High Court: Fee Awards Subject To Offset To Satisfy Debt Owed U.S. Government

WASHINGTON, D.C. - (Mealey's) A unanimous U.S. Supreme Court on June 14 reversed an Eighth Circuit U.S. Court of Appeals ruling and held that an attorney fees award is payable to the litigant; therefore, it is subject to an offset to satisfy the litigant's pre-existing obligation when a debt is owed to the government (Michael J. Astrue v. Catherine G. Ratliff, No. 08-1322, U.S. Sup.).

Commissioner of Social Security Michael J. Astrue petitioned the Supreme Court for review of the  Eighth Circuit ruling, arguing that the panel incorrectly ruled that attorney fee awards under the Equal Access to Justice Act (EAJA), 28 U.S. Code Section 2412(d), become the property of the prevailing party's attorney when assessed and may not be used to offset a plaintiff's debt.

Catherine G. Ratliff, an attorney who represented two Social Security claimants in separate civil actions challenging the denial of their Social Security benefits, argued at the briefing stage that the Supreme Court should have denied review because the matter is "a poor vehicle for resolving the question" Astrue was asking.

Justice Clarence Thomas wrote the opinion for the court, ruling that Ratliff's position was "irreconcilable" with the textual differences between reading of 28 U.S. Code Section 2412(d) and the Social Security Act (SSA), 42 U.S. Code Section 406(b).  "The fact that the government, until 2006, frequently paid EAJA fees awards directly to attorneys in SSA cases in which the prevailing party had assigned the attorney her rights in the award does not alter the court's interpretation of the act's fees awards."

In a separate, concurring opinion, Justice Sonia Sotomayor, joined by Justices John Paul Stevens and Ruth Bader Ginsburg, wrote that while they agree with the majority opinion, the conclusion the court reached did not answer whether Congress intended the government to deduct moneys from EAJA fee awards to offset a litigant's pre-existing and unrelated debt, as the U.S. Treasury Department began to do in 2005 pursuant to its authority under the Debt Collection Improvement Act of 1996.

"In the end, the government has no compelling response to the fact that today's decision will make it more difficult for the neediest litigants to find attorneys to represent them in cases against the government," Justice Sotomayor wrote.

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