                 FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT


FLINT WOOD; PHONESAGNAM                No. 14-15356
SILIVONGXAY; CYNTHIA
ROBERTS; FLISHA MUMAW, on                  D.C. No.
behalf of themselves and all         3:12-cv-08098-DGC
others similarly situated,
            Plaintiffs-Appellants,
                                           OPINION
                v.

SYLVIA MATHEWS BURWELL,
Secretary of the United States
Department of Health and
Human Services,
            Defendant-Appellee.


      Appeal from the United States District Court
               for the District of Arizona
      David G. Campbell, District Judge, Presiding

         Argued and Submitted March 17, 2016
               San Francisco, California

                Filed September 14, 2016

Before: M. Margaret McKeown, Kim McLane Wardlaw,
        and Richard C. Tallman, Circuit Judges.

               Opinion by Judge McKeown
2                       WOOD V. BURWELL

                            SUMMARY*


                   Equal Access to Justice Act

    The panel reversed the district court’s denial of plaintiffs’
motion for attorneys’ fees under the Equal Access to Justice
Act (“EAJA”); held that plaintiffs, who were members of a
class action suit against the Secretary of the Department of
Health and Human Services, were entitled to “prevailing
party” status; and remanded to the district court to consider
whether the government’s position was “substantially
justified” under EAJA.

   Plaintiffs were recipients of health coverage under an
Arizona Medicaid demonstration project, and they challenged
the Secretary’s approval of a new Arizona 2011–2016
demonstration project.

    The panel applied the factors set out in Buckhannon Bd.
& Care Home, Inc. v. W. Va. Dep’t of Health & Human Res.,
532 U.S. 598, 604-05 (2001), and held that plaintiffs were the
“prevailing parties” for the purpose of attorneys’ fees under
EAJA. The panel held that the dispositive question was not
whether the plaintiffs ultimately obtained some form of
substantive relief, but rather whether there was a lasting
alteration in the legal relationship of the parties. The panel
concluded that there was a material alteration in the legal
relationship of the parties, to the benefit of plaintiffs. The
panel further held that although a district court’s decision to
remand without vacatur might weigh against awarding

    *
      This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                     WOOD V. BURWELL                          3

prevailing party status in some cases, it did not do so in this
case, and the district court’s retention of jurisdiction for
practical and equitable reasons did not undermine the reality
that plaintiffs were a prevailing party.


                         COUNSEL

Richard Rothschild (argued), Western Center on Law and
Poverty, Los Angeles, California; Jane Perkins, National
Health Law Program, Carrboro, North Carolina; Ellen Sue
Katz, William E. Morris Institute for Justice; Phoenix,
Arizona; for Plaintiffs-Appellants.

Sushma Soni (argued) and Michael Jay Singer, Attorneys,
Appellate Staff; John S. Leonardo, United States Attorney;
Civil Division, United States Department of Justice,
Washington, D.C.; for Defendant-Appellee.


                          OPINION

McKEOWN, Circuit Judge:

    This appeal is the latest in a decade-long conflict over the
cost of copayments and medication for low-income
Arizonans who qualify for a state Medicaid demonstration
project covering childless adults. The sole issue is whether
the members of a class action suit against the Secretary of the
Department of Health and Human Services (“DHHS” or the
“Secretary”) were the “prevailing part[ies]” for purposes of
attorneys’ fees under the Equal Access to Justice Act
(“EAJA”), 28 U.S.C. § 2412.
4                    WOOD V. BURWELL

    In many ways, this case reads like a classic victory for the
class (the “Wood plaintiffs”): The district court found that the
Secretary acted in a manner that was arbitrary and
capricious—in violation of the Administrative Procedure Act
(“APA”), 5 U.S.C. § 706(2)(A)—by approving the project
without considering the class members’ evidence and
objections. The court remanded the case to the agency for a
new decision consistent with its legal obligations and the
Secretary complied. See Wood v. Betlach, 922 F. Supp. 2d
836 (D. Ariz. 2013). After reconsideration, the Secretary
again approved the demonstration project, and the district
court then granted summary judgment in her favor. However,
during the remand the district court retained jurisdiction and
did not vacate the demonstration project. Following the
remand, the district court found that the Wood plaintiffs were
not entitled to attorneys’ fees because, after the case returned
from the agency, the plaintiffs did not prevail on their
substantive claims.

   We disagree. Applying the factors set out in Buckhannon
Bd. & Care Home, Inc. v. W. Va. Dep’t of Health & Human
Res., 532 U.S. 598, 604–05 (2001), we hold that under the
EAJA, the Wood plaintiffs are the “prevailing party” in their
procedural APA challenge against the Secretary.

                       BACKGROUND

    This appeal arises out of substantive and procedural
challenges to the Secretary’s approval of an Arizona
Medicaid demonstration project. In 2012, the Wood
plaintiffs, who were recipients of health coverage under that
project, filed suit against the Secretary. The complaint
challenged her approval of a new Arizona project that raised
copayments for medical visits and medications and that
                     WOOD V. BURWELL                           5

permitted healthcare providers to refuse non-emergency
services based on an inability to pay.

    Under the Medicaid Act, a “demonstration project” allows
the Secretary to waive certain Medicaid requirements for
state projects that are “likely to assist in promoting the
objectives of” the Medicaid Act. 42 U.S.C. § 1315(a).
Demonstration projects may cover populations that would not
otherwise be eligible under the state Medicaid plan, but for
whom the state can receive federal reimbursement. In
approving a project, the Secretary must examine: (1) whether
the project is an experimental, pilot, or demonstration project;
(2) whether it is likely to assist in promoting the objectives of
the Medicaid Act; and (3) the “extent and period” necessary
for the project. Newton–Nations v. Betlach, 660 F.3d 370,
380 (9th Cir. 2011) (citing Beno v. Shalala, 30 F.3d 1057,
1071 (9th Cir. 1994)). Cost-saving is not a sufficient ground
for approving a demonstration project. Id. at 381 (citing
Beno, 30 F.3d at 1069).

    In 2000, Arizona voters opted to expand the state
Medicaid program to cover low-income childless adults who
would not otherwise be eligible for Medicaid. Arizona
applied to DHHS to create a project for eligible adults to
receive health services with nominal copayments. Under this
plan, healthcare providers could not refuse services because
of an inability to pay. DHHS approved the demonstration
project in 2001.

    With DHHS approval, Arizona modified the program in
2003 to include higher copays (the “Copayment Rule”) and
to permit healthcare providers to refuse services for inability
to pay. A group of affected individuals filed suit in federal
court challenging the modified program.                   See
6                    WOOD V. BURWELL

Newton–Nations v. Rodgers, No. CV-03-2506-PHX-EHC,
2010 WL 1266827, at *2–*7 (D. Ariz. Mar. 29, 2010)
(summarizing the procedural history). On appeal, we
determined that the Secretary’s approval of the Copayment
Rule violated the APA: “There is little, if any, evidence that
the Secretary considered the factors § 1315 requires her to
consider before granting Arizona’s waiver. Thus, the
Secretary’s decision was arbitrary and capricious within the
meaning of the APA insofar as it entirely failed to consider an
important aspect of the problem.” Newton–Nations, 660 F.3d
at 381–82 (internal quotation marks omitted).

    When the first demonstration project expired in 2011,
Arizona sought approval for a new demonstration project,
which also included the Copayment Rule. DHHS approved
the new project through 2016, although the Copayment Rule
expired in 2013. At around the same time that the new
project was approved, we remanded the Newton–Nations case
to the district court with an order to vacate and remand to the
Secretary for further consideration. 660 F.3d at 383. On
remand, the district court dismissed the case as moot because
of the intervening 2011–2016 demonstration project, a
dismissal that we affirmed on appeal. Newton–Nations v.
Betlach, 569 F. App’x 525, 526 (9th Cir. 2014). The
Newton–Nations plaintiffs were awarded attorneys’ fees
under the EAJA. Newton–Nations v. Betlach, No. CV-03-
02506-PHX-ROS, ECF No. 284, at 5 (D. Ariz. Aug. 22,
2014) (finding that the plaintiffs were the prevailing parties
because “the Ninth Circuit concluded the Secretary violated
the APA in connection with the increased copayments”).

   The Wood plaintiffs filed suit on essentially the same
grounds as the Newton–Nations plaintiffs, but challenged the
new 2011–2016 demonstration project. The complaint
                     WOOD V. BURWELL                           7

alleged that the Secretary once again failed to review or
analyze a number of issues related to the Copayment Rule,
such as whether it was justified by any ground other than
cost-saving. The plaintiffs sought declaratory and injunctive
relief under the Due Process Clause of the Fourteenth
Amendment, the APA, and the Social Security Act (“SSA”).
They requested that the Secretary be enjoined from
implementing the Copayment Rule, but did not specifically
request a remand to the agency. The district court denied the
Wood plaintiffs’ motion for a preliminary injunction because
the court determined that it could not enjoin the Copayment
Rule without enjoining the entire demonstration project, a
remedy that the plaintiffs did not seek.

    In 2013, the district court partially granted the plaintiffs’
motion for summary judgment and remanded for the
Secretary to address the deficiencies in her approval of the
2011 demonstration project. According to the district court,
the Secretary’s approval of the new demonstration project
was arbitrary and capricious in violation of the APA.
Specifically, the Secretary had not considered the report of
Dr. Ku, the Wood plaintiffs’ expert. His report indicated that
cost-sharing measures, like the Copayment Rule, had already
been amply studied, such that there was minimal research or
experimental value to the new project. The report further
suggested that heightened costs for low-income individuals
did not, in fact, reduce medical costs, but rather resulted in
greater reliance on emergency care. The district court
determined that “the record contains no evidence that the
Secretary considered or responded to Plaintiffs’ substantive
objections during the administrative process,” and that “the
Secretary has not pointed to any expert opinion or evidence
in the administrative record that refutes the objections put
forth by Plaintiffs on the basis of Dr. Ku’s research.” Wood,
8                   WOOD V. BURWELL

922 F. Supp. 2d at 847–48. The court ordered the Secretary
to “address the deficiencies” set forth in the order and to
complete a re-evaluation of the demonstration project within
sixty days. Id. at 857.

    The district court took a practical approach to the
situation, reasoning that because the Copayment Rule was an
integral component of the whole project, it would be
impossible to vacate that rule without vacating the entire
demonstration project. Id. at 851–52. Instead, the district
court opted to retain jurisdiction, because

       [v]acating the entire demonstration project
       would . . . deny Plaintiffs and the class the
       very health benefits they claim to require. A
       remand of the Secretary’s decision without
       vacating the project is the clearly preferable
       alternative and comports with Ninth Circuit
       precedent holding that agency action in
       violation of the APA can be left in place
       during remand ‘when equity demands.’

Id. (quoting Idaho Farm Bureau Fed’n v. Babbitt, 58 F.3d
1392, 1395 (9th Cir. 1995)).

    Upon remand and reconsideration, the Secretary came to
the same conclusion as before and approved the 2011–2016
demonstration project in a letter dated April 8, 2013.
Reasoning that in the letter “[t]he Secretary explained her
rationale for disagreeing with the substance of [the Wood
plaintiffs’] evidence” and “was not required to do more,” the
court granted the Secretary’s motion for summary judgment.
Wood v. Betlach, No. CV-12-08098-PCT-DGC, 2013 WL
3871414, at *7 (D. Ariz. July 26, 2013).
                      WOOD V. BURWELL                           9

    The district court later denied the Wood plaintiffs’ motion
for attorneys’ fees under the EAJA on the ground that they
were not the “prevailing party.” In its order, the district court
noted that the plaintiffs cited “seemingly dispositive cases”
holding that remand to an agency can give rise to prevailing
party status. The court also acknowledged that “[t]he interim
success obtained by Plaintiffs rested on a premise that was
not later rejected by the Court.” However, the district court
noted that the “dispositive” Ninth Circuit cases pre-dated the
Supreme Court’s decision in Sole v. Wyner, 551 U.S. 74
(2007), which the district court interpreted as foreclosing
prevailing party status for a party that obtained only interim
relief.

                           ANALYSIS

      As the Supreme Court recently reiterated, “[b]efore
deciding whether an award of attorney’s fees is appropriate
. . . a court must determine whether the party seeking fees has
prevailed in the litigation.” CRST Van Expedited, Inc. v.
EEOC, 136 S. Ct. 1642, 1646 (2016). The Court went on to
note that: “Congress has included the term ‘prevailing party’
in various fee-shifting statutes, and it has been the Court’s
approach to interpret the term in a consistent manner.” Id. A
fee-seeking party must show that (1) there has been a material
alteration in the legal relationship of the parties and (2) it was
judicially sanctioned. See Buckhannon, 532 U.S. at 604–05;
Klamath Siskiyou Wildlands Ctr. v. U.S. Bureau of Land
Mgmt., 589 F.3d 1027, 1030 (9th Cir. 2009) (applying the
Buckhannon factors to the EAJA).

   The Wood plaintiffs present the classic hallmarks of a
prevailing party. They alleged that the government acted
improperly in not following prescribed administrative review;
10                   WOOD V. BURWELL

the district court agreed and ordered the agency to conform its
behavior to the law; and the Secretary complied.
Nevertheless, the government points to two factors that it
contends alter the prevailing party analysis: (1) the Wood
plaintiffs obtained procedural relief, but not the substantive
relief they sought; and (2) the district court remanded to the
agency without vacatur, while retaining jurisdiction. We
disagree with the government’s claim that this “procedural
posture made all the difference.” Because the posture of this
case did not fundamentally affect the prevailing party inquiry
set out in Buckhannon, we conclude that the district court
erred as a matter of law in holding that the Wood plaintiffs
were not a prevailing party.

I. Judicially-Sanctioned Material Alteration

     The district court determined that the Secretary’s initial
authorization violated the APA and compelled her to
reconsider the evidence. Even though the Secretary later re-
approved the demonstration project (including the Copayment
Rule), she was obliged to consider the Wood plaintiffs’
objections and evidence, which she failed to do during the
first authorization. This posture resulted in a judicially-
sanctioned material alteration in the parties’ relationship
because “the defendants were required to do something
directly benefitting the plaintiff[ ] that they otherwise would
not have had to do.” Carbonell v. INS, 429 F.3d 894, 900
(9th Cir. 2005) (alteration in original) (citations omitted)
(internal quotation marks omitted).

    Procedural remedies can constitute a material alteration
in the parties’ legal relationship. See, e.g., Or. Nat. Res.
Council v. Marsh, 52 F.3d 1485, 1492 (9th Cir. 1995), as
amended on denial of reh’g (June 29, 1995) (awarding
                     WOOD V. BURWELL                         11

prevailing party status to plaintiffs where the agency had
failed to “include an analysis of cumulative impacts” in its
Environmental Impact Statement as required by law); Role
Models Am., Inc. v. Brownlee, 353 F.3d 962, 964–65 (D.C.
Cir. 2004) (awarding attorneys’ fees under the EAJA where
the court “ordered the Secretary of the Army to correct
procedural errors” and enjoined agency action while
procedural errors were addressed). We have consistently
held, both before and after the Supreme Court’s 2007
decision in Sole, that when remand is based on a legal defect
in the agency’s decision, the remand order can be sufficient
to confer prevailing party status. See Tobeler v. Colvin,
749 F.3d 830, 833–34 (9th Cir. 2014) (stating that remand to
consider evidence that the agency had improperly ignored
was sufficient to award attorneys’ fees); Li v. Keisler,
505 F.3d 913, 917–18 (9th Cir. 2007) (“remand orders . . .
advanced the goals sought by petitioners, and constituted
material alterations of the parties’ legal relationships”);
Rueda–Menicucci v. INS, 132 F.3d 493, 495 (9th Cir. 1997)
(awarding prevailing party status based on an agency
remand).

     Sole did not alter the landscape with respect to agency
remands. In Sole, the Supreme Court considered whether a
party that obtained a preliminary injunction, which was later
dissolved by a final order denying relief, was a “prevailing
party” under the EAJA. 551 U.S. at 82–83. The Court
observed that “[a] plaintiff who achieves a transient victory
at the threshold of an action can gain no award under that fee-
shifting provision if, at the end of the litigation, her initial
success is undone and she leaves the courthouse
emptyhanded.” Id. at 78. Unlike Wyner, the plaintiff in Sole
who ultimately left the courthouse with a ruling that vitiated
the legal ground upon which her injunction claim was based,
12                   WOOD V. BURWELL

id. at 80–81, the Wood plaintiffs left the courthouse with an
order that the Secretary violated the APA and had to
undertake a “do over” of her administrative review—a victory
that can hardly be described as leaving “emptyhanded.”

     Remand to an agency based on an APA procedural
violation differs markedly from a transitory preliminary
injunction. In Sole, the Court observed that the hearing prior
to the grant of a preliminary injunction was “hasty and
abbreviated” and that “[a]t the summary judgment stage, with
the benefit of a fuller record, the District Court recognized
that its initial assessment was incorrect.” Id. at 84–85. The
initial determination that Wyner had demonstrated a
likelihood of success on the merits was “tentative” and
“rested on a premise the District Court ultimately rejected.”
Id. The Court’s reference to the “transient” nature of the
preliminary ruling comports with the view that a preliminary
injunction is, “by its very nature, intended to be temporary.”
Higher Taste, Inc. v. City of Tacoma, 717 F.3d 712, 716 (9th
Cir. 2013). In contrast, in a procedural challenge under the
APA, part and parcel of the relief sought is agency adherence
to administrative procedures, apart from any substantive
relief.

    The district court’s reliance on the procedural versus
substantive remedy dichotomy misreads Sole.                 The
dispositive question is not whether the plaintiff ultimately
obtained some form of substantive relief, but rather whether
there is a lasting alteration in the legal relationship between
the parties. The preliminary ruling in Sole granting the
injunction, which included an assessment of the substantive
merits, was both “incorrect” and “undone.” 551 U.S. at 85,
78. In this case, the district court’s remand order finding the
Secretary’s actions arbitrary and capricious under the APA
                     WOOD V. BURWELL                         13

was not “reversed, dissolved, or otherwise undone” by its
later summary judgment order. Id. at 83. Quite the opposite,
the district court noted that the remand order requiring re-
evaluation by the Secretary “rested on a premise that was not
later rejected by the Court.” (Emphasis added); cf. id.
Whatever the Secretary’s ultimate decision, she was
compelled to authorize the demonstration project in a manner
that conformed to the APA.

    The result does not change simply because the complaint
did not specifically seek remand for agency reconsideration
of the demonstration project as a whole. By challenging the
process by which the Secretary approved the demonstration
project, the Wood plaintiffs essentially sought the remedy of
a remand. See Newton–Nations, 660 F.3d at 382 (remanding
for reconsideration based on a nearly identical claim to that
of the Wood plaintiffs). When assessing whether there has
been a material alteration in the legal relationship of the
parties, the order must grant “relief that the would-be
prevailing party sought,” Klamath, 589 F.3d at 1030, but the
relief need not be of “precisely the same character as the
relief sought in the complaint” so long as it “serves the goals
of the claim” and “require[s] defendants to do something they
otherwise would not have been required to do.” Saint John’s
Organic Farm v. Gem Cty. Mosquito Abatement Dist.,
574 F.3d 1054, 1059 (9th Cir. 2009). Although the district
court found that the Copayment Rule was not severable from
the rest of the demonstration project and thus equity
precluded the Wood plaintiffs’ preferred form of relief (i.e.,
vacating the Copayment Rule), this ruling did not undermine
the relief granted in the remand order. We conclude that
there was a material alteration in the legal relationship of the
parties, to the benefit of the Wood plaintiffs.
14                   WOOD V. BURWELL

II. Remand Without          Vacatur     and    Retention     of
    Jurisdiction

    We have not previously addressed whether remand
without vacatur affects the prevailing party analysis set out in
Buckhannon. This gap is unsurprising given that remand
without vacatur is a remedy used sparingly in this circuit. See
Pollinator Stewardship Council v. EPA, 806 F.3d 520, 532
(9th Cir. 2015) (“We order remand without vacatur only in
‘limited circumstances.’” (citations omitted)).            The
government argues that because the district court retained
jurisdiction during the remand, prevailing party status is
benchmarked against the post-remand grant of summary
judgment in favor of the defendants. We disagree. Although
a district court’s decision to remand without vacatur might
weigh against awarding prevailing party status in some cases,
it does not do so here.

    The district court’s rationale for declining to vacate the
demonstration project supports the Wood plaintiffs’ victory.
The court retained jurisdiction during the remand to allow the
demonstration project to continue uninterrupted. It found that
“remand of the Secretary’s decision without vacating the
project is the clearly preferable alternative and comports with
Ninth Circuit precedent holding that agency action in
violation of the APA can be left in place during remand
‘when equity demands.’” Wood, 922 F. Supp. 2d at 851–52
(quoting Idaho Farm Bureau, 58 F.3d at 1395). This
approach is consistent with the factors courts weigh when
deciding whether to remand to an agency without vacatur:
(1) “how serious the agency’s errors are” and (2) “‘the
disruptive consequences of an interim change that may itself
be changed.’” Cal. Cmtys. Against Toxics v. EPA., 688 F.3d
989, 992 (9th Cir. 2012) (quoting Allied–Signal, Inc. v. U.S.
                     WOOD V. BURWELL                         15

Nuclear Regulatory Comm’n, 988 F.2d 146, 150–51 (D.C.
Cir. 1993)).

    The district court rested its decision on the second
factor—“disruptive consequences”—because vacating the
demonstration project would be prejudicial and deny ongoing
benefits to the very individuals who sought procedural relief
through agency reconsideration.

    Contrary to the government’s characterization, the
remand did not “simply provide[] the opportunity for the
Secretary to provide further information about the rationale
for her approval decision prior to the court rendering a
decision on the merits.” Instead, the district court found that
the agency violated the APA and ordered the Secretary to
“address the deficiencies set forth in th[e] order,” not just
provide further information. Wood, 922 F. Supp. 2d at 857.
The remand was based upon agency error, and the district
court’s retention of jurisdiction was a by-product of its desire
to maintain the demonstration projection for equitable
reasons. Cf. Black Warrior Riverkeeper, Inc. v. U.S. Army
Corps of Engr’s, 781 F.3d 1271, 1289 (11th Cir. 2015)
(deciding not to vacate the agency’s decision during remand
in part because the court was “unable to discern whether that
error truly is significant” or if the agency’s “ultimate
conclusion” was unlawful).

   The Wood plaintiffs’ prevailing party status should not be
denied simply because the district court chose to protect this
vulnerable class by allowing the Medicaid program to
16                        WOOD V. BURWELL

continue uninterrupted.1 To hold otherwise would put
plaintiffs in the untenable position of foregoing procedural
relief or losing medical coverage, compounded by the
possible forfeiture of a claim for attorneys’ fees. Likewise,
it would force district courts to choose between exercising
their equitable power to retain jurisdiction during an agency
remand and maintaining plaintiffs’ potential eligibility for
attorneys’ fees. We see no reason to impose such a Hobson’s
choice on litigants or on the court.

    The government urges that a Social Security remand
provides an analogous context to support its position and to
benchmark the circumstances of the Wood plaintiffs. To the
contrary, the Social Security analogy supports our holding
that the Wood plaintiffs were the prevailing party. Although
we need not rely on the Social Security comparison for our
rationale, we address it because this point was one of the
government’s central arguments on appeal.


     1
       We decline to adopt the Federal Circuit’s prevailing party analysis,
which requires the district court to relinquish jurisdiction unless the party
ultimately succeeds on the merits. See Former Emps. of Motorola
Ceramic Prods. v. United States, 336 F.3d 1360, 1366 (Fed. Cir. 2003);
see also Dover v. McDonald, 818 F.3d 1316, 1320 (Fed. Cir. 2016)
(granting attorney’s fees where the district court did not retain jurisdiction,
remanded to the agency, and ordered further agency proceedings);
Thompson v. Shinseki, 682 F.3d 1377, 1381 (Fed. Cir. 2012) (“[W]here
the plaintiff secures a remand requiring further agency proceedings
because of alleged error by the agency, the plaintiff qualifies as a
prevailing party . . . without regard to the outcome of the agency
proceedings where there has been no retention of jurisdiction by the
court.” (alterations in original) (citation omitted) (internal quotation marks
omitted)). In cases where, as here, the retention of jurisdiction flows from
an equitable remand without vacatur, such a rule does not comport with
the purpose of the EAJA or with the district court’s equitable authority to
decline to vacate an illegal agency action during remand.
                     WOOD V. BURWELL                        17

    Sentence four and sentence six of 42 U.S.C. § 405(g) of
the Social Security Act delineate the exclusive avenues for
remand following judicial review of a decision by the
Commissioner of Social Security. See Shalala v. Schaefer,
509 U.S. 292, 296 (1993). Under sentence four, the court can
remand “a judgment affirming, modifying, or reversing the
decision of the Commissioner,” while a sentence six remand
arises from a “motion of the Commissioner of Social
Security” or “upon a showing that there is new evidence
which is material and that there is good cause for the failure
to incorporate such evidence into the record.” 42 U.S.C.
§ 405(g).

    In Schaefer, the Supreme Court distinguished between
situations that give rise to a sentence four remand versus a
sentence six remand, stating that, regardless of whether the
claimant is ultimately awarded benefits, “a party who wins a
sentence-four remand order is a prevailing party.” 509 U.S.
at 300–02. However, based on the specific statutory language
of § 405(g), courts are not permitted to retain jurisdiction
during a sentence four remand. Id. at 297.

    The government suggests that because the district court
retained jurisdiction here, the proper analogy is to a sentence
six remand, where the party can only be “prevailing” if it
ultimately obtains substantive relief. In focusing exclusively
on the retention of jurisdiction, the government misses a key
difference between sentences four and six, which is critical
for the purposes of analogy to the EAJA. The distinction
turns on the reason for the remand. In Flores v. Shalala, we
applied the Schaefer principle that a claimant becomes a
prevailing party after a sentence four remand regardless of
whether there was an ultimate award of benefits. 49 F.3d
562, 568–69 (9th Cir. 1995), as amended on denial of reh’g
18                       WOOD V. BURWELL

(June 5, 1995). Distinguishing between the two kinds of
Social Security remand, we explained:

         The district court reversed the Secretary’s
         decision because the Secretary incorrectly
         failed to consider all the evidence . . . . The
         remand here was not a sentence-six remand
         . . . [which] may be issued only in two
         situations: ‘where the Secretary requests a
         remand before answering the complaint, or
         where new, material evidence is adduced that
         was for good cause not presented before the
         agency.’

Id. at 569 (citation omitted). In Rueda–Menicucci, we
extended this reasoning to BIA remands, because both BIA
remands and sentence four remands result in a final judgment
that the agency’s actions did not comply with the law, such
that “we can perceive no difference between a ‘sentence
four’ remand under § 405(g) and a remand to the BIA for
further proceedings.” 132 F.3d at 495.

     This case does not fit into the sentence six box. Instead,
to the extent it is instructive, a sentence four remand provides
a closer analogy to the current case: the Wood suit was
remanded because of the Secretary’s failure to comply with
the APA—in effect reversing the decision for failure to
follow mandated procedures—not because of intervening
facts or on a motion by the agency.2


     2
      Our reasoning does not change in light of this court’s recent opinion
in Ibrahim v. United States Department of Homeland Security, —F.3d—,
2016 WL 4527560 (9th Cir. 2016). There, we held that a district court
should make a holistic “single inquiry” as to whether the government’s
                         WOOD V. BURWELL                               19

    In sum, the retention of jurisdiction for practical and
equitable reasons did not undermine the reality that the Wood
plaintiffs were a prevailing party. The remand was not
interim relief, but rather represented success on the APA
challenge.

                            CONCLUSION

    The Wood 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. We remand to the district court to consider
whether the government’s position was “substantially
justified” under the EAJA. Thangaraja v. Gonzales, 428 F.3d
870, 874–76 (9th Cir. 2005).

    REVERSED AND REMANDED.



conduct was “substantially justified” under the EAJA instead of making
“discrete” findings regarding the government’s positions at specific stages
of litigation. We also noted there that this court has not extended beyond
the Social Security context the rule in Corbin v. Apfel, 149 F.3d 1051,
1053 (9th Cir. 1998), that the district court may consider at the remand
stage whether the government’s position was substantially justified for
purposes of the EAJA. See Ibrahim, at *5–6 (discussing Corbin). In
contrast, this case examines the prevailing party determination, not the
distinct inquiry into substantial justification as in Ibrahim. In Ibrahim,
there was no possibility that Ibrahim could be considered a prevailing
party prior to the ultimate resolution of her claims. But here the Wood
plaintiffs prevailed on their claim that the Secretary violated APA
procedures, a question that is not dependent on the ultimate success of
their substantive claims. Therefore, because this case does not address the
substantial justification inquiry of the EAJA and especially because our
ruling does not depend upon an extension of Corbin, Ibrahim does not
change the result.
