0:22-cv-03030•Case Name in Social Security Case - Unavailable
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UNITED STATES DISTRICT COURT DISTRICT OF MINNESOTA Ariel D.1 Plaintiff, v. Kilolo Kijakazi, Acting Commissioner of Social Security, Defendant. Case No. 22-cv-3030 (JWB/DJF) REPORT AND RECOMMENDATION This matter is before the Court on Plaintiff’s Motion for Authorization of Attorney Fees Pursuant to 42 USC § 406(b) (“Fee Motion”) (ECF No. 40) related to a contingency fee agreement between Plaintiff and his counsel (“Fee Agreement”) (ECF No. 42-1 at 17-18). The undersigned considers the matter pursuant to 28 U.S.C. § 636(b)(1)(B) and Local Rule 72.1. For the reasons set forth below, the Court recommends the Fee Motion be granted. I. Background On November 22, 2022, Plaintiff signed a Fee Agreement with her counsel that stated: I agree that my attorney shall charge and receive as the fee an amount equal to twenty-five percent (25%) of the past-due benefits that are awarded to my family and me in the event my case is won, for work performed in connection with federal court litigation. (ECF No. 42-1 at 17-18.) Plaintiff filed a Complaint in this matter on January 5, 2022 with the assistance of counsel (ECF No. 1). On December 12, 2023, the Court remanded this matter to the Commissioner pursuant to sentence four of 42 U.S.C. § 405(g), for further administrative proceedings (ECF No. 20). Shortly thereafter the Court awarded Plaintiff’s counsel, Konoski & 1 This District has adopted a policy of using only the first name and last initial of any nongovernmental parties in orders in Social Security matters. CASE 0:22-cv-03030-JWB-DJF Doc. 50 Filed 12/05/25 Page 1 of 6
2 Partners, P.C. (“Counsel”), $8,000 in reasonable attorney fees under the Equal Access to Justice Act U.S.C. 28 § 2412(D) (“EAJA”) (ECF No. 35). Upon remand, an Administrative Law Judge issued a favorable decision to Plaintiff finding her disabled. (ECF No. 42 ¶ 4.) Plaintiff’s attorneys now seek an award of attorneys’ fees in the amount of $15,112. (Id. ¶ 2.) Defendant acknowledges this amount is less than 25% of the past-due Title II benefits amount. (See ECF No. 49 at 2 n.2, stating that Plaintiff’s past- due Title II benefits amount is $64,204 and that 25% of that total is $16,051.) Based on its review of the record, the Court agrees. (See ECF No. 42-1 at 2-3.)2 Plaintiff’s attorneys request that the amount paid from the total fee award be reduced by the original EAJA fee award of $8,000, for a net total fee of $7,112. (Id.) Defendant “neither supports nor opposes [Plaintiff’s attorneys’] request for attorney’s fees in the amount of $15,112, under 42 USC § 406(b)” but asks that the Court’s Order authorizing any fee specify that the award must come from Plaintiff’s past-due benefits and clarify that the reasonableness determination is based on the full amount of 406(b) fees sought rather than the net fee awarded after EAJA fee offset. (ECF No. 49 at 1-3.) I. Legal Standard Under section 406(b): 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. 42 USC § 406(b). The United States Supreme Court has recognized that the Social Security Act has no 2 The Title II Notice of Award (ECF No. 42-1 at 5) states the past-due benefits amount (as opposed to 25% of the total) is $16,051, but this statement conflicts with other information in the notice and Defendant agrees it is an error. (See ECF Nos. 42-1 at 2 and 49 at 2 n.1.) CASE 0:22-cv-03030-JWB-DJF Doc. 50 Filed 12/05/25 Page 2 of 6
3 “design to prohibit or discourage attorneys and claimants from entering into contingent-fee agreements.” Gisbrecht v. Barnhart, 535 U.S. 789, 791 (2002). Instead, courts are tasked with independently determining whether attorney’s fees sought under such agreements are reasonable. See id. at 808. Contingency agreements are unenforceable when they require fees in excess of 25 percent of the past-due benefits, but when “[w]ithin the 25 percent boundary … the attorney for the successful claimant must show that the fee sought is reasonable for the services rendered.” Id. at 807 (citing 42 U.S.C. § 406(b)). “A reduced fee may be appropriate where the legal representation was substandard, counsel was responsible for delay that increased the fund from which the fee was payable, or if benefits were large in comparison to the amount of time counsel spent on the case.” Shane T. v. Saul, Case No. 18-cv-634 (BRT), 2020 WL 5743075, at *1 (D. Minn. Sept. 25, 2020) (citing Gisbrecht, 535 U.S. at 808). Moreover, when a court awards attorney’s fees to a plaintiff under the EAJA and also awards fees to the plaintiff’s attorney under section 406(b), the attorney must refund the amount of the smaller received fee to the plaintiff. Gisbrecht, 535 U.S. at 789. II. Analysis Plaintiff’s attorneys contend their fee request of $15,112 under Section 406(b) is reasonable because it is less than 25 percent of the total past-due benefits awarded and is therefore consistent with the Fee Agreement. (ECF No. 42-1 at 2.) Plaintiff’s attorneys also contend their fee request is appropriate based on their experience and expertise in the field, the contingent nature of the representation, and the work performed in this case. (Id. at 4-6.) The Court finds Plaintiff’s attorneys’ fee request is reasonable and recommends that the Fee Motion be granted. Plaintiff’s Fee Agreement provides that if she wins in federal court, her counsel is entitled to 25 percent of any past-due benefits owed to her or her family. (ECF No. 42-1 at 17-18.) Plaintiff prevailed in federal court, entitling her to past-due benefits. Plaintiff’s CASE 0:22-cv-03030-JWB-DJF Doc. 50 Filed 12/05/25 Page 3 of 6
4 attorneys have submitted records establishing 37.3 hours worked, which equates to approximately $405 per hour. Though high, this amount is not unreasonable in light of the risk Plaintiff’s counsel agreed to bear in taking this case on a contingency arrangement. The Court does not find any basis in the record to conclude her attorneys’ work was substandard, resulted in undue delay, or involved an amount of effort that is disproportionate to the outcome. Because Plaintiff’s attorneys’ fee request is less than 25% of the past-due benefits Plaintiff is owed, and because there does not appear to be any rationale for reducing the fee, both the Fee Agreement (ECF No. 42-1 at 17-18) and the statute permit the requested award. Gisbrecht, 535 U.S. at 791. The Court further agrees the fee award should be offset in this case. Plaintiff’s attorneys ask the Court to authorize a fee award under section 406(b) that deducts the $8,000 EAJA award already paid. (ECF No. 42 at 1.) Defendant takes no position on the request to award a netted 406(b) award but asks that the Court determine the reasonableness of the section 406(b) award based on the full 406(b) fees sought rather than the net fee awarded after the offset. (ECF No. 49 at 3.) Three other courts in this District have recently addressed this issue and held that while the indirect refund method has been accepted by some courts, “it seems to be the disfavored method” and finding it within their discretion to award fees in the “usual way.” Williamson v. Kijakazi, 21- CV-2034 (SRN/LIB), 2023 WL 8295270, at *3 (D. Minn. Dec. 1, 2023) (quoting Theodoros K. v. Kijakazi, 20-CV-2228 (KMM/ECW), 2023 WL 4621896, at *3 (D. Minn. July 19, 2023) (citing O’Donnell v. Saul, 983 F.3d 950, 957 (7th Cir. 2020) (viewing the indirect method as disfavored)); Thalassa R. v. O’Malley, No. 21-CV-02696 (KMM/ECW), 2024 WL 5359851, at *3 (D. Minn. Dec. 6, 2024), report and recommendation adopted sub nom., Thalassa R. v. Colvin, No. 21-CV- 2696 (KMM/ECW), 2025 WL 307417 (D. Minn. Jan. 27, 2025) (awarding section 406(b) fees on basis that Plaintiff’s counsel refund to Plaintiff the previously awarded EAJA fees); see also CASE 0:22-cv-03030-JWB-DJF Doc. 50 Filed 12/05/25 Page 4 of 6
5 McGraw v. Barnhart, 450 F.3d 493, 497 n.2 (10th Cir. 2006) (“[I]t is more appropriate for counsel to make the required refund to his client, rather than to delegate that duty to the Commissioner.”); but see Jackson v. Comm’r of Soc. Sec., 601 F.3d 1268, 1274 (11th Cir. 2010) (holding the EAJA does not mandate a direct refund approach and approving attorney’s request to offset section 406(b) award with previously awarded EAJA fees); Crawford v. Astrue, 586 F.3d 1142, 1144 n.3 (9th Cir. 2009) (holding the district court “properly reduced the fee award [under section 406(b)] by the amount of attorneys’ fees already paid by the government under the Equal Access to Justice Act”)). The Court agrees with Williamson, Theodoros K., and Thalassa R. that the Court has discretion whether to award fees using the indirect refund method or in the “usual way.” Williamson, 2023 WL 8295270, at *3; Theodoros K, 2023 WL 4621896, at *3; Thalassa R., 2024 WL 5359851, at *3. In this case, however, the Court recommends exercising that discretion to offset the fees, because the record is not clear as to whether the Commissioner withheld the entire 25% fee amount from the past-due Title II benefits paid to Plaintiff. (See ECF No. 42-1 at 5, “We withheld $9,200 from your past-due benefits to pay the lawyer.”; id. at 6, stating the Commissioner would withhold $6,851 in case a fee is approved for work done before the Federal Court.) Thus, a portion of the past-due benefits available to pay the fees may have already been paid to Plaintiff. Under these circumstances, the most efficient way to facilitate payment to counsel of the fees owed is to offset the total fee. The Court therefore recommends that the $15,112 fee award authorized under 42 U.S.C. § 406(b) be offset by the $8,000 EAJA fee previously awarded, for a total of $7,112 to be paid from the Commissioner to Plaintiff’s counsel. CASE 0:22-cv-03030-JWB-DJF Doc. 50 Filed 12/05/25 Page 5 of 6
6 RECOMMENDATION Based on the foregoing, and on all the files, records, and proceedings herein, IT IS HEREBY RECOMMENDED THAT: 1. Plaintiff’s Motion for Authorization of Attorney Fees Pursuant to 42 USC § 406(b) (ECF No. 40) be GRANTED; 2. Plaintiff be awarded a total of $15,112 in fees pursuant to 42 U.S.C. § 406(b), less $8,000 for EAJA fees previously awarded; and 3. The government be directed to pay $7,112 in fees directly to Plaintiff’s counsel out of Plaintiff’s past-due benefits. Dated: December 5, 2025 s/ Dulce J. Foster DULCE J. FOSTER United States Magistrate Judge NOTICE This Report and Recommendation is not an order or judgment of the District Court and is therefore not appealable directly to the Eighth Circuit Court of Appeals. Under Local Rule 72.2(b)(1), “a party may file and serve specific written objections to a magistrate judge’s proposed finding and recommendations within 14 days after being served a copy” of the Report and Recommendation. A party may respond to those objections within 14 days after being served a copy of the objections. LR 72.2(b)(2). All objections and responses must comply with the word or line limits set forth in LR 72.2(c). CASE 0:22-cv-03030-JWB-DJF Doc. 50 Filed 12/05/25 Page 6 of 6
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