United States District Court, D. Arizona
G. Campbell United States District Judge
before the Court is Plaintiffs' renewed motion for
attorneys' fees under the Equal Access to Justice Act
(“EAJA”), 28 U.S.C. § 2412(d). Doc. 142. The
motion is fully briefed. Docs. 142, 153, 159. The Court will
grant the motion in part.
participates in Medicaid through the Arizona Health Care Cost
Containment System (“AHCCCS”), which administers
Arizona's Medicaid plan, its demonstration projects, and
certain state-only initiatives. On March 31, 2011, Arizona
submitted a request to the Secretary of Health and Human
Services for approval of a proposed demonstration project
under Section 1115 of the Social Security Act
(“SSA”). The Secretary may approve any Section
1115 demonstration project that, in her judgment,
“is likely to assist in promoting the objectives”
of specified SSA programs, including the Medicaid program. 42
U.S.C. § 1315(a). Arizona's proposed new project
covered the childless adult population that had been covered
by the previous 2001 demonstration project, but with
enrollment frozen at lower levels. It also included a
copayment rule which modified the 2001 demonstration project
by increasing copayments for the childless adult population.
On October 21, 2011, the Secretary approved the project for a
five-year period, through September 30, 2016.
brought this action in May 2012 to challenge the copayments
imposed on childless adults. Plaintiffs argued that the
Secretary's approval of the copayments violated the
Administrative Procedure Act (“APA”) and the SSA.
This Court granted Plaintiffs' motion for class
certification (Doc. 87), but denied their motion for a
preliminary injunction (Doc. 88). On February 7, 2013, the
Court determined that the Secretary's decision to approve
the project was arbitrary and capricious because she failed
to consider and address Plaintiffs' evidence and the
expert opinion of Dr. Ku. Doc. 102 at 8, 18-22. The Court
remanded the case to the Secretary for a new decision.
April 8, 2013, the Secretary reaffirmed her prior decision
and again approved Arizona's request. The parties briefed
renewed motions for summary judgment, and the Court entered
summary judgment in the Secretary's favor. Doc. 117. The
Court held that the Secretary had reasonably determined that
Arizona's proposed project met the Section 1115 factors,
and denied Plaintiffs' request for attorneys' fees
because it found that they were not “prevailing
parties.” The Ninth Circuit reversed that decision,
holding that Plaintiffs “are entitled to prevailing
party status with respect to the February 6, 2013 order
remanding the approval of the Medicaid demonstration project
to the Secretary.” Wood v. Burwell, 837 F.3d
969, 978 (2016).
the EAJA, the Court shall award attorneys' fees to a
prevailing party unless the United States shows that its
position was “substantially justified or that special
circumstances make an award unjust.” 28 U.S.C. §
2412(d)(1)(A); Gutierrez v. Barnhart, 274 F.3d 1255,
1258 (9th Cir. 2001). The Supreme Court's decision in
Hensley v. Eckerhart, 461 U.S. 424 (1983), sets
forth the analysis for attorneys' fees that applies to
EAJA cases. INS v. Jean, 496 U.S. 154, 161 (1990);
Sorenson v. Mink, 239 F.3d 1140, 1145 n.2 (9th Cir.
Ninth Circuit held that Plaintiffs are entitled to prevailing
party status. See Wood, 837 F.3d at 978. The Court
must now determine whether: (1) the government's position
was substantially justified, or (2) special circumstances
make an award of attorneys' fees unjust. 28 U.S.C. §
2412(d)(1)(A); see also Thangaraja v. Gonzales, 428
F.3d 870, 873-75 (2005). If both answers are negative, the
Court must also determine whether the attorneys' fees
request is reasonable.
government bears the burden of demonstrating substantial
justification.” Thangaraja, 428 F.3d at 874
(citing Gonzales v. Free Speech Coalition, 408 F.3d
613, 618 (9th Cir. 2005)). In the context of attorneys'
fees determinations, the Ninth Circuit has held that:
“‘Substantial justification' is equated with
‘reasonableness.'. . . The government's
position is ‘substantially justified' if it
‘has a reasonable basis in law and fact.'”
Ramon-Sepulveda v. INS, 863 F.2d 1458, 1459 (9th
Cir. 1988) (quoting Pierce v. Underwood, 487 U.S.
552, 566 n.2 (1988)); see also Al-Harbi v. INS, 284
F.3d 1080, 1085 (9th Cir. 2002).
this Court found the Secretary's initial decision to be
arbitrary and capricious and not supported by substantial
evidence is “a strong indication that the
‘position of the [Secretary] in this matter was not
substantially justified.'” See Thangaraja,
428 F.3d at 874 (quoting Al-Harbi, 284 F.3d at
1085). “Indeed, it will be only a ‘decidedly
unusual case in which there is substantial justification
under the EAJA even though the agency's decision was
reversed as lacking in reasonable, substantial and probative
evidence in the record.'” Id.
Secretary argues that “both the October 2011 and the
April 2013 [agency] approvals  had a ‘reasonable
basis in law and fact[, ]'. . . even if the former was
procedurally deficient[.]” Doc. 153 at 6. The Secretary
also argues that he “prevailed on every material issue
save one, ” and that “the sole issue on which he
did not prevail was reasonable.” Id. at 7-13.
Both arguments are unpersuasive.
Secretary's first argument can be reduced to a contention
that attorneys' fees may not be awarded under the EAJA
for procedural victories. But that contention is plainly
incorrect. Courts routinely award attorneys' fees under
the EAJA for procedural victories. See, e.g.,
Tobler v. Colvin, 749 F.3d 830, 834-35 (9th Cir.
2014) (Social Security Disability remand);
Rueda-Menicucci v. INS, 132 F.3d 493, 495 (9th Cir.
1997) (BIA remand); Newton-Nations v. Betlach, No.
03-cv-2506-PHX-ROS, at 4, 13 (D. Ariz. Aug. 22, 2014)
Secretary's second argument is more appealing on its
face, but ultimately unpersuasive. The Secretary argues that
the Court must “assess the case holistically, ”
even if the “suit contains multiple stages and rounds
of briefing, and even if the parties' postures on
individual matters during those phases may be more or less
justified.” Doc. 153 at 7 (citing Jean, 496
U.S. at 161-62 (internal quotations omitted)). “The
matter for the Court to decide at present, then, is whether
the government's position, as a whole, had a
reasonable basis in law and fact.” Id.
(emphasis in original). The Secretary goes on to argue that
when the balance of issues won is weighed against issues
lost, the government's position was substantially
in APA cases, however, often limit their focus to whether
evidence in the administrative file was properly considered
by the agency. See, e.g., Tobeler, 749 F.3d
at 834-35; Rueda-Menicucci, 132 F.3d at 495;
Flores v. Shalala, 49 F.3d 562, 564 (9th Cir. 1995).
In Flores, for example, a social security disability
claimant brought an action asserting that a decision of the
Secretary of Health and Human Services (HHS) denying benefits
was not supported by substantial evidence. 49 F.3d at 564.
The district court remanded for further proceedings.
Id. at 565. Following a decision on remand that the
claimant was disabled for a closed period, but not
thereafter, the district court denied claimant's motion
for fees. Id. On appeal, the Ninth Circuit held that
the district court improperly focused on post-remand
proceedings on the ultimate issue of disability, and should
instead have considered whether HHS was substantially
justified with respect to the procedural issue which the
court had remanded. Id. at 566. Applying the same
focus here, the Secretary's position cannot be
substantially justified given the Court's finding that it
was arbitrary and capricious.
Secretary contends that his position was reasonable, and thus
substantially justified, because no “pellucid
pronouncements on the Secretary's responsibilities
vis-à-vis objections to demonstration projects”
existed. Doc. 153 at 12. He argues that the Ninth Circuit has
held that “it is not fair to conclude that every
violation of a regulation or statute by an agency stamps its
position as unreasonable[, ]” and “[t]he
government may avoid EAJA fees if it can prove that the
regulation it violated was ambiguous, complex, or required
exceptional analysis.” Meinhold v. U.S. Dep't
of Def., 123 F.3d 1275, 1278 (9th Cir. 1997),
amended, 131 F.3d 842 (9th Cir. 1997). But contrary
to the Secretary's contention, the regulation violated
was not ambiguous, complex, or requiring exceptional
analysis. The regulation required the Secretary to consider
objections, and no evidence in the reviewable record
indicated that she did so. Indeed the Court found as much in
its February 2013 opinion, stating:
Here, as in Beno, the record contains no evidence
that the Secretary considered or responded to Plaintiffs'
substantive objections during the administrative process . .
. . [or] that the Secretary considered plaintiffs'
objections during the administrative process as she was
required to do (Beno, 30 F.3d at 1075) or that she
reasonably relied on her own expertise when she reached a
conclusion that runs counter to the expert opinion submitted
Doc. 102 at 15-18.
Secretary argues that this case is distinguishable from
Beno and Newton-Nations. Specifically, the
Secretary argues that unlike in Beno, where the
Secretary conceded that the information it failed to review
was relevant to her inquiry, the Secretary in this case
conceded no such thing. Doc. 153 at 12. “In short, the
Secretary reasonably believed that not every objection raised
during the administrative process merits an on-the-record
response, and reasonable minds may differ as to whether
Plaintiffs' objection in this case was the sort of
objection that did.” Id. The Secretary lost
the argument on relevance when the Court remanded the
decision for failing to consider relevant evidence. Doc. 102
at 14-15 (“Plaintiffs submitted the Ku Declaration to
DHHS as part of the administrative process . . . .
Plaintiffs' administrative submission related to an
important aspect of the Secretary's required analysis . .
. [and] the Secretary was required to address Plaintiffs'
submission and their contention that the opinion of Dr. Ku .
. . applied in this case.”). Plaintiffs' argument
that “unlike Newton-Nation ...