Sullivan v. Hudson/Opinion of the Court

The issue before us in this case is whether a Social Security claimant is entitled to an award of attorney's fees under the Equal Access to Justice Act for representation provided during administrative proceedings held pursuant to a district court order remanding the action to the Secretary of Health and Human Services.

* Respondent Elmer Hudson filed an application for the establishment of a period of disability and for disability benefits under the Social Security Act, 49 Stat. 620, as amended, 42 U.S.C. § 401 et seq. (1982 ed. and Supp. V) on September 9, 1981. On the same day, she filed an application for supplemental security income under Title XVI of the Act. Respondent, now 50, submitted medical evidence indicating obesity, limitations in movement, and lower back pain. Her application for benefits was administratively denied, and that position was upheld on reconsideration by the Social Security Administration. Respondent requested and received a hearing before an Administrative Law Judge (ALJ), where she was represented by a Legal Services Corporation paralegal. At the hearing, respondent testified that she suffered from back pain, depression, and nervousness. Respondent was in a state of anxiety and cried throughout the hearing. The ALJ ordered a posthearing psychiatric examination by Dr. Anderson, a psychiatrist, and respondent's representative chose to have her undergo an additional evaluation by Dr. Myers, a clinical psychologist. Dr. Anderson's report indicated that respondent suffered rom mild to moderate dysthymic disorder and a histrionic personality disorder. He concluded that respondent's psychological condition would not interfere with her ability to work in the domestic services area, where most of her past work experience lay. Dr. Myers found that respondent was moderately to severely depressed, suffered from insomnia, fatigue, psychomotor retardation, tearfulness, and anxiety. He concluded that her psychological problems, coupled with her mild physical disabilities and back pain, rendered her unemployable absent exhaustive rehabilitative efforts.

Based on these two reports, the ALJ rendered her decision finding that respondent was not disabled because she was capable of performing work similar to that she had done in the past. The ALJ's decision was approved by the Social Security Appeals Council, thus becoming the final decision of the Secretary concerning respondent's applications. Respondent then brought an action in the District Court for the Northern District of Alabama under 42 U.S.C. § 405(g) seeking judicial review of the Secretary's decision denying benefits. The District Court found that the Secretary's decision was supported by substantial evidence and affirmed the denial of benefits. App. to Pet. for Cert. 43a-44a. The Court of Appeals for the Eleventh Circuit reversed. It vacated the Secretary's decision and instructed the District Court to remand the case to the Secretary for reconsideration. Hudson v. Heckler, 755 F.2d 781 (1985). The Court of Appeals agreed with respondent that "the Secretary did not follow her own regulations" in making the disability determination in respondent's case. Id., at 785. The court found that those regulations required the Secretary to consider the cumulative effect of impairments even where no individual ailment considered in isolation would be disabling. Ibid. In respondent's case the ALJ had never considered the combined effect of respondent's physical and psychological afflictions. Nor had the ALJ given any reasons for her rejection of Dr. Myers' evaluation of the combined effects of respondent's physical and psychological conditions. Id., at 785-786.

Following the District Court's remand order, the Social Security Appeals Council vacated its earlier denial of respondent's request for review and returned the case to an ALJ for further proceedings. App. to Pet. for Cert. 30a. The Appeals Council instructed the ALJ to provide respondent with an opportunity to testify at a supplemental hearing and to adduce additional evidence. Id., at 31a. The Appeals Council also indicated that the ALJ might wish to obtain the services of a medical adviser to evaluate respondent's psychiatric impairment during the period at issue. Ibid. Finally, the Appeals Council instructed the ALJ to apply the revised regulations for determining disability due to mental disorders, which had been published by the Secretary in 1985 pursuant to statutory directive. Ibid. On remand, the ALJ found that respondent had been disabled as of May 15, 1981, as she had originally maintained in her initial applications for benefits. Respondent was represented before the ALJ in the remand proceedings by the same counsel who had represented her before the District Court and the Court of Appeals.

On October 22, 1986, the Appeals Council adopted the ALJ's recommended decision and instructed the Social Security Administration to pay respondent disability and supplemental income benefits. Id., at 21a-23a. On December 11, 1986, the District Court, pursuant to the Secretary's motion, dismissed respondent's action for judicial review, finding that after the remand order respondent had obtained all the relief prayed for in her complaint. The District Court retained jurisdiction over the action for the limited purpose of considering any petition for the award of attorney's fees. Respondent then filed the instant petition for an award of attorney's fees under the Equal Access to ustice Act (EAJA), Pub.L. 96-481, 94 Stat. 2328, as amended, 28 U.S.C. § 2412(d) (1982 ed., Supp. V). The District Court denied respondent's fee application in toto, finding that the position taken by the Secretary in the initial denial of benefits to respondent was "substantially justified." App. to Pet. for Cert. 17a-20a. The Court of Appeals again reversed. Hudson v. Secretary of Health and Human Services, 839 F.2d 1453 (CA11 1988). The Court of Appeals noted that in its earlier opinion it had found that the Secretary had violated her own regulations by failing to consider the cumulative effect of respondent's ailments, and that the ALJ had failed to give her reasons for rejection of Dr. Myers' testimony concerning the cumulative effects of respondent's ailments. Id., at 1457-1458. The Secretary's defense of the denial of benefits to respondent "on those two grounds was not substantially justified." Id., at 1458. Having concluded that an award of attorney's fees was proper under the EAJA, the court went on to consider whether the award could include attorney's fees for work done at the administrative level after the cause was remanded to the Secretary by the District Court. The Court of Appeals rejected the Secretary's argument that 5 U.S.C. §§ 504(a)(1) and 504(b)(1)(C) (1982 ed., Supp. V) limited a court's power to award attorney's fees for administrative proceedings to those situations "in which the position of the United States is represented by counsel or otherwise. . . ." While recognizing that the Secretary was not represented by counsel in the remand proceedings at issue here, the Court of Appeals found that "the critical determination is whether the Secretary has staked out a position." 839 F.2d, at 1460. Since the Secretary had taken an adversarial position in the proceedings for judicial review prior to the remand, the Court of Appeals found that the proceedings were no less "adversarial" on remand before the agency, and therefore a fee award encompassing work performed before the agency on remand was proper. Ibid.

Because the Court of Appeals' decision granting attorney's fees for representation in administrative proceedings on remand from judicial review of a Social Security benefits determination conflicts with the decisions of other Courts of Appeals, see, e.g., Cornella v. Schweiker, 728 F.2d 978, 988-989 (C.A.8, 1984), we granted the Secretary's petition for certiorari. Sub nom. Bowen v. Hudson, 488 U.S. 980, 109 S.Ct. 527, 102 L.Ed.2d 559 (1988).

In 1980, Congress passed the EAJA in response to its concern that persons "may be deterred from seeking review of, or defending against, unreasonable governmental action because of the expense involved in securing the vindication of their rights." 94 Stat. 2325. As the Senate Report put it:

"For many citizens, the costs of securing vindication of their rights and the inability to recover attorney fees preclude resort to the adjudicatory process. . . . When the cost of contesting a Government order, for example, exceeds the amount at stake, a party has no realistic choice and no effective remedy. In these cases, it is more practical to endure an injustice than to contest it." S.Rep. No. 96-253, p. 5 (1979).

The EAJA was designed to rectify this situation by providing for an award of a reasonable attorney's fee to a "prevailing party" in a "civil action" or "adversary adjudication" unless the position taken by the United States in the proceeding at issue "was substantially justified" or "special circumstances make an award unjust." That portion of the Act applicable to "civil actions" provides, as amended, in relevant part that

"[e]xcept as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses . . . incurred by that party in any civil action . . . including proceedings for judicial review of agency action, brought by or aga nst the United States in any court having jurisdiction of that action, unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust." 28 U.S.C. § 2412(d)(1)(A) (1982 ed., Supp. V).

Application of this provision to respondent's situation here requires brief consideration of the structure of administrative proceedings and judicial review under the Social Security Act. Once a claim has been processed administratively, judicial review of the Secretary's decision is available pursuant to § 205(g) of the Social Security Act, 42 U.S.C. § 405(g), which provides in pertinent part:

"Any individual, after any final decision of the Secretary made after a hearing to which he was a party, . . . may obtain a review of such decision by a civil action. . . . The court shall have the power to enter, upon the pleadings and transcript of the record, a judgment affirming, modifying, or reversing the decision of the Secretary, with or without remanding the cause for a rehearing. . . . The court may, on motion of the Secretary for good cause shown before he files his answer, remand the case to the Secretary for further action by the Secretary, and it may at any time order additional evidence to be taken before the Secretary, but only upon a showing that there is new evidence which is material and that there is good cause for the failure to incorporate such evidence into the record in a prior proceeding; and the Secretary shall, after the case is remanded, and after hearing such additional evidence if so ordered, modify or affirm his findings of fact or his decision, or both, and shall file with the court any such additional and modified findings of fact and decision, and a transcript of the additional record and testimony upon which his action in modifying or affirming was based."

As provisions for judicial review of agency action go, § 405(g) is somewhat unusual. The detailed provisions for the transfer of proceedings from the courts to the Secretary and for the filing of the Secretary's subsequent findings with the court suggest a degree of direct interaction between a federal court and an administrative agency alien to traditional review of agency action under the Administrative Procedure Act. As one source puts it:

"The remand power places the courts, not in their accustomed role as external overseers of the administrative process, making sure that it stays within legal bounds, but virtually as coparticipants in the process, exercising ground-level discretion of the same order as that exercised by ALJs and the Appeals Council when they act upon a request to reopen a decision on the basis of new and material evidence." J. Mashaw, C. Goetz, F. Goodman, W. Schwartz, P. Verkuil, & M. Carrow, Social Security Hearings and Appeals 133 (1978).

Where a court finds that the Secretary has committed a legal or factual error in evaluating a particular claim, the district court's remand order will often include detailed instructions concerning the scope of the remand, the evidence to be adduced, and the legal or factual issues to be addressed. See, e.g., Cooper v. Bowen, 815 F.2d 557, 561 (C.A.9, 1987). Often, complex legal issues are involved, including classification of the claimant's alleged disability or his or her prior work experience within the Secretary's guidelines or "grids" used for determining claimant disability. See, e.g., Cole v. Secretary of Health and Human Services, 820 F.2d 768, 772-773 (C.A.6, 1987). Deviation from the court's remand order in the subsequent administrative proceedings is itself legal error, subject to reversal on further judicial review. See, e.g., Hooper v. Heckler, 752 F.2d 83, 88 (C.A.4, 1985); Mefford v. Gardner, 383 F.2d 748, 758-759 (C.A.6, 1967). In many remand situations, the court will retain jurisdiction over the action pending the Secretary's decision and its filing with the court. See Ahghazali v. Secretary of Heal h and Human Services, 867 F.2d 921, 927 (C.A.6, 1989) (remanding action to District Court with instructions to retain jurisdiction during proceedings on remand before the agency); Taylor v. Heckler, 778 F.2d 674, 677, n. 2 (C.A.11, 1985) ("[T]he district court retains jurisdiction of the case until the proceedings on remand have been concluded"); accord, Brown v. Secretary of Health and Human Services, 747 F.2d 878, 883-885 (C.A.3, 1984). The court retains the power in such situations to assure that its prior mandate is effectuated. See Ford Motor Co. v. NLRB, 305 U.S. 364, 373, 59 S.Ct. 301, 307, 83 L.Ed. 221 (1939).

Two points important to the application of the EAJA emerge from the interaction of the mechanisms for judicial review of Social Security benefits determinations and the EAJA. First, in a case such as this one, where a court's remand to the agency for further administrative proceedings does not necessarily dictate the receipt of benefits, the claimant will not normally attain "prevailing party" status within the meaning of § 2412(d)(1)(A) until after the result of the administrative proceedings is known. The situation is for all intents and purposes identical to that we addressed in Hanrahan v. Hampton, 446 U.S. 754, 100 S.Ct. 1987, 64 L.Ed.2d 670 (1980). There we held that the reversal of a directed verdict for defendants on appeal did not render the plaintiffs in that action "prevailing parties" such that an interim award of attorney's fees would be justified under 42 U.S.C. § 1988. We found that such "procedural or evidentiary rulings" were not themselves "matters on which a party could 'prevail' for purposes of shifting his counsel fees to the opposing party under § 1988." Id., at 759, 100 S.Ct., at 1990. More recently in Texas State Teachers Assn. v. Garland Independent School Dist., 489 U.S. 782, 109 S.Ct. 1486, 103 L.Ed.2d 866 (1989), we indicated that in order to be considered a prevailing party, a plaintiff must achieve some of the benefit sought in bringing the action. Id., at 791-793, 109 S.Ct. at 1494. We think it clear that under these principles a Social Security claimant would not, as a general matter, be a prevailing party within the meaning of the EAJA merely because a court had remanded the action to the agency for further proceedings. See Hewitt v. Helms, 482 U.S. 755, 760, 107 S.Ct. 2672, 2675-2676, 96 L.Ed.2d 654 (1987). Indeed, the vast majority of the Courts of Appeals have come to this conclusion. See, e.g., Paulson v. Bowen, 836 F.2d 1249, 1252 (C.A.9, 1988); Swedberg v. Bowen, 804 F.2d 432, 434 (C.A.8, 1986); Brown v. Secretary of Health and Human Services, supra, at 880-881.

Second, the EAJA provides that an application for fees must be filed with the court "within thirty days of final judgment in the action." 28 U.S.C. § 2412(d)(1)(B) (1982 ed., Supp. V). As in this case, there will often be no final judgment in a claimant's civil action for judicial review until the administrative proceedings on remand are complete. See Guthrie v. Schweiker, 718 F.2d 104, 106 (C.A.4, 1983) ("[T]he procedure set forth in 42 U.S.C. § 405(g) contemplates additional action both by the Secretary and a district court before a civil action is concluded following a remand"). The Secretary concedes that a remand order from a district court to the agency is not a final determination of the civil action and that the district court "retains jurisdiction to review any determination rendered on remand." Brief for Petitioner 16, 16-17.

Thus, for purposes of the EAJA, the Social Security claimant's status as a prevailing party and the final judgment in her "civil action . . . for review of agency action" are often completely dependent on the successful completion of the remand proceedings before the Secretary. Moreover, the remanding court continues to retain jurisdiction over the action within the meaning of the EAJA and may exercise that jurisdiction to det rmine if its legal instructions on remand have been followed by the Secretary. Our past decisions interpreting other fee-shifting provisions make clear that where administrative proceedings are intimately tied to the resolution of the judicial action and necessary to the attainment of the results Congress sought to promote by providing for fees, they should be considered part and parcel of the action for which fees may be awarded.

In Pennsylvania v. Delaware Valley Citizens' Council, 478 U.S. 546, 106 S.Ct. 3088, 92 L.Ed.2d 439 (1986), we considered whether the costs of representation before federal and state administrative agencies in defense of the provisions of a consent decree entered under the Clean Air Act were compensable under the fee-shifting provision of that statute. Section 304(d) of the Clean Air Act provides for the award of a reasonable attorney fee in conjunction with "any final order in any action brought pursuant to" certain provisions of the Act. 42 U.S.C. § 7604(d). In Delaware Valley, we rejected the contention that the word "action" in the fee-shifting provision should be read narrowly to exclude all proceedings which could be plausibly characterized as "nonjudicial." We indicated that

"[a]lthough it is true that the proceedings [at issue] were not 'judicial' in the sense that they did not occur in a courtroom or involve 'traditional' legal work such as examination of witnesses or selection of jurors for trial, the work done by counsel in these two phases was as necessary to the attainment of adequate relief for their client as was all of their earlier work in the courtroom which secured Delaware Valley's initial success in obtaining the consent decree." 478 U.S., at 558, 106 S.Ct., at 3094.

Similarly, in New York Gas Light Club, Inc. v. Carey, 447 U.S. 54, 100 S.Ct. 2024, 64 L.Ed.2d 723 (1980), we held that under the fee-shifting provision of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-5(k), a federal court could award attorney's fees for services performed in state administrative and judicial enforcement proceedings. We noted that the words of the statute, authorizing "the court" to award attorney's fees "[i]n any action or proceeding under this title," could be read to include only federal administrative or judicial proceedings. 447 U.S., at 60-61, 100 S.Ct., at 2029-30. Looking to the entire structure of Title VII, we observed that Congress had mandated initial resort to state and local remedies, and that "Congress viewed proceedings before the Equal Employment Opportunity Commission and in federal court as supplements to available state remedies for employment discrimination." Id., at 65, 100 S.Ct., at 2031. Given this interlocking system of judicial and administrative avenues to relief, we concluded that the exclusion of state and local administrative proceedings from the fee provisions would clearly clash with the congressional design behind the statutory scheme whose enforcement the fee-shifting provisions was designed to promote. Ibid. See also Webb v. Dyer County Board of Education, 471 U.S. 234, 243, 105 S.Ct. 1923, 1928, 85 L.Ed.2d 233 (1985) (work performed in administrative proceedings that is "both useful and of a type ordinarily necessary to advance civil rights litigation" may be compensable under 42 U.S.C. § 1988); North Carolina Dept. of Transportation v. Crest Street Community Council, Inc., 479 U.S. 6, 15, 107 S.Ct. 336, 341, 93 L.Ed.2d 188 (1986).

We think the principles we found persuasive in Delaware Valley and Carey are controlling here. As in Delaware Valley, the administrative proceedings on remand in this case were "crucial to the vindication of [respondent's] rights." Delaware Valley, supra, at 561, 106 S.Ct., at 3096. No fee award at all would have been available to respondent absent successful conclusion of the remand proceedings, and the services of an attorney may be necessary both to ensure compliance with the District Court's order in the a ministrative proceedings themselves, and to prepare for any further proceedings before the District Court to verify such compliance. In addition, as we did in Carey, we must endeavor to interpret the fee statute in light of the statutory provisions it was designed to effectuate. Given the "mandatory" nature of the administrative proceedings at issue here, and their close relation in law and fact to the issues before the District Court on judicial review, we find it difficult to ascribe to Congress an intent to throw the Social Security claimant a lifeline that it knew was a foot short. Indeed, the incentive which such a system would create for attorneys to abandon claimants after judicial remand runs directly counter to long established ethical canons of the legal profession. See American Bar Association, Model Rules of Professional Conduct, Rule 1.16, pp. 53-55 (1984). Given the anomalous nature of this result, and its frustration of the very purposes behind the EAJA itself, Congress cannot lightly be assumed to have intended it. SeeChristiansburg Garment Co. v. EEOC, 434 U.S. 412, 418-419, 98 S.Ct. 694, 698-99, 54 L.Ed.2d 648 (1978). Since the judicial review provisions of the Social Security Act contemplate an ongoing civil action of which the remand proceedings are but a part, and the EAJA allows "any court having jurisdiction of that action" to award fees, 28 U.S.C. § 2412(d)(1)(A), we think the statute, read in light of its purpose "to diminish the deterrent effect of seeking review of, or defending against, governmental action," 94 Stat. 2325, permits a court to award fees for services performed on remand before the Social Security Administration. Where a court finds that the Secretary's position on judicial review was not substantially justified within the meaning of the EAJA, see Pierce v. Underwood, 487 U.S. 552, 563-568, 108 S.Ct. 2541, 2549-2552, 101 L.Ed.2d 490 (1988), it is within the court's discretion to conclude that representation on remand was necessary to the effectuation of its mandate and to the ultimate vindication of the claimant's rights, and that an award of fees for work performed in the administrative proceedings is therefore proper. See Delaware Valley, supra, at 561, 106 S.Ct., at 3096; Webb, supra, 471 U.S., at 243, 105 S.Ct., at 1928.

The Secretary mounts two interrelated challenges to this interpretation of § 2412(d)(1)(A). While the Secretary's contentions are not without some force, neither rises to the level necessary to oust what we think is the most reasonable interpretation of the statute in light of its manifest purpose. First, the Secretary argues that plain meaning of the term "civil action" in § 2412(d)(1)(A) excludes any proceedings outside of a court of law. Brief for Petitioner 12-13; Reply Brief for Petitioner 8-9. Of course, if the plain language of the EAJA evinced a congressional intent to preclude the interpretation we reach here, that would be the end of the matter. In support of this proposition, the Secretary points out that the " '[t]erm [action] in its usual legal sense means a suit brought in a court; a formal complaint within the jurisdiction of a court of law.' " Brief for Petitioner 13, n. 7, quoting Black's Law Dictionary 26 (5th ed. 1979). Second, the Secretary notes that Congress did authorize EAJA fee awards under 5 U.S.C. § 504(a)(1) (1982 ed., Supp. V) where an agency "conducts an adversary adjudication," and that an adversary adjudication is defined in § 504(b)(1)(C) as "an adjudication . . . in which the position of the United States is represented by counsel or otherwise." Under 28 U.S.C. § 2412(d)(3) (1982 ed., Supp. V) a court is empowered to award fees for representation before an agency to a party who prevails in an action for judicial review to "the same extent authorized in [[[5 U.S.C. § 504]](a) ]." Thus, the Secretary concludes that since benefits proceedings before the Secretary and his designates are nonadversarial, and a court is explici ly empowered to award fees for agency proceedings where such proceedings satisfy the requirements of § 504(a)(1), the principle of expressio unius est exclusio alterius applies, and a court may never award fees for time spent in nonadversarial administrative proceedings. See Brief for Petitioner 12-18; Reply Brief for Petitioner 7-12.

We agree with the Secretary that for purposes of the EAJA Social Security benefit proceedings are not "adversarial" within the meaning of § 504(b)(1)(C) either initially or on remand from a court. See Richardson v. Perales, 402 U.S. 389, 403, 91 S.Ct. 1420, 1428, 28 L.Ed.2d 842 (1971). The plain language of the statute requires that the United States be represented by "counsel or otherwise," and neither is true in this context. Nonetheless, we disagree with the conclusion the Secretary would draw from this fact. First, as Delaware Valley, Webb, and Carey indicate, administrative proceedings may be so intimately connected with judicial proceedings as to be considered part of the "civil action" for purposes of a fee award. This is particularly so in the Social Security context where "a suit [has been] brought in a court," and where "a formal complaint within the jurisdiction of a court of law" remains pending and depends for its resolution upon the outcome of the administrative proceedings. Second, we disagree with the Secretary's submission that a negative implication can be drawn from the power granted a court to award fees based on representation in a prior adversary adjudication before an agency. Section 2412(d)(3) provides that "[i]n awarding fees and other expenses under this subsection to a prevailing party in any action for judicial review of an adversary adjudication," the court may award fees to the same extent that they would have been available before the agency itself under § 504(a)(1). On its face, the provision says nothing about the power of a court to award reasonable fees for representation in a nonadversarial adjudication which is wholly ancillary to a civil action for judicial review. That Congress carved the world of EAJA proceedings into "adversary adjudications" and "civil actions" does not necessarily speak to, let alone preclude, a reading of the term "civil action" which includes administrative proceedings necessary to the completion of a civil action.

We conclude that where a court orders a remand to the Secretary in a benefits litigation and retains continuing jurisdiction over the case pending a decision from the Secretary which will determine the claimant's entitlement to benefits, the proceedings on remand are an integral part of the "civil action" for judicial review, and thus attorney's fees for representation on remand are available subject to the other limitations in the EAJA. We thus affirm the judgment of the Court of Appeals on this issue and remand the case to that court for further proceedings consistent with this opinion.

It is so ordered.

Justice WHITE, with whom THE CHIEF JUSTICE, Justice SCALIA, and Justice KENNEDY join, dissenting.

Notes