Tell Congress to stop Rx greed and cut prices now! Here’s how.
by Holly Yeager, AARP Bulletin, Published March 15, 2010
When Catherine Ratliff opened her small storefront law office in Hot Springs, S.D., 31 years ago, it didn’t take long for her caseload to fill up with disputes over Social Security disability claims.
“The word kind of got out that I was doing this, and there was a flood of people,” she recalls. “There were so many.”
Ratliff has continued that work ever since, mostly with low-income clients who come to her by way of the Department of Veterans Affairs Health Care System in Hot Springs and the Pine Ridge Indian Reservation just on the edge of town. “They have the whole gamut of problems,” she says. “Depression, anxiety, traumatic stress, pain conditions. And at least half the time, there are undiagnosed mental conditions.”
It’s the kind of work that most attorneys stay away from, because even if they win, the sums in dispute are small and their fees are, too. But Ratliff says she believes in serving people in need, pointing to three generations of Methodist ministers in her family as a source of her views.
Now Ratliff, 68 and semiretired, finds herself in the middle of her own legal dispute. Her case, about how lawyers who do such work are paid, was argued before the U.S. Supreme Court in February. It is one of three cases involving attorneys’ fees that the high court is considering this term, and, taken together, their impact could be far-reaching. Public-interest advocates worry that the outcome of the cases could make it harder for people with a wide range of legal disputes—over everything from disability coverage, veterans’ benefits and consumer issues to civil rights and employee benefit plans—to find attorneys willing to represent them.
Looking out for the little guy
In most legal disputes, each side pays its own lawyers for their work. But the cases before the Supreme Court all involve “fee shifting,” an approach that helps to ensure lawyers are paid for work on certain kinds of cases, even if the dollar value of the disputes is small. Under this structure, established through federal legislation, if a person is successful in their lawsuit, their attorneys’ fees are paid by their opponent.
Fee-shifting is most often used in cases where Congress wanted to encourage lawyers to work “on behalf of the little guys,” says Brian Wolfman, codirector of the Institute for Public Representation at the Georgetown University Law Center.
Laura Beth Nielsen, a sociology professor and director of legal studies at Northwestern University, agrees. “These are, for the most part, underrepresented people,” she says. “They’re poor, they’re children, and they’re often going up against the biggest defendant there is, the U.S. government, and everything we do to make that harder is a threat to everyone’s civil rights.”
Ratliff’s frequent Social Security disability work means the government often paid her fees when she won a case. That’s what she was expecting to happen when she represented Ruby Willow Kills Rhee, a member of the Oglala-Lakota (Sioux) tribe who had diabetes, arthritis and other physical and mental health issues. Kills Rhee was receiving disability benefits, but Ratliff argued that she should be getting more. A district court ruled that Kills Rhee was entitled to two months of additional benefits, and Ratliff asked for, and was awarded, attorneys’ fees of $2,112.60 for her work on the case.
But the Treasury Department stepped in and took that fee, applying it to an unrelated debt that Kills Rhee owed the government. “Screwed again,” Ratliff recalls thinking. Faced with the prospect of receiving nothing for her work on the case, Ratliff sued the Social Security Commissioner, trying to recoup her fee.
The case, Astrue v. Ratliff, hinges on the high court’s interpretation of the Equal Access to Justice Act (EAJA), passed by Congress in 1980 to improve access to the courts for people with Social Security and veterans disputes by requiring the government to pay their attorneys’ fees and other costs when it loses. Most of the fees paid by the Social Security Administration to lawyers under the law are small (the average was less than $3,600 in 2006). But the government points to the letter of the law, which says fees should be paid to “a prevailing party,” not the party’s lawyer, with the prevailing party then able to pay her attorney’s fees–or see those fees applied to an outstanding government debt.
A brief filed in the case on behalf of Ratliff by AARP and several other public-interest advocacy groups argues that in Social Security cases, EAJA fees “are the first—and sometimes the only—fees the attorney may receive.” The possibility that attorneys won’t be paid because of their clients’ unrelated debt would be a big disincentive to take such cases, these advocates say.
Rewarding exceptional work
A similar issue is at play in Perdue v. Kenny A., argued before the Supreme Court in October, which stems from a case brought by lawyers working for a nonprofit advocacy group and a private firm, all working without pay on behalf of children in Atlanta’s troubled foster care system.
“The kids were being housed in a really, really bad shelter where they were getting abused,” says Marcia Robinson Lowry, executive director of Children’s Rights, the national watchdog group that helped bring the case. ”Kids were in overcrowded and abusive foster homes, kids were being moved from place to place, and kids weren’t moving out of foster care.”
After a series of court proceedings, the state and advocates for the children reached an agreement that brought sweeping reforms to the city’s foster care system. A federal district court judge then calculated that the children’s attorneys were due $6 million in fees (based on the number of hours worked and reasonable hourly rates), to be paid by the state. The district court also accepted the lawyers’ request to increase that sum, adding what’s known as an “enhancement”—bumping the fee owed to the children’s attorneys to $10.5 million because the judge said the lawyers had brought an exceptional degree of skill, commitment and professionalism to the case.
The state of Georgia, led by governor Sonny Perdue, balked at the fee increase. Now the Supreme Court is weighing whether judges have the authority to increase attorneys’ fees based simply on the quality of their work and results. While it has become rare for lawyers to receive such hefty enhancements, the court could effectively eliminate them in cases brought under more than 100 federal laws that allow winners to recover their attorneys’ fees. (AARP has also filed a friend of the court brief in this case, on behalf of the Atlanta foster care children and their attorneys.)
Richard Samp, chief counsel at the Washington Legal Foundation, a conservative group that filed a brief in the case on behalf of the state of Georgia, says the fee-shifting system shouldn’t be used to generate windfalls for plaintiffs’ attorneys. He also argues that the current system encourages lawyers to spend too much time seeking enhancements, on top of the time already spent tracking hours and wrangling over fees. “You ought to try to make the process of computing those fees as simple as possible, so lawyers can spend time doing other things,” Samp says.
But Lowry stands by her decision to ask for the extra fees. “It was a very hard-fought case, and it presented some novel legal issues,” she says. “Organizations like mine need these fees to stay in business.”
Victory outside the courtroom
The case of Bridget Hardt, a 65-year-old woman living in Chesapeake, Va., will focus on a related question when the Supreme Court hears Hardt v. Reliance Standard Life Insurance Co. on April 26. Hardt worked as an executive assistant at Dan River Inc., a textile company, and after Hardt’s surgery for carpal tunnel syndrome, Reliance agreed to pay her disability for two years. During that time, her medical condition worsened, and she was awarded Social Security disability benefits. But at the end of the agreed two years, Reliance terminated her benefits, saying her condition wasn’t serious enough to warrant continued payment.
Hardt went to court, charging that Reliance had violated the Employee Retirement Income Security Act (ERISA), the federal law that governs the administration of most private health and pension plans, when it denied her benefits. A court sent her case back to the insurer, and said that if Reliance didn’t reconsider Hardt’s claim within 30 days, it would rule in her favor.
She was eventually awarded full benefits, but because that decision came from the insurance company rather than from a courtroom, the circuit court ruled that Reliance didn’t have to pay her attorney’s fees. The Supreme Court will consider whether Hardt is entitled to those fees. (AARP has filed a brief in her favor with the court.)
“You wind up using all your savings, all your credit cards, and you wind up in debt,” to fight this case, says Hardt, and even after winning, “you don’t get attorneys fees. I can see why a lot of people wouldn’t even attempt it.”
Hardt’s lawyers argue that ERISA “expressly authorizes an award of fees and costs.” But lawyers for the insurance company point to an earlier Supreme Court ruling that such fees are only awarded to a “prevailing party,” and that Hardt’s disability claim was decided by the insurance company, not the court.
Georgetown professor Wolfman, who has worked with Hardt’s lawyers on her case, is especially troubled by a circuit court ruling that Hardt’s lawyers–even after getting a court order that effectively forced the insurance company to give Hardt her disability benefits—shouldn’t be reimbursed for their work. Knowing that was a possibility, Wolfman says, “what lawyer would take that case?”
Hardt’s main lawyer, Ann Sullivan, agrees: “I’m a member of a firm, and I can’t take cases that don’t have a reasonable prospect of getting paid.”
But Ratliff, pressed on what she would have done if her fees had been at risk throughout her three decades of working on disability cases for poor Native Americans and veterans, hesitates for a moment. “You know what,” she says. “I would probably take them anyway.”
Holly Yeager lives in Washington, D.C.
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