Martinez v. Secretary of Health and Human Services

Mr. Martinez (plaintiff) received disability benefits under the Social Security Act until a continuing disability investigation led to the termination of his benefits. An administrative law judge upheld the termination of benefits, and Martinez sought review of the decision. The appeals council denied his request for review, and Martinez brought the case to federal court. Martinez argued that the termination of his benefits required evidence that the his medical condition improved, while the Secretary of Health and Human Services (Secretary) (defendant) took the position that the medical improvement test was inapplicable. Subsequently, in an unrelated case, a federal appeals court held that social security disability benefits cannot be discontinued without a finding that the claimant’s position has improved, and that failure to apply the correct legal standard is sufficient to warrant reversal of a termination case. Based on this decision, the district court sua sponte reversed Martinez’s termination and directed the Secretary to reinstate his benefits. As the prevailing party, Martinez sought attorney’s fees and costs under the Equal Access to Justice Act (EAJA). The Secretary argued that it was substantially justified in its litigation position against Martinez because the court of appeals had not adopted the medical improvement standard at the time of the termination decision or the initiation of the federal litigation. The district court denied Martinez’s request for attorney’s fees under the EAJA. Martinez appealed.