AR 93-3(6): Akers v. Secretary of Health and Human Services , 966 F.2d 205 (6th Cir. 1992)--Attorney's Fees Based in Part on Continued Benefits Paid to Social Security Claimants--Title II of the Social Security Act

AR 93-3(6) (Rescinded 4/14/2000)

EFFECTIVE DATE 07/29/93

Issue

Whether continued benefits paid to claimants pursuant to section 2(e) of

the Social Security Disability Benefits Reform Act of 1984 or section

223(g) of the Social Security Act (the Act) are ``past-due benefits''

within the meaning of section 206(b)(1) of the Act.

Statute/Regulation/Ruling Citation

Sections 206(b)(1) and 223(g) of the Social Security Act (42 U.S.C.

406(b)(1) and 423(g)); sections 2(d) and 2(e) of the Social Security

Disability Benefits Reform Act of 1984, Pub. L. No. 98-460; 20 CFR

404.1703; 20 CFR 404.1728-1730; and section 5106 of Pub. L. No. 101-508.

Circuit

Sixth (Kentucky, Michigan, Ohio, Tennessee).

Akers v. Secretary of Health and Human Services , 966 F.2d 205 (6th

Cir. 1992).

Applicability of Ruling

This Ruling applies to cases in which a court may allow an attorney's fee

as a result of a civil action in which the court has reversed the final

decision of the Secretary and awarded benefits to the claimant. It does

not affect the way the Social Security Administration (SSA) adjudicates

cases, but only affects how SSA calculates past-due benefits and disburses

accumulated past-due benefits within the meaning of section 206(b)(1) of

the Act.

Description of Case

In October 1987, SSA determined that plaintiff's medical condition had

improved and that his disability benefits would therefore cease as of

December 1987. Plaintiff requested reconsideration of the cessation

decision and received

continued [1] benefits pending

his appeal. SSA upheld the cessation determination throughout the

administrative process and discontinued the continuing benefits in June

1989. Plaintiff filed a complaint in the U.S. District Court for the

Eastern District of Kentucky. The district court reversed SSA's decision

and held that plaintiff's benefits should not have been terminated.

received

continued [1] benefits pending

his appeal. SSA upheld the cessation determination throughout the

administrative process and discontinued the continuing benefits in June

1989. Plaintiff filed a complaint in the U.S. District Court for the

Eastern District of Kentucky. The district court reversed SSA's decision

and held that plaintiff's benefits should not have been terminated.

Subsequently, plaintiff's counsel moved the district court pursuant to

section 206(b)(1) of the Act, for attorney's fees in the amount of

twenty-five percent of plaintiff's ``past-due benefits,'' including

continued benefits. The Secretary maintained that continued benefits are

not ``accumulated because of a favorable ... decision,'' (20 CFR

404.1703), and thus are not past-due benefits for purposes of calculating

attorney's fees. The district court accepted the Secretary's argument and

ordered SSA to pay plaintiff's counsel twenty-five percent of only those

benefits accrued since plaintiff's continued benefits were

discontinued.

Holding

In reversing the district court's decision, the Sixth Circuit held that

``interim benefits'' paid to social security claimants pursuant to the

Social Security Disability Benefits Reform Act of 1984 should be included

in the calculation of title II past-due benefits for the purpose of

awarding attorney's fees under section 206(b) of the Act. The court

rationalized its decision on several grounds. It first noted that

``interim benefits are similar to a loan, since they must be repaid by

unsuccessful claimants (absent waiver by the Secretary).'' Accordingly,

stated the court, a claimant is not ``entitled'' to the benefits absent a

final favorable decision

e purpose of

awarding attorney's fees under section 206(b) of the Act. The court

rationalized its decision on several grounds. It first noted that

``interim benefits are similar to a loan, since they must be repaid by

unsuccessful claimants (absent waiver by the Secretary).'' Accordingly,

stated the court, a claimant is not ``entitled'' to the benefits absent a

final favorable decision. Second, the court stated that the Secretary's

definition of past-due benefits would (1) Create an ``unjustifiable

dichotomy'' between attorneys of claimants who did and did not elect

``interim benefits;'' (2) Create a potential conflict between attorneys

and claimants; and (3) Impose greater hardships on claimants by

discouraging competent attorneys from representing them.

Additionally, the Sixth Circuit acknowledged that Congress had amended

section 206(a) of the Act, through the Omnibus Budget Reconciliation Act

of 1990, to exclude ``interim benefits'' from ``past-due benefits,'' for

purposes of calculating attorney's fees for representation before the

Secretary. The court did not apply the section 206(a) definition of

past-due benefits to cases under section 206(b), but could not infer any

congressional intent for excluding interim benefits from calculating

past-due benefits under section 206(b).

Statement as to How Akers Differs From Social Security

Policy

Under section 206 of the Act, the Secretary is authorized to withhold up

to 25 percent of the total of title II past-due benefits to which a

claimant is entitled for possible payment of attorney's fees. Although

section 206 does not expressly define past-due benefits for section 206(b)

purposes, 20 CFR 404.1703 defines past-due benefits as the total amount of

benefits payable under title II of the Act to all beneficiaries that has

accumulated because of a favorable administrative or judicial

determination or decision

hich a

claimant is entitled for possible payment of attorney's fees. Although

section 206 does not expressly define past-due benefits for section 206(b)

purposes, 20 CFR 404.1703 defines past-due benefits as the total amount of

benefits payable under title II of the Act to all beneficiaries that has

accumulated because of a favorable administrative or judicial

determination or decision. When calculating past-due benefits, SSA does

not consider continued benefits to be past-due benefits because (1) They

have already been paid and are, therefore, not accumulated and payable,

and (2) They result from legislation, not from an ``administrative or

judicial determination or decision.''

Accordingly, when computing the 25 percent withholding amount from which

attorney's fees can be paid, SSA considers only those benefits which are

payable to the claimant. Contrary to SSA's interpretation of the term

``past-due benefits,'' the court of appeals held that continued benefits

paid to social security claimants are included in past-due benefits for

the purpose of calculating attorney's fees under section 206(b).

Although Congress has expressly excluded continued benefits from the

calculation of ``past-due benefits'' for section 206(a) purposes, the

legislative history is silent as to whether continued benefits are to be

included in the amount of money available for court allowed attorney's

fees (section 206(b) cases). Under the Sixth Circuit Webb rule, the

tribunal (i.e., SSA or the court) which awards benefits sets the fee for

both administrative and court services. SSA believes its policy of not

including continued benefits in the ``past-due benefit'' calculation for

section 206(b) purposes addresses the overriding concern of Congress in

enacting section 223(g), i.e., to provide claimants with ``continuation of

payments during appeal ... to ease the severe financial and emotional

hardships that would otherwise be suffered.'' H.R. Rep. No. 98-618, 98th

Cong., 2d Sess

icy of not

including continued benefits in the ``past-due benefit'' calculation for

section 206(b) purposes addresses the overriding concern of Congress in

enacting section 223(g), i.e., to provide claimants with ``continuation of

payments during appeal ... to ease the severe financial and emotional

hardships that would otherwise be suffered.'' H.R. Rep. No. 98-618, 98th

Cong., 2d Sess. 18, reprinted in 1984 U.S. Code Cong. & Ad.

News 3038, 3055.

Explanation of How SSA Will Apply Akers Within The Circuit

This Ruling applies to title II disability cases and the title II portion

of concurrent title II and title XVI disability cases in which a fee

petition is filed in a court within the Sixth Circuit (Kentucky, Michigan,

Ohio, Tennessee).

When a case involves: (l) A fee petition that has been filed in a federal

court based on proceedings on the issue of continuing entitlement to

disability insurance benefits and (2) a claimant who has received

continued benefits pursuant to section 2(e) of the 1984 Disability

Amendments or section 223(g) of the Act during any period considered in

the court's decision, SSA will consider both accumulated benefits and

continued benefits already paid to be ``past-due benefits'' within the

meaning of section 206(b)(1) of the Act.

SSA will not withhold funds from continued benefits to pay an attorney's

fee. SSA will pay the approved fee directly to the attorney from the

accumulated past-due benefits held by the Secretary, subject to the

maximum of 25 percent of the total past-due benefits amount (as defined by

the court, i.e., past-due benefits include both accumulated benefits and

continued benefits).

If the sum of accumulated past-due benefits which the Secretary certifies

for direct payment and any funds held in trust or escrow by the attorney

is less than the fee set by the court, SSA will advise the attorney to

seek payment of the balance of the authorized fee directly from the

claimant.

the court, i.e., past-due benefits include both accumulated benefits and

continued benefits).

If the sum of accumulated past-due benefits which the Secretary certifies

for direct payment and any funds held in trust or escrow by the attorney

is less than the fee set by the court, SSA will advise the attorney to

seek payment of the balance of the authorized fee directly from the

claimant.

[1] Although the district court

and the Sixth Circuit stated that the plaintiff elected to receive

``interim'' benefits pursuant to section 223(g) of the Social Security Act

(42 U.S.C. 423(g)), consistent with statutory language, SSA refers to

section 223(g) benefits as ``continued'' benefits.