Employment Law | Expert Legal Commentary

September 17, 2010

Astrue v. Ratliff: EAJA Attorney’s Fee Award Can Be Taken to Pay Government Debt

Astrue v. Ratliff

By Jeremy Gray of Zuber Lawler & Del Duca

Astrue v. Ratliff: EAJA Attorney’s Fee Award Can Be Taken to Pay Government Debt

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A warning to attorneys representing low income plaintiffs in actions against government agencies: If your client owes money to the government, you may not get paid, even if you win and receive an award of attorney’s fees pursuant to the EAJA. In Astrue v. Ratliff, 130 S.Ct. 2521 (2010), the U.S. Supreme Court found that an award of attorney’s fees to a prevailing party made pursuant to the Equal Access to Justice Act (“EAJA”) could be offset by the unrelated, pre-existing debt that the plaintiff owed to the government. The Court found that the attorney’s fee award belonged to the party, not his or her attorney, and therefore it could be subject to offset. The decision creates a significant disincentive for attorneys who represent low-income clients in these cases in reliance on being paid through the EAJA.

BACKGROUND

Attorney Catherine Ratliff successfully represented her client, Ruby Ree, in a lawsuit against the Social Security Administration for benefits. Ree and Ratliff subsequently filed a motion for attorney’s fees pursuant to 28 U.S.C. 2412(d), part of the Equal Access to Justice Act (“EAJA”). The federal district court granted that motion, which the government did not oppose, and awarded Ree $2,112.60 in attorney’s fees.

Before the U.S. paid the fee award, however, it discovered that Ree owed a pre-existing outstanding debt to the government that exceeded the amount of the fee award. The government moved to offset and partially satisfy Ree’s debt by the amount of the fee award. Ratliff intervened, claiming that as Ree’s attorney, the fee award belonged to her, not Ree, and therefore could not be used to offset Ree’s debt. Ratliff claimed that taking the fee award to pay toward Ree’s debt constituted an illegal seizure of Ratliff’s money in violation of the Fourth Amendment.

The district court disagreed with Ratliff, finding that EAJA fee awards are awarded to parties, not their attorneys, and therefore they could be used to offset the party’s government debt. Therefore, the district court found that Ratliff lacked standing to challenge the offset.

The U.S. Court of Appeals for the Eighth Circuit, however, agreed with Ratliff and reversed the district court’s decision. The Eighth Circuit held that Congress intended for attorney’s fees awarded under the EAJA to go to the prevailing party’s attorney, and therefore they “cannot be used to offset the parties’ debt to the government. Ratliff v. Astrue, 540 F.3d 800, 801 (8th Cir. 2008).

The Eighth Circuit’s ruling was directly contrary to a decision by the Fourth Circuit U.S. Court of Appeals, which had held that EAJA fees are payable to the prevailing party. Stephens v. Astrue, 565 F.3d 131 (4th Cir. 2009). The U.S. Supreme Court resolved this split between circuit courts in Astrue v. Ratliff, 130 S.Ct. 2521 (2010).

EAJA Attorney’s Fee Awards Belong to the Prevailing Party, Not Her Attorney

The EAJA provides that “… a court shall award to a prevailing party other then the United States fees and other expenses… incurred by that party…” 29 U.S.C. section 2412(d)(1)(A).

In a unanimous decision, the Supreme Court reversed the Eighth Circuit’s decision and found that EAJA awards for attorney’s fees are payable directly to the prevailing party, not his or her attorney and as such, are subject to offset. The Court found that the specific language of the EAJA was unambiguous in stating that the fee award is given to “a prevailing party,” which is the litigant herself, not the attorney. 130 S.Ct. at 2525. The Court noted that other provisions of the EAJA explicitly distinguish attorneys from prevailing parties, supporting the Court’s interpretation and application of this unambiguous statutory provision. Id. at 2527. Therefore, because the fees belong to the litigant, that award may be subject to offset against amounts the litigants owes to the government. Id.

CONCLUSION

Certainly, the Supreme Court cannot be faulted for interpreting the clear language of an unambiguous statute. However, this language, whether it accurately reflects Congress’ intent or not, may serve to frustrate the overall stated purpose of the EAJA, which is to improve and encourage access to courts for parties of modest means.

Subjecting an attorney’s fees award to debt recovery efforts may create a significant disincentive for attorneys to represent individuals in social security and similar government actions, especially if those individuals owe debt to the government. Because these individuals are generally of modest means, many attorneys take these cases solely in reliance upon an award of EAJA fees. The Ratliff case may give pause to those attorneys when presented with a client burdened by debt, no matter how strong their case.

Moreover, Congress enacted the EAJA to encourage private parties of modest means to challenge Government actions that have caused them unjust harm by enabling those individuals to recover the costs of bringing those challenges. If potential plaintiffs know that the Act can be used as a debt collection vehicle for the government, they may be reluctant to challenge those harmful government actions at all.

The Ratliff case inevitably raises the question of the slippery slope: If the government can seize an attorney’s fee award made pursuant to the EAJA in order to offset a party’s unrelated government debts, can it seize fee awards made to “prevailing parties” pursuant to other statutes, in other types of cases, for that same purpose? Attorneys should remain vigilant on the issue.