AR 93-3(6) (Rescinded 4/14/2000)
EFFECTIVE DATE 07/29/93
Whether continued benefits paid to claimants pursuant to section 2(e) of the Social Security Disability Benefits Reform Act of 1984 or section 223(g) of the Social Security Act (the Act) are ``past-due benefits'' within the meaning of section 206(b)(1) of the Act.
Sections 206(b)(1) and 223(g) of the Social Security Act (42 U.S.C. 406(b)(1) and 423(g)); sections 2(d) and 2(e) of the Social Security Disability Benefits Reform Act of 1984, Pub. L. No. 98-460; 20 CFR 404.1703; 20 CFR 404.1728-1730; and section 5106 of Pub. L. No. 101-508.
Sixth (Kentucky, Michigan, Ohio, Tennessee).
Akers v. Secretary of Health and Human Services, 966 F.2d 205 (6th Cir. 1992).
This Ruling applies to cases in which a court may allow an attorney's fee as a result of a civil action in which the court has reversed the final decision of the Secretary and awarded benefits to the claimant. It does not affect the way the Social Security Administration (SSA) adjudicates cases, but only affects how SSA calculates past-due benefits and disburses accumulated past-due benefits within the meaning of section 206(b)(1) of the Act.
In October 1987, SSA determined that plaintiff's medical condition had improved and that his disability benefits would therefore cease as of December 1987. Plaintiff requested reconsideration of the cessation decision and received continued benefits pending his appeal. SSA upheld the cessation determination throughout the administrative process and discontinued the continuing benefits in June 1989. Plaintiff filed a complaint in the U.S. District Court for the Eastern District of Kentucky. The district court reversed SSA's decision and held that plaintiff's benefits should not have been terminated.
Subsequently, plaintiff's counsel moved the district court pursuant to section 206(b)(1) of the Act, for attorney's fees in the amount of twenty-five percent of plaintiff's ``past-due benefits,'' including continued benefits. The Secretary maintained that continued benefits are not ``accumulated because of a favorable ... decision,'' (20 CFR 404.1703), and thus are not past-due benefits for purposes of calculating attorney's fees. The district court accepted the Secretary's argument and ordered SSA to pay plaintiff's counsel twenty-five percent of only those benefits accrued since plaintiff's continued benefits were discontinued.
In reversing the district court's decision, the Sixth Circuit held that ``interim benefits'' paid to social security claimants pursuant to the Social Security Disability Benefits Reform Act of 1984 should be included in the calculation of title II past-due benefits for the purpose of awarding attorney's fees under section 206(b) of the Act. The court rationalized its decision on several grounds. It first noted that ``interim benefits are similar to a loan, since they must be repaid by unsuccessful claimants (absent waiver by the Secretary).'' Accordingly, stated the court, a claimant is not ``entitled'' to the benefits absent a final favorable decision. Second, the court stated that the Secretary's definition of past-due benefits would (1) Create an ``unjustifiable dichotomy'' between attorneys of claimants who did and did not elect ``interim benefits;'' (2) Create a potential conflict between attorneys and claimants; and (3) Impose greater hardships on claimants by discouraging competent attorneys from representing them.
Additionally, the Sixth Circuit acknowledged that Congress had amended section 206(a) of the Act, through the Omnibus Budget Reconciliation Act of 1990, to exclude ``interim benefits'' from ``past-due benefits,'' for purposes of calculating attorney's fees for representation before the Secretary. The court did not apply the section 206(a) definition of past-due benefits to cases under section 206(b), but could not infer any congressional intent for excluding interim benefits from calculating past-due benefits under section 206(b).
Under section 206 of the Act, the Secretary is authorized to withhold up to 25 percent of the total of title II past-due benefits to which a claimant is entitled for possible payment of attorney's fees. Although section 206 does not expressly define past-due benefits for section 206(b) purposes, 20 CFR 404.1703 defines past-due benefits as the total amount of benefits payable under title II of the Act to all beneficiaries that has accumulated because of a favorable administrative or judicial determination or decision. When calculating past-due benefits, SSA does not consider continued benefits to be past-due benefits because (1) They have already been paid and are, therefore, not accumulated and payable, and (2) They result from legislation, not from an ``administrative or judicial determination or decision.''
Accordingly, when computing the 25 percent withholding amount from which attorney's fees can be paid, SSA considers only those benefits which are payable to the claimant. Contrary to SSA's interpretation of the term ``past-due benefits,'' the court of appeals held that continued benefits paid to social security claimants are included in past-due benefits for the purpose of calculating attorney's fees under section 206(b).
Although Congress has expressly excluded continued benefits from the calculation of ``past-due benefits'' for section 206(a) purposes, the legislative history is silent as to whether continued benefits are to be included in the amount of money available for court allowed attorney's fees (section 206(b) cases). Under the Sixth Circuit Webb rule, the tribunal (i.e., SSA or the court) which awards benefits sets the fee for both administrative and court services. SSA believes its policy of not including continued benefits in the ``past-due benefit'' calculation for section 206(b) purposes addresses the overriding concern of Congress in enacting section 223(g), i.e., to provide claimants with ``continuation of payments during appeal ... to ease the severe financial and emotional hardships that would otherwise be suffered.'' H.R. Rep. No. 98-618, 98th Cong., 2d Sess. 18, reprinted in 1984 U.S. Code Cong. & Ad. News 3038, 3055.
This Ruling applies to title II disability cases and the title II portion of concurrent title II and title XVI disability cases in which a fee petition is filed in a court within the Sixth Circuit (Kentucky, Michigan, Ohio, Tennessee).
When a case involves: (l) A fee petition that has been filed in a federal court based on proceedings on the issue of continuing entitlement to disability insurance benefits and (2) a claimant who has received continued benefits pursuant to section 2(e) of the 1984 Disability Amendments or section 223(g) of the Act during any period considered in the court's decision, SSA will consider both accumulated benefits and continued benefits already paid to be ``past-due benefits'' within the meaning of section 206(b)(1) of the Act.
SSA will not withhold funds from continued benefits to pay an attorney's fee. SSA will pay the approved fee directly to the attorney from the accumulated past-due benefits held by the Secretary, subject to the maximum of 25 percent of the total past-due benefits amount (as defined by the court, i.e., past-due benefits include both accumulated benefits and continued benefits).
If the sum of accumulated past-due benefits which the Secretary certifies for direct payment and any funds held in trust or escrow by the attorney is less than the fee set by the court, SSA will advise the attorney to seek payment of the balance of the authorized fee directly from the claimant.
 Although the district court and the Sixth Circuit stated that the plaintiff elected to receive ``interim'' benefits pursuant to section 223(g) of the Social Security Act (42 U.S.C. 423(g)), consistent with statutory language, SSA refers to section 223(g) benefits as ``continued'' benefits.
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