J. THOMAS RAY, United States Magistrate Judge.
Pending before the Court is Plaintiffs Application for Attorney's Fees Under the Equal Access to Justice Act ("EAJA"). (Docket entry # 19). On August 26, 2009, Plaintiff filed this action challenging the decision of an Administrative Law Judge ("ALJ") denying her claim for social security benefits. (Docket entry # 2). On June 16, 2010, the Court entered a Memorandum Order (docket entry # 16) reversing the ALJ's decision and remanding the case pursuant to sentence four of 42 U.S.C. § 405(g) and Melkonyan v. Sullivan, 501 U.S. 89, 111 S.Ct. 2157, 115 L.Ed.2d 78 (1991).
On August 18, 2010, Plaintiff's attorney, Mr. Alan J. Nussbaum, filed an Application for Attorney's Fees Under the EAJA. (Docket entry # 19). Nussbaum requests a total payment of $5,014.24, representing 21 hours of time in 2009 at an hourly rate of $172.24 ($3,617.04), and 8 hours of time in 2010 at hourly rate of $174.65 ($1,397.20). He also requests that any award be made directly to him.
While the Commissioner does not object to the requested amounts for attorney's fees, he makes the conclusory assertion "that, pursuant to Astrue v. Ratliff, ___ U.S. ___, 130 S.Ct. 2521, 177 L.Ed.2d 91 (2010), the fees awarded under the EAJA are payable to the prevailing party." (Docket entry # 21).
In Ratliff, a social security claimant prevailed in her appeal of the denial of benefits, and later sought attorney's fees as the prevailing party under the EAJA, 28 U.S.C. § 2412(d). Before paying the award, the Commissioner discovered that the claimant owed a preexisting debt to the government, and sought to offset that debt against the EAJA award. The claimant's attorney intervened to challenge the offset. She argued that, because the
The United States Supreme Court granted certiorari to determine "whether an award of `fees and other expenses' to a `prevailing party' under § 2412(d) is payable to the litigant or to his attorney." Ratliff, 130 S.Ct. at 2524. The Court held that: (1) the plain language of the statute made it clear the amount of the award is "payable to the litigant"; (2) the Commissioner's historical practice of paying lawyers directly, in cases where the claimant had assigned her rights to the fee and owed the government no debt, did not mandate a different result; and (3) because the EAJA award was "payable to the litigant," the government could offset the claimant's debt against that award.
In his Reply, Nussbaum acknowledges the Court's holding in Ratliff, but contends that a claimant may still contractually assign her EAJA fee to her lawyer as long as "plaintiff owes no outstanding debt to the federal government[.]" (Docket entry # 22). Nussbaum's contract to represent Plaintiff, which he attaches to his Reply, contains a provision that assigns Plaintiffs right to any EAJA award directly to Nussbaum.
Since the Court's decision in Ratliff, numerous lower courts have considered how to handle the issues surrounding a claimant's assignment of a potential future award of EAJA attorney's fees and expenses directly to the claimant's attorney.
On September 27, 2010, the Court entered an Order (docket entry # 26) in Johnson v. Astrue, E.D.Ark. No. NO. 3:08CV00187 JTR which approved the amount of the attorney's fees and expenses requested by the prevailing claimant's attorney, under the EAJA, but held that it should be left up to the Commissioner to decide: (1) if the claimant had legally assigned those fees and expenses to his attorney; and (2) if the claimant owed the government any debts that should be offset against those attorney's fees and expenses. While the Court was in a position to decide if the assignment was in proper form, it was not in a position to determine the offset issue because the Commissioner's Response failed to address it. The Court reasoned that, if those issues were sent back to the Commissioner, he would be in a position to decide both matters.
This case provides the Court with its second opportunity to consider this issue. After giving the matter further thought, the Court concludes that it—not the Commissioner—should decide both the issue of the legal sufficiency of the assignment and the issue of whether any debt owed by the claimant to the government should be offset against the attorney's fees and expenses.
First, if the matter is returned to the Commissioner, the Court has no way of knowing how long it may take for the Commissioner to resolve what should be two simple issues. Accordingly, a lawyer who has earned his or her fee and is entitled to be paid, may be placed in administrative limbo for an unknown but potentially lengthy period of time. Absent a clear statutory mandate, the Court is unwilling to send counsel for a prevailing party into such uncharted administrative waters.
Second, the Court would be charging the Commissioner, who oversees an agency of "the government," with making decisions about issues in which he has an interest. Presumably, the Commissioner would refer the matter to an ALJ, a neutral thir-dparty who would be charged with deciding the matter. If the prevailing party's attorney disagreed with the ALJ's decision, it seems probable the matter would go to the Appeals Council and, then, back to this Court. In other words, the claimant's attorney would be required to embark on an administrative journey, which might take many months to complete, only to end up once again before this Court, requesting it to reverse the Commissioner's final decision on attorney's fees.
Finally, it is unquestionably within the jurisdiction of the federal court, not the Commissioner, to decide: (1) if EAJA attorney's fees and expenses are recoverable; (2) if the requested the amount of those fees and expenses is reasonable; and (3) the party who is entitled to receive those fees and expenses. The corollary issues of whether a prevailing claimant has lawfully assigned those fees and expenses to his or her attorney and whether the claimant owes the government a debt that should be offset against those fees and expenses are inextricably related to the other issues which the Court must decide in resolving every Application for Attorney's Fees under the EAJA. Accordingly, the Court concludes that it should decide any issues surrounding the claimant's assignment of his right to receive EAJA fees and expenses and any legitimate amounts that should be offset against those fees and expenses based on outstanding debts the claimant may owe the federal government.
As indicated earlier, the Commissioner's Response to Plaintiff's Application for Attorney's Fees and Expenses does not object to the amounts requested by Nussbaum. The Commissioner also does not address or challenge the assignment pursuant to which Nussbaum contends Plaintiff assigned to him her interest in any future award of EAJA attorney's fees and expenses. Similarly, the Commissioner does not address whether Plaintiff owes the government any debt which should be offset against the amount of the requested attorney's fees and expenses. Instead the Commissioner makes a blanket objection to Plaintiff's Application for Attorney's Fees and Expenses "based on Ratliff." The Court concludes that the Commissioner's Response is inadequate and fails to provide the Court with any of the information that it needs to resolve the postRatliff issues which the Commissioner nominally raises but does not address in his Response.
Plaintiff's counsel will then be allowed fourteen (14) days to file a Supplemental Reply addressing the issues raised in the Supplemental Response.
Finally, Plaintiff is an interested party. If the validity of the assignment is successfully challenged, she may be entitled to recover the EAJA attorney's fees and expenses. Accordingly, Nussbaum must provide Plaintiff with a copy of this Order.
IT IS THEREFORE ORDERED THAT:
1. The Commissioner shall file a Supplemental Response with twenty one (21) days of the entry of this Order.
2. Nussbaum may file a Supplemental Reply within fourteen (14) days of the filing of the Supplemental Response.
3. Nussbaum must mail a copy of this Order to Plaintiff, and promptly file a Notice with the Court confirming the mailing. If Plaintiff wishes to contest the validity of the assignment in this case, she shall file a Response within twenty-one (21) days of the date of this Order setting forth the basis for her objection.
(Docket entry # 22-1 at 1).