SSR 68-61c: SECTION 206(b)(1). -- REPRESENTATION OF CLAIMANT IN COURT PROCEEDINGS -- FIXING AMOUNT OF ATTORNEY'S FEE

20 CFR 404.977(a)

SSR 68-61c

HOPKINS v. COHEN, 390 U.S. 530 (U.S.Sup.Ct., 4-2-68)

SUPREME COURT OF THE UNITED STATES

October Term, 1967.

Raymond Hopkins, Petitioner, v. Wilbur J. Cohen, Acting Secretary

of Health, Education, and Welfare.

On Writ of Certiorari to the United States Court of Appeals for

the Seventh Circuit.

[April 2, 1968.]

MR. JUSTICE DOUGLAS delivered the opinion of the Court.

The question is whether the ceiling on an attorney's fee under §

206(b)(1) of the Social Security Act, as

amended, [1] 42 U.S.C. §

406(b)(1), is based on the benefits received by the claimant alone or may

be based also on the benefits that other dependent members of this family

receive by virtue of the claimant's disability.

Respondent ruled that

petitioner [2] was not totally

and permanently disabled within the meaning of the Act. The District Court

reversed and awarded the claimant's attorney a fee equal to 25% of the

benefits accruing to the claimant alone. The Court of Appeals for the

Seventh Circuit affirmed. 374 F.2d 726,. Because its ruling as to attorney

fees conflicted with decisions of the Fourth Circuit (see Redden v. Celebrezze , 361 F.2d 815; Lambert v. Celebrezze , 361

F.2d 677), we granted the petition for certiorari. 389 U.S. 811.

The disabled claimant qualifies under § 223 of the Act (42 U.S.C. §

416).

The claimants who receive benefits as relatives of the disabled person

who qualifies under § 223, figure their eligibility and amount of benefits

under § 202 of the Act (42 U.S.C. § 402; wife, § 202(b); child, § 202(d);

widow, § 202(e); widower, § 202(f); mother, § 202(g); parent, §

202(h)).

Section 202 of the Act describes in (b)(1) and (b)(2) the benefits

payable to the wife on the disability of the husband, and in (d)(1) and

ves of the disabled person

who qualifies under § 223, figure their eligibility and amount of benefits

under § 202 of the Act (42 U.S.C. § 402; wife, § 202(b); child, § 202(d);

widow, § 202(e); widower, § 202(f); mother, § 202(g); parent, §

202(h)).

Section 202 of the Act describes in (b)(1) and (b)(2) the benefits

payable to the wife on the disability of the husband, and in (d)(1) and

(d)(2) the disability benefits of the child of the disabled husband. The

wife (§ 202(b)(1)(A) and the child (§ 202(d)(1)(A)) may file for these

benefits. But they need not always do so

themselves, [3] for the Act makes

the right to such benefits dependent primarily on the status and condition

of those dependent persons.

The wife and child each compute their benefits on the basis of a

percentage share of the disabled husband's primary benefits determined

under §223. See § 202(b)(2) [4] and 202(d)(2). The maximum family benefit depends upon the amount of the

primary benefit to which the disabled husband is entitled. See §§ 215(a)

and 203(a). The scheme of the Act thus proceeds from a recognition of an

intimate relationship between the varying amounts of benefits due the

disabled claimant and his dependents.

Hopkins was receiving disability payments under § 223 between March 1961

and December 1962; his wife and two children were also receiving benefits

during this same period as dependents of a recipient of disability

payments (§ 202). In December 1962, these benefits were terminated, on the

ground that petitioner was no longer "disabled" within the meaning of the

Act. Petitioner exhausted his administrative remedies, and then sought

review in the District Court. The District Court's order reversed the

administrative decision as to disability. And pursuant to this order the

Director of the Bureau of Disability Insurance wrote petitioner as

follows:

were terminated, on the

ground that petitioner was no longer "disabled" within the meaning of the

Act. Petitioner exhausted his administrative remedies, and then sought

review in the District Court. The District Court's order reversed the

administrative decision as to disability. And pursuant to this order the

Director of the Bureau of Disability Insurance wrote petitioner as

follows:

Section 206(b)(1), restricting the amount of an attorney's fee, speaks of

"the past-due benefits to which the claimant is entitled." Respondent

argues that only a plaintiff can satisfy such a description, not a

non-party. It is also urged that dependents who are not joined as parties

have not received a judgment and that the benefits accruing to the wife

and the children are not benefits to which her husband, the only claimant,

is "entitled" within the meaning of § 206(b)(1).

That seems to us to be too technical a construction of the Act which we

need not adopt. In this instance, proof of the husband's

"claim" [5] results in a package

of benefits to his immediate family; and those benefits inure to the

benefit of the head of the family who files the "claim."

The legislative history of § 206(b)(1) speaks of the desire of Congress

to reduce "contingent fee" arrangements and to restrict an attorney's fee

to an amount "not in excess of 26 per cent of accrued

benefits." [6] We find nothing in

the history of § 206(b)(1) that would likewise restrict those "accrued

benefits" to amounts owed the husband, as distinguished from his

dependents, viz . the wife and the children.

Reversed

MR JUSTICE MARSHALL took no part in the consideration or decision of this

case.

MR JUSTICE WHITE, with whom THE CHIEF JUSTICE and MR. JUSTICE BRENNAN

join, dissenting.

fits." [6] We find nothing in

the history of § 206(b)(1) that would likewise restrict those "accrued

benefits" to amounts owed the husband, as distinguished from his

dependents, viz . the wife and the children.

Reversed

MR JUSTICE MARSHALL took no part in the consideration or decision of this

case.

MR JUSTICE WHITE, with whom THE CHIEF JUSTICE and MR. JUSTICE BRENNAN

join, dissenting.

As the Court recognizes, § 206(b)(1) entitles the attorney of a Social

Security benefits claimant to a fee "not in excess of 26 percent of the

total of the past-due benefits to which the claimant is entitled by

reason of such judgment . . . ." (Emphasis added.) The Court characterizes

the normal and natural reading of this language as "too technical a

construction . . . which we need not adopt." From this undisputed fact

that benefits accruing to the dependents of a claimant inure to the

benefit of the claimant as head of the family, the Court seems to conclude

that it may read "claimant" to mean "claimant and his dependents." Because

I see no justification for this result, either in the language of the

statute or its history, I dissent.

Section 206(b)(1) deals with the attorney's fees payable with respect to

"a claimant under this subchapter who was represented before the court by

an attorney . . . ." The attorney may receive no more than 25% of the

benefits payable to such a claimant "by reason of such judgment . . . ."

Only plaintiffs can meet the § 206(b)(1) definition of a "claimant."

Therefore, dependents who are not joined as parties in a suit for past-due

benefits are not "claimants," for they are not before the court, are not

represented in court, and do not receive a judgment. In this case only

petitioner, and not his wife and children, were plaintiffs in the court

below. As is true in most such cases, petitioner's wife and children were

determined in separate administrative proceedings to be dependents

eligible for secondary benefits under § 202

re not "claimants," for they are not before the court, are not

represented in court, and do not receive a judgment. In this case only

petitioner, and not his wife and children, were plaintiffs in the court

below. As is true in most such cases, petitioner's wife and children were

determined in separate administrative proceedings to be dependents

eligible for secondary benefits under § 202. Their entitlement to § 223

was not disputed and was not an issue before the court below. Since

petitioner was the sole claimant before the court, and the only party for

whom his lawyer provided representation in that court, I cannot escape the

conclusion that the lawyer was entitled only to a maximum of 25% of the

past-due benefits payable to petitioner. The situation might well be

different in a case where the dependents were active plaintiffs before the

court and where the primary claimant's attorney provided effective

representation for the secondary claimants as well.

As the Court makes clear, the purpose of § 206(b)(1) was to reduce

contingent fee arrangements by limiting the maximum fees recoverable by

attorneys. The Court somehow concludes that this clear legislative purpose

militates for a construction of the statute which is against its clear

wording and which has the result of once again permitting attorneys to

obtain a very high percentage of the benefits payable to Social Security

claimants. The legislative history, however, supports the plain language

of the statute. Indeed, the Court fails to mention that this very case was

generated initially by a claim made by petitioner's lawyer that a

contingent fee contract signed by petitioner, which would have given his

lawyer 40% of the award, should be given effect because entered into prior

to the passage of § 206(b)(1). It was just such contingent fees that

Congress meant to prohibit. By its present ruling the Court gives mere

lipservice to the legislative mandate while effectively undoing it in

practice

ioner's lawyer that a

contingent fee contract signed by petitioner, which would have given his

lawyer 40% of the award, should be given effect because entered into prior

to the passage of § 206(b)(1). It was just such contingent fees that

Congress meant to prohibit. By its present ruling the Court gives mere

lipservice to the legislative mandate while effectively undoing it in

practice. For the foregoing reasons I respectfully dissent.

[1] Section 206(b)(1) presently

provides:

"Whenever a court renders a judgment favorable to a claimant under this

subchapter who was represented before the court by an attorney, the court

may determine and allow as part of its judgment a reasonable fee for such

representation, 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] "Petitioner," as used in

this opinion, refers to Raymond Hopkins, the Social Security claimant. The

interest involved in the case, as it reaches this Court on the issue of

the proper amount of the attorney's fee, is, however, that of Hopkins'

attorney, Allen Sharp.

[3] See 20 CFR §§

404.603-404.604. Nor are the wife and children required to become parties

to proceedings or review of an administrative determination. See 42 U.S.C.

§ 405(b) and (g); and 20 CFR §§ 404.909-404.910; 404.916-404.919; 404.945;

404.951.

[4] The Social Security Act

Amendments of 1967 changed former § 202(b) to read:

e, is, however, that of Hopkins'

attorney, Allen Sharp.

[3] See 20 CFR §§

404.603-404.604. Nor are the wife and children required to become parties

to proceedings or review of an administrative determination. See 42 U.S.C.

§ 405(b) and (g); and 20 CFR §§ 404.909-404.910; 404.916-404.919; 404.945;

404.951.

[4] The Social Security Act

Amendments of 1967 changed former § 202(b) to read:

"Except as provided in subsection (q), such wife's insurance benefit for

each month shall be equal to whichever of the following is the smaller:

(A) one-half of the primary insurance amount of her husband (or, in the

case of a divorced wife, her former husband) for such month, or (B) $105."

Pub. L. No. 90-248, § 103 (Jan. 2, 1968).

[5] The record reveals that

petitioner applied for benefits for his two children in his initial

application for disability payments. Although that application did not

encompass a claim for benefits on behalf of his wife, it is made clear in

the application that his wife was also applying for benefits. It does not

appear, however, on her behalf. See n. 3 supra . No question is

raised concerning the property of the claims that were filed. Nor is this

a case where any question has been raised concerning the right of the wife

or children to benefits. Rather, the wife and children had been receiving

them as dependents of a disabled person until they were terminated by

respondent's erroneous decision that the husband was no longer

disabled. When that decision was reversed by the District Court, the only

impediment standing in the way of the receipt of past-due benefits by the

wife and children was removed. In a realistic sense, then, the attorney

was representing fully the interests of the wife and children when he

litigated the question of the husband's disability.

[6] S.Rep. No. 404, Pt. I, 80th

Cong., 1st Sess., p. 122.

When that decision was reversed by the District Court, the only

impediment standing in the way of the receipt of past-due benefits by the

wife and children was removed. In a realistic sense, then, the attorney

was representing fully the interests of the wife and children when he

litigated the question of the husband's disability.

[6] S.Rep. No. 404, Pt. I, 80th

Cong., 1st Sess., p. 122.

"It has come to the attention of the committee that attorneys have upon

occasion charged what appear to be inordinately large fees for

representing claimants in Federal district court actions arising under the

social security program. Usually, these large fees result from a

contingent-fee arrangement under which the attorney is entitled to a

percentage (frequently one-third to one-half) of the accrued benefits.

Since litigation necessarily involves a considerable lapse of time, in

many cases large amounts of accrued benefits, and consequently large legal

fees, are payable if the claimant wins his case.

"The committee bill would provide that whenever a court renders a

judgment favorable to a claimant, it would have express authority to allow

as part of its judgment a reasonable fee, not in excess of 25 percent of

accrued benefits for services rendered in connection with the claim; no

other fee would be payable. . . ."