Social Security Lawyer Upends Fee Cap at Supreme Court

WASHINGTON (CN) – A lawyer who secured Social Security benefits for a client persuaded the Supreme Court on Tuesday to toss a 25 percent cap on his aggregate fee award.

While Section 406(b) of the Social Security applies a flat 25 percent cap on fees for court representation, Section 406(a) provides options to determine fees for agency proceedings depending on whether a fee agreement is in place.

Where there is a fee agreement, Subsection (a)(2) caps fees at either $6,000 or 25 percent of past-due benefits, depending which is less. But Subsection (a)(1), which applies where there is no fee agreement, allows the agency to set any fee, including a fee greater than 25 percent of past-due benefits, so long as the fee is “reasonable.” 

In the underlying case, however, a federal judge imposed the 25 percent cap to set fees for attorney Richard Culbertson for his representation of a client both before the court and the agency.

The 11th Circuit affirmed this judgment, but the Supreme Court was unanimous Tuesday in reversing.

“Given [the] statutory structure, applying §406(b)’s 25% cap on court-stage fees to §406(a) agency-stage fees, or the aggregate of §§406(a) and (b) fees, would make little sense,” Justice Clarence Thomas wrote for the court. “Many claimants will never litigate in court, yet under the aggregate reading, agency fees would be capped at 25% based on a provision related exclusively to representation in court. Absent a fee agreement, §406(a)(1) subjects agency fees only to a reasonableness limitation, so applying §406(b)’s cap to such fees would add a limitation that Congress did not include in the relevant provision of the statute. If Congress had wanted these fees to be capped at 25%, it presumably would have said so directly in subsection (a), instead of providing for a “reasonable fee” in that subsection and adding a 25% cap in §406(b) without even referencing subsection (a). Thus, the structure of the statute confirms that §406(b) caps only court representation fees.”

Thomas noted that the court had to appoint Atlanta attorney Amy Weil to argue in support of the underlying judgment because the Social Security Administration did not defend it either.

“Despite the force of [Weil’s] arguments, the statute does not bear her reading,” the 9-page opinion states. “Any concerns about a shortage of withheld benefits for direct payment and the consequences of such a shortage are best addressed to the agency, Congress, or the attorney’s good judgment.”

Culbertson was represented by Daniel Roy Ortiz of the University of Virginia School of Law. “We’re very happy with the result and think it will serve both attorneys and social security beneficiaries and claimants well,” Ortiz said in an email. “It removes what may have been the greatest roadblock to their effective representation.”

Weil did not offer a comment by press time.

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