author: JAMES McGIRR KELLY, District Judge.

text:
    UNITED STATES of America v. Joseph G. DiBONA, et al.
    Civ. A. No. 83-1311.
    United States District Court, E.D. Pennsylvania.
    Nov. 9, 1984.
    Dennis C. Egan, U.S. Dept, of Justice, Washington, D.C., for plaintiff.
    Bernard L. Shapiro, Philadelphia, Pa., for defendants.
   MEMORANDUM AND ORDER

JAMES McGIRR KELLY, District Judge.

Defendants Joseph DiBona and David Rights were employed as the President and Secretary-Treasurer respectively of RDL, Inc. RDL, Inc. is also a named party to this action. They have been charged with, inter alia, violations of 31 U.S.C. § 3729 prohibiting the making of false claims for payment by the United States government.

Defendants have filed a motion for reconsideration of our Order granting partial summary judgment in favor of plaintiff.

Prior to the commencement of this civil action, DiBona and Rights were indicted and charged with three counts of making false statements to the government in violation of 18 U.S.C. § 1001. The two defendants entered guilty pleas on these charges.

RDL, Inc. is engaged in defense contract work as a subcontractor. Among the many requirements the government imposes upon defense contractors is the obligation to file certificates which certify that the cost and pricing data submitted with the proposal was accurate, complete and current. If this certificate was not filed, RDL would have been statutorily barred from receiving payment on its work. The evidence showed that the defendants inflated the actual number of hours worked. After pleading guilty to making false statements, this action was brought under the False Claims Act, 31 U.S.C. § 3729 based upon the same operative facts to which defendants pled guilty to in the criminal action.

Section 3729 reads in part,

... [A] person not a member of an armed forces of the United States is liable ... if the person
(1) knowingly presents or causes to be presented to an officer or employee of the government or a member of an armed force a false or fraudulent claim for payment or approval; ____

The government moved for partial summary judgment against the defendants arguing that they were estopped from denying their liability under the False Claims Act because of their guilty pleas in the antecedent criminal proceeding.

The court granted the motion as to DiBona and Rights only. It excluded RDL, Inc. holding that it had not been found guilty in the antecedent proceeding. RDL was free to deny its liability in the civil proceeding.

The government asks us to reconsider the legal grounds upon which the decision was made. It is their position that RDL is liable, not on the theory of collateral estoppel, but rather on the principal of respondeat superior.

DiBona and Rights continue to contend that the doctrine of collateral estoppel is inapplicable since the elements of the antecedent criminal action are different from the present civil action.

Part I of the discussion will address DiBona and Rights’ claim, Part II will discuss the doctrine of respondeat superior as applied to RDL. Part III deals with the government’s motion to strike defendants’ affidavit.

Part I — Partial Summary Judgment Against DiBona and Rights.

Collateral estoppel is the principal which bars relitigation between the same parties issues actually determined at a previous trial. When an ultimate issue of fact has once been determined by a valid and final judgment, that issue is precluded from again being litigated between the same parties in any future lawsuit. Ashe v. Swenson, 397 U.S. 436, 443, 90 S.Ct. 1189, 1194, 25 L.Ed.2d 469 (1970). Furthermore, it is well established that prior criminal convictions may work an estoppel in favor of the government in a subsequent civil proceeding. Emich Motors Corp. v. General Motors Corp., 340 U.S. 558, 568, 71 S.Ct. 408, 413, 95 L.Ed. 534 (1951).

DiBona and Rights pled guilty to submitting false statements in violation of 18 U.S.C. § 1001. It reads

Whoever ... knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or device a material fact or makes any false fictitious or fraudulent statements ... shall be fined not more than $10,000 or imprisoned not more than five years or both.

The issues determined in the criminal action were that the defendants knowingly made a false statement setting forth the costs incurred and anticipated to be incurred in performance of the contracts.

Defendants stress that the only issue decided was that of whether a false statement was made. 31 U.S.C. § 3729(1) is a provision relating to false claims and therefore the court erred in granting plaintiffs motion since this issue was not before the court in the earlier action.

While at first blush such reasoning seems persuasive, a closer examination of the elements of the offense coupled with the well developed case law of this circuit yields to a different conclusion.

The elements necessary to establish liability under § 3729(1) are:

(1) knowingly presenting or causing to be presented;
(2) to a government officer or employee, or member of the armed forces;
(3) a false claim for payment or approval.

The real issue is whether the false statement also amounts to a false claim.

Two cases which are not dissimilar to these facts are instructive on this issue. In United States v. Hibbs, 420 F.Supp. 1365 (E.D.Pa.1976); rev’d on other grounds, 568 F.2d 347 (3d Cir.1977) defendant was a real estate broker who was convicted on criminal charges of filing false statements with the Federal Housing Administration (FHA). Hibbs acted as a broker in the sale of a number of properties for which the buyers applied for FHA mortgages. Prior to issuing an FHA backed mortgage, the agency assigns an appraiser to inspect the property and determine if its condition meets the agency’s specifications. Often times the appraiser requires the broker to obtain certification from a contractor that the structure complies with these FHA guidelines. The FHA will not issue a mortgage on the property without such certification.

Hibbs filed false certificates verifying the structure. Partially due to the substandard conditions of the houses, the homeowners defaulted on the mortgages requiring the FHA to reimburse the mortgage holders.

Hibbs was convicted on criminal charges of filing false statements. The government then brought suit under the False Claim Act. The court held:

Hibbs’ conviction on the criminal charges estops him from disputing in this suit that he caused to be submitted to the FHA false certificates as to the conditions [of the houses] which are in issue in this case for the purpose of influencing action by the FHA.

Hibbs, 1370.

The court went on to hold that the false claim was the claim for reimbursement by the mortgagee. Even though an innocent party received reimbursement, it was a false claim since the mortgage would not have been issued but for the false certificates filed by Hibbs. Id. at 1371. Citing United States v. McNinch, 356 U.S. 595, 78 S.Ct. 950, 2 L.Ed.2d 1001 (1958); United States v. Tieger, 234 F.2d 589 (3d Cir.1956), cert. denied, 352 U.S. 941, 77 S.Ct. 262, 1 L.Ed.2d 237 (1956); United States v. Veneziale, 268 F.2d 504 (3d Cir.1959).

Defendants’ situation is similar to Hibbs. Both were convicted of filing false statements. As in Hibbs, had DiBona and Rights not filed the necessary certificates, they would have been statutorily unable to receive payment on their work. The facts establish a nexus between payments to be received from the government and the filing of the false statement.

The Hibbs decision does not stand alone in our circuit. In United States v. Bornstein, 361 F.Supp. 869 (D.N.J.1973), rev’d on other grounds, 504 F.2d 368 (3d Cir.1974), cert. granted 420 U.S. 906, 95 S.Ct. 823, 42 L.Ed.2d 835 modified, 423 U.S. 303, 96 S.Ct. 523, 46 L.Ed.2d 514 (1976), vacated and remanded, 530 F.2d 964 (3d Cir.1976) defendants pleaded guilty to filing false statements with the government. Like defendants here, they were engaged in defense work supplying materials which, although free of material defect, were falsely marked to conform to the government’s specifications.

The court held that it was inescapable that defendants had violated the False Claim Act by knowingly affixing false markings to the materials and by certifying that all materials furnished conformed to government specifications. This action caused the false claims to be presented to the United States for payment. Bornstein, 874. Again, the nexus the court found was the filing of a false statement and the ability to participate in and be paid for government contract work. The false statement is the necessary first and foremost step that needs to be taken. Were it not for the filing of defendants’ false certification, this issue would not even be before the court for they would have been unable to participate in the contract work. The false statement and the false claim are two sides of the same coin, issues which arise out of the same core of operative facts. As the Supreme Court said in United States v. Neifert-White, 390 U.S. 228, 88 S.Ct. 959, 19 L.Ed.2d 1061 (1967), “an action which has the effect of inducing the government to part with money would be a claim under this Act.” Id. at 232, 88 S.Ct. at 961. Collateral estoppel will properly lie against the defendants, DiBona and Rights, on the issue of false claims. Hibbs, supra; Bornstein, supra.

Defendants’ conviction under 18 U.S.C. § 1001 was to contract numbers DAAA-25-72-A-0578/BA04 and 86RA-DQ7605/(F16). Defendants are estopped on the issue of liability as to these two contracts only. Since this is a partial summary judgment, defendants are free to fully litigate the issue of damages. To recover anything beyond the statutory penalty of $2,000 the government must prove that it sustained damages by reason of the false claim. United States v. Klein, 356 F.2d 983 (3d Cir.1966). Additionally, the government must show that defendants submitted their invoices to the general contractor for payment.

Lastly, defendants assert that the law mandates a finding of intentional fraudulent conduct on their part before liability attaches under § 3729(1). The specific words “intent to defraud” are found in subsections 4 and 5 of the False Claim Act. Defendants are charged with violation of subsection (1). This subsection does not address “intent to defraud”, it reads:

(1) Knowingly presents, or causes to be presented, to an officer or employee of the government or a member of an armed force a false or fraudulent claim for payment or approval, (emphasis added)

The drafters specifically used the disjunctive form of “or” rather than “and”. The legislatures could have written in, had they chosen to, the requirements of “intent to defraud”, yet it is absent from the language of § 3729 until subsection 4. The word “knowingly” is the first requirement of subsection (1). This issue is not one of first impression.

Five of the eleven circuits have spoken directly on whether specific intent to defraud is a necessary element of this specific violation, including the Third Circuit in U.S. v. Rohleder, 157 F.2d 126 (1946) (evidence was sufficient to show that defendant knew that the bids being submitted for Navy approval were not bona fide). All five cases have held that the government is required to prove that defendants knew the claims to be false.

Part II — RDL, Inc.

It seems but a truism to state that corporations may act only through persons. United States v. Hougland Barge Line, Inc., 387 F.Supp. 1110 (W.D.Pa.1974). It follows that the fraud of an officer of the corporation may be imputed to the corporation when his conduct was (1) in the course of his employment and (2) for the benefit of the corporation. The third circuit has held that an officer acting for the corporation may make that corporation vicariously liable under the doctrine of respondeat superi- or. Donsco, Inc. v. Casper Corp., 587 F.2d 602 (3rd Cir.1978).

DiBona was the highest ranking officer of the corporation. Rights was its Secretary-Treasurer. The apex of power in RDL, Inc. was vested in these two men. The factual questions concerning the scope of their authority and whether benefits inured to RDL, Inc. are not present here.

DiBona and Rights point to United States v. Kates, 419 F.Supp. 846 (E.D.Pa.1976) for the proposition that collateral estoppel applies only to the defendants who pleaded guilty and not to their principals. This court believes that the defendants miscomprehend the holding of Kates.

In Kates numerous defendants were brought to trial for violations of the False Claims Act. In an antecedent criminal proceeding some of the defendants were granted immunity and were required to testify against the others on conspiracy charges.

The court held that admissions of filing false claims by those granted immunity in the criminal action could be used against them in the civil action to estop them from denying liability. Furthermore, in one instance, the corporation was held liable through the action of its president even though the corporation was not convicted on criminal charges.

The case law supports the government’s position that RDL, Inc. may not now deny its liability after its top officers, acting through the corporation, admitted to violations of the False Claims Act.

Part III

Through an Order dated June 29, 1984 the court inadvertently ordered defendants’ Exhibit 5 to be struck from the pleadings. That portion of the Order will be vacated. Defendants’ motion for summary judgment on the basis of exhibit 5 (an affidavit) was denied in that same Order. Again, defendants ask the court to grant summary judgment on the basis of this affidavit.

The affidavit does not make their false statements truthful, nor can it overturn their guilty pleas. It is relevant only to the issue of damages which is not before the court at this present moment. Defendants will have an opportunity in the future to present their argument on the lack of any causal connection between their action and the damages suffered by the United States government. The defendants’ motion for summary judgment will be denied.

      . This was required of RDL by 10 U.S.C. § 2306(f).

      . Transcript of Change of Plea Hearing, Criminal No. 82-172.

      . RDL, Inc. was indicted but the charges were withdrawn as part of an arrangement with the two defendants.

      . The necessary fourth element is one going to the damages. This issue will not be affected by the court's ruling today.

      . "Thus the wrong of the defendant was an important, even an essential factor in subjecting the government to an enforceable demand for money. [I]t has long been settled that a fraudulently induced contract may create liability under the False Claims Act when that contract later results in payment thereunder by the government, whether to the wrongdoer or someone else.” Veneziale, 505.

      . The government’s briefs and complaint contain errors as to the contract codes. The government has referred to DA04 instead of BA04 on occasion when indicating the contract number. However, the numbers proceeding the slash have been correct. The government in some of its briefs has correctly identified the contracts in question. Defendants pleaded guilty to violations associated with contracts DAAA-25-72-A-0578/BA04 and 86RA-DQ-67605/(F-16) only.

      . It is not necessary that the wrongdoer be in a direct contractual relationship with the government in order to be liable under this act. Bomstein, supra.

      . Other circuits which agree with this interpretation are, the seventh, U.S. v. Hughes, 585 F.2d 284 (1978); the second, U.S. v. Foster Wheeler Corp., 316 F.Supp. 963 (S.D.N.Y.1970), modified on other grounds, 447 F.2d 100 (1971); the sixth, U.S. v. Ekelman & Associates, Inc., 532 F.2d 545 (1976); the fifth, U.S. v. Aerodex, 469 F.2d 1003 (1972).

      . 10 W. Fletcher, Cyclopedia Corporation § 4886, p. 399 (rev. ed. 1978).


source: Caselaw Access Project

author: BRITT, Chief Judge.

license: Public Domain

text:
    Mary E. DUNN, Plaintiff, v. Margaret M. HECKLER, Secretary of Health and Human Services, Defendant.
    No. 83-438-CIV-5.
    United States District Court, E.D. North Carolina, Raleigh Division.
    Jan. 17, 1985.

      Gregory C. Malhoit, E. Central Community Legal Services, Inc., Raleigh, N.C., for plaintiff.
    Gary H. Clemmons, Asst. U.S. Atty., Raleigh, N.C., for defendant.
   ORDER

BRITT, Chief Judge.

This matter is before the Court on plaintiff’s motion for an award of attorney fees pursuant to the Equal Access to Justice Act (EAJA). See 28 U.S.C. § 2412(d)(1)(B).

This civil action was filed on April 25, 1983, after defendant administratively denied plaintiff’s claims for Disability Insurance Benefits and Supplemental Security Income Benefits. Plaintiff and defendant filed cross-motions for summary judgment which were referred to Magistrate Charles K. McCotter, Jr., for his recommendation pursuant to 28 U.S.C. § 636(b)(1)(B).

On October 18, 1984, Magistrate McCotter issued an Order remanding this matter to the Secretary for further proceedings consistent with the substance of his Order. Plaintiff filed objections to the Magistrate’s Order, contending that the findings and conclusions contained in the memorandum mandated reversal for payment of benefits and not simply remand. Upon review, the Court concluded that the plaintiff’s motion for summary judgment should be granted and directed the defendant to award benefits to the plaintiff.

The EAJA permits an award of attorney fees to a qualified prevailing party, other than the United States, in civil actions brought by or against the United States “unless the Court finds that the position of the United States was substantially justified or that the special circumstances make an award unjust.” 28 U.S.C. § 2412(d)(1)(A).

Plaintiff contends that the EAJA is applicable to Social Security proceedings despite the fee provisions in the Social Security Act; that she was the prevailing party; that she qualified for this relief in terms of her financial need; and that such an award is appropriate in her case because defendant’s position was not substantially justified. After a review of the record, the Court concludes that plaintiff is entitled to attorney fees under the EAJA.

Plaintiff’s application for attorney fees under the EAJA is a request that her attorney fees be paid by the government. The attorney fee provisions of the EAJA apply to services rendered in court in Social Security cases. Guthrie v. Schweiker, 718 F.2d 104 (4th Cir.1983). The record shows that the plaintiff is the prevailing party and financially qualified for relief. The question becomes whether the defendant’s position was substantially justified.

Ordinarily the government’s position in the district court is substantially justified if the United States Attorney does no more than rely on an “arguably defensible record.” Guthrie v. Schweiker, 718 F.2d at 108. The finding that a final decision of the Secretary is not supported by substantial evidence raises no presumption that the government’s position was not substantially justified. Id.; Bennett v. Schweiker, 543 F.Supp. 897 (D.D.C.1982).

The government has the burden of showing substantial justification for its position. Alspach v. District Director of Internal Revenue, 527 F.Supp. 225 (D.Md.1981). The government must show that the position had a reasonable basis both in law and fact. Smith v. Heckler, 739 F.2d 144 (4th Cir.1984); Trujillo v. Heckler, 582 F.Supp. 701 (D.Col.1984); Zimmerman v. Schweiker, 575 F.Supp. 1436 (E.D.N.Y.1983). The administrative record may be so deficient that the government may not reasonably rely on it. Guthrie v. Schweiker, supra. The Court’s task here is made more difficult because the government has not responded to plaintiff’s motion for counsel fees.

The government’s position in this case was unreasonable and unjustified in at least three ways. Magistrate McCotter’s extensive memorandum found that the ALJ (1) failed to properly consider the opinion of plaintiff’s treating physician; (2) failed to properly evaluate plaintiff’s congestive heart failure in light of her other impairments, especially her hypertension; and (3) improperly applied the medical-vocational guidelines (grids).

In reviewing the magistrate’s order and directing the award of benefits, the Court concluded that “the evidence of plaintiff’s disability is overwhelming.” The Court now finds the government’s position was not substantially justified, as it was not based on an arguably defensible administrative record. Id. There are no “special circumstances” which would make an award of attorney fees unjust. Accordingly, the Court concludes that an award of attorney fees under the EAJA is proper. The remaining issue before the Court is the amount of the award of attorney fees.

In cases involving award of attorney fees, the Fourth Circuit has held that the guidelines established in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir.1974), must be followed. Barber v. Kimbrell’s, Inc., 577 F.2d 216 (4th Cir.1978), cert. denied, 439 U.S. 934, 99 S.Ct. 329, 58 L.Ed.2d 330 (1978). • The utilization of the Johnson factors has been modified by the Supreme Court decisions in Hensley v. Eckerhart, 461 U.S. 424, 103 S.Ct. 1933, 76 L.Ed.2d 40 (1983), and Blum v. Stenson, 465 U.S. 886, 104 S.Ct. 1541, 79 L.Ed.2d 891 (1984). The first step in this evaluation is to determine the number of hours reasonably expended and multiply that number times the customary fee for similar work. Anderson v. Morris, 658 F.2d 246 (4th Cir.1981); Blum v. Stenson, supra. In its discretion, the Court may consider a number of factors in determining a reasonable hourly rate, including the experience and skills of the attorney, the quality of representation, the novelty and complexity of the issue, and the results obtained. Id. Also the court should consider, to the extent applicable, the Johnson factors. Redic v. Gary H. Watts Realty Co., 586 F.Supp. 699 (W.D.N.C.1984). The Court will now utilize the Johnson factors in light of Hensley and Blum to determine whether the claimed rate and number of hours and their product are reasonable.

The itemized time sheet which plaintiffs counsel has submitted shows a total of 44 hours of attorney time and seeks compensation at the rate of $75 per hour. Plaintiff seeks $200 in expenses for a medical-vocational expert witness who reviewed plaintiffs case. Plaintiff also seeks to multiply the base attorney fee which may be awarded by the court by a factor of 25%, primarily because of preclusion of other employment and time limitations imposed by the client. While these factors alone do not justify an upward adjustment of a reasonable base fee, they can be pertinent in determining whether the claimed rate and number of hours are reasonable. Blum v. Stenson, supra.

Based upon review of counsel’s affidavit, the Court concludes that counsel reasonably expended 44 hours in the conduct of this litigation. Based on a survey of hourly rates recently conducted by the North Carolina Bar Association and other awards under the EAJA, a reasonable rate of $75 per hour can be used. In the absence of other factors, this rate is the maximum allowable under the EAJA. 28 U.S.C. § 2412(d)(2)(A)(ii). Accordingly, the base amount is computed as follows: 44 hours times $75 equals $3,300.00. The Court will now review the remaining Johnson and Barber factors to determine if the base amount is reasonable.

1. The novelty and difficulty of the questions raised

This action involved neither novel nor difficult issues.

2. The skill required to properly perform the legal services rendered

Social Security litigation requires a certain degree of specialized expertise and skill. See Blankenship v. Schweiker, 676 F.2d 116 (4th Cir.1982). Counsel’s memorandum effectively aided the court in reviewing the administrative record. However, this factor alone does not require an adjustment in fee.

3. The attorney’s opportunity costs in pressing the instant litigation

Plaintiff’s counsel is an attorney employed by East Central Community Legal Services, a federally-funded legal services program charged with providing civil legal services to over 93,000 low-income citizens in a five-county area. The legal services program employs only eight attorneys. Because of its limited staff, the legal services agency is not able to represent all low-income persons who request the program’s services. Therefore, there has been some opportunity cost to plaintiff’s counsel in this litigation.

4. The customary fee for like work. See supra

5. The attorney’s expectations at the outset of the litigation

Although the evidence of plaintiff’s disability is overwhelming, the plaintiff had lost twice at the administrative level. The expectation of success must have seemed questionable.

6. The time limitation imposed by the client or circumstances

Although counsel suggests delay in other litigation occasioned by the time spent on this action, nothing in the record reflects severe time limitations resulting in pressured working conditions for counsel.

7. The amount in controversy and the results obtained

Counsel was completely successful in obtaining the relief requested, which results in a substantial award for the plaintiff. For a disabled individual with little or no income, the beneficial results of a favorable decision are obvious. The hours reasonably expended by plaintiffs counsel in pursuing all of her theories are properly includable in the basis for making the award. Hensley v. Eckerhart, supra.

8. The experience, reputation, and ability of the attorney

Plaintiffs counsel has over eleven years of experience as an attorney. His work in this case is very competent.

9. The undesirability of the case within the legal community in which the suit arose

Representation of clients in Social Security actions' is not undesirable within the legal community.

10. The nature and length of the professional relationship between attorney and client

This is not relevant to this case, thereby not requiring any adjustment.

11. Whether the fee is fixed or contingent

In a Social Security case, there are two means by which an attorney can recover counsel fees for pursuit of court action. Under 42 U.S.C. § 406(b)(1), counsel can recover as attorney fee no more-than 25% of the past-due benefits when the court renders judgment favorable to the claimant. Pursuant to the EAJA, counsel for a prevailing party may recover attorney fees unless the position of the United States was substantially justified or circumstances make an award unjust. The Court has considered this factor only in determining the reasonableness of the base fee, because this is not a case of “exceptional success.” Hensley v. Eckerhart, supra; Blum v. Stenson, supra.

12. Attorney fee awards in similar cases

In counsel fee awards under § 406, the total fee which may be awarded is 25% of the past-due benefits. 42 U.S.C. § 406(b)(1); Guthrie v. Schweiker, 718 F.2d at 108, n. 11; Morris v. Social Security Administration, 689 F.2d 495 (4th Cir.1982). The court has not been notified of the amount of past-due benefits herein. However, counsel presently is not pursuing fees under § 406(b)(1). He is seeking attorney fees under the EAJA.

The EAJA and § 406(b)(1) differ in purpose. Section 406(b)(1) limits the amount of attorney fee from funds which otherwise would have gone to the claimant as benefits. The EAJA is a fee-shifting statute. If attorney fees are awarded under the EAJA, they are in addition to the amount of judgment and not in diminution of the claimant’s benefits. Watkins v. Harris, 566 F.Supp. 493 (E.D.Pa.1983).

The question arises whether an EAJA award of counsel fees is limited by § 406 and thereby cannot exceed 25% of the past-due benefits. This Court concludes that as long as there is no duplication of fee award, there is no provision in the EAJA that would limit counsel’s award to 25% of past-due benefits. See Berman v. Schweiker, 531 F.Supp. 1149 (N.D.Ill.1982), wherein the court awarded fees under the EAJA where prevailing counsel was not otherwise entitled to an award under § 406(b)(1) because the relief obtained did not include reimbursement of past-due benefits.

Where the fees are allowed under the EAJA, plaintiff’s counsel still would be entitled to an award under 42 U.S.C. § 406 allocable to his services during the administrative proceedings, because the EAJA does not award fees for work at the administrative level in Social Security-cases. Guthrie v. Schweiker, supra. However, under § 406, the combined award for counsel fees for the administrative and court proceedings cannot exceed 25% of the past-due benefits. Morris v. Social Security Administration, supra. Within the same 25% limitation, counsel may also be eligible for additional fees for court proceedings under 42 U.S.C. § 406(b)(1) in the event the EAJA award does not exceed 25% of the past-due benefits. Any such additional fee award would come from the plaintiffs past-due benefits and could not duplicate the EAJA award. Guthrie v. Schweiker, supra.

The only limitation of fees under the EAJA is a $75-per-hour limitation in the absence of cost-of-living increase or special factors justifying a higher fee. 28 U.S.C. § 2412(d)(2)(A)(ii). No such factor is present in this case, and no higher rate is warranted. The only other limitation would be the avoidance of duplication of fees. In such an instance, duplication can be avoided by requiring plaintiffs counsel receiving an award under the EAJA for work in court to reimburse the claimant up to the amount awarded under 42 U.S.C. § 406(b)(1) allocable to plaintiffs counsel’s services in court. Any EAJA award in excess of the § 406(b)(1) award could be properly retained by counsel as attorney fee. Guthrie v. Schweiker, supra.

Premised on awards in similar cases, the court finds the base amount previously calculated above to be reasonable and in line with awards in these cases. See, Ocasio v. Schweiker, 540 F.Supp. 1320 (S.D.N.Y.1982); Shumate v. Harris, 544 F.Supp. 779 (W.D.N.C.1982). In addition, the base amount is consistent with awards in other cases in the Eastern District of North Carolina. See, e.g., Cain v. Heckler, No. 81-85-CIV-3 (May 3, 1984); Jones v. Heckler, 83-41-CIV-7 (September 28, 1984). This Court concludes that counsel’s claimed rate and number of hours are reasonable.

Where the applicant has shown that the claimed rate and the number of hours are reasonable, the resulting product may be found to be reasonable. Blum v. Stenson, supra. However, this does not end the inquiry. Hensley v. Eckerhart, supra, — U.S. at-, 103 S.Ct. at 1940. In some cases of “exceptional success,” the court may consider an enhancement of the fee award. Id.; Blum v. Stenson, supra. Only in cases of “exceptional success” can an enhancement award be justified. Id. This is not a case where the success achieved is exceptional; therefore, plaintiff is not entitled to the 25% requested enhancement award. Nor are there present any cost-of-living or special factors under the EAJA which would entitle plaintiff to an increased award. 28 U.S.C. § 2412(d)(2)(A)(ii). The fee of $3,300 is fully compensatory. In addition to fees, plaintiff is entitled to recover reasonable expenses in the amount of $200 for use of a medical-vocational expert which was necessary for the preparation of her case. 28 U.S.C. § 2412(d)(2)(A). Correa v. Heckler, 587 F.Supp. 1216 (S.D.N.Y.1984).

IT IS, THEREFORE, ORDERED that defendant pay to counsel for plaintiff the following sums:

Attorney Fees $3,300.00
Expenses 200.00
TOTAL: $3,500.00

      . In Hicks v. Heckler, 586 F.Supp. 853 (W.D.Va.1984), the court held that Congress did not intend a legal services corporation entity to recover legal fees and costs from the United States. This Court concludes that the Hicks decision is contrary to the overwhelming weight of authority which concludes that legal aid organizations can recover under the EAJA. Jones v. Schweiker, 565 F.Supp. 52 (W.D.Mich.1983); Ocasio v. Schweiker, 540 F.Supp. 1320 (S.D.N.Y.1982); Homal v. Schweiker, 551 F.Supp. 612 (M.D.Tenn.1982); Kauffman v. Schweiker, 559 F.Supp. 372 (M.D.Pa.1983); and Howard v. Heckler, 581 F.Supp. 1231 (S.D.Ohio 1984).

      . Hensley and Blum interpret the attorney fee provisions of 42 U.S.C. § 1988.


author: JOHN W. OLIVER, Senior District Judge.

text:
    Frances J. BARKLAGE, Plaintiff, v. METROPOLITAN LIFE INSURANCE COMPANY, Defendant.
    No. 84-1028-CV-W-1.
    United States District Court, W.D. Missouri, W.D.
    Jan. 17, 1985.

      Charles W. Hess, Sr., Kansas City, Mo., for plaintiff.
    Niles S. Corson, of Swanson, Midgley, Gangwere, Clarke & Kitchin, Kansas City, Mo., for defendant.
   MEMORANDUM OPINION AND ORDER

JOHN W. OLIVER, Senior District Judge.

I.

This diversity case, removed from the Circuit Court of Jackson County, Missouri, was originally filed in two counts. Count II, which sought punitive damages in addition to the penalties provided in Missouri Revised Statute Section 375.420, was dismissed by Order of this Court on July 5, 1984.

We find and conclude that there is no genuine issue of material fact and that defendant is entitled to summary judgment as a matter of law.

Count I, which now pends on cross motions for summary judgment, alleges that defendant is liable for the payment of certain disability benefits provided under a group long term disability policy which covers plaintiff as an employee of the defendant. We have considered all of the numerous briefs, affidavits, responses and replies that have been filed by the parties in support and in opposition to the pending cross motions for summary judgment. By letters to the Court, both plaintiff and defendant stated their agreement that the case is now in a posture for ruling.

II. Facts

It is undisputed that plaintiff was covered by the group insurance policy, 50-LTD-1, which provided for an employees’ benefit plan offered by defendant to its employees and participated in by plaintiff. (Stip.Doc. # 1). A copy of a summary of the policy upon which plaintiff relies is one of the documents before the Court under the stipulation of the parties. (Stip.Doc. # 6).

The parties agree that plaintiff was determined to be disabled on March 9, 1981. Pursuant to defendant’s insurance program she received temporary disability benefits for approximately six months at which time it was agreed that she became eligible for long term disability benefits. There is no dispute that defendant complied with the terms of the contract in regard to the payment of the temporary disability payments. (Depo. of PL, p. 110).

It is further agreed that on September 12, 1981 plaintiff became eligible for the payment of long term disability benefits through the group insurance policy offered by defendant, 50-LTD-l. The dispute between the parties relates to the monthly amount of the long term disability benefits to which plaintiff is entitled.

The amount of the monthly benefit is contingent upon the employee’s monthly compensation at the time of the on-set of disability, and upon the length of employment with the company. The parties agree that plaintiff had worked for defendant for over ten years before the on-set of her disability. It is also agreed that her monthly compensation for purposes of figuring the benefit due was $1,633.67 ($377.00 per week). Seventy percent is thus $1,143.57 and fifty percent is $816.84.

Section 6(B) of the policy sets forth the “Schedule of Insurance and Initial Premium Rates” in the following form:

_Class_
Years of Continuous Service at Date of Disability
Long Term Disability Income Insurance (Monthly Benefit)*
Initial Monthly Rate per $1,000 of Covered Payroll
(United States and Canada)
A. Employees employed in New York State:
B. All other Employees employed in the United States:
$2.07
The amount of Monthly Benefit shall be an amount equal to the applicable percentage specified below of the Employee’s Monthly Compensation*, as determined by the Employer, subject to a minimum Monthly Benefit of $50.00 _
During First Six Months For Which Monthly Benefits are Payable Seventh and Subsequent Months For Which Monthly Benefits are payable_
Less than 5 years 50% 50%
5 years but less than 10 years 60% 50%
10 years or more 70% 50%

Section 7(1) of the policy, the “coordination of benefits” provision, states as follows:

(B) The Monthly Benefits otherwise provided for any period of disability shall be reduced by the aggregate of the following amounts paid or payable for the same period of disability or any part thereof ...
(c) the amount of any weekly or monthly benefits paid or payable or which would be payable to the Employee for the time lost from work under any worker’s compensation, Employer’s Liability Insurance or occupational disease law, or from any fund, insurance, or other arrangement, provided or established in conformity with any state or other governmental disability or cash sickness benefit law.
(d) the amount of the United States Social Security Benefits ... to which the Employee is (or upon making timely and proper request and submitting due proof, would be) eligible____
(e) with respect to an Employee in the United States who has received benefits hereunder for six months, the amount of the United States Social Security Disability Benefits to which all dependents of the Employee are (or upon making timely and proper request and submitting due proof, would be) eligible by reason of the Employee’s disability or the amount of any Old Age Social Security Benefits to which all dependents of the Employee are or would become eligible after the Employee’s attainment of age 62, but only to the extent that the monthly rate of the aggregate of such Benefits exceed 20% of the Employee's basic monthly compensation, as determined by the Employer. (Doc. # 1, pp. 6-7).

The relevant provisions of the “Summary of Your Insurance and Retirement Program and Other Employee Benefit Plans” provided to the employees was set forth in the following form:

4. Benefits are payable as follows, with a minimum LTD benefit of $50 a month:
If you have the following years of service at the date of your disability_ You are paid the following percentage of your monthly salary as of the date of your disability_
First After 6 months 6 months
Less than 5 50% 50%
5 but less than 10 60% 50% _
10 and over 70% 50%
These benefits are reduced by the amount of disability benefits for which you are eligible because of any motor vehicle no-fault insurance law, or under any workmen’s compensation law, occupational disease law, state or government cash sickness compensation law or any fund, insurance or other arrangement established in conformity with such law and also by any Social Security disability and old age benefits for which you are eligible.
5. After you have received LTD benefits for six months, the total of your benefits from LTD, Social Security (including family benefits), workmen’s compensation and no-fault insurance may not be more than 70 percent of your monthly salary at the time you were disabled. If your total benefits are greater, your LTD benefit will be reduced to bring your combined benefits to 70 percent of the monthly salary you were receiving when you became disabled. However, the minimum LTD benefit will still be $50 a month.

(Doc. # 6, p. 13).

On August 5, 1981 plaintiff signed a document entitled a “Reimbursement Agreement Regarding Monthly Advances For Which Social Security Benefits May Be Payable.” Her application for benefits was then pending before the Social Security Administration.

The reimbursement agreement stated in part:

“I understand that Long Term Disability benefits under the Metropolitan Insurance and Retirement Program are reduced by primary Old Age or Disability benefits which I may be eligible to receive under the Federal Social Security Act ...
Pending determination of my claim under Social Security, I request that Metropolitan Life Insurance Company advance to me amounts which would be otherwise payable as Metropolitan Long Term Disability benefits if I were not eligible for Social Security Old Age or Disability benefits ...
In consideration of any such advances, I agree to reimburse Metropolitan the amount of any such advances immediately upon receipt of my retroactive Social Security benefits. Furthermore, I agree that in the event of my failure to reimburse Metropolitan in full, Metropolitan may recover the amount of the unreimbursed advances by withholding or reducing the amount of such advances from future benefit amounts which may become payable under any Metropolitan coverage for which I am insured.” (Stip. Doc. # 7 and # 9).

Defendant’s policy is to extend the benefit payment arrangement for only three months of Long Term Disability. (Stip. Doc. # 8). Plaintiffs application for Social Security Disability Benefits was not processed within the three-month period. Plaintiff wrote to defendant on November 9, 1981 to ask that her advancements be continued for another three months. She wrote,

I am begging that you consider [sic] the long term disability benefits without reduction of the Social Security Benefits. I signed the form where I would return the advance to you as soon as I receive it from Social Security.

(Stip.Doc. # 10).

On December 3, 1981 plaintiff signed an identical reimbursement agreement to that quoted above. It is agreed that defendant continued the advances to plaintiff.

In February 1982, plaintiffs Social Security claim was approved for disability benefits of $466.70 per month, commencing retroactively on September 12, 1981. In April 1982, defendant began reducing plaintiffs monthly award by $466.70 per month. (Stip.Doc. #2).

Defendant had advanced plaintiff $2,800.20 ($466.70 per month for six months) which was awarded to plaintiff retroactively by the Social Security Administration. (Depo. of PL, p. 41-2). Defendant began to attempt to be reimbursed this sum. Defendant notified plaintiff to return the advances as agreed. (Stip.Doc. # 11, 12, and 19). Plaintiff refused; so, beginning in July 1982, the balance of the benefit payments after all reductions has been applied by defendant to recouping the $2,800.20.

On April 1, 1982 plaintiff settled three worker’s compensation injury claims for a total of $21,000.00. A transcript of the deposition and settlement conference has been stipulated as genuine. (Stip.Doc. #3). Administrative Law Judge James Crisp entered an “Order Approving Compromise Settlement.” (Stip.Doc. # 5).

The order set out the dollar amount of the settlement for each injury and then stated,

Further, it is ordered that the full sum of twenty-one thousand dollars ($21,000.00) be paid to claimant and her attorneys and that such sum shall not be reduced by virtue of any amounts previously paid to claimant under any long term disability program of employer-insurer.

(p. 1-2).

Defendant paid plaintiff in a lump sum as agreed and plaintiff signed receipts for the compensations. (Stip.Doc. # 4). Twenty-five percent (25%) of the award was given to plaintiff’s attorney, Kenneth Dake, as his fee. On July 1, 1982 defendant began reducing the amount of plaintiff’s benefits by $292.50 per month. This amount is the $21,000.00 award reduced by the attorney fee and divided by 233.33 weeks. • Defendant will have recouped the $15,750.00 settlement by December 31, 1986. Defendant does not intend to insist that plaintiff repay the amount of the settlement attributable to the attorney fee.

The transcript of the conference documents that the attorney for defendant questioned plaintiff extensively on the terms of the settlement involving waiver of rights saying:

Q: And you understand that any claim that Metropolitan or Travelers may have or may not have to reduce these Workers’ Compensation settlements and payments by virtue of that $14,000.00 disability payment, is being waived by Metropolitan and Travelers here today in the event that the settlement is approved?
A: Yes....
Q: And you understand then, that one of the benefits accruing to you by this settlement, if it’s approved, is that you and your attorney will receive the full $21,000.00 in cash without any reduction for past long-term disability payments that you may have received from Metropolitan?
A: Yes....
A: And you understand, Ms. Barklage, that it’s the position of Metropolitan Insurance Company that any future long-term disability payments they may make to you under their long-term disability program may be reduced substantially because of the money you are seeking to recover under this Workers’ Compensation settlement?
A: Yes.

(Stip.Doc. # 3, p. 13-15). At the end of the deposition the attorney for defendant made a lengthy record and expressly stated in plaintiff’s presence that no waiver in regard to the future benefits had been made, including:

I am not authorized to and have not waived any right that Metropolitan may have and which it claims, in fact, it does have, to reduce future long-term disability payments to this Claimant under the Metropolitan long-term disability program for its employees by virtue of the settlement she will receive here if it’s approved.

(Stip.Doc. # 3, p. 23).

Further facts will be stated below in this memorandum as necessary to clarify the contentions of the parties and the Court’s discussion of the applicable law.

III. Contentions of the Parties A.

Plaintiff contends that defendant has not been paying her the monthly benefit she is due under the policy.

Plaintiff’s petition as filed in the state court prayed that plaintiff be awarded damages in the amount of $282,126.00. Plaintiff has never attempted to articulate a theory upon which she should recover damages in that amount.

Plaintiff, however, maintains in various filings made subsequent to the filing of her petition that she is entitled to be paid each month 70% of her former monthly compensation, or $1,143.57, until she reaches the age of 60.

Plaintiff contends that paragraph five of the summary, rather than the chart in paragraph four or in the contract, controls in “combined benefits situations.” She proposes that the chart governs the normal case, but that paragraph five of the summary of the policy controls where benefits from other sources are involved. Plaintiff maintains that paragraph five, establishes a “floor under which monthly reductions can not go.” (Barklage Affidavit, ¶ 6; Pl.’s Supp. Reply filed 10/31/84). Plaintiff states that “this clause establishes $1,143.57 as the monthly benefit of plaintiff until she reaches 60 years of age.” (Pl.’s Counter-affidavit to Raneri, ¶ 4; Pl.’s Reply 11/26/84). Plaintiff cites no legal authority which would construe the policy in this manner.

Plaintiff further contends that defendant is not entitled to reduce the amount of the worker’s compensation settlement under any circumstances. Plaintiff proposes that the “coordination of benefits” provision does not apply to her particular worker’s compensation settlement because plaintiff’s situation is not an ordinary one in that the worker’s compensation payment was made in one lump sum settlement and an order approving the settlement was entered by an AU.

Plaintiff further contends that the provision applies only to “non-settlement” situations. She maintains that where a lump sum cash payment is involved, rather than periodic payments, the provision does not control. (Pl.’s Reply filed 11/26/84). Again, plaintiff cites no legal authority in support of this construction.

Plaintiff maintains that reduction of any of the $21,000.00 award is in violation of the order entered by Administrative Law Judge Crisp. (Pl.’s Supp. Reply filed 10/31/84, p. 4). Plaintiff argues that “Judge Crisp’s Order ... provides that Metropolitan could not reduce [the $21,000] sum ... such an action would disregard the Court’s Order.” (Barklage Affidavit p. 2, ¶ 4).

Plaintiff also contends that the coordination of benefits provision is not applicable because any rights under it were waived. (Pl.’s Counter-affidavit to Raneri, ¶ 5). Plaintiff argues that defendant waived any rights it might have to reduce the benefits by the settlement sum in the conference leading to the settlement agreement.

Plaintiff’s final contention is that paragraphs four and five of the summary at least establish a minimum monthly payment of $50. Plaintiff states that she has not even received that amount since April 1982. (Petition, 115; Barklage Affidavit If 7).

B.

Defendant contends that it is and has been in compliance with the terms of the contract of insurance and the order approving the compromise settlement of the worker’s compensation claims. Defendant’s explanation in its answer of the reductions made has remained consistent throughout the case.

Defendant contends that the benefits chart set forth in the policy and the summary establishes that after the first six months the long term benefits due are 50% of the monthly compensation, or $816.84 per month for plaintiff. It is from this amount that reductions are made.

Defendant maintains that it is permitted pursuant to the coordination of benefits provision to reduce plaintiffs monthly benefits by the amount plaintiff receives from Social Security. Accordingly, after notice that plaintiffs disability benefits were $466.70 per month, defendant began reducing plaintiffs payment by that amount in April 1982. (Answer, ¶ 12).

Defendant further contends that the same provision allows it to reduce plaintiffs benefits by the $15,750.00 plaintiff herself received from settlement of her worker’s compensation claims. It was agreed that plaintiff would settle for a rating of 58.33% disability. (Doc. 3, p. 12). The maximum compensation period for a permanent partial disability under the worker’s compensation schedule of losses is 400 weeks. R.S.Mo. § 287.190(3). 58.33% of 400 weeks is 233.33 weeks. Defendant divided the award plaintiff received in settlement by 233.33 and began reducing plaintiff’s monthly benefit by $292.50 per month in July 1982. (Answer, ¶ 11).

Defendant contends that all it waived at the conference was the right to offset the $21,000.00 by the $14,000.00 in benefits defendant had already paid to plaintiff. Defendant maintains that it agreed to give plaintiff a lump sum award of the whole amount, rather than to recoup any over-payments before paying out the balance. Defendant contends that pursuant to Judge Crisp’s order the full sum was paid unreduced by virtue of any amounts previously paid to plaintiff and that it is only the future payments which have been reduced.

Defendant acknowledges that the policy establishes a $50 minimum payment despite reductions for Social Security and worker’s compensation. Defendant contends that it is crediting $57.64 per month to plaintiff's account in compliance with the minimum due.

Defendant further contends, however, that it may reduce plaintiff’s monthly benefits to recoup the advances defendant made to plaintiff which duplicated those Social Security benefits awarded retroactively to plaintiff. This reduction, defendant maintains, was provided for in the Reimbursement Agreement signed by plaintiff. Defendant contends that plaintiff explicitly agreed that in the event of her failure to reimburse the advances, defendant could reduce the amount of the advances from future benefit amounts payable by defendant. (Answer, II14). Accordingly, defendant has been crediting the remainder of plaintiff’s monthly benefit to the reduction of the advances since July 1982. Defendant explains that plaintiff, therefore, receives no monthly check from defendant and it is planned that she will not until the balance of $2,800.20 is recouped.

IV. Discussion of Applicable Law

Defendant’s liability is determined by the terms of the contract of insurance as contained in the policy. Levin v. State Farm Mutual Auto. Ins. Co., 510 S.W.2d 455, 461 (Mo. banc 1974); Frisella v. Reserve Life Ins. Co. of Dallas, 583 S.W.2d 728, 733 (Mo.App.1979). An insurance policy is simply a contract, involving matters of basic contract law. Moss v. National Life & Acc. Insur. Co., 385 F.Supp. 1291, 1295 (W.D.Mo.1974); Stahlberg v. Travelers Indem. Co., 568 S.W.2d 79, 85 (Mo.App.1978).

The rule in contract interpretation is to ascertain the intent of the parties and to give effect to that intent. Where there is no ambiguity in the contract the intent of the parties is to be gathered from the contract alone. The clear meaning of the contract is a matter of law for the Court’s decision, not a question of fact. J.E. Hathman, Inc. v. Sigma Alpha Epsilon Club, 491 S.W.2d 261, 264 (Mo. banc 1973). Ambiguity does not arise from a contract merely because the parties disagree as to how the contract should be construed. J.E. Hathman, supra, 491 S.W.2d at 264; Buder v. Martin, 657 S.W.2d 667, 669 (Mo.App.1983).

We find that the provisions of the policy in question are clear and unambiguous. The language has been stipulated to by the parties in each instance. We will proceed to construe these provisions as a matter of law in accordance with the clear meaning of the policy language.

We find that the chart in the policy and the summary clearly set out that plaintiffs monthly benefit after six months is to be 50% of her former monthly salary. Under this section plaintiff is entitled to $816.84 per month. The amount to be paid, however, is subject to reductions in accordance with other provisions in the policy.

We disagree with plaintiffs interpretation of paragraph 5 of the summary which plaintiff calls the “combined benefits” provision. We find that this paragraph is unambiguous and clearly limits defendant’s potential liability by establishing a ceiling on the payment amount in conjunction with other benefits an insured might receive.

We find and conclude that defendant contracted to pay a minimum of $50 per month and a maximum after six months of 50% of the insured’s previous income. Paragraph 5 explains the “coordination of benefits” provision which allows defendant to adjust the amount within these bounds based in part upon the total the insured receives from the sources listed. Pursuant to section 7(l)(B)(e) of the policy, Social Security benefits to dependents of the employee are reduced from the monthly benefit only to the extent that they exceed 20% of the basic monthly compensation. The family benefits, if any, may raise the monthly award by that 20% from 50% to 70%. Anything over the 70% ceiling may be reduced' as is explained in paragraph 5 of the summary. However, since plaintiff has no dependents receiving benefits, that provision has no effect on her monthly benefit. Plaintiff is entitled to a total of $816.84 per month from the listed sources.

We find that the language of the “coordination of benefits” provision in the contract is unambiguous and that the parties specifically contracted to allow defendant to reduce the monthly payments due to plaintiff by any Social Security or worker’s compensation award. Similar “coordination of benefits” clauses have been upheld by other courts. Dowell v. Aetna Life Ins. Co., 468 F.2d 802, 804 (4th Cir.1972), cert. denied, 410 U.S. 931, 93 S.Ct. 1374, 35 L.Ed.2d 594 (1973); Lamb v. Connecticut Gen. Life Ins. Co., 643 F.2d 108, 110 (3rd Cir.1981); Weiss v. CNA, 468 F.Supp. 1291, 1294 (D.C.Pa.1979); Henning v. Metropolitan Life Ins. Co., 546 F.Supp. 442, 449 (D.C.Pa.1982). The fact that plaintiff received the award in a lump sum does not bar reduction of the worker’s compensation award. Christian v. Metropolitan Life Ins. Co., 566 P.2d 445, 447 (Okla.1977); Capps v. Amer. Mut. Liability, 601 S.W.2d 816, 818 (Tex.Civ.App.1980).

We find and conclude that defendant is clearly entitled to reduce the monthly benefit by the amount of plaintiff’s Social Security disability payment, $466.70 per month, pursuant to the contract provisions. Defendant may continue such reductions so long as plaintiff is receiving Social Security disability payments.

The policy clearly provides for reduction of amounts to which the employee “upon making timely and proper request and submitting due proof would be” eligible. (Doc. # 1, p. 7). The retroactive award of benefits proves that plaintiff was eligible at the time for such benefits. Plaintiff contracted for one award, not two. Defendant was entitled to reduce this amount all along. However, defendant advanced plaintiff $2,800.20 while the Social Security claim was pending.

We find and conclude that defendant is entitled to be reimbursed this amount. We find that pursuant to the Reimbursement Agreements signed by plaintiff, since plaintiff has not reimbursed the advances, defendant is entitled to reduce the amount of the advances from the monthly benefit payments plaintiff is due.

We further find that the transcript of the worker’s compensation settlement conference clearly documents that defendant did not waive any right it might have to reduce plaintiff’s future benefits. We find that the settlement payments were made in accordance with Judge Crisp’s order. Based upon the stipulated documents and the depositions, we find and conclude that plaintiff’s settlement was not reduced at all. Her benefits paid after the settlement have been reduced. We find that these reductions are allowable as a matter of law by the terms of the policy and the Order Approving Compromise Settlement.

V. Conclusion and Orders

We find that by the explicit terms of the policy, defendant is to be paying plaintiff 50% of her former monthly compensation, or $816.84, each month until retirement. We further find that defendant is entitled to reduce these payments each month by $466.70 so long as Plaintiffs Social Security disability benefits continue at that rate or at a higher rate, and by $292.50 per month until the $15,750 worker’s compensation award is recouped. This means that at present defendant should be paying plaintiff $57.64 per month, which is over the minimum $50 per month as contracted.

We find that defendant has been crediting this amount to plaintiff’s account each month. From this amount defendant is applying $10.85 each month as a premium for a policy of survivor benefit insurance for which plaintiff has opted. Defendant is applying $5.40 each month to a premium for health insurance coverage under the Insurance and Retirement Program. These payments, explained in stipulated document # 28, amounting to $16.25 per month are not disputed. Defendant has been applying the remaining $41.30 each month as a credit toward reducing the $2,800.20 Social Security advancement. We find as a matter of law that by the clear and unambiguous terms of the policy, defendant may continue to credit these benefit payments until the advancement is recouped.

We find and conclude that as a matter of law defendant has not breached its contract with plaintiff. We find and conclude that there is no genuine issue of material fact and that defendant is entitled to summary judgment as a matter of law.

Accordingly, it is

ORDERED (1) that defendant’s motion for summary judgment in regard to Count I should be and is hereby granted. It is further

ORDERED (2) that plaintiff’s motion for summary judgment in regard to Count I should be and is hereby denied. It is further

ORDERED (3) that the Clerk of this Court will enter judgment for the defendant on both Count I and Count II of plaintiff’s complaint pursuant to Rule 56 of the Federal Rules of Civil Procedure, the Court having granted defendant’s motion to dismiss Count II on July 5, 1984.

      . From a balance sheet point of view, plaintiffs account is as follows:
      GROSS MONTHLY LTD BENEFIT $816.84 SOCIAL SECURITY PAYMENT $466.70
      WORKER'S COMP. PAYMENT 292.50
      SURVIVOR BENEFIT PREMIUM 10.85
      HEALTH INSURANCE PREMIUM 5.40
      SOC. SEC. ADVANCE REDUCTION 41.39
      _ $816.84 $816.84


author: THOMAS F. HOGAN, District Judge.

text:
    Viola B. DIXON, Plaintiff, v. STEPHENSON INC., Defendant.
    Civ. A. No. 84-1843.
    United States District Court, District of Columbia.
    Feb. 12, 1985.

      Susan A. Pendleton, Alexandria, Va., for plaintiff.
    Lawrence T. Zimmerman, Steven R. Semler, Washington, D.C., for defendant.
   MEMORANDUM OPINION AND ORDER

THOMAS F. HOGAN, District Judge.

This is an action on a motion to dismiss a complaint alleging violation of the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621, et seq. Defendant, Stephenson Inc., claims that plaintiff’s complaint should be dismissed pursuant to Rule 12(b)(1), (2) and (4) of the Federal Rules of Civil Procedure for insufficient service of process, lack of jurisdiction over the defendant and lack of subject matter jurisdiction. Plaintiff, Viola Dixon, argues that this Court has both personal and subject matter jurisdiction.

Plaintiff, a Maryland resident, alleges that defendant, a corporation operating a printing plant in Alexandria, Virginia and registered to do business in Washington, D.C., wrongfully terminated her employment due to age. She claims that three younger workers were retained while she was dismissed without cause and that one younger worker was recalled after being initially discharged. Defendant asserts that plaintiff’s work was unsatisfactory and inadequate. According to plaintiff, defendant never informed her of any problems while she was employed.

Plaintiff filed her original charge on December 19,1983 with the District of Columbia’s office of the Equal Employment Opportunity Commission (EEOC). Her complaint was then forwarded to the EEOC office in Baltimore, Maryland. At this point plaintiff was advised that she must wait sixty days before commencing civil suit. 29 U.S.C. § 626(d). On May 16,1984, the EEOC informed plaintiff that the office had discontinued its processing of her complaint. Plaintiff commenced this suit pro se on June 6, 1984. This Court appointed counsel to represent plaintiff.

Discussion

Service of Process Claim

Proper service of process may be accomplished pursuant to the laws of the State in which the district court is held, or by mailing a copy to the person to bé served, or by delivering a copy of the complaint to an officer or authorized agent of the corporation. Fed.R.Civ.P. 4(c)(2)(C)(i) & (ii), 4(d)(3). Generally the complaint may be served only within the territorial limits of the State in which the federal court sits. Fed. R.Civ.P. 4(f).

Defendant claims that the service of process employed here was improper. The Court agrees. The United States Marshal mailed the complaint directly to defendant in Virginia, rather than to the agent in the District of Columbia. This form of service does not comply with either the Federal Rules of Civil Procedure outlined above or with the D.C. Code requiring service on the agent directly at his place of business or residence in the District if the agent cannot be found or is absent. D.C. Code § 13-334. It is undisputed, however, that defendant received timely notice of this suit and did in fact respond. In light of this response and in light of the fact that plaintiff initiated this case pro se, this Court finds dismissal of the case for insufficient process to be unwarranted. See Hill v. Sands, 403 F.Supp. 1368 (N.D.Ill.1975). The appropriate remedy is to allow amended service of process.

Subject Matter Jurisdictional Claim

At the heart of this motion to dismiss is the issue of whether this Court lacks subject matter jurisdiction because plaintiff failed to first file her complaint with the Fairfax County Human Rights Commission (FCHRC). Defendant alleges that under Section 14(b) of the ADEA plaintiff must try to resolve the dispute at the local level by filing with the appropriate state fair employment practice agency. Plaintiff agrees with this contention but argues that the Fairfax agency does not qualify as a deferral state agency within the meaning of ADEA. It is undisputed that plaintiff did not file with any state agency prior to commencing this suit.

The Supreme Court in Oscar Mayer & Co. v. Evans, 441 U.S. 750, 758, 99 S.Ct. 2066, 2073, 60 L.Ed.2d 609 (1979), held that “under § 14(b) of the ADEA, as under § 706(c) of Title VII [of the Civil Rights Act of 1964], resort to administrative remedies in deferral states by individual claimants is mandatory — not optional.” The state proceedings, though, need not be commenced within the time limits of the state law. Id. at 753, 99 S.Ct. at 2070. Deferral states under the ADEA must meet two requirements: “1) the State must have a law prohibiting age discrimination in employment, and 2) there must be a state agency authorized to seek relief for individuals suffering age discrimination.” Simpson v. Whirlpool Corp., 604 F.2d 997, 999 (6th Cir.1979); see Mizrary v. Texas Reha bilitation Commission, 522 F.Supp. 611 (S.D.Tex.1981); Goodman v. Board of Trustees of Community College District, 498 F.Supp. 1329 (N.D.Ill.1980).

Plaintiff first argues that Virginia has no law prohibiting age discrimination and therefore fails the first requirement of a deferral state for purposes of Section 633(b). The Court agrees. Without a state prohibition on age discrimination, plaintiff had no state law in which to resort for a remedy.

Defendant, though, relies on the comparison the Supreme Court made in Oscar Mayer of Section 14(b) of the ADEA with Section 706 of Title VII to argue that Virginia is a deferral State. The EEOC has expressly certified the FCHRC as a“§ 706 deferral agency.” 29 C.F.R. § 1601.74. Plaintiff, however, notes that the EEOC regulations concerning referral to and from State agencies for all ADEA charges does not list Virginia as a State to which ADEA claims may be referred. 29 C.F.R. § 1626.-9. While Title VII and ADEA claims are similar, they are not identical, and this lack of reference to Virginia in the ADEA regulations strongly suggests that the local agency does not meet the requirements for State proceedings.

The EEOC regulations provide for worksharing agreements with state or local agencies to receive ADEA complaints and to assist the EEOC in enforcement and processing activities. 29 C.F.R. § 1626.-10(a)(b). Defendant further argues that since the EEOC and the FCHRC entered into a worksharing agreement that this characterizes Virginia as a deferral state. The worksharing agreement, however, limited the powers of the FCHRC to “receiving charges on behalf of the EEOC____ This delegation of authority does not include the right of the FEPA [FCHRC] to make final determinations on the jurisdiction of EEOC over charges.” Worksharing Agreement, § 2(a). Plaintiff here was never told by the District of Columbia or the Baltimore EEOC offices that she needed to file with the FCHRC, which further indicates the EEOC did not delegate their authority to the FCHRC in this instance. For all the reasons stated above, Virginia fails to qualify as a deferral state.

Subject matter jurisdiction is established in a civil suit when the cause of action arises under the Constitution, laws or treaties of the United States. 28 U.S.C. § 1331(a). Under the ADEA an individual may bring suit for age discrimination “in any court of competent jurisdiction for such legal or equitable relief as will effectuate the purpose of this chapter.” 29 U.S.C. § 626(c)(1). Plaintiff’s case arises under the ADEA and, therefore, in the absence of an appropriate deferral State agency with which to first file, this Court has subject matter jurisdiction over the dispute.

Defendant argues that even if this Court should find jurisdiction, this case should be transferred to the United States District Court for the Eastern District of Virginia pursuant to 28 U.S.C. § 1404(a). Under the federal venue statute a corporation may be sued “in any judicial district in which it is incorporated or licensed to do business, or is doing business.” 28 U.S.C. § 1391(c). Defendant has obtained a certificate of authority to conduct business in the District of Columbia in compliance with the laws of the District of Columbia. D.C. Code § 29-399, et seq. Defendant appointed an agent to accept service of process, and therefore subjected itself to the jurisdiction of this district. See Neirbo Co. v. Bethlehem Shipbuilding Corp., 308 U.S. 165, 60 S.Ct. 153, 84 L.Ed. 167 (1939); Vogel v. Tenneco Oil Co., 276 F.Supp. 1008 (D.C.D.C.1967). Because defendant is authorized to do business in this district and has therefore subjected himself to personal jurisdiction of this Court, venue is proper in this Court.

Cases are generally transferred for the convenience of the parties and witnesses. 28 U.S.C. § 1404(a). Given the close proximity of Alexandria, Virginia, where defendant’s plant operates, to Maryland, where the plaintiff resides, and the District of Columbia, there appears to be no compelling reason to transfer this case to Virginia.

ORDERED that defendant’s motion to dismiss is hereby denied; and it is

FURTHER ORDERED that plaintiff amend service' of process in accordance with this Opinion; and it is

FURTHER ORDERED that the parties shall appear for a status call on March 13, 1985 at 9:15 A.M. prepared to discuss all scheduling matters. -

      . 29 U.S.C. § 633(b) states:
      In the case of an alleged unlawful practice occurring in a State which has a law prohibiting discrimination in employment because of age and establishing or authorizing a State authority to grant or seek relief from such discriminatory practice, no suit may be brought under Section 626 of this title before the expiration of sixty days after proceedings have been commenced under the State law, unless such proceedings have been earlier terminated.

      . The Virginia Code provisions establishing a Virginia Equal Employment Opportunity Committee and a Human Rights Commission set out a policy against age discrimination but do not prohibit age discrimination. Va.Code § 2.1-116.10, et seq.; § 15.1-687.3. Defendant points to the Fairfax County Human Rights Ordinance making age discrimination unlawful. § 11 — 1— 3(b). The ADEA, though, explicitly refers to State law, not the ordinances of political subdivisions. An ordinance does not carry the same weight as a State statute and therefore this Fair-fax ordinance does not meet the requirement of State law under ADEA.

      . Another section of the agreement provides that the FCHRC "will take primary responsibility for processing all charges filed with the EEOC or the FEPA against respondents within the general jurisdiction of FEPA.” Worksharing Agreement § 4(b). This provision largely focuses on duplicative processing concerns and does not provide remedial power.

      . The last annual report filed by defendant with the District's Superintendent of Corporations was in April 1983. Although defendant does not appear from the record to have filed an annual report in 1984, it does not mean that it has ceased doing business. To cease doing business in the District of Columbia a corporation must apply for and be granted a certificate of withdrawal. D.C.Code § 29-399.14, § 29-399.15. Defendant, therefore, is considered to still be licensed to do business in the District of Columbia.