Distinct Caps for Social Security Attorney Fees: Clarifying §406(a) and §406(b)

Introduction

The case of Richard Allen Culbertson v. Nancy A. Berryhill, decided by the U.S. Supreme Court on January 8, 2019, addresses the interpretation of attorney fee limitations under the Social Security Act. The dispute arises from whether the statutory cap of 25% on attorney fees under §406(b)(1)(A) applies solely to court representations or also limits the aggregate fees when combined with §406(a) fees for administrative proceedings. The parties involved include Richard Allen Culbertson, an attorney representing Social Security disability claimant Katrina Wood, and Nancy A. Berryhill, Acting Commissioner of Social Security.

Summary of the Judgment

The Supreme Court held that the 25% fee cap under §406(b)(1)(A) of the Social Security Act applies exclusively to attorney fees for representation in court proceedings. This cap does not extend to or affect the fees awarded under §406(a) for representation before the Social Security Administration (the agency). Consequently, the Court reversed the Eleventh Circuit's decision, which had limited the aggregate attorney fees to 25% of past-due benefits across both administrative and judicial representations.

Analysis

Precedents Cited

The Supreme Court emphasized the importance of statutory interpretation grounded in the plain language of the statute. Referencing cases such as United States v. Detroit Timber & Lumber Co., Puerto Rico v. Franklin Cal. Tax-Free Trust, and GISBRECHT v. BARNHART, the Court reinforced the principle that statutes should be interpreted based on their clear language before considering extrinsic materials. Additionally, historical amendments to the Social Security Act were considered to understand Congress's intent regarding attorney fee structures.

Legal Reasoning

Justice Thomas, delivering the opinion of the Court, focused on the statutory language's clarity and structure. §406(a) and §406(b) address distinct phases of representation: administrative and judicial, respectively. The term "such" in §406(b)(1)(A) was interpreted to mean representation before the court only, based on the context provided within §406(b) itself. The separate calculation methods for fees under §§406(a) and (b) further supported the distinction, as §406(a) allows for either a fee agreement (capped at 25% or $6,000) or a "reasonable" fee without the 25% limitation absent such an agreement.

The Court also dismissed the argument that because the agency withholds a single 25% pool for fees, an aggregate cap is intended. The statutory text clearly delineates separate pools (§406(a)(4) and §406(b)(1)(A)) for administrative and judicial fees, respectively, regardless of the agency's withholding practices.

Impact

This judgment clarifies that attorneys can potentially receive fees exceeding 25% of past-due benefits when representing claimants in both administrative and judicial proceedings. It underscores the statutory separation of fee caps for different representation stages, thereby providing greater flexibility in compensation for attorneys. Future cases will reference this decision to determine the proper application of fee caps under the Social Security Act, potentially affecting the financial arrangements between attorneys and claimants.

Complex Concepts Simplified

Understanding §§406(a) and §406(b)

The Social Security Act provides two distinct sections for attorney fees:

§406(a): Pertains to representation before the Social Security Administration. Attorneys can either have a fee agreement capped at 25% of past-due benefits or a maximum dollar amount (currently $6,000). If no agreement exists, the agency can set a "reasonable" fee without the 25% limitation.
§406(b): Applies to representation in court proceedings. Here, the fee is strictly capped at 25% of past-due benefits, and this cap does not interact with fees under §406(a).

Aggregate Fee Caps

An aggregate fee cap would mean that the total fees from both administrative (§406(a)) and judicial (§406(b)) representations cannot exceed 25% of past-due benefits. However, the Supreme Court clarified that this is not the case; each section has its separate cap.

Conclusion

The Supreme Court's decision in Culbertson v. Berryhill establishes a clear distinction between attorney fee caps for administrative and judicial representations under the Social Security Act. By interpreting §406(b)(1)(A) as solely applicable to court-related fees, the Court ensures that attorney fees can be appropriately awarded for different stages of representation without an unintended cumulative cap. This clarification enhances the understanding and application of statutory provisions governing attorney compensation in Social Security cases, ensuring that legal representation remains adequately funded while adhering to legislative intent.