AR 93-5(11): Shoemaker v. Bowen , 853 F.2d 858 (11th Cir. 1988)-- Attorney's Fees Based in Part on Continued Benefits Paid to Social Security Claimants--Title II of the Social Security Act

AR 93-5(11) (Rescinded 4/14/2000)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 (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

Eleventh (Alabama, Florida, Georgia)

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

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. 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 March 1979, plaintiff Mary Shoemaker applied for and subsequently was

awarded disability insurance benefits under title II of the Act. In August

1982, SSA determined that plaintiff's disability had ceased and that she

was no longer entitled to disability insurance benefits. After exhausting

her administrative remedies, plaintiff sought judicial review in the

United States District Court for the Northern District of Alabama.

The district court remanded the case to the Secretary for further review.

While her case was pending on remand, plaintiff elected to receive

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

Amendments. [1]

ce benefits. After exhausting

her administrative remedies, plaintiff sought judicial review in the

United States District Court for the Northern District of Alabama.

The district court remanded the case to the Secretary for further review.

While her case was pending on remand, plaintiff elected to receive

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

Amendments. [1]

The plaintiff received continued benefits from December 1984 until

December 1986 when, based on a favorable decision by the Secretary, her

entitlement to disability insurance benefits was reinstated. The Secretary

then calculated the accumulated past-due benefits to which the plaintiff

was entitled to include past-due benefits for the period from October

1982, when her payments had stopped, until December 1984, when her

continued benefits began.

The plaintiff's attorney subsequently filed a petition with the district

court pursuant to section 206(b)(1) of the Act, seeking compensation for

his representation of the plaintiff before the court. The attorney stated

that the request did not exceed 25 percent of "past-due benefits payable

or paid" to the plaintiff. The attorney suggested that the funds withheld

from the past-due benefits by the Secretary and the amount retained from

the plaintiff's continued benefits and placed in trust by the attorney be

used for payment of the fee award.

The Secretary opposed the attorney's fee request on the ground that under

section 206(b)(1) attorney's fees may not exceed 25 percent of a

claimant's past-due benefits. The Secretary maintained that continued

benefits, because they have already been paid, are not considered past-due

benefits within the meaning of section 206(b)(1). The district court

rejected the Secretary's position that attorney's fees could not be

granted out of the continued benefits and awarded attorney's fees based on

both the accumulated past-due benefits and the continued benefits

e Secretary maintained that continued

benefits, because they have already been paid, are not considered past-due

benefits within the meaning of section 206(b)(1). The district court

rejected the Secretary's position that attorney's fees could not be

granted out of the continued benefits and awarded attorney's fees based on

both the accumulated past-due benefits and the continued benefits. The

Secretary appealed the district court's decision to the United States

Court of Appeals for the Eleventh Circuit. The court of appeals affirmed

the decision of the district court.

Holding

The court held that "interim benefits" a claimant receives pursuant to

section 223(g) of the Act may be considered by a district court in

awarding attorney's fees under section 206(b)(1) of the Act.

Because the language of the statute did not expressly state whether or not

continued benefits are included in the definition of past-due

benefits, [2] the court looked to

congressional intent to reach its conclusion. The court stated that

"[w]hile one of the purposes of section 406 [(206(b) of the Act)] is to

limit attorney's fees, Congress also intended 'to encourage effective

legal representation' by ensuring that attorneys will receive a fee for

their representation." 853 F.2d at 860. The court concluded that under the

Secretary's interpretation (i.e., not to include continued benefits in the

definition of past-due benefits), claimants who do not elect to receive

continued benefits have a greater amount of money available for a

reasonable attorney's fee than those who elect the continued benefits,

placing claimants who elect to receive the continued benefits at a

disadvantage in obtaining effective legal representation.

Statement as to How Shoemaker Differs From Social Security

Policy

of past-due benefits), claimants who do not elect to receive

continued benefits have a greater amount of money available for a

reasonable attorney's fee than those who elect the continued benefits,

placing claimants who elect to receive the continued benefits at a

disadvantage in obtaining effective legal representation.

Statement as to How Shoemaker 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 did not expressly define past-due benefits at the time of the

court's decision, 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: (l) they

have already been paid and are 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. Contrary to SSA's interpretation of the term "past-due benefits,"

under the court of appeals decision continued benefits paid to

social security claimants constitute past-due benefits for the purpose of

calculating attorney's fees under section 206(b)(1).

mputing the 25 percent withholding amount from which

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

payable. Contrary to SSA's interpretation of the term "past-due benefits,"

under the court of appeals decision continued benefits paid to

social security claimants constitute past-due benefits for the purpose of

calculating attorney's fees under section 206(b)(1).

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 attorney's fees the court

may award for court services (section 206(b) cases). 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. 18, reprinted in 1984 U.S. Code

Cong. & Ad. News 3038, 3055.

Explanation of How SSA Will Apply The Decision 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 involving court services performed within the Eleventh

Circuit (Alabama, Florida or Georgia).

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

Cong. & Ad. News 3038, 3055.

Explanation of How SSA Will Apply The Decision 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 involving court services performed within the Eleventh

Circuit (Alabama, Florida or Georgia).

When a case involves: (l) a fee petition that has been filed in 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 per cent 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 Eleventh Circuit stated that the plaintiff elected to receive

"interim" benefits pursuant to § 223(g) of the Social Security Act (42

U.S.C. 423(g)), the benefits the plaintiff received were authorized by §

2(e) of the 1984 Amendments. The characteristics of the "interim" benefits

provided by the two statutes are not distinguishable in any manner

relevant to the issue of whether "interim" benefits are to be considered

"past-due" benefits under § 206(b)(1) of the Act (42 U.S.C. 406(b)(1)).

[2] Subsequent to this decision

Congress enacted Section 5106 of Pub. L. No. 101-508, the Omnibus Budget

Reconciliation Act of 1990, which states that for the purposes of section

206(a) of the Social Security Act the term "past-due" benefits excludes

continued and interim benefits under sections 223(g) and (h),

respectively, of the Act. Congress did not expressly exclude continued

benefits from "past-due benefits" for purposes of calculating attorney

fees under section 206(b) of the Act.