On Appeal From the United States District Court For the Eastern District of Pennsylvania, D.C. Civil Action No. 85-0627. Argued November 4, 1986 Opinion filed March 20, 1987 On Remand From The Supreme Court Of The United States.
Sloviter, and Stapleton, Circuit Judges, and Farnan, District Judge.*fn*
STAPLETON, Circuit Judge:
When this case was last before us, we held that under the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412(d) (Supp. III 1985), Christine Russell was entitled to an award of counsel fees and costs incurred by her in her successful defense of a proceeding instituted by the Secretary to recoup an overpayment of social security benefits. Russell v. Heckler, 814 F.2d 148 (3d Cir. 1987). We so held based on our conclusion that the Secretary's positions on recoupment and the ensuing fee petition were not "substantially justified" as that phrase is used in the EAJA. 28 U.S.C. § 2412(d)(1)(A) (Supp. III 1985).
Following our decision, the Supreme Court granted certiorari and ultimately remanded the case to us for reconsideration in light of its decision in Pierce v. Underwood, 487 U.S. 552, 108 S. Ct. 2541, 101 L. Ed. 2d 490 (1988). We agree with the Secretary that the Supreme Court returned this case to us so that we might review it with two teachings of Pierce in mind:
1. A Court of Appeals reviews a decision of a district court denying a petition for fees and costs under the EAJA only to determine whether there has been an abuse of discretion. 108 S. Ct. at 2547.
2. "Substantially justified" means "justified in substance or in the main -- that is, justified to a degree that could satisfy a reasonable person" i.e., having a "reasonable basis both in law and in fact." Id. at 2550.
Having reconsidered the issues presented in this appeal in light of these two legal standards, we reach the same conclusion. Russell is entitled to an award because the Secretary's position was not "substantially justified" and the district court abused its discretion in concluding otherwise. Our explanation of this result assumes knowledge on the reader's part of the factual setting described in our earlier opinion.
Mrs. Russell's husband died at a time when she had two sons: James, then 15, who lived with her, and Michael, then 9, who was mentally retarded and lived in a nursing home under the custody of the state. Although Mrs. Russell did not pay for Michael's care, she was consulted about his welfare and activities and was "allowed to bring him home for an occasional week." She filed an application with the SSA for mother's benefits, surviving child's benefits, and benefits on behalf of another, i.e. Michael. To qualify for mother's insurance benefits, an applicant must have at least one child in her care. Equally important for present purposes, to be named as payee for a child's benefit, the child must be in the care of the applicant.
The application for mother's benefits contained the following statement:
YOU MUST NOTIFY THE SOCIAL SECURITY ADMINISTRATION PROMPTLY IF:
You NO LONGER HAVE IN YOUR CARE a child or dependent grandchild of the deceased entitled to benefits because he (she) is under 18 or disabled.
Similarly, the "Certificate of Applicant for Benefits on Behalf of Another" required Russell to "agree to notify the Social Security Administration promptly when you [she] no longer had responsibility for the welfare and care ...