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PETRELLA v. SECRETARY OF HHS

February 27, 1987

JEANETTE PETRELLA, Plaintiff
v.
SECRETARY OF HEALTH AND HUMAN SERVICES, Defendant



The opinion of the court was delivered by: MUIR

 MUIR, U.S. District Judge

 THE BACKGROUND OF THIS ORDER IS AS FOLLOWS:

 On May 24, 1984, Jeanette Petrella commenced this action pursuant to 42 U.S.C. § 405(g) seeking review of a final decision of the Secretary of Health and Human Services (Secretary) denying Petrella's claims for disability insurance benefits and supplemental security income. On December 10, 1984, Petrella filed a motion requesting that we remand her case to the Secretary for a redetermination. The Secretary concurred in the motion to remand and on December 19, 1984, we remanded the case to the Secretary. On July 3, 1986, the Secretary filed a notice stating that a decision to award benefits to Petrella had been made.

 Both statutes provide for the awarding of attorney's fees. However, they differ in their approach. Under the Social Security Act, when a claimant receives a favorable determination, counsel may obtain a fee not in excess of 25% of the total past due benefits. 42 U.S.C. § 406. Under the Equal Access to Justice Act, a prevailing claimant may recover attorney's fees from the Government if the Secretary's position was not substantially justified and no special circumstances make an award unjust. Tressler v. Heckler, 748 F.2d 146, 148-149 (3d Cir. 1984). The Equal Access to Justice Act shifts the litigation expenses that a prevailing claimant has incurred in contesting unreasonable government action to the United States. The fundamental difference between the two statutes is that fee awards made pursuant to the Social Security Act are paid out of the claimant's past due benefits whereas fee awards made pursuant to the Equal Access to Justice Act are paid by the Government.

 In this case counsel seeks a fee in the amount of $1,687.50 for 11.25 hours of time spent in this case, an hourly rate of $150.00, pursuant to the Social Security Act and an award of $843.75 for the same 11.25 hours pursuant to the Equal Access to Justice Act at a rate of $75.00 per hour (the maximum hourly rate allowable under the Equal Access to Justice Act). However, he requests that any award made pursuant to the Equal Access to Justice Act be credited against an award made pursuant to the Social Security Act so as to reduce the amount Petrella must pay him from her past due benefits. Neither party has addressed the propriety or provided any authority for the awarding of attorney's fees pursuant to both of the relevant attorney's fees statutes.

 Our own independent research reveals that at least one court has awarded fees pursuant to both statutes on the theory that any funds awarded pursuant to the Equal Access to Justice Act serve as a reimbursement to the claimant for fees paid out of his or her disability award to his or her counsel. Eustache v. Sec of Dept. of Health and Human Serv., 601 F. Supp. 176 (E.D. N.Y. 1985). In addition, the obvious financial advantage to the claimant of an award under the Equal Access to Justice Act has prompted one court to hold that attorneys must, when appropriate, proceed first under the Equal Access to Justice Act. Taylor v. Heckler, 608 F. Supp. 1255, 1259 (D.N.J. 1985) (Sarokin, J.). Judge Sarokin reasons that reducing the awards of claimants for counsel fees when such fees can be obtained pursuant to the Equal Access to Justice Act unnecessarily compounds the anguish and deprivation claimants undergo when their claims are wrongfully denied and they are required to endure a lengthy review process in the federal courts.

 We are of the view that in a given case fees may be awarded under both of the relevant statutes because, in effect, any award made pursuant to the Equal Access to Justice Act reduces the amount of fees the successful claimant must pay from his or her past due benefits. Thus, we will consider Petrella's application under both the Equal Access to Justice Act and the Social Security Act. We also agree with Judge Sarokin that when the position the Secretary has taken warrants an application under the Equal Access to Justice Act, counsel should look to that statute before seeking fees from the claimant under the Social Security Act. We will now proceed to determine whether counsel in this case may recover fees under the Equal Access to Justice Act.

 The Equal Access to Justice Act, 28 U.S.C. § 2412(d)(1)(A) provides, in relevant part, that:

 
. . . A Court shall award to a prevailing party [in certain suits against the United States] . . . fees and other expenses . . . unless the Court finds that the position of the United States was substantially justified . . . .

 Two conditions must be satisfied for attorney's fees to be properly awarded under the Equal Access to Justice Act. First, the claimant must be a "prevailing party." Second, the Court must find that the Secretary's position was not "substantially justified." Tressler v. Heckler, 748 F.2d 146, 149 (3d Cir. 1984).

 Petrella sought reversal of the Secretary's initial decision that she was not entitled to receive benefits. After the matter was remanded from this Court, Petrella obtained a favorable decision regarding her benefits from the Secretary. Consequently, Petrella is a prevailing party in that she received the substantive relief she requested. Id. Having determined that Petrella is a prevailing party, we must decide whether the Secretary's position was substantially justified.

 The substantial justification standard represents ". . . a middle ground between an automatic award of fees to a prevailing party and an award made only when the Government's position was frivolous." Dougherty v. Lehman, 711 F.2d 555-563 (3d Cir. 1983). The standard for determining substantial justification is one of reasonableness. Thus, even if the Secretary is ultimately unsuccessful, the issue is whether his position had a reasonable basis in law and in fact. Id. at 563. In Dougherty, the ...


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