Steigerwald v. Commissioner of Social Security, No. 1:2017cv01516 - Document 88 (N.D. Ohio 2019)
Court Description: Opinion & Order signed by Judge James S. Gwin on 1/25/19. The Court, for the reasons set forth in this order, grants plaintiffs' motion for summary judgment. The Court orders defendant to perform the Subtraction Recalculation for plaintiffs and pay any past-due benefits to plaintiffs within 90 days. (Related Doc. 50 ) (D,MA)
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Steigerwald v. Commissioner of Social Security Doc. 88 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF OHIO -----------------------------------------------------------------: STEPHANIE STEIGERWALD, : on behalf of herself and the class, : : Plaintiffs, : : vs. : : NANCY BERRYHILL, ACTING : COMMISSIONER OF SOCIAL : SECURITY, : : Defendant. : : ------------------------------------------------------------------ CASE NO. 1:17-CV-1516 OPINION & ORDER [Resolving Doc. 50] JAMES S. GWIN, UNITED STATES DISTRICT JUDGE: In this class action lawsuit, Plaintiffs claim that Defendant Social Security Administration ( SSA ) failed to properly calculate and pay social security benefits. Plaintiffs now move for summary judgment regarding liability on the sole count of the complaint.1 For the following reasons, the Court GRANTS Plaintiffs’ motion. I. Background The mechanics of the alleged underpayment are fairly byzantine. Before this lawsuit, Defendant had found Plaintiffs eligible for both retroactive disability benefits under Title II of the Social Security Act and retroact“ve supplemental secur“ty “ncome ( SSI ) under Title XVI of the Act. Plaintiffs retained an attorney or representative to help them obtain benefits, and chose to have the SSA pay their attorney fees from their awarded benefits. 1 Doc. 50. Defendant opposes. Doc. 52. Plaintiff replies. Doc. 54. Dockets.Justia.com Case No. 1:17-cv-1516 Gwin, J. The rec“p“ent’s “ncome impacts both eligibility for SSI benefits and the amount of SSI benefits.2 Title II disability payments become income for calculating SSI benefits.3 The disability benefit payments become income that must be considered when calculating the right to SSI benefits and when calculating the amount of those SSI benefits. For this reason, the Social Security Administration adjusts claimants’ retroactive SSI retirement payments to account for Title II disability income when they qualify for both retroactive Title II disability payments and SSI benefits. The Social Security Administration calls this the Windfall Offset Calculat“on. 4 So far, so good. This case focuses on a problem that can occur when a claimant chooses to pay her legal fees out of their retroactive Title II disability benefits.5 The Social Security Administration often pays attorney fees well after the Social Security Administration has set the SSI retirement benefit payment level. However, after pay“ng d“sab“l“ty cla“mant’s attorney fees, the Social Security Administration then reduces the monthly Title II disability benefit to recoup the attorney fee payment. But because Title II disability benefits reduce with the attorney fee award, the SSI retirement benefit should rise because the claimant no longer has the same amount of disability payment income. Simply described, the Social Security Administration considers the Title II disability benefit when calculating the monthly SSI retirement benefit amount. 2 See 42 U.S.C. § 1320a-6. 20 C.F.R. § 416.1123(b)(3) ( If you rece“ve a retroact“ve check from a benef“t program other than SSI, legal fees connected w“th the cla“m are subtracted [from “ncome]. ). 4 See, e.g., Soc“al Secur“ty Agency Program Operat“ons Manual System ( POMS ) SI 02006.202(b)(5). 5 POMS SI 02006.202 3 2 Case No. 1:17-cv-1516 Gwin, J. Plaintiffs say the SSI retirement benefits should have increased after the Title II disability monthly benefit fell after the attorney fee award. Because the attorney fee payment reduces the recipient’s income, the attorney fee monthly reduction may “ncrease the rec“p“ent’s SSI retirement benefit amount. Thus, Plaintiffs argue that the Social Security Administration should twice perform the Windfall Offset Calculation: once when the claimant is awarded retroactive benefits, and aga“n when the cla“mant’s representative fees are paid out of their Title II benefits and the cla“mant’s monthly benef“ts are reduced to recoup the attorney fee award. The Plaintiffs call this second Windfall Offset Calculat“on the Subtraction Recalculat“on. 6 Plaintiffs claim that they should receive increased SSI benefits because the Social Security Administration failed to perform the Subtraction Recalculation. Based on class discovery, Plaintiffs estimate that the Social Security Administration did not perform the Subtraction Recalculation for 37,675 class period claimants. If true, that would mean that the Social Security Administration did not do the Subtraction Recalculation in 39% of the cases where it should have performed the Recalculation. Plaintiffs now move for summary judgment on the sole count of their complaint. II. Discussion Summary judgment should be given where the movant has demonstrated that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a 6 Defendant also adopts this terminology in their briefing. See Doc. 52 at 2 n.1. 3 Case No. 1:17-cv-1516 Gwin, J. matter of law. 7 The Court v“ews the facts and draws all “nferences “n the l“ght most favorable to the party oppos“ng the mot“on. 8 A. Plaintiffs are Entitled to Summary Judgment on Count One of the Complaint In their complaint, Plaintiffs sue under 42 U.S.C. § 405(g), claiming that federal law9 required the Social Security Administration to do the Subtraction Recalculation. They request an order requiring the Social Security Administration to perform the Subtraction Calculation and to make retroactive payments to class members within ninety days. Plaintiffs argue that they are entitled to summary judgment because Defendant has conceded that the Social Security Administration must perform the Subtraction Recalculation and conceded that the Social Security Administration has failed to do so. In responding to an interrogatory, the Social Security Administration described individual class members in Category I 10 as people for whom after the amount of [attorney fees] was determined and paid out of retroactive benefits, Social Security Administration has not yet recalculated the windfall offset and therefore has not issued an underpayment due. 11 Plaintiffs argue that this language admits that federal law requires Social Security Administration to perform the Subtraction Recalculation and that Plaintiffs have been underpaid as a result. 7 Fed. R. Civ. P. 56. 8 Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587 (1986). See 42 U.S.C. § 1320a-6; 20 C.F.R. § 416.1123(b)(3); POMS SI 02006.200. 10 The SSA has sorted the class members “nto two categor“es. Category I “s compr“sed of class members who would potentially be eligible for past-due SSI benefits had the SSA performed the Subtraction Recalculation. Category II “s compr“sed of “nd“v“duals who would not rece“ve any past-due benefits had SSA performed the Subtraction Recalculation. See Doc. 50-2. 11 Doc. 50-2 at 1. 9 4 Case No. 1:17-cv-1516 Gwin, J. The Court agrees. This response clearly adm“ts that an underpayment “s due (i.e., owed) to Category I Plaintiffs. Defendant does not dispute that federal law requires it perform the Subtraction Recalculation. Nor does it deny that it did not do the Subtraction Recalculation for Plaintiffs. Rather, Defendant mostly argues that Plaintiffs fail to show that its error results from a systematic Social Security Administration pattern and practice. Relying upon the Sixth Circuit decision Unan v. Lyon,12 Defendant contends that the Plaintiffs are not entitled to summary judgment unless they can show a systemic error caused the underpayment. Unan is not on point. In Unan, a class action Plaintiffs alleged that a systematic computer error caused the Department of Health and Human Services to wrongly deny comprehensive Medicaid eligibility.13 Shortly after Plaintiffs brought suit, the Department reprocessed 16,000 Plaintiff cases and stated that it had corrected the computer error.14 Desp“te Pla“nt“ffs’ protest that new cla“mants were st“ll be“ng wrongly denied comprehensive coverage, the district court granted summary judgment to the Department because there [were] no potential plaintiffs remaining to whom it could issue prospective rel“ef. 15 The Sixth Circuit reversed, holding that Plaintiffs had raised an issue of material fact with regard to ongoing coverage denials. That is, there was a dispute whether the denials were due to human error or a systematic computer malfunction. On the facts of that case, 12 853 F.3d 279 (6th Cir. 2017). Id. at 283 14 Id. at 284. 15 Id. at 290. 13 5 Case No. 1:17-cv-1516 Gwin, J. Plaintiffs needed to raise issues of systematic error because there was no reason to grant prospective relief without risk of a continuing pattern and practice. In contrast, Plaintiffs here seek to remedy Defendant’s past errors. Defendant has admitted that it pervasively did not perform the required Subtraction Recalculation. There is no reason for Plaintiffs to prove a systematic reason for Defendant’s fa“lure. Plaintiffs show that there is no genuine issue as to whether Defendant failed to conduct the legally required Subtraction Recalculation. Thus, the Court grants Plaintiffs summary judgment on their complaint. B. Pla“nt“ffs’ Counsel Are El“g“ble For Attorney’s Fees Under 42 U.S.C. § 406(b) Pla“nt“ffs’ attorneys request th“s Court rule on how attorney fees m“ght be pa“d. The parties disagree regarding the law that should be used to decide attorney fees. Plaintiffs say that the Court should award attorney fees under Section 406(b) of the Social Security Act, 42 U.S.C. § 406(b). Defendants respond that the Equal Access to Justice Act, 28 U.S.C. § 2412(d), controls any award of fees in a class action concerning Social Security benefits. Plaintiffs’ counsel request fees under 42 U.S.C. § 406(b)(1)(A), which provides in relevant part that: 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[.] To th“s Court’s knowledge, no other c“rcu“t decision has faced this question. The availability of § 406(b) fees in this context appears to be a matter of first impression. The Court knows of only one other case addressing this issue: the District of Columbia District Court in Greenberg v. Colvin. In that case, a district court held that Plaintiff class action 6 Case No. 1:17-cv-1516 Gwin, J. counsel who had challenged the Soc“al Secur“ty Adm“n“strat“on’s Windfall Offset Calculation were eligible for § 406(b) fees.16 Defendant argues that Pla“nt“ffs’ counsel are not el“g“ble for § 406(b) fees for three reasons. First, Defendant argues that § 406(b) fees are not available when a court awards additional past-due benefits. With this argument, the Social Security Administration argues that an order directing the Social Security Administration perform the Subtraction Recalculat“on would not ent“tle the class members to past-due benefits. It would merely direct the Social Security Administration to give additional past-due benefits to which they are already entitled because of an earlier eligibility decision. Defendant’s logic puzzles. On one hand, Defendant vigorously denies that Plaintiffs are entitled to relief whatsoever in this case.17 On the other hand, it now insists that Plaintiffs will not become entitled to anything at all by reason of a favorable judgment. In one sense, it is true that Plaintiffs are entitled to money independently of this suit, because the SSA is legally obligated to perform the Subtraction Recalculation. But this is also true where a Plaintiff establishes their legal right to receive disability benefits in the first place. And as the language of the statue shows, their legal entitlement to these pastdue benef“ts ar“ses by reason of that favorable judgment. A judgment in this case is what grant[s] a legal r“ght to these benef“ts.18 16 63 F. Supp. 3d 37, 49 (D.D.C. 2014) (holding that § 406(b) fees are available in the class action context). See Doc. 17 at 14 ( Defendants deny that Plaintiff is entitled to any relief whatsoever . . . . (emphasis added)). See also Doc. 18 (moving to dismiss the case on jurisdictional grounds); Doc. 52 (opposing Pla“nt“ffs’ mot“on for summary ”udgment). 18 Entitle, Black’s Law D“ct“onary (8th ed. 2004). 17 7 Case No. 1:17-cv-1516 Gwin, J. Secondly, Defendant argues that Pla“nt“ffs are not cla“mants under § 406(b). Though the Soc“al Secur“ty Act does not def“ne the term cla“mant, the statute does at po“nts d“fferent“ate between cla“mants and benef“c“ar“es. 19 Because Plaintiffs are rec“p“ents of benef“ts under the act, Defendant argues that they are only benef“c“ar“es and not cla“mants. As a matter of pla“n mean“ng, Pla“nt“ffs are cla“mants because they are making a claim for past-due SSI benefits. And there is nothing in the Social Security Act showing that the terms cla“mant and benef“c“ar“es are mutually exclus“ve. More sensibly, Plaintiffs are both cla“mants and benef“c“ar“es under the act. That “s, they are cla“mants w“th respect to the past-due benefits they are seeking and benef“c“ar“es w“th respect to the benefits they have already received. Finally, Defendant argues that a § 406(b) fees award would be unjust because it would force class members to pay fees twice for the same award of benefits. That is, class members would be placed “n the novel and untenable pos“t“on of pay“ng attorney’s fees again on an existing award of benefits on which they have already paid fees to the representat“ves who helped them obta“n that award. 20 This argument is also wrong, because Plaintiffs will not be paying fees twice on the same award. They will have paid fees on two different awards: once for their original Compare 42 U.S.C. § 503(a)(10) (d“scuss“ng c“rcumstances under wh“ch a cla“mant may have obtained reemployment services), and id. § 405(g) (explaining that judicial review of Social Security determinations may be l“m“ted because of fa“lure of the cla“mant . . . to subm“t proof “n conform“ty w“th any regulat“on under the subchapter), with id. 403(a)(1) (descr“b“ng the max“mum total monthly benefits to which benef“c“ar“es may be ent“tled under the act). 20 Doc. 52 at 10. 19 8 Case No. 1:17-cv-1516 Gwin, J. award of past-due benefits, and again for any additional benefits awarded as a result of this suit. It may be unfortunate that Plaintiffs had to bring suit twice to obtain the full amount of past-due benefits owed them. If the SSA had performed the Subtraction Recalculation of its own initiative, then Plaintiffs would not have had to pay fees out of benefits. But there is no more injustice in this case than in any other situation where Plaintiffs must hire counsel to vindicate their rights. Thus, the Court joins the Greenberg court in holding that Pla“nt“ffs’ counsel are eligible § 406(b) fees, in an amount to be decided at a later date. Pla“nt“ffs’ counsel may also be simultaneously eligible for fees under the Equal Access to Justice Act, 42 U.S.C. § 2412(d).21 The Court does not dec“de the“r el“g“b“l“ty under th“s act at th“s t“me. Pla“nt“ffs’ counsel may move for fees under this Act later. III. Conclusion For the foregoing reasons, the Court GRANTS Pla“nt“ffs’ mot“on for summary judgment. The Court ORDERS Defendant to perform the Subtraction Recalculation for Plaintiffs and pay any past-due benefits to Plaintiffs within ninety days. s/ Dated: January 25, 2019 James S. Gwin JAMES S. GWIN UNITED STATES DISTRICT JUDGE 21 See Gisbrecht v. Barnhart, 535 U.S. 789, 795-6 (2002) (explaining that counsel may receive § 406(b) fees and EAJA fees for the same representation). 9
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