FEDERAL COURT GRINCHES CHRISTMAS FOR HUNDREDS OF THOUSANDS OF FUTURE SSA DISABILITY CLAIMANTS

In a stunning ruling issued today the Tenth Circuit Federal Court of Appeals has ruled that the fees paid to attorneys who dare represent disabled persons in their SSA appeals, are not to be paid to the attorney. 

Instead, the court has ordered that the attorneys' fees must be handed over to the claimant and then those attorneys fees can and will be confiscated by the United States to pay off any completely unrelated state or federal debts personally owed by the SSA claimant.

In SSA disability claims, the vast majority of claimants are wrongfully denied their disability benefits by the SSA.  The disability process itself can take years.  The SSA system has been described the US Supreme Court as one of the most complicated governmental bureaucracies to understand. 

If denied by the SSA, the claimant must file an appeal in the federal court system.  Federal court appeals are an even more complex system of rules and regulations that all but require an attorney.   Since most SSA claimants are by definition disabled and thus not employed and have little to no money to pay for an attorney, the United States enacted the Equal Access to Justice Act (EAJA).  

The EAJA was specifically designed to encourage attorneys to represent SSA claimants who otherwise could not afford to appeal their SSA denials.  Attorneys would not be allowed to charge SSA claimants a fee for representation.  The United States under EAJA would in turn pay the attorneys fees for the SSA claimant if the federal claim against the United States was successful.  If the claim was not successful, then no fees would be paid. 

The EAJA encouraged attorneys to represent the destitute SSA claimant knowing that if the SSA claim was won the attorney would be paid for his time by the United States. 

The system has worked quite well for SSA claimants for decades. 

Until today.

In a Social Security benefits case, the Tenth Circuit turned EAJA upside down and inside out.  The Court ruled that under EAJA, the attorneys' fees are not to be paid to the attorney.  The Court ruled that the attorneys' fees must instead be paid to the SSA claimant who in turn will then be charged for the tax liability on those fees. 

Furthermore,  as the claimant receives those attorney fees and increased tax liability, the Court ruled that the attorney fees now held by the claimant can then be immediately confiscated by the Government to pay for any outstanding loans, debts or taxes the claimant may personally owe under state or federal law.  Manning v. Astrue, No. 06-7127

In short, the Court ruled that under EAJA, an attorney who successfully represents a SSA claimant on her disability appeal may never receive payment for his time and effort. 

The attorneys' fees would instead be sent to the claimant who will then be charged with the taxes owing on those fees.  Those same fees can then be taken right back by the government as payment for any personal debts the claimant may owe the government for any debts,  taxes, child support, student or VA loans, etc.

The result is devastating for hundreds of thousands of present and future disabled adults and children who are trying to win their SSA benefits. 

If they need to go to federal court to fight for their benefits, they will need an attorney.  The Government has ruled that the claimant cannot pay for her own attorney and now has ruled that the Government will not pay the attorney his fees under EAJA.  And to add insult to injury, the claimant who is successful on her appeal may then be stuck with payment of taxes dues on attorneys' fees paid to her, only to have the Government immediately confiscate those same fees to pay for the taxes now due the Government on those fees.

The claimant loses.   Her attorney loses.

Incredibly, even the Tenth Circuit itself admitted the complete injustice of its own ruling, but simply scoffed at its final impact upon the disabled.      "We are cognizant of the possibility that decisions by individual clients to bargain away fee awards may, in the aggregate and in the long run, diminish lawyers' expectations of statutory fees in civil rights cases . If this occurred, the pool of lawyers willing to represent plaintiffs in such cases might shrink, constricting the "effective assess to the judicial process" for persons with civil rights grievances which the Fees Act was intended to provide."