Legal Fees After Benefits Were Wrongly Reduced

WASHINGTON (CN) - A federal judge has set attorneys' fees owed to a class who saw a reduction in insurance benefits because they also receive old-age benefits from the National Insurance Institute of Israel.

Lead plaintiff Ephraim Greenberg sued the Social Security Administration last year after it implemented a reduction to old-age, survivors or disability benefits under the windfall-elimination provision of the Social Security Act.

The Social Security Administration immediately admitted that the reduction was wrong, and refused to fight the plaintiffs' request for class certification, but argued that the plaintiffs' attorneys should be awarded fees under the Equal Access to Justice Act instead of under the Social Security Act as the plaintiffs had requested.

"Defendants set forth various arguments, all of which are unavailing, in an attempt to persuade the court that attorney fees in a Social Security class action suit are inappropriate under § 406(b)," U.S. District Judge Rosemary Collyer wrote on Aug. 8.

The judge ruled that "the statute, however, does not demand a contingent agreement; it merely states that the court may award reasonable attorney fees, not in excess of twenty-five percent of total past-due benefits, to a lawyer who has represented a successful claimant in court," she added.

Counsel for the class is entitled to fees no greater than 25 percent of each beneficiary payment, according to the ruling.

Settlement discussions prodded an agreement by the administration to rescind the reduction in benefits, recalculate the benefits owed and pay out such benefits as if the reduction had not been applied.

The Department of Justice must approve the final settlement terms before Collyer will review them for approval.

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