SSR 68-47c: Rescinded

Rescinded September 14, 2018 by FR Vol. 83, No. 179, page 46771

20 CFR 404.972, 404.975, and 404.976

SSR 68-47c

RANDOLPH v. U.S.A., 389 U.S. 570 (U.S.D.C. MD. N. Car.); U.S. Supreme

Court granted Govt. motion to affirm D.C. decision (88 U.S.C. 695,

1/15/68)

Held , section 206(e) of the Social Security Act and regulations

thereunder providing for regulation of the fees of attorneys appearing

before the Secretary of HEW, do not violate the "due process" clause of

the constitution, since they fall within the reasonable exercise of the

Congressional power to subject attorneys' fees to regulation; they do not

violate Article III, section 2 of the constitution, as an encroachment on

the judiciary, since they relate only to attorneys' fees in connection

with claims before an executive office; they do not deprive the claimant

of a constitutional right to counsel, since claimants for social security

benefits have no constitutionally protected right to counsel in pursuing

their claims through the administrative procedures of the social security

system; nor are they an unconstitutional delegation of legislative power

to the Secretary, but rather a lawful delegation of discretion to him to

set maximum fees for services performed in connection with claims before

his department, which discretion is exercised based upon a recommendation

emanating from that level of the administration best able to judge what

the proper compensation should be in each case, i.e., that administrative

division where the services were actually rendered.

PER CURIAM

In this action an individual attorney attacks as unconstitutional the

statutory and regulatory restrictions placed on the fees of attorneys

representing claimants seeking social security benefits.

that level of the administration best able to judge what

the proper compensation should be in each case, i.e., that administrative

division where the services were actually rendered.

PER CURIAM

In this action an individual attorney attacks as unconstitutional the

statutory and regulatory restrictions placed on the fees of attorneys

representing claimants seeking social security benefits.

The plaintiff in his complaint filed December 16, 1966, seeks a

declaratory judgment that 42 U.S.C. �

406(a) [1] and the administrative

regulation issued by the Secretary of Health, Education and Welfare

pursuant to such statute, 20 C.F.R.

404.976, [2] are void as being

repugnant to the constitution, in that:

1. Claimants for social security benefits are effectively deprived, in

the prosecution of social security claims, of their right to retained

counsel as guaranteed by the due process clause of the Fifth Amendment.

2. These restrictions are an unreasonable encroachment of the judicial

branch in violation of Article III, Section 2 of the Constitution.

3. The statute is an unconstitutional delegation of legislative power to

an administrative agency.

4. No valid and legally effective rule or regulation has actually been

promulgated by the Secretary of Health, Education, and Welfare as

authorized by 42 U.S.C. � 406.

Plaintiff seeks an injunction against the United States of America to

restrain enforcement of 42 U.S. C. � 406 and a mandatory injunction to

compel the Secretary of Health, Education and Welfare to deal directly

with attorneys representing claimants seeking social security benefits and

to recognize the honor liens of attorneys for their fees.

The government in a motion filed April 17, 1967, moved to dismiss the

complaint on the grounds that:

1. The complaint fails to state a claim against the defendant from which

relief can be granted.

2. The plaintiff has no standing to bring the action and the complaint

fails to allege a justiciable controversy.

ecurity benefits and

to recognize the honor liens of attorneys for their fees.

The government in a motion filed April 17, 1967, moved to dismiss the

complaint on the grounds that:

1. The complaint fails to state a claim against the defendant from which

relief can be granted.

2. The plaintiff has no standing to bring the action and the complaint

fails to allege a justiciable controversy.

The essential facts are as follows: On or about October 1, 1965, the

plaintiff was retained by Mrs. Novella B Holder to prosecute her claim for

social security disability benefits on a contingent fee based on one-third

of any past due benefits recovered. Mrs. Holder's claim had twice been

previously denied by the Social Security Administration prior to

plaintiff's retention and was again administratively denied on April 8,

1966. A hearing was requested on April 25, 1966, and held before a Hearing

Examiner, on July 12, 1966. As a result, the claimant was found to have

been under a disability since December 1, 1961, and subsequently received

past due benefits in the amount of $4,866.40. The plaintiff filed with the

Social Security Administration a Petition For Order Approving Counsel Fees

in which was noted the amount of work done and the complicated medical

problems involved in representing the claimant. The fee requested was

$1,577.33, which was the plaintiff's computation of one-third of the total

past due benefits. On October 24, 1966, the plaintiff received an

authorization to charge a fee in the amount of $750.00.

stration a Petition For Order Approving Counsel Fees

in which was noted the amount of work done and the complicated medical

problems involved in representing the claimant. The fee requested was

$1,577.33, which was the plaintiff's computation of one-third of the total

past due benefits. On October 24, 1966, the plaintiff received an

authorization to charge a fee in the amount of $750.00.

At the outset, plaintiff concedes that statues regulating the fees of

attorneys appearing before administrative agencies have survived attacks

which were based on the attorney's right to contract as guaranteed by the

Fourteenth Amendment. [3] However, plaintiff asserts his challenge on more novel grounds: first,

that the statute violates the due process clause of the Fifth Amendment

which guarantees the claimant the right to

counsel [4] , and secondly, that

it encroaches on the powers of the judiciary as set forth in Article 3,

Section 2 of the

Constitution. [5] For instance,

two not so novel grounds are also urged upon the Court: that the statute

is an unconstitutional delegation of legislative authority, and that a

proper administrative regulation has not been promulgated by the Secretary

of Health, Education, and Welfare.

This Court finds that the statute survives these attacks despite their

novelty and grants the defendant's motion to dismiss on the grounds that

the plaintiff has failed to state a claim upon which relief can be

granted.

stitutional delegation of legislative authority, and that a

proper administrative regulation has not been promulgated by the Secretary

of Health, Education, and Welfare.

This Court finds that the statute survives these attacks despite their

novelty and grants the defendant's motion to dismiss on the grounds that

the plaintiff has failed to state a claim upon which relief can be

granted.

In plaintiff's main thrust be asserts that every social security claimant

has the constitutional right to counsel in administratively pursuing his

claims, and that this right is thwarted by 46 U.S.C. � 406 and its

progeny, 20 C.F.R. 404.976, which require that any attorney's fee larger

than a very minimum figure must be approved by the Social Security

Administration. The statute also provides for criminal sanctions if a

greater fee is charged. The plaintiff contends that these statutory and

regulatory restrictions of attorney's fees so effectively discourage

attorneys from handling social security cases that the claimants are

deprived of the assistance of counsel.

Even assuming arguendo that the plaintiff's conclusion, that

claimants are effectively deprived of counsel under these fee restrictions

is correct, this Court cannot accept the plaintiff's initial premise,

which is that claimants for social security benefits have a

constitutionally protected right to counsel in pursuing their claims

through the administrative procedures of the social security system.

It is readily acknowledged that the interest of a claimant is of

sufficient substance to fall within the protection from arbitrary

governmental action afforded by the due process clause. Fleming v. Nester , [sic.] 363 U.S. 603, 80 S. Ct. 1367, 4 L. Ed. 2d 1435

utionally protected right to counsel in pursuing their claims

through the administrative procedures of the social security system.

It is readily acknowledged that the interest of a claimant is of

sufficient substance to fall within the protection from arbitrary

governmental action afforded by the due process clause. Fleming v. Nester , [sic.] 363 U.S. 603, 80 S. Ct. 1367, 4 L. Ed. 2d 1435

(1960). However, the Supreme Court in the above case also stated that such

benefits did not have the due process protection of an accrued property

right. Within the bounds of reasonable action, the social security system

is a child of Congress and, as such, subject to its regulation. If for a

valid reason, Congress can prohibit attorneys completely from the

administrative processing of claims, then certainly Congress can subject

attorney's fees to regulations.

As a practical matter, attorneys should be encouraged to assist in the

presentation of complicated claims. The attorney's absence in such cases

is lamented in a number of opinions which comment on the chaotic records

of such cases on appeal to the Federal

Courts. [6] Nevertheless, if such

fee restrictions place too great a burden on attorneys, the change in such

restrictions should be attempted through legislative channels and should

not be accomplished through judicial fiat when such restrictions do not

offend due process.

Next, the plaintiff urges that these restrictions on attorney's fees

violate Article III, Section 2, of the Constitution as an encroachment on

the judiciary. However, these restrictions do not relate to the regulation

of fees of attorneys prosecuting claims before the courts which might

raise the question of encroachment on the judiciary. These restrictions

relate only to attorney's fees in connection with claims before an

executive officer, thus precluding any question of judicial

encroachment.

titution as an encroachment on

the judiciary. However, these restrictions do not relate to the regulation

of fees of attorneys prosecuting claims before the courts which might

raise the question of encroachment on the judiciary. These restrictions

relate only to attorney's fees in connection with claims before an

executive officer, thus precluding any question of judicial

encroachment.

The argument, that 46 U.S.C. � 406 is an unconstitutional delegation of

legislative power because it provides the Secretary with full discretion

to regulate attorney's fees, is without merit. It is well accepted that

while Congress may not delegate the discretion of what a law shall be, it

may lawfully delegate the discretion of how a law will be administered.

The cases cited by the plaintiff to uphold his

argument [7] have little

persuasive force now in light of subsequent decisions. Congress can

legislate only so far as it is reasonable and practical, and it must be

able to clothe executive officers with the discretion to fill in the

details so as to accomplish its

purposes. [8] In order to insure

flexibility in the administration of the

legislation, [9] no specific

standards need be set for each subsidiary executive action. The

legislative intent of 46 U.S.C. � 406 is clear. Congress intended to allow

the Secretary the discretion of setting maximum fees for services

performed in connection with any claims before his Department. To require

a strict standard to be set by Congress, would rob the Executive officer

of the flexibility needed to properly administer the statutory scheme

embodied in the Social Security Act.

slative intent of 46 U.S.C. § 406 is clear. Congress intended to allow

the Secretary the discretion of setting maximum fees for services

performed in connection with any claims before his Department. To require

a strict standard to be set by Congress, would rob the Executive officer

of the flexibility needed to properly administer the statutory scheme

embodied in the Social Security Act.

Lastly, the plaintiff contends that the Secretary has not prescribed by

rule or regulation the maximum attorney's fees as authorized by statute,

but has attempted to vest his subordinate administrative officials with

the absolute discretion to arbitrarily fix such fees. Since 20 C.F.R. 404.

976 does not lay down strict standards to be followed in the determination

of fees, the plaintiff asserts that it is not a valid rule or regulation.

The flexibility needed in legislative enactment by Congress is no less

needed in the promulgation of executive regulations. The discretion to set

fees is exercised based upon a recommendation immunating [sic]] from the

level of the administration best able to judge what the proper

compensation should be in each case, i.e., that division of the

administration where the services were actually rendered. To require the

Secretary to prescribe rigid standards in the setting of attorney's fees

would serve to straitjacket the Social Security Administration in an area

where adaptability is a continuing necessity.

Accordingly, an order will be entered.

[1] 42 U.S.C. § 406:

"* * * 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 this title, and any agreement in

violation of such rules and regulations shall be void. . . ."

in an area

where adaptability is a continuing necessity.

Accordingly, an order will be entered.

[1] 42 U.S.C. § 406:

"* * * 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 this title, and any agreement in

violation of such rules and regulations shall be void. . . ."

[See 206 of the SSA, [42 U.S.C. 406] as amended by the Social Security

Amendments of 1967 (P.I. 90-248, enacted January 2, 1968) also provides

that the Secretary may, in any claim where he makes a determination

favorable to the claimant, and the claimant was represented by an

attorney, fix a reasonable attorney's fee. If the claimant is entitled to

past-due benefits, the Secretary may certify for payment to the attorney,

out of such past-due benefits an amount equal to whichever of the

following is the smaller: (1) 15 per cent of the total amount of such

past-due benefits, (2) the amount of the attorney's fee so fixed, or (3)

the amount agreed upon between the claimant and the attorney as the

latter's fee for services.] [Ed.]

[2] 20 C.F.R. 404.976:

"An attorney who is admitted to practice before a court of a State,

Territory, District, or insular possession, or before the Supreme Court of

the United States or an inferior Federal court, and who is not otherwise

prohibited by law from charging or receiving such a fee, may upon petition

therefor and good cause shown, charge and receive such fee for services

rendered in any proceeding under Title II of the Act before the Bureau of

Old-Age and Survivors Insurance, or a hearing examiner, or the Appeals

Council, * * * as may be approved by such Bureau, hearing examiner, or

Appeals council, respectively: Provided, That no such approval shall be

required for charging or receiving a fee for such services in a total

amount not greater than the following: Representation before the Bureau

only, $20; representation before a hearing examine

ivors Insurance, or a hearing examiner, or the Appeals

Council, * * * as may be approved by such Bureau, hearing examiner, or

Appeals council, respectively: Provided, That no such approval shall be

required for charging or receiving a fee for such services in a total

amount not greater than the following: Representation before the Bureau

only, $20; representation before a hearing examiner and/or the Appeals

Council only, $30; representation before the Bureau and a hearing examiner

and/or the Appeals Council only, $50. This limitation shall be applicable

whether the fee is paid by a party to the proceeding or by some else."

[3] Calhoun v. Massey , 253 U.S. 170, 40 S. Ct. 474, 64 L. Ed. 843 (1920); Hines v. Lowrey 305 U.S. 85, 59 S. Ct. 31, 83 L. Ed. 56

(1938).

[4] Fifth Amendment:

"No person shall . . . be deprived of life, liberty, or property, without

due process of law; . . ."

[5] Article III, Section 2:

"The judicial Power shall extend to all Cases, in Law and Equity, arising

under this Constitution, the Laws of the United States, and Treaties made,

or which shall be made, under their Authority; . . ."

[6] Farley v. Celebrezze, 3 Cir., 315 F.2d 704 (1963); Butler v. Fleming , 5 Cir., 288 F.2d 591 (1961).

[7] Panama Refining Co. v. Rhyne , 292 U.S. 388, 55 S. Ct. 241, 79 L. Ed. 446 (1935); Scheckter Poultry Corp. v. U.S. 295 U.S. 495, 55 S. Ct. 847,

79 L. Ed. 1570 (1935).

[8] Carlson v. Landen , 342 U.S. 524, 72 S. Ct. 525, 96 L. Ed. 547 (1961).

[9] Yakus v. U.S. 321 U.S. 414, 64 S. Ct. 660, 88 L. Ed. 834 (1944).