AR 93-5(11) (Rescinded 4/14/2000)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 (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.
Eleventh (Alabama, Florida, Georgia)
Shoemaker v. Bowen, 853 F.2d 858 (llth Cir. 1988)
This Ruling applies to cases in which a court may allow an attorney's fee as a result of a civil action. 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 March 1979, plaintiff Mary Shoemaker applied for and subsequently was awarded disability insurance benefits under title II of the Act. In August 1982, SSA determined that plaintiff's disability had ceased and that she was no longer entitled to disability insurance benefits. After exhausting her administrative remedies, plaintiff sought judicial review in the United States District Court for the Northern District of Alabama.
The district court remanded the case to the Secretary for further review. While her case was pending on remand, plaintiff elected to receive continued benefits pursuant to section 2(e) of the 1984 Disability Amendments.
The plaintiff received continued benefits from December 1984 until December 1986 when, based on a favorable decision by the Secretary, her entitlement to disability insurance benefits was reinstated. The Secretary then calculated the accumulated past-due benefits to which the plaintiff was entitled to include past-due benefits for the period from October 1982, when her payments had stopped, until December 1984, when her continued benefits began.
The plaintiff's attorney subsequently filed a petition with the district court pursuant to section 206(b)(1) of the Act, seeking compensation for his representation of the plaintiff before the court. The attorney stated that the request did not exceed 25 percent of "past-due benefits payable or paid" to the plaintiff. The attorney suggested that the funds withheld from the past-due benefits by the Secretary and the amount retained from the plaintiff's continued benefits and placed in trust by the attorney be used for payment of the fee award.
The Secretary opposed the attorney's fee request on the ground that under section 206(b)(1) attorney's fees may not exceed 25 percent of a claimant's past-due benefits. The Secretary maintained that continued benefits, because they have already been paid, are not considered past-due benefits within the meaning of section 206(b)(1). The district court rejected the Secretary's position that attorney's fees could not be granted out of the continued benefits and awarded attorney's fees based on both the accumulated past-due benefits and the continued benefits. The Secretary appealed the district court's decision to the United States Court of Appeals for the Eleventh Circuit. The court of appeals affirmed the decision of the district court.
The court held that "interim benefits" a claimant receives pursuant to section 223(g) of the Act may be considered by a district court in awarding attorney's fees under section 206(b)(1) of the Act.
Because the language of the statute did not expressly state whether or not continued benefits are included in the definition of past-due benefits, the court looked to congressional intent to reach its conclusion. The court stated that "[w]hile one of the purposes of section 406 [(206(b) of the Act)] is to limit attorney's fees, Congress also intended 'to encourage effective legal representation' by ensuring that attorneys will receive a fee for their representation." 853 F.2d at 860. The court concluded that under the Secretary's interpretation (i.e., not to include continued benefits in the definition of past-due benefits), claimants who do not elect to receive continued benefits have a greater amount of money available for a reasonable attorney's fee than those who elect the continued benefits, placing claimants who elect to receive the continued benefits at a disadvantage in obtaining effective legal representation.
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 did not expressly define past-due benefits at the time of the court's decision, 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: (l) they have already been paid and are 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. Contrary to SSA's interpretation of the term "past-due benefits," under the court of appeals decision continued benefits paid to social security claimants constitute past-due benefits for the purpose of calculating attorney's fees under section 206(b)(1).
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 attorney's fees the court may award for court services (section 206(b) cases). 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 involving court services performed within the Eleventh Circuit (Alabama, Florida or Georgia).
When a case involves: (l) a fee petition that has been filed in 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 per cent 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 Eleventh Circuit stated that the plaintiff elected to receive "interim" benefits pursuant to § 223(g) of the Social Security Act (42 U.S.C. 423(g)), the benefits the plaintiff received were authorized by § 2(e) of the 1984 Amendments. The characteristics of the "interim" benefits provided by the two statutes are not distinguishable in any manner relevant to the issue of whether "interim" benefits are to be considered "past-due" benefits under § 206(b)(1) of the Act (42 U.S.C. 406(b)(1)).
 Subsequent to this decision Congress enacted Section 5106 of Pub. L. No. 101-508, the Omnibus Budget Reconciliation Act of 1990, which states that for the purposes of section 206(a) of the Social Security Act the term "past-due" benefits excludes continued and interim benefits under sections 223(g) and (h), respectively, of the Act. Congress did not expressly exclude continued benefits from "past-due benefits" for purposes of calculating attorney fees under section 206(b) of the Act.
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