases. This case

presents the Court with a unique oppor-

tunity to clarify the law and diffuse at

Abe

-27-

least a portion of the rampant confusion

and conflict which now prevails in Title

II attorney's fees cases in the circuit

courts. Without the Court's guidance,

some circuit courts will continue to deny

attorneys the fees--particularly for ad-

ministrative representation--to which

they are entitled by law and thus ul-

timately discourage legal representation

of disability claimants. To avoid this

inequitable result, this petition for a

writ of certiorari should be granted.

II. THE APPELLATE COURT FAILED TO

APPLY THE PROPER STANDARD IN

RULING ON THE PETITIONER'S RE-

QUEST FOR RETROACTIVE APPLICA-

TION OF GOWEN V. BOWEN.

In Ziegenhorn v. Department of

Health & Human Services, supra, the

Eighth Circuit specifically declined to

apply Gower v. Bowen, supra, retroactive-

ly in response to the petitioner's con-

tempt claim and thereby prevented the pe-

titioner from obtaining the only relief

available to him. The Eighth Circuit

reasoned that seeking retroactive ap-

plication of Gowen v. Bowen, supra, by

way of a contempt proceeding constituted

an impermissible collateral attack on the

Court's April 1987 order, which had long

since become final and unappealable (App.

A). For the reasons which follow, the

Court's analysis was erroneous.

In Ex parte Robinson, 86 U.S. (19

Wall.) 505 (1874), quoted in 11 C. Wright

& A. Miller, Federal Practice and Proce-

dure § 2960 at 581-82 (2d ed. 1973), the

Supreme Court said:

The’ power to punish for con-

tempt is inherent in all

courts; its existence is essen-

tial to the preservation of

order in judicial proceedings,

and to the enforcement of the

judgments, orders and writs of

the courts and, consequently,

to the due administration of

justice. The moment the courts

-29-

of the United States were

called inte existence and in-

vested with jurisdiction over

any subject, they became pos-

sessed of this power.

The power of federal courts to punish by

contempt is now codified at 18 U.S.C. §

401. Pursuant to that statute, dis-

obedience to a "lawful writ, process,

order, rule, decree, or command" is

grounds for exercising the court's con-

tempt power. 18 U.S.C. § 401(3).

Given the breadth of the court's

contempt power, the Eighth Circuit erred

by characterizing the petitioner's con-

tempt claim as an impermissible col-

lateral attack (App. A). The Court ob-

viously had the power to hold the Secre-

tary in contempt. In this case, where

virtually no other remedy was available,

the case for contempt was unusually com-

pelling.

-30-

Even if the Eighth Circuit was cor-

rect in finding that contempt was an in-

appropriate vehicle for applying Gowen v.

Bowen, supra, retroactively, the Court

had the power to fashion an equitable

remedy and thereby afford the petitioner

with his duly authorized administrative

fees. The contempt power of the court

does not limit the court's discretion to

fashion an equitable remedy. Smith v.

Bonds, 813 F.2d 1299, 1303 (4th Cir.),

cert. denied, 488 U.S. 868 (1987). The

court need not choose between contempt or

nothing. Alexander v. Hill, 707 F.2d

780, 783 (4th Cir.), cert. denied, 464

U.S. 874 (1983); see also Berger v.

Heckler, 771 F.2d 1556, 1569 (2d Cir.

1985). Thus, in Alexander v. Hill,

supra, where the plaintiff filed a motion

seeking to hold state welfare officials

in contempt for failing to timely imple-

-3li-

ment a plan for processing ADC and Medi-

caid applications, the court held that

the district court had the authority to

impose remedial fines or penalties, de-

spite the fact that there had been no

fi..Jing of contempt or bad faith.

In this case, the Secretary refuses

to pay the petitioner those administra-

tive fees to which he is legally en-

titled. The federal courts provide the

only avenue for challenging the

Secretary's intransigence and consequent-

ly provide the only avenue for giving

meaning to 42 U.S.C. § 406 and its im-

plementing regulations. The Eighth Cir-

cuit grievously erred by failing to

remedy the unjust and illegal situation

created by the Secretary's refusal to

comply with the law. Because fundamental

federal issues concerning the proper role

of the federal courts are here at issue,

-32-

the Court should grant this petition for

a writ of certiorari.

CONCLUSION

The petition for a writ of cer-

tiorari should be granted.

Respectfully submitted,

ORIGINAL SIGNED BY

a2ZZ

ANTHONY @. BARTELS

Attorney at Law

316 South Church

Jonesboro, Arkansas 72401

(501) 972-5000

A ) C

| Ujembsen ot, 1990.

| APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

No. 89~-2180EA

Louie Pittman, Appellee,

Vv.

Louis W. Sullivan, M.D.,

Secretary of Health and Human Services,

Appellant

No. 89=-2552EA

Wayne E. Ziegenhorn, Appellee,

Department of Health and

Human Services, Appellant.

Appeals from the United States

District Court for the

Eastern District of Arkansas

Submitted: April 12, 1990

Filed: August 1, 1990

Before MAGILL, Circuit Judge, FLOYD R.

GIBSON, Senior Circuit Judge, and BEAM,

Circuit Judge.

MAGILL, Circuit Judgment.

In these consolidated appeals, the

Secretary of Health and Human Services

seeks reversal of the district court's

orders requiring him to make additional

attorney's fee payments to Anthony

Bartels, the attorney who represented

claimants Wayne Ziegenhorn and Louie

Pittman in administrative and judicial

proceedings concerning the termination of

their disability insurance benefits. When

their cases were remanded for further

administrative proceedings following

enactment of the Social Security

Disability Benefits Reform Act of 1984,

both Ziegenhorn and Pittman elected to

receive interim benefits under 42 U.S.C. §

423 (g), which permits claimants to

continue receiving disability benefit

payments pending administrative review of

the termination decision. The Secretary

=35e

ultimately reinstated both claimants’

disability benefits. Bartels then

petitioned the district court for

attorney's fee awards in the two cases.

Under 42 U.S.C. § 406 (b) (1), such awards

are paid out of and may not exceed

twenty-five percent of past-due benefits.

In both cases, the Secretary did not

include interim benefits as part of

past-due benefits in calculating the

amount to be withheld for payment of

authorized attorney's fees.

This court subsequently held in Gowen

v. Bowen, 855 F. 2d 613, 618-19 (8th Cir.

1988), that interim benefits must be

included as part of past-due benefits in

determining allowable attorney's fees

under § 406. After the Gowen decision,

Bartels filed motions in the district

court to hold the Secretary in contempt

for failing to pay the balances remaining

on the court's fee awards for his

representation of Ziegenhorn and Pittman,

=36-

and the fees authorized by the Secretary

in the two cases. The district court

denied the contempt motions, but in each

case it went on to order the Secretary to

| make additional fee payments to Bartels

out of general social security funds. We

reverse the district court's order in the

Ziegenhorn case, and affirm in part the

court's order in the Pittman case.

The Secretary reinstated Ziegenhorn's

disability benefits in October 1986.

Excluding interim benefits, Ziegenhorn's

past-due benefits total $3,958.70. The

Secretary withheld twenty-five percent of

this amount, $989.67, for payment of

authorized attorney's fees. In an April

1987 order, the district court awarded

Bartels a fee of $1,015 or twenty-five

percent of Ziegenhorn's past-due benefits,

whichever was less, for his representation

of Ziegenhorn at the district court level.

) Bartels did not appeal this order. In

ee hl

en ee ee

DIN Oe Dial ah i Nk ee EN Mlle aa Ce Rn Gre ae ee CN,

meee

July 1987, the Secretary authorized

Bartels to charge $1,618.17 in attorney's

fees for his services at the

administrative level. Shortly thereafter,

the Secretary released to Bartc¢ls the

$989.67 withheld from Ziegenhorn's

past-due benefits. The Secretary advised

Bartels that he would have to look to

Ziegenhorn for the remainder of his fees.

In December 1988, almost four months

after Gowen was decided, Bartels filed a

motion in the district court to hold the

Secretary in contempt for failure to

comply with the court's April 1987 order

awarding fees. Bartels claimed that the

Secretary had disobeyed the order by not

including interim benefits as part of

past-due benefits. The motion also stated

that Ziegenhorn had refused to pay the

balance of the fees owed. Because of its

April 1987 order did not require the

Secretary to include interim benefits as

part of the past-due benefits, the court

- eh ne oe

ee Se

;

denied the contempt motion. However, the

court went on to find that Gowen applies

retroactively. On that basis, the court

ordered the Secretary to pay Bartels the

administrative fee authorized by the

Secretary plus the balance remaining on

the court-ordered fee ($25.33), or

twenty-five percent of Ziegenhorn's

past-due benefits as defined by Gowen,

whichever amount was less. The court

stated that it was up to the Secretary to

decide whether to seek recoupment from

Ziegenhorn.

Pittman's disability benefits were

reinstated in October 1986. In a June

1987 order, the district court awarded

Bartels a fee of $1,782.16 or twenty-five

percent of Pittman's past-due benefits,

whichever was less, for representing

Pittman at the district court level. The

order expressly held that past-due

benefits do not include interim benefits.

In July 1987, the Secretary released

$1,046.82 to Bartels. This amount

represented twenty-five percent of

Pittman's past-due benefits, not including

interim benefits. Bartels then appealed

the court's June 1987 order to this court.

In Gowen, 855 F. 2d at 614, 619, we

vacated the order insofar as it denied

attorney's fees from interim benefits, and

remanded. Thereafter, in February 1989,

the Secretary authorized Bartels to charge

a fee of $1,254.16 for representing

Pittman at the administrative level. The

Secretary advised Bartels that he would

have to look to Pittman for payment

because no benefits had been withheld

beyond the $1,046.82 previously released

to Bartels.

Bartels responded by filing a motion

in the district court to hold the

Secretary in contempt. The motion stated

that Pittman was unable and unwilling to

pay the balance of the fees he owed. The

court denied the contempt motion, but

-40-

Ordered the Secretary to pay Bartels the

balance owing on the court-ordered fee

($735.34), as well as the administrative

fee authorized by the Secretary. The

court further directed the Secretary to

pursue recoupment of these amounts from

Pittman's future disability benefits.

II. %ZIEGENHORN

The district court did not abuse its

discretion in denying Bartels’ motion to

hold the Secretary in contempt for failure

to comply with the court's April 1987

order awarding attorney's fees. It is

clear that “the Secretary fully complied

with the express terms and intent of the

order." Davis v. Bowen, 894 F. 2d 271,

273 (8th Cir. 1989) (per curiam), cert.

denied, 110 S. Ct. 1922 (1990).

The district court erred, however,

when it went on to grant Bartels the

relief he sought on the ground that Gowen

applies retroactively. Bartels’ effort to

obtain retroactive application of Gowen

~41<

through a contempt proceeding constituted

an impermissible collateral attack on the

court's April 1987 order, which had long

since become final and unappealable. It

is well settled that ""'a contempt

proceeding does not open - to

reconsideration the legal or factual basis

of the order alleged to have been

disobeyed.'" United States v. Rylander,

460 U.S. 752, 756 (1983) (quoting Maggio

v. Zeitz, 333 U.S. 56, 69 (1984)). This

rule is based on the doctrine of res

judicata. See United States ex rel. Shell

Oil Co. v. Barco Corp., 430 F. 2d 998,

1001 (8th Cir. 1970); Daly v. United

States, 393 F. 2d 873, 876 (8th Cir.

1968). As the Third Circuit has observed,

“any other rule would set to nought the

time limits for seeking appellate review

set forth in Fed. R. App. P. 4 (a)."

United States v. Millstone Enters., Inc.,

864 F. 2d 21, 23 (3d Cir. 1988). We

believe that the res judicata rationale

for the rule prohibiting a collateral

attack on the underlying court order ina

contempt proceeding applies with even

greater force in the unusual situation

where the movant is the party making the

attack.

This result is consistent with our

decisions in Davis and Russell v.

Sullivan, 887 F. 2d170 (8th Cir. 1989)

(per curiam), cert. denied, 1105S. Ct.

1473 (1990). In both of these cases, the

district court denied similar contempt

motions by Bartels without going on to

order relief based upon retroactive

application of Gowen. In affirming the

denials, we refused to address Bartels’

argument that Gowen should be applied

retroactively. Russell, 887 F. 2d at 172

(declining to address argument on ground

that only issue before the panel was

Bartels' contempt motion); Davis, 894 F.

2d at 273 (emphasizing that argument was

inherently inconsistent with Bartels’

contempt motion alleging the Secretary had

disobeyed the underlying order awarding

fees).

III. PITTMAN

The district court properly declined

to hold the Secretary in contempt in the

Pittman case. Bartels does not contend

otherwise. Because the matter was on

remand from this court, see Gowen, 855 F.

2d at 614, the Secretary concedes that

Bartels' request for relief did not

constitute a collateral attack. The

question is to what extent the remedy

ordered by the court was permissible.

The matter of attorneys’ fees for

services performed at the administrative

level is committed by § 406 (b) (1) to the

responsibility of the Secretary

exclusively, and such fees may not be

awarded by the courts. Id. at 618 (citing

Fenix v. Finch, 436 F. 2d 831, 838 (8th

Cir. 1971)). Furthermore, fee awards made

by the Secretary are not subject to

»o44-

‘judicial review. Copaken v. Secretary of

Health, Educ. & Welfare, 590 F. 2d 729,

731 (8th Cir. 1979) (per curiam). Because

"the Secretary's fee awards are not

judicially reviewable, the district court

likewise has no authority to force the

Secretary to comply with an award the

court did not issue." Russell, 887 F. 2d

at 171. Therefore, the district court had

no authority to order the Secretary to pay

Bartels the authorized administrative fee,

or to direct the Secretary to recoup that

amount from Pittman and pay it over to

Bartels.

lin deciding this and the following

issue, we do not consider whether a

different result might be required if

Bartels had raised a constitutional claim.

-45~<

We must also conclude that the court

had no authority to order the Secretary to

pay Bartels the balance remaining on its

fee award out of general social security

funds. "The United States is not liable

for such a payment absent aie specific

waiver of sovereign immunity.” Id. at 172

(citing Ruckelshaus v. Sierra Club, 463

U. &. 680, 685 (1983)). Section 406

"cannot be construed as a waiver of

immunity" because it “contemplates payment

of the fee award by the claimant, out of

past-due benefits, rather than by the

government, out of general funds.” Id

(emphasis in original) .? Aithough it was

2two district court decisions have

ordered the Secretary to make additional

fee payments to an attorney because the

Secretary failed to withhold benefits that

should have gone to the attorney as

payment for fees. Kovar v. Heckler, 622

F. Supp. 88, 93-94 (W.D. Va. 1985), rev'd

on other grounds, 800 F. 2d 1253 (4th Cir.

1986); see also Clay v. Secretary of

Health & Human Servs., 823 F. 2d 679, 684

(Ist Cir. 1987) (agreeing with district

court's determination that “the Secretary

can either recoup such funds’ from the

state [to which they were paid as

reimbursement] or bear the burden of

recovering the attorney's fees from the

claimant for payment to counsel"). The

courts in Kovar and Motley did not discuss

whether the federal government's sovereign

immunity would be violated if the

Secretary effectively ended up paying the

additional fees out of general funds

because he was unable to recoup the

overpayment from the claimant's future

benefits.

its...

aie

not addressed by the parties, we are aware

that the Social Security Administration's

Programs Operating Manual System provides

that if past-due benefits are mistakenly

released to the claimant rather than his

attorney, and the attorney is unable to

collect the fee that was to be paid out of

those benefits, then the Administration

will pay the fee directly to the attorney

and attempt to recoup that amount from the

claimant. We are constrained, however, by

the principle that "administrative

regulations cannot waive the federal

government's sovereign immunity."

Mitzelfelt v. Department of Air Force, 903

F. 2d 1293, (10th Cir. 1990) (citing

United States v. Mitchell, 463 U. S. 206,

215-16 (1983)); see also United States v.

N.Y. Rayon Importing Co., 329 U.S. 654,

660 (1947) (agency officials “possess no

power through their actions to waive an

immunity of the United States").

We agree with the district court's

-48-

determination that under our “ecision in

Gowen, the Secretary erroneously paid

Pittman benefit:s that should have been

withheld for payment of attorney's fees *o

Bartels. This resulted in an overpayment

to Pittman. 42 U.S.C. § 404 (a) (1) (A)

states that the Secretary "shall" recoup

overpayments made to a claimant. This

language "mandates" recoupment of

overpayments. Sullivan v. Everhart, 110

S. Ct. 960, 965 (1990). The Secretary's

regulations specifically provide that §

404's provision for recoupment "apply in

cases where through error . . . [al]

payment of past due benefits is made to an

individual and such payment had not been

reduced by the amount of attorney's fees

payable directly to an attorney under

[$406] ." 20 C.F.R. § 404.501 (a) (8).

Accordingly we find that the district

court did not err in directing the

Secretary to pursue recoupment of the

balance remaining on its fee award.

~49<

Section 404 (b) provides that the

Secretary must waive recoupment if (1) the

claimant is without fault, and .(2)

recoupment would either defeat the purpose

of the Social Security Act or be against

equity and good conscience. See also 20

C.F.R. §404.506. Benefit recipients are

entitled to a prerecoupment oral hearing

if they request waiver under § 404 (b).

Califano v. Yamasaki, 442 U.S. 682, 695-97

(1979). We recognize the very real

possibility that the Secretary will be

required to waive recoupment in this case.

The parties in no way suggest that Pittman

was at fault for the overpayment, and we

have previously indicated that the phrase

"against equity and good conscience” is

not to be’ narrowly construed. See

Groseclose v. Bowen, 809 F. 2d 502, 505-06

(8th Cir. 1987); see also 20 C.F.R.

§ 404.508 (a) (recoupment defeats the

purpose of the Act if it would “deprive a

person of income required for ordinary and

=-50-

necessary living expenses") .° As this

case illustrates, recoupment is an

uncertain, drawn-out, and cumbersome

method of collecting unpaid attorney's

fees. However, the need to resort to this

procedure should arise less often in the

future given our conclusion that Gowen

requires the Secretary to withhold

twenty-five percent of interim benefits

for payment of possible fee awards. In

addition, if the claimant agrees, an

3Bartels himself may not attempt to

intercept Pittman's future disability

benefits because they are not “subject to

execution, levy, attachment, garnishment,

or other legal process." 42 U.S.C. § 407

(a).

-Si1<

attorney can guard against erroneous

disbursements of past-due benefits by

setting up an escrow account for payment

of possible attorney's fees. See Condon

v. Bowen, 853 F. 2d 66, 72-73 (2d Cir.

1988). The Secretary has expressly

authorized the use of such accounts.

Social Security Ruling 82-39.

The Secretary does not dispute that

he is obligated to seek recoupment in

cases of overpayment. Rather, he argues

that there was no ovntpesnans in the

Pittman case because Gowen's holding that

past-due benefits include interim benefits

applies only to the calculation of

allowable attorney's fees under § 406, not

to the payment of those fees. The

Secretary emphasizes his contention that

the withholding of twenty-five percent of

interim benefits for payment of possible

fee awards would result in hardship to

-52-

claimants.4 We agree with the Second

~ ‘fhe Secretary also argues that there

is no statutory basis for such withholding

because the language of § 406 permits the

withholding of past-due benefits only if

the Secretary has made a determination

favorable to the claimant or a district

court has entered judgment for the

claimant. By definition, interim benefits

are paid prior to any such determination

or judgment. See § 423 (g) (1). We view

the Secretary's interpretation of § 406 as

overly mechanical, and no different in

substance than the one rejected in Gowen},

855 F. 2d at 619. See also Shoemaker v.

Bowen, 853 F. 2d 858, 861 (llth Cir. 1988)

(rejecting Secretary's argument that

"because interim benefits are paid prior

to the reinstatement of benefits they are

not 'past-due benefits,'" and holding that

interim benefits are past-due benefits

under § 406). Although the Secretary's

interpretation of the statute is entitled

to considerable deference, we need not

accept it where, as here, it is

unreasonably narrow and frustrates’ the

statute's purpose. See Groseclose, 809 F.

2d at 505-06.

-53-

Circuit that

claimants would actually suffer much

greater hardship if they were not

able to secure competent counsel to

represent. them in their appeals

because of the extremely low fees to

which their attorneys would be

consigned under the Secretary's

position, rather than if they

received seventy-five percent of the

benefits during the appeal process

instead of one hundred percent.

Condon v. Bowen, 853 F. 2d at 71 (going on

to hold that interim benefits are part of

past-due benefits within the meaning of §

406). Restricting Gowen to the confines

urged by the Secretary would render our

decision in that case all but meaningless

because in most cases the attorney's only

realistic source of payment for a fee

award is withheld benefits. Not including

interim benefits in this source would

create a disincentive for attorneys to

represent claimants who elect to receive

interim benefits, which in turn would lead

claimants "to forego the relief intended

by Congress to retain competent legal

-54-

representation." Gowen, 855 F. 2d at 619.°

Our representation in Gowen was based on

the purpose of § 406, which is to

""promote the adequate representation of

potentially disabled individuals through a

reasonable attorney's fee while at the

same time preventing too great a reduction

in a claimant's already inadequate stipend

in the event he is declared disabled.'"

Id. (quoting Santos Rivera v. Secretary of

Health & Human Servs. 674 F. Supp. 963,

965 (D.P.R. 197)). We decline to

undermine this purpose and subvert the

effect of Gowen by limiting to fee

calculation its holding that interim

benefits are past-due benefits under §

406.

Sindeed, attorneys could be placed in

the conflict-ridden position of advising

clients not to apply for sorely needed

interim benefits. See Condon, 853 F. 2d

at 7l.

-55-

IV.

For the reasons stated above, the

district court's order in the Ziegenhorn

case is reversed. We affirm the court's

order in the Pittman case only insofar as

it directs the Secretary to pursue

recoupment of the balance remaining on its

fee award. Unless waiver of recoupment is

required, the Secretary must attempt to

recoup this amount to the extent the award

does not exceed twenty-five percent of

Pittman's past-due benefits as defined by

Gowen. The funds recouped must be paid

over to Bartels.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS,

EIGHTH CIRCUIT

-56-

APPENDIX B

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF ARKANSAS

JONESBORO DIVISION

Civil No. J-C-84-114

LOUIE V. PITTMAN, PLAINTIFF

SECRETARY OF HHS, DEFENDANT

[FILED APRIL 5, 1989]

ORDER

This case is before the Court on

remand from the Eighth Circuit Court of

Appeals for recalculation of the amount of

fees due plaintiff's counsel. Pittman v.

Bowen, Case No. 87-1995 (8th Cir. August

31, 1988). The Court of Appeals reversed

the Secretary and this Court and concluded

that interim benefits should be included

in the “past due benefits” against which

maximum attorney's fees are calculated.

See 42 U.S.C. 406 (b) (1). Plaintiff's

o§7<-

counsel has moved to hold the Secretary in

contempt for his refusal to pay counsel

any additional amount, and the Secretary

has responded by claiming that counsel

should look to his client for the balance

due.*

*Counsel claims that the amount now owed

to him is $1989.572 [sic] which includes

an uncollected $735.34 awarded to him by

this Court for proceedings before it as

well as an uncollected $1,254.16 awarded

by the Secretary for counsel's

representation during administrative

proceedings. See 42 U.S. C. 406 (a) and

(b). The Secretary at one point seems to

suggest that the only additional amount

collectible is the $735.34 awarded by this

Court. See Defendant's Response, at 4;

but see id., at 5-6, acknowledging that

“the attorney was authorized to charge

$3,036.32," which would include the

administrative award. The Court is

unclear as to how much the Secretary

believes counsel may now collect, and will

give the Secretary an opportunity to make

his views known.

-58-

If interim benefits were excluded

from the definition of past due benefits,

the ceiling on counsel's award would have

been $1,046.82. This was the amount the

Secretary withheld and paid over pursuant

to this Court's now-reversed Order and

consistently with the Secretary's

pre-Pittman understanding of the statute.

When interim benefits are included, the

ceiling is increased to $3,226.05. The

Secretary concedes that counsel is

entitled to collect more money (though it

is not clear how much, see footnote

supra), but claims that plaintiff is the

proper source from which to recover.

Defendant's Response, at 6. Counsel

contends that the Secretary should pay

counsel and then recoup from the plaintiff

by withholding future amounts as

authorized by 42 ".S.C. 404 (a) (1).

Counsel further contends that the

Secretary's failure to make payment to him

is contemptuous.

-59-

First of all, the Court will not hold

the Secretary in contempt because the

issues involved here are the subject of

fair dispute and the applicable law is

uncertain. There is no evidence of

willful disobedience to court orders.

On the other hand, the Court finds

that counsel is correct in contending that

the Secretary should pay him the

additional amount which he may collect

under the Eighth Circuit decision in

Pittman. The Court of Appeals held that

counsel was entitled to have up to 25% of

the total award to plaintiff withheld

pursuant to section 406 (b) (1). The

Secretary did not withhold the appropriate

amount, but instead dispersed the funds to

the plaintiff. The fact that both the

Secretary and this Court misread the

applicable statutory provisions may make

the Secretary's conduct non-contemptuous,

but it does not make it legally correct.

In plain language, counsel was entitled to

his full reasonable fee up to 25% of the

award. The Secretary paid the money to

the wrong party, the plaintiff, and must

now make payment to the attorney and

recoup the overpayment.

The Secretary points to Condon v.

Bowen, 853 F. 2d 66, 72-3 (2d Cir. 1988),

for the proposition that the Social

Security Administration is not a

"collection agency for the Social Security

bar," but the Secretary's reading of that

language seems too broad and the actual

holding of the case does not reach the

question of whether the Secretary is

required to pay and recoup mistaken

attorney's fees underpayments. It is

perfectly obvious that the Social Security

Administration does fulfill a collection

agency-like function under section 406

(b), withholding funds from the award and

forwarding them to the plaintiff's

attorney. Whatever "practical

difficulties” are attendant upon requiring

a@i«

the Secretary to comply with the statutory

mandate are, first of all, largely of the

Secretary's own making, and second of all,

likely matched by the practical

difficulties facing an attorney trying to

recover money from his destitute client.

On that last head, the difficulty of

forcing the counsel to chase his client

for his rightful fees, it is worth noting

that the Social Security Act contains an

extremely broad exemption from collection

for benefits. Section 207 of the Act, 42

U.S.C. 407, provides that "none of the

moneys paid or payable or rights existing

under this subchapter shall be subject to

execution, levy, attachment, garnishment,

or other legal process, or to the

operation of any bankruptcy or insolvency

law." It is difficult to see how counsel

is to collect his fees, given his

representation that his client has no

money.

In short, the Court's earlier

PUBLISHER'S NOTE:

ORIGINAL PAGINATICON IS NOT CONTINUOUS.

«FOa

conclusion that interim benefits should

not be included in the amount of past due

benefits from which counsel's fee could be

taken was an erroneous interpretation of

the law, the Secretary's payment of moneys

owed to counsel was likewise contrary to

the statute, and the receipt of those

funds was a windfall to the plaintiff.

The matter may be made right by the

Secretary paying counsel the additional

funds owed and recouping the amount

overpaid to plaintiff.

The justness of this result is

reinforced by the nature of interim

benefits. These benefits are paid to a

Claimant subject to the Secretary's right

of recoupment should the recipient

ultimately be found not entitled to them.

42 U.S.C. 423 (g) (2) (A). The final

result on the merits in this case is that

plaintiff is not entitled to keep the

interim benefits paid him, but he is not

entitled to that portion which represents

oFi«

counsel's reasonable fees. Plaintiff

received interim fees provisionally,

subject to a decision as to the precise

amount which he was owed. That amount has

now been determined, and it is not unjust

to require the plaintiff to repay the

overpayment.

IT Is THEREFORE ORDERED that

plaintiff's motion to hold the Secretary

in contempt be, and it is hereby, DENIED.

The Secretary is ordered to forthwith pay

counsel the amount of additional fees owed

to him under the Court of Appeals decision

in Pittman v. Bowen, Case No. 87-1995 (8th

Cir. August 31, 1988). If the Secretary

contends that the balance owed is other

than $1,989.57 (representing the combined

additional amount collectible under this

Court's award and the Secretary's

administrative award), the Secretary shall

state the basis for that contention within

15 days of this Order. Counsel may

respond to the Secretary's position within

ll days after it is filed. The Secretary

may recover the additional amount paid to

counsel from plaintiff.

Dated this 4th day of April, 1989.

/s/Garnett Thomas Eisele

United States District Court

oF%e

APPENDIX C

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF ARKANSAS

JONESBORO DIVISION :

Civil No. J-C-84-113

WAYNE E. ZIEGENHORN, PLAINTIFF

OTIS R. BOWEN, SECRETARY OF

HEALTH AND HUMAN SERVICES

[FILED MARCH 29, 1989]

ORDER

Plaintiff commenced this suit seeking

review of the Secretary's decision to deny

Social Security benefits. On December 17,

1986 the court granted the Secretary's

motion to remand for further

administrative proceedings to award

plaintiff benefits. Plaintiff's attorney,

Mr. Anthony W. Bartels, subsequently

petitioned the Court for attorney's fees

pursuant to §206 (b) of the Social

Security Act, 42 U.S. C. §406 (b) (1),

5 =

«FG=

which provides that whenever a _ court

renders judgment favorable to- the

claimant, the court may allow reasonable

attorney fees, "not in excess of 25

percent of the total of the past due

benefits to Section 406 (b) provides that

the Secretary may certify and withold

attorney fees from the claimants [sic]

past due benefits award so long as these

fees do not exceed twenty-five percent of

the past due benefits. Id. The Court

found Mr. Bartels was entitled to fees in

the amount of $1,000 and $15 in costs for

his representation of the claimant at the

district court level. Order of April 16,

1987 at 2. At the same time, the Court

noted it could not award similar fees for

representation of the claimant at the

administrative level, and left it to the

Secretary to “coordinate any fees granted

for such representation with the amount

granted by the Court so that the maximum

allowed fee will not exceed twenty-five

=-75<

percent oof the plaintiff's past-due

benefits. Id at 2-3.

According to Mr. Bartels, the Social

Security Administration approved attorney

fees in the amount of $1,678.17 for his

work at the administrative level. This

fee, along with the Court's own award

amounted to a total $2,693.17. Mr.

Bartels also contends that this sum equals

twenty-five percent of the claimant's past

due benefits, and is the total amount to

which he is entitled pursuant to the

court's order of April 16th.

On August 10, 1987, the Secretary

released to Mr. Bartels only $989.67

representing the Secretary's calculations

of the amount subject to witholding from

the plaintiff's past-due benefits. Mr.

Bartels _contends that he is still owed

$1,703.50, and has been unable to recover

this sum from the claimant. He now moves

to have this Court hold the Secretary in

contempt for failure to comply with the

aF6<

Court's April 16, 1987 order.

The Secretary states at the time of

the payment it was the agency's policy to

exclude interim benefits paid te the

plaintiff during the pendency of his

appeal from the definition of past-due

benefits. Consequently, interim benefits

were not included in "the total amount of

benefits payable under Title II of the Act

to all beneficiaries" when the Secretary

calculated the twenty-five percent

allowable amount in attorney fees. 20

C.F .R. § 404.1703. Last year, this

practice was rejected by the United States

Court of Appeals for the Eighth Circuit

which held that the Secretary must include

interim benefits in the calculation of

attorney fees. Gowen v. Bowen, 855 F. 2d

613 (1988). The Secretary argues that

Gowen should not be given retrospective

effect.

Contempt

To begin with, the Court will deny

”

a i

the motion to hold the Secretary in

contempt. As Mr. Bartels points out in

his brief, civil contempt is an act by one

party to a suit in disobedience to an

order in behalf of another party. Besset

v. W. B. Conky Co., 194 U.S. 324 (1904).

Contempt is appropriate where it has been

shown by clear and convincing evidence

that a person refused to do what he was

ordered to do. Gompers v. Bucks Stove and

Range Co., 221 U.S. 418, 449 (1910). In

this case, the order of April 16, i987 was

silent on the question of how the

Secretary was to calculate attorney fees

from the claimant's past due benefits.

Furthermore, as Mr. Bartels is aware, it

had been previously the opinion of this

court that interim benefits could be

excluded from attorney fee calculations.

Gowen v. Heckler, No. J-C-83-386 (E. D.

Ark. June 6, 1986) rev'd. in part sub nom.

Gowen _v. Bowen, supra. Therefore, it

cannot be said that the Secretary

@18

consciously or otherwise disobeyed any

order of this court.

Nonretroactivity

The issue presented in this case is

whether Gowen should be applied

retrospectively. In Chevron Oil Co. v.

Hunson, 404 U.S. 97 (1971), the Supreme

Court summarized the analytic framework to

be used in determining whether a decision

should be denied retroactive application:

In our cases dealing with the

nonretroactivity question, we have

generally considered three separate

factors. First, the decision to be

applied retroactively must establish

a new principal of law, either by

overruling clear past precedent on

which litigants may have relied...

or by deciding an issue of first

impression whose result was not

Clearly forshadowed .. . . Second,

it has been stressed that "we must

- « « weigh the merits and demerits

in each case by looking to the prior

history of the rule in question, its

purpose and effect, and whether

retrospective operation will further

or retard its operation." .

Finally, we have weighed the inequity

imposed by retroactive application,

for "(w]here a decision of this Court

could produce substantial inequitable

results if applied retroactively,

there is ample basis in our cases for

avoiding the ‘injustice or hardship’

by a holding of nonretroactivity.”

Id. at 106-7 (citations omitted).

Although the analysis must obviously

proceed one step at a time, a final

determination involves pulling together

the three factors for a careful balancing.

Cash v. Califano, 621 F. 2d 626, 629 (4th

Cir. 1980). Thus, the final factor of

substantial inequity is closely tied with

a finding of initial reliance. Without

some reliance there can be no basis of

inequity. Id. Similarly, the mere fact

that a retroactive application would not

advance the policy of the recently

discovered law "will notin itself preclude

retroactivity, unless application of the

rule would produce an inequitable result.

Id.

The Secretary argues that Gowen

announced a new, unanticipated principle

of law not “clearly foreshadowed” by legal

precedent. In those cases involving

retrospective application of new

interpretations of law, it is clear that

=80-

the focus has been upon the reasonableness

of the prior interpretation. For example,

in Allen v. State Board of Elections, 393

U. S. §44 (1969) the Court was presented

with the question of interpreting the

application of § 5 of the Civil Rights Act

of 1965. The section provided that if a

state covered by the act passed any law

changing voting qualifications, standards

Or procedures, such laws would have no

effect unless the state first obtained a

favorable declaratory judgment in the

United States District Court for the

District of Columbia. Id. at 548-49. The

State of Mississippi sought to enforce

certain election law amendments without

obtaining declaratory judgments. The

state argued that each case involved a

change in rules relating to the

qualification of candidates and methods of

election or appointment to office, while

the language of § 5 of the Act only

referred to changes affecting an

—_—e

individual's right to register and vote in

an election. Id. at 550-51.

The Court disagreed and held the

provision of § 5 applicable to the

Mississippi amendments. But it also

declined to give the ruling retrospecitve

[sic] effect by ordering new elections

finding that the question of the

application of § 5 involved "complex

issues of first impression” in which it

was never shown that the amendments

contravened the underlying purpose of the

Act. Thus the state could reasonably

conclude that the amendments were exempt

from the provision of section 5. Id at

§71-72.

Similarly in Cash v. Califano, supra,

the question before the Court was whether

to deny retroactive application of the

Supreme Court's earlier decision in

Califano v. Goldfarm, 430 U. Ss. 199

91977), which invalidated a statute

requiring widowers to prove dependence

“ar

ary a ae

-§2-

upon their deceased spouse before becoming

eligible for Social Security benefits

while at the same time exempting widows

from having to make a similar showing.

The court in Cash noted that in the years

prior to Goldfarb the Supreme Court had

invalidated a number of similar

gender-based benefits statutes. Given

this trend, the court concluded that the

"Secretary cannot have been surprised by

the result in Goldfarb." Cash v. Califano,

supra, 621 F. 2d at 630.

The essence of these cases is that

reasonable parties will not be held to

foreknowledge of the result in a case of

first impression. Thus, the question must

be whether the Secretary was reasonable in

concluding prior to Gowen that interim

benefits should be excluded from attorney

fee calculations. The Secretary argues

that since this practice had never been

challeneged [sic] before, there was no way

to predict a new interpretation would be

=§3-

discovered. The reasonableness of this

position, the government contends, is

evidenced by the decision in Rodriguez v.

Secretary of HHS, 856 F. 2d 338 (lst Cir.

1988) upholding the Secretary's

interpretation of past-due benefits.

There is no doubt that opinions vary

among the courts on whether interim

benefits should have been used in

calculating attorney fees. The only other

appellate courts to have addressed this

question also rejected the Secretary's

position. Condon v. Bowen, 853 F. 2d 66

(2a Cir. 1988); Shoemaker v. Bowen, 853 F.

2d 858 (11th Cir. 1988). Prior to that,

the district courts disaqreed on the

correct interpretation of past-due

benefits. See Pittman v. Bowen, No.

J-C-84-114, slip op. (E. D. Ark. 1987) and

Hewett v. Bowen, No. 584-Civ.-040, slip

op. (S. D. Ga. 1987) (agreeing with the

Secretary). Santos Rivera v. Secretary of

Health and Human Services, 674 F. Supp.

84-

963 (D. P. R. 1987} and Shoemaker v.

Bowen, No. CV 84-PT-0486-S, slip op. (N.

D. Ala. 1987) aff'd 853 F. 2d 858

(disagreeing with the Secretary).

About the most that can be said then

of the prior precedent on whether interim

benefits should be considered past-due

benefits for the purpose of computing

attorney fees is that it generated mixed

reactions at the district court level, and

that for the moment, the Secretary's

position appears to be losing favor with

the appellate courts. But reasonableness

must entail a closer analysis’ than

counting up past court decisions and

scoring the outcome. In that regard, it

is important to note that the Social

Security Administration had calculated Mr.

Bartels' attorney fees using its formula

of excluding interim benefits in October

of 1986--well before the caselaw on this

question even began develop. See

Defendant's Exhibit B.

-85-

In excluding interim benefits from

the fee calculation, the Secretary states

that the practice was based upon the

agency's interpretation of the regulation

defining "“past-due benefits". 20 C.F.R.

404.1703. Like section 406 (b) of the

Act, the regulation is silent on the

question of interim benefits. It reads in

relevant part:

"Past-due benefits" means the total

amount of benefits payable under

title II of the Act to all

beneficiaries that has accumulated

because of a favorable administrative

or judicial determination, up to but

not including the month the

determination or decision is made.

20 C.F.R. 404.1703.

The regulation was first promulgated

by the Secretary on August 5, 1980. See

45 Fed. Reg. 52090. Interim benefits,

however, were not made available to

Claimants until 1983 when Congress passed

the Social Security Disability Benefit

Appeals Act, Pub. L. No. 97-455, § 2, 96

Stat. 2497, 2498 codified as amended 42

U.S.C. § 423 (g) (1). See Condon v.

Bowen, supra., 853 F. 2d at 69.

"Therefore, when the Secretary promulagted

[sic] section 404.1703, he could not have

specifically intended to exclude interim

benefits from the definition of past-due

benefits.” Id. at 72.

The regulation has sever been amended

to more clearly define past-due benefits

with respect to interim benefits. Thus,

it is a bit disengenous for the Secretary

to claim surprise when the relevant

history suggests that the decision to

exclude interim benefits from the

definition grew not out of the plain

language of the Act, or the regulation,

but through administrative fiat. To say

for the purposes of nonretroactivity that

the Secretary's reliance upon his own

decision to interpret past-due benefits in

a certain way was reasonable, is to say

that every decision the Resetary makes is

reasonable for the purpose of

nonretroactivity. Given such a construct,

rt itt etree

' -87-

it would be impossible to ever hold the

Secretary to foreknowledge that a

different rule of law might be found.

With every subjective and unilateral

administrative decision that the courts

find to be wholly without basis and

completely incorrect statements of the

law, the Secretary could always claim

"surprise."

The law in this circuit is that the

Secretary's interpretation of past-due

benefits was never supported by the plain

language, or the purpose of the

legislative history of statutes granting

attorney's the right to recover reasonable

fees fram a claimant's past due benefits.

Gowen _v. Bowen, supra, 855 F. 2d at

618-19. The fact that the Secretary once

imposed upon the Social Security bar a

different view, does not make reliance

upon that view reasonable, nor cannot be

said that the Secretary did not have

foreknowledge that the courts would

-88-

eventually find the law differently.

The second factor in the analysis

involves weighing the merits of

retrospective application by looking at

the history of the prior rule, its purpose

and effect, and whether the purpose of the

new rules as announced by Gowen would be

advanced by restrospective application.

The nistory of the Secretary's decision to

exclude interim benefits from the

calculation of attorney fees lies in the

mists of administrative decision-making.

It drastically reduced the award an

attorney might reasonably expect to

recover from a successful benefits appeal,

and created "a disincentive for attorneys

in representing Claimants who accept

interim benefits." Id. at 619; Shoemaker

v. Bowen, supra 853 F. 2d at 860 n. 5.

The Secretary argues that since Mr.

Bartels has concluded his representation

of the plaintiff in this case,

retrospective application of Gowen would

eee eee

-89-

neither advance or retard the purpose the

court's ruling. First of all, the Court

is not in a position to predict what

future impact. denial of additional fees

pursuant to Gowen would have on Mr.

Bartels or any attorney's willingness to

take on new Social Security cases.

Moreover, as previously noted, the mere

fact that retrospective application does

not advance the purpose of the new rule,

does not preclude retroactivity. Cash v.

Califano, supra.

This leads then to the question

whether retrospective application would

work any inequity. Since the court has

already found that the Secretary's

reliance upon his decision to exlcude

[sic] interim benefits from the definition

of past-due benefits was not reasonable,

it cannot be said that the Secretary would

suffer any injustice through the

retrospective application of Gowen. Yet

the Secretary points out that retospective

-90-

[sic] application may work a hardship upon

the claimant, Mr. Bartels' own client,

since overpayments of past-due benefits

would be subject to recoupment by the

Secretary. 42 U.S.C. § 423 (g) (2) (A).

It is, of course, up to the Secretary to

decide whether or not to pursue

recoupment, and this argument, as with

much of the Secretary's other arguments on

this motion, essentially seeks to shift

the effect of its own mistaken practices

onto other parties.

Furthermore, the interim payments

made to the claimant were, as the court in

Gowen explained, "loans" made by the

Secretary and could have been recouped

anyway had Mr. Bartels not succeeded in

his efforts to overturn the Secretary's

initial denial of benefits. Id. at 619.

It is now clear from Gowen that up to

twenty-five percent of those loans to the

Claimant could have been, and should have

been withheld by the Secretary for payment

~»9{-

as attorney fees. It cannot be said that

the plaintiff's claim to those sums ever

properly vested. On balance then, after

considering all the foregoing, the Court

is convinced that the ruling in Gowen

should be applied retrospectively.

Unfortunately, the submissions from

both parties makes it difficult for the

court to determine exactly what amount is

still owed Mr. Bartels. He contends the

total of the fees to which he is entitled

is $2,693,17 [sic] of which only $989 was

paid to date. As the order of April 16,

1987 states, the fees should include not

only the $1,013 this Court awarded for his

work at the district Court level, but also

any fees the Secretary finds were earned

at the administrative level. In its

brief, the Secretary appears to be of the

opinion that the order meantto award only

$1,013 or one-fourth of the claimant's

past-due benefits, whichever is less.

There is no mention of the fees approved

=92<

for work at the administrative level,

which Mr. Bartels contends is $1,678.17.

To exclude this sum would be contrary to

the court's original order awarding Mr.

Bartels "$1,015.00, from the past-due

benefits due the plaintiff herein... in

addition to any fees found to be due for

representation at the administrative level

IT IS, THEREFORE, ORDERED that the

Secretary compute, certify, and pay Mr.

Bartels fees and costs pursuant to 42 U.S.

Cc. §406 (b) (1) less those fees already

paid, and any fees due for his

representation at the administrative

level, or twenty-five percent of the

plaintiff's past-due benefits as that term

is defined by Gowen v. Bowen, supra,

whichever sum is less.

IT IS FURTHER ORDERED that the motion

of Mr. Bartels to hold the Secretary in

contempt of the court's April 16, 1987

order be, and it is hereby, denied.

~93-

Dated this 27th day of March, 1989.

/s/Garnett Thomas Eisele

seresa States District Judge

-94-

APPENDIX D

UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

No. 89-2180EA

Louie Pittman, Appellee,

Vv.

Louis W. Sullivan, M.D.,

Secretary of Health and Human Services,

Appellant

No. 89-2552EA

Wayne E. Ziegenhorn, Appellee,

Vv.

Department of Health and

Human Services, Appellant.

Order Denying Petition for

Rehearing and Suggestion for

Rehearing En Banc

Appellees’ suggestion for rehearing

en banc has been considered by the court

and is denied by reason of the lack of a

majority of the active judgments voting to

rehear the case en banc.

——EE———————

-95-

Petition for rehearing by the panel

is also denied.

September 19, 1990

Order Entered at the Direction of the

Court:

/s/Robert D. St. Vrain

Clerk, U. S. Court of Appeals, Eighth

Circuit

-96-

APPENDIX E

RELEVANT STATUTORY PROVISIONS

20 C.F.R- § 404.1720 (b) (4),

provides in pertinent part:

(b) Charging and receiving a fee.

(1) The representative must file a

written request with us before he or

she may charge or receive a fee for

his or her services.

ze*e*ketkt

(4) If the representative is an

attorney and the claimant is entitled

to past-due benefits, we will pay the

authorized fee, or a part of the

authorized fee directly to the

attorney out of past-due benefits

subject to the limitations described

in § 404.1730 (b) (1). If the

representative is not an attorney we

assume no responsibility for the

payment of any fee that we have

authorized.

20 C.F.R. § 404.1730 (b), provides in

pertinent part:

(b) Fees we may authorize--(1)

Attorneys. Except as provided in

paragraph (c) of this section, if we

make a determination or decision in

favor of a claimant who was

represented by an attorney, and as a

result of the determination or

decision past-due berefits are

payable, we will pay the attorney out

of the past-due benefits the smallest

of--

(i) Twenty-five percent of the

sO7~

total of past-due benefits;

(ii) The amount of the fee that

we set; or

(iii) The amount agreed upon -

between the attorney and the claimant

represented.

20 C.F.R. § 404.501 (a) (8) provides

in pertinent part:

(a) In general. Section 204 of

the Act provides for adjustment as

set forth in §§ 404.502 and 404.503,

in cases where an individual has.

received more or less than the

correct payment due under title II of

the Act. As used in this subpart,

the term “overpayment” includes a

payment in excess of the amount due

under title II of the Act, a payment

resulting from the failure to impose

deductions or to suspend or reduce

benefits under sections 203, 222 (b),

224, and 228 (c), and (d), and (e) of

the Act (see Subpart E of this part),

a payment pursuant to section 205 (n)

of the Act in an amount in excess of

the amount to which the individual is

entitled under section 202 or 223 of

the Act, a payment resulting from the

failure to terminate benefits, and a

payment where no amount is payable

under title II of the Act. .. . The

provisions for adjustment also apply

in cases where through error:

zx 2k @

(8) A payment of past due

benefits is made to an individual and

such payment had not been reduced by

the amount of attorney's fees payable

-98-

directly to an attorney under section

206 of the Act (see § 404.977).

42 U.S.C. § 406 is as follows:

(a) The Secretary may prescribe

rules and regulations governing the

recognition of agents or other

persons, other than attorneys as

hereinafter provided, representing

claimants before the Secretary, and

may require of such agents or other

persons, before being recognized as

representatives of claimants that

they shall show that they are of good

character and in good repute,

possessed of the necessary

qualifications to enable them to

render such claimants valuable

service, and otherwise competent to

advise and assist such claimants in

the presentation of their cases. An

attorney in good standing who is

admitted to practice before the

highest court of the State,

Territory, District, or insular

possession of his residence or before

the Supreme Court of the United

States or the inferior Federal

courts, shall be entitled to

represent claimants before the

Secretary. The Secretary may, after

due notice and opportunity for

hearing, suspend or prohibit from

further practice before him any such

person, agent, or attorney who

refuses to comply with the

Secretary's rules and regulations or

who violates any provision of this

section for which a penalty is

prescribed. The Secretary may, by

rule and regulation, prescribe the

maximum fees which may be charged for

services performed in connection with

any claim before the Secretary under

-99-

this subchapter, and any agreement in

violation of such rules and

regulations shall be void. Whenever

the Secretary, in any claim before

him for benefits under this

subchapter, makes a determination

favorable to the claimant, he shall,

if the claimant was represented by an

attorney in connection with such

claim, fix (in accordance with the

regulations prescribed pursuant to

the preceding sentence) a reasonable

fee to compensate such attorney for

the services performed by him in

connection with such claim. If asa

result of such determination, such

claimant is entitled to past-due

benefits under this subchapter, the

Secretary shall, notwithstanding

section 405 (i) of this title,

certify for payment (out of such

past-due benefits) to such attorney

an amount equal to whichever of the

following is the smaller: (A) 25 per

centum of the total amount of such

past-due benefits, (B) the amount of

the attorney's fee so fixed, or (C)

the amount agreed upon between the

claimant and such attorney as the fee

for such attorney's services. Any

person who shall, with intent to

defraud, in any manner willfully and

knowingly deceive, mislead, or

threaten any claimant or prospective

Claimant or beneficiary under this

subchapter by word, circular, letter

or. advertisement, or who shall

knowingly charge or collect directly

or indirectly any fee in excess of

the maximum fee, or make any

agreement directly or indirectly to

charge or collect any fee in excess

of the maximum fee, prescribed by the

Secretary shall be deemed guilty of a

misdeameanor and, upon conviction

thereof, shall for each offense be

-100-

punished by a fine not exceeding $500

or by imprisonment not exceeding one

year, or both.

(b) (1) 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

Secretary may, notwithstanding the

provisions of section 405 (i) of this

title, certify the amount of such fee

for payment to such attorney out of,

and not in addition to, the amount of

such past-due benefits. In case of

any such judgment, no other fee may

be payable or certified for payment

for such representation except as

provided in this paragraph.

(2) Any attorney who charges,

demands, receives, or collects for

services rendered in connection with

proceedings before a court to which

paragraph (1) of this subsection is

applicable any amount in excess of

that allowed by the court thereunder

shall be guilty of a misdemeanor and

upon conviction thereof shall be

subject to a fine of not more than

$500, or imprisonment for not more

than one year, or both.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.