A federal appeals court has rejected an attempt by a disability rights law firm to sue the Social Security Administration for failing to reimburse it for legal fees it was owed for helping clients obtain Social Security Disability Insurance benefits.
“The failure of the SSA to deduct the fees that the plaintiffs owes the lawyers may be wrong on the part of the SSA. But the existence of a wrong – even a statutory wrong – by the government, does not, without more, waive sovereign immunity,” the U.S. Court of Appeals for the Second Circuit wrote in an opinion published March 21 [PDF].
The Social Security Act sets strict statutory guidelines on how much attorneys can recover in legal fees when they successfully represent SSDI claimants.
In 2012, Binder & Binder successfully assisted an individual become approved for benefits, but the SSA failed to withhold $6,000 in legal fees owed to the firm. The next year, that individual applied for Chapter 7 bankruptcy, where he successfully wiped out his owed legal fees.
Binder & Binder subsequently sought to reopen the bankruptcy proceeding to recover the fees, which was unsuccessful. It also filed a lawsuit against the SSA, which it joined with another case alleging similar facts, on the basis that the Social Security Act’s legal fees provision constituted a waiver of sovereign immunity, which normally bars private private parties from suing federal agencies.
Both the U.S. District Court for the Eastern District of New York and the Second Circuit, citing decisions from the Third and Eighth Circuits, disagreed, effectively barring Binder & Binder from any legal avenue for obtaining the legal fees.
“We realize that our holding today ‘may leave some aggrieved parties without relief, but that is inherent in the doctrine of sovereign immunity,” the Second Circuit wrote. “That does not mean the plaintiffs do have a genuine grievance. As the government acknowledged at oral argument, the SSA does make ‘inadvertent mistakes…We can hope that the agency and Congress will consider fashioning remedies for those injured by such mistakes when the federal court cannot.”