Rosario Gutierrez v. Jo Anne Barnhart, Commissioner, Social Security Administration

Rosario Gutierrez appeals the district court’s denial of attorney fees under the Equal Access to Justice Act (EAJA), 28 U.S.C. § 2412 (d), after she prevailed in her appeal in this court reversing the Social Security Administration’s (SSA) denial of disability benefits. See Gutierrez v. Apfel, 199 F.3d 1048 (2000) (Gutierrez I). We hold that the district court abused its discretion in denying fees because (1) the government’s underlying conduct, failing to follow its own regulations, was not substantially justified, and (2) the government’s litigation position was not substantially justified even though the effect of noncompliance with the SSA’s regulations was an issue of first impression in this Circuit.

I.

In any action brought by or against the United States, the EAJA requires that “a court shall award to a prevailing party other than the United States fees and other expenses ... 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). An applicant for disability benefits becomes a prevailing party for the purposes of the EAJA if the denial of her benefits is…