Appeal from the United States District Court for the District of New Jersey (D.C. Civil No. 1-08-cv-03119) District Judge: Honorable Robert B. Kugler
The opinion of the court was delivered by: Rendell, Circuit Judge.
Before: SCIRICA, RENDELL and SMITH, Circuit Judges
Dr. John Handron, a psychologist, appeals from the denial of his request for counsel fees following his challenge to the government's claim that he had overbilled Medicare and owed the government more than $600,000 in overpayments. At an ALJ hearing to contest the government's claim, Dr. Handron presented extensive evidence, but the government neither appeared nor presented argument or advocacy, either written or in person. The ALJ concluded that the overpayment was actually $5,434.48. Dr. Handron then moved, pursuant to the Equal Access to Justice Act ("EAJA"), 5 U.S.C. § 504(a)(1), to recoup the tens of thousands of dollars in attorneys' fees and expenses he incurred in fighting the overpayment demand. His request for fees was denied by an administrative appeals council and the District Court based on their conclusion that the hearing before the ALJ was not an "adversary adjudication," as is required for an award of fees under the EAJA.
While we sympathize with Dr. Handron's plight, we are constrained to agree with the determination that, given the statutory definition of an "adversary adjudication," his request was properly denied. At the same time, we disagree with the District Court's ruling that the mere fact that the government did not appear in person at the hearing was a sufficient basis upon which to conclude that the adjudication was not adversary in nature.
The EAJA was passed, in large part, to allow individuals and small businesses to fight back against unjustified government action, without fear that the high cost of doing so would make victory ultimately more expensive than acquiescence. H.R. Rep. No. 96-1418, at 5-6 (1980), reprinted in 1980 U.S.C.C.A.N. 4984; John J. Sullivan, Note, The Equal Access to Justice Act in the Federal Courts,84 Colum. L. Rev. 1089, 1092-93 (1984). It empowers parties who prevail against the government, either in an administrative proceeding or in a civil action, to collect their fees and other expenses from the government. 5 U.S.C. § 504(a)(1)*fn1 ; 28 U.S.C. § 2412(d)(1)(A)*fn2 . However, Congress placed several limitations on a party's ability to recover fees under the EAJA. Relevant here, parties who prevail against the government in an agency proceeding can only collect their fees under the EAJA if the proceeding was an "adversary adjudication." 5 U.S.C. § 504(a)(1). An "adversary adjudication" is defined, in relevant part, as "an adjudication under section 554 of [Title 5, United States Code] in which the position of the United States is represented by counsel or otherwise, but excludes an adjudication for the purpose of establishing or fixing a rate or for the purpose of granting or renewing a license." 5 U.S.C. § 504(b)(1)(C).
The House Report for the bill makes clear that the adversary adjudication requirement was designed, in part, to "narrow the scope of the bill in order to make its costs acceptable." H.R. Rep. No. 96-1418, at 14, reprinted in 1980 U.S.C.C.A.N. 4984, 4993; see also id. at 20, reprinted in 1980 U.S.C.C.A.N. 4984, 4999 ("[T]he Committee has eliminated non-adversary adjudications (including administrative proceedings under the Social Security Act) from the coverage of the principal part of this bill, and believes that is a significant factor in reducing the cost."). That report also commented that "[i]t is basic fairness that the United States not be liable in an administrative proceeding in which its interests are not represented." Id. at 12, reprinted in 1980 U.S.C.C.A.N. 4984, 4991. The Conference Report for the bill stated that the definition of "adversary adjudication" was intended to "preclude an award in a situation where an agency, e.g., the Social Security Administration, does not take a position in the adjudication." H.R. Conf. Rep. 96-1434, at 23 (1980), reprinted in 1980 U.S.C.C.A.N. 5003, 5012.
In 1985, when Congress reauthorized*fn3 and amended the EAJA, it reaffirmed the adversary adjudication requirement. The House report noted the following:
One issue which needs clarification is what coverage, if any, is allowed under the Equal Access to Justice Act for Social Security Administration hearings at the administrative level. As enacted in 1980, the Act covers "adversary adjudications"-i.e., an adjudication under Section 554 of Title 5, United States Code "in which the position of the United States is represented by counsel or otherwise." While this language generally excludes Social Security Administrative hearings from the Act, Congress made clear in 1980 that "If * * * the agency does take a position at some point in the adjudication, the adjudication would then become adversarial," and thus be subject to the Act. It is the committee's understanding that the Secretary of Health and Human Services has implemented an experiment in five locations in which the Secretary is represented at the hearing before the administrative law judge. This is precisely the type of situation covered by section 504(b)(1)(C). While, generally, Social Security administrative hearings remain outside the scope of this statute, those in which the Secretary is represented are covered by the Act.
H.R. Rep. No. 99-120, at 10 (1985), reprinted in 1985 U.S.C.C.A.N. 132, 138-39 (quoting H.R. Conf. Rep. 96-1434, at 23, reprinted in 1980 U.S.C.C.A.N. 5003, 5012) (emphasis and ellipsis in original).
The EAJA also tasked the Administrative Conference of the United States with interpreting the statute and developing model rules. See Scafar Contracting, Inc. v. Sec'y of Labor, 325 F.3d 422, 428 n.4 (3d Cir. 2003); 5 U.S.C. § 504(c)(1) ("After consultation with the Chairman of the Administrative Conference of the United States, each agency shall by rule establish uniform procedures for the submission and consideration of applications for an award of fees and other expenses."). The Administrative Conference's model rule implementing 5 U.S.C. § 504 states that an agency proceeding is an "adversary adjudication" under the EAJA if "the position of this or any other agency of the United States, or any component of any agency, is presented by an attorney or other representative who enters an appearance and participates in the ...