Supreme Court takes a bite out of attorney's fees

By Amanda Becker
Monday, June 21, 2010

A U.S. Supreme Court decision last week that will make it more difficult for attorneys to collect fees in claims brought by low-income individuals against the government could undermine the intent of the statute at the heart of the case, attorneys say.

In Astrue v. Ratliff, the justices ruled unanimously that attorney fee awards under the Equal Access to Justice Act are payable directly to the client -- not the litigant's attorney -- and can therefore be seized to pay debts owed to the federal government. The act was designed to increase access to the courts by awarding attorney's fees and costs if an individual prevails in a claim against the government. Now, if that client has debt, those fees could go unpaid.

"It's going make it more difficult for these people to get attorneys if the money is used to pay debts owed to the government," said Barbara Jones, an attorney with the AARP, which signed onto a friend-of-the-court brief in the case.

In its brief to the court, the Organization of Social Security Claimants' Representatives, along with the AARP, National Senior Citizens Law Center and other organizations that represent low-income, elderly and disabled people, pointed out there are more than 12,000 claims filed each year that challenge the denial of Social Security benefits. More than half of fees awarded under the EAJA are in Social Security claims.

In the case being considered by the court, for example, South Dakota attorney Catherine Ratliff had helped two clients obtain benefits from the Social Security Administration and was awarded fees under the EAJA. The Treasury Department later notified Ratliff that the $2,112.60 fee award for her work on behalf of Ruby Willow Kills Ree was being applied to the outstanding debt of her client. When Ratliff sued for her fees, arguing the move was illegal seizure prohibited by the Fourth Amendment, the district court ruled against her.

The U.S. Court of Appeals for the 8th Circuit, meeting in St. Louis, reversed the decision and sided with Ratliff, though it based its decision not on her legal argument, but on prior circuit precedent, which the court noted conflicted with rulings elsewhere. Social Security Commissioner Michael J. Astrue appealed the ruling to the Supreme Court, which last week interpreted the statute literally, writing that a "fee award is payable to the litigant and is therefore subject to a Government offset to satisfy a pre-existing debt that the litigant owes to the United States."

"They really stayed away from the broad implications," said Sheila McCorkle, a summer associate at Akin Gump Strauss Hauer & Feld, who covered the opinion for the firm's SCOTUSblog.

It was in Justice Sonia Sotomayor's concurring opinion, which was joined by justices John Paul Stevens and Ruth Bader Ginsburg, that the court looked past the text of the law to the ruling's broader implications. Sotomayor pointed out that while the text of the statute and prior legal precedent compelled the court to arrive at its decision, the conclusion likely conflicts with the statute's intent, as the Treasury Department obtained the authority to collect attorney fee awards to offset debt after the statute was written.

"The EAJA's admirable purpose will be undercut if lawyers fear that they will never actually receive attorney's fees to which a court has determined the prevailing party is entitled," Sotomayor wrote, opening the door for Congress to rewrite the statute in the future.

"What I was hoping would come out of this case would be a decision by the court that looked like Sotomayor's concurrence," said Gerald McIntyre, an attorney at the National Senior Citizens Law Center in Los Angeles. Her opinion "opens a way to go to Congress and see if they would be willing to amend this."

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