Sovereign Immunity Saves SSA From Its Own Blunder, Bilks Lawyers

In a case that will actually make some people take sides with lawyers against the Social Security Administration, the Second Circuit recently found that applicable federal law of Sovereign Immunity shields the SSA from suit.

There aren't too many cases out there where people can agree that lawyers got the short end of the stick, but we think we might have a contender here.

Binder and Binder

The tax law firm Binder and Binder represented two clients in separate cases before the Social Security Administration and successfully brought each of those cases to amicable resolutions with each client receiving a sum from the SSA. Under 42 U.S.C. sec 406(a) -- part of the Social Security Act -- successful representatives (i.e., lawyers) "shall" be compensated for their services through deductions from payments that their clients are entitled to receive.

In both cases, Binder's clients received payments from the SSA, but no deductions were made before the clients took possession. The Binder firms were not paid for their services.

Sovereign Immunity

Binder and Binder sued for fees under a theory that 42 U.S.C. sec. 406(a) constituted a waiver of general sovereign immunity from suit because it contained the imperative word "shall" when referring to the payments that must be deducted from the sum that claimants received from the federal government. In both client cases, the courts found that Binder's arguments were unavailing. Both district courts concluded that 42 U.S.C. sec 406 did not amount to a waiver of sovereign immunity and thus, the defendants' motions for summary judgment were granted.

No Waiver

As unfortunate and unfair as the facts appeared to be, the circuit court agreed with the conclusions of the lower district courts. Part of the problem was that even though the SSA was under a duty to deduct the funds and pass them to Binder before it sent a check to the claimants, the relevant statute did not constitute an "unequivocally expressed statutory waiver" of sovereign immunity against the government.

Sucks for You

Although the government clearly caused Binder's injury, the fact remained that the debt was actually the clients' debt, not the governments. In order to place the government on the hook, Binder would have to find that an express waiver existed in the relevant federal law. Since none was presented (or likely even exists), Binder is left with a means of relief.

If you represent claimants before the SSA, this line of cases should remind you to follow your client's case at the SSA and kindly remind them to deduct your fee from the client's sum. It's your money after all, and you certainly can't depend on the government to reliably give it to you.

Related Resources:

• Law Firm Stumbles in 2nd Circuit Fees Dispute (Courthouse News Service)
• Little Tucker Act Doesn't Waive Sovereign Immunity for FCRA Suit (FindLaw's Supreme Court of the US Blog)
• If You've Been Denied Social Security Benefits (FindLaw's Learn About the Law)