The opinion of the court was delivered by: GERRY
Plaintiff, Paul Baeder, has moved this court for an award of attorney's fees pursuant to the Equal Access to Justice Act, 28 U.S.C. § 2412 (EAJA). Plaintiff contends that he is entitled to such an award because he was a prevailing party in his social security appeal, and because the Government's position was not substantially justified.
Plaintiff filed an application for disability insurance benefits on November 17, 1982. The application was denied by the Secretary, both initially and on reconsideration. Plaintiff requested and received a de novo hearing before an Administrative Law Judge (ALJ). On May 27, 1983, the ALJ ruled that Mr. Baeder was not disabled within the meaning of the Social Security Act because he did not suffer from a severe impairment. The decision of the ALJ became the final decision of the Secretary of Health and Human Services (the Secretary) when it was approved by the Appeals Council on July 21, 1983.
On July 24, 1985, the Third Circuit affirmed this court's invalidation of the severity regulation. Baeder v. Heckler, 768 F.2d 547 (1985). Although the Circuit Court ruled that we did not have the authority to issue a nationwide injunction, it stressed that its opinion "compels this court [i.e., the Third Circuit] to overturn any denial of benefits made because the Secretary and the ALJ concluded that the applicant's impairment was not severe enough, without reference to vocational factors, to meet 20 C.F.R. § 404.1520(c)." Id. at 553 n.5.
On September 13, 1985, Edward Spell, Assistant United States Attorney, requested an order to show cause in the United States District Court for the District of New Jersey. The Secretary requested therein that each of the cases on the schedule annexed thereto be remanded for reconsideration in light of the Third Circuit opinion in Baeder. On December 3, 9 and 27, 1985, the Honorable Clarkson S. Fisher, Chief Judge of the District of New Jersey, signed a series of orders remanding numerous cases to the Secretary for review in accordance with Baeder.
According to the certification of James Katz, Esquire, the Secretary has also moved before the Third Circuit that any case which is an action appealing a finding of no severe impairment pursuant to § 404.1520(c) without the necessary consideration of vocational factors must also be remanded for adjudication in accordance with the Baeder decision. Similarly, Mr. Katz represents that the Secretary is promulgating new regulations to comply with the requirements of Baeder.
Plaintiff's motion for an award of attorney's fees is brought under the Equal Access to Justice Act, 28 U.S.C. § 2412(d), as amended and approved on August 5, 1985. According to the EAJA,
except as otherwise specifically provided by statute, a court shall award to a prevailing party other than the United States fees and other expenses, in addition to any costs awarded pursuant to subsection (a), incurred by that party in any civil action (other than cases sounding in tort), including proceedings for judicial review of agency action, brought by or against the United States in any court having jurisdiction of that action, unless the court finds that the position of the United States was substantially justified or that special circumstances make an award unjust.
28 U.S.C. § 2412(d)(1)(A) (emphasis added).
It is well settled in this Circuit that the EAJA applies to judicial review of actions brought pursuant to the Social Security Act, 42 U.S.C. § 405(g). Brown v. Secretary of Health and Human Services, 747 F.2d 878, 880 (3d Cir. 1984). A social security claimant, like any other EAJA claimant, must demonstrate that the two statutory prerequisites to an EAJA award have been met. First, the court must be able to conclude that the claimant was a "prevailing party." Second, after the claimant has "prevailed," the court must find that the position of the Government was not substantially justified, and that no special circumstances render an award unjust. Tressler v. Heckler, 748 F.2d 146, 149 (3d Cir. 1984).
Plaintiff Baeder and the Secretary are in sharp disagreement over the question of whether Baeder qualifies as a "prevailing party" for purposes of the EAJA. At the heart of their debate is the effect of the Third Circuit's opinion in Brown, supra, on the fee application at bar. In Brown, the Third Circuit specifically addressed the narrow question of whether a social security claimant who obtains a remand in the district court for a further administrative hearing is a "prevailing party" entitled to fees. In reaching its decision, the Circuit Court cited with approval the Second Circuit opinion in McGill v. Secretary of Health and Human Services, 712 F.2d 28 (2d Cir. 1983), cert. denied, 465 U.S. 1068, 104 S. Ct. 1420, 79 L. Ed. 2d 745 (1984), which held that an award of fees upon remand is not authorized by the EAJA. The Second Circuit in McGill observed that the ultimate relief a social security claimant desires is not simply vindication of a procedural right to a new hearing, but a final determination that he or she is entitled to benefits. While a favorable ruling on a petitioner's procedural claim, that is, the granting of a new hearing, may ultimately further a positive outcome on the merits of a petitioner's efforts to receive benefits, a victory on such a procedural claim does not establish the plaintiff as a prevailing party for the purpose of shifting attorney's fees. Id. at 29-30. In Brown, the Third Circuit adopted the Second Circuit view and agreed "that there is an important distinction between the victory achieved by a procedural due process litigant who secures a hearing and the success attained by a social security claimant whose case is remanded for further action by the Secretary." Brown, supra, 747 F.2d at 883.
In light of the language contained in the McGill and Brown opinions, the Government here contends that the receipt of benefits is the sine qua non of a social security claimant's right to recover fees under the EAJA. However, a closer look at the Brown and McGill opinions shows that the Government's view is unnecessarily restrictive. In Brown, the Third Circuit said that the receipt of benefits "renders a typical social security plaintiff a prevailing party." Brown, supra, 747 F.2d at 883. (Emphasis ...