Payment of attorney or agent fees (U. S. Department of Veteran Affairs)

2. Process for Paying Fees Directly From Past Due Benefits

Introduction

This topic contains information of the process of paying fees directly from past due benefits including the direct fee payment process, and direct payment of fees when appointment of a fiduciary is pending

Change Date

July 31, 2015

a. The Direct Fee Payment Process

The table below describes the process for paying attorney/agent fees directly from past-due benefits. Note: The following actions should take place at approximately the same time: withholding past-due benefits to be paid as fees authorizing the award and providing notice of the rating decision, and making and providing notice of the direct-pay fee eligibility decision.

Stage	Who Is Responsible	Description	Reference
1	AAFC	Determines whether direct payment of fees is at issue by analyzing whether a valid direct-pay fee agreement that VA can honor has been timely submitted.	38 CFR 14.636(g) and (h) M21-1, Part I, 3.C.4.g.
2	Veterans Service Representative (VSR)	Under review of the AAFC, prepares the claimant’s award, leaving it in a pending status.	M21-1, Part I, 3.C.3.f
3	AAFC	Determines the amount of past due benefits awarded computes the amount of past-due benefits to be withheld for fees in the event eligibility to fees is established.	M21-1, Part I, 3.C.3.
4	AAFC	Requests the RO’s finance activity to establish a withholding of the amount payable.	M21-1, Part I, 3.C.3.f.
5	Finance Activity	Establishes the withholding.	M21-1, Part I, 3.C.3.f and g.
6	AAFC/Senior Veterans Service Representative (SVSR)	Authorizes the award when the withholding appears in the corporate record, and Notifies the claimant and his/her attorney/agent of the rating decision and award.	M21-1, Part I, 3.C.3.g.
7	AAFC	Determines whether the attorney/agent is eligible to receive fees, and Notifies the claimant and his/her attorney/agent of the fee eligibility decision.	M21-1, Part 1, 3.C.4.
8	AAFC	When the appeal period expires (or any appeal is completed), asks the finance activity to release funds to the claimant or attorney/agent, according to the fee eligibility decision. Note: If the NOD was received on or after June 20, 2007, the finance activity must withhold an assessment from the attorney/agent’s payment.	M21-1, Part I, 3.C.5.
9	Finance Activity	Releases funds.	See M21-1, Part I, 3.C.5.

b. Direct Payment of Fees When Appointment of a Fiduciary is Pending

The table below describes the process for direct payment of attorney/agent fees out of past-due benefits awarded to an incompetent claimant when appointment of a fiduciary is pending.

Stage	Description
1	After the award of past due benefits to an incompetent claimant has been promulgated but before the award is authorized the AAFC will compute the amount of past-due benefits to be withheld for fees in the event eligibility to fees is established, and create and provide a signed Memorandum to the RO’ requesting an 18 transaction in Finance and Accounting System (FAS), to establish the 63C Offset withholding the calculated amount of attorney or agent fees from total past due amounts in accordance with the fee agreement (see M21-1, Part I, 3.C.3). Once the withholding transaction has been processed and approved by the RO Finance Officer or designee, the financial activity will notify the AAFC, and provide the AAFC with the signed FAS authorization sheet (18 transaction), to be placed in the claims folder.
2	The AAFC makes a direct-pay fee eligibility decision and sends it to the claimant and the attorney or agent as provided in M21-1, Part I, 3.C.4.
3	Once the fee-appeal period (60 days) has expired, and no appeal has been filed, the AAFC will create and provide a signed Memorandum to the finance activity requesting the disbursement of attorney fees (now in Fund 6279 from the 63C Offset), to the attorney/agent and collection of the assessment fee as applicable The finance activity will process the request to disburse the attorney/agent fee and collect the attorney assessment (when required) as provided in M21-1, Part I, 3.C.5.

Important: Do not hold attorney/agent fees approved under the eligibility decision until a fiduciary is appointed, as this could result in considerable delay of payment to the attorney/agent. The memoranda referred to in the table above are evidentiary and must be included in the claims folder. Authorization and payment of the remaining past due amount (not withheld for direct fee payment) in a case of an incompetent claimant must follow the guidance in M21-1, Part III, Subpart v, 9.B.2. References: For more information on general authorization information on incompetency and fiduciary cases, see M21-1, Part III, Subpart v, 9.A, and paying attorney/agent fees when appointment of a fiduciary is pending, see Freeman v. Shinseki, 24 Vet.App. 404 (2011).